other assets we may seek to sell, or securities we may seek to issue, in each case, in a timely manner and on anticipated terms; failure to obtain any required regulatory, stockholder and/or noteholder approvals or consents for such alternative strategic plans, or our challenges changing or being more costly or difficult to successfully address than currently anticipated or the benefits achieved being less than anticipated; inability to achieve anticipated cost-savings in a timely manner; and adverse tax or accounting charges; and our ability to increase the capital needed in our mortgage insurance businesses in a timely manner and on anticipated terms, including through business performance, reinsurance or similar transactions, asset sales, securities offerings or otherwise, in each case as and when required;

•

~~risks relating to estimates, assumptions and valuations~~ ~~including: inadequate reserves and the need to increase reserves (including as a result of any~~ changes we may make in the future to our assumptions, methodologies or otherwise in connection with periodic or other reviews); risks related to the impact of our annual review of assumptions and methodologies relating to our long-term care insurance claim reserves and margin, including risks that ~~additional information obtained in the future or other changes to assumptions or methodologies materially~~could affect our margins; inaccurate models; deviations from our estimates and actuarial assumptions or other reasons in our long-term care insurance, life insurance and/or annuity businesses; accelerated amortization of deferred acquisition costs (“DAC”) and present value of future profits (“PVFP”) (including as a result of any changes we may make to our assumptions, methodologies or otherwise in connection with periodic or other reviews); adverse impact on our financial results as a result of projected profits followed by projected losses (as is currently the case with our long-term care insurance business); adverse impact on our results of operations, including the outcome of our annual review of the premium earnings pattern for our mortgage insurance businesses; and changes in valuation of fixed maturity and equity securities;

performance;

•

~~risks relating to economic, market and political conditions~~ including: downturns and volatility in global economies and equity and credit markets; interest rates and changes in rates have adversely impacted, and may continue to materially adversely impact, our business and profitability; deterioration in economic conditions or a decline in home prices that adversely affect our loss experience in mortgage insurance; political and economic instability or changes in government policies; and fluctuations in foreign currency exchange rates and international securities markets;

•

~~regulatory and legal risks~~

strategic risks in the event the proposed transaction with China Oceanwide is not consummated

including: our inability to successfully execute alternative strategic plans to effectively address our current business challenges (including with respect to stabilizing our U.S. life insurance businesses, debt obligations, cost savings, ratings and capital); the risk that the impacts of or uncertainty created by

COVID-19

delay or hinder alternative transactions or otherwise make alternative plans less attractive; our inability to attract buyers for any businesses or other assets we may seek to sell, or securities we may seek to issue, in each case, in a timely manner and on anticipated terms; failure to obtain any required regulatory, stockholder and/or noteholder approvals or consents for such alternative strategic plans, or our challenges changing or being more costly or difficult to successfully address than currently anticipated or the benefits achieved being less than anticipated; inability to achieve anticipated cost-savings in a timely manner; adverse tax or accounting charges; and our ability to increase the capital needed in our mortgage insurance businesses in a timely manner and on anticipated terms, including through business performance, reinsurance or similar transactions, asset sales, securities offerings or otherwise, in each case as and when required;

risks relating to estimates, assumptions and valuations

including: inadequate reserves and the need to increase reserves (including as a result of any changes we may make in the future to our assumptions, methodologies or otherwise in connection with periodic or other reviews); risks related to the impact of our annual review of assumptions and methodologies related to our long-term care insurance claim reserves and margin reviews, including risks that additional information obtained in the future or other changes to assumptions or methodologies materially affect margins; the inability to accurately estimate the impacts of

COVID-19;

inaccurate models; deviations from our estimates and actuarial assumptions or other reasons in our long-term care insurance, life insurance and/or annuity businesses; accelerated amortization of deferred acquisition costs (“DAC”) and present value of future profits (“PVFP”) (including as a result of any future changes we may make to our assumptions, methodologies or otherwise in connection with periodic or other reviews); adverse impact on our financial results as a result of projected profits followed by projected losses (as is currently the case with our long-term care insurance business); adverse impact on our results of operations, including the outcome of our reviews of the premium earnings pattern for our mortgage insurance businesses; and changes in valuation of fixed maturity and equity securities;

risks relating to economic, market and political conditions

including: downturns and volatility in global economies and equity and credit markets, including as a result of prolonged unemployment, a sustained low interest rate environment and other displacements caused by

COVID-19;

interest rates and changes in rates have adversely impacted, and may continue to materially adversely impact, our business and profitability; deterioration in economic conditions or a decline in home prices that adversely affect our loss experience in mortgage insurance; political and economic instability or changes in government policies; and fluctuations in foreign currency exchange rates and international securities markets;

regulatory and legal risks

including: extensive regulation of our businesses and changes in applicable laws and regulations (including changes to tax laws and regulations); litigation and regulatory investigations or other actions; dependence on dividends and other distributions from our subsidiaries (particularly our mortgage insurance subsidiaries) and the inability of any subsidiaries to pay dividends or make other distributions to us, including as a result of the performance of our subsidiaries, regulatory restrictions resulting from

COVID-19,

and other distributions from our subsidiaries (particularly our international subsidiaries) and the inability of any subsidiaries to pay dividends or make other distributions to us, including as a result of the performance of our subsidiaries and insurance, regulatory or corporate law restrictions; the inability to successfully seek

in-force

rate action increases (including increased

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premiums and associated benefit reductions) in our long-term care insurance business, including as a result of

COVID-19;

adverse change in regulatory requirements, including risk-based capital; changes in regulations adversely affecting our ~~international operations;~~Australian mortgage insurance business; inability to continue to maintain the private mortgage insurer eligibility requirements (“PMIERs”); the impact on capital levels of increased delinquencies caused by

COVID-19;

inability of our U.S. mortgage insurance subsidiaries to meet minimum statutory capital ~~requirements and hazardous financial condition standards;~~requirements; the influence of Federal National Mortgage Association (“Fannie Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac”) and a small number of large mortgage lenders on the U.S. mortgage insurance market and adverse changes to the role or structure of Fannie Mae and Freddie Mac; adverse changes in regulations affecting our mortgage insurance businesses; inability to continue to implement actions to mitigate the impact of statutory reserve requirements; ~~impact of additional regulations pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act;~~ changes in tax laws; and changes in accounting and reporting standards;

•

~~liquidity, financial strength ratings, credit and counterparty risks~~ including: insufficient internal sources to meet liquidity needs and limited or no access to capital (including the ability to obtain further financing under an additional secured term loan or credit facility); future adverse rating agency actions, including with respect to rating downgrades or potential downgrades or being put on review for potential downgrade, all of which could have adverse implications for us, including with respect to key business relationships, product offerings, business results of operations, financial condition and

capital needs, strategic plans, collateral obligations and availability and terms of hedging, reinsurance and borrowings; defaults by counterparties to reinsurance arrangements or derivative instruments; defaults or other events impacting the value of our fixed maturity securities portfolio; and defaults on our commercial mortgage loans or the mortgage loans underlying our investments in commercial mortgage-backed securities and volatility in performance;

•

~~operational risks~~ including: inability to retain, attract and motivate qualified employees or senior management; ineffective or inadequate risk management in identifying, controlling or mitigating risks; reliance on, and loss of, key customer or distribution relationships; competition, including in our mortgage insurance businesses from government and government-owned and government-sponsored enterprises (“GSEs”) offering mortgage insurance; the design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements or misrepresentations; and failure or any compromise of the security of our computer systems, disaster recovery systems and business continuity plans and failures to safeguard, or breaches of, its confidential information;

•

~~insurance and product-related risks~~ ~~including: our inability to increase premiums and associated benefit reductions sufficiently, and in a timely manner, on ourin-force~~ long-term care insurance policies, and charge higher premiums on policies, in each case, as currently anticipated and as may be required from time to time in the future (including as a result of our failure to obtain any necessary regulatory approvals or unwillingness or inability of policyholders to pay increased premiums and/or accept reduced benefits), including to offset any impact on our long term care insurance margins; availability, affordability and adequacy of reinsurance to protect us against losses; inability to realize anticipated benefits of our rescissions, curtailments, loan modifications or other similar programs in our mortgage insurance businesses; premiums for the significant portion of our mortgage insurance risk~~in-force~~ ~~with highloan-to-value~~ ~~ratios may not be sufficient to compensate us for the greater risks associated with those policies; decreases in the volume of highloan-to-value~~ mortgage originations or increases in mortgage insurance cancellations; increases in the use of alternatives to private mortgage insurance and reductions in the level of coverage selected; potential liabilities in connection with our U.S. contract underwriting services; and medical advances, such as genetic research and diagnostic imaging, and related legislation that impact policyholder behavior in ways adverse to us;

•

~~other risks~~ including: impairments of or valuation allowances against our deferred tax assets; the possibility that in certain circumstances we will be obligated to make payments to General Electric Company (“GE”) under the tax matters agreement with GE even if our corresponding tax savings are never realized and payments could be accelerated in the event of certain changes in control; and provisions of our certificate of incorporation and bylaws and the tax matters agreement with GE may discourage takeover attempts and business combinations that stockholders might consider in their best interests; and

•

~~risks relating to our common stock~~~~including: the continued suspension of payment of dividends; and stock price fluctuations.~~

liquidity, financial strength ratings, credit and counterparty risks

including: insufficient internal sources to meet liquidity needs and limited or no access to capital (including the ability to obtain further financing under an additional secured term loan or credit facility); the impact on holding company liquidity caused by the inability to receive dividends or other returns of capital from our mortgage insurance businesses as a result of

COVID-19;

continued availability of capital and financing; future adverse rating agency actions, including with respect to rating downgrades or potential downgrades or being put on review for potential downgrade, all of which could have adverse implications for us, including with respect to key business relationships, product offerings, business results of operations, financial condition and capital needs, strategic plans, collateral obligations and availability and terms of hedging, reinsurance and borrowings; defaults by counterparties to reinsurance arrangements or derivative instruments; defaults or other events impacting the value of our fixed maturity securities portfolio; and defaults on our commercial mortgage loans or the mortgage loans underlying our investments in commercial mortgage-backed securities and volatility in performance;

operational risks

including: inability to retain, attract and motivate qualified employees or senior management; ineffective or inadequate risk management in identifying, controlling or mitigating risks; the impact on processes caused by

shelter-in-place

or other governmental restrictions imposed as a result of

COVID-19;

reliance on, and loss of, key customer or distribution relationships; competition, including in our mortgage insurance businesses from government and government-owned and government-sponsored enterprises (“GSEs”) offering mortgage insurance; the design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements or misrepresentations; and failure or any compromise of the security of our computer systems, disaster recovery systems and business continuity plans and failures to safeguard, or breaches of, its confidential information;

insurance and product-related risks

including: our inability to increase premiums and reduce benefits sufficiently, and in a timely manner, on our

in-force

long-term care insurance policies, in each case, as currently anticipated and as may be required from time to time in the future (including as a result of a delay or failure to obtain any necessary regulatory approvals, including as a result of COVID-19, or unwillingness or inability of policyholders to pay increased premiums and/or accept reduced benefits), including to offset any negative impact on our long-term care insurance margins; availability, affordability and adequacy of reinsurance to protect us against losses; decreases in the volume of high

loan-to-value

mortgage originations or increases in mortgage insurance cancellations; increases in the use of alternatives to private mortgage insurance and reductions in the level of coverage selected; potential liabilities in connection with our U.S. contract underwriting services; and medical advances, such as genetic research and diagnostic imaging, and related legislation that impact policyholder behavior in ways adverse to us;

other risks

including: impairments of or valuation allowances against our deferred tax assets and the occurrence of natural or

man-made

disasters or a pandemic, such as COVID-19, could materially adversely affect our financial condition and results of operations.

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We provide additional information regarding these risks and uncertainties in the Definitive Proxy Statement, filed with the U.S. Securities and Exchange Commission (“SEC”) on January 25, 2017, and our Annual Report on Form

10-K,

filed with the SEC on February 27, 2020. See also “Part II — Item 1A — Risk Factors.” Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Accordingly, for the foregoing reasons, we caution you against relying on any forward-looking statements. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or ~~otherwise.~~

otherwise, except as may be required under applicable securities laws.

Strategic Update

We continue to focus on improving business performance, addressing financial leverage and increasing financial and strategic flexibility across the organization. Our strategy includes maximizing our opportunities in our mortgage insurance businesses and stabilizing our U.S. life insurance businesses.

China Oceanwide Transaction

On October 21, 2016, Genworth Financial, Inc. (“Genworth Financial”) entered into an agreement and plan of merger (the “Merger Agreement”) with Asia Pacific Global Capital Co., Ltd. (“Parent”), a limited liability company incorporated in the People’s Republic of China and a subsidiary of China Oceanwide Holdings Group Co., Ltd., a limited liability company incorporated in the People’s Republic of China (together with its affiliates, “China Oceanwide”), and Asia Pacific Global Capital USA Corporation (“Merger Sub”), a Delaware corporation and ~~an indirect,~~a direct, wholly-owned subsidiary of Asia Pacific Insurance USA Holdings LLC (“Asia Pacific Insurance”), which is a Delaware limited liability company and owned by China Oceanwide, pursuant to which, subject to the terms and conditions set forth therein, Merger Sub would merge with and into Genworth Financial with Genworth Financial surviving the merger as ~~an indirect,~~a direct, wholly-owned subsidiary of Asia Pacific Insurance (the “Merger”). China Oceanwide has agreed to acquire all of our outstanding common stock for a total transaction value of approximately $2.7 billion, or $5.43 per share in cash. At a special meeting held on March 7, 2017, Genworth Financial’s stockholders voted on and approved a proposal to adopt the Merger Agreement.

Genworth Financial and China Oceanwide continue to work towards satisfying the closing conditions of the Merger as soon as possible. In December 2018 and January 2019, we received the remaining approvals from our U.S. domestic insurance regulators. These approvals had multiple conditions, including but not limited to, the Merger being consummated without the purchase of Genworth Life and Annuity Insurance Company (“GLAIC”) from Genworth Life Insurance Company (“GLIC”) by a Genworth intermediate holding company, which had been initially proposed and which we refer to as the “GLAIC unstacking.” Our U.S. domestic regulatory approvals included the approval from the Delaware Department of Insurance (“DDOI”). Genworth Financial and China Oceanwide worked with the DDOI and other regulators to obtain approval of the Merger without the GLAIC unstacking throughout the second half of 2018. As part of the DDOI approval, Genworth Financial and China Oceanwide agreed, following the Merger, Genworth Holdings, Inc. (“Genworth Holdings”) will contribute $175 million to GLIC, which was previously committed by Genworth Financial to be used as partial consideration for the GLAIC unstacking. The $175 million was originally scheduled to be contributed in three equal tranches, with the first contribution completed by the end of March 2019, the second contribution completed by the end of September 2019 and the final contribution completed by the end of January 2020. Due to the delay in closing the Merger, we did not make the March 2019 contribution. We will work with the DDOI on a revised timeline for the first contribution and the remaining amounts due thereafter, depending on the timing of the closing of the Merger. In addition, at or before the closing of the Merger, GLAIC will purchase from GLIC an intercompany note with a principal amount of $200 million. This intercompany note was issued by Genworth Holdings to GLIC, with Genworth Holdings obligated to pay the principal amount on the maturity date of

On March 31, ~~2020. The purchase price will be at fair value, but not less than $200 million. No changes will be made to the existing terms of the intercompany note, other than~~2020, Genworth, ~~Holdings will now pay GLAIC the principal amount of the note at maturity. Likewise, the amount will continue to be eliminated in consolidation.~~

In October 2018, the National Development and Reform Commission (“NDRC”) of the People’s Republic of China accepted China Oceanwide’s filing in connection with the Merger Agreement, which concluded NDRC’s review process and enables China Oceanwide to seek the clearance in China for currency conversion and the transfer of funds once all other regulatory approvals have been received.

In June 2018, the Committee on Foreign Investment in the United States (“CFIUS”) completed its review of the proposed transaction and concluded that there are no unresolved national security concerns with respect to the proposed transaction. The completion of the CFIUS review satisfied one of the conditions to closing the proposed transaction. In connection with the CFIUS review of the proposed transaction, Genworth Financial and China Oceanwide entered into an agreement to implement a data security risk mitigation plan, which includes, among other things, the use of a U.S. third-party service provider and an independent security monitor to protect the personal data of Genworth Financial’s policyholders and customers in the United States.

The closing of the Merger remains subject to other conditions and approvals, including the required regulatory approval in Canada. In addition, China Oceanwide will need to receive clearance in China for currency conversion and the transfer of funds.

~~On April 29, 2019, Genworth Financial,~~ Parent and Merger Sub entered into a ~~tenth~~fourteenth waiver and agreement (“~~Tenth~~Fourteenth Waiver and Agreement”) pursuant to which Genworth ~~Financial~~ and Parent each agreed to waive ~~until June 30, 2019~~ its right to terminate the Merger Agreement and abandon the Merger to the earliest date of: (i) June 30, 2020, (ii) failure by the Parent to approve final documents provided by Genworth for the sale of Genworth, its subsidiaries or a portion of its assets or (iii) in ~~accordance~~the event that after March 31, 2020 any governmental entity imposes or requires, any term, condition, obligation, restriction, requirement, limitation, qualification, remedy or other action that applies to the Merger Agreement, that is materially and adversely different, individually or in the aggregate, from the conditions set forth by the governmental entities with respect to the ~~terms~~Merger that were in effect on the date of the Fourteenth Waiver and Agreement.

Under the Fourteenth Waiver and Agreement, if the parties are unable to agree on a closing date following the satisfaction or waiver of the conditions to closing, each party has the right to terminate the Merger Agreement. If the parties are unable to satisfy the closing conditions by June 30, 2020, and are unable to reach an agreement as to a further extension of the deadline, then either party may terminate the Merger Agreement pursuant to its terms.

On August 12, 2019, with the approval of Genworth’s Board of Directors and China Oceanwide, Genworth, Genworth Financial International Holdings, LLC (“GFIH”) and Genworth Mortgage Insurance Corporation (“GMICO”) entered into a Share Purchase Agreement with an affiliate of Brookfield Business Partners L.P. (“Brookfield”). Under the Share Purchase Agreement, Genworth, GFIH and GMICO agreed to sell the common shares of Genworth MI Canada Inc. (“Genworth Canada”) owned by GFIH and GMICO to Brookfield. GFIH and GMICO are indirect wholly-owned subsidiaries of Genworth. Genworth sold its stake in Genworth Canada to facilitate the closing of the transaction with China Oceanwide. The ~~Tenth~~sale of Genworth Canada increases

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Genworth’s financial flexibility, whether or not the transaction with China Oceanwide is consummated. The sale closed on December 12, 2019 for an adjusted sale price of approximately $1.7 billion.

On March 24, 2020, the New York State Department of Financial Services (“NYDFS”)

re-approved

the China Oceanwide transaction. In connection with the NYDFS’

re-approval,

Genworth committed, among other items, to contribute $100 million to Genworth Life Insurance Company of New York (“GLICNY”) at the closing of the China Oceanwide transaction. On March 31, 2020, the Virginia State Corporation Commission, Bureau of Insurance, also

re-approved

the China Oceanwide transaction. In addition, as previously disclosed, the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”)

re-approved

the China Oceanwide transaction in January 2020. With the Virginia regulator’s

re-approval

and previously received approvals and

re-approvals,

and subject to the receipt of the confirmation from the Delaware regulator of its existing approval, China Oceanwide has obtained all U.S. regulatory approvals necessary to close the transaction. China Oceanwide is currently finalizing its funding plan. China Oceanwide has secured a financing commitment for debt funding of up to $1.8 billion through Hony Capital to partially finance the acquisition of Genworth, which was extended to June 30, 2020. After this funding plan is finalized, China Oceanwide will discuss the currency conversion and transfer of funds with China’s State Administration of Foreign Exchange in order to complete the transaction. China Oceanwide will also seek confirmation from the Delaware Department of Insurance that the acquisition of Genworth Life Insurance Company (“GLIC”), Genworth’s indirect wholly-owned Delaware domiciled insurer, may proceed under the existing approval.

Genworth and China Oceanwide remain committed to satisfying the closing conditions under the Merger Agreement as soon as possible. However, given the unprecedented market disruptions due to

COVID-19,

China Oceanwide and Genworth extended the Merger Agreement deadline under the Fourteenth Waiver and Agreement ~~extended~~to provide the ~~ninth waiver and agreement extension deadline of April 30, 2019 to allow~~parties with additional time ~~for~~to close the ~~remaining regulatory approval and clearance processes.~~

transaction.

In connection with the Merger, China Oceanwide and Genworth have agreed on a capital investment plan under which China Oceanwide and/or its affiliates will contribute an aggregate of $1.5 billion to Genworth over time following consummation of the Merger. This contribution is subject to the closing of the Merger and the receipt of required regulatory ~~approvals.~~approvals and clearances. The $1.5 billion contribution would be used to further improve our financial stability, which could include retiring future debt ~~due in 2020 and 2021~~obligations or enabling future growth opportunities. China Oceanwide has no future obligation and has informed us that it has no current intention, ~~or future obligation~~ to contribute additional capital to support our legacy long-term care insurance ~~business. However, as discussed above,~~business other than agreed in connection with the ~~parties have agreed following~~regulatory approvals for the ~~closing of the Merger, Genworth Holdings would contribute $175 million in aggregate to GLIC over time.~~

~~At this time Genworth Financial and~~ China Oceanwide remain committed to satisfying the closing conditions under the Merger Agreement as soon as possible. However, if the parties are unable to satisfy the closing conditions by June 30, 2019 and are unable to reach an agreement as to a further extension of the deadline, then either party may terminate the Merger Agreement pursuant to its terms.

transaction.

If the China Oceanwide transaction is completed, we will be a standalone subsidiary and our senior management team will continue to lead the business from our current headquarters in Richmond, Virginia. ~~Likewise, we~~We intend to maintain our existing portfolio of ~~businesses, including our mortgage insurance businesses in Australia and Canada.~~businesses. Except for the specific monitoring and reporting required under the ~~CFIUS~~Committee on Foreign Investment in the United States data security risk mitigation plan, our

day-to-day

operations are not expected to change as a result of this transaction.

Strategic Alternatives

If the China Oceanwide transaction is not completed, we will continue to explore strategic alternatives and financing options to address our ongoing challenges. As a result of the ~~recent~~ performance of our long-term care and life insurance businesses, ~~and~~as well as the ~~charges we recorded in previous periods, absent~~resulting lack of potential dividend capacity from our U.S. life insurance subsidiaries, our financial strength ratings have been downgraded. Absent any alternative commitment of external capital, or other proactive actions to meet our closest debt maturities, we believe there would be: increased pressure on and potential further downgrades of our financial strength ratings, particularly for our mortgage insurance businesses, which could affect our ability to maintain our market share ofin the U.S. mortgage insurance industry, and other limitations on our holding company liquidity and ability to service and/or refinance our holding company debt.

In These challenges may be exacerbated by

COVID-19.

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If the ~~absence of the transaction with~~ China Oceanwide ~~which we can neither predict nor guarantee,~~transaction cannot be completed, we may need to pursue additional strategic ~~asset sales~~transactions to improve our financial stability and address our future debt maturities, ~~in 2020 and thereafter,~~ including ~~potential sales of~~evaluating our ~~mortgage insurance businesses in Canada and/or Australia. We have and would continue~~alternatives with respect to ~~evaluate options to insulate~~ our U.S. mortgage insurance business ~~from additional ratings pressure, including a potential partial sale,~~and/or our mortgage insurance business in ~~the event the transaction with China Oceanwide cannot be completed.~~Australia. Changes to our financial projections, including changes that anticipate planned ~~asset sales,~~strategic transactions, may negatively impact our ability to realize certain foreign tax credits or other deferred tax assets and have a resulting material adverse effect on our results of operations.

Ongoing Priorities

Stabilizing our U.S. life insurance businesses continues to be one of our long-term goals. We will continue to execute this objective primarily through our multi-year long-term care insurance

in-force

rate action plan.

~~Increased premiums~~ Premium rate increases and associated benefit reductions on our legacy long-term care insurance policies are critical to the business. ~~As previously disclosed, we are no longer seeking an unstacking of GLAIC as part of our long-term care insurance strategy.~~ In addition, reducing debt will remain a high priority. We believe that increased financial support and our strengthened financial foundation resulting from the China Oceanwide transaction would provide us with more options to manage our debt maturities and reduce overall indebtedness, which in turn ~~is intended to~~would likely improve our credit and ratings profile over time. Finally, we also believe that the completion of the China Oceanwide transaction would allow us to place greater focus on the future of our long-term care and mortgage insurance businesses while continuing to service our existing policyholders.

COVID-19 Summary

COVID-19

has brought unprecedented changes to the global economy. Although we are unsure of the ultimate impact

COVID-19

will have on our businesses, we are actively responding to and planning for further disruption. Below is a summary of certain of the trends, impacts and uncertainties relating to

COVID-19,

which are generally not reflected in the quarterly results under review in this report and which are expected to impact our future results of operations and financial condition. Our discussion and analysis of our quarterly results should be read in conjunction with the following disclosures regarding

COVID-19

and the more detailed disclosures contained elsewhere herein.

Economic Backdrop

COVID-19

has disrupted the global economy and financial markets, business operations, and consumer behavior and confidence. Large scale disruption in the U.S. economy is leaving several industries

non-operational

through state and federal mandated shutdowns in an effort to contain the spread of

COVID-19.

While all states have been impacted, certain geographies have been disproportionately impacted by

COVID-19

During and following the first quarter of 2020, signs have pointed to a global recession as a result of

COVID-19.

Other signs of a potential global recession include negative monthly inflation, historically low retail sales and a dramatic decrease in industrial production.

In response to the economic headwinds and

COVID-19,

the U.S. Federal Reserve reduced interest rates by 150 basis points during the first quarter of 2020. The U.S. Federal Reserve’s interest rate reductions, along with expectations of negative growth drove U.S. Treasury yields down approximately 100 to 150 basis points, with the decline in short-term interest rates outpacing the decline in long-term interest rates.

The global economic slowdown has driven other global central banks and foreign governments to take similar accommodative actions to stabilize capital markets and implement fiscal stimulus to support their respective domestic economies. Credit markets responded to

COVID-19

and the subsequent economic downturn with widening of credit spreads to recessionary levels.

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Stay at home orders and partial economic shutdowns are expected to place strain on earnings and corporate balance sheets for the next two quarters and possibly for the remainder of 2020, which when combined with forced liquidations as a result of liquidity strains, further contributed to the credit spread widening.

A crude oil price war triggered by supply and demand imbalance decreased crude oil prices over 60% in the first quarter of 2020 and contributed to additional credit spread widening and financial pressure to the energy sector.

The U.S. Federal Reserve announced new quantitative easing programs to help support credit markets, including a $2.3 trillion program that includes a $750 billion corporate credit facility to purchase investment grade and certain high yield corporate securities, among other facilities to support the loan, municipal and structured markets.

U.S. Mortgage Insurance

As a result of

COVID-19,

our U.S. mortgage insurance business has already begun to experience declines in investment valuations and declines in persistency rates from prevailing lower interest rates. Additionally, we could experience asset impairments, increases in delinquent loans and paid claims, lower future new insurance written levels, increases to our capital requirements and pressure on our capital sufficiency ratios.

The recently signed Coronavirus Aid, Relief, and Economic Security (“CARES”) Act along with programs announced by the Federal Housing Finance Agency (“FHFA”), Fannie Mae, and Freddie Mac all include provisions to offer forbearance to borrowers facing hardship due to

COVID-19.

In addition, the CARES act, the FHFA, and many local governments announced moratoriums on foreclosures and evictions for 60 days, beginning March 18, 2020.

The result of a large response to forbearance programs and an extended time to remain in forbearance or enter modification means we expect an elevated level of delinquencies reported to us and for those loans to remain in a delinquent status for an extended period. The result will likely decrease our Private Mortgage Insurer Eligibility Requirements (“PMIERs”) required asset levels with which we must comply to remain an eligible insurer for Fannie Mae and Freddie Mac. We and the other U.S. mortgage insurers are currently working closely with the FHFA, Fannie Mae, and Freddie Mac to determine the proper treatment of these COVID-19 delinquencies, which may cure at a higher rate than traditional delinquencies should economic activity quickly return to pre-COVID-19 levels. Severity of loss on loans that do go to claim, however, may be negatively impacted by the extended forbearance timeline, the associated elevated expenses such as accumulated interest and home price depreciation, if any.

We expect our PMIERs sufficiency ratio to decrease as a result of incremental delinquencies directly or indirectly related to

COVID-19.

Given the expectation for a decrease in our PMIERs sufficiency ratio prospectively as a result of new delinquencies stemming from

COVID-19,

we intend to preserve PMIERs available assets and our U.S. mortgage insurance business may not provide dividends in 2020. The amount and timing of dividends will be reevaluated later in 2020 and will depend on the economic recovery from COVID-19.

Australia Mortgage Insurance

COVID-19

is having a significant impact on the Australian economy. To curb the spread of the virus, the Australian government restricted the movement of people within the country by implementing social distancing measures and shutting down all

non-essential

businesses. This has resulted in major disruptions to economic activity across the country.

Many of our lender customers have announced initiatives that allow affected homeowners the option to defer their repayments for a period of up to six months. Homeowners that participate in such lender hardship programs will not be reported as delinquent during this time. In addition, the Australian

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Prudential Regulation Authority (“APRA”) has provided guidance to insurers asking them to limit discretionary capital distributions, including dividends, until the impact of COVID-19 is better understood to ensure that they have sufficient capital capacity to continue essential functions such as underwriting new insurance. Given the uncertainty, we cannot predict the ultimate impact that COVID-19 will have on our mortgage insurance business in Australia.

Given the potential economic impacts of

COVID-19,

our mortgage insurance business in Australia could be subject to a ratings downgrade in the future. If that occurs, the business will work with its customers to demonstrate its credit strength and endeavor to avoid termination of any existing contracts.

As a result of potential impacts on capital levels, we may not receive dividends or other returns of capital from our mortgage insurance business in Australia for the remainder of 2020. The amount and timing of dividends will be reevaluated later in 2020 and will depend on the economic recovery from COVID-19.

U.S. Life Insurance

The most significant impacts in our U.S. life insurance businesses from

COVID-19

are related to the current low interest rate environment and equity market volatility/declines, and may also be impacted by future mortality and morbidity experience.

Our long-term care insurance product reserves could be negatively impacted by the current low interest rate environment, particularly as it relates to loss recognition testing and asset adequacy analysis. In our long-term care insurance products, we would expect some degree of higher mortality during

COVID-19

which would have a favorable impact on claims. We are not expecting

COVID-19

to drive higher claims frequency in our long-term care insurance business and we may observe temporarily reduced claim incidence while

shelter-in-place

and social distancing protocols are in effect.

Our U.S. life insurance companies are dependent on the approval of actuarially justified

in-force

rate actions in our long-term care insurance business, including those rate actions which were previously filed and are currently pending review and approval. We could experience delays in receiving approvals of these

in-force

rate actions during

COVID-19.

The low interest rate environment and declining equity markets have adversely impacted earnings in our fixed annuity products; however, if mortality is higher in future months, it could benefit earnings in these products in future quarters. Conversely, higher mortality rates could lower profitability in our life insurance products.

In our U.S life insurance companies, we will comply with guidance issued by certain insurance regulators, such as mandates that policies cannot be lapsed or cancelled if premiums are not paid or requirements to provide extensions of grace periods during the

COVID-19

outbreak.

Runoff

The low interest rate environment and declining equity markets have materially adversely impacted earnings in our variable annuity products; however, if mortality is higher in future months, it could benefit earnings in these products in future quarters.

While certain states currently have mandates in place that policies cannot be lapsed, we do not expect a significant impact on our Runoff segment. There is no requirement to pay premiums in the majority of our variable annuity contracts and benefits would adjust contractually based on actual premiums paid in these products.

We could see additional losses and declines in statutory risk-based capital driven by increases to the required capital supporting our variable annuity products, as a result of the decline in equity markets and low interest rates.

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Investment Portfolio

We are actively monitoring our investment portfolio, including asset valuations impacted by the spread of

COVID-19

and the resulting economic disruption. Our investment portfolio is primarily comprised of investment grade fixed maturity securities, with approximately 58% rated “A” and above. The carrying value of our investment portfolio as of March 31, 2020 and December 31, 2019 was $70.7 billion and $71.2 billion, respectively, of which 84% and 85%, respectively, was invested in fixed maturity securities.

In March 2020, due in large part to

COVID-19,

we experienced significant credit spread widening, principally in our U.S. and

non-U.S.

corporate bond investments. The credit spread widening resulted in approximately $2.5 billion of unrealized investment losses, partially offset by approximately $0.8 billion of unrealized investment gains in our U.S. government bond investments principally due to the dramatic decrease in interest rates. The net unrealized investment loss of approximately $1.7 billion related to our fixed maturity securities was recorded as a part of accumulated other comprehensive income (loss) as of March 31, 2020 and had no impact on earnings in the first quarter of 2020.

We routinely monitor our investment portfolio for possible ratings downgrades and other signs of distress that could be indicators of impairment. Our monitoring includes identifying assets susceptible to the efforts to contain the spread of

COVID-19,

including close inspection of investments in industries directly impacted, such as travel, energy, leisure, lodging and auto. Our monitoring also includes inspection of other credit risk attributes, such as high leverage, supply chain interruptions and service disruptions/stoppages.

Our investment portfolio is less exposed to equity market volatility; however, we have seen a dramatic decline in the fair value of our equity securities and limited partnership investments which was recognized as a loss of $59 million in the first quarter of 2020.

Income Tax and Accounting

The CARES Act includes numerous measures to assist businesses, including temporary changes to income and

non-income-based

tax laws, permitting employers to delay contributions to defined benefit pension plans until January 1, 2021 and allowing financial institutions to suspend U.S. GAAP guidance related to loan modifications considered to be troubled debt restructurings. We are not included among the entities permitted to suspend U.S. GAAP guidance related to loan modifications considered to be troubled debt restructurings or temporarily defer new accounting guidance on expected credit losses. Accordingly, we adopted the new guidance on January 1, 2020 as discussed further in note 2 in our unaudited condensed consolidated financial statements under “Part 1—Item 1—Financial Statements.”

The most significant changes pertaining to temporary income and

non-income-based

tax laws include:

eliminating the 80% of taxable income limitation, allowing corporate entities to fully utilize net operating loss (“NOL”) carryforwards to offset taxable income in 2018, 2019 or 2020 (the 80% limitation is reinstated for tax years after 2020);

allowing NOLs originating in 2018, 2019 or 2020 to be carried back five years;

increasing the net interest expense deduction limit from 30% to 50% of adjusted taxable income for tax years beginning January 1, 2019 and 2020; and

non-income

tax provision, allowing payments of the employer share of social security payroll taxes that are not Medicare related and would otherwise be due from the date of enactment through December 31, 2020 to be paid in two installments at the end of 2021 and 2022.

We have applied the temporary NOL changes to our current period tax provision reflecting our most likely tax return filing position.

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Operational Readiness and Business Continuity

We are actively taking preventive measures to mitigate the risk of operational disruption, which includes identifying potential impacts on our consumers, employees and vendors. Our business continuity plans allow us to continue operations of critical functions, such as entering client orders, completing customer transactions, paying claims and providing clients access to their accounts and policy values. Our business continuity plans also consider workforce continuity.

In addition, we are in discussions with key suppliers on their business continuity status as it relates to

COVID-19.

Our most critical suppliers are reporting on their actions to keep facilities clean, limit workforce in their facilities, and moving to a remote work from home workforce. For our suppliers who interact with customers, we do have a few that are reporting limitations or the inability to service designated areas due to local and state government shelter in place or restrictions on essential activities. Currently, affected areas are primarily located in India and the Philippines, where the ability to work from home is impacted due to country-wide infrastructure and other limitations. To mitigate this, we are leveraging our business continuity plans to ensure critical activities are still being conducted by leveraging supplier remote work capabilities and redeploying internal resources.

For our customers, we have employed a range of activities to share our continued commitment to serving them through this unprecedented situation, along with any process changes that have resulted from our work-from-home status or other community mandates. These communications include, but are not limited to, email communication, mailing letters and publishing a webpage on

“COVID-19

Preparedness” on genworth.com. We continue to provide customer service to our policyholders during this uncertain time and will work with our policyholders if they contact us with questions or concerns regarding their policies.

We have performed an analysis of our internal control environment and believe the impact of the current remote work environment as a result of

COVID-19

has not to date materially affected our ability to maintain effective controls and procedures.

Liquidity

Genworth Holdings maintains a continuous process for evaluating group-level liquidity, under normal and stressed environments. In light of

COVID-19

emergence, we are currently developing additional stress scenarios to evaluate potential impacts to our businesses and Genworth Holdings. We are modeling various stress scenarios given the potential lack of near-term dividends from our subsidiaries.

Currently, we believe Genworth Holdings has adequate liquidity and options available to address current liquidity needs, if they arise, such as cash on hand, a potential issuance of debt at the holding company of our U.S. mortgage insurance subsidiary, or secured debt at Genworth Holdings. Genworth Holdings’ next debt maturity is February 2021.

We also monitor the cash and highly liquid investment positions in each of our operating subsidiaries to ensure they will have the cash necessary to meet their obligations as they come due. Our businesses have liquidity options available to them, including Federal Home Loan Bank funding agreements and repurchase facilities, selling highly liquid securities and entering into new reinsurance arrangements. Given the options available, we believe Genworth Holdings and its operating subsidiaries will be able to meet the near-term liquidity demands given the current market impacts from

COVID-19.

For additional details on our overall liquidity and future dividend sources, see “—Liquidity and Capital Resources.”

We employ a process to both monitor and assess the impacts of unexpected events on our businesses. While the impact of

COVID-19

is very difficult to predict, the ultimate impact on our business will depend on the length of the pandemic and speed of the economic recovery. We will continue to monitor developments and the potential financial impacts on our business. For additional details on the impact

COVID-19

is having on our

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current results of operations and potential future impacts see “—Business Trends and Conditions” by segment. See also “Item 1A. Risk Factors — COVID-19 could materially adversely affect our financial condition and results of operations.”

Executive Summary of Financial Results

Below is an executive summary of our consolidated financial results for the periods indicated. Amounts below are net of taxes, unless otherwise indicated.

After-tax

amounts assume a tax rate of 21%.

Three Months Ended March 31, ~~2019~~2020 Compared to Three Months Ended March 31, ~~2018~~

2019

We had a net loss available to Genworth Financial, Inc.’s common stockholders of $66 million for the three months ended March 31, 2020 compared to net income available to Genworth Financial, Inc.’s common stockholders of $174 million ~~and $112 million~~ for the three months ended March 31, ~~2019 and 2018, respectively.~~2019. Adjusted operating income available to Genworth Financial, Inc.’s common stockholders was ~~$121~~$33 million and ~~$125~~$95 million for the three months ended March 31, 2020 and 2019, ~~and 2018,~~ respectively.

Our U.S. Mortgage Insurance segment had adjusted operating income available to Genworth Financial, Inc.’s common stockholders of ~~$124~~$148 million and ~~$111~~$124 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. The increase was primarily attributable to higher ~~insurancein-force~~premiums and an increase in investment income, partially offset by higher operating costs and losses in the current year.

Our Canada Mortgage Insurance segment had adjusted operating income available to Genworth Financial, Inc.’s common stockholders of $41 million and $49 million for the three months ended March 31, 2019 and 2018, respectively. The decrease was primarily driven by changes in foreign exchange rates in the current year and from lower earned premiums largely related to refinements in premium recognition factors in the prior year that did not recur and lower mortgage insurance written on prime-based, individually underwritten residential mortgage loans (“flow mortgage insurance”) in recent years. The decrease was also attributable to an increase in acquisition and operating expenses, which included higher stock-based compensation expense in the current year.

Our Australia Mortgage Insurance segment had adjusted operating income available to Genworth Financial, Inc.’s common stockholders of ~~$14~~$9 million and ~~$19~~$14 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. The decrease was ~~predominantly attributable to~~primarily driven by lower earned premiums largely from ~~changes in foreign exchange rates in the current year~~portfolio seasoning and ~~from the seasoning of our smaller, more recentin-force~~ ~~books of business. These decreases were~~lower policy cancellations, partially offset by lower ~~contract fees amortization~~losses primarily from favorable aging of existing delinquencies in the current year.

Our U.S. Life Insurance segment had an adjusted operating loss available to Genworth Financial, Inc.’s common stockholders of $70 million and $5 million ~~in both~~for the three months ended March 31, 2020 and 2019, ~~and 2018. The~~respectively.

Our long-term care insurance business had adjusted operating income available to Genworth Financial, Inc.’s common stockholders of $1 million in the current year compared to an adjusted operating loss available to Genworth Financial, Inc.’s common stockholders ~~for our long-term care insurance business decreased $12~~of $20 million ~~mainly attributable~~in the prior year. The increase to ~~$60~~income in the current year from a loss in the prior year was primarily from $52 million of higher premiums and reduced benefits in the current year from

in-force

rate actions approved and implemented, a slightly favorable impact from benefit utilization rate updates in the current year compared to an unfavorable impact in the prior year and ~~from~~continued favorable development on prior year incurred but not reported claims. ~~This was~~These increases were partially offset by ~~lower claim terminations~~higher frequency and ~~higher~~ severity ~~and frequency~~ of new claims in the current year.

The adjusted operating loss available to Genworth Financial, Inc.’s common stockholders for our life insurance business increased $1$75 million mainly ~~from the continued runoff of our term life insurance products and from~~attributable to higher lapses primarily associated with ~~the~~our large20-year term life insurance ~~blocks~~block entering ~~the~~its post-level premium ~~periods. These increases were mostly offset by lower~~period, higher reserves in our 10-year term universal life insurance block entering its post-level premium period during the premium grace period and from higher mortality in our universal and term life insurance products in the current year compared to the prior ~~year~~year.

Adjusted operating income available to Genworth Financial, Inc.’s common stockholders decreased $11 million in our ~~term~~fixed annuities business predominantly from higher reserves and ~~universal life insurance products. Adjusted~~

amortization of DAC in our fixed indexed annuities driven by unfavorable market changes in the current year, lower mortality in our single premium immediate annuities and a decrease in net spreads due to the runoff of the block. These decreases were partially offset by $13 million of

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~~operating income available to Genworth Financial, Inc.’s common stockholders decreased $11 million in our fixed annuities business predominantly attributable to $13 million of~~ unfavorable charges in connection with loss recognition testing in our fixed immediate annuity products ~~partially offset by favorable mortality~~ in the ~~current year.~~

prior year that did not recur.

Our Runoff segment had an adjusted operating loss available to Genworth Financial, Inc.’s common stockholders of $13 million for the three months ended March 31, 2020 compared to adjusted operating income available to Genworth Financial, Inc.’s common stockholders of $20 million ~~and $10 million~~ for the three months ended March 31, ~~2019 and 2018, respectively.~~2019. The ~~increase~~decrease to a loss in the current year from income in the prior year was predominantly from ~~favorable~~the decline in equity ~~market performance~~markets and interest rates in the current year.

Corporate and Other Activities had an adjusted operating loss available to Genworth Financial, Inc.’s common stockholders of ~~$73~~$41 million and ~~$59~~$58 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. The ~~increase~~decrease in the loss was principally related to $12 million of higher taxes in the current year associated with the Global Intangible Low Taxed Income (“GILTI”) provision of the Tax Cuts and Jobs Act (“TCJA”) and from $13 million of unfavorable provisional tax adjustments. These decreases were partially offset by lower interest expense and ~~operating costs~~higher investment income in the current year.

Other Significant Developments

The periods under review include, among others, the following significant developments.

U.S. Mortgage Insurance

•

~~PMIERs Compliance~~. Our U.S. mortgage insurance business has been compliant with the original requirements under the private mortgage insurer eligibility requirements (“PMIERs”) since its introduction into the private mortgage insurance industry in 2015. These requirements set forth operational and financial requirements that mortgage insurers must meet in order to remain eligible to offer private mortgage insurance. On March 31, 2019, revisions to the original PMIERs became effective for our U.S. mortgage insurance business. The major revisions include the elimination of any credit for future premiums that had previously been allowed on insurance policies written in 2008 and earlier. Our U.S. mortgage insurance business had available assets of approximately 123% of the required assets under PMIERs as of March 31, 2019. The PMIERs sufficiency ratio was in excess of $600 million of available assets above the requirements as of March 31, 2019.

