Exhibit 99.2

LOGO


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Table of Contents

   Page

Investor Letter

   3

Use of Non-GAAP Measures

   4

Financial Highlights

   5

First Quarter Results

  

Reconciliation of Net Income to Net Operating Income

   7

Net Income and Net Operating Income

   8

Consolidated Net Income and Net Operating Income by Quarter

   9

Consolidated Balance Sheet

   10-11

Consolidated Balance Sheet by Segment

   12-13

Deferred Acquisition Costs Rollforward

   14

Quarterly Results by Segment

  

Consolidated Segment Net Income and Segment Net Operating Income

   17-19

Segment Net Income and Segment Net Operating Income and Sales—Retirement and Protection

   20-32

Segment Net Income and Segment Net Operating Income and Sales—International

   33-41

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

   42-48

Net Loss and Net Operating Loss—Corporate and Other

   49-50

Additional Financial Data

  

Investments Summary

   52

Fixed Maturities Summary

   53

Commercial Mortgage Loans Data

   54

General Account GAAP Net Investment Income Yields

   55

Reconciliations of Non-GAAP Measures

   56-60

Corporate Information

  

Industry Ratings

   62-63

 

2


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Dear Investor,

You will note that this first quarter supplement has some new disclosures in an effort to provide additional transparency into our financial trends. The new disclosures are: (1) balance sheets by segment, (2) loans in default and claims for our international mortgage insurance business, (3) U.S. Mortgage Insurance loan portfolio information, and (4) U.S. Mortgage Insurance primary insurance in-force and risk in-force by year of policy origination.

In addition, a reminder that our group life and health insurance business is now reported as a discontinued operation and is no longer included in our net operating income. The sale of this business is expected to close during the second quarter of 2007.

Once again, thank you for your continued interest in Genworth Financial and please feel free to call one of us with any questions or comments.

Regards,

Alicia Charity

Vice President

Investor Relations

804-662-2248

Linnea Olsen

Director

Investor Relations

804-662-2536

 

3


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Use of Non-GAAP Measures

This financial supplement includes the non-GAAP(1) financial measure entitled “net operating income.” The company defines net operating income as net income from continuing operations, excluding after-tax net investment gains (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 income for the periods presented in this financial supplement other than $14 million after-tax of reorganization related expenses recorded in the first quarter of 2007.

Management believes that analysis of net operating income enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers. However, net operating income should not be viewed as a substitute for GAAP net income. In addition, the company’s definition of net operating income may differ from the definitions used by other companies. The table on page 7 of this report provides a reconciliation of net income to net operating income (as defined above) for the three months ended March 31, 2007 and 2006.

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 56 through 60 of this financial supplement.

 


(1) U.S. Generally Accepted Accounting Principles

 

4


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Financial Highlights

(amounts in millions, except per share data)

 

Balance Sheet Data

   2007     2006  
     Q1     Q4     Q3     Q2     Q1  

Total stockholders’ equity, excluding accumulated other comprehensive income

   $ 12,197     $ 12,173     $ 12,143     $ 11,977     $ 11,738  

Total accumulated other comprehensive income

     1,111       1,157       1,166       233       740  
                                        

Total stockholders’ equity

   $ 13,308     $ 13,330     $ 13,309     $ 12,210     $ 12,478  
                                        

Book value per common share

   $ 30.43     $ 30.09     $ 29.44     $ 26.84     $ 27.37  

Book value per common share, excluding accumulated other comprehensive income

   $ 27.89     $ 27.48     $ 26.86     $ 26.33     $ 25.74  

Common shares outstanding as of balance sheet date

     437.4       443.0       452.1       454.9       456.0  
     Twelve months ended  

Return on Equity (ROE)

   March 31,
2007
    December 31,
2006
    September 30,
2006
    June 30,
2006
    March 31,
2006
 

GAAP Basis ROE

     10.9 %     11.1 %     10.6 %     10.8 %     10.7 %

Operating ROE

     11.0 %     11.0 %     10.6 %     10.7 %     10.5 %

See page 57 herein for a reconciliation of GAAP Basis ROE to Operating ROE.

 

Basic and Diluted Shares

   Three months
ended
March 31,
2007
    

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

   441.0   

Dilutive securities:

     

Stock purchase contracts underlying equity units(1) 

   8.4   

Stock options, restricted stock units and stock appreciation rights

   5.6   
       

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

   455.0   
       

(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, 2006.

 

Dilutive Effect of Stock Purchase Contracts Underlying Equity Units

   Average market
price
   Incremental
shares(1)
    
   $ 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    9.3   
   $ 38.00    9.7   
   $ 39.00    10.1   
   $ 40.00    10.5   

(1)

Incremental shares are calculated using the treasury stock method.

 

5


First Quarter Results

 

6


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Reconciliation of Net Income to Net Operating Income

(amounts in millions, except per share data)

 

    

Three months

ended

March 31,

 
         2007              2006      

Net income

   $ 324      $ 334  

Less income from discontinued operations, net of taxes

     (10 )      (8 )

Less cumulative effect of accounting change, net of taxes

     —          (4 )
                 

Net income from continuing operations

     314        322  

Expenses related to reorganization, net of taxes

     14        —    

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

     12        15  
                 

Net operating income

   $ 340      $ 337  
                 

Net earnings per common share:

     

Basic

   $ 0.74      $ 0.72  
                 

Diluted

   $ 0.71      $ 0.70  
                 

Net earnings from continuing operations per common share:

     

Basic

   $ 0.71      $ 0.69  
                 

Diluted

   $ 0.69      $ 0.67  
                 

Net operating earnings per common share:

     

Basic

   $ 0.77      $ 0.72  
                 

Diluted

   $ 0.75      $ 0.70  
                 

Weighted-average common shares outstanding:

     

Basic

     441.0        467.0  
                 

Diluted

     455.0        479.5  
                 
    

Three months

ended

March 31,

 

Adjusted for foreign exchange

   2007      2006  

Net income

   $ 320      $ 334  

Net income from continuing operations

   $ 310      $ 322  

Net operating income

   $ 336      $ 337  

Net earnings per common share:

     

Basic

   $ 0.73      $ 0.72  

Diluted

   $ 0.70      $ 0.70  

Net earnings from continuing operations per common share:

     

Basic

   $ 0.70      $ 0.69  

Diluted

   $ 0.68      $ 0.67  

Net operating earnings per common share:

     

Basic

   $ 0.76      $ 0.72  

Diluted

   $ 0.74      $ 0.70  

The 2007 amounts exclude the effects of changes in foreign exchange rates on the current period ended and were calculated by applying the same prior year comparable period foreign exchange rates to the current period.

 

7


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Net Income and Net Operating Income

(amounts in millions)

 

    

Three months
ended

March 31,

 
     2007     2006  

REVENUES:

    

Premiums

   $ 1,511     $ 1,371  

Net investment income

     984       912  

Net investment gains (losses)

     (19 )     (22 )

Policy fees and other income

     234       181  
                

Total revenues

     2,710       2,442  
                

BENEFITS AND EXPENSES:

    

Benefits and other changes in policy reserves

     1,067       915  

Interest credited

     385       372  

Acquisition and operating expenses, net of deferrals

     489       436  

Amortization of deferred acquisition costs and intangibles

     213       164  

Interest expense

     107       82  
                

Total benefits and expenses

     2,261       1,969  
                

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     449       473  

Provision for income taxes

     135       151  

Effective tax rate

     30.1 %     31.9 %
                

NET INCOME FROM CONTINUING OPERATIONS

     314       322  

Net income from discontinued operations, net of taxes

     10       8  
                

NET INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE

     324       330  

Cumulative effect of accounting change, net of taxes

     —         4  
                

NET INCOME

     324       334  

ADJUSTMENTS TO NET INCOME:

    

Net income from discontinued operations, net of taxes

     (10 )     (8 )

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

     12       15  

Expenses related to reorganization, net of taxes

     14       —    

Cumulative effect of accounting change, net of taxes

     —         (4 )
                

NET OPERATING INCOME

   $ 340     $ 337  
                

Effective tax rate (operating income)

     30.4 %     32.1 %

The operating income effective tax rate for all pages in this financial supplement are calculated using whole dollars. As a result, the percentages shown may differ with the operating income effective tax rate calculated using the rounded numbers in this financial supplement.

 

8


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Consolidated Net Income and Net Operating Income by Quarter

(amounts in millions, except per share amounts)

 

      2007      2006  
      Q1      Q4     Q3     Q2     Q1     Total  

REVENUES:

                      

Premiums

   $ 1,511      $ 1,446     $ 1,505     $ 1,480     $ 1,371     $ 5,802  

Net investment income

     984        1,003       932       940       912       3,787  

Net investment gains (losses)

     (19 )      8       (6 )     (49 )     (22 )     (69 )

Policy fees and other income

     234        200       184       200       181       765  
                                                   

Total revenues

     2,710        2,657       2,615       2,571       2,442       10,285  
                                                   

BENEFITS AND EXPENSES:

                      

Benefits and other changes in policy reserves

     1,067        1,050       1,061       978       915       4,004  

Interest credited

     385        388       382       378       372       1,520  

Acquisition and operating expenses, net of deferrals

     489        446       493       483       436       1,858  

Amortization of deferred acquisition costs and intangibles

     213        165       160       197       164       686  

Interest expense

     107        107       87       88       82       364  
                                                   

Total benefits and expenses

     2,261        2,156       2,183       2,124       1,969       8,432  
                                                   

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     449        501       432       447       473       1,853  

Provision for income taxes

     135        140       138       141       151       570  
                                                   

NET INCOME FROM CONTINUING OPERATIONS

     314        361       294       306       322       1,283  

Net income from discontinued operations, net of taxes

     10        12       10       11       8       41  
                                                   

NET INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE

     324        373       304       317       330       1,324  

Cumulative effect of accounting change, net of taxes

     —          —         —         —         4       4  
                                                   

NET INCOME

     324        373       304       317       334       1,328  

ADJUSTMENTS TO NET INCOME:

                      

Net income from discontinued operations, net of taxes

     (10 )      (12 )     (10 )     (11 )     (8 )     (41 )

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

     12        (6 )     3       22       15       34  

Expenses related to reorganization, net of taxes

     14        —         —         —         —         —    

Cumulative effect of accounting change, net of taxes

     —          —         —         —         (4 )     (4 )
                                                   

NET OPERATING INCOME

   $ 340      $ 355     $ 297     $ 328     $ 337     $ 1,317  
                                                   
                                                   

Effective tax rate (operating income)

     30.4 %      27.9 %     32.1 %     31.9 %     32.1 %     31.0 %

Earnings Per Share Data:

               

Net earnings from continuing operations per common share

               

Basic

   $ 0.71      $ 0.81     $ 0.65     $ 0.67     $ 0.69     $ 2.81  

Diluted

   $ 0.69      $ 0.78     $ 0.63     $ 0.65     $ 0.67     $ 2.73  

Net earnings per common share

               

Basic

   $ 0.74      $ 0.83     $ 0.67     $ 0.70     $ 0.72     $ 2.91  

Diluted

   $ 0.71      $ 0.81     $ 0.65     $ 0.68     $ 0.70     $ 2.83  

Net operating earnings per common share

               

Basic

   $ 0.77      $ 0.79     $ 0.65     $ 0.72     $ 0.72     $ 2.89  

Diluted

   $ 0.75      $ 0.77     $ 0.64     $ 0.70     $ 0.70     $ 2.81  

Shares outstanding

               

Basic

     441.0        447.4       453.8       455.8       467.0       455.9  

Diluted

     455.0        460.7       467.2       468.3       479.5       469.4  

 

9


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Consolidated Balance Sheet

(amounts in millions)

 

      March 31,
2007
   December 31,
2006
   September 30,
2006
   June 30,
2006
   March 31,
2006

ASSETS

                     

Investments:

                     

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

   $ 55,113    $ 54,684    $ 53,516    $ 51,554    $ 52,758

Equity securities available-for-sale, at fair value

     200      197      192      187      193

Commercial mortgage loans

     8,508      8,357      8,182      8,072      7,769

Policy loans

     1,494      1,489      1,493      1,480      1,356

Other invested assets

     3,762      3,846      3,050      1,840      2,738
                                    

Total investments

     69,077      68,573      66,433      63,133      64,814

Cash and cash equivalents

     2,250      2,436      2,296      2,346      1,891

Accrued investment income

     810      742      751      653      778

Deferred acquisition costs

     6,320      6,183      6,026      5,905      5,682

Intangible assets

     802      831      877      936      811

Goodwill

     1,604      1,602      1,353      1,351      1,316

Reinsurance recoverable

     16,746      16,783      16,907      17,035      17,254

Other assets

     808      864      1,193      760      720

Separate account assets

     11,216      10,875      10,084      9,625      9,700

Assets associated with discontinued operations

     1,925      1,982      1,927      1,902      1,941
                                    

Total assets

   $ 111,558    $ 110,871    $ 107,847    $ 103,646    $ 104,907
                                    
                                    

 

10


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Consolidated Balance Sheet (continued)

(amounts in millions)

 

      March 31,
2007
     December 31,
2006
    September 30,
2006
    June 30,
2006
    March 31,
2006
 

LIABILITIES AND STOCKHOLDERS’ EQUITY

                    

Liabilities:

                    

Future annuity and contract benefits

   $ 63,477      $ 63,299     $ 62,777     $ 62,802     $ 62,833  

Liability for policy and contract claims

     3,216        3,114       2,971       2,882       2,848  

Unearned premiums

     4,422        4,229       4,179       3,955       3,704  

Other policyholder liabilities

     375        385       454       423       379  

Other liabilities

     5,702        5,709       5,111       3,596       4,468  

Non-recourse funding obligations

     2,765        2,765       2,450       2,150       2,150  

Short-term borrowings

     250        199       295       295       380  

Long-term borrowings

     3,332        3,321       2,730       2,741       2,729  

Senior notes underlying equity units

     600        600       600       600       600  

Mandatorily redeemable preferred stock

     100        100       100       100       100  

Deferred tax liability

     1,384        1,522       1,411       897       1,132  

Separate account liabilities

     11,216        10,875       10,084       9,625       9,700  

Liabilities associated with discontinued operations

     1,411        1,423       1,376       1,370       1,406  
                                           

Total liabilities

     98,250        97,541       94,538       91,436       92,429  
                                           

Stockholders’ equity:

