Genworth Financial Announces First Quarter 2015 Results Net Income Of $154 Million, Or $0.31 Per Share

RICHMOND, Va., April 28, 2015 /PRNewswire/ --

• Progress Made On Review Of Strategic Options
• Achieved Targeted $250 To $300 Million Premium Increase Approvals On 2012 Long Term Care Insurance In Force Rate Action
• Received $132 Million Of Dividends From Operating Companies; Maintained Solid Capital Positions And Significant Holding Company Liquidity
• Will Comply With Final U.S. Mortgage Insurer Eligibility Requirements By Effective Date

Genworth Financial, Inc. (NYSE: GNW) today reported results for the period ended March 31, 2015. The company reported net income¹ of $154 million, or $0.31 per diluted share, compared with net income of $184 million, or $0.37 per diluted share, in the first quarter of 2014. Net operating income² for the first quarter of 2015 was $156 million, or $0.31 per diluted share, compared with net operating income of $194 million, or $0.39 per diluted share, in the first quarter of 2014.

Strategic Update
The company continues to make progress on its review of strategic options in order to position the company for future success and is actively engaged in three areas: (1) strengthening its mortgage insurance businesses and long term care insurance (LTC) capital, earnings and sales; (2) simplifying the business portfolio; and (3) increasing its financial strength and flexibility. In addition, the company continues to pursue the planned sale of its non-core lifestyle protection insurance business. The company believes the execution of these strategic initiatives will improve operating returns, support compliance with the Private Mortgage Insurer Eligibility Requirements (PMIERs), reduce debt levels, increase LTC capital buffers and maintain solid holding company cash levels.  

As disclosed on April 17, 2015, the company estimates $500 to $700 million of additional capital will be required to be fully compliant with the final PMIERs by the effective date of December 31, 2015. The company will comply with the final PMIERs by the effective date and intends to utilize both reinsurance and holding company cash to meet the additional capital requirement. 

"Regarding the quarter, we are encouraged with the results in spite of continued challenges and remain focused on initiatives aimed at strengthening and building our businesses," said Tom McInerney, President and CEO. "During the first quarter, we made significant progress on our strategic review and are developing next steps to position the company for future success. We look forward to updating you on specific actions as appropriate."

Net investment losses, net of taxes and other adjustments, were $2 million in the quarter, compared to $10 million in the prior year. Net investment income decreased to $803 million, compared to $819 million in the prior quarter primarily from lower reinvestment rates and unfavorable foreign exchange. The reported yield for the current quarter was 4.51 percent. The core yield² was down compared to the prior quarter at 4.28 percent.

Net operating income (loss) results are summarized in the table below:

Net operating income (loss) excludes net investment gains (losses), goodwill impairments, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, gains (losses) on insurance block transactions, restructuring costs and other adjustments, net of taxes. 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.

Unless specifically noted in the discussion of results for the International Mortgage Insurance and International Protection segments, references to percentage changes exclude the impact of translating foreign denominated activity into U.S. dollars (foreign exchange). Percentage changes, which include the impact of foreign exchange, are found in a table at the end of this press release. The impact of foreign exchange on results in the first quarter of 2015 was an unfavorable impact of $7 million versus the prior quarter and an unfavorable impact of $8 million versus the prior year.

Global Mortgage Insurance Division
Global Mortgage Insurance Division had net operating income of $116 million, compared with $83 million in the prior quarter and $132 million a year ago.

Canada Mortgage Insurance
Canada reported net operating income of $40 million versus $36 million in the prior quarter and $41 million in the prior year. The loss ratio in the quarter was 22 percent, down four points from the prior quarter from fewer new delinquencies, net of cures and up two points from the prior year from a higher average reserve per delinquency, which was partially offset by a decrease in the number of new delinquencies, net of cures. Results included lower expenses versus the prior quarter and prior year and unfavorable foreign exchange. Flow NIW was down 36 percent⁴ sequentially from a seasonally smaller originations market and up 24 percent⁴ year over year primarily from a larger originations market. In addition, the company completed several bulk transactions in the quarter of approximately $5.0 billion in total, consisting of low loan-to-value prime loans, reflecting its selective participation in this market.

