EX-99.2 3 d506405dex992.htm FINANCIAL SUPPLEMENT FOR THE QUARTER ENDED MARCH 31, 2013 FINANCIAL SUPPLEMENT FOR THE QUARTER ENDED MARCH 31, 2013
Table of Contents

EXHIBIT 99.2

 

LOGO


Table of Contents

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

 

Table of Contents

   Page  

Investor Letter .

     3   

Use of Non-GAAP Measures and Selected Operating Performance Measures .

     4   

Financial Highlights

     5   

First Quarter Results

  

Consolidated Net Income by Quarter

     7   

Net Operating Income by Segment by Quarter

     8   

Consolidated Balance Sheets

     9-10   

Consolidated Balance Sheets by Segment

     11-12   

Deferred Acquisition Costs Rollforward

     13   

Quarterly Results

  

Net Operating Income and Sales—U.S. Life Insurance Division

     15-22   

Net Operating Income (Loss) and Sales—Global Mortgage Insurance Division

     24-46   

Net Operating Income (Loss) and Sales—Corporate and Other Division

     48-58   

Additional Financial Data

  

Investments Summary

     60   

Fixed Maturity Securities Summary

     61   

Commercial Mortgage Loans Summary

     62-63   

General Account GAAP Net Investment Income Yields

     64   

Net Investment Gains (Losses), Net of Taxes and Other Adjustments—Detail

     65   

Reconciliations of Non-GAAP Measures

  

Reconciliation of Operating Return On Equity (ROE)

     67   

Reconciliation of Expense Ratio

     68   

Reconciliation of Core Premiums

     69   

Reconciliation of Core Yield

     70   

Corporate Information

  

Industry Ratings

     72-73   

Note: 

Unless otherwise noted, references in this financial supplement to income (loss) from continuing operations, income (loss) from continuing operations per share, net income (loss), net income (loss) per share, book value and book value per common share should be read as income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders, income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders per share, net income (loss) available to Genworth Financial, Inc.’s common stockholders, net income (loss) available to Genworth Financial, Inc.’s common stockholders per share, book value available to Genworth Financial, Inc.’s common stockholders and book value available to Genworth Financial, Inc.’s common stockholders per share, respectively.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

Dear Investor,

On March 27, 2013, the company announced that it had agreed to sell its wealth management business to AqGen Liberty Acquisition, Inc., a subsidiary of AqGen Liberty Holdings LLC, a partnership of Aquiline Capital Partners and Genstar Capital. As a result, this business has been accounted for as discontinued operations and its financial position and results of operations are separately reported for all periods presented. The wealth management business, previously a separate segment, is separately presented as discontinued operations and all prior periods reflected herein on this basis.

The company has a practice of refunding the post-delinquent premiums in the U.S. mortgage insurance business to the insured party if the delinquent loan goes to claim. The company's historical accounting practice was to account for these premium refunds as a reduction in premiums upon payment. In the first quarter of 2013, the company determined that it should have been recording a liability for premiums received on the delinquent loans where its practice was to refund post-delinquent premiums. This error was not material to the company's consolidated financial condition, results of operations or cash flows as presented in the company's previously filed annual and quarterly financial statements; however, the adjustment to correct the cumulative effect of this error would have been material if recorded in the first quarter of 2013. The company restated the financial information to correct this error for all periods presented herein. The cumulative decrease to retained earnings was $46 million as of January 1, 2012. Any ratios derived from premiums have also been restated. The following summarizes the adjustments to the income statement in the U.S. mortgage insurance business:

 

     2012  

(amounts in millions)

   4Q      3Q      2Q      1Q     Total  

Premiums

   $ 2       $     2       $ —         $ (1   $ 3   

Provision for income taxes

     —           1         —           —          1   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net income

   $ 2       $ 1       $ —         $ (1   $ 2   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

As previously announced, on April 1, 2013, the company completed a holding company reorganization in connection with a comprehensive capital plan for the U.S. mortgage insurance business. Pursuant to the reorganization, the public holding company historically known as “Genworth Financial, Inc.” (now renamed Genworth Holdings, Inc. (“Genworth Holdings”)) became a direct, wholly-owned subsidiary of a new public holding company that was formed and that now has been renamed Genworth Financial, Inc. (“New Genworth”). In connection with the reorganization, all the stockholders of Genworth Holdings immediately prior to the completion of the reorganization automatically became stockholders of New Genworth, owning the same number of shares of stock in New Genworth that they owned in Genworth Holdings immediately prior to the reorganization.

Accordingly, references to “Genworth” or the “company” in this Quarterly Financial Supplement have the following meanings:

 

   

For periods prior to April 1, 2013: Genworth Holdings

 

   

For periods from and after April 1, 2013: New Genworth

Once again, thank you for your continued interest in Genworth Financial.

Please feel free to call with any questions or comments.

