Genworth MI Canada Inc. Reports Fourth Quarter 2013 Earnings And Full Year Results

Genworth MI Canada Inc. Reports Fourth Quarter 2013 Earnings And Full Year 
Results 
Fourth Quarter Net Operating Income of $85 million, Operating Diluted EPS of 
$0.90 per share
Full Year Net Operating Income of $349 million, Full Year Diluted Operating 
EPS of $3.60 per share 
Full Year Operating EPS up 5%
Full Year Operating Return on Equity of 12% 
TORONTO, Feb. 4, 2014 /CNW/ - Genworth MI Canada Inc. (the "Company") (TSX: 
MIC) today reported fourth quarter 2013 net income of $93 million or $0.98 per 
diluted common share, and net operating income of $85 million or $0.90 
operating earnings per diluted common share. While net operating income was 
lower by 4% as compared to the same quarter in the prior year on an adjusted 
basis, the Company delivered consistent operating earnings per share. 
On a full year basis, the Company reported $349 million in total net operating 
income, as compared to $339 million on an adjusted basis for the prior year.  
Compared to the adjusted net operating income in the prior year, net operating 
income for 2013 represented a $10 million or 3% increase.  Full year operating 
earnings per share were $3.60 as compared to $3.43 in the prior year, on an 
adjusted basis.  This represents a 5% increase to the prior year. The Company 
also delivered an operating return on equity of 12% during the quarter and on 
a full year basis. 
"We delivered strong performance in 2013," said Brian Hurley, Chairman and 
Chief Executive Officer of the Company.  "We enhanced the customer experience, 
strengthened the quality of our insurance portfolio, and realized loss ratio 
improvement.  We believe that we are well positioned for continued 
profitability." 
With the implementation of the Protection of Residential Mortgage or 
Hypothecary Insurance Act (Canada) ("PRMHIA") on January 1, 2013, reported net 
operating income for the fourth quarter and full year in 2012 was $226 million 
and $470 million, respectively.   These reported values included a one-time 
favourable after-tax item of $137 million on a quarter basis and $122 million 
on a full year basis related to the reversal of previously accrued exit fees 
related to the federal government guarantee fund under the previous Government 
of Canada Guarantee Agreement, which was released with the implementation of 
PRMHIA.   Adjusted net operating income of $89 million in the fourth quarter 
of 2012 and $339 million for the 2012 full year are being used for comparison 
purposes. 
Fourth Quarter 2013 Key Financial Metrics: 


        --  Net premiums written of $129 million were $32 million, or 20%,
            lower than the prior quarter and $12 million, or 11%, higher
            than the same quarter in the prior year.   The sequential
            decrease was primarily driven by typical seasonally lower
            volumes of high loan-to-value mortgages and lower market demand
            for portfolio insurance.  The year-over-year increase was
            primarily the result of a slightly higher mortgage origination
            volume.
        --  Net premiums earned of $142 million were lower by $1 million as
            compared to the prior quarter and $5 million lower than the
            same quarter in the prior year. The unearned premium reserve
            was $1.7 billion at the end of the quarter, consistent with the
            prior quarter.
        --  Losses on claimsof $31 million reflected a $1 million
            improvement over the prior quarter and $15 million improvement
            over the same quarter in the prior year.  In both cases, the
            Company experienced lower losses primarily due to a favourable
            shift in the regional mix of delinquencies, a stable economic
            environment, and strong credit quality of recent books.  This
            resulted in a loss ratio of 22% for this quarter, as compared
            to 22% in the prior quarter and 31% in the same quarter in the
            prior year.
        --  The expense ratio was 23%, as a percentage of net premiums
            earned, during the quarter.  This ratio was 4 percentage points
            higher than the prior quarter and 4 percentage points higher as
            compared to the same quarter in the prior year.  The increase
            was primarily attributed to higher employee share-based
            compensation due to a higher share price.  Excluding this cost,
            which fluctuates with movements in the trading price of the
            Company's common shares, the expense ratio is generally in line
            with the full year expense ratio of 19%. 
        --  Net Investment income, excluding realized gains,of $44 million
            was essentially flat to the prior quarter and $2 million lower
            than the same quarter in the prior year.  The comparison to the
            prior year excluded the one-time favourable pre-tax impact of
            $186 million from the reversal of the previously accrued exit
            fees.
        --  Net operating incomeof $85 million was $6 million lower
            relative to the prior quarter and $4 million lower compared to
            the adjusted net operating income in the same quarter in the
            prior year which excluded the one-time favourable after tax
            impact of $137 million from the reversal of the previously
            accrued exit fees.
        --  Operating return on equity was 12% for the quarter, 1
            percentage point lower when compared to the prior quarter and 1
            percentage point lower on a year-over-year basis, when compared
            on an adjusted basis. 
        --  The regulatory capital ratio or Minimum Capital Test ("MCT")
            ratio was approximately 222%, 4 percentage points higher than
            the prior quarter and 37 percentage points higher than the
            Company's internal target MCT ratio of 185%.  The Company
            currently intends to operate with a MCT ratio above 190% to
            maintain financial strength and flexibility.

