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Salt-box houses built for munitions plan employees in Ajax on land owned by Canadian Housing and Mortgage Corp (CMHC).

Dave LeBlanc/The Globe and Mail

One thing that jumps out in Canada Mortgage and Housing Corp.'s third quarter results is the much bigger capital cushion the home loan insurer is holding.

By one measure, the level of capital held is up about 50 per cent from 2008 and 2009, when there was less scrutiny of CMHC's stability. And that capital figure has been steadily climbing.

CMHC has what it calls "retained earnings set aside for capitalization" in its insurance segment. Management has been letting that pile up, and it has risen by roughly $600-million in the last nine months to $11.37-billion, a significant increase.

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The result is a rapid swelling in the relative size of the cushion to the insurance business.

In 2008 and 2009, retained earnings set aside for capitalization represented about 1.3 per cent of CMHC's total insurance in force. By last year at this time, the ratio had risen to 1.9 per cent.

Now, with insurance in force coming down thanks to government curbs on CMHC activity, and capital piling up, the ratio now stands at 2 per cent. That's roughly a 50 per cent increase from the 1.3 per cent level of just a few years ago.

What accounts for the change? It seems prudent in light of the concern about the housing market, even if CMHC's losses are actually down. It also appears to line up with a move to make the Office of the Superintendant of Financial Institutions the regulator responsible for CMHC.

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