Three months ended September 30th, (Unaudited)
2005 2004
Per diluted Per diluted
Total share Total share
(Amounts in millions,
except per share)
Net earnings $307 $0.64 $271 $0.55
Net operating earnings $311 $0.65 $269 $0.55
Weighted average
diluted shares 481.1 490.4
RICHMOND, Va., Oct. 14 /PRNewswire-FirstCall/ -- Genworth Financial, Inc.
(NYSE: GNW) today reported net earnings for the third quarter of 2005 of $307
million, or $0.64 per diluted share. Net earnings for the third quarter of
2004 were $271 million, or $0.55 per diluted share.
Net operating earnings for the third quarter of 2005 were $311 million, or
$0.65 per diluted share, compared to net operating earnings of $269 million or
$0.55 per diluted share in the third quarter of 2004.
Earnings for the third quarter of 2005 included $24 million, or $0.05 per
diluted share, of investment income related to bond calls, prepayments and
partnership income.
Management believes that the presentation of net operating earnings
enhances understanding and comparability of performance by highlighting
underlying business activity and profitability drivers. However, net
operating earnings should not be viewed as a substitute for net earnings
prepared under U.S. generally accepted accounting principles (GAAP).
Detailed Earnings Release and Conference Call Information
Genworth will issue a detailed earnings release and third quarter
financial supplement after the market closes on October 25, 2005 and will
conduct a conference call on October 26 from 10 a.m. to 11 a.m. (EDT).
The conference call will be accessible via telephone and the Internet.
The earnings release and financial supplement will be posted on the company's
website when released. Investors are encouraged to review all of these
materials. The web cast will be available at http://www.genworth.com. To
access the call by telephone, dial 1-800-599-9795 (U.S.) or 1-617-786-2905
(outside the U.S.), access code "Genworth". A replay of the call will be
available from 1 p.m. EDT on October 26 through November 9, 2005 at
1-888-286-8010 or 1-617-801-6888 (outside the U.S.), access code 56584034.
The call will also be replayed at the company's website during this same time
period.
Use of Non-GAAP Measures
This press release includes the non-GAAP financial measure entitled "net
operating earnings." The company defines net operating earnings as net
earnings from continuing operations, excluding after-tax net realized
investment gains and losses (which can fluctuate significantly from period to
period), changes in accounting principles and non-recurring, infrequent or
unusual items. There were no non-recurring, infrequent or unusual items
excluded from net operating earnings for the periods presented in this press
release.
Management believes that analysis of net operating earnings enhances
understanding and comparability of performance by highlighting underlying
business activity and profitability drivers. However, net operating earnings
should not be viewed as a substitute for GAAP net earnings. In addition, the
company's definition of net operating earnings may differ from the definitions
used by other companies. The table at the end of this press release provides
a reconciliation of net earnings to net operating earnings (as defined above)
for the three months ended September 30, 2005 and 2004.
Cautionary Note Regarding Forward-Looking Statements
This press release contains certain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Forward-
looking statements may be identified by words such as "expects," "intends,"
"anticipates," "plans," "believes," "seeks," "estimates," "will," or words of
similar meaning and include, but are not limited to, statements regarding the
outlook for the company's future business and financial performance. Forward-
looking statements are based on management's current expectations and
assumptions, which are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Actual outcomes and results may
differ materially due to global political, economic, business, competitive,
market, regulatory and other factors and risks, including the following:
* Risks relating to our businesses, including interest rate fluctuations,
downturns and volatility in equity markets, defaults in portfolio securities,
downgrades in our financial strength and credit ratings, insufficiency of
reserves, legal constraints on dividend distributions by subsidiaries,
illiquidity of investments, competition, inability to attract or retain
independent sales intermediaries and dedicated sales specialists, defaults by
counterparties, foreign exchange rate fluctuations, regulatory restrictions on
our operations and changes in applicable laws and regulations, legal or
regulatory actions or investigations, political or economic instability, the
failure or any compromise of the security of our computer systems and the
occurrence of natural or man-made disasters;
* Risks relating to our Protection and Retirement Income and Investments
segments, including unexpected changes in mortality, morbidity and
unemployment rates, accelerated amortization of deferred acquisition costs and
present value of future profits, goodwill impairments, medical advances such
as genetic mapping research, unexpected changes in persistency rates,
increases in statutory reserve requirements, the failure of demand for long-
term care insurance to increase as we expect and changes in tax and securities
laws;
* Risks relating to our Mortgage Insurance segment, including the
influence of Fannie Mae, Freddie Mac and a small number of large mortgage
lenders and investors, increased regulatory scrutiny of Fannie Mae and Freddie
Mac resulting in possible regulatory changes, decreases in the volume of high
loan-to-value mortgage originations, increases in mortgage insurance
cancellations, increases in the use of simultaneous second mortgages and other
alternatives to private mortgage insurance and reductions by lenders in the
level of coverage they select, unexpected increases in mortgage insurance
default rates or severity of defaults, deterioration in economic conditions,
insufficiency of premium rates to compensate us for risks associated with
mortgage loans bearing high loan-to-value ratios, increases in the use of
captive reinsurance in the mortgage insurance market, changes in the demand
for mortgage insurance that could arise as a result of efforts of large
mortgage investors, legal or regulatory actions or investigations under
applicable laws and regulations, including the Real Estate Settlement
Practices Act and the Federal Fair Credit Reporting Act, potential liabilities
in connection with contract underwriting services and growth in the European
mortgage insurance market that is lower than we expect; and
* Risks relating to our separation from GE, including the loss of benefits
associated with GE's brand and reputation, our need to establish our new
Genworth brand identity quickly and effectively, the lack of comparability
between our financial information for periods before the IPO and for periods
after the IPO, the possibility that we will not be able to replace services
previously provided by GE on terms that are at least as favorable, the
possibility that in certain circumstances we will be obligated to make
payments to GE under our tax matters agreement even if our corresponding tax
savings either are delayed or never materialize, the possibility that in the
event of a change in control of our company we would have insufficient funds
to meet accelerated obligations under the tax matters agreement, GE's control
over certain tax matters that could have an impact on us, potential conflicts
of interest with GE and GE's engaging in the same type of business as we do in
the future.
The company undertakes no obligation to publicly update any forward-
looking statement, whether as a result of new information, future developments
or otherwise.
About Genworth Financial
Genworth is a leading insurance holding company, serving the lifestyle
protection, retirement income, investment and mortgage insurance needs of more
than 15 million customers, and has operations in 24 countries, including the
U.S., Canada, Australia, the U.K. and more than a dozen other European
countries. For more information, visit http://www.genworth.com.
RECONCILIATION TO NET OPERATING EARNINGS
(Amounts in millions, except per share data)
(Unaudited)
Three months
ended September 30,
2005 2004
Net earnings $307 $271
Net realized investment losses
(gains), net of taxes 4 (2)
Net operating earnings $311 $269
Net earnings per common share:
Basic $0.65 $0.55
Diluted $0.64 $0.55
Net operating earnings per common share:
Basic $0.66 $0.55
Diluted $0.65 $0.55
Weighted-average common shares outstanding:
Basic 470.7 489.6
Diluted 481.1 490.4
SOURCE Genworth Financial, Inc.
CONTACT: Investors: Jean Peters, +1-804-662-2693,
jean.peters@genworth.com, or Alicia Charity, +1-804-662-2248,
alicia.charity@genworth.com; or Media: Neal McGarity, +1-804-662-2534,
neal.mcgarity@genworth.com, all of Genworth Financial, Inc.