GNW Genworth Financial Inc

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Exhibit 99.1

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

Cautionary Note Regarding Forward-Looking Statements

This financial supplement 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," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will" or words of similar meaning and include, but are not limited to, statements regarding the outlook for future business and financial performance of Genworth Financial, Inc. and its consolidated subsidiaries. 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, as well as risks discussed in the risk factor section of the company’s Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission on February 28, 2023. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Table of Contents		Page
Investor Letter			3
Use of Non-GAAP Measures			4
Results of Operations and Selected Operating Performance Measures			5
Financial Highlights			6
Consolidated Quarterly Results
Consolidated Net Income by Quarter			8
Reconciliation of Net Income to Adjusted Operating Income			9
Consolidated Balance Sheets			10-11
Consolidated Balance Sheets by Segment			12-13
Quarterly Results by Business
Adjusted Operating Income and Sales—Enact Segment			15-20
Adjusted Operating Income (Loss) and Statutory Impact of In-Force Rate Actions—Long-Term Care Insurance Segment			22-23
Adjusted Operating Income (Loss)—Life and Annuities Segment			25-28
Adjusted Operating Loss—Corporate and Other			30
Additional Financial Data
Investments Summary			32
Fixed Maturity Securities Summary			33
U.S. GAAP Net Investment Income Yields			34
Net Investment Gains (Losses)—Detail			35
Reconciliations of Non-GAAP Measures
Reconciliation of Operating Return On Equity (ROE)			37
Reconciliation of Consolidated Expense Ratio			38
Reconciliation of Reported Yield to Core Yield			39

Note:

Unless otherwise stated, all references in this financial supplement to income (loss) from continuing operations, income (loss) from continuing operations per share, net income (loss), net income (loss) per share, adjusted operating income (loss), adjusted operating income (loss) per share, book value and book value per share should be read as income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders, income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders per share, net income (loss) available to Genworth Financial, Inc.’s common stockholders, net income (loss) available to Genworth Financial, Inc.’s common stockholders per share, non-U.S. Generally Accepted Accounting Principles (U.S. GAAP) adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders, non-GAAP adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders per share, book value available to Genworth Financial, Inc.’s common stockholders and book value available to Genworth Financial, Inc.’s common stockholders per share, respectively.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Dear Investor,

On January 1, 2023, the company adopted new U.S. GAAP accounting guidance that significantly changed the recognition and measurement of long-duration insurance contracts, commonly known as long-duration targeted improvements (LDTI). This accounting guidance impacted the company’s long-term care insurance, life insurance and annuity products and was applied as of January 1, 2021, also known as the transition date. While the new guidance has had a significant impact on U.S. GAAP financial statements and disclosures, it does not impact the cash flows or underlying economics of the business, business strategy, statutory net income (loss), risk-based capital of the company’s U.S. life insurance companies, management of capital or the company’s Enact segment and Corporate and Other.

All prior period information has been re-presented to reflect the adoption of LDTI and is currently unaudited. It is possible that the final audited financial results may differ, perhaps materially, from the information included in this financial supplement. In addition, the unaudited financial results reported in this financial supplement are not indicative of future financial results, although as the company has indicated, it does expect the quarterly volatility of results in its Long-Term Care Insurance and Life and Annuities segments to extend to future periods with the adoption of LDTI.

There are some changes related to the implementation of LDTI to highlight for the company's Long-Term Care Insurance and Life and Annuities segments:

 

•

Assumptions are best estimate and updated annually in the fourth quarter. Changes in assumptions now flow through the liability remeasurement (gains) losses financial statement line item in the income statement, which contributes significantly to annual income volatility. However, the company will update cash flow assumptions related to the timing and approval amounts of in-force rate actions on a quarterly basis, which could contribute to quarterly income volatility for its Long-Term Care Insurance segment.

 

•

Assumptions are recorded at a more granular cohort level. Impacts from older less profitable capped cohorts that do not have margin will more heavily influence income statement results than impacts from newer uncapped profitable cohorts that have positive margin.

 

•

The liability remeasurement (gains) losses financial statement line item in the income statement includes the differences between actual experience and best estimate assumptions on a quarterly basis and can be favorable or unfavorable. This line item also includes the quarterly updates to cash flow assumptions noted above related to in-force rate actions. Both of these items could contribute to quarterly income volatility in the Long-Term Care Insurance segment.

 

•

Best estimate assumptions for long-term care insurance products now include an estimate for benefit reductions from both in-force rate actions and legal settlements. Similarly, cash payments made to policyholders who elect certain reduced benefit options in connection with long-term care insurance legal settlements, referred to as “settlement payments,” are also included in the liability for future policyholder benefits. Therefore, the impacts from benefit reductions and settlement payments will only impact the income statement on a quarterly basis to the extent that actual experience differs from expectations as mentioned above. There was no change to how the company accounts for premiums related to in-force rate actions, which are recorded to the income statement when they occur.

 

•

Market risk benefits (primarily variable annuities) are recorded at fair value. The company excludes changes in fair value of market risk benefits attributable to interest rates, equity markets and associated hedges from adjusted operating income (loss). See page 25 for additional details.

In the second quarter of 2023, the company revised its accounting for the liability for future policy benefits in its long-term care insurance products under LDTI to include an estimate in its cash flow assumptions for settlement payments. The company's historical accounting practice was to record settlement payments as incurred through current period earnings. The impact of this revision to prior periods is reflected in the financial results included in this quarterly financial supplement. Accordingly, for all periods prior to the second quarter of 2023, this quarterly financial supplement replaces and supersedes the quarterly financial supplement previously furnished for the first quarter of 2023 on July 11, 2023.

Additional information concerning the company's long-term care insurance business is included on page 22 of this financial supplement. As disclosed on page 22, in the fourth quarter of 2022, the liability remeasurement gain of $255 million in the company's long-term care insurance business reflected favorable assumption updates of $303 million, largely from an update to legal settlement elections attributable to the inclusion of a second legal settlement and the resulting expected reserve reduction, net of settlement payments to policyholders. This settlement, comprised of PCS I and PSC II policies, represents approximately 15% of the overall block and impacts older unprofitable capped cohorts. When the company updates its assumptions for its third long-term care insurance legal settlement later in 2023 for its Choice II policies, which represents approximately 35% of the overall block, the income statement impact is not expected to be as material because this settlement impacts profitable uncapped cohorts. As previously disclosed, the company’s blocks with profits or margin have a net premium ratio below 100% and therefore have less impact on liability remeasurement (gains) losses in the income statement.

Page 23 provides further information for investors on the company’s long-term care insurance business and the impact of in-force rate actions, including the legal settlements, on pre-tax statutory earnings.

Thank you for your continued interest in Genworth Financial, Inc.

Regards,

Sarah E. Crews, Investor Relations

InvestorInfo@genworth.com

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Use of Non-GAAP Measures

This financial supplement includes the non-GAAP financial measures entitled “adjusted operating income (loss)” and “adjusted operating income (loss) per share.” Adjusted operating income (loss) per share is derived from adjusted operating income (loss). The company’s President and Chief Executive Officer (Principal Executive Officer), who serves as the chief operating decision maker, evaluates segment performance and allocates resources on the basis of adjusted operating income (loss). The company defines adjusted operating income (loss) as income (loss) from continuing operations excluding the after-tax effects of income (loss) from continuing operations attributable to noncontrolling interests, net investment gains (losses), changes in fair value of market risk benefits and associated hedges, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, restructuring costs and infrequent or unusual non-operating items. A component of the company’s net investment gains (losses) is the result of estimated future credit losses, 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. The company excludes net investment gains (losses), changes in fair value of market risk benefits and associated hedges, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, restructuring costs and infrequent or unusual non-operating items from adjusted operating income (loss) because, in the company’s opinion, they are not indicative of overall operating performance.

While some of these items may be significant components of net income (loss) available to Genworth Financial, Inc.’s common stockholders in accordance with U.S. GAAP, the company believes that adjusted operating income (loss) and measures that are derived from or incorporate adjusted operating income (loss), including adjusted operating income (loss) per 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 adjusted 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 adjusted operating income (loss) have occurred in the past and could, and in some cases will, recur in the future. Adjusted operating income (loss) and adjusted operating income (loss) per share on a basic and diluted basis are not substitutes for net income (loss) available to Genworth Financial, Inc.’s common stockholders or net income (loss) available to Genworth Financial, Inc.’s common stockholders per share on a basic and diluted basis determined in accordance with U.S. GAAP. In addition, the company’s definition of adjusted operating income (loss) may differ from the definitions used by other companies.

Adjustments to reconcile net income (loss) available to Genworth Financial, Inc.’s common stockholders to adjusted operating income (loss) assume a 21% tax rate and are net of the portion attributable to noncontrolling interests. Changes in fair value of market risk benefits and associated hedges are adjusted to exclude changes in reserves, attributed fees and benefit payments.

In the third and fourth quarters of 2022, the company incurred $6 million and $2 million, respectively, of pre-tax pension plan termination costs related to one of its defined benefit pension plans. There were no other infrequent or unusual items excluded from adjusted operating income (loss) during the periods presented.

The table on page 9 of this financial supplement provides a reconciliation of net income available to Genworth Financial, Inc.’s common stockholders to adjusted operating income for the periods presented and reflects adjusted operating income (loss) as determined in accordance with accounting guidance related to segment reporting. This financial supplement includes other non-GAAP measures management believes enhances the understanding and comparability of performance by highlighting underlying business activity and profitability drivers. These additional non-GAAP measures are on pages 37 to 39 of this financial supplement.

Statutory Accounting Data

The company presents certain supplemental statutory data for Genworth Life Insurance Company (GLIC) and its consolidating life insurance subsidiaries that has been prepared on the basis of statutory accounting principles (SAP). GLIC and its consolidating life insurance subsidiaries file financial statements with state insurance regulatory authorities and the National Association of Insurance Commissioners that are prepared using SAP, an accounting basis either prescribed or permitted by such authorities. Due to differences in methodology between SAP and U.S. GAAP, the values for assets, liabilities and equity, and the recognition of income and expenses, reflected in financial statements prepared in accordance with U.S. GAAP are materially different from those reflected in financial statements prepared under SAP. This supplemental statutory data should not be viewed as an alternative to, or used in lieu of, U.S. GAAP.

This supplemental statutory data includes the impact from in-force rate actions on pre-tax long-term care insurance statutory earnings. Statutory pre-tax earnings represent the net gain from operations, including the impact from in-force rate actions, before dividends to policyholders, refunds to members and federal income taxes and before realized capital gains or (losses). Management uses and provides this supplemental statutory data because it believes it provides a useful measure of, among other things, statutory pre-tax earnings and the adequacy of capital. Management uses this data to measure against its policy to manage the U.S. life insurance companies with internally generated capital.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Results of Operations and Selected Operating Performance Measures

The company taxes its businesses at the U.S. corporate federal income tax rate of 21%. Each segment is then adjusted to reflect the unique tax attributes of that segment, such as permanent differences between U.S. GAAP and tax law. 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.

