Genworth Financial Announces Third Quarter 2009 Results

Strategic Progress Continues On Multiple Fronts

RICHMOND, Va., Oct. 29 /PRNewswire-FirstCall/ -- Genworth Financial, Inc.
(NYSE: GNW) today reported results for the third quarter of 2009. Net
income(1), before provision for noncontrolling interests, was $45 million, or
$0.10 per diluted share, compared with a net loss of $258 million, or $0.60
per diluted share, in the third quarter of 2008. Net operating income(2),
before provision for noncontrolling interests, for the third quarter of 2009
was $106 million, or $0.24 per diluted share, compared with $220 million, or
$0.51 per diluted share, in the third quarter of 2008.

Reflecting the company's recent reduction in ownership of Genworth MI Canada
in the quarter from 100 percent to 57.5 percent in connection with an initial
public offering (IPO) transaction, Genworth's net income available to
Genworth's common stockholders was $19 million, or $0.04 per diluted share. On
this same basis, net operating income available to Genworth's common
stockholders for the third quarter of 2009 was $81 million, or $0.18 per
diluted share.

Three months ended September 30 (Unaudited)

2009 2008

Total Per Total Per
diluted diluted
share share
(Amounts in millions,
except per share)
Net income (loss) $45 $0.10 $(258) $(0.60)
Less: net income attributable to
noncontrolling interests 26 0.06 N/A(3) N/A
Net income (loss) available
to Genworth's common stockholders $19 $0.04 $(258) $(0.60)

Net operating income $106 $0.24 $220 $0.51
Less: net operating income
attributable to noncontrolling
interests 25 0.06 N/A N/A

Net operating income available to
Genworth's common stockholders $81 $0.18 $220 $0.51

Weighted average diluted shares 451.6 433.1

Genworth's results in the quarter included net operating income of $120
million from the Retirement and Protection segment and $96 million from the
International segment. This was partially offset by net operating losses of
$116 million in the U.S. Mortgage Insurance (U.S. MI) segment and $19 million
in Corporate and Other. The impact of foreign exchange on net operating income
in the third quarter of 2009 was an unfavorable $6 million.

Net investment losses, net of tax and other adjustments, decreased to $62
million from $478 million in the third quarter 2008, and increased on a
sequential basis from $59 million in the second quarter. Net unrealized
investment losses, net of tax, deferred acquisition costs (DAC) and other
adjustments, declined to $1.4 billion from $3.0 billion in the prior year
quarter. On September 21, 2009, Genworth completed an equity offering of 55.2
million shares for net proceeds of $622 million, bringing total outstanding
shares at the end of the quarter to 488.5 million. Book value per share grew
10 percent sequentially to $25.42 per share from $23.01 per share as of June
30, 2009, reflecting improvement in the investment environment and the
additional equity capital partially offset by an increased number of shares.
Book value per share, excluding accumulated other comprehensive income (loss),
decreased sequentially to $25.37 per share from $27.33 per share as of June
30, 2009.

"Genworth continued to make substantial progress across our business lines
with improved sequential sales, emerging benefits from sound price increases
in several lines, lower losses and strong financial flexibility," said Michael
D. Fraizer, chairman and chief executive officer. "We are encouraged by the
multiple signs of stabilization and improvement in our served markets which
combined with our focused growth strategies, engaged distribution
relationships and risk reduction efforts position us well for improved results
as we move ahead."

Third Quarter Highlights

New Business Growth
-- Retirement and Protection had sequential sales growth across its life,
long term care (LTC) and variable annuity (VA) lines. In addition
wealth
management net flows increased for a second consecutive quarter
bringing
assets under management (AUM) to $18.0 billion with positive net flows
continuing into October. These favorable trends resulted from a
combination of new product introductions, distribution expansion,
strong
service execution and improved market conditions.
-- In International mortgage insurance, Australia flow new insurance
written (NIW) grew nine percent(4) versus prior year to $8.9 billion,
and Canada flow NIW increased 14 percent(4) sequentially.

-- U.S. MI made a number of changes to underwriting guidelines in the
third
quarter that are expected to improve future NIW growth. In particular,
199 metropolitan statistical areas (MSAs) where Genworth had been
restricting coverages to 90 percent loan to value (LTV) based on
housing
market conditions, were reopened to mortgages with 95 percent and
lower
LTVs. Underwriting guidelines remained more stringent in five states
including California, Florida, Arizona, Nevada and Michigan.

