The midst of a pandemic turns out to be the best of times for Genworth’s claims ratio.


Underwriting profits were the healthiest they’ve looked in years.


Insurance companies aim to generate an underwriting profit, but the real aim is to generate solid returns from float. And with very low yields on bonds, this is difficult to do.


GMA need the sweet spot of rates sufficiently high so as to make a meaningful return in shareholder funds, and technical reserves, but not so high they imperil loan demand.

That’s usually a difficult tightrope to walk. Add in the challenges of powerful, large clients (like CBA) who use GMA for mortgage insurance, clients whom often float the idea of a) insourcing or b) provider switching and you’ve got a challenging investment case.

Given our concerns over lending volumes, the sustainability of the collateral value, the pandemics’ impact on delinquencies, and the idea that there are other companies with positive leverage to rising rates (e.g. insurance companies like QBE) we prefer to look elsewhere.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

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