RICHMOND, Va., April 28, 2015 /PRNewswire/ --
- Progress Made On Review Of Strategic Options
- Achieved Targeted $250 To $300
Million Premium Increase Approvals On 2012 Long Term Care
Insurance In Force Rate Action
- Received $132 Million Of
Dividends From Operating Companies; Maintained Solid Capital
Positions And Significant Holding Company Liquidity
- Will Comply With Final U.S. Mortgage Insurer Eligibility
Requirements By Effective Date
Genworth Financial, Inc. (NYSE: GNW) today reported results for
the period ended March 31, 2015. The
company reported net income1 of $154 million, or $0.31 per diluted share, compared with net income
of $184 million, or $0.37 per diluted share, in the first quarter of
2014. Net operating income2 for the first quarter of
2015 was $156 million, or
$0.31 per diluted share, compared
with net operating income of $194
million, or $0.39 per diluted
share, in the first quarter of 2014.
Strategic Update
The company continues to make
progress on its review of strategic options in order to position
the company for future success and is actively engaged in three
areas: (1) strengthening its mortgage insurance businesses
and long term care insurance (LTC) capital, earnings and
sales; (2) simplifying the business portfolio; and (3) increasing
its financial strength and flexibility. In addition, the company
continues to pursue the planned sale of its non-core lifestyle
protection insurance business. The company believes the execution
of these strategic initiatives will improve operating returns,
support compliance with the Private Mortgage Insurer Eligibility
Requirements (PMIERs), reduce debt levels, increase LTC capital
buffers and maintain solid holding company cash levels.
As disclosed on April 17, 2015,
the company estimates $500 to $700
million of additional capital will be required to be fully
compliant with the final PMIERs by the effective date of
December 31, 2015. The company will
comply with the final PMIERs by the effective date and intends to
utilize both reinsurance and holding company cash to meet the
additional capital requirement.
"Regarding the quarter, we are encouraged with the results in
spite of continued challenges and remain focused on initiatives
aimed at strengthening and building our businesses," said
Tom McInerney, President and CEO.
"During the first quarter, we made significant progress on our
strategic review and are developing next steps to position the
company for future success. We look forward to updating you on
specific actions as appropriate."
Consolidated Net
Income &
|
|
Net Operating
Income
|
|
|
|
|
Three months ended
March 31
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Per
|
|
|
|
|
Per
|
|
|
|
|
|
|
|
|
|
diluted
|
|
|
|
|
diluted
|
|
Total
|
|
(Amounts in
millions, except per share)
|
|
Total
|
|
share
|
|
Total
|
|
share
|
|
% change
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available
to Genworth's common stockholders
|
|
$
|
154
|
|
$
|
0.31
|
|
$
|
184
|
|
$
|
0.37
|
|
(16)%
|
|
Adjustment: Net
income attributable to noncontrolling interests in Australia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
mortgage insurance
(MI)
|
|
|
21
|
|
|
0.04
|
|
|
N/A
|
|
|
N/A
|
|
N/A
|
|
Net income available
to Genworth's common stockholders before net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to
noncontrolling interests in Australia
MI2
|
|
$
|
175
|
|
$
|
0.35
|
|
$
|
184
|
|
$
|
0.37
|
|
(5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating
income
|
|
$
|
156
|
|
$
|
0.31
|
|
$
|
194
|
|
$
|
0.39
|
|
(20)%
|
|
Adjustment: Net
operating income attributable to noncontrolling interests
in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia
MI
|
|
|
21
|
|
|
0.04
|
|
|
N/A
|
|
|
N/A
|
|
N/A
|
|
Net operating income
before net operating income attributable to
noncontrolling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interests in
Australia MI2
|
|
$
|
177
|
|
$
|
0.35
|
|
$
|
194
|
|
$
|
0.39
|
|
(9)%
|
|
Weighted average
diluted shares
|
|
|
498.9
|
|
|
|
|
|
502.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31
|
|
|
|
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|
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(Unaudited)
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
Book value per
share
|
|
|
|
|
$
|
30.81
|
|
|
|
|
$
|
31.27
|
|
|
|
Book value per share,
excluding accumulated other comprehensive income
(loss)
|
|
|
|
|
$
|
21.38
|
|
|
|
|
$
|
24.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment losses, net of taxes and other adjustments, were
$2 million in the quarter, compared
to $10 million in the prior year. Net
investment income decreased to $803
million, compared to $819
million in the prior quarter primarily from lower
reinvestment rates and unfavorable foreign exchange. The reported
yield for the current quarter was 4.51 percent. The core
yield2 was down compared to the prior quarter at 4.28
percent.
