RICHMOND, Va., Nov. 3, 2016 /PRNewswire/ --
- Net Loss1 And Net Operating Loss2
Included $548 Million After-Tax, Or
$1.10 Per Diluted Share, Of Net
Unfavorable Items Relating To Increase To Long Term Care Insurance
(LTC) Claim Reserves & Deferred Tax Charges
- Strong Loss Ratio, New Insurance Written (NIW) And Capital
Levels In U.S. Mortgage Insurance (MI)
- Strong Loss Ratio In Canada
MI; Loss Ratio Higher In Australia
MI From Continued Pressure In Queensland And Western Australia
- Completed Repatriation Of Bermuda Subsidiary On October 1, 2016 As Part Of U.S. Life Insurance
Restructuring Plan
- Holding Company Cash And Liquid Assets Increased To
Approximately $1.2 Billion
Genworth Financial, Inc. (NYSE: GNW) today reported results for
the period ended September 30, 2016.
The company reported a net loss of $380
million, or $0.76 per diluted
share, in the third quarter of 2016, compared with a net loss of
$284 million, or $0.57 per diluted share, in the third quarter of
2015. The net operating loss for the third quarter of 2016 was
$405 million, or $0.81 per diluted share, compared with net
operating income of $64 million, or
$0.13 per diluted share, in the third
quarter of 2015. The net loss and net operating loss included
$548 million after-tax, or
$1.10 per diluted share, of net
unfavorable items discussed below.
As previously announced, during the third quarter of 2016, the
company completed a review of its LTC claim reserves. The company
made several changes to its assumptions and methodologies primarily
impacting claim terminations, benefit utilization and incurred but
not reported reserves. As a result of these changes, claim reserves
were increased by approximately $435
million pre-tax resulting in a charge to earnings of
$283 million after-tax, or
$0.57 per diluted share.
Additionally, the company recorded a non-cash charge of
$265 million, or $0.53 per diluted share, related to deferred tax
assets that are not expected to be utilized before their expiration
in light of the company's latest financial projections, including
the impact to current and future earnings associated with higher
expected claim costs in LTC and sustained low interest rates.
"While our mortgage insurance performance remained strong, it
was overshadowed by the previously announced charges related to the
review of our LTC claim reserves and taxes," said Tom McInerney, President and CEO. "LTC
remains challenged, but we continue to receive significant premium
rate increases and remain focused on executing our multi-year rate
action plan."
Financial Performance
Consolidated Net
Loss &
|
|
|
Net Operating
Income (Loss)
|
|
|
|
|
|
Three months ended
September 30
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Per
|
|
|
|
|
Per
|
|
|
|
|
|
|
|
|
diluted
|
|
|
|
|
diluted
|
|
Total
|
(Amounts in
millions, except per share)
|
|
Total
|
|
share
|
|
Total
|
|
share
|
|
% change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss available to
Genworth's common stockholders
|
|
$
|
(380)
|
|
$
|
(0.76)
|
|
$
|
(284)
|
|
$
|
(0.57)
|
|
(34)%
|
Net operating income
(loss)
|
|
$
|
(405)
|
|
$
|
(0.81)
|
|
$
|
64
|
|
$
|
0.13
|
|
NM3
|
Weighted-average
diluted shares4
|
|
|
498.3
|
|
|
|
|
|
497.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
2016
|
|
2015
|
|
|
Book value per common
share
|
|
|
|
|
$
|
29.84
|
|
|
|
|
$
|
27.29
|
|
|
Book value per common
share, excluding accumulated other comprehensive income
(loss)
|
|
|
|
|
$
|
19.40
|
|
|
|
|
$
|
20.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The net loss was impacted by net investment gains, net of taxes
and other adjustments, of $12 million
in the quarter, compared to net investment losses of $21 million in the prior year. The net loss in
the prior year reflected an after-tax loss of $296 million related to a write-off of deferred
acquisition costs (DAC) from entering into a life block sale.
Net investment income increased to $805
million in the quarter, up from $779
million in the prior quarter and up from $783 million in the prior year. Prepayment speed
adjustments related to residential mortgage-backed securities were
favorable versus both the prior quarter and prior year in addition
to favorable variable investment income compared to the prior
quarter. The reported yield and core yield2 for the
current quarter were 4.62 percent and 4.51 percent,
respectively.
Net operating income (loss) results are summarized in the table
below:
Net Operating
Income (Loss)
|
|
|
|
|
|
|
|
|
|
(Amounts in
millions)
|
|
Q3
16
|
|
Q2
16
|
|
Q3
15
|
U.S. Mortgage
Insurance
|
|
$
|
67
|
|
$
|
61
|
|
$
|
37
|
Canada Mortgage
Insurance
|
|
|
36
|
|
|
38
|
|
|
38
|
Australia Mortgage
Insurance
|
|
|
14
|
|
|
15
|
|
|
21
|
U.S. Life
Insurance
|
|
|
(207)
|
|
|
55
|
|
|
40
|
Runoff
|
|
|
12
|
|
|
6
|
|
|
(4)
|
Corporate and
Other
|
|
|
(327)
|
|
|
(52)
|
|
|
(68)
|
Total Net
Operating Income (Loss)
|
|
$
|
(405)
|
|
$
|
123
|
|
$
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income (loss) represents net operating income
(loss) from continuing operations excluding net investment gains
(losses), 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
MI businesses in Canada and
Australia, 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.
