Genworth Mortgage (GMA)

By Jason Fittler

Genworth Mortgage Insurance Australia Limited (GMA) is the provider of Lenders Mortgage Insurance (LMI) in Australia.

Currently, GMA offers three main LMI products, which are Standard LMI, Homebuyer Plus and Business Select/Low Doc.

Standard LMI product mainly focuses on Homebuyers, Employed/self-employed and Targeted packages for graduates/professionals.

Home Buyer Plus LMI product mainly focuses on First homebuyers with limited deposit on their first property this product is limited to owner-occupier only.

Business Select/Low Doc loans is focused on the Self Employed market allowing self employed to get loans based on sufficient security. 

As at 31 December 2013, GMA has an in-force portfolio of $300 billion.

GMA’s Standard LMI product, 87%, comprises the largest part of the overall in-force portfolio.

The rest are 7% in Low Doc, 4% in Homebuyer, 1% in Business Select and 1% other.

This company floated this week and had a good overall result, as the company closed up 12.5% for the week.

The initial float price was $2.65 and it closed the week out at $2.98.

Its high of the week was $3.04.

The company is forecasting a dividend yield of between 6.2% to 8.5% based on a payout ratio between 50% to 70% of Net Profit After Tax.

The equity value of this company is $3.18, which makes the stock look well priced at the current level.

The risks with this company include loss of a major client such as the banks which for whom they do a lot of their work.

Keep in mind it is insurance to protect the lending bodies not the person lending the money.

They will also be affected by the cash rate as like all insurance companies part of the profit is derived from investment surplus cash into bonds.

GMA is one to keep an eye on. 

For more information about Genworth Mortgage (GMA) please contact us on 07 4771 4577.