RICHMOND, Va., Aug. 4, 2015 /PRNewswire/ --
- Strategic Actions Taken Expected To Generate In Excess Of
$600 Million Of Proceeds In 2015
- Reduced Stake In Genworth Australia Mortgage Insurance By 14
Percent; Retained Majority Share
- In Exclusive Negotiations For Sale of Lifestyle Protection
Insurance Business
- Transactions Executed To Generate Approximately $500 Million of Additional PMIERs
Capital Credit
- Cash Expense Savings Of Approximately $30 Million Expected In 2015; $40 To $50 Million In 2016
- Sequential Results Reflect Good Loss Ratios In Global Mortgage
Insurance Division And Unfavorable Impact From Mortality In U.S.
Life Insurance Division
Genworth Financial, Inc. (NYSE: GNW) today reported results for
the period ended June 30, 2015. The
company reported a net loss1 of $193 million, or $0.39 per diluted share, compared with net income
of $176 million, or $0.35 per diluted share, in the second quarter of
2014. The net loss in the quarter includes an after-tax loss of
$306 million, or $0.61 per diluted share, related to the planned
sale of the lifestyle protection insurance business. Net operating
income2 for the second quarter of 2015 was $119 million, or $0.24 per diluted share, compared with net
operating income of $154 million, or
$0.31 per diluted share, in the
second quarter of 2014.
Strategic Update
In May
2015, the company sold 92.3 million shares, or approximately
14 percent, in Genworth Mortgage Insurance Australia Limited. On
July 22, 2015, the company announced
it had entered into exclusive negotiations with AXA S.A. after
receiving an irrevocable offer to purchase its lifestyle protection
insurance business, which has been previously identified as
non-core. These transactions increase the financial flexibility and
strength of the company as it advances the ability to support
compliance with the private mortgage insurer eligibility
requirements (PMIERs) and reduce debt levels.
As of June 30, 2015, the company
believes its U.S. mortgage insurance business would be compliant
with the PMIERs capital requirements when including a series of
transactions that have been executed to generate approximately
$500 million of additional PMIERs
capital credit and the completion of a planned internal
restructuring. The transactions include:
- Execution of two excess of loss reinsurance transactions with a
panel of reinsurers, both effective as of July 1, 2015, that are expected to provide
approximately $300 million of PMIERs
capital credit as of December 31,
2015. One of the transactions has been approved by the
government-sponsored enterprises (GSEs) while the second is pending
final approval from the GSEs.
- An intercompany sale of the U.S. mortgage insurance business'
ownership interest in affiliated preferred securities in exchange
for approximately $200 million of
cash from Genworth Holdings, Inc. (proceeds used were
primarily from the Australia
mortgage insurance sell down) that resulted in a corresponding
increase in available assets under PMIERs. The transaction did not
affect statutory risk-to-capital ratios in the quarter, and the
cash from Genworth Holdings, Inc. was transferred in July 2015.
The company will look to execute future capital transactions
over the remainder of the year that provide a prudent level of
financial flexibility in excess of the PMIERs capital requirements,
including additional reinsurance transactions and contributions of
holding company cash.
In connection with the company's plan to target cash savings in
excess of $100 million pre-tax by the
end of 2016, actions were taken in the first half of 2015 to reduce
headcount and program spend that are expected to reduce cash
expenses by approximately $30 million
pre-tax in 2015 and $40 to $50 million pre-tax in
2016.
"We are encouraged with our second quarter results in the Global
Mortgage Insurance Division and remain focused on initiatives aimed
at strengthening and improving U.S. Life Insurance Division
results," said Tom McInerney,
President and CEO. "We are making steady progress on our
strategy to strengthen and simplify our businesses and increase
financial flexibility as evidenced by the two sale transactions we
announced recently in addition to the significant progress made
towards complying with PMIERs."
Operating Results
|
|
Consolidated Net
Income (Loss) &
|
|
Net Operating
Income
|
|
|
|
|
Three months ended
June 30
|
|
|
|
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|
(Unaudited)
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
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|
Per
|
|
|
|
|
Per
|
|
|
|
|
|
|
|
|
|
diluted
|
|
|
|
|
diluted
|
|
Total
|
|
(Amounts in
millions, except per share)
|
|
Total
|
|
share
|
|
Total
|
|
share
|
|
% change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
available to Genworth's common stockholders
|
|
$
|
(193)
|
|
$
|
(0.39)
|
|
$
|
176
|
|
$
|
0.35
|
|
NM3
|
|
Net operating
income
|
|
$
|
119
|
|
$
|
0.24
|
|
$
|
154
|
|
$
|
0.31
|
|
(23) %
|
|
Weighted average
diluted shares
|
|
|
499.3
|
|
|
|
|
|
503.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
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|
2015
|
|
2014
|
|
|
|
Book value per
share
|
|
|
|
|
$
|
27.52
|
|
|
|
|
$
|
32.68
|
|
|
|
Book value per share,
excluding accumulated other comprehensive income
(loss)
|
|
|
|
|
$
|
20.87
|
|
|
|
|
$
|
24.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
Net investment gains, net of taxes and other adjustments, were
$4 million in the quarter, compared
to $20 million in the prior year. Net
investment income increased to $793
million, compared to $781
million in the prior quarter primarily from favorable
limited partnership performance, partially offset by prepayment
speed adjustments related to residential mortgage-backed
securities. The reported yield for the current quarter was 4.52
percent. The core yield2 was 4.45 percent, up from the
prior quarter. There were no impairments in the quarter.
Beginning in the second quarter of 2015, the lifestyle
protection insurance business is being separately reported as
discontinued operations and all prior periods herein have been
re-presented. During the quarter, the company recognized an
after-tax loss of $306 million
related to the planned sale of this business and an $8 million loss from discontinued operations
primarily related to a prior period tax true-up. The company
expects the transaction to close by the end of 2015, subject to
customary closing conditions, including requisite regulatory
approvals.
Net operating income (loss) results are summarized in the table
below:
Net Operating
Income (Loss)
|
|
|
|
|
|
|
|
|
|
(Amounts in
millions)
|
|
Q2
15
|
|
Q1
15
|
|
Q2
14
|
Global Mortgage
Insurance Division
|
|
$
|
110
|
|
$
|
116
|
|
$
|
136
|
U.S. Life Insurance
Division
|
|
|
57
|
|
|
81
|
|
|
69
|
Corporate and Other
Division
|
|
|
(48)
|
|
|
(43)
|
|
|
(51)
|
Total Net
Operating Income (Loss)
|
|
$
|
119
|
|
$
|
154
|
|
$
|
154
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income (loss) represents net operating income
(loss) from continuing operations excluding net investment gains
(losses), goodwill impairments, gains (losses) on the sale of
businesses, gains (losses) on the early extinguishment of debt,
gains (losses) on insurance block transactions, restructuring costs
and other adjustments, net of taxes. A reconciliation of net
operating income (loss) of segments and Corporate and Other
activities to net income (loss) is included at the end of this
press release.