Net operating income (loss) results are summarized in the table
below:
Net Operating
Income (Loss)
|
|
|
|
|
|
|
|
|
|
(Amounts in
millions)
|
|
Q1
15
|
|
Q4
14
|
|
Q1
14
|
Global Mortgage
Insurance Division
|
|
$
|
1163
|
|
$
|
83 3
|
|
$
|
132
|
U.S. Life Insurance
Division
|
|
|
81
|
|
|
(482)
|
|
|
94
|
Corporate and Other
Division
|
|
|
(41)
|
|
|
(17)
|
|
|
(32)
|
Total Net
Operating Income (Loss)
|
|
$
|
156
|
|
$
|
(416)
|
|
$
|
194
|
|
|
|
|
|
|
|
|
|
|
|
|
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, restructuring costs
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 first quarter of
2015 was an unfavorable impact of $7
million versus the prior quarter and an unfavorable impact
of $8 million versus the prior
year.
Global Mortgage Insurance Division
Global Mortgage
Insurance Division had net operating income of $116 million, compared with $83 million in the prior quarter and $132 million a year ago.
Global Mortgage
Insurance Division
|
Net Operating
Income (Loss)
|
(Amounts in
millions)
|
|
Q1
15
|
|
Q4
14
|
|
Q1
14
|
International
Mortgage Insurance
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
$
|
40
|
|
$
|
36
|
|
$
|
41
|
|
Australia
|
|
|
303
|
|
|
333
|
|
|
62
|
|
Other
Countries
|
|
|
(6)
|
|
|
(7)
|
|
|
(4)
|
Total
International Mortgage Insurance
|
|
|
64
|
|
|
62
|
|
|
99
|
U.S. Mortgage
Insurance
|
|
|
52
|
|
|
21
|
|
|
33
|
Total Global
Mortgage Insurance
|
|
$
|
116
|
|
$
|
83
|
|
$
|
132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
(Amounts in
billions)
|
|
Q1
15
|
|
Q4
14
|
|
Q1
14
|
International
Mortgage Insurance
|
|
|
|
|
|
|
|
|
|
|
Flow
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
$
|
3.3
|
|
$
|
5.5
|
|
$
|
2.9
|
|
|
Australia
|
|
|
5.8
|
|
|
8.0
|
|
|
7.8
|
|
|
Other
Countries
|
|
|
0.4
|
|
|
0.5
|
|
|
0.4
|
|
Bulk
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
|
5.0
|
|
|
2.3
|
|
|
2.9
|
|
|
Australia
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
Other
Countries
|
|
|
0.2
|
|
|
—
|
|
|
—
|
U.S. Mortgage
Insurance
|
|
|
|
|
|
|
|
|
|
|
Primary
Flow
|
|
|
6.3
|
|
|
6.9
|
|
|
3.9
|
|
Primary
Bulk
|
|
|
—
|
|
|
—
|
|
|
—
|
Canada Mortgage Insurance
Canada reported net operating income of
$40 million versus $36 million in the prior quarter and $41 million in the prior year. The loss ratio in
the quarter was 22 percent, down four points from the prior quarter
from fewer new delinquencies, net of cures and up two points from
the prior year from a higher average reserve per delinquency, which
was partially offset by a decrease in the number of new
delinquencies, net of cures. Results included lower expenses versus
the prior quarter and prior year and unfavorable foreign exchange.
Flow NIW was down 36 percent4 sequentially from a
seasonally smaller originations market and up 24
percent4 year over year primarily from a larger
originations market. In addition, the company completed several
bulk transactions in the quarter of approximately $5.0 billion in total, consisting of low
loan-to-value prime loans, reflecting its selective participation
in this market.
Australia Mortgage Insurance
Australia reported net operating income of
$30 million versus $33 million in the prior quarter and $62 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, flat sequentially and
down two points from the prior year. During the quarter, the
company accrued a $7 million pre-tax
receivable for expected recoveries relating to paid claims
reflecting its experience of successful borrower recovery activity,
favorably impacting the loss ratio by nine points. New
delinquencies were up 14 percent and cures were down 17 percent
sequentially reflecting normal seasonal variation. Results were
also impacted by unfavorable foreign exchange versus both the prior
quarter and prior year. Flow NIW was down 20 percent4
sequentially primarily from seasonal variation and other market
factors and down 17 percent4 year over year from a
smaller mortgage insurance market.
Other Countries Mortgage Insurance
Other Countries had
a net operating loss of $6 million,
compared to $7 million in the prior
quarter and $4 million in the prior
year.
U.S. Mortgage Insurance
U.S. MI net operating income
was $52 million, compared with
$21 million in the prior quarter and
$33 million in the prior year. The
loss ratio in the current quarter was 33 percent, down 28 points
sequentially reflecting seasonally lower new delinquencies and
favorable net cures and aging of existing delinquencies. New flow
delinquencies decreased approximately 12 percent from the prior
quarter from seasonal variation and decreased approximately 22
percent from the prior year, reflecting the continued burn through
of delinquencies from the 2005 to 2008 book years.
Flow NIW of $6.3 billion decreased
nine percent from the prior quarter from a seasonally smaller
purchase originations market and increased 62 percent versus the
prior year primarily from a larger purchase originations market,
higher refinance activity and an 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 in part depending on the company's evaluation of the risk
return profile of these transactions.
U.S. Life Insurance Division
U.S. Life Insurance
Division net operating income was $81
million, compared with a net operating loss of $482 million in the prior quarter and net
operating income of $94 million a
year ago.
