2 MAY 2018 1Q18 FINANCIAL RESULTS PRESENTATIONinvestor.genworth.com.au/FormBuilder/_Resource/... · 2 1Q 2018 results –produced by Genworth. This presentation contains general information

©2018 Genworth Mortgage Insurance Australia Limited. All rights reserved.

2 MAY 2018

1Q18 FINANCIAL

RESULTS

PRESENTATION

GR OWIN G TOGETH ER

1Q 2018 results – produced by Genworth.2

This presentation contains general information in summary form which is current as at 31 March 2018. It may present financial information on both a statutory basis

(prepared in accordance with Australian accounting standards which comply with International Financial Reporting Standards (IFRS)) and non-IFRS basis.

This presentation is not a recommendation or advice in relation to Genworth or any product or service offered by Genworth’s subsidiaries. It is not intended to be relied

upon as advice to investors or potential investors, and does not contain all information relevant or necessary for an investment decision. It should be read in conjunction

with Genworth’s other periodic and continuous disclosure announcements filed with the Australian Securities Exchange (ASX). These are also available at

genworth.com.au.

No representation or warranty, expressed or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates or opinions or other information

contained in this presentation. To the maximum extent permitted by law, Genworth, its subsidiaries and their respective directors, officers, employees and agents disclaim

all liability and responsibility for any direct or indirect loss or damage which may be suffered by any recipient through use of or reliance on anything contained in or omitted

from this presentation. No recommendation is made as to how investors should make an investment decision. Investors must rely on their own examination of Genworth,

including the merits and risks involved. Investors should consult with their own professional advisors in connection with any acquisition of securities.

The information in this report is for general information only. To the extent that certain statements contained in this report may constitute “forward-looking statements” or

statements about “future matters”, the information reflects Genworth’s intent, belief or expectations at the date of this report. Genworth gives no undertaking to update this

information over time (subject to legal or regulatory requirements). Any forward-looking statements, including projections, guidance on future revenues, earnings and

estimates, are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Forward-looking statements involve

known and unknown risks, uncertainties and other factors that may cause Genworth’s actual results, performance or achievements to differ materially from any future

results, performance or achievements expressed or implied by these forward-looking statements. Any forward-looking statements, opinions and estimates in this report are

based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on

interpretations of current market conditions. Neither Genworth, nor any other person, gives any representation, assurance or guarantee that the occurrence of the events

expressed or implied in any forward-looking statements in this report will actually occur. In addition, please note that past performance is no guarantee or indication of

future performance.

This presentation does not constitute an offer to issue or sell securities or other financial products in any jurisdiction. The distribution of this report outside Australia may be

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published, in whole or in part, for any purpose without the prior written permission of Genworth. Local currencies have been used where possible. Prevailing current

exchange rates have been used to convert foreign currency amounts into Australian dollars, where appropriate. All references starting with “FY” refer to the financial year

ended 31 December. For example, “FY17” refers to the year ended 31 December 2017. All references starting with “1Q” refers to the quarter ended 31 March. For

example, “1Q18” refers to the quarter ended 31 March 2018.

Genworth Mortgage Insurance Australia Limited ABN 72 154 890 730 ® Genworth, Genworth Financial and the Genworth logo are registered service marks of Genworth

Financial, Inc and used pursuant to license.

Disclaimer

http://www.genworth.com.au/

Introduction


Summary

1Q18 result in line with expectations

• Increase in GWP includes new business written pursuant to

Bermudan entity and new micro markets LMI. Bermudan

transaction includes a consortium of reinsurers so only a

portion of premium will flow to NEP. Net of the premium to

reinsurers Genworth GWP increased 26.5% in 1Q18.

• NEP adversely impacted by 2017 Earnings Curve Review

($32.3 million impact). Excluding this impact NEP would be

down 7.6%

• Reported NPAT includes after-tax mark-to-market loss of

$11.5 million on investment portfolio

• 1Q17 underlying NPAT included $20.8 million after tax

realised gains from rebalancing of the investment portfolio

• Loss ratio impacted by lower NEP. Excluding the 2017

Earnings Curve Review impact the loss ratio would have

been 37.8%

• Softening in cure rates in NSW & WA – cautious outlook.