Regards,

Georgette Nicholas

Investor Relations

804 662.2248

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

Use of Non-GAAP Measures

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

While some of these items may be significant components of net income (loss) available to Genworth Financial, Inc.’s common stockholders in accordance with GAAP, the company believes that net operating income (loss) and measures that are derived from or incorporate net operating income (loss), including net operating income (loss) per common share on a basic and diluted basis, are appropriate measures that are useful to investors because they identify the income (loss) attributable to the ongoing operations of the business. Management also uses net operating income (loss) as a basis for determining awards and compensation for senior management and to evaluate performance on a basis comparable to that used by analysts. However, the items excluded from net operating income (loss) have occurred in the past and could, and in some cases will, recur in the future. Net operating income (loss) and net operating income (loss) per common share on a basic and diluted basis are not substitutes for net income (loss) available to Genworth Financial, Inc.’s common stockholders or net income (loss) available to Genworth Financial, Inc.’s common stockholders per common share on a basic and diluted basis determined in accordance with GAAP. In addition, the company’s definition of net operating income (loss) may differ from the definitions used by other companies.

The table on page 8 of this financial supplement reflects net operating income (loss) as determined in accordance with accounting guidance related to segment reporting, and a reconciliation of net operating income (loss) of the company’s segments and Corporate and Other activities to net income (loss) available to Genworth Financial, Inc.’s common stockholders for the periods presented. The financial supplement includes other non-GAAP measures management believes enhances the understanding and comparability of performance by highlighting underlying business activity and profitability drivers. These additional non-GAAP measures are on pages 67 through 70 of this financial supplement.

Selected Operating Performance Measures

This financial supplement contains selected operating performance measures including “sales” and “insurance in-force” or “risk in-force” which are commonly used in the insurance industry as measures of operating performance.

Management regularly monitors and reports sales metrics as a measure of volume of new and renewal business generated in a period. Sales refer to: (1) annualized first-year premiums for term life and long-term care insurance; (2) annualized first-year deposits plus 5% of excess deposits for universal and term universal life insurance products; (3) 10% of premium deposits for linked-benefits products; (4) new and additional premiums/deposits for fixed annuities; (5) new insurance written for mortgage insurance; and (6) written premiums and deposits, gross of ceded reinsurance and cancellations, and premium equivalents, where the company earns a fee for administrative services only business, for the lifestyle protection insurance business. Sales do not include renewal premiums on policies or contracts written during prior periods. The company considers annualized first-year premiums, premium equivalents, new premiums/deposits, written premiums and new insurance written to be a measure of the company’s operating performance because they represent a measure of new sales of insurance policies or contracts during a specified period, rather than a measure of the company’s revenues or profitability during that period.

Management regularly monitors and reports insurance in-force and risk in-force. Insurance in-force for the life, international mortgage and U.S. mortgage insurance businesses is a measure of the aggregate face value of outstanding insurance policies as of the respective reporting date. For the risk in-force in the international mortgage insurance business, the company has computed an “effective” risk in-force amount, which recognizes that the loss on any particular loan will be reduced by the net proceeds received upon sale of the property. Effective risk in-force has been calculated by applying to insurance in-force a factor of 35% that represents the highest expected average per-claim payment for any one underwriting year over the life of the company’s businesses in Canada and Australia. Risk in-force for the U.S. mortgage insurance business is the obligation that is limited under contractual terms to the amounts less than 100% of the mortgage loan value. The company considers insurance in-force and risk in-force to be a measure of the company’s operating performance because they represent a measure of the size of the business at a specific date which will generate revenues and profits in a future period, rather than a measure of the company’s revenues or profitability during that period.

This financial supplement also includes information related to loss mitigation activities for the U.S. mortgage insurance business. The company defines loss mitigation activities as rescissions, cancellations, borrower loan modifications, repayment plans, lender- and borrower-titled presales, claims administration and other loan workouts. Estimated savings related to rescissions are the reduction in carried loss reserves, net of premium refunds and reinstatement of prior rescissions. Estimated savings related to loan modifications and other cure related loss mitigation actions represent the reduction in carried loss reserves. Estimated savings related to claims mitigation activities represent amounts deducted or “curtailed” from claims due to acts or omissions by the insured or the servicer with respect to the servicing of an insured loan that is not in compliance with obligations under our master policy. For non-cure related actions, including presales, the estimated savings represent the difference between the full claim obligation and the actual amount paid. The company believes that this information helps to enhance the understanding of the operating performance of the U.S. mortgage insurance business as loss mitigation activities specifically impact current and future loss reserves and level of claim payments.

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

 

(1) 

U.S. Generally Accepted Accounting Principles

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

 

Financial Highlights

(amounts in millions, except per share data)

 

 

Balance Sheet Data

   March 31,
2013
     December 31,
2012
     September 30,
2012
     June 30,
2012
     March 31,
2012
 

Total Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income

   $ 11,398       $ 11,291       $ 11,158       $ 11,117       $ 11,035   

Total accumulated other comprehensive income

     4,824         5,202         5,223         4,653         3,656   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Genworth Financial, Inc.’s stockholders’ equity

   $ 16,222       $ 16,493       $ 16,381       $ 15,770       $ 14,691   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Book value per common share

   $ 32.90       $ 33.53       $ 33.31       $ 32.08       $ 29.89   

Book value per common share, excluding accumulated other comprehensive income

   $ 23.11       $ 22.95       $ 22.69       $ 22.61       $ 22.45   

Common shares outstanding as of the balance sheet date

     493.1         491.9         491.8         491.6         491.5   
     Twelve months ended  

Twelve Month Rolling Average ROE

   March 31,
2013
     December 31,
2012
     September 30,
2012
     June 30,
2012
     March 31,
2012
 

