Sagen MI Canada Inc · TSX:MIC.PR.A
Sagen MI Canada — Genworth MI Canada — Investor Presentation (August 2010)
25 slides from Sagen MI Canada's investor presentation, Aug 5, 2010
Slide 1: Genworth MI Canada Inc.
Genworth MI Canada Inc. Brian Hurley Chairman and Chief Executive Officer August 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: Business Overview
Genworth MI Canada Inc. Business Overview
Slide 5: Leading Private Canadian MI Platform
Leading Private Canadian MI Platform Highly Attractive Mortgage Market Long Standing Relationships with the Largest Lenders Proactive Risk Management Platform High Quality Investment Portfolio Seasoned Management Team Strong Financial Performance Well-Positioned To Deliver Strong and Consistent Resu
Slide 6: Understanding Mortgage Insurance ("MI")
Understanding Mortgage Insurance (“MI”) Overview Illustrative Example Mandatory on loans with LTV > 80% House price $300,000 Down payment 10% $30,000 MI protects lenders against losses if the borrower defaults Mortgage loan $270,000 Covers 100% of loan amount, secured by property Lender buys
Slide 7: Typical Borrower Profile
Typical Borrower Profile Criteria Genworth Market Averages Average Property Price $273,000 $342,000 Average Household Income $85,000 $74,000 Note: Genworth averages based on 2009 and YTD 2010 data, Market averages from Manifold Data Mining Inc. Greater Than Two Thirds Of Canadians Own A Home App
Slide 8: Canada's Stable Mortgage Market
Canada’s Stable Mortgage Market Prime Borrowers Mortgage Delinquencies in Canada vs. U.S. (1994 – Q1 2010) Strong Credit Culture 6% Mortgage Interest Not US: 5.02% (Q1 2010) Tax Deductible 5% Mortgage Delinquencies Majority Originations 4% Current Delinquency: 3.53% From Banks Borrower Rec
Slide 9: Growth In Canada's MI Industry
Growth In Canada’s MI Industry Lenders benefit from capital Mortgage Insurance Industry Premium Growth relief, risk transfer and funding flexibility 3.5 Gross Premiums Written ($ billions) Facilitates homeownership 3.0 2.8 2.9 2.8 for borrowers 2.5 Government supports private 2.0 1.9 2.0 2.0 M
Slide 10: Solid Housing Fundamentals
Solid Housing Fundamentals Improving Employment Levels Strong Consumer Confidence Low Mortgage Interest Rates Moderating Home Prices Strong First Time Home Buyer Demand 9
Slide 11: Business Highlights
Business Highlights Solid Top Line Focused Risk Management Capital Efficiency Strong Financials Positioned for Growth 10
Slide 12: Operational Review
Genworth MI Canada Inc. Operational Review
Slide 13: Operational Highlights
Operational Highlights Enhanced Customer Experience Driving Volume Continued Diversification Of Lender Base Improved Visibility Through Spring Campaign Expanded Loss Mitigation Strategy 97% Customer Satisfaction Rating 12
Slide 14: Fundamentals of Underwriting
Fundamentals of Underwriting Credit Profile Debt Service Credit Score Income Level Credit Age Interest Rate Payment History Amortization Sound Risk Property Judgment Product Property Location Loan to Value Property Value Self Employed Sales History Salaried 13
Slide 15: 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 16: Financial Review
Genworth MI Canada Inc. Financial Review
Slide 17: Q2 2010 Financial Results
Q2 2010 Financial Results Q2’ 10 Q1’ 10 Net Premiums Written $157 $94 Premiums Earned 154 156 Losses On Claims 49 59 Underwriting Income 81 71 Investment Income1 42 45 Net Operating Income $86 $81 1 Excludes investment gains and losses 16
Slide 18: 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 19: Proven Track Record of Profitability
Proven Track Record of Profitability Net Operating Income $ Millions $86 $771 $81 $75 $771 $70 $30 $29 $31 Investment $29 $32 $30 $50 $56 Underwriting $45 $46 $48 $40 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 ROE 14%1 12% 12% 12%1 13% 13% 1Excluding earnings curve adjustment in Q1 2009 and excludes favora
Slide 20: High Quality Investment Portfolio
High Quality Investment Portfolio $5.2 Billion Portfolio Investment Management Asset Backed & Other 5% Conservative And Balanced Approach Corporates 42% Fixed Income And Preferred Shares 13% 99% In Securities Rated A Or Better Provincials Federal Government 18% Balancing Yield And Quality Cash
Slide 21: Strongly Capitalized
Strongly Capitalized 160% 154% 149% 150% 150% 147% 140% 140% OSFI Minimum 130% Supervisory MCT Requirement 120% 110% 100% 2Q'09 3Q'09 4Q'09 1Q'10 2Q'10 Book Value $21.151 $21.95 $22.401 $22.85 $23.56 Per Share (Diluted) 1 Includes Accumulated Other Comprehensive Income 20
Slide 22: Driving Capital Efficiency
Driving Capital Efficiency Executing On Capital Management Plan Added ~ 10% Leverage With $275 MM Debenture Issue Announced Substantial Issuer Bid Up To $325 MM Internal Minimum Capital Target Ratio To 145% Sufficient Capital For Growth And Stress Scenarios 21
Slide 23: Strong Credit Ratings
Strong Credit Ratings • Genworth MI Canada Inc. A- (Positive) by S&P AA low (Stable) by DBRS Genworth Financial Mortgage Insurance AA – (Positive) by S&P AA (Stable) by DBRS 22
Slide 24: Outlook
Outlook Normalizing Housing Market Well Positioned For Growing Market Position Proactive Risk Management Solid Balance Sheet Supports Growth 23
Slide 25: Question and Answer Session
Question and Answer Session August, 2010 For further information: Samantha Cheung, VP Investor Relations 905-287-5482 samantha.cheung@genworth.com www.genworth.ca
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