slides q1 2016_final

1 Genworth MI Canada Inc. Q1 2016 Results

April 29th, 2016

First Quarter 2016 Results


Forward-looking and non-IFRS statements

DRIVING VALUE THROUGH CUSTOMIZED SERVICE EXPERIENCE

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, but are not limited to, statements with respect to the Company’s future operating and financial results, expectations

regarding premiums written, losses on claims and investment income, the Canadian housing market, and other statements that are

not historical facts. These forward-looking statements may be identified by their use of words such as “may”, “would”, “could”, “will,”

“intend”, “plan”, “anticipate”, “believe”, “seek”, “propose”, “estimate”, “expect”, and similar 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 to significant risks, uncertainties and changes in

circumstances, many of which are beyond the control of the Company. The Company’s actual results may differ materially from

those expressed or implied by such forward-looking statements, including as a result of changes in the facts underlying the

Company’s assumptions, and the other risks described in the Company’s most recently issued Annual Information Form,

Management’s Discussion and Analysis, its Short Form Base Shelf Prospectus dated June 18, 2014, the Prospectus Supplements

thereto, and all documents incorporated by reference in such documents. Management’s current views regarding the Company’s

financial outlook are stated as of the date hereof and may not be appropriate for other purposes. Other than as required 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 net operating income, interest and dividend income (net of investment expenses), operating earnings per common share

(basic), operating earnings per common share (diluted), shareholders’ equity excluding accumulated other comprehensive income

(“AOCI”), operating return 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 investors because they allow for greater transparency with respect to key metrics used by management in its financial

and operational decision making. Non-IFRS measures do not have standardized meanings and are unlikely to be comparable to any

similar measures presented by other companies. These measures are defined in the Company’s glossary, which is posted on the

Company’s website at http://investor.genworthmicanada.ca. A reconciliation from non-IFRS financial measures to the most readily

comparable measures calculated 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/








1.03

0.99 1.00 1.03

0.99

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016

Q1 2016 financial results

$MM except

ROE, EPS &

MCT

Q1

2016

Q4

2015

Q1

2015 Q/Q Y / Y

Premiums

written $117 $213 $130 -45% -10%

Loss ratio 24% 23% 22% +1 pt +2 pts

Net Operating

Income $91 $95 $97 -4% -6%

Operating ROE 11% 12% 12% -1% -1%

Operating EPS

(dil.) $0.99 $1.03 $1.03 -4% -4%

MCT1 234% 234% 233% Flat +1 pt

Q1 key highlights

• Top-line constrained primarily due to targeted

underwriting changes and a smaller transactional

insurance market

• Loss ratio of 24%, below expected range

• Operating income -4% Q/Q, primarily due to

marginally higher combined ratio

• Ongoing capital strength with MCT ratio of 234%1

Operating EPS (diluted) Book Value Per Share (diluted, incl. AOCI2)

36.07 36.18 36.14 36.82 37.23

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016

+3%

YoY

1. Q1 2016 MCT company estimate. MCT denotes ratio for operating insurance company.

2. Book value per share, diluted, including AOCI.


2016 key themes

• New standardized

capital test for mortgage

insurers

• More risk sensitive

• Increased capital on

new business if

regional house price

to income threshold is

exceeded

• 2017 implementation

• Regulatory rule change

may reduce demand for

portfolio insurance post

July 1, 2016

implementation

Regulatory changes Economic environment

• Flat-to-modestly

smaller high LTV

mortgage originations

market

• Fiscally disciplined

first-time homebuyers

• Minimal impact from

downpayment rule

changes

• Focus on underwriting

quality throughout the

lending industry

Market dynamics

• Moderately lower total

premiums written

• Moderate growth of

5%+ expected in

premiums earned

• Loss ratio range for

2016 of 25% to 40%

• Targeting MCT ratio in

the range of 225% to

230%

Implications

• Low oil prices

• Modest economic

growth (GDP)

• Increasing disparity

between regional

housing markets

• Regional affordability

pressures


Top line

$3.9 $3.4 $5.9 $4.5

$6.8 $4.1

~$22.0 $8.3 $6.1

$6.2 $9.6

2015 Q1'16 2015 Q1'16

New insurance written ($ billions) Net premiums written ($ millions)

Note: Company sources.

