RICHMOND, Va., Feb. 10, 2015 /PRNewswire/ --
- Long Term Care Insurance (LTC) Active Life Margin Review
Substantially Complete (Pending Regulatory Filings); Majority Of
LTC Block Has Positive Margin But Acquired Blocks And New York
Subsidiary Had Negative Margins Resulting In 4Q14
Charges
- Commenced Strategic Review Of Businesses
- Initial Charges Taken To Rationalize Portfolio
- Mortgage Insurance Turnaround Near Complete; Continued Strong
Loss Ratio In Australia, Canada
And United States
- LTC Remains A Priority; Seeking Structural And Regulatory
Reform
- Retained Solid Capital Positions And Significant Holding
Company Liquidity
Genworth Financial, Inc. (NYSE: GNW) today reported results for
the period ended December 31, 2014.
The company reported a net loss1 of $760 million, or $1.53 per diluted share, compared with net income
of $208 million, or $0.41 per diluted share, in the fourth quarter of
2013. The net operating loss2 for the fourth quarter of
2014 was $416 million, or
$0.84 per diluted share, compared
with net operating income of $193
million, or $0.38 per diluted
share, in the fourth quarter of 2013.
The company reported a net loss of $1,244
million, or $2.51 per diluted
share, in 2014, compared with net income of $560 million, or $1.12 per diluted share, in 2013. The company
reported a net operating loss of $381
million, or $0.77 per diluted
share, in 2014, compared with net operating income of $616 million, or $1.24 per diluted share, in 2013.
The current quarter results included an after-tax GAAP charge of
$478 million related to the LTC
active life margin review of its blocks acquired before 1996.
Additionally, the company's New
York subsidiary had a preliminary3 incremental
negative margin of $195 million. The
company increased statutory reserves by $39
million in the New York
subsidiary in the fourth quarter, with the remaining $156 million recognized over the next four years.
The remaining LTC blocks have positive margin. The company also
recorded non-cash charges of $340
million after-tax reflecting the write off of remaining life
insurance and LTC goodwill, as well as a tax charge related to a
change in its permanent reinvestment assertion in Australia mortgage insurance (MI) and a tax
benefit in connection with the company's plan to sell the lifestyle
protection insurance business, which was previously identified as
non-core, discussed below.
In response to current market realities, the company is
embarking on a multistep restructuring plan targeting cash savings
in excess of $100 million pre-tax
over the next two years. In January, the company began the
consolidation of its U.S. Life Insurance Division and corporate
holding company functions, which resulted in the reduction of key
leadership positions. In connection with the company's plan to sell
the lifestyle protection insurance business, the company completed
an internal debt restructuring recognizing tax benefits of
$108 million in the quarter impacting
net loss. In addition, while no decisions have been made, the
company recognized a tax charge of $174
million as it is no longer asserting its intent to
permanently reinvest earnings from Genworth Mortgage Insurance
Australia Limited.
"I am disappointed by the continued challenges in our older LTC
blocks and how it is overshadowing otherwise strong performance and
momentum in other businesses, however we have taken steps on many
fronts to deal with these challenges in order to strengthen and
rebuild the future. During the quarter we conducted a thorough
review of our portfolio, exploring all options to maximize
long-term shareholder value. As a result, we are taking proactive
measures to leverage our strengths, namely in the Global Mortgage
Insurance Division, and rationalize our portfolio including
reducing costs and debt levels. These efforts will better
position the company for profitable growth, and improve our capital
position and return on equity," said Tom
McInerney, President and CEO. "While LTC continues to
be challenged, we plan to capitalize on our industry leadership and
drive regulatory changes that are necessary to sustain this
business long term."
Consolidated Net
Income (Loss) &
|
Net Operating
Income (Loss)
|
|
|
|
Three months ended
December 31
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
Per
|
|
|
|
|
Per
|
|
|
|
|
|
|
|
|
|
diluted
|
|
|
|
|
diluted
|
|
Total
|
|
(Amounts in
millions, except per share)
|
|
Total
|
|
share
|
|
Total
|
|
share
|
|
%
change
|
|
Net income (loss)
available to Genworth's
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common
stockholders
|
|
$
|
(760)
|
|
$
|
(1.53)
|
|
$
|
208
|
|
$
|
0.41
|
|
NM4
|
|
Adjustment: Net
income attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noncontrolling
interests in Australia MI
|
|
|
22
|
|
|
0.04
|
|
|
N/A
|
|
|
N/A
|
|
N/A
|
|
Net income (loss)
available to Genworth's common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stockholders before
net income attributable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to noncontrolling
interests in Australia MI2
|
|
$
|
(738)
|
|
$
|
(1.49)
|
|
$
|
208
|
|
$
|
0.41
|
|
NM4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income
(loss)
|
|
$
|
(416)
|
|
$
|
(0.84)
|
|
$
|
193
|
|
$
|
0.38
|
|
NM4
|
|
Adjustment: Net
operating income attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noncontrolling
interests in Australia MI
|
|
|
21
|
|
|
0.04
|
|
|
N/A
|
|
|
N/A
|
|
N/A
|
|
Net operating income
(loss) before net operating
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income attributable
to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Australia
MI2
|
|
$
|
(395)
|
|
$
|
(0.79)
|
|
$
|
193
|
|
$
|
0.38
|
|
NM4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted shares5
|
|
|
496.7
|
|
|
|
|
|
501.2
|
|
|
|
|
|
|
Book value per
share
|
|
$
|
30.04
|
|
|
|
|
$
|
29.08
|
|
|
|
|
|
|
Book value per share,
excluding accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other comprehensive
income (loss)
|
|
$
|
21.09
|
|
|
|
|
$
|
23.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Net
Income (Loss) &
|
Net Operating
Income (Loss)
|
|
|
|
Twelve months ended
December 31
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
Per
|
|
|
|
|
Per
|
|
|
|
|
|
|
|
|
|
diluted
|
|
|
|
|
diluted
|
|
Total
|
|
(Amounts in
millions, except per share)
|
|
Total
|
|
share
|
|
Total
|
|
share
|
|
%
change
|
|
Net income (loss)
available to Genworth's
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common
stockholders
|
|
$
|
(1,244)
|
|
$
|
(2.51)
|
|
$
|
560
|
|
$
|
1.12
|
|
NM4
|
|
Adjustment: Net
income attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noncontrolling
interests in Australia MI
|
|
|
56
|
|
|
0.11
|
|
|
N/A
|
|
|
N/A
|
|
N/A
|
|
Net income (loss)
available to Genworth's common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stockholders before
net income attributable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to noncontrolling
interests in Australia MI2
|
|
$
|
(1,188)
|
|
$
|
(2.39)
|
|
$
|
560
|
|
$
|
1.12
|
|
NM4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income
(loss)
|
|
$
|
(381)
|
|
$
|
(0.77)
|
|
$
|
616
|
|
$
|
1.24
|
|
(162)%
|
|
Adjustment: Net
operating income attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noncontrolling
interests in Australia MI
|
|
|
55
|
|
|
0.11
|
|
|
N/A
|
|
|
N/A
|
|
N/A
|
|
Net operating income
(loss) before net operating
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income attributable
to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Australia
MI2
|
|
$
|
(326)
|
|
$
|
(0.66)
|
|
$
|
616
|
|
$
|
1.24
|
|
(153)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted shares5
|
|
|
496.4
|
|
|
|
|
|
498.7
|
|
|
|
|
|
|
Book value per
share
|
|
$
|
30.04
|
|
|
|
|
$
|
29.08
|
|
|
|
|
|
|
Book value per share,
excluding accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other comprehensive
income (loss)
|
|
$
|
21.09
|
|
|
|
|
$
|
23.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the fourth quarter of 2014 in connection with the
preparation of its financial statements, the company recorded
after-tax goodwill impairments of $129
million in the long term care insurance business and
$145 million in the life insurance
business, in each case, as a result of current market conditions
and potential further decreases in sales. The impairments reduced
the goodwill of these two businesses to zero.
Net investment losses, net of taxes and other adjustments, were
$4 million in the quarter, compared
to net investment gains, net of taxes and other adjustments, of
$15 million in the prior year.