Fourth Quarter 2013 Key Highlights:
        --  The high loan-to-value component of new insurance written
            during the quarter was $5.2 billion, representing a decrease of
            $1.1 billion or 17% from the prior quarter, and an increase of
            $0.8 billion or 19% over the same quarter in the prior year. 
            The sequential decrease was primarily due to typical
            seasonality.  The year-over-year increase was primarily due to
            a normalization of the high loan-to-value mortgage insurance
            market following the impact from 2012 product changes.
        --  During the quarter, the Company insured $2.5 billion of low
            loan-to-value mortgage portfolios, representing a decrease of
            $1.5 billion or 38% from the prior quarter volume, and a $1.6
            billion or 39% decrease over the same quarter in the prior
            year.  The volume of portfolio insurance fluctuates and varies
            from quarter to quarter based on lender demand.
        --  The net premiums written in the quarter from insurance of high
            loan-to-value mortgage was $119 million, accounting for 92% of
            the Company's net premiums written.  This represented a
            decrease of $25 million, or 17%, from the prior quarter and an
            increase of 17 million, or 16%, from the same quarter in the
            prior year.
        --  The number of reported delinquencies was 1,830 outstanding at
            the end of the quarter, representing a small increase of 52, as
            compared to the prior quarter and a decrease of 323
            delinquencies as compared to the same quarter in the prior
            year, reflecting an improvement of 15% on a year over year
            basis.  This reflects the strong credit quality in the
            portfolio and improving economic conditions across most
            regions.  These factors, in combination with the ongoing
            success of the Company's proactive loss mitigation strategies,
            contributed to the Company's delinquency performance, resulting
            in a loss ratio of 22% for the quarter.
        --  The Company's investment portfolio had a market value of $5.4
            billion at the end of the quarter.  The portfolio had a pre-tax
            equivalent book yield of 3.6% and duration of 3.7 years as at
            December 31, 2013.  As a result of ongoing active portfolio
            management, the Company had realized investment gains of $11
            million in the quarter, primarily related to a further
            reduction in its equity exposure.

Dividends

On November 29, 2013, the Company paid a quarterly dividend of $0.35 per 
common share.

The Company also announced today that its Board of Directors approved a 
dividend payment of $0.35 per common share, payable on February 28, 2014, to 
shareholders of record at the close of business on February 14, 2014.

Shareholders' Equity

As of December 31, 2013, shareholders' equity was $3.1 billion, representing a 
book value of $32.53 per common share on a fully diluted basis.  Excluding 
accumulated other comprehensive income ("AOCI") shareholders' equity was $ 3.0 
billion, or a book value of $31.22 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, the Company's Review of 
Performance, and the fourth quarter 2013 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 5, 2014 at 
10:00 am ET (Local: 416-644-3414, Toll free: 1-800-814-4859, Conference ID: 
4660814).  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 5, 2014 (Local 
416-640-1917, Toll Free 1-877-289-8525, Access Code 4660814#).  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 customer service excellence, innovative processing technology, 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, 
2013, Genworth Canada had $5.7 billion total assets and $3.1 billion 
shareholders' equity. Find out more at www.genworth.ca.

