genworthmi canada building on growth momentum

MIC Fixed Income Presentation – March 24, 20141 1Genworth MI Canada Inc.

Genworth MI Canada

Genworth MI Canada BUILDING ON GROWTH MOMENTUM

MAY 2015


Genworth MI Canada > FORWARD-LOOKING ANDNON-IFRS STATEMENTS

This presentation relating to Genworth MI Canada Inc. (the “Company”, “Genworth Canada” or “MIC”) includes certain forward-lookingstatements. These forward-looking statements include, but are not limited to, statements with respect to the Company’s futureoperating and financial results, expectations regarding premiums written, losses on claims and investment income, the Canadianhousing market, and other statements that are not historical facts. These forward-looking statements may be identified by their use ofwords such as “may”, “would”, “could”, “will,” “intend”, “plan”, “anticipate”, “believe”, “seek”, “propose”, “estimate”, “expect”, andsimilar expressions. These statements are based on the Company’s current assumptions, including assumptions regarding economic,global, political, business, competitive, market and regulatory matters. These forward-looking statements are inherently subject tosignificant risks, uncertainties and changes in circumstances, many of which are beyond the control of the Company. The Company’sactual results may differ materially from those expressed or implied by such forward-looking statements, including as a result ofchanges in the facts underlying the Company’s assumptions, and the other risks described in the Company’s Annual Information Formdated March 23, 2015, its Short Form Base Shelf Prospectus dated June 18, 2014, the Prospectus Supplements thereto, its mostrecently issued Management’s Discussion and Analysis and all documents incorporated by reference in such documents. Other than asrequired by applicable laws, the Company undertakes no obligation to publicly update or revise any forward-looking statement,whether as a result of new information, future developments or otherwise.

To supplement its financial statements, the Company uses select non-IFRS financial measures. Non-IFRS financial measures include netoperating income, interest and dividend income (net of investment expenses), operating earnings per common share (basic), operatingearnings per common share (diluted), shareholders’ equity excluding accumulated other comprehensive income (“AOCI”), operatingreturn on equity and underwriting ratios such as loss ratio, expense ratio and combined ratio. The Company believes that these non-IFRS financial measures provide meaningful supplemental information regarding its performance and may be useful to investorsbecause they allow for greater transparency with respect to key metrics used by management in its financial and operational decisionmaking. Non-IFRS measures do not have standardized meanings and are unlikely to be comparable to any similar measures presentedby other companies. These measures are defined in the Company’s glossary, which is posted on the Company’s website athttp://investor.genworthmicanada.ca. A reconciliation from non-IFRS financial measures to the most readily comparable measurescalculated in accordance with IFRS, where applicable can be found in the Company’s most recent management’s discussion and analysis,which is posted on the Company’s website and is also available at www.sedar.com.

http://investor.genworthmicanada.ca/


Genworth MI Canada

LARGEST PRIVATE RESIDENTIAL

MORTGAGE INSURER IN CANADA

Since 1995 helped 1.5 million families COAST TO COAST achieve homeownership.

We support more than 250 Canadian lenders.

MARKET FACTS (as at March 31, 2015)

$5.9 billion Total Assets

$3.4 billion Shareholders’ Equity

$3 billion Market Capitalization

93 million Shares Outstanding

COMPETITIVE STRENGTHS

Strong Market Presence

Long-Standing Customer Relationships

Best-in Class Technology and Processes

Prudent Risk Management

Impressive Long-Term Track Record

Experienced and Engaged Workforce

> WHO WE ARE


Genworth MI Canada> STRONG PERFORMANCE

0.22

0.260.29

0.32

0.35

0.15

0.25

0.35

0.45

Dividends Paid/Share

20102011 2012 2013 2014

$2.67

$3.02

$3.08

$3.43

$3.60

$3.86

$0.00 $1.00 $2.00 $3.00 $4.00 $5.00

09

10

11

12

13

14

Operating earning per share(diluted)

$22.40

$24.44

$26.94

$30.62

$32.53

0 5 10 15 20 25 30 35

09

10

11

12

13

14

Book value per share(diluted, including AOCI)

13%

14%

13%

13%

12%

12%

0% 5% 10% 15%

09

10

11

12

13

14

Operating return on equity(%)

