glossary
Glossary
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A
a 90% Guarantee

90% Guarantee” means the guarantee of the Canadian government provided under the terms of the Government Guarantee Agreement (as defined herein) of the benefits payable under eligible mortgage insurance policies issued by the Company, less 10% of the original principal amount of each insured loan, in the event that Genworth Mortgage Insurance Canada fails to make claim payments with respect to that loan due to its bankruptcy or insolvency.

 
Accumulated other comprehensive income

Accumulated other comprehensive income” or “AOCI” is a component of shareholders’ equity and reflects the unrealized gains and losses, net of taxes, related to available-for-sale assets. Unrealized gains and losses on assets classified as available-for-sale are recorded in the consolidated statement of comprehensive income and included in accumulated other comprehensive income until recognized in the consolidated statement of income.

 
Alt A mortgages

Alt A mortgages” means mortgages provided to self-employed borrowers with strong credit and reduced income documentation. Specific loan qualification criteria apply, including down payment documentation, assessment of income reasonableness and a 660 minimum credit score for mortgages with loan-to-value ratios exceeding 85%.

 
Available-for-sale

Available-for-sale” or “AFS” means investments recorded at fair value on the balance sheet, using quoted market prices, with changes in the fair value of these investments included in AOCI.

 
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B
Book value per share excluding AOCI (basic)
“Book value per share excluding AOCI (basic)” means the ratio of shareholders’ equity excluding AOCI to number of basic common shares outstanding at a specified date.
 
Book value per share excluding AOCI (diluted)
“Book value per share excluding AOCI (diluted)” means the ratio of shareholders’ equity excluding AOCI to number of diluted common shares outstanding at a specified date. Diluted common shares outstanding takes into account all of the outstanding dilutive securities that could potentially be exercised.
 
Book value per share including AOCI (basic)
“Book value per share including AOCI asdas(basic)” means the ratio of shareholders’ equity to number of basic common shares outstanding at a specified date.
 
Book value per share including AOCI (diluted)
“Book value per share including AOCI (diluted)” means the ratio of shareholders’ equity including AOCI to number of diluted common shares outstanding at a specified date. Diluted common shares outstanding takes into account all of the outstanding dilutive securities that could potentially be exercised.
 
Book yield

Book yield” means the ratio (expressed as a percentage) of interest income to the average amortized cost for all or a given portion of invested assets during a specified period.

 
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C
Case reserves

Case reserves” means the expected losses associated with reported delinquent loans. Lenders report delinquent loans to the Company on a monthly basis. The Company analyzes reported delinquent files on a case-by-case basis and derives an estimate of the expected loss. Case reserve estimates incorporate the amount expected to be recovered from the ultimate sale of the residential property securing the insured mortgage.

 
Claim

Claim” means the amount demanded under a policy of insurance arising from the loss relating to an insured event.

 
Combined ratio

Combined ratio” means the sum of the loss ratio and the expense ratio. The combined ratio measures the proportion of the Company’s total cost to its premium earned and is used to assess the profitability of the Company’s insurance underwriting activities.

 
Compound annual growth rate

Compound annual growth rate” or “CAGR” means the annualized year-over-year growth rate of the applicable measure over a specified period of time.

 
Credit score

Credit score” means the lowest average credit score of all borrowers on a mortgage insurance application. Average credit scores are calculated by averaging the score obtained from both Equifax and TransUnion for each borrower on the application.

 
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D
Debt-to-capital ratio

Debt-to-capital ratio” means the ratio (expressed as a percentage) of debt to total capital (the sum of debt and equity).

 
Deferred policy acquisition costs

Deferred policy acquisition costs” means the expenses incurred in the acquisition of new business, comprised of premium taxes and other expenses that relate directly to the acquisition of new business. Policy acquisition costs are only deferred to the extent that they are in excess of the service fees and can be expected to be recovered from unearned premium reserves. Deferred policy acquisition costs are amortized into income in proportion to and over the periods in which premiums are earned.

 
Delinquency rate

Delinquency rate” means the ratio (expressed as a percentage) of the total number of delinquent loans to the total number of policies in-force at a specified date.

 
Delinquency ratio
“Delinquency ratio” means the ratio (expressed as a percentage) of the total number of delinquent loans to the total original number of policies in-force at a specified date. The delinquency ratio is an indicator of the emergence of losses on claims and the quality of the insurance portfolio and a useful for comparison to industry benchmarks and internal targets.
 
