Genworth MI Canada Inc. Reports Solid Fourth Quarter 2012 And Full Year Results

Genworth MI Canada Inc. Reports Solid Fourth Quarter 2012 And Full Year Results 
Fourth Quarter Net Operating Income of $226 million, Operating Diluted EPS of 
$2.28/share
Adjusted Q4 Net Operating Income of $89 million, Adjusted Operating Diluted 
EPS of $0.90/share
Adjusted Full Year Net Operating Income of $339 million and Adjusted Operating 
Diluted EPS of $3.43/share 
TORONTO, Feb. 5, 2013 /CNW/ - Genworth MI Canada Inc. (the "Company") (TSX: 
MIC) today reported fourth quarter 2012 net income of $226 million or $2.29 
per diluted common share. On an adjusted basis, the Company reported fourth 
quarter net operating income of $89 million or $0.90 per diluted common share, 
excluding the one-time favourable impact of $137 million from the reversal of 
previously accrued federal government guarantee fund exit fees. The adjusted 
net operating income was $8 million or 10% higher than the prior quarter and 
$10 million or 13% higher year-over-year. 
On a full year basis, the Company reported $462 million in total net operating 
income. On an adjusted basis, the Company reported $339 million in total net 
operating income as compared to $318 million in 2011. This represents a $21 
million or 7% increase in net operating income. 
"In 2012, we continued to deliver strong profitability including higher 
premiums written and loss ratio improvement," said Brian Hurley, Chairman and 
Chief Executive Officer. "This momentum, combined with stronger lender 
relationships and improved borrower quality, positions us well for 2013." 
As reported in the Company's December 20, 2012 press release, the Protection 
of Residential Mortgage or Hypothecary Insurance Act (Canada) ("PRMHIA") 
became effective on January 1, 2013 and established a legislative framework 
that replaced the previous guarantee agreement the Company had with the 
federal government. Under PRMHIA, all obligations related to the previous 
federal government guarantee fund and related exit fees were terminated. As 
a result, the Company has reversed the previously accrued exit fees of $186 
million, or $137 million after taxes, in the fourth quarter. This consisted 
of $166 million ($122 million after taxes) accrued in 2011 and prior years and 
$20 million ($15 million after taxes) accrued for the first nine months of 
2012. The following table provides a summary of the fourth quarter and full 
year results including and excluding the impact of the reversal of such exit 
fees. The Company's Review of Performance for this quarter includes a full 
description of this impact. 
Fourth Quarter 2012 Key Financial Metrics: 
Summary of Financial Adjustments 
 ____________________________________________________________________
|                          | Fourth Quarter 2012|    Full Year 2012  |
|$millions except as noted |____________________|____________________|
|                          |Reported|Adjusted(1)|Reported|Adjusted(1)|
|__________________________|________|___________|________|___________|
|Underwriting Income       |      73|         73|     291|        291|
|__________________________|________|___________|________|___________|
|Net investment income     |     233|         47|     367|        201|
|__________________________|________|___________|________|___________|
|Net Income                |     226|         89|     470|        348|
|__________________________|________|___________|________|___________|
|Net Operating Income(1)   |     226|         89|     462|        339|
|__________________________|________|___________|________|___________|
|Operating EPS (diluted)(1)|   $2.28|      $0.90|   $4.67|      $3.43|
|__________________________|________|___________|________|___________|
|Operating Return on Equity|     33%|        13%|     17%|        13%|
|(1)                       |        |           |        |           |
|__________________________|________|___________|________|___________| 
(1 )This is a financial measure not calculated based on International
Financial Reporting Standards ("IFRSs").  See the "IFRSs and Non-IFRSs
Financial Measures" section of this press release for additional
information. 


    --  Net premiums written of $117 million were $61 million lower
        than the prior quarter and $6 million lower year-over-year.  
        The sequential decrease was primarily driven by typical
        seasonality resulting in lower mortgage volumes in the fourth
        quarter in combination with a smaller high loan-to-value
        mortgage market that resulted from changes to the mortgage
        insurance eligibility rules in July 2012.  The year-over-year
        decrease was also attributable to the smaller high
        loan-to-value market.
    --  Net premiums earned of $147 million were flat as compared to
        the prior quarter and $9 million lower year-over-year.
    --  Losses on claims of $46 million were $2 million higher than the
        prior quarter due to typical seasonality.  On a year-over-year
        basis, losses on claims were $15 million lower, reflecting
        lower new reported delinquencies due to an improving economic
        environment, particularly in Alberta.  This resulted in a loss
        ratio of 31% for the quarter, 1 percentage point higher
        sequentially and 8 percentage points lower year-over-year.
    --  Adjusted net Investment income excluding realized gains of $46
        million was $7 million higher than the prior quarter and $4
        million higher year-over-year.  The increases were primarily
        due to the inclusion of exit fees in the prior quarter and
        year-over-year results.
    --  Adjusted net operating income of $89 million was $8 million
        higher than the prior quarter, which included exit fees, and
        $10 million higher year-over-year, due to loss ratio
        improvement.
    --  Adjusted operating return on equity was 13% for the quarter, 1
        percentage point higher than the prior quarter and flat
        year-over-year.
    --  The expense ratio, as a ratio of net premiums earned, was 19%. 
        This ratio was 1 percentage point higher than the prior quarter
        and 2 percentage points higher year-over-year, but consistent
        with the Company's expected range.
    --  The unearned premium reserve was $1.8 billion at the end of the
        quarter.  These premiums will be earned over time in accordance
        with the Company's premium recognition curve which follows the
        Company's historical loss emergence pattern.
    --  The regulatory capital ratio or Minimum Capital Test ("MCT")
        ratio was approximately 170%, 6 percentage points higher than
        the prior quarter and 8 percentage points higher
        year-over-year.