$25.2 $25.7

Q1

Q2

Q3

Q4

New insurance written Net premiums written

Impact of lower transactional

new insurance written

partially offset by a higher

average premium rate

Portfolio insurance

premiums written primarily

reflect low LTVs and high

credit quality

Transactional Portfolio

$104 $99

$183

$236

$181

2015 Q1'16

$705 $104

Q1

Q2

Q3

Q4

Transactional Portfolio

$26 $18

$22

$24

$32

2015 Q1'16

Reflects portfolio insurance NIW

in first three weeks of April 2016

Reflects portfolio insurance

premiums written in first three

weeks of April 2016

Targeted underwriting

changes and a smaller

transactional insurance market

have driven modestly lower

transactional NIW

Portfolio NIW….

strong pipeline

reflects increased

demand ahead of

July 1, 2016

regulatory change

Average premium rate

2.79% 2.91%


Portfolio quality improving

TRANSACTIONAL PORTFOLIO QUALITY SIGNIFICANTLY IMPROVED COMPARED TO ‘07/08

Note: Company sources for transactional new insurance written.

Highlights

Steady credit score

improvement year-over-year

Modest home

price increases

Stable debt

servicing ratios

Credit score Average gross debt service ratio (%) Median home price (In ‘$000s)

16

%

3%

71

6

75

1

'07

'08

'09

'10

'11

'12

'13

'14

'15

Q1'1

6

% Score <660 (R) Avg score (L)

24

%

23

%

22

%

24

%

25

%

24

%

23

%

24

%

24

%

25

%

'07

'08

'09

'10

'11

'12

'13

'14

'15

Q1'1

6

$2

25

$2

32

$2

40

$2

55

$2

70

$2

75

$2

80

$2

91

$2

95

$3

01

'07

'08

'09

'10

'11

'12

'13

'14

'15

Q1'1

6


Outstanding delinquencies

Highlights

• Delinquencies up 11% Q/Q, primarily due to

seasonality and pressure in oil-producing

regions

• Delinquencies increased Y/Y largely due to

Alberta and Quebec, partly offset by decreases

in Ontario & B.C.

407 344 365 385 383

263 228 203 181 187

220 227 258 303

424

584 579 578

624

656

216 191 198

204

222 102

97 113 132

162

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

1,792

1,666 1,715 1,829

2,034

Ontario

BC2

Alberta

Quebec

Atlantic

Prairies1

Based on reported outstanding balances

Delinquency Rates3 Q2’15 Q3’15 Q4’15 Q1’164

Transactional 0.29% 0.29% 0.31% n.a.

Portfolio 0.07% 0.08% 0.08% n.a.

Total 0.20% 0.21% 0.21% n.a.

1 Prairies include MB and SK. 2 BC includes the Territories. 3 Delinquency rates are based on outstanding insured mortgage balances as at the end of the quarter and exclude

delinquencies that have been incurred but not reported. 4 Outstanding insured mortgage balances are reported on a one quarter lag.

• Total delinquency rates remain flat Q/Q


25% 27% 22% 20%

38% 38% 39% 42%

14% 12% 12% 11%

10% 12% 13% 15%

13% 12% 12% 12%

0%

20%

40%

60%

80%

100%

2013 2014 2015 Q1'16

Alberta Ontario Quebec B.C. Other

Alberta: proactive risk management

Geographically diversified portfolio Regional Transactional NIW Dispersion

Average

Credit Score 2013 2014 2015 Q1’16

National 733 737 743 751

Alberta 730 734 740 751

2016 highlights

Unemployment expected to be in the

range of 7.8% to 9.0% in Alberta as

oil and gas sector layoffs continue

Home price depreciation in Alberta

expected to be in the range of 5% to

12%

Enhanced due diligence resulting in

slightly smaller but better quality

Alberta portfolio


Solid financial performance

$MM except EPS & BVPS Q1’16 Q4’15 Q1’15

Transactional premiums written $99 $181 $104

Portfolio premiums written 18 32 26

Total premiums written $117 $213 $130

Premiums earned 154 151 143

Losses on claims (37) (35) (31)

Expenses (28) (27) (24)

Underwriting income $88 $90 $87

Net investment income (excl. realized gains / losses)

41 44 42

Net operating income $91 $95 $97

Operating EPS (diluted)

$0.99 $1.03 $1.03

Book value per share (diluted, incl. AOCI)

$37.23 $36.82 $36.07

Q1 highlights

• Transactional premiums written lower by

5% Y/Y

• Premiums earned increased Q/Q by

$3 million

• Loss ratio of 24%, up 1 pt Q/Q

• Net investment income down $2 million

Q/Q

• Net operating income down Y/Y, primarily

due to an increase in the corporate tax

rate and a $5 million non-recurring

favourable tax item in Q1 2015

• Book value per share up 3% Y/Y

Note: Amounts may not total due to rounding.


