Genworth Financial Announces First Quarter 2017 Results

RICHMOND, Va., May 2, 2017 /PRNewswire/ --

• Stockholder Approval Of Acquisition By China Oceanwide Holdings Group Co., Ltd. (Oceanwide) March 7, 2017 With Approximately 96 Percent Of Votes Cast Voting In Favor Of The Merger
• All Regulatory Filings For The Oceanwide Acquisition Submitted
• Progress Made On U.S. Life Restructuring Plan With Several Internal Reinsurance Transactions Completed Effective April 1, 2017
• Net Income¹ And Adjusted Operating Income² Includes An Unfavorable Item In Long Term Care Insurance (LTC) Relating To Guaranty Fund Assessments For The Penn Treaty Plan Of Liquidation Of $14 Million After-Tax, Or $0.03 Per Diluted Share
• LTC Results Benefitted From Seasonally Favorable Existing Claim Experience
• Strong Loss Ratio And Capital Levels In The First Quarter For U.S. And Canada Mortgage Insurance (MI)
• U.S. MI First Quarter Of 2017 Adjusted Operating Income Increased 20 Percent Compared To The First Quarter Of 2016
• Holding Company Cash And Liquid Assets Of Approximately $1.0 Billion

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 &  Kurse    Genworth Financial 2,96 € 0,00%
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
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