Slide 1: Genworth Mortgage Insurance Australia 3Q 2015 Financial results presentation
Genworth Mortgage Insurance Australia 3Q 2015 Financial results presentation 30 October 2015 ©2015 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 September 2015, unless otherwise stated. It may present financial information on both a statutory basis (prepared in accordance with Australian accounting standards which comply with International Fin
Slide 3: 3Q 2015 and YTD results
3Q 2015 and YTD results (A$ millions) 3Q14 3Q15 Change Market conditions pressuring GWP Gross written premium 157.5 124.7 (20.8%) Lower LVR mix impacting price and GWP. Net earned premium 112.0 123.9 10.6% Investment property lending at multi-year Reported net profit after tax 64.0 65.5 2.3% hig
Slide 4: Residential mortgage lending market
Residential mortgage lending market HLVR Penetration $ bn, % Loans approved LVR<60% Loans approved LVR 60%-80% Loans approved LVR 80%-90% Loans approved LVR>90% HLVR Loans (% of New Residential Loan Approvals) 36.9% 34.0% 34.3% 34.0% 33.7% 33.3% 30.5% 28.6% 41.5 41.9 72.0 46.2 37.3 25.8 30.7 60.5 41
Slide 5: Gross written premium
Gross written premium GWP and average price of flow business (GWP/NIW 1) Flow business – GWP walk $ millions (5.4) (4.6) (22.8) 1.84% 2.00% 1.80% 1.80% 1.79% 1.77% 1.77% 200.0 1.47% 1.50% 150.0 159.7 157.5 163.1 157.6 153.9 127.7 124.7 1.00% 157.5 100.0 124.7 50.0 0.50% 0.0 0.00% 1Q14 2Q14 3Q14 4Q14
Slide 6: 3Q 2015 income statement
3Q 2015 income statement (A$ millions) 3Q14 3Q15 Change Gross written premium 157.5 124.7 (20.8%) Movement in unearned premium (26.6) 19.2 (172.2%) Gross earned premium 130.9 143.9 9.9% Outwards reinsurance expense (18.9) (20.0) 5.8% Net earned premium 112.0 123.9 10.6% Net claims incurred (24.0) (4
Slide 7: Net incurred claims
Net incurred claims (A$ millions unless otherwise stated) 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Number of paid claims (#) 462 419 350 314 280 288 325 Average paid claim ($’000) 65.1 60.5 58.6 49.6 28.2 69.3 67.4 Claims paid 30.1 25.3 20.5 15.6 7.9 20.0 21.9 Movement in reserves (12.8) 0.2 3.5 2.1 10.5
Slide 8: Capital management initiatives
Capital management initiatives Recent actions Genworth dividends Since listing, Genworth has paid out all after- 35 70% tax profits by way of ordinary and special 30 dividends to shareholders. 65% Ordinary payout ratio 25 Additional $100 million reinsurance effective cents per share 1 January 20
Slide 9: 3Q 2015 regulatory capital position
3Q 2015 regulatory capital position Pro Forma2 Level 21 (A$ in millions) 31 Dec 14 30 Sep 15 30 Sep 15 Capital Base Common Equity Tier 1 Capital 2,742.1 2,537.9 2,387.9 Tier 2 Capital 112.0 249.6 249.6 Regulatory Capital Base 2,854.1 2,787.5 2,637.5 Capital Requirement Probable Maximum Loss (‘PML’)
Slide 10: Summary and outlook
Summary and outlook Steady 3Q result and FY15 guidance reaffirmed. Market conditions are dynamic; pressure on LVR mix. Strong capital position continues. On-market share buy-back announced. Key financial measures – FY 2015 guidance Net earned premium growth Up to 5% Full Year Loss ratio 25.0
Slide 11: Supplementary Slides
Supplementary Slides
Slide 12: Residential mortgage lending market
