Sagen MI Canada Inc. Reports First Quarter 2021 Results Including Net Operating Income of $139 Million

Sagen MI Canada Inc. Reports First Quarter 2021 Results Including Net Operating Income of $139 Million

Canada NewsWire

TORONTO, May 4, 2021 /CNW/ - Sagen MI Canada Inc. (the "Company") (TSX: MIC.PRA) today reported first quarter 2021 net income of $133 million and net operating income of $139 million.

Net Income:

$133 million

Up 41% Y/Y


Net Operating Income:

$139 million

Up 19% Y/Y


Key First Quarter 2021 Financial Results:

  • Net income of $133 million was $39 million higher than the same quarter in the prior year, primarily due to lower losses on claims, higher premiums earned, lower losses from derivatives and foreign exchange and lower expenses, partially offset by lower operating investment income.

  • Net operating income of $139 million was $22 million higher than the same quarter in the prior year,  primarily due to lower losses on claims, higher premiums earned and lower expenses, partially offset by lower operating investment income. 

Key First Quarter 2021 Operational Metrics:

  • New insurance written from transactional insurance was $6.1 billion, an increase of $2.9 billion compared to the same quarter in the prior year. The increase was primarily due to an increase in transactional mortgage originations and an increase in market share.

  • Premiums written from transactional insurance were $214 million, representing an increase of $104 million from the same quarter in the prior year, primarily due to the aforementioned higher new insurance written.

  • New insurance written from portfolio insurance on low loan-to-value mortgages was $2.7 billion, an increase of $1.8 billion compared to the same quarter in the prior year primarily due to increased demand from lenders.  

  • Premiums written from portfolio insurance were $9 million, representing an increase of $5 million compared to the same quarter in the prior year primarily due to the aforementioned higher new insurance written.

  • Premiums earned of $188 million were $17 million, or 10%, higher than the same quarter in the prior year, reflecting the relatively higher level of premiums written in 2019 and 2020. The unearned premiums reserve was $2.4 billion at the end of the quarter. These unearned premiums will be recognized as premiums earned over time in accordance with the Company's historical pattern of loss emergence.

  • The loss ratio, as a percentage of premiums earned, for the quarter was 3% compared to 14% in the same quarter in the prior year. Losses on claims of $6 million were $18 million lower than the same quarter in the prior year, primarily due to significant favorable development related to the strong housing market and improved employment levels.

  • The regulatory capital ratio or Mortgage Insurer Capital Adequacy Test ("MICAT") ratio was approximately 192%, 42 percentage points higher than the Office of the Superintendent of Financial Institutions Supervisory MICAT ratio target of 150%. 

Preferred Dividends

The Company also announced today that its Board of Directors had declared a dividend of $0.48822 per Class A preferred share, Series 1, payable on June 30th, 2021, to holders of record at the close of business on June 15th, 2021.

Credit Ratings

The Company's issuer credit rating by DBRS Ratings Limited of 'A' high, the financial strength rating of the Company's primary operating subsidiary of 'AA' and the preferred shares (Series 1) rating of pfd-2 (high) were recently confirmed, with the ratings' trend changed to stable from negative.

The Company's issuer credit rating by S&P of BBB+, the financial strength rating of the Company's primary operating subsidiary of A+ and the preferred shares (Series 1) rating of P-2 (low) were recently affirmed, with the ratings' outlook changed to stable from negative.

Detailed Operating Results

For more information on the Company's operating results, please refer to the Company's Management Discussion and Analysis ("MD&A") as posted on SEDAR and available at www.sedar.com.

This Press Release, as well as the Company's first quarter 2021 consolidated Financial Statements and MD&A are also posted on the Investor section of the Company's website, https://www.sagen.ca/about/investor-relations/.  Investors are encouraged to review all of these materials. 

About Sagen MI Canada Inc. 

Sagen MI Canada Inc., operating through its wholly owned subsidiary, Genworth Financial Mortgage Insurance Company Canada (doing business as SagenTM), is the largest private sector residential mortgage insurer in Canada.  The Company provides mortgage default insurance to Canadian residential mortgage lenders, making homeownership more accessible to first-time homebuyers. Sagen differentiates itself through customer service excellence, innovative processing technology, and a robust risk management framework. For more than two decades, the Company 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 31st, 2021, the Company had $8.1 billion total assets and $4.0 billion shareholders' equity. Find out more at www.sagen.ca.

Contact Information:

Investors – Aaron Williams, 905-287-5504 [email protected]
Media Susan Carter, 905-287-5520  [email protected]

Consolidated Financial Highlights

($ millions, except per share amounts)

Three Months Ended

March 31st (unaudited),

2021

2020

Transactional new insurance written1

$6,124

$3,190

Portfolio new insurance written1

2,731

952


Total new insurance written
1

$8,855

$4,142

 

Premiums written

223

114

 

Premiums earned

188

171

 

Losses on claims

6

25

Expenses

35

37

Net underwriting income

$147

$109

 

Investment income (interest and dividends, net of expenses) 1

43

47

Interest rate hedging program income

3

7


Realized gains (losses) on sale of investments

(3)

5

Realized and unrealized losses on derivatives, foreign
exchange

(5)

(34)


Total net investment income

$38

$25


Net income

$133

$95

Net operating income1

$139

$117

Loss ratio1

3%

14%

Combined ratio1

22%

36%

MICAT ratio 1,2

192%

172%

Note: Amounts may not total due to rounding.

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.

2 Company estimate as at March 31st, 2021.

Non-IFRS financial measures reconciled to comparable IFRS measures for such periods

Definitions of key non-IFRS financial measures and explanations of why these measures are useful to investors and management can be found in the Company's "Glossary", in the "Non-IFRS financial measures" section at the end of the MD&A for the three months ended March 31st, 2021.  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.

Caution regarding forward-looking information and statements

Certain statements made in this news release contain forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). When used in this news 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, the timing for payment of the dividends on the Class A preferred shares, Series 1.

Since forward-looking statements relate to future events and conditions, by their very nature they require making assumptions and involve inherent risks and uncertainties. The Company cautions that although it is believed that the assumptions are reasonable in the circumstances, these risks and uncertainties give rise to the possibility that actual results may differ materially from the expectations set out in the forward-looking statements. The Company does not undertake to update any forward-looking statements, except to the extent required by applicable securities laws.

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Sagen MI Canada and Sagen are trademarks owned by Sagen MI Canada Inc.

SOURCE Sagen MI Canada Inc.

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