TORONTO, Jul 28, 2011, 2011 (Canada NewsWire via COMTEX) -- Net premiums written of $149 million Net operating income of $81 million Diluted book value per common share of $25.59 increases 9% year over year Operating return on equity of 13%
Genworth MI Canada Inc. (the "Company") (TSX: MIC) today reported results for the second quarter of 2011 with net income of $83 million or $0.79 per diluted common share and net operating income of $81 million or $0.77 per diluted common share. Operating earnings per diluted share was higher by $0.05 year over year and $0.03 sequentially.
"Another strong quarterly performance contributes to our momentum for 2011," said Brian Hurley, Chairman and Chief Executive Officer. "Solid business execution combined with an improving loss environment position us well to deliver continued stable net income performance and consistent returns for investors."
Second Quarter 2011 Key Financial Metrics:
- Net premiums written of $149 million were $48 million higher
sequentially and $8 million lower year over year. Sequential
improvements were primarily driven by spring housing
activity. When compared to the same period last year, lower
premiums were due to a smaller high loan-to-value origination
market for both purchase and refinance transactions, offset
partially by modest gains in market penetration.
- Net premiums earned of $151 million were $4 million lower
sequentially and $3 million lower year over year. The slight
decrease in earned premiums is the result of the larger 2007
and 2008 books being beyond their peak earning periods. At the
end of the second quarter of 2011 and consistent with the
previous quarter, the Company had $1.85 billion in unearned
premium reserves, which will be earned into premiums over time
in accordance with the Company's premium recognition curve.
- Losses on claims of $50 million were $9 million lower
sequentially and flat on a year over year basis. The loss
ratio of 33% in the second quarter was 5 points lower
sequentially and 1 point higher year over year.( ) Sequential
improvement in the loss ratio was positively influenced by
seasonality and regional delinquency improvements.
- Investment Income of $43 million (excluding $2 million of
realized and unrealized investment gains) was flat sequentially
and $1 million higher year over year. The Company continues
to maintain a high quality investment portfolio, consisting
primarily of investment grade fixed income securities.
- Net operating income of $81 million was $3 million higher
sequentially and $5 million lower year over year. This
resulted in an operating return on equity of 13% for the
quarter, consistent with the prior quarter and the prior year.
- The expense ratio was 16%, 1 point lower sequentially and flat
year over year, while the combined ratio of 49% was 6 points
lower sequentially and 1 point higher year over year. Expenses
of $25 million were $1 million lower sequentially.
- The regulatory capital ratio or Minimum Capital Test ("MCT")
ratio was 158%, 3 points higher sequentially and 4 points
higher year over year.
Shareholders' Equity
- On June 30, 2011, the Company successfully completed a
substantial issuer bid and purchased 6,153,846 million of its
common shares, representing approximately 5.87% of the common
shares outstanding at the time, for an aggregate purchase price
of approximately $160 million. Taking the transaction into
effect, the Company has 98,641,835 common shares outstanding at
the end of the quarter. Genworth Financial, Inc., the
principal shareholder of the Company, participated in the
issuer bid on a proportional basis and continues to indirectly
hold approximately 57.5% of the outstanding common shares.
- As of June 30, 2011, shareholders' equity was $2.5 billion or
book value of $25.59 per common share on a fully diluted
basis. Excluding accumulated other comprehensive income
("AOCI") or loss, shareholders' equity was $2.4 billion or book
value of $24.22 per common share on a fully diluted basis.
Second Quarter 2011 Key Highlights:
The Company continued to make solid progress on its strategic priorities and continues to maintain its leading position in the private mortgage insurance industry.
- New insurance written of $7.7 billion represented a sequential
increase of 42% due to typical spring seasonality. The year
over year decrease of 7% was due to a smaller origination
market for both purchase and refinance transactions resulting
from recent government product changes. This was offset in
part by the Company's improved market penetration.
- The overall delinquency rate for the insurance portfolio was
0.25%, sequentially lower by 2 basis points and 1 basis point
lower than the same period last year. The general improvements
were due to regional delinquency improvements in Quebec,
Ontario and Alberta.
- During the quarter, the Company continued to realize positive
results from its loss mitigation activities. The Company's
Homeowner Assistance Program completed 1025 workouts
representing approximately over 40% of new reported
delinquencies. As well, the Company's asset management
strategy, which involves the conveyance of certain real estate
properties from the lender to the Company, continued to have a
positive impact on the reduction of overall losses.
- The Company had an investment portfolio of $5.0 billion at the
end of the quarter. The general portfolio had a pre-tax
equivalent book yield of 4.3% and duration of 3.9 years as at
June 30, 2011. The portfolio is well-positioned with a short
duration and should benefit from a rising interest rate
environment as $263 million of investment maturities for the
remainder of the year are reinvested.
- During the quarter, the Federal government passed legislative
changes affecting mortgage insurance providers. The objective
of the legislative initiative is to reinforce the stability and
efficiency of the Canadian housing finance system.
Dividends
- On June 1, 2011, the Company paid a quarterly dividend of $0.26
per common share. The Company also announced today that its
Board of Directors approved a $0.26 per common share dividend,
payable on September 1, 2011 to shareholders of record at the
close of business on August 15, 2011.
