UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
November 3, 2016
Date of Report
(Date of earliest event reported)
GENWORTH FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-32195 | 80-0873306 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) | ||
6620 West Broad Street, Richmond, VA | 23230 | |||
(Address of principal executive offices) | (Zip Code) |
(804) 281-6000
(Registrants telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On November 3, 2016, Genworth Financial, Inc. issued (1) a press release announcing its financial results for the quarter ended September 30, 2016, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference, and (2) a financial supplement for the quarter ended September 30, 2016, a copy of which is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
The information contained in this Current Report on Form 8-K (including the exhibits) is being furnished and shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that Section. The information contained in this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.
Item 9.01 Financial Statements and Exhibits.
The following materials are furnished as exhibits to this Current Report on Form 8-K:
Exhibit |
Description of Exhibit | |
99.1 | Press Release dated November 3, 2016. | |
99.2 | Financial Supplement for the quarter ended September 30, 2016. |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
GENWORTH FINANCIAL, INC. | ||||
Date: November 3, 2016 | By: | /s/ Matthew D. Farney | ||
Matthew D. Farney | ||||
Vice President and Controller (Principal Accounting Officer) |
3
Exhibit Index
Exhibit |
Description of Exhibit | |
99.1 | Press Release dated November 3, 2016. | |
99.2 | Financial Supplement for the quarter ended September 30, 2016. |
4
Exhibit 99.1
Genworth Financial Announces Third Quarter 2016 Results
Net Loss Of $380 Million And Net Operating Loss Of $405 Million
| Net Loss1 And Net Operating Loss2 Included $548 Million After-Tax, Or $1.10 Per Diluted Share, Of Net Unfavorable Items Relating To Increase To Long Term Care Insurance (LTC) Claim Reserves & Deferred Tax Charges |
| Strong Loss Ratio, New Insurance Written (NIW) And Capital Levels In U.S. Mortgage Insurance (MI) |
| Strong Loss Ratio In Canada MI; Loss Ratio Higher In Australia MI From Continued Pressure In Queensland And Western Australia |
| Completed Repatriation Of Bermuda Subsidiary On October 1, 2016 As Part Of U.S. Life Insurance Restructuring Plan |
| Holding Company Cash And Liquid Assets Increased To Approximately $1.2 Billion |
Richmond, VA (November 3, 2016) Genworth Financial, Inc. (NYSE: GNW) today reported results for the period ended September 30, 2016. The company reported a net loss of $380 million, or $0.76 per diluted share, in the third quarter of 2016, compared with a net loss of $284 million, or $0.57 per diluted share, in the third quarter of 2015. The net operating loss for the third quarter of 2016 was $405 million, or $0.81 per diluted share, compared with net operating income of $64 million, or $0.13 per diluted share, in the third quarter of 2015. The net loss and net operating loss included $548 million after-tax, or $1.10 per diluted share, of net unfavorable items discussed below.
As previously announced, during the third quarter of 2016, the company completed a review of its LTC claim reserves. The company made several changes to its assumptions and methodologies primarily impacting claim terminations, benefit utilization and incurred but not reported reserves. As a result of these changes, claim reserves were increased by approximately $435 million pre-tax resulting in a charge to earnings of $283 million after-tax, or $0.57 per diluted share. Additionally, the company recorded a non-cash charge of $265 million, or $0.53 per diluted share, related to deferred tax assets that are not expected to be utilized before their expiration in light of the companys latest financial projections, including the impact to current and future earnings associated with higher expected claim costs in LTC and sustained low interest rates.
1 | Unless otherwise stated, all references in this press release to net income (loss), net income (loss) per share, net operating income (loss), net operating income (loss) per share and book value per share should be read as net income (loss) available to Genworths common stockholders, net income (loss) available to Genworths common stockholders per diluted share, net operating income (loss) available to Genworths common stockholders, net operating income (loss) available to Genworths common stockholders per diluted share and book value available to Genworths common stockholders per share, respectively. |
2 | This is a financial measure not calculated based on U.S. Generally Accepted Accounting Principles (Non-GAAP). See the Use of Non-GAAP Measures section of this press release for additional information. |
1
While our mortgage insurance performance remained strong, it was overshadowed by the previously announced charges related to the review of our LTC claim reserves and taxes, said Tom McInerney, President and CEO. LTC remains challenged, but we continue to receive significant premium rate increases and remain focused on executing our multi-year rate action plan.
Financial Performance
Consolidated Net Loss &
Net Operating Income (Loss)
Three months ended September 30 (Unaudited) |
||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||
(Amounts in millions, except per share) |
Total | Per diluted share |
Total | Per diluted share |
Total % change |
|||||||||||||||
Net loss available to Genworths common stockholders |
$ | (380 | ) | $ | (0.76 | ) | $ | (284 | ) | $ | (0.57 | ) | (34 | )% | ||||||
Net operating income (loss) |
$ | (405 | ) | $ | (0.81 | ) | $ | 64 | $ | 0.13 | NM | 3 | ||||||||
Weighted-average diluted shares4 |
498.3 | 497.4 | ||||||||||||||||||
Three months ended September 30 (Unaudited) |
||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||
Book value per common share |
$ | 29.84 | $ | 27.29 | ||||||||||||||||
Book value per common share, excluding accumulated other comprehensive income (loss) |
$ | 19.40 | $ | 20.30 |
The net loss was impacted by net investment gains, net of taxes and other adjustments, of $12 million in the quarter, compared to net investment losses of $21 million in the prior year. The net loss in the prior year reflected an after-tax loss of $296 million related to a write-off of deferred acquisition costs (DAC) from entering into a life block sale.
Net investment income increased to $805 million in the quarter, up from $779 million in the prior quarter and up from $783 million in the prior year. Prepayment speed adjustments related to residential mortgage-backed securities were favorable versus both the prior quarter and prior year in addition to favorable variable investment income compared to the prior quarter. The reported yield and core yield2 for the current quarter were 4.62 percent and 4.51 percent, respectively.
3 | The company defines NM as not meaningful for increases or decreases greater than 200 percent. |
4 | Under applicable accounting guidance, companies in a loss position are required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share. Therefore, as a result of the loss from continuing operations, the company was required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share as the inclusion of shares for stock options, restricted stock units and stock appreciation rights of 2.2 million and 1.3 million, respectively, for the three months ended September 30, 2016 and 2015 would have been antidilutive to the calculation. If the company had not incurred a loss from continuing operations in these periods, dilutive potential weighted-average common shares outstanding would have been 500.5 million and 498.7 million, respectively, for the three months ended September 30, 2016 and 2015. Since it had net operating income for the three months ended September 30, 2015, the company used 498.7 million diluted weighted-average common shares outstanding in the calculation of diluted net operating income per common share. |
2
Net operating income (loss) results are summarized in the table below:
Net Operating Income (Loss)
(Amounts in millions) |
Q3 16 | Q2 16 | Q3 15 | |||||||||
U.S. Mortgage Insurance |
$ | 67 | $ | 61 | $ | 37 | ||||||
Canada Mortgage Insurance |
36 | 38 | 38 | |||||||||
Australia Mortgage Insurance |
14 | 15 | 21 | |||||||||
U.S. Life Insurance |
(207 | ) | 55 | 40 | ||||||||
Runoff |
12 | 6 | (4 | ) | ||||||||
Corporate and Other |
(327 | ) | (52 | ) | (68 | ) | ||||||
|
|
|
|
|
|
|||||||
Total Net Operating Income (Loss) |
$ | (405 | ) | $ | 123 | $ | 64 | |||||
|
|
|
|
|
|
Net operating income (loss) represents net operating income (loss) from continuing operations excluding net investment gains (losses), gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, gains (losses) on insurance block transactions, restructuring costs and other adjustments, net of taxes. A reconciliation of net operating income (loss) of segments and Corporate and Other activities to net income (loss) is included at the end of this press release.
Unless specifically noted in the discussion of results for the MI businesses in Canada and Australia, references to percentage changes exclude the impact of translating foreign denominated activity into U.S. dollars (foreign exchange). Percentage changes, which include the impact of foreign exchange, are found in a table at the end of this press release.
U.S. Mortgage Insurance
Operating Metrics
(Dollar amounts in millions) |
Q3 16 | Q2 16 | Q3 15 | |||||||||
Net operating income |
$ | 67 | $ | 61 | $ | 37 | ||||||
New insurance written |
||||||||||||
Primary Flow |
$ | 12,800 | $ | 11,400 | $ | 9,300 | ||||||
Loss ratio |
21 | % | 24 | % | 43 | % |
U.S. MI net operating income was $67 million, compared with $61 million in the prior quarter and $37 million in the prior year. The loss ratio in the current quarter was 21 percent, down three points sequentially and down 22 points from the prior year primarily reflecting the continued decline and improved performance in delinquencies from the 2005 to 2008 book years. During the quarter, the company made a favorable $6 million after-tax adjustment to its loss reserves associated with lower expected claim rates on early stage delinquencies, partially offset by higher claim severity on late stage delinquencies. This adjustment favorably impacted the loss ratio by six points.
Flow NIW of $12.8 billion increased 12 percent from the prior quarter and 38 percent versus the prior year primarily from a larger purchase originations market and higher refinance originations from lower interest rates. During the third quarter of 2016, the companys concentration of single premium flow NIW was lower than the prior quarter and the prior year as it continues its selective participation in this market.
3
Canada Mortgage Insurance
Operating Metrics
(Dollar amounts in millions) |
Q3 16 | Q2 16 | Q3 15 | |||||||||
Net operating income |
$ | 36 | $ | 38 | $ | 38 | ||||||
New insurance written |
||||||||||||
Flow |
$ | 5,300 | $ | 4,400 | $ | 6,600 | ||||||
Bulk |
$ | 5,100 | $ | 19,700 | $ | 4,800 | ||||||
Loss ratio |
24 | % | 20 | % | 21 | % |
Canada MI reported net operating income of $36 million versus $38 million in the prior quarter and the prior year. The loss ratio in the quarter was 24 percent, up four points from the prior quarter and up three points compared to the prior year primarily from an increase in new delinquencies, net of cures, in oil-producing regions. Results versus the prior quarter and prior year included increased earned premiums from a higher level of NIW in recent years.
Flow NIW was up 20 percent5 sequentially primarily from a seasonally larger originations market and down 18 percent5 from the prior year primarily from targeted underwriting changes in select markets and a smaller market size. In addition, the company completed several bulk transactions in the quarter of $5.1 billion, consisting of high quality low loan-to-value prime loans.
5 | Percent change excludes the impact of foreign exchange. |
4
Australia Mortgage Insurance
Operating Metrics
(Dollar amounts in millions) |
Q3 16 | Q2 16 | Q3 15 | |||||||||
Net operating income |
$ | 14 | $ | 15 | $ | 21 | ||||||
New insurance written |
||||||||||||
Flow |
$ | 4,600 | $ | 5,000 | $ | 6,300 | ||||||
Bulk |
$ | | $ | 800 | $ | | ||||||
Loss ratio |
42 | % | 36 | % | 29 | % |
Australia MI reported net operating income of $14 million versus $15 million in the prior quarter and $21 million in the prior year. The loss ratio in the quarter was 42 percent, up six points sequentially and up 13 points from the prior year. Continued unfavorable experience primarily from the commodity dependent regions of Queensland and Western Australia contributed to unfavorable aging of existing delinquencies versus the prior quarter and prior year as well as a 16 percent increase in new delinquencies versus the prior year. Results in the prior year included actuarial updates that had a negligible impact on earnings, but did unfavorably impact the prior year loss ratio by approximately seven points.
Flow NIW was down eight percent5 sequentially and down 27 percent5 from the prior year from a smaller high loan-to-value originations market.
U.S. Life Insurance
Operating Metrics
(Amounts in millions) |
Q3 16 | Q2 16 | Q3 15 | |||||||||
Net operating income (loss) |
||||||||||||
Long Term Care Insurance |
$ | (270 | ) | $ | 37 | $ | (10 | ) | ||||
Life Insurance |
48 | 31 | 31 | |||||||||
Fixed Annuities |
15 | (13 | ) | 19 | ||||||||
|
|
|
|
|
|
|||||||
Total U.S. Life Insurance |
$ | (207 | ) | $ | 55 | $ | 40 | |||||
|
|
|
|
|
|
|||||||
Sales |
||||||||||||
Long Term Care Insurance |
||||||||||||
Individual |
$ | 2 | $ | 4 | $ | 7 | ||||||
Group |
3 | 2 | 1 | |||||||||
Life Insurance |
||||||||||||
Term Life |
| 2 | 7 | |||||||||
Universal Life |
1 | 1 | 2 | |||||||||
Linked Benefits |
| 1 | 3 | |||||||||
Fixed Annuities |
1 | 9 | 260 |
Long Term Care Insurance
LTC had a net operating loss of $270 million, compared with net operating income of $37 million in the prior quarter and a net operating loss of $10 million in the prior year. During the quarter, the company completed its annual review of assumptions and methodologies related to its LTC claim reserves. Based on this review, which included an additional year of claims experience since the last annual review in the third quarter of 2015, the company updated several assumptions and methodologies related to LTC claim reserves. The updates included the following:
| Reflected differences in claim termination rate assumptions between product types and daily benefit amounts; |
5
| Reduced claim termination rate assumptions for longer duration claims for certain product types; |
| Modestly refined utilization rate assumptions; and |
| Refined methodology primarily related to the calculation of incurred but not reported reserves to better reflect the aging of the block. |
As a result of this review, the company increased LTC claim reserves by approximately $435 million pre-tax resulting in an after-tax charge to earnings of $283 million for the third quarter. The updated assumptions also increased new claim severity versus the prior quarter and prior year.
Results for the quarter included a less favorable impact from higher premiums and reduced benefit options of $4 million after-tax versus the prior quarter and a more favorable impact of $35 million after-tax versus the prior year related to premium increases from in force rate actions approved and implemented to date.
Results in the prior quarter included $29 million after-tax of net unfavorable adjustments while results in the prior year included $21 million of after-tax unfavorable items.
Life Insurance
Life insurance had net operating income of $48 million, compared with $31 million in the prior quarter and the prior year. Results versus the prior quarter reflect higher investment income from favorable prepayment speed adjustments related to residential mortgage-backed securities as well as favorable in force performance and lower expenses. Results versus the prior year reflected lower reinsurance expenses.
Fixed Annuities
Fixed annuities had net operating income of $15 million, compared with a net operating loss of $13 million in the prior quarter and net operating income of $19 million in the prior year. Results in the quarter include an $8 million after-tax unfavorable correction related to state guaranty funds, partially offset by favorable variable investment income versus the prior quarter. Results in the prior quarter included $28 million after-tax of unfavorable items.
Runoff
Runoff net operating income was $12 million, compared with net operating income of $6 million in the prior quarter and a net operating loss of $4 million in the prior year.
Corporate And Other
Corporate and Other net operating loss was $327 million, compared with $52 million in the prior quarter and $68 million in the prior year. Results in the quarter reflected $265 million of deferred tax charges.
6
Capital & Liquidity
The following table summarizes the capital positions of Genworths operating subsidiaries.
Key Capital & Liquidity Metrics
(Dollar amounts in millions) |
Q3 16 | Q2 16 | Q3 15 | |||||||||
U.S. MI |
||||||||||||
Consolidated Risk-To-Capital Ratio6 |
15.0:1 | 15.0:1 | 14.3:1 | |||||||||
Genworth Mortgage Insurance Corporation Risk-To-Capital Ratio6 |
15.0:1 | 15.1:1 | 14.3:1 | |||||||||
Private Mortgage Insurer Eligibility Requirements (PMIERs) Sufficiency Ratio7 |
117 | % | 115 | % | N/A | |||||||
Canada MI |
||||||||||||
Minimum Capital Test (MCT) Ratio6 |
236 | % | 233 | % | 228 | % | ||||||
Australia MI |
||||||||||||
Prescribed Capital Amount (PCA) Ratio6 |
155 | % | 156 | % | 167 | % | ||||||
U.S. Life Insurance Companies |
||||||||||||
Consolidated Risk-Based Capital (RBC) Ratio6 |
345 | % | 373 | % | 444 | % | ||||||
Genworth Life Insurance Company Unassigned Surplus6 |
$ | (650 | ) | $ | (410 | ) | $ | 75 | ||||
Holding Company Cash8 and Liquid Assets9 |
$ | 1,165 | $ | 934 | $ | 983 |
Key Points
| U.S. MI PMIERs sufficiency ratio increased in the quarter and the business remained PMIERs compliant, with a buffer as of September 30, 2016; |
| Canada MI and Australia MI continue to maintain solid capital ratios in excess of management targets; |
| U.S. life insurance companies unassigned surplus and RBC ratio decreased from the prior quarter primarily from the increase in LTC claim reserves; |
| The holding company ended the quarter with $1,165 million of cash and liquid assets, representing a buffer of approximately $720 million in excess of one and a half times annual debt service and restricted cash and liquid assets; and |
| Holding company cash and liquid assets increased from the prior quarter from $194 million of intercompany tax payments primarily related to the life block transaction completed in the first quarter of 2016, of which $175 million is committed to be used to facilitate the separation and isolation of the LTC business, $65 million of dividends from the international operating companies and $32 million of net other items and expenses, partially offset by $60 million paid for debt interest expense. |
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a Fortune 500 insurance holding company committed to helping families achieve the dream of homeownership and address the financial challenges of aging through its leadership positions in mortgage insurance and long term care insurance. Headquartered in Richmond, Virginia, Genworth traces its roots back to 1871 and became a public company in 2004. For more information, visit genworth.com.
6 | Company estimate for the third quarter of 2016, due to timing of the filing of statutory statements. |
7 | Calculated as available assets divided by required assets as defined within PMIERs. As of September 30, 2016 and June 30, 2016, the PMIERs sufficiency ratios were in excess of $400 million and $350 million, respectively, of available assets above the PMIERs requirements. Company estimate for the third quarter of 2016. |
8 | Holding company cash and liquid assets comprises assets held in Genworth Holdings, Inc. (the issuer of outstanding public debt) which is a wholly-owned subsidiary of Genworth Financial, Inc. |
9 | Comprises cash and cash equivalents of $1,065 million, $834 million and $733 million, respectively, and U.S. government bonds of $100 million, $100 million and $250 million, respectively, as of September 30, 2016, June 30, 2016 and September 30, 2015. |
7
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, Genworths publicly traded subsidiaries, Genworth MI Canada Inc. and Genworth Mortgage Insurance Australia Limited, separately release financial and other information about their operations. This information can be found at http://genworth.ca and http://www.genworth.com.au.
Conference Call and Financial Supplement Information
This press release and the third quarter 2016 financial supplement are now posted on the companys website. Additional information regarding business results will be posted on the companys website, http://investor.genworth.com, by 7:30 a.m. on November 4, 2016. Investors are encouraged to review these materials.
Genworth will conduct a conference call on November 4, 2016 at 8:00 a.m. (ET) to discuss business results. The conference call will be accessible via telephone and the Internet. The dial-in number for the conference call is 877 888.4034 or 913 489.5101 (outside the U.S.); conference ID # 3198608. To participate in the call by webcast, register at http://investor.genworth.com at least 15 minutes prior to the webcast to download and install any necessary software.
Replays of the call will be available through November 21, 2016 at 888 203.1112 or 719 457.0820 (outside the U.S.); conference ID # 3198608. The webcast will also be archived on the companys website.
Use of Non-GAAP Measures
This press release includes the non-GAAP financial measures entitled net operating income (loss) and net operating income (loss) per common share. Net operating income (loss) per common share is derived from net operating income (loss). The chief operating decision maker evaluates segment performance and allocates resources on the basis of net operating income (loss). The company defines net operating income (loss) as income (loss) from continuing operations excluding the after-tax effects of income attributable to noncontrolling interests, net investment gains (losses), goodwill impairments, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, gains (losses) on insurance block transactions, restructuring costs and infrequent or unusual non-operating items. Gains (losses) on insurance block transactions are defined as gains (losses) on the early extinguishment of non-recourse funding obligations, early termination fees for other financing restructuring and/or resulting gains (losses) on reinsurance restructuring for certain blocks of business. The company excludes net investment gains (losses) and infrequent or unusual non-operating items because the company does not consider them to be related to the operating performance of the companys segments and Corporate and Other activities. A component of the companys 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 companys 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,
8
gains (losses) on insurance block transactions and restructuring costs are also excluded from net operating income (loss) because, in the companys 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 companys opinion, they are not indicative of overall operating trends.
While some of these items may be significant components of net income (loss) available to Genworths 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 Genworths common stockholders or net income (loss) available to Genworths common stockholders per common share on a basic and diluted basis determined in accordance with GAAP. In addition, the companys definition of net operating income (loss) may differ from the definitions used by other companies.
Adjustments to reconcile net income (loss) attributable to Genworths common stockholders and net operating income (loss) assume a 35 percent tax rate (unless otherwise indicated) and are net of the portion attributable to noncontrolling interests. Net investment gains (losses) are also adjusted for DAC and other intangible amortization and certain benefit reserves.
In June 2016, the company completed the sale of its term life insurance new business platform and recorded a pre-tax gain of $12 million. In May 2016, the company completed the sale of its mortgage insurance business in Europe and recorded an additional pre-tax loss of $2 million. The company also incurred a tax charge of $7 million in the third quarter of 2015 from potential business portfolio changes related to this business. These transactions were excluded from net operating income (loss) for the periods presented as they related to a gain (loss) on the sale of businesses.
In June 2016, the company settled restricted borrowings of $70 million related to a securitization entity and recorded a $64 million pre-tax gain related to the early extinguishment of debt. In the third quarter of 2015, the company paid an early redemption payment of approximately $1 million, net of the portion attributable to noncontrolling interests, related to the early redemption of Genworth Financial Mortgage Insurance Pty Limiteds notes that were scheduled to mature in 2021. In the third quarter of 2015, the company also repurchased approximately $50 million principal amount of Genworth Holdings, Inc.s notes with various maturity dates for a pre-tax loss of $1 million. These transactions were excluded from net operating income (loss) for the periods presented as they related to a gain (loss) on the early extinguishment of debt.
In the third quarter of 2015, the company recorded a pre-tax DAC impairment of $455 million on certain term life insurance policies in connection with entering into an agreement to complete a life block transaction.
In the third and second quarters of 2016, the company recorded a pre-tax expense of $2 million and $5 million, respectively, related to restructuring costs as part of an expense reduction plan as the company evaluates and appropriately sizes its organizational needs and expenses.
There were no infrequent or unusual items excluded from net operating income (loss) during the periods presented.
The tables at the end of this press release reflect net operating income (loss) as determined in accordance with accounting guidance related to segment reporting, and a reconciliation of net operating income (loss) of the companys segments and Corporate and Other activities to net income (loss) available to Genworths common stockholders for the three months ended September 30, 2016 and 2015, as well as for the three months ended June 30, 2016.
9
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 companys 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 companys 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 companys revenues or profitability during that period.
Management also regularly monitors and reports a loss ratio for the companys 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.
10
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 companys future business and financial performance. Forward-looking statements are based on managements 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 companys inability to complete the transaction in a timely manner or at all; the companys 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 companys current plans and operations; certain restrictions during the pendency of the transaction may impact the companys 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 companys 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; managements attention may be diverted from the companys ongoing business operations; the merger agreement may be terminated in circumstances that would require the company to pay China Oceanwide a fee; the companys 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 companys relationships with its employees, customers, distributors, vendors or other business partners, and may result in a negative impact on the companys business; |
| strategic risks in the event the proposed transaction with China Oceanwide is not consummated including: the companys 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 companys 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 companys challenges changing or being more costly or difficult to successfully address than currently anticipated or the benefits achieved being less than anticipated; inability to achieve anticipated cost-savings in a timely manner; or adverse tax or accounting charges; and inability to increase the capital needed in the companys 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 companys annual review of assumptions and methodologies related to its long term care insurance claim reserves in the third quarter of 2016 and its margin reviews in the fourth quarter of 2016, including risks that additional information obtained in finalizing its margin review in the fourth quarter of 2016 or other changes to assumptions or methodologies materially affect the impact on margins or that the company underestimates the magnitude of impact the updated claim reserves assumptions have on its margins; inadequate reserves and the need to increase reserves (including as a result of changes the company made to its assumptions in the third quarter of 2016 in connection with its annual review of its long term care insurance claim reserves and any changes the company may make in the future to its assumptions, methodologies or otherwise in connection with periodic or |
11
other reviews); inaccurate models; deviations from the companys estimates and actuarial assumptions or other reasons in its long term care insurance, life insurance and/or annuity businesses; accelerated amortization of deferred acquisition costs (DAC) and present value of future profits (PVFP) (including as a result of any changes the company made to its assumptions in the third quarter of 2016 in connection with its annual review of its long term care insurance claim reserves and any changes it may make in the future to its assumptions, methodologies or otherwise in connection with periodic or other reviews); adverse impact on the companys 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 companys business and profitability; deterioration in economic conditions or a decline in home prices that adversely affect the companys 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 companys businesses and changes in applicable laws and regulations; litigation and regulatory investigations or other actions; dependence on dividends and other distributions from the companys 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 companys international operations; inability to meet or maintain the private mortgage insurer eligibility requirements (PMIERs); inability of the companys 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 companys 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 companys inability to replace its credit facility); recent or future adverse rating agency actions, including with respect to rating downgrades or potential downgrades or being put on review for potential downgrade (including in connection with the companys recent announcement of a material increase to the companys long term care insurance claim reserves), all of which could have adverse implications for the company, including with respect to key business relationships, product offerings, business results of operations, financial condition and capital needs, strategic plans, collateral obligations and availability and terms of hedging, reinsurance and borrowings; defaults by counterparties to reinsurance arrangements or derivative instruments; defaults or other events impacting the value of the companys fixed maturity securities portfolio; and defaults on the companys 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 |
12
company against losses; competition; competition in the companys 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 companys 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 companys inability to increase sufficiently, and in a timely manner, premiums on in force long term care insurance policies and/or reduce in force benefits, and charge higher premiums on new policies, in each case, as currently anticipated and as may be required from time to time in the future (including as a result of the companys failure to obtain any necessary regulatory approvals or unwillingness or inability of policyholders to pay increased premiums), including to offset the impact on the companys margins of updated claim reserves assumptions in connection with its annual review of its long term care insurance claim reserves in the third quarter of 2016 and its margin reviews in the fourth quarter of 2016; the companys inability to reflect future premium increases and other management actions in its margin calculation as anticipated, including in connection with its margin reviews in the fourth quarter of 2016; failure to sufficiently increase new sales for the companys long term care insurance products; inability to realize anticipated benefits of the companys rescissions, curtailments, loan modifications or other similar programs in its mortgage insurance businesses; premiums for the significant portion of the companys 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 companys 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 companys 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 companys 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 companys 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.