Unless specifically noted in the discussion of results for the
International Mortgage Insurance segment, references to percentage
changes exclude the impact of translating foreign denominated
activity into U.S. dollars (foreign exchange). Percentage changes,
which include the impact of foreign exchange, are found in a table
at the end of this press release. The impact of foreign exchange on
results in the second quarter of 2015 was an unfavorable impact of
$2 million versus the prior quarter
and an unfavorable impact of $11
million versus the prior year.
Global Mortgage Insurance Division
The Global Mortgage Insurance Division had net operating income
of $110 million, compared with
$116 million in the prior quarter and
$136 million a year ago.
Global Mortgage
Insurance Division
|
Net Operating
Income (Loss)
|
(Amounts in
millions)
|
|
Q2
15
|
|
Q1
15
|
|
Q2
14
|
International
Mortgage Insurance
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
$
|
37
|
|
$
|
40
|
|
$
|
47
|
|
Australia
|
|
|
29
|
|
|
30
|
|
|
57
|
|
Other
Countries
|
|
|
(5)
|
|
|
(6)
|
|
|
(7)
|
Total
International Mortgage Insurance
|
|
|
61
|
|
|
64
|
|
|
97
|
U.S. Mortgage
Insurance
|
|
|
49
|
|
|
52
|
|
|
39
|
Total Global
Mortgage Insurance
|
|
$
|
110
|
|
$
|
116
|
|
$
|
136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
(Amounts in
billions)
|
|
Q2
15
|
|
Q1
15
|
|
Q2
14
|
International
Mortgage Insurance
|
|
|
|
|
|
|
|
|
|
|
Flow
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
$
|
5.4
|
|
$
|
3.3
|
|
$
|
5.0
|
|
|
Australia
|
|
|
6.5
|
|
|
5.8
|
|
|
7.9
|
|
|
Other
Countries
|
|
|
0.5
|
|
|
0.4
|
|
|
0.5
|
|
Bulk
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
|
3.3
|
|
|
5.0
|
|
|
7.5
|
|
|
Australia
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|
Other
Countries
|
|
|
—
|
|
|
0.2
|
|
|
—
|
U.S. Mortgage
Insurance
|
|
|
|
|
|
|
|
|
|
|
Primary
Flow
|
|
|
8.2
|
|
|
6.3
|
|
|
6.1
|
|
Primary
Bulk
|
|
|
—
|
|
|
—
|
|
|
—
|
Canada Mortgage Insurance
Canada reported net operating income of
$37 million versus $40 million in the prior quarter and $47 million in the prior year. The loss ratio in
the quarter was 17 percent, down five points from the prior quarter
from a modest decrease in new delinquencies, net of cures, and up
five points from the prior year from a modest increase in new
delinquencies, net of cures, and a higher average reserve per
delinquency related to regional mix. Results included higher
expenses versus the prior quarter and unfavorable foreign exchange
versus the prior year of $6 million.
Flow new insurance written (NIW) was up 67
percent4 sequentially from a seasonally larger
origination market and up 22 percent4 year over year
primarily from an increase in market penetration. In addition, the
company completed several bulk transactions in the quarter of
approximately $3.3 billion in total,
consisting of low loan-to-value prime loans, reflecting its
selective participation in this market.
Australia Mortgage Insurance
Australia reported net operating income of
$29 million versus $30 million in the prior quarter and $57 million in the prior year. The loss ratio in
the quarter was 28 percent, up 13 points sequentially from higher
new delinquencies, partially offset by a higher cure rate and up
five points from the prior year. In the prior quarter, the company
accrued a $7 million pre-tax
receivable for expected recoveries relating to paid claims
reflecting its experience of successful borrower recovery activity,
favorably impacting the loss ratio by nine points. New
delinquencies were up 16 percent sequentially primarily reflecting
normal seasonal variation with most of the increase related to
Queensland and Western Australia and cures were up 16 percent
sequentially reflecting normal seasonal variation. Results versus
the prior year were also impacted by less favorable tax benefits of
$14 million, an unfavorable
$11 million related to the timing of
the minority IPO of 33.8 percent of the Australia mortgage insurance (MI) business in
May 2014 and the further sell down of
approximately 14 percent in May 2015
and unfavorable foreign exchange of $5
million. Flow NIW was up 16 percent4 sequentially
primarily from seasonal variation and down three
percent4 year over year.
Other Countries Mortgage Insurance
Other Countries had
a net operating loss of $5 million,
compared to a net operating loss of $6
million in the prior quarter and a net operating loss of
$7 million in the prior year.
U.S. Mortgage Insurance
U.S. mortgage insurance net
operating income was $49 million,
compared with $52 million in the
prior quarter and $39 million in the
prior year. The loss ratio in the current quarter was 33 percent,
flat sequentially reflecting lower new delinquencies offset by less
favorable net cures and aging of existing delinquencies. New flow
delinquencies decreased approximately five percent from the prior
quarter and decreased approximately 14 percent from the prior year,
reflecting the continued burn through of delinquencies from the
2005 to 2008 book years. Results versus the prior quarter reflected
lower net investment income.
Flow NIW of $8.2 billion increased
30 percent from the prior quarter from a seasonally larger mortgage
insurance market and increased 34 percent versus the prior year
primarily from a larger purchase originations market and higher
refinance activity. During the second quarter, the company
decreased its single premium lender paid new insurance written
reflecting its selective participation in this market. Future
volumes of this product will vary in part depending on the
company's evaluation of the risk return profile of these
transactions.
U.S. Life Insurance Division
The U.S. Life Insurance
Division had net operating income of $57
million, compared with $81
million in the prior quarter and $69
million a year ago.
