Table of Contents

Exhibit 99.2

LOGO


Table of Contents

GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Table of Contents

  Page

Investor Letter

  3

Use of Non-GAAP Measures

  4

Financial Highlights

  5

Second Quarter Results—Three and six months ended June 30, 2006 as compared to three and six months ended June 30, 2005

 

Reconciliation of Net Earnings to Net Operating Earnings

  7

Net Earnings and Net Operating Earnings

  8

Consolidated Balance Sheet

  9

Deferred Acquisition Costs Rollforward

  11

Consolidated Net Earnings and Net Operating Earnings by Quarter

  12

Quarterly Results by Segment

 

Consolidated Net Earnings and Net Operating Earnings

  14-17

Segment Net Earnings and Segment Net Operating Earnings and Sales—Protection

  18-22

Segment Net Earnings and Segment Net Operating Earnings and Sales—Retirement Income and Investments

  23-26

Segment Net Earnings and Segment Net Operating Earnings and Sales—Mortgage Insurance

  27-29

Segment Net Earnings and Segment Net Operating Earnings—Corporate and Other

  30

Additional Financial Data

 

Investments Summary

  32

Fixed Maturities Summary

  34

Commercial Mortgage Loans Data

  35-36

General Account GAAP Net Investment Income Yields

  37

Life Insurance In-force

  38

Assets Under Management—Retirement Income and Investments

  39-42

Selected Key Performance Measures—Mortgage Insurance

  43-45

Reconciliations of Non-GAAP Measures

  46-50

Corporate Information

 

Industry Ratings

  52-53

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Dear Investor,

In conjunction with the release of Genworth’s second quarter results for 2006, we have prepared this financial supplement to assist investors in understanding Genworth’s financial results.

Additional detail on the basis of financial information is provided on page 4 of this supplement.

Please feel free to call if you have any additional questions.

Regards,

Jean Peters

Senior Vice President

Investor Relations and Corporate Communications

804-662-2693

Alicia Charity

Vice President

Investor Relations

804-662-2248

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Use of Non-GAAP Measures

This financial supplement 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 investment gain (losses), net of taxes and other adjustments, changes in accounting principles and infrequent or unusual non-operating items. There were no infrequent or unusual non-operating items excluded from net operating earnings for the periods presented in this financial supplement.

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 on page 7 of this report provides a reconciliation of net earnings to net operating earnings (as defined above) for the three months and six months ended June 30, 2006 and 2005.

During 2006, we began allocating net investment gains (losses) to the segments in determining segment net earnings. We exclude the net investment gains (losses), net of taxes and other adjustments, from segment net operating earnings for each of the segments. Other adjustments represent amortization of deferred acquisition costs and other intangible assets associated with the net investment gains (losses). During 2005, all net investment gains (losses) were recorded in the Corporate and Other segment.

This 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 46 through 50 of this financial supplement.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Financial Highlights

(amounts in millions, except per share data)

 

Balance Sheet Data

      2006   2005
     Q2   Q1   Q4   Q3   Q2   Q1

Total stockholders’ equity, excluding accumulated other comprehensive income

  $ 11,977   $ 11,738   $ 11,906   $ 11,615   $ 11,343   $ 11,062

Total accumulated other comprehensive income

    233     740     1,404     1,713     2,163     1,458
                                     

Total stockholders’ equity

  $ 12,210   $ 12,478   $ 13,310   $ 13,328   $ 13,506   $ 12,520
                                     

Book value per common share

  $ 26.84   $ 27.37   $ 28.26   $ 28.31   $ 28.69   $ 26.62

Book value per common share, excluding accumulated other comprehensive income

  $ 26.33   $ 25.74   $ 25.28   $ 24.67   $ 24.10   $ 23.52

Common shares outstanding as of balance sheet date

    454.9     456.0     470.9     470.8     470.7     470.2

 

    Twelve months ended  

Return on Equity (ROE)

  June 30,
2006
    December 31,
2005
 

GAAP Basis ROE

  10.8 %   10.7 %

Operating ROE

  11.1 %   10.7 %

See page 47 herein for a reconciliation of GAAP Basis ROE to Operating ROE

 

Basic and Diluted Shares

 

Three months
ended

June 30, 2006

 

Six months
ended

June 30, 2006

Weighted-average shares used in basic earnings per common share calculations

  455.8   461.3

Dilutive securities:

   

Stock purchase contracts underlying equity units (1)

  7.5   7.5

Stock options, restricted stock units and stock appreciation rights

  5.0   5.1
       

Weighted-average shares used in diluted earnings per common share calculations

  468.3   473.9
       

(1) For more information on our Equity Units, see note 13 (d) in our audited financial statements filed on Form 10-K for the year ended December 31, 2005.

 

Dilutive Effect of Stock Purchase Contracts Underlying Equity Units

  Average market
price
  Incremental
shares (a)
  $ 31.00   6.1
  $ 32.00   6.7
  $ 33.00   7.3
  $ 34.00   7.8
  $ 35.00   8.3
  $ 36.00   8.8
  $ 37.00   9.2
  $ 38.00   9.7
  $ 39.00   10.1
  $ 40.00   10.4

(a) Incremental shares are calculated using the treasury stock method.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

Second Quarter Results

Three and six months ended June 30, 2006 as compared to

three and six months ended June 30, 2005

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Reconciliation of Net Earnings to Net Operating Earnings

(amounts in millions, except per share data)

 

    Three months
ended June 30,
  Six months
ended June 30,
    2006   2005   2006   2005

Net earnings

  $ 317   $ 285   $ 651   $ 607

Less cumulative effect of accounting change, net of taxes

    —       —       4     —  
                       

Net earnings before accounting change

    317     285     647     607

Net investment losses (gains), net of taxes and other adjustments

    22     —       37     4
                       

Net operating earnings

  $ 339   $ 285   $ 684   $ 611
                       

Net earnings per common share:

       

Basic

  $ 0.70   $ 0.61   $ 1.41   $ 1.27
                       

Diluted

  $ 0.68   $ 0.60   $ 1.37   $ 1.25
                       

Net earnings before accounting change per common share:

       

Basic

  $ 0.70   $ 0.61   $ 1.40   $ 1.27
                       

Diluted

  $ 0.68   $ 0.60   $ 1.37   $ 1.25
                       

Net operating earnings per common share:

       

Basic

  $ 0.74   $ 0.61   $ 1.48   $ 1.27
                       

Diluted

  $ 0.72   $ 0.60   $ 1.44   $ 1.26
                       

Weighted-average common shares outstanding:

       

Basic

    455.8     470.4     461.3     479.6
                       

Diluted

    468.3     477.4     473.9     485.9
                       

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Net Earnings and Net Operating Earnings

(amounts in millions)

 

    Three months
ended June 30,
    Six months
ended June 30,
 
    2006     2005     2006     2005  

REVENUES:

       

Premiums

  $ 1,648     $ 1,614     $ 3,187     $ 3,219  

Net investment income

    953       842       1,877       1,693  

Net investment gains (losses)

    (49 )     —         (71 )     (6 )

Policy fees and other income

    202       154       386       315  
                               

Total revenues

    2,754       2,610       5,379       5,221  
                               

BENEFITS AND EXPENSES:

       

Benefits and other changes in policy reserves

    1,096       1,051       2,131       2,126  

Interest credited

    378       347       751       687  

Acquisition and operating expenses, net of deferrals

    521       523       996       970  

Amortization of deferred acquisition costs and intangibles

    207       208       381       401  

Interest expense

    88       69       170       141  
                               

Total benefits and expenses

    2,290       2,198       4,429       4,325  
                               

NET EARNINGS BEFORE INCOME TAXES AND ACCOUNTING CHANGE

    464       412       950       896  

Provision for income taxes

    147       127       303       289  

Effective tax rate

    31.7 %     30.8 %     31.9 %     32.3 %
                               

NET EARNINGS BEFORE ACCOUNTING CHANGE

    317       285       647       607  

Cumulative effect of accounting change, net of taxes

    —         —         4       —    
                               

NET EARNINGS

    317       285       651       607  

ADJUSTMENTS TO NET EARNINGS:

       

Net investment losses (gains), net of taxes and other adjustments

    22       —         37       4  

Cumulative effect of accounting change, net of taxes

    —         —         (4 )     —    
                               

NET OPERATING EARNINGS

  $ 339     $ 285     $ 684     $ 611  
                               

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Consolidated Balance Sheet

(amounts in millions)

 

     June 30,
2006
  March 31,
2006
  December 31,
2005
  September 30,
2005
  June 30,
2005
  March 31,
2005

ASSETS

                  

Investments:

                  

Fixed maturity securities available-for-sale, at fair value

  $ 52,316   $ 53,559   $ 53,937   $ 53,740   $ 53,591   $ 52,812

Equity securities available-for-sale, at fair value

    187     193     206     195     187     184

Commercial mortgage loans

    8,203     7,854     7,558     7,272     6,859     6,279

Policy loans

    1,485     1,362     1,350     1,353     1,233     1,232

Restricted investments held by securitization entities

    —       —       685     753     781     815

Other invested assets

    1,840     2,738     3,174     3,224     3,696     3,888
                                     

Total investments

    64,031     65,706     66,910     66,537     66,347     65,210

Cash and cash equivalents

    2,351     1,909     1,875     1,834     1,518     1,461

Accrued investment income

    663     788     733     749     759     809

Deferred acquisition costs

    6,042     5,817     5,586     5,391     5,165     5,212

Intangible assets

    942     817     782     778     778     819

Goodwill

    1,486     1,451     1,450     1,455     1,454     1,462

Reinsurance recoverable

    17,789     18,003     18,245     18,331     18,526     18,560

Other assets

    717     716     967     1,691     1,210     1,551

Separate account assets

    9,625     9,700     9,106     8,923     8,731     8,608
                                     

Total assets

  $ 103,646   $ 104,907   $ 105,654   $ 105,689   $ 104,488   $ 103,692
                                     
                                     

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Consolidated Balance Sheet (continued)

(amounts in millions)

 

     June 30,
2006
    March 31,
2006
    December 31,
2005
    September 30,
2005
    June 30,
2005
    March 31,
2005
 

LIABILITIES AND STOCKHOLDERS’ EQUITY

                    

Liabilities:

                    

Future annuity and contract benefits

  $ 63,614     $ 63,632     $ 63,749     $ 63,786     $ 62,519     $ 62,098  

Liability for policy and contract claims

    3,297       3,279       3,364       3,315       3,343       3,376  

Unearned premiums

    3,956       3,706       3,647       3,567       3,417       3,580  

Other policyholder liabilities

    484       443       507       518       682       677  

Other liabilities

    3,652       4,551       4,937       5,337       5,609       6,793  

Non-recourse funding obligations

    2,150       2,150       1,400       1,400       1,100       900  

Short-term borrowings

    295       380       152       167       529       544  

Long-term borrowings

    2,741       2,729       2,736       2,761       2,416       2,440  

Senior notes underlying equity units

    600       600       600       600       600       600  

Mandatorily redeemable preferred stock

    100       100       100       100       100       100  

Deferred tax liability

    922       1,159       1,386       1,177       1,182       643  

Borrowings related to securitization entities

                660       710       754       813  

Separate account liabilities

    9,625       9,700       9,106       8,923       8,731       8,608  
                                                 

Total liabilities

    91,436       92,429       92,344       92,361       90,982       91,172  
                                                 

Commitments and contingencies

                    

Stockholders’ equity:

                    

Common stock

                                   

Additional paid-in capital

    10,713       10,682       10,671       10,651       10,651       10,625  
                                                 

Accumulated other comprehensive income:

                    

Net unrealized investment gains (losses)

    (312 )     223       760       1,040       1,538       847  

Derivatives qualifying as hedges

    212       280       389       399       406       266  

Foreign currency translation and other adjustments

    333       237       255       274       219       345  
                                                 

Total accumulated other comprehensive income

    233       740       1,404       1,713       2,163       1,458  

Retained earnings

    2,317       2,035       1,735       1,464       1,192       937  

Treasury stock, at cost

    (1,053 )     (979 )     (500 )     (500 )     (500 )     (500 )
                                                 

Total stockholders’ equity

    12,210       12,478       13,310       13,328       13,506       12,520  
                                                 

Total liabilities and stockholders’ equity

  $ 103,646     $ 104,907     $ 105,654     $ 105,689     $ 104,488     $ 103,692  
                                                 
                                                 

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

DEFERRED ACQUISITION COSTS ROLLFORWARD

(amounts in millions)

 

Deferred Acquisition Costs Rollforward

  Protection     Retirement
Income and
Investments
    Mortgage
Insurance
    Corporate
and Other
  Total  

Unamortized balance as of March 31, 2006

  $ 4,695     $ 880     $ 136     $   $ 5,711  

Costs deferred

    237       62       21           320  

Amortization, net of interest accretion(1)

    (134 )     (36 )     (11 )         (181 )

