RICHMOND, Va., Feb. 7, 2017 /PRNewswire/ --
- Special Meeting Of Stockholders To Vote On Acquisition By China
Oceanwide Holdings Group Co., Ltd. (China Oceanwide) Scheduled For
March 7
- All Regulatory Filings For China Oceanwide Acquisition
Submitted
- GAAP Annual Assumption Review Complete For U.S. Life Insurance
- Long Term Care Insurance (LTC) Active Life GAAP Margins Of
Approximately $1.0 To $1.5
Billion
- Universal Life Insurance1 After-Tax
Charges Of $196 Million Primarily
Reflecting Updates To Mortality Assumptions
- Statutory Results And Cash Flow Testing Results For U.S. Life
Insurance Companies Expected To Be Made Available At The Time Of
The Form 10-K Filing
- Net Loss2 And Adjusted Operating
Loss3 Included Aggregate Unfavorable Items In
Universal Life Insurance Relating To Annual Assumption Updates Of
$196 Million, Or $0.39 Per Diluted Share, And Tax Charges Of
$29 Million, Or $0.06 Per Diluted Share
- Strong Loss Ratio And Capital Levels In The Fourth Quarter For
U.S., Canada And Australia Mortgage Insurance (MI); 2016 Full Year
Loss Ratios At Or Better Than Company Outlook
- U.S. MI Full Year Adjusted Operating Income And New Insurance
Written (NIW) Increased 40 Percent And 35 Percent, Respectively,
Compared To 2015
- Holding Company Cash And Liquid Assets Of Approximately
$1.1 Billion
Genworth Financial, Inc. (NYSE: GNW) today reported results for
the period ended December 31, 2016.
The company reported a net loss of $122
million, or $0.25 per diluted
share, in the fourth quarter of 2016, compared with a net loss of
$292 million, or $0.59 per diluted share, in the fourth quarter of
2015. The adjusted operating loss for the fourth quarter of 2016
was $137 million, or $0.27 per diluted share, compared with an
adjusted operating loss of $82
million, or $0.17 per diluted
share, in the fourth quarter of 2015.
The company reported a net loss of $277
million, or $0.56 per diluted
share, in 2016, compared with a net loss of $615 million, or $1.24 per diluted share, in 2015. The company
reported an adjusted operating loss of $316
million, or $0.63 per diluted
share, in 2016, compared with adjusted operating income of
$255 million, or $0.51 per diluted share, in 2015.
Strategic Update
The previously announced transaction
with China Oceanwide is subject to receipt of required approvals by
Genworth's stockholders, regulators and other closing
conditions. On January 25,
2017, Genworth filed a definitive proxy statement with the
Securities and Exchange Commission (SEC) and commenced mailing to
stockholders of record the definitive proxy materials in connection
with the transaction. The special meeting of Genworth stockholders
will be held on Tuesday, March 7,
2017, at 9:00 a.m. Eastern
Time.
All filings required under the merger agreement for regulatory
approval of the transaction have been submitted, including those
for the Committee on Foreign Investment in the United States (CFIUS), where we are
waiting for the CFIUS staff to initiate the review period, and the
other regulators in the U.S., China, and other international markets. Both
parties are engaging with regulators regarding the applications and
the pending transaction. Genworth and China Oceanwide
continue to expect the transaction to close by mid-2017.
"China Oceanwide is continuing to work diligently with Genworth to
obtain all regulatory approvals and satisfy other necessary
conditions to closing," said Mr. Lu
Zhiqiang, Chairman of China Oceanwide.
"The Genworth Board of Directors continues to believe that this
transaction is in the best interests of Genworth's stockholders and
unanimously recommends the approval of the transaction," said
Tom McInerney, President and CEO of
Genworth.
Financial Performance
Consolidated Net
Loss &
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Adjusted Operating
Income (Loss)
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Three months ended
December 31
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Twelve months ended
December 31
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(Unaudited)
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(Unaudited)
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2016
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2015
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2016
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2015
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Per
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Per
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Per
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Per
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diluted
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diluted
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Total
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diluted
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diluted
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Total
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(Amounts in
millions, except per share)
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Total
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share
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Total
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share
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%
change
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Total
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share
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Total
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share
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%
change
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Net loss available to
Genworth's common
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stockholders
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$
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(122)
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$
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(0.25)
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$
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(292)
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$
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(0.59)
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58 %
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$
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(277)
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$
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(0.56)
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$
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(615)
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$
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(1.24)
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55 %
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Adjusted operating
income (loss)
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$
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(137)
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$
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(0.27)
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$
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(82)
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$
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(0.17)
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(67) %
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$
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(316)
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$
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(0.63)
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$
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255
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$
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0.51
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NM 4
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Weighted-average
diluted shares5
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498.4
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497.6
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498.3
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497.4
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Three months ended
December 31
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(Unaudited)
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2016
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2015
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Book value per
share
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$
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25.37
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$
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25.76
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Book value per share,
excluding
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accumulated other
comprehensive
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income
(loss)
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$
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19.16
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$
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19.71
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The net loss in the fourth quarter of 2016 was impacted by net
investment gains, net of taxes and other adjustments, of
$19 million in the quarter, compared
to net investment losses of $1
million in the prior year. The net loss in the current
quarter and prior year quarter also reflected after-tax losses of
$196 million and $194 million, respectively, related to assumption
updates in universal life insurance and $214
million in the prior year quarter related to the pending and
completed sale of the European mortgage and lifestyle protection
insurance businesses.
Net investment income was $786
million in the quarter, down from $805 million in the prior quarter and up from
$781 million in the prior year.
Prepayment speed adjustments related to residential mortgage-backed
securities were unfavorable versus the prior quarter and prior
year. The reported yield and core yield3 for the current
quarter were 4.50 percent and 4.47 percent, respectively.
Adjusted operating income (loss) results are summarized in the
table below:
Adjusted Operating
Income (Loss)
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(Amounts in
millions)
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Q4
16
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Q3
16
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Q4
15
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U.S. Mortgage
Insurance
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$
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61
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$
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67
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$
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41
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Canada Mortgage
Insurance
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39
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36
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37
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Australia Mortgage
Insurance
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14
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14
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22
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U.S. Life
Insurance
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(154)
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(207)
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(135)
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Runoff
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6
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12
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11
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Corporate and
Other
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(103)
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(327)
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(58)
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Total Adjusted
Operating Loss
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$
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(137)
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$
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(405)
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$
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(82)
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Adjusted operating income (loss) represents income (loss) from
continuing operations excluding net investment gains (losses),
gains (losses) on the sale of businesses, gains (losses) on the
early extinguishment of debt, gains (losses) on insurance block
transactions, restructuring costs and other adjustments, net of
taxes. A reconciliation of net income (loss) to adjusted operating
income (loss) of segments and Corporate and Other activities is
included at the end of this press release.
