The ratings on Toronto-based Home Capital Group Inc. (Home Capital; TSX: HCG) and Home Trust Co. (Home Trust), a federally regulated trust company and a member of the Canadian Deposit Insurance Corp. (CDIC), reflect what we consider to be the company's strong and defendable position in the Canadian residential mortgage sector, strong and uninterrupted growth in earnings over the past decade, satisfactory asset quality, and very strong capital adequacy position. These strengths are somewhat offset by what we view as its limited business and geographic diversification versus its larger Canadian peers', the higher risk profile of its nonprime mortgage customers, reliance on retail brokers to originate both deposits and mortgages, single-name exposures within the commercial mortgage book, and the soft