Consolidated Financial Highlights(1)
_____________________________________________________________________
| |Three Months Ended June 30|
| | (Unaudited) |
|($ millions, except per share amounts) |__________________________|
| | 2011 | 2010(1) |
| |_______|__________________|
| | | |
|__________________________________________|_______|__________________|
|New Insurance Written | 7,715| 7,181|
|__________________________________________|_______|__________________|
|Insurance In Force |255,217| 234,196|
|__________________________________________|_______|__________________|
|Net Premiums Written | 149| 157|
|__________________________________________|_______|__________________|
|Net Premiums Earned | 151| 154|
|__________________________________________|_______|__________________|
|Losses on Claims | 50| 49|
|__________________________________________|_______|__________________|
|Investment Income | 43| 42|
|__________________________________________|_______|__________________|
|Realized and Unrealized Gains or Losses on| 2| (1)|
|investments | | |
|__________________________________________|_______|__________________|
|Net Income | 83| 85|
|__________________________________________|_______|__________________|
|Net Operating Income | 81| 86|
|__________________________________________|_______|__________________|
|Fully Diluted Earnings Per Share | $0.79| $0.72|
|__________________________________________|_______|__________________|
|Fully Diluted Operating Earnings Per Share| | |
|(2) | $0.77| $0.72|
|__________________________________________|_______|__________________|
|Fully Diluted Book Value Per Common Share,| $25.59| $23.56|
|including AOCI | | |
|__________________________________________|_______|__________________|
|Fully Diluted Book Value Per Common Share,| $24.22| $22.53|
|excluding AOCI | | |
|__________________________________________|_______|__________________|
|Loss Ratio | 33%| 32%|
|__________________________________________|_______|__________________|
|Combined Ratio | 49%| 48%|
|__________________________________________|_______|__________________|
|Operating Return on Equity | 13%| 13%|
|__________________________________________|_______|__________________|
|Minimum Capital Test Ratio (MCT) | 158%| 154%|
|__________________________________________|_______|__________________|
(1 )Effective January 1, 2010, the Company has adopted International Financial Reporting Standards ("IFRSs"). Certain accounting and measurement methods previously applied under Canadian generally accepted accounting principles were amended to comply with IFRSs. The comparative figures for 2010 have been restated to reflect these adjustments.
(2 )This is a financial measure not calculated based on IFRSs. See the "Non-IFRSs Financial Measures" section of this press release for additional information.
Detailed Operating Results and Financial Supplement
For more information on the Company's operating results, please refer to the Company's Management's Discussion and Analysis and Financial Statements as posted on SEDAR and available at:
http://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00028505.
This press release, the financial statements, Management Discussion and Analysis, and the second quarter 2011 financial supplement are also posted on the investor section of the Company's website (http://investor.genworthmicanada.ca). Investors are encouraged to review all of these materials.
Earnings Call
The Company's second quarter earnings call will be held on July 29(th) at 10:30 am EDT. The dial-in number is 1-888-300-0053 (#I.D. 80765798). The call is accessible via telephone and by audio webcast on the Company's website. Slides to accompany the call will be posted just prior to its start. A recording of the call will be available on the Company's website until September 15, 2011.
Non-IFRSs Financial Measures
To supplement its financial statements, the Company uses select non-IFRSs financial measures. Non-IFRSs 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 net operating income and return on net operating income. The Company believes that these non-IFRSs 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-IFRSs measures do not have standardized meanings and are unlikely to be comparable to any similar measure presented by other companies. These measures are defined in the Company's glossary, which is posted on the investor section of the Company's website (http://investor.genworthmicanada.ca). To access the glossary, click on the "Glossary of Terms" link under "Investor Resources" subsection on the left navigation bar. A reconciliation of non-IFRSs financial measures to the most recently comparable measures calculated in accordance with IFRSs can be found in the Management Discussion and Analysis filed with the Company's most recent financial statements, which are available on the Company's website and on SEDAR at www.sedar.com.
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain forward-looking statements. These forward-looking statements include, but are not limited to, the Company's plans, objectives, expectations and intentions, and other statements contained in this release that are not historical facts. These statements may be identified by their use of words such as "expects", "anticipates", "contemplates", "intends", "plans", "believes", "seeks", "estimates", or words of similar meaning. These statements are based on the Company's current beliefs or expectations, including the Company's assumptions, beliefs and expectations regarding its future capital requirements, market conditions and its ability to obtain regulatory approvals. These statements are inherently subject to significant risks, uncertainties and changes in circumstances, many of which are beyond the Company's control. The Company's actual results may differ materially from those expressed or implied by such forward-looking statements, including as a result of changes in global, political, economic, business, competitive, market and regulatory factors, and the other risks described in the Company's Annual Information Form. Other than as required by applicable laws, the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
About Genworth MI Canada Inc.
Genworth MI Canada Inc., through its subsidiary, Genworth Financial Mortgage Insurance Company Canada, has been the leading Canadian private residential mortgage insurer since 1995. Known as Genworth Financial Canada, "The Homeownership Company," it provides default mortgage insurance to Canadian residential mortgage lenders that enables low down payment borrowers to own a home more affordably and stay in their homes during difficult financial times. Genworth Financial Canada combines technological and service excellence with risk management expertise to deliver innovation to the mortgage marketplace. As of June 30, 2011, Genworth Financial Canada had $5.3 billion total assets and $2.5 billion shareholders' equity. Based in Oakville, Ontario, Genworth Financial Canada employs approximately 265 people across Canada. Additional information about Genworth MI Canada Inc. is available at www.genworth.ca.
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SOURCE: Genworth Financial Canada
SOURCE: Genworth MI Canada
Investors - Samantha Cheung, 905-287-5482 samantha.cheung@genworth.com
Media- Anita
DiPaolo-Booth, 905-287-5394 anita.dipaolobooth@genworth.com