Genworth Financial Inc. (GNW, Financial) filed Quarterly Report for the period ended 2011-09-30.
Genworth Financial Inc. Cl A has a market cap of $3.53 billion; its shares were traded at around $7.19 with and P/S ratio of 0.35.
Our retirement income business decreased $67 million largely attributable to a decrease of $77 million from our life-contingent spread-based products as a result of a decline in sales in the current year and more favorable mortality in the current year compared to prior year. In addition, we recorded a favorable reserve adjustment in the current year of $8 million in our spread-based products from terminating contracts related to deaths that had not been previously reported. This decrease was partially offset by a $10 million increase in our fee-based products driven by an increase in our guaranteed minimum death benefits due to unfavorable equity market impacts in the third quarter of 2011.
Provision for income taxes. The effective tax rate increased to 29.9% for the nine months ended September 30, 2011 from 23.6% for the nine months ended September 30, 2010. This increase in the effective tax rate was primarily attributable to changes in uncertain Australian tax positions and a Canadian legislative change in the current year, compared to an Australian tax legislative benefit in the prior year. The Canadian legislation change passed in June 2011 will eliminate the Canadian government guarantee fund. The elimination of the guarantee fund is expected to increase the effective tax rate on our U.S. GAAP earnings as prior deductions for contributions to the fund lowered the effective tax rate on U.S. GAAP earnings. The nine months ended September 30, 2011 included an increases of $15 million and $1 million attributable to changes in foreign exchange rates for our international mortgage and lifestyle protection insurance businesses, respectively.
The aggregate fair value of securities sold at a loss during the three months ended September 30, 2011 and 2010 was $263 million from the sale of 94 securities and $275 million from the sale of 100 securities, respectively, which was approximately 93% and 89% of book value for the three months ended September 30, 2011 and 2010, respectively. The loss on sales of securities in the three months ended September 30, 2011 was primarily driven by widening credit spreads. Generally, securities that are sold at a loss represent either small dollar amounts or percentage losses upon disposition. The securities sold at a loss in the third quarter of 2011 included one U.S. corporate security that was sold for a total loss of $4 million related to portfolio repositioning activities. The securities sold at a loss in the third quarter of 2010 included one U.S corporate security that was sold for a total loss of $6 million, one municipal bond that was sold for a total loss of $6 million and one collateralized mortgage obligation security that was sold for a total loss of $5 million.
The aggregate fair value of securities sold at a loss during the nine months ended September 30, 2011 and 2010 was $954 million from the sale of 231 securities and $1,691 million from the sale of 285 securities, respectively, which was approximately 93% and 94%, respectively, of book value. The loss on sales of securities in the nine months ended September 30, 2011 was primarily driven by widening credit spreads. Generally, securities that are sold at a loss represent either small dollar amounts or percentage losses upon disposition. The securities sold at a loss during the nine months ended September 30, 2011 included two U.S. corporate securities that were sold for a total loss of $11 million in the first quarter of 2011, one foreign corporate security that was sold for a total loss of $11 million in the second quarter of 2011 and one U.S. corporate security was sold for a total loss of $4 million in the third quarter of 2011 related to portfolio repositioning activities. The securities sold at a loss during the nine months ended September 30, 2010 included one non-U.S. government security that was sold for a total loss of $7 million in the first quarter of 2010, one mortgage-backed security that was sold for a total loss of $4 million in the second quarter of 2010 related to portfolio repositioning activities, and one U.S. corporate security, one municipal bond and one collateralized mortgage obligation security that were sold for total losses of $6 million, $6 million and $5 million, respectively, in the third quarter of 2010 related to portfolio repositioning activities.
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Genworth Financial Inc. Cl A has a market cap of $3.53 billion; its shares were traded at around $7.19 with and P/S ratio of 0.35.