On May 21, 2014, the company
completed the minority initial public offering (IPO) of 33.8
percent of its Australia MI business and as a result, net income
attributable to noncontrolling interests in the Australia MI
business was $22 million in the
quarter. The company's net loss before net income attributable to
noncontrolling interests in the Australia MI business was
$738 million, or $1.49 per diluted share, in the fourth quarter of
2014 compared with net income available to Genworth's common
stockholders of $208 million, or
$0.41 per diluted share, in the
fourth quarter of 2013. The company's net operating loss before net
operating income attributable to noncontrolling interests in the
Australia MI business for the fourth quarter of 2014 was
$395 million, or $0.79 per diluted share, compared with net
operating income of $193 million, or
$0.38 per diluted share, in the
fourth quarter of 2013.
Net operating income (loss) results are summarized in the table
below:
Net Operating
Income (Loss)
|
(Amounts in
millions)
|
|
Q4
14
|
|
Q3
14
|
|
Q4
13
|
U.S. Life Insurance
Division:
|
|
|
|
|
|
|
|
|
|
|
U.S. Life
Insurance
|
|
$
|
(482)
|
|
$
|
(322)
|
|
$
|
119
|
|
Total U.S. Life
Insurance Division
|
|
|
(482)
|
|
|
(322)
|
|
|
119
|
Global Mortgage
Insurance Division:
|
|
|
|
|
|
|
|
|
|
|
International
Mortgage Insurance
|
|
|
626
|
|
|
876
|
|
|
101
|
|
U.S. Mortgage
Insurance (U.S. MI)
|
|
|
21
|
|
|
(2)
|
|
|
6
|
|
Total Global
Mortgage Insurance Division
|
|
|
83
|
|
|
85
|
|
|
107
|
Corporate and Other
Division:
|
|
|
|
|
|
|
|
|
|
|
International
Protection
|
|
|
(4)
|
|
|
3
|
|
|
13
|
|
Runoff
|
|
|
16
|
|
|
5
|
|
|
19
|
|
Corporate and
Other
|
|
|
(29)
|
|
|
(88)
|
|
|
(65)
|
|
Total Corporate
and Other Division
|
|
|
(17)
|
|
|
(80)
|
|
|
(33)
|
Total Net
Operating Income (Loss)
|
|
$
|
(416)
|
|
$
|
(317)
|
|
$
|
193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income (loss) excludes net investment gains
(losses), goodwill impairments, gains (losses) on the sale of
businesses, gains (losses) on the early extinguishment of debt,
gains (losses) on insurance block transactions and other
adjustments, net of taxes. A reconciliation of net operating income
(loss) of segments and Corporate and Other activities to net income
(loss) 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
translating foreign denominated activity into U.S. dollars (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 results in the fourth quarter of
2014 was an unfavorable impact of $3
million versus the prior quarter and $6 million versus the prior year.
U.S. Life Insurance Division
U.S. Life Insurance Division net operating loss was $482 million, compared with a net operating loss
of $322 million in the prior quarter
and net operating income of $119
million a year ago.
U.S. Life
Insurance Division
|
Net Operating
Income (Loss)
|
(Amounts in
millions)
|
|
Q4
14
|
|
Q3
14
|
|
Q4
13
|
U.S. Life
Insurance
|
|
|
|
|
|
|
|
|
|
Long Term Care
Insurance
|
|
$
|
(506)
|
|
$
|
(361)
|
|
$
|
42
|
Life Insurance
|
|
|
1
|
|
|
13
|
|
|
56
|
Fixed Annuities
|
|
|
23
|
|
|
26
|
|
|
21
|
Total U.S. Life
Insurance
|
|
|
(482)
|
|
|
(322)
|
|
|
119
|
Total U.S. Life
Insurance
|
|
$
|
(482)
|
|
$
|
(322)
|
|
$
|
119
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
(Amounts in
millions)
|
|
Q4
14
|
|
Q3
14
|
|
Q4
13
|
U.S. Life
Insurance
|
|
|
|
|
|
|
|
|
|
Long Term Care Insurance
|
|
|
|
|
|
|
|
|
|
Individual
|
|
$
|
17
|
|
$
|
28
|
|
$
|
24
|
Group
|
|
|
6
|
|
|
1
|
|
|
2
|
Life Insurance
|
|
|
|
|
|
|
|
|
|
Term Life
|
|
|
11
|
|
|
13
|
|
|
9
|
Term Universal Life
|
|
|
—
|
|
|
—
|
|
|
—
|
Universal Life
|
|
|
7
|
|
|
11
|
|
|
5
|
Linked Benefits
|
|
|
5
|
|
|
4
|
|
|
3
|
Fixed Annuities
|
|
|
495
|
|
|
371
|
|
|
730
|
|
|
|
|
|
|
|
Account
Value
|
|
|
|
|
|
|
(Amounts in millions)
|
|
Q4
14
|
|
Q3
14
|
|
Q4
13
|
Fixed
Annuities
|
|
$
|
19,278
|
|
$
|
19,156
|
|
$
|
18,737
|
|
|
|
|
|
|
|
|
|
|
U.S. Life Insurance Division
Key Points
- U.S. Life Insurance Division net operating loss was
$482 million, compared with a net
operating loss of $322 million in the
prior quarter and net operating income of $119 million a year ago. The net operating loss
in the quarter reflected the completion of the company's annual
review of its LTC active life margins that resulted in after-tax
charges of $478 million on its
acquired blocks.
- Compared to the prior quarter, sales results were mixed with
individual LTC and life insurance products lower but higher for
fixed annuities.
- The consolidated risk-based capital (RBC) ratio is estimated to
be approximately 430 percent7, down from approximately
445 percent at the end of the third quarter of 2014.
- As of December 31, 2014, 47
states have approved the initial round of premium rate increases
and six states have approved a second round of premium rate
increases as part of the 2012 in force premium rate action. The
company continues to expect to achieve $250
to $300 million of additional annual premiums when fully
implemented by 2017.
- 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. As of December 31,
2014, 22 states have approved these rate increases.
Long Term Care Insurance
Long term care insurance net operating loss was $506 million, compared with a net operating loss
of $361 million in the prior quarter
and net operating income of $42
million in the prior year.
During the quarter, the company substantially completed (pending
regulatory filings) its annual review of active life margins,
including a review of the associated assumptions and methodologies.
The company updated its margin assumptions and methodologies,
informed by the work done in connection with the claim reserve
review completed in the third quarter of 2014. The updates resulted
in changes to claim termination rates and benefit utilization
assumptions and associated methodologies, which materially reduced
the company's active life margins. As part of the review, the
company also developed updated assumptions relating to planned in
force premium rate increases on in force policies that offset much
of the reduction on margins from the updated margin assumptions,
and also reviewed its other active life margin assumptions,
including but not limited to claims frequency, and investment
allocation and returns. As previously disclosed, the company is
required to separately test its acquired LTC blocks for
recoverability as part of its loss recognition testing margin
review which resulted in a negative margin for these blocks, and
the company unlocked the associated active life reserve
assumptions, while the margin on the remaining blocks was positive.
The current quarter impact of this unlocking, as well as additional
adjustments to reserves, are as follows:
- Reserves were increased $729
million pre-tax or $474
million after-tax and the present value of future profits
balance of $6 million pre-tax or
$4 million after-tax was written off
as a result of annual loss recognition testing;
- Claim reserves were increased a net $24
million pre-tax or $16 million
after-tax, as a result of a $44
million after-tax correction to the prior quarter's claim
reserve primarily related to claims in course of settlement,
partially offset by a $28 million
after-tax refinement of assumptions relating to claim termination
rates.
Results for the quarter also included lower benefits from
premium increases and reduced benefit options of $3 million after-tax versus the prior quarter and
a favorable benefit of $7 million
after-tax versus the prior year related to the premium increases
approved and implemented to date.
