Helia Group Limited · ASX:HLI
Helia — Genworth Mortgage Insurance Australia — Q1 2018 Earnings Presentation
30 slides from Helia's earnings presentation, May 2, 2018
Slide 1: 1Q18 Financial Results Presentation
2 MAY 2018 1Q18 FINANCIAL RESULTS PRESENTATION GROWING TOGETHER ©2018 Genworth Mortgage Insurance Australia Limited. All rights reserved.
Slide 2: Disclaimer
Disclaimer This presentation contains general information in summary form which is current as at 31 March 2018. It may present financial information on both a statutory basis (prepared in accordance with Australian accounting standards which comply with International Financial Reporting Standards (I
Slide 3: Introduction
ij Bastin Introduction
Slide 4: 1Q18 results overview
1Q18 results overview Summary Change % 1Q18 result in line with expectations (A$ millions) 1Q17 4Q17 1Q18 1Q17 v • Increase in GWP includes new business written pursuant to 1Q18 Bermudan entity and new micro markets LMI. Bermudan transaction includes a consortium of reinsurers so only a Gross writte
Slide 5: Macroeconomic conditions
Macroeconomic conditions Interest rates House values – capital city dwellings 8% NSW VIC QLD SA WA ACT Australia Cash rate Standard variable mortgage rate 7% 185 6% Home value Index 5% 165 4% 145 3% 125 2% 105 1% 0% 85 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Mar-
Slide 6: Residential mortgage lending market
Residential mortgage lending market Originations and HLVR penetration1 A$ bn 37% 34% 33% 31% 31% 27% 27% 24% 22% 21% 376 385 371 335 31 28 37 300 52 54 40 51 262 256 40 240 242 49 219 46 36 41 26 31 41 43 47 43 200 202 50 200 40 139 166 102 99 98 111 74 80 80 83 93 101 65 71 68 63 66 2008 2009 2010
Slide 7: Detailed financial performance
Detailed financial performance
Slide 8: 1Q18 income statement
1Q18 income statement (A$ millions) 1Q17 4Q17 1Q18 Change 1Q17 v 1Q18 Gross written premium 88.2 97.7 174.1 97.4% Movement in unearned premium 36.7 (22.0) (84.7) (330.8%) Gross earned premium 124.9 75.7 89.4 (28.4%) Outwards reinsurance expense (17.0) (16.9) (22.0) (29.4%) Net earned premium 107.9 5
Slide 9: New insurance written
New insurance written NIW1 by original LVR2 band NIW1 by product type $ bn, % $ bn, % 88% 88% 85% 84% 84% 84% 83% 82% 81% 7.8 7.8 6.8 6.6 6.8 6.2 16% 6.6 6.3 6.2 6.1 6.3 6.1 16% 5.5 5.4 5.5 5.4 17% 18% 18% 18% 4.3 46% 20% 22% 4.3 42% 99.1% 50% 54% 23% 99.3% 56% 56% 99.3% 99.2% 99.0% 99.3% 62% 99.4%
Slide 10: Gross written premium
Gross written premium GWP and average price1 of flow business GWP walk $ m, % $m 13.0 174.1 2.0% 74.0 1.83% 1.80% 1.82% 1.69% 1.57% 1.56% 1.60% 174.1 1.42% 1.48% 1.5% 88.2 (1.1) 1.0% 104.8 99.7 92.5 94.1 97.7 85.0 88.2 88.9 0.5% 0.0% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 3 1Q17 Flow Volume Fl
Slide 11: Net incurred claims
Net incurred claims (A$ millions unless otherwise stated) 1Q17 2Q17 3Q17 4Q17 1Q18 Number of paid claims (#) 356 355 376 385 365 Average paid claim1 ($’000) 92.5 112.2 110.6 131.1 119.5 Claims paid1 32.9 39.8 41.6 50.5 43.6 Movement in non-reinsurance recoveries on paid claims - (8.2) - - - Movement
Slide 12: Loss development
Loss development Delinquency roll and incurred loss drivers Delinquency roll 1Q17 2Q17 3Q17 4Q17 1Q18 Opening balance 6,731 6,926 7,285 7,146 6,696 New delinquencies 2,852 3,145 2,887 2,463 2,701 Cures (2,301) (2,431) (2,650) (2,528) (2,074) Paid claims (356) (355) (376) (385) (365) Closing delinque
Slide 13: Balance sheet and unearned premium reserve
Balance sheet and unearned premium reserve Strong balance sheet with $3.3bn in cash and investments and $1.2bn in UPR Unearned premium by year as at Balance sheet as at 31 March 2018 31 March 2018 (A$ in millions) 31 Dec 17 31 Mar 18 Total UPR $1.2bn Assets Cash and cash equivalents 43.0 67.5 2010 2
Slide 14: Regulatory capital position
Regulatory capital position 1Q 2018 (A$ in millions) 31 Dec 17 31 Mar 18 NIW1 by original LVR band and Probable Capital base Maximum Loss1 Common Equity Tier 1 capital 1,892.4 1,856.2 $ bn Tier 2 capital 200.0 200.0 Regulatory capital base 2,092.4 2,056.2 2.60 2.59 2.51 Capital requirement 2.36 2.36
Slide 15: Reinsurance
Reinsurance 2018 Renewal has improved capital efficiency Reinsurance program as at 1 April 2018 Observations • As at 31 March 2018, $900 million of excess of loss cover 2,500 with varying durations depending on the layer • Well diversified panel with over 20 different reinsurers 100 Consortium 6 par
