From the Wires
Genworth Financial Reports Third Quarter Net Operating Income Of $0.51 Per Diluted Share-Loss From Continuing Operations of $0.60 Per Diluted Share
Nov. 6, 2008 04:05 PM
RICHMOND, Va., Nov. 6 /PRNewswire-FirstCall/ -- Genworth Financial, Inc.
(NYSE: GNW) today reported a loss from continuing operations for the third
quarter of 2008 of $258 million, or $0.60 per diluted share, compared with
income of $339 million, or $0.76 per diluted share, in the third quarter of
2007. Net operating income for the third quarter of 2008 was $220 million, or
$0.51 per diluted share, compared to net operating income of $368 million, or
$0.83 per diluted share, in the third quarter of 2007.
Three months ended September 30
(Unaudited)
2008 2007
Per Per
diluted diluted
Total share Total share
(Amounts in millions, except
per share)
Income (loss) from continuing
operations $(258) $(0.60) $339 $0.76
Net income (loss) $(258) $(0.60) $339 $0.76
Net operating income(1) $220 $0.51 $368 $0.83
Weighted average diluted shares 433.1 445.6
Third quarter results reflected net investment losses of $478 million, net
of tax and amortization of deferred acquisition costs (DAC), including $321
million of credit and/or cash flow related impairments, $55 million of
impairments related to a change of intent to hold securities to recovery and
$86 million of net realized losses from asset sales associated primarily with
portfolio repositioning activities. Of total impairments, $153 million, net of
tax, related to sub-prime and Alt-A residential mortgage and asset-backed
securities, and $145 million, net of tax, in corporate bonds concentrated
among several large financial services issuers.
Accounting Principles Board (APB) Opinion No. 28, Interim Financial
Reporting, requires that tax benefits be recorded during the year in
proportion to pre-tax income. As a result, tax benefits on operating income
that would otherwise have been recognized earlier in the year are recognized
in the third quarter, and the operating effective tax rate was nearly eight
percent in the quarter and 26 percent year to date. On a full year basis,
Genworth's effective tax rate on operating income is expected to be between 23
percent and 25 percent.
"This was a disappointing quarter for the company, which was compounded by
the ongoing turmoil in the credit, equity and housing markets," said Michael
D. Fraizer, chairman and chief executive officer. "In this unprecedented
period, we are focused on maintaining appropriate liquidity, and taking
additional steps to strengthen our capital levels and maximize our
flexibility. Among immediate actions taken are the suspension of our common
stock dividend, the formal suspension of our share repurchase program, which
has been inactive since the first quarter, and the contribution of $500
million of cash from the holding company to our life operating companies,
leaving those companies with a combined 360 percent RBC at the end of the
third quarter. We are also looking at other avenues - including the potential
for asset sales, debt refinancing or a possible capital raise. These steps
may be needed to navigate continued market uncertainty and turmoil in the
credit markets, while effectively positioning Genworth for the future."
Strategic Highlights:
-- Genworth is managing its liquidity profile effectively, and currently
holds approximately $435 million of cash and cash equivalents at the holding
company level and approximately $6.2 billion at the insurance company
operating levels.
-- The life insurance company consolidated risk-based capital ratio is
estimated at approximately 360 percent at September 30, 2008, following the
contribution of $500 million from the holding company effective as of that
date.
-- Reinsurance and capital efficiency projects providing capital benefits
of approximately $750 million were completed in the third quarter, $115
million were completed since the end of the quarter and additional projects
totaling approximately $500 million are targeted for year-end completion.
-- The company is planning to reduce annual expenses by approximately $100
million to $150 million, reflecting refinement of business focus in the
Retirement and Protection segment, along with the impact of economic slowdowns
in the U.S. and global markets generally. Lower new business volumes will
preserve capital while expense reductions could result in a restructuring
charge in the fourth quarter of 2008.
-- Genworth is evaluating several additional capital flexibility
alternatives including potential asset sales, continued review of the U.S.
Mortgage Insurance business, and the potential to raise private or public
equity, or debt capital.
-- The company's suspension of the common stock dividend will generate
approximately $175 million per year in available capital. The share
repurchase program also will be suspended for the foreseeable future.
Genworth is also suspending operating earnings outlook for 2008.
Segment Results
Net operating income (loss) presented in the tables below excludes net
investment gains (losses), net of taxes and other adjustments. In the
discussion of International results, all references to percentage changes
exclude the impact of foreign exchange. The impact of foreign exchange on net
operating income in the third quarter of 2008 was a favorable $5 million.