Benefits and other changes in policy reserves increased
$151 million after-tax versus the
prior quarter and increased $549
million after-tax versus the prior year. Results versus the
prior quarter were primarily impacted by the completion of the
annual review of active life margins completed in the current
quarter and the impact in the prior quarter from the completion of
the claim reserve review, in addition to lower reinsurance benefits
in the current quarter. Performance was unfavorable to the prior
year primarily from the completion of the annual review of active
life margins in the current quarter, but was also impacted by
higher new claim severity assumptions resulting from the claim
reserve review completed in the third quarter of 2014 in addition
to higher frequency of new claims.
Individual LTC sales of $17
million were lower than the prior quarter and the prior
year. In July 2014, the company
launched its Privileged Choice Flex 3.0 product. This product is
now available in 45 states. Sales are expected to continue at low
levels in the near term due to the introduction of this higher
priced product and ratings pressure.
Life Insurance
Life insurance net operating income was $1 million, compared with $13 million in the prior quarter and $56 million in the prior year. Results in the
quarter included a correction to a reserve calculation on a
reinsurance transaction of $32
million. Mortality performance was $14 million favorable compared to the prior
quarter and $10 million unfavorable
compared to the prior year. Prior quarter results included
$10 million of unfavorable items and
prior year results included $14
million of favorable items.
Sales of $23 million decreased
compared to the prior quarter and increased compared to the prior
year. Linked benefit product deposits were $42 million in the quarter, down from
$47 million in the prior quarter and
up from $27 million in the prior
year.
Fixed Annuities
Fixed annuities net operating income was $23 million, compared with $26 million in the prior quarter and $21 million in the prior year. Results in the
quarter reflected slightly improved mortality results and lower
expenses but also included higher amortization of deferred
acquisition costs versus the prior quarter and the prior year.
Sales in the quarter totaled $495
million, up sequentially but down versus the prior year
given the lower interest rate environment.
U.S. Life Insurance Division Statutory Capital
The consolidated RBC ratio is estimated to be approximately 430
percent7, down from approximately 445 percent at the end
of the third quarter of 2014, and the consolidated U.S. life
insurance companies unassigned surplus is estimated to be
$155 million7, down from
approximately $290 million at the end
of the third quarter of 2014. Primary drivers in the quarter
include:
- $39 million increase in LTC cash
flow testing reserves in the New
York subsidiary as part of the annual review of LTC active
life margins. Remaining $156 million
reserve increase spread over next four years;
- $70 million reserve increase
relating to life insurance products with secondary guarantees in
the New York subsidiary;
- Approximately $80 million
unassigned surplus benefit from the completion of a life
reinsurance transaction; and
- Approximately $155 million
unfavorable taxes associated with the planned sale of the lifestyle
protection insurance business, from intercompany tax sharing
agreements. Brookfield Life &
Annuity Insurance Company, the parent company of the lifestyle
protection insurance business, had a favorable impact of
approximately $230 million.
Global Mortgage Insurance Division
Global Mortgage Insurance Division had net operating income of
$83 million, compared with
$85 million in the prior quarter and
$107 million a year ago.
Global Mortgage
Insurance Division
|
Net Operating
Income (Loss)
|
(Amounts in
millions)
|
|
Q4
14
|
|
Q3
14
|
|
Q4
13
|
International
Mortgage Insurance
|
|
|
|
|
|
|
|
|
|
Canada
|
|
$
|
36
|
|
$
|
46
|
|
$
|
44
|
Australia
|
|
|
336
|
|
|
486
|
|
|
66
|
Other Countries
|
|
|
(7)
|
|
|
(7)
|
|
|
(9)
|
Total
International Mortgage Insurance
|
|
|
62
|
|
|
87
|
|
|
101
|
U.S. Mortgage
Insurance
|
|
|
21
|
|
|
(2)
|
|
|
6
|
Total Global
Mortgage Insurance
|
|
$
|
83
|
|
$
|
85
|
|
$
|
107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
(Amounts in
billions)
|
|
Q4
14
|
|
Q3
14
|
|
Q4
13
|
International
Mortgage Insurance
|
|
|
|
|
|
|
|
|
|
Flow
|
|
|
|
|
|
|
|
|
|
Canada
|
|
$
|
5.5
|
|
$
|
6.8
|
|
$
|
5.0
|
Australia
|
|
|
8.0
|
|
|
8.1
|
|
|
9.0
|
Other Countries
|
|
|
0.5
|
|
|
0.4
|
|
|
0.5
|
Bulk
|
|
|
|
|
|
|
|
|
|
Canada
|
|
|
2.3
|
|
|
5.6
|
|
|
2.4
|
Australia
|
|
|
0.1
|
|
|
1.0
|
|
|
—
|
Other Countries
|
|
|
—
|
|
|
—
|
|
|
0.6
|
U.S. Mortgage
Insurance
|
|
|
|
|
|
|
|
|
|
Primary Flow
|
|
|
6.9
|
|
|
7.5
|
|
|
4.9
|
Primary Bulk
|
|
|
—
|
|
|
—
|
|
|
—
|
International Mortgage Insurance Segment
Key Points
- Reported International Mortgage Insurance segment net operating
income was $62 million, compared with
$87 million in the prior quarter and
$101 million a year ago. Results in
the quarter reflected a $21 million
decrease in net operating income versus the prior year as a result
of the minority IPO of 33.8 percent of the Australia MI business,
which was completed on May 21, 2014.
Results were impacted by less favorable tax benefits of
$23 million versus the prior quarter
and $21 million versus the prior
year. Results were also impacted by unfavorable foreign exchange of
$5 million versus the prior year. The
loss ratio was 26 percent in Canada and 15 percent in Australia.
- In Canada, flow new insurance
written (NIW) was down 16 percent8 sequentially and up
18 percent8 year over year. In addition, in the current
quarter, the company completed $2.3
billion of bulk transactions, consisting of low
loan-to-value prime loans.
- In Australia, flow NIW was up
five percent8 sequentially and down six
percent8 year over year.
- The Canadian and Australian MI businesses continue to maintain
sound capital positions and paid $109
million in dividends to the holding company in 2014.
Canada Mortgage Insurance
Canada reported net operating
income of $36 million versus
$46 million in the prior quarter and
$44 million in the prior year. The
loss ratio in the quarter was 26 percent, up five points from the
prior quarter from seasonally higher new delinquencies, net of
cures, and up four points from the prior year. Results included
less favorable tax benefits of $6
million versus the prior quarter and $5 million versus the prior year and higher
expenses versus the prior quarter. Flow NIW was down 16
percent8 sequentially primarily from a seasonally
smaller originations market and up 18 percent8 year over
year from a larger originations market. In addition, the company
completed several bulk transactions in the quarter of approximately
$2.3 billion in total, consisting of
low loan-to-value prime loans, reflecting its selective
participation in this market. At quarter end, the Canada mortgage insurance business had a
minimum capital test (MCT) ratio of 225 percent7, in
excess of the targeted level.
Australia Mortgage Insurance
Australia reported net
operating income of $33 million
versus $48 million in the prior
quarter and $66 million in the prior
year. Results in the quarter reflected a $21
million decrease in net operating income versus the prior
year as a result of the minority IPO of 33.8 percent of the
Australia MI business, which was completed on May 21, 2014. The loss ratio in the quarter was
15 percent, down six points sequentially from seasonally lower new
delinquencies and favorable aging of existing delinquencies and
down six points from the prior year. Results were impacted by less
favorable tax benefits of $17 million
versus the prior quarter and $16
million versus the prior year, including a $7 million net unfavorable impact in the current
quarter. Flow NIW was up five percent8 sequentially
from normal seasonal variation and down six percent8
year over year from a slightly smaller mortgage insurance market.
At quarter end, the Australia
mortgage insurance business had a prescribed capital amount (PCA)
ratio of 159 percent7, in excess of the targeted
range.
Other Countries Mortgage Insurance
Other Countries had a net operating loss of $7 million, compared to $7
million in the prior quarter and $9
million in the prior year. During the quarter, a lender
settlement was executed reducing outstanding risk in force in
Ireland from approximately
$700 million to $60 million.
