Third Quarter 2024 MD&A

increase in its regulatory capital requirements; increased market volatility, political risk, regulatory compliance and costs associated with international investing; geopolitical risk, including deterioration in international trade or consumer confidence due to geopolitical instability resulting from armed conflicts or acts of terrorism or war; environmental concerns, including climate change; changes in the value of investment securities held by the Company; loss of members of the Company's senior management team; potential legal, tax and regulatory investigations and actions; negative publicity; operational risks, including the failure of the Company's computer systems or potential cyber threats; reduction of business or adverse selection of loans with key lenders; the Company's reliance on its subsidiaries; litigation; insufficient insurance coverage; and potential conflicts of interest between the Company and its sole Class A common shareholder, Brookfield.

This is not an exhaustive list of the factors that may affect any of the Company's forward-looking statements. Some of these and other factors are discussed in more detail in the Company's Annual Information Form (the "AIF") dated March 20, 2024. Investors and others should carefully consider these and other factors and not place undue reliance on the forward-looking statements. Further information regarding these and other risk factors is included in the Company's public filings with provincial and territorial securities regulatory authorities (including the Company's AIF) and can be found on the System for Electronic Data Analysis and Retrieval ("SEDAR+") website at www.sedarplus.com. The forward-looking statements contained in this MD&A represent the Company's views only as of the date hereof. Forward-looking statements contained in this MD&A are based on management's current plans, estimates, projections, beliefs and opinions and the assumptions related to these plans, estimates, projections, beliefs and opinions may change, and are presented for the purpose of assisting the Company's security holders in understanding management's current views regarding those future outcomes and may not be appropriate for other purposes. While the Company anticipates that subsequent events and developments may cause the Company's views to change, the Company does not undertake to update any forward-looking statements, except to the extent required by applicable securities laws.

Non-GAAP and other financial measures disclosure

Non-GAAPfinancial measures are used by the Company to analyze performance and supplement its consolidated financial statements, which are prepared in accordance with IFRS. Such non-GAAP financial measures include premiums written; net operating income; operating investment income; interest and dividend income, net of investment expenses; pre-tax equivalent operating investment income; net insurance revenue; and net insurance service results. See the Non-GAAPand other financial measures section at the end of this MD&A for a reconciliation of (i) net insurance revenue to the comparable financial measure of insurance revenue, (ii) net insurance service result to the comparable financial measure of insurance service result, (iii) operating investment income and interest and dividend income, net of investment expenses to the comparable financial measure of total investment income; (iv) net operating income to the comparable financial measure of net income; and (v) pre-tax equivalent operating investment income to the comparable financial measure of total investment income. These non-GAAP financial measures have been restated to reflect the impact of new accounting standards as described below.

Non-GAAPratios used by the Company include investment yield.

Supplementary financial measures used by the Company to analyze performance include loss ratio, expense ratio, combined ratio, financial leverage ratio and contractual service margin ratio. The supplementary financial measures can be calculated using financial measures from the Company's consolidated financial statements.

The Company believes that these non-GAAP financial measures, non-GAAP ratios and supplementary financial measures provide meaningful information regarding its performance and may be useful to investors as they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. These measures and ratios may not have standardized meanings and may not be comparable to similar measures presented by other companies.

Definitions of key non-GAAP and other financial measures and explanations of why these measures are useful to investors and management can be found in the Company's Non-GAAPand other financial measures glossary, in the Non-GAAPand other financial measures section at the end of this MD&A.

Operational metrics

Operational metrics used by the Company include outstanding insured mortgage balances, delinquency ratio on outstanding insured mortgage balances, new reported delinquencies, cures, average reserve per delinquencies and average premium rate. These metrics are used by the Company to analyze performance in regard to the aggregate amount of outstanding insurance, delinquency trends and premium rate trends.

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Business profile

Business background

Sagen is the largest private-sector residential mortgage insurer in Canada and has been providing mortgage default insurance in the country since 1995. The Company has built a broad underwriting and distribution platform across the country that provides customer-focused products and support services to the vast majority of Canada's residential mortgage lenders and originators. Sagen underwrites mortgage insurance for residential properties in all provinces and territories of Canada and has the leading market share and largest in-force book among private-sector mortgage insurers. The Canada Mortgage and Housing Corporation ("CMHC"), a crown corporation, and Canada Guaranty Mortgage Insurance Company, a private mortgage insurer, are the Company's main competitors.

