Virus costs major home insurer millions
Genworth Insurance has incurred a multimillion-dollar loss, blaming the economic downturn induced by the coronavirus pandemic for its financial woes.
The major provider of lenders' mortgage insurance in Australia has booked a net loss of $90 million for the six months ending June 30, a 202.2 per cent decline compared with its 2019 interim results that posted a net profit of $88.1 million.
Genworth chief executive Pauline Blight-Johnston said the company's liquidity remained strong despite the net loss.
"Genworth's first-half performance reflects the sound fundamentals of our business which, along with a strong capital base and leading market position, has set us up well to manage the impacts of COVID-19," she said.
"The anticipated impacts of COVID-19 on Genworth are playing out broadly in line with our first quarter assumptions at this stage, although there remains a long road ahead of us."
Genworth's gross written premium for the period stood at $239.3 million, a 30 per cent increase compared with the previous corresponding period, while its net earned premium rose 2.2 per cent over the same period to $150.8 million.
It will also not be issuing a half-year dividend for the 2020 financial year.
The company said the significant deterioration of the economy from COVID-19 had caused it to issue a deferred acquisition cost writedown worth $181.8 million and further losses equating to $35.5 million.
In its update, Genworth said ongoing higher levels of unemployment would impact the short to medium term outlook of its businesses and persist while the economic situation remained uncertain.
Genworth's home-lending insurance division has been impacted throughout the pandemic as a result of the high number of home lenders placing their loan repayments on suspension through financial hardship measures.
Despite the repayment deferrals, Genworth's lenders' mortgage insurance business posted an 8.1 per cent rise in new insurance premiums sold to $13.5 billion.
The company said the growth has come off the back of metropolitan housing market growth, with homebuyers taking advantage of the low interest rate environment.
"Volumes continued to grow over the second quarter, with strong lender customer performance accompanied by improving consumer confidence as COVID-19 restrictions begin to ease," Genworth said.
Originally published as Virus costs major home insurer millions