Fourth Quarter 2012 Key Highlights:

The Company continued to make solid progress towards its operational 
targets. As a result of its strategic efforts, Genworth Canada consistently 
remains the leader in the Canadian private mortgage insurance industry.
    --  Total new insurance written this quarter increased to $8.5
        billion as compared to $6.2 billion in the fourth quarter of
        the prior year, largely driven by higher volumes of portfolio
        insurance, which were offset in part by lower high
        loan-to-value volumes resulting from the July 2012 changes in
        the mortgage insurance eligibility rules.   The high
        loan-to-value component of new insurance written during the
        quarter was $4.4 billion, representing a decline of 16% from
        $5.2 billion in the fourth quarter of the prior year.
    --  The Company insured $4.1 billion of low-loan-to-value mortgage
        portfolios, higher than the prior quarter volume of $2.7
        billion.  The Company continued to take advantage of selected
        portfolio insurance opportunities under its clearly defined
        risk appetite and disciplined pricing approach.
    --  The total delinquency rate was 0.14%, 1 basis points lower than
        the prior quarter and 6 basis points lower year-over-year.  The
        delinquency rate continues to be positively influenced by
        improving economic conditions in combination with ongoing
        success of the Company's proactive loss mitigation strategies.
    --  The Company's investment portfolio had a market value of $5.4
        billion at the end of the quarter.  Going forward with the
        implementation of PRHMIA, the funds previously segregated under
        their own investment mandate in the Government Guarantee fund
        will be combined with the Company's general portfolio.  The
        combined portfolio had a pre-tax equivalent book yield of 3.7%
        and duration of 3.8 years as at December 31, 2012.
    --  Effective January 1, 2013, with the implementation of the new
        legislation, the Minister of Finance set the minimum MCT ratio
        for the Genworth Financial Mortgage Insurance Company Canada,
        the Company's Insurance subsidiary, at 175%.  In conjunction
        with this, the Company increased its internal MCT target
        capital ratio to 185%.  As at January 1, 2013, the Company's
        MCT ratio increased to approximately 211%.  The Company expects
        to operate above 190% MCT ratio in the normal course of
        business.

Dividends

On November 15, 2012, the Company paid a quarterly dividend of $0.32 per 
common share.

The Company also announced today that its Board of Directors approved a 
dividend payment of $0.32 per common share, payable on March 1, 2013 to 
shareholders of record at the close of business on February 15, 2013.

Shareholders' Equity

As of December 31, 2012, shareholders' equity was $3.04 billion representing a 
book value of $30.62 per common share on a fully diluted basis. Excluding 
accumulated other comprehensive income ("AOCI") or loss, shareholders' equity 
was $2.82 billion or a book value of $28.40 per common share on a fully 
diluted basis.

Detailed Operating Results and Financial Supplement

For more information on the Company's operating results, please refer to the 
Company's Review of Performance as posted on SEDAR and available at 
www.sedar.com.

This press release, the financial statements, Review of Performance, and the 
fourth quarter 2012 financial supplement are also posted on the investor 
section of the Company's website (http://investor.genworthmicanada.ca). 
Investors are encouraged to review all of these materials.

Earnings Call

The Company's fourth quarter earnings call will be held on February 6, 2013 at 
10:30 am ET (Local: 416-644-3414, Toll free: 1-800-814-4859). The call is 
accessible via telephone and by audio webcast on the Company's website. 
Slides to accompany the call will be posted just prior to its start. A 
replay of the call will be available until March 6, 2013 (Local: 416-640-1917, 
Toll Free: 1-877-289-8525 Access Code 4589899#). Participants are encouraged 
to pre-register for the webcast through the Company's website. A replay of the 
call will also be available from the Company's website for a period of at 
least 45 days following the conference call.

About Genworth MI Canada Inc.