Earnings Power & Risk Positions
-- Loss ratios improved sequentially in Canada and Australia mortgage
insurance as well as in lifestyle protection.
-- U.S. MI achieved three consecutive quarters of increased loss
mitigation
savings and decreased losses. U.S. MI had net loss mitigation savings
of
$224 million in the quarter, bringing the year to date total to $557
million. The company expects total year savings to be between $775
million and $825 million.
-- U.S. MI new business effective pricing increased approximately 35
percent reflecting both the 2008 approximate 20 percent price increase
as well as the benefit from new business not being subject to ceded
premiums for lender captive reinsurance arrangements.
-- Lifestyle protection earnings improved significantly over the second
quarter as a result of lower claims volume as well as the impact of
ongoing portfolio repricing and distributor agreement restructuring
efforts.
-- Mortgage insurance risk in force (RIF) in Spain continued to be
reduced,
dropping to $1.3 billion from $2.7 billion a year ago. In addition, as
a
result of actions completed after the close of the quarter, Spain RIF
will be further reduced by at least an additional $340 million by year
end. In total, European mortgage insurance RIF represented less than
four percent of the total international mortgage insurance RIF at the
end of the quarter.
-- Genworth initiated a number of strategies to begin reinvesting
operating
company cash balances. This included redeploying cash at the operating
companies, where cash totaled $5.8 billion at the end of the quarter,
at
yields accretive on average to the current portfolio rate. Given
strong
holding company liquidity and improved credit market conditions,
approximately $2.5 billion to $3.5 billion of additional cash
reinvestment is targeted over the next few quarters across the
operating
companies.

-- Investment performance improved significantly in the quarter with year
over year declines in realized and unrealized losses. Portfolio
repositioning to decrease targeted risks continued, with over $1.5
billion of positions sold year to date which, coupled with improved
credit market conditions, contributed to better performance. Net
unrealized investment losses, net of tax, DAC and other adjustments,
decreased to $1.4 billion from $3.0 billion in the prior year.

Capital Management & Flexibility
-- On September 21, 2009, Genworth completed an equity offering with net
proceeds of $622 million and 55.2 million shares issued, including the
underwriters' full exercise of their option to purchase additional
shares, bringing total outstanding shares to 488.5 million.
-- Holding company cash totaled $1.3 billion and included net proceeds
associated with the Genworth MI Canada IPO and the equity offering. In
addition, Genworth repurchased $73 million of long term debt during
the
quarter.
-- Consolidated U.S. life companies ended the third quarter of 2009 with
an
estimated risk based capital (RBC) ratio of approximately 370
percent(5). Genworth expects to end the year with an RBC ratio at or
above 350 percent.
-- The risk to capital ratio in the U.S. mortgage insurance companies was
15.1:1(5) at the end of the quarter which provides flexibility to
increase the level of attractive return new business.

-- The International segment ended the quarter with sound capital ratios
in
excess of regulatory required levels.

Segment Results
Net operating income (loss) presented in the tables below excludes net
investment gains (losses) and other adjustments, net of taxes. In the
discussion of International results, all references to percentage changes
exclude the impact of foreign exchange. The percentage changes including the
impact of foreign exchange are included in a table at the end of this press
release.

A reconciliation of net operating income (loss) of segments and Corporate and
Other activities to net income (loss) is included at the end of this press
release.

Retirement and Protection

Retirement and Protection
Net Operating Income (Loss)
(in millions) Q3 09 Q3 08

Life Insurance $79 $63
Long Term Care 35 39
Wealth Management 8 12
Retirement Income
Fee-Based 16 (1)
Spread-Based (8) 16
Institutional (10) 49

Total Retirement and Protection $120 $178

Sales
(in millions) Q3 09 Q3 08

Life Insurance $50 $76
Long Term Care 53 64
Wealth Management
Gross Flows 1,372 1,230
Net Flows 468 183
Retirement Income
Fee-Based 217 596
Spread-Based 127 727
Institutional - 458

Assets Under Management(6)
(in millions) Q3 09 Q3 08

Wealth Management $17,992 $18,671
Retirement Income Fee-Based 8,067 7,710
Total Fee-Based 26,059 26,381
Retirement Income Spread-Based 19,457 20,236
Institutional 5,053 9,253
Total Spread-Based 24,510 29,489
Total Assets Under Management $50,569 $55,870

Retirement and Protection earned $120 million compared with $178 million a
year ago. Consolidated U.S. life companies ended the quarter with an estimated
RBC ratio of approximately 370 percent(5), and are expected to end the year at
or above 350 percent.

Life insurance earnings increased to $79 million from $63 million. Earnings in
the current quarter included an annual review of actuarial assumptions that
resulted in a $16 million favorable unlocking related to a refinement of
assumptions for better mortality experience and lower reinsurance costs.
Results in the quarter also reflected favorable mortality, offset partially by
lower investment income. Total life sales decreased 34 percent from prior year
primarily reflecting a decline in overall universal life industry sales.
Genworth continued its transition to the "main street" life insurance market
characterized by policy face sizes of $1 million and below resulting in lower
comparable premium levels while achieving a 15 percent sequential increase in
new term policies sold. Genworth recently introduced a new suite of life
insurance products with more capital efficient designs which provide higher
returns.

LTC earnings declined $4 million to $35 million, as profit emergence from
favorable new block business growth was more than offset by higher claims
primarily associated with lower death related terminations. Individual LTC
sales decreased $15 million year over year, primarily from an overall decline
in LTC sales across the industry, but sequentially increased $3 million from
higher sales across all channels.