Consolidated Financial Highlights
                                     
                                 Three Months                Full Year
    ($ millions, except       Ended December 31          Ended December 31
    per share amounts)           (Unaudited)                (Unaudited)
                             2013         2012          2013          2012
    New insurance             7,693         8,472        34,985        41,286
    written
    Insurance in-Force      316,702       301,456       316,702       301,456
    Net premiums written        129           117           512           550
    Net premiums earned         142           147           573           589
    Losses on claims             31            46           142           194
    Expenses                     33            28           113           105
    Investment income            44            46           179           169
    (interest/dividends,
    net of expenses)1
    Net investment gains         11             1            37            12
    Total net investment         56           472           215          1812
    income
    Net income                   93           892           375          3482
    Net operating                85           892           349          3392
    income1
    Fully diluted             $0.98        $0.902         $3.86        $3.522
    earnings per common
    share
    Fully diluted             $0.90        $0.902         $3.60        $3.432
    operating earnings
    per common share1
    Fully diluted book       $32.53        $30.62        $32.53        $30.62
    value per common
    share, inc. AOCI
    Fully diluted book       $31.22        $28.40        $31.22        $28.40
    value per common
    share, excl. AOCI1
    Basic weighted       94,904,567    98,695,175    97,049,781    98,684,587
    average common
    shares outstanding
    Diluted weighted     94,907,933    98,836,531    97,067,722    98,806,915
    average common
    shares outstanding
    Loss ratio                  22%           31%           25%           33%
    Combined ratio              45%           50%           44%           51%
    Operating return on         12%           13%           12%           13%
    equity1
    Minimum Capital Test       222%          170%          222%          170%
    ratio (MCT)
    1This is a financial measure not calculated based on International
    Financial Reporting Standards ("IFRS").  See the "Non-IFRS Financial
    Measures" section of this press release for additional information.
    2 Total investment income, net income, net operating income, fully
    diluted earnings per common share, fully diluted operating earnings per
    common share, and operating return on equity for 2012 are presented in
    the table as adjusted values and exclude the one-time impact from the
    reversal of the government guarantee exit fee.  Including this
    adjustment in Q4 2012, total investment income, net income, net
    operating income, fully diluted earnings per common share, fully
    diluted operating earnings per common share, and net operating return
    on equity were $233 million, $226 million, $226 million, $2.29, $2.28,
    and 33%, respectively.  Including this adjustment on a full year 2012
    basis, total investment income, net income, net operating income, fully
    diluted earnings per common share, fully diluted operating earnings per
    common share, and operating return on equity were $367 million, $470
    million, $462 million, $4.76, $4.67, and 17%, respectively.
     

Non-IFRS Financial Measures

To supplement the Company's consolidated financial statements, which are 
prepared in accordance with IFRS, the Company uses non-IFRS financial measures 
to analyze performance. Non-IFRS financial measures include net operating 
income, 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. Non-IFRS 
financial measures used by the Company to analyze the impact of the reversal 
of the government guarantee fund exit fee include adjusted net investment 
income, adjusted net income, adjusted earnings per common share (basic), 
adjusted earnings per common share (diluted), adjusted net operating income, 
adjusted operating earnings per common share (basic), adjusted operating 
earnings per common share (diluted), and adjusted operating return on equity. 
Other non-IFRS measures used by the Company to analyze performance include 
insurance in-force, new insurance written, Minimum Capital Test ("MCT") ratio, 
delinquency ratio, severity on claims paid, investment yield, book value per 
common share (basic) including AOCI, book value per common share (basic) 
excluding AOCI, book value per common share (diluted) including AOCI, book 
value per common share (diluted) excluding AOCI, and dividends paid per common 
share. 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 financial measures do not have standardized meanings and are 
unlikely to be comparable to any similar measures presented by other 
companies. In addition, where applicable, non-IFRS measures have been adjusted 
to analyze the impact of the reversal of the government guarantee fund exit 
fee.

These non-IFRS 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" link under "Investor Resources" subsection at the 
bottom of the page.   A reconciliation of net operating income to net income, 
operating earnings per common share (basic) to earnings per common share 
(basic), operating earnings per common share (diluted) to earnings per common 
share (diluted), and shareholders' equity excluding AOCI to shareholders' 
equity may be found in the Review of Performance. A definition of these 
measures as well as an explanation of why these measures are useful to 
investors and the additional purposes for which management uses the measures 
can be found in the Company's "Glossary for non-IFRS financial measures", in 
the  "Non-IFRS financial measures" section at the end of the Review of 
Performance.  The Review of Performance along with the Company's most recent 
financial statements, 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 dated March 18, 2013.  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.



SOURCE  Genworth MI Canada 
Investors - Samantha Cheung, 905-287-5482samantha.cheung@genworth.com 
Media- Lisa Azzuolo, 905-287-5520lisa.azzuolo@genworth.com 
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CO: Genworth MI Canada
ST: Ontario
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-0- Feb/04/2014 22:11 GMT
 
 
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