Company: BBU
Filing Date: 2025-04-10
Form Type: 20-F
Source: 0001628280-25-017216
Chunk: 28

Company: Brookfield Business Partners L.P.
Filing Date: 2025-04-10
Form: 20-F
Item: Item 3
Chunk 28
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 activity. A significant downturn in global, Canadian or any provincial economies could have an adverse effect on our residential mortgage insurer and its results of operations.

Further, as our residential mortgage insurer provides mortgage insurance primarily for high loan-to-value mortgages, material changes in factors that impact the volume of such mortgages could lead to a decrease in the volume of transactional insurance originations, which would reduce the demand for mortgage insurance and, therefore, could have an adverse effect on its financial condition and results of operations. Material changes in factors that impact the volume of such mortgages include changes in the level of mortgage interest rates, housing prices, government housing policies and other government action to reduce consumer debt levels and changes to the capital treatment of privately insured mortgages that could disproportionately increase the regulatory capital held on privately insured mortgages relative to non-privately insured mortgages. We can provide no assurance that our residential mortgage insurer will not be negatively affected by these factors in the future, whether or not there is an improving interest rate environment; accordingly, our residential mortgage insurer may be adversely affected.

Our residential mortgage insurer is heavily regulated and may be affected by changes in government policy.

Failure of our residential mortgage insurer to meet its regulatory requirements or changes in regulation and governance requirements may impact the housing and mortgage markets, reduce its profitability, impact regulatory capital requirements, affect its ability to pay dividends or distribute capital to shareholders, expose it to claims, fines or penalties and could limit its growth. Action or inaction by the federal government of Canada in respect of its policy of supporting home ownership in Canada through mortgage insurance, could significantly reduce the demand for, or availability of, private sector mortgage insurance or mortgage insurance in general.

For example, all financial institutions that are federally regulated by the OSFI are required to purchase mortgage insurance whenever the amount of a mortgage loan exceeds 80% of the value of the collateral property at the time the loan is made. A change to this requirement or any change to the threshold loan-to-value ratio could adversely affect the operations of our residential mortgage insurer and could reduce the demand for mortgage insurance.

In addition, our residential mortgage insurer is subject to capital requirements imposed under Canadian law, including the Insurance Companies Act and the Protection of Residential Mortgage or Hypothecary Insurance Act. A decline in the regulatory capital of our residential mortgage insurer in relation to the size of risk it is insuring or an increase in its regulatory capital requirements could result in a decline in its ratings, increased scrutiny by OSFI, restrictions on our residential mortgage insurer from writing new business, distributing capital, utilizing capital for