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Transcript of Merrill Lynch Conferences2.q4cdn.com/240635966/files/doc_events/021208_ ¢  2015. 10....

  • ©2008 Genworth Financial, Inc. All rights reserved.

    Merrill Lynch Conference

    Michael Fraizer Chairman and CEO

    February 12, 2008

  • 1Merrill Lynch & Co., Inc. Conference – February 12, 2008

    Forward-Looking Statements This presentation contains “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,” “anticipates,” “intends,” “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, including those discussed in the Appendix and in the risk factors section of the company’s Form 10-K filed with the SEC on February 28, 2007, the company’s Form 8-K filed with the SEC on April 16, 2007 and the company’s Form 10-Q filed with the SEC on October 26, 2007. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

    Non-GAAP and Selected Operating Performance Measures

    All references to EPS, income, and ROE refer to net operating earnings per diluted share, net operating income and operating return on equity. All references to ROE in the business segments are levered, assuming 25% debt to total capital at the product line level.

    All financial data as of 12/31/07 unless otherwise noted. For additional information, please see Genworth’s Fourth Quarter of 2007 earnings release and financial supplement, as well investor materials dated February 8, 2008 regarding Genworth’s U.S. Mortgage Insurance business, posted at www.genworth.com.

    For important information regarding the use of non-GAAP measures and selected operating performance measures, see the Appendix.

    This presentation should be used in conjunction with the accompanying audio or call transcript.

    http://www.genworth.com/

  • 2Merrill Lynch & Co., Inc. Conference – February 12, 2008

    9.5% 11.0%

    20041 2007

    Retirement & Protection

    50%

    2007 Percentages Exclude Corporate And Other

    13 - 14%

    2010 – 2011 Target

    Retirement & Protection

    50%

    U.S. Mortgage Ins. 11%

    International 39%

    2007 Performance Operating EPS Operating ROE

    $3.07

    1 Pro Forma - See Genworth’s Q4 2005 Earnings Release (Dated 1/26/06) For Reconciliation. Adjusted For Earnings From Discontinued Operations Of $36MM

  • 3Merrill Lynch & Co., Inc. Conference – February 12, 2008

    Genworth Strategy

    Mortgage Insurance

    Protection Wellness &

    Care Services

    Accumulation Managed Accounts

    Homeownership Life Security

    Wealth Management

    Your Financial Security Company

    Retirement Security

    Income LTC

    Liquidity

    25 40

    5570 Age

    Delivering Financial Security

  • 4Merrill Lynch & Co., Inc. Conference – February 12, 2008

    U.S. MI 61% Mid Teens

    Int’l MI 34% High Teens

    Int’l PPI 23% High Teens

    Fee Based 84% High Teens

    New Life 33% Low Teens

    New LTC 17% Mid Teens

    Opportunistic Spread (13%) Low Teens

    Positioning For The Future

    2008E

    Operating Income Mix

    2007

    Repositioning

    Growth Engines

    Driving Growth/ROE Expansion

    2010/11E

    ~80%

    ~85%+

    Fee Based Includes Fee Based Retirement Income & Managed Money. Spread Includes Spread Based Retirement Income & Institutional

    2005-2007 Sales CAGR

    New Business ROE

    Old Life/Spread Extract Capital

    Old LTC Improve ROE/Extract Capital

    ~90%

    Redeployment

  • 5Merrill Lynch & Co., Inc. Conference – February 12, 2008

    Today’s Updates Priority Growth Opportunities – International

    – Fee Based Wealth Management & Retirement

    U.S. Mortgage Insurance

    Investment Portfolio

    Capital Optimization & Deployment

  • 6Merrill Lynch & Co., Inc. Conference – February 12, 2008

    Strong International Platform

    ($MM)

    25+ Countries

    600+ Distribution Relationships

    1,900+ Associates

    Global Risk Management

    Double Digit Growth

    Operating Income ~50% GNW Op Income

    Australia

    22% 2007 Operating ROE $3.4B Mortgage Insurance Unearned Premium Reserve (12/31/2007)

