Table of Contents

Exhibit 99.2

 

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Table of Contents

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND 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—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, net operating income (loss), net operating income (loss) per common share, book value and book value per common share should be read as income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders, income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders per share, net income (loss) available to Genworth Financial, Inc.’s common stockholders, net income (loss) available to Genworth Financial, Inc.’s common stockholders per share, net operating income (loss) available to Genworth Financial, Inc.’s common stockholders, net operating income (loss) available to Genworth Financial, Inc.’s common stockholders per share, book value available to Genworth Financial, Inc.’s common stockholders and book value available to Genworth Financial, Inc.’s common stockholders per share, respectively.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND 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

SECOND QUARTER 2016

Use of Non-GAAP Measures

This financial supplement includes the non-GAAP⁽¹⁾ financial measures entitled “net operating income (loss)” and “net operating income (loss) per common share.” Net operating income (loss) per common share is derived from net operating income (loss). The chief operating decision maker evaluates segment performance and allocates resources on the basis of net operating income (loss). The company defines net operating income (loss) as income (loss) from continuing operations excluding the after-tax effects of income attributable to noncontrolling interests, net investment gains (losses), goodwill impairments, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, gains (losses) on insurance block transactions, restructuring costs and infrequent or unusual non-operating items. Gains (losses) on insurance block transactions are defined as gains (losses) on the early extinguishment of non-recourse funding obligations, early termination fees for other financing restructuring and/or resulting gains (losses) on reinsurance restructuring for certain blocks of business. The company excludes net investment gains (losses) and infrequent or unusual non-operating items because the company does not consider them to be related to the operating performance of the 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.

Adjustments to reconcile net income (loss) attributable to Genworth Financial, Inc.’s common stockholders and net operating income (loss) assume a 35% tax rate (unless otherwise indicated) and are net of the portion attributable to noncontrolling interests. Net investment gains (losses) are also adjusted for DAC and other intangible amortization and certain benefit reserves (see page 46).

In June 2016, the company completed the sale of its term life insurance new business platform and recorded a pre-tax gain of $12 million. In May 2016, the company completed the sale of its mortgage insurance business in Europe and recorded an additional pre-tax loss of $2 million. In the first quarter of 2016, the company recorded an estimated pre-tax loss of $7 million and a tax benefit of $27 million related to the planned sale of the mortgage insurance business in Europe. The company also recognized an estimated pre-tax loss of $140 million in the fourth quarter of 2015 for the planned sale of this business. The company also incurred a $6 million tax benefit in the fourth quarter of 2015 related to the planned sale as well as a tax charge of $7 million in the third quarter of 2015 from potential business portfolio changes related to this business. These transactions were excluded from net operating income (loss) for the periods presented as they related to a gain (loss) on the sale of businesses.

In June 2016, the company settled restricted borrowings of $70 million related to a securitization entity and recorded a $64 million pre-tax gain related to the early extinguishment of debt. In January 2016, the company paid a pre-tax make-whole expense of $20 million related to the early redemption of Genworth Holdings, Inc.’s (Genworth Holdings) 2016 notes. The company also repurchased $28 million principal amount of Genworth Holdings’ notes with various maturity dates for a pre-tax gain of $4 million in the first quarter of 2016. In the third quarter of 2015, the company paid an early redemption payment of approximately $1 million, net of portion attributable to noncontrolling interests, related to the early redemption of Genworth Financial Mortgage Insurance Pty Limited’s notes that were scheduled to mature in 2021. In the third quarter of 2015, the company also repurchased approximately $50 million principal amount of Genworth Holdings’ notes with various maturity dates for a pre-tax loss of $1 million. These transactions were excluded from net operating income (loss) for the periods presented as they related to a gain (loss) on the early extinguishment of debt.

In the first quarter of 2016, the company completed a life block transaction resulting in a pre-tax loss of $9 million in connection with the early extinguishment of non-recourse funding obligations. In the third quarter of 2015, the company recorded a pre-tax DAC impairment of $455 million on certain term life insurance policies in connection with entering into an agreement to complete a life block transaction.

In the second and first quarters of 2016, the company recorded a pre-tax expense of $5 million and $15 million, respectively, related to restructuring costs as part of an expense reduction plan as the company evaluates and appropriately sizes its organizational needs and expenses. In the fourth and second quarters of 2015, the company also recorded a pre-tax expense of $5 million and $3 million, respectively, related to restructuring costs.

There were no infrequent or unusual items excluded from net operating income (loss) during the periods presented other than fees incurred during the first quarter of 2016 related to Genworth Holdings’ bond consent solicitation of $18 million for broker, advisor and investment banking fees.

The table on page 9 of this financial supplement reflects net operating income (loss) as determined in accordance with accounting guidance related to segment reporting, and a reconciliation of net operating income (loss) of the 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.

 

(1)	U.S. Generally Accepted Accounting Principles

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND 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.

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 original loan balance for outstanding insurance policies as of the respective reporting date. Risk in-force for the U.S. mortgage insurance business is based on the coverage percentage applied to the estimated current outstanding loan balance. For risk in-force in the mortgage insurance businesses in Canada and Australia, the company has computed an “effective” risk in-force amount, which recognizes that the loss on any particular loan will be reduced by the net proceeds received upon sale of the property. Effective risk in-force has been calculated by applying to insurance in-force a factor of 35% that represents the highest expected average per-claim payment for any one underwriting year over the life of the company’s mortgage insurance businesses in Canada and Australia. In Australia, the company has certain risk share arrangements where it provides pro-rata coverage of certain loans rather than 100% coverage. As a result, for loans with these risk share arrangements, the applicable pro-rata coverage amount provided is used when applying the factor. The company considers insurance in-force and risk in-force to be measures of the 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

SECOND QUARTER 2016

 

Financial Highlights

(amounts in millions, except per share data)

 

Balance Sheet Data		June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015
Total Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income		$	10,045			$	9,870			$	9,814			$	10,101			$	10,381
Total accumulated other comprehensive income			5,088				4,185				3,010				3,478				3,309
Total Genworth Financial, Inc.’s stockholders’ equity		$	15,133			$	14,055			$	12,824			$	13,579			$	13,690
Book value per common share		$	30.37			$	28.19			$	25.76			$	27.29			$	27.52
Book value per common share, excluding accumulated other comprehensive income		$	20.16			$	19.80			$	19.71			$	20.30			$	20.87
Common shares outstanding as of the balance sheet date			498.3				498.5				497.8				497.5				497.4
		Twelve months ended
Twelve Month Rolling Average ROE		June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015
GAAP Basis ROE			-3.5%				-7.0%				-6.0%				-10.3%				-15.0%
Operating ROE(1)			2.1%				2.0%				2.5%				-0.7%				-4.2%
		Three months ended
Quarterly Average ROE		June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015
GAAP Basis ROE			6.9%				2.2%				-11.7%				-11.1%				-7.3%
Operating ROE(1)			4.9%				4.2%				-3.3%				2.5%				4.5%

 

Basic and Diluted Shares		Three months ended June 30, 2016				Six months ended June 30, 2016
Weighted-average common shares used in basic earnings per common share calculations			498.5				498.3
Potentially dilutive securities:
Stock options, restricted stock units and stock appreciation rights			1.9				1.6
Weighted-average common shares used in diluted earnings per common share calculations			500.4				499.9

 

(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

SECOND QUARTER 2016

Consolidated Net Income (Loss) by Quarter

(amounts in millions, except per share amounts)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	1,127			$	794			$	1,921			$	1,157			$	1,145			$	1,134			$	1,143			$	4,579
Net investment income			779				789				1,568				781				783				793				781				3,138
Net investment gains (losses)			30				(19	)			11				(16	)			(51	)			8				(16	)			(75	)
Policy fees and other income			300				221				521				234				223				222				227				906
Total revenues			2,236				1,785				4,021				2,156				2,100				2,157				2,135				8,548
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			1,193				860				2,053				1,435				1,290				1,232				1,192				5,149
Interest credited			173				177				350				180				179				181				180				720
Acquisition and operating expenses, net of deferrals			327				394				721				433				314				295				267				1,309
Amortization of deferred acquisition costs and intangibles			112				99				211				207				563				101				95				966
Interest expense			80				105				185				104				105				103				107				419
Total benefits and expenses			1,885				1,635				3,520				2,359				2,451				1,912				1,841				8,563
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			351				150				501				(203	)			(351	)			245				294				(15	)
Provision (benefit) for income taxes			110				23				133				(36	)			(134	)			70				91				(9	)
INCOME (LOSS) FROM CONTINUING OPERATIONS			241				127				368				(167	)			(217	)			175				203				(6	)
Income (loss) from discontinued operations, net of taxes(1)			(21	)			(19	)			(40	)			(73	)			(21	)			(314	)			1				(407	)
NET INCOME (LOSS)			220				108				328				(240	)			(238	)			(139	)			204				(413	)
Less: net income attributable to noncontrolling interests			48				55				103				52				46				54				50				202
NET INCOME (LOSS) AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS		$	172			$	53			$	225			$	(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		$	0.39			$	0.14			$	0.53			$	(0.44	)		$	(0.53	)		$	0.24			$	0.31			$	(0.42	)
Diluted		$	0.39			$	0.14			$	0.53			$	(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		$	0.35			$	0.11			$	0.45			$	(0.59	)		$	(0.57	)		$	(0.39	)		$	0.31			$	(1.24	)
Diluted		$	0.34			$	0.11			$	0.45			$	(0.59	)		$	(0.57	)		$	(0.39	)		$	0.31			$	(1.24	)
Weighted-average common shares outstanding
Basic			498.5				498.0				498.3				497.6				497.4				497.4				497.0				497.4
Diluted(2)			500.4				499.4				499.9				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 second and first quarters of 2016, the company recorded an additional after-tax loss of approximately $21 million and $19 million, respectively, as it finalized the closing balance sheet purchase price adjustments.

