Helia Group Limited · ASX:HLI
Helia — Investor Presentation (October 2019)
32 slides from Helia's investor presentation, Oct 30, 2019
Slide 1: 3Q19 Financial Results Presentation
30 OCTOBER 2019 3Q19 FINANCIAL RESULTS PRESENTATION Illustration by Sydney based 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 30 September 2019. It may present financial information on both a statutory basis (prepared in accordance with Australian accounting standards which comply with International Financial Reporting Standard
Slide 3: Introduction
Introduction Georgette Nicholas, CEO and MD
Slide 4: 3Q19 results overview
3Q19 results overview Summary Change 3Q19 results in line with or above guidance (A$ millions) 3Q18 3Q19 % • New insurance written (NIW) of $6.4 billion, up 26.4% (3Q18: $5.1 Gross written premium 92.1 114.6 24.4% billion) Net earned premium 11.9% • GWP increased 24.4%. Reflects strong performance i
Slide 5: Macroeconomic conditions
Macroeconomic conditions Interest rates House values – capital city dwellings NSW VIC QLD SA WA ACT Australia 200 8% 180 Cash rate Standard variable mortgage rate 7% Home value Index 160 6% 5% 140 4% 3% 120 2% 100 1% 0% 80 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19
Slide 6: Residential mortgage lending market
Residential mortgage lending market Originations and HLVR penetration1 A$ bn 34% 33% 31% 31% 27% 27% 24% 22% 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 43 200 202 187 47 50 200 152 166 139 11 102 111 23 99 98 HLVR Penetration 77 83 93 101 9
Slide 7: Detailed financial performance
Detailed financial performance
Slide 8: YTD 30 Sep-19 income statement
YTD 30 Sep-19 income statement (A$ millions) 3Q18 3Q19 3Q19 v YTD YTD YTD Sep-19 YTD 30 Sep-19 commentary 3Q18 (%) 30 Sep-18 30 Sep-19 v YTD Sep-18 • GWP in YTD 30 Sep-18 included a bespoke (%) transaction written through Genworth’s Bermudian insurance entity. Excluding this transaction, GWP Gross w
Slide 9: New insurance written
New insurance written NIW1 by original LVR2 band NIW1 by product type $ bn, % $ bn 88% 88% 88% 88% 85% 86% 84% 85% 82% 7.1 6.8 6.4 6.0 17% 5.5 18% 7.1 5.4 5.4 22% 6.8 18% 5.1 6.4 20% 6.0 22% 4.3 20% 5.5 5.4 5.4 23% 5.1 23% 56% 4.3 62% 58% 62% 65% 75% 99.7% 99.8% 99.7% 99.8% 74% 73% 99.4% 99.5% 99.6%
Slide 10: Gross written premium
Gross written premium GWP and average price1 of flow business GWP walk $ m, % $m 1.83% 1.80% 1.82% 1.80% 1.82% 27.6 (4.0) 114.6 1.79% 1.75% 1.74% 1.79% 174.1 92.1 (1.1) 114.6 97.7 101.3 97.8 88.9 92.7 92.1 86.3 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 3Q18 Flow LVR Volume Other 3Q19 band mix 2 G
Slide 11: Net claims incurred
Net claims incurred (A$ millions unless otherwise stated) 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 Number of paid claims (#) 365 301 320 325 319 296 361 Average paid claim1 ($’000) 117.8 115.2 115.7 102.1 94.2 94.1 97.9 Claims paid1 43.0 34.7 37.0 33.2 30.1 27.8 35.3 Movement in non-reinsurance recoveries
Slide 12: Loss development
Loss development Delinquency roll and incurred loss drivers Delinquency roll 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 Opening balance 6,696 6,958 7,306 7,350 7,145 7,490 7,891 New delinquencies 2,701 2,864 2,742 2,390 2,662 2,853 2,622 Cures (2,074) (2,215) (2,378) (2,270) (1,998) (2,156) (2,439) Paid cla
Slide 13: Balance sheet
Balance sheet Strong balance sheet with $3.2bn in cash and investments Unearned premium by year as at 30 September Balance sheet as at 30 September 2019 20193 (A$ in millions) 31 Dec 18 30 Sep 19 Assets Total UPR $1.2bn Cash and cash equivalents 141.5 26.1 2011 2012 1% 1% Accrued investment income 2
Slide 14: 3Q 2019 regulatory capital position
3Q 2019 regulatory capital position (A$ in millions) 31 Dec 18 30 Sep 19 NIW1 by original LVR band and Probable Capital Base Maximum Loss1 Common Equity Tier 1 Capital 1,748.1 1,542.5 $ bn Tier 2 Capital 200.0 200.0 Regulatory Capital Base 1,948.1 1,742.5 2.60 2.59 2.51 Capital requirement 2.36 2.28
Slide 15: Reinsurance
Reinsurance Program continues to drive efficiency Reinsurance program as at 30 Sep 2019 Observations 2,500 • As at 30 September 2019, $800 million of excess of loss cover with varying durations depending on the layer 2,000 100 100 • Well diversified panel with over 20 different reinsurers 100 100 pa
Slide 16: Summary and conclusion
Summary and conclusion we Genworth 5, <.