U.S. Life
Insurance Division
|
Net Operating
Income
|
(Amounts in
millions)
|
|
Q2
15
|
|
Q1
15
|
|
Q2
14
|
U.S. Life
Insurance
|
|
|
|
|
|
|
|
|
|
|
Long Term Care
Insurance
|
|
$
|
10
|
|
$
|
10
|
|
$
|
6
|
|
Life
Insurance
|
|
|
22
|
|
|
40
|
|
|
39
|
|
Fixed
Annuities
|
|
|
25
|
|
|
31
|
|
|
24
|
Total U.S. Life
Insurance
|
|
|
57
|
|
|
81
|
|
|
69
|
Total U.S. Life
Insurance
|
|
$
|
57
|
|
$
|
81
|
|
$
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
(Amounts in
millions)
|
|
Q2
15
|
|
Q1
15
|
|
Q2
14
|
U.S. Life
Insurance
|
|
|
|
|
|
|
|
|
|
|
Long Term Care
Insurance
|
|
|
|
|
|
|
|
|
|
|
|
Individual
|
|
$
|
8
|
|
$
|
10
|
|
$
|
24
|
|
|
Group
|
|
|
1
|
|
|
1
|
|
|
2
|
|
Life
Insurance
|
|
|
|
|
|
|
|
|
|
|
|
Term Life
|
|
|
9
|
|
|
9
|
|
|
14
|
|
|
Universal
Life
|
|
|
4
|
|
|
4
|
|
|
7
|
|
|
Linked
Benefits
|
|
|
2
|
|
|
4
|
|
|
5
|
|
Fixed
Annuities
|
|
|
224
|
|
|
326
|
|
|
429
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Care Insurance
Long term care insurance
(LTC) net operating income was $10
million, compared with $10
million in the prior quarter and $6
million in the prior year. Benefits and other changes in
policy reserves increased $9 million
after-tax versus the prior quarter and $29
million after-tax versus the prior year. The current quarter
included unfavorable mortality on existing claims versus the prior
quarter that decreased claim termination rates, in line with
expected seasonality. Results also included unfavorable severity on
new claims given the mix of new claims with a higher average
reserve versus both the prior quarter and prior year and also
reflected higher claim reserve factors, versus the prior year,
based on the updated assumptions and methodologies the company
implemented in 2014. Results in the quarter included a $5 million after-tax increase to reserves
associated with profits followed by losses on business written
since late 1995 and net favorable items of $12 million after-tax primarily reflecting
corrections to reserve calculations. Results in the prior quarter
included net unfavorable items of $7
million after-tax. The loss ratio in the current quarter was
73 percent.
Individual LTC sales of $8 million
were lower than the prior quarter and the prior year. Sales are
expected to continue at low levels in the near term due to the 2014
introduction of a higher priced LTC product and lower ratings, but
build over time as new products are introduced.
Life Insurance
Life insurance net operating income was
$22 million, compared with
$40 million in the prior quarter and
$39 million in the prior year.
Results versus the prior quarter were primarily impacted by
unfavorable term life insurance mortality related to higher
severity, but favorable versus pricing. Increased lapses in the
post-level term life insurance premium period and prepayment speed
adjustments related to residential mortgage-backed securities also
reduced earnings versus the prior quarter and prior year. Results
versus the prior year were also impacted by higher reinsurance
expenses. Sales of $15 million
decreased compared to the prior quarter and the prior year given
lower ratings. Linked benefit product deposits were $25 million in the quarter, down from
$41 million in the prior quarter and
$42 million in the prior year.
Fixed Annuities
Fixed annuities net operating income
was $25 million, compared with
$31 million in the prior quarter and
$24 million in the prior year.
Results in the quarter reflected unfavorable impacts from mortality
versus the prior quarter. Sales in the quarter totaled $224 million, down sequentially and versus the
prior year given the lower interest rate environment and lower
ratings.
Corporate and Other Division
Corporate and Other Division net operating loss was $48 million, compared with $43 million in the prior quarter and $51 million in the prior year.
Corporate and
Other Division
|
Net Operating
Income (Loss)
|
(Amounts in
millions)
|
|
Q2
15
|
|
Q1
15
|
|
Q2
14
|
Runoff
|
|
$
|
9
|
|
$
|
11
|
|
$
|
15
|
Corporate and
Other
|
|
|
(57)
|
|
|
(54)
|
|
|
(66)
|
Total Corporate
and Other
|
|
$
|
(48)
|
|
$
|
(43)
|
|
$
|
(51)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Runoff net operating income was $9
million, compared with $11
million in the prior quarter and $15
million in the prior year.
Corporate and Other net operating loss was $57 million, compared with $54 million in the prior quarter and $66 million in the prior year.
Capital & Liquidity
Genworth maintains solid
capital positions in its operating subsidiaries.
Key Capital &
Liquidity Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollar amounts in
millions)
|
|
Q2
15
|
|
Q1
15
|
|
Q2
14
|
|
Canada
MI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum Capital Test
(MCT) Ratio5
|
|
|
231
|
%
|
|
|
233
|
%
|
|
|
231
|
%
|
Australia
MI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prescribed Capital
Amount (PCA) Ratio 5
|
|
|
164
|
%
|
|
|
163
|
%
|
|
|
154
|
%
|
U.S.
MI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Risk-To-Capital Ratio 5
|
|
|
13.7:1
|
|
|
|
14.1:1
|
|
|
|
14.6:1
|
|
|
GMICO Risk-To-Capital
Ratio 5
|
|
|
13.5:1
|
|
|
|
13.8:1
|
|
|
|
14.0:1
|
|
U.S. Life
Companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Risk-Based Capital (RBC) Ratio 5
|
|
|
455
|
%
|
|
|
453
|
%
|
|
|
492
|
%
|
|
Unassigned
Surplus 5
|
|
$
|
100
|
|
|
$
|
138
|
|
|
$
|
563
|
|
Holding Company
Cash6 and Liquid Assets7
|
|
$
|
1,154
|
|
|
$
|
1,070
|
|
|
$
|
1,223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Points
- $173 million from the net
proceeds related to the sale of 92.3 million shares of the
Australia MI business and $47 million
of dividends from the operating subsidiaries were paid to the
holding company during the second quarter;
- Unassigned surplus declined versus the prior quarter primarily
related to unfavorable LTC and life insurance mortality
results;
- The holding company ended the second quarter with a buffer of
approximately $670 million in excess
of one and a half times annual debt service and restricted
cash;
- The holding company targets maintaining cash balances of at
least one and a half times its annual debt service expense plus a
risk buffer of $350 million;
- In July 2015, $200 million of cash from Genworth Holdings, Inc.
was transferred to U.S. mortgage insurance in exchange for the
business' ownership interest in affiliated preferred securities;
and
- In July 2015, the Australia MI
business completed the issuance of AUD$200 million of subordinated
notes and, concurrent with the transaction, redeemed approximately
AUD$90 million of existing subordinated notes. If the transaction
had been completed as of June 30,
2015, it would have favorably impacted the PCA ratio by
approximately nine
points.
About Genworth Financial
Genworth
Financial, Inc. (NYSE: GNW) is a leading Fortune 500 insurance
holding company committed to helping families become more
financially secure, self-reliant and prepared for the future.