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. U.S. GAAP generally requires an annualized effective tax rate to be used for interim reporting periods, utilizing projections of full year results. However, in certain circumstances it is appropriate to record the actual effective tax rate for the period if a reliable full year estimate cannot be made. For the three months ended March 31, 2023 and June 30, 2023, the company utilized the actual effective tax rate for the interim period to record the provision for income taxes for its Long-Term Care Insurance and Life and Annuities segments and the annualized projected effective tax rate for its Enact segment and Corporate and Other. The company utilized the effective tax rate for the year ended December 31, 2022 and 2021 in determining the re-presented provision for income taxes for the quarters in 2022 and the full year 2021, respectively.

This financial supplement contains 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 business generated in a period. Sales refer to new insurance written for mortgage insurance products included in the company's Enact segment. The company considers new insurance written to be a measure of the operating performance of its Enact segment because it represents a measure of new sales of insurance policies during a specified period, rather than a measure of revenues or profitability during that period.

Management regularly monitors and reports insurance in-force, risk in-force and a loss ratio for the company's Enact segment. Insurance in-force is a measure of the aggregate unpaid principal balance as of the respective reporting date for loans insured by the company's U.S. mortgage insurance subsidiaries. Risk in-force is based on the coverage percentage applied to the estimated current outstanding loan balance. The company considers insurance in-force and risk in-force to be measures of the operating performance of its Enact segment because they represent measures of the size of its business at a specific date which will generate revenues and profits in a future period, rather than measures of its revenues or profitability during that period. The loss ratio is the ratio of benefits and other changes in policy reserves to net earned premiums. The company considers the loss ratio to be a measure of underwriting performance and helps to enhance the understanding of the operating performance of the Enact segment.

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.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Financial Highlights

(amounts in millions, except per share data)

 

Balance Sheet Data		June 30,         2023				March 31,         2023				December 31,         2022				September 30,         2022				June 30,         2022
Total Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income (loss)		$	10,321			$	10,292			$	10,245			$	9,892			$	9,769
Total accumulated other comprehensive income (loss)(1)			(2,861	)			(2,853	)			(2,614	)			(2,632	)			(3,288	)
Total Genworth Financial, Inc.’s stockholders’ equity		$	7,460			$	7,439			$	7,631			$	7,260			$	6,481
Book value per share		$	15.98			$	15.28			$	15.40			$	14.44			$	12.76
Book value per share, excluding accumulated other comprehensive income (loss)		$	22.11			$	21.14			$	20.68			$	19.68			$	19.24
Common shares outstanding as of the balance sheet date			466.8				486.9				495.4				502.6				507.8
		Three months ended
Quarterly Average ROE		June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022
U.S. GAAP Basis ROE			5.3	%			4.8	%			15.1	%			5.5	%			6.6	%
Operating ROE(2)			3.3	%			5.6	%			13.4	%			6.4	%			6.3	%
Basic and Diluted Shares		Three months ended June 30, 2023				Six months ended June 30, 2023
Weighted-average common shares used in basic earnings per share calculations			473.2				482.7
Potentially dilutive securities:
Stock options, restricted stock units and other equity-based awards			4.9				6.4
Weighted-average common shares used in diluted earnings per share calculations			478.1				489.1

 

(1)

As of June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022, total accumulated other comprehensive income (loss) includes $(964) million, $(1,628) million, $(403) million, $115 million and $(3,167) million, net of taxes, respectively, related to changes in the current discount rate used to remeasure the liability for future policy benefits and related reinsurance recoverables.

(2)	See page 37 herein for a reconciliation of U.S. GAAP Basis ROE to Operating ROE.

 

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    Consolidated Quarterly Results

 

 

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

Consolidated Net Income by Quarter

(amounts in millions, except per share amounts)

 

		2023												2022																				2021
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total				Full Year
REVENUES:
Premiums		$	902			$	915			$	1,817			$	918			$	929			$	916			$	917			$	3,680			$	3,406
Net investment income			785				787				1,572				787				808				787				764				3,146				3,370
Net investment gains (losses)			39				(11	)			28				(5	)			(58	)			19				42				(2	)			322
Policy fees and other income			166				163				329				167				169				165				170				671				724
Total revenues			1,892				1,854				3,746				1,867				1,848				1,887				1,893				7,495				7,822
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			1,175				1,176				2,351				1,209				1,159				768				1,167				4,303				4,615
Liability remeasurement (gains) losses			70				(15	)			55				(267	)			17				24				(64	)			(290	)			202
Changes in fair value of market risk benefits and associated hedges			(19	)			17				(2	)			(56	)			(27	)			20				(41	)			(104	)			(160	)
Interest credited			126				126				252				125				128				126				125				504				511
Acquisition and operating expenses, net of deferrals			226				240				466				225				245				579				236				1,285				998
Amortization of deferred acquisition costs and intangibles			64				72				136				74				80				84				88				326				384
Interest expense			29				29				58				28				26				26				26				106				160
Total benefits and expenses			1,671				1,645				3,316				1,338				1,628				1,627				1,537				6,130				6,710
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			221				209				430				529				220				260				356				1,365				1,112
Provision for income taxes			55				55				110				119				54				62				84				319				248
INCOME FROM CONTINUING OPERATIONS			166				154				320				410				166				198				272				1,046				864
Net income (loss) from discontinued operations, net of taxes(1)			2				—				2				(2	)			5				(1	)			(2	)			—				27
NET INCOME			168				154				322				408				171				197				270				1,046				891
Less: net income from continuing operations attributable to noncontrolling interests			31				32				63				27				35				38				30				130				33
Less: net income from discontinued operations attributable to noncontrolling interests			—				—				—				—				—				—				—				—				8
NET INCOME AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS		$	137			$	122			$	259			$	381			$	136			$	159			$	240			$	916			$	850
NET INCOME AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS:
Income from continuing operations available to Genworth Financial, Inc.’s common stockholders		$	135			$	122			$	257			$	383			$	131			$	160			$	242			$	916			$	831
Income (loss) from discontinued operations available to Genworth Financial, Inc.’s common stockholders			2				—				2				(2	)			5				(1	)			(2	)			—				19
NET INCOME AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS		$	137			$	122			$	259			$	381			$	136			$	159			$	240			$	916			$	850
Earnings Per Share Data:
Income from continuing operations available to Genworth Financial, Inc.’s common stockholders per share
Basic		$	0.28			$	0.25			$	0.53			$	0.77			$	0.26			$	0.32			$	0.48			$	1.82			$	1.64
Diluted		$	0.28			$	0.24			$	0.53			$	0.76			$	0.26			$	0.31			$	0.47			$	1.79			$	1.61
Net income available to Genworth Financial, Inc.’s common stockholders per share
Basic		$	0.29			$	0.25			$	0.54			$	0.77			$	0.27			$	0.31			$	0.47			$	1.82			$	1.68
Diluted		$	0.29			$	0.24			$	0.53			$	0.76			$	0.27			$	0.31			$	0.46			$	1.79			$	1.65
Weighted-average common shares outstanding
Basic			473.2				492.3				482.7				496.5				503.8				508.9				508.3				504.4				506.9
Diluted			478.1				500.1				489.1				502.9				509.3				514.1				517.4				510.9				514.7

 

(1)	Income (loss) from discontinued operations primarily relates to a settlement agreement involving the company's former lifestyle protection insurance business that was sold on December 1, 2015.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Reconciliation of Net Income to Adjusted Operating Income

(amounts in millions, except per share amounts)

 

		2023												2022																				2021
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total				Full Year
NET INCOME AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS		$	137			$	122			$	259			$	381			$	136			$	159			$	240			$	916			$	850
Add: net income from continuing operations attributable to noncontrolling interests			31				32				63				27				35				38				30				130				33
Add: net income from discontinued operations attributable to noncontrolling interests			—				—				—				—				—				—				—				—				8
NET INCOME			168				154				322				408				171				197				270				1,046				891
Less: income (loss) from discontinued operations, net of taxes			2				—				2				(2	)			5				(1	)			(2	)			—				27
INCOME FROM CONTINUING OPERATIONS			166				154				320				410				166				198				272				1,046				864
Less: net income from continuing operations attributable to noncontrolling interests			31				32				63				27				35				38				30				130				33
INCOME FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS			135				122				257				383				131				160				242				916				831
ADJUSTMENTS TO INCOME FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS:
Net investment (gains) losses, net(1)			(41	)			11				(30	)			5				58				(19	)			(42	)			2				(322	)
Changes in fair value of market risk benefits attributable to interest rates, equity markets and associated hedges(2)			(23	)			14				(9	)			(64	)			(32	)			8				(54	)			(142	)			(210	)
(Gains) losses on early extinguishment of debt			—				(1	)			(1	)			(1	)			3				1				3				6				45
Expenses related to restructuring			1				3				4				1				—				1				—				2				34
Pension plan termination costs			—				—				—				2				6				—				—				8				—
Taxes on adjustments			13				(5	)			8				12				(8	)			2				20				26				96
ADJUSTED OPERATING INCOME		$	85			$	144			$	229			$	338			$	158			$	153			$	169			$	818			$	474
ADJUSTED OPERATING INCOME (LOSS):
Enact segment		$	146			$	143			$	289			$	120			$	156			$	167			$	135			$	578			$	520
Long-Term Care Insurance segment			(43	)			23				(20	)			204				26				17				73				320				126
Life and Annuities segment:
Life Insurance			(17	)			(27	)			(44	)			1				(28	)			(37	)			(47	)			(111	)			(201	)
Fixed Annuities			10				14				24				14				15				20				13				62				83
Variable Annuities			9				9				18				8				7				2				4				21				22
Total Life and Annuities segment			2				(4	)			(2	)			23				(6	)			(15	)			(30	)			(28	)			(96	)
Corporate and Other			(20	)			(18	)			(38	)			(9	)			(18	)			(16	)			(9	)			(52	)			(76	)
ADJUSTED OPERATING INCOME		$	85			$	144			$	229			$	338			$	158			$	153			$	169			$	818			$	474
Earnings Per Share Data:
Net income available to Genworth Financial, Inc.’s common stockholders per share
Basic		$	0.29			$	0.25			$	0.54			$	0.77			$	0.27			$	0.31			$	0.47			$	1.82			$	1.68
Diluted		$	0.29			$	0.24			$	0.53			$	0.76			$	0.27			$	0.31			$	0.46			$	1.79			$	1.65
Adjusted operating income per share
Basic		$	0.18			$	0.29			$	0.47			$	0.68			$	0.31			$	0.30			$	0.33			$	1.62			$	0.93
Diluted		$	0.18			$	0.29			$	0.47			$	0.67			$	0.31			$	0.30			$	0.33			$	1.60			$	0.92
Weighted-average common shares outstanding
Basic			473.2				492.3				482.7				496.5				503.8				508.9				508.3				504.4				506.9
Diluted			478.1				500.1				489.1				502.9				509.3				514.1				517.4				510.9				514.7

 

(1)	Net investment (gains) losses were adjusted for the portion attributable to noncontrolling interests (see page 35 for reconciliation).

