Genworth Financial Inc · NYSE:GNW
Genworth Financial — Q4 2016 Earnings Presentation
28 slides from Genworth Financial's earnings presentation, Feb 7, 2017
Slide 1: Earnings Summary Fourth Quarter 2016
Earnings Summary February 7, 2017 Fourth Quarter 2016 Exhibit 99.3
Slide 2: Forward-Looking Statements and Assumptions
Genworth 4Q16 Earnings Presentation - February 7, 2017 This presentation contains certain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “expects,” “anticipates,” “in
Slide 3: Key Financial Themes For The 4th Quarter
Key Financial Themes For The 4th Quarter Financial Performance GAAP Annual Assumption Review Complete For U.S. Life Insurance Long Term Care Insurance (LTC) Active Life GAAP Margins Of ~$1.0 To $1.5 Billion Universal Life1 (UL) Insurance After-Tax Charges Of $196MM Primarily Reflecting Updates To Mo
Slide 4: U.S. MI 2016 Adjusted Operating Income Is Second Highest Year Since IPO
U.S. MI 2016 Adjusted Operating Income Of $250MM Is Second Highest Year Since IPO In 2004 Strong Flow Insurance In Force Growth With A 3 Year Compound Annual Growth Rate (“CAGR”) Of ~9% Flow Delinquencies Down To Less Than 25K After Reaching A Crisis Peak Of Over 107K In 4Q09 PMIERs1 Sufficiency Rat
Slide 5: 4Q16 Results Summary – Genworth Consolidated
4Q16 Results Summary – Genworth Consolidated U.S. MI: 61 Insurance In Force Growth & New Delinquency Decline Continue To Drive Strong Results Strong Loss Ratio Performance Canada MI: 39 Continued Higher Earned Premiums From Increased Level Of NIW In Recent Years Strong Loss Ratio Performance Austral
Slide 6: U.S. Mortgage Insurance
U.S. Mortgage Insurance ($MM) ($MM) Benefits/Changes In Policy Reserves Premiums Flow NIW7,80012,80011,100 Loss Ratio39%21%28% Primary Delqs (#)31,66325,80325,709 Primary New Delqs (#)10,0439,6099,504 Primary Paid Claims (#)2,5341,5611,397 Primary Cures (#)8,8358,0438,201 % Of RIF1 2009+268%75%77% P
Slide 7: Canada Mortgage Insurance
Flow NIW4,7005,3003,900 Bulk NIW7,3005,1003,700 Canada Mortgage Insurance ($MM) ($MM) Loss Ratio23%24%18% Total Delqs (#)1,8292,0272,070 New Delqs (#)1,1981,2521,228 Paid Claims (#)373427393 Cures (#)711759792 Benefits/Changes In Policy Reserves Premiums Unfavorable $2MM Premium Impact From Foreign
Slide 8: Australia Mortgage Insurance
Australia Mortgage Insurance ($MM) ($MM) Benefits/Changes In Policy Reserves Premiums Flow NIW4,6004,6005,000 Bulk NIW--- Loss Ratio17%42%30% Total Delqs (#)5,5526,8446,731 New Delqs (#)2,4013,2142,786 Paid Claims (#)291321312 Cures (#)2,3622,4622,587 Favorable $5MM Premium Impact From FX Versus Pri
Slide 9: MI Businesses – Capital Adequacy
MI Businesses – Capital Adequacy1 1Company Estimate For 4Q16, Due To Timing Of The Filing Of Statutory Statements; 2Risk-To-Capital; 3Calculated As Available Assets Divided By Required Assets As Defined Within PMIERs. As of December 31, 2015, September 30, 2016 & December 31, 2016, The PMIERs Suffic
Slide 10: 4Q16 Summary – U.S. Life Insurance
4Q16 Summary – U.S. Life Insurance ($MM) Highlights Adjusted Operating Income (Loss) (135) (207) (154) Life Fixed Annuities LTC LTC Less Favorable Impact From Reduced Benefit Elections From In-Force Policyholders Versus Prior Quarter & Prior Year 4Q16 Results Include $7MM After-Tax Increase To Reser
Slide 11: Long Term Care Insurance
Benefits & Other Changes In Policy Reserves & Loss Ratio (%) Long Term Care Insurance Results Reflect Low Interest Rate Environment & Variability In Prepayment Speeds, Limited Partnership Performance & Bond Call Income 3Q16 Claim Reserves Strengthening Of $435MM Pre-Tax $45MM In 4Q16 Estimated Pre-T
Slide 12: LTC In Force Premium Rate Increase
Approved Filings FY15 Actual 1Q16 Actual 2Q16 Actual 3Q16 Actual 4Q16 Actual Comments State Filings Approved1 69 21 31 24 20 96 Approvals On ~$719MM Annualized In Force Premiums At ~28% Average For Full Year 2016; In Line With Expectations For 2015 Margin Testing Impacted In Force Premium ($MM) 739
Slide 13: LTC: Margin Testing
LTC: Margin Testing GAAP & Statutory Margin Testing Margin Testing Results PGAAP Positive Margin; No Unlocking Of Reserves HGAAP Positive Margin Although Decline From Prior Year Statutory In Process – Expected To Be Made Available At The Time Of The Form 10-K Filing Key Assumption Updates Included C
Slide 14: Life Insurance