Impact of foreign currency translation

    32             2           34  
                                     

Unamortized balance as of June 30, 2006

    4,830       906       148           5,884  

Accumulated effect of net unrealized investment gains

    1       157                 158  
                                     

Balance as of June 30, 2006

  $ 4,831     $ 1,063     $ 148     $   $ 6,042  
                                     

(1) Amortization, net of interest accretion, includes $11 million of amortization related to net investment gains (losses) for our investment contracts.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Consolidated Net Earnings and Net Operating Earnings by Quarter

(amounts in millions, except per share amounts)

 

           2006                 2005  
     Q2     Q1     Total     Q4     Q3     Q2   Q1     Total  

REVENUES:

                        

Premiums

  $ 1,648     $ 1,539     $ 3,187     $ 1,531     $ 1,547     $ 1,614   $ 1,605     $ 6,297  

Net investment income

    953       924       1,877       941       902       842     851       3,536  

Net investment gains (losses)

    (49 )     (22 )     (71 )     11       (7 )     —       (6 )     (2 )

Policy fees and other income

    202       184       386       172       186       154     161       673  
                                                               

Total revenues

    2,754       2,625       5,379       2,655       2,628       2,610     2,611       10,504  
                                                               

BENEFITS AND EXPENSES:

                        

Benefits and other changes in policy reserves

    1,096       1,035       2,131       1,053       1,026       1,051     1,075       4,205  

Interest credited

    378       373       751       374       364       347     340       1,425  

Acquisition and operating expenses, net of deferrals

    521       475       996       513       506       523     447       1,989  

Amortization of deferred acquisition costs and intangibles

    207       174       381       176       217       208     193       794  

Interest expense

    88       82       170       80       72       69     72       293  
                                                               

Total benefits and expenses

    2,290       2,139       4,429       2,196       2,185       2,198     2,127       8,706  
                                                               

EARNINGS BEFORE INCOME TAXES

    464       486       950       459       443       412     484       1,798  

Provision for income taxes

    147       156       303       152       136       127     162       577  
                                                               

NET EARNINGS BEFORE ACCOUNTING CHANGE

    317       330       647       307       307       285     322       1,221  

Cumulative effect of accounting change, net of taxes

    —         4       4       —         —         —       —         —    
                                                               

NET EARNINGS

    317       334       651       307       307       285     322       1,221  

ADJUSTMENTS TO NET EARNINGS:

                        

Net investment losses (gains), net of taxes and other adjustments

    22       15       37       (7 )     4       —       4       1  

Cumulative effect of accounting change, net of taxes

    —         (4 )     (4 )     —         —         —       —         —    
                                                               

NET OPERATING EARNINGS

  $ 339     $ 345     $ 684     $ 300     $ 311     $ 285   $ 326     $ 1,222  
                                                               
                                                               

EPS Data:

                 

Earnings Per Share

         

Basic

  $ 0.70     $ 0.72     $ 1.41     $ 0.65     $ 0.65     $ 0.61   $ 0.66     $ 2.57  

Diluted

  $ 0.68     $ 0.70     $ 1.37     $ 0.64     $ 0.64     $ 0.60   $ 0.65     $ 2.52  

Operating Earnings Per Share

                 

Basic

  $ 0.74     $ 0.74     $ 1.48     $ 0.64     $ 0.66     $ 0.61   $ 0.67     $ 2.57  

Diluted

  $ 0.72     $ 0.72     $ 1.44     $ 0.62     $ 0.65     $ 0.60   $ 0.66     $ 2.52  

Shares Outstanding

                 

Basic

    455.8       467.0       461.3       470.9       470.7       470.4     488.8       475.3  

Diluted

    468.3       479.5       473.9       482.6       481.1       477.4     494.3       484.6  

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

Quarterly Results by Segment

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Consolidated Net Earnings and Net Operating Earnings

(amounts in millions)

 

     Protection     Retirement Income and Investments     Mortgage               

Three months ended June 30, 2006

  Life     Long-
term
Care
    Payment
Protection
Insurance
  Group
Life
and
Health
  Total     Spread-
Based
Retail
    Fee-Based   Spread-
Based
Institutional
    Total     U.S.     International   Total     Corporate
and Other
    Total  

REVENUES:

                             

Premiums

  $ 226     $ 458     $ 322   $ 168   $ 1,174     $ 200     $ —     $ —       $ 200     $ 116     $ 151   $ 267     $ 7     $ 1,648  

Net investment income

    146       184       23     11     364       336       6     145       487       37       48     85       17       953  

Net investment gains (losses)

    (1 )     (1 )     —       —       (2 )     (42 )     —       (3 )     (45 )     1       —       1       (3 )     (49 )

Policy fees and other income

    86       8       7     2     103       7       77     —         84       6       5     11       4       202  
                                                                                                         

Total revenues

    457       649       352     181     1,639       501       83     142       726       160       204     364       25       2,754  
                                                                                                         

BENEFITS AND EXPENSES:

                             

Benefits and other changes in policy reserves

    171       435       54     118     778       264       3     —         267       24       26     50       1       1,096  

Interest credited

    60       36       —       —       96       155       4     123       282       —         —       —         —         378  

Acquisition and operating expenses, net of deferrals

    35       93       182     40     350       29       49     2       80       32       44     76       15       521  

Amortization of deferred acquisition costs and intangibles

    38       28       77     10     153       34       6     —         40       7       6     13       1       207  

Interest expense

    34       —         —       —       34       1       —       —         1       —         —       —         53       88  
                                                                                                         

Total benefits and expenses

    338       592       313     168     1,411       483       62     125       670       63       76     139       70       2,290  
                                                                                                         

EARNINGS BEFORE INCOME TAXES

    119       57       39     13     228       18       21     17       56       97       128     225       (45 )     464  

Provision (benefit) for income taxes

    43       21       10     5     79       7       6     6       19       24       38     62       (13 )     147  
                                                                                                         
      76       36       29     8     149       11       15     11       37       73       90     163       (32 )     317  

Cumulative effect of accounting change, net of taxes

    —         —         —       —       —         —         —       —         —         —         —       —         —         —    
                                                                                                         

SEGMENT NET EARNINGS (LOSS)

    76       36       29     8     149       11       15     11       37       73       90     163       (32 )     317  

ADJUSTMENTS TO SEGMENT NET EARNINGS (LOSS):

                             

Net investment losses (gains), net of taxes and other adjustments

    1       1       —       —       2       18       —       2       20       (1 )     —       (1 )     1       22  

Cumulative effect of accounting change, net of taxes

    —         —         —       —       —         —         —       —         —         —         —       —         —         —    
                                                                                                         

SEGMENT NET OPERATING EARNINGS (LOSS)

  $ 77     $ 37     $ 29   $ 8   $ 151     $ 29     $ 15   $ 13     $ 57     $ 72     $ 90   $ 162     $ (31 )   $ 339  
                                                                                                         

 

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Table of Contents

GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Consolidated Net Earnings and Net Operating Earnings (continued)

(amounts in millions)

 

     Protection   Retirement Income and Investments   Mortgage   Corporate
and Other
      

Three months ended June 30, 2005

  Life   Long-
term
Care
  Payment
Protection
Insurance
  Group
Life
and
Health
  Total   Spread-
Based
Retail
  Fee-Based   Spread-
Based
Institutional
  Total   U.S.   International   Total     Total

REVENUES:

                                

Premiums

  $ 193   $ 431   $ 352   $ 165   $ 1,141   $ 241   $   $   $ 241   $ 113   $ 107   $ 220   $ 12     $ 1,614

Net investment income

    116     160     25     11     312     322     5     105     432     32     36     68     30       842

Net investment gains (losses)

    —       —       —       —       —       —       —       —       —       —       —       —       —         —  

Policy fees and other income

    65     2     8     3     78     5     57     —       62     7     5     12     2       154
                                                                                       

Total revenues

    374     593     385     179     1,531     568     62     105     735     152     148     300     44       2,610
                                                                                       

BENEFITS AND EXPENSES:

                                

Benefits and other changes in policy reserves

    165     371     61     113     710     297     4     —       301     25     14     39     1       1,051

Interest credited

    58     32     —       1     91     166     4     86     256     —       —       —       —         347

Acquisition and operating expenses, net of deferrals

    28     74     209     41     352     31     33     2     66     40     35     75     30       523

Amortization of deferred acquisition costs and intangibles

    26     45     78     12     161     28     4     —       32     7     6     13     2       208

Interest expense

    11     —       —       —       11     1     —       —       1     —       —       —       57       69
                                                                                       

Total benefits and expenses

    288     522     348     167     1,325     523     45     88     656     72     55     127     90       2,198
                                                                                       

EARNINGS BEFORE INCOME TAXES

    86     71     37     12     206     45     17     17     79     80     93     173     (46 )     412

Provision (benefit) for income taxes

    31     25     13     4     73     10     3     6     19     19     33     52     (17 )     127
                                                                                       

SEGMENT NET EARNINGS (LOSS)

    55     46     24     8     133     35     14     11     60     61     60     121     (29 )     285

ADJUSTMENT TO SEGMENT NET EARNINGS (LOSS):

                                

Net investment losses (gains), net of taxes and other adjustments

    —       —       —       —       —       —       —       —       —       —       —       —       —         —  
                                                                                       

SEGMENT NET OPERATING EARNINGS (LOSS)

  $ 55   $ 46   $ 24   $ 8   $ 133   $ 35   $ 14   $ 11   $ 60   $ 61   $ 60   $ 121   $ (29 )   $ 285
                                                                                       
                                                                                       

 

15


Table of Contents

GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Consolidated Net Earnings and Net Operating Earnings (continued)

(amounts in millions)

 

     Protection     Retirement Income and Investments     Mortgage               

Six months ended June 30, 2006

  Life    

Long-

term
Care

    Payment
Protection
Insurance
 

Group

Life
and
Health

  Total    

Spread-

Based
Retail

    Fee-Based  

Spread-

Based
Institutional

    Total     U.S.     International   Total     Corporate
and Other
    Total  

REVENUES:

                             

Premiums

  $ 447     $ 883     $ 613   $ 336   $ 2,279     $ 380     $ —     $ —       $ 380     $ 232     $ 282   $ 514     $ 14     $ 3,187  

Net investment income

    284       358       45     23     710       665       10     277       952       72       93     165       50       1,877  

Net investment gains (losses)

    (1 )     3       —       —       2       (49 )     —       (5 )     (54 )     1       1     2       (21 )     (71 )

Policy fees and other income

    169       13       13     5     200       13       148     —         161       10       8     18       7       386  
                                                                                                         

Total revenues

    899       1,257       671     364     3,191       1,009       158     272       1,439       315       384     699       50       5,379  
                                                                                                         

BENEFITS AND EXPENSES:

                             

Benefits and other changes in policy reserves

    354       831       102     238     1,525       504       4     —         508       43       53     96       2       2,131  

Interest credited

    120       70       —       1     191       315       8     237       560       —         —       —         —         751  

Acquisition and operating expenses, net of deferrals

    71       174       354     81     680       56       92     4       152       64       80     144       20       996  

Amortization of deferred acquisition costs and intangibles

    59       54       142     20     275       65       11     —         76       15       13     28       2       381  

Interest expense

    59       —         —       —       59       2       —       —         2       —         —       —         109       170  
                                                                                                         

Total benefits and expenses

    663       1,129       598     340     2,730       942       115     241       1,298       122       146     268       133       4,429  
                                                                                                         

EARNINGS BEFORE INCOME TAXES

    236       128       73     24     461       67       43     31       141       193       238     431       (83 )     950  

Provision (benefit) for income taxes

    86       46       19     9     160       25       13     11       49       48       71     119       (25 )     303  
                                                                                                         
      150       82       54     15     301       42       30     20       92       145       167     312       (58 )     647  

Cumulative effect of accounting change, net of taxes

    —         —         —       —       —         —         —       —         —         —         —       —         4       4  
                                                                                                         

SEGMENT NET EARNINGS (LOSS)

    150       82       54     15     301       42       30     20       92       145       167     312       (54 )     651  

ADJUSTMENTS TO SEGMENT NET EARNINGS (LOSS):

                             

Net investment losses (gains), net of taxes and other adjustments

    1       (2 )     —       —       (1 )     23       —       3       26       (1 )     —       (1 )     13       37  

Cumulative effect of accounting change, net of taxes

    —         —         —       —       —         —         —       —         —         —         —       —         (4 )     (4 )
                                                                                                         

SEGMENT NET OPERATING EARNINGS (LOSS)

  $ 151     $ 80     $ 54   $ 15   $ 300     $ 65     $ 30   $ 23     $ 118     $ 144     $ 167   $ 311     $ (45 )   $ 684  
                                                                                                         

 

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Table of Contents

GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Consolidated Net Earnings and Net Operating Earnings (continued)

(amounts in millions)

 

     Protection   Retirement Income and Investments   Mortgage             

Six months ended June 30, 2005

  Life   Long-
term
Care
  Payment
Protection
Insurance
  Group
Life
and
Health
  Total   Spread-
Based
Retail
  Fee-Based   Spread-
Based
Institutional
  Total   U.S.   International   Total   Corporate
and Other
    Total  

REVENUES:

                             

