The Genworth Mortgage Insurance Australia (ASX: GMA) share price has soared more than 11% in early trade after the company released its report for the third quarter.
What did Genworth announce?
Genworth reported its results for the quarter ending 30 September 2019 earlier today. The report was highlighted by an increased statutory net profit after tax (NPAT) in the third quarter of $25.1 million, in comparison to the $19.6 million in the prior corresponding period.
Additional highlights of the report included a 26.4% increase in new insurance written (NIW) of $6.4 billion for the quarter and net earned premium up 11.9% from the third quarter of 2018, to $76.2 million. According to management, the growth in these metrics reflects Genworth's traditional lenders mortgage insurance (LMI) flow business model and improving market conditions.
In her address to shareholders, Genworth's chief executive Ms Georgette Nicholas said that the company was seeing signs of stability across the east coast metro housing markets. Ms Nicholas reiterated that favourable market conditions were acting as a catalyst for greater activity. According to Ms Nicholas "this translated to our [Genworth's] best quarter by gross written premium in four years for our flow LMI business."
In addition to its quarterly report, Genworth also provided an update on the company's renowned supply and service contract with Commonwealth Bank of Australia (ASX:CBA). The contract for the provision of lenders mortgage insurance will last until the end of 2022.
The company also announced that current chief executive and managing director Ms Nicholas, will retire from both her roles effective 31 December 2019. Mr Duncan West will step in as acting CEO for the transition period as the company's board searches for a permanent replacement.
Genworth also declared an unfranked special dividend of 24.2 cents per share.
What is the outlook for Genworth?
Genworth is a mortgage insurer that provides lenders mortgage insurance to banks for borrowers who are perceived as riskier clients. The company's share price has nearly doubled in 2019 after opening the year at $2.05.
Management maintained that the company's full-year outlook remains unchanged, however it is subject to unforeseen circumstances or economic events. Genworth continues to target an ordinary dividend payout ratio of 50–80% of underlying NPAT
The Genworth share price is up more than 11% for the day, with an intraday high of $4.05.
