Table of Contents

Exhibit 99.2

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Table of Contents

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Table of Contents		Page
Investor Letter			3
Use of Non-GAAP Measures			4
Results of Operations and Selected Operating Performance Measures			5
Financial Highlights			6
Consolidated Quarterly Results
Consolidated Net Income (Loss) by Quarter			8
Net Operating Income (Loss) by Segment by Quarter			9
Consolidated Balance Sheets			10-11
Consolidated Balance Sheets by Segment			12-13
Deferred Acquisition Costs (DAC) Rollforward			14
Quarterly Results by Business
Net Operating Income and Sales—U.S. Mortgage Insurance Segment			16-22
Net Operating Income and Sales—Canada Mortgage Insurance Segment			24-27
Net Operating Income and Sales—Australia Mortgage Insurance Segment			29-32
Net Operating Income (Loss) and Sales—U.S. Life Insurance Segment			34-37
Net Operating Income (Loss)—Runoff Segment			39
Net Operating Loss and Other Metrics—Corporate and Other Activities			41
Additional Financial Data
Investments Summary			43
Fixed Maturity Securities Summary			44
General Account GAAP Net Investment Income Yields			45
Net Investment Gains (Losses), Net—Detail			46
Reconciliations of Non-GAAP Measures
Reconciliation of Operating Return On Equity (ROE)			48
Reconciliation of Core Yield			49
Corporate Information
Industry Ratings			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, 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, book value available to Genworth Financial, Inc.’s common stockholders and book value available to Genworth Financial, Inc.’s common stockholders per share, respectively.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

Dear Investor,

Thank you for your continued interest in Genworth Financial.

Regards,

David Rosenbaum

Investor Relations

InvestorInfo@genworth.com

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

Use of Non-GAAP Measures

This financial supplement includes the non-GAAP⁽¹⁾ financial measure entitled “net operating income (loss).” The chief operating decision maker evaluates segment performance and allocates resources on the basis of net operating income (loss). The company defines net operating income (loss) as income (loss) from continuing operations excluding the after-tax effects of income attributable to noncontrolling interests, net investment gains (losses), goodwill impairments, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, gains (losses) on insurance block transactions, restructuring costs and infrequent or unusual non-operating items. Gains (losses) on insurance block transactions are defined as gains (losses) on the early extinguishment of non-recourse funding obligations, early termination fees for other financing restructuring and/or resulting gains (losses) on reinsurance restructuring for certain blocks of business. The company excludes net investment gains (losses) and infrequent or unusual non-operating items because the company does not consider them to be related to the operating performance of the company’s segments and Corporate and Other activities. A component of the company’s net investment gains (losses) is the result of impairments, the size and timing of which can vary significantly depending on market credit cycles. In addition, the size and timing of other investment gains (losses) can be subject to the company’s discretion and are influenced by market opportunities, as well as asset-liability matching considerations. Goodwill impairments, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, gains (losses) on insurance block transactions and restructuring costs are also excluded from net operating income (loss) because, in the company’s opinion, they are not indicative of overall operating trends. Infrequent or unusual non-operating items are also excluded from net operating income (loss) if, in the company’s opinion, they are not indicative of overall operating trends.

While some of these items may be significant components of net income (loss) available to Genworth 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 company’s definition of net operating income (loss) may differ from the definitions used by other companies.

In the first quarter of 2016, the company recorded an estimated gain of $20 million, net of taxes, related to the planned sale of the mortgage insurance business in Europe. The company also recognized an estimated loss of $134 million, net of taxes, in the fourth quarter of 2015 for the planned sale of this business, as well as a tax charge of $7 million in the third quarter of 2015 from potential business portfolio changes related to this business resulting in a total estimated loss on sale of $141 million in 2015.

In January 2016, the company paid a make-whole expense of $13 million, net of taxes, 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 gain of $2 million, net of taxes, 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 taxes and portion attributable to noncontrolling interests, related to the early redemption of Genworth Financial Mortgage Insurance Pty Limited’s notes that were scheduled to mature in 2021. In the third quarter of 2015, the company also repurchased approximately $50 million principal amount of Genworth Holdings’ notes with various maturity dates for a loss of $1 million, net of taxes. 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 an after-tax loss of $6 million in connection with the early extinguishment of non-recourse funding obligations. In the third quarter of 2015, the company recorded a DAC impairment of $296 million, net of taxes, on certain term life insurance policies in connection with entering into an agreement to complete a life block transaction.

In the first quarter of 2016, the company recorded an after-tax expense of $9 million 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 an after-tax expense of $3 million and $2 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 $12 million, net of taxes, 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 company’s 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.

Adjustments to reconcile net income (loss) attributable to Genworth Financial, Inc.’s common stockholders and net operating income (loss) assume a 35% tax rate 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).

 

(1)	U.S. Generally Accepted Accounting Principles

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Results of Operations and Selected Operating Performance Measures

The company’s 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 company’s segments and Corporate and Other activities to net income (loss) available to Genworth Financial, Inc.’s common stockholders for the periods presented.

The company allocates the consolidated provision for income taxes to its operating segments. The allocation methodology applies a specific tax rate to the pre-tax income (loss) of each segment, which is then adjusted in each segment to reflect the tax attributes of items unique to that segment such as foreign income. The difference between the consolidated provision for income taxes and the sum of the provision for income taxes in each segment is reflected in Corporate and Other activities. The annually-determined tax rates and adjustments to each segment’s provision for income taxes are estimates which are subject to review and could change from year to year.

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 company’s operating performance because they represent a measure of new sales of insurance policies or contracts during a specified period, rather than a measure of the company’s revenues or profitability during that period.

Management regularly monitors and reports insurance in-force and risk in-force. Insurance in-force for the mortgage insurance businesses is a measure of the aggregate face value of outstanding insurance policies as of the respective reporting date. For risk in-force in the mortgage insurance businesses, 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. Risk in-force for the U.S. mortgage insurance business is the obligation that is limited under contractual terms to the amounts less than 100% of the mortgage loan value. 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 company’s 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 company’s operating performance because they represent measures of the size of the business at a specific date which will generate revenues and profits in a future period, rather than measures of the company’s revenues or profitability during that period.

Management also regularly monitors and reports a loss ratio for the company’s businesses. For the mortgage insurance businesses, the loss ratio is the ratio of incurred losses and loss adjustment expenses to net earned premiums. For the long-term care insurance business, the loss ratio is the ratio of benefits and other changes in reserves less tabular interest on reserves less loss adjustment expenses to net earned premiums. The company considers the loss ratio to be a measure of underwriting performance in these businesses and helps to enhance the understanding of the operating performance of the businesses.

These operating performance measures enable the company to compare its operating performance across periods without regard to revenues or profitability related to policies or contracts sold in prior periods or from investments or other sources.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

Financial Highlights

(amounts in millions, except per share data)

 

Balance Sheet Data		March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015				March 31, 2015
Total Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income		$	9,870			$	9,814			$	10,101			$	10,381			$	10,632
Total accumulated other comprehensive income			4,185				3,010				3,478				3,309				4,692
Total Genworth Financial, Inc.’s stockholders’ equity		$	14,055			$	12,824			$	13,579			$	13,690			$	15,324
Book value per common share		$	28.19			$	25.76			$	27.29			$	27.52			$	30.81
Book value per common share, excluding accumulated other comprehensive income		$	19.80			$	19.71			$	20.30			$	20.87			$	21.38
Common shares outstanding as of the balance sheet date			498.5				497.8				497.5				497.4				497.4
		Twelve months ended
Twelve Month Rolling Average ROE		March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015				March 31, 2015
GAAP Basis ROE			-7.0%				-6.0%				-10.3%				-15.0%				-11.3%
Operating ROE(1)			2.0%				2.5%				-0.7%				-4.2%				-3.8%
		Three months ended
Quarterly Average ROE		March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015				March 31, 2015
GAAP Basis ROE			2.2%				-11.7%				-11.1%				-7.3%				5.8%
Operating ROE(1)			4.2%				-3.3%				2.5%				4.5%				5.8%

 

Basic and Diluted Shares		Three months ended March 31, 2016
Weighted-average common shares used in basic earnings per common share calculations			498.0
Potentially dilutive securities:
Stock options, restricted stock units and stock appreciation rights			1.4
Weighted-average common shares used in diluted earnings per common share calculations			499.4

 

(1)	See page 48 herein for a reconciliation of GAAP Basis ROE to Operating ROE.

 

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Consolidated Quarterly Results

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

Consolidated Net Income (Loss) by Quarter

(amounts in millions, except per share amounts)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	794			$	1,157			$	1,145			$	1,134			$	1,143			$	4,579
Net investment income			789				781				783				793				781				3,138
Net investment gains (losses)			(19	)			(16	)			(51	)			8				(16	)			(75	)
Policy fees and other income			221				234				223				222				227				906
Total revenues			1,785				2,156				2,100				2,157				2,135				8,548
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			860				1,435				1,290				1,232				1,192				5,149
Interest credited			177				180				179				181				180				720
Acquisition and operating expenses, net of deferrals			394				433				314				295				267				1,309
Amortization of deferred acquisition costs and intangibles			99				207				563				101				95				966
Interest expense			105				104				105				103				107				419
Total benefits and expenses			1,635				2,359				2,451				1,912				1,841				8,563
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			150				(203	)			(351	)			245				294				(15	)
Provision (benefit) for income taxes			23				(36	)			(134	)			70				91				(9	)
INCOME (LOSS) FROM CONTINUING OPERATIONS			127				(167	)			(217	)			175				203				(6	)
Income (loss) from discontinued operations, net of taxes(1)			(19	)			(73	)			(21	)			(314	)			1				(407	)
NET INCOME (LOSS)			108				(240	)			(238	)			(139	)			204				(413	)
Less: net income attributable to noncontrolling interests			55				52				46				54				50				202
NET INCOME (LOSS) AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS		$	53			$	(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		$	0.14			$	(0.44	)		$	(0.53	)		$	0.24			$	0.31			$	(0.42	)
Diluted		$	0.14			$	(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		$	0.11			$	(0.59	)		$	(0.57	)		$	(0.39	)		$	0.31			$	(1.24	)
Diluted		$	0.11			$	(0.59	)		$	(0.57	)		$	(0.39	)		$	0.31			$	(1.24	)
Weighted-average common shares outstanding
Basic			498.0				497.6				497.4				497.4				497.0				497.4
Diluted(2)			499.4				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 first quarter of 2016, the company recorded an additional after-tax loss of approximately $19 million as it continues to finalize 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 1.4 million and 1.3 million, respectively, for the three months ended December 31, 2015 and September 30, 2015 and 1.6 million for 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 499.0 million and 498.7 million, respectively, for the three months ended December 31, 2015 and September 30, 2015 and 499.0 million for the twelve months ended December 31, 2015.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Net Operating Income (Loss) by Segment by Quarter