# # #
Contact Information:
Investors: | David Rosenbaum, 804 662.2643 | |
david.rosenbaum@genworth.com | ||
Media: | Julie Westermann, 804 662.2423 | |
julie.westermann@genworth.com |
13
Condensed Consolidated Statements of Income
(Amounts in millions, except per share amounts)
Three months ended September 30, |
||||||||
2016 | 2015 | |||||||
Revenues: |
||||||||
Premiums |
$ | 1,108 | $ | 1,145 | ||||
Net investment income |
805 | 783 | ||||||
Net investment gains (losses) |
20 | (51 | ) | |||||
Policy fees and other income |
217 | 223 | ||||||
|
|
|
|
|||||
Total revenues |
2,150 | 2,100 | ||||||
|
|
|
|
|||||
Benefits and expenses: |
||||||||
Benefits and other changes in policy reserves |
1,662 | 1,290 | ||||||
Interest credited |
173 | 179 | ||||||
Acquisition and operating expenses, net of deferrals |
269 | 314 | ||||||
Amortization of deferred acquisition costs and intangibles |
94 | 563 | ||||||
Interest expense |
77 | 105 | ||||||
|
|
|
|
|||||
Total benefits and expenses |
2,275 | 2,451 | ||||||
|
|
|
|
|||||
Loss from continuing operations before income taxes |
(125 | ) | (351 | ) | ||||
Provision (benefit) for income taxes |
222 | (134 | ) | |||||
|
|
|
|
|||||
Loss from continuing operations |
(347 | ) | (217 | ) | ||||
Income (loss) from discontinued operations, net of taxes |
15 | (21 | ) | |||||
|
|
|
|
|||||
Net loss |
(332 | ) | (238 | ) | ||||
Less: net income attributable to noncontrolling interests |
48 | 46 | ||||||
|
|
|
|
|||||
Net loss available to Genworth Financial, Inc.s common stockholders |
$ | (380 | ) | $ | (284 | ) | ||
|
|
|
|
|||||
Loss from continuing operations available to Genworth Financial, Inc.s common stockholders per common share: |
||||||||
Basic |
$ | (0.79 | ) | $ | (0.53 | ) | ||
|
|
|
|
|||||
Diluted |
$ | (0.79 | ) | $ | (0.53 | ) | ||
|
|
|
|
|||||
Net loss available to Genworth Financial, Inc.s common stockholders per common share: |
||||||||
Basic |
$ | (0.76 | ) | $ | (0.57 | ) | ||
|
|
|
|
|||||
Diluted |
$ | (0.76 | ) | $ | (0.57 | ) | ||
|
|
|
|
|||||
Weighted-average shares outstanding: |
||||||||
Basic |
498.3 | 497.4 | ||||||
|
|
|
|
|||||
Diluted4 |
498.3 | 497.4 | ||||||
|
|
|
|
14
Reconciliation of Net Operating Income (Loss) to Net Income (Loss)
(Amounts in millions, except per share amounts)
Three months ended September 30, |
Three months ended June 30, 2016 |
|||||||||||
2016 | 2015 | |||||||||||
Net operating income (loss): |
||||||||||||
U.S. Mortgage Insurance segment |
$ | 67 | $ | 37 | $ | 61 | ||||||
Canada Mortgage Insurance segment |
36 | 38 | 38 | |||||||||
Australia Mortgage Insurance segment |
14 | 21 | 15 | |||||||||
U.S. Life Insurance segment: |
||||||||||||
Long Term Care Insurance |
(270 | ) | (10 | ) | 37 | |||||||
Life Insurance |
48 | 31 | 31 | |||||||||
Fixed Annuities |
15 | 19 | (13 | ) | ||||||||
|
|
|
|
|
|
|||||||
Total U.S. Life Insurance segment |
(207 | ) | 40 | 55 | ||||||||
|
|
|
|
|
|
|||||||
Runoff segment |
12 | (4 | ) | 6 | ||||||||
Corporate and Other |
(327 | ) | (68 | ) | (52 | ) | ||||||
|
|
|
|
|
|
|||||||
Net operating income (loss) |
(405 | ) | 64 | 123 | ||||||||
Adjustments to net operating income (loss), net of portion attributable to noncontrolling interests: |
||||||||||||
Net investment gains (losses), net (see below for reconciliation) |
18 | (33 | ) | 39 | ||||||||
Gains (losses) on sale of businesses |
| | 10 | |||||||||
Gains (losses) on early extinguishment of debt |
| (2 | ) | 64 | ||||||||
Gains (losses) from life block transactions |
| (455 | ) | | ||||||||
Expenses related to restructuring |
(2 | ) | | (5 | ) | |||||||
Taxes on adjustments |
(6 | ) | 163 | (38 | ) | |||||||
|
|
|
|
|
|
|||||||
Income (loss) from continuing operations available to Genworth Financial, Inc.s common stockholders |
(395 | ) | (263 | ) | 193 | |||||||
Add: income from continuing operations attributable to noncontrolling interests |
48 | 46 | 48 | |||||||||
|
|
|
|
|
|
|||||||
Income (loss) from continuing operations |
(347 | ) | (217 | ) | 241 | |||||||
Income (loss) from discontinued operations, net of taxes |
15 | (21 | ) | (21 | ) | |||||||
|
|
|
|
|
|
|||||||
Net income (loss) |
(332 | ) | (238 | ) | 220 | |||||||
Less: net income attributable to noncontrolling interests |
48 | 46 | 48 | |||||||||
|
|
|
|
|
|
|||||||
Net income (loss) available to Genworth Financial, Inc.s common stockholders |
$ | (380 | ) | $ | (284 | ) | $ | 172 | ||||
|
|
|
|
|
|
|||||||
Net income (loss) available to Genworth Financial, Inc.s common stockholders per common share: |
||||||||||||
Basic |
$ | (0.76 | ) | $ | (0.57 | ) | $ | 0.35 | ||||
|
|
|
|
|
|
|||||||
Diluted |
$ | (0.76 | ) | $ | (0.57 | ) | $ | 0.34 | ||||
|
|
|
|
|
|
|||||||
Net operating income (loss) per common share: |
||||||||||||
Basic |
$ | (0.81 | ) | $ | 0.13 | $ | 0.25 | |||||
|
|
|
|
|
|
|||||||
Diluted |
$ | (0.81 | ) | $ | 0.13 | $ | 0.25 | |||||
|
|
|
|
|
|
|||||||
Weighted-average shares outstanding: |
||||||||||||
Basic |
498.3 | 497.4 | 498.5 | |||||||||
|
|
|
|
|
|
|||||||
Diluted4 |
498.3 | 497.4 | 500.4 | |||||||||
|
|
|
|
|
|
|||||||
Reconciliation of net investment gains (losses): |
||||||||||||
Net investment gains (losses), gross |
$ | 20 | $ | (51 | ) | $ | 30 | |||||
Adjustments for: |
||||||||||||
Deferred acquisition costs and other intangible amortization and certain benefit reserves |
| 10 | 6 | |||||||||
Net investment gains (losses) attributable to noncontrolling interests |
(2 | ) | 8 | 3 | ||||||||
|
|
|
|
|
|
|||||||
Net investment gains (losses), net |
$ | 18 | $ | (33 | ) | $ | 39 | |||||
|
|
|
|
|
|
15
Condensed Consolidated Balance Sheets
(Amounts in millions)
September 30, 2016 |
December 31, 2015 |
|||||||
Assets |
||||||||
Cash, cash equivalents and invested assets |
$ | 79,015 | $ | 75,746 | ||||
Deferred acquisition costs |
3,982 | 4,398 | ||||||
Intangible assets and goodwill |
258 | 357 | ||||||
Reinsurance recoverable |
17,542 | 17,245 | ||||||
Deferred tax and other assets |
570 | 675 | ||||||
Separate account assets |
7,485 | 7,883 | ||||||
Assets held for sale |
| 127 | ||||||
|
|
|
|
|||||
Total assets |
$ | 108,852 | $ | 106,431 | ||||
|
|
|
|
|||||
Liabilities and equity |
||||||||
Liabilities: |
||||||||
Future policy benefits |
$ | 37,405 | $ | 36,475 | ||||
Policyholder account balances |
25,867 | 26,209 | ||||||
Liability for policy and contract claims |
8,869 | 8,095 | ||||||
Unearned premiums |
3,464 | 3,308 | ||||||
Deferred tax and other liabilities |
4,431 | 3,028 | ||||||
Borrowings related to securitization entities |
78 | 179 | ||||||
Non-recourse funding obligations |
310 | 1,920 | ||||||
Long-term borrowings |
4,194 | 4,570 | ||||||
Separate account liabilities |
7,485 | 7,883 | ||||||
Liabilities held for sale |
| 127 | ||||||
|
|
|
|
|||||
Total liabilities |
92,103 | 91,794 | ||||||
|
|
|
|
|||||
Equity: |
||||||||
Common stock |
1 | 1 | ||||||
Additional paid-in capital |
11,959 | 11,949 | ||||||
|
|
|
|
|||||
Accumulated other comprehensive income (loss): |
||||||||
Net unrealized investment gains (losses): |
||||||||
Net unrealized gains (losses) on securities not other-than-temporarily impaired |
2,836 | 1,236 | ||||||
Net unrealized gains (losses) on other-than-temporarily impaired securities |
24 | 18 | ||||||
|
|
|
|
|||||
Net unrealized investment gains (losses) |
2,860 | 1,254 | ||||||
|
|
|
|
|||||
Derivatives qualifying as hedges |
2,493 | 2,045 | ||||||
Foreign currency translation and other adjustments |
(151 | ) | (289 | ) | ||||
|
|
|
|
|||||
Total accumulated other comprehensive income (loss) |
5,202 | 3,010 | ||||||
Retained earnings |
409 | 564 | ||||||
Treasury stock, at cost |
(2,700 | ) | (2,700 | ) | ||||
|
|
|
|
|||||
Total Genworth Financial, Inc.s stockholders equity |
14,871 | 12,824 | ||||||
Noncontrolling interests |
1,878 | 1,813 | ||||||
|
|
|
|
|||||
Total equity |
16,749 | 14,637 | ||||||
|
|
|
|
|||||
Total liabilities and equity |
$ | 108,852 | $ | 106,431 | ||||
|
|
|
|
16
Impact of Foreign Exchange on Operating Results10
Three months ended September 30, 2016
Percentages Including Foreign Exchange |
Percentages Excluding Foreign Exchange11 |
|||||||
Canada Mortgage Insurance (MI): |
||||||||
Flow new insurance written |
(20 | )% | (18 | )% | ||||
Flow new insurance written (3Q16 vs. 2Q16) |
20 | % | 20 | % | ||||
Australia MI: |
||||||||
Flow new insurance written |
(27 | )% | (27 | )% | ||||
Flow new insurance written (3Q16 vs. 2Q16) |
(8 | )% | (8 | )% |
10 | All percentages are comparing the third quarter of 2016 to the third quarter of 2015 unless otherwise stated. |
11 | The impact of foreign exchange was calculated using the comparable prior period exchange rates. |
17
Reconciliation of Core Yield to Reported Yield
Three months ended September 30, 2016 |
||||
(Assets - amounts in billions) |
||||
Reported Total Invested Assets and Cash |
$ | 78.3 | ||
Subtract: |
||||
Securities lending |
0.4 | |||
Unrealized gains (losses) |
7.7 | |||
|
|
|||
Adjusted end of period invested assets |
$ | 70.2 | ||
|
|
|||
Average Invested Assets Used in Reported Yield Calculation |
$ | 69.7 | ||
Subtract: |
||||
Restricted commercial mortgage loans and other invested assets related to securitization entities12 |
0.3 | |||
|
|
|||
Average Invested Assets Used in Core Yield Calculation |
$ | 69.4 | ||
|
|
|||
(Income - amounts in millions) |
||||
Reported Net Investment Income |
$ | 805 | ||
Subtract: |
||||
Bond calls and commercial mortgage loan prepayments |
14 | |||
Other non-core items13 |
8 | |||
Restricted commercial mortgage loans and other invested assets related to securitization entities12 |
1 | |||
|
|
|||
Core Net Investment Income |
$ | 782 | ||
|
|
|||
Reported Yield |
4.62 | % | ||
|
|
|||
Core Yield |
4.51 | % | ||
|
|
12 | Represents the incremental assets and investment income related to restricted commercial mortgage loans and other invested assets. |
13 | Includes cost basis adjustments on structured securities and various other immaterial items. |
18
Exhibit 99.2
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Page | ||||
3 | ||||
4 | ||||
Results of Operations and Selected Operating Performance Measures |
5 | |||
6 | ||||
8 | ||||
9 | ||||
10-11 | ||||
12-13 | ||||
14 | ||||
Net Operating Income and SalesU.S. Mortgage Insurance Segment |
16-22 | |||
Net Operating Income and SalesCanada Mortgage Insurance Segment |
24-27 | |||
Net Operating Income and SalesAustralia Mortgage Insurance Segment |
29-32 | |||
Net Operating Income (Loss) and SalesU.S. Life Insurance Segment |
34-37 | |||
39 | ||||
41 | ||||
43 | ||||
44 | ||||
45 | ||||
46 | ||||
48 | ||||
49 | ||||
51 |
Note:
Unless otherwise noted, references in this financial supplement to income (loss) from continuing operations, income (loss) from continuing operations per share, net income (loss), net income (loss) per share, net operating income (loss), net operating income (loss) per common share, book value and book value per common share should be read as income (loss) from continuing operations available to Genworth Financial, Inc.s common stockholders, income (loss) from continuing operations available to Genworth Financial, Inc.s common stockholders per share, net income (loss) available to Genworth Financial, Inc.s common stockholders, net income (loss) available to Genworth Financial, Inc.s common stockholders per share, net operating income (loss) available to Genworth Financial, Inc.s common stockholders, net operating income (loss) available to Genworth Financial, Inc.s common stockholders per share, book value available to Genworth Financial, Inc.s common stockholders and book value available to Genworth Financial, Inc.s common stockholders per share, respectively.
2
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Dear Investor,
During the third quarter of 2016, the company completed a review of its long-term care insurance claim reserves. The company made changes to its assumptions and methodologies impacting claim terminations, benefit utilization and incurred but not reported reserves. As a result of these changes, long-term care insurance claim reserves were increased $435 million pre-tax, or $283 million after-tax.
The company also recorded a non-cash charge of $265 million related to deferred tax assets that are not expected to be utilized before their expiration in light of the companys latest financial projections, including the impact to current and future earnings associated with higher expected claim costs in its long-term care insurance business and sustained low interest rates.
Thank you for your continued interest in Genworth Financial.
Regards,
David Rosenbaum
Investor Relations
InvestorInfo@genworth.com
3
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
This financial supplement includes the non-GAAP(1) financial measures entitled net operating income (loss) and net operating income (loss) per common share. Net operating income (loss) per common share is derived from net operating income (loss). The chief operating decision maker evaluates segment performance and allocates resources on the basis of net operating income (loss). The company defines net operating income (loss) as income (loss) from continuing operations excluding the after-tax effects of income attributable to noncontrolling interests, net investment gains (losses), goodwill impairments, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, gains (losses) on insurance block transactions, restructuring costs and infrequent or unusual non-operating items. Gains (losses) on insurance block transactions are defined as gains (losses) on the early extinguishment of non-recourse funding obligations, early termination fees for other financing restructuring and/or resulting gains (losses) on reinsurance restructuring for certain blocks of business. The company excludes net investment gains (losses) and infrequent or unusual non-operating items because the company does not consider them to be related to the operating performance of the companys segments and Corporate and Other activities. A component of the companys 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 companys 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 companys 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 companys 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 Financial, Inc.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 Financial, Inc.s common stockholders or net income (loss) available to Genworth Financial, Inc.s common stockholders per common share on a basic and diluted basis determined in accordance with GAAP. In addition, the companys definition of net operating income (loss) may differ from the definitions used by other companies.
Adjustments to reconcile net income (loss) attributable to Genworth Financial, Inc.s common stockholders and net operating income (loss) assume a 35% tax rate (unless otherwise indicated) and are net of the portion attributable to noncontrolling interests. Net investment gains (losses) are also adjusted for DAC and other intangible amortization and certain benefit reserves (see page 46).
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 net operating income (loss) for the periods presented as they related to a gain (loss) on the sale of businesses.
In June 2016, the company settled restricted borrowings of $70 million related to a securitization entity and recorded a $64 million pre-tax gain related to the early extinguishment of debt. In 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 Limiteds 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 net 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 net 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 table on page 9 of this financial supplement reflects 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 companys segments and Corporate and Other activities to net income (loss) available to Genworth Financial, Inc.s common stockholders for the periods presented. The financial supplement includes other non-GAAP measures management believes enhances the understanding and comparability of performance by highlighting underlying business activity and profitability drivers. These additional non-GAAP measures are on pages 48 and 49 of this financial supplement.
(1) | U.S. Generally Accepted Accounting Principles |
4
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Results of Operations and Selected Operating Performance Measures
The companys chief operating decision maker evaluates segment performance and allocates resources on the basis of net operating income (loss). The table on page 9 of this financial supplement reflects 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 companys segments and Corporate and Other activities to net income (loss) available to Genworth Financial, Inc.s common stockholders for the periods presented.
This financial supplement contains selected operating performance measures including sales and insurance in-force or risk in-force which are commonly used in the insurance industry as measures of operating performance.
Management regularly monitors and reports sales metrics as a measure of volume of new 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 5% of excess deposits for universal and term universal life insurance products; (4) 10% 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 companys 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 companys revenues or profitability during that period.
Management regularly monitors and reports insurance in-force and risk in-force. Insurance in-force for the mortgage insurance businesses is a measure of the aggregate original loan balance for outstanding insurance policies as of the respective reporting date. Risk in-force for the U.S. mortgage insurance business is based on the coverage percentage applied to the estimated current outstanding loan balance. For risk in-force in the mortgage insurance businesses in Canada and Australia, 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% that represents the highest expected average per-claim payment for any one underwriting year over the life of the companys mortgage insurance businesses in Canada and Australia. In Australia, the company has certain risk share arrangements where it provides pro-rata coverage of certain loans rather than 100% coverage. As a result, for loans with these risk share arrangements, the applicable pro-rata coverage amount provided is used when applying the factor. The company considers insurance in-force and risk in-force to be measures of the companys 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 companys revenues or profitability during that period.
Management also regularly monitors and reports a loss ratio for the companys 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.
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.
