Genworth Financial Partial IPO of US Mortgage Business

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

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

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

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