                    

Common stock

     —          —         —         —         —    

Additional paid-in capital

     10,785        10,759       10,737       10,713       10,682  
                                           

Accumulated other comprehensive income (loss):

                    

Net unrealized investment gains (losses)

     418        435       437       (312 )     223  

Derivatives qualifying as hedges

     309        375       377       212       280  

Foreign currency translation and other adjustments

     384        347       352       333       237  
                                           

Total accumulated other comprehensive income (loss)

     1,111        1,157       1,166       233       740  

Retained earnings

     3,145        2,914       2,581       2,317       2,035  

Treasury stock, at cost

     (1,733 )      (1,500 )     (1,175 )     (1,053 )     (979 )
                                           

Total stockholders’ equity

     13,308        13,330       13,309       12,210       12,478  
                                           

Total liabilities and stockholders’ equity

   $ 111,558      $ 110,871     $ 107,847     $ 103,646     $ 104,907  
                                           
                                           

 

11


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Consolidated Balance Sheet by Segment

(amounts in millions)

 

     March 31, 2007
     Retirement &
Protection
   International    U.S. Mortgage
Insurance
   Corporate and
Other
    Total

ASSETS

             

Cash and investments

   $ 57,671    $ 7,827    $ 3,139    $ 3,500     $ 72,137

Deferred acquisition costs and intangible assets

     7,648      955      86      37       8,726

Reinsurance recoverable

     16,660      81      5      —         16,746

Other assets

     210      227      97      274       808

Separate account assets

     11,216      —        —        —         11,216

Assets associated with discontinued operations

     —        —        —        1,925       1,925
                                   

Total assets

   $ 93,405    $ 9,090    $ 3,327    $ 5,736     $ 111,558
                                   

LIABILITIES AND STOCKHOLDERS’ EQUITY

             

Liabilities:

             

Future annuity and contract benefits

   $ 63,440    $ 36    $ —      $ 1     $ 63,477

Liability for policy and contract claims

     2,533      428      251      4       3,216

Unearned premiums and other policyholder liabilities

     868      3,885      42      2       4,797

Non-recourse funding obligations

     2,765      —        —        —         2,765

Deferred tax and other liabilities

     3,167      1,106      132      2,681       7,086

Borrowing and capital securities

     —        —        —        4,282       4,282

Separate account liabilities

     11,216      —        —        —         11,216

Liabilities associated with discontinued operations

     —        —        —        1,411       1,411
                                   

Total liabilities

     83,989      5,455      425      8,381       98,250
                                   

Stockholders’ equity:

             

Allocated equity, excluding accumulated other comprehensive income

     8,846      3,207      2,841      (2,697 )     12,197

Allocated accumulated other comprehensive income

     570      428      61      52       1,111
                                   

Total stockholders’ equity

     9,416      3,635      2,902      (2,645 )     13,308
                                   

Total liabilities and stockholders’ equity

   $ 93,405    $ 9,090    $ 3,327    $ 5,736     $ 111,558
                                   

 

12


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Consolidated Balance Sheet by Segment (continued)

(amounts in millions)

 

     December 31, 2006
     Retirement &
Protection
   International    U.S. Mortgage
Insurance
   Corporate
and Other
    Total

ASSETS

             

Cash and investments

   $ 57,468    $ 7,231    $ 3,063    $ 3,989     $ 71,751

Deferred acquisition costs and intangible assets

     7,559      939      86      32       8,616

Reinsurance recoverable

     16,701      77      4      1       16,783

Other assets

     217      271      84      292       864

Separate account assets

     10,875      —        —        —         10,875

Assets associated with discontinued operations

     —        —        —        1,982       1,982
                                   

Total assets

   $ 92,820    $ 8,518    $ 3,237    $ 6,296     $ 110,871
                                   

LIABILITIES AND STOCKHOLDERS’ EQUITY

             

Liabilities:

             

Future annuity and contract benefits

   $ 63,262    $ 37    $ —      $ —       $ 63,299

Liability for policy and contract claims

     2,464      409      237      4       3,114

Unearned premiums and other policyholder liabilities

     861      3,724      39      (10 )     4,614

Non-recourse funding obligations

     2,765      —        —        —         2,765

Deferred tax and other liabilities

     3,128      1,145      121      2,837       7,231

Borrowing and capital securities

     —        —        —        4,220       4,220

Separate account liabilities

     10,875      —        —        —         10,875

Liabilities associated with discontinued operations

     —        —        —        1,423       1,423
                                   

Total liabilities

     83,355      5,315      397      8,474       97,541
                                   

Stockholders’ equity:

             

Allocated equity, excluding accumulated other comprehensive income

     8,794      2,804      2,777      (2,202 )     12,173

Allocated accumulated other comprehensive income

     671      399      63      24       1,157
                                   

Total stockholders’ equity

     9,465      3,203      2,840      (2,178 )     13,330
                                   

Total liabilities and stockholders’ equity

   $ 92,820    $ 8,518    $ 3,237    $ 6,296     $ 110,871
                                   

 

13


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Deferred Acquisition Costs Rollforward

(amounts in millions)

 

      Retirement and
Protection
    International     U.S. Mortgage
Insurance
    Corporate
and Other
   Total  

Deferred Acquisition Costs Rollforward

                             

Unamortized balance as of December 31, 2006

   $ 5,308     $ 791     $ 60     $ —      $ 6,159  

Costs deferred

     212       91       8       —        311  

Amortization, net of interest accretion(1)

     (80 )     (86 )     (8 )     —        (174 )

Impact of foreign currency translation

     —         9       —         —        9  
                                       

Unamortized balance as of March 31, 2007

     5,440       805       60       —        6,305  

Effect of accumulated net unrealized investment gains (losses)

     15       —         —         —        15  
                                       

Balance as of March 31, 2007

   $ 5,455     $ 805     $ 60     $ —      $ 6,320  
                                       

(1)

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

 

14


This Page Left Intentionally Blank

 

15


Quarterly Results by Segment

 

16


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Consolidated Segment Net Income and Segment Net Operating Income

(amounts in millions, except per share amounts)

 

      2007      2006  
      Q1      Q4     Q3     Q2     Q1     Total  

Retirement and Protection:

                      

Managed Money

   $ 10      $ 7     $ 5     $ 6     $ 2     $ 20  

Retirement Income

     46        49       39       38       49       175  

Institutional

     14        10       9       13       10       42  

Life Insurance

     78        83       79       77       74       313  

Long-Term Care Insurance

     37        35       38       37       43       153  
                                                   

Total Retirement and Protection

     185        184       170       171       178       703  

International:

                      

International Mortgage Insurance —Canada

     55        57       54       51       46       208  
                                                                  —Australia      36        46       26       35       30       137  

                                                                  —Other International

     3        4       1       4       1       10  

Payment Protection Insurance

     29        33       26       29       25       113  
                                                   

Total International

     123        140       107       119       102       468  

U.S. Mortgage Insurance

     65        62       53       72       72       259  

Corporate and Other

     (33 )      (31 )     (33 )     (34 )     (15 )     (113 )
                                                   

NET OPERATING INCOME

     340        355       297       328       337       1,317  

ADJUSTMENTS TO NET OPERATING INCOME:

                      

Net income from discontinued operations, net of taxes

     10        12       10       11       8       41  

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

     (12 )      6       (3 )     (22 )     (15 )     (34 )

Expenses related to reorganization, net of taxes

     (14 )      —         —         —         —         —    

Cumulative effect of accounting change, net of taxes

     —          —         —         —         4       4  
                                                   

NET INCOME

   $ 324      $ 373     $ 304     $ 317     $ 334     $ 1,328  
                                                   
                                                   

Earnings Per Share Data:

               

Net earnings per common share

               

Basic

   $ 0.74      $ 0.83     $ 0.67     $ 0.70     $ 0.72     $ 2.91  

Diluted

   $ 0.71      $ 0.81     $ 0.65     $ 0.68     $ 0.70     $ 2.83  

Net operating earnings per common share

               

Basic

   $ 0.77      $ 0.79     $ 0.65     $ 0.72     $ 0.72     $ 2.89  

Diluted

   $ 0.75      $ 0.77     $ 0.64     $ 0.70     $ 0.70     $ 2.81  

Shares outstanding

               

Basic

     441.0        447.4       453.8       455.8       467.0       455.9  

Diluted

     455.0        460.7       467.2       468.3       479.5       469.4  

 

17


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Consolidated Segment Net Income and Segment Net Operating Income

(amounts in millions)

 

    Retirement and Protection     International    

U.S. Mortgage
Insurance

   

Corporate
and Other

   

Total

 

Three months ended March 31, 2007

  Managed
Money
    Retirement
Income
    Institutional     Life
Insurance
    Long-Term
Care
Insurance
    Total     Mortgage
Insurance -
Canada
    Mortgage
Insurance -
Australia
    Other
Mortgage
Insurance
    Payment
Protection
Insurance
    Total        

REVENUES:

                           

Premiums

  $ —       $ 154     $ —       $ 235     $ 485     $ 874     $ 83     $ 68     $ 22     $ 320     $ 493     $ 137     $ 7     $ 1,511  

Net investment income

    1       324       166       157       196       844       29       22       5       32       88       37       15       984  

Net investment gains (losses)

    —         (9 )     (5 )     —         (5 )     (19 )     —         —         —         —         —         —         —         (19 )

Policy fees and other income

    75       44       —         93       7       219       —         1       —         5       6       7       2       234  
                                                                                                               

Total revenues

    76       513       161       485       683       1,918       112       91       27       357       587       181       24       2,710  
                                                                                                               

BENEFITS AND EXPENSES:

                           

Benefits and other changes in policy reserves

    —         232       —         196       480       908       13       31       5       58       107       52       —         1,067  

Interest credited

    —         145       141       60       39       385       —         —         —         —         —         —         —         385  

Acquisition and operating expenses, net of deferrals

    60       34       3       31       84       212       13       12       18       181       224       32       21       489  

Amortization of deferred acquisition costs and intangibles

    —         45       —         32       27       104       4       5       1       77       87       8       14       213  

Interest expense

    —         1       —         42       —         43       1       —         —         3       4       —         60       107  
                                                                                                               

Total benefits and expenses

    60       457       144       361       630       1,652       31       48       24       319       422       92       95       2,261  
                                                                                                               

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

    16       56       17       124       53       266       81       43       3       38       165       89       (71 )     449  

Provision (benefit) for income taxes

    6       16       6       46       19       93       26       7       —         9       42       24       (24 )     135  
                                                                                                               

SEGMENT NET INCOME (LOSS) FROM CONTINUING OPERATIONS

    10       40       11       78       34       173       55       36       3       29       123       65       (47 )     314  

ADJUSTMENTS TO SEGMENT NET INCOME (LOSS) FROM CONTINUING OPERATIONS:

                           

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

    —         6       3       —         3       12       —         —         —         —         —         —         —         12  

Expenses related to reorganization, net of taxes

    —         —         —         —         —         —         —         —         —         —         —         —         14       14  
                                                                                                               

SEGMENT NET OPERATING INCOME (LOSS)

  $ 10     $ 46     $ 14     $ 78     $ 37     $ 185     $ 55     $ 36     $ 3     $ 29     $ 123     $ 65     $ (33 )   $ 340  
                                                                                                               
                                                                                                               

Effective tax rate (operating income)

    36.4 %     29.6 %     35.5 %     37.1 %     35.9 %     35.0 %     32.6 %     15.5 %     -1.6 %     22.8 %     25.3 %     27.1 %     33.7 %     30.4 %

 

18


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Consolidated Segment Net Income and Segment Net Operating Income (continued)

(amounts in millions)

 

     Retirement and Protection     International    

U.S.
Mortgage
Insurance

   

Corporate
and Other

   

Total

 

Three months ended March 31, 2006

  Managed
Money
    Retirement
Income
    Institutional     Life
Insurance
    Long-Term
Care
Insurance
    Total     Mortgage
Insurance
- Canada
    Mortgage
Insurance -
Australia
    Other
Mortgage
Insurance
    Payment
Protection
Insurance
    Total        

REVENUES:

                             

Premiums

  $ —       $ 180     $ —       $ 221     $ 425     $ 826     $ 68     $ 51     $ 12     $ 291     $ 422     $ 116     $ 7     $ 1,371  

Net investment income

    —         333       132       138       174       777       25       16       4       22       67       35       33       912  

Net investment gains (losses)

    —         (7 )     (2 )     —         4       (5 )     1       —         —         —         1       —         (18 )     (22 )

Policy fees and other income

    41       36       —         83       5       165       3       —         —         6       9       5       2       181  
                                                                                                                 

Total revenues

    41       542       130       442       608       1,763       97       67       16       319       499       156       24       2,442  
                                                                                                                 

BENEFITS AND EXPENSES:

                             

Benefits and other changes in policy reserves

    —         241       —         183       396       820       11       14       2       48       75       19       1       915  

Interest credited

    —         164       114       60       34       372       —         —         —         —         —         —         —         372  

Acquisition and operating expenses, net of deferrals

    37       33       2       36       81       189       16       9       11       172       208       33       6       436  

Amortization of deferred acquisition costs and intangibles

    —         36       —         21       26       83       2       4       1       65       72       8       1       164  

Interest expense

    —         1       —         25       —         26       —         —         —         —         —         —         56       82  
                                                                                                                 

Total benefits and expenses

    37       475       116       325       537       1,490       29       27       14       285       355       60       64       1,969  
                                                                                                                 