Federally regulated lenders are required to purchase transactional mortgage insurance in respect of a residential mortgage loan whenever the loan-to-value ratio exceeds 80%. The Company offers both transactional and portfolio mortgage insurance. The Company's transactional mortgage insurance covers default risk on mortgage loans secured by residential properties to protect lenders from any resulting losses on claims. By offering insurance for transactional mortgages, the Company plays a significant role in providing access to homeownership for Canadian residents. Homebuyers who can only afford to make a smaller down payment can, through the benefits provided by mortgage insurers such as Sagen, obtain mortgages at rates comparable to buyers with more substantial down payments.

The Company also provides portfolio mortgage insurance to lenders for loans with loan-to-value ratios of 80% or less. Portfolio mortgage insurance is beneficial to lenders as it provides the ability to manage capital and funding requirements and mitigate risk. The Company views portfolio mortgage insurance as an extension of its relationship with existing transactional insurance customers. Therefore, the Company carefully manages the level of its portfolio mortgage insurance relative to its overall mortgage insurance business. Premium rates on portfolio mortgage insurance have historically been lower than those on transactional mortgage insurance due to the lower risk profile associated with portfolio loans.

Seasonality

The transactional mortgage insurance business is seasonal. Business volumes vary each quarter, while interest and dividend income, net of investment expenses, and administrative expenses tend to be relatively consistent from quarter to quarter. The variations in business volumes are driven by mortgage origination activity, which typically peak in the spring and summer months. Strong housing demand throughout the second half of 2020 and 2021 impacted the typical seasonal variations in transactional premiums written in those years. In 2022, rising interest rates and strained housing affordability led to a weaker housing market starting in the Spring of 2022, which continued throughout 2023 and into the first half of 2024.

Losses on claims vary from quarter to quarter, primarily as the result of prevailing economic conditions, changes in employment levels and characteristics of the outstanding insured mortgage balances, such as size, age, seasonality and geographic mix of delinquencies. Typically, losses on claims increase during the winter months, primarily due to an increase in new delinquencies, and decrease during the spring and summer months. The COVID-19 pandemic and actions taken by lenders and mortgage insurers in respect of mortgage payment deferrals impacted the typical seasonal patterns of mortgage delinquencies in 2020 and 2021. During 2022, the cumulative favourable impact of home price appreciation from 2020 and 2021 in most regions of Canada resulted in relatively low levels of losses on claims and largely muted the typical seasonal pattern, which continued throughout 2023 and into 2024.

The Company's business volumes from portfolio mortgage insurance vary from period to period based on a number of factors including the amount of portfolio mortgages lenders seek to insure, the competitiveness of the Company's pricing, underwriting guidelines and credit enhancement for portfolio insurance, and the Company's risk appetite for such mortgage insurance.

Distribution and marketing

The Company works with lenders, mortgage brokers and real estate agents across Canada to make homeownership more accessible for first- time homebuyers. Mortgage insurance customers consist of originators of residential mortgage loans, such as banks, mortgage loan and trust companies, credit unions and other lenders. These lenders typically determine which mortgage insurer they will use for the placement of mortgage insurance written on loans originated by them. The five largest Canadian chartered banks have historically been the largest residential mortgage originators in Canada.

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Adoption of new accounting standards

On January 1, 2023, the Company adopted IFRS 17: Insurance contracts ("IFRS 17") and IFRS 9: Financial instruments ("IFRS 9") for the first time. IFRS 17 and IFRS 9 were applied to the Company's financial statements retrospectively, and comparative information was restated. IFRS 17, which replaced IFRS 4: Insurance contracts ("IFRS 4"), had a material impact on the Company's consolidated financial statements in 2023. Despite this impact, the Company's business model and related risks are not affected by these changes in accounting policies.

