Slides q4 2015_final

1 Genworth MI Canada Inc. Q4 2015 Results

February 5th, 2016

Fourth Quarter 2015 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 Annual Information Form dated March 23, 2015, 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. 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/








2015 financial results

$MM except

ROE, EPS &

MCT

Q4

2015 Q / Q Y / Y 2015 Y / Y

Premiums

written $213 -18% +20% $809 +26%

Loss ratio 23% +2 pts -3 pts 21% +1 pt

Operating

Income $95 +3% +14% $375 +3%

Operating ROE 12% Flat +1% 12% Flat

Operating EPS

(dil.) $1.03 +3% +16% $4.05 +5%

MCT1 233% +5 pts +5 pts 233% +5 pts

2015 key highlights

• Strong 2015 top line growth of +26% Y/Y

• Loss ratio of 21%, at lower end of stated range

• Operating income +3% and Op. EPS +5% Y/Y

• Consistent ROE performance at 12%

• Ongoing capital strength with MCT ratio at 233%1

• Book value per share2 growth of 5%

Operating EPS (diluted)

0.96 1.03

1.04 0.99

0.97 1.00

0.89 1.03

2014 2015

Q1

Q2

Q3

$3.86 $4.05

Book Value Per Share (diluted, incl. AOCI)

35.02 36.07 36.18 36.14

36.82

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015

+5%

YoY

Q4

+5%

YoY

1. Year end MCT based on company estimates. Actual year-end MCT for 2014 was 225%, pro-forma under 2015 guidelines was 228%.

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


2015 key accomplishments

PROVEN BUSINESS MODEL .... WELL POSITIONED GOING INTO 2016

Strong but prudent

top line growth

High quality and

diversified insurance

portfolio, with a strong

risk culture1

21% loss ratio at lower

end of stated range

~34%

Current

market share CREDIT

SCORE

20% to 30% range

Note: Company sources

1. Average credit score for 2015 volumes.

25%

25% cumulative price

increases since 2013

translate into earnings

tailwinds

Credit score

743


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

Regulatory changes Economic environment

• Modestly smaller

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

• Flat to modestly

lower transactional

premiums written

• Lower portfolio

insurance volumes

• Moderate growth of

5%+ expected in

premiums earned

• Loss ratio range for

2016 of 25% to 40%

• MCT ratio to remain

modestly above 220%

Implications

• Low oil prices

• Modest economic

growth (GDP)

• Slowing house price

appreciation

• Consumer

indebtedness and

regional affordability

pressures


Regional risk assessment

Prudent underwriting

actions in Alberta &

Saskatchewan

Monitoring

housing risk in

GTA and GVA

Balanced risk

profile in

Quebec

and Ontario

Note: Based on Company estimates.

Ho

us

ing

ris

k

Economic risk Low High

High

GTA

GVA

Quebec

Alberta

Atlantic

Ontario

(ex GTA)

Prairies

Key Metrics

Price-to-income

Affordability

Price-to-rent

Key Metrics: GDP; UE Rate; Economic diversity

Pacific

(ex GVA)


Portfolio quality improving

NATIONAL PORTFOLIO QUALITY SIGNIFICANTLY IMPROVED COMPARED TO ‘07/08

Note: Company sources for transactional new insurance written.

2015 highlights

Credit score Average gross debt service ratio (%)

Steady credit score

improvement year-over-year

Modest home

price increases

Stable debt

servicing ratios

Median home price (In ‘$000s)

16

%

5%

71

6

74

3

'07

'08

'09

'10

'11

'12

'13

'14

'15

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

24

%

23

%

22

%

24

%

25

%

24

%

23

%

24

%

24

%

'07

'08

'09

'10

'11

'12

'13

'14

'15

$2

25

$2

32

$2

40

$2

55

$2

70

$2

75

$2

80

$2

91

$2

95

'07

'08

'09

'10

'11

'12

'13

'14

'15


Outstanding delinquencies

Highlights

• Delinquencies up 7% Q/Q, primarily reflecting

seasonality

• Increases in Alberta, Quebec & Ontario

partially offset by a decrease in BC

• Delinquencies decreased in Ontario & B.C. Y/Y

• Delinquency rates relatively stable over the past

year 395 407 344 365 385

271 263 228 203 181

222 220 227 258 303

569 584 579 578

624

207 216 191 198

204

92 102

97 113 132

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

1,756 1,792

1,666 1,715

1,829

Ontario

BC2

Alberta

Quebec

Atlantic

Prairies1

Based on reported outstanding balances

Delinquency Rates3 Q1’15 Q2’15 Q3’15 Q4’154

Transactional 0.31% 0.29% 0.29% n.a.