U.S. Mortgage Insurance
Operating
Metrics
|
|
|
|
|
|
|
|
|
|
(Dollar amounts in
millions)
|
|
Q3
16
|
|
Q2
16
|
|
Q3
15
|
Net operating
income
|
|
$
|
67
|
|
$
|
61
|
|
$
|
37
|
New insurance
written
|
|
|
|
|
|
|
|
|
|
|
Primary
Flow
|
|
$
|
12,800
|
|
$
|
11,400
|
|
$
|
9,300
|
Loss ratio
|
|
|
21%
|
|
|
24%
|
|
|
43%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. MI net operating income was $67
million, compared with $61
million in the prior quarter and $37
million in the prior year. The loss ratio in the current
quarter was 21 percent, down three points sequentially and down 22
points from the prior year primarily reflecting the continued
decline and improved performance in delinquencies from the 2005 to
2008 book years. During the quarter, the company made a favorable
$6 million after-tax adjustment to
its loss reserves associated with lower expected claim rates on
early stage delinquencies, partially offset by higher claim
severity on late stage delinquencies. This adjustment favorably
impacted the loss ratio by six points.
Flow NIW of $12.8 billion
increased 12 percent from the prior quarter and 38 percent versus
the prior year primarily from a larger purchase originations market
and higher refinance originations from lower interest rates. During
the third quarter of 2016, the company's concentration of single
premium flow NIW was lower than the prior quarter and the prior
year as it continues its selective participation in this
market.
Canada Mortgage Insurance
Operating
Metrics
|
|
|
|
|
|
|
|
|
|
(Dollar amounts in
millions)
|
|
Q3
16
|
|
Q2
16
|
|
Q3
15
|
Net operating
income
|
|
$
|
36
|
|
$
|
38
|
|
$
|
38
|
New insurance
written
|
|
|
|
|
|
|
|
|
|
|
Flow
|
|
$
|
5,300
|
|
$
|
4,400
|
|
$
|
6,600
|
|
Bulk
|
|
$
|
5,100
|
|
$
|
19,700
|
|
$
|
4,800
|
Loss ratio
|
|
|
24%
|
|
|
20%
|
|
|
21%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada MI reported net operating income of $36 million versus $38
million in the prior quarter and the prior year. The loss
ratio in the quarter was 24 percent, up four points from the prior
quarter and up three points compared to the prior year primarily
from an increase in new delinquencies, net of cures, in
oil-producing regions. Results versus the prior quarter and prior
year included increased earned premiums from a higher level of NIW
in recent years.
Flow NIW was up 20 percent5 sequentially
primarily from a seasonally larger originations market and down 18
percent5 from the prior year primarily from targeted
underwriting changes in select markets and a smaller market
size. In addition, the company completed several bulk transactions
in the quarter of $5.1 billion,
consisting of high quality low loan-to-value prime loans.
Australia Mortgage Insurance
Operating
Metrics
|
|
|
|
|
|
|
|
|
|
(Dollar amounts in
millions)
|
|
Q3
16
|
|
Q2
16
|
|
Q3
15
|
Net operating
income
|
|
$
|
14
|
|
$
|
15
|
|
$
|
21
|
New insurance
written
|
|
|
|
|
|
|
|
|
|
|
Flow
|
|
$
|
4,600
|
|
$
|
5,000
|
|
$
|
6,300
|
|
Bulk
|
|
$
|
—
|
|
$
|
800
|
|
$
|
—
|
Loss ratio
|
|
|
42%
|
|
|
36%
|
|
|
29%
|
Australia MI reported net operating income of $14 million versus $15
million in the prior quarter and $21
million in the prior year. The loss ratio in the quarter was
42 percent, up six points sequentially and up 13 points from the
prior year. Continued unfavorable experience primarily from the
commodity dependent regions of Queensland and Western Australia contributed to unfavorable
aging of existing delinquencies versus the prior quarter and prior
year as well as a 16 percent increase in new delinquencies versus
the prior year. Results in the prior year included actuarial
updates that had a negligible impact on earnings, but did
unfavorably impact the prior year loss ratio by approximately seven
points.
Flow NIW was down eight percent5 sequentially and
down 27 percent5 from the prior year from a smaller high
loan-to-value originations market.