U.S. Mortgage Insurance Segment
Key Points
- U.S. MI net operating income was $21
million, compared with a net operating loss of $2 million in the prior quarter and net operating
income of $6 million in the prior
year. Results in the prior quarter included $4 million of favorable tax benefits from a prior
year true-up, as well as $34 million
of after-tax accruals recorded principally in connection with the
settlement agreement with Bank of America as well as discussions
with another servicer in an effort to resolve pending disputes over
loss mitigation activities. The company has recently received
government-sponsored enterprise (GSE) approvals in connection with
the Bank of America settlement agreement and resolved the servicer
dispute consistent with prior period accruals. The loss ratio in
the current quarter was 61 percent.
- Flow NIW decreased eight percent from the prior quarter and
increased 41 percent from the prior year to $6.9 billion.
- The risk-to-capital ratio for Genworth Mortgage Insurance
Corporation (GMICO) is estimated at 14.2:17 and the
combined risk-to-capital ratio is estimated at 14.5:17
as of December 31, 2014.
Total flow delinquencies decreased three percent sequentially
and 22 percent versus the prior year. New flow delinquencies
decreased approximately six percent from the prior quarter from
recent 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 $30,200,
down slightly from the prior quarter.
Total losses were down $50 million
versus the prior quarter reflecting the pre-tax accruals of
approximately $53 million recorded in
the third quarter principally in connection with the settlement
agreement with Bank of America as well as discussions with another
servicer in an effort to resolve pending disputes over loss
mitigation activities. Loss mitigation savings were $59 million in the quarter.
Flow NIW of $6.9 billion decreased
eight percent from the prior quarter from a seasonally smaller
purchase originations market and increased 41 percent versus the
prior year primarily from a larger purchase origination market and
an approximately two point increase in estimated market share.
During the quarter, the company increased its single premium lender
paid new insurance written reflecting its selective participation
in this market. Future volumes of this product will vary
depending on the evaluation of the risk return profile of these
transactions. Overall private mortgage insurance market penetration
was flat compared with the prior quarter and up approximately three
points year over year as purchase penetration increased. The
company's estimate of its market share at the end of the quarter is
approximately 15 percent. Flow persistency was 83 percent. In
addition, the Home Affordable Refinance Program (HARP) accounted
for about $0.3 billion in the quarter
of insurance that is treated as a modification of the coverage on
existing insurance in force rather than NIW, bringing the total
current insurance in force under the HARP program to $18.9 billion.
The combined U.S. MI statutory risk-to-capital ratio is
estimated at 14.5:17 at the end of the fourth quarter
with the risk-to-capital ratio for GMICO estimated at
14.2:17.
On July 10, 2014, the Federal
Housing Finance Agency (FHFA) released publicly a draft of the
revised GSE private mortgage insurer eligibility requirements
(PMIERs). The company currently intends that its U.S. MI
business will meet the additional capital requirements contained in
the PMIERs by the effective date, primarily through reinsurance (or
similar) transactions, together with cash available at the holding
company. The company will seek to utilize the transition
period provided for in the draft guidelines if it does not comply
by the anticipated effective date (subject to GSE approval). The
company and its U.S. MI business believe that they are well
positioned to meet the draft version of the operational and
financial requirements contained in the guidelines within the
prescribed transition period and expect the business to maintain
its strong presence in the private mortgage insurance market.
Corporate and Other Division
Corporate and Other Division net operating loss was $17 million, compared with $80 million in the prior quarter and $33 million in the prior year.
Corporate and
Other Division
|
Net Operating
Income (Loss)
|
(Amounts in
millions)
|
|
Q4
14
|
|
Q3
14
|
|
Q4
13
|
International
Protection
|
|
$
|
(4)
|
|
$
|
3
|
|
$
|
13
|
Runoff
|
|
|
16
|
|
|
5
|
|
|
19
|
Corporate and
Other
|
|
|
(29)
|
|
|
(88)
|
|
|
(65)
|
Total Corporate
and Other
|
|
$
|
(17)
|
|
$
|
(80)
|
|
$
|
(33)
|
|
|
|
|
|
|
|
|
|
|
Account
Value
|
|
|
|
|
|
|
|
|
|
(Amounts in
millions)
|
|
Q4
14
|
|
Q3
14
|
|
Q4
13
|
Variable
Annuities
|
|
$
|
7,434
|
|
$
|
7,566
|
|
$
|
8,020
|
Guaranteed Investment
Contracts, Funding Agreements
|
|
|
|
|
|
|
|
|
|
|
Backing Notes and
Funding Agreements
|
|
|
493
|
|
|
526
|
|
|
896
|
|
|
|
|
|
|
|
|
|
|
|
International Protection Segment
International Protection reported a net operating loss of
$4 million, compared with net
operating income of $3 million in the
prior quarter and $13 million in the
prior year. Results in the current quarter reflected $4 million of net unfavorable items including
higher claim reserves on certain contracts, an unfavorable shift in
the mix of contracts with profit share, higher expenses and
unfavorable foreign exchange. Results in the prior year reflected
$10 million of favorable adjustments.
At quarter end, the lifestyle protection insurance business had a
regulatory capital ratio of approximately 365
percent7, well in excess of regulatory requirements.
Runoff Segment
The Runoff segment's net operating income was $16 million, compared with $5 million in the prior quarter and $19 million in the prior year. Results in the
current quarter reflect lower equity market performance versus the
prior year primarily impacting variable annuity products. Results
also reflect favorable taxes versus the prior quarter and the prior
year. The prior quarter's results included a favorable impact from
refinement of deferred acquisition costs assumptions related to the
company's annual review of assumptions in variable annuity
products.
Corporate and Other
Corporate and Other's net operating loss was $29 million, compared with $88 million in the prior quarter and $65 million in the prior year. Results in the
current quarter reflect favorable taxes versus the prior quarter
and prior year.
Investment Portfolio Performance
Net investment income increased to $819
million, compared to $805
million in the prior quarter primarily from changes in
prepayment speeds on structured securities due to lower interest
rates. The reported yield for the current quarter was 4.63 percent.
The core yield2 was down slightly compared to the prior
quarter at 4.38 percent.
Net investment losses, net of taxes and other adjustments, were
$4 million in the quarter, compared
to net investment gains, net of taxes and other adjustments, of
$15 million in the prior year.
Net unrealized investment gains were $2.5
billion, net of taxes and other items, as of December 31, 2014 compared with $2.1 billion as of September 30, 2014 and $0.9 billion as of December 31, 2013. The fixed maturity securities
portfolio had gross unrealized investment gains of $5.8 billion as of December 31, 2014 compared with $3.3 billion as of December 31, 2013 and gross unrealized investment
losses of $0.3 billion as of
December 31, 2014 compared with
$1.0 billion as of December 31, 2013.
Holding Company
Genworth's holding company9 ended the quarter
with approximately $1.1
billion10 of cash and liquid assets, down
approximately $35 million compared to
the prior quarter, from $76 million
of debt interest payments and $26
million of net other expenses partially offset by
$67 million of dividends paid from
the operating companies. The holding company targets maintaining
cash balances of at least one and a half times its annual debt
service expense plus a risk buffer of $350
million. The company ended the quarter with a buffer of
approximately $685 million in excess
of one and a half times annual debt service.
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a leading Fortune 500
insurance holding company committed to helping families become more
financially secure, self-reliant and prepared for the future.
Genworth has leadership positions in long term care insurance and
mortgage insurance and competitive offerings in life insurance and
fixed annuities that assist consumers in solving their insurance,
retirement and home ownership needs.
Genworth operates through three divisions: U.S. Life Insurance,
which includes long term care insurance, life 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.
From time to time, Genworth's publicly traded subsidiaries,
Genworth MI Canada Inc. and Genworth Mortgage Insurance Australia
Limited, separately release financial and other information about
their operations. This information can be found at
http://genworth.ca and http://www.genworth.com.au.
Conference Call and Financial Supplement Information
This press release and the fourth quarter 2014 financial
supplement are now posted on the company's website. Additional
information regarding business results, strategic update and the
LTC active life margin review will be posted on the company's
website, http://investor.genworth.com, by 7:30 a.m. on February 11,
2015. Investors are encouraged to review these
materials.