Genworth has leadership positions in mortgage insurance and long
term care insurance and product offerings in life insurance and
fixed annuities that assist consumers in solving their home
ownership, insurance and retirement needs. To help families start
"the talk" about their futures and long term care planning,
Genworth recently completed the first stage of its national
#LetsTalk Tour to encourage conversations and information sharing.
Headquartered in Richmond,
Virginia, Genworth traces its roots back to 1871 and became
a public company in 2004. For more information, visit
genworth.com.
From time to time, Genworth releases important information via
postings on its corporate website. Accordingly, investors and other
interested parties are encouraged to enroll to receive automatic
email alerts and Really Simple Syndication (RSS) feeds regarding
new postings. Enrollment information is found under the "Investors"
section of genworth.com. From time to time, Genworth's
publicly traded subsidiaries, Genworth MI Canada Inc. and Genworth
Mortgage Insurance Australia Limited, separately release financial
and other information about their operations. This information can
be found at http://genworth.ca and
http://www.genworth.com.au.
Conference Call and Financial Supplement
Information
This press release and the second quarter 2015
financial supplement are now posted on the company's website.
Additional information regarding business results and strategic
update will be posted on the company's website,
http://investor.genworth.com, by 7:30
a.m. on August 5, 2015.
Investors are encouraged to review these materials.
Genworth will conduct a conference call on August 5, 2015 at 8:00
a.m. (ET) to discuss second quarter 2015 results and provide
an update on strategic priorities. The conference call will be
accessible via telephone and the Internet. The dial-in number for
the conference call is 877 888.4034 or 913 489.5101 (outside the
U.S.); conference ID # 9386003. To participate in the call by
webcast, register at http://investor.genworth.com at least 15
minutes prior to the webcast to download and install any necessary
software.
Replays of the call will be available through August 19, 2015 at 888 203.1112 or 719 457.0820
(outside the U.S.); conference ID # 9386003. The webcast will also
be archived on the company's website.
Use of Non-GAAP Measures
This press release includes
the non-GAAP financial measures entitled "net operating income
(loss)" and "operating earnings per share." Operating earnings per
share is derived from net operating income (loss). The chief
operating decision maker evaluates segment performance and
allocates resources on the basis of net operating income (loss).
The company defines net operating income (loss) as income (loss)
from continuing operations excluding the after-tax effects of
income attributable to noncontrolling interests, net investment
gains (losses), goodwill impairments, gains (losses) on the sale of
businesses, gains (losses) on the early extinguishment of debt,
gains (losses) on insurance block transactions, restructuring costs
and infrequent or unusual non-operating items. Gains (losses) on
insurance block transactions are defined as gains (losses) on the
early extinguishment of non-recourse funding obligations, early
termination fees for other financing restructuring and/or resulting
gains (losses) on reinsurance restructuring for certain blocks of
business. The company excludes net investment gains (losses) and
infrequent or unusual non-operating items because the company does
not consider them to be related to the operating performance of the
company's segments and Corporate and Other activities. A component
of the company's net investment gains (losses) is the result of
impairments, the size and timing of which can vary significantly
depending on market credit cycles. In addition, the size and timing
of other investment gains (losses) can be subject to the company's
discretion and are influenced by market opportunities, as well as
asset-liability matching considerations. Goodwill impairments,
gains (losses) on the sale of businesses, gains (losses) on the
early extinguishment of debt, gains (losses) on insurance block
transactions and restructuring costs are also excluded from net
operating income (loss) because, in the company's opinion, they are
not indicative of overall operating trends. Infrequent or unusual
non-operating items are also excluded from net operating income
(loss) if, in the company's opinion, they are not indicative of
overall operating trends.
While some of these items may be significant components of net
income (loss) available to Genworth's common stockholders in
accordance with GAAP, the company believes that net operating
income (loss) and measures that are derived from or incorporate net
operating income (loss), including net operating income (loss) per
common share on a basic and diluted basis, are appropriate measures
that are useful to investors because they identify the income
(loss) attributable to the ongoing operations of the business.
Management also uses net operating income (loss) as a basis for
determining awards and compensation for senior management and to
evaluate performance on a basis comparable to that used by
analysts. However, the items excluded from net operating income
(loss) have occurred in the past and could, and in some cases will,
recur in the future. Net operating income (loss) and net operating
income (loss) per common share on a basic and diluted basis are not
substitutes for net income (loss) available to Genworth's common
stockholders or net income (loss) available to Genworth's common
stockholders per common share on a basic and diluted basis
determined in accordance with GAAP. In addition, the company's
definition of net operating income (loss) may differ from the
definitions used by other companies.
In the second quarter of 2015, the company recorded a
$2 million after-tax expense related
to restructuring costs as part of an expense reduction plan as the
company evaluates and appropriately sizes its organizational needs
and expenses.
In the second quarter of 2014, the company paid an early
redemption payment of approximately $2
million, net of taxes and portion attributable to
noncontrolling interests, related to the early redemption of
Genworth MI Canada Inc.'s notes that were scheduled to mature in
2015. This transaction was excluded from net operating income
(loss) for the periods presented as it related to the loss on the
early extinguishment of debt.
There were no infrequent or unusual items excluded from net
operating income (loss) during the periods presented.
The tables at the end of this press release reflect net
operating income (loss) as determined in accordance with accounting
guidance related to segment reporting, and a reconciliation of net
operating income (loss) of the company's segments and Corporate and
Other activities to net income (loss) available to Genworth's
common stockholders for the three months ended June 30, 2015 and 2014, as well as for the three
months ended March 31, 2015.
Adjustments to reconcile net income (loss) attributable to
Genworth's common stockholders and net operating income (loss)
assume a 35 percent tax rate and are net of the portion
attributable to noncontrolling interests. Net investment gains
(losses) are also adjusted for deferred acquisition costs and other
intangible amortization and certain benefit reserves.
This press release includes the non-GAAP financial measure
entitled "core yield" as a measure of investment yield. The company
defines core yield as the investment yield adjusted for those items
that are not recurring in nature. Management believes that analysis
of core yield enhances understanding of the investment yield of the
company. However, core yield is not a substitute for investment
yield determined in accordance with GAAP. In addition, the
company's definition of core yield may differ from the definitions
used by other companies. A reconciliation of core yield to reported
GAAP yield is included in a table at the end of this press
release.
Results of Operations by Segment
In the first quarter of 2015, the company revised how it
allocates the consolidated provision for income taxes to its
operating segments to simplify the process and reflect how the
chief operating decision maker is evaluating segment performance.
