RICHMOND, Va., Oct. 29, 2013 /PRNewswire/ -- Genworth
Financial, Inc. (NYSE: GNW) today reported results for the third
quarter of 2013. The company reported net income1 of
$108 million, or $0.22 per diluted share, compared with net income
of $35 million, or $0.07 per diluted share, in the third quarter of
2012. Net operating income2 for the third quarter of
2013 was $119 million, or
$0.24 per diluted share, compared
with net operating income of $111
million, or $0.22 per diluted
share, in the third quarter of 2012.
"Genworth is moving forward and rebuilding shareholder value
through solid operating performance from our divisions, the
increasing impact of long term care rate actions and continued
achievement of key milestones," said Tom
McInerney, President and CEO. "We have increased our
cash balance, established a new credit line, and addressed our near
term debt maturities, which have strengthened our balance sheet and
increased financial flexibility."
Consolidated Net
Income &
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30
|
|
|
|
(Unaudited)
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
Per
|
|
|
|
|
Per
|
|
|
|
Total
|
|
diluted
|
|
Total
|
|
diluted
|
(Amounts in
millions, except per share)
|
|
|
|
share
|
|
|
|
share
|
Net income
|
|
$
|
108
|
|
$
|
0.22
|
|
$
|
35
|
|
$
|
0.07
|
Net operating
income
|
|
$
|
119
|
|
$
|
0.24
|
|
$
|
111
|
|
$
|
0.22
|
Weighted average
diluted shares
|
|
|
499.3
|
|
|
|
|
|
493.9
|
|
|
|
Book value per
share
|
|
$
|
29.55
|
|
|
|
|
$
|
33.31
|
|
|
|
Book value per share,
excluding accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other comprehensive
income (loss)
|
|
$
|
23.60
|
|
|
|
|
$
|
22.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the quarter was negatively impacted by two
charges in Corporate and Other activities consisting of
$20 million from the make-whole
expense related to the redemption of the company's 2015 senior
notes and an adjustment of $20
million, including $18 million from a correction of
prior periods, related to non-deductible stock compensation expense
resulting from cancellations.
Net investment losses, net of tax and other adjustments, were
$13 million in the quarter compared
to net investment losses of $2
million in the prior year. Total investment impairments, net
of tax, were $3 million in the
current quarter and $19 million in
the prior year. The prior year included an after-tax goodwill
impairment of all of the goodwill related to the International
Protection segment of $86
million.
In August 2013, the company closed
the sale of its wealth management business. During the quarter, the
company recognized $2 million of
income from discontinued operations, comprising $4 million of income and a true-up to the loss on
sale of $2 million. Net proceeds of
approximately $360 million, together
with cash on hand at Genworth Holdings, Inc., will be used to
address the company's remaining 2014 debt at maturity or
before.
Net operating income results are summarized in the table
below:
Net Operating
Income (Loss)
|
|
|
|
|
|
|
|
|
|
(Amounts in
millions)
|
|
Q3
13
|
|
Q2
13
|
|
Q3
12
|
U.S. Life Insurance
Division:
|
|
|
|
|
|
|
|
|
|
|
U.S. Life
Insurance
|
|
$
|
111
|
|
$
|
79
|
|
$
|
86
|
|
Total U.S. Life
Insurance Division
|
|
|
111
|
|
|
79
|
|
|
86
|
Global Mortgage
Insurance Division:
|
|
|
|
|
|
|
|
|
|
|
International
Mortgage Insurance
|
|
|
90
|
|
|
89
|
|
|
94
|
|
U.S. Mortgage
Insurance (U.S. MI)
|
|
|
(3)
|
|
|
13
|
|
|
(37)
|
|
Total Global
Mortgage Insurance Division
|
|
|
87
|
|
|
102
|
|
|
57
|
Corporate and Other
Division:
|
|
|
|
|
|
|
|
|
|
|
International
Protection
|
|
|
4
|
|
|
1
|
|
|
8
|
|
Runoff
|
|
|
25
|
|
|
6
|
|
|
9
|
|
Corporate and
Other
|
|
|
(108)
|
|
|
(55)
|
|
|
(49)
|
|
Total Corporate
and Other Division
|
|
|
(79)
|
|
|
(48)
|
|
|
(32)
|
Total Net
Operating Income
|
|
$
|
119
|
|
$
|
133
|
|
$
|
111
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income excludes net investment gains (losses),
goodwill impairments, gains (losses) on the sale of businesses
and restructuring charges, net of taxes. A reconciliation of
net operating income of segments and Corporate and Other activities
to net income is included at the end of this press release.
Unless specifically noted in the discussion of results for the
International Mortgage Insurance and International Protection
segments, references to percentage changes exclude the impact of
foreign exchange. Percentage changes, which include the impact of
foreign exchange, are found in a table at the end of this press
release. The impact of foreign exchange on net operating income in
the third quarter of 2013 was an unfavorable impact of $7 million versus the prior quarter and prior
year.
U.S. Life Insurance Division
U.S. Life Insurance Division net operating income was
$111 million, compared with
$79 million in the prior quarter and
$86 million a year ago.
U.S. Life
Insurance Division
|
Net Operating
Income
|
(Amounts in
millions)
|
|
Q3
13
|
|
Q2
13
|
|
Q3
12
|
U.S. Life
Insurance
|
|
|
|
|
|
|
|
|
|
|
Life
Insurance
|
|
$
|
54
|
|
$
|
27
|
|
$
|
22
|
|
Long Term Care
Insurance
|
|
|
41
|
|
|
26
|
|
|
45
|
|
Fixed
Annuities
|
|
|
16
|
|
|
26
|
|
|
19
|
Total U.S. Life
Insurance
|
|
|
111
|
|
|
79
|
|
|
86
|
Total U.S. Life
Insurance
|
|
$
|
111
|
|
$
|
79
|
|
$
|
86
|
|
|
|
|
|
|
|
|
|
|
|
Sales
(Amounts in
millions)
|
|
Q3
13
|
|
Q2
13
|
|
Q3
12
|
U.S. Life
Insurance
|
|
|
|
|
|
|
|
|
|
|
Life
Insurance
|
|
|
|
|
|
|
|
|
|
|
|
Term Life
|
|
$
|
5
|
|
$
|
4
|
|
$
|
1
|
|
|
Term Universal
Life
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
Universal
Life
|
|
|
5
|
|
|
5
|
|
|
15
|
|
|
Linked
Benefits
|
|
|
2
|
|
|
3
|
|
|
3
|
|
Long Term Care
Insurance
|
|
|
|
|
|
|
|
|
|
|
|
Individual
|
|
|
37
|
|
|
38
|
|
|
63
|
|
|
Group
|
|
|
3
|
|
|
5
|
|
|
6
|
|
Fixed
Annuities
|
|
|
760
|
|
|
212
|
|
|
487
|
|
|
|
|
|
|
|
|
|
|
|
|
Account Value
(Amounts in
millions)
|
|
Q3
13
|
|
Q2
13
|
|
Q3
12
|
Fixed
Annuities
|
|
$
|
18,367
|
|
$
|
17,949
|
|
$
|
18,677
|
|
|
|
|
|
|
|
|
|
|
U.S. Life Insurance Division
Key Points
- U.S. Life Insurance Division net operating income was
$111 million, compared with
$79 million in the prior quarter and
$86 million a year ago.
