New Government Guarantee Legislative Framework, Effective January 1, 2013, Enhances Genworth MI Canada's Financial Position

New Government Guarantee Legislative Framework, Effective January 1, 2013, 
Enhances Genworth MI Canada's Financial Position 
Company's claims-paying ability is strengthened 
TORONTO, Dec. 20, 2012 /CNW/ - Genworth MI Canada Inc. (the "Company" or 
"Genworth Canada") (TSX: MIC) reported today on the expected impact of the 
Protection of Residential Mortgage or Hypothecary Insurance Act (Canada) 
("PRMHIA"). On January 1, 2013, PRMHIA will come into force and establish a 
legislative framework that replaces the current guarantee agreement the 
Company has with the Federal Government (the "Guarantee Agreement"). 
Under the current Guarantee Agreement between Genworth Financial Mortgage 
Insurance Company Canada ("GFMICC") and the Government, GFMICC contributes an 
amount equal to 10.5% of gross premiums written to a trust fund ("the 
Guarantee Fund") and pays a risk premium to the federal government. On 
September 30, 2012, the investments and accrued income held in the Guarantee 
Fund totaled approximately $980 million. The Guarantee Fund is accounted for 
as an asset on the Company's balance sheet. Contributions to the Guarantee 
Fund are deductible in the calculation of taxable income, and income earned by 
the Guarantee Fund is not taxed until monies are withdrawn. Any withdrawals 
from the Guarantee Fund are included as taxable income. Upon the withdrawal 
of monies from the Guarantee Fund, the Guarantee Agreement requires the 
payment of exit fees equal to 1% of the amount of the fund for each year from 
the effective date of the Guarantee Agreement (February 1992) to the date of 
withdrawal up to a maximum of 25%. 
"The implementation of PRMHIA will be positive for Genworth Canada and the 
Canadian Mortgage market" said Brian Hurley, Chairman and Chief Executive 
Officer. "The elimination of the Guarantee Fund will strengthen Genworth 
Canada's claims-paying ability by approximately $675 million and will result 
in a one-time increase in its net book value." 
Effective January 1, 2013, the specific impact of PRMHIA is as follows: 

    --  The level of federal government guarantee of insured mortgages
        will remain at 90 percent.
    --  All mortgages that were previously insured by GFMICC and
        covered by the Guarantee Agreement will continue to be covered
        under PRMHIA.
    --  The maximum outstanding insured exposure for private insured
        mortgages will be increased from $250 billion to $300 billion.
        The current risk premium is being replaced by a risk fee
        payable by the Company to the federal government equal to 2.25
        percent of gross premiums written.
    --  GFMICC's insurance activities will continue to be restricted to
        insuring mortgages that meet the government guarantee mortgage
        insurance eligibility guideline.
    --  The Guarantee Agreement and all obligations under it, including
        the requirement for a Guarantee Fund and payment of exit fees
        related to it, will be terminated. As a result the Company will
        reverse, in the 4(th) quarter 2012, the liability it had been
        accruing for the exit fee. The Company expects the pre-tax
        impact of this reversal to be approximately $166 million
        related to exit fees accrued in 2011 and prior years and a
        further $20 million accrued for the first nine months of 2012.
        This will result( )in a net increase in Shareholders' Equity
        excluding Accumulated Other Comprehensive Income of
        approximately $135 million.
    --  The amount held in the Guarantee Fund will revert to the
        Company on January 1, 2013 and the Company's taxable income
        will increase by the same amount (the Company's operating
        income on a GAAP basis will not be affected).  The resulting
        increase in income taxes payable is expected to be
        approximately $255 million, which the Company has already
        provided for in its financial statements.
    --  The Company expects that GFMICC's regulatory capital available
        will increase by approximately $675 million from the
        elimination of the Guarantee Fund and the reversal of the exit
        fees previously accrued, net of the related income tax effect.
        This will increase its Minimum Capital Test (MCT) ratio by
        approximately 45 percentage points to over 200%.
    --  The Guarantee Fund is being eliminated in favour of a higher
        MCT ratio. The Minister of Finance advised the Company today
        that under PRMHIA and the Insurance Companies Act (Canada) the
        minimum MCT ratio for GFMICC will be 175%. In conjunction with
        this new target, GFMICC will increase its internal MCT target
        capital ratio on January 1, 2013 to 185% and expects to operate
        above 190% MCT in the normal course.

