ENP Newswire -
Release date- 30042014 -
Net operating income was positively impacted by the Company's improving loss experience primarily a reflection of continuing strong market conditions.
'Our strong business execution and continued trend of lower losses produced solid first quarter results,' said
First Quarter 2014 Key Financial Metrics:
Net premiums written of
Net premiums earned of
Losses on claims of
The expense ratio was 19%, as a percentage of net premiums earned, during the quarter. This ratio was 1 percentage point higher as compared to the same quarter in the prior year and 4 percentage points lower than the prior quarter.
Net Investment income, excluding realized gains, of
Net operating income of
Operating return on equity was 12% for the quarter, flat when compared to both the same quarter in the prior year and prior quarter.
The regulatory capital ratio or Minimum Capital Test ('MCT') ratio was approximately 229%, 6 percentage points higher than the prior quarter and 44 percentage points higher than the Company's internal target MCT ratio of 185%. The Company currently intends to operate with a MCT ratio above 190% to maintain financial strength and flexibility.
First Quarter 2014 Key Highlights
The high loan-to-value component of new insurance written during the quarter was
The resulting net premiums written in the quarter from insurance of high loan-to-value mortgages was
During the quarter, the Company realized
The number of reported delinquencies was 1,860 outstanding at the end of the quarter. This represents a decrease of 5% as compared to the same quarter in the prior year and a marginal increase of 2% in the current quarter due to typical seasonality. The year-over-year decline in delinquencies reflects the strong credit quality in the portfolio and improving economic conditions across most regions.
The Company's investment portfolio had a market value of
During the quarter, the Company received confirmation from OSFI that the Company will be subject to a customized Minimum Capital Test ('MCT') for mortgage insurers starting in 2015. The Company is awaiting the final details of the customized MCT, but does not anticipate a material impact on the calculation of the MCT ratio.
In a press release dated
The draft form of Regulation B-21, entitled 'Residential Mortgage Insurance Underwriting Practices and Procedures', was released by OSFI on
Subsequent to the quarter, the Company successfully completed a
The Company also announced today that its Board of Directors approved a dividend payment of
Detailed Operating Results and Financial Supplement
For more information on the Company's operating results, please refer to its Management's Discussion and Analysis as posted on SEDAR and available at www.sedar.com.
The Company's first quarter earnings call will be held on
For almost two decades, Genworth Canada has supported the housing market by providing thought leadership and a focus on the safety and soundness of the mortgage finance system. As at
Non-IFRS Financial Measures
To supplement the Company's consolidated financial statements, which are prepared in accordance with IFRS, the Company uses non-IFRS financial measures to analyze performance. Non-IFRS financial measures include net operating income, operating earnings per common share (basic), operating earnings per common share (diluted), shareholders' equity excluding accumulated other comprehensive income ('AOCI'), operating return on equity and underwriting ratios such as loss ratio, expense ratio and combined ratio.
Non-IFRS financial measures used by the Company to analyze the impact of the reversal of the government guarantee fund exit fee include adjusted net investment income, adjusted net income, adjusted earnings per common share (basic), adjusted earnings per common share (diluted), adjusted net operating income, adjusted operating earnings per common share (basic), adjusted operating earnings per common share (diluted), and adjusted operating return on equity.
Other non-IFRS measures used by the Company to analyze performance include insurance in-force, new insurance written, Minimum Capital Test ('MCT') ratio, delinquency ratio, severity on claims paid, investment yield, book value per common share (basic) including AOCI, book value per common share (basic) excluding AOCI, book value per common share (diluted) including AOCI, book value per common share (diluted) excluding AOCI, and dividends paid per common share.
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 financial measures do not have standardized meanings and are unlikely to be comparable to any similar measures presented by other companies.
In the first quarter of 2014, the Company revised its definition of net operating income (loss) to exclude gains (losses) on the early extinguishment of debt to better reflect the basis on which the performance of its business is internally assessed and to reflect management's opinion that they are not indicative of overall operating trends. Changes were not required for prior periods.
Definitions of key Non-IFRS financial measures as well as an explanation of why these measures are useful to investors and the additional purposes for which management uses the measures can be found in the Company's 'Glossary for non-IFRS financial measures', in the 'Non-IFRS financial measures' section at the end of the MD&A. The MD&A along with the Company's most recent financial statements are available on the Company's website and on SEDAR at www.sedar.com.
Special Note Regarding Forward-Looking Statements
Certain statements made in this press release contain forward-looking information within the meaning of applicable securities laws ('forward-looking statements'). When used in this press release, the words 'may', 'would', 'could', 'will', 'intend', 'plan', 'anticipate', 'believe', 'seek', 'propose', 'estimate', 'expect', and similar expressions, as they relate to the Company are intended to identify forward-looking statements.
Specific forward-looking statements in this document include, but are not limited to, statements with respect to the Company's expectations regarding the effect of the Canadian government guarantee legislative framework, the impact of proposed guideline changes by OSFI, and the effect of changes to the government guarantee mortgage eligibility rules, and the Company's beliefs as to housing demand and home price appreciation, unemployment rates, the Company's future operating and financial results, sales expectations regarding premiums written, capital expenditure plans, dividend policy and the ability to execute on its future operating, investing and financial strategies.
The forward-looking statements contained herein are based on certain factors and assumptions, certain of which appear proximate to the applicable forward-looking statements contained herein.
Inherent in the forward-looking statements are known and unknown risks, uncertainties and other factors beyond the Company's ability to control or predict, that may cause the actual results, performance or achievements of the Company, or developments in the Company's business or in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. Actual results or developments may differ materially from those contemplated by the forward-looking statements.
The Company's actual results and performance could differ materially from those anticipated in these forward-looking statements as a result of both known and unknown risks, including the continued availability of the Canadian government's guarantee of private mortgage insurance on terms satisfactory to the Company; the Company's expectations regarding its revenues, expenses and operations; the Company's plans to implement its strategy and operate its business; the Company's expectations regarding the redemption of its existing debentures; Company's expectations regarding the compensation of directors and officers; the Company's anticipated cash needs and its estimates regarding its capital expenditures, capital requirements, reserves and its needs for additional financing; the Company's plans for and timing of expansion of service and products; the Company's ability to accurately assess and manage risks associated with the policies that are written; the Company's ability to accurately manage market, interest and credit risks; the Company's ability to maintain ratings; interest rate fluctuations; a decrease in the volume of high loan-to-value mortgage orientations; the cyclical nature of the mortgage insurance industry; changes in government regulations and laws mandating mortgage insurance; the acceptance by the Company's lenders of new technologies and products; the Company's ability to attract lenders and develop and maintain lender relationships; the Company's competitive position and its expectations regarding competition from other providers of mortgage insurance in
This is not an exhaustive list of the factors that may affect any of the Company's forward-looking statements. Some of these and other factors are discussed in more detail in the Company's AIF dated
The forward-looking statements contained in this press release represent the Company's views only as of the date hereof. Forward-looking statements contained in this press release are based on management's current plans, estimates, projections, beliefs and opinions and the assumptions related to these plans, estimates, projections, beliefs and opinions may change, and therefore are presented for the purpose of assisting the Company's security holders in understanding management's current views regarding those future outcomes and may not be appropriate for other purposes.
While the Company anticipates that subsequent events and developments may cause the Company's views to change, the Company does not undertake to update any forward-looking statements, except to the extent required by applicable securities laws.
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