Unless specifically noted in the discussion of results for the
MI businesses in Canada and
Australia, references to
percentage changes exclude the impact of translating foreign
denominated activity into U.S. dollars (foreign exchange).
Percentage changes, which include the impact of foreign exchange,
are found in a table at the end of this press release.
U.S. Mortgage Insurance
Operating
Metrics
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(Dollar amounts in
millions)
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Q4
16
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Q3
16
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Q4
15
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Adjusted operating
income
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$
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61
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$
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67
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$
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41
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New insurance
written
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Primary
Flow
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$
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11,100
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$
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12,800
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$
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7,800
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Loss ratio
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28%
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21%
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39%
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U.S. MI reported adjusted operating income of $61 million, compared with $67 million in the prior quarter and $41 million in the prior year. The loss ratio in
the current quarter was 28 percent, up seven points sequentially
driven primarily by the favorable adjustment to loss reserves in
the prior quarter and down 11 points from the prior year primarily
reflecting the continued decline and improved performance in
delinquencies from the 2005 to 2008 book years. The full year loss
ratio was 24 percent in 2016, compared to 37 percent in 2015 and
better than the company's outlook for 2016 of 30 to 40 percent.
Flow NIW of $11.1 billion
decreased 13 percent from the prior quarter from a seasonally
smaller purchase originations market, but increased 42 percent
versus the prior year primarily from a larger purchase originations
market and higher refinance originations from lower interest rates.
U.S. MI's flow insurance in force grew 13 percent during 2016
driven by an expanding purchase originations market, higher
refinance originations and its differentiated service
offerings.
Canada Mortgage Insurance
Operating
Metrics
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(Dollar amounts in
millions)
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Q4
16
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Q3
16
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|
Q4
15
|
Adjusted operating
income
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$
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39
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$
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36
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$
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37
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New insurance
written
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Flow
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$
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3,900
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$
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5,300
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$
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4,700
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Bulk
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$
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3,700
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$
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5,100
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$
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7,300
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Loss ratio
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18%
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24%
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23%
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Canada MI reported adjusted operating income of $39 million versus $36
million in the prior quarter and $37
million in the prior year. The loss ratio in the quarter was
18 percent, down six points from the prior quarter from a decrease
in new delinquencies, net of cures, primarily related to higher
cures in Alberta and down five
points compared to the prior year from a decrease in new
delinquencies, net of cures. The full year loss ratio was 22
percent in 2016, compared to 21 percent in 2015 and better than the
company's outlook for 2016 of 25 to 35 percent. Results versus the
prior year included increased earned premiums from a higher level
of NIW in recent years.
Flow NIW was down 25
percent6 sequentially primarily from a
seasonally smaller originations market and down 17
percent6 from the prior year primarily from targeted
underwriting changes in select markets and a smaller market
size. In addition, the company completed several bulk transactions
in the quarter of $3.7 billion in the
aggregate, consisting of high quality low loan-to-value prime
loans. Effective March 17, 2017,
Canada MI will increase its flow mortgage insurance premium rates
for new insured mortgages an average of approximately 20 percent to
reflect the regulatory capital framework that came into effect on
January 1, 2017.
Australia Mortgage Insurance
Operating
Metrics
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(Dollar amounts in
millions)
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|
Q4
16
|
|
Q3
16
|
|
Q4
15
|
Adjusted operating
income
|
|
$
|
14
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|
$
|
14
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|
$
|
22
|
New insurance
written
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|
|
|
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Flow
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$
|
5,000
|
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$
|
4,600
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$
|
4,600
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Loss ratio
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30%
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42%
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17%
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Australia MI reported adjusted operating income of $14 million versus $14
million in the prior quarter and $22
million in the prior year. The loss ratio in the quarter was
30 percent, down 12 points sequentially from higher cure activity
and favorable aging of later stage delinquencies and up 13 points
from the prior year from continued unfavorable experience from the
commodity dependent regions of Queensland and Western Australia. The full year loss ratio
was 34 percent in 2016, compared to 23 percent in 2015 and at the
upper end of the company's outlook for 2016 of 25 to 35
percent.
Flow NIW was up nine percent6 sequentially from a
larger originations market and up two percent6 from the
prior year.
U.S. Life Insurance
Operating
Metrics
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|
|
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(Amounts in
millions)
|
|
Q4
16
|
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Q3
16
|
|
Q4
15
|
Adjusted operating
income (loss)
|
|
|
|
|
|
|
|
|
|
|
Long Term Care
Insurance
|
|
$
|
(1)
|
|
$
|
(270)
|
|
$
|
19
|
|
Life
Insurance
|
|
|
(193)
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|
|
48
|
|
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(173)
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Fixed
Annuities
|
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40
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|
|
15
|
|
|
19
|
|
Total U.S. Life
Insurance
|
|
$
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(154)
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|
$
|
(207)
|
|
$
|
(135)
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|
|
|
|
|
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|
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|
Sales
|
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|
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Long Term Care
Insurance
|
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|
|
|
|
|
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Individual
|
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$
|
1
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|
$
|
2
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|
$
|
8
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Group
|
|
|
1
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|
|
3
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|
|
2
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|
Life
Insurance
|
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|
|
|
|
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|
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Term Life
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—
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—
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6
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Universal
Life
|
|
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—
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|
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1
|
|
|
3
|
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Linked
Benefits
|
|
|
—
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|
|
—
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|
|
1
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|
Fixed
Annuities
|
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|
—
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|
|
1
|
|
|
314
|
Long Term Care Insurance
LTC reported an
adjusted operating loss of $1
million, compared with $270
million in the prior quarter and adjusted operating
income of $19 million in the prior
year. Results in the prior quarter included an increase to LTC
claim reserves of approximately $435
million pre-tax resulting in an after-tax charge of
$283 million related to the company's
annual review of LTC claim reserves assumptions and
methodologies.
During the quarter, the company completed its annual review of
GAAP active life margins or loss recognition testing. GAAP loss
recognition testing margins for the business were reduced to
approximately $1.0 to $1.5 billion as
higher expected future claim costs were partially offset by the
impact of higher future in force rate actions. The company
continues to separately test its LTC acquired block (representing
business written prior to late 1995) for recoverability as part of
testing its GAAP loss recognition margins. The GAAP loss
recognition testing margin for the LTC acquired block was positive
and did not require an increase to reserves in the quarter, driven
mostly by more favorable claim termination assumptions.
Results for the quarter included a less favorable impact from
reduced benefit options from elections from in force policyholders
of $13 million after-tax versus the
prior quarter and $26 million
after-tax versus the prior year. Estimated favorable impact from in
force rate action premiums continues to build and was $67 million after-tax in the current quarter
versus $62 million after-tax in the
prior quarter and $51 million
after-tax in the prior year.
