Genworth (ASX:GMA) share price hits new 52-week high as profits surge

Why are the Genworth Mortgage Insurance results impressing investors today?

| More on:
Young businessman standing on the top of the mountain punching fist in the air.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Genworth share price has hit a yearly high today 
  • The lenders mortgage insurer reported a $192.8 NPAT in FY21 
  • Genworth has recommenced paying a dividend to shareholders 

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

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.

More on Earnings Results

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Earnings Results

ASX 200 stock jumps 10% on strong FY24 results

How did this KFC restaurant operator perform in FY 2024?

Read more »

A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin, waiting in anticipation.
Consumer Staples & Discretionary Shares

Guess which ASX 200 stock just slashed its final dividend by 23%

This retailer had a tough time during the 12 months. Here's how it performed.

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Earnings Results

Catapult shines: 20% sales growth propels ASX tech stock to new 52-week high

A strong annual result from this tech player has caught investor attention.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Earnings Results

Xero share price leaps 8% on staggering earnings upheaval

A major turnaround in profitability is sending investors into a frenzy over Xero shares today.

Read more »

a construction worker sits pensively at his desk with his arm propping up his chin as he looks at his laptop computer while wearing a hard hat and visibility vest in a bunker style construction shed.
Materials Shares

Which ASX 200 stock just plunged 12% despite record full-year earnings?

It looks like an impressive report card but UBS doesn't like the FY25 guidance.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Earnings Results

ASX 200 tech stock lifts off on another record-setting half-year profit

Investors are bidding up the ASX 200 tech company following its half-year results.

Read more »

increasing rural asx share price represented by happy looking sheep
Earnings Results

Why is this ASX All Ords stock staying strong as profits crash 76%

How is this company's share price marching higher after mowing down more than three-quarters of its profits compared to a…

Read more »

Two men sit side by side on a couch with video game controls in their hands and expressive looks on their faces as they react to the action in front of them in a home setting.
Earnings Results

Guess which ASX 200 stock is surging 11% on an 'outstanding' result

This ASX gaming giant just posted a 17% jump in profits, and its shareholders are basking in the glory.

Read more »