Wealth management earnings decreased from the prior year, driven by a 13
percent decline in average AUM to $17.0 billion from $19.5 billion. On a
sequential basis, earnings increased $1 million reflecting growth in AUM. Net
flows were positive for the second consecutive quarter improving to $468
million compared with $160 million in the second quarter. Net flows, combined
with favorable market performance, resulted in a $2.1 billion sequential
increase in AUM.

Retirement income fee-based earnings increased to $16 million from lower DAC
amortization attributable to positive equity market performance during the
quarter. This was partially offset by lower fees from a decline in average AUM
for the VA product and higher taxes. On a sequential basis, earnings
increased $5 million from $11 million as a result of improved equity market
performance and lower taxes. Total VA sales grew 41 percent sequentially to
$217 million. Recently, Genworth launched RetireReady(SM) One, a more
streamlined retirement income VA product with improved risk characteristics
and flexible features that enable a more customized guaranteed income
strategy.

The retirement income spread-based business had a net operating loss of $8
million compared to income of $16 million in the prior year. In the prior
year, earnings included a $15 million tax benefit that did not recur. Earnings
in the current period reflected lower investment income associated with
holding higher cash balances and $5 million of unfavorable DAC unlocking
related to a refinement of assumptions for spreads. A significant portion of
these higher cash balances is targeted for reinvestment as noted previously.
Total spread-based AUM remained relatively flat sequentially ending at $19.5
billion. Genworth's fixed annuity production in the quarter was down
significantly and reflected a less attractive spread environment and a
cautious stance regarding interest rates and related investment strategies.
Going forward, fixed annuity production will remain targeted with a
disciplined focus on risk adjusted returns.

Institutional had a net operating loss of $10 million from lower net
investment spread associated with a decline in AUM and holding higher cash
balances. The prior year quarter included $52 million of opportunistic
repurchases of funding agreements backing notes (FABNs) at prices discounted
to contract value as compared with only $2 million of similar transactions in
the current quarter. AUM declined $0.5 billion sequentially to $5.1 billion,
primarily reflecting scheduled maturities and the company's decision not to
offer new institutional contracts given the current market environment.

International

International
Net Operating Income (Loss)
(in millions) Q3 09 Q3 08

Mortgage Insurance
Canada:
Net operating income $70 $80
Less: net operating income attributable
to noncontrolling interests 25 N/A
Net operating income available to
Genworth's common stockholders 45 80
Australia 42 48
Other International (9) (2)
Lifestyle Protection 18 40

Total International $96 $166

International Q3 09 Q3 08
Sales
(in billions)
Mortgage Insurance (MI)
Flow
Canada $4.4 $8.0
Australia 8.9 8.7
Other International 0.9 2.0
Bulk
Canada 0.2 0.9
Australia - 0.6
Other International - 1.1

Total International MI $14.4 $21.3

Lifestyle Protection $0.5 $0.6

International earnings reflected sound mortgage insurance performance in
Canada and Australia as housing markets improved and economies stabilized, a
$25 million decrease in earnings as a result of the IPO of 42.5 percent of
Genworth MI Canada and lower earnings in the lifestyle protection business
associated primarily with higher unemployment related claims in Europe and
lower consumer lending levels which reduced new business.

In Canada and Australia, a sequential lift in aggregate home prices were
reported during the quarter, which continues the favorable trends the company
observed since the beginning of the year. Government stimulus programs
including lower interest rates, combined with enhanced housing affordability
and increased home sales activity, contributed to home price improvement.
After several consecutive quarters of job losses in both Canada and Australia,
there were modest job gains in September. The unemployment rate(7) in Canada
ended the quarter at 8.4 percent, down from 8.7 percent in August 2009 and in
Australia ended the quarter at 5.7 percent, down from 5.8 percent in August
2009.

In Canada, operating earnings available to Genworth's common stockholders were
$45 million reflecting the minority stake IPO of Genworth MI Canada. Total
Canadian operating earnings decreased 10 percent from the prior year primarily
from increased losses associated with seasoning of the 2007 and 2008 books
during a period of challenged economic conditions. On a sequential basis,
total Canadian earnings increased 16 percent primarily from lower
delinquencies. The loss ratio declined to 41 percent from 48 percent. The
average reserve per delinquency increased to CDN$68,200 from CDN$62,800 in the
second quarter primarily from continued housing market pressure in Alberta.
Loss mitigation initiatives, where the company is partnering with lenders to
work out loans for borrowers facing financial difficulty, increased during the
quarter.

Flow NIW in Canada declined 40 percent from the prior year primarily as a
result of lower levels of high LTV mortgage originations associated with
economic conditions and weaker consumer confidence. On a sequential basis,
flow NIW increased 14 percent associated primarily with seasonal growth in the
high LTV market during the summer months.

The regulatory capital ratio in Canada increased sequentially to 147
percent(5) from 140 percent and is in excess of the targeted 135 percent
regulatory range. GAAP book value for the Canada MI business was $2.4 billion,
of which $1.4 billion represented Genworth's 57.5 percent ownership interest.