Results in the quarter were negatively impacted by a
$7 million after-tax increase to the
reserve related to profits followed by losses versus the prior
quarter.
Life Insurance
Life insurance reported an
adjusted operating loss of $193
million, compared with adjusted operating income of
$48 million in the prior quarter and
an adjusted operating loss of $173
million in the prior year.
During the quarter, the company completed its annual review of
life insurance assumptions and recorded an after-tax charge of
$196 million associated with its
universal life insurance products. The negative impact was
primarily driven by assumption changes due to emerging mortality
experience in older age populations with more modest assumption
updates related to interest rates, lapses and other refinements.
Results in the prior year reflected an after-tax charge of
$194 million related to the company's
annual review of life insurance assumptions.
Results versus the prior quarter and prior year reflect lower
investment income from unfavorable prepayment speed adjustments
related to residential mortgage-backed securities as well as higher
mortality.
Fixed Annuities
Fixed annuities reported
adjusted operating income of $40
million, compared with $15
million in the prior quarter and $19
million in the prior year. Results in the quarter include a
$6 million after-tax favorable
adjustment related to state guaranty funds and a $10 million after-tax favorable impact related to
an update of lapse assumptions and other refinements versus the
prior quarter. Results in the prior quarter also included an
$8 million after-tax unfavorable
correction related to state guaranty funds.
Runoff
Runoff reported adjusted operating income of
$6 million which included an
after-tax charge of $3 million
primarily related to lapse assumption updates, compared with
adjusted operating income of $12
million in the prior quarter and $11
million in the prior year which included an after-tax
benefit of $3 million from assumption
updates primarily relating to mortality.
Corporate And Other
Corporate and Other reported an
adjusted operating loss of $103
million, compared with an adjusted operating loss of
$327 million in the prior quarter and
$58 million in the prior year.
Results in the quarter reflected $29
million of deferred tax charges compared with $265 million of deferred tax charges in the prior
quarter and an increase in professional fees and legal expenses
associated with the China Oceanwide transaction and pending
litigation.
Capital & Liquidity
Genworth maintains the following capital positions in its
operating subsidiaries:
Key Capital &
Liquidity Metrics
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|
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|
|
|
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(Dollar amounts in
millions)
|
|
Q4
16
|
|
Q3
16
|
|
Q4
15
|
|
U.S.
MI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Risk-To-Capital Ratio7
|
|
|
14.4:1
|
|
|
|
15.0:1
|
|
|
|
16.3:1
|
|
|
Genworth Mortgage
Insurance Corporation Risk-To-Capital
Ratio7
|
|
|
14.5:1
|
|
|
|
15.0:1
|
|
|
|
16.4:1
|
|
|
Private Mortgage
Insurer Eligibility Requirements (PMIERs) Sufficiency
Ratio8
|
|
|
115
|
%
|
|
|
117
|
%
|
|
|
109
|
%
|
Canada
MI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum Capital Test
(MCT) Ratio7
|
|
|
245
|
%
|
|
|
237
|
%
|
|
|
234
|
%
|
Australia
MI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prescribed Capital
Amount (PCA) Ratio7
|
|
|
157
|
%
|
|
|
155
|
%
|
|
|
159
|
%
|
U.S. Life Insurance
Companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Risk-Based Capital (RBC) Ratio
|
|
|
N/A
|
9
|
|
|
345
|
%
|
|
|
393
|
%
|
|
Unassigned
Surplus
|
|
|
N/A
|
9
|
|
$
|
(650)
|
|
|
$
|
(329)
|
|
Holding Company
Cash10 and Liquid Assets11
|
|
$
|
1,098
|
|
|
$
|
1,165
|
|
|
$
|
1,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Points
- The U.S. MI PMIERs sufficiency ratio of 115 percent decreased
slightly in the quarter on strong NIW;
- Canada MI and Australia MI continue to maintain solid capital
ratios in excess of management targets;
- Canada MI's pro-forma MCT ratio as of December 31, 2016 under the new capital framework
is estimated to be 158 to 162 percent, above the recalibrated
minimum target of 150 percent;
- U.S. life insurance companies' statutory results are expected
to be made available at the time of the Form 10-K filing;
- U.S. Life Insurance maintaining previously achieved cash
expense reduction target of $150
million pre-tax on an annualized basis;
- The holding company ended the quarter with $1,098 million of cash and liquid assets,
representing a buffer of approximately $660
million in excess of one and a half times annual debt
service and restricted cash and liquid assets; and
- $175 million of holding company
cash is committed to facilitate the separation and isolation of the
LTC business.
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a Fortune 500 insurance
holding company committed to helping families achieve the dream of
homeownership and address the financial challenges of aging through
its leadership positions in mortgage insurance and long term care
insurance. Headquartered in Richmond, Virginia, Genworth traces its roots
back to 1871 and became a public company in 2004. For more
information, visit genworth.com.
From time to time, Genworth releases important information via
postings on its corporate website. Accordingly, investors and other
interested parties are encouraged to enroll to receive automatic
email alerts and Really Simple Syndication (RSS) feeds regarding
new postings. Enrollment information is found under the "Investors"
section of genworth.com. From time to time, Genworth's
publicly traded subsidiaries, Genworth MI Canada Inc. and Genworth
Mortgage Insurance Australia Limited, separately release financial
and other information about their operations. This information can
be found at http://genworth.ca and
http://www.genworth.com.au.
Financial Supplement Information
This press release,
fourth quarter 2016 financial supplement and earnings presentation
are now posted on the company's website. Investors are encouraged
to review these materials. Due to the pending sale to China
Oceanwide, the company does not plan to host an earnings call.
Use of Non-GAAP Measures
This press release includes the non-GAAP financial measures
entitled "adjusted operating income (loss)" and "adjusted operating
income (loss) per common share." Adjusted operating income (loss)
per common share is derived from adjusted operating income (loss).
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
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
adjusted 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 adjusted
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
loss available to Genworth's common stockholders in accordance with
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 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 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 common share on a
basic and diluted basis are not substitutes for net loss available
to Genworth's common stockholders or net 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 adjusted operating income (loss) may differ
from the definitions used by other companies.
Adjustments to reconcile net income (loss) attributable to
Genworth's common stockholders and adjusted operating income (loss)
assume a 35 percent tax rate (unless otherwise indicated) and are
net of the portion attributable to noncontrolling interests. Net
investment gains (losses) are also adjusted for deferred
acquisition costs (DAC) and other intangible amortization and
certain benefit reserves.