Australia Mortgage Insurance
Australia reported net operating income of $30 million versus $33 million in the prior quarter and $62 million in the prior year. Results in the quarter reflected a $21 million decrease in net operating income versus the prior year as a result of the minority IPO of 33.8 percent of the Australia MI business, which was completed on May 21, 2014. The loss ratio in the quarter was 15 percent, flat sequentially and down two points from the prior year. During the quarter, the company accrued a $7 million pre-tax receivable for expected recoveries relating to paid claims reflecting its experience of successful borrower recovery activity, favorably impacting the loss ratio by nine points. New delinquencies were up 14 percent and cures were down 17 percent sequentially reflecting normal seasonal variation. Results were also impacted by unfavorable foreign exchange versus both the prior quarter and prior year. Flow NIW was down 20 percent⁴ sequentially primarily from seasonal variation and other market factors and down 17 percent⁴ year over year from a smaller mortgage insurance market.

Other Countries Mortgage Insurance
Other Countries had a net operating loss of $6 million, compared to $7 million in the prior quarter and $4 million in the prior year.

U.S. Mortgage Insurance
U.S. MI net operating income was $52 million, compared with $21 million in the prior quarter and $33 million in the prior year. The loss ratio in the current quarter was 33 percent, down 28 points sequentially reflecting seasonally lower new delinquencies and favorable net cures and aging of existing delinquencies. New flow delinquencies decreased approximately 12 percent from the prior quarter from seasonal variation and decreased approximately 22 percent from the prior year, reflecting the continued burn through of delinquencies from the 2005 to 2008 book years.

Flow NIW of $6.3 billion decreased nine percent from the prior quarter from a seasonally smaller purchase originations market and increased 62 percent versus the prior year primarily from a larger purchase originations market, higher refinance activity and an increase in estimated market share. During the quarter, the company increased its single premium lender paid new insurance written reflecting its selective participation in this market. Future volumes of this product will vary in part depending on the company's evaluation of the risk return profile of these transactions.

U.S. Life Insurance Division
U.S. Life Insurance Division net operating income was $81 million, compared with a net operating loss of $482 million in the prior quarter and net operating income of $94 million a year ago.

Long Term Care Insurance
LTC net operating income was $10 million, compared with a net operating loss of $506 million in the prior quarter and net operating income of $46 million in the prior year. Benefits and other changes in policy reserves decreased $506 million after-tax versus the prior quarter and increased $66 million after-tax versus the prior year. The current quarter included favorable mortality on existing claims versus both the prior quarter and prior year partially offset by unfavorable severity given the mix of new claims with a higher average reserve. Results in the quarter included net unfavorable items of $7 million after-tax reflecting a refinement to a reserve calculation on the acquired block of business, partially offset primarily by a correction related to reinsurance. During the quarter, the company began implementing a process to accrue for profits followed by losses on business written since late 1995, but it had no impact on the current quarter financial results. The prior quarter impact of the unlocking of assumptions associated with the active life reserves on the acquired block, as well as additional adjustments to reserves, was $494 million after-tax. The loss ratio in the current quarter was 72 percent.

Results for the quarter included lower benefits from reduced benefit options of $3 million after-tax versus the prior quarter related to the premium increases approved and implemented to date.

Individual LTC sales of $10 million were lower than the prior quarter and the prior year. Sales are expected to continue at low levels in the near term due to the 2014 introduction of a higher priced product and ratings pressure, but build over time as new products are introduced.

Life Insurance
Life insurance net operating income was $40 million, compared with $1 million in the prior quarter and $21 million in the prior year. Results in the quarter included favorable mortality versus pricing, in line with the prior quarter and better than the prior year, and favorable term life insurance reserve development from aging of the block and lower new business. During the quarter, the company completed a reinsurance transaction that reduced paid claims that were offset with lower premiums resulting in a minimal reduction in net operating income, but will reduce future excess reserve financing costs. Results in the prior quarter included an unfavorable correction to a reserve calculation on a reinsurance transaction of $32 million. Sales of $17 million decreased compared to the prior quarter and the prior year. Linked benefit product deposits were $41 million in the quarter, down from $42 million in the prior quarter and up from $25 million in the prior year.

