Resources sector slowdown noted in Genworth FY16 financials
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.
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.
"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.
"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."