•

~~Market Share.~~ Our U.S. mortgage insurance business increased its market share during the first quarter of 2019 compared to the fourth quarter of 2018 principally from selective participation in forward commitment transactions and the continued successful rollout of its proprietary risk-based pricing engine, GenRATE. New insurance written increased 7% during the first quarter of 2019 compared to the first quarter of 2018 primarily driven by the increase in the estimated market share.

~~Canada~~

PMIERs compliance

. Our U.S. mortgage insurance business has been compliant with the PMIERs since their introduction into the private mortgage insurance industry in 2015. These requirements set forth operational and financial requirements that mortgage insurers must meet in order to remain eligible to offer private mortgage insurance. On March 31, 2019, revisions to the original PMIERs became effective for our U.S. mortgage insurance business. The revisions include the elimination of any credit for future premiums that had previously been allowed on insurance policies written in 2008 and earlier. Our U.S. mortgage insurance business had available assets of approximately 142% of the required assets under PMIERs as of March 31, 2020. The PMIERs sufficiency ratio was in excess of $1.1 billion of available assets above the requirements as of March 31, 2020.

New insurance written.

Our U.S. mortgage insurance business continued to grow its insurance
in-force
through higher new insurance written, which increased 86% in the first quarter of 2020 compared to the first quarter of 2019. The increase was primarily due to higher mortgage refinancing originations and our higher estimated market share in the current year.

Existing Delinquencies.

We are not aware of any reported COVID-19 related delinquencies in the first quarter of 2020. In addition, we have not identified any deterioration in performance trends of our existing delinquencies within the first quarter of 2020 that would require the strengthening of existing reserves on our existing delinquencies. However, based on the surveillance of early forbearance uptake with servicers, we do expect to see elevated levels of new delinquencies in the coming months given the rise in unemployment and the availability of forbearance options driven by COVID-19.

Australia Mortgage Insurance

•

~~Regulatory Capital~~. The Mortgage Insurer Capital Adequacy Test (“MICAT”) guideline was effective for our Canada mortgage insurance business on January 1, 2019. The MICAT guideline did not have a material impact on our regulatory solvency as of March 31, 2019, as the impact of the elimination of the credit score update more than offset the 5% increase in the total asset requirement on existing insurance~~in-force.~~ In addition, these new requirements should permit our mortgage insurance business in Canada to more closely align its actual capital levels with its targeted operating range going forward, which may allow for meaningful levels of capital redeployment in addition to regular quarterly dividends. As of March 31, 2019, our MICAT ratio under the framework was approximately 172%, which was above the supervisory target.

Regulatory capital.

As of March 31, 2020, our Australia mortgage insurance business estimated its Prescribed Capital Amount (“PCA”) ratio was approximately 178%, representing a decrease from 191% as of December 31, 2019. The decrease was largely from a DAC write-off of AUD$182 million recorded in connection with the completion of liability adequacy testing as part of the first quarter of 2020 results.

Impact from bushfires.

Certain areas of Australia have been impacted by bushfires that occurred in late 2019 and continued into the first quarter of 2020. Although we do not cover property damage and continue to monitor the effect of the bushfires, we do not believe there will be a significant impact to our Australia mortgage insurance business. We expect our exposure to be limited to any economic downturn that may occur in the regions impacted directly by the bushfires.

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U.S. Life Insurance

•

~~In-force~~ ~~rate actions in our long-term care insurance business.~~ As part of our strategy for our long-term care insurance business, we have been implementing, and expect to continue to pursue, significant premium rate increases and associated benefit reductions on older generation blocks of business in order to bring those blocks closer to a break-even point over time and reduce the strain on earnings and capital. We are also requesting premium rate increases and associated benefit reductions on newer blocks of business, as needed, some of which may be significant, to help bring their loss ratios back towards their original pricing. For all of these~~in-force~~ ~~rate action filings, we received 24 filing approvals from nine states in the first quarter of 2019, representing a weighted-average increase of 62% on approximately $241 million in annualizedin-force~~ ~~premiums, or approximately $150 million of incremental annual premiums.~~

In-force rate actions in our long-term care insurance business.

As part of our strategy for our long-term care insurance business, we have been implementing, and expect to continue to pursue, significant premium rate increases and associated benefit reductions on older generation blocks of business in order to bring those blocks closer to a break-even point over time and reduce the strain on earnings and capital. We are also requesting premium rate increases and associated benefit reductions on newer blocks of business, as needed, some of which may be significant, to help bring their loss ratios back towards their original pricing. For all of these
in-force
rate action filings, we received 32 filing approvals from 15 states in the first quarter of 2020, representing a weighted-average increase of 35% on approximately $130 million in annualized
in-force
premiums, or approximately $45 million of incremental annual premiums.

Liquidity, Capital Resources and Intercompany Obligations

•

~~International Dividends.~~During the first quarter of 2019, our international subsidiaries paid $47 million of dividends to Genworth Holdings, which was comprised of $28 million of ordinary dividends and $19 million of dividends attributable to share repurchases in our Canada and Australia mortgage insurance businesses. See “Item 2—Liquidity and Capital Resources” for additional details.

•

~~Genworth Holdings Cash~~a~~nd Targeted Cash Buffer.~~ As of March 31, 2019, Genworth Holdings held $361 million of cash, cash equivalents and restricted cash and $44 million of unrestricted and restricted U.S. government securities. The $405 million combined cash and liquid assets is below our targeted cash buffer of two times expected annual external debt interest payments by approximately $100 million. See “Item 2—Liquidity and Capital Resources” for additional details.

•

~~Intercompany Note Maturity.~~ Genworth Holdings currently has an intercompany note due to GLIC on March 31, 2020 with a principal amount of $200 million. In conjunction with the Merger with China Oceanwide and as discussed above, GLAIC will purchase from GLIC this intercompany note at fair value, but not less than $200 million.

Redemption of Genworth Holdings’ June 2020 senior notes

. On January 21, 2020, Genworth Holdings early redeemed $397 million of its 7.70% senior notes originally scheduled to mature in June 2020 for a

pre-tax

loss of $9 million. The senior notes were fully redeemed with a cash payment of $409 million, comprised of the outstanding principal balance of $397 million, accrued interest of $3 million and a make-whole premium of $9 million.

Partial Repurchases of Genworth Holdings’ 2021 senior notes

In March 2020, Genworth Holdings repurchased $14 million principal amount of its senior notes with 2021 maturity dates for a

pre-tax

gain of $1 million and paid accrued interest thereon. In April 2020, Genworth Holdings repurchased an additional $36 million principal amount of its senior notes with 2021 maturity dates for a

pre-tax

gain of $2 million.

Redemption of non-recourse funding obligations.

In January 2020, upon receipt of approval from the Director of Insurance of the State of South Carolina, Rivermont Life Insurance Company I (“Rivermont I”), our indirect wholly-owned special purpose consolidated captive insurance subsidiary, redeemed all of its $315 million of outstanding

non-recourse

funding obligations due in 2050. The early redemption resulted in a

pre-tax

loss of $4 million from the

write-off

of deferred borrowing costs.

Intercompany note maturity

. In March 2020, Genworth Holdings repaid a $200 million intercompany note due to GLIC with a maturity date of March 31, 2020.

Financial Strength Ratings

There were no changes ~~in the~~to our solicited financial strength ratings of our insurance subsidiaries subsequent to February 27, ~~2019,~~2020, the date we filed our ~~2018~~2019 Annual Report on Form

10-K.

For a discussion of the financial strength ratings of our insurance subsidiaries, see “Item 1—Financial Strength Ratings” in our ~~2018~~2019 Annual Report on Form

10-K.

On April 18, 2020, we notified Standard & Poor’s Financial Services, LLC (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”) of our decision to discontinue the solicitation of their financial strength ratings of our principal life insurance subsidiaries. On April 24, 2020, Moody’s downgraded all of our principal life insurance subsidiaries, which reflected Moody’s view that our life insurance subsidiaries are likely to suffer near term declines in profitability and capital generation due to COVID-19 and the related economic shock. While we do not provide non-public information to rating agencies issuing unsolicited ratings, we cannot ensure that rating agencies will discontinue their ratings of our company or our insurance subsidiaries on an unsolicited basis going forward.

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Consolidated

General Trends and Conditions

The stability of both the financial markets and global economies in which we operate impacts the sales, revenue growth and profitability trends of our businesses as well as the value of assets and liabilities. The U.S. and international financial markets in which we operate have been significantly impacted by concerns regarding regulatory changes, global trade, modest global growth and the rate and strength of recovery. During 2018, the global economy improved and most countries in which we conduct business saw improved levels of gross domestic product (“GDP”) growth. The U.S. GDP grew in the first quarter of 2019 at an estimated 3.2%, driven in part by strong consumer spending. This GDP growth was unexpected given that many economic forecasts predicted the U.S. economy would slow down beginning in the first quarter of 2019 and continue this slower growth path

COVID-19,

see “—COVID-19 Summary” for the remainder of the year. In spite of the better than expected first quarter of 2019 GDP growth, many economic uncertainties remain, including, U.S. and China trade tensions, fluctuating oil prices, declining commodity prices and global growth concerns. Historic low interest rates began to rise in 2018 given actions taken by the U.S. Federal Reserve and other central banks, although long-term interest rates remain at low levels and interest rates

reversed course from their upward trend and declined during the first quarter of 2019. The U.S. Federal Reserve did not increase rates during the first quarter of 2019 and signaled that they might not raise rates again until 2020. Prior to the first quarter of 2019, the U.S. Federal Reserve projected two additional rate increases in 2019 and one in 2020. The modification in the forecast relates to the economic concerns relating to ongoing global trade tensions, declining commodity prices, slower global growth and a negative inflation outlook. Given this forecast, we expect interest rates will remain low as compared to historical norms. Likewise, we remain uncertain at the pace in which future interest rate increases will occur and its ultimate impact on our businesses. Near term inflation remains relatively stable but long-term forecasts indicate signs of volatility, which has resulted in a negative outlook. The U.S. Treasury yield curve steepened in the first quarter of 2019 with short-term interest rates decreasing at a higher rate than long-term interest rate decreases. Portions of the U.S. Treasury yield curve inverted in late March 2019, as the yield on the U.S.~~10-year~~ ~~Treasury note dipped below the yield on the3-month~~ Treasury bill, though subsequent to quarter end this inversion normalized. Credit markets generally recovered from spread widening seen in the fourth quarter of 2018, with spreads tightening in the first quarter of 2019 driven by healthy consumer demand, corporate profits, investor demand for bonds and lower government bond yields. For a discussion of the risks associated with interest rates, see “Item 1A Risk Factors—Interest rates and changes in rates could materially adversely affect our business and profitability” in our 2018 Annual Report on Form~~10-K.~~

details.

Varied levels of economic ~~growth,~~performance, coupled with uncertain economic outlooks, changes in government policy, global trade, regulatory and tax reforms, and other changes in market conditions, ~~influenced, and we believe~~ will continue to influence investment and spending decisions by consumers and businesses as they ~~weigh~~adjust their consumption, debt, capital and risk profiles in response to these ~~conditions.~~ conditions, including as a result of

COVID-19.

These trends change as investor confidence in the markets and the outlook for some consumers and businesses shift. As a result, our sales, revenues and profitability trends of certain insurance and investment products as well as the value of assets and liabilities ~~have been and~~ could be ~~further~~ impacted going forward. In particular, factors such as the length of

COVID-19

and the speed of the economic recovery, government responses to

COVID-19,

government spending, monetary policies (such as further quantitative easing), the volatility and strength of the capital markets, ~~further~~ changes in tax policy and/or in U.S. tax legislation, international trade and the impact of global financial regulation reform will continue to affect economic and business outlooks, level of interest rates, consumer confidence and consumer ~~behaviors~~behavior moving forward.

The U.S. and international governments, the U.S. Federal Reserve, other central banks and other legislative and regulatory bodies have taken certain actions in ~~past years~~ response to

COVID-19

to support the global economy and capital markets, influence interest rates, influence housing markets and mortgage servicing and provide liquidity to promote economic growth. These include various mortgage restructuring programs implemented or under consideration by the GSEs, lenders, servicers and the U.S. government. Outside of the United States, various governments and central banks have taken actions to stimulate economies, stabilize financial systems and improve market liquidity.markets. These policies and actions have ~~generally~~ been supportive to the worldwide economy, however, a U.S. or global recession or regional or global financial crisis could occur which would materially and adversely affect our business, financial condition and results of operations.

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Consolidated Results of Operations

The following is a discussion of our consolidated results of operations. For a discussion of our segment results, see “—Results of Operations and Selected Financial and Operating Performance Measures by Segment.”

Three Months Ended March 31, ~~2019~~2020 Compared to Three Months Ended March 31, ~~2018~~

2019

The following table sets forth the consolidated results of operations for the periods indicated:

   Three months ended
March 31,    Increase
(decrease) and
percentage
change
(Amounts in millions)
   2019    2018    2019 vs. 2018
Revenues:

Premiums
   $ 1,114    $ 1,140    $ (26 )    (2 )%
Net investment income
   829    804    25    3 %
Net investment gains (losses)
   74    (31 )    105    NM ⁽¹⁾
Policy fees and other income
   187    202    (15 )    (7 )%







Total revenues
   2,204    2,115    89    4 %







Benefits and expenses:

Benefits and other changes in policy reserves
   1,301    1,311    (10 )    (1 )%
Interest credited
   147    156    (9 )    (6 )%
Acquisition and operating expenses, net of deferrals
   251    240    11    5 %
Amortization of deferred acquisition costs and intangibles
   91    104    (13 )    (13 )%
Interest expense
   72    76    (4 )    (5 )%







Total benefits and expenses
   1,862    1,887    (25 )    (1 )%







Income before income taxes
   342    228    114    50 %
Provision for income taxes
   112    63    49    78 %







Net income
   230    165    65    39 %
Less: net income attributable to noncontrolling interests
   56    53    3    6 %







Net income available to Genworth Financial, Inc.’s common stockholders
   $ 174    $ 112    $ 62    55 %


	Three months ended March 31,					Increase (decrease) and percentage change
(Amounts in millions)	2020			2019		2020 vs. 2019
Revenues:
Premiums	$	1,015		$	988	$	27		3	%
Net investment income		793			794		(1	)	—	%
Net investment gains (losses)		(152	)		75		(227	)	NM	(1)
Policy fees and other income		181			187		(6	)	(3	)%

Total revenues		1,837			2,044		(207	)	(10	)%

Benefits and expenses:
Benefits and other changes in policy reserves		1,361			1,282		79		6	%
Interest credited		141			147		(6	)	(4	)%
Acquisition and operating expenses, net of deferrals		249			237		12		5	%
Amortization of deferred acquisition costs and intangibles		116			81		35		43	%
Interest expense		52			60		(8	)	(13	)%

Total benefits and expenses		1,919			1,807		112		6	%

Income (loss) from continuing operations before income taxes		(82	)		237		(319	)	(135	)%
Provision (benefit) for income taxes		(10	)		69		(79	)	(114	)%

Income (loss) from continuing operations		(72	)		168		(240	)	(143	)%
Income from discontinued operations, net of taxes		—			62		(62	)	(100	)%

Net income (loss)		(72	)		230		(302	)	(131	)%
Less: net income (loss) from continuing operations attributable to noncontrolling interests		(6	)		20		(26	)	(130	)%
Less: net income from discontinued operations attributable to noncontrolling interests		—			36		(36	)	(100	)%

Net income (loss) available to Genworth Financial, Inc.’s common stockholders	$	(66	)	$	174	$	(240	)	(138	)%

Net income (loss) available to Genworth Financial, Inc.’s common stockholders:
Income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders	$	(66	)	$	148	$	(214	)	(145	)%
Income from discontinued operations available to Genworth Financial, Inc.’s common stockholders		—			26		(26	)	(100	)%

Net income (loss) available to Genworth Financial, Inc.’s common stockholders	$	(66	)	$	174	$	(240	)	(138	)%

⁽¹⁾	We define “NM” as not meaningful for increases or decreases greater than 200%.

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Premiums.

Premiums are primarily earned on insurance products for mortgage, long-term care, life ~~and accident and health~~ insurance, single premium immediate annuities and structured settlements with life contingencies.

Our Australia Mortgage Insurance segment decreased $15 million predominantly from $8 million of changes attributable to foreign exchange rates in the current year and from the seasoning of our smaller, more recent~~in-force~~ ~~books of business.~~

•

Our U.S. Mortgage Insurance segment increased $32 million mainly attributable to higher insurance in-force and an increase in policy cancellations in our single premium mortgage insurance product driven largely by higher mortgage refinancing, partially offset by lower average premium rates in the current year.

Our U.S. Life Insurance segment ~~decreased $13~~increased $9 million. Our long-term care insurance business ~~decreased $3 million. The decrease was~~increased $14 million largely from ~~policy terminations, partially offset by $17~~$34 million of increased premiums in the current year from

in-force

rate actions approved and ~~implemented.~~implemented, partially offset by policy terminations and policies entering

paid-up

status in the current year. Our life insurance business decreased ~~$10~~$5 million mainly attributable to the continued runoff of our term life insurance products ~~and higher reinsurance rates~~ in the current year.

Our ~~Canada~~Australia Mortgage Insurance segment decreased ~~$13~~$14 million ~~primarily~~predominantly from ~~$7 million of changes attributable to foreign exchange rates~~portfolio seasoning and lower policy cancellations in the current ~~year, refinements in premium recognition factors in the prior year that did not recur and from the seasoning~~year. The three months ended March 31, 2020 included a decrease of ~~our smaller, more recentin-force~~ ~~books of business.~~

~~Our U.S. Mortgage Insurance segment increased $15~~$4 million ~~mainly~~ attributable to ~~higher insurancein-force~~changes in ~~the current year.~~

foreign exchange rates.

Net investment income.

Net investment income represents the income earned on our investments. For discussion of the change in net investment income, see the comparison for this line item under “—Investments and Derivative Instruments.”

Net investment gains (losses).

Net investment gains (losses) consist primarily of realized gains and losses from the sale of or ~~impairment of~~estimated future credit losses on our investments, unrealized and realized gains and losses from our equity and trading securities and derivative instruments. For discussion of the change in net investment gains (losses), see the comparison for this line item under “—Investments and Derivative Instruments.”

Policy fees and other income.

Policy fees and other income consists primarily of fees assessed against policyholder and contractholder account values, surrender charges, cost of insurance assessed on universal and term universal life insurance policies, advisory and administration service fees assessed on investment contractholder account values, broker/dealer commission revenues and other fees.

~~Our~~ The decrease was principally related to our U.S. Life Insurance segment ~~decreased $12 million mostly attributable to~~primarily driven by our life insurance business ~~primarily~~ from a decline in our universal and term universal insurance

in-force

and ~~universal life insurancein-force~~ ~~blocks~~higher ceded reinsurance costs in the current year.

~~Our Runoff segment decreased $5 million principally from lower fee income driven mostly by a decline in the average account values in our variable annuity products in the current year.~~

Benefits and other changes in policy reserves.

Benefits and other changes in policy reserves consist primarily of claim costs incurred related to mortgage insurance products and benefits paid and reserve activity related to current claims and future policy benefits on insurance and investment products for long-term care, life ~~and accident and health~~ insurance, structured settlements and single premium immediate annuities with life contingencies.

Our ~~Runoff~~U.S. Life Insurance segment ~~decreased $7~~increased $61 million. Our long-term care insurance business increased $1 million principally from the aging of the in-force block (including higher frequency of new claims), higher incremental reserves of $39 million recorded in connection with an accrual for profits followed by losses and higher severity of new claims in the current year. These increases were mostly offset by a higher favorable impact of $34 million from reduced benefits in the current year related to in-force rate actions approved and implemented, a slightly favorable impact from benefit utilization rate updates in the current year compared to an unfavorable impact in the prior year and favorable development on prior year incurred but not reported claims. Our life insurance business increased $60 million primarily attributable to higher reserves in our 10-year term universal life insurance block entering its post-level premium period during the premium grace period and from higher mortality in our universal and term life insurance products in the current year compared to the prior year. Our fixed annuities business was flat as higher reserves in our fixed indexed annuities driven by unfavorable market changes in the current year and lower mortality in our single premium immediate annuities were offset by $17 million of higher reserves recorded in the prior year related to loss recognition testing in our fixed immediate annuity products that did not recur.

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Our Runoff segment increased $19 million primarily attributable to higher guaranteed minimum death benefit (“GMDB”) reserves in our variable annuity products due to ~~favorable~~unfavorable equity market performance in the current year.

Our U.S. Life Insurance segment decreased $2 million. Our long-term care insurance business decreased $1 million principally related to a $61 million higher favorable impact from reduced benefits in the current year related to~~in-force~~ ~~rate actions approved and implemented and from favorable development on prior year incurred but not reported claims. This decrease was mostly offset by aging of thein-force~~ block (including higher frequency of new claims), lower claim terminations and higher severity of new claims in the current year. Our life insurance business decreased $5 million primarily attributable to lower mortality in the current year compared to the prior year in our term and universal life insurance products. Our fixed annuities business increased $4 million largely attributable to $17 million of higher reserves in connection with loss recognition testing in our fixed immediate annuity products primarily as a result of portfolio management actions and from a decrease in the projected yield curve. These increases were partially offset by favorable mortality and lower interest credited in the current year due to block runoff.

•

Our U.S. Mortgage Insurance segment increased $3 million largely from lower net benefits from cures and aging of existing delinquencies, partially offset by a decrease in new delinquencies and a lower average reserve on new delinquencies in the current year.

Our Australia Mortgage Insurance segment decreased $2$4 million ~~largely~~primarily from $3 million of changes attributable to foreign exchange rates in the current year. Excluding the effects of changes in foreign exchange rates, benefits and other changes in policy reserves increased slightly mainly from higher new delinquencies, net of cures, in the current year.

~~Our U.S. Mortgage Insurance segment was flat as a lower average reserve per delinquency was offset by a lower net benefit from cures and~~favorable aging of existing delinquencies in the current year.

Our Canada Mortgage Insurance segment increased $1 million principally from a higher average reserve per delinquency, higher new delinquencies, net of cures, primarily attributable to increased losses in Alberta, and from modestly lower favorable development in our loss reserves, mostly offset by changes in foreign exchange rates in the current year.

Interest credited.

Interest credited represents interest credited on behalf of policyholder and contractholder general account balances.

~~Our~~ The decrease was principally related to our U.S. Life Insurance segment ~~decreased $13 million. Our life insurance and~~driven by our fixed annuities ~~businesses decreased $3 million and $10 million, respectively, primarily driven by~~business largely due to a decline in average account values ~~and lower crediting rates~~ in the current year.

~~Our Runoff segment increased $4 million principally from higher account values in our corporate-owned life insurance products in the current year.~~

Acquisition and operating expenses, net of deferrals.

Acquisition and operating expenses, net of deferrals, represent costs and expenses related to the acquisition and ongoing maintenance of insurance and investment contracts, including commissions, policy issuance expenses and other underwriting and general operating costs. These costs and expenses are net of amounts that are capitalized and deferred, which are costs and expenses that are related directly to the successful acquisition of new or renewal insurance policies and investment contracts, such as first-year commissions in excess of ultimate renewal commissions and other policy issuance expenses.

Corporate and Other activities increased $5 million mainly driven by a make-whole premium of $9 million related to the early redemption of Genworth Holdings’ senior notes originally scheduled to mature in June 2020 and higher employee-related expenses, partially offset by lower operating expenses in the current year.

Our U.S. Mortgage Insurance segment increased $7$4 million primarily attributable to higher operating costs driven mostly by increased sales in the current year.

Our U.S. Life Insurance segment increased $7 million mostly related to $4 million of restructuring costs, which included the suspension of sales of our individual long-term care insurance products through sales intermediaries effective March 7, 2019. The remaining increase was mostly attributable to our long-term care insurance business largely from higher commissions and premium taxes associated with our~~in-force~~ ~~rate action plan.~~

~~Our Canada Mortgage Insurance segment increased $3 million mainly driven by higher stock-based compensation expense and higher operating costs in the current year.~~

~~Corporate and Other activities decreased $4 million mainly driven by lower operating costs and a decrease in employee related expenses in the current year.~~

Amortization of deferred acquisition costs and intangibles.

Amortization of DAC and intangibles consists primarily of the amortization of acquisition costs that are capitalized, PVFP and capitalized software.

Our U.S. Life Insurance segment ~~decreased $5~~increased $21 million ~~primarily related to~~driven mostly by our life insurance business principally from ~~our updated assumptions implemented in the fourth quarter of 2018, partially offset by an increase in DAC amortization from~~ higher lapses primarily associated with ~~the~~our large

20-year

term life insurance ~~blocks~~block entering ~~the~~its post-level premium ~~periods. The current year also included~~period, partially offset by a $10 million unfavorable model correction in our universal life insurance ~~products.~~

products in the prior year that did not recur. Our fixed annuities business increased $5 million largely related to higher DAC amortization reflecting lower net spreads and the impact of unfavorable market changes in the current year.

Our Runoff segment ~~decreased $5~~increased $15 million mainly related to higher DAC amortization in our variable annuity products ~~mainly~~principally from ~~favorable~~unfavorable equity market performance in the current year.

~~Our Australia Mortgage Insurance segment decreased $2 million primarily from lower contract fees amortization and from changes in foreign exchange rates in the current year.~~

Interest expense.

Interest expense represents interest related to our borrowings that are incurred at Genworth Holdings or subsidiaries ~~and ournon-recourse~~ ~~funding obligations~~ and interest expense related to the Tax Matters Agreement and certain reinsurance arrangements being accounted for as deposits. ~~The decrease was attributable to~~ Corporate and Other activities ~~which~~ decreased $4$7 million largely driven by the early redemption of ~~$597 million of~~ Genworth ~~Holding’s~~Holdings’ senior notes originally scheduled to mature in May 2018, partially offset by higher interest expense attributable to the term loan that Genworth Holdings closed in March 2018 and from our junior subordinated notes which had a higher floating rate of interest in the current year.

June 2020.

Provision (benefit) for income taxes.

The effective tax rate ~~increased~~decreased to ~~32.7%~~12.2% for the three months ended March 31, ~~2019 from 27.6%~~2020 compared to 29.1% for the three months ended March 31, ~~2018.~~2019. The ~~increase~~decrease in the effective tax rate was ~~principally driven by~~primarily attributable to tax expense on forward starting swaps settled prior to the enactment of the Tax Cuts and Jobs Act (“TCJA”), which are tax effected at 35% as they are amortized into net investment income, in relation to a ~~tax~~

pre-tax

~~expense~~loss in the current ~~year~~year. The decrease was also attributable to a lower tax expense related to ~~the GILTI provision of the TCJA. GILTI has an unfavorable impact on our current year effective tax rate due~~foreign operations and higher stock-based compensation in relation to ~~the utilization of net operating~~ a

pre-tax

loss ~~carryforwards and projected taxable losses~~ in the ~~U.S. life insurance businesses without any offsetting foreign tax credit carryforwards. The unfavorable impact on the effective rate is expected to continue for the remainder of 2019 and into 2020.~~

current year.

Net income (loss) attributable to noncontrolling interests

. Net income attributable to noncontrolling interests represents the portion of equity in a subsidiary attributable to third parties.

The decrease to a loss in the current year from income in the prior year was predominantly related to higher net investment losses driven largely by derivative losses in the current year.

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Use of
non-Generally
Accepted Accounting Principles (“GAAP”) measures

Reconciliation of net income (loss) to adjusted operating income available to Genworth Financial, Inc.’s common stockholders

We use

non-GAAP

financial measures entitled “adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders” and “adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders per share.” Adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders per share is derived from adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders. Our chief operating decision maker evaluates segment performance and allocates resources on the basis of adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders. We define adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders 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. We exclude net investment gains (losses) and infrequent or unusual

non-operating

items because we do not consider them to be related to the operating performance of our segments and Corporate and Other activities. A component of our net investment gains (losses) is the result of ~~impairments,~~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 our 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) available to Genworth Financial, Inc.’s common stockholders because, in our opinion, they are not indicative of overall operating trends. Infrequent or unusual

non-operating

items are also excluded from adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders if, in our 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, we believe that adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders, and measures that are derived from or incorporate adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders, including adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders 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) available to Genworth Financial, Inc.’s common stockholders 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) available to Genworth Financial, Inc.’s common stockholders have occurred in the past and could, and in some cases will, recur in the future. Adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders and adjusted

operating income (loss) available to Genworth Financial, Inc.’s common stockholders 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, our definition of adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders may differ from the definitions used by other companies.

~~In the first quarter of 2019, we revised how we tax the adjustments~~

Adjustments to reconcile net income (loss) available to Genworth Financial, Inc.’s common stockholders to adjusted operating income (loss) ~~available to Genworth Financial, Inc.’s common stockholders to align the~~assume a 21% tax rate ~~used in the reconciliation to each segment’s local jurisdictional tax rate. Beginning in the first quarter of 2019, we used~~for our domestic segments and a 30% tax rate ~~of 27% and 30%~~ for our ~~Canada and~~ Australia Mortgage Insurance segments, respectively, to tax effect their adjustments. Our domestic segments remain at a 21% tax rate. In 2018, we assumed a flat 21% tax rate on adjustments for all of our segments to reconcile net income (loss) available to Genworth Financial, Inc.’s common stockholderssegment and ~~adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders. These adjustments~~ are ~~also~~ net of the portion attributable to noncontrolling ~~interests and net~~interests. Net investment gains (losses) are also adjusted for DAC and other intangible amortization and certain benefit reserves.

Prior year amounts have not been re-presented to reflect this revised presentation; however, the previous methodology would not have resulted in a materially different segment-level adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders.

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The following table includes a reconciliation of net income (loss) available to Genworth Financial, Inc.’s common stockholders to adjusted operating income available to Genworth Financial, Inc.’s common stockholders for the periods indicated:

   Three months ended
March 31,
(Amounts in millions)
   2019 2018
Net income
   $ 230 $ 165
Less: net income attributable to noncontrolling interests
   56 53


Net income available to Genworth Financial, Inc.’s common stockholders
   174 112
Adjustments to net income available to Genworth Financial, Inc.’s common stockholders:

Net investment (gains) losses, net⁽¹⁾
   (71 ) 17
Expenses related to restructuring
   4 —
Taxes on adjustments
   14 (4 )


Adjusted operating income available to Genworth Financial, Inc.’s common stockholders
   $ 121 $ 125


	Three months ended
	March 31,
(Amounts in millions)	2020			2019
Net income (loss) available to Genworth Financial, Inc.’s common stockholders	$	(66	)	$	174
Less: net income (loss) from continuing operations attributable to noncontrolling interests		(6	)		20
Less: net income from discontinued operations attributable to noncontrolling interests		—			36

Net income (loss)		(72	)		230
Less: income from discontinued operations, net of taxes		—			62

Income (loss) from continuing operations		(72	)		168
Less: net income (loss) from continuing operations attributable to noncontrolling interests		(6	)		20

Income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders		(66	)		148
Adjustments to income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders:
Net investment (gains) losses, net (1)		115			(71	)
Losses on early extinguishment of debt		12			—
Expenses related to restructuring		1			4
Taxes on adjustments		(29	)		14

Adjusted operating income available to Genworth Financial, Inc.’s common stockholders	$	33		$	95

⁽¹⁾

For the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, net investment (gains) losses were adjusted for DAC and other intangible amortization and certain benefit reserves of ~~$(2)~~$(11) million and ~~$(3)~~$(2) million, respectively, and adjusted for net investment gains (losses) attributable to noncontrolling interests of $5$(26) million and ~~$(11)~~$6 million, respectively.

~~We recorded~~

In January 2020, we paid a

pre-tax

make-whole expense of $9 million related to the early redemption of Genworth Holdings, Inc.’s senior notes originally scheduled to mature in June 2020 and Rivermont I, our 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. We also repurchased $14 million principal amount of Genworth Holdings’ senior notes with 2021 maturity dates for a

pre-tax

gain of $1 million in the first quarter of 2020. These transactions were excluded from adjusted operating income (loss) for the ~~three months ended March 31,~~first quarter of 2020 as they relate to gains (losses) on the early extinguishment of debt.

We recorded a

pre-tax

expense of $1 million and $4 million in the first quarters of 2020 and 2019, respectively, related to restructuring costs as we continue to evaluate and appropriately size our organizational needs and expenses. There were no infrequent or unusual items excluded from adjusted operating income during the periods presented.

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Earnings (loss) per share

Basic and diluted earnings (loss) per share are calculated by dividing each income (loss) category ~~presented below~~ by the weighted-average basic and diluted common shares outstanding for the periods indicated:

   Three months ended
March 31,
(Amounts in millions, except per share amounts)
   2019    2018
Net income available to Genworth Financial, Inc.’s common stockholdersper share:

Basic
   $ 0.35    $ 0.22




Diluted
   $ 0.34    $ 0.22




Adjusted operating income available to Genworth Financial, Inc.’s common stockholders per share:

Basic
   $ 0.24    $ 0.25




Diluted
   $ 0.24    $ 0.25




Weighted-average common shares outstanding:

Basic
   501.2    499.6




Diluted
   508.6    502.7


	Three months ended
	March 31,
(Amounts in millions, except per share amounts)	2020			2019
Income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders per share:
Basic	$	(0.13	)	$	0.29
			��
Diluted	$	(0.13	)	$	0.29

Net income (loss) available to Genworth Financial, Inc.’s common stockholders per share:
Basic	$	(0.13	)	$	0.35

Diluted	$	(0.13	)	$	0.34

Adjusted operating income available to Genworth Financial, Inc.’scommon stockholders per share:
Basic	$	0.07		$	0.19

Diluted	$	0.07		$	0.19

Weighted-average common shares outstanding:
Basic		504.3			501.2

Diluted (1)		504.3			508.6

(1)

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 our loss from continuing operations available to Genworth Financial, Inc.’s common stockholders for the three months ended March 31, 2020, we were required to use basic weighted-average common shares outstanding 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 we had not incurred a loss from continuing operations available to Genworth Financial, Inc.’s common stockholders for the three months ended March 31, 2020, dilutive potential weighted-average common shares outstanding would have been 509.7 million.

Diluted weighted-average common shares outstanding reflect the effects of potentially dilutive securities including stock options, restricted stock units and other equity-based compensation.

Results of Operations and Selected Financial and Operating Performance Measures by Segment

Our chief operating decision maker evaluates segment performance and allocates resources on the basis of adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders. See note 911 in our unaudited condensed consolidated financial statements under “Item 1—Financial Statements” for ~~a reconciliation of net income available to Genworth Financial, Inc.’s common stockholders to adjusted operating income available to Genworth Financial, Inc.’s common stockholders and~~ a summary of adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders for our segments and Corporate and Other activities.

We tax our international businesses at their local jurisdictional tax rates and our domestic businesses at the U.S. corporate federal income tax rate of 21%. Our 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.

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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.

Management’s discussion and analysis by segment 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 ~~and renewal~~ business generated in a period. Sales refer to new insurance written for mortgage insurance products. ~~Sales do not~~

~~include renewal premiums on policies or contracts written during prior periods.~~ We consider new insurance written to be a measure of our operating performance because it represents a measure of new sales of insurance policies ~~or contracts~~ during a specified period, rather than a measure of our revenues or profitability during that period.

Management regularly monitors and reports insurance

in-force

and risk

in-force.

Insurance

in-force

for our 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 our U.S. mortgage insurance business is based on the coverage percentage applied to the estimated current outstanding loan balance. ~~For risk~~Risk

in-force

in our Australia mortgage insurance ~~businesses in Canada and Australia, we have~~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 our mortgage insurance ~~businesses~~business in ~~Canada and~~ Australia. ~~In Australia, we~~We also have certain risk share arrangements in Australia where we provide

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. We consider insurance

in-force

and risk

in-force

to be measures of our operating performance because they represent measures of the size of our business at a specific date which will generate revenues and profits in a future period, rather than measures of our revenues or profitability during that period.

Management also regularly monitors and reports a loss ratio for our businesses. For our mortgage insurance businesses, the loss ratio is the ratio of benefits and other changes in policy reserves to net earned premiums. For our 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. We consider the loss ratio to be a measure of underwriting performance in these businesses and helps to enhance the understanding of the operating performance of our businesses.

These operating performance measures enable us to compare our 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.

U.S. Mortgage Insurance segment

Trends and conditions

Results of our U.S. mortgage insurance business are affected primarily by the following factors: competitor actions; unemployment or underemployment levels; other economic and housing market trends, including interest rates, home prices, the number of first-time homebuyers, and mortgage origination volume mix and practices; the levels and aging of mortgage delinquencies; the effect of seasonal ~~variations;~~variations, including the adverse impact of seasonality that we experience historically in the second half of the year; the inventory of unsold homes; loan modification and other servicing efforts; and litigation, among other items. ~~Our~~

COVID-19

has disrupted the global economy and financial markets, business operations, and consumer behavior and confidence. While all states have been impacted, certain geographies have been disproportionately

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impacted by

COVID-19

either through the spread of the virus or the severity of the mitigation steps taken to control its spread. Unemployment claims have increased to historic levels with approximately 30 million Americans filing for unemployment claims through late April 2020, reducing consumer confidence to its lowest level since the 2008 financial crisis. As a result, our U.S. mortgage insurance business has already begun to experience declines in investment valuations and declines in persistency rates from prevailing lower interest rates. Additionally, we could experience asset impairments, increases in delinquent loans and paid claims, lower future new insurance written levels, increases to our capital requirements and pressure on our capital sufficiency ratios.

While the impact of the developing

COVID-19

pandemic is difficult to predict, the related outcomes and impact on our U.S. mortgage insurance business will depend on the spread and length of the pandemic, regulatory and government actions to support housing and the economy, social distancing and other mitigating actions, and the shape of the economic recovery. We are continuing to monitor

COVID-19

developments, regulatory and government actions, including the impact of the recently passed CARES Act and programs announced by the GSEs, and the potential financial impacts on our business. However, given the specific risks to our business, it is possible the pandemic could have a significant adverse impact on our U.S. mortgage insurance business, including a significant adverse effect on our financial condition and results of operations.

Within the U.S. mortgage insurance business, we have actively taken preventative measures focused on effective social distancing including restricting business travel and implementing a remote work environment (substantially all employees and contractors are working from home). Most of our customers and vendors have taken similar measures with the majority of their workforce. Prior to

COVID-19,

approximately 35% of our U.S. mortgage insurance business employees worked remotely including the majority of resources involved in key business activities such as underwriting and sales. Restrictions on business travel have prevented our sales force from conducting

in-person

customer visits. Through the transition to a remote work environment, we have not experienced any meaningful interruption to our operations and have successfully mitigated the risk of disruptions to our customers, vendors and employees. In addition, we have complied with all applicable directives from local, state and federal agencies.

Specific to housing finance, the CARES Act requires mortgage servicers to provide up to 180 days of deferred or reduced payments (“forbearance”) for borrowers with a federally backed mortgage loan who assert they have experienced a financial hardship related to

COVID-19.

Forbearance may be extended for an additional 180 days up to a year in total or shortened at the request of the borrower. Federally backed mortgages include Federal Housing Administration (“FHA”) and U.S. Department of Veterans Affairs (“VA”) backed loans and those purchased by Fannie Mae and Freddie Mac. The CARES Act also prohibits foreclosures on all federally backed mortgage loans, except for vacant and abandoned properties, for a

60-day

period beginning on March 18, 2020. Since the introduction of the CARES Act, the GSEs as well as most servicers of

non-federally

backed mortgage loans have announced that they will be extending similar relief to their respective portfolios of loans. At the conclusion of the forbearance term, a borrower may either bring their loan current or the loan can be modified through a repayment plan or extension of the mortgage term. In addition, the CARES Act provides that furnishers of credit reporting information, including servicers, should continue to report a loan as current to credit reporting agencies if the loan is subject to a payment accommodation, such as forbearance, so long as the ~~performance~~borrower abides by the terms of the ~~U.S. housing market and the extent of the adverse impact of seasonality that we experience historically in the second half of the year.~~

accommodation. Servicers are working on updating their reporting to private mortgage insurers to include whether a loan is covered by forbearance.

The level of mortgage originations requiring private mortgage insurance (“market ~~penetration~~penetration”) and eventual market size isare affected in part by actions taken by the GSEs and the U.S. government, including but not limited to, the ~~Federal Housing Administration (“FHA”), the Federal Housing Finance Agency,~~FHA and the ~~U.S. Congress,~~FHFA, which impact housing or housing finance policy. In the past, these actions have included announced changes, or potential changes, to underwriting standards, including changes to the GSEs’ automated underwriting systems, FHA pricing, GSE guaranty fees, loan limits and alternative products, such as those offered through Freddie Mac’s Integrated Mortgage Insurance (“IMAGIN”) and Fannie Mae’s Enterprise Paid Mortgage Insurance (“EPMI”) pilot programs, as well as low down payment programs available

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through the FHA or GSEs. For more information about the potential future impact, see “Item 1A—Risk Factors—~~Fannie Mae and Freddie Mac exert significant influence over the U.S. mortgage insurance market and changes~~Changes to the role of the GSEs or ~~structure~~to the charters or business practices of ~~Freddie~~

~~Mac~~the GSEs, including actions or ~~Fannie Mae could have a material adverse impact on our U.S.~~decisions to decrease or discontinue the use of mortgage insurance, could adversely affect our financial condition and results of operations or significantly impact our business,” and “—Risk Factors—The amount of mortgage insurance we write could decline significantly if alternatives to private mortgage insurance are used or lower coverage levels of mortgage insurance are selected” in our ~~2018~~2019 Annual Report on Form

10-K.

~~Estimated~~

COVID-19

did not have a material negative impact on our first quarter of 2020 results. Rather, estimated mortgage origination volume ~~decreased~~increased during the first quarter of ~~2019~~2020 compared to the first quarter of ~~2018~~2019 primarily due to higher refinance originations driven by lower interest rates. The estimated private mortgage insurance available market ~~was flat~~increased in the first quarter of ~~2019~~2020 compared to the first quarter of ~~2018 mainly due to lower originations offset~~2019 driven in large part by higher ~~private~~refinance originations, including higher market penetration. Our persistency of mortgage insurance ~~penetration rates. Our~~ written on prime-based, individually underwritten residential mortgage loans (“flow ~~persistency~~mortgage insurance”) was 76% during the first quarter of 2020 compared to 86% during the first quarter of 2019, ~~compared~~due in part to ~~84% during~~lower interest rates.

Prospectively, we also expect

COVID-19

to have an impact on the level of mortgage originations, market penetration and the private mortgage insurance industry’s market size. While originations remained elevated through the first quarter of ~~2018, due~~2020, in part, as a result of prevailing low interest rates, we expect mortgage originations to decline in the second half of 2020 driven by the impact of and actions related to

COVID-19.

The impact on mortgage originations may be more severe for geographies that have been disproportionately impacted by

COVID-19.

The residents of at least

forty-two

states and the District of Columbia are under

shelter-in-place

orders as of April 20, 2020. These orders and concerns with

COVID-19

generally have caused a decrease in seller interest in listing their homes, buyer interest in new home purchases, restrictions on realtors’ ability to interact with buyers and sellers and a reduced ability to both visit homes for sale and close on purchase transactions, resulting in approximately 60% of realtors reporting delayed home purchase decisions among potential homebuyers. In the purchase originations market, mortgage applications have decreased by approximately 33% between the end of March 2020 and the second week of April 2020. To help facilitate the home closing process amid

COVID-19,

the GSEs have implemented policies designed to alleviate appraisal and employment verification requirements; however, certain lenders have reacted to the ~~rise~~rising uncertainty by tightening their lending standards, through certain credit overlays and higher prices for riskier loan and borrower attributes, which will likely lower origination volume. Some of the decrease in ~~interest rates. Our U.S.~~mortgage originations may be offset by increased market penetration for mortgage insurance ~~estimated market share for the first quarter of 2019 increased compared~~as credit and securitization options previously available to lenders prior to the ~~fourth quarter~~pandemic are now constrained or no longer available such as the private label securitizations market and jumbo loan market. We expect the concentration of 2018 driven primarily by our selective participation in forward commitment transactions and the continued successful rollout of our proprietary risk-based pricing engine, GenRATE. However, our market share remains impactedloans backed by the ~~negative ratings differential relative~~GSEs to ~~our competitors, concerns expressed about Genworth’s financial condition,~~expand and, as a result, drive incremental volume to the ~~proposed transaction with China Oceanwide and pricing competition. For more information on~~private mortgage insurance industry. We expect the ~~potential impacts due to competition, see “Item 1A—Risk Factors—Competitors could negatively affect our ability to maintain or increase our~~net effect of these market ~~share and profitability,” and “—Risk Factors—Our reliance on key customer or distribution relationships could cause us to lose significant sales if one or more~~dynamics will be a smaller private mortgage insurance market size in the second half of ~~those relationships terminate or are reduced” in our 2018 Annual Report on Form10-K.~~

2020.

