News Feed Item

Genworth MI Canada Inc. Reports Strong Second Quarter 2014 Earnings

Premiums Written of $160 million, up 17% Year-over-Year
Net Operating Income of $99 million, up 12% Year-over-Year
Operating Diluted EPS of $1.04 per share, up 17%, Year-over-Year

TORONTO, July 29, 2014 /CNW/ - Genworth MI Canada Inc. (the "Company") (TSX: MIC) today reported second quarter 2014 net income of $97 million or $1.02 per diluted common share, and net operating income of $99 million or $1.04 operating earnings per diluted common share.   Net operating income was positively impacted by the Company's improved loss experience, primarily a reflection of overall high quality insurance portfolio and continuing strong housing market conditions.  Premiums written increased 17% over the prior year with growth in both the high and low loan-to-value mortgage segments.  

"Strong business execution led to solid top line growth and our high quality insurance portfolio supported our trend of lower losses," said Brian Hurley, Chairman and Chief Executive Officer of the Company. "The business performance combined with the stable economic climate continues to drive our positive momentum."

Second Quarter 2014 Key Financial Metrics:

  • Premiums written of $160 million were $23 million, or 17% higher than the same quarter in the prior year and $76 million, or 91%, higher than the prior quarter. Premiums growth reflected the larger high loan-to-value market size in combination with the Company's strong market position. The Company's top line was further supported by premiums written from portfolio insurance on low loan-to-value mortgages. Premiums earned of $141 million were $2 million lower than the same quarter in the prior year and relatively flat to the prior quarter, reflecting the contribution from recent books of business. The unearned premium reserve was $1.7 billion at the end of the quarter, $19 million higher than the prior quarter.

  • Losses on claims of $17 million reflected an $18 million improvement over the same quarter in the prior year and an $11 million improvement over the prior quarter. During the quarter, the Company experienced lower delinquencies and lower losses primarily due to its high quality insurance portfolio, a stable economic environment and continued housing market strength. This resulted in a loss ratio of 12% for this quarter, 13 percentage points lower than the same quarter in the prior year and 8 percentage points lower than the prior quarter. Based on the current environment, the Company believes that its loss ratio for 2014 will be in the 15 to 25% range.

  • The expense ratio, as a percentage of premiums earned, was 19% during the quarter. This ratio was 1 percentage point higher as compared to the same quarter in the prior year and flat to the prior quarter. The expense ratio remains within the expected operating range.

  • Net Investment income, excluding realized gains, of $43 million was $1 million lower than the same quarter in the prior year and relatively flat to the prior quarter. Net Investment income remains a steady contributor to net operating income.

  • Net operating income of $99 million was $11 million higher than the same quarter in the prior year and $8 million higher than the prior quarter.

  • Operating return on equity was 13% for the quarter, one point higher than the same quarter in the prior year and prior quarter.

  • The regulatory capital ratio or Minimum Capital Test ("MCT") ratio was approximately 230%, 1 percentage point higher than the prior quarter and 14 percentage points higher than the same quarter in the prior year.  

Second Quarter 2014 Key Highlights:

  • New insurance written from the Company's high loan-to-value insured mortgages during the quarter totalled $5.4 billion, $0.6 billion or 13% higher than the same quarter in the prior year and $2.3 billion, or 75% higher than the prior quarter. Market share penetration and a larger mortgage origination market were the primary drivers of the higher volumes. The resulting premiums written in the quarter from insurance of high loan-to-value mortgages were $129 million, accounting for 80% of the Company's premiums written. This represented an increase of $18 million from the same quarter in the prior year and a $57 million over the prior quarter.

  • During the quarter, the Company realized $32 million of premiums written from portfolio insurance of low loan-to-value mortgages which totaled $8.2 billion. This represents an increase of $5.0 billion in new insurance written from the prior quarter and a $1.7 billion increase over the same quarter in the prior year.

  • The number of reported outstanding delinquencies was 1,703 at the end of the quarter. This represents a decrease of 4% when compared to the same quarter in the prior year and a decrease of 8% when compared to the prior quarter. The decline in delinquencies reflects the strong insurance portfolio credit quality and improving economic conditions across most regions.

  • The Company's investment portfolio had a market value of $5.3 billion at the end of the quarter. The portfolio had a pre-tax equivalent book yield of 3.6% and duration of 3.7 years as at June 30, 2014. As a result of ongoing active portfolio management, the Company realized investment gains of $5 million in the quarter related to its equity holdings.