U.S. Life
Insurance Division
|
Net Operating
Income (Loss)
|
(Amounts in
millions)
|
|
Q1
15
|
|
Q4
14
|
|
Q1
14
|
U.S. Life
Insurance
|
|
|
|
|
|
|
|
|
|
|
Long Term Care
Insurance
|
|
$
|
10
|
|
$
|
(506)
|
|
$
|
46
|
|
Life
Insurance
|
|
|
40
|
|
|
1
|
|
|
21
|
|
Fixed
Annuities
|
|
|
31
|
|
|
23
|
|
|
27
|
Total U.S. Life
Insurance
|
|
|
81
|
|
|
(482)
|
|
|
94
|
Total U.S. Life
Insurance
|
|
$
|
81
|
|
$
|
(482)
|
|
$
|
94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in
millions)
|
|
Q1
15
|
|
Q4
14
|
|
Q1
14
|
U.S. Life
Insurance
|
|
|
|
|
|
|
|
|
|
|
Long Term Care
Insurance
|
|
|
|
|
|
|
|
|
|
|
|
Individual
|
|
$
|
10
|
|
$
|
17
|
|
$
|
21
|
|
|
Group
|
|
|
1
|
|
|
6
|
|
|
1
|
|
Life
Insurance
|
|
|
|
|
|
|
|
|
|
|
|
Term Life
|
|
|
9
|
|
|
11
|
|
|
13
|
|
|
Universal
Life
|
|
|
4
|
|
|
7
|
|
|
6
|
|
|
Linked
Benefits
|
|
|
4
|
|
|
5
|
|
|
2
|
|
Fixed
Annuities
|
|
|
326
|
|
|
495
|
|
|
520
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Care Insurance
LTC net operating income was
$10 million, compared with a net
operating loss of $506 million in the
prior quarter and net operating income of $46 million in the prior year. Benefits and other
changes in policy reserves decreased $506
million after-tax versus the prior quarter and increased
$66 million after-tax versus the
prior year. The current quarter included favorable mortality on
existing claims versus both the prior quarter and prior year
partially offset by unfavorable severity given the mix of new
claims with a higher average reserve. Results in the quarter
included net unfavorable items of $7
million after-tax reflecting a refinement to a reserve
calculation on the acquired block of business, partially offset
primarily by a correction related to reinsurance. During the
quarter, the company began implementing a process to accrue for
profits followed by losses on business written since late 1995, but
it had no impact on the current quarter financial results. The
prior quarter impact of the unlocking of assumptions associated
with the active life reserves on the acquired block, as well as
additional adjustments to reserves, was $494
million after-tax. The loss ratio in the current quarter was
72 percent.
Results for the quarter included lower benefits from reduced
benefit options of $3 million
after-tax versus the prior quarter related to the premium increases
approved and implemented to date.
Individual LTC sales of $10
million were lower than the prior quarter and the prior
year. Sales are expected to continue at low levels in the near term
due to the 2014 introduction of a higher priced product and ratings
pressure, but build over time as new products are introduced.
Life Insurance
Life insurance net operating income was
$40 million, compared with
$1 million in the prior quarter and
$21 million in the prior year.
Results in the quarter included favorable mortality versus pricing,
in line with the prior quarter and better than the prior year, and
favorable term life insurance reserve development from aging of the
block and lower new business. During the quarter, the company
completed a reinsurance transaction that reduced paid claims that
were offset with lower premiums resulting in a minimal reduction in
net operating income, but will reduce future excess reserve
financing costs. Results in the prior quarter included an
unfavorable correction to a reserve calculation on a reinsurance
transaction of $32 million. Sales of
$17 million decreased compared to the
prior quarter and the prior year. Linked benefit product deposits
were $41 million in the quarter, down
from $42 million in the prior quarter
and up from $25 million in the prior
year.
Fixed Annuities
Fixed annuities net operating income
was $31 million, compared with
$23 million in the prior quarter and
$27 million in the prior year.
Results in the quarter reflected favorable mortality versus
both the prior quarter and prior year and lower lapses versus the
prior quarter. Sales in the quarter totaled $326 million, down sequentially and versus the
prior year given the lower interest rate environment and ratings
impacts.
Corporate and Other Division
Corporate and Other
Division net operating loss was $41
million, compared with $17
million in the prior quarter and $32
million in the prior year.
Corporate and
Other Division
|
Net Operating
Income (Loss)
|
(Amounts in
millions)
|
|
Q1
15
|
|
Q4
14
|
|
Q1
14
|
International
Protection
|
|
$
|
—
|
|
$
|
(4)
|
|
$
|
7
|
Runoff
|
|
|
11
|
|
|
16
|
|
|
12
|
Corporate and
Other
|
|
|
(52)
|
|
|
(29)
|
|
|
(51)
|
Total Corporate
and Other
|
|
$
|
(41)
|
|
$
|
(17)
|
|
$
|
(32)
|
|
|
|
|
|
|
|
|
|
|
|
|
International Protection net operating income was zero for the
quarter, compared with a net operating loss of $4 million in the prior quarter and net operating
income of $7 million in the prior
year. Results in the prior quarter reflected $4 million of net unfavorable items and the prior
year reflected $4 million of
favorable tax adjustments.