Strategic update

• Good progress in implementing initiatives pursuant to

strategic program of work.

Capital management

• Announced on-market share buy-back (up to value of $100

million) subject to shareholder approval at AGM.

1Q18 results overview

(A$ millions) 1Q17 4Q17 1Q18

Change %

1Q17 v

1Q18

Gross written premium 88.2 97.7 174.1 97.4%

Net earned premium 107.9 58.8 67.4 (37.5%)

Reported net profit after tax 52.2 28.4 8.4 (83.9%)

Underlying net profit after tax 68.3 17.1 19.9 (70.9%)

Key financial

measureFY18 guidance 1Q18 actual

NEP growth Down 25 to 30%(37.5%)

Full year loss ratio 40 to 50% 55.9%


Macroeconomic conditions

Interest rates House values – capital city dwellings

Source: Reserve Bank of Australia Source: CoreLogic

2. Select current reporting month in cell 'D2'

85

105

125

145

165

185

Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

Ho

me

va

lue

Ind

ex

NSW VIC QLD SA WA ACT Australia

0%

1%

2%

3%

4%

5%

6%

7%

8%

Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18

Cash rate Standard variable mortgage rate

Unemployment rates (seasonally adjusted)

State Mar 17 Mar 18Change

(basis points)

New South Wales 5.0% 5.0% -

Victoria 6.2% 5.2% (100 bps)

Queensland 6.2% 6.0% (20 bps)

Western Australia 6.3% 6.9% 60 bps

South Australia 7.1% 5.6% (150 bps)

National 5.9% 5.5% (40 bps)

Source: Australian Bureau of Statistics

Total delinquency rates by geography (Genworth)

State Mar 17 Mar 18Change

(basis points)

New South Wales 0.31% 0.33% 2 bps

Victoria 0.38% 0.39% 1 bp

Queensland 0.68% 0.67% (1 bps)

Western Australia 0.78% 0.88% 10 bps

South Australia 0.66% 0.63% (3 bps)

Group 0.48% 0.49% 1 bps

Note: Total delinquency includes aged as well as new delinquency

Source: Genworth


Originations and HLVR penetration1

Residential mortgage lending market

Note: Totals may not sum due to rounding. Total new residential loans approved in the 12 months to 31 December 2017 were $384.7 billion, up 2.3% on the previous corresponding

period.

1. Prior periods have been restated in line with market updates.

Source: APRA Quarterly ADI property exposures statistics (ADI’s new housing loan approvals), December 2017.

HLVR Penetration

65 71 68 63 66 80 80 83 93 101

74102 99 98 111

139166

200 200 202

40

43 47 50 43

41

49

51 52 54

41

46 26 31 36

40

40

37 31 28

219

262 240 242

256

300

335

371 376 385

37%

34%

31%

33%

31%

27% 27%

24%

22%21%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Loans approved LVR<60% Loans approved LVR 60%-80% Loans approved LVR 80%-90%

Loans approved LVR>90% HLVR loans (% of New residential loan approvals)

A$ bn

Detailed financial performance


1Q18 income statement

(A$ millions) 1Q17 4Q17 1Q18 Change

1Q17 v 1Q18

Gross written premium 88.2 97.7 174.1 97.4%

Movement in unearned premium 36.7 (22.0) (84.7) (330.8%)

Gross earned premium 124.9 75.7 89.4 (28.4%)

Outwards reinsurance expense (17.0) (16.9) (22.0) (29.4%)

Net earned premium 107.9 58.8 67.4 (37.5%)

Net claims incurred (37.6) (31.2) (37.7) (0.3%)

Acquisition costs (13.7) (9.0) (9.4) 31.4%

Other underwriting expenses (13.5) (14.9) (13.2) 2.2%

Underwriting result 43.1 3.7 7.1 (83.5%)

Investment income on technical funds1 12.7 8.3 6.6 (48.0%)

Insurance profit 55.8 12.0 13.7 (75.4%)

Investment income on shareholder funds1 21.6 30.3 1.2 (94.4%)

Financing costs (2.8) (2.9) (2.9) (3.6%)

Profit before income tax 74.6 39.4 12.0 (83.9%)

Income tax expense (22.5) (11.0) (3.6) 84.0%

Net profit after tax 52.2 28.4 8.4 (83.9%)

Underlying net profit after tax 68.3 17.1 19.9 (70.9%)

Note: Totals may not sum due to rounding.