In Australia, earnings decreased six percent primarily from higher taxes
compared with the prior year. Pre-tax operating income increased five percent
from both higher premiums and lower losses. On a sequential basis, earnings
increased 19 percent primarily as a result of lower losses. Continued growth
in net premiums written was the result of the prior year price increase,
ongoing strength of the high LTV market and increased account penetration.
The loss ratio declined to 45 percent from 54 percent in the second quarter
primarily from a decline in new delinquencies. Loss mitigation initiatives,
where the company is partnering with lenders to work out loans for borrowers
facing financial difficulty, increased during the quarter.

Australian flow NIW increased nine percent compared with the prior year, from
both ongoing strength in the high LTV market and increased account
penetration. Flow NIW was down seven percent sequentially reflecting a
reduction in government first time homebuyer program benefits and rising
interest rates. Australia completed implementation of an approximate 20
percent average price increase in the third quarter which followed a 17
percent average price increase in 2008. During the quarter, the company
expanded its relationship with a large existing lender to capture additional
origination volume.

The regulatory capital ratio in Australia increased sequentially to 130
percent(5) and is in excess of the minimum capital requirement of 120 percent.
GAAP book value for Australia mortgage insurance at the end of the quarter was
$1.5 billion.

Other international mortgage insurance had a $9 million net operating loss
primarily from increased reserves per delinquencies reflecting emerging
experience. RIF in Spain was reduced to $1.3 billion from $2.7 billion a year
ago and will be further reduced by at least an additional $340 million by year
end. Total flow NIW decreased 55 percent reflecting market conditions,
tightened underwriting and active risk management.

Lifestyle protection earnings decreased to $18 million primarily from
increased claims associated with unemployment related policies in Europe,
particularly in Spain and Ireland. On a sequential basis, earnings increased
from $4 million to $18 million as the loss ratio decreased to 27 percent from
34 percent in the second quarter. New claim registrations for unemployment
related policies in Europe peaked in March, and have subsequently trended
downward. Total new claim registrations declined across Europe by 35 percent
since March. Significant price or distribution contract changes have been made
or are in the process of implementation across both new and eligible in force
policies, with the majority of these actions expected to be completed by year
end. Collectively, these strategies will help absorb the impact of current and
future economic exposures and are expected to improve future results.

Total lifestyle protection sales decreased 16 percent as a result of the
stressed economic environment in Europe and related lower consumer lending
along with selective risk management actions. Initiatives to expand lifestyle
protection lender distribution relationships have been successful, with over
46 new distribution agreements completed year to date with new and existing
clients.

In lifestyle protection, the regulatory capital ratio was relatively flat
sequentially at 210 percent(5), more than twice the regulatory requirement.

U.S. Mortgage Insurance

U.S. Mortgage Insurance
Q3 09 Q3 08
Net Operating Loss $(116) $(121)
(in millions)

Primary Insurance In Force $149.5 $175.3
(in billions)
Primary Risk In Force $32.6 $36.5
(in billions)

Primary Sales
(in billions) Q3 09 Q3 08
Flow $1.5 $6.2
Bulk 0.5 0.1
Total Primary Sales $2.0 $6.3

U.S. Mortgage Insurance had a $116 million net operating loss which included a
$62 million charge from a previously announced settlement of an arbitration
proceeding with a lender. Excluding this item, loss mitigation savings and a
favorable adjustment to loss reserves associated with current loss mitigation
experience were more than offset by higher incurred losses in the quarter.

Primary insurance in force declined by $25.8 billion versus the prior year
from a combination of lower NIW, rescissions and higher paid claims. Primary
NIW declined by $4.3 billion to $2.0 billion from the prior year as a result
of the smaller market size and the company's tighter set of product offerings
and underwriting guidelines. U.S. MI made a number of changes to underwriting
guidelines in the third quarter that are expected to support future NIW
growth. In particular, 199 MSAs where Genworth had been restricting coverages
to 90 percent LTV based on housing market conditions, were reopened to
mortgages with 95 percent and lower LTVs. Underwriting guidelines remained
more stringent in California, Florida, Arizona, Nevada and Michigan. Flow
persistency decreased four points to 84 percent versus the prior year.

Gross flow losses declined to $219 million from $385 million sequentially from
a reduction in loss reserves associated with current loss mitigation
experience. On a net basis, adjusting for $49 million of reinsurance benefits,
losses declined to $170 million from $308 million.

Gross bulk losses increased sequentially from $63 million to $176 million of
which $95 million was related to the legal settlement and $81 million was
primarily related to government sponsored enterprise (GSE) Alt-A business
where losses exceeded deductible levels.

Flow delinquencies totaled approximately 100,200 and increased on a sequential
basis from both seasonal factors and a decline in cured delinquencies. The
company has experienced a lag in the rate at which delinquent loans proceed to
foreclosure due to various local and lender foreclosure delays as well as
servicer and court-related backlog issues. As these delays end, loans may
eventually go through foreclosure and move to paid claims or be impacted
beneficially by government or lender modification programs.