GAAP Basis ROE

     3.4%         2.9%         2.7%         2.2%         0.2%   

Operating ROE(1)

     4.4%         3.2%         2.8%         2.2%         0.4%   
     Three months ended  

Quarterly Average ROE

   March 31,
2013
     December 31,
2012
     September 30,
2012
     June 30,
2012
     March 31,
2012
 

GAAP Basis ROE

     3.6%         6.0%         1.3%         2.7%         1.7%   

Operating ROE(1)

     5.3%         5.7%         4.0%         2.4%         0.6%   

 

Basic and Diluted Shares

   Three months ended
March 31,

2013
 

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

     492.5   

Potentially dilutive securities:

  

Stock options, restricted stock units and stock appreciation rights

     4.3   
  

 

 

 

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

     496.8   
  

 

 

 

 

(1) 

See page 67 herein for a reconciliation of GAAP Basis ROE to Operating ROE.

 

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First Quarter Results

 

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Table of Contents

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

 

Consolidated Net Income by Quarter

(amounts in millions, except per share amounts)

 

     2013      2012  
     1Q      4Q      3Q      2Q     1Q      Total  

REVENUES:

                  

Premiums

   $ 1,261       $ 1,320       $ 1,313       $ 1,302      $ 1,106       $ 5,041   

Net investment income

     814         840         825         846        832         3,343   

Net investment gains (losses)

     (61      14         9         (33     37         27   

Insurance and investment product fees and other

     289         293         309         287        340         1,229   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total revenues

     2,303         2,467         2,456         2,402        2,315         9,640   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

BENEFITS AND EXPENSES:

                  

Benefits and other changes in policy reserves

     1,201         1,401         1,363         1,382        1,232         5,378   

Interest credited

     184         193         193         194        195         775   

Acquisition and operating expenses, net of deferrals

     433         272         443         439        440         1,594   

Amortization of deferred acquisition costs and intangibles

     122         144         160         147        271         722   

Goodwill impairment

     —           —           89         —          —           89   

Interest expense

     126         124         126         131        95         476   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total benefits and expenses

     2,066         2,134         2,374         2,293        2,233         9,034   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     237         333         82         109        82         606   

Provision for income taxes

     76         73         23         27        15         138   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

INCOME FROM CONTINUING OPERATIONS

     161         260         59         82        67         468   

Income (loss) from discontinued operations, net of taxes(1)

     (20      6         12         27        12         57   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

NET INCOME

     141         266         71         109        79         525   

Less: net income attributable to noncontrolling interests

     38         98         36         33        33         200   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

NET INCOME AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS

   $ 103       $ 168       $ 35       $ 76      $ 46       $ 325   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 
  

 

 

                                             

Earnings Per Share Data:

                

Income from continuing operations available to Genworth Financial, Inc.’s common stockholders per common share

                

Basic

   $ 0.25       $ 0.33       $ 0.05       $ 0.10      $ 0.07       $ 0.55   

Diluted

   $ 0.25       $ 0.33       $ 0.05       $ 0.10      $ 0.07       $ 0.54   

Net income available to Genworth Financial, Inc.’s common stockholders per common share

                

Basic

   $ 0.21       $ 0.34       $ 0.07       $ 0.16      $ 0.09       $ 0.66   

Diluted

   $ 0.21       $ 0.34       $ 0.07       $ 0.16      $ 0.09       $ 0.66   

Weighted-average shares outstanding

                

Basic

     492.5         491.9         491.7         491.5        491.2         491.6   

Diluted

     496.8         493.9         493.9         493.9        495.7         494.4   

 

(1) 

Income from discontinued operations related to the wealth management business. Refer to page 58 for operating results of discontinued operations.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

 

Net Operating Income by Segment by Quarter

(amounts in millions, except per share amounts)

 

         2013      2012  
         1Q      4Q     3Q     2Q     1Q     Total  

U.S. Life Insurance Division

                 

U.S. Life Insurance segment:

                 

Life Insurance

     $ 36       $ 49      $ 22      $ 30      $ 6      $ 107   

Long-Term Care

       20         7        45        14        35        101   

Fixed Annuities

       29         20        19        20        23        82   
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total U.S. Life Insurance segment

       85         76        86        64        64        290   
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total U.S. Life Insurance Division

       85         76        86        64        64        290   
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Global Mortgage Insurance Division

                 

International Mortgage Insurance segment:

                 

Canada

       42         114        42        41        37        234   

Australia

       46         62        57        44        (21     142   

Other Countries

       (7      (11     (5     (9     (9     (34
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total International Mortgage Insurance segment

       81         165        94        76        7        342   

U.S. Mortgage Insurance segment

       21         (32     (37     (25     (44     (138
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Global Mortgage Insurance Division

       102         133        57        51        (37     204   
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Corporate and Other Division

                 

International Protection segment

       6         8        8        3        5        24   

Runoff segment

       16         8        9        (6     35        46   

Corporate and Other

       (58      (65     (49     (45     (50     (209
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Corporate and Other Division

       (36      (49     (32     (48     (10     (139
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET OPERATING INCOME

       151         160        111        67        17        355   
 

ADJUSTMENTS TO NET OPERATING INCOME:

                 