1. Investment income on technical funds and shareholder funds include the before-tax effect of realised and unrealised gains/(losses) on the investment portfolio.


NIW1 by original LVR2 band NIW1 by product type

New insurance written

1. NIW includes capitalised premium. NIW excludes excess of loss insurance (excess of loss insurance includes the Bermudan entity transaction).

2. Original LVR excludes capitalised premium and excess of loss insurance.

$ bn, % $ bn, %

99.3%

99.1%

99.2% 99.0% 99.3%99.3%

99.4% 99.5%99.4%

6.2

7.8

6.1 6.6 6.8

6.3 5.5 5.4

4.3

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18

Standard Others (incl. HomeBuyer Plus)

33%38%

26% 28%42%

26% 18% 4% 5%

50%

46%

56% 54%42%

56%62%

74%72%

17%

16%

18%18% 16%

18%20% 22%

23%

6.2

7.8

6.16.6 6.8

6.35.5 5.4

4.3

83% 82%84% 84%

81%

84%85%

88% 88%

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18

0 - 80.00% 80.01 - 90.00% 90.01% and above Original LVR


GWP and average price1 of flow business GWP walk

Gross written premium

1. Average price excludes excess of loss insurance.

2. Historical NIW has been adjusted in the average premium calculation to reflect a risk sharing arrangement.

3. Volume include excess of loss insurance and bulk transactions.

$ m$ m, %

85.0

104.892.5

99.788.2

94.1 88.997.7

174.11.42% 1.48%

1.57% 1.56%1.60%

1.69%

1.83% 1.80% 1.82%

0.0%

0.5%

1.0%

1.5%

2.0%

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18

GWP (including bulk and excess of loss insurance)

Average premium (Flow only)2

(1.1)

13.0

88.2

174.1

1Q17 Flowproduct mix

Volume FlowLVR mix

1Q18

74.0

3


Net incurred claims


1. Movement in non-reinsurance recoveries on paid claims is excluded from average paid claim calculation and claims paid.

2. The 2017 Earnings Curve Review (which took effect from 1 Oct 2017) unfavorably impacted NEP in 1Q18 by $32.3m.

(A$ millions unless otherwise stated) 1Q17 2Q17 3Q17 4Q17 1Q18

Number of paid claims (#) 356 355 376 385 365

Average paid claim1 ($’000) 92.5 112.2 110.6 131.1 119.5

Claims paid1 32.9 39.8 41.6 50.5 43.6

Movement in non-reinsurance recoveries on paid claims - (8.2) - - -

Movement in reserves 4.6 4.4 (4.6) (19.3) (6.0)

Net claims incurred 37.6 36.0 37.0 31.2 37.7

Reported loss ratio (%) 34.8% 34.7% 37.0% 53.1% 55.9%

Movement in non-reinsurance recoveries on paid claims - 8.2 - - -

Adjusted net claims incurred [A] 37.6 44.2 37.0 31.2 37.7

Net earned premium (NEP) 107.9 103.7 100.1 58.8 67.4

Change in earnings curve2 - - - 37.3 32.3

NEP excluding impact of change in earnings curve [B] 107.9 103.7 100.1 96.1 99.7

Adjusted loss ratio – [A] / [B] (%) 34.8% 42.6% 37.0% 32.5% 37.8%


Delinquency roll and incurred loss drivers

Loss development

1. Ageing relates to reserve movements on delinquencies that remain delinquent from prior periods.

2. Includes changes to actuarial assumptions and non-reinsurance recoveries on paid claims.

Delinquency roll 1Q17 2Q17 3Q17 4Q17 1Q18

Opening balance 6,731 6,926 7,285 7,146 6,696

New delinquencies 2,852 3,145 2,887 2,463 2,701

Cures (2,301) (2,431) (2,650) (2,528) (2,074)

