Genworth

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Genworth Mortgage Insurance Australia has reported a statutory net profit after tax (NPAT) of $203.1 million for FY16.
Underlying NPAT was $212.2 million following adjustment for the after-tax mark-to-market move in the investment portfolio of $9.1 million.
<a href="https://www.propertyobserver.com.au/images/2017/02/08/Screen%20Shot%202017-02-08%20at%2010.57.42%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/08/Screen%20Shot%202017-02-08%20at%2010.57.42%20AM.png" alt="">
According to the Investor Report released today the results show lower sales (Gross Written Premium) and lower revenue (Net Earned Premium).
The report said GWP declined 24.8 percent compared with the previous corresponding period due to a number of factors including reduced high loan-to-value (LVR) penetration in the market and a lower LVR mix of business.
"Net Earned Premium decreased 3.6 percent reflecting lower earned premium from current and prior book years," it said.
"Net claims incurred increased due to an increase in the number of delinquent loans relative to a year ago and a higher average claim amount.
"The overall portfolio continues to be supported by strong performance in New South Wales and Victoria. However, the performance in Queensland and Western Australia is challenging, reflecting increased delinquencies, particularly in regions exposed to the slowdown in the resources sector.
"Genworth continues its engagement with policymakers, rating agencies and other industry participants to promote legislative and regulatory policies that support home ownership and continued responsible credit growth.
"Throughout 2016, Genworth has focused on working with APRA to develop and propose suitable capital requirements for the residential mortgage industry. Genworth is leading industry efforts to develop solutions with policy makers and regulators that emphasise the importance of LMI to the Australian mortgage market and stability of the wider financial system, especially its value as a loss absorption and capital management tool for risk management purposes. 
"The figure below shows the evolution of Genworth’s 3 month+ delinquencies (Flow only) by residential mortgage loan book year from the point of policy issuance. 
<a href="https://www.propertyobserver.com.au/images/2017/02/08/Screen%20Shot%202017-02-08%20at%2012.25.45%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/08/Screen%20Shot%202017-02-08%20at%2012.25.45%20PM.png" alt="">
"Each line below illustrates the level of 3 month+ delinquencies relative to the number of months an LMI policy has been in-force for policies issued within a specific year.
<a href="https://www.propertyobserver.com.au/images/2017/02/08/Screen%20Shot%202017-02-08%20at%2012.40.20%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/08/Screen%20Shot%202017-02-08%20at%2012.40.20%20PM.png" alt="">
"The 2008 Book Year was affected by the economic downturn in Australia and heightened stress experienced among self-employed borrowers, particularly in Queensland, which was exacerbated by the floods in 2011.
"The post-GFC book years are seasoning at lower levels as a result of credit tightening, however, accelerated increases for 2012-14 books have been predominantly driven by regional parts of Queensland and Western Australia that are continuing to face challenges as a result of the downturn in the mining sector."
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Resources sector slowdown noted in Genworth FY16 financials

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The mortgage lender insurer Genworth says the housing market is likely to continue to moderate.
It came as its first-half profit more than halved.
Total portfolio delinquencies only rose 0.3% to $7.3 million, while the portfolio delinquency rate rose just 0.03% to 0.54%.
Genworth, which provides insurance to lenders against the risk of borrowers defaulting, posted a $41.9 million profit for the six months to June, down 52.8% on the same period a year earlier.
Genworth said it expected the moderating trend to continue in the second half of the year, due to macro-prudential measures, tightening credit standards and record levels of new housing supply coming onto the market.
“Metropolitan housing markets in Sydney and Melbourne are predicted to lead the trend whilst the rate of ­decline in regions linked to the mining resource industry in Queensland and Western Australia, is expected to stabilise,” chief executive Georgette Nicholas said.
The company said it was making progress as it looked to evolve in the face of changing borrower and lender expectations, resulting from technology and regulatory change.
“Our first-half results are in line with our guidance and reflect the fact that 2018 will be a transitionary year as the impact of our 2017 annual premium earning pattern review is felt and we continue to implement strategic initiatives designed to redefine our core business model and diversify our revenue streams,” Nicholas said.
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