(amounts in millions, except per share amounts)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
U.S. Mortgage Insurance segment		$	61			$	41			$	37			$	49			$	52			$	179
Canada Mortgage Insurance segment			33				37				38				37				40				152
Australia Mortgage Insurance segment			19				22				21				29				30				102
U.S. Life Insurance segment:
Long-Term Care Insurance			34				19				(10	)			10				10				29
Life Insurance			31				(173	)			31				22				40				(80	)
Fixed Annuities			26				19				19				25				31				94
Total U.S. Life Insurance segment			91				(135	)			40				57				81				43
Runoff segment			4				11				(4	)			9				11				27
Corporate and Other			(105	)			(58	)			(68	)			(62	)			(60	)			(248	)
NET OPERATING INCOME (LOSS)			103				(82	)			64				119				154				255
ADJUSTMENTS TO NET OPERATING INCOME (LOSS):
Net investment gains (losses), net			(13	)			—				(22	)			4				(1	)			(19	)
Gains (losses) on sale of business, net			20				(134	)			(7	)			—				—				(141	)
Gains (losses) on early extinguishment of debt, net			(11	)			—				(2	)			—				—				(2	)
Gains (losses) from life block transactions, net			(6	)			—				(296	)			—				—				(296	)
Expenses related to restructuring, net			(9	)			(3	)			—				(2	)			—				(5	)
Fees associated with bond consent solicitation, net			(12	)			—				—				—				—				—
INCOME (LOSS) FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL INC.’S COMMON STOCKHOLDERS			72				(219	)			(263	)			121				153				(208	)
Net income attributable to noncontrolling interests			55				52				46				54				50				202
INCOME (LOSS) FROM CONTINUING OPERATIONS			127				(167	)			(217	)			175				203				(6	)
Income (loss) from discontinued operations, net of taxes			(19	)			(73	)			(21	)			(314	)			1				(407	)
NET INCOME (LOSS)			108				(240	)			(238	)			(139	)			204				(413	)
Less: net income attributable to noncontrolling interests			55				52				46				54				50				202
NET INCOME (LOSS) AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS		$	53			$	(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		$	0.11			$	(0.59	)		$	(0.57	)		$	(0.39	)		$	0.31			$	(1.24	)
Diluted		$	0.11			$	(0.59	)		$	(0.57	)		$	(0.39	)		$	0.31			$	(1.24	)
Net operating income (loss) per common share
Basic		$	0.21			$	(0.17	)		$	0.13			$	0.24			$	0.31			$	0.51
Diluted		$	0.21			$	(0.17	)		$	0.13			$	0.24			$	0.31			$	0.51
Weighted-average common shares outstanding
Basic			498.0				497.6				497.4				497.4				497.0				497.4
Diluted(1)			499.4				497.6				497.4				499.3				498.9				497.4

 

(1)

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 1.4 million and 1.3 million, respectively, for the three months ended December 31, 2015 and September 30, 2015 and 1.6 million for 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 499.0 million and 498.7 million, respectively, for the three months ended December 31, 2015 and September 30, 2015 and 499.0 million for 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.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Consolidated Balance Sheets

(amounts in millions)

 

		March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015				March 31, 2015
ASSETS
Investments:
Fixed maturity securities available-for-sale, at fair value		$	60,290			$	58,197			$	60,646			$	60,368			$	61,732
Equity securities available-for-sale, at fair value			431				310				273				299				299
Commercial mortgage loans			6,179				6,170				6,133				6,175				6,149
Restricted commercial mortgage loans related to securitization entities			155				161				175				181				188
Policy loans			1,565				1,568				1,567				1,584				1,506
Other invested assets			2,923				2,309				2,764				2,176				2,667
Restricted other invested assets related to securitization entities			422				413				412				410				411
Total investments			71,965				69,128				71,970				71,193				72,952
Cash and cash equivalents			4,043				5,965				3,635				4,069				4,937
Accrued investment income			720				653				682				612				713
Deferred acquisition costs			4,235				4,398				4,441				4,899				4,748
Intangible assets and goodwill			291				357				297				300				221
Reinsurance recoverable			17,587				17,245				17,255				17,276				17,285
Other assets			577				520				523				580				473
Deferred tax asset			—				155				—				—				—
Separate account assets			7,624				7,883				7,893				8,702				9,064
Assets held for sale(1)			131				127				1,484				1,493				1,897
Total assets		$	107,173			$	106,431			$	108,180			$	109,124			$	112,290

 

(1)	The 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) have been segregated in the consolidated balance sheets.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

Consolidated Balance Sheets

(amounts in millions)

 

		March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015				March 31, 2015
LIABILITIES AND EQUITY
Liabilities:
Future policy benefits		$	36,776			$	36,475			$	36,472			$	36,298			$	36,488
Policyholder account balances			26,354				26,209				26,000				25,987				26,136
Liability for policy and contract claims			8,177				8,095				8,009				7,936				7,877
Unearned premiums			3,378				3,308				3,281				3,373				3,266
Other liabilities			3,596				3,004				3,225				3,125				3,613
Borrowings related to securitization entities			173				179				188				199				205
Non-recourse funding obligations			310				1,920				1,937				1,953				1,968
Long-term borrowings			4,232				4,570				4,573				4,581				4,575
Deferred tax liability			449				24				200				258				1,056
Separate account liabilities			7,624				7,883				7,893				8,702				9,064
Liabilities held for sale(1)			131				127				986				985				961
Total liabilities			91,200				91,794				92,764				93,397				95,209
Equity:
Common stock			1				1				1				1				1
Additional paid-in capital			11,952				11,949				11,944				11,940				11,998
Accumulated other comprehensive income (loss):
Net unrealized investment gains (losses):
Net unrealized gains (losses) on securities not other-than-temporarily impaired			2,043				1,236				1,709				1,606				2,724
Net unrealized gains (losses) on other-than-temporarily impaired securities			14				18				22				22				24
Net unrealized investment gains (losses)			2,057				1,254				1,731				1,628				2,748
Derivatives qualifying as hedges			2,302				2,045				2,130				1,913				2,247
Foreign currency translation and other adjustments			(174	)			(289	)			(383	)			(232	)			(303	)
Total accumulated other comprehensive income			4,185				3,010				3,478				3,309				4,692
Retained earnings			617				564				856				1,140				1,333
Treasury stock, at cost			(2,700	)			(2,700	)			(2,700	)			(2,700	)			(2,700	)
Total Genworth Financial, Inc.’s stockholders’ equity			14,055				12,824				13,579				13,690				15,324
Noncontrolling interests			1,918				1,813				1,837				2,037				1,757
Total equity			15,973				14,637				15,416				15,727				17,081
Total liabilities and equity		$	107,173			$	106,431			$	108,180			$	109,124			$	112,290

 

(1)	The 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) have been segregated in the consolidated balance sheets.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Consolidated Balance Sheet by Segment

(amounts in millions)

 

		March 31, 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		$	2,283			$	4,552			$	2,969			$	61,287			$	2,987			$	2,650			$	76,728
Deferred acquisition costs and intangible assets			35				130				55				4,023				276				7				4,526
Reinsurance recoverable			6				—				—				16,754				827				—				17,587
Other assets			43				45				29				346				15				99				577
Separate account assets			—				—				—				—				7,624				—				7,624
Assets held for sale			—				—				—				—				—				131				131
Total assets		$	2,367			$	4,727			$	3,053			$	82,410			$	11,729			$	2,887			$	107,173
LIABILITIES AND EQUITY
Liabilities:
Future policy benefits		$	—			$	—			$	—			$	36,773			$	3			$	—			$	36,776
Policyholder account balances			—				—				—				22,915				3,439				—				26,354
Liability for policy and contract claims			768				102				181				7,097				21				8				8,177
Unearned premiums			274				1,527				976				595				6				—				3,378
Non-recourse funding obligations			—				—				—				310				—				—				310
Deferred tax and other liabilities			(489	)			84				147				3,440				(49	)			912				4,045
Borrowings and capital securities			—				333				188				—				10				3,874				4,405
Separate account liabilities			—				—				—				—				7,624				—				7,624
Liabilities held for sale			—				—				—				—				—				131				131
Total liabilities			553				2,046				1,492				71,130				11,054				4,925				91,200
Equity:
Allocated equity, excluding accumulated other comprehensive income (loss)			1,794				1,668				641				7,022				682				(1,937	)			9,870
Allocated accumulated other comprehensive income (loss)			20				(117	)			132				4,258				(7	)			(101	)			4,185
Total Genworth Financial, Inc.’s stockholders’ equity			1,814				1,551				773				11,280				675				(2,038	)			14,055
Noncontrolling interests			—				1,130				788				—				—				—				1,918
Total equity			1,814				2,681				1,561				11,280				675				(2,038	)			15,973
Total liabilities and equity		$	2,367			$	4,727			$	3,053			$	82,410			$	11,729			$	2,887			$	107,173

 

(1)	Includes inter-segment eliminations and other businesses that are managed outside the operating segments.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Consolidated Balance Sheet by Segment

(amounts in millions)

 