Residential mortgage lending market Investment vs. Owner Occupied (APRA statistic) Investment vs. Owner Occupied1 (GMA) $ bn, % $bn, % 40.0% 37.1% 34.8% 29.9% 33.9% 32.1% 32.8% 27.8% 31.1% 28.8% 24.5% 22.9% 23.3% 124.9 20.8% 19.6% 20.2% 104.8 75.6 84.0 81.3 77.7 68.2 8.7 12.5 6.7 8.0 8.6 6.2 5.2 211
Slide 13: New insurance written
New insurance written NIW 1 by original LVR2 band (quarterly) NIW 1 by product type (quarterly) $ billions, % $ billions, % 14 100% 86.8% 86.5% 86.4% 86.5% 86.6% 85.3% 84.7% 90% 12 10.5 10.5 80% 9.8 9.8 9.1 10 9.1 70% 8.7 8.6 8.5 8.7 8.6 23.0% 8.5 26.6% 60% 7.2 8 29.7% 7.2 20.2% 34.2% 30.9% 50% 6 28
Slide 14: Insurance in force
Insurance in force Insurance in force (IIF)1 by original LVR2 band as at 31 IIF1 by product type, as at 31 December 2014 and 30 September 2015 December 2014 and 30 September 2015 Total IIF $319 billion as at 30 September 2015 % 89% 90% 30% 30% 29% 29% 16% 16% 9% 9% 8% 8% 6% 6% 2% 2% 6% 6% 3% 3% 1% 1
Slide 15: Insurance ratio analysis
Insurance ratio analysis Expenses Combined ratio $ millions, % $ millions, % 59.2% 51.2% 53.4% 41.3% 47.8% 27.9% 41.6% 43.9% 26.3% 26.3% 27.3% 25.3% 26.0% 25.7% 31.9 29.9 18.7 17.1 29.5 17.6 17.3 17.5 16.9 30.3 30.3 15.3 30.8 27.4 41.5 31.5 13.0 13.0 14.8 25.6 24.0 12.1 12.0 11.9 12.8 17.3 17.7 18.4
Slide 16: Quarterly financial information
Quarterly financial information Statement of comprehensive income Pro forma Pro forma Actual Actual Actual Actual Actual (A$ in millions) 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Gross written premium 159.7 153.9 157.5 163.1 127.7 157.7 124.7 Movement in unearned premium (32.6) (25.0) (26.6) (29.4) 3.0 (2
Slide 17: Balance sheet and unearned premium reserve
Balance sheet and unearned premium reserve Strong stable balance sheet with $4.1bn in Cash and Investments and $1.36bn in UPR (A$ in millions) 31 Dec 14 30 Sep 15 Unearned premium by book year as at 30 September 2015 Assets Total UPR $1.36bn 2009 2010 Cash and cash equivalents 88.6 102.2 2008 1.6% 2
Slide 18: Net incurred claims
Net incurred claims Average paid claim1 Average reserve per delinquency2 $’000 $’000 69.3 67.4 65.1 60.5 58.6 49.6 46.6 47.4 44.4 43.3 45.0 41.7 43.1 28.2 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 1. Calculated as claims handling expense and paid claims net of recoveries
Slide 19: Delinquency development
Delinquency development Favourable performance post 2009 1.40% 2004 2005 1.20% 2006 2007 2008 1.00% 2009 Delinquency Rate (%) 2010 2011 0.80% 2012 2013 2014 0.60% 2015 0.47% 0.40% 0.31% 0.41% 0.42% 0.32% 0.37% 0.23% 0.27% 0.20% 0.14% 0.13% 0.09% 0.00% 1 7 103 109 115 121 127 133 139 73 13 19 25 31 3
Slide 20: Delinquency development
Delinquency development Quarterly delinquency roll and delinquency composition Delinquency Roll 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Opening balance 4,980 5,070 5,405 5,300 4,953 5,378 5,900 New delinquencies 2,689 2,913 2,734 2,357 2,679 3,103 2,782 Cures (2,137) (2,159) (2,489) (2,390) (1,974) (2,29
Slide 21: Income statement reconciliation – 3Q 2015
Income statement reconciliation – 3Q 2015 Reconciling to the USGAAP figures reported by Genworth Financial, Inc. Add Back: Non USGAAP AU Adjustments USGAAP AU USGAAP AU Total GMA Controlling Segment Segment Results Segment Interest Results + (a) (b) (c) (d) (e) (f) Adjust. Group in USD Results + NCI