Net Operating Income of $81 million
Net Operating EPS of $0.82/share
Net Premiums Written of $178 million
Quarterly dividend will increase 10% to $0.32
TORONTO, Oct. 30, 2012 /CNW/ - Genworth MI Canada Inc. (the "Company") (TSX:
MIC) today reported third quarter 2012 net income of $85 million or $0.86 per
diluted common share. Net operating income was $81 million or $0.82 per
diluted common share. On a comparative basis, net operating income was $2
million higher than the prior quarter and $1 million higher year-over-year.
"We continued to deliver consistent profitability," said Brian Hurley,
Chairman and Chief Executive Officer. "In addition, we are pleased to be
providing shareholders a dividend increase of 10% reflecting our confidence in
our business outlook. This increase represents our third common share
dividend increase since becoming a public company."
Third Quarter 2012 Key Financial Metrics:
-- Net premiums written of $178 million were $2 million higher
sequentially and $18 million higher year-over-year. The
sequential increase was driven by an increase of $38 million in
premiums from high loan-to-value mortgages, which was offset by
$36 million in lower premiums from low loan-to-value
mortgages. The year-over-year increase was primarily a result
of premiums from higher levels of both high loan-to-value
mortgages and portfolio insurance on low loan-to-value
-- Net premiums earned of $147 million were $1 million lower
sequentially and $2 million lower year-over-year. As the
larger 2007 and 2008 books have largely seasoned, their
contribution to earned premiums continued to decline. The
current net premiums earned are largely based on the earnings
contributions from the more recent books of business originated
in 2009 and later.
-- Losses on claims of $44 million were $4 million lower
sequentially and $10 million lower year-over- year, reflecting
lower new reported delinquencies. This resulted in a loss
ratio of 30% for the quarter, 2 percentage points lower than
the prior quarter and 6 percentage points lower
year-over-year. While losses will fluctuate from quarter to
quarter, from a pricing perspective, this quarter's losses were
lower than the Company's loss ratio range of 35-40% over a full
-- Investment Income of $39 million (excluding realized and
unrealized investment gains) was $1 million lower sequentially
and $5 million lower year-over-year. The sequential decline in
investment income resulted from lower reinvestment yields.
-- Net operating income of $81 million was $2 million higher
sequentially and $1 million higher year-over-year. Operating
return on equity was 12% for the quarter, flat sequentially and
one percentage point lower year-over-year.
-- The expense ratio was 18%, 1 percentage point higher
sequentially and 2 percentage points higher year-over-year.
This was consistent with the Company's anticipated range.
-- The unearned premium reserve increased slightly during the
quarter to $1.81 billion at the end of the quarter. These
premiums will be earned over time in accordance with the
Company's premium recognition curve which follows the Company's
loss emergence pattern.
-- The regulatory capital ratio or Minimum Capital Test ("MCT")
ratio was 164%, 4 percentage points higher sequentially and 3
percentage points higher year-over-year. This level of capital
is well in excess of the Company's internal MCT target of
145%. The Company continues to maintain a strong capital
position and ongoing financial flexibility to support and grow
On August 31, 2012, the Company paid a quarterly dividend of $0.29 per common
The Company also announced today that its Board of Directors approved a
dividend increase to $0.32 per common share, payable on November 30, 2012, to
shareholders of record at the close of business on November 15, 2012. This
dividend increase represents a 10% increase in the quarterly payment.
As of September 30, 2012, shareholders' equity was $2.9 billion representing a
book value of $28.72 per common share on a fully diluted basis. Excluding
accumulated other comprehensive income ("AOCI") or loss, shareholders' equity
was $2.6 billion or a book value of $26.45 per common share on a fully diluted
Third Quarter 2012 Key Highlights:
The Company continued to make solid progress towards its operational targets
and continues to maintain its leading position in the Canadian private
mortgage insurance industry.
-- Total new insurance written this quarter decreased sequentially
to $9.9 billion primarily due to lower volumes of portfolio
insurance written on low loan-to-value mortgages. The Company
selectively participates in portfolio insurance under its
clearly defined risk appetite and disciplined pricing
approach. The Company believes that this selective
participation results in profitable business and enhances
overall lender relationships. This quarter, the Company
insured $2.7 billion of low-loan-to-value mortgage portfolios.
The Company anticipates the volumes of insurance on low
loan-to-value mortgages will continue to fluctuate quarter over
quarter in conjunction with varying demand from lenders.
-- The high loan-to-value component of new insurance written was
$7.2 billion, representing an increase of 25% sequentially and
9% year-over-year, largely driven by the volume of mortgage
insurance commitments issued in the second quarter during the
traditional spring housing market.
-- The total delinquency rate was 0.15%, 2 basis points lower
sequentially and 6 basis points lower year-over-year. The
Company experienced a 9% lower number of net new delinquencies
as compared to the previous quarter. The delinquency rate
continues to be positively influenced by improving economic
conditions in combination with the increased success of the
Company's loss mitigation strategies.
