Morningstar analyst Nathan Zaia played down the chances of the company paying a first-half dividend, adding that a small payment at the full year was more probable but still uncertain.
“The company essentially exists to provide some downside cover for the banks in the event of a downturn, and while Genworth looks like it has a strong enough capital position to withstand this downturn, the severity of the downside is extremely uncertain,” Mr Zaia said.
“I think it will take a brave board to seek APRA approval to pay out an interim dividend while recording losses and with so much uncertainty ahead.”
Genworth shares were 1.5 per cent higher at $2.07 shortly after midday.
While conditions were favourable early in the year as the housing market recovered, the coronavirus pandemic had sparked a major change in its operating environment, prompting it to assess scenarios on how it could be exposed.
Based on a central estimate that included a peak unemployment rate of 8.2 per cent, and property prices falling 5.4 per cent this year, the insurer found there was a case for the $181.8 million write-down to its deferred acquisition costs.
It said unemployment had been concentrated among people who were less likely to have mortgages, such as casual employees, so it had assumed a lower level of unemployment for its portfolio when it conducted the assessment.
The company cautioned that predicting future claims was very difficult, and it would depend on the length of the downturn and the role of banks’ repayment deferrals.
Chief executive Pauline Blight-Johnston said: “Given the current economic uncertainty and APRA guidance encouraging insurers to seriously consider deferring decisions on dividends and capital returns until the outlook is clearer, we believe it is sensible to preserve capital at this time to sustain our strong capital position.”
Genworth, which counts banks including the Commonwealth Bank among its customers, said gross premium revenue rose 32.2 per cent to $114 million in the quarter compared with last year, while the delinquency on its loan portfolio was unchanged at 0.57 per cent.