EX-99.2

EX-99.2 3 d946509dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

LOGO

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020


Table of Contents	Page
Investor Letter		3
Use of Non-GAAP Measures		4
Results of Operations and Selected Operating Performance Measures		5
Financial Highlights		6

*Consolidated Quarterly Results*
Consolidated Net Income (Loss) by Quarter		8
Reconciliation of Net Income (Loss) to Adjusted Operating Income (Loss)		9
Consolidated Balance Sheets		10-11
Consolidated Balance Sheets by Segment		12-13
Deferred Acquisition Costs (DAC) Rollforward		14

*Quarterly Results by Business*
Adjusted Operating Income (Loss) and Sales—U.S. Mortgage Insurance Segment		16-22
Adjusted Operating Income and Sales—Australia Mortgage Insurance Segment		24-27
Adjusted Operating Income (Loss)—U.S. Life Insurance Segment		29-32
Adjusted Operating Income (Loss)—Runoff Segment		34
Adjusted Operating Loss—Corporate and Other Activities		36

*Additional Financial Data*
Investments Summary		38
Fixed Maturity Securities Summary		39
General Account U.S. GAAP Net Investment Income Yields		40
Net Investment Gains (Losses), Net—Detail		41

*Reconciliations of Non-GAAP Measures*
Reconciliation of Operating Return On Equity (ROE)		43
Reconciliation of Reported Yield to Core Yield		44

*Corporate Information*
Financial Strength Ratings		46

Note:

Unless otherwise stated, all references in this financial supplement to income (loss) from continuing operations, income (loss) from continuing operations per share, net income (loss), net income (loss) per share, adjusted operating income (loss), adjusted operating income (loss) per share, book value and book value per share should be read as income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders, income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders per share, net income (loss) available to Genworth Financial, Inc.’s common stockholders, net income (loss) available to Genworth Financial, Inc.’s common stockholders per share, non-U.S. Generally Accepted Accounting Principles (U.S. GAAP) adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders, non-GAAP adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders per share, book value available to Genworth Financial, Inc.’s common stockholders and book value available to Genworth Financial, Inc.’s common stockholders per share, respectively.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Dear Investor,

Thank you for your continued interest in Genworth Financial, Inc.

Regards,

Investor Relations

InvestorInfo@genworth.com

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Use of Non-GAAP Measures

This financial supplement 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 (loss) from continuing operations 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 estimated future credit losses, 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 Financial, Inc.’s common stockholders in accordance with U.S. 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 Financial, Inc.’s common stockholders or net income (loss) available to Genworth Financial, Inc.’s common stockholders per share on a basic and diluted basis determined in accordance with U.S. 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) available to Genworth Financial, Inc.’s common stockholders to adjusted operating income (loss) assume a 21% tax rate for the company’s domestic segments and a 30% tax rate for its Australia Mortgage Insurance segment and are net of the portion attributable to noncontrolling interests. Net investment gains (losses) are also adjusted for DAC and other intangible amortization and certain benefit reserves (see page 41).

In the second quarter of 2020, the company recorded a goodwill impairment of $3 million, net of the portion attributable to noncontrolling interests, in its Australia mortgage insurance business.

During the second and first quarters of 2020, the company repurchased $52 million and $14 million, respectively, principal amount of Genworth Holdings, Inc.’s (Genworth Holdings) senior notes with 2021 maturity dates for a pre-tax gain of $3 million and $1 million, respectively. In January 2020, the company paid a pre-tax make-whole expense of $9 million related to the early redemption of Genworth Holdings’ senior notes originally scheduled to mature in June 2020 and Rivermont Life Insurance Company I, the company’s indirect wholly-owned special purpose consolidated captive insurance subsidiary, early redeemed all of its $315 million outstanding non-recourse funding obligations originally due in 2050 resulting in a pre-tax loss of $4 million from the write-off of deferred borrowing costs. These transactions were excluded from adjusted operating income (loss) as they relate to gains (losses) on the early extinguishment of debt.

The company recorded a pre-tax expense of $1 million in both the second and first quarters of 2020 and $4 million in the first quarter of 2019 related to restructuring costs as it continues to evaluate and appropriately size its organizational needs and expenses. There were no infrequent or unusual items excluded from adjusted operating income (loss) during the periods presented.

The table on page 9 of this financial supplement provides a reconciliation of net income (loss) available to Genworth Financial, Inc.’s common stockholders to adjusted operating income (loss) for the periods presented and reflects adjusted operating income (loss) as determined in accordance with accounting guidance related to segment reporting. This financial supplement includes other non-GAAP measures management believes enhances the understanding and comparability of performance by highlighting underlying business activity and profitability drivers. These additional non-GAAP measures are on pages 43 and 44 of this financial supplement.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Results of Operations and Selected Operating Performance Measures

The company’s chief operating decision maker evaluates segment performance and allocates resources on the basis of adjusted operating income (loss). The table on page 9 of this financial supplement provides a reconciliation of net income (loss) available to Genworth Financial, Inc.’s common stockholders to adjusted operating income (loss) for the periods presented and reflects adjusted operating income (loss) as determined in accordance with accounting guidance related to segment reporting.

The company taxes its international businesses at their local jurisdictional tax rates and its domestic businesses at the U.S. corporate federal income tax rate of 21%. The company’s segment tax methodology applies the respective jurisdictional or domestic tax rate to the pre-tax income (loss) of each segment, which is then adjusted in each segment to reflect the tax attributes of items unique to that segment such as foreign withholding taxes and permanent differences between U.S. GAAP and local tax law. The difference between the consolidated provision for income taxes and the sum of the provision for income taxes in each segment is reflected in Corporate and Other activities.

The annually-determined tax rates and adjustments to each segment’s provision for income taxes are estimates which are subject to review and could change from year to year.

This financial supplement contains 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 business generated in a period. Sales refer to new insurance written for mortgage insurance products. The company considers new insurance written to be a measure of the company’s operating performance because it represents a measure of new sales of insurance policies during a specified period, rather than a measure of the company’s revenues or profitability during that period.

Management regularly monitors and reports insurance in-force and risk in-force. Insurance in-force for the company’s mortgage insurance businesses is a measure of the aggregate original loan balance for outstanding insurance policies as of the respective reporting date. Risk in-force for the company’s U.S. mortgage insurance business is based on the coverage percentage applied to the estimated current outstanding loan balance. Risk in-force in the Australia mortgage insurance business is computed using an “effective” risk in-force amount, which recognizes that the loss on any particular loan will be reduced by the net proceeds received upon sale of the property. Effective risk in-force has been calculated by applying to insurance in-force a factor of 35% that represents the highest expected average per-claim payment for any one underwriting year over the life of the company’s mortgage insurance business in Australia. The company also has certain risk share arrangements in Australia where it provides pro-rata coverage of certain loans rather than 100% coverage. As a result, for loans with these risk share arrangements, the applicable pro-rata coverage amount provided is used when applying the factor. The company considers insurance in-force and risk in-force to be measures of its operating performance because they represent measures of the size of its business at a specific date which will generate revenues and profits in a future period, rather than measures of its 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 benefits and other changes in policy reserves 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.

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.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Financial Highlights

(amounts in millions, except per share data)


Balance Sheet Data	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
Total Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income	$	10,196		$	10,634		$	10,752		$	10,765		$	10,744
Total accumulated other comprehensive income		4,447			3,815			3,433			3,622			3,013

Total Genworth Financial, Inc.’s stockholders’ equity	$	14,643		$	14,449		$	14,185		$	14,387		$	13,757

Book value per share	$	28.96		$	28.61		$	28.17		$	28.57		$	27.32
Book value per share, excluding accumulated other comprehensive income	$	20.17		$	21.05		$	21.35		$	21.38		$	21.34
Common shares outstanding as of the balance sheet date		505.6			505.1			503.5			503.5			503.5

	Twelve months ended
Twelve Month Rolling Average ROE	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
U.S. GAAP Basis ROE		(4.8	)%		1.0	%		3.2	%		0.3	%		1.5	%
Operating ROE⁽¹⁾		1.5	%		3.3	%		3.9	%		0.9	%		0.6	%

	Three months ended
Quarterly Average ROE	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
U.S. GAAP Basis ROE		(16.9	)%		(2.5	)%		(0.6	)%		0.7	%		6.3	%
Operating ROE⁽¹⁾		(0.8	)%		1.2	%		0.9	%		4.6	%		6.7	%


Basic and Diluted Shares	Three months ended June 30, 2020		Six months ended June 30, 2020
Weighted-average common shares used in basic earnings per share calculations		505.4		504.8
Potentially dilutive securities:
Stock options, restricted stock units and stock appreciation rights		7.1		6.3

Weighted-average common shares used in diluted earnings per share calculations		512.5		511.1

⁽¹⁾	See page 43 herein for a reconciliation of U.S. GAAP Basis ROE to Operating ROE.

Consolidated Quarterly Results

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Consolidated Net Income (Loss) by Quarter

(amounts in millions, except per share amounts)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q		Total
REVENUES:
Premiums	$	1,019		$	1,015		$	2,034		$	1,033		$	1,015		$	1,001		$	988	$	4,037
Net investment income		786			793			1,579			794			816			816			794		3,220
Net investment gains (losses)		159			(152	)		7			23			(2	)		(46	)		75		50
Policy fees and other income		174			181			355			188			191			223			187		789

Total revenues		2,138			1,837			3,975			2,038			2,020			1,994			2,044		8,096

BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves		1,486			1,361			2,847			1,346			1,284			1,251			1,282		5,163
Interest credited		139			141			280			138			146			146			147		577
Acquisition and operating expenses, net of deferrals		223			249			472			249			247			229			237		962
Amortization of deferred acquisition costs and intangibles		93			116			209			164			112			84			81		441
Goodwill impairment		5			—			5			—			—			—			—		—
Interest expense		44			52			96			60			59			60			60		239

Total benefits and expenses		1,990			1,919			3,909			1,957			1,848			1,770			1,807		7,382

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		148			(82	)		66			81			172			224			237		714
Provision (benefit) for income taxes		46			(10	)		36			26			34			66			69		195

INCOME (LOSS) FROM CONTINUING OPERATIONS		102			(72	)		30			55			138			158			168		519
Income (loss) from discontinued operations, net of taxes⁽¹⁾		(520	)		—			(520	)		(31	)		(80	)		60			62		11

NET INCOME (LOSS)		(418	)		(72	)		(490	)		24			58			218			230		530
Less: net income (loss) from continuing operations attributable to noncontrolling interests		23			(6	)		17			19			10			15			20		64
Less: net income from discontinued operations attributable to noncontrolling interests		—			—			—			22			30			35			36		123

NET INCOME (LOSS) AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS	$	(441	)	$	(66	)	$	(507	)	$	(17	)	$	18		$	168		$	174	$	343

NET INCOME (LOSS) AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS:
Income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders	$	79		$	(66	)	$	13		$	36		$	128		$	143		$	148	$	455
Income (loss) from discontinued operations available to Genworth Financial, Inc.’s common stockholders		(520	)		—			(520	)		(53	)		(110	)		25			26		(112	)

NET INCOME (LOSS) AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS	$	(441	)	$	(66	)	$	(507	)	$	(17	)	$	18		$	168		$	174	$	343


Earnings (Loss) Per Share Data:
Income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders per share
Basic	$	0.16		$	(0.13	)	$	0.03		$	0.07		$	0.25		$	0.29		$	0.29	$	0.90
Diluted	$	0.15		$	(0.13	)	$	0.03		$	0.07		$	0.25		$	0.28		$	0.29	$	0.89
Net income (loss) available to Genworth Financial, Inc.’s common stockholders per share
Basic	$	(0.87	)	$	(0.13	)	$	(1.00	)	$	(0.03	)	$	0.04		$	0.33		$	0.35	$	0.68
Diluted	$	(0.86	)	$	(0.13	)	$	(0.99	)	$	(0.03	)	$	0.04		$	0.33		$	0.34	$	0.67
Weighted-average common shares outstanding
Basic		505.4			504.3			504.8			503.5			503.5			503.4			501.2		502.9
Diluted⁽²⁾		512.5			504.3			511.1			510.4			511.2			508.7			508.6		509.7

⁽¹⁾

Income (loss) from discontinued operations relates to the company’s former Canada mortgage insurance business that was sold on December 12, 2019 and its former lifestyle protection insurance business that was sold on December 1, 2015. During the second quarter of 2020, the company recorded an after-tax loss of $520 million in connection with a settlement agreement reached with AXA S.A. (AXA), including legal fees and other expenses, regarding a dispute over payment protection insurance claims sold by its former lifestyle protection insurance business. During the fourth quarter of 2019, the company also recorded an after-tax loss of $110 million prior to reaching the settlement agreement with AXA.

