Genworth MI Canada BUILDING ON GROWTH MOMENTUM Genworth MI Canada FEBRUARY 2015 MIC Fixed Income Presentation – March 24, 2014 1 1 Genworth MI Canada Inc.
> FORWARD-LOOKING AND Genworth MI Canada NON-IFRS STATEMENTS This presentation relating to Genworth MI Canada Inc. (the “Company”, “Genworth Canada” or “MIC”) 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, 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 Annual Information Form dated March 17, 2014, its Short Form Base Shelf Prospectus dated June 18, 2014, the Prospectus Supplements thereto, its most recently issued Management’s Discussion and Analysis and all documents incorporated by reference in such documents. 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. MIC Fixed Income Presentation – March 24, 2014 2 2 Genworth MI Canada Inc.
> STUART LEVINGS, PRESIDENT AND CEO SOLID AND SUSTAINABLE BUSINESS
Genworth MI Canada > WHO WE ARE MARKET FACTS (as at December 31, 2014) LARGEST PRIVATE RESIDENTIAL $5.8 billion Total Assets MORTGAGE INSURER IN CANADA $3.3 billion Shareholders’ Equity Since 1995 helped 1.5 million families COAST $2.9 billion Market Capitalization TO COAST achieve homeownership. 94 million Shares Outstanding We support more than 250 Canadian lenders. COMPETITIVE STRENGTHS Experienced Strong Long-Standing Best-in Class Prudent Risk Impressive and Engaged Market Customer Technology Management Long-Term Workforce Presence Relationships Track Record and Processes MIC Fixed Income Presentation – March 24, 2014 4 4 Genworth MI Canada Inc.
Genworth MI Canada > STRONG PERFORMANCE Operating earning per share Book value per share Operating return on equity (diluted) (diluted, including AOCI) (%) $35.02 14 $3.86 14 14 12% $32.53 13 $3.60 13 13 12% 12 $3.43 12 $30.62 12 13% 11 $3.08 11 $26.94 11 13% 10 $3.02 10 $24.44 10 14% 09 $2.67 09 $22.40 09 13% $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 0 5 10 15 20 25 30 35 0% 5% 10% 15% 2014 0.45 2013 2012 2011 0.39 2010 0.35 0.35 0.32 0.29 2009 0.26 Q3 0.25 0.22 0.15 Dividends Paid/Share MIC Fixed Income Presentation – March 24, 2014 5 5 Genworth MI Canada Inc.
Genworth MI Canada > MISSION AND VISION OUR MISSION Working with our lender partners, regulators and influencers we › help people responsibly achieve and maintain the dream of homeownership › promote strong and sustainable communities across Canada While enhancing stakeholder value OUR VISION CANADA’S MORTGAGE INSURER OF CHOICE MIC Fixed Income Presentation – March 24, 2014 6 6 Genworth MI Canada Inc.
> COMPETITIVE STRENGTHS Genworth MI Canada AND GROWTH CATALYSTS COMPETITIVE STRENGTHS COMPETITIVE STRENGTHS Strong Long-Standing Best-in Class Impressive Experienced Prudent Risk Market Customer Technology Long-Term and Engaged Management Presence Relationships and Processes Track Record Workforce GROWTH CATALYSTS Premium Adjacent Market Share Market Size Rates Opportunities FOCUS ON PEOPLE, RISK AND TECHNOLOGY MIC Fixed Income Presentation – March 24, 2014 7 7 Genworth MI Canada Inc.
Genworth MI Canada > KEY STRATEGIC PRIORITIES HOW WE MEASURE SUCCESS STRATEGIC PRIORITIES Expand Market Share Market Share Gains Proactive Risk Management Strong Government Relations High Quality, Diversified Portfolio Efficient Capital Structure Adjacent Opportunities Operating Income Growth Employ and Engage Employees Strong Employee Engagement MIC Fixed Income Presentation – March 24, 2014 8 8 Genworth MI Canada Inc.
Genworth MI Canada > TOP LINE KEY POINTS PREMIUMS WRITTEN › Strong sales momentum in 2014 ($millions) expected to continue into 2015 25% Premiums Written $640 ($millions) $512 82 Low LTV +28% 178 Q4 65 Low LTV 129 Q3 High LTV +25% 217 557 Q2 High LTV 447 161 Q1 160 137 2013 2014 84 84 2013 2014 › Portfolio insurance may be lower in Premiums 2015 due to government MBS changes $573 $565 Earned › Higher premiums written Y/Y is positive for earned premiums going forward TOP LINE GROWTH IN 2014 DRIVEN BY HIGHER VOLUME & PREMIUM RATE INCREASE MIC Fixed Income Presentation – March 24, 2014 9 9 Genworth MI Canada Inc.
> CHANGING MARKET Genworth MI Canada DYNAMICS Impact to Business Market Dynamics Unemployment rate likely modestly higher Oil is anticipated to be in the $50-$65 and home prices modestly lower in oil USD range for 2015 producing regions (Alberta, Newfoundland, Saskatchewan) 2015 GDP outlook of 2.1% GDP, home prices and employment in Canadian dollar expected to be in the Ontario and Quebec may benefit from range of $0.75 to $0.85 per USD lower oil prices and Canadian dollar Interest rate cut partially offsets impact of Continued lower interest rates supportive lower oil prices of housing affordability REBALANCING OF ECONOMIC GROWTH ACROSS THE COUNTRY MIC Fixed Income Presentation – March 24, 2014 10 10 Genworth MI Canada Inc.
> HIGHER QUALITY Genworth MI Canada PORTFOLIO 737 733 730 727 727 726 Average 720 716 Credit Score › '07 '08 '09 '10 '11 '12 '13 '14 Credit score up 21 points since 2007 › Average home price 29% lower than ($000’s) CREA national average price of $407K Average 315 301 304 296 284 266 256 › 247 Gross debt ratios stable, strong Home Price preference for 5 year fixed rate '07 '08 '09 '10 '11 '12 '13 '14 mortgages › Financially disciplined first-time (%) Average homebuyers 25 24 24 24 24 23 23 22 Gross Debt Service Ratio '07 '08 '09 '10 '11 '12 '13 '14 MIC Fixed Income Presentation – March 24, 2014 11 11 Genworth MI Canada Inc.
Genworth MI Canada > REGIONAL DISPERSION Alberta Effective Loan-to-Value by Book Year Regional Dispersion 100 High LTV 13% 20% 90 5% 80 4% 14% 70 60 50 43% 40 Low LTV <=2009 2010 2011 2012 2013 2014 Estimated Alberta Atlantic Ontario outstanding 7.6 6.8 2.5 3.1 3.3 4.0 4.8 balance of B.C. Prairies Quebec insured Note: % as per Company’s estimate of outstanding balance of insured mortgages mortgages ($B) Avg. Credit 749 720 728 730 729 730 734 Score DIVERSIFICATION OFFSETS REGIONAL PRESSURES; ALBERTA PORTFOLIO MANAGEABLE MIC Fixed Income Presentation – March 24, 2014 12 12 Genworth MI Canada Inc.
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