Canada Guaranty Launches

3911 rp R2 CG_SiteCanada Guaranty Mortgage Insurance Company (“Canada Guaranty”) has replaced AIG United Guaranty (AIGUG).

The switch comes after AIGUG closed it’s deal to be acquired on Friday.

Canada Guaranty, remains the #3 mortgage default insurer by volume, with assets of C$270 million and total equity of C$118 million (as of December 31, 2009).

The company is backed financially by pension giant, Ontario Teachers’ Pension Plan, and National Guaranty Mortgage Holdings Inc. (a private family company run by First National CEO, Stephen Smith). Canada Guaranty says it is the “only 100% Canadian owned private mortgage insurer.”

Most likely, the company will begin building its business slowly and methodically. It will put plenty of emphasis on establishing relationships and maintaining high service levels.

CEO, Andrew Charles, told the Financial Post: “We've had dialogue with a number of significant lending institutions. Over the period of the next few years we will focus hard on the larger lending institutions."

The Post estimates the company’s market share at 1% at the moment. That’s obviously quite low, but it’s mostly reflective of the unprecedented challenges faced by its predecessor’s parent company (AIG) during the subprime crisis. The subprime fallout was out of AIGUG’s control but it had a deleterious effect on the insurer’s Canadian market share.

Looking forward, Canada Guaranty has a capable team behind it. It will undoubtedly eat into CMHC and Genworth’s market share in coming quarters, drive industry efficiencies, and (hopefully) encourage new product creation.

It’s also got a brand new website and branding. Here is a list of its current products.

The company says that “all [AIG] mortgage insurance policies that were underwritten prior to April 19, 2010 will continue to receive mortgage insurance coverage through Canada Guaranty.”

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