The U.S. private mortgage insurance industry is highly competitive. There are currently six active mortgage insurers, including us. InThe majority of the ~~fourth quarter of 2018,~~new insurance written in our U.S. mortgage insurance business ~~launched~~is priced using our proprietary risk-based pricing engine, GenRATE, which provides lenders with a ~~more~~ granular approach to pricing for borrowers. All active U.S. mortgage insurers utilize proprietary risk-based pricing engines. We expect ~~more~~most new insurance written in the market to be priced using opaque pricing that will frequently provide a different price to lenders compared to prevailing rate cards. Given evolving market dynamics, we expect price competition to remain highly competitive.

For more information on the potential impacts due to competition, see “Item 1A—Risk Factors—Competitors could negatively affect our ability to maintain or increase our market share and profitability” in our 2019 Annual Report on Form

10-K.

At the same time, we believe mortgage insurers, including us, consider many variables when pricing their new insurance written including the prevailing and future macroeconomic conditions. Given the recent disruption to economic activity, including a spike in first-time unemployment claims filed since

mid-March

2020 caused by

COVID-19,

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and the potential for lower economic activity and elevated unemployment to persist into the future, we expect pricing to increase across new mortgage insurance policies written in the immediate future.

New insurance written increased ~~7% during~~86% in the first quarter of ~~2019~~2020 compared to the first quarter of ~~2018 largely~~2019 primarily due to higher mortgage refinancing originations and our higher estimated market share. The percentage of single premium new insurance written decreased during the first quarter of ~~2019~~2020 compared to the first quarter of ~~2018,~~2019, reflecting our selective participation in this market. Future volumes of these products will vary depending in part on our evaluation of their risk return ~~profile.~~profile and their concentration in the private mortgage insurance available market. We continue to manage the quality of new business through pricing and our underwriting guidelines, which we modify from time to time when circumstances warrant.

Net earned premiums increased in the first quarter of 2020 compared to the first quarter of 2019 primarily due to the growth in our

insurance-in-force

portfolio and an increase in premiums earned from single premium policy cancellations driven largely by higher mortgage refinancing, partially offset by lower average premium rates in the current year. As a result of

COVID-19,

certain state insurance regulators have issued orders or provided guidance to insurers requiring or requesting, as the case may be, the provision of grace periods of varying lengths to insureds in the event of

non-payment

of premium. Regulators differ greatly in their approaches but generally focus on the avoidance of cancellation of coverage for

non-payment.

We currently comply with all state regulatory requirements and requests. If timely payment is not made, future premiums could decrease and the certificate of insurance could be subject to cancellation after 60 days, or such longer time as required under applicable law.

Our loss ratio was 8% for both the three months ended March 31, ~~2019 compared to 9% for the three months ended March 31, 2018.~~2020 and 2019. The loss ratio ~~decreased slightly primarily driven~~was flat as higher losses from lower net benefits from cures and aging of existing delinquencies was offset by ~~higher net earned premiums attributable to increased insurancein-force~~a decrease in ~~the current year. Losses were flat as~~new delinquencies, a lower average reserve on new delinquencies ~~was offset by a lower~~and higher net ~~benefit from cures~~earned premiums in the current year. We are monitoring both the delinquency reporting within the first quarter of 2020 and ~~aging~~the uptake of available forbearance options with servicers as an early indicator of future new delinquencies. We are not aware of any reported

COVID-19

related delinquencies in the first quarter of 2020. In addition, we have not identified any deterioration in performance trends of our existing delinquencies within the first quarter of 2020 that would require the strengthening of existing reserves on our existing delinquencies. Consequently, we did not strengthen reserves on existing delinquencies in the ~~current year.~~

first quarter of 2020. Based on the surveillance of early forbearance uptake with servicers, we do expect to see elevated levels of new delinquencies in the coming months given the rise in unemployment and the availability of forbearance options driven by

COVID-19.

The impact on new delinquencies may be more severe for geographies that have been disproportionately impacted by

COVID-19.

In addition, loss mitigation performance across servicers may vary materially based on the impact of

COVID-19

on their respective servicing portfolios. We are actively engaged with the FHFA and the GSEs to mitigate the potential impact of early delinquencies on our PMIERs capital sufficiency and to support loss mitigation efforts such as forbearance and loan modification to mitigate future claims.

While

COVID-19

is unique in that it is a sudden, global economic disruption stemming from a health crisis, we have experience with the financial impacts of sudden, unexpected economic events on our U.S. mortgage insurance business. Prior localized natural disasters, such as hurricanes, have helped inform our view of the severity and potential duration of the economic shock caused by the efforts to contain the spread of

COVID-19.

Similar to our hurricane experience, we expect borrowers who have experienced a financial hardship including, but not limited to, the loss of income due to the closing of a business or the loss of a job will take advantage of available forbearance programs. As a result, we expect to see elevated new delinquencies, but as in past natural disasters, those delinquencies may cure at a higher rate than traditional delinquencies should economic activity quickly return to

pre-COVID-19

levels. Severity of loss on loans that do go to claim, however, may be negatively impacted by the extended forbearance timeline, the associated elevated expenses such as accumulated interest and home price depreciation, if any.

As of March 31, ~~2019, Genworth Mortgage Insurance Corporation’s (“GMICO”)~~2020, GMICO’s

risk-to-capital

ratio under the current regulatory framework as established under North Carolina law and enforced by the North Carolina Department of Insurance (“NCDOI”), GMICO’s

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domestic insurance regulator, was approximately ~~12.1:~~12.4:1, compared with a

risk-to-capital

ratio of approximately 12.5:1 as of December 31, ~~2018 and approximately 12.7:1 as of March 31, 2018.~~2019. This

risk-to-capital

ratio remains below the NCDOI’s maximum

risk-to-capital

ratio of 25:1. North Carolina’s calculation of

risk-to-capital

excludes the

risk-in-force

for delinquent loans given the established loss reserves against all delinquencies. As a result, we do not expect any immediate, material pressure to GMICO’s

risk-to-capital

ratio in the short term as a result of

COVID-19.

GMICO’s ongoing

risk-to-capital

ratio will depend principally on the magnitude of future losses incurred by GMICO, the effectiveness of ongoing loss mitigation activities, new business volume and profitability, the amount of policy lapses ~~changes in the value of affiliated assets~~ and the amount of additional capital that is generated ~~within~~or distributed by the business or capital support (if any) that we provide.

Under PMIERs, we are subject to operational and financial requirements that mortgage insurers must meet in order to remain eligible. Each approved mortgage insurer is required to provide the GSEs with an annual

certification and a quarterly report as to its compliance with PMIERs. ~~The revised PMIERs was effective on March 31, 2019.~~ As of March 31, ~~2019,~~2020, our U.S. mortgage insurance business had available assets of approximately ~~123%~~142% of the required assets under PMIERs compared to approximately ~~129% under the previous PMIERs requirements~~138% as of December 31, ~~2018.~~2019. The sufficiency ratio as of March 31, ~~2019~~2020 was in excess of ~~$600 million~~$1.1 billion of available assets above the PMIERs requirements, compared to ~~$750 million of available assets above the previous PMIERs requirements~~$1.0 billion as of December 31, ~~2018. This difference is primarily due~~2019. Pursuant to existing PMIERs requirements and industry application, our first quarter of 2020 PMIERs sufficiency ratio and excess available assets above PMIERs requirements both benefited from the application of a 0.30 multiplier applied to the ~~elimination~~risk-based required asset amount factor for each

non-performing

loan backed by a property located in a FEMA Declared Major Disaster Area that either (1) is subject to a forbearance plan executed in response to a FEMA Declared Major Disaster Area eligible for Individual Assistance, the terms of ~~any~~which are materially consistent with terms of forbearance plans offered by Freddie Mac or Fannie Mae, or (2) has an initial default date occurring up to either (i) 30 days prior to or (ii) 90 days following March 15, 2020. As of April 11, 2020, all fifty states and the District of Columbia have been declared FEMA Major Disaster Areas. The application of the 0.30 multiplier to all eligible delinquencies provided approximately three points and $54 million of benefit to our first quarter of 2020 PMIERs sufficiency ratio and excess available assets, respectively. We remain actively engaged with the FHFA and the GSEs on alternative solutions to mitigate the potential impact of early delinquencies on our PMIERs capital sufficiency. After giving effect to the reduced PMIERs risk-based required asset factors for

non-performing

loans, we expect our PMIERs sufficiency ratio to decrease as a result of incremental delinquencies directly or indirectly related to

COVID-19.

Given the expectation for a decrease in our PMIERs sufficiency ratio prospectively as a result of new delinquencies stemming from

COVID-19,

Effective January 1, 2020, our U.S. mortgage insurance business executed an excess of loss reinsurance transaction with a panel of reinsurers covering a portion of the loss tier on current and expected new insurance written for the 2020 book year. Combined with our other outstanding credit ~~for future premiums in PMIERs that had previously been allowed on~~risk transfer transactions including our insurance ~~policies written in 2008 or earlier. Reinsurance transactions~~linked note, our credit risk transfer program provided an aggregate of approximately ~~$490~~$825 million of PMIERs capital credit as of March 31, ~~2019.~~

2020. Our U.S. mortgage insurance business may execute future risk transfer transactions to maintain a prudent level of financial flexibility in excess of the PMIERs capital requirements in response to potential changes in performance and PMIERs requirements over time. We believe that future credit risk transfer transactions may be more difficult to execute, if possible at all, and may have a higher cost in the immediate future following the

COVID-19

pandemic.

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Segment results of operations

Three Months Ended March 31, ~~2019~~2020 Compared to Three Months Ended March 31, ~~2018~~

2019

The following table sets forth the results of operations relating to our U.S. Mortgage Insurance segment for the periods indicated:

   Three months ended
March 31,    Increase
(decrease) and
percentage
change
(Amounts in millions)
   2019    2018    2019 vs. 2018
Revenues:

Premiums
   $ 194    $ 179    $ 15    8 %
Net investment income
   28    21    7    33 %
Net investment gains (losses)
   —      —      —      —   %
Policy fees and other income
   1    —      1    NM ⁽¹⁾







Total revenues
   223    200    23    12 %







Benefits and expenses:

Benefits and other changes in policy reserves
   16    16    —      —   %
Acquisition and operating expenses, net of deferrals
   46    39    7    18 %
Amortization of deferred acquisition costs and intangibles
   4    4    —      —   %







Total benefits and expenses
   66    59    7    12 %







Income before income taxes
   157    141    16    11 %
Provision for income taxes
   33    30    3    10 %







Net income
   124    111    13    12 %
Adjustments to net income:

Net investment (gains) losses
   —      —      —      —   %
Taxes on adjustments
   —      —      —      —   %







Adjusted operating income available to Genworth Financial, Inc.’s common stockholders
   $ 124    $ 111    $ 13    12 %

⁽¹⁾	~~We define “NM” as not meaningful for increases or decreases greater than 200%.~~

Three months ended
March 31,

Increase
(decrease) and
percentage
change

(Amounts in millions)

2020

2019

2020 vs.
2019

Revenues:

Premiums
$
226
$
194
$
32

16
%
Net investment income

33

28

5

18
%
Net investment gains (losses)

—

—

—

—
%
Policy fees and other income

2

1

1

100
%

Total revenues

261

223

38

17
%

Benefits and expenses:

Benefits and other changes in policy reserves

19

16

3

19
%
Acquisition and operating expenses, net of deferrals

50

46

4

9
%
Amortization of deferred acquisition costs and intangibles

4

4

—

—
%

Total benefits and expenses

73

66

7

11
%

Income from continuing operations before income taxes

188

157

31

20
%
Provision for income taxes

40

33

7

21
%

Income from continuing operations

148

124

24

19
%
Adjustments to income from continuing operations:

Net investment (gains) losses

—

—

—

—
%
Taxes on adjustments

—

—

—

—
%

Adjusted operating income available to Genworth Financial, Inc.’s common stockholders
$
148
$
124
$
24

19
%

Adjusted operating income available to Genworth Financial, Inc.’s common stockholders

Adjusted operating income available to Genworth Financial, Inc.’s common stockholders increased primarily attributable to higher ~~insurancein-force~~premiums and an increase in investment income, partially offset by higher operating costs and losses in the current year.

Revenues

Premiums increased mainly attributable to higher insurance

in-force

and an increase in policy cancellations in our single premium mortgage insurance product driven largely by higher mortgage refinancing, partially offset by lower average premium rates in the current year.

Net investment income increased primarily from higher average invested assets ~~and investment yields~~ in the current year.

Benefits and expenses

Benefits and other changes in policy reserves ~~were flat as~~increased largely from lower net benefits from cures and aging of existing delinquencies, partially offset by a decrease in new delinquencies and a lower average reserve on new delinquencies ~~was offset by a lower net benefit from cures and aging of existing delinquencies~~ in the current year.

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Acquisition and operating expenses, net of deferrals, increased primarily attributable to higher operating costs driven mostly by increased sales in the current year.

Provision for income taxes.

The effective tax rate was 21.3% and 21.2% for ~~both~~ the three months ended March 31, 2020 and 2019, ~~and 2018,~~respectively, consistent with the U.S. corporate federal income tax rate.

U.S. Mortgage Insurance selected operating performance measures

The following table sets forth selected operating performance measures regarding our U.S. Mortgage Insurance segment as of or for the dates indicated:

   As of or for the three
months ended
March 31,    Increase
(decrease) and
percentage
change
(Amounts in millions)
   2019    2018    2019 vs. 2018
Primary insurancein-force⁽¹⁾
   $ 170,400    $ 154,900    $ 15,500    10 %
Riskin-force
   $ 41,300    $ 37,500    $ 3,800    10 %
New insurance written
   $ 9,600    $ 9,000    $ 600    7 %
Net premiums written
   $ 193    $ 185    $ 8    4 %


	As of or for the three months ended March 31,				Increase (decrease) and percentage change
(Amounts in millions)	2020		2019		2020 vs. 2019
Primary insurance in-force (1)	$	198,500	$	170,400	$	28,100	16	%
Risk in-force	$	47,900	$	41,300	$	6,600	16	%
New insurance written	$	17,900	$	9,600	$	8,300	86	%
Net premiums written	$	208	$	193	$	15	8	%

⁽¹⁾

Primary insurance

in-force

represents the aggregate original loan balance 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.

Primary insurance
in-force
and risk

in-force

Primary insurance

in-force

increased largely as a result of ~~$15.8~~$28.3 billion in higher flow insurance

in-force,

which increased from ~~$153.5 billion as of March 31, 2018 to~~ $169.3 billion as of March 31, 2019 to $197.6 billion as of March 31, 2020 as a result of new insurance written, partially offset by lapses in the current year. The increase in flow insurance

in-force

was partially offset by a decline of ~~$0.3~~$0.2 billion in mortgage insurance on a bulk basis (“bulk insurance”)

in-force,

which decreased from ~~$1.4 billion as of March 31, 2018 to~~ $1.1 billion as of March 31, 2019 to $0.9 billion as of March 31, 2020 from cancellations and lapses. In addition, risk

in-force

increased primarily as a result of higher flow new insurance written. Flow persistency was ~~86%~~76% and ~~84%~~86% for the three months ended March 31, 2020 and 2019, ~~and 2018,~~ respectively.

New insurance written

New insurance written increased primarily due to higher mortgage refinancing originations and our higher estimated market share in the current year.

Net premiums written

Net premiums written increased primarily from higher average flow insurance

in-force

in the current year.

Loss and expense ratios

The following table sets forth the loss and expense ratios for our U.S. Mortgage Insurance segment for the dates indicated:

   Three months ended
March 31, Increase (decrease)
   2019 2018 2019 vs. 2018
Loss ratio
   8 % 9 % (1 )%
Expense ratio (net earned premiums)
   25 % 24 % 1 %
Expense ratio (net premiums written)
   26 % 23 % 3 %


	Three months ended March 31,						Increase (decrease)
	2020			2019			2020 vs. 2019
Loss ratio		8	%		8	%		—	%
Expense ratio (net earned premiums)		24	%		25	%		(1	)%
Expense ratio (net premiums written)		26	%		26	%		—	%

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The loss ratio is the ratio of benefits and other changes in policy reserves to net earned premiums. The expense ratio (net earned premiums) is the ratio of general expenses to net earned premiums. The expense ratio (net premiums written) is the ratio of general expenses to net premiums written. In our business, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles.

The loss ratio ~~decreased slightly primarily driven~~was flat compared to the three months ended March 31, 2019 as higher losses from lower net benefits from cures and aging of existing delinquencies were offset by ~~higher net earned premiums attributable to increased insurancein-force~~a decrease in ~~the current year. Losses were flat as~~new delinquencies, a lower average reserve on new delinquencies ~~was offset by a lower net benefit from cures~~ and ~~aging of existing delinquencies in the current year.~~

~~The expense ratio (net earned premiums) increased slightly mainly driven by higher operating costs, mostly offset by~~ higher net earned premiums in the current year.

The expense ratio (net earned premiums) decreased slightly mainly driven by higher net earned premiums, ~~written) increased primarily due to higher operating costs, partially~~mostly offset by higher ~~net premiums written in the current year.~~

operating costs.

Delinquent loans

The following table sets forth the number of loans insured, the number of delinquent loans and the delinquency rate for our U.S. mortgage insurance portfolio as of the dates indicated:

   March 31,
2019 December 31,
2018 March 31,
2018
Primary insurance:

Insured loansin-force
   792,800 783,288 749,145
Delinquent loans
   16,206 17,159 20,602
Percentage of delinquent loans (delinquency rate)
   2.04 % 2.19 % 2.75 %
Flow loansin-force
   780,733 770,657 734,411
Flow delinquent loans
   15,764 16,670 20,007
Percentage of flow delinquent loans (delinquency rate)
   2.02 % 2.16 % 2.72 %
Bulk loansin-force
   12,067 12,631 14,734
Bulk delinquent loans⁽¹⁾
   442 489 595
Percentage of bulk delinquent loans (delinquency rate)
   3.66 % 3.87 % 4.04 %
A minus andsub-prime loansin-force
   14,712 15,348 17,964
A minus andsub-prime delinquent loans
   2,530 2,727 3,557
Percentage of A minus andsub-prime delinquent loans (delinquency rate)
   17.20 % 17.77 % 19.80 %
Pool insurance:

Insured loansin-force
   4,470 4,535 4,961
Delinquent loans
   187 220 220
Percentage of delinquent loans (delinquency rate)
   4.18 % 4.85 % 4.43 %


	March 31, 2020			December 31, 2019			March 31, 2019
Primary insurance:
Insured loans in-force		876,912			860,214			792,800
Delinquent loans		15,648			16,607			16,206

Percentage of delinquent loans (delinquency rate)		1.78	%		1.93	%		2.04	%
Flow loans in-force		866,562			849,472			780,733
Flow delinquent loans		15,246			16,209			15,764

Percentage of flow delinquent loans (delinquency rate)		1.76	%		1.91	%		2.02	%
Bulk loans in-force		10,350			10,742			12,067
Bulk delinquent loans (1)		402			398			442

Percentage of bulk delinquent loans (delinquency rate)		3.88	%		3.71	%		3.66	%
A minus and sub-prime loans in-force		12,243			12,792			14,712
A minus and sub-prime delinquent loans		2,077			2,283			2,530
Percentage of A minus and sub-prime delinquent loans (delinquency rate)		16.96	%		17.85	%		17.20	%

Pool insurance:
Insured loans in-force		4,071			4,122			4,470
Delinquent loans		132			167			187
Percentage of delinquent loans (delinquency rate)		3.24	%		4.05	%		4.18	%

⁽¹⁾

Included loans where we were in a secondary loss position for which no reserve was established due to an existing deductible. Excluding these loans, bulk delinquent loans were 345 as of March 31, 2020, 348 as of December 31, 2019 and 360 as of March 31, ~~2019, 403 as of December 31, 2018 and 494 as of March 31, 2018.~~

2019.

Delinquency ~~and foreclosure levels that developed principally in our 2005 through 2008 book years~~rates have declined as the residential real estate market in the United States ~~stabilized subsequent~~has continued to ~~those book years and strengthened~~strengthen during recent years. ~~In addition, we experienced lower foreclosure starts during 2018, which continued in the first quarter~~

Table of 2019. However, our 2005 through 2008 book years continue to make up the majority of our existing delinquencies as well as new delinquencies, therefore, we may experience variability in our delinquency rates.

Contents

The following tables set forth flow delinquencies, direct case reserves and risk

in-force

by aged missed payment status in our U.S. mortgage insurance portfolio as of the dates indicated:

   March 31, 2019
(Dollar amounts in millions)
   Delinquencies    Direct casereserves⁽¹⁾    Risk
in-force    Reserves as %
of risk in-force
Payments in default:

3 payments or less
   7,679    $ 29    $ 343    8 %
4 - 11 payments
   4,664    90    214    42 %
12 payments or more
   3,421    127    173    73 %







Total
   15,764    $ 246    $ 730    34 %


	March 31, 2020
(Dollar amounts in millions)	Delinquencies		Direct case reserves (1)		Risk in-force		Reserves as % of risk in-force
Payments in default:
3 payments or less		7,572	$	24	$	351		7	%
4 - 11 payments		4,872		82		230		36	%
12 payments or more		2,802		95		142		67	%

Total		15,246	$	201	$	723		28	%


	December 31, 2019
(Dollar amounts in millions)	Delinquencies		Direct case reserves (1)		Risk in-force		Reserves as % of risk in-force
Payments in default:
3 payments or less		8,524	$	27	$	386		7	%
4 - 11 payments		4,836		78		224		35	%
12 payments or more		2,849		99		145		68	%

Total		16,209	$	204	$	755		27	%

⁽¹⁾	Direct flow case reserves exclude loss adjustment expenses, incurred but not reported and reinsurance reserves.

   December 31, 2018
(Dollar amounts in millions)
   Delinquencies    Direct casereserves⁽¹⁾    Risk
in-force    Reserves as %
of risk in-force
Payments in default:

3 payments or less
   8,360    $ 31    $ 365    8 %
4 - 11 payments
   4,591    88    208    42 %
12 payments or more
   3,719    142    188    76 %







Total
   16,670    $ 261    $ 761    34 %

⁽¹⁾	~~Direct flow case reserves exclude loss adjustment expenses, incurred but not reported and reinsurance reserves.~~

Primary insurance delinquency rates differ from region to region in the United States at any one time depending upon economic conditions and cyclical growth patterns. The tables below set forth our primary delinquency rates for the various regions of the United States and the 10 largest states by our risk

in-force

as of the dates indicated. Delinquency rates are shown by region based upon the location of the underlying property, rather than the location of the lender.

Percent of primary
riskin-force as of

Percent of total
reserves as of
Delinquency rate
March 31, December 31, March 31,
   March 31, 2019 March 31, 2019 ⁽¹⁾ 2019 2018 2018
By Region:

Southeast⁽²⁾
   18 % 22 % 2.39 % 2.63 % 3.99 %
Pacific⁽³⁾
   17 10 1.29 % 1.29 % 1.36 %
South Central⁽⁴⁾
   16 12 1.97 % 2.11 % 2.79 %
Northeast⁽⁵⁾
   12 27 3.10 % 3.43 % 4.18 %
North Central⁽⁶⁾
   11 9 1.90 % 1.98 % 2.16 %
Great Lakes⁽⁷⁾
   11 6 1.62 % 1.72 % 1.86 %
Mid-Atlantic⁽⁸⁾
   6 5 2.11 % 2.16 % 2.47 %
New England⁽⁹⁾
   5 6 2.05 % 2.23 % 2.54 %
Plains⁽¹⁰⁾
   4 3 1.82 % 1.87 % 2.08 %


Total
   100 % 100 % 2.04 % 2.19 % 2.75 %


	Percent of primary risk in-force as of March 31, 2020			Percent of total reserves as of March 31, 2020 (1)			Delinquency rate
	Percent of primary risk in-force as of March 31, 2020			Percent of total reserves as of March 31, 2020 (1)			March 31, 2020			December 31, 2019			March 31, 2019
By Region:
Southeast (2)		19	%		20	%		2.00	%		2.15	%		2.39	%
Pacific (3)		18			12			1.29	%		1.36	%		1.29	%
South Central (4)		17			12			1.68	%		1.84	%		1.97	%
Northeast (5)		12			26			2.50	%		2.72	%		3.10	%
North Central (6)		10			10			1.82	%		1.91	%		1.90	%
Great Lakes (7)		10			7			1.53	%		1.69	%		1.62	%
Mid-Atlantic (8)		6			5			1.72	%		1.90	%		2.11	%
New England (9)		5			6			1.80	%		1.92	%		2.05	%
Plains (10)		3			2			1.50	%		1.69	%		1.82	%

Total		100	%		100	%		1.78	%		1.93	%		2.04	%

⁽¹⁾	Total reserves were ~~$280~~$230 million as of March 31, ~~2019.~~ 2020.

⁽²⁾	Alabama, Arkansas, Florida, Georgia, Mississippi, North Carolina, South Carolina and Tennessee.

⁽³⁾	Alaska, California, Hawaii, Nevada, Oregon and Washington.

⁽⁴⁾	Arizona, Colorado, Louisiana, New Mexico, Oklahoma, Texas and Utah.

⁽⁵⁾	New Jersey, New York and Pennsylvania.

⁽⁶⁾	Illinois, Minnesota, Missouri and Wisconsin.

⁽⁷⁾	Indiana, Kentucky, Michigan and Ohio.

⁽⁸⁾	Delaware, Maryland, Virginia, Washington D.C. and West Virginia.

⁽⁹⁾	Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.

⁽¹⁰⁾	Idaho, Iowa, Kansas, Montana, Nebraska, North Dakota, South Dakota and Wyoming.

Percent of primary
risk in-force as of

Percent of total
reserves as of
Delinquency rate
March 31, December 31, March 31,
   March 31, 2019 March 31, 2019 ⁽¹⁾ 2019 2018 2018
By State:

California
   10 % 5 % 1.27 % 1.28 % 1.27 %
Texas
   7 % 5 % 2.03 % 2.29 % 3.66 %
Florida
   6 % 12 % 2.61 % 2.91 % 6.60 %
Illinois
   5 % 6 % 2.23 % 2.26 % 2.47 %
New York
   5 % 15 % 3.42 % 3.64 % 4.38 %
Washington
   5 % 2 % 1.05 % 1.04 % 1.05 %
Michigan
   4 % 2 % 1.30 % 1.40 % 1.36 %
Pennsylvania
   4 % 4 % 2.37 % 2.79 % 3.09 %
Ohio
   4 % 3 % 1.82 % 1.97 % 2.12 %
North Carolina
   4 % 3 % 1.96 % 2.27 % 2.47 %

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	Percent of primary risk in-force as of March 31, 2020			Percent of total reserves as of March 31, 2020 (1)			Delinquency rate
	Percent of primary risk in-force as of March 31, 2020			Percent of total reserves as of March 31, 2020 (1)			March 31, 2020			December 31, 2019			March 31, 2019
By State:
California		11	%		7	%		1.33	%		1.42	%		1.27	%
Texas		7	%		5	%		1.83	%		2.02	%		2.03	%
Florida		6	%		10	%		1.97	%		2.13	%		2.61	%
New York		5	%		15	%		2.71	%		3.00	%		3.42	%
Illinois		5	%		6	%		2.15	%		2.27	%		2.23	%
Washington		4	%		2	%		1.09	%		1.10	%		1.05	%
Michigan		4	%		2	%		1.32	%		1.44	%		1.30	%
Pennsylvania		4	%		4	%		1.98	%		2.15	%		2.37	%
North Carolina		4	%		2	%		1.65	%		1.79	%		1.96	%
Ohio		3	%		3	%		1.62	%		1.84	%		1.82	%

⁽¹⁾	Total reserves were ~~$280~~$230 million as of March 31, ~~2019.~~ 2020.

The following table sets forth the dispersion of our total reserves and primary insurance

in-force

and risk

in-force

by year of policy origination and average annual mortgage interest rate as of March 31, ~~2019:~~

(Amounts in millions)
   Average
rate Percent of totalreserves⁽¹⁾ Primary
insurance
in-force    Percent
of total Primary
risk
in-force    Percent
of total
Policy Year

2004 and prior
   6.09 % 8.7 % $ 1,587    0.9 % $ 299    0.7 %
2005 - 2008
   5.47 % 59.4 18,391    10.8 4,226    10.3
2009 - 2012
   4.28 % 2.2 4,428    2.6 1,034    2.5
2013
   4.09 % 2.2 5,204    3.1 1,278    3.1
2014
   4.45 % 4.2 8,900    5.2 2,162    5.2
2015
   4.15 % 5.9 17,652    10.4 4,281    10.4
2016
   3.88 % 7.9 32,065    18.8 7,736    18.8
2017
   4.25 % 6.6 34,400    20.2 8,398    20.4
2018
   4.77 % 2.9 38,147    22.4 9,394    22.8
2019
   4.87 % —   9,581    5.6 2,385    5.8






Total portfolio
   4.51 % 100.0 % $ 170,355    100.0 % $ 41,193    100.0 %

2020:


(Amounts in millions)	Average rate			Percent of total reserves (1)			Primary insurance in-force		Percent of total			Primary risk in-force		Percent of total
Policy Year
2004 and prior		6.14	%		7.2	%	$	1,290		0.6	%	$	242		0.5	%
2005 to 2008		5.47	%		48.2			14,870		7.5			3,400		7.1
2009 to 2013		4.22	%		4.0			6,246		3.1			1,465		3.1
2014		4.46	%		4.0			6,492		3.3			1,561		3.3
2015		4.16	%		5.9			13,408		6.8			3,227		6.7
2016		3.89	%		8.7			25,079		12.6			6,031		12.6
2017		4.25	%		9.6			27,335		13.8			6,616		13.8
2018		4.76	%		9.1			29,005		14.6			7,034		14.7
2019		4.26	%		3.3			56,918		28.7			13,912		29.1
2020		3.82	%		—			17,824		9.0			4,378		9.1

Total portfolio		4.40	%		100.0	%	$	198,467		100.0	%	$	47,866		100.0	%

⁽¹⁾	Total reserves were ~~$280~~$230 million as of March 31, ~~2019.~~ 2020.

~~Canada Mortgage Insurance segment~~

~~Trends and conditions~~

Results of our mortgage insurance business in Canada are affected primarily by changes in the regulatory environment, employment levels, consumer borrowing behavior, lender mortgage-related strategies, including lender servicing practices, and other economic and housing market influences, including interest rate trends, home price appreciation or depreciation, mortgage origination volume, levels and aging of mortgage delinquencies and movements in foreign currency exchange rates. During the first quarter of 2019, the Canadian dollar weakened against the U.S. dollar compared to the first quarter of 2018, which negatively impacted the results of our mortgage insurance business in Canada as reported in U.S. dollars. Any future movement in foreign exchange rates could impact future results.

The Canadian GDP is expected to have experienced modest growth in the first quarter of 2019, although lower than in the first quarter of 2018, reflecting lower oil prices and weakness in residential investment activity. The overnight interest rate in Canada remained flat at 1.75% in the first quarter of 2019. Canada’s unemployment rate increased slightly to 5.8% at the end of the first quarter of 2019 compared to 5.6% at the end of 2018 as workforce participation outpaced an increase in job creation.

National home prices increased in the first quarter of 2019 by approximately 2% compared to the first quarter of 2018 led by gains in Ontario, particularly in the Greater Toronto Area. However, home prices were down by approximately 1% compared to the fourth quarter of 2018, mostly due to declines in British Columbia. National home sales in the first quarter of 2019 were down by approximately 3% compared to both the first and fourth quarters of 2018, mostly due to the slowdown in sales in British Columbia as a result of regulatory and housing policy changes.

Our mortgage insurance business in Canada experienced slightly higher losses in the first quarter of 2019 compared to the first quarter of 2018 primarily from a higher average reserve per delinquency and higher new delinquencies, net of cures, most pronounced in Alberta. The higher losses in the current year were also attributable to modestly lower favorable development in our loss reserves. Our loss ratio in Canada was 15% for the first quarter of 2019. We expect our full year 2019 loss ratio to be the same or modestly higher than our full year 2018 loss ratio of 15% as economic conditions continue to normalize.

In the first quarter of 2019, flow new insurance written volumes were down in our mortgage insurance business in Canada compared to the first quarter of 2018 primarily from a smaller originations market due to regulatory changes and ongoing housing affordability pressure. The first quarter of 2018 included higher volumes from applications received in the fourth quarter of 2017 resulting from an acceleration of housing demand ahead of regulatory changes. Earned premiums also decreased mainly from the seasoning of our smaller, more recent~~in-force~~ ~~books of business and from a favorable adjustment of $3 million relating to refinements in premium recognition factors in the first quarter of 2018 that did not recur.~~

Bulk new insurance written levels in the first quarter of 2019 were slightly lower compared to the first quarter of 2018 due to marginally lower demand. Insurance written from bulk mortgage insurance varies from period to period based on a number of factors, including the amount of bulk mortgages lenders seek to insure, the competitiveness of our pricing and our risk appetite for such mortgage insurance.

We are subject to regulation under the Protection of Residential Mortgage or Hypothecary Insurance Act (Canada) (“PRMHIA”) and the Insurance Companies Act (Canada), under which our mortgage insurance business in Canada is required to meet a minimum MICAT ratio to support its outstanding mortgage insurance~~in-force~~ per the MICAT guideline released by the Office of the Superintendent of Financial Institutions (“OSFI”) on August 9, 2018. The MICAT guideline was effective January 1, 2019 and replaced the guideline titled “Minimum Capital Test for Federally Regulated Property and Casualty Insurance Companies” and the capital advisory titled “Capital Requirements for Federally Regulated Mortgage Insurers.” The OSFI supervisory MICAT target ratio and the minimum MICAT ratio under PRMHIA are 150%. The primary changes included a 5% increase of the total asset requirement, elimination of the requirement to use updated credit scores for 2015 and prior book years and a transitional arrangement that provides a~~phase-in~~ period for the increased capital required for insurance risk on outstanding insured mortgages as of December 31, 2018. We expect the benefit from the transitional arrangement to run off in the current year. The MICAT guideline did not have a material impact on our regulatory solvency as reported at March 31, 2019 as the impact of the elimination of the credit score update more than offset the 5% increase in the total asset requirement on existing insurance~~in-force.~~ In addition, these new requirements should permit our mortgage insurance business in Canada to more closely align its actual capital levels with its targeted operating range going forward, which may allow for meaningful levels of capital redeployment in addition to regular quarterly dividends. As of March 31, 2019, our MICAT ratio under the framework was approximately 172%, which was above the supervisory target.

~~On March 1, 2019, OSFI released a revised version of GuidelineB-21~~ ~~Residential Mortgage Insurance Underwriting Practices and Procedures(“B-21~~ ~~Guideline”). The updates made to theB-21~~ ~~Guideline are intended to align with GuidelineB-20~~ ~~Residential Mortgage Underwriting Practices and Procedures(“B-20~~ Guideline”), which sets out OSFI’s expectations for prudent residential mortgage underwriting by federally regulated financial institutions in the areas of income verification, property valuation, and fraud detection and prevention. Although the changes made to the~~B-21~~ Guideline are new for federally regulated mortgage insurers, we do not expect those changes to have a material impact given that federally regulated lenders have already been subject to the same rules since January 1, 2018 under the~~B-20~~ ~~Guideline.~~

~~Canada’s2019-20~~ federal budget released on March 19, 2019 includes a new program called the First-Time Home Buyers Incentive (“FTHBI”) intended to help with housing affordability. Under the program, for qualifying borrowers, the Canada Mortgage Housing Corporation (“CMHC”) will contribute up to 10% of the value of a newly built home or 5% of the value of a resale in exchange for a corresponding equity stake in the home. The FTHBI program is expected to launch in September 2019 and will require borrowers to meet minimum insured mortgage down payment requirements to ensure they are invested in their purchase. The program is capped at CAD$1.25 billion over three years, and the incentive will be further limited to households with a maximum combined income of CAD$120,000, with total borrowing limited to four times the income level. Many of the program’s details and guidelines are still unknown, and therefore it is premature to determine how this program may impact our mortgage insurance business in Canada. However, the business has confirmed that it is eligible to participate in this program and is currently in discussions with the Department of Finance.

~~Segment results of operations~~

~~Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018~~

~~The following table sets forth the results of operations relating to our Canada Mortgage Insurance segment for the periods indicated:~~

   Three months ended
March 31,    Increase
(decrease) and
percentage
change
(Amounts in millions)
   2019    2018    2019 vs. 2018
Revenues:

Premiums
   $ 126    $ 139    $ (13 )    (9 )%
Net investment income
   34    34    —      —   %
Net investment gains (losses)
   (1 )    (15 )    14    93 %







Total revenues
   159    158    1    1 %







Benefits and expenses:

Benefits and other changes in policy reserves
   19    18    1    6 %
Acquisition and operating expenses, net of deferrals
   20    17    3    18 %
Amortization of deferred acquisition costs and intangibles
   10    10    —      —   %
Interest expense
   4    5    (1 )    (20 )%







Total benefits and expenses
   53    50    3    6 %







Income before income taxes
   106    108    (2 )    (2 )%
Provision for income taxes
   29    30    (1 )    (3 )%







Net income
   77    78    (1 )    (1 )%
Less: net income attributable to noncontrolling interests
   36    36    —      —   %







Net income available to Genworth Financial, Inc.’s common stockholders
   41    42    (1 )    (2 )%
Adjustments to net income available to Genworth Financial, Inc.’scommon stockholders:

Net investment (gains) losses, net⁽¹⁾
   —      9    (9 )    (100 )%
Taxes on adjustments
   —      (2 )    2    100 %







Adjusted operating income available to Genworth Financial, Inc.’s common stockholders
   $ 41    $ 49    $ (8 )    (16 )%

⁽¹⁾	For the three months ended March 31, 2019 and 2018, net investment (gains) losses were adjusted for the portion of net investment gains (losses) attributable to noncontrolling interests of $(1) million and $(6) million, respectively.

~~Adjusted operating income available to Genworth Financial, Inc.’s common stockholders~~

Adjusted operating income available to Genworth Financial, Inc.’s common stockholders decreased primarily driven by changes in foreign exchange rates in the current year and from lower earned premiums largely related to refinements in premium recognition factors in the prior year that did not recur and lower flow mortgage insurance written in recent years. The decrease was also attributable to an increase in acquisition and operating expenses, which included higher stock-based compensation expense in the current year.

~~Revenues~~

Premiums decreased primarily from $7 million of changes attributable to foreign exchange rates in the current year, refinements in premium recognition factors in the prior year that did not recur and from the seasoning of our smaller, more recent~~in-force~~ ~~books of business.~~

~~Net investment losses decreased primarily attributable to derivative gains in the current year compared to losses in the prior year largely from hedgingnon-functional~~ currency transactions and derivative gains on interest rate floors, partially offset by derivative losses on interest rate swaps in the current year compared to gains in the prior year. The decrease was also attributable to lower net investment losses from changes in the fair value of equity securities in the current year.

~~Benefits and expenses~~

Benefits and other changes in policy reserves increased principally from a higher average reserve per delinquency, higher new delinquencies, net of cures, primarily attributable to increased losses in Alberta, and from modestly lower favorable development in our loss reserves, mostly offset by changes in foreign exchange rates in the current year.

~~Acquisition and operating expenses, net of deferrals, increased mainly driven by higher stock-based compensation expense and higher operating costs in the current year.~~

~~Provision for income taxes.~~~~The effective tax rate was 27.6% and 27.4% for the three months ended March 31, 2019 and 2018, respectively, consistent with our jurisdictional rate of 27%.~~

~~Canada Mortgage Insurance selected operating performance measures~~

~~The following table sets forth selected operating performance measures regarding our Canada Mortgage Insurance segment as of or for the dates indicated:~~

   As of or for the three
months ended
March 31,    Increase
(decrease) and
percentage
change
(Amounts in millions)
   2019    2018    2019 vs. 2018
Primary insurancein-force
   $ 382,200    $ 384,600    $ (2,400 )    (1 )%
Riskin-force
   $ 133,800    $ 134,600    $ (800 )    (1 )%
New insurance written
   $ 2,900    $ 3,400    $ (500 )    (15 )%
Net premiums written
   $ 79    $ 92    $ (13 )    (14 )%

~~Primary insurancein-force~~ ~~and riskin-force~~

~~Our mortgage insurance business in Canada currently provides 100% coverage on the majority of the loans we insure in that market. For the purpose of representing our riskin-force,~~ ~~we have computed an “effective” riskin-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 riskin-force~~ ~~has been calculated by applying to insurancein-force~~ ~~a factor that represents our highest expected averageper-claim~~ ~~payment for any one underwriting year over the life of our business in Canada. For the three months ended March 31, 2019 and 2018, this factor was 35%.~~

~~Primary insurancein-force~~ ~~and riskin-force~~ ~~decreased largely from decreases of $14.1 billion and $5.0 billion, respectively, attributable to changes in foreign exchange rates, partially offset by new flow and bulk mortgage insurance written.~~

~~New insurance written~~

New insurance written decreased primarily from lower flow mortgage insurance written largely resulting from a smaller mortgage originations market due to regulatory changes and ongoing housing affordability pressure. The first quarter of 2018 included higher volumes from applications received in the fourth quarter of 2017 resulting from an acceleration of housing demand ahead of regulatory changes. The three months ended March 31, 2019 included a decrease of $100 million attributable to changes in foreign exchange rates.

~~Net premiums written~~

Our mortgage insurance policies in Canada provide for single premiums at the time that loan proceeds are advanced. We initially record the single premiums to unearned premium reserves and recognize the premiums earned over time in accordance with the expected pattern of risk emergence. As of March 31, 2019 and December 31, 2018, our unearned premium reserves were $1.5 billion in each period.

Net premiums written decreased primarily from lower flow mortgage insurance written and lower average premium rates on bulk mortgage insurance. The three months ended March 31, 2019 included a decrease of $5 million attributable to changes in foreign exchange rates.

~~Loss and expense ratios~~

~~The following table sets forth the loss and expense ratios for our Canada Mortgage Insurance segment for the periods indicated:~~

   Three months ended March 31, Increase (decrease)
   2019 2018 2019 vs. 2018
Loss ratio
   15 % 13 % 2 %
Expense ratio (net earned premiums)
   24 % 20 % 4 %
Expense ratio (net premiums written)
   39 % 30 % 9 %

The loss ratio is the ratio of benefits and other changes in policy reserves to net earned premiums. The expense ratio (net earned premiums) is the ratio of general expenses to net earned premiums. The expense ratio (net premiums written) is the ratio of general expenses to net premiums written. In our mortgage insurance business in Canada, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles.

~~The loss ratio increased primarily from a higher average reserve per delinquency and higher new delinquencies, net of cures, most pronounced in Alberta, in the current year.~~

~~The expense ratio (net earned premiums) increased primarily attributable to higher stock-based compensation and operating expenses and lower earned premiums in the current year.~~

~~The expense ratio (net premiums written) increased largely from higher stock-based compensation and operating expenses and lower net premiums written in the current year.~~

~~Delinquent loans~~

~~The following table sets forth the number of loans insured, the number of delinquent loans and the delinquency rate for our Canada mortgage insurance portfolio as of the dates indicated:~~

   March 31, 2019 December 31, 2018 March 31, 2018
Primary insured loansin-force
   2,152,048 2,143,191 2,123,727
Delinquent loans
   1,760 1,684 1,723
Percentage of delinquent loans (delinquency rate)
   0.08 % 0.08 % 0.08 %
Flow loansin-force
   1,507,283 1,499,304 1,456,573
Flow delinquent loans
   1,384 1,310 1,385
Percentage of flow delinquent loans (delinquency rate)
   0.09 % 0.09 % 0.10 %
Bulk loansin-force
   644,765 643,887 667,154
Bulk delinquent loans
   376 374 338
Percentage of bulk delinquent loans (delinquency rate)
   0.06 % 0.06 % 0.05 %

~~Flow mortgage loansin-force~~ increased from new policies written. The number of delinquent loans of our flow mortgage insurance increased compared to the fourth quarter of 2018 primarily driven by seasonally higher new delinquencies.

