Genworth MI Canada Inc. Reports Fourth Quarter 2013 Earnings And Full Year Results

 Genworth MI Canada Inc. Reports Fourth Quarter 2013 Earnings And Full Year  Results  Fourth Quarter Net Operating Income of $85 million, Operating Diluted EPS of  $0.90 per share Full Year Net Operating Income of $349 million, Full Year Diluted Operating  EPS of $3.60 per share  Full Year Operating EPS up 5% Full Year Operating Return on Equity of 12%  TORONTO, Feb. 4, 2014 /CNW/ - Genworth MI Canada Inc. (the "Company") (TSX:  MIC) today reported fourth quarter 2013 net income of $93 million or $0.98 per  diluted common share, and net operating income of $85 million or $0.90  operating earnings per diluted common share. While net operating income was  lower by 4% as compared to the same quarter in the prior year on an adjusted  basis, the Company delivered consistent operating earnings per share.  On a full year basis, the Company reported $349 million in total net operating  income, as compared to $339 million on an adjusted basis for the prior year.   Compared to the adjusted net operating income in the prior year, net operating  income for 2013 represented a $10 million or 3% increase.  Full year operating  earnings per share were $3.60 as compared to $3.43 in the prior year, on an  adjusted basis.  This represents a 5% increase to the prior year. The Company  also delivered an operating return on equity of 12% during the quarter and on  a full year basis.  "We delivered strong performance in 2013," said Brian Hurley, Chairman and  Chief Executive Officer of the Company.  "We enhanced the customer experience,  strengthened the quality of our insurance portfolio, and realized loss ratio  improvement.  We believe that we are well positioned for continued  profitability."  With the implementation of the Protection of Residential Mortgage or  Hypothecary Insurance Act (Canada) ("PRMHIA") on January 1, 2013, reported net  operating income for the fourth quarter and full year in 2012 was $226 million  and $470 million, respectively.   These reported values included a one-time  favourable after-tax item of $137 million on a quarter basis and $122 million  on a full year basis related to the reversal of previously accrued exit fees  related to the federal government guarantee fund under the previous Government  of Canada Guarantee Agreement, which was released with the implementation of  PRMHIA.   Adjusted net operating income of $89 million in the fourth quarter  of 2012 and $339 million for the 2012 full year are being used for comparison  purposes.  Fourth Quarter 2013 Key Financial Metrics:            --  Net premiums written of $129 million were $32 million, or 20%,             lower than the prior quarter and $12 million, or 11%, higher             than the same quarter in the prior year.   The sequential             decrease was primarily driven by typical seasonally lower             volumes of high loan-to-value mortgages and lower market demand             for portfolio insurance.  The year-over-year increase was             primarily the result of a slightly higher mortgage origination             volume.         --  Net premiums earned of $142 million were lower by $1 million as             compared to the prior quarter and $5 million lower than the             same quarter in the prior year. The unearned premium reserve             was $1.7 billion at the end of the quarter, consistent with the             prior quarter.         --  Losses on claimsof $31 million reflected a $1 million             improvement over the prior quarter and $15 million improvement             over the same quarter in the prior year.  In both cases, the             Company experienced lower losses primarily due to a favourable             shift in the regional mix of delinquencies, a stable economic             environment, and strong credit quality of recent books.  This             resulted in a loss ratio of 22% for this quarter, as compared             to 22% in the prior quarter and 31% in the same quarter in the             prior year.         --  The expense ratio was 23%, as a percentage of net premiums             earned, during the quarter.  This ratio was 4 percentage points             higher than the prior quarter and 4 percentage points higher as             compared to the same quarter in the prior year.  The increase             was primarily attributed to higher employee share-based             compensation due to a higher share price.  Excluding this cost,             which fluctuates with movements in the trading price of the             Company's common shares, the expense ratio is generally in line             with the full year expense ratio of 19%.          --  Net Investment income, excluding realized gains,of $44 million             was essentially flat to the prior quarter and $2 million lower             than the same quarter in the prior year.  The comparison to the             prior year excluded the one-time favourable pre-tax impact of             $186 million from the reversal of the previously accrued exit             fees.         --  Net operating incomeof $85 million was $6 million lower             relative to the prior quarter and $4 million lower compared to             the adjusted net operating income in the same quarter in the             prior year which excluded the one-time favourable after tax             impact of $137 million from the reversal of the previously             accrued exit fees.         --  Operating return on equity was 12% for the quarter, 1             percentage point lower when compared to the prior quarter and 1             percentage point lower on a year-over-year basis, when compared             on an adjusted basis.          --  The regulatory capital ratio or Minimum Capital Test ("MCT")             ratio was approximately 222%, 4 percentage points higher than             the prior quarter and 37 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 strength and flexibility.  Fourth Quarter 2013 Key Highlights:         --  The high loan-to-value component of new insurance written             during the quarter was $5.2 billion, representing a decrease of             $1.1 billion or 17% from the prior quarter, and an increase of             $0.8 billion or 19% over the same quarter in the prior year.              The sequential decrease was primarily due to typical             seasonality.  The year-over-year increase was primarily due to             a normalization of the high loan-to-value mortgage insurance             market following the impact from 2012 product changes.         --  During the quarter, the Company insured $2.5 billion of low             loan-to-value mortgage portfolios, representing a decrease of             $1.5 billion or 38% from the prior quarter volume, and a $1.6             billion or 39% decrease over the same quarter in the prior             year.  The volume of portfolio insurance fluctuates and varies             from quarter to quarter based on lender demand.         --  The net premiums written in the quarter from insurance of high             loan-to-value mortgage was $119 million, accounting for 92% of             the Company's net premiums written.  This represented a             decrease of $25 million, or 17%, from the prior quarter and an             increase of 17 million, or 16%, from the same quarter in the             prior year.         --  The number of reported delinquencies was 1,830 outstanding at             the end of the quarter, representing a small increase of 52, as             compared to the prior quarter and a decrease of 323             delinquencies as compared to the same quarter in the prior             year, reflecting an improvement of 15% on a year over year             basis.  This reflects 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, resulting             in a loss ratio of 22% for the quarter.         --  The Company's investment portfolio had a market value of $5.4             billion at the end of the quarter.  The portfolio had a pre-tax             equivalent book yield of 3.6% and duration of 3.7 years as at             December 31, 2013.  As a result of ongoing active portfolio             management, the Company had realized investment gains of $11             million in the quarter, primarily related to a further             reduction in its equity exposure.  Dividends  On November 29, 2013, the Company paid a quarterly dividend of $0.35 per  common share.  The Company also announced today that its Board of Directors approved a  dividend payment of $0.35 per common share, payable on February 28, 2014, to  shareholders of record at the close of business on February 14, 2014.  Shareholders' Equity  As of December 31, 2013, shareholders' equity was $3.1 billion, representing a  book value of $32.53 per common share on a fully diluted basis.  Excluding  accumulated other comprehensive income ("AOCI") shareholders' equity was $ 3.0  billion, or a book value of $31.22 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 Review of Performance as posted on SEDAR and available at  www.sedar.com.  This press release, the financial statements, the Company's Review of  Performance, and the fourth 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.  Earnings Call  The Company's fourth quarter earnings call will be held on February 5, 2014 at  10:00 am ET (Local: 416-644-3414, Toll free: 1-800-814-4859, Conference ID:  4660814).  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 March 5, 2014 (Local  416-640-1917, Toll Free 1-877-289-8525, Access Code 4660814#).  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.  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 December 31,  2013, Genworth Canada had $5.7 billion total assets and $3.1 billion  shareholders' equity. Find out more at www.genworth.ca.  Consolidated Financial Highlights                                                                        Three Months                Full Year     ($ millions, except       Ended December 31          Ended December 31     per share amounts)           (Unaudited)                (Unaudited)                              2013         2012          2013          2012     New insurance             7,693         8,472        34,985        41,286     written     Insurance in-Force      316,702       301,456       316,702       301,456     Net premiums written        129           117           512           550     Net premiums earned         142           147           573           589     Losses on claims             31            46           142           194     Expenses                     33            28           113           105     Investment income            44            46           179           169     (interest/dividends,     net of expenses)1     Net investment gains         11             1            37            12     Total net investment         56           472           