Benefits & Other Changes In Policy Reserves Life Insurance Variability In Prepayment Speed Adjustments Impacting Reported Net Investment Income & Yield Annual Assumption Reviews Resulted In An Increase Of $208MM Pre-Tax In 4Q16 & $187MM Pre-Tax In 4Q15 Unfavorable Mortality Versus The Prior Quarter
Slide 15: Life Insurance Assumption Updates
Life Insurance After Updates To These & Other Assumptions, Net Unfavorable $196MM After-Tax Impact To GAAP Results In 4Q16 Statutory Results, Including Standalone Testing (Actuarial Guideline 38) Of Universal Life Insurance Products With Secondary Guarantees, Are In Process & Expected To Be Made Ava
Slide 16: Fixed Annuities
SPDA2 Spread1.67%1.61%1.65% SPIA3 Spread1.00%1.16%1.12% Fixed Annuities 1Net Investment Income Less Interest Credited; 2Single Premium Deferred Annuities; Excludes Fixed Indexed Annuities; 3Single Premium Immediate Annuities; Includes Both Paid & Unpaid Interest Credited; 4Excludes Incurred But Not
Slide 17: Net Investment Income
Net Investment Income ($MM) Highlights Net Investment Income 1Non-GAAP Measure, See Appendix 2Commercial Mortgage Loans GNW Reported Yield4.45%4.62%4.50% GNW Core Yield14.35%4.51%4.47% U.S. Life Ins. Segment Reported Yield4.82%4.99%4.79% Impairments(15)(2)(5) Continued Variability In Net Investment
Slide 18: Holding Company Cash & Liquid Assets
Variance (67) 1Holding Company Cash & Liquid Assets Comprise Assets Held In Genworth Holdings, Inc. (The Issuer Of Outstanding Public Debt) Which Is A Wholly-Owned Subsidiary Of Genworth Financial, Inc.; 2 Comprises Cash & Cash Equivalents Of $1,065MM & U.S. Government Bonds Of $100MM As Of Septembe
Slide 19: 2016 Goals & Drivers – MI Businesses
2016 Goals & Drivers – MI Businesses 1Company Estimate For 4Q16, Due To Timing Of The Filing Of Statutory Statements; 2Home Affordable Refinance Program Dividends / Payments Capital Ratios U.S. MI – Combined RTC< 18.0:1~14.4:11 Canada MI – MCT> 220%~245%1 Australia MI – PCA132-144%~157%1 Portfolio C
Slide 20: 2016 Goals – U.S. Life Insurance & Holding Co.
2016 Goals – U.S. Life Insurance & Holding Co. U.S. Life Insurance Holding Company LTC Rate Action Continued Execution Of Current Rate Actions & Begin Execution Of Multi-Year Rate Action Filing Plan U.S. Life Restructuring Plan Complete Cash Expense Reduction Of $100MM By First Half 2016 Complete ~$
Slide 21: Appendix
Appendix Genworth 4Q16 Earnings Presentation - February 7, 2017
Slide 22: Total Genworth Financial, Inc.'s Stockholders' Equity (GAAP)
Total Genworth Financial, Inc.’s Stockholders’ Equity (GAAP) ($MM) 4Q16 3Q16 2Q16 1Q16 4Q15 U.S. MI 2,070 2,089 2,015 1,814 1,703 Canada MI 1,565 1,601 1,592 1,551 1,443 Australia MI 651 687 706 773 763 U.S. Life Insurance 10,980 12,897 11,868 11,280 9,851 LTC1 7,621 8,957 8,155 7,666 6,690 Life Ins
Slide 23: Use Of Non-GAAP Measures
Use Of Non-GAAP Measures This presentation includes the non-GAAP financial measures entitled "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 ope
Slide 24: Reconciliation Of Net Loss To Adjusted Operating Income (Loss)
Reconciliation Of Net Loss To Adjusted Operating Income (Loss) Genworth 4Q16 Earnings Presentation - February 7, 2017 2015 (Amounts in millions) 4Q 3Q 4Q NET LOSS AVAILABLE TO GENWORTH FINANCIAL, INC.'S COMMON STOCKHOLDERS (122) $ (380) $ (292) $ Add: net income attributable to noncontrolling intere
Slide 25: Reconciliation Of Core Yield To Reported Yield
Reconciliation Of Core Yield To Reported Yield Genworth 4Q16 Earnings Presentation - February 7, 2017 2015 (Assets - amounts in billions) 4Q 3Q 4Q Reported - Total Invested Assets and Cash 74.4 $ 78.3 $ 75.1 $ Subtract: Securities lending 0.5 0.4 0.3 Unrealized gains (losses) 4.3 7.7 4.2 Adjusted en
Slide 26: Definition Of Selected Operating Performance Measures
Definition Of Selected Operating Performance Measures Management uses 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 repor
Slide 27: Cautionary Note Regarding Forward-Looking Statements
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,
Slide 28: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements Genworth 4Q16 Earnings Presentation - February 7, 2017 regulatory and legal risks including: extensive regulation of the company's businesses and changes in applicable laws and regulations; litigation and regulatory investigations or other actions