Genworth Financial (GNW) 10-Q 30 Apr 10 2010 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information
	3 Months Ended Mar. 31, 2010	Apr. 26, 2010
Amendment Flag	false
Document Type	10-Q
Document Period End Date	2010-03-31
Entity Registrant Name	GENWORTH FINANCIAL INC
Entity Central Index Key	0001276520
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		489,079,622
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income (USD $)
In Millions, except Per Share data	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Revenues:
Premiums	$1,470	$1,502
Net investment income	765	711
Net investment gains (losses)	(70)	(770)
Insurance and investment product fees and other	256	291
Total revenues	2,421	1,734
Benefits and expenses:
Benefits and other changes in policy reserves	1,315	1,508
Interest credited	213	275
Acquisition and operating expenses, net of deferrals	475	441
Amortization of deferred acquisition costs and intangibles	184	247
Interest expense	115	96
Total benefits and expenses	2,302	2,567
Income (loss) before income taxes	119	(833)
Benefit for income taxes	(93)	(364)
Net income (loss)	212	(469)
Less: net income attributable to noncontrolling interests	34
Net income (loss) available to Genworth Financial, Inc.'s common stockholders	178	(469)
Net income (loss) available to Genworth Financial, Inc.'s common stockholders per common share:
Basic	0.36	-1.08
Diluted	0.36	-1.08
Weighted-average common shares outstanding:
Basic	488.8	433.2
Diluted	493.5	433.2
Supplemental disclosures:
Total other-than-temporary impairments	(77)	(597)
Portion of other-than-temporary impairments recognized in other comprehensive income (loss)	(3)
Net other-than-temporary impairments	(80)	(597)
Other investments gains (losses)	10	(173)
Total net investment gains (losses)	($70)	($770)

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (USD $)
In Millions	3 Months Ended Mar. 31, 2010	12 Months Ended Dec. 31, 2009
Assets
Fixed maturity securities available-for-sale, at fair value	$52,040	$49,752
Equity securities available-for-sale, at fair value	179	159
Commercial mortgage loans	7,336	7,499
Restricted commercial mortgage loans related to securitization entities	552
Policy loans	1,408	1,403
Other invested assets	3,972	4,702
Restricted other invested assets related to securitization entities ($377 at fair value)	385
Total investments	65,872	63,515
Cash and cash equivalents	3,466	5,002
Accrued investment income	775	691
Deferred acquisition costs	7,252	7,341
Intangible assets	863	934
Goodwill	1,319	1,324
Reinsurance recoverable	17,333	17,332
Other assets	934	954
Deferred tax asset	18	92
Separate account assets	11,261	11,002
Total assets	109,093	108,187
Liabilities and stockholders' equity
Future policy benefits	29,686	29,469
Policyholder account balances	28,107	28,470
Liability for policy and contract claims	6,389	6,567
Unearned premiums	4,571	4,714
Other liabilities ($135 and $- other liabilities related to securitization entities)	6,185	6,298
Borrowings related to securitization entities ($58 at fair value)	551
Non-recourse funding obligations	3,437	3,443
Short-term borrowings	930	930
Long-term borrowings	3,638	3,641
Deferred tax liability	313	303
Separate account liabilities	11,261	11,002
Total liabilities	95,068	94,837
Commitments and contingencies
Stockholders' equity:
Class A common stock, $0.001 par value; 1.5 billion shares authorized; 577 million shares issued as of March 31, 2010 and December 31, 2009; 489 million shares outstanding as of March 31, 2010 and December 31, 2009	1	1
Additional paid-in capital	12,064	12,034
Accumulated other comprehensive income (loss):
Net unrealized gains (losses) on securities not other-than-temporarily impaired	(652)	(1,151)
Net unrealized gains (losses) on other-than-temporarily impaired securities	(208)	(247)
Net unrealized investment gains (losses)	(860)	(1,398)
Derivatives qualifying as hedges	777	802
Foreign currency translation and other adjustments	430	432
Total accumulated other comprehensive income (loss)	347	(164)
Retained earnings	3,179	3,105
Treasury stock, at cost (88 million shares as of March 31, 2010 and December 31, 2009)	(2,700)	(2,700)
Total Genworth Financial, Inc.'s stockholders' equity	12,891	12,276
Noncontrolling interests	1,134	1,074
Total stockholders' equity	14,025	13,350
Total liabilities and stockholders' equity	$109,093	$108,187

