Sagen MI Canada Inc · TSX:MIC.PR.A
Sagen MI Canada — Genworth MI Canada — Investor Presentation (November 2009)
29 slides from Sagen MI Canada's investor presentation, November 2009
Slide 1: Genworth MI Canada Inc.
Genworth MI Canada Inc. November, 2009
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements that relate to the Company’s current expectations and views of future events. These forward-looking statements may be identified by words or phrases such as “may”, “will”, “expect”, “anticipate”, “aim”, “estimate”, “int
Slide 3: Non-GAAP Measures
Non-GAAP Measures To supplement its financial statements, the Company uses select non-GAAP financial measures. Non-GAAP 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 o
Slide 4: Overview
Overview Genworth MI Canada Inc.
Slide 5: Company Overview
Company Overview • Leading private mortgage insurer established 1995 • Well positioned in a highly attractive mortgage market • Strong relationships with the largest mortgage originators • Over 12 consecutive years of profitable growth • Debt free balance sheet and high quality investment portfolio
Slide 6: Business Highlights
Business Highlights • $220 billion total insurance in force that high quality and well-diversified • Total Assets of $5.1 billion • YTD Total Revenues of $598 mm1 • YTD Net Operating Income of $222 mm1 • Shareholders’ Equity $2.6 billion • Current Market Cap Approx $3 billion 1Excludes impact of cha
Slide 7: Genworth MI Operates in a Highly Attractive Mortgage Market
Genworth MI Operates in a Highly Attractive Mortgage Market 4 • High levels of homeownership 90 Day Delq Rates US vs CAN 3.5 Source: Canadian Bankers Association and Mortgage Bankers Association • Stable Canadian housing market 3 Delinquency Rate % 2.5 • Mandatory mortgage insurance 2 US peak delinq
Slide 8: Understanding Mortgage Insurance ("MI")
Understanding Mortgage Insurance (“MI”) Overview Illustrative Example • Mandatory on loans with LTV > 80% House price $275,000 Down payment 10% $27,500 • MI protects lenders against losses if the borrower defaults Mortgage loan $247,500 • Covers 100% of loan amount, secured by property Lender buys M
Slide 9: Well-Diversified Mortgage Portfolio
Well-Diversified Mortgage Portfolio • Geography – Portfolio distribution consistent with Origination distribution – 48% Ontario, 16% BC, 15% Alberta, 14% Quebec • Book Year – 53% business written prior to 2007 • Credit Score – High quality portfolio with the average score greater than 700 • Loan-to-
Slide 10: Our Strategy is Delivering Results
Our Strategy is Delivering Results Deepen Lender Relationships Maintain Strong Capital Base Continued Focus on Risk Deliver Solid Returns to Management Shareholders Third Quarter 2009 Results Net Operating Income: $75 million Operating EPS: $0.63 ROE: 12% 9
Slide 11: Improving Trends
Improving Trends Slowing Job Losses Market Conditions Strong Housing Market Increasing Consumer Confidence Improving Risk Profile Business Execution Strong Loss Mitigation Results Key Lender Penetration 10
Slide 12: Competitive Advantages
Competitive Advantages
Slide 13: Our Competitive Strengths
Our Competitive Strengths • Established relationships with over 180 mortgage Strong Lender Relationships lenders and originators with over 10 years of history with each of top 10 lenders Best in Class Service • Fully integrated into lenders’ value chain driven by And Technology differentiated servic
Slide 14: Fully Integrated in Lender Value Chain
Fully Integrated in Lender Value Chain Strong and Customized Lender Service Best In Class Relationships Excellence Technology Big 5 Banks to ~90% customer Proprietary software regional lenders satisfaction1 • Tailored strategies geared to strengthen lender relationships • Dedicated customer service
Slide 15: Highly Predictive, Automated Underwriting Platform
Highly Predictive, Automated Underwriting Platform Electronic Mortgage Application Genworth MI Canada Proprietary Underwriting System • Point of Sale technology Credit Evaluation Property Valuation Risk Rules Assessment Proprietary Mortgage Scoring System • Rigorously applied criteria Referred to Un
Slide 16: Comprehensive Risk Management
Comprehensive Risk Management Enterprise Risk Management Portfolio Analytics Quality Assurance Underwriting Guidelines Loss Mitigation Investment Policy & Loan-By-Loan Underwriting Regulatory Compliance Risk Management Key To Minimizing Losses And Driving Earnings 15
Slide 17: Loss Mitigation is a Key Differentiator
Loss Mitigation is a Key Differentiator • Expanded Homeownership Assistance Program • Increased Lender and Homebuyer Awareness • Strengthened Partnership With Lenders • Market Specific Claims Management Strategy Improving Losses on Claims 16
Slide 18: Market Environment Impacts Performance
Market Environment Impacts Performance
Slide 19: Affordability and Confidence Improving
Affordability and Confidence Improving Housing Market 1 20 2 .4 1 10 2 .3 CCI & Existing Sales & Completions Indexes 2 .2 Inverse of Housing Affordability Index 1 00 2 .1 90 2 .0 80 1 .9 70 1 .8 60 1 .7 50 1 .6 40 1 .5 Year 2006 2007 2 008 2009F 2010 F # o f S ales 483,770 518,369 434,352 43 2,600 4
Slide 20: Job Losses Stabilizing
Job Losses Stabilizing …. CBA Delinquency Rate vs. Unemployment Rate 0.70% 12.0% 0.60% 11.0% 10.0% 0.50% CBA Delinquency Rate (%) Unemployment Rate (%) 9.0% 0.40% 8.0% 0.30% 7.0% 0.20% 6.0% 0.10% 5.0% 0.00% 4.0% Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 200
Slide 21: Financial Strength
Genworth MI Canada Inc.
Slide 22: Q3 Financial Results
Q3 Financial Results Improving Premiums Written and Lower Losses on Claims $ Millions Except EPS • Net premiums written: $104 Net Income: $79 • Net premiums earned: $154 Net Operating Income: $75 • Losses on Claims: $64 Operating EPS: $0.63 • Investment income: $431 10% Sequential Increase in Net Op
Slide 23: Solid Financial Performance
Solid Financial Performance Improving Underwriting Results … 70% 63% 1 62% 57% 54% 60% Expense 20% 15% 50% 13% 15% Ratio 41% 40% 30% 14% Higher Net Operating Income 20% 42% 41% 46% 42% Loss 100 $MM 27% 10% Ratio 0% 80 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 60 1 40 85 77 75 74 69 Stable Investment Income2 … 2
Slide 24: Good Visibility into Future Revenues
Good Visibility into Future Revenues Unearned premium reserve of $2.0 billion Recognized as earned premium principally over 5 years – Actuarially-developed earnings curve – Matches expected loss development pattern Matched Premiums and Losses Premiums Losses ~90% of UPR Expected To Be Earned Over th
Slide 25: Delinquencies Are Improving And Stabilizing
Delinquencies Are Improving And Stabilizing September 30, 2009 Insurance in Force $220 Billion Delinquency Rate 30-Sept-08 30-June-09 30-Sept-09 Ontario 48% 0.22% 0.30% 0.25% BC 16% 0.11% 0.21% 0.23% Alberta 15% 0.24% 0.47% 0.50% Quebec 14% 0.25% 0.29% 0.29% Other1 7% Total Delinquency 0.21% 0.30% 0
Slide 26: High Quality Investment Portfolio
High Quality Investment Portfolio Total: $5.0 Billion • Diversified High Quality Portfolio 98% Cash or Investments Rated A or Higher Positive AOCI of $104 million • No Impairments • Initiatives Underway To Reduce Cash Enhance Yield While Maintaining Portfolio Quality Average Duration: 3.2 years Book
Slide 27: Growth and Focus Moving Forward
Growth and Focus Moving Forward
Slide 28: Key Messages
Key Messages • Strong Business Execution • Improving Economic Conditions • Pro-active Risk Management • Solid Capital Structure • Best in Class Customer Service Well-Positioned To Deliver Strong Returns 27
Slide 29: Genworth MI Canada Inc.
Genworth MI Canada Inc. For further information: Samantha Cheung, VP Investor Relations 905-287-5482 samantha.cheung@genworth.com www.genworth.ca
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