U.S. Life Insurance
Operating
Metrics
|
|
|
|
|
|
|
|
|
|
(Amounts in
millions)
|
|
Q3
16
|
|
Q2
16
|
|
Q3
15
|
Net operating income
(loss)
|
|
|
|
|
|
|
|
|
|
|
Long Term Care
Insurance
|
|
$
|
(270)
|
|
$
|
37
|
|
$
|
(10)
|
|
Life
Insurance
|
|
|
48
|
|
|
31
|
|
|
31
|
|
Fixed
Annuities
|
|
|
15
|
|
|
(13)
|
|
|
19
|
|
Total U.S. Life
Insurance
|
|
$
|
(207)
|
|
$
|
55
|
|
$
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
Long Term Care
Insurance
|
|
|
|
|
|
|
|
|
|
|
|
Individual
|
|
$
|
2
|
|
$
|
4
|
|
$
|
7
|
|
|
Group
|
|
|
3
|
|
|
2
|
|
|
1
|
|
Life
Insurance
|
|
|
|
|
|
|
|
|
|
|
|
Term Life
|
|
|
—
|
|
|
2
|
|
|
7
|
|
|
Universal
Life
|
|
|
1
|
|
|
1
|
|
|
2
|
|
|
Linked
Benefits
|
|
|
—
|
|
|
1
|
|
|
3
|
|
Fixed
Annuities
|
|
|
1
|
|
|
9
|
|
|
260
|
Long Term Care Insurance
LTC had a net operating loss of $270
million, compared with net operating income of $37 million in the prior quarter and a net
operating loss of $10 million in the
prior year. During the quarter, the company completed its annual
review of assumptions and methodologies related to its LTC claim
reserves. Based on this review, which included an additional year
of claims experience since the last annual review in the third
quarter of 2015, the company updated several assumptions and
methodologies related to LTC claim reserves. The updates included
the following:
- Reflected differences in claim termination rate assumptions
between product types and daily benefit amounts;
- Reduced claim termination rate assumptions for longer duration
claims for certain product types;
- Modestly refined utilization rate assumptions; and
- Refined methodology primarily related to the calculation of
incurred but not reported reserves to better reflect the aging of
the block.
As a result of this review, the company increased LTC claim
reserves by approximately $435
million pre-tax resulting in an after-tax charge to earnings
of $283 million for the third
quarter. The updated assumptions also increased new claim severity
versus the prior quarter and prior year.
Results for the quarter included a less favorable impact from
higher premiums and reduced benefit options of $4 million after-tax versus the prior quarter and
a more favorable impact of $35
million after-tax versus the prior year related to premium
increases from in force rate actions approved and implemented to
date.
Results in the prior quarter included $29
million after-tax of net unfavorable adjustments while
results in the prior year included $21
million of after-tax unfavorable items.
Life Insurance
Life insurance had net operating income of $48 million, compared with $31 million in the prior quarter and the prior
year. Results versus the prior quarter reflect higher investment
income from favorable prepayment speed adjustments related to
residential mortgage-backed securities as well as favorable in
force performance and lower expenses. Results versus the prior year
reflected lower reinsurance expenses.
Fixed Annuities
Fixed annuities had net operating income of $15 million, compared with a net operating loss
of $13 million in the prior quarter
and net operating income of $19
million in the prior year. Results in the quarter include an
$8 million after-tax unfavorable
correction related to state guaranty funds, partially offset by
favorable variable investment income versus the prior quarter.
Results in the prior quarter included $28
million after-tax of unfavorable items.
Runoff
Runoff net operating income was $12
million, compared with net operating income of $6 million in the prior quarter and a net
operating loss of $4 million in the
prior year.
Corporate And Other
Corporate and Other net operating loss was $327 million, compared with $52 million in the prior quarter and $68 million in the prior year. Results in the
quarter reflected $265 million of
deferred tax charges.
Capital & Liquidity
The following table summarizes the capital positions of
Genworth's operating subsidiaries.
Key Capital &
Liquidity Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollar amounts in
millions)
|
|
Q3
16
|
|
Q2
16
|
|
Q3
15
|
U.S.
MI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Risk-To-Capital Ratio6
|
|
|
15.0:1
|
|
|
|
15.0:1
|
|
|
|
14.3:1
|
|
|
Genworth Mortgage
Insurance Corporation Risk-To-Capital
Ratio6
|
|
|
15.0:1
|
|
|
|
15.1:1
|
|
|
|
14.3:1
|
|
|
Private Mortgage
Insurer Eligibility Requirements (PMIERs) Sufficiency
Ratio7
|
|
|
117
|
%
|
|
|
115
|
%
|
|
|
N/A
|
|
Canada
MI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum Capital Test
(MCT) Ratio6
|
|
|
236
|
%
|
|
|
233
|
%
|
|
|
228
|
%
|
Australia
MI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prescribed Capital
Amount (PCA) Ratio6
|
|
|
155
|
%
|
|
|
156
|
%
|
|
|
167
|
%
|
U.S. Life Insurance
Companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Risk-Based Capital (RBC)
Ratio6
|
|
|
345
|
%
|
|
|
373
|
%
|
|
|
444
|
%
|
|
Genworth Life
Insurance Company Unassigned
Surplus6
|
|
$
|
(650)
|
|
|
$
|
(410)
|
|
|
$
|
75
|
|
Holding Company
Cash8 and Liquid Assets9
|
|
$
|
1,165
|
|
|
$
|
934
|
|
|
$
|
983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Points
- U.S. MI PMIERs sufficiency ratio increased in the quarter and
the business remained PMIERs compliant, with a buffer as of
September 30, 2016;
- Canada MI and Australia MI continue to maintain solid capital
ratios in excess of management targets;
- U.S. life insurance companies' unassigned surplus and RBC ratio
decreased from the prior quarter primarily from the increase in LTC
claim reserves;
- The holding company ended the quarter with $1,165 million of cash and liquid assets,
representing a buffer of approximately $720
million in excess of one and a half times annual debt
service and restricted cash and liquid assets; and
- Holding company cash and liquid assets increased from the prior
quarter from $194 million of
intercompany tax payments primarily related to the life block
transaction completed in the first quarter of 2016, of which
$175 million is committed to be used
to facilitate the separation and isolation of the LTC business,
$65 million of dividends from the
international operating companies and $32
million of net other items and expenses, partially offset by
$60 million paid for debt interest
expense.