1_Condensed Consolidated Balanc

Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Per Share data	3 Months Ended Mar. 31, 2010	Dec. 31, 2009
Fair value of restricted other invested assets related to securitization entities	$377
Liabilities related to securitization entities, other	135
Fair value of borrowings related to securitization entities	$58
Class A Common Stock, par value	0.001	0.001
Class A Common Stock, shares authorized	1,500	1,500
Class A Common Stock, shares issued	577	577
Class A Common Stock, shares outstanding	489	489
Treasury stock, shares	88	88

2_Condensed Consolidated Statem

Condensed Consolidated Statements of Changes in Stockholders' Equity (USD $)
In Millions	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
Balances at Dec. 31, 2008	$1	$11,477	($3,062)	$3,210	($2,700)	$8,926		$8,926
Comprehensive income (loss):
Net income (loss)				(469)		(469)		(469)
Net unrealized gains (losses) on investment securities			(57)			(57)		(57)
Derivatives qualifying as hedges			(100)			(100)		(100)
Foreign currency translation and other adjustments			(79)			(79)		(79)
Total comprehensive income (loss)						(705)		(705)
Stock-based compensation expense and exercises and other		8				8		8
Balances at Mar. 31, 2009	1	11,485	(3,298)	2,741	(2,700)	8,229		8,229
Balances at Dec. 31, 2009	1	12,034	(164)	3,105	(2,700)	12,276	1,074	13,350
Cumulative effect of change in accounting, net of taxes and other adjustments			91	(104)		(13)		(13)
Comprehensive income (loss):
Net income (loss)				178		178	34	212
Net unrealized gains (losses) on securities not other-than-temporarily impaired			408			408	(1)	407
Net unrealized gains (losses) on other-than-temporarily impaired securities			39			39		39
Derivatives qualifying as hedges			(25)			(25)		(25)
Foreign currency translation and other adjustments			(2)			(2)	37	35
Total comprehensive income (loss)								668
Dividends to noncontrolling interests							(10)	(10)
Stock-based compensation expense and exercises and other		10				10		10
Other capital transactions		20				20		20
Balances at Mar. 31, 2010	$1	$12,064	$347	$3,179	($2,700)	$12,891	$1,134	$14,025

3_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Cash flows from operating activities:
Net income (loss)	$212	($469)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Amortization of fixed maturity discounts and premiums	24	82
Net investment losses (gains)	70	770
Charges assessed to policyholders	(113)	(103)
Acquisition costs deferred	(193)	(194)
Amortization of deferred acquisition costs and intangibles	184	247
Deferred income taxes	(101)	(502)
Net increase (decrease) in trading securities, held-for-sale investments and derivative instruments	58	(56)
Stock-based compensation expense	11	8
Change in certain assets and liabilities:
Accrued investment income and other assets	(43)	(70)
Insurance reserves	576	468
Current tax liabilities	(163)	83
Other liabilities and other policy-related balances	(392)	519
Net cash from operating activities	130	783
Cash flows from investing activities:
Fixed maturity securities	941	901
Commercial mortgage loans	136	239
Restricted commercial mortgage loans related to securitization entities	12
Proceeds from sales of investments:
Fixed maturity and equity securities	1,021	947
Purchases and originations of investments:
Fixed maturity and equity securities	(3,623)	(825)
Other invested assets, net	344
Policy loans, net	(5)	(8)
Net cash from investing activities	(1,174)	1,254
Cash flows from financing activities:
Deposits to universal life and investment contracts	490	773
Withdrawals from universal life and investment contracts	(913)	(2,803)
Short-term borrowings and other, net	(37)	(82)
Repayment and repurchase of long-term borrowings		(79)
Redemption of non-recourse funding obligations	(6)	(12)
Repayment of borrowings related to securitization entities	(11)
Dividends paid to noncontrolling interests	(10)
Net cash from financing activities	(487)	(2,203)
Effect of exchange rate changes on cash and cash equivalents	(5)	(98)
Net change in cash and cash equivalents	(1,536)	(264)
Cash and cash equivalents at beginning of period	5,002	7,328
Cash and cash equivalents at end of period	$3,466	$7,064