The flow average reserve per delinquency decreased sequentially to $20,000
from $22,900 primarily from an adjustment to reserves reflecting loss
mitigation experience and to a lesser extent from a geographic shift in the
mix of delinquencies. As a result of the significant increase in loss
mitigation activities and savings during 2009, Genworth adjusted reserves to
reflect the current experience on certain delinquent loans. In addition, this
is the second sequential quarter of decline in the reserve per delinquency
reflecting a shift of delinquencies from a concentration in higher loan
balance states and among alternative products to prime borrowers across the
nation pressured by the impact of increasing unemployment.

Loss mitigation activities, including workouts, presales and policy
rescissions, net of reinstatements, resulted in $224 million of savings during
the third quarter, bringing year to date savings to $557 million. Loss
mitigation efforts continue to expand, with additional execution and
resources, coupled with the growing intensity of loan modification activities
estimated to generate savings between $775 million and $825 million for total
year 2009. Based upon reporting from the GSEs and certain servicers, Genworth
estimates that there are approximately 11,500 delinquent loans that are
currently pending within the U.S. Department of the Treasury's Homeowner
Assistance Modification Program (HAMP). These, along with additional future
modifications, are expected to have a more significant impact on loss
mitigation savings in 2010.

Genworth continued to generate targeted levels of new business production with
a focus on high quality underwriting and maintaining sound capital levels.
Flow NIW decreased six percent sequentially to $1.5 billion, as mortgage
insurance market penetration declined significantly in the quarter and the
impact from underwriting and guideline restrictions initiated throughout 2008
continued. Given its sound capital position, the company sees opportunities
to selectively increase NIW, particularly given the guideline changes made
during the third quarter.

Risk to capital increased slightly on a sequential basis to 15.1:1(5) from
14.8:1 from the statutory loss, new business production and higher
persistency.

Corporate and Other

Corporate and Other
(in millions) Q3 09 Q3 08
Net Operating Loss $(19) $(3)

Corporate and other operating loss increased to $19 million primarily from
lower expenses in the third quarter of 2008.

Investments
The net loss in the third quarter included net investment losses of $62
million, net of tax and other adjustments, including $127 million of net
other-than-temporary impairments, $12 million of gains on derivatives used for
risk management purposes and $28 million of net realized gains from asset
sales.

Credit related impairments totaled $127 million and were primarily comprised
of:
-- $47 million from financial hybrid securities;
-- $47 million from sub-prime and Alt-A residential mortgage-backed
securities (RMBS);
-- $16 million from other structured securities, with $13 million related
to prime RMBS; and

-- $15 million from other corporate securities.

Net unrealized investment losses were $1.4 billion, net of tax, DAC and other
items, as of September 30, 2009, a decline from $3.0 billion as of June 30,
2009. The fixed maturity securities portfolio had gross unrealized investment
losses of $4.0 billion compared to $6.0 billion at the end of the second
quarter and gross unrealized investment gains of $1.6 billion compared to $0.8
billion at the end of the second quarter.

Derivatives Hedging Activity
Third quarter included $12 million of gains on derivatives associated with
guaranteed minimum withdrawal benefit variable annuities and a change in
market value related to credit derivatives, offset by modest losses on the
company's capital hedges.

Stockholders' Equity
Stockholders' equity as of September 30, 2009 increased to $12.4 billion, or
$25.42 per share, compared with $10.5 billion, or $24.24 per share, as of
September 30, 2008. Stockholders' equity, excluding accumulated other
comprehensive income (loss), as of September 30, 2009 increased to $12.4
billion, or $25.37 per share, compared with $12.3 billion, or $28.44 per
share, as of September 30, 2008.

About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a leading Fortune 500 global financial
security company. Genworth has more than $100 billion in assets and employs
approximately 6,000 people with a presence in more than 25 countries. Its
products and services help meet the investment, protection, retirement and
lifestyle needs of more than 15 million customers. Genworth operates through
three segments: Retirement & Protection, U.S. Mortgage Insurance and
International. Its products and services are offered through financial
intermediaries, advisors, independent distributors and sales specialists.
Genworth Financial, which traces its roots back to 1871, became a public
company in 2004 and is headquartered in Richmond, Virginia. For more
information, visit Genworth.com. From time to time Genworth releases
important information via postings on its corporate website. Accordingly,
investors and other interested parties are encouraged to enroll to receive
automatic email alerts and Really Simple Syndication (RSS) feeds regarding new
postings. Enrollment information is found under the "Investors" section of
Genworth.com.

Conference Call and Financial Supplement Information
This press release and the third quarter 2009 financial supplement are now
posted on the company's website. Investors are encouraged to review all of
these materials.

