Genworth Mortgage Insurance Australia Ltd.

GMA Details

During Q1FY17, Genworth Mortgage Insurance Australia Limited (ASX: GMA) reported statutory net profit after tax (NPAT) of $52.2 million and underlying2 NPAT of $68.3 million. The company’s profitability remains strong despite revenue being pressured by a smaller high loan-to-value ratio (LVR) market.  New business volume, as measured by New Insurance Written (NIW), increased 9.7% to $6.8 billion in Q1FY17 compared with $6.2 billion in Q1FY16. Further, GWP (gross written premium) increased 3.8% cent to $88.2 million in Q1FY17, reflects a higher LVR mix of business compared with the same quarter in 2016 and the impact of the premium rate actions taken in 2016. However, Net Earned Premium (NEP) of $107.9 million decreased 4.9% compared with $113.5 million in Q1FY16 reflecting lower earned premium from recent book years. The expense ratio in Q1FY17 stood at 25.2% against 23.4% during the same period in previous year. Further, the loss ratio was 34.8%, up from 27.0% in Q1FY16, due to lower NEP, an increase in the number of delinquent loans relative to a year ago and a higher average paid claim amount. On regulatory front, Australian regulators have taken further steps recently to reinforce sound housing lending practices, with a focus on slowing the growth in investor lending and limiting the flow of new interest only lending. We maintain a “Hold” recommendation on the stock at the current market price of $2.97


GMA Daily chart; (Source: Thomson Reuters)

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