⁽²⁾

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 for the three months ended March 31, 2020, the company was required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share for the three months ended March 31, 2020, as the inclusion of shares for stock options, restricted stock units and stock appreciation rights of 5.4 million would have been antidilutive to the calculation. If the company had not incurred a loss from continuing operations for the three months ended March 31, 2020, dilutive potential weighted-average common shares outstanding would have been 509.7 million.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Reconciliation of Net Income (Loss) to Adjusted Operating Income (Loss)

(amounts in millions, except per share amounts)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q			Total
NET INCOME (LOSS) AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS	$	(441	)	$	(66	)	$	(507	)	$	(17	)	$	18		$	168		$	174		$	343
Add: net income (loss) from continuing operations attributable to noncontrolling interests		23			(6	)		17			19			10			15			20			64
Add: net income from discontinued operations attributable to noncontrolling interests		—			—			—			22			30			35			36			123

NET INCOME (LOSS)		(418	)		(72	)		(490	)		24			58			218			230			530
Less: income (loss) from discontinued operations, net of taxes		(520	)		—			(520	)		(31	)		(80	)		60			62			11

INCOME (LOSS) FROM CONTINUING OPERATIONS		102			(72	)		30			55			138			158			168			519
Less: net income (loss) from continuing operations attributable to noncontrolling interests		23			(6	)		17			19			10			15			20			64

INCOME (LOSS) FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS		79			(66	)		13			36			128			143			148			455

ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS:
Net investment (gains) losses, net⁽¹⁾		(131	)		115			(16	)		(17	)		(5	)		43			(71	)		(50	)
Goodwill impairment, net⁽²⁾		3			—			3			—			—			—			—			—
(Gains) losses on early extinguishment of debt		(3	)		12			9			—			—			—			—			—
Expenses related to restructuring		1			1			2			—			—			—			4			4
Taxes on adjustments		30			(29	)		1			5			—			(8	)		14			11

ADJUSTED OPERATING INCOME (LOSS)	$	(21	)	$	33		$	12		$	24		$	123		$	178		$	95		$	420

ADJUSTED OPERATING INCOME (LOSS):
U.S. Mortgage Insurance segment	$	(3	)	$	148		$	145		$	160		$	137		$	147		$	124		$	568
Australia Mortgage Insurance segment		1			9			10			12			12			13			14			51
U.S. Life Insurance segment:
Long-Term Care Insurance		48			1			49			19			21			37			(20	)		57
Life Insurance		(81	)		(77	)		(158	)		(164	)		(25	)		10			(2	)		(181	)
Fixed Annuities		28			6			34			30			3			19			17			69

Total U.S. Life Insurance segment		(5	)		(70	)		(75	)		(115	)		(1	)		66			(5	)		(55	)

Runoff segment		24			(13	)		11			17			10			9			20			56
Corporate and Other		(38	)		(41	)		(79	)		(50	)		(35	)		(57	)		(58	)		(200	)

ADJUSTED OPERATING INCOME (LOSS)	$	(21	)	$	33		$	12		$	24		$	123		$	178		$	95		$	420


Earnings (Loss) Per Share Data:
Net income (loss) available to Genworth Financial, Inc.’s common stockholders per share
Basic	$	(0.87	)	$	(0.13	)	$	(1.00	)	$	(0.03	)	$	0.04		$	0.33		$	0.35		$	0.68
Diluted	$	(0.86	)	$	(0.13	)	$	(0.99	)	$	(0.03	)	$	0.04		$	0.33		$	0.34		$	0.67
Adjusted operating income (loss) per share
Basic	$	(0.04	)	$	0.07		$	0.02		$	0.05		$	0.25		$	0.35		$	0.19		$	0.84
Diluted	$	(0.04	)	$	0.07		$	0.02		$	0.05		$	0.24		$	0.35		$	0.19		$	0.82
Weighted-average common shares outstanding
Basic		505.4			504.3			504.8			503.5			503.5			503.4			501.2			502.9
Diluted⁽³⁾		512.5			504.3			511.1			510.4			511.2			508.7			508.6			509.7

⁽¹⁾	Net investment (gains) losses were adjusted for the portion attributable to noncontrolling interests and DAC and other intangible amortization and certain benefit reserves (see page 41 for reconciliation).

⁽²⁾	For the three and six months ended June 30, 2020, goodwill impairment was adjusted by $2 million related to the company’s mortgage insurance business in Australia for the portion attributable to noncontrolling interests.

⁽³⁾

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Consolidated Balance Sheets

(amounts in millions)


	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
ASSETS
Investments:
Fixed maturity securities available-for-sale, at fair value⁽¹⁾	$	63,544		$	59,051		$	60,339		$	61,233		$	59,491
Equity securities, at fair value		206			188			239			239			262
Commercial mortgage loans⁽²⁾		6,945			6,944			6,976			7,045			7,030
Less: Allowance for credit losses		(28	)		(29	)		(13	)		(12	)		(11	)

Commercial mortgage loans, net		6,917			6,915			6,963			7,033			7,019
Policy loans		2,182			2,052			2,058			2,069			2,076
Other invested assets		2,473			2,465			1,632			1,693			1,396

Total investments		75,322			70,671			71,231			72,267			70,244
Cash, cash equivalents and restricted cash		2,597			2,483			3,341			1,629			1,715
Accrued investment income		601			707			654			643			595
Deferred acquisition costs		1,718			1,898			1,836			1,881			1,980
Intangible assets and goodwill		223			263			201			210			229
Reinsurance recoverable		16,944			17,122			17,103			17,180			17,211
Less: Allowance for credit losses		(44	)		(42	)		—			—			—

Reinsurance recoverable, net		16,900			17,080			17,103			17,180			17,211
Other assets		454			456			443			479			516
Deferred tax asset		286			319			425			236			383
Separate account assets		5,536			4,967			6,108			6,005			6,187
Assets held for sale related to discontinued operations⁽³⁾		—			—			—			5,123			5,246

Total assets	$	103,637		$	98,844		$	101,342		$	105,653		$	104,306

⁽¹⁾	Amortized cost of $54,834 million and $54,136 million as of June 30, 2020 and March 31, 2020, respectively, and allowance for credit losses of $7 million and $— million as of June 30, 2020 and March 31, 2020, respectively.

⁽²⁾	Net of unamortized balance of loan origination fees and costs of $4 million as of June 30, 2020, March 31, 2020, December 31, 2019, September 30, 2019, and June 30, 2019.

⁽³⁾	Prior to the sale on December 12, 2019, the assets of the company’s former Canada mortgage insurance business were held for sale related to discontinued operations and segregated in the consolidated balance sheets.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Consolidated Balance Sheets

(amounts in millions)


	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
LIABILITIES AND EQUITY
Liabilities:
Future policy benefits	$	41,463		$	39,339		$	40,384		$	40,489		$	39,583
Policyholder account balances		22,921			22,313			22,217			22,607			22,673
Liability for policy and contract claims		11,280			11,132			10,958			10,780			10,586
Unearned premiums		1,804			1,722			1,893			1,863			1,917
Other liabilities⁽¹⁾		2,075			1,686			1,428			1,445			1,604
Non-recourse funding obligations		—			—			311			311			311
Long-term borrowings		2,817			2,851			3,277			3,706			3,711
Separate account liabilities		5,536			4,967			6,108			6,005			6,187
Liabilities held for sale related to discontinued operations^(1),(2)		653			—			134			2,302			2,142

Total liabilities		88,549			84,010			86,710			89,508			88,714

Equity:
Common stock		1			1			1			1			1
Additional paid-in capital		11,996			11,993			11,990			11,986			11,983
Accumulated other comprehensive income (loss)		4,447			3,815			3,433			3,622			3,013
Retained earnings		899			1,340			1,461			1,478			1,460
Treasury stock, at cost		(2,700	)		(2,700	)		(2,700	)		(2,700	)		(2,700	)

Total Genworth Financial, Inc.’s stockholders’ equity		14,643			14,449			14,185			14,387			13,757
Noncontrolling interests		445			385			447			1,758			1,835

Total equity		15,088			14,834			14,632			16,145			15,592

Total liabilities and equity	$	103,637		$	98,844		$	101,342		$	105,653		$	104,306

⁽¹⁾	Certain liability balances have been reclassified as of December 31, 2019 to conform to the current period presentation.

⁽²⁾

Liabilities related to discontinued operations as of June 30, 2020 relates to a contingent liability recorded in connection with a settlement agreement reached with AXA involving the sale of the company’s former lifestyle protection insurance business. The company also recorded a contingent liability as of December 31, 2019 prior to reaching the settlement agreement with AXA. In addition, prior to the sale on December 12, 2019, the liabilities of the company’s Canada mortgage insurance business were held for sale related to discontinued operations and segregated in the consolidated balance sheets.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Consolidated Balance Sheet by Segment

(amounts in millions)


	June 30, 2020
	U.S. Mortgage Insurance		Australia Mortgage Insurance		U.S. Life Insurance			Runoff		Corporate and Other⁽¹⁾			Total
ASSETS
Cash and investments	$	4,831	$	2,216	$	66,136		$	3,355	$	1,982		$	78,520
Deferred acquisition costs and intangible assets		49		82		1,650			149		11			1,941
Reinsurance recoverable, net		—		2		16,164			734		—			16,900
Deferred tax and other assets		64		139		(121	)		9		649			740
Separate account assets		—		—		—			5,536		—			5,536

Total assets	$	4,944	$	2,439	$	83,829		$	9,783	$	2,642		$	103,637

LIABILITIES AND EQUITY
Liabilities:
Future policy benefits	$	—	$	—	$	41,461		$	2	$	—		$	41,463
Policyholder account balances		—		—		19,317			3,604		—			22,921
Liability for policy and contract claims		439		226		10,583			25		7			11,280
Unearned premiums		340		994		466			4		—			1,804
Other liabilities		115		192		1,142			48		578			2,075
Borrowings		—		138		—			—		2,679			2,817
Separate account liabilities		—		—		—			5,536		—			5,536
Liabilities related to discontinued operations		—		—		—			—		653			653

Total liabilities		894		1,550		72,969			9,219		3,917			88,549

Equity:
Allocated equity, excluding accumulated other comprehensive income (loss)		3,897		422		6,546			538		(1,207	)		10,196
Allocated accumulated other comprehensive income (loss)		153		22		4,314			26		(68	)		4,447

Total Genworth Financial, Inc.’s stockholders’ equity		4,050		444		10,860			564		(1,275	)		14,643
Noncontrolling interests		—		445		—			—		—			445

Total equity		4,050		889		10,860			564		(1,275	)		15,088

Total liabilities and equity	$	4,944	$	2,439	$	83,829		$	9,783	$	2,642		$	103,637

