Genworth MI Canada Inc. Reports Strong Second Quarter 2014 Earnings

Genworth MI Canada Inc. Reports Strong Second Quarter 2014 Earnings 
Premiums Written of $160 million, up 17% Year-over-Year Net Operating Income 
of $99 million, up 12% Year-over-Year Operating Diluted EPS of $1.04 per 
share, up 17%, Year-over-Year 
TORONTO, July 29, 2014 /CNW/ - Genworth MI Canada Inc. (the "Company") (TSX: 
MIC) today reported second quarter 2014 net income of $97 million or $1.02 per 
diluted common share, and net operating income of $99 million or $1.04 
operating earnings per diluted common share.   Net operating income was 
positively impacted by the Company's improved loss experience, primarily a 
reflection of overall high quality insurance portfolio and continuing strong 
housing market conditions.  Premiums written increased 17% over the prior year 
with growth in both the high and low loan-to-value mortgage segments. 
"Strong business execution led to solid top line growth and our high quality 
insurance portfolio supported our trend of lower losses," said Brian Hurley, 
Chairman and Chief Executive Officer of the Company. "The business performance 
combined with the stable economic climate continues to drive our positive 
momentum." 
Second Quarter 2014 Key Financial Metrics: 


    --  Premiums written of $160 million were $23 million, or 17%
        higher than the same quarter in the prior year and $76 million,
        or 91%, higher than the prior quarter. Premiums growth
        reflected the larger high loan-to-value market size in
        combination with the Company's strong market position. The
        Company's top line was further supported by premiums written
        from portfolio insurance on low loan-to-value mortgages.
        Premiums earned of $141 million were $2 million lower than the
        same quarter in the prior year and relatively flat to the prior
        quarter, reflecting the contribution from recent books of
        business. The unearned premium reserve was $1.7 billion at the
        end of the quarter, $19 million higher than the prior quarter.
    --  Losses on claims of $17 million reflected an $18 million
        improvement over the same quarter in the prior year and an $11
        million improvement over the prior quarter. During the quarter,
        the Company experienced lower delinquencies and lower losses
        primarily due to its high quality insurance portfolio, a stable
        economic environment and continued housing market strength.
        This resulted in a loss ratio of 12% for this quarter, 13
        percentage points lower than the same quarter in the prior year
        and 8 percentage points lower than the prior quarter. Based on
        the current environment, the Company believes that its loss
        ratio for 2014 will be in the 15 to 25% range.
    --  The expense ratio, as a percentage of premiums earned, was 19%
        during the quarter. This ratio was 1 percentage point higher as
        compared to the same quarter in the prior year and flat to the
        prior quarter. The expense ratio remains within the expected
        operating range.
    --  Net Investment income, excluding realized gains, of $43 million
        was $1 million lower than the same quarter in the prior year
        and relatively flat to the prior quarter. Net Investment income
        remains a steady contributor to net operating income.
    --  Net operating income of $99 million was $11 million higher than
        the same quarter in the prior year and $8 million higher than
        the prior quarter.
    --  Operating return on equity was 13% for the quarter, one point
        higher than the same quarter in the prior year and prior
        quarter.
    --  The regulatory capital ratio or Minimum Capital Test ("MCT")
        ratio was approximately 230%, 1 percentage point higher than
        the prior quarter and 14 percentage points higher than the same
        quarter in the prior year.

