Helia Group Limited · ASX:HLI
Helia — 1Q19 Earnings Presentation
31 slides from Helia's earnings presentation, May 1, 2019
Slide 1: 1Q19 Financial Results Presentation
1 MAY 2019 1Q19 FINANCIAL RESULTS PRESENTATION Illustration by Australian artist and illustrator, Mike Watt ©2019 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 2019. 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
Introduction Georgette Nicholas, CEO and MD
Slide 4: 1Q19 results overview
1Q19 results overview Summary 1Q19 result in line with guidance Change (A$ millions) 1Q18 1Q19 % • New Insurance Written of $5.4 billion, up 24.0% from 1Q18 • GWP decreased 50.4% reflecting the fact that 1Q18 GWP included a bespoke transaction written via Genworth’s Bermudian entity (utilising a Gro
Slide 5: Macroeconomic conditions
Macroeconomic conditions Interest rates House values – capital city dwellings NSW VIC QLD SA WA ACT Australia 200 8% Cash rate Standard variable mortgage rate 180 7% Home value Index 6% 160 5% 140 4% 3% 120 2% 100 1% 0% 80 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19
Slide 6: Residential mortgage lending market
Residential mortgage lending market Originations and HLVR penetration1 A$ bn 34% 33% 31% 31% 27% 27% 24% 22% 21% 20% 376 385 371 359 28 335 37 31 24 300 54 40 52 49 51 262 256 40 240 242 49 46 36 41 26 31 43 43 200 202 47 50 187 200 166 139 102 HLVR 99Penetration 111 98 83 93 101 99 71 68 63 66 80 8
Slide 7: Detailed financial performance
Detailed financial performance Michael Bencsik, CFO
Slide 8: 1Q19 income statement
1Q19 income statement (A$ millions) 1Q18 2Q18 3Q18 4Q18 1Q19 Change 1Q18 v 1Q19 Gross written premium 174.1 92.7 92.1 101.3 86.3 (50.4%) Movement in unearned premium (84.7) 0.8 (6.5) (13.4) 3.9 104.6% Gross earned premium 89.4 93.5 85.6 87.9 90.2 0.9% Outwards reinsurance expense (22.0) (17.5) (17.5
Slide 9: New insurance written
New insurance written NIW1 by original LVR2 band NIW1 by product type $ bn, % $ bn 88% 88% 88% 85% 86% 84% 85% 84% 81% 6.8 6.8 6.3 6.0 16% 5.5 18% 18% 5.4 5.4 18% 5.1 6.8 6.8 20% 22% 4.3 20% 6.3 6.0 42% 23% 5.5 5.4 5.4 5.1 23% 4.3 56% 62% 58% 62% 65% 99.3% 99.3% 99.7% 74% 99.4% 99.5% 99.7% 99.7% 73%
Slide 10: Gross written premium
Gross written premium GWP and average price1 of flow business GWP walk $ m, % $m 174.1 0.1 (84.2) 1.83% 1.80% 1.82% 1.80% 1.82% 1.79% 1.75% 1.69% 1.60% 174.1 (3.6) 86.3 97.7 101.3 88.2 94.1 88.9 92.7 92.1 86.3 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 Flow LVR Volume 3 Other 1Q19 band mix 2
Slide 11: Net claims incurred
Net claims incurred (A$ millions unless otherwise stated) 1Q18 2Q18 3Q18 4Q18 1Q19 Number of paid claims (#) 365 301 320 325 319 Average paid claim1 ($’000) 117.8 115.2 115.7 102.1 94.2 Claims paid1 43.0 34.7 37.0 33.2 30.1 Movement in non-reinsurance recoveries on paid claims 0.6 (1.5) (0.5) - - Mo
Slide 12: Loss development
Loss development Delinquency roll and incurred loss drivers Delinquency roll 1Q18 2Q18 3Q18 4Q18 1Q19 Opening balance 6,696 6,958 7,306 7,350 7,145 New delinquencies 2,701 2,864 2,742 2,390 2,662 Cures (2,074) (2,215) (2,378) (2,270) (1,998) Paid claims (365) (301) (320) (325) (319) Closing delinque
Slide 13: Balance sheet and unearned premium reserve
Balance sheet and unearned premium reserve Strong balance sheet with $3.2bn in cash and investments and $1.2bn in UPR Unearned premium by year as at Balance sheet as at 31 March 2019 31 March 2019 (A$ in millions) 31 Dec 18 31 Mar 19 Total UPR $1.2bn Assets 2011 2012 Cash and cash equivalents 141.5
Slide 14: 1Q 2019 regulatory capital position
1Q 2019 regulatory capital position (A$ in millions) 31 Dec 18 31 Mar 19 NIW1 by original LVR band and Probable Maximum Loss Capital Base Common Equity Tier 1 Capital 1,748.1 1,711.8 $ bn Tier 2 Capital 200.0 200.0 2.60 2.59 Regulatory Capital Base 2.51 1,948.1 1,911.8 2.36 2.36 2.28 Capital require
Slide 15: Reinsurance
Reinsurance Program continues to drive efficiency Reinsurance program as at 31 Mar 2019 Observations 2,500 • As at 31 March 2019, $800 million of excess of loss cover with varying durations depending on the layer 100 • Well diversified panel with over 20 different reinsurers 2,000 100 Consortium 6 p
Slide 16: Ongoing program of capital management
Ongoing program of capital management Recent actions Genworth dividends • Since listing in 2014, Genworth has paid out all after tax profits by way of ordinary and special dividends to shareholders 32 • Paid fully franked final ordinary dividends of $39.3 million 28 100% in March 2019 Ordinary payou
Slide 17: Summary and conclusion
Georgette Nicholas, CEO and MD Summary and conclusion
Slide 18: Genworth economic outlook and FY19 guidance
2019 Genworth economic outlook and FY19 guidance Economic growth in 1Q19 consistent with Perth likely to continue to experience 2H18 trends, reflecting softer growth rates challenging market conditions throughout 2019 compared with 1H18 resulting from the flow-on effect of the end of the mining boom
Slide 19: Conclusion
Conclusion Good progress in Track record of Strategic work to implementing Business is well delivering profits deliver profitable strategic initiatives capitalised and strong capital growth over the that broaden returns medium term product offerings Unique set of Excess capital and competencies that
Slide 20: Questions
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Slide 21: Supplementary slides
Supplementary slides we Genworth %, <.