The revised methodology applies a specific tax rate to the pre-tax
income (loss) of each segment, which is then adjusted in each
segment to reflect the tax attributes of items unique to that
segment such as foreign income. The difference between the
consolidated provision for income taxes and the sum of the
provision for income taxes in each segment is reflected in
Corporate and Other activities. Previously, the company calculated
a unique income tax provision for each segment based on quarterly
changes to tax attributes and implications of transactions specific
to each product within the segment.
The annually-determined tax rates and adjustments to each
segment's provision for income taxes are estimates which are
subject to review and could change from year to year. Prior year
amounts have not been re-presented to reflect this revised
presentation and are, therefore, not comparable to the current year
provision for income taxes by segment. However, the company
does not believe that the previous methodology would have resulted
in a materially different segment-level provision for income
taxes.
Definition of Selected Operating Performance Measures
The company reports selected operating performance measures
including "sales" and "insurance in force" or "risk in force" which
are commonly used in the insurance industry as measures of
operating performance.
Management regularly monitors and reports sales metrics as a
measure of volume of new and renewal business generated in a
period. Sales refer to: (1) new insurance written for mortgage
insurance; (2) annualized first-year premiums for long term care
and term life insurance products; (3) annualized first-year
deposits plus five percent of excess deposits for universal and
term universal life insurance products; (4) 10 percent of premium
deposits for linked-benefits products; and (5) new and additional
premiums/deposits for fixed annuities. Sales do not include renewal
premiums on policies or contracts written during prior periods. The
company considers new insurance written, annualized first-year
premiums/deposits, premium equivalents and new premiums/deposits to
be a measure of the company's operating performance because they
represent a measure of new sales of insurance policies or contracts
during a specified period, rather than a measure of the company's
revenues or profitability during that period.
Management regularly monitors and reports insurance in force and
risk in force. Insurance in force for the international mortgage
and U.S. mortgage insurance businesses is a measure of the
aggregate face value of outstanding insurance policies as of the
respective reporting date. For risk in force in the international
mortgage insurance business, the company has computed an
"effective" risk in force amount, which recognizes that the loss on
any particular loan will be reduced by the net proceeds received
upon sale of the property. Effective risk in force has been
calculated by applying to insurance in force a factor of 35 percent
that represents the highest expected average per-claim payment for
any one underwriting year over the life of the company's businesses
in Canada and Australia. Risk in force for the U.S. mortgage
insurance business is the obligation that is limited under
contractual terms to the amounts less than 100 percent of the
mortgage loan value. The company considers insurance in force
and risk in force to be measures of the company's operating
performance because they represent measures of the size of the
business at a specific date which will generate revenues and
profits in a future period, rather than measures of the company's
revenues or profitability during that period.
Management also regularly monitors and reports a loss ratio for
the company's businesses. For the mortgage insurance businesses,
the loss ratio is the ratio of incurred losses and loss adjustment
expenses to net earned premiums. For the long term care insurance
business, the loss ratio is the ratio of benefits and other changes
in reserves less tabular interest on reserves less loss adjustment
expenses to net earned premiums. The company considers the
loss ratio to be a measure of underwriting performance in these
businesses and helps to enhance the understanding of the operating
performance of the businesses.
An assumed tax rate of 35 percent is utilized in certain
adjustments to net operating income (loss) and in the explanation
of specific variances of operating performance and investment
results.
These operating performance measures enable the company to
compare its operating performance across periods without regard to
revenues or profitability related to policies or contracts sold in
prior periods or from investments or other sources.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains certain
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by words such as "expects," "intends,"
"anticipates," "plans," "believes," "seeks," "estimates," "will" or
words of similar meaning and include, but are not limited to,
statements regarding the outlook for the company's future business
and financial performance. Forward-looking statements are based on
management's current expectations and assumptions, which are
subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Actual outcomes and
results may differ materially due to global political, economic,
business, competitive, market, regulatory and other factors and
risks, including, but not limited to, the following:
- Risks relating to all of the company's businesses,
including: (i) inability to successfully develop and execute
strategic plans to effectively address the company's current
business challenges (including with respect to its long term care
insurance business, ratings and capital), including as a result of
the inability to complete the planned sale of the company's
lifestyle protection insurance business at all or on the terms
anticipated and failure to attract buyers for any other businesses
or other assets the company may seek to sell, or securities it may
seek to issue, in each case, in a timely manner on anticipated
terms; inability to generate required capital; failure to obtain
any required regulatory, stockholder and/or noteholder approvals or
consents, or the company's challenges changing or being more costly
or difficult to successfully address than currently anticipated or
the benefits achieved being less than anticipated; inability to
successfully develop more targeted product features and benefits,
strengthen relationships with producers or achieve anticipated
cost-savings in a timely manner; adverse tax or accounting charges;
(ii) inability to increase the capital needed in the company's
businesses in a timely manner and on anticipated terms, including
through improved business performance, reinsurance or similar
transactions, asset sales, securities offerings or otherwise,
in each case as and when required; (iii) inadequate reserves and
the need to increase reserves, including as a result of any changes
the company may make to its assumptions, methodologies or otherwise
in connection with periodic or other reviews (including as a result
of the company's actual experience differing significantly from its
assumptions); (iv) ineffective or inadequate risk management in
identifying, controlling or mitigating risks; weaknesses in, or
ineffective, internal controls; (v) recent or future adverse rating
agency actions, including with respect to rating downgrades or
potential downgrades, being placed on negative outlook or being put
on review for potential downgrade, all of which could have adverse
implications for the company, including with respect to key
business relationships, product offerings, business results of
operations, financial condition and capital needs, strategic plans,
collateral obligations and availability and terms of hedging,
