Some housing bears got over-excited about a hic-cup for Genworth Australia in the first quarter of this year. Turns out it made a US$44 million profit in the June quarter, and reported the second consecutive quarterly decline in arrears. This is in line with what I had anticipated. Don't expect to hear the doomsayers discuss it much, though. Just like they will try to ignore the triumvirate of recent house price index results. Banking Day reports today:
Last night Genworth published its second detailed quarterly update in a row on the issues facing its business in Australia, a level of disclosure motivated by the need to inform restless US investors.The firm's interest in reviving its options for a sell-down of its local subsidiary will be another consideration.
The insurer said it paid out 770 claims in Australia during the June quarter, down from 852 in the March quarter...
Genworth said 0.52 per cent of insured loans were in arrears at the end of June, down two basis points from March.
[Genworth]...is reporting profits once again, after a one-off loss in March quarter. Genworth reported a net profit in Australia for the June 2012 quarter of US$44 million, down from US$54 million in the corresponding quarter of 2011.
Four months ago Genworth reported a loss of US$21 million in the March 2012 quarter. A review of troubled loans for that quarter led to a rise in reserves of US$131 million, which was more than three times the average level for each quarter in 2011.
Genworth said that new insurance written in Australia over the June 2012 quarter increased by eight per cent over the March quarter, and increased by 24 per cent over the June 2011 quarter.
The firm said the rise in the refinancing of home loans was helping to prop up business flows.
Refinancings of home loans overall were up 16 per cent in the three months to May 2012 compared with the previous year, according to Australian Bureau of Statistics data, which suggests Genworth is faring well.
Depending on the percentage of loans refinanced that were previously insured by Genworth, the rise in refinancings should be beneficial to the insurer's bottom line.
Genworth's Australian management will hold a briefing for investors and the media this morning to amplify the disclosures released last night.