Portfolio 0.08% 0.07% 0.08% n.a.

Total 0.22% 0.20% 0.21% n.a.

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

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


2016 annual loss ratio expectations

MIC loss ratio1 & CBA delinquency rates1,2

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

0%

10%

20%

30%

40%

50%

60%

70%

80%

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

0.8%

0.9%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*

Canada loss ratio - MIC (RS)

2016 Loss

Ratio Range

Alberta delq.

rate (CBA) (LS)

Canada delq.

rate (CBA) (LS)

1 Source: Canadian Bankers Association (CBA, annual averages) and Company sources. 2 2009 excludes the impact of the change to the premium recognition curve in 1Q’09 3 Based on Company’s estimate of outstanding balance of insured mortgages as at September 30, 2015 of $184B. * CBA delinquency rates as of Q3 2015.

Alberta National

Unemployment rate 7.8 to 9.0% 7.4 to 8.0%

Home price appreciation (depreciation) (8) to (12)% 1 to (3)%

Assumptions for

loss ratio range

47% 50%

67% 71%

76%

81%

87% 91%

40%

50%

60%

70%

80%

90%

100%

Portfolio <=2009 2010 2011 2012 2013 2014 2015

Portfolio 2015

Effective Loan-to-Value by Book Year

National, as at September 30, 2015

> 20% Equity

O/S Insured Mortgage

Balances3 ($B)

Transactional Segment

$67 $24 $10 $13 $15 $16 $20 $18

Transactional


Solid financial performance

$MM except EPS & BVPS Q4’15 Q3’15 Q4’14

Transactional premiums written $181 $236 $165

Portfolio premiums written 32 24 13

Total premiums written $213 $260 $178

Premiums earned 151 148 143

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

Expenses (27) (28) (30)

Underwriting income $90 $89 $76

Net investment income (excl. realized gains / losses)

44 42 43

Net operating income $95 $92 $84

Operating EPS (diluted)

$1.03 $1.00 $0.89

Book value per share (diluted, incl. AOCI)

$36.82 $36.14 $35.02

Q4 highlights

• Transactional premiums written higher by

10% Y/Y primarily due to premium rate

increases

• Premiums Earned increased by 3% Q/Q

and 6% Y/Y as a result of the larger

recent books and price increases

• Loss ratio of 23%, up 2 pts Q/Q consistent

with typical seasonality, and emerging

Alberta pressure, but down 3 pts Y/Y

• Net investment income modestly higher

Q/Q primarily due to higher invested

assets

• Net operating income modestly higher

Q/Q

• Book value per share up 5% Y/Y


Transactional insurance

$19.5

$3.1 $3.9

$5.4 $6.8

$7.4

$8.3

$6.2

$6.2

2013 2014 2015

+$2.6B

+$3.1B

SOLID BUSINESS FUNDAMENTALS; FLAT TO MODESTLY LOWER

PREMIUMS WRITTEN FROM TRANSACTIONAL INSURANCE IN 2016

New insurance written ($ billions)

+$148M

Net premiums written ($ millions)

+$110M

Note: Company sources.

