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Genworth first-half profit drops

Genworth Mortgage Insurance’s first-half net profit fell 34.7% to $88.7 million, reflecting lower sales and revenue.

Gross written premium dropped 4% to $182.3 million compared with the corresponding period last year, while new business deteriorated 6.4% to $13.1 billion due to changes in the customer portfolio and business mix, and the impact of premium rate actions last year.

The number of portfolio delinquencies was up by 872 to 7285, mainly attributable to parts of Queensland and WA affected by the slowdown in the resources sector.

Net claims incurred fell 2.4% to $73.6 million. The loss ratio was 34.8%, compared with 33% in the first half of last year, due to lower net earned premium, the increase in delinquent loans and a higher average paid claim, partly offset by an increase in expected non-reinsurance recoveries on paid claims of $8.2 million.

Investment income was $49.1 million, including an unrealised loss of $35.5 million and a $33.7 million pre-tax realised gain.

At June 30 Genworth’s investment portfolio was valued at $3.5 billion.

CEO and MD Georgette Nicholas says the results are in line with expectations and demonstrate Genworth’s resilience.

“Despite some challenging market dynamics, including elevated mortgage delinquencies in resource-exposed regional economies and a smaller high loan-to-value ratio market, our profitability remains strong,” she said. “At this time, our full-year… guidance is unchanged from that provided to the market in February.”

Ms Nicholas says Genworth is managing its capital position and intends to begin an on-market buyback for shares, up to a maximum of $100 million.

Underlying profit for the first half was $113.5 million.

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