- Compared to the prior quarter, sales of life insurance products
were flat, modestly lower in individual long term care insurance
(LTC) and up in fixed annuities from more competitively priced
products in the higher interest rate environment.
- The consolidated risk-based capital (RBC) ratio is estimated to
be approximately 450 percent3, up modestly from
approximately 445 percent at the end of the second quarter of
2013.
- As of September 30, 2013, LTC in
force premium rate increase approvals represented approximately
$155 to $160 million of the expected
$200 to $300 million premium increase
when fully implemented.
Life Insurance
Life insurance net operating income was
$54 million, compared with
$27 million in the prior quarter and
$22 million in the prior year.
Results in the quarter included an $18
million favorable impact from a correction to reserves in
the term universal life insurance product, a $12 million unfavorable tax valuation allowance
on a deferred tax asset on a specific separate tax return net
operating loss that is no longer expected to be realized and an
$11 million net favorable impact from
the unlocking of mortality and interest assumptions primarily
impacting reserves and deferred acquisition costs (DAC). Mortality
experience was favorable versus pricing expectations, the prior
quarter and prior year because of lower frequency and severity.
Prior year results included $15
million of unfavorable items, including a $6 million unfavorable impact from a life block
transaction. Sales were flat versus the prior quarter and down
$26 million versus the prior year
when the company discontinued sales of its term universal life
insurance product and began to transition to new term and universal
life insurance product offerings. The company will continue to make
pricing and product changes that are expected to increase sales
over time.
Long Term Care Insurance
Long term care insurance net
operating income was $41 million,
compared with $26 million in the
prior quarter and $45 million in the
prior year. Results benefitted from premium increases and reduced
benefits of $14 million versus the
prior quarter and $26 million versus
the prior year related to the premium increases approved and
implemented to date. Results also included a $16 million correction that increased reserves to
reflect a benefit for policyholders related to an accumulated
benefit option. Mostly offsetting the increase was an $11 million favorable adjustment from a
refinement of the methodology for calculating incurred but not
reported reserves to more fully reflect product specific incidence
rates and a $4 million favorable
impact as part of the multi-stage system conversion. Total pending
claims were up from the prior quarter as cancellations of pending
claims were more than offset by new pending claims. Prior year
results included favorable reserve adjustments of $29 million. The reported loss ratio for the
current quarter was approximately 64 percent, three points lower
than the prior quarter and one point higher than the prior year.
Individual LTC sales of $37 million
were modestly lower than the prior quarter. Sales are expected to
trend down in the near term due to the cessation of sales of AARP
branded products in the retail channel and the introduction of
higher priced products in additional states. The company continues
to utilize reinsurance in LTC as part of its capital optimization
strategies.
As previously announced in the third quarter of 2012, the
company filed for LTC in force premium rate increases with the goal
of achieving approximately $200 to $300
million of additional annual premiums when fully implemented
by 2017. As of September 30, 2013,
the company has received approvals representing approximately
$155 to $160 million of the targeted
premium increase.
In September 2013, the company
announced that it began filing for LTC premium rate increases on
certain Privileged Choice® and Classic Select® policies sold
between 2003 and 2012. The premium rate increases requested
range between six and thirteen percent on more than $800 million in annualized in force
premiums. Although these policies have generated positive
operating earnings to date, the premium rate increases on these
policies are primarily due to improvements in mortality and lower
than priced-for lapse rates and are intended to return the
projected lifetime loss ratios to the original priced-for loss
ratios.
Fixed Annuities
Fixed annuities net operating income
was $16 million, compared with
$26 million in the prior quarter and
$19 million in the prior year.
Results in the quarter included lower limited partnership and bond
call performance versus the prior quarter and spread compression
versus both the prior quarter and prior year. Mortality was
unfavorable versus the prior quarter. Sales in the quarter totaled
$760 million, up sequentially
benefitting from competitively priced products in the rising
interest rate environment while still meeting or exceeding targeted
returns.
U.S. Life Companies Capital
The consolidated RBC ratio
is estimated to be approximately 450 percent3, up
modestly from approximately 445 percent at the end of the second
quarter of 2013 from in force capital generation, primarily from a
reduction in variable annuity required capital related to favorable
equity market trends offset by new business capital use.
Global Mortgage Insurance Division
Global Mortgage Insurance Division had net operating income of
$87 million, compared with net
operating income of $102 million in
the prior quarter and $57 million a
year ago.
Global Mortgage
Insurance Division
|
Net Operating
Income (Loss)
|
(Amounts in
millions)
|
|
Q3
13
|
|
Q2
13
|
|
Q3
12
|
International
Mortgage Insurance
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
$
|
41
|
|
$
|
43
|
|
$
|
42
|
|
Australia
|
|
|
61
|
|
|
55
|
|
|
57
|
|
Other
Countries
|
|
|
(12)
|
|
|
(9)
|
|
|
(5)
|
Total
International Mortgage Insurance
|
|
|
90
|
|
|
89
|
|
|
94
|
U.S. Mortgage
Insurance
|
|
|
(3)
|
|
|
13
|
|
|
(37)
|
Total Global
Mortgage Insurance
|
|
$
|
87
|
|
$
|
102
|
|
$
|
57
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
(Amounts in
billions)
|
|
Q3
13
|
|
Q2
13
|
|
Q3
12
|
|
International
Mortgage Insurance
|
|
|
|
|
|
|
|
|
|
|
|
Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
$
|
6.0
|
|
$
|
4.7
|
|
$
|
7.2
|
|
|
|
Australia
|
|
|
8.0
|
|
|
8.7
|
|
|
8.8
|
|
|
|
Other
Countries
|
|
|
0.5
|
|
|
0.4
|
|
|
0.4
|
|
|
Bulk
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
|
3.9
|
|
|
6.4
|
|
|
2.6
|
|
|
|
Australia
|
|
|
0.1
|
|
|
0.9
|
|
|
—
|
|
|
|
Other
Countries
|
|
|
—
|
|
|
—
|
|
|
—
|
|
U.S. Mortgage
Insurance
|
|
|
|
|
|
|
|
|
|
|
|
Primary
Flow
|
|
|
6.4
|
|
|
6.3
|
|
|
4.7
|
|
|
Primary
Bulk
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Mortgage Insurance Segment
Key Points
- Reported International Mortgage Insurance segment net operating
earnings were $90 million, compared
with $89 million in the prior quarter
and $94 million a year ago. Foreign
exchange had an unfavorable impact of $8
million versus the prior quarter and $9 million versus the prior year, primarily in
Australia.
