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Leading provider of lenders mortgage insurance, Genworth Mortgage Insurance Australia Limited (ASX:GMA) has reported its FY 2018 results. The companyâs Gross Written Premium (GWP) increased by 24.7% to $460.2 million in FY18 as compared to the prior year. Further, the companyâs Net Earned Premium (NEP) decreased by 24.1 percent from $370.5 million in FY 2017 to $281.3 million in FY 2018. As per the companyâs announcement, the Net Earned Premium is in line with the guidance and reflects the 12-month adverse impact of the 2017 Earnings Curve Review compared to the three-month adverse impact in FY 2017.
The company has reported Statutory net profit after tax (NPAT) of $75.7 million for FY 2018 which is 49.3 percent lower than FY 2017. Further, the company has reported an Underlying NPAT of $93.9 million which is 45.1% lower than FY 2018.Â
According to Genworthâs CEO and Managing Director Ms. Georgette Nicholas, the companyâs FY 2018 financial performance is in line with its guidance and its expectation of a transitionary year for Genworth. The FY 2018 result reflects the 12-month impact of the 2017 Earnings Curve Review as well as moderating housing market conditions, tightening credit standards and higher mortgage interest rates during the year.
She further told that the company made good progress in implementing initiatives which were designed to redefine the companyâs core business model. These strategic initiatives contributed to the growth of Gross Written Premium (GWP) in FY 2018 and delivered underwriting and operating efficiencies.
According to her, the company remained focused on capital management initiatives, having completed two on-market buy-backs to the value of $149.1 million in 2018 and announcing a new on-market share buy-back today, up to a value of $100 million.
The companyâs FY 2018 Loss Ratio was 51.9% which is higher than the Loss Ratio of 38.3% in FY 2017. According to the company, the Loss ratio is in line with the Companyâs guidance range of 50%-55%, and it reflects the impact of lower NEP (Net Earned Premium) due to the 2017 Earnings Curve Review.
Today, the company has also announced a new on-market share buy-back up to a value of $100 million. The purchase of 38.6 million shares pursuant to this buy-back is covered by the shareholder approval which was obtained at the 2018 Annual General Meeting (AGM). The remaining shares to be acquired pursuant to this buy-back will be subject to shareholder approval at the AGM which is scheduled to occur on 9 May 2019. Based on Genworthâs closing share price of $2.26 on 5 February 2019, the on-market buy-back would represent 10.1 percent of the Companyâs issued share capital or around 44.2 Mn ordinary shares.
The Board of Directors has declared a fully franked final ordinary dividend of 9.0 cents per share which will be paid on 18 March 2019 to shareholders registered on 4 March 2019.
In the last six months, the share price of Genworth decreased by 21.53 percent as on 5 February 2019 and is trading at a PE multiple of 10.660x. GMAâs shares traded at $2.355 (+3.097% intraday) with a market capitalization of circa $988.67 million as on 6 February 2019 (AEST 4:00 PM).
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