5
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
(amounts in millions, except per share data)
Balance Sheet Data |
September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
|||||||||||||||
Total Genworth Financial, Inc.s stockholders equity, excluding accumulated other comprehensive income |
$ | 9,669 | $ | 10,045 | $ | 9,870 | $ | 9,814 | $ | 10,101 | ||||||||||
Total accumulated other comprehensive income |
5,202 | 5,088 | 4,185 | 3,010 | 3,478 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Genworth Financial, Inc.s stockholders equity |
$ | 14,871 | $ | 15,133 | $ | 14,055 | $ | 12,824 | $ | 13,579 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Book value per common share |
$ | 29.84 | $ | 30.37 | $ | 28.19 | $ | 25.76 | $ | 27.29 | ||||||||||
Book value per common share, excluding accumulated other comprehensive income |
$ | 19.40 | $ | 20.16 | $ | 19.80 | $ | 19.71 | $ | 20.30 | ||||||||||
Common shares outstanding as of the balance sheet date |
498.4 | 498.3 | 498.5 | 497.8 | 497.5 | |||||||||||||||
Twelve months ended | ||||||||||||||||||||
Twelve Month Rolling Average ROE |
September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
|||||||||||||||
GAAP Basis ROE |
-4.5 | % | -3.5% | -7.0% | -6.0 | % | -10.3 | % | ||||||||||||
Operating ROE(1) |
-2.6 | % | 2.1% | 2.0% | 2.5 | % | -0.7 | % | ||||||||||||
Three months ended | ||||||||||||||||||||
Quarterly Average ROE |
September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
|||||||||||||||
GAAP Basis ROE |
-15.4 | % | 6.9% | 2.2% | -11.7 | % | -11.1 | % | ||||||||||||
Operating ROE(1) |
-16.4 | % | 4.9% | 4.2% | -3.3 | % | 2.5 | % |
Basic and Diluted Shares |
Three months ended September 30, 2016 |
Nine months ended September 30, 2016 |
||||||
Weighted-average common shares used in basic earnings per common share calculations |
498.3 | 498.3 | ||||||
Potentially dilutive securities: |
||||||||
Stock options, restricted stock units and stock appreciation rights |
| | ||||||
|
|
|
|
|||||
Weighted-average common shares used in diluted earnings per common share calculations(2) |
498.3 | 498.3 | ||||||
|
|
|
|
(1) | See page 48 herein for a reconciliation of GAAP Basis ROE to Operating ROE. |
(2) | 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 for the three and nine months ended September 30, 2016, the company was required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share for the three and nine months ended September 30, 2016, as the inclusion of shares for stock options, restricted stock units and stock appreciation rights of 2.2 million and 1.8 million, respectively, would have been antidilutive to the calculation. If the company had not incurred a loss from continuing operations for the three and nine months ended September 30, 2016, dilutive potential weighted-average common shares outstanding would have been 500.5 million and 500.1 million, respectively. |
6
Consolidated Quarterly Results
7
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Consolidated Net Income (Loss) by Quarter
(amounts in millions, except per share amounts)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
REVENUES: |
||||||||||||||||||||||||||||||||||||
Premiums |
$ | 1,108 | $ | 1,127 | $ | 794 | $ | 3,029 | $ | 1,157 | $ | 1,145 | $ | 1,134 | $ | 1,143 | $ | 4,579 | ||||||||||||||||||
Net investment income |
805 | 779 | 789 | 2,373 | 781 | 783 | 793 | 781 | 3,138 | |||||||||||||||||||||||||||
Net investment gains (losses) |
20 | 30 | (19 | ) | 31 | (16 | ) | (51 | ) | 8 | (16 | ) | (75 | ) | ||||||||||||||||||||||
Policy fees and other income |
217 | 300 | 221 | 738 | 234 | 223 | 222 | 227 | 906 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total revenues |
2,150 | 2,236 | 1,785 | 6,171 | 2,156 | 2,100 | 2,157 | 2,135 | 8,548 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
BENEFITS AND EXPENSES: |
||||||||||||||||||||||||||||||||||||
Benefits and other changes in policy reserves |
1,662 | 1,193 | 860 | 3,715 | 1,435 | 1,290 | 1,232 | 1,192 | 5,149 | |||||||||||||||||||||||||||
Interest credited |
173 | 173 | 177 | 523 | 180 | 179 | 181 | 180 | 720 | |||||||||||||||||||||||||||
Acquisition and operating expenses, net of deferrals |
269 | 327 | 394 | 990 | 433 | 314 | 295 | 267 | 1,309 | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs and intangibles |
94 | 112 | 99 | 305 | 207 | 563 | 101 | 95 | 966 | |||||||||||||||||||||||||||
Interest expense |
77 | 80 | 105 | 262 | 104 | 105 | 103 | 107 | 419 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total benefits and expenses |
2,275 | 1,885 | 1,635 | 5,795 | 2,359 | 2,451 | 1,912 | 1,841 | 8,563 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
(125 | ) | 351 | 150 | 376 | (203 | ) | (351 | ) | 245 | 294 | (15 | ) | |||||||||||||||||||||||
Provision (benefit) for income taxes |
222 | 110 | 23 | 355 | (36 | ) | (134 | ) | 70 | 91 | (9 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS |
(347 | ) | 241 | 127 | 21 | (167 | ) | (217 | ) | 175 | 203 | (6 | ) | |||||||||||||||||||||||
Income (loss) from discontinued operations, net of taxes(1) |
15 | (21 | ) | (19 | ) | (25 | ) | (73 | ) | (21 | ) | (314 | ) | 1 | (407 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NET INCOME (LOSS) |
(332 | ) | 220 | 108 | (4 | ) | (240 | ) | (238 | ) | (139 | ) | 204 | (413 | ) | |||||||||||||||||||||
Less: net income attributable to noncontrolling interests |
48 | 48 | 55 | 151 | 52 | 46 | 54 | 50 | 202 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NET INCOME (LOSS) AVAILABLE TO GENWORTH FINANCIAL, INC.S COMMON STOCKHOLDERS |
$ | (380 | ) | $ | 172 | $ | 53 | $ | (155 | ) | $ | (292 | ) | $ | (284 | ) | $ | (193 | ) | $ | 154 | $ | (615 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Earnings (Loss) Per Share Data: |
||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations available to Genworth Financial, Inc.s common stockholders per common share |
||||||||||||||||||||||||||||||||||||
Basic |
$ | (0.79 | ) | $ | 0.39 | $ | 0.14 | $ | (0.26 | ) | $ | (0.44 | ) | $ | (0.53 | ) | $ | 0.24 | $ | 0.31 | $ | (0.42 | ) | |||||||||||||
Diluted |
$ | (0.79 | ) | $ | 0.39 | $ | 0.14 | $ | (0.26 | ) | $ | (0.44 | ) | $ | (0.53 | ) | $ | 0.24 | $ | 0.31 | $ | (0.42 | ) | |||||||||||||
Net income (loss) available to Genworth Financial, Inc.s common stockholders per common share |
||||||||||||||||||||||||||||||||||||
Basic |
$ | (0.76 | ) | $ | 0.35 | $ | 0.11 | $ | (0.31 | ) | $ | (0.59 | ) | $ | (0.57 | ) | $ | (0.39 | ) | $ | 0.31 | $ | (1.24 | ) | ||||||||||||
Diluted |
$ | (0.76 | ) | $ | 0.34 | $ | 0.11 | $ | (0.31 | ) | $ | (0.59 | ) | $ | (0.57 | ) | $ | (0.39 | ) | $ | 0.31 | $ | (1.24 | ) | ||||||||||||
Weighted-average common shares outstanding |
||||||||||||||||||||||||||||||||||||
Basic |
498.3 | 498.5 | 498.0 | 498.3 | 497.6 | 497.4 | 497.4 | 497.0 | 497.4 | |||||||||||||||||||||||||||
Diluted(2) |
498.3 | 500.4 | 499.4 | 498.3 | 497.6 | 497.4 | 499.3 | 498.9 | 497.4 |
(1) | Income (loss) from discontinued operations related to the lifestyle protection business that was sold on December 1, 2015. During the third, second and first quarters of 2016, the company recorded an additional after-tax gain (loss) of approximately $15 million, $(21) million and $(19) million, respectively, as it finalized the closing balance sheet purchase price adjustments. |
(2) | Under applicable accounting guidance, companies in a loss position are required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share. Therefore, as a result of the loss from continuing operations, the company was required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share as the inclusion of shares for stock options, restricted stock units and stock appreciation rights of 2.2 million, 1.4 million and 1.3 million, respectively, for the three months ended September 30, 2016, December 31, 2015 and September 30, 2015 and 1.8 million and 1.6 million, respectively, for the nine months ended September 30, 2016 and the twelve months ended 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 500.5 million, 499.0 million and 498.7 million, respectively, for the three months ended September 30, 2016, December 31, 2015 and September 30, 2015 and 500.1 million and 499.0 million, respectively, for the nine months ended September 30, 2016 and the twelve months ended December 31, 2015. |
8
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Net Operating Income (Loss) by Segment by Quarter
(amounts in millions, except per share amounts)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
NET OPERATING INCOME (LOSS): |
||||||||||||||||||||||||||||||||||||
U.S. Mortgage Insurance segment |
$ | 67 | $ | 61 | $ | 61 | $ | 189 | $ | 41 | $ | 37 | $ | 49 | $ | 52 | $ | 179 | ||||||||||||||||||
Canada Mortgage Insurance segment |
36 | 38 | 33 | 107 | 37 | 38 | 37 | 40 | 152 | |||||||||||||||||||||||||||
Australia Mortgage Insurance segment |
14 | 15 | 19 | 48 | 22 | 21 | 29 | 30 | 102 | |||||||||||||||||||||||||||
U.S. Life Insurance segment: |
||||||||||||||||||||||||||||||||||||
Long-Term Care Insurance |
(270 | ) | 37 | 34 | (199 | ) | 19 | (10 | ) | 10 | 10 | 29 | ||||||||||||||||||||||||
Life Insurance |
48 | 31 | 31 | 110 | (173 | ) | 31 | 22 | 40 | (80 | ) | |||||||||||||||||||||||||
Fixed Annuities |
15 | (13 | ) | 26 | 28 | 19 | 19 | 25 | 31 | 94 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total U.S. Life Insurance segment |
(207 | ) | 55 | 91 | (61 | ) | (135 | ) | 40 | 57 | 81 | 43 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Runoff segment |
12 | 6 | 4 | 22 | 11 | (4 | ) | 9 | 11 | 27 | ||||||||||||||||||||||||||
Corporate and Other |
(327 | ) | (52 | ) | (105 | ) | (484 | ) | (58 | ) | (68 | ) | (62 | ) | (60 | ) | (248 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NET OPERATING INCOME (LOSS) |
(405 | ) | 123 | 103 | (179 | ) | (82 | ) | 64 | 119 | 154 | 255 | ||||||||||||||||||||||||
ADJUSTMENTS TO NET OPERATING INCOME (LOSS): |
||||||||||||||||||||||||||||||||||||
Net investment gains (losses), net(1) |
18 | 39 | (19 | ) | 38 | (1 | ) | (33 | ) | 5 | (1 | ) | (30 | ) | ||||||||||||||||||||||
Gains (losses) on sale of businesses |
| 10 | (7 | ) | 3 | (140 | ) | | | | (140 | ) | ||||||||||||||||||||||||
Gains (losses) on early extinguishment of debt(2) |
| 64 | (16 | ) | 48 | | (2 | ) | | | (2 | ) | ||||||||||||||||||||||||
Gains (losses) from life block transactions |
| | (9 | ) | (9 | ) | | (455 | ) | | | (455 | ) | |||||||||||||||||||||||
Expenses related to restructuring |
(2 | ) | (5 | ) | (15 | ) | (22 | ) | (5 | ) | | (3 | ) | | (8 | ) | ||||||||||||||||||||
Fees associated with bond consent solicitation |
| | (18 | ) | (18 | ) | | | | | | |||||||||||||||||||||||||
Taxes on adjustments |
(6 | ) | (38 | ) | 53 | 9 | 9 | 163 | | | 172 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL INC.S COMMON STOCKHOLDERS |
(395 | ) | 193 | 72 | (130 | ) | (219 | ) | (263 | ) | 121 | 153 | (208 | ) | ||||||||||||||||||||||
Add: income from continuing operations attributable to noncontrolling interests |
48 | 48 | 55 | 151 | 52 | 46 | 54 | 50 | 202 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS |
(347 | ) | 241 | 127 | 21 | (167 | ) | (217 | ) | 175 | 203 | (6 | ) | |||||||||||||||||||||||
Income (loss) from discontinued operations, net of taxes |
15 | (21 | ) | (19 | ) | (25 | ) | (73 | ) | (21 | ) | (314 | ) | 1 | (407 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NET INCOME (LOSS) |
(332 | ) | 220 | 108 | (4 | ) | (240 | ) | (238 | ) | (139 | ) | 204 | (413 | ) | |||||||||||||||||||||
Less: net income attributable to noncontrolling interests |
48 | 48 | 55 | 151 | 52 | 46 | 54 | 50 | 202 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NET INCOME (LOSS) AVAILABLE TO GENWORTH FINANCIAL, INC.S COMMON STOCKHOLDERS |
$ | (380 | ) | $ | 172 | $ | 53 | $ | (155 | ) | $ | (292 | ) | $ | (284 | ) | $ | (193 | ) | $ | 154 | $ | (615 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Earnings (Loss) Per Share Data: |
||||||||||||||||||||||||||||||||||||
Net income (loss) available to Genworth Financial, Inc.s common stockholders per common share |
||||||||||||||||||||||||||||||||||||
Basic |
$ | (0.76 | ) | $ | 0.35 | $ | 0.11 | $ | (0.31 | ) | $ | (0.59 | ) | $ | (0.57 | ) | $ | (0.39 | ) | $ | 0.31 | $ | (1.24 | ) | ||||||||||||
Diluted |
$ | (0.76 | ) | $ | 0.34 | $ | 0.11 | $ | (0.31 | ) | $ | (0.59 | ) | $ | (0.57 | ) | $ | (0.39 | ) | $ | 0.31 | $ | (1.24 | ) | ||||||||||||
Net operating income (loss) per common share |
||||||||||||||||||||||||||||||||||||
Basic |
$ | (0.81 | ) | $ | 0.25 | $ | 0.21 | $ | (0.36 | ) | $ | (0.17 | ) | $ | 0.13 | $ | 0.24 | $ | 0.31 | $ | 0.51 | |||||||||||||||
Diluted |
$ | (0.81 | ) | $ | 0.25 | $ | 0.21 | $ | (0.36 | ) | $ | (0.17 | ) | $ | 0.13 | $ | 0.24 | $ | 0.31 | $ | 0.51 | |||||||||||||||
Weighted-average common shares outstanding |
||||||||||||||||||||||||||||||||||||
Basic |
498.3 | 498.5 | 498.0 | 498.3 | 497.6 | 497.4 | 497.4 | 497.0 | 497.4 | |||||||||||||||||||||||||||
Diluted(3) |
498.3 | 500.4 | 499.4 | 498.3 | 497.6 | 497.4 | 499.3 | 498.9 | 497.4 |
(1) | Net investment gains (losses) were adjusted for the portion attributable to noncontrolling interests and DAC and other intangible amortization and certain benefit reserves (see page 46 for reconciliation). |
(2) | For the three months ended September 30, 2015, gains (losses) on early extinguishment of debt were adjusted by $1 million related to the mortgage insurance business in Australia for the portion attributable to noncontrolling interests. |
(3) | Under applicable accounting guidance, companies in a loss position are required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share. Therefore, as a result of the loss from continuing operations, the company was required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share as the inclusion of shares for stock options, restricted stock units and stock appreciation rights of 2.2 million, 1.4 million and 1.3 million, respectively, for the three months ended September 30, 2016, December 31, 2015 and September 30, 2015 and 1.8 million and 1.6 million, respectively, for the nine months ended September 30, 2016 and the twelve months ended 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 500.5 million, 499.0 million and 498.7 million, respectively, for the three months ended September 30, 2016, December 31, 2015 and September 30, 2015 and 500.1 million and 499.0 million, respectively, for the nine months ended September 30, 2016 and the twelve months ended December 31, 2015. Since it had net operating income for the three months ended September 30, 2015 and the twelve months ended December 31, 2015, the company used 498.7 million and 499.0 million, respectively, diluted weighted-average common shares outstanding in the calculation of diluted net operating income per common share. |
9
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
(amounts in millions)
September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
||||||||||||||||
ASSETS |
||||||||||||||||||||
Investments: |
||||||||||||||||||||
Fixed maturity securities available-for-sale, at fair value |
$ | 63,780 | $ | 62,828 | $ | 60,290 | $ | 58,197 | $ | 60,646 | ||||||||||
Equity securities available-for-sale, at fair value |
590 | 481 | 431 | 310 | 273 | |||||||||||||||
Commercial mortgage loans |
6,017 | 6,121 | 6,179 | 6,170 | 6,133 | |||||||||||||||
Restricted commercial mortgage loans related to securitization entities |
134 | 141 | 155 | 161 | 175 | |||||||||||||||
Policy loans |
1,751 | 1,754 | 1,565 | 1,568 | 1,567 | |||||||||||||||
Other invested assets |
2,676 | 2,510 | 2,923 | 2,309 | 2,764 | |||||||||||||||
Restricted other invested assets related to securitization entities |
312 | 312 | 422 | 413 | 412 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total investments |
75,260 | 74,147 | 71,965 | 69,128 | 71,970 | |||||||||||||||
Cash and cash equivalents |
3,078 | 3,457 | 4,043 | 5,965 | 3,635 | |||||||||||||||
Accrued investment income |
677 | 601 | 720 | 653 | 682 | |||||||||||||||
Deferred acquisition costs |
3,982 | 4,046 | 4,235 | 4,398 | 4,441 | |||||||||||||||
Intangible assets and goodwill |
258 | 267 | 291 | 357 | 297 | |||||||||||||||
Reinsurance recoverable |
17,542 | 17,564 | 17,587 | 17,245 | 17,255 | |||||||||||||||
Other assets |
570 | 640 | 577 | 520 | 523 | |||||||||||||||
Deferred tax asset |
| | | 155 | | |||||||||||||||
Separate account assets |
7,485 | 7,484 | 7,624 | 7,883 | 7,893 | |||||||||||||||
Assets held for sale(1) |
| | 131 | 127 | 1,484 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total assets |
$ | 108,852 | $ | 108,206 | $ | 107,173 | $ | 106,431 | $ | 108,180 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
(1) | Assets held for sale related to the lifestyle protection insurance business (prior to its sale on December 1, 2015) and the European mortgage insurance business (prior to its sale on May 9, 2016). |
10
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Consolidated Balance Sheets
(amounts in millions)
September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
||||||||||||||||
LIABILITIES AND EQUITY |
||||||||||||||||||||
Liabilities: |
||||||||||||||||||||
Future policy benefits |
$ | 37,405 | $ | 37,154 | $ | 36,776 | $ | 36,475 | $ | 36,472 | ||||||||||
Policyholder account balances |
25,867 | 26,182 | 26,354 | 26,209 | 26,000 | |||||||||||||||
Liability for policy and contract claims |
8,869 | 8,289 | 8,177 | 8,095 | 8,009 | |||||||||||||||
Unearned premiums |
3,464 | 3,412 | 3,378 | 3,308 | 3,281 | |||||||||||||||
Other liabilities |
3,280 | 3,197 | 3,596 | 3,004 | 3,225 | |||||||||||||||
Borrowings related to securitization entities |
78 | 85 | 173 | 179 | 188 | |||||||||||||||
Non-recourse funding obligations |
310 | 310 | 310 | 1,920 | 1,937 | |||||||||||||||
Long-term borrowings |
4,194 | 4,191 | 4,232 | 4,570 | 4,573 | |||||||||||||||
Deferred tax liability |
1,151 | 893 | 449 | 24 | 200 | |||||||||||||||
Separate account liabilities |
7,485 | 7,484 | 7,624 | 7,883 | 7,893 | |||||||||||||||
Liabilities held for sale(1) |
| | 131 | 127 | 986 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total liabilities |
92,103 | 91,197 | 91,200 | 91,794 | 92,764 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Equity: |
||||||||||||||||||||
Common stock |
1 | 1 | 1 | 1 | 1 | |||||||||||||||
Additional paid-in capital |
11,959 | 11,955 | 11,952 | 11,949 | 11,944 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Accumulated other comprehensive income (loss): |
||||||||||||||||||||
Net unrealized investment gains (losses): |
||||||||||||||||||||
Net unrealized gains (losses) on securities not other-than-temporarily impaired |
2,836 | 2,770 | 2,043 | 1,236 | 1,709 | |||||||||||||||
Net unrealized gains (losses) on other-than-temporarily impaired securities |
24 | 19 | 14 | 18 | 22 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net unrealized investment gains (losses) |
2,860 | 2,789 | 2,057 | 1,254 | 1,731 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Derivatives qualifying as hedges |
2,493 | 2,439 | 2,302 | 2,045 | 2,130 | |||||||||||||||
Foreign currency translation and other adjustments |
(151 | ) | (140 | ) | (174 | ) | (289 | ) | (383 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total accumulated other comprehensive income |
5,202 | 5,088 | 4,185 | 3,010 | 3,478 | |||||||||||||||
Retained earnings |
409 | 789 | 617 | 564 | 856 | |||||||||||||||
Treasury stock, at cost |
(2,700 | ) | (2,700 | ) | (2,700 | ) | (2,700 | ) | (2,700 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Genworth Financial, Inc.s stockholders equity |
14,871 | 15,133 | 14,055 | 12,824 | 13,579 | |||||||||||||||
Noncontrolling interests |
1,878 | 1,876 | 1,918 | 1,813 | 1,837 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total equity |
16,749 | 17,009 | 15,973 | 14,637 | 15,416 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total liabilities and equity |
$ | 108,852 | $ | 108,206 | $ | 107,173 | $ | 106,431 | $ | 108,180 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
(1) | Liabilities held for sale related to the lifestyle protection insurance business (prior to its sale on December 1, 2015) and the European mortgage insurance business (prior to its sale on May 9, 2016). |
11
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Consolidated Balance Sheet by Segment
(amounts in millions)
September 30, 2016 | ||||||||||||||||||||||||||||
U.S. Mortgage Insurance |
Canada Mortgage Insurance |
Australia Mortgage Insurance |
U.S. Life Insurance |
Runoff | Corporate and Other(1) |
Total | ||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||
Cash and investments |
$ | 2,582 | $ | 4,796 | $ | 2,731 | $ | 64,157 | $ | 3,003 | $ | 1,746 | $ | 79,015 | ||||||||||||||
Deferred acquisition costs and intangible assets |
43 | 140 | 50 | 3,746 | 253 | 8 | 4,240 | |||||||||||||||||||||
Reinsurance recoverable |
2 | | | 16,736 | 804 | | 17,542 | |||||||||||||||||||||
Other assets |
40 | 47 | 13 | 377 | (42 | ) | 135 | 570 | ||||||||||||||||||||
Separate account assets |
| | | | 7,485 | | 7,485 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total assets |
$ | 2,667 | $ | 4,983 | $ | 2,794 | $ | 85,016 | $ | 11,503 | $ | 1,889 | $ | 108,852 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
LIABILITIES AND EQUITY |
||||||||||||||||||||||||||||
Liabilities: |
||||||||||||||||||||||||||||
Future policy benefits |
$ | | $ | | $ | | $ | 37,402 | $ | 3 | $ | | $ | 37,405 | ||||||||||||||
Policyholder account balances |
| | | 22,436 | 3,431 | | 25,867 | |||||||||||||||||||||
Liability for policy and contract claims |
658 | 112 | 215 | 7,861 | 16 | 7 | 8,869 | |||||||||||||||||||||
Unearned premiums |
329 | 1,628 | 922 | 579 | 6 | | 3,464 | |||||||||||||||||||||
Non-recourse funding obligations |
| | | 310 | | | 310 | |||||||||||||||||||||
Deferred tax and other liabilities |
(409 | ) | 140 | 114 | 3,531 | (65 | ) | 1,120 | 4,431 | |||||||||||||||||||
Borrowings and capital securities |
| 330 | 150 | | 11 | 3,781 | 4,272 | |||||||||||||||||||||
Separate account liabilities |
| | | | 7,485 | | 7,485 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total liabilities |
578 | 2,210 | 1,401 | 72,119 | 10,887 | 4,908 | 92,103 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Equity: |
||||||||||||||||||||||||||||
Allocated equity, excluding accumulated other comprehensive income (loss) |
2,049 | 1,716 | 544 | 7,713 | 612 | (2,965 | ) | 9,669 | ||||||||||||||||||||
Allocated accumulated other comprehensive income (loss) |
40 | (115 | ) | 143 | 5,184 | 4 | (54 | ) | 5,202 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Genworth Financial, Inc.s stockholders equity |
2,089 | 1,601 | 687 | 12,897 | 616 | (3,019 | ) | 14,871 | ||||||||||||||||||||
Noncontrolling interests |
| 1,172 | 706 | | | | 1,878 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total equity |
2,089 | 2,773 | 1,393 | 12,897 | 616 | (3,019 | ) | 16,749 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total liabilities and equity |
$ | 2,667 | $ | 4,983 | $ | 2,794 | $ | 85,016 | $ | 11,503 | $ | 1,889 | $ | 108,852 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Includes inter-segment eliminations and other businesses that are managed outside the operating segments. |
12
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Consolidated Balance Sheet by Segment
(amounts in millions)
June 30, 2016 | ||||||||||||||||||||||||||||
U.S. Mortgage Insurance |
Canada Mortgage Insurance |
Australia Mortgage Insurance |
U.S. Life Insurance |
Runoff | Corporate and Other(1) |
Total | ||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||
Cash and investments |
$ | 2,494 | $ | 4,707 | $ | 2,730 | $ | 62,646 | $ | 2,893 | $ | 2,735 | $ | 78,205 | ||||||||||||||
Deferred acquisition costs and intangible assets |
39 | 137 | 52 | 3,818 | 260 | 7 | 4,313 | |||||||||||||||||||||
Reinsurance recoverable |
2 | | | 16,744 | 818 | | 17,564 | |||||||||||||||||||||
Other assets |
41 | 47 | 17 | 369 | 10 | 156 | 640 | |||||||||||||||||||||
Separate account assets |
| | | | 7,484 | | 7,484 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total assets |
$ | 2,576 | $ | 4,891 | $ | 2,799 | $ | 83,577 | $ | 11,465 | $ | 2,898 | $ | 108,206 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
LIABILITIES AND EQUITY |
||||||||||||||||||||||||||||
Liabilities: |
||||||||||||||||||||||||||||
Future policy benefits |
$ | | $ | | $ | | $ | 37,151 | $ | 3 | $ | | $ | 37,154 | ||||||||||||||
Policyholder account balances |
| | | 22,709 | 3,473 | | 26,182 | |||||||||||||||||||||
Liability for policy and contract claims |
707 | 104 | 190 | 7,264 | 16 | 8 | 8,289 | |||||||||||||||||||||
Unearned premiums |
304 | 1,598 | 926 | 578 | 6 | | 3,412 | |||||||||||||||||||||
Non-recourse funding obligations |
| | | 310 | | | 310 | |||||||||||||||||||||
Deferred tax and other liabilities |
(450 | ) | 103 | 117 | 3,697 | (85 | ) | 708 | 4,090 | |||||||||||||||||||
Borrowings and capital securities |
| 333 | 145 | | 11 | 3,787 | 4,276 | |||||||||||||||||||||
Separate account liabilities |
| | | | 7,484 | | 7,484 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total liabilities |
561 | 2,138 | 1,378 | 71,709 | 10,908 | 4,503 | 91,197 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Equity: |
||||||||||||||||||||||||||||
Allocated equity, excluding accumulated other comprehensive income (loss) |
1,975 | 1,691 | 578 | 6,770 | 554 | (1,523 | ) | 10,045 | ||||||||||||||||||||
Allocated accumulated other comprehensive income (loss) |
40 | (99 | ) | 128 | 5,098 | 3 | (82 | ) | 5,088 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Genworth Financial, Inc.s stockholders equity |
2,015 | 1,592 | 706 | 11,868 | 557 | (1,605 | ) | 15,133 | ||||||||||||||||||||
Noncontrolling interests |
| 1,161 | 715 | | | | 1,876 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total equity |
2,015 | 2,753 | 1,421 | 11,868 | 557 | (1,605 | ) | 17,009 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total liabilities and equity |
$ | 2,576 | $ | 4,891 | $ | 2,799 | $ | 83,577 | $ | 11,465 | $ | 2,898 | $ | 108,206 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Includes inter-segment eliminations and other businesses that are managed outside the operating segments. |
13
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Deferred Acquisition Costs Rollforward
(amounts in millions)
U.S. Mortgage Insurance |
Canada Mortgage Insurance |
Australia Mortgage Insurance |
U.S. Life Insurance(1) |
Runoff | Corporate and Other |
Total | ||||||||||||||||||||||
Unamortized balance as of June 30, 2016 |
$ | 25 | $ | 120 | $ | 34 | $ | 4,057 | $ | 255 | $ | | $ | 4,491 | ||||||||||||||
Costs deferred |
5 | 13 | 2 | 12 | 1 | | 33 | |||||||||||||||||||||
Amortization, net of interest accretion |
(3 | ) | (9 | ) | (3 | ) | (58 | ) | (7 | ) | | (80 | ) | |||||||||||||||
Impact of foreign currency translation |
| (1 | ) | 1 | | | | | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Unamortized balance as of September 30, 2016 |
27 | 123 | 34 | 4,011 | 249 | | 4,444 | |||||||||||||||||||||
Effect of accumulated net unrealized investment (gains) losses |
| | | (453 | ) | (9 | ) | | (462 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance as of September 30, 2016 |
$ | 27 | $ | 123 | $ | 34 | $ | 3,558 | $ | 240 | $ | | $ | 3,982 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Amortization, net of interest accretion, included $1 million of amortization related to net investment gains for the policyholder account balances. |
14
U.S. Mortgage Insurance Segment
15
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Net Operating Income and SalesU.S. Mortgage Insurance Segment
(amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
REVENUES: |
||||||||||||||||||||||||||||||||||||
Premiums |
$ | 169 | $ | 160 | $ | 160 | $ | 489 | $ | 153 | $ | 146 | $ | 153 | $ | 150 | $ | 602 | ||||||||||||||||||
Net investment income |
16 | 15 | 15 | 46 | 14 | 12 | 13 | 19 | 58 | |||||||||||||||||||||||||||
Net investment gains (losses) |
| | (1 | ) | (1 | ) | | 1 | | | 1 | |||||||||||||||||||||||||
Policy fees and other income |
1 | 1 | 1 | 3 | 1 | 2 | | 1 | 4 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total revenues |
186 | 176 | 175 | 537 | 168 | 161 | 166 | 170 | 665 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
BENEFITS AND EXPENSES: |
||||||||||||||||||||||||||||||||||||
Benefits and other changes in policy reserves |
36 | 38 | 38 | 112 | 59 | 63 | 50 | 50 | 222 | |||||||||||||||||||||||||||
Acquisition and operating expenses, net of deferrals |
45 | 41 | 39 | 125 | 42 | 38 | 38 | 37 | 155 | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs and intangibles |
3 | 2 | 3 | 8 | 3 | 3 | 2 | 2 | 10 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total benefits and expenses |
84 | 81 | 80 | 245 | 104 | 104 | 90 | 89 | 387 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
102 | 95 | 95 | 292 | 64 | 57 | 76 | 81 | 278 | |||||||||||||||||||||||||||
Provision for income taxes |
36 | 34 | 34 | 104 | 23 | 20 | 27 | 29 | 99 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS |
66 | 61 | 61 | 188 | 41 | 37 | 49 | 52 | 179 | |||||||||||||||||||||||||||
ADJUSTMENTS TO INCOME FROM CONTINUING OPERATIONS: |
||||||||||||||||||||||||||||||||||||
Net investment (gains) losses |
| | 1 | 1 | | (1 | ) | | | (1 | ) | |||||||||||||||||||||||||
Expenses related to restructuring |
1 | | | 1 | | | | | | |||||||||||||||||||||||||||
Taxes on adjustments |
| | (1 | ) | (1 | ) | | 1 | | | 1 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NET OPERATING INCOME |
$ | 67 | $ | 61 | $ | 61 | $ | 189 | $ | 41 | $ | 37 | $ | 49 | $ | 52 | $ | 179 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
SALES: |
||||||||||||||||||||||||||||||||||||
New Insurance Written (NIW) |
||||||||||||||||||||||||||||||||||||
Flow |
$ | 12,800 | $ | 11,400 | $ | 7,400 | $ | 31,600 | $ | 7,800 | $ | 9,300 | $ | 8,200 | $ | 6,300 | $ | 31,600 | ||||||||||||||||||
Bulk |
| | | | | | | | | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total U.S. Mortgage Insurance NIW |
$ | 12,800 | $ | 11,400 | $ | 7,400 | $ | 31,600 | $ | 7,800 | $ | 9,300 | $ | 8,200 | $ | 6,300 | $ | 31,600 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
16
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Flow New Insurance Written MetricsU.S. Mortgage Insurance Segment
(amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | 4Q | 3Q | 2Q | 1Q | ||||||||||||||||||||||||||||||||||||||||||||||||||
Flow NIW |
Premium Rate (bps) |
Flow NIW |
Premium Rate (bps) |
Flow NIW |
Premium Rate (bps) |
Flow NIW |
Premium Rate (bps) |
Flow NIW |
Premium Rate (bps) |
Flow NIW |
Premium Rate (bps) |
Flow NIW |
Premium Rate (bps) |
|||||||||||||||||||||||||||||||||||||||||||
Product |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Monthly(1) |
$ | 10,000 | 54 | $ | 8,400 | 55 | $ | 5,400 | 59 | $ | 5,900 | 60 | $ | 7,000 | 60 | $ | 6,500 | 60 | $ | 4,400 | 60 | |||||||||||||||||||||||||||||||||||
Single |
2,800 | 167 | 3,000 | 161 | 2,000 | 164 | 1,900 | 168 | 2,300 | 171 | 1,700 | 172 | 1,900 | 160 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
Total Flow |
$ | 12,800 | $ | 11,400 | $ | 7,400 | $ | 7,800 | $ | 9,300 | $ | 8,200 | $ | 6,300 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
Flow NIW |
% of Flow NIW |
Flow NIW |
% of Flow NIW |
Flow NIW |
% of Flow NIW |
Flow NIW |
% of Flow NIW |
Flow NIW |
% of Flow NIW |
Flow NIW |
% of Flow NIW |
Flow NIW |
% of Flow NIW |
|||||||||||||||||||||||||||||||||||||||||||
FICO Scores |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Over 735 |
$ | 8,100 | 63 | % | $ | 7,100 | 62 | % | $ | 4,400 | 60 | % | $ | 4,600 | 59 | % | $ | 5,500 | 59 | % | $ | 5,000 | 61 | % | $ | 3,700 | 59 | % | ||||||||||||||||||||||||||||
680-735 |
3,800 | 30 | 3,400 | 30 | 2,400 | 32 | 2,500 | 32 | 3,000 | 32 | 2,500 | 30 | 2,100 | 33 | ||||||||||||||||||||||||||||||||||||||||||
660-679(2) |
500 | 4 | 500 | 4 | 300 | 4 | 400 | 5 | 500 | 6 | 400 | 5 | 300 | 5 | ||||||||||||||||||||||||||||||||||||||||||
620-659 |
400 | 3 | 400 | 4 | 300 | 4 | 300 | 4 | 300 | 3 | 300 | 4 | 200 | 3 | ||||||||||||||||||||||||||||||||||||||||||
<620 |
| | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total Flow |
$ | 12,800 | 100 | % | $ | 11,400 | 100 | % | $ | 7,400 | 100 | % | $ | 7,800 | 100 | % | $ | 9,300 | 100 | % | $ | 8,200 | 100 | % | $ | 6,300 | 100 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Loan-To-Value Ratio |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
95.01% and above |
$ | 1,000 | 8 | % | $ | 700 | 6 | % | $ | 400 | 5 | % | $ | 400 | 5 | % | $ | 500 | 5 | % | $ | 400 | 5 | % | $ | 300 | 5 | % | ||||||||||||||||||||||||||||
90.01% to 95.00% |
6,100 | 48 | 5,900 | 52 | 3,700 | 50 | 4,000 | 51 | 4,900 | 53 | 4,200 | 51 | 3,100 | 49 | ||||||||||||||||||||||||||||||||||||||||||
85.01% to 90.00% |
4,000 | 31 | 3,400 | 30 | 2,400 | 33 | 2,500 | 32 | 3,000 | 32 | 2,600 | 32 | 2,000 | 32 | ||||||||||||||||||||||||||||||||||||||||||
85.00% and below |
1,700 | 13 | 1,400 | 12 | 900 | 12 | 900 | 12 | 900 | 10 | 1,000 | 12 | 900 | 14 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total Flow |
$ | 12,800 | 100 | % | $ | 11,400 | 100 | % | $ | 7,400 | 100 | % | $ | 7,800 | 100 | % | $ | 9,300 | 100 | % | $ | 8,200 | 100 | % | $ | 6,300 | 100 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Origination |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase |
$ | 10,500 | 82 | % | $ | 9,400 | 82 | % | $ | 6,000 | 81 | % | $ | 6,500 | 83 | % | $ | 8,100 | 87 | % | $ | 6,500 | 79 | % | $ | 4,300 | 68 | % | ||||||||||||||||||||||||||||
Refinance |
2,300 | 18 | 2,000 | 18 | 1,400 | 19 | 1,300 | 17 | 1,200 | 13 | 1,700 | 21 | 2,000 | 32 | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total Flow |
$ | 12,800 | 100 | % | $ | 11,400 | 100 | % | $ | 7,400 | 100 | % | $ | 7,800 | 100 | % | $ | 9,300 | 100 | % | $ | 8,200 | 100 | % | $ | 6,300 | 100 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
(1) | Includes loans with annual and split payment types. |
(2) | Loans with unknown FICO scores are included in the 660-679 category. |
17
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Other MetricsU.S. Mortgage Insurance Segment
(dollar amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
Net Premiums Written |
$ | 193 | $ | 190 | $ | 176 | $ | 559 | $ | 171 | $ | 171 | $ | 170 | $ | 170 | $ | 682 | ||||||||||||||||||
New Risk Written |
||||||||||||||||||||||||||||||||||||
Flow |
$ | 3,188 | $ | 2,865 | $ | 1,845 | $ | 7,898 | $ | 1,964 | $ | 2,364 | $ | 2,040 | $ | 1,557 | $ | 7,925 | ||||||||||||||||||
Bulk |
| | | | | | | | | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total Primary |
3,188 | 2,865 | 1,845 | 7,898 | 1,964 | 2,364 | 2,040 | 1,557 | 7,925 | |||||||||||||||||||||||||||
Pool |
| | | | | | | | | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total New Risk Written |
$ | 3,188 | $ | 2,865 | $ | 1,845 | $ | 7,898 | $ | 1,964 | $ | 2,364 | $ | 2,040 | $ | 1,557 | $ | 7,925 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Primary Insurance In-Force(1) |
$ | 133,700 | $ | 128,400 | $ | 124,100 | $ | 122,400 | $ | 120,400 | $ | 117,100 | $ | 115,200 | ||||||||||||||||||||||
Risk In-Force |
||||||||||||||||||||||||||||||||||||
Flow(2) |
$ | 32,067 | $ | 30,760 | $ | 29,620 | $ | 29,142 | $ | 28,563 | $ | 27,623 | $ | 27,025 | ||||||||||||||||||||||
Bulk(3) |
290 | 314 | 318 | 326 | 349 | 360 | 387 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total Primary |
32,357 | 31,074 | 29,938 | 29,468 | 28,912 | 27,983 | 27,412 | |||||||||||||||||||||||||||||
Pool |
104 | 111 | 116 | 120 | 129 | 137 | 142 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total Risk In-Force |
$ | 32,461 | $ | 31,185 | $ | 30,054 | $ | 29,588 | $ | 29,041 | $ | 28,120 | $ | 27,554 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Primary Risk In-Force That Is GSE Conforming |
96 | % | 96 | % | 96 | % | 96 | % | 97 | % | 97 | % | 97 | % | ||||||||||||||||||||||
Expense Ratio (Net Earned Premiums)(4) |
28 | % | 27 | % | 26 | % | 27 | % | 29 | % | 28 | % | 26 | % | 26 | % | 27 | % | ||||||||||||||||||
Expense Ratio (Net Premiums Written)(5) |
24 | % | 23 | % | 24 | % | 24 | % | 26 | % | 24 | % | 23 | % | 23 | % | 24 | % | ||||||||||||||||||
Flow Persistency |
77 | % | 77 | % | 82 | % | 81 | % | 80 | % | 79 | % | 81 | % | ||||||||||||||||||||||
Risk To Capital Ratio(6) |
15.0:1 | 15.0:1 | 15.3:1 | 16.3:1 | 14.3:1 | 13.7:1 | 14.1:1 | |||||||||||||||||||||||||||||
PMIERs Sufficiency Ratio(7) |
117 | % | 115 | % | 113 | % | 109 | % | NA | NA | NA | |||||||||||||||||||||||||
Average Primary Loan Size (in thousands) |
$ | 195 | $ | 192 | $ | 189 | $ | 188 | $ | 186 | $ | 184 | $ | 182 |
The expense ratios included above were calculated using whole dollars and may be different than the ratios calculated using the rounded numbers included herein.
(1) | Primary insurance in-force represents aggregate loan balances for outstanding insurance policies and is used to determine premiums. Original loan balances are presented for policies with level renewal premiums. Amortized loan balances are presented for policies with annual, amortizing renewal premiums. |
(2) | Flow risk in-force represents current loan balances as provided by servicers, lenders and investors and conform to the presentation under the Private Mortgage Insurer Eligibility Requirements (PMIERs). |
(3) | As of September 30, 2016, 89% of the bulk risk in-force was related to loans financed by lenders who participated in the mortgage programs sponsored by the Federal Home Loan Banks. |
(4) | The ratio of an insurers general expenses to net earned premiums. In the business, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles. |
(5) | The ratio of an insurers general expenses to net premiums written. In the business, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles. |
(6) | Certain states limit a private mortgage insurers risk in-force to 25 times the total of the insurers policyholders surplus plus the statutory contingency reserve, commonly known as the risk to capital requirement. The current period risk to capital ratio is an estimate due to the timing of the filing of statutory statements and is prepared consistent with the presentation of the statutory financial statements in the combined annual statement of the U.S. mortgage insurance business. |
(7) | PMIERs became effective December 31, 2015. The PMIERs sufficiency ratio is calculated as available assets divided by required assets as defined within PMIERs. The current period PMIERs sufficiency ratio is an estimate due to the timing of the PMIERs filing for the U.S. mortgage insurance business. As of September 30, 2016, June 30, 2016, March 31, 2016 and December 31, 2015, the PMIERs sufficiency ratios were in excess of $400 million, $350 million, $300 million and $200 million, respectively, of available assets above the PMIERs requirements. |
18
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Loss MetricsU.S. Mortgage Insurance Segment
(dollar amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
Paid Claims |
||||||||||||||||||||||||||||||||||||
Flow |
||||||||||||||||||||||||||||||||||||
Direct(1) |
$ | 80 | $ | 94 | $ | 112 | $ | 286 | $ | 158 | $ | 98 | $ | 131 | $ | 130 | $ | 517 | ||||||||||||||||||
Assumed(2) |
1 | 1 | 2 | 4 | 1 | 3 | 4 | 5 | 13 | |||||||||||||||||||||||||||
Ceded |
| (1 | ) | (3 | ) | (4 | ) | (1 | ) | | (1 | ) | (16 | ) | (18 | ) | ||||||||||||||||||||
Loss adjustment expenses |
2 | 3 | 3 | 8 | 3 | 3 | 3 | 4 | 13 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total Flow |
83 | 97 | 114 | 294 | 161 | 104 | 137 | 123 | 525 | |||||||||||||||||||||||||||
Bulk |
1 | 1 | 2 | 4 | 1 | 1 | 2 | 2 | 6 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total Primary |
84 | 98 | 116 | 298 | 162 | 105 | 139 | 125 | 531 | |||||||||||||||||||||||||||
Pool |
| 1 | | 1 | 1 | | 1 | 1 | 3 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total Paid Claims |
$ | 84 | $ | 99 | $ | 116 | $ | 299 | $ | 163 | $ | 105 | $ | 140 | $ | 126 | $ | 534 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Average Paid Claim (in thousands)(3) |
$ | 53.6 | $ | 50.8 | $ | 51.9 | $ | 63.6 | $ | 54.0 | $ | 50.8 | $ | 46.5 | ||||||||||||||||||||||
Average Reserve Per Delinquency (in thousands) |
||||||||||||||||||||||||||||||||||||
Flow |
$ | 25.9 | $ | 27.8 | $ | 28.3 | $ | 27.2 | $ | 29.4 | $ | 30.6 | $ | 31.0 | ||||||||||||||||||||||
Bulk loans with established reserve |
18.8 | 21.1 | 21.2 | 19.9 | 20.0 | 21.5 | 21.2 | |||||||||||||||||||||||||||||
Reserves: |
||||||||||||||||||||||||||||||||||||
Flow direct case |
$ | 599 | $ | 640 | $ | 698 | $ | 775 | $ | 870 | $ | 909 | $ | 992 | ||||||||||||||||||||||
Bulk direct case |
14 | 14 | 15 | 17 | 17 | 18 | 20 | |||||||||||||||||||||||||||||
Assumed(2) |
6 | 6 | 7 | 8 | 9 | 12 | 15 | |||||||||||||||||||||||||||||
All other(4) |
39 | 47 | 48 | 49 | 57 | 57 | 60 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total Reserves |
$ | 658 | $ | 707 | $ | 768 | $ | 849 | $ | 953 | $ | 996 | $ | 1,087 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Beginning Reserves |
$ | 707 | $ | 768 | $ | 849 | $ | 849 | $ | 953 | $ | 996 | $ | 1,087 | $ | 1,180 | $ | 1,180 | ||||||||||||||||||
Paid claims(1) |
(84 | ) | (99 | ) | (119 | ) | (302 | ) | (164 | ) | (105 | ) | (141 | ) | (142 | ) | (552 | ) | ||||||||||||||||||
Increase in reserves |
35 | 38 | 38 | 111 | 60 | 62 | 50 | 49 | 221 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Ending Reserves |
$ | 658 | $ | 707 | $ | 768 | $ | 658 | $ | 849 | $ | 953 | $ | 996 | $ | 1,087 | $ | 849 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Beginning Reinsurance Recoverable(5) |
$ | 2 | $ | 2 | $ | 5 | $ | 5 | $ | 6 | $ | 6 | $ | 7 | $ | 24 | $ | 24 | ||||||||||||||||||
Ceded paid claims |
| | (3 | ) | (3 | ) | (1 | ) | | (1 | ) | (16 | ) | (18 | ) | |||||||||||||||||||||
Decrease in recoverable |
| | | | | | | (1 | ) | (1 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Ending Reinsurance Recoverable |
$ | 2 | $ | 2 | $ | 2 | $ | 2 | $ | 5 | $ | 6 | $ | 6 | $ | 7 | $ | 5 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Loss Ratio(6) |
21 | % | 24 | % | 24 | % | 23 | % | 39 | % | 43 | % | 33 | % | 33 | % | 37 | % |
The loss ratio included above was calculated using whole dollars and may be different than the ratio calculated using the rounded numbers included herein.
(1) | Direct paid claims and paid claims in the fourth quarter of 2015 included payment of a previously disclosed negotiated servicer settlement reached in 2014 and payment in relation to an agreement on non-performing loans. |
(2) | Assumed is comprised of reinsurance arrangements with state governmental housing finance agencies. |
(3) | Average paid claim in the fourth quarter of 2015 reflected the non-recurring payment to extinguish the risk on prior paid claims pursuant to a previously disclosed servicer settlement reached in 2014. |
(4) | Other includes loss adjustment expenses, pool and incurred but not reported reserves. |
(5) | Reinsurance recoverable excludes ceded unearned premium recoveries and amounts for which cash proceeds have not yet been received. |
(6) | The ratio of incurred losses and loss adjustment expenses to net earned premiums. |
19
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Delinquency MetricsU.S. Mortgage Insurance Segment
(dollar amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
Number of Primary Delinquencies |
||||||||||||||||||||||||||||||||||||
Flow |
24,720 | 24,753 | 26,491 | 30,416 | 31,678 | 31,876 | 34,220 | |||||||||||||||||||||||||||||
Bulk loans with an established reserve |
778 | 732 | 776 | 889 | 917 | 908 | 984 | |||||||||||||||||||||||||||||
Bulk loans with no reserve(1) |
305 | 313 | 335 | 358 | 394 | 415 | 461 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total Number of Primary Delinquencies |
25,803 | 25,798 | 27,602 | 31,663 | 32,989 | 33,199 | 35,665 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Beginning Number of Primary Delinquencies |
25,798 | 27,602 | 31,663 | 31,663 | 32,989 | 33,199 | 35,665 | 39,786 | 39,786 | |||||||||||||||||||||||||||
New delinquencies |
9,609 | 8,265 | 8,761 | 26,635 | 10,043 | 10,192 | 9,061 | 9,554 | 38,850 | |||||||||||||||||||||||||||
Delinquency cures |
(8,043 | ) | (8,137 | ) | (10,602 | ) | (26,782 | ) | (8,835 | ) | (8,484 | ) | (8,800 | ) | (10,988 | ) | (37,107 | ) | ||||||||||||||||||
Paid claims |
(1,561 | ) | (1,932 | ) | (2,220 | ) | (5,713 | ) | (2,534 | ) | (1,918 | ) | (2,727 | ) | (2,687 | ) | (9,866 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Ending Number of Primary Delinquencies |
25,803 | 25,798 | 27,602 | 25,803 | 31,663 | 32,989 | 33,199 | 35,665 | 31,663 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Composition of Cures |
||||||||||||||||||||||||||||||||||||
Reported delinquent and cured-intraquarter |
1,798 | 1,597 | 2,503 | 1,740 | 1,805 | 1,658 | 2,271 | |||||||||||||||||||||||||||||
Number of missed payments delinquent prior to cure: |
||||||||||||||||||||||||||||||||||||
3 payments or less |
4,276 | 4,335 | 5,775 | 5,005 | 4,630 | 4,260 | 6,112 | |||||||||||||||||||||||||||||
4 - 11 payments |
1,413 | 1,577 | 1,443 | 1,330 | 1,487 | 2,250 | 1,912 | |||||||||||||||||||||||||||||
12 payments or more |
556 | 628 | 881 | 760 | 562 | 632 | 693 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total |
8,043 | 8,137 | 10,602 | 8,835 | 8,484 | 8,800 | 10,988 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Primary Delinquencies by Missed Payment Status |
||||||||||||||||||||||||||||||||||||
3 payments or less |
9,405 | 8,529 | 8,395 | 10,487 | 10,226 | 9,432 | 9,271 | |||||||||||||||||||||||||||||
4 - 11 payments |
6,212 | 6,323 | 7,254 | 7,577 | 7,376 | 7,824 | 9,086 | |||||||||||||||||||||||||||||
12 payments or more |