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

       (28      2        (2     (18     17        (1

Goodwill impairment, net of taxes

       —           —          (86     —          —          (86

Income (loss) from discontinued operations, net of taxes

       (20      6        12        27        12        57   
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS

       103         168        35        76        46        325   

Add: net income attributable to noncontrolling interests

       38         98        36        33        33        200   
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME

     $ 141       $ 266      $ 71      $ 109      $ 79      $ 525   
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    

 

 

                                          

Earnings Per Share Data:

               

Net income available to Genworth Financial, Inc.’s common stockholders per common share

       

Basic

     $ 0.21       $ 0.34      $ 0.07      $ 0.16      $ 0.09      $ 0.66   

Diluted

     $ 0.21       $ 0.34      $ 0.07      $ 0.16      $ 0.09      $ 0.66   

Net operating income per common share

               

Basic

     $ 0.31       $ 0.32      $ 0.23      $ 0.14      $ 0.03      $ 0.72   

Diluted

     $ 0.30       $ 0.32      $ 0.22      $ 0.14      $ 0.03      $ 0.72   

Weighted-average shares outstanding

               

Basic

       492.5         491.9        491.7        491.5        491.2        491.6   

Diluted

       496.8         493.9        493.9        493.9        495.7        494.4   

 

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Table of Contents

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

 

 

Consolidated Balance Sheets

(amounts in millions)

 

     March 31,
2013
     December 31,
2012
     September 30,
2012
     June 30,
2012
     March 31,
2012
 

ASSETS

                

Investments:

                

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

   $ 61,082       $ 62,161       $ 62,214       $ 59,791       $ 58,532   

Equity securities available-for-sale, at fair value

     490         518         524         431         432   

Commercial mortgage loans

     5,866         5,872         5,861         5,875         6,030   

Restricted commercial mortgage loans related to securitization entities

     324         341         359         382         392   

Policy loans

     1,606         1,601         1,626         1,619         1,555   

Other invested assets

     2,982         3,493         3,906         4,502         3,001   

Restricted other invested assets related to securitization entities

     399         393         393         391         384   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total investments

     72,749         74,379         74,883         72,991         70,326   

Cash and cash equivalents

     3,797         3,632         3,720         3,854         4,152   

Accrued investment income

     769         715         746         652         759   

Deferred acquisition costs

     5,050         5,036         5,020         5,023         5,060   

Intangible assets

     346         366         375         407         460   

Goodwill

     868         868         868         958         961   

Reinsurance recoverable

     17,211         17,230         17,195         17,177         17,193   

Other assets

     706         710         975         1,005         917   

Separate account assets

     10,140         9,937         10,166         10,033         10,646   

Assets associated with discontinued operations(1)

     439         439         439         436         509   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

   $ 112,075       $ 113,312       $ 114,387       $ 112,536       $ 110,983   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
  

 

 

                                     

 

(1) 

The assets associated with discontinued operations prior to the sale have been segregated in the consolidated balance sheets. The major assets categories for discontinued operations were as follows:

 

     March 31,
2013
     December 31,
2012
     September 30,
2012
     June 30,
2012
     March 31,
2012
 

ASSETS

              

Equity securities available-for-sale, at fair value

   $ —         $ —         $ —         $ —         $ 2   

Other invested assets

     10         10         10         10         —     

Cash and cash equivalents

     22         21         21         20         35   

Intangible assets

     116         115         113         112         113   

Goodwill

     247         260         260         260         295   

Other assets

     44         33         35         34         64   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Assets associated with discontinued operations

   $ 439       $ 439       $ 439       $ 436       $ 509   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

9


Table of Contents

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

 

Consolidated Balance Sheets

(amounts in millions)

 

     March 31,
2013
     December 31,
2012
    September 30,
2012
    June 30,
2012
    March 31,
2012
 

LIABILITIES AND STOCKHOLDERS' EQUITY

             

Liabilities:

             

Future policy benefits

   $ 33,601       $ 33,505      $ 33,221      $ 32,825      $ 32,380   

Policyholder account balances

     25,886         26,262        26,449        26,160        26,204   

Liability for policy and contract claims

     7,343         7,509        7,545        7,552        7,663   

Unearned premiums

     4,193         4,333        4,291        4,156        4,209   

Other liabilities

     5,028         5,239        6,094        5,813        5,318   

Borrowings related to securitization entities

     329         336        353        375        383   

Non-recourse funding obligations

     2,062         2,066        2,325        2,598        2,602   

Long-term borrowings

     4,766         4,776        4,880        4,865        5,095   

Deferred tax liability

     1,132         1,507        1,406        1,186        580   

Separate account liabilities

     10,140         9,937        10,166        10,033        10,646   

Liabilities associated with discontinued operations(1)

     86         61        56        54        67   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     94,566         95,531        96,786        95,617        95,147   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Stockholders' equity:

             

Common stock

     1         1        1        1        1   

Additional paid-in capital

     12,131         12,127        12,162        12,156        12,150   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated other comprehensive income (loss):

             

Net unrealized investment gains (losses):

             

Net unrealized gains on securities not other-than-temporarily impaired

     2,471         2,692        2,641        2,132        1,438   

Net unrealized gains (losses) on other-than-temporarily impaired securities

     (28      (54     (88     (116     (111
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Net unrealized investment gains (losses)