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

    4       67       14       117       71       273       68       40       2       34       144       96       (40 )     473  

Provision (benefit) for income taxes

    2       23       5       43       25       98       22       10       1       9       42       24       (13 )     151  
                                                                                                                 
      2       44       9       74       46       175       46       30       1       25       102       72       (27 )     322  

Cumulative effect of accounting change, net of taxes

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

SEGMENT NET INCOME (LOSS) FROM CONTINUING OPERATIONS

    2       44       9       74       46       175       46       30       1       25       102       72       (23 )     326  

ADJUSTMENTS TO SEGMENT NET INCOME (LOSS) FROM CONTINUING OPERATIONS:

                             

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

    —         5       1       —         (3 )     3       —         —         —         —         —         —         12       15  

Cumulative effect of accounting change, net of taxes

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

SEGMENT NET OPERATING INCOME (LOSS)

  $ 2     $ 49     $ 10     $ 74     $ 43     $ 178     $ 46     $ 30     $ 1     $ 25     $ 102     $ 72     $ (15 )   $ 337  
                                                                                                                 
                                                                                                                 

Effective tax rate (operating income)

    35.5 %     34.8 %     35.4 %     36.5 %     35.8 %     35.8 %     32.3 %     26.1 %     25.8 %     25.7 %     29.0 %     24.9 %     26.9 %     32.1 %

 

19


Retirement and Protection

 

20


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Segment Net Income and Segment Net Operating Income—Retirement and Protection

(amounts in millions)

 

      2007     2006  
      Q1     Q4     Q3     Q2     Q1     Total  

REVENUES:

                     

Premiums

   $ 874     $ 861     $ 923     $ 884     $ 826     $ 3,494  

Net investment income

     844       840       803       817       777       3,237  

Net investment gains (losses)

     (19 )     (6 )     (6 )     (47 )     (5 )     (64 )

Policy fees and other income

     219       189       166       178       165       698  
                                                  

Total revenues

     1,918       1,884       1,886       1,832       1,763       7,365  
                                                  

BENEFITS AND EXPENSES:

                     

Benefits and other changes in policy reserves

     908       893       935       873       820       3,521  

Interest credited

     385       388       382       378       372       1,520  

Acquisition and operating expenses, net of deferrals

     212       207       203       208       189       807  

Amortization of deferred acquisition costs and intangibles

     104       103       76       106       83       368  

Interest expense

     43       43       36       35       26       140  
                                                  

Total benefits and expenses

     1,652       1,634       1,632       1,600       1,490       6,356  
                                                  

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     266       250       254       232       273       1,009  

Provision for income taxes

     93       68       87       83       98       336  
                                                  

SEGMENT NET INCOME FROM CONTINUING OPERATIONS

     173       182       167       149       175       673  
 

ADJUSTMENT TO SEGMENT NET INCOME FROM CONTINUING OPERATIONS:

                     

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

     12       2       3       22       3       30  
                                                  

SEGMENT NET OPERATING INCOME

   $ 185     $ 184     $ 170     $ 171     $ 178     $ 703  
                                                  
                                                  

Effective tax rate (operating income)

     35.0 %     26.6 %     34.5 %     35.8 %     35.8 %     33.3 %

 

21


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Segment Net Income and Segment Net Operating Income, Sales and Assets Under Management—Managed Money

(amounts in millions)

 

      2007      2006  
      Q1      Q4     Q3     Q2     Q1     Total  

REVENUES:

                      

Premiums

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

Net investment income

     1        1       —         1       —         2  

Net investment gains (losses)

     —          —         —         —         —         —    

Policy fees and other income

     75        64       46       46       41       197  
                                                   

Total revenues

     76        65       46       47       41       199  
                                                   

BENEFITS AND EXPENSES:

                      

Benefits and other changes in policy reserves

     —          —         —         —         —         —    

Interest credited

     —          —         —         —         —         —    

Acquisition and operating expenses, net of deferrals

     60        53       38       39       37       167  

Amortization of deferred acquisition costs and intangibles

     —          —         —         —         —         —    

Interest expense

     —          —         —         —         —         —    
                                                   

Total benefits and expenses

     60        53       38       39       37       167  
                                                   

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     16        12       8       8       4       32  

Provision for income taxes

     6        5       3       2       2       12  
                                                   

SEGMENT NET INCOME FROM CONTINUING OPERATIONS

     10        7       5       6       2       20  
 

ADJUSTMENT TO SEGMENT NET INCOME FROM CONTINUING OPERATIONS:

                      

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

     —          —         —         —         —         —    
                                                   

SEGMENT NET OPERATING INCOME

   $ 10      $ 7     $ 5     $ 6     $ 2     $ 20  
                                                   
                                                   

Effective tax rate (operating income)

     36.4 %      37.6 %     36.9 %     38.0 %     35.5 %     37.2 %

SALES:

               

Sales by Distribution Channel:

               

Independent Producers

   $ 1,400      $ 984     $ 373     $ 417     $ 299     $ 2,073  

Dedicated Sales Specialists

     312        233       229       226       283       971  
                                                   

Total Sales

   $ 1,712      $ 1,217     $ 602     $ 643     $ 582     $ 3,044  
                                                   
                                                   

ASSETS UNDER MANAGEMENT:

               

Account value, beginning of the period

   $ 17,293      $ 6,766     $ 6,143     $ 5,824     $ 5,180     $ 5,180  

Acquisitions(1)

     —          9,110       —         —         —         9,110  

Deposits

     1,712        1,217       602       643       582       3,044  

Interest credited and investment performance

     232        696       154       (159 )     254       945  

Surrenders, benefits and product charges

     (431 )      (496 )     (133 )     (165 )     (192 )     (986 )
                                                   

Account value, end of period

   $ 18,806      $ 17,293     $ 6,766     $ 6,143     $ 5,824     $ 17,293  
                                                   
                                                   

Sales for our managed assets represent new deposits.

Managed Money results represent AssetMark Investment Services, Inc., Genworth Financial Asset Management, Inc., Genworth Financial Advisers Corporation, Genworth Financial Trust Company and Capital Brokerage Corporation.

 

(1)

On October 20, 2006, we acquired AssetMark Investment Services, Inc., an investment management and advisory company. Assets under management at acquisition date were $9,110 million.

 

22


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Segment Net Income and Segment Net Operating Income—Retirement Income

(amounts in millions)

 

      2007     2006  
      Q1     Q4     Q3     Q2     Q1     Total  

REVENUES:

                     

Premiums

   $ 154     $ 146     $ 210     $ 200     $ 180     $ 736  

Net investment income

     324       330       331       341       333       1,335  

Net investment gains (losses)

     (9 )     (7 )     (7 )     (42 )     (7 )     (63 )

Policy fees and other income

     44       40       39       38       36       153  
                                                  

Total revenues

     513       509       573       537       542       2,161  
                                                  

BENEFITS AND EXPENSES:

                     

Benefits and other changes in policy reserves

     232       223       284       267       241       1,015  

Interest credited

     145       153       158       159       164       634  

Acquisition and operating expenses, net of deferrals

     34       31       36       39       33       139  

Amortization of deferred acquisition costs and intangibles

     45       52       45       40       36       173  

Interest expense

     1       1       2       1       1       5  
                                                  

Total benefits and expenses

     457       460       525       506       475       1,966  
                                                  

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     56       49       48       31       67       195  
 

Provision for income taxes

     16       3       13       11       23       50  
                                                  

SEGMENT NET INCOME FROM CONTINUING OPERATIONS

     40       46       35       20       44       145  

ADJUSTMENT TO SEGMENT NET INCOME FROM CONTINUING OPERATIONS:

                     

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

     6       3       4       18       5       30  
                                                  

SEGMENT NET OPERATING INCOME

   $ 46     $ 49     $ 39     $ 38     $ 49     $ 175  
                                                  
                                                  

Effective tax rate (operating income)

     29.6 %     7.8 %     27.6 %     34.4 %     34.8 %     27.3 %

 

23


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Segment Net Income and Segment Net Operating Income and Sales—Retirement Income—Fee-Based

(amounts in millions)

 

      2007      2006  
      Q1      Q4     Q3     Q2     Q1     Total  

REVENUES:

                      

Premiums

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

Net investment income

     4        5       5       5       4       19  

Net investment gains (losses)

     —          1       (1 )     —         —         —    

Policy fees and other income

     38        36       33       31       30       130  
                                                   

Total revenues

     42        42       37       36       34       149  
                                                   

BENEFITS AND EXPENSES:

                      

Benefits and other changes in policy reserves

     4        3       3       3       1       10  

Interest credited

     4        3       3       4       4       14  

Acquisition and operating expenses, net of deferrals

     10        6       9       10       6       31  

Amortization of deferred acquisition costs and intangibles

     7        6       6       6       5       23  

Interest expense

     —          —         —         —         —         —    
                                                   

Total benefits and expenses

     25        18       21       23       16       78  
                                                   

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     17        24       16       13       18       71  

Provision for income taxes

     2        5       1       4       5       15  
                                                   

SEGMENT NET INCOME FROM CONTINUING OPERATIONS

     15        19       15       9       13       56  

ADJUSTMENT TO SEGMENT NET INCOME FROM CONTINUING OPERATIONS:

                      

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

     —          (1 )     1       —         —         —    
                                                   

SEGMENT NET OPERATING INCOME

   $ 15      $ 18     $ 16     $ 9     $ 13     $ 56  
                                                   
                                                   

Effective tax rate (operating income)

     10.9 %      20.8 %     7.7 %     27.7 %     29.7 %     21.2 %

SALES:

               

Sales by Product:

               

Income Distribution Series(1)

   $ 409      $ 400     $ 327     $ 307     $ 264     $ 1,298  

Traditional Variable Annuities

     134        130       111       140       138       519  

Variable Life

     1        3       3       1       4       11  
                                                   

Total Sales

   $ 544      $ 533     $ 441     $ 448     $ 406     $ 1,828  
                                                   

Sales by Distribution Channel:

                      

Financial Intermediaries

   $ 513      $ 498     $ 408     $ 420     $ 375     $ 1,701  

Independent Producers

     12        10       12       9       9       40  

Dedicated Sales Specialists

     19        25       21       19       22       87  
                                                   

Total Sales

   $ 544      $ 533     $ 441     $ 448     $ 406     $ 1,828  
                                                   
                                                   

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

 

(1)

The Income Distribution Series products are comprised of our retirement income deferred and immediate variable annuity products, including those variable annuity products with rider options that provide similar income features. These products do not include fixed single premium immediate or deferred annuities, which also may serve income distribution needs.

 

24


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Assets Under Management—Retirement Income—Fee-Based

(amounts in millions)

 

      2007      2006  
      Q1      Q4     Q3     Q2     Q1     Total  

Income Distribution Series(1)

                      

Account value, net of reinsurance, beginning of period

   $ 2,402      $ 1,929     $ 1,555     $ 1,235     $ 911     $ 911  

Deposits

     421        411       334       350       281       1,376  

Interest credited and investment performance

     50        105       68       (5 )     59       227  

Surrenders, benefits and product charges

     (60 )      (43 )     (28 )     (25 )     (16 )     (112 )
                                                   

Account value, net of reinsurance, end of period

     2,813        2,402       1,929       1,555       1,235       2,402  
                                                   

Traditional Variable Annuities

                      

Account value, net of reinsurance, beginning of period

     1,780        1,585       1,458       1,360       1,182       1,182  

Deposits

     130        126       105       147       132       510  

Interest credited and investment performance

     36        104       54       (19 )     78       217  

Surrenders, benefits and product charges

     (41 )      (35 )     (32 )     (30 )     (32 )     (129 )
                                                   

Account value, net of reinsurance, end of period

     1,905        1,780       1,585       1,458       1,360       1,780  
                                                   

Variable Life Insurance

                      

Account value, beginning of the period

     391        371       367       377       363       363  

Deposits

     5        7       7       7       9       30  

Interest credited and investment performance

     12        23       10       (5 )     18       46  

Surrenders, benefits and product charges

     (12 )      (10 )     (13 )     (12 )     (13 )     (48 )
                                                   

Account value, end of period

     396        391       371       367       377       391  
                                                   

Total Retirement Income—Fee-Based

   $ 5,114      $ 4,573     $ 3,885     $ 3,380     $ 2,972     $ 4,573  
                                                   
                                                   

(1)

The Income Distribution Series products are comprised of our retirement income deferred and immediate variable annuity products, including those variable annuity products with rider options that provide similar income features. These products do not include fixed single premium immediate or deferred annuities, which also may serve income distribution needs.