Primary insurance delinquency rates differ by the various provinces and territories of Canada at any one time depending upon economic conditions and cyclical growth patterns. The table below sets forth our primary delinquency rates for the various provinces and territories of Canada by our risk~~in-force~~ ~~as of the dates indicated. Delinquency rates are shown by region based upon the location of the underlying property, rather than the location of the lender.~~

Percent of primary
riskin-force as of
Delinquency rate
March 31, December 31, March 31,
   March 31, 2019 2019 2018 2018
By province and territory:

Ontario
   47 % 0.03 % 0.03 % 0.03 %
Alberta
   17 0.19 % 0.18 % 0.17 %
British Columbia
   14 0.04 % 0.04 % 0.04 %
Quebec
   13 0.09 % 0.10 % 0.10 %
Saskatchewan
   3 0.29 % 0.28 % 0.30 %
Nova Scotia
   2 0.13 % 0.13 % 0.15 %
Manitoba
   2 0.11 % 0.10 % 0.10 %
New Brunswick
   1 0.13 % 0.10 % 0.17 %
All other
   1 0.20 % 0.19 % 0.19 %


Total
   100 % 0.08 % 0.08 % 0.08 %

Delinquency rates were flat compared to December 31, 2018 and March 31, 2018 reflecting regional housing market improvement primarily driven by stable macroeconomic conditions in most regions, offset by higher losses in Alberta.

~~As a part of enhanced lender reporting, we receive updated outstanding loansin-force~~ in Canada from almost all of our customers. Based on the data provided by lenders, the delinquency rate as of March 31, 2019 was 0.20%, reflecting a lower number of outstanding loans and related policies~~in-force~~ ~~compared to our reported policiesin-force.~~

Australia Mortgage Insurance segment

Trends and conditions

Results of our mortgage insurance business in Australia are affected primarily by changes in regulatory environments, employment levels, consumer borrowing behavior, lender mortgage-related strategies, including lender servicing practices, and other economic and housing market influences, including interest rate trends, home price appreciation or depreciation, mortgage origination volume, levels and aging of mortgage delinquencies and movements in foreign currency exchange rates. During the first quarter of ~~2019,~~2020, the Australian dollar weakened against the U.S. dollar compared to the first quarter of ~~2018,~~2019, which negatively impacted the results of our mortgage insurance business in Australia as reported in U.S. dollars. Any future movement in foreign exchange rates could impact future results.

COVID-19

non-essential

businesses. This has resulted in major disruptions to economic

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activity across the country. The Australian ~~GDP is~~Government has taken steps to support jobs, incomes and businesses by providing multiple economic stimulus packages, including wage subsidies, income support to households and cash flow support to businesses. In addition, many of our lender customers have announced initiatives that allow affected homeowners the option to defer their repayments for a period of up to six months. Homeowners that participate in such lender hardship programs will not be reported as delinquent during this time. In response, our mortgage insurance business in Australia expanded its COVID-19 hardship policy to enable lenders to further support borrowers impacted by the pandemic. While the government programs and lender initiatives are expected to lessen the effect of COVID-19 on the loss experience in the business, the ultimate impact will depend on the length of COVID-19 and the speed of the economic recovery. We continue to actively consider the potential economic impacts and work closely with our lender customers to support borrowers who have been impacted by

COVID-19

In addition to

COVID-19,

certain areas of Australia have been impacted by bushfires that occurred in late 2019 and continued into the first quarter of 2020. At this time, we do not believe there will be a significant impact to the business, and we expect our exposure to be limited to any economic downturn that may occur in the impacted regions.

As of the February 2020 release of its Statement on Monetary Policy, the Reserve Bank of Australia (“RBA”) expected the Australian gross domestic product (“GDP”) to have experienced moderate growth in the first quarter of ~~2019,~~2020, supported by ~~sustained expansion~~strengthened housing activity and export growth. However, the impact of~~non-mining~~ ~~business investment~~

COVID-19

is expected to lead to uncertainty and ~~an ongoing rise~~material contractions over the first half of 2020. The future growth of the Australian GDP will depend on the time it takes to bring the virus under control and the government’s economic responses, in~~non-resource~~ ~~exports. The~~ addition to how countries around the world progress and support economic activity. As part of a comprehensive package to support the Australian economy during this period of uncertainty, the RBA reduced its official cash rate ~~remained flat at 1.50%~~ in the first quarter of 2020 to 0.25%, down from 0.75% as of the end of 2019. According to RBA’s governor, the cash rate could potentially remain at this level for three years as RBA’s Board will not increase the cash rate target until progress is made toward full employment and it is confident that inflation will remain within a target range of two to three percent. The March 2020 unemployment rate ~~remained flat~~increased slightly to 5.2% from 5.1% at ~~5.0% compared~~the end of 2019. However, the unemployment rate is expected to ~~December 2018.~~

~~Following consistent growth~~rise sharply in ~~2017,~~the coming months as a result of the shut-down of major industries across the country.

March 2020 home prices in ~~Australia continued~~ the ~~2018 downward trend with declines in the first quarter~~combined capital cities of ~~2019. March 2019 home values~~Australia were approximately 8% ~~lower~~higher than the prior year, as housing values in ~~March 2018, with declines experienced across~~ the majority of the capital ~~cities.~~cities continued to rise during the first quarter of 2020. The ~~main drivers of the home price depreciation were the~~ Sydney and Melbourne housing markets were the main drivers of growth, with ~~decreases~~annual home price increases of ~~approximately 11%~~13% and ~~10%~~12%, ~~respectively, for~~respectively. Although Australia’s housing values continued to climb during the first quarter of ~~2019.~~

2020, the second half of March 2020 experienced a decline in growth as social distancing policies took effect and confidence weakened. This reversal in trend could persist as the economic impact of

COVID-19

continues to unfold.

Our mortgage insurance business in Australia completed a review of its premium earnings pattern in the fourth quarter of ~~2018,~~2019, which resulted in no changes to the earnings pattern adopted in the fourth quarter of 2017. The adjustment to our premium earnings pattern in the fourth quarter of 2017 was applied on a retrospective basis under U.S. GAAP, however, under local Australian Accounting Standards (“AAS”) this adjustment was applied on a prospective basis. Due to this divergence in accounting application, the financial results and certain metrics, such as the loss ratio and expense ratios, for our mortgage insurance business in Australia were different between the two accounting standards through the first quarter of 2020. These differences will continue in future periods but will become less significant as time passes.

Given the range of possible future adverse economic scenarios resulting from COVID-19, our mortgage insurance business in Australia assessed the adequacy of its unearned premium liability under local AAS as part of its first quarter of 2020 results. The liability adequacy test under AAS resulted in a deficiency, mostly driven by higher expected future claims. Accordingly, our Australia mortgage insurance business wrote off

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AUD$182 million of its DAC balance as part of its first quarter of 2020 results. There was no deficiency adjustment under U.S. GAAP primarily due to a higher unearned premium reserve and a lower DAC balance. This further contributed to differences in results for our Australia mortgage insurance business under the two accounting standards in the first quarter of ~~2019 and will be different in future periods.~~

2020.

Our mortgage insurance business in Australia had lower losses in the first quarter of ~~2019~~2020 compared to the first quarter of ~~2018 attributable to changes in foreign exchange rates. Excluding foreign exchange, losses were slightly higher~~2019 primarily ~~as a result~~from favorable aging of ~~higher new delinquencies, net of cures, in the current year.~~existing delinquencies. The loss ratio in Australia for the three months ended March 31, ~~2019~~2020 was 34%. ~~We still expect the full year 2019 loss ratio~~While we did not experience increased claims in ~~Australia to be similar to the full year 2018 loss ratio of 30%, as higher delinquencies and lower cures traditionally experienced in the first half of the year are expected to normalize thereafter.~~

In the first quarter of ~~2019,~~2020 due to COVID-19, our mortgage insurance business in Australia ~~experienced an~~anticipates future claims to increase intoward the end of 2020, which could negatively impact losses.

In the first quarter of 2020, new insurance written ~~volumes~~increased compared to the first quarter of ~~2018~~2019 primarily due to ~~a higher level of bulk insurance transactions and~~ higher mortgage origination ~~volumes~~volume from ~~certain~~a key ~~customers~~customer in the current year.

~~Gross~~ We also had higher gross written premiums in the first quarter of 2020 compared to the first quarter of 2019 largely as a result of higher flow new insurance written. Despite the growth trend in the first quarter of 2020, new insurance written volumes could potentially decrease in the coming months due to economic impacts from

COVID-19.

Net earned premiums were lower in the first quarter of ~~2019~~2020 compared to the first quarter of ~~2018 largely as~~2019 primarily from portfolio seasoning and lower policy cancellations.

Our mortgage insurance business in Australia is concentrated in a ~~result~~small number of ~~the timing of initial premiums received from a structured insurance transaction in the prior year, partially offset by higher flow new insurance written from increased~~ key ~~customer activity in the current year. Earned premiums were lower in the first quarter of~~customers. In October 2019, ~~compared to the first quarter of 2018 primarily due to the seasoning of~~we renewed our ~~smaller, more recentin-force~~ ~~books of business.~~

~~In November 2016, we entered into a new~~supply and service contract with our largest customer, effective January 1, ~~2017, with~~2020, for a term of three years. In November 2018, we entered into a new contract with our second largest customer, effective November 21, 2018, with a term of two years and the option to extend for an additional year at the customer’s discretion. These two customers ~~together~~ represented ~~64%~~56% and 10%, respectively, of our gross written premiums in the first quarter of ~~2019.~~

2020. Any termination, reduction or material change in relationship with one of them could have a material adverse effect on our future results because of our reliance on these key customers for the majority of our business. One consideration is that some of our customer contracts contain provisions that allow the customer the option to terminate their contract, on a prospective basis for new business, within a specified period following a ratings downgrade. Given the potential economic impacts of

COVID-19,

Our mortgage insurance business in Australia evaluates its capital position in relation to the ~~Prescribed Capital Amount (“PCA”)~~PCA as determined by ~~the Australian Prudential Regulation Authority (“APRA”)~~APRA and utilizes its Internal Capital Adequacy Assessment Process as the framework to ensure that our Australia group of companies as a whole, and each regulated entity, are independently capitalized to meet regulatory requirements. As of March 31, ~~2019, the~~2020, our estimated PCA ratio was approximately 178%, representing a decrease from 191% as of December 31, 2019 largely from a DAC write-off of AUD$182 million recorded in connection with the completion of liability adequacy testing as part of first quarter of 2020 results. Given the economic uncertainty surrounding COVID-19, APRA has provided guidance to insurers asking them to limit discretionary capital distributions, including dividends, until the impact of COVID-19 is better understood to ensure that they have sufficient capital capacity to continue essential functions such as underwriting new insurance.

In September 2019, the Australian Government released details of the First Home Loan Deposit Scheme (“FHLDS”), which is designed to assist eligible first-time home buyers by providing a government guarantee to participating lenders on eligible loans equal to the difference between the deposit (of at least 5%) and 20% of the purchase price. Borrower income and regional property value caps apply, and the program is intended to support up to 10,000 eligible first-time home buyers each Australian Government fiscal year, which is July 1 through June 30. If the loan comes to an end or the loan principal balance reduces to below 80% of the value of the property at purchase, the government guarantee will terminate. The FHLDS became effective on January 1, 2020. At this time, it is too early to determine what impact, if any, this program will have on our mortgage insurance business in ~~Australia was approximately 201%, representing an increase from 194% as~~Australia.

Table of ~~December 31, 2018, largely resulting from portfolio seasoning, partially offset by dividends paid, share repurchase activity and lower reinsurance credit.~~

Contents

Segment results of operations

Three Months Ended March 31, ~~2019~~2020 Compared to Three Months Ended March 31, ~~2018~~

2019

The following table sets forth the results of operations relating to our Australia Mortgage Insurance segment for the periods indicated:

   Three months ended
March 31,    Increase
(decrease) and
percentage
change
(Amounts in millions)
   2019    2018    2019 vs. 2018
Revenues:

Premiums
   $ 83    $ 98    $ (15 )    (15 )%
Net investment income
   16    17    (1 )    (6 )%
Net investment gains (losses)
   12    (9 )    21    NM ⁽¹⁾
Policy fees and other income
   (1 )    1    (2 )    (200 )%







Total revenues
   110    107    3    3 %







Benefits and expenses:

Benefits and other changes in policy reserves
   28    30    (2 )    (7 )%
Acquisition and operating expenses, net of deferrals
   17    17    —      —   %
Amortization of deferred acquisition costs and intangibles
   9    11    (2 )    (18 )%
Interest expense
   2    2    —      —   %







Total benefits and expenses
   56    60    (4 )    (7 )%







Income before income taxes
   54    47    7    15 %
Provision for income taxes
   16    14    2    14 %







Net income
   38    33    5    15 %
Less: net income attributable to noncontrolling interests
   20    17    3    18 %







Net income available to Genworth Financial, Inc.’s common stockholders
   18    16    2    13 %
Adjustments to net income available to Genworth Financial, Inc.’scommon stockholders:

Net investment (gains) losses, net⁽²⁾
   (6 )    4    (10 )    NM ⁽¹⁾
Taxes on adjustments
   2    (1 )    3    NM ⁽¹⁾







Adjusted operating income available to Genworth Financial, Inc.’s common stockholders
   $ 14    $ 19    $ (5 )    (26 )%


	Three months ended March 31,						Increase (decrease) and percentage change
(Amounts in millions)	2020			2019			2020 vs. 2019
Revenues:
Premiums	$	69		$	83		$	(14	)	(17	)%
Net investment income		10			16			(6	)	(38	)%
Net investment gains (losses)		(53	)		12			(65	)	NM	(1)
Policy fees and other income		1			(1	)		2		200	%

Total revenues		27			110			(83	)	(75	)%

Benefits and expenses:
Benefits and other changes in policy reserves		24			28			(4	)	(14	)%
Acquisition and operating expenses, net of deferrals		17			17			—		—	%
Amortization of deferred acquisition costs and intangibles		8			9			(1	)	(11	)%
Interest expense		1			2			(1	)	(50	)%

Total benefits and expenses		50			56			(6	)	(11	)%

Income (loss) from continuing operations before income taxes		(23	)		54			(77	)	(143	)%
Provision (benefit) for income taxes		(7	)		16			(23	)	(144	)%

Income (loss) from continuing operations		(16	)		38			(54	)	(142	)%
Less: net income (loss) from continuing operations attributable to noncontrolling interests		(6	)		20			(26	)	(130	)%

Income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders		(10	)		18			(28	)	(156	)%
Adjustments to income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders:
Net investment (gains) losses, net (2)		27			(6	)		33		NM	(1)
Taxes on adjustments		(8	)		2			(10	)	NM	(1)

Adjusted operating income available to Genworth Financial, Inc.’scommon stockholders	$	9		$	14		$	(5	)	(36	)%

⁽¹⁾	We define “NM” as not meaningful for increases or decreases greater than 200%.

⁽²⁾	For the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, net investment (gains) losses were adjusted for the portion of net investment gains (losses) attributable to noncontrolling interests of $(26) million and $6 million, ~~and $(5) million,~~ respectively.

Adjusted operating income available to Genworth Financial, Inc.’s common stockholders

Adjusted operating income available to Genworth Financial, Inc.’s common stockholders decreased primarily driven by lower earned premiums largely from portfolio seasoning and lower policy cancellations, partially offset by lower losses primarily from favorable aging of existing delinquencies in the current year.

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Revenues

Premiums decreased predominantly from portfolio seasoning and lower policy cancellations in the current year. The three months ended March 31, 2020 included a decrease of $4 million attributable to changes in foreign exchange ~~rates~~rates.

Net investment income decreased largely from lower average invested assets and lower yields in the current year.

Net investment losses in the current year were primarily from derivative losses and net unrealized losses from a decrease in the ~~seasoning~~fair value of ~~our smaller, more recentin-force~~ ~~books of business. These decreases were~~equity securities, partially offset by ~~lower contract fees amortization in the current year.~~

~~Revenues~~

~~Premiums decreased predominantly from $8 million of changes attributable to foreign exchange rates in the current year and~~net realized gains from the ~~seasoning~~sale of ~~our smaller, more recentin-force~~ ~~books of business.~~

~~We had net~~ investment ~~gains in the current year compared to net investment losses in the prior year.~~securities. Net investment gains in the ~~current~~prior year were ~~primarily~~largely from net realized gains from the sale of investment securities and derivative ~~gains and from changes in the fair value~~gains. The three months ended March 31, 2020 included an increase of ~~equity securities. Net investment losses in the prior year were predominantly from changes in the fair value of equity securities.~~

~~Policy fees and other income decreased primarily~~$3 million attributable ~~to foreign exchange losses onnon-Australian~~ ~~dollar denominated invested assets due~~ to changes in foreign exchange ~~rates in the current year.~~

rates.

Benefits and expenses

Benefits and other changes in policy reserves decreased ~~largely~~primarily from ~~$3 million~~favorable aging of ~~changes attributable to foreign exchange rates~~existing delinquencies in the current year. ~~Excluding the effects of changes in foreign exchange rates, benefits and other changes in policy reserves increased slightly mainly from higher new delinquencies, net of cures, in the current year.~~

~~Amortization of DAC and intangibles decreased primarily from lower contract fees amortization and from changes in foreign exchange rates in the current year.~~

Provision (benefit) for income taxes.

The effective tax rate was 30.0% for both the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, consistent with our jurisdictional rate.

Net income (loss) attributable to noncontrolling interests

. The decrease to a loss in the current year from income in the prior year was predominantly related to higher net investment losses driven largely by derivative losses in the current year.

Australia Mortgage Insurance selected operating performance measures

~~Our~~

As of March 31, 2020, our mortgage insurance business in Australia ~~currently has~~had structured insurance transactions with three lenders where it iswas in a secondary loss position. The insurance portfolio metrics associated with these transactions, which include insurance

in-force,

risk

in-force,

new insurance written, loans

in-force

and delinquent loans, are excluded from the following tables. These arrangements represented approximately ~~$157~~$143 million and ~~$160~~$157 million of risk

in-force ~~of our mortgage insurance business~~

as of March 31, 2020 and 2019, ~~and 2018,~~ respectively.

The following table sets forth selected operating performance measures regarding our Australia Mortgage Insurance segment as of or for the dates indicated:

   As of or for the three
months ended
March 31,    Increase
(decrease) and
percentage change
(Amounts in millions)
   2019    2018    2019 vs. 2018
Primary insurancein-force
   $ 219,200    $ 246,300    $ (27,100 )    (11 )%
Riskin-force
   $ 76,300    $ 85,700    $ (9,400 )    (11 )%
New insurance written
   $ 3,900    $ 3,400    $ 500    15 %
Net premiums written
   $ 52    $ 60    $ (8 )    (13 )%

~~Primary insurancein-force~~ ~~and riskin-force~~


	As of or for the three months ended March 31,				Increase (decrease) and percentage change
(Amounts in millions)	2020		2019		2020 vs. 2019
Primary insurance in-force	$	188,400	$	219,200	$	(30,800	)	(14	)%
Risk in-force	$	65,700	$	76,300	$	(10,600	)	(14	)%
New insurance written	$	4,300	$	3,900	$	400		10	%
Net premiums written	$	62	$	52	$	10		19	%

Our mortgage insurance business in Australia currently provides 100% coverage on the majority of the loans we insure in those markets. For the purpose of representing our risk

in-force,

we have 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 of 35% that represents our highest expected average

per-claim

payment for any one underwriting year over the life of our business in Australia. ~~For the three months ended March 31, 2019 and 2018, this factor was 35%.~~ We also have certain risk share arrangements where we provide

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.

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Primary insurance

in-force

and risk

in-force

Primary insurance

in-force

and risk

in-force

decreased primarily from decreases of ~~$18.1~~$30.1 billion and ~~$6.3~~$10.5 billion, respectively, due to changes in foreign exchange rates ~~and from policy cancellations~~ in the current year.

New insurance written

New insurance written increased mainly attributable to ~~new bulk insurance written and~~ higher mortgage origination volume from ~~certain~~a key ~~customers.~~customer in the current year. The three months ended March 31, ~~2019~~2020 included a decrease of ~~$300~~$200 million attributable to changes in foreign exchange rates.

Net premiums written

Most of our Australian mortgage insurance policies provide for single premiums at the time that loan proceeds are advanced. We initially record the single premiums to unearned premium reserves and recognize the premiums earned over time in accordance with the expected pattern of risk emergence. As of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, our unearned premium reserves were $0.9 billion and $1.0 billion, ~~and $1.1 billion,~~ respectively.

The three months ended March 31, 2020 included a decrease of $130 million attributable to changes in foreign exchange rates.

Net premiums written ~~decreased~~increased primarily ~~from $5 million of changes attributable to foreign exchange rates and from lower net premiums written on structured insurance~~ due to ~~the timing of initial premiums received~~higher flow new insurance written from ~~a transaction~~an increase in ~~the prior year, partially offset by higher~~ mortgage origination volume from ~~certain~~a key ~~customers~~customer in the current year.

The three months ended March 31, 2020 included a decrease of $3 million attributable to changes in foreign exchange rates.

Loss and expense ratios

The following table sets forth the loss and expense ratios for our Australia Mortgage Insurance segment for the periods indicated:

   Three months ended March 31, Increase (decrease)
   2019 2018 2019 vs. 2018
Loss ratio
   34 % 30 % 4 %
Expense ratio (net earned premiums)
   31 % 29 % 2 %
Expense ratio (net premiums written)
   50 % 47 % 3 %


	Three months ended March 31,						Increase (decrease)
	2020			2019			2020 vs. 2019
Loss ratio		34	%		34	%		—	%
Expense ratio (net earned premiums)		36	%		31	%		5	%
Expense ratio (net premiums written)		40	%		50	%		(10	)%

The loss ratio is the ratio of benefits and other changes in policy reserves to net earned premiums. The expense ratio (net earned premiums) is the ratio of general expenses to net earned premiums. The expense ratio (net premiums written) is the ratio of general expenses to net premiums written. In our mortgage insurance business in Australia, general expenses consist of acquisition and operating expenses, net of deferrals, and amortization of DAC and intangibles.

The loss ratio ~~increased~~was flat as the decrease in premiums from portfolio seasoning and lower policy cancellations was offset by the decrease in losses primarily from ~~higher new~~favorable aging of existing delinquencies ~~net of cures,~~ in the current year. ~~The increase was also attributable to lower earned premiums largely due to the seasoning of our smaller, more recentin-force~~ ~~books of business.~~

The expense ratio (net earned ~~premiums and net premiums written)~~premiums) increased primarily from lower ~~earned/written~~net earned premiums as discussed ~~above, partially offset by lower contract fees amortization~~above.

The expense ratio (net premiums written) decreased primarily from higher net premiums written primarily due to an increase in mortgage origination volume from a key customer in the current year.

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Delinquent loans

The following table sets forth the number of loans insured, the number of delinquent loans and the delinquency rate for our Australia mortgage insurance portfolio as of the dates indicated:

   March 31, 2019 December 31, 2018 March 31, 2018
Primary insured loansin-force
   1,323,172 1,332,906 1,407,431
Delinquent loans
   7,490 7,145 6,958
Percentage of delinquent loans (delinquency rate)
   0.57 % 0.54 % 0.49 %
Flow loansin-force
   1,217,050 1,226,219 1,296,055
Flow delinquent loans
   7,265 6,931 6,735
Percentage of flow delinquent loans (delinquency rate)
   0.60 % 0.57 % 0.52 %
Bulk loansin-force
   106,122 106,687 111,376
Bulk delinquent loans
   225 214 223
Percentage of bulk delinquent loans (delinquency rate)
   0.21 % 0.20 % 0.20 %


	March 31, 2020			December 31, 2019			March 31, 2019
Primary insured loans in-force		1,284,120			1,290,216			1,323,172
Delinquent loans		7,274			7,221			7,490
Percentage of delinquent loans (delinquency rate)		0.57	%		0.56	%		0.57	%

Flow loans in-force		1,183,889			1,189,019			1,217,050
Flow delinquent loans		7,055			7,003			7,265
Percentage of flow delinquent loans (delinquency rate)		0.60	%		0.59	%		0.60	%

Bulk loans in-force		100,231			101,197			106,122
Bulk delinquent loans		219			218			225
Percentage of bulk delinquent loans (delinquency rate)		0.22	%		0.22	%		0.21	%

Flow loans

in-force

decreased primarily from policy ~~cancellations. Flow delinquent loans increased primarily from higher new delinquencies, net of cures,~~cancellations in the current year.

Primary insurance delinquency rates differ by the various states and territories of Australia at any one time depending upon economic conditions and cyclical growth patterns. The table below sets forth our primary delinquency rates for the states and territories of Australia by our risk

in-force

as of the dates indicated. Delinquency rates are shown by region based upon the location of the underlying property, rather than the location of the lender.

Percent of primary
risk in-force as of
Delinquency rate
March 31, December 31, March 31,
   March 31, 2019 2019 2018 2018
By state and territory:

New South Wales
   28 % 0.41 % 0.38 % 0.33 %
Queensland
   23 0.74 % 0.70 % 0.67 %
Victoria
   22 0.42 % 0.40 % 0.39 %
Western Australia
   13 1.05 % 0.98 % 0.88 %
South Australia
   6 0.69 % 0.68 % 0.63 %
Australian Capital Territory
   3 0.19 % 0.17 % 0.18 %
Tasmania
   2 0.28 % 0.31 % 0.32 %
New Zealand
   2 0.04 % 0.05 % 0.06 %
Northern Territory
   1 0.76 % 0.68 % 0.52 %


Total
   100 % 0.57 % 0.54 % 0.49 %

~~Delinquency~~


	Percent of primary risk in-force as of March 31, 2020			Delinquency rate
	Percent of primary risk in-force as of March 31, 2020			March 31, 2020			December 31, 2019			March 31, 2019
By state and territory:
New South Wales		27	%		0.44	%		0.42	%		0.41	%
Queensland		23			0.75	%		0.75	%		0.74	%
Victoria		23			0.42	%		0.41	%		0.42	%
Western Australia		13			1.00	%		1.00	%		1.05	%
South Australia		6			0.67	%		0.65	%		0.69	%
Australian Capital Territory		3			0.25	%		0.24	%		0.19	%
Tasmania		2			0.30	%		0.29	%		0.28	%
New Zealand		2			0.02	%		0.02	%		0.04	%
Northern Territory		1			0.83	%		0.71	%		0.76	%

Total		100	%		0.57	%		0.56	%		0.57	%

U.S. Life Insurance segment

COVID-19

The most significant impacts in our U.S. life insurance businesses from

COVID-19

are related to the current low interest rate environment and equity market volatility/declines, and may also be impacted by future mortality and morbidity experience. Our long-term care insurance products could be negatively impacted by the current low interest rate environment, particularly as it relates to loss recognition testing and asset adequacy analysis, as well as experiencing delays in approvals for

in-force

rate actions. These impacts would be partially offset by higher mortality which is favorable to our long-term care insurance products. The low interest rate environment and declining equity markets have adversely impacted earnings in our fixed annuity products; however, if mortality is higher in future months, it could benefit earnings in these products in future quarters. Conversely, higher mortality rates ~~increased~~could lower profitability in our life insurance products.

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In our long-term care insurance products, we would expect some degree of higher mortality during

COVID-19

which would have a favorable impact on claims. We are not expecting

COVID-19

to drive higher claims frequency in our long-term care insurance business and we may observe temporarily reduced incidence while

shelter-in-place

and social distancing protocols are in effect. We are temporarily unable to perform our full intake assessment, which requires an

in-person

assessment, but are relying on an abbreviated assessment form and evaluating initial claim eligibility through a virtual assessment technique in the ~~current year compared~~interim, with an

in-person

assessment to ~~December 31, 2018~~follow once social distancing protocols are relaxed. As a result, we may experience temporary delays in adjudicating new claims and ~~March 31, 2018 mainly from lower flow loans~~disruptions to our normal intake process. Our long-term care insurance benefit utilization will also be affected; although it is too early to tell the magnitude and/or direction of that impact.

Additionally, our U.S. life insurance companies are dependent on the approval of actuarially justified

in-force

COVID-19

although we do not expect a significant impact on our financial results during 2020 as a result of ~~policy cancellations~~any delays.

We continue to provide customer service and ~~from higher~~flexibility to our policyholders during this uncertain time and will work with them if they contact us with questions or concerns regarding their policies. For example, we have approved accommodations for certain long-term care insurance policyholders on claim given unique circumstances related to

COVID-19.

We are continually assessing our operational processes and monitoring potential impacts to morbidity due to

COVID-19.

COVID-19

outbreak. We are actively monitoring developments related to

COVID-19

such as state directives that are issued during this time and we will continue to monitor and comply with any new ~~delinquencies, net~~guidance issued by our state insurance regulators. We may seek permitted practices during this time to help our capital position and our ongoing risk-based capital (“RBC”) requirements if

COVID-19

continues for an extended period of ~~cures,~~time. One permitted practice being considered relates to waiving the requirement to

non-admit

premium receivables over 90 days if we are in a no lapse mandate. We are also contacting our reinsurance counterparties to inform them of the actions we are taking in response to state bulletins on extension of grace periods and prohibition of lapsation as well as showing flexibility to our policyholders who are on claim.

While there are premium deferrals/grace period mandates in certain states currently in place, we do not expect a significant impact on our premiums in our U.S. life insurance businesses. Given our current ~~year.~~

ratings, our sales volume is low in our long-term care insurance products. In 2016, we suspended sales of our traditional life insurance and fixed annuity products. For traditional life insurance policies, where regular premiums are typically required, and universal life insurance contracts, where premiums are typically flexible but frequently require minimum premiums to be paid, subject to state mandates for additional grace periods during the

COVID-19

pandemic, policies would follow normal lapse or nonforfeiture options if the policyholders decided not to pay their premiums. Therefore, we would not expect to experience a material financial strain in our life insurance products. There is no requirement to pay premiums in our fixed annuity contracts and benefits would adjust contractually based on actual premiums paid in these products.

We actively monitor cash and highly liquid investment positions in each of our U.S. ~~Life Insurance segment~~

life insurance companies against operating targets that are designed to ensure that we will have the cash necessary to meet our obligations as they come due. The targets are set based on stress scenarios that have the effect of increasing our expected cash outflows and decreasing our expected cash inflows. Liquidity risk is assessed by comparing subsidiary cash to potential cash needs under a stressed liquidity scenario. The stressed scenario reflects potential policyholder surrenders, variability of normal operating cash flow and potential increase in collateral requirements under our cleared derivative program.

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While the impact of
COVID-19
is very difficult to predict, the related outcomes and impact on the U.S. life insurance business will depend on the length of the pandemic and shape of the economic recovery. Further declines in interest rates and equity markets as a result of
COVID-19
would increase reserves and capital requirements in our U.S. life insurance business. For sensitivities related to interest rates, lapses and mortality on our U.S. life insurance products, see “Item 7—Management’s Discussion and Analysis— Critical Accounting Estimates” in our 2019 Annual Report on Form
10-K.
We will continue to monitor COVID-19 impacts and evaluate all of our assumptions that may need updating as a result of longer-term trends related to the pandemic.

Trends and conditions

Results of our U.S. life insurance businesses depend significantly upon the extent to which our actual future experience is consistent with assumptions and methodologies we have used in calculating our reserves. Many

factors can affect the ~~reserves in~~results of our U.S. life insurance businesses. Because these factors are not known in advance, change over time, are difficult to accurately predict and are inherently uncertain, we cannot determine with precision the ultimate amounts we will pay for actual claims or the timing of those payments. We will continue to monitor our experience and assumptions closely and make changes to our assumptions and methodologies, as appropriate, for our U.S. life insurance products. Even small changes in assumptions or small deviations of actual experience from assumptions can have, and in the past have had, material impacts on our DAC amortization, reserve levels, results of operations and financial condition.

We perform loss recognition testing to ensure that the current reserves along with the present value of future gross premiums are sufficient to cover the present value of future expected claims and expense, as well as recover the unamortized portion of DAC and, if any, PVFP. If the loss recognition test indicates a deficiency in the ability to pay all future claims and expenses, including the amortization of DAC and PVFP, a loss is recognized in earnings as an impairment of the DAC and/or PVFP balance and, if the loss is greater than the DAC and/or PVFP balance, by an increase in reserves.

Our liability for policy and contract claims is reviewed quarterly and we ~~conduct~~completed a detailed review of our claim reserve assumptions ~~for our long-term care insurance business annually. We completed our annual review of claim reserve assumptions~~and methodologies for our long-term care insurance business in the third quarter of 2019. In the fourth quarter of ~~2018. See “Long-term~~2019, we performed assumption reviews for U.S. life insurance products, including our long-term care ~~insurance” below for more details. Our liability for future policy benefits is reviewed at least annually as a part of~~and life insurance products, and completed our loss recognition testing. AsOur review of assumptions, as part of ~~loss recognition~~our testing ~~we also review~~in the ~~recoverability~~fourth quarter of ~~DAC~~2019, included expected claim incidence, benefit utilization, mortality, persistency, interest rates and ~~PVFP at least annually.~~

in-force

rate actions, among other assumptions. In addition, we ~~perform~~performed cash flow testing separately for each of our U.S. life insurance companies on a statutory accounting basis ~~annually. In~~in the fourth quarter of 2018, we performed assumption reviews for our universal and term universal life insurance products as well as for our other U.S. life insurance products, including our long-term care insurance products, and completed our loss recognition testing. For our acquired block of long-term care insurance business and our fixed immediate annuity products, we monitor these blocks more frequently than annually given the premium deficiencies that existed in previous periods.

Our U.S. Life Insurance segment will continue to migrate to a new valuation and projection platform for certain lines of business, while we upgrade platforms for other lines of business. The migration and upgrades are part of our ongoing efforts to improve the infrastructure and capabilities of our information systems and our routine assessment and refinement of financial, actuarial, investment and risk management capabilities and processes enterprise wide. These efforts will also provide our U.S. Life Insurance segment with improved platforms to support emerging accounting guidance and ongoing changes in capital regulations. Concurrently, actuarial processes and methodologies will be reviewed, and may result in additional refinements to our models and/or assumptions. Any material changes in balances, margins or income trends that may result from these activities will be disclosed accordingly. We intend to continue developing our modeling capabilities in our various businesses, including for our long-term care insurance projections where we migrated substantially all of our retained long-term care insurance business to this new modeling system in 2016 and 2017. The new modeling system values and forecasts associated liability cash flows and policyholder behavior at a more granular level than our previous system.

2019.

Results of our U.S. life insurance businesses are also impacted by interest rates. Low interest rates put pressure on the profitability and returns of these businesses as higher yielding investments mature and are replaced with ~~lower-yielding~~lower yielding investments. We seek to manage the impact of low interest rates through asset-liability management as well as interest rate hedging strategies for a portion of our long-term care insurance product cash flows. Additionally, certain products have implicit and explicit rate guarantees or optionality that are significantly impacted by changes in interest rates. For a further discussion of the impact of interest rates on our U.S. life insurance businesses, see “Item 7A—Quantitative and Qualitative Disclosures About Market Risk” in our ~~2018~~2019 Annual Report on Form

10-K.

Our U.S. life insurance subsidiaries are subject to the National Association of Insurance Commissioners’ (“NAIC”) risk-based capital (“RBC”) standards and other minimum statutory capital and surplus requirements. As of December 31, 2018, the

The RBC of each of our U.S. life insurance subsidiaries exceeded the level of RBC that

would require any of them to take or become subject to any corrective action in their respective domiciliary ~~state.~~state as of December 31, 2019. However, the RBC ratio of our U.S. life insurance subsidiaries has ~~declined~~been negatively impacted over the past few years as a result of statutory losses driven by the declining performance of the business and increases in our statutory reserves, including results of Actuarial Guideline 38, cash flow testing and assumption reviews particularly in our long-term care insurance business. In the first quarter of 2020, low interest rates and equity market volatility negatively impacted our variable annuity products resulting in material statutory reserve increases. However, hedge favorability, regulatory changes effective January 1, 2020 and the repayment of the $200 million intercompany note between Genworth Holdings and GLIC favorably impacted the RBC ratio in the first quarter of 2020. Any future statutory losses would decrease the RBC ratio of our U.S. life insurance subsidiaries. We continue to face challenges in our principal life insurance subsidiaries, particularly those subsidiaries that rely heavily on

in-force

rate actions as a source of earnings and capital. We may see variability in statutory results and a further decline in the RBC ratios of these subsidiaries given the time lag between the approval of

in-force

rate actions versus when the benefits from the

in-force

rate actions (including increased

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Table of Contents

premiums and associated benefit reductions) are fully realized in our financial results. Further declines in the RBC ratio of our life insurance subsidiaries could result in heightened supervision and regulatory action.

Long-term care insurance

The long-term profitability of our long-term care insurance business depends upon how our actual experience compares with our valuation assumptions, including but not limited to morbidity, mortality and persistency. If any of our assumptions prove to be inaccurate, our reserves may be inadequate, which in the past has had, and may in the future have, a material adverse effect on our results of operations, financial condition and business. Results of our long-term care insurance business are also influenced ~~primarily~~ by our ability to achieve

in-force

rate actions, ~~morbidity, mortality, persistency,~~improve investment yields and manage expenses ~~changes in regulations~~ and ~~reinsurance.~~reinsurance, among other factors. Changes in regulations or government programs, including long-term care insurance rate action legislation, regulation and/or practices, could also impact our long-term care insurance business either positively or negatively.

Our liability for policy and contract claims is reviewed quarterly and we conduct a detailed review of our claim reserve assumptions for our long-term care insurance business annually. We completed our annual review of claim reserve assumptions and methodologies for our long-term care insurance business in the fourth quarter of 2018 and recorded higher claim reserves of $308 million and reinsurance recoverables of $17 million. Based on this review, we updated several assumptions and methodologies, including benefit utilization rates, claim termination rates and other assumptions. The primary impact related to increasing later duration utilization assumptions for claims with lifetime benefits.

~~Additional changes in assumptions or methodologies in our long-term care insurance claim reserves in the future could also impact our loss recognition and cash flow testing results.~~

Our assumptions are sensitive to slight variability in actual experience and small changes in assumptions could result in decreases in the margin of our long-term care insurance blocks to at/or below zero in future years. To the extent, based on reviews, the margin of our long-term care insurance block, excluding the acquired block, is negative, we would be required to recognize a loss, by amortizing more DAC and/or establishing additional benefit reserves. For our acquired block of long-term care insurance, the impacts of adverse changes in assumptions would also be reflected as a loss if our margin for this block is reduced below zero by establishing additional benefit reserves. A significant decrease in our loss recognition testing margin of our long-term care insurance blocks could have a material adverse effect on our business, results of operations and financial condition.

~~In connection with~~

As a result of the ~~updated assumptions and methodologies that increased~~review of our claim reserves ~~on existing claims~~completed in the fourth quarter of 2018 we ~~now establish~~have been establishing higher claim reserves on new claims, which ~~decreased~~has negatively impacted earnings ~~in the first quarter of 2019~~ and we expect ~~will decrease earnings~~this to continue going ~~forward as higher reserves are recorded. Additionally,~~forward. Also, average claim reserves for new claims are higher as the mix of claims continues to evolve, with an increasing number of policies with higher daily benefit amounts and higher inflation factors going on claim. ~~The average~~In addition, although new claim ~~reserve established in~~counts on our older long-term care insurance blocks of business will continue to decrease as the ~~first quarter~~blocks run off, we are gaining more experience on our larger new blocks of ~~2019 was approximately 8% higher than the average new claim reserve established during the first quarter of 2018. Also, we~~business and expect continued growth in new claims on these blocks as ~~our blocks~~policyholders reach older attained ages with higher likelihood of ~~business continue to age.~~

~~We experience volatility in our loss ratios caused by variances in policy terminations, claim terminations, claim severity and claim counts. Our approvedin-force~~ ~~rate actions may also cause fluctuations in our loss ratios during~~going on claim.

Given the ~~period when reserves are adjusted to reflect policyholders electing benefit reductions ornon-forfeiture~~ options within their policy coverage. In addition, we periodically review our reserve assumptions and methodologies based upon developing experience, which may result in changes to claim reserves and loss recognition testing results, causing volatility in our operating results and loss ratios. Our loss ratio for the three months ended March 31, 2019 and 2018 was 81% and 84%, respectively.

~~As a result of~~ ongoing challenges in our long-term care insurance business, we continue pursuing initiatives to improve the risk and profitability profile of our business including: premium rate increases and associated benefit reductions on our

in-force

policies; managing expense levels; executing investment strategies targeting higher returns; and enhancing our financial and actuarial analytical capabilities. Executing on our multi-year long-term care insurance

in-force

rate action plan with ~~increased premiums~~premium rate increases and associated benefit reductions on our legacy long-term care insurance policies is critical to the business. For an update on

in-force

rate actions, refer to “Significant Developments—U.S. Life Insurance.” As of March 31, ~~2019,~~2020, we have suspended sales in Hawaii, Massachusetts, New Hampshire, Vermont and Montana, and will consider taking similar actions in the future in other states where we are unable to obtain satisfactory rate increases on

in-force

policies. We will also consider litigation against states that decline actuarially justified rate increases. As of March 31, ~~2019,~~2020, we were in litigation with one state that has refused to approve actuarially justified~~in-force~~ rate ~~actions.~~ increases.

The approval process for

in-force

rate ~~increases~~actions and the amount and timing of the premium rate increases and associated benefit reductions approved vary by state. In certain states, the decision to approve or disapprove a rate increase can take a significant amount of time, and the approved amount may be phased in over time. After approval, insureds are provided with written notice of the increase and increases are generally applied on the insured’s next policy anniversary date. As a result, the benefits of any rate increase are not fully realized until the implementation cycle is complete and are, therefore, expected to be realized over time.

~~Our U.S. Life Insurance segment is taxed at 21%, the enacted tax rate under the TCJA. However, gains on forward starting swaps settled prior to the enactment~~

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Table of the TCJA are tax effected at 35% as they are amortized into net investment income. This will negatively impact our long-term care insurance business given the majority of our forward starting swaps are in this business.

Contents

We also manage risk and capital allocated to our long-term care insurance business through utilization of external reinsurance in the form of coinsurance. We executed external reinsurance agreements to reinsure 20% of all sales of our individual long-term care insurance products that have been introduced since early 2013. External new business reinsurance is dependent on a number of factors, including price, availability, risk tolerance and capital levels. Over time, there can be no assurance that affordable, or any, reinsurance will continue to be available. We also have external reinsurance on some older blocks of business which includes a treaty on a yearly renewable term basis on business that was written between 1998 and 2003. This yearly renewable term reinsurance provides coverage for claims on those policies for 15 years after the policy was written. After 15 years, reinsurance coverage ends for policies not on claim, while reinsurance coverage continues for policies on claim until the claim ends. The

15-year

coverage on the policies written in 2003 expired in 2018; therefore, any new claims will not have reinsurance coverage under this treaty. Since 2013, we have seen, and may continue to see, an increase in our benefit costs as policies with reinsurance coverage exhaust their benefits or terminate and policies which are not covered by reinsurance go on claim.

Life insurance

Results of our life insurance business are impacted primarily by mortality, persistency, investment yields, expenses, reinsurance and statutory reserve requirements, among other factors. ~~Effective March 7, 2016, we suspended~~We no longer solicit sales of ~~our~~ traditional life insurance ~~products.~~

~~We review~~products; however, we continue to service our ~~life insurance assumptions in detail at least annually. In the fourth quarter~~existing retained and reinsured blocks of 2018, we performed our annual review of life insurance assumptions and completed our loss recognition testing for our universal and term universal life insurance products. As part of our assumption review in the fourth quarter of 2018, we recorded $91 million of~~after-tax~~ charges in our universal and term universal life insurance products primarily driven by assumption changes due to lower expected growth in interest rates and emerging mortality experience primarily in our term universal life insurance product.

business.

Mortality levels may deviate each period from historical trends. ~~Mortality~~Overall mortality experience was ~~lower in~~higher for the ~~first quarter of 2019~~three months ended March 31, 2020 compared to ~~the fourth quarter of 2018~~three months ended March 31, 2019 and ~~first quarter of 2018, however,~~ we have experienced higher mortality than our ~~then current~~then-current and ~~priced for~~

priced-for

assumptions in recent years for our universal life insurance

blocks. We have also been experiencing higher mortality related charges resulting from an increase in rates charged by our reinsurance partners reflecting natural block aging and higher mortality compared to expectations.