-- The Company's investment portfolio had a market value of $5.2
billion at the end of the quarter. The general portfolio had a
pre-tax equivalent book yield of 4.1% for the quarter and a
duration of 3.5 years as at September 30, 2012. The Company's
strategy in managing its high-quality investment portfolio
remained consistent with previous quarters and the portfolio
continues to be comprised primarily of investment grade fixed
income securities with an equity component of about 6%.
While the investment portfolio is a strong contributor to
income, the yield from the investment portfolio continues to be
challenged in the context of a low interest rate environment.
-- The ratings for the Company and its operating insurance
company, Genworth Financial Mortgage Insurance Company of
Canada, were recently confirmed by Standard & Poor's Ratings
Services (S&P) and DBRS Ratings Limited (DBRS). Genworth MI
Canada Inc.'s issuer credit rating remains 'A' with a stable
outlook by S&P and 'AA' (low) with stable trend from DBRS. The
financial strength of its operating insurance company remains
rated 'AA-' with a stable outlook by S&P and 'AA' with a stable
trend by DBRS.
Consolidated Financial Highlights
| |Three Months Ended September 30 |
|($ millions, except per share | (Unaudited) |
| | 2012 | 2011 |
|New Insurance Written(1) | 9,876| 7,219|
|Insurance In Force(1) |294,685| 261,039|
|Net Premiums Written | 178| 160|
|Net Premiums Earned | 147| 149|
|Losses on Claims | 44| 54|
|Investment Income | 39| 44|
|Realized and Unrealized Gains or | | |
|Losses on Investments | 5| 1|
|Net Income | 85| 81|
|Net Operating Income(1) | 81| 80|
|Fully Diluted Earnings Per Common | | |
|Share | $0.86| $0.80|
|Fully Diluted Operating Earnings Per| | |
|Common Share(1) | $0.82| $0.79|
|Fully Diluted Book Value Per Common | | |
|Share, including AOCI | $28.72| $26.82|
|Fully Diluted Book Value Per Common | | |
|Share, excluding AOCI(1) | $26.45| $24.79|
|Loss Ratio(1) | 30%| 36%|
|Combined Ratio(1) | 48%| 52%|
|Operating Return on Equity(1) | 12%| 13%|
|Minimum Capital Test Ratio (MCT)(1) | 164%| 161%|
(1 )This is a financial measure not calculated based on International
Financial Reporting Standards ("IFRSs").
See the "IFRSs and 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
Management's Discussion and Analysis as posted on SEDAR and available at
This press release, the financial statements, Management's Discussion and
Analysis, and the third quarter 2012 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.
The Company's third quarter earnings call will be held on October 31, 2012 at
10:30 am ET (Local: 416-644-3414, Toll free: 1-800-814-4859). 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
replay of the call will be available until December 1, 2012 (Local:
416-640-1917, Toll Free: 1-877-289-8525 Access Code 4567118#). Participants
are encouraged to pre-register for the webcast through the Company's website.
A replay of the call will also be available from the Company's website for a
period of at least 45 days following the conference call.
IFRSs and Non-IFRSs Financial Measures
The Company's consolidated financial statements are prepared in accordance
with IFRSs. 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 operating income. Other non-IFRSs measures used
by the Company include shareholders' equity excluding accumulated other
comprehensive income ("AOCI"), insurance in-force, new insurance written,
minimal capital test ratio ("MCT"), delinquency ratio, severity on claims
paid, operating earnings per common share of the Company (basic and diluted),
book value per common share (basic and diluted; including and excluding AOCI),
dividends paid per common share of the Company, and portfolio duration. 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 measures 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. 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 Management's 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 "may", "would", "could", "will",
"intend", "plan", "anticipate", "believe", "seek", "propose", "estimate",
"expect", or similar expressions, as they relate to the Company are intended
to identify forward-looking statements. Specific forward-looking statements
in this document include, but are not limited to, statements with respect to
the Company's expectations regarding the Canadian government's proposed
changes to the guarantee regime regarding residential mortgages, and the
Company's beliefs as to housing demand and home price appreciation,
unemployment rates, the Company's future operating and financial results,
sales expectations regarding premiums written, capital expenditure plans,
dividend policy and the ability to execute on its future operating, investing
and financial strategies. 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. (TSX: MIC), through its subsidiary, Genworth Financial
Mortgage Insurance Company Canada, has been the leading Canadian private
residential mortgage insurer since 1995. Known as Genworth Canada, the
Company 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 Canada
combines technological and service excellence with risk management expertise
to deliver innovation to the mortgage marketplace. As of September 30, 2012,
Genworth Canada had $5.6 billion total assets and $2.9 billion shareholders'
equity. Based in Oakville, Ontario, Genworth Canada employs approximately
260 people across Canada. Find out more at www.genworth.ca.
Investors - Samantha Cheung, firstname.lastname@example.org
Media- Lisa Azzuolo, email@example.com
SOURCE: Genworth MI Canada
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