Genworth will conduct a 90 minute conference call on
February 11, 2015 at 8:00 a.m. (ET) to discuss fourth quarter 2014
results, cover results of LTC active life margin review, and
provide an update on strategic priorities. The conference call will
be accessible via telephone and the Internet. The dial-in number
for the conference call is 877 888.4034 or 913 489.5101 (outside
the U.S.); conference ID # 9155802. 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 February 25, 2015 at 888 203.1112 or 719 457.0820
(outside the U.S.); conference ID # 9155802. 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 "net operating income
(loss) per share." Net operating income (loss) 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, gains
(losses) on the early extinguishment of debt, gains (losses) on
insurance block transactions and infrequent or unusual
non-operating items. Gains (losses) on insurance block transactions
are defined as gains (losses) on the early extinguishment of
non-recourse funding obligations, early termination fees for other
financing restructuring and/or resulting gains (losses) on
reinsurance restructuring for certain blocks of business. 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,
gains (losses) on the sale of businesses, gains (losses) on the
early extinguishment of debt and gains (losses) on insurance block
transactions 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.
In the fourth quarter of 2014, the company recorded goodwill
impairments of $129 million, net of
taxes, in the long term care insurance business and $145 million, net of taxes, in the life insurance
business. In the third quarter of 2014, the company recorded
goodwill impairments of $167 million,
net of taxes, in the long term care insurance business and
$350 million, net of taxes, in the
life insurance business.
The following transactions were excluded from net operating
income (loss) for the periods presented as they related to the loss
on the early extinguishment of debt. In the second quarter of 2014,
the company paid an early redemption payment of approximately
$2 million, net of taxes and portion
attributable to noncontrolling interests, related to the early
redemption of Genworth MI Canada Inc.'s notes that were scheduled
to mature in 2015. In the third quarter of 2013, the company paid a
make-whole expense of approximately $20
million, net of taxes, related to the early redemption of
Genworth Holdings' notes that were scheduled to mature in 2015.
There were no infrequent or unusual items excluded from net
operating income (loss) during the periods presented other than the
following items. There was a $66
million net tax impact in the fourth quarter of 2014 from
potential business portfolio changes. Although no decisions have
been made, the company recognized a tax charge of $174 million in the fourth quarter of 2014
associated with the Australian mortgage insurance business as the
company can no longer assert its intent to permanently reinvest
earnings in that business. In connection with the company's plans
to sell the lifestyle protection insurance business, the company
completed an internal debt restructuring recognizing tax benefits
of $108 million in the fourth quarter
of 2014. Also, in the second quarter of 2013, the company recorded
a $13 million, net of taxes, expense
related to restructuring costs.
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.
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 (loss) available to Genworth's
common stockholders for the three and twelve months ended
December 31, 2014 and 2013, as well
as for the three months ended September 30,
2014.
Adjustments to reconcile net income (loss) attributable to
Genworth's common stockholders and net operating income (loss)
assume a 35 percent tax rate and are net of the portion
attributable to noncontrolling interests. Net investment gains
(losses) are also adjusted for deferred acquisition costs and other
intangible amortization and certain benefit reserves.
This press release also includes non-GAAP financial measures
entitled "net income (loss) before net income attributable to
noncontrolling interests in the Australia MI business" and "net
operating income (loss) before net operating income attributable to
noncontrolling interests in the Australia MI business." The company
defines net income (loss) before net income attributable to
noncontrolling interests in the Australia MI business and net
operating income (loss) before net operating income attributable to
noncontrolling interests in the Australia MI business as net income
(loss) or net operating income (loss), as applicable, adjusted for
net income attributable to noncontrolling interests in the
Australia MI business but before noncontrolling interests in the
Canada MI business. These measures are presented as they are
comparable to net income (loss) and net operating income (loss) for
the three and twelve months ended December
31, 2013. However, net income (loss) before net income
attributable to noncontrolling interests in the Australia MI
business and net operating income (loss) before net operating
income attributable to noncontrolling interests in the Australia MI
business are not substitutes for net income (loss) and net
operating income (loss) determined in accordance with GAAP. A
reconciliation of net income (loss) before net income attributable
to noncontrolling interests in the Australia MI business and net
operating income (loss) before net operating income attributable to
noncontrolling interests in the Australia MI business to net income
(loss) and net operating income (loss) is included in a table at
the end of this press release.
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 is not a substitute for investment
yield determined in accordance with GAAP. 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 long
term care and term life 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 premiums
written 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, new
insurance written, and net premiums 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 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 measures of the company's operating
performance because they represent measures of the size of the
business at a specific date which will generate revenues and
profits in a future period, rather than measures 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 the company's
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 the
company's loss mitigation actions, the results of which have been
included in the company's 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 also regularly monitors and reports a loss ratio for
the company's businesses. 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. 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. 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 percent is utilized in certain
adjustments to net operating income (loss) and in the explanation
of specific variances of operating performance and investment
results.
These operating performance 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 all of the company's businesses,
including:
(i) inability to successfully develop and execute strategic
plans to effectively address the company's current business
challenges (including with respect to its long-term care insurance
business, ratings and capital), including as a result of failure to
attract buyers for any assets the company may seek to sell, or
securities it may seek to issue, in each case, in a timely manner
on anticipated terms; inability to generate required capital;
failure to obtain any required regulatory, stockholder and/or
noteholder approvals or consents, or the company's challenges
changing or being more costly or difficult to successfully address
than currently anticipated or the benefits achieved being less than
anticipated; inability to achieve anticipated cost-savings in a
timely manner; (ii) inability to increase the capital needed in the
company's businesses in a timely manner and on anticipated terms,
including through improved business performance, reinsurance or
similar transactions, asset sales, securities offerings or
otherwise, in each case as and when required; (iii) inadequate
reserves and need to increase to reserves, including as a result of
any changes the company may make to its assumptions, methodologies
or otherwise in connection with periodic or other reviews; (iv)
lapse experience for the company's products differing significantly
from its pricing assumptions (particularly with respect
to certain of the company's term life insurance policies where
the level premium period is nearing an end, after which premiums
may increase significantly and cause the company to experience
significantly higher lapses than historically has been the case and
adverse selection with respect to those policyholders maintaining
their policies; (v) adverse rating agency actions, including with
respect to rating downgrades or potential downgrades, being placed
on negative outlook or being put on review for potential downgrade,
all of which could have adverse implications for the company,
including with respect to key business relationships, product
offerings, business results of operations, financial condition and
capital needs, collateral obligations and availability and terms of
hedging, reinsurance and credit facility; (vi) inability to retain,
attract and motivate qualified employees and independent sales
representatives, particularly in the light of the company's recent
business challenges; (vii) adverse change in regulatory
requirements, including risk-based capital; (viii) dependence on
dividends and other distributions from the company's subsidiaries
(particularly the company's Australian and Canadian businesses) and
the inability of any subsidiaries to pay dividends or make other
distributions to the company, including as a result of the
performance of the subsidiaries and insurance, regulatory or
corporate law restrictions (including the unwillingness or
inability of the subsidiary that indirectly owns most of the
company's interests in the Australian and Canadian mortgage
insurance businesses to pay dividends to the company that it
receives from those businesses as a result of the impact on its
financial condition of its guarantee of certain long-term care
insurance related reinsurance arrangements); (ix) inability to
borrow under the company's credit facility; (x) downturns and
volatility in global economies and equity and credit markets; (xi)
interest rates and changes in rates; (xii) availability,
affordability and adequacy of reinsurance to meet the company's
needs; defaults by counterparties to reinsurance arrangements or
derivative instruments; (xiii) changes in valuation of fixed
maturity, equity and trading securities; defaults 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 its investments in commercial
mortgage-backed securities and volatility in performance; (xiv)
adverse capital and credit markets adversely affecting the
company's ability to meet capital and liquidity needs; (xv)
competition; (xvi) reliance on, and loss of, key distribution
relationships; (xvii) extensive regulation on the company's
business and changes in applicable laws and regulations; (xviii)
litigation and regulatory investigations or other actions
(including the two shareholder class action lawsuits alleging
securities law violations filed against the company in
2014); (xix) failure or any compromise of the security of the
company's computer systems, disaster recovery systems and business
continuity plans and failures to safeguard, or breaches of, the
company's confidential information; (xx) occurrence of natural or
man-made disasters or a pandemic; (xxi) impact of additional
regulations pursuant to the Dodd-Frank Wall Street Reform and
Consumer Protection Act; (xxii) ineffective or inadequate risk
management; weaknesses in, or ineffective, internal controls;
(xxiii) changes in accounting and reporting standards; (xxiv)
impairments of or valuation allowances against the company's
deferred tax assets; (xxv) accelerated amortization of deferred
acquisition costs and present value of future profits (including as
a result of any changes the company may make to its assumptions,
methodologies or otherwise in connection with periodic or other
reviews); (xxvi) political and economic instability or changes in
government policies; and (xxvii) fluctuations in foreign currency
exchange rates and international securities markets.