In the fourth quarter of 2019, we performed our annual review of life insurance assumptions and completed our loss recognition testing. Our review focused on assumptions for mortality, particularly for our conversion products, persistency and interest rates, among other assumptions. As part of our review in the fourth quarter of 2019, we recorded $107 million of

after-tax

charges in our universal and term universal life insurance products primarily from assumption changes related to the lower interest rate environment.

We also updated mortality assumptions for certain universal and term universal life insurance products as well as our term life insurance products in the fourth quarter of 2019. Our mortality experience for older ages and late-duration premium periods and conversion products is emerging. Assumption changes in our term life insurance products focused on mortality improvements during the post-level premium period based on observed trends in emerging experience. This change to the mortality assumption increased the loss recognition testing margin in our term life insurance products. We will continue to regularly review our mortality assumptions as well as all of our other assumptions in light of emerging ~~experience and~~experience. We may be required to make further adjustments in the future to our assumptions which could impact our universal and term universal life insurance reserves ~~in the future, which could also impact~~or our loss recognition testing ~~results.~~results of our term life insurance products. Any further materially adverse changes to our assumptions, including mortality ~~may~~or interest rates, could have a materially negative impact on our results of operations, financial condition and business.

~~Between 1999~~

Compared to 1998 and ~~2009,~~prior years, we had a significant increase in term life insurance sales, between 1999 and 2009, particularly in 1999 and 2000. The blocks of business issued since 2000 vary in size as compared to ~~1998~~the large 1999 and ~~prior years.~~2000 blocks of business. As our large

10-

and

15-year

level premium period term life insurance policies written in 1999 and 2000 transitioned to their ~~post level~~post-level guaranteed premium rate period, we ~~have~~ experienced lower persistency compared to our pricing and valuation ~~assumptions. The blocks~~assumptions which accelerated DAC amortization in previous years. As our large

20-year

level premium period business written in 1999 entered its

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Table of ~~business issued since 2000 vary~~Contents

post-level period, we experienced higher lapses resulting in ~~size as compared to~~accelerated DAC amortization in 2019. This trend continued in the first quarter of 2020 for the 1999 block, as it reached the end of its level premium period. Additionally, we expect similar experience with the

20-year

level premium period business written in 2000 as it enters its post-level period during 2020 and ~~2000 blocks of business. Accordingly, in~~into 2021. In the future, as additional

10-~~,15-~~,

15-

and

20-year

level premium period blocks enter their ~~post level~~post-level guaranteed premium rate period, we expect to experience volatility in DAC amortization, premiums and mortality experience, which we expect to reduce profitability in our term life insurance products, in amounts that could be material, if persistency is lower than our original assumptions as itexperience has ~~been~~emerged on ~~our10-~~earlier blocks. Additionally, the extension of grace periods or no lapsation mandated by state regulators during

COVID-19

may impact the timing and~~15-year~~ level ~~premium period business written in 1999 and 2000. In the first quarter~~ of ~~2019 and the full years 2018 and 2017, we experienced higher~~ lapses ~~and accelerated DAC amortization associated with our large15-year~~ ~~and20-year~~ ~~level premium period term life insurance~~for these blocks ~~entering their post level guaranteed premium rate periods. We anticipate this trend will continue for the remainder~~ of 2019 with accompanying higher DAC amortization and lower profitability as larger blocks reach the end of their level premium periods and will continue as our other blocks reach their post guaranteed level premium rate period, especially for our 2000 block. As of March 31, 2019, our term life insurance products had a DAC balance of $1.3 billion.business. We have ~~also~~ taken actions to mitigate potentially unfavorable impacts through the use of reinsurance, particularly for certain term life insurance policies issued between 2001 and 2004.

We began selling term universal life insurance in late 2009, with sales peaking in 2011 prior to discontinuing sales of the product in 2012. We priced these products assuming high lapses upon expiration of the level premium period and we continue to expect those higher lapses. As our
10-year
level premium period term universal life insurance policies written in 2009 and 2010 enter their post-level premium period, we will record higher reserves during the premium grace period and will release the reserves when the policies lapse. We expect further reserve increases in these blocks through 2020 and into 2021 until the number of policies exiting the grace period exceeds the number of policies entering the post-level guaranteed premium rate period. However, any extension of grace periods or reinstatements mandated by state regulators during
COVID-19
may impact the level of reserves held for these blocks of business.

Fixed annuities

Results of our fixed annuities business are affected primarily by investment performance, interest rate levels, the slope of the interest rate yield curve, net interest spreads, equity market conditions, mortality, persistency and expense and commission levels. ~~Effective March 7, 2016, we suspended~~We no longer solicit sales of ~~our~~ traditional fixed annuity ~~products.~~

products; however, we continue to service our existing retained and reinsured blocks of business.

We monitor and change crediting rates on fixed annuities on a regular basis to maintain spreads and targeted returns, if applicable. However, if interest rates remain at current levels or decrease, we could see declines in spreads which impact the margins on our products, particularly our fixed immediate annuity products. Due to the premium deficiency that existed in 2016, we continue to monitor our fixed immediate annuity products more frequently than annually and recorded additional charges to net income during ~~2017, the fourth quarter of 2018 and the first quarter of~~ 2019. If investment performance deteriorates or interest rates decrease or remain at the current levels ~~or increase at a slower pace than we assumed,~~for an extended period of time, we could incur additional charges in the future. The impacts of future adverse changes in our assumptions could result in the establishment of additional future policy benefit reserves and would be immediately reflected as a loss if our margin for this block is again reduced below zero. Any favorable variation would result in additional margin but no immediate benefit to income and would result in higher income recognition over the remaining duration of the

in-force

block.

For fixed indexed annuities, equity market performance and volatility could also result in additional gains or losses, although associated hedging activities are expected to partially mitigate these impacts.

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Table of Contents

Segment results of operations

Three Months Ended March 31, ~~2019~~2020 Compared to Three Months Ended March 31, ~~2018~~

2019

The following table sets forth the results of operations relating to our U.S. Life Insurance segment for the periods indicated:

   Three months ended
March 31,    Increase
(decrease) and
percentage
change
(Amounts in millions)
   2019    2018    2019 vs. 2018
Revenues:

Premiums
   $ 709    $ 722    $ (13 ) (2)%
Net investment income
   701    688    13 2%
Net investment gains (losses)
   84    8    76 NM⁽¹⁾
Policy fees and other income
   151    163    (12 ) (7)%






Total revenues
   1,645    1,581    64 4%






Benefits and expenses:

Benefits and other changes in policy reserves
   1,236    1,238    (2 ) —  %
Interest credited
   106    119    (13 ) (11)%
Acquisition and operating expenses, net of deferrals
   148    141    7 5%
Amortization of deferred acquisition costs and intangibles
   66    71    (5 ) (7)%
Interest expense
   5    4    1 25%






Total benefits and expenses
   1,561    1,573    (12 ) (1)%






Net income before income taxes
   84    8    76 NM⁽¹⁾
Provision for income taxes
   24    6    18 NM ⁽¹⁾






Net income
   60    2    58 NM⁽¹⁾
Adjustments to net income:

Net investment (gains) losses, net⁽²⁾
   (86 )    (9 )    (77 ) NM⁽¹⁾
Expenses related to restructuring
   4    —      4 NM⁽¹⁾
Taxes on adjustments
   17    2    15 NM⁽¹⁾






Adjusted operating loss available to Genworth Financial, Inc.’scommon stockholders
   $ (5 )    $ (5 )    $ —   —  %


	Three months ended March 31,						Increase (decrease) and percentage change
(Amounts in millions)	2020			2019			2020 vs. 2019
Revenues:
Premiums	$	718		$	709		$	9		1	%
Net investment income		695			701			(6	)	(1	)%
Net investment gains (losses)		(70	)		84			(154	)	(183	)%
Policy fees and other income		144			151			(7	)	(5	)%

Total revenues		1,487			1,645			(158	)	(10	)%

Benefits and expenses:
Benefits and other changes in policy reserves		1,297			1,236			61		5	%
Interest credited		100			106			(6	)	(6	)%
Acquisition and operating expenses, net of deferrals		151			148			3		2	%
Amortization of deferred acquisition costs and intangibles		87			66			21		32	%
Interest expense		5			5			—		—	%

Total benefits and expenses		1,640			1,561			79		5	%

Income (loss) from continuing operations before income taxes		(153	)		84			(237	)	NM	(1)
Provision (benefit) for income taxes		(27	)		24			(51	)	NM	(1)

Income (loss) from continuing operations		(126	)		60			(186	)	NM	(1)
Adjustments to income (loss) from continuing operations:
Net investment (gains) losses, net (2)		67			(86	)		153		178	%
Losses on early extinguishment of debt		4			—			4		NM	(1)
Expenses related to restructuring		—			4			(4	)	(100	)%
Taxes on adjustments		(15	)		17			(32	)	(188	)%

Adjusted operating loss available to Genworth Financial, Inc.’s common stockholders	$	(70	)	$	(5	)	$	(65	)	NM	(1)

⁽¹⁾	We define “NM” as not meaningful for increases or decreases greater than 200%.

⁽²⁾	For the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, net investment (gains) losses were adjusted for DAC and other intangible amortization and certain benefit reserves of $(3) million and $(2) million, ~~and $(1) million,~~ respectively.

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Table of Contents

The following table sets forth adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders for the businesses included in our U.S. Life Insurance segment for the periods indicated:

   Three months ended
March 31,    Increase
(decrease) and
percentage
change
(Amounts in millions)
   2019    2018    2019 vs. 2018
Adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders:

Long-term care insurance
   $ (20 )    $ (32 )    $ 12    38 %
Life insurance
   (2 )    (1 )    (1 )    (100 )%
Fixed annuities
   17    28    (11 )    (39 )%







Total adjusted operating loss available to Genworth Financial, Inc.’s common stockholders
   $ (5 )    $ (5 )    $ —      —   %

Three months ended
March 31,

Increase
(decrease) and
percentage
change

(Amounts in millions)

2020

2019

2020 vs. 2019

Adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders:

Long-term care insurance
$
1
$
(20
) $
21

105
%
Life insurance

(77
)
(2
)
(75
)
NM
(1)
Fixed annuities

6

17

(11
)
(65
)%

Total adjusted operating loss available to Genworth Financial, Inc.’s common stockholders
$
(70
) $
(5
) $
(65
)
NM
(1)

(1) We define “NM” as not meaningful for increases or decreases greater than 200%.

Adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders

~~The~~

in-force

20-year

term life insurance ~~blocks~~block entering ~~the~~its post-level premium ~~periods~~period, higher reserves in our

10-year

term universal life insurance block entering its post-level premium period during the premium grace period and ~~an $11 million unfavorable model correction~~from higher mortality in our universal and term life insurance products ~~in the current year. These increases were mostly offset by lower mortality~~ in the current year compared to the prior ~~year in our term and universal life insurance products.~~

year.

Adjusted operating income available to Genworth Financial, Inc.’s common stockholders decreased $11 million in our fixed annuities business predominantly ~~attributable~~from higher reserves and DAC amortization in our fixed indexed annuities driven by unfavorable market changes in the current year, lower mortality in our single premium immediate annuities and a decrease in net spreads due to the runoff of the block. These decreases were partially offset by $13 million of unfavorable charges in connection with loss recognition testing in our fixed immediate annuity products ~~partially offset by favorable mortality~~ in the ~~current year.~~

prior year that did not recur.

Revenues

Premiums

Our long-term care insurance business ~~decreased $3 million. The decrease was~~increased $14 million largely from ~~policy terminations, partially offset by $17~~$34 million of increased premiums in the current year from

in-force

rate actions approved and ~~implemented.~~

implemented, partially offset by policy terminations and policies entering

paid-up

status in the current year.

Our life insurance business decreased ~~$10~~$5 million mainly attributable to the continued runoff of our term life insurance products ~~and higher reinsurance rates~~ in the current year.

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Table of Contents

Net investment income

Our long-term care insurance business increased ~~$24~~$13 million largely from higher average invested assets, higher income on U.S. government treasury inflation protected securities and an increase in bond calls, partially offset by lower gains from limited partnerships in the current year.

Our life insurance business ~~increased $9~~decreased $3 million principally related to ~~higher yields and average invested assets~~lower gains from limited partnerships in the current year. The increase was also attributable to a favorable prepayment speed adjustment on mortgage-backed securities in the current year compared to an unfavorable prepayment speed adjustment in the prior year.

Our fixed annuities business decreased ~~$20~~$16 million largely attributable to lower average invested assets in the current year due to block runoff.

Net investment gains (losses)

~~Net investment gains in our~~

Our long-term care insurance business ~~increased $74~~had net investment losses of $55 million ~~primarily related~~in the current year compared to net investment gains of $80 million in the prior year. The change to net investment losses in the current year from net investment gains in the prior year was mainly driven by unrealized losses from changes in the fair value of equity securities in the current year compared to unrealized gains in the prior year. The change was also attributable to net gains from the sale of investment securities in the ~~current year compared to net losses in the~~ prior year ~~and higher gains on equity securities in the current year related to changes in fair value.~~

that did not recur.

Net investment gains in our life insurance business ~~increased $5~~decreased $9 million primarily related to ~~higher~~lower net gains from the sale of investment securities ~~partially offset by lower gains on embedded derivatives associated with our indexed universal life insurance products.~~

in the current year.

Net investment losses in our fixed annuities business increased $3$10 million primarily related to derivative losses in the current year compared to derivative gains in the prior year. The increase was partially offset by gains on embedded derivatives related to our fixed indexed annuity products in the current year compared to ~~gains in the prior year, partially offset by derivative gains in the current year compared to derivative~~ losses in the prior year.

Policy fees and other income.

The decrease was ~~mostly~~ attributable to our life insurance business primarily ~~from~~driven by a decline in our ~~term~~ universal and term universal life insurance

in-force ~~blocks~~

and higher ceded reinsurance costs in the current year.

Benefits and expenses

Benefits and other changes in policy reserves

Our long-term care insurance business ~~decreased~~increased $1 million principally ~~related to~~from the aging of the

in-force

block (including higher frequency of new claims), higher incremental reserves of $39 million recorded in connection with an accrual for profits followed by losses and higher severity of new claims in the current year. These increases were mostly offset by a ~~$61 million~~ higher favorable impact of $34 million from reduced benefits in the current year related to

in-force

rate actions approved and implemented, a slightly favorable impact from benefit utilization rate updates in the current year compared to an unfavorable impact in the prior year and ~~from~~ favorable development on prior year incurred but not reported claims. ~~This decrease was mostly offset by aging of thein-force~~ ~~block (including higher frequency of new claims), lower claim terminations and higher severity of new claims in the current year.~~

Our life insurance business ~~decreased $5~~increased $60 million primarily attributable to ~~lower~~higher reserves in our

10-year

term universal life insurance block entering its post-level premium period during the premium grace period and from higher mortality in our universal and term life insurance products in the current year compared to the prior ~~year in our term and universal life insurance products.~~

year.

Our fixed annuities business ~~increased $4 million largely attributable to~~was flat as higher reserves in our fixed indexed annuities driven by unfavorable market changes in the current year and lower mortality in our single premium immediate annuities were offset by $17 million of higher reserves recorded in ~~connection with~~the prior year related to loss recognition testing in our fixed immediate annuity products ~~primarily as a result of portfolio management actions and from a~~that did not recur.

Interest credited.

The decrease in ~~the projected yield curve. These increases were partially offset by favorable mortality and lower~~ interest credited ~~in the current year due to block runoff.~~

~~Interest credited.~~~~The decrease~~ was ~~due~~primarily related to our ~~life insurance and~~ fixed annuities ~~businesses, which decreased $3 million and $10 million, respectively, primarily~~business largely driven by a decline in the average account ~~values and lower crediting rates~~value in the current year.

~~Acquisition and operating expenses, net~~

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Table of ~~deferrals.~~The increase was predominantly related to $4 million in restructuring costs in our U.S. Life Insurance segment, which included the suspension of sales of our individual long-term care insurance products through sales intermediaries effective March 7, 2019. The remaining increase was mostly attributable to our long-term care insurance business largely from higher commissions and premium taxes associated with our~~in-force~~ ~~rate action plan.~~

Contents

Amortization of deferred acquisition costs and ~~intangibles.~~~~The decrease in amortization of DAC and~~ intangibles ~~was primarily related to our~~

Our life insurance business increased $17 million principally ~~from our updated assumptions implemented in the fourth quarter of 2018, partially offset by an increase in DAC amortization~~ from higher lapses primarily associated with ~~the~~our large

20-year

products in the prior year that did not recur.

Our fixed annuities business increased $5 million largely related to higher DAC amortization reflecting lower net spreads and the impact of unfavorable market changes in the current year.

Interest expense.

Interest expense was flat as the early redemption of
non-recourse
funding obligations in our life insurance business was offset by the
write-off
of $4 million in deferred borrowing costs.

Provision (benefit) for income taxes.

The effective tax rate was ~~28.5%~~17.5% and ~~78.6%~~28.5% for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. The decrease in the effective tax rate was largely attributable to ~~higher~~a

pre-tax

loss in the current year compared to

pre-tax

income in the ~~current~~prior year. The prior year higher effective tax rate reflects $5 million of tax expense attributable to our long-term care insurance business related to gains on forward starting swaps settled prior to the enactment of the TCJA in relation to low pre-tax income.

U.S. Life Insurance selected operating performance measures

Long-term care insurance

The following table sets forth selected operating performance measures regarding our individual and group long-term care insurance products for the periods indicated:

   Three months ended
March 31, Increase
(decrease) and
percentage
change
(Amounts in millions)
   2019 2018 2019 vs. 2018
Net earned premiums:

Individual long-term care insurance
   $ 599 $ 603 $ (4 ) (1 )%
Group long-term care insurance
   29 28 1 4 %


Total
   $ 628 $ 631 $ (3 ) —   %


Loss ratio
   81 % 84 % (3 )%


	Three months ended March 31,						Increase (decrease) and percentage change
(Amounts in millions)	2020			2019			2020 vs. 2019
Net earned premiums:
Individual long-term care insurance	$	611		$	599		$	12		2	%
Group long-term care insurance		31			29			2		7	%

Total	$	642		$	628		$	14		2	%

Loss ratio		78	%		81	%		(3	)%

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.

Net earned premiums ~~decreased~~increased in the current year largely from ~~policy terminations, partially offset by $17~~$34 million of increased premiums ~~in the current year~~ from

in-force

rate actions approved and ~~implemented.~~

implemented, partially offset by policy terminations and policies entering

paid-up

status in the current year.

The loss ratio decreased largely related to the ~~decrease in benefits and other changes in reserves, partially offset by the lower~~higher premiums as discussed above.

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Life insurance

The following table sets forth selected operating performance measures regarding our life insurance business as of or for the dates indicated:

   As of or for the three
months ended March 31,    Increase
(decrease) and
percentage
change
(Amounts in millions)
   2019    2018    2019 vs. 2018
Term and whole life insurance

Net earned premiums
   $ 81    $ 91    $ (10 )    (11 )%
Life insurancein-force, net of reinsurance
   95,245    102,100    (6,855 )    (7 )%
Life insurancein-force before reinsurance
   427,879    454,051    (26,172 )    (6 )%
Term universal life insurance

Net deposits
   $ 58    $ 61    $ (3 )    (5 )%
Life insurancein-force, net of reinsurance
   114,894    117,967    (3,073 )    (3 )%
Life insurancein-force before reinsurance
   115,691    118,810    (3,119 )    (3 )%
Universal life insurance

Net deposits
   $ 76    $ 132    $ (56 )    (42 )%
Life insurancein-force, net of reinsurance
   34,961    36,472    (1,511 )    (4 )%
Life insurancein-force before reinsurance
   39,785    41,642    (1,857 )    (4 )%
Total life insurance

Net earned premiums and deposits
   $ 215    $ 284    $ (69 )    (24 )%
Life insurancein-force, net of reinsurance
   245,100    256,539    (11,439 )    (4 )%
Life insurancein-force before reinsurance
   583,355    614,503    (31,148 )    (5 )%


	As of or for the three months ended March 31,				Increase (decrease) and percentage change
(Amounts in millions)	2020		2019		2020 vs. 2019
Term and whole life insurance
Net earned premiums	$	76	$	81		$ (5	)	(6	)%
Life insurance in-force, net of reinsurance		75,992		95,245		(19,253	)	(20	)%
Life insurance in-force before reinsurance		389,553		427,879		(38,326	)	(9	)%

Term universal life insurance
Net deposits	$	56	$	58	$	(2	)	(3	)%
Life insurance in-force, net of reinsurance		111,945		114,894		(2,949	)	(3	)%
Life insurance in-force before reinsurance		112,710		115,691		(2,981	)	(3	)%

Universal life insurance
Net deposits	$	71	$	76	$	(5	)	(7	)%
Life insurance in-force, net of reinsurance		33,552		34,961		(1,409	)	(4	)%
Life insurance in-force before reinsurance		38,144		39,785		(1,641	)	(4	)%

Total life insurance
Net earned premiums and deposits	$	203	$	215	$	(12	)	(6	)%
Life insurance in-force, net of reinsurance		221,489		245,100		(23,611	)	(10	)%
Life insurance in-force before reinsurance		540,407		583,355		(42,948	)	(7	)%

We no longer solicit sales of our traditional life insurance products; however, we continue to service our existing blocks of business.

Term and whole life insurance

Net earned premiums ~~and life insurancein-force~~ decreased mainly attributable to the continued runoff of our term life insurance products in the current year. ~~Earned premiums~~ Life insurance

in-force

also decreased ~~due to higher reinsurance rates in the current year.~~

~~Universal life insurance~~

~~Net deposits decreased primarily attributable to $50 million~~as a result of ~~funding agreements with the Federal Home Loan Bank of Atlanta in the prior year that did not recur and from~~ the continued runoff of our~~in-force~~ ~~block~~ term life insurance products in the current ~~year.~~

year, including higher lapses primarily associated with a large

20-year

term life insurance block entering its post-level premium period.

Fixed annuities

The following table sets forth selected operating performance measures regarding our fixed annuities business as of or for the dates indicated:

   As of or for the three
months ended March 31,
(Amounts in millions)
   2019    2018
Account value, beginning of period
   $ 14,348    $ 16,401
Deposits
   29    22
Surrenders, benefits and product charges
   (516 )    (536 )




Net flows
   (487 )    (514 )
Interest credited and investment performance
   142    106
Effect of accumulated net unrealized investment gains (losses)
   106    (112 )




Account value, end of period
   $ 14,109    $ 15,881


	As of or for the three months ended March 31,
(Amounts in millions)	2020			2019
Account value, beginning of period	$	13,023		$	14,348
Deposits		22			29
Surrenders, benefits and product charges		(467	)		(516	)

Net flows		(445	)		(487	)
Interest credited and investment performance		61			142
Effect of accumulated net unrealized investment gains (losses)		(152	)		106

Account value, end of period	$	12,487		$	14,109

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We no longer solicit sales of our traditional fixed annuity products; however, we continue to service our existing block of business.

Account value decreased compared to December 31, ~~2018~~2019 as surrenders, benefits and net unrealized investment losses exceeded interest credited.

Runoff segment

COVID-19

Similar to our U.S. life insurance businesses, the most significant impacts from

COVID-19

in our Runoff segment are related to the current low interest rate environment and volatile equity market environment. The low interest rate environment and declining equity markets have materially adversely impacted earnings in our variable annuity products; however, if mortality is higher in future months, it could benefit earnings in these products in future quarters.

While certain states currently have mandates in place that policies cannot be lapsed, we do not expect a significant impact on our Runoff segment. Our variable annuity, variable life insurance and corporate-owned life insurance products have not been actively sold since 2011. There is no requirement to pay premiums in the majority of our variable annuity contracts and benefits ~~exceeded~~would adjust contractually based on actual premiums paid in these products.

While the impact of

COVID-19

is very difficult to predict, the related outcomes and impact on our Runoff segment will depend on the length of the pandemic and shape of the economic recovery. We could see additional losses and declines in statutory risk-based capital driven by increases to the required capital supporting our variable annuity products, as a result of the decline in equity markets and low interest ~~credited~~rates. For a further discussion of the impact of interest rates, see “Item 7A—Quantitative and ~~unrealized investment gains.~~

~~Runoff segment~~

Qualitative Disclosures About Market Risk” in our 2019 Annual Report on Form

10-K.

Trends and conditions

Results of our Runoff segment are affected primarily by investment performance, interest rate levels, net interest spreads, equity market conditions, mortality, ~~policyholder loan activity, policyholder~~ surrenders and scheduled maturities. In addition, the results of our Runoff segment can significantly impact our ~~operating performance,~~ regulatory capital requirements, distributable earnings and liquidity.

We ~~discontinued sales of our individual~~use hedging strategies as well as liquidity planning and ~~group variable annuities~~asset-liability management to help mitigate the impacts. In addition, we may consider reinsurance opportunities to further mitigate volatility in ~~2011; however, we continue to service our existing blocks of variable annuity business~~results and ~~accept additional deposits on existing contracts.~~ manage capital in the future.

Equity market volatility ~~has~~and interest rate movements have caused fluctuations in the results of our variable annuity products and regulatory capital requirements. In the future, equity and interest rate market performance and volatility could result in additional gains or losses in ~~our variable annuity~~these products although associated hedging activities are expected to partially mitigate these impacts. ~~Volatility in the results~~

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Table of our variable annuity products can result in favorable or unfavorable impacts on earnings and statutory capital. In addition to the use of hedging activities to help mitigate impacts related to equity market volatility and interest rate risks, in the future, we may consider reinsurance opportunities to further mitigate volatility in results and manage capital.

The results of our institutional products are impacted by scheduled maturities of the liabilities, credit and interest income performance on assets, as well as liquidity levels. While we do not actively sell institutional products, we may periodically issue funding agreements for asset-liability matching purposes.

~~Several factors may impact the time period for these products to runoff including the specific policy types, economic conditions and management strategies.~~

Contents

Segment results of operations

Three Months Ended March 31, ~~2019~~2020 Compared to Three Months Ended March 31, ~~2018~~

2019

The following table sets forth the results of operations relating to our Runoff segment for the periods indicated:

   Three months ended
March 31,    Increase
(decrease) and
percentage
change
(Amounts in millions)
   2019    2018    2019 vs. 2018
Revenues:

Net investment income
   $ 47    $ 42    $ 5    12 %
Net investment gains (losses)
   —      (14 )    14    100 %
Policy fees and other income
   35    40    (5 )    (13 )%







Total revenues
   82    68    14    21 %







Benefits and expenses:

Benefits and other changes in policy reserves
   1    8    (7 )    (88 )%
Interest credited
   41    37    4    11 %
Acquisition and operating expenses, net of deferrals
   13    15    (2 )    (13 )%
Amortization of deferred acquisition costs and intangibles
   2    7    (5 )    (71 )%







Total benefits and expenses
   57    67    (10 )    (15 )%







Income before income taxes
   25    1    24    NM ⁽¹⁾
Provision for income taxes
   5    —      5    NM ⁽¹⁾







Net income
   20    1    19    NM ⁽¹⁾
Adjustments to net income:

Net investment (gains) losses, net⁽²⁾
   —      12    (12 )    (100 )%
Taxes on adjustments
   —      (3 )    3    100 %







Adjusted operating income available to Genworth Financial, Inc.’scommon stockholders
   $ 20    $ 10    $ 10    100 %


	Three months ended March 31,					Increase (decrease) and percentage change
(Amounts in millions)	2020			2019		2020 vs. 2019
Revenues:
Net investment income	$	49		$	47	$	2		4	%
Net investment gains (losses)		(75	)		—		(75	)	NM	(1)
Policy fees and other income		33			35		(2	)	(6	)%

Total revenues		7			82		(75	)	(91	)%

Benefits and expenses:
Benefits and other changes in policy reserves		20			1		19		NM	(1)
Interest credited		41			41		—		—	%
Acquisition and operating expenses, net of deferrals		13			13		—		—	%
Amortization of deferred acquisition costs and intangibles		17			2		15		NM	(1)

Total benefits and expenses		91			57		34		60	%

Income (loss) from continuing operations before income taxes		(84	)		25		(109	)	NM	(1)
Provision (benefit) for income taxes		(18	)		5		(23	)	NM	(1)

Income (loss) from continuing operations		(66	)		20		(86	)	NM	(1)
Adjustments to income (loss) from continuing operations:
Net investment (gains) losses, net (2)		67			—		67		NM	(1)
Taxes on adjustments		(14	)		—		(14	)	NM	(1)

Adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders	$	(13	)	$	20	$	(33	)	(165	)%

⁽¹⁾	We define “NM” as not meaningful for increases or decreases greater than 200%.

⁽²⁾	For the three months ended March 31, ~~2018,~~2020, net investment (gains) losses were adjusted for DAC and other intangible amortization and certain benefit reserves of ~~$(2)~~$(8) million.

Adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders

The decrease to an adjusted operating loss available to Genworth Financial, Inc.’s common stockholders in the current year from adjusted operating income available to Genworth Financial, Inc.’s common stockholders

~~Adjusted operating income available to Genworth Financial, Inc.’s common stockholders increased~~ in the prior year was predominantly from ~~favorable~~the decline in equity ~~market performance~~markets and interest rates in the current year.

Revenues

~~Net investment income increased mainly driven by higher policy loan income in our corporate-owned life insurance products in the current year.~~

Net investment losses in the ~~prior~~current year were largely related to ~~derivative~~ losses ~~partially offset by gains~~ on embedded derivatives associated with our variable annuity products with guaranteed minimum withdrawal benefits (“GMWBs”).

~~Policy fees and other income decreased principally from lower fee income driven mostly~~, partially offset by ~~a decline in the average account values in our variable annuity products in the current year.~~

derivative gains.

Benefits and expenses

Benefits and other changes in policy reserves ~~decreased~~increased primarily attributable to ~~lower~~higher GMDB reserves in our variable annuity products due to ~~favorable~~unfavorable equity market performance in the current year.

~~Interest credited increased largely related to higher account values in our corporate-owned life insurance products in the current year.~~

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Amortization of deferred acquisition costs and ~~intangible decreased~~intangibles increased mainly related to higher DAC amortization in our variable annuity products ~~mainly~~principally from ~~favorable~~unfavorable equity market performance in the current year.

Provision (benefit) for income ~~taxes.~~taxes

. The ~~provision for income taxes~~effective tax rate was 22.0% and 19.4% for the three months ended March 31, 2020 and 2019, respectively. The increase was primarily the result of ~~higher~~a

pre-tax ~~income.~~

loss in the current year compared to
pre-tax
income in the prior year.

Runoff selected operating performance measures

Variable annuity and variable life insurance products

The following table sets forth selected operating performance measures regarding our variable annuity and variable life insurance products as of or for the dates indicated:

   As of or for the three
months ended March 31,
(Amounts in millions)
   2019    2018
Account value, beginning of period
   $ 4,918    $ 5,884
Deposits
   7    7
Surrenders, benefits and product charges
   (161 )    (208 )




Net flows
   (154 )    (201 )
Interest credited and investment performance
   349    (64 )




Account value, end of period
   $ 5,113    $ 5,619


	As of or for the three months ended March 31,
(Amounts in millions)	2020			2019
Account value, beginning of period	$	5,042		$	4,918
Deposits		4			7
Surrenders, benefits and product charges		(166	)		(161	)

Net flows		(162	)		(154	)
Interest credited and investment performance		(359	)		349

Account value, end of period	$	4,521		$	5,113

We no longer solicit sales of our variable annuity or variable life insurance products; however, we continue to service our existing blocks of business and accept additional deposits on existing contracts and policies.

Account value ~~increased~~decreased compared to December 31, ~~2018~~2019 primarily related to ~~favorable~~unfavorable equity market performance ~~partially offset by~~and surrenders in the current year.

Institutional products

The following table sets forth selected operating performance measures regarding our institutional products as of or for the dates indicated:

   As of or for the three
months ended March 31,
(Amounts in millions)
   2019    2018
Funding Agreements

Account value, beginning of period
   $ 381    $ 260
Surrenders and benefits
   (78 )    (76 )




Net flows
   (78 )    (76 )
Interest credited
   2    1




Account value, end of period
   $ 305    $ 185


	As of or for the three months ended March 31,
(Amounts in millions)	2020			2019
Funding Agreements
Account value, beginning of period	$	253		$	381
Surrenders and benefits		(1	)		(78	)

Net flows		(1	)		(78	)
Interest credited		1			2

Account value, end of period	$	253		$	305

Account value related to our institutional products decreased compared to ~~December~~March 31, ~~2018~~2019 mainly attributable to scheduled maturities of certain funding agreements in the ~~current year.~~

prior year that did not recur.

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Table of Contents

Corporate and Other Activities

Results of operations

Three Months Ended March 31, ~~2019~~2020 Compared to Three Months Ended March 31, ~~2018~~

2019

The following table sets forth the results of operations relating to Corporate and Other activities for the periods indicated:

   Three months ended
March 31,    Increase
(decrease) and
percentage
change
(Amounts in millions)
   2019    2018    2019 vs. 2018
Revenues:

Premiums
   $ 2    $ 2    $ —      —   %
Net investment income
   3    2    1    50 %
Net investment gains (losses)
   (21 )    (1 )    (20 )    NM ⁽¹⁾
Policy fees and other income
   1    (2 )    3    150 %







Total revenues
   (15 )    1    (16 )    NM ⁽¹⁾







Benefits and expenses:

Benefits and other changes in policy reserves
   1    1    —      —   %
Acquisition and operating expenses, net of deferrals
   7    11    (4 )    (36 )%
Amortization of deferred acquisition costs and intangibles
   —      1    (1 )    (100 )%
Interest expense
   61    65    (4 )    (6 )%







Total benefits and expenses
   69    78    (9 )    (12 )%







Loss before income taxes
   (84 )    (77 )    (7 )    (9 )%
Provision (benefit) for income taxes
   5    (17 )    22    129 %







Net loss
   (89 )    (60 )    (29 )    (48 )%
Adjustments to net loss:

Net investment (gains) losses
   21    1    20    NM ⁽¹⁾
Taxes on adjustments
   (5 )    —      (5 )    NM ⁽¹⁾







Adjusted operating loss available to Genworth Financial, Inc.’s common stockholders
   $ (73 )    $ (59 )    $ (14 )    (24 )%


	Three months ended March 31,						Increase (decrease) and percentage change
(Amounts in millions)	2020			2019			2020 vs. 2019
Revenues:
Premiums	$	2		$	2		$	—		—	%
Net investment income		6			2			4		200	%
Net investment gains (losses)		46			(21	)		67		NM	(1)
Policy fees and other income		1			1			—		—	%

Total revenues		55			(16	)		71		NM	(1)

Benefits and expenses:
Benefits and other changes in policy reserves		1			1			—		—	%
Acquisition and operating expenses, net of deferrals		18			13			5		38	%
Interest expense		46			53			(7	)	(13	)%

Total benefits and expenses		65			67			(2	)	(3	)%

Loss from continuing operations before income taxes		(10	)		(83	)		73		88	%
Provision (benefit) for income taxes		2			(9	)		11		122	%

Loss from continuing operations		(12	)		(74	)		62		84	%
Adjustments to loss from continuing operations:
Net investment (gains) losses		(46	)		21			(67	)	NM	(1)
Losses on early extinguishment of debt		8			—			8		NM	(1)
Expenses related to restructuring		1			—			1		NM	(1)
Taxes on adjustments		8			(5	)		13		NM	(1)

Adjusted operating loss available to Genworth Financial, Inc.’s common stockholders	$	(41	)	$	(58	)	$	17		29	%

⁽¹⁾	We define “NM” as not meaningful for increases or decreases greater than 200%.

Adjusted operating loss available to Genworth Financial, Inc.’s common stockholders

The adjusted operating loss available to Genworth Financial, Inc.’s common stockholders ~~increased~~decreased primarily related to ~~$12 million of~~lower interest expense and higher ~~taxes~~investment income in the current year.

Revenues

Net investment income increased primarily from higher average invested assets in the current year.

The change to net investment gains in the current year ~~associated with~~from net investment losses in the ~~GILTI provision of the TCJA and from $13 million of unfavorable provisional tax adjustments. These decreases were partially offset by lower interest expense and operating costs~~prior year was predominantly related to derivative gains in the current ~~year.~~

~~Revenues~~

~~Net investment losses increased predominantly from higher~~year compared to derivative losses in the ~~current~~prior year.

Benefits and expenses

Acquisition and operating expenses, net of deferrals, ~~decreased~~increased mainly driven by a make-whole premium of $9 million related to the early redemption of Genworth Holdings’ senior notes originally scheduled to mature in June 2020 and higher employee-related expenses, partially offset by lower operating ~~costs and a decrease in employee related~~ expenses in the current year.

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Interest expense decreased largely driven by the early redemption of ~~$597 million of~~ Genworth ~~Holding’s~~Holdings’ senior notes originally scheduled to mature in ~~May 2018,~~June 2020.

The provision for income taxes for the three months ended March 31, 2020 primarily related to discrete and

non-deductible

expenses, partially offset by ~~higher interest expense attributable~~a tax benefit related to the ~~term loan that Genworth Holdings closed in March 2018 and from our junior subordinated notes which had a higher floating rate of interest in the current year.~~

pre-tax

loss. The ~~effective tax rate decreased to (5.3)%~~benefit for income taxes for the three months ended March 31, 2019 ~~from 22.0% for the three months ended March 31, 2018. The decrease~~ was principally ~~driven by a~~from the tax ~~expense in the current year~~benefit related to the ~~GILTI~~

pre-tax

loss, partially offset by tax expenses related to the Global Intangible Low Taxed Income provision of the TCJA and gains on forward starting swaps settled prior to the enactment of the TCJA.

Investments and Derivative Instruments

Trends and conditions

Investments—credit and investment markets

During the first quarter of 2020, the U.S. Federal Reserve decreased interest rates 150 basis points in response to the negative economic impact of

COVID-19.

The accommodative economic policies from ~~unfavorable provisional tax adjustments~~the U.S. Federal Reserve and negative growth expectations drove U.S. Treasury yields down approximately 100 to 150 basis points, setting new record lows, with the decline in ~~relation~~short-term interest rates outpacing the decline in long-term interest rates. The

10-year

Treasury yield fell to a ~~higherpre-tax~~ ~~loss. GILTI has~~low of 54 basis points during the first quarter of 2020, over 80 basis points lower than the previous historic low set in July 2016, before finishing the first quarter of 2020 at 70 basis points.

Preliminary economic data related to

COVID-19

indicate an ~~unfavorable impact on our current year tax provision due~~upcoming recession, with record U.S. initial unemployment claims of approximately 30 million through late April 2020, negative monthly inflation and historically low retail sales and industrial production. In response to the ~~utilization of net operating loss carryforwards~~ escalating risks from

COVID-19

and ~~projected taxable losses~~ in an effort to stimulate the U.S. ~~life insurance~~economy, the CARES Act was signed into law during the first quarter of 2020, which provided approximately $2.0 trillion of relief to individuals, businesses ~~without any offsetting~~and government agencies, including government assistance and income tax benefits to businesses and enhanced unemployment and health benefits to individuals. The global economic slowdown has driven other global central banks and foreign ~~tax~~governments to take similar accommodative actions to stabilize capital markets and implement fiscal stimulus to support their respective domestic economies.

Credit markets responded to

COVID-19

and the subsequent economic downturn with widening of credit ~~carryforwards. The unfavorable impact on the effective rate is~~spreads to recessionary levels. Stay at home orders and partial economic shutdowns are expected to ~~continue~~place strain on earnings and corporate balance sheets for the next two quarters and possibly for the remainder of ~~2019~~2020, which when combined with forced liquidations as a result of liquidity strains, further contributed to the credit spread widening. A crude oil price war triggered by supply and ~~into 2020.~~

~~Investments~~demand imbalance decreased crude oil prices over 60% in the current year and ~~Derivative Instruments~~

~~Trends~~contributed to additional credit spread widening and ~~conditions~~

~~Investments—credit and investment markets~~

~~The~~pressure to the energy sector. On March 23, 2020, the U.S. Federal Reserve ~~increased its benchmark lending rate four times in 2018. Ongoing global trade tensions, declining commodity prices, slower global growth~~announced new quantitative easing programs to help support credit markets, including a $2.3 trillion program that includes a $750 billion corporate credit facility to purchase investment grade and ~~a negative inflation outlook drove~~certain high yield corporate securities, amongst other facilities to support the ~~central bank~~loan, municipal and structured markets. This support from the U.S. Federal Reserve helped reverse some of the initial credit spread widening resulting from

COVID-19,

with credit spreads continuing to ~~revise its interest rate path in~~tighten during April 2020 but remaining near recessionary levels.

During the first quarter of ~~2019. The U.S. Federal Reserve now projects no rate increases in 2019~~2020, we did not have any modifications or extensions of commercial mortgage loans that were considered troubled debt restructurings. As a result of

COVID-19

, we expect the number of modifications or extensions related to our commercial mortgage loans to increase during the remainder of 2020. We are working with individual borrowers impacted by

COVID-19

to provide alternative forms of relief for a specified period of time. Most of our borrowers are current on payments and ~~forecasts one rate increase in 2020,~~we do not anticipate a ~~meaningful change~~significant impact from ~~its December 2018 projection of two rate increases in 2019 and one~~troubled debt restructurings in 2020.

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The ~~U.S. Federal Reserve’s policy revision coupled~~United Kingdom completed its exit from the European Union (“Brexit”) on January 31, 2020. In accordance with ~~more accommodative monetary policies fromnon-U.S.~~ ~~central banks drove both domestic~~the current withdrawal agreement, the legal exit is followed by a transition period that ends on December 31, 2020, during which the United Kingdom continues to remain within the European Union’s single market and ~~foreign government bond yields lower in~~customs union. During the ~~first quarter of 2019,~~transition period, the United Kingdom is expected to negotiate and finalize a trade agreement with ~~short-term interest rate declines outpacing decreases in long-term interest rates. Portions~~the European Union which will lay out the terms of the ~~U.S. Treasury yield curve inverted in late March 2019, as~~future trading relation between the ~~yield on the U.S.10-year~~ ~~Treasury note dipped below the yield on the3-month~~ Treasury bill, though subsequent to quarter end this inversion normalized. Credit markets generally recovered from spread widening seen in the fourth quarter of 2018, with spreads tightening in the first quarter of 2019 driven by healthy consumer demand, corporate profits, investor demand for bonds and lower government bond yields.

two parties. The nature, timing and implications of ~~the United Kingdom’s proposed withdrawal from the European Union (“Brexit”)~~these trade negotiations remain uncertain. On April 10, 2019, the European Union Council approved a negotiation extension with a deadline of October 31, 2019. While this extension removes the near-term risks of the United Kingdom leaving the European Union with neither a trade agreement nor a transition period in place, it still leaves many open items and uncertainties. Likewise, the United Kingdom will be required to participate in the European Union Parliamentary elections from May 23, 2019 through May 26, 2019 unless the United Kingdom Parliament approves a withdrawal package before that time.

Our investment portfolio ~~maintains~~maintained approximately ~~$2.4~~$2.6 billion of United Kingdom exposure, or approximately 3%4% of total ~~invested assets. We hold~~fixed maturity securities as of March 31, 2020. These assets were primarily U.S. dollar-denominated fixed-income investments and we held no direct United Kingdom sovereign exposure. ~~These assets are almost exclusively fixed income instruments and are primarily U.S. dollar denominated.~~

While the ultimate range of Brexit outcomes could lead to potential credit devaluation or rating agency downgrades of our United Kingdom related ~~exposures,~~investments, at this time, we do not believe there is a material risk of investment impairments arising from the various Brexit scenarios.

As of March 31, ~~2019,~~2020, our fixed ~~maturities~~maturity securities portfolio, which was ~~97%~~96% investment grade, comprised ~~85%~~81% of our total ~~investment portfolio.~~

invested assets and cash.

Derivatives

Several of our master swap agreements ~~contain~~previously contained credit downgrade provisions that ~~allow~~allowed either party to assign or terminate the derivative ~~transactions~~transaction if the other party’s long-term unsecured ~~debt rating~~credit or financial strength

rating iswas below the limit defined in the applicable agreement. ~~Beginning in 2018, we~~We renegotiated with many of our counterparties to remove the credit downgrade provisions from the master swap agreements entirely or replace itthem with a provision that allows the counterparty to terminate the derivative ~~transactions~~transaction if the RBC ratio of the applicable insurance company goes below a certain ~~threshold.~~threshold and as of March 31, 2020, none of our insurance company master swap agreements have credit downgrade provisions. As of March 31, ~~2019,~~2020, the RBC ratios of the respective insurance companies were above the thresholds negotiated in the applicable master swap agreements and therefore, no counterparty ~~has any~~had rights ~~under a traditional ratings-based trigger and one counterparty has rights~~to take action against us under the RBC ~~trigger but has not exercised its right to terminate or revise the terms of its transactions with us.~~

threshold provisions.