⁽¹⁾	Includes inter-segment eliminations and other businesses that are managed outside the operating segments.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Consolidated Balance Sheet by Segment

(amounts in millions)


	March 31, 2020
	U.S. Mortgage Insurance			Australia Mortgage Insurance			U.S. Life Insurance			Runoff			Corporate and Other⁽¹⁾			Total
ASSETS
Cash and investments	$	4,385		$	1,915		$	62,482		$	3,634		$	1,445		$	73,861
Deferred acquisition costs and intangible assets		48			81			1,855			166			11			2,161
Reinsurance recoverable, net		—			4			16,322			754			—			17,080
Deferred tax and other assets		109			146			(95	)		(19	)		634			775
Separate account assets		—			—			—			4,967			—			4,967

Total assets	$	4,542		$	2,146		$	80,564		$	9,502		$	2,090		$	98,844

LIABILITIES AND EQUITY
Liabilities:
Future policy benefits	$	—		$	—		$	39,337		$	2		$	—		$	39,339
Policyholder account balances		—			—			18,684			3,629			—			22,313
Liability for policy and contract claims		230			184			10,702			10			6			11,132
Unearned premiums		366			876			476			4			—			1,722
Other liabilities		71			203			733			43			636			1,686
Borrowings		—			122			—			—			2,729			2,851
Separate account liabilities		—			—			—			4,967			—			4,967

Total liabilities		667			1,385			69,932			8,655			3,371			84,010

Equity:
Allocated equity, excluding accumulated other comprehensive income (loss)		3,891			395			6,643			850			(1,145	)		10,634
Allocated accumulated other comprehensive income (loss)		(16	)		(19	)		3,989			(3	)		(136	)		3,815

Total Genworth Financial, Inc.’s stockholders’ equity		3,875			376			10,632			847			(1,281	)		14,449
Noncontrolling interests		—			385			—			—			—			385

Total equity		3,875			761			10,632			847			(1,281	)		14,834

Total liabilities and equity	$	4,542		$	2,146		$	80,564		$	9,502		$	2,090		$	98,844

⁽¹⁾	Includes inter-segment eliminations and other businesses that are managed outside the operating segments.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Deferred Acquisition Costs Rollforward

(amounts in millions)


	U.S. Mortgage Insurance			Australia Mortgage Insurance			U.S. Life Insurance			Runoff			Total
Unamortized balance as of March 31, 2020	$	30		$	32		$	2,954		$	158		$	3,174
Costs deferred		3			3			(1	)		—			5
Amortization, net of interest accretion		(1	)		(3	)		(74	)		—			(78	)
Impact of foreign currency translation		—			4			—			—			4

Unamortized balance as of June 30, 2020		32			36			2,879			158			3,105
Effect of accumulated net unrealized investment (gains) losses		—			—			(1,375	)		(12	)		(1,387	)

Balance as of June 30, 2020	$	32		$	36		$	1,504		$	146		$	1,718

U.S. Mortgage Insurance Segment

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Adjusted Operating Income (Loss) and Sales—U.S. Mortgage Insurance Segment

(amounts in millions)


	2020								2019
	2Q			1Q		Total			4Q		3Q		2Q		1Q		Total
REVENUES:
Premiums	$	243		$	226	$	469		$	237	$	219	$	206	$	194	$	856
Net investment income		31			33		64			30		31		28		28		117
Net investment gains (losses)		(1	)		—		(1	)		1		—		—		—		1
Policy fees and other income		1			2		3			1		1		1		1		4

Total revenues		274			261		535			269		251		235		223		978

BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves		228			19		247			11		23		—		16		50
Acquisition and operating expenses, net of deferrals		47			50		97			50		51		44		46		191
Amortization of deferred acquisition costs and intangibles		4			4		8			4		3		4		4		15

Total benefits and expenses		279			73		352			65		77		48		66		256

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(5	)		188		183			204		174		187		157		722
Provision (benefit) for income taxes		(1	)		40		39			43		37		40		33		153

INCOME (LOSS) FROM CONTINUING OPERATIONS		(4	)		148		144			161		137		147		124		569

ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses		1			—		1			(1)		—		—		—		(1	)
Taxes on adjustments		—			—		—			—		—		—		—		—

ADJUSTED OPERATING INCOME (LOSS)	$	(3	)	$	148	$	145		$	160	$	137	$	147	$	124	$	568


SALES:
Flow New Insurance Written (NIW)	$	28,400		$	17,900	$	46,300		$	18,100	$	18,900	$	15,800	$	9,600	$	62,400

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Flow New Insurance Written Metrics—U.S. Mortgage Insurance Segment

(amounts in millions)


	2020										2019
	2Q					1Q					4Q					3Q					2Q					1Q
	Flow NIW		% of Flow NIW			Flow NIW		% of Flow NIW			Flow NIW		% of Flow NIW			Flow NIW		% of Flow NIW			Flow NIW		% of Flow NIW			Flow NIW		% of Flow NIW
Product
Monthly⁽¹⁾	$	25,900		91	%	$	16,400		92	%	$	16,300		90	%	$	16,800		89	%	$	13,900		88	%	$	8,400		87	%
Single		2,500		9			1,500		8			1,800		10			2,100		11			1,900		12			1,200		13

Total Flow	$	28,400		100	%	$	17,900		100	%	$	18,100		100	%	$	18,900		100	%	$	15,800		100	%	$	9,600		100	%

FICO Scores
Over 735	$	17,900		63	%	$	11,200		63	%	$	11,200		62	%	$	11,300		60	%	$	9,200		58	%	$	5,500		57	%
680-735		8,900		31			5,800		32			6,000		33			6,300		33			5,500		35			3,300		35
660-679⁽²⁾		900		3			500		3			500		3			700		4			600		4			400		4
620-659		700		3			400		2			400		2			600		3			500		3			400		4
<620		—		—			—		—			—		—			—		—			—		—			—		—

Total Flow	$	28,400		100	%	$	17,900		100	%	$	18,100		100	%	$	18,900		100	%	$	15,800		100	%	$	9,600		100	%

Loan-To-Value Ratio
95.01% and above	$	3,200		11	%	$	1,800		10	%	$	2,000		11	%	$	2,900		16	%	$	2,900		18	%	$	1,800		19	%
90.01% to 95.00%		12,300		43			7,700		43			7,900		44			8,000		42			6,900		44			4,200		44
85.01% to 90.00%		8,100		29			5,500		31			5,600		31			5,500		29			4,300		27			2,500		26
85.00% and below		4,800		17			2,900		16			2,600		14			2,500		13			1,700		11			1,100		11

Total Flow	$	28,400		100	%	$	17,900		100	%	$	18,100		100	%	$	18,900		100	%	$	15,800		100	%	$	9,600		100	%

Origination
Purchase	$	17,400		61	%	$	12,000		67	%	$	12,900		71	%	$	14,900		79	%	$	13,900		88	%	$	8,600		90	%
Refinance		11,000		39			5,900		33			5,200		29			4,000		21			1,900		12			1,000		10

Total Flow	$	28,400		100	%	$	17,900		100	%	$	18,100		100	%	$	18,900		100	%	$	15,800		100	%	$	9,600		100	%

⁽¹⁾	Includes loans with annual and split payment types.

⁽²⁾	Loans with unknown FICO scores are included in the 660-679 category.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Other Metrics—U.S. Mortgage Insurance Segment

(dollar amounts in millions)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q			Total
Net Premiums Written	$	217		$	208		$	425		$	208		$	213		$	204		$	193		$	818

Flow New Risk Written	$	7,011		$	4,405		$	11,416		$	4,465		$	4,647		$	3,931		$	2,403		$	15,446

Primary Insurance In-Force⁽¹⁾	$	207,400		$	198,500					$	192,100		$	186,300		$	178,500		$	170,400

Risk In-Force
Flow⁽²⁾	$	49,851		$	47,723					$	46,228		$	44,885		$	42,917		$	41,020
Bulk⁽³⁾		135			143						150			160			167			173

Total Primary		49,986			47,866						46,378			45,045			43,084			41,193
Pool		51			53						56			59			62			66

Total Risk In-Force	$	50,037		$	47,919					$	46,434		$	45,104		$	43,146		$	41,259


Primary Risk In-Force That Is GSE Conforming		93	%		92	%					93	%		93	%		93	%		93	%

Expense Ratio (Net Earned Premiums)⁽⁴⁾		21	%		24	%		22	%		23	%		24	%		24	%		25	%		24	%

Expense Ratio (Net Premiums Written)⁽⁵⁾		23	%		26	%		25	%		27	%		25	%		24	%		26	%		25	%

Flow Persistency		60	%		76	%					74	%		75	%		82	%		86	%

Risk To Capital Ratio⁽⁶⁾		12.0:1			12.2:1						12.2:1			11.9:1			11.8:1			11.9:1

PMIERs Sufficiency Ratio⁽⁷⁾		143	%		142	%					138	%		129	%		123	%		123	%

Average Primary Loan Size (in thousands)	$	229		$	226					$	223		$	221		$	218		$	215

The expense ratios included above were calculated using whole dollars and may be different than the ratios calculated using the rounded numbers included herein.

⁽¹⁾

Primary insurance in-force represents aggregate loan balances for outstanding insurance policies and is used to determine premiums. Original loan balances are presented for policies with level renewal premiums. Amortized loan balances are presented for policies with annual, amortizing renewal premiums.

⁽²⁾	Flow risk in-force represents current loan balances as provided by servicers, lenders and investors and conforms to the presentation under the Private Mortgage Insurer Eligibility Requirements (PMIERs).

⁽³⁾	As of June 30, 2020, 87% of the bulk risk in-force was related to loans finmanced by lenders who participated in the mortgage programs sponsored by the Federal Home Loan Banks.

⁽⁴⁾	The ratio of an insurer’s general expenses to net earned premiums. In the business, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles.

⁽⁵⁾	The ratio of an insurer’s general expenses to net premiums written. In the business, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles.

⁽⁶⁾

Certain states limit a private mortgage insurer’s risk in-force to 25 times the total of the insurer’s policyholders’ surplus plus the statutory contingency reserve, commonly known as the “risk to capital” requirement. The current period risk to capital ratio is an estimate due to the timing of the filing of statutory statements and is prepared consistent with the presentation of the statutory financial statements in the combined annual statement of the U.S. mortgage insurance business.

⁽⁷⁾

The PMIERs sufficiency ratio is calculated as available assets divided by required assets as defined within PMIERs. The current period PMIERs sufficiency ratio is an estimate due to the timing of the PMIERs filing for the U.S. mortgage insurance business. As of June 30, 2020, March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, the PMIERs sufficiency ratios were in excess of $1.2 billion, $1.1 billion, $1.0 billion, $850 million, $650 million and $600 million, respectively, of available assets above the PMIERs requirements.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Loss Metrics—U.S. Mortgage Insurance Segment

(amounts in millions)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q			Total
Paid claims
Flow
Direct	$	18		$	20		$	38		$	22		$	28		$	24		$	30		$	104
Assumed⁽¹⁾		—			—			—			—			—			—			—			—
Ceded		—			—			—			—			—			—			—			—
Loss adjustment expenses		1			2			3			2			1			2			2			7

Total Flow		19			22			41			24			29			26			32			111
Bulk		—			—			—			1			—			—			—			1

Total Primary		19			22			41			25			29			26			32			112
Pool		—			—			—			—			1			—			—			1

Total Paid Claims	$	19		$	22		$	41		$	25		$	30		$	26		$	32		$	113


Average Paid Claim (in thousands)	$	47.1		$	45.0					$	39.2		$	44.2		$	45.4		$	49.0

Average Reserve Per Delinquency (in thousands)
Flow	$	8.1		$	14.8					$	14.1		$	15.5		$	16.5		$	17.4
Bulk loans with established reserve	$	11.3		$	12.4					$	13.4		$	13.3		$	14.1		$	13.8

Reserves:
Flow direct case	$	378		$	201					$	204		$	216		$	222		$	246
Bulk direct case		4			4						4			4			4			4
Assumed⁽¹⁾		1			1						1			1			1			1
All other⁽²⁾		56			24						24			26			27			29

Total Reserves	$	439		$	230					$	233		$	247		$	254		$	280


Beginning Reserves	$	230		$	233		$	233		$	247		$	254		$	280		$	296		$	296
Paid claims		(19	)		(22	)		(41	)		(25	)		(30	)		(26	)		(32	)		(113	)
Increase (decrease) in reserves		228			19			247			11			23			—			16			50

Ending Reserves	$	439		$	230		$	439		$	233		$	247		$	254		$	280		$	233

Loss Ratio⁽³⁾		94	%		8	%		53	%		4	%		11	%		-	%		8	%		6	%

The loss ratio included above was calculated using whole dollars and may be different than the ratio calculated using the rounded numbers included herein.

