Another reason why Genworth MI Canada (TSX: MIC) is a cash machine is because delinquency rates have significantly decreased since the 2008-2009 financial crisis:
Also, a stress test scenario where unemployment goes from 8% to 11% and property values go down 15% (which seems to be a low number – higher decreases in property prices would increase severity):
Unless if there is a huge crash in the commodity market, I don’t see this happening. The crash might occur, but not when you have massively loose monetary policy like we do today. The only reason why the stock got as low as it did (bottoming out at $16.72) is betting on a massive real estate bust. Now those expectations are moderating somewhat.