Premiums

  $ 394   $ 839   $ 719   $ 327   $ 2,279   $ 485   $ —     $ —     $ 485   $ 224   $ 211   $ 435   $ 20     $ 3,219  

Net investment income

    237     316     52     22     627     653     9     203     865     63     74     137     64       1,693  

Net investment gains (losses)

    —       —       —       —       —       —       —       —       —       —       —       —       (6 )     (6 )

Policy fees and other income

    143     4     13     7     167     8     112     —       120     14     8     22     6       315  
                                                                                         

Total revenues

    774     1,159     784     356     3,073     1,146     121     203     1,470     301     293     594     84       5,221  
                                                                                         

BENEFITS AND EXPENSES:

                             

Benefits and other changes in policy reserves

    337     759     134     225     1,455     604     5     —       609     40     20     60     2       2,126  

Interest credited

    117     63     —       1     181     331     7     168     506     —       —       —       —         687  

Acquisition and operating expenses, net of deferrals

    62     139     395     86     682     61     60     4     125     74     60     134     29       970  

Amortization of deferred acquisition costs and intangibles

    46     62     184     21     313     52     7     —       59     13     11     24     5       401  

Interest expense

    20     —       —       —       20     1     —       —       1     —       —       —       120       141  
                                                                                         

Total benefits and expenses

    582     1,023     713     333     2,651     1,049     79     172     1,300     127     91     218     156       4,325  
                                                                                         

EARNINGS BEFORE INCOME TAXES

    192     136     71     23     422     97     42     31     170     174     202     376     (72 )     896  

Provision (benefit) for income taxes

    69     48     25     8     150     28     11     11     50     41     73     114     (25 )     289  
                                                                                         

SEGMENT NET EARNINGS (LOSS)

    123     88     46     15     272     69     31     20     120     133     129     262     (47 )     607  

ADJUSTMENT TO SEGMENT NET EARNINGS (LOSS):

                             

Net investment losses (gains), net of taxes and other adjustments

    —       —       —       —       —       —       —       —       —       —       —       —       4       4  
                                                                                         

SEGMENT NET OPERATING EARNINGS (LOSS)

  $ 123   $ 88   $ 46   $ 15   $ 272   $ 69   $ 31   $ 20   $ 120   $ 133   $ 129   $ 262   $ (43 )   $ 611  
                                                                                         

 

17


Table of Contents

GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Segment Net Earnings and Segment Net Operating Earnings—Protection

(amounts in millions)

 

          2006                 2005
    Q2     Q1     Total     Q4   Q3   Q2   Q1   Total

REVENUES:

               

Premiums

  $ 1,174     $ 1,105     $ 2,279     $ 1,109   $ 1,133   $ 1,141   $ 1,138   $ 4,521

Net investment income

    364       346       710       339     321     312     315     1,287

Net investment gains (losses)

    (2 )     4       2       —       —       —       —       —  

Policy fees and other income

    103       97       200       94     110     78     89     371
                                                     

Total revenues

    1,639       1,552       3,191       1,542     1,564     1,531     1,542     6,179
                                                     

BENEFITS AND EXPENSES:

               

Benefits and other changes in policy reserves

    778       747       1,525       731     740     710     745     2,926

Interest credited

    96       95       191       98     90     91     90     369

Acquisition and operating expenses, net of deferrals

    350       330       680       336     332     352     330     1,350

Amortization of deferred acquisition costs and intangibles

    153       122       275       121     163     161     152     597

Interest expense

    34       25       59       19     13     11     9     52
                                                     

Total benefits and expenses

    1,411       1,319       2,730       1,305     1,338     1,325     1,326     5,294
                                                     

EARNINGS BEFORE INCOME TAXES

    228       233       461       237     226     206     216     885

Provision for income taxes

    79       81       160       86     81     73     77     317
                                                     

SEGMENT NET EARNINGS

    149       152       301       151     145     133     139     568

ADJUSTMENT TO SEGMENT NET EARNINGS:

               

Net investment losses (gains), net of taxes and other adjustments

    2       (3 )     (1 )     —       —       —       —       —  
                                                     

SEGMENT NET OPERATING EARNINGS

  $ 151     $ 149     $ 300     $ 151   $ 145   $ 133   $ 139   $ 568
                                                     
                                                     

 

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Table of Contents

GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Segment Net Earnings and Segment Net Operating Earnings and Sales—Life

(amounts in millions)

 

           2006               2005
     Q2     Q1   Total     Q4   Q3   Q2   Q1   Total

REVENUES:

                        

Premiums

  $ 226     $ 221   $ 447     $ 207   $ 212   $ 193   $ 201   $ 813

Net investment income

    146       138     284       134     122     116     121     493

Net investment gains (losses)

    (1 )     —       (1 )     —       —       —       —       —  

Policy fees and other income

    86       83     169       80     94     65     78     317
                                                     

Total revenues

    457       442     899       421     428     374     400     1,623
                                                     

BENEFITS AND EXPENSES:

                        

Benefits and other changes in policy reserves

    171       183     354       158     168     165     172     663

Interest credited

    60       60     120       59     59     58     59     235

Acquisition and operating expenses, net of deferrals

    35       36     71       36     36     28     34     134

Amortization of deferred acquisition costs and intangibles

    38       21     59       26     39     26     20     111

Interest expense

    34       25     59       19     13     11     9     52
                                                     

Total benefits and expenses

    338       325     663       298     315     288     294     1,195
                                                     

EARNINGS BEFORE INCOME TAXES

    119       117     236       123     113     86     106     428

Provision for income taxes

    43       43     86       44     40     31     38     153
                                                     

SEGMENT NET EARNINGS

    76       74     150       79     73     55     68     275

ADJUSTMENT TO SEGMENT NET EARNINGS:

                        

Net investment losses (gains), net of taxes and other adjustments

    1       —       1       —       —       —       —       —  
                                                     

SEGMENT NET OPERATING EARNINGS

  $ 77     $ 74   $ 151     $ 79   $ 73   $ 55   $ 68   $ 275
                                                     
                                                     

SALES:

                 

Sales by Product:

                 

Term Life

  $ 37     $ 34   $ 71     $ 37   $ 38   $ 34   $ 29   $ 138

Universal Life:

                        

Annualized first-year deposits

    10       9     19       7     7     6     7     27

Excess deposits

    22       19     41       20     12     8     6     46
                                                     

Total Universal Life

    32       28     60       27     19     14     13     73
                                                     

Total Sales

  $ 69     $ 62   $ 131     $ 64   $ 57   $ 48   $ 42   $ 211
                                                     

Sales by Distribution Channel:

                        

Financial Intermediaries

  $ 1     $ 1   $ 2     $ 1   $ 1   $ 1   $ 3   $ 6

Independent Producers

    68       61     129       63     56     47     39     205
                                                     

Total Sales

  $ 69     $ 62   $ 131     $ 64   $ 57   $ 48   $ 42   $ 211
                                                     
                                                     

Sales from our term life insurance product represent annualized first-year premiums. Annualized first-year premiums are calculated as if premiums are consistently paid for the full period of the sale even if they were actually paid for only a portion of such period. Sales from our universal life product represent annualized first-year deposits and excess deposits.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Segment Net Earnings and Segment Net Operating Earnings and Sales—Long-term Care

(amounts in millions)

 

           2006                     2005
     Q2     Q1     Total     Q4   Q3   Q2   Q1   Total

REVENUES:

                        

Premiums

  $ 458     $ 425     $ 883     $ 429   $ 412   $ 431   $ 408   $ 1,680

Net investment income

    184       174       358       171     165     160     156     652

Net investment gains (losses)

    (1 )     4       3       —       —       —       —       —  

Policy fees and other income

    8       5       13       5     6     2     2     15
                                                       

Total revenues

    649       608       1,257       605     583     593     566     2,347
                                                       

BENEFITS AND EXPENSES:

                        

Benefits and other changes in policy reserves

    435       396       831       399     389     371     388     1,547

Interest credited

    36       34       70       38     31     32     31     132

Acquisition and operating expenses, net of deferrals

    93       81       174       79     80     74     65     298

Amortization of deferred acquisition costs and intangibles

    28       26       54       22     19     45     17     103

Interest expense

    —         —         —         —       —       —       —       —  
                                                       

Total benefits and expenses

    592       537       1,129       538     519     522     501     2,080
                                                       

EARNINGS BEFORE INCOME TAXES

    57       71       128       67     64     71     65     267

Provision for income taxes

    21       25       46       24     23     25     23     95
                                                       

SEGMENT NET EARNINGS

    36       46       82       43     41     46     42     172

ADJUSTMENT TO SEGMENT NET EARNINGS:

                        

Net investment losses (gains), net of taxes and other adjustments

    1       (3 )     (2 )     —       —       —       —       —  
                                                       

SEGMENT NET OPERATING EARNINGS

  $ 37     $ 43     $ 80     $ 43   $ 41   $ 46   $ 42   $ 172
                                                       
                                                       

SALES:

                 

Sales by Distribution Channel:

                 

Financial Intermediaries

  $ 11     $ 10     $ 21     $ 9   $ 10   $ 9   $ 10   $ 38

Independent Producers

    16       17       33       15     12     13     13     53

Dedicated Sales Specialist

    14       14       28       14     16     16     15     61
                                                       

Total Individual Long-term Care

    41       41       82       38     38     38     38     152

Group Long-term Care

    1       —         1       5     —       1     —       6

Medicare Supplement and Other A&H

    9       7       16       3     3     3     3     12
                                                       

Total Sales

  $ 51     $ 48     $ 99     $ 46   $ 41   $ 42   $ 41   $ 170
                                                       
                                                       

Sales from our long-term care products represent annualized first-year premiums. Annualized first-year premiums are calculated as if premiums are consistently paid for the full period of the sale even if they were actually paid for only a portion of such period.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Segment Net Earnings and Segment Net Operating Earnings and Sales—Payment Protection Insurance

(amounts in millions)

 

         2006               2005
     Q2   Q1   Total   Q4   Q3   Q2   Q1   Total

REVENUES:

                      

Premiums

  $ 322   $ 291   $ 613   $ 307   $ 343   $ 352   $ 367   $ 1,369

Net investment income

    23     22     45     22     23     25     27     97

Net investment gains (losses)

    —       —       —       —       —       —       —       —  

Policy fees and other income

    7     6     13     6     7     8     5     26
                                                 

Total revenues

    352     319     671     335     373     385     399     1,492
                                                 

BENEFITS AND EXPENSES:

                      

Benefits and other changes in policy reserves

    54     48     102     61     68     61     73     263

Interest credited

    —       —       —       —       —       —       —       —  

Acquisition and operating expenses, net of deferrals

    182     172     354     176     176     209     186     747

Amortization of deferred acquisition costs and intangibles

    77     65     142     63     93     78     106     340

Interest expense

    —       —       —       —       —       —       —       —  
                                                 

Total benefits and expenses

    313     285     598     300     337     348     365     1,350
                                                 

EARNINGS BEFORE INCOME TAXES

    39     34     73     35     36     37     34     142

Provision for income taxes

    10     9     19     14     13     13     12     52
                                                 

SEGMENT NET EARNINGS

    29     25     54     21     23     24     22     90

ADJUSTMENT TO SEGMENT NET EARNINGS:

                      

Net investment losses (gains), net of taxes and other adjustments

    —       —       —       —       —       —       —       —  
                                                 

SEGMENT NET OPERATING EARNINGS

  $ 29   $ 25   $ 54   $ 21   $ 23   $ 24   $ 22   $ 90
                                                 
                                                 

SALES:

                 

Payment Protection Insurance

  $ 500   $ 419   $ 919   $ 421   $ 454   $ 501   $ 453   $ 1,829

Mexico Operations

    15     16     31     16     14     12     12     54
                                                 

Total Sales

  $ 515   $ 435   $ 950   $ 437   $ 468   $ 513   $ 465   $ 1,883
                                                 
                                                 

Sales from our payment protection insurance business represent total written premiums and deposits gross of ceded reinsurance and cancellation during the specified period. The Q2 2006 payment protection sales include $32 million of gross deposits related to a reciprocal reinsurance agreement closed during the quarter. Sales from our Mexican-domiciled operations represent total written premiums net of cancellations.

