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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Genworth Financial Inc | NYSE:GNW | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.03 | 0.46% | 6.49 | 6.54 | 6.34 | 6.46 | 3,156,939 | 01:00:00 |
RICHMOND, Va., May 2, 2017 /PRNewswire/ --
Genworth Financial, Inc. (NYSE: GNW) today reported results for the period ended March 31, 2017. The company reported net income of $155 million, or $0.31 per diluted share, in the first quarter of 2017, compared with net income of $53 million, or $0.11 per diluted share, in the first quarter of 2016. The adjusted operating income for the first quarter of 2017 was $143 million, or $0.29 per diluted share, compared with adjusted operating income of $103 million, or $0.21 per diluted share, in the first quarter of 2016. Net income and adjusted operating income in the quarter were each reduced by $14 million after-tax, or $0.03 per diluted share, relating to state guaranty fund assessments for the Penn Treaty Network American Insurance Company and American Network Insurance Company (Penn Treaty) plan of liquidation.
Strategic Update
At a special meeting held on March 7, 2017, Genworth stockholders voted to approve the proposed transaction with Oceanwide, under which Oceanwide has agreed to acquire Genworth for a total transaction value of approximately $2.7 billion, or $5.43 per share, in cash. Approximately 96 percent of votes cast were voted in favor of the merger, which represented 71 percent of Genworth's total outstanding shares of common stock.
Genworth and Oceanwide continue to work diligently to satisfy the closing conditions under the merger agreement. On April 28, 2017, Genworth and Oceanwide withdrew and refiled the joint voluntary notice to The Committee on Foreign Investment in the United States ("CFIUS") to permit more time for review and discussion with CFIUS. All other filings required under the merger agreement for regulatory approval of the transaction have been submitted. The closing of the proposed transaction remains subject to conditions, including the receipt of required regulatory approvals in the U.S., China, and other international jurisdictions. Genworth and Oceanwide are engaged with the relevant regulators regarding the pending applications and continue to target closing the transaction in the middle of 2017.
"Led by U.S. MI, our mortgage insurance platform continues to perform well and we are making progress against our U.S. Life restructuring and LTC rate action plans," said Tom McInerney, President and CEO of Genworth. "Genworth continues to work to complete the pending transaction with Oceanwide and focus on our key financial and operational priorities, including our multi-year LTC rate action plan."
Financial Performance
Consolidated Net Income & |
|||||||||||||||||
Adjusted Operating Income |
|||||||||||||||||
Three months ended March 31 |
|||||||||||||||||
(Unaudited) |
|||||||||||||||||
2017 |
2016 |
||||||||||||||||
Per |
Per |
||||||||||||||||
diluted |
diluted |
Total |
|||||||||||||||
(Amounts in millions, except per share) |
Total |
share |
Total |
share |
% change |
||||||||||||
Net Income available to Genworth's common |
|||||||||||||||||
stockholders |
$ |
155 |
$ |
0.31 |
$ |
53 |
$ |
0.11 |
192 % |
||||||||
Adjusted operating income |
$ |
143 |
$ |
0.29 |
$ |
103 |
$ |
0.21 |
39 % |
||||||||
Weighted-average diluted shares |
501.0 |
499.4 |
|||||||||||||||
Three months ended March 31 |
|||||||||||||||||
(Unaudited) |
|||||||||||||||||
2017 |
2016 |
||||||||||||||||
Book value per share |
$ |
25.68 |
$ |
28.19 |
|||||||||||||
Book value per share, excluding |
|||||||||||||||||
accumulated other comprehensive |
|||||||||||||||||
income (loss) |
$ |
19.47 |
$ |
19.80 |
|||||||||||||
Net income in the first quarter of 2017 benefitted from net investment gains, net of taxes and other adjustments, of $13 million in the quarter. Net income in the first quarter of 2016 was reduced by net investment losses, net of taxes and other adjustments, of $13 million, a net after-tax loss of $11 million for early extinguishment of Genworth Holdings' senior notes, an after-tax loss of $6 million on a life block transaction, restructuring costs of $9 million after-tax and after-tax fees incurred related to a bond consent solicitation of $12 million.