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a Fortune 500 insurance
holding company committed to helping families achieve the dream of
homeownership and address the financial challenges of aging through
its leadership positions in mortgage insurance and long term care
insurance. 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 third quarter 2016 financial
supplement are now posted on the company's website. Additional
information regarding business results will be posted on the
company's website, http://investor.genworth.com, by 7:30 a.m. on November 4,
2016. Investors are encouraged to review these
materials.
Genworth will conduct a conference call on November 4, 2016 at 8:00
a.m. (ET) to discuss business results. 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 # 3198608. To participate in the
call by webcast, register at http://investor.genworth.com at least
15 minutes prior to the webcast to download and install any
necessary software.
Replays of the call will be available through November 21, 2016 at 888 203.1112 or 719 457.0820
(outside the U.S.); conference ID # 3198608. 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 common share." Net operating income (loss) per common
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.
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.
Adjustments to reconcile net income (loss) attributable to
Genworth's common stockholders and net operating income (loss)
assume a 35 percent tax rate (unless otherwise indicated) and are
net of the portion attributable to noncontrolling interests. Net
investment gains (losses) are also adjusted for DAC and other
intangible amortization and certain benefit reserves.
In June 2016, the company
completed the sale of its term life insurance new business platform
and recorded a pre-tax gain of $12
million. In May 2016, the
company completed the sale of its mortgage insurance business in
Europe and recorded an additional
pre-tax loss of $2 million. The
company also incurred a tax charge of $7
million in the third quarter of 2015 from potential business
portfolio changes related to this business. These transactions were
excluded from net operating income (loss) for the periods presented
as they related to a gain (loss) on the sale of businesses.
In June 2016, the company settled
restricted borrowings of $70 million
related to a securitization entity and recorded a $64 million pre-tax gain related to the early
extinguishment of debt. In the third quarter of 2015, the company
paid an early redemption payment of approximately $1 million, net of the portion attributable to
noncontrolling interests, related to the early redemption of
Genworth Financial Mortgage Insurance Pty Limited's notes that were
scheduled to mature in 2021. In the third quarter of 2015, the
company also repurchased approximately $50
million principal amount of Genworth Holdings, Inc.'s notes
with various maturity dates for a pre-tax loss of $1 million. These transactions were excluded from
net operating income (loss) for the periods presented as they
related to a gain (loss) on the early extinguishment of debt.
In the third quarter of 2015, the company recorded a pre-tax DAC
impairment of $455 million on certain
term life insurance policies in connection with entering into an
agreement to complete a life block transaction.
In the third and second quarters of 2016, the company recorded a
pre-tax expense of $2 million and
$5 million, respectively, related to
restructuring costs as part of an expense reduction plan as the
company evaluates and appropriately sizes its organizational needs
and expenses.
There were no infrequent or unusual items excluded from net
operating income (loss) during the periods presented.
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 September 30, 2016 and 2015, as well as for the
three months ended June 30, 2016.
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 items that
do not reflect the underlying performance of the investment
portfolio. 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) 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; and (5) new and additional
premiums/deposits for fixed annuities. 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 and new premiums/deposits 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 also regularly monitors and reports a loss ratio for
the company's businesses. For the mortgage 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 related to the proposed transaction with China
Oceanwide Holdings Group Co., Ltd. (China Oceanwide) including:
the company's inability to complete the transaction in a timely
manner or at all; the company's inability to obtain stockholder or
regulatory approvals, or the possibility that the parties may delay
the transaction or that materially burdensome or adverse regulatory
conditions may be imposed in connection with any such regulatory
approvals; legal proceedings may be instituted against the company
in connection with the proposed transaction; the proposed
transaction may disrupt the company's current plans and operations;
certain restrictions during the pendency of the transaction may
impact the company's ability to pursue certain business
opportunities or strategic transactions; there may be insufficient
continued availability of capital and financing to the company