Fixed Annuities
Fixed annuities net operating income was $31 million, compared with $23 million in the prior quarter and $27 million in the prior year. Results in the quarter reflected favorable mortality versus both the prior quarter and prior year and lower lapses versus the prior quarter. Sales in the quarter totaled $326 million, down sequentially and versus the prior year given the lower interest rate environment and ratings impacts.

Corporate and Other Division
Corporate and Other Division net operating loss was $41 million, compared with $17 million in the prior quarter and $32 million in the prior year.

International Protection net operating income was zero for the quarter, compared with a net operating loss of $4 million in the prior quarter and net operating income of $7 million in the prior year. Results in the prior quarter reflected $4 million of net unfavorable items and the prior year reflected $4 million of favorable tax adjustments.

Runoff net operating income was $11 million, compared with $16 million in the prior quarter and $12 million in the prior year. Results in the current quarter reflect less favorable taxes partially offset by favorable equity market performance versus the prior quarter primarily impacting variable annuity products.

Corporate and Other net operating loss was $52 million, compared with $29 million in the prior quarter and $51 million in the prior year. Results in the prior quarter reflected favorable year-end tax benefits.

Capital & Liquidity
Genworth maintains solid capital positions in its operating subsidiaries.      

Key Points

• Canada and Australia paid $126 million in dividends to the holding company during the quarter;
• U.S. Life Insurance companies unassigned surplus decreased primarily from approximately $70 million related to the completion of a life reinsurance transaction that will reduce future excess reserve financing costs;
• The holding company ended the quarter with a buffer of approximately $585 million in excess of one and a half times annual debt service and restricted cash;
• The holding company targets maintaining cash balances of at least one and a half times its annual debt service expense plus a risk buffer of $350 million; and
• In April, the Australia business received regulatory approval for the potential issuance of up to A$250 million of subordinated notes, but a decision to issue these notes has not yet been made and will be subject to business and market conditions.

About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a leading Fortune 500 insurance holding company committed to helping families become more financially secure, self-reliant and prepared for the future. To help families start "the talk" about their futures and long term care planning, Genworth recently completed a national #LetsTalk Tour to encourage conversations and information sharing. Genworth has leadership positions in mortgage insurance and long term care insurance and product offerings in life insurance and fixed annuities that assist consumers in solving their home ownership, insurance and retirement needs. Headquartered in Richmond, Virginia, Genworth traces its roots back to 1871 and became a public company in 2004. 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. From time to time, Genworth's publicly traded subsidiaries, Genworth MI Canada Inc. and Genworth Mortgage Insurance Australia Limited, separately release financial and other information about their operations. This information can be found at http://genworth.ca and http://www.genworth.com.au.

Conference Call and Financial Supplement Information
This press release and the first quarter 2015 financial supplement are now posted on the company's website. Additional information regarding business results and strategic update will be posted on the company's website, http://investor.genworth.com, by 7:30 a.m. on April 29, 2015. Investors are encouraged to review these materials.

Genworth will conduct a conference call on April 29, 2015 at 8:00 a.m. (ET) to discuss first quarter 2015 results and provide an update on strategic priorities. The conference call will be accessible via telephone and the Internet. The dial-in number for the conference call is 877 888.4034 or 913 489.5101 (outside the U.S.); conference ID # 9308558. 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. 

Replays of the call will be available through May 13, 2015 at 888 203.1112 or 719 457.0820 (outside the U.S.); conference ID # 9308558. The webcast will also be archived on the company's website.

Use of Non-GAAP Measures
This press release includes the non-GAAP financial measures entitled "net operating income (loss)" and "net operating income (loss) per share." Operating earnings (loss) per share is derived from 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 the after-tax effects of income attributable to noncontrolling interests, net investment gains (losses), goodwill impairments, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, gains (losses) on insurance block transactions, restructuring costs and infrequent or unusual non-operating items. Gains (losses) on insurance block transactions are defined as gains (losses) on the early extinguishment of non-recourse funding obligations, early termination fees for other financing restructuring and/or resulting gains (losses) on reinsurance restructuring for certain blocks of business. The company excludes net investment gains (losses) and infrequent or unusual non-operating items because the company does not consider them to be related to the operating performance of the company's segments and Corporate and Other activities. A component of the company's 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) can be subject to the company's discretion and are influenced by market opportunities, as well as asset-liability matching considerations. Goodwill impairments, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, gains (losses) on insurance block transactions and restructuring costs are also excluded from net operating income (loss) because, in the company's opinion, they are not indicative of overall operating trends. 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. 