Paid claims (356) (355) (376) (385) (365)

Closing delinquencies 6,926 7,285 7,146 6,696 6,958

Delinquency rate 0.48% 0.51% 0.50% 0.47% 0.49%

Average reserve per delinquency ($’000) 52.1 49.5 50.4 50.7 47.9

Net claims incurred ($A in millions) 1Q17 2Q17 3Q17 4Q17 1Q18

New delinquencies 45 46 50 43 34

Cures (38) (38) (48) (44) (32)

Ageing1 30 38 38 37 35

Other2 1 (10) (3) (5) 1

Net claims incurred 38 36 37 31 38


Strong balance sheet with $3.3bn in cash and investments and $1.2bn in UPR

Balance sheet as at 31 March 2018

Unearned premium by year as at

31 March 2018

Balance sheet and unearned premium reserve

(A$ in millions) 31 Dec 17 31 Mar 18

Assets

Cash and cash equivalents 43.0 67.5

Accrued investment income 17.8 23.1

Investments 3,348.5 3,217.9

Deferred reinsurance expense 145.4 97.9

Non-reinsurance recoveries 23.6 21.5

Deferred acquisition costs 151.8 149.2

Deferred tax assets 9.4 9.0

Goodwill and Intangibles 10.4 10.8

Other assets 1 15.9 99.1

Total assets 3,765.9 3,695.8

Liabilities

Payables 2 191.6 140.6

Outstanding claims 339.7 333.4

Unearned premiums 1,108.6 1,193.3

Interest bearing liabilities 197.0 197.3

Employee provisions 6.8 6.9

Total liabilities 1,843.7 1,871.5

Net assets 1,922.2 1,824.3

Total UPR $1.2bn

Note: Totals may not sum due to rounding. 2018 underwriting year includes excess of

loss insurance.

1. Includes trade receivables, prepayments and plant and equipment. The increase

from 31 December 2017 is primarily due to the GWP of 1Q18

2. Includes reinsurance payables.

2010

1%2011

1%

2012

4%2013

7%

2014

12%

2015

15%

2016

19%

2017

27%

2018

14%


1Q 2018

NIW1 by original LVR band and Probable

Maximum Loss1

Regulatory capital position

(A$ in millions) 31 Dec 17 31 Mar 18

Capital base

Common Equity Tier 1 capital 1,892.4 1,856.2

Tier 2 capital 200.0 200.0

Regulatory capital base 2,092.4 2,056.2

Capital requirement

Probable Maximum Loss (PML) 2,003.8 1,938.3

Net premiums liability deduction (291.9) (284.8)

Reinsurance (950.5) (870.8)1

Insurance concentration risk charge (ICRC) 761.4 782.7

Asset risk charge 137.6 135.4

Asset concentration risk charge -

-

Insurance risk charge 221.7 228.1

Operational risk charge 28.0 32.4

Aggregation benefit (62.1) (61.3)

Prescribed capital amount (PCA) 1,086.7 1,117.3

PCA coverage ratio (times) 1.93 x 1.84 x


1. Adjusted to allow for future premium to extend reinsurance contract.

$ bn

*2014 percentage splits have been restated

30%16% 19% 19%

26% 31%23%

5%

41%

45%45%

51% 51%51%

58%

72%

29%39%

36%30%

23%

17%

19%

23%

30.8

33.835.4 36.2

32.6

26.6

23.9

4.3

2.36 2.36

2.60 2.59

2.51

2.28

2.00

1.94

2011 2012 2013 2014 2015 2016 2017 1Q18

0-80.00% 80.01-90.00%

90.01% and above Probable Maximum Loss

1. NIW and Probable Maximum Loss exclude excess of loss insurance.


2018 Renewal has improved capital efficiency

Observations

Reinsurance

• As at 31 March 2018, $900 million of excess of loss cover

with varying durations depending on the layer

• Well diversified panel with over 20 different reinsurers

participating across the program – minimum rating of A-

• Non-renewal of $100 million remote layer of reinsurance on

1 April 2018 due to lack of internal economic capital credit

recognition and reducing Probable Maximum Loss

• Despite the reduction, our new program structure has led

to an increase in internal economic capital credit

• An overall reduction in both lifetime and first year premiums

and lower cost of capital.