Runoff net operating income was $11
million, compared with $16
million in the prior quarter and $12
million in the prior year. Results in the current quarter
reflect less favorable taxes partially offset by favorable equity
market performance versus the prior quarter primarily impacting
variable annuity products.
Corporate and Other net operating loss was $52 million, compared with $29 million in the prior quarter and $51 million in the prior year. Results in
the prior quarter reflected favorable year-end tax
benefits.
Capital & Liquidity
Genworth maintains solid
capital positions in its operating
subsidiaries.
Key Capital &
Liquidity Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollar amounts in
millions)
|
|
Q1
15
|
|
Q4
14
|
|
Q1
14
|
|
Canada
MI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum Capital Test
Ratio5
|
|
|
233
|
%
|
|
|
225
|
%
|
|
|
229
|
%
|
Australia
MI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prescribed Capital
Amount Ratio5
|
|
|
163
|
%
|
|
|
159
|
%
|
|
|
147
|
%
|
U.S.
MI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Risk-To-Capital Ratio5
|
|
|
14.1:1
|
|
|
|
14.5:1
|
|
|
|
18.7:1
|
|
|
GMICO Risk-To-Capital
Ratio5
|
|
|
13.8:1
|
|
|
|
14.3:1
|
|
|
|
18.4:1
|
|
U.S. Life
Companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Risk-Based Capital (RBC) Ratio5
|
|
|
450
|
%
|
|
|
438
|
%
|
|
|
480
|
%
|
|
Unassigned
Surplus5
|
|
$
|
115
|
|
|
$
|
155
|
|
|
$
|
444
|
|
Lifestyle Protection
Insurance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory
Ratio5
|
|
|
348
|
%
|
|
|
365
|
%
|
|
|
362
|
%
|
Holding
Company6 Cash and Liquid
Assets7
|
|
$
|
1,070
|
|
|
$
|
1,103
|
|
|
$
|
1,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Points
- Canada and Australia paid $126
million in dividends to the holding company during the
quarter;
- U.S. Life Insurance companies unassigned surplus decreased
primarily from approximately $70
million related to the completion of a life reinsurance
transaction that will reduce future excess reserve financing
costs;
- The holding company ended the quarter with a buffer of
approximately $585 million in excess
of one and a half times annual debt service and restricted
cash;
- 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; and
- In April, the Australia
business received regulatory approval for the potential issuance of
up to A$250 million of subordinated
notes, but a decision to issue these notes has not yet been made
and will be subject to business and market conditions.
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. To help families start
"the talk" about their futures and long term care planning,
Genworth recently completed a national #LetsTalk Tour to encourage
conversations and information sharing. Genworth has leadership
positions in mortgage insurance and long term care insurance and
product offerings in life insurance and fixed annuities that assist
consumers in solving their home ownership, insurance and retirement
needs. Headquartered in Richmond,
Virginia, Genworth 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 first quarter 2015
financial supplement are now posted on the company's website.
Additional information regarding business results and strategic
update will be posted on the company's website,
http://investor.genworth.com, by 7:30
a.m. on April 29, 2015.
Investors are encouraged to review these materials.
Genworth will conduct a conference call on April 29, 2015 at 8:00
a.m. (ET) to discuss first quarter 2015 results 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 # 9308558. 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 May 13, 2015 at 888 203.1112 or 719 457.0820
(outside the U.S.); conference ID # 9308558. 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." Operating
earnings (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,
restructuring costs 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, gains (losses) on insurance block transactions and
restructuring costs are also excluded from net operating income
(loss) because, in the company's opinion, they are not indicative
of overall operating trends. Infrequent or unusual 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 first quarter of 2015, the company modified its
definition to explicitly state that restructuring costs, which were
previously included in the infrequent and unusual category, are
excluded from net operating income (loss). There were no
restructuring costs in the periods presented.
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.
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.
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 months ended March 31, 2015 and 2014, as well as for the three
months ended December 31, 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 first quarter of 2014. 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.
Results of Operations by Segment
In the first quarter
of 2015, the company revised how it allocates the consolidated
provision for income taxes to its operating segments to simplify
the process and reflect how the chief operating decision maker is
evaluating segment performance. The revised methodology applies a
specific tax rate to the pre-tax income (loss) of each segment,
which is then adjusted in each segment to reflect the tax
attributes of items unique to that segment such as foreign income.
The difference between the consolidated provision for income taxes
and the sum of the provision for income taxes in each segment is
reflected in Corporate and Other activities. Previously, the
company calculated a unique income tax provision for each segment
based on quarterly changes to tax attributes and implications of
transactions specific to each product within the segment.
