Good day, and thank you for standing by, and welcome to the Genworth Mortgage Insurance Australia's First-Half 2021 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star one on your telephone. Please be advised that today's conference is being recorded. I will now hand the conference over to your first speaker today, Mr. Paul O'Sullivan, Head of Investor Relations for Genworth Mortgage Insurance Australia. Thank you. Please go ahead.
Hello, welcome to the first-half 2021 financial results briefing for Genworth Mortgage Insurance Australia. I am Paul O'Sullivan, Head of Investor Relations. This morning we will start with a presentation from our CEO, Pauline Blight-Johnston, who will provide an overview of the results. Our CFO, Michael Cant, will go into more detail on the financials, Pauline will then wrap up with a summary. After the presentations, we will open up for questions from investors and analysts. I'll now hand over to Pauline.
Thanks, Paul. Good morning, everyone. Good to be here with you as we've reported strong first-half 2021 results with a return to profit, ongoing top-line volume growth, and a resumption of dividends. Over the half, the business benefited from the improved economy, housing market appreciation, and low interest rates. Our strong performance was also underpinned by the operational and reserving initiatives we implemented last year that are enabling us to respond more efficiently and strategically to the evolving needs of our lender customers and their borrowers.
The increasing challenge of housing affordability in Australia continues to drive demand for solutions to help individuals bridge the deposit gap and get onto the property ladder. Through our traditional LMI product, as well as a strategic focus on evolving this offering to better meet the desires of today's home buyers, the company is well-positioned to help meet this demand and benefit from the continued strength in the housing market. The latest lockdowns will have some impact on the economy over coming months.
We have been pleased to see the resilience of the economy and its ability to recover from prior lockdowns due to its strong underlying momentum and hope this pattern will continue as the states move through their reopening phases over the coming months. Let's turn to slide five to go through the results. On slide five. For the first half of 2021, Genworth delivered an improved underwriting result of AUD 88 million. Underlying net profit after tax was AUD 76 million, with statutory net profit after tax of AUD 59 million, which includes the impact of unrealized mark-to-market investment losses from a rise in government bond rates.
Over the half, we achieved ongoing top-line volume growth underpinned by strong housing market performance and above-system growth from our lender customers. New insurance written during the first half of 2021 increased 14.7% to AUD 16.5 billion compared to the same period in 2020. Gross written premium increased 21.1% to AUD 290 million, and net earned premium increased 13.3% to AUD 171 million. This strong new business flow will underpin earnings growth for the company over coming years.
During the first half, reported delinquencies and paid claims remained subdued as a result of strong dwelling price appreciation and the government and lender support programs that were in place to assist borrowers up until March 2021. Of course, it remains to be seen how the latest lockdowns will affect the ongoing economic recovery and hence Genworth's claims experience over coming periods. We welcome the new borrower support programs introduced by lenders, noting that they will further extend the duration of the subdued delinquency behavior that we've been experiencing. We believe these programs are ultimately positive for our claims experience. However, they will extend the timeframe over which we will obtain clarity on the ultimate claims outcome.
Importantly, the company remains in a strong operational and financial position. We are well placed to withstand a wide range of future claims outcomes and have the capacity to respond to changing circumstances and opportunities. As of the 13th of June 2021, Genworth's PCA coverage ratio on a level 2 basis was 1.74x , which was above the top end of the board's target range of 1.32-1.44x , representing surplus capital of AUD 320 million above the top of the range.
This strong capital position and the improvement in our earnings have led to the board's decision to declare an unfranked interim ordinary dividend of AUD 0.05 per share. I want to touch briefly on the economy now on slide six. Economic conditions continued to improve through the first half, with a low interest rate environment providing ongoing stimulus to housing markets and unemployment improving to pre-COVID-19 levels, supported by significant fiscal and monetary support. As at June 2021, national dwelling values were 12.4% above the previous peak of April 2020, and the unemployment rate 4.9%.
