In a trading update on Friday, Genworth reported a net profit after tax for the 12 months to 31 December of $228 million.
However, the group also reported an underlying net profit after tax of $264.7 million, down 5.3 per cent from the prior corresponding period.
Genworth CEO Georgette Nicholas said the full-year 2015 financial results demonstrate the resilience of Genworth’s business model in the face of a dynamic economic environment and mortgage market.
“High loan-to-value ratio lending as a proportion of total mortgage originations has reduced recently in response to tightened lender risk appetite,” Ms Nicholas said.
“We expect this to lead to a lower level of new insurance written in 2016. Yet, this business is expected to be lower risk and less capital-intensive. Our focus is on maintaining our risk discipline in this changing market.
“Our strategic priority remains delivering long-term value to all shareholders,” she said.
Genworth expects to continue to evaluate a range of capital management initiatives in 2016. The firm also plans to continue “right-sizing” its capital base at a level that balances its objectives of long-term shareholder returns and flexibility to grow the business in the future, Ms Nicholas said.
“Genworth remains committed to playing a vital role in supporting the home ownership aspirations of Australian families,” she said.
“We do this by mitigating risk for our lender customers and thereby helping credit-worthy borrowers to purchase a property sooner and with a smaller deposit.”
In a research note, Morningstar analyst Nathan Zaia stated that Genworth’s financial result reflects tougher lending standards crimping demand for LMI. Mr Zaia also noted the loss of Westpac as a client in July, with gross written premiums falling 20 per cent.
“Nonetheless, net earned premiums increased 5.4 per cent to $469.9 million, as the firm benefits from earnings booked on insurance written in prior years and relatively low claims, helped by low unemployment and interest rates,” Mr Zaia said.
[Related: Genworth names new CEO]