Reinsurance program as at 1 April 2018

200

200

200

100

100

0

500

1,000

1,500

2,000

2,500

01-Apr-18

AP

RA

Lo

sse

s ($

m)

Consortium 5

Consortium 2

Consortium 3

Consortium 4

Consortium 6

0%

20%

40%

60%

80%

100%

0

4

8

12

16

20

24

28

32

FY14 FY15 FY16 FY17

Ord

inary

payo

ut

rati

o

ce

nts

pe

r sh

are

Ordinary Special Dividend payout ratio (RHS)


Recent actions Genworth dividends

Ongoing program of capital management

• Since listing in 2014, Genworth has:

− Paid out all after-tax profits by way of ordinary and

special dividends to shareholders; and

− Returned more than $1 billion ($2 per share) of

excess capital.

• In February 2018 completed $100 million on-market

share buy-back that was commenced in 2H 2017

• Today, announced a new on-market share buy-back

(up to a value of $100 million) subject to shareholder

approval at the AGM on 10 May 2018.

Summary and conclusion


Genworth economic outlook and FY18 guidance

Full year outlook is subject to market conditions and unforeseen circumstances or economic events

2018

The Australian economy is expected to

continue to perform relatively well in 2018

underpinned by strong infrastructure

investment at a federal and state level

Housing market conditions likely to ease

further in 2018 as macro-prudential

measures continue to take effect and new

housing supply comes onto the market

Recent data suggests strong labour

market with growth in full-time jobs

outpacing population growth. Expectation

that this will continue in 2018

Expect Sydney and Melbourne housing

markets to moderate. Continued pressure in

regional markets (especially resources

states) but to a lesser extent than 2017

Official cash rate likely to remain on hold

due to benign wage growth and low

inflation

National house price appreciation (HPA)

expected to be flat in 2018

Key financial measures - FY18 guidance

Net earned premium Down 25% to 30%

Full year loss ratio 40% to 50%

Ordinary dividend payout ratio 50% to 80%


Conclusion

Heading

Lorem ipsum dolor sit

amet, augue dignissim

Business is well

capitalised

Track record of

delivering strong

profits and

shareholder returns

Strategy designed

to position

Genworth as the

leading provider of

customer-focused

capital and risk

management

solutions

Excess capital and

potential uses

continue to be

evaluated

Well positioned

to continue to

deliver

sustainable

shareholder

returns over time

Committed to actively managing capital

position

Good progress in

implementing

strategic initiatives

that broaden

product offerings

Unique set of

competencies that

can be leveraged

to grow our

business

Strategic work

being undertaken

to redefine core

business model

Dividend payout

range of 50% -

80%

Questions and supplementary slides


A refined strategic plan to re-ignite profitable growth over the medium-term

Genworth’s strategic objectives

Focus: To be the leading provider of customer-focused capital and risk management solutions in residential mortgage markets and deliver sustainable shareholder returns

Value proposition: Innovation and technology will underpin Genworth’s value proposition.