In the first quarter of 2015, the company modified its definition to explicitly state that restructuring costs, which were previously included in the infrequent and unusual category, are excluded from net operating income (loss). There were no restructuring costs in the periods presented.

In the fourth quarter of 2014, the company recorded goodwill impairments of $129 million, net of taxes, in the long term care insurance business and $145 million, net of taxes, in the life insurance business.

There were no infrequent or unusual items excluded from net operating income (loss) during the periods presented other than the following items. There was a $66 million net tax impact in the fourth quarter of 2014 from potential business portfolio changes. Although no decisions have been made, the company recognized a tax charge of $174 million in the fourth quarter of 2014 associated with the Australian mortgage insurance business as the company can no longer assert its intent to permanently reinvest earnings in that business. In connection with the company's plans to sell the lifestyle protection insurance business, the company completed an internal debt restructuring recognizing tax benefits of $108 million in the fourth quarter of 2014.

While some of these items may be significant components of net income (loss) available to Genworth's common stockholders in accordance with GAAP, the company believes that net operating income (loss) and measures that are derived from or incorporate net operating income (loss), including net operating income (loss) per common share on a basic and diluted basis, are appropriate measures that are useful to investors because they identify the income (loss) attributable to the ongoing operations of the business. Management also uses net operating income (loss) as a basis for determining awards and compensation for senior management and to evaluate performance on a basis comparable to that used by analysts. However, the items excluded from net operating income (loss) have occurred in the past and could, and in some cases will, recur in the future. Net operating income (loss) and net operating income (loss) per common share on a basic and diluted basis are not substitutes for net income (loss) available to Genworth's common stockholders or net income (loss) available to Genworth's common stockholders per common share on a basic and diluted basis determined in accordance with GAAP. In addition, the company's definition of net operating income (loss) may differ from the definitions used by other companies.

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) available to Genworth's common stockholders for the three months ended March 31, 2015 and 2014, as well as for the three months ended December 31, 2014.

Adjustments to reconcile net income (loss) attributable to Genworth's common stockholders and net operating income (loss) assume a 35 percent tax rate and are net of the portion attributable to noncontrolling interests. Net investment gains (losses) are also adjusted for deferred acquisition costs and other intangible amortization and certain benefit reserves.

This press release also includes non-GAAP financial measures entitled "net income (loss) before net income attributable to noncontrolling interests in the Australia MI business" and "net operating income (loss) before net operating income attributable to noncontrolling interests in the Australia MI business." The company defines net income (loss) before net income attributable to noncontrolling interests in the Australia MI business and net operating income (loss) before net operating income attributable to noncontrolling interests in the Australia MI business as net income (loss) or net operating income (loss), as applicable, adjusted for net income attributable to noncontrolling interests in the Australia MI business but before noncontrolling interests in the Canada MI business. These measures are presented as they are comparable to net income (loss) and net operating income (loss) for the first quarter of 2014. However, net income (loss) before net income attributable to noncontrolling interests in the Australia MI business and net operating income (loss) before net operating income attributable to noncontrolling interests in the Australia MI business are not substitutes for net income (loss) and net operating income (loss) determined in accordance with GAAP. A reconciliation of net income (loss) before net income attributable to noncontrolling interests in the Australia MI business and net operating income (loss) before net operating income attributable to noncontrolling interests in the Australia MI business to net income (loss) and net operating income (loss) is included in a table at the end of this press release.

This press release includes the non-GAAP financial measure entitled "core yield" as a measure of investment yield. The company defines core yield as the investment yield adjusted for those items that are not recurring in nature. Management believes that analysis of core yield enhances understanding of the investment yield of the company. However, core yield is not a substitute for investment yield determined in accordance with GAAP. In addition, the company's definition of core yield may differ from the definitions used by other companies. A reconciliation of core yield to reported GAAP yield is included in a table at the end of this press release.

