Sagen MI Canada Inc · TSX:MIC.PR.A
Sagen MI Canada — Genworth MI Canada — Q2 2020 Earnings Presentation
16 slides from Sagen MI Canada's earnings presentation, Aug 6, 2020
Slide 1: Second Quarter 2020 Results
Second Quarter 2020 Results August 6th, 2020 Q2 2020 Results Genworth MI Canada Inc. 1
Slide 2: Forward-looking and non-IFRS statements
Forward-looking and non-IFRS statements Public communications, including oral or written communications such as this document, relating to Genworth MI Canada Inc. (the “Company”, “Genworth Canada” or “MIC”) often contain certain forward-looking statements. These forward-looking statements include, b
Slide 3: 2Q20 financial results
2Q20 financial results $MM except loss ratio, Q2 Q1 Q2 Q2 key highlights Op. ROE, Op. EPS & Q/Q Y/Y MICAT ratio 2020 2020 2019 Premiums written $227 $114 $195 +99% +17% • Total premiums written increased Y/Y by 17% primarily due to increased demand for portfolio insurance Premiums earned $172 $171 $
Slide 4: Potential Economic Scenarios
Potential Economic Scenarios Base Assumptions Downside Assumptions GDP • Short but severe economic correction in 1H’20 • Deeper economic shock and slower recovery as health • Recovery begins in Q3 as the health crisis subsides crisis extends into 2H’20 with slower recovery for oil-producing regions
Slide 5: Top line
Top line New insurance written ($ billions) Premiums written ($ millions) Transactional Portfolio Transactional Portfolio Q4 $177 Q4 $5.1 Q3 $213 $60 Q3 $6.1 $5 $13.4 $6 Q2 $1.3 Q2 $187 $167 $5.3 $4.8 $1.3 $8 Q1 $2.4 Q1 $100 $110 $5 $4 $2.9 $3.2 $1.0 $1.0 2019 2020 2019 2020 2019 2020 2019 2020 Q2 A
Slide 6: Strong portfolio quality
Strong portfolio quality Credit score1 Average home price2 Stacked risk factors3 (In ‘$000s) Credit Score Ratio LTV Avg < 660 Contractual TDSR > 40% 90-95% % Score <660 Avg score Compliance GDSR/TDSR Max < 680 90-95% $369 > 35%/42% $357 $356 $350 $349 $335 $331 $327 $324 $322 1.3% $315 $304 $301 $29
Slide 7: Transactional NIW opportunity
Transactional NIW opportunity Market Development Assessment CMHC Product Changes: • The Company confirmed it had no plans to change • Effective July 1, CMHC will apply the following its underwriting policy. underwriting criteria to insured mortgages: • Non-traditional sources of down payment and < 6
Slide 8: Mortgage payment deferrals
Mortgage payment deferrals Payment deferral have proven to be an effective loss mitigation tool as highlighted by Bank of Canada: “Household indebtedness risks in the wake of COVID-19”, June 2020 Simulated mortgage arrears Source: Household indebtedness risks in the wake of COVID-19, Bank of Canada
Slide 9: Reported mortgage payment deferrals
Reported mortgage payment deferrals Reporting overview Mortgage payment deferrals are an effective loss mitigation strategy in the COVID-19 environment because the deferrals help borrowers bridge income interruptions. As at June 30, 2020: • Approximately 13.7% have taken payment deferrals. • Approxi
Slide 10: Strong financial performance
Strong financial performance $MM except EPS & BVPS Q2’20 Q1’20 Q2’19 Q2 highlights Transactional premiums written $167 $110 $187 Portfolio premiums written 60 4 8 • Transactional premiums written were lower by 11% Y/Y on decreased housing activity Total premiums written $227 $114 $195 • Premiums ear
Slide 11: Accounting for payment deferrals
Accounting for payment deferrals Loss reserving for payment deferrals • The Company expects that a subset of insured mortgages with payment deferrals will likely end up in default after the deferral period ends. • The Company has included a provision in its IBNR1 reserve for its estimate of the loss
Slide 12: Delinquency trends
Delinquency trends Outstanding delinquencies New delinquencies, net of cures, by region Total Q/Q Total 1,974 491 ∆ 1,761 1,798 1,754 Prairies1 1,701 Prairies1 385 69 14 373 297 39 -15 Atlantic 242 258 Atlantic 240 273 206 281 48 64 284 73 44 199 221 226 227 69 51 Quebec 315 295 293 Quebec 34 55 275
Slide 13: Investments
Investments Total investments and net derivatives Operating Investment Income ($6.5B1) (excluding realized/unrealized gains, $ millions) Duration: 3.6 years Book yield: 3.0%2 $55 Market MTM6 MTM6 Q4 Portfolio ($MM) % Mix Value Q2 Q1 Q3 $57 Cash & other4 $419 - 6% - Q2 $56 $48 Q1 $57 $54 Federals 2,0
Slide 14: Capital management
Capital management Regulatory capital as at June 30th, 2020 (by category, $ millions unless otherwise noted)* Highlights June 30th, 2020 March 31st, 2020 MICAT & Holdco Cash • Strong capital position with MICAT ratio of 169% and Holdco Cash of $108 MM Capital available 4,104 3,923 • Significant Q/Q
Slide 15: Revised 2020 outlook
Revised 2020 outlook Moderately higher total premiums written due to the increase in portfolio insurance opportunities, the recovery in the housing market and CMHC product changes Flat to modestly higher premiums earned due to the expected increase in premiums written Full year loss ratio range revi
Slide 16: Investor Relations
Aaron Williams, CPA, CA Vice President, Finance/Investor Relations 905.287.5504 aaron.williams@genworth.com Investor Relations investor.genworthmicanada.ca investor@genworth.com Q2 2020 Results Genworth MI Canada Inc. 16