before the consummation of the transaction; there may be further
rating agency actions and downgrades in the company's financial
strength ratings; there may be changes in applicable laws or
regulations; the company may not recognize the anticipated benefits
of the transaction; the amount of the costs, fees, expenses and
other charges related to the transaction may be material;
management's attention may be diverted from the company's ongoing
business operations; the merger agreement may be terminated in
circumstances that would require the company to pay China Oceanwide
a fee; the company's ability to attract, recruit, retain and
motivate current and prospective employees may be adversely
affected; and disruptions and uncertainty relating to the
transaction, whether or not it is completed, may harm the company's
relationships with its employees, customers, distributors, vendors
or other business partners, and may result in a negative impact on
the company's business;
- strategic risks in the event the proposed transaction
with China Oceanwide is not consummated including: the
company's inability to successfully execute alternative strategic
plans to effectively address its current business challenges
(including with respect to the restructuring of its U.S. life
insurance businesses, debt obligations, cost savings, ratings and
capital); the company's inability to attract buyers for any
businesses or other assets it may seek to sell, or securities it
may seek to issue, in each case, in a timely manner on anticipated
terms; 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; or adverse tax or
accounting charges; and 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;
- risks relating to estimates, assumptions and valuations
including: risks related to the impact of the company's annual
review of assumptions and methodologies related to its long term
care insurance claim reserves in the third quarter of 2016 and its
margin reviews in the fourth quarter of 2016, including risks that
additional information obtained in finalizing its margin review in
the fourth quarter of 2016 or other changes to assumptions or
methodologies materially affect the impact on margins or that the
company underestimates the magnitude of impact the updated claim
reserves assumptions have on its margins; inadequate reserves and
the need to increase reserves (including as a result of changes the
company made to its assumptions in the third quarter of 2016 in
connection with its annual review of its long term care insurance
claim reserves and any changes the company may make in the future
to its assumptions, methodologies or otherwise in connection with
periodic or other reviews); inaccurate models; deviations from the
company's estimates and actuarial assumptions or other reasons in
its long term care insurance, life insurance and/or annuity
businesses; accelerated amortization of deferred acquisition costs
(DAC) and present value of future profits (PVFP) (including as a
result of any changes the company made to its assumptions in the
third quarter of 2016 in connection with its annual review of its
long term care insurance claim reserves and any changes it may make
in the future to its assumptions, methodologies or otherwise in
connection with periodic or other reviews); adverse impact on the
company's financial results as a result of projected profits
followed by projected losses (as is currently the case with its
long term care insurance business); and changes in valuation of
fixed maturity, equity and trading securities;
- risks relating to economic, market and political
conditions including: downturns and volatility in global
economies and equity and credit markets; interest rates and changes
in rates (particularly given the historically low interest rate
environment) have adversely impacted, and may continue to
materially adversely impact, the company's business and
profitability; deterioration in economic conditions or a decline in
home prices that adversely affect the company's loss experience in
mortgage insurance; political and economic instability or changes
in government policies; and fluctuations in foreign currency
exchange rates and international securities markets;
- regulatory and legal risks including: extensive
regulation of the company's businesses and changes in applicable
laws and regulations; litigation and regulatory investigations or
other actions; dependence on dividends and other distributions from
the company's subsidiaries (particularly its 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 its subsidiaries and insurance,
regulatory or corporate law restrictions; adverse change in
regulatory requirements, including risk-based capital; changes in
regulations adversely affecting the company's international
operations; inability to meet or maintain the private mortgage
insurer eligibility requirements (PMIERs); inability of the
company's U.S. mortgage insurance subsidiaries to meet minimum
statutory capital requirements and hazardous financial condition
standards; 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; adverse changes in regulations
affecting the company's mortgage insurance businesses; inability to
continue to implement actions to mitigate the impact of statutory
reserve requirements; impact of additional regulations pursuant to
the Dodd-Frank Wall Street Reform and Consumer Protection Act (the