(2)	Changes in fair value of market risk benefits and associated hedges were adjusted to exclude changes in reserves, attributed fees and benefit payments (see page 25 for reconciliation).

 

9

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Consolidated Balance Sheets

(amounts in millions)

 

		June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022
ASSETS
Investments:
Fixed maturity securities available-for-sale, at fair value(1)		$	46,070			$	47,381			$	46,583			$	46,215			$	49,286
Equity securities, at fair value			378				364				319				274				243
Commercial mortgage loans(2)			6,876				6,915				7,032				7,086				7,088
Less: Allowance for credit losses			(24	)			(24	)			(22	)			(23	)			(23	)
Commercial mortgage loans, net			6,852				6,891				7,010				7,063				7,065
Policy loans			2,270				2,133				2,139				2,153				2,178
Limited partnerships			2,585				2,456				2,331				2,195				2,123
Other invested assets			648				617				566				590				573
Total investments			58,803				59,842				58,948				58,490				61,468
Cash, cash equivalents and restricted cash			2,173				1,752				1,799				1,561				1,724
Accrued investment income			553				700				643				616				553
Deferred acquisition costs			2,096				2,150				2,211				2,276				2,342
Intangible assets			201				203				203				209				215
Reinsurance recoverable			19,113				19,606				19,059				18,906				20,659
Less: Allowance for credit losses			(64	)			(64	)			(63	)			(64	)			(63	)
Reinsurance recoverable, net			19,049				19,542				18,996				18,842				20,596
Other assets			445				478				488				493				521
Deferred tax asset			1,954				2,002				1,983				2,092				2,492
Market risk benefit assets			37				28				26				20				22
Separate account assets			4,533				4,479				4,417				4,298				4,683
Total assets		$	89,844			$	91,176			$	89,714			$	88,897			$	94,616

 

(1)

Amortized cost of $49,864 million, $50,461 million, $50,834 million, $51,248 million and $51,248 million as of June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022, respectively, and allowance for credit losses of $4 million as of June 30, 2023, $15 million as of March 31, 2023 and $— as of December 31, 2022, September 30, 2022 and June 30, 2022.

(2)	Net of unamortized balance of loan origination fees and costs of $4 million as of June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022.

 

10

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Consolidated Balance Sheets

(amounts in millions)

 

		June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022
LIABILITIES AND EQUITY
Liabilities:
Future policy benefits		$	56,443			$	57,531			$	55,407			$	54,553			$	60,254
Policyholder account balances			15,922				16,202				16,564				16,985				17,332
Market risk benefit liabilities			666				761				748				832				910
Liability for policy and contract claims			628				665				683				669				733
Unearned premiums			175				189				203				213				225
Other liabilities			1,607				1,510				1,687				1,701				1,470
Long-term borrowings			1,601				1,600				1,611				1,622				1,773
Separate account liabilities			4,533				4,479				4,417				4,298				4,683
Liabilities related to discontinued operations(1)			2				7				8				6				4
Total liabilities			81,577				82,944				81,328				80,879				87,384
Equity:
Common stock			1				1				1				1				1
Additional paid-in capital			11,869				11,863				11,869				11,865				11,859
Accumulated other comprehensive income (loss):
Change in the discount rate used to measure future policy benefits			(964	)			(1,628	)			(403	)			115				(3,167	)
All other			(1,897	)			(1,225	)			(2,211	)			(2,747	)			(121	)
Total accumulated other comprehensive income (loss)			(2,861	)			(2,853	)			(2,614	)			(2,632	)			(3,288	)
Retained earnings			1,398				1,261				1,139				760				624
Treasury stock, at cost			(2,947	)			(2,833	)			(2,764	)			(2,734	)			(2,715	)
Total Genworth Financial, Inc.’s stockholders’ equity			7,460				7,439				7,631				7,260				6,481
Noncontrolling interests			807				793				755				758				751
Total equity			8,267				8,232				8,386				8,018				7,232
Total liabilities and equity		$	89,844			$	91,176			$	89,714			$	88,897			$	94,616

 

(1)	Liabilities related to discontinued operations relates to a liability recorded in connection with a settlement agreement reached with AXA and other unrelated liabilities involving the sale of the company’s former lifestyle protection insurance business.

 

11

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Consolidated Balance Sheet by Segment

(amounts in millions)

 

		June 30, 2023
		Enact				Long-Term Care Insurance				Life and Annuities				Corporate and Other(1)				Total
ASSETS
Cash and investments		$	5,675			$	35,113			$	19,449			$	1,292			$	61,529
Deferred acquisition costs and intangible assets			39				932				1,317				9				2,297
Reinsurance recoverable, net			—				7,454				11,595				—				19,049
Deferred tax and other assets			208				1,695				237				259	(2)			2,399
Market risk benefit assets			—				—				37				—				37
Separate account assets			—				—				4,533				—				4,533
Total assets		$	5,922			$	45,194			$	37,168			$	1,560			$	89,844
LIABILITIES AND EQUITY
Liabilities:
Future policy benefits		$	—			$	42,661			$	13,782			$	—			$	56,443
Policyholder account balances			—				—				15,922				—				15,922
Market risk benefit liabilities			—				—				666				—				666
Liability for policy and contract claims			490				—				131				7				628
Unearned premiums			175				—				—				—				175
Other liabilities			125				751				284				447				1,607
Borrowings			744				—				—				857				1,601
Separate account liabilities			—				—				4,533				—				4,533
Liabilities related to discontinued operations			—				—				—				2				2
Total liabilities			1,534				43,412				35,318				1,313				81,577
Equity:
Allocated equity, excluding accumulated other comprehensive income (loss)			3,864				2,784				2,930				743				10,321
Allocated accumulated other comprehensive income (loss)			(283	)			(1,002	)			(1,080	)			(496	)			(2,861	)
Total Genworth Financial, Inc.’s stockholders’ equity			3,581				1,782				1,850				247				7,460
Noncontrolling interests			807				—				—				—				807
Total equity			4,388				1,782				1,850				247				8,267
Total liabilities and equity		$	5,922			$	45,194			$	37,168			$	1,560			$	89,844

 

(1)	Includes inter-segment eliminations and other businesses, including start-up growth initiatives and certain international businesses, that are managed outside the operating segments.

(2)	Deferred tax and other assets in Corporate and Other includes holding company deferred tax assets of $117 million (comprised of Genworth Financial, Inc. and Genworth Holdings).

 

12

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Consolidated Balance Sheet by Segment

(amounts in millions)

 

		March 31, 2023
		Enact				Long-Term Care Insurance				Life and Annuities				Corporate and Other(1)				Total
ASSETS
Cash and investments		$	5,611			$	35,210			$	20,112			$	1,361			$	62,294
Deferred acquisition costs and intangible assets			36				945				1,360				12				2,353
Reinsurance recoverable, net			—				7,604				11,938				—				19,542
Deferred tax and other assets			194				1,761				214				311	(2)			2,480
Market risk benefit assets			—				—				28				—				28
Separate account assets			—				—				4,479				—				4,479
Total assets		$	5,841			$	45,520			$	38,131			$	1,684			$	91,176
LIABILITIES AND EQUITY
Liabilities:
Future policy benefits		$	—			$	43,344			$	14,187			$	—			$	57,531
Policyholder account balances			—				—				16,202				—				16,202
Market risk benefit liabilities			—				—				761				—				761
Liability for policy and contract claims			502				—				157				6				665
Unearned premiums			189				—				—				—				189
Other liabilities			100				676				287				447				1,510
Borrowings			743				—				—				857				1,600
Separate account liabilities			—				—				4,479				—				4,479
Liabilities related to discontinued operations			—				—				—				7				7
Total liabilities			1,534				44,020				36,073				1,317				82,944
Equity:
Allocated equity, excluding accumulated other comprehensive income (loss)			3,776				2,634				3,034				848				10,292
Allocated accumulated other comprehensive income (loss)			(262	)			(1,134	)			(976	)			(481	)			(2,853	)
Total Genworth Financial, Inc.’s stockholders’ equity			3,514				1,500				2,058				367				7,439
Noncontrolling interests			793				—				—				—				793
Total equity			4,307				1,500				2,058				367				8,232
Total liabilities and equity		$	5,841			$	45,520			$	38,131			$	1,684			$	91,176

 

(1)	Includes inter-segment eliminations and other businesses, including start-up growth initiatives and certain international businesses, that are managed outside the operating segments.

(2)	Deferred tax and other assets in Corporate and Other includes holding company deferred tax assets of $174 million (comprised of Genworth Financial, Inc. and Genworth Holdings).

 

13

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Enact Segment

 

 

 

14

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

Adjusted Operating Income and Sales—Enact Segment

(amounts in millions)

 

		2023												2022
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	239			$	235			$	474			$	233			$	235			$	238			$	234			$	940
Net investment income			50				46				96				45				39				36				35				155
Net investment gains (losses)			(13	)			—				(13	)			(1	)			—				(1	)			—				(2	)
Policy fees and other income			1				—				1				—				1				—				1				2
Total revenues			277				281				558				277				275				273				270				1,095
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			(4	)			(11	)			(15	)			18				(40	)			(62	)			(10	)			(94	)
Acquisition and operating expenses, net of deferrals			52				52				104				60				55				58				54				227
Amortization of deferred acquisition costs and intangibles			2				3				5				2				4				3				3				12
Interest expense			13				13				26				14				12				13				13				52
Total benefits and expenses			63				57				120				94				31				12				60				197
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			214				224				438				183				244				261				210				898
Provision for income taxes			46				49				95				39				53				57				45				194
INCOME FROM CONTINUING OPERATIONS			168				175				343				144				191				204				165				704
Less: net income from continuing operations attributable to noncontrolling interests			31				32				63				27				35				38				30				130
INCOME FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS			137				143				280				117				156				166				135				574
ADJUSTMENTS TO INCOME FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS:
Net investment (gains) losses, net(1)			11				—				11				1				—				1				—				2
Expenses related to restructuring			—				—				—				3				—				—				—				3
Taxes on adjustments			(2	)			—				(2	)			(1	)			—				—				—				(1	)
ADJUSTED OPERATING INCOME		$	146			$	143			$	289			$	120			$	156			$	167			$	135			$	578
SALES:
Primary New Insurance Written (NIW)		$	15,083			$	13,154			$	28,237			$	15,145			$	15,069			$	17,448			$	18,823			$	66,485

 

(1)	Net investment (gains) losses were adjusted for the portion of net investment losses attributable to noncontrolling interests of $2 million in the second quarter of 2023.

