Genworth this week released its 2016 full-year earnings, which show a 19.8 per cent fall in underlying net profit after tax (NPAT) and a reported NPAT of $203.1 million, down 10.9 per cent on 2015.
Genworth CEO and managing director Georgette Nicholas said the group’s 2016 results were in line with guidance.
“Despite some challenging market dynamics, including a smaller high loan-to-value ratio (LVR) market and a rise in mortgage delinquencies in resources-exposed regional economies, our profitability is strong, our business model is resilient and we are strongly capitalised,” she said.
“From a strategic perspective, we are beginning a program of work to redefine our core business model, to further address our customers’ capital and risk management needs and to deliver a sustainable return on equity for shareholders.
“In particular, we are focused on improving our underwriting efficiency, enhancing our product offerings and where appropriate, leveraging our data and partnerships along the mortgage value chain.”
The LMI insurer managed to renew its contract with CBA late last year following the loss of Westpac in 2015, one of its biggest clients. Genworth is currently in negotiations to renew its contract with its second largest customer, due to expire this month. However, the customer – which was not named – is considering other options.
“Genworth is in ongoing discussions with this customer about managing its mortgage default risk and is aware that the customer is considering other alternatives to traditional lenders mortgage insurance (LMI), in particular for their less-than-80 per cent LVR portfolio, and this may impact the level of business received by Genworth,” the group said.
“The company also advises that the current supply and service contract with its third largest customer is due to expire on 20 November 2017 and that this customer may, or may not, issue a Request For Proposal prior to that time.”
Genworth said that it remains engaged with other existing and potential customers about the provision of LMI and other risk management solutions and will continue to actively pursue new agreements over the course of 2017.
“Overall, the company expects GWP (Gross Written Premium) in 2017 to be below 2016 levels, down between 10 per cent and 15 per cent, subject to the timing and extent of any changes in the customer portfolio.”
[Related: CBA renews LMI deal]