In June 2016, the company
completed the sale of its term life insurance new business platform
and recorded a pre-tax gain of $12
million. In May 2016, the
company completed the sale of its mortgage insurance business in
Europe and recorded an additional
pre-tax loss of $2 million. In the
first quarter of 2016, the company recorded an estimated pre-tax
loss of $7 million and a tax benefit
of $27 million related to the planned
sale of the mortgage insurance business in Europe. The company also recognized an
estimated pre-tax loss of $140
million in the fourth quarter of 2015 for the planned sale
of this business. The company also incurred a $6 million tax benefit in the fourth quarter of
2015 related to the planned sale as well as a tax charge of
$7 million in the third quarter of
2015 from potential business portfolio changes related to this
business. These transactions were excluded from adjusted operating
income (loss) for the periods presented as they related to a gain
(loss) on the sale of businesses.
In June 2016, the company settled
restricted borrowings of $70 million
related to a securitization entity and recorded a $64 million pre-tax gain related to the early
extinguishment of debt. In January
2016, the company paid a pre-tax make-whole expense of
$20 million related to the early
redemption of Genworth Holdings, Inc.'s (Genworth Holdings) 2016
notes. The company also repurchased $28
million principal amount of Genworth Holdings' notes with
various maturity dates for a pre-tax gain of $4 million in the first quarter of 2016. In the
third quarter of 2015, the company paid an early redemption payment
of approximately $1 million, net of
the portion attributable to noncontrolling interests, related to
the early redemption of Genworth Financial Mortgage Insurance Pty
Limited's notes that were scheduled to mature in 2021. In the third
quarter of 2015, the company also repurchased approximately
$50 million principal amount of
Genworth Holdings' notes with various maturity dates for a pre-tax
loss of $1 million. These
transactions were excluded from adjusted operating income (loss)
for the periods presented as they related to a gain (loss) on the
early extinguishment of debt.
In the first quarter of 2016, the company completed a life block
transaction resulting in a pre-tax loss of $9 million in connection with the early
extinguishment of non-recourse funding obligations. In the third
quarter of 2015, the company recorded a pre-tax DAC impairment of
$455 million on certain term life
insurance policies in connection with entering into an agreement to
complete a life block transaction.
In the third, second and first quarters of 2016, the company
recorded a pre-tax expense of $2
million, $5 million and
$15 million, respectively, related to
restructuring costs as part of an expense reduction plan as the
company evaluates and appropriately sizes its organizational needs
and expenses. In the fourth and second quarters of 2015, the
company also recorded a pre-tax expense of $5 million and $3
million, respectively, related to restructuring costs.
There were no infrequent or unusual items excluded from adjusted
operating income (loss) during the periods presented other than
fees incurred during the first quarter of 2016 related to Genworth
Holdings' bond consent solicitation of $18
million for broker, advisor and investment banking fees.
The tables at the end of this press release provide a
reconciliation of net loss available to Genworth's common
stockholders to adjusted operating income (loss) for the three and
twelve months ended December 31, 2016
and 2015, as well as for the three months ended September 30, 2016 and reflect adjusted operating
income (loss) as determined in accordance with accounting guidance
related to segment reporting.
This press release includes the non-GAAP financial measure
entitled "core yield" as a measure of investment yield. The company
defines core yield as the investment yield adjusted for items that
do not reflect the underlying performance of the investment
portfolio. Management believes that analysis of core yield enhances
understanding of the investment yield of the company. However, core
yield is not a substitute for investment yield determined in
accordance with GAAP. In addition, the company's definition of core
yield may differ from the definitions used by other companies. A
reconciliation of core yield to reported GAAP yield is included in
a table at the end of this press release.
Definition of Selected Operating Performance Measures
The company reports selected operating performance measures
including "sales" and "insurance in force" or "risk in force" which
are commonly used in the insurance industry as measures of
operating performance.
Management regularly monitors and reports sales metrics as a
measure of volume of new and renewal business generated in a
period. Sales refer to: (1) new insurance written for mortgage
insurance; (2) annualized first-year premiums for long term care
and term life insurance products; (3) annualized first-year
deposits plus five percent of excess deposits for universal and
term universal life insurance products; (4) 10 percent of premium
deposits for linked-benefits products; and (5) new and additional
premiums/deposits for fixed annuities. Sales do not include renewal
premiums on policies or contracts written during prior periods. The
company considers new insurance written, annualized first-year
premiums/deposits, premium equivalents and new premiums/deposits to
be a measure of the company's operating performance because they
represent a measure of new sales of insurance policies or contracts
during a specified period, rather than a measure of the company's
revenues or profitability during that period.
Management also regularly monitors and reports a loss ratio for
the company's businesses. For the mortgage insurance businesses,
the loss ratio is the ratio of incurred losses and loss adjustment
expenses to net earned premiums. For the long term care insurance
business, the loss ratio is the ratio of benefits and other changes
in reserves less tabular interest on reserves less loss adjustment
expenses to net earned premiums. The company considers the loss
ratio to be a measure of underwriting performance in these
businesses and helps to enhance the understanding of the operating
performance of the businesses.
An assumed tax rate of 35 percent is utilized in certain
adjustments to adjusted operating income (loss) and in the
explanation of specific variances of operating performance and
investment results.
These operating performance measures enable the company to
compare its operating performance across periods without regard to
revenues or profitability related to policies or contracts sold in
prior periods or from investments or other sources.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements may be identified by words such
as "expects," "intends," "anticipates," "plans," "believes,"
"seeks," "estimates," "will" or words of similar meaning and
include, but are not limited to, statements regarding the outlook
for the company's future business and financial performance.