 

15

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Primary New Insurance Written Metrics—Enact Segment

(amounts in millions)

 

		2023																2022
		2Q								1Q								4Q								3Q								2Q								1Q
		Primary NIW				% of Primary NIW				Primary NIW				% of Primary NIW				Primary NIW				% of Primary NIW				Primary NIW				% of Primary NIW				Primary NIW				% of Primary NIW				Primary NIW				% of Primary NIW
Payment Type
Monthly		$	14,774				98	%		$	12,809				97	%		$	13,745				91	%		$	14,138				94	%		$	16,169				93	%		$	17,071				91	%
Single			281				2				318				3				1,368				9				890				6				1,218				7				1,690				9
Other(1)			28				—				27				—				32				—				41				—				61				—				62				—
Total Primary		$	15,083				100	%		$	13,154				100	%		$	15,145				100	%		$	15,069				100	%		$	17,448				100	%		$	18,823				100	%
Origination
Purchase		$	14,720				98	%		$	12,761				97	%		$	14,744				97	%		$	14,634				97	%		$	16,802				96	%		$	17,326				92	%
Refinance			363				2				393				3				401				3				435				3				646				4				1,497				8
Total Primary		$	15,083				100	%		$	13,154				100	%		$	15,145				100	%		$	15,069				100	%		$	17,448				100	%		$	18,823				100	%
FICO Scores
Over 760		$	6,911				46	%		$	6,004				46	%		$	6,951				46	%		$	6,948				46	%		$	7,981				45	%		$	8,359				45	%
740 - 759			2,608				17				2,268				17				2,709				18				2,554				17				2,916				17				3,085				16
720 - 739			2,097				14				1,817				14				2,226				15				2,106				14				2,530				15				2,515				13
700 - 719			1,499				10				1,296				10				1,489				10				1,531				10				1,917				11				1,952				10
680 - 699			1,060				7				954				7				1,035				7				1,085				7				1,099				6				1,316				7
660 - 679(2)			568				4				517				4				478				3				527				3				598				3				931				5
640 - 659			260				2				229				2				189				1				234				2				297				2				486				3
620 - 639			76				—				65				—				66				—				79				1				106				1				173				1
<620			4				—				4				—				2				—				5				—				4				—				6				—
Total Primary		$	15,083				100	%		$	13,154				100	%		$	15,145				100	%		$	15,069				100	%		$	17,448				100	%		$	18,823				100	%
Loan-To-Value Ratio
95.01% and above		$	2,692				18	%		$	2,106				16	%		$	2,423				16	%		$	1,741				11	%		$	2,177				12	%		$	3,146				17	%
90.01% to 95.00%			5,743				38				4,928				38				5,684				37				6,184				41				7,458				43				6,682				35
85.01% to 90.00%			4,753				31				4,390				33				4,971				33				5,094				34				5,207				30				5,620				30
85.00% and below			1,895				13				1,730				13				2,067				14				2,050				14				2,606				15				3,375				18
Total Primary		$	15,083				100	%		$	13,154				100	%		$	15,145				100	%		$	15,069				100	%		$	17,448				100	%		$	18,823				100	%
Debt-To-Income Ratio
45.01% and above		$	4,467				30	%		$	3,538				27	%		$	4,294				28	%		$	3,728				25	%		$	4,067				23	%		$	4,452				24	%
38.01% to 45.00%			5,214				34				4,940				38				5,518				37				5,681				38				6,436				37				6,361				34
38.00% and below			5,402				36				4,676				35				5,333				35				5,660				37				6,945				40				8,010				42
Total Primary		$	15,083				100	%		$	13,154				100	%		$	15,145				100	%		$	15,069				100	%		$	17,448				100	%		$	18,823				100	%

 

(1)	Includes loans with annual and split payment types.

(2)	Loans with unknown FICO scores are included in the 660-679 category.

 

16

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Other Metrics—Enact Segment

(dollar amounts in millions)

 

		2023												2022
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
Primary Insurance In-Force(1)		$	257,816			$	252,516							$	248,262			$	241,813			$	237,563			$	231,853
Risk In-Force
Primary(2)		$	65,714			$	64,106							$	62,791			$	61,124			$	59,911			$	58,295
Pool			73				76								79				84				89				97
Total Risk In-Force		$	65,787			$	64,182							$	62,870			$	61,208			$	60,000			$	58,392
Expense Ratio(3)			23	%			23	%			23	%			27	%			25	%			26	%			24	%			23	%
Primary Persistency Rate			84	%			85	%			85	%			86	%			82	%			80	%			76	%			85	%
Combined Risk To Capital Ratio(4)			11.8:1				12.6:1								12.8:1				12.3:1				12.6:1				12.0:1
EMICO Risk To Capital Ratio(4),(5)			11.9:1				12.7:1								12.9:1				12.3:1				12.6:1				12.1:1
PMIERs Available Assets(6)		$	5,093			$	5,357							$	5,206			$	5,292			$	5,147			$	5,222
PMIERs Required Assets(6)		$	3,135			$	3,259							$	3,156			$	3,043			$	3,100			$	2,961
Available Assets Above PMIERs Requirements(6)		$	1,958			$	2,098							$	2,050			$	2,249			$	2,047			$	2,261
PMIERs Sufficiency Ratio(6)			162	%			164	%							165	%			174	%			166	%			176	%
Average Primary Loan Size (in thousands)		$	265			$	262							$	259			$	255			$	251			$	246

The expense ratio included above was calculated using whole dollars and may be different than the ratio calculated using the rounded numbers included herein.

 

(1)	Primary insurance in-force represents aggregate unpaid balance for loans the company's U.S. mortgage insurance subsidiaries insure.

(2)	Primary risk in-force represents risk on current loan balances as provided by servicers, lenders and investors.

(3)	The ratio of an insurer's general expenses to net earned premiums. In the business, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles.

(4)

Certain states limit a private mortgage insurer's risk in-force to 25 times the total of the insurer's policyholders' surplus plus the statutory contingency reserve, commonly known as the “risk to capital” requirement. The current period risk to capital ratio is an estimate due to the timing of the filing of statutory statements and is prepared consistent with the presentation of the statutory financial statements in the combined annual statement of the company's U.S. mortgage insurance subsidiaries.

(5)	Enact Mortgage Insurance Corporation (EMICO), the company's principal U.S. mortgage insurance subsidiary.

(6)

The Private Mortgage Insurer Eligibility Requirements (PMIERs) sufficiency ratio is calculated as available assets divided by required assets as defined within PMIERs. The current period PMIERs sufficiency ratio is an estimate due to the timing of the PMIERs filing. The PMIERs sufficiency ratios for the four quarters of 2022 did not take into consideration the impact of restrictions previously imposed by the government-sponsored enterprises on EMICO.

 

17

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Loss Metrics—Enact Segment

(amounts in millions)

 

		2023												2022
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
Average Paid Claim (in thousands)(1)		$	46.6			$	46.9							$	48.7			$	42.2			$	50.1			$	51.6
Average Reserve Per Primary Delinquency (in thousands)(2)		$	25.0			$	24.8							$	24.0			$	25.2			$	27.0			$	26.2
Reserves:
Direct primary case		$	452			$	462							$	479			$	476			$	526			$	591
All other(3)			38				40								40				34				33				34
Total Reserves		$	490			$	502							$	519			$	510			$	559			$	625
Beginning Reserves		$	502			$	519			$	519			$	510			$	559			$	625			$	641			$	641
Paid claims			(8	)			(6	)			(14	)			(9	)			(9	)			(4	)			(6	)			(28	)
Increase (decrease) in reserves			(4	)			(11	)			(15	)			18				(40	)			(62	)			(10	)			(94	)
Ending Reserves		$	490			$	502			$	490			$	519			$	510			$	559			$	625			$	519
Loss Ratio(4)			(2	)%			(5	)%			(3	)%			8	%			(17	)%			(26	)%			(4	)%			(10	)%

The loss ratio included above was calculated using whole dollars and may be different than the ratio calculated using the rounded numbers included herein.

 

(1)	Average paid claim in the third and fourth quarters of 2022 includes payments in relation to agreements on non-performing loans.

(2)	Direct primary case reserves divided by primary delinquency count.

(3)	Other includes loss adjustment expenses, pool, incurred but not reported and reinsurance reserves.

(4)	The ratio of benefits and other changes in policy reserves to net earned premiums.

 

18

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Delinquency Metrics—Enact Segment

(dollar amounts in millions)

 

		2023												2022
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
Primary Loans
Primary loans in-force			973,280				965,544								960,306				949,052				946,891				941,689
Primary delinquent loans			18,065				18,633								19,943				18,856				19,513				22,571
Primary delinquency rate			1.86	%			1.93	%							2.08	%			1.99	%			2.06	%			2.40	%
Beginning Number of Primary Delinquencies			18,633				19,943				19,943				18,856				19,513				22,571				24,820				24,820
New delinquencies			9,205				9,599				18,804				10,304				9,121				7,847				8,724				35,996
Delinquency cures			(9,609	)			(10,771	)			(20,380	)			(9,024	)			(9,588	)			(10,806	)			(10,860	)			(40,278	)
Paid claims			(156	)			(126	)			(282	)			(190	)			(187	)			(90	)			(107	)			(574	)
Rescissions and claim denials			(8	)			(12	)			(20	)			(3	)			(3	)			(9	)			(6	)			(21	)
Ending Number of Primary Delinquencies			18,065				18,633				18,065				19,943				18,856				19,513				22,571				19,943
Composition of Cures
Reported delinquent and cured-intraquarter			1,661				2,016								1,489				1,598				1,306				1,581
Number of missed payments delinquent prior to cure:
3 payments or less			4,516				5,238								4,179				3,719				4,037				3,902
4 - 11 payments			2,448				2,431								2,001				2,279				2,484				2,315
12 payments or more			984				1,086								1,355				1,992				2,979				3,062
Total			9,609				10,771								9,024				9,588				10,806				10,860
Primary Delinquencies by Missed Payment Status
3 payments or less			8,162				7,876								8,920				7,446				6,442				6,837
4 - 11 payments			6,229				6,714								6,466				6,119				6,372				6,875
12 payments or more			3,674				4,043								4,557				5,291				6,699				8,859
Primary Delinquencies			18,065				18,633								19,943				18,856				19,513				22,571
		June 30, 2023
Direct Primary Case Reserves(1) and Percentage Reserved by Payment Status		Direct Primary Case Reserves				Risk In-Force				Reserves as % of Risk In-Force
3 payments or less in default		$	70			$	488				14	%
4 - 11 payments in default			186				409				46	%
12 payments or more in default			196				205				95	%
Total		$	452			$	1,102				41	%
		December 31, 2022
Direct Primary Case Reserves(1) and Percentage Reserved by Payment Status		Direct Primary Case Reserves				Risk In-Force				Reserves as % of Risk In-Force
3 payments or less in default		$	69			$	509				14	%
4 - 11 payments in default			166				390				43	%
12 payments or more in default			244				248				98	%
Total		$	479			$	1,147				42	%

 

(1)	Direct primary case reserves exclude loss adjustment expenses, pool, incurred but not reported and reinsurance reserves.

