Helia Group Limited · ASX:HLI
Helia — Investor Presentation (February 2017)
38 slides from Helia's investor presentation, Feb 8, 2017
Slide 1: Genworth Mortgage Insurance Australia Full Year 2016 Financial Results Presentation
Genworth Mortgage Insurance Australia Full Year 2016 Financial Results Presentation 8 February 2017 ©2017 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 December 2016. It may present financial information on both a statutory basis (prepared in accordance with Australian accounting standards which comply with International Financial Reporting Standards
Slide 3: Introduction
Introduction Georgette Nicholas, CEO
Slide 4: FY16 financial results summary
FY16 financial results summary (A$ millions) FY15 FY16 Change % FY16 result in line with expectations • GWP lower on reduced HLVR segment and customer Gross written premium 507.6 381.9 (24.8%) changes. • Sequential improvement in average flow price reflects Net earned premium 469.9 452.9 (3.6%) prod
Slide 5: Residential mortgage lending market
Residential mortgage lending market Originations and HLVR penetration1 $ bn 37% 34% 33% 31% 31% 27% 27% 24% 22% 371 Note: 2016 335 37 data for first 300 40 9mths only 51 275 262 256 40 240 242 49 23 219 46 36 41 26 31 38 41 43 47 43 50 200 40 166 139 146 102 99 98 111 74 65 71 68 63 66 80 80 83 68 2
Slide 6: Macroeconomic conditions
Macroeconomic conditions Delinquency rates by geography Unemployment rates (seasonally adjusted) Change Change State Dec 15 Dec 16 State Dec 15 Dec 16 (basis points) (basis points) New South Wales 0.27% 0.30% 3 bps New South Wales 5.1% 5.2% 10 bps Victoria 0.33% 0.38% 5 bps Victoria 5.9% 6.0% 10 bps
Slide 7: Genworth value proposition
Genworth value proposition Innovation and technology will underpin Genworth’s value proposition Market & regulatory changes Genworth value proposition • Changing credit cycle • Customer focused • New and refined bank capital • Risk management partner requirements • Mortgage market insights • Tighter
Slide 8: Genworth's Strategic Objectives
Genworth’s Strategic Objectives A refined strategic plan to re-ignite profitable growth over the medium term Mission: We support Australians in realising their dream of home ownership through the provision of capital and risk management solutions to mortgage lenders Vision: To be the leading provide
Slide 9: Detailed financial performance
Detailed financial performance Luke Oxenham, CFO
Slide 10: FY 2016 income statement
FY 2016 income statement (A$ millions) 1H15 2H15 FY15 1H16 2H16 FY16 Change FY15 v FY16 Gross written premium 285.4 222.2 507.6 189.8 192.1 381.9 (24.8%) Movement in unearned premium (19.7) 61.7 42.0 76.0 66.8 142.8 240.0% Gross earned premium 265.7 283.9 549.6 265.8 258.9 524.7 (4.5%) Outwards rein
Slide 11: New insurance written
New insurance written NIW1 by original LVR2 band NIW1 by product type $ bn, % $ bn, % 87% 87% 86% 85% 18.9 83% 84% 17.3 17.7 18.9 28% 14.9 17.3 17.7 25% 14.0 33% 14.9 21% 12.6 16% 14.0 18% 12.6 51% 49% 52% 48% 99.1% 50% 98.6% 99.3% 55% 99.1% 99.2% 99.1% 25% 36% 17% 21% 27% 27% 1H14 2H14 1H15 2H15 1H
Slide 12: Gross written premium
Gross written premium GWP and average price of flow business GWP walk $ m, % $m (83.2) 2.0% 507.6 3.4 1.82% 1.79% 1.78% 1.56% (45.8) 313.6 320.6 1.55% 1.45% 1.5% 285.4 381.9 222.2 1.0% 189.8 192.1 0.5% 0.0% 1H14 2H14 1H15 2H15 1H16 2H16 FY15 Product mix Volume LVR mix FY16 1 GWP (including bulk) Ave
Slide 13: Net incurred claims
Net incurred claims (A$ millions unless otherwise stated) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Number of paid claims (#) 280 288 325 291 280 286 321 312 Average paid claim1 ($’000) 62.5 66.9 65.9 71.0 65.8 79.2 73.3 65.0 Claims paid1 17.5 19.3 21.4 20.6 18.4 22.7 23.5 21.3 Movement in borrower re