10,186 | 10,946 | 11,953 | 13,599 | 15,387 | 15,943 | 17,308 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Primary Delinquencies |
25,803 | 25,798 | 27,602 | 31,663 | 32,989 | 33,199 | 35,665 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
September 30, 2016 | ||||||||||||||||||||||||||||||||||||
Flow Delinquencies and Percentage Reserved by Payment Status |
Delinquencies | Direct Case Reserves(2) |
Risk In-Force | Reserves as % of Risk In-Force |
||||||||||||||||||||||||||||||||
3 payments or less in default |
9,048 | $ | 45 | $ | 371 | 12 | % | |||||||||||||||||||||||||||||
4 - 11 payments in default |
6,053 | 144 | 252 | 57 | % | |||||||||||||||||||||||||||||||
12 payments or more in default |
9,619 | 410 | 466 | 88 | % | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total |
24,720 | $ | 599 | $ | 1,089 | 55 | % | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
December 31, 2015 | ||||||||||||||||||||||||||||||||||||
Flow Delinquencies and Percentage Reserved by Payment Status |
Delinquencies | Direct Case Reserves(2) |
Risk In-Force | Reserves as % of Risk In-Force |
||||||||||||||||||||||||||||||||
3 payments or less in default |
10,103 | $ | 52 | $ | 405 | 13 | % | |||||||||||||||||||||||||||||
4 - 11 payments in default |
7,366 | 180 | 307 | 59 | % | |||||||||||||||||||||||||||||||
12 payments or more in default |
12,947 | 543 | 638 | 85 | % | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total |
30,416 | $ | 775 | $ | 1,350 | 57 | % | |||||||||||||||||||||||||||||
|
|
|
|
|
|
(1) | Reserves were not established on loans where the company was in a secondary loss position due to an existing deductible and the company believes currently have no risk for claim. |
(2) | Direct flow case reserves exclude loss adjustment expenses, incurred but not reported and reinsurance reserves. |
20
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Portfolio Quality MetricsU.S. Mortgage Insurance Segment
2016 | 2015 | |||||||||||||||||||||||||||
3Q | 2Q | 1Q | 4Q | 3Q | 2Q | 1Q | ||||||||||||||||||||||
Primary Loans |
||||||||||||||||||||||||||||
Primary loans in-force |
686,789 | 668,951 | 655,300 | 651,668 | 647,126 | 636,640 | 631,591 | |||||||||||||||||||||
Primary delinquent loans |
25,803 | 25,798 | 27,602 | 31,663 | 32,989 | 33,199 | 35,665 | |||||||||||||||||||||
Primary delinquency rate |
3.76 | % | 3.86 | % | 4.21 | % | 4.86 | % | 5.10 | % | 5.21 | % | 5.65 | % | ||||||||||||||
Flow loans in-force |
665,821 | 647,100 | 632,010 | 627,349 | 620,430 | 608,615 | 601,472 | |||||||||||||||||||||
Flow delinquent loans |
24,720 | 24,753 | 26,491 | 30,416 | 31,678 | 31,876 | 34,220 | |||||||||||||||||||||
Flow delinquency rate |
3.71 | % | 3.83 | % | 4.19 | % | 4.85 | % | 5.11 | % | 5.24 | % | 5.69 | % | ||||||||||||||
Bulk loans in-force |
20,968 | 21,851 | 23,290 | 24,319 | 26,696 | 28,025 | 30,119 | |||||||||||||||||||||
Bulk delinquent loans |
1,083 | 1,045 | 1,111 | 1,247 | 1,311 | 1,323 | 1,445 | |||||||||||||||||||||
Bulk delinquency rate |
5.17 | % | 4.78 | % | 4.77 | % | 5.13 | % | 4.91 | % | 4.72 | % | 4.80 | % | ||||||||||||||
A minus and sub-prime loans in-force |
24,281 | 25,552 | 26,995 | 28,332 | 29,745 | 31,051 | 33,805 | |||||||||||||||||||||
A minus and sub-prime delinquent loans |
5,306 | 5,220 | 5,546 | 6,448 | 6,642 | 6,530 | 7,019 | |||||||||||||||||||||
A minus and sub-prime delinquency rate |
21.85 | % | 20.43 | % | 20.54 | % | 22.76 | % | 22.33 | % | 21.03 | % | 20.76 | % | ||||||||||||||
Pool Loans |
||||||||||||||||||||||||||||
Pool loans in-force |
5,896 | 6,196 | 6,406 | 6,620 | 7,284 | 7,709 | 7,979 | |||||||||||||||||||||
Pool delinquent loans |
343 | 356 | 369 | 386 | 426 | 447 | 468 | |||||||||||||||||||||
Pool delinquency rate |
5.82 | % | 5.75 | % | 5.76 | % | 5.83 | % | 5.85 | % | 5.80 | % | 5.87 | % | ||||||||||||||
Primary Risk In-Force by Credit Quality |
||||||||||||||||||||||||||||
Over 735 |
55 | % | 54 | % | 53 | % | 53 | % | 52 | % | 52 | % | 52 | % | ||||||||||||||
680-735 |
31 | % | 32 | % | 32 | % | 31 | % | 31 | % | 31 | % | 31 | % | ||||||||||||||
660-679(1) |
6 | % | 6 | % | 6 | % | 7 | % | 7 | % | 7 | % | 7 | % | ||||||||||||||
620-659 |
6 | % | 6 | % | 7 | % | 7 | % | 7 | % | 7 | % | 7 | % | ||||||||||||||
< 620 |
2 | % | 2 | % | 2 | % | 2 | % | 3 | % | 3 | % | 3 | % |
(1) | Loans with unknown FICO scores are included in the 660-679 category. |
21
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Portfolio Quality MetricsU.S. Mortgage Insurance Segment
(dollar amounts in millions)
September 30, 2016 | ||||||||||||||||||||||||||||
Policy Year |
Average Rate(1) |
% of Total Reserves(2) |
Primary Insurance In-Force |
% of Total | Primary Risk In-Force |
% of Total | Deliquency Rate |
|||||||||||||||||||||
2004 and prior |
6.02 | % | 11.6 | % | $ | 3,205 | 2.4 | % | $ | 627 | 1.9 | % | 13.75 | % | ||||||||||||||
2005 |
5.63 | % | 11.2 | 2,887 | 2.2 | 697 | 2.2 | 12.97 | % | |||||||||||||||||||
2006 |
5.79 | % | 17.0 | 4,992 | 3.7 | 1,177 | 3.6 | 12.76 | % | |||||||||||||||||||
2007 |
5.71 | % | 35.3 | 12,757 | 9.5 | 3,001 | 9.3 | 11.61 | % | |||||||||||||||||||
2008 |
5.26 | % | 16.5 | 10,891 | 8.2 | 2,555 | 7.9 | 6.40 | % | |||||||||||||||||||
2009 |
4.95 | % | 0.8 | 1,350 | 1.0 | 290 | 0.9 | 2.44 | % | |||||||||||||||||||
2010 |
4.68 | % | 0.7 | 1,755 | 1.3 | 401 | 1.2 | 1.74 | % | |||||||||||||||||||
2011 |
4.53 | % | 0.7 | 2,430 | 1.8 | 580 | 1.8 | 1.60 | % | |||||||||||||||||||
2012 |
3.84 | % | 0.8 | 6,432 | 4.8 | 1,567 | 4.8 | 0.78 | % | |||||||||||||||||||
2013 |
4.03 | % | 1.4 | 11,409 | 8.5 | 2,795 | 8.6 | 0.74 | % | |||||||||||||||||||
2014 |
4.41 | % | 2.3 | 16,562 | 12.4 | 4,063 | 12.6 | 0.86 | % | |||||||||||||||||||
2015 |
4.10 | % | 1.5 | 28,053 | 21.0 | 6,911 | 21.4 | 0.43 | % | |||||||||||||||||||
2016 |
3.91 | % | 0.2 | 31,007 | 23.2 | 7,693 | 23.8 | 0.07 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total |
4.59 | % | 100.0 | % | $ | 133,730 | 100.0 | % | $ | 32,357 | 100.0 | % | 3.76 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | ||||||||||||||||||||||||||
Primary Risk In-Force |
Primary Delinquency Rate |
Primary Risk In-Force |
Primary Delinquency Rate |
Primary Risk In-Force(3) |
Primary Delinquency Rate |
|||||||||||||||||||||||
Lender concentration (by original applicant) |
$ | 32,357 | 3.76 | % | $ | 31,074 | 3.86 | % | $ | 28,912 | 5.10 | % | ||||||||||||||||
Top 10 lenders |
10,538 | 4.63 | % | 10,533 | 4.71 | % | 11,156 | 6.68 | % | |||||||||||||||||||
Top 20 lenders |
13,696 | 4.56 | % | 13,532 | 4.67 | % | 13,539 | 5.91 | % | |||||||||||||||||||
Loan-to-value ratio |
||||||||||||||||||||||||||||
95.01% and above |
$ | 5,685 | 6.92 | % | $ | 5,682 | 6.80 | % | $ | 6,002 | 8.15 | % | ||||||||||||||||
90.01% to 95.00% |
16,168 | 2.55 | % | 15,247 | 2.62 | % | 13,270 | 3.66 | % | |||||||||||||||||||
80.01% to 90.00% |
10,235 | 3.41 | % | 9,858 | 3.60 | % | 9,326 | 4.85 | % | |||||||||||||||||||
80.00% and below |
269 | 3.19 | % | 287 | 3.19 | % | 314 | 3.44 | % | |||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||
Total |
$ | 32,357 | 3.76 | % | $ | 31,074 | 3.86 | % | $ | 28,912 | 5.10 | % | ||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||
Loan grade |
||||||||||||||||||||||||||||
Prime |
$ | 31,503 | 3.09 | % | $ | 30,175 | 3.20 | % | $ | 27,866 | 4.27 | % | ||||||||||||||||
A minus and sub-prime |
854 | 21.85 | % | 899 | 20.43 | % | 1,046 | 22.33 | % | |||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||
Total |
$ | 32,357 | 3.76 | % | $ | 31,074 | 3.86 | % | $ | 28,912 | 5.10 | % | ||||||||||||||||
|
|
|
|
|
|
(1) | Average Annual Mortgage Interest Rate. |
(2) | Total reserves were $658 million as of September 30, 2016. |
(3) | Beginning in the second quarter of 2016, all flow risk in-force metrics are based upon more current loan balances as provided by servicers, lenders and investors and conform to the presentation under PMIERs. Previously, certain flow risk in-force metrics were based on original loan balances when current loan balances were not available. The prior period has been re-presented to reflect these modified metrics. |
22
Canada Mortgage Insurance Segment
23
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Net Operating Income and SalesCanada Mortgage Insurance Segment
(amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
REVENUES: |
||||||||||||||||||||||||||||||||||||
Premiums |
$ | 124 | $ | 122 | $ | 111 | $ | 357 | $ | 115 | $ | 116 | $ | 116 | $ | 119 | $ | 466 | ||||||||||||||||||
Net investment income |
33 | 32 | 29 | 94 | 31 | 32 | 33 | 34 | 130 | |||||||||||||||||||||||||||
Net investment gains (losses) |
| (8 | ) | 20 | 12 | (11 | ) | (23 | ) | 20 | (18 | ) | (32 | ) | ||||||||||||||||||||||
Policy fees and other income |
(1 | ) | 1 | | | | (1 | ) | | 1 | | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total revenues |
156 | 147 | 160 | 463 | 135 | 124 | 169 | 136 | 564 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
BENEFITS AND EXPENSES: |
||||||||||||||||||||||||||||||||||||
Benefits and other changes in policy reserves |
30 | 25 | 26 | 81 | 26 | 24 | 21 | 25 | 96 | |||||||||||||||||||||||||||
Acquisition and operating expenses, net of deferrals |
21 | 19 | 18 | 58 | 16 | 16 | 22 | 12 | 66 | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs and intangibles |
10 | 10 | 9 | 29 | 9 | 9 | 9 | 9 | 36 | |||||||||||||||||||||||||||
Interest expense |
5 | 4 | 4 | 13 | 4 | 5 | 4 | 5 | 18 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total benefits and expenses |
66 | 58 | 57 | 181 | 55 | 54 | 56 | 51 | 216 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
90 | 89 | 103 | 282 | 80 | 70 | 113 | 85 | 348 | |||||||||||||||||||||||||||
Provision for income taxes |
24 | 23 | 29 | 76 | 20 | 17 | 31 | 22 | 90 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS |
66 | 66 | 74 | 206 | 60 | 53 | 82 | 63 | 258 | |||||||||||||||||||||||||||
Less: income from continuing operations attributable to noncontrolling interests |
30 | 30 | 34 | 94 | 27 | 24 | 38 | 29 | 118 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.S COMMON STOCKHOLDERS |
36 | 36 | 40 | 112 | 33 | 29 | 44 | 34 | 140 | |||||||||||||||||||||||||||
ADJUSTMENTS TO INCOME FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.S COMMON STOCKHOLDERS: |
||||||||||||||||||||||||||||||||||||
Net investment (gains) losses, net(1) |
| 4 | (11 | ) | (7 | ) | 7 | 13 | (11 | ) | 10 | 19 | ||||||||||||||||||||||||
Taxes on adjustments |
| (2 | ) | 4 | 2 | (3 | ) | (4 | ) | 4 | (4 | ) | (7 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NET OPERATING INCOME(2) |
$ | 36 | $ | 38 | $ | 33 | $ | 107 | $ | 37 | $ | 38 | $ | 37 | $ | 40 | $ | 152 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
SALES: |
||||||||||||||||||||||||||||||||||||
New Insurance Written (NIW) |
||||||||||||||||||||||||||||||||||||
Flow |
$ | 5,300 | $ | 4,400 | $ | 2,500 | $ | 12,200 | $ | 4,700 | $ | 6,600 | $ | 5,400 | $ | 3,300 | $ | 20,000 | ||||||||||||||||||
Bulk |
5,100 | 19,700 | 3,200 | 28,000 | 7,300 | 4,800 | 3,300 | 5,000 | 20,400 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total Canada NIW(3) |
$ | 10,400 | $ | 24,100 | $ | 5,700 | $ | 40,200 | $ | 12,000 | $ | 11,400 | $ | 8,700 | $ | 8,300 | $ | 40,400 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
(1) | Net investment (gains) losses were adjusted for the portion of net investment gains (losses) attributable to noncontrolling interests as reconciled below: |
Net investment (gains) losses, gross |
$ | | $ | 8 | $ | (20 | ) | $ | (12 | ) | $ | 11 | $ | 23 | $ | (20 | ) | $ | 18 | $ | 32 | |||||||||||||||
Adjustment for net investment gains (losses) attributable to noncontrolling interests |
| (4 | ) | 9 | 5 | (4 | ) | (10 | ) | 9 | (8 | ) | (13 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net investment (gains) losses, net |
$ | | $ | 4 | $ | (11 | ) | $ | (7 | ) | $ | 7 | $ | 13 | $ | (11 | ) | $ | 10 | $ | 19 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) | Net operating income for the Canadian platform adjusted for foreign exchange as compared to the prior year period was $36 million and $115 million for the three and nine months ended September 30, 2016, respectively. |
(3) | New insurance written for the Canadian platform adjusted for foreign exchange as compared to the prior year period was $10,600 million and $42,500 million for the three and nine months ended September 30, 2016, respectively. |
24
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Selected Key Performance MeasuresCanada Mortgage Insurance Segment
(amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
Net Premiums Written |
$ | 172 | $ | 191 | $ | 84 | $ | 447 | $ | 162 | $ | 204 | $ | 166 | $ | 109 | $ | 641 | ||||||||||||||||||
Loss Ratio(1) |
24 | % | 20 | % | 24 | % | 23 | % | 23 | % | 21 | % | 17 | % | 22 | % | 21 | % | ||||||||||||||||||
Expense Ratio (Net Earned Premiums)(2) |
24 | % | 24 | % | 24 | % | 24 | % | 22 | % | 22 | % | 27 | % | 18 | % | 22 | % | ||||||||||||||||||
Expense Ratio (Net Premiums Written)(3) |
18 | % | 15 | % | 32 | % | 19 | % | 15 | % | 12 | % | 19 | % | 20 | % | 16 | % | ||||||||||||||||||
Primary Insurance In-Force(4) |
$ | 347,300 | $ | 341,600 | $ | 317,400 | $ | 292,600 | $ | 292,000 | $ | 300,900 | $ | 288,800 | ||||||||||||||||||||||
Primary Risk In-Force(5) |
||||||||||||||||||||||||||||||||||||
Flow |
$ | 82,300 | $ | 81,400 | $ | 79,900 | $ | 74,300 | $ | 75,500 | $ | 78,500 | $ | 75,700 | ||||||||||||||||||||||
Bulk |
39,200 | 38,100 | 31,200 | 28,100 | 26,700 | 26,800 | 25,400 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total |
$ | 121,500 | $ | 119,500 | $ | 111,100 | $ | 102,400 | $ | 102,200 | $ | 105,300 | $ | 101,100 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
September 30, 2016 | June 30, 2016 | |||||||||||||||||||||||||||||||||||
Risk In-Force by Loan-To-Value Ratio(6) |
Primary | Flow | Bulk | Primary | Flow | Bulk | ||||||||||||||||||||||||||||||
95.01% and above |
$ | 39,938 | $ | 39,938 | $ | | $ | 39,332 | $ | 39,332 | $ | | ||||||||||||||||||||||||
90.01% to 95.00% |
24,616 | 24,616 | | 24,401 | 24,401 | | ||||||||||||||||||||||||||||||
80.01% to 90.00% |
14,787 | 14,784 | 3 | 14,756 | 14,753 | 3 | ||||||||||||||||||||||||||||||
80.00% and below |
42,198 | 2,973 | 39,225 | 41,058 | 2,960 | 38,098 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total |
$ | 121,539 | $ | 82,311 | $ | 39,228 | $ | 119,547 | $ | 81,446 | $ | 38,101 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The loss and expense ratios included above were calculated using whole dollars and may be different than the ratios calculated using the rounded numbers included herein.
Amounts may not total due to rounding.
(1) | The ratio of incurred losses and loss adjustment expenses to net earned premiums. |
(2) | The ratio of an insurers general expenses to net earned premiums. In the business, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles. |
(3) | The ratio of an insurers general expenses to net premiums written. In the business, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles. |
(4) | As part of an ongoing effort to improve the estimate of outstanding insurance exposure, the company is receiving updated outstanding balances in Canada from most of its customers on a quarter lag. As a result, the company estimates that the outstanding balance of insured mortgages was approximately $170.0 billion, $152.0 billion, $139.0 billion, $138.0 billion, $142.0 billion and $137.0 billion as of June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015, respectively. This is based on the extrapolation of the amounts reported by lenders to the entire insured population. |
(5) | The business currently provides 100% coverage on the majority of the loans the company insures. For the purpose of representing the risk in-force, Canada 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 that represents the highest expected average per-claim payment for any one underwriting year over the life of the business. This factor was 35% for all periods presented. |
(6) | Loan amount in loan-to-value ratio calculation includes capitalized premiums, where applicable. |
25
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Selected Key Performance MeasuresCanada Mortgage Insurance Segment
(dollar amounts in millions)
Primary Insurance |
September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | |||||||||||||||||||
Insured loans in-force(1),(2) |
2,006,484 | 1,968,171 | 1,860,978 | 1,835,916 | 1,785,541 | |||||||||||||||||||
Insured delinquent loans |
2,027 | 1,961 | 2,034 | 1,829 | 1,715 | |||||||||||||||||||
Insured delinquency rate(2),(3) |
0.10 | % | 0.10 | % | 0.11 | % | 0.10 | % | 0.10 | % | ||||||||||||||
Flow loans in-force(1) |
1,379,020 | 1,358,927 | 1,341,636 | 1,331,773 | 1,313,034 | |||||||||||||||||||
Flow delinquent loans |
1,715 | 1,669 | 1,711 | 1,550 | 1,449 | |||||||||||||||||||
Flow delinquency rate(3) |
0.12 | % | 0.12 | % | 0.13 | % | 0.12 | % | 0.11 | % | ||||||||||||||
Bulk loans in-force(1) |
627,464 | 609,244 | 519,342 | 504,143 | 472,507 | |||||||||||||||||||
Bulk delinquent loans |
312 | 292 | 323 | 279 | 266 | |||||||||||||||||||
Bulk delinquency rate(3) |
0.05 | % | 0.05 | % | 0.06 | % | 0.06 | % | 0.06 | % | ||||||||||||||
Loss Metrics |
September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | |||||||||||||||||||
Beginning Reserves |
$ | 104 | $ | 102 | $ | 87 | $ | 83 | $ | 85 | ||||||||||||||
Paid claims(4) |
(20 | ) | (21 | ) | (18 | ) | (18 | ) | (20 | ) | ||||||||||||||
Increase in reserves |
29 | 23 | 26 | 25 | 23 | |||||||||||||||||||
Impact of changes in foreign exchange rates |
(1 | ) | | 7 | (3 | ) | (5 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Ending Reserves |
$ | 112 | $ | 104 | $ | 102 | $ | 87 | $ | 83 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | ||||||||||||||||||||||
Province and Territory |
% of Primary Risk In-Force |
Primary Delinquency Rate |
% of Primary Risk In-Force |
Primary Delinquency Rate |
% of Primary Risk In-Force |
Primary Delinquency Rate |
||||||||||||||||||
Ontario |
46 | % | 0.04 | % | 47 | % | 0.04 | % | 46 | % | 0.05 | % | ||||||||||||
Alberta |
16 | 0.22 | % | 16 | 0.17 | % | 17 | 0.10 | % | |||||||||||||||
British Columbia |
15 | 0.07 | % | 15 | 0.07 | % | 14 | 0.10 | % | |||||||||||||||
Quebec |
13 | 0.15 | % | 13 | 0.17 | % | 13 | 0.18 | % | |||||||||||||||
Saskatchewan |
3 | 0.27 | % | 3 | 0.25 | % | 3 | 0.15 | % | |||||||||||||||
Nova Scotia |
2 | 0.20 | % | 2 | 0.20 | % | 2 | 0.20 | % | |||||||||||||||
Manitoba |
2 | 0.08 | % | 2 | 0.09 | % | 2 | 0.08 | % | |||||||||||||||
New Brunswick |
1 | 0.15 | % | 1 | 0.18 | % | 1 | 0.19 | % | |||||||||||||||
All Other |
2 | 0.14 | % | 1 | 0.12 | % | 2 | 0.11 | % | |||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Total |
100 | % | 0.10 | % | 100 | % | 0.10 | % | 100 | % | 0.10 | % | ||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
By Policy Year |
||||||||||||||||||||||||
2007 and prior |
30 | % | 0.04 | % | 31 | % | 0.04 | % | 37 | % | 0.04 | % | ||||||||||||
2008 |
4 | 0.16 | % | 6 | 0.19 | % | 6 | 0.17 | % | |||||||||||||||
2009 |
4 | 0.16 | % | 4 | 0.17 | % | 4 | 0.15 | % | |||||||||||||||
2010 |
6 | 0.19 | % | 6 | 0.20 | % | 7 | 0.21 | % | |||||||||||||||
2011 |
6 | 0.27 | % | 6 | 0.26 | % | 7 | 0.25 | % | |||||||||||||||
2012 |
7 | 0.21 | % | 8 | 0.21 | % | 9 | 0.21 | % | |||||||||||||||
2013 |
8 | 0.19 | % | 8 | 0.18 | % | 9 | 0.13 | % | |||||||||||||||
2014 |
9 | 0.17 | % | 9 | 0.15 | % | 11 | 0.06 | % | |||||||||||||||
2015 |
13 | 0.06 | % | 13 | 0.03 | % | 10 | | % | |||||||||||||||
2016 |
13 | 0.01 | % | 9 | | % | | | % | |||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Total |
100 | % | 0.10 | % | 100 | % | 0.10 | % | 100 | % | 0.10 | % | ||||||||||||
|
|
|
|
|
|
(1) | Insured loans in-force represent the original number of loans insured for which the coverage term has not expired, and for which no policy level cancellation or termination has been received. |
(2) | As part of an ongoing effort to improve the estimate of outstanding insurance exposure, the company is receiving updated outstanding loans in-force in Canada from most of its customers on a quarter lag. As a result, the company estimates that the outstanding loans in-force were 968,000 as of June 30, 2016, 883,000 as of March 31, 2016, 870,000 as of December 31, 2015, 836,000 as of September 30, 2015 and 828,000 as of June 30, 2015. This is based on the extrapolation of the amounts reported by lenders to the entire insured population. The corresponding insured delinquency rate was 0.20% as of June 30, 2016, 0.23% as of March 31, 2016, 0.21% as of December 31, 2015 and September 30, 2015 and 0.20% as of June 30, 2015. |
(3) | Delinquency rates are based on insured loans in-force. |
(4) | Paid claims exclude adjustments for expected recoveries related to loss reserves and prior paid claims. |
26
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Selected Key Performance MeasuresCanada Mortgage Insurance Segment
(Canadian dollar amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
Paid Claims(1) |
||||||||||||||||||||||||||||||||||||
Flow |
$ | 26 | $ | 25 | $ | 24 | $ | 75 | $ | 23 | $ | 25 | $ | 25 | $ | 25 | $ | 98 | ||||||||||||||||||
Bulk |
1 | 2 | 1 | 4 | 1 | 1 | 1 | 2 | 5 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total Paid Claims |
$ | 27 | $ | 27 | $ | 25 | $ | 79 | $ | 24 | $ | 26 | $ | 26 | $ | 27 | $ | 103 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Average Paid Claim (in thousands) |
$ | 62.0 | $ | 62.5 | $ | 67.8 | $ | 63.7 | $ | 66.2 | $ | 58.7 | $ | 67.9 | ||||||||||||||||||||||
Average Reserve Per Delinquency (in thousands) |
$ | 72.8 | $ | 69.1 | $ | 65.0 | $ | 65.7 | $ | 64.2 | $ | 63.6 | $ | 60.4 | ||||||||||||||||||||||
Loss Metrics |
||||||||||||||||||||||||||||||||||||
Beginning Reserves |
$ | 136 | $ | 132 | $ | 120 | $ | 110 | $ | 106 | $ | 108 | $ | 106 | ||||||||||||||||||||||
Paid claims(1) |
(27 | ) | (27 | ) | (25 | ) | (24 | ) | (26 | ) | (26 | ) | (27 | ) | ||||||||||||||||||||||
Increase in reserves |
39 | 31 | 37 | 34 | 30 | 24 | 29 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Ending Reserves |
$ | 148 | $ | 136 | $ | 132 | $ | 120 | $ | 110 | $ | 106 | $ | 108 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Loan Amount(2) |
||||||||||||||||||||||||||||||||||||
Over $550K |
8 | % | 8 | % | 7 | % | 7 | % | 7 | % | 6 | % | 6 | % | ||||||||||||||||||||||
$400K to $550K |
14 | 14 | 13 | 13 | 12 | 12 | 12 | |||||||||||||||||||||||||||||
$250K to $400K |
33 | 34 | 34 | 33 | 33 | 33 | 33 | |||||||||||||||||||||||||||||
$100K to $250K |
41 | 40 | 42 | 43 | 44 | 44 | 44 | |||||||||||||||||||||||||||||
$100K or Less |
4 | 4 | 4 | 4 | 4 | 5 | 5 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total |
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Average Primary Loan Size (in thousands) |
$ | 227 | $ | 225 | $ | 222 | $ | 221 | $ | 218 | $ | 216 | $ | 215 |
All amounts presented in Canadian dollars.