 

25


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Segment Net Income and Segment Net Operating Income and Sales—Retirement Income—Spread-Based

(amounts in millions)

 

     2007      2006  
     Q1      Q4     Q3     Q2     Q1     Total  

REVENUES:

                     

Premiums

  $ 154      $ 146     $ 210     $ 200     $ 180     $ 736  

Net investment income

    320        325       326       336       329       1,316  

Net investment gains (losses)

    (9 )      (8 )     (6 )     (42 )     (7 )     (63 )

Policy fees and other income

    6        4       6       7       6       23  
                                                  

Total revenues

    471        467       536       501       508       2,012  
                                                  

BENEFITS AND EXPENSES:

                     

Benefits and other changes in policy reserves

    228        220       281       264       240       1,005  

Interest credited

    141        150       155       155       160       620  

Acquisition and operating expenses, net of deferrals

    24        25       27       29       27       108  

Amortization of deferred acquisition costs and intangibles

    38        46       39       34       31       150  

Interest expense

    1        1       2       1       1       5  
                                                  

Total benefits and expenses

    432        442       504       483       459       1,888  
                                                  

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

    39        25       32       18       49       124  

Provision (benefit) for income taxes

    14        (2 )     12       7       18       35  
                                                  

SEGMENT NET INCOME FROM CONTINUING OPERATIONS

    25        27       20       11       31       89  

ADJUSTMENT TO SEGMENT NET INCOME FROM CONTINUING OPERATIONS:

                     

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

    6        4       3       18       5       30  
                                                  

SEGMENT NET OPERATING INCOME

  $ 31      $ 31     $ 23     $ 29     $ 36     $ 119  
                                                  
                                                  

Effective tax rate (operating income)

    36.2 %      -1.3 %     37.3 %     36.5 %     36.4 %     29.9 %

SALES:

              

Sales by Product:

              

Structured Settlements

  $ 47      $ 10     $ 37     $ 43     $ 47     $ 137  

Single Premium Immediate Annuities

    200        228       250       215       200       893  

Fixed Annuities

    167        202       360       261       189       1,012  
                                                  

Total Sales

  $ 414      $ 440     $ 647     $ 519     $ 436     $ 2,042  
                                                  

Sales by Distribution Channel:

                     

Financial Intermediaries

  $ 275      $ 322     $ 517     $ 409     $ 323     $ 1,571  

Independent Producers

    131        108       112       106       107       433  

Dedicated Sales Specialists

    8        10       18       4       6       38  
                                                  

Total Sales

  $ 414      $ 440     $ 647     $ 519     $ 436     $ 2,042  
                                                  
                                                  

PREMIUMS:

              

Premiums by Product:

              

Single Premium Immediate Annuities

  $ 111      $ 137     $ 178     $ 160     $ 129     $ 604  

Structured Settlements

    43        9       32       40       51       132  
                                                  

Total Premiums

  $ 154      $ 146     $ 210     $ 200     $ 180     $ 736  
                                                  
                                                  

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.

 

26


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Assets Under Management—Retirement Income—Spread-Based

(amounts in millions)

 

     2007      2006  
     Q1      Q4     Q3     Q2     Q1     Total  

Fixed Annuities

                     

Account value, net of reinsurance, beginning of period

  $ 13,972      $ 14,449     $ 14,835     $ 15,241     $ 15,547     $ 15,547  

Deposits

    207        245       424       326       267       1,262  

Interest credited

    124        133       137       139       145       554  

Surrenders, benefits and product charges

    (781 )      (855 )     (947 )     (871 )     (718 )     (3,391 )
                                                  

Account value, net of reinsurance, end of period

    13,522        13,972       14,449       14,835       15,241       13,972  
                                                  

Single Premium Immediate Annuities

                     

Account value, net of reinsurance, beginning of period

    6,174        6,064       5,888       5,772       5,680       5,680  

Premiums and deposits

    237        269       294       290       250       1,103  

Interest credited

    84        83       82       78       80       323  

Surrenders, benefits and product charges

    (234 )      (242 )     (200 )     (252 )     (238 )     (932 )
                                                  

Account value, net of reinsurance, end of period

    6,261        6,174       6,064       5,888       5,772       6,174  
                                                  

Structured Settlements

                     

Account value, net of reinsurance, beginning of period

    1,011        1,003       966       925       871       871  

Premiums and deposits

    47        9       37       45       58       149  

Interest credited

    14        14       14       13       12       53  

Surrenders, benefits and product charges

    (14 )      (15 )     (14 )     (17 )     (16 )     (62 )
                                                  

Account value, net of reinsurance, end of period

    1,058        1,011       1,003       966       925       1,011  
                                                  

Total Retirement Income—Spread-Based, net of reinsurance

  $ 20,841      $ 21,157     $ 21,516     $ 21,689     $ 21,938     $ 21,157  
                                                  
                                                  

 

27


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Segment Net Income and Segment Net Operating Income and Sales—Institutional

(amounts in millions)

 

     2007     2006  
     Q1     Q4     Q3     Q2     Q1     Total  

REVENUES:

                    

Premiums

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

Net investment income

    166       157       144       145       132       578  

Net investment gains (losses)

    (5 )     —         (1 )     (3 )     (2 )     (6 )

Policy fees and other income

    —         —         —         —         —         —    
                                                 

Total revenues

    161       157       143       142       130       572  
                                                 

BENEFITS AND EXPENSES:

                    

Benefits and other changes in policy reserves

    —         —         —         —         —         —    

Interest credited

    141       139       128       123       114       504  

Acquisition and operating expenses, net of deferrals

    3       2       2       2       2       8  

Amortization of deferred acquisition costs and intangibles

    —         —         1       —         —         1  

Interest expense

    —         —         —         —         —         —    
                                                 

Total benefits and expenses

    144       141       131       125       116       513  
                                                 

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

    17       16       12       17       14       59  

Provision for income taxes

    6       6       4       6       5       21  
                                                 

SEGMENT NET INCOME FROM CONTINUING OPERATIONS

    11       10       8       11       9       38  

ADJUSTMENT TO SEGMENT NET INCOME FROM CONTINUING OPERATIONS:

                    

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

    3       —         1       2       1       4  
                                                 

SEGMENT NET OPERATING INCOME

  $ 14     $ 10     $ 9     $ 13     $ 10     $ 42  
                                                 
                                                 

Effective tax rate (operating income)

    35.5 %     35.6 %     35.4 %     35.4 %     35.4 %     35.5 %

SALES:

             

Sales by Product:

             

Guaranteed Investment Contracts (GICs)

  $ 22     $ 85     $ 146     $ 29     $ 57     $ 317  

Funding Agreements Backing Notes

    600       800       450       300       700       2,250  

Funding Agreements

    —         —         —         50       —         50  
                                                 

Total Sales

  $ 622     $ 885     $ 596     $ 379     $ 757     $ 2,617  
                                                 
                                                 

Sales from our 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.

 

28


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Assets Under Management—Institutional

(amounts in millions)

 

     2007      2006  
     Q1      Q4     Q3     Q2     Q1     Total  

GICs, Funding Agreements and Funding Agreements Backing Notes

                     

Account value, net of reinsurance, beginning of period

  $ 10,483      $ 9,812     $ 9,886     $ 9,766     $ 9,777     $ 9,777  

Deposits

    722        971       676       498       980       3,125  

Interest credited

    141        139       128       123       114       504  

Surrenders and benefits

    (629 )      (439 )     (878 )     (501 )     (1,105 )     (2,923 )

Foreign currency translation

    7        —         —         —         —         —    
                                                  

Account value, end of period

  $ 10,724      $ 10,483     $ 9,812     $ 9,886     $ 9,766     $ 10,483  
                                                  
                       

By Contract Type:

                   

Guaranteed Investment Contracts

  $ 2,073      $ 2,241     $ 2,373     $ 2,619     $ 2,849    

Funding agreements backing notes

    5,953        5,544       4,741       4,569       4,270    

Funding agreements

    2,698        2,698       2,698       2,698       2,647    
                                            
    $ 10,724      $ 10,483     $ 9,812     $ 9,886     $ 9,766    
                                            

Funding agreements by liquidity provisions:

                   

90 day

  $ 425      $ 425     $ 425     $ 425     $ 425    

180 day

    450        450       450       450       450    

No put

    1,235        1,235       1,235       1,485       1,485    

13 month rolling maturity

    575        575       575       325       275    

Accrued interest

    13        13       13       13       12    
                                            

Total funding agreements

  $ 2,698      $ 2,698     $ 2,698     $ 2,698     $ 2,647    
                                            
                                            

 

29


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Segment Net Income and Segment Net Operating Income and Sales—Life Insurance

(amounts in millions)

 

      2007      2006  
      Q1      Q4     Q3     Q2     Q1     Total  

REVENUES:

                      

Premiums

   $ 235      $ 225     $ 228     $ 226     $ 221     $ 900  

Net investment income

     157        156       146       146       138       586  

Net investment gains (losses)

     —          —         (3 )     (1 )     —         (4 )

Policy fees and other income

     93        82       74       86       83       325  
                                                   

Total revenues

     485        463       445       457       442       1,807  
                                                   

BENEFITS AND EXPENSES:

                      

Benefits and other changes in policy reserves

     196        178       183       171       183       715  

Interest credited

     60        59       59       60       60       238  

Acquisition and operating expenses, net of deferrals

     31        32       39       35       36       142  

Amortization of deferred acquisition costs and intangibles

     32        33       7       38       21       99  

Interest expense

     42        42       34       34       25       135  
                                                   

Total benefits and expenses

     361        344       322       338       325       1,329  
                                                   

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     124        119       123       119       117       478  

Provision for income taxes

     46        36       45       43       43       167  
                                                   

SEGMENT NET INCOME FROM CONTINUING OPERATIONS

     78        83       78       76       74       311  

ADJUSTMENT TO SEGMENT NET INCOME FROM CONTINUING OPERATIONS:

                      

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

     —          —         1       1       —         2  
                                                   

SEGMENT NET OPERATING INCOME

   $ 78      $ 83     $ 79     $ 77     $ 74     $ 313  
                                                   
                                                   

Effective tax rate (operating income)

     37.1 %      29.7 %     36.6 %     36.6 %     36.5 %     34.9 %

SALES:

               

Sales by Product:

                        

Term Life

   $ 29      $ 33     $ 36     $ 37     $ 34     $ 140  

Universal Life:

                      

Annualized first-year deposits

     11        13       9       10       9       41  

Excess deposits(1)

     48        33       24       22       19       98  
                                                   

Total Universal Life

     59        46       33       32       28       139  
                                                   

Total Sales

   $ 88      $ 79     $ 69     $ 69     $ 62     $ 279  
                                                   

Sales by Distribution Channel:

                      

Financial Intermediaries

   $ 1      $ 1     $ 1     $ 1     $ 1     $ 4  

Independent Producers

     87        78       68       68       61       275  
                                                   

Total Sales

   $ 88      $ 79     $ 69     $ 69     $ 62     $ 279  
                                                   
                                                   

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.

 

(1)

Excess deposits reported in the fourth quarter of 2006 include $8 million of sales from the second and third quarters of 2006 not previously recognized.

 

30


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Life Insurance In-force

(amounts in millions)

 

      2007    2006
      Q1    Q4    Q3    Q2    Q1

Term life insurance

                     

Life insurance in-force, net of reinsurance

   $ 439,380    $ 429,803    $ 422,163    $ 409,103    $ 393,812

Life insurance in-force before reinsurance

   $ 602,725    $ 595,045    $ 583,780    $ 571,014    $ 554,472
 

Universal and whole life insurance

                     

Life insurance in-force, net of reinsurance

   $ 40,912    $ 40,669    $ 41,595    $ 40,850    $ 40,890

Life insurance in-force before reinsurance

   $ 49,834    $ 49,572    $ 49,337    $ 49,207    $ 49,335
 

Total life insurance

                     

Life insurance in-force, net of reinsurance

   $ 480,292    $ 470,472    $ 463,758    $ 449,953    $ 434,702

Life insurance in-force before reinsurance

   $ 652,559    $ 644,617    $ 633,117    $ 620,221    $ 603,807

 

31


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Segment Net Income and Segment Net Operating Income and Sales—Long-Term Care Insurance

(amounts in millions)

 

      2007      2006  
      Q1      Q4     Q3     Q2     Q1     Total  

REVENUES:

                      

Premiums

   $ 485      $ 490     $ 485     $ 458     $ 425     $ 1,858  

Net investment income

     196        196       182       184       174       736  

Net investment gains (losses)

     (5 )      1       5       (1 )     4       9  

Policy fees and other income

     7        3       7       8       5       23  
                                                   

Total revenues

     683        690       679       649       608       2,626  
                                                   

BENEFITS AND EXPENSES:

                      

Benefits and other changes in policy reserves

     480        492       468       435       396       1,791  

Interest credited

     39        37       37       36       34       144  

Acquisition and operating expenses, net of deferrals

     84        89       88       93       81       351  

Amortization of deferred acquisition costs and intangibles

     27        18       23       28       26       95  

Interest expense

     —          —         —         —         —         —    
                                                   

Total benefits and expenses

     630        636       616       592       537       2,381  
                                                   

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     53        54       63       57       71       245  

Provision for income taxes

     19        18       22       21       25       86  
                                                   

SEGMENT NET INCOME FROM CONTINUING OPERATIONS

     34        36       41       36       46       159  
 

ADJUSTMENT TO SEGMENT NET INCOME FROM CONTINUING OPERATIONS:

                      

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

     3        (1 )     (3 )     1       (3 )     (6 )
                                                   

SEGMENT NET OPERATING INCOME

   $ 37      $ 35     $ 38     $ 37     $ 43     $ 153  
                                                   
                                                   

Effective tax rate (operating income)

     35.9 %      32.8 %     35.8 %     35.8 %     35.8 %     35.1 %

SALES:

               

Sales by Distribution Channel:

               

Financial Intermediaries

   $ 7      $ 7     $ 6     $ 5     $ 6     $ 24  

Independent Producers

     24        24       27       22       21       94  

Dedicated Sales Specialists

     10        11       11       14       14       50  
                                                   

Total Individual Long-Term Care

     41        42       44       41       41       168  
 

Group Long-Term Care

     —          —         —         1       —         1  

Medicare Supplement and Other A&H

     7        7       7       9       7       30  

Linked Benefit

     4        3       —         —         —         3  
                                                   

Total Sales

   $ 52      $ 52     $ 51     $ 51     $ 48     $ 202  
                                                   
                                                   

LOSS RATIOS:

               

Total Long-Term Care

               

Earned Premium

   $ 419      $ 423     $ 418     $ 407     $ 399     $ 1,647  

Loss Ratio(1)

     65.4 %      71.5 %     65.6 %     64.4 %     59.6 %     65.4 %

Gross Benefits Ratio(2)

     101.0 %      106.3 %     99.1 %     98.0 %     92.7 %     99.1 %

Medicare Supplement and A&H(3)

                      

Earned Premium

   $ 67      $ 69     $ 69     $ 53     $ 26     $ 217  

Loss Ratio(1)

     80.7 %      60.7 %     76.5 %     67.6 %     94.6 %     71.4 %

Sales from our long-term care products represent annualized first-year premiums and deposits. 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.