⁽¹⁾	Assumed is comprised of reinsurance arrangements with state governmental housing finance agencies.

⁽²⁾	Other includes loss adjustment expenses, pool and incurred but not reported reserves.

⁽³⁾

The ratio of benefits and other changes in policy reserves to net earned premiums. The company recorded a favorable reserve adjustment of $13 million and a favorable adjustment to net earned premiums of $14 million in the fourth quarter of 2019, which reduced the loss ratio by six percentage points for the three months ended December 31, 2019. The company also recorded a favorable reserve adjustment of $10 million in the second quarter of 2019, which reduced the loss ratio by five percentage points for the three months ended June 30, 2019. These adjustments reduced the loss ratio by three percentage points for the twelve months ended December 31, 2019.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Delinquency Metrics—U.S. Mortgage Insurance Segment

(dollar amounts in millions)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q			Total
Number of Primary Delinquencies
Flow		53,372			15,246						16,209			15,575			15,070			15,764
Bulk loans with an established reserve		422			345						348			375			347			360
Bulk loans with no reserve⁽¹⁾		100			57						50			55			65			82

Total Number of Primary Delinquencies		53,894			15,648						16,607			16,005			15,482			16,206

Beginning Number of Primary Delinquencies		15,648			16,607			16,607			16,005			15,482			16,206			17,159			17,159
New delinquencies		48,557			8,214			56,771			8,738			8,650			7,705			8,539			33,632
Delinquency cures		(9,890	)		(8,699	)		(18,589	)		(7,526	)		(7,451	)		(7,872	)		(8,835	)		(31,684	)
Paid claims		(421	)		(474	)		(895	)		(610	)		(676	)		(557	)		(657	)		(2,500	)

Ending Number of Primary Delinquencies		53,894			15,648			53,894			16,607			16,005			15,482			16,206			16,607

Composition of Cures
Reported delinquent and cured-intraquarter		4,012			2,228						1,681			1,803			1,621			2,342
Number of missed payments delinquent prior to cure:
3 payments or less		4,588			4,901						4,457			4,280			4,567			4,862
4 - 11 payments		1,128			1,393						1,179			1,132			1,434			1,345
12 payments or more		162			177						209			236			250			286

Total		9,890			8,699						7,526			7,451			7,872			8,835

Primary Delinquencies by Missed Payment Status
3 payments or less		43,323			7,757						8,703			8,398			7,807			7,873
4 - 11 payments		7,507			4,953						4,919			4,411			4,243			4,755
12 payments or more		3,064			2,938						2,985			3,196			3,432			3,578

Primary Delinquencies		53,894			15,648						16,607			16,005			15,482			16,206



	June 30, 2020
Flow Delinquencies and Percentage Reserved by Payment Status	Delinquencies			Direct Case Reserves⁽²⁾			Risk In-Force			Reserves as % of Risk In-Force
3 payments or less in default		43,044		$	162		$	2,687			6	%
4 - 11 payments in default		7,404			111			388			29	%
12 payments or more in default		2,924			105			147			71	%

Total		53,372		$	378		$	3,222			12	%


	December 31, 2019
Flow Delinquencies and Percentage Reserved by Payment Status	Delinquencies			Direct Case Reserves⁽²⁾			Risk In-Force			Reserves as % of Risk In-Force
3 payments or less in default		8,524		$	27		$	386			7	%
4 - 11 payments in default		4,836			78			224			35	%
12 payments or more in default		2,849			99			145			68	%

Total		16,209		$	204		$	755			27	%

⁽¹⁾	Reserves were not established on loans where the company was in a secondary loss position due to an existing deductible and the company believes they currently have no risk for claim.

⁽²⁾	Direct flow case reserves exclude loss adjustment expenses, incurred but not reported and reinsurance reserves.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Portfolio Quality Metrics—U.S. Mortgage Insurance Segment


	2020						2019
	2Q			1Q			4Q			3Q			2Q			1Q
Primary Loans
Primary loans in-force		904,753			876,912			860,214			842,692			818,358			792,800
Primary delinquent loans		53,894			15,648			16,607			16,005			15,482			16,206
Primary delinquency rate		5.96	%		1.78	%		1.93	%		1.90	%		1.89	%		2.04	%

Flow loans in-force		894,715			866,562			849,472			831,586			806,739			780,733
Flow delinquent loans		53,372			15,246			16,209			15,575			15,070			15,764
Flow delinquency rate		5.97	%		1.76	%		1.91	%		1.87	%		1.87	%		2.02	%

Bulk loans in-force		10,038			10,350			10,742			11,106			11,619			12,067
Bulk delinquent loans		522			402			398			430			412			442
Bulk delinquency rate		5.20	%		3.88	%		3.71	%		3.87	%		3.55	%		3.66	%

A minus and sub-prime loans in-force		11,712			12,243			12,792			13,450			14,180			14,712
A minus and sub-prime delinquent loans		2,470			2,077			2,283			2,339			2,367			2,530
A minus and sub-prime delinquency rate		21.09	%		16.96	%		17.85	%		17.39	%		16.69	%		17.20	%

Pool Loans
Pool loans in-force		3,818			4,071			4,122			4,261			4,331			4,470
Pool delinquent loans		151			132			167			168			177			187
Pool delinquency rate		3.95	%		3.24	%		4.05	%		3.94	%		4.09	%		4.18	%

Primary Risk In-Force by Credit Quality
Over 735		58	%		58	%		57	%		57	%		57	%		57	%
680-735		33	%		33	%		33	%		33	%		32	%		32	%
660-679⁽¹⁾		4	%		4	%		5	%		5	%		5	%		5	%
620-659		4	%		4	%		4	%		4	%		5	%		5	%
<620		1	%		1	%		1	%		1	%		1	%		1	%

⁽¹⁾	Loans with unknown FICO scores are included in the 660-679 category.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Portfolio Quality Metrics—U.S. Mortgage Insurance Segment

(amounts in millions)


	June 30, 2020
Policy Year	Average Rate⁽¹⁾			% of Total Reserves⁽²⁾			Primary Insurance In-Force		% of Total			Primary Risk In-Force		% of Total			Delinquency Rate
2004 and prior		6.15	%		4.2	%	$	1,241		0.6	%	$	231		0.5	%		13.55	%
2005 to 2008		5.47	%		30.2			14,017		6.8			3,193		6.4			13.20	%
2009 to 2013		4.23	%		2.7			5,461		2.6			1,267		2.5			4.55	%
2014		4.46	%		3.1			5,719		2.8			1,367		2.7			5.59	%
2015		4.16	%		5.1			11,858		5.7			2,843		5.7			5.51	%
2016		3.89	%		9.2			22,566		10.9			5,415		10.8			5.67	%
2017		4.25	%		11.5			23,845		11.5			5,752		11.5			6.55	%
2018		4.77	%		12.9			24,767		11.9			5,975		12.0			7.29	%
2019		4.25	%		18.4			52,068		25.1			12,690		25.4			5.77	%
2020		3.58	%		2.7			45,816		22.1			11,253		22.5			1.47	%

Total		4.29	%		100.0	%	$	207,358		100.0	%	$	49,986		100.0	%		5.96	%


	June 30, 2020						March 31, 2020					June 30, 2019
	Primary Risk In-Force			Primary Delinquency Rate			Primary Risk In-Force		Primary Delinquency Rate			Primary Risk In-Force		Primary Delinquency Rate
Lender concentration (by original applicant)	$	49,986			5.96	%	$	47,866		1.78	%	$	43,084		1.89	%
Top 10 lenders	$	15,803			6.62	%	$	15,099		1.82	%	$	12,597		2.11	%
Top 20 lenders	$	20,264			6.53	%	$	19,410		1.75	%	$	16,729		2.03	%

Loan-to-value ratio
95.01% and above	$	8,789			7.43	%	$	8,482		2.00	%	$	7,837		3.16	%
90.01% to 95.00%		25,690			5.85	%		24,707		1.50	%		22,389		1.49	%
80.01% to 90.00%		15,378			5.26	%		14,540		1.37	%		12,699		1.59	%
80.00% and below		129			3.80	%		137		2.42	%		159		2.43	%

Total	$	49,986			5.96	%	$	47,866		1.78	%	$	43,084		1.89	%

Loan grade
Prime	$	49,572			5.76	%	$	47,433		1.57	%	$	42,587		1.63	%
A minus and sub-prime		414			21.09	%		433		16.96	%		497		16.69	%

Total	$	49,986			5.96	%	$	47,866		1.78	%	$	43,084		1.89	%

⁽¹⁾	Average Annual Mortgage Interest Rate.

⁽²⁾	Total reserves were $439 million as of June 30, 2020.

Australia Mortgage Insurance Segment

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Adjusted Operating Income and Sales—Australia Mortgage Insurance Segment

(amounts in millions)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q			Total
REVENUES:
Premiums	$	62		$	69		$	131		$	72		$	77		$	80		$	83		$	312
Net investment income		8			10			18			11			13			15			16			55
Net investment gains (losses)		66			(53	)		13			19			(9	)		1			12			23
Policy fees and other income		—			1			1			—			1			—			(1	)		—

Total revenues		136			27			163			102			82			96			110			390

BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves		39			24			63			22			28			26			28			104
Acquisition and operating expenses, net of deferrals		18			17			35			18			17			17			17			69
Amortization of deferred acquisition costs and intangibles		6			8			14			6			9			9			9			33
Goodwill impairment		5			—			5			—			—			—			—			—
Interest expense		2			1			3			2			2			2			2			8

Total benefits and expenses		70			50			120			48			56			54			56			214

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		66			(23	)		43			54			26			42			54			176
Provision (benefit) for income taxes		20			(7	)		13			16			8			13			16			53

INCOME (LOSS) FROM CONTINUING OPERATIONS		46			(16	)		30			38			18			29			38			123
Less: net income (loss) from continuing operations attributable to noncontrolling interests		23			(6	)		17			19			10			15			20			64

INCOME (LOSS) FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS		23			(10	)		13			19			8			14			18			59

ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS:
Net investment (gains) losses, net⁽¹⁾		(34	)		27			(7	)		(10	)		5			(1	)		(6	)		(12	)
Goodwill impairment, net⁽²⁾		3			—			3			—			—			—			—			—
Taxes on adjustments		9			(8	)		1			3			(1	)		—			2			4

ADJUSTED OPERATING INCOME⁽³⁾	$	1		$	9		$	10		$	12		$	12		$	13		$	14		$	51


SALES:
New Insurance Written (NIW)
Flow	$	4,400		$	4,100		$	8,500		$	4,900		$	4,600		$	3,700		$	3,400		$	16,600
Bulk		100			200			300			400			—			1,200			500			2,100

Total Australia NIW^(4),(5)	$	4,500		$	4,300		$	8,800		$	5,300		$	4,600		$	4,900		$	3,900		$	18,700


⁽¹⁾ Net investment (gains) losses were adjusted for the portion of net investment gains (losses) attributable to noncontrolling interests as reconciled below:

Net investment (gains) losses, gross	$	(66	)	$	53		$	(13	)	$	(19	)	$	9		$	(1	)	$	(12	)	$	(23	)
Adjustment for net investment gains (losses) attributable to noncontrolling interests		32			(26	)		6			9			(4	)		—			6			11

Net investment (gains) losses, net	$	(34	)	$	27		$	(7	)	$	(10	)	$	5		$	(1	)	$	(6	)	$	(12	)

⁽²⁾	For the three and six months ended June 30, 2020, goodwill impairment was adjusted by $2 million for the portion attributable to noncontrolling interests.