The new government guarantee legislative framework confirms the important role 
of private mortgage insurance in the Canadian marketplace. The Company 
believes that these changes strengthen its balance sheet and claims-paying 
ability thereby further reducing the likelihood of the government guarantee 
ever being invoked.

IFRSs and Non-IFRSs Financial Measures

The Company's consolidated financial statements are prepared in accordance 
with IFRSs. To supplement its financial statements, the Company uses select 
non-IFRSs financial measures. Non-IFRSs measures used by the Company to 
analyze performance include underwriting ratios such as loss ratio, expense 
ratio and combined ratio, as well as other performance measures such as net 
operating income and return on operating income. Other non-IFRSs measures used 
by the Company include shareholders' equity excluding accumulated other 
comprehensive income ("AOCI"), insurance in-force, new insurance written, 
minimal capital test ratio ("MCT"), delinquency ratio, severity on claims 
paid, operating earnings per common share of the Company (basic and diluted), 
book value per common share (basic and diluted; including and excluding AOCI), 
dividends paid per common share of the Company, and portfolio duration. The 
Company believes that these non-IFRSs 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-IFRSs 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 
investor section of the Company's website. To access the glossary, click on 
the "Glossary of Terms" link under "Investor Resources" subsection on the left 
navigation bar. A reconciliation of non-IFRSs financial measures to the 
most recently comparable measures calculated in accordance with IFRSs can be 
found in Management's Discussion and Analysis filed with the Company's most 
recent financial statements, which are available on the Company's website and 
on SEDAR at

Cautionary Note Regarding Forward-Looking Statements

This press release includes certain forward-looking statements. These 
forward-looking statements include, but are not limited to, the Company's 
plans, objectives, expectations and intentions, and other statements contained 
in this release that are not historical facts. These statements may be 
identified by their use of words such as "may", "would", "could", "will", 
"intend", "plan", "anticipate", "believe", "seek", "propose", "estimate", 
"expect", or similar expressions, as they relate to the Company are intended 
to identify forward-looking statements. Specific forward-looking statements 
in this document include, but are not limited to, statements with respect to 
the Company's expectations regarding the Canadian government's proposed 
changes to the guarantee regime regarding residential mortgages, the 
anticipated effects of the implementation of PRMHIA on the Company, the 
Company's future operation and MCT ratio under PRMHIA, and the Company's 
beliefs as to housing demand and home price appreciation, unemployment rates, 
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. These statements are inherently subject to significant risks, 
uncertainties and changes in circumstances, many of which are beyond the 
Company's control. 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 global, political, economic, business, competitive, 
market and regulatory factors, and the other risks described in the Company's 
Annual Information Form. 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.

About Genworth MI Canada Inc.

Genworth MI Canada Inc. (TSX: MIC), through its subsidiary, Genworth Financial 
Mortgage Insurance Company Canada, has been the leading Canadian private 
residential mortgage insurer since 1995. Known as Genworth Canada, the 
Company provides default mortgage insurance to Canadian residential mortgage 
lenders that enables low down payment borrowers to own a home more affordably 
and stay in their homes during difficult financial times. Genworth Canada 
combines technological and service excellence with risk management expertise 
to deliver innovation to the mortgage marketplace. As of September 30, 2012, 
Genworth Canada had $5.6 billion total assets and $2.9 billion shareholders' 
equity. Based in Oakville, Ontario, Genworth Canada employs approximately 
260 people across Canada. Find out more at

Contact Information:

Investors - Samantha Cheung, 
Media- Lisa Azzuolo,

SOURCE: Genworth MI Canada

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CO: Genworth MI Canada
ST: Ontario

-0- Dec/20/2012 14:06 GMT

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