(1) | Paid claims exclude adjustments for expected recoveries related to loss reserves and prior paid claims. |
(2) | The percentages in this table are based on the amount of primary insurance in-force in each loan band as a percentage of total insurance in-force. |
27
Australia Mortgage Insurance Segment
28
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Net Operating Income and SalesAustralia Mortgage Insurance Segment
(amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
REVENUES: |
||||||||||||||||||||||||||||||||||||
Premiums |
$ | 88 | $ | 86 | $ | 81 | $ | 255 | $ | 86 | $ | 92 | $ | 90 | $ | 89 | $ | 357 | ||||||||||||||||||
Net investment income |
23 | 25 | 24 | 72 | 25 | 28 | 29 | 32 | 114 | |||||||||||||||||||||||||||
Net investment gains (losses) |
4 | 2 | | 6 | 2 | 3 | | 1 | 6 | |||||||||||||||||||||||||||
Policy fees and other income |
| | | | 1 | (1 | ) | 1 | (4 | ) | (3 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total revenues |
115 | 113 | 105 | 333 | 114 | 122 | 120 | 118 | 474 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
BENEFITS AND EXPENSES: |
||||||||||||||||||||||||||||||||||||
Benefits and other changes in policy reserves |
37 | 31 | 21 | 89 | 15 | 27 | 25 | 14 | 81 | |||||||||||||||||||||||||||
Acquisition and operating expenses, net of deferrals |
23 | 25 | 19 | 67 | 24 | 27 | 25 | 22 | 98 | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs and intangibles |
4 | 4 | 3 | 11 | 4 | 4 | 5 | 5 | 18 | |||||||||||||||||||||||||||
Interest expense |
2 | 3 | 3 | 8 | 3 | 3 | 2 | 2 | 10 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total benefits and expenses |
66 | 63 | 46 | 175 | 46 | 61 | 57 | 43 | 207 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
49 | 50 | 59 | 158 | 68 | 61 | 63 | 75 | 267 | |||||||||||||||||||||||||||
Provision for income taxes |
16 | 16 | 19 | 51 | 20 | 18 | 18 | 24 | 80 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS |
33 | 34 | 40 | 107 | 48 | 43 | 45 | 51 | 187 | |||||||||||||||||||||||||||
Less: income from continuing operations attributable to noncontrolling interests |
18 | 18 | 21 | 57 | 25 | 22 | 16 | 21 | 84 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.S COMMON STOCKHOLDERS |
15 | 16 | 19 | 50 | 23 | 21 | 29 | 30 | 103 | |||||||||||||||||||||||||||
ADJUSTMENTS TO INCOME FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.S COMMON STOCKHOLDERS: |
||||||||||||||||||||||||||||||||||||
Net investment (gains) losses, net(1) |
(2 | ) | (1 | ) | | (3 | ) | (2 | ) | (1 | ) | | | (3 | ) | |||||||||||||||||||||
(Gains) losses on early extinguishment of debt(2) |
| | | | | 1 | | | 1 | |||||||||||||||||||||||||||
Taxes on adjustments |
1 | | | 1 | 1 | | | | 1 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NET OPERATING INCOME(3) |
$ | 14 | $ | 15 | $ | 19 | $ | 48 | $ | 22 | $ | 21 | $ | 29 | $ | 30 | $ | 102 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
SALES: |
||||||||||||||||||||||||||||||||||||
New Insurance Written (NIW) |
||||||||||||||||||||||||||||||||||||
Flow |
$ | 4,600 | $ | 5,000 | $ | 4,400 | $ | 14,000 | $ | 4,600 | $ | 6,300 | $ | 6,500 | $ | 5,800 | $ | 23,200 | ||||||||||||||||||
Bulk |
| 800 | | 800 | | | 1,700 | | 1,700 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total Australia NIW(4) |
$ | 4,600 | $ | 5,800 | $ | 4,400 | $ | 14,800 | $ | 4,600 | $ | 6,300 | $ | 8,200 | $ | 5,800 | $ | 24,900 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
(1) | Net investment (gains) losses were adjusted for the portion of net investment gains (losses) attributable to noncontrolling interests as reconciled below: |
Net investment (gains) losses, gross |
$ | (4 | ) | $ | (2 | ) | $ | | $ | (6 | ) | $ | (2 | ) | $ | (3 | ) | $ | | $ | (1 | ) | $ | (6 | ) | |||||||||||
Adjustment for net investment gains (losses) attributable to noncontrolling interests |
2 | 1 | | 3 | | 2 | | 1 | 3 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net investment (gains) losses, net |
$ | (2 | ) | $ | (1 | ) | $ | | $ | (3 | ) | $ | (2 | ) | $ | (1 | ) | $ | | $ | | $ | (3 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) | For the three months ended September 30, 2015, (gains) losses on early extinguishment of debt were adjusted by $1 million for the portion attributable to noncontrolling interests. |
(3) | Net operating income for the Australian platform adjusted for foreign exchange as compared to the prior year period was $13 million and $51 million for the three and nine months ended September 30, 2016, respectively. |
(4) | New insurance written for the Australian platform adjusted for foreign exchange as compared to the prior year period was $4,600 million and $15,500 million for the three and nine months ended September 30, 2016, respectively. |
29
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Selected Key Performance MeasuresAustralia Mortgage Insurance Segment
(amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
Net Premiums Written |
$ | 57 | $ | 65 | $ | 47 | $ | 169 | $ | 55 | $ | 79 | $ | 107 | $ | 87 | $ | 328 | ||||||||||||||||||
Loss Ratio(1),(2) |
42 | % | 36 | % | 26 | % | 35 | % | 17 | % | 29 | % | 28 | % | 15 | % | 23 | % | ||||||||||||||||||
Expense Ratio (Net Earned Premiums)(3) |
31 | % | 33 | % | 27 | % | 31 | % | 31 | % | 34 | % | 33 | % | 30 | % | 32 | % | ||||||||||||||||||
Expense Ratio (Net Premiums Written)(4) |
48 | % | 44 | % | 47 | % | 46 | % | 49 | % | 40 | % | 28 | % | 31 | % | 35 | % | ||||||||||||||||||
Primary Insurance In-Force |
$ | 247,900 | $ | 241,100 | $ | 246,800 | $ | 233,600 | $ | 224,100 | $ | 243,800 | $ | 240,900 | ||||||||||||||||||||||
Primary Risk In-Force(5) |
||||||||||||||||||||||||||||||||||||
Flow |
$ | 80,400 | $ | 78,300 | $ | 80,300 | $ | 76,000 | $ | 72,900 | $ | 79,100 | $ | 78,600 | ||||||||||||||||||||||
Bulk |
5,900 | 5,700 | 5,700 | 5,500 | 5,500 | 6,200 | 5,700 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total |
$ | 86,300 | $ | 84,000 | $ | 86,000 | $ | 81,500 | $ | 78,400 | $ | 85,300 | $ | 84,300 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
September 30, 2016 | June 30, 2016 | |||||||||||||||||||||||||||||||||||
Risk In-Force by Loan-To-Value Ratio(6) |
Primary | Flow | Bulk | Primary | Flow | Bulk | ||||||||||||||||||||||||||||||
95.01% and above |
$ | 14,933 | $ | 14,933 | $ | | $ | 14,812 | $ | 14,812 | $ | | ||||||||||||||||||||||||
90.01% to 95.00% |
22,670 | 22,664 | 6 | 21,843 | 21,837 | 6 | ||||||||||||||||||||||||||||||
80.01% to 90.00% |
23,153 | 23,087 | 66 | 22,356 | 22,291 | 65 | ||||||||||||||||||||||||||||||
80.00% and below |
25,536 | 19,743 | 5,793 | 25,037 | 19,368 | 5,669 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total |
$ | 86,292 | $ | 80,427 | $ | 5,865 | $ | 84,048 | $ | 78,308 | $ | 5,740 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The loss and expense ratios included above were calculated using whole dollars and may be different than the ratios calculated using the rounded numbers included herein.
Amounts may not total due to rounding.
(1) | The ratio of incurred losses and loss adjustment expenses to net earned premiums. |
(2) | During the third quarter of 2015, the company increased reserves $9 million mainly related to the estimate of the period of time it takes for a delinquent loan to be reported and increased net earned premiums $8 million from refinements to premium recognition factors. These adjustments unfavorably impacted the loss ratio by seven percentage points for the three months ended September 30, 2015. During the first quarter of 2015, the company accrued a $7 million pre-tax receivable for expected recoveries relating to paid claims reflecting its experience of successful borrower recovery activity, which favorably impacted the loss ratio by nine percentage points for the three months ended March 31, 2015. |
(3) | The ratio of an insurers general expenses to net earned premiums. In the business, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles. The debt early redemption payment of $2 million in the third quarter of 2015 unfavorably impacted this expense ratio by two percentage points for the three months ended September 30, 2015. |
(4) | The ratio of an insurers general expenses to net premiums written. In the business, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles. The debt early redemption payment of $2 million in the third quarter of 2015 unfavorably impacted this expense ratio by two percentage points for the three months ended September 30, 2015. |
(5) | The business currently provides 100% coverage on the majority of the loans the company insures. For the purpose of representing the risk in-force, Australia 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 that represents the highest expected average per-claim payment for any one underwriting year over the life of the business. This factor was 35% for all periods presented. Australia also has certain risk share arrangements where it provides pro-rata coverage of certain loans rather than 100% coverage. As a result, for loans with these risk share arrangements, the applicable pro-rata coverage amount provided is used when applying the factor. |
(6) | Loan amount in loan-to-value ratio calculation includes capitalized premiums, where applicable. |
30
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Selected Key Performance MeasuresAustralia Mortgage Insurance Segment
(dollar amounts in millions)
Primary Insurance |
September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | |||||||||||||||||||
Insured loans in-force |
1,470,302 | 1,477,826 | 1,479,544 | 1,478,434 | 1,479,676 | |||||||||||||||||||
Insured delinquent loans |
6,844 | 6,413 | 5,889 | 5,552 | 5,804 | |||||||||||||||||||
Insured delinquency rate |
0.47 | % | 0.43 | % | 0.40 | % | 0.38 | % | 0.39 | % | ||||||||||||||
Flow loans in-force |
1,358,286 | 1,364,756 | 1,366,914 | 1,364,628 | 1,364,537 | |||||||||||||||||||
Flow delinquent loans |
6,574 | 6,143 | 5,633 | 5,317 | 5,545 | |||||||||||||||||||
Flow delinquency rate |
0.48 | % | 0.45 | % | 0.41 | % | 0.39 | % | 0.41 | % | ||||||||||||||
Bulk loans in-force |
112,016 | 113,070 | 112,630 | 113,806 | 115,139 | |||||||||||||||||||
Bulk delinquent loans |
270 | 270 | 256 | 235 | 259 | |||||||||||||||||||
Bulk delinquency rate |
0.24 | % | 0.24 | % | 0.23 | % | 0.21 | % | 0.22 | % | ||||||||||||||
Loss Metrics |
September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | |||||||||||||||||||
Beginning Reserves |
$ | 190 | $ | 181 | $ | 165 | $ | 156 | $ | 160 | ||||||||||||||
Paid claims(1) |
(18 | ) | (17 | ) | (13 | ) | (14 | ) | (16 | ) | ||||||||||||||
Increase in reserves |
37 | 31 | 20 | 17 | 27 | |||||||||||||||||||
Impact of changes in foreign exchange rates |
6 | (5 | ) | 9 | 6 | (15 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Ending Reserves |
$ | 215 | $ | 190 | $ | 181 | $ | 165 | $ | 156 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | ||||||||||||||||||||||
State and Territory |
% of Primary Risk In-Force |
Primary Delinquency Rate |
% of Primary Risk In-Force |
Primary Delinquency Rate |
% of Primary Risk In-Force |
Primary Delinquency Rate |
||||||||||||||||||
New South Wales |
28 | % | 0.32 | % | 29 | % | 0.30 | % | 29 | % | 0.30% | |||||||||||||
Queensland |
23 | 0.67 | % | 23 | 0.62 | % | 23 | 0.57% | ||||||||||||||||
Victoria |
23 | 0.39 | % | 23 | 0.37 | % | 23 | 0.35% | ||||||||||||||||
Western Australia |
12 | 0.69 | % | 11 | 0.61 | % | 11 | 0.45% | ||||||||||||||||
South Australia |
6 | 0.62 | % | 6 | 0.59 | % | 6 | 0.50% | ||||||||||||||||
Australian Capital Territory |
3 | 0.20 | % | 3 | 0.19 | % | 3 | 0.15% | ||||||||||||||||
Tasmania |
2 | 0.37 | % | 2 | 0.36 | % | 2 | 0.31% | ||||||||||||||||
New Zealand |
2 | 0.10 | % | 2 | 0.10 | % | 2 | 0.23% | ||||||||||||||||
Northern Territory |
1 | 0.33 | % | 1 | 0.27 | % | 1 | 0.21% | ||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Total |
100 | % | 0.47 | % | 100 | % | 0.43 | % | 100 | % | 0.39% | |||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
By Policy Year |
||||||||||||||||||||||||
2007 and prior |
34 | % | 0.31 | % | 35 | % | 0.31 | % | 36 | % | 0.31% | |||||||||||||
2008 |
6 | 1.07 | % | 6 | 1.01 | % | 7 | 0.93% | ||||||||||||||||
2009 |
7 | 0.93 | % | 7 | 0.84 | % | 8 | 0.75% | ||||||||||||||||
2010 |
5 | 0.59 | % | 6 | 0.55 | % | 6 | 0.44% | ||||||||||||||||
2011 |
6 | 0.66 | % | 6 | 0.58 | % | 6 | 0.46% | ||||||||||||||||
2012 |
8 | 0.72 | % | 8 | 0.64 | % | 9 | 0.51% | ||||||||||||||||
2013 |
9 | 0.62 | % | 9 | 0.54 | % | 10 | 0.37% | ||||||||||||||||
2014 |
10 | 0.45 | % | 10 | 0.36 | % | 11 | 0.16% | ||||||||||||||||
2015 |
9 | 0.17 | % | 9 | 0.11 | % | 7 | 0.01% | ||||||||||||||||
2016 |
6 | 0.01 | % | 4 | | % | | % | ||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Total |
100 | % | 0.47 | % | 100 | % | 0.43 | % | 100 | % | 0.39% | |||||||||||||
|
|
|
|
|
|
(1) | Paid claims exclude adjustments for expected recoveries related to loss reserves and prior paid claims. |
31
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Selected Key Performance MeasuresAustralia Mortgage Insurance Segment
(Australian dollar amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
Paid Claims(1) |
||||||||||||||||||||||||||||||||||||
Flow |
$ | 24 | $ | 23 | $ | 18 | $ | 65 | $ | 22 | $ | 21 | $ | 19 | $ | 17 | $ | 79 | ||||||||||||||||||
Bulk |
| | | | | | | 1 | 1 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total Paid Claims |
$ | 24 | $ | 23 | $ | 18 | $ | 65 | $ | 22 | $ | 21 | $ | 19 | $ | 18 | $ | 80 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Average Paid Claim (in thousands) |
$ | 73.3 | $ | 79.2 | $ | 65.8 | $ | 71.0 | $ | 65.9 | $ | 66.9 | $ | 62.5 | ||||||||||||||||||||||
Average Reserve Per Delinquency (in thousands) |
$ | 41.0 | $ | 39.9 | $ | 40.1 | $ | 40.7 | $ | 38.3 | $ | 35.2 | $ | 36.4 | ||||||||||||||||||||||
Loss Metrics |
||||||||||||||||||||||||||||||||||||
Beginning Reserves |
$ | 256 | $ | 236 | $ | 226 | $ | 222 | $ | 208 | $ | 196 | $ | 186 | ||||||||||||||||||||||
Paid claims(1) |
(24 | ) | (23 | ) | (18 | ) | (22 | ) | (21 | ) | (19 | ) | (18 | ) | ||||||||||||||||||||||
Increase in reserves |
49 | 43 | 28 | 26 | 35 | 31 | 28 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Ending Reserves |
$ | 281 | $ | 256 | $ | 236 | $ | 226 | $ | 222 | $ | 208 | $ | 196 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Loan Amount(2) |
||||||||||||||||||||||||||||||||||||
Over $550K |
15 | % | 15 | % | 15 | % | 15 | % | 15 | % | 14 | % | 13 | % | ||||||||||||||||||||||
$400K to $550K |
20 | 20 | 20 | 19 | 19 | 19 | 19 | |||||||||||||||||||||||||||||
$250K to $400K |
36 | 36 | 36 | 36 | 36 | 36 | 37 | |||||||||||||||||||||||||||||
$100K to $250K |
24 | 24 | 24 | 25 | 25 | 25 | 26 | |||||||||||||||||||||||||||||
$100K or Less |
5 | 5 | 5 | 5 | 5 | 6 | 5 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total |
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Average Primary Loan Size (in thousands) |
$ | 220 | $ | 219 | $ | 218 | $ | 217 | $ | 216 | $ | 213 | $ | 211 |
All amounts presented in Australian dollars.
(1) | Paid claims exclude adjustments for expected recoveries related to loss reserves and prior paid claims. |
(2) | The percentages in this table are based on the amount of primary insurance in-force in each loan band as a percentage of total insurance in-force. |
32
U.S. Life Insurance Segment
33
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Net Operating Income (Loss)U.S. Life Insurance Segment
(amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
REVENUES: |
||||||||||||||||||||||||||||||||||||
Premiums |
$ | 725 | $ | 756 | $ | 436 | $ | 1,917 | $ | 797 | $ | 784 | $ | 769 | $ | 778 | $ | 3,128 | ||||||||||||||||||
Net investment income |
695 | 670 | 684 | 2,049 | 673 | 680 | 677 | 671 | 2,701 | |||||||||||||||||||||||||||
Net investment gains (losses) |
21 | 114 | (16 | ) | 119 | 17 | (16 | ) | (7 | ) | (4 | ) | (10 | ) | ||||||||||||||||||||||
Policy fees and other income |
175 | 180 | 177 | 532 | 187 | 177 | 182 | 180 | 726 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total revenues |
1,616 | 1,720 | 1,281 | 4,617 | 1,674 | 1,625 | 1,621 | 1,625 | 6,545 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
BENEFITS AND EXPENSES: |
||||||||||||||||||||||||||||||||||||
Benefits and other changes in policy reserves |
1,556 | 1,089 | 758 | 3,403 | 1,324 | 1,155 | 1,122 | 1,091 | 4,692 | |||||||||||||||||||||||||||
Interest credited |
140 | 143 | 144 | 427 | 148 | 148 | 150 | 150 | 596 | |||||||||||||||||||||||||||
Acquisition and operating expenses, net of deferrals |
149 | 199 | 165 | 513 | 178 | 176 | 167 | 163 | 684 | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs and intangibles |
69 | 84 | 78 | 231 | 194 | 530 | 75 | 73 | 872 | |||||||||||||||||||||||||||
Interest expense |
2 | 5 | 28 | 35 | 23 | 22 | 22 | 25 | 92 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total benefits and expenses |
1,916 | 1,520 | 1,173 | 4,609 | 1,867 | 2,031 | 1,536 | 1,502 | 6,936 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
(300 | ) | 200 | 108 | 8 | (193 | ) | (406 | ) | 85 | 123 | (391 | ) | |||||||||||||||||||||||
Provision (benefit) for income taxes |
(106 | ) | 70 | 39 | 3 | (68 | ) | (144 | ) | 31 | 43 | (138 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS |
(194 | ) | 130 | 69 | 5 | (125 | ) | (262 | ) | 54 | 80 | (253 | ) | |||||||||||||||||||||||
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS: |
||||||||||||||||||||||||||||||||||||
Net investment (gains) losses, net(1) |
(21 | ) | (119 | ) | 11 | (129 | ) | (20 | ) | 10 | 4 | 1 | (5 | ) | ||||||||||||||||||||||
(Gains) losses on sale of businesses |
| (1 | ) | | (1 | ) | | | | | | |||||||||||||||||||||||||
(Gains) losses from life block transactions |
| | 9 | 9 | | 455 | | | 455 | |||||||||||||||||||||||||||
Expenses related to restructuring |
1 | 3 | 15 | 19 | 3 | | 2 | | 5 | |||||||||||||||||||||||||||
Taxes on adjustments |
7 | 42 | (13 | ) | 36 | 7 | (163 | ) | (3 | ) | | (159 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NET OPERATING INCOME (LOSS) |
$ | (207 | ) | $ | 55 | $ | 91 | $ | (61 | ) | $ | (135 | ) | $ | 40 | $ | 57 | $ | 81 | $ | 43 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
(1) | Net investment (gains) losses were adjusted for DAC and other intangible amortization and certain benefit reserves as reconciled below: |
Net investment (gains) losses, gross |
$ | (21 | ) | $ | (114 | ) | $ | 16 | $ | (119 | ) | $ | (17 | ) | $ | 16 | $ | 7 | $ | 4 | $ | 10 | ||||||||||||||
Adjustment for DAC and other intangible amortization and certain benefit reserves |
| (5 | ) | (5 | ) | (10 | ) | (3 | ) | (6 | ) | (3 | ) | (3 | ) | (15 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net investment (gains) losses, net |
$ | (21 | ) | $ | (119 | ) | $ | 11 | $ | (129 | ) | $ | (20 | ) | $ | 10 | $ | 4 | $ | 1 | $ | (5 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Net Operating Income (Loss) and SalesU.S. Life Insurance SegmentLong-Term Care Insurance
(amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
REVENUES: |
||||||||||||||||||||||||||||||||||||
Premiums |
$ | 610 | $ | 636 | $ | 618 | $ | 1,864 | $ | 633 | $ | 618 | $ | 597 | $ | 589 | $ | 2,437 | ||||||||||||||||||
Net investment income |
353 | 344 | 329 | 1,026 | 325 | 327 | 320 | 313 | 1,285 | |||||||||||||||||||||||||||
Net investment gains (losses) |
17 | 139 | 4 | 160 | 24 | 4 | (3 | ) | 3 | 28 | ||||||||||||||||||||||||||
Policy fees and other income |
| | 1 | 1 | 1 | | 1 | | 2 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total revenues |
980 | 1,119 | 952 | 3,051 | 983 | 949 | 915 | 905 | 3,752 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
BENEFITS AND EXPENSES: |
||||||||||||||||||||||||||||||||||||
Benefits and other changes in policy reserves |
1,262 | 806 | 776 | 2,844 | 797 | 825 | 780 | 766 | 3,168 | |||||||||||||||||||||||||||
Interest credited |
| | | | | | | | | |||||||||||||||||||||||||||
Acquisition and operating expenses, net of deferrals |
95 | 93 | 95 | 283 | 110 | 112 | 98 | 95 | 415 | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs and intangibles |
25 | 26 | 26 | 77 | 25 | 24 | 24 | 26 | 99 | |||||||||||||||||||||||||||
Interest expense |
| | | | | | | | | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total benefits and expenses |
1,382 | 925 | 897 | 3,204 | 932 | 961 | 902 | 887 | 3,682 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
(402 | ) | 194 | 55 | (153 | ) | 51 | (12 | ) | 13 | 18 | 70 | ||||||||||||||||||||||||
Provision (benefit) for income taxes |
(142 | ) | 68 | 20 | (54 | ) | 19 | (5 | ) | 5 | 6 | 25 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS |
(260 | ) | 126 | 35 | (99 | ) | 32 | (7 | ) | 8 | 12 | 45 | ||||||||||||||||||||||||
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS: |
||||||||||||||||||||||||||||||||||||
Net investment (gains) losses |
(17 | ) | (139 | ) | (4 | ) | (160 | ) | (24 | ) | (4 | ) | 3 | (3 | ) | (28 | ) | |||||||||||||||||||
Expenses related to restructuring |
1 | 2 | 3 | 6 | 2 | | 1 | | 3 | |||||||||||||||||||||||||||
Taxes on adjustments |
6 | 48 | | 54 | 9 | 1 | (2 | ) | 1 | 9 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NET OPERATING INCOME (LOSS) |
$ | (270 | ) | $ | 37 | $ | 34 | $ | (199 | ) | $ | 19 | $ | (10 | ) | $ | 10 | $ | 10 | $ | 29 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
SALES: |
||||||||||||||||||||||||||||||||||||
Individual Long-Term Care Insurance |
$ | 2 | $ | 4 | $ | 5 | $ | 11 | $ | 8 | $ | 7 | $ | 8 | $ | 10 | $ | 33 | ||||||||||||||||||
Group Long-Term Care Insurance |
3 | 2 | 2 | 7 | 2 | 1 | 1 | 1 | 5 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total Sales |
$ | 5 | $ | 6 | $ | 7 | $ | 18 | $ | 10 | $ | 8 | $ | 9 | $ | 11 | $ | 38 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
RATIOS: |
||||||||||||||||||||||||||||||||||||
Loss Ratio(1) |
145.5 | % | 70.1 | % | 67.6 | % | 93.9 | % | 72.9 | % | 76.4 | % | 72.6 | % | 72.4 | % | 73.6 | % | ||||||||||||||||||
Gross Benefits Ratio(2) |
207.0 | % | 126.7 | % | 125.5 | % | 152.6 | % | 125.9 | % | 133.5 | % | 130.5 | % | 130.2 | % | 130.0 | % |
(1) | The loss ratio was calculated by dividing benefits and other changes in policy reserves less tabular interest on reserves less loss adjustment expenses by net earned premiums. |
(2) | The gross benefits ratio was calculated by dividing benefits and other changes in policy reserves by net earned premiums. |
35
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Net Operating Income (Loss) and SalesU.S. Life Insurance SegmentLife Insurance
(amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
REVENUES: |
||||||||||||||||||||||||||||||||||||
Premiums(1) |
$ | 115 | $ | 120 | $ | (185 | ) | $ | 50 | $ | 160 | $ | 162 | $ | 169 | $ | 179 | $ | 670 | |||||||||||||||||
Net investment income |
128 | 117 | 133 | 378 | 125 | 126 | 127 | 127 | 505 | |||||||||||||||||||||||||||
Net investment gains (losses) |
4 | (1 | ) | 2 | 5 | 15 | (8 | ) | 3 | 3 | 13 | |||||||||||||||||||||||||
Policy fees and other income |
171 | 176 | 173 | 520 | 183 | 175 | 178 | 178 | 714 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total revenues |
418 | 412 | 123 | 953 | 483 | 455 | 477 | 487 | 1,902 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
BENEFITS AND EXPENSES: |
||||||||||||||||||||||||||||||||||||
