Net premiums written of $160 million
Net operating income of $80 million
Operating return on equity of 13%
TORONTO, Nov. 3, 2011 /CNW/ - Genworth MI Canada Inc. (the "Company")
(TSX: MIC) today reported results for the third quarter of 2011 with
net income of $81 million or $0.82 per diluted common share and net
operating income of $80 million or net operating earnings of $0.81 per
diluted common share. Excluding the favourable tax impact experienced
during the same period last year, operating earnings per diluted share
were higher by $0.05 year over year and sequentially higher by $0.04.
The Company also announced today that its Board of Directors approved a
dividend increase of 3 cents in the quarterly dividend from $0.26 to
$0.29 per common share, with such dividend to be paid on its next
payment date. As well, the Company announced that it has declared a
special dividend of $0.50 per common share (with an approximate
aggregate amount of $50 million), also to be paid on its next payment
date. The common dividend increase and the special dividend
declaration reinforce the strength of the Company's business model and
its confidence in delivering ongoing profitability.
"Despite the challenging Canadian and global economic landscape of
today, we continue to deliver solid results," said Brian Hurley,
Chairman and CEO. "In addition, after a detailed review of our
financial position and outlook, we are pleased to announce a 12% common
share dividend increase and a special dividend to our shareholders."
Third Quarter 2011 Key Financial Metrics:
Net premiums written of $160 million were $11 million higher sequentially and $6 million
lower year over year. The sequential improvement was primarily driven
by seasonality. The year over year decline was driven by a smaller
mortgage origination market as compared to last year due to fewer
insured refinance transactions, partially offset by increased market
penetration by the Company.
Net premiums earned of $149 million were $2 million lower sequentially and $6 million lower
year over year. The decline in earned premiums is the result of the
larger 2007 and 2008 books having matured past their peak earning
periods, offset by the increased earnings contribution from more recent
books of business. At the end of the third quarter of 2011 and
consistent with the previous quarter, the Company had $1.9 billion in
unearned premium reserves, which will be earned into premiums over time
in accordance with the Company's premium recognition curve.
Losses on claims of $54 million were $4 million higher sequentially and $7 million higher
year over year. The loss ratio of 36% in the third quarter was 3
points higher sequentially and 6 points higher year over year. The
increase in losses on claims is primarily due to a higher average claim
size on delinquent mortgages in Alberta originated in 2007 and 2008.
Investment Income of $44 million (excluding $1 million of realized and unrealized
investment gains) was $1 million higher sequentially and $1 million
lower year over year. The Company's high quality investment portfolio, comprised primarily of
investment grade fixed income securities, continues to be a consistent
contributor to net income.
Net operating income of $80 million was $1 million lower sequentially and $11 million lower
year over year. Excluding the favourable tax impact experienced last
year, net operating income was $6 million lower year over year. Operating return on equity was 13% for the quarter, the same as the prior quarter and 1 point lower
than in the prior year.
The expense ratio was 16%, flat sequentially and 1 point lower year over year, while the combined ratio (expense ratio and loss ratio combined) of 52% was 3 points higher
sequentially and 5 points higher year over year. Expenses of $24
million were $1 million lower sequentially and $2 million lower year
The regulatory capital ratio or Minimum Capital Test ("MCT") ratio was 161%, 3 points higher sequentially and 8 points higher year over
year. The Company continues to have a strong capital position with the
financial flexibility to support the business and its operations.
On September 1, 2011, the Company paid a quarterly dividend of $0.26 per
Furthermore, the Company's Board of Directors has approved an amendment
to its dividend policy, authorizing the declaration and payment of a
fixed dividend of $0.29 per common share per quarter. The payment of
dividends pursuant to this policy, however, is not guaranteed and the
amount and timing of any dividends payable remains at the discretion of
the Company's Board of Directors.
The Company announced today that its Board of Directors approved a
dividend of $0.29 per common share, payable on December 1, 2011, to
shareholders of record at the close of business on November 15, 2011.
This dividend payment represents an increase of 12% from its prior
quarterly dividend of $0.26 per common share. In conjunction with the
payment of the common share dividend on December 1, 2011, the Company
will also pay a special dividend of $0.50 per common share to
shareholders of record at the close of business on November 15, 2011.
As of September 30, 2011, shareholders' equity was $2.7 billion or a
book value of $26.82 per common share on a fully diluted basis.
Excluding accumulated other comprehensive income ("AOCI") or loss,
shareholders' equity was $2.5 billion or a book value of $24.79 per
common share on a fully diluted basis.
Third Quarter 2011 Key Highlights:
The Company continued to make solid progress on its strategic priorities
and continues to maintain its leading position in the private mortgage
New insurance written of $6.6 billion on high loan-to-value mortgages
which represented a sequential increase of 7%. The year over year
decrease of 5% was due to a smaller mortgage origination market,
primarily due to a lower number of refinance transactions as a
consequence of recent government product changes. This was offset in
part by the Company's improved market penetration.
The overall delinquency rate for the insurance portfolio was 0.21%,
sequentially lower by 4 basis points and lower by 4 basis points than
the same period last year. The delinquency rate is being positively
influenced by a higher number of cures and increased paid claims.
