Morningstar | Genworth’s Stronger 1Q19 Earnings Hide Higher Delinquencies, FVE Unchanged
Genworth is Australia's largest lenders mortgage insurer, with about 30% market share. Banks typically use LMI on home loans with loan/value ratios over 80% to manage default risk. The insurer is a high-risk play on Australia’s housing market, given its exposure to the riskiest housing loans. The U.S. housing crash illustrates the leverage of LMI to a severe economic downturn. We expect Genworth to face increasing earnings pressure from lower new business volumes and higher delinquencies, but do not expect Australia to suffer the same fate as the U.S., given strongly capitalised banks, tighter lending standards and full-recourse loans in Australia. The prospects of further capital management initiatives remain, underpinned by its strong balance sheet and surplus regulatory capital position. The key risk is that delinquencies could deteriorate at a faster pace and persist for longer than expected.Genworth Australia is a provider of lenders mortgage insurance (LMI) under authorisation from Australian Prudential Regulation Authority. Co. provides three LMI products: Standard LMI, Homebuyer Plus and Business Select/Low Doc. Co. maintains commercial relationships with over 105 lender customers across Australia.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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