Genworth Maintains a Conservatism on Future Claims. Maintaining Market Share Our Greater Concern

Granted it is just one quarter, and earnings are volatile, but Genworth’s first-quarter 2021 result and the strong economy puts the insurer on course for a better full-year result than we expected. We lift our fiscal 2021 forecasts to AUD 152 million from AUD 90 million previously. We lower claims costs from 60% of premiums to less than 30%, with lower investment returns offsetting some of the benefit. Lower unemployment and strengthening house prices add to our confidence the insurer is more than adequately reserved for a potential increase in claims. Our long-term forecasts and our fair value estimate of AUD 2.20 are unchanged.