     2,443         2,638        2,553        2,016        1,327   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Derivatives qualifying as hedges

     1,799         1,909        2,011        2,087        1,680   

Foreign currency translation and other adjustments

     582         655        659        550        649   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total accumulated other comprehensive income

     4,824         5,202        5,223        4,653        3,656   

Retained earnings

     1,966         1,863        1,695        1,660        1,584   

Treasury stock, at cost

     (2,700      (2,700     (2,700     (2,700     (2,700
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total Genworth Financial, Inc.'s stockholders' equity

     16,222         16,493        16,381        15,770        14,691   

Noncontrolling interests

     1,287         1,288        1,220        1,149        1,145   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     17,509         17,781        17,601        16,919        15,836   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders' equity

   $ 112,075       $ 113,312      $ 114,387      $ 112,536      $ 110,983   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
  

 

 

                                  

 

(1) 

The liabilities associated with discontinued operations prior to the sale have been segregated in the consolidated balance sheets. The major liability categories for discontinued operations were as follows:

 

     March 31,
2013
     December 31,
2012
     September 30,
2012
     June 30,
2012
     March 31,
2012
 

LIABILITIES

              

Other liabilities

   $ 70       $ 48       $ 49       $ 49       $ 62   

Deferred tax liability

     16         13         7         5         5   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities associated with discontinued operations

   $ 86       $ 61       $ 56       $ 54       $ 67   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

10


Table of Contents

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

 

Consolidated Balance Sheet by Segment

(amounts in millions)

 

     March 31, 2013   
     U.S. Life
Insurance
     International
Mortgage
Insurance
     U.S. Mortgage
Insurance
    International
Protection
     Runoff     Corporate
and Other
(1)
    Total  

ASSETS

                 

Cash and investments

   $ 56,805       $ 9,579       $ 2,063      $ 1,634       $ 3,990      $ 3,244      $ 77,315   

Deferred acquisition costs and intangible assets

     5,370         220         20        256         363        35        6,264   

Reinsurance recoverable

     16,172         17         79        27         916        —          17,211   

Deferred tax and other assets

     371         118         39        132         26        20        706   

Separate account assets

     —           —           —          —           10,140        —          10,140   

Assets associated with discontinued operations

     —           —           —          —           —          439        439   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total assets

   $ 78,718       $ 9,934       $ 2,201      $ 2,049       $ 15,435      $ 3,738      $ 112,075   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

                 

Liabilities:

                 

Future policy benefits

   $ 33,595       $ —         $ —        $ —         $ 6      $ —        $ 33,601   

Policyholder account balances

     21,336         —           —          15         4,535        —          25,886   

Liability for policy and contract claims

     4,906         494         1,820        102         21        —          7,343   

Unearned premiums

     594         2,961         117        511         10        —          4,193   

Non-recourse funding obligations

     2,092         —           —          —           —          (30     2,062   

Deferred tax and other liabilities

     5,142         332         (810     437         89        970        6,160   

Borrowings and capital securities

     —           564         —          —           8        4,523        5,095   

Separate account liabilities

     —           —           —          —           10,140        —          10,140   

Liabilities associated with discontinued operations

     —           —           —          —           —          86        86   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total liabilities

     67,665         4,351         1,127        1,065         14,809        5,549        94,566   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Stockholders’ equity:

                 

Allocated equity, excluding accumulated other comprehensive
income (loss)

     6,990         3,457         1,042        959         697        (1,747     11,398   

Allocated accumulated other comprehensive income (loss)

     4,063         839         32        25         (71     (64     4,824   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total Genworth Financial, Inc.’s stockholders’ equity

     11,053         4,296         1,074        984         626        (1,811     16,222   

Noncontrolling interests

     —           1,287         —          —           —          —          1,287   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     11,053         5,583         1,074        984         626        (1,811     17,509   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 78,718       $ 9,934       $ 2,201      $ 2,049       $ 15,435      $ 3,738      $ 112,075   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

(1)

Includes inter-segment eliminations and non-core products.

 

11


Table of Contents

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

 

Consolidated Balance Sheet by Segment

(amounts in millions)

 

     December 31, 2012  
     U.S. Life
Insurance
     International
Mortgage
Insurance
     U.S. Mortgage
Insurance
    International
Protection
     Runoff     Corporate and
Other
(1)
    Total  

ASSETS

                 

Cash and investments

   $ 57,341       $ 9,702       $ 2,192      $ 1,715       $ 4,065      $ 3,711      $ 78,726   

Deferred acquisition costs and intangible assets

     5,368         230         19        267         348        38        6,270   

Reinsurance recoverable

     16,160         18         96        26         930        —          17,230   

Deferred tax and other assets

     345         113         50        137         28        37        710   

Separate account assets

     —           —           —          —           9,937        —          9,937   

Assets associated with discontinued operations

     —           —           —          —           —          439        439   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total assets

   $ 79,214       $ 10,063       $ 2,357      $ 2,145       $ 15,308      $ 4,225      $ 113,312   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

                 

Liabilities:

                 

