Genworth Financial does not currently have any plans to sell any additional portion of its US mortgage insurance business beyond what is envisaged in the proposed IPO.
Due to dormant time restrictions activated after filing the registration statement on April 19 – 13 days after China Oceanwide's merger ended – Genworth was unable to provide any information about the offering, including when the first quarter earnings call was made.
"As part of our strategy, it is our strong preference to maintain a sufficient stake in US MI in order to have the option to distribute the remainder tax-free to Genworth shareholders in the future," said Tom McInerney, President and CEO of Genworth. said during the call for prizes. "After going public, we currently have no plans to sell our stake in US-MI. With our anticipated debt reduction plan and strong cash flow profile, we do not need to do so to meet our upcoming debt obligations."
The holding company still has $ 345 million from its settlement with AXA and $ 513 million in debt due in September. This brings a total of $ 400 million to Genworth Financial in August 2023 and February 2024, which is expected to be covered by cash and the resumption of dividends from the U.S. mortgage insurance business. After maturing in February 2024, the holding company's remaining debt would be $ 300 million in 2034 and $ 600 million in 2066.
The U.S. mortgage insurance business had adjusted operating income of $ 126 million for the first quarter, compared to $ 96 million in the fourth quarter and $ 148 million in the first quarter of 2020.
These results were due to increases in applicable insurance policies and lower mortgage defaults, said Dan Sheehan, Genworth's chief financial officer.
"We view the stimulus initiatives, forbearance breaks and the sharp appreciation in home prices as positive for crime development and healing as well as ultimate claims," he said.
Quarter to quarter, Genworth's new insurance fell to $ 24.9 billion from $ 27 billion in the fourth quarter. In the first quarter of last year, the NAV was $ 17.9 billion.
"While most of our peers have not reported, we estimate our market share will reflect a modest sequential increase in total market share for the quarter," said Sheehan. The only MI company to date to report first quarter results is Arch, which reported a NAV of $ 27 billion in the first quarter, compared to $ 38 billion in the fourth quarter and $ 16.8 billion Dollars in the first quarter of 2020.
Genworth received approximately 10,000 new communications from mortgage service providers in the first quarter. Sheehan said it was down 16% compared to pre-COVID levels from the fourth quarter. Approximately 54% of these new notices were in indulgence plans.
"New arrears resulted in a cost of loss of $ 44 million for the quarter and our expected ultimate loss ratio was approximately 8%," Sheehan added. "Remedies of approximately 13,500 declined 19% sequentially and continued to beat new arrears."
Genworth ended the quarter with a total of around 41,000 arrears, or a rate of 4.5%. About 70% of these loans are in forbearance.
The company also increased its pre-tax arrears provision by $ 10 million. "The increase in reserves primarily reflects our expectation that these pre-COVID arrears will have a slightly higher loss ratio than the company's best estimate to date, given the slower emergence of remedies," Sheehan said.
When the MI company can return dividends to the holding company is currently under constant discussion with state-sponsored corporations and the Federal Housing Finance Agency "how they think about forbearance, how they think about recovery from pandemics," said Rohit Gupta , President and CEO of Genworth MI. "But until you make a final decision, we have no further clues as to how you think about capital or dividends in the future."
Genworth Financial sold its remaining stake in the Australian MI business in February after the Canadian business was sold in an ultimately unsuccessful attempt to close the China Oceanwide deal.