genworth canada investor-presentation-june2016

1 Genworth MI Canada Inc.

June 2016

Proven Business Model


Forward-looking and non-IFRS statements

DRIVING VALUE THROUGH CUSTOMIZED SERVICE EXPERIENCE

Public communications, including oral or written communications such as this document, relating to Genworth MI Canada Inc. (the

“Company”, “Genworth Canada” or “MIC”) often contain certain forward-looking statements. These forward-looking statements

include, but are not limited to, statements with respect to the Company’s future operating and financial results, expectations

regarding premiums written, losses on claims and investment income, the Canadian housing market, and other statements that are

not historical facts. These forward-looking statements may be identified by their use of words such as “may”, “would”, “could”, “will,”

“intend”, “plan”, “anticipate”, “believe”, “seek”, “propose”, “estimate”, “expect”, and similar expressions. These statements are based

on the Company’s current assumptions, including assumptions regarding economic, global, political, business, competitive, market

and regulatory matters. These forward-looking statements are inherently subject to significant risks, uncertainties and changes in

circumstances, many of which are beyond the control of the Company. 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 the facts underlying the

Company’s assumptions, and the other risks described in the Company’s most recently issued Annual Information Form,

Management’s Discussion and Analysis, its Short Form Base Shelf Prospectus dated June 18, 2014, the Prospectus Supplements

thereto, and all documents incorporated by reference in such documents. Management’s current views regarding the Company’s

financial outlook are stated as of the date hereof and may not be appropriate for other purposes. 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.

To supplement its financial statements, the Company uses select non-IFRS financial measures. 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. 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 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

Company’s website at http://investor.genworthmicanada.ca. A reconciliation from non-IFRS financial measures to the most readily

comparable measures calculated in accordance with IFRS, where applicable can be found in the Company’s most recent

management’s discussion and analysis, which is posted on the Company’s website and is also available at www.sedar.com.

http://investor.genworthmicanada.ca/








$3.1 billion Market capitalization*

92 million Shares outstanding

$6.2 billion Total assets

$3.5 billion Shareholders’ equity

Genworth Canada overview

WHO WE ARE

LARGEST private residential mortgage insurer in Canada

Helped ~1M+ families achieve homeownership

Supported 250+ Canadian lenders

WHAT WE DO1

1 2

4 3

Mortgage Application Mortgage Insurance Application and Premium

Mortgage Loan Insurance Contract

MARKET FACTS (Q1 2016)

• Mandatory for less than 20% down payment

• Covers 100% of loan, secured by property

• Upfront non-refundable premium

• Lender receives protection against loss from

mortgage default

• Capital relief for lenders

Homebuyer Mortgage lender (originates mortgage)

Mortgage insurer

Note: Company sources

1. Denotes transactional mortgage insurance.

*As at June 20th, 2016, Source: Bloomberg.


Q1 2016 financial results

1.03

0.99 1.00 1.03

0.99

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016

$MM except

ROE, EPS &

MCT

Q1

2016

Q4

2015

Q1

2015 Q/Q Y / Y

Premiums

written $117 $213 $130 -45% -10%

Loss ratio 24% 23% 22% +1 pt +2 pts

Net Operating

Income $91 $95 $97 -4% -6%

Operating ROE 11% 12% 12% -1% -1%

Operating EPS

(dil.) $0.99 $1.03 $1.03 -4% -4%

MCT1 234% 234% 233% Flat +1 pt

Q1 key highlights

• Top-line constrained primarily due to targeted

underwriting changes and a smaller transactional

insurance market

• Loss ratio of 24%, below expected range

• Operating income -4% Q/Q, primarily due to

marginally higher combined ratio

• Ongoing capital strength with MCT ratio of 234%1

Operating EPS (diluted) Book Value Per Share (diluted, incl. AOCI2)

36.07 36.18 36.14 36.82 37.23

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016

+3%

YoY

1. Q1 2016 MCT company estimate. MCT denotes ratio for operating insurance company.

2. Book value per share, diluted, including AOCI.


Served market: first time homebuyers

Purchase price <300K >300K - <=500K >500K

NATIONAL VANCOUVER TORONTO CALGARY

…and what our prudent home buyers purchase

What our prudent home buyer profile looks like…

53%

31%

11%

5%

<= 100K >100K - 150K >150K - 200K > 200K

55%

28%

13%

5%

<= 35 >35 - <= 45 >45 - <= 55 > 55

64% 12% 24% 40% 22% 38% 39% 29% 32% 67% 11% 22%

Detached Condo Row/Semi

3% immigrated

to Canada1

67% bought with

spouse/partner1

752 average

credit score2

Average

household

income

= $97K

Average

borrower age

= 36 years

Avg. price3

$427,634

Avg. price3

$326,967

Avg. price3

$461,688

Avg. price3

$406,113

Note: Company sources. 1. Jan16-Mar16 timeframe; Purchase Business only. 2. Credit score references the Q1 2016 YTD timeframe; Purchase Business only 3. Average price represents Greater Calgary Area, Greater Toronto Area and

Greater Vancouver Area as at 2016 YTD; Purchase Business only


Drivers of losses on claims

UNEMPLOYMENT & PORTFOLIO QUALITY

DRIVE PROBABILITY OF DEFAULT

Sources: Statistics Canada, Canadian Bankers Association (CBA, annual average) and Company sources. 1. Based on Company’s estimate of outstanding balance of insured mortgages as at December 31, 2015 of $193B.

