Helia Group Limited · ASX:HLI
Helia — Investor Presentation (August 2018)
37 slides from Helia's investor presentation, Aug 1, 2018
Slide 1: 1H18 Financial Results Presentation
1 AUGUST 2018 1H18 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 30 June 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 (IF
Slide 3: Introduction
Introduction Re Genworth ¥, <.
Slide 4: 1H18 results overview
1H18 results overview Summary Change % 1H18 result in line with guidance (A$ millions) 1H17 1Q18 2Q18 1H18 1H17 v • Increase in GWP includes business written pursuant to new 1H18 Bermudan entity and new micro markets LMI. Bermudan transaction includes a consortium of reinsurers therefore only a Gros
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 200 7% 6% 180 5% 160 Home value Index 4% 140 3% 120 2% 100 1% 0% 80 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18
Slide 6: ADI residential mortgage lending market
ADI residential mortgage lending market Originations and HLVR penetration1 A$ bn 37% 34% 33% 31% 31% 27% 27% 24% 22% 21% 20% 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 40 166 139 102 99 98 111 74 80 80 83 93 101 65 71 68 63 66 2008 20
Slide 7: Genworth's Strategic Program of Work
Genworth’s Strategic Program of Work 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 re
Slide 8: Detailed financial performance
Detailed financial performance
Slide 9: 1H18 income statement
1H18 income statement (A$ millions) 1H17 1Q18 2Q18 1H18 Change 1H17 v 1H18 Gross written premium 182.3 174.1 92.7 266.8 46.4% Movement in unearned premium 63.1 (84.7) 0.8 (83.9) (233.0%) Gross earned premium 245.4 89.4 93.5 182.9 (25.5%) Outwards reinsurance expense (33.9) (22.0) (17.5) (39.5) (16.5
Slide 10: New insurance written
New insurance written NIW1 by original LVR2 band NIW1 by product type $ bn, % $ bn, % 87% 87% 86% 84% 84% 84% 18.9 84% 17.7 82% 82% 17.3 18.9 28% 14.9 17.7 25% 14.0 17.3 33% 13.1 21% 12.6 14.9 16% 14.0 18% 17% 10.9 10.3 12.6 13.1 10.9 10.3 21% 20% 51% 49% 52% 48% 99.1% 50% 49% 98.6% 99.3% 55% 99.1%
Slide 11: Gross written premium
Gross written premium GWP and average price1 of flow business GWP walk $ m, % $m 2.0% 1.82% 1.79% 1.78% 1.82% 1.81% 1.65% 313.6 320.6 1.55% 1.56% 1.45% 1.5% 285.4 66.2 (1.2) 266.8 266.8 222.2 19.5 1.0% 189.8 192.1 182.3 186.7 182.3 0.5% 0.0% 3 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 1H17 Flow L
Slide 12: Net incurred claims
Net incurred claims (A$ millions unless otherwise stated) 1Q17 2Q17 1H17 3Q17 4Q17 FY17 1Q18 2Q18 1H18 Number of paid claims (#) 356 355 711 376 385 1,472 365 301 666 Average paid claim 1 ($’000) 92.5 112.2 102.3 110.6 133.4 112.6 117.8 115.2 116.7 Claims paid1 32.9 39.8 72.7 41.6 51.4 165.7 43.0 34
Slide 13: Loss development
Loss development Delinquency roll and incurred loss drivers Delinquency roll 1Q17 2Q17 1H17 3Q17 4Q17 FY17 1Q18 2Q18 1H18 Opening balance 6,731 6,926 6,731 7,285 7,146 6,731 6,696 6,958 6,696 New delinquencies 2,852 3,145 5,997 2,887 2,463 11,347 2,701 2,864 5,565 Cures (2,301) (2,431) (4,732) (2,65
Slide 14: Balance sheet and unearned premium reserve
