Net Operating Income of $91 million, 12% higher year-over-year
Operating Diluted EPS of $0.94/share, 15% higher year-over-year
Common Dividend Increase of 9% to $0.35 per share
TORONTO, Oct. 29, 2013 /CNW/ - Genworth MI Canada Inc. (the "Company") (TSX:
MIC) today reported third quarter 2013 net income of $96 million or $0.99 per
diluted common share, and net operating income of $91 million or $0.94
operating earnings per diluted common share. As compared to the prior
quarter, net income this quarter was 2% or $2 million lower, while net
operating income was 3% or $3 million higher. As compared to the prior year,
net income for this quarter was 13% or $11 million higher and net operating
income was 12% or $10 million higher.
"Our disciplined business execution and the strong quality of our insurance
portfolio resulted in one of our best quarters to date," said Brian Hurley,
Chairman and Chief Executive Officer. "The low loss ratio of 22% is the
principal driver of this quarter's results. We are also pleased to announce
that our Board of Directors has approved a 9% increase to the quarterly common
share dividend. This represents our fourth annual increase."
Third Quarter 2013 Key Financial Metrics:
-- Net premiums written of $161 million were $24 million, or 18%,
higher than the prior quarter and $17 million, or 10%, lower
year-over-year. The sequential increase was primarily driven
by seasonally higher volumes. The year-over-year decrease was
reflective of the smaller high loan-to-value mortgage insurance
market and reduced low loan-to-value mortgage insurance volume.
-- Net premiums earned of $143 million were flat as compared to
the prior quarter and $4 million lower year-over-year. Premiums
earned this quarter primarily reflected the size of the 2010
and subsequent books of business.
-- Losses on claims of $32 million were $4 million lower than the
prior quarter and $12 million lower than the same quarter in
the prior year. In both cases, the improvement was primarily
due to a favourable shift in the geographic mix of
delinquencies, a stabilizing economic environment, and strong
credit quality of the recent books. This resulted in a loss
ratio of 22% for this quarter, as compared to 30% in the same
quarter in the prior year. The loss performance was 3
percentage points lower sequentially and 8 percentage points
-- Net Investment income excluding realized gains of $45 million
was $1 million higher than the prior quarter and $6 million
higher than the same quarter in the prior year. Net investment
income inclusive of realized gains and losses was $51 million,
$8 million lower sequentially and $7 million higher than the
same quarter in the prior year. Net investment income from the
prior year included fees paid by the Company related to the
government guarantee agreement which was replaced on January 1,
2013 by a legislative framework.
-- Net operating income of $91 million was $3 million higher
relative to the prior quarter and $10 million higher
year-over-year, primarily as a result of lower losses on
claims, which was partially offset by lower premiums earned.
-- Operating return on equity was 13% for the quarter, relatively
unchanged as compared to the prior quarter and 1 percentage
point higher on a year-over-year basis.
-- The expense ratio, as a ratio of net premiums earned, was 19%
during the quarter. This ratio was 1 percentage point higher
than the prior quarter and 1 percentage point higher as
compared to the same quarter in the prior year, consistent with
the Company's expectations.
-- The unearned premium reserve was $1.7 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 historical loss emergence pattern.
-- The regulatory capital ratio or Minimum Capital Test ("MCT")
ratio was approximately 218%, 2 percentage points higher than
the prior quarter and 33 percentage points higher than the
Company's internal target MCT ratio of 185%. The Company
currently intends to operate with a MCT ratio above 190% to
maintain financial flexibility.
Third Quarter 2013 Key Highlights:
-- The high loan-to-value component of new insurance written
during the quarter was $6.2 billion, representing an increase
of $1.4 billion or 29% from the prior quarter, and a decline of
$1 billion or 13% over the same quarter in the prior year. The
sequential increase was primarily due to typical seasonality.
The year-over-year decline was primarily due to a smaller
market size for high loan-to-value mortgage origination.
-- During the quarter, the Company insured $4.1 billion of low
loan-to-value mortgage portfolios, representing a decrease of
$2.4 billion or 37% from the prior quarter volume of $6.5
billion, and a $1.4 billion or 52% increase over the same
quarter in the prior year. The volume of portfolio insurance
fluctuates and varies from quarter to quarter based on the
needs of lenders.
-- The net premiums written in the quarter from insurance of high
loan-to-value mortgage portfolios was $144 million, accounting
for 89% of the Company's net premiums written. This
represented an increase of $33 million, or 29%, from the prior
quarter and a decrease of $26 million, or 15%, from the same
quarter in the prior year.
-- The number of reported delinquencies remained flat at 1,778 as
compared to the prior quarter and decreased by 405
delinquencies as compared to the same quarter in the prior
year, reflecting an improvement of 19%. The current number of
delinquencies was the lowest since 2008 and reflected the
continuation of a favourable shift in the geographic mix of
delinquencies, the strong credit quality in the portfolio and
improving economic conditions across most regions. These
factors, in combination with the ongoing success of the
Company's proactive loss mitigation strategies, contributed to
the Company's delinquency performance.