The annually-determined tax rates and adjustments to each
segment's provision for income taxes are estimates which are
subject to review and could change from year to year. Prior year
amounts have not been re-presented to reflect this revised
presentation and are, therefore, not comparable to the current year
provision for income taxes by segment. However, the company
does not believe that the previous methodology would have resulted
in a materially different segment-level provision for income
taxes.
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) new insurance written for mortgage
insurance; (2) annualized first-year premiums for long term care
and term life insurance products; (3) annualized first-year
deposits plus five percent of excess deposits for universal and
term universal life insurance products; (4) 10 percent of premium
deposits for linked-benefits products; (5) new and additional
premiums/deposits for fixed annuities; 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 new insurance written,
annualized first-year premiums/deposits, premium equivalents, new
premiums/deposits 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 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.
Management also 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 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 the company's lifestyle protection
insurance business and any other businesses or other 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; adverse tax or
accounting charges; (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 the need to increase 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 (including as a result of the company's actual experience
differing significantly from its assumptions); (iv) ineffective or
inadequate risk management in identifying, controlling or
mitigating risks; weaknesses in, or ineffective, internal controls;
(v) recent or future 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, strategic plans, collateral obligations and
availability and terms of hedging, reinsurance and borrowings; (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 international
subsidiaries) 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 the dividends 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 protect the company against losses;
(xiii) defaults by counterparties to reinsurance arrangements or
derivative instruments; (xiv) changes in valuation of fixed
maturity, equity and trading securities; (xv) defaults or other
events impacting the value of the company's fixed maturity
securities portfolio; (xvi) defaults on the company's commercial
mortgage loans or the mortgage loans underlying its investments in
commercial mortgage-backed securities and volatility in
performance; (xvii) competition; (xviii) reliance on, and loss of,
key distribution relationships; (xix) extensive regulation of the
company's businesses and changes in applicable laws and
regulations; (xx) litigation and regulatory investigations or other
actions (including the two shareholder putative class action
lawsuits alleging securities law violations filed against the
company in 2014); (xxi) the material weakness in the company's
internal control over financial reporting; (xxii) 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; (xxiii) occurrence of natural or man-made disasters or
a pandemic; (xxiv) impact of additional regulations pursuant to the
Dodd-Frank Wall Street Reform and Consumer Protection Act; (xxv)
changes in accounting and reporting standards; (xxvi) impairments
of or valuation allowances against the company's deferred tax
assets; (xxvii) 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);
(xxviii) political and economic instability or changes in
government policies; and (xxix) fluctuations in foreign currency
exchange rates and international securities markets;
- Risks relating primarily to the company's mortgage insurance
businesses, including: (i) deterioration in economic conditions
or a decline in home prices that adversely affect the company's
loss experience in mortgage insurance; (ii) 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; (iii) competition in the company's
international and U.S. mortgage insurance businesses, including
from government and government-owned and government-sponsored
enterprises offering mortgage insurance; (iv) changes in
regulations adversely affecting the company's international
operations; (v) inability to meet the private mortgage insurance
eligibility requirements (PMIERs) on the contemplated timetable
with the contemplated funding; (vi) inability of U.S. mortgage
insurance subsidiaries to meet minimum statutory capital
requirements and hazardous financial condition standards; (vii) the
influence of Federal National Mortgage Association (Fannie Mae),