(2)

Under applicable accounting guidance, companies in a loss position are required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share. Therefore, as a result of the loss from continuing operations, the company was required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share as the inclusion of shares for stock options, restricted stock units and stock appreciation rights of 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

SECOND QUARTER 2016

 

Net Operating Income (Loss) by Segment by Quarter

(amounts in millions, except per share amounts)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
NET OPERATING INCOME (LOSS):
U.S. Mortgage Insurance segment		$	61			$	61			$	122			$	41			$	37			$	49			$	52			$	179
Canada Mortgage Insurance segment			38				33				71				37				38				37				40				152
Australia Mortgage Insurance segment			15				19				34				22				21				29				30				102
U.S. Life Insurance segment:
Long-Term Care Insurance			37				34				71				19				(10	)			10				10				29
Life Insurance			31				31				62				(173	)			31				22				40				(80	)
Fixed Annuities			(13	)			26				13				19				19				25				31				94
Total U.S. Life Insurance segment			55				91				146				(135	)			40				57				81				43
Runoff segment			6				4				10				11				(4	)			9				11				27
Corporate and Other			(52	)			(105	)			(157	)			(58	)			(68	)			(62	)			(60	)			(248	)
NET OPERATING INCOME (LOSS)			123				103				226				(82	)			64				119				154				255
ADJUSTMENTS TO NET OPERATING INCOME (LOSS):
Net investment gains (losses), net(1)			39				(19	)			20				(1	)			(33	)			5				(1	)			(30	)
Gains (losses) on sale of businesses			10				(7	)			3				(140	)			—				—				—				(140	)
Gains (losses) on early extinguishment of debt(2)			64				(16	)			48				—				(2	)			—				—				(2	)
Gains (losses) from life block transactions			—				(9	)			(9	)			—				(455	)			—				—				(455	)
Expenses related to restructuring			(5	)			(15	)			(20	)			(5	)			—				(3	)			—				(8	)
Fees associated with bond consent solicitation			—				(18	)			(18	)			—				—				—				—				—
Taxes on adjustments			(38)				53				15				9				163				—				—				172
INCOME (LOSS) FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL INC.’S COMMON STOCKHOLDERS			193				72				265				(219	)			(263	)			121				153				(208	)
Add: income from continuing operations attributable to noncontrolling interests			48				55				103				52				46				54				50				202
INCOME (LOSS) FROM CONTINUING OPERATIONS			241				127				368				(167	)			(217	)			175				203				(6	)
Income (loss) from discontinued operations, net of taxes			(21	)			(19	)			(40	)			(73	)			(21	)			(314	)			1				(407	)
NET INCOME (LOSS)			220				108				328				(240	)			(238	)			(139	)			204				(413	)
Less: net income attributable to noncontrolling interests			48				55				103				52				46				54				50				202
NET INCOME (LOSS) AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS		$	172			$	53			$	225			$	(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		$	0.35			$	0.11			$	0.45			$	(0.59	)		$	(0.57	)		$	(0.39	)		$	0.31			$	(1.24	)
Diluted		$	0.34			$	0.11			$	0.45			$	(0.59	)		$	(0.57	)		$	(0.39	)		$	0.31			$	(1.24	)
Net operating income (loss) per common share
Basic		$	0.25			$	0.21			$	0.45			$	(0.17	)		$	0.13			$	0.24			$	0.31			$	0.51
Diluted		$	0.25			$	0.21			$	0.45			$	(0.17	)		$	0.13			$	0.24			$	0.31			$	0.51
Weighted-average common shares outstanding
Basic			498.5				498.0				498.3				497.6				497.4				497.4				497.0				497.4
Diluted(3)			500.4				499.4				499.9				497.6				497.4				499.3				498.9				497.4

 

(1)	Net investment gains (losses) were adjusted for the portion attributable to noncontrolling interests and DAC and other intangible amortization and certain benefit reserves (see page 46 for reconciliation).

(2)	For the three months ended September 30, 2015, gains (losses) on early extinguishment of debt were adjusted by $1 million related to the mortgage insurance business in Australia for the portion attributable to noncontrolling interests.

(3)

Under applicable accounting guidance, companies in a loss position are required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share. Therefore, as a result of the loss from continuing operations, the company was required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share as the inclusion of shares for stock options, restricted stock units and stock appreciation rights of 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

SECOND QUARTER 2016

 

Consolidated Balance Sheets

(amounts in millions)

 

		June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015
ASSETS
Investments:
Fixed maturity securities available-for-sale, at fair value		$	62,828			$	60,290			$	58,197			$	60,646			$	60,368
Equity securities available-for-sale, at fair value			481				431				310				273				299
Commercial mortgage loans			6,121				6,179				6,170				6,133				6,175
Restricted commercial mortgage loans related to securitization entities			141				155				161				175				181
Policy loans			1,754				1,565				1,568				1,567				1,584
Other invested assets			2,510				2,923				2,309				2,764				2,176
Restricted other invested assets related to securitization entities			312				422				413				412				410
Total investments			74,147				71,965				69,128				71,970				71,193
Cash and cash equivalents			3,457				4,043				5,965				3,635				4,069
Accrued investment income			601				720				653				682				612
Deferred acquisition costs			4,046				4,235				4,398				4,441				4,899
Intangible assets and goodwill			267				291				357				297				300
Reinsurance recoverable			17,564				17,587				17,245				17,255				17,276
Other assets			640				577				520				523				580
Deferred tax asset			—				—				155				—				—
Separate account assets			7,484				7,624				7,883				7,893				8,702
Assets held for sale(1)			—				131				127				1,484				1,493
Total assets		$	108,206			$	107,173			$	106,431			$	108,180			$	109,124

 

(1)	Assets held for sale related to the lifestyle protection insurance business (prior to its sale on December 1, 2015) and the European mortgage insurance business (prior to its sale on May 9, 2016).

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

 

Consolidated Balance Sheets

(amounts in millions)

 

		June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015
LIABILITIES AND EQUITY
Liabilities:
Future policy benefits		$	37,154			$	36,776			$	36,475			$	36,472			$	36,298
Policyholder account balances			26,182				26,354				26,209				26,000				25,987
Liability for policy and contract claims			8,289				8,177				8,095				8,009				7,936
Unearned premiums			3,412				3,378				3,308				3,281				3,373
Other liabilities			3,197				3,596				3,004				3,225				3,125
Borrowings related to securitization entities			85				173				179				188				199
Non-recourse funding obligations			310				310				1,920				1,937				1,953
Long-term borrowings			4,191				4,232				4,570				4,573				4,581
Deferred tax liability			893				449				24				200				258
Separate account liabilities			7,484				7,624				7,883				7,893				8,702
Liabilities held for sale(1)			—				131				127				986				985
Total liabilities			91,197				91,200				91,794				92,764				93,397
Equity:
Common stock			1				1				1				1				1
Additional paid-in capital			11,955				11,952				11,949				11,944				11,940
Accumulated other comprehensive income (loss):
Net unrealized investment gains (losses):
Net unrealized gains (losses) on securities not other-than-temporarily impaired			2,770				2,043				1,236				1,709				1,606
Net unrealized gains (losses) on other-than-temporarily impaired securities			19				14				18				22				22
Net unrealized investment gains (losses)			2,789				2,057				1,254				1,731				1,628
Derivatives qualifying as hedges			2,439				2,302				2,045				2,130				1,913
Foreign currency translation and other adjustments			(140	)			(174	)			(289	)			(383	)			(232	)
Total accumulated other comprehensive income			5,088				4,185				3,010				3,478				3,309
Retained earnings			789				617				564				856				1,140
Treasury stock, at cost			(2,700	)			(2,700	)			(2,700	)			(2,700	)			(2,700	)
Total Genworth Financial, Inc.’s stockholders’ equity			15,133				14,055				12,824				13,579				13,690
Noncontrolling interests			1,876				1,918				1,813				1,837				2,037
Total equity			17,009				15,973				14,637				15,416				15,727
Total liabilities and equity		$	108,206			$	107,173			$	106,431			$	108,180			$	109,124

 

(1)	Liabilities held for sale related to the lifestyle protection insurance business (prior to its sale on December 1, 2015) and the European mortgage insurance business (prior to its sale on May 9, 2016).

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

 

 

Consolidated Balance Sheet by Segment

(amounts in millions)

 

		June 30, 2016
		U.S. Mortgage Insurance				Canada Mortgage Insurance				Australia Mortgage Insurance				U.S. Life Insurance				Runoff				Corporate and Other(1)				Total
ASSETS
Cash and investments		$	2,494			$	4,707			$	2,730			$	62,646			$	2,893			$	2,735			$	78,205
Deferred acquisition costs and intangible assets			39				137				52				3,818				260				7				4,313
Reinsurance recoverable			2				—				—				16,744				818				—				17,564
Other assets			41				47				17				369				10				156				640
Separate account assets			—				—				—				—				7,484				—				7,484
Total assets		$	2,576			$	4,891			$	2,799			$	83,577			$	11,465			$	2,898			$	108,206
LIABILITIES AND EQUITY
Liabilities:
Future policy benefits		$	—			$	—			$	—			$	37,151			$	3			$	—			$	37,154
Policyholder account balances			—				—				—				22,709				3,473				—				26,182
Liability for policy and contract claims			707				104				190				7,264				16				8				8,289
Unearned premiums			304				1,598				926				578				6				—				3,412
Non-recourse funding obligations			—				—				—				310				—				—				310
Deferred tax and other liabilities			(450	)			103				117				3,697				(85	)			708				4,090
Borrowings and capital securities			—				333				145				—				11				3,787				4,276
Separate account liabilities			—				—				—				—				7,484				—				7,484
Total liabilities			561				2,138				1,378				71,709				10,908				4,503				91,197
Equity:
Allocated equity, excluding accumulated other comprehensive income (loss)			1,975				1,691				578				6,770				554				(1,523	)			10,045
Allocated accumulated other comprehensive income (loss)			40				(99	)			128				5,098				3				(82	)			5,088
Total Genworth Financial, Inc.’s stockholders’ equity			2,015				1,592				706				11,868				557				(1,605	)			15,133
Noncontrolling interests			—				1,161				715				—				—				—				1,876
Total equity			2,015				2,753				1,421				11,868				557				(1,605	)			17,009
Total liabilities and equity		$	2,576			$	4,891			$	2,799			$	83,577			$	11,465			$	2,898			$	108,206

 

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

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND 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

SECOND 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 March 31, 2016		$	23			$	114			$	36			$	4,108			$	267			$	—			$	4,548
Costs deferred			4				15				3				19				—				—				41
Amortization, net of interest accretion			(2	)			(9	)			(4	)			(70	)			(12	)			—				(97	)
Impact of foreign currency translation			—				—				(1	)			—				—				—				(1	)
Unamortized balance as of June 30, 2016			25				120				34				4,057				255				—				4,491
Effect of accumulated net unrealized investment (gains) losses			—				—				—				(437	)			(8	)			—				(445	)
Balance as of June 30, 2016		$	25			$	120			$	34			$	3,620			$	247			$	—			$	4,046

 

(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 $2 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

SECOND QUARTER 2016

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

(amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	160			$	160			$	320			$	153			$	146			$	153			$	150			$	602
Net investment income			15				15				30				14				12				13				19				58
Net investment gains (losses)			—				(1	)			(1	)			—				1				—				—				1
Policy fees and other income			1				1				2				1				2				—				1				4
Total revenues			176				175				351				168				161				166				170				665
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			38				38				76				59				63				50				50				222
Acquisition and operating expenses, net of deferrals			41				39				80				42				38				38				37				155
Amortization of deferred acquisition costs and intangibles			2				3				5				3				3				2				2				10
Total benefits and expenses			81				80				161				104				104				90				89				387
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			95				95				190				64				57				76				81				278
Provision for income taxes			34				34				68				23				20				27				29				99
INCOME FROM CONTINUING OPERATIONS			61				61				122				41				37				49				52				179
ADJUSTMENTS TO INCOME FROM CONTINUING OPERATIONS:
Net investment (gains) losses			—				1				1				—				(1	)			—				—				(1	)
Taxes on adjustments			—				(1	)			(1	)			—				1				—				—				1
NET OPERATING INCOME		$	61			$	61			$	122			$	41			$	37			$	49			$	52			$	179
SALES:
New Insurance Written (NIW)
Flow		$	11,400			$	7,400			$	18,800			$	7,800			$	9,300			$	8,200			$	6,300			$	31,600
Bulk			—				—				—				—				—				—				—				—
Total U.S. Mortgage Insurance NIW		$	11,400			$	7,400			$	18,800			$	7,800			$	9,300			$	8,200			$	6,300			$	31,600

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

 

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

(amounts in millions)

 

