Genworth MI Canada Inc. Reports First Quarter 2014 Earnings

 First Quarter Net Operating Income of $91 million, up 7% Year-over-Year  Operating Diluted EPS of $0.96 per share, up 12%, Year-over-Year 15% Average  Premium Rate Increase Will Take Effect May 1, 2014  TORONTO, April 29, 2014 /CNW/ - Genworth MI Canada Inc. (the "Company") (TSX:  MIC) today reported first quarter 2014 net income of $95 million or $1.00 per  diluted common share, and net operating income of $91 million or $0.96  operating earnings per diluted common share.   Net operating income was  positively impacted by the Company's improving loss experience primarily a  reflection of continuing strong market conditions.  "Our strong business execution and continued trend of lower losses produced  solid first quarter results," said Brian Hurley, Chairman and Chief Executive  Officer of the Company. "The stable economy and housing market, and the 15%  average price increase effective May 1, 2014, should bode well for our  business going forward."  First Quarter 2014 Key Financial Metrics:        --  Net premiums written of $84 million were flat to the same         quarter in the prior year and $45 million lower than the prior         quarter, consistent with typical seasonality. The top line         reflects an improved market position offset by delays in home         closings related to the harsh and prolonged winter.     --  Net premiums earned of $141 million were $3 million lower than         the same quarter in the prior year and lower by $1 million as         compared to the prior quarter. The unearned premium reserve was         $1.7 billion at the end of the quarter, $57 million lower than         the prior quarter.     --  Losses on claims of $28 million reflected a $16 million         improvement over the same quarter in the prior year and a $3         million improvement over the prior quarter. During the quarter,         the Company experienced lower losses primarily due to a         favourable shift in the regional mix of delinquencies, a stable         economic environment, and continued housing market strength.         This resulted in a loss ratio of 20% for this quarter, 11         points lower than the same quarter in the prior year and 2         points lower than the prior quarter.     --  The expense ratio was 19%, as a percentage of net premiums         earned, during the quarter. This ratio was 1 percentage point         higher as compared to the same quarter in the prior year and 4         percentage points lower than the prior quarter.     --  Net Investment income, excluding realized gains, of $44 million         was $2 million lower than the same quarter in the prior year         and $1 million lower than the prior quarter.     --  Net operating income of $91 million was $6 million higher         relative to both the same quarter in the prior year and the         prior quarter.     --  Operating return on equity was 12% for the quarter, flat when         compared to both the same quarter in the prior year and prior         quarter.     --  The regulatory capital ratio or Minimum Capital Test ("MCT")         ratio was approximately 229%, 6 percentage points higher than         the prior quarter and 44 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.  First Quarter 2014 Key Highlights:     --  The high loan-to-value component of new insurance written         during the quarter was $3.1 billion, essentially flat to the         same quarter in the prior year and $2 billion lower than the         prior quarter due to typical seasonality. Mortgage insurance         approvals increased by 9% year over year reflecting marginally         higher housing resale activity and modest improvements in         market penetration. The resulting net premiums written in the         quarter from insurance of high loan-to-value mortgages was $71         million, accounting for 85% of the Company's net premiums         written. This represented a decrease of $2 million from the         same quarter in the prior year and $47 million lower than the         prior quarter.     --  During the quarter, the Company realized $13 million of         premiums written from new insurance written from its portfolio         of low loan-to-value mortgages totaling $3.2 billion. This         represents an increase of $0.7 billion in new insurance written         from the prior quarter volume, and a $0.8 billion increase over         the same quarter in the prior year. The volume of portfolio         insurance varies from quarter to quarter based on lender         demand.     --  The number of reported delinquencies was 1,860 outstanding at         the end of the quarter. This represents a decrease of 5% as         compared to the same quarter in the prior year and a marginal         increase of 2% in the current quarter due to typical         seasonality. The year-over-year decline in delinquencies         reflects the strong credit quality in the portfolio and         improving economic conditions across most regions.     --  The Company's investment portfolio had a market value of $5.2         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         March 31, 2014. As a result of ongoing active portfolio         management, the Company realized investment gains of $5 million         in the quarter related to its equity holdings.     --  During the quarter, the Company received confirmation from OSFI         that the Company will be subject to a customized Minimum         Capital Test ("MCT") for mortgage insurers starting in 2015.         The Company is awaiting the final details of the customized         MCT, but does not anticipate a material impact on the         calculation of the MCT ratio.     --  In a press release dated February 28, 2014, the Company         announced that it will increase its mortgage insurance premium         rates by an average of 15% effective May 1, 2014. The Company         believes the new pricing structure is reflective of increased         regulatory capital requirements and supportive of the long-term         safety and stability of the housing market.     --  The draft form of Regulation B-21, entitled "Residential         Mortgage Insurance Underwriting Practices and Procedures", was         released by OSFI on April 14, 2014, for public commentary.         