- In Canada, flow new insurance
written (NIW) was up 30 percent4 sequentially and down
15 percent4 year over year. In addition, in the current
quarter, the company completed $3.9
billion of bulk transactions, consisting of low
loan-to-value prime loans. In Australia, flow NIW was up two
percent4 sequentially and up one percent4
year over year.
- The Canadian and Australian businesses continue to maintain
sound capital positions.
- Dividends of $173 million,
including proceeds relating to Genworth MI Canada Inc.'s share
repurchase program, were paid to the holding company year-to-date
through September 30, 2013.
Canada Mortgage Insurance
Canada reported net operating earnings of
$41 million versus $43 million in the prior quarter and $42 million in the prior year. The loss ratio in
the quarter was 22 percent, down three points from the prior
quarter and down eight points from the prior year primarily from a
favorable shift in the geographic mix of delinquencies. Total
delinquencies were flat sequentially as new delinquencies were
offset by cures, processed claims, loss mitigation and improving
economic conditions in most regions. Improvement in losses was more
than offset by higher taxes versus the prior quarter and prior year
and lower revenues versus the prior year. Flow NIW was up 30
percent4 sequentially from normal seasonal variation and
down 15 percent4 year over year primarily from a smaller
origination market. In addition, the company completed several bulk
transactions, consisting of low loan-to-value prime loans, of
approximately $3.9 billion reflecting
its selective participation in this market. At quarter end, the
Canada mortgage insurance business
had a regulatory capital ratio of 218 percent3, well in
excess of regulatory requirements. GAAP book value was $2.9 billion, of which $1.7 billion represented Genworth's 57.4 percent
ownership interest and was flat to the prior quarter.
Australia Mortgage Insurance
Australia reported net operating earnings of
$61 million versus $55 million in the prior quarter and $57 million in the prior year. The loss ratio in
the quarter was 31 percent, down four points sequentially and down
16 points from the prior year and total delinquencies were down six
percent sequentially from lower new delinquencies and higher cures.
Improvements in losses were partially offset by unfavorable foreign
exchange. Taxes were also favorable versus the prior quarter,
including an $8 million favorable
impact reflecting a partial reversal of an uncertain tax position.
Flow NIW was up two percent4 sequentially and up one
percent4 year over year as low interest rates continued
to improve affordability. At quarter end, the Australia mortgage insurance business had a
regulatory capital ratio of 135 percent3, in excess of
regulatory requirements. The GAAP book value was $2.0 billion as of the end of the quarter, up
$0.1 billion from the prior
quarter.
Other Countries Mortgage Insurance
Other Countries had
a net operating loss of $12 million,
compared to $9 million in the prior
quarter and $5 million in the prior
year as the business continues to be pressured from elevated
losses, primarily in Ireland.
U.S. Mortgage Insurance Segment
Key Points
- U.S. MI net operating loss was $3
million, compared with net operating income of $13 million in the prior quarter and a net
operating loss of $37 million in the
prior year.
- Flow NIW increased two percent from the prior quarter and
increased 36 percent over the prior year to $6.4 billion.
- The risk-to-capital ratio for Genworth Mortgage Insurance
Corporation (GMICO) is estimated at 23.2:13 and the
combined risk-to-capital ratio is estimated at 22.4:13
as of September 30, 2013.
Total flow delinquencies decreased five percent sequentially and
decreased 24 percent versus the prior year. New flow delinquencies
increased approximately eight percent from the prior quarter from
normal seasonal variation and decreased approximately 19 percent
from the prior year, reflecting the continued burn through of
delinquencies from the 2005 to 2008 book years. The flow average
reserve per delinquency was $29,600,
down slightly from the prior quarter.
Total losses were up $26 million
compared to the prior quarter from a seasonal increase in new
delinquency development, modest changes in aging of existing
delinquencies and lower cure activity.
Loss mitigation savings were $136
million in the quarter, down $8
million from the prior quarter. Loss mitigation savings this
year through September 30, 2013 were
$439 million.
Flow NIW of $6.4 billion increased
two percent over the prior quarter and increased 36 percent versus
the prior year reflecting an increase in both refinance and
purchase private mortgage insurance penetration and stable market
share. Overall private mortgage insurance market penetration was up
approximately three points from the prior quarter and up
approximately six points year over year. The company's estimate of
market share at the end of the quarter is approximately 13 percent.
Flow persistency was 79 percent. In addition, the Home Affordable
Refinance Program (HARP) accounted for about $1.4 billion in the quarter of insurance that is
treated as a modification of the coverage on existing insurance in
force rather than NIW.
The combined U.S. MI statutory risk-to-capital ratio is
estimated at 22.4:13 at the end of the third quarter
with the risk-to-capital ratio for GMICO estimated at
23.2:13. GMICO currently maintains waivers or other
authorizations from 45 states that permit the company to continue
writing new business if its risk-to-capital ratio exceeds 25.0:1.
Additionally, the company has separately capitalized and licensed
legal entities to write new business for states where waivers are
not in place, subject to the approval of applicable regulators and
the GSE's (government sponsored entities) approval. Currently, new
business in one state is being written out of Genworth Residential
Mortgage Assurance Corporation (GRMAC), a subsidiary of GMICO.
The company currently expects the U.S. mortgage insurance
business to be modestly profitable in 2013 and expects that its
2014 results should improve over 2013. The company continues to
expect seasonality in the remainder of 2013, which could cause the
fourth quarter of the year to have a marginal net loss profile. Its
profitability expectations are subject to the continued recovery of
the U.S. housing market, the extent of seasonality that has been
historically experienced in the second half of the year, and
certain other items such as the cost of resolution of pending
litigation.
Corporate and Other Division
Corporate and Other Division net operating loss was $79 million, compared with $48 million in the prior quarter and $32 million in the prior year.
