Full Description

Genworth Financial, Inc. (Genworth), incorporated on October 23, 2003, is a financial security company dedicated to providing insurance, investment and financial solutions to approximately 15 million customers, with a presence in approximately 25 countries. As of December 31, 2008, the Company had three segments: Retirement and Protection, International and U.S. Mortgage Insurance. Retirement and Protection segment offers a variety of protection, wealth accumulation, retirement income and institutional products. Through the International segment the Company is a provider of mortgage insurance products in Canada, Australia, New Zealand, Mexico, Japan and multiple European countries. In the United States, it offers mortgage insurance products predominantly insuring prime-based, individually underwritten residential mortgage loans, also known as flow mortgage insurance. On June 20, 2008, the Company acquired National Eldercare Referral Systems, Inc. On August 29, 2008, it acquired Quantuvis Consulting, Inc. In August 2008, Genworth Financial Asset Management was created with the combination of Genworth Financial Asset Management and AssetMark. The unit wealth management offers a fee-based investment management platform for independent financial advisers. In October 2009, the Company completed the sale of Genworth Seguros Mexico S.A. de C.V. to HDI-Gerling International Holding AG.

Retirement and Protection

Through its Retirement and Protection segment, the Company markets various forms of wealth management, retirement income, institutional, life insurance and long-term care insurance products and services. The Company offers asset management products and services to affluent individual investors. It provides and tailors client advice, asset allocation, open-architecture products and prepackaged support, services and technology to the independent advisor channel. The Company offers variable annuities that provide customers a variety of investment options. The Company offers fixed single premium deferred annuities, which require a single premium payment at time of issue and provide an accumulation period and an annuity payout period. In exchange for a single premium, immediate annuities provide a fixed amount of income for either a defined number of years, the annuitant’s lifetime, or the longer of the defined number of years or the annuitant’s lifetime.

Genworth offers funding agreements, funding agreements backing notes (FABNs) and guaranteed investment contracts (GICs), which are deposit-type products that pay a guaranteed return to the contract holder on specified dates. The Company sells these specialized products to institutional customers for use in retirement plans, money market funds and other investment purposes. The Company’s life insurance business markets and sells products that provide a personal financial safety net for individuals and their families. These products provide protection against financial hardship after the death of an insured and may also offer a savings element that can be used to help accumulate funds to meet future financial needs. Its principal life insurance products are term life and universal life. The Company also has a runoff block of whole life insurance. Term life insurance products provide coverage with guaranteed level premiums for a specified period of time and generally have little or no buildup of cash value.

International

In the International segment, the Company offers mortgage insurance and payment protection insurance and has a presence in over 25 countries. Through its international mortgage insurance business, the Company is a provider of mortgage insurance in Canada, Australia, New Zealand, Mexico and multiple European countries. The Company has mortgage insurance operations in Canada and Australia, as well as smaller operations in New Zealand and the developing markets in Europe and Mexico. The Company offers primary flow insurance and portfolio credit enhancement insurance in Canada. It also provides portfolio credit enhancement insurance to lenders that have originated loans with loan-to-value ratios of less than or equal to 80%. These policies provide lenders with immediate capital relief from applicable bank regulatory capital requirements and facilitate the securitization of mortgages in the Canadian market. In both primary flow insurance and portfolio policies, its mortgage insurance in Canada provides insurance coverage for the entire unpaid loan balance, including interest, selling costs and expenses, following the sale of the underlying property.

In Australia and New Zealand, the Company offers primary flow mortgage insurance, also known as lenders mortgage insurance (LMI), and portfolio credit enhancement policies. Its principal product is LMI, which is similar to single premium primary flow insurance the Company offers in Canada with 100% coverage. Lenders usually collect the single premium from borrowers at the time the loan proceeds are advanced and remit the amount to the Company as the mortgage insurer. The Company provides LMI on a flow basis to customers, including banks, building societies, credit unions and non-bank mortgage originators, called mortgage managers.

The Company’s mortgage insurance products in Europe consist principally of primary flow insurance structured with single premium payments. Its primary flow insurance generally provides first-loss coverage in the event of default on a portion (typically 10% to 20%) of the balance of an individual mortgage loan. The Company also offers portfolio credit enhancement to lenders that have originated loans for securitization. The Company provides lifestyle protection insurance to consumers in more than 20 countries offered principally by financial services companies at the point of sale of consumer products. This business also includes a small Mexican property and casualty insurance business. Its lifestyle protection products include lifestyle protection from involuntary unemployment, disability, accident and death. The benefits on these policies pay the periodic payments on the consumer loan for a limited period of time, typically 12 months, though can be up to 84 months. In some cases, for certain coverages, the Company may make lump sum payments.

U.S. Mortgage Insurance

Through the U.S. Mortgage Insurance segment, the Company provides private mortgage insurance. Private mortgage insurance enables borrowers to buy homes with low-down-payment mortgages, which are usually defined as loans with a down payment of less than 20% of the home’s value. Flow insurance is primary mortgage insurance placed on an individual loan when the loan is originated. The Company’s primary mortgage insurance covers default risk on first mortgage loans generally secured by one- to four-unit residential properties and can be used to protect mortgage lenders and investors from default on any type of residential mortgage loan instrument that it has approved. The Company’s insurance covers a specified coverage percentage of a claim amount consisting of unpaid loan principal, delinquent interest and certain expenses associated with the default and subsequent foreclosure.

Under the Company’s primary bulk insurance, it insures a portfolio of loans in a single, bulk transaction. Generally, in its bulk insurance, the individual loans in the portfolio are insured to specified levels of coverage and there may be deductible provisions and aggregate loss limits applicable to all of the insured loans. In addition, loans that the Company insures in bulk transactions with loan-to-value ratios above 80% typically have flow mortgage insurance, written either by the Company or another private mortgage insurer, which helps mitigate its exposure under these transactions.

Pool insurance generally covers the loss on a defaulted mortgage loan that either exceeds the claim payment under the primary coverage (if primary insurance is required on that loan) or the total loss (if that loan does not require primary insurance), in each case up to a stated aggregate loss limit on the pool. These policies cover prime credit-quality second lien mortgages and typically include aggregate stop loss provisions.

The Company competes with Mortgage Guaranty Insurance Corporation; PMI Mortgage Insurance Company, CMG Mortgage Insurance Company, Radian Guaranty Inc., Republic Mortgage Insurance Company, Triad Guaranty Insurance Corporation, United Guaranty Residential Insurance Company and Canada Mortgage and Housing Corporation.