2009Q3

$35.02

0.39

*Excludes the impact of the change to the premium recognition curve in Q1 2009

*


Genworth MI Canada> MISSION AND VISION

OUR MISSION

Working with our lender partners, regulators and influencers we

› help people responsibly achieve and maintain the dream of homeownership

› promote strong and sustainable communities across Canada

While enhancing stakeholder value

OUR VISION

CANADA’S MORTGAGE INSURER OF CHOICE


Genworth MI Canada > COMPETITIVE STRENGTHS AND GROWTH CATALYSTS

Strong Market Presence

Long-Standing Customer Relationships

Best-in Class Technology and Processes

Prudent Risk Management

Impressive Long-Term Track Record

Experienced and Engaged Workforce


Market Share Market SizePremium

RatesAdjacent

Opportunities


GROWTH CATALYSTS

FOCUS ON PEOPLE, RISK AND TECHNOLOGY


Genworth MI Canada> KEY STRATEGIC PRIORITIES

Expand Market Share

Proactive Risk Management

Strong Government Relations

Efficient Capital Structure

Adjacent Opportunities

Employ and Engage Employees

High Quality, Diversified Portfolio

Operating Income Growth

HOW WE MEASURE SUCCESS

Market Share Gains

Strong Employee Engagement

STRATEGIC PRIORITIES


Genworth MI Canada > CHANGING MARKET DYNAMICS

REBALANCING OF ECONOMIC GROWTH ACROSS THE COUNTRY

Market Dynamics

Oil is anticipated to be in the $55-$65 USD range for 2015

2015 GDP outlook of 1.9%

Canadian dollar expected to be in the range of $0.78 to $0.82 per USD

Interest rate flat; low interest rates to partially offset economic impact from lower oil prices

Impact to Business

Unemployment rate modestly higher and home prices modestly lower in oil producing regions (Alberta, Newfoundland, Saskatchewan)

GDP, home prices and employment in Ontario and Quebec may benefit from lower oil prices and Canadian dollar

Continued lower interest rates supportive of housing affordability


Genworth MI Canada > HIGHER QUALITY PORTFOLIO

Average Credit Score

Average Home Price

Average Gross Debt Service Ratio

Steady credit score improvement since 2009

Average home price 23% below CREA national average price of $424K

Home price increase driven by higher concentration in Toronto and Vancouver

Gross debt ratios stable, strong preference for 5 year fixed-rate mortgages

Financially disciplined first-time homebuyers

726 727 727 730733

737 737

'09 '10 '11 '12 '13 '14 Q1'15

266 284 296 301 304 315 326

'09 '10 '11 '12 '13 '14 Q1'15

($000’s)

22 24 25 24 23 24 25

'09 '10 '11 '12 '13 '14 Q1'15

(%)


Genworth MI Canada> DELINQUENCY TREND

Outstanding Delinquencies

Y/Y delinquency improvement reflects lower delinquencies in Ontario and BC

Improvement in delinquencies partially offset by Alberta, Quebec and the Atlantic region

497 430 431 395 407

303268 279 268 260

249221 207 222 220

527

511 516 569 584

206

198 199 207 216

78

75 76 95 105

Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

1,860

1,703 1,7081,756 1,792Prairies

Atlantic

Quebec

Alberta

BC

Ontario


Genworth MI Canada> OUR SERVED MARKET

Region Average Home Price Average Income

Average Gross Debt Servicing

Genworth Market % Variance Genworth Genworth

Vancouver $486K $847K -43% $115K 28%

Toronto $447K $589K -24% $108K 29%

Calgary $421K $445K -5% $113K 27%

Rest of Canada $297K $334K -11% 94K 24%

Canada $326K $424K -23% $97K 25%

GENWORTH’S AVERAGE HOME PRICE ~23% LOWER THAN MARKET AVERAGE

Note: Q1’15 data; Genworth averages for purchase deals only, market averages from CREA; market rest of Canada calculated by using CREA cities weighted average s


Genworth MI Canada> FINANCIAL PRIORITIES

PRIORITIES IMPACT ON FINANCIAL METRICS

› Prudent top line growth Increasing premiums written Improving premiums earned

› Proactive risk management› High quality insurance portfolio

Loss ratio in 20-30% range for 2015

› High quality investment portfolio Investment income pressured by low rate environment

› Proactive approach to capital management

Operating modestly above MCT holding target of 220% Ongoing capital generation Focus on sustainable ordinary and growing dividend

TARGETING ROE EXPANSION OVER TIME


Genworth MI Canada> STRONG PERFORMANCE

$MM except EPS and BVPS Q1’15 Q4’14 Q1’14

Premiums written $130 $178 $84

Premiums earned 143 143 141

Losses on claims 31 37 28

Expenses 24 30 27

Underwriting income $87 $76 $86

Investment income(excl. realized gains / losses)

42 43 44

Net operating Income $97 $84 $91

Diluted operating EPS $1.03 $0.89 $0.96

Book value per share(diluted, incl. AOCI)

$36.07 $35.02 $33.52

MCT 233% 225% 229%

Strong top line performance was primarily result of market penetration

Loss ratio of 22%

Consistent investment income

$5 MM one-time favorable tax item

Book value up to $36 per share

Strong capital position


Genworth MI Canada> TOP LINE GROWTH

71 104

13

26

Q1 '14 Q1 '15

Premiums Written($millions)

Transactional (High LTV)

Portfolio(Low LTV)

VPY +100%$84

$130

VPY +47%

Premiums Earned

$141 $143 VPY +2%

Strong sales momentum expected to continue into 2015

15% premium rate increase effective June 1 on >90% loan-to-value

Higher premiums written Y/Y is positive for earned premiums going forward

Incremental Premiums Written (2014 & 2015 Price Increases on $22 B of Transactional NIW Example)

45 75 75

25 55

2014 2015 2016

($MM)