Future policy benefits

   $ 33,499       $ —         $ —        $ —         $ 6      $ —        $ 33,505   

Policyholder account balances

     21,454         —           —          16         4,792        —          26,262   

Liability for policy and contract claims

     4,857         516         2,009        106         21        —          7,509   

Unearned premiums

     617         3,051         116        539         10        —          4,333   

Non-recourse funding obligations

     2,096         —           —          —           —          (30     2,066   

Deferred tax and other liabilities

     5,386         373         (801     481         105        1,202        6,746   

Borrowings and capital securities

     —           573         —          —           8        4,531        5,112   

Separate account liabilities

     —           —           —          —           9,937        —          9,937   

Liabilities associated with discontinued operations

     —           —           —          —           —          61        61   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total liabilities

     67,909         4,513         1,324        1,142         14,879        5,764        95,531   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Stockholders’ equity:

                 

Allocated equity, excluding accumulated other comprehensive income (loss)

     6,895         3,382         1,006        925         540        (1,457     11,291   

Allocated accumulated other comprehensive income (loss)

     4,410         880         27        78         (111     (82     5,202   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total Genworth Financial, Inc.’s stockholders’ equity

     11,305         4,262         1,033        1,003         429        (1,539     16,493   

Noncontrolling interests

     —           1,288         —          —           —          —          1,288   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     11,305         5,550         1,033        1,003         429        (1,539     17,781   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 79,214       $ 10,063       $ 2,357      $ 2,145       $ 15,308      $ 4,225      $ 113,312   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

(1)

Includes inter-segment eliminations and non-core products.

 

12


Table of Contents

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

 

Deferred Acquisition Costs Rollforward

(amounts in millions)

 

    U.S. Life
Insurance
    International
Mortgage
Insurance
    U.S. Mortgage
Insurance
    International
Protection
    Runoff(1)     Corporate and
Other
    Total  

Unamortized balance as of December 31, 2012

  $ 4,711      $ 161      $ 10      $ 242      $ 336      $ —        $ 5,460   

Costs deferred

    66        12        2        24        1        —          105   

Amortization, net of interest accretion

    (70     (14     (1     (26     14        —          (97

Impact of foreign currency translation

    —          (2     —          (8     —          —          (10
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Unamortized balance as of March 31, 2013

    4,707        157        11        232        351        —          5,458   

Effect of accumulated net unrealized investment (gains) losses

    (395     —          —          —          (13     —          (408
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of March 31, 2013

  $ 4,312      $ 157      $ 11      $ 232      $ 338      $ —        $ 5,050   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Amortization, net of interest accretion, includes $19 million of amortization related to net investment gains for the policyholder account balances.

 

13


Table of Contents

U.S. Life Insurance Division

 

14


Table of Contents

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

 

Net Operating Income—U.S. Life Insurance Division

(amounts in millions)

 

     2013     2012  
     1Q     4Q     3Q     2Q     1Q     Total  

REVENUES:

              

Premiums

   $ 707      $ 759      $ 754      $ 733      $ 543      $ 2,789   

Net investment income

     638        661        644        651        638        2,594   

Net investment gains (losses)

     (12     8        7        (21     (2     (8

Insurance and investment product fees and other

     188        199        221        192        263        875   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     1,521        1,627        1,626        1,555        1,442        6,250   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BENEFITS AND EXPENSES:

              

Benefits and other changes in policy reserves

     974        1,075        1,051        1,038        786        3,950   

Interest credited

     152        161        160        160        162        643   

Acquisition and operating expenses, net of deferrals

     163        169        170        169        169        677   

Amortization of deferred acquisition costs and intangibles

     87        78        94        82        223        477   

Interest expense

     23        26        24        24        12        86   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total benefits and expenses

     1,399        1,509        1,499        1,473        1,352        5,833   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     122        118        127        82        90        417   

Provision for income taxes

     45        40        42        29        32        143   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME FROM CONTINUING OPERATIONS

     77        78        85        53        58        274   

ADJUSTMENT TO INCOME FROM CONTINUING OPERATIONS:

              

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

     8        (2     1        11        6        16   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET OPERATING INCOME

   $ 85      $ 76      $ 86      $ 64      $ 64      $ 290   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  

 

 

                                         

Effective tax rate (operating income)(1)

     36.4     32.7     32.4     36.1     35.6     34.1

 

(1) 

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

 

15


Table of Contents

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

 

Net Operating Income—U.S. Life Insurance Division

(amounts in millions)

 

      U.S. Life Insurance Segment        

Three months ended March 31, 2013

   Life Insurance     Long-Term Care     Fixed Annuities     Total U.S. Life
Insurance Segment
    Total  

REVENUES:

            

Premiums

   $ 181      $ 513      $ 13      $ 707      $ 707   

Net investment income

     131        264        243        638        638   

Net investment gains (losses)

     (4     (3     (5     (12     (12

Insurance and investment product fees and other

     186        1        1        188        188   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     494        775        252        1,521        1,521   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BENEFITS AND EXPENSES:

            

Benefits and other changes in policy reserves

     264        628        82        974        974   

Interest credited

     64        —          88        152        152   

Acquisition and operating expenses, net of deferrals

     50        94        19        163        163   

Amortization of deferred acquisition costs and intangibles

     40        25        22        87        87   

Interest expense

     23        —          —          23        23   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total benefits and expenses

     441        747        211        1,399        1,399   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     53        28        41        122        122   