The Company's Homeowner Assistance Program completed 965 workouts,
representing approximately 50% of new reported delinquencies. As well,
the Company's asset management strategy continued to expand during the
quarter, which assisted in accelerating the foreclosure and sale
The Company had an investment portfolio of $5.0 billion at the end of
the quarter. The general portfolio had a pre-tax equivalent book yield
of 4.3% and duration of 3.9 years as at September 30, 2011. The
portfolio is well-positioned with a short duration
Consolidated Financial Highlights1
($ millions, except per share amounts)
Three Months Ended Sept 30
New Insurance Written
Insurance In Force
Net Premiums Written
Net Premiums Earned
Losses on Claims
Realized and Unrealized Gains or Losses on Investments
Net Operating Income2
Fully Diluted Earnings Per Share
Fully Diluted Operating Earnings Per Share2
Fully Diluted Book Value Per Common Share, including AOCI
Fully Diluted Book Value Per Common Share, excluding AOCI
Operating Return on Equity2
Minimum Capital Test Ratio (MCT)
1 Effective January 1, 2010, the Company has adopted International
Financial Reporting Standards ("IFRS"). Certain accounting and
measurement methods previously applied under Canadian generally
accepted accounting principles were amended to comply with IFRS. The
comparative figures for 2010 have been restated to reflect these
2 This is a financial measure not calculated based on IFRS. See the
"Non-IFRS Financial Measures" section of this press release for
Detailed Operating Results and Financial Supplement
For more information on the Company's operating results, please refer to
the Company's Management's Discussion and Analysis and Financial
Statements as posted on SEDAR and available at:
This press release, the financial statements, Management's Discussion
and Analysis, and the third quarter 2011 financial supplement are also
posted on the investor section of the Company's website (http://investor.genworthmicanada.ca). Investors are encouraged to review all of these materials.
The Company's third quarter earnings call will be held on November 4th at 10:30 am EDT. The dial-in number is 1-888-300-0053 (#I.D.
16308812). The call is accessible via telephone and by audio webcast
on the Company's website. Slides to accompany the call will be posted
just prior to its start. A recording of the call will be available on
the Company's website until December 15, 2011.
Non-IFRS Financial Measures
To supplement its financial statements, the Company uses select non-IFRS
financial measures. Non-IFRS measures used by the Company to analyze
performance include underwriting ratios such as loss ratio, expense
ratio and combined ratio, as well as other performance measures such as
net operating income. The Company believes that these non-IFRS
financial measures provide meaningful supplemental information
regarding its performance and may be useful to investors because they
allow for greater transparency with respect to key metrics used by
management in its financial and operational decision making. Non-IFRS
measures do not have standardized meanings and are unlikely to be
comparable to any similar measure presented by other companies. These
measures are defined in the Company's glossary, which is posted on the
investor section of the Company's website (http://investor.genworthmicanada.ca). To access the glossary, click on the "Glossary of Terms" link under
"Investor Resources" subsection on the left navigation bar. A
reconciliation of non-IFRS financial measures to the most recently
comparable measures calculated in accordance with IFRS can be found in
the Management's Discussion and Analysis filed with the Company's most
recent financial statements, which are available on the Company's
website and on SEDAR at www.sedar.com.
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain forward-looking statements. These
forward-looking statements include, but are not limited to, the
Company's plans, objectives, expectations and intentions, and other
statements contained in this release that are not historical facts.
These statements may be identified by their use of words such as
"expects", "anticipates", "contemplates", "intends", "plans",
"believes", "seeks", "estimates", or words of similar meaning. These
statements are based on the Company's current beliefs or expectations,
including the Company's assumptions, beliefs and expectations regarding
its future capital requirements, market conditions and its ability to
obtain regulatory approvals. These statements are inherently subject
to significant risks, uncertainties and changes in circumstances, many
of which are beyond the Company's control. The Company's actual results
may differ materially from those expressed or implied by such
forward-looking statements, including as a result of changes in global,
political, economic, business, competitive, market and regulatory
factors, and the other risks described in the Company's Annual
Information Form. Other than as required by applicable laws, the
Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future developments or otherwise.
About Genworth MI Canada Inc.
Genworth MI Canada Inc., through its subsidiary, Genworth Financial
Mortgage Insurance Company Canada, has been the leading Canadian
private residential mortgage insurer since 1995. Known as Genworth
Financial Canada, "The Homeownership Company," it provides default
mortgage insurance to Canadian residential mortgage lenders that
enables low down payment borrowers to own a home more affordably and
stay in their homes during difficult financial times. Genworth
Financial Canada combines technological and service excellence with
risk management expertise to deliver innovation to the mortgage
marketplace. As of September 30, 2011, Genworth Financial Canada had
$5.4 billion total assets and $2.7 billion shareholders' equity. Based
in Oakville, Ontario, Genworth Financial Canada employs approximately
265 people across Canada. Additional information about Genworth MI
Canada Inc. is available at www.genworth.ca.
SOURCE Genworth MI Canada
For further information:
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