Genworth will conduct a conference call on October 30, 2009 at 9 a.m. (ET) to
discuss the quarter's results. The conference call will be accessible via
telephone and the Internet. The dial-in number for Genworth's October 30
conference call is 888 857.6931 or 719 325.2122 (outside the U.S.). To
participate in the call by webcast, register at http://investor.genworth.com
at least 15 minutes prior to the webcast to download and install any necessary
software.

The webcast will be archived on the company's website and a replay of the call
will be available at 888 203.1112 or 719 457.0820 (outside the U.S.); passcode
4289665. The replay will be available through November 13, 2009.

Use of Non-GAAP Measures
This press release includes the non-GAAP financial measure entitled "net
operating income (loss)." The chief operating decision maker evaluates segment
performance and allocates resources on the basis of net operating income
(loss). The company defines net operating income (loss) 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. This metric excludes these items
because the company does not consider them to be related to the operating
performance of its segments and Corporate and Other activities. A significant
component of the 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 Genworth's 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) if, in the company's opinion, they are not indicative of overall
operating trends. While some of these items may be significant components of
net income (loss) in accordance with GAAP, the company believes that net
operating income (loss), and measures that are derived from or incorporate net
operating income (loss), are appropriate measures that are useful to investors
because they identify the income (loss) attributable to the ongoing operations
of the business. However, net operating income (loss) is not a substitute for
GAAP net income (loss). In addition, the company's definition of net operating
income (loss) may differ from the definitions used by other companies. There
were no infrequent or unusual non-operating items excluded from net operating
income (loss) during the periods presented in this press release. The tables
at the end of this press release reflect net operating income (loss) as
determined in accordance with accounting guidance related to segment reporting
and a reconciliation of net operating income (loss) of the company's segments
and Corporate and Other activities to net income (loss) for the three months
ended September 30, 2009 and 2008.

Definition of Selected Operating Performance Measures
The company reports selected operating performance measures including "sales,"
"assets under management" and "insurance in force" or "risk in force" which
are commonly used in the insurance and investment industries as measures of
operating performance. Management regularly monitors and reports the sales
metric as a measure of volume of new and renewal business generated in a
period. "Sales" refer to (1) annualized first-year premiums for term life
insurance, long term care insurance and Medicare supplement insurance; (2) new
and additional premiums/deposits for universal life insurance,
linked-benefits, spread-based and variable products; (3) gross and net flows,
which represent gross flows less redemptions, for the wealth management
business; (4) written premiums and deposits, gross of ceded reinsurance and
cancellations, and premium equivalents, where we earn a fee for administrative
services only business, for lifestyle protection insurance; (5) new insurance
written for mortgage insurance, which in each case reflects the amount of
business the company generated during each period presented; and (6) written
premiums, net of cancellations, for the Mexican insurance operations. Sales do
not include renewal premiums on policies or contracts written during prior
periods. The company considers annualized first-year premiums, new
premiums/deposits, gross and net flows, written premiums, premium equivalents
and new insurance written to be measures of the company's operating
performance because they represent a measure of new sales of insurance
policies or contracts during a specified period, rather than measures of the
company's revenues or profitability during that period.

Management regularly monitors and reports assets under management for the
wealth management business, insurance in force and risk in force. Assets
under management for the wealth management business represent third-party
assets under management that are not consolidated in the financial statements.
Insurance in force for the life insurance, international and U.S. mortgage
insurance businesses is a measure of the aggregate face value of outstanding
insurance policies as of the respective reporting date. Risk in force for the
international and U.S. mortgage insurance businesses is a measure that
recognizes that the loss on any particular mortgage loan will be reduced by
the net proceeds received upon sale of the underlying property. The company
considers assets under management for its wealth management business,
insurance in force and risk in force to be measures of the company's operating
performance because they represent measures of the size of the business at a
specific date, rather than measures of the company's revenues or profitability
during that period.

This press release also includes a metric related to loss mitigation
activities for the U.S. mortgage insurance business. The company defines loss
mitigation activities as rescissions, borrower loan modifications, repayment
plans, lender- and borrower-titled presales and other loan workouts and claim
mitigation actions. Estimated savings related to rescissions are the reduction
in carried loss reserves, net of premium refunds and reinstatement of prior
rescissions. Estimated savings related to loan modifications, presales and
other cure related loss mitigation actions, the estimated savings represent
the reduction in carried loss reserves. For non-cure related actions,
including presales, the estimated savings represent the difference between the
full claim obligation and the actual amount paid. The company believes that
this metric helps to enhance the understanding of the operating performance of
the U.S. mortgage insurance business.

These operating measures enable the company to compare its operating
performance across periods without regard to revenues or profitability related
to policies or contracts sold in prior periods or from investments or other
sources.

