Sagen MI Canada Inc · TSX:MIC.PR.A
Sagen MI Canada — Genworth MI Canada — Investor Presentation (September 2014)
22 slides from Sagen MI Canada's investor presentation, September 2014
Slide 1: Delivering exceptional value
delivering exceptional value September, 2014
Slide 2: Forward-looking and non-IFRS statements
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 op
Slide 3: Agenda
Agenda Business overview Market dynamics and portfolio Financial performance Strategic priorities Key takeaways Genworth MI Canada (TSX: MIC) l 3
Slide 4: Mortgage insurance enables homeownership
Mortgage insurance enables homeownership premium premium Mortgage Lender Homebuyer Mortgage Insurer Originates Mortgages mortgage claim Product characteristics Mandatory for less than 20% down payment Upfront borrower paid premium Lender receives protection against loss from mortgage default
Slide 5: Genworth MI Canada (TSX: MIC) – Who we are
Genworth MI Canada (TSX: MIC) – Who we are Business Highlights Differentiating Factors 20 years in market Value added service Leading private sector MI Risk management $5.7 billion assets Regulatory expertise $3.6 billion shareholders’ equity Capital management Publicly traded on T
Slide 6: Influences of our business – the market
Influences of our business – the market Housing Resales and Completions (units in thousands) Key messages 642 635 636 634 643 663 “New to Canada” a key component of growth 176 176 185 200 187 180 Balanced housing markets Stable unemployment outlook Low interest rates helping 466 448 460 454
Slide 7: Influences of our business – housing risk
Influences of our business – housing risk Housing risk scorecard Key Risks Risk Level Assessment / Actions Rebound in consumer confidence British Columbia Overvaluation Resale volumes returning to long term trend Stronger economic conditions Alberta Supply Labour force growth boosting housing demand
Slide 8: Who do we insure?
Who do we insure? Mortgage Originators Borrower demographics 10% First-time home buyers Regional/Credit Unions 75% Prime borrowers with Big 6 Banks 15% strong credit profiles Mortgage Banks Primarily fixed rate loans 25 year amortization Source: Statistics Canada First-time home buyers will
Slide 9: High quality insurance portfolio
High quality insurance portfolio Average 726 727 727 730 733 734 737 Credit Key Messages Score Credit score up 11 pts '09 '10 '11 '12 '13 1Q'14 2Q'14 Modest home price ($000’s) appreciation Average Home 301 304 315 304 Gross debt ratios stable, 266 284 296 Price strong preference for 5-yr '09
Slide 10: Solid financial performance
Solid financial performance 1H 2014 1H 2013 Net premiums written $244 million $221 million Underwriting profits $183 million $156 million Investment income $97 million $108 million Net operating income $190 million $173 million Operating EPS (diluted) $2.00 $1.75 Operating return on equity 13% 12% B
Slide 11: Strong track record – 5 years as public company
Strong track record – 5 years as public company Operating earning per share Book value per share Operating return on equity (diluted) (diluted, including AOCI) (%) 13 $3.60 13 $32.53 13 12% 2 122 $3.43 12 $30.62 12 13% 11 $3.08 11 $26.94 11 13% 10 $3.02 10 $24.44 10 14% 091 $2.67 09 $22.40 091 13% 0
Slide 12: Our strategic priorities
Our strategic priorities Prudently grow market position Proactively manage risk Actively drive loss mitigation Maintain strong government relations Explore strategic opportunities Maintain solid financial and capital position Genworth MI Canada (TSX: MIC) l 12
Slide 13: Targeted approach to strategic growth
Targeted approach to strategic growth Market position Leverage favourable private MI sentiment Execute on delivering the best customer service Selectively offer portfolio insurance Risk Proactively manage housing risk and emerging risks Enhance governance and oversight Continuously refin
Slide 14: Key takeaways
Key takeaways (MIC: TSX) Leading private residential mortgage insurer Stable housing and mortgage market Positive sentiment towards private MI Prudent risk management Track record of solid profitability Strong capital generation Genworth MI Canada (TSX: MIC) l 14
Slide 15: Appendix
Appendix Delinquency trends Effective loan-to-value Stress test scenario Investment income Selected biographies Genworth MI Canada (TSX: MIC) l 15
Slide 16: Declining delinquency trends
Declining delinquency trends Number of reported delinquencies Key Messages 1,778 1,778 1,830 1,860 4% decrease in 1,703 Other 255 259 252 284 delinquencies Y/Y 1,830 269 482 527 Downward trend driven by Quebec 451 463 511 strong portfolio quality, Alberta 301 284 284 249 employment 221 BC 318 31
Slide 17: Seasoning reduces loss exposure
Seasoning reduces loss exposure Estimated current effective loan-to-value for high loan-to-value insurance in-force Insurance In-Force Original Effective Book Year $ billions % of total Loan-to-Value Loan-to-Value 2006 and Prior 100 40% 90% 39% Lower risk of 2007 29 12% 91% 65% loss exposure 2008 22
Slide 18: Premiums cover losses in stress scenario
Premiums cover losses in stress scenario Stress Scenario 2011 Book Example Full Cycle Scenario (Early 90’s recession) New Insurance in Force $22 B $22 B Claim Severity 27% 35% Gross Exposure $6 B $8 B Claim Frequency 3% 6% Loss Exposure $181 MM $480 MM Premiums Written $514 MM $514 MM Loss Ratio 35%
Slide 19: Investments contribute steady income
Investments contribute steady income $5.3 billion Key Messages Common Equity Cash Focus on high investment 3% 5% quality Corporates Diversified portfolio with 44% Federal over 50% in government 31% securities and cash Pre-tax yield of 3.6%1 Duration of 3.7 years Provincial 17% Strong top lin
Slide 20: Biographies
Biographies Brian led the establishment of Stuart Levings is a qualified Genworth into the Canadian Chartered Accountant with over 15 marketplace in 1994 and later years of professional experience in led it through its initial public a variety of industry sectors. Since offering in 2009. He has more
Slide 21: Biographies
Biographies Philip became Chief Financial Officer of the Company in 2009. He has over 20 years of finance and general management experience in financial services businesses. Since joining the Company in 1995, Phillip has held several senior Philip positions, including Vice President, Mayers Finance,
Slide 22: Investor Contact: Samantha Cheung
Investor Contact: Samantha Cheung VP Investor Relations 905.287.5482 samantha.cheung@genworth.com www.genworth.ca Genworth MI Canada (TSX: MIC) l 22
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