⁽³⁾	Adjusted operating income for the Australian platform adjusted for foreign exchange as compared to the prior year period was $1 million and $11 million for the three and six months ended June 30, 2020, respectively.

⁽⁴⁾	New insurance written for the Australian platform adjusted for foreign exchange as compared to the prior year period was $5,000 million and $9,500 million for the three and six months ended June 30, 2020, respectively.

⁽⁵⁾	The business currently has structured insurance transactions with three lenders where it is in a secondary loss position. The new insurance written associated with these arrangements is excluded from these metrics.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Selected Key Performance Measures—Australia Mortgage Insurance Segment

(amounts in millions)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q			Total
Net Premiums Written	$	70		$	62		$	132		$	92		$	70		$	58		$	52		$	272
Loss Ratio⁽¹⁾		63	%		34	%		48	%		30	%		36	%		34	%		34	%		33	%
Expense Ratio (Net Earned Premiums)⁽²⁾		47	%		36	%		41	%		34	%		34	%		33	%		31	%		33	%
Expense Ratio (Net Premiums Written)⁽³⁾		41	%		40	%		41	%		26	%		38	%		44	%		50	%		38	%

Primary Insurance In-Force⁽⁴⁾	$	210,200		$	188,400					$	215,700		$	206,400		$	215,600		$	219,200
Primary Risk In-Force^(4),(5)
Flow	$	67,700		$	60,700					$	69,400		$	66,400		$	69,100		$	70,600
Bulk		5,500			5,000						5,700			5,500			6,000			5,700

Total	$	73,200		$	65,700					$	75,100		$	71,900		$	75,100		$	76,300



	June 30, 2020												March 31, 2020
Risk In-Force by Loan-To-Value Ratio^(4),(6)	Primary			Flow			Bulk						Primary			Flow			Bulk
95.01% and above	$	9,613		$	9,613		$	—					$	8,669		$	8,669		$	—
90.01% to 95.00%		21,066			21,057			9						18,719			18,711			8
80.01% to 90.00%		23,481			23,403			78						20,899			20,828			71
80.00% and below		19,060			13,675			5,385						17,363			12,517			4,846

Total	$	73,220		$	67,748		$	5,472					$	65,650		$	60,725		$	4,925

The loss and expense ratios included above were calculated using whole dollars and may be different than the ratios calculated using the rounded numbers included herein.

⁽¹⁾	The ratio of benefits and other changes in policy reserves to net earned premiums.

⁽²⁾	The ratio of an insurer’s general expenses to net earned premiums. In the business, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles.

⁽³⁾	The ratio of an insurer’s general expenses to net premiums written. In the business, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles.

⁽⁴⁾

The business currently has structured insurance transactions with three lenders where it is in a secondary loss position. The insurance in-force and risk in-force associated with these arrangements are excluded from these metrics. The risk in-force on these transactions was approximately $162 million, $143 million, $162 million, $152 million, $157 million and $157 million as of June 30, 2020, March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively.

⁽⁵⁾

The business currently provides 100% coverage on the majority of the loans the company insures. For the purpose of representing the risk in-force, Australia has computed an “effective risk in-force” amount which recognizes that the loss on any particular loan will be reduced by the net proceeds received upon sale of the property. Effective risk in-force has been calculated by applying to insurance in-force a factor that represents the highest expected average per-claim payment for any one underwriting year over the life of the business. This factor was 35% for all periods presented. Australia also has certain risk share arrangements where it provides pro-rata coverage of certain loans rather than 100% coverage. As a result, for loans with these risk share arrangements, the applicable pro-rata coverage amount provided is used when applying the factor.

⁽⁶⁾	Loan amount in loan-to-value ratio calculation includes capitalized premiums, where applicable.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Selected Key Performance Measures—Australia Mortgage Insurance Segment

(dollar amounts in millions)


Primary Insurance⁽¹⁾	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
Insured loans in-force		1,236,657			1,284,120			1,290,216			1,293,961			1,308,811
Insured delinquent loans		7,614			7,274			7,221			7,713			7,891
Insured delinquency rate		0.62	%		0.57	%		0.56	%		0.60	%		0.60	%

Flow loans in-force		1,137,784			1,183,889			1,189,019			1,192,282			1,200,603
Flow delinquent loans		7,380			7,055			7,003			7,469			7,642
Flow delinquency rate		0.65	%		0.60	%		0.59	%		0.63	%		0.64	%

Bulk loans in-force		98,873			100,231			101,197			101,679			108,208
Bulk delinquent loans		234			219			218			244			249
Bulk delinquency rate		0.24	%		0.22	%		0.22	%		0.24	%		0.23	%

Loss Metrics	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
Beginning Reserves	$	184		$	208		$	204		$	209		$	204
Paid claims⁽²⁾		(22	)		(21	)		(25	)		(24	)		(20	)
Increase in reserves		39			24			22			27			27
Impact of changes in foreign exchange rates		25			(27	)		7			(8	)		(2	)

Ending Reserves	$	226		$	184		$	208		$	204		$	209


	June 30, 2020						March 31, 2020						June 30, 2019
State and Territory⁽¹⁾	% of Primary Risk In-Force			Primary Delinquency Rate			% of Primary Risk In-Force			Primary Delinquency Rate			% of Primary Risk In-Force			Primary Delinquency Rate
New South Wales		27	%		0.51	%		27	%		0.44	%		27	%		0.45	%
Queensland		23			0.78	%		23			0.75	%		23			0.81	%
Victoria		23			0.46	%		23			0.42	%		23			0.45	%
Western Australia		13			1.06	%		13			1.00	%		13			1.10	%
South Australia		6			0.70	%		6			0.67	%		6			0.68	%
Australian Capital Territory		3			0.27	%		3			0.25	%		3			0.25	%
Tasmania		2			0.27	%		2			0.30	%		2			0.31	%
New Zealand		2			0.03	%		2			0.02	%		2			0.02	%
Northern Territory		1			0.87	%		1			0.83	%		1			0.83	%

Total		100	%		0.62	%		100	%		0.57	%		100	%		0.60	%


By Policy Year⁽¹⁾
2011 and prior		44	%		0.55	%		46	%		0.50	%		48	%		0.54	%
2012		5			1.01	%		5			0.93	%		6			1.11	%
2013		6			1.12	%		6			1.06	%		7			1.10	%
2014		7			1.10	%		7			1.05	%		8			0.97	%
2015		7			0.89	%		7			0.79	%		7			0.82	%
2016		6			0.71	%		6			0.64	%		7			0.60	%
2017		6			0.57	%		6			0.51	%		7			0.36	%
2018		7			0.41	%		7			0.35	%		7			0.15	%
2019		8			0.10	%		8			0.04	%		3			0.01	%
2020		4			0.01	%		2			—	%		—			—	%

Total		100	%		0.62	%		100	%		0.57	%		100	%		0.60	%

⁽¹⁾	The business currently has structured insurance transactions with three lenders where it is in a secondary loss position. The loans in-force, including delinquent loans, and risk in-force associated with these arrangements are excluded from these metrics.

⁽²⁾	Paid claims exclude adjustments for expected recoveries related to loss reserves and prior paid claims.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Selected Key Performance Measures—Australia Mortgage Insurance Segment

(Australian dollar amounts in millions)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q			Total
Paid Claims⁽¹⁾
Flow	$	35		$	31		$	66		$	37		$	35		$	28		$	30		$	130

Total Paid Claims	$	35		$	31		$	66		$	37		$	35		$	28		$	30		$	130


Average Paid Claim (in thousands)	$	97.0		$	92.7					$	99.4		$	97.9		$	94.1		$	94.2

Average Reserve Per Delinquency (in thousands)	$	43.0		$	41.3					$	41.1		$	39.2		$	37.8		$	38.4

Loss Metrics
Beginning Reserves	$	301		$	297		$	297		$	302		$	298		$	288		$	279		$	279
Paid claims⁽¹⁾		(35	)		(31	)		(66	)		(37	)		(35	)		(28	)		(30	)		(130	)
Increase in reserves		62			35			97			32			39			38			39			148

Ending Reserves	$	328		$	301		$	328		$	297		$	302		$	298		$	288		$	297


Loan Amount^(2),(3)
Over $550K		21	%		20	%					19	%		19	%		19	%		18	%
$400K to $550K		22			22						22			22			21			21
$250K to $400K		33			32						33			33			33			34
$100K to $250K		20			21						21			21			22			22
$100K or Less		4			5						5			5			5			5

Total		100	%		100	%					100	%		100	%		100	%		100	%


Average Primary Loan Size (in thousands)⁽³⁾	$	246		$	240					$	238		$	236		$	235		$	233

All amounts presented in Australian dollars.

⁽¹⁾	Paid claims exclude adjustments for expected recoveries related to loss reserves and prior paid claims.

⁽²⁾	The percentages in this table are based on the amount of primary insurance in-force in each loan band as a percentage of total insurance in-force.

⁽³⁾	The business currently has structured insurance transactions with three lenders where it is in a secondary loss position. The loans in-force associated with these arrangements are excluded from these metrics.

