Genworth Canada’s 1st Public Earnings Report

Genworth Mortgage Insurance Canada made $74 million last quarter. That was the headline in the company’s first earnings report since going public.

Among other notable points from the quarter:

  • It wrote 59% less insurance.  This was largely due to a tightening of lending guidelines, changes in product mix, and to lenders & investors being hesitant to back Genworth-insured mortgages (since Genworth polices are only 90% government guaranteed, versus CMHC’s 100% guarantee).
  • Genworth said “Job losses across Canada and home price declines” increased its claims losses to $71 million from $30 million in Q2 2008.
  • The company ended the quarter with $511 million in cash on hand.
  • The company helped 1,226 borrowers who couldn’t make their mortgage payments, versus 148 in Q2 2008.  Genworth reported a 90%+ success rate with these “workouts.”
  • Refinances have been 35-40% of Genworth’s business. (It said premiums are lower on refinance business than purchases.)

Genworth is Canada’s 2nd largest default insurer. As of Dec. 31, 2008, the company estimated its share of Canada’s mortgage default insurance market was 30%, but this has come down a bit since then.

Despite a mixed earnings report, however, Genworth’s stock has ramped up the past few days. It’s now up 17% from it’s close on IPO day, July 7.

Traders are obviously anticipating good news to come.


  1. Read between the lines on this point:
    The company helped 1,226 borrowers who couldn’t make their mortgage payments, versus 148 in Q2 2008. Genworth reported a 90%+ success rate with these “workouts.”
    What they have been doing is recapitalizing people’s missed mortgage payments, i.e. so they do not have to pay the premium to the lender, quite controversial indeed, guess that’s what you do when you do not have liquidity.

  2. Hank are you saying that the lender does not benefit from these workout agreements?
    I find that hard to believe because Genworth says lenders have been receptive to these arrangements.

  3. What does the lender gain? They would receive the premium if the customer defaults anyway, it actually puts the LTV for the lender up i.e. higher mortgage amount, the only big bank that uses Genworth is Scotia, they have agreed to allow it for the time being but require the branches approval (another disadvantage for Scotia–ties up their resources)
    Please do not come back with well they are helping the client out of a hard time and the customer will be loyal then to Scotia in the future, hogwash.

  4. For all the people who thought Genworth would go to $5 a share after IPO, wipe the egg off your face.
    People that are too busy yapping about the past usually forget that stock prices reflect the future.
    What Genworth went through last year is no reflection of where they will be one year from now.

  5. Hank I didn’t plan on coming back to you with anything of the sort. :)
    But I would like to know how Genworth’s workouts are any different from what CMHC is doing. Do you have any insights on this?
    I’d also like to know your angle on this issue. You seem unusually interested in this matter. To me, it hints that you a business interest in this debate.

  6. Business interest in the debate? Yes I own CMHC like you do I am a tax payer.
    Remember the mandates of both insurers:
    CMHC–to house Canadians
    Genworth–to make money
    From that basis alone CMHC has more skin in the game.

  7. LOL. Here is what I find interesting about your reply Hank. (I use the word “interesting” to be polite.)
    1) You chose not to answer the question about how Genworth’s workouts are any different from what CMHC is doing.
    2) You seem a little edgy for some reason.
    3) You appear to have a problem with private enterprises making money.
    4) You fail to mentioned that CMHC makes significantly more money than Genworth.
    5) You are just an interested taxpayer who happens to have an intimate knowledge of the mortgage insurance industry and no industry ties. This is perhaps the most “interesting” of all points.

  8. Here you go “John”:
    1) You chose not to answer the question about how Genworth’s workouts are any different from
    what CMHC is doing–There probably is no difference I am not aware of what CMHC is doing, just Genworth.
    3)No just pointing out the facts, different mandates
    4)CMHC makes more money than Genworth, ok, and your point is?
    *Stop with the conspiracy theories “John”, I have given nothing but factual items that anyone kind find out, there is no conspiracy*

  9. Genworth and CMHC both have workout programs. No one wants to see the borrower default and there is nothing wrong with workout programs.
    Each insurer has the same mandate regardless of what their taglines are. They are both in business to make money. Period.
    Any spin to the contrary is just that. Spin.

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