Genworth Mortgage Insurance (ASX:GMA) - CEO and Managing Director, Pauline Blight-Johnston
CEO and Managing Director, Pauline Blight
Source: FinServCouncil (YouTube)
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  • Genworth Mortgage Insurance (GMA) has revealed some heavy losses over 2020 as COVID-19 wrought havoc on the Australian economy
  • The lenders mortgage insurance (LMI) company posted a net loss after tax of $104.3 million over 2020, with an underwriting loss of $234 million
  • For reference, Genworth made a net profit of $97 million in 2019, with an underwriting result of $42.1 million in profit
  • The company says its net losses were impacted by lower investment income from declining fixed-interest yields, though they were offset by higher realised gains
  • Still, CEO and Managing Director Pauline Blight-Johnston says the company is in a strong capital position to tackle the year ahead
  • Genworth had just under $3.7 billion in assets and $2.3 billion in liabilities as of the end of December 2020, meaning its net assets sat at around $1.4 billion
  • Nevertheless, Genworth’s share price took a hit today, down 4.59 per cent at $2.70 per share just before market close

While many businesses seem to have fought off the worst of the COVID-19 economic blow, Genworth Mortgage Insurance (GMA) had a brutal 2020.

The lenders mortgage insurance (LMI) company announced its annual financial results for 2020 today, highlighting some major losses as it was forced to pay millions of dollars in claims.

Essentially, LMI offers an extra level of protection to banks and other businesses lending money to high-risk borrowers. LMI protects the lender if a borrower defaults on their home loan.

And given the financial havoc the coronavirus pandemic wrought on many Australians in 2020, it’s likely no surprise it was a tough year for Genworth.

The company posted an annual net loss after tax of $104.3 million for the year. For reference, Genworth’s 2019 result was a $97 million profit.

The company had an annual underwriting loss of $234 million — a far cry below the $42.1 underwriting profit from the year before.

The company said its net losses were also impacted by lower investment income from declining fixed-interest yields, though they were offset by higher realised gains.

Genworth CEO and Managing Director Pauline Blight-Johnston said despite the tough year, the business was resilient and adaptable in the face of severe challenges.

“Whilst the business achieved strong topline volume growth in gross written premium (GWP), our statutory and underlying net profit after tax (NPAT) losses were affected by an increase in reserving to reflect anticipated future claims outcomes arising from the economic impacts of COVID-19,” Pauline said.

“During this challenging year, we continued to work closely with our lender customers to support their borrowers, whilst prudently managing portfolio risk and maintaining strong business quality,” she said.

She added that despite the difficult year, Genworth is still in a strong capital position, meaning it is able to withstand a range of future claims outcomes.

Taking a look at Genworth’s balance sheet at the end of December 2020, the mortgage insurer had $104.6 million in cash and $3.3 billion in investments. With a total of just under $3.7 billion in assets and $2.3 billion in liabilities, the company’s net assets sat at around $1.4 billion as of December 31.

Nevertheless, despite the relatively strong balance sheet, Genworth’s share price still took a hit today. Just before market close, GMA shares are down 4.59 per cent to $2.70 per share.

GMA by the numbers
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