U.S. Life Insurance Segment

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Adjusted Operating Income (Loss)—U.S. Life Insurance Segment

(amounts in millions)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q			Total
REVENUES:
Premiums	$	712		$	718		$	1,430		$	722		$	717		$	713		$	709		$	2,861
Net investment income		692			695			1,387			705			722			724			701			2,852
Net investment gains (losses)		118			(70	)		48			23			11			(36	)		84			82
Policy fees and other income		142			144			286			153			152			187			151			643

Total revenues		1,664			1,487			3,151			1,603			1,602			1,588			1,645			6,438

BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves		1,213			1,297			2,510			1,307			1,225			1,211			1,236			4,979
Interest credited		97			100			197			101			106			106			106			419
Acquisition and operating expenses, net of deferrals		147			151			298			156			158			142			148			604
Amortization of deferred acquisition costs and intangibles		83			87			170			150			89			67			66			372
Interest expense		—			5			5			4			4			4			5			17

Total benefits and expenses		1,540			1,640			3,180			1,718			1,582			1,530			1,561			6,391

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		124			(153	)		(29	)		(115	)		20			58			84			47
Provision (benefit) for income taxes		33			(27	)		6			(19	)		10			19			24			34

INCOME (LOSS) FROM CONTINUING OPERATIONS		91			(126	)		(35	)		(96	)		10			39			60			13

ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses, net⁽¹⁾		(121	)		67			(54	)		(24	)		(14	)		35			(86	)		(89	)
Losses on early extinguishment of debt		—			4			4			—			—			—			—			—
Expenses related to restructuring		—			—			—			—			—			(1	)		4			3
Taxes on adjustments		25			(15	)		10			5			3			(7	)		17			18

ADJUSTED OPERATING INCOME (LOSS)	$	(5	)	$	(70	)	$	(75	)	$	(115	)	$	(1	)	$	66		$	(5	)	$	(55	)


⁽¹⁾ Net investment (gains) losses were adjusted for DAC and other intangible amortization and certain benefit reserves as reconciled below:
Net investment (gains) losses, gross	$	(118	)	$	70		$	(48	)	$	(23	)	$	(11	)	$	36		$	(84	)	$	(82	)
Adjustment for DAC and other intangible amortization and certain benefit reserves		(3	)		(3	)		(6	)		(1	)		(3	)		(1	)		(2	)		(7	)

Net investment (gains) losses, net	$	(121	)	$	67		$	(54	)	$	(24	)	$	(14	)	$	35		$	(86	)	$	(89	)

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Adjusted Operating Income (Loss)—U.S. Life Insurance Segment—Long-Term Care Insurance

(amounts in millions)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q			Total
REVENUES:
Premiums	$	649		$	642		$	1,291		$	663		$	652		$	640		$	628		$	2,583
Net investment income		422			419			841			424			432			428			406			1,690
Net investment gains (losses)		129			(55	)		74			19			28			(15	)		80			112
Policy fees and other income		—			—			—			—			(2	)		2			—			—

Total revenues		1,200			1,006			2,206			1,106			1,110			1,055			1,114			4,385

BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves		876			928			1,804			925			916			896			927			3,664
Interest credited		—			—			—			—			—			—			—			—
Acquisition and operating expenses, net of deferrals		103			101			204			105			106			93			101			405
Amortization of deferred acquisition costs and intangibles		21			24			45			25			25			26			25			101
Interest expense		—			—			—			—			—			—			—			—

Total benefits and expenses		1,000			1,053			2,053			1,055			1,047			1,015			1,053			4,170

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		200			(47	)		153			51			63			40			61			215
Provision (benefit) for income taxes		49			(4	)		45			17			19			15			19			70

INCOME (LOSS) FROM CONTINUING OPERATIONS		151			(43	)		108			34			44			25			42			145

ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses		(129	)		55			(74	)		(19	)		(28	)		15			(80	)		(112	)
Expenses related to restructuring		—			—			—			—			—			(1	)		2			1
Taxes on adjustments		26			(11	)		15			4			5			(2	)		16			23

ADJUSTED OPERATING INCOME (LOSS)	$	48		$	1		$	49		$	19		$	21		$	37		$	(20	)	$	57


RATIOS:
Loss Ratio⁽¹⁾		69	%		78	%		74	%		76	%		76	%		74	%		81	%		77	%
Gross Benefits Ratio⁽²⁾		135	%		145	%		140	%		140	%		140	%		140	%		148	%		142	%

⁽¹⁾	The loss ratio was calculated by dividing benefits and other changes in policy reserves less tabular interest on reserves less loss adjustment expenses by net earned premiums.

⁽²⁾	The gross benefits ratio was calculated by dividing benefits and other changes in policy reserves by net earned premiums.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Adjusted Operating Income (Loss)—U.S. Life Insurance Segment—Life Insurance

(amounts in millions)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q			Total
REVENUES:
Premiums	$	63		$	76		$	139		$	59		$	65		$	73		$	81		$	278
Net investment income		127			130			257			128			133			130			133			524
Net investment gains (losses)		5			1			6			6			(2	)		(3	)		10			11
Policy fees and other income		140			141			281			150			151			182			148			631

Total revenues		335			348			683			343			347			382			372			1,444

BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves		289			302			591			335			228			244			242			1,049
Interest credited		57			59			116			58			60			58			58			234
Acquisition and operating expenses, net of deferrals		34			39			73			39			40			37			34			150
Amortization of deferred acquisition costs and intangibles		53			44			97			109			50			28			27			214
Interest expense		—			5			5			4			4			4			5			17

Total benefits and expenses		433			449			882			545			382			371			366			1,664

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(98	)		(101	)		(199	)		(202	)		(35	)		11			6			(220	)
Provision (benefit) for income taxes		(21	)		(22	)		(43	)		(43	)		(8	)		3			1			(47	)

INCOME (LOSS) FROM CONTINUING OPERATIONS		(77	)		(79	)		(156	)		(159	)		(27	)		8			5			(173	)

ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses		(5	)		(1	)		(6	)		(6	)		2			3			(10	)		(11	)
Losses on early extinguishment of debt		—			4			4			—			—			—			—			—
Expenses related to restructuring		—			—			—			—			—			—			1			1
Taxes on adjustments		1			(1	)		—			1			—			(1	)		2			2

ADJUSTED OPERATING INCOME (LOSS)	$	(81	)	$	(77	)	$	(158	)	$	(164	)	$	(25	)	$	10		$	(2	)	$	(181	)

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Adjusted Operating Income—U.S. Life Insurance Segment—Fixed Annuities

(amounts in millions)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q			Total
REVENUES:
Premiums	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net investment income		143			146			289			153			157			166			162			638
Net investment gains (losses)		(16	)		(16	)		(32	)		(2	)		(15	)		(18	)		(6	)		(41	)
Policy fees and other income		2			3			5			3			3			3			3			12

Total revenues		129			133			262			154			145			151			159			609

BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves		48			67			115			47			81			71			67			266
Interest credited		40			41			81			43			46			48			48			185
Acquisition and operating expenses, net of deferrals		10			11			21			12			12			12			13			49
Amortization of deferred acquisition costs and intangibles		9			19			28			16			14			13			14			57
Interest expense		—			—			—			—			—			—			—			—

Total benefits and expenses		107			138			245			118			153			144			142			557

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		22			(5	)		17			36			(8	)		7			17			52
Provision (benefit) for income taxes		5			(1	)		4			7			(1	)		1			4			11

INCOME (LOSS) FROM CONTINUING OPERATIONS		17			(4	)		13			29			(7	)		6			13			41

ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses, net⁽¹⁾		13			13			26			1			12			17			4			34
Expenses related to restructuring		—			—			—			—			—			—			1			1
Taxes on adjustments		(2	)		(3	)		(5	)		—			(2	)		(4	)		(1	)		(7	)

ADJUSTED OPERATING INCOME	$	28		$	6		$	34		$	30		$	3		$	19		$	17		$	69


⁽¹⁾ Net investment (gains) losses were adjusted for DAC and other intangible amortization and certain benefit reserves as reconciled below:
Net investment (gains) losses, gross	$	16		$	16		$	32		$	2		$	15		$	18		$	6		$	41
Adjustment for DAC and other intangible amortization and certain benefit reserves		(3	)		(3	)		(6	)		(1	)		(3	)		(1	)		(2	)		(7	)

Net investment (gains) losses, net	$	13		$	13		$	26		$	1		$	12		$	17		$	4		$	34

Runoff Segment

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Adjusted Operating Income (Loss)—Runoff Segment

(amounts in millions)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q		Total
REVENUES:
Net investment income	$	54		$	49		$	103		$	45		$	48		$	47		$	47	$	187
Net investment gains (losses)		4			(75	)		(71	)		(12	)		(9	)		(4	)		—		(25	)
Policy fees and other income		32			33			65			35			35			35			35		140

Total revenues		90			7			97			68			74			78			82		302

BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves		4			20			24			5			8			13			1		27
Interest credited		42			41			83			37			40			40			41		158
Acquisition and operating expenses, net of deferrals		11			13			24			13			13			13			13		52
Amortization of deferred acquisition costs and intangibles		(1	)		17			16			2			10			4			2		18

Total benefits and expenses		56			91			147			57			71			70			57		255

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		34			(84	)		(50	)		11			3			8			25		47
Provision (benefit) for income taxes		6			(18	)		(12	)		2			—			1			5		8

INCOME (LOSS) FROM CONTINUING OPERATIONS		28			(66	)		(38	)		9			3			7			20		39

ADJUSTMENTS TO INCOME (LOSS) FROM CONTINUING OPERATIONS:
Net investment (gains) losses, net⁽¹⁾		(5	)		67			62			10			9			2			—		21
Taxes on adjustments		1			(14	)		(13	)		(2	)		(2	)		—			—		(4	)

ADJUSTED OPERATING INCOME (LOSS)	$	24		$	(13	)	$	11		$	17		$	10		$	9		$	20	$	56


⁽¹⁾ Net investment (gains) losses were adjusted for DAC and other intangible amortization and certain benefit reserves as reconciled below:
Net investment (gains) losses, gross	$	(4	)	$	75		$	71		$	12		$	9		$	4		$	—	$	25
Adjustment for DAC and other intangible amortization and certain benefit reserves		(1	)		(8	)		(9	)		(2	)		—			(2	)		—		(4	)

Net investment (gains) losses, net	$	(5	)	$	67		$	62		$	10		$	9		$	2		$	—	$	21

Corporate and Other

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Adjusted Operating Loss—Corporate and Other⁽¹⁾

(amounts in millions)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q			Total
REVENUES:
Premiums	$	2		$	2		$	4		$	2		$	2		$	2		$	2		$	8
Net investment income		1			6			7			3			2			2			2			9
Net investment gains (losses)		(28	)		46			18			(8	)		5			(7	)		(21	)		(31	)
Policy fees and other income		(1	)		1			—			(1	)		2			—			1			2

Total revenues		(26	)		55			29			(4	)		11			(3	)		(16	)		(12	)

BENEFITS AND EXPENSES:
Benefits and other changes in policy reserves		2			1			3			1			—			1			1			3
Acquisition and operating expenses, net of deferrals		—			18			18			12			8			13			13			46
Amortization of deferred acquisition costs and intangibles		1			—			1			2			1			—			—			3
Interest expense		42			46			88			54			53			54			53			214

Total benefits and expenses		45			65			110			69			62			68			67			266

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(71	)		(10	)		(81	)		(73	)		(51	)		(71	)		(83	)		(278	)
Provision (benefit) for income taxes		(12	)		2			(10	)		(16	)		(21	)		(7	)		(9	)		(53	)

LOSS FROM CONTINUING OPERATIONS		(59	)		(12	)		(71	)		(57	)		(30	)		(64	)		(74	)		(225	)

ADJUSTMENTS TO LOSS FROM CONTINUING OPERATIONS:
Net investment (gains) losses		28			(46	)		(18	)		8			(5	)		7			21			31
(Gains) losses on early extinguishment of debt		(3	)		8			5			—			—			—			—			—
Expenses related to restructuring		1			1			2			—			—			1			—			1
Taxes on adjustments		(5	)		8			3			(1	)		—			(1	)		(5	)		(7	)

ADJUSTED OPERATING LOSS	$	(38	)	$	(41	)	$	(79	)	$	(50	)	$	(35	)	$	(57	)	$	(58	)	$	(200	)

⁽¹⁾	Includes inter-segment eliminations and the results of other businesses that are managed outside the operating segments, including certain smaller international mortgage insurance businesses.