		2016																2015
		2Q								1Q								4Q								3Q								2Q								1Q
		Flow NIW				Premium Rate (bps)				Flow NIW				Premium Rate (bps)				Flow NIW				Premium Rate (bps)				Flow NIW				Premium Rate (bps)				Flow NIW				Premium Rate (bps)				Flow NIW				Premium Rate (bps)
Product
Monthly(1)		$	8,400				55			$	5,400				59			$	5,900				60			$	7,000				60			$	6,500				60			$	4,400				60
Single			3,000				161				2,000				164				1,900				168				2,300				171				1,700				172				1,900				160
Total Flow		$	11,400							$	7,400							$	7,800							$	9,300							$	8,200							$	6,300
		Flow NIW				% of Flow NIW				Flow NIW				% of Flow NIW				Flow NIW				% of Flow NIW				Flow NIW				% of Flow NIW				Flow NIW				% of Flow NIW				Flow NIW				% of Flow NIW
FICO Scores
Over 735		$	7,100				62	%		$	4,400				60	%		$	4,600				59	%		$	5,500				59	%		$	5,000				61	%		$	3,700				59	%
680-735			3,400				30				2,400				32				2,500				32				3,000				32				2,500				30				2,100				33
660-679(2)			500				4				300				4				400				5				500				6				400				5				300				5
620-659			400				4				300				4				300				4				300				3				300				4				200				3
<620			—				—				—				—				—				—				—				—				—				—				—				—
Total Flow		$	11,400				100	%		$	7,400				100	%		$	7,800				100	%		$	9,300				100	%		$	8,200				100	%		$	6,300				100	%
Loan-To-Value Ratio
95.01% and above		$	700				6	%		$	400				5	%		$	400				5	%		$	500				5	%		$	400				5	%		$	300				5	%
90.01% to 95.00%			5,900				52				3,700				50				4,000				51				4,900				53				4,200				51				3,100				49
85.01% to 90.00%			3,400				30				2,400				33				2,500				32				3,000				32				2,600				32				2,000				32
85.00% and below			1,400				12				900				12				900				12				900				10				1,000				12				900				14
Total Flow		$	11,400				100	%		$	7,400				100	%		$	7,800				100	%		$	9,300				100	%		$	8,200				100	%		$	6,300				100	%
Origination
Purchase		$	9,400				82	%		$	6,000				81	%		$	6,500				83	%		$	8,100				87	%		$	6,500				79	%		$	4,300				68	%
Refinance			2,000				18				1,400				19				1,300				17				1,200				13				1,700				21				2,000				32
Total Flow		$	11,400				100	%		$	7,400				100	%		$	7,800				100	%		$	9,300				100	%		$	8,200				100	%		$	6,300				100	%

 

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

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

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

 

Other Metrics—U.S. Mortgage Insurance Segment

(dollar amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
Net Premiums Written		$	190			$	176			$	366			$	171			$	171			$	170			$	170			$	682
New Risk Written
Flow		$	2,865			$	1,845			$	4,710			$	1,964			$	2,364			$	2,040			$	1,557			$	7,925
Bulk			—				—				—				—				—				—				—				—
Total Primary			2,865				1,845				4,710				1,964				2,364				2,040				1,557				7,925
Pool			—				—				—				—				—				—				—				—
Total New Risk Written		$	2,865			$	1,845			$	4,710			$	1,964			$	2,364			$	2,040			$	1,557			$	7,925
Primary Insurance In-Force(1)		$	128,400			$	124,100							$	122,400			$	120,400			$	117,100			$	115,200
Risk In-Force(2)
Flow		$	30,760			$	29,620							$	29,142			$	28,563			$	27,623			$	27,025
Bulk(3)			314				318								326				349				360				387
Total Primary			31,074				29,938								29,468				28,912				27,983				27,412
Pool			111				116								120				129				137				142
Total Risk In-Force		$	31,185			$	30,054							$	29,588			$	29,041			$	28,120			$	27,554
Primary Risk In-Force That Is GSE Conforming			96	%			96	%							96	%			97	%			97	%			97	%
Expense Ratio (Net Earned Premiums)(4)			27	%			26	%			27	%			29	%			28	%			26	%			26	%			27	%
Expense Ratio (Net Premiums Written)(5)			23	%			24	%			23	%			26	%			24	%			23	%			23	%			24	%
Flow Persistency			77	%			82	%							81	%			80	%			79	%			81	%
Risk To Capital Ratio(6)			15.0:1				15.3:1								16.3:1				14.3:1				13.7:1				14.1:1
PMIERs Sufficiency Ratio(7)			115	%			113	%							109	%			NA				NA				NA
Average Primary Loan Size (in thousands)		$	192			$	189							$	188			$	186			$	184			$	182

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

 

(1)

Primary insurance in-force represents aggregate loan balances for outstanding insurance policies and is used to determine premiums. Original loan balances are presented for policies with level renewal premiums. Amortized loan balances are presented for policies with annual, amortizing renewal premiums.

(2)

In the second quarter of 2016, all flow risk in-force metrics were based upon more current loan balances as provided by servicers, lenders and investors and conform to the presentation under the Private Mortgage Insurer Eligibility Requirements (PMIERs). Previously, certain flow risk in-force metrics were based on original loan balances when current loan balances were not available. All prior periods have been re-presented to reflect these modified metrics.

(3)	As of June 30, 2016, 89% of the bulk risk in-force was related to loans financed by lenders who participated in the mortgage programs sponsored by the Federal Home Loan Banks.

(4)	The ratio of an 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.

(5)	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.

(6)

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.

(7)

PMIERs became effective December 31, 2015. The PMIERs sufficiency ratio is calculated as available assets divided by required assets as defined within PMIERs. The current period PMIERs sufficiency ratio is an estimate due to the timing of the PMIERs filing for the U.S. mortgage insurance business. As of June 30, 2016, March 31, 2016 and December 31, 2015, the PMIERs sufficiency ratios were in excess of $350 million, $300 million and $200 million, respectively, of available assets above the PMIERs requirements.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

 

Loss Metrics—U.S. Mortgage Insurance Segment

(dollar amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
Paid Claims
Flow
Direct(1)		$	94			$	112			$	206			$	158			$	98			$	131			$	130			$	517
Assumed(2)			1				2				3				1				3				4				5				13
Ceded			(1	)			(3	)			(4	)			(1	)			—				(1	)			(16	)			(18	)
Loss adjustment expenses			3				3				6				3				3				3				4				13
Total Flow			97				114				211				161				104				137				123				525
Bulk			1				2				3				1				1				2				2				6
Total Primary			98				116				214				162				105				139				125				531
Pool			1				—				1				1				—				1				1				3
Total Paid Claims		$	99			$	116			$	215			$	163			$	105			$	140			$	126			$	534
Average Paid Claim (in thousands)(3)		$	50.8			$	51.9							$	63.6			$	54.0			$	50.8			$	46.5
Average Reserve Per Delinquency (in thousands)
Flow		$	27.8			$	28.3							$	27.2			$	29.4			$	30.6			$	31.0
Bulk loans with established reserve			21.1				21.2								19.9				20.0				21.5				21.2
Reserves:
Flow direct case		$	640			$	698							$	775			$	870			$	909			$	992
Bulk direct case			14				15								17				17				18				20
Assumed(2)			6				7								8				9				12				15
All other(4)			47				48								49				57				57				60
Total Reserves		$	707			$	768							$	849			$	953			$	996			$	1,087
Beginning Reserves		$	768			$	849			$	849			$	953			$	996			$	1,087			$	1,180			$	1,180
Paid claims(1)			(99	)			(119	)			(218	)			(164	)			(105	)			(141	)			(142	)			(552	)
Increase in reserves			38				38				76				60				62				50				49				221
Ending Reserves		$	707			$	768			$	707			$	849			$	953			$	996			$	1,087			$	849
Beginning Reinsurance Recoverable(5)		$	2			$	5			$	5			$	6			$	6			$	7			$	24			$	24
Ceded paid claims			—				(3	)			(3	)			(1	)			—				(1	)			(16	)			(18	)
Decrease in recoverable			—				—				—				—				—				—				(1	)			(1	)
Ending Reinsurance Recoverable		$	2			$	2			$	2			$	5			$	6			$	6			$	7			$	5
Loss Ratio(6)			24	%			24	%			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

SECOND QUARTER 2016

 

Delinquency Metrics—U.S. Mortgage Insurance Segment

(dollar amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
Number of Primary Delinquencies
Flow			24,753				26,491								30,416				31,678				31,876				34,220
Bulk loans with an established reserve			732				776								889				917				908				984
Bulk loans with no reserve(1)			313				335								358				394				415				461
Total Number of Primary Delinquencies			25,798				27,602								31,663				32,989				33,199				35,665
Beginning Number of Primary Delinquencies			27,602				31,663				31,663				32,989				33,199				35,665				39,786				39,786
New delinquencies			8,265				8,761				17,026				10,043				10,192				9,061				9,554				38,850
Delinquency cures			(8,137	)			(10,602	)			(18,739	)			(8,835	)			(8,484	)			(8,800	)			(10,988	)			(37,107	)
Paid claims			(1,932	)			(2,220	)			(4,152	)			(2,534	)			(1,918	)			(2,727	)			(2,687	)			(9,866	)
Ending Number of Primary Delinquencies			25,798				27,602				25,798				31,663				32,989				33,199				35,665				31,663
Composition of Cures
Reported delinquent and cured-intraquarter			1,597				2,503								1,740				1,805				1,658				2,271
Number of missed payments delinquent prior to cure:
3 payments or less			4,335				5,775								5,005				4,630				4,260				6,112
4 - 11 payments			1,577				1,443								1,330				1,487				2,250				1,912
12 payments or more			628				881								760				562				632				693
Total			8,137				10,602								8,835				8,484				8,800				10,988
Primary Delinquencies by Missed Payment Status
3 payments or less			8,529				8,395								10,487				10,226				9,432				9,271
4 - 11 payments			6,323				7,254								7,577				7,376				7,824				9,086
12 payments or more			10,946				11,953								13,599				15,387				15,943				17,308
Primary Delinquencies			25,798				27,602								31,663				32,989				33,199				35,665
		June 30, 2016
Flow Delinquencies and Percentage Reserved by Payment Status		Delinquencies				Direct Case Reserves(2)				Risk In-Force				Reserves as % of Risk In-Force
3 payments or less in default			8,230			$	45			$	337				13	%
4 - 11 payments in default			6,159				159				261				61	%
12 payments or more in default			10,364				435				510				85	%
Total			24,753			$	639			$	1,108				58	%
		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

SECOND QUARTER 2016

 

Portfolio Quality Metrics—U.S. Mortgage Insurance Segment

 