reinsurance and borrowings; (vi) inability to retain, attract and
motivate qualified employees and independent sales representatives,
particularly in the light of the company's recent business
challenges; (vii) adverse change in regulatory requirements,
including risk-based capital; (viii) dependence on dividends and
other distributions from the company's subsidiaries (particularly
the company's international subsidiaries) and the inability of any
subsidiaries to pay dividends or make other distributions to the
company, including as a result of the performance of the
subsidiaries and insurance, regulatory or corporate law
restrictions (including the unwillingness or inability of the
subsidiary that indirectly owns most of the company's interests in
the Australian and Canadian mortgage insurance businesses to pay
the dividends that it receives from those businesses as a result of
the impact on its financial condition of its guarantee of certain
long term care insurance related reinsurance arrangements); (ix)
inability to borrow under the company's credit facility; (x)
downturns and volatility in global economies and equity and credit
markets; (xi) interest rates and changes in rates; (xii)
availability, affordability and adequacy of reinsurance to protect
the company against losses; (xiii) defaults by counterparties to
reinsurance arrangements or derivative instruments; (xiv) changes
in valuation of fixed maturity, equity and trading securities; (xv)
defaults or other events impacting the value of the company's fixed
maturity securities portfolio; (xvi) defaults on the company's
commercial mortgage loans or the mortgage loans underlying its
investments in commercial mortgage-backed securities and volatility
in performance; (xvii) competition; (xviii) reliance on, and loss
of, key distribution relationships; (xix) extensive regulation on
the company's businesses and changes in applicable laws and
regulations; (xx) litigation and regulatory investigations or other
actions (including the two shareholder putative class action
lawsuits alleging securities law violations filed against the
company in 2014); (xxi) the material weakness in the company's
internal control over financial reporting; (xxii) failure or any
compromise of the security of the company's computer systems,
disaster recovery systems and business continuity plans and
failures to safeguard, or breaches of, the company's confidential
information; (xxiii) occurrence of natural or man-made disasters or
a pandemic; (xxiv) impact of additional regulations pursuant to the
Dodd-Frank Wall Street Reform and Consumer Protection Act; (xxv)
changes in accounting and reporting standards; (xxvi) impairments
of or valuation allowances against the company's deferred tax
assets; (xxvii) accelerated amortization of deferred acquisition
costs and present value of future profits (including as a result of
any changes the company may make to its assumptions, methodologies
or otherwise in connection with periodic or other reviews);
(xxviii) political and economic instability or changes in
government policies; and (xxix) fluctuations in foreign currency
exchange rates and international securities markets;
- Risks relating primarily to the company's mortgage insurance
businesses, including: (i) deterioration in economic conditions
or a decline in home prices that adversely affect the company's
loss experience in mortgage insurance; (ii) premiums for the
significant portion of the company's international mortgage
insurance risk in-force with high loan-to-value ratios may not be
sufficient to compensate the company for the greater risks
associated with those policies; (iii) competition in the company's
international and U.S. mortgage insurance businesses, including
from government and government-owned and government-sponsored
enterprises (GSEs) offering mortgage insurance; (iv) changes in
regulations adversely affecting the company's international
operations; (v) inability to meet or maintain the private mortgage
insurer eligibility requirements (PMIERs) on the contemplated
timetable with the contemplated funding; (vi) inability of U.S.
mortgage insurance subsidiaries to meet minimum statutory capital
requirements and hazardous financial condition standards; (vii) the
influence of Federal National Mortgage Association (Fannie Mae),
Federal Home Loan Mortgage Corporation (Freddie Mac) and a small
number of large mortgage lenders on the U.S. mortgage insurance
market and adverse changes to the role or structure of Fannie Mae
and Freddie Mac; (viii) increases in U.S. mortgage insurance
default rates; (ix) inability to realize anticipated benefits of
the company's rescissions, curtailments, loan modifications or
other similar programs in its U.S. mortgage insurance business; (x)
problems associated with foreclosure process defects in
the United States that may defer
claim payments; (xi) competition with GSEs may put the company at a
disadvantage on pricing and other terms and conditions; (xii)
adverse changes in regulations affecting the company's U.S.
mortgage insurance business; (xiii) decreases in the volume of high
loan-to-value mortgage originations or increases in mortgage
insurance cancellations in the United
States; (xiv) increases in the use of alternatives to
private mortgage insurance in the United
States and reductions in the level of coverage selected; and
(xv) potential liabilities in connection with the company's U.S.
contract underwriting services;
- Risks relating primarily to the company's long term care
insurance, life insurance and annuities businesses, including:
(i) the company's inability to increase sufficiently, and in
a timely manner, premiums on in-force long term care insurance
policies and/or reduce in-force benefits, and charge higher
premiums on new policies, in each case, as currently anticipated
(including the future increases assumed in connection with the
completion of the company's margin reviews in the fourth quarter of
2014) and as may be required from time to time in the future
(including as a result of its failure to obtain any necessary
regulatory approvals or unwillingness or inability of policyholders
to pay increased premiums); the company's inability to reflect
future premium increases and other management actions in its margin
calculation as anticipated; (ii) failure to sufficiently increase
demand for the company's long term care insurance, life insurance
and fixed annuity products; (iii) adverse impact on the company's
financial results as a result of projected profits followed by
projected losses (as is currently the case with the company's long
term care insurance business); (iv) deviations from the persistency
assumptions used to price and establish reserves for the company's
insurance policies and annuity contracts; (v) medical advances,
such as genetic research and diagnostic imaging, and related
legislation that impact policyholder behavior in ways adverse to
the company; and (vi) inability to continue to implement actions to
mitigate the impact of statutory reserve requirements;
- Other risks, including: (i) the possibility that in
certain circumstances the company will be obligated to make
payments to General Electric Company (GE) under the tax matters
agreement with GE even if its corresponding tax savings are never
realized and payments could be accelerated in the event of certain
changes in control; and (ii) provisions of the company's
certificate of incorporation and bylaws and the tax matters
agreement with GE may discourage takeover attempts and business
combinations that stockholders might consider in their best
interests; and
- Risks relating to the company's common stock, including:
(i) the continued suspension of payment of dividends; and (ii)
stock price fluctuations.
The company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future developments or otherwise.