Dodd-Frank Act); and changes in accounting and reporting
standards;
- liquidity, financial strength ratings, credit and
counterparty risks including: insufficient internal sources to
meet liquidity needs and limited or no access to capital (including
the company's inability to replace its credit facility); recent or
future adverse rating agency actions, including with respect to
rating downgrades or potential downgrades or being put on review
for potential downgrade (including in connection with the company's
recent announcement of a material increase to the company's long
term care insurance claim reserves), 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; defaults by counterparties to
reinsurance arrangements or derivative instruments; defaults or
other events impacting the value of the company's fixed maturity
securities portfolio; and defaults on the company's commercial
mortgage loans or the mortgage loans underlying its investments in
commercial mortgage-backed securities and volatility in
performance;
- operational risks including: inability to retain,
attract and motivate qualified employees or senior management;
ineffective or inadequate risk management in identifying,
controlling or mitigating risks; reliance on, and loss of, key
customer or distribution relationships; availability, affordability
and adequacy of reinsurance to protect the company against losses;
competition; competition in the company's mortgage insurance
businesses from government and government-owned and
government-sponsored enterprises (GSEs) offering mortgage
insurance; material weakness in, or ineffective, internal control
over financial reporting; and 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, its confidential information;
- insurance and product-related risks including: 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 and as may be
required from time to time in the future (including as a result of
the company's failure to obtain any necessary regulatory approvals
or unwillingness or inability of policyholders to pay increased
premiums), including to offset the impact on the company's margins
of updated claim reserves assumptions in connection with its annual
review of its long term care insurance claim reserves in the third
quarter of 2016 and its margin reviews in the fourth quarter of
2016; the company's inability to reflect future premium increases
and other management actions in its margin calculation as
anticipated, including in connection with its margin reviews in the
fourth quarter of 2016; failure to sufficiently increase new sales
for the company's long term care insurance products; inability to
realize anticipated benefits of the company's rescissions,
curtailments, loan modifications or other similar programs in its
mortgage insurance businesses; premiums for the significant portion
of the company's 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;
decreases in the volume of high loan-to-value mortgage originations
or increases in mortgage insurance cancellations; increases in the
use of alternatives to private mortgage insurance and reductions in
the level of coverage selected; potential liabilities in connection
with the company's U.S. contract underwriting services; and medical
advances, such as genetic research and diagnostic imaging, and
related legislation that impact policyholder behavior in ways
adverse to the company;
- other risks including: occurrence of natural or man-made
disasters or a pandemic; impairments of or valuation allowances
against the company's deferred tax assets; 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 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:
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
|
|
|
|
|
|
September
30,
|
|
|
|
|
|
2016
|
|
2015
|
Revenues:
|
|
|
|
|
|
|
Premiums
|
|
$
|
1,108
|
|
$
|
1,145
|
Net investment
income
|
|
|
805
|
|
|
783
|
Net investment gains
(losses)
|
|
|
20
|
|
|
(51)
|
Policy fees and other
income
|
|
|
217
|
|
|
223
|
Total
revenues
|
|
|
2,150
|
|
|
2,100
|
Benefits and
expenses:
|
|
|
|
|
|
|
Benefits and other
changes in policy reserves
|
|
|
1,662
|
|
|
1,290
|
Interest
credited
|
|
|
173
|
|
|
179
|
Acquisition and
operating expenses, net of deferrals
|
|
|
269
|
|
|
314
|
Amortization of
deferred acquisition costs and intangibles
|
|
|
94
|
|
|
563
|
Interest
expense
|
|
|
77
|
|
|
105
|
Total benefits and
expenses
|
|
|
2,275
|
|
|
2,451
|
Loss from continuing
operations before income taxes
|
|
|
(125)
|
|
|
(351)
|
Provision (benefit)
for income taxes
|
|
|
222
|
|
|
(134)
|
Loss from continuing
operations
|
|
|
(347)
|
|
|
(217)
|
Income (loss) from
discontinued operations, net of taxes
|
|
|
15
|
|
|
(21)
|
Net
loss
|
|
|
(332)
|
|
|
(238)
|
Less: net income
attributable to noncontrolling interests
|
|
|
48
|
|
|
46
|
Net loss available to
Genworth Financial, Inc.'s common stockholders
|
|
$
|
(380)
|
|
$
|
(284)
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing
operations available to Genworth Financial, Inc.'s
|
|
|
|
|
|
|
common stockholders per
common share:
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.79)
|
|
$
|
(0.53)
|
Diluted
|
|
$
|
(0.79)
|
|
$
|
(0.53)
|
Net loss available to
Genworth Financial, Inc.'s common stockholders
|
|
|
|
|
|
|
per common
share:
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.76)
|
|
$
|
(0.57)
|