Highlight of Business Operations:
Workouts and loan modifications, which related to loans representing 3% of our primary risk in-force as of September 30, 2011, and occurred during the period then ended, resulted in a reduction of expected losses during the nine months ended September 30, 2011 of $314 million compared to $413 million during the nine months ended September 30, 2010. Our workout and loan modification programs with various lenders and servicers are designed to help borrowers in default regain current repayment status on their mortgage loans, which ultimately allowed many of these borrowers to remain in their homes. The loans that are subject to workouts and loan modifications that were completed could be subject to potential re-default by the underlying borrower at some future date. In addition, pre-sales, claims administration and other non-cure workouts that occurred during the nine months ended September 30, 2011 resulted in a reduction of expected losses of $70 million compared to $43 million that occurred during the nine months ended September 30, 2010.Our retirement income business decreased $67 million largely attributable to a decrease of $77 million from our life-contingent spread-based products as a result of a decline in sales in the current year and more favorable mortality in the current year compared to prior year. In addition, we recorded a favorable reserve adjustment in the current year of $8 million in our spread-based products from terminating contracts related to deaths that had not been previously reported. This decrease was partially offset by a $10 million increase in our fee-based products driven by an increase in our guaranteed minimum death benefits due to unfavorable equity market impacts in the third quarter of 2011.
Provision for income taxes. The effective tax rate increased to 29.9% for the nine months ended September 30, 2011 from 23.6% for the nine months ended September 30, 2010. This increase in the effective tax rate was primarily attributable to changes in uncertain Australian tax positions and a Canadian legislative change in the current year, compared to an Australian tax legislative benefit in the prior year. The Canadian legislation change passed in June 2011 will eliminate the Canadian government guarantee fund. The elimination of the guarantee fund is expected to increase the effective tax rate on our U.S. GAAP earnings as prior deductions for contributions to the fund lowered the effective tax rate on U.S. GAAP earnings. The nine months ended September 30, 2011 included an increases of $15 million and $1 million attributable to changes in foreign exchange rates for our international mortgage and lifestyle protection insurance businesses, respectively.
The aggregate fair value of securities sold at a loss during the three months ended September 30, 2011 and 2010 was $263 million from the sale of 94 securities and $275 million from the sale of 100 securities, respectively, which was approximately 93% and 89% of book value for the three months ended September 30, 2011 and 2010, respectively. The loss on sales of securities in the three months ended September 30, 2011 was primarily driven by widening credit spreads. Generally, securities that are sold at a loss represent either small dollar amounts or percentage losses upon disposition. The securities sold at a loss in the third quarter of 2011 included one U.S. corporate security that was sold for a total loss of $4 million related to portfolio repositioning activities. The securities sold at a loss in the third quarter of 2010 included one U.S corporate security that was sold for a total loss of $6 million, one municipal bond that was sold for a total loss of $6 million and one collateralized mortgage obligation security that was sold for a total loss of $5 million.
The aggregate fair value of securities sold at a loss during the nine months ended September 30, 2011 and 2010 was $954 million from the sale of 231 securities and $1,691 million from the sale of 285 securities, respectively, which was approximately 93% and 94%, respectively, of book value. The loss on sales of securities in the nine months ended September 30, 2011 was primarily driven by widening credit spreads. Generally, securities that are sold at a loss represent either small dollar amounts or percentage losses upon disposition. The securities sold at a loss during the nine months ended September 30, 2011 included two U.S. corporate securities that were sold for a total loss of $11 million in the first quarter of 2011, one foreign corporate security that was sold for a total loss of $11 million in the second quarter of 2011 and one U.S. corporate security was sold for a total loss of $4 million in the third quarter of 2011 related to portfolio repositioning activities. The securities sold at a loss during the nine months ended September 30, 2010 included one non-U.S. government security that was sold for a total loss of $7 million in the first quarter of 2010, one mortgage-backed security that was sold for a total loss of $4 million in the second quarter of 2010 related to portfolio repositioning activities, and one U.S. corporate security, one municipal bond and one collateralized mortgage obligation security that were sold for total losses of $6 million, $6 million and $5 million, respectively, in the third quarter of 2010 related to portfolio repositioning activities.
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