Helia Group Limited · ASX:HLI
Helia — Investor Presentation (May 2020)
37 slides from Helia's investor presentation, May 6, 2020
Slide 1: 1Q20 Financial Results Presentation
6 MAY 2020 1Q20 FINANCIAL RESULTS PRESENTATION ©2020 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 March 2020. It may present financial information on both a statutory basis (prepared in accordance with Australian accounting standards which comply with International Financial Reporting Standards (I
Slide 3: Introduction
Introduction Pauline Blight-Johnston, CEO & Managing Director
Slide 4: 1Q20 Highlights, Detailed Summary and Conclusion
01 1Q20 Highlights 02 1Q20 Detailed 03 Summary and Financial Conclusion Performance 4 1Q 2020 financial results – produced by Genworth.
Slide 5: 1Q20 Highlights
1Q20 Highlights Core business performed well, impacted by COVID economic outlook • Wellbeing of our people, customers and stakeholders is our number one Focus on People priority. • Seamless transition to working from home. • Strong volume growth and improved claims experience pre COVID-19 from Solid
Slide 6: Strong 1Q20 underlying financial performance
Strong 1Q20 underlying financial performance Business growth and improved claims experience 1Q20 result headlines ($ millions) 1Q19 1Q20 Change ▪ Significant increases in New insurance written and Gross written premium due to housing market recovery and low Gross written premium (GWP) 86.3 114.1 32.
Slide 7: Strategic focus on customers
Strategic focus on customers Serving lenders and their borrowers Customer commitment Product and technology • Long-term relationships – over 100 • Speed-to-yes – industry-leading lenders across Australia. connectivity and decisioning with • Borrower-led enhancing customer lenders, Fintech supported.
Slide 8: 1Q20 Macroeconomic conditions
1Q20 Macroeconomic conditions Housing recovery momentum and lower interest rate environment 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 Mar-15 Sep
Slide 9: Responding to COVID-19
Responding to COVID-19 Our business has transitioned well to the new operating environment People Operations Financial Customer • Well-being and safety • Business continuity • Well-capitalised with • Supporting borrowers is our priority. processes enacted. flexibility to manage to stay in their and
Slide 10: Detailed financial performance
Detailed financial performance Michael Bencsik, CFO
Slide 11: 1Q20 Income statement
1Q20 Income statement Strong underlying business performance impacted by COVID-19 ($ millions) 1Q19 2Q19 3Q19 4Q19 1Q20 Change 1Q19 v 1Q20 Gross written premium 86.3 97.8 114.6 134.6 114.1 32.2% Movement in unearned premium 3.9 (5.1) (20.9) (42.7) (21.4) (N.M.) 1 Gross earned premium 90.2 92.7 93.7
Slide 12: Liability adequacy test (LAT)
Liability adequacy test (LAT) Deferred acquisition costs (DAC) write-down of $181.8 million Key assumptions / outcome Central Economic indicators adopted estimate • A range of possible economic scenarios were tested. Economic expansion re-commences 1Q21 • Central estimate adopted for the LAT assessm
Slide 13: New insurance written
New insurance written NIW up 18% reflecting housing market recovery and low interest rate environment NIW1 by original LVR2 band NIW1 by product type $ billions, % $ billions, % 88% 88% 88% 88% 86% 87% 84% 85% 82% 7.8 7.1 6.8 6.4 21% 6.4 6.0 7.8 17% 7.1 18% 5.4 6.8 5.1 22% 21% 6.4 6.4 18% 6.0 4.3 20
Slide 14: Gross written premium
Gross written premium Strong performance across lender customers as property prices rose in capital cities GWP and average price1 of flow business GWP walk $ millions, % $ millions 1.82% 1.80% 1.82% 1.79% 1.79% 1.84% 1.83% 1.75% 1.74% 174.1 4.7 114.1 22.8 134.6 86.3 0.3 114.6 114.1 101.3 97.8 92.7 9
Slide 15: Net claims incurred