		December 31, 2015
		U.S. Mortgage Insurance				Canada Mortgage Insurance				Australia Mortgage Insurance				U.S. Life Insurance				Runoff				Corporate and Other(1)				Total
ASSETS
Cash and investments		$	2,227			$	4,295			$	2,886			$	60,788			$	2,862			$	2,688			$	75,746
Deferred acquisition costs and intangible assets			32				123				56				4,251				285				8				4,755
Reinsurance recoverable			6				—				—				16,415				824				—				17,245
Deferred tax and other assets			634				102				45				(1,924	)			261				1,557				675
Separate account assets			—				—				—				—				7,883				—				7,883
Assets held for sale			—				—				—				—				—				127				127
Total assets		$	2,899			$	4,520			$	2,987			$	79,530			$	12,115			$	4,380			$	106,431
LIABILITIES AND EQUITY
Liabilities:
Future policy benefits		$	—			$	—			$	—			$	36,471			$	4			$	—			$	36,475
Policyholder account balances			—				—				—				23,009				3,200				—				26,209
Liability for policy and contract claims			849				87				165				6,969				18				7				8,095
Unearned premiums			258				1,460				963				621				6				—				3,308
Non-recourse funding obligations			—				—				—				1,950				—				(30	)			1,920
Deferred tax and other liabilities			89				170				152				659				290				1,668				3,028
Borrowings and capital securities			—				313				178				—				10				4,248				4,749
Separate account liabilities			—				—				—				—				7,883				—				7,883
Liabilities held for sale			—				—				—				—				—				127				127
Total liabilities			1,196				2,030				1,458				69,679				11,411				6,020				91,794
Equity:
Allocated equity, excluding accumulated other comprehensive income (loss)			1,701				1,637				662				6,646				725				(1,557	)			9,814
Allocated accumulated other comprehensive income (loss)			2				(194	)			101				3,205				(21	)			(83	)			3,010
Total Genworth Financial, Inc.’s stockholders’ equity			1,703				1,443				763				9,851				704				(1,640	)			12,824
Noncontrolling interests			—				1,047				766				—				—				—				1,813
Total equity			1,703				2,490				1,529				9,851				704				(1,640	)			14,637
Total liabilities and equity		$	2,899			$	4,520			$	2,987			$	79,530			$	12,115			$	4,380			$	106,431

 

(1)	Includes inter-segment eliminations and other businesses that are managed outside the operating segments.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST 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(2)				Corporate and Other				Total
Unamortized balance as of December 31, 2015		$	22			$	108			$	35			$	4,132			$	272			$	—			$	4,569
Costs deferred			3				8				2				37				—				—				50
Amortization, net of interest accretion			(2	)			(9	)			(3	)			(61	)			(5	)			—				(80	)
Impact of foreign currency translation			—				7				2				—				—				—				9
Unamortized balance as of March 31, 2016			23				114				36				4,108				267				—				4,548
Effect of accumulated net unrealized investment (gains) losses			—				—				—				(308	)			(5	)			—				(313	)
Balance as of March 31, 2016		$	23			$	114			$	36			$	3,800			$	262			$	—			$	4,235

 

(1)	Amortization, net of interest accretion, included $4 million of amortization related to net investment gains for the policyholder account balances.

(2)	Amortization, net of interest accretion, included $4 million of amortization related to net investment gains for the policyholder account balances.

 

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U.S. Mortgage Insurance Segment

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Net Operating Income and Sales—U.S. Mortgage Insurance Segment

(amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	160			$	153			$	146			$	153			$	150			$	602
Net investment income			15				14				12				13				19				58
Net investment gains (losses)			(1	)			—				1				—				—				1
Policy fees and other income			1				1				2				—				1				4
Total revenues			175				168				161				166				170				665
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			38				59				63				50				50				222
Acquisition and operating expenses, net of deferrals			39				42				38				38				37				155
Amortization of deferred acquisition costs and intangibles			3				3				3				2				2				10
Total benefits and expenses			80				104				104				90				89				387
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			95				64				57				76				81				278
Provision for income taxes			34				23				20				27				29				99
INCOME FROM CONTINUING OPERATIONS			61				41				37				49				52				179
ADJUSTMENT TO INCOME FROM CONTINUING OPERATIONS:
Net investment (gains) losses, net			—				—				—				—				—				—
NET OPERATING INCOME		$	61			$	41			$	37			$	49			$	52			$	179
Effective tax rate (operating income)(1)			35.8	%			35.5	%			35.4	%			35.6	%			35.7	%			35.6	%
SALES:
New Insurance Written (NIW)
Flow		$	7,400			$	7,800			$	9,300			$	8,200			$	6,300			$	31,600
Bulk			—				—				—				—				—				—
Total U.S. Mortgage Insurance NIW		$	7,400			$	7,800			$	9,300			$	8,200			$	6,300			$	31,600

 

(1)	The operating income (loss) effective tax rate for all pages in this financial supplement was calculated using whole dollars. As a result, the percentages shown may differ from an operating income (loss) effective tax rate calculated using the rounded numbers in this financial supplement.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Flow New Insurance Written Metrics—U.S. Mortgage Insurance Segment

(amounts in millions)

 

		2016								2015
		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)
Product
Monthly(1)		$	5,400				59			$	5,900				60			$	7,000				60			$	6,500				60			$	4,400				60
Single			2,000				164				1,900				168				2,300				171				1,700				172				1,900				160
Total Flow		$	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
FICO Scores
Over 735		$	4,400				60	%		$	4,600				59	%		$	5,500				59	%		$	5,000				61	%		$	3,700				59	%
680—735			2,400				32				2,500				32				3,000				32				2,500				30				2,100				33
660—679(2)			300				4				400				5				500				6				400				5				300				5
620—659			300				4				300				4				300				3				300				4				200				3
<620			—				—				—				—				—				—				—				—				—				—
Total Flow		$	7,400				100	%		$	7,800				100	%		$	9,300				100	%		$	8,200				100	%		$	6,300				100	%
Loan-To-Value Ratio
95.01% and above		$	400				5	%		$	400				5	%		$	500				5	%		$	400				5	%		$	300				5	%
90.01% to 95.00%			3,700				50				4,000				51				4,900				53				4,200				51				3,100				49
85.01% to 90.00%			2,400				33				2,500				32				3,000				32				2,600				32				2,000				32
85.00% and below			900				12				900				12				900				10				1,000				12				900				14
Total Flow		$	7,400				100	%		$	7,800				100	%		$	9,300				100	%		$	8,200				100	%		$	6,300				100	%
Origination
Purchase		$	6,000				81	%		$	6,500				83	%		$	8,100				87	%		$	6,500				79	%		$	4,300				68	%
Refinance			1,400				19				1,300				17				1,200				13				1,700				21				2,000				32
Total Flow		$	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.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Other Metrics—U.S. Mortgage Insurance Segment

(dollar amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
Net Premiums Written		$	176			$	171			$	171			$	170			$	170			$	682
New Risk Written
Flow		$	1,845			$	1,964			$	2,364			$	2,040			$	1,557			$	7,925
Bulk			—				—				—				—				—				—
Total Primary			1,845				1,964				2,364				2,040				1,557				7,925
Pool			—				—				—				—				—				—
Total New Risk Written		$	1,845			$	1,964			$	2,364			$	2,040			$	1,557			$	7,925
Primary Insurance In-Force		$	124,100			$	122,400			$	120,400			$	117,100			$	115,200
Risk In-Force
Flow		$	31,136			$	30,616			$	30,001			$	29,026			$	28,415
Bulk(1)			318				326				349				360				387
Total Primary			31,454				30,942				30,350				29,386				28,802
Pool			116				120				129				137				142
Total Risk In-Force		$	31,570			$	31,062			$	30,479			$	29,523			$	28,944
Primary Risk In-Force That Is GSE Conforming			96	%			96	%			97	%			97	%			97	%
Expense Ratio (Net Earned Premiums)(2)			26	%			29	%			28	%			26	%			26	%			27	%
Expense Ratio (Net Premiums Written)(3)			24	%			26	%			24	%			23	%			23	%			24	%
Flow Persistency			82	%			81	%			80	%			79	%			81	%
Risk To Capital Ratio(4)			15.3:1				16.3:1				14.3:1				13.7:1				14.1:1
Average Primary Loan Size (in thousands)		$	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)	As of March 31, 2016, 90% 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.

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

(3)	The ratio of an insurer’s 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)

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

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Loss Metrics—U.S. Mortgage Insurance Segment

(dollar amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
Paid Claims
Flow
Direct(1)		$	112			$	158			$	98			$	131			$	130			$	517
Assumed(2)			2				1				3				4				5				13
Ceded			(3	)			(1	)			—				(1	)			(16	)			(18	)
Loss adjustment expenses			3				3				3				3				4				13
Total Flow			114				161				104				137				123				525
Bulk			2				1				1				2				2				6
Total Primary			116				162				105				139				125				531
Pool			—				1				—				1				1				3
Total Paid Claims		$	116			$	163			$	105			$	140			$	126			$	534
Average Paid Claim (in thousands)(3)		$	51.9			$	63.6			$	54.0			$	50.8			$	46.5
Average Reserve Per Delinquency (in thousands)
Flow		$	28.3			$	27.2			$	29.4			$	30.6			$	31.0
Bulk loans with established reserve			21.2				19.9				20.0				21.5				21.2
Reserves:
Flow direct case		$	698			$	775			$	870			$	909			$	992
Bulk direct case			15				17				17				18				20
Assumed(2)			7				8				9				12				15
All other(4)			48				49				57				57				60
Total Reserves		$	768			$	849			$	953			$	996			$	1,087
Beginning Reserves		$	849			$	953			$	996			$	1,087			$	1,180			$	1,180
Paid claims(1)			(119	)			(164	)			(105	)			(141	)			(142	)			(552	)
Increase in reserves			38				60				62				50				49				221
Ending Reserves		$	768			$	849			$	953			$	996			$	1,087			$	849
Beginning Reinsurance Recoverable(5)		$	5			$	6			$	6			$	7			$	24			$	24
Ceded paid claims			(3	)			(1	)			—				(1	)			(16	)			(18	)
Decrease in recoverable			—				—				—				—				(1	)			(1	)
Ending Reinsurance Recoverable		$	2			$	5			$	6			$	6			$	7			$	5
Loss Ratio(6)			24	%			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 include 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 reflects 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.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

