Helia Group Limited · ASX:HLI
Helia — Investor Presentation (August 2021)
31 slides from Helia's investor presentation, Aug 4, 2021
Slide 1: 1H21 Financial Results Presentation
4 AUGUST 2021 1H21 Financial Results Presentation
Slide 2: Disclaimer
Disclaimer This presentation contains general information in summary form which is current as at 30 June 2021. 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 01 Overview 02 1H21 Financial result 03 Summary Pauline Blight- Pauline Blight- Michael Bencsik Johnston Johnston CFO CEO & MD CEO & MD Pages 11 - 18 Pages 4 - 10 Pages 19 - 20 04 Supplementary slides 05 Glossary Pages 21 - 28 Pages 29 - 30 3 1H21 financial result – produced by Genworth.
Slide 4: Overview
Overview Pauline Blight-Johnston
Slide 5: Overview
Overview Strong business performance benefiting from economic recovery Underwriting profit • 1H21 Underwriting result of $88m driving NPAT growth • 1H21 Statutory NPAT of $59m (includes $23m of pre-tax mark to market losses) • 1H21 Underlying NPAT of $76m. Continued • Improved unemployment and house
Slide 6: Continued economic recovery in first half
Continued economic recovery in first half May be dampened by recent COVID-19 outbreaks Unemployment • Number of employed people and hours worked in June both above pre-COVID-19 levels • Various federal and state government stimulus programmes continue. Data sourced from ABS Labour Force Australia se
Slide 7: Claims environment benign
Claims environment benign Net incurred claims and premium earning rate delayed Delayed claims paid Earnings curve delayed to match claims experience Note: Earnings pattern for new business based on forecasted cancelations excluding excess of loss and bulk policies • Properties in possession and numb
Slide 8: Capital strength and flexibility
Capital strength and flexibility Strong capital base with dividends resumed PCA ratio walk Capital management 1 Note: Totals may not sum due to rounding. 1. Excludes $63.9m on-market share buy-back. Strong capital position underpinned by: Resuming dividend payments: • PCA ratio of 1.74 times, with s
Slide 9: Genworth Financial separation programme
Genworth Financial separation programme Transition of services provides opportunity to simplify the business Areas impacted Expected range of $15m - $19m • Finance systems • $0.8m transition costs incurred in 1H21 • Human resources systems • 2/3 expected to be incurred in FY21 • Some investments ser
Slide 10: Strategic focus
Strategic focus Alignment with customer value proposition to drive sustainable growth Improve the efficiency and Reimagine LMI for a new Leverage our core capabilities competitiveness of LMI generation of home buyers into complementary offerings 1H21 achievements: • Automating the flow of data to re
Slide 11: 1H21 Financial result
1H21 Financial result Michael Bencsik
Slide 12: 1H21 income statement
1H21 income statement Strong business performance ($ millions) 1H20 2H20 FY20 1Q21 2Q21 1H21 1H21 v 1H21 commentary: 1H20 (%) • GWP growth reflecting Gross written premium 239.3 322.4 561.7 142.7 147.0 289.7 21.1% higher LMI flow volumes across lender customers Movement in unearned premium (54.0) (1
Slide 13: Strong NIW and premium growth
Strong NIW and premium growth Market conditions remain favourable New insurance written Gross written premium Net earned premium $b $m $m • Owner-occupiers and first home • Higher business volumes continue • Past GWP book year growth will buyers supporting lender customer to drive growth over prior
Slide 14: Net claims incurred
Net claims incurred Timing of claims continues to be delayed ($ millions unless otherwise stated) 1H20 2H20 FY20 1Q21 2Q21 1H21 1H21 net claims incurred movements driven by: Number of paid claims (#) 691 563 1,254 186 139 325 1 Average paid claim ($’000) 94.9 98.0 96.3 67.2 84.8 74.7 • COVID-19 lend
Slide 15: Investment performance
Investment performance Reversal of 1Q21 unrealised losses during 2Q21 ($ millions) 1H20 2H20 FY20 1Q21 2Q21 1H21 Net interest income and dividend income 27.2 20.0 47.2 8.8 13.8 22.6 Realised gains on investments 29.0 18.5 47.5 1.9 0.0 2.0 Unrealised gains / (losses) and net FX on investments (6.4) 1
Slide 16: Balance sheet
Balance sheet Balance sheet strength with $3.6b in cash and investments Balance sheet as at 30 June 2021 ($ millions) 30 Jun 20 31 Dec 20 30 Jun 21 1H21 commentary: Assets • Deferred reinsurance expense increased Cash 80.9 104.6 89.6 following the renewal of the 2021 reinsurance Accrued investment i
Slide 17: Cash and investment portfolio
Cash and investment portfolio Well-diversified portfolio with average maturity of 4.2 years1 Cash and investment portfolio ($m) 30 Jun 20 31 Dec 20 30 Jun 21 Commonwealth3 1,192.1 70.6% 784.2 45.9% 584.9 35.3% State Gov't 226.2 13.4% 573.3 33.5% 589.9 35.6% Corporate / Other 268.8 15.9% 350.2 20.5%
Slide 18: Regulatory capital
Regulatory capital Strong regulatory capital position maintained ($ millions) 30 Jun 20 31 Dec 20 30 Jun 21 NIW1 by original LVR2 band and probable Capital base maximum loss Common equity Tier 1 capital 1,298.1 1,426.3 1,652.0 $b Tier 2 capital 200.0 190.0 190.0 Regulatory capital base 1,498.1 1,616
Slide 19: Summary
Summary Pauline Blight-Johnston
Slide 20: Summary
Summary Well positioned to drive sustainable growth Business set up to benefit from improving economy • GWP will underpin earnings over the coming years • Continued attention on quality of underwriting • Strong focus on profitable customer renewals. Outlook • Economic environment currently uncertain
Slide 21: Supplementary slides
Supplementary slides Genworths <=.