Federal Home Loan Mortgage Corporation (Freddie Mac) and a small
number of large mortgage lenders on the U.S. mortgage insurance
market and adverse changes to the role or structure of Fannie Mae
and Freddie Mac; (viii) increases in U.S. mortgage insurance
default rates; (ix) inability to realize anticipated benefits of
the company's rescissions, curtailments, loan modifications or
other similar programs in its U.S. mortgage insurance business; (x)
problems associated with foreclosure process defects in
the United States that may defer
claim payments; (xi) competition with government-sponsored
enterprises may put the company at a disadvantage on pricing and
other terms and conditions; (xii) adverse changes in regulations
affecting the company's U.S. mortgage insurance business; (xiii)
decreases in the volume of high loan-to-value mortgage originations
or increases in mortgage insurance cancellations in the United States; (xiv) increases in the use
of alternatives to private mortgage insurance in the United States and reductions in the level
of coverage selected; and (xv) potential liabilities in connection
with the company's U.S. contract underwriting services;
- Risks relating primarily to the company's long term care
insurance, life insurance and annuities businesses, including:
(i) 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 margin reviews 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 margin
calculation as anticipated; (ii) failure to sufficiently increase
demand for the company's long term care insurance, life insurance
and fixed annuity products; (iii) adverse impact on the company's
financial results as a result of projected profits followed by
projected losses (as is currently the case with the company's long
term care insurance business); (iv) deviations from the persistency
assumptions used to price and establish reserves for the company's
insurance policies and annuity contracts; (v) medical advances,
such as genetic research and diagnostic imaging, and related
legislation that impact policyholder behavior in ways adverse to
the company; and (vi) inability to continue to implement actions to
mitigate the impact of statutory reserve requirements;
- Other risks, including: (i) 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 (ii) 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:
(i) the continued suspension of payment of dividends; and (ii)
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
|
|
|
March
31,
|
|
|
2015
|
|
2014
|
Revenues:
|
|
|
|
|
|
|
Premiums
|
|
$
|
1,323
|
|
$
|
1,307
|
Net investment
income
|
|
|
803
|
|
|
805
|
Net investment gains
(losses)
|
|
|
(16)
|
|
|
(17)
|
Insurance and
investment product fees and other
|
|
|
225
|
|
|
227
|
|
Total
revenues
|
|
|
2,335
|
|
|
2,322
|
Benefits and
expenses:
|
|
|
|
|
|
|
Benefits and other
changes in policy reserves
|
|
|
1,243
|
|
|
1,194
|
Interest
credited
|
|
|
180
|
|
|
183
|
Acquisition and
operating expenses, net of deferrals
|
|
|
380
|
|
|
378
|
Amortization of
deferred acquisition costs and intangibles
|
|
|
121
|
|
|
134
|
Interest
expense
|
|
|
116
|
|
|
127
|
|
Total benefits and
expenses
|
|
|
2,040
|
|
|
2,016
|
Income before income
taxes
|
|
|
295
|
|
|
306
|
Provision for income
taxes
|
|
|
91
|
|
|
87
|
Net
income
|
|
|
204
|
|
|
219
|
Less: net income
attributable to noncontrolling interests
|
|
|
50
|
|
|
35
|
Net income available
to Genworth Financial, Inc.'s common stockholders
|
|
$
|
154
|
|
$
|
184
|
|
|
|
|
|
|
|
Net income available
to Genworth Financial, Inc.'s common stockholders per
|
|
|
|
|
|
|
|
common
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.31
|
|
$
|
0.37
|
|
|
Diluted
|
|
$
|
0.31
|
|
$
|
0.37
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
497.0
|
|
|
495.8
|
|
|
Diluted
|
|
|
498.9
|
|
|
502.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Operating Income (Loss) to Net Income
(Loss)
|
(Amounts in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
Three
|
|
months
ended
|
|
months
ended
|
|
March
31,
|
|
December
31,
|
|
|
2015
|
|
2014
|
|
2014
|
Net operating income
(loss):
|
|
|
|
|
|
|
|
|
|
Global Mortgage
Insurance Division
|
|
|
|
|
|
|
|
|
|
|
International
Mortgage Insurance segment
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
$
|
40
|
|
$
|
41
|
|
$
|
36
|
|
Australia
|
|
|
303
|
|
|
62
|
|
|
333
|
|
Other
Countries
|
|
|
(6)
|
|
|
(4)
|
|
|
(7)
|
|
Total International
Mortgage Insurance segment
|
|
|
64
|
|
|
99
|
|
|
62
|
|
U.S. Mortgage
Insurance segment
|
|
|
52
|
|
|
33
|
|
|
21
|
|
Total Global Mortgage
Insurance Division
|
|
|
116
|
|
|
132
|
|
|
83
|
U.S. Life Insurance
Division
|
|
|
|
|
|
|
|
|
|
|
U.S. Life Insurance
segment
|
|
|
|
|
|
|
|
|
|
|
Long Term Care
Insurance
|
|
|
10
|
|
|
46
|
|
|
(506)
|
|
Life
Insurance
|
|
|
40
|
|
|
21
|
|
|
1
|
|
Fixed
Annuities
|
|
|
31
|
|
|
27
|
|
|
23
|