Slide 22: Genworth's Strategic Program of Work
Genworth’s Strategic Program of Work Designed to deliver profitable growth over the medium-term Value proposition: Innovation and technology will underpin Genworth’s value proposition Our vision: To help Australians achieve the dream of home ownership Our purpose: To be the leading provider of custo
Slide 23: Residential mortgage lending market
Residential mortgage lending market Investment vs. owner-occupied (APRA statistics for ADI)1 Investment vs. owner-occupied2 (Genworth) $ bn, % $ bn, % 40% 27% 36% 37% 34% 24% 25% 34% 33% 23% 32% 33% 23% 21% 29% 30% 20% 20% 19% 128 127 136 109 136 14% 14% 109 8.7 76 84 81 78 6.7 8.0 8.6 8.4 6.2 5.2 6
Slide 24: 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 2019 IIF1 by product type, as at 31 March 2019 Total IIF $309 bn HomeBuyer Plus Low Doc 2% Other 95.01%+ 60.01-70% 5% 1% 1% 6% <60% 8% 90.01-95% 27% 70.01-80% 15% 85.01-90% Standard 80.01-85%
Slide 25: Insurance ratio analysis
Insurance ratio analysis Expenses Combined ratio $ m, % $ m, % 40.6% 93.7% 89.5% 89.3% 36.1% 83.3% 85.0% 84.3% 33.5% 32.4% 32.5% 34.0% 60.1% 61.3% 66.6% 29.7% 25.2% 26.6% 29.7 27.2 27.6 66.7 24.6 25.2 24.8 64.8 63.6 63.3 65.1 23.9 22.6 60.3 57.9 58.9 22.1 55.1 13.5 14.1 16.0 29.7 24.8 27.2 27.6 22.6
Slide 26: Delinquency development
Delinquency development Delinquency composition Delinquencies by book Delinquencies by Mar 18 Mar 19 Mar 18 Mar 19 year geography 2010 and prior 4,043 3,875 0.49% New South Wales 1,156 1,322 0.41% 2011 389 416 0.78% Victoria 1,346 1,349 0.42% 2012 665 708 1.05% Queensland 2,100 2,171 0.74% 2013 619
Slide 27: Delinquency rate (%)
Delinquency development Favourable performance post 2009 1.40% 2005 2006 2007 1.20% 2008 2009 1.00% 2010 2011 2012 Delinquency rate (%) 0.80% 2013 2014 2015 0.60% 0.59% 0.58% 0.60% 2016 2017 0.51% 0.47% 2018 0.42% 0.41% 2019 0.40% 0.39% 0.28% 0.28% 0.23% 0.20% 0.18% 0.11% 0.05% 0.00% 0.00% 103 109 1
Slide 28: Delinquency population
Delinquency population By month in arrears1, 2 8,000 50% 7,490 7,285 7,306 7,350 7,146 7,145 6,926 6,958 8% 45% 7,000 6,844 10% 6,731 6,696 10% 12% 9% 6,413 12% 11% 13% 40% 14% 14% 13% 5,889 6,000 13% 23% 20% 21% 19% 22% 19% 35% 14% 20% 20% 17% 19% 20% 5,000 18% 30% No. of arrears 18% Cure rate 25%
Slide 29: Insurance in force
Insurance in force IIF1 by book year IIF1 by state 2019 ACT NT NZ 2% 2018 3% 1% 2% 7% TAS 2% SA 2017 6% NSW 7% 2009& 2016 28% 7% Prior WA 39% 13% 2015 8% 2014 8% 2013 2010 QLD VIC 2012 20114% 23% 22% 7% 6% 5% 1.IIF includes capitalised premium. Excludes excess of loss insurance 29 1Q 2019 financial
Slide 30: Investment portfolio
Investment portfolio Conservative, well-diversified portfolio with average maturity of 3.4 years1 Investment portfolio by maturity Investment portfolio by rating Investment portfolio by issuer type 2% 2% 8% 2% 2% 14% 26% 25% 18% 44% 48% 15% 2% 9% 15% 31% 23% 14% Corporate State Gov't Cash Equiv. 0 -
Slide 31: NVA
NVA Genworth > Sse