RICHMOND, Va., March 29 /PRNewswire-FirstCall/ -- Genworth Financial, Inc.
(NYSE: GNW) today announced several strategic steps to align high-growth
business platforms and better position the company globally as the financial
security company of choice for distributors and consumers. The company
expects to make approximately $100 million of investments in these initiatives
over two years. In addition, the company has identified approximately
$220 million of cost savings and efficiencies over the same period. Net
after-tax savings to the company are expected to be approximately $75 million
over two years, and are consistent with the company's previously stated
earnings outlook for 2007.
Investment initiatives and details of efficiencies include:
- Expansion of the Retirement and Protection segment sales and
wholesaling forces, as well as product development, operations and
service support strengthening;
- Investments in multiple global growth platforms including country
expansion initiatives across Europe and elsewhere; and
- Enhancements to investment and capital markets innovation programs.
- The result of cost studies undertaken concurrent with the announced
realignment in January is that duplicated functions have been
eliminated and growth platforms more closely aligned to focus on
meeting the needs of distributors and providing comprehensive solutions
to consumers.
New growth investments will include a 20-25 percent expansion in the
number of U.S.-based wholesalers and sales support staff across retirement,
life insurance and long-term care insurance lines, to maximize distribution
capabilities. Additional investments are being made in programs designed to
further Genworth's leadership in designing capital markets solutions to
enhance balance sheet efficiency. Internationally, additional investments
will be made in recently entered and potential new countries that, coupled
with expansion of established platforms, will support accelerating global
growth.
In addition to the growth investments within the Retirement and Protection
segment, recently completed legal entity mergers and the combination of
multiple functional teams, will create greater efficiency and alignment across
the business.
As part of the cost study results and expense initiatives, Genworth said
it expects to incur a non-operating, after-tax charge of approximately $15
million in the first quarter of 2007. Also, the company will include its
group life and health insurance business as part of discontinued operations in
the reporting of first quarter results, reflecting the pending sale of this
business for $650 million that is expected to close in the second quarter of
2007.
"These strategic moves strengthen our position in the rapidly growing
retirement income, protection and wealth management markets in the U.S., and
further solidify our global leadership in the mortgage insurance and payment
protection insurance markets, " said Michael D. Fraizer, chairman and chief
executive. "We will be able to better leverage our product expertise and
service capabilities to meet consumer and distributor needs. We also will
become even more agile in finding innovative capital markets approaches to
manage our capital needs. Along the way we continue to identify ways to
consolidate or free up resources to invest in our high-growth platforms."
The company affirmed its 2007 outlook for $3.15 to $3.25 net operating
earnings per diluted share. "These initiatives are coming together as
anticipated when we developed our outlook for 2007," said Fraizer. "Taken
together, they give us a comprehensive new platform to accelerate growth into
the future, and keep us on track to achieve a 12 percent operating return on
equity by 2008, and a 13 to 14 percent operating return on equity by the 2010-
2011 timeframe."
In January, Genworth combined its U.S. Retirement and Protection
businesses into one segment, which includes managed money, retirement income,
institutional, life insurance and long term care insurance. A new
International segment was formed to include non-U.S. mortgage insurance,
payment protection insurance and international new business development. A
third segment was formed to encompass the U. S. Mortgage Insurance business.
Conference Call
Genworth will hold a conference call on March 30, 2007 at 1 p.m. EDT to
discuss how the segment reporting structure changes will be reflected in the
financial statements, as well as the financial impacts of the realignment.
Historical financial data in the company's quarterly financial supplement has
been re-presented to conform to the new segment reporting as well as to
reflect the inclusion of the group life and health insurance business as
discontinued operations. The re-segmented December 31, 2006 financial
supplement is available in the investor section of the company's website at
http://www.genworth.com.
Genworth's conference call will be accessible via telephone and the
Internet. The dial-in numbers for Genworth's March 30 conference call are:
1-866-875-7108 (U.S. and Canada), or 1-706-634-9180 (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 scheduled start time.
About Genworth Financial
Genworth is a leading financial security company meeting the retirement,
longevity and lifestyle protection, investment and mortgage insurance needs of
more than 15 million customers, with a presence in more than 25 countries. For
more information, visit http://genworth.com.
Caution Concerning Forward-Looking Statements
This press release includes certain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to our plans,
objectives, expectations and intentions and other statements contained in this
press release that are not historical facts as well as statements identified
by words such as "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "estimates," "will," or words of similar meaning. These statements
are based on our current beliefs or expectations and are inherently subject to
significant uncertainties and changes in circumstances, many of which are
beyond our control. Actual results may differ materially from these
expectations due to changes in global political, economic, business,
competitive, market and regulatory factors, including those identified in the
company's Annual Report on Form 10-K dated February 28, 2007.
Use of Non-GAAP Measures
This press release includes the non-GAAP financial measure entitled "net
operating income." The company defines net operating income as net income from
continuing operations excluding after-tax net investment gains (losses), which
can fluctuate significantly from period to period, changes in accounting
principles and infrequent or unusual non-operating items.
Management believes that analysis of net operating income enhances
understanding and comparability of performance by highlighting underlying
business activity and profitability drivers. However, net operating income
should not be viewed as a substitute for GAAP net income. In addition, the
company's definition of net operating income may differ from the definitions
used by other companies. Due to the unpredictable nature of the items excluded
from the company's definition of net operating income, the company is unable
to reconcile its outlook for net operating income to net income presented in
accordance with GAAP.
In this press release, the company also references the non-GAAP financial
measure entitled "operating return on equity (ROE)." The company defines
operating ROE as net operating income divided by average ending stockholders'
equity excluding accumulated other comprehensive income (AOCI). Management
believes that analysis of operating ROE enhances understanding of the
efficiency with which the company deploys its capital. However, operating ROE
as defined by the company should not be viewed as a substitute for GAAP net
income divided by average stockholders' equity. Due to the unpredictable
nature of net income and average stockholders' equity excluding AOCI, the
company is unable to reconcile its outlook for operating ROE to GAAP.
SOURCE Genworth Financial, Inc.
CONTACT: Jean Peters,
+1-804-662-2693, or
Jean.Peters@genworth.com, or
Alicia Charity,
+1-804-662-2248, or
Alicia.Charity@genworth.com,
both of
Genworth Financial, Inc.