Balance sheet and unearned premium reserve Strong balance sheet with $3.3bn in cash and investments and $1.2bn in UPR Unearned premium by year as at Balance sheet as at 30 June 2018 30 June 2018 (A$ in millions) 31 Dec 17 30 Jun 18 Total UPR $1.2bn Assets Cash 43.0 57.3 2010 2011 2012 0% 1% 3% Accru
Slide 15: Regulatory capital position
Regulatory capital position 1H 2018 (A$ in millions) 31 Dec 17 30 Jun 18 NIW1 by original LVR band and PML1 Capital base Common Equity Tier 1 capital 1,892.4 1,871.6 $ bn Tier 2 capital 200.0 200.0 Regulatory capital base 2,092.4 2,071.6 2.60 2.59 2.51 Capital requirement Probable maximum loss (PML)
Slide 16: Reinsurance
Reinsurance 2018 renewal has improved capital efficiency Reinsurance program as at 30 June 2018 Observations 2,500 • As at 30 June 2018, $800 million of excess of loss cover with varying durations depending on the layer • Well diversified panel with over 20 different reinsurers participating across
Slide 17: 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 • In February 2018 completed $100 million on-market share buy- back that was commenced in 2H17 32 • In
Slide 18: Summary and conclusion
Summary and conclusion re Genworth ¥, <.
Slide 19: Genworth economic outlook and FY18 guidance
2018 Genworth economic outlook and FY18 guidance Domestic economy expected to continue to perform relatively well in 2H18 Official cash rate likely to remain on hold underpinned by infrastructure investment due to benign wage growth and low inflation and export growth Housing market conditions likel
Slide 20: Conclusion
Conclusion Good progress in Track record of Strategic work implementing Business is well delivering profits being undertaken strategic initiatives capitalised and shareholder to redefine core that broaden returns business model product offerings Unique set of Excess capital and competencies that Div
Slide 21: Questions
Questions 44 Genworth ¥, <.
Slide 22: Supplementary slides
Supplementary slides Re Genworth ¥, <.
Slide 23: Earnings curve
Earnings curve Comprehensive review of premium earning pattern completed in 2H17 Earnings pattern for premium written post 1 Oct 20171 25% 20% 15% 10% 5% 0% 1 2 3 4 5 6 7 8 9 10 11 12 Years since inception 1. Earnings pattern excludes excess of loss insurance and bulk and is based on assumed cancell
Slide 24: Earnings curve
Earnings curve Comparative in-force earning pattern for premium written pre-1 October 20171 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) 1. Earnings pattern excludes excess of loss insurance
Slide 25: Residential mortgage lending market
Residential mortgage lending market Investment vs. owner-occupied (APRA statistics Investment vs. owner-occupied2 (Genworth) for ADI)1 $ bn, % $ bn, % 30% 40% 27% 36% 37% 34% 25% 34% 24% 32% 33% 33% 23% 23% 31% 29% 31% 21% 20% 20% 19% 128 127 136 15% 136 109 8.7 12.5 76 84 78 6.7 8.0 8.6 81 68 8.4 6
Slide 26: 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 30 June 2018 IIF1 by product type, as at 30 June 2018 Low HomeBuyer Plus 95.01%+ 60.01-70% Doc 2% Other 2% 6% 5% 1% <60% 8% 90.01-95% 27% 70.01-80% 16% 85.01-90% Standard 80.01-85% 32% 92% 9% Flow NIW
Slide 27: Insurance ratio analysis