Formation of Genworth and Basis

Formation of Genworth and Basis of Presentation
	3 Months Ended Mar. 31, 2010
Formation of Genworth and Basis of Presentation	(1) Formation of Genworth and Basis of Presentation Genworth Financial, Inc. (Genworth) was incorporated in Delaware on October 23, 2003. The accompanying condensed financial statements include on a consolidated basis the accounts of Genworth and our affiliate companies in which we hold a majority voting or where we are the primary beneficiary of a variable interest entity, which we refer to as the Company, we, us or our unless the context otherwise requires. All intercompany accounts and transactions have been eliminated in consolidation. We have the following three operating segments: Retirement and Protection. We offer and manage a variety of protection, wealth management and retirement income products. Our primary protection products include: life, long-term care and Medicare supplement insurance. Additionally, we offer other senior supplemental products, as well as care coordination services for our long-term care policyholders. Our wealth management and retirement income products include: a variety of managed account programs and advisor services, financial planning services, fixed and variable deferred and immediate individual annuities and group variable annuities offered through retirement plans. International. We are a leading provider of mortgage insurance products in Canada, Australia, Mexico and multiple European countries. Our products predominantly insure prime-based, individually underwritten residential mortgage loans, also known as flow mortgage insurance. On a limited basis, we also provide mortgage insurance on a structured, or bulk, basis that aids in the sale of mortgages to the capital markets and helps lenders manage capital and risk. Additionally, we offer services, analytical tools and technology that enable lenders to operate efficiently and manage risk. We also offer payment protection coverages in multiple European countries, Canada and Mexico. Our lifestyle protection insurance products help consumers meet specified payment obligations should they become unable to pay due to accident, illness, involuntary unemployment, disability or death. U.S. Mortgage Insurance. In the U.S., we offer mortgage insurance products predominantly insuring prime-based, individually underwritten residential mortgage loans, also known as flow mortgage insurance. We selectively provide mortgage insurance on a structured, or bulk, basis with essentially all of our bulk writings prime-based. Additionally, we offer services, analytical tools and technology that enable lenders to operate efficiently and manage risk. We also have Corporate and Other activities which include debt financing expenses that are incurred at our holding company level, unallocated corporate income and expenses, eliminations of inter-segment transactions and the results of non-core businesses and non-strategic products that are managed outside of our operating segments. Our non-strategic products include our institutional and corporate-owned life insurance products. Institutional products consist of: funding agreements, funding agreements backing notes (FABNs) and guaranteed investment co