 

(1)

We calculate the loss ratio for our products by dividing benefits and other changes in policy reserves less tabular interest on reserves less loss adjustment expenses by net earned premiums.

 

(2)

We calculate the gross benefits ratio by dividing the benefits and other changes in policy reserves by net earned premium.

 

(3)

The Medicare Supplement and A&H earned premium and loss ratio does not include the linked benefit product.

 

32


International

 

33


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Segment Net Income and Segment Net Operating Income—International

(amounts in millions)

 

      2007     2006  
      Q1     Q4     Q3     Q2     Q1     Total  

REVENUES:

                     

Premiums

   $ 493     $ 446     $ 454     $ 473     $ 422     $ 1,795  

Net investment income

     88       101       75       71       67       314  

Net investment gains (losses)

     —         1       (1 )     —         1       1  

Policy fees and other income

     6       3       10       12       9       34  
                                                  

Total revenues

     587       551       538       556       499       2,144  
                                                  

BENEFITS AND EXPENSES:

                     

Benefits and other changes in policy reserves

     107       103       81       80       75       339  

Acquisition and operating expenses, net of deferrals

     224       188       228       226       208       850  

Amortization of deferred acquisition costs and intangibles

     87       55       73       83       72       283  

Interest expense

     4       6       —         —         —         6  
                                                  

Total benefits and expenses

     422       352       382       389       355       1,478  
                                                  

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     165       199       156       167       144       666  

Provision for income taxes

     42       58       49       48       42       197  
                                                  

SEGMENT NET INCOME FROM CONTINUING OPERATIONS

     123       141       107       119       102       469  

ADJUSTMENT TO SEGMENT NET INCOME FROM CONTINUING OPERATIONS:

                     

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

     —         (1 )     —         —         —         (1 )
                                                  

SEGMENT NET OPERATING INCOME(1)

   $ 123     $ 140     $ 107     $ 119     $ 102     $ 468  
                                                  
                                                  

Effective tax rate (operating income)

     25.3 %     29.1 %     30.9 %     29.1 %     29.0 %     29.5 %

(1)

Segment net operating income adjusted for foreign exchange for our International segment was $119 million for the three months ended March 31, 2007.

 

34


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Segment Net Income and Segment Net Operating Income and Sales—International Mortgage Insurance—Canada

(amounts in millions)

 

      2007     2006  
      Q1     Q4(3)     Q3     Q2     Q1     Total  

REVENUES:

                     

Premiums

   $ 83     $ 88     $ 78     $ 72     $ 68     $ 306  

Net investment income

     29       30       27       26       25       108  

Net investment gains (losses)

     —         2       —         —         1       3  

Policy fees and other income

     —         —         3       5       3       11  
                                                  

Total revenues

     112       120       108       103       97       428  
                                                  

BENEFITS AND EXPENSES:

                     

Benefits and other changes in policy reserves

     13       14       11       5       11       41  

Acquisition and operating expenses, net of deferrals

     13       15       16       19       16       66  

Amortization of deferred acquisition costs and intangibles

     4       3       3       3       2       11  

Interest Expense

     1       —         —         —         —         —    
                                                  

Total benefits and expenses

     31       32       30       27       29       118  
                                                  

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     81       88       78       76       68       310  

Provision for income taxes

     26       30       24       25       22       101  
                                                  

SEGMENT NET INCOME FROM CONTINUING OPERATIONS

     55       58       54       51       46       209  

ADJUSTMENT TO SEGMENT NET INCOME FROM CONTINUING OPERATIONS:

                     

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

     —         (1 )     —         —         —         (1 )
                                                  

SEGMENT NET OPERATING INCOME(1)

   $ 55     $ 57     $ 54     $ 51     $ 46     $ 208  
                                                  
                                                  

Effective tax rate (operating income)

     32.6 %     34.4 %     30.4 %     32.3 %     32.3 %     32.4 %

SALES:

              

New Insurance Written (NIW):

              

Flow

   $ 6,000     $ 6,500     $ 8,100     $ 6,000     $ 4,000     $ 24,600  

Bulk

     400       300       2,700       200       —         3,200  
                                                  

Total International Mortgage Insurance Canada NIW(2)

   $ 6,400     $ 6,800     $ 10,800     $ 6,200     $ 4,000     $ 27,800  
                                                  
                                                  

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.

 

(1)

Segment net operating income for our Canada platform adjusted for foreign exchange was $56 million for the three months ended March 31, 2007.

 

(2)

New insurance written for our Canada platform adjusted for foreign exchange was $6,500 for the three months ended March 31, 2007.

 

(3)

Included in the results for the fourth quarter of 2006 are adjustments related to the premium recognition curve and loss factor update. These adjustments favorably impacted segment net operating income by $5 million in the fourth quarter of 2006. For further details, see our fourth quarter 2006 financial supplement on our website at www.genworth.com.

 

35


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Segment Net Income and Segment Net Operating Income and Sales—International Mortgage Insurance—Australia

(amounts in millions)

 

      2007     2006  
      Q1     Q4 (3)     Q3     Q2     Q1     Total  

REVENUES:

                     

Premiums

   $ 68     $ 110     $ 48     $ 57     $ 51     $ 266  

Net investment income

     22       22       20       17       16       75  

Net investment gains (losses)

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

Policy fees and other income

     1       —         —         —         —         —    
                                                  

Total revenues

     91       131       67       74       67       339  
                                                  

BENEFITS AND EXPENSES:

                     

Benefits and other changes in policy reserves

     31       52       18       17       14       101  

Acquisition and operating expenses, net of deferrals

     12       11       8       9       9       37  

Amortization of deferred acquisition costs and intangibles

     5       5       4       2       4       15  

Interest Expense

     —         —         —         —         —         —    
                                                  

Total benefits and expenses

     48       68       30       28       27       153  
                                                  

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     43       63       37       46       40       186  

Provision for income taxes

     7       17       11       11       10       49  
                                                  

SEGMENT NET INCOME FROM CONTINUING OPERATIONS

     36       46       26       35       30       137  

ADJUSTMENT TO SEGMENT NET INCOME FROM CONTINUING OPERATIONS:

                     

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

     —         —         —         —         —         —    
                                                  

SEGMENT NET OPERATING INCOME(1)

   $ 36     $ 46     $ 26     $ 35     $ 30     $ 137  
                                                  
                                                  

Effective tax rate (operating income)

     15.5 %     26.8 %     27.0 %     26.0 %     26.1 %     26.5 %

SALES:

              

New Insurance Written (NIW):

              

Flow

   $ 10,800     $ 9,800     $ 10,700     $ 9,400     $ 11,900     $ 41,800  

Bulk

     2,300       800       1,800       200       500       3,300  
                                                  

Total International Mortgage Insurance Australia NIW(2)

   $ 13,100     $ 10,600     $ 12,500     $ 9,600     $ 12,400     $ 45,100  
                                                  
                                                  

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.

 

(1)

Segment net operating income for our Australia platform adjusted for foreign exchange was $34 million for the three months ended March 31, 2007.

 

(2)

New insurance written for our Australia platform adjusted for foreign exchange was $12,400 for the three months ended March 31, 2007.

 

(3)

Included in the results for the fourth quarter of 2006 are adjustments related to the premium recognition curve and loss factor update. These adjustments favorably impacted segment net operating income by $10 million in the fourth quarter of 2006. For further details, see our fourth quarter 2006 financial supplement on our website at www.genworth.com.

 

36


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Segment Net Income and Segment Net Operating Income and Sales—Other International Mortgage Insurance

(amounts in millions)

 

      2007     2006  
      Q1     Q4     Q3     Q2     Q1     Total  

REVENUES:

                     

Premiums

   $ 22     $ 22     $ 18     $ 22     $ 12     $ 74  

Net investment income

     5       4       5       5       4       18  

Net investment gains (losses)

     —         —         —         —         —         —    

Policy fees and other income

     —         1       —         —         —         1  
                                                  

Total revenues

     27       27       23       27       16       93  
                                                  

BENEFITS AND EXPENSES:

                     

Benefits and other changes in policy reserves

     5       1       3       4       2       10  

Acquisition and operating expenses, net of deferrals

     18       20       17       16       11       64  

Amortization of deferred acquisition costs and intangibles

     1       2       1       1       1       5  

Interest Expense

     —         —         —         —         —         —    
                                                  

Total benefits and expenses

     24       23       21       21       14       79  
                                                  

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     3       4       2       6       2       14  

Provision for income taxes

     —         —         1       2       1       4  

SEGMENT NET INCOME FROM CONTINUING OPERATIONS

     3       4       1       4       1       10  

ADJUSTMENT TO SEGMENT NET INCOME FROM CONTINUING OPERATIONS:

                     

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

     —         —         —         —         —         —    
                                                  

SEGMENT NET OPERATING INCOME(1)

   $ 3     $ 4     $ 1     $ 4     $ 1     $ 10  
                                                  
                                                  

Effective tax rate (operating income)

     -1.6 %     15.5 %     -10.7 %     25.5 %     25.8 %     29.2 %

SALES:

              

New Insurance Written (NIW):

              

Flow

   $ 4,900     $ 5,400     $ 4,600     $ 4,600     $ 3,800     $ 18,400  

Bulk

     3,800       2,800       800       1,300       200       5,100  
                                                  

Total Other International NIW(2)

   $ 8,700     $ 8,200     $ 5,400     $ 5,900     $ 4,000     $ 23,500  
                                                  
                                                  

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.

 

(1)

Segment net operating income for our Other International platform adjusted for foreign exchange was $2 million for the three months ended March 31, 2007.

 

(2)

New insurance written for our Other International platform adjusted for foreign exchange was $8,300 for the three months ended March 31, 2007.

 

37


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Selected Key Performance Measures—International Mortgage Insurance

(amounts in millions)

 

      2007      2006  
      Q1      Q4     Q3     Q2     Q1     Total  

Net Premiums Written

                      

Canada

   $ 137      $ 145     $ 178     $ 123     $ 79     $ 525  

Australia

     102        75       91       74       93       333  

Other International

     83        62       42       47       32       183  
                                                   

Total International Net Premiums Written

   $ 322      $ 282     $ 311     $ 244     $ 204     $ 1,041  
                                                   
 

Loss Ratio(1)

                      

Canada

     16 %      16 %     14 %     7 %     16 %     13 %

Australia

     46 %      47 %     37 %     30 %     29 %     38 %

Other International

     24 %      6 %     18 %     15 %     14 %     13 %

Total International Loss Ratio

     29 %      30 %     22 %     17 %     21 %     24 %
 

Expense Ratio(2)

                      

Canada

     12 %      13 %     11 %     18 %     23 %     15 %

Australia

     17 %      22 %     13 %     15 %     14 %     16 %

Other International

     23 %      34 %     43 %     34 %     41 %     37 %

Total International Expense Ratio

     16 %      20 %     16 %     20 %     21 %     19 %
 

Primary Insurance In-force

                      

Canada

   $ 119,700      $ 113,200     $ 112,200     $ 101,900     $ 92,800      

Australia

     185,200        174,100       167,300       133,100       133,600      

Other International

     56,000        44,700       40,100       36,600       30,400      
                                               

Total International Primary Insurance In-force

   $ 360,900      $ 332,000     $ 319,600     $ 271,600     $ 256,800      
                                               
 

Total Risk In-force(3)

                      

Canada

   $ 41,900      $ 39,600     $ 39,300     $ 35,700     $ 32,500      

Australia

     64,800        61,000       58,500       46,600       46,700      

Other International

     6,900        5,700       4,900       4,300       3,600      
                                               

Total International Risk In-force

   $ 113,600      $ 106,300     $ 102,700     $ 86,600     $ 82,800      
                                               
                                               

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

 

(1)

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

 

(2)

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.

 

(3)

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. This factor was 35% for all periods presented.

 

38


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Loans in Default and Claims—International Mortgage Insurance

 

Primary Insurance

   March 31,
2007
    December 31,
2006
 

Insured loans in-force

   2,600,997     2,437,746  

Loans in default

   9,895     8,870  

Percentage of loans in default (default rate)

   0.4 %   0.4 %

Flow loans in-force

   2,279,741     2,156,641  

Flow loans in default

   9,455     8,599  

Percentage of flow loans in default (default rate)

   0.4 %   0.4 %

Bulk loans in-force

   321,256     281,105  

Bulk loans in default

   440     271  

Percentage of bulk loans in default (default rate)

   0.1 %   0.1 %

 

39


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

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

(amounts in millions)

 

      2007     2006  
      Q1     Q4(1)     Q3     Q2     Q1     Total  

REVENUES:

                     

Premiums

   $ 320     $ 226     $ 310     $ 322     $ 291     $ 1,149  

Net investment income

     32       45       23       23       22       113  

Net investment gains (losses)

     —         —         —         —         —         —    

Policy fees and other income

     5       2       7       7       6       22  
                                                  

Total revenues

     357       273       340       352       319       1,284  
                                                  

BENEFITS AND EXPENSES:

                     

Benefits and other changes in policy reserves

     58       36       49       54       48       187  

Acquisition and operating expenses, net of deferrals

     181       142       187       182       172       683  

Amortization of deferred acquisition costs and intangibles

     77       45       65       77       65       252  

Interest expense

     3       6       —         —         —         6  
                                                  

Total benefits and expenses

     319       229       301       313       285       1,128  
                                                  

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     38       44       39       39       34       156  

Provision for income taxes

     9       11       13       10       9       43  
                                                  

SEGMENT NET INCOME FROM CONTINUING OPERATIONS

     29       33       26       29       25       113  

ADJUSTMENT TO SEGMENT NET INCOME FROM CONTINUING OPERATIONS:

                     

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

     —         —         —         —         —         —    
                                                  

SEGMENT NET OPERATING INCOME(2)

   $ 29     $ 33     $ 26     $ 29     $ 25     $ 113  
                                                  
                                                  

Effective tax rate (operating income)

     22.8 %     23.8 %     32.9 %     27.2 %     25.7 %     27.4 %

SALES:

              

Payment Protection:

              

Traditional indemnity premiums

   $ 364     $ 203     $ 424     $ 454     $ 389     $ 1,470  

Premium equivalents for administrative services only business

     50       51       31       14       30       126  

Reinsurance premiums assumed accounted for under the deposit method

     172       437       97       32       —         566  
                                                  

Total Payment Protection(3)

     586       691       552       500       419       2,162  

Mexico operations

     19       18       18       15       16       67  
                                                  

Total Sales

   $ 605     $ 709     $ 570     $ 515     $ 435     $ 2,229  
                                                  
                                                  

Sales from our payment protection insurance business represent total written premiums, deposits and premium equivalents for third-party administered business, gross of ceded reinsurance and cancellations, during the specified period.