1. Redefine core business model 2. Leverage data and technology to add value across

the mortgage value chainProduct enhancement

Underwriting efficiency

Leverage data and partnerships

Cost efficiency

Regulator and policy maker advocacy

Stage 1: Initiatives (2017 & 2018) Stage 2: Longer-term initiatives (2019+)

Strategic enablers

People, organisation

and cultural change

Data and

analyticsTechnology Stakeholder

management

Product innovation

Loss management solutions

Leverage HLVR experience and expertise

Earnings pattern for premium written post 1 October 2017


Comprehensive review of premium earning pattern completed in 2H17

Earnings curve

0%

5%

10%

15%

20%

25%

1 2 3 4 5 6 7 8 9 10 11 12

Years since inception


Earnings curve

Comparative in- force earning pattern for premium written pre 1 Oct 2017

0%

5%

10%

15%

20%

25%

30%

35%

2018 2019 2020 2021 2022 2023 2024

Proportion - prior curve (pre 01 Oct 2017)

Proportion - revised curve (post 01 Oct 2017)


Investment vs. owner-occupied (APRA statistics)1 Investment vs. owner-occupied2 (Genworth)

Residential mortgage lending market

• Investment property lending represented 33% of

originations for the twelve months ended 31 December

2017.

• Investment property lending represented 15% of

Genworth’s portfolio for the three months ended 31 March

2018.

1. Prior periods have been restated in line with market updates.

2. Flow NIW only. Owner occupied includes loans for owner occupied and other types.

Sources: APRA Quarterly ADI property exposures statistics (ADIs new housing loan approvals), December 2017. Statistics only show ADIs mortgage portfolios above $1 billion, thereby

excluding small lenders and non-banks.

$ bn, %$ bn, %

29.233.0

20.9 21.226.5 26.4 26.4

22.1 19.1 17.0

3.7

12.5 8.7

6.2 5.2

6.7 8.0 8.6

8.4 6.4

4.0

0.6

30%

21% 23%

20% 20%

23%24%

27%

25%

19%

15%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q2018

Owner-occupied Investment Investment as a % of total

151187

159 164 172 191 200235 248 258

68

7681 78

84

109136

136 128 127

31%29%

34%32% 33%

36%

40%

37%34%

33%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Owner-occupied Investment Investment as a % of total

2


Insurance in force (IIF)1 by original LVR2 band,

as at 31 March 2018 IIF1 by product type, as at 31 March 2018

Insurance in force and new insurance written

Flow NIW1 by loan type IIF1 by loan type, as at 31 March 2018

1. NIW and IIF include capitalised premium. NIW and IIF exclude excess of loss insurance. Genworth has retained $205m of risk in relation to excess of loss insurance.

2. Original LVR excludes capitalised premium.

Investment26%

Owner-occupied74%

81%

19%

85%

15%

Owner-occupied Investment

FY-2017 1Q-2018

<60%8%

60.01-70%6%

70.01-80%16%

80.01-85%8%

85.01-90%32%

90.01-95%28%

95.01%+2%

Standard92%

Low Doc5%

HomeBuyer Plus2%

Other1%


Expenses Combined ratio

Insurance ratio analysis

Insurance margin Trailing 12-month ROE and underlying ROE

The expense ratio is calculated by dividing the sum of the acquisition costs and the other underwriting

expenses by the net earned premium.The combined ratio is the sum of the loss ratio and the expense ratio.

The insurance margin is calculated by dividing the profit from underwriting and interest income on

technical funds (including realised and unrealised gains or losses) by the net earned premium.

The trailing twelve months underlying ROE is calculated by dividing underlying NPAT of the past 12

months by the average of the opening and closing underlying equity balance for the past 12 months. The

trailing twelve months ROE is calculated by dividing NPAT of the past 12 months by the average of the

opening and closing equity balance for the past 12 months.