Delinquency Metrics—U.S. Mortgage Insurance Segment

(dollar amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
Number of Primary Delinquencies
Flow			26,491				30,416				31,678				31,876				34,220
Bulk loans with an established reserve			776				889				917				908				984
Bulk loans with no reserve(1)			335				358				394				415				461
Total Number of Primary Delinquencies			27,602				31,663				32,989				33,199				35,665
Beginning Number of Primary Delinquencies			31,663				32,989				33,199				35,665				39,786				39,786
New delinquencies			8,761				10,043				10,192				9,061				9,554				38,850
Delinquency cures			(10,602	)			(8,835	)			(8,484	)			(8,800	)			(10,988	)			(37,107	)
Paid claims			(2,220	)			(2,534	)			(1,918	)			(2,727	)			(2,687	)			(9,866	)
Ending Number of Primary Delinquencies			27,602				31,663				32,989				33,199				35,665				31,663
Composition of Cures
Reported delinquent and cured-intraquarter			2,503				1,740				1,805				1,658				2,271
Number of missed payments delinquent prior to cure:
3 payments or less			5,775				5,005				4,630				4,260				6,112
4 - 11 payments			1,443				1,330				1,487				2,250				1,912
12 payments or more			881				760				562				632				693
Total			10,602				8,835				8,484				8,800				10,988
Primary Delinquencies by Missed Payment Status
3 payments or less			8,395				10,487				10,226				9,432				9,271
4 - 11 payments			7,254				7,577				7,376				7,824				9,086
12 payments or more			11,953				13,599				15,387				15,943				17,308
Primary Delinquencies			27,602				31,663				32,989				33,199				35,665
		March 31, 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			8,082			$	45			$	337				13	%
4 - 11 payments in default			7,065				176				294				60	%
12 payments or more in default			11,344				477				559				85	%
Total			26,491			$	698			$	1,190				59	%
		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.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

Portfolio Quality Metrics—U.S. Mortgage Insurance Segment

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q
Primary Loans
Primary loans in-force			655,300				651,668				647,126				636,640				631,591
Primary delinquent loans			27,602				31,663				32,989				33,199				35,665
Primary delinquency rate			4.21	%			4.86	%			5.10	%			5.21	%			5.65	%
Flow loans in-force			632,010				627,349				620,430				608,615				601,472
Flow delinquent loans			26,491				30,416				31,678				31,876				34,220
Flow delinquency rate			4.19	%			4.85	%			5.11	%			5.24	%			5.69	%
Bulk loans in-force			23,290				24,319				26,696				28,025				30,119
Bulk delinquent loans			1,111				1,247				1,311				1,323				1,445
Bulk delinquency rate			4.77	%			5.13	%			4.91	%			4.72	%			4.80	%
A minus and sub-prime loans in-force			26,995				28,332				29,745				31,051				33,805
A minus and sub-prime delinquent loans			5,546				6,448				6,642				6,530				7,019
A minus and sub-prime delinquency rate			20.54	%			22.76	%			22.33	%			21.03	%			20.76	%
Pool Loans
Pool loans in-force			6,406				6,620				7,284				7,709				7,979
Pool delinquent loans			369				386				426				447				468
Pool delinquency rate			5.76	%			5.83	%			5.85	%			5.80	%			5.87	%
Primary Risk In-Force by Credit Quality
Over 735			53	%			53	%			52	%			52	%			52	%
680-735			31	%			31	%			31	%			31	%			31	%
660-679(1)			7	%			7	%			7	%			7	%			7	%
620-659			7	%			7	%			7	%			7	%			7	%
< 620			2	%			2	%			3	%			3	%			3	%

 

 

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

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Portfolio Quality Metrics—U.S. Mortgage Insurance Segment

(dollar amounts in millions)

 

		March 31, 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			6.04	%			11.9	%		$	3,714				3.0	%		$	833				2.6	%			13.68	%
2005			5.65	%			11.7				3,310				2.7				898				2.9				13.03	%
2006			5.84	%			17.2				5,498				4.4				1,431				4.6				12.48	%
2007			5.74	%			37.1				14,236				11.5				3,588				11.4				11.25	%
2008			5.28	%			16.8				12,181				9.8				3,089				9.8				6.22	%
2009			4.95	%			0.6				1,679				1.4				393				1.2				1.95	%
2010			4.69	%			0.7				2,121				1.7				534				1.7				1.76	%
2011			4.53	%			0.6				3,020				2.4				781				2.5				1.41	%
2012			3.83	%			0.6				7,749				6.2				2,032				6.5				0.62	%
2013			4.01	%			1.0				13,719				11.1				3,548				11.3				0.57	%
2014			4.40	%			1.4				19,256				15.5				4,886				15.5				0.58	%
2015			4.10	%			0.4				30,277				24.4				7,603				24.2				0.17	%
2016			4.12	%			—				7,336				5.9				1,838				5.8				0.02	%
Total			4.73	%			100.0	%		$	124,096				100.0	%		$	31,454				100.0	%			4.21	%
		March 31, 2016								December 31, 2015								March 31, 2015
		Primary Risk In-Force				Primary Delinquency Rate				Primary Risk In-Force				Primary Delinquency Rate				Primary Risk In-Force				Primary Delinquency Rate
Lender concentration (by original applicant)		$	31,454				4.21	%		$	30,942				4.86	%		$	28,802				5.65	%
Top 10 lenders			11,282				5.60	%			11,536				6.47	%			12,123				6.98	%
Top 20 lenders			14,165				5.01	%			14,201				5.68	%			14,177				6.54	%
Loan-to-value ratio
95.01% and above		$	6,207				7.14	%		$	6,309				8.17	%		$	6,654				8.16	%
90.01% to 95.00%			14,941				2.90	%			14,425				3.36	%			12,398				4.34	%
80.01% to 90.00%			10,004				3.99	%			9,900				4.57	%			9,402				5.51	%
80.00% and below			302				3.17	%			308				3.39	%			348				3.37	%
Total		$	31,454				4.21	%		$	30,942				4.86	%		$	28,802				5.65	%
Loan grade
Prime		$	30,436				3.51	%		$	29,874				4.05	%		$	27,593				4.81	%
A minus and sub-prime			1,018				20.54	%			1,068				22.76	%			1,209				21.18	%
Total		$	31,454				4.21	%		$	30,942				4.86	%		$	28,802				5.65	%

 

(1)	Average Annual Mortgage Interest Rate.

(2)	Total reserves were $768 million as of March 31, 2016.

 

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Canada Mortgage Insurance Segment

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Net Operating Income and Sales—Canada Mortgage Insurance Segment

(amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	111			$	115			$	116			$	116			$	119			$	466
Net investment income			29				31				32				33				34				130
Net investment gains (losses)			20				(11	)			(23	)			20				(18	)			(32	)
Policy fees and other income			—				—				(1	)			—				1				—
Total revenues			160				135				124				169				136				564
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			26				26				24				21				25				96
Acquisition and operating expenses, net of deferrals			18				16				16				22				12				66
Amortization of deferred acquisition costs and intangibles			9				9				9				9				9				36
Interest expense			4				4				5				4				5				18
Total benefits and expenses			57				55				54				56				51				216
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			103				80				70				113				85				348
Provision for income taxes			29				20				17				31				22				90
INCOME FROM CONTINUING OPERATIONS			74				60				53				82				63				258
Less: net income attributable to noncontrolling interests			34				27				24				38				29				118
INCOME FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS			40				33				29				44				34				140
ADJUSTMENT TO INCOME FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS:
Net investment (gains) losses, net			(7	)			4				9				(7	)			6				12
NET OPERATING INCOME(1)		$	33			$	37			$	38			$	37			$	40			$	152
Effective tax rate (operating income)			18.6	%			27.1	%			27.2	%			27.3	%			27.9	%			27.4	%
SALES:
New Insurance Written (NIW)
Flow		$	2,500			$	4,700			$	6,600			$	5,400			$	3,300			$	20,000
Bulk			3,200				7,300				4,800				3,300				5,000				20,400
Total Canada NIW(2)		$	5,700			$	12,000			$	11,400			$	8,700			$	8,300			$	40,400

 

(1)	Net operating income for the Canadian platform adjusted for foreign exchange as compared to the prior year period was $39 million for the three months ended March 31, 2016.

(2)	New insurance written for the Canadian platform adjusted for foreign exchange as compared to the prior year period was $6,600 million for the three months ended March 31, 2016.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Selected Key Performance Measures—Canada Mortgage Insurance Segment

(amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
Net Premiums Written		$	84			$	162			$	204			$	166			$	109			$	641
Loss Ratio(1)			24	%			23	%			21	%			17	%			22	%			21%
Expense Ratio (Net Earned Premiums)(2)			24	%			22	%			22	%			27	%			18	%			22%
Expense Ratio (Net Premiums Written)(3)			32	%			15	%			12	%			19	%			20	%			16%
Primary Insurance In-Force(4)		$	317,400			$	292,600			$	292,000			$	300,900			$	288,800
Primary Risk In-Force(5)
Flow		$	79,900			$	74,300			$	75,500			$	78,500			$	75,700
Bulk			31,200				28,100				26,700				26,800				25,400
Total		$	111,100			$	102,400			$	102,200			$	105,300			$	101,100
Risk In-Force by Loan-To-Value Ratio(6)		March 31, 2016																December 31, 2015
		Primary				Flow				Bulk								Primary				Flow				Bulk
95.01% and above		$	38,398			$	38,398			$	—							$	35,570			$	35,570			$	—
90.01% to 95.00%			24,011				24,011				—								22,338				22,338				—
80.01% to 90.00%			14,602				14,599				3								13,630				13,627				3
80.00% and below			34,078				2,928				31,150								30,873				2,729				28,144
Total		$	111,089			$	79,936			$	31,153							$	102,411			$	74,264			$	28,147

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 insurer’s general expenses to net earned premiums. In the business, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles.