|
Total U.S. Life
Insurance segment
|
|
|
81
|
|
|
94
|
|
|
(482)
|
|
Total U.S. Life
Insurance Division
|
|
|
81
|
|
|
94
|
|
|
(482)
|
Corporate and Other
Division
|
|
|
|
|
|
|
|
|
|
|
International
Protection segment
|
|
|
—
|
|
|
7
|
|
|
(4)
|
|
Runoff
segment
|
|
|
11
|
|
|
12
|
|
|
16
|
|
Corporate and
Other
|
|
|
(52)
|
|
|
(51)
|
|
|
(29)
|
|
Total Corporate and
Other Division
|
|
|
(41)
|
|
|
(32)
|
|
|
(17)
|
Net operating income
(loss)
|
|
|
156
|
|
|
194
|
|
|
(416)
|
Adjustments to net
operating income (loss):
|
|
|
|
|
|
|
|
|
|
Net investment gains
(losses), net (see below for reconciliation)
|
|
|
(2)
|
|
|
(10)
|
|
|
(4)
|
Goodwill impairment,
net
|
|
|
—
|
|
|
—
|
|
|
(274)
|
Tax impact from
potential business portfolio changes
|
|
|
—
|
|
|
—
|
|
|
(66)
|
Net income (loss)
available to Genworth Financial, Inc.'s common
|
|
|
|
|
|
|
|
|
|
|
stockholders
|
|
|
154
|
|
|
184
|
|
|
(760)
|
Add: net income
attributable to noncontrolling interests
|
|
|
50
|
|
|
35
|
|
|
52
|
Net income
(loss)
|
|
$
|
204
|
|
$
|
219
|
|
$
|
(708)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
available to Genworth Financial, Inc.'s common
|
|
|
|
|
|
|
|
|
|
|
stockholders per
common share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.31
|
|
$
|
0.37
|
|
$
|
(1.53)
|
|
Diluted
|
|
$
|
0.31
|
|
$
|
0.37
|
|
$
|
(1.53)
|
Net operating income
(loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.31
|
|
$
|
0.39
|
|
$
|
(0.84)
|
|
Diluted
|
|
$
|
0.31
|
|
$
|
0.39
|
|
$
|
(0.84)
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
497.0
|
|
|
495.8
|
|
|
496.7
|
|
Diluted8
|
|
|
498.9
|
|
|
502.7
|
|
|
496.7
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net
investment gains (losses):
|
|
|
|
|
|
|
|
|
|
Net investment gains
(losses), gross
|
|
$
|
(16)
|
|
$
|
(17)
|
|
$
|
(10)
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
|
Deferred acquisition
costs and other intangible amortization and
certain
|
|
|
6
|
|
|
1
|
|
|
1
|
|
benefit
reserves
|
|
|
|
|
|
|
|
|
|
|
Net investment gains
(losses) attributable to noncontrolling interests
|
|
|
7
|
|
|
1
|
|
|
1
|
|
Taxes
|
|
|
1
|
|
|
5
|
|
|
4
|
Net investment gains
(losses), net of taxes and other adjustments
|
|
$
|
(2)
|
|
$
|
(10)
|
|
$
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets
|
(Amounts in
millions)
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2015
|
|
2014
|
Assets
|
|
|
|
|
|
Cash, cash
equivalents and invested assets
|
|
$
|
80,118
|
|
$
|
78,841
|
|
Deferred acquisition
costs
|
|
|
4,918
|
|
|
5,042
|
|
Intangible
assets
|
|
|
227
|
|
|
272
|
|
Goodwill
|
|
|
15
|
|
|
16
|
|
Reinsurance
recoverable
|
|
|
17,339
|
|
|
17,346
|
|
Other
assets
|
|
|
650
|
|
|
633
|
|
Separate account
assets
|
|
|
9,064
|
|
|
9,208
|
|
|
|
|
Total
assets
|
|
$
|
112,331
|
|
$
|
111,358
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Future policy
benefits
|
|
$
|
36,488
|
|
$
|
35,915
|
|
|
Policyholder account
balances
|
|
|
26,146
|
|
|
26,043
|
|
|
Liability for policy
and contract claims
|
|
|
8,030
|
|
|
8,043
|
|
|
Unearned
premiums
|
|
|
3,731
|
|
|
3,986
|
|
|
Deferred tax and
other liabilities
|
|
|
5,002
|
|
|
4,512
|
|
|
Borrowings related to
securitization entities
|
|
|
205
|
|
|
219
|
|
|
Non-recourse funding
obligations
|
|
|
1,983
|
|
|
1,996
|
|
|
Long-term
borrowings
|
|
|
4,601
|
|
|
4,639
|
|
|
Separate account
liabilities
|
|
|
9,064
|
|
|
9,208
|
|
|
|
|
Total
liabilities
|
|
|
95,250
|
|
|
94,561
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
1
|
|
|
1
|
|
|
Additional paid-in
capital
|
|
|
11,998
|
|
|
11,997
|
|
|
Accumulated other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
Net unrealized
investment gains (losses):
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized gains
(losses) on securities not other-than-temporarily
impaired
|
|
|
2,724
|
|
|
2,431
|
|
|
|
|
|
Net unrealized gains
(losses) on other-than-temporarily impaired securities
|
|
|
24
|
|
|
22
|
|
|
|
|
Net unrealized
investment gains (losses)
|
|
|
2,748
|
|
|
2,453
|
|
|
|
|
Derivatives
qualifying as hedges
|
|
|
2,247
|
|
|
2,070
|
|
|
|
|
Foreign currency
translation and other adjustments
|
|
|
(303)
|
|
|
(77)
|
|
|
Total accumulated
other comprehensive income (loss)
|
|
|
4,692
|
|
|
4,446
|
|
|
Retained
earnings
|
|
|
1,333
|
|
|
1,179
|
|
|
Treasury stock, at
cost
|
|
|
(2,700)
|
|
|
(2,700)
|
|
|
|
|
Total Genworth
Financial, Inc.'s stockholders' equity
|
|
|
15,324
|
|
|
14,923
|
|
|
Noncontrolling
interests
|
|
|
1,757
|
|
|
1,874
|
|
|
|
|
Total stockholders'
equity
|
|
|
17,081
|
|
|
16,797
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
112,331
|
|
$
|
111,358
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of Foreign
Exchange on Operating Results9
Three months ended
March 31, 2015
|
|
|
Percentages
|
|
Percentages
|
|
|
Including
Foreign