These guidelines set out principles based on four main areas:         governance of the underwriting decisions, interactions with         lenders, risk management and disclosure. The Company believes         that the ongoing oversight by the regulator is prudent for the         industry in preserving the long term safety and soundness of         the housing market. Based upon the Company's interpretation of         the draft, the Company believes its current practices are         generally aligned with these guidelines.     --  On April 29, 2014, the Company also announced its acceptance by         the Toronto Stock Exchange of its Notice of Intention to make a         Normal Course Issuer Bid ("NCIB"). Until its expiry on May 4,         2015, the Company may, if considered advisable, purchase up to         an aggregate of 4,746,504 of its issued and outstanding common         shares ("Common Shares"), being approximately 5% of the Common         Shares issued and outstanding as of April 23, 2014. The         Company's major shareholder, Genworth Financial intends to         participate in the NCIB in order to maintain its proportionate         ownership in Genworth Canada at approximately 57.4%.     --  Subsequent to the quarter, the Company successfully completed a         $160 million senior unsecured debenture issue at a coupon of         4.242% with a maturity date of April 1, 2024. In doing so, the         Company took advantage of favourable market conditions and         extended its debt maturity profile. The net proceeds from the         issue will primarily be used to early redeem the Company's         outstanding $150 million 4.59% December 2015 debentures on May         1, 2014. The Company expects to incur a make whole cost of         approximately $7.2 million in connection with the early         redemption.  Dividends  On February 28, 2014, 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 May 30, 2014, to  shareholders of record at the close of business on May 15, 2014.  Shareholders' Equity  As of March 31, 2014, shareholders' equity was $3.2 billion, representing a  book value of $33.52 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 $31.83 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 its  Management's Discussion and Analysis as posted on SEDAR and available at  www.sedar.com.  This press release, the financial statements, the Company's Management's  Discussion and Analysis, and the first quarter 2014 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 first quarter earnings call will be held on April 30, 2014 at  10:00 am ET (Local: 416-644-3415, Toll free: 1-877-974-0445, Conference ID:  4678076).  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 June 1, 2014 (Local  416-640-1917, Toll Free 1-877-289-8525, Access Code 4678076#).  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 March 31,  2014, Genworth Canada had $5.5 billion total assets and $3.2 billion total  shareholders' equity. Find out more at www.genworth.ca.  Consolidated Financial Highlights          ($ millions, except per share amounts)           Three Months                                                           Ended March 31                                                            (Unaudited)     ---                                                  ---------------                           2014                              2013                           ----                              ----                                                            6,348        5,685     New insurance written     ---------------------                                                               84           84     Net premiums written     --------------------                                                              141          144     Net premiums earned     -------------------                                                               28           44     Losses on claims     ----------------     Expenses                                                  27           26     --------                                                 ---          ---                                                               44           45     Investment income (interest/dividends, net of      expenses) 1     ---------------------------------------------                                                                5            4     Net investment gains     --------------------                                                               49           50     Total net investment income     ===========================                                                               95           88     Net income     ----------     Net operating income (1)                                  91           85     -----------------------                                  ---          ---     Fully diluted earnings per common share                $1.00        $0.89     ---------------------------------------                -----        -----     Fully diluted operating earnings per common      share(1)                                              $0.96        $0.86     ===========================================            =====        =====     Fully diluted book value per common share, inc.      AOCI                                                 $33.52       $31.32     -----------------------------------------------       ------       ------     Fully diluted book value per common share,      excl. AOCI(1)                                        $31.83       $28.99     ==========================================            ======       ======     Basic weighted average common shares      outstanding                                      94,921,173   98,716,181     ------------------------------------              ----------   ----------     Diluted weighted average common shares      outstanding                                      94,983,507   98,835,148     ======================================            ==========   ==========     Loss ratio                                                20%          31%     ----------                                               ---          ---     Combined ratio                                            39%          49%     --------------                                           ---          ---     Operating return on equity(1)                             12%          12%     ----------------------------                             ---          ---     Minimum Capital Test ratio (MCT)                         229%         216%     -------------------------------                          ---          ---     (1)This 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.  