 

19

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Portfolio Quality Metrics—Enact Segment

(amounts in millions)

 

		June 30, 2023
Policy Year		% of Direct Primary Case Reserves(1)				Primary Insurance In-Force				% of Total				Primary Risk In-Force				% of Total				Delinquency Rate
2008 and prior			22	%		$	6,135				2	%		$	1,581				2	%			8.40	%
2009-2015			6				4,296				2				1,138				2				3.90	%
2016			5				5,289				2				1,418				2				2.97	%
2017			6				5,878				2				1,549				2				3.40	%
2018			7				6,270				2				1,601				3				4.00	%
2019			10				15,026				6				3,831				6				2.47	%
2020			15				49,522				19				12,827				20				1.39	%
2021			19				76,381				30				19,245				29				1.27	%
2022			10				61,390				24				15,392				23				0.97	%
2023			—				27,629				11				7,132				11				0.12	%
Total			100	%		$	257,816				100	%		$	65,714				100	%			1.86	%
		June 30, 2023								December 31, 2022								June 30, 2022
		Primary Risk In-Force				Percent of Primary Risk In-Force				Primary Risk In-Force				Percent of Primary Risk In-Force				Primary Risk In-Force				Percent of Primary Risk In-Force
Loan-to-value ratio
95.01% and above		$	12,086				18	%		$	11,136				18	%		$	10,647				18	%
90.01% to 95.00%			31,220				48				30,079				48				28,838				48
85.01% to 90.00%			18,518				28				17,621				28				16,517				27
85.00% and below			3,890				6				3,955				6				3,909				7
Total		$	65,714				100	%		$	62,791				100	%		$	59,911				100	%
		June 30, 2023								December 31, 2022								June 30, 2022
		Primary Risk In-Force				Percent of Primary Risk In-Force				Primary Risk In-Force				Percent of Primary Risk In-Force				Primary Risk In-Force				Percent of Primary Risk In-Force
Credit Quality
Over 760		$	27,305				42	%		$	25,807				41	%		$	24,252				40	%
740 - 759			10,749				16				10,154				16				9,559				16
720 - 739			9,368				14				8,931				14				8,484				14
700 - 719			7,516				12				7,317				12				7,129				12
680 - 699			5,543				9				5,428				9				5,329				9
660 - 679(2)			2,850				4				2,767				5				2,728				5
640 - 659			1,558				2				1,540				2				1,547				3
620 - 639			653				1				665				1				687				1
<620			172				—				182				—				196				—
Total		$	65,714				100	%		$	62,791				100	%		$	59,911				100	%

 

(1)	Direct primary case reserves exclude loss adjustment expenses, pool, incurred but not reported and reinsurance reserves.

(2)	Loans with unknown FICO scores are included in the 660-679 category.

 

20

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Long-Term Care Insurance Segment

 

 

 

21

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

Adjusted Operating Income (Loss)—Long-Term Care Insurance Segment

(amounts in millions)

 

		2023												2022																				2021
		2Q				1Q				Total				4Q(1)				3Q				2Q				1Q				Total				Full  Year(2)
REVENUES:
Premiums		$	611			$	616			$	1,227			$	639			$	637			$	617			$	607			$	2,500			$	2,561
Net investment income			470				473				943				470				497				486				447				1,900				2,027
Net investment gains (losses)			62				9				71				20				(47	)			5				41				19				257
Policy fees and other income			—				—				—				—				—				—				—				—				1
Total revenues			1,143				1,098				2,241				1,129				1,087				1,108				1,095				4,419				4,846
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			941				944				1,885				965				956				942				925				3,788				3,808
Liability remeasurement (gains) losses			61				(32	)			29				(255	)			3				23				(88	)			(317	)			68
Acquisition and operating expenses, net of deferrals			108				119				227				100				122				95				96				413				451
Amortization of deferred acquisition costs and intangibles			18				18				36				18				19				18				19				74				76
Total benefits and expenses			1,128				1,049				2,177				828				1,100				1,078				952				3,958				4,403
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			15				49				64				301				(13	)			30				143				461				443
Provision (benefit) for income taxes			10				18				28				79				(1	)			9				38				125				123
INCOME (LOSS) FROM CONTINUING OPERATIONS			5				31				36				222				(12	)			21				105				336				320
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses			(62	)			(9	)			(71	)			(20	)			47				(5	)			(41	)			(19	)			(257	)
Expenses related to restructuring			1				(1	)			—				(2	)			—				1				—				(1	)			12
Taxes on adjustments			13				2				15				4				(9	)			—				9				4				51
ADJUSTED OPERATING INCOME (LOSS)		$	(43	)		$	23			$	(20	)		$	204			$	26			$	17			$	73			$	320			$	126
Liability remeasurement (gains) losses:
Cash flow assumption updates		$	(24	)		$	21			$	(3	)		$	(303	)		$	(10	)		$	(20	)		$	(2	)		$	(335	)		$	227
Actual to expected experience			85				(53	)			32				48				13				43				(86	)			18				(159	)
Total		$	61			$	(32	)		$	29			$	(255	)		$	3			$	23			$	(88	)		$	(317	)		$	68
Ratio of the liability remeasurement (gains) losses to beginning reserves(3)			0.15	%			(0.08	)%			0.07	%			(0.62	)%			—	%			0.06	%			(0.22	)%			(0.78	)%			0.17	%

 

(1)

In the fourth quarter of 2022, the liability remeasurement gain of $255 million in the company’s long-term care insurance business reflected favorable assumption updates of $303 million, largely from an update to legal settlement elections attributable to the inclusion of a second legal settlement and the resulting expected reserve reduction. This settlement, comprised of PCS I and PCS II policies, represents approximately 15% of the overall block and impacts older unprofitable capped cohorts. While a favorable assumption impact was recognized in the fourth quarter of 2022, differences between actual experience and expectations will flow through earnings in subsequent periods. The company’s long-term care insurance business also updated its interest rate assumptions to reflect the impact of the higher interest rate environment.

(2)

In 2021, unfavorable assumption updates of $227 million in the fourth quarter of 2021 related primarily to an update to the benefit utilization trend, which drove significant updates to the in-force rate action plan and related assumptions. Given the expected future increases in cost of care, the company expected its long-term benefit utilization to trend higher than previously assumed.

(3)	The ratio of the liability remeasurement (gains) losses to beginning reserves is calculated by dividing the liability remeasurement (gains) losses by the beginning liability for future policy benefits at the original discount rate as of each applicable quarter.

 

22

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Statutory Impact of In-Force Rate Actions—Long-Term Care Insurance Segment

(amounts in millions)

 

		2023												2022
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
Impact of in-force rate actions on pre-tax statutory earnings(1)
Premiums, premium tax, commissions and other expenses, net(2)		$	224			$	219			$	443			$	224			$	220			$	207			$	192			$	843
Reserve changes(2)			104				94				198				124				120				113				132				489
Settlement impacts - reserve changes			97				93				190				78				9				19				148				254
Settlement impacts - litigation expenses and settlement payments			(54	)			(56	)			(110	)			(45	)			(10	)			(6	)			(43	)			(104	)
Settlement impacts, net			43				37				80				33				(1	)			13				105				150
Statutory earnings from in-force rate actions		$	371			$	350			$	721			$	381			$	339			$	333			$	429			$	1,482

 

(1)	Includes all implemented in-force rate actions since 2012.

(2)

Earned premium and reserve change estimates for statutory earnings reflect certain simplifying assumptions that may vary materially from actual historical results, including but not limited to, a uniform rate of coinsurance and premium taxes in addition to consistent policyholder behavior over time. Actual behavior may differ significantly from these assumptions and these impacts exclude reserve updates.

 

23

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Life and Annuities Segment

 

24

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

Adjusted Operating Income (Loss)—Life and Annuities Segment

(amounts in millions)

 

		2023												2022																				2021
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total				Full Year
REVENUES:
Premiums		$	50			$	62			$	112			$	45			$	55			$	60			$	74			$	234			$	(136	)
Net investment income			261				264				525				268				271				265				279				1,083				1,195
Net investment gains (losses)			(7	)			(10	)			(17	)			(3	)			(15	)			—				14				(4	)			74
Policy fees and other income			165				163				328				167				169				164				169				669				718
Total revenues			469				479				948				477				480				489				536				1,982				1,851
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			240				246				486				226				247				(108	)			255				620				688
Liability remeasurement (gains) losses			9				17				26				(12	)			14				1				24				27				134
Changes in fair value of market risk benefits and associated hedges			(19	)			17				(2	)			(56	)			(27	)			20				(41	)			(104	)			(160	)
Interest credited			126				126				252				125				128				126				125				504				511
Acquisition and operating expenses, net of deferrals			51				53				104				54				57				416				77				604				233
Amortization of deferred acquisition costs and intangibles			44				51				95				54				57				63				66				240				291
Total benefits and expenses			451				510				961				391				476				518				506				1,891				1,697
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			18				(31	)			(13	)			86				4				(29	)			30				91				154
Provision (benefit) for income taxes			3				(7	)			(4	)			17				—				(7	)			6				16				30
INCOME (LOSS) FROM CONTINUING OPERATIONS			15				(24	)			(9	)			69				4				(22	)			24				75				124
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses			7				10				17				3				15				—				(14	)			4				(74	)
Changes in fair value of market risk benefits attributable to interest rates, equity markets and associated hedges(1)			(23	)			14				(9	)			(64	)			(32	)			8				(54	)			(142	)			(210	)
Expenses related to restructuring			—				—				—				(1	)			—				—				—				(1	)			5
Pension plan termination costs			—				—				—				2				6				—				—				8				—
Taxes on adjustments			3				(4	)			(1	)			14				1				(1	)			14				28				59
ADJUSTED OPERATING INCOME (LOSS)		$	2			$	(4	)		$	(2	)		$	23			$	(6	)		$	(15	)		$	(30	)		$	(28	)		$	(96	)
(1)  Changes in fair value of market risk benefits and associated hedges were adjusted to exclude changes in reserves, attributed fees and benefit payments as reconciled below:
Changes in fair value of market risk benefits and associated hedges		$	(19	)		$	17			$	(2	)		$	(56	)		$	(27	)		$	20			$	(41	)		$	(104	)		$	(160	)
Adjustment for changes in reserves, attributed fees and benefit payments			(4	)			(3	)			(7	)			(8	)			(5	)			(12	)			(13	)			(38	)			(50	)
Changes in fair value of market risk benefits attributable to interest rates, equity markets and associated hedges		$	(23	)		$	14			$	(9	)		$	(64	)		$	(32	)		$	8			$	(54	)		$	(142	)		$	(210	)