Forward-looking statements are based on management's current
expectations and assumptions, which are subject to inherent
uncertainties, risks and changes in circumstances that are
difficult to predict. Actual outcomes and results may differ
materially due to global political, economic, business,
competitive, market, regulatory and other factors and risks,
including, but not limited to, the following:
- risks related to the proposed transaction with China
Oceanwide Holdings Group Co., Ltd. (China Oceanwide) including:
the company's inability to complete the transaction in a timely
manner or at all; the company's inability to obtain stockholder or
regulatory approvals, or the possibility that the parties may delay
the transaction or that materially burdensome or adverse regulatory
conditions may be imposed in connection with any such regulatory
approvals; legal proceedings may be instituted against the company
in connection with the proposed transaction; the proposed
transaction may disrupt the company's current plans and operations;
certain restrictions during the pendency of the transaction may
impact the company's ability to pursue certain business
opportunities or strategic transactions; there may be insufficient
continued availability of capital and financing to the company
before the consummation of the transaction; there may be further
rating agency actions and downgrades in the company's financial
strength ratings; there may be changes in applicable laws or
regulations; the company may not recognize the anticipated benefits
of the transaction; the amount of the costs, fees, expenses and
other charges related to the transaction may be material;
management's attention may be diverted from the company's ongoing
business operations; the merger agreement may be terminated in
circumstances that would require the company to pay China Oceanwide
a fee; the company's ability to attract, recruit, retain and
motivate current and prospective employees may be adversely
affected; and disruptions and uncertainty relating to the
transaction, whether or not it is completed, may harm the company's
relationships with its employees, customers, distributors, vendors
or other business partners, and may result in a negative impact on
the company's business;
- strategic risks in the event the proposed transaction with
China Oceanwide is not consummated including: the company's
inability to successfully execute alternative strategic plans to
effectively address its current business challenges (including with
respect to the restructuring of its U.S. life insurance businesses,
debt obligations, cost savings, ratings and capital); the company's
inability to attract buyers for any businesses or other assets it
may seek to sell, or securities it may seek to issue, in each case,
in a timely manner on anticipated terms; failure to obtain any
required regulatory, stockholder and/or noteholder approvals or
consents, or the company's challenges changing or being more costly
or difficult to successfully address than currently anticipated or
the benefits achieved being less than anticipated; inability to
achieve anticipated cost-savings in a timely manner; adverse tax or
accounting charges; and inability to increase the capital needed in
the company's businesses in a timely manner and on anticipated
terms, including through improved business performance, reinsurance
or similar transactions, asset sales, securities offerings or
otherwise, in each case as and when required;
- risks relating to estimates, assumptions and valuations
including: risks related to the impact of the company's annual
review of assumptions and methodologies related to its long term
care insurance claim reserves in the third quarter of 2016 and its
margin reviews in the fourth quarter of 2016; inadequate reserves
and the need to increase reserves (including any changes the
company may make in the future to its assumptions, methodologies or
otherwise in connection with periodic or other reviews); inaccurate
models; deviations from the company's estimates and actuarial
assumptions or other reasons in its long term care insurance, life
insurance and/or annuity businesses; accelerated amortization of
deferred acquisition costs (DAC) and present value of future
profits (PVFP) (including any changes it may make in the future to
its assumptions, methodologies or otherwise in connection with
periodic or other reviews); adverse impact on the company's
financial results as a result of projected profits followed by
projected losses (as is currently the case with its long term care
insurance business); and changes in valuation of fixed maturity,
equity and trading securities;
- risks relating to economic, market and political
conditions including: downturns and volatility in global
economies and equity and credit markets; interest rates and changes
in rates (particularly given the historically low interest rate
environment) have adversely impacted, and may continue to
materially adversely impact, the company's business and
profitability; deterioration in economic conditions or a decline in
home prices that adversely affect the company's loss experience in
mortgage insurance; political and economic instability or changes
in government policies; and fluctuations in foreign currency
exchange rates and international securities markets;
- regulatory and legal risks including: extensive
regulation of the company's businesses and changes in applicable
laws and regulations; litigation and regulatory investigations or
other actions; dependence on dividends and other distributions from
the company's subsidiaries (particularly its international
subsidiaries) and the inability of any subsidiaries to pay
dividends or make other distributions to the company, including as
a result of the performance of its subsidiaries and insurance,
regulatory or corporate law restrictions; adverse change in
regulatory requirements, including risk-based capital; changes in
regulations adversely affecting the company's international
operations; inability to meet or maintain the private mortgage
insurer eligibility requirements (PMIERs); inability of the
company's U.S. mortgage insurance subsidiaries to meet minimum
statutory capital requirements and hazardous financial condition
standards; the influence of Federal National Mortgage Association
(Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac)
and a small number of large mortgage lenders on the U.S. mortgage
insurance market and adverse changes to the role or structure of
Fannie Mae and Freddie Mac; adverse changes in regulations
affecting the company's mortgage insurance businesses; inability to
continue to implement actions to mitigate the impact of statutory
reserve requirements; impact of additional regulations pursuant to
the Dodd-Frank Wall Street Reform and Consumer Protection Act (the
Dodd-Frank Act); and changes in accounting and reporting
standards;
- liquidity, financial strength ratings, credit and
counterparty risks including: insufficient internal sources to
meet liquidity needs and limited or no access to capital (including
the company's inability to enter into a credit facility); recent or
future adverse rating agency actions, including with respect to
rating downgrades or potential downgrades or being put on review
for potential downgrade (including in connection with the company's
recent announcement of a material increase to the company's
universal life insurance reserves), all of which could have adverse
implications for the company, including with respect to key
business relationships, product offerings, business results of
operations, financial condition and capital needs, strategic plans,
collateral obligations and availability and terms of hedging,
reinsurance and borrowings; defaults by counterparties to
reinsurance arrangements or derivative instruments; defaults or
other events impacting the value of the company's fixed maturity
securities portfolio; and defaults on the company's commercial
mortgage loans or the mortgage loans underlying its investments in
commercial mortgage-backed securities and volatility in
performance;
- operational risks including: inability to retain,
attract and motivate qualified employees or senior management;
ineffective or inadequate risk management in identifying,
controlling or mitigating risks; reliance on, and loss of, key
customer or distribution relationships; availability, affordability
and adequacy of reinsurance to protect the company against losses;
competition; competition in the company's mortgage insurance
businesses from government and government-owned and
government-sponsored enterprises (GSEs) offering mortgage
insurance; material weakness in, or ineffective, internal control
over financial reporting; and failure or any compromise of the
security of the company's computer systems, disaster recovery
systems and business continuity plans and failures to safeguard, or
breaches of, its confidential information;
- insurance and product-related risks including: the
company's inability to increase sufficiently, and in a timely
manner, premiums on in force long term care and life insurance
policies and/or reduce in force benefits, and charge higher
premiums on new policies, in each case, as currently anticipated
and as may be required from time to time in the future (including
as a result of the company's failure to obtain any necessary
regulatory approvals or unwillingness or inability of policyholders
to pay increased premiums), including to offset the impact on the
company's margins of updated claim reserves assumptions in
connection with its annual review of its long term care insurance
claim reserves in the third quarter of 2016 and its annual U.S.
life insurance assumption reviews in the fourth quarter of 2016;
the company's inability to reflect future premium increases and
other management actions in its margin calculation as anticipated;
failure to sufficiently increase new sales for the company's long
term care insurance products; inability to realize anticipated
benefits of the company's rescissions, curtailments, loan
modifications or other similar programs in its mortgage insurance
businesses; premiums for the significant portion of the company's
mortgage insurance risk in force with high loan-to-value ratios may
not be sufficient to compensate the company for the greater risks
associated with those policies; decreases in the volume of high
loan-to-value mortgage originations or increases in mortgage
insurance cancellations; increases in the use of alternatives to
private mortgage insurance and reductions in the level of coverage
selected; potential liabilities in connection with the company's
U.S. contract underwriting services; and medical advances, such as
genetic research and diagnostic imaging, and related legislation
that impact policyholder behavior in ways adverse to the
company;
- other risks including: occurrence of natural or man-made
disasters or a pandemic; impairments of or valuation allowances
against the company's deferred tax assets; the possibility that in
certain circumstances the company will be obligated to make
payments to General Electric Company (GE) under the tax matters
agreement with GE even if its corresponding tax savings are never
realized and payments could be accelerated in the event of certain
changes in control; and provisions of the company's certificate of
incorporation and bylaws and the tax matters agreement with GE may
discourage takeover attempts and business combinations that
stockholders might consider in their best interests; and
- risks relating to the company's common stock including:
the continued suspension of payment of dividends; and stock price
fluctuations.