$ m, % $ m, %

% %

12.1 13.2 13.5 13.7 13.7 13.5 13.79.0 9.4

14.5 15.9 16.4 17.1

13.5 14.1 16.0

14.9 13.2

26.629.1 29.9 30.8

27.2 27.629.7

23.9 22.6

23.4% 25.2% 25.8%28.5%

25.2% 26.6%29.7%

40.6%

33.5%

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18

Acq. costs Und. Expense Exp. ratio

30.744.7

52.5

30.9 37.6 36.0 37.0 31.2 37.7

26.6

29.129.9

30.827.2 27.6 29.7

23.922.6

57.3

73.882.4

61.7 64.8 63.6 66.7

55.160.3

50.5%64.0% 71.1%

57.1% 60.1% 61.3% 66.6%93.7% 89.5%

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18

Net claims incurred Expenses Combined ratio

12% 11% 11%10%

11% 11% 11%

9%

7%

9%

11% 11%

10%9%

8% 7% 8%

6%

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18

underlying ROE ROE

67.7%

59.4%

38.8%

25.6%

51.7%

44.3%

34.6%

20.4% 20.3%

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18


Delinquency composition

Delinquency development

Delinquencies by

book year31 Mar 17 31 Dec 17 31 Mar 18

2008 and prior 2,955 2,660 2,767 0.38%

2009 929 892 909 1.04%

2010 436 357 367 0.56%

2011 457 393 389 0.65%

2012 682 663 665 0.87%

2013 594 609 619 0.77%

2014 583 594 641 0.71%

2015 250 355 378 0.47%

2016 40 155 187 0.26%

2017 - 18 36 0.06%

2018 - - - -

TOTAL 6,926 6,696 6,958 0.49%

Total

delinquencies by

geography

31 Mar 17 31 Dec 17 31 Mar 18

New South Wales 1,139 1,088 1,156 0.33%

Victoria 1,375 1,304 1,346 0.39%

Queensland 2,151 2,083 2,100 0.67%

Western Australia 1,267 1,336 1,418 0.88%

South Australia 660 593 616 0.63%

Australian Capital

Territory64 48 60 0.18%

Tasmania 174 151 153 0.32%

Northern Territory 66 75 82 0.53%

New Zealand 30 18 27 0.06%

TOTAL 6,926 6,696 6,958 0.49%

Delinquency rate (%) is calculated as delinquencies divided by policies in force


Favourable performance post 2009

Delinquency development

• Performance within majority of vintages remained relatively stable with the exception of 2012-14 books

• Underperformance within 2012-14 books has been predominantly driven by resources reliant states of QLD and WA following the end of the mining

boom. WA and regional parts of QLD continue to experience challenging economic and housing market conditions however has seen signs of

stabilising over recent months

• Historical performance of 2008 book year was affected by the economic downturn experienced across Australia and heightened stress experienced

among self-employed borrowers, particularly in Queensland, which was exacerbated by the floods in 2011

• Post-GFC book years seasoning at lower levels as a result of credit tightening.

Note: graph excludes excess of loss insurance.

Delinquency rate is calculated as delinquencies divided by policies written which is gross of cancelled policies.

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1 7

13

19

25

31

37

43

49

55

61

67

73

79

85

91

97

10

3

10

9

11

5

12

1

12

7

13

3

13

9

14

5

15

1

15

7

16

3

16

9

17

5

Delin

qu

en

cy

rate

(%

)

Performance month

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

0.52%0.51%

0.37%

0.12%

0.22%

0.08%

0.05%

0.19%

0.27%

0.39%

0.46%

0.29%

0.45%

0.55%


By month in arrears

Delinquency population


1. Prior quarters cures have been amended to include cures as a result of hardship assistance programs.

39.79%

42.64%

43.27%

40.70%

37.46%

40.84%

38.38%

37.80%

34.19%

35.10%

36.38%

35.38%

45%46%

44%41%

44%45% 44% 42% 43%

45% 44%41%

43%

22%

24%25%

25%

24%

24%

25% 25%

26%

25%26%

27%

27%18%

16%17%

18%

18%

18%

17% 19%

20%

19%19%

20%

20%

15%

14%14%

15%

14%

13%

14% 14%

13%

12%12%

13%

11%

5,378

5,900 5,804

5,552

5,889

6,413

6,8446,731

6,926

7,2857,146

6,696

6,958

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18

Cure

s r

ate

No

. of a

rre

ars

3-5 Months 6-9 Months 10+ Months MIP Cures rate (%) 11

Documents

2 MAY 2018 1Q18 FINANCIAL RESULTS PRESENTATIONinvestor.genworth.com.au/FormBuilder/_Resource/... · 2 1Q 2018 results –produced by Genworth. This presentation contains general information