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Genworth has reported a bumper profit and enjoyed a soaring share price thanks to its “favourable claims experience”.
The LMI insurance firm made its stock market debut on May 20, with its price jumping 32.8 per cent between then and yesterday’s announcement of its results for the six months to 30 June 2014.
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Genworth reported a headline net profit of $42.5 million on revenue of $94.5 million, for a 45 per cent profit margin.
According to the pro forma results, net profit rose 130.4 per cent year-on-year to $151.4 million and underlying net profit grew 40.7 per cent to $133.1 million.
Genworth said its strong result was partly due to “a low volume of paid claims and a smaller-than-expected average claim size”.
This “favourable claims experience” was attributed to a strong housing market.
Genworth also reported a 1.2 per cent increase in new insurance written to $17.3 billion, as housing demand and low interest rates produced a rise in mortgage volumes.
The volume of loans with an LVR of 80-90 per cent rose 15.2 per cent “due to a change in business mix” by lenders.
Managing director Ellie Comerford said she was very pleased with the company’s performance, which was “marginally ahead of our expectations”.
Genworth forecast a full-year underlying net profit of between $231.1 million and $250 million.
[Related: More winners than losers in strong 2013/14]