The company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future developments or otherwise.
Important Information For Investors and
Stockholders
This communication may be deemed to be a
solicitation material in respect of the proposed transaction with
China Oceanwide Holdings Group Co., Ltd. Genworth filed the
definitive proxy statement with the SEC in connection with the
solicitation of proxies for a special meeting to be held on
March 7, 2017 (the Proxy Statement).
The Proxy Statement and a proxy card are in the process of being
mailed to each stockholder entitled to vote at the meeting.
Genworth stockholders are urged to read the Proxy Statement
(including any and all amendments and supplements thereto) and all
other relevant documents which Genworth will file with the SEC when
they become available, because they will contain important
information about the proposed transaction and related matters.
Stockholders will also be able to obtain copies of the Proxy
Statement, without charge, when available, at the SEC's website at
www.sec.gov or by contacting the investor relations department of
Genworth at the following:
investorinfo@genworth.com
Participants in the Solicitation
Genworth and its
directors and executive officers may be deemed to be participants
in the solicitation of proxies of Genworth's stockholders in
connection with the proposed transaction with China Oceanwide
Holdings Group Co., Ltd. Genworth's stockholders may obtain,
without charge, more detailed information regarding such interested
participants in the Proxy Statement, Genworth's Annual Report on
Form 10-K filed with the SEC on February 26,
2016, any Statements of Changes in Beneficial Ownership on
Form 4 of such participants, filed with the SEC, and certain other
documents to be filed with the SEC in connection with the proposed
transaction.
Condensed
Consolidated Statements of Income
|
(Amounts in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
$
|
1,131
|
|
$
|
1,157
|
|
$
|
4,160
|
|
$
|
4,579
|
Net investment
income
|
|
|
786
|
|
|
781
|
|
|
3,159
|
|
|
3,138
|
Net investment gains
(losses)
|
|
|
41
|
|
|
(16)
|
|
|
72
|
|
|
(75)
|
Policy fees and other
income
|
|
|
240
|
|
|
234
|
|
|
978
|
|
|
906
|
Total
revenues
|
|
|
2,198
|
|
|
2,156
|
|
|
8,369
|
|
|
8,548
|
Benefits and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and other
changes in policy reserves
|
|
|
1,530
|
|
|
1,435
|
|
|
5,245
|
|
|
5,149
|
Interest
credited
|
|
|
173
|
|
|
180
|
|
|
696
|
|
|
720
|
Acquisition and
operating expenses, net of deferrals
|
|
|
283
|
|
|
433
|
|
|
1,273
|
|
|
1,309
|
Amortization of
deferred acquisition costs and intangibles
|
|
|
193
|
|
|
207
|
|
|
498
|
|
|
966
|
Interest
expense
|
|
|
75
|
|
|
104
|
|
|
337
|
|
|
419
|
Total benefits and
expenses
|
|
|
2,254
|
|
|
2,359
|
|
|
8,049
|
|
|
8,563
|
Income (loss) from
continuing operations before income taxes
|
|
|
(56)
|
|
|
(203)
|
|
|
320
|
|
|
(15)
|
Provision (benefit)
for income taxes
|
|
|
3
|
|
|
(36)
|
|
|
358
|
|
|
(9)
|
Loss from continuing
operations
|
|
|
(59)
|
|
|
(167)
|
|
|
(38)
|
|
|
(6)
|
Loss from
discontinued operations, net of taxes
|
|
|
(4)
|
|
|
(73)
|
|
|
(29)
|
|
|
(407)
|
Net
loss
|
|
|
(63)
|
|
|
(240)
|
|
|
(67)
|
|
|
(413)
|
Less: net income
attributable to noncontrolling interests
|
|
|
59
|
|
|
52
|
|
|
210
|
|
|
202
|
Net loss available to
Genworth Financial, Inc.'s common stockholders
|
|
$
|
(122)
|
|
$
|
(292)
|
|
$
|
(277)
|
|
$
|
(615)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing
operations available to Genworth Financial, Inc.'s
|
|
|
|
|
|
|
|
|
|
|
|
|
common
stockholders per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.24)
|
|
$
|
(0.44)
|
|
$
|
(0.50)
|
|
$
|
(0.42)
|
Diluted
|
|
$
|
(0.24)
|
|
$
|
(0.44)
|
|
$
|
(0.50)
|
|
$
|
(0.42)
|
Net loss available to
Genworth Financial, Inc.'s common stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
per
common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.25)
|
|
$
|
(0.59)
|
|
$
|
(0.56)
|
|
$
|
(1.24)
|
Diluted
|
|
$
|
(0.25)
|
|
$
|
(0.59)
|
|
$
|
(0.56)
|
|
$
|
(1.24)
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
498.4
|
|
|
497.6
|
|
|
498.3
|
|
|
497.4
|
Diluted5
|
|
|
498.4
|
|
|
497.6
|
|
|
498.3
|
|
|
497.4
|
Reconciliation of
Net Loss to Adjusted Operating Income (Loss)
|
(Amounts in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
Twelve
|
|
Three
|
|
|
|
|
|
months
ended
|
|
months
ended
|
|
months
ended
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
September
30,
|
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
Net loss available to
Genworth Financial, Inc.'s common stockholders
|
|
$
|
(122)
|
|
$
|
(292)
|
|
$
|
(277)
|
|
$
|
(615)
|
|
$
|
(380)
|
Add: net income
attributable to noncontrolling interests
|
|
|
59
|
|
|
52
|
|
|
210
|
|
|
202
|
|
|
48
|
Net
loss
|
|
|
(63)
|
|
|
(240)
|
|
|
(67)
|
|
|
(413)
|
|
|
(332)
|
Income (loss) from
discontinued operations, net of taxes
|
|
|
(4)
|
|
|
(73)
|
|
|
(29)
|
|
|
(407)
|
|
|
15
|
Loss from continuing
operations
|
|
|
(59)
|
|
|
(167)
|
|
|
(38)
|
|
|
(6)
|
|
|
(347)
|
Less: income from
continuing operations attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noncontrolling interests
|
|
|
59
|
|
|
52
|
|
|
210
|
|
|
202
|
|
|
48
|
Loss from continuing
operations available to Genworth Financial, Inc.'s
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common
stockholders
|
|
|
(118)
|
|
|
(219)
|
|
|
(248)
|
|
|
(208)
|
|
|
(395)
|
Adjustments to loss
from continuing operations available to Genworth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial, Inc.'s common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
(gains) losses, net12
|
|
|
(28)
|
|
|
1
|
|
|
(66)
|
|
|
30
|
|
|
(18)
|
(Gains) losses on