Corporate and
Other Division
|
Net Operating
Income (Loss)
|
(Amounts in
millions)
|
|
Q3
13
|
|
Q2
13
|
|
Q3
12
|
International
Protection
|
|
$
|
4
|
|
$
|
1
|
|
$
|
8
|
Runoff
|
|
|
25
|
|
|
6
|
|
|
9
|
Corporate and
Other
|
|
|
(108)
|
|
|
(55)
|
|
|
(49)
|
Total Corporate
and Other
|
|
$
|
(79)
|
|
$
|
(48)
|
|
$
|
(32)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Account Value
(Amounts in
millions)
|
|
Q3
13
|
|
Q2
13
|
|
Q3
12
|
Variable
Annuities
|
|
$
|
7,966
|
|
$
|
7,877
|
|
$
|
8,270
|
Guaranteed Investment
Contracts, Funding Agreements
|
|
|
|
|
|
|
|
|
|
|
Backing Notes and
Funding Agreements
|
|
|
1,036
|
|
|
1,077
|
|
|
2,297
|
|
|
|
|
|
|
|
|
|
|
|
International Protection Segment
International Protection reported operating earnings of
$4 million, compared with
$1 million in the prior quarter and
$8 million in the prior year. The
business continues to be impacted by the slow consumer lending
environment in Europe, and high
unemployment in Southern Europe
continues to keep losses elevated while a favorable shift in mix of
contracts with profit share and lower expenses favorably impacted
results in the quarter. At quarter end, the lifestyle protection
business had a regulatory capital ratio of approximately 335
percent3, well in excess of regulatory requirements.
Dividends of $24 million were paid to
the holding company through September 30,
2013.
Runoff Segment
The Runoff segment's net operating income was $25 million, compared with $6 million in the prior quarter and $9 million in the prior year. Results in the
current quarter reflected more favorable equity market conditions
versus the prior quarter. Taxes in the current quarter were also
more favorable than the prior quarter and prior year. Results in
the prior year included a $6 million
unfavorable impact from refinement of DAC assumptions primarily
related to the company's annual review of assumptions.
Corporate and Other
Corporate and Other's net operating loss was $108 million, compared with $55 million in the prior quarter and $49 million in the prior year. Results in the
current quarter included a $20
million make-whole expense related to the redemption of the
company's 2015 senior notes and an adjustment of $20 million, including $18 million from
a correction of prior periods, related to non-deductible stock
compensation expense resulting from cancellations.
Investment Portfolio Performance
Net investment income decreased to $801
million, compared to $821
million in the prior quarter primarily from unfavorable
foreign exchange and lower impact from prepayment speeds on
structured securities as interest rates increase. The reported
yield for the current quarter was approximately 4.7 percent. The
core yield2 was flat to the prior quarter at
approximately 4.5 percent.
Net income in the quarter included $13
million of net investment losses, net of tax, DAC
amortization and other items of $4
million primarily related to mark-to-market on derivatives.
Total investment impairments, net of tax, were $3 million in the current quarter and
$19 million in the prior year.
Net unrealized investment gains were $1.1
billion, net of tax and other items, as of September 30, 2013 compared with $2.6 billion as of September 30, 2012 and $1.3 billion as of June
30, 2013 primarily driven by rising interest rates. The
fixed maturity securities portfolio had gross unrealized investment
gains of $3.7 billion compared with
$6.7 billion as of September 30, 2012 and gross unrealized
investment losses of $1.0 billion
compared with $0.8 billion as of
September 30, 2012.
Holding Company
Genworth's holding company5 ended the quarter with
approximately $1.3
billion6 of cash and liquid assets, up
approximately $300 million compared
to the prior quarter, from approximately $360 million of net proceeds from the sale of the
wealth management business and $45
million of dividends received from the operating companies,
partially offset by approximately $50
million of debt interest payments and $50 million of net other expenses. In
September 2013, the company entered
into a credit agreement that provides Genworth Holdings, Inc. with
a three-year $300 million,
multicurrency revolving credit facility, with a $100 million sublimit for letters of credit. With
the addition of the credit facility, the holding company cash and
liquid asset balance target changed from two to one and a half
times its annual debt service expense, plus a risk buffer of
$350 million. After deducting for the
net proceeds from the sale of the wealth management business
transaction and cash on hand at Genworth Holdings, Inc. that will
be used to address the remaining $485
million 2014 debt at maturity or before, cash and highly
liquid securities were approximately $830
million at the end of the quarter. The holding company has
no debt maturities until June
2014.
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a leading Fortune 500
insurance holding company dedicated to helping people secure their
financial lives, families and futures. Genworth has leadership
positions in offerings that assist consumers in protecting
themselves, investing for the future and planning for
retirement--including life insurance, long term care insurance, and
financial protection coverages--and mortgage insurance that helps
consumers achieve home ownership while assisting lenders in
managing their risk and capital.
Genworth operates through three divisions: U.S. Life Insurance,
which includes life insurance, long term care insurance and fixed
annuities; Global Mortgage Insurance, containing U.S. Mortgage
Insurance and International Mortgage Insurance segments; and the
Corporate and Other division, which includes the International
Protection and Runoff segments. Products and services are offered
through financial intermediaries, advisors, independent
distributors and sales specialists. Genworth, headquartered in
Richmond, Virginia, traces its
roots back to 1871 and became a public company in 2004. For more
information, visit genworth.com.
From time to time, Genworth releases important information via
postings on its corporate website. Accordingly, investors and other
interested parties are encouraged to enroll to receive automatic
email alerts and Really Simple Syndication (RSS) feeds regarding
new postings. Enrollment information is found under the "Investors"
section of genworth.com.
Conference Call and Financial Supplement Information
This press release and the third quarter 2013 financial
supplement are now posted on the company's website. Additional
information regarding business results will be posted on the
company's website, http://investor.genworth.com, by 7:30 a.m. on October 30,
2013. Investors are encouraged to review these
materials.
Genworth will conduct a conference call on October 30, 2013 at 8 a.m.
(ET) to discuss the quarter's results and provide an update
on the company's strategy and 2013 goals. The conference call
will be accessible via telephone and the Internet. The dial-in
number for the conference call is 866 393.0571 or 206 453.2872
(outside the U.S.). To participate in the call by webcast,
register at http://investor.genworth.com at least 15 minutes prior
to the webcast to download and install any necessary
software.
Replays of the call will be available through November 13, 2013 at 855 859.2056 or 404 537.3406
(outside the U.S.); the conference ID # for the call is #
70370923. The webcast will also be archived on the company's
website.
