Genworth (ASX:GMA) share price jumps 7% on half-year earnings

High LVR mortgages have propelled the Genworth share price higher, largely driven by high property prices and first home buyers.

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The Genworth Mortgage Insurance Australia Ltd (ASX: GMA) share price has jumped 7.55% higher on Wednesday morning after announcing its half-year earnings result.

Genworth shares are currently trading hands at $2.28 apiece.

A smiling man points upwards with both fingers in an exaggerated sideways pose.

Image source: Getty Images

Genworth share price jumps as dividend returns

Shares in the Aussie mortgage insurer are on the move after reporting results for the period ended 30 June 2021 (1H 2021).

A few key highlights from Genworth's results are:

  • Gross written premium revenue up 21.1% to $289.7 million
  • Net earned premium of $170.9 million, up 13.3% from $150.8 million reported in 1H 2020
  • Statutory net profit of $59.4 million compared to a $90.0 million net loss in 1H 2020
  • Insurance profit of $71.5 million versus a $128.1 million loss in 1H 2020
  • The board declared a 5 cents per share dividend after declining to pay an interim dividend in 1H 2020

The Genworth share price is climbing higher in early trade following the earnings result and dividend announcement.

What happened in 1H 2021 for Genworth?

The Genworth share price has climbed 27% higher in the last 12 months, prior to this morning's open. Shares in the Aussie mortgage insurer have been boosted by strong underwriting volumes and significant government incentives for home ownership.

High loan-to-value mortgages have propelled the Genworth share price higher, largely driven by high property prices and first home buyers.

Genworth Financial Inc sold its entire holding of shares in Genworth back in March. The separation is expected to occur by 31 March 2022 with one-off costs of $15 million to $19 million, largely to be incurred in FY 2021.

What did management say?

Genworth CEO and managing director Pauline Blight-Johnston described the first-half result as "pleasing".

"The result reflects the improved economy, housing market appreciation, and low interest rates experienced during the half", Blight-Johnston said.

"The stronger economy over the first half has provided good momentum for the company, however, the recent COVID-19 restrictions in some states will affect the ongoing economic recovery and have created renewed uncertainty," she added.

What's next for Genworth shares?

Genworth expects the low delinquency rates (0.60% in 1H 2021) to remain, thanks to ongoing borrower support programs.

Ongoing COVID-19 disruptions have made FY 2022 forecasting difficult for the company. However, it remains well capitalised with a prescribed capital coverage ratio of 1.74 times.

The Genworth share price has jumped 7.55% higher following this morning's result but remains down 4.6% in 2021.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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