Second Quarter 2014 Key Highlights:
    --  New insurance written from the Company's high loan-to-value
        insured mortgages during the quarter totalled $5.4 billion,
        $0.6 billion or 13% higher than the same quarter in the prior
        year and $2.3 billion, or 75% higher than the prior quarter.
        Market share penetration and a larger mortgage origination
        market were the primary drivers of the higher volumes. The
        resulting premiums written in the quarter from insurance of
        high loan-to-value mortgages were $129 million, accounting for
        80% of the Company's premiums written. This represented an
        increase of $18 million from the same quarter in the prior year
        and a $57 million over the prior quarter.
    --  During the quarter, the Company realized $32 million of
        premiums written from portfolio insurance of low loan-to-value
        mortgages which totaled $8.2 billion. This represents an
        increase of $5.0 billion in new insurance written from the
        prior quarter and a $1.7 billion increase over the same quarter
        in the prior year.
    --  The number of reported outstanding delinquencies was 1,703 at
        the end of the quarter. This represents a decrease of 4% when
        compared to the same quarter in the prior year and a decrease
        of 8% when compared to the prior quarter. The decline in
        delinquencies reflects the strong insurance portfolio credit
        quality and improving economic conditions across most regions.
    --  The Company's investment portfolio had a market value of $5.3
        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
        June 30, 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.
    --  On May 1, 2014, the Company retired its $150 million 4.59%
        December 2015 debentures, and incurred a one-time fee of $7.2
        million in connection with this early redemption. This fee was
        not included in the calculation of net operating income.
    --  In the normal course of business, the Company renewed its short
        form base shelf prospectus on June 18, 2014. The shelf
        prospectus remains available for a period of 25 months from the
        date of the prospectus.
    --  The Company regularly reviews its operating MCT holding target.
        After consultations with the Company's regulator, The Office of
        the Superintendent of Financial Institutions (OSFI), the
        Company established its operating holding target at 220% MCT,
        pending the development of a new regulatory capital test for
        mortgage insurers.

Dividends

On May 30, 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 August 29, 2014, to 
shareholders of record at the close of business on August 15, 2014.

Shareholders' Equity

As of June 30, 2014, shareholders' equity was $3.3 billion, representing a 
book value of $34.17 per common share on a fully diluted basis.  Excluding 
accumulated other comprehensive income ("AOCI") shareholders' equity was $3.1 
billion, or a book value of $32.36 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 second 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 second quarter earnings call will be held on July 30, 2014 at 
10:00 am ET (Local: 416-847-6330, Toll free: 1-866-530-1553, Conference ID: 
7859221).  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 August 30, 2014 
(Local 647-436-0148, Toll Free 1-888-203-1112, Replay Passcode 7859221).  
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 June 30, 2014, 
Genworth Canada had $5.7 billion total assets and $3.3 billion total 
shareholders' equity. Find out more at www.genworth.ca.

Consolidated Financial Highlights
        ($ millions, except per share
                   amounts)                          Three Months
                                               Ended June 30 (Unaudited)
    ---                                        ------------------------
                                    2014             2013
                                    ----             ----
                                                  $13,628          $11,312
    New insurance written(1)
    -----------------------
                                                      160              137
    Premiums written
    ================
                                                      141              143
    Premiums earned
    ---------------
                                                       17               35
    Losses on claims
    ----------------
                                                       27               26
    Expenses
    --------
                                                       97               82
    Net underwriting income
    =======================
                                                       43               44
    Investment income (interest and
     dividends, net of expenses) 1
    -------------------------------
                                                        5               15
    Net investment gains
    --------------------
                                                       48               59
    Total net investment income
    ===========================
                                                      $97              $98
    Net income
    ----------
                                                      $99              $88
    Net operating income(1)
    ======================
    Fully diluted earnings per common
     share                                          $1.02            $1.00
    ---------------------------------               -----            -----
    Fully diluted operating earnings per
     common share(1)                                $1.04            $0.89
    ====================================            =====            =====
    Fully diluted book value per common
     share, inc. AOCI(1)                           $34.17           $30.94
    -----------------------------------            ------           ------
    Fully diluted book value per common
     share, excl. AOCI(1)                          $32.36           $29.55
    ===================================            ======           ======
    Basic weighted average common shares
     outstanding                               94,976,887       98,200,843
    ------------------------------------       ----------       ----------
    Diluted weighted average common
     shares outstanding                        95,220,039       98,453,184
    ===============================            ==========       ==========
    Loss ratio(1)                                     12%             25%
    ------------                                      ---              ---
    Combined ratio(1)                                 31%             43%
    ----------------                                  ---              ---
    Operating return on equity(1)                     13%             12%
    ----------------------------                      ---              ---
    Minimum Capital Test ratio (MCT) 1               230%            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, interest and dividend income (net of investment expenses), 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.

The Company revised its definition of net operating income (loss) to exclude 
the fee on the early retirement 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/July2014/29/c2176.html 
CO: Genworth Canada
ST: Ontario
NI: REL ERN CONF DIV  
-0- Jul/29/2014 21:35 GMT
 
 
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