Wednesday, July 30, 2014

Genworth MI Canada Q2 2014 Earnings Call

A correspondent asks, "Can you say 'adverse selection'?",

"We were pleased to see our first-quarter momentum continue in the second quarter with strong gains in high ratio new insurance written compared to both the prior quarter and the prior year. The increase reflects a modestly larger higher ratio market together with improved share penetration across a number of key customer accounts.

our top line was strong with premiums written totaling CAD160 million. Our high loan-to-value business contributed CAD128 million resulting in 17% year-over-year growth.

During the quarter, a competitor withdrew a number of products from the market, including insurance on secondary home financing and self-insured borrowers with limited income validation. Based on our comfort level with both our underwriting expertise and the loss performance of these products, together with feedback from our customers, we kept our product offerings unchanged. In supporting our customers with this important albeit small segment of the market, we continue to demonstrate value by providing prudent solutions to their lending needs."


GlennC said...
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GlennC said...

In this case, isn't the adverse selection favorable for Genworth? More competition would lower their loan quality... less competition increases their loan quality.

*Not that I would touch Genworth Canada with a 10-foot pole.