Sales from our Mexico operations represent net written premium, net of cancellations.

 

(1)

During the fourth quarter of 2006, approximately $73 million of premiums related to certain reinsurance assumed business were reclassified from reinsurance accounting to the deposit method of accounting. This change in accounting also resulted in reclassifications in the investment income, benefits and other changes in policyholder reserves and interest expense captions on the income statement, but had no impact on segment net income or segment net operating income in the fourth quarter of 2006. The fourth quarter 2006 reclassification to the deposit method of accounting presented above was a cumulative catch-up for the previous three quarters of 2006. To better facilitate the analysis of PPI’s sales, revenue and expense trends, page 41 presents all 2006 quarterly income statements and sales data on a basis consistent with these reinsurance assumed arrangements being accounted for under the deposit method of accounting. This change in accounting had no impact on segment net income from continuing operations or segment net operating income for all periods presented.

 

(2)

Segment net operating income adjusted for foreign exchange for our payment protection insurance business was $27 million for the three months ended March 31, 2007.

 

(3)

Sales adjusted for foreign exchange for our payment protection insurance business was $539 million for the three months ended March 31, 2007.

 

40


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

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

(Supplemental Analysis—Prior Quarters Adjusted for Change in Accounting)

(amounts in millions)

 

      2007      2006  
      Q1      Q4     Q3     Q2     Q1     Total  

REVENUES:

                      

Premiums

   $ 320      $ 277     $ 287     $ 306     $ 279     $ 1,149  

Net investment income

     32        29       31       28       25       113  

Net investment gains (losses)

     —          —         —         —         —         —    

Policy fees and other income

     5        8       3       5       6       22  
                                                   

Total revenues

     357        314       321       339       310       1,284  
                                                   

BENEFITS AND EXPENSES:

                      

Benefits and other changes in policy reserves

     58        54       41       48       44       187  

Acquisition and operating expenses, net of deferrals

     181        151       183       179       170       683  

Amortization of deferred acquisition costs and intangibles

     77        64       56       72       60       252  

Interest expense

     3        1       2       1       2       6  
                                                   

Total benefits and expenses

     319        270       282       300       276       1,128  
                                                   

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     38        44       39       39       34       156  

Provision for income taxes

     9        11       13       10       9       43  
                                                   

SEGMENT NET INCOME FROM CONTINUING OPERATIONS

     29        33       26       29       25       113  

ADJUSTMENT TO SEGMENT NET INCOME FROM CONTINUING OPERATIONS:

                      

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

     —          —         —         —         —         —    
                                                   

SEGMENT NET OPERATING INCOME

   $ 29      $ 33     $ 26     $ 29     $ 25     $ 113  
                                                   
                                                   

Effective tax rate (operating income)

     22.8 %      23.8 %     32.9 %     27.2 %     25.7 %     27.4 %

SALES:

               

Payment Protection:

               

Traditional indemnity premiums

   $ 364      $ 476     $ 307     $ 369     $ 318     $ 1,470  

Premium equivalents for administrative services only business

     50        51       31       14       30       126  

Reinsurance premiums assumed accounted for under the deposit method

     172        164       214       117       71       566  
                                                   

Total Payment Protection

     586        691       552       500       419       2,162  

Mexico operations

     19        18       18       15       16       67  
                                                   

Total Sales

   $ 605      $ 709     $ 570     $ 515     $ 435     $ 2,229  
                                                   

PREMIUMS:

                      

Continuing business

   $ 305      $ 271     $ 265     $ 269     $ 254     $ 1,059  

Travel and runoff block

     15        6       22       37       25       90  
                                                   

Total Premiums

   $ 320      $ 277     $ 287     $ 306     $ 279     $ 1,149  
                                                   
                                                   

Supplemental Analysis for Change in Accounting:

During the fourth quarter of 2006, approximately $73 million of premiums related to certain reinsurance assumed business were reclassified from reinsurance accounting to the deposit method of accounting. This change in accounting also resulted in reclassifications in the investment income, benefits and other changes in policyholder reserves and interest expense captions on the income statement, but had no impact on segment net income or segment net operating income in the fourth quarter of 2006. The fourth quarter 2006 reclassification to the deposit method of accounting presented on page 40 was treated as a cumulative catch-up for the previous three quarters of 2006.

To better facilitate the analysis of PPI’s sales, revenue and expense trends, the above represents all 2006 quarterly income statements and sales data on a basis consistent with these reinsurance assumed arrangements being accounted for under the deposit method of accounting. This change in accounting had no impact on segment net income from continuing operations or segment net operating income for all periods presented.

 

41


U.S. Mortgage Insurance

 

42


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

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

(amounts in millions)

 

      2007     2006  
      Q1     Q4(1)     Q3     Q2     Q1     Total  

REVENUES:

                     

Premiums

   $ 137     $ 136     $ 118     $ 116     $ 116     $ 486  

Net investment income

     37       34       34       37       35       140  

Net investment gains (losses)

     —         4       1       1       —         6  

Policy fees and other income

     7       6       7       8       5       26  
                                                  

Total revenues

     181       180       160       162       156       658  
                                                  

BENEFITS AND EXPENSES:

                     

Benefits and other changes in policy reserves

     52       54       44       24       19       141  

Acquisition and operating expenses, net of deferrals

     32       32       37       34       33       136  

Amortization of deferred acquisition costs and intangibles

     8       6       9       7       8       30  
                                                  

Total benefits and expenses

     92       92       90       65       60       307  
                                                  

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     89       88       70       97       96       351  

Provision for income taxes

     24       24       17       24       24       89  
                                                  

SEGMENT NET INCOME FROM CONTINUING OPERATIONS

     65       64       53       73       72       262  

ADJUSTMENT TO SEGMENT NET INCOME FROM CONTINUING OPERATIONS:

                     

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

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

SEGMENT NET OPERATING INCOME

   $ 65     $ 62     $ 53     $ 72     $ 72     $ 259  
                                                  
                                                  

Effective tax rate (operating income)

     27.1 %     26.3 %     24.0 %     25.2 %     24.9 %     25.1 %

SALES:

              

New Insurance Written (NIW):

              

Flow

   $ 6,900     $ 7,300     $ 6,900     $ 6,700     $ 5,500     $ 26,400  

Bulk

     6,100       8,100       1,200       1,400       1,300       12,000  

Pool

     100       200       100       100       —         400  
                                                  

Total U.S. Mortgage NIW

   $ 13,100     $ 15,600     $ 8,200     $ 8,200     $ 6,800     $ 38,800  
                                                  
                                                  

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.

 

(1)

Included in the results for the fourth quarter of 2006 are adjustments related to the premium recognition curve and loss factor update. These adjustments favorably impacted segment net operating income by $5 million in the fourth quarter of 2006. For further details, see our fourth quarter 2006 financial supplement on our website at www.genworth.com.

 

43


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Selected Key Performance Measures—U.S. Mortgage Insurance

(amounts in millions)

 

      2007     2006  
      Q1     Q4     Q3     Q2     Q1     Total  

New Insurance Written

   $ 13,100     $ 15,600     $ 8,200     $ 8,200     $ 6,800     $ 38,800  

Net Premiums Written

   $ 140     $ 138     $ 121     $ 119     $ 115     $ 493  

New Risk Written

              

Flow

   $ 1,695     $ 1,776     $ 1,773     $ 1,697     $ 1,404     $ 6,650  

Bulk

     198       257       40       41       102       440  
                                                  

Total Primary

     1,893       2,033       1,813       1,738       1,506       7,090  

Pool

     3       9       3       2       2       16  
                                                  

Total New Risk Written

   $ 1,896     $ 2,042     $ 1,816     $ 1,740     $ 1,508     $ 7,106  
                                                  

Loss Ratio(1)

     38 %     40 %     37 %     21 %     16 %     29 %

Expense Ratio(2)

     29 %     28 %     37 %     35 %     36 %     34 %

Primary Insurance In-force

   $ 120,500     $ 113,400     $ 104,000     $ 102,000     $ 100,500      

Risk In-force

              

Flow

   $ 23,013     $ 22,484     $ 21,962     $ 21,555     $ 21,328      

Bulk

     978       783       534       498       460      
                                              

Total Primary

     23,991       23,267       22,496       22,053       21,788      

Pool

     436       452       468       494       516      
                                              

Total Risk In-force

   $ 24,427     $ 23,719     $ 22,964     $ 22,547     $ 22,304      
                                              
                                              

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

 

(1)

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

 

(2)

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. Prior quarter expense ratios have been restated as a result of a reclassification from acquisition and operating expenses, net of deferrals, to policy fees and other income.

 

44


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Selected Key Performance Measures—U.S. Mortgage Insurance

 

      2007      2006  
      Q1      Q4     Q3     Q2     Q1  

Risk In-force by Credit Quality

                    

Flow by FICO Scores >619 (%)

     91 %      91 %     91 %     92 %     92 %

Flow by FICO Scores 575-619

     7 %      7 %     7 %     6 %     6 %

Flow by FICO Scores <575

     2 %      2 %     2 %     2 %     2 %
 

Bulk by FICO Scores >619

     98 %      97 %     95 %     95 %     94 %

Bulk by FICO Scores 575-619

     1 %      2 %     3 %     3 %     4 %

Bulk by FICO Scores <575

     1 %      1 %     2 %     2 %     2 %

Primary A minus and sub-prime

     11.5 %      11.2 %     11.1 %     10.8 %     10.6 %
 

Primary Loans

                    

Primary total loans in-force

     800,110        778,311       744,867       740,091       740,562  

Primary total loans in default

     23,370        24,296       23,083       22,069       23,127  

Primary loans total default rate

     2.9 %      3.1 %     3.1 %     3.0 %     3.1 %
 

Flow loans in-force

     646,004        638,833       631,181       628,744       632,759  

Flow loans in default

     21,804        22,966       22,001       21,021       22,070  

Flow loans default rate

     3.4 %      3.6 %     3.5 %     3.3 %     3.5 %
 

Bulk loans in-force

     154,106        139,478       113,686       111,347       107,803  

Bulk loans in default

     1,566        1,330       1,082       1,048       1,057  

Bulk loans default rate

     1.0 %      1.0 %     1.0 %     0.9 %     1.0 %
 

A minus and sub-prime loans in-force

     79,405        75,234       72,678       70,595       69,066  

A minus and sub-prime loans in default

     6,875        7,258       6,773       6,185       6,064  

A minus and sub-prime loans default rate

     8.7 %      9.6 %     9.3 %     8.8 %     8.8 %
 

Pool Loans

                    

Insured loans in-force

     20,074        21,597       17,926       18,142       18,613  

Pool loans in default

     415        402       446       477       500  

Pool loans default rate

     2.1 %      1.9 %     2.5 %     2.6 %     2.7 %
 

Claims Paid (dollar amounts in millions)

                    

Primary Claims Paid (includes LAE)

   $ 37.5      $ 36.0     $ 36.0     $ 32.2     $ 30.6  

Pool Claims Paid (includes LAE)

   $ 0.1      $ 0.2     $ —       $ 0.4     $ 0.1  

Primary Average Claim Severity

     101 %      99 %     98 %     95 %     96 %
 

Other Measures

                    

Flow Persistency

     78 %      76 %     74 %     71 %     72 %

Gross written premiums ceded to captives/total direct written premiums

     22 %      23 %     23 %     24 %     24 %

Risk to capital ratio(1)

     8.8:1        8.6:1       7.9:1       8.0:1       8.1:1  

(1)

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.

