Your SlideShare is downloading. ×

Q1 2014 Earnings Slides

203

Published on

Published in: Business, Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
203
On Slideshare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
1
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. First Quarter 2014 April 30, 2014 Genworth MI Canada Inc.
  • 2. Q1 2014Genworth MI Canada Inc. 2 Forward-looking and non-IFRS statements This presentation relating to Genworth MI Canada Inc. (the “Company”, “Genworth Canada” or “MIC”) includes certain forward- looking statements. These forward-looking statements include, but are not limited to, statements with respect to the Company’s future operating and financial results, expectations regarding premiums written, losses on claims and investment income, the Canadian housing market, and other statements that are not historical facts. These forward-looking statements may be identified by their use of words such as “may”, “would”, “could”, “will,” “intend”, “plan”, “anticipate”, “believe”, “seek”, “propose”, “estimate”, “expect”, and similar expressions. These statements are based on the Company’s current assumptions, including assumptions regarding economic, global, political, business, competitive, market and regulatory matters. These forward-looking statements are inherently subject to significant risks, uncertainties 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 assumptions, and the other risks described in the Company’s Annual Information Form dated March 17, 2014, 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 obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. To supplement its financial statements, the Company uses select non-IFRS financial measures. Non-IFRS measures used by the Company to analyze performance include underwriting ratios such as loss ratio, expense ratio and combined ratio, as well as other performance measures such as adjusted net operating income and adjusted return on equity. The Company believes that these non-IFRS financial measures provide meaningful supplemental information 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 operational decision making. Non-IFRS 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 http://investor.genworthmicanada.ca. A reconciliation from non-IFRS financial measures to the most readily comparable measures calculated in accordance with IFRS, where applicable can be found in the Company’s most recent management’s discussion and analysis, which is posted on the Company’s website and is also available at www.sedar.com.
  • 3. Q1 2014Genworth MI Canada Inc. 3 Financial highlights Q1 2014 Q/Q Net Operating Income $91 million +7% Operating ROE 12% flat Operating EPS (diluted) $0.96 +7% MCT 229% +6 pts Book Value Per Share (diluted, including AOCI) $31.32 $30.94 $31.82 $32.53 $33.52 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Key messages:  Solid earnings performance with QoQ EPS growth of 7%  Ongoing generation of capital  $160 mm debt raise to repay existing debt May 1, 2014  Announced a 15% average premium rate increase effective May 1, 2014 Operating EPS (diluted) $0.86 $0.89 $0.94 $0.90 $0.96 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
  • 4. Q1 2014Genworth MI Canada Inc. 4 Recent development – OSFI B-21 Guideline Our current practices are generally aligned  On April 14, 2014 OSFI released for comment draft guideline B-21 entitled “Residential Mortgage Insurance Underwriting Practices and Procedures”, based on six principles: Principles 1 Maintain a comprehensive underwriting plan 2 Maintain standards for lender qualification 3 Establish prudent underwriting criteria 4 Conduct periodic assessments of lender underwriting 5 Periodic validation of internal systems, models & processes 6 Establish effective portfolio risk management/risk mitigation
  • 5. Q1 2014Genworth MI Canada Inc. 5 Market overview Influencer Stable macro economic environment Low interest rate environment continues Improving first time home buyer confidence Lender sentiment positive on private MI’s Impact to business Continued strong loss performance this year Modest mortgage origination market growth – with stable debt ratios Core high loan-to-value premium growth Opportunity to improve market share position