Use of Non-GAAP Measures
This press release includes the non-GAAP financial measures
entitled "net operating income (loss)" and "operating earnings per
share." Operating earnings per share is derived from net
operating income (loss). The chief operating decision maker
evaluates segment performance and allocates resources on the basis
of net operating income (loss). The company defines net operating
income (loss) as income (loss) from continuing operations excluding
the after-tax effects of income attributable to noncontrolling
interests, net investment gains (losses), goodwill impairments,
gains (losses) on the sale of businesses and infrequent or unusual
non-operating items. The company excludes net investment gains
(losses) and infrequent or unusual non-operating items because the
company does not consider them to be related to the operating
performance of the company's segments and Corporate and Other
activities. A component of the company's net investment gains
(losses) is the result of impairments, the size and timing of which
can vary significantly depending on market credit cycles. In
addition, the size and timing of other investment gains (losses)
can be subject to the company's discretion and are influenced by
market opportunities, as well as asset-liability matching
considerations. Goodwill impairments and gains (losses) on the sale
of businesses are also excluded from net operating income (loss)
because in the company's opinion, they are not indicative of
overall operating trends. Other non-operating items are also
excluded from net operating income (loss) if, in the company's
opinion, they are not indicative of overall operating trends.
While some of these items may be significant components of net
income (loss) available to Genworth's common stockholders in
accordance with GAAP, the company believes that net operating
income (loss) and measures that are derived from or incorporate net
operating income (loss), including net operating income (loss) per
common share on a basic and diluted basis, are appropriate measures
that are useful to investors because they identify the income
(loss) attributable to the ongoing operations of the business.
Management also uses net operating income (loss) as a basis for
determining awards and compensation for senior management and to
evaluate performance on a basis comparable to that used by
analysts. However, the items excluded from net operating income
(loss) have occurred in the past and could, and in some cases will,
recur in the future. Net operating income (loss) and net operating
income (loss) per common share on a basic and diluted basis are not
substitutes for net income (loss) available to Genworth's common
stockholders or net income (loss) available to Genworth's common
stockholders per common share on a basic and diluted basis
determined in accordance with GAAP. In addition, the company's
definition of net operating income (loss) may differ from the
definitions used by other companies. There were no infrequent or
unusual non-operating items excluded from net operating income
during the periods presented in this press release other than a
$13 million after-tax expense
recorded in the second quarter of 2013 related to restructuring
costs. The tables at the end of this press release reflect
net operating income (loss) as determined in accordance with
accounting guidance related to segment reporting, and a
reconciliation of net operating income (loss) of the company's
segments and Corporate and Other activities to net income available
to Genworth's common stockholders for the three months ended
September 30, 2013 and 2012.
This press release includes the non-GAAP financial measure
entitled "core yield" as a measure of investment yield. The company
defines core yield as the investment yield adjusted for those items
that are not recurring in nature. Management believes that analysis
of core yield enhances understanding of the investment yield of the
company. However, core yield as defined by the company should not
be viewed as a substitute for GAAP investment yield. In addition,
the company's definition of core yield may differ from the
definitions used by other companies. A reconciliation of core yield
to reported GAAP yield is included in a table at the end of this
press release.
Definition of Selected Operating Performance Measures
The company reports selected operating performance measures
including "sales" and "insurance in force" or "risk in force" which
are commonly used in the insurance industry as measures of
operating performance.
Management regularly monitors and reports sales metrics as a
measure of volume of new and renewal business generated in a
period. Sales refer to: (1) annualized first-year premiums for term
life and long term care insurance products; (2) annualized
first-year deposits plus five percent of excess deposits for
universal and term universal life insurance products; (3) 10
percent of premium deposits for linked-benefits products; (4) new
and additional premiums/deposits for fixed annuities; (5) new
insurance written for mortgage insurance; and (6) net written
premiums for the lifestyle protection insurance business. Sales do
not include renewal premiums on policies or contracts written
during prior periods. The company considers annualized first-year
premiums/deposits, premium equivalents, new premiums/deposits,
written premiums and new insurance written to be a measure of the
company's operating performance because they represent a measure of
new sales of insurance policies or contracts during a specified
period, rather than a measure of the company's revenues or
profitability during that period.
Management regularly monitors and reports insurance in force and
risk in force. Insurance in force for the life, international
mortgage and U.S. mortgage insurance businesses is a measure of the
aggregate face value of outstanding insurance policies as of the
respective reporting date. For the risk in force in the
international mortgage insurance business, the company has computed
an "effective" risk in force amount, which recognizes that the loss
on any particular loan will be reduced by the net proceeds received
upon sale of the property. Effective risk in force has been
calculated by applying to insurance in force a factor of 35 percent
that represents the highest expected average per-claim payment for
any one underwriting year over the life of the company's businesses
in Canada and Australia.
Risk in force for the U.S. mortgage insurance business is the
obligation that is limited under contractual terms to the amounts
less than 100 percent of the mortgage loan value. The company
considers insurance in force and risk in force to be a measure of
the company's operating performance because they represent a
measure of the size of the business at a specific date which will
generate revenues and profits in a future period, rather than a
measure of the company's revenues or profitability during that
period.
This press release also includes information related to loss
mitigation activities for the U.S. mortgage insurance business. The
company defines loss mitigation activities as rescissions,
cancellations, borrower loan modifications, repayment plans,
lender- and borrower-titled presales, claims administration and
other loan workouts. Estimated savings related to rescissions are
the reduction in carried loss reserves, net of premium refunds and
reinstatement of prior rescissions. Estimated savings related to
loan modifications and other cure related loss mitigation actions
represent the reduction in carried loss reserves. Estimated savings
related to claims mitigation activities represent amounts deducted
or "curtailed" from claims due to acts or omissions by the insured
or the servicer with respect to the servicing of an insured loan
that is not in compliance with obligations under our master policy.
For non-cure related actions, including presales, the estimated
savings represent the difference between the full claim obligation
and the actual amount paid. Loans subject to our loss mitigation
actions, the results of which have been included in our reported
estimated loss mitigation savings, are subject to re-default and
may result in a potential claim in future periods, as well as
potential future loss mitigation savings depending on the
resolution of the re-defaulted loan. The company believes that this
information helps to enhance the understanding of the operating
performance of the U.S. mortgage insurance business as loss
mitigation activities specifically impact current and future loss
reserves and level of claim payments.