- Risks relating primarily to the company's long-term care
insurance, life insurance and annuities businesses, including:
(xxviii) the company's inability to increase sufficiently,
and in a timely manner, premiums on in-force long-term care
insurance policies and/or reduce in-force benefits, and charge
higher premiums on new policies, in each case, as currently
anticipated (including the future increases assumed in connection
with the completion of the company's active life reserve review in
the fourth quarter of 2014) and as may be required from time to
time in the future (including as a result of its failure to obtain
any necessary regulatory approvals or unwillingness or inability of
policyholders to pay increased premiums); the company's inability
to reflect future premium increases and other management actions in
its active life margin calculation as anticipated; (xxix) failure
to sufficiently increase demand for the company's long-term care
insurance, life insurance and fixed annuity products; (xxx) adverse
impact on the company's financial results as a result of projected
profits followed by projected losses in the company's long-term
care insurance business; (xxxi) deviations from the persistence
assumptions used to price and establish reserves for the company's
insurance policies and annuity contracts; (xxxii) medical advances,
such as genetic research and diagnostic imaging, and related
legislation that impact policyholder behavior in ways adverse to
the company; and (xxxiii) inability to continue to implement
actions to mitigate the impact of statutory reserve
requirements.
- Risks relating primarily to the company's mortgage insurance
businesses, including:
(xxxiv) deterioration in economic conditions or a decline
in home prices that adversely affect the company's loss experience
in mortgage insurance; (xxxv) premiums for the significant portion
of the company's international mortgage insurance risk in-force
with high loan-to-value ratios may not be sufficient to compensate
the company for the greater risks associated with those policies;
(xxxvi) competition in the company's international and U.S.
mortgage insurance businesses, including from government and
government-owned and sponsored enterprises offering mortgage
insurance; (xxxvii) changes in regulations adversely affecting the
company's international operations; (xxxviii) inability to meet the
proposed private mortgage insurance eligibility requirements
(PMIERs) on the contemplated timetable with the contemplated
funding; (xxxix) the influence of Federal National Mortgage
Association (Fannie Mae), Federal Home Loan Mortgage Corporation
(Freddie Mac) and a small number of large mortgage lenders and
investors on the company's industry and business and adverse
changes to the role or structure of Fannie Mae and Freddie Mac;
(xl) increases in U.S. mortgage insurance default rates; (xli)
inability to realize anticipated benefits of the company's
rescissions, curtailments and loan modifications; (xlii) problems
associated with foreclosure process defects in the United States that may defer claim
payments; (xliii) adverse changes in regulations affecting the
company's U.S. mortgage insurance business; (xliv) decrease in the
volume of high loan-to-value mortgage originations or increases in
mortgage insurance cancellations in the United States; (xlv)
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; (xlvi)
reduction in profitability and return on capital as a result of
reinsurance with reinsurance companies affiliated with the
company's U.S. mortgage lending customers; and (xlvii) liabilities
in connection with the company's U.S. contract underwriting
services.
- Other risks, including:
(xlviii) the possibility that in certain circumstances the company
will be obligated to make payments to General Electric Company (GE)
under the tax matters agreement with GE even if its corresponding
tax savings are never realized and payments could be accelerated in
the event of certain changes in control; and (xlix)
provisions of the company's 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
- Risks relating to the company's common stock,
including:
(l) the continued suspension of payment 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
|
|
Twelve months
ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
$
|
1,386
|
|
$
|
1,310
|
|
$
|
5,431
|
|
$
|
5,148
|
Net investment
income
|
|
|
819
|
|
|
835
|
|
|
3,242
|
|
|
3,271
|
Net investment gains
(losses)
|
|
|
(10)
|
|
|
26
|
|
|
(20)
|
|
|
(37)
|
Insurance and
investment product fees and other
|
|
|
229
|
|
|
241
|
|
|
912
|
|
|
1,021
|
Total revenues
|
|
|
2,424
|
|
|
2,412
|
|
|
9,565
|
|
|
9,403
|
Benefits and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and other
changes in policy reserves
|
|
|
2,184
|
|
|
1,256
|
|
|
6,620
|
|
|
4,895
|
Interest
credited
|
|
|
185
|
|
|
186
|
|
|
737
|
|
|
738
|
Acquisition and
operating expenses, net of
|
|
|
|
|
|
|
|
|
|
|
|
|
deferrals
|
|
|
405
|
|
|
406
|
|
|
1,585
|
|
|
1,659
|
Amortization of
deferred acquisition costs and
|
|
|
|
|
|
|
|
|
|
|
|
|
intangibles
|
|
|
156
|
|
|
128
|
|
|
571
|
|
|
569
|
Goodwill
impairment
|
|
|
299
|
|
|
—
|
|
|
849
|
|
|
—
|
Interest
expense
|
|
|
118
|
|
|
121
|
|
|
479
|
|
|
492
|
Total benefits and expenses
|
|
|
3,347
|
|
|
2,097
|
|
|
10,841
|
|
|
8,353
|
Income (loss) from
continuing operations before income taxes
|
|
|
(923)
|
|
|
315
|
|
|
(1,276)
|
|
|
1,050
|
Provision (benefit)
for income taxes
|
|
|
(215)
|
|
|
70
|
|
|
(228)
|
|
|
324
|
Income (loss) from
continuing operations
|
|
|
(708)
|
|
|
245
|
|
|
(1,048)
|
|
|
726
|
Loss from
discontinued operations, net of taxes
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12)
|
Net income
(loss)
|
|
|
(708)
|
|
|
245
|
|
|
(1,048)
|
|
|
714
|
Less: net income
attributable to noncontrolling interests
|
|
|
52
|
|
|
37
|
|
|
196
|
|
|
154
|
Net income (loss)
available to Genworth Financial, Inc.'s
|
|
|
|
|
|
|
|
|
|
|
|
|
common
stockholders
|
|
$
|
(760)
|
|
$
|
208
|
|
$
|
(1,244)
|
|
$
|
560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations available to
|
|
|
|
|
|
|
|
|
|
|
|
|
Genworth Financial, Inc.'s
common stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
per common
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(1.53)
|
|
$
|
0.42
|
|
$
|
(2.51)
|
|
$
|
1.16
|
Diluted
|
|
$
|
(1.53)
|
|
$
|
0.42
|
|
$
|
(2.51)
|
|
$
|
1.15
|
Net income (loss)
available to Genworth Financial, Inc.'s
|
|
|
|
|
|
|
|
|
|
|
|
|
common stockholders per
common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(1.53)
|
|
$
|
0.42
|
|
$
|
(2.51)
|
|
$
|
1.13
|
Diluted
|
|
$
|
(1.53)
|
|
$
|
0.41
|
|
$
|
(2.51)
|
|
$
|
1.12
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
496.7
|
|
|
494.7
|
|
|
496.4
|
|
