Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

Genworth Financial Inc Cl A / Equity Bottom-Up

*Poor Result Despite Mortgage Unit Gains: After the market close, Genworth Financial (GNW.US) [Genworth] reported 2Q20 adjusted earnings per share loss of USD 0.04, which was worse than consensus of USD 0.03 per share;* AXA Settlement Increases Risk: Post-2Q20, Genworth announced that it had agreed to a settlement with AXA (AXA.FP). Under the terms of the settlement, Genworth has agreed to pay AXA approximately USD 521 mn, with USD 125 mn payable on July 23, 2020 and the balance deferred to 2022. As such, post payment the stated USD 554 mn in cash on Genworth’s balance sheet dwindles by USD 125 mn or 22.5% to USD 429 mn, while restricted cash amounts to USD 59mm. Unfortunately, there appears to be no mention of a liability cap on AXA’s future PPI losses; and*China Oceanwide Wasting Time: Genworth’s transaction with China Oceanwide (715.HK) appears increasingly in doubt following the 15th extension on June 30, 2020 due to China Oceanwide’s continued inability to fund this transaction. China Oceanwide is required to provide evidence of deal funding by August 31st.

*Poor Result Despite Mortgage Unit Gains: After the market close, Genworth Financial (GNW.US) [Genworth] reported 2Q20 adjusted earnings per share loss of USD 0.04, which was worse than consensus of USD 0.03 per share;* AXA Settlement Increases Risk: Post-2Q20, Genworth announced that it had agreed to a settlement with AXA (AXA.FP). Under the terms of the settlement, Genworth has agreed to pay AXA approximately USD 521 mn, with USD 125 mn payable on July 23, 2020 and the balance deferred to 2022. As such, post payment the stated USD 554 mn in cash on Genworth’s balance sheet dwindles by USD 125 mn or 22.5% to USD 429 mn, while restricted cash amounts to USD 59mm. Unfortunately, there appears to be no mention of a liability cap on AXA’s future PPI losses; and*China Oceanwide Wasting Time: Genworth’s transaction with China Oceanwide (715.HK) appears increasingly in doubt following the 15th extension on June 30, 2020 due to China Oceanwide’s continued inability to fund this transaction. China Oceanwide is required to provide evidence of deal funding by August 31st. 

Genworth Financial – Big MI Print, Uncertainties Persist

Thematic (Sector/Industry)

* Mortgage Servicers:The mortgage servicer of a scheduled remittance must remit funds to the Government Sponsored Entity (GSE) when they are scheduled to be paid rather than when actually collected. In the case where there is a payment shortfall, the mortgage servicer must advance its own funds to cover the delinquent mortgage even if the funds are collected.  * Mortgage Insurers:Insurance is only partly overs the default after the loan becomes delinquent for 90 days. In other words, the mortgage servicer would still need to front the cash shortfall of each mortgage within the Fannie Mae and Freddie Mac pool. Another factor to consider is this thin capitalization of the mortgage insurers where their credit guarantee may not be worth the paper that its written on.

* Mortgage Servicers:The mortgage servicer of a scheduled remittance must remit funds to the Government Sponsored Entity (GSE) when they are scheduled to be paid rather than when actually collected. In the case where there is a payment shortfall, the mortgage servicer must advance its own funds to cover the delinquent mortgage even if the funds are collected.  * Mortgage Insurers:Insurance is only partly overs the default after the loan becomes delinquent for 90 days. In other words, the mortgage servicer would still need to front the cash shortfall of each mortgage within the Fannie Mae and Freddie Mac pool. Another factor to consider is this thin capitalization of the mortgage insurers where their credit guarantee may not be worth the paper that its written on.

United States

PennyMac Mortgage Investment Trust is a specialty finance company that invests primarily in residential mortgage loans and mortgage-related assets. The Company's objective is to provide risk-adjusted returns to its investors over the long-term, primarily through dividends and secondarily through capital appreciation.

Pennymac Mortgage Investment Trust (PMT US)

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Pennymac Mortgage Investment Trust (PMT US)

Genworth Financial – Big MI Print, Uncertainties Persist

*Poor Result Despite Mortgage Unit Gains: After the market close, Genworth Financial (GNW.US) [Genworth] reported 2Q20 adjusted earnings per share...

Thomas J. Monaco

Another American Mortgage Tsunami Coming

* Mortgage Servicers:The mortgage servicer of a scheduled remittance must remit funds to the Government Sponsored Entity (GSE) when they are...

Thomas J. Monaco

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