|
|
Excluding
Foreign
|
|
|
Exchange
|
|
Exchange10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada Mortgage
Insurance (MI):
|
|
|
|
|
|
Flow new insurance
written
|
|
14%
|
|
24%
|
Flow new insurance
written (1Q15 vs. 4Q14)
|
|
(40)%
|
|
(36)%
|
|
|
|
|
|
|
|
Australia
MI:
|
|
|
|
|
|
|
Flow new insurance
written
|
|
(26)%
|
|
(17)%
|
Flow new insurance
written (1Q15 vs. 4Q14)
|
|
(28)%
|
|
(20)%
|
|
|
|
|
|
|
|
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
|
|
Three
|
|
|
|
|
|
months
ended
|
|
months
ended
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2015
|
|
2014
|
|
2014
|
Net income (loss)
before net income attributable to noncontrolling
interests
|
|
$
|
204
|
|
$
|
219
|
|
$
|
(708)
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests in the Australia MI
business
|
|
|
21
|
|
|
N/A
|
|
|
22
|
|
|
Net income
attributable to noncontrolling interests in the Canada MI
business
|
|
|
29
|
|
|
35
|
|
|
30
|
Net income (loss)
available to Genworth's common stockholders
|
|
$
|
154
|
|
$
|
184
|
|
$
|
(760)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income
(loss) before net operating income attributable to
|
|
|
|
|
|
|
|
|
|
|
noncontrolling
interests
|
|
$
|
211
|
|
$
|
230
|
|
$
|
(363)
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income
attributable to noncontrolling interests in the
|
|
|
|
|
|
|
|
|
|
|
|
Australia MI
business
|
|
|
21
|
|
|
N/A
|
|
|
21
|
|
|
Net operating income
attributable to noncontrolling interests in the
|
|
|
|
|
|
|
|
|
|
|
|
Canada MI
business
|
|
|
34
|
|
|
36
|
|
|
32
|
Net operating income
(loss)
|
|
$
|
156
|
|
$
|
194
|
|
$
|
(416)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Core Yield to Reported Yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
three
|
|
|
|
|
|
|
months
ended
|
|
|
|
|
|
|
March
31,
|
|
(Assets - amounts
in billions)
|
|
2015
|
|
Reported Total
Invested Assets and Cash
|
|
$
|
79.4
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Securities
lending
|
|
|
0.3
|
|
|
|
Unrealized gains
(losses)
|
|
|
7.9
|
|
|
|
Derivative
counterparty collateral
|
|
|
—
|
|
|
Adjusted end of
period invested assets
|
|
$
|
71.2
|
|
|
|
|
|
|
|
|
|
|
|
Average Invested
Assets Used in Reported Yield Calculation
|
|
$
|
71.2
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Restricted commercial
mortgage loans and other invested assets related to
|
|
|
|
|
|
|
securitization entities11
|
|
|
0.2
|
|
|
Average Invested
Assets Used in Core Yield Calculation
|
|
$
|
71.0
|
|
|
|
|
|
|
|
|
|
|
|
(Income - amounts
in millions)
|
|
|
|
|
|
Reported Net
Investment Income
|
|
$
|
803
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Bond calls and
commercial mortgage loan prepayments
|
|
|
14
|
|
|
|
Reinsurance12
|
|
|
15
|
|
|
|
Other non-core
items13
|
|
|
12
|
|
|
|
Restricted commercial
mortgage loans and other invested assets related to
|
|
|
|
|
|
|
securitization entities11
|
|
|
3
|
|
|
Core Net Investment
Income
|
|
$
|
759
|
|
|
|
|
|
|
|
|
|
|
|
Reported
Yield
|
|
|
4.51
|
%
|
|
Core Yield
|
|
|
4.28
|
%
|
|
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 Excludes net operating income attributable to
noncontrolling interests in the Australia MI business of
$21 million in the first quarter of
2015 and fourth quarter of 2014 related to the Australia MI initial
public offering (IPO) completed on May 21,
2014.
4 Percent change excludes the impact of foreign
exchange.
5 Company estimate for the first quarter of 2015, due to
timing of the filing of statutory statements.
6 Holding company cash and liquid assets comprise assets
held in Genworth Holdings, Inc. (the issuer of outstanding public
debt) which is a wholly-owned subsidiary of Genworth Financial,
Inc.
7 Comprises cash and cash equivalents of $820 million, $953
million and $1,118,
respectively, and U.S. government bonds of $250 million, $150
million and $150 million,
respectively, as of March 31, 2015,
December 31, 2014 and March 31, 2014.
8 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 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 months ended December 31, 2014,
dilutive potential weighted average common shares outstanding would
have been 499.9 million.
9 All percentages are comparing the first quarter of
2015 to the first quarter of 2014 unless otherwise stated.
10 The impact of foreign exchange was calculated using
the comparable prior period exchange rates.
11 Represents the incremental assets and investment
income related to restricted commercial mortgage loans and other
invested assets.
12 Represents imputed investment income related to
reinsurance agreements in the lifestyle protection insurance
business.
13 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-first-quarter-2015-results-net-income-of-154-million-or-031-per-share-300073762.html
SOURCE Genworth Financial, Inc.