Beginning in 2006, our Mexican-domiciled operations are reported within the payment protection insurance business. All quarters presented have been revised to combine our Mexican-domiciled operations with payment protection insurance. The revision has also been made to reflect the impact on the Corporate and Other segment where our Mexican-domiciled operations results were previously reported.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Segment Net Earnings and Segment Net Operating Earnings and Sales—Group Life and Health

(amounts in millions)

 

         2006               2005
     Q2   Q1   Total   Q4   Q3   Q2   Q1   Total

REVENUES:

                      

Premiums

  $ 168   $ 168   $ 336   $ 166   $ 166   $ 165   $ 162   $ 659

Net investment income

    11     12     23     12     11     11     11     45

Net investment gains (losses)

    —       —       —       —       —       —       —       —  

Policy fees and other income

    2     3     5     3     3     3     4     13
                                                 

Total revenues

    181     183     364     181     180     179     177     717
                                                 

BENEFITS AND EXPENSES:

                      

Benefits and other changes in policy reserves

    118     120     238     113     115     113     112     453

Interest credited

    —       1     1     1     —       1     —       2

Acquisition and operating expenses, net of deferrals

    40     41     81     45     40     41     45     171

Amortization of deferred acquisition costs and intangibles

    10     10     20     10     12     12     9     43

Interest expense

    —       —       —       —       —       —       —       —  
                                                 

Total benefits and expenses

    168     172     340     169     167     167     166     669
                                                 

EARNINGS BEFORE INCOME TAXES

    13     11     24     12     13     12     11     48

Provision for income taxes

    5     4     9     4     5     4     4     17
                                                 

SEGMENT NET EARNINGS

    8     7     15     8     8     8     7     31

ADJUSTMENT TO SEGMENT NET EARNINGS:

                      

Net investment losses (gains), net of taxes and other adjustments

    —       —       —       —       —       —       —       —  
                                                 

SEGMENT NET OPERATING EARNINGS

  $ 8   $ 7   $ 15   $ 8   $ 8   $ 8   $ 7   $ 31
                                                 
                                                 

Sales by Distribution Channel:

                 

Independent Producers

  $ 44   $ 34   $ 78   $ 69   $ 37   $ 38   $ 30   $ 174

Sales from our group life and health insurance products represent annualized first-year premiums. Annualized first-year premiums are calculated as if premiums are consistently paid for the full period of the sale even if they were actually paid for only a portion of such period.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

S egment Net Earnings and Segment Net Operating Earnings—Retirement Income and Investments

(amounts in millions)

 

             2006                    2005
      Q2      Q1      Total      Q4    Q3    Q2    Q1    Total

REVENUES:

                                

Premiums

   $ 200      $ 180      $ 380      $ 181    $ 189    $ 241    $ 244    $ 855

Net investment income

     487        465        952        493      455      432      433      1,813

Net investment gains (losses)

     (45 )      (9 )      (54 )      —        —        —        —        —  

Policy fees and other income

     84        77        161        63      61      62      58      244
                                                               

Total revenues

     726        713        1,439        737      705      735      735      2,912
                                                               

BENEFITS AND EXPENSES:

                                

Benefits and other changes in policy reserves

     267        241        508        255      247      301      308      1,111

Interest credited

     282        278        560        276      274      256      250      1,056

Acquisition and operating expenses, net of deferrals

     80        72        152        68      66      66      59      259

Amortization of deferred acquisition costs and intangibles

     40        36        76        39      33      32      27      131

Interest expense

     1        1        2        1      1      1      —        3
                                                               

Total benefits and expenses

     670        628        1,298        639      621      656      644      2,560
                                                               

EARNINGS BEFORE INCOME TAXES

     56        85        141        98      84      79      91      352

Provision for income taxes

     19        30        49        30      25      19      31      105
                                                               

SEGMENT NET EARNINGS

     37        55        92        68      59      60      60      247

ADJUSTMENT TO SEGMENT NET EARNINGS:

                                

Net investment losses (gains), net of taxes and other adjustments

     20        6        26        —        —        —        —        —  
                                                               

SEGMENT NET OPERATING EARNINGS

   $ 57      $ 61      $ 118      $ 68    $ 59    $ 60    $ 60    $ 247
                                                               
                                                               

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Segment Net Earnings and Segment Net Operating Earnings and Sales—Spread-Based Retail

(amounts in millions)

 

           2006                 2005
     Q2     Q1     Total     Q4   Q3   Q2   Q1   Total

REVENUES:

                        

Premiums

  $ 200     $ 180     $ 380     $ 181   $ 189   $ 241   $ 244   $ 855

Net investment income

    336       329       665       361     338     322     331     1,352

Net investment gains (losses)

    (42 )     (7 )     (49 )     —       —       —       —       —  

Policy fees and other income

    7       6       13       5     4     5     3     17
                                                       

Total revenues

    501       508       1,009       547     531     568     578     2,224
                                                       

BENEFITS AND EXPENSES:

                        

Benefits and other changes in policy reserves

    264       240       504       255     245     297     307     1,104

Interest credited

    155       160       315       165     172     166     165     668

Acquisition and operating expenses, net of deferrals

    29       27       56       28     29     31     30     118

Amortization of deferred acquisition costs and intangibles

    34       31       65       34     28     28     24     114

Interest expense

    1       1       2       1     1     1     —       3
                                                       

Total benefits and expenses

    483       459       942       483     475     523     526     2,007
                                                       

EARNINGS BEFORE INCOME TAXES

    18       49       67       64     56     45     52     217

Provision for income taxes

    7       18       25       21     17     10     18     66
                                                       

SEGMENT NET EARNINGS

    11       31       42       43     39     35     34     151

ADJUSTMENT TO SEGMENT NET EARNINGS:

                        

Net investment losses (gains), net of taxes and other adjustments

    18       5       23       —       —       —       —       —  
                                                       

SEGMENT NET OPERATING EARNINGS

  $ 29     $ 36     $ 65     $ 43   $ 39   $ 35   $ 34   $ 151
                                                       
 

SALES:

                       

Sales by Product:

                 

Structured Settlements

  $ 43     $ 47     $ 90     $ 51   $ 50   $ 93   $ 153   $ 347

Single Premium Immediate Annuities

    215       200       415       193     190     164     166     713

Fixed Annuities

    261       189       450       343     378     686     364     1,771
                                                       

Total Spread-based retail

  $ 519     $ 436     $ 955     $ 587   $ 618   $ 943   $ 683   $ 2,831
                                                       

Sales by Distribution Channel:

                        

Financial Intermediaries

  $ 409     $ 323     $ 732     $ 467   $ 487   $ 771   $ 441   $ 2,166

Independent Producers

    106       107       213       113     124     164     230     631

Dedicated Sales Specialists

    4       6       10       7     7     8     12     34
                                                       

Total Spread-based retail

  $ 519     $ 436     $ 955     $ 587   $ 618   $ 943   $ 683   $ 2,831
                                                       
                                                       

Sales from our life-contingent spread-based retail products represent annualized first-year premiums. Annualized first-year premiums are calculated as if premiums are consistently paid for the full period of the sale even if they were actually paid for only a portion of such period. Sales from our non-life-contingent spread-based retail products represent new and additional premiums/deposits.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Segment Net Earnings and Segment Net Operating Earnings and Sales—Fee-Based

(amounts in millions)

 

         2006               2005
     Q2   Q1   Total   Q4   Q3   Q2   Q1   Total

REVENUES:

                      

Premiums

  $ —     $ —     $ —     $ —     $ —     $ —     $ —     $ —  

Net investment income

    6     4     10     6     4     5     4     19

Net investment gains (losses)

    —       —       —       —       —       —       —       —  

Policy fees and other income

    77     71     148     58     57     57     55     227
                                                 

Total revenues

    83     75     158     64     61     62     59     246
                                                 

BENEFITS AND EXPENSES:

                      

Benefits and other changes in policy reserves

    3     1     4     —       2     4     1     7

Interest credited

    4     4     8     5     1     4     3     13

Acquisition and operating expenses, net of deferrals

    49     43     92     36     35     33     27     131

Amortization of deferred acquisition costs and intangibles

    6     5     11     5     5     4     3     17

Interest expense

    —       —       —       —       —       —       —       —  
                                                 

Total benefits and expenses

    62     53     115     46     43     45     34     168
                                                 

EARNINGS BEFORE INCOME TAXES

    21     22     43     18     18     17     25     78

Provision for income taxes

    6     7     13     4     4     3     8     19
                                                 

SEGMENT NET EARNINGS

    15     15     30     14     14     14     17     59

ADJUSTMENT TO SEGMENT NET EARNINGS:

                      

Net investment losses (gains), net of taxes and other adjustments

    —       —       —       —       —       —       —       —  
                                                 

SEGMENT NET OPERATING EARNINGS

  $ 15   $ 15   $ 30   $ 14   $ 14   $ 14   $ 17   $ 59
                                                 
                                                 

SALES:

                 

Sales by Product:

                       

Income Distribution Series (1)

  $ 307   $ 264   $ 571   $ 201   $ 99   $ 95   $ 86   $ 481

Traditional Variable Annuities

    140     138     278     134     142     159     178     613

Variable Life

    1     4     5     3     3     5     3     14

Asset Management

    643     582     1,225     473     429     378     323     1,603
                                                 

Total Fee-based

  $ 1,091   $ 988   $ 2,079   $ 811   $ 673   $ 637   $ 590   $ 2,711
                                                 

Sales by Distribution Channel:

                      

Financial Intermediaries

  $ 420   $ 375   $ 795   $ 308   $ 221   $ 243   $ 247   $ 1,019

Independent Producers

    426     308     734     236     218     228     202     884

Dedicated Sales Specialist

    245     305     550     267     234     166     141     808
                                                 

Total Fee-based

  $ 1,091   $ 988   $ 2,079   $ 811   $ 673   $ 637   $ 590   $ 2,711
                                                 
                                                 

Sales from our fee-based products represent new and additional premiums/deposits.

 

(1) Income distribution series products are comprised of our retirement income and annuity product and four variable annuity riders that provide similar income features.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Segment Net Earnings and Segment Net Operating Earnings and Sales—Spread-Based Institutional

(amounts in millions)

 

           2006                   2005
     Q2     Q1     Total     Q4   Q3   Q2   Q1   Total

REVENUES:

                        

Premiums

  $ —       $ —       $ —       $ —     $ —     $ —     $ —     $ —  

Net investment income

    145       132       277       126     113     105     98     442

Net investment gains (losses)

    (3 )     (2 )     (5 )     —       —       —       —       —  

Policy fees and other income

    —         —         —         —       —       —       —       —  
                                                       

Total revenues

    142       130       272       126     113     105     98     442
                                                       

BENEFITS AND EXPENSES:

                        

Benefits and other changes in policy reserves

    —         —         —         —       —       —       —       —  

Interest credited

    123       114       237       106     101     86     82     375

Acquisition and operating expenses, net of deferrals

    2       2       4       4     2     2     2     10

Amortization of deferred acquisition costs and intangibles

    —         —         —         —       —       —       —       —  

Interest expense

    —         —         —         —       —       —       —       —  
                                                       

Total benefits and expenses

    125       116       241       110     103     88     84     385
                                                       

EARNINGS BEFORE INCOME TAXES

    17       14       31       16     10     17     14     57

Provision for income taxes

    6       5       11       5     4     6     5     20
                                                       

SEGMENT NET EARNINGS

    11       9       20       11     6     11     9     37

ADJUSTMENT TO SEGMENT NET EARNINGS:

                        

Net investment losses (gains), net of taxes and other adjustments

    2       1       3       —       —       —       —       —  
                                                       

SEGMENT NET OPERATING EARNINGS

  $ 13     $ 10     $ 23     $ 11   $ 6   $ 11   $ 9   $ 37
                                                       
                                                       

SALES:

                 

Sales by Product:

                 

Guaranteed Investment Contracts (GICs)

  $ 29     $ 57     $ 86     $ 31   $ 81   $ 105   $ 49   $ 266

Funding Agreements Backing Notes

    300       700       1,000       500     1,000     150     300     1,950

Funding Agreements

    50       —         50       —       —       100     —       100
                                                       

Total Spread-based institutional

  $ 379     $ 757     $ 1,136     $ 531   $ 1,081   $ 355   $ 349   $ 2,316
                                                       
                                                       

Sales from our spread-based institutional products represent new and additional premiums/deposits. These products are sold through specialized brokers and investment brokers as well as directly to the contractholder.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

S egment Net Earnings and Segment Net Operating Earnings and Sales—Mortgage Insurance

(amounts in millions)

 

           2006                 2005
     Q2     Q1   Total     Q4   Q3   Q2   Q1   Total

REVENUES:

                        

Premiums

  $ 267     $ 247   $ 514     $ 229   $ 218   $ 220   $ 215   $ 882

Net investment income

    85       80     165       77     73     68     69     287

Net investment gains (losses)

    1       1     2       —       —       —       —       —  

Policy fees and other income

    11       7     18       11     12     12     10     45
                                                     

Total revenues

    364       335     699       317     303     300     294     1,214
                                                     

BENEFITS AND EXPENSES:

                        

Benefits and other changes in policy reserves

    50       46     96       66     36     39     21     162

Acquisition and operating expenses, net of deferrals

    76       68     144       74     81     75     59     289

Amortization of deferred acquisition costs and intangibles

    13       15     28       14     18     13     11     56
                                                     

Total benefits and expenses

    139       129     268       154     135     127     91     507
                                                     

EARNINGS BEFORE INCOME TAXES

    225       206     431       163     168     173     203     707

Provision for income taxes

    62       57     119       44     42     52     62     200
                                                     

SEGMENT NET EARNINGS

    163       149     312       119     126     121     141     507

ADJUSTMENT TO SEGMENT NET EARNINGS:

                        

Net investment losses (gains), net of taxes and other adjustments

    (1 )     —       (1 )     —       —       —       —       —  
                                                     

SEGMENT NET OPERATING EARNINGS

  $ 162     $ 149   $ 311     $ 119   $ 126   $ 121   $ 141   $ 507
                                                     
                                                     