  • 6. Q1 2014Genworth MI Canada Inc. 6 Key messages:  Credit score up 14 pts since 2008  New business mix drove average home price up 4% in Q1  Gross debt ratios stable, strong preference for 5 year fixed rate mortgages Strong insurance portfolio quality 720 726 727 727 730 733 734 08 09 10 11 12 13 Q1'14 256 266 284 296 301 304 315 08 09 10 11 12 13 Q1'14 ($000’s) 23 22 24 25 24 23 25 08 09 10 11 12 13 Q1'14 (%) Average Credit Score Average Home Price Average Gross Debt Service Ratio
  • 7. Q1 2014Genworth MI Canada Inc. 7 533 453 461 517 497 337 318 311 295 303 337 301 284 284 249 507 451 463 482 527 249 255 259 252 284 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 1,860 Number of Reported Delinquencies Delinquency trends Ontario BC Alberta Quebec Other Key messages:  Modest increase in Q1 due to typical seasonality  Downward trend YoY driven by improving employment and stable housing markets  Declining trend in most regions led by Alberta, BC and Ontario 1,963 1,778 1,778 1,830
  • 8. Q1 2014Genworth MI Canada Inc. 8 Financial overview – Q1 2014 $MM except EPS and BVPS Q1’14 Q4’13 Q1’13 Net premiums written $84 $129 $84 Net premiums earned 141 142 144 Losses on claims 28 31 44 Expenses 27 33 26 Underwriting income 86 78 74 Investment income (excl. realized gains / losses) 44 44 45 Net operating Income $91 $85 $85 Diluted operating EPS $0.96 $0.90 $0.86 Book value per share (diluted, incl. AOCI) $33.52 $32.53 $31.32 Key messages:  Premiums written reflect typical seasonality  Premiums earned flat  Loss ratio of 20% reflects favourable economic conditions and strong portfolio quality  Investment income consistent QoQ Strong profitability ... 7% QoQ and 12% YoY growth in EPS
  • 9. Q1 2014Genworth MI Canada Inc. 9 Premiums Earned Limited impact from price increase on premiums earned in 2014 / 15 due to earnings curve Impact from premium increase Enhances long term ROE Losses Premiums Premiums Written 15% premium rate increase effective May 1 Standard Product 90.01 – 95% LTV 85.01 – 90% LTV 80.01 – 85% LTV Current 2.75% 2.00% 1.75% New 3.15% 2.40% 1.80% Premiums Written Impact1  2014E ~$35 MM  Full Year ~$70 MM 1. Estimates based on 2013 actual high loan-to-value new insurance written
  • 10. Q1 2014Genworth MI Canada Inc. 10 74 82 84 78 86 26 26 27 33 27 44 35 32 31 28 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Profitability driven by low losses Underwriting profitability Underwriting profit Expenses Losses on claims Loss ratio 31% 25% 22% 22% 20% Expense ratio 18% 18% 19% 23% 19% Combined ratio 49% 43% 41% 45% 39% ($millions) Key messages:  Q1 loss ratio of 20% below expected range  Expense ratio of 19% in line with management’s expectation Favourable economic conditions & strong business execution Premiums earned $144 $143 $143 $142 $141
  • 11. Q1 2014Genworth MI Canada Inc. 11 Cash 3% Federal 33% Provincial 16% Corporates 44% Common Equity 4% Investments contribute steady income Total $5.2 billion 1. Pre-tax equivalent book yield after dividend gross-up of general portfolio (as at March 31, 2014) Portfolio Assets (market value) $5.2 billion Pre-tax yield1 3.7 % Duration 3.7 years Key messages:  Focus on high investment quality  Diversified portfolio with over 50% government and cash  Relatively short duration
  • 12. Q1 2014Genworth MI Canada Inc. 12 185% 185% 185% 185% 185% 31% 31% 33% 38% 44% 216% 216% 218% Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Strong capital position Minimum Capital Test Ratio (MCT) Internal MCT target Buffer Key messages:  Continuing to balance capital strength, flexibility and efficiency  Subsequent to quarter end, successfully extended debt maturity profile  Issued $160 MM 10 year unsecured debt @ 4.24% to fund $150 MM retirement  Customized MCT will be in place for 2015 with no material impact expected  New Normal Course Issuer Bid takes effect May 5, 2014 Strong capital position ... Including $94 MM holding co. cash 229%223%
  • 13. Q1 2014Genworth MI Canada Inc. 13 Question and Answer SAMANTHA CHEUNG VP INVESTOR RELATIONS 905 287 5482 samantha.cheung@genworth.com www.genworth.ca Contact:

×