A reconciliation of net operating income (loss) of segments and Corporate
and Other activities to net income (loss) is included at the end of this press
release.
Retirement and Protection
Retirement and Protection
Net Operating Income (Loss)
(in millions) Q3 08 Q3 07
Wealth Management $12 $11
Retirement Income
Fee-Based (1) 40
Spread-Based 16 42
Institutional 49 10
Life Insurance 63 81
Long Term Care 39 39
Total Retirement and $178 $223
Protection
Sales
(in millions) Q3 08 Q3 07
Wealth Management
Gross Flows $1,230 $1,665
Net Flows 183 1,098
Retirement Income
Fee-Based 596 665
Spread-Based 727 358
Institutional 458 224
Life Insurance 76 96
Long Term Care 64 60
Assets Under Management (AUM)(2)
(in millions) Q3 08 Q3 07
Wealth Management $18,671 $21,662
Retirement Income Fee-Based 7,710 6,654
Total Fee-Based 26,381 28,316
Retirement Income Spread-Based 20,236 19,918
Institutional 9,253 11,292
Total Spread-Based 29,489 31,210
Total Assets Under Management $55,870 $59,526
Retirement and Protection earnings declined $45 million to $178 million,
primarily from lower investment income, unfavorable equity markets and a $12
million goodwill impairment in the institutional product line. The decline in
net investment income included $36 million lower limited partnership earnings
and $15 million related to lower bond calls, mortgage loan prepayments and
higher cash balances in a lower short term interest rate environment. The
decline in the equity markets resulted in $15 million of additional DAC
amortization, higher death benefits and lower fees. These were partially
offset by $52 million of income from granting an early redemption request from
a distressed institutional customer for funding agreements backing notes
(FABNs), at a price discounted to contract value.
Wealth management earnings were $12 million, up nine percent despite
equity market declines. AUM declined to $18.7 billion as equity market
declines surpassed the $183 million of positive net flows.
Retirement income fee-based results in the quarter were a $1 million net
loss, reflecting weak equity market performance that resulted in $8 million of
higher DAC amortization, $5 million in higher guaranteed death and withdrawal
benefits, in addition to $3 million of lower service related fees. Results in
the prior year included a favorable $22 million tax benefit related to the
dividends received deduction.
Retirement income spread-based earnings declined to $16 million. Earnings
in the current quarter reflected $25 million in lower net investment income
from limited partnerships, bond calls, pre-payments and higher cash balances.
In addition, there was approximately $5 million of unfavorable mortality as
compared to the prior year. These declines were partially offset by lower
taxes. Spread-based sales more than doubled to $727 million from higher sales
of both immediate annuities and deferred annuities.
Institutional earnings increased to $49 million driven by $52 million of
income from the early FABN redemptions noted previously, partially offset by
the impairment of all the remaining $12 million of goodwill associated with
the product line and the impact of an 18 percent decline in AUM. The goodwill
impairment reflects the impact of distressed market conditions on new business
viability and the profitability of older blocks. Institutional sales were $458
million. AUM declined $2.0 billion from the September 30, 2007 level of $11.3
billion, primarily from scheduled maturities.
Life insurance earnings decreased to $63 million, as a result of $11
million of lower limited partnership income and ongoing, higher life reserve
funding costs. Universal life sales decreased 19 percent, reflecting smaller
policy sizes and lower excess deposits. Term life sales decreased 25 percent,
reflecting intense pricing competition and the company's continued shift to
focus on the middle market which has a smaller average policy size.
Long term care earnings remained flat as profit emergence associated with
new block business growth and performance was offset by lower limited
partnership investment income. Total long term care sales increased seven
percent to $64 million as growth in career channel and Medicare supplement
sales offset lower sales through independent distribution.
International
International
Net Operating Income (Loss)
(in millions) Q3 08 Q3 07
Mortgage Insurance (MI)
Canada $80 $68
Australia 48 36
Other International (2) 6
Lifestyle Protection(3) 40 30
Total International $166 $140
International
Sales
(in billions) Q3 08 Q3 07
Mortgage Insurance
Flow
Canada $8.0 $11.0
Australia 8.7 11.4
Other International 2.0 4.7
Bulk
Canada 0.9 1.3
Australia 0.6 7.0
Other International 1.1 0.8
Total International MI $21.3 $36.2
Lifestyle Protection $0.6 $0.7
Total International earnings increased 15 percent to $166 million.