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

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

(amounts in millions)

 

             2006                   2005
      Q2      Q1   Total     Q4   Q3   Q2   Q1   Total

REVENUES:

                          

Premiums

   $ 116      $ 116   $ 232     $ 112   $ 111   $ 113   $ 111   $ 447

Net investment income

     37        35     72       33     34     32     31     130

Net investment gains (losses)

     1        —       1       —       —       —       —       —  

Policy fees and other income

     6        4     10       6     6     7     7     26
                                                       

Total revenues

     160        155     315       151     151     152     149     603
                                                       

BENEFITS AND EXPENSES:

                          

Benefits and other changes in policy reserves

     24        19     43       50     27     25     15     117

Acquisition and operating expenses, net of deferrals

     32        32     64       38     49     40     34     161

Amortization of deferred acquisition costs and intangibles

     7        8     15       9     13     7     6     35
                                                       

Total benefits and expenses

     63        59     122       97     89     72     55     313
                                                       

EARNINGS BEFORE INCOME TAXES

     97        96     193       54     62     80     94     290

Provision for income taxes

     24        24     48       7     4     19     22     52
                                                       

SEGMENT NET EARNINGS

     73        72     145       47     58     61     72     238

ADJUSTMENT TO SEGMENT NET EARNINGS:

                          

Net investment losses (gains), net of taxes and other adjustments

     (1 )      —       (1 )     —       —       —       —       —  
                                                       

SEGMENT NET OPERATING EARNINGS

   $ 72      $ 72   $ 144     $ 47   $ 58   $ 61   $ 72   $ 238
                                                       
                                                       

SALES:

                   

New Insurance Written (NIW):

                   

Flow

   $ 6,651      $ 5,544   $ 12,195     $ 6,567   $ 7,073   $ 6,533   $ 4,983   $ 25,156

Bulk

     1,462        1,258     2,720       62     147     687     683     1,579

Pool

     63        41     104       61     —       —       —       61
                                                       

Total U.S. Mortgage NIW

   $ 8,176      $ 6,843   $ 15,019     $ 6,690   $ 7,220   $ 7,220   $ 5,666   $ 26,796
                                                       
                                                       

Sales represent new insurance written. New insurance written represents the original principal balance of mortgages covered by newly issued mortgage insurance during the specified period.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Segment Net Earnings and Segment Net Operating Earnings and Sales—International Mortgage Insurance

(amounts in millions)

 

         2006                   2005
     Q2   Q1   Total   Q4   Q3   Q2   Q1   Total

REVENUES:

                      

Premiums

  $ 151   $ 131   $ 282   $ 117   $ 107   $ 107   $ 104   $ 435

Net investment income

    48     45     93     44     39     36     38     157

Net investment gains (losses)

    —       1     1     —       —       —       —       —  

Policy fees and other income

    5     3     8     5     6     5     3     19
                                                 

Total revenues

    204     180     384     166     152     148     145     611
                                                 

BENEFITS AND EXPENSES:

                      

Benefits and other changes in policy reserves

    26     27     53     16     9     14     6     45

Acquisition and operating expenses, net of deferrals

    44     36     80     36     32     35     25     128

Amortization of deferred acquisition costs and intangibles

    6     7     13     5     5     6     5     21
                                                 

Total benefits and expenses

    76     70     146     57     46     55     36     194
                                                 

EARNINGS BEFORE INCOME TAXES

    128     110     238     109     106     93     109     417

Provision for income taxes

    38     33     71     37     38     33     40     148
                                                 

SEGMENT NET EARNINGS

    90     77     167     72     68     60     69     269

ADJUSTMENT TO SEGMENT NET EARNINGS:

                      

Net investment losses (gains), net of taxes and other adjustments

    —       —       —       —       —       —       —       —  
                                                 

SEGMENT NET OPERATING EARNINGS

  $ 90   $ 77   $ 167   $ 72   $ 68   $ 60   $ 69   $ 269
                                                 

SEGMENT OPERATING EARNINGS BY PLATFORM

                      

Australia

  $ 35   $ 30   $ 65   $ 24   $ 28   $ 25   $ 29   $ 106

Canada

    51     46     97     46     38     35     34     153

Europe and Rest of World

    4     1     5     2     2     —       6     10
                                                 

SEGMENT NET EARNINGS

    90     77     167     72     68     60     69     269

ADJUSTMENT TO SEGMENT NET EARNINGS:

                      

Net investment losses (gains), net of taxes and other adjustments

    —       —       —       —       —       —       —       —  
                                                 

SEGMENT NET OPERATING EARNINGS

  $ 90   $ 77   $ 167   $ 72   $ 68   $ 60   $ 69   $ 269
                                                 
                                                 

SALES:

                 

New Insurance Written (NIW):

                 

Flow

  $ 19,990   $ 19,714   $ 39,704   $ 19,230   $ 18,556   $ 14,070   $ 12,743   $ 64,599

Bulk

    1,677     667     2,344     2,650     2,474     7,333     1,500     13,957
                                                 

Total International Mortgage NIW

  $ 21,667   $ 20,381   $ 42,048   $ 21,880   $ 21,030   $ 21,403   $ 14,243   $ 78,556
                                                 
                                                 

Sales represent new insurance written. New insurance written represents the original principal balance of mortgages covered by newly issued mortgage insurance during the specified period.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Segment Net Earnings and Segment Net Operating Earnings—Corporate and Other

(amounts in millions)

 

           2006               2005  
     Q2     Q1     Total     Q4     Q3     Q2     Q1     Total  

REVENUES:

                        

Premiums

  $ 7     $ 7     $ 14     $ 12     $ 7     $ 12     $ 8     $ 39  

Net investment income

    17       33       50       32       53       30       34       149  

Net investment gains (losses)

    (3 )     (18 )     (21 )     11       (7 )     —         (6 )     (2 )

Policy fees and other income

    4       3       7       4       3       2       4       13  
                                                                 

Total revenues

    25       25       50       59       56       44       40       199  
                                                                 

BENEFITS AND EXPENSES:

                        

Benefits and other changes in policy reserves

    1       1       2       1       3       1       1       6  

Interest credited

    —         —         —         —         —         —         —         —    

Acquisition and operating expenses, net of deferrals

    15       5       20       35       27       30       (1 )     91  

Amortization of deferred acquisition costs and intangibles

    1       1       2       2       3       2       3       10  

Interest expense

    53       56       109       60       58       57       63       238  
                                                                 

Total benefits and expenses

    70       63       133       98       91       90       66       345  
                                                                 

SEGMENT NET LOSS BEFORE INCOME TAXES AND ACCOUNTING CHANGE

    (45 )     (38 )     (83 )     (39 )     (35 )     (46 )     (26 )     (146 )

Benefit from income taxes

    (13 )     (12 )     (25 )     (8 )     (12 )     (17 )     (8 )     (45 )
                                                                 
      (32 )     (26 )     (58 )     (31 )     (23 )     (29 )     (18 )     (101 )

SEGMENT NET LOSS BEFORE ACCOUNTING CHANGE

                        

Cumulative effect of accounting change, net of taxes

    —         4       4       —         —         —         —         —    
                                                                 

SEGMENT NET LOSS

    (32 )     (22 )     (54 )     (31 )     (23 )     (29 )     (18 )     (101 )

ADJUSTMENTS TO SEGMENT NET LOSS:

                        

Net investment losses (gains), net of taxes and other adjustments

    1       12       13       (7 )     4       —         4       1  

Cumulative effect of accounting change, net of taxes

    —         (4 )     (4 )     —         —         —         —         —    
                                                                 

SEGMENT NET OPERATING LOSS

  $ (31 )   $ (14 )   $ (45 )   $ (38 )   $ (19 )   $ (29 )   $ (14 )   $ (100 )
                                                                 
                                                                 

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

ADDITIONAL FINANCIAL DATA

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Investments Summary

(amounts in millions)

 

     June 30, 2006     March 31, 2006     December 31, 2005     September 30, 2005     June 30, 2005     March 31, 2005  
     Carrying
Amount
  % of
Total
    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

                                

Other public

  $ 23,431   36 %   $ 24,118   36 %   $ 25,184   37 %   $ 25,250   37 %   $ 25,635   38 %   $ 25,317   38 %

Other private

    10,302   16       10,272   15       10,200   15       10,171   15       9,889   15       9,443   14  

Mortgage and asset-backed

    12,915   19       13,464   20       12,803   19       12,434   18       12,020   18       12,071   18  

Tax exempt

    2,802   4       2,900   4       2,886   4       2,909   4       2,991   4       3,012   5  

Non-investment grade

    2,866   4       2,805   4       2,864   4       2,976   4       3,056   5       2,969   5  

Equity securities:

                                

Common stocks and mutual funds

    44   —         45   —         54   —         62   —         50   —         52   —    

Preferred stocks

    143   —         148   —         152   —         133   —         137   —         132   —    

Commercial mortgage loans

    8,203   12       7,854   12       7,558   11       7,272   11       6,859   10       6,279   9  

Policy loans

    1,485   2       1,362   2       1,350   2       1,353   2       1,233   2       1,232   2  

Restricted investments held by securitization entities

    —     —         —     —         685   1       753   1       781   1       815   1  

Cash, cash equivalents and short-term investments

    2,353   5       1,962   3       1,900   3       1,860   3       1,545   2       1,526   2  

Securities lending

    935   1       1,597   2       1,820   3       2,212   3       2,670   4       3,019   5  

Other invested assets

    903   1       1,088   2       1,329   1       986   2       999   1       804   1  
                                                                         

Total invested assets and cash

  $ 66,382   100 %   $ 67,615   100 %   $ 68,785   100 %   $ 68,371   100 %   $ 67,865   100 %   $ 66,671   100 %
                                                                         
                                                                         

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Investment Summary (continued)

(amounts in millions)

 

     June 30, 2006     March 31, 2006     December 31, 2005     September 30, 2005     June 30, 2005     March 31, 2005  

Public Fixed Maturities—Credit Quality:

  Carrying
Amount
  % of
Total
    Carrying
Amount
  % of
Total
    Carrying
Amount
  % of
Total
    Carrying
Amount
  % of
Total
    Carrying
Amount
  % of
Total
    Carrying
Amount
  % of
Total
 

NAIC
Designation

 

Rating Agency

Equivalent Designation

                                                           

1

  Aaa/Aa/A   $ 28,641   74 %   $ 29,269   73 %   $ 29,295   72 %   $ 28,966   72 %   $ 29,191   72 %   $ 29,107   72 %

2

  Baa     7,910   20       8,512   22       9,072   23       9,345   23       9,447   23       9,472   23  

3

  Ba     1,442   4       1,504   4       1,466   4       1,575   4       1,529   4       1,439   4  

4

  B     625   2       548   1       557   1       440   1       465   1       474   1  

5

  Caa and lower     25   —         81   —         79   —         122   —         119   —         91   —    

6

  In or near default     9   —         9   —         13   —         12   —         26   —         26   —    

Not rated

  Not rated     —     —         5   —         57   —         47   —         36   —         35   —    
                                                                           
    Total public fixed maturities   $ 38,652   100 %   $ 39,928   100 %   $ 40,539   100 %   $ 40,507   100 %   $ 40,813   100 %   $ 40,644   100 %
                                                                           
   

Private Fixed Maturities—Credit Quality:

                                                           

NAIC
Designation

 

Rating Agency

Equivalent Designation

                                                           

1

  Aaa/Aa/A   $ 7,603   56 %   $ 7,707   57 %   $ 7,452   56 %   $ 7,201   55 %   $ 6,907   55 %   $ 6,350   52 %

2

  Baa     5,297   39       5,266   39       5,252   39       5,252   40       4,990   39       4,914   41  

3

  Ba     549   4       450   3       470   4       535   4       550   4       543   5  

4

  B     163   1       161   1       157   1       139   1       217   2       175   1  

5

  Caa and lower     12   —         13   —         16   —         36   —         39   —         46   —    

6

  In or near default     39   —         34   —         34   —         50   —         55   —         37   —    

Not rated

  Not rated     1   —         —     —         17   —         20   —         20   —         103   1  
                                                                           
    Total private fixed maturities   $ 13,664   100 %   $ 13,631   100 %   $ 13,398   100 %   $ 13,233   100 %   $ 12,778   100 %   $ 12,168   100 %
                                                                           
                                                                           

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Fixed Maturities Summary

(amounts in millions)

 

     June 30, 2006     March 31, 2006     December 31, 2005     September 30, 2005     June 30, 2005     March 31, 2005  
     Estimated
Fair Value
  % of
Total
    Estimated
Fair Value
  % of
Total
    Estimated
Fair Value
  % of
Total
    Estimated
Fair Value
  % of
Total
    Estimated
Fair Value
  % of
Total
    Estimated
Fair Value
  % of
Total
 

Fixed Maturities—Security Sector:

                         

U.S. government, agencies & government sponsored entities

  $ 688   1 %   $ 657   1 %   $ 805   2 %   $ 715   1 %   $ 731   1 %   $ 493   1 %