Slide 14: FY 2016 regulatory capital position
FY 2016 regulatory capital position (A$ in millions) 31 Dec 15 31 Dec 16 NIW by original LVR band and Probable Maximum Loss Capital Base $ bn Common Equity Tier 1 Capital 2,351.2 2,012.8 2.60 2.59 Tier 2 Capital 249.6 200.0 2.51 Regulatory Capital Base 2,600.8 2,212.8 Capital Requirement 2.36 2.36 3
Slide 15: Reinsurance program
Reinsurance program Reinsurance Program 31 Dec 2016 - $900m cover Reinsurance Program 1 January 2017 - $950m cover $m $m 3,000 3,000 2,500 2,500 Consortium 6 100 100 Provider 1 100 Provider 1 100 Consortium 5 100 Consortium 5 200 Consortium 4 200 Consortium 4 APRA Losses ($m) APRA Losses ($m) 2,000
Slide 16: Composition of Underlying ROE changes
Composition of Underlying ROE changes Underlying ROE Walk from FY15 to FY16 % (0.5) 1.2 (1.4) 1.4 (0.7) 11.6 11.6 10.4 10.4 9.0 FY15 Change in NEP Change in Losses Investment Change in Equity FY16 Excess Capital FY16 @ 144% Income Base / Other Capital Ratio 16 Full Year 2016 Results Presentation – p
Slide 17: Ongoing program of capital management
Ongoing program of capital management Recent actions Genworth dividends • Since listing, Genworth has paid out all after- 20 75% tax profits by way of ordinary and special 16 70% dividends to shareholders. Ordinary payout ratio cents per share • $202 million or 34 cents per share capital 12 65% redu
Slide 18: Summary and conclusion
Summary and conclusion Georgette Nicholas, CEO
Slide 19: 2017 outlook
2017 outlook • Australian economic conditions have moderated recently as the economy continues to transition away from the mining investment boom. • The unemployment rate has moved up slightly to 5.8 per cent, but key labour market indicators remain mixed. Under-employment remains near-record highs,
Slide 20: Questions
Questions Georgette Nicholas, CEO Luke Oxenham, CFO
Slide 21: Supplementary slides
Supplementary slides x Genworth %,<.
Slide 22: Residential mortgage lending market
Residential mortgage lending market Investment vs. owner-occupied (APRA statistics)1 Investment vs. owner-occupied3 (Genworth) $ bn, % 40% $ bn, % 36% 37% 30% 34% 34% 27% 32% 33% 31% 29% 25% 24% 23% 23% 21% 20% 20% 136 136 109 76 93 78 84 12.5 8.7 81 68 8.0 8.6 6.7 8.4 6.2 5.2 6.4 235 187 191 200 18
Slide 23: 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 December 2016 IIF1 by product type, as at 31 December 2016 Total IIF $324 bn Low HomeBuyer Plus 95.01%+ 60.01-70% Doc 3% Other 5% 1% 2% 6% <60% 8% 90.01-95% 28% 70.01-80% 17% Standard 85.01-90% 91%
Slide 24: Insurance ratio analysis
Insurance ratio analysis Expenses Combined ratio $ m, % 27.1% 64.3% 26.6% 26.3% 26.7% $ m, % 57.3% $ m, % 25.7% 24.4% 51.4% 46.2% 48.8% 144.2 44.7% 62.8 60.8 125.6 131.2 58.1 59.8 60.2 55.8 110.1 101.0 101.5 60.8 55.8 34.4 34.1 33.6 62.8 34.0 34.9 30.5 60.2 58.2 59.8 75.4 83.4 24.1 24.9 25.8 28.7 25
Slide 25: 2016 full year performance metrics
2016 full year performance metrics Change Key financial measures FY15 FY16 FY16 vs FY15 NIW ($ billions) $32.6bn $26.6bn (18.4%) Average price - Flow NIW 1.63% 1.51% (0.12%) Gross written premium ($ millions) $507.6 m $381.9m (24.8%) Net earned premium ($ millions) $469.9 m $452.9m (3.6%) Loss ratio
Slide 26: Half yearly financial information
Half yearly financial information Financial ratios Key financial measures 1H15 2H15 1H16 2H16 Loss ratio 22.1% 25.7% 33.0% 37.2% Expense ratio 26.7% 25.7% 24.4% 27.1% Combined Ratio 48.8% 51.4% 57.3% 64.3% Insurance Margin 57.2% 59.0% 63.5% 32.4% Effective Tax Rate 29.9% 30.0% 29.7% 30.0% ROE 11.9%
Slide 27: Delinquency development
Delinquency development Quarterly delinquency roll and delinquency composition Delinquency roll 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Opening balance 4,953 5,378 5,900 5,804 5,552 5,889 6,413 6,844 New delinquencies 2,679 3,103 2,782 2,401 2,697 3,215 3,214 2,786 Cures (1,974) (2,293) (2,553) (2,3