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 the first quarter of 2014, the Company revised its definition of net  operating income (loss) to exclude gains (losses) on the early extinguishment  of debt to better reflect the basis on which the performance of its business  is internally assessed and to reflect management's opinion that they are not  indicative of overall operating trends.  Changes were not required for prior  periods.  See the "Non?IFRS financial measures" section at the end of the MD&A for 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.  Definitions of  key Non?IFRS financial 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 MD&A.  The MD&A along with the Company's most recent financial  statements, are available on the Company's website and on SEDAR at  www.sedar.com.  Special Note Regarding Forward-Looking Statements  Certain statements made in this press release contain forward-looking  information within the meaning of applicable securities laws ("forward-looking  statements").  When used in this press release, the words "may", "would",  "could", "will", "intend", "plan", "anticipate", "believe", "seek", "propose",  "estimate", "expect", and 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 guarantee legislative framework, the impact of proposed guideline  changes by OSFI, and the effect of 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.  The forward-looking statements contained herein are based on certain factors  and assumptions, certain of which appear proximate to the applicable  forward-looking statements contained herein.  Inherent in the forward-looking  statements are known and unknown risks, uncertainties and other factors beyond  the Company's ability to control or predict, that may cause the actual  results, performance or achievements of the Company, or developments in the  Company's business or in its industry, to differ materially from the  anticipated results, performance, achievements or developments expressed or  implied by such forward-looking statements.  Actual results or developments  may differ materially from those contemplated by the forward-looking  statements.  The Company's actual results and performance could differ materially from  those anticipated in these forward-looking statements as a result of both  known and unknown risks, including the continued availability of the Canadian  government's guarantee of private mortgage insurance on terms satisfactory to  the Company; the Company's expectations regarding its revenues, expenses and  operations; the Company's plans to implement its strategy and operate its  business; the Company's expectations regarding the redemption of its existing  debentures; Company's expectations regarding the compensation of directors and  officers; the Company's anticipated cash needs and its estimates regarding its  capital expenditures, capital requirements, reserves and its needs for  additional financing; the Company's plans for and timing of expansion of  service and products; the Company's ability to accurately assess and manage  risks associated with the policies that are written; the Company's ability to  accurately manage market, interest and credit risks; the Company's ability to  maintain ratings; interest rate fluctuations; a decrease in the volume of high  loan-to-value mortgage orientations; the cyclical nature of the mortgage  insurance industry; changes in government regulations and laws mandating  mortgage insurance; the acceptance by the Company's lenders of new  technologies and products; the Company's ability to attract lenders and  develop and maintain lender relationships; the Company's competitive position  and its expectations regarding competition from other providers of mortgage  insurance in Canada; anticipated trends and challenges in the Company's  business and the markets in which it operates; changes in the global or  Canadian economies; a decline in the Company's regulatory capital or an  increase in its regulatory capital requirements; loss of members of the  Company's senior management team; potential legal, tax and regulatory  investigations and actions; the failure of the Company's computer systems; and  potential conflicts of interest between the Company and its majority  shareholder, Genworth Financial, Inc.  This is not an exhaustive list of the factors that may affect any of the  Company's forward-looking statements.  Some of these and other factors are  discussed in more detail in the Company's AIF dated March 17, 2014.  Investors  and others should carefully consider these and other factors and not place  undue reliance on the forward-looking statements.  Further information  regarding these and other risk factors is included in the Company's public  filings with provincial and territorial securities regulatory authorities  (including the Company's AIF) and can be found on the SEDAR website at  www.sedar.com. The forward-looking statements contained in this press release  represent the Company's views only as of the date hereof.  Forward-looking  statements contained in this press release are based on management's current  plans, estimates, projections, beliefs and opinions and the assumptions  related to these plans, estimates, projections, beliefs and opinions may  change, and therefore are presented for the purpose of assisting the Company's  security holders in understanding management's current views regarding those  future outcomes and may not be appropriate for other purposes.  While the  Company anticipates that subsequent events and developments may cause the  Company's views to change, the Company does not undertake to update any  forward-looking statements, except to the extent required by applicable  securities laws.    SOURCE  Genworth MI Canada  Investors, Samantha Cheung, 905-287-5482, samantha.cheung@genworth.com; Media,  Lisa Azzuolo, 905-287-5520, lisa.azzuolo@genworth.com  To view this news release in HTML formatting, please use the following URL:  http://www.newswire.ca/en/releases/archive/April2014/29/c1692.html  CO: Genworth MI Canada ST: Ontario NI: REL ERN CONF  
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