Condensed
Consolidated Statements of Income
|
(Amounts in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
|
June
30,
|
|
|
|
|
|
2015
|
|
2014
|
Revenues:
|
|
|
|
|
|
|
Premiums
|
|
$
|
1,134
|
|
$
|
1,144
|
Net investment
income
|
|
|
793
|
|
|
791
|
Net investment gains
(losses)
|
|
|
8
|
|
|
34
|
Insurance and
investment product fees and other
|
|
|
222
|
|
|
225
|
|
Total
revenues
|
|
|
2,157
|
|
|
2,194
|
Benefits and
expenses:
|
|
|
|
|
|
|
Benefits and other
changes in policy reserves
|
|
|
1,232
|
|
|
1,200
|
Interest
credited
|
|
|
181
|
|
|
184
|
Acquisition and
operating expenses, net of deferrals
|
|
|
295
|
|
|
282
|
Amortization of
deferred acquisition costs and intangibles
|
|
|
101
|
|
|
108
|
Interest
expense
|
|
|
103
|
|
|
112
|
|
Total benefits and
expenses
|
|
|
1,912
|
|
|
1,886
|
Income from
continuing operations before income taxes
|
|
|
245
|
|
|
308
|
Provision for income
taxes
|
|
|
70
|
|
|
84
|
Income from
continuing operations
|
|
|
175
|
|
|
224
|
Income (loss) from
discontinued operations, net of taxes
|
|
|
(314)
|
|
|
4
|
Net income
(loss)
|
|
|
(139)
|
|
|
228
|
Less: net income
attributable to noncontrolling interests
|
|
|
54
|
|
|
52
|
Net income (loss)
available to Genworth Financial, Inc.'s common
stockholders
|
|
$
|
(193)
|
|
$
|
176
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations available to Genworth Financial, Inc.'s
|
|
|
|
|
|
|
|
common stockholders
per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.24
|
|
$
|
0.35
|
|
|
Diluted
|
|
$
|
0.24
|
|
$
|
0.34
|
Net income (loss)
available to Genworth Financial, Inc.'s common stockholders per
|
|
|
|
|
|
|
|
common
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.39)
|
|
$
|
0.35
|
|
|
Diluted
|
|
$
|
(0.39)
|
|
$
|
0.35
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
497.4
|
|
|
496.6
|
|
|
Diluted
|
|
|
499.3
|
|
|
503.6
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Operating Income to Net Income (Loss)
|
(Amounts in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
Three
|
|
|
|
|
|
months
ended
|
|
months
ended
|
|
|
|
|
|
June
30,
|
|
March
31,
|
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
Net operating income
(loss):
|
|
|
|
|
|
|
|
|
|
Global Mortgage
Insurance Division
|
|
|
|
|
|
|
|
|
|
|
International
Mortgage Insurance segment
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
$
|
37
|
|
$
|
47
|
|
$
|
40
|
|
|
Australia
|
|
|
29
|
|
|
57
|
|
|
30
|
|
|
Other
Countries
|
|
|
(5)
|
|
|
(7)
|
|
|
(6)
|
|
Total International
Mortgage Insurance segment
|
|
|
61
|
|
|
97
|
|
|
64
|
|
U.S. Mortgage
Insurance segment
|
|
|
49
|
|
|
39
|
|
|
52
|
|
Total Global Mortgage
Insurance Division
|
|
|
110
|
|
|
136
|
|
|
116
|
U.S. Life Insurance
Division
|
|
|
|
|
|
|
|
|
|
|
U.S. Life Insurance
segment
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Care
Insurance
|
|
|
10
|
|
|
6
|
|
|
10
|
|
|
Life
Insurance
|
|
|
22
|
|
|
39
|
|
|
40
|
|
|
Fixed
Annuities
|
|
|
25
|
|
|
24
|
|
|
31
|
|
Total U.S. Life
Insurance segment
|
|
|
57
|
|
|
69
|
|
|
81
|
|
Total U.S. Life
Insurance Division
|
|
|
57
|
|
|
69
|
|
|
81
|
Corporate and Other
Division
|
|
|
|
|
|
|
|
|
|
|
Runoff
segment
|
|
|
9
|
|
|
15
|
|
|
11
|
|
Corporate and
Other
|
|
|
(57)
|
|
|
(66)
|
|
|
(54)
|
|
Total Corporate and
Other Division
|
|
|
(48)
|
|
|
(51)
|
|
|
(43)
|
Net operating
income
|
|
|
119
|
|
|
154
|
|
|
154
|
Adjustments to net
operating income:
|
|
|
|
|
|
|
|
|
|
Net investment gains
(losses), net (see below for reconciliation)
|
|
|
4
|
|
|
20
|
|
|
(1)
|
Gains (losses) on
early extinguishment of debt, net
|
|
|
—
|
|
|
(2)
|
|
|
—
|
Expenses related to
restructuring, net
|
|
|
(2)
|
|
|
—
|
|
|
—
|
Income (loss) from
discontinued operations, net of taxes
|
|
|
(314)
|
|
|
4
|
|
|
1
|
Net income (loss)
available to Genworth Financial, Inc.'s common
|
|
|
|
|
|
|
|
|
|
|
stockholders
|
|
|
(193)
|
|
|
176
|
|
|
154
|
Add: net income
attributable to noncontrolling interests
|
|
|
54
|
|
|
52
|
|
|
50
|
Net income
(loss)
|
|
$
|
(139)
|
|
$
|
228
|
|
$
|
204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
available to Genworth Financial, Inc.'s common
|
|
|
|
|
|
|
|
|
|
|
stockholders per
common share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.39)
|
|
$
|
0.35
|
|
$
|
0.31
|
|
|
Diluted
|
|
$
|
(0.39)
|
|
$
|
0.35
|
|
$
|
0.31
|
Net operating income
per common share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.24
|
|
$
|
0.31
|
|
$
|
0.31
|
|
|
Diluted
|
|
$
|
0.24
|
|
$
|
0.31
|
|
$
|
0.31
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
497.4
|
|
|
496.6
|
|
|
497.0
|
|
|
Diluted
|
|
|
499.3
|
|
|
503.6
|
|
|
498.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net
investment gains (losses):
|
|
|
|
|
|
|
|
|
|
Net investment gains
(losses), gross
|
|
$
|
8
|
|
$
|
34
|
|
$
|
(16)
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
|
Deferred acquisition
costs and other intangible amortization and
certain
|
|
|
8
|
|
|
3
|
|
|
6
|
|
|
benefit
reserves
|
|
|
|
|
|
|
|
|
|
|
Net investment gains
(losses) attributable to noncontrolling interests
|
|
|
(9)
|
|
|
(5)
|
|
|
7
|
|
Taxes
|
|
|
(3)
|
|
|
(12)
|
|
|
2
|
Net investment gains
(losses), net of taxes and other adjustments
|
|
$
|
4
|
|
$
|
20
|
|
$
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets
|
(Amounts in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
Assets
|
|
|
|
|
|
Cash, cash
equivalents and invested assets
|
|
$
|
76,123
|
|
$
|
77,388
|
|
Deferred acquisition
costs
|
|
|
4,896
|
|
|
4,849
|
|
Intangible
assets
|
|
|
286
|
|
|
250
|
|
Goodwill
|
|
|
15
|
|
|
16
|
|
Reinsurance
recoverable
|
|
|
17,297
|
|
|
17,314
|
|
Other
assets
|
|
|
625
|
|
|
524
|
|
Separate account
assets
|
|
|
8,702
|
|
|
9,208
|
|
Assets held for sale
related to discontinued operations
|
|
|
1,220
|
|
|
1,809
|
|
|
|
|
Total
assets
|
|
$
|
109,164
|
|
$
|
111,358
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Future policy