Additional Financial Data

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Investments Summary

(amounts in millions)


		June 30, 2020					March 31, 2020					December 31, 2019					September 30, 2019					June 30, 2019
		Carrying Amount		% of Total			Carrying Amount		% of Total			Carrying Amount		% of Total			Carrying Amount		% of Total			Carrying Amount		% of Total
Composition of Investment Portfolio
Fixed maturity securities:
Investment grade:
Public fixed maturity securities⁽¹⁾		$	35,802		45	%	$	33,056		46	%	$	33,684		45	%	$	34,280		46	%	$	32,958		46	%
Private fixed maturity securities			13,952		18			12,736		17			13,384		18			13,411		18			13,091		18
Residential mortgage-backed securities⁽²⁾			2,151		3			2,243		3			2,232		3			2,335		3			2,395		3
Commercial mortgage-backed securities			2,952		4			2,963		4			3,006		4			3,051		4			2,970		4
Other asset-backed securities			2,921		4			3,061		4			3,257		4			3,337		5			3,287		5
State and political subdivisions⁽¹⁾			2,998		4			2,864		4			2,747		4			2,729		4			2,636		4
Non-investment grade fixed maturity securities			2,768		4			2,128		3			2,029		3			2,090		3			2,154		3
Equity securities:
Common stocks and mutual funds			104		—			91		—			105		—			107		—			111		—
Preferred stocks			102		—			97		—			134		—			132		—			151		—
Commercial mortgage loans, net			6,917		9			6,915		10			6,963		9			7,033		10			7,019		10
Policy loans			2,182		3			2,052		3			2,058		3			2,069		3			2,076		3
Cash, cash equivalents, restricted cash and short-term investments			2,809		3			2,696		3			3,601		5			1,839		2			1,907		3
Securities lending			59		—			58		—			51		—			62		—			113		—
Other invested assets:	Limited partnerships		764		1			671		1			634		1			565		1			512		1
	Derivatives:
	Interest rate swaps		939		1			1,002		1			197		—			402		1			144		—
	Foreign currency swaps		17		—			21		—			4		—			10		—			5		—
	Equity index options		66		—			62		—			81		—			62		—			65		—
	Other foreign currency contracts		2		—			16		—			8		—			13		—			8		—
	Other		414		1			422		1			397		1			369		—			357		—

Total invested assets and cash		$	77,919		100	%	$	73,154		100	%	$	74,572		100	%	$	73,896		100	%	$	71,959		100	%

Public Fixed Maturity Securities—Credit Quality:
NRSRO⁽³⁾ Designation
AAA		$	10,805		25	%	$	11,025		27	%	$	10,160		24	%	$	10,561		25	%	$	10,195		24	%
AA			3,636		8			3,554		8			3,536		8			3,758		9			3,674		9
A			11,970		27			11,268		27			12,315		29			12,040		28			11,690		28
BBB			16,780		37			14,807		35			15,041		36			15,418		35			14,768		36
BB			1,506		3			1,139		3			1,040		3			1,093		3			1,128		3
B			73		—			50		—			44		—			53		—			76		—
CCC and lower			24		—			21		—			26		—			25		—			25		—

Total public fixed maturity securities		$	44,794		100	%	$	41,864		100	%	$	42,162		100	%	$	42,948		100	%	$	41,556		100	%

Private Fixed Maturity Securities—Credit Quality:
NRSRO⁽³⁾ Designation
AAA		$	1,526		8	%	$	1,382		8	%	$	1,536		8	%	$	1,594		9	%	$	1,504		8	%
AA			2,209		12			2,090		12			2,235		12			2,254		12			2,315		13
A			5,320		28			4,914		28			5,182		29			5,296		29			5,286		30
BBB			8,530		46			7,883		46			8,305		46			8,222		45			7,905		44
BB			994		5			819		5			844		5			851		5			865		5
B			160		1			98		1			73		—			66		—			58		—
CCC and lower			11		—			1		—			2		—			2		—			2		—

Total private fixed maturity securities		$	18,750		100	%	$	17,187		100	%	$	18,177		100	%	$	18,285		100	%	$	17,935		100	%

⁽¹⁾	Certain fixed maturity securities balances have been reclassified as of December 31, 2019 to conform to the current period presentation.

⁽²⁾	The company does not have any material exposure to residential mortgage-backed securities collateralized debt obligations (CDOs).

⁽³⁾	Nationally Recognized Statistical Rating Organizations.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Fixed Maturity Securities Summary

(amounts in millions)


	June 30, 2020					March 31, 2020					December 31, 2019					September 30, 2019					June 30, 2019
	Fair Value		% of Total			Fair Value		% of Total			Fair Value		% of Total			Fair Value		% of Total			Fair Value		% of Total
Fixed Maturity Securities—Security Sector:

U.S. government, agencies and government-sponsored enterprises	$	5,602		9	%	$	5,771		10	%	$	5,025		8	%	$	5,254		9	%	$	4,987		8	%
State and political subdivisions⁽¹⁾		2,998		5			2,864		5			2,747		5			2,729		4			2,636		4
Foreign government		1,542		2			1,201		2			1,350		2			1,359		2			1,336		2
U.S. corporate⁽¹⁾		34,395		54			31,077		52			32,111		54			32,424		54			31,329		53
Foreign corporate		10,885		17			9,799		17			10,525		17			10,656		17			10,462		18
Residential mortgage-backed securities		2,184		3			2,273		4			2,270		4			2,375		4			2,436		4
Commercial mortgage-backed securities		2,970		5			2,981		5			3,026		5			3,071		5			2,989		5
Other asset-backed securities		2,968		5			3,085		5			3,285		5			3,365		5			3,316		6

Total fixed maturity securities	$	63,544		100	%	$	59,051		100	%	$	60,339		100	%	$	61,233		100	%	$	59,491		100	%

Corporate Bond Holdings—Industry Sector:

Investment Grade:
Finance and insurance	$	10,611		23	%	$	9,523		23	%	$	9,881		23	%	$	9,995		22	%	$	9,669		23	%
Utilities		6,052		13			5,555		14			5,743		14			5,868		14			5,697		14
Energy		3,193		7			2,799		7			3,699		9			3,801		9			3,732		9
Consumer—non-cyclical		6,836		15			6,163		15			6,247		15			6,293		15			6,043		14
Consumer—cyclical		2,076		5			1,856		4			1,937		5			2,003		5			1,836		4
Capital goods		3,511		8			3,076		8			3,161		7			3,243		8			3,108		7
Industrial		2,210		5			2,063		5			2,201		5			2,188		5			2,093		5
Technology and communications		4,221		9			3,966		10			3,966		9			3,919		9			3,821		10
Transportation		2,151		5			2,047		5			2,127		5			2,189		5			2,121		5
Other⁽¹⁾		1,847		4			1,855		4			1,839		4			1,691		4			1,719		4

Subtotal		42,708		94			38,903		95			40,801		96			41,190		96			39,839		95


Non-Investment Grade:
Finance and insurance		258		1			211		1			212		1			208		—			216		1
Utilities		97		—			77		—			83		—			85		—			100		—
Energy		676		1			391		1			319		1			346		1			331		1
Consumer—non-cyclical		218		1			196		1			138		—			138		—			155		—
Consumer—cyclical		297		1			225		1			220		1			233		1			243		1
Capital goods		130		—			149		—			155		—			137		—			157		—
Industrial		288		1			193		—			183		—			224		1			207		—
Technology and communications		437		1			418		1			417		1			425		1			465		2
Transportation		49		—			29		—			8		—			8		—			8		—
Other		122		—			84		—			100		—			86		—			70		—

Subtotal		2,572		6			1,973		5			1,835		4			1,890		4			1,952		5

Total	$	45,280		100	%	$	40,876		100	%	$	42,636		100	%	$	43,080		100	%	$	41,791		100	%

Fixed Maturity Securities—Contractual Maturity Dates:

Due in one year or less	$	1,517		2	%	$	1,421		2	%	$	1,434		2	%	$	1,587		3	%	$	1,684		3	%
Due after one year through five years		10,054		16			8,949		15			9,381		16			9,655		16			9,689		16
Due after five years through ten years		14,478		23			12,642		21			12,296		20			12,387		20			11,985		20
Due after ten years		29,373		46			27,700		48			28,647		48			28,793		47			27,392		46

Subtotal		55,422		87			50,712		86			51,758		86			52,422		86			50,750		85
Mortgage and asset-backed securities		8,122		13			8,339		14			8,581		14			8,811		14			8,741		15

Total fixed maturity securities	$	63,544		100	%	$	59,051		100	%	$	60,339		100	%	$	61,233		100	%	$	59,491		100	%

⁽¹⁾	Certain fixed maturity securities balances have been reclassified as of December 31, 2019 to conform to the current period presentation.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

General Account U.S. GAAP Net Investment Income Yields

(amounts in millions)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q			Total
U.S. GAAP Net Investment Income
Fixed maturity securities—taxable	$	601		$	622		$	1,223		$	616		$	631		$	634		$	613		$	2,494
Fixed maturity securities—non-taxable		1			2			3			2			2			2			2			8
Commercial mortgage loans		84			85			169			94			87			85			82			348
Equity securities		2			2			4			3			4			5			4			16
Other invested assets		52			49			101			50			49			47			44			190
Limited partnerships		14			(2	)		12			4			13			12			15			44
Policy loans		49			49			98			42			47			45			46			180
Cash, cash equivalents, restricted cash and short-term investments		4			11			15			9			8			11			11			39

Gross investment income before expenses and fees		807			818			1,625			820			841			841			817			3,319
Expenses and fees		(21	)		(25	)		(46	)		(26	)		(25	)		(25	)		(23	)		(99	)

Net investment income	$	786		$	793		$	1,579		$	794		$	816		$	816		$	794		$	3,220

Annualized Yields
Fixed maturity securities—taxable		4.4	%		4.6	%		4.5	%		4.6	%		4.7	%		4.7	%		4.6	%		4.6	%
Fixed maturity securities—non-taxable		2.6	%		5.2	%		4.1	%		6.0	%		6.1	%		6.1	%		6.1	%		6.1	%
Commercial mortgage loans		4.9	%		4.9	%		4.9	%		5.4	%		5.0	%		4.9	%		4.8	%		5.0	%
Equity securities		4.1	%		3.8	%		3.8	%		5.0	%		6.4	%		7.8	%		6.1	%		6.3	%
Other invested assets⁽¹⁾		49.8	%		47.8	%		49.0	%		52.2	%		54.0	%		56.1	%		65.7	%		57.2	%
Limited partnerships⁽²⁾		7.8	%		(1.2	)%		3.5	%		2.7	%		9.7	%		9.9	%		13.8	%		8.5	%
Policy loans		9.3	%		9.5	%		9.3	%		8.1	%		9.1	%		8.8	%		9.5	%		8.9	%
Cash, cash equivalents, restricted cash and short-term investments		0.6	%		1.4	%		1.0	%		1.3	%		1.7	%		2.2	%		2.1	%		1.7	%

Gross investment income before expenses and fees		4.8	%		4.9	%		4.8	%		4.9	%		5.1	%		5.1	%		5.0	%		5.0	%
Expenses and fees		(0.1	)%		(0.2	)%		(0.1	)%		(0.2	)%		(0.2	)%		(0.1	)%		(0.2	)%		(0.1	)%

Net investment income		4.7	%		4.7	%		4.7	%		4.7	%		4.9	%		5.0	%		4.8	%		4.9	%

Yields are based on net investment income as reported under U.S. GAAP and are consistent with how the company measures its investment performance for management purposes. Yields are annualized, for interim periods, and are calculated as net investment income as a percentage of average quarterly asset carrying values except for fixed maturity securities, derivatives and derivative counterparty collateral, which exclude unrealized fair value adjustments and securities lending activity, which is included in other invested assets and is calculated net of the corresponding securities lending liability. See page 44 herein for average invested assets and cash used in the yield calculation.

⁽¹⁾	Investment income for other invested assets includes amortization of terminated cash flow hedges, which have no corresponding book value within the yield calculation.