 

25

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Adjusted Operating Income (Loss)—Life and Annuities Segment—Life Insurance

(amounts in millions)

 

		2023												2022																				2021
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total				Full Year
REVENUES:
Premiums		$	50			$	62			$	112			$	45			$	55			$	60			$	74			$	234			$	(136	)
Net investment income			165				164				329				167				166				164				164				661				667
Net investment gains (losses)			(1	)			(2	)			(3	)			1				(7	)			2				9				5				74
Policy fees and other income			136				134				270				138				138				133				134				543				567
Total revenues			350				358				708				351				352				359				381				1,443				1,172
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			197				199				396				181				197				217				203				798				486
Liability remeasurement (gains) losses			7				18				25				(10	)			16				4				22				32				109
Interest credited			98				98				196				97				98				96				94				385				373
Acquisition and operating expenses, net of deferrals			34				36				70				39				40				32				56				167				136
Amortization of deferred acquisition costs and intangibles			36				44				80				45				49				55				57				206				254
Total benefits and expenses			372				395				767				352				400				404				432				1,588				1,358
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			(22	)			(37	)			(59	)			(1	)			(48	)			(45	)			(51	)			(145	)			(186	)
Benefit for income taxes			(5	)			(8	)			(13	)			(1	)			(10	)			(10	)			(11	)			(32	)			(40	)
LOSS FROM CONTINUING OPERATIONS			(17	)			(29	)			(46	)			—				(38	)			(35	)			(40	)			(113	)			(146	)
ADJUSTMENTS TO LOSS FROM CONTINUING OPERATIONS:
Net investment (gains) losses			1				2				3				(1	)			7				(2	)			(9	)			(5	)			(74	)
Expenses related to restructuring			—				—				—				(1	)			—				—				—				(1	)			4
Pension plan termination costs			—				—				—				2				6				—				—				8				—
Taxes on adjustments			(1	)			—				(1	)			1				(3	)			—				2				—				15
ADJUSTED OPERATING INCOME (LOSS)		$	(17	)		$	(27	)		$	(44	)		$	1			$	(28	)		$	(37	)		$	(47	)		$	(111	)		$	(201	)

 

26

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Adjusted Operating Income—Life and Annuities Segment—Fixed Annuities

(amounts in millions)

 

		2023												2022																				2021
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total				Full Year
REVENUES:
Net investment income		$	87			$	91			$	178			$	93			$	96			$	93			$	108			$	390			$	498
Net investment gains (losses)			(5	)			(8	)			(13	)			(4	)			(7	)			(2	)			5				(8	)			(2	)
Policy fees and other income			2				2				4				1				2				2				2				7				9
Total revenues			84				85				169				90				91				93				115				389				505
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves(1)			35				39				74				37				42				(332	)			46				(207	)			188
Liability remeasurement (gains) losses			2				(1	)			1				(2	)			(2	)			(3	)			2				(5	)			25
Changes in fair value of market risk benefits and associated hedges			(4	)			8				4				—				(15	)			(12	)			(13	)			(40	)			(21	)
Interest credited			27				27				54				27				28				29				30				114				133
Acquisition and operating expenses, net of deferrals(1)			7				8				15				7				7				372				9				395				44
Amortization of deferred acquisition costs and intangibles			4				3				7				4				4				4				4				16				17
Total benefits and expenses			71				84				155				73				64				58				78				273				386
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			13				1				14				17				27				35				37				116				119
Provision for income taxes			3				—				3				4				6				7				8				25				25
INCOME FROM CONTINUING OPERATIONS			10				1				11				13				21				28				29				91				94
ADJUSTMENTS TO INCOME FROM CONTINUING OPERATIONS:
Net investment (gains) losses			5				8				13				4				7				2				(5	)			8				2
Changes in fair value of market risk benefits attributable to interest rates, equity markets and associated hedges(2)			(5	)			8				3				(3	)			(14	)			(13	)			(15	)			(45	)			(17	)
Expenses related to restructuring			—				—				—				—				—				—				—				—				1
Taxes on adjustments			—				(3	)			(3	)			—				1				3				4				8				3
ADJUSTED OPERATING INCOME		$	10			$	14			$	24			$	14			$	15			$	20			$	13			$	62			$	83
(1)  In the second quarter of 2022, the recapture of certain single premium immediate annuity contracts by a third party reduced benefits and other changes in policy reserves by $374 million and increased acquisition and operating expenses, net of deferrals, by $365 million. (2)  Changes in fair value of market risk benefits and associated hedges were adjusted to exclude changes in reserves, attributed fees and benefit payments as reconciled below:
Changes in fair value of market risk benefits and associated hedges		$	(4	)		$	8			$	4			$	—			$	(15	)		$	(12	)		$	(13	)		$	(40	)		$	(21	)
Adjustment for changes in reserves, attributed fees and benefit payments			(1	)			—				(1	)			(3	)			1				(1	)			(2	)			(5	)			4
Changes in fair value of market risk benefits attributable to interest rates, equity markets and associated hedges		$	(5	)		$	8			$	3			$	(3	)		$	(14	)		$	(13	)		$	(15	)		$	(45	)		$	(17	)

 

27

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

Adjusted Operating Income—Life and Annuities Segment—Variable Annuities

(amounts in millions)

 

		2023												2022																				2021
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total				Full Year
REVENUES:
Net investment income		$	9			$	9			$	18			$	8			$	9			$	8			$	7			$	32			$	30
Net investment gains (losses)			(1	)			—				(1	)			—				(1	)			—				—				(1	)			2
Policy fees and other income			27				27				54				28				29				29				33				119				142
Total revenues			35				36				71				36				37				37				40				150				174
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			8				8				16				8				8				7				6				29				14
Changes in fair value of market risk benefits and associated hedges			(15	)			9				(6	)			(56	)			(12	)			32				(28	)			(64	)			(139	)
Interest credited			1				1				2				1				2				1				1				5				5
Acquisition and operating expenses, net of deferrals			10				9				19				8				10				12				12				42				53
Amortization of deferred acquisition costs and intangibles			4				4				8				5				4				4				5				18				20
Total benefits and expenses			8				31				39				(34	)			12				56				(4	)			30				(47	)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			27				5				32				70				25				(19	)			44				120				221
Provision (benefit) for income taxes			5				1				6				14				4				(4	)			9				23				45
INCOME (LOSS) FROM CONTINUING OPERATIONS			22				4				26				56				21				(15	)			35				97				176
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses			1				—				1				—				1				—				—				1				(2	)
Changes in fair value of market risk benefits attributable to interest rates, equity markets and associated hedges(1)			(18	)			6				(12	)			(61	)			(18	)			21				(39	)			(97	)			(193	)
Taxes on adjustments			4				(1	)			3				13				3				(4	)			8				20				41
ADJUSTED OPERATING INCOME		$	9			$	9			$	18			$	8			$	7			$	2			$	4			$	21			$	22
(1)  Changes in fair value of market risk benefits and associated hedges were adjusted to exclude changes in reserves, attributed fees and benefit payments as reconciled below:
Changes in fair value of market risk benefits and associated hedges		$	(15	)		$	9			$	(6	)		$	(56	)		$	(12	)		$	32			$	(28	)		$	(64	)		$	(139	)
Adjustment for changes in reserves, attributed fees and benefit payments			(3	)			(3	)			(6	)			(5	)			(6	)			(11	)			(11	)			(33	)			(54	)
Changes in fair value of market risk benefits attributable to interest rates, equity markets and associated hedges		$	(18	)		$	6			$	(12	)		$	(61	)		$	(18	)		$	21			$	(39	)		$	(97	)		$	(193	)

 

28

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Corporate and Other

 

29

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

Adjusted Operating Loss—Corporate and Other⁽¹⁾

(amounts in millions)

 

		2023												2022
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	2			$	2			$	4			$	1			$	2			$	1			$	2			$	6
Net investment income			4				4				8				4				1				—				3				8
Net investment gains (losses)			(3	)			(10	)			(13	)			(21	)			4				15				(13	)			(15	)
Policy fees and other income			—				—				—				—				(1	)			1				—				—
Total revenues			3				(4	)			(1	)			(16	)			6				17				(8	)			(1	)
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			(2	)			(3	)			(5	)			—				(4	)			(4	)			(3	)			(11	)
Acquisition and operating expenses, net of deferrals			15				16				31				11				11				10				9				41
Interest expense			16				16				32				14				14				13				13				54
Total benefits and expenses			29				29				58				25				21				19				19				84
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			(26	)			(33	)			(59	)			(41	)			(15	)			(2	)			(27	)			(85	)
Provision (benefit) for income taxes			(4	)			(5	)			(9	)			(16	)			2				3				(5	)			(16	)
LOSS FROM CONTINUING OPERATIONS			(22	)			(28	)			(50	)			(25	)			(17	)			(5	)			(22	)			(69	)
ADJUSTMENTS TO LOSS FROM CONTINUING OPERATIONS:
Net investment (gains) losses			3				10				13				21				(4	)			(15	)			13				15
(Gains) losses on early extinguishment of debt			—				(1	)			(1	)			(1	)			3				1				3				6
Expenses related to restructuring			—				4				4				1				—				—				—				1
Taxes on adjustments			(1	)			(3	)			(4	)			(5	)			—				3				(3	)			(5	)
ADJUSTED OPERATING LOSS		$	(20	)		$	(18	)		$	(38	)		$	(9	)		$	(18	)		$	(16	)		$	(9	)		$	(52	)

 

(1)	Includes inter-segment eliminations and the results of other businesses, including start-up growth initiatives and certain international businesses, that are managed outside the operating segments.

