Helia Group Limited · ASX:HLI
Helia — Genworth Mortgage Insurance Australia — H1 2014 Earnings Presentation
31 slides from Helia's earnings presentation, Jul 30, 2014
Slide 1: 1H 2014 Financial results presentation
Genworth Mortgage Insurance Australia 1H 2014 Financial results presentation 30 July 2014 ©2014 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 30 July 2014. It may present financial information on both a statutory basis (prepared in accordance with Australian accounting standards which comply with International Financial Reporting Standards (IF
Slide 3: Agenda
Agenda 1. Introduction (Ellie Comerford, MD and CEO) • Summary of financial performance • Overview of economic environment • Overview of business/regulatory environment 2. Detailed financial performance (Georgette Nicholas, CFO) • Pro forma income statement ‒ Sales and revenue performance ‒ Delinque
Slide 4: Introduction
Introduction Ellie Comerford, Managing Director and CEO
Slide 5: Overview of 1H14 financial performance
Overview of 1H14 financial performance Solid financial performance – marginally ahead of IPO prospectus • Statutory Net Profit After Tax of $42.5 for the period post reorganisation from 19 May 2014 to 30 June 2014 • Underlying NPAT of $133.1m – Reported Net Profit After Tax (NPAT) of $151.4m include
Slide 6: Overview of economic environment
Overview of economic environment Stable macroeconomic conditions largely in line with expectations • First quarter GDP was stronger than expected – however second quarter likely to be more in line with expectations, influenced by deterioration in the terms of trade and subdued consumer sentiment • T
Slide 7: Overview of business and regulatory environment
Overview of business and regulatory environment Significant level of regulatory focus and interim report from the FSI Customer Regulatory developments • Overall the LVR mix of the business is slightly lower • 18 July 2014 - APRA presentation to the House of than what was expected: Representatives St
Slide 8: Detailed financial performance
Detailed financial performance Georgette Nicholas, Chief Financial Officer
Slide 9: 1H 2014 pro-forma income statement
1H 2014 pro-forma income statement Strong housing and stable economic conditions have supported solid performance FY14 (A$ millions) 1H12 1H13 1H14 Change F’cast2 Commentary Gross written premium 237.4 273.0 313.6 14.9% 663.2 • GWP growth has been mainly underpinned Movement in unearned premium (14.
Slide 10: New Insurance Written
New Insurance Written New business mix reflecting policy changes since 2009 NIW by LVR band (half yearly) NIW by product type (half yearly) $ billions, % $ billions, % 17.9 18.3 17.9 18.3 17.3 17.1 17.3 17.1 15.9 15.9 41.0% 35.7% 98.2% 36.2% 32.6% 97.2% 98.6% 97.9% 36.3% 97.0% 43.5% 45.9% 50.1% 43.1
Slide 11: Gross Written Premium
Gross Written Premium Price increases offset by shift in LVR mix GWP and average price (GWP/NIW) Flow business - GWP walk vs. pcp $ millions, % $ millions 1.77% 1.82% 1.72% 1.68% 1.55% 18.8 35.9 323.5 313.6 307.3 (14.1) 273.0 237.6 313.6 273.0 1H12 2H12 1H13 2H13 1H14 1H13 Avg. price Volume LVR mix
Slide 12: Delinquency development
Delinquency development Favourable performance post 2009 with usual seasonal first half trends 1.40% 2004 • The post 2009 book years continue to 2005 perform favourably relative to the previous three years at an equivalent 1.20% 2006 point of development, led by tightened 2007 underwriting criteria
Slide 13: Net incurred claims
Net incurred claims Lower level of delinquencies flowing through to MIP and lower average claim size Average paid claim Average reserve per delinquency $ millions $ millions 83.8 82.2 52.0 51.6 80.9 48.7 75.4 47.9 41.7 62.9 1H12 2H12 1H13 2H13 1H14 30 Jun 12 31 Dec 12 30 Jun 13 31 Dec 13 30 Jun 14 C
Slide 14: Effective LVR
Effective LVR House price growth in 1H14 has improved embedded borrower equity in portfolio As at 31 Dec 13 As at 30 Jun 14 Insurance in force LVR Change Insurance in force LVR Change in house in house Book year $ billion % Original Effective price % Book year $ billion % Original Effective price %
Slide 15: Insurance ratio analysis
Insurance ratio analysis Performance trending in line with expectation reflecting seasoning of older books Expenses Combined ratio $ millions, % $ millions, % 28.0% 134.3% 27.6% 27.2% 27.3% 26.6% 49.7 65.1% 69.9% 49.9% 46.2% 31.6 34.1 26.8 29.0 30.4 53.0 188.8 50.6 56.2 58.2 22.9 21.6 22.6 24.5 24.1
Slide 16: Balance sheet and unearned premium reserve
Balance sheet and unearned premium reserve Strong stable balance sheet with over $1.3bn in UPR (A$ in millions) 31 Dec 12 31 Dec 13 30 Jun 13 Unearned premium by book year as at 30 June 2014 Assets Total UPR $1.3bn 2007 2008 Cash and cash equivalents 33.7 113.9 77.7 1% 2% Investments (1) 3,591.0 3,6