		2016								2015
		2Q				1Q				4Q				3Q				2Q				1Q
Primary Loans
Primary loans in-force			668,951				655,300				651,668				647,126				636,640				631,591
Primary delinquent loans			25,798				27,602				31,663				32,989				33,199				35,665
Primary delinquency rate			3.86	%			4.21	%			4.86	%			5.10	%			5.21	%			5.65	%
Flow loans in-force			647,100				632,010				627,349				620,430				608,615				601,472
Flow delinquent loans			24,753				26,491				30,416				31,678				31,876				34,220
Flow delinquency rate			3.83	%			4.19	%			4.85	%			5.11	%			5.24	%			5.69	%
Bulk loans in-force			21,851				23,290				24,319				26,696				28,025				30,119
Bulk delinquent loans			1,045				1,111				1,247				1,311				1,323				1,445
Bulk delinquency rate			4.78	%			4.77	%			5.13	%			4.91	%			4.72	%			4.80	%
A minus and sub-prime loans in-force			25,552				26,995				28,332				29,745				31,051				33,805
A minus and sub-prime delinquent loans			5,220				5,546				6,448				6,642				6,530				7,019
A minus and sub-prime delinquency rate			20.43	%			20.54	%			22.76	%			22.33	%			21.03	%			20.76	%
Pool Loans
Pool loans in-force			6,196				6,406				6,620				7,284				7,709				7,979
Pool delinquent loans			356				369				386				426				447				468
Pool delinquency rate			5.75	%			5.76	%			5.83	%			5.85	%			5.80	%			5.87	%
Primary Risk In-Force by Credit Quality
Over 735			54	%			53	%			53	%			52	%			52	%			52	%
680-735			32	%			32	%			31	%			31	%			31	%			31	%
660-679(1)			6	%			6	%			7	%			7	%			7	%			7	%
620-659			6	%			7	%			7	%			7	%			7	%			7	%
< 620			2	%			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

SECOND QUARTER 2016

 

Portfolio Quality Metrics—U.S. Mortgage Insurance Segment

(dollar amounts in millions)

 

		June 30, 2016
Policy Year		Average Rate(1)				% of Total Reserves(2)				Primary Insurance In-Force				% of Total				Primary Risk In-Force				% of Total				Delinquency Rate
2004 and prior			6.03	%			11.6	%		$	3,403				2.6	%		$	677				2.2	%			13.41	%
2005			5.64	%			11.3				3,061				2.4				746				2.4				12.60	%
2006			5.81	%			17.2				5,229				4.1				1,241				4.0				12.13	%
2007			5.72	%			36.8				13,348				10.4				3,154				10.1				11.15	%
2008			5.27	%			16.8				11,525				9.0				2,723				8.8				6.20	%
2009			4.95	%			0.7				1,519				1.2				326				1.1				2.22	%
2010			4.69	%			0.7				1,943				1.5				444				1.4				1.68	%
2011			4.53	%			0.6				2,715				2.1				647				2.1				1.40	%
2012			3.83	%			0.6				7,088				5.5				1,723				5.5				0.61	%
2013			4.02	%			1.0				12,569				9.8				3,075				9.9				0.62	%
2014			4.40	%			1.7				17,984				14.0				4,417				14.2				0.70	%
2015			4.10	%			0.9				29,407				22.9				7,259				23.4				0.26	%
2016			4.00	%			0.1				18,628				14.5				4,642				14.9				0.04	%
Total			4.66	%			100.0	%		$	128,419				100.0	%		$	31,074				100.0	%			3.86	%
		June 30, 2016								March 31, 2016								June 30, 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)		$	31,074				3.86	%		$	29,938				4.21	%		$	27,983				5.21	%
Top 10 lenders			10,533				4.71	%			10,671				5.60	%			11,313				6.61	%
Top 20 lenders			13,532				4.67	%			13,450				5.01	%			13,420				5.88	%
Loan-to-value ratio
95.01% and above		$	5,682				6.80	%		$	5,771				7.14	%		$	6,118				7.87	%
90.01% to 95.00%			15,247				2.62	%			14,314				2.90	%			12,457				3.86	%
80.01% to 90.00%			9,858				3.60	%			9,556				3.99	%			9,086				5.07	%
80.00% and below			287				3.19	%			297				3.17	%			322				3.33	%
Total		$	31,074				3.86	%		$	29,938				4.21	%		$	27,983				5.21	%
Loan grade
Prime		$	30,175				3.20	%		$	28,987				3.51	%		$	26,891				4.40	%
A minus and sub-prime			899				20.43	%			951				20.54	%			1,092				21.03	%
Total		$	31,074				3.86	%		$	29,938				4.21	%		$	27,983				5.21	%

 

(1)	Average Annual Mortgage Interest Rate.

(2)	Total reserves were $707 million as of June 30, 2016.

 

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Canada Mortgage Insurance Segment

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

Net Operating Income and Sales—Canada Mortgage Insurance Segment

(amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	122			$	111			$	233			$	115			$	116			$	116			$	119			$	466
Net investment income			32				29				61				31				32				33				34				130
Net investment gains (losses)			(8	)			20				12				(11	)			(23	)			20				(18	)			(32	)
Policy fees and other income			1				—				1				—				(1	)			—				1				—
Total revenues			147				160				307				135				124				169				136				564
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			25				26				51				26				24				21				25				96
Acquisition and operating expenses, net of deferrals			19				18				37				16				16				22				12				66
Amortization of deferred acquisition costs and intangibles			10				9				19				9				9				9				9				36
Interest expense			4				4				8				4				5				4				5				18
Total benefits and expenses			58				57				115				55				54				56				51				216
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			89				103				192				80				70				113				85				348
Provision for income taxes			23				29				52				20				17				31				22				90
INCOME FROM CONTINUING OPERATIONS			66				74				140				60				53				82				63				258
Less: income from continuing operations attributable to noncontrolling interests			30				34				64				27				24				38				29				118
INCOME FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS			36				40				76				33				29				44				34				140
ADJUSTMENTS TO INCOME FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS:
Net investment (gains) losses, net(1)			4				(11	)			(7	)			7				13				(11	)			10				19
Taxes on adjustments			(2	)			4				2				(3	)			(4	)			4				(4	)			(7	)
NET OPERATING INCOME(2)		$	38			$	33			$	71			$	37			$	38			$	37			$	40			$	152
SALES:
New Insurance Written (NIW)
Flow		$	4,400			$	2,500			$	6,900			$	4,700			$	6,600			$	5,400			$	3,300			$	20,000
Bulk			19,700				3,200				22,900				7,300				4,800				3,300				5,000				20,400
Total Canada NIW(3)		$	24,100			$	5,700			$	29,800			$	12,000			$	11,400			$	8,700			$	8,300			$	40,400

 

(1)	Net investment (gains) losses were adjusted for the portion of net investment gains (losses) attributable to noncontrolling interests as reconciled below:

 

Net investment (gains) losses, gross		$	8			$	(20	)		$	(12	)		$	11			$	23			$	(20	)		$	18			$	32
Adjustment for net investment gains (losses) attributable to noncontrolling interests			(4	)			9				5				(4	)			(10	)			9				(8	)			(13	)
Net investment (gains) losses, net		$	4			$	(11	)		$	(7	)		$	7			$	13			$	(11	)		$	10			$	19

 

(2)	Net operating income for the Canadian platform adjusted for foreign exchange as compared to the prior year period was $40 million and $79 million for the three and six months ended June 30, 2016, respectively.

(3)	New insurance written for the Canadian platform adjusted for foreign exchange as compared to the prior year period was $25,300 million and $31,900 million for the three and six months ended June 30, 2016, respectively.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

 

Selected Key Performance Measures—Canada Mortgage Insurance Segment

(amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
Net Premiums Written		$	191			$	84			$	275			$	162			$	204			$	166			$	109			$	641
Loss Ratio(1)			20	%			24	%			22	%			23	%			21	%			17	%			22	%			21	%
Expense Ratio (Net Earned Premiums)(2)			24	%			24	%			24	%			22	%			22	%			27	%			18	%			22	%
Expense Ratio (Net Premiums Written)(3)			15	%			32	%			20	%			15	%			12	%			19	%			20	%			16	%
Primary Insurance In-Force(4)		$	341,600			$	317,400							$	292,600			$	292,000			$	300,900			$	288,800
Primary Risk In-Force(5)
Flow		$	81,400			$	79,900							$	74,300			$	75,500			$	78,500			$	75,700
Bulk			38,100				31,200								28,100				26,700				26,800				25,400
Total		$	119,500			$	111,100							$	102,400			$	102,200			$	105,300			$	101,100
		June 30, 2016												March 31, 2016
Risk In-Force by Loan-To-Value Ratio(6)		Primary				Flow				Bulk				Primary				Flow				Bulk
95.01% and above		$	39,332			$	39,332			$	—			$	38,398			$	38,398			$	—
90.01% to 95.00%			24,401				24,401				—				24,011				24,011				—
80.01% to 90.00%			14,756				14,753				3				14,602				14,599				3
80.00% and below			41,058				2,960				38,098				34,078				2,928				31,150
Total		$	119,547			$	81,446			$	38,101			$	111,089			$	79,936			$	31,153

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 $152.0 billion, $139.0 billion, $138.0 billion, $142.0 billion and $137.0 billion as of March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015, respectively. This is based on the extrapolation of the amounts reported by lenders to the entire insured population.

(5)

The business currently provides 100% coverage on the majority of the loans the company insures. For the purpose of representing the risk in-force, Canada has computed an “effective risk in-force” amount which recognizes that the loss on any particular loan will be reduced by the net proceeds received upon sale of the property. Effective risk in-force has been calculated by applying to insurance in-force a factor that represents the highest expected average per-claim payment for any one underwriting year over the life of the business. This factor was 35% for all periods presented.

(6)	Loan amount in loan-to-value ratio calculation includes capitalized premiums, where applicable.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

 

Selected Key Performance Measures—Canada Mortgage Insurance Segment

(dollar amounts in millions)

 

Primary Insurance		June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015
Insured loans in-force(1),(2)			1,968,171				1,860,978				1,835,916				1,785,541				1,737,083
Insured delinquent loans			1,961				2,034				1,829				1,715				1,666
Insured delinquency rate(2),(3)			0.10	%			0.11	%			0.10	%			0.10	%			0.10	%
Flow loans in-force(1)			1,358,927				1,341,636				1,331,773				1,313,034				1,287,744
Flow delinquent loans			1,669				1,711				1,550				1,449				1,435
Flow delinquency rate(3)			0.12	%			0.13	%			0.12	%			0.11	%			0.11	%
Bulk loans in-force(1)			609,244				519,342				504,143				472,507				449,339
Bulk delinquent loans			292				323				279				266				231
Bulk delinquency rate(3)			0.05	%			0.06	%			0.06	%			0.06	%			0.05	%
Loss Metrics		June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015
Beginning Reserves		$	102			$	87			$	83			$	85			$	85
Paid claims(4)			(21	)			(18	)			(18	)			(20	)			(21	)
Increase in reserves			23				26				25				23				19
Impact of changes in foreign exchange rates			—				7				(3	)			(5	)			2
Ending Reserves		$	104			$	102			$	87			$	83			$	85
		June 30, 2016								March 31, 2016								June 30, 2015
Province and Territory		% of Primary Risk In-Force				Primary Delinquency Rate				% of Primary Risk In-Force				Primary Delinquency Rate				% of Primary Risk In-Force				Primary Delinquency Rate
Ontario			47	%			0.04	%			47	%			0.05	%			46	%			0.04	%
Alberta			16				0.17	%			17				0.16	%			17				0.09	%
British Columbia			15				0.07	%			14				0.08	%			14				0.11	%
Quebec			13				0.17	%			13				0.20	%			14				0.19	%
Saskatchewan			3				0.25	%			3				0.21	%			3				0.13	%
Nova Scotia			2				0.20	%			2				0.20	%			2				0.20	%
Manitoba			2				0.09	%			2				0.10	%			2				0.07	%
New Brunswick			1				0.18	%			1				0.21	%			1				0.18	%
All Other			1				0.12	%			1				0.14	%			1				0.12	%
Total			100	%			0.10	%			100	%			0.11	%			100	%			0.10	%
By Policy Year
2007 and prior			31	%			0.04	%			35	%			0.05	%			37	%			0.05	%
2008			6				0.19	%			6				0.19	%			7				0.20	%
2009			4				0.17	%			4				0.18	%			4				0.16	%
2010			6				0.20	%			6				0.22	%			7				0.20	%
2011			6				0.26	%			6				0.29	%			7				0.25	%
2012			8				0.21	%			8				0.24	%			10				0.19	%
2013			8				0.18	%			9				0.19	%			10				0.10	%
2014			9				0.15	%			10				0.12	%			12				0.05	%
2015			13				0.03	%			14				0.02	%			6				—	%
2016			9				—	%			2				—	%			—				—	%
Total			100	%			0.10	%			100	%			0.11	%			100	%			0.10	%

 

(1)	Insured loans in-force represent the original number of loans insured for which the coverage term has not expired, and for which no policy level cancellation or termination has been received.