Management regularly monitors and reports a loss ratio for the
company's businesses. For the mortgage and lifestyle protection
insurance businesses, the loss ratio is the ratio of incurred
losses and loss adjustment expenses to net earned premiums. For the
long-term care insurance business, the loss ratio is the ratio of
benefits and other changes in reserves less tabular interest on
reserves less loss adjustment expenses to net earned premiums. The
company considers the loss ratio to be a measure of underwriting
performance in these businesses and helps to enhance the
understanding of the operating performance of the businesses.
An assumed tax rate of 35% is utilized in the explanation of
certain specific variances of operating performance and investment
results.
These operating measures enable the company to compare its
operating performance across periods without regard to revenues or
profitability related to policies or contracts sold in prior
periods or from investments or other sources.
Cautionary Note Regarding Forward-Looking Statements
This press release contains certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements may be identified by words such
as "expects," "intends," "anticipates," "plans," "believes,"
"seeks," "estimates," "will" or words of similar meaning and
include, but are not limited to, statements regarding the outlook
for the company's future business and financial performance.
Forward-looking statements are based on management's current
expectations and assumptions, which are subject to inherent
uncertainties, risks and changes in circumstances that are
difficult to predict. Actual outcomes and results may differ
materially due to global political, economic, business,
competitive, market, regulatory and other factors and risks,
including, but not limited to, the following:
- Risks relating to the company's businesses, including
downturns and volatility in global economies and equity and credit
markets; downgrades or potential downgrades in the company's
financial strength or credit ratings; interest rate fluctuations
and levels; adverse capital and credit market conditions; the
valuation of fixed maturity, equity and trading securities;
defaults, downgrades or other events impacting the value of the
company's fixed maturity securities portfolio; defaults on the
company's commercial mortgage loans or the mortgage loans
underlying our investments in commercial mortgage-backed securities
and volatility in performance; goodwill impairments; defaults by
counterparties to reinsurance arrangements or derivative
instruments; an adverse change in risk-based capital and other
regulatory requirements; insufficiency of reserves and required
increases to reserve liabilities; legal constraints on dividend
distributions by the company's subsidiaries; competition;
availability, affordability and adequacy of reinsurance; loss of
key distribution partners; regulatory restrictions on the company's
operations and changes in applicable laws and regulations; legal or
regulatory investigations or actions; the failure of or any
compromise of the security of our computer systems and confidential
information contained therein; the occurrence of natural or
man-made disasters or a pandemic; the effect of the enactment of
the Dodd-Frank Wall Street Reform and Consumer Protection Act;
changes in accounting and reporting standards issued by the
Financial Accounting Standards Board or other standard-setting
bodies and insurance regulators; impairments of or valuation
allowances against the company's deferred tax assets; changes in
expected morbidity or mortality rates; accelerated amortization of
deferred acquisition costs and present value of future profits;
ability to increase premiums on certain in-force and future
long-term care insurance products by enough or quickly enough,
including the current rate actions and any future rate actions;
medical advances, such as genetic research and diagnostic imaging,
and related legislation; unexpected changes in persistency rates;
ability to continue to implement actions to mitigate the impact of
statutory reserve requirements; the failure of demand for long-term
care insurance to increase; political and economic instability or
changes in government policies; fluctuations in foreign exchange
rates and international securities markets; unexpected changes in
unemployment rates; unexpected increases in international mortgage
insurance default rates or severity of defaults; the significant
portion of high loan-to-value insured international mortgage loans
which generally result in more and larger claims than lower
loan-to-value ratios; competition with government-owned and
government-sponsored enterprises (GSEs) offering mortgage
insurance; changes in international regulations reducing demand for
mortgage insurance; increases in U.S. mortgage insurance default
rates; failure to meet, or have waived to the extent needed, the
minimum statutory capital requirements and hazardous financial
condition standards; uncertain results of continued investigations
of insured U.S. mortgage loans; possible rescissions of coverage
and the results of objections to the company's rescissions; the
extent to which loan modifications and other similar programs may
provide benefits to the company; unexpected changes in unemployment
and underemployment rates in the United
States; further deterioration in economic conditions or a
further decline in home prices in the
United States; problems associated with foreclosure process
defects in the United States that
may defer claim payments; changes to the role or structure of
Federal National Mortgage Association (Fannie Mae) and Federal Home
Loan Mortgage Corporation (Freddie Mac); competition with
government-owned and government-sponsored enterprises offering U.S.
mortgage insurance; changes in regulations that affect the
company's U.S. mortgage insurance business; the influence of Fannie
Mae, Freddie Mac and a small number of large mortgage lenders and
investors; decreases in the volume of high loan-to-value mortgage
originations or increases in mortgage insurance cancellations in
the United States; increases in
the use of alternatives to private mortgage insurance in
the United States and reductions
by lenders in the level of coverage they select; the impact of the
use of reinsurance with reinsurance companies affiliated with the
company's U.S. mortgage lending customers; legal actions under the
Real Estate Settlement Procedures Act of 1974 (RESPA); potential
liabilities in connection with the company's U.S. contract
underwriting services; and the impact on the statutory capital and
risk-to-capital ratios of the U.S. mortgage insurance business from
variations in the valuation of affiliate investments;
- Other risks, including the risk that the company's
strategy may not be successfully implemented; the company's Capital
Plan may not achieve its anticipated benefits; adverse market or
other conditions might delay or impede the minority sale of the
company's mortgage insurance business in Australia; the possibility that in certain
circumstances we will be obligated to make payments to General
Electric Company (GE) under the tax matters agreement with GE even
if the company's corresponding tax savings are never realized and
payments could be accelerated in the event of certain changes in
control; provisions of our certificate of incorporation and bylaws
and the tax matters agreement with GE may discourage takeover
attempts and business combinations that stockholders might consider
in their best interests; and the impact of the expense reduction
announced on June 6, 2013 is not as
anticipated and the company may lose key personnel related to
actions like this as well as general uncertainty in the timing of
the company's turnaround; and
- Risks relating to the company's common stock, including
the suspension of dividends and stock price fluctuations.
The company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future developments or otherwise.