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Sagen MI Canada Inc.Q3 2024 MD&A

Overview

Third quarter financial highlights

Table 1: Selected financial information

Note: Amounts may not total due to rounding. 1 Non-GAAP financial measure. 2 Includes realized and unrealized gains and losses from derivatives and foreign exchange, excluding realized income and expense from the interest rate hedging program. 3 This estimate is based on the amounts reported by lenders to the Company which represents the vast majority of outstanding insured mortgage balances. 4 Supplementary financial measure. 5 Company estimate as at September 30, 2024. The Company calculated its mortgage insurer capital adequacy test ("MICAT") ratio in accordance with OSFI's Mortgage Insurer Capital Adequacy Test Guideline dated January 1, 2023 for the 2023 reporting period and the 2024 MICAT Guideline dated January 1, 2024 for the 2024 reporting period. The OSFI supervisory MICAT target ratio and minimum MICAT ratio under the Protection of Residential Mortgage or Hypothecary Insurance Act ("PRMHIA") is 150% and the Company's internal target ratio under the MICAT is 157%. See the Non-GAAP and other financial measures section at the end of this MD&A for additional information.

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The Company reported net income of $147 million in the third quarter of 2024, $1 million lower than the same quarter in the prior year, primarily due to higher insurance service expense and higher insurance finance expense, partially offset by higher insurance revenue and higher investment income. Net operating income of $149 million in the third quarter of 2024 was higher than net income primarily due to the exclusion of the after-tax impact of net losses from investments, financial assets at Fair Value through Profit or Loss ("FVTPL"), derivatives, and foreign exchange.

The Company reported net income of $442 million in the nine months ended September 30, 2024, $81 million higher than the prior year's period, primarily due to higher insurance revenue and higher investment income, partially offset by higher insurance service expense, higher insurance finance expense and higher interest expense. Net operating income of $422 million in the nine months ended September 30, 2024 was lower than net income primarily due to the exclusion of the after-tax impact of net gains from investments, financial assets at FVTPL, derivatives, and foreign exchange.

Recent business and regulatory developments

Expansion of Eligible Mortgage Criteria under PRMHIA

On September 16, 2024, the Canadian federal government announced the following changes to mortgage insurance rules in Canada, effective December 15, 2024:

• Increasing the $1 million price cap for insured mortgages to $1.5 million; and
• Expanding eligibility for 30-year mortgage amortizations for insured mortgages to all first-time homebuyers and to all buyers of new build properties. This measure expands the change the Canadian federal government made on August 1, 2024, that allowed only first-time homebuyers, who were buying new build properties, access to 30-year insured high ratio mortgages.

These measures will be available for high-ratio mortgage insurance applications that are submitted, including previously submitted applications that are resubmitted, on or after December 15, 2024.

On October 8, 2024, as previously announced in the 2024 Canadian federal budget, the Canadian federal government released details for lenders and mortgage insurers to offer the new insured mortgage refinancing product to encourage densification and enable homeowners to add more units to their current homes or properties. More specifically, these changes will (i) allow refinancing of insured mortgages for secondary suites, and (ii) increase the mortgage insurance home price limit to $2 million for those refinancing to build a secondary suite.

These measures will be available for mortgage insurance applications that lenders submit to mortgage insurers on or after January 15, 2025.

OSFI's new supervisory framework

On February 8, 2024, OSFI released a new supervisory framework for federally regulated financial institutions ("FRFIs") and pension plans that came into effect in April 2024. The new framework is designed to respond quickly to the most serious risks that could jeopardize the public's confidence in the soundness of the Canadian financial system and provide greater transparency to financial institutions through disclosure of (i) a new tier rating based on size, complexity, and potential for contagion, (ii) a rating reflecting viability risk according to an expanded 8-point scale, and (iii) for larger institutions, it will also include ratings of business risk, financial resilience, operational resilience, and risk governance.

Mortgage Insurer Capital Adequacy Test 2024 Guideline ("2024 MICAT Guideline")

On October 20, 2023, OSFI published the 2024 MICAT Guideline which builds on the existing MICAT guideline and reflects two key revisions, including (i) incorporating the September 28, 2022 advisory, clarifying the maximum remaining amortization in the capital requirements calculations is the lesser of the calculated remaining amortization period and 40 years, and (ii) an increase to the maximum loan-to-value ratio from 100% to 105% in the capital requirements calculations, aligning the MICAT capital formula to the maximum permitted loan-to- value ratio for insured mortgages.

The revised 2024 MICAT Guideline became effective on January 1, 2024, and has not had a material impact on the Company's MICAT ratio. Refer to the Capital management - Mortgage insurer capital adequacy test section below for additional information.

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