|
493.6
|
Diluted5
|
|
|
496.7
|
|
|
501.2
|
|
|
496.4
|
|
|
498.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Operating Income (Loss) to Net Income
(Loss)
|
(Amounts in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
Twelve
|
|
Three
|
|
|
months
ended
|
|
months
ended
|
|
months
ended
|
|
|
December
31,
|
|
December
31,
|
|
September
30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
Net operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Life Insurance
Division
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Life Insurance
segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Care Insurance
|
|
$
|
(506)
|
|
$
|
42
|
|
$
|
(815)
|
|
$
|
129
|
|
$
|
(361)
|
Life Insurance
|
|
|
1
|
|
|
56
|
|
|
74
|
|
|
173
|
|
|
13
|
Fixed Annuities
|
|
|
23
|
|
|
21
|
|
|
100
|
|
|
92
|
|
|
26
|
Total U.S. Life
Insurance segment
|
|
|
(482)
|
|
|
119
|
|
|
(641)
|
|
|
394
|
|
|
(322)
|
Total U.S. Life Insurance
Division
|
|
|
(482)
|
|
|
119
|
|
|
(641)
|
|
|
394
|
|
|
(322)
|
Global Mortgage
Insurance Division
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Mortgage
Insurance segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
|
36
|
|
|
44
|
|
|
170
|
|
|
170
|
|
|
46
|
Australia
|
|
|
336
|
|
|
66
|
|
|
200
|
|
|
228
|
|
|
486
|
Other Countries
|
|
|
(7)
|
|
|
(9)
|
|
|
(25)
|
|
|
(37)
|
|
|
(7)
|
Total International Mortgage
Insurance segment
|
|
|
62
|
|
|
101
|
|
|
345
|
|
|
361
|
|
|
87
|
U.S. Mortgage Insurance
segment
|
|
|
21
|
|
|
6
|
|
|
91
|
|
|
37
|
|
|
(2)
|
Total Global Mortgage
Insurance Division
|
|
|
83
|
|
|
107
|
|
|
436
|
|
|
398
|
|
|
85
|
Corporate and Other
Division
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Protection
segment
|
|
|
(4)
|
|
|
13
|
|
|
8
|
|
|
24
|
|
|
3
|
Runoff
segment
|
|
|
16
|
|
|
19
|
|
|
48
|
|
|
66
|
|
|
5
|
Corporate and
Other
|
|
|
(29)
|
|
|
(65)
|
|
|
(232)
|
|
|
(266)
|
|
|
(88)
|
Total Corporate and Other
Division
|
|
|
(17)
|
|
|
(33)
|
|
|
(176)
|
|
|
(176)
|
|
|
(80)
|
Net operating income
(loss)
|
|
|
(416)
|
|
|
193
|
|
|
(381)
|
|
|
616
|
|
|
(317)
|
Adjustments to net
operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment gains
(losses), net
|
|
|
(4)
|
|
|
15
|
|
|
(4)
|
|
|
(11)
|
|
|
(10)
|
Goodwill impairment,
net
|
|
|
(274)
|
|
|
—
|
|
|
(791)
|
|
|
—
|
|
|
(517)
|
Gains (losses) on
early extinguishment of debt, net
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
(20)
|
|
|
—
|
Tax impact from
potential business portfolio changes
|
|
|
(66)
|
|
|
—
|
|
|
(66)
|
|
|
—
|
|
|
—
|
Expenses related to
restructuring, net
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13)
|
|
|
—
|
Loss from
discontinued operations, net of taxes
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12)
|
|
|
—
|
Net income (loss)
available to Genworth Financial, Inc.'s
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common
stockholders
|
|
|
(760)
|
|
|
208
|
|
|
(1,244)
|
|
|
560
|
|
|
(844)
|
Add: net income
attributable to noncontrolling interests
|
|
|
52
|
|
|
37
|
|
|
196
|
|
|
154
|
|
|
57
|
Net income
(loss)
|
|
$
|
(708)
|
|
$
|
245
|
|
$
|
(1,048)
|
|
$
|
714
|
|
$
|
(787)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
available to Genworth Financial, Inc.'s
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common stockholders per
common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(1.53)
|
|
$
|
0.42
|
|
$
|
(2.51)
|
|
$
|
1.13
|
|
$
|
(1.70)
|
Diluted
|
|
$
|
(1.53)
|
|
$
|
0.41
|
|
$
|
(2.51)
|
|
$
|
1.12
|
|
$
|
(1.70)
|
Net operating income
(loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.84)
|
|
$
|
0.39
|
|
$
|
(0.77)
|
|
$
|
1.25
|
|
$
|
(0.64)
|
Diluted
|
|
$
|
(0.84)
|
|
$
|
0.38
|
|
$
|
(0.77)
|
|
$
|
1.24
|
|
$
|
(0.64)
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
496.7
|
|
|
494.7
|
|
|
496.4
|
|
|
493.6
|
|
|
496.6
|
Diluted5
|
|
|
496.7
|
|
|
501.2
|
|
|
496.4
|
|
|
498.7
|
|
|
496.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets
|
(Amounts in
millions)
|
|
|
|
December
31,
|
|
December
31,
|
|
|
2014
|
|
2013
|
Assets
|
|
|
|
|
|
|
Cash, cash equivalents and
invested assets
|
|
$
|
78,841
|
|
$
|
73,505
|
Deferred acquisition
costs
|
|
|
5,042
|
|
|
5,278
|
Intangible assets
|
|
|
272
|
|
|
399
|
Goodwill
|
|
|
16
|
|
|
867
|
Reinsurance
recoverable
|
|
|
17,346
|
|
|
17,219
|
Other assets
|
|
|
633
|
|
|
639
|
Separate account
assets
|
|
|
9,208
|
|
|
10,138
|
Total assets
|
|
$
|
111,358
|
|
$
|
108,045
|
Liabilities and
stockholders' equity
|
|
Liabilities:
|
|
|
|
|
|
|
Future policy benefits
|
|
$
|
35,915
|
|
$
|
33,705
|
Policyholder account balances
|
|
|
26,043
|
|
|
25,528
|
Liability for policy and contract claims
|
|
|
8,043
|
|
|
7,204
|
Unearned premiums
|
|
|
3,986
|
|
|
4,107
|
Deferred tax and other liabilities
|
|
|
4,512
|
|
|
4,302
|
Borrowings related to securitization entities
|
|
|
219
|
|
|
242
|
Non-recourse funding obligations
|
|
|
1,996
|
|
|
2,038
|
Long-term borrowings
|
|
|
4,639
|
|
|
5,161
|
Separate account liabilities
|
|
|
9,208
|
|
|
10,138
|
Total liabilities
|
|
|
94,561
|
|
|
92,425
|
Stockholders'
equity:
|
|
|
|
|
|
|
Common stock
|
|
|
1
|
|
|
1
|
Additional paid-in capital
|
|
|
11,997
|
|
|
12,127
|
Accumulated other
comprehensive income (loss):
|
|
|
|
|
|
|
Net unrealized investment gains
(losses):
|
|
|
|
|
|
|
Net unrealized gains (losses) on securities not
|
|
|
|
|
|
|
other-than-temporarily impaired
|
|
|
2,431
|
|
|
914
|
Net unrealized gains (losses) on other-than-
|
|
|
|
|
|
|
temporarily impaired securities
|
|
|
22
|
|
|
12
|
Net unrealized investment gains (losses)
|
|
|
2,453
|
|
|
926
|
Derivatives
qualifying as hedges
|
|
|
2,070
|
|
|
1,319
|
Foreign currency translation and other adjustments
|
|
|
(77)
|
|
|
297
|
Total accumulated
other comprehensive income (loss)
|
|
|
4,446
|
|
|
2,542
|
Retained
earnings
|
|
|
1,179
|
|
|
2,423
|
Treasury stock, at
cost
|
|
|
(2,700)
|
|
|
(2,700)
|
Total Genworth Financial, Inc.'s stockholders' equity
|
|
|
14,923
|
|
|
14,393
|
Noncontrolling
interests
|
|
|
1,874
|
|
|
1,227
|
Total stockholders' equity
|
|
|
16,797
|
|
|
15,620
|
Total liabilities and stockholders' equity
|
|
$
|
111,358
|
|
$
|
108,045
|
|
|
|
|
|
|
|
Impact of Foreign
Exchange on Operating Results11
|
Three months ended
December 31, 2014
|
|
|
|
|
|
|
|
|
|
Percentages
|
|
Percentages
|
|
|
|
Including
Foreign
|
|
Excluding
Foreign
|
|
|
|
Exchange
|
|
Exchange12
|
|
Canada Mortgage
Insurance (MI):
|
|
|
|
|
|
|
|
Flow new insurance
written
|
|
10
|
%
|
|
18
|
%
|
|
Flow new insurance
written (4Q14 vs. 3Q14)
|
|
(19)
|
%
|
|
(16)
|
%
|
|
|
|
|
|
|
|
|
|
Australia
MI:
|
|
|
|
|
|
|
|
Flow new insurance
written
|
|
(11)
|
%
|
|
(6)
|
%
|
|
Flow new insurance
written (4Q14 vs. 3Q14)
|
|
(1)
|
%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Investment Gains (Losses)