Delinquent loans

Delinquent loans” means loans where the borrowers have failed to make scheduled mortgage payments under the terms of the mortgage and where the cumulative amount of mortgage payments missed exceeds the scheduled payments due in a three-month period.

 
Dividends paid per common share
“dividends paid per common share” means the portion of the Company’s profits distributed to shareholders during a specified period. and measures of the total amount distributed by the Company to shareholders.
 
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E
Effective loan-to-value

Effective loan-to-value” means a Company estimate based on the estimated balance of loans insured (original balance less principal repayments on a standard amortization schedule) divided by the estimated fair market value of the mortgaged property (original value plus or minus adjustments for changes in home prices for the province in which the property is located).

 
Expense ratio
“Expense ratio” means the ratio (expressed as a percentage) of sales, underwriting and administrative expenses to net premiums earned for a specified period. The expense ratio measures the operational efficiency of the Company’s and is a useful comparison to industry benchmarks and internal targets.
 
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G
General portfolio

General portfolio” means invested assets (including cash and cash equivalents, short-term securities and bonds or other fixed income securities) excluding the government guarantee fund.

 
Government guarantee fund

Government guarantee fund” means a trust account which is intended to provide the federal government with a source of funds in the event it is required to make a guarantee payment.

 
Gross premiums written

Gross premiums written” means gross payments received from insurance policies issued during a specified period.

 
Guarantee fund earnings

Guarantee fund earnings” means the investment income from the cash and invested assets held in the government guarantee fund, net of applicable exit fees.

 
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H
High loan-to-value mortgage insurance

High loan-to-value mortgage insurance” means mortgage insurance covering an individual mortgage that typically has a loan-to-value ratio of greater than 80% at the time the loan is originated.

 
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I
Incurred but not reported

Incurred but not reported” or “IBNR” reserves means the estimated losses for delinquencies that have occurred prior to a specified date, but have not been reported to the Company.

 
Insurance in-force
Insurance in-force” means the amount of all mortgage insurance policies in effect at a specified date, based on the original principal balance of mortgages covered by such insurance policies, including any capitalized premiums. Insurance in-force measures the maximum potential total risk exposure under insurance contracts at any given time and is used to asses potential losses on claims.
 
Investment yield
“investment yield” means the net investment income before investment fees and excluding net realized gains (losses) tax affected for dividends for a period divided by the average of the beginning and ending investments book value, for such period. For quarterly results, the investment yield is the annualized net investment income using the average of beginning and ending investments book value, for such quarter.
 
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L
Loan-to-value ratio

Loan-to-value ratio” means the original balance of a mortgage loan divided by the original value of the mortgaged property.

 
Loss adjustment expenses

"Loss adjustment expenses” means all costs and expenses incurred by the Company in the investigation, adjustment and settlement of claims. Loss adjustment expenses include third-party costs as well as the Company’s internal expenses, including salaries and expenses of loss management personnel and certain administrative costs.

 
Loss ratio
Loss ratio” means the ratio (expressed as a percentage) of the total amount of losses on claims associated with insurance policies incurred during a specified period to net premiums earned during such period. The loss ratio is a key measure of underwriting profitability and the quality of the insurance portfolio and is used for comparisons to industry benchmarks and internal targets.
 
Loss reserves

"Loss reserves” means case reserves based on delinquencies reported to the Company, an estimate for losses based on delinquencies that are IBNR, supplemental loss reserves for potential adverse developments related to claim severity and loss adjustment expenses representing an estimate for the administrative costs of investigating, adjusting and settling claims.

 
Losses

"Losses” means the estimated amount payable by an insurer under mortgage insurance policies during a specified period. A portion of reported losses represents estimates of costs of pending claims that are still open during the reporting period, as well as estimates of losses associated with claims that have yet to be reported and the cost of investigating, adjusting and settling claims.

 
Low loan-to-value mortgage insurance

Low loan-to-value mortgage insurance” means mortgage insurance covering an individual mortgage that has a loanto-value ratio equal to or less than 80% at the time the loan is insured.

 
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M
Market share

Market share” or “share” of a mortgage insurer means the insurer’s gross premiums written as a percentage of the reported gross premiums written of the Canadian mortgage insurance industry.

 
Minimum Capital Test

Minimum Capital Test” or “MCT” means the minimum capital test for certain federally regulated insurance companies established by OSFI (as defined herein). Under MCT, companies calculate a MCT ratio of regulatory capital available to regulatory capital required using a defined methodology prescribed by OSFI in monitoring the adequacy of a company’s capital. The MCT ratio is a key metric of the adequacy of the Company’s capital in comparison to regulatory requirements and is used for comparisons to other mortgage insurers and internal targets.

 
Multi-family

Multi-family” means dwellings with five or more units, including apartment buildings and long-term care facilities, but excluding individual condominium units.

 
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N
Net operating income

Net operating income” means net income excluding after-tax net realized gains (losses) on sale of investments and unrealized gains (losses) on Fair Value Through Profit or Loss (“FVTPL”) securities. Net operating income estimates the recurring after-tax earnings from core business activities and is an indicator of core operating performance.

 
Net premiums earned

Net premiums earned” means the portion of net premiums written from current and prior periods that is recognized as revenue in a specified period. Premiums written are initially deferred and recorded as unearned premium reserves and then recognized in revenue as premiums earned over the term of the related policies based on the expected pattern of loss emergence.

 
Net premiums written

Net premiums written” means gross payments received from insurance policies issued during a specified period, net of the risk premiums payable pursuant to the Government Guarantee Agreement in respect of those policies.

 
Net underwriting income

Net underwriting income” means the sum of net premiums earned and fees and other income, less losses and sales, underwriting and administrative expenses during a specified period.

 
New insurance written

New insurance written” means the original principal balance of mortgages, including any capitalized premiums, insured during a specified period. New insurance written measures the maximum potential risk exposure under insurance contracts added during a specific time period and is used to determine potential loss exposure.

 
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O
Operating return on equity

Operating return on equity” means the net operating income for a period divided by the average of the beginning and ending shareholders’ equity, excluding AOCI, for such period. For quarterly results, the operating return is the annualized operating return on equity using the average of beginning and ending shareholders’ equity, excluding AOCI, for such quarter. Operating return on equity is an indicator of return on equity from the core business activities.

 
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P
Premium tax

Premium tax” means a tax paid by insurance companies to provincial and territorial governments calculated as a percentage of gross premiums written.

 
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R
Residential mortgage insurance market

Residential mortgage insurance market” means the mortgage insurance market for residential properties, including one to four residential unit properties and individual condominium units, but excluding multi-family units.

 
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S
Sales, underwriting and administrative expenses

Sales, underwriting and administrative expenses” means the cost of marketing and underwriting new mortgage insurance policies and other general and administrative expenses, including premium taxes and net of the change in deferred policy acquisition costs.

 
Severity

Severity” means the dollar amount of losses that arise from a claim.

 
Severity on claims paid
“Severity on claims paid” means the ratio (expressed as a percentage) of the dollar amount of paid claims during a specified period on insured loans to the original insured mortgage amount relating to such loans. The main determinants of the severity ratio are the loan-to-value (original balance of a mortgage loan divided by the original value of the mortgaged property), age of the mortgage loan, the value of the underlying property, accrued interest on the loan, expenses advanced by the insured and foreclosure expenses. Severity on claims paid ratio measures the size of the average loss on a paid claim relative to the original insured mortgage amount and is used to assess the potential loss exposure related to insurance in force and for comparison to industry benchmarks and internal targets.
 
Severity ratio

Severity ratio” means the ratio (expressed as a percentage) of the dollar amount of paid claims during a specified period on insured loans to the original insured mortgage amount relating to such loans. The main determinants of the severity ratio are the loan-to-value, age of the mortgage loan, the value of the underlying property, accrued interest on the loan, expenses advanced by the insured and foreclosure expenses.

 
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T
Total debt service ratio

Total debt service ratio” or “TDS” means the percentage of borrowers’ monthly debt servicing costs as a percentage of borrowers’ monthly gross income.

 
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U
Underwriter

Underwriter” means an individual who examines and accepts or rejects mortgage insurance risks based on the Company’s approved underwriting policies and guidelines.

 
Unearned premium reserves

Unearned premium reserves” or “UPR” means that portion of premiums written that has not yet been recognized as revenue. Unearned premium reserves are recognized as revenue over the policy life in accordance with the expected pattern of loss emergence as derived from actuarial analysis of historical loss development.

 
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Presentations

November 6, 2014 Q3 2014 Earnings Conference Call Slides
View this Presentation (PDF 375 KB)
Latest Presentation
November 6, 2014 Q3 2014 Earnings Conference Call Slides
View this Presentation (PDF 375 KB)

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November 25, 2014 - 5:00 PM ET Note: Minimum 20 minute delay