Benefits and other changes in policy reserves(1) |
216 | 231 | (87 | ) | 360 | 446 | 248 | 266 | 250 | 1,210 | ||||||||||||||||||||||||||
Interest credited |
64 | 65 | 64 | 193 | 68 | 66 | 68 | 66 | 268 | |||||||||||||||||||||||||||
Acquisition and operating expenses, net of deferrals |
31 | 39 | 51 | 121 | 50 | 48 | 52 | 51 | 201 | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs and intangibles |
27 | 27 | 33 | 87 | 150 | 487 | 33 | 30 | 700 | |||||||||||||||||||||||||||
Interest expense |
2 | 5 | 28 | 35 | 23 | 22 | 22 | 25 | 92 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total benefits and expenses |
340 | 367 | 89 | 796 | 737 | 871 | 441 | 422 | 2,471 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
78 | 45 | 34 | 157 | (254 | ) | (416 | ) | 36 | 65 | (569 | ) | ||||||||||||||||||||||||
Provision (benefit) for income taxes |
28 | 16 | 12 | 56 | (90 | ) | (147 | ) | 13 | 23 | (201 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS |
50 | 29 | 22 | 101 | (164 | ) | (269 | ) | 23 | 42 | (368 | ) | ||||||||||||||||||||||||
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS: |
||||||||||||||||||||||||||||||||||||
Net investment (gains) losses |
(4 | ) | 1 | (2 | ) | (5 | ) | (15 | ) | 8 | (3 | ) | (3 | ) | (13 | ) | ||||||||||||||||||||
(Gains) losses on sale of businesses |
| (1 | ) | | (1 | ) | | | | | | |||||||||||||||||||||||||
(Gains) losses from life block transactions |
| | 9 | 9 | | 455 | | | 455 | |||||||||||||||||||||||||||
Expenses related to restructuring |
| 2 | 8 | 10 | | | 1 | | 1 | |||||||||||||||||||||||||||
Taxes on adjustments |
2 | | (6 | ) | (4 | ) | 6 | (163 | ) | 1 | 1 | (155 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NET OPERATING INCOME (LOSS) |
$ | 48 | $ | 31 | $ | 31 | $ | 110 | $ | (173 | ) | $ | 31 | $ | 22 | $ | 40 | $ | (80 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
SALES: |
||||||||||||||||||||||||||||||||||||
Term Life |
$ | | $ | 2 | $ | 5 | $ | 7 | $ | 6 | $ | 7 | $ | 9 | $ | 9 | $ | 31 | ||||||||||||||||||
Universal Life |
1 | 1 | 2 | 4 | 3 | 2 | 4 | 4 | 13 | |||||||||||||||||||||||||||
Linked-Benefits |
| 1 | 2 | 3 | 1 | 3 | 2 | 4 | 10 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total Sales |
$ | 1 | $ | 4 | $ | 9 | $ | 14 | $ | 10 | $ | 12 | $ | 15 | $ | 17 | $ | 54 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
(1) | In January 2016, as part of a life block transaction, the company entered into a new reinsurance agreement to cede certain of its term life insurance policies. This new reinsurance agreement primarily reduced premiums by $326 million and reduced benefits and other changes in policy reserves by $331 million for the amounts initially ceded. |
36
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Net Operating Income (Loss) and SalesU.S. Life Insurance SegmentFixed Annuities
(amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
REVENUES: |
||||||||||||||||||||||||||||||||||||
Premiums |
$ | | $ | | $ | 3 | $ | 3 | $ | 4 | $ | 4 | $ | 3 | $ | 10 | $ | 21 | ||||||||||||||||||
Net investment income |
214 | 209 | 222 | 645 | 223 | 227 | 230 | 231 | 911 | |||||||||||||||||||||||||||
Net investment gains (losses) |
| (24 | ) | (22 | ) | (46 | ) | (22 | ) | (12 | ) | (7 | ) | (10 | ) | (51 | ) | |||||||||||||||||||
Policy fees and other income |
4 | 4 | 3 | 11 | 3 | 2 | 3 | 2 | 10 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total revenues |
218 | 189 | 206 | 613 | 208 | 221 | 229 | 233 | 891 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
BENEFITS AND EXPENSES: |
||||||||||||||||||||||||||||||||||||
Benefits and other changes in policy reserves(1) |
78 | 52 | 69 | 199 | 81 | 82 | 76 | 75 | 314 | |||||||||||||||||||||||||||
Interest credited |
76 | 78 | 80 | 234 | 80 | 82 | 82 | 84 | 328 | |||||||||||||||||||||||||||
Acquisition and operating expenses, net of deferrals(2) |
23 | 67 | 19 | 109 | 18 | 16 | 17 | 17 | 68 | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs and intangibles |
17 | 31 | 19 | 67 | 19 | 19 | 18 | 17 | 73 | |||||||||||||||||||||||||||
Interest expense |
| | | | | | | | | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total benefits and expenses |
194 | 228 | 187 | 609 | 198 | 199 | 193 | 193 | 783 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
24 | (39 | ) | 19 | 4 | 10 | 22 | 36 | 40 | 108 | ||||||||||||||||||||||||||
Provision (benfit) for income taxes |
8 | (14 | ) | 7 | 1 | 3 | 8 | 13 | 14 | 38 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS |
16 | (25 | ) | 12 | 3 | 7 | 14 | 23 | 26 | 70 | ||||||||||||||||||||||||||
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS: |
||||||||||||||||||||||||||||||||||||
Net investment (gains) losses, net(3) |
| 19 | 17 | 36 | 19 | 6 | 4 | 7 | 36 | |||||||||||||||||||||||||||
Expenses related to restructuring |
| (1 | ) | 4 | 3 | 1 | | | | 1 | ||||||||||||||||||||||||||
Taxes on adjustments |
(1 | ) | (6 | ) | (7 | ) | (14 | ) | (8 | ) | (1 | ) | (2 | ) | (2 | ) | (13 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NET OPERATING INCOME (LOSS) |
$ | 15 | $ | (13 | ) | $ | 26 | $ | 28 | $ | 19 | $ | 19 | $ | 25 | $ | 31 | $ | 94 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||
SALES: |
||||||||||||||||||||||||||||||||||||
Single Premium Deferred Annuities |
$ | 1 | $ | 8 | $ | 159 | $ | 168 | $ | 297 | $ | 248 | $ | 211 | $ | 306 | $ | 1,062 | ||||||||||||||||||
Single Premium Immediate Annuities |
| 1 | 9 | 10 | 17 | 12 | 13 | 20 | 62 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total Sales |
$ | 1 | $ | 9 | $ | 168 | $ | 178 | $ | 314 | $ | 260 | $ | 224 | $ | 326 | $ | 1,124 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
(1) | In the second quarter of 2016, benefits and other changes in policy reserves included $45 million of lower assumed reinsurance in connection with the recapture by a third party. |
(2) | In the second quarter of 2016, acquisition and operating expenses, net of deferrals, included a $55 million ceding commission paid in connection with the recapture by a third party. |
(3) | Net investment (gains) losses were adjusted for DAC and other intangible amortization and certain benefit reserves as reconciled below: |
Net investment (gains) losses, gross |
$ | | $ | 24 | $ | 22 | $ | 46 | $ | 22 | $ | 12 | $ | 7 | $ | 10 | $ | 51 | ||||||||||||||||||
Adjustment for DAC and other intangible amortization and certain benefit reserves |
| (5 | ) | (5 | ) | (10 | ) | (3 | ) | (6 | ) | (3 | ) | (3 | ) | (15 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net investment (gains) losses, net |
$ | | $ | 19 | $ | 17 | $ | 36 | $ | 19 | $ | 6 | $ | 4 | $ | 7 | $ | 36 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
Runoff Segment
38
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Net Operating Income (Loss)Runoff Segment
(amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
REVENUES: |
||||||||||||||||||||||||||||||||||||
Premiums |
$ | | $ | | $ | | $ | | $ | | $ | | $ | 1 | $ | | $ | 1 | ||||||||||||||||||
Net investment income |
37 | 36 | 35 | 108 | 35 | 32 | 40 | 31 | 138 | |||||||||||||||||||||||||||
Net investment gains (losses) |
4 | (13 | ) | (8 | ) | (17 | ) | (30 | ) | (25 | ) | (8 | ) | (6 | ) | (69 | ) | |||||||||||||||||||
Policy fees and other income |
43 | 42 | 42 | 127 | 45 | 46 | 49 | 49 | 189 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total revenues |
84 | 65 | 69 | 218 | 50 | 53 | 82 | 74 | 259 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
BENEFITS AND EXPENSES: |
||||||||||||||||||||||||||||||||||||
Benefits and other changes in policy reserves |
2 | 9 | 15 | 26 | 8 | 18 | 11 | 7 | 44 | |||||||||||||||||||||||||||
Interest credited |
33 | 30 | 33 | 96 | 32 | 31 | 31 | 30 | 124 | |||||||||||||||||||||||||||
Acquisition and operating expenses, net of deferrals |
20 | 18 | 16 | 54 | 19 | 17 | 21 | 19 | 76 | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs and intangibles |
7 | 12 | 6 | 25 | (3 | ) | 17 | 10 | 5 | 29 | ||||||||||||||||||||||||||
Interest expense |
1 | | | 1 | | | 1 | | 1 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total benefits and expenses |
63 | 69 | 70 | 202 | 56 | 83 | 74 | 61 | 274 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
21 | (4 | ) | (1 | ) | 16 | (6 | ) | (30 | ) | 8 | 13 | (15 | ) | ||||||||||||||||||||||
Provision (benefit) for income taxes |
6 | (2 | ) | (2 | ) | 2 | (3 | ) | (12 | ) | 2 | 3 | (10 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS |
15 | (2 | ) | 1 | 14 | (3 | ) | (18 | ) | 6 | 10 | (5 | ) | |||||||||||||||||||||||
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS: |
||||||||||||||||||||||||||||||||||||
Net investment (gains) losses, net(1) |
(4 | ) | 12 | 4 | 12 | 22 | 21 | 5 | 1 | 49 | ||||||||||||||||||||||||||
Taxes on adjustments |
1 | (4 | ) | (1 | ) | (4 | ) | (8 | ) | (7 | ) | (2 | ) | | (17 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NET OPERATING INCOME (LOSS) |
$ | 12 | $ | 6 | $ | 4 | $ | 22 | $ | 11 | $ | (4 | ) | $ | 9 | $ | 11 | $ | 27 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
(1) | Net investment (gains) losses were adjusted for DAC and other intangible amortization and certain benefit reserves as reconciled below: |
Net investment (gains) losses, gross |
$ | (4 | ) | $ | 13 | $ | 8 | $ | 17 | $ | 30 | $ | 25 | $ | 8 | $ | 6 | $ | 69 | |||||||||||||||||
Adjustment for DAC and other intangible amortization and certain benefit reserves |
| (1 | ) | (4 | ) | (5 | ) | (8 | ) | (4 | ) | (3 | ) | (5 | ) | (20 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net investment (gains) losses, net |
$ | (4 | ) | $ | 12 | $ | 4 | $ | 12 | $ | 22 | $ | 21 | $ | 5 | $ | 1 | $ | 49 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
Corporate and Other
40
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Net Operating LossCorporate and Other(1)
(amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
REVENUES: |
||||||||||||||||||||||||||||||||||||
Premiums |
$ | 2 | $ | 3 | $ | 6 | $ | 11 | $ | 6 | $ | 7 | $ | 5 | $ | 7 | $ | 25 | ||||||||||||||||||
Net investment income |
1 | 1 | 2 | 4 | 3 | (1 | ) | 1 | (6 | ) | (3 | ) | ||||||||||||||||||||||||
Net investment gains (losses)(2) |
(9 | ) | (65 | ) | (14 | ) | (88 | ) | 6 | 9 | 3 | 11 | 29 | |||||||||||||||||||||||
Policy fees and other income(3) |
(1 | ) | 76 | 1 | 76 | | | (10 | ) | | (10 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total revenues |
(7 | ) | 15 | (5 | ) | 3 | 15 | 15 | (1 | ) | 12 | 41 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
BENEFITS AND EXPENSES: |
||||||||||||||||||||||||||||||||||||
Benefits and other changes in policy reserves |
1 | 1 | 2 | 4 | 3 | 3 | 3 | 5 | 14 | |||||||||||||||||||||||||||
Acquisition and operating expenses, net of deferrals(4) |
11 | 25 | 137 | 173 | 154 | 40 | 22 | 14 | 230 | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs and intangibles |
1 | | | 1 | | | | 1 | 1 | |||||||||||||||||||||||||||
Interest expense |
67 | 68 | 70 | 205 | 74 | 75 | 74 | 75 | 298 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total benefits and expenses |
80 | 94 | 209 | 383 | 231 | 118 | 99 | 95 | 543 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
(87 | ) | (79 | ) | (214 | ) | (380 | ) | (216 | ) | (103 | ) | (100 | ) | (83 | ) | (502 | ) | ||||||||||||||||||
Provision (benefit) for income taxes |
246 | (31 | ) | (96 | ) | 119 | (28 | ) | (33 | ) | (39 | ) | (30 | ) | (130 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
LOSS FROM CONTINUING OPERATIONS |
(333 | ) | (48 | ) | (118 | ) | (499 | ) | (188 | ) | (70 | ) | (61 | ) | (53 | ) | (372 | ) | ||||||||||||||||||
ADJUSTMENTS TO LOSS FROM CONTINUING OPERATIONS: |
||||||||||||||||||||||||||||||||||||
Net investment (gains) losses |
9 | 65 | 14 | 88 | (6 | ) | (9 | ) | (3 | ) | (11 | ) | (29 | ) | ||||||||||||||||||||||
(Gains) losses on sale of businesses |
| (9 | ) | 7 | (2 | ) | 140 | | | | 140 | |||||||||||||||||||||||||
(Gains) losses on early extinguishment of debt |
| (64 | ) | 16 | (48 | ) | | 1 | | | 1 | |||||||||||||||||||||||||
Expenses related to restructuring |
| 2 | | 2 | 2 | | 1 | | 3 | |||||||||||||||||||||||||||
Fees associated with bond consent solicitation |
| | 18 | 18 | | | | | | |||||||||||||||||||||||||||
Taxes on adjustments |
(3 | ) | 2 | (42 | ) | (43 | ) | (6 | ) | 10 | 1 | 4 | 9 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NET OPERATING LOSS |
$ | (327 | ) | $ | (52 | ) | $ | (105 | ) | $ | (484 | ) | $ | (58 | ) | $ | (68 | ) | $ | (62 | ) | $ | (60 | ) | $ | (248 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
(1) | Includes inter-segment eliminations and the results of other businesses that are managed outside the operating segments, including certain smaller international mortgage insurance businesses. |
(2) | In the second quarter of 2016, net investment gains (losses) included a $64 million loss from the write-off of residual interest in certain policy loan securitization entities. |
(3) | In the second quarter of 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, which was included in policy fees and other income. |
(4) | In the first quarter of 2016, acquisition and operating expenses, net of deferrals, included the following: $83 million of legal fees and expenses, including $69 million related to the settlement of the long-term care insurance class action lawsuit; $20 million of make-whole expense on the early redemption of Genworth Holdings 2016 senior notes in January 2016; $18 million associated with Genworth Holdings bond consent solicitation for broker, advisor and investment banking fees; and an additional estimated loss of $7 million related to the planned sale of the mortgage insurance business in Europe. In the fourth quarter of 2015, acquisition and operating expenses, net of deferrals, included an estimated loss of $140 million related to the planned sale of the mortgage insurance business in Europe. |
41
42
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
(amounts in millions)
September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | ||||||||||||||||||||||||||||||||||||||
Carrying Amount |
% of Total |
Carrying Amount |
% of Total |
Carrying Amount |
% of Total |
Carrying Amount |
% of Total |
Carrying Amount |
% of Total |
|||||||||||||||||||||||||||||||||
Composition of Investment Portfolio |
||||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities: |
||||||||||||||||||||||||||||||||||||||||||
Investment grade: |
||||||||||||||||||||||||||||||||||||||||||
Public fixed maturity securities |
$ | 35,544 | 45 | % | $ | 35,003 | 45 | % | $ | 33,362 | 44 | % | $ | 31,969 | 43 | % | $ | 33,541 | 44 | % | ||||||||||||||||||||||
Private fixed maturity securities |
11,669 | 15 | 11,370 | 15 | 10,867 | 14 | 10,822 | 15 | 10,908 | 15 | ||||||||||||||||||||||||||||||||
Residential mortgage-backed securities(1) |
4,742 | 6 | 4,981 | 6 | 5,041 | 7 | 4,998 | 7 | 5,008 | 7 | ||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities |
3,148 | 4 | 2,940 | 4 | 2,633 | 4 | 2,475 | 3 | 2,492 | 3 | ||||||||||||||||||||||||||||||||
Other asset-backed securities |
3,310 | 4 | 3,279 | 4 | 3,287 | 4 | 3,253 | 4 | 3,904 | 5 | ||||||||||||||||||||||||||||||||
State and political subdivisions |
2,823 | 4 | 2,751 | 4 | 2,517 | 3 | 2,428 | 3 | 2,447 | 3 | ||||||||||||||||||||||||||||||||
Non-investment grade fixed maturity securities |
2,544 | 3 | 2,504 | 3 | 2,583 | 3 | 2,252 | 3 | 2,346 | 3 | ||||||||||||||||||||||||||||||||
Equity securities: |
||||||||||||||||||||||||||||||||||||||||||
Common stocks and mutual funds |
175 | | 140 | | 108 | | 37 | | 37 | | ||||||||||||||||||||||||||||||||
Preferred stocks |
415 | 1 | 341 | 1 | 323 | | 273 | | 236 | | ||||||||||||||||||||||||||||||||
Commercial mortgage loans |
6,017 | 8 | 6,121 | 8 | 6,179 | 8 | 6,170 | 8 | 6,133 | 8 | ||||||||||||||||||||||||||||||||
Restricted commercial mortgage loans related to securitization entities |
134 | | 141 | | 155 | | 161 | | 175 | | ||||||||||||||||||||||||||||||||
Policy loans |
1,751 | 2 | 1,754 | 2 | 1,565 | 2 | 1,568 | 2 | 1,567 | 2 | ||||||||||||||||||||||||||||||||
Cash, cash equivalents and short-term investments |
3,420 | 4 | 3,730 | 5 | 4,217 | 6 | 6,162 | 8 | 4,003 | 6 | ||||||||||||||||||||||||||||||||
Securities lending |
417 | 1 | 328 | | 415 | 1 | 347 | | 367 | | ||||||||||||||||||||||||||||||||
Other invested assets: |
Limited partnerships |
188 | | 181 | | 177 | | 188 | | 195 | | |||||||||||||||||||||||||||||||
Derivatives: |
||||||||||||||||||||||||||||||||||||||||||
Long-term care (LTC) forward starting swapcash flow |
735 | 1 | 627 | 1 | 1,087 | 1 | 629 | 1 | 768 | 1 | ||||||||||||||||||||||||||||||||
Other cash flow |
6 | | 7 | | 7 | | 8 | | 8 | | ||||||||||||||||||||||||||||||||
Equity index optionsnon-qualified |
61 | | 57 | | 36 | | 30 | | 15 | | ||||||||||||||||||||||||||||||||
Other non-qualified |
529 | 1 | 578 | 1 | 537 | 1 | 445 | 1 | 534 | 1 | ||||||||||||||||||||||||||||||||
Trading portfolio |
384 | 1 | 441 | 1 | 471 | 1 | 447 | 1 | 458 | 1 | ||||||||||||||||||||||||||||||||
Restricted other invested assets related to securitization entities |
312 | | 312 | | 422 | 1 | 413 | 1 | 412 | 1 | ||||||||||||||||||||||||||||||||
Other |
14 | | 18 | | 19 | | 18 | | 51 | | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total invested assets and cash |
$ | 78,338 | 100 | % | $ | 77,604 | 100 | % | $ | 76,008 | 100 | % | $ | 75,093 | 100 | % | $ | 75,605 | 100 | % | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Public Fixed Maturity SecuritiesCredit Quality: |
||||||||||||||||||||||||||||||||||||||||||
NRSRO(2) Designation |
||||||||||||||||||||||||||||||||||||||||||
AAA |
$ | 15,608 | 33 | % | $ | 15,714 | 33 | % | $ | 15,385 | 34 | % | $ | 14,785 | 34 | % | $ | 15,057 | 33 | % | ||||||||||||||||||||||
AA |
4,536 | 9 | 4,455 | 10 | 4,174 | 10 | 4,121 | 10 | 4,603 | 10 | ||||||||||||||||||||||||||||||||
A |
13,317 | 28 | 13,122 | 28 | 12,664 | 28 | 12,155 | 28 | 13,485 | 30 | ||||||||||||||||||||||||||||||||
BBB |
12,632 | 27 | 12,154 | 26 | 11,213 | 25 | 10,720 | 25 | 10,667 | 24 | ||||||||||||||||||||||||||||||||
BB |
1,464 | 3 | 1,440 | 3 | 1,464 | 3 | 1,200 | 3 | 1,234 | 3 | ||||||||||||||||||||||||||||||||
B |
145 | | 149 | | 141 | | 63 | | 50 | | ||||||||||||||||||||||||||||||||
CCC and lower |
53 | | 56 | | 77 | | 92 | | 95 | | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total public fixed maturity securities |
$ | 47,755 | 100 | % | $ | 47,090 | 100 | % | $ | 45,118 | 100 | % | $ | 43,136 | 100 | % | $ | 45,191 | 100 | % | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Private Fixed Maturity SecuritiesCredit Quality: |
||||||||||||||||||||||||||||||||||||||||||
NRSRO(2) Designation |
||||||||||||||||||||||||||||||||||||||||||
AAA |
$ | 1,731 | 11 | % | $ | 1,683 | 10 | % | $ | 1,614 | 10 | % | $ | 1,531 | 10 | % | $ | 1,725 | 11 | % | ||||||||||||||||||||||
AA |
2,071 | 13 | 2,013 | 13 | 1,923 | 13 | 1,899 | 13 | 1,966 | 13 | ||||||||||||||||||||||||||||||||
A |
4,937 | 31 | 4,864 | 31 | 4,725 | 31 | 4,731 | 31 | 4,737 | 31 | ||||||||||||||||||||||||||||||||
BBB |
6,404 | 40 | 6,319 | 40 | 6,009 | 40 | 6,003 | 40 | 6,060 | 39 | ||||||||||||||||||||||||||||||||
BB |
815 | 5 | 734 | 5 | 772 | 5 | 777 | 5 | 839 | 5 | ||||||||||||||||||||||||||||||||
B |
51 | | 102 | 1 | 104 | 1 | 104 | 1 | 114 | 1 | ||||||||||||||||||||||||||||||||
CCC and lower |
16 | | 23 | | 25 | | 16 | | 14 | | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total private fixed maturity securities |
$ | 16,025 | 100 | % | $ | 15,738 | 100 | % | $ | 15,172 | 100 | % | $ | 15,061 | 100 | % | $ | 15,455 | 100 | % | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
|
(1) | The company does not have any material exposure to residential mortgage-backed securities collateralized debt obligations (CDOs). |
(2) | Nationally Recognized Statistical Rating Organizations. |
43
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Fixed Maturity Securities Summary
(amounts in millions)
September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | ||||||||||||||||||||||||||||||||||||
Fair Value | % of Total |
Fair Value | % of Total |
Fair Value | % of Total |
Fair Value | % of Total |
Fair Value | % of Total |
|||||||||||||||||||||||||||||||
Fixed Maturity SecuritiesSecurity Sector: |
||||||||||||||||||||||||||||||||||||||||
U.S. government, agencies and government-sponsored enterprises |
$ | 6,703 | 11 | % | $ | 6,806 | 11 | % | $ | 6,524 | 11 | % | $ | 6,203 | 11 | % | $ | 5,913 | 10 | % | ||||||||||||||||||||
State and political subdivisions |
2,824 | 4 | 2,751 | 4 | 2,517 | 4 | 2,438 | 4 | 2,448 | 4 | ||||||||||||||||||||||||||||||
Foreign government |
2,227 | 3 | 2,113 | 3 | 2,080 | 3 | 2,015 | 3 | 1,935 | 3 | ||||||||||||||||||||||||||||||
U.S. corporate |
27,695 | 44 | 26,984 | 43 | 25,389 | 43 | 24,401 | 42 | 25,679 | 43 | ||||||||||||||||||||||||||||||
Foreign corporate |
13,008 | 20 | 12,833 | 21 | 12,629 | 21 | 12,199 | 21 | 13,027 | 22 | ||||||||||||||||||||||||||||||
Residential mortgage-backed securities |
4,823 | 8 | 5,055 | 8 | 5,122 | 8 | 5,101 | 9 | 5,118 | 8 | ||||||||||||||||||||||||||||||
Commercial mortgage-backed securities |
3,173 | 5 | 2,979 | 5 | 2,713 | 4 | 2,559 | 4 | 2,587 | 4 | ||||||||||||||||||||||||||||||
Other asset-backed securities |
3,327 | 5 | 3,307 | 5 | 3,316 | 6 | 3,281 | 6 | 3,939 | 6 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total fixed maturity securities |
$ | 63,780 | 100 | % | $ | 62,828 | 100 | % | $ | 60,290 | 100 | % | $ | 58,197 | 100 | % | $ | 60,646 | 100 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Corporate Bond HoldingsIndustry Sector: |
||||||||||||||||||||||||||||||||||||||||
Investment Grade: |
||||||||||||||||||||||||||||||||||||||||
Finance and insurance |
$ | 8,756 | 23 | % | $ | 8,499 | 23 | % | $ | 8,128 | 23 | % | $ | 7,746 | 22 | % | $ | 8,290 | 23 | % | ||||||||||||||||||||
Utilities |
5,637 | 15 | 5,507 | 15 | 5,275 | 15 | 4,453 | 13 | 4,618 | 12 | ||||||||||||||||||||||||||||||
Energy |
2,961 | 8 | 2,949 | 8 | 2,908 | 8 | 3,839 | 11 | 4,249 | 11 | ||||||||||||||||||||||||||||||
Consumernon-cyclical |
5,483 | 14 | 5,292 | 14 | 4,894 | 14 | 4,619 | 13 | 4,647 | 13 | ||||||||||||||||||||||||||||||
Consumercyclical |
2,034 | 5 | 2,039 | 5 | 2,150 | 6 | 2,119 | 6 | 2,288 | 6 | ||||||||||||||||||||||||||||||
Capital goods |
2,623 | 7 | 2,613 | 7 | 2,444 | 7 | 2,361 | 7 | 2,461 | 7 | ||||||||||||||||||||||||||||||
Industrial |
2,006 | 5 | 1,971 | 5 | 1,980 | 5 | 1,915 | 6 | 2,130 | 6 | ||||||||||||||||||||||||||||||
Technology and communications |
3,418 | 9 | 3,272 | 9 | 3,019 | 8 | 2,872 | 8 | 3,095 | 8 | ||||||||||||||||||||||||||||||
Transportation |
1,868 | 5 | 1,860 | 5 | 1,750 | 5 | 1,689 | 5 | 1,695 | 5 | ||||||||||||||||||||||||||||||
Other |
3,605 | 9 | 3,538 | 9 | 3,162 | 9 | 3,049 | 9 | 3,213 | 9 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Subtotal |
38,391 | 100 | % | 37,540 | 100 | % | 35,710 | 100 | % | 34,662 | 100 | % | 36,686 | 100 | % | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Non-Investment Grade: |
||||||||||||||||||||||||||||||||||||||||
Finance and insurance |
242 | 11 | % | 285 | 13 | % | 306 | 13 | % | 359 | 19 | % | 381 | 19 | % | |||||||||||||||||||||||||
Utilities |
73 | 3 | 74 | 3 | 78 | 4 | 83 | 4 | 67 | 3 | ||||||||||||||||||||||||||||||
Energy |
713 | 31 | 679 | 30 | 693 | 30 | 348 | 18 | 400 | 20 | ||||||||||||||||||||||||||||||
