Genworth MI Canada Inc. Third Quarter 2013

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Genworth MI Canada Inc. Third Quarter 2013

  1. 1. Genworth MI Canada Inc. Third Quarter 2013 October 30, 2013
  2. 2. Forward-looking and non-IFRS statements This presentation 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, capital expenditure plans, dividend policy and the ability to execute on its future operating, investing and financial strategies, 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,” “expects,” “anticipates,” “contemplates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” or words of similar meaning. 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 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 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-IFRSs financial measures. Non-IFRSs 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 net operating income and return on net operating income. The Company believes that these nonIFRSs 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-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 http://investor.genworthmicanada.ca. A reconciliation 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 Q32013 October 30, 2013
  3. 3. Income up 12%, EPS up 15% year-over-year Q3 2013 Net operating income Q3 2012 $91 million $81 million Operating Return on equity 13% $0.94 Operating earnings per share (diluted) 12% $0.82 Book Value Per Share (diluted, including AOCI) 11% CAGR $31.32 $30.94 Q1 2013 $30.62 Q22013 $31.82 $28.72 Q3 2012 Genworth MI Canada Inc. Q4 2012 3 Q32013 Q32013 October 30, 2013
  4. 4. Strength across key metrics Priority Q3 2013 Result  Premiums written $161 million of new premiums  Risk management Loss ratio of 22%  Investments $5.3 billion investment portfolio Book yield of 3.7% (Sept 30/13)  Capital 218% MCT Announced 9% dividend increase from $0.32 to $0.35 per share Genworth MI Canada Inc. 4 Q32013 October 30, 2013
  5. 5. Market themes Drivers Implications Housing Market: - Balanced - Resales flat year -to-date - Home prices up modestly Premiums Written: - Modest increase in high LTV mortgage market in coming quarters - Portfolio quality should remain strong Unemployment: - Stable around 7% Losses on Claims: - Losses trending below long term pricing range Interest Rates: - Low rates supporting affordability Investment Income: - Stable investment yield Consumer Confidence: - Improving Genworth MI Canada Inc. 5 Q32013 October 30, 2013
  6. 6. Stable delinquencies quarter-over-quarter Number of delinquencies & Delinquency rate Insurance in-force Sept 30 2013 June 30 2013 Sept 30 2012 Sept 30 2013 Ontario 461 453 573 46% BC 311 318 341 15% Alberta 284 301 475 16% Quebec 463 451 548 14% Other 259 255 246 9% Total 1,778 1,778 2,183 100% Delinquency rate 0.12% 0.12% 0.15% * Delinquency rates are based on original insured loans in-force for which coverage term has not expired 19% decline in delinquencies over prior year Genworth MI Canada Inc. 6 Q32013 October 30, 2013
  7. 7. Increased profitability $ millions Q3 2013 (except EPS and book value) Net premiums written Q2 2013 Q3 2012 $161 $137 $178 Premiums earned 143 143 147 Losses on claims (32) (35) (44) Underwriting income 84 82 77 Net investment income (excluding gains/losses) 45 44 39 $91 $88 $81 $0.94 $0.89 $0.82 $31.82 $30.94 $28.72 Net operating income Operating EPS (diluted) Book value per share (diluted and including AOCI) Genworth MI Canada Inc. 7 Q32013 October 30, 2013
  8. 8. Top line reflects typical seasonality Premiums written ($millions) 11 10 18 2 11 3 160 99 Refinance 141  Premiums from purchases down 12% yearover-year 26 3 17 3 Portfolio  2012 regulatory changes to mortgage lending led to slower real estate activity in H1 2013 108 71 Purchase 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 Gross PW 181 119 84 137 161 Risk premium (3) (2) - - - $178 $117 $84 $137  Selectively participated in portfolio insurance $161 Net PW (PW represents premiums written) $1.7 billion in unearned premiums Genworth MI Canada Inc. 8 Q32013 October 30, 2013
  9. 9. Trend of loss ratio improvement ($millions) Underwriting profitability Earned premium $147 $147 $144 $143 Losses on claims 44 46 44 35 32 Expenses 26 28 26 26  Strong portfolio quality & stable economic conditions positively influencing loss performance $143 27 Underwriting profit 77 73 74 82 84 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Loss ratio 30% 31% 31% 25% 22% Expense ratio 18% 19% 18% 18% 19% Combined ratio 48% 50% 49% 43%  Q3 loss ratio of 22%, improved by 8 points year-over-year 41% Consistent underwriting profit Genworth MI Canada Inc. 9 Q32013 October 30, 2013
  10. 10. Investment portfolio remains high quality  Balanced high quality portfolio • Primarily fixed income Cash 2% • 51% federal & provincial bonds Common Equity 4% • 43% corporate Total $5.3 billion • 94% of bonds ‘A’ or higher Federal 35%  $180 million positive mark-to-market $ Billion Corporates 43% Portfolio Assets (MV) Pre-tax yield1 Provincial 16% $5.3 3.7 % Duration 3.8 years 1Pre-tax equivalent book yield after dividend gross-up of general portfolio (as at September 30, 2013) Genworth MI Canada Inc. 10 Q32013 October 30, 2013
  11. 11. Strong capital position Minimum Capital Test Ratio (MCT) 216% 17% 218% 31% 162% 216% 31% 33% Buffer 170% 25% 185% 145% 2012 185% Q1 2013 Q2 2013 Q3 2013 145% 2011 185% Internal MCT ratio target Repurchased $55 million common shares during quarter Genworth MI Canada Inc. 11 Q32013 October 30, 2013
  12. 12. Core strengths Proven business model Disciplined execution Strong risk focus Capital flexibility Solid financial foundation Genworth MI Canada Inc. 12 Q32013 October 30, 2013
  13. 13. Question and Answer SAMANTHA CHEUNG For further info: VP INVESTOR RELATIONS 905 287 5482 samantha.cheung@genworth.com www.genworth.ca Genworth MI Canada Inc. 13 Q32013 October 30, 2013

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