(3)	The ratio of an insurer’s 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 $139 billion, $138 billion, $142 billion and $137 billion as of December 31, 2015, September 30, 2015, June 30, 2015, and March 31, 2015. 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.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Selected Key Performance Measures—Canada Mortgage Insurance Segment

(dollar amounts in millions)

 

Primary Insurance		March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015				March 31, 2015
Insured loans in-force(1),(2)			1,860,978				1,835,916				1,785,541				1,737,083				1,704,483
Insured delinquent loans			2,034				1,829				1,715				1,666				1,792
Insured delinquency rate(2),(3)			0.11	%			0.10	%			0.10	%			0.10	%			0.11	%
Flow loans in-force(1)			1,341,636				1,331,773				1,313,034				1,287,744				1,266,626
Flow delinquent loans			1,711				1,550				1,449				1,435				1,532
Flow delinquency rate(3)			0.13	%			0.12	%			0.11	%			0.11	%			0.12	%
Bulk loans in-force(1)			519,342				504,143				472,507				449,339				437,857
Bulk delinquent loans			323				279				266				231				260
Bulk delinquency rate(3)			0.06	%			0.06	%			0.06	%			0.05	%			0.06	%
Loss Metrics		March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015				March 31, 2015
Beginning Reserves		$	87			$	83			$	85			$	85			$	91
Paid claims(4)			(18	)			(18	)			(20	)			(21	)			(22	)
Increase in reserves			26				25				23				19				24
Impact of changes in foreign exchange rates			7				(3	)			(5	)			2				(8	)
Ending Reserves		$	102			$	87			$	83			$	85			$	85
		March 31, 2016								December 31, 2015								March 31, 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			47	%			0.05	%			47	%			0.05	%			46	%			0.05	%
Alberta			17				0.16	%			17				0.12	%			17				0.09	%
British Columbia			14				0.08	%			14				0.08	%			14				0.13	%
Quebec			13				0.20	%			13				0.19	%			14				0.19	%
Saskatchewan			3				0.21	%			3				0.17	%			3				0.15	%
Nova Scotia			2				0.20	%			2				0.18	%			2				0.23	%
Manitoba			2				0.10	%			2				0.09	%			2				0.07	%
New Brunswick			1				0.21	%			1				0.20	%			1				0.22	%
All Other			1				0.14	%			1				0.13	%			1				0.12	%
Total			100	%			0.11	%			100	%			0.10	%			100	%			0.11	%
By Policy Year
2007 and prior			35	%			0.05	%			36	%			0.04	%			39	%			0.05	%
2008			6				0.19	%			6				0.19	%			7				0.22	%
2009			4				0.18	%			4				0.16	%			5				0.19	%
2010			6				0.22	%			7				0.21	%			7				0.23	%
2011			6				0.29	%			6				0.26	%			7				0.26	%
2012			8				0.24	%			7				0.22	%			10				0.19	%
2013			9				0.19	%			9				0.16	%			10				0.11	%
2014			10				0.12	%			10				0.09	%			12				0.05	%
2015			14				0.02	%			15				0.01	%			3				—	%
2016			2				—	%			—				—	%			—				—	%
Total			100	%			0.11	%			100	%			0.10	%			100	%			0.11	%

 

(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 870,000 as of December 31, 2015, 836,000 as of September 30, 2015, 828,000 as of June 30, 2015, and 809,100 as of March 31, 2015. This is based on the extrapolation of the amounts reported by lenders to the entire insured population. The corresponding insured delinquency rate was 0.21% as of December 31, 2015 and September 30, 2015, 0.20% as of June 30, 2015 and 0.22% as of March 31, 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.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Selected Key Performance Measures—Canada Mortgage Insurance Segment

(Canadian dollar amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
Paid Claims(1)
Flow		$	24			$	23			$	25			$	25			$	25			$	98
Bulk			1				1				1				1				2				5
Total Paid Claims		$	25			$	24			$	26			$	26			$	27			$	103
Average Paid Claim (in thousands)		$	67.8			$	63.7			$	66.2			$	58.7			$	67.9
Average Reserve Per Delinquency (in thousands)		$	65.0			$	65.7			$	64.2			$	63.6			$	60.4
Loss Metrics
Beginning Reserves		$	120			$	110			$	106			$	108			$	106
Paid claims(1)			(25	)			(24	)			(26	)			(26	)			(27	)
Increase in reserves			37				34				30				24				29
Ending Reserves		$	132			$	120			$	110			$	106			$	108
Loan Amount(2)
Over $550K			7	%			7	%			7	%			6	%			6	%
$400K to $550K			13				13				12				12				12
$250K to $400K			34				33				33				33				33
$100K to $250K			42				43				44				44				44
$100K or Less			4				4				4				5				5
Total			100	%			100	%			100	%			100	%			100	%
Average Primary Loan Size (in thousands)		$	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.

 

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Australia Mortgage Insurance Segment

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

Net Operating Income and Sales—Australia Mortgage Insurance Segment

(amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	81			$	86			$	92			$	90			$	89			$	357
Net investment income			24				25				28				29				32				114
Net investment gains (losses)			—				2				3				—				1				6
Policy fees and other income			—				1				(1	)			1				(4	)			(3	)
Total revenues			105				114				122				120				118				474
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			21				15				27				25				14				81
Acquisition and operating expenses, net of deferrals			19				24				27				25				22				98
Amortization of deferred acquisition costs and intangibles			3				4				4				5				5				18
Interest expense			3				3				3				2				2				10
Total benefits and expenses			46				46				61				57				43				207
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			59				68				61				63				75				267
Provision for income taxes			19				20				18				18				24				80
INCOME FROM CONTINUING OPERATIONS			40				48				43				45				51				187
Less: net income attributable to noncontrolling interests			21				25				22				16				21				84
INCOME FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS			19				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	)			(1	)			—				—				(2	)
(Gains) losses on early extinguishment of debt, net			—				—				1				—				—				1
NET OPERATING INCOME(1)		$	19			$	22			$	21			$	29			$	30			$	102
Effective tax rate (operating income)			30.3	%			28.7	%			28.0	%			29.5	%			30.5	%			29.3	%
SALES:
New Insurance Written (NIW)
Flow		$	4,400			$	4,600			$	6,300			$	6,500			$	5,800			$	23,200
Bulk			—				—				—				1,700				—				1,700
Total Australia NIW(2)		$	4,400			$	4,600			$	6,300			$	8,200			$	5,800			$	24,900

 

(1)	Net operating income for the Australian platform adjusted for foreign exchange as compared to the prior year period was $22 million for the three months ended March 31, 2016.

(2)	New insurance written for the Australian platform adjusted for foreign exchange as compared to the prior year period was $4,900 million for the three months ended March 31, 2016.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Selected Key Performance Measures—Australia Mortgage Insurance Segment

(amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
Net Premiums Written		$	47			$	55			$	79			$	107			$	87			$	328
Loss Ratio(1),(2)			26	%			17	%			29	%			28	%			15	%			23%
Expense Ratio (Net Earned Premiums)(3)			27	%			31	%			34	%			33	%			30	%			32%
Expense Ratio (Net Premiums Written)(4)			47	%			49	%			40	%			28	%			31	%			35%
Primary Insurance In-Force		$	246,800			$	233,600			$	224,100			$	243,800			$	240,900
Primary Risk In-Force(5)
Flow		$	80,300			$	76,000			$	72,900			$	79,100			$	78,600
Bulk			5,700				5,500				5,500				6,200				5,700
Total		$	86,000			$	81,500			$	78,400			$	85,300			$	84,300
		March 31, 2016																December 31, 2015
Risk In-Force by Loan-To-Value Ratio(6)		Primary				Flow				Bulk								Primary				Flow				Bulk
95.01% and above		$	15,585			$	15,585			$	—							$	15,055			$	15,055			$	—
90.01% to 95.00%			22,243				22,237				6								20,933				20,927				6
80.01% to 90.00%			22,803				22,736				67								21,510				21,446				64
80.00% and below			25,392				19,744				5,648								23,970				18,545				5,426
Total		$	86,023			$	80,302			$	5,721							$	81,468			$	75,972			$	5,496

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 insurer’s general expenses to net earned premiums. In the business, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles. 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 insurer’s 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.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Selected Key Performance Measures—Australia Mortgage Insurance Segment

(dollar amounts in millions)

 

Primary Insurance		March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015				March 31, 2015
Insured loans in-force			1,479,544				1,478,434				1,479,676				1,481,755				1,498,197
Insured delinquent loans			5,889				5,552				5,804				5,900				5,378
Insured delinquency rate			0.40	%			0.38	%			0.39	%			0.40	%			0.36	%
Flow loans in-force			1,366,914				1,364,628				1,364,537				1,364,653				1,382,156
Flow delinquent loans			5,633				5,317				5,545				5,623				5,112
Flow delinquency rate			0.41	%			0.39	%			0.41	%			0.41	%			0.37	%
Bulk loans in-force			112,630				113,806				115,139				117,102				116,041
Bulk delinquent loans			256				235				259				277				266
Bulk delinquency rate			0.23	%			0.21	%			0.22	%			0.24	%			0.23	%
Loss Metrics		March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015				March 31, 2015
Beginning Reserves		$	165			$	156			$	160			$	149			$	152
Paid claims(1)			(13	)			(14	)			(16	)			(15	)			(14	)
Increase in reserves			20				17				27				25				21
Impact of changes in foreign exchange rates			9				6				(15	)			1				(10	)
Ending Reserves		$	181			$	165			$	156			$	160			$	149
		March 31, 2016								December 31, 2015								March 31, 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			29	%			0.29	%			29	%			0.27	%			29	%			0.29%
Queensland			23				0.55	%			23				0.53	%			23				0.50%
Victoria			23				0.35	%			23				0.33	%			23				0.32%
Western Australia			11				0.53	%			11				0.46	%			11				0.37%
South Australia			6				0.52	%			6				0.51	%			6				0.48%
Australian Capital Territory			3				0.18	%			3				0.17	%			3				0.13%
Tasmania			2				0.38	%			2				0.32	%			2				0.28%
New Zealand			2				0.13	%			2				0.17	%			2				0.27%
Northern Territory			1				0.21	%			1				0.17	%			1				0.20%
Total			100	%			0.40	%			100	%			0.38	%			100	%			0.36%
By Policy Year
2007 and prior			36	%			0.29	%			36	%			0.29	%			39	%			0.29%
2008			6				0.98	%			6				0.89	%			7				0.87%
2009			7				0.73	%			8				0.71	%			9				0.70%
2010			6				0.51	%			6				0.46	%			6				0.42%
2011			6				0.52	%			6				0.46	%			7				0.42%
2012			8				0.54	%			8				0.49	%			9				0.40%
2013			9				0.47	%			10				0.37	%			10				0.26%
2014			11				0.26	%			11				0.19	%			11				0.06%
2015			9				0.06	%			9				0.02	%			2				—  %
2016			2				—	%			—				—	%			—				—  %
Total			100	%			0.40	%			100	%			0.38	%			100	%			0.36%

 

(1)	Paid claims exclude adjustments for expected recoveries related to loss reserves and prior paid claims.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

Selected Key Performance Measures—Australia Mortgage Insurance Segment

(Australian dollar amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
Paid Claims(1)
Flow		$	18			$	22			$	21			$	19			$	17			$	79
Bulk			—				—				—				—				1				1
Total Paid Claims		$	18			$	22			$	21			$	19			$	18			$	80
Average Paid Claim (in thousands)		$	65.8			$	71.0			$	65.9			$	66.9			$	62.5
Average Reserve Per Delinquency (in thousands)		$	40.1			$	40.7			$	38.3			$	35.2			$	36.4
Loss Metrics
Beginning Reserves		$	226			$	222			$	208			$	196			$	186
Paid claims(1)			(18	)			(22	)			(21	)			(19	)			(18	)
Increase in reserves			28				26				35				31				28
Ending Reserves		$	236			$	226			$	222			$	208			$	196
Loan Amount(2)
Over $550K			15	%			15	%			15	%			14	%			13	%
$400K to $550K			20				19				19				19				19
$250K to $400K			36				36				36				36				37
$100K to $250K			24				25				25				25				26
$100K or Less			5				5				5				6				5
Total			100	%			100	%			100	%			100	%			100	%
Average Primary Loan Size (in thousands)		$	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.