Cautionary Note Regarding Forward-Looking Statements
This press release contains certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by words such as "expects,"
"intends," "anticipates," "plans," "believes," "seeks," "estimates," "will" or
words of similar meaning and include, but are not limited to, statements
regarding the outlook for the company's future business and financial
performance. Forward-looking statements are based on management's current
expectations and assumptions, which are subject to inherent uncertainties,
risks and changes in circumstances that are difficult to predict. Actual
outcomes and results may differ materially due to global political, economic,
business, competitive, market, regulatory and other factors and risks,
including the following:
-- Risks relating to the company's businesses, including adverse capital
and credit market conditions, downturns and volatility in equity and
credit markets, downgrades in the company's financial strength or
credit
ratings, the impact of the U.S. government's plan to purchase illiquid
mortgage-backed and other securities, the company's ability to access
the U.S. government's financial support programs, interest rate
fluctuations, the valuation of fixed maturity, equity and trading
securities, defaults, downgrades or impairments of fixed maturity
securities portfolio, goodwill impairments, the soundness of other
financial institutions, the inability to access the company's credit
facilities, declines in risk based capital, insufficiency of reserves,
legal constraints on dividend distributions by subsidiaries, intense
competition, availability and adequacy of reinsurance, defaults by
counterparties, loss of key distribution partners, regulatory
restrictions on the company's operations and changes in applicable
laws
and regulations, legal or regulatory investigations or actions, the
failure or any compromise of the security of the company's computer
systems and the occurrence of natural or man-made disasters or a
pandemic;
-- Risks relating to the company's Retirement and Protection segment,
including changes in morbidity and mortality, accelerated amortization
of deferred acquisition costs and present value of future profits,
reputational risks as a result of rate increases on certain in force
long term care insurance products, medical advances such as genetic
mapping research, unexpected changes in persistency rates, increases
in
statutory reserve requirements and the failure of demand for long term
care insurance to increase as expected;
-- Risks relating to the company's International segment, including
political and economic instability, foreign exchange rate
fluctuations,
unexpected changes in unemployment rates, unexpected increases in
mortgage insurance default rates or severity of defaults, decreases in
the volume of high loan to value international mortgage originations,
increased competition with government owned and government sponsored
enterprises offering mortgage insurance and changes in regulations;
-- Risks relating to the company's U.S. Mortgage Insurance segment,
including the company's review of strategic alternatives for the
segment, increases in mortgage insurance default rates or severity of
defaults, deterioration in economic conditions or a decline in home
price appreciation, the effect of the conservatorship of Fannie Mae
and
Freddie Mac on mortgage originations, the influence of Fannie Mae,
Freddie Mac and a small number of large mortgage lenders and
investors,
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 by lenders
in
the level of coverage they select, increases in the use of reinsurance
with reinsurance companies affiliated with the company's mortgage
lending customers, increased competition with government owned and
government sponsored enterprises offering mortgage insurance, changes
in
regulations, legal actions under the Real Estate Settlement Practices
Act of 1974, potential liabilities in connection with the company's
U.S.
contract underwriting services, the extent to which the company may
continue to realize benefits from rescissions and the extent to which
loan modifications and other similar programs may provide benefits to
Genworth;
-- Other risks, including the possibility that in certain circumstances
we
will be obligated to make payments to General Electric Company (GE)
under the company's tax matters agreement with GE even if the
company's
corresponding tax savings are never realized and the company's
payments
could be accelerated in the event of certain changes in control and
provisions of the company's certificate of incorporation and bylaws
and
the company's tax matters agreement with GE may discourage takeover
attempts and business combinations that stockholders might consider in
their best interests; and

-- Risks relating to the company's common stock, including the suspension
of dividends and stock price fluctuation.

The company undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future developments or
otherwise.

Consolidated Statements of Income
(Amounts in millions, except per share amounts)

Three months ended
September 30,

2009 2008
Revenues:
Premiums $1,492 $1,735
Net investment income 759 918
Net investment gains (losses) (122) (816)
Insurance and investment product fees and other 262 331

Total revenues 2,391 2,168

Benefits and expenses:
Benefits and other changes in policy reserves 1,450 1,497
Interest credited 225 319
Acquisition and operating expenses, net of deferrals 484 515
Amortization of deferred acquisition costs and
intangibles 143 208
Interest expense 96 125

Total benefits and expenses 2,398 2,664

Loss before income taxes (7) (496)
Benefit for income taxes (52) (238)

Net income (loss) 45 (258)
Less: net income attributable to noncontrolling
interests 26 -

Net income (loss) available to Genworth
Financial, Inc.'s common stockholders $19 $(258)

Net income (loss) available to Genworth Financial,
Inc.'s common stockholders per common share:
Basic $0.04 $(0.60)

Diluted $0.04 $(0.60)

Weighted-average common shares outstanding:
Basic 448.9 433.1

Diluted 451.6 433.1

Supplemental disclosures:
Total other-than-temporary impairments $(285) $(577)
Portion of other-than-temporary impairments
included in other comprehensive income (loss) 89 -

Net other-than-temporary impairments (196) (577)
Other investment gains (losses) 74 (239)

Total net investment gains (losses) $(122) $(816)

Reconciliation of Net Operating Income to Net Income (Loss)
(Amounts in millions, except per share amounts)

Three months ended
September 30,

2009 2008

Net operating income:
Retirement and Protection segment $120 $178
International segment 96 166
U.S. Mortgage Insurance segment (116) (121)
Corporate and Other (19) (3)