(2)

As part of an ongoing effort to improve the estimate of outstanding insurance exposure, the company is receiving updated outstanding loans in-force in Canada from most of its customers on a quarter lag. As a result, the company estimates that the outstanding loans in-force were 883,000 as of March 31, 2016, 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 0.23% as of March 31, 2016, 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

SECOND QUARTER 2016

 

Selected Key Performance Measures—Canada Mortgage Insurance Segment

(Canadian dollar amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
Paid Claims(1)
Flow		$	25			$	24			$	49			$	23			$	25			$	25			$	25			$	98
Bulk			2				1				3				1				1				1				2				5
Total Paid Claims		$	27			$	25			$	52			$	24			$	26			$	26			$	27			$	103
Average Paid Claim (in thousands)		$	62.5			$	67.8							$	63.7			$	66.2			$	58.7			$	67.9
Average Reserve Per Delinquency (in thousands)		$	69.1			$	65.0							$	65.7			$	64.2			$	63.6			$	60.4
Loss Metrics
Beginning Reserves		$	132			$	120							$	110			$	106			$	108			$	106
Paid claims(1)			(27	)			(25	)							(24	)			(26	)			(26	)			(27	)
Increase in reserves			31				37								34				30				24				29
Ending Reserves		$	136			$	132							$	120			$	110			$	106			$	108
Loan Amount(2)
Over $550K			8	%			7	%							7	%			7	%			6	%			6	%
$400K to $550K			14				13								13				12				12				12
$250K to $400K			34				34								33				33				33				33
$100K to $250K			40				42								43				44				44				44
$100K or Less			4				4								4				4				5				5
Total			100	%			100	%							100	%			100	%			100	%			100	%
Average Primary Loan Size (in thousands)		$	225			$	222							$	221			$	218			$	216			$	215

All amounts presented in Canadian dollars.

 

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

(2)	The percentages in this table are based on the amount of primary insurance in-force in each loan band as a percentage of total insurance in-force.

 

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Australia Mortgage Insurance Segment

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

 

Net Operating Income and Sales—Australia Mortgage Insurance Segment

(amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	86			$	81			$	167			$	86			$	92			$	90			$	89			$	357
Net investment income			25				24				49				25				28				29				32				114
Net investment gains (losses)			2				—				2				2				3				—				1				6
Policy fees and other income			—				—				—				1				(1	)			1				(4	)			(3	)
Total revenues			113				105				218				114				122				120				118				474
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			31				21				52				15				27				25				14				81
Acquisition and operating expenses, net of deferrals			25				19				44				24				27				25				22				98
Amortization of deferred acquisition costs and intangibles			4				3				7				4				4				5				5				18
Interest expense			3				3				6				3				3				2				2				10
Total benefits and expenses			63				46				109				46				61				57				43				207
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			50				59				109				68				61				63				75				267
Provision for income taxes			16				19				35				20				18				18				24				80
INCOME FROM CONTINUING OPERATIONS			34				40				74				48				43				45				51				187
Less: income from continuing operations attributable to noncontrolling interests			18				21				39				25				22				16				21				84
INCOME FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS			16				19				35				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	)			—				(1	)			(2	)			(1	)			—				—				(3	)
(Gains) losses on early extinguishment of debt(2)			—				—				—				—				1				—				—				1
Taxes on adjustments			—				—				—				1				—				—				—				1
NET OPERATING INCOME(3)		$	15			$	19			$	34			$	22			$	21			$	29			$	30			$	102
SALES:
New Insurance Written (NIW)
Flow		$	5,000			$	4,400			$	9,400			$	4,600			$	6,300			$	6,500			$	5,800			$	23,200
Bulk			800				—				800				—				—				1,700				—				1,700
Total Australia NIW(4)		$	5,800			$	4,400			$	10,200			$	4,600			$	6,300			$	8,200			$	5,800			$	24,900

 

(1)	Net investment (gains) losses were adjusted for the portion of net investment gains (losses) attributable to noncontrolling interests as reconciled below:

 

Net investment (gains) losses, gross		$	(2	)		$	—			$	(2	)		$	(2	)		$	(3	)		$	—			$	(1	)		$	(6	)
Adjustment for net investment gains (losses) attributable to noncontrolling interests			1				—				1				—				2				—				1				3
Net investment (gains) losses, net		$	(1	)		$	—			$	(1	)		$	(2	)		$	(1	)		$	—			$	—			$	(3	)

 

(2)	For the three months ended September 30, 2015, (gains) losses on early extinguishment of debt were adjusted by $1 million for the portion attributable to noncontrolling interests.

(3)	Net operating income for the Australian platform adjusted for foreign exchange as compared to the prior year period was $16 million and $38 million for the three and six months ended June 30, 2016, respectively.

(4)	New insurance written for the Australian platform adjusted for foreign exchange as compared to the prior year period was $6,000 million and $10,900 million for the three and six months ended June 30, 2016, respectively.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

 

Selected Key Performance Measures—Australia Mortgage Insurance Segment

(amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
Net Premiums Written		$	65			$	47			$	112			$	55			$	79			$	107			$	87			$	328
Loss Ratio(1),(2)			36	%			26	%			31	%			17	%			29	%			28	%			15	%			23	%
Expense Ratio (Net Earned Premiums)(3)			33	%			27	%			30	%			31	%			34	%			33	%			30	%			32	%
Expense Ratio (Net Premiums Written)(4)			44	%			47	%			45	%			49	%			40	%			28	%			31	%			35	%
Primary Insurance In-Force		$	241,100			$	246,800							$	233,600			$	224,100			$	243,800			$	240,900
Primary Risk In-Force(5)
Flow		$	78,300			$	80,300							$	76,000			$	72,900			$	79,100			$	78,600
Bulk			5,700				5,700								5,500				5,500				6,200				5,700
Total		$	84,000			$	86,000							$	81,500			$	78,400			$	85,300			$	84,300
		June 30, 2016												March 31, 2016
Risk In-Force by Loan-To-Value Ratio(6)		Primary				Flow				Bulk				Primary				Flow				Bulk
95.01% and above		$	14,812			$	14,812			$	—			$	15,585			$	15,585			$	—
90.01% to 95.00%			21,843				21,837				6				22,243				22,237				6
80.01% to 90.00%			22,356				22,291				65				22,803				22,736				67
80.00% and below			25,037				19,368				5,669				25,392				19,744				5,648
Total		$	84,048			$	78,308			$	5,740			$	86,023			$	80,302			$	5,721

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

SECOND QUARTER 2016

 

Selected Key Performance Measures—Australia Mortgage Insurance Segment

(dollar amounts in millions)

 

Primary Insurance		June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015
Insured loans in-force			1,477,826				1,479,544				1,478,434				1,479,676				1,481,755
Insured delinquent loans			6,413				5,889				5,552				5,804				5,900
Insured delinquency rate			0.43	%			0.40	%			0.38	%			0.39	%			0.40	%
Flow loans in-force			1,364,756				1,366,914				1,364,628				1,364,537				1,364,653
Flow delinquent loans			6,143				5,633				5,317				5,545				5,623
Flow delinquency rate			0.45	%			0.41	%			0.39	%			0.41	%			0.41	%
Bulk loans in-force			113,070				112,630				113,806				115,139				117,102
Bulk delinquent loans			270				256				235				259				277
Bulk delinquency rate			0.24	%			0.23	%			0.21	%			0.22	%			0.24	%
Loss Metrics		June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015
Beginning Reserves		$	181			$	165			$	156			$	160			$	149
Paid claims(1)			(17	)			(13	)			(14	)			(16	)			(15	)
Increase in reserves			31				20				17				27				25
Impact of changes in foreign exchange rates			(5	)			9				6				(15	)			1
Ending Reserves		$	190			$	181			$	165			$	156			$	160
		June 30, 2016								March 31, 2016								June 30, 2015
State and Territory		% of Primary Risk In-Force				Primary Delinquency Rate				% of Primary Risk In-Force				Primary Delinquency Rate				% of Primary Risk In-Force				Primary Delinquency Rate
New South Wales			29	%			0.30	%			29	%			0.29	%			29	%			0.30%
Queensland			23				0.62	%			23				0.55	%			23				0.57%
Victoria			23				0.37	%			23				0.35	%			23				0.34%
Western Australia			11				0.61	%			11				0.53	%			11				0.45%
South Australia			6				0.59	%			6				0.52	%			6				0.52%
Australian Capital Territory			3				0.19	%			3				0.18	%			3				0.14%
Tasmania			2				0.36	%			2				0.38	%			2				0.35%
New Zealand			2				0.10	%			2				0.13	%			2				0.27%
Northern Territory			1				0.27	%			1				0.21	%			1				0.24%
Total			100	%			0.43	%			100	%			0.40	%			100	%			0.40%
By Policy Year
2007 and prior			35	%			0.31	%			36	%			0.29	%			37	%			0.32%
2008			6				1.01	%			6				0.98	%			7				0.97%
2009			7				0.84	%			7				0.73	%			8				0.73%
2010			6				0.55	%			6				0.51	%			6				0.45%
2011			6				0.58	%			6				0.52	%			7				0.46%
2012			8				0.64	%			8				0.54	%			9				0.49%
2013			9				0.54	%			9				0.47	%			10				0.32%
2014			10				0.36	%			11				0.26	%			11				0.12%
2015			9				0.11	%			9				0.06	%			5				—  %
2016			4				—	%			2				—	%			—				—  %
Total			100	%			0.43	%			100	%			0.40	%			100	%			0.40%

 

(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

SECOND QUARTER 2016

 

Selected Key Performance Measures—Australia Mortgage Insurance Segment

(Australian dollar amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
Paid Claims(1)
Flow		$	23			$	18			$	41			$	22			$	21			$	19			$	17			$	79
Bulk			—				—				—				—				—				—				1				1
Total Paid Claims		$	23			$	18			$	41			$	22			$	21			$	19			$	18			$	80
Average Paid Claim (in thousands)		$	79.2			$	65.8							$	71.0			$	65.9			$	66.9			$	62.5
Average Reserve Per Delinquency (in thousands)		$	39.9			$	40.1							$	40.7			$	38.3			$	35.2			$	36.4
Loss Metrics
Beginning Reserves		$	236			$	226							$	222			$	208			$	196			$	186
Paid claims(1)			(23	)			(18	)							(22	)			(21	)			(19	)			(18	)
Increase in reserves			43				28								26				35				31				28
Ending Reserves		$	256			$	236							$	226			$	222			$	208			$	196
Loan Amount(2)
Over $550K			15	%			15	%							15	%			15	%			14	%			13	%
$400K to $550K			20				20								19				19				19				19
$250K to $400K			36				36								36				36				36				37
$100K to $250K			24				24								25				25				25				26
$100K or Less			5				5								5				5				6				5
Total			100	%			100	%							100	%			100	%			100	%			100	%
Average Primary Loan Size (in thousands)		$	219			$	218							$	217			$	216			$	213			$	211

All amounts presented in Australian dollars.

