Helia Group Limited · ASX:HLI
Helia — 3Q18 Earnings Presentation
30 slides from Helia's earnings presentation, Oct 31, 2018
Slide 1: 3Q18 Financial Results Presentation
31 OCTOBER 2018 3Q18 FINANCIAL RESULTS PRESENTATION GROWING TOGETHER ©2018 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 2018. 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 NV Genworth z=.
Slide 4: 3Q18 results overview
3Q18 results overview Summary 3Q18 result % Change • Increase in GWP reflects the greater proportion of (A$ millions) 3Q17 4Q17 1Q18 2Q18 3Q18 traditional LMI flow business written by Genworth lender- 3Q17 v. 3Q18 customers in the quarter • NEP adversely impacted by 2017 earnings curve review. Gross
Slide 5: Year-to-date 2018 results
Year-to-date 2018 results Summary YTD18 YTD18 results YTD18 results • GWP up 32.3% includes business written pursuant to new product (A$ millions) YTD17 YTD18 Change % offerings (including business written via Genworth’s new Bermudan entity, Micro Markets LMI and excess of loss insurance) Gross writ
Slide 6: Macroeconomic conditions
Macroeconomic conditions Interest rates House values – capital city dwellings 8% NSW VIC QLD SA WA ACT Australia Cash rate Standard variable mortgage rate 200 7% 180 6% Home value Index 5% 160 4% 140 3% 120 2% 100 1% 0% 80 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18
Slide 7: ADI residential mortgage lending market
ADI residential mortgage lending market Originations and HLVR penetration1 37% A$ bn 34% 33% 31% 31% 27% 27% 24% 22% 21% 20% 376 385 371 28 335 37 31 300 54 40 52 51 262 256 40 240 242 49 219 46 36 41 26 31 202 181 41 43 47 43 200 50 200 12 40 166 24 139 102 Penetration99 HLVR 111 98 74 96 93 101 65
Slide 8: Detailed financial performance
Detailed financial performance
Slide 9: 3Q18 income statement
3Q18 income statement (A$ millions) 3Q17 4Q17 1Q18 2Q18 3Q18 Change YTD17 YTD18 Change 3Q17 v YTD17 v 3Q18 YTD18 Gross written premium 88.9 97.7 174.1 92.7 92.1 3.6% 271.2 358.9 32.3% Movement in unearned premium 28.1 (22.0) (84.7) 0.8 (6.5) (123.1%) 91.2 (90.4) (199.0%) Gross earned premium 117.0 7
Slide 10: New insurance written
New insurance written NIW1 by original LVR2 band NIW1 by product type $ bn, % $ bn 88% 88% 88% 85% 84% 84% 84% 84% 81% 6.6 6.8 6.1 6.3 6.0 16% 5.5 5.4 6.8 18% 18% 5.1 6.6 18% 18% 6.1 6.3 6.0 20% 22% 4.3 5.5 5.4 23% 5.1 42% 4.3 54% 23% 56% 56% 58% 62% 99.2% 99.0% 99.3% 99.3% 99.7% 74% 73% 99.4% 99.5%
Slide 11: Gross written premium
Gross written premium GWP and average price1 of flow business GWP walk $ m, % $m 1.83% 1.80% 1.82% 1.80% 1.82% 1.69% 1.57% 1.60% 1.56% 174.1 3.7 0.3 92.1 88.9 (0.7) 99.7 94.1 97.7 92.5 88.2 88.9 92.7 92.1 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 Flow LVR Volume 3 3 Other 3Q18 band mix 2 GWP
Slide 12: Net claims incurred
Net claims incurred (A$ millions unless otherwise stated) 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Number of paid claims (#) 356 355 376 385 365 301 320 Average paid claim1 ($’000) 92.5 112.2 110.6 133.4 117.8 115.2 115.7 Claims paid1 32.9 39.8 41.6 51.4 43.0 34.7 37.0 Movement in non-reinsurance recoveri
Slide 13: Loss development
Loss development Delinquency roll and incurred loss drivers Delinquency roll 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Opening balance 6,731 6,926 7,285 7,146 6,696 6,958 7,306 New delinquencies 2,852 3,145 2,887 2,463 2,701 2,864 2,742 Cures (2,301) (2,431) (2,650) (2,528) (2,074) (2,215) (2,378) Paid cla
Slide 14: Balance sheet and unearned premium reserve
Balance sheet and unearned premium reserve Strong balance sheet with $3.2bn in cash and investments and $1.2bn in UPR Unearned premium by year as at Balance sheet as at 30 September 2018 30 September 2018 (A$ in millions) 31 Dec 17 30 Sep 18 Total UPR $1.2bn Assets Cash 43.0 65.0 2011 2012 Accrued i
Slide 15: Regulatory capital position
Regulatory capital position 3Q 2018 NIW1 by original LVR band and PML1 (A$ in millions) 31 Dec 17 30 Sep 18 $ bn Capital base 2.60 2.59 Common equity tier 1 capital 1,892.4 1,706.6 2.51 Tier 2 capital 200.0 200.0 2.36 2.36 2.28 Regulatory capital base 2,092.4 1,906.6 Capital requirement 35.4 36.2 33
Slide 16: Summary and conclusion
Summary and conclusion Genworth
Slide 17: Genworth economic outlook and FY18 guidance
2018 Genworth economic outlook and FY18 guidance Lending institutions facing higher funding Domestic economy expected to be stable costs are expected to continue to implement in 4Q18. ‘out-of-cycle’ interest rate increases. Expectation of ongoing growth in Housing market conditions expected to emplo
Slide 18: Conclusion
Conclusion Good progress in Track record of Strategic work implementing Business is well delivering profits being undertaken strategic initiatives capitalised and strong capital to redefine core that broaden returns business model product offerings Unique set of Excess capital and competencies that
Slide 19: Questions
Questions NK Genworth = =.