Accounting Pronouncements

Accounting Pronouncements
	3 Months Ended Mar. 31, 2010
Accounting Pronouncements	(2) Accounting Pronouncements Recently Adopted Accounting for Transfers of Financial Assets On January 1, 2010, we adopted new accounting guidance related to accounting for transfers of financial assets. This accounting guidance amends the previous guidance on transfers of financial assets by eliminating the qualifying special-purpose entity concept, providing certain conditions that must be met to qualify for sale accounting, changing the amount of gain or loss recognized on certain transfers and requiring additional disclosures. The adoption of this accounting guidance did not have a material impact on our consolidated financial statements. The elimination of the qualifying special-purpose entity concept requires that these entities be considered for consolidation as a result of the new guidance related to variable interest entities (VIEs) as discussed below. Improvements to Financial Reporting by Enterprises Involved with VIEs On January 1, 2010, we adopted new accounting guidance for determining which enterprise, if any, has a controlling financial interest in a VIE and requires additional disclosures about involvement in VIEs. Under this new accounting guidance, the primary beneficiary of a VIE is the enterprise that has the power to direct the activities of a VIE that most significantly impacts the VIEs economic performance and has the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. Upon adoption of this new accounting guidance, we were required to consolidate certain VIEs, including previously qualifying special-purpose entities and investment structures. We recorded a transition adjustment for the impact upon adoption to reflect the difference between the assets and liabilities of the newly consolidated entities and the amounts recorded for our interests in these entities prior to adoption. On January 1, 2010, we recorded a net cumulative effect adjustment of $104 million to retained earnings with a partial offset to accumulated other comprehensive income (loss) of $91 million related to the adoption of this new accounting guidance. The assets and liabilities of the newly consolidated entities were as follows as of January 1, 2010: (Amounts in millions) Carryingvalue (1) Adjustmentforelectionof fair value option (2) Amountsrecordeduponconsolidation Assets Restricted commercial mortgage loans $ 564 $ $ 564 Restricted other invested assets 409 (30 ) 379 Accrued investment income 2 2 Total assets 975 (30 ) 945 Liabilities Other liabilities 138 138 Borrowings related to securitization entities 644 (80 ) 564 Total liabilities 782 (80 ) 702 Net assets and liabilities of newly consolidated entities $ 193 $ 50

Earnings

Earnings (Loss) Per Share
	3 Months Ended Mar. 31, 2010
Earnings (Loss) Per Share	(3) 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 shares outstanding for the periods indicated: Threemonthsended March 31, (Amounts in millions, except per share amounts) 2010 2009 Net income (loss) $ 212 $ (469 ) Less: net income attributable to noncontrolling interests 34 Net income (loss) available to Genworth Financial, Inc.s common stockholders $ 178 $ (469 ) Basic per common share: Net income (loss) $ 0.43 $ (1.08 ) Less: net income attributable to noncontrolling interests 0.07 Net income (loss) available to Genworth Financial, Inc.s common stockholders (1) $ 0.36 $ (1.08 ) Diluted per common share: Net income (loss) $ 0.43 $ (1.08 ) Less: net income attributable to noncontrolling interests 0.07 Net income (loss) available to Genworth Financial, Inc.s common stockholders (1) $ 0.36 $ (1.08 ) Weighted-average shares used in basic earnings (loss) per common share calculations 488.8 433.2 Potentially dilutive securities: Stock options, restricted stock units and stock appreciation rights 4.7 Weighted-average shares used in diluted earnings (loss) per common sharecalculations ( 2 ) 493.5 433.2 (1) May not total due to whole number calculation. (2) Under applicable accounting guidance, companies in a loss position are required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share. Therefore, as a result of our net loss for the three months ended March31, 2009, we were required to use basic weighted-average common shares outstanding in the calculation of the 2009 diluted loss per share, as the inclusion of shares for stock options, restricted stock units and stock appreciation rights of 53,858 would have been antidilutive to the calculation. If we had not incurred a net loss in 2009, dilutive potential common shares would have remained at 433.2 million.

Investments

Investments
	3 Months Ended Mar. 31, 2010
Investments	(4) Investments (a) Net Investment Income Sources of net investment income were as follows for the periods indicated: ThreemonthsendedMarch31, (Amounts in millions) 2010 2009 Fixed maturity securitiestaxable $ 626 $ 623 Fixed maturity securitiesnon-taxable 16 30 Commercial mortgage loans 104 114 Restricted commercial mortgage loans related to securitization entities (1) 10 Equity securities 2 3 Other invested assets (2 ) (99 ) Restricted other invested assets related to securitization entities (1) 1 Policy loans 27 44 Cash, cash equivalents and short-term investments 5 17 Gross investment income before expenses and fees 789 732 Expenses and fees (24 ) (21 ) Net investment income $ 765 $ 711 (1) See note 7 for additional information related to consolidated securitization entities. (b) Net Investment Gains (Losses) The following table sets forth net investment gains (losses) for the periods indicated: ThreemonthsendedMarch31, (Amounts in millions) 2010 2009 Available-for-sale securities: Realized gains on sale $ 23 $ 29 Realized losses on sale (38 ) (63 ) Impairments: Total other-than-temporary impairments (77 ) (597 ) Portion of other-than-temporary impairments recognized in other comprehensive income (loss) (3 ) Net other-than-temporary impairments (80 ) (597 ) Trading securities 6 (12 ) Commercial mortgage loans (4 ) (6 ) Net gains (losses) related to securitization entities (1) 11 Derivative instruments (8 ) (121 ) Other 20 Net investment gains (losses) $ (70 ) $ (770 ) (1) See note 7 for additional information related to consolidated securitization entities. Derivative instruments primarily consist of changes in the fair value of non-qualifying derivatives, including embedded derivatives, changes in fair value of certain derivatives and related hedged items in fair value hedge relationships and hedge ineffectiveness on qualifying derivative instruments. See note 5 for additional information on the impact of derivative instruments included in net investment gains (losses). The following represents the activity for credit losses recognized in net income (loss) on debt securities where an other-than-temporary impairment was identified and a portion of other-than-temporary impairments was included in other compre