 

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

(2)	The percentages in this table are based on the amount of primary insurance in-force in each loan band as a percentage of total insurance in-force.

 

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U.S. Life Insurance Segment

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

 

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

(amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	756			$	436			$	1,192			$	797			$	784			$	769			$	778			$	3,128
Net investment income			670				684				1,354				673				680				677				671				2,701
Net investment gains (losses)			114				(16	)			98				17				(16	)			(7	)			(4	)			(10	)
Policy fees and other income			180				177				357				187				177				182				180				726
Total revenues			1,720				1,281				3,001				1,674				1,625				1,621				1,625				6,545
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			1,089				758				1,847				1,324				1,155				1,122				1,091				4,692
Interest credited			143				144				287				148				148				150				150				596
Acquisition and operating expenses, net of deferrals			199				165				364				178				176				167				163				684
Amortization of deferred acquisition costs and intangibles			84				78				162				194				530				75				73				872
Interest expense			5				28				33				23				22				22				25				92
Total benefits and expenses			1,520				1,173				2,693				1,867				2,031				1,536				1,502				6,936
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			200				108				308				(193	)			(406	)			85				123				(391	)
Provision (benefit) for income taxes			70				39				109				(68	)			(144	)			31				43				(138	)
INCOME (LOSS) FROM CONTINUING OPERATIONS			130				69				199				(125	)			(262	)			54				80				(253	)
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses, net(1)			(119	)			11				(108	)			(20	)			10				4				1				(5	)
(Gains) losses on sale of businesses			(1	)			—				(1	)			—				—				—				—				—
(Gains) losses from life block transactions			—				9				9				—				455				—				—				455
Expenses related to restructuring			3				15				18				3				—				2				—				5
Taxes on adjustments			42				(13	)			29				7				(163	)			(3	)			—				(159	)
NET OPERATING INCOME (LOSS)		$	55			$	91			$	146			$	(135	)		$	40			$	57			$	81			$	43

 

(1)	Net investment (gains) losses were adjusted for DAC and other intangible amortization and certain benefit reserves as reconciled below:

 

Net investment (gains) losses, gross		$	(114	)		$	16			$	(98	)		$	(17	)		$	16			$	7			$	4			$	10
Adjustment for DAC and other intangible amortization and certain benefit reserves			(5	)			(5	)			(10	)			(3	)			(6	)			(3	)			(3	)			(15	)
Net investment (gains) losses, net		$	(119	)		$	11			$	(108	)		$	(20	)		$	10			$	4			$	1			$	(5	)

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

 

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

(amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	636			$	618			$	1,254			$	633			$	618			$	597			$	589			$	2,437
Net investment income			344				329				673				325				327				320				313				1,285
Net investment gains (losses)			139				4				143				24				4				(3	)			3				28
Policy fees and other income			—				1				1				1				—				1				—				2
Total revenues			1,119				952				2,071				983				949				915				905				3,752
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			806				776				1,582				797				825				780				766				3,168
Interest credited			—				—				—				—				—				—				—				—
Acquisition and operating expenses, net of deferrals			93				95				188				110				112				98				95				415
Amortization of deferred acquisition costs and intangibles			26				26				52				25				24				24				26				99
Interest expense			—				—				—				—				—				—				—				—
Total benefits and expenses			925				897				1,822				932				961				902				887				3,682
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			194				55				249				51				(12	)			13				18				70
Provision (benefit) for income taxes			68				20				88				19				(5	)			5				6				25
INCOME (LOSS) FROM CONTINUING OPERATIONS			126				35				161				32				(7	)			8				12				45
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses			(139	)			(4	)			(143	)			(24	)			(4	)			3				(3	)			(28	)
Expenses related to restructuring			2				3				5				2				—				1				—				3
Taxes on adjustments			48				—				48				9				1				(2	)			1				9
NET OPERATING INCOME (LOSS)		$	37			$	34			$	71			$	19			$	(10	)		$	10			$	10			$	29
SALES:
Individual Long-Term Care Insurance		$	4			$	5			$	9			$	8			$	7			$	8			$	10			$	33
Group Long-Term Care Insurance			2				2				4				2				1				1				1				5
Total Sales		$	6			$	7			$	13			$	10			$	8			$	9			$	11			$	38
RATIOS:
Loss Ratio(1)			70.1	%			67.6	%			68.9	%			72.9	%			76.4	%			72.6	%			72.4	%			73.6	%
Gross Benefits Ratio(2)			126.7	%			125.5	%			126.1	%			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

SECOND QUARTER 2016

 

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

(amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums(1)		$	120			$	(185	)		$	(65	)		$	160			$	162			$	169			$	179			$	670
Net investment income			117				133				250				125				126				127				127				505
Net investment gains (losses)			(1	)			2				1				15				(8	)			3				3				13
Policy fees and other income			176				173				349				183				175				178				178				714
Total revenues			412				123				535				483				455				477				487				1,902
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves(1)			231				(87	)			144				446				248				266				250				1,210
Interest credited			65				64				129				68				66				68				66				268
Acquisition and operating expenses, net of deferrals			39				51				90				50				48				52				51				201
Amortization of deferred acquisition costs and intangibles			27				33				60				150				487				33				30				700
Interest expense			5				28				33				23				22				22				25				92
Total benefits and expenses			367				89				456				737				871				441				422				2,471
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			45				34				79				(254	)			(416	)			36				65				(569	)
Provision (benefit) for income taxes			16				12				28				(90	)			(147	)			13				23				(201	)
INCOME (LOSS) FROM CONTINUING OPERATIONS			29				22				51				(164	)			(269	)			23				42				(368	)
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses			1				(2	)			(1	)			(15	)			8				(3	)			(3	)			(13	)
(Gains) losses on sale of businesses			(1	)			—				(1	)			—				—				—				—				—
(Gains) losses from life block transactions			—				9				9				—				455				—				—				455
Expenses related to restructuring			2				8				10				—				—				1				—				1
Taxes on adjustments			—				(6	)			(6	)			6				(163	)			1				1				(155	)
NET OPERATING INCOME (LOSS)		$	31			$	31			$	62			$	(173	)		$	31			$	22			$	40			$	(80	)
SALES:
Term Life		$	2			$	5			$	7			$	6			$	7			$	9			$	9			$	31
Universal Life			1				2				3				3				2				4				4				13
Linked-Benefits			1				2				3				1				3				2				4				10
Total Sales		$	4			$	9			$	13			$	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

SECOND QUARTER 2016

 

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

(amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	—			$	3			$	3			$	4			$	4			$	3			$	10			$	21
Net investment income			209				222				431				223				227				230				231				911
Net investment gains (losses)			(24	)			(22	)			(46	)			(22	)			(12	)			(7	)			(10	)			(51	)
Policy fees and other income			4				3				7				3				2				3				2				10
Total revenues			189				206				395				208				221				229				233				891
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves(1)			52				69				121				81				82				76				75				314
Interest credited			78				80				158				80				82				82				84				328
Acquisition and operating expenses, net of deferrals(2)			67				19				86				18				16				17				17				68
Amortization of deferred acquisition costs and intangibles			31				19				50				19				19				18				17				73
Interest expense			—				—				—				—				—				—				—				—
Total benefits and expenses			228				187				415				198				199				193				193				783
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			(39	)			19				(20	)			10				22				36				40				108
Provision (benefit) for income taxes			(14	)			7				(7	)			3				8				13				14				38
INCOME (LOSS) FROM CONTINUING OPERATIONS			(25	)			12				(13	)			7				14				23				26				70
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses, net(3)			19				17				36				19				6				4				7				36
Expenses related to restructuring			(1	)			4				3				1				—				—				—				1
Taxes on adjustments			(6	)			(7	)			(13	)			(8	)			(1	)			(2	)			(2	)			(13	)
NET OPERATING INCOME (LOSS)		$	(13	)		$	26			$	13			$	19			$	19			$	25			$	31			$	94
SALES:
Single Premium Deferred Annuities		$	8			$	159			$	167			$	297			$	248			$	211			$	306			$	1,062
Single Premium Immediate Annuities			1				9				10				17				12				13				20				62
Total Sales		$	9			$	168			$	177			$	314			$	260			$	224			$	326			$	1,124

 

(1)	In the second quarter of 2016, benefits and other changes in policy reserves included $45 million of lower assumed reinsurance in connection with the recapture by a third party.

(2)	In the second quarter of 2016, acquisition and operating expenses, net of deferrals, included a $55 million ceding commission paid in connection with the recapture by a third party.

(3)	Net investment (gains) losses were adjusted for DAC and other intangible amortization and certain benefit reserves as reconciled below:

 

Net investment (gains) losses, gross		$	24			$	22			$	46			$	22			$	12			$	7			$	10			$	51
Adjustment for DAC and other intangible amortization and certain benefit reserves			(5	)			(5	)			(10	)			(3	)			(6	)			(3	)			(3	)			(15	)
Net investment (gains) losses, net		$	19			$	17			$	36			$	19			$	6			$	4			$	7			$	36

 

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Runoff Segment

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

 

Net Operating Income (Loss)—Runoff Segment

(amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	—			$	—			$	—			$	—			$	—			$	1			$	—			$	1
Net investment income			36				35				71				35				32				40				31				138
Net investment gains (losses)			(13	)			(8	)			(21	)			(30	)			(25	)			(8	)			(6	)			(69	)
Policy fees and other income			42				42				84				45				46				49				49				189
Total revenues			65				69				134				50				53				82				74				259
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			9				15				24				8				18				11				7				44
Interest credited			30				33				63				32				31				31				30				124
Acquisition and operating expenses, net of deferrals			18				16				34				19				17				21				19				76
Amortization of deferred acquisition costs and intangibles			12				6				18				(3	)			17				10				5				29
Interest expense			—				—				—				—				—				1				—				1
Total benefits and expenses			69				70				139				56				83				74				61				274
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			(4	)			(1	)			(5	)			(6	)			(30	)			8				13				(15	)
Provision (benefit) for income taxes			(2	)			(2	)			(4	)			(3	)			(12	)			2				3				(10	)
INCOME (LOSS) FROM CONTINUING OPERATIONS			(2	)			1				(1	)			(3	)			(18	)			6				10				(5	)
ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses, net(1)			12				4				16				22				21				5				1				49
Taxes on adjustments			(4	)			(1	)			(5	)			(8	)			(7	)			(2	)			—				(17	)
NET OPERATING INCOME (LOSS)		$	6			$	4			$	10			$	11			$	(4	)		$	9			$	11			$	27

 

(1)	Net investment (gains) losses were adjusted for DAC and other intangible amortization and certain benefit reserves as reconciled below:

 

Net investment (gains) losses, gross		$	13			$	8			$	21			$	30			$	25			$	8			$	6			$	69
Adjustment for DAC and other intangible amortization and certain benefit reserves			(1	)			(4	)			(5	)			(8	)			(4	)			(3	)			(5	)			(20	)
Net investment (gains) losses, net		$	12			$	4			$	16			$	22			$	21			$	5			$	1			$	49

