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  
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