Improved GDP results have been reported in the most recent data published to the 31st of March 2021, and housing savings have significantly increased over the same period. These trends are all positive for our business. Against this, the recent COVID-19 outbreak and the re-emergence of lockdowns demonstrates that the speed and shape of the economic recovery is far from certain. It largely depends on the effective management of health outcomes across the nation, including the speed of the vaccine rollout. We are, however, encouraged that the Australian economy has shown extraordinary resilience since the onset of the pandemic and has demonstrated an ability to recover from the short-term shocks created by lockdowns.
I want to turn now to slide seven to talk about Genworth's claims experience to date. You'll recall that the initial government support and lender repayment deferrals ended in March 2021. The vast majority of loans that were on those repayment deferrals prior to March have resumed repayment, and we're working closely with lender customers to understand the performance of the remaining loans that have been restructured. To date, we've seen lower than usual levels of reported delinquency. This, accompanied by the ongoing moratoriums on owner-occupied foreclosures as well as strong economic recovery, have resulted in lower than usual paid claims, as you can see in the chart on the left-hand side.
We compensated for these impacts with a AUD 23 million incurred but not reported reserve increase in the first quarter of 2021. In the second quarter of this year, we reviewed the earnings curve to incorporate the more favorable loss experience and improved economic outlook. Based on the advice of Genworth's appointed actuary, the earnings curve has been adjusted to improve the alignment of premium recognition with net claims incurred by lengthening the average duration of revenue recognition. You can see this in the chart on the right-hand side.
The earnings curve adjustment is effective from the 1st of April 2021 and resulted in a reduction in first half 2021 net earned premium of AUD 12 million. Turning now to slide eight, where I'll talk about our strong capital position and capital management. As at the 30th of June 2021, Genworth's PCA coverage ratio was 1.74x on a level 2 basis. This was above the top end of the board's target range of 1.32-1.44x and represented surplus capital of AUD 320 million above the top end of the range. The chart on the left provides a PCA ratio walk showing the key movements in our capital position over the half.
You can see that the capital required to support the ongoing new business growth is slightly less than the capital seen released on the back book. This demonstrates the ability of the business to self-support its growth. In addition, the PCA ratio was improved as a result of the statutory NPAT and economic assumption changes, reflecting the improvement in the economy over the half. Turning to the chart on the right on capital management. This provides some recent historical context regarding the payment of dividends.
Prior to COVID-19, Genworth regularly paid out ordinary dividends, targeting a dividend payout ratio of between 50%-80% of underlying NPAT. Since listing on the ASX in 2014, Genworth has returned over 100% of after-tax profits by way of ordinary and special dividends to shareholders. The company has also implemented other capital management initiatives, including share buybacks and capital reductions. In 2020, due to the uncertain economic outlook, regulatory guidance from APRA and the company's statutory net loss, the board concluded it would preserve capital and not pay an interim or final ordinary dividend.
As noted earlier, the improvement in earnings and increased confidence regarding the eventual impact of COVID-19 on the company's capital position have allowed the board to resume dividend payments. For the first half 2021, the board has approved an unfranked interim ordinary dividend of AUD 0.05 per share, which is payable to shareholders registered as at the 18th of August 2021. Due to the prior year statutory loss in full in 2020 and the company's current franking position, the interim ordinary dividend will be unfranked.
The company is committed to responsibly managing its capital, and whilst there's still some uncertainty around how COVID-19 will ultimately play out in 2021, it's pleasing that we've been able to resume dividend payments during this half year. Moving now to slide nine. I want to touch briefly on the separation of the company from our former majority shareholder, Genworth Financial, Inc., or GFI. On the 3rd of March 2021, GFI sold its entire 52% shareholding in the company. As a result, key service agreements between Genworth Australia and GFI will terminate over time.
We're working through the transition of relevant services to bring them in-house or to local service providers. The separation program is progressing on schedule. The separation has provided a good opportunity to review and simplify some service areas such as accounting and human resource information systems. We expect the main transition activities will be completed by the 31st of March 2022, with some rebranding actions completing later in 2022. The costs are expected to be in the range of AUD 15 million-AUD 19 million, with the bulk expensed in 2021, including approximately AUD 1 million that's already been expensed in the first half.
Moving now to slide 10. Genworth has relationships with over 50 lender customers, including banks, building societies, credit unions, and non-bank mortgage originators. Throughout the half, while managing large volumes of new business, we've maintained excellent standards of customer service. At the end of the first half 2021, Genworth successfully renewed its contract with a large non-major bank customer for the provision of LMI on an exclusive basis for a further three-year period to 2024. Importantly, ongoing customer renewals continue to exceed our ROE benchmark.
We welcome the opportunity to submit a proposal to CBA during the coming months to extend our arrangements for the supply of LMI beyond 2022, building on the strong foundations of a long-standing relationship. We're continuing to progress our customer-centric sustained growth strategy under the three pillars you can see on the slide. Enhance, evolve, and extend. That will enable us to take advantage of our growing market. We've implemented a range of initiatives to improve efficiency and competitiveness. These have been primarily around automation and digital reporting. After a successful pilot of the monthly premium LMI product in late 2020, this new product is now in market and available through two lenders.
We're in advanced discussions with other lender customers to extend the rollout of this offering further. We're also exploring how we might play a greater role in helping Australians to access home ownership, including evaluating partnership opportunities to offer new ways of bridging the deposit gap. The strategy work completed to date is already enhancing our offerings to our lender customers through a greater alignment to their strategic goals of improved borrower outcomes, and the feedback has been very positive. On that note, I'll now hand over to Michael to talk about the first half financial results in more detail.
Thank you, Pauline. Welcome to everyone on the call, and thank you for joining us today. I will start on slide four with the income statement. During first half 2021, Genworth reported an AUD 59 million statutory net profit after tax and an underlying net profit after tax of AUD 76 million. Statutory NPAT was impacted by unrealized mark-to-market investment losses from a rise in government bond rates during the half. Gross written premium rose 21.1% to AUD 290 million over the first half of 2020 from higher LMI flow volumes across our lender customers with consistent underwriting quality.
Net earned premium in first half 2021 increased 13.3% to AUD 171 million over the first half of 2020, continuing the stronger growth in gross written premium that began over the second half of 2020. This strong new business flow will underpin earnings growth in future years. The change to the earnings curve in second quarter 2021 reduced net earned premium by AUD 12 million in first half 2021. This adjustment has the effect of lengthening the average duration of the period of premium revenue recognition to align with the pattern of net claims incurred, reflecting the slower emergence of new delinquencies noted earlier.
Net claims incurred was AUD 49 million, or 51% lower than compared to AUD 101 million in first half 2020. During the half year, the government and lender support programs continued to interrupt the typical incidence patterns of delinquency behavior and claims with lower loss experience, higher levels of curing, and reduced aging, including as a result of moratoriums in placing properties into possession. I will talk more about loss performance on slide 14. Finally, investment income earned on technical and shareholders' funds for first half 2021 was a small net gain of AUD 1 million compared to AUD 50 million first half of 2020.
Moving on to slide 13, we have provided some further detail on new insurance written and gross written premium performance. New business volumes and claims experience continued to be supported by the low interest rate environment, providing stimulus to housing markets through rising national dwelling values and strong consumer sentiment. New insurance written of AUD 15.5 billion increased 14.7% over first half 2020, as owner-occupiers and first-time buyers have taken advantage of the low interest rates to enter the housing market.
Genworth's lender customers continued to achieve above-market lending growth rates. These higher business volumes were the main driver of our top-line growth and will drive growth in net earned premium over the medium term. The key features of our loss performance are shown on slide 14. As we have mentioned, our claims experience during the half continued to be impacted by government stimulus packages and the restructuring by lenders of home loans that have been on repayment deferral prior to 31 March 2021. Whilst the majority of these loans have resumed repayments, there remains a portion of the remaining loans that have been restructured or continue in arrears.
Net claims incurred was AUD 49 million in first half 2021, down 51.2% on first half 2020, reflecting lower levels of new reported delinquencies and aging, as well as higher levels of cures. The reported first half 2021 loss ratio of 28.9% reflects both these trends, as well as the benefit of strong house price appreciation over the half year and improving economic conditions. We saw lower paid claims in first half 2021 of 325 claims due to the ongoing legal moratorium on repossessions, as well as improved house price appreciation. During first half 2021, the average paid claim fell to AUD 75,000 compared to AUD 95,000 in first half 2020.
This was due to an increased proportion of borrower sales and house price appreciation, both of which are helping generally reduce claim sizes. In terms of reserving, in first quarter 2021, we had increased reserves by AUD 23 million, including an amount of incurred but not yet reported reserves of AUD 22 million, to compensate for the lower levels of reported delinquencies and paid claims noted earlier. There was a small increase in reserves in second quarter 2021 of AUD 10 million.
Looking at the second table on this slide, you can see that the lower value of new delinquencies for the first half of 2021 compared to first half 2020. It is still too soon to have seen much impact from the expiry of the repayment deferrals as at 31 March 2021. The cures line represents the release from reserves of the delinquencies that have naturally cured, being AUD 85 million in first half 2021 compared to AUD 69 million in first half 2020. This reflects the improved economy, house price appreciation, and these support measures.
Aging of AUD 35 million represents the natural increase in reserves for delinquencies which remain on our books over the year. Finally, the other adjustments line of AUD 30 million includes such items as COVID-19 actuarial adjustments relating to policies affected by moratoriums, IBNR for repayment deferrals, and an allowance for cured policies re-entering arrears. On the bottom table of this slide, you can see the key movements in the outstanding claims reserve. As at first half 2021, the outstanding claims reserve was AUD 567 million compared to AUD 399 million in first half 2020.
The outstanding claims reserve comprises both reported delinquencies, largely 90-day arrears reported by lenders, and IBNR reserves for unreported or sub-90 day arrears. In addition to an 18% risk margin we hold on both these reserve levels. We have provided detail on the delinquency rate and trends in the supplementary slides, specifically on slide 26. The delinquency rate has been relatively flat at 60 basis points in first half 2021 compared to 62 basis points in first half 2020.
On to slide 15 and our investment performance over this half. Investment income earned on technical and shareholders' funds for first half 2021 was a net gain of AUD 1 million compared to AUD 50 million in first half 2020, which experienced realized gains due to falling bond rates. It was really a tale of two quarters. In first quarter 2021, there was a loss of AUD 28 million due primarily to higher unrealized losses on government bonds from an increase in bond rates during that quarter. These losses were partially reversed in the second quarter as bond rates reduced, resulting in unrealized gains for that quarter of AUD 15 million.
Our annualized investment return for this half was 0.1% compared to 3.1% for first half of 2020, reflecting the unrealized losses and that investment returns continue to be pressured by the low interest rate environment. Between 31 December 2020 and 30 June 2021, the running yield on the investment portfolio improved from 50 basis points to 70 basis points net of fees, reflecting the increase in government bond rates and higher exposure to corporate bonds and equities to improve yield.
Slide 16 highlights the continued strength of our balance sheet. The asset side of the balance sheet consisted of an AUD 3.6 billion cash and investment portfolio. The increased assets from second half 2020 reflects the strong new business and the lower claims paid. The cash balance tends to fluctuate in line with the timing of both investment settlements and liquidity management activities. In terms of liabilities, the movement in payables is due to the renewal of our reinsurance program on the 1st of January 2021 and the timing of investment trade settlements.
Our outstanding claims reserves were AUD 567 million. This is higher than usual due to the reserving that has built up over the past 12 months to compensate for the reduced incidence of claims payments as a result of the repayment deferrals. As at 30 June 2021, we have retained over AUD 1.5 billion of unearned premium on our balance sheet, which we will gradually earn over future periods. On the 1st of January 2021, we renewed our AUD 800 million reinsurance program, which is structured on a paid claims basis for policies in force, plus two additional years of new insurance written.
It is our investment portfolio, plus our potential reinsurance recoveries, are essentially what is available to meet our claims-paying obligations to our policyholders, providing us with over AUD 4.4 billion of claims-paying resources. Turning to slide 17, Genworth retains a well-diversified cash and investment portfolio with an average maturity of 4.2 years and an average duration of 2.4 years, which excludes equities and derivatives. During the half, we reduced our exposure to Commonwealth Government bonds and increased our exposure to corporate bonds and equities to improve yield. 94% of this portfolio is now held in cash and investment-grade bonds.
Turning to slide 18 shows that our regulatory capital position remains strong. As at 30 June 2021, Genworth's PCA coverage ratio on a level 2 basis of 1.74 x was above the top end of the board's target range of 1.32- 1.44x . This represented a surplus capital of AUD 321 million above the top end of the range. The reduction in net premiums liability deduction reflected the improved economic outlook. The movement in asset risk charge during the half reflected the increase in our exposure to corporate bonds and equities.
The chart on the right-hand of this slide shows the trend increase in probable maximum loss, which increased slightly in first half 2021 to AUD 1.77 billion. This reflects the higher volume of new business being written on our front book and, to a smaller extent, a higher LVR mix business mix being written in the 80-90% LVR bands, meaning the amount of capital we are required to hold is gradually increasing. This is being supported by the capital being released by the in-force runoff in the back book. With that, I'll hand now back to Pauline to wrap up the presentation.
Thanks, Michael. Turning now to slide 20. Genworth has reported a strong first half result. The growth in written premiums in the half will underpin our earnings over coming years. We have extensive underwriting experience through a range of economic cycles, and we'll continue to focus on strong underwriting quality and profitable customer renewal. Over the coming periods, we will have increasing visibility over the ultimate claims outcomes from the COVID-19 pandemic.
This visibility will gradually improve over the second half of 2021 and into 2022, although we note it has been delayed by the latest round of mortgage repayment deferrals on offer. Importantly, Genworth has the capital strength and operational resilience that means we remain well-positioned to withstand a wide range of future claims outcomes. We're pleased to have been able to resume dividend payments in this half, and we'll continue to focus on improving returns to shareholders.
We'll continue to review the appropriate level of capital for the company to hold as clarity emerges regarding the likely ultimate capital implications of the pandemic and to actively manage our capital resources. The operational and strategic initiatives that we implemented in 2020 have set the business up to benefit from the ongoing demand for support to achieve home ownership in a market where this is becoming increasingly difficult.
We will continue to partner with our lender customers to provide support to home buyers who need help to bridge the deposit gap, as well as to explore partnership opportunities with others looking to solve this problem in new ways. Our developing business strategy will set us up to take advantage of the opportunities to achieve sustainable growth over the years ahead as we help more Australians to build financial security through home ownership.
With that, I'll open up to any questions we have today.
Thank you. Just as a reminder today, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press the pound or hash key. Our first question today comes on the line of Andrew Lyons from Goldman Sachs. Please ask your question.
Thanks and good morning. Just two questions if I may. Just firstly, you've noted that claims activity is expected to normalize after the additional deferral period's complete. Just in light of your reserve build over the past 12 months, can you perhaps help us to understand what that might mean for your P&L claims expense? I've then got a second question. Thanks.
Okay. I guess the simple answer to the question is that if that experience that we see over the next- it'll probably take 12 months or more from now to emerge. If that comes through as we expect, the reserves that we've put aside will be what we need to cover that, the money will move out of reserves into claims paid, with minimal impact on P&L.
If those claims emerge at a lower level than we have reserved for- somebody's not on mute and typing- i f those claims emerge at a lower level than we've reserved for, clearly the reserve releases will be greater than what gets expensed to claims and have a positive impact on P&L, and vice versa if the claims emerge at a higher level than we've reserved for. The releases from reserves won't be sufficient to meet the claim payments, and it'll have a negative impact on P&L. That'll all come through over the next probably two years.
Great. Just a second question. You've noted the company's capital position remains well above the top end of the target range, and I think you said it'll be optimized as future capital requirements become clearer. Can you perhaps talk about what those future capital requirements might look like and specific to the CBA contract, if that was to be lost, how quickly might the capital requirements of that contract be returned to shareholders?
The first piece of clarity we're looking for on capital requirements is, of course, just how these claims play out from COVID-19. As we get more confidence each period on how those claims are looking, that will give us better visibility of how much capital we ultimately need and how much is available for other things. The second, I guess, would be any strategic investment required to make the most of the opportunities in front of us.
The third, of course, is the pace of the runoff of the existing book. As you've noted this period, the runoff of the existing book generates pretty significant capital anyway, so it can provide a fair degree of flexibility. If we were to lose any one of our large customers, that will, of course, increase the run-off of the [capital-deleting] book, but it's not an immediate impact. It runs off over the life of the business running off. It's not a one-off windfall. Okay. Thanks.
Our next question, sorry, comes on the line of Andrew Buncombe from Macquarie. Please ask your question.
Good morning. Thanks for taking my questions. Two from me, please. Just the first one, maybe if you can talk about your updated assumptions for unemployment and house prices and maybe how they've changed in the last quarter. I'm just trying to understand if there's still a buffer above the current rates. Thanks.
We haven't disclosed our assumptions. It's not something we would normally disclose. Throughout the height of the pandemic, we did disclose- w e thought it was important to provide some more visibility. We've returned to our normal level of disclosure around that. What I would say is that in setting our assumptions, we take account of the most recent economic data. They've been updated by what we've seen as at the end of June.
Okay. My other question was just maybe if you can give us an update on your expected timing for the CBA tender. That would be great. Thank you.
We expect this to play out over the second half of the year, and we'll update you as we know more.
Congratulations on the result. Thanks for taking my questions.
Thank you.
Our next question today comes on the line of Simon Fitzgerald from Evans and Partners. Please go ahead.
Hi there. I've got two questions here. Just firstly, on the earnings curve changes. Can I just be clear that is this a change to the existing curves, or are you introducing a new curve over the top, in which case it would only apply to new policies written post the 1st of April? Looking at that AUD 12 million impact, it seems rather large if it was only related to new policies. Perhaps you can give us a bit of a feel around that, also if there's a full year impact we should be thinking about as well.
Yeah, it is a change to the existing curve for not just the new business, but for all the policies that were on the most recent curve. Yes, that was a one-quarter impact. The full year impact is largely proportionate.
Proportionate-
Approximately.
So, we should be thinking then of a sort of AUD 50 million impact on an annualized basis.
It's not quite that much. It's not quite that much, but it's similar...
Okay. That's helpful.
...of that order.
Just if we could also talk about capital. You did speak about the CBA tender in terms of the timeframe in which that could come back to shareholders if there was capital released. Understanding that it wouldn't be a windfall. It would also reflect the earnings curve, though, as it would probably be accelerated at the front end as opposed to amounts coming out over sort of 10- 12 years or something like that as those policies run off...
Yeah.
...be a fair assessment. Also could I ask, is it easy to assume that out of that probable maximum loss, that also around about 57% relates to that CBA contract as was disclosed in FY 2020 as the GWP contribution?
There's two comments on that. The run-off of capital is slower than the run-off of the earnings curve.
Great. Thank you.
The earnings curve- the premiums are earned over a 12-year period, whereas the capital is held for the entire time that the policy is on the books. It is slower, and there are other factors that contribute to lengthening that. The second, the 57% was the proportion of our revenue last year that was accounted for by CBA. The PML is driven by our in-force portfolio. The proportion of CBA on the in-force portfolio is lower than it was in the new business portfolio because of some of the large customers that have not been writing new business with us over the last two years.
Okay. All right. Thank you very much. That's very helpful. Thank you very much for that.
Your next question today comes on the line of Julian Braganza from JP Morgan. Please go ahead.
Hi, guys. Just a couple of quick questions from me. Just firstly, in terms of pricing, I know that you mentioned some small benefits there coming through on pricing, but can you just articulate how do you think about pricing, particularly given the impact of just lower yields over the last couple of years, and has that been reflected in pricing going forward? Just how should we think of that more broadly from a framework perspective? Thanks.
We price to achieve a target return on equity. That's our primary driver in pricing. That target return on equity does vary from time to time as the economy changes and as interest rates change, but it's not a one-to-one relationship.
Okay, great. Thanks. Just in terms of the ROE, so obviously we saw some improvement in the ROE from the last quarter given, I guess, the reversal of some of the, I mean, some improvements on the investment side and also just the benign claims environment. How should we think about the ROE going into next year, given, I guess, there's a lot of benefits coming through in the current period? How should we think about the ROE going into next year towards achieving a more sustainable ROE? I think it is of the order of around 10%.
It's not something we provide guidance on. Our intent over time is that our portfolio level ROE blends towards our new business ROE. If we do continue to write new business and it delivers the ROEs that we believe we're pricing it at, then over time, the portfolio will head towards the new business ROE.
Okay, sure. Okay, thanks for that. Then just lastly, in terms of the earnings curve change, I'm just trying to understand exactly what that impact assumes around the delay in claims that you're assuming. Obviously you'd have had to have assumed what it means on the claims side to articulate just that deferral on the premium side. Is that consistent with how you've reserved, et cetera? I think you mentioned it previously around potentially a deferral of claims over the next two-year period. Just if you can just articulate what your earnings curve change basically assumes around claims.
The entire intent of the earnings curve is to create an outcome whereby revenue and claims are matched in their timing. The earnings curve is always an assumption. It's necessarily an assumption. We don't know exactly what the future will hold. The actuaries attempt to refine that assumption, or review that assumption, based on the experience that's emerging- not just the experience of the last six months- but they've looked at our experience over an extended period of time to try to come up with a long-term assumption around the pattern of claims that we expect going forward. The delays in the last 12 months has a part of that, but it doesn't fully react to that.
Okay, great. Thanks so much for that.
Hi, it seems we have no further questions on the line today. I will now return the conference back to your presenters for closing remarks.
Thank you. Thank you. T hank you, everybody, today, for your interest and for dialing in. We have had a good start to the year. It's been very pleasing to report a good profit and to again be able to start paying dividends. The results reflect the strengthening economy we enjoyed in the first half. Also, the actions we took throughout 2020 to position us to be able to participate in that economic recovery. Clearly, the latest lockdowns create a little bit more uncertainty, although we have seen the economy bounce back well. We're hopeful that we will see the same thing again.
Either way, we are well-positioned to be able to manage any volatility that comes. We're well-capitalized- w e continue to enjoy the support of our lender customers. We continue to work more closely with them on how we can show up better for borrowers and help to make that easier for them to get onto the property ladder. We believe this creates a great opportunity for the business, and we look forward to working with those lenders to help more borrowers into homes going forward. I'll now hand back to the moderator to end the call.
Thank you. Ladies and gentlemen, that does conclude today's conference call. We thank you all for your participation.