Net investment income was $790 million in the quarter, up from $786 million in the prior quarter and up from $789 million in the prior year. Net investment income continues to reflect variability in prepayment speed adjustments related to residential mortgage-backed securities and other variable investment income, as well as higher average invested assets supporting our LTC business. The reported yield and the core yield2 for the quarter were 4.53 percent and 4.48 percent, respectively.
Adjusted operating income (loss) results are summarized in the table below:
Adjusted Operating Income (Loss) |
|||||||||||
(Amounts in millions) |
Q1 17 |
Q4 16 |
Q1 16 | ||||||||
U.S. Mortgage Insurance |
$ |
73 |
$ |
61 |
$ |
61 | |||||
Canada Mortgage Insurance |
36 |
39 |
33 | ||||||||
Australia Mortgage Insurance |
13 |
14 |
19 | ||||||||
U.S. Life Insurance |
53 |
(154) |
91 | ||||||||
Runoff |
14 |
6 |
4 | ||||||||
Corporate and Other |
(46) |
(103) |
(105) | ||||||||
Total Adjusted Operating Income (Loss) |
$ |
143 |
$ |
(137) |
$ |
103 |
Adjusted operating income (loss) represents income (loss) from continuing operations excluding net investment gains (losses), gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, gains (losses) on insurance block transactions, restructuring costs and other adjustments, net of taxes. A reconciliation of net income (loss) to adjusted operating income (loss) of segments and Corporate and Other activities is included at the end of this press release.
Unless specifically noted in the discussion of results for the MI businesses in Canada and Australia, references to percentage changes exclude the impact of translating foreign denominated activity into U.S. dollars (foreign exchange). Percentage changes, which include the impact of foreign exchange, are found in a table at the end of this press release.
U.S. Mortgage Insurance
Operating Metrics |
||||||||||
(Dollar amounts in millions) |
Q1 17 |
Q4 16 |
Q1 16 | |||||||
Adjusted operating income |
$ |
73 |
$ |
61 |
$ |
61 | ||||
New insurance written |
||||||||||
Primary Flow |
$ |
7,600 |
$ |
11,100 |
$ |
7,400 | ||||
Loss ratio |
17% |
28% |
24% |
U.S. MI reported adjusted operating income of $73 million, compared with $61 million in both the prior quarter and the prior year. The loss ratio in the current quarter was 17 percent, down eleven points sequentially driven primarily by strong seasonal net cures and aging benefits and down seven points from the prior year primarily reflecting the continued decline and improved performance in delinquencies from the 2005 to 2008 book years.
Flow NIW of $7.6 billion decreased 32 percent from the prior quarter from a seasonally smaller purchase originations market, but increased three percent versus the prior year primarily from a larger purchase originations market. U.S. MI's flow insurance in force grew 13 percent in the first quarter of 2017 versus the first quarter of 2016 driven primarily by an expanded originations market.
Canada Mortgage Insurance
Operating Metrics |
||||||||||
(Dollar amounts in millions) |
Q1 17 |
Q4 16 |
Q1 16 | |||||||
Adjusted operating income |
$ |
36 |
$ |
39 |
$ |
33 | ||||
New insurance written |
||||||||||
Flow |
$ |
2,300 |
$ |
3,900 |
$ |
2,500 | ||||
Bulk |
$ |
8,000 |
$ |
3,700 |
$ |
3,200 | ||||
Loss ratio |
16% |
18% |
24% |
Canada MI reported adjusted operating income of $36 million versus $39 million in the prior quarter and $33 million in the prior year. The loss ratio in the quarter was 16 percent, down two points from the prior quarter from lower average reserve per delinquency and down eight points compared to the prior year from a decrease in new delinquencies, net of cures. Results in the quarter reflect higher expenses both sequentially and versus the prior year from higher share based compensation.
Flow NIW was down 41 percent3 sequentially primarily from a seasonally smaller originations market and down 12 percent3 from the prior year primarily from a smaller market size. In addition, the company completed several bulk transactions in the quarter of $8.0 billion in the aggregate, consisting of high quality low loan-to-value prime loans. Effective March 17, 2017, Canada MI increased its flow mortgage insurance premium rates for new insured mortgages an average of approximately 20 percent to reflect the regulatory capital framework that came into effect on January 1, 2017.
