Genworth looks offshore as profits plummet by 27%

Genworth Mortgage Insurance Australia Limited this week reported its 2017 full-year financial results, which showed a 26.7 per cent fall in underlying NPAT to $171.1 million.

The group’s financial results have been severely impacted in recent years by APRA’s macro-prudential measures, which have resulted in tighter credit and a significant reduction in high-LVR mortgage originations.

Early last year, Genworth commenced a strategic program of work to redefine its core business model and position the company as a leading provider of customer-focused capital and risk management solutions.

“I am pleased to report that we have made significant progress in implementing initiatives pursuant to this program of work,” Genworth CEO Georgette Nicholas said.

“The company’s Strategic Program of Work is designed to address evolving lender and consumer expectations (resulting from technological and regulatory change) by leveraging Genworth’s existing core competencies in managing mortgage credit default risk.

“As part of this work program, a number of initiatives have been identified that focus on improving the company’s underwriting efficiency, enhancing its product offerings and, where appropriate, leveraging its data and mortgage partnerships along the mortgage value chain.”

One such initiative has involved the establishment of an offshore insurance entity based in Bermuda, which provides Genworth with the capability to structure bespoke risk management solutions for portfolio cover across both high and low loan-to-value ratios (LVR).

“By leveraging its strong relationships in the global reinsurance market, Genworth has created a consortium and entered into an agreement with a customer to utilise the new structure to manage mortgage default risk. This bespoke solution is a complementary risk management tool to traditional LMI cover,” Ms Nicholas said.

In the second half of 2017, Genworth also commented work on the creation and implementation of risk management solutions for borrower-paid LMI in the less than 80 per cent LVR segment on a micro market basis (Micro Market LMI).

“Both of these initiatives demonstrate our ability as an organisation to tailor products and solutions for customers that address their evolving capital and risk management needs in a dynamic market environment,” Ms Nicholas said.

“They also demonstrate our ability to leverage our extensive local experience, global expertise and strong relationships within international risk and capital markets to offer customers a greater depth and breadth of tailored risk and capital management tools that complement our traditional LMI offering.”