Derivative Instruments

Derivative Instruments
	3 Months Ended Mar. 31, 2010
Derivative Instruments	(5) Derivative Instruments Our business activities routinely deal with fluctuations in interest rates, equity prices, currency exchange rates and other asset and liability prices. We use derivative instruments to mitigate or reduce certain of these risks. We have established policies for managing each of these risks, including prohibitions on derivatives market-making and other speculative derivatives activities. These policies require the use of derivative instruments in concert with other techniques to reduce or mitigate these risks. While we use derivatives to mitigate or reduce risks, certain derivatives do not meet the accounting requirements to be designated as hedging instruments and are denoted as derivatives not designated as hedges in the following disclosures. For derivatives that meet the accounting requirements to be designated as hedges, the following disclosures for these derivatives are denoted as derivatives designated as hedges, which include both cash flow and fair value hedges. The following table sets forth our positions in derivative instruments as of the dates indicated: Asset derivatives Liability derivatives Balance sheetclassification Fair value Balance sheetclassification Fair value (Amounts in millions) March31,2010 December31,2009 March31,2010 December31,2009 Derivatives designated as hedges Cash flow hedges: Interest rate swaps Otherinvestedassets $ 69 $ 72 Otherliabilities $ 158 $ 114 Inflation indexed swaps Other investedassets 1 Otherliabilities 13 21 Foreign currency swaps Other investedassets 100 101 Otherliabilities Total cash flow hedges 170 173 171 135 Fair value hedges: Interest rate swaps Other investedassets 130 132 Otherliabilities 12 15 Foreign currency swaps Other investedassets 22 24 Otherliabilities Total fair value hedges 152 156 12 15 Total derivatives designated as hedges 322 329 183 150 Derivatives not designated as hedges Interest rate swaps Other investedassets 475 505 Otherliabilities 44 59 Interest rate swaps related tosecuritization entities (1) Restrictedother investedassets Otherliabilities 16 Interest rate swaptions Other investedassets 14 54 Otherliabilities 18 67 C