Australia Mortgage Insurance
Operating Metrics |
||||||||||
(Dollar amounts in millions) |
Q1 17 |
Q4 16 |
Q1 16 | |||||||
Adjusted operating income |
$ |
13 |
$ |
14 |
$ |
19 | ||||
New insurance written |
||||||||||
Flow |
$ |
4,100 |
$ |
5,000 |
$ |
4,400 | ||||
Bulk |
$ |
1,000 |
$ |
— |
$ |
— | ||||
Loss ratio |
35% |
30% |
26% |
Australia MI reported adjusted operating income of $13 million versus $14 million in the prior quarter and $19 million in the prior year. The loss ratio in the quarter was 35 percent, up five points sequentially from seasonally lower net cures and aging benefits and up nine points from the prior year from continued unfavorable experience from the commodity dependent regions of Queensland and Western Australia.
Flow NIW was down 18 percent3 sequentially from a seasonally smaller originations market and down 11 percent3 from the prior year from lower levels of high loan to value lending.
U.S. Life Insurance
Operating Metrics |
|||||||||||
(Amounts in millions) |
Q1 17 |
Q4 16 |
Q1 16 | ||||||||
Adjusted operating income (loss) |
|||||||||||
Long Term Care Insurance |
$ |
14 |
$ |
(1) |
$ |
34 | |||||
Life Insurance |
16 |
(193) |
31 | ||||||||
Fixed Annuities |
23 |
40 |
26 | ||||||||
Total U.S. Life Insurance |
$ |
53 |
$ |
(154) |
$ |
91 | |||||
Sales |
|||||||||||
Long Term Care Insurance |
|||||||||||
Individual |
$ |
2 |
$ |
1 |
$ |
5 | |||||
Group |
1 |
1 |
2 | ||||||||
Life Insurance |
|||||||||||
Term Life |
— |
— |
5 | ||||||||
Universal Life |
1 |
— |
2 | ||||||||
Linked Benefits |
— |
— |
2 | ||||||||
Fixed Annuities |
1 |
— |
168 |
Long Term Care Insurance
LTC reported adjusted operating income of $14 million, compared with an adjusted operating loss of $1 million in the prior quarter and adjusted operating income of $34 million in the prior year. Results versus the prior quarter reflected seasonally favorable existing claim experience and higher reserve releases from reduced benefit elections by in-force policyholders as Genworth continues to implement its LTC rate action plan. Results in the quarter also reflect higher new claims growth versus both the prior quarter and prior year. Results in the quarter included an accrual for state guaranty fund assessments of $14 million after-tax relating to the Penn Treaty plan of liquidation.
Life Insurance
Life insurance reported adjusted operating income of $16 million, compared with an adjusted operating loss of $193 million in the prior quarter and adjusted operating income of $31 million in the prior year. Results in the prior quarter reflected a $196 million after-tax charge related to the company's annual review of life insurance assumptions. Results versus the prior quarter also reflected higher variable investment income and improved mortality. Results versus the prior year reflected higher reserve impacts from the fourth quarter of 2016 assumption review, lower variable investment income and unfavorable term mortality, partially offset by lower reinsurance financing costs.
Fixed Annuities
Fixed annuities reported adjusted operating income of $23 million, compared with $40 million in the prior quarter and $26 million in the prior year. Results in the quarter reflected favorable impacts from single premium immediate annuity mortality experience versus the prior quarter. Results in the prior quarter include a $6 million after-tax favorable adjustment related to state guaranty funds and a $10 million after-tax favorable impact related to an update of lapse assumptions and other refinements.
Runoff
Runoff reported adjusted operating income of $14 million compared with $6 million in the prior quarter and $4 million in the prior year. Results versus the prior quarter and prior year were primarily driven by improved equity market performance.
Corporate And Other
Corporate and Other reported an adjusted operating loss of $46 million, compared with $103 million in the prior quarter and $105 million in the prior year. Results in the current quarter reflected lower interest expense associated with our junior subordinated notes due to the interest rate change from fixed to floating rate and a correction to our Tax Matters Agreement liability. Results in the prior quarter reflected $29 million of deferred tax charges and an increase in professional fees and legal expenses associated with the Oceanwide transaction and pending litigation.
