PEOPLE POWERED SMARTER MI DATA DRIVEN CUSTOMER CENTRIC 2017 Investor Day December 6 th , 2017 2017 Investor Day Genworth MI Canada Inc. 1
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, but are not limited to, statements with respect to the implementation of any regulatory or legal changes introduced by the Government and the potential impact on new insurance written, as well as the Company’s future operating and financial results, sales expectations regarding premiums written, capital expenditure plans, dividend policy and the ability to execute on its future operating, investing and financial strategies, the Canadian housing market, and the size of the transactional insurance market, proposed or potential transactions involving the Company or its shareholders 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 ability of the Company to control or predict. 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, Short Form Base Shelf Prospectus, and 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. Such non-IFRS financial measures include net operating income, operating earnings per common share (basic), operating earnings per common share (diluted), operating return on equity, insurance in-force, new insurance written, loss ratio, expense ratio, combined ratio, investment yield, delinquency rates, effective loan-to-value, and Minimum Capital Test (“MCT”) . 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 DRIVING VALUE THROUGH CUSTOMIZED SERVICE EXPERIENCE 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. 2017 Investor Day Genworth MI Canada Inc. 2
Genworth Canada 2017 Investor Day December 6 th , 2017 – Agenda Lunch and registration: 12 noon to 12:40 PM Discussion topic Duration Opening remarks Jonathan Pinto 5 minutes VP, Investor Relations and introduction Stuart Levings Strategic outlook 30 minutes President & CEO Disciplined risk Craig Sweeney 30 minutes SVP & Chief Risk Officer management Financial strategy Philip Mayers 30 minutes SVP & Chief Financial Officer and insights Wrap up by CEO, followed by Q & A DRIVING VALUE THROUGH CUSTOMIZED SERVICE EXPERIENCE 30 minutes period with all executive presenters 2017 Investor Day Genworth MI Canada Inc. 3
Agenda and key themes Strategic outlook Disciplined risk management Smarter M.I. Financial strategy and insights Question and answer session 2017 Investor Day Genworth MI Canada Inc. 4
Stuart Levings President and Chief Executive Officer Strategic outlook 2017 Investor Day Genworth MI Canada Inc. 5
Genworth Canada overview MARKET FACTS (Q3’17) WHO WE ARE LARGEST private residential $6.8 billion $3.9 billion mortgage insurer in Canada Shareholders’ equity Total assets Helped 1.5M+ families achieve homeownership 1 $4.0 billion 91 million Supported 250+ Market capitalization* Shares outstanding** Canadian lenders 1 MORTGAGE INSURANCE PRODUCT WHAT WE DO 2 • Mandatory for less than 20% down payment • 100% coverage protects lender against default risk Mortgage Insurance 1 2 Mortgage Application • Application and Premium Upfront non-refundable premium • Capital relief for lenders SERVED MARKET Homebuyer Mortgage lender Mortgage insurer (originates mortgage) • Primarily first time homebuyers with: • 4 3 25-45 age demographic Mortgage Loan Insurance Contract • $102K average household income….70% multiple borrowers 3 Note: Company sources. Market facts in Canadian dollars. 1. Cumulative transactional funded deals. 2017 Investor Day Genworth MI Canada Inc. 6 2. Denotes transactional mortgage insurance. 3. YTD 2017 – as at Q3’17 ; transactional purchase only. *As at November 20 th , 2017, Source: Ipreo. ** Basic shares outstanding as at Sept. 30, 2017.
Served market: first time homebuyers What our prudent home buyer profile looks like… 4.7% 5.8% 3% immigrated 746 average to Canada 1 12.5% credit score 1 13.0% Average Average household 46.4% borrower age income 54.2% = 36 years = $102K 28.6% 34.8% 70% bought with spouse/partner 1 <= 35 >35 - <= 45 >45 - <= 55 > 55 <= 100K >100K - 150K >150K - 200K > 200K …and what they purchase Detached Condo Row/Semi Purchase price <300K >300K - <=500K >500K CALGARY TORONTO VANCOUVER NATIONAL Avg. price 2 = $408K Avg. price 2 = $518K Avg. price 2 = $461K Avg. price 2 = $325K Avg. income = $115K Avg. income = $122K Avg. income = $111K Avg. income = $102K Avg. GDS 3 = 26% Avg. GDS 3 = 29% Avg. GDS 3 = 28% Avg. GDS 3 = 24% 68% 9% 13% 30% 30% 23% 29% 40% 31% 68% 11% 12% Note: Company sources, in Canadian dollars. 1. Jan17-Sep17 timeframe; Purchase Business only. 2017 Investor Day Genworth MI Canada Inc. 7 2. Average price represents Greater Calgary Area, Greater Toronto Area and Greater Vancouver Area YTD Sep17; Purchase Business only. 3. Denotes Gross Debt Service Ratio.
2017 key accomplishments Strong financial 2017 loss ratio trending Loss mitigation efforts ongoing; performance; 7% increase in towards lower half of range 54% workout penetration ; quarterly dividend 1 ; success rate of 96% , 12 transactional premium rate months after workout on increase of 18% 2 in 2017 average 3 10 % to 20 % range Enhancements to risk Well-distributed ; high quality Proactive engagement with selection, technology and portfolio ; average credit score regulators to influence processes (Smarter MI) 746 4 , improved debt service mortgage finance sector ratios DRIVING SHAREHOLDER VALUE THROUGH SOUND RISK MANAGEMENT AND INDUSTRY THOUGHT LEADERSHIP Note: Company sources. 1. Increase is effective Q4’17. 2. Q3 2017 vs. Q3 2016. 2017 Investor Day Genworth MI Canada Inc. 8 3. Oct. 2016 to Sept. 2017 period. 4. YTD Sept. 2017, purchase business only.
Our environment today Key takeaways Risk Assessment Strong economic growth environment, 3.1% 1 expected in 2017 Positive momentum in oil producing regions Interest rates on the rise Economic Monitoring NAFTA renegotiations Housing markets trending towards more normalized state Housing & First time homebuyer affordability still impacting HLTV market size mortgage Strong supporting fundamentals; 1MM immigration in next 3 years 2 markets Portfolio quality remains strong Mortgage rate stress test driving improved consumer debt profile in Insurance the insured segment portfolio Extremely strong mortgage loan performance Government shifting focus to uninsured mortgage space (B-20) OSFI capital rules impacting lender profitability and competitor Regulatory dynamics Increasing provincial focus on housing policy initiatives STRONG MACROECONOMIC ENVIRONMENT 2017 Investor Day Genworth MI Canada Inc. 9 1. BoC GDP forecast, Monetary Policy Report, Oct. 2017. 2. Multi-year strategy tabled by the Liberal government, Nov. 2017.
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