Slide 20: Supplementary slides
Supplementary slides Genworth
Slide 21: Genworth's strategic program of work
Genworth’s strategic program of work A refined strategic plan to re-ignite profitable growth over the medium-term Value proposition: Innovation and technology will underpin Genworth’s value proposition Focus: To be the leading provider of customer-focused capital and risk management solutions in res
Slide 22: Earnings curve
Earnings curve Comprehensive review of premium earning pattern completed in 2H17 Earnings pattern for premium written post 1 Oct 20171 25% 20% 15% 10% 5% 0% 1 2 3 4 5 6 7 8 9 10 11 12 Years since inception 1.Earnings pattern excludes excess of loss insurance and bulk and is based on assumed cancella
Slide 23: Earnings curve
Earnings curve Comparative in-force earning pattern for premium written pre-1 October 20171 35% 30% 25% 20% 15% 10% 5% 0% 2018 2019 2020 2021 2022 2023 2024 Proportion - prior curve (pre 01 Oct 2017) Proportion - revised curve (post 01 Oct 2017) 1.Earnings pattern excludes excess of loss insurance a
Slide 24: Residential mortgage lending market
Residential mortgage lending market Investment vs. owner-occupied (APRA Investment vs. owner-occupied2 statistics for ADI)1 (Genworth) $ bn, % $ bn, % 40% 30% 36% 27% 37% 34% 25% 34% 33% 24% 32% 33% 23% 31% 31% 21% 23% 29% 20% 20% 19% 128 127 136 136 14% 109 8.7 76 12.5 84 81 78 6.7 8.0 8.6 68 8.4 5
Slide 25: 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 2018 IIF1 by product type, as at 30 September 2018 HomeBuyer Plus 95.01%+ 60.01-70% Low Doc 2% Other 1% 6% 5% 1% <60% 8% 90.01-95% 27% 70.01-80% 16% 85.01-90% Standard 33% 80.01-85% 92% 9
Slide 26: Insurance ratio analysis
Insurance ratio analysis Expenses Combined ratio $ m, % $ m, % 40.6% 93.7% 89.5% 83.3% 85.0% 33.5% 32.4% 32.5% 71.1% 61.3% 66.6% 29.7% 57.1% 60.1% 28.5% 26.6% 25.8% 25.2% 30.8 82.4 29.9 29.7 27.2 27.6 24.6 64.8 63.6 66.7 63.3 23.9 22.6 61.7 60.3 57.9 22.1 29.9 55.1 16.4 17.1 16.0 13.5 14.1 27.2 27.6
Slide 27: Delinquency development
Delinquency development Delinquency composition Delinquency Total Delinquency Delinquencies by delinquencies by 31 Dec 17 30 Sep 18 rate as at 30 30 Sep 17 31 Dec 17 30 Sep 18 rate as at 30 30 Sep 17 book year geography Sep 2018 Sep 2018 2009 and prior 3,843 3,552 3,638 0.49% New South Wales 1,126 1
Slide 28: Delinquency rate (%)
Delinquency development Since 2005 1.40% 2005 2006 2007 1.20% 2008 2009 2010 1.00% 2011 2012 Delinquency rate (%) 0.80% 2013 2014 2015 2016 0.60% 0.58% 0.55% 0.57% 2017 0.48% 2018 0.45% 0.40% 0.46% 0.41% 0.29% 0.28% 0.33% 0.19% 0.20% 0.12% 0.13% 0.00% 103 109 115 121 127 133 139 145 151 157 163 169
Slide 29: Delinquency population
Delinquency population By month in arrears1 8,000 50% 39. 7,285 7,146 7,306 7,350 42. 6,958 45% 7,000 6,844 6,731 6,926 6,696 10% 10% 43. 12% 6,413 12% 11% 40. 13% 40% 14% 5,900 5,804 5,889 14% 13% 37. 6,000 13% 5,552 19% 21% 22% 40. 5,378 19% 35% 20% 14% 14% 14% 17% 20% 38. 15% 19% 20% 5,000 15% 18
Slide 30: NVA
NVA Genworth > Sse