Fair Value of Financial Instrum

Fair Value of Financial Instruments
	3 Months Ended Mar. 31, 2010
Fair Value of Financial Instruments	(6) Fair Value of Financial Instruments Assets and liabilities that are reflected in the accompanying consolidated financial statements at fair value are not included in the following disclosure of fair value. Such items include cash and cash equivalents, investment securities, separate accounts, securities held as collateral and derivative instruments. Other financial assets and liabilitiesthose not carried at fair valueare discussed below. Apart from certain of our borrowings and certain marketable securities, few of the instruments discussed below are actively traded and their fair values must often be determined using models. The fair value estimates are made at a specific point in time, based upon available market information and judgments about the financial instruments, including estimates of the timing and amount of expected future cash flows and the credit standing of counterparties. Such estimates do not reflect any premium or discount that could result from offering for sale at one time our entire holdings of a particular financial instrument, nor do they consider the tax impact of the realization of unrealized gains or losses. In many cases, the fair value estimates cannot be substantiated by comparison to independent markets. The basis on which we estimate fair value is as follows: Commercial mortgage loans. Based on recent transactions and/or discounted future cash flows, using current market rates. Restricted commercial mortgage loans. Based on recent transactions and/or discounted future cash flows, using current market rates. Other invested assets. Based on comparable market transactions, discounted future cash flows, quoted market prices and/or estimates using the most recent data available for the related instrument. Primarily represents short-term investments, limited partnerships accounted for under the cost method and bank loans. Short-term borrowings. Based on carrying value which approximates fair value since the borrowings are based on variable interest rates that are reset monthly. Long-term borrowings. Based on market quotes or comparable market transactions. Non-recourse funding obligations. Based on the then current coupon, revalued based on the London Interbank Offered Rate (LIBOR) rate set and current spread assumption based on commercially available data. The model is a floating rate coupon model using the spread assumption to derive the valuation. Borrowings related to securitization entities. Based on market quotes or comparable market transactions. Investment contracts. Based on expected future cash flows, discounted at current market rates for annuity contracts or institutional products. The following represents the fair value of financial assets and liabilities that are not required to be carried at fair value as of the dates indicated: (Amounts in millions) March31, 2010 December31, 2009 Notionalamount Carrying amount Fair value Notional amount Carrying amount Fair value Assets:

Variable Interest and Securitiz

Variable Interest and Securitization Entities
	3 Months Ended Mar. 31, 2010
Variable Interest and Securitization Entities	(7) Variable Interest and Securitization Entities VIEs are generally entities that have either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest. We evaluate VIEs to determine whether we are the primary beneficiary and are required to consolidate the assets and liabilities of the entity. The determination of the primary beneficiary for a VIE can be complex and requires management judgment regarding the expected results of the entity and who directs the activities of the entity that most significantly impact the economic results of the VIE. Our primary involvement related to VIEs includes: asset securitization transactions, certain investments and certain mortgage insurance policies. (a) Asset securitizations We have used former affiliates and third-party entities to facilitate asset securitizations. Disclosure requirements related to off-balance sheet arrangements encompass a broader array of arrangements than those at risk for consolidation. These arrangements include transactions with term securitization entities, as well as transactions with conduits that are sponsored by third parties. The following table summarizes the total securitized assets as of the dates indicated: (Amounts in millions) March31, 2010 December31,2009 Receivables secured by: Commercial mortgage loans $ $ 574 Fixed maturity securities 110 123 Other assets 169 236 Total securitized assets not required to be consolidated 279 933 Total securitized assets required to be consolidated 631 Total securitized assets $ 910 $ 933 Financial support for certain securitization entities was provided under credit support agreements, in which we provided limited recourse for a maximum of $117 million of credit losses as of March 31, 2010. These agreements will remain in place throughout the life of the related entities. Included in this amount was $40 million for the limited recourse related to one of our commercial mortgage loan entities that was required to be consolidated with assets of $129 million as of March 31, 2010. There were no amounts recorded for these limited recourse liabilities as of March 31, 2010 and December 31, 2009. (b) Securitization and Variable Interest Entities Not Required To Be Consolidated We are involved in certain securitization and VIEs where we are not required to consolidate the securitization entity. Asset securitizations. We transferred assets to securitization entities that would be considered VIEs but we were not required to consolidate the securitization entities. These securitization entities were designed to have significant limitations on the types of assets owned and the types and extent of permitted activities and decision making rights.