Slide 22: Australian key economic indicators
Australian key economic indicators Change in dwelling values Mar 21 – Jun 21 Dec 20 – Jun 21 12 months Rental vacancies Jun 20 Dec 20 Jun 21 Sydney 8.2% 15.4% 15.0% Sydney 3.8% 3.6% 2.8% Melbourne 4.6% 9.7% 7.7% Melbourne 3.0% 4.7% 3.5% Brisbane 5.7% 10.8% 13.2% Brisbane 2.4% 1.8% 1.3% Perth 2.1% 7.
Slide 23: Residential mortgage lending market
Residential mortgage lending market Originations and HLVR penetration1 Industry loan approvals: Investment vs. owner occupied Genworth NIW: Investment vs. owner occupied2 $b, % $b, % Source: APRA Quarterly ADI property exposures statistics (ADI’s new housing loan funded), March 2021. APRA has discon
Slide 24: Insurance in-force
Insurance in-force As at 30 June 2020 As at 30 June 2021 $ Original Effective Change in $ Original Effective Change in Book year % Book year % billions LVR LVR house price % billions LVR LVR house price % 2010 & Prior 88.1 31% 78.2 36.3 75% 2010 & Prior 83.1 29% 80.0 32.0 96% 2011 10.7 4% 83.0 56.6
Slide 25: Insurance ratio analysis
Insurance ratio analysis Expense ratio1 Loss ratio2 % % Combined ratio3 Insurance margin4 % % 1. Adjusted ratio excludes $181.8m DAC write-down in 1H20, less associated DAC amortisation benefit of $12.3m in 1H20, $25.1m in 2H20, $12.3m in 1Q21, $11.3m in 2Q21 and $23.5m in 1H21. 2. Adjusted ratio ex
Slide 26: Delinquency trends
Delinquency trends Delinquency roll 1H19 FY19 1H20 FY20 1Q21 2Q21 1H21 Opening balance 7,145 7,145 7,221 7,221 6,964 6,879 6,964 New delinquencies 5,515 10,414 4,988 9,368 2,082 2,302 4,384 Cures (4,154) (8,986) (3,904) (8,371) (1,981) (2,189) (4,170) Paid claims (615) (1,352) (691) (1,254) (186) (1
Slide 27: Reinsurance
Reinsurance 2021 Reinsurance programme • The reinsurance programme is designed to drive efficient economic capital credit, whilst also allowing for risk management in severe stress scenarios only • The 2021 programme is structured on a paid claims basis for policies in-force at 1 January 2021 plus t
Slide 28: Reconciliations
Reconciliations Statutory NPAT to Underlying NPAT ($ millions) 1H19 2H19 FY19 1H20 2H20 FY20 1Q21 2Q21 1H21 Statutory net profit / (loss) after tax 88.1 32.0 120.1 (90.0) (17.6) (107.6) 3.4 56.0 59.4 Unrealised (gains) / losses and FX (64.4) 31.4 (33.0) 6.4 (1.7) 4.7 38.5 (15.0) 23.5 Separation cost
Slide 29: Glossary
Glossary As at 30 June 2021 Term Definition Term Definition Ageing Movement in reserves on any insurance policy that remains in a Earnings curve Is based on an analysis of claims incidence. This curve determines delinquent state (3+ months of missed payments or Mortgage In the proportion of the unea
Slide 30: Glossary
Glossary As at 30 June 2021 Term Definition Term Definition LMI Lenders mortgage insurance Separation costs The cost of transition and implementation of new software, hardware and services previously provided by GFI Loss ratio The loss ratio is calculated by dividing the net claims incurred by the n
Slide 31: For more information, analysts, investors and other interested parties should contact:
For more information, analysts, investors and other interested parties should contact: Paul O’Sullivan Head of Investor Relations D: +61 499 088 640 The release of this announcement was authorised by the Board.