 

45


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Primary Risk In-force and Primary Default Rate

by Region and State

 

     March 31, 2007     December 31, 2006     March 31, 2006  
     % of Primary
Risk In-force
    Primary
Default Rate
    % of Primary
Risk In-force
    Primary
Default Rate
    % of Primary
Risk In-force
    Primary
Default Rate
 

By Region

            

Southeast(1)

   26 %   3.14 %   26 %   3.36 %   25 %   3.33 %

South Central(2)

   17     2.91 %   17     3.18 %   17     3.85 %

Northeast(3)

   13     3.16 %   13     3.34 %   14     3.29 %

North Central(4)

   12     2.62 %   12     2.80 %   12     2.54 %

Great Lakes(5)

   10     4.44 %   10     4.75 %   10     4.33 %

Pacific(6)

   8     1.52 %   8     1.44 %   8     1.54 %

Plains(7)

   6     2.31 %   6     2.52 %   6     2.28 %

New England(8)

   4     2.63 %   4     2.66 %   4     2.33 %

Mid-Atlantic(9)

   4     2.07 %   4     2.21 %   4     2.15 %
                        

Total

   100 %   2.92 %   100 %   3.12 %   100 %   3.12 %
                        

By State

            

Florida

   9 %   2.33 %   9 %   2.17 %   9 %   1.93 %

Texas

   7 %   3.44 %   7 %   3.89 %   7 %   4.26 %

New York

   6 %   2.43 %   6 %   2.59 %   6 %   2.48 %

Illinois

   5 %   2.93 %   5 %   3.08 %   5 %   2.83 %

Georgia

   4 %   4.01 %   4 %   4.22 %   4 %   4.08 %

North Carolina

   4 %   3.50 %   4 %   4.04 %   4 %   3.91 %

Pennsylvania

   4 %   4.11 %   4 %   4.47 %   4 %   4.42 %

Ohio

   4 %   4.70 %   4 %   4.96 %   4 %   4.59 %

California

   4 %   1.20 %   3 %   0.99 %   3 %   0.94 %

New Jersey

   3 %   3.19 %   3 %   3.14 %   3 %   3.11 %

(1)

Alabama, Arkansas, Florida, Georgia, Mississippi, North Carolina, South Carolina and Tennessee

 

(2)

Arizona, Colorado, Louisiana, New Mexico, Oklahoma, Texas and Utah

 

(3)

New Jersey, New York and Pennsylvania

 

(4)

Illinois, Minnesota, Missouri and Wisconsin

 

(5)

Indiana, Kentucky, Michigan and Ohio

 

(6)

Alaska, California, Hawaii, Nevada, Oregon and Washington

 

(7)

Idaho, Iowa, Kansas, Montana, Nebraska, North Dakota, South Dakota and Wyoming

 

(8)

Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont

 

(9)

Delaware, Maryland, Virginia, Washington D.C. and West Virginia

 

46


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

U.S. Mortgage Insurance Loan Portfolio

(amounts in millions)

 

     March 31,
2007
   December 31,
2006
   March 31,
2006

Primary risk-in-force lender concentration (by original applicant)

   $ 23,991    $ 23,267    $ 21,788

Top 10 lenders

     9,168      8,829      8,485

Top 20 lenders

     11,988      11,456      10,931

Loan-to-value ratio

        

95.01% and above

   $ 5,812    $ 5,378    $ 4,314

90.01% to 95.00%

     8,137      8,141      8,258

80.01% to 90.00%

     9,148      9,028      8,800

80.00% and below

     894      720      416
                    

Total

   $ 23,991    $ 23,267    $ 21,788
                    

Loan grade

        

Prime

   $ 21,233    $ 20,670    $ 19,473

A minus and sub-prime

     2,758      2,597      2,315
                    

Total

   $ 23,991    $ 23,267    $ 21,788
                    

Loan type(1)

        

Fixed rate mortgage

   $ 22,332    $ 21,729    $ 20,356

Adjustable rate mortgage

     1,659      1,538      1,432
                    

Total

   $ 23,991    $ 23,267    $ 21,788
                    

Type of documentation

        

Alt A

   $ 1,586    $ 1,517    $ 1,189

Standard

     22,405      21,750      20,599
                    

Total

   $ 23,991    $ 23,267    $ 21,788
                    

Mortgage term

        

15 years and under

   $ 398    $ 441    $ 660

More than 15 years

     23,593      22,826      21,128
                    

Total

   $ 23,991    $ 23,267    $ 21,788
                    

(1)

For loan type in this table, any loan with an interest rate that is fixed for an initial term of five years or more is categorized as a fixed rate mortgage.

 

47


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Primary Insurance In-force and Risk In-Force

(dollar amounts in millions)

 

     As of March 31, 2007  

Policy Year

   Average
Rate
    Primary
insurance
in-force
   Percent
of total
   

Primary

risk
in-force

   Percent
of total
 

1997 and Prior

   8.13 %   $ 2,449    2.0 %   $ 601    2.5 %

1998

   7.14 %     972    0.8 %     256    1.1 %

1999

   7.29 %     1,154    1.0 %     292    1.2 %

2000

   8.14 %     737    0.6 %     181    0.8 %

2001

   7.36 %     2,702    2.2 %     665    2.8 %

2002

   6.72 %     6,672    5.5 %     1,607    6.7 %

2003

   5.63 %     24,933    20.7 %     4,290    17.9 %

2004

   5.83 %     13,790    11.4 %     3,003    12.5 %

2005

   5.97 %     19,588    16.3 %     4,796    20.0 %

2006

   6.67 %     34,715    28.9 %     6,423    26.7 %

2007

   6.90 %     12,814    10.6 %     1,877    7.8 %
                                

Total portfolio

   6.35 %   $ 120,526    100.0 %   $ 23,991    100.0 %

 

48


Corporate and Other

 

49


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Net Loss and Net Operating Loss—Corporate and Other

(amounts in millions)

 

      2007     2006  
      Q1     Q4     Q3     Q2     Q1     Total  

REVENUES:

                     

Premiums

   $ 7     $ 3     $ 10     $ 7     $ 7     $ 27  

Net investment income

     15       28       20       15       33       96  

Net investment gains (losses)

     —         9       —         (3 )     (18 )     (12 )

Policy fees and other income

     2       2       1       2       2       7  
                                                  

Total revenues

     24       42       31       21       24       118  
                                                  
 

BENEFITS AND EXPENSES:

                     

Benefits and other changes in policy reserves

     —         —         1       1       1       3  

Acquisition and operating expenses, net of deferrals(1)

     21       19       25       15       6       65  

Amortization of deferred acquisition costs and intangibles(1)

     14       1       2       1       1       5  

Interest expense

     60       58       51       53       56       218  
                                                  

Total benefits and expenses

     95       78       79       70       64       291  
                                                  

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     (71 )     (36 )     (48 )     (49 )     (40 )     (173 )

Benefit from income taxes

     (24 )     (10 )     (15 )     (14 )     (13 )     (52 )
                                                  

NET LOSS FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE

     (47 )     (26 )     (33 )     (35 )     (27 )     (121 )

Cumulative effect of accounting change, net of taxes

     —         —         —         —         4       4  
                                                  

NET LOSS FROM CONTINUING OPERATIONS

     (47 )     (26 )     (33 )     (35 )     (23 )     (117 )

ADJUSTMENT TO NET LOSS FROM CONTINUING OPERATIONS:

                     

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

     —         (5 )     —         1       12       8  

Expenses related to reorganization, net of taxes

     14       —         —         —         —         —    

Cumulative effect of accounting change, net of taxes

     —         —         —         —         (4 )     (4 )
                                                  

NET OPERATING LOSS

   $ (33 )   $ (31 )   $ (33 )   $ (34 )   $ (15 )   $ (113 )
                                                  
                                                  

Effective tax rate (operating income)

     33.7 %     22.4 %     29.6 %     31.1 %     26.9 %     27.8 %

(1)

Includes pretax reorganization costs for an impairment of internal-use software of $13 million and $8 million of severance and other employee termination related expenses in the first quarter of 2007.

 

50


ADDITIONAL FINANCIAL DATA

 

51


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Investments Summary

(amounts in millions)

 

         March 31, 2007     December 31, 2006     September 30, 2006     June 30, 2006     March 31, 2006  
         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   $ 24,915   36 %   $ 24,604   35 %   $ 24,259   36 %   $ 23,087   35 %   $ 23,752    36 %
Other private     10,657   15       10,653   15       10,476   15       10,193   16       10,163    15  
Mortgage and asset-backed     14,513   20       14,438   20       13,170   19       12,629   19       13,158    20  
Tax exempt     2,212   3       2,231   3       2,720   4       2,801   4       2,900    4  
Non-investment grade     2,816   4       2,758   4       2,891   4       2,844   4       2,785    4  
Equity securities:                              
Common stocks and mutual funds     53   —         52   —         45   —         44   —         45    —    
Preferred stocks     147   —         145   —         147   —         143   —         148    —    
Commercial mortgage loans     8,508   12       8,357   12       8,182   12       8,072   12       7,769    12  
Policy loans     1,494   2       1,489   2       1,493   2       1,480   2       1,356    2  
Cash, cash equivalents and short-term investments     2,261   3       2,449   4       2,301   3       2,349   4       1,944    3  
Securities lending     2,179   3       2,277   3       1,621   3       935   2       1,597    2  
Other invested assets     1,572   2       1,556   2       1,424   2       902   2       1,088    2  
                                                                
Total invested assets and cash   $ 71,327   100 %   $ 71,009   100 %   $ 68,729   100 %   $ 65,479   100 %   $ 66,705    100 %
                                                                
Public Fixed Maturities—Credit Quality:                                                   
NAIC
Designation
 

Rating Agency Equivalent Designation

                                                  
1   Aaa/Aa/A   $ 30,435   77 %   $ 30,041   76 %   $ 29,341   74 %   $ 28,204   74 %   $ 28,800    74 %
2   Baa     7,315   18       7,496   19       7,971   20       7,758   20       8,347    21  
3   Ba     1,325   3       1,320   3       1,425   4       1,430   4       1,496    4  
4   B     635   2       611   2       647   2       616   2       544    1  
5   Caa and lower     49   —         76   —         22   —         25   —         77    —    
6   In or near default     9   —         9   —         9   —         9   —         9    —    
Not rated   Not rated     —     —         —     —         —     —         —     —         5    —    
                                                                
    Total public fixed maturities   $ 39,768   100 %   $ 39,553   100 %   $ 39,415   100 %   $ 38,042   100 %   $ 39,278    100 %
                                                                
   
Private Fixed Maturities—Credit Quality:                                                   
NAIC
Designation
 

Rating Agency Equivalent Designation

                                                  
1   Aaa/Aa/A   $ 8,944   58 %   $ 8,897   59 %   $ 7,972   57 %   $ 7,530   56 %   $ 7,634    57 %
2   Baa     5,603   37       5,493   36       5,341   38       5,231   39       5,193    39  
3   Ba     658   4       579   4       592   4       535   4       445    3  
4   B     102   1       132   1       172   1       163   1       160    1  
5   Caa and lower     30   —         5   —         12   —         13   —         13    —    
6   In or near default     7   —         7   —         11   —         39   —         34    —    
Not rated   Not rated     1   —         18   —         1   —         1   —         1    —    
                                                                
    Total private fixed maturities   $ 15,345   100 %   $ 15,131   100 %   $ 14,101   100 %   $ 13,512   100 %   $ 13,480    100 %
                                                                
                                                                

 

52


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Fixed Maturities Summary

(amounts in millions)

 

      March 31, 2007     December 31, 2006     September 30, 2006     June 30, 2006     March 31, 2006  
      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

   $ 516    1 %   $ 864    2 %   $ 689    1 %   $ 665    1 %   $ 635    1 %

Tax exempt

     2,220    4       2,231    4       2,720    5       2,802    5       2,900    6  

Foreign government

     1,736    3       1,765    3       1,770    3       1,842    4       1,824    4  

U.S. corporate

     25,013    45       24,656    45       24,730    46       24,051    47       24,950    47  

Foreign corporate

     10,993    20       10,632    19       10,335    20       9,457    18       9,183    17  

Mortgage-backed(1)

     9,639    18       9,212    17       8,508    16       8,130    16       8,633    16  

Asset-backed(1)

     4,996    9       5,324    10       4,764    9       4,607    9       4,633    9  
                                                                   

Total fixed maturities

   $ 55,113    100 %   $ 54,684    100 %   $ 53,516    100 %   $ 51,554    100 %   $ 52,758    100 %
                                                                   

Corporate Bond Holdings—Industry Sector:

                                  

Finance and insurance

   $ 13,010    36 %   $ 12,461    35 %   $ 11,832    34 %   $ 11,202    33 %   $ 11,485    34 %

Utilities and energy

     6,370    18       6,238    18       6,345    18       6,073    18       6,472    19  

Consumer—non cyclical

     4,210    12       4,136    12       4,219    12       4,085    12       4,419    13  

Consumer—cyclical

     2,503    7       2,497    7       2,464    7       2,413    7       2,306    7  

Capital goods

     2,142    6       2,115    6       1,954    6       1,840    6       1,798    5  

Industrial

     1,734    5       1,762    5       1,998    6       2,027    6       2,016    6  

Technology and communications

     2,479    7       2,469    7       2,497    7       2,431    7       2,511    7  

Transportation

     1,236    3       1,230    3       1,235    3       1,207    4       1,217    3  

Other

     2,322    6       2,380    7       2,521    7       2,230    7       1,909    6  
                                                                   

Total

   $ 36,006    100 %       $ 35,288    100 %   $ 35,065    100 %   $ 33,508    100 %   $ 34,133    100 %
                                                                   

Fixed Maturities—Contractual Maturity Dates:

                                  

Due in one year or less

   $ 2,192    4 %   $ 2,342    4 %   $ 2,902    5 %   $ 2,867    6 %   $ 2,729    5 %

Due after one year through five years

     10,487    19       10,416    19       9,984    19       9,567    18       9,780    19  

Due after five years through ten years

     9,999    18       9,900    18       10,264    19       10,229    20       10,512    20  

Due after ten years

     17,800    32       17,490    32       17,094    32       16,154    31       16,471    31  
                                                                   

Subtotal

     40,478    73       40,148    73       40,244    75       38,817    75       39,492    75  

Mortgage and asset-backed

     14,635    27       14,536    27       13,272    25       12,737    25       13,266    25  
                                                                   

Total fixed maturities

   $ 55,113    100 %   $ 54,684    100 %   $ 53,516    100 %   $ 51,554    100 %   $ 52,758    100 %
                                                                   
                                                                   

(1)

We had $6,064 million of residential mortgage-backed securities included in mortgage-backed and asset-backed securities, of which $2,045 million are investment grade securities which are collateralized by sub-prime loans as of March 31, 2007.

