Genworth Mortgage Insurance Australia Ltd (ASX: GMA) shares are tumbling lower today after the company released its financial results for the full year ending 31 December 2020 (FY20). At the time of writing, the Genworth share price has fallen 5.65% lower to $2.67.
Why is the Genworth share price sinking?
The Genworth share price is on the slide today after the business reported an underlying net loss after tax of $104.3 million for FY20. This compares to a $97 million net profit after tax during FY19.
The company experienced an underwriting loss of $234 million for the period. The FY19 underwriting result was $42.1 million.
Genworth reported it would not be declaring an interim or final dividend due to the uncertainty surrounding coronavirus and the current economic environment. The board advised that it remains committed to resuming dividend payments when appropriate.
Genworth maintained a cash and investment portfolio worth $3.4 billion as at 31 December 2020.
The company's net-earned premium was higher for the period, totalling $312 million in FY20 compared to $298.2 million in FY19. Gross written premium jumped 29.7% from $433.2 million in FY19 to $561.7 million in FY20.
CEO comments
Addressing the company's losses, Genworth Chief Executive Officer and Managing Director Ms Pauline Blight-Johnston said:
Genworth's FY20 results were materially impacted by the effects of COVID-19 on the economy. While the business achieved strong toppling volume growth in Gross Written Premium (GWP), our Statutory and Underlying net profit after tax (NPAT) losses were affected by an increase in reserving to reflect anticipated future claims outcomes arising from the economic impacts of COVID-19.
Ms Blight-Johnston added:
Importantly, Genworth remains in a strong capital position, able to withstand a wide range of future claims and outcomes.
Genworth share price snapshot
Genworth provides lenders mortgage insurance (LMI) as well as capital and risk management solutions in Australia.
Over the past 12-months, the Genworth share price has fallen by around 30% after being hammered in the March 2020 bear market.
Based on the current Genworth share price, the company commands a market capitalisation of around $1.2 billion.