As of March 31, ~~2019, $10.4~~2020, $8.0 billion notional of our derivatives portfolio was cleared through the Chicago Mercantile Exchange (“CME”). The customer swap agreements that govern our cleared derivatives contain provisions that enable our clearing agents to request initial margin in excess of CME requirements. As of March 31, ~~2019,~~2020, we posted initial margin of ~~$233~~$319 million to our clearing agents, which represented approximately ~~$70~~$94 million more than was otherwise required by the clearinghouse. Because our clearing agents serve as guarantors of our obligations to the CME, the customer agreements contain broad termination provisions that are not specifically dependent on ratings. As of March 31, ~~2019, $14.2~~2020, $10.9 billion notional of our derivatives portfolio was in bilateral

over-the-counter

(“OTC”) derivative transactions pursuant to which we have posted aggregate independent amounts of ~~$318~~$448 million and are holding collateral from counterparties in the amount of ~~$74~~$1,018 million.

In July 2017, the United Kingdom Financial Conduct Authority announced its intention to transition away from the LIBOR, with its full elimination to occur after 2021. The announcement indicates that LIBOR may not continue to be available on the current basis (or at all) after 2021. The last committed publication date for LIBOR is December 31, 2021. The Alternate Reference Rate Committee, convened by the Board of Governors of the Federal Reserve System and the New York Federal Reserve Bank, has endorsed the Secured Overnight Financing Rate (“SOFR”) as its preferred replacement benchmark for U.S. dollar LIBOR. SOFR is calculated and published by the New York Federal Reserve Bank and reflects the combination of three overnight U.S. Treasury Repo Rates. The rate is different from LIBOR, in that it is a risk-free rate, is backward-looking instead of forward-looking, is a secured rate and currently is available primarily as an overnight rate rather than as

1-,

and

6-month

rates available for LIBOR. Upon the announcement, we formed a working group comprised of finance, investments, derivative, and tax professionals, as well as lawyers (the “Working Group”) to evaluate contracts

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and perform analysis of our LIBOR-based derivative instrument and investment exposure, as well as debt (including subordinated debt and Federal Home Loan Bank loans), reinsurance agreements and institutional products within the Runoff segment, as a result of the elimination of LIBOR. The Working Group took inventory of all investments with LIBOR exposure and identified nearly 400 instruments.

We employ derivatives primarily for the purpose of hedging interest rate risk. The more closely a rate hedging instrument aligns with Treasury rate movements, the more effective it is. As a result, to the extent changes in SOFR in relation to Treasury movements were to differ meaningfully from those of LIBOR, a SOFR-based hedge could be relatively less effective. We currently track both LIBOR and SOFR changes and analyze each in comparison to Treasury rate movements. We have ~~notional~~discovered that the difference between the two comparisons is de minimis. Therefore, we do not believe a move to SOFR will have a material impact on our derivatives portfolio. Although we expect a minimal impact from this conversion, we remain actively engaged with the broader financial services community on the topic of ~~$3.0 billion~~SOFR, including conversations with peers, derivatives clearinghouses, bilateral dealers and external legal counsel. With regard to derivatives, we expect the process for implementing SOFR as a replacement rate to be relatively seamless. The International Swap and Derivatives Association (“ISDA”) has developed a contractual supplement to derivatives trading documentation that includes triggers and fallbacks for determining the replacement for a benchmark rate. The supplement may be agreed to between counterparties or through an ISDA protocol. In addition, ISDA has drafted an amendment to the 2006 Interbank Offered Rate definitions and a related protocol for legacy transactions.

For our other instruments and contracts, including investments, debt and reinsurance contracts, there is a wide variety in ~~bilateral OTC~~replacement language ranging from a rate freeze to silence on the matter. With respect to instruments that include a rate replacement, we will comply with the process prescribed by each instrument. For investments that do not contain such a replacement, we will generally endeavor to agree upon a replacement rate with our counterparties well in advance of LIBOR’s transition. In some cases, such as our long-term junior subordinated notes that mature in 2066 and are linked to three-month LIBOR, we may decide not to replace LIBOR which would

lock-in

the last published rate. We understand that the investment community is inclined to adopt SOFR as a substitute rate. Therefore, the adoption of SOFR will add certainty to the process of replacing LIBOR as the reference rate for many instruments. We do acknowledge the complications in calculating the credit spread necessary to equate SOFR to LIBOR and will monitor the potential risk.

We are at different stages of assessing operational readiness for LIBOR cessation related to our various instruments. These stages range from derivatives, where we are fully operationally ready, to other products and instruments, as well as tax impacts, where we have just begun our assessment process. Our Working Group will continue to monitor the ~~counterparty has~~process of elimination and replacement of LIBOR. Since the ~~right~~initial announcement, we have terminated a portion of our LIBOR-based swaps and entered into alternative rate swaps. In anticipation of the elimination of LIBOR, we plan to ~~terminate its transactions~~continue to convert our remaining LIBOR-based derivatives in a similar manner. In addition, our

non-recourse

funding obligations with usinterest rates based on

one-month

LIBOR were redeemed in January 2020. We expect to implement additional measures that we believe will ease the transition from LIBOR. Even though we have begun to take these actions, as described above, it is too early to determine the ultimate impact the elimination of LIBOR will have on our ~~current ratings. Given our current ratings, our ability to enter into new derivative transactions could be limited.~~

results of operations or financial condition.

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Investment results

The following table sets forth information about our investment income, excluding net investment gains (losses), for each component of our investment portfolio for the periods indicated:

   Three months ended March 31, Increase (decrease)
   2019 2018 2019 vs. 2018
(Amounts in millions)
   Yield Amount Yield Amount Yield Amount
Fixed maturity securities—taxable
   4.5 % $ 643 4.4 % $ 635 0.1 % $ 8
Fixed maturitysecurities—non-taxable
   6.1 % 2 3.7 % 3 2.4 % (1 )
Equity securities
   5.6 % 9 5.1 % 10 0.5 % (1 )
Commercial mortgage loans
   4.8 % 81 5.2 % 82 (0.4 )% (1 )
Restricted commercial mortgage loans related toa securitization entity
   6.7 % 1 7.8 % 2 (1.1 )% (1 )
Policy loans
   9.5 % 46 9.6 % 43 (0.1 )% 3
Other invested assets⁽¹⁾
   33.5 % 59 39.6 % 39 (6.1 )% 20
Cash, cash equivalents, restricted cash andshort-term investments
   2.0 % 12 1.3 % 12 0.7 % —


Gross investment income before expenses and fees
   4.8 % 853 4.8 % 826 —   % 27
Expenses and fees
   (0.1 )% (24 ) (0.2 )% (22 ) 0.1 % (2 )


Net investment income
   4.7 % $ 829 4.6 % $ 804 0.1 % $ 25


Average invested assets and cash
   $ 70,355 $ 70,699 $ (344 )


	Three months ended March 31,												Increase (decrease)
	2020						2019						2020 vs. 2019
(Amounts in millions)	Yield			Amount			Yield			Amount			Yield			Amount
Fixed maturity securities—taxable		4.6	%	$	622			4.6	%	$	613			—	%	$	9
Fixed maturity securities—non-taxable		5.2	%		2			6.1	%		2			(0.9	)%		—
Equity securities		3.8	%		2			6.1	%		4			(2.3	)%		(2	)
Commercial mortgage loans		4.9	%		85			4.8	%		82			0.1	%		3
Policy loans		9.5	%		49			9.5	%		46			—	%		3
Other invested assets (1)		17.7	%		47			33.5	%		59			(15.8	)%		(12	)
Cash, cash equivalents, restricted cash and short-term investments		1.4	%		11			2.1	%		11			(0.7	)%		—

Gross investment income before expenses and fees		4.9	%		818			5.0	%		817			(0.1	)%		1
Expenses and fees		(0.2	)%		(25	)		(0.2	)%		(23	)		—	%		(2	)

Net investment income		4.7	%	$	793			4.8	%	$	794			(0.1	)%	$	(1	)

Average invested assets and cash				$	67,334					$	65,678					$	1,656

⁽¹⁾

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

calculation and includes limited partnership investments, which are primarily equity-based and do not have fixed returns by period.

Yields are based on net investment income as reported under U.S. GAAP and are consistent with how we measure our 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.

For the three months ended March 31, ~~2019,~~2020, annualized weighted-average investment yields ~~increased slightly~~decreased primarily ~~attributable to $13~~driven by lower investment income on higher average invested assets. Net investment income included $17 million of lower limited partnership income, mostly offset by $10 million of higher ~~limited partnership~~prepayment speed adjustments on structured securities and $6 million of higher income ~~partially offset by lower average invested assets.~~

related to inflation-driven volatility on U.S. Government Treasury Inflation Protected Securities.

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The following table sets forth net investment gains (losses) for the periods indicated:

   Three months ended
March 31,
(Amounts in millions)
   2019    2018
Available-for-sale securities:

Realized gains
   $ 81    $ 7
Realized losses
   (22 )    (16 )




Net realized gains (losses) onavailable-for-sale securities
   59    (9 )




Impairments:

Total other-than-temporary impairments
   —      —
Portion of other-than-temporary impairments recognized inother comprehensive income
   —      —




Net realized gains (losses) on equity securities sold
   3    2
Net unrealized gains (losses) on equity securities still held
   8    (18 )
Limited partnerships
   15    7
Commercial mortgage loans
   (1 )    —
Derivative instruments
   (10 )    (13 )




Net investment gains (losses)
   $ 74    $ (31 )

Three months ended
March 31,

(Amounts in millions)

2020

2019

Available-for-sale
fixed maturity securities:

Realized gains
$
14
$
79

Realized losses

(1
)
(21
)

Net realized gains (losses) on
available-for-sale
fixed maturity securities

13

58

Impairments:

Total other-than-temporary impairments

—

—

Portion of other-than-temporary impairments recognized in other
comprehensive income

—

—

Net other-than-temporary impairments

—

—

Net change in allowance for credit losses on
available-for-sale
fixed maturity
securities

—

—

Net realized gains (losses) on equity securities sold

—

3

Net unrealized gains (losses) on equity securities still held

(19
)
12

Limited partnerships

(40
)
15

Commercial mortgage loans

—

(1
)
Derivative instruments

(105
)
(12
)
Other

(1
)
—

Net investment gains (losses)
$
(152
) $
75

Three Months Ended March 31, ~~2019~~2020 Compared to Three Months Ended March 31, ~~2018~~

2019

We recorded net ~~realized~~ gains ~~of $59 million~~ related to the sale of~~available-for-sale~~ fixed maturity securities ~~primarily driven by the sale~~ of ~~Separate Trading of Registered Interest and Principal of Securities, cash tenders and investment exchanges from merger and acquisition activity compared to $9~~$13 million ~~of net losses~~ during the three months ended March 31, ~~2018.~~

2020 primarily driven by portfolio rebalancing and asset exposure management. We recorded net realized gains of $58 million during the three months ended March 31, 2019 primarily related to cash tenders from merger and acquisition activity.

The change into net unrealized losses on equity securities and limited partnership investments during the three months ended March 31, 2020 from net unrealized gains ~~(losses) on equity securities is largely related to favorable~~during the three months ended March 31, 2019 was primarily from unfavorable equity market performance in the current year compared to ~~a slightly unfavorable~~favorable equity market performance in the prior year.

We recorded ~~higher~~ net ~~gains on limited partnership investments~~losses related to derivatives of $105 million during the three months ended March 31, 2020 primarily associated with hedging programs that support our runoff variable annuity products and losses from our foreign currency hedging programs that support our Australia Mortgage Insurance segment due to the decline in the ~~current year principally~~Australian dollar, partially offset by gains from ~~favorable~~hedging programs used to protect statutory surplus from equity market ~~performance.~~

fluctuations.

We recorded net losses related to derivatives of $12 million during the three months ended March 31, 2019 primarily associated with losses related to hedging programs for our runoff variable annuity products and fixed indexed annuity products, partially offset by gains from hedging programs that support our long-term care insurance products and losses from derivatives used to hedge foreign currency risk associated with expected dividend payments from our Australia mortgage insurance business.

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Investment portfolio

The following table sets forth our cash, cash equivalents, restricted cash and invested assets as of the dates indicated:

   March 31, 2019 December 31, 2018
(Amounts in millions)
   Carrying value    % of total Carrying value    % of total
Fixed maturity securities,available-for-sale:

Public
   $ 42,585    57 % $ 41,857    58 %
Private
   18,775    25 17,804    25
Equity securities
   635    1 655    1
Commercial mortgage loans
   6,929    9 6,687    8
Restricted commercial mortgage loans related to a securitization entity
   59    —   62    —
Policy loans
   1,994    3 1,861    3
Other invested assets
   1,208    2 1,188    2
Cash, cash equivalents and restricted cash
   2,221    3 2,177    3






Total cash, cash equivalents, restricted cash and invested assets
   $ 74,406    100 % $ 72,291    100 %


	March 31, 2020					December 31, 2019
(Amounts in millions)	Carrying value		% of total			Carrying value		% of total
Fixed maturity securities, available-for-sale:
Public	$	41,864		57	%	$	42,162		57	%
Private		17,187		24			18,177		24
Equity securities		188		—			239		—
Commercial mortgage loans, net		6,915		10			6,963		9
Policy loans		2,052		3			2,058		3
Other invested assets		2,465		3			1,632		2
Cash, cash equivalents and restricted cash		2,483		3			3,341		5

Total cash, cash equivalents, restricted cash and invested assets	$	73,154		100	%	$	74,572		100	%

For a discussion of the change in cash, cash equivalents, restricted cash and invested assets, see the comparison for this line item under “—Consolidated Balance Sheets.” See note 4 in our unaudited condensed consolidated financial statements under “Item 1—Financial Statements” for additional information related to our investment portfolio.

We hold fixed maturity and equity securities, derivatives, embedded derivatives, securities held as collateral and certain other financial instruments, which are carried at fair value. Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. As of March 31, ~~2019,~~2020, approximately 6%7% of our investment holdings recorded at fair value ~~were~~was based on significant inputs that were not market observable and were classified as Level 3 measurements. See note 6 in our unaudited condensed consolidated financial statements under “Item 1—Financial Statements” for additional information related to fair value.

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Fixed maturity securities

As of March 31, 2020, the amortized cost or cost, gross unrealized gains (losses), allowance for credit losses and fair value of our fixed maturity securities classified as

available-for-sale

were as follows:


(Amounts in millions)	Amortized cost or cost		Gross unrealized gains		Gross unrealized losses			Allowance for credit losses		Fair value
Fixed maturity securities:
U.S. government, agencies and government-sponsoredenterprises	$	4,041	$	1,730	$	—		$	—	$	5,771
State and political subdivisions		2,495		374		(5	)		—		2,864
Non-U.S. government		1,118		92		(9	)		—		1,201
U.S. corporate:
Utilities		4,333		556		(22	)		—		4,867
Energy		2,426		51		(385	)		—		2,092
Finance and insurance		7,179		548		(104	)		—		7,623
Consumer—non-cyclical		5,006		725		(46	)		—		5,685
Technology and communications		3,000		312		(37	)		—		3,275
Industrial		1,304		72		(31	)		—		1,345
Capital goods		2,420		272		(28	)		—		2,664
Consumer—cyclical		1,628		134		(43	)		—		1,719
Transportation		1,344		152		(23	)		—		1,473
Other		295		40		(1	)		—		334

Total U.S. corporate		28,935		2,862		(720	)		—		31,077

Non-U.S. corporate:
Utilities		757		24		(16	)		—		765
Energy		1,158		42		(102	)		—		1,098
Finance and insurance	��	2,023		128		(40	)		—		2,111
Consumer—non-cyclical		639		43		(8	)		—		674
Technology and communications		1,021		96		(8	)		—		1,109
Industrial		877		63		(29	)		—		911
Capital goods		546		25		(10	)		—		561
Consumer—cyclical		362		12		(12	)		—		362
Transportation		554		62		(13	)		—		603
Other		1,475		155		(25	)		—		1,605

Total non-U.S. corporate		9,412		650		(263	)		—		9,799

Residential mortgage-backed (1)		2,032		258		(17	)		—		2,273
Commercial mortgage-backed		2,876		169		(64	)		—		2,981
Other asset-backed		3,227		12		(154	)		—		3,085

Total available-for-sale fixed maturity securities	$	54,136	$	6,147	$	(1,232	)	$	—	$	59,051

(1)	Fair value included $8 million collateralized by Alt-A residential mortgage loans and $19 million collateralized by sub-prime residential mortgage loans.

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As of December 31, 2019, the amortized cost or cost, gross unrealized gains (losses) and fair value of our fixed maturity securities classified as

available-for-sale

were as follows:

Gross unrealized gains Gross unrealized losses
(Amounts in millions)
Amortized
cost or
cost Not other-than-
temporarily
impaired Other-than-
temporarily
impaired Not other-than-
temporarily
impaired Other-than-
temporarily
impaired Fair
value
Fixed maturity securities:

U.S. government, agencies andgovernment-sponsored enterprises
$ 4,116 $ 619 $ —   $ (4 ) $ —   $ 4,731
State and political subdivisions
2,329 223 —   (6 ) —   2,546
Non-U.S. government
2,403 121 —   (6 ) —   2,518
U.S. corporate:

Utilities
4,296 426 —   (37 ) —   4,685
Energy
2,447 186 —   (15 ) —   2,618
Finance and insurance
6,883 405 —   (37 ) —   7,251
Consumer—non-cyclical
4,905 407 —   (55 ) —   5,257
Technology and communications
2,832 161 —   (19 ) —   2,974
Industrial
1,194 67 —   (12 ) —   1,249
Capital goods
2,283 225 —   (19 ) —   2,489
Consumer—cyclical
1,579 83 —   (16 ) —   1,646
Transportation
1,271 107 —   (16 ) —   1,362
Other
379 33 —   (1 ) —   411

Total U.S. corporate
28,069 2,100 —   (227 ) —   29,942

Non-U.S. corporate:

Utilities
1,100 36 —   (9 ) —   1,127
Energy
1,327 124 —   (4 ) —   1,447
Finance and insurance
2,434 129 —   (9 ) —   2,554
Consumer—non-cyclical
699 19 —   (9 ) —   709
Technology and communications
1,151 52 —   (6 ) —   1,197
Industrial
920 56 —   (3 ) —   973
Capital goods
644 21 —   (3 ) —   662
Consumer—cyclical
537 8 —   (4 ) —   541
Transportation
756 65 —   (6 ) —   815
Other
2,127 139 —   (6 ) —   2,260

Totalnon-U.S. corporate
11,695 649 —   (59 ) —   12,285

Residential mortgage-backed⁽¹⁾
2,762 181 13 (6 ) —   2,950
Commercial mortgage-backed
2,946 64 —   (48 ) —   2,962
Other asset-backed
3,422 18 1 (15 ) —   3,426

Totalavailable-for-sale fixedmaturity securities
$ 57,742 $ 3,975 $ 14 $ (371 ) $ —   $ 61,360


	Gross unrealized gains						Gross unrealized losses
(Amounts in millions)	Amortized cost or cost		Not other-than- temporarily impaired		Other-than- temporarily impaired		Not other-than- temporarily impaired			Other-than- temporarily impaired		Fair value
Fixed maturity securities:
U.S. government, agencies andgovernment-sponsored enterprises	$	4,073	$	952	$	—	$	—		$	—	$	5,025
State and political subdivisions		2,394		355		—		(2	)		—		2,747
Non-U.S. government		1,235		117		—		(2	)		—		1,350
U.S. corporate:
Utilities		4,322		675		—		—			—		4,997
Energy		2,404		303		—		(8	)		—		2,699
Finance and insurance		6,977		798		—		(1	)		—		7,774
Consumer—non-cyclical		4,909		796		—		(4	)		—		5,701
Technology and communications		2,883		363		—		(1	)		—		3,245
Industrial		1,271		125		—		—			—		1,396
Capital goods		2,345		367		—		(1	)		—		2,711
Consumer—cyclical		1,590		172		—		(2	)		—		1,760
Transportation		1,320		187		—		(1	)		—		1,506
Other		292		30		—		—			—		322

Total U.S. corporate		28,313		3,816		—		(18	)		—		32,111

Non-U.S. corporate:
Utilities		779		50		—		—			—		829
Energy		1,140		179		—		—			—		1,319
Finance and insurance		2,087		232		—		—			—		2,319
Consumer—non-cyclical		631		55		—		(2	)		—		684
Technology and communications		1,010		128		—		—			—		1,138
Industrial		896		92		—		—			—		988
Capital goods		565		40		—		—			—		605
Consumer—cyclical		373		24		—		—			—		397
Transportation		557		73		—		(1	)		—		629
Other		1,431		188		—		(2	)		—		1,617

Total non-U.S. corporate		9,469		1,061		—		(5	)		—		10,525

Residential mortgage-backed (1)		2,057		199		15		(1	)		—		2,270
Commercial mortgage-backed		2,897		137		—		(8	)		—		3,026
Other asset-backed		3,262		30		—		(7	)		—		3,285

Total available-for-sale fixed maturity securities	$	53,700	$	6,667	$	15	$	(43	)	$	—	$	60,339

⁽¹⁾	Fair value included ~~$18~~$9 million collateralized by Alt-A residential mortgage loans and ~~$22~~$24 million collateralized by sub-prime residential mortgage loans.

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Table of ~~December 31, 2018, the amortized cost or cost, gross unrealized gains (losses) and fair value of our fixed maturity securities classified asavailable-for-sale~~ ~~were as follows:~~

Gross unrealized gains Gross unrealized losses
Amortized Not other-than- Other-than- Not other-than- Other-than-
cost or temporarily temporarily temporarily temporarily Fair
(Amounts in millions)
cost impaired impaired impaired impaired value
Fixed maturity securities:

U.S. government, agencies and government-sponsored enterprises
$ 4,175 $ 473 $ —   $ (17 ) $ —   $ 4,631
State and political subdivisions
2,406 168 —   (22 ) —   2,552
Non-U.S. government
2,345 72 —   (24 ) —   2,393
U.S. corporate:

Utilities
4,439 331 —   (95 ) —   4,675
Energy
2,382 101 —   (64 ) —   2,419
Finance and insurance
6,705 249 —   (132 ) —   6,822
Consumer—non-cyclical
4,891 294 —   (137 ) —   5,048
Technology and communications
2,823 110 —   (78 ) —   2,855
Industrial
1,230 41 —   (33 ) —   1,238
Capital goods
2,277 165 —   (51 ) —   2,391
Consumer—cyclical
1,592 53 —   (48 ) —   1,597
Transportation
1,283 78 —   (41 ) —   1,320
Other
376 24 —   (3 ) —   397

Total U.S. corporate
27,998 1,446 —   (682 ) —   28,762

Non-U.S. corporate:

Utilities
1,056 17 —   (32 ) —   1,041
Energy
1,320 72 —   (23 ) —   1,369
Finance and insurance
2,391 72 —   (40 ) —   2,423
Consumer—non-cyclical
756 8 —   (25 ) —   739
Technology and communications
1,168 23 —   (26 ) —   1,165
Industrial
926 36 —   (17 ) —   945
Capital goods
615 10 —   (10 ) —   615
Consumer—cyclical
532 1 —   (13 ) —   520
Transportation
689 46 —   (15 ) —   720
Other
2,218 105 —   (23 ) —   2,300

Totalnon-U.S. corporate
11,671 390 —   (224 ) —   11,837

Residential mortgage-backed⁽¹⁾
2,888 160 13 (17 ) —   3,044
Commercial mortgage-backed
3,054 43 —   (81 ) —   3,016
Other asset-backed
3,444 10 1 (29 ) —   3,426

Totalavailable-for-sale fixedmaturity securities
$ 57,981 $ 2,762 $ 14 $ (1,096 ) $ —   $ 59,661

⁽¹⁾	~~Fair value included $19 million collateralized byAlt-A~~ ~~residential mortgage loans and $22 million collateralized bysub-prime~~ ~~residential mortgage loans.~~

Contents

Fixed maturity securities ~~increased by $1.7~~decreased $1.3 billion compared to December 31, ~~2018~~2019 principally from ~~higher~~a decrease in net unrealized gains ~~attributable to~~primarily from credit spread widening on our corporate and structured securities, partially offset by an increase in net unrealized gains on U.S. government, agencies and government-sponsored enterprises securities from a decrease in interest rates in the current year.

The decrease in fixed maturity securities was also partially offset by purchases exceeding sales, maturities and repayments during the first quarter of 2020.

Commercial mortgage loans

The following tables set forth additional information regarding our commercial mortgage loans as of the dates indicated:

   March 31, 2019
(Dollar amounts in millions)
   Total recorded
investment    Number of
loans    Loan-to-value ⁽¹⁾ Delinquent
principal balance    Number of
delinquent
loans
Loan Year

2008 and prior
   $ 1,264    443    39 % $ 3    1
2009
   —      —      —   % —      —
2010
   48    10    37 % —      —
2011
   186    45    40 % —      —
2012
   462    80    45 % —      —
2013
   643    120    48 % —      —
2014
   754    131    52 % —      —
2015
   871    139    58 % —      —
2016
   547    95    61 % —      —
2017
   764    143    66 % —      —
2018
   1,035    165    69 % —      —
2019
   369    40    73 % —      —








Total
   $ 6,943    1,411    55 % $ 3    1


	March 31, 2020
(Dollar amounts in millions)	Total amortized cost		Number of loans		Debt-to-value (1)			Delinquent principal balance		Number of delinquent loans
Loan Year
2010 and prior	$	1,138		398		36	%	$	—		—
2011		163		41		37	%		—		—
2012		405		74		41	%		—		—
2013		570		113		46	%		—		—
2014		703		128		50	%		—		—
2015		810		133		55	%		—		—
2016		507		92		58	%		—		—
2017		735		141		60	%		—		—
2018		1,003		164		66	%		—		—
2019		803		111		71	%		—		—
2020		107		18		69	%		—		—

Total	$	6,944		1,413		54	%	$	—		—

⁽¹⁾	Represents weighted-average~~loan-to-value~~ debt-to-value as of March 31, ~~2019.~~ 2020.

   December 31, 2018
(Dollar amounts in millions)
   Total recorded
investment    Number of
loans    Loan-to-value ⁽¹⁾ Delinquent
principal balance    Number of
delinquent
loans
Loan Year

2008 and prior
   $ 1,310    459    39 % $ 3    1
2009
   —      —      —   % —      —
2010
   50    11    37 % —      —
2011
   193    46    41 % —      —
2012
   476    81    45 % —      —
2013
   656    122    48 % 3    1
2014
   772    133    53 % —      —
2015
   877    139    58 % —      —
2016
   553    96    61 % —      —
2017
   773    144    66 % —      —
2018
   1,040    165    69 % —      —








Total
   $ 6,700    1,396    54 % $ 6    2


	December 31, 2019
(Dollar amounts in millions)	Total recorded investment		Number of loans		Debt-to-value (1)			Delinquent principal balance		Number of delinquent loans
Loan Year
2010 and prior	$	1,182		419		37	%	$	—		—
2011		168		42		38	%		—		—
2012		415		75		42	%		—		—
2013		579		114		47	%		—		—
2014		720		129		50	%		—		—
2015		833		136		56	%		—		—
2016		517		93		59	%		—		—
2017		740		141		61	%		—		—
2018		1,019		165		66	%		—		—
2019		807		111		71	%		—		—

Total	$	6,980		1,425		54	%	$	—		—

⁽¹⁾	Represents weighted-average~~loan-to-value~~ debt-to-value as of December 31, ~~2018.~~ 2019.

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Other invested assets

The following table sets forth the carrying values of our other invested assets as of the dates indicated:

   March 31, 2019 December 31, 2018
(Amounts in millions)
   Carrying value    % of total Carrying value    % of total
Limited partnerships
   $ 462    38 % $ 409    34 %
Bank loan investments
   294    25 248    21
Derivatives
   187    15 178    15
Short-term investments
   139    12 230    19
Securities lending collateral
   106    9 102    9
Other investments
   20    1 21    2






Total other invested assets
   $ 1,208    100 % $ 1,188    100 %


	March 31, 2020					December 31, 2019
(Amounts in millions)	Carrying value		% of total			Carrying value		% of total
Derivatives	$	1,101		44	%	$	290		18	%
Limited partnerships		671		27			634		39
Bank loan investments		409		17			383		23
Short-term investments		213		9			260		16
Securities lending collateral		58		2			51		3
Other investments		13		1			14		1

Total other invested assets	$	2,465		100	%	$	1,632		100	%

Derivatives increased largely from a decrease in interest rates in the current year. Limited partnerships increased primarily from additional capital investments, ~~and from net unrealized gains,~~ partially offset by net unrealized losses and return of capital ~~on our investments~~ in the current year. Short-term investments decreased ~~principally~~ due to ~~net sales~~maturities and ~~maturities~~unfavorable changes in ~~our Australia and Canada Mortgage Insurance segments in the current year.~~

foreign exchange rates.

Derivatives

The activity associated with derivative instruments can generally be measured by the change in notional value over the periods presented. However, for GMWB embedded derivatives, fixed index annuity embedded derivatives and indexed universal life embedded derivatives, the change between periods is best illustrated by the number of policies. The following tables represent activity associated with derivative instruments as of the dates indicated:

(Notional in millions)
   Measurement    December 31,
2018    Additions    Maturities/
terminations March 31,
2019
Derivatives designated as hedges

Cash flow hedges:

Interest rate swaps
   Notional    $ 9,924    $ —      $ (654 ) $ 9,270
Foreign currency swaps
   Notional    80    35    (22 ) 93






Total cash flow hedges
      10,004    35    (676 ) 9,363






Total derivatives designated as hedges
      10,004    35    (676 ) 9,363






Derivatives not designated as hedges

Interest rate swaps
   Notional    4,674    —      —   4,674
Interest rate swaps in a foreign currency
   Notional    2,565    98    (44 ) 2,619
Interest rate caps and floors
   Notional    2,624    84    (38 ) 2,670
Foreign currency swaps
   Notional    453    —      (2 ) 451
Equity index options
   Notional    2,628    503    (580 ) 2,551
Financial futures
   Notional    1,415    1,759    (1,968 ) 1,206
Equity return swaps
   Notional    17    1    —   18
Other foreign currency contracts
   Notional    1,080    1,386    (1,414 ) 1,052






Total derivatives not designated as hedges
      15,456    3,831    (4,046 ) 15,241






Total derivatives
      $ 25,460    $ 3,866    $ (4,722 ) $ 24,604






(Number of policies)
   Measurement    December 31,
2018    Additions    Maturities/
terminations March 31,
2019
Derivatives not designated as hedges

GMWB embedded derivatives
   Policies    27,886    —      (577 ) 27,309
Fixed index annuity embedded derivatives
   Policies    16,464    —      (213 ) 16,251
Indexed universal life embedded derivatives
   Policies    929    —      (11 ) 918


(Notional in millions)	Measurement		December 31, 2019		Additions		Maturities/ terminations			March 31, 2020
Derivatives designated as hedges
Cash flow hedges:
Interest rate swaps		Notional	$	8,968	$	1,158	$	(1,102	)	$	9,024
Foreign currency swaps		Notional		110		—		—			110

Total cash flow hedges				9,078		1,158		(1,102	)		9,134

Total derivatives designated as hedges				9,078		1,158		(1,102	)		9,134

Derivatives not designated as hedges
Interest rate swaps		Notional		4,674		—		—			4,674
Equity index options		Notional		2,451		509		(531	)		2,429
Financial futures		Notional		1,182		1,651		(1,266	)		1,567
Other foreign currency contracts		Notional		628		1,819		(1,308	)		1,139

Total derivatives not designated as hedges				8,935		3,979		(3,105	)		9,809

Total derivatives			$	18,013	$	5,137	$	(4,207	)	$	18,943


(Number of policies)	Measurement		December 31, 2019		Additions		Maturities/ terminations			March 31, 2020
Derivatives not designated as hedges
GMWB embedded derivatives		Policies		25,623		—		(561	)		25,062
Fixed index annuity embedded derivatives		Policies		15,441		—		(317	)		15,124
Indexed universal life embedded derivatives		Policies		884		—		(18	)		866

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The ~~decrease~~increase in the notional value of derivatives was primarily attributable to ~~terminations of interest rate swaps that support our long-term care insurance business, partially offset by interest rate swaps~~an increase in foreign currency derivatives entered into to hedge a potential adverse legal settlement related to asserted claims denominated in a foreign currency and ~~interest rate caps and floors related~~an increase in financial futures to ~~our hedging strategy to mitigate interest rate risk~~hedge the GMWB liability associated with our ~~regulatory capital position.~~

runoff variable annuity products.

The number of policies related to our embedded derivatives decreased as these products are no longer being offered and continue to runoff.

Consolidated Balance Sheets

Total assets

. Total assets ~~increased $1,265~~decreased $2,498 million from ~~$100,923~~$101,342 million as of December 31, ~~2018~~2019 to ~~$102,188~~$98,844 million as of March 31, ~~2019.~~

2020.

Cash, cash equivalents, restricted cash and invested assets ~~increased $2,115~~decreased $1,418 million primarily from ~~increases~~decreases of ~~$1,699~~$1,288 million, ~~$239~~$858 million, and ~~$133~~$51 million in fixed maturity securities, ~~commercial mortgage loans~~cash, cash equivalents and ~~policy loans,~~restricted cash and equity securities, respectively. The ~~increase~~decrease in fixed maturity securities was

predominantly related to lower unrealized gains principally from credit spread widening, largely in our U.S. and

non-U.S.

~~predominantly related to higher market values as a result of a decrease in interest rates,~~corporate bond investments, partially offset by net sales of fixed maturity securities in the current year. Commercial mortgage loans increased from higher originations and lower prepayments in the current year. The increase in policy loans was principally driven by new loans offered through our corporate-owned life insurance policies collateralized by the cash surrender value of the policy.

~~DAC decreased $1,044 million predominantly related to our U.S. Life Insurance segment. We are required to analyze the impacts from net unrealized investment gains and losses on ouravailable-for-sale~~ ~~investment securities backing insurance liabilities, as if those unrealized investment gains and losses were realized. During the three months ended March 31, 2019, due primarily to~~ a decrease in interest rates ~~increasing unrealized investment gains, we decreased the DAC balance of~~favorably impacting our U.S. Life Insurance segment by $975 million, resulting in a cumulative decrease of $1,470 million to the DAC balance as of March 31, 2019, with an offsetting amount recorded in other comprehensive income (loss). The decrease was also attributable to amortization,government bond investments and net ~~of interest and deferrals, in our U.S. Life Insurance segment~~purchases in the current year.

The decrease in cash, cash equivalents and restricted cash was largely related to the early redemption of Genworth Holdings’ senior notes originally scheduled to mature in June 2020, the early repayment of Rivermont I’s

non-recourse

funding obligations originally due in 2050 and net purchases of fixed maturity securities in the current year. Equity securities decreased principally from unfavorable equity market performance driven in large part by

COVID-19.

These decreases were partially offset by an increase of $833 million in other invested assets primarily from lower interest rates increasing derivative assets in the current year.

Deferred tax asset decreased ~~$163~~$106 million primarily due to higher unrealized gains on derivatives, partially offset by lower unrealized gains on investments ~~and derivatives~~ in the current year.

Separate account assets ~~increased $351~~decreased $1,141 million primarily due to ~~favorable~~unfavorable equity market performance ~~partially offset by net cash outflows mostly~~and surrenders in ~~our variable annuity business as~~ the ~~business continues to run off.~~

current year.

Total liabilities

. Total liabilities ~~increased $572~~decreased $2,700 million from ~~$86,734~~$86,710 million as of December 31, ~~2018~~2019 to ~~$87,306~~$84,010 million as of March 31, ~~2019.~~

2020.

Future policy benefits ~~increased $429~~decreased $1,045 million primarily driven by ~~our long-term insurance business largely from aging~~shadow accounting adjustments associated with the recognition of ~~thein-force~~ ~~block. In addition, as discussed above, the decrease in interest rates increased our~~lower unrealized ~~investments~~ gains. ~~As a result, we increased~~The shadow accounting adjustments decreased future policy benefits by approximately ~~$306~~$1,110 million, mostly in our long-term care insurance business, with an offsetting amount recorded in other comprehensive income (loss).

This decrease was partially offset by aging of our long-term care insurance

in-force

block and an increase in incremental reserves of $41 million recorded in connection with an accrual for profits followed by losses in the current year.

Policyholder account balances ~~decreased $317~~increased $96 million largely ~~as a result of~~attributable to our variable annuity business from unfavorable equity market performance, partially offset by surrenders and benefits in our fixed annuities business ~~and from scheduled maturities of certain funding agreements in our institutional products~~ in the current year.

Liability for policy and contract claims increased ~~$157~~$174 million due principally to our long-term care insurance business primarily ~~from~~attributable to new claims, which includes higher new claims frequency as a result of the aging of the

in-force

block, ~~(including higher frequency of new claims) and~~as well as higher severity, ~~of new claims,~~ partially offset by favorable development on prior year incurred but not reported claims ~~and favorable claim terminations~~ in the current year. ~~These increases were partially offset by lower delinquencies in~~

Unearned premiums decreased $171 million principally related to our ~~U.S.~~Australia mortgage insurance business ~~along~~due primarily to changes in foreign exchange rates, as the U.S. dollar strengthened against the

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Australian dollar as compared to the December 31, 2019 balance sheet rate. The decrease was also attributable to earned premiums outpacing written premiums in our U.S. mortgage insurance business and from policy terminations and policies entering

paid-up

status in our long-term care insurance business.

Non-recourse

funding obligations decreased $311 million due to the early redemption of Rivermont I’s outstanding

non-recourse

funding obligations originally due in 2050.

Long-term borrowings decreased $426 million mainly attributable to the early redemption of Genworth Holdings’ 7.70% senior notes originally scheduled to mature in June 2020. In addition, Genworth Holdings repurchased $14 million principal amount of its senior notes with ~~timing differences~~2021 maturity dates in ~~claim disbursements and lower claim frequency in our life insurance products in the current year.~~

March 2020.

Total equity

. Total equity increased ~~$693~~$202 million from ~~$14,189~~$14,632 million as of December 31, ~~2018~~2019 to ~~$14,882~~$14,834 million as of March 31, ~~2019.~~

2020.

We reported a net ~~income~~loss available to Genworth Financial, Inc.’s common stockholders of ~~$174~~$66 million for the three months ended March 31, ~~2019.~~

2020. We also adopted new accounting guidance on January 1, 2020 related to estimating expected credit losses that was applied on a modified retrospective basis, resulting in a $55 million decrease to retained earnings in the current year.

~~Net unrealized gains (losses) and derivatives~~

Derivatives qualifying as hedges increased ~~$348~~$753 million ~~and $69 million, respectively,~~ primarily from a decrease in interest rates, partially offset by a decrease in net unrealized gains of $316 million driven largely by credit spread widening, mostly in our U.S. and

non-U.S.

corporate bond investments in the current year.

Noncontrolling interests increased $69 million predominantly related to total comprehensive income attributable to noncontrolling interests of $111 million, partially offset by dividends to noncontrolling interests of $28 million and the repurchase of shares of $12 million in the current year.

Liquidity and Capital Resources

Liquidity and capital resources represent our overall financial strength and our ability to generate cash flows from our businesses, borrow funds at competitive rates and raise new capital to meet our operating and growth needs.

Genworth and subsidiaries

The following table sets forth our unaudited condensed consolidated cash flows for the three months ended March 31:

(Amounts in millions)
   2019    2018
Net cash from operating activities
   $ 134    $ 109
Net cash from (used by) investing activities
   277    (167 )
Net cash from (used by) financing activities
   (375 )    47




Net increase (decrease) in cash before foreign exchange effect
   $ 36    $ (11 )


(Amounts in millions)	2020			2019
Net cash from operating activities	$	680		$	134
Net cash from (used by) investing activities		(551	)		277
Net cash used by financing activities		(957	)		(375	)

Net increase (decrease) in cash before foreign exchange effect	$	(828	)	$	36

Our principal sources of cash include sales of our products and services, income from our investment portfolio and proceeds from sales of investments. As an insurance business, we typically generate positive cash flows from operating activities, as premiums collected from our insurance products and income received from our investments typically exceed policy acquisition costs, benefits paid, redemptions and operating expenses. Our cash flows from operating activities are affected by the timing of premiums, fees and investment income received and benefits and expenses paid. Positive cash flows from operating activities are then invested to support the obligations of our insurance and investment products and required capital supporting these products. In analyzing our cash flow, we focus on the change in the amount of cash available and used in investing activities. Changes in cash from financing activities primarily relate to the issuance of, and redemptions and benefit payments on, universal life insurance and investment contracts; deposits from Federal Home Loan ~~Banks (“FHLBs”);~~Banks; the issuance and acquisition of debt and equity securities; the issuance and repayment or repurchase of borrowings and

non-recourse

funding obligations; and other capital transactions.

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We had higher cash inflows from operating activities in the current year mainly attributable to posting lower collateral with counterparties related to our derivative positions and a lower ~~tax payments, partially offset by new~~amount of policy loans issued in our corporate-owned life insurance product, partially offset by a $134 million interim litigation payment to AXA in the current year.

We had cash outflows from investing activities in the current year primarily driven by net purchases of fixed maturity securities and capital calls related to limited partnership investments, partially offset by net sales of short-term investments. We had cash inflows from investing activities in the ~~current~~prior year mainly driven by net sales of fixed maturity and equity securities, partially offset by commercial mortgage loan originations outpacing repayments.

We had cash outflows from investing activities in the prior year primarily driven by commercial mortgage loan originations and net purchases of fixed maturity securities, partially offset by net sales of short-term investments.

~~We had~~higher cash outflows from financing activities in the current year principally ~~driven~~from the early redemption of $397 million of Genworth Holdings’ senior notes originally scheduled to mature in June 2020, the early repayment of $315 million of Rivermont I’s

non-recourse

funding obligations originally due in 2050 and the repurchase of $14 million principal amount of Genworth Holdings’ senior notes with 2021 maturity dates, partially offset by lower net withdrawals from our investment contracts.

We had cash inflows from financing activities in the prior year largely from $441 million of net proceeds from the term loan closed in March 2018, partially offset by net withdrawals from our investment contracts.

~~In the United States and Canada, we~~ engage in certain securities lending transactions for the purpose of enhancing the yield on our investment securities portfolio. We maintain effective control over all loaned securities and, therefore, continue to report such securities as fixed maturity securities on the consolidated balance sheets. We are currently indemnified against counterparty credit risk by the intermediary.

Genworth—holding company

Genworth Financial and Genworth Holdings each act as a holding company for their respective subsidiaries and do not have any significant operations of their own. Dividends from their respective subsidiaries, payments

to them under tax sharing and expense reimbursement arrangements with their subsidiaries and proceeds from borrowings or securities issuances are their principal sources of cash to meet their obligations. Insurance laws and regulations regulate the payment of dividends and other distributions to Genworth Financial and Genworth Holdings by their insurance subsidiaries. We expect dividends paid by the insurance subsidiaries will vary depending on strategic objectives, capital levels, regulatory requirements and business ~~performance.~~

performance, including the expected adverse impacts from

COVID-19.

The primary uses of funds at Genworth Financial and Genworth Holdings include payment of holding company general operating expenses (including ~~taxes)~~taxes and litigation expenses related to discontinued operations), payment of principal, interest and other expenses on current and any future borrowings, payments under current and any future guarantees (including guarantees of certain subsidiary obligations), payment of amounts owed to GE under the Tax Matters Agreement, payments to subsidiaries (and, in the case of Genworth Holdings, to Genworth Financial) under tax sharing agreements, contributions to subsidiaries, repurchases of debt securities and, in the case of Genworth Holdings, loans, dividends or other distributions to Genworth Financial. In deploying future capital, important current priorities include focusing on our mortgage insurance businesses so they remain appropriately capitalized and accelerating progress on reducing overall indebtedness of Genworth Holdings. We may from time to time seek to repurchase or redeem outstanding notes for cash (with cash on hand, proceeds from the issuance of new debt and/or the proceeds from asset or stock sales) in open market purchases, tender offers, privately negotiated transactions or otherwise. We currently seek to address our indebtedness over time through repurchases, redemptions and/or repayments at maturity.