Provision for income taxes

     20        10        15        45        45   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME FROM CONTINUING OPERATIONS

     33        18        26        77        77   

ADJUSTMENT TO INCOME FROM CONTINUING OPERATIONS:

            

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

     3        2        3        8        8   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET OPERATING INCOME

   $ 36      $ 20      $ 29      $ 85      $ 85   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                                  

 

 

 

Effective tax rate (operating income)

     37.6     35.4     35.5     36.4     36.4

 

      U.S. Life Insurance Segment        

Three months ended March 31, 2012

   Life Insurance     Long-Term Care     Fixed Annuities     Total U.S. Life
Insurance Segment
    Total  

REVENUES:

            

Premiums

   $ (11   $ 521      $ 33      $ 543      $ 543   

Net investment income

     129        255        254        638        638   

Net investment gains (losses)

     (5     (2     5        (2     (2

Insurance and investment product fees and other

     260        1        2        263        263   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     373        775        294        1,442        1,442   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BENEFITS AND EXPENSES:

            

Benefits and other changes in policy reserves

     65        601        120        786        786   

Interest credited

     65        —          97        162        162   

Acquisition and operating expenses, net of deferrals

     55        98        16        169        169   

Amortization of deferred acquisition costs and intangibles

     172        22        29        223        223   

Interest expense

     12        —          —          12        12   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total benefits and expenses

     369        721        262        1,352        1,352   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     4        54        32        90        90   

Provision for income taxes

     1        20        11        32        32   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME FROM CONTINUING OPERATIONS

     3        34        21        58        58   

ADJUSTMENT TO INCOME FROM CONTINUING OPERATIONS:

            

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

     3        1        2        6        6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET OPERATING INCOME

   $ 6      $ 35      $ 23      $ 64      $ 64   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                                  

 

 

 

Effective tax rate (operating income)

     30.3     36.5     35.6     35.6     35.6

 

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U.S. Life Insurance Segment

 

17


Table of Contents

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

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

(amounts in millions)

 

     2013     2012  
     1Q     4Q     3Q(1)     2Q     1Q(2)     Total  

REVENUES:

              

Premiums

   $ 181      $ 177      $ 187      $ 189      $ (11   $ 542   

Net investment income

     131        137        129        130        129        525   

Net investment gains (losses)

     (4     10        (2     (9     (5     (6

Insurance and investment product fees and other

     186        198        219        188        260        865   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     494        522        533        498        373        1,926   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BENEFITS AND EXPENSES:

              

Benefits and other changes in policy reserves

     264        264        313        281        65        923   

Interest credited

     64        69        66        65        65        265   

Acquisition and operating expenses, net of deferrals

     50        44        51        55        55        205   

Amortization of deferred acquisition costs and intangibles

     40        35        49        37        172        293   

Interest expense

     23        25        24        23        12        84   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total benefits and expenses

     441        437        503        461        369        1,770   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     53        85        30        37        4        156   

Provision for income taxes

     20        30        10        13        1        54   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME FROM CONTINUING OPERATIONS

     33        55        20        24        3        102   
 

ADJUSTMENT TO INCOME FROM CONTINUING OPERATIONS:

              

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

     3        (6     2        6        3        5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET OPERATING INCOME

   $ 36      $ 49      $ 22      $ 30      $ 6      $ 107   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  

 

 

                                         

Effective tax rate (operating income)

     37.6     34.9     32.8     35.7     30.3     34.4

SALES:

            

Sales by Product:

            

Term Life

   $ 4      $ —        $ 1      $ —        $ —        $ 1   

Term Universal Life

     1        11        19        32        31        93   

Universal Life

     9        17        15        19        16        67   

Linked-Benefits

     2        3        3        3        3        12   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Sales

   $ 16      $ 31      $ 38      $ 54      $ 50      $ 173   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Sales by Distribution Channel:

              

Financial Intermediaries

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

Independent Producers

     15        30        35        52        48        165   

Dedicated Sales Specialist

     —          —          1        1        —          2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Sales

   $ 16      $ 31      $ 38      $ 54      $ 50      $ 173   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  

 

 

                                         

 

(1) 

In the third quarter of 2012, as part of a life block transaction, the company repurchased $270 million of non-recourse funding obligations resulting in a U.S. GAAP after-tax gain of approximately $21 million. The company also recorded higher after-tax deferred acquisition costs (DAC) amortization of approximately $25 million reflecting loss recognition associated with a third-party reinsurance treaty plus additional expenses. The combined transactions resulted in a U.S. GAAP after-tax loss of $6 million.

(2) 

In January 2012, as part of a life block transaction, the company repurchased $475 million of non-recourse funding obligations resulting in a U.S. GAAP after-tax gain of approximately $52 million and then ceded certain term life insurance policies to a third-party reinsurer resulting in a U.S. GAAP after-tax loss, net of DAC, of $93 million. The combined transactions resulted in a U.S. GAAP after-tax loss of approximately $41 million.