Results of Operations by Segment
In the first quarter of 2015, the company revised how it allocates the consolidated provision for income taxes to its operating segments to simplify the process and reflect how the chief operating decision maker is evaluating segment performance. The revised methodology applies a specific tax rate to the pre-tax income (loss) of each segment, which is then adjusted in each segment to reflect the tax attributes of items unique to that segment such as foreign income. The difference between the consolidated provision for income taxes and the sum of the provision for income taxes in each segment is reflected in Corporate and Other activities. Previously, the company calculated a unique income tax provision for each segment based on quarterly changes to tax attributes and implications of transactions specific to each product within the segment.

The annually-determined tax rates and adjustments to each segment's provision for income taxes are estimates which are subject to review and could change from year to year. Prior year amounts have not been re-presented to reflect this revised presentation and are, therefore, not comparable to the current year provision for income taxes by segment.  However, the company does not believe that the previous methodology would have resulted in a materially different segment-level provision for income taxes.

Definition of Selected Operating Performance Measures
The company reports selected operating performance measures including "sales" and "insurance in force" or "risk in force" which are commonly used in the insurance industry as measures of operating performance.

Management regularly monitors and reports sales metrics as a measure of volume of new and renewal business generated in a period. Sales refer to: (1) new insurance written for mortgage insurance; (2) annualized first-year premiums for long term care and term life insurance products; (3) annualized first-year deposits plus five percent of excess deposits for universal and term universal life insurance products; (4) 10 percent of premium deposits for linked-benefits products; (5) new and additional premiums/deposits for fixed annuities; and (6) net premiums written for the lifestyle protection insurance business. Sales do not include renewal premiums on policies or contracts written during prior periods. The company considers new insurance written, annualized first-year premiums/deposits, premium equivalents, new premiums/deposits and net premiums written to be a measure 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 a measure of the company's revenues or profitability during that period.

Management regularly monitors and reports insurance in force and risk in force. Insurance in force for the international mortgage and U.S. mortgage insurance businesses is a measure of the aggregate face value of outstanding insurance policies as of the respective reporting date. For risk in force in the international mortgage insurance business, the company has computed an "effective" risk in force amount, which recognizes that the loss on any particular loan will be reduced by the net proceeds received upon sale of the property. Effective risk in force has been calculated by applying to insurance in force a factor of 35 percent that represents the highest expected average per-claim payment for any one underwriting year over the life of the company's businesses in Canada and Australia. Risk in force for the U.S. mortgage insurance business is the obligation that is limited under contractual terms to the amounts less than 100 percent of the mortgage loan value.  The company considers 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 which will generate revenues and profits in a future period, rather than measures of the company's revenues or profitability during that period.

Management also regularly monitors and reports a loss ratio for the company's businesses. For the mortgage and lifestyle protection insurance businesses, the loss ratio is the ratio of incurred losses and loss adjustment expenses to net earned premiums. For the long term care insurance business, the loss ratio is the ratio of benefits and other changes in reserves less tabular interest on reserves less loss adjustment expenses to net earned premiums.  The company considers the loss ratio to be a measure of underwriting performance in these businesses and helps to enhance the understanding of the operating performance of the businesses.

An assumed tax rate of 35 percent is utilized in certain adjustments to net operating income (loss) and in the explanation of specific variances of operating performance and investment results.

These operating performance 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, but not limited to, the following:

• Risks relating to all of the company's businesses, including: (i) inability to successfully develop and execute strategic plans to effectively address the company's current business challenges (including with respect to its long term care insurance business, ratings and capital), including as a result of failure to attract buyers for the company's lifestyle protection insurance business and any other businesses or other assets the company may seek to sell, or securities it may seek to issue, in each case, in a timely manner on anticipated terms; inability to generate required capital; failure to obtain any required regulatory, stockholder and/or noteholder approvals or consents, or the company's challenges changing or being more costly or difficult to successfully address than currently anticipated or the benefits achieved being less than anticipated; inability to achieve anticipated cost-savings in a timely manner; adverse tax or accounting charges; (ii) inability to increase the capital needed in the company's businesses in a timely manner and on anticipated terms, including through improved business performance, reinsurance or similar transactions, asset sales, securities offerings or otherwise, in each case as and when required; (iii) inadequate reserves and the need to increase reserves, including as a result of any changes the company may make to its assumptions, methodologies or otherwise in connection with periodic or other reviews (including as a result of the company's actual experience differing significantly from its assumptions); (iv) ineffective or inadequate risk management in identifying, controlling or mitigating risks; weaknesses in, or ