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Genworth MI Canada Inc. – First Quarter 2013
 

Genworth MI Canada Inc. – First Quarter 2013

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    Genworth MI Canada Inc. – First Quarter 2013 Genworth MI Canada Inc. – First Quarter 2013 Presentation Transcript

    • First  Quarter  2013  May  1,  2013  Genworth MI Canada Inc.
    • Q1 2013 May 1, 2013Genworth MI Canada Inc. 2Forward-­‐looking  and  non-­‐IFRS  statements  This  presenta>on  includes  certain  forward-­‐looking  statements.  These  forward-­‐looking  statements  include,  but  are  not  limited  to,  statements  with  respect  to  the  Company’s  future  opera>ng  and  financial  results,  expecta>ons  regarding  premiums  wriIen,  capital  expenditure  plans,  dividend  policy  and  the  ability  to  execute  on  its  future  opera>ng,  inves>ng  and  financial  strategies,  and  other  statements  that  are  not  historical  facts.  These  forward-­‐looking  statements  may  be  iden>fied  by  their  use  of  words  such  as  “may,”  “would,”  “could,”  “will,”  “expects,”  “an>cipates,”  “contemplates,”  “intends,”  “plans,”  “believes,”  “seeks,”  “es>mates,”  or  words  of  similar  meaning.  These  statements  are  based  on  the  Company’s  current  assump>ons,  including  assump>ons  regarding  economic,  global,  poli>cal,  business,  compe>>ve,  market  and  regulatory  maIers.  These  forward-­‐looking  statements  are  inherently  subject  to  significant  risks,  uncertain>es  and  changes  in  circumstances,  many  of  which  are  beyond  the  control  of  the  Company.  The  Company’s  actual  results  may  differ  materially  from  those  expressed  or  implied  by  such  forward-­‐looking  statements,  including  as  a  result  of  changes  in  the  facts  underlying  the  Company’s  assump>ons,  and  the  other  risks  described  in  the  Company’s  Annual  Informa>on  Form  dated  March  29,  2013,  its  Short  Form  Base  Shelf  Prospectus  dated  May  31,  2012,  the  Prospectus  Supplements  thereto  and  all  documents  incorporated  by  reference  in  such  documents.  Other  than  as  required  by  applicable  laws,  the  Company  undertakes  no  obliga>on  to  publicly  update  or  revise  any  forward-­‐looking  statement,  whether  as  a  result  of  new  informa>on,  future  developments  or  otherwise.      To  supplement  its  financial  statements,  the  Company  uses  select  non-­‐IFRSs  financial  measures.  Non-­‐IFRSs  measures  used  by  the  Company  to  analyze  performance  include  underwri>ng  ra>os  such  as  loss  ra>o,  expense  ra>o  and  combined  ra>o,  as  well  as  other  performance  measures  such  as  net  opera>ng  income  and  return  on  net  opera>ng  income.  The  Company  believes  that  these  non-­‐IFRSs  financial  measures  provide  meaningful  supplemental  informa>on  regarding  its  performance  and  may  be  useful  to  investors  because  they  allow  for  greater  transparency  with  respect  to  key  metrics  used  by  management  in  its  financial  and  opera>onal  decision  making.  Non-­‐IFRSs  measures  do  not  have  standardized  meanings  and  are  unlikely  to  be  comparable  to  any  similar  measures  presented  by  other  companies.  These  measures  are  defined  in  the  Company’s  glossary,  which  is  posted  on  the  Company’s  website  at  hIp://investor.genworthmicanada.ca.  A  reconcilia>on  from  non-­‐IFRSs  financial  measures  to  the  most  readily  comparable  measures  calculated  in  accordance  with  IFRSs  can  be  found  in  the  Company’s  most  recent  financial  statements,  which  are  posted  on  the  Company’s  website  and  are  also  available  at  www.sedar.com.      
    • Q1 2013 May 1, 2013Genworth MI Canada Inc. 3Solid  Q1  2013  results  across  key  metrics  Net  opera>ng  income   $  85  MM   $76  MM  Opera>ng  Return  on  equity   12%   12%  Opera>ng  earnings  per  share  (diluted)   $0.86     $0.77  Q1  2013   Q1  2012  Book  Value  Per  Share  (diluted,  including  AOCI)  $27.31 $27.88$28.72$30.62$31.32Q1  2012 Q2  2012 Q3  2012 Q4  2012 Q1  201315%  YoY  growth  
    • Q1 2013 May 1, 2013Genworth MI Canada Inc. 4Consistent  results  PrioriFes   First  Quarter  2013     Premiums    wriIen   $84  million  of  new  premiums  wriIen     Prudent  risk  management   Loss  ra>o  of  31%     Investment  pordolio  return   $5.3  billion  investment  pordolio  Book  yield  of  3.7%  as  at  March  31,  2013     Capital  strength   Minimum  capital  test  of  216%      Dividends  and  return  to  shareholders  Quarterly  dividend  of  $0.32  per  common  share  Normal  course  issuer  bid  announced  