Tax exempt

    2,803   5       2,900   6       2,890   6       2,913   6       2,995   6       3,016   6  

Foreign government

    1,842   4       1,825   4       1,806   3       1,793   3       1,887   3       1,808   3  

U.S. corporate

    24,398   47       25,314   47       26,122   48       26,617   50       27,058   51       26,623   50  

Foreign corporate

    9,561   18       9,291   17       9,390   17       9,144   17       8,776   16       8,651   16  

Mortgage-backed

    8,324   16       8,836   16       8,834   16       8,659   16       8,557   16       8,835   17  

Asset-backed

    4,700   9       4,736   9       4,090   8       3,899   7       3,587   7       3,386   7  
                                                                         

Total fixed maturities

  $ 52,316   100 %   $ 53,559   100 %   $ 53,937   100 %   $ 53,740   100 %   $ 53,591   100 %   $ 52,812   100 %
                                                                         

Corporate Bond Holdings—Industry Sector:

                         

Finance and insurance

  $ 11,323   33 %   $ 11,617   33 %   $ 11,385   32 %   $ 11,151   31 %   $ 10,915   31 %   $ 10,658   30 %

Utilities and energy

    6,151   18       6,552   19       6,836   19       6,963   19       7,171   20       6,985   20  

Consumer—non cyclical

    4,137   12       4,477   13       4,632   13       4,734   13       4,877   14       4,705   13  

Consumer—cyclical

    2,442   7       2,328   7       2,642   7       2,719   8       2,670   7       2,634   8  

Capital goods

    1,871   6       1,833   5       2,043   6       2,134   6       2,194   6       2,289   6  

Industrial

    2,068   6       2,064   6       2,141   6       2,146   6       2,269   6       2,384   7  

Technology and communications

    2,453   7       2,530   7       2,424   7       2,476   7       2,473   7       2,329   7  

Transportation

    1,227   4       1,237   4       1,325   4       1,317   4       1,240   3       1,156   3  

Other

    2,287   7       1,967   6       2,084   6       2,121   6       2,025   6       2,134   6  
                                                                         

Total

  $ 33,959   100 %   $ 34,605   100 %   $ 35,512   100 %   $ 35,761   100 %   $ 35,834   100 %   $ 35,274   100 %
                                                                         

Fixed Maturities—Contractual Maturity Dates:

                         

Due in one year or less

  $ 2,879   5 %   $ 2,750   5 %   $ 2,812   5 %   $ 2,646   5 %   $ 2,858   5 %   $ 2,652   5 %

Due after one year through five years

    9,715   19       9,923   19       10,129   19       10,331   19       10,382   19       10,329   20  

Due after five years through ten years

    10,426   20       10,723   20       11,218   21       11,567   22       11,514   22       11,658   22  

Due after ten years

    16,272   31       16,591   31       16,854   31       16,638   31       16,693   31       15,952   30  
                                                                         

Subtotal

    39,292   75       39,987   75       41,013   76       41,182   77       41,447   77       40,591   77  

Mortgage and asset-backed

    13,024   25       13,572   25       12,924   24       12,558   23       12,144   23       12,221   23  
                                                                         

Total fixed maturities

  $ 52,316   100 %   $ 53,559   100 %   $ 53,937   100 %   $ 53,740   100 %   $ 53,591   100 %   $ 52,812   100 %
                                                                         
                                                                         

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Commercial Mortgage Loans Data

(amounts in millions)

 

     June 30, 2006     March 31, 2006     December 31, 2005     September 30, 2005     June 30, 2005     March 31, 2005  

Summary of Commercial Mortgage Loans

  Carrying
Amount
  % of
Total
    Carrying
Amount
  % of
Total
    Carrying
Amount
  % of
Total
    Carrying
Amount
  % of
Total
    Carrying
Amount
  % of
Total
    Carrying
Amount
  % of
Total
 

Geographic Region

                                

Pacific

  $ 2,391   29 %   $ 2,285   29 %   $ 2,272   30 %   $ 2,191   30 %   $ 2,043   30 %   $ 1,850   30 %

South Atlantic

    1,747   21       1,668   21       1,586   21       1,508   21       1,451   21       1,234   20  

Middle Atlantic

    1,119   14       1,113   14       1,088   14       1,081   15       998   15       989   16  

East North Central

    840   10       868   11       794   11       766   10       704   10       662   11  

Mountain

    737   9       612   8       580   8       514   7       496   7       471   8  

West South Central

    366   4       345   4       336   4       346   5       306   5       304   5  

West North Central

    477   6       450   6       440   6       431   6       432   6       366   5  

East South Central

    307   4       292   4       280   4       268   4       261   4       230   3  

New England

    219   3       221   3       182   2       167   2       168   2       173   2  
                                                                         

Total

  $ 8,203   100 %   $ 7,854   100 %   $ 7,558   100 %   $ 7,272   100 %   $ 6,859   100 %   $ 6,279   100 %
                                                                         

Property Type

                                

Office

  $ 2,371   29 %   $ 2,293   29 %   $ 2,197   28 %   $ 2,156   30 %   $ 1,914   28 %   $ 1,861   30 %

Industrial

    2,211   27       2,176   28       2,109   28       2,017   28       1,963   29       1,845   30  

Retail

    2,144   26       2,103   27       2,092   28       2,046   28       1,938   28       1,701   27  

Apartments

    983   12       952   12       833   11       746   10       708   10       655   10  

Mixed use/other

    494   6       330   4       327   5       307   4       336   5       217   3  
                                                                         

Total

  $ 8,203   100 %   $ 7,854   100 %   $ 7,558   100 %   $ 7,272   100 %   $ 6,859   100 %   $ 6,279   100 %
                                                                         
                                                                         

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Commercial Mortgage Loans Data (continued)

(amounts in millions)

 

     June 30, 2006     March 31, 2006     December 31, 2005     September 30, 2005     June 30, 2005     March 31, 2005  

Summary of Commercial Mortgage Loans

  Principal
Balance
    % of
Total
    Principal
Balance
  % of
Total
    Principal
Balance
  % of
Total
    Principal
Balance
  % of
Total
    Principal
Balance
  % of
Total
    Principal
Balance
  % of
Total
 

Loan Size

                                  

Under $5 million

  $ 3,588       43 %   $ 3,514   45 %   $ 3,407   45 %   $ 3,330   46 %   $ 3,247   47 %   $ 3,122   49 %

$5 million but less than $10 million

    1,903       23       1,854   23       1,831   24       1,720   23       1,647   24       1,457   23  

$10 million but less than $20 million

    1,537       19       1,498   19       1,427   19       1,382   19       1,245   18       1,072   17  

$20 million but less than $30 million

    548       7       525   7       448   6       466   6       323   5       350   6  

$30 million and over

    635       8       487   6       469   6       429   6       446   6       324   5  
                                                                             

Total

  $ 8,211       100 %   $ 7,878   100 %   $ 7,582   100 %   $ 7,327   100 %   $ 6,908   100 %   $ 6,325   100 %
                                                                             
                                                                             
                           
     June 30,
2006
    December 31,
2005
                                                   

Allowance for Losses on Commercial Mortgage Loans

                                  

Balance, beginning of year

  $ 31     $ 52                        

Provisions

    —         11                        

Releases

    (16 )     (32 )                      

Deductions for write-downs and dispositions

    —         —                          
                                       

Balance, end of year

  $ 15     $ 31                        
                                       
                                       

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

General Account GAAP Net Investment Income Yields

(amounts in millions)

 

           2006                 2005  
     Q2     Q1     Total     Q4     Q3     Q2     Q1     Total  

GAAP Net Investment Income

                 

Fixed maturities—taxable

  $731     $719     $ 1,450     $691     $ 694     $ 665     $ 669     $ 2,719  

Fixed maturities—non-taxable

  31     31       62     32       31       32       33       128  

Commercial mortgage loans

  138     121       259     145       116       98       98       457  

Equity securities

  7     7       14     7       6       6       6       25  

Other investments

  12     11       23     34       20       10       14       78  

Policy loans

  32     30       62     29       27       27       26       109  

Restricted investments held by securitization entities

  —       7       7     11       12       13       14       50  

Cash, cash equivalents and short-term investments

  20     17       37     11       15       7       8       41  
                                                           

Gross investment income before expenses and fees

  971     943       1,914     960       921       858       868       3,607  
                                                           

Expenses and fees

  (18 )   (19 )     (37 )   (19 )     (19 )     (16 )     (17 )     (71 )
                                                           

Net investment income

  $953     $924     $ 1,877     $941     $ 902     $ 842     $ 851     $ 3,536  
                                                           

Annualized Yields

                 

Fixed maturities—taxable

  5.8 %   5.7 %     5.8 %   5.6 %     5.7 %     5.5 %     5.6 %     5.6 %

Fixed maturities—non-taxable

  4.5 %   4.4 %     4.5 %   4.5 %     4.5 %     4.5 %     4.5 %     4.5 %

Commercial mortgage loans

  6.9 %   6.3 %     6.6 %   7.8 %     6.6 %     6.0 %     6.4 %     6.7 %

Equity securities

  16.1 %   12.3 %     13.2 %   9.4 %     9.0 %     8.6 %     8.8 %     8.9 %

Other investments

  6.4 %   5.2 %     5.7 %   13.9 %     7.9 %     4.6 %     6.9 %     8.5 %

Policy loans

  9.1 %   8.8 %     8.9 %   8.6 %     8.5 %     8.9 %     8.3 %     8.6 %

Restricted investments held by securitization entities

  —       8.2 %     6.1 %   6.2 %     6.2 %     6.3 %     6.9 %     6.4 %

Cash, cash equivalents and short-term investments

  3.6 %   3.6 %     3.6 %   2.3 %     3.6 %     1.8 %     1.7 %     2.3 %
                                                           

Gross investment income before expenses and fees

  5.9 %   5.7 %     5.8 %   5.9 %     5.8 %     5.5 %     5.6 %     5.7 %
                                                           

Expenses and fees

  -0.1 %   -0.1 %     -0.1 %   -0.1 %     -0.1 %     -0.1 %     -0.1 %     -0.1 %
                                                           

Net investment income

  5.8 %   5.6 %     5.7 %   5.8 %     5.7 %     5.4 %     5.5 %     5.6 %
                                                           
                                                           

Yields for fixed maturities and equity securities are based on amortized cost and cost, respectively. Yields for securities lending activity, which is included in other investments, are calculated net of the corresponding securities lending liability. All other yields are based on average carrying values.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Life Insurance In-force

(amounts in millions)

 

         2006   2005
     Q2   Q1   Q4   Q3   Q2   Q1

Term life insurance

                  

Life insurance in-force, net of reinsurance

  $ 409,103   $ 393,812   $ 379,378   $ 366,131   $ 350,224   $ 337,927

Life insurance in-force before reinsurance

  $ 571,014   $ 554,472   $ 540,257   $ 525,264   $ 508,330   $ 494,431
 

Universal and whole life insurance

                  

Life insurance in-force, net of reinsurance

  $ 40,850   $ 40,890   $ 40,711   $ 41,722   $ 42,110   $ 42,428

Life insurance in-force before reinsurance

  $ 49,207   $ 49,335   $ 49,353   $ 49,613   $ 49,846   $ 50,805
 

Total life insurance

                  

Life insurance in-force, net of reinsurance

  $ 449,953   $ 434,702   $ 420,089   $ 407,853   $ 392,334   $ 380,355

Life insurance in-force before reinsurance

  $ 620,221   $ 603,807   $ 598,610   $ 574,877   $ 558,176   $ 545,236

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

A ssets Under Management—Retirement Income and Investments

(amounts in millions)

 

           2006     2005  
     Q2     Q1     Q4     Q3     Q2     Q1  

Spread-Based Retail

                    
 

Fixed Annuities

                    

Account value, net of reinsurance, beginning of period

  $ 15,241     $ 15,547     $ 15,676     $ 15,540     $ 15,214     $ 15,113  

Deposits

    326       267       356       530       699       285  

Interest credited

    139       145       151       154       150       150  

Surrenders, benefits and product charges

    (871 )     (718 )     (636 )     (548 )     (523 )     (334 )
                                                 

Account value, net of reinsurance, end of period

    14,835       15,241       15,547       15,676       15,540       15,214  
                                                 

Single Premium Immediate Annuities

                    

Account value, net of reinsurance, beginning of period

    5,772       5,680       5,578       5,488       5,415       5,344  

Premiums and deposits

    290       250       240       230       215       212  

Interest credited

    78       80       79       77       80       77  

Surrenders, benefits and product charges

    (225 )     (238 )     (217 )     (217 )     (222 )     (218 )
                                                 

Account value, net of reinsurance, end of period

    5,915       5,772       5,680       5,578       5,488       5,415  
                                                 

Structured Settlements

                    

Account value, net of reinsurance, beginning of period

    925       871       831       765       653       533  

Premiums and deposits

    45       58       41       69       116       124  

Interest credited

    13       12       12       11       11       11  

Surrenders, benefits and product charges

    (15 )     (16 )     (13 )     (14 )     (15 )     (15 )
                                                 