Slide 17: Genworth economic outlook and FY19 guidance
2019 Genworth economic outlook and FY19 guidance Economic growth continued to slow Australian economic fundamentals remain through 3Q19, driven by subdued sound with stimuli on multiple fronts including household consumption and ongoing slow a historically low cash rate, tax cuts and growth in house
Slide 18: 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 19: Questions
Questions 44 Genworth =<.
Slide 20: Supplementary slides
Supplementary slides we Genworth 5, <.
Slide 21: Supplementary slides contents
Supplementary slides Contents Section Slide Graph: Residential mortgage lending 22 Graph: IIF and NIW 23 Graph: Insurance ratio analysis 24 Delinquency development 25 Graph: Delinquency development 26 Graph: Delinquency population 27 Graph: IIF 28 Investment portfolio 29 Glossary 30 21 3Q 2019 finan
Slide 22: Residential mortgage lending market
Residential mortgage lending market NIW: Investment vs. owner-occupied (APRA statistics for ADI)1 NIW: Investment vs. owner-occupied2 (Genworth) $ bn, % $ bn, % 40% 36% 37% 27% 34% 25% 34% 33% 24% 32% 33% 23% 23% 29% 30% 30% 21% 20% 20% 19% 128 127 136 109 136 14% 14% 109 8.7 76 84 81 78 8.0 8.6 6.7
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 30 September 2019 IIF1 by product type, as at 30 September 2019 Total IIF $306 bn HomeBuyer Plus Low Doc 2% Other 95.01%+ 1% 4% 1% 60.01-70% <60% 5% 8% 90.01-95% 27% 70.01-80% 15% 80.01-85% Standard 8
Slide 24: Insurance ratio analysis
Insurance ratio analysis Expenses Combined ratio $ m, % $ m, % 40.6% 36.1% 34.0% 35.3% 35.7% 93.7% 89.5% 83.3% 85.0% 84.3% 89.3% 88.4% 88.6% 33.5% 32.4% 32.5% 29.7% 60.1% 61.3% 66.6% 25.2% 26.6% 29.7 27.2 27.6 26.4 27.2 23.9 24.6 25.2 24.8 63.6 66.7 65.1 66.0 67.5 22.6 22.1 64.8 60.3 63.3 55.1 57.9
Slide 25: Delinquency development
Delinquency development Delinquency composition Delinquencies Delinquencies Sep 18 % Dec 18 % Sep 19 % Sep 18 % Dec 18 % Sep 19 % by book year by geography 2010 and prior 3,998 0.50% 3,805 0.48% 3,869 0.51% New South Wales 1,235 0.38% 1,254 0.38% 1,422 0.45% 2011 415 0.75% 416 0.77% 386 0.77% Victor
Slide 26: Delinquency development
Delinquency development 1.40% 2005 2006 1.20% 2007 2008 2009 1.00% 2010 2011 2012 Delinquency rate (%) 0.80% 2013 2014 2015 0.60% 0.63% 0.60% 0.57% 2016 0.56% 2017 0.46% 2018 0.44% 0.40% 0.43% 0.38% 0.41% 2019 0.27% 0.26% 0.20% 0.19% 0.19% 0.11% 0.00% 0.00% 103 109 115 121 127 133 139 145 151 157 16
Slide 27: Delinquency population
Delinquency population By month in arrears1, 2 37.80% 7,891 8,000 7,713 50% 34.19% 7,490 7,285 7,146 7,306 7,350 7,145 8% 9% 35.10% 6,926 6,958 8% 45% 7,000 6,844 6,731 6,696 10% 10% 36.38% 12% 9% 13% 12% 11% 35.38% 14% 23% 40% 14% 13% 23% 30.97% 6,000 23% 19% 19% 20% 21% 22% 35% 31.83% 20% 17% 20%
Slide 28: Insurance in force
Insurance in force IIF1 by book year IIF1 by state ACT NT NZ 3% 1% 2% 2019 TAS 2018 6% 2% SA 7% 6% NSW 2017 28% 2009& 7% Prior WA 2016 39% 13% 7% 2015 7% 2014 7% QLD VIC 2010 2013 2012 2011 4% 23% 22% 6% 6% 4% 1.IIF includes capitalised premium. Excludes excess of loss insurance 28 3Q 2019 financial
Slide 29: Investment portfolio
Investment portfolio Conservative, well-diversified portfolio with average maturity of 3.6 years1 Investment portfolio by maturity Investment portfolio by rating Investment portfolio by issuer type 1% 3% 2% 3% 8% 15% 22% 41% 30% 18% 47% 17% 18% 31% 1% 10% 24% 9% AAA AA Corporate State Gov't 0 - 1 yr
Slide 30: Glossary
Glossary As at 30 September 2019 Term Definition Term Definition AIFRS Australian equivalent to International Financial Reporting Standards Expense ratio The expense ratio is calculated by dividing the sum of the acquisition costs and the other underwriting expenses by the ASX ASX Limited ABN 98 008
Slide 31: Glossary
Glossary As at 30 September 2019 Term Definition Term Definition Investment The investment return is calculated as the interest income on Return on equity The ROE is calculated by dividing NPAT by the average of the return technical funds plus the interest income on shareholder funds (ROE) opening a
Slide 32: NVA
NVA Genworth > Sse