215          1812     income     Net income                   93           892           375          3482     Net operating                85           892           349          3392     income1     Fully diluted             $0.98        $0.902         $3.86        $3.522     earnings per common     share     Fully diluted             $0.90        $0.902         $3.60        $3.432     operating earnings     per common share1     Fully diluted book       $32.53        $30.62        $32.53        $30.62     value per common     share, inc. AOCI     Fully diluted book       $31.22        $28.40        $31.22        $28.40     value per common     share, excl. AOCI1     Basic weighted       94,904,567    98,695,175    97,049,781    98,684,587     average common     shares outstanding     Diluted weighted     94,907,933    98,836,531    97,067,722    98,806,915     average common     shares outstanding     Loss ratio                  22%           31%           25%           33%     Combined ratio              45%           50%           44%           51%     Operating return on         12%           13%           12%           13%     equity1     Minimum Capital Test       222%          170%          222%          170%     ratio (MCT)     1This is a financial measure not calculated based on International     Financial Reporting Standards ("IFRS").  See the "Non-IFRS Financial     Measures" section of this press release for additional information.     2 Total investment income, net income, net operating income, fully     diluted earnings per common share, fully diluted operating earnings per     common share, and operating return on equity for 2012 are presented in     the table as adjusted values and exclude the one-time impact from the     reversal of the government guarantee exit fee.  Including this     adjustment in Q4 2012, total investment income, net income, net     operating income, fully diluted earnings per common share, fully     diluted operating earnings per common share, and net operating return     on equity were $233 million, $226 million, $226 million, $2.29, $2.28,     and 33%, respectively.  Including this adjustment on a full year 2012     basis, total investment income, net income, net operating income, fully     diluted earnings per common share, fully diluted operating earnings per     common share, and operating return on equity were $367 million, $470     million, $462 million, $4.76, $4.67, and 17%, respectively.        Non-IFRS Financial Measures  To supplement the Company's consolidated financial statements, which are  prepared in accordance with IFRS, the Company uses non-IFRS financial measures  to analyze performance. Non-IFRS financial measures include net operating  income, operating earnings per common share (basic), operating earnings per  common share (diluted), shareholders' equity excluding accumulated other  comprehensive income ("AOCI"), operating return on equity and underwriting  ratios such as loss ratio, expense ratio and combined ratio. Non-IFRS  financial measures used by the Company to analyze the impact of the reversal  of the government guarantee fund exit fee include adjusted net investment  income, adjusted net income, adjusted earnings per common share (basic),  adjusted earnings per common share (diluted), adjusted net operating income,  adjusted operating earnings per common share (basic), adjusted operating  earnings per common share (diluted), and adjusted operating return on equity.  Other non-IFRS measures used by the Company to analyze performance include  insurance in-force, new insurance written, Minimum Capital Test ("MCT") ratio,  delinquency ratio, severity on claims paid, investment yield, book value per  common share (basic) including AOCI, book value per common share (basic)  excluding AOCI, book value per common share (diluted) including AOCI, book  value per common share (diluted) excluding AOCI, and dividends paid per common  share. 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 financial measures do not have standardized meanings and are  unlikely to be comparable to any similar measures presented by other  companies. In addition, where applicable, non-IFRS measures have been adjusted  to analyze the impact of the reversal of the government guarantee fund exit  fee.  These non-IFRS 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 net operating income to net income,  operating earnings per common share (basic) to earnings per common share  (basic), operating earnings per common share (diluted) to earnings per common  share (diluted), and shareholders' equity excluding AOCI to shareholders'  equity may be found in the Review of Performance. A definition of these  measures as well as an explanation of why these measures are useful to  investors and the additional purposes for which management uses the measures  can be found in the Company's "Glossary for non-IFRS financial measures", in  the  "Non-IFRS financial measures" section at the end of the Review of  Performance.  The Review of Performance along with the Company's most recent  financial statements, 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 MI Canada  Investors - Samantha Cheung, 905-287-5482samantha.cheung@genworth.com  Media- Lisa Azzuolo, 905-287-5520lisa.azzuolo@genworth.com  To view this news release in HTML formatting, please use the following URL:  http://www.newswire.ca/en/releases/archive/February2014/04/c7415.html  CO: Genworth MI Canada ST: Ontario NI: REL ERN