The Genworth Mortgage Insurance (ASX:GMA) share price was trading 5% lower today following the release of its annual financial results.
Meanwhile, the broader Australian share market or S&P/ASX 200 (INDEXASX: XJO) was trading at 6989, up 0.58%.
About Genworth Mortgage Insurance
Genworth is an insurer of mortgages. It offers the product called “LMI” to banks for borrowers who are perceived to be riskier or can’t come up with an adequate deposit for a home.
Genworth Mortgage Insurance’s annual report
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Key Results – Genworth
| This period | Last period | Change | |
| Gross earned premium | 368.4 | 356.3 | 3.4% |
| Profit | 120.1 | 75.7 | 58.65% |
| Dividends | 7.5 | 9 | -16.67% |
Source: Genworth Mortgage Insurance announcements; author calculations.
As can be seen above, the company’s gross earned premium came in at $368.4 million, up $12.1 million. This number is effectively an insurer’s revenue or sales.
GMA’s profit was $120.1 million, up $44.4 million, thanks to an improved insurance profit result (up 35%).
Finally, the final dividend declared by the company stood at 7.5 cents, bringing total dividends to 16.5 cents versus 17 cents last year. However, this figure excludes special dividends paid by GMA.
“Our FY19 financial performance reflects that our core business continues to perform well and in line with our full year guidance,” GMA CEO Duncan West said.
“Our result reflects more favourable market conditions providing an impetus to housing market activity especially in 2H19 with gross written premium increasing 28.9% compared with 2H18.”
The company attributed its gross written premium increases to the rebound in Australian property prices in the last quarter of 2019.
“National house prices continued to recover during 4Q19 led by the metropolitan centres with Sydney and Melbourne recording strong growth, which Genworth expects to see continue in 2020.” – Genworth
What Happens Next?
Looking towards 2020, the company expects its net earned premium to be within 5% of its 2019 result. Dividends are expected to stay between 50% and 80% of its underlying profit result.
“We are committed to maintaining the momentum of our Strategic Program of Work leveraging data and technology to add value across the mortgage value chain,” Mr West added.
“Our Company is well capitalised and has a solid balance sheet with net tangible assets of approximately $3.66 per share as at 31 December 2019 and remains committed to actively managing our capital position to continue delivering solid profits and attractive returns for our shareholders.”
Genworth Mortgage Insurance shares were last seen trading at $3.73, giving the company a market capitalisation more than $1.5 billion.
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