Diluted
|
|
$
|
(0.76)
|
|
$
|
(0.57)
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
498.3
|
|
|
497.4
|
Diluted4
|
|
|
498.3
|
|
|
497.4
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Operating Income (Loss) to Net Income
(Loss)
|
(Amounts in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
Three
|
|
|
|
|
|
months
ended
|
|
months
ended
|
|
|
|
|
|
September
30,
|
|
June
30,
|
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
Net operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
U.S. Mortgage
Insurance segment
|
|
$
|
67
|
|
$
|
37
|
|
$
|
61
|
Canada Mortgage
Insurance segment
|
|
|
36
|
|
|
38
|
|
|
38
|
Australia Mortgage
Insurance segment
|
|
|
14
|
|
|
21
|
|
|
15
|
U.S. Life Insurance
segment:
|
|
|
|
|
|
|
|
|
|
Long Term Care
Insurance
|
|
|
(270)
|
|
|
(10)
|
|
|
37
|
Life
Insurance
|
|
|
48
|
|
|
31
|
|
|
31
|
Fixed
Annuities
|
|
|
15
|
|
|
19
|
|
|
(13)
|
Total U.S. Life
Insurance segment
|
|
|
(207)
|
|
|
40
|
|
|
55
|
Runoff
segment
|
|
|
12
|
|
|
(4)
|
|
|
6
|
Corporate and
Other
|
|
|
(327)
|
|
|
(68)
|
|
|
(52)
|
Net operating income
(loss)
|
|
|
(405)
|
|
|
64
|
|
|
123
|
Adjustments to net
operating income (loss), net of portion attributable to
|
|
|
|
|
|
|
|
|
|
noncontrolling
interests:
|
|
|
|
|
|
|
|
|
|
Net investment gains
(losses), net (see below for reconciliation)
|
|
|
18
|
|
|
(33)
|
|
|
39
|
Gains (losses) on
sale of businesses
|
|
|
—
|
|
|
—
|
|
|
10
|
Gains (losses) on
early extinguishment of debt
|
|
|
—
|
|
|
(2)
|
|
|
64
|
Gains (losses) from
life block transactions
|
|
|
—
|
|
|
(455)
|
|
|
—
|
Expenses related to
restructuring
|
|
|
(2)
|
|
|
—
|
|
|
(5)
|
Taxes on
adjustments
|
|
|
(6)
|
|
|
163
|
|
|
(38)
|
Income (loss) from
continuing operations available to Genworth
|
|
|
|
|
|
|
|
|
|
Financial, Inc.'s
common stockholders
|
|
|
(395)
|
|
|
(263)
|
|
|
193
|
Add: income from
continuing operations attributable to
|
|
|
|
|
|
|
|
|
|
noncontrolling
interests
|
|
|
48
|
|
|
46
|
|
|
48
|
Income (loss) from
continuing operations
|
|
|
(347)
|
|
|
(217)
|
|
|
241
|
Income (loss) from
discontinued operations, net of taxes
|
|
|
15
|
|
|
(21)
|
|
|
(21)
|
Net income
(loss)
|
|
|
(332)
|
|
|
(238)
|
|
|
220
|
Less: net income
attributable to noncontrolling interests
|
|
|
48
|
|
|
46
|
|
|
48
|
Net income (loss)
available to Genworth Financial, Inc.'s common
|
|
|
|
|
|
|
|
|
|
stockholders
|
|
$
|
(380)
|
|
$
|
(284)
|
|
$
|
172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
available to Genworth Financial, Inc.'s common
|
|
|
|
|
|
|
|
|
|
stockholders per common
share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.76)
|
|
$
|
(0.57)
|
|
$
|
0.35
|
Diluted
|
|
$
|
(0.76)
|
|
$
|
(0.57)
|
|
$
|
0.34
|
Net operating income
(loss) per common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.81)
|
|
$
|
0.13
|
|
$
|
0.25
|
Diluted
|
|
$
|
(0.81)
|
|
$
|
0.13
|
|
$
|
0.25
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
498.3
|
|
|
497.4
|
|
|
498.5
|
Diluted4
|
|
|
498.3
|
|
|
497.4
|
|
|
500.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net
investment gains (losses):
|
|
|
|
|
|
|
|
|
|
Net investment gains
(losses), gross
|
|
$
|
20
|
|
$
|
(51)
|
|
$
|
30
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
Deferred acquisition
costs and other intangible amortization and
|
|
|
|
|
|
|
|
|
|
certain
benefit reserves
|
|
|
—
|
|
|
10
|
|
|
6
|
Net investment gains
(losses) attributable to noncontrolling interests
|
|
|
(2)
|
|
|
8
|
|
|
3
|
Net investment gains
(losses), net
|
|
$
|
18
|
|
$
|
(33)
|
|
$
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets
|
(Amounts in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
Assets
|
|
|
|
|
|
Cash, cash
equivalents and invested assets
|
|
$
|
79,015
|
|
$
|
75,746
|
|
Deferred acquisition
costs
|
|
|
3,982
|
|
|
4,398
|
|
Intangible assets and
goodwill
|
|
|
258
|
|
|
357
|
|
Reinsurance
recoverable
|
|
|
17,542
|
|
|
17,245
|
|
Deferred tax and
other assets
|
|
|
570
|
|
|
675
|
|
Separate account
assets
|
|
|
7,485
|
|
|
7,883
|
|
Assets held for
sale
|
|
|
—
|
|
|
127
|
|
Total
assets
|
|
$
|
108,852
|
|
$
|
106,431
|
Liabilities and
equity
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Future policy
benefits
|
|
$
|
37,405
|
|
$
|
36,475
|
|
Policyholder account
balances
|
|
|
25,867
|
|
|
26,209
|
|
Liability for policy
and contract claims
|
|
|
8,869
|
|
|
8,095
|
|
Unearned
premiums
|
|
|
3,464
|
|
|
3,308
|
|
Deferred tax and other
liabilities
|
|
|
4,431
|
|
|
3,028
|
|
Borrowings related to
securitization entities
|
|
|
78
|
|
|
179
|
|
Non-recourse funding
obligations
|
|
|
310
|
|
|
1,920
|
|
Long-term
borrowings
|
|
|
4,194
|
|
|
4,570
|
|
Separate account
liabilities
|
|
|
7,485
|
|
|
7,883
|
|
Liabilities held for
sale
|
|
|
—
|
|
|
127
|
|
Total
liabilities
|
|
|
92,103
|
|
|
91,794
|
|
Equity:
|
|
|
|
|
|
|
|
Common stock
|
|
|
1
|
|
|
1
|
|
Additional paid-in
capital
|
|
|
11,959
|
|
|
11,949
|
|
Accumulated other
comprehensive income (loss):
|
|
|
|
|
|
|
|
Net
unrealized investment gains (losses):
|
|
|
|
|
|
|
|
Net
unrealized gains (losses) on securities not other-than-temporarily
impaired
|
|
|
2,836
|
|
|
1,236
|
|
Net
unrealized gains (losses) on other-than-temporarily impaired
securities
|
|
|
24
|
|
|
18
|
|
Net
unrealized investment gains (losses)
|
|
|
2,860
|
|
|
1,254
|
|
Derivatives
qualifying as hedges
|
|
