Genworth Mortgage Insurance Australia

GMA Details

Genworth Mortgage Insurance Australia Limited (ASX: GMA) reported 34.7% yoy decline statutory net profit after tax (NPAT) at $88.7 million and underlying NPAT of $113.5 million for the half year ended 30 June 2017. New business volume, as measured by New Insurance Written (NIW), decreased 6.4% to $13.1 billion (included $2.1 billion in bulk portfolio transactions) in the first half 2017 (1H17) compared with $14.0 billion in 1H16. Gross Written Premium (GWP) decreased 4.0% to $182.3 million in 1H17, led by the changes in the customer portfolio over the period, partially offset by changes in the business mix compared with the same period in 2016 and the impact of the premium rate actions taken in 2016. Net Earned Premium (NEP) declined by 7.5% yoy to $211.6 million in 1H17 compared with $228.8 million in 1H16 reflecting lower earned premium from recent book years.


H1FY17 Financial performance; (Source: Company reports)

The company announced its intention to commence, an on-market share buy-back for shares up to a maximum aggregate value of $100 million with effect from 21 August 2017. Based on Genworth’s closing share price of $3.02 on 1 August 2017, this would represent 6.5% of the Company’s issued share capital or around 33.1 million ordinary shares. Additionally, the board has declared fully franked ordinary and special dividends totaling 14 cents per share. The proposed on-market share buy-back is a continuation of the capital management actions that are designed to bring Genworth’s solvency ratio more in line with the Board’s target capital range of 1.32 to 1.44 times the Prescribed Capital Amount (PCA) on a Level 2 basis. The Company has received consent from its majority shareholder, Genworth Financial, Inc. (Genworth Financial), under the Shareholder Agreement, and the necessary regulatory approvals to commence the on-market share buy-back. We maintain a “Hold” recommendation on the stock at the current market price of $3.20


GMA Daily chart; (Source: Thomson Reuters)

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