Net operating income 81 220
Adjustment to net operating income:
Net investment gains (losses), net of taxes and
other adjustments (62) (478)

Net income (loss) available to Genworth Financial,
Inc.'s common stockholders 19 (258)
Add: net income attributable to noncontrolling interests 26 -

Net income (loss) $45 $(258)

Net income (loss) available to Genworth Financial,
Inc.'s common stockholders per common share:
Basic $0.04 $(0.60)

Diluted $0.04 $(0.60)

Net operating earnings per common share:
Basic $0.18 $0.51

Diluted $0.18 $0.51

Weighted-average common shares outstanding:
Basic 448.9 433.1

Diluted 451.6 433.1

Condensed Consolidated Balance Sheets
(Amounts in millions)

September 30, December 31,
2009 2008

Assets
Cash, cash equivalents and invested assets $69,832 $68,676
Deferred acquisition costs 7,414 7,786
Intangible assets 961 1,147
Goodwill 1,324 1,316
Reinsurance recoverable 17,308 17,212
Deferred tax and other assets 1,281 2,037
Separate account assets 10,712 9,215

Total assets $108,832 $107,389

Liabilities and stockholders' equity
Liabilities:
Future policy benefits $29,251 $28,533
Policyholder account balances 29,381 34,702
Liability for policy and contract claims 6,415 5,322
Unearned premiums 4,808 4,734
Deferred tax and other liabilities 6,990 7,108
Non-recourse funding obligations 3,443 3,455
Short-term borrowings 930 1,133
Long-term borrowings 3,457 4,261
Separate account liabilities 10,712 9,215

Total liabilities 95,387 98,463

Stockholders' equity:
Common stock 1 1
Additional paid-in capital 12,028 11,477
Accumulated other comprehensive income (loss):
Net unrealized investment gain (losses):
Net unrealized gains (losses) on securities
not other-than-temporarily impaired (1,121) (4,038)
Net unrealized gains (losses) on
other-than-temporarily impaired securities (280) -

Net unrealized investment gains (losses) (1,401) (4,038)

Derivatives qualifying as hedges 1,013 1,161
Foreign currency translation and other
adjustments 411 (185)

Total accumulated other comprehensive income (loss) 23 (3,062)
Retained earnings 3,065 3,210
Treasury stock, at cost (2,700) (2,700)

Total Genworth Financial, Inc.'s stockholders'
equity 12,417 8,926
Noncontrolling interests 1,028 -

Total stockholders' equity 13,445 8,926
Total liabilities and stockholders' equity $108,832 $107,389

Impact of Foreign Exchange on Operating Results(8)
Three months ended September 30, 2009

Percentages Percentages
Including Foreign Excluding Foreign
Exchange Exchange (9)
Canada Mortgage Insurance (MI):
Total Canada MI Operating Income (13)% (10)%
Total Canada MI Operating Income
(3Q09 compared to 2Q09) 21% 16%
Flow new insurance written (45)% (40)%
Flow new insurance written (3Q09
compared to 2Q09) 22% 14%

Australia MI:
Net operating income (13)% (6)%
Net operating income (3Q09 compared
to 2Q09) 31% 19%
Pre-tax operating income (3)% 5%
Flow new insurance written 2% 9%
Flow new insurance written (3Q09
compared to 2Q09) 2% (7)%

Other International MI:
Flow new insurance written (55)% (55)%

Lifestyle Protection:
Sales (23)% (16)%

(1) Unless otherwise stated, all references in this press release to net
income (loss), net income (loss) per share, operating income, operating income
per share, book value, book value per share and stockholders' equity should be
read as net income (loss) available to Genworth's common stockholders, net
income (loss) available to Genworth's common stockholders per share, operating
income available to Genworth's common stockholders, operating income available
to Genworth's common stockholders per share, book value available to
Genworth's common stockholders, book value available to Genworth's common
stockholders per share and stockholders' equity available to Genworth's common
stockholders, respectively.

(2) This is a financial measure not calculated based on U.S. Generally
Accepted Accounting Principles (Non-GAAP). See the Use of Non-GAAP Measures
section of this press release for additional information.

(3) N/A-Not Applicable in the prior period.

(4) Percentage change excludes the impact of foreign exchange.

(5) Company estimate for the third quarter of 2009, due to the timing of the
filing of statutory statements.

(6) Assets under management represent account values, net of reinsurance, and
managed third-party assets.

(7) Source: Statistics Canada and Australian Bureau of Statistics (ABS)

(8) All percentages are comparing the third quarter of 2009 to the third
quarter of 2008 unless otherwise stated.

(9) The impact of foreign exchange was adjusted using the comparable prior
period exchange rates.

SOURCE Genworth Financial, Inc.

Investors, Alicia Charity, +1-804-662-2248, alicia.charity@genworth.com;
Media, Al Orendorff, +1-804-662-2534, alfred.orendorff@genworth.com