-- The Company commenced its normal course issuer bid in May,
2013, under which the Company may purchase a maximum of
4,937,078 common shares over a period up to 12 months ending
May 2014. As at September 30, 2013, the Company had purchased
and cancelled 3,903,117 of its common shares as part of its
normal course issuer bid. The aggregate value of the cancelled
common shares was approximately $105 million, inclusive of
common shares repurchased from Genworth Financial, Inc., which
allowed Genworth Financial to maintain its proportional
percentage ownership in the Company.
-- The Company's investment portfolio had a market value of $5.3
billion at the end of the quarter. The portfolio had a pre-tax
equivalent book yield of 3.7% and duration of 3.8 years as at
September 30, 2013. As a result of ongoing portfolio
management, the Company had realized investment gains of $7
million in the quarter.
-- The ratings for the Company and its operating insurance
company, Genworth Financial Mortgage Insurance Company Canada,
were recently confirmed by Standard & Poor's Ratings Services
(S&P) and DBRS Ratings Limited (DBRS). The Company's issuer
credit rating remains 'A' with a stable outlook from 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 stable trend by DBRS.
On August 30, 2013, the Company paid a quarterly dividend of $0.32 per common
The Company also announced today that its Board of Directors approved a
dividend increase to $0.35 per common share, payable on November 29, 2013, to
shareholders of record at the close of business on November 15, 2013. This
dividend represents a 9% increase in the quarterly payment to the Company's
As of September 30, 2013, shareholders' equity was $3.0 billion, representing
a book value of $31.82 per common share on a fully diluted basis. Excluding
accumulated other comprehensive income ("AOCI") shareholders' equity was $2.9
billion, or a book value of $30.50 per common share on a fully diluted basis.
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 as posted on SEDAR and
available at www.sedar.com.
This press release, the financial statements, Management's Discussion and
Analysis, and the third quarter 2013 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 30, 2013 at
10:00 am ET (Local: 416-644-3414, Toll free: 1-800-814-4859, Conference ID:
4641371). 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 November 30, 2013
(Local 416-640-1917, Toll Free 1-877-289-8525, Access Code 4641371#).
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
About Genworth MI Canada Inc.
Genworth MI Canada Inc. (TSX: MIC) through its subsidiary, Genworth Financial
Mortgage Insurance Company Canada (Genworth Canada), is the largest private
residential mortgage insurer in Canada. The Company provides mortgage
default insurance to Canadian residential mortgage lenders, making
homeownership more accessible to first-time homebuyers. Genworth Canada
differentiates itself through customer service excellence, innovative
processing technology, and a robust risk management framework. For almost two
decades, Genworth Canada has supported the housing market by providing thought
leadership and a focus on the safety and soundness of the mortgage finance
system. As at September 30, 2013, Genworth Canada had $5.6 billion total
assets and $3.0 billion shareholders' equity. Find out more at www.genworth.ca.
Three Months Year- to- date
($ millions, except Ended September 30 Ended September 30
per share amounts)
2013 2012 2013 2012
written 10,295 9,876 27,292 32,814
Insurance in-Force 309,650 294,685 309,650 294,685
Net premiums written 161 178 382 434
Net premiums earned 143 147 431 442
Losses on claims 32 44 111 148
net of expenses)( 1) 45 39 134 123
unrealized gains or
investments 7 5 25 11
income 51 44 160 134
Net income 96 85 282 244
Net operating income
(1) 91 81 264 236
earnings per common
share $0.99 $0.86 $2.88 $2.48
per common share(1) $0.94 $0.82 $2.70 $2.39
Fully diluted book
value per common
share, inc. AOCI $31.82 $28.72 $31.82 $28.72
Fully diluted book
value per common
share, excl. AOCI(1) $30.50 $26.45 $30.50 $26.45
shares outstanding 96,426,269 98,691,648 97,772,710 98,681,032
shares outstanding 96,561,756 98,691,648 97,907,664 98,910,753
Loss ratio 22% 30% 26% 33%
Combined ratio 41% 48% 44% 51%
Operating return on
equity(1) 13% 12% 12% 12%
Minimum Capital Test
ratio (MCT) 218% 164% 218% 164%
(1 ) This is a financial measure not calculated based on International
Financial Reporting Standards ("IFRS").
See the "IFRS and Non-IFRS Financial Measures" section of this
press release for additional information.
IFRS and Non-IFRS Financial Measures
The Company's consolidated financial statements are prepared in accordance
with IFRS. To supplement its financial statements, the Company uses select
non-IFRS 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-IFRS measures used by the
Company include shareholders' equity excluding AOCI, insurance in-force, new
insurance written, MCT ratio, 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-IFRS 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-IFRS 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" link under "Investor Resources" subsection at the bottom of the
page. A reconciliation of non-IFRS financial measures to the most recently
comparable measures calculated in accordance with IFRS can be found in the
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 effect of the Canadian government's
new government guarantee legislative framework, the effect of the changes to
the government guarantee mortgage eligibility rules, 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 dated March 18, 2013. 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.
SOURCE Genworth Canada
Investors - Samantha Cheung, firstname.lastname@example.org
Media- Lisa Azzuolo, email@example.com
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