The Genworth Mortgage Insurance Australia Ltd (ASX: GMA) share price hit a 52-week high today on the back of the company's full-year results.
At the time of writing, Genworth shares are swapping hands at a yearly high of $3.01 apiece, a 3.79% gain on yesterday's closing price. For comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.38%.
Let's take a look at what the lenders mortgage insurance company reported today.
Genworth share price climbs as loss turns to profit
Highlights of the company's results for the year ended 31 December (FY21) include:
- Net profit after tax (NPAT) of $192.8 million compared to a $107.6 million loss in FY20
- Underlying NPAT of $237.8 million compared to a $104.2 million loss in FY20
- Insurance profit of $261.8 million compared to a $174.1 million loss in FY20
- Net earned premium surged 18.8% to $370.5 million
- Fully franked ordinary dividend of 12 cents per share (cps)
- Fully franked special dividend of 12 cps
What else happened in the year?
Genworth achieved underlying growth of 8.6% year on year, excluding the impact of the loss of the National Australia Bank Ltd (ASX: NAB) contract in late 2020. New insurance written (NIW) dropped 4.4% in FY21. Gross written premium (GWP) dropped by 2.2% due to the movement in NIW.
Despite this drop in GWP, net earned premium (NEP) surged 18.8% to $370.5 million. This was due to new business growth and cancellations from the high levels of industry financing activity.
Net claims were negative $8.3 million, while new delinquencies prevailed below historical levels. Cures and ageing were positively impacted by a strong environment for borrower finances and higher dwelling values.
Cash and investments increased 8.1% to $3.7 billion in FY21.
Due to the sound FY21 result, the company has resumed the payout of a dividend, of 12cps. In FY20, no dividend was paid to shareholders. The company also was able to announce a $100 million market buy-back on 23 November and a fully franked special dividend of 12 cps. Both dividends will be paid on 25 March to shareholders registered as of 11 March.
Genworth believes it is well-positioned to fund its organic growth while still returning capital to shareholders.
Management commentary
Commenting on the results that may be impacting the Genworth share price, CEO and managing director Pauline Blight-Johnston said:
Genworth has delivered a strong full-year profit result. Underlying premium volumes grew and underwriting quality was good. This was accompanied with an unusually favourable claims environment driven by high dwelling value price growth, falling delinquencies and low numbers of mortgages in possession.
Genworth's sound financial management at the commencement of COVID-19 has seen us come through this period well-positioned to benefit from the improving economic outcomes as we focus on delivering our strategic vision and value to shareholders.
Momentum is growing in the business as evidenced by our strong financial results, recent lender customer contract renewals, and our resumption of capital management activities. This positions us well to deliver on our vision to be the leading choice for flexible home ownership solution.
What's next?
Looking ahead, Genworth expects slowing levels of new housing credit and fewer cancellations from refinancing to be reflected in its FY22 net earned premium. Genworth has offered a net earned premium guidance of $315 to $375 million in FY22.
Genworth will also exclusively provide Lenders Mortgage Insurance to Commonwealth Bank of Australia (ASX: CBA) for three years from January 2023.
In a separate announcement to the market, Genworth also reported David Foster has retired as a non-executive director as of 31 March 2022.
Genworth share price snapshot
The Genworth share price has climbed 12% in the past 12 months, while it is up 29% this year to date.
In the past month, Genworth shares have surged 29%, while they have jumped 6% in the past week alone.
For perspective, the benchmark ASX 200 index has returned around 3% over the past year.
Genworth has a market capitalisation of about $1.2 billion