Mortgage arrears and

unemployment rate

2. Portfolio quality

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

200

2

200

4

200

5

200

6

200

7

200

9

201

0

201

1

201

2

201

4

201

5

Mortgage Arrears

UE Rate (R)

Strong correlation

49% 49%

67%

71%

76%

81%

87%

92%

40%

50%

60%

70%

80%

90%

100%

Portfolio<=2009 2010 2011 2012 2013 2014 2015

Portfolio 2015

> 20% Equity

O/S

Insured

Mortgage

Balances1

($B)

Transactional Segment

$76 $23 $9 $12 $14 $15 $20 $24

Transactional

Effective LTV

(National, as at December 31, 2015)

1. Unemployment 3. House prices

200

250

300

350

400

450

500

'07 '08 '09 '10 '11 '12 '13 '14 '15

MIC All Market All

Median house price appreciation

(‘$000s)

PRICE APPRECIATION & EFFECTIVE LTV

DRIVE LOSS GIVEN DEFAULT


Insurance risk framework

• Portfolio analytics

• Identification of emerging

loss trends

• Dynamic underwriting

guidelines

• Proactive loss mitigation

• Comprehensive master

policy

Portfolio risk

management

• Underwriting fundamentals

• Risk limits and triggers

• Proprietary mortgage

scoring model

• Robust quality assurance

Manage the quality

of new business

RISK PILLARS

• Macro-economic

environment

• Housing market trends

• Regional risk factors

Identify & assess

key risks

Supportive

regulatory

framework

• Defined underwriting best practices (OSFI’s B20 / B21 support

safety and soundness)

• Borrower recourse

• Efficient and effective mortgage foreclosure process

REGULATORY FRAMEWORK


Regional risk assessment

Note: Based on Company estimates.

Slowdown will pressure

delqs in Alberta &

Saskatchewan

Monitoring

housing risk in

GTA and GVA

Balanced risk profile

in Pacific, Quebec

and Ontario

Ho

us

ing

ris

k

Economic risk Low High

High

GTA

GVA

Quebec

Alberta

Atlantic

Ontario

(ex GTA)

Prairies

Key Metrics

Price-to-income

Affordability

Price growth

Key Metrics: GDP; UE Rate; Economic diversity

Pacific

(ex GVA)


Portfolio quality improving

TRANSACTIONAL PORTFOLIO QUALITY SIGNIFICANTLY IMPROVED COMPARED TO ‘07/08

Note: Company sources for transactional new insurance written.

Highlights

Steady credit score

improvement year-over-year

Modest home

price increases

Stable debt

servicing ratios

Credit score Average gross debt service ratio (%) Median home price (In ‘$000s)

16

%

3%

71

6

75

1

'07

'08

'09

'10

'11

'12

'13

'14

'15

Q1'1

6

% Score <660 (R) Avg score (L)

24

%

23

%

22

%

24

%

25

%

24

%

23

%

24

%

24

%

25

%

'07

'08

'09

'10

'11

'12

'13

'14

'15

Q1'1

6

$2

25

$2

32

$2

40

$2

55

$2

70

$2

75

$2

80

$2

91

$2

95

$3

01

'07

'08

'09

'10

'11

'12

'13

'14

'15

Q1'1

6


Delinquency performance

1,177 1,415

1,232 1,047

735 619 517 395 385 383

108

240 387

492

480

342 295

268 181 187

165

484 862 1,048

722

437

284

222 303 424

413

561

645 552

554

515

482 569 624

656

183

240

255 262

261

240

252 302 336

384

2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016

Number of reported delinquencies

Loss

Ratio2 19% 31% 42% 33% 37% 33% 25% 20% 21% 24%

3,381 3,401

2,752

2,153

1,830 1,756 1,829

2,940

2,046

Ontario

BC Alberta

Quebec

Other

Dec. 31, 2015

delinquency

rate1

0.31%

0.45%

0.22%

0.18%

0.10%

Note: Company sources.