    Europe & Other

    Retirement Products

    2010-2011E2007

    585

    Canada

    PPI

  • 7Merrill Lynch & Co., Inc. Conference – February 12, 2008

    200+ Financial Institutions Globally

    Distributor Branded

    Direct or Reinsurance

    Sickness/Accident ~50%

    Life ~25%

    Unemployment ~25%

    3 - 5 Year Average Life

    Personal Loan

    Mortgage

    Other

    Auto Credit Card

    Protected By: – Waiting & Exclusion Periods – Capitated Claim Payment Period – Maximum Limits

    Payment Protection Overview Coverage2007 Sales By Obligation

    52%

    16%

    8%

    13% 11%

    Mix

  • 8Merrill Lynch & Co., Inc. Conference – February 12, 2008

    Structured

    1.4

    .7

    .2

    .5

    New Markets

    U.K. & Ireland

    Continental Europe

    2.8 ($B)

    Penetrate Significant Customer Base

    New Products & Customers

    Lender Structured Transactions

    New Markets

    Transfer Product/Risk Expertise

    Leverage Global Client Base

    Mexico, Poland, South Korea, Others

    Payment Protection Opportunity Sales By Region Established Markets

    2007

  • 9Merrill Lynch & Co., Inc. Conference – February 12, 2008

    Global Mortgage Insurance Environment Demand Drivers: Homeownership Initiatives, Capital

    Regulation, Economic Environment

    Economies Generally Healthy

    Slowing Global Housing Finance & Appreciation Trends – Most Pronounced in Spain, Ireland & U.K.

    Some Liquidity Impact On Global Housing Finance

    Significant Structural Differences vs. U.S.

    New Markets Develop Gradually

  • 10Merrill Lynch & Co., Inc. Conference – February 12, 2008

    Comparing Mortgage Markets U.S. AustraliaCanadaRisk Management Europe

    Credit Scoring External Yes Yes No U.K. Only Internal Yes Yes Yes U.K. Only

    Sub-Prime, Reduced Doc And Second Liens Based On Company Estimates

    Reduced Documents ~13% Self Self Limited Employed Employed

    Sub-Prime Products ~20% Limited Limited Limited

    Property Appraisals Yes Yes Yes Yes

    Second Liens ~14% Limited Limited Limited

    Borrower Underwriting Yes Yes Yes Yes

    Premium Payment Monthly Single Single Single

  • 11Merrill Lynch & Co., Inc. Conference – February 12, 2008

    151

    Canada

    Europe / Other

    Australia

    Canada & Australia Customer Penetration Underwriting & Pricing Discipline Ensure Exposure Management Expand Support Services

    ($B)

    12/31/2007 See Appendix For Details Regarding Global MI Risk In Force

    International Mortgage Insurance Strategy Primary Risk In Force

    Europe & Other Slowed Expansion Selective Geographies / Lenders Build Gradually For The Future

  • 12Merrill Lynch & Co., Inc. Conference – February 12, 2008

    Expanding U.S. Wealth Management Assets Under Management

    AssetMark Acquisition

    Existing Platforms

    2007

    22

    3 Yr CAGR

    ($B)

    Strong Organic & Acquisition Performance Advisor Expansion & Penetration Leveraging Practice Management Services~ 36%

    ~ 33%

    ~ 34%

    Total Market AUM Outlook

    Independent

    Other Channels

    2010E

    2.8

    ($T) Expect Future Growth Ahead of Market – Product Innovation/Income Guarantees

    – Expanded Services Offerings

    – Acquisitions

    ~ 12%

    3 Yr CAGR1

    ~ 11%

    ~ 17%.7

    1 Cerulli & Management Estimates

  • 13Merrill Lynch & Co., Inc. Conference – February 12, 2008

    Early Mover

    9%

    2.8

    15%+

    1.7 2.7

    Positioned For Income Guarantee Market

    Market Size1

    Market Growth1 15%+

    In Process

    ~ 5.6

    ✓ Established

    5 - 8%

    ~$10 Trillion Opportunity for Income Guarantees

    401(k) / 403(b)

    Managed Money

    Mutual Funds

    Individual VA (Retail + Rollover)

    1 Company And 3rd Party Estimates. Market Size In Trillions

    Genworth Position ✓ Established

  • 14Merrill Lynch & Co., Inc. Conference – February 12, 2008

    U.S. Mortgage Insurance Overview

    Industry Represents MGIC, PMI, UGI, ORI, and Triad Based on MICA Reports. Delinquency Rate Represents Number of L