Stock Name: MIC
Amount: CAD 0.29
Announcement Date: 31/07/2012
Record Date: 13/08/2012
Dividend Detail:
Net Operating Income of $79 million
Net Operating EPS of $0.79/share
Net Premiums Written of $176 million
TORONTO, July 31, 2012 /CNW/ - Genworth MI Canada Inc. (the "Company")
(TSX: MIC) today reported second quarter 2012 net income of $79 million
or $0.79 per diluted common share.�� Net operating income was $79
million or $0.79 per diluted common share.�� On a comparative basis, net
operating income was $3 million higher than the prior quarter and $2
million lower year-over-year.
"We continued to capitalize on strong business momentum during the
second quarter and delivered top line growth, lower losses on claims,
and strong bottom line profitability," said Brian Hurley, Chairman and
Chief Executive Officer.�� "Our prudent approach to risk management
helps drive consistent results."
Second Quarter 2012 Key Financial Metrics:
Net premiums written of $176 million were $97 million higher sequentially and $27 million
higher year-over-year.����The sequential increase was driven primarily by
typical spring seasonality and higher levels of portfolio insurance on
low loan-to-value mortgages.�� The year-over-year increase was primarily
a result of higher levels of portfolio insurance on low loan-to-value
mortgages.
Net premiums earned of $148 million were $1 million higher sequentially and $3 million
lower year-over-year.�� The larger 2007 and 2008 books are past their
peak premiums earned contribution resulting in a smaller adjustment to
the quarterly premium recognition curve this quarter.
Losses on claims of $48 million were $8 million lower sequentially and $2 million lower
year-over- year, reflecting lower new reported delinquencies.�� This
resulted in a loss ratio of 32% for the quarter, 6 percentage points
lower than the prior quarter.
Investment Income of $40 million (excluding realized and unrealized investment gains) was
$3 million lower sequentially and $3 million lower year-over-year.�� The
sequential decline in investment income resulted from a $2 million decline in government
guarantee fund earnings and a modest decrease in the investment
portfolio yield.
Net operating income of $79 million was $3 million higher sequentially and $2 million lower
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 17%, 1 percentage point lower sequentially and 1 percentage point
higher year-over-year.�� Expenses of $25 million were slightly lower on
a sequential and year-over-year basis.
The unearned premium reserve was $1.8 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 160%, 1 percentage point higher sequentially and 2 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
have a strong capital position with the financial flexibility to
support and grow the business.
Dividends
On June 1, 2012, the Company paid a quarterly dividend of $0.29 per
common share.
The Company also announced today that its Board of Directors approved a
dividend of $0.29 per common share, payable on August 31, 2012, to
shareholders of record at the close of business on August 15, 2012.
Shareholders' Equity
As of June 30, 2012, shareholders' equity was $2.8 billion representing
a book value of $27.88 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 $25.81 per
common share on a fully diluted basis.
Second 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 increased sequentially to $18.8 billion
primarily due to $13.1 billion of portfolio insurance written on low
loan-to-value mortgages. The Company selectively participates in
portfolio insurance under a clearly defined risk appetite and
disciplined pricing approach.�� The Company believes that this selective
participation results in profitable business and enhances overall
lender relationships.
The high loan-to-value component of new insurance written was $5.7
billion, representing an increase of 62% sequentially, largely driven
by typical spring seasonality.�� The year-over-year decline of 7% was
largely due to a smaller market for high loan-to-value mortgages as
compared to the previous year.
On June 20, 2012, the Government of Canada announced a number of changes
to the rules governing the issuance of high loan-to-value residential
mortgages (with a greater than 80% loan-to-value) backed by the federal
government guarantee, effective July 9 of this year.�� These changes
include reducing the maximum amortization period from 30 years to 25
years and reducing the maximum loan-to-value for refinances from 85% to
80%.
The total delinquency rate was 0.17%, 2 basis points lower sequentially
and 8 basis points lower year-over-year.�� The Company experienced 22%
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 asset management strategy.
The Company's investment portfolio had a market value of $5.0 billion at
the end of the quarter.�� The general portfolio had a pre-tax equivalent
book yield of 4.3% and duration of 3.5 years as at June 30, 2012.�� The
Company's strategy in managing its high-quality investment portfolio
remained consistent with previous quarters and the portfolio continues
to be comprised primarily of investment grade fixed income securities
with an equity component of about 7%.�� �� While the investment portfolio
is a strong contributor to income, the yield from the investment
portfolio continues to be challenged in the context of a low interest
rate environment.
Consolidated Financial Highlights
�� | �� | �� |
($ millions, except per share amounts) | Three Months Ended June 30 (Unaudited) | |
2012 | 2011 | |
New Insurance Written1 | 18,833 | 7,715 |
Insurance In Force1 | 286,343 | 255,217 |
Net Premiums Written | 176 | 149 |
Net Premiums Earned | 148 | 151 |
Losses on Claims | 48 | 50 |
Investment Income | 40 | 43 |
Realized and Unrealized Gains or Losses on Investments | 0 | 2 |
Net Income | 79 | 83 |
Net Operating Income1 | 79 | 81 |
Fully Diluted Earnings Per Common Share | $0.79 | $0.78 |
Fully Diluted Operating Earnings Per Common Share1 | $0.79 | $0.77 |
Fully Diluted Book Value Per Common Share, including AOCI | $27.88 | $25.59 |
Fully Diluted Book Value Per Common Share, excluding AOCI1 | $25.81 | $24.22 |
Loss Ratio1 | 32% | 33% |
Combined Ratio1 | 49% | 49% |
Operating Return on Equity1 | 12% | 13% |
Minimum Capital Test Ratio (MCT)1 | 160% | 158% |
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 www.sedar.com.
This press release, the financial statements, Management's Discussion
and Analysis, and the second 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.
Earnings Call
The Company's second quarter earnings call will be held on August 1,
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
September 1, 2012 (Local: 416-640-1917, Toll Free: 1-877-289-8525
Access Code 4550694#).�� Participants are encouraged to pre-register for
the webcast through the Company's website. A replay of the call will be
available on the Company's website until September 15, 2012.
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., 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 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 Canada combines
technological and service excellence with risk management expertise to
deliver innovation to the mortgage marketplace.�� As of June 30, 2012,
Genworth Canada had $5.5 billion total assets and $2.8 billion
shareholders' equity.�� Based in Oakville, Ontario, Genworth Canada
employs approximately 260 people across Canada. Find out more at www.genworth.ca.
SOURCE: Genworth Financial Canada
For further information:
Investors - Samantha Cheung, 905-287-5482������samantha.cheung@genworth.com
Media��- Lisa Azzuolo, 905-287-5520��lisa.azzuolo@genworth.com
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