Three months ended December 31st, (Unaudited)
2005 2004
Per diluted Per diluted
Total share Total share
(Amounts in millions, except
per share)
Net earnings $307 $0.64 $346 $0.70
Net operating earnings $300 $0.62 $254 $0.52
Weighted average diluted shares 482.6 492.4
RICHMOND, Va., Jan. 20 /PRNewswire-FirstCall/ -- Genworth Financial, Inc.
(NYSE: GNW) today reported net earnings for the fourth quarter of 2005 of $307
million, or $0.64 per diluted share. Net earnings for the fourth quarter of
2004 were $346 million, or $0.70 per diluted share.
Net earnings for the fourth quarter of 2004 included a $68 million IPO-
related net tax benefit and $24 million of after-tax gains. Net earnings for
the fourth quarter of 2005 included $7 million of after-tax gains.
Net operating earnings for the fourth quarter of 2005 were $300 million,
or $0.62 per diluted share, compared to net operating earnings of $254 million
or $0.52 per diluted share in the fourth quarter of 2004.
Net operating earnings for the fourth quarter of 2005 included a $19
million after-tax, or $.04 per diluted share, increase in net investment
income from an adjustment to commercial mortgage loan loss reserves resulting
from a change in process for estimating credit losses.
Detailed Earnings Release and Conference Call Information
Genworth will issue a detailed earnings release and fourth quarter
financial supplement after the market closes on January 26, 2006 and will
conduct a conference call on January 27 from 9 a.m. to 10 a.m. (EST).
The conference call will be accessible via telephone and the Internet.
The earnings release and financial supplement will be posted on the company's
website when released. Investors are encouraged to review all of these
materials. The web cast will be available at http://www.genworth.com. To
access the call by telephone, dial 1-800-599-9795 (U.S.) or 1-617-786-2905
(outside the U.S.), access code "Genworth". A replay of the call will be
available from 1 p.m. EST on January 27 through February 3, 2006 at
1-888-286-8010 or 1-617-801-6888 (outside the U.S.), access code 57552239.
The call will also be replayed at the company's website during this same time
period.
Use of Non-GAAP Measures
This press release includes the non-GAAP financial measure entitled "net
operating earnings." The company defines net operating earnings as net
earnings from continuing operations, excluding after-tax net realized
investment gains and losses (which can fluctuate significantly from period to
period), changes in accounting principles and infrequent or unusual non-
operating items. There were no infrequent or unusual non-operating items
excluded from net operating earnings for the periods presented in this release
other than a $68 million IPO-related net tax benefit recorded during the
fourth quarter of 2004 and a $25 million after-tax gain related to our waiver
of contractual rights under an outsourcing services agreement with General
Electric's (GE) global business processing operation, 60% of which was sold in
the fourth quarter of 2004.
Management believes that analysis of net operating earnings enhances
understanding and comparability of performance by highlighting underlying
business activity and profitability drivers. However, net operating earnings
should not be viewed as a substitute for GAAP net earnings. In addition, the
company's definition of net operating earnings may differ from the definitions
used by other companies. The table at the end of this press release provides
a reconciliation of net earnings to net operating earnings (as defined above)
for the three months ended December 31, 2005 and 2004.
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 our businesses, including interest rate
fluctuations, downturns and volatility in equity markets, defaults in
portfolio securities, downgrades in our financial strength and credit
ratings, insufficiency of reserves, legal constraints on dividend
distributions by subsidiaries, illiquidity of investments,
competition, inability to attract or retain independent sales
intermediaries and dedicated sales specialists, defaults by
counterparties, foreign exchange rate fluctuations, regulatory
restrictions on our operations and changes in applicable laws and
regulations, legal or regulatory actions or investigations, political
or economic instability, the failure or any compromise of the security
of our computer systems and the occurrence of natural or man-made
disasters;
- Risks relating to our Protection and Retirement Income and Investments
segments, including unexpected changes in mortality, morbidity and
unemployment rates, accelerated amortization of deferred acquisition
costs and present value of future profits, goodwill impairments,
medical advances such as genetic mapping research, unexpected changes
in persistency rates, increases in statutory reserve requirements, the
failure of demand for long-term care insurance to increase as we
expect and changes in tax and securities laws;
- Risks relating to our Mortgage Insurance segment, including the
influence of Fannie Mae, Freddie Mac and a small number of large
mortgage lenders and investors, increased regulatory scrutiny of
Fannie Mae and Freddie Mac resulting in possible regulatory changes,
decreases in the volume of high loan-to-value mortgage originations,
increases in mortgage insurance cancellations, increases in the use of
simultaneous second mortgages and other alternatives to private
mortgage insurance and reductions by lenders in the level of coverage
they select, unexpected increases in mortgage insurance default rates
or severity of defaults, deterioration in economic conditions,
insufficiency of premium rates to compensate us for risks associated
with mortgage loans bearing high loan-to-value ratios, increases in
the use of captive reinsurance in the mortgage insurance market,
changes in the demand for mortgage insurance that could arise as a
result of efforts of large mortgage investors, legal or regulatory
actions or investigations under applicable laws and regulations,
including the Real Estate Settlement Practices Act and the Federal
Fair Credit Reporting Act, potential liabilities in connection with
contract underwriting services and growth in the European mortgage
insurance market that is lower than we expect; and
- Risks relating to our separation from GE, including the loss of
benefits associated with GE's brand and reputation, our need to
establish our new Genworth brand identity quickly and effectively, the
lack of comparability between our financial information for periods
before the IPO and for periods after the IPO, the possibility that we
will not be able to replace services previously provided by GE on
terms that are at least as favorable, the possibility that in certain
circumstances we will be obligated to make payments to GE under our
tax matters agreement even if our corresponding tax savings either are
delayed or never materialize, the possibility that in the event of a
change in control of our company we would have insufficient funds to
meet accelerated obligations under the tax matters agreement, GE's
control over certain tax matters that could have an impact on us,
potential conflicts of interest with GE and GE's engaging in the same
type of business as we do in the future.
The company undertakes no obligation to publicly update any forward-
looking statement, whether as a result of new information, future developments
or otherwise.
About Genworth Financial
Genworth is a leading insurance holding company, serving the lifestyle
protection, retirement income, investment and mortgage insurance needs of more
than 15 million customers, and has operations in 24 countries, including the
U.S., Canada, Australia, the U.K. and more than a dozen other European
countries. For more information, visit http://www.genworth.com.
RECONCILIATION OF NET EARNINGS TO NET OPERATING EARNINGS
(Amounts in millions, except per share data)
(Unaudited)
Three months
ended December 31,
2005 2004
Net earnings $ 307 $ 346
Net realized investment losses (gains),
net of taxes (7) 1
Net tax benefit related to initial
public offering - (68)
Gain on outsourcing service agreement,
net of taxes - (25)
Net operating earnings $ 300 $ 254
Net earnings per common share:
Basic $ 0.65 $ 0.71
Diluted $ 0.64 $ 0.70
Net operating earnings per common share:
Basic $ 0.64 $ 0.52
Diluted $ 0.62 $ 0.52
Weighted-average common shares outstanding:
Basic 470.9 489.6
Diluted 482.6 492.4
SOURCE Genworth Financial, Inc.
CONTACT: Investors: Jean Peters, +1-804-662-2693,
jean.peters@genworth.com, or Alicia Charity, +1-804-662-2248,
alicia.charity@genworth.com; or Media: Phil Moeller, +1-804-662-2534,
philip.moeller@genworth.com, all of Genworth Financial