    • Q1 2013 May 1, 2013Genworth MI Canada Inc. 5Posi>ve  trends  in  delinquency  rate  Mortgage insurance portfoliodelinquency rateInsurance  in-­‐force  March  31    2013  Dec  31    2012  Sept  30    2012  March  31    2013  Ontario   0.08%   0.09%   0.09%   46%  BC   0.20%   0.18%   0.18%   15%  Alberta   0.18%   0.22%   0.24%   16%  Quebec   0.19%   0.19%   0.20%   14%  Other   0.15%   0.14%   0.15%   9%  Canada   0.14%   0.14%   0.15%   100%  
    • Q1 2013 May 1, 2013Genworth MI Canada Inc. 6Recent  federal  budget    ConsultaFons  with  government  underway      No  changes  to  high  loan-­‐to-­‐value  products    Proposal  to  limit  use  of  pordolio  insurance  to  gov’t  sponsored  securi>za>on  programs    Proposal  to  prohibit  use  of  insured  mortgages  in  private  securi>za>on  programs      MIC  insured  mortgages  eligible  for  gov’t  sponsored  securi>za>on  programs    Majority  of  MIC  insured  mortgages  currently  securi>zed  through  these  programs        March  budget  overview  Impact  on  MIC  
    • Q1 2013 May 1, 2013Genworth MI Canada Inc. 7Canadian  market  outlook    Economy  to  grow  modestly  in  2013  …  Second  half  stronger  than  first    Moderate  income  growth    Stable  employment  outlook  Housing  market    Low  rates  and  steady  employment  con>nues  to  support  housing    Balanced  market  expected  to  keep  prices  rela>vely  flat    Market  adap>ng  to  lower  more  sustainable  level  of  housing  ac>vity    Borrower  quality  remains  high      Macroeconomic  environment  
    • Q1 2013 May 1, 2013Genworth MI Canada Inc. 8Book  value  con>nues  to  grow  $  millions  (except  EPS)   Q1    2013   Q4    2012   Q1    2012  Net  premiums  wriZen   $84   $  117   $79  Premiums  earned   144   147   147  Losses  on  claims   (44)   (46)   (56)  UnderwriFng  income   74   73   65  Adjusted  net  investment  income    (excluding  gains/losses)  45   46   43  Adjusted  net  operaFng  income   $85   $89   $76  Adjusted  operaFng  EPS  (diluted)   $0.86   $  0.90   $0.77  Book  value  per  share  (diluted  and  including  AOCI)  $31.32   $  30.62   $27.31  Demonstrated  track  record  of  performance  
    • Q1 2013 May 1, 2013Genworth MI Canada Inc. 9Core  business  outpaced  market    69      121      160      99      71      9      11      10      3      3      3      47      11      17      11    Q1  2012  Q2  2012  Q3  2012  Q4  2012  Q1  2013  ($millions)  Refinance  Gross    PW   82   179   181   119   84  Risk  premium   (3)   (2)   (3)   (2)   -­‐  Net    PW   $79   $176   $178   $117   $84  Purchase  Porcolio  3  Premiums  wriZen  Q1‘12   Q2‘12   Q3‘12   Q4‘12   Q1‘13  $1.7  billion  in  unearned  premiums    Lower  housing  ac>vity  as  housing  market  transi>ons  to  more  sustainable  level      Resale  volumes  down  15%  year-­‐over-­‐year    Improved  market  penetra>on  par>ally  offset  smaller  higher  loan-­‐to-­‐value  market      Con>nued  demand  for  pordolio  insurance      (PW  represents  premiums  wriIen)  
    • Q1 2013 May 1, 2013Genworth MI Canada Inc. 10Solid  underwri>ng  performance  65 76 77 73 742625 26 28 2656 484446 44Q112 Q212 Q312 Q412 Q113$147  UnderwriFng  profit  $144  Premiums  earned  UnderwriFng  profit  Expenses  Losses  on  claims  $147  Loss  ra>o   38%   32%   30%   31%   31%  Expense    ra>o   18%   17%   18%   19%   18%  Combined  raFo  56%   49%   48%   50%   49%    New  reported  delinquencies  declined  by  6%  sequen>ally  despite  typical  seasonal  pressures      Q1  loss  ra>o  flat  sequen>ally      Con>nued  success  with  loss  mi>ga>on  programs  $148   $147  Consistent  underwriFng  profit  ($millions)  
    • Q1 2013 May 1, 2013Genworth MI Canada Inc. 11Cash5%Federal35%Provincial14%Corporates40%Common Equity6%Investment  pordolio  remains  high  quality    Balanced    high  quality  pordolio  •  49%  federal  &  provincial  bonds  •  40%  corporate  bonds  •  96%    of  bonds  ‘A’  or  higher    $324  million  posi>ve  mark-­‐to-­‐market    Total      $5.3  billion  1Pre-­‐tax  equivalent  book  yield  amer  dividend  gross-­‐up  of  general  pordolio  (as  at  March  31,  2013)  $  Billion   Porcolio  Assets  (MV)                     $5.3  Pre-­‐tax  yield1   3.7  %  Dura>on   3.6  years  
    • Q1 2013 May 1, 2013Genworth MI Canada Inc. 12Strong  capital  posi>on  with  flexibility  145% 145% 145%185% 185%11% 17% 25%25% 31%156%162%170%210%216%2010 2011 2012 1-­‐Jan-­‐13 31-­‐Mar-­‐13Minimum  Capital  Test  RaFo  Buffer    Internal  MCT  raFo  target  MCT  raFo  Normal  course  issuer  bid  announced  
    • Q1 2013 May 1, 2013Genworth MI Canada Inc. 13Disciplined  execuFon  Proven  business  model  Solid  financial  foundaFon    Strategic  priori>es  remain  the  same!Profitability  remains  a  key  focus  
    • Q1 2013 May 1, 2013Genworth MI Canada Inc. 14Ques>on  and  Answer  SAMANTHA  CHEUNG    VP  INVESTOR  RELATIONS    905  287  5482  samantha.cheung@genworth.com    www.genworth.ca  For  further  info: