Research Update: Sagen MI Canada Inc. 'BBB+' Rating Affirmed Following Revised Capital Model Criteria; Outlook Remains Stable

On Nov. 15, 2023, we published our revised criteria for analyzing insurers' risk-based capital (see "Insurer Risk-Based Capital Adequacy--Methodology And Assumptions"). The implementation of the revised capital model criteria has not affected our view of the financial strength of Sagen MI Canada Inc. and its operating subsidiary (collectively, Sagen). Therefore, we affirmed our 'BBB+' long-term issuer credit rating on Sagen. The stable outlook reflects our expectations that Sagen's competitive position will remain unhindered, and it will maintain capitalization at our 99.99% confidence level, supported by solid operating earnings. On April 23, 2024, S&P Global Ratings affirmed its 'BBB+' long-term issuer credit rating on Sagen MI Canada Inc. The outlook remains stable. At the same time, we have affirmed our issue-level

...Key strengths Key risks Superior mortgage portfolio quality anchored by prudent underwriting. Macroeconomic headwinds could weigh on near-term loss ratios. Excellent capitalization supported by solid operating profitability. Highly leveraged debt profile has weakened the quality of capital. Significant market presence in the Canadian mortgage insurance market. Monoline nature of business sensitive to systemic risks, including housing market reforms....

Research Update