Sagen MI Canada Inc · TSX:MIC.PR.A
Sagen MI Canada — Genworth MI Canada — Corporate Update (August 2010)
18 slides from Sagen MI Canada's corporate update, Aug 9, 2010
Slide 1: Genworth MI Canada Inc. Housing Market View
Genworth MI Canada Inc. Housing Market View August 9th, 2010
Slide 2: Forward-Looking Statements
Forward-Looking 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 pl
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
Slide 4: Second Quarter 2010 Results
Second Quarter 2010 Results Fourth Sequential Quarterly Increase In Net Income $5.5 Billion Assets and $2.8 Billion Shareholders’ Equity Solid Operating Results Net Operating Income $86 MM Operating EPS (diluted) $0.73 ROE (operating) 13% Key Business Objectives Return to Mid-teen ROE
Slide 5: Agenda
Agenda Our View Of The Current Market How We Measure The Housing Market A Regional Focus Drivers Of Loss Buffers In The MIC Portfolio Questions and Answers Housing Market View – August 9th 2010 4
Slide 6: Solid Housing Fundamentals
Solid Housing Fundamentals Improving Employment Levels Strong Consumer Confidence Low Mortgage Interest Rates Moderating Home Prices Stable Household Formation … First Time Homebuyers Housing Market View – August 9th 2010 5
Slide 7: Our View Of The Current Housing Market
Our View Of The Current Housing Market House Prices Up ~4% Year To Date …Estimate ~2.5% For 2010 Markets Returning To More Balanced State Regional Focus Areas ... Vancouver Expect Flat Market In 2011, 2 – 3% Growth Thereafter Canadian Housing Market Normalizing Again Housing Market View – Au
Slide 8: How We Measure The Housing Market
How We Measure The Housing Market What How Price Change Canadian Real Estate Association (CREA) Teranet House Price Index Supply vs Demand Sales To New Listings Ratio (CREA) Affordability Price To Income Multiple (MIC & Market) Price To Rent Multiple Debt To Income Ratio Mortgage Rates
Slide 9: Measuring Price Change
-15% -10% 10% 15% 20% 25% -5% 0% 5% 2005.01 2005.03 2005.05 2005.07 2005.09 2005.11 2006.01 Housing Market View – August 9th 2010 2006.03 2006.05 2006.07 2006.09 2006.11 2007.01 CREA YoY% Change 2007.03 2007.05 8 2007.07 2007.09 2007.11 Measuring Price Change 2008.01 2008.03 2008.05 2008.07 2008.09
Slide 10: Measuring Supply vs Demand
Measuring Supply vs Demand Sales To Listings Ratio 80% Canada GTA 80% Sellers 70% 70% 60% 60% 50% Balanced 50% 40% 40% 30% 30% Buyers 20% 20% 2009.09 2009.12 2010.03 2010.06 2009.09 2009.12 2010.03 2010.06 Calgary Vancouver 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 2009.09 2009.12 2010
Slide 11: Measuring Affordability
Measuring Affordability Affordability Index – P&I/ Household Income % 70 60 50 40 30 20 10 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Market MIC Market Median Affordability Reasonable – MIC More Conservative Housing Market View – A
Slide 12: Strong Regional Profiles
Strong Regional Profiles National Genworth Market Averages Average Property Price $287,100 $340,400 Average Household Income $83,800 $71,400 GTA Genworth Market Averages Average Property Price $376,400 $435,227 Average Household Income $84,000 $87,400 Calgary Genworth Market Averages Average Propert
Slide 13: A Closer View Of Our Vancouver Portfolio
A Closer View Of Our Vancouver Portfolio MIC’s Served Market Our Loan Characteristics Total Mortgage Market 99% Regular Owner Occupied High Loan to Value • Market 1% Secondary Property One Third Lower Loan Average Smaller Loans • Lower Average LTV • High Average Credit Higher Credit Sc
Slide 14: Drivers of Loss In Our Business
Drivers of Loss In Our Business Frequency of Default Job Losses …70% - Loss of Income - Bankruptcy Severity of Default House Prices …25% - Drop in Value Erodes Equity in Home - Slower Market … Interest Expense Marginal Impact - Frequency & Severity Interest Rates …5% - Majority Fixed Rate Mortgages
Slide 15: Buffers In Our Portfolio
Buffers In Our Portfolio Insurance In Force 75% Fixed Rate Portfolio Original Effective LTV LTV ($B) $234 >5 Yrs 2010 $11 91% 91% 5 Yrs 3.8% 70.3% 2009 $17 91% 85% 2008 $25 92% 86% 3 Yrs 19.4% 2007 $32 91% 76% 2006 $23 89% 65% 4 Yrs 2005 $18 89% 58% 6.6% 2004 $19 90% 48% 2003 $12 90% 47% Average Deb
Slide 16: Mortgage Portfolio Performance
Mortgage Portfolio Performance Insurance in Force 06/30/10 Delinquency Rate 30-Jun-10 31-Mar-10 31-Dec-09 Ontario 48% 0.19% 0.23% 0.23% BC 16% 0.26% 0.25% 0.25% Alberta 15% 0.57% 0.55% 0.54% Quebec 14% 0.24% 0.30% 0.29% Other 7% 0.17% 0.17% 0.19% Canada 0.26% 0.28% 0.28% Delinquencies Trending Lower
Slide 17: Improving Combined Ratio
Improving Combined Ratio 62% 57% 55% 55% 54% 15% 46% 15% 47% 13% 16% 17% Expense 15% 15% Ratio 33% 14% 46% 42% Loss 41% 39% 38% Ratio 31% 32% 19% 1 '07 '08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 1 Including impact of changes to the premiums recognition curve, loss ratio and expense ratio would have bee
Slide 18: Questions?
Questions? Housing Market View – August 9th 2010 17