Canadian and Australian mortgage insurance businesses contributed double-digit
earnings growth, as did the company's lifestyle protection business.
In Canada, earnings grew 16 percent to $80 million from higher premiums,
offset partially by higher losses as in force vintages season normally. The
loss ratio increased to 25 percent, driven by the seasoning of the larger 2006
and 2007 book years in a slowing economic environment with the loss ratio
remaining well below pricing expectations. In Australia, earnings grew 31
percent to $48 million from solid revenue growth and lower taxes. The loss
ratio was 48 percent, down slightly from a year ago and higher sequentially as
a result of higher mortgage rates and the seasoning of the 2006 and 2007 books
in a slowing economy. The net loss of other international mortgage insurance
business was $2 million, primarily from higher delinquencies in Spain, where
active loss mitigation continues.
Slowing mortgage originations, coupled with selective risk management
actions, resulted in a decline in new insurance written in most international
markets. In Canada and Australia, flow new insurance written decreased 27
percent and 28 percent, respectively. The decrease in global mortgage
securitizations also resulted in very limited bulk sales in both Canada and
Australia.
Lifestyle protection earnings increased 23 percent to $40 million,
primarily as a result of lower expenses, a lower tax rate and a favorable
reserve adjustment for a reinsurance block of business, partially offset by
increased claims. Total lifestyle protection sales declined to $636 million
from lower sales in the U.K. and Ireland, reflecting declining levels of
consumer lending. Sales in established regions, outside of the U.K. and
Ireland, grew three percent.
U.S. Mortgage Insurance
U.S. Mortgage Insurance
(in millions) Q3 08 Q3 07
Net Operating Income (Loss) $(121) $39
Primary Insurance In Force $175.3 $144.8
(in billions)
Primary Risk In Force $36.5 $28.0
(in billions)
Primary Sales
(in billions)
Flow $6.2 $13.2
Bulk 0.1 2.8
Total Primary Sales $6.3 $16.0
U.S. Mortgage Insurance had a $121 million net operating loss as 16
percent earned premium growth and higher lender captive reinsurance coverage
were more than offset by higher incurred losses and higher expenses. Earnings
in the quarter benefited from $169 million pretax of lender captive
reinsurance coverage. Expenses in the quarter included a write-down of $20
million representing all DAC associated with the 2006 and 2007 book years,
which demonstrated declining performance, and a $22 million impairment of all
goodwill associated with the segment.
The gross increase in U.S. mortgage insurance loss reserves was $339
million. Flow net reserves increased $132 million, primarily from increased
delinquency counts and reserve strengthening in the 2006 and 2007 book years
concentrated primarily in what are referred to as the sand states of Florida,
California, Arizona and Nevada, which was partially offset by $169 million of
lender captive reinsurance coverage. On a year to date basis, more than 65
percent of the reserve build was related to mortgages in the sand states,
which represented 18 percent of flow risk in force. In addition, flow
delinquency trends increased in Georgia, Illinois, New Jersey and Minnesota.
Bulk reserves increased $38 million in the quarter, primarily from portfolio
and GSE Alt-A transactions, where delinquencies have exceeded deductible
layers.
Paid claims were $132 million, before taxes, an increase of $83 million
versus the third quarter of 2007 and $40 million, sequentially. The average
paid claim was $48,600, up from $35,800 a year ago, reflecting higher loan
balances in recent book years and a shift in claims to higher loan balance
states.
Loss mitigation activities, including workouts and presales, resulted in
$41 million of reduced loss exposure for the third quarter, up 95 percent from
2007. The company approved approximately 4,000 workouts, modifications, and
presales during the quarter. In addition, investigations and policy
rescissions associated with misrepresentation, ineligibility, and policy
exclusions resulted in a $76 million reduction in loss exposure.
Flow new insurance written decreased 53 percent to $6.2 billion as overall
mortgage originations declined significantly in the quarter and from
underwriting and guideline restrictions initiated throughout 2008 including in
the quarter, as well as from a higher percentage of the mortgage insurance
market going to the Federal Housing Administration (FHA). Underwriting and
guideline changes for risk management effectively excluded sales of
alternative products such as Alt-A, A minus, and 100 percent loan to value
(LTV) loans, which combined represented only one percent of new insurance
written during the quarter. Additional steps have been taken to limit
production in markets where home prices are expected to decline, bringing the
total number of Metropolitan Statistical Areas (MSAs) from 140 in the second
quarter of 2008 to 178 at present, where new business is limited to products
with a 90 percent or below LTV along with other underwriting conditions.