Capital & Liquidity
Genworth maintains the following capital positions in its operating subsidiaries:
Key Capital & Liquidity Metrics |
||||||||||||||
(Dollar amounts in millions) |
Q1 17 |
Q4 16 |
Q1 16 | |||||||||||
U.S. MI |
||||||||||||||
Consolidated Risk-To-Capital Ratio4 |
13.6:1 |
14.4:1 |
15.3:1 |
|||||||||||
Genworth Mortgage Insurance Corporation Risk-To-Capital Ratio4 |
13.7:1 |
14.5:1 |
15.5:1 |
|||||||||||
Private Mortgage Insurer Eligibility Requirements (PMIERs) Sufficiency Ratio5 |
118 |
% |
115 |
% |
113 |
% | ||||||||
Canada MI |
||||||||||||||
Minimum Capital Test (MCT) - New Regulatory Framework Effective January 1, 20174 |
162 |
% |
245 |
% |
234 |
% | ||||||||
Australia MI |
||||||||||||||
Prescribed Capital Amount (PCA) Ratio4 |
171 |
% |
157 |
% |
168 |
% | ||||||||
U.S. Life Insurance Companies |
||||||||||||||
Consolidated Risk-Based Capital (RBC) Ratio4 |
326 |
% |
329 |
% |
373 |
% | ||||||||
Holding Company Cash6 and Liquid Assets7 |
$ |
999 |
$ |
1,098 |
$ |
760 |
Key Points
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a Fortune 500 insurance holding company committed to helping families achieve the dream of homeownership and address the financial challenges of aging through its leadership positions in mortgage insurance and long term care insurance. Headquartered in Richmond, Virginia, Genworth traces its roots back to 1871 and became a public company in 2004. For more information, visit genworth.com.
From time to time, Genworth releases important information via postings on its corporate website. Accordingly, investors and other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds regarding new postings. Enrollment information is found under the "Investors" section of genworth.com. From time to time, Genworth's publicly traded subsidiaries, Genworth MI Canada Inc. and Genworth Mortgage Insurance Australia Limited, separately release financial and other information about their operations. This information can be found at http://genworth.ca and http://www.genworth.com.au.
Financial Supplement Information
This press release, first quarter 2017 financial supplement and earnings presentation are now posted on the company's website. Investors are encouraged to review these materials. Due to the pending sale to Oceanwide, the company does not plan to host an earnings call.
Use of Non-GAAP Measures
This press release includes the non-GAAP financial measures entitled "adjusted operating income (loss)" and "adjusted operating income (loss) per share." Adjusted operating income (loss) per share is derived from adjusted operating income (loss). The chief operating decision maker evaluates segment performance and allocates resources on the basis of adjusted operating income (loss). The company defines adjusted 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, gains (losses) on the early extinguishment of debt, gains (losses) on insurance block transactions, restructuring costs and infrequent or unusual non-operating items. Gains (losses) on insurance block transactions are defined as gains (losses) on the early extinguishment of non-recourse funding obligations, early termination fees for other financing restructuring and/or resulting gains (losses) on reinsurance restructuring for certain blocks of business. 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, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, gains (losses) on insurance block transactions and restructuring costs are also excluded from adjusted operating income (loss) because, in the company's opinion, they are not indicative of overall operating trends. Infrequent or unusual non-operating items are also excluded from adjusted 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) available to Genworth's common stockholders in accordance with GAAP, the company believes that adjusted operating income (loss) and measures that are derived from or incorporate adjusted operating income (loss), including adjusted operating income (loss) per 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 adjusted 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 adjusted operating income (loss) have occurred in the past and could, and in some cases will, recur in the future. Adjusted operating income (loss) and adjusted operating income (loss) per share on a basic and diluted basis are not substitutes for net income (loss) available to Genworth's common stockholders or net income (loss) available to Genworth's common stockholders per share on a basic and diluted basis determined in accordance with GAAP. In addition, the company's definition of adjusted operating income (loss) may differ from the definitions used by other companies.
Adjustments to reconcile net income (loss) attributable to Genworth's common stockholders and adjusted operating income (loss) assume a 35 percent tax rate (unless otherwise indicated) and are net of the portion attributable to noncontrolling interests. Net investment gains (losses) are also adjusted for deferred acquisition cost (DAC) and other intangible amortization and certain benefit reserves.
In the first quarter of 2016, the company recorded an estimated pre-tax loss of $7 million and a tax benefit of $27 million related to the planned sale of the mortgage insurance business in Europe. This transaction was excluded from adjusted operating income (loss) for the periods presented as it related to a gain (loss) on the sale of businesses.
In January 2016, the company paid a pre-tax make-whole expense of $20 million related to the early redemption of Genworth Holdings, Inc.'s (Genworth Holdings) 2016 notes. The company also repurchased $28 million principal amount of Genworth Holdings' notes with various maturity dates for a pre-tax gain of $4 million in the first quarter of 2016. These transactions were excluded from adjusted operating income (loss) for the periods presented as they related to a gain (loss) on the early extinguishment of debt.
In the first quarter of 2016, the company completed a life block transaction resulting in a pre-tax loss of $9 million in connection with the early extinguishment of non-recourse funding obligations.
In the first quarters of 2017 and 2016, the company recorded a pre-tax expense of $1 million and $15 million, respectively, related to restructuring costs as part of an expense reduction plan as the company evaluates and appropriately sizes its organizational needs and expenses.
There were no infrequent or unusual items excluded from adjusted operating income (loss) during the periods presented other than fees incurred during the first quarter of 2016 related to Genworth Holdings' bond consent solicitation of $18 million for broker, advisor and investment banking fees.
The tables at the end of this press release provide a reconciliation of net income (loss) available to Genworth's common stockholders to adjusted operating income (loss) for the three months ended March 31, 2017 and 2016, as well as for the three months ended December 31, 2016 and reflect adjusted operating income (loss) as determined in accordance with accounting guidance related to segment reporting.
This press release includes the non-GAAP financial measure entitled "core yield" as a measure of investment yield. The company defines core yield as the investment yield adjusted for items that do not reflect the underlying performance of the investment portfolio. Management believes that analysis of core yield enhances understanding of the investment yield of the company. However, core yield is not a substitute for investment yield determined in accordance with GAAP. In addition, the company's definition of core yield may differ from the definitions used by other companies. A reconciliation of core yield to reported GAAP yield is included in a table at the end of this press release.
Definition of Selected Operating Performance Measures
The company reports 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) new insurance written for mortgage insurance; (2) annualized first-year premiums for long term care and term life insurance products; (3) annualized first-year deposits plus five percent of excess deposits for universal and term universal life insurance products; (4) 10 percent of premium deposits for linked-benefits products; and (5) new and additional premiums/deposits for fixed annuities. Sales do not include renewal premiums on policies or contracts written during prior periods. The company considers new insurance written, annualized first-year premiums/deposits, premium equivalents and new premiums/deposits 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 also regularly monitors and reports a loss ratio for the company's businesses. For the mortgage insurance businesses, the loss ratio is the ratio of incurred losses and loss adjustment expenses to net earned premiums. For the long term care insurance business, the loss ratio is the ratio of benefits and other changes in reserves less tabular interest on reserves less loss adjustment expenses to net earned premiums. The company considers the loss ratio to be a measure of underwriting performance in these businesses and helps to enhance the understanding of the operating performance of the businesses.
An assumed tax rate of 35 percent is utilized in certain adjustments to adjusted operating income (loss) and in the explanation of specific variances of operating performance and investment results.
These operating performance 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, but not limited to, the following:
The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.