⁽²⁾	Limited partnership investments are primarily equity-based and do not have fixed returns by period.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Net Investment Gains (Losses), Net—Detail

(amounts in millions)


	2020									2019
	2Q			1Q			Total			4Q			3Q			2Q			1Q			Total
Net realized gains (losses) on available-for-sale securities:
Fixed maturity securities:
U.S. corporate	$	2		$	2		$	4		$	(2	)	$	11		$	(16	)	$	30		$	23
U.S. government, agencies and government-sponsored enterprises		94			—			94			—			—			2			33			35
Foreign corporate		4			—			4			1			1			(1	)		(1	)		—
Foreign government		10			5			15			4			2			2			—			8
State and political subdivisions		—			—			—			—			—			—			—			—
Mortgage-backed securities		4			—			4			—			1			1			(2	)		—
Asset-backed securities		(2	)		—			(2	)		—			—			—			(1	)		(1	)
Foreign exchange		2			6			8			2			1			1			(1	)		3

Total net realized gains (losses) on available-for-sale securities		114			13			127			5			16			(11	)		58			68

Impairments:
Bank loans		—			—			—			(1	)		—			—			—			(1	)

Total impairments		—			—			—			(1	)		—			—			—			(1	)

Net change in allowance for credit losses on available-for-sale fixed maturity securities		(7	)		—			(7	)		—			—			—			—			—
Net realized gains (losses) on equity securities sold		—			—			—			—			6			—			3			9
Net unrealized gains (losses) on equity securities still held		9			(19	)		(10	)		1			(4	)		5			12			14
Limited partnerships		37			(40	)		(3	)		19			6			(11	)		15			29
Commercial mortgage loans		1			—			1			(1	)		(1	)		1			(1	)		(2	)
Derivative instruments		10			(105	)		(95	)		(1	)		(29	)		(30	)		(12	)		(72	)
Other		(5	)		(1	)		(6	)		1			4			—			—			5

Net investment gains (losses), gross		159			(152	)		7			23			(2	)		(46	)		75			50
Adjustment for DAC and other intangible amortization and certain benefit reserves		4			11			15			3			3			3			2			11
Adjustment for net investment (gains) losses attributable to noncontrolling interests		(32	)		26			(6	)		(9	)		4			—			(6	)		(11	)

Net investment gains (losses), net	$	131		$	(115	)	$	16		$	17		$	5		$	(43	)	$	71		$	50

Reconciliations of Non-GAAP Measures

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Reconciliation of Operating ROE

(amounts in millions)


Twelve Month Rolling Average ROE	Twelve months ended
	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
U.S. GAAP Basis ROE
Net income (loss) available to Genworth Financial, Inc.’s common stockholders for the twelve months ended⁽¹⁾	$	(506	)	$	103		$	343		$	31		$	159
Quarterly average Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income⁽²⁾	$	10,618		$	10,695		$	10,650		$	10,646		$	10,609
U.S. GAAP Basis ROE^(1)/(2)		(4.8	)%		1.0	%		3.2	%		0.3	%		1.5	%

Operating ROE
Adjusted operating income for the twelve months ended⁽¹⁾	$	159		$	358		$	420		$	91		$	67
Quarterly average Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income⁽²⁾	$	10,618		$	10,695		$	10,650		$	10,646		$	10,609
Operating ROE^(1)/(2)		1.5	%		3.3	%		3.9	%		0.9	%		0.6	%

Quarterly Average ROE	Three months ended
	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
U.S. GAAP Basis ROE
Net income (loss) available to Genworth Financial, Inc.’s common stockholders for the period ended⁽³⁾	$	(441	)	$	(66	)	$	(17	)	$	18		$	168
Quarterly average Genworth Financial, Inc.’s stockholders’ equity for the period, excluding accumulated other comprehensive income⁽⁴⁾	$	10,415		$	10,693		$	10,759		$	10,755		$	10,663
Annualized U.S. GAAP Quarterly Basis ROE^(3)/(4)		(16.9	)%		(2.5	)%		(0.6	)%		0.7	%		6.3	%

Operating ROE
Adjusted operating income (loss) for the period ended⁽³⁾	$	(21	)	$	33		$	24		$	123		$	178
Quarterly average Genworth Financial, Inc.’s stockholders’ equity for the period, excluding accumulated other comprehensive income⁽⁴⁾	$	10,415		$	10,693		$	10,759		$	10,755		$	10,663
Annualized Operating Quarterly Basis ROE^(3)/(4)		(0.8	)%		1.2	%		0.9	%		4.6	%		6.7	%

Non-GAAP Definition for Operating ROE

The company references the non-GAAP financial measure entitled “operating return on equity” or “operating ROE.” The company defines operating ROE as adjusted operating income (loss) divided by average ending Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income (loss) in average ending Genworth Financial, Inc.’s stockholders’ equity. Management believes that analysis of operating ROE enhances understanding of the efficiency with which the company deploys its capital. However, operating ROE is not a substitute for net income (loss) available to Genworth Financial, Inc.’s common stockholders divided by average ending Genworth Financial, Inc.’s stockholders’ equity determined in accordance with U.S. GAAP.

⁽¹⁾	The twelve months ended information is derived by adding the four quarters of net income (loss) available to Genworth Financial, Inc.’s common stockholders and adjusted operating income (loss) from page 9 herein.

⁽²⁾	Quarterly average Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income, is derived by averaging ending Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income, for the most recent five quarters.

⁽³⁾	Net income (loss) available to Genworth Financial, Inc.’s common stockholders and adjusted operating income (loss) from page 9 herein.

⁽⁴⁾	Quarterly average Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income, is derived by averaging ending Genworth Financial, Inc.’s stockholders’ equity, excluding accumulated other comprehensive income.

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Reconciliation of Reported Yield to Core Yield


		2020									2019
	(Assets—amounts in billions)		2Q			1Q			Total			4Q			3Q			2Q			1Q			Total
	Reported—Total Invested Assets and Cash	$	77.9		$	73.2		$	77.9		$	74.6		$	73.9		$	72.0		$	69.5		$	74.6
	Subtract:
	Securities lending		0.1			0.1			0.1			0.1			0.1			0.1			0.1			0.1
	Unrealized gains (losses)		9.7			6.0			9.7			6.9			7.5			5.7			3.7			6.9

	Adjusted end of period invested assets and cash	$	68.1		$	67.1		$	68.1		$	67.6		$	66.3		$	66.2		$	65.7		$	67.6

(A)	Average Invested Assets and Cash Used in Reported and Core Yield Calculation	$	67.6		$	67.3		$	67.6		$	66.9		$	66.2		$	66.0		$	65.7		$	66.3

	(Income—amounts in millions)

(B)	Reported—Net Investment Income	$	786		$	793		$	1,579		$	794		$	816		$	816		$	794		$	3,220
	Subtract:
	Bond calls and commercial mortgage loan prepayments		8			16			24			23			13			7			6			49
	Other non-core items⁽¹⁾		2			7			9			(2	)		8			7			2			15

(C)	Core Net Investment Income	$	776		$	770		$	1,546		$	773		$	795		$	802		$	786		$	3,156


(B) / (A)	Reported Yield		4.65	%		4.71	%		4.67	%		4.74	%		4.93	%		4.95	%		4.83	%		4.86	%
(C) / (A)	Core Yield		4.59	%		4.57	%		4.57	%		4.62	%		4.80	%		4.86	%		4.79	%		4.76	%

Note: Yields have been annualized.

Non-GAAP Definition for Core Yield

The company references 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 U.S. GAAP.

⁽¹⁾	Includes cost basis adjustments on structured securities and various other immaterial items.

Corporate Information

GENWORTH FINANCIAL, INC.

FINANCIAL SUPPLEMENT

SECOND QUARTER 2020

Financial Strength Ratings As Of July 28, 2020


Company	Standard & Poor’s Financial Services LLC (S&P)	Moody’s Investors Service, Inc. (Moody’s)	A.M. Best Company, Inc. (A.M. Best)
Genworth Mortgage Insurance Corporation	BB+ (Marginal)	Baa3 (Adequate)	N/A
Genworth Financial Mortgage Insurance Pty Limited (Australia)⁽¹⁾	A (Strong)	N/A	N/A
Genworth Life Insurance Company	N/A	N/A	C++ (Marginal)
Genworth Life and Annuity Insurance Company	N/A	N/A	B (Fair)
Genworth Life Insurance Company of New York	N/A	N/A	C++ (Marginal)

The S&P, Moody’s, A.M. Best, HR Ratings and Fitch Rating Service (Fitch) ratings included herewith represent those solicited by the company and are not designed to be, and do not serve as, measures of protection or valuation offered to investors. These financial strength ratings should not be relied on with respect to making an investment in the company’s securities.

S&P states that an insurer rated “A” (Strong) has strong financial security characteristics that outweigh any vulnerabilities and is highly likely to have the ability to meet financial commitments. Insurers rated “A” (Strong) or “BB” (Marginal) have strong or marginal financial security characteristics, respectively. The “A” and “BB” ranges are the third- and fifth-highest of nine financial strength rating ranges assigned by S&P, which range from “AAA” to “R.” A plus (+) or minus (-) shows relative standing within a rating category. These suffixes are not added to ratings in the “AAA” category or to ratings below the “CCC” category. Accordingly, the “A” and “BB+” ratings are the sixth- and eleventh-highest of S&P’s 21 ratings categories.

Moody’s states that insurance companies rated “Baa” (Adequate) offer adequate financial security. The “Baa” (Adequate) range is the fourth-highest of nine financial strength rating ranges assigned by Moody’s, which range from “Aaa” to “C.” Numeric modifiers are used to refer to the ranking within the groups, with 1 being the highest and 3 being the lowest. These modifiers are not added to ratings in the “Aaa” category or to ratings below the “Caa” category. Accordingly, the “Baa3” rating is the tenth-highest of Moody’s 21 ratings categories.

A.M. Best states that its “B” (Fair) rating is assigned to companies that have, in its opinion, a fair ability to meet their ongoing insurance obligations while “C++” (Marginal) is assigned to those companies that have, in its opinion, a marginal ability to meet their ongoing insurance obligations. The “B” (Fair) and “C++” (Marginal) ratings are the seventh- and ninth-highest of 15 ratings assigned by A.M. Best, which range from “A++” to “F.”

The Australian mortgage insurance subsidiary also solicits a rating from Fitch. Fitch states that “A” (Strong) rated insurance companies are viewed as possessing strong capacity to meet policyholder and contract obligations. The “A” rating category is the third-highest of nine financial strength rating categories, which range from “AAA” to “C.” The symbol (+) or (-) may be appended to a rating to indicate the relative position of a credit within a rating category. These suffixes are not added to ratings in the “AAA” category or to ratings below the “B” category. Accordingly, the “A” rating is the sixth-highest of Fitch’s 21 ratings categories.

The company also solicits a rating from HR Ratings on a local scale for Genworth Seguros de Credito a la Vivienda S.A. de C.V., its Mexican mortgage insurance subsidiary, with a short-term rating of “HR1” and long-term rating of “HR AA.” For short-term ratings, HR Ratings states that “HR1” rated companies are viewed as exhibiting high capacity for timely payment of debt obligations in the short-term and maintain low credit risk. The “HR1” short-term rating category is the highest of six short-term rating categories, which range from “HR1” to “HR D.” For long-term ratings, HR Ratings states that “HR AA” rated companies are viewed as having high credit quality and offer high safety for timely payment of debt obligations and maintain low credit risk under adverse economic scenarios. The “HR AA” long-term rating is the second-highest of HR Rating’s eight long-term rating categories, which range from “HR AAA” to “HR D.”

S&P, Moody’s, A.M. Best, Fitch and HR Ratings review their ratings periodically and the company cannot assure you that it will maintain the current ratings in the future. These and other agencies may also rate the company or its insurance subsidiaries on a solicited or an unsolicited basis. The company does not provide information to agencies issuing unsolicited ratings and cannot ensure that any agencies that rate the company or its insurance subsidiaries on an unsolicited basis will continue to do so.

⁽¹⁾	Genworth Financial Mortgage Insurance Pty Limited (Australia) is also rated “A” by Fitch.