sale of businesses
|
|
|
—
|
|
|
140
|
|
|
(3)
|
|
|
140
|
|
|
—
|
(Gains) losses on
early extinguishment of debt, net13
|
|
|
—
|
|
|
—
|
|
|
(48)
|
|
|
2
|
|
|
—
|
Losses from life
block transactions
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
455
|
|
|
—
|
Expenses related to
restructuring
|
|
|
—
|
|
|
5
|
|
|
22
|
|
|
8
|
|
|
2
|
Fees associated with
bond consent solicitation
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
Taxes on
adjustments
|
|
|
9
|
|
|
(9)
|
|
|
—
|
|
|
(172)
|
|
|
6
|
Adjusted operating
income (loss)
|
|
$
|
(137)
|
|
$
|
(82)
|
|
$
|
(316)
|
|
$
|
255
|
|
$
|
(405)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Mortgage
Insurance segment
|
|
$
|
61
|
|
$
|
41
|
|
$
|
250
|
|
$
|
179
|
|
$
|
67
|
Canada Mortgage
Insurance segment
|
|
|
39
|
|
|
37
|
|
|
146
|
|
|
152
|
|
|
36
|
Australia Mortgage
Insurance segment
|
|
|
14
|
|
|
22
|
|
|
62
|
|
|
102
|
|
|
14
|
U.S. Life Insurance
segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Care
Insurance
|
|
|
(1)
|
|
|
19
|
|
|
(200)
|
|
|
29
|
|
|
(270)
|
Life
Insurance
|
|
|
(193)
|
|
|
(173)
|
|
|
(83)
|
|
|
(80)
|
|
|
48
|
Fixed
Annuities
|
|
|
40
|
|
|
19
|
|
|
68
|
|
|
94
|
|
|
15
|
Total U.S. Life
Insurance segment
|
|
|
(154)
|
|
|
(135)
|
|
|
(215)
|
|
|
43
|
|
|
(207)
|
Runoff
segment
|
|
|
6
|
|
|
11
|
|
|
28
|
|
|
27
|
|
|
12
|
Corporate and
Other
|
|
|
(103)
|
|
|
(58)
|
|
|
(587)
|
|
|
(248)
|
|
|
(327)
|
Adjusted operating
income (loss)
|
|
$
|
(137)
|
|
$
|
(82)
|
|
$
|
(316)
|
|
$
|
255
|
|
$
|
(405)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss available to
Genworth Financial, Inc.'s common stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
per
common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.25)
|
|
$
|
(0.59)
|
|
$
|
(0.56)
|
|
$
|
(1.24)
|
|
$
|
(0.76)
|
Diluted
|
|
$
|
(0.25)
|
|
$
|
(0.59)
|
|
$
|
(0.56)
|
|
$
|
(1.24)
|
|
$
|
(0.76)
|
Adjusted operating
income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.27)
|
|
$
|
(0.17)
|
|
$
|
(0.63)
|
|
$
|
0.51
|
|
$
|
(0.81)
|
Diluted
|
|
$
|
(0.27)
|
|
$
|
(0.17)
|
|
$
|
(0.63)
|
|
$
|
0.51
|
|
$
|
(0.81)
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
498.4
|
|
|
497.6
|
|
|
498.3
|
|
|
497.4
|
|
|
498.3
|
Diluted5
|
|
|
498.4
|
|
|
497.6
|
|
|
498.3
|
|
|
497.4
|
|
|
498.3
|
Condensed
Consolidated Balance Sheets
|
(Amounts in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
Assets
|
|
|
|
|
Cash, cash equivalents and invested assets
|
|
$
|
75,012
|
|
$
|
75,746
|
Deferred acquisition costs
|
|
|
3,571
|
|
|
4,398
|
Intangible assets and goodwill
|
|
|
348
|
|
|
357
|
Reinsurance recoverable
|
|
|
17,755
|
|
|
17,245
|
Deferred tax and other assets
|
|
|
673
|
|
|
675
|
Separate account assets
|
|
|
7,299
|
|
|
7,883
|
Assets held for sale
|
|
|
—
|
|
|
127
|
Total assets
|
|
$
|
104,658
|
|
$
|
106,431
|
Liabilities and
equity
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
Future
policy benefits
|
|
$
|
37,063
|
|
$
|
36,475
|
Policyholder account balances
|
|
|
25,662
|
|
|
26,209
|
Liability
for policy and contract claims
|
|
|
9,256
|
|
|
8,095
|
Unearned
premiums
|
|
|
3,378
|
|
|
3,308
|
Deferred
tax and other liabilities
|
|
|
2,969
|
|
|
3,028
|
Borrowings
related to securitization entities
|
|
|
74
|
|
|
179
|
Non-recourse funding obligations
|
|
|
310
|
|
|
1,920
|
Long-term
borrowings
|
|
|
4,180
|
|
|
4,570
|
Separate
account liabilities
|
|
|
7,299
|
|
|
7,883
|
Liabilities held for sale
|
|
|
—
|
|
|
127
|
Total
liabilities
|
|
|
90,191
|
|
|
91,794
|
Equity:
|
|
|
|
|
|
|
Common
stock
|
|
|
1
|
|
|
1
|
Additional
paid-in capital
|
|
|
11,962
|
|
|
11,949
|
Accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
Net
unrealized investment gains (losses):
|
|
|
|
|
|
|
Net unrealized gains (losses) on securities not
other-than-temporarily impaired
|
|
|
1,253
|
|
|
1,236
|
Net unrealized gains (losses) on other-than-temporarily impaired
securities
|
|
|
9
|
|
|
18
|
Net unrealized investment gains (losses)
|
|
|
1,262
|
|
|
1,254
|
Derivatives qualifying as hedges
|
|
|
2,085
|
|
|
2,045
|
Foreign currency translation and other adjustments
|
|
|
(253)
|
|
|
(289)
|
Total
accumulated other comprehensive income (loss)
|
|
|
3,094
|
|
|
3,010
|
Retained
earnings
|
|
|
287
|
|
|
564
|
Treasury
stock, at cost
|
|
|
(2,700)
|
|
|
(2,700)
|
Total Genworth Financial, Inc.'s stockholders' equity
|
|
|
12,644
|
|
|
12,824
|
Noncontrolling interests
|
|
|
1,823
|
|
|
1,813
|
Total equity
|
|
|
14,467
|
|
|
14,637
|
Total liabilities and equity
|
|
$
|
104,658
|
|
$
|
106,431
|
Impact of Foreign
Exchange on Adjusted Operating Income14
Three months ended
December 31, 2016
|
|
|
|
Percentages
|
|
|
Percentages
|
|
|
|
Including
Foreign
|
|
|
Excluding
Foreign
|
|
|
|
Exchange
|
|
|
Exchange15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada Mortgage
Insurance (MI):
|
|
|
|
|
|
|
Flow new insurance
written
|
|
(17)
|
%
|
|
(17)
|
%
|
Flow new insurance
written (4Q16 vs. 3Q16)
|
|
(26)
|
%
|
|
(25)
|
%
|
|
|
|
|
|
|
|
Australia
MI:
|
|
|
|
|
|
|
Flow new insurance
written
|
|
9
|
%
|
|
2
|
%
|
Flow new insurance
written (4Q16 vs. 3Q16)
|
|
9
|
%
|
|
9
|
%
|
|
|
|
|
|
|
|
Reconciliation of
Core Yield to Reported Yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
|
|
|
|
|
|
|
months
ended
|
|
|
|
|
|
|
December
31,
|
|
(Assets - amounts
in billions)
|
|
2016
|
|
Reported Total
Invested Assets and Cash
|
|
$
|
74.4
|
|
|
Subtract:
|
|
|
|
|
|
|
|
Securities lending
|
|
|
0.5
|
|
|
Unrealized gains (losses)
|
|
|
4.3
|
|
|
Adjusted end of
period invested assets
|
|
$
|
69.6
|
|
|
|
|
|
|
|
|
|
|
|
Average Invested
Assets Used in Reported Yield Calculation
|
|
$
|
69.8
|
|
|
Subtract:
|
|
|
|
|
|
|
|
Restricted commercial mortgage loans and other invested assets