Account value, net of reinsurance, end of period

    968       925       871       831       765       653  
                                                 

Total Spread-Based Retail, net of reinsurance

  $ 21,718     $ 21,938     $ 22,098     $ 22,085     $ 21,793     $ 21,282  
                                                 

Spread-Based Institutional

                    
 

GICs, Funding Agreements and Funding Agreements Backing Notes

                    

Account value, net of reinsurance, beginning of period

  $ 9,766     $ 9,777     $ 9,998     $ 9,162     $ 9,408     $ 9,541  

Deposits

    498       980       587       1,402       871       841  

Interest credited

    123       114       107       101       86       82  

Surrenders and benefits

    (501 )     (1,105 )     (915 )     (667 )     (1,203 )     (1,056 )
                                                 

Account value, end of period

    9,886       9,766       9,777       9,998       9,162       9,408  
                                                 

Total Spread-Based Retail and Institutional

  $ 31,604     $ 31,704     $ 31,875     $ 32,083     $ 30,955     $ 30,690  
                                                 
                                                 

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Assets Under Management—Retirement Income and Investments (continued)

(amounts in millions)

 

           2006     2005  
     Q2     Q1     Q4     Q3     Q2     Q1  

Fee-Based

                    

Income Distribution Series

                    

Account value, net of reinsurance, beginning of period

  $ 1,235     $ 911     $ 747     $ 634     $ 540     $ 462  

Deposits

    350       281       170       109       92       85  

Interest credited and investment performance

    (5 )     59       6       13       8       (4 )

Surrenders, benefits and product charges

    (25 )     (16 )     (12 )     (9 )     (6 )     (3 )
                                                 

Account value, net of reinsurance, end of period

    1,555       1,235       911       747       634       540  
                                                 

Traditional Variable Annuities

                    

Account value, net of reinsurance, beginning of period

    1,360       1,182       1,048       902       747       632  

Deposits

    147       132       123       137       145       143  

Interest credited and investment performance

    (17 )     78       32       35       29       (13 )

Surrenders, benefits and product charges

    (30 )     (32 )     (21 )     (26 )     (19 )     (15 )
                                                 

Account value, net of reinsurance, end of period

    1,460       1,360       1,182       1,048       902       747  
                                                 

Variable Life Insurance

                    

Account value, beginning of the period

    377       363       355       347       335       345  

Deposits

    7       9       8       7       11       8  

Interest credited and investment performance

    (5 )     18       12       13       11       (11 )

Surrenders, benefits and product charges

    (12 )     (13 )     (12 )     (12 )     (10 )     (7 )
                                                 

Account value, end of period

    367       377       363       355       347       335  
                                                 

Third-Party Assets

                    

Genworth Financial Asset Management

                    

Account value, beginning of the period

    3,756       3,352       3,137       2,907       2,753       2,775  

Deposits

    460       370       275       242       224       212  

Interest credited and investment performance

    (121 )     169       67       120       44       (94 )

Surrenders, benefits and product charges

    (150 )     (135 )     (127 )     (132 )     (114 )     (140 )
                                                 

Account value, end of period

    3,945       3,756       3,352       3,137       2,907       2,753  
                                                 

Genworth Financial Advisors

                    

Account value, beginning of the period

    2,068       1,828       1,640       1,428       1,293       1,198  

Deposits

    183       212       198       187       135       112  

Interest credited and investment performance

    (38 )     85       5       40       14       (2 )

Surrenders, benefits and product charges

    (15 )     (57 )     (15 )     (15 )     (14 )     (15 )
                                                 

Account value, end of period

    2,198       2,068       1,828       1,640       1,428       1,293  
                                                 

Total Third-Party Assets

    6,143       5,824       5,180       4,777       4,335       4,046  
                                                 

Total Fee-Based Assets Under Management

  $ 9,525     $ 8,796     $ 7,636     $ 6,927     $ 6,218     $ 5,668  
                                                 

Assets Under Management, Net of Reinsurance

  $ 41,129     $ 40,500     $ 39,511     $ 39,010     $ 37,173     $ 36,358  
                                                  
                                                  

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Assets Under Management—Retirement Income and Investments (continued)

(amounts in millions)

 

           2006     2005  
     Q2     Q1     Q4     Q3     Q2     Q1  

Reinsured Products

                    

Account value, beginning of period

  $ 20,817     $ 21,004     $ 21,293     $ 21,542     $ 21,789     $ 22,291  

Deposits

    10       11       7       15       32       37  

Interest credited and investment performance

    (7 )     643       416       496       433       60  

Surrenders, benefits and product charges

    (689 )     (841 )     (712 )     (760 )     (712 )     (599 )
                                                 

Account value, end of period

  $ 20,131     $ 20,817     $ 21,004     $ 21,293     $ 21,542     $ 21,789  
                                                 
                                                 

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Institutional Assets Under Management by Contract Type—Retirement Income and Investments

(amounts in millions)

 

        2006   2005
    Q2   Q1   Q4   Q3   Q2   Q1

Spread-Based Institutional

           

Guaranteed Investment Contracts

  $ 2,619   $ 2,849   $ 3,142   $ 3,217   $ 3,264   $ 3,302

Funding agreements backing notes

    4,569     4,270     3,957     4,054     3,172     3,381

Funding agreements

    2,698     2,647     2,678     2,727     2,726     2,725
                                   
  $ 9,886   $ 9,766   $ 9,777   $ 9,998   $ 9,162   $ 9,408
                                   

Funding agreements by liquidity provisions:

           

90 day

  $ 425   $ 425   $ 558   $ 858   $ 1,108   $ 1,308

180 day

    450     450     450     550     350     150

No put

    1,485     1,485     1,385     1,035     985     1,010

13 month rolling maturity

    325     275     275     275     275     250

Accrued interest

    13     12     10     9     8     7
                                   

Total funding agreements

  $ 2,698   $ 2,647   $ 2,678   $ 2,727   $ 2,726   $ 2,725
                                   
                                   

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Selected Key Performance Measures—U.S. Mortgage Insurance

(amounts in millions)

 

             2006      2005  
      Q2      Q1      Q4      Q3      Q2      Q1  

Primary Insurance In-force

   $ 102,000      $ 100,500      $ 100,200      $ 101,900      $ 104,300      $ 106,000  
 

New Insurance Written

   $ 8,200      $ 6,800      $ 6,700      $ 7,200      $ 7,200      $ 5,700  
 

Net Premiums Written

   $ 119      $ 115      $ 112      $ 112      $ 111      $ 109  
 

Loss Ratio (a)

     21 %      16 %      45 %      24 %      22 %      14 %
 

Expense Ratio (b)

     33 %      35 %      42 %      55 %      42 %      37 %
 

New Risk Written

                          

Flow

   $ 1,697      $ 1,404      $ 1,667      $ 1,820      $ 1,713      $ 1,263  

Bulk

     41        102        2        10        19        9  
                                                       

Total Primary

     1,738        1,506        1,669        1,830        1,732        1,272  

Pool

     2        2        2        —          —          —    
                                                       

Total New Risk Written

   $ 1,740      $ 1,508      $ 1,671      $ 1,830      $ 1,732      $ 1,272  
                                                       
 

Risk In-force

                          

Flow

   $ 21,555      $ 21,328      $ 21,375      $ 21,500      $ 21,848      $ 22,103  

Bulk

     498        460        363        370        369        284  
                                                       

Total Primary

     22,053        21,788        21,738        21,870        22,217        22,387  

Pool

     494        516        554        590        643        682  
                                                       

Total Risk In-force

   $ 22,547      $ 22,304      $ 22,292      $ 22,460      $ 22,860      $ 23,069  
                                                       
                                                       

(a) The ratio of incurred losses and loss adjustment expense to net premiums earned.

 

(b) The ratio of an insurer’s general expenses to net premiums written. In our business, general expenses consist of acquisition and insurance expenses, net of deferrals, and amortization of DAC and intangibles.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

Selected Key Performance Measures—U.S. Mortgage Insurance (continued)

(amounts in millions)

 

           2006     2005  
     Q2     Q1     Q4     Q3     Q2     Q1  

Risk In-force by Credit Quality

                  

Flow by FICO Scores >619 (%)

  92 %   92 %   92 %   92 %   92 %   92 %

Flow by FICO Scores 575-619

  6 %   6 %   6 %   6 %   6 %   6 %

Flow by FICO Scores <575

  2 %   2 %   2 %   2 %   2 %   2 %
 

Bulk by FICO Scores >619

  95 %   94 %   96 %   95 %   95 %   92 %

Bulk by FICO Scores 575-619

  3 %   4 %   2 %   3 %   3 %   4 %

Bulk by FICO Scores <575

  2 %   2 %   2 %   2 %   2 %   4 %
 

Primary A minus and sub-prime

  10.8 %   10.6 %   10.4 %   10.1 %   9.9 %   9.9 %
 

Primary Loans

                  

Primary total loans in-force

  740,091     740,562     744,970     763,988     786,959     804,839  

Primary total loans in default

  22,069     23,127     27,391     24,478     23,613     24,376  

Primary loans total default rate

  3.0 %   3.1 %   3.7 %   3.2 %   3.0 %   3.0 %
 

Flow loans in default

  21,021     22,070     26,163     23,284     22,392     22,891  

Flow loans default rate

  3.3 %   3.5 %   4.1 %   3.5 %   3.3 %   3.3 %
 

Bulk loans in default

  1,048     1,057     1,228     1,194     1,221     1,485  

Bulk loans default rate

  0.9 %   1.0 %   1.2 %   1.1 %   1.1 %   1.4 %
 

A minus and sub-prime loans in default

  6,185     6,064     7,072     6,420     5,930     6,058  

A minus and sub-prime loans default rate

  8.8 %   8.8 %   10.5 %   9.6 %   8.9 %   8.9 %
 

Pool Loans

                  

Pool loans in default

  477     500     597     542     597     648  

Pool loans default rate

  2.6 %   2.7 %   3.1 %   2.7 %   2.8 %   2.7 %
 

Claims Paid

                  

Primary Claims Paid (includes LAE)

  32.2     30.6     33.8     34.0     37.9     39.6  

Pool Claims Paid (includes LAE)

  0.4     0.1     0.1     0.0     0.2     0.1  

Primary Average Claim Severity

  95 %   96 %   95 %   94 %   95 %   95 %
 

Other Measures

                  

Flow Persistency (a)

  71 %   72 %   68 %   59 %   63 %   66 %

Gross written premiums ceded to captives/total direct written premiums

  24 %   24 %   24 %   24 %   24 %   25 %

Risk to capital ratio (b)

  8.0:1     8.1:1     8.2:1     8.6:1     8.9:1     9.4:1  

(a) Excludes bulk transactions and the effect of periodic reconciliations involving single premium mortgage insurance. Including the effect of the periodic reconciliations, flow persistency would be 71% and 65% for the three months ended March 31, 2006 and December 31, 2005, respectively. All other periods shown were unaffected.

 

(b) 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 contingent reserve, commonly known as the “risk to capital” requirement. The risk to capital ratio for our U.S. mortgage insurance business was computed as of the beginning of the period indicated.

 

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Selected Key Performance Measures—International Mortgage Insurance

(amounts in millions)

 

           2006     2005  
     Q2     Q1     Q4     Q3     Q2     Q1  

Primary Insurance In-force

                    

Canada

  $ 101,900     $ 92,800     $ 89,300     $ 81,000     $ 71,500     $ 77,100  

Australia

    133,100       133,600       127,300       123,800       114,900       110,800  

Europe and Rest of World

    36,600       30,400       27,600       26,200       23,800       22,000  
                                                 

Total International Primary Insurance In-force

  $ 271,600     $ 256,800     $ 244,200     $ 231,000     $ 210,200     $ 209,900  
                                                 
 

New Insurance Written

                    

Canada

  $ 6,200     $ 4,000     $ 7,400     $ 5,900     $ 4,600     $ 3,300  

Australia

    9,600       12,400       10,400       12,200       11,400       9,200  

Europe and Rest of World

    5,900       4,000       4,100       2,900       5,400       1,700  
                                                 

Total International New Insurance Written

  $ 21,700     $ 20,400     $ 21,900     $ 21,000     $ 21,400     $ 14,200  
                                                 

Total Risk In-force (a)

  $ 86,600     $ 82,800     $ 79,000     $ 74,500     $ 67,800     $ 68,000  
 

Net Premiums Written

  $ 244     $ 204     $ 212     $ 204     $ 168     $ 137  
 

Loss Ratio (b)

                    

Canada

    7 %     16 %     12 %     10 %     13 %     15 %

Australia

    30 %     29 %     20 %     5 %     13 %     -14 %

Europe and Rest of World

    15 %     14 %     9 %     9 %     11 %     17 %

Total International Loss Ratio

    17 %     21 %     14 %     8 %     13 %     6 %
 

Expense Ratio (c)

                    

Canada

    18 %     23 %     16 %     15 %     17 %     19 %

Australia

    15 %     14 %     13 %     14 %     16 %     15 %

Europe and Rest of World

    34 %     41 %     50 %     52 %     90 %     79 %

Total International Expense Ratio

    20 %     21 %     19 %     18 %     24 %     22 %

(a) Our businesses in Australia, New Zealand and Canada currently provide 100% coverage on the majority of the loans we insure in those markets. For the purpose of representing our risk in-force, we have 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 our highest expected average per-claim payment for any one underwriting year over the life of our businesses in Australia, New Zealand and Canada. For the period ending June 30, 2005 through the period ending June 30, 2006, this factor was 35%.
(b) The ratio of incurred losses and loss adjustment expense to net premiums earned.
(c) The ratio of an insurer’s general expenses to net premiums written. In our business, general expenses consist of acquisition and insurance expenses, net of deferrals, and amortization of DAC and intangibles.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

RECONCILIATIONS OF NON-GAAP MEASURES

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Reconciliation of Operating ROE

(amounts in millions)

 

       Twelve months ended  
       June 30,
2006
    December 31,
2005
 

GAAP Basis ROE

      

Net earnings for the twelve months ended (1)

     $ 1,265     $ 1,221  

Quarterly average stockholders’ equity, excluding accumulated other comprehensive income (2)

     $ 11,716     $ 11,437  

GAAP Basis ROE (1) divided by (2)

       10.8 %     10.7 %

Operating ROE

      

Net operating earnings for the twelve months ended (1)

     $ 1,295     $ 1,222  

Quarterly average stockholders’ equity, excluding accumulated other comprehensive income (2)

     $ 11,716     $ 11,437  

Operating ROE (1) divided by (2)

       11.1 %     10.7 %

(1) The twelve months ended information is derived by adding the four quarters of net earnings and net operating earnings from page 12 herein.

