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Genworth Canada Earnings

Genworth-FinancialThere were some tidbits of note in Genworth Financial’s latest earnings report.  Among them:

  • As reported Thursday, Genworth (the parent company) expects to issue an IPO to sell 49% of Genworth Financial Canada.
  • The parent said it “plans to hold the majority position for the foreseeable future.”
  • Chairman and CEO, Michael Fraizer, says the move “reinforces (Genworth’s) financial foundation, provides us with additional strategic options.”

In its release on Thursday, Genworth said:

  • First quarter Canadian mortgage insurance earnings “remained strong despite the challenging economic environment.”
  • On the other hand, “Slowing mortgage origination markets, and proactive risk management actions contributed to lower levels of new insurance written (NIW) and slower revenue growth.”
  • Genworth had “solid solvency ratios for mortgage insurance businesses in Canada.”
  • Genworth’s Canadian earnings “grew 8% driven by 15% revenue growth and lower taxes, partially offset by increased losses from seasoning of the large 2007 book during a period of declining home prices in several regions and rising unemployment. Flow NIW declined 39 percent primarily as a result of lower levels of high loan to value (LTV) mortgage originations.”
  • After exchange rates are factored in, Genworth Financial Canada earned $66 million of net operating income in its mortgage insurance business. That compares to first quarter 2008 when it earned $75 million. 

In the company’s conference call there were a few other notes of interest:

  • Average unemployment rates increased dramatically in the first quarter (by 120 basis points to 7.6%) and Genworth saw an increase in delinquencies to about 3,400 from 2,400 in the fourth quarter.
  • Genworth Canada’s book value increased to approximately $1.8 billion as of March 31.

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Genworth Financial Canada is the leading private sector supplier of mortgage default insurance in Canada, and 2nd in volume to CMHC.

(Special thanks to Seeking Alpha for providing the conference call transcript.)

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Last modified: April 26, 2017

Robert McLister is one of Canada’s best-known mortgage experts. A mortgage columnist for The Globe and Mail, interest rate analyst and editor of MortgageLogic.news, Rob has been covering Canada's mortgage market since 2007.

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