Genworth MI Canada Inc. Reports Fourth Quarter and 2009 Year End Results
Sequential Improvement to Net Operating Income
During the quarter, the Company paid its first quarterly dividend of
Net operating income for the full year 2009 was
"We are pleased with our results. Our strong execution against our business objectives combined with improving housing fundamentals contributed favourably to our overall results this quarter," said
Fourth Quarter Key Financial Metrics:
- Net premiums written were $110 million representing an increase of
$6 million over the third quarter and a $42 million decrease over the
fourth quarter in 2008. Sequential top line improvement was impacted
favourably by a strong housing market, improving consumer confidence,
and market position gains with key lenders.
- Net premiums earned of $155 million were $1 million higher than in
the third quarter and $18 million higher than the fourth quarter in
2008. The year-over-year increase was due to the continued seasoning
of the large 2007 and 2008 books. As at the end of the quarter, the
Company had $2.0 billion in unearned premium reserves.
- Losses on claims of $60 million were $4 million lower than in the
third quarter and $2 million higher than the fourth quarter in 2008.
The loss ratio of 39% in the fourth quarter was 3 points lower than
in the third quarter and 3 points lower than in the fourth quarter of
2008. An improving economic environment drove fewer delinquencies
which in combination with the continued impact of the Company's
Homeownership Assistance Program (HAP) contributed to lower losses on
claims this quarter.
- Investment Income of $46 million (including gains) was $3 million
lower than in the third quarter and $2 million higher than the fourth
quarter in 2008. The sequential decrease was due to lower unrealized
gains.
- Net operating income of $85 million was $10 million higher than the
third quarter and $10 million higher than the fourth quarter in 2008
driven by higher earned premiums. On a sequential basis,
approximately $7 million or $0.06 per share of this increase over the
third quarter was attributed to the change in rate applied to future
tax liabilities.
- The expense ratio was 16%, one point higher than in the third quarter
and 3 points lower than in the fourth quarter in 2008.
- The combined ratio of 55% was 2 points lower than in the third
quarter and 7 points lower than in the fourth quarter in 2008.
- The regulatory capital ratio or Minimum Capital Test ratio was 149%,
representing a two point increase compared to the third quarter and a
22 point increase over the fourth quarter in 2008. This is in excess
of the regulatory supervisory target of 120% and the Company's
internal regulatory target of 135%.
- Operating return on equity was 14% for the quarter, representing a
2 point increase from the third quarter. The increase was primarily
due to the impact of the reduction in tax rate as described earlier.
Operational Highlights:
During the fourth quarter of 2009, the Company made progress on its strategic objectives. As indicated previously, the overall business strategy is to:
- Grow premiums written through outstanding customer service and
technology;
- Mitigate losses on claims and manage risks prudently;
- Enhance investment portfolio yield; and
- Optimize capital structure.
Key operating highlights for the fourth quarter were:
- The Company's continued execution of its customer sales and service
strategy contributed positively to the 5% increase in new insurance
written over the third quarter. The Company made progress with key
lenders and continues to be focused on top line growth.
- The overall delinquency rate remained flat at 0.28% compared to the
third quarter and 3 basis points higher than in the fourth quarter in
2008. The Company's Homeownership Assistance Program helped almost
1,400 families stay in their homes this quarter, representing an
increase of 4% over the third quarter.
- The Company's conservatively managed fixed income investment
portfolio of $5.0 billion added stability to its financial
performance in 2009. During the quarter, the Company continued its
focus on improving the overall investment yield. At December 31,
2009, cash and cash equivalents were $378 million, representing a
decrease of $127 million over the third quarter. As in previous
quarters, there were no impairments this quarter. The Company's
investment portfolio had an average duration of 3.1 years as at the
end of the quarter, which is relatively unchanged from the third
quarter.
- The Company continued to be well positioned with a strong capital
position. In the fourth quarter, the Company paid $26 million in
dividends to shareholders.
Overall, the Company is well positioned to continue to be a leading private mortgage insurer due to its significant scale, its prudent growth strategies through customer-focused sales and service, its prudent investment strategy, and strong financial position. The Company continues to target a 35-40% loss ratio, improvements in its market position, and increases in its investment yield. The Company will continue to focus on optimization of shareholder return.
Shareholders' Equity
Shareholders' equity as of
Consolidated Financial Highlights
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Three Months Ended
(Amounts in millions, December 31 Year Ended
except per share) (Unaudited) (Unaudited)
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2009 2008 2009 2008
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New Insurance Written 5,307 7,839 18,007 31,919
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Insurance In Force 223,842 211,724 223,842 211,724
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Net Premiums Written 110 152 360 706
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Net Premiums Earned 155 138 710(2) 518
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Losses on Claims 60 58 256 160
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Investment Income 46 44 189 200
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Net Income 87 74 379 337
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Net Operating Income(1) 85 75 371(2) 324
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Fully Diluted EPS $ 0.74 $ 0.66 $ 3.30 $ 3.02
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Fully Diluted Operating EPS(1) $ 0.72 $ 0.67 $ 3.23(2) $ 2.91
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Loss Ratio 39% 42% 36%(2) 31%
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Combined Ratio 55% 61% 50%(2) 46%
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Operating Return on Equity 14% 15% 16%(2) 17%
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Minimum Capital Test Ratio 149% 127% 149% 127%
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(1) This is a financial measure not calculated based on Canadian
generally accepted accounting principles (GAAP). See the "Non-GAAP
Measures" section of this press release for additional information.
(2) Excluding the impact of change to the premium recognition curve, net
premiums earned, net income, net operating income, loss ratio,
combined ratio, operating return on equity and operating earnings per
share for the year ended December 31, 2009 would have been $610,
$315, $307, 42%, 57%, 13%, and $2.67 respectively.
Detailed Operating Results and Financial Supplement
For more information on Genworth MI
http://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00028505.
A copy of these statements can also be found on the Company's website at: http://investor.genworthmicanada.ca.
This press release and the fourth quarter 2009 financial supplement are also posted on the Company's website.
Investors are encouraged to review all of these materials.
Conference Call
Genworth MI
Non-GAAP Measures
To supplement its financial statements, the Company uses select non-GAAP financial measures. Non-GAAP measures used by the Company to analyze performance include underwriting ratios such as loss ratio, expense ratio and combined ratio as well as other performance measures such as operating income and return on operating income. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and may be useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. Non-GAAP measures do not have standardized meanings and are unlikely to be comparable to any similar measures presented by other companies. These measures are defined in the Company's glossary, which is posted on the Company's website at http://investor.genworthmicanada.ca. To access the glossary, click on the "Glossary of Terms" link under "Investor Resources" subsection on the left navigation bar.
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain forward-looking statements. These forward-looking statements include, but are not limited to, Genworth MI Canada's plans, objectives, expectations and intentions and other statements contained in this release that are not historical facts as well as statements identified by words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", or words of similar meaning. These statements are based on Genworth MI
About Genworth MI
Genworth MI
For further information: Investors, Samantha Cheung, (905) 287-5482, [email protected]; Media, Anita DiPaolo-Booth, (905) 287-5394, [email protected]
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