 

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

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 earnings divided by average stockholders’ equity, excluding accumulated other comprehensive income (AOCI) in average stockholders’ equity. Management believes that analysis of operating ROE enhances understanding of the efficiency with which the company deploys its capital. However, operating ROE as defined by the company should not be viewed as a substitute for GAAP net earnings divided by average stockholders’ equity.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Reconciliation of Expense Ratio

(amounts in millions)

 

           2006                 2005  
     Q2     Q1     Total     Q4     Q3     Q2     Q1     Total  

GAAP Basis Expense Ratio

                 

Acquisition and operating expenses, net of deferrals (1)

  $ 521     $ 475     $ 996     $ 513     $ 506     $ 523     $ 447     $ 1,989  

Total revenues (2)

  $ 2,754     $ 2,625     $ 5,379     $ 2,655     $ 2,628     $ 2,610     $ 2,611     $ 10,504  
                                                                 

Expense ratio (1) divided by (2)

    18.9 %     18.1 %     18.5 %     19.3 %     19.3 %     20.0 %     17.1 %     18.9 %
                                                                 

GAAP Basis, As Adjusted—Expense Ratio

                 

Acquisition and operating expenses, net of deferrals

  $ 521     $ 475     $ 996     $ 513     $ 506     $ 523     $ 447     $ 1,989  

Less payment protection insurance business

    182       172       354       176       176       209       186       747  
                                                                 

Adjusted acquisition and operating expenses, net of deferrals (3)

  $ 339     $ 303     $ 642     $ 337     $ 330     $ 314     $ 261     $ 1,242  
                                                                 

Total revenues

  $ 2,754     $ 2,625     $ 5,379     $ 2,655     $ 2,628     $ 2,610     $ 2,611     $ 10,504  

Less payment protection insurance business

    352       319       671       335       373       385       399       1,492  

Less net investment gains (losses)

    (49 )     (22 )     (71 )     11       (7 )     —         (6 )     (2 )
                                                                 

Adjusted total revenues (4)

  $ 2,451     $ 2,328     $ 4,779     $ 2,309     $ 2,262     $ 2,225     $ 2,218     $ 9,014  
                                                                 

Adjusted expense ratio (3) divided by (4)

    13.8 %     13.0 %     13.4 %     14.6 %     14.6 %     14.1 %     11.8 %     13.8 %
                                                                 
                                                                 

Non-GAAP Definition for Expense Ratio

The company references the non-GAAP financial measure entitled “expense ratio” as a measure of productivity. The company defines expense ratio as acquisition and operating expenses, net of deferrals, divided by total revenues, excluding the effects of the company’s payment protection insurance business. The payment protection insurance business is excluded from this ratio as its expense base is comprised of varying levels of non-deferrable acquisition costs. Management believes that the expense ratio analysis enhances understanding of the productivity of the company. However, the expense ratio as defined by the company should not be viewed as a substitute for GAAP acquisition and operating expenses, net of deferrals, divided by total revenues.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Reconciliation of Core Premiums

(amounts in millions)

 

           2006               2005
     Q2     Q1   Total   Q4   Q3   Q2   Q1   Total

Reported premiums

  $ 1,648     $ 1,539   $ 3,187   $ 1,531   $ 1,547   $ 1,614   $ 1,605   $ 6,297

Less payment protection insurance run-off premiums

    35       19     54     34     64     64     74     236

Less spread-based retail premiums

    200       180     380     181     189     241     244     855
                                                   

Core premiums

  $ 1,413     $ 1,340   $ 2,753   $ 1,316   $ 1,294   $ 1,309   $ 1,287   $ 5,206
                                                   
 

Reported premium percentage change from prior year

    2.1 %                

Core premium percentage change from prior year

    7.9 %                

Non-GAAP Definition for Core Premiums

The company references the non-GAAP financial measure entitled “core premiums” as a measure of premium growth. The company defines core premiums as earned premiums less premiums on a run-off block in our payment protection insurance business and less premiums from our spread-based retail business. The spread-based retail premiums are excluded in this measure primarily because these are single premiums and are not an indication of future premiums. Management believes that analysis of core premiums enhances understanding of premium growth of the company. However, core premiums as defined by the company should not be viewed as a substitute for GAAP earned premiums.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Reconciliation of Core Yield

 

               2006     2005     2004
     (Assets—amounts in billions)   Q2     Q1     Q4     Q3     Q2     Q1     Q4
    Reported—Total Invested Assets and Cash   $ 66.4     $ 67.6     $ 68.8     $ 68.4     $ 67.9     $ 66.7     $ 67.1
    Subtract:                       
   

Securities lending

    0.9       1.6       1.8       2.2       2.7       3.0       3.2
   

Unrealized gains (losses)

    (0.7 )     0.2       1.2       1.7       2.6       1.5       1.9
   

Derivative counterparty collateral

    0.2       0.3       0.4       —         —         —         —  
                                                         
    Adjusted end-of-period invested assets   $ 66.0     $ 65.5     $ 65.4     $ 64.5     $ 62.6     $ 62.2     $ 62.1
                                                         

(A)

  Average Invested Assets used in Reported Yield   $ 65.7     $ 65.5     $ 64.9     $ 63.5     $ 62.4     $ 62.1      
    Subtract: limited partnership investments (average balance)     0.1       0.1       0.2       0.2       0.2       0.2      
                                                       

(B)

  Average Invested Assets used in Core Yield Calculation     65.6       65.3       64.8       63.4       62.2       62.0      
    Subtract: floating and short-term portfolios (average balance)     10.0       9.1       8.3       7.6       6.9       6.8      
                                                       

(C)

  Average Invested Assets used in Core Yield (excl. Floating & Short-Term) Calculation   $ 55.6     $ 56.2     $ 56.5     $ 55.8     $ 55.3     $ 55.1      
                                                       
    (Income—amounts in millions)                       

(D)

  Reported—Net Investment Income   $ 953     $ 924     $ 941     $ 902     $ 842     $ 851      
    Subtract certain investment items (1)     38       27       68       49       14       24      
                                                       

(E)

  Core Net Investment Income     915       897       873       853       828       827      
    Subtract: investment income from floating and short-term portfolios     139       120       100       83       74       59      
                                                       

(F)

  Core Net Investment Income (excl. Floating and Short-Term)   $ 776     $ 777     $ 773     $ 770     $ 754     $ 767      
                                                       

(D)/(A)

  Reported Yield     5.8 %     5.6 %     5.8 %     5.7 %     5.4 %     5.5 %    

(E)/(B)

  Core Yield     5.6 %     5.5 %     5.4 %     5.4 %     5.3 %     5.3 %    

(F)/(C)

  Core Yield (excl. Floating and Short-Term)     5.6 %     5.5 %     5.5 %     5.5 %     5.4 %     5.6 %    

 

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 those items that are not recurring in nature. Management believes that analysis of core yield enhances understanding of the investment yield of the company. However, core yield as defined by the company should not be viewed as a substitute for GAAP investment yield.


(1) Includes bond calls, prepayments, non-qualifying derivatives, commercial mortgage loan loss reserves and other items.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

CORPORATE INFORMATION

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Industry Ratings

Our principal life insurance subsidiaries are rated by A.M. Best, S&P, Moody’s and Fitch as follows:

 

Company

     A.M. Best rating      S&P rating      Moody’s rating      Fitch rating

American Mayflower Life Insurance Company of New York

     A+      AA-      Aa3      AA-

Continental Life Insurance Company of Brentwood, Tennessee

     A-      Not rated      Not rated      Not rated

Federal Home Life Insurance Company

     A+      Not rated      Aa3      AA-

First Colony Life Insurance Company

     A+      AA-      Aa3      AA-

Genworth Life Insurance Company of New York

     A+      AA-      Aa3      AA-

Genworth Life and Annuity Insurance Company

     A+      AA-      Aa3      AA-

Genworth Life and Annuity Insurance Company (short term rating)

     Not rated      A-1+      P-1      Not rated

Genworth Life and Health Insurance Company

     A      AA-      Not rated      Not rated

Genworth Life Insurance Company

     A+      AA-      Aa3      AA-

Genworth Life Insurance Company (short term rating)

     Not rated      A-1+      P-1      Not rated

Our mortgage insurance subsidiaries are rated by S&P, Moody’s and Fitch as follows:

 

Company (a)

     S&P rating      Moody’s rating      Fitch rating

Genworth Mortgage Insurance Corporation

     AA      Aa2      AA

Genworth Financial Mortgage Insurance Pty. Limited

     AA      Aa2      AA

Genworth Financial Mortgage Insurance Limited

     AA      Aa2      AA

Genworth Residential Mortgage Insurance Corporation of NC

     AA      Aa2      AA

(a) Our Canadian mortgage insurance company, Genworth Financial Mortgage Insurance Company Canada, is not rated by any of the rating agencies shown above, but is rated “AA” by Dominion Bond Rating Service.

The A.M. Best, S&P, Moody’s and Fitch ratings 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 our securities.

A.M. Best states that its ‘‘A+’’ (Superior) rating is assigned to those companies that have, in its opinion, a superior ability to meet their ongoing obligations to policyholders. The ‘‘A+’’ (Superior) rating is the second-highest of fifteen ratings assigned by A.M. Best, which range from ‘‘A++’’ to ‘‘S’’.

 

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GENWORTH FINANCIAL, INC.

2Q 2006 FINANCIAL SUPPLEMENT

 

Industry Ratings (continued)

Moody’s states that insurance companies rated “Aa” (Excellent) offer excellent financial security. Moody’s states that companies in this group constitute what are generally known as high-grade companies. The “Aa” range is the second-highest 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. Accordingly, the “Aa2” and “Aa3” ratings are the third- and fourth-highest of Moody’s 21 ratings categories. Short-term rating “P1” is the highest rating and shows superior ability for repayment of short-term debt obligations.

Fitch states that ‘‘AA’’ (Very Strong) rated insurance companies are viewed as possessing very strong capacity to meet policyholder and contract obligations. Risk factors are modest, and the impact of any adverse business and economic factors is expected to be very small. The ‘‘AA’’ rating category is the second-highest of eight financial strength rating categories, which range from ‘‘AAA’’ to ‘‘D.’’ 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 ‘‘CCC’’ category. Accordingly, the ‘‘AA’’ and ‘‘AA-’’ ratings are the third- and fourth-highest of Fitch’s 24 ratings categories.

Dominion Bond Rating states that long-term debt rated AA is of superior credit quality, and protection of interest and principal is considered high. In many cases they differ from long-term debt rated AAA only to a small degree. Given the extremely restrictive definition DBRS has for the AAA category, entities rated AA are also considered to be strong credits, typically exemplifying above-average strength in key areas of consideration and unlikely to be significantly affected by reasonably foreseeable events.

A.M. Best, S&P, Moody’s, Fitch and Dominion Bond Rating review their ratings periodically and we cannot assure you that we will maintain our current ratings in the future. Other agencies may also rate our company or our insurance subsidiaries on a solicited or an unsolicited basis.

On June 2, 2006, A.M. Best removed Continental Life Insurance Company of Brentwood, Tennessee from under review and upgraded the financial strength ratings to A- (excellent) from B++ (very good). The outlook for the rating is positive.

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 www.genworth.com.

Inquiries:

Genworth Financial, Inc.

Jean Peters, 804-662-2693

jean.peters@genworth.com

Alicia Charity, 804-662-2248

alicia.charity@genworth.com

 

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