Consumernon-cyclical |
217 | 9 | 217 | 9 | 226 | 10 | 229 | 12 | 230 | 11 | ||||||||||||||||||||||||||||||
Consumercyclical |
131 | 6 | 131 | 6 | 86 | 4 | 82 | 4 | 98 | 5 | ||||||||||||||||||||||||||||||
Capital goods |
152 | 7 | 153 | 7 | 216 | 9 | 193 | 10 | 204 | 10 | ||||||||||||||||||||||||||||||
Industrial |
303 | 13 | 263 | 11 | 279 | 12 | 244 | 13 | 254 | 13 | ||||||||||||||||||||||||||||||
Technology and communications |
355 | 15 | 335 | 15 | 320 | 14 | 309 | 16 | 293 | 14 | ||||||||||||||||||||||||||||||
Transportation |
30 | 1 | 30 | 1 | 2 | | 2 | | 2 | | ||||||||||||||||||||||||||||||
Other |
96 | 4 | 110 | 5 | 102 | 4 | 89 | 4 | 91 | 5 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Subtotal |
2,312 | 100 | % | 2,277 | 100 | % | 2,308 | 100 | % | 1,938 | 100 | % | 2,020 | 100 | % | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total |
$ | 40,703 | 100 | % | $ | 39,817 | 100 | % | $ | 38,018 | 100 | % | $ | 36,600 | 100 | % | $ | 38,706 | 100 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Fixed Maturity SecuritiesContractual Maturity Dates: |
||||||||||||||||||||||||||||||||||||||||
Due in one year or less |
$ | 1,775 | 3 | % | $ | 1,851 | 3 | % | $ | 1,879 | 3 | % | $ | 1,744 | 3 | % | $ | 2,075 | 4 | % | ||||||||||||||||||||
Due after one year through five years |
11,309 | 18 | 11,024 | 18 | 10,730 | 18 | 10,192 | 18 | 10,817 | 18 | ||||||||||||||||||||||||||||||
Due after five years through ten years |
13,129 | 20 | 12,708 | 20 | 11,964 | 20 | 11,917 | 20 | 12,155 | 20 | ||||||||||||||||||||||||||||||
Due after ten years |
26,244 | 41 | 25,904 | 41 | 24,566 | 41 | 23,403 | 40 | 23,955 | 40 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Subtotal |
52,457 | 82 | 51,487 | 82 | 49,139 | 82 | 47,256 | 81 | 49,002 | 82 | ||||||||||||||||||||||||||||||
Mortgage and asset-backed securities |
11,323 | 18 | 11,341 | 18 | 11,151 | 18 | 10,941 | 19 | 11,644 | 18 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total fixed maturity securities |
$ | 63,780 | 100 | % | $ | 62,828 | 100 | % | $ | 60,290 | 100 | % | $ | 58,197 | 100 | % | $ | 60,646 | 100 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
|
|
44
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
General Account GAAP Net Investment Income Yields
(amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
GAAP Net Investment Income |
||||||||||||||||||||||||||||||||||||
Fixed maturity securitiestaxable |
$ | 655 | $ | 634 | $ | 641 | $ | 1,930 | $ | 634 | $ | 647 | $ | 645 | $ | 632 | $ | 2,558 | ||||||||||||||||||
Fixed maturity securitiesnon-taxable |
3 | 3 | 3 | 9 | 3 | 3 | 3 | 3 | 12 | |||||||||||||||||||||||||||
Commercial mortgage loans |
79 | 77 | 81 | 237 | 85 | 84 | 83 | 85 | 337 | |||||||||||||||||||||||||||
Restricted commercial mortgage loans related to securitization entities |
3 | 3 | 2 | 8 | 4 | 3 | 3 | 4 | 14 | |||||||||||||||||||||||||||
Equity securities |
8 | 7 | 5 | 20 | 4 | 3 | 4 | 4 | 15 | |||||||||||||||||||||||||||
Other invested assets |
29 | 33 | 32 | 94 | 30 | 22 | 17 | 33 | 102 | |||||||||||||||||||||||||||
Limited partnerships |
5 | | 6 | 11 | 2 | 4 | 20 | 7 | 33 | |||||||||||||||||||||||||||
Restricted other invested assets related to securitization entities |
| 1 | 2 | 3 | 2 | 1 | 1 | 1 | 5 | |||||||||||||||||||||||||||
Policy loans |
38 | 34 | 35 | 107 | 36 | 33 | 35 | 33 | 137 | |||||||||||||||||||||||||||
Cash, cash equivalents and short-term investments |
5 | 6 | 5 | 16 | 3 | 3 | 4 | 3 | 13 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Gross investment income before expenses and fees |
825 | 798 | 812 | 2,435 | 803 | 803 | 815 | 805 | 3,226 | |||||||||||||||||||||||||||
Expenses and fees |
(20 | ) | (19 | ) | (23 | ) | (62 | ) | (22 | ) | (20 | ) | (22 | ) | (24 | ) | (88 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net investment income |
$ | 805 | $ | 779 | $ | 789 | $ | 2,373 | $ | 781 | $ | 783 | $ | 793 | $ | 781 | $ | 3,138 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Annualized Yields |
||||||||||||||||||||||||||||||||||||
Fixed maturity securitiestaxable |
4.6 | % | 4.6 | % | 4.7 | % | 4.6 | % | 4.6 | % | 4.6 | % | 4.6 | % | 4.6 | % | 4.6 | % | ||||||||||||||||||
Fixed maturity securitiesnon-taxable |
3.7 | % | 3.6 | % | 3.6 | % | 3.6 | % | 3.5 | % | 3.5 | % | 3.5 | % | 3.5 | % | 3.5 | % | ||||||||||||||||||
Commercial mortgage loans |
5.2 | % | 5.0 | % | 5.2 | % | 5.2 | % | 5.5 | % | 5.5 | % | 5.4 | % | 5.6 | % | 5.5 | % | ||||||||||||||||||
Restricted commercial mortgage loans related to securitization entities |
7.4 | % | 8.0 | % | 5.1 | % | 7.2 | % | 9.5 | % | 6.4 | % | 7.2 | % | 8.2 | % | 8.0 | % | ||||||||||||||||||
Equity securities |
5.8 | % | 5.8 | % | 5.1 | % | 5.7 | % | 5.1 | % | 4.0 | % | 5.6 | % | 6.1 | % | 5.2 | % | ||||||||||||||||||
Other invested assets |
31.6 | % | 31.9 | % | 29.4 | % | 31.3 | % | 27.4 | % | 22.2 | % | 24.2 | % | 60.6 | % | 30.7 | % | ||||||||||||||||||
Limited partnerships(1) |
10.9 | % | | % | 13.2 | % | 8.0 | % | 4.2 | % | 7.8 | % | 37.0 | % | 12.0 | % | 15.5 | % | ||||||||||||||||||
Restricted other invested assets related to securitization entities |
| % | 1.1 | % | 2.0 | % | 1.1 | % | 2.0 | % | 1.0 | % | 1.0 | % | 1.0 | % | 1.3 | % | ||||||||||||||||||
Policy loans |
8.7 | % | 8.2 | % | 8.9 | % | 8.6 | % | 9.2 | % | 8.4 | % | 9.1 | % | 8.8 | % | 8.9 | % | ||||||||||||||||||
Cash, cash equivalents and short-term investments |
0.6 | % | 0.6 | % | 0.4 | % | 0.5 | % | 0.2 | % | 0.3 | % | 0.3 | % | 0.2 | % | 0.3 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Gross investment income before expenses and fees |
4.7 | % | 4.6 | % | 4.6 | % | 4.6 | % | 4.6 | % | 4.6 | % | 4.6 | % | 4.6 | % | 4.6 | % | ||||||||||||||||||
Expenses and fees |
-0.1 | % | -0.1 | % | -0.1 | % | -0.1 | % | -0.1 | % | -0.1 | % | -0.1 | % | -0.1 | % | -0.1 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net investment income |
4.6 | % | 4.5 | % | 4.5 | % | 4.5 | % | 4.5 | % | 4.5 | % | 4.5 | % | 4.5 | % | 4.5 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
Yields are based on net investment income as reported under GAAP and are consistent with how the company measures its investment performance for management purposes. Yields are annualized, for interim periods, and are calculated as net investment income as a percentage of average quarterly asset carrying values except for fixed maturity and equity securities, derivatives and derivative counterparty collateral, which exclude unrealized fair value adjustments and securities lending activity, which is included in other invested assets and is calculated net of the corresponding securities lending liability. See page 49 herein for average invested assets and cash used in the yield calculation.
(1) | Limited partnership investments are equity-based and do not have fixed returns by period. |
45
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Net Investment Gains (Losses), NetDetail
(amounts in millions)
2016 | 2015 | |||||||||||||||||||||||||||||||||||
3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | ||||||||||||||||||||||||||||
Net realized gains (losses) on available-for-sale securities: |
||||||||||||||||||||||||||||||||||||
Fixed maturity securities: |
||||||||||||||||||||||||||||||||||||
U.S. corporate |
$ | 2 | $ | | $ | (7 | ) | $ | (5 | ) | $ | 12 | $ | (3 | ) | $ | | $ | | $ | 9 | |||||||||||||||
U.S. government, agencies and government-sponsored enterprises |
15 | 137 | 7 | 159 | 3 | | | 1 | 4 | |||||||||||||||||||||||||||
Foreign corporate |
(1 | ) | (6 | ) | (8 | ) | (15 | ) | (6 | ) | (1 | ) | (2 | ) | (7 | ) | (16 | ) | ||||||||||||||||||
Foreign government |
4 | | | 4 | (2 | ) | | 1 | 1 | | ||||||||||||||||||||||||||
Tax-exempt |
| | | | (1 | ) | | | | (1 | ) | |||||||||||||||||||||||||
Mortgage-backed securities |
(1 | ) | | | (1 | ) | | (3 | ) | 2 | | (1 | ) | |||||||||||||||||||||||
Asset-backed securities |
(5 | ) | (10 | ) | | (15 | ) | (2 | ) | (2 | ) | | | (4 | ) | |||||||||||||||||||||
Equity securities |
1 | | 1 | 2 | 1 | 3 | 12 | 7 | 23 | |||||||||||||||||||||||||||
Foreign exchange |
| 1 | | 1 | 2 | 2 | 1 | 1 | 6 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total net realized gains (losses) on available-for-sale securities |
15 | 122 | (7 | ) | 130 | 7 | (4 | ) | 14 | 3 | 20 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Impairments: |
||||||||||||||||||||||||||||||||||||
Corporate fixed maturity securities |
| (16 | ) | (8 | ) | (24 | ) | (15 | ) | (6 | ) | | | (21 | ) | |||||||||||||||||||||
Foreign government |
| (1 | ) | | (1 | ) | | | | | | |||||||||||||||||||||||||
Limited partnerships |
| | (3 | ) | (3 | ) | | | | | | |||||||||||||||||||||||||
Commercial mortgage loans |
| (4 | ) | | (4 | ) | | (1 | ) | | (3 | ) | (4 | ) | ||||||||||||||||||||||
Commercial mortgage-backed securities |
| (1 | ) | | (1 | ) | | | | | | |||||||||||||||||||||||||
Other asset-backed securities |
| | | | | (2 | ) | | | (2 | ) | |||||||||||||||||||||||||
Equity securities |
(2 | ) | | | (2 | ) | | | | | | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total impairments |
(2 | ) | (22 | ) | (11 | ) | (35 | ) | (15 | ) | (9 | ) | | (3 | ) | (27 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net unrealized gains (losses) on trading securities |
(4 | ) | 16 | 28 | 40 | (9 | ) | 12 | (16 | ) | 6 | (7 | ) | |||||||||||||||||||||||
Commercial mortgage loans held-for-sale market valuation allowance |
(1 | ) | 1 | 1 | 1 | 2 | 1 | 2 | 2 | 7 | ||||||||||||||||||||||||||
Net gains (losses) related to securitization entities |
2 | (61 | ) | 8 | (51 | ) | (4 | ) | (1 | ) | 2 | 8 | 5 | |||||||||||||||||||||||
Derivative instruments |
10 | (24 | ) | (38 | ) | (52 | ) | 3 | (53 | ) | 6 | (32 | ) | (76 | ) | |||||||||||||||||||||
Contingent purchase price valuation change |
| (2 | ) | | (2 | ) | | 2 | | | 2 | |||||||||||||||||||||||||
Other |
| | | | | 1 | | | 1 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net investment gains (losses), gross |
20 | 30 | (19 | ) | 31 | (16 | ) | (51 | ) | 8 | (16 | ) | (75 | ) | ||||||||||||||||||||||
Adjustment for DAC and other intangible amortization and certain benefit reserves |
| 6 | 9 | 15 | 11 | 10 | 6 | 8 | 35 | |||||||||||||||||||||||||||
Adjustment for net investment (gains) losses attributable to noncontrolling interests |
(2 | ) | 3 | (9 | ) | (8 | ) | 4 | 8 | (9 | ) | 7 | 10 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net investment gains (losses), net |
$ | 18 | $ | 39 | $ | (19 | ) | $ | 38 | $ | (1 | ) | $ | (33 | ) | $ | 5 | $ | (1 | ) | $ | (30 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
46
Reconciliations of Non-GAAP Measures
47
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Reconciliation of Operating ROE
(amounts in millions)
Twelve Month Rolling Average ROE |
Twelve months ended | |||||||||||||||||||
September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
||||||||||||||||
GAAP Basis ROE | ||||||||||||||||||||
Net income (loss) available to Genworth Financial, Inc.s common stockholders for the twelve months ended(1) |
$ | (447 | ) | $ | (351 | ) | $ | (716 | ) | $ | (615 | ) | $ | (1,083 | ) | |||||
Quarterly average Genworth Financial, Inc.s stockholders equity, excluding accumulated other comprehensive income (loss)(2) |
$ | 9,900 | $ | 10,042 | $ | 10,160 | $ | 10,281 | $ | 10,564 | ||||||||||
GAAP Basis ROE (1)/(2) |
-4.5 | % | -3.5 | % | -7.0 | % | -6.0 | % | -10.3 | % | ||||||||||
Operating ROE |
||||||||||||||||||||
Net operating income (loss) for the twelve months ended(1) |
$ | (261 | ) | $ | 208 | $ | 204 | $ | 255 | $ | (78 | ) | ||||||||
Quarterly average Genworth Financial, Inc.s stockholders equity, excluding accumulated other comprehensive income (loss)(2) |
$ | 9,900 | $ | 10,042 | $ | 10,160 | $ | 10,281 | $ | 10,564 | ||||||||||
Operating ROE (1)/(2) |
-2.6 | % | 2.1 | % | 2.0 | % | 2.5 | % | -0.7 | % | ||||||||||
Quarterly Average ROE |
Three months ended | |||||||||||||||||||
September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
||||||||||||||||
GAAP Basis ROE | ||||||||||||||||||||
Net income (loss) available to Genworth Financial, Inc.s common stockholders for the period ended(3) |
$ | (380 | ) | $ | 172 | $ | 53 | $ | (292 | ) | $ | (284 | ) | |||||||
Quarterly average Genworth Financial, Inc.s stockholders equity for the period, excluding accumulated other comprehensive income (loss)(4) |
$ | 9,857 | $ | 9,958 | $ | 9,842 | $ | 9,958 | $ | 10,241 | ||||||||||
Annualized GAAP Quarterly Basis ROE (3)/(4) |
-15.4 | % | 6.9 | % | 2.2 | % | -11.7 | % | -11.1 | % | ||||||||||
Operating ROE |
||||||||||||||||||||
Net operating income (loss) for the period ended(3) |
$ | (405 | ) | $ | 123 | $ | 103 | $ | (82 | ) | $ | 64 | ||||||||
Quarterly average Genworth Financial, Inc.s stockholders equity for the period, excluding accumulated other comprehensive income (loss)(4) |
$ | 9,857 | $ | 9,958 | $ | 9,842 | $ | 9,958 | $ | 10,241 | ||||||||||
Annualized Operating Quarterly Basis ROE (3)/(4) |
-16.4 | % | 4.9 | % | 4.2 | % | -3.3 | % | 2.5 | % |
Non-GAAP Definition for Operating ROE
The company references the non-GAAP financial measure entitled operating return on equity or operating ROE. The company defines operating ROE as net operating income (loss) divided by average ending Genworth Financial, Inc.s stockholders equity, excluding accumulated other comprehensive income (loss) in average ending Genworth Financial, Inc.s stockholders equity. Management believes that analysis of operating ROE enhances understanding of the efficiency with which the company deploys its capital. However, operating ROE is not a substitute for net income (loss) available to Genworth Financial, Inc.s common stockholders divided by average ending Genworth Financial, Inc.s stockholders equity determined in accordance with GAAP.
(1) | The twelve months ended information is derived by adding the four quarters of net income (loss) available to Genworth Financial, Inc.s common stockholders and net operating income (loss) from page 9 herein. |
(2) | Quarterly average Genworth Financial, Inc.s stockholders equity, excluding accumulated other comprehensive income (loss), is derived by averaging ending Genworth Financial, Inc.s stockholders equity, excluding accumulated other comprehensive income (loss), for the most recent five quarters. |
(3) | Net income (loss) available to Genworth Financial, Inc.s common stockholders and net operating income (loss) from page 9 herein. |
(4) | Quarterly average Genworth Financial, Inc.s stockholders equity, excluding accumulated other comprehensive income (loss), is derived by averaging ending Genworth Financial, Inc.s stockholders equity, excluding accumulated other comprehensive income (loss). |
48
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
2016 | 2015 | |||||||||||||||||||||||||||||||||||||
(Assetsamounts in billions) | 3Q | 2Q | 1Q | Total | 4Q | 3Q | 2Q | 1Q | Total | |||||||||||||||||||||||||||||
ReportedTotal Invested Assets and Cash |
$ | 78.3 | $ | 77.6 | $ | 76.0 | $ | 78.3 | $ | 75.1 | $ | 75.6 | $ | 75.3 | $ | 77.9 | $ | 75.1 | ||||||||||||||||||||
Subtract: |
||||||||||||||||||||||||||||||||||||||
Securities lending |
0.4 | 0.3 | 0.4 | 0.4 | 0.3 | 0.4 | 0.3 | 0.3 | 0.3 | |||||||||||||||||||||||||||||
Unrealized gains (losses) |
7.7 | 7.6 | 6.3 | 7.7 | 4.2 | 5.4 | 4.9 | 7.8 | 4.2 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Adjusted end of period invested assets and cash |
$ | 70.2 | $ | 69.7 | $ | 69.3 | $ | 70.2 | $ | 70.6 | $ | 69.8 | $ | 70.1 | $ | 69.8 | $ | 70.6 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
(A) |
Average Invested Assets and Cash Used in Reported Yield Calculation |
$ | 69.7 | $ | 69.5 | $ | 70.0 | $ | 69.7 | $ | 70.2 | $ | 70.0 | $ | 70.0 | $ | 69.7 | $ | 70.0 | |||||||||||||||||||
Subtract: |
||||||||||||||||||||||||||||||||||||||
Restricted commercial mortgage loans and other invested assets related to securitization entities(1) |
0.3 | 0.1 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
(B) |
Average Invested Assets and Cash Used in Core Yield Calculation |
$ | 69.4 | $ | 69.4 | $ | 69.8 | $ | 69.5 | $ | 70.0 | $ | 69.8 | $ | 69.8 | $ | 69.5 | $ | 69.8 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
(Incomeamounts in millions) |
||||||||||||||||||||||||||||||||||||||
(C) |
ReportedNet Investment Income |
$ | 805 | $ | 779 | $ | 789 | $ | 2,373 | $ | 781 | $ | 783 | $ | 793 | $ | 781 | $ | 3,138 | |||||||||||||||||||
Subtract: |
||||||||||||||||||||||||||||||||||||||
Bond calls and commercial mortgage loan prepayments |
14 | 5 | 11 | 30 | 18 | 12 | 17 | 14 | 61 | |||||||||||||||||||||||||||||
Other non-core items(2) |
8 | (6 | ) | 15 | 17 | (2 | ) | 1 | (4 | ) | 7 | 2 | ||||||||||||||||||||||||||
Restricted commercial mortgage loans and other invested assets related to securitization entities(1) |
1 | 2 | 3 | 6 | 3 | 2 | 2 | 3 | 10 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
(D) |
Core Net Investment Income |
$ | 782 | $ | 778 | $ | 760 | $ | 2,320 | $ | 762 | $ | 768 | $ | 778 | $ | 757 | $ | 3,065 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
(C) / (A) |
Reported Yield |
4.62 | % | 4.48 | % | 4.51 | % | 4.54 | % | 4.45 | % | 4.47 | % | 4.53 | % | 4.48 | % | 4.48 | % | |||||||||||||||||||
(D) / (B) |
Core Yield |
4.51 | % | 4.48 | % | 4.36 | % | 4.45 | % | 4.35 | % | 4.40 | % | 4.46 | % | 4.36 | % | 4.39 | % |
Notes: | Columns may not add due to rounding. |
Yields have been annualized. |
Non-GAAP Definition for Core Yield
The company references the non-GAAP financial measure entitled core yield as a measure of investment yield. The company defines core yield as the investment yield adjusted for items that do not reflect the underlying performance of the investment portfolio. Management believes that analysis of core yield enhances understanding of the investment yield of the company. However, core yield is not a substitute for investment yield determined in accordance with GAAP.
(1) | Represents the incremental assets and investment income related to restricted commercial mortgage loans and other invested assets. |
(2) | Includes cost basis adjustments on structured securities and various other immaterial items. |
49
50
GENWORTH FINANCIAL, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2016
Financial Strength Ratings As Of November 2, 2016
Company |
Standard & Poors Financial Services LLC (S&P) |
Moodys Investors Service, Inc. (Moodys) |
A.M. Best Company, Inc. (A.M. Best) | |||
Genworth Mortgage Insurance Corporation |
BB+ | Ba1 | Not rated | |||
Genworth Financial Mortgage Insurance Company Canada(1) |
A+ | Not rated | Not rated | |||
Genworth Financial Mortgage Insurance Pty Limited (Australia)(2) |
A+ | A3 | Not rated | |||
Genworth Life Insurance Company |
BB- | Ba2 | B | |||
Genworth Life and Annuity Insurance Company |
BB- | Baa2 | B++ | |||
Genworth Life Insurance Company of New York |
BB- | Ba2 | B |
The S&P, Moodys, A.M. Best, Dominion Bond Rating Service (DBRS) and Fitch Rating Service (Fitch) ratings included are not designed to be, and do not serve as, measures of protection or valuation offered to investors. These financial strength ratings should not be relied on with respect to making an investment in the companys securities.
S&P states that insurers rated A (Strong) or BB (Marginal) have strong or marginal financial security characteristics, respectively. The A and BB ranges are the third- and fifth-highest of nine financial strength rating ranges assigned by S&P, which range from AAA to R. A plus (+) or minus (-) shows relative standing within a major rating category. These suffixes are not added to ratings in the AAA category or to ratings below the CCC category. Accordingly, the A+, BB+ and BB- ratings are the fifth-, eleventh- and thirteenth-highest of S&Ps 21 ratings categories.
Moodys states that insurance companies rated A (Good) offer good financial security, that insurance companies rated Baa (Adequate) offer adequate financial security and that insurance companies rated Ba (Questionable) offer questionable financial security. The A (Good), Baa (Adequate) and Ba (Questionable) ranges are the third-, fourth- and fifth-highest, respectively, of nine financial strength rating ranges assigned by Moodys, which range from Aaa to C. Numeric modifiers are used to refer to the ranking within the group, with 1 being the highest and 3 being the lowest. These modifiers are not added to ratings in the Aaa category or to ratings below the Caa category. Accordingly, the A3, Baa2, Ba1 and Ba2 ratings are the seventh-, ninth-, eleventh- and twelfth-highest, respectively, of Moodys 21 ratings categories.
A.M. Best states that the B++ (Good) rating is assigned to those companies that have, in its opinion, a good ability to meet their ongoing insurance obligations while B (Fair) is assigned to those companies that have, in its opinion, a fair ability to meet their ongoing insurance obligations. The B++ (Good) and B (Fair) ratings are the fifth- and seventh-highest of 15 ratings assigned by A.M. Best, which range from A++ to F.
DBRS states that long-term obligations rated AA are of superior credit quality. The capacity for the payment of financial obligations is considered high and unlikely to be significantly vulnerable to future events. Credit quality differs from AAA only to a small degree.
The Australian mortgage insurance subsidiary also solicits a rating from Fitch. Fitch states that A (Strong) rated insurance companies are viewed as possessing strong capacity to meet policyholder and contract obligations. The A rating category is the third-highest of nine financial strength rating categories, which range from AAA to C. The symbol (+) or (-) may be appended to a rating to indicate the relative position of a credit within a rating category. These suffixes are not added to ratings in the AAA category or to ratings below the B category. Accordingly, the A+ rating is the fifth-highest of Fitchs 21 ratings categories.
The company also solicits a rating from HR Ratings on a local scale for Genworth Seguros de Credito a la Vivienda S.A. de C.V., its Mexican mortgage insurance subsidiary, with a short-term rating of HR1 and long-term rating of HR AA-. For short-term ratings, HR Ratings states that HR1 rated companies are viewed as exhibiting high capacity for timely payment of debt obligations in the short-term and maintain low credit risk. The HR1 short-term rating category is the highest of six short-term rating categories, which range from HR1 to HR D. For long-term ratings, HR Ratings states that HR AA- rated companies are viewed as having high credit quality and offer high safety for timely payment of debt obligations and maintain low credit risk under adverse economic scenarios. The HR AA- long-term rating is the second-highest of HR Ratings eight long-term rating categories, which range from HR AAA to HR D.
S&P, Moodys, A.M. Best, DBRS, Fitch and HR Ratings review their ratings periodically and the company cannot assure you that it will maintain the current ratings in the future. Other agencies may also rate the company or its insurance subsidiaries on a solicited or an unsolicited basis.
(1) | Genworth Financial Mortgage Insurance Company Canada is also rated AA by DBRS. |
(2) | Genworth Financial Mortgage Insurance Pty Limited (Australia) is also rated A+ by Fitch. |
51