1. Based on outstanding insured mortgages as at December 30, 2015

2. Loss ratio in 2009 excludes the impact of the change to the premium recognition curve in the first quarter of 2009.

2,034

EMERGING ALBERTA PRESSURE…. QUEBEC SHOWING SIGNS OF IMPROVING

0.21% Total

8%

61%

23%

8%

Portfolio insurance

Core transactionalproducts

Refinance >80%LTV

100% LTV

Products

Eliminated

2010 delinquency

mix by

product

Elimination of higher risk products


2016 annual loss ratio expectations

Regional Transactional NIW Dispersion

25% 27% 22% 20%

38% 38% 39% 42%

14% 12% 12% 11%

10% 12% 13% 15%

13% 12% 12% 12%

0%

20%

40%

60%

80%

100%

2013 2014 2015 Q1'16

Alberta Ontario Quebec B.C. Other

Average Credit Score

National 733 737 743 751

Alberta 730 734 740 751

Responsible Underwriting Actions

Enhanced borrower due diligence,

ensuring consumers can afford to stay

in homes for the long term

Increased underwriting due diligence

resulting in slightly smaller but better

quality Alberta portfolio in 2015/16

Increased appraisals and property

risk assessment, ensuring borrowers

are not over-leveraged


Elevated risk: regional markets

Median Prices (‘$000s)

200

300

400

500

600

700

800

900

1,000

1,100

1,200

'07 '08 '09 '10 '11 '12 '13 '14 '15

GNW Single GNW Condo

Market Single Market Condo

200

250

300

350

400

450

500

550

600

650

700

'07 '08 '09 '10 '11 '12 '13 '14 '15

GNW Single GNW Condo

Market Single Market Condo

Greater Vancouver

Note: Company sources, except for market data based on Teranet, CREA and Statistics Canada. Median price on transactional new insurance written for purchase transactions (excludes re-financings).

PRODUCT RESTRICTIONS AND AFFORDABILITY CONSTRAINTS HAVE CONTRIBUTED

TO MORE MODEST HOME PRICE APPRECIATION IN GENWORTH SERVED MARKET

Greater Toronto


Loss performance & economic scenarios

MI PRICED TO COVER TYPICAL ECONOMIC CYCLE

Illustration: Expected over

economic cycle

Stress

scenario

Unemployment rate

change over 5 years 1% to 2% increase 2% to 4% increase

Cumulative HPA /

HPD over 5 years 5% to 7% -15% to -20%

Loss ratio (national)

over 5 years 25% to 30% 60% to 70%

Note: Company estimates based upon historical data and performance trends; expected ranges are approximations. Actual results may differ materially from those expressed above.


Top line

$3.9 $3.4 $5.9 $4.5

$6.8 $4.1

~$22.0 $8.3 $6.1

$6.2 $9.6

2015 Q1'16 2015 Q1'16

New insurance written ($ billions) Net premiums written ($ millions)


$25.2 $25.7

Q1

Q2

Q3

Q4

New insurance written Net premiums written

Impact of lower transactional

new insurance written

partially offset by a higher

average premium rate

Portfolio insurance

premiums written primarily

reflect low LTVs and high

credit quality

Transactional Portfolio

$104 $99

$183

$236

$181

2015 Q1'16

$705 $104

Q1

Q2

Q3

Q4

Transactional Portfolio

$26 $18

$22

$24

$32

2015 Q1'16

Reflects portfolio insurance NIW

in first three weeks of April 2016

Reflects portfolio insurance

premiums written in first three

weeks of April 2016

Targeted underwriting

changes and a smaller

transactional insurance market

have driven modestly lower

transactional NIW

Portfolio NIW….

strong pipeline

reflects increased

demand ahead of

July 1, 2016

regulatory change

Average premium rate

2.79% 2.91%


Solid financial performance

$MM except EPS & BVPS Q1’16 Q4’15 Q1’15

Transactional premiums written $99 $181 $104

Portfolio premiums written 18 32 26

Total premiums written $117 $213 $130

Premiums earned 154 151 143

Losses on claims (37) (35) (31)

Expenses (28) (27) (24)

Underwriting income $88 $90 $87

Net investment income (excl. realized gains / losses)

41 44 42

Net operating income $91 $95 $97

Operating EPS (diluted)

$0.99 $1.03 $1.03

Book value per share (diluted, incl. AOCI)

$37.23 $36.82 $36.07

Q1 highlights

• Transactional premiums written lower by

5% Y/Y

• Premiums earned increased Q/Q by

$3 million

• Loss ratio of 24%, up 1 pt Q/Q

• Net investment income down $2 million

Q/Q

• Net operating income down Y/Y, primarily

due to an increase in the corporate tax

rate and a $5 million non-recurring

favourable tax item in Q1 2015

• Book value per share up 3% Y/Y

Note: Amounts may not total due to rounding.