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

Life Insurance In-Force

(amounts in millions)

 

     2013      2012  
     1Q      4Q      3Q      2Q      1Q  

Term and Whole Life Insurance

                

Life insurance in-force, net of reinsurance

   $ 338,014       $ 340,394       $ 382,735       $ 387,333       $ 391,870   

Life insurance in-force before reinsurance

   $ 534,194       $ 539,317       $ 546,829       $ 554,019       $ 561,186   
 

Term Universal Life Insurance

                

Life insurance in-force, net of reinsurance

   $ 136,222       $ 137,359       $ 133,846       $ 119,687       $ 112,906   

Life insurance in-force before reinsurance

   $ 137,297       $ 138,436       $ 134,921       $ 127,640       $ 113,737   
 

Universal Life Insurance

                

Life insurance in-force, net of reinsurance

   $ 44,051       $ 44,129       $ 43,523       $ 43,232       $ 42,734   

Life insurance in-force before reinsurance

   $ 50,906       $ 50,954       $ 50,364       $ 50,083       $ 49,527   
 

Total Life Insurance

                

Life insurance in-force, net of reinsurance

   $ 518,287       $ 521,882       $ 560,104       $ 550,252       $ 547,510   

Life insurance in-force before reinsurance

   $ 722,397       $ 728,707       $ 732,114       $ 731,742       $ 724,450   

 

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GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

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

(amounts in millions)

 

     2013      2012  
     1Q      4Q     3Q     2Q     1Q     Total  

REVENUES:

               

Premiums

   $ 513       $ 552      $ 541      $ 529      $ 521      $ 2,143   

Net investment income

     264         273        266        266        255        1,060   

Net investment gains (losses)

     (3      1        1        —          (2     —     

Insurance and investment product fees and other

     1         —          1        2        1        4   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     775         826        809        797        775        3,207   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BENEFITS AND EXPENSES:

               

Benefits and other changes in policy reserves

     628         694        625        654        601        2,574   

Interest credited

     —           —          —          —          —          —     

Acquisition and operating expenses, net of deferrals

     94         105        100        96        98        399   

Amortization of deferred acquisition costs and intangibles

     25         17        19        24        22        82   

Interest expense

     —           1        —          1        —          2   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total benefits and expenses

     747         817        744        775        721        3,057   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     28         9        65        22        54        150   

Provision for income taxes

     10         1        20        8        20        49   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME FROM CONTINUING OPERATIONS

     18         8        45        14        34        101   
 

ADJUSTMENT TO INCOME FROM CONTINUING OPERATIONS:

               

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

     2         (1     —          —          1        —     
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET OPERATING INCOME

   $ 20       $ 7      $ 45      $ 14      $ 35      $ 101   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  

 

 

                                          

Effective tax rate (operating income)

     35.4      2.1     30.9     38.4     36.5     32.6

SALES:

             

Sales by Distribution Channel:

             

Financial Intermediaries

   $ 4       $ 6      $ 5      $ 5      $ 5      $ 21   

Independent Producers

     21         41        46        35        28        150   

Dedicated Sales Specialist

     10         13        12        13        12        50   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Individual Long-Term Care

     35         60        63        53        45        221   

Group Long-Term Care

     5         4        6        7        3        20   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Sales

   $ 40       $ 64      $ 69      $ 60      $ 48      $ 241   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  

 

 

                                          

RATIOS:

             

Loss Ratio(1)

     69.2      76.2     65.8     74.2     66.4     70.7

Gross Benefits Ratio(2)

     122.8      126.4     115.0     124.1     115.1     120.2

 

(1) 

The loss ratio was calculated by dividing benefits and other changes in policy reserves less tabular interest on reserves less loss adjustment expenses by net earned premiums.

(2) 

The gross benefits ratio was calculated by dividing the benefits and other changes in policy reserves by net earned premiums.

 

20


Table of Contents

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2013

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

(amounts in millions)

 

     2013     2012  
     1Q     4Q     3Q     2Q     1Q     Total  

REVENUES:

              

Premiums

   $ 13      $ 30      $ 26      $ 15      $ 33      $ 104   

Net investment income

     243        251        249        255        254        1,009   

Net investment gains (losses)

     (5     (3     8        (12     5        (2

Insurance and investment product fees and other

     1        1        1        2        2        6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     252        279        284        260        294        1,117   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BENEFITS AND EXPENSES:

              

Benefits and other changes in policy reserves

     82        117        113        103        120        453   

Interest credited

     88        92        94        95        97        378   

Acquisition and operating expenses, net of deferrals

     19        20        19        18        16        73   

Amortization of deferred acquisition costs and intangibles

     22        26        26        21        29        102   

Interest expense

     —          —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total benefits and expenses

     211        255        252        237        262        1,006   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     41        24        32        23        32        111   

Provision for income taxes

     15        9        12        8        11        40   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME FROM CONTINUING OPERATIONS

     26        15        20        15        21        71   
 

ADJUSTMENT TO INCOME FROM CONTINUING OPERATIONS:

              

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

     3        5        (1     5        2        11   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET OPERATING INCOME

   $ 29      $ 20      $ 19      $ 20      $ 23      $ 82   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  

 

 

                                         

Effective tax rate (operating income)

     35.5     35.1     35.4     35.3     35.6     35.3

SALES:

            

Sales by Product:

            

Single Premium Immediate Annuities

   $ 40      $ 69      $ 63      $ 51      $ 74      $ 257   

Single Premium Deferred Annuities

     67        179        424        285        262        1,150   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Sales

   $ 107      $ 248      $ 487      $ 336      $ 336      $ 1,407