Our Board of Directors has suspended the payment of stockholder dividends on our Genworth Financial common stock indefinitely. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors and will be dependent on many factors including the receipt of dividends from our operating subsidiaries, our financial condition and operating results, the capital requirements of our subsidiaries, legal requirements, regulatory constraints, our debt obligations, our credit and financial strength ratings and such other factors as the Board of Directors deems relevant. In addition, our Board of

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Directors has suspended repurchases of our Genworth Financial common stock under our stock repurchase program indefinitely. The resumption of our stock repurchase program will be at the discretion of our Board of Directors.

Genworth Holdings had ~~$361~~$525 million and ~~$429~~$1,461 million of cash, cash equivalents and restricted cash as of March 31, ~~2019~~2020 and December 31, ~~2018, respectively, which included approximately $16 million of restricted cash in each period.~~2019. Genworth Holdings also held ~~$44~~$50 million and ~~$75~~$70 million in U.S. government securities as of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, which included approximately ~~$37~~$50 million and ~~$42~~$48 million, respectively, of restricted assets. The ~~$405 million of cash and liquid assets as of March 31, 2019 is below our targeted cash buffer of two times expected annual external debt interest payments, as described below. In addition,~~decrease in Genworth Holdings ~~has an~~cash, cash equivalents and restricted cash was principally driven by the repayment of long-term debt and intercompany ~~note with~~notes and a ~~principal amount of $200~~$134 million ~~due~~interim litigation payment to AXA. For additional details on ~~March 31, 2020.~~

the decrease in cash, cash equivalents and restricted cash, see below under “—Capital resources and financing activities.”

During the three months ended March 31, 2020 and 2019, Genworth Holdings received cash dividends from its international subsidiaries of $11 million and ~~2018,~~$47 million, respectively.

Due to the macroeconomic uncertainty resulting from COVID-19, we ~~received common stock~~may not receive further dividends from our ~~international subsidiaries~~mortgage insurance businesses in 2020. Future dividends and the timing of ~~$47 million~~their distribution will be reevaluated later in 2020 and ~~$63 million, respectively. Dividends in~~will depend on the first quarter of 2019 included proceeds of $14 million that we received through our participation in Normal Course Issuer Bid (“NCIB”) transactions completed by Genworth MI Canada Inc. (“Genworth Canada”) during the fourth quarter of 2018.

economic recovery from COVID-19.

Regulated insurance subsidiaries

The liquidity requirements of our regulated insurance subsidiaries principally relate to the liabilities associated with their various insurance and investment products, operating costs and expenses, the payment of dividends to us, contributions to their subsidiaries, payment of principal and interest on their outstanding debt obligations and income taxes. Liabilities arising from insurance and investment products include the payment of benefits, as well as cash payments in connection with policy surrenders and withdrawals, policy loans and obligations to redeem funding agreements.

Our insurance subsidiaries have used cash flows from operations and investment activities to fund their liquidity requirements. Our insurance subsidiaries’ principal cash inflows from operating activities are derived from premiums, annuity deposits and insurance and investment product fees and other income, including commissions, cost of insurance, mortality, expense and surrender charges, contract underwriting fees, investment management fees and dividends and distributions from their subsidiaries. The principal cash inflows from investment activities result from repayments of principal, investment income and, as necessary, sales of invested assets.

Our insurance subsidiaries maintain investment strategies intended to provide adequate funds to pay benefits without forced sales of investments. Products having liabilities with longer durations, such as certain life insurance and long-term care insurance policies, are matched with investments having similar duration such as long-term fixed maturity securities and commercial mortgage loans. Shorter-term liabilities are matched with fixed maturity securities that have short- and medium-term fixed maturities. In addition, our insurance subsidiaries hold highly liquid, high quality short-term investment securities and other liquid investment grade fixed maturity securities to fund anticipated operating expenses, surrenders and withdrawals. As of March 31, ~~2019,~~2020, our total cash, cash equivalents, restricted cash and invested assets were ~~$74.4~~$73.2 billion. Our investments in privately placed fixed maturity securities, commercial mortgage loans, policy loans, limited partnership investments and select mortgage-backed and asset-backed securities are relatively illiquid. These asset classes represented approximately ~~38%~~37% of the carrying value of our total cash, cash equivalents, restricted cash and invested assets as of March 31, ~~2019.~~

2020.

As of March 31, ~~2019 and December 31, 2018,~~2020, our U.S. mortgage insurance business was compliant with the PMIERs capital requirements, with a prudent buffer. ~~Reinsurance~~Credit risk transfer transactions provided an aggregate of approximately ~~$490~~

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$825 million of PMIERs capital credit as of March 31, ~~2019.~~2020. Our U.S. mortgage insurance business may execute future capital transactions to maintain a prudent level of financial flexibility in excess of the PMIERs capital requirements given the dynamic nature of asset valuations and requirement changes over time, including additional reinsurance ~~transactions and contributions of holding company cash.~~

~~In February 2019, Genworth Mortgage Insurance Australia Limited (“Genworth Australia”) announced its intention to commence anon-market~~ ~~sharebuy-back~~ ~~program for shares up to a maximum aggregate amount of AUD$100 million. The purchase of 38.6 million shares pursuant to thisbuy-back~~ ~~is covered by shareholder approval obtained in 2018. The remaining shares to be repurchased pursuant to thisbuy-back~~ will be subject to shareholder approval at its Annual General Meeting on May 9, 2019. The total number of shares to be purchased by Genworth Australia under the program will depend on business and market conditions, the prevailing share price, market volumes and other ~~considerations. In the first quarter of 2019, Genworth Australia repurchased approximately 12 million shares for AUD$29 million. As the majority shareholder, we participated inon-market~~ ~~sales transactions during thebuy-back~~ period to maintain our ownership position of approximately 52.1% and received $9 million in cash, $5 million of which was paid to Genworth Holdings as a dividend in the first quarter of 2019 with the remainder expected to be paid as a dividend to Genworth Holdings in the second quarter of 2019. If Genworth Australia decides to repurchase additional shares through the~~buy-back~~ ~~program, we plan to participate in order to maintain our ownership at its current level.~~

In April 2019, Genworth Canada announced acceptance by the Toronto Stock Exchange (“TSX”) of its Notice of Intention to Make an NCIB. Pursuant to the NCIB, Genworth Canada may, if considered advisable, purchase from time to time through May 6, 2020, up to an aggregate of approximately 4.4 million of its issued and outstanding common shares. If Genworth Canada decides to purchase shares through the NCIB, we intend to participate in order to maintain our overall ownership at its current level.

credit risk transfer transactions.

Capital resources and financing activities

In March 2020, Genworth Holdings repaid a $200 million intercompany note due to GLIC with a maturity date of March 31, 2020.

In March 2020, Genworth Holdings repurchased $14 million principal amount of its senior notes with 2021 maturity dates for a

pre-tax

gain of $1 million and paid accrued interest thereon. In April 2020, Genworth Holdings repurchased an additional $36 million principal amount of its senior notes with 2021 maturity dates for a

pre-tax

gain of $2 million.

On January 21, 2020, Genworth Holdings early redeemed $397 million of its 7.70% senior notes originally scheduled to mature in June 2020 for a

pre-tax

In January 2020, upon receipt of approval from the Director of Insurance of the State of South Carolina, Rivermont I, our indirect wholly-owned special purpose consolidated captive insurance subsidiary, redeemed all of its $315 million of outstanding

non-recourse

funding obligations due in 2050. The early redemption resulted in a

pre-tax

loss of $4 million from the

write-off

of deferred borrowing costs.

In January 2020, we made an interim payment to AXA for approximately $134 million, which was accrued as a contingent liability as of December 31, 2019. Additional amounts may be due following the damages hearing scheduled for June 2020. To date, AXA has submitted invoices to us claiming aggregate losses of approximately £489 million, of which £100 million ($134 million) was paid in January 2020. AXA is also seeking a tax gross-up on the amount invoiced for an additional £115 million. AXA may also claim and seek additional losses at the damages hearing scheduled for June 2020. See note 12 to our unaudited condensed consolidated financial statements under “Item 1—Financial Statements” for additional details.

We believe existing cash held at Genworth Holdings combined with dividends from operating subsidiaries, payments under tax sharing and expense reimbursement arrangements with subsidiaries, proceeds from

borrowings or securities issuances, and if necessary, sales of assets, as described below, will provide us with sufficient capital flexibility and liquidity to meet our projected future operating and financing requirements. We actively monitor our liquidity position, liquidity generation options and the credit markets given changing market conditions. Our cash management target is to maintain a cash buffer of two times expected annual external debt interest payments. During the first quarter of 2019, we fell below our targeted cash buffer by approximately $100 million mostly due to semi-annual interest payments and from the timing of certain cash payouts related to employee compensation expenses. We may move below or above our targeted cash buffer during any given quarter due to the timing of cash outflows and inflows or from future actions. We continue to evaluate our target level of liquidity as circumstances warrant. Additionally, we will continue to evaluate market influences on the valuation of our senior debt and may consider additional opportunities to repurchase our debt over time. We cannot predict with ~~any~~ certainty the impact to us from ~~any~~ future disruptions in the credit markets or the recent or any further future downgrades by one or more of the rating agencies of the financial strength ratings of our insurance company subsidiaries and/or the credit ratings of our holding ~~companies.~~company debt. In the absence of the transaction with China Oceanwide, we may need to pursue financing transactions or potential asset sales to address our debt maturities, ~~in 2020 and thereafter,~~ including a potential ~~sales of our mortgage insurance businesses in Canada and Australia. We have and would continue~~transaction with respect to ~~evaluate options to insulate~~ our U.S. mortgage insurance business ~~from additional ratings pressure, including a~~and/or our mortgage insurance business in Australia. The timing and feasibility of such potential ~~partial sale, in the event the transaction with China Oceanwide cannot~~transactions may adversely be ~~completed.~~affected by COVID-19. The availability of additional funding will depend on a variety of factors such as market conditions, regulatory considerations, the general availability of credit, the overall availability of credit to the financial services industry, the level of activity and availability of reinsurance, our credit ratings and credit capacity and the performance of and outlook for our business. For a discussion of certain risks associated with

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our liquidity, see “Item 1A—Risk Factors—Our internal sources of liquidity may be insufficient to meet our needs and our access to capital may be limited or unavailable. Under such conditions, we may seek additional capital but may be unable to obtain it” and “Litigation and regulatory investigations or other actions are common in the insurance business and may result in financial losses and harm our reputation” in our ~~2018~~2019 Annual Report on Form

10-K.

In addition, see note 12 to our unaudited condensed consolidated financial statements under “Item 1—Financial Statements” regarding the case captioned “
AXA S.A. v. Genworth Financial International Holdings, LLC et al
.,” for additional details on litigation, including potential further contingent liabilities. These risks may be exacerbated by the economic impact of COVID-19.

Contractual obligations and commercial commitments

~~There~~

Except as disclosed above, there have been no material additions or changes to our contractual obligations as compared to the amounts disclosed within our ~~2018~~2019 Annual Report on Form

10-K

filed on February 27, ~~2019.~~2020. For additional details related to our commitments, see note 1012 in our unaudited condensed consolidated financial statements under “Item 1—Financial Statements.

”

Supplemental Condensed Consolidating Financial Information

Genworth Financial provides a full and unconditional guarantee to the trustee of Genworth Holdings’ outstanding senior and subordinated notes and the holders of the senior and subordinated notes, on an unsecured unsubordinated and subordinated basis, respectively, of the full and punctual payment of the principal of, premium, if any and interest on, and all other amounts payable under, each outstanding series of senior notes and outstanding subordinated notes, and the full and punctual payment of all other amounts payable by Genworth Holdings under the senior and subordinated notes indentures in respect of such senior and subordinated notes. Genworth Holdings is a direct, 100% owned subsidiary of Genworth Financial.

The following supplemental condensed consolidating financial information of Genworth Financial and its direct and indirect subsidiaries has been prepared pursuant to rules regarding the preparation of consolidating financial information of Regulation

S-X,

as amended by the SEC on March 2, 2020. In the first quarter of 2020, we early applied new rules issued by the SEC by removing comparative prior year condensed consolidating financial information herein and presenting the supplemental condensed consolidating financial information outside the footnotes of our interim unaudited condensed consolidated financial statements. We continue to provide prior year annual period condensed consolidating financial information in accordance with the new amended rules.

The supplemental condensed consolidating financial information presents the condensed consolidating balance sheet information as of March 31, 2020 and December 31, 2019, the condensed consolidating income statement information, the condensed consolidating comprehensive income statement information and the condensed consolidating cash flow statement information for the three months ended March 31, 2020 and for the year ended December 31, 2019.

The supplemental condensed consolidating financial information reflects Genworth Financial (“Parent Guarantor”), Genworth Holdings (“Issuer”) and each of Genworth Financial’s other direct and indirect subsidiaries (the “All Other Subsidiaries”) on a combined basis, none of which guarantee the senior notes or subordinated notes, as well as the eliminations necessary to present Genworth Financial’s financial information on a consolidated basis and total consolidated amounts.

The accompanying supplemental condensed consolidating financial information is presented based on the equity method of accounting for all periods presented. Under this method, investments in subsidiaries are recorded at cost and adjusted for the subsidiaries’ cumulative results of operations, capital contributions and distributions, and other changes in equity. Elimination entries include consolidating and eliminating entries for investments in subsidiaries and intercompany activity.

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The following table presents the condensed consolidating balance sheet information as of March 31, 2020:


(Amounts in millions)		Parent Guarantor			Issuer			All Other Subsidiaries			Eliminations			Consolidated
Assets
Investments:
Fixed maturity securities available-for-sale, at fair value (amortized cost of $54,136 and allowance for credit losses of $—)		$	—		$	—		$	59,051		$	—		$	59,051
Equity securities, at fair value			—			—			188			—			188
Commercial mortgage loans (net of unamortized balance of loan origination fees and costs of $4)			—			—			6,944			—			6,944
Less: Allowance for credit losses			—			—			(29	)		—			(29	)

Commercial mortgage loans, net			—			—			6,915			—			6,915
Policy loans			—			—			2,052			—			2,052
Other invested assets			—			61			2,404			—			2,465
Investments in subsidiaries			14,352			15,436			—			(29,788	)		—

Total investments			14,352			15,497			70,610			(29,788	)		70,671
Cash, cash equivalents and restricted cash			—			525			1,958			—			2,483
Accrued investment income			—			—			707			—			707
Deferred acquisition costs			—			—			1,898			—			1,898
Intangible assets and goodwill			—			—			263			—			263
Reinsurance recoverable			—			—			17,122			—			17,122
Less: Allowance for credit losses			—			—			(42	)		—			(42	)

Reinsurance recoverable, net			—			—			17,080			—			17,080
Other assets			(2	)		233			225			—			456
Intercompany notes receivable			104			189			—			(293	)		—
Deferred tax assets			7			827			(515	)		—			319
Separate account assets	��		—			—			4,967			—			4,967

Total assets		$	14,461		$	17,271		$	97,193		$	(30,081	)	$	98,844


Liabilities and equity
Liabilities:
Future policy benefits		$	—		$	—		$	39,339		$	—		$	39,339
Policyholder account balances			—			—			22,313			—			22,313
Liability for policy and contract claims			—			—			11,132			—			11,132
Unearned premiums			—			—			1,722			—			1,722
Other liabilities			12			96			1,578			—			1,686
Intercompany notes payable			—			105			188			(293	)		—
Long-term borrowings			—			2,729			122			—			2,851
Separate account liabilities			—			—			4,967			—			4,967

Total liabilities			12			2,930			81,361			(293	)		84,010

Equity:
Common stock			1			—			3			(3	)		1
Additional paid-in capital			11,993			12,761			18,431			(31,192	)		11,993
Accumulated other comprehensive income (loss)			3,815			3,815			3,908			(7,723	)		3,815
Retained earnings			1,340			(2,235	)		(7,195	)		9,430			1,340
Treasury stock, at cost			(2,700	)		—			—			—			(2,700	)

Total Genworth Financial, Inc.’s stockholders’ equity			14,449			14,341			15,147			(29,488	)		14,449
Noncontrolling interests			—			—			685			(300	)		385

Total equity			14,449			14,341			15,832			(29,788	)		14,834

Total liabilities and equity		$	14,461		$	17,271		$	97,193		$	(30,081	)	$	98,844

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The following table presents the condensed consolidating balance sheet information as of December 31, 2019:


(Amounts in millions)	Parent Guarantor			Issuer			All Other Subsidiaries			Eliminations			Consolidated
Assets
Investments:
Fixed maturity securities available-for-sale, at fair value	$	—		$	—		$	60,539		$	(200	)	$	60,339
Equity securities, at fair value		—			—			239			—			239
Commercial mortgage loans ($47 are restricted related to a securitization entity)		—			—			6,963			—			6,963
Policy loans		—			—			2,058			—			2,058
Other invested assets		—			71			1,561			—			1,632
Investments in subsidiaries		14,079			15,090			—			(29,169	)		—

Total investments		14,079			15,161			71,360			(29,369	)		71,231
Cash, cash equivalents and restricted cash		—			1,461			1,880			—			3,341
Accrued investment income		—			—			657			(3	)		654
Deferred acquisition costs		—			—			1,836			—			1,836
Intangible assets and goodwill		—			—			201			—			201
Reinsurance recoverable		—			—			17,103			—			17,103
Other assets		4			48			392			(1	)		443
Intercompany notes receivable		119			132			—			(251	)		—
Deferred tax assets		13			821			(409	)		—			425
Separate account assets		—			—			6,108			—			6,108

Total assets	$	14,215		$	17,623		$	99,128		$	(29,624	)	$	101,342


Liabilities and equity
Liabilities:
Future policy benefits	$	—		$	—		$	40,384		$	—		$	40,384
Policyholder account balances		—			—			22,217			—			22,217
Liability for policy and contract claims		—			—			10,958			—			10,958
Unearned premiums		—			—			1,893			—			1,893
Other liabilities		30			99			1,438			(5	)		1,562
Intercompany notes payable		—			319			132			(451	)		—
Non-recourse funding obligations		—			—			311			—			311
Long-term borrowings		—			3,137			140			—			3,277
Separate account liabilities		—			—			6,108			—			6,108

Total liabilities		30			3,555			83,581			(456	)		86,710

Equity:
Common stock		1			—			3			(3	)		1
Additional paid-in capital		11,990			12,761			18,431			(31,192	)		11,990
Accumulated other comprehensive income (loss)		3,433			3,433			3,474			(6,907	)		3,433
Retained earnings		1,461			(2,126	)		(7,108	)		9,234			1,461
Treasury stock, at cost		(2,700	)		—			—			—			(2,700	)

Total Genworth Financial, Inc.’s stockholders’ equity		14,185			14,068			14,800			(28,868	)		14,185
Noncontrolling interests		—			—			747			(300	)		447

Total equity		14,185			14,068			15,547			(29,168	)		14,632

Total liabilities and equity	$	14,215		$	17,623		$	99,128		$	(29,624	)	$	101,342

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The following table presents the condensed consolidating income statement information for the three months ended March 31, 2020:


(Amounts in millions)	Parent Guarantor			Issuer			All Other Subsidiaries			Eliminations			Consolidated
Revenues:
Premiums	$	—		$	—		$	1,015		$	—		$	1,015
Net investment income		(1	)		5			792			(3	)		793
Net investment gains (losses)		—			10			(162	)		—			(152	)
Policy fees and other income		—			1			182			(2	)		181

Total revenues		(1	)		16			1,827			(5	)		1,837

Benefits and expenses:
Benefits and other changes in policy reserves		—			—			1,361			—			1,361
Interest credited		—			—			141			—			141
Acquisition and operating expenses, net of deferrals		8			10			231			—			249
Amortization of deferred acquisition costs and intangibles		—			—			116			—			116
Interest expense		—			49			8			(5	)		52

Total benefits and expenses		8			59			1,857			(5	)		1,919

Loss from continuing operations before income taxes and equity in loss of subsidiaries		(9	)		(43	)		(30	)		—			(82	)
Provision (benefit) for income taxes		3			(9	)		(4	)		—			(10	)
Equity in loss of subsidiaries		(54	)		(20	)		—			74			—

Loss from continuing operations		(66	)		(54	)		(26	)		74			(72	)
Income from discontinued operations, net of taxes		—			—			—			—			—

Net loss		(66	)		(54	)		(26	)		74			(72	)
Less: net loss from continuing operations attributable to noncontrolling interests		—			—			(6	)		—			(6	)
Less: net income from discontinued operations attributable to noncontrolling interests		—			—			—			—			—

Net loss available to Genworth Financial, Inc.’s common stockholders	$	(66	)	$	(54	)	$	(20	)	$	74		$	(66	)

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The following table presents the condensed consolidating income statement information for the year ended December 31, 2019:


(Amounts in millions)	Parent Guarantor			Issuer			All Other Subsidiaries		Eliminations			Consolidated
Revenues:
Premiums	$	—		$	—		$	4,037	$	—		$	4,037
Net investment income		(3	)		10			3,228		(15	)		3,220
Net investment gains (losses)		—			(5	)		55		—			50
Policy fees and other income		—			2			792		(5	)		789

Total revenues		(3	)		7			8,112		(20	)		8,096

Benefits and expenses:
Benefits and other changes in policy reserves		—			—			5,163		—			5,163
Interest credited		—			—			577		—			577
Acquisition and operating expenses, net of deferrals		20			—			942		—			962
Amortization of deferred acquisition costs and intangibles		—			—			441		—			441
Interest expense		3			231			25		(20	)		239

Total benefits and expenses		23			231			7,148		(20	)		7,382

Income (loss) from continuing operations before income taxes and equity in income of subsidiaries		(26	)		(224	)		964		—			714
Provision (benefit) for income taxes		(3	)		(45	)		243		—			195
Equity in income of subsidiaries		366			177			—		(543	)		—

Income (loss) from continuing operations		343			(2	)		721		(543	)		519
Income (loss) from discontinued operations, net of taxes		—			(140	)		151		—			11

Net income (loss)		343			(142	)		872		(543	)		530
Less: net income from continuing operations attributable to noncontrolling interests		—			—			64		—			64
Less: net income from discontinued operations attributable to noncontrolling interests		—			—			123		—			123

Net income (loss) available to Genworth Financial, Inc.’s common stockholders	$	343		$	(142	)	$	685	$	(543	)	$	343

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The following table presents the condensed consolidating comprehensive income statement information for the three months ended March 31, 2020:

													��
(Amounts in millions)	Parent Guarantor			Issuer			All Other Subsidiaries			Eliminations			Consolidated
Net loss	$	(66	)	$	(54	)	$	(26	)	$	74		$	(72	)
Other comprehensive income (loss), net of taxes:
Net unrealized gains (losses) on securities without an allowance for credit losses		(316	)		(316	)		(320	)		632			(320	)
Net unrealized gains (losses) on securities with an allowance for credit losses		—			—			—			—			—
Derivatives qualifying as hedges		753			753			803			(1,556	)		753
Foreign currency translation and other adjustments		(55	)		(55	)		(96	)		108			(98	)

Total other comprehensive income (loss)		382			382			387			(816	)		335

Total comprehensive income		316			328			361			(742	)		263
Less: comprehensive loss attributable to noncontrolling interests		—			—			(53	)		—			(53	)

Total comprehensive income available to Genworth Financial, Inc.’s common stockholders	$	316		$	328		$	414		$	(742	)	$	316

The following table presents the condensed consolidating comprehensive income statement information for the year ended December 31, 2019:


(Amounts in millions)	Parent Guarantor		Issuer			All Other Subsidiaries		Eliminations			Consolidated
Net income (loss)	$	343	$	(142	)	$	872	$	(543	)	$	530
Other comprehensive income (loss), net of taxes:
Net unrealized gains (losses) on securities not other-than-temporarily impaired		859		842			846		(1,701	)		846
Net unrealized gains (losses) on other-than-temporarily impaired securities		2		2			2		(4	)		2
Derivatives qualifying as hedges		221		221			247		(468	)		221
Foreign currency translation and other adjustments		307		224			486		(530	)		487

Total other comprehensive income (loss)		1,389		1,289			1,581		(2,703	)		1,556

Total comprehensive income		1,732		1,147			2,453		(3,246	)		2,086
Less: comprehensive income attributable to noncontrolling interests		—		—			354		—			354

Total comprehensive income available to Genworth Financial, Inc.’s common stockholders	$	1,732	$	1,147		$	2,099	$	(3,246	)	$	1,732

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The following table presents the condensed consolidating cash flow statement information for the three months ended March 31, 2020:


(Amounts in millions)	Parent Guarantor			Issuer			All Other Subsidiaries			Eliminations			Consolidated
Cash flows from (used by) operating activities:
Net loss	$	(66	)	$	(54	)	$	(26	)	$	74		$	(72	)
Adjustments to reconcile net loss to net cash from (used by)operating activities:
Equity in loss from subsidiaries		54			20			—			(74	)		—
Dividends from subsidiaries		—			11			(11	)		—			—
Amortization of fixed maturity securities discounts and premiums		—			2			(37	)		—			(35	)
Net investment (gains) losses		—			(10	)		162			—			152
Charges assessed to policyholders		—			—			(158	)		—			(158	)
Acquisition costs deferred		—			—			(4	)		—			(4	)
Amortization of deferred acquisition costs and intangibles		—			—			116			—			116
Deferred income taxes		6			8			(25	)		—			(11	)
Derivative instruments, limited partnerships and other		—			(63	)		410			—			347
Stock-based compensation expense		10			—			1			—			11
Change in certain assets and liabilities:
Accrued investment income and other assets		7			(16	)		(93	)		(5	)		(107	)
Insurance reserves		—			—			328			—			328
Current tax liabilities		(5	)		(16	)		16			—			(5	)
Other liabilities, policy and contract claims and otherpolicy-related balances		(16	)		(147	)		276			5			118

Net cash from (used by) operating activities		(10	)		(265	)		955			—			680

Cash flows from (used by) investing activities:
Proceeds from maturities and repayments of investments:
Fixed maturity securities		—			—			921			—			921
Commercial mortgage loans		—			—			139			—			139
Other invested assets		—			—			34			—			34
Proceeds from sales of investments:
Fixed maturity and equity securities		—			—			369			—			369
Purchases and originations of investments:
Fixed maturity and equity securities		—			—			(1,804	)		—			(1,804	)
Commercial mortgage loans		—			—			(107	)		—			(107	)
Other invested assets		—			—			(160	)		—			(160	)
Short-term investments, net		—			20			28			—			48
Policy loans, net		—			—			9			—			9
Intercompany notes receivable		15			(57	)		200			(158	)		—
Capital contributions to subsidiaries		(1	)		—			1			—			—

Net cash from (used by) investing activities		14			(37	)		(370	)		(158	)		(551	)

Cash flows used by financing activities:
Deposits to universal life and investment contracts		—			—			180			—			180
Withdrawals from universal life and investment contracts		—			—			(493	)		—			(493	)
Redemption of non-recourse funding obligations		—			—			(315	)		—			(315	)
Repayment and repurchase of long-term debt		—			(420	)		—			—			(420	)
Dividends paid to noncontrolling interests		—			—			(9	)		—			(9	)
Intercompany notes payable		—			(214	)		56			158			—
Other, net		(4	)		—			104			—			100

Net cash used by financing activities		(4	)		(634	)		(477	)		158			(957	)

Effect of exchange rate changes on cash, cash equivalents and restricted cash		—			—			(30	)		—			(30	)

Net change in cash, cash equivalents and restricted cash		—			(936	)		78			—			(858	)
Cash, cash equivalents and restricted cash at beginning of period		—			1,461			1,880			—			3,341

Cash, cash equivalents and restricted cash at end of period		—			525			1,958			—			2,483
Less cash, cash equivalents and restricted cash of discontinued operations at end of period		—			—			—			—			—

Cash, cash equivalents and restricted cash of continuing operations at end of period	$	—		$	525		$	1,958		$	—		$	2,483

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The following table presents the condensed consolidating cash flow statement information for the year ended December 31, 2019:


(Amounts in millions)	Parent Guarantor			Issuer			All Other Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	343		$	(142	)	$	872		$	(543	)	$	530
Less (income) loss from discontinued operations, net of taxes		—			140			(151	)		—			(11	)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Equity in income from subsidiaries		(366	)		(177	)		—			543			—
Dividends from subsidiaries		250			1,352			(1,602	)		—			—
Amortization of fixed maturity securities discounts and premiums		—			8			(126	)		—			(118	)
Net investment (gains) losses		—			5			(55	)		—			(50	)
Charges assessed to policyholders		—			—			(699	)		—			(699	)
Acquisition costs deferred		—			—			(27	)		—			(27	)
Amortization of deferred acquisition costs and intangibles		—			—			441			—			441
Deferred income taxes		1			132			6			—			139
Derivative instruments and limited partnerships		—			(35	)		(63	)		—			(98	)
Stock-based compensation expense		26			—			1			—			27
Change in certain assets and liabilities:
Accrued investment income and other assets		—			7			(365	)		—			(358	)
Insurance reserves		—			—			1,259			—			1,259
Current tax liabilities		16			(43	)		53			—			26
Other liabilities, policy and contract claims and other policy-related balances		(17	)		(44	)		668			2			609
Cash from operating activities—discontinued operations		—			134			275			—			409

Net cash from operating activities		253			1,337			487			2			2,079

Cash flows from (used by) investing activities:
Proceeds from maturities and repayments of investments:
Fixed maturity securities		—			—			3,436			—			3,436
Commercial mortgage loans		—			—			582			—			582
Restricted commercial mortgage loans related to a securitization entity		—			—			15			—			15
Proceeds from sales of investments:
Fixed maturity and equity securities		—			—			3,883			—			3,883
Purchases and originations of investments:
Fixed maturity and equity securities		—			—			(6,899	)		—			(6,899	)
Commercial mortgage loans		—			—			(813	)		—			(813	)
Other invested assets, net		—			5			(392	)		(2	)		(389	)
Policy loans, net		—			—			62			—			62
Intercompany notes receivable		(119	)		48			6			65			—
Capital contributions to subsidiaries		(5	)		—			5			—			—
Proceeds from sale of business, net of cash transferred		—			—			1,398			—			1,398
Cash from investing activities—discontinued operations		—			—			26			—			26

Net cash from (used by) investing activities		(124	)		53			1,309			63			1,301

Cash flows used by financing activities:
Deposits to universal life and investment contracts		—			—			824			—			824
Withdrawals from universal life and investment contracts		—			—			(2,319	)		—			(2,319	)
Repayment and repurchase of long-term debt		—			(446	)		—			—			(446	)
Intercompany notes payable		(122	)		112			75			(65	)		—
Repurchase of subsidiary shares		—			—			(22	)		—			(22	)
Dividends paid to noncontrolling interests		—			—			(87	)		—			(87	)
Other, net		(7	)		(24	)		(4	)		—			(35	)
Cash used by financing activities—discontinued operations		—			—			(132	)		—			(132	)

Net cash used by financing activities		(129	)		(358	)		(1,665	)		(65	)		(2,217	)

Effect of exchange rate changes on cash, cash equivalents and restricted cash (includes $6 related to discontinued operations)		—			—			1			—			1

Net change in cash, cash equivalents and restricted cash		—			1,032			132			—			1,164
Cash, cash equivalents and restricted cash at beginning of period		—			429			1,748			—			2,177

Cash, cash equivalents and restricted cash at end of period		—			1,461			1,880			—			3,341
Less cash, cash equivalents and restricted cash of discontinued operations at end of period		—			—			—			—			—

Cash, cash equivalents and restricted cash of continuing operations at end of period	$	—		$	1,461		$	1,880		$	—		$	3,341

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Our insurance company subsidiaries are restricted by state and foreign laws and regulations as to the amount of dividends they may pay to their parent without regulatory approval in any year, the purpose of which is to protect affected insurance policyholders and contractholders, not stockholders. Any dividends in excess of limits are deemed “extraordinary” and require approval. Based on statutory results as of December 31, 2019, in accordance with applicable dividend restrictions, our subsidiaries could pay dividends of approximately $300 million to us in 2020, and the remaining net assets are considered restricted. While the $300 million is considered unrestricted, our insurance subsidiaries most likely will not pay dividends to us in 2020 at this level as they need to retain capital to meet regulatory requirements and preserve desired capital thresholds. As of March 31, 2020, Genworth Financial’s and Genworth Holdings’ subsidiaries had restricted net assets of $14.0 billion and $15.1 billion, respectively.

Securitization Entities

There were no

off-balance

sheet securitization transactions during the three months ended March 31, ~~2019~~2020 or ~~2018.~~

2019.

New Accounting Standards

For a discussion of recently adopted accounting standards, see note 2 in our unaudited condensed consolidated financial statements under “Item 1—Financial Statements.”

~~Item 3. Quantitative and Qualitative Disclosures About Market Risk~~

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of the loss of fair value resulting from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and equity prices. Market risk is directly influenced by the volatility and liquidity in the markets in which the related underlying financial instruments are traded. Except as disclosed below and in our executive summary under “Item 2— Management’s Discussion and Analysis of Financial Condition and Results of Operations—COVID-19 Summary,” there were no other material changes in our market risks since December 31, ~~2018.~~2019. See “—Business trends and conditions” and “—Investments and Derivative Instruments” in “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion of recent market conditions, including changes in interest rates.

We are exposed to foreign currency exchange risks associated with fluctuations in foreign currency exchange rates against the U.S. dollar resulting from our international operations and

non-U.S.-denominated

securities. Our primary international operations are located in ~~Canada and~~ Australia. The assets and liabilities of our international operations are translated into U.S. dollars at the exchange rates in effect at the balance sheet date, while revenues and expenses of our international operations are translated into U.S. dollars at the average rates of exchange during the period of the transaction. In general, the weakening of the U.S. dollar results in higher levels of reported assets, liabilities, revenues and net ~~income.~~income (loss). As of March 31, ~~2019,~~2020 the U.S. dollar ~~weakened~~strengthened against the ~~currencies in Canada and Australia~~Australian dollar compared to the respective balance sheet rate as of December 31, ~~2018.~~2019. In the first quarter of ~~2019,~~2020, the U.S. dollar strengthened against the ~~currencies in Canada and Australia~~Australian dollar compared to ~~their~~the respective average ~~rates~~rate in the first quarter of ~~2018.~~2019. See “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion on the impact of changes in foreign currency exchange rates.

~~Item 4. Controls and Procedures~~

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of March 31, ~~2019,~~2020, an evaluation was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules

13a-15(e)

and

15d-15(e)

under the Securities Exchange Act of 1934). Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, ~~2019.~~

2020.

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Changes in Internal Control Over Financial Reporting During the Quarter Ended March 31, ~~2019~~

~~During~~2020

On January 1, 2020, we adopted new accounting guidance related to accounting for credit losses on financial instruments. The new guidance requirements resulted in us implementing a new analytical model that estimates lifetime credit losses based on model inputs that consider reasonable and supportable forecasts disaggregated by asset class. In addition, as part of our adoption of the ~~three months ended March 31, 2019, there have not been any~~guidance, we implemented new internal controls to address risks associated with applying the new standard, including risks related to judgmental estimates made in determining the allowance for credit losses for our commercial mortgage loans, reinsurance recoverables and bank loan investments, as well as estimating the allowance for credit losses related to

available-for-sale

fixed maturity securities. The new internal controls implemented include the review of the model data for completeness and accuracy, review controls that support the compilation of new disclosure requirements and updates to our accounting policies and procedures.

There were no other changes in our internal control over financial reporting during the three months ended March 31, 2020 that ~~have~~ materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1.

Legal Proceedings

See note 1012 in our unaudited condensed consolidated financial statements under “Part 1—Item 1—Financial Statements” for a description of material pending litigation and regulatory matters affecting us.

Item 1A.

Risk Factors

The discussion of our business and operations should be read together with the risk factors contained in Item 1A of our ~~2018~~2019 Annual Report on Form

10-K,

which together describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner. ~~There~~Except as disclosed below, there have been no material changes to the risk factors set forth in the above-referenced filing as of March 31, ~~2019.~~

2020.

COVID-19 could materially adversely affect our financial condition and results of operations.

COVID-19 has brought unprecedented changes to the global economy. Large scale disruption in the U.S. economy is leaving several industries non-operational through state and federal mandated shutdowns in an effort to contain the spread of COVID-19. Unemployment claims have increased to historic levels, reducing consumer confidence to its lowest level since the 2008 financial crisis. The level of uncertainty created by COVID-19 is far-reaching and difficult to estimate. We are unsure of the ultimate impact COVID-19 will have on our business, and conditions, including economic and operational, are evolving rapidly. COVID-19 exposes our business to significant risks, including interest rate declines, significantly higher levels of unemployment, liquidity pressures, credit risk on our investment portfolio, equity market volatility, and operational, information technology and personnel risks. We could experience significant declines in asset valuations and potential material asset impairments, as well as unexpected changes in persistency rates, as policyholders and contractholders who are affected by the pandemic may not be able to meet their contractual obligations, such as premium payments on their insurance policies, deposits to their investment products, or mortgage payments on their loans insured by our mortgage insurance policies. The pandemic has decreased historically low interest rates further and could also significantly increase our mortality and morbidity experience and/or impact our ability to successfully implement in-force rate actions (including increased premiums and associated benefit reductions), all of which could result in higher reserve charges and an adverse impact to our financial results in our U.S. life insurance businesses. Regarding our mortgage insurance businesses, COVID-19 has resulted in significantly higher levels of unemployment, which most likely will increase delinquencies, and could reduce mortgage originations, the

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need for mortgage insurance and have an adverse effect on home prices, all of which would result in a significant adverse impact to our financial condition and results of operations in our mortgage insurance businesses. Losses in our mortgage insurance businesses could lead to lower credit ratings and impaired capital, which could hinder our mortgage insurance businesses from offering their products, preclude them from returning capital to our holding company, and thereby harm our liquidity. COVID-19 could also disrupt medical and financial services and has resulted in us practicing social distancing with our employees through office closures, all of which could disrupt our normal business operations. The level of disruption, the economic downturn, the potential global recession, and the far-reaching effects of COVID-19 could negatively affect our investment portfolio and cause the harms to our business to persist for long periods of time. As a result of the foregoing, any of the risks identified above or other related COVID-19 risks may have a material adverse impact on us, including a material adverse effect on our financial condition and results of operations.

Item 6.

Exhibits


~~Number~~		~~Description~~
Number			Description
~~2.1~~
	2.1		~~Tenth~~Fourteenth Waiver and Agreement, dated as of ~~April 29, 2019,~~March 31, 2020, by and among Genworth Financial, Inc., Asia Pacific Global Capital Co., Ltd., and Asia Pacific Global Capital USA Corporation (incorporated by reference to Exhibit 2.1 to the Current Report on Form8-K filed on ~~April 29, 2019)~~March 31, 2020)

~~31.1~~
	31.1		Certification of Thomas J. McInerney (filed herewith)

~~31.2~~
	31.2		Certification of Kelly L. Groh (filed herewith)

~~32.1~~
	32.1		Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code—Thomas J. McInerney (filed herewith)


~~Number~~		~~Description~~

	32.2		Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code—Kelly L. Groh (filed herewith)

~~101.INS~~
	101.INS		XBRL Instance Document

~~101.SCH~~
	101.SCH		XBRL Taxonomy Extension Schema Document

~~101.CAL~~
	101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

~~101.LAB~~
	101.LAB		XBRL Taxonomy Extension Label Linkbase Document

~~101.PRE~~
	101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

~~101.DEF~~
	101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

	104		The cover page for the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2020, has been formatted in Inline XBRL

142

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~136~~

143


~~Delaware~~		~~80-0873306~~
Delaware		80-0873306
(State or ~~Other Jurisdiction~~other jurisdiction of ~~Incorporation~~ incorporation or ~~Organization)~~ organization)		(I.R.S. Employer Identification Number)

6620 West Broad Street Richmond , Virginia		23230
(Address of ~~Principal Executive Offices)~~principal executive offices)		(Zip Code)


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

~~Non-accelerated filer~~	☐	~~Smaller reporting company~~		☐

		Emerging growth company		☐


Title of Each Class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, par value $.001 per share	GNW	New York Stock Exchange


		Page
PART I—FINANCIAL INFORMATION
		~~Page~~
~~PART I—FINANCIAL INFORMATION~~ Item 1.