Solid underwriting profitability

87 90 89 90 88

24 29 28 27 28

31 25 31 35 37

Q1' 15 Q2' 15 Q3' 15 Q4' 15 Q1' 16

Underwriting profitability ($ millions)

Underwriting

profit

Expenses

Losses on claims

Loss ratio 22% 17% 21% 23% 24%

Expense ratio 17% 20% 19% 18% 19%

Combined

ratio 39% 37% 40% 41% 42%

Premiums earned $151 $143 $144 $148

2016 ANNUAL LOSS RATIO ESTIMATED RANGE: 25% TO 40%

$154

Avg. reserve

per delq. ($000’s)

$66.2 $69.8 $70.4 $71.9 $70.9

Highlights

Continued growth

in premiums

earned

New delinquencies net of cures increased by

81 Q/Q, primarily due to Alberta, partly offset by

a modest decrease in Ontario and Quebec

Loss ratio

marginally below

expected range

Solid underwriting

profitability with

42% combined ratio

New delinquencies net of cures by region

114 59

105 96 77

52

38 42 31 40

47

43

75 89 183

130

119

116 156

138 76

58

76 82

92

13

2

26 33

38

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16

432 319 440 487 568

Ontario

Pacific2

Alberta

Quebec

Atlantic

Prairies1

1 Prairies includes MB and SK. 2 Pacific includes the Territories.

Total


Strong balance sheet

($ millions) March 31, 2016 Dec. 31, 2015 Dec. 31, 2014

Assets

Cash and investments $ 5,872 $ 5,917 $ 5,472

Other assets 338 322 299

Total assets $ 6,211 $ 6,239 $ 5,771

Liabilities

Loss reserves 144 132 115

Unearned premiums 1,984 2,021 1,799

Other liabilities 621 666 585

Total liabilities 2,749 2,819 2,499

Shareholders’ equity

(incl. AOCI) 3,462 3,420 3,271

Total liabilities and

shareholders’ equity $ 6,211 $ 6,239 $ 5,771

234% MCT Ratio

vs. Holding Target

of 220%

Strong capital

position with MCT

modestly above

220% holding

target

$2.0 billion of

unearned

premiums

represents future

revenues

High quality

investment

portfolio 95%

investment grade

fixed income


Federals

Provincials

Preferred shares

Emerging markets debt3

Investment grade

corporates2

Cash4

33%

17%

35%

5%

5%

5%

Investments contribute steady income

Duration: 3.7 years

Book yield: 3.1%1

Invested assets (C$ millions, unless noted)


1. Represents market value. Book yield represents pre-tax equivalent book yield after dividend gross-up of portfolio (as at Mar. 31, 2016).

2. Market value, includes CLOs. 3. 99% Investment grade. 4. Cash includes short-term investments.

Total Invested Assets ($5.9B portfolio1) Net Investment Income ($ millions)

$5,917

$5,867

LOW RATES CONTINUE TO PRESSURE INVESTMENT

YIELD…FOCUS ON OPTIMIZING YIELD WITHIN RISK APPETITE

$353 million of

maturities over

remainder of 2016

5,641 5,633

276 235

Q4 2015 Q1 2016

Book value

Net

unrealized

gain

$5.9B $5.9B

43.8 41.5

Q4 2015 Q1 2016


2,396

449 436

569 570

219 217

December 31st,2015

March 31st, 2016

Capital management

INTEND TO OPERATE IN THE 225-230% MCT RANGE,

PENDING FINALIZATION OF THE CAPITAL FRAMEWORK

Regulatory capital at 220% MCT holding target (by risk category, $ millions)

Flexibility Efficiency

Strength

Note: Company sources. 1. Market risk includes interest rate, credit, equity risk, and foreign exchange risk.

MCT denotes ratio for operating insurance company. 1Q16 MCT based on company estimates.

2. Represents liquid investments and cash held in addition to capital in operating insurance company.

• MCT ratio of 234%:

• Introduced interest rate hedging

program

• Strong portfolio insurance

pipeline for second quarter

• New capital framework for

insurance risk under development

for implementation in 2017:

• More risk sensitive

• No expected change in overall

level of capital held

• Renewing Normal Course Issuer

Bid

Highlights

3,633 3,636

Insurance Risk

Market Risk1

Operational Risk

Capital in

excess of 220%

MCT 234% 234%

Holdco

cash2 ($ millions)

$121 $173

2,413


Keen focus on risk management

Proactive loss mitigation

programs

Investing in our customer

experience strategy

Key takeaways

Proven business model has positioned

MIC for future

performance

Balanced approach to writing

new business


[email protected] investor.genworthmicanada.ca

Investor Relations

Jonathan A. Pinto, MBA, LL.M

Vice President, Investor Relations

[email protected] 905.287.5482