Commitments and Contingencies

Commitments and Contingencies
	3 Months Ended Mar. 31, 2010
Commitments and Contingencies	(8) Commitments and Contingencies (a) Litigation We face the risk of litigation and regulatory investigations and actions in the ordinary course of operating our businesses, including class action lawsuits. Our pending legal and regulatory actions include proceedings specific to us and others generally applicable to business practices in the industries in which we operate. In our insurance operations, we are, have been, or may become subject to class actions and individual suits alleging, among other things, issues relating to sales or underwriting practices, payment of contingent or other sales commissions, bidding practices in connection with our management and administration of a third partys municipal guaranteed investment contract business, claims payments and procedures, cancellation or rescission of coverage, product design, product disclosure, administration, additional premium charges for premiums paid on a periodic basis, denial or delay of benefits, charging excessive or impermissible fees on products, recommending unsuitable products to customers, our pricing structures and business practices in our mortgage insurance businesses, such as captive reinsurance arrangements with lenders and contract underwriting services, violations of Real Estate Settlement Procedures Act of 1974 or related state anti-inducement laws, and breaching fiduciary or other duties to customers. Plaintiffs in class action and other lawsuits against us may seek very large or indeterminate amounts which may remain unknown for substantial periods of time. In our investment-related operations, we are subject to litigation involving commercial disputes with counterparties. We are also subject to litigation arising out of our general business activities such as our contractual and employment relationships. We are also subject to various regulatory inquiries, such as information requests, subpoenas, books and record examinations and market conduct and financial examinations from state, federal and international regulators and other authorities. A substantial legal liability or a significant regulatory action against us could have an adverse effect on our financial condition and results of operations. Moreover, even if we ultimately prevail in the litigation, regulatory action or investigation, we could suffer significant reputational harm, which could have an adverse effect on our business, financial condition or results of operations. At this time, it is not feasible to predict, nor to determine the ultimate outcomes of all pending investigations and legal proceedings, nor to provide reasonable ranges of potential losses. (b) Commitments As of March 31, 2010, we were committed to fund $187 million in limited partnership investments and $9 million in U.S. commercial mortgage loan investments.

Borrowings and Other Financings

Borrowings and Other Financings
	3 Months Ended Mar. 31, 2010
Borrowings and Other Financings	(9) Borrowings and Other Financings Revolving Credit Facilities We have two five-year revolving credit facilities that mature in May 2012 and August 2012. These facilities bear variable interest rates based on one-month LIBOR plus a margin. Each of these facilities originally had $1.0 billion available for borrowings. Lehman Commercial Paper Inc. (LCP) had committed $70 million under the August 2012 credit facility and Lehman Brothers Bank, FSB (Lehman FSB) had committed $70 million under the May 2012 credit facility. On October 5, 2008, LCP filed for protection under Chapter 11 of the Federal Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. LCP was unable to fulfill its commitments under the August 2012 credit facility and Lehman FSB declined to fulfill its commitment under the May 2012 credit facility. Therefore, as of March 31, 2010, we only had access to $1.9 billion under these facilities. On April 1, 2010, a consent and waiver agreement was entered into which releases the Lehman Brothers-related entities from their commitments under the facilities and reduces the remaining commitments by those respective amounts. As of March 31, 2010, we had borrowings of $930 million under these facilities and we utilized $404 million under these facilities primarily for the issuance of letters of credit for the benefit of one of our life insurance subsidiaries. As of December 31, 2009, we had borrowings of $930 million under these facilities and we utilized $407 million under these facilities for the issuance of letters of credit for the benefit of one of our life insurance subsidiaries. Non-Recourse Funding Obligations As of March 31, 2010, we had $3.4 billion of fixed and floating rate non-recourse funding obligations outstanding backing additional statutory reserves. As of March 31, 2010 and December 31, 2009, the weighted-average interest rates on our non-recourse funding obligations were 1.40% and 1.49%, respectively. Borrowings Related To Securitization Entities Borrowings related to securitization entities were as follows as of March 31, 2010: (Amounts in millions) Principal amount Carrying value GFCM LLC, due 2035, 5.2541% $ 250 $ 250 GFCM LLC, due 2035, 5.7426% 113 113 Genworth Special Purpose Two, LLC, due 2023, 6.0175% 130 130 Marvel Finance 2007-1 LLC, due 2017 ( 1 ) 9 1 Marvel Finance 2007-3 LLC, due 2017 ( 1 ) 1 Marvel Finance 2007-4 LLC, due 2017 ( 1 ) 12 7 Genworth Special Purpose Five, LLC, due 2040 ( 1 ) 50 50 Total $ 565 $ 551 (1) Accrual of interest based on three-month LIBOR that resets every three months plus a fixed margin. These borrowings are required to be paid down as principal is collected on the restricted investments held by the securitization entities and accordingly the repayment of these borrowings follows the maturity or