 

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U.S. Life Insurance Segment

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

Net Operating Income (Loss)—U.S. Life Insurance Segment

(amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	436			$	797			$	784			$	769			$	778			$	3,128
Net investment income			684				673				680				677				671				2,701
Net investment gains (losses)			(16	)			17				(16	)			(7	)			(4	)			(10	)
Policy fees and other income			177				187				177				182				180				726
Total revenues			1,281				1,674				1,625				1,621				1,625				6,545
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			758				1,324				1,155				1,122				1,091				4,692
Interest credited			144				148				148				150				150				596
Acquisition and operating expenses, net of deferrals			165				178				176				167				163				684
Amortization of deferred acquisition costs and intangibles			78				194				530				75				73				872
Interest expense			28				23				22				22				25				92
Total benefits and expenses			1,173				1,867				2,031				1,536				1,502				6,936
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			108				(193	)			(406	)			85				123				(391	)
Provision (benefit) for income taxes			39				(68	)			(144	)			31				43				(138	)
INCOME (LOSS) FROM CONTINUING OPERATIONS			69				(125	)			(262	)			54				80				(253	)
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses, net			7				(12	)			6				2				1				(3	)
(Gains) losses from life block transactions, net			6				—				296				—				—				296
Expenses related to restructuring, net			9				2				—				1				—				3
NET OPERATING INCOME (LOSS)		$	91			$	(135	)		$	40			$	57			$	81			$	43
Effective tax rate (operating income (loss))			35.3	%			35.3	%			35.3	%			35.3	%			35.3	%			35.3	%

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Net Operating Income (Loss) and Sales—U.S. Life Insurance Segment—Long-Term Care Insurance

(amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	618			$	633			$	618			$	597			$	589			$	2,437
Net investment income			329				325				327				320				313				1,285
Net investment gains (losses)			4				24				4				(3	)			3				28
Policy fees and other income			1				1				—				1				—				2
Total revenues			952				983				949				915				905				3,752
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			776				797				825				780				766				3,168
Interest credited			—				—				—				—				—				—
Acquisition and operating expenses, net of deferrals			95				110				112				98				95				415
Amortization of deferred acquisition costs and intangibles			26				25				24				24				26				99
Interest expense			—				—				—				—				—				—
Total benefits and expenses			897				932				961				902				887				3,682
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			55				51				(12	)			13				18				70
Provision (benefit) for income taxes			20				19				(5	)			5				6				25
INCOME (LOSS) FROM CONTINUING OPERATIONS			35				32				(7	)			8				12				45
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses, net			(3	)			(15	)			(3	)			2				(2	)			(18	)
Expenses related to restructuring, net			2				2				—				—				—				2
NET OPERATING INCOME (LOSS)		$	34			$	19			$	(10	)		$	10			$	10			$	29
Effective tax rate (operating income (loss))			35.3	%			35.3	%			35.3	%			35.3	%			35.3	%			35.3	%
SALES:
Individual Long-Term Care Insurance		$	5			$	8			$	7			$	8			$	10			$	33
Group Long-Term Care Insurance			2				2				1				1				1				5
Total Sales		$	7			$	10			$	8			$	9			$	11			$	38
RATIOS:
Loss Ratio(1)			67.6	%			72.9	%			76.4	%			72.6	%			72.4	%			73.6	%
Gross Benefits Ratio(2)			125.5	%			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.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Net Operating Income (Loss) and Sales—U.S. Life Insurance Segment—Life Insurance

(amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums(1)		$	(185	)		$	160			$	162			$	169			$	179			$	670
Net investment income			133				125				126				127				127				505
Net investment gains (losses)			2				15				(8	)			3				3				13
Policy fees and other income			173				183				175				178				178				714
Total revenues			123				483				455				477				487				1,902
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves(1)			(87	)			446				248				266				250				1,210
Interest credited			64				68				66				68				66				268
Acquisition and operating expenses, net of deferrals			51				50				48				52				51				201
Amortization of deferred acquisition costs and intangibles			33				150				487				33				30				700
Interest expense			28				23				22				22				25				92
Total benefits and expenses			89				737				871				441				422				2,471
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			34				(254	)			(416	)			36				65				(569	)
Provision (benefit) for income taxes			12				(90	)			(147	)			13				23				(201	)
INCOME (LOSS) FROM CONTINUING OPERATIONS			22				(164	)			(269	)			23				42				(368	)
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses, net			(1	)			(9	)			4				(2	)			(2	)			(9	)
(Gains) losses from life block transactions, net			6				—				296				—				—				296
Expenses related to restructuring, net			4				—				—				1				—				1
NET OPERATING INCOME (LOSS)		$	31			$	(173	)		$	31			$	22			$	40			$	(80	)
Effective tax rate (operating income (loss))			35.3	%			35.3	%			35.3	%			35.3	%			35.3	%			35.3	%
SALES:
Term Life		$	5			$	6			$	7			$	9			$	9			$	31
Universal Life			2				3				2				4				4				13
Linked-Benefits			2				1				3				2				4				10
Total Sales		$	9			$	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.

 

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Net Operating Income and Sales—U.S. Life Insurance Segment—Fixed Annuities

(amounts in millions)

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	3			$	4			$	4			$	3			$	10			$	21
Net investment income			222				223				227				230				231				911
Net investment gains (losses)			(22	)			(22	)			(12	)			(7	)			(10	)			(51	)
Policy fees and other income			3				3				2				3				2				10
Total revenues			206				208				221				229				233				891
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			69				81				82				76				75				314
Interest credited			80				80				82				82				84				328
Acquisition and operating expenses, net of deferrals			19				18				16				17				17				68
Amortization of deferred acquisition costs and intangibles			19				19				19				18				17				73
Interest expense			—				—				—				—				—				—
Total benefits and expenses			187				198				199				193				193				783
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			19				10				22				36				40				108
Provision for income taxes			7				3				8				13				14				38
INCOME FROM CONTINUING OPERATIONS			12				7				14				23				26				70
ADJUSTMENTS TO INCOME FROM CONTINUING OPERATIONS:
Net investment (gains) losses, net			11				12				5				2				5				24
Expenses related to restructuring, net			3				—				—				—				—				—
NET OPERATING INCOME		$	26			$	19			$	19			$	25			$	31			$	94
Effective tax rate (operating income)			35.3	%			35.3	%			35.3	%			35.3	%			35.3	%			35.3	%
SALES:
Single Premium Deferred Annuities		$	159			$	297			$	248			$	211			$	306			$	1,062
Single Premium Immediate Annuities			9				17				12				13				20				62
Total Sales		$	168			$	314			$	260			$	224			$	326			$	1,124

 

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Runoff Segment

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

Net Operating Income (Loss)—Runoff Segment

(amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	—			$	—			$	—			$	1			$	—			$	1
Net investment income			35				35				32				40				31				138
Net investment gains (losses)			(8	)			(30	)			(25	)			(8	)			(6	)			(69	)
Policy fees and other income			42				45				46				49				49				189
Total revenues			69				50				53				82				74				259
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			15				8				18				11				7				44
Interest credited			33				32				31				31				30				124
Acquisition and operating expenses, net of deferrals			16				19				17				21				19				76
Amortization of deferred acquisition costs and intangibles			6				(3	)			17				10				5				29
Interest expense			—				—				—				1				—				1
Total benefits and expenses			70				56				83				74				61				274
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			(1	)			(6	)			(30	)			8				13				(15	)
Provision (benefit) for income taxes			(2	)			(3	)			(12	)			2				3				(10	)
INCOME (LOSS) FROM CONTINUING OPERATIONS			1				(3	)			(18	)			6				10				(5	)
ADJUSTMENT TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses, net			3				14				14				3				1				32
NET OPERATING INCOME (LOSS)		$	4			$	11			$	(4	)		$	9			$	11			$	27
Effective tax rate (operating income (loss))			3.1	%			26.6	%			49.2	%			25.7	%			26.7	%			19.9	%

 

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Corporate and Other

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

Net Operating Loss—Corporate and Other⁽¹⁾

(amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	6			$	6			$	7			$	5			$	7			$	25
Net investment income			2				3				(1	)			1				(6	)			(3	)
Net investment gains (losses)			(14	)			6				9				3				11				29
Policy fees and other income			1				—				—				(10	)			—				(10	)
Total revenues			(5	)			15				15				(1	)			12				41
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			2				3				3				3				5				14
Acquisition and operating expenses, net of deferrals(2)			137				154				40				22				14				230
Amortization of deferred acquisition costs and intangibles			—				—				—				—				1				1
Interest expense			70				74				75				74				75				298
Total benefits and expenses			209				231				118				99				95				543
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			(214	)			(216	)			(103	)			(100	)			(83	)			(502	)
Benefit for income taxes			(96	)			(28	)			(33	)			(39	)			(30	)			(130	)
LOSS FROM CONTINUING OPERATIONS			(118	)			(188	)			(70	)			(61	)			(53	)			(372	)
Income (loss) from discontinued operations, net of taxes			(19	)			(73	)			(21	)			(314	)			1				(407	)
NET LOSS			(137	)			(261	)			(91	)			(375	)			(52	)			(779	)
ADJUSTMENTS TO NET LOSS:
Net investment (gains) losses, net			10				(5	)			(6	)			(2	)			(7	)			(20	)
(Gains) losses on sale of business, net			(20	)			134				7				—				—				141
(Gains) losses on early extinguishment of debt, net			11				—				1				—				—				1
Expenses related to restructuring, net			—				1				—				1				—				2
Fees associated with bond consent solicitation, net			12				—				—				—				—				—
(Income) loss from discontinued operations, net of taxes			19				73				21				314				(1	)			407
NET OPERATING LOSS(3)		$	(105	)		$	(58	)		$	(68	)		$	(62	)		$	(60	)		$	(248	)
Effective tax rate (operating loss)			22.5	%			27.4	%			40.0	%			40.2	%			34.0	%			36.0	%

 

(1)	Includes inter-segment eliminations and the results of other businesses that are managed outside of the operating segments.