Condensed
Consolidated Statements of Income
|
|
(Amounts in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
|
|
September
30,
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Revenues:
|
|
|
|
|
|
|
|
Premiums
|
|
$
|
1,291
|
|
$
|
1,313
|
|
Net investment
income
|
|
|
801
|
|
|
825
|
|
Net investment gains
(losses)
|
|
|
(23)
|
|
|
9
|
|
Insurance and
investment product fees and other
|
|
|
248
|
|
|
309
|
|
|
Total
revenues
|
|
|
2,317
|
|
|
2,456
|
|
Benefits and
expenses:
|
|
|
|
|
|
|
|
Benefits and other
changes in policy reserves
|
|
|
1,169
|
|
|
1,363
|
|
Interest
credited
|
|
|
184
|
|
|
193
|
|
Acquisition and
operating expenses, net of
|
|
|
|
|
|
|
|
deferrals
|
|
|
407
|
|
|
443
|
|
Amortization of
deferred acquisition costs and
|
|
|
|
|
|
|
|
intangibles
|
|
|
182
|
|
|
160
|
|
Goodwill
impairment
|
|
|
—
|
|
|
89
|
|
Interest
expense
|
|
|
124
|
|
|
126
|
|
|
Total benefits and
expenses
|
|
|
2,066
|
|
|
2,374
|
|
Income from
continuing operations before income taxes
|
|
|
251
|
|
|
82
|
|
Provision for income
taxes
|
|
|
105
|
|
|
23
|
|
Income from
continuing operations
|
|
|
146
|
|
|
59
|
|
Income from
discontinued operations, net of taxes
|
|
|
2
|
|
|
12
|
|
Net income
|
|
|
148
|
|
|
71
|
|
Less: net income
attributable to noncontrolling interests
|
|
|
40
|
|
|
36
|
|
Net income available
to Genworth Financial, Inc.'s
|
|
|
|
|
|
|
|
common
stockholders
|
|
$
|
108
|
|
$
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations available to
|
|
|
|
|
|
|
|
Genworth
Financial, Inc.'s common stockholders
|
|
|
|
|
|
|
|
per common
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.21
|
|
$
|
0.05
|
|
|
Diluted
|
|
$
|
0.21
|
|
$
|
0.05
|
|
Net income available
to Genworth Financial, Inc.'s
|
|
|
|
|
|
|
|
common
stockholders per common share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.22
|
|
$
|
0.07
|
|
|
Diluted
|
|
$
|
0.22
|
|
$
|
0.07
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
494.0
|
|
|
491.7
|
|
|
Diluted
|
|
|
499.3
|
|
|
493.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Operating Income to Net Income
|
(Amounts in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
|
September
30,
|
|
|
|
|
|
2013
|
|
2012
|
Net operating income
(loss):
|
|
|
|
|
|
|
U.S. Life Insurance
Division
|
|
|
|
|
|
|
|
U.S. Life Insurance
segment
|
|
|
|
|
|
|
|
Life
Insurance
|
|
$
|
54
|
|
$
|
22
|
|
Long Term
Care
|
|
|
41
|
|
|
45
|
|
Fixed
Annuities
|
|
|
16
|
|
|
19
|
|
Total U.S. Life
Insurance segment
|
|
|
111
|
|
|
86
|
|
Total U.S. Life
Insurance Division
|
|
|
111
|
|
|
86
|
Global Mortgage
Insurance Division
|
|
|
|
|
|
|
|
International
Mortgage Insurance segment
|
|
|
|
|
|
|
|
Canada
|
|
|
41
|
|
|
42
|
|
Australia
|
|
|
61
|
|
|
57
|
|
Other
Countries
|
|
|
(12)
|
|
|
(5)
|
|
Total International
Mortgage Insurance segment
|
|
|
90
|
|
|
94
|
|
U.S. Mortgage
Insurance segment
|
|
|
(3)
|
|
|
(37)
|
|
Total Global Mortgage
Insurance Division
|
|
|
87
|
|
|
57
|
Corporate and Other
Division
|
|
|
|
|
|
|
|
International
Protection segment
|
|
|
4
|
|
|
8
|
|
Runoff
segment
|
|
|
25
|
|
|
9
|
|
Corporate and
Other
|
|
|
(108)
|
|
|
(49)
|
|
Total Corporate and
Other Division
|
|
|
(79)
|
|
|
(32)
|
Net operating
income
|
|
|
119
|
|
|
111
|
Adjustments to net
operating income:
|
|
|
|
|
|
|
Net investment gains
(losses), net of taxes and other
|
|
|
|
|
|
|
|
adjustments
|
|
|
(13)
|
|
|
(2)
|
Goodwill impairment,
net of taxes
|
|
|
—
|
|
|
(86)
|
Income from
discontinued operations, net of taxes
|
|
|
2
|
|
|
12
|
Net income available
to Genworth Financial, Inc.'s
|
|
|
|
|
|
|
|
common
stockholders
|
|
|
108
|
|
|
35
|
Add: net income
attributable to noncontrolling interests
|
|
|
40
|
|
|
36
|
Net income
|
|
$
|
148
|
|
$
|
71
|
|
|
|
|
|
|
|
|
|
|
Net income available
to Genworth Financial, Inc.'s
|
|
|
|
|
|
|
|
common stockholders
per common share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.22
|
|
$
|
0.07
|
|
Diluted
|
|
$
|
0.22
|
|
$
|
0.07
|
Net operating income
per common share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.24
|
|
$
|
0.23
|
|
Diluted
|
|
$
|
0.24
|
|
$
|
0.22
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
494.0
|
|
|
491.7
|
|
Diluted
|
|
|
499.3
|
|
|
493.9
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets
|
(Amounts in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
Assets
|
|
|
|
|
|
Cash, cash
equivalents and invested assets
|
|
$
|
73,758
|
|
$
|
78,726
|
|
Deferred acquisition
costs
|
|
|
5,256
|
|
|
5,036
|
|
Intangible
assets
|
|
|
404
|
|
|
366
|
|
Goodwill
|
|
|
867
|
|
|
868
|
|
Reinsurance
recoverable
|
|
|
17,224
|
|
|
17,230
|
|
Other
assets
|
|
|
668
|
|
|
710
|
|
Separate account
assets
|
|
|
9,957
|
|
|
9,937
|
|
Assets associated
with discontinued operations
|
|
|
—
|
|
|
439
|
|
|
|
|
Total
assets
|
|
$
|
108,134
|
|
$
|
113,312
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Future policy
benefits
|
|
$
|
33,612
|
|
$
|
33,505
|
|
|
Policyholder account
balances
|
|
|
25,266
|
|
|
26,262
|
|
|
Liability for policy
and contract claims
|
|
|
7,271
|
|
|
7,509
|
|
|
Unearned
premiums
|
|
|
4,160
|
|
|
4,333
|
|
|
Deferred tax and
other liabilities
|
|
|
4,900
|
|
|
6,746
|
|
|
Borrowings related to
securitization entities
|
|
|
297
|
|
|
336
|
|
|
Non-recourse funding
obligations
|
|
|
2,046
|
|
|
2,066
|
|
|
Long-term
borrowings
|
|
|
4,780
|
|
|
4,776
|
|
|
Separate account
liabilities
|
|
|
9,957
|
|
|
9,937
|
|
|
Liabilities
associated with discontinued operations
|
|
|
—
|
|
|
61
|
|
|
|
|
Total
liabilities
|
|
|
92,289
|
|
|
95,531