related to
|
|
|
|
|
|
securitization entities16
|
|
|
0.1
|
|
|
Average Invested
Assets Used in Core Yield Calculation
|
|
$
|
69.7
|
|
|
|
|
|
|
|
|
|
|
|
(Income - amounts
in
millions)
|
|
|
|
|
|
Reported Net
Investment Income
|
|
$
|
786
|
|
|
Subtract:
|
|
|
|
|
|
|
|
Bond calls and commercial mortgage loan prepayments
|
|
|
22
|
|
|
Other non-core items17
|
|
|
(17)
|
|
|
Restricted commercial mortgage loans and other invested assets
related to
|
|
|
|
|
|
securitization entities16
|
|
|
2
|
|
|
Core Net Investment
Income
|
|
$
|
779
|
|
|
|
|
|
|
|
|
|
|
|
Reported
Yield
|
|
|
4.50
|
%
|
|
Core Yield
|
|
|
4.47
|
%
|
|
|
1 Includes
both universal life and term universal life insurance.
|
2 Unless
otherwise stated, all references in this press release to net loss,
net loss per share, adjusted operating income (loss) - formerly
labeled "net operating income (loss)," adjusted operating income
(loss) per share and book value per share should be read as net
loss available to Genworth's common stockholders, net loss
available to Genworth's common stockholders per diluted share,
adjusted operating income (loss) available to Genworth's common
stockholders, adjusted operating income (loss) available to
Genworth's common stockholders per diluted share and book value
available to Genworth's common stockholders per share,
respectively.
|
3 This is
a financial measure that is 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.
|
4 The
company defines "NM" as not meaningful for increases or decreases
greater than 200 percent.
|
5 Under
applicable accounting guidance, companies in a loss position are
required to use basic weighted-average common shares outstanding in
the calculation of diluted loss per share. Therefore, as a result
of the loss from continuing operations, the company was required to
use basic weighted-average common shares outstanding in the
calculation of diluted loss per share as the inclusion of shares
for stock options, restricted stock units and stock appreciation
rights of 2.5 million, 2.2 million and 1.4 million, respectively,
for the three months ended December 31, 2016, September 30, 2016
and December 31, 2015 and 2.0 million and 1.6 million,
respectively, for the twelve months ended December 31, 2016 and
December 31, 2015, would have been antidilutive to the calculation.
If the company had not incurred a loss from continuing operations
in these periods, dilutive potential weighted-average common shares
outstanding would have been 500.9 million, 500.5 million and 499.0
million, respectively, for the three months ended December 31,
2016, September 30, 2016 and December 31, 2015 and 500.3 million
and 499.0 million, respectively, for the twelve months ended
December 31, 2016 and December 31, 2015. Since it had adjusted
operating income for the twelve months ended December 31, 2015, the
company used 499.0 million diluted weighted-average common shares
outstanding in the calculation of diluted adjusted operating income
(loss) per common share.
|
6 Percent
change excludes the impact of foreign exchange.
|
7 Company
estimate for the fourth quarter of 2016, due to timing of the
filing of statutory statements.
|
8
Calculated as available assets divided by required assets as
defined within PMIERs. As of December 31, 2016 and September 30,
2016, the PMIERs sufficiency ratios were in excess of approximately
$350 million and $400 million, respectively, of available assets
above the PMIERs requirements. Company estimate for the fourth
quarter of 2016.
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9 U.S.
life insurance companies' statutory results are expected to be made
available at the time of the Form 10-K filing.
|
10 Holding
company cash and liquid assets comprises assets held in Genworth
Holdings, Inc. (the issuer of outstanding public debt) which is a
wholly-owned subsidiary of Genworth Financial, Inc.
|
11
Comprises cash and cash equivalents of $998 million, $1,065 million
and $1,124 million, respectively, and U.S. government bonds of $100
million, $100 million and $250 million, respectively, as of
December 31, 2016, September 30, 2016 and December 31,
2015.
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12 For the
three months ended December 31, 2016 and 2015, the years ended
December 31, 2016 and 2015 and the three months ended September 30,
2016, net investment gains (losses) were adjusted for DAC and other
intangible amortization and certain benefit reserves of $1 million,
$(11) million, $(14) million, $(35) million and zero, respectively,
and adjusted for net investment gains (losses) attributable to
noncontrolling interests of $12 million, $(4) million, $20 million,
$(10) million and $2 million, respectively.
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13 For the
year ended December 31, 2015, (gains) losses on the early
extinguishment of debt were adjusted by $1 million related to the
mortgage insurance business in Australia for the portion
attributable to noncontrolling interests.
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14 All
percentages are comparing the fourth quarter of 2016 to the fourth
quarter of 2015 unless otherwise stated.
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15 The
impact of foreign exchange was calculated using the comparable
prior period exchange rates.
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16
Represents the incremental assets and investment income related to
restricted commercial mortgage loans and other invested
assets.
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17
Includes cost basis adjustments on structured securities and
various other immaterial items.
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SOURCE Genworth Financial, Inc.