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Genworth MI Canada Inc. Second Quarter 2013

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Genworth MI Canada Inc. Second Quarter 2013

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Genworth MI Canada Inc. Second Quarter 2013

  1. 1. Genworth MI Canada Inc. Second  Quarter  2013   July  31,  2013  
  2. 2. Forward-­‐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.       Genworth MI Canada Inc. 2 Q22013 July 31, 2013
  3. 3. Net  opera?ng  income  higher  by  11%     Q2  2013   Net  opera?ng  income   Q2  2012   $88  million   $79  million   Opera?ng  Return  on  equity   12%   $0.89   Opera?ng  earnings  per  share  (diluted)   12%   $0.79   Book  Value  Per  Share  (diluted,  including  AOCI)   11%  CAGR     $30.62 $27.88 Q2  2012 Genworth MI Canada Inc. $31.32 $30.94 Q1  2013 Q22013 $28.72 Q3  2012 Q4  2012 3 Q22013 July 31, 2013
  4. 4. Solid  results  for  Q2  2013   Priority   Result      Premiums    wriIen   $137  million  of  new  premiums  wriIen      Prudent  risk  management   Loss  ra?o  of  25%      Investment  porbolio  return   $5.3  billion  investment  porbolio   Book  yield  of  3.6%  as  at  June  30,  2013      Capital  strength   Minimum  capital  test  of  216%        Dividends  and  return  to   shareholders   Quarterly  dividend  of  $0.32  per  common  share   Repurchased  $50  million  in  common  shares   Genworth MI Canada Inc. 4 Q22013 July 31, 2013
  5. 5. Broad  based  improvement  in  delinquencies   Number of delinquencies & Delinquency rate Insurance   in-­‐force   June  30    2013   March  31    2013   June  30    2012   June  30    2013   Ontario   453   533   649   46%   BC   318   337   395   15%   Alberta   301   337   551   16%   Quebec   451   507   587   14%   Other   255   249   226   9%   Total   1,778   1,963   2,408   100%   Delinquency  rate   0.12%   0.14%   0.17%   26%  decline  in  number  of  delinquencies  over  prior  year   Genworth MI Canada Inc. 5 Q22013 July 31, 2013
  6. 6. Canadian  market  update   Macroeconomic  environment   •  Solid  outlook  for  Canadian  economy   2013  New  Insurance  WriZen     •  Unemployment  rate  stable   •  Average  credit  score  732   •  Monetary  policy  suppor?ng  growth   •  Average  GDS*  of  23%   Housing  market   •  Home  prices  up  a  modest  4%     Balanced  housing  market   •  89%  locking  in  the  5-­‐yr  fixed  rate     Low  interest  rates  con?nue   •  Average  home  purchase  price  $318K     Trending  towards  a  som  landing   *  GDS  =  Gross  Debt  Service  which  represents    principal,     interest  and  taxes  as  a  %  of  gross  family  income       Genworth MI Canada Inc. 6 Q22013 July 31, 2013
  7. 7. Demonstrated  track  record  of  performance   $  millions  (except  EPS)   Q2  2013   Q1    2013   Q2    2012   Net  premiums  wriZen   $137   $84   $176   Premiums  earned   143   144   148   Losses  on  claims   (35)   (44)   (48)   Underwriang  income   82   74   76   Net  investment  income     (excluding  gains/losses)   44   45   40   $88   $85   $79   $0.89   $0.86   $0.79   $30.94   $31.32   $27.88   Net  operaang  income   Operaang  EPS  (diluted)   Book  value  per  share   (diluted  and  including  AOCI)   Genworth MI Canada Inc. 7 Q22013 July 31, 2013
  8. 8. Core  business  steady,  in  line  with  market   Premiums  wriZen   ($millions)    47      11      10      26      11      17      3      160     Pordolio    121      3      11      3      108      99     Refinance    71     Purchase   Q2‘12   Q2  2012  QQ3‘12   Q4  2012  QQ1‘13   Q2  2013   3  2012   Q4‘12   1  2013   Q2‘13   Gross    PW   179   181   119   84   137   Risk  premium   (2)   (3)   (2)   -­‐   -­‐   $84     2012  product  changes  have  resulted  in   slower  real  estate  ac?vity       Premiums  from  purchases  down  10%  year-­‐ over-­‐year  consistent  with  slower  resale   volumes         Con?nued  to  selec?vely  par?cipate  in   porbolio  insurance   $137   Net    PW   $176   $178   $117   (PW  represents  premiums  wriIen)   $1.7  billion  in  unearned  premiums   Genworth MI Canada Inc. 8 Q22013 July 31, 2013
  9. 9. Solid  underwri?ng  performance   ($millions)   Premiums  earned   Losses  on   claims   Underwriang  profit   $148   $147   35 Underwriang   profit   48 44 46 44 25 26 28 26 76 77 73 74 82 Q2'12 Expenses     Strong  porbolio  quality  &  stable   economic  condi?ons  posi?vely   influencing  loss  performance     $147   $144   $143   Q3'12 Q4'12 Q1'13 Q2'13 26 Loss  ra?o   32%   30%   31%   31%   17%   18%   19%   18%   18%   Combined   raao   49%   48%   50%   49%     Q2  loss  ra?o  of  25%,  improved  by  6   points     25%   Expense    ra?o     New  reported  delinquencies   declined  by  9%  sequen?ally   43%     Consistent  underwriang  profit   Genworth MI Canada Inc. 9 Q22013 July 31, 2013
  10. 10. Investment  porbolio  remains  high  quality     Balanced  high  quality  porbolio   •  50%  federal  &  provincial  bonds   Cash 5% •  41%  corporate  bonds   Common Equity 5% •  95%    of  bonds  ‘A’  or  higher   Total       $5.3  billion     $193  million  posi?ve  mark-­‐to-­‐market     Federal 37% $  Billion   Corporates 41% Assets  (MV)                     Provincial 13% Pre-­‐tax  yield1   Dura?on   Pordolio   $5.3   3.6  %   3.6  years   1Pre-­‐tax  equivalent  book  yield  amer  dividend  gross-­‐up  of  general   porbolio  (as  at  June  30,  2013)   Genworth MI Canada Inc. 10 Q22013 July 31, 2013
  11. 11. Strong  capital  posi?on  with  flexibility   Minimum  Capital  Test  Raao  (MCT  raao)   216% 31% 156% 31% 185% 162% 216% 185% Q1  2013 Q2  2013 170% 25% 11% 17% 145% 145% 145% 2010 2011 2012 Internal  MCT  raao  target   Repurchased  $50  million  common  shares  during  quarter   Genworth MI Canada Inc. 11 Q22013 July 31, 2013
  12. 12. Our  core  strengths! Proven  business  model   Disciplined  execuaon   Strong  risk  focus   Capital  flexibility   Solid  financial  foundaaon   Genworth MI Canada Inc. 12 Q22013 July 31, 2013
  13. 13. Ques?on  and  Answer   SAMANTHA  CHEUNG     For  further  info:   Genworth MI Canada Inc. VP  INVESTOR  RELATIONS     905  287  5482   samantha.cheung@genworth.com     www.genworth.ca   13 Q22013 July 31, 2013

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