Genworth MI Canada Inc. (TSX: MIC) through its subsidiary, Genworth Financial 
Mortgage Insurance Company Canada (Genworth Canada), is the largest private 
residential mortgage insurer in Canada. The Company provides mortgage 
default insurance to Canadian residential mortgage lenders, making 
homeownership more accessible to first-time homebuyers. Genworth Canada 
differentiates itself through innovative processing technology, superior 
customer service, and a robust risk management framework. For almost two 
decades, Genworth Canada has supported the housing market by providing thought 
leadership and a focus on the safety and soundness of the mortgage finance 
system. As at December 31, 2012, Genworth Canada, had $5.7 billion total 
assets and $3.0 billion shareholders' equity. Find out more at www.genworth.ca.
    Consolidated Financial Highlights

 _____________________________________________________________________
|                                |Three Months Ended |Full Year Ended |
|($ millions, except per share   |   December 31     |  December 31   |
|amounts)                        |    (Unaudited)    |  (Unaudited)   |
|                                |___________________|________________|
|                                |  2012 |     2011  |  2012 |   2011 |
|________________________________|_______|___________|_______|________|
|New Insurance Written           |  8,472|      6,224| 41,286|  26,586|
|________________________________|_______|___________|_______|________|
|Insurance In Force              |301,456|    265,776|301,456| 265,776|
|________________________________|_______|___________|_______|________|
|Net Premiums Written            |    117|        123|    550|     533|
|________________________________|_______|___________|_______|________|
|Net Premiums Earned             |    147|        156|    589|     612|
|________________________________|_______|___________|_______|________|
|Losses on Claims                |     46|         62|    194|     225|
|________________________________|_______|___________|_______|________|
|Adjusted Investment Income      |     46|         42|    162|     169|
|(Interest and Dividends, net of |       |           |       |        |
|expenses)( 1)                   |       |           |       |        |
|________________________________|_______|___________|_______|________|
|Impact of reversal of government|    186|          -|    186|       -|
|guarantee exit fee              |       |           |       |        |
|________________________________|_______|___________|_______|________|
|Realized and Unrealized Gains or|      1|          1|     12|       7|
|Losses on Investments           |       |           |       |        |
|________________________________|_______|___________|_______|________|
|Total investment income         |    233|         43|    367|     179|
|________________________________|_______|___________|_______|________|
|Net Income                      |    226|         79|    470|     323|
|________________________________|_______|___________|_______|________|
|Net Operating Income(1)         |    226|         79|    462|     318|
|________________________________|_______|___________|_______|________|
|Adjusted Net Operating Income(1)|     89|         79|    339|     318|
|________________________________|_______|___________|_______|________|
|Fully Diluted Earnings Per Share|  $2.29|      $0.80|  $4.76|   $3.13|
|________________________________|_______|___________|_______|________|
|Fully Diluted Operating Earnings|  $2.28|      $0.80|  $4.67|   $3.08|
|Per Share(1)                    |       |           |       |        |
|________________________________|_______|___________|_______|________|
|Adjusted Fully Diluted Earnings |  $0.90|      $0.80|  $3.52|   $3.13|
|Per Share(1)                    |       |           |       |        |
|________________________________|_______|___________|_______|________|
|Adjusted Diluted Operating      |  $0.90|      $0.80|  $3.43|   $3.08|
|Earnings Per Share(1)           |       |           |       |        |
|________________________________|_______|___________|_______|________|
|Fully Diluted Book Value Per    | $30.62|     $26.94| $30.62|  $26.94|
|Common Share, including AOCI    |       |           |       |        |
|________________________________|_______|___________|_______|________|
|Fully Diluted Book Value Per    | $28.40|     $24.78| $28.40|  $24.78|
|Common Share, excluding AOCI(1) |       |           |       |        |
|________________________________|_______|___________|_______|________|
|Loss Ratio                      |    31%|        39%|    33%|     37%|
|________________________________|_______|___________|_______|________|
|Combined Ratio                  |    50%|        56%|    51%|     53%|
|________________________________|_______|___________|_______|________|
|Operating Return on Equity(1)   |    33%|        13%|    17%|     13%|
|________________________________|_______|___________|_______|________|
|Adjusted Operating Return on    |    13%|       -   |    13%|  -     |
|Equity(1)                       |       |           |       |        |
|________________________________|_______|___________|_______|________|
|Minimum Capital Test Ratio (MCT)|   170%|       162%|   170%|    162%|
|________________________________|_______|___________|_______|________|

((1 )) This is a financial measure not calculated based on
       International Financial Reporting Standards ("IFRSs").  See the
       "IFRSs and Non-IFRSs Financial Measures" section of this press
       release for additional information.
        

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, insurance in-force, new insurance 
written, MCT ratio, 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 www.sedar.com.

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 effect of the Canadian government's 
new government guarantee legislative framework, the effect of the changes to 
the government guarantee mortgage eligibility rules, 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.





Investors - Samantha Cheung, 905-287-5482samantha.cheung@genworth.com 
Media- Lisa Azzuolo, 905-287-5520lisa.azzuolo@genworth.com

SOURCE: Genworth MI Canada

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CO: Genworth MI Canada
ST: Ontario
NI: REL ERN CONF DIV 

-0- Feb/05/2013 22:13 GMT


 
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