Incremental Premiums Earned (2014 & 2015 Price Increases on $22 B of Transactional NIW Example)

2 15 40

65

2014 2015 2016 2017

($MM)


Genworth MI Canada > UNDERWRITING PROFITABILITY

86 97 87 76 87

27 27

24 30

24

28 17

30 37 31

Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

Underwriting profit

Expenses

Losses on claims

Loss ratio 20% 12% 21% 26% 22%

Expense ratio 19% 19% 17% 21% 17%

Combined ratio 39% 31% 38% 47% 39%

New delinquenciesnet of cures

469 289 412 489 432

($millions)Underwriting Profitability

Loss ratio improved 4 pts. Q/Q Improved Quebec performance

Low level of Alberta delinquencies

Expense ratio of 17% in line with target

Full year 2015 loss ratio expected to be in the range of 20 to 30%


Genworth MI Canada

Diversify Globally

IG Emerging Markets Debt US CLOs (<3% of AUM / “A’ or

Above) Hedge FX Risk

Diversify by Sector

Market Weight Financials Underweight Energy

Preserve Principal Gov’t Bonds (~50% of AUM)

Investment Grade Bonds

Protect From Rising Rates Short Duration (3.8 Years) Floating Rate Notes

Cash Flow Match Liabilities Portfolio Duration < 5 Years

Enhance Income Dividend Paying Equities Preferred Shares IG Emerging Markets Debt US CLOs

(<3% of AUM / “A” or Above)

ACTIVE PORTFOLIO MANAGEMENT

› 4 external managers

› In -house investmentallocation & oversight

› Focus on investmentgrade fixed income

› Limited appetite for“risk” assets

1. Pre-tax equivalent book yield after dividend gross-up of general portfolio

$5.6 B INVESTMENT PORTFOLIO PRE-TAX YIELD1 OF 3.4% (MAR.31/15)

> DISCIPLINED APPROACH TO INVESTMENT MANAGEMENT

IG = Investment Grade CLOs = Collateral Loan Obligations

YIELD CURRENTLY PRESSURED BY LOW RATES ... STILL STRONG INCOME CONTRIBUTOR


Genworth MI Canada> STRONG BALANCE SHEET

$ MM March 31, 2015

Assets

Cash and investments $5,649

Other Assets 280

Total Assets $5,929

Liabilities

Loss reserves 119

Unearned Premiums 1,786

Long Term Debt 432

Other Liabilities 191

Total Liabilities 2,527

Shareholders’ Equity (w/AOCI) 3,402

Total Liabilities and Shareholders’ Equity

$5,929

Book Value Per Share (diluted) $36.07

KEY HIGHLIGHTS

› $1.8 B of unearned premiums represent future revenues & profits

› Illustration:

Unearned Premiums $1.8 B

Future Losses on Claims & Expenses1

(1.0)

Future Pre-tax Underwriting Income 0.8

Future Net Income $0.6 B

1. Theoretical example - future losses on claims and expenses calculated using 55% combined ratio


Genworth MI Canada> CAPITAL STRENGTH

185% 185%

40% 48%

225%233%

2014 Q1 2015

Minimum Capital Test Ratio (MCT)

Internal MCT target

Buffer to internal target

KEY HIGHLIGHTS

› Strong capital generation has resulted in actions

› History of ordinary dividend increases

› 35-45% payout ratio

› History of share repurchases - $75 million in Q4 2014, $105 million in 2013, $160 million in 2011, $325 million in 2010

› Special dividends paid in 2011 and 2014

› Renewed NCIB effective until May 2015

› Conservative leverage of 12%

› Holding company cash and liquid securities of $158 million

› Intend to operate moderately above 220% MCT operating holding target

CAPITAL OBJECTIVES: STRENGTH, FLEXIBILITY, EFFICIENCY


POTENTIAL IMPACT OF PERFORMANCE LEVERS OVER TIME

Levers EPS ROE Comments

Price Increase ↑ ↑2014 price increase positive to EPS/ROEAnnual review of pricing by government

Market Share Gains ↑ ↑ Capitalizing on momentum

Investment Yield Improvement

↑ ↑10 bps improvement in yield adds $4MM in net operating income

Capital Optimization ↑ Potential for a lower MCT Holding

> ROE EXPANSION

SEVERAL LEVERS TO DRIVE ROE EXPANSION OVER TIME


Genworth MI Canada

Proven and sustainable business model

Clear strategy for prudent growth

Supportive market and regulatory environment

Experts at managing mortgage default risk

Solid financial position

Experienced and engaged employees

> KEY TAKE-AWAYS

CANADA’S MORTGAGE INSURER OF CHOICE


Genworth MI Canada> CONTACT INFORMATION

INVESTOR RELATIONS

[email protected]

HEAD OFFICE

2060 Winston Park DriveSuite 300Oakville, Ontario905-287-5300 (reception)

DIRECT CONTACT

Samantha CheungVice-President, Investor Relations

[email protected]

905.287.5482

Visit our online Annual Report at www.genworth.ca

http://www.genworth.ca/

mailto:[email protected]

genworthmi canada building on growth momentum

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