 

30

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Additional Financial Data

 

31

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

Investments Summary

(amounts in millions)

 

				June 30, 2023								March 31, 2023								December 31, 2022								September 30, 2022								June 30, 2022
				Carrying Amount				% of Total				Carrying Amount				% of Total				Carrying Amount				% of Total				Carrying Amount				% of Total				Carrying Amount				% of Total
Composition of Investment Portfolio
Fixed maturity securities:
Investment grade:
Public fixed maturity securities				$	26,413				43	%		$	26,894				44	%		$	26,047				43	%		$	25,550				43	%		$	27,342				43	%
Private fixed maturity securities					10,808				18				11,182				18				11,126				19				10,997				18				11,727				19
Residential mortgage-backed securities(1)					935				1				986				2				995				2				1,069				2				1,213				2
Commercial mortgage-backed securities					1,674				3				1,814				3				1,900				3				1,980				3				2,126				3
Other asset-backed securities					2,164				4				2,113				3				2,117				3				2,139				4				2,009				3
State and political subdivisions					2,343				4				2,403				4				2,399				4				2,532				4				2,849				5
Non-investment grade fixed maturity securities					1,733				3				1,989				3				1,999				3				1,948				3				2,020				3
Equity securities:
Common stocks and mutual funds					326				1				306				1				258				1				204				—				172				—
Preferred stocks					52				—				58				—				61				—				70				—				71				—
Commercial mortgage loans, net					6,852				11				6,891				11				7,010				11				7,063				11				7,065				12
Policy loans					2,270				4				2,133				3				2,139				3				2,153				4				2,178				3
Limited partnerships					2,585				4				2,456				4				2,331				4				2,195				4				2,123				3
Cash, cash equivalents, restricted cash and short-term investments					2,196				3				1,759				3				1,802				3				1,563				3				1,774				3
Other invested assets:		Derivatives:
		Interest rate swaps			30				—				42				—				24				—				25				—				30				—
		Foreign currency swaps			16				—				17				—				20				—				32				—				17				—
		Equity index options			15				—				10				—				6				—				38				—				30				—
		Other			564				1				541				1				513				1				493				1				446				1
Total invested assets and cash				$	60,976				100	%		$	61,594				100	%		$	60,747				100	%		$	60,051				100	%		$	63,192				100	%
Public Fixed Maturity Securities—Credit Quality:
NRSRO(2) Designation
AAA				$	5,936				19	%		$	6,112				19	%		$	6,067				19	%		$	6,174				20	%		$	6,713				20	%
AA					2,896				9				2,872				9				2,859				9				2,958				9				3,245				10
A					8,597				27				8,699				27				8,398				27				8,278				26				8,886				26
BBB					13,649				43				14,056				43				13,623				43				13,322				43				14,155				42
BB					564				2				786				2				776				2				780				2				846				2
B					23				—				41				—				34				—				33				—				33				—
CCC and lower					—				—				—				—				—				—				—				—				—				—
Total public fixed maturity securities				$	31,665				100	%		$	32,566				100	%		$	31,757				100	%		$	31,545				100	%		$	33,878				100	%
Private Fixed Maturity Securities—Credit Quality:
NRSRO(2) Designation
AAA				$	863				6	%		$	860				6	%		$	825				6	%		$	830				6	%		$	806				5	%
AA					1,416				10				1,422				10				1,421				10				1,407				10				1,421				9
A					4,135				29				4,217				28				4,170				28				4,059				28				4,308				28
BBB					6,845				47				7,154				48				7,221				48				7,239				48				7,732				50
BB					1,016				7				1,012				7				1,076				7				1,028				7				1,015				7
B					122				1				150				1				113				1				107				1				120				1
CCC and lower					8				—				—				—				—				—				—				—				6				—
Total private fixed maturity securities				$	14,405				100	%		$	14,815				100	%		$	14,826				100	%		$	14,670				100	%		$	15,408				100	%

 

(1)	The company does not have any material exposure to residential mortgage-backed securities collateralized debt obligations (CDOs).

(2)	Nationally Recognized Statistical Rating Organizations.

 

32

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Fixed Maturity Securities Summary

(amounts in millions)

 

		June 30, 2023								March 31, 2023								December 31, 2022								September 30, 2022								June 30, 2022
		Fair Value				% of Total				Fair Value				% of Total				Fair Value				% of Total				Fair Value				% of Total				Fair Value				% of Total
Fixed Maturity Securities - Security Sector:
U.S. government, agencies and government-sponsored enterprises		$	3,389				7	%		$	3,441				7	%		$	3,341				7	%		$	3,307				7	%		$	3,627				7	%
State and political subdivisions			2,343				5				2,403				5				2,399				5				2,532				6				2,849				6
Foreign government			625				1				630				1				645				1				622				1				682				1
U.S. corporate			27,043				59				27,872				59				27,119				59				26,562				58				28,243				58
Foreign corporate			7,838				17				8,059				17				8,010				17				7,947				17				8,482				17
Residential mortgage-backed securities			934				2				985				2				995				2				1,069				2				1,213				2
Commercial mortgage-backed securities			1,690				4				1,831				4				1,908				4				1,989				4				2,137				5
Other asset-backed securities			2,208				5				2,160				5				2,166				5				2,187				5				2,053				4
Total fixed maturity securities		$	46,070				100	%		$	47,381				100	%		$	46,583				100	%		$	46,215				100	%		$	49,286				100	%
Corporate Bond Holdings - Industry Sector:
Investment Grade:
Finance and insurance		$	8,871				26	%		$	9,149				26	%		$	8,986				26	%		$	8,858				26	%		$	9,313				25	%
Utilities			4,653				14				4,788				13				4,591				13				4,476				13				4,857				14
Energy			3,022				9				2,882				8				2,813				8				2,790				8				3,043				8
Consumer - non-cyclical			4,863				14				4,998				14				4,872				14				4,782				14				5,221				15
Consumer - cyclical			1,558				4				1,602				4				1,594				5				1,557				5				1,576				4
Capital goods			2,490				7				2,554				7				2,517				7				2,505				7				2,677				7
Industrial			1,857				5				1,944				6				1,863				5				1,806				5				1,877				5
Technology and communications			3,599				10				3,713				10				3,564				10				3,481				10				3,681				10
Transportation			1,428				4				1,459				4				1,439				4				1,385				4				1,465				4
Other			973				3				1,022				3				1,048				3				1,072				3				1,147				3
Subtotal			33,314				96				34,111				95				33,287				95				32,712				95				34,857				95
Non-Investment Grade:
Finance and insurance			154				—				164				1				153				1				159				1				168				1
Utilities			46				—				47				—				47				—				48				—				56				—
Energy			228				1				407				1				409				1				399				1				431				1
Consumer - non-cyclical			139				—				150				—				151				—				140				—				141				—
Consumer - cyclical			273				1				291				1				299				1				302				1				290				1
Capital goods			172				1				178				1				167				1				158				1				146				—
Industrial			149				—				155				—				152				—				146				—				171				1
Technology and communications			226				1				247				1				277				1				266				1				286				1
Transportation			35				—				37				—				36				—				35				—				29				—
Other			145				—				144				—				151				—				144				—				150				—
Subtotal			1,567				4				1,820				5				1,842				5				1,797				5				1,868				5
Total		$	34,881				100	%		$	35,931				100	%		$	35,129				100	%		$	34,509				100	%		$	36,725				100	%
Fixed Maturity Securities - Contractual Maturity Dates:
Due in one year or less		$	1,375				3	%		$	1,328				3	%		$	1,234				3	%		$	1,128				2	%		$	1,314				3	%
Due after one year through five years			8,000				17				8,245				17				7,931				17				7,856				17				7,958				16
Due after five years through ten years			11,662				25				11,746				25				11,915				26				11,751				25				12,765				26
Due after ten years			20,201				44				21,086				44				20,434				43				20,235				45				21,846				44
Subtotal			41,238				89				42,405				89				41,514				89				40,970				89				43,883				89
Mortgage and asset-backed securities			4,832				11				4,976				11				5,069				11				5,245				11				5,403				11
Total fixed maturity securities		$	46,070				100	%		$	47,381				100	%		$	46,583				100	%		$	46,215				100	%		$	49,286				100	%

 

33

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

U.S. GAAP Net Investment Income Yields

(amounts in millions)

 

		2023												2022
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
U.S. GAAP Net Investment Income
Fixed maturity securities - taxable		$	567			$	561			$	1,128			$	562			$	576			$	578			$	580			$	2,296
Fixed maturity securities - non-taxable			1				1				2				1				2				1				1				5
Equity securities			3				2				5				3				3				2				2				10
Commercial mortgage loans			75				76				151				81				81				78				81				321
Policy loans			54				55				109				55				55				51				50				211
Limited partnerships			17				28				45				22				38				32				7				99
Other invested assets			70				68				138				71				67				66				63				267
Cash, cash equivalents, restricted cash and short-term investments			22				18				40				12				7				1				—				20
Gross investment income before expenses and fees			809				809				1,618				807				829				809				784				3,229
Expenses and fees			(24	)			(22	)			(46	)			(20	)			(21	)			(22	)			(20	)			(83	)
Net investment income		$	785			$	787			$	1,572			$	787			$	808			$	787			$	764			$	3,146
Annualized Yields
Fixed maturity securities—taxable			4.5	%			4.4	%			4.5	%			4.4	%			4.5	%			4.5	%			4.4	%			4.5	%
Fixed maturity securities—non-taxable			4.9	%			4.6	%			4.8	%			4.0	%			7.1	%			3.6	%			3.6	%			4.7	%
Equity securities			3.2	%			2.3	%			2.8	%			4.0	%			4.6	%			3.4	%			3.7	%			4.0	%
Commercial mortgage loans			4.4	%			4.4	%			4.4	%			4.6	%			4.6	%			4.5	%			4.7	%			4.6	%
Policy loans			9.8	%			10.3	%			10.0	%			10.3	%			10.2	%			9.7	%			9.8	%			10.0	%
Limited partnerships(1)			2.7	%			4.7	%			3.7	%			3.9	%			7.0	%			6.2	%			1.4	%			4.7	%
Other invested assets(2)			50.7	%			51.6	%			51.2	%			56.6	%			57.0	%			62.6	%			64.8	%			59.9	%
Cash, cash equivalents, restricted cash and short-term investments			4.5	%			4.0	%			4.2	%			2.9	%			1.7	%			0.3	%			—	%			1.2	%
Gross investment income before expenses and fees			5.0	%			5.0	%			5.0	%			5.0	%			5.1	%			4.9	%			4.8	%			5.0	%
Expenses and fees			(0.1	)%			(0.1	)%			(0.1	)%			(0.2	)%			(0.1	)%			(0.1	)%			(0.1	)%			(0.2	)%
Net investment income			4.9	%			4.9	%			4.9	%			4.8	%			5.0	%			4.8	%			4.7	%			4.8	%

Yields are based on net investment income as reported under U.S. GAAP and are consistent with how the company measures its investment performance for management purposes. Yields are annualized, for interim periods, and are calculated as net investment income as a percentage of average quarterly asset carrying values except for fixed maturity securities, derivatives and derivative counterparty collateral, which exclude unrealized fair value adjustments. See page 39 herein for average invested assets and cash used in the yield calculation.

