Genworth Financial Partial IPO of US Mortgage Business


Enact IPO

Catalysts


  • Deal with China Oceanwide did not go through

  • Recently sold Australian business to focus on life insurance

  • Spinoff of PMI business into Enact

  • Genworth will still own 83% of Enact after the IPO, which is set to raise $497 million

  • Valuation of Enact will be about $3.85 billion, giving Genworth about $3 billion valuation

  • Enact currently has a book value of $3.95 billion

Enact IPO

  • Rising demand for housing

  • Record Low Mortgage rate further increases demand for mortgages and consequently mortgage insurance

  • Asset price inflation - further increase in housing prices

Risks


  • Rising mortgage rates

  • Emerging Housing bubble


Financial Analysis


  • Revenues of $1.98 billion in 1Q21 vs $1.80 billion in 1Q20

  • Revenues of $8.65 billion in FY20 vs $8.09 billion in FY19

  • Premiums of $4.11 billion in FY20 vs $4.03 billion in FY19

  • Operating income of $168 million in 4Q20 vs $20 million in 1Q20

  • US PMI: $126 million in 1Q21 vs $95 million in 1Q20

  • US Life Insurance: $62 million in 1Q21 vs $7 operating loss in 1Q20

  • Net income of $195 million in 1Q21 vs net loss of $72 million in 1Q20

  • Net income of $178 million in FY20 vs net income of $343 million in FY19

  • US PMI:

  • NIW of $99.9 billion for FY20 vs $62.4 billion for FY19

  • Total Revenues of $1.10 billion for FY20 vs $978 million for FY19

  • Loss Ratio 35%

  • US Life Insurance:

  • Total revenues of $4.84 billion in FY20 vs $6.43 billion in FY19

  • Loss ratio of 65%

  • Assets of $98.5 billion, liabilities of $83.8 billion, and book value of $14.7 billion

  • Investments of $73.6 billion vs $77.9 billion in 4Q20

  • Yield of 4.84%

  • Almost all investment graded


Read the full analysis on my Research Partnership: https://ishfaaqpeerally.teachable.com/courses/662813/lectures/32196778


Enact IPO

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