Sagen MI Canada Inc · TSX:MIC.PR.A
Sagen MI Canada — Genworth MI Canada — Q4 2015 Earnings Presentation
18 slides from Sagen MI Canada's earnings presentation, Feb 5, 2016
Slide 1: Fourth Quarter 2015 Results
Fourth Quarter 2015 Results February 5th, 2016 Q4 2015 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: 2015 financial results
2015 financial results $MM except ROE, EPS & Q4 Q/Q Y/Y 2015 Y/Y 2015 key highlights 2015 MCT Premiums written $213 -18% +20% $809 +26% • Strong 2015 top line growth of +26% Y/Y Loss ratio 23% +2 pts -3 pts 21% +1 pt • Loss ratio of 21%, at lower end of stated range Operating $95 +3% +14% $375 +3% •
Slide 4: 2015 key accomplishments
2015 key accomplishments Strong but prudent High quality and 21% loss ratio at lower 25% cumulative price top line growth diversified insurance end of stated range increases since 2013 portfolio, with a strong translate into earnings risk culture1 tailwinds Credit score 743 20% to 30% range ~34% 25%
Slide 5: 2016 key themes
2016 key themes Economic environment Market dynamics Regulatory changes Implications • Low oil prices • Modestly smaller • New standardized • Moderately lower total • Modest economic mortgage originations capital test for mortgage premiums written growth (GDP) market insurers • Flat to modestly • Sl
Slide 6: Housing risk
Regional risk assessment High Housing risk Key Metrics GTA Price-to-income Affordability GVA Ontario Price-to-rent (ex GTA) Prairies Alberta Atlantic Pacific Quebec (ex GVA) Low Economic risk High Key Metrics: GDP; UE Rate; Economic diversity Monitoring Prudent underwriting Balanced risk housi
Slide 7: Portfolio quality improving
Portfolio quality improving Credit score Median home price (In ‘$000s) Average gross debt service ratio (%) % Score <660 (R) Avg score (L) 16% 743 $295 $291 $280 $275 $270 $255 $240 $232 $225 25% 24% 24% 24% 24% 24% 23% 23% 22% 5% 716 '07 '08 '09 '10 '11 '12 '13 '14 '15 '07 '08 '09 '10 '11 '12 '13 '
Slide 8: Outstanding delinquencies
Outstanding delinquencies Highlights 1,756 1,792 1,829 1,715 92 102 1,666 132 Prairies1 113 216 97 204 Atlantic 207 191 198 • Delinquencies up 7% Q/Q, primarily reflecting seasonality Quebec 569 584 624 579 578 • Increases in Alberta, Quebec & Ontario Alberta partially offset by a decrease in BC 222
Slide 9: 2016 annual loss ratio expectations
2016 annual loss ratio expectations Effective Loan-to-Value by Book Year MIC loss ratio1 & CBA delinquency rates1,2 National, as at September 30, 2015 0.9% 80% Canada loss ratio - MIC (RS) 100% 0.8% 70% Portfolio Transactional 2015 Alberta delq. 0.7% rate (CBA) (LS) 90% 60% 91% 87% 0.6% 50% 80% > 20
Slide 10: Solid financial performance
Solid financial performance $MM except EPS & BVPS Q4’15 Q3’15 Q4’14 Q4 highlights Transactional premiums written $181 $236 $165 • Transactional premiums written higher by 10% Y/Y primarily due to premium rate Portfolio premiums written 32 24 13 increases Total premiums written $213 $260 $178 • Premi
Slide 11: Transactional insurance
Transactional insurance New insurance written ($ billions) Net premiums written ($ millions) 2015 average +$148M +$3.1B premium $705 +$2.6B rates $25.2 +$110M Price = ~$67M $22.1 $557 Vol. = ~$81M $181 2.90% $19.5 Q4 $6.2 $447 Price = ~$43M Q4 $6.2 Vol. = ~$67M $165 Q3 $236 2.83% Q3 $8.3 $7.4 $192 $
Slide 12: Portfolio insurance
Portfolio insurance New insurance written ($ billions) Net premiums written ($ millions) +$21M $104 +$5.7B $26 +$18M +$4.6B $82 Q4 $32 Q4 $10 $13 $25 Q3 $24 Q3 $6 $20 Q2 $22 $15 Q2 $4 $65 $32 Q1 $6 Q1 $26 $13 2013 2014 2015 2013 2014 2015 Avg. score 756 750 756 Avg. LTV 63% 62% 65% 2015 highlights 2
Slide 13: Premiums earned growth
Premiums earned growth LARGER RECENT BOOKS PROVIDE TAILWIND FOR PREMIUMS EARNED Unearned premiums reserve ($ millions) Premiums earned ($ millions) +12% -1% +4% +4% $2.0B FY $586 $1.8B FY $573 FY $565 $1.7B $767 $142 $143 $151 $481 +25% $599 +28% (2013 book) (2015 book) (2014 book) $143 $140 $148 $9
Slide 14: Solid underwriting profitability
Solid underwriting profitability Underwriting profitability ($ millions) Highlights Premiums earned $143 $143 $144 $148 $151 25 31 35 Losses on claims 37 31 24 29 28 27 • 2015 loss ratio of 21% at lower Expenses 30 end of stated range of 20 to 30% Underwriting 87 90 89 90 • New delinquencies net of
Slide 15: Investments contribute steady income
Investments contribute steady income Total Invested Assets Investment Income ($ millions) Net Investment Gains Interest Dividends 17% $201 Fed. Agency / NHA MBS 29% $195 $5.9B portfolio1 Federal bonds Duration: 3.7 years1 $22 $32 Preferred shares Book yield: 3.1%1 $6 $8 Emerging markets debt2 Growth
Slide 16: Capital management
Capital management Transactional new insurance written ($ billions) Capital required at 220% MCT ($ millions)1 +$187M $3,632 +$3.1B Excess +$2.6B +$248M $3,445 $200 capital over 220% $25.2 $116 $22.1 Strength $3,197 $19.5 $38 Capital at $3,432 220% $3,329 Flexibility Efficiency $3,159 2013 2014 2015
Slide 17: Key takeaways
Key takeaways Market share retention Proven Navigating 2016 with a keen focus on risk management business model has positioned MIC for Proactive loss mitigation future programs performance Investing in our customer experience strategy Q4 2015 Results Genworth MI Canada Inc. 17
Slide 18: Investor Relations
Jonathan A. Pinto, MBA, LL.M Vice President, Investor Relations 905.287.5482 jonathan.pinto@genworth.com Investor Relations investor.genworthmicanada.ca investor@genworth.com Q4 2015 Results Genworth MI Canada Inc. 18