Solid underwriting profitability

87 90 89 90 88

24 29 28 27 28

31 25 31 35 37

Q1' 15 Q2' 15 Q3' 15 Q4' 15 Q1' 16

Underwriting profitability ($ millions)

Underwriting

profit

Expenses

Losses on claims

Loss ratio 22% 17% 21% 23% 24%

Expense ratio 17% 20% 19% 18% 19%

Combined

ratio 39% 37% 40% 41% 42%

Premiums earned $151 $143 $144 $148

2016 ANNUAL LOSS RATIO ESTIMATED RANGE: 25% TO 40%

$154

Avg. reserve

per delq. ($000’s)

$66.2 $69.8 $70.4 $71.9 $70.9

Highlights

Continued growth

in premiums

earned

New delinquencies net of cures increased by

81 Q/Q, primarily due to Alberta, partly offset by

a modest decrease in Ontario and Quebec

Loss ratio

marginally below

expected range

Solid underwriting

profitability with

42% combined ratio

New delinquencies net of cures by region

114 59

105 96 77

52

38 42 31 40

47

43

75 89 183

130

119

116 156

138 76

58

76 82

92

13

2

26 33

38

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

432 319 440 487 568

Ontario

Pacific2

Alberta

Quebec

Atlantic

Prairies1

1 Prairies includes MB and SK. 2 Pacific includes the Territories.

Total


Federals

Provincials

Preferred shares

Emerging markets debt3

Investment grade

corporates2

Cash4

33%

17%

35%

5%

5%

5%

Investments contribute steady income

Duration: 3.7 years

Book yield: 3.1%1

Invested assets (C$ millions, unless noted)

Note: Company sources.

1. Represents market value. Book yield represents pre-tax equivalent book yield after dividend gross-up of portfolio (as at Mar. 31, 2016).

2. Market value, includes CLOs. 3. 99% Investment grade. 4. Cash includes short-term investments.

Total Invested Assets ($5.9B portfolio1) Net Investment Income ($ millions)

$5,917

$5,867

LOW RATES CONTINUE TO PRESSURE INVESTMENT

YIELD…FOCUS ON OPTIMIZING YIELD WITHIN RISK APPETITE

$353 million of

maturities over

remainder of 2016

5,641 5,633

276 235

Q4 2015 Q1 2016

Book value

Net

unrealized

gain

$5.9B $5.9B

43.8 41.5

Q4 2015 Q1 2016


2,396

449 436

569 570

219 217

December 31st,2015

March 31st, 2016

Capital management

INTEND TO OPERATE IN THE 225-230% MCT RANGE,

PENDING FINALIZATION OF THE CAPITAL FRAMEWORK

Regulatory capital at 220% MCT holding target (by risk category, $ millions)

Flexibility Efficiency

Strength

Note: Company sources. 1. Market risk includes interest rate, credit, equity risk, and foreign exchange risk.

MCT denotes ratio for operating insurance company. 1Q16 MCT based on company estimates.

2. Represents liquid investments and cash held in addition to capital in operating insurance company.

• MCT ratio of 234%:

• Introduced interest rate hedging

program

• Strong portfolio insurance

pipeline for second quarter

• New capital framework for

insurance risk under development

for implementation in 2017:

• More risk sensitive

• No expected change in overall

level of capital held

• Renewing Normal Course Issuer

Bid

Highlights

3,633 3,636

Insurance Risk

Market Risk1

Operational Risk

Capital in

excess of 220%

MCT 234% 234%

Holdco

cash2 ($ millions)

$121 $173

2,413


Keen focus on risk management

Proactive loss mitigation

programs

Investing in our customer

experience strategy

Key takeaways

Proven business model has positioned

MIC for future

performance

Balanced approach to writing

new business


[email protected] investor.genworthmicanada.ca

Investor Relations

Jonathan A. Pinto, MBA, LL.M

Vice President, Investor Relations

[email protected] 905.287.5482