Slide 17: 1H 2014 regulatory capital position
1H 2014 regulatory capital position Improved solvency from strong 1H14 performance and seasoning of old books (A$ in millions) 31 Dec 13 30 Jun 14 Evolution of capital sources Capital Base $ billions Common Equity Tier 1 Capital 2,440.0 2,598.7 3.45 3.58 3.54 3.49 3.55 Tier 2 Capital 126.0 112.0 Reg
Slide 18: Update on initiatives to deliver ROE progression
Update on initiatives to deliver ROE progression ROE Progression Opportunity Comment 1. Underwriting and pricing • Book years post 2009 have been underwritten on more attractive terms primarily due discipline to premium rate increases and tightening of underwriting criteria • Post 2009 portfolio rep
Slide 19: Genworth Australia 2014 Full Year Outlook
Genworth Australia 2014 Full Year Outlook Based on pro forma financial information as set out in the prospectus Key measures - full Year 2014 financial guidance IPO prospectus Revised target Flow NIW ($ billions) $33.8 bn $33.8 bn Portfolio NIW ($ billions) $4.0 bn $4.0 bn Average price - Flow NIW 1
Slide 20: Summary and conclusion
Summary and conclusion Ellie Comerford, Managing Director and CEO
Slide 21: Genworth Australia's investment proposition
Genworth Australia’s investment proposition The leading provider, in an attractive industry, with strong financial performance Key takeaways Investment proposition • Market leader in the Australian LMI market Strong financial with ~ 44% market share performance, financial Clear and focused strategy
Slide 22: Questions
Questions Ellie Comerford, Managing Director and CEO Georgette Nicholas, Chief Financial Officer
Slide 23: Supplementary Slides
Supplementary Slides
Slide 24: Genworth Australia's strategic priorities
Genworth Australia’s strategic priorities Delivering long-term returns to Shareholders, reflected in an attractive, sustainable ROE • Proactively manage business and Lender Customer relationships Strengthen market • Strengthen and grow Lender Customer relationships through understanding their strate
Slide 25: Pro forma income statement reconciliation
Pro forma income statement reconciliation Reconciling to the USGAAP figures reported by Genworth Financial, Inc. USGAAP AU Add Back: Non USGAAP AU USGAAP AU Adjustments GMA Segment Controilling Segment Segment Total Group pro Results in Interest Results + Results + (a) (b) (c) (d) Adjust. USD (NCI)
Slide 26: Pro forma income statement reconciliation
Pro forma income statement reconciliation Reconciling pro forma results to the AIFRS statutory accounts (A$ in millions) 1H14 Pro Forma NPAT for half year to 30 June 2014 151.4 Less period prior to formation of consolidated group: 1 Jan to 18 May 2014 (108.7) Pro Forma result for period 19 May to 30
Slide 27: Quarterly pro forma financial information
Quarterly pro forma financial information Pro forma statement of comprehensive income (A$ in millions) 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Gross written premium 127.7 145.4 149.6 173.8 159.7 153.9 Movement in unearned premium (14.8) (29.6) (29.3) (51.4) (32.6) (25.0) Gross earned premium 112.9 115.8 120.3
Slide 28: Quarterly pro forma financial information
Quarterly pro forma financial information Financial ratios 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Loss ratio 47.2% 37.5% 27.4% 17.8% 15.9% 23.2% Expense ratio 27.4% 27.8% 26.0% 28.6% 25.3% 27.9% Combined Ratio 74.7% 65.2% 53.4% 46.4% 41.3% 51.2% Insurance Margin 30.5% 40.9% 55.8% 60.3% 67.9% 64.4% Effective
Slide 29: Delinquency development
Delinquency development Quarterly delinquency roll and delinquency composition Delinquency Roll 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Opening balance 5,851 5,868 5,820 5,454 4,980 5,070 New delinquencies 2,928 3,095 2,901 2,383 2,689 2,913 Cures (2,189) (2,594) (2,757) (2,276) (2,137) (2,159) Paid claims (7
Slide 30: Summary portfolio characteristics
Summary portfolio characteristics Insurance portfolio as at 30 June 2014 – total $306 billion Insurance in force by LVR band (original LVR), as at Insurance in force by product type, as at % 2% % 1% 1% 9% 4% 6% <60% 6% 60.01-70% Standard 30% 70.01-80% Low Doc 17% Homebuyer Plus 80.01-85% 85.01-90% B
Slide 31: Investment portfolio
Investment portfolio Conservative well diversified portfolio with duration to maturity of 2.0 years Investment portfolio by maturity Investment portfolio by rating Investment portfolio by issuer type Avg. Maturity = 2.0 yrs 2% 2% 2% 2% 0% 8% 21% 17% 18% 38% 46% 40% 17% 27% 32% 2% 26% C’wealth Corpor
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