Net claims incurred Reduced loss ratio from higher NEP seasoning and favourable delinquency ageing ($ millions unless otherwise stated) 1Q19 2Q19 3Q19 4Q19 1Q20 Number of paid claims (#) 319 296 361 376 333 Average paid claim1 ($’000) 94.2 94.1 97.9 99.4 92.7 Claims paid1 30.1 27.8 35.3 37.4 30.9 Mo
Slide 16: Loss development
Loss development Favourable delinquency ageing, partly offset by higher average reserves on new delinquencies Delinquency roll 1Q19 2Q19 3Q19 4Q19 1Q20 Opening balance 7,145 7,490 7,891 7,713 7,221 New delinquencies 2,662 2,853 2,622 2,277 2,326 Cures (1,998) (2,156) (2,439) (2,393) (1,940) Paid cla
Slide 17: Balance sheet
Balance sheet $3.1 billion in cash and investments Balance sheet as at 31 March 2020 Unearned premium by book year as at 31 March 20204 ($ millions) 31 Dec 19 31 Mar 20 Assets Cash 87.3 71.0 Total UPR $1.3 billion Accrued investment income 19.5 23.4 Investments 3,043.8 3,035.4 2011 2012 2013 0% 1% 2
Slide 18: Regulatory capital
Regulatory capital Well-capitalised comfortably above Board targets ($ millions) 31 Dec 19 31 Mar 20 NIW1 by original LVR band and Probable Capital base maximum loss1 Common equity Tier 1 capital 1,459.6 1,199.2 $ billions Tier 2 capital 200.0 200.0 Regulatory capital base 1,659.6 1,399.2 2.60 2.59
Slide 19: Strong capital position
Strong capital position PCA coverage ratio remains above Board target range and APRA requirements PCA ratio walk – pre and post COVID-19 impacts (times) Strong capital position underpinned by: • Cash and Investment portfolio of $3.1 billion, of which 83% is held in cash and fixed interest securities
Slide 20: Reinsurance
Reinsurance Well-diversified panel with flexibility, continues to drive efficient capital credit Reinsurance program as at 31 March 2020 • As at 31 March 2020, $800 million of excess of loss cover with varying durations depending on the layer. • Well diversified panel with over 20 different reinsure
Slide 21: Summary and conclusion
Summary and conclusion Pauline Blight-Johnston, CEO & Managing Director
Slide 22: Well-positioned to support customers through the economic uncertainty and recovery
Well-positioned to support customers through the economic uncertainty and recovery Strong business • Solid first quarter result pre COVID-19. fundamentals Leading market • Over 100 lender customers. Long-standing relationships and recent renewals. position Rapid customer • Working closely with lende
Slide 23: Questions
Questions +44 Genworth =, <.
Slide 24: Supplementary slides
Supplementary slides HY Genworth 5, <.
Slide 25: Supplementary slides contents
Supplementary slides Contents Section Slide Graph: Residential mortgage lending market 26 Graph: Insurance-in-force and new insurance written 27 Graph: Insurance ratio analysis 28 Delinquency development 29 Graph: Delinquency development 30 Graph: Delinquency population 31 Graph: Insurance-in-force
Slide 26: Residential mortgage lending market
Residential mortgage lending market More owner-occupied property lending NIW: Investment vs. owner-occupied (APRA NIW: Investment vs. owner-occupied3 (Genworth) statistics for ADI)1 $ billions, % $ billions, % 27% 40% 23% 24% 25% 37% 23% 36% 34% 34% 20% 32% 33% 33% 20% 19% 30% 30% 128 127 14% 14% 14
Slide 27: Insurance-in-force and new insurance written
Insurance-in-force and new insurance written Insurance-in-force (IIF)1 by original LVR2 band, IIF1 by product type, as at 31 March 2020 as at 31 March 2020 Total IIF $308 billion HomeBuyer Plus 95.01%+ Low Doc 2% Other 1% 60.01-70% 4% 1% <60% 5% 8% 90.01-95% 26% 70.01-80% 15% 80.01-85% 9% 85.01-90%
Slide 28: Insurance ratio analysis (excluding DAC write-down)
Insurance ratio analysis (excluding DAC write-down) Expenses Combined ratio $ millions, % $ millions, % 36.1% 35.3% 35.7% 35.9% 89.5% 83.3% 85.0% 84.3% 89.3% 88.4% 88.6% 77.3% 81.6% 33.5% 32.4% 32.5% 34.0% 34.5% 26.4 27.2 26.7 26.0 24.6 25.2 24.8 65.1 66.0 67.5 22.6 22.1 60.3 63.3 61.5 57.9 58.9 57.