Finally, flow persistency remained strong, rising to 88 percent from 82
percent a year ago.
Genworth recently announced that it will no longer participate in excess
of loss captive reinsurance transactions as of January 1, 2009 and going
forward on new production it will only consider participation in quota share
reinsurance arrangements.
Corporate and Other
Corporate and Other
(in millions) Q3 08 Q3 07
Net Operating Loss $(3) $(34)
Corporate and Other had a net operating loss of $3 million, compared to a
$34 million loss in the prior year, primarily from lower taxes.
Investments
Third quarter net realized investment losses of $478 million, net of tax
and amortization of DAC, included $321 million of credit and/or cash flow
related impairments and $55 million of impairments related to a change of
intent to hold securities to recovery, all net of tax. Of total impairments,
$153 million, net of tax, related to sub-prime and Alt-A residential mortgage
and asset-backed securities, (with the majority currently rated below single-
A), and $145 million, net of tax, in corporate bonds concentrated among
several large financial services issuers. The company also realized $86
million of after-tax investment losses from asset sales, associated
principally with portfolio repositioning activities.
Limited partnerships generated a $20 million loss compared to a $17
million gain a year ago reflecting declines in real estate partnerships. Bond
calls and mortgage loan prepayments were $2 million, net of tax and DAC,
compared with $9 million a year ago.
Retirement income fee-based net income included a $22 million loss, net of
DAC and tax, from hedge ineffectiveness related to fund underperformance and
volatility in the equity markets. Hedging is used to manage the risk
associated with living benefit guarantees for the income distribution series
products.
Stockholders' Equity
Stockholders' equity as of September 30, 2008 was $10.5 billion, or $24.24
per share, compared with $13.3 billion, or $30.32 per share, as of September
30, 2007. Stockholders' equity, excluding accumulated other comprehensive
income (loss), as of September 30, 2008 was $12.3 billion, or $28.44 per
share, compared with $12.6 billion, or $28.73 per share, as of September 30,
2007.
The fixed maturity securities portfolio had gross unrealized investment
losses of $5,480 million, compared to $3,546 million at the end of the prior
quarter, and gross unrealized investment gains of $373 million, versus $549
million in the prior quarter. As of September 30, 2007, our fixed maturity
securities portfolio had gross unrealized investment losses of $1,475 million
and gross unrealized investment gains of $806 million.
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a leading public Fortune 500
global financial security company. Genworth has more than $100 billion in
assets and employs approximately 7,000 people with a presence in more than 25
countries. Its products and services help meet the investment, protection,
retirement and lifestyle needs of over 15 million customers. Genworth
operates through three segments: Retirement and Protection, International and
U.S. Mortgage Insurance. Its products and services are offered through
financial intermediaries, advisors, independent distributors and sales
specialists. Genworth Financial, which traces its roots back to 1871, became
a public company in 2004 and is headquartered in Richmond, Virginia. For more
information, visit genworth.com.
Conference Calls and Financial Supplement Information
This press release and the Third Quarter 2008 Financial Supplement are now
posted on the company's website. Investors are encouraged to review all of
these materials.
Genworth will conduct a conference call on November 6 at 5 p.m. to (ET) to
provide a detailed report on business operations and strategic priorities. The
conference call will be accessible via telephone and the Internet. The dial-
in number for Genworth's November 6 conference call is 800 762.7948 or 480
248.5083 (outside the U.S.). To participate in the call by webcast, register
at http://investor.genworth.com at least 15 minutes prior to the webcast to
download and install any necessary software.
The webcast will be archived on the company's website and a replay of the
call will be available at 800 406.7325 or 303 590.3030 (outside the U.S.)
passcode 3939696#. The replay will be available through November 20, 2008.
Use of Non-GAAP Measures
This press release includes the non-GAAP 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 after-tax net investment gains (losses) and
other adjustments and infrequent or unusual non-operating items. This metric
excludes these items because the company does not consider them to be related
to the operating performance of its segments and Corporate and Other
activities. A significant component of the net investment gains (losses) is
the result of impairments, including changes in intent to hold securities to
recovery and credit-related gains and losses, the timing of which can vary
significantly depending on market credit cycles. In addition, the size and
timing of other investment gains (losses) are often subject to Genworth's
discretion and are influenced by market opportunities, as well as asset-
liability matching considerations. Infrequent or unusual non-operating items
are also excluded from net operating income (loss) if, in the company's
opinion, they are not indicative of overall operating trends. While some of
these items may be significant components of net income (loss) in accordance
with GAAP, the company believes that net operating income (loss), and measures
that are derived from or incorporate net operating income (loss), are
appropriate measures that are useful to investors because they identify the
income (loss) attributable to the ongoing operations of the business.