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
1
|
|
|
1
|
|
|
Additional paid-in
capital
|
|
|
12,149
|
|
|
12,127
|
|
|
Accumulated other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
Net unrealized
investment gains (losses):
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized gains
(losses) on securities not
|
|
|
|
|
|
|
|
|
|
|
|
|
other-than-temporarily impaired
|
|
|
1,106
|
|
|
2,692
|
|
|
|
|
|
Net unrealized gains
(losses) on other-than-
|
|
|
|
|
|
|
|
|
|
|
|
|
temporarily impaired
securities
|
|
|
3
|
|
|
(54)
|
|
|
|
|
Net unrealized
investment gains (losses)
|
|
|
1,109
|
|
|
2,638
|
|
|
|
|
Derivatives
qualifying as hedges
|
|
|
1,442
|
|
|
1,909
|
|
|
|
|
Foreign currency
translation and other adjustments
|
|
|
388
|
|
|
655
|
|
|
Total accumulated
other comprehensive income (loss)
|
|
|
2,939
|
|
|
5,202
|
|
|
Retained
earnings
|
|
|
2,215
|
|
|
1,863
|
|
|
Treasury stock, at
cost
|
|
|
(2,700)
|
|
|
(2,700)
|
|
|
|
|
Total Genworth
Financial, Inc.'s stockholders' equity
|
|
|
14,604
|
|
|
16,493
|
|
|
Noncontrolling
interests
|
|
|
1,241
|
|
|
1,288
|
|
|
|
|
Total stockholders'
equity
|
|
|
15,845
|
|
|
17,781
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
108,134
|
|
$
|
113,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of Foreign
Exchange on Operating Results7
|
Three months ended
September 30, 2013
|
|
|
|
|
|
|
|
|
|
Percentages
|
|
Percentages
|
|
|
Including
Foreign
|
|
Excluding
Foreign
|
|
|
Exchange
|
|
Exchange8
|
|
Canada Mortgage
Insurance (MI):
|
|
|
|
|
|
|
|
|
Flow new insurance
written
|
|
(17)
|
%
|
|
(15)
|
%
|
|
|
Flow new insurance
written (3Q13 vs. 2Q13)
|
|
28
|
%
|
|
30
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Australia
MI:
|
|
|
|
|
|
|
|
|
Flow new insurance
written
|
|
(9)
|
%
|
|
1
|
%
|
|
|
Flow new insurance
written (3Q13 vs. 2Q13)
|
|
(8)
|
%
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Investment Gains (Losses)
(Amounts in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
|
September
30,
|
|
|
2013
|
|
2012
|
Net investment gains
(losses), gross
|
|
$
|
(23)
|
|
$
|
9
|
Adjustments
for:
|
|
|
|
|
|
|
|
Deferred acquisition
costs and other intangible amortization and certain benefit
reserves
|
|
|
6
|
|
|
(9)
|
|
Net investment gains
(losses) attributable to noncontrolling interests
|
|
|
(4)
|
|
|
(2)
|
|
Taxes
|
|
|
8
|
|
|
—
|
Net investment gains
(losses), net of taxes and other adjustments
|
|
$
|
(13)
|
|
$
|
(2)
|
Reconciliation of
Core Yield to Reported Yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
three
|
|
|
|
|
|
|
months
ended
|
|
|
|
|
|
|
September
30,
|
|
(Assets - amounts
in billions)
|
|
2013
|
|
Reported Total
Invested Assets and Cash
|
|
$
|
73.1
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Securities
lending
|
|
|
0.2
|
|
|
|
Unrealized gains
(losses)
|
|
|
3.3
|
|
|
|
Derivative
counterparty collateral
|
|
|
0.3
|
|
|
Adjusted end of
period invested assets
|
|
$
|
69.3
|
|
|
|
|
|
|
|
|
|
|
|
Average Invested
Assets Used in Reported Yield Calculation
|
|
$
|
68.6
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Restricted commercial
mortgage loans and other invested assets related to
|
|
|
|
|
|
|
securitization entities9
|
|
|
0.3
|
|
|
Average Invested
Assets Used in Core Yield Calculation
|
|
$
|
68.3
|
|
|
|
|
|
|
|
|
|
|
|
(Income - amounts
in
millions)
|
|
|
|
|
|
Reported Net
Investment Income
|
|
$
|
801
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Bond calls and
commercial mortgage loan prepayments
|
|
|
15
|
|
|
|
Reinsurance10
|
|
|
17
|
|
|
|
Other non-core
items11
|
|
|
4
|
|
|
|
Restricted commercial
mortgage loans and other invested assets related to
|
|
|
|
|
|
|
securitization entities9
|
|
|
4
|
|
|
Core Net Investment
Income
|
|
$
|
761
|
|
|
|
|
|
|
|
|
|
|
|
Reported
Yield
|
|
|
4.67
|
%
|
|
Core Yield
|
|
|
4.46
|
%
|
1 Unless otherwise stated, all references in this
press release to net income, net income per share, book value, book
value per share and stockholders' equity should be read as net
income available to Genworth's common stockholders, net income
available to Genworth's common stockholders per share, book value
available to Genworth's common stockholders, book value available
to Genworth's common stockholders per share and stockholders'
equity available to Genworth's common stockholders,
respectively.
2 This is a financial measure not calculated based on
U.S. Generally Accepted Accounting Principles (Non-GAAP). See
the Use of Non-GAAP Measures section of this press release for
additional information.
3 Company estimate for the third quarter of 2013, due
to timing of the filing of statutory statements.
4 Percent change excludes the impact of foreign
exchange.
5 Holding company cash and liquid assets comprises
assets held in Genworth Holdings, Inc. (the issuer of outstanding
public company debt) which is now a subsidiary of Genworth
Financial, Inc.
6 Comprises cash and cash equivalents of $1,164 million and U.S. government bonds of
$150 million.
7 All percentages are comparing the third quarter of
2013 to the third quarter of 2012 unless otherwise stated.
8 The impact of foreign exchange was calculated using
the comparable prior period exchange rates.
9 Represents the incremental assets and investment
income related to restricted commercial mortgage loans and other
invested assets.
10 Represents imputed investment income related to
reinsurance agreements in the lifestyle protection insurance
business.
11 Includes cost basis adjustments on structured
securities, preferred stock income and various other immaterial
items.
SOURCE Genworth Financial, Inc.