|
2,493
|
|
|
2,045
|
|
Foreign
currency translation and other adjustments
|
|
|
(151)
|
|
|
(289)
|
|
Total accumulated other
comprehensive income (loss)
|
|
|
5,202
|
|
|
3,010
|
|
Retained
earnings
|
|
|
409
|
|
|
564
|
|
Treasury stock, at
cost
|
|
|
(2,700)
|
|
|
(2,700)
|
|
Total
Genworth Financial, Inc.'s stockholders' equity
|
|
|
14,871
|
|
|
12,824
|
|
Noncontrolling
interests
|
|
|
1,878
|
|
|
1,813
|
|
Total
equity
|
|
|
16,749
|
|
|
14,637
|
|
Total
liabilities and equity
|
|
$
|
108,852
|
|
$
|
106,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of Foreign
Exchange on Operating
Results10 Three months ended September 30,
2016
|
|
|
Percentages
|
|
|
Percentages
|
|
|
|
Including
Foreign
|
|
|
Excluding
Foreign
|
|
|
|
Exchange
|
|
|
Exchange11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada Mortgage
Insurance (MI):
|
|
|
|
|
|
|
Flow new insurance
written
|
|
(20)
|
%
|
|
(18)
|
%
|
Flow new insurance
written (3Q16 vs. 2Q16)
|
|
20
|
%
|
|
20
|
%
|
|
|
|
|
|
|
|
Australia
MI:
|
|
|
|
|
|
|
Flow new insurance
written
|
|
(27)
|
%
|
|
(27)
|
%
|
Flow new insurance
written (3Q16 vs. 2Q16)
|
|
(8)
|
%
|
|
(8)
|
%
|
|
|
|
|
|
|
|
Reconciliation of
Core Yield to Reported Yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
|
|
|
|
|
months
ended
|
|
|
|
|
|
|
September
30,
|
|
(Assets - amounts
in billions)
|
|
2016
|
|
Reported Total
Invested Assets and Cash
|
|
$
|
78.3
|
|
|
Subtract:
|
|
|
|
|
|
|
|
Securities
lending
|
|
|
0.4
|
|
|
Unrealized gains
(losses)
|
|
|
7.7
|
|
|
Adjusted end of
period invested assets
|
|
$
|
70.2
|
|
|
|
|
|
|
|
|
|
|
|
Average Invested
Assets Used in Reported Yield Calculation
|
|
$
|
69.7
|
|
|
Subtract:
|
|
|
|
|
|
|
|
Restricted commercial
mortgage loans and other invested assets related to
|
|
|
|
|
|
securitization
entities12
|
|
|
0.3
|
|
|
Average Invested
Assets Used in Core Yield Calculation
|
|
$
|
69.4
|
|
|
|
|
|
|
|
|
|
|
|
(Income - amounts
in millions)
|
|
|
|
|
|
Reported Net
Investment Income
|
|
$
|
805
|
|
|
Subtract:
|
|
|
|
|
|
|
|
Bond calls and
commercial mortgage loan prepayments
|
|
|
14
|
|
|
Other non-core
items13
|
|
|
8
|
|
|
Restricted commercial
mortgage loans and other invested assets related to
|
|
|
|
|
|
securitization
entities12
|
|
|
1
|
|
|
Core Net Investment
Income
|
|
$
|
782
|
|
|
|
|
|
|
|
|
|
|
|
Reported
Yield
|
|
|
4.62
|
%
|
|
Core Yield
|
|
|
4.51
|
%
|
|
______________________________
|
1 Unless
otherwise stated, all references in this press release to net
income (loss), net income (loss) per share, net operating income
(loss), net operating income (loss) per share and book value per
share should be read as net income (loss) available to Genworth's
common stockholders, net income (loss) available to Genworth's
common stockholders per diluted share, net operating income (loss)
available to Genworth's common stockholders, net operating income
(loss) available to Genworth's common stockholders per diluted
share and book value available to Genworth's common stockholders
per share, 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 The
company defines "NM" as not meaningful for increases or decreases
greater than 200 percent.
|
4 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 loss from continuing operations, 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 of 2.2 million and 1.3 million, respectively, for the three
months ended September 30, 2016 and 2015 would have been
antidilutive to the calculation. If the company had not incurred a
loss from continuing operations in these periods, dilutive
potential weighted-average common shares outstanding would have
been 500.5 million and 498.7 million, respectively, for the three
months ended September 30, 2016 and 2015. Since it had net
operating income for the three months ended September 30, 2015, the
company used 498.7 million diluted weighted-average common shares
outstanding in the calculation of diluted net operating income per
common share.
|
5 Percent
change excludes the impact of foreign exchange.
|
6 Company
estimate for the third quarter of 2016, due to timing of the filing
of statutory statements.
|
7
Calculated as available assets divided by required assets as
defined within PMIERs. As of September 30, 2016 and June 30, 2016,
the PMIERs sufficiency ratios were in excess of $400 million and
$350 million, respectively, of available assets above the PMIERs
requirements. Company estimate for the third quarter of
2016.
|
8 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.
|
9
Comprises cash and cash equivalents of $1,065 million, $834 million
and $733 million, respectively, and U.S. government bonds of $100
million, $100 million and $250 million, respectively, as of
September 30, 2016, June 30, 2016 and September 30,
2015.
|
10 All
percentages are comparing the third quarter of 2016 to the third
quarter of 2015 unless otherwise stated.
|
11 The
impact of foreign exchange was calculated using the comparable
prior period exchange rates.
|
12
Represents the incremental assets and investment income related to
restricted commercial mortgage loans and other invested
assets.
|
13
Includes cost basis adjustments on structured securities and
various other immaterial items.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/genworth-financial-announces-third-quarter-2016-results-300357305.html
SOURCE Genworth Financial, Inc.