However, net operating income (loss) is not viewed as a substitute for GAAP
net income (loss). In addition, the company's definition of net operating
income (loss) may differ from the definitions used by other companies. There
were no infrequent or unusual non-operating items excluded from net operating
income (loss) during the periods presented in this press release. The tables
at the end of this press release reflect net operating income (loss) as
determined in accordance with Statement of Financial Accounting Standards No.
131, Disclosures about Segments of an Enterprise and Related Information, and
a reconciliation of net operating income (loss) of the company's segments and
Corporate and Other activities to net income (loss) for the three months ended
September 30, 2008 and 2007.
Definition of Selected Operating Performance Measures
Management regularly monitors and reports a production volume metric
referred to as "sales," which is a measure commonly used in the insurance
industry as a measure of volume of new and renewal business generated in a
period. "Sales" refers to (1) annualized first-year premiums for term life
insurance, long term care insurance and Medicare supplement insurance; (2) new
and additional premiums/deposits for universal life insurance, linked-
benefits, spread-based and variable products; (3) gross and net flows for the
wealth management business which represent gross flows less redemptions; (4)
written premiums and deposits, gross of ceded reinsurance and cancellations,
and premium equivalents, where we earn a fee for administrative services only
business, for lifestyle protection insurance; (5) new insurance written for
mortgage insurance, which in each case reflects the amount of business the
company generated during each period presented; and (6) written premiums, net
of cancellations, for the Mexican insurance operations. Sales do not include
renewal premiums on policies or contracts written during prior periods. The
company considers annualized first-year premiums, new premiums/deposits, gross
and net flows, written premiums, premium equivalents and new insurance written
to be measures of the company's operating performance because they represent
measures of new sales of insurance policies or contracts during a specified
period, rather than measures of the company's revenues or profitability during
that period.
Management regularly monitors and reports assets under management for the
wealth management business, insurance in-force and risk in-force. Assets
under management for the wealth management business represent third-party
assets under management that are not consolidated in the financial statements.
Insurance in-force for the life insurance, international mortgage insurance
and U.S. mortgage insurance businesses is a measure of the aggregate face
value of outstanding insurance policies as of the respective reporting date.
Risk in-force for the international and U.S. mortgage insurance businesses is
a measure that recognizes that the loss on any particular mortgage loan will
be reduced by the net proceeds received upon sale of the underlying property.
The company considers assets under management for its wealth management
business, insurance in-force and risk in-force to be measures of the company's
operating performance because they represent measures of the size of the
business at a specific date, rather than measures of the company's revenues or
profitability during that period.
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.
Cautionary Note Regarding Forward-Looking Statements
This press release contains certain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Forward-
looking statements may be identified by words such as "expects," "intends,"
"anticipates," "plans," "believes," "seeks," "estimates," "will," or words of
similar meaning and include, but are not limited to, statements regarding the
outlook for the company's future business and financial performance. Forward-
looking statements are based on management's current expectations and
assumptions, which are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Actual outcomes and results may
differ materially due to global political, economic, business, competitive,
market, regulatory and other factors and risks, including the following:
-- Risks relating to the company's businesses, including adverse capital
and credit market conditions, downturns and volatility in equity and
credit markets, downgrades in the company's financial strength or
credit ratings, the impact of government actions on the financial
markets, the company's ability to access current and future government
support programs, interest rate fluctuations, the valuation of fixed
maturity, equity and trading securities, defaults, downgrades or
impairments of portfolio investments, goodwill impairments, the
soundness of other financial institutions, the company's ability to
access sources of liquidity, declines in risk-based capital,
insufficiency of reserves, legal constraints on dividend distributions
by subsidiaries, intense competition, availability and adequacy of
reinsurance, defaults by counterparties, loss of key distribution
partners, regulatory restrictions on the company's operations and
changes in applicable laws and regulations, legal or regulatory
investigations or actions, the failure or any compromise of the
security of the company's computer systems, and the occurrence of