  • On May 1, 2014, the Company retired its $150 million 4.59% December 2015 debentures, and incurred a one-time fee of $7.2 million in connection with this early redemption. This fee was not included in the calculation of net operating income.

  • In the normal course of business, the Company renewed its short form base shelf prospectus on June 18, 2014. The shelf prospectus remains available for a period of 25 months from the date of the prospectus.

  • The Company regularly reviews its operating MCT holding target. After consultations with the Company's regulator, The Office of the Superintendent of Financial Institutions (OSFI), the Company established its operating holding target at 220% MCT, pending the development of a new regulatory capital test for mortgage insurers.


On May 30, 2014, the Company paid a quarterly dividend of $0.35 per common share.

The Company also announced today that its Board of Directors approved a dividend payment of $0.35 per common share, payable on August 29, 2014, to shareholders of record at the close of business on August 15, 2014. 

Shareholders' Equity

As of June 30, 2014, shareholders' equity was $3.3 billion, representing a book value of $34.17 per common share on a fully diluted basis.  Excluding accumulated other comprehensive income ("AOCI") shareholders' equity was $3.1 billion, or a book value of $32.36 per common share on a fully diluted basis.

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.

This press release, the financial statements, the Company's Management's Discussion and Analysis, and the second quarter 2014 financial supplement are also posted on the investor section of the Company's website (http://investor.genworthmicanada.ca).  Investors are encouraged to review all of these materials. 

Earnings Call

The Company's second quarter earnings call will be held on July 30, 2014 at 10:00 am ET (Local: 416-847-6330, Toll free: 1-866-530-1553, Conference ID: 7859221).  The call is accessible via telephone and by audio webcast on the Company's website.  Slides to accompany the call will be posted just prior to its start.  A replay of the call will be available until August 30, 2014 (Local 647-436-0148, Toll Free 1-888-203-1112, Replay Passcode 7859221).  Participants are encouraged to pre-register for the webcast through the Company's website.  A replay of the call will also be available from the Company's website for a period of at least 45 days following the conference call.             

About Genworth MI Canada Inc.

Genworth MI Canada Inc. (TSX: MIC) through its subsidiary, Genworth Financial Mortgage Insurance Company Canada (Genworth Canada), is the largest private residential mortgage insurer in Canada.  The Company provides mortgage default insurance to Canadian residential mortgage lenders, making homeownership more accessible to first-time homebuyers. Genworth Canada differentiates itself through customer service excellence, innovative processing technology, and a robust risk management framework. 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 June 30, 2014, Genworth Canada had $5.7 billion total assets and $3.3 billion total shareholders' equity. Find out more at www.genworth.ca.

Consolidated Financial Highlights

($ millions, except per share amounts)

Three Months

Ended June 30 (Unaudited)




New insurance written1




Premiums written




Premiums earned




Losses on claims








Net underwriting income




Investment income (interest and dividends, net of expenses) 1




Net investment gains




Total net investment income




Net income




Net operating income1



Fully diluted earnings per common share



Fully diluted operating earnings per common share1



Fully diluted book value per common share, inc. AOCI1



Fully diluted book value per common share, excl. AOCI1



Basic weighted average common shares outstanding



Diluted weighted average common shares outstanding



Loss ratio1



Combined ratio1



Operating return on equity1



Minimum Capital Test ratio (MCT) 1



1This is a financial measure not calculated based on International Financial Reporting Standards ("IFRS").

See the "Non-IFRS Financial Measures" section of this press release for additional information.

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, interest and dividend income (net of investment expenses), 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.

The Company revised its definition of net operating income (loss) to exclude the fee on the early retirement 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.

See the "Non‐IFRS financial measures" section at the end of the MD&A for a reconciliation of net operating income to net income, operating earnings per common share (basic) to earnings per common share (basic), operating earnings per common share (diluted) to earnings per common share (diluted), and shareholders' equity excluding AOCI to shareholders' equity.  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 Canada; anticipated trends and challenges in the Company's business and the markets in which it operates; changes in the global or Canadian economies; a decline in the Company's regulatory capital or an increase in its regulatory capital requirements; loss of members of the Company's senior management team; potential legal, tax and regulatory investigations and actions; the failure of the Company's computer systems; and potential conflicts of interest between the Company and its majority shareholder, Genworth Financial, Inc.

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 March 17, 2014.  Investors and others should carefully consider these and other factors and not place undue reliance on the forward-looking statements.  Further information regarding these and other risk factors is included in the Company's public filings with provincial and territorial securities regulatory authorities (including the Company's AIF) and can be found on the SEDAR website at www.sedar.com. 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.