Insurance ratio analysis Expenses Combined ratio 86.2% $ m, % 33.7% 32.9% $ m, % 76.7% 64.3% 60.6% 27.1% 25.9% 57.3% 26.6% 26.3% 26.7% 25.7% 51.4% 46.2% 48.8% 24.4% 44.7% 144.2 125.6 131.2 128.3 121.8 123.5 59.8 60.2 62.8 60.8 110.1 58.1 55.8 54.7 101.0 101.5 53.6 60.8 47.1 55.8 54.7 47.1 62.8 53.6
Slide 28: Delinquency development
Delinquency development Delinquency composition Delinquencies by Total delinquencies 30 Jun 17 31 Dec 17 30 Jun 18 30 Jun 17 31 Dec 17 30 Jun 18 book year by geography New South Wales 1,159 1,088 1,224 0.37% 2009 and prior 4,020 3,552 3,709 0.49% Victoria 1,455 1,304 1,368 0.42% 2010 402 357 376 0.6
Slide 29: Delinquency development
Delinquency development Favourable performance post-2009 1.40% 2005 2006 1.20% 2007 2008 Active delinquencies / policies written (%) 2009 1.00% 2010 2011 2012 0.80% 2013 2014 2015 0.56% 0.56% 0.60% 0.57% 2016 2017 0.48% 2018 0.45% 0.42% 0.45% 0.40% 0.28% 0.29% 0.29% 0.19% 0.20% 0.12% 0.08% 0.00% 103
Slide 30: Delinquency population
Delinquency population By month in arrears1 8,000 50% 7,285 7,306 7,146 6,926 6,958 45% 7,000 6,844 6,731 6,696 10% 12% 6,413 12% 11% 13% 14% 40% 14% 13% 5,900 5,804 5,889 6,000 13% 5,552 20% 19% 5,378 19% 20% 35% 14% 14% 14% 20% 17% 15% 19% 20% 5,000 15% 18% No. of arrears 30% 16% 18% 17% Cures rat
Slide 31: Portfolio evolution
Portfolio evolution Annual NIW1 by LVR Annual NIW1 by product type $bn $bn 73.8 73.8 26% 28% 17% 44.7 41.6 44.7 41.6 35.4 36.2 36.2 36% 33.8 32.6 35% 15% 33.8 35.4 31.8 30.8 31.8 2% 1% 32.6 46% 30.8 3% 1% 36% 26.6 5% 3% 24% 36% 23% 26.6 1% 29% 39% 23.9 72% 1% 23.9 20% 17% 1% 57% 19% 41% 45% 51% 85%
Slide 32: Insurance in force
Insurance in force Insurance portfolio as at 30 June 2018 – total $310 billion Insurance in force (IIF)1 by original LVR2 band3 IIF1 by product type3 Low HomeBuyer Plus Total IIF $310 bn Doc 2% Other 95.01%+ 60.01-70% 5% 1% 2% 6% <60% 8% 90.01-95% 27% 70.01-80% 16% Standard 85.01-90% 80.01-85% 92% 3
Slide 33: Investment portfolio
Investment portfolio Conservative, well-diversified portfolio with duration to maturity of 1.4 years1 Investment portfolio by maturity Investment portfolio by rating Investment portfolio by issuer type ~0% 5% 2% 5% 5% 6% 12% 39% 34% 24% 35% 16% 23% 2% 11% 23% 28% 30% 0 - 1 yr 1 - 3 yr 3 - 5 yr AAA A
Slide 34: Claims severity
Claims severity1 40% 37% 35% 31% 30% 30% 26% 26% 25% 25% 23% 22% 23% 20% 16% 15% 16% 10% 5% 0% 0% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1. Claim severity refers to the si
Slide 35: Claims frequency by book year
Claims frequency by book year (%) at 30 June 2018 2.0% 1.76% 1.8% 1.6% 1.4% 1.32% 1.24% 1.2% 1.03% 1.0% 0.8% 0.6% 0.52% 0.51% 0.51% 0.4% 0.36% 0.2% 0.19% 0.01% 0.09% 0.0% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 2006 2007 2008 2009 2010 2011 2012
Slide 36: Effective LVR
Effective LVR As at 31 Dec 17 As at 30 Jun 18 Insurance in force LVR Change in Insurance in force LVR Change in house price house price Book year $ billion % Original Effective % Book year $ billion % Original Effective % 2008 and 2009 and 81.8 28% 77.7% 35.3% 87% 89.5 32% 78.5% 37.5% 78% prior prio
Slide 37: Genworth >"
Genworth >" Pics