 

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Corporate and Other

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

 

Net Operating Loss—Corporate and Other⁽¹⁾

(amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
REVENUES:
Premiums		$	3			$	6			$	9			$	6			$	7			$	5			$	7			$	25
Net investment income			1				2				3				3				(1	)			1				(6	)			(3	)
Net investment gains (losses)(2)			(65	)			(14	)			(79	)			6				9				3				11				29
Policy fees and other income(3)			76				1				77				—				—				(10	)			—				(10	)
Total revenues			15				(5	)			10				15				15				(1	)			12				41
BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves			1				2				3				3				3				3				5				14
Acquisition and operating expenses, net of deferrals(4)			25				137				162				154				40				22				14				230
Amortization of deferred acquisition costs and intangibles			—				—				—				—				—				—				1				1
Interest expense			68				70				138				74				75				74				75				298
Total benefits and expenses			94				209				303				231				118				99				95				543
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES			(79	)			(214	)			(293	)			(216	)			(103	)			(100	)			(83	)			(502	)
Benefit for income taxes			(31	)			(96	)			(127	)			(28	)			(33	)			(39	)			(30	)			(130	)
LOSS FROM CONTINUING OPERATIONS			(48	)			(118	)			(166	)			(188	)			(70	)			(61	)			(53	)			(372	)
ADJUSTMENTS TO LOSS FROM CONTINUING OPERATIONS:
Net investment (gains) losses			65				14				79				(6	)			(9	)			(3	)			(11	)			(29	)
(Gains) losses on sale of businesses			(9	)			7				(2	)			140				—				—				—				140
(Gains) losses on early extinguishment of debt			(64	)			16				(48	)			—				1				—				—				1
Expenses related to restructuring			2				—				2				2				—				1				—				3
Fees associated with bond consent solicitation			—				18				18				—				—				—				—				—
Taxes on adjustments			2				(42	)			(40	)			(6	)			10				1				4				9
NET OPERATING LOSS		$	(52	)		$	(105	)		$	(157	)		$	(58	)		$	(68	)		$	(62	)		$	(60	)		$	(248	)

 

(1)	Includes inter-segment eliminations and the results of other businesses that are managed outside the operating segments, including certain smaller international mortgage insurance businesses.

(2)	In the second quarter of 2016, net investment gains (losses) included a $64 million loss from the write-off of residual interest in certain policy loan securitization entities.

(3)	In the second quarter of 2016, the company settled restricted borrowings of $70 million related to a securitization entity and recorded a $64 million pre-tax gain related to the early extinguishment of debt, which was included in policy fees and other income.

(4)

In the first quarter of 2016, acquisition and operating expenses, net of deferrals, included the following: $83 million of legal fees and expenses, including $69 million related to the settlement of the long-term care insurance class action lawsuit; $20 million of make-whole expense on the early redemption of Genworth Holdings’ 2016 senior notes in January 2016; $18 million associated with Genworth Holdings’ bond consent solicitation for broker, advisor and investment banking fees; and an additional estimated loss of $7 million related to the planned sale of the mortgage insurance business in Europe. In the fourth quarter of 2015, acquisition and operating expenses, net of deferrals, included an estimated loss of $140 million related to the planned sale of the mortgage insurance business in Europe.

 

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Additional Financial Data

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

Investments Summary

(amounts in millions)

 

				June 30, 2016								March 31, 2016								December 31, 2015								September 30, 2015								June 30, 2015
				Carrying Amount				% of Total				Carrying Amount				% of Total				Carrying Amount				% of Total				Carrying Amount				% of Total				Carrying Amount				% of Total
Composition of Investment Portfolio
Fixed maturity securities:
Investment grade:
Public fixed maturity securities				$	35,003				45	%		$	33,362				44	%		$	31,969				43	%		$	33,541				44	%		$	33,407				45	%
Private fixed maturity securities					11,370				15				10,867				14				10,822				15				10,908				15				10,777				14
Residential mortgage-backed securities(1)					4,981				6				5,041				7				4,998				7				5,008				7				4,954				7
Commercial mortgage-backed securities					2,940				4				2,633				4				2,475				3				2,492				3				2,475				3
Other asset-backed securities					3,279				4				3,287				4				3,253				4				3,904				5				3,837				5
State and political subdivisions					2,751				4				2,517				3				2,428				3				2,447				3				2,388				3
Non-investment grade fixed maturity securities					2,504				3				2,583				3				2,252				3				2,346				3				2,530				3
Equity securities:
Common stocks and mutual funds					140				—				108				—				37				—				37				—				62				—
Preferred stocks					341				1				323				—				273				—				236				—				237				1
Commercial mortgage loans					6,121				8				6,179				8				6,170				8				6,133				8				6,175				8
Restricted commercial mortgage loans related to securitization entities					141				—				155				—				161				—				175				—				181				—
Policy loans					1,754				2				1,565				2				1,568				2				1,567				2				1,584				2
Cash, cash equivalents and short-term investments					3,730				5				4,217				6				6,162				8				4,003				6				4,413				6
Securities lending					328				—				415				1				347				—				367				—				337				—
Other invested assets:		Limited partnerships			181				—				177				—				188				—				195				—				216				—
		Derivatives:
		Long-term care (LTC) forward starting swap—cash flow			627				1				1,087				1				629				1				768				1				423				1
		Other cash flow			7				—				7				—				8				—				8				—				8				—
		Equity index options—non-qualified			57				—				36				—				30				—				15				—				12				—
		Other non-qualified			578				1				537				1				445				1				534				1				416				—
		Trading portfolio			441				1				471				1				447				1				458				1				368				1
		Restricted other invested assets related to securitization entities			312				—				422				1				413				1				412				1				410				1
		Other			18				—				19				—				18				—				51				—				52				—
Total invested assets and cash				$	77,604				100	%		$	76,008				100	%		$	75,093				100	%		$	75,605				100	%		$	75,262				100	%
Public Fixed Maturity Securities—Credit Quality:
NRSRO(2) Designation
AAA				$	15,714				33	%		$	15,385				34	%		$	14,785				34	%		$	15,057				33	%		$	14,920				33	%
AA					4,455				10				4,174				10				4,121				10				4,603				10				4,763				11
A					13,122				28				12,664				28				12,155				28				13,485				30				13,376				30
BBB					12,154				26				11,213				25				10,720				25				10,667				24				10,576				23
BB					1,440				3				1,464				3				1,200				3				1,234				3				1,276				3
B					149				—				141				—				63				—				50				—				68				—
CCC and lower					56				—				77				—				92				—				95				—				99				—
Total public fixed maturity securities				$	47,090				100	%		$	45,118				100	%		$	43,136				100	%		$	45,191				100	%		$	45,078				100	%
Private Fixed Maturity Securities—Credit Quality:
NRSRO(2) Designation
AAA				$	1,683				10	%		$	1,614				10	%		$	1,531				10	%		$	1,725				11	%		$	1,641				11	%
AA					2,013				13				1,923				13				1,899				13				1,966				13				1,941				13
A					4,864				31				4,725				31				4,731				31				4,737				31				4,781				31
BBB					6,319				40				6,009				40				6,003				40				6,060				39				5,840				38
BB					734				5				772				5				777				5				839				5				973				6
B					102				1				104				1				104				1				114				1				101				1
CCC and lower					23				—				25				—				16				—				14				—				13				—
Total private fixed maturity securities				$	15,738				100	%		$	15,172				100	%		$	15,061				100	%		$	15,455				100	%		$	15,290				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

SECOND QUARTER 2016

 

Fixed Maturity Securities Summary

(amounts in millions)

 

		June 30, 2016								March 31, 2016								December 31, 2015								September 30, 2015								June 30, 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		$	6,806				11	%		$	6,524				11	%		$	6,203				11	%		$	5,913				10	%		$	5,721				9	%
State and political subdivisions			2,751				4				2,517				4				2,438				4				2,448				4				2,389				4
Foreign government			2,113				3				2,080				3				2,015				3				1,935				3				1,955				3
U.S. corporate			26,984				43				25,389				43				24,401				42				25,679				43				25,135				42
Foreign corporate			12,833				21				12,629				21				12,199				21				13,027				22				13,628				23
Residential mortgage-backed securities			5,055				8				5,122				8				5,101				9				5,118				8				5,085				9
Commercial mortgage-backed securities			2,979				5				2,713				4				2,559				4				2,587				4				2,582				4
Other asset-backed securities			3,307				5				3,316				6				3,281				6				3,939				6				3,873				6
Total fixed maturity securities		$	62,828				100	%		$	60,290				100	%		$	58,197				100	%		$	60,646				100	%		$	60,368				100	%
Corporate Bond Holdings—Industry Sector:
Investment Grade:
Finance and insurance		$	8,499				23	%		$	8,128				23	%		$	7,746				22	%		$	8,290				23	%		$	8,047				22	%
Utilities			5,507				15				5,275				15				4,453				13				4,618				12				4,568				12
Energy			2,949				8				2,908				8				3,839				11				4,249				11				4,403				12
Consumer—non-cyclical			5,292				14				4,894				14				4,619				13				4,647				13				4,504				12
Consumer—cyclical			2,039				5				2,150				6				2,119				6				2,288				6				2,319				6
Capital goods			2,613				7				2,444				7				2,361				7				2,461				7				2,434				7
Industrial			1,971				5				1,980				5				1,915				6				2,130				6				2,224				6
Technology and communications			3,272				9				3,019				8				2,872				8				3,095				8				3,107				9
Transportation			1,860				5				1,750				5				1,689				5				1,695				5				1,629				5
Other			3,538				9				3,162				9				3,049				9				3,213				9				3,356				9
Subtotal			37,540				100	%			35,710				100	%			34,662				100	%			36,686				100	%			36,591				100	%
Non-Investment Grade:
Finance and insurance			285				13	%			306				13	%			359				19	%			381				19	%			443				20	%
Utilities			74				3				78				4				83				4				67				3				68				3
Energy			679				30				693				30				348				18				400				20				409				19
Consumer—non-cyclical			217				9				226				10				229				12				230				11				257				12
Consumer—cyclical			131				6				86				4				82				4				98				5				99				5
Capital goods			153				7				216				9				193				10				204				10				234				11
Industrial			263				11				279				12				244				13				254				13				240				11
Technology and communications			335				15				320				14				309				16				293				14				336				15
Transportation			30				1				2				—				2				—				2				—				3				—
Other			110				5				102				4				89				4				91				5				83				4
Subtotal			2,277				100	%			2,308				100	%			1,938				100	%			2,020				100	%			2,172				100	%
Total		$	39,817				100	%		$	38,018				100	%		$	36,600				100	%		$	38,706				100	%		$	38,763				100	%
Fixed Maturity Securities—Contractual Maturity Dates:
Due in one year or less		$	1,851				3	%		$	1,879				3	%		$	1,744				3	%		$	2,075				4	%		$	2,003				3	%
Due after one year through five years			11,024				18				10,730				18				10,192				18				10,817				18				10,935				19
Due after five years through ten years			12,708				20				11,964				20				11,917				20				12,155				20				12,212				20
Due after ten years			25,904				41				24,566				41				23,403				40				23,955				40				23,678				39
Subtotal			51,487				82				49,139				82				47,256				81				49,002				82				48,828				81
Mortgage and asset-backed securities			11,341				18				11,151				18				10,941				19				11,644				18				11,540				19
Total fixed maturity securities		$	62,828				100	%		$	60,290				100	%		$	58,197				100	%		$	60,646				100	%		$	60,368				100	%