(2)

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.

(3)	Operating results of certain smaller international mortgage insurance businesses are included above. Metrics for these businesses were as follows:

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
Net Operating Loss		$	(1	)		$	(4	)		$	(5	)		$	(5	)		$	(6	)		$	(20	)
Loss Ratio(a)			27	%			62	%			48	%			43	%			81	%			59	%
Expense Ratio (Earned Premiums)(b),(c)			107	%			145	%			143	%			143	%			125	%			139	%
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.                                  (a)     The ratio of incurred losses and loss adjustment expenses to net earned premiums. (b)     The ratio of an insurer’s general expenses to net earned premiums. In the business, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles. (c)     Includes the impact of settlements and cancelled insurance contracts, primarily in Europe.

 

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Additional Financial Data

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

Investments Summary

(amounts in millions)

 

				March 31, 2016								December 31, 2015								September 30, 2015								June 30, 2015								March 31, 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				$	33,362				44	%		$	31,969				43	%		$	33,541				44	%		$	33,407				45	%		$	34,555				44	%
Private fixed maturity securities					10,867				14				10,822				15				10,908				15				10,777				14				10,879				14
Residential mortgage-backed securities(1)					5,041				7				4,998				7				5,008				7				4,954				7				5,011				6
Commercial mortgage-backed securities					2,633				4				2,475				3				2,492				3				2,475				3				2,548				3
Other asset-backed securities					3,287				4				3,253				4				3,904				5				3,837				5				3,766				5
State and political subdivisions					2,517				3				2,428				3				2,447				3				2,388				3				2,350				3
Non-investment grade fixed maturity securities					2,583				3				2,252				3				2,346				3				2,530				3				2,623				4
Equity securities:
Common stocks and mutual funds					108				—				37				—				37				—				62				—				134				—
Preferred stocks					323				—				273				—				236				—				237				1				165				—
Commercial mortgage loans					6,179				8				6,170				8				6,133				8				6,175				8				6,149				8
Restricted commercial mortgage loans related to securitization entities					155				—				161				—				175				—				181				—				188				—
Policy loans					1,565				2				1,568				2				1,567				2				1,584				2				1,506				2
Cash, cash equivalents and short-term investments					4,217				6				6,162				8				4,003				6				4,413				6				5,315				7
Securities lending					415				1				347				—				367				—				337				—				323				1
Other invested assets:		Limited partnerships			177				—				188				—				195				—				216				—				215				—
		Derivatives:
		Long-term care (LTC) forward starting swap—cash flow			1,087				1				629				1				768				1				423				1				948				1
		Other cash flow			7				—				8				—				8				—				8				—				9				—
		Equity index options—non-qualified			36				—				30				—				15				—				12				—				15				—
		Other non-qualified			537				1				445				1				534				1				416				—				512				1
		Trading portfolio			471				1				447				1				458				1				368				1				218				—
		Restricted other invested assets related to securitization entities			422				1				413				1				412				1				410				1				411				1
		Other			19				—				18				—				51				—				52				—				49				—
Total invested assets and cash				$	76,008				100	%		$	75,093				100	%		$	75,605				100	%		$	75,262				100	%		$	77,889				100	%
Public Fixed Maturity Securities—Credit Quality:
NRSRO(2) Designation
AAA				$	15,385				34	%		$	14,785				34	%		$	15,057				33	%		$	14,920				33	%		$	15,520				33	%
AA					4,174				10				4,121				10				4,603				10				4,763				11				4,849				11
A					12,664				28				12,155				28				13,485				30				13,376				30				13,781				30
BBB					11,213				25				10,720				25				10,667				24				10,576				23				10,715				23
BB					1,464				3				1,200				3				1,234				3				1,276				3				1,385				3
B					141				—				63				—				50				—				68				—				76				—
CCC and lower					77				—				92				—				95				—				99				—				108				—
Total public fixed maturity securities				$	45,118				100	%		$	43,136				100	%		$	45,191				100	%		$	45,078				100	%		$	46,434				100	%
Private Fixed Maturity Securities—Credit Quality:
NRSRO(2) Designation
AAA				$	1,614				10	%		$	1,531				10	%		$	1,725				11	%		$	1,641				11	%		$	1,509				10	%
AA					1,923				13				1,899				13				1,966				13				1,941				13				1,945				13
A					4,725				31				4,731				31				4,737				31				4,781				31				4,792				31
BBB					6,009				40				6,003				40				6,060				39				5,840				38				5,998				39
BB					772				5				777				5				839				5				973				6				910				6
B					104				1				104				1				114				1				101				1				126				1
CCC and lower					25				—				16				—				14				—				13				—				18				—
Total private fixed maturity securities				$	15,172				100	%		$	15,061				100	%		$	15,455				100	%		$	15,290				100	%		$	15,298				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.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Fixed Maturity Securities Summary

(amounts in millions)

 

		March 31, 2016								December 31, 2015								September 30, 2015								June 30, 2015								March 31, 2015
		Fair Value				% of Total				Fair Value				% of Total				Fair Value				% of Total				Fair Value				% of Total				Fair Value				% of Total
Fixed Maturity Securities—Security Sector:
U.S. government, agencies and government-sponsored enterprises		$	6,524				11	%		$	6,203				11	%		$	5,913				10	%		$	5,721				9	%		$	6,132				10	%
State and political subdivisions			2,517				4				2,438				4				2,448				4				2,389				4				2,351				4
Foreign government			2,080				3				2,015				3				1,935				3				1,955				3				1,837				3
U.S. corporate			25,389				43				24,401				42				25,679				43				25,135				42				25,806				42
Foreign corporate			12,629				21				12,199				21				13,027				22				13,628				23				13,961				23
Residential mortgage-backed securities			5,122				8				5,101				9				5,118				8				5,085				9				5,153				8
Commercial mortgage-backed securities			2,713				4				2,559				4				2,587				4				2,582				4				2,690				4
Other asset-backed securities			3,316				6				3,281				6				3,939				6				3,873				6				3,802				6
Total fixed maturity securities		$	60,290				100	%		$	58,197				100	%		$	60,646				100	%		$	60,368				100	%		$	61,732				100	%
Corporate Bond Holdings—Industry Sector:
Investment Grade:
Finance and insurance		$	8,128				23	%		$	7,746				22	%		$	8,290				23	%		$	8,047				22	%		$	8,219				22	%
Utilities			5,275				15				4,453				13				4,618				12				4,568				12				4,788				13
Energy			2,908				8				3,839				11				4,249				11				4,403				12				4,555				12
Consumer—non-cyclical			4,894				14				4,619				13				4,647				13				4,504				12				4,614				12
Consumer—cyclical			2,150				6				2,119				6				2,288				6				2,319				6				2,361				6
Capital goods			2,444				7				2,361				7				2,461				7				2,434				7				2,417				7
Industrial			1,980				5				1,915				6				2,130				6				2,224				6				2,309				6
Technology and communications			3,019				8				2,872				8				3,095				8				3,107				9				3,091				8
Transportation			1,750				5				1,689				5				1,695				5				1,629				5				1,687				4
Other			3,162				9				3,049				9				3,213				9				3,356				9				3,508				10
Subtotal			35,710				100	%			34,662				100	%			36,686				100	%			36,591				100	%			37,549				100	%
Non-Investment Grade:
Finance and insurance			306				13	%			359				19	%			381				19	%			443				20	%			471				21	%
Utilities			78				4				83				4				67				3				68				3				67				3
Energy			693				30				348				18				400				20				409				19				363				16
Consumer—non-cyclical			226				10				229				12				230				11				257				12				262				12
Consumer—cyclical			86				4				82				4				98				5				99				5				117				5
Capital goods			216				9				193				10				204				10				234				11				236				11
Industrial			279				12				244				13				254				13				240				11				238				11
Technology and communications			320				14				309				16				293				14				336				15				365				16
Transportation			2				—				2				—				2				—				3				—				19				1
Other			102				4				89				4				91				5				83				4				80				4
Subtotal			2,308				100	%			1,938				100	%			2,020				100	%			2,172				100	%			2,218				100	%
Total		$	38,018				100	%		$	36,600				100	%		$	38,706				100	%		$	38,763				100	%		$	39,767				100	%
Fixed Maturity Securities—Contractual Maturity Dates:
Due in one year or less		$	1,879				3	%		$	1,744				3	%		$	2,075				4	%		$	2,003				3	%		$	1,830				3	%
Due after one year through five years			10,730				18				10,192				18				10,817				18				10,935				19				10,838				18
Due after five years through ten years			11,964				20				11,917				20				12,155				20				12,212				20				12,193				20
Due after ten years			24,566				41				23,403				40				23,955				40				23,678				39				25,226				41
Subtotal			49,139				82				47,256				81				49,002				82				48,828				81				50,087				82
Mortgage and asset-backed securities			11,151				18				10,941				19				11,644				18				11,540				19				11,645				18
Total fixed maturity securities		$	60,290				100	%		$	58,197				100	%		$	60,646				100	%		$	60,368				100	%		$	61,732				100	%