$19.5 $22.1

$25.2

Q1

Q2

Q3

Q4

$447

$71 $104

$129 $183

$192

$236

$165

$181

2013 2014 2015

$447

$557

$705

Price = ~$43M

Vol. = ~$67M

Price = ~$67M

Vol. = ~$81M

2015

average

premium

rates

2.90%

2.83%

2.71%

2.65% Q1

Q2

Q3

Q4

2015 highlights 2016 outlook

Average market share increase of ~4 percentage

points in 2015; modestly larger origination market

Maintain market share in a

modestly smaller origination

market

Average premium rate

should be marginally

higher than 2.90%

2.29% 2.51% 2.79% Average

premium rate


Portfolio insurance

+$4.6B +$18M

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

PORTFOLIO INSURANCE IS A KEY PART OF VALUE PROPOSITION


+$5.7B

$15 $20

$6

$4

$6

$10

2013 2014 2015

+$21M

$65

$13 $26

$32 $22

$25 $24

$13

$32

2013 2014 2015

Q1

Q2

Q3

Q4

Avg. score

Avg. LTV

756 750 756

63% 62% 65%

2015 highlights 2016 outlook

Large wins

at banks

Leveraging proprietary

risk models to drive

portfolio quality

Q1

Q2

Q3

Q4

$26

Regulatory rule change expected to moderate demand in 2H16 as

portfolio insurance could be limited to mortgages backing gov’t MBS

$82

$104


Premiums earned growth

LARGER RECENT BOOKS PROVIDE TAILWIND FOR PREMIUMS EARNED

PREMIUMS EARNED IN 2016 TO GROW BY 5%+ DRIVEN BY LARGER RECENT BOOKS

$244 $209 $228

$999 $991 $1,025

$481 $599 $767

2013 2014 2015

6 years & prior Previous 4 books Most recent

+25% +28%

-1% +3%

-14% +9% $144 $141 $143

$143 $141 $144

$143 $140 $148

$142 $143 $151

2013 2014 2015

Q1 Q2 Q3 Q4

Unearned premiums reserve ($ millions) Premiums earned ($ millions)

FY $573 FY $565 $1.7B $1.8B $2.0B


FY $586

-1% +4%

(2013 book) (2014 book)

(2015 book)

(2011-2014

books)

(2010-2013

books)

(2009-2012

books)

+4% +12%


Solid underwriting profitability

76 87 90 89 90

30 24 29 28 27

37 31 25 31 35

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

Underwriting profitability ($ millions)

Underwriting

profit

Expenses

Losses on claims

Loss ratio 26% 22% 17% 21% 23%

Expense ratio 21% 17% 20% 19% 18%

Combined

ratio 47% 39% 37% 40% 41%

New

delinquencies

net of cures 489 432 319 440 487

Highlights

• 2015 loss ratio of 21% at lower

end of stated range of 20 to 30%

• New delinquencies net of cures

modestly higher, primarily due to

Quebec and Alberta

• Expense ratio of 18% in line with

management expectations

• Loss mitigation programs continue

to be effective

Premiums earned $143 $151 $143 $144 $148

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


Fed. Agency / NHA MBS

Federal bonds

Preferred shares

Emerging markets debt2

Investment grade

corporates3

Provincials

5%

29% 17%

33%

5%

7%

4%

$4,000

4Q14 4Q15

Investments contribute steady income

$5.9B portfolio1

Duration: 3.7 years1

Book yield: 3.1%1

Growth in invested assets (C$ millions)


1. Represents market value. Book yield represents pre-tax equivalent book yield after dividend gross-up of portfolio (as at Dec. 31, 2015).

2. 98% investment grade. 3. Market value, includes CLOs.

Total Invested Assets

Cash

2015 highlights

89% of portfolio is high-quality fixed

income

Limited energy exposure

6% of portfolio

2016 outlook

Impact of low rate environment

should be largely offset by growth in

invested assets

Investment Income ($ millions)

$172 $165

$6 $8

$22 $32

2014 2015

$195 $201

Net Investment Gains

Dividends

Interest

$5,443

$474

or 9%

$5,917


Capital management

INTEND TO OPERATE MODESTLY ABOVE THE 220% MCT HOLDING TARGET IN 2016

Capital required at 220% MCT ($ millions)1 Transactional new insurance written ($ billions)

$3,159 $3,329

$3,432

$38

$116

$200

2013 Jan. 1/15 4Q15

Holdco cash2 $85M $143M $121M

MCT ratio 223% 228% 233%

$3,197

$3,632

+$248M

+$187M

Flexibility Efficiency

Strength


1. MCT denotes ratio for operating insurance company. 4Q15 MCT based on company estimates.

2. Represents capital in addition to capital in operating insurance company.

$19.5 $22.1

$25.2

2013 2014 2015

+$2.6B +$3.1B Excess

capital over 220%

Capital at 220%

2016 outlook

Maintain holdco cash and liquid securities above

$100 million

New capital test under development for 2017 will be more risk

sensitive and will include additional capital for new business if

regional home price to income threshold is exceeded

$3,445

(pro-forma)


Key takeaways

Proven business model has positioned

MIC for future

performance

Market share retention

Navigating 2016 with a keen

focus on risk management

Proactive loss mitigation

programs

Investing in our customer

experience strategy


[email protected] investor.genworthmicanada.ca

Investor Relations

Jonathan A. Pinto, MBA, LL.M

Vice President, Investor Relations

[email protected] 905.287.5482