Slide 28: Delinquency development
Delinquency development Favourable performance post 2009 1.40% 2004 2005 1.20% 2006 2007 2008 1.00% 2009 2010 2011 Delinquency rate (%) 0.80% 2012 2013 2014 0.60% 0.57% 2015 0.47% 0.46% 2016 0.48% 0.40% 0.40% 0.45% 0.32% 0.31% 0.20% 0.19% 0.18% 0.13% 0.07% 0.02% 0.00% 103 109 115 121 127 133 139 145
Slide 29: Balance sheet and unearned premium reserve
Balance sheet and unearned premium reserve Strong balance sheet with $3.5bn in cash and investments and $1.2bn in UPR Balance sheet as at 31 December 2016 Unearned premium by year as at 31 Dec 2016 (A$ in millions) 31 Dec 15 31 Dec16 Assets Total UPR $1.2bn Cash and cash equivalents 78.1 57.6 2011 2
Slide 30: Delinquency population by months in arrears
Delinquency population by months in arrears 7,000 6,844 6,731 6,413 14% 5,804 14% 5,900 5,889 6,000 13% 5,552 5,405 5,300 5,378 14% 14% 5,070 14% 17% 4,953 15% 19% 5,000 16% 15% 18% 16% 18% 17% 16% 18% 17% 18% No. of arrears 16% 18% 4,000 17% 16% 25% 18% 24% 25% 24% 25% 24% 3,000 23% 22% 25% 23% 22%
Slide 31: Portfolio evolution
Portfolio evolution Annual NIW by LVR Annual NIW by Product Type $bn $bn 73.8 73.8 26% 28% 17% 44.7 44.7 41.6 41.6 35.4 36.2 36.2 36% 33.8 32.6 15% 33.8 35.4 31.8 30.8 35% 31.8 1% 32.6 46% 30.8 3% 2% 36% 26.6 5% 1% 26.6 24% 39% 36% 23% 3% 29% 17% 72% 1% 1% 20% 57% 41% 41% 45% 51% 85% 97% 98% 99% 35%
Slide 32: Insurance in force
Insurance in force Insurance portfolio as at 31 December 2016 – total $324 billion Insurance in force (IIF)1 by original LVR2 band IIF1 by product type Total IIF $324 bn Low HomeBuyer Plus Doc 3% Other 95.01%+ 60.01-70% 1% 2% 5% 6% <60% 8% 90.01-95% 28% 70.01-80% 17% Standard 85.01-90% 91% 80.01-85%
Slide 33: Investment portfolio
Investment portfolio Conservative, well-diversified portfolio with duration to maturity of 2.5 years1 Investment portfolio by maturity Investment portfolio by rating Investment portfolio by issuer type 5% 2% 2% 5% 5% 3% 13% 26% 23% 40% 16% 44% 23% 10% 31% 30% 0% 22% 0 - 1 yr 1 - 3 Yr 3 - 5 yr Corpor
Slide 34: Claims severity
Claims severity1 30% 26% 25% 25% 25% 21% 23% 23% 23% 22% 20% 19% 18% 15% 10% 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 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1. Claim severity refers to the size of net claims paid as a pr
Slide 35: Claims frequency by Book Year
Claims frequency by Book Year (%) as at 31 December 2016 1.8% 1.63% 1.6% 1.4% 1.18% 1.21% 1.2% 1.05% 1.0% 0.96% 0.8% 0.6% 0.4% 0.41% 0.33% 0.2% 0.14% 0.24% 0.01% 0.05% 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 2005 2006 2007 2008 2009 2010 2011 2012
Slide 36: Net claims incurred development
Ever to Date Loss Ratio by Book Year (%) as at 31 December 2016 80% 70% Net claims incurred development 67% 60% 53% 50% 40% 35% 30% 17% 20% 20% 16% 10% 10% 5% 0% 0% 2% 0 1 2 3 4 5 6 7 8 9 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 36 Full Year 2016 Results Presentation – produced by Genworth.
Slide 37: Effective LVR
Effective LVR As at 31 Dec 16 As at 31 Dec 15 Insurance in force LVR Change in Insurance in force LVR Change in house price house Book year $ billion % Original Effective % Book year $ billion % Original Effective price % 2007& prior 70.7 24% 76.6% 33.4% 96% 2007 & prior 74.5 26% 76.8% 36.7% 87% 200
Slide 38: Income statement reconciliation
Income statement reconciliation Reconciling to the US GAAP figures reported by Genworth Financial, Inc. Walk from US GAAP AUS segment results to Quarterly Less Quarterly AUD Adjustments Total Genworth AIFRS Genworth Consolidated Income Statement supplement non - supplement equivalent adjustments gro