Condensed Consolidated Statements of Income | ||||||||||
(Amounts in millions, except per share amounts) | ||||||||||
Three months ended |
||||||||||
March 31, |
||||||||||
2017 |
2016 |
|||||||||
Revenues: |
||||||||||
Premiums |
$ |
1,136 |
$ |
794 |
||||||
Net investment income |
790 |
789 |
||||||||
Net investment gains (losses) |
34 |
(19) |
||||||||
Policy fees and other income |
211 |
221 |
||||||||
Total revenues |
2,171 |
1,785 |
||||||||
Benefits and expenses: |
||||||||||
Benefits and other changes in policy reserves |
1,246 |
860 |
||||||||
Interest credited |
167 |
177 |
||||||||
Acquisition and operating expenses, net of deferrals |
270 |
394 |
||||||||
Amortization of deferred acquisition costs and intangibles |
94 |
99 |
||||||||
Interest expense |
62 |
105 |
||||||||
Total benefits and expenses |
1,839 |
1,635 |
||||||||
Income from continuing operations before income taxes |
332 |
150 |
||||||||
Provision for income taxes |
116 |
23 |
||||||||
Income from continuing operations |
216 |
127 |
||||||||
Loss from discontinued operations, net of taxes |
— |
(19) |
||||||||
Net income |
216 |
108 |
||||||||
Less: net income attributable to noncontrolling interests |
61 |
55 |
||||||||
Net income available to Genworth Financial, Inc.'s common stockholders |
$ |
155 |
$ |
53 |
||||||
Income from continuing operations available to Genworth Financial, Inc.'s |
||||||||||
common stockholders per share: |
||||||||||
Basic |
$ |
0.31 |
$ |
0.14 |
||||||
Diluted |
$ |
0.31 |
$ |
0.14 |
||||||
Net income available to Genworth Financial, Inc.'s common stockholders |
||||||||||
per share: |
||||||||||
Basic |
$ |
0.31 |
$ |
0.11 |
||||||
Diluted |
$ |
0.31 |
$ |
0.11 |
||||||
Weighted-average common shares outstanding: |
||||||||||
Basic |
498.6 |
498.0 |
||||||||
Diluted |
501.0 |
499.4 |
Reconciliation of Net Income (Loss) to Adjusted Operating Income (Loss) | ||||||||||||
(Amounts in millions, except per share amounts) | ||||||||||||
Three |
Three | |||||||||||
months ended |
months ended | |||||||||||
March 31, |
December 31, | |||||||||||
2017 |
2016 |
2016 | ||||||||||
Net income (loss) available to Genworth Financial, Inc.'s common stockholders |
$ |
155 |
$ |
53 |
$ |
(122) | ||||||
Add: net income attributable to noncontrolling interests |
61 |
55 |
59 | |||||||||
Net income (loss) |
216 |
108 |
(63) | |||||||||
Loss from discontinued operations, net of taxes |
— |
(19) |
(4) | |||||||||
Income (loss) from continuing operations |
216 |
127 |
(59) | |||||||||
Less: income from continuing operations attributable to |
||||||||||||
noncontrolling interests |
61 |
55 |
59 | |||||||||
Income (loss) from continuing operations available to Genworth Financial, Inc.'s |
||||||||||||
common stockholders |
155 |
72 |
(118) | |||||||||
Adjustments to income (loss) from continuing operations available to Genworth |
||||||||||||
Financial, Inc.'s common stockholders: |
||||||||||||
Net investment (gains) losses, net8 |
(20) |
19 |
(28) | |||||||||
Losses on sale of businesses |
— |
7 |
— | |||||||||
Losses on early extinguishment of debt, net |
— |
16 |
— | |||||||||
Losses from life block transactions |
— |
9 |
— | |||||||||
Expenses related to restructuring |
1 |
15 |
— | |||||||||
Fees associated with bond consent solicitation |
— |
18 |
— | |||||||||
Taxes on adjustments |
7 |
(53) |
9 | |||||||||
Adjusted operating income (loss) |
$ |
143 |
$ |
103 |
$ |
(137) | ||||||
Adjusted operating income (loss): |
||||||||||||
U.S. Mortgage Insurance segment |
$ |
73 |
$ |
61 |
$ |
61 | ||||||
Canada Mortgage Insurance segment |
36 |
33 |
39 | |||||||||
Australia Mortgage Insurance segment |
13 |
19 |
14 | |||||||||
U.S. Life Insurance segment: |
||||||||||||
Long Term Care Insurance |
14 |
34 |
(1) | |||||||||
Life Insurance |
16 |
31 |
(193) | |||||||||
Fixed Annuities |
23 |
26 |
40 | |||||||||
Total U.S. Life Insurance segment |
53 |
91 |
(154) | |||||||||
Runoff segment |
14 |
4 |
6 | |||||||||
Corporate and Other |
(46) |
(105) |
(103) | |||||||||
Adjusted operating income (loss) |
$ |
143 |
$ |
103 |
$ |
(137) | ||||||
Net income (loss) available to Genworth Financial, Inc.'s common stockholders |
