Genworth MI Canada Q2 2014 Conf Call Slides

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Genworth MI Canada Q2 2014 Conf Call Slides

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Genworth MI Canada Q2 2014 Conf Call Slides

  1. 1. Second Quarter 2014 July 30, 2014 Genworth MI Canada Inc.
  2. 2. Q2 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 June 18, 2014, 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 financial measures include net operating income, interest and dividend income (net of investment expenses), operating earnings per common share (basic), operating earnings per common share (diluted), shareholders’ equity excluding accumulated other comprehensive income (“AOCI”), operating return on equity and underwriting ratios such as loss ratio, expense ratio and combined ratio. 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. 3. Q2 2014Genworth MI Canada Inc. 3 $0.89 $0.94 $0.90 $0.96 $1.04 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 $30.94 $31.82 $32.53 $33.52 $34.17 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Strong performance across all key metrics Q2 2014 Q/Q Y/Y Premiums written $160 million +91% +17% Net Operating Income $99 million +9% +12% Operating ROE 13% +1 pt +1 pt Operating EPS (diluted) $1.04 +8% +17% MCT 230% +1 pts +14 pts Book Value Per Share (diluted, including AOCI) Key Q2 2014 messages:  Strong top line growth  High quality insurance portfolio  Low losses continue  Increased net operating income Operating EPS (diluted)
  4. 4. Q2 2014Genworth MI Canada Inc. 4 Market overview Influencer  Stable macro economic environment  Balanced housing market  Industry premium rate increase on May 1  Positive momentum for private mortgage insurers Impact to business  Modest mortgage origination growth  Larger premium opportunity in the core high loan-to-value market segment  Opportunity for market share gains  Full year loss ratio of 15-25%
  5. 5. Q2 2014Genworth MI Canada Inc. 5 Key messages:  Credit score up 11 pts since 2009  Modest home price appreciation since 2012  Gross debt ratios stable, strong preference for 5 year fixed-rate mortgages  Financially disciplined first-time home buyers High quality insurance portfolio 726 727 727 730 733 734 737 09 10 11 12 13 Q114 Q214 266 284 296 301 304 315 304 09 10 11 12 13 Q114 Q214 ($000’s) 22 24 25 24 23 25 24 09 10 11 12 13 Q114 Q214 (%) Average Credit Score Average Home Price Average Gross Debt Service Ratio
  6. 6. Q2 2014Genworth MI Canada Inc. 6 453 461 517 497 430 318 311 295 303 272 301 284 284 249 221 451 463 482 527 511 255 259 252 284 269 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 1,8601,830 1,703 Number of Reported Delinquencies Delinquency trends Ontario BC Alberta Quebec Other Key messages:  4% decrease in delinquencies YoY  Downward trend driven by strong portfolio quality, employment growth and stable housing markets  Declining trend led by Alberta, BC and Ontario 1,778 1,778 1,830
  7. 7. Q2 2014Genworth MI Canada Inc. 7 Strong profitability in Q2 2014 $MM except EPS and BVPS Q2’14 Q1’14 Q2’13 Premiums written $160 $84 $137 Premiums earned 141 141 143 Losses on claims 17 28 35 Expenses 27 27 26 Underwriting income 97 86 82 Investment income (excl. realized gains / losses) 43 44 44 Net operating Income $99 $91 $88 Diluted operating EPS $1.04 $0.96 $0.89 Book value per share (diluted, incl. AOCI) $34.17 $33.52 $30.94 Key messages:  Premiums written result of higher market penetration and increased housing activity  May 1 price increase will have favourable impact in H2 2014  Loss ratio of 12% reflects strong portfolio quality and favourable economic conditions  Investment income consistent QoQ 8% QoQ and 17% YoY growth in operating EPS
  8. 8. Q2 2014Genworth MI Canada Inc. 8 82 84 78 86 97 26 27 33 27 27 35 32 31 28 17 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Low losses drove increased profitability Underwriting profitability Underwriting profit Expenses Losses on claims Loss ratio 25% 22% 22% 20% 12% Expense ratio 18% 19% 23% 19% 19% Combined ratio 43% 41% 45% 39% 31% ($millions) Key messages:  Low mortgage delinquencies for industry  Company’s 2014 full year loss ratio anticipated range of 15-25%  Stable expense ratio Strong business execution and favourable housing market Premiums earned $143 $143 $142 $141 $141
  9. 9. Q2 2014Genworth MI Canada Inc. 9 Cash 5% Federal 31% Provincial 17% Corporates 44% Common Equity 3% Investments contribute steady income Total $5.3 billion 1. Pre-tax equivalent book yield after dividend gross-up of general portfolio (as at June 30, 2014) Portfolio Invested assets and cash (market value) $5.3 billion Pre-tax yield1 3.6% Duration 3.7 years Key messages:  Focus on high investment quality  Diversified portfolio with over 50% government securities and cash
  10. 10. Q2 2014Genworth MI Canada Inc. 10 185% 185% 185% 185% 185% 31% 33% 38% 44% 45% 216% 218% Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Strong capital position Minimum Capital Test Ratio (MCT) Internal MCT target Buffer to internal target Key messages:  Continuing to balance capital strength, flexibility and efficiency  Operating holding MCT target established at 220%, pending finalization of new capital test for mortgage insurers  $115 million holding company cash 230%229%223% 220% holding target
  11. 11. Q2 2014Genworth MI Canada Inc. 11 Question and Answer SAMANTHA CHEUNG VP INVESTOR RELATIONS 905 287 5482 samantha.cheung@genworth.com www.genworth.ca Contact:

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