Sagen MI Canada Inc · TSX:MIC.PR.A
Sagen MI Canada — Genworth MI Canada — Q4 2017 Earnings Presentation
16 slides from Sagen MI Canada's earnings presentation, Feb 6, 2018
Slide 1: Fourth Quarter 2017 Results
Fourth Quarter 2017 Results February 6th, 2018 Q4 2017 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: 2017 financial results
2017 financial results $MM except ROE, Q4 FY EPS & MCT 2017 Q/Q Y/Y 2017 Y/Y Key highlights Fourth quarter highlights: Premiums written $164 -18% -4% $663 -13% • Loss ratio of 9%, decreased 5 pts Q/Q Premiums earned $171 Flat +4% $676 +6% • NOI of $121 MM, up 8% Q/Q • Operating EPS of $1.33, up 9% Q
Slide 4: Our environment today
Our environment today Key takeaways Risk Assessment Sound economic environment; forecasted GDP growth of 2.2%1 in 2018 and 1.6%1 in 2019. Unemployment rate at 40-year low2. Economic Positive momentum in oil producing regions Interest rates are expected to increase in 2018 Monitoring NAFTA re
Slide 5: Regional risk assessment
Regional risk assessment Quarterly Snapshot TOR VAN MTL CGY Q4’17 Q/Q Teranet HPI1 -4.4% 2.0% 1.2% -0.2% December ‘17 UE Rate1 6.0% 4.1% 6.1% 7.5% GDP 2018 Forecast2 2.5% 2.5% 2.0% 2.1% High GTA Denotes change from Q3’17 Key Indicators Ontario Illustrates relative size of regional Overvaluation tr
Slide 6: Top line
Top line New insurance written ($ billions) Premiums written ($ millions) Transactional Portfolio Transactional Portfolio $41.9 $619 $603 $140 $4.9 $22 $6.5 Q4 $149 $157 $22 Q3 $201 $195 $21.2 $60 $18.2 $78 $7 Q4 $5.1 $6 $4.5 $25.9 $13.4 Q2 $170 $161 $8 $0.9 Q3 $6.9 $5.6 $0.8 $38 $1.1 Q1 $99 $89 $18
Slide 7: Transactional growth outlook
Transactional growth outlook 2018 Impact1 • Modest improvement in first 1 Market size time homebuyer +1-2% participation rate Market share • Diversified across lenders +1-2 2 points • Full year impact of 2017 rate 3 Premium rate increase (~3.50% v. 3.31%)2 +19 bps Transactional market participation
Slide 8: Strong portfolio quality
Strong portfolio quality Credit score1 Average home price2 Stacked risk factors3 (In ‘$000s) % Score <660 Avg score $332 $332 $330 $328 $327 $326 $322 $317 $315 $315 746 $304 $301 10% $296 $284 1.0% 727 3% 0.3% '10 '11 '12 '13 '14 '15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 '10 '11 '12 '13 '
Slide 9: Strong financial performance
Strong financial performance $MM except EPS & BVPS Q4’17 Q3’17 Q4’16 Q4 highlights Transactional premiums written $157 $195 $149 • Transactional premiums written higher by 5% Y/Y, primarily due to a higher average Portfolio premiums written 7 6 22 premium rate, partly offset by lower NIW Total premi
Slide 10: Delinquency trends
Delinquency trends Delinquencies outstanding New delinquencies, net of cures, by region 2,082 491 Total 2,070 Total 436 1,809 1,759 50 Prairies1 203 212 1,718 Q/Q Prairies1 33 337 346 ∆ Atlantic 235 259 205 205 101 224 Atlantic 77 204 214 25 53 +28 Quebec 521 517 226 109 70 446 427 Quebec 128 155 80
Slide 11: Outstanding underwriting results
Outstanding underwriting results Net premiums written & earnings curve 2018 outlook % contribution to 2018E 1,000 premiums earned (RS) Premiums written 30% ($MM, LS) Premiums written 750 760 809 20% • Modestly higher in 2018 as transactional 500 663 640 512 550 premiums increase more than offset exp
Slide 12: Investments contribute steady income
Investments contribute steady income Total investments and net derivative assets ($6.6B1) Interest rate hedge program Investments: $6.4B Interest rate swaps 2018 forward curve5 Notional (C$B) $3.5 Floating rate5 1.68% 15% Federals Duration: 3.9 years Fixed rate5 1.17% Book yield: 3.2%2 Spread 0.51%
Slide 13: Capital management
Capital management Regulatory capital as at Dec. 31st, 2017 (by category, $ billions unless otherwise noted)* Highlights Proactive yet prudent capital ~4.1 ~4.2 management actions taken in 2017: Capital in excess of 150% ~0.4 ~0.4 • Increased dividend by 7% Operational Risk 0.5 0.5 Market Risk1 0.2
Slide 14: 2018 outlook
2018 outlook Modestly higher premiums written driven by modest growth in MI market size and market share coupled with higher average premium rates Flat to modestly higher premiums earned due to smaller book of business in 2017 Normalizing loss ratio range of 15% to 25% aided by strong portfolio qual
Slide 15: Strategic priorities for 2018
Strategic priorities for 2018 1 2 3 4 Invest in Continue to Leverage our Maintain an process exercise prudent data and efficient capital innovation and risk mortgage structure to technology to management expertise to ensure capital drive improved and proactive influence our strength while customer l
Slide 16: 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 2017 Results Genworth MI Canada Inc. 16