||||||||||||
per share: |
||||||||||||
Basic |
$ |
0.31 |
$ |
0.11 |
$ |
(0.25) | ||||||
Diluted |
$ |
0.31 |
$ |
0.11 |
$ |
(0.25) | ||||||
Adjusted operating income (loss) per share: |
||||||||||||
Basic |
$ |
0.29 |
$ |
0.21 |
$ |
(0.27) | ||||||
Diluted |
$ |
0.29 |
$ |
0.21 |
$ |
(0.27) | ||||||
Weighted-average common shares outstanding: |
||||||||||||
Basic |
498.6 |
498.0 |
498.4 | |||||||||
Diluted9 |
501.0 |
499.4 |
498.4 | |||||||||
Condensed Consolidated Balance Sheets | ||||||||||||
(Amounts in millions) | ||||||||||||
March 31, |
December 31, | |||||||||||
2017 |
2016 | |||||||||||
Assets |
||||||||||||
Cash, cash equivalents and invested assets |
$ |
75,387 |
$ |
75,012 | ||||||||
Deferred acquisition costs |
3,207 |
3,571 | ||||||||||
Intangible assets and goodwill |
381 |
348 | ||||||||||
Reinsurance recoverable |
17,681 |
17,755 | ||||||||||
Other assets |
703 |
673 | ||||||||||
Separate account assets |
7,327 |
7,299 | ||||||||||
Total assets |
$ |
104,686 |
$ |
104,658 | ||||||||
Liabilities and equity |
||||||||||||
Liabilities: |
||||||||||||
Future policy benefits |
$ |
37,291 |
$ |
37,063 | ||||||||
Policyholder account balances |
25,383 |
25,662 | ||||||||||
Liability for policy and contract claims |
9,295 |
9,256 | ||||||||||
Unearned premiums |
3,370 |
3,378 | ||||||||||
Deferred tax and other liabilities |
2,732 |
2,969 | ||||||||||
Borrowings related to securitization entities |
68 |
74 | ||||||||||
Non-recourse funding obligations |
310 |
310 | ||||||||||
Long-term borrowings |
4,194 |
4,180 | ||||||||||
Separate account liabilities |
7,327 |
7,299 | ||||||||||
Total liabilities |
89,970 |
90,191 | ||||||||||
Equity: |
||||||||||||
Common stock |
1 |
1 | ||||||||||
Additional paid-in capital |
11,964 |
11,962 | ||||||||||
Accumulated other comprehensive income (loss): |
||||||||||||
Net unrealized investment gains (losses): |
||||||||||||
Net unrealized gains (losses) on securities not other-than-temporarily impaired |
1,233 |
1,253 | ||||||||||
Net unrealized gains (losses) on other-than-temporarily impaired securities |
10 |
9 | ||||||||||
Net unrealized investment gains (losses) |
1,243 |
1,262 | ||||||||||
Derivatives qualifying as hedges |
2,036 |
2,085 | ||||||||||
Foreign currency translation and other adjustments |
(183) |
(253) | ||||||||||
Total accumulated other comprehensive income (loss) |
3,096 |
3,094 | ||||||||||
Retained earnings |
451 |
287 | ||||||||||
Treasury stock, at cost |
(2,700) |
(2,700) | ||||||||||
Total Genworth Financial, Inc.'s stockholders' equity |
12,812 |
12,644 | ||||||||||
Noncontrolling interests |
1,904 |
1,823 | ||||||||||
Total equity |
14,716 |
14,467 | ||||||||||
Total liabilities and equity |
$ |
104,686 |
$ |
104,658 | ||||||||
Impact of Foreign Exchange on Flow New Insurance Written10 Three months ended March 31, 2017 | ||||||
Percentages |
Percentages |
|||||
Including Foreign |
Excluding Foreign |
|||||
Exchange |
Exchange11 |
|||||
Canada Mortgage Insurance (MI): |
||||||
Flow new insurance written |
(8) |
% |
(12) |
% | ||
Flow new insurance written (1Q17 vs. 4Q16) |
(41) |
% |
(41) |
% | ||
Australia MI: |
||||||
Flow new insurance written |
(7) |
% |
(11) |
% | ||
Flow new insurance written (1Q17 vs. 4Q16) |
(18) |
% |
(18) |
% | ||
Reconciliation of Core Yield to Reported Yield | ||||||
Three | ||||||
months ended | ||||||
March 31, | ||||||
(Assets - amounts in billions) |
2017 | |||||
Reported Total Invested Assets and Cash |
$ |
74.7 |
||||
Subtract: |
||||||
Securities lending |
0.3 |
|||||
Unrealized gains (losses) |
4.6 |
|||||
Adjusted end of period invested assets |
$ |
69.8 |
||||
Average Invested Assets Used in Reported Yield Calculation |
$ |
69.7 |
||||
Subtract: |
||||||
Restricted commercial mortgage loans and other invested assets related to |
||||||
securitization entities12 |
0.1 |
|||||
Average Invested Assets Used in Core Yield Calculation |
$ |
69.6 |
||||
(Income - amounts in millions) |
||||||
Reported Net Investment Income |
$ |
790 |
||||
Subtract: |
||||||
Bond calls and commercial mortgage loan prepayments |
6 |
|||||
Other non-core items13 |
3 |
|||||
Restricted commercial mortgage loans and other invested assets related to |
||||||
securitization entities12 |
1 |
|||||
Core Net Investment Income |
$ |
780 |
||||
Reported Yield |
4.53 |
% | ||||
Core Yield |
4.48 |
% |
_________________________
1 Unless otherwise stated, all references in this press release to net income (loss), net income (loss) per share, adjusted operating income (loss), adjusted operating income (loss) per share and book value per share should be read as net income (loss) available to Genworth's common stockholders, net income (loss) available to Genworth's common stockholders per diluted share, adjusted operating income (loss) available to Genworth's common stockholders, adjusted operating income (loss) available to Genworth's common stockholders per diluted share and book value available to Genworth's common stockholders per share, respectively.
2 This is a financial measure that is 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.
3 Percent change excludes the impact of foreign exchange.
4 Company estimate for the first quarter of 2017, due to timing of the filing of statutory statements; The MCT Ratio for Canada MI in the first quarter of 2017 reflects the new regulatory framework effective January 1, 2017. The Consolidated RBC Ratio for the U.S. Life Insurance companies in the first quarter of 2016 is restated to reflect the merger of Brookfield Life Annuity Insurance Company with and into Genworth Life Insurance Company as if the merger occurred January 1, 2015.
5 Calculated as available assets divided by required assets as defined within PMIERs. As of March 31, 2017, December 31, 2016 and March 31, 2016, the PMIERs sufficiency ratios were in excess of approximately $400 million, $350 million and $300 million, respectively, of available assets above the PMIERs requirements. Company estimate for the first quarter of 2017.
6 Holding company cash and liquid assets comprises assets held in Genworth Holdings, Inc. (the issuer of outstanding public debt) which is a wholly-owned subsidiary of Genworth Financial, Inc.
7 Comprises cash and cash equivalents of $849 million, $998 million and $760 million, respectively, and U.S. government bonds of $150 million, $100 million and zero, respectively, as of March 31, 2017, December 31, 2016 and March 31, 2016.
8 For the three months ended March 31, 2017 and 2016 and the three months ended December 31, 2016, net investment gains (losses) were adjusted for DAC and other intangible amortization and certain benefit reserves of zero, $(9) million and $1 million respectively, and adjusted for net investment gains (losses) attributable to noncontrolling interests of $14 million, $9 million, and $12 million, respectively.
9 Under applicable accounting guidance, companies in a loss position are required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share. Therefore, as a result of the loss from continuing operations, the company was required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share as the inclusion of shares for stock options, restricted stock units and stock appreciation rights of 2.5 million for the three months ended December 31, 2016 would have been antidilutive to the calculation. If the company had not incurred a loss from continuing operations in this period, dilutive potential weighted-average common shares outstanding would have been 500.9 million for the three months ended December 31, 2016.
10 All percentages are comparing the first quarter of 2017 to the first quarter of 2016 unless otherwise stated.
11 The impact of foreign exchange was calculated using the comparable prior period exchange rates.
12 Represents the incremental assets and investment income related to restricted commercial mortgage loans and other invested assets.
13 Includes cost basis adjustments on structured securities and various other immaterial items.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/genworth-financial-announces-first-quarter-2017-results-300449944.html
SOURCE Genworth Financial, Inc.
Copyright 2017 PR Newswire
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