Genworth to be axed from ASX index

As of 24 September, Genworth Mortgage Insurance Australia will be removed from the S&P/ASX 200 index, following a quarterly rebalance.

According to the ASX’s selection criteria, a company’s average daily market capitalisation for the previous six months must be considered “institutionally investable” and “meet a minimum benchmark size”, while liquidity must also be “adequate”, with its public float (shares not owned by company founders, directors, government agencies etc) also required to meet a minimum standard.

The announcement follows on from Genworth’s half-year 2018 (HY18) financial results, in which it reported a decline in its net profit after tax (NPAT) of 52.8 per cent, from $88.7 million in HY17 to $41.9 million in HY18.

According to Genworth CEO and managing director Georgette Nicholas, the results were in line with the group’s expectation that 2018 would be a “transitionary year”, adding that it will continue to implement strategic initiatives designed to “redefine” its “core business model” and diversify its revenue streams.

The ASX has also announced that broking franchise group Mortgage Choice will be removed from the ASX 300 list on the same day (24 September).

Mortgage Choice also reported a decline in its financial performance, with its full-year 2018 (FY18) financial results reporting a 7 per cent fall in broker settlements. This equated to settlements being down by $800 million, from $12.3 billion in FY17 to $11.5 billion in FY18.

Mortgage Choice’s NPAT also dropped by 80.9 per cent, from $22.2 million in FY17 to $4.2 million in FY18.

The brokerage partly attributed the fall to a $7.1 million “positive adjustment” for “changes in run-off and other adjustments”, and non-cash adjustment of $28.5 million due to the introduction of the group’s new broker remuneration model.

When asked about Mortgage Choice’s removal from the ASX 300 index, CEO Susan Mitchell told Mortgage Business’ sister publication, The Adviser: “Rebalancing of the ASX 300 index occurs every six months and is determined by a number of factors.
 
“The new remuneration model and changes we have implemented have provided a platform for sustainable growth. It will allow Mortgage Choice brokers to invest in their businesses while attracting new, high-quality brokers to the network.
 
“We are confident that this will see us return to growing settlement volumes and market share over the medium term.”

Further, the ASX’s quarterly rebalance revealed that general insurance provider iSelect will be removed from the S&P/ASX 300 index.

In its full-year 2018 financial results, iSelect reported a net loss after tax of $13.5 million down from a net profit of $16.4 million in FY17.

  [Related: Genworth reports 71% decline in profits]