natural or man-made disasters or a pandemic;
-- Risks relating to the company's Retirement and Protection segment,
including changes in morbidity and mortality, accelerated amortization
of deferred acquisition costs and present value of future
profits, reputational risks as a result of rate increases on certain
in-force long-term care insurance products, medical advances such as
genetic mapping research, unexpected changes in persistency rates,
increases in statutory reserve requirements, and the failure of demand
for long-term care insurance to increase as expected;
-- Risks relating to the company's International segment, including
political and economic instability, foreign exchange rate fluctuations,
unexpected changes in unemployment rates, unexpected increases in
mortgage insurance delinquency rates or severity of defaults, decreases
in the volume of high loan-to-value international mortgage
originations, increased competition with government-owned and
government-sponsored enterprises offering mortgage insurance, changes
in regulations, and growth in the global mortgage insurance market that
is slower than the company expects;
-- Risks relating to the company's U.S. Mortgage Insurance segment,
including the outcome of the company's review of strategic alternatives
for the segment, increases in mortgage insurance delinquency rates or
severity of defaults, deterioration in economic conditions or a decline
in home price appreciation, the effect of the conservatorship of Fannie
Mae and Freddie Mac on mortgage originations, the influence of Fannie
Mae, Freddie Mac and a small number of large mortgage lenders and
investors, decreases in the volume of high loan-to-value mortgage
originations or increases in mortgage insurance cancellations,
increases in the use of alternatives to private mortgage insurance
(such as simultaneous second mortgages) and reductions by lenders in
the level of coverage they select, increases in the use of reinsurance
with reinsurance companies affiliated with the company's mortgage
lending customers, increased competition with government-owned and
government-sponsored enterprises offering mortgage insurance, changes
in regulations, legal actions under the Real Estate Settlement
Practices Act of 1974, and potential liabilities in connection with
the company's U.S. contract underwriting services;
-- Other risks, including the possibility that in certain circumstances we
will be obligated to make payments to General Electric Company (GE)
under the company's tax matters agreement with GE even if the company's
corresponding tax savings are never realized and the company's payments
could be accelerated in the event of certain changes in control, and
provisions of the company's certificate of incorporation and bylaws and
the company's tax matters agreement with GE may discourage takeover
attempts and business combinations that stockholders might consider in
their best interests; and
-- Risks relating to the company's common stock, including the suspension
of dividends and share price fluctuation.
The company undertakes no obligation to publicly update any forward-
looking statement, whether as a result of new information, future developments
or otherwise.
Consolidated Statements of Income (Loss)
(Amounts in millions, except per share amounts)
Three months ended
September 30,
2008 2007
Revenues:
Premiums $1,735 $1,600
Net investment income 918 1,074
Net investment gains (losses) (816) (48)
Insurance and investment product fees
and other 331 249
Total revenues 2,168 2,875
Benefits and expenses:
Benefits and other changes in policy reserves 1,497 1,168
Interest credited 319 391
Acquisition and operating expenses, net
of deferrals 515 540
Amortization of deferred acquisition
costs and intangibles 208 202
Interest expense 125 124
Total benefits and expenses 2,664 2,425
Income (loss) from continuing operations
before income taxes (496) 450
Provision (benefit) for income taxes (238) 111
Net income (loss) $(258) $339
Earnings (loss) from continuing operations per
common share:
Basic $(0.60) $0.77
Diluted $(0.60) $0.76
Earnings (loss) per common share:
Basic $(0.60) $0.77
Diluted $(0.60) $0.76
Weighted-average common shares
outstanding:
Basic 433.1 441.1
Diluted 433.1 445.6
Reconciliation of Net Operating Income to Net Income (Loss)
(Amounts in millions, except per share amounts)
Three months ended
September 30,
2008 2007
Net operating income:
Retirement and Protection segment $178 $223
International segment 166 140
U.S. Mortgage Insurance segment (121) 39
Corporate and Other (3) (34)
Net operating income 220 368
Net investment gains (losses), net of taxes and
other adjustments (478) (29)
Net income (loss) $(258) $339
Earnings (loss) per common share:
Basic $(0.60) $0.77
Diluted $(0.60) $0.76
Net operating earnings per common share:
Basic $0.51 $0.83
Diluted $0.51 $0.83
Weighted-average common shares outstanding:
Basic 433.1 441.1
Diluted 433.1 445.6
(1) This is a financial measure not calculated based on U.S. Generally
Accepted Accounting Principles (Non-GAAP). See the Use of Non-GAAP
Measures section of this press release for additional information.
(2) Assets under management represent account values, net of reinsurance,
and managed third party assets.
(3) Lifestyle Protection was formerly referred to as Payment Protection.
SOURCE Genworth Financial, Inc.
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