 

(1)	Limited partnership investments are primarily equity-based and do not have fixed returns by period.

(2)	Investment income for other invested assets includes amortization of terminated cash flow hedges, which have no corresponding book value within the yield calculation.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

 

Net Investment Gains (Losses)—Detail

(amounts in millions)

 

		2023												2022
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
Realized investment gains (losses):
Net realized gains (losses) on available-for-sale securities:
Fixed maturity securities:
U.S. corporate		$	(39	)		$	(8	)		$	(47	)		$	(25	)		$	(23	)		$	(2	)		$	(12	)		$	(62	)
U.S. government, agencies and government-sponsored enterprises			1				1				2				—				9				—				6				15
Foreign corporate			1				(3	)			(2	)			(6	)			(7	)			(1	)			(2	)			(16	)
Foreign government			—				(1	)			(1	)			—				—				—				—				—
Mortgage-backed securities			(2	)			(5	)			(7	)			(4	)			(5	)			(1	)			—				(10	)
Asset-backed securities			9				—				9				—				(1	)			—				—				(1	)
Total net realized gains (losses) on available-for-sale securities			(30	)			(16	)			(46	)			(35	)			(27	)			(4	)			(8	)			(74	)
Net realized gains (losses) on equity securities sold			(1	)			—				(1	)			—				—				—				—				—
Net realized gains (losses) on limited partnerships			—				—				—				—				—				—				—				—
Total net realized investment gains (losses)			(31	)			(16	)			(47	)			(35	)			(27	)			(4	)			(8	)			(74	)
Net change in allowance for credit losses on available-for-sale fixed maturity securities			11				(15	)			(4	)			—				—				—				—				—
Write-down of available-for-sale fixed maturity securities			(1	)			—				(1	)			—				—				—				(2	)			(2	)
Net unrealized gains (losses) on equity securities still held			21				11				32				11				(14	)			(26	)			(6	)			(35	)
Net unrealized gains (losses) on limited partnerships			40				—				40				36				(24	)			24				35				71
Commercial mortgage loans			—				(2	)			(2	)			1				—				2				1				4
Derivative instruments			(1	)			12				11				(12	)			7				18				19				32
Other			—				(1	)			(1	)			(6	)			—				5				3				2
Net investment gains (losses), gross			39				(11	)			28				(5	)			(58	)			19				42				(2	)
Adjustment for net investment (gains) losses attributable to noncontrolling interests			2				—				2				—				—				—				—				—
Net investment gains (losses), net		$	41			$	(11	)		$	30			$	(5	)		$	(58	)		$	19			$	42			$	(2	)

 

35

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Reconciliations of Non-GAAP Measures

 

36

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

Reconciliation of Operating ROE

(amounts in millions)

 

Quarterly Average ROE		Three months ended
U.S. GAAP Basis ROE		June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022
Net income available to Genworth Financial, Inc.’s common stockholders for the period ended(1)		$	137			$	122			$	381			$	136			$	159
Quarterly average Genworth Financial, Inc.’s stockholders’ equity for the period, excluding accumulated other comprehensive income (loss)(2)		$	10,307			$	10,269			$	10,069			$	9,831			$	9,696
Annualized U.S. GAAP Quarterly Basis ROE(1)/(2)			5.3	%			4.8	%			15.1	%			5.5	%			6.6	%
Operating ROE
Adjusted operating income for the period ended(1)		$	85			$	144			$	338			$	158			$	153
Quarterly average Genworth Financial, Inc.’s stockholders’ equity for the period, excluding accumulated other comprehensive income (loss)(2)		$	10,307			$	10,269			$	10,069			$	9,831			$	9,696
Annualized Operating Quarterly Basis ROE(1)/(2)			3.3	%			5.6	%			13.4	%			6.4	%			6.3	%

Non-GAAP Definition for Operating ROE

The company references the non-GAAP financial measure entitled “operating return on equity” or “operating ROE.” The company defines operating ROE as adjusted operating income (loss) divided by average ending Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income (loss) in average ending Genworth Financial, Inc.’s stockholders’ equity. Management believes that analysis of operating ROE enhances understanding of the efficiency with which the company deploys its capital. However, operating ROE is not a substitute for net income (loss) available to Genworth Financial, Inc.’s common stockholders divided by average ending Genworth Financial, Inc.’s stockholders’ equity determined in accordance with U.S. GAAP.

 

(1)	Net income available to Genworth Financial, Inc.’s common stockholders and adjusted operating income from page 9 herein.

(2)	Quarterly average Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income (loss), is derived by averaging ending Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income (loss).

 

37

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

Reconciliation of Consolidated Expense Ratio

(amounts in millions)

 

				2023												2022
		GAAP Basis Expense Ratio		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
(A)		Acquisition and operating expenses, net of deferrals		$	226			$	240			$	466			$	225			$	245			$	579			$	236			$	1,285
(B)		Premiums		$	902			$	915			$	1,817			$	918			$	929			$	916			$	917			$	3,680
(A) / (B)		GAAP Basis Expense Ratio			25	%			26	%			26	%			25	%			26	%			63	%			26	%			35	%
		Adjusted Expense Ratio
		Acquisition and operating expenses, net of deferrals		$	226			$	240			$	466			$	225			$	245			$	579			$	236			$	1,285
		Less: Reinsurance recapture payment(1)			—				—				—				—				—				365				—				365
		Less: Legal settlement expenses(2)			1				13				14				—				20				—				—				20
(C)		Adjusted acquisition and operating expenses, net of deferrals		$	225			$	227			$	452			$	225			$	225			$	214			$	236			$	900
		Premiums		$	902			$	915			$	1,817			$	918			$	929			$	916			$	917			$	3,680
		Add: Policy fees and other income			166				163				329				167				169				165				170				671
(D)		Adjusted revenues		$	1,068			$	1,078			$	2,146			$	1,085			$	1,098			$	1,081			$	1,087			$	4,351
(C) / (D)		Adjusted expense ratio(3)			21	%			21	%			21	%			21	%			20	%			20	%			22	%			21	%

Non-GAAP Definition for Adjusted Expense Ratio

The company references the non-GAAP financial measure entitled “adjusted expense ratio” as a measure of its operating performance. The company defines adjusted expense ratio as acquisition and operating expenses, net of deferrals, less certain reinsurance expenses, less legal settlement expenses incurred in the company's long-term care insurance business divided by the sum of premiums, policy fees and other income. Management believes that the expense ratio analysis enhances understanding of the operating performance of the company. However, the adjusted expense ratio as defined by the company should not be viewed as a substitute for the GAAP basis expense ratio.

 

(1)	In the second quarter of 2022, the company paid $365 million to a third party in connection with the recapture of certain single premium immediate annuity contracts.

(2)	Estimated pre-tax class action attorney fees incurred in connection with legal settlements in the company's long-term care insurance business. These amounts are accrued in the period the court settlement occurs.

(3)	In the first quarter of 2022, the company recorded a legal settlement accrual of $25 million in its life insurance business, which increased the adjusted expense ratio by three percentage points for the three months ended March 31, 2022.

 

38

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2023

Reconciliation of Reported Yield to Core Yield

 

				2023												2022
		(Assets - amounts in billions)		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
		Reported - Total Invested Assets and Cash		$	61.0			$	61.6			$	61.0			$	60.7			$	60.1			$	63.2			$	68.2			$	60.7
		Subtract:
		Unrealized gains (losses)			(3.7	)			(3.0	)			(3.7	)			(4.2	)			(4.9	)			(1.9	)			3.0				(4.2	)
		Adjusted end of period invested assets and cash		$	64.7			$	64.6			$	64.7			$	64.9			$	65.0			$	65.1			$	65.2			$	64.9
(A)		Average Invested Assets and Cash Used in Reported and Core Yield Calculation		$	64.6			$	64.8			$	64.7			$	65.0			$	65.0			$	65.2			$	65.4			$	65.2
		(Income - amounts in millions)
(B)		Reported - Net Investment Income		$	785			$	787			$	1,572			$	787			$	808			$	787			$	764			$	3,146
		Subtract:
		Bond calls and commercial mortgage loan prepayments			—				2				2				6				6				7				10				29
		Other non-core items(1)			3				1				4				(1	)			—				—				—				(1	)
(C)		Core Net Investment Income		$	782			$	784			$	1,566			$	782			$	802			$	780			$	754			$	3,118
(B) / (A)		Reported Yield			4.86	%			4.86	%			4.86	%			4.84	%			4.97	%			4.83	%			4.67	%			4.83	%
(C) / (A)		Core Yield			4.84	%			4.84	%			4.84	%			4.81	%			4.93	%			4.79	%			4.61	%			4.79	%

Note:    Yields have been annualized.

Non-GAAP Definition for Core Yield

The company references 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 U.S. GAAP.

 

(1)	Includes cost basis adjustments on structured securities and various other immaterial items.

 

39

v3.23.2

Document and Entity Information	Jul. 11, 2023
Cover [Abstract]
Entity Registrant Name	GENWORTH FINANCIAL INC
Amendment Flag	true
Entity Central Index Key	0001276520
Document Type	8-K/A
Document Period End Date	Jul. 11, 2023
Entity Incorporation State Country Code	DE
Entity File Number	001-32195
Entity Tax Identification Number	80-0873306
Entity Address, Address Line One	6620 West Broad Street
Entity Address, City or Town	Richmond
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	23230
City Area Code	(804)
Local Phone Number	281-6000
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Class A Common Stock, par value $.001 per share
Trading Symbol	GNW
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Amendment Description	This current report on Form 8-K/A amends and supplements the current report on Form 8-K filed by Genworth Financial, Inc. (the “Company” or “Genworth”), with the U.S. Securities and Exchange Commission on July 11, 2023 (the “Original Form 8-K”). The Original Form 8-K, including the unaudited financial supplement, was furnished to reflect the adoption of long-duration targeted improvements (“LDTI”) and to assist investors and others in evaluating the impact of LDTI on the Company’s financial position and results of operations. This Form 8-K/A is being furnished to give effect to the revised accounting treatment applied by the Company in the second quarter of 2023, as described below. For all periods prior to the second quarter of 2023, the quarterly financial supplement furnished as Exhibit 99.1 with this Form 8-K/A replaces and supersedes the quarterly financial supplement previously furnished for the first quarter of 2023 in the Original Form 8-K.

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