Income Taxes

Income Taxes
	3 Months Ended Mar. 31, 2010
Income Taxes	(10) Income Taxes The reconciliation of the federal statutory tax rate to the effective income tax rate was as follows for the periods indicated: ThreemonthsendedMarch31, 2010 2009 Statutory U.S. federal income tax rate 35.0 % 35.0 % Increase (reduction) in rate resulting from: State income tax, net of federal income tax effect (3.4 ) 0.5 Benefit on tax favored investments (6.6 ) 4.3 Effect of foreign operations (13.7 ) 4.8 Non-deductible expenses (0.5 ) (0.5 ) Interest on uncertain tax positions (2.2 ) (0.3 ) Tax benefits related to separation from our former parent (89.5 ) Other, net 2.7 (0.1 ) Effective rate (78.2 )% 43.7 % The effective tax rate decreased significantly from the prior year due to uncertain tax benefits related to separation from our former parent, lower taxed foreign income and tax favored investments. In connection with our 2004 separation from our former parent, General Electric (GE), we made certain joint tax elections and realized certain tax benefits. During the first quarter of 2010, the Internal Revenue Service (IRS) completed an examination of GEs 2004 tax return, including these tax impacts. Therefore, $106 million of previously uncertain tax benefits related to separation became certain and we recognized those in the first quarter of 2010. Additionally, we recorded $20 million as additional paid-in capital related to our 2004 separation.

Segment Information

Segment Information
	3 Months Ended Mar. 31, 2010
Segment Information	(11) Segment Information We conduct our operations in three operating business segments: (1) Retirement and Protection, which includes our life insurance, long-term care insurance, wealth management products and services and retirement income products; (2) International, which includes international mortgage and lifestyle protection insurance; and (3) U.S. Mortgage Insurance, which includes mortgage-related products and services that facilitate homeownership by enabling borrowers to buy homes with low-down-payment mortgages. We also have Corporate and Other activities which include interest and other debt financing expenses, other corporate income and expenses not allocated to the segments, the results of non-core businesses and non-strategic products that are managed outside of our operating segments, and eliminations of inter-segment transactions. We allocate net investment gains (losses) from Corporate and Other activities to our Retirement and Protection segment using an approach based principally upon the investment portfolio established to support the segments products and targeted capital levels. We do not allocate net investment gains (losses) from Corporate and Other activities to our International and U.S. Mortgage Insurance segments, because they have their own separate investment portfolios, and net investment gains (losses) from those portfolios are reflected in the International and U.S. Mortgage Insurance segment results, respectively. We use the same accounting policies and procedures to measure segment income (loss) and assets as our consolidated net income (loss) and assets. Our chief operating decision maker evaluates segment performance and allocates resources on the basis of net operating income (loss) available to Genworth Financial, Inc.s common stockholders. We define net operating income (loss) available to Genworth Financial, Inc.s common stockholders as income (loss) from continuing operations excluding net income attributable to noncontrolling interests, after-tax net investment gains (losses) and other adjustments and infrequent or unusual non-operating items. 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 significant component of our net investment gains (losses) is the result of impairments, 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) are often subject to our discretion and are influenced by market opportunities, as well as asset-liability matching considerations. Infrequent or unusual non-operating items are also excluded from net 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 net operating income (loss) available to Genworth

Noncontrolling Interests

Noncontrolling Interests
	3 Months Ended Mar. 31, 2010
Noncontrolling Interests	(12) Noncontrolling Interests In July 2009, Genworth MI Canada Inc. (Genworth Canada), our indirect subsidiary, completed the initial public offering (the Offering) of its common shares. Of the 49.7 million common shares of Genworth Canada that were sold in the Offering, 5.1 million common shares were sold by Genworth Canada and 44.6 million common shares were sold by Brookfield Life Assurance Company Limited, our indirect wholly-owned subsidiary. Following completion of the Offering, we beneficially own 57.5% of the common shares of Genworth Canada. In March 2010, a dividend of $10 million was paid to the noncontrolling interests.