TORONTO, Jan. 25, 2006 (PRIMEZONE) -- The following are notes from a speech given by Reliant Home Warranty (OTCBB:RHWC) President Boyd Soussana to analysts attending the annual meeting of the Metropolitan Association of Strategic Advisors (January 6, 2006).
"Reliant's objective is to enhance shareholder and stakeholder value by realizing superior financial results within a prudent risk management framework. This will be achieved going forward by:
Niche Market Focus
Reliant through its partners will initially focus on serving as the leading alternative lender in the dwelling segment of the mortgage financing market within selected Canadian markets.
This niche market strategy will be successful due to:
(i) the size of Reliant's target market;
(ii) the utilization by Reliant of specialized mortgage
underwriting expertise in the non-conforming residential
mortgage market through its underwriting guidelines;
(iii) Reliant's target market will be characterized by less
competition, attractive margins and increased growth
potential; and
(iv) Reliant's expected lower loan losses and lower
administrative costs compared to conventional lenders
will result in declining mortgage insurance premiums,
increased capacity for Reliant mortgage products in the
capital markets and improving returns to Reliant's
shareholders.
Disciplined and Efficient Lending Practices
Reliant will emphasize a strict, disciplined approach to mortgage financing, concentrating on sound risk selection. All loans will be secured by a first mortgage and require independent third party property appraisals. Reliant has clearly defined underwriting parameters that will be adhered to in its mortgage approval process. This underwriting approach places an emphasis on security evaluation and focuses on the borrower's practical likelihood of going into default. This underwriting approach will be fact specific and flexible rather than being based upon rigid, uniform rules that are applied regardless of the circumstances.
Low Cost Business Model
Reilant will operate from a single location in Toronto and will have no branches. Mortgage origination and deposit taking functions will be performed by Reliant partners. The benefits of this business model include:
(i) a low cost structure with a superior productivity ratio of
33.2% compared to an average 67.3% for the six largest
Canadian chartered banks;
(ii) enhanced ability to increase profitability with little
additional investment or staffing;
(iii) minimal interest rate exposure by limiting the amount of
mortgage warehoused prior to sale; and
(iv) a lower level of fixed costs, which permits increased
flexibility and reduced operational risk.
Strategic Business Alliances
Reliant has developed key business relationships with certain organizations in the mortgage industry to facilitate its business plan:
Dundee Securities Inc. (Fiscal Advisor), Sodha Associates (International Insurance Counsel), Brit Insurance (Global Reinsurer), Mpire Credit Corporation (Mortgage Brokerage), First National Financial Corporation (Title Insurance and Escrow Service)
Expand Mortgage Broker Network
Reliant will initially have all of its single family dwelling mortgage originated through its Reliant partners and their mortgage broker relationships. Reliant management intends to increase the size of this network in order to further increase its volume of mortgages originated by mortgage brokers if the incumbent mortgage broker cannot generate sufficient mortgage volume to meet our business plan.
Enhance Economics of Scale
Reliant intends to maintain its focus on outsourcing to expand volumes in its principal lines of business. Management expects Reliant's margins to expand as growth in revenue exceeds increases in expenses.
Raise and Rapidly Deploy Capital
Reliant will have enhanced access to capital because of the insurance arranged to support its mortgage products. Reliant intends to increase its insurance capacity in the market place so that it may exploit pre-determined mortgage financing opportunities.
Specialized Mortgage Underwriting Expertise
Reliant's underwriters are experts at lending into the non-conforming/sub prime market. Leveraging off this experience, Reliant will be in an excellent position to ensure that its mortgage approvals are consistent with its overall credit philosophy.
Superior Customer Service
Reliant has gathered together experienced mortgage servicers and administrators with an outstanding reputation of customer service in the residential mortgage market, thereby ensuring that all of our prospective clients have a very favorable borrowing experience.
Ability to Raise Competitively Priced Funds
Reliant will be securitizing its mortgages by accessing several separate sources of capital. Mortgages will be sold to institutional investors as well as being securitized through the usual securitization conduits. The diversification of funding sources provides for a number of advantages. Firstly, Reliant will always be able to access the lowest cost of funds. Each market will have a particular yield and term preference at a particular point of time. Reliant will endeavor to meet those needs through the appropriate pricing of mortgage product. Secondly, multiple funding sources ensure the continuing viability of the business."
For more information on the Reliant programs visit the Web site at www.relianthwc.com.
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. Any statements that express or involve discussion with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical facts may be forward-looking statements. Forward-looking statements are based on expectations, estimates and projections at the time the statements are made to involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. For a summary of such risks and uncertainties, see the Company's periodic reports and other filings with the Securities and Exchange Commission.