benefits
|
|
$
|
36,298
|
|
$
|
35,915
|
|
|
Policyholder account
balances
|
|
|
25,987
|
|
|
26,032
|
|
|
Liability for policy
and contract claims
|
|
|
7,990
|
|
|
7,937
|
|
|
Unearned
premiums
|
|
|
3,431
|
|
|
3,547
|
|
|
Deferred tax and
other liabilities
|
|
|
3,394
|
|
|
4,140
|
|
|
Borrowings related to
securitization entities
|
|
|
199
|
|
|
219
|
|
|
Non-recourse funding
obligations
|
|
|
1,967
|
|
|
1,996
|
|
|
Long-term
borrowings
|
|
|
4,607
|
|
|
4,639
|
|
|
Separate account
liabilities
|
|
|
8,702
|
|
|
9,208
|
|
|
Liabilities held for
sale related to discontinued operations
|
|
|
862
|
|
|
928
|
|
|
|
|
Total
liabilities
|
|
|
93,437
|
|
|
94,561
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
1
|
|
|
1
|
|
|
Additional paid-in
capital
|
|
|
11,940
|
|
|
11,997
|
|
|
Accumulated other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
Net unrealized
investment gains (losses):
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized gains
(losses) on securities not other-than-temporarily
impaired
|
|
|
1,606
|
|
|
2,431
|
|
|
|
|
|
Net unrealized gains
(losses) on other-than-temporarily impaired securities
|
|
|
22
|
|
|
22
|
|
|
|
|
Net unrealized
investment gains (losses)
|
|
|
1,628
|
|
|
2,453
|
|
|
|
|
Derivatives
qualifying as hedges
|
|
|
1,913
|
|
|
2,070
|
|
|
|
|
Foreign currency
translation and other adjustments
|
|
|
(232)
|
|
|
(77)
|
|
|
Total accumulated
other comprehensive income (loss)
|
|
|
3,309
|
|
|
4,446
|
|
|
Retained
earnings
|
|
|
1,140
|
|
|
1,179
|
|
|
Treasury stock, at
cost
|
|
|
(2,700)
|
|
|
(2,700)
|
|
|
|
|
Total Genworth
Financial, Inc.'s stockholders' equity
|
|
|
13,690
|
|
|
14,923
|
|
|
Noncontrolling
interests
|
|
|
2,037
|
|
|
1,874
|
|
|
|
|
Total stockholders'
equity
|
|
|
15,727
|
|
|
16,797
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
109,164
|
|
$
|
111,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of Foreign
Exchange on Operating Results8
Three months ended
June 30, 2015
|
|
|
|
|
|
|
|
|
|
Percentages
|
|
|
Percentages
|
|
|
|
Including
Foreign
|
|
|
Excluding
Foreign
|
|
|
|
Exchange
|
|
|
Exchange9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada Mortgage
Insurance (MI):
|
|
|
|
|
|
|
Flow new insurance
written
|
|
8
|
%
|
|
22
|
%
|
Flow new insurance
written (2Q15 vs. 1Q15)
|
|
64
|
%
|
|
67
|
%
|
|
|
|
|
|
|
|
Australia
MI:
|
|
|
|
|
|
|
Flow new insurance
written
|
|
(18)
|
%
|
|
(3)
|
%
|
Flow new insurance
written (2Q15 vs. 1Q15)
|
|
12
|
%
|
|
16
|
%
|
|
|
|
|
|
|
|
Reconciliation of
Core Yield to Reported Yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
|
|
|
|
|
months
ended
|
|
|
|
|
|
|
June
30,
|
|
(Assets - amounts
in billions)
|
|
2015
|
|
Reported Total
Invested Assets and Cash
|
|
$
|
75.5
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Securities
lending
|
|
|
0.3
|
|
|
|
Unrealized gains
(losses)
|
|
|
4.9
|
|
|
|
Derivative
counterparty collateral
|
|
|
—
|
|
|
Adjusted end of
period invested assets
|
|
$
|
70.3
|
|
|
|
|
|
|
|
|
|
|
|
Average Invested
Assets Used in Reported Yield Calculation
|
|
$
|
70.2
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Restricted commercial
mortgage loans and other invested assets related to
|
|
|
|
|
|
|
|
securitization
entities10
|
|
|
0.2
|
|
|
Average Invested
Assets Used in Core Yield Calculation
|
|
$
|
70.0
|
|
|
|
|
|
|
|
|
|
|
|
(Income - amounts
in
millions)
|
|
|
|
|
|
Reported Net
Investment Income
|
|
$
|
793
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Bond calls and
commercial mortgage loan prepayments
|
|
|
17
|
|
|
|
Other non-core
items11
|
|
|
(4)
|
|
|
|
Restricted commercial
mortgage loans and other invested assets related to
|
|
|
|
|
|
|
|
securitization
entities10
|
|
|
2
|
|
|
Core Net Investment
Income
|
|
$
|
778
|
|
|
|
|
|
|
|
|
|
|
|
Reported
Yield
|
|
|
4.52
|
%
|
|
Core Yield
|
|
|
4.45
|
%
|
|
1
|
Unless otherwise
stated, all references in this press release to net income (loss),
net income (loss) per share, book value, book value per share and
stockholders' equity should be read as net income (loss) available
to Genworth's common stockholders, net income (loss) available to
Genworth's common stockholders per share, book value available to
Genworth's common stockholders, book value available to Genworth's
common stockholders per share and stockholders' equity available to
Genworth's common stockholders, respectively.
|
2
|
This is a financial
measure not calculated based on U.S. Generally Accepted Accounting
Principles (Non-GAAP). See the Use of Non-GAAP Measures
section of this press release for additional
information.
|
3
|
The company defines
"NM" as not meaningful for increases or decreases greater than 200
percent.
|
4
|
Percent change
excludes the impact of foreign exchange.
|
5
|
Company estimate for
the second quarter of 2015, due to timing of the filing of
statutory statements.
|
6
|
Holding company cash
& liquid assets comprises assets held in Genworth Holdings,
Inc. (the issuer of outstanding public debt) which is a
wholly-owned subsidiary of Genworth Financial, Inc.
|
7
|
Comprises cash and
cash equivalents of $904 million, $820 million and $1,073 million,
respectively, and U.S. government bonds of $250 million, $250
million and $150 million, respectively, as of June 30, 2015, March
31, 2015 and June 30, 2014.
|
8
|
All percentages are
comparing the second quarter of 2015 to the second quarter of 2014
unless otherwise stated.
|
9
|
The impact of foreign
exchange was calculated using the comparable prior period exchange
rates.
|
10
|
Represents the
incremental assets and investment income related to restricted
commercial mortgage loans and other invested assets.
|
11
|
Includes cost basis
adjustments on structured securities and various other immaterial
items.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/genworth-financial-announces-second-quarter-2015-results-300123514.html
SOURCE Genworth Financial, Inc.