Sagen MI Canada Inc · TSX:MIC.PR.A
Sagen MI Canada — Genworth MI Canada — Q4 2018 Earnings Presentation
16 slides from Sagen MI Canada's earnings presentation, Feb 5, 2019
Slide 1: Fourth Quarter 2018 Results
Fourth Quarter 2018 Results February 5th, 2019 Q4 2018 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: 4Q18 & 2018 financial results
4Q18 & 2018 financial results $MM except ROE, Q4 FY EPS & MCT 2018 Q/Q Y/Y 2018 Y/Y Key highlights Premiums written $156 -20% -5% $639 -4% Fourth quarter highlights (Q/Q): • Loss ratio of 18%, increased 4 pts Premiums earned $169 Flat -1% $680 +1% • Net income of $80MM, including a $46MM impact, pri
Slide 4: Our environment today
Our environment today Risk Assessment Denotes change from Q3’18 Key observations ▪ Economic environment continues to be sound; unemployment rate is at a 40-year low Economic ▪ GDP forecast for 20191 reduced to 1.7% (from 2.1%) mainly as a result of lower oil prices ▪ BoC overnight rate maintained at
Slide 5: Transactional insurance market
Transactional insurance market Market size Industry price and premiums written (denotes transactional new insurance written, C$B) (C$B) Average price (transactional, 780 140 in bps) 760 120 ~350 740 100 $1.9B ~$2.0B Mortgage 720 rate stress test for MI 80 210 700 60 Total industry transactional 680
Slide 6: Regional risk assessment
Regional risk assessment Quarterly Snapshot TOR VAN MTL CGY CANADA Q4’18 Q/Q Teranet HPI 1 -0.2% -1.7% 1.0% -1.1% -0.6% Q4‘18 UE Rate 1 6.1% 4.4% 5.9% 7.6% 5.7% High Denotes change from Q3’18 Size of circle reflects regional total risk-in-force Key Indicators GTA riskRisk ▪ Overvaluation ▪ Affordabi
Slide 7: Top line
Top line New insurance written ($ billions) Premiums written ($ millions) Transactional Portfolio Transactional Portfolio $18.2 $603 $619 $60 $17.8 $151 $7 Q4 $4.5 $4.3 Q4 $157 $6 $13.4 $8 $0.9 $192 $0.8 Q3 $195 Q3 $5.6 $5.5 $1.1 $20 $161 $166 $38 $5 Q2 $4 $5.0 $4.8 $10.5 $4.2 $5 Q2 Q1 $89 $109 $6 $
Slide 8: Strong portfolio quality
Strong portfolio quality Credit score1 Average home price2 Stacked risk factors3 (In ‘$000s) % Score <660 Avg score Q2 reflects typical increase in QC business mix $342 $341 $336 $332 $332 $328 $324 $323 $322 $317 $315 $304 $301 $296 $284 748 9.8% 1.0% 727 2.4% 0.3% '10 '11 '12 '13 '14 '15 '16 Q1'17
Slide 9: Strong financial performance
Strong financial performance $MM except EPS & BVPS Q4’18 Q3’18 Q4’17 Q4 highlights Transactional premiums written $151 $192 $157 • Transactional premiums written lower by 4% Y/Y, primarily due to lower NIW Portfolio premiums written 5 4 7 • Premiums earned flat Q/Q Total premiums written $156 $196 $
Slide 10: Delinquency trends
Delinquency trends Outstanding delinquencies New delinquencies, net of cures, by region 365 Q/Q 346 360 ∆ 1,723 1,742 Total Total 1,718 1,695 1,684 58 45 328 326 Prairies1 53 Prairies1 224 246 241 247 42 52 +10 244 67 78 47 Atlantic 226 230 229 206 192 Atlantic 80 54 +7 368 73 Quebec 374 370 349 347
Slide 11: Strong underwriting results
Strong underwriting results Underwriting profitability ($ millions) Highlights Premiums earned $171 $171 $171 $169 $169 • Single upfront premium provides visibility into 15 22 25 Losses on claims 23 30 2019 premiums earned which are expected to Expenses 34 32 33 32 be flat to modestly lower due to r
Slide 12: Proactive investment management
Proactive investment management Total investments and net derivative assets ($6.5B1) Interest rate hedge program Investments: $6.4B Interest rate swaps Forward curve5 Notional (C$B) $3.5 13% Floating rate5 2.10% - 2.30% Federals Duration: 3.8 years Fixed rate5 1.17% Book yield: 3.2%2 Spread ~0.90% -
Slide 13: Capital management
Capital management Regulatory capital as at Dec. 31st, 2018 (by category, $ millions unless otherwise noted)* Highlights Current MICAT MCT ▪ Strong capital position with MCT Jan. 1st, 2019 Dec. 31st, 2018 Sept. 30th, 2018 ratio of ~171% and holding company cash and liquid Capital available 4,370 4,3
Slide 14: Key takeaways for 2019
Key takeaways for 2019 Modestly higher total premiums written; flat to modestly higher transactional NIW and premiums written, and modestly higher portfolio insurance premiums written Flat to modestly lower premiums earned due to smaller recent book of business Proven business model Normalizing loss
Slide 15: Key strategic priorities
Key strategic priorities 1 2 3 4 5 Drive market Continue to Develop Right-size Influence key share growth exercise innovative our capital government by leveraging prudent risk product levels to stakeholders to advanced management solutions to drive focus on first analytics and and proactive enhance
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 2018 Results Genworth MI Canada Inc. 16