~~Item 1.~~	Financial Statements		3
Condensed Consolidated Balance Sheets as of March 31, ~~2019~~2020 (Unaudited) and December 31, ~~2018~~2019.			3
Condensed Consolidated Statements of Income for the three months ended March 31, 2020 and 2019 ~~and 2018~~ (Unaudited)			4
Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019 ~~and 2018~~ (Unaudited)			5
Condensed Consolidated Statements of Changes in Equity for the three months ended March 31, 2020 and 2019 ~~and 2018~~ (Unaudited)			6
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 ~~and 2018~~ (Unaudited)			7
Notes to Condensed Consolidated Financial Statements (Unaudited)			8

~~Item 2.~~
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		74 67

~~Item 3.~~
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		~~133~~ 140

~~Item 4.~~	~~Controls and Procedures~~		~~134~~
Item 4.	Controls and Procedures		140

PART II—OTHER INFORMATION			141

~~Item 1.~~	~~Legal Proceedings~~		~~134~~

~~Item 1A.~~	~~Risk Factors~~		~~134~~

Item 6.1.	~~Exhibits~~Legal Proceedings		~~134~~ 141

~~Signatures~~			~~136~~
Item 1A.	Risk Factors		141

Item 6.	Exhibits		142

Signatures			143


(Amounts in millions)	March 31, 2019			December 31, 2018
Net unrealized gains (losses) on fixed maturity securities⁽¹⁾	$	3,714		$	1,775
Adjustments to deferred acquisition costs, present value of future profits, sales inducements and benefit reserves		(2,401	)		(952	)
Income taxes, net		(300	)		(190	)

Net unrealized investment gains (losses)		1,013			633
Less: net unrealized investment gains (losses) attributable to noncontrolling interests		70			38

Net unrealized investment gains (losses) attributable to Genworth Financial, Inc.	$	943		$	595


	March 31,			December 31,
	2019			2018
	(Unaudited)
Assets
Investments:
Fixed maturity securitiesavailable-for-sale, at fair value	$	61,360		$	59,661
Equity securities, at fair value		635			655
Commercial mortgage loans ($59 and $62 are restricted as of March 31, 2019 and December 31, 2018, respectively, related to a securitization entity)		6,988			6,749
Policy loans		1,994			1,861
Other invested assets		1,208			1,188

Total investments		72,185			70,114
Cash, cash equivalents and restricted cash		2,221			2,177
Accrued investment income		726			675
Deferred acquisition costs		2,219			3,263
Intangible assets and goodwill		265			347
Reinsurance recoverable		17,257			17,278
Other assets		532			474
Deferred tax asset		573			736
Separate account assets		6,210			5,859

Total assets	$	102,188		$	100,923

Liabilities and equity
Liabilities:
Future policy benefits	$	38,369		$	37,940
Policyholder account balances		22,651			22,968
Liability for policy and contract claims		10,536			10,379
Unearned premiums		3,482			3,546
Other liabilities		1,682			1,682
Non-recourse funding obligations		311			311
Long-term borrowings		4,035			4,025
Deferred tax liability		30			24
Separate account liabilities		6,210			5,859

Total liabilities		87,306			86,734

Commitments and contingencies

Equity:
Class A common stock, $0.001 par value; 1.5 billion shares authorized; 591 million and 589 million shares issued as of March 31, 2019 and December 31, 2018, respectively; 503 million and 501 million shares outstanding as of March 31, 2019 and December 31, 2018, respectively		1			1
Additionalpaid-in capital		11,989			11,987

Accumulated other comprehensive income (loss):
Net unrealized investment gains (losses):
Net unrealized gains (losses) on securities not other-than-temporarily impaired		932			585
Net unrealized gains (losses) on other-than-temporarily impaired securities		11			10

Net unrealized investment gains (losses)		943			595

Derivatives qualifying as hedges		1,850			1,781
Foreign currency translation and other adjustments		(301	)		(332	)

Total accumulated other comprehensive income (loss)		2,492			2,044
Retained earnings		1,292			1,118
Treasury stock, at cost (88 million shares as of March 31, 2019 and December 31, 2018)		(2,700	)		(2,700	)

Total Genworth Financial, Inc.’s stockholders’ equity		13,074			12,450
Noncontrolling interests		1,808			1,739

Total equity		14,882			14,189

Total liabilities and equity	$	102,188		$	100,923


														Total
														Genworth
					Accumulated									Financial,
			Additional		other						Treasury			Inc.’s
	Common		paid-in		comprehensive			Retained			stock, at			stockholders’			Noncontrolling			Total
	stock		capital		income (loss)			earnings			cost			equity			interests			equity
Balances as of December 31, 2018	$	1	$	11,987	$	2,044		$	1,118		$	(2,700	)	$	12,450		$	1,739		$	14,189
Repurchase of subsidiary shares		—		—		—			—			—			—			(12	)		(12	)
Comprehensive income:
Net income		—		—		—			174			—			174			56			230
Other comprehensive income, net of taxes		—		—		448			—			—			448			55			503

Total comprehensive income															622			111			733
Dividends to noncontrolling interests		—		—		—			—			—			—			(28	)		(28	)
Stock-based compensation expense and exercises and other		—		2		—			—			—			2			(2	)		—

Balances as of March 31, 2019	$	1	$	11,989	$	2,492		$	1,292		$	(2,700	)	$	13,074		$	1,808		$	14,882

Balances as of December 31, 2017	$	1	$	11,977	$	3,027		$	1,113		$	(2,700	)	$	13,418		$	1,910		$	15,328
Cumulative effect of change in accounting, net of taxes		—		—		131			(114	)		—			17			—			17
Repurchase of subsidiary shares		—		—		—			—			—			—			(36	)		(36	)
Comprehensive income (loss):
Net income		—		—		—			112			—			112			53			165
Other comprehensive loss, net of taxes		—		—		(531	)		—			—			(531	)		(49	)		(580	)

Total comprehensive income (loss)															(419	)		4			(415	)
Dividends to noncontrolling interests		—		—		—			—			—			—			(36	)		(36	)
Stock-based compensation expense and exercises and other		—		2		—			—			—			2			2			4

Balances as of March 31, 2018	$	1	$	11,979	$	2,627		$	1,111		$	(2,700	)	$	13,018		$	1,844		$	14,862


	Three months ended March 31, 2020
	Common stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings			Treasury stock, at cost			Total Genworth Financial, Inc.’s stockholders’ equity			Noncontrolling interests			Total equity
Balances as of December 31, 2019	$	1	$	11,990	$	3,433	$	1,461		$	(2,700)		$	14,185		$	447		$	14,632
Cumulative effect of change in accounting, net of taxes		—		—		—		(55	)		—			(55	)		—			(55	)
Comprehensive income (loss):
Net loss		—		—		—		(66	)		—			(66	)		(6	)		(72	)
Other comprehensive income (loss), net of taxes		—		—		382		—			—			382			(47	)		335

Total comprehensive income (loss)														316			(53	)		263
Dividends to noncontrolling interests		—		—		—		—			—			—			(9	)		(9	)
Stock-based compensation expense and exercises and other		—		3		—		—			—			3			—			3

Balances as of March 31, 2020	$	1	$	11,993	$	3,815	$	1,340		$	(2,700	)	$	14,449		$	385		$	14,834


	Three months ended March 31, 2019
	Common stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Treasury stock, at cost			Total Genworth Financial, Inc.’s stockholders’ equity		Noncontrolling interests			Total equity
Balances as of December 31, 2018	$	1	$	11,987	$	2,044	$	1,118	$	(2,700	)	$	12,450	$	1,739		$	14,189
Repurchase of subsidiary shares		—		—		—		—		—			—		(12	)		(12	)
Comprehensive income:
Net income		—		—		—		174		—			174		56			230
Other comprehensive income, net of taxes		—		—		448		—		—			448		55			503

Total comprehensive income													622		111			733
Dividends to noncontrolling interests		—		—		—		—		—			—		(28	)		(28	)
Stock-based compensation expense and exercises and other		—		2		—		—		—			2		(2	)		—

Balances as of March 31, 2019	$	1	$	11,989	$	2,492	$	1,292	$	(2,700	)	$	13,074	$	1,808		$	14,882


	Three months ended March 31,
	2020			2019
Cash flows from operating activities:
Net income (loss)	$	(72	)	$	230
Less income from discontinued operations, net of taxes		—			(62	)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Amortization of fixed maturity securities discounts and premiums		(35	)		(18	)
Net investment (gains) losses		152			(75	)
Charges assessed to policyholders		(158	)		(165	)
Acquisition costs deferred		(4	)		(9	)
Amortization of deferred acquisition costs and intangibles		116			81
Deferred income taxes		(11	)		51
Derivative instruments, limited partnerships and other		347			(32	)
Stock-based compensation expense		11			6
Change in certain assets and liabilities:
Accrued investment income and other assets		(107	)		(242	)
Insurance reserves		328			301
Current tax liabilities		(5	)		9
Other liabilities, policy and contract claims and other policy-related balances		118			27
Cash from operating activities—discontinued operations		—			32

Net cash from operating activities		680			134

Cash flows from (used by) investing activities:
Proceeds from maturities and repayments of investments:
Fixed maturity securities		921			871
Commercial mortgage loans		139			130
Other invested assets		34			20
Proceeds from sales of investments:
Fixed maturity and equity securities		369			1,592
Purchases and originations of investments:
Fixed maturity and equity securities		(1,804	)		(1,976	)
Commercial mortgage loans		(107	)		(370	)
Other invested assets		(160	)		(94	)
Short-term investments, net		48			98
Policy loans, net		9			12
Cash used by investing activities—discontinued operations		—			(6	)

Net cash from (used by) investing activities		(551	)		277

Cash flows used by financing activities:
Deposits to universal life and investment contracts		180			198
Withdrawals from universal life and investment contracts		(493	)		(581	)
Redemption of non-recourse funding obligations		(315	)		—
Repayment and repurchase of long-term debt		(420	)		—
Repurchase of subsidiary shares		—			(12	)
Dividends paid to noncontrolling interests		(9	)		(14	)
Other, net		100			48
Cash used by financing activities—discontinued operations		—			(14	)

Net cash used by financing activities		(957	)		(375	)

Effect of exchange rate changes on cash, cash equivalents and restricted cash (includes $— and $5 related to discontinued operations)		(30	)		8

Net change in cash, cash equivalents and restricted cash		(858	)		44
Cash, cash equivalents and restricted cash at beginning of period		3,341			2,177

Cash, cash equivalents and restricted cash at end of period		2,483			2,221
Less cash, cash equivalents and restricted cash of discontinued operations at end of period		—			201

Cash, cash equivalents and restricted cash of continuing operations at end of period	$	2,483		$	2,020


	Three months ended March 31,
(Amounts in millions, except per share amounts)	2020			2019
Weighted-average shares used in basic earnings (loss) per share calculations		504.3			501.2
Potentially dilutive securities:
Stock options, restricted stock units and stock appreciation rights		—			7.4
Weighted-average shares used in diluted earnings (loss) per share calculations (1)		504.3			508.6
Income (loss) from continuing operations:
Income (loss) from continuing operations	$	(72	)	$	168
Less: net income (loss) from continuing operations attributable to noncontrolling interests		(6	)		20
Income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders	$	(66	)	$	148
Basic per share	$	(0.13	)	$	0.29
Diluted per share	$	(0.13	)	$	0.29
Income from discontinued operations:
Income from discontinued operations, net of taxes	$	—		$	62
Less: net income from discontinued operations attributable to noncontrolling interests		—			36
Income from discontinued operations available to Genworth Financial, Inc.’s common stockholders	$	—		$	26
Basic per share	$	—		$	0.05
Diluted per share	$	—		$	0.05
Net income (loss):
Income (loss) from continuing operations	$	(72	)	$	168
Income from discontinued operations, net of taxes		—			62
Net income (loss)		(72	)		230
Less: net income (loss) attributable to noncontrolling interests		(6	)		56
Net income (loss) available to Genworth Financial, Inc.’s common stockholders	$	(66	)	$	174
Basic per share (2)	$	(0.13	)	$	0.35
Diluted per share	$	(0.13	)	$	0.34


(Amounts in millions)
Beginning balance	$	24
Other-than-temporary impairments not previously recognized		—
Increases related to other-than-temporary impairments previously recognized		—
Reductions:
Securities sold, paid down or disposed		(1	)

Ending balance	$	23


			Gross unrealized gains				Gross unrealized losses
	Amortized		Not other-than-		Other-than-		Not other-than-			Other-than-
	cost or		temporarily		temporarily		temporarily			temporarily		Fair
(Amounts in millions)	cost		impaired		impaired		impaired			impaired		value
Fixed maturity securities:
U.S. government, agencies and government-sponsored enterprises	$	4,116	$	619	$	—	$	(4	)	$	—	$	4,731
State and political subdivisions		2,329		223		—		(6	)		—		2,546
Non-U.S. government		2,403		121		—		(6	)		—		2,518
U.S. corporate:
Utilities		4,296		426		—		(37	)		—		4,685
Energy		2,447		186		—		(15	)		—		2,618
Finance and insurance		6,883		405		—		(37	)		—		7,251
Consumer—non-cyclical		4,905		407		—		(55	)		—		5,257
Technology and communications		2,832		161		—		(19	)		—		2,974
Industrial		1,194		67		—		(12	)		—		1,249
Capital goods		2,283		225		—		(19	)		—		2,489
Consumer—cyclical		1,579		83		—		(16	)		—		1,646
Transportation		1,271		107		—		(16	)		—		1,362
Other		379		33		—		(1	)		—		411

Total U.S. corporate		28,069		2,100		—		(227	)		—		29,942

Non-U.S. corporate:
Utilities		1,100		36		—		(9	)		—		1,127
Energy		1,327		124		—		(4	)		—		1,447
Finance and insurance		2,434		129		—		(9	)		—		2,554
Consumer—non-cyclical		699		19		—		(9	)		—		709
Technology and communications		1,151		52		—		(6	)		—		1,197
Industrial		920		56		—		(3	)		—		973
Capital goods		644		21		—		(3	)		—		662
Consumer—cyclical		537		8		—		(4	)		—		541
Transportation		756		65		—		(6	)		—		815
Other		2,127		139		—		(6	)		—		2,260

Totalnon-U.S. corporate		11,695		649		—		(59	)		—		12,285

Residential mortgage-backed		2,762		181		13		(6	)		—		2,950
Commercial mortgage-backed		2,946		64		—		(48	)		—		2,962
Other asset-backed		3,422		18		1		(15	)		—		3,426

Totalavailable-for-sale fixed maturity securities	$	57,742	$	3,975	$	14	$	(371	)	$	—	$	61,360


	Less than 12 months							12 months or more							Total
			Gross							Gross							Gross
	Fair		unrealized			Number of		Fair		unrealized			Number of		Fair		unrealized			Number of
(Dollar amounts in millions)	value		losses			securities		value		losses			securities		value		losses			securities
Description of Securities
Fixed maturity securities:
U.S. government, agencies and government-sponsoredenterprises	$	—	$	—			—	$	229	$		(4)		31	$	229	$		(4)		31
State and political subdivisions		11		—			3		259		(6	)		60		270		(6	)		63
Non-U.S. government		62		—			11		331		(6	)		36		393		(6	)		47
U.S. corporate		1,247		(37	)		153		5,003		(190	)		698		6,250		(227	)		851
Non-U.S. corporate		354		(6	)		57		1,922		(53	)		296		2,276		(59	)		353
Residential mortgage-backed		46		(1	)		9		476		(5	)		85		522		(6	)		94
Commercial mortgage-backed		168		(4	)		22		933		(44	)		143		1,101		(48	)		165
Other asset-backed		981		(10	)		209		707		(5	)		162		1,688		(15	)		371

Total for fixed maturity securities in an unrealized loss position	$	2,869	$	(58	)		464	$	9,860	$	(313	)		1,511	$	12,729	$	(371	)		1,975

% Below cost:
<20% Below cost	$	2,869	$	(58	)		464	$	9,839	$	(304	)		1,505	$	12,708	$	(362	)		1,969
20%-50% Below cost		—		—			—		18		(6	)		3		18		(6	)		3
>50% Below cost		—		—			—		3		(3	)		3		3		(3	)		3

Total for fixed maturity securities in an unrealized loss position	$	2,869	$	(58	)		464	$	9,860	$	(313	)		1,511	$	12,729	$	(371	)		1,975

Investment grade	$	2,639	$	(51	)		434	$	9,439	$	(292	)		1,446	$	12,078	$	(343	)		1,880
Below investment grade		230		(7	)		30		421		(21	)		65		651		(28	)		95

Total for fixed maturity securities in an unrealized loss position	$	2,869	$	(58	)		464	$	9,860	$	(313	)		1,511	$	12,729	$	(371	)		1,975


(Amounts in millions)	Amortized cost or cost		Fair value
Due one year or less	$	1,415	$	1,421
Due after one year through five years		8,835		8,949
Due after five years through ten years		12,207		12,642
Due after ten years		23,544		27,700

Subtotal		46,001		50,712
Residential mortgage-backed		2,032		2,273
Commercial mortgage-backed		2,876		2,981
Other asset-backed		3,227		3,085

Total	$	54,136	$	59,051


	March 31, 2019						December 31, 2018
	Carrying			% of			Carrying			% of
(Amounts in millions)	value			total			value			total
Property type:
Retail	$	2,548			37	%	$	2,463			37	%
Industrial		1,678			24			1,659			25
Office		1,671			24			1,548			23
Apartments		520			7			495			7
Mixed use		254			4			254			4
Other		272			4			281			4

Subtotal		6,943			100	%		6,700			100	%

Unamortized balance of loan origination fees and costs		(4	)					(4	)
Allowance for losses		(10	)					(9	)

Total	$	6,929					$	6,687


	March 31, 2019
							Greater than
	31 - 60 days			61 - 90 days			90 days past			Total
(Amounts in millions)	past due			past due			due			past due			Current			Total
Property type:
Retail	$	—		$	—		$	—		$	—		$	2,548		$	2,548
Industrial		—			—			—			—			1,678			1,678
Office		—			—			3			3			1,668			1,671
Apartments		—			—			—			—			520			520
Mixed use		—			—			—			—			254			254
Other		—			—			—			—			272			272

Total recorded investment	$	—		$	—		$	3		$	3		$	6,940		$	6,943

% of total commercial mortgage loans		—	%		—	%		—	%		—	%		100	%		100	%


	December 31, 2018
							Greater than
	31 - 60 days			61 - 90 days			90 days past			Total
(Amounts in millions)	past due			past due			due			past due			Current			Total
Property type:
Retail	$	3		$	—		$	—		$	3		$	2,460		$	2,463
Industrial		—			—			—			—			1,659			1,659
Office		—			—			3			3			1,545			1,548
Apartments		—			—			—			—			495			495
Mixed use		—			—			—			—			254			254
Other		—			—			—			—			281			281

Total recorded investment	$	3		$	—		$	3		$	6		$	6,694		$	6,700

% of total commercial mortgage loans		—	%		—	%		—	%		—	%		100	%		100	%


	March 31, 2020
(Amounts in millions)	31 - 60 days past due			61 - 90 days past due			Greater than 90 days past due			Total past due			Current			Total
Property type:
Retail	$	—		$	—		$	—		$	—		$	2,566		$	2,566
Industrial		—			—			—			—			1,646			1,646
Office		—			—			—			—			1,641			1,641
Apartments		—			—			—			—			548			548
Mixed use		—			—			—			—			279			279
Other		—			—			—			—			264			264

Total amortized cost	$	—		$	—		$	—		$	—		$	6,944		$	6,944

% of total commercial mortgage loans		—	%		—	%		—	%		—	%		100	%		100	%


	March 31, 2019
													Greater
(Amounts in millions)	0% - 50%			51% - 60%			61% - 75%			76% - 100%			than 100% ⁽¹⁾			Total
Property type:
Retail	$	877		$	537		$	1,119		$	15		$	—		$	2,548
Industrial		738			290			634			14			2			1,678
Office		588			371			712			—			—			1,671
Apartments		208			90			217			5			—			520
Mixed use		104			45			105			—			—			254
Other		43			68			161			—			—			272

Total recorded investment	$	2,558		$	1,401		$	2,948		$	34		$	2		$	6,943

% of total		37	%		20	%		43	%		—	%		—	%		100	%

Weighted-average debt service coverage ratio		2.42			1.80			1.58			1.46			0.88			1.93


	March 31, 2020
(Amounts in millions)	0% - 50%			51% - 60%			61% - 75%			76% - 100%			Greater than 100%			Total
Property type:
Retail	$	956		$	587		$	1,023		$	—		$	—		$	2,566
Industrial		787			323			536			—			—			1,646
Office		550			353			738			—			—			1,641
Apartments		220			110			218			—			—			548
Mixed use		103			70			106			—			—			279
Other		55			69			140			—			—			264

Total amortized cost	$	2,671		$	1,512		$	2,761		$	—		$	—		$	6,944

% of total		38	%		22	%		40	%		—	%		—	%		100	%

Weighted-average debt service coverage ratio		2.31			1.82			1.55			—			—			1.90


	March 31, 2019
													Greater
(Amounts in millions)	Less than 1.00			1.00 - 1.25			1.26 - 1.50			1.51 - 2.00			than 2.00			Total
Property type:
Retail	$	35		$	155		$	572		$	1,216		$	570		$	2,548
Industrial		22			69			259			667			661			1,678
Office		53			56			203			836			523			1,671
Apartments		4			24			108			191			193			520
Mixed use		3			18			52			80			101			254
Other		13			133			52			40			34			272

Total recorded investment	$	130		$	455		$	1,246		$	3,030		$	2,082		$	6,943

% of total		2	%		7	%		18	%		43	%		30	%		100	%

Weighted-averageloan-to-value		56	%		61	%		64	%		59	%		42	%		55	%


	December 31, 2018
													Greater
(Amounts in millions)	Less than 1.00			1.00 - 1.25			1.26 - 1.50			1.51 - 2.00			than 2.00			Total
Property type:
Retail	$	43		$	157		$	448		$	1,234		$	581		$	2,463
Industrial		22			75			233			653			676			1,659
Office		57			56			156			765			514			1,548
Apartments		4			24			104			168			195			495
Mixed use		3			19			51			80			101			254
Other		13			134			50			50			34			281

Total recorded investment	$	142		$	465		$	1,042		$	2,950		$	2,101		$	6,700

% of total		2	%		7	%		16	%		44	%		31	%		100	%

Weighted-averageloan-to-value		57	%		61	%		62	%		59	%		42	%		54	%


	March 31, 2020
(Amounts in millions)	Less than 1.00			1.00 - 1.25			1.26 - 1.50			1.51 - 2.00			Greater than 2.00			Total
Property type:
Retail	$	65		$	138		$	601		$	1,126		$	636		$	2,566
Industrial		24			50			217			655			700			1,646
Office		41			113			273			745			469			1,641
Apartments		16			31			130			186			185			548
Mixed use		3			18			37			105			116			279
Other		34			146			19			31			34			264

Total amortized cost	$	183		$	496		$	1,277		$	2,848		$	2,140		$	6,944

% of total		3	%		7	%		18	%		41	%		31	%		100	%

Weighted-average debt-to-value		58	%		61	%		63	%		58	%		41	%		54	%


	December 31, 2019
(Amounts in millions)	Less than 1.00			1.00 - 1.25			1.26 - 1.50			1.51 - 2.00			Greater than 2.00			Total
Property type:
Retail	$	68		$	141		$	596		$	1,148		$	637		$	2,590
Industrial		24			51			221			658			716			1,670
Office		44			89			277			751			471			1,632
Apartments		16			32			129			175			189			541
Mixed use		4			16			37			107			117			281
Other		34			147			20			31			34			266

Total recorded investment	$	190		$	476		$	1,280		$	2,870		$	2,164		$	6,980

% of total		3	%		7	%		18	%		41	%		31	%		100	%

Weighted-average debt-to-value		59	%		61	%		63	%		58	%		41	%		54	%


	Derivative assets					Derivative liabilities
		Fair value					Fair value
	Balance	March 31,		December 31,		Balance	March 31,		December 31,
(Amounts in millions)	sheet classification	2019		2018		sheet classification	2019		2018
Derivatives designated ashedges
Cash flow hedges:
Interest rate swaps	Other invested assets	$	59	$	42	Other liabilities	$	49	$	102
Foreign currency swaps	Other invested assets		3		6	Other liabilities		—		—

Total cash flow hedges			62		48			49		102

Total derivativesdesignated as hedges			62		48			49		102

Derivatives not designated ashedges
Interest rate swaps in a foreign currency	Other invested assets		46		74	Other liabilities		—		—
Interest rate caps and floors	Other invested assets		13		7	Other liabilities		—		—
Foreign currency swaps	Other invested assets		—		—	Other liabilities		13		23
Equity index options	Other invested assets		60		39	Other liabilities		—		—
Financial futures	Other invested assets		—		—	Other liabilities		—		—
Equity return swaps	Other invested assets		—		—	Other liabilities		1		1
Other foreign currencycontracts	Other invested assets		6		10	Other liabilities		25		42
GMWB embedded derivatives	Reinsurancerecoverable⁽¹⁾		18		20	Policyholderaccount balances ⁽²⁾		295		337
Fixed index annuity embeddedderivatives	Other assets		—		—	Policyholderaccount balances⁽³⁾		423		389
Indexed universal life embedded derivatives	Reinsurancerecoverable		—		—	Policyholderaccount balances⁽⁴⁾		13		12

Total derivatives notdesignated as hedges			143		150			770		804

Total derivatives		$	205	$	198		$	819	$	906


	Derivative assets					Derivative liabilities
	Balance sheet classification	Fair value				Balance sheet classification	Fair value
(Amounts in millions)	Balance sheet classification	March 31, 2020		December 31, 2019		Balance sheet classification	March 31, 2020		December 31, 2019
Derivatives designated as hedges
Cash flow hedges:
Interest rate swaps	Other invested assets	$	1,002	$	197	Other liabilities	$	—	$	10
Foreign currency swaps	Other invested assets		21		4	Other liabilities		—		—

Total cash flow hedges			1,023		201			—		10

Total derivatives designated as hedges			1,023		201			—		10

Derivatives not designated as hedges
Equity index options	Other invested assets		62		81	Other liabilities		—		—
Financial futures	Other invested assets		—		—	Other liabilities		—		—
Other foreign currency contracts	Other invested assets		16		8	Other liabilities		14		1
GMWB embeddedderivatives	Reinsurance recoverable (1)		47		20	Policyholder account balances (2)		691		323
Fixed index annuity embedded derivatives	Other assets		—		—	Policyholder account balances (3)		413		452
Indexed universal lifeembedded derivatives	Reinsurance recoverable		—		—	Policyholder account balances (4)		21		19

Total derivatives not designated as hedges			125		109			1,139		795

Total derivatives		$	1,148	$	310		$	1,139	$	805


		December 31,				Maturities/			March 31,
(Notional in millions)	Measurement	2018		Additions		terminations			2019
Derivatives designated as hedges
Cash flow hedges:
Interest rate swaps	Notional	$	9,924	$	—	$	(654	)	$	9,270
Foreign currency swaps	Notional		80		35		(22	)		93

Total cash flow hedges			10,004		35		(676	)		9,363

Total derivatives designated as hedges			10,004		35		(676	)		9,363

Derivatives not designated as hedges
Interest rate swaps	Notional		4,674		—		—			4,674
Interest rate swaps in a foreign currency	Notional		2,565		98		(44	)		2,619
Interest rate caps and floors	Notional		2,624		84		(38	)		2,670
Foreign currency swaps	Notional		453		—		(2	)		451
Equity index options	Notional		2,628		503		(580	)		2,551
Financial futures	Notional		1,415		1,759		(1,968	)		1,206
Equity return swaps	Notional		17		1		—			18
Other foreign currency contracts	Notional		1,080		1,386		(1,414	)		1,052

Total derivatives not designated as hedges			15,456		3,831		(4,046	)		15,241

Total derivatives		$	25,460	$	3,866	$	(4,722	)	$	24,604


		December 31,				Maturities/			March 31,
(Number of policies)	Measurement	2018		Additions		terminations			2019
Derivatives not designated as hedges
GMWB embedded derivatives	Policies		27,886		—		(577	)		27,309
Fixed index annuity embedded derivatives	Policies		16,464		—		(213	)		16,251
Indexed universal life embedded derivatives	Policies		929		—		(11	)		918


				Gain (loss)
				reclassified into		Classification of gain	Gain (loss)		Classification of gain
	Gain (loss)			net income		(loss) reclassified into	recognized in		(loss) recognized in
(Amounts in millions)	recognized in OCI			from OCI		net income	net income		net income
Interest rate swaps hedging assets	$	137		$	38	Net investment income	$	—	Net investment gains (losses)
Interest rate swaps hedging assets		—			6	Net investment gains (losses)		—	Net investment gains (losses)
Interest rate swaps hedging liabilities		(12	)		—	Interest expense		—	Net investment gains (losses)
Foreign currency swaps		(3	)		—	Net investment income		2	Net investment gains (losses)

Total	$	122		$	44		$	2


(Amounts in millions)	Gain (loss) recognized in OCI			Gain (loss) reclassified into net income (loss) from OCI		Classification of gain (loss) reclassified into net income (loss)		Gain (loss) recognized in net income (loss)		Classification of gain (loss) recognized in net income (loss)
Interest rate swaps hedging assets	$	1,041		$	43		Net investment income	$	—		Net investment gains (losses)
Interest rate swaps hedging assets		—			4		Net investment gains (losses)		—		Net investment gains (losses)
Interest rate swaps hedging liabilities		(63	)		—		Interest expense		—		Net investment gains (losses)
Foreign currency swaps		17			—		Net investment income		—		Net investment gains (losses)

Total	$	995		$	47			$	—


(Amounts in millions)	Gain (loss) recognized in OCI			Gain (loss) reclassified into net income (loss) from OCI		Classification of gain (loss) reclassified into net income (loss)		Gain (loss) recognized in net income (loss)		Classification of gain (loss) recognized in net income (loss)
Interest rate swaps hedging assets	$	137		$	38		Net investment income	$	—		Net investment gains (losses)
Interest rate swaps hedging assets		—			6		Net investment gains (losses)		—		Net investment gains (losses)
Interest rate swaps hedging liabilities		(12	)		—		Interest expense		—		Net investment gains (losses)
Foreign currency swaps		(3	)		—		Net investment income		—		Net investment gains (losses)
Forward currency swaps		—			—		Net investment gains (losses)		2		Net investment gains (losses)

Total	$	122		$	44			$	2


	Three months ended March 31,						Classification of gain (loss) recognized in net income
(Amounts in millions)	2019			2018			Classification of gain (loss) recognized in net income
Interest rate swaps	$	(1	)	$	(1	)	Net investment gains (losses)
Interest rate swaps in a foreign currency		(23	)		—		Net investment gains (losses)
Interest rate caps and floors		6			—		Net investment gains (losses)
Equity index options		17			(15	)	Net investment gains (losses)
Financial futures		(44	)		(24	)	Net investment gains (losses)
Equity return swaps		—			(5	)	Net investment gains (losses)
Other foreign currency contracts		9			8		Net investment gains (losses)
Foreign currency swaps		10			(8	)	Net investment gains (losses)
GMWB embedded derivatives		45			14		Net investment gains (losses)
Fixed index annuity embedded derivatives		(38	)		8		Net investment gains (losses)
Indexed universal life embedded derivatives		1			5		Net investment gains (losses)

Total derivatives not designated as hedges	$	(18	)	$	(18	)


	March 31, 2019
	Notional amount			Carrying amount		Fair value
(Amounts in millions)	Notional amount			Carrying amount		Total		Level 1		Level 2		Level 3
Assets:
Commercial mortgage loans			⁽¹⁾	$	6,929	$	7,038	$	—	$	—	$	7,038
Restricted commercial mortgage loans			⁽¹⁾		59		63		—		—		63
Bank loan investments			⁽¹⁾		294		293		—		—		293
Liabilities:
Long-term borrowings			⁽¹⁾		4,035		3,564		—		3,420		144
Non-recourse funding obligations			⁽¹⁾		311		215		—		—		215
Investment contracts			⁽¹⁾		12,663		13,241		—		—		13,241
Other firm commitments:
Commitments to fund limited partnerships		747			—		—		—		—		—
Commitments to fund bank loan investments		40			—		—		—		—		—
Ordinary course of business lendingcommitments		152			—		—		—		—		—

	December 31, 2018
	Notional amount			Carrying amount		Fair value
(Amounts in millions)	Notional amount			Carrying amount		Total		Level 1		Level 2		Level 3
Assets:
Commercial mortgage loans			⁽¹⁾	$	6,687	$	6,737	$	—	$	—	$	6,737
Restricted commercial mortgage loans			⁽¹⁾		62		66		—		—		66
Bank loan investments			⁽¹⁾		248		248		—		—		248
Liabilities:
Long-term borrowings			⁽¹⁾		4,025		3,577		—		3,434		143
Non-recourse funding obligations			⁽¹⁾		311		215		—		—		215
Investment contracts			⁽¹⁾		13,105		13,052		—		—		13,052
Other firm commitments:
Commitments to fund limited partnerships		539			—		—		—		—		—
Commitments to fund bank loan investments		33			—		—		—		—		—
Ordinary course of business lendingcommitments		73			—		—		—		—		—


(Amounts in millions)	Fair value		Primary methodologies	Significant inputs
U.S. government, agencies and government-sponsored enterprises	$	4,731	Price quotes from trading desk, broker feeds	Bid side prices, trade prices, Option Adjusted Spread (“OAS”) to swap curve, Bond Market Association OAS, Treasury Curve, Agency Bullet Curve, maturity to issuer spread

State and political subdivisions	$	2,494	Multi-dimensional attribute-based modeling systems, third-party pricing vendors	Trade prices, material event notices, Municipal Market Data benchmark yields, broker quotes

Non-U.S. government	$	2,502	Matrix pricing, spread priced to benchmark curves, price quotes from market makers	Benchmark yields, trade prices, broker quotes, comparative transactions, issuer spreads,bid-offer spread, market research publications, third-party pricing sources

U.S. corporate	$	26,748	Multi-dimensional attribute-based modeling systems, broker quotes, price quotes from market makers, internal models,OAS-based models	Bid side prices to Treasury Curve, Issuer Curve, which includes sector, quality, duration, OAS percentage and change for spread matrix, trade prices, comparative transactions, Trade Reporting and Compliance Engine (“TRACE”) reports

Non-U.S. corporate	$	10,123	Multi-dimensional attribute-based modeling systems,OAS-based models, price quotes from market makers	Benchmark yields, trade prices, broker quotes, comparative transactions, issuer spreads,bid-offer spread, market research publications, third-party pricing sources

Residential mortgage-backed	$	2,915	OAS-based models, To Be Announced pricing models, single factor binomial models, internally priced	Prepayment and default assumptions, aggregation of bonds with similar characteristics, including collateral type, vintage, tranche type, weighted-average life, weighted-average loan age, issuer program and delinquency ratio, pay up and pay down factors, TRACE reports

Commercial mortgage-backed	$	2,864	Multi-dimensional attribute-based modeling systems, pricing matrix, spread matrix priced to swap curves, Trepp commercial mortgage-backed securities analytics model	Credit risk, interest rate risk, prepayment speeds, new issue data, collateral performance, origination year, tranche type, original credit ratings, weighted-average life, cash flows, spreads derived from broker quotes, bid side prices, spreads to daily updated swaps curves, TRACE reports

Other asset-backed	$	3,224	Multi-dimensional attribute-based modeling systems, spread matrix priced to swap curves, price quotes from market makers, internal models	Spreads to daily updated swaps curves, spreads derived from trade prices and broker quotes, bid side prices, new issue data, collateral performance, analysis of prepayment speeds, cash flows, collateral loss analytics, historical issue analysis, trade data from market makers, TRACE reports


	March 31, 2019
(Amounts in millions)	Total		Level 1		Level 2		Level 3		NAV ⁽¹⁾
Assets
Investments:
Fixed maturity securities:
U.S. government, agencies and government-sponsoredenterprises	$	4,731	$	—	$	4,731	$	—	$	—
State and political subdivisions		2,546		—		2,494		52		—
Non-U.S. government		2,518		—		2,518		—		—
U.S. corporate:
Utilities		4,685		—		3,937		748		—
Energy		2,618		—		2,503		115		—
Finance and insurance		7,251		—		6,661		590		—
Consumer—non-cyclical		5,257		—		5,183		74		—
Technology and communications		2,974		—		2,922		52		—
Industrial		1,249		—		1,209		40		—
Capital goods		2,489		—		2,394		95		—
Consumer—cyclical		1,646		—		1,451		195		—
Transportation		1,362		—		1,308		54		—
Other		411		—		212		199		—

Total U.S. corporate		29,942		—		27,780		2,162		—

Non-U.S. corporate:
Utilities		1,127		—		692		435		—
Energy		1,447		—		1,226		221		—
Finance and insurance		2,554		—		2,372		182		—
Consumer—non-cyclical		709		—		642		67		—
Technology and communications		1,197		—		1,170		27		—
Industrial		973		—		910		63		—
Capital goods		662		—		489		173		—
Consumer—cyclical		541		—		416		125		—
Transportation		815		—		623		192		—
Other		2,260		—		2,170		90		—

Totalnon-U.S. corporate		12,285		—		10,710		1,575		—

Residential mortgage-backed		2,950		—		2,915		35		—
Commercial mortgage-backed		2,962		—		2,864		98		—
Other asset-backed		3,426		—		3,224		202		—

Total fixed maturity securities		61,360		—		57,236		4,124		—

Equity securities		635		513		67		55		—

Other invested assets:
Derivative assets:
Interest rate swaps		59		—		59		—		—
Interest rate swaps in a foreign currency		46		—		46		—		—
Interest rate caps and floors		13		—		13		—		—
Foreign currency swaps		3		—		3		—		—
Equity index options		60		—		—		60		—
Other foreign currency contracts		6		—		6		—		—

Total derivative assets		187		—		127		60		—

Securities lending collateral		106		—		106		—		—
Short-term investments		139		—		139		—		—
Limited partnerships		359		—		—		—		359

Total other invested assets		791		—		372		60		359

Reinsurance recoverable⁽²⁾		18		—		—		18		—
Separate account assets		6,210		6,210		—		—		—

Total assets	$	69,014	$	6,723	$	57,675	$	4,257	$	359


	December 31, 2018
(Amounts in millions)	Total		Level 1		Level 2		Level 3		NAV⁽¹⁾
Assets
Investments:
Fixed maturity securities:
U.S. government, agencies and government-sponsoredenterprises	$	4,631	$	—	$	4,631	$	—	$	—
State and political subdivisions		2,552		—		2,501		51		—
Non-U.S. government		2,393		—		2,393		—		—
U.S. corporate:
Utilities		4,675		—		4,032		643		—
Energy		2,419		—		2,298		121		—
Finance and insurance		6,822		—		6,288		534		—
Consumer—non-cyclical		5,048		—		4,975		73		—
Technology and communications		2,855		—		2,805		50		—
Industrial		1,238		—		1,199		39		—
Capital goods		2,391		—		2,299		92		—
Consumer—cyclical		1,597		—		1,386		211		—
Transportation		1,320		—		1,263		57		—
Other		397		—		219		178		—

Total U.S. corporate		28,762		—		26,764		1,998		—

Non-U.S. corporate:
Utilities		1,041		—		637		404		—
Energy		1,369		—		1,152		217		—
Finance and insurance		2,423		—		2,252		171		—
Consumer—non-cyclical		739		—		633		106		—
Technology and communications		1,165		—		1,139		26		—
Industrial		945		—		884		61		—
Capital goods		615		—		442		173		—
Consumer—cyclical		520		—		398		122		—
Transportation		720		—		549		171		—
Other		2,300		—		2,219		81		—

Totalnon-U.S. corporate		11,837		—		10,305		1,532		—

Residential mortgage-backed		3,044		—		3,009		35		—
Commercial mortgage-backed		3,016		—		2,921		95		—
Other asset-backed		3,426		—		3,261		165		—

Total fixed maturity securities		59,661		—		55,785		3,876		—

Equity securities		655		533		64		58		—

Other invested assets:
Derivative assets:
Interest rate swaps		42		—		42		—		—
Interest rate swaps in a foreign currency		74		—		74		—		—
Interest rate caps and floors		7		—		7		—		—
Foreign currency swaps		6		—		6		—		—
Equity index options		39		—		—		39		—
Other foreign currency contracts		10		—		10		—		—

Total derivative assets		178		—		139		39		—

Securities lending collateral		102		—		102		—		—
Short-term investments		230		—		230		—		—
Limited partnerships		318		—		—		—		318

Total other invested assets		828		—		471		39		318

Reinsurance recoverable⁽²⁾		20		—		—		20		—
Separate account assets		5,859		5,859		—		—		—

Total assets	$	67,023	$	6,392	$	56,320	$	3,993	$	318


(Amounts in millions)	Beginning balance as of January 1, 2019		Total realized and unrealized gains (losses)					Purchases		Sales			Issuances		Settlements			Transfer intoLevel 3 ⁽¹⁾		Transfer out ofLevel 3 ⁽¹⁾			Ending balance as of March 31, 2019		Total gains (losses) included in net income attributable to assets still held
(Amounts in millions)	Beginning balance as of January 1, 2019		Included in net income			Included in OCI		Purchases		Sales			Issuances		Settlements			Transfer intoLevel 3 ⁽¹⁾		Transfer out ofLevel 3 ⁽¹⁾			Ending balance as of March 31, 2019
Fixed maturity securities:
U.S. government, agenciesand government-sponsoredenterprises	$	—	$	—		$	—	$	—	$	—		$	—	$	—		$	—	$	—		$	—	$	—
State and political subdivisions		51		1			—		—		—			—		—			—		—			52		1
U.S. corporate:
Utilities		643		—			22		14		(1	)		—		(2	)		72		—			748		—
Energy		121		—			4		—		—			—		(10	)		—		—			115		—
Finance and insurance		534		—			23		30		—			—		(4	)		7		—			590		—
Consumer—non-cyclical		73		—			2		—		—			—		(10	)		9		—			74		—
Technology andcommunications		50		—			2		—		—			—		—			—		—			52		—
Industrial		39		—			1		—		—			—		—			—		—			40		—
Capital goods		92		—			3		—		—			—		—			—		—			95		—
Consumer—cyclical		211		—			7		—		(13	)		—		(1	)		—		(9	)		195		—
Transportation		57		—			1		4		—			—		(8	)		—		—			54		—
Other		178		—			3		22		—			—		(12	)		8		—			199		—

Total U.S. corporate		1,998		—			68		70		(14	)		—		(47	)		96		(9	)		2,162		—

Non-U.S. corporate:
Utilities		404		—			16		30		—			—		—			—		(15	)		435		—
Energy		217		—			7		1		—			—		(4	)		—		—			221		—
Finance and insurance		171		1			11		5		—			—		—			—		(6	)		182		1
Consumer—non-cyclical		106		2			3		—		—			—		(44	)		—		—			67		—
Technology andcommunications		26		—			1		—		—			—		—			—		—			27		—
Industrial		61		—			2		—		—			—		—			—		—			63		—
Capital goods		173		—			6		5		—			—		(11	)		—		—			173		—
Consumer—cyclical		122		—			6		—		—			—		(3	)		—		—			125		—
Transportation		171		—			6		15		—			—		—			—		—			192		—
Other		81		—			4		—		—			—		(1	)		6		—			90		—

Totalnon-U.S. corporate		1,532		3			62		56		—			—		(63	)		6		(21	)		1,575		1

Residential mortgage-backed		35		—			—		—		—			—		—			—		—			35		—
Commercial mortgage-backed		95		—			2		1		—			—		—			—		—			98		—
Other asset-backed		165		—			1		54		—			—		(13	)		1		(6	)		202		—

Total fixed maturity securities		3,876		4			133		181		(14	)		—		(123	)		103		(36	)		4,124		2

Equity securities		58		—			—		—		(3	)		—		—			—		—			55		—

Other invested assets:
Derivative assets:
Equity index options		39		17			—		12		—			—		(8	)		—		—			60		12

Total derivative assets		39		17			—		12		—			—		(8	)		—		—			60		12

Total other invested assets		39		17			—		12		—			—		(8	)		—		—			60		12

Reinsurance recoverable⁽²⁾		20		(3	)		—		—		—			1		—			—		—			18		(3	)

Total Level 3 assets	$	3,993	$	18		$	133	$	193	$	(17	)	$	1	$	(131	)	$	103	$	(36	)	$	4,257	$	11


	Beginning balance as of January 1, 2020		Total realized and unrealized gains (losses)																					Ending balance as of March 31, 2020		Total gains (losses) attributable to assets still held
(Amounts in millions)	Beginning balance as of January 1, 2020		Included in net income (loss)			Included in OCI			Purchases		Sales			Issuances		Settlements			Transfer into Level 3 (1)		Transfer out of Level 3 (1)			Ending balance as of March 31, 2020		Included in net income (loss)			Included in OCI
Fixed maturity securities:
State and political subdivisions	$	102	$	1		$	(19	)	$	—	$	—		$	—	$	(1	)	$	—	$	—		$	83	$	1		$	(19	)
Non-U.S. government		—		—			—			—		—			—		—			1		—			1		—			—
U.S. corporate:
Utilities		865		—			(25	)		—		—			—		—			16		(13	)		843		—			(23	)
Energy		129		—			(15	)		10		(21	)		—		(1	)		22		—			124		—			(14	)
Finance and insurance		572		2			(31	)		—		—			—		(12	)		—		(21	)		510		—			(28	)
Consumer— non-cyclical		94		—			(6	)		—		—			—		—			—		—			88		—			(6	)
Technology and communications		50		—			(4	)		20		—			—		—			—		(5	)		61		—			(4	)
Industrial		40		—			(3	)		—		—			—		—			—		—			37		—			(2	)
Capital goods		102		—			(8	)		—		—			—		(4	)		—		—			90		—			(8	)
Consumer—cyclical		173		—			(7	)		—		—			—		(2	)		15		—			179		—			(7	)
Transportation		78		—			(4	)		—		—			—		(1	)		—		(30	)		43		—			(1	)
Other		136		—			(1	)		5		—			—		(2	)		—		—			138		—			(1	)

Total U.S. corporate		2,239		2			(104	)		35		(21	)		—		(22	)		53		(69	)		2,113		—			(94	)

Non-U.S. corporate:
Utilities		374		—			(20	)		11		—			—		—			21		(31	)		355		—			(20	)
Energy		247		—			(30	)		—		—			—		—			19		—			236		—			(30	)
Finance and insurance		234		1			(41	)		15		—			—		—			21		(7	)		223		1			(40	)
Consumer— non-cyclical		59		—			(3	)		8		—			—		—			1		(7	)		58		—			(3	)
Technology and communications		28		—			(1	)		—		—			—		—			—		—			27		—			(1	)
Industrial		104		—			(7	)		—		—			—		(5	)		—		—			92		—			(6	)
Capital goods		161		1			(11	)		—		—			—		(16	)		—		—			135		—			(11	)
Consumer—cyclical		147		—			(15	)		4		—			—		(4	)		32		—			164		—			(15	)
Transportation		191		—			(9	)		—		—			—		—			—		(74	)		108		—			(5	)
Other		140		—			(9	)		—		—			—		(1	)		1		—			131		—			(9	)

Total non-U.S. corporate		1,685		2			(146	)		38		—			—		(26	)		95		(119	)		1,529		1			(140	)

Residential mortgage-backed		27		—			(1	)		—		—			—		—			1		(3	)		24		—			(1	)
Commercial mortgage-backed		6		—			1			—		—			—		—			—		(7	)		—		—			—
Other asset-backed		132		—			(4	)		9		—			—		(17	)		—		(2	)		118		—			(5	)

Total fixed maturity securities		4,191		5			(273	)		82		(21	)		—		(66	)		150		(200	)		3,868		2			(259	)

Equity securities		51		—			—			—		(1	)		—		—			—		—			50		—			—

Other invested assets:
Derivative assets:
Equity index options		81		(13	)		—			11		—			—		(17	)		—		—			62		(3	)		—

Total derivative assets		81		(13	)		—			11		—			—		(17	)		—		—			62		(3	)		—

Total other invested assets		81		(13	)		—			11		—			—		(17	)		—		—			62		(3	)		—

Reinsurance recoverable (2)		20		26			—			—		—			1		—			—		—			47		26			—

Total Level 3 assets	$	4,343	$	18		$	(273	)	$	93	$	(22	)	$	1	$	(83	)	$	150	$	(200	)	$	4,027	$	25		$	(259	)

GENWORTH FINANCIAL, INC.
(Registrant)

Date: May ~~1, 2019~~6, 2020

/s/ Matthew D. Farney

Matthew D. Farney
Vice President and Controller
(Principal Accounting Officer)