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

General Account GAAP Net Investment Income Yields

(amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
GAAP Net Investment Income
Fixed maturity securities—taxable		$	641			$	634			$	647			$	645			$	632			$	2,558
Fixed maturity securities—non-taxable			3				3				3				3				3				12
Commercial mortgage loans			81				85				84				83				85				337
Restricted commercial mortgage loans related to securitization entities			2				4				3				3				4				14
Equity securities			5				4				3				4				4				15
Other invested assets			32				30				22				17				33				102
Limited partnerships			6				2				4				20				7				33
Restricted other invested assets related to securitization entities			2				2				1				1				1				5
Policy loans			35				36				33				35				33				137
Cash, cash equivalents and short-term investments			5				3				3				4				3				13
Gross investment income before expenses and fees			812				803				803				815				805				3,226
Expenses and fees			(23	)			(22	)			(20	)			(22	)			(24	)			(88	)
Net investment income		$	789			$	781			$	783			$	793			$	781			$	3,138
Annualized Yields
Fixed maturity securities—taxable			4.7	%			4.6	%			4.6	%			4.6	%			4.6	%			4.6	%
Fixed maturity securities—non-taxable			3.6	%			3.5	%			3.5	%			3.5	%			3.5	%			3.5	%
Commercial mortgage loans			5.2	%			5.5	%			5.5	%			5.4	%			5.6	%			5.5	%
Restricted commercial mortgage loans related to securitization entities			5.1	%			9.5	%			6.4	%			7.2	%			8.2	%			8.0	%
Equity securities			5.1	%			5.1	%			4.0	%			5.6	%			6.1	%			5.2	%
Other invested assets			29.4	%			27.4	%			22.2	%			24.2	%			60.6	%			30.7	%
Limited partnerships(1)			13.2	%			4.2	%			7.8	%			37.0	%			12.0	%			15.5	%
Restricted other invested assets related to securitization entities			2.0	%			2.0	%			1.0	%			1.0	%			1.0	%			1.3	%
Policy loans			8.9	%			9.2	%			8.4	%			9.1	%			8.8	%			8.9	%
Cash, cash equivalents and short-term investments			0.4	%			0.2	%			0.3	%			0.3	%			0.2	%			0.3	%
Gross investment income before expenses and fees			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	%
Net investment income			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.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Net Investment Gains (Losses), Net—Detail⁽¹⁾

(amounts in millions)

 

		2016				2015
		1Q				4Q				3Q				2Q				1Q				Total
Net realized gains (losses) on available-for-sale securities:
Fixed maturity securities:
U.S. corporate		$	(4	)		$	7			$	(2	)		$	—			$	—			$	5
U.S. government, agencies and government-sponsored enterprises			4				1				—				—				1				2
Foreign corporate			(5	)			(4	)			(1	)			(1	)			(4	)			(10	)
Foreign government			—				—				—				1				—				1
Mortgage-backed securities			—				—				(2	)			1				—				(1	)
Asset-backed securities			—				(1	)			(1	)			—				—				(2	)
Equity securities			—				—				2				8				5				15
Foreign exchange			—				1				1				—				1				3
Total net realized gains (losses) on available-for-sale securities			(5	)			4				(3	)			9				3				13
Impairments:
Corporate fixed maturity securities			(5	)			(9	)			(4	)			—				—				(13	)
Limited partnerships			(2	)			—				—				—				—				—
Commercial mortgage loans			—				—				(1	)			—				(2	)			(3	)
Other asset-backed securities			—				—				(1	)			—				—				(1	)
Total impairments			(7	)			(9	)			(6	)			—				(2	)			(17	)
Net unrealized gains (losses) on trading securities			18				(6	)			8				(11	)			4				(5	)
Derivative instruments			(25	)			2				(34	)			4				(21	)			(49	)
Commercial mortgage loans held-for-sale market valuation allowance			1				1				—				2				1				4
Contingent purchase price valuation change			—				—				2				—				—				2
Net gains (losses) related to securitization entities			5				(2	)			—				1				5				4
Net investment gains (losses), net of taxes			(13	)			(10	)			(33	)			5				(10	)			(48	)
Adjustment for DAC and other intangible amortization and certain benefit reserves, net of taxes			6				8				6				5				4				23
Adjustment for net investment (gains) losses attributable to noncontrolling interests, net of taxes			(6	)			2				5				(6	)			5				6
Net investment gains (losses), net		$	(13	)		$	—			$	(22	)		$	4			$	(1	)		$	(19	)

 

(1)	All adjustments for income taxes assume a 35% tax rate.

 

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Reconciliations of Non-GAAP Measures

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

Reconciliation of Operating ROE

(amounts in millions)

 

Twelve Month Rolling Average ROE		Twelve months ended
		March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015				March 31, 2015
GAAP Basis ROE
Net income (loss) available to Genworth Financial, Inc.’s common stockholders for the twelve months ended(1)		$	(716	)		$	(615	)		$	(1,083	)		$	(1,643	)		$	(1,274	)
Quarterly average Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income (loss)(2)		$	10,160			$	10,281			$	10,564			$	10,958			$	11,288
GAAP Basis ROE (1)/(2)			-7.0	%			-6.0	%			-10.3	%			-15.0	%			-11.3	%
Operating ROE
Net operating income (loss) for the twelve months ended(1)		$	204			$	255			$	(78	)		$	(465	)		$	(430	)
Quarterly average Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income (loss)(2)		$	10,160			$	10,281			$	10,564			$	10,958			$	11,288
Operating ROE (1)/(2)			2.0	%			2.5	%			-0.7	%			-4.2	%			-3.8	%
Quarterly Average ROE		Three months ended
		March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015				March 31, 2015
GAAP Basis ROE
Net income (loss) available to Genworth Financial, Inc.’s common stockholders for the period ended(3)		$	53			$	(292	)		$	(284	)		$	(193	)		$	154
Quarterly average Genworth Financial, Inc.’s stockholders’ equity for the period, excluding accumulated other comprehensive income (loss)(4)		$	9,842			$	9,958			$	10,241			$	10,507			$	10,555
Annualized GAAP Quarterly Basis ROE (3)/(4)			2.2	%			-11.7	%			-11.1	%			-7.3	%			5.8	%
Operating ROE
Net operating income (loss) for the period ended(3)		$	103			$	(82	)		$	64			$	119			$	154
Quarterly average Genworth Financial, Inc.’s stockholders’ equity for the period, excluding accumulated other comprehensive income (loss)(4)		$	9,842			$	9,958			$	10,241			$	10,507			$	10,555
Annualized Operating Quarterly Basis ROE (3)/(4)			4.2	%			-3.3	%			2.5	%			4.5	%			5.8	%

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).

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

 

Reconciliation of Core Yield

 

				2016				2015
		(Assets—amounts in billions)		1Q				4Q				3Q				2Q				1Q				Total
		Reported—Total Invested Assets and Cash		$	76.0			$	75.1			$	75.6			$	75.3			$	77.9			$	75.1
		Subtract:
		Securities lending			0.4				0.3				0.4				0.3				0.3				0.3
		Unrealized gains (losses)			6.3				4.2				5.4				4.9				7.8				4.2
		Adjusted end of period invested assets and cash		$	69.3			$	70.6			$	69.8			$	70.1			$	69.8			$	70.6
(A)		Average Invested Assets and Cash Used in Reported Yield Calculation		$	70.0			$	70.2			$	70.0			$	70.0			$	69.7			$	70.0
		Subtract:
		Restricted commercial mortgage loans and other invested assets related to securitization entities(1)			0.2				0.2				0.2				0.2				0.2				0.2
(B)		Average Invested Assets and Cash Used in Core Yield Calculation			69.8				70.0				69.8				69.8				69.5				69.8
		Subtract:
		Portfolios supporting floating products and non-recourse funding obligations(2)			2.5				3.5				3.5				3.6				3.7				3.6
(C)		Average Invested Assets and Cash Used in Core Yield (excl. Floating and Non-Recourse Funding) Calculation		$	67.3			$	66.5			$	66.3			$	66.2			$	65.8			$	66.2
		(Income—amounts in millions)
(D)		Reported—Net Investment Income		$	789			$	781			$	783			$	793			$	781			$	3,138
		Subtract:
		Bond calls and commercial mortgage loan prepayments			11				18				12				17				14				61
		Other non-core items(3)			15				(2	)			1				(4	)			7				2
		Restricted commercial mortgage loans and other invested assets related to securitization entities(1)			3				3				2				2				3				10
(E)		Core Net Investment Income			760				762				768				778				757				3,065
		Subtract:
		Investment income from portfolios supporting floating products and non-recourse funding obligations(2)			15				16				21				26				20				83
(F)		Core Net Investment Income (excl. Floating and Non-Recourse Funding)		$	745			$	746			$	747			$	752			$	737			$	2,982
(D) / (A)		Reported Yield			4.51	%			4.45	%			4.47	%			4.53	%			4.48	%			4.48	%
(E) / (B)		Core Yield			4.36	%			4.35	%			4.40	%			4.46	%			4.36	%			4.39	%
(F) / (C)		Core Yield (excl. Floating and Non-Recourse Funding)			4.43	%			4.49	%			4.51	%			4.54	%			4.48	%			4.51	%

 

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)	Floating products refer to institutional products and the non-recourse funding obligations that support certain term and universal life insurance reserves in the company’s life insurance business.

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

 

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Corporate Information

 

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2016

Financial Strength Ratings As Of April 27, 2016

 

Company		Standard & Poor’s Financial Services LLC (S&P)		Moody’s Investors Service, Inc. (Moody’s)		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 Financial Mortgage Insurance Limited (Europe)		B		Not rated		Not rated
Genworth Life Insurance Company		BB		Ba1		B++
Genworth Life and Annuity Insurance Company		BB		Baa2		B++
Genworth Life Insurance Company of New York		BB		Ba1		B++

The S&P, Moody’s, 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 company’s securities.

S&P states that insurers rated “A” (Strong), “BB” (Marginal) or “B” (Weak) have strong, marginal or weak financial security characteristics, respectively. The “A,” “BB” and “B” ranges are the third-, fifth- and sixth-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+,” “BB” and “B” ratings are the fifth-, eleventh-, twelfth- and fifteenth-highest of S&P’s 21 ratings categories.

Moody’s 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 Moody’s, 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” and “Ba1” ratings are the seventh-, ninth- and eleventh-highest, respectively, of Moody’s 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. The “B++” (Good) rating is the fifth-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 Fitch’s 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 Rating’s eight long-term rating categories, which range from “HR AAA” to “HR D.”

S&P, Moody’s, 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.

 

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