 

53


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Commercial Mortgage Loans Data

(amounts in millions)

 

      March 31, 2007      December 31, 2006     September 30, 2006     June 30, 2006     March 31, 2006  

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
 

Geographic Region

                                

Pacific

   $ 2,303     27 %    $ 2,321     28 %   $ 2,372     29 %   $ 2,359     29 %   $ 2,267     29 %

South Atlantic

     1,870     22        1,798     21       1,721     21       1,703     21       1,634     21  

Middle Atlantic

     1,124     13        1,115     13       1,117     14       1,105     14       1,105     14  

East North Central

     858     10        835     10       829     10       835     10       867     11  

Mountain

     821     10        815     10       759     9       718     9       609     8  

West South Central

     344     4        357     4       331     4       365     4       344     4  

West North Central

     549     7        535     7       531     6       473     6       451     6  

East South Central

     292     3        280     3       306     4       303     4       293     4  

New England

     360     4        311     4       224     3       219     3       222     3  
                                                                         

Subtotal

     8,521     100 %      8,367     100 %     8,190     100 %     8,080     100 %     7,792     100 %
                                                 

Allowance for losses

     (17 )           (15 )       (14 )       (15 )       (30 )    

Unamortized fees and costs

     4             5         6         7         7      
                                                          

Total

   $ 8,508           $ 8,357       $ 8,182       $ 8,072       $ 7,769      
                                                          
   

Property Type

                                  

Office

   $ 2,364     28 %    $ 2,319     28 %   $ 2,334     29 %   $ 2,349     29 %   $ 2,291     29 %

Industrial

     2,258     27        2,211     26       2,184     27       2,174     27       2,155     28  

Retail

     2,238     26        2,203     26       2,158     26       2,089     26       2,067     27  

Apartments

     972     11        987     12       995     12       976     12       950     12  

Mixed use/other

     689     8        647     8       519     6       492     6       329     4  
                                                                         

Subtotal

     8,521     100 %      8,367     100 %     8,190     100 %     8,080     100 %     7,792     100 %
                                                 

Allowance for losses

     (17 )           (15 )       (14 )       (15 )       (30 )    

Unamortized fees and costs

     4             5         6         7         7      
                                                          

Total

   $ 8,508           $ 8,357       $ 8,182       $ 8,072       $ 7,769      
                                                          
      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

   $ 3,583     42 %    $ 3,557     43 %   $ 3,545     43 %   $ 3,491     43 %   $ 3,757     48 %

$5 million but less than $10 million

     1,944     23        1,885     23       1,845     23       1,870     23       1,813     24  

$10 million but less than $20 million

     1,674     20        1,638     19       1,640     20       1,537     19       1,342     17  

$20 million but less than $30 million

     461     5        507     6       558     7       548     7       474     6  

$30 million and over

     859     10        781     9       603     7       635     8       407     5  
                                                                         

Subtotal

     8,521     100 %      8,368     100 %     8,191     100 %     8,081     100 %     7,793     100 %
                                                 

Net premium/discount

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

Total

   $ 8,521           $ 8,367       $ 8,190       $ 8,080       $ 7,792      
                                                          

Allowance for Losses on Commercial Mortgage Loans

                                

Beginning balance

   $ 15           $ 14       $ 15       $ 30       $ 31      

Provisions

     2             1         —           —           —        

Releases

     —               —           (1 )       (15 )       (1 )    
                                                          

Ending balance

   $ 17           $ 15       $ 14       $ 15       $ 30      
                                                            
                                                             

 

54


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

General Account GAAP Net Investment Income Yields

(amounts in millions)

 

      2007     2006  
      Q1     Q4     Q3     Q2     Q1     Total  

GAAP Net Investment Income

                     

Fixed maturities—taxable(1)

   $ 774     $ 778     $ 724     $ 720     $ 708     $ 2,930  

Fixed maturities—non-taxable

     25       28       32       31       31       122  

Commercial mortgage loans

     130       127       125       136       119       507  

Equity securities

     7       3       6       7       7       23  

Other investments

     10       19       9       12       11       51  

Policy loans

     34       34       32       32       30       128  

Restricted investments held by securitization entities

     —         —         —         —         7       7  

Cash, cash equivalents and short-term investments

     27       35       23       20       17       95  
                                                  

Gross investment income before expenses and fees

     1,007       1,024       951       958       930       3,863  
                                                  

Expenses and fees

     (23 )     (21 )     (19 )     (18 )     (18 )     (76 )
                                                  

Net investment income

   $ 984     $ 1,003     $ 932     $ 940     $ 912     $ 3,787  
                                                  

Annualized Yields

                     

Fixed maturities—taxable(1)

     5.9 %     6.1 %     5.8 %     5.8 %     5.7 %     5.8 %

Fixed maturities—non-taxable

     4.8 %     4.8 %     4.7 %     4.5 %     4.4 %     4.7 %

Commercial mortgage loans

     6.2 %     6.1 %     6.2 %     6.9 %     6.3 %     6.4 %

Equity securities

     15.2 %     8.0 %     15.9 %     16.1 %     12.3 %     12.3 %

Other investments

     5.4 %     12.2 %     6.7 %     10.3 %     10.5 %     9.9 %

Policy loans

     9.0 %     9.0 %     8.5 %     9.1 %     8.8 %     8.9 %

Restricted investments held by securitization entities

     —         —         —         —         8.2 %     5.1 %

Cash, cash equivalents and short-term investments

     4.6 %     5.8 %     4.0 %     3.6 %     3.6 %     4.3 %
                                                  

Gross investment income before expenses and fees

     5.9 %     6.1 %     5.8 %     5.9 %     5.8 %     5.9 %
                                                  

Expenses and fees

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

Net investment income

     5.8 %     6.0 %     5.7 %     5.8 %     5.7 %     5.8 %
                                                  
                                                  

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.

 

(1)

Includes a $22 million adjustment in the fourth quarter of 2006 reflecting imputed investment income related to reinsurance assumed in our payment protection business previously reflected as risk transfer and adjusted in the fourth quarter of 2006 to reflect deposit accounting.

 

55


RECONCILIATIONS OF NON-GAAP MEASURES

 

56


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Reconciliation of Operating ROE

(amounts in millions)

 

     Twelve months ended  
      March 31,
2007
    December 31,
2006
    September 30,
2006
    June 30,
2006
    March 31,
2006
 

GAAP Basis ROE

          

Net income for the twelve months ended (1)

   $ 1,318     $ 1,328     $ 1,262     $ 1,265     $ 1,233  

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

   $ 12,046     $ 11,987     $ 11,876     $ 11,716     $ 11,533  

GAAP Basis ROE (1) divided by (2)

     10.9 %     11.1 %     10.6 %     10.8 %     10.7 %

Operating ROE

          

Net operating income for the twelve months ended (1)

   $ 1,320     $ 1,317     $ 1,253     $ 1,259     $ 1,207  

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

   $ 12,046     $ 11,987     $ 11,876     $ 11,716     $ 11,533  

Operating ROE (1) divided by (2)

     11.0 %     11.0 %     10.6 %     10.7 %     10.5 %

(1) The twelve months ended information is derived by adding the four most recent quarters of net income and net operating income.

 

(2) Quarterly average stockholders’ equity, excluding accumulated other comprehensive income, is derived by averaging ending stockholders’ equity, excluding accumulated other comprehensive income, but including equity related to discontinued operations, 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 income divided by average ending stockholders’ equity, excluding accumulated other comprehensive income (AOCI) in average ending 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 income divided by average ending stockholders’ equity.

 

57


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Reconciliation of Expense Ratio

(amounts in millions)

 

      2007     2006  
      Q1     Q4     Q3     Q2     Q1     Total  

GAAP Basis Expense Ratio

                     

Acquisition and operating expenses, net of deferrals (1)

   $ 489     $ 446     $ 493     $ 483     $ 436     $ 1,858  

Total revenues (2)

   $ 2,710     $ 2,657     $ 2,615     $ 2,571     $ 2,442     $ 10,285  
                                                  

Expense ratio (1) divided by (2)

     18.0 %     16.8 %     18.9 %     18.8 %     17.9 %     18.1 %
                                                  

GAAP Basis, As Adjusted—Expense Ratio

                     

Acquisition and operating expenses, net of deferrals

   $ 489     $ 446     $ 493     $ 483     $ 436     $ 1,858  

Less payment protection insurance business

     181       142       187       182       172       683  

Less expenses related to reorganization(A)

     8       —         —         —         —         —    
                                                  

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

   $ 300     $ 304     $ 306     $ 301     $ 264     $ 1,175  
                                                  

Total revenues

   $ 2,710     $ 2,657     $ 2,615     $ 2,571     $ 2,442     $ 10,285  

Less payment protection insurance business

     357       273       340       352       319       1,284  

Less net investment gains (losses)

     (19 )     8       (6 )     (49 )     (22 )     (69 )
                                                  

Adjusted total revenues (4)

   $ 2,372     $ 2,376     $ 2,281     $ 2,268     $ 2,145     $ 9,070  
                                                  

Adjusted expense ratio (3) divided by (4)

     12.6 %     12.8 %     13.4 %     13.3 %     12.3 %     13.0 %
                                                  
                                                  

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.


(A)

Includes severance and other employee related expenses associated with our reorganization announced in the first quarter of 2007.

 

58


GENWORTH FINANCIAL, INC.

1Q 2007 FINANCIAL SUPPLEMENT

 

Reconciliation of Core Premiums

(amounts in millions)

 

      2007     2006
      Q1     Q4    Q3    Q2    Q1    Total

Reported premiums

   $ 1,511     $ 1,446    $ 1,505    $ 1,480    $ 1,371    $ 5,802

Less payment protection insurance run-off and Travel Insurance premiums

     15       6      22      37      25      90

Less retirement income—spread-based premiums

     154       146      210      200      180      736
                                            

Core premiums

   $ 1,342     $ 1,294    $ 1,273    $ 1,243    $ 1,166    $ 4,976
                                            

Reported premium percentage change from prior year

     10.2 %                

Core premium percentage change from prior year

     15.1 %                

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 run-off and Travel Insurance blocks in our payment protection insurance business and less premiums from our spread-based retail business. The retirement income—spread-based 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.

1Q 2007 FINANCIAL SUPPLEMENT

 

Reconciliation of Core Yield

 

           2007      2006  
      (Assets—amounts in billions)    Q1      Q4     Q3     Q2     Q1  
    

Reported—Total Invested Assets and Cash

   $ 71.3      $ 71.0     $ 68.7     $ 65.5     $ 66.7  
    

Subtract:

                    
    

Securities lending

     2.2        2.3       1.6       0.9       1.6  
    

Unrealized gains (losses)

     1.0        1.2       0.6       (0.7 )     0.2  
    

Derivative counterparty collateral

     0.3        0.4       0.4       0.2       0.3  
                                              
    

Adjusted end-of-period invested assets

   $ 67.8      $ 67.1     $ 66.1     $ 65.1     $ 64.6  
                                              

(A)

  

Average Invested Assets used in Reported Yield

   $ 67.5      $ 66.6     $ 65.6     $ 64.8     $ 64.5  
    

Subtract: limited partnership investments (average balance)

     0.2        0.2       0.2       0.1       0.1  
                                              

(B)

  

Average Invested Assets used in Core Yield Calculation

     67.3        66.4       65.4       64.7       64.4  
    

Subtract: portfolios supporting floating and short-term products

     12.2        11.0       10.4       10.0       9.1  
                                              

(C)

  

Average Invested Assets used in Core Yield (excl. Floating & Short-Term) Calculation

   $ 55.1      $ 55.4     $ 55.0     $ 54.7     $ 55.3  
                                              
    

(Income - amounts in millions)

                    
 

(D)

  

Reported - Net Investment Income

   $ 984      $ 1,003     $ 932     $ 940     $ 912  
    

Subtract certain investment items (1)

     29        54       9       38       27  
                                              

(E)

  

Core Net Investment Income

     955        949       923       902       885  
    

Subtract: investment income from portfolios supporting floating and short-term products

     180        165       147       139       120  
                                              

(F)

  

Core Net Investment Income (excl. Floating and Short-Term)

   $ 775      $ 784     $ 776     $ 763     $ 765  
                                              

(D)/(A)

  

Reported Yield

     5.8 %      6.0 %     5.7 %     5.8 %     5.7 %

(E)/(B)

  

Core Yield

     5.7 %      5.7 %     5.6 %     5.6 %     5.5 %

(F)/(C)

  

Core Yield (excl. Floating and Short-Term)

     5.6 %      5.7 %     5.6 %     5.6 %     5.5 %

 

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, limited partnerships, commercial mortgage loan loss reserves and other items. This amount also includes a $22 million reclassification in the fourth quarter of 2006 reflecting imputed investment income related to certain reinsurance assumed in our payment protection insurance business reclassified from reinsurance accounting to the deposit method of accounting.

 

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CORPORATE INFORMATION

 

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GENWORTH FINANCIAL, INC.

1Q 2007 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

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

Continental Life Insurance Company of Brentwood, Tennessee

   A    Not rated    Not rated    Not rated

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

 

Company

   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

Private Residential Mortgage Insurance Corporation

   Not rated    Aa2    AA

Genworth Financial Mortgage Insurance Company Canada(1)

   AA    Not rated    Not rated

(1)

Genworth Financial Mortgage Insurance Company Canada is also rated “AA” by Dominion Bond Rating Service (DBRS).

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”.

S&P states that an insurer rated “AA” (Very Strong) has very strong financial security characteristics that outweigh any vulnerabilities, and is highly likely to have the ability to meet financial commitments. The “AA” range is the second-highest of the four ratings ranges that meet these criteria, and also is the second-highest of nine financial strength rating ranges assigned by S&P, which range from “AAA” to “R.” A plus (+) or minus (-) shows relative standing in a rating category. Accordingly, the “AA” and “AA-” ratings are the third- and fourth-highest of S&P’s 20 ratings categories. The short-term “A-1” rating is the highest rating and shows the capacity to meet financial commitments is strong. Within this category, the designation of a plus sign (+) indicates capacity to meet its financial commitments is extremely strong.

 

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GENWORTH FINANCIAL, INC.

1Q 2007 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.

DBRS 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 DBRS 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 April 4, 2007, AM Best upgraded Continental Life Insurance Company from an “A-” to “A”. In addition, the outlook was changed from positive to stable.

About Genworth Financial

Genworth is a leading financial security company meeting the retirement, longevity and lifestyle protection, investment and mortgage insurance needs of more than 15 million customers, with a presence in more than 25 countries. For more information, visit www.genworth.com.

Inquiries:

Alicia Charity, 804-662-2248

alicia.charity@genworth.com

Linnea Olsen, 804-662-2536

linnea.olsen@genworth.com

 

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