Slide 29: Delinquency development
Delinquency development Delinquency rate stable from 1Q19 Delinquencies Delinquencies Mar 19 % Dec 19 % Mar 20 % Mar 19 % Dec 19 % Mar 20 % by book year by geography 2011 and prior 4,291 0.51% 3,952 0.50% 3,967 0.50% New South Wales 1,322 0.41% 1,320 0.42% 1,350 0.44% 2012 708 1.05% 585 0.95% 558 0.
Slide 30: Delinquency rate (%)
Delinquency development 1.40% 2005 2006 1.20% 2007 2008 2009 1.00% 2010 2011 2012 Delinquency rate (%) 0.80% 2013 2014 0.58% 0.54% 2015 0.60% 0.52% 0.51% 2016 0.45% 2017 0.40% 0.41% 0.39% 0.40% 2018 0.35% 2019 0.27% 0.25% 2020 0.25% 0.20% 0.17% 0.10% 0.01% 0.00% 0.00% 103 115 133 145 175 109 121 127
Slide 31: Delinquency population
Delinquency population By month in arrears1, 2 37.80% 7,891 8,000 7,713 50% 34.19% 7,490 7,350 7,285 7,146 7,306 7,145 8% 9% 7,221 7,274 35.10% 6,926 6,958 8% 45% 7,000 6,696 10% 10% 10% 36.38% 12% 9% 10% 13% 12% 11% 35.38% 23% 40% 13% 23% 23% 30.97% 6,000 20% 21% 19% 19% 22% 24% 25% 31.83% 20% 35%
Slide 32: Insurance-in-force
Insurance-in-force IIF1 by book year IIF1 by State 2020 ACT NT NZ 2% 3% 1% 2% TAS 2019 2% 9% SA 2018 6% NSW 7% 27% 2010& 2017 Prior WA 6% 41% 13% 2016 6% 2015 7% 2014 QLD VIC 2011 23% 23% 7% 2013 2012 4% 6% 5% Source: Genworth Source: Genworth 1.IIF includes capitalised premium. Excludes excess of l
Slide 33: Cash and Investments portfolio
Cash and Investments portfolio Conservative, well-diversified portfolio with average maturity of 4.1 years1 Portfolio by maturity Portfolio by rating Portfolio by issuer type 2% 2% 9% 20% 15% 2% 29% 19% 40% 45% 19% 2% 30% 6% 20% 16% 24% 0 - 1 yr 1 - 3 yr Corporate State Gov't 3 - 5 yr 5 - 10 yr AAA
Slide 34: Glossary
Glossary As at 31 March 2020 Term Definition Term Definition ASX ASX Limited ABN 98 008 624 691 or Australian Securities Expense ratio The expense ratio is calculated by dividing the sum of the Exchange acquisition costs and the other underwriting expenses by the net earned premium Average reserve A
Slide 35: Glossary
Glossary As at 31 March 2020 Term Definition Term Definition Lapsed policy A strategic initiative which involves identifying and securing new Regulatory The regulatory capital base is the sum of Tier 1 Capital and Tier 2 initiative data sources that enables refinanced or discharged loans to be capit
Slide 36: For more information, analysts, investors and other interested parties should contact
For more information, analysts, investors and other interested parties should contact: Iwona (Evi) Falkiner Keshvar Seale Head of Corporate Affairs and Investor Relations Corporate Affairs and Investor Relations Manager D: +61 428 059 965 D: +61 499 088 640 The release of this announcement was autho
Slide 37: NVA
NVA Genworth > Sse