Slide 16: Ongoing program of capital management
Ongoing program of capital management Recent actions Genworth dividends • Since listing in 2014, Genworth has: 32 − Paid out all after-tax profits by way of ordinary and 28 100% special dividends to shareholders; and Ordinary payout ratio 24 80% cents per share − Returned more than $1 billion ($2 pe
Slide 17: Summary and conclusion
ij Bastin Summary and conclusion
Slide 18: Genworth economic outlook and FY18 guidance
2018 Genworth economic outlook and FY18 guidance The Australian economy is expected to Housing market conditions likely to ease continue to perform relatively well in 2018 further in 2018 as macro-prudential underpinned by strong infrastructure measures continue to take effect and new investment at
Slide 19: Conclusion
Conclusion Good progress in Track record of Strategic work implementing Business is well delivering strong being undertaken strategic initiatives capitalised profits and to redefine core that broaden shareholder returns business model product offerings Unique set of Excess capital and competencies t
Slide 20: Questions and supplementary slides
Questions and supplementary slides
Slide 21: Genworth's strategic objectives
Genworth’s strategic objectives A refined strategic plan to re-ignite profitable growth over the medium-term Value proposition: Innovation and technology will underpin Genworth’s value proposition. Focus: To be the leading provider of customer-focused capital and risk management solutions in residen
Slide 22: Earnings curve
Earnings curve Comprehensive review of premium earning pattern completed in 2H17 Earnings pattern for premium written post 1 October 2017 25% 20% 15% 10% 5% 0% 1 2 3 4 5 6 7 8 9 10 11 12 Years since inception 22 1Q 2018 results – produced by Genworth.
Slide 23: Earnings curve
Earnings curve Comparative in- force earning pattern for premium written pre 1 Oct 2017 35% 30% 25% 20% 15% 10% 5% 0% 2018 2019 2020 2021 2022 2023 2024 Proportion - prior curve (pre 01 Oct 2017) Proportion - revised curve (post 01 Oct 2017) 23 1Q 2018 results – produced by Genworth.
Slide 24: Residential mortgage lending market
Residential mortgage lending market Investment vs. owner-occupied (APRA statistics)1 Investment vs. owner-occupied2 (Genworth) $ bn, % $ bn, % 40% 30% 36% 37% 27% 34% 34% 33% 24% 25% 32% 33% 31% 23% 23% 29% 21% 20% 20% 19% 128 127 136 136 15% 109 76 12.5 8.7 78 84 81 68 6.7 8.0 8.6 8.4 258 6.2 5.2 6
Slide 25: Insurance in force and new insurance written
Insurance in force and new insurance written Insurance in force (IIF)1 by original LVR2 band, as at 31 March 2018 IIF1 by product type, as at 31 March 2018 Low HomeBuyer Plus Doc 2% 95.01%+ 60.01-70% 5% Other 2% 6% 1% <60% 8% 90.01-95% 28% 70.01-80% 16% Standard 85.01-90% 80.01-85% 92% 32% 8% Flow N
Slide 26: Insurance ratio analysis
Insurance ratio analysis Expenses Combined ratio $ m, % $ m, % 40.6% 93.7% 89.5% 33.5% 64.0% 71.1% 61.3% 66.6% 29.7% 57.1% 60.1% 28.5% 50.5% 25.2% 25.8% 25.2% 26.6% 23.4% 82.4 29.9 30.8 29.7 29.1 73.8 26.6 27.2 27.6 66.7 61.7 64.8 63.6 23.9 22.6 57.3 29.9 60.3 55.1 17.1 29.1 15.9 16.4 13.5 14.1 16.0
Slide 27: Delinquency development
Delinquency development Delinquency composition Delinquencies by Total 31 Mar 17 31 Dec 17 31 Mar 18 delinquencies by 31 Mar 17 31 Dec 17 31 Mar 18 book year geography 2008 and prior 2,955 2,660 2,767 0.38% New South Wales 1,139 1,088 1,156 0.33% 2009 929 892 909 1.04% Victoria 1,375 1,304 1,346 0.3
Slide 28: Delinquency development
Delinquency development Favourable performance post 2009 1.40% 2004 2005 2006 1.20% 2007 2008 2009 1.00% 2010 2011 Delinquency rate (%) 0.80% 2012 2013 2014 2015 0.60% 0.51% 0.52% 0.55% 2016 0.46% 2017 0.45% 0.40% 0.37% 0.39% 0.29% 0.27% 0.22% 0.19% 0.20% 0.12% 0.08% 0.05% 0.00% 103 109 115 121 127
Slide 29: Delinquency population
Delinquency population By month in arrears 8,000 50% 39.79% 7,285 7,146 42.64% 6,958 45% 7,000 6,844 6,731 6,926 6,696 43.27% 12% 6,413 13% 12% 11% 40.70% 14% 40% 5,900 5,804 5,889 14% 13% 37.46% 6,000 13% 5,552 19% 19% 40.84% 5,378 20% 35% 14% 14% 14% 17% 20% 38.38% 15% 19% 20% 5,000 15% 18% 30% 37
Slide 30: NVA
NVA Genworth > Sse
Genworth Mortgage Insurance Australia — Q1 2018 Earnings Presentation on 6ix