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

 

General Account GAAP Net Investment Income Yields

(amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
GAAP Net Investment Income
Fixed maturity securities—taxable		$	634			$	641			$	1,275			$	634			$	647			$	645			$	632			$	2,558
Fixed maturity securities—non-taxable			3				3				6				3				3				3				3				12
Commercial mortgage loans			77				81				158				85				84				83				85				337
Restricted commercial mortgage loans related to securitization entities			3				2				5				4				3				3				4				14
Equity securities			7				5				12				4				3				4				4				15
Other invested assets			33				32				65				30				22				17				33				102
Limited partnerships			—				6				6				2				4				20				7				33
Restricted other invested assets related to securitization entities			1				2				3				2				1				1				1				5
Policy loans			34				35				69				36				33				35				33				137
Cash, cash equivalents and short-term investments			6				5				11				3				3				4				3				13
Gross investment income before expenses and fees			798				812				1,610				803				803				815				805				3,226
Expenses and fees			(19	)			(23	)			(42	)			(22	)			(20	)			(22	)			(24	)			(88	)
Net investment income		$	779			$	789			$	1,568			$	781			$	783			$	793			$	781			$	3,138
Annualized Yields
Fixed maturity securities—taxable			4.6	%			4.7	%			4.6	%			4.6	%			4.6	%			4.6	%			4.6	%			4.6	%
Fixed maturity securities—non-taxable			3.6	%			3.6	%			3.6	%			3.5	%			3.5	%			3.5	%			3.5	%			3.5	%
Commercial mortgage loans			5.0	%			5.2	%			5.1	%			5.5	%			5.5	%			5.4	%			5.6	%			5.5	%
Restricted commercial mortgage loans related to securitization entities			8.0	%			5.1	%			6.6	%			9.5	%			6.4	%			7.2	%			8.2	%			8.0	%
Equity securities			5.8	%			5.1	%			5.6	%			5.1	%			4.0	%			5.6	%			6.1	%			5.2	%
Other invested assets			31.9	%			29.4	%			30.8	%			27.4	%			22.2	%			24.2	%			60.6	%			30.7	%
Limited partnerships(1)			0.0	%			13.2	%			6.6	%			4.2	%			7.8	%			37.0	%			12.0	%			15.5	%
Restricted other invested assets related to securitization entities			1.1	%			2.0	%			1.6	%			2.0	%			1.0	%			1.0	%			1.0	%			1.3	%
Policy loans			8.2	%			8.9	%			8.5	%			9.2	%			8.4	%			9.1	%			8.8	%			8.9	%
Cash, cash equivalents and short-term investments			0.6	%			0.4	%			0.5	%			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	%			4.6	%			4.6	%
Expenses and fees			-0.1	%			-0.1	%			-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	%			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

SECOND QUARTER 2016

 

Net Investment Gains (Losses), Net—Detail

(amounts in millions)

 

		2016												2015
		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
Net realized gains (losses) on available-for-sale securities:
Fixed maturity securities:
U.S. corporate		$	—			$	(7	)		$	(7	)		$	12			$	(3	)		$	—			$	—			$	9
U.S. government, agencies and government-sponsored enterprises			137				7				144				3				—				—				1				4
Foreign corporate			(6	)			(8	)			(14	)			(6	)			(1	)			(2	)			(7	)			(16	)
Foreign government			—				—				—				(2	)			—				1				1				—
Tax-exempt			—				—				—				(1	)			—				—				—				(1	)
Mortgage-backed securities			—				—				—				—				(3	)			2				—				(1	)
Asset-backed securities			(10	)			—				(10	)			(2	)			(2	)			—				—				(4	)
Equity securities			—				1				1				1				3				12				7				23
Foreign exchange			1				—				1				2				2				1				1				6
Total net realized gains (losses) on available-for-sale securities			122				(7	)			115				7				(4	)			14				3				20
Impairments:
Corporate fixed maturity securities			(16	)			(8	)			(24	)			(15	)			(6	)			—				—				(21	)
Foreign government			(1	)			—				(1	)			—				—				—				—				—
Limited partnerships			—				(3	)			(3	)			—				—				—				—				—
Commercial mortgage loans			(4	)			—				(4	)			—				(1	)			—				(3	)			(4	)
Commercial mortgage-backed securities			(1	)			—				(1	)			—				—				—				—				—
Other asset-backed securities			—				—				—				—				(2	)			—				—				(2	)
Total impairments			(22	)			(11	)			(33	)			(15	)			(9	)			—				(3	)			(27	)
Net unrealized gains (losses) on trading securities			16				28				44				(9	)			12				(16	)			6				(7	)
Commercial mortgage loans held-for-sale market valuation allowance			1				1				2				2				1				2				2				7
Net gains (losses) related to securitization entities			(61	)			8				(53	)			(4	)			(1	)			2				8				5
Derivative instruments			(24	)			(38	)			(62	)			3				(53	)			6				(32	)			(76	)
Contingent purchase price valuation change			(2	)			—				(2	)			—				2				—				—				2
Other			—				—				—				—				1				—				—				1
Net investment gains (losses), gross			30				(19	)			11				(16	)			(51	)			8				(16	)			(75	)
Adjustment for DAC and other intangible amortization and certain benefit reserves			6				9				15				11				10				6				8				35
Adjustment for net investment (gains) losses attributable to noncontrolling interests			3				(9	)			(6	)			4				8				(9	)			7				10
Net investment gains (losses), net		$	39			$	(19	)		$	20			$	(1	)		$	(33	)		$	5			$	(1	)		$	(30	)

 

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Reconciliations of Non-GAAP Measures

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

Reconciliation of Operating ROE

(amounts in millions)

 

Twelve Month Rolling Average ROE		Twelve months ended
		June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015
GAAP Basis ROE
Net income (loss) available to Genworth Financial, Inc.’s common stockholders for the twelve months ended(1)		$	(351	)		$	(716	)		$	(615	)		$	(1,083	)		$	(1,643	)
Quarterly average Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income (loss)(2)		$	10,042			$	10,160			$	10,281			$	10,564			$	10,958
GAAP Basis ROE (1)/(2)			-3.5	%			-7.0	%			-6.0	%			-10.3	%			-15.0	%
Operating ROE
Net operating income (loss) for the twelve months ended(1)		$	208			$	204			$	255			$	(78	)		$	(465	)
Quarterly average Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income (loss)(2)		$	10,042			$	10,160			$	10,281			$	10,564			$	10,958
Operating ROE (1)/(2)			2.1	%			2.0	%			2.5	%			-0.7	%			-4.2	%
Quarterly Average ROE		Three months ended
		June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015
GAAP Basis ROE
Net income (loss) available to Genworth Financial, Inc.’s common stockholders for the period ended(3)		$	172			$	53			$	(292	)		$	(284	)		$	(193	)
Quarterly average Genworth Financial, Inc.’s stockholders’ equity for the period, excluding accumulated other comprehensive income (loss)(4)		$	9,958			$	9,842			$	9,958			$	10,241			$	10,507
Annualized GAAP Quarterly Basis ROE (3)/(4)			6.9	%			2.2	%			-11.7	%			-11.1	%			-7.3	%
Operating ROE
Net operating income (loss) for the period ended(3)		$	123			$	103			$	(82	)		$	64			$	119
Quarterly average Genworth Financial, Inc.’s stockholders’ equity for the period, excluding accumulated other comprehensive income (loss)(4)		$	9,958			$	9,842			$	9,958			$	10,241			$	10,507
Annualized Operating Quarterly Basis ROE (3)/(4)			4.9	%			4.2	%			-3.3	%			2.5	%			4.5	%

Non-GAAP Definition for Operating ROE

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

 

(1)	The twelve months ended information is derived by adding the four quarters of net income (loss) available to Genworth Financial, Inc.’s common stockholders and net operating income (loss) from page 9 herein.

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

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

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

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

 

Reconciliation of Core Yield

 

				2016												2015
		(Assets—amounts in billions)		2Q				1Q				Total				4Q				3Q				2Q				1Q				Total
		Reported—Total Invested Assets and Cash		$	77.6			$	76.0			$	77.6			$	75.1			$	75.6			$	75.3			$	77.9			$	75.1
		Subtract:
		Securities lending			0.3				0.4				0.3				0.3				0.4				0.3				0.3				0.3
		Unrealized gains (losses)			7.6				6.3				7.6				4.2				5.4				4.9				7.8				4.2
		Adjusted end of period invested assets and cash		$	69.7			$	69.3			$	69.7			$	70.6			$	69.8			$	70.1			$	69.8			$	70.6
(A)		Average Invested Assets and Cash Used in Reported Yield Calculation		$	69.5			$	70.0			$	69.8			$	70.2			$	70.0			$	70.0			$	69.7			$	70.0
		Subtract:
		Restricted commercial mortgage loans and other invested assets related to securitization entities(1)			0.1				0.2				0.2				0.2				0.2				0.2				0.2				0.2
(B)		Average Invested Assets and Cash Used in Core Yield Calculation		$	69.4			$	69.8			$	69.6			$	70.0			$	69.8			$	69.8			$	69.5			$	69.8
		(Income—amounts in millions)
(C)		Reported—Net Investment Income		$	779			$	789			$	1,568			$	781			$	783			$	793			$	781			$	3,138
		Subtract:
		Bond calls and commercial mortgage loan prepayments			5				11				16				18				12				17				14				61
		Other non-core items(2)			(6	)			15				9				(2	)			1				(4	)			7				2
		Restricted commercial mortgage loans and other invested assets related to securitization entities(1)			2				3				5				3				2				2				3				10
(D)		Core Net Investment Income		$	778			$	760			$	1,538			$	762			$	768			$	778			$	757			$	3,065
(C) / (A)		Reported Yield			4.48	%			4.51	%			4.49	%			4.45	%			4.47	%			4.53	%			4.48	%			4.48	%
(D) / (B)		Core Yield			4.48	%			4.36	%			4.42	%			4.35	%			4.40	%			4.46	%			4.36	%			4.39	%

 

Notes:

Columns may not add due to rounding.

Yields have been annualized.

Non-GAAP Definition for Core Yield

The company references the non-GAAP financial measure entitled “core yield” as a measure of investment yield. The company defines core yield as the investment yield adjusted for items that do not reflect the underlying performance of the investment portfolio. Management believes that analysis of core yield enhances understanding of the investment yield of the company. However, core yield is not a substitute for investment yield determined in accordance with GAAP.

 

(1)	Represents the incremental assets and investment income related to restricted commercial mortgage loans and other invested assets.

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

 

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Corporate Information

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2016

Financial Strength Ratings As Of August 1, 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 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) or “BB” (Marginal) have strong or marginal financial security characteristics, respectively. The “A” and “BB” ranges are the third- and fifth-highest of nine financial strength rating ranges assigned by S&P, which range from “AAA” to “R.” A plus (+) or minus (-) shows relative standing within a major rating category. These suffixes are not added to ratings in the “AAA” category or to ratings below the “CCC” category. Accordingly, the “A+,” “BB+” and “BB” ratings are the fifth-, eleventh- and twelfth-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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