|
(Amounts in
millions)
|
|
|
|
|
|
|
|
|
|
Three
|
|
Twelve
|
|
Three
|
|
|
months
ended
|
|
months
ended
|
|
months
ended
|
|
|
December
31,
|
|
December
31,
|
|
September
30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
Net investment gains
(losses), gross
|
|
$
|
(10)
|
|
$
|
26
|
|
$
|
(20)
|
|
$
|
(37)
|
|
$
|
(27)
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred acquisition costs
and other intangible amortization and certain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
benefit reserves
|
|
|
1
|
|
|
—
|
|
|
14
|
|
|
32
|
|
|
9
|
Net investment gains
(losses) attributable to noncontrolling interests
|
|
|
1
|
|
|
(2)
|
|
|
—
|
|
|
(13)
|
|
|
3
|
Taxes
|
|
|
4
|
|
|
(9)
|
|
|
2
|
|
|
7
|
|
|
5
|
Net investment gains
(losses), net of taxes and other adjustments
|
|
$
|
(4)
|
|
$
|
15
|
|
$
|
(4)
|
|
$
|
(11)
|
|
$
|
(10)
|
Reconciliation of
Net Income (Loss) Before Net Income Attributable To
Noncontrolling
|
Interests In The
Australia MI Business to Net Income (Loss) Available To Genworth's
Common
|
Stockholders and
Net Operating Income (Loss) Before Net Operating Income
Attributable
|
To Noncontrolling
Interests In The Australia MI Business to Net Operating Income
(Loss)
|
(Amounts in
millions)
|
|
|
|
|
|
|
|
|
|
Three
|
|
Twelve
|
|
Three
|
|
|
months
ended
|
|
months
ended
|
|
months
ended
|
|
|
December
31,
|
|
December
31,
|
|
September
30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
Net income (loss)
before net income attributable to noncontrolling
interests
|
|
$
|
(708)
|
|
$
|
245
|
|
$
|
(1,048)
|
|
$
|
714
|
|
$
|
(787)
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to noncontrolling interests in the Australia MI
business
|
|
|
22
|
|
|
N/A
|
|
|
56
|
|
|
N/A
|
|
|
23
|
Net income attributable to
noncontrolling interests in the Canada MI business
|
|
|
30
|
|
|
37
|
|
|
140
|
|
|
154
|
|
|
34
|
Net income (loss)
available to Genworth's common stockholders
|
|
$
|
(760)
|
|
$
|
208
|
|
$
|
(1,244)
|
|
$
|
560
|
|
$
|
(844)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income
(loss) before net operating income attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noncontrolling
interests
|
|
$
|
(363)
|
|
$
|
228
|
|
$
|
(183)
|
|
$
|
761
|
|
$
|
(258)
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income
attributable to noncontrolling interests in the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia MI business
|
|
|
21
|
|
|
N/A
|
|
|
55
|
|
|
N/A
|
|
|
23
|
Net operating income
attributable to noncontrolling interests in the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada MI business
|
|
|
32
|
|
|
35
|
|
|
143
|
|
|
145
|
|
|
36
|
Net operating income
(loss)
|
|
$
|
(416)
|
|
$
|
193
|
|
$
|
(381)
|
|
$
|
616
|
|
$
|
(317)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Core Yield to Reported Yield
|
|
|
|
|
|
For the
three
|
|
|
months
ended
|
|
|
December
31,
|
(Assets - amounts
in billions)
|
|
2014
|
Reported Total
Invested Assets and Cash
|
|
$
|
78.2
|
|
Subtract:
|
|
|
|
|
Securities lending
|
|
|
0.3
|
|
Unrealized gains
(losses)
|
|
|
6.7
|
|
Derivative counterparty
collateral
|
|
|
—
|
|
Adjusted end of
period invested assets
|
|
$
|
71.2
|
|
|
|
|
|
|
Average Invested
Assets Used in Reported Yield Calculation
|
|
$
|
70.8
|
|
Subtract:
|
|
|
|
|
Restricted commercial
mortgage loans and other invested assets related to
|
|
|
|
|
securitization entities13
|
|
|
0.2
|
|
Average Invested
Assets Used in Core Yield Calculation
|
|
$
|
70.6
|
|
|
|
|
|
|
(Income - amounts
in
millions)
|
|
|
|
|
Reported Net
Investment Income
|
|
$
|
819
|
|
Subtract:
|
|
|
|
|
Bond calls and commercial
mortgage loan prepayments
|
|
|
18
|
|
Reinsurance14
|
|
|
14
|
|
Other non-core
items15
|
|
|
12
|
|
Restricted commercial
mortgage loans and other invested assets related to
|
|
|
|
|
securitization entities13
|
|
|
2
|
|
Core Net Investment
Income
|
|
$
|
773
|
|
|
|
|
|
|
Reported
Yield
|
|
|
4.63
|
%
|
Core Yield
|
|
|
4.38
|
%
|
1 Unless
otherwise stated, all references in this press release to net
income (loss), net income (loss) per share, book value, book value
per share and stockholders' equity should be read as net income
(loss) available to Genworth's common stockholders, net income
(loss) 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
Preliminary margins as of September 30, 2014 in force - modeled
with December 31, 2014 treasury rates.
|
4 The
company defines "NM" as not meaningful for increases or decreases
greater than 200 percent.
|
5 Under
applicable accounting guidance, companies in a loss position are
required to use basic weighted average common shares outstanding in
the calculation of diluted loss per share. Therefore, as a result
of the company's loss for the three and twelve months ended
December 31, 2014, the company was required to use basic weighted
average common shares outstanding in the calculation of diluted
loss per share, as the inclusion of shares for stock options,
restricted stock units and stock appreciation rights would have
been antidilutive to the calculation. If the company had not
incurred a loss during the three and twelve months ended December
31, 2014, dilutive potential weighted average common shares
outstanding would have been 499.9 million and 502.0 million,
respectively.
|
6 Excludes
net operating income attributable to noncontrolling interests in
the Australia MI business of $21 million and $23 million,
respectively, in the fourth quarter of 2014 and third quarter of
2014 related to the Australia MI IPO completed on May 21,
2014.
|
7 Company
estimate for the fourth quarter of 2014, due to timing of the
filing of statutory statements.
|
8 Percent
change excludes the impact of foreign exchange.
|
9 Holding
company cash and liquid assets comprises assets held in Genworth
Holdings, Inc. (the issuer of outstanding public debt) which is a
wholly-owned subsidiary of Genworth Financial, Inc.
|
10
Comprises cash and cash equivalents of $953 million and U.S.
government bonds of $150 million.
|
11 All
percentages are comparing the fourth quarter of 2014 to the fourth
quarter of 2013 unless otherwise stated.
|
12 The
impact of foreign exchange was calculated using the comparable
prior period exchange rates.
|
13
Represents the incremental assets and investment income related to
restricted commercial mortgage loans and other invested
assets.
|
14
Represents imputed investment income related to reinsurance
agreements in the lifestyle protection insurance
business.
|
15
Includes cost basis adjustments on structured securities, preferred
stock income and various other immaterial items.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/genworth-financial-announces-fourth-quarter-2014-results-300034063.html
SOURCE Genworth Financial, Inc.