SOURCE Genworth MI Canada

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
In the 21st century, security on the Internet has become one of the most important issues. We hear more and more about cyber-attacks on the websites of large corporations, banks and even small businesses. When online we’re concerned not only for our own safety but also our privacy. We have to know that hackers usually start their preparation by investigating the private information of admins – the habits, interests, visited websites and so on. On the other hand, our own security is in danger bec...
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
As companies adopt the cloud-to-streamline workflow, deployment hasn’t been very seamless because of IT concerns surrounding security risks. The cloud offers many benefits, but protecting and securing information can be tricky across multiple cloud providers and remains IT’s overall responsibility. In his session at 19th Cloud Expo, Simon Bain, CEO of SearchYourCloud, will address security compliance issues associated with cloud applications and how document-level encryption is critical for sup...
Successful digital transformation requires new organizational competencies and capabilities. Research tells us that the biggest impediment to successful transformation is human; consequently, the biggest enabler is a properly skilled and empowered workforce. In the digital age, new individual and collective competencies are required. In his session at 19th Cloud Expo, Bob Newhouse, CEO and founder of Agilitiv, will draw together recent research and lessons learned from emerging and established ...
SYS-CON Events announced today that Cemware will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Use MATLAB functions by just visiting website mathfreeon.com. MATLAB compatible, freely usable, online platform services. As of October 2016, 80,000 users from 180 countries are enjoying our platform service.
SYS-CON Events announced today that MathFreeOn will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. MathFreeOn is Software as a Service (SaaS) used in Engineering and Math education. Write scripts and solve math problems online. MathFreeOn provides online courses for beginners or amateurs who have difficulties in writing scripts. In accordance with various mathematical topics, there are more tha...
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
SYS-CON Events announced today that StarNet Communications will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. StarNet Communications’ FastX is the industry first cloud-based remote X Windows emulator. Using standard Web browsers (FireFox, Chrome, Safari, etc.) users from around the world gain highly secure access to applications and data hosted on Linux-based servers in a central data center. ...
Virgil consists of an open-source encryption library, which implements Cryptographic Message Syntax (CMS) and Elliptic Curve Integrated Encryption Scheme (ECIES) (including RSA schema), a Key Management API, and a cloud-based Key Management Service (Virgil Keys). The Virgil Keys Service consists of a public key service and a private key escrow service. 

In his general session at 19th Cloud Expo, Manish Dixit, VP of Product and Engineering at Dice, will discuss how Dice leverages data insights and tools to help both tech professionals and recruiters better understand how skills relate to each other and which skills are in high demand using interactive visualizations and salary indicator tools to maximize earning potential. Manish Dixit is VP of Product and Engineering at Dice. As the leader of the Product, Engineering and Data Sciences team a...
The best way to leverage your Cloud Expo presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering Cloud Expo and @ThingsExpo will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at Cloud Expo. Product announcements during our show provide your company with the most reach through our targeted audiences.
SYS-CON Events announced today that eCube Systems, the leading provider of modern development tools and best practices for Continuous Integration on OpenVMS, will exhibit at SYS-CON's @DevOpsSummit at Cloud Expo New York, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. eCube Systems offers a family of middleware products and development tools that maximize return on technology investment by leveraging existing technical equity to meet evolving business needs. ...
Intelligent machines are here. Robots, self-driving cars, drones, bots and many IoT devices are becoming smarter with Machine Learning. In her session at @ThingsExpo, Sudha Jamthe, CEO of IoTDisruptions.com, will discuss the next wave of business disruption at the junction of IoT and AI, impacting many industries and set to change our lives, work and world as we know it.
@ThingsExpo has been named the Top 5 Most Influential Internet of Things Brand by Onalytica in the ‘The Internet of Things Landscape 2015: Top 100 Individuals and Brands.' Onalytica analyzed Twitter conversations around the #IoT debate to uncover the most influential brands and individuals driving the conversation. Onalytica captured data from 56,224 users. The PageRank based methodology they use to extract influencers on a particular topic (tweets mentioning #InternetofThings or #IoT in this ...
Join Impiger for their featured webinar: ‘Cloud Computing: A Roadmap to Modern Software Delivery’ on November 10, 2016, at 12:00 pm CST. Very few companies have not experienced some impact to their IT delivery due to the evolution of cloud computing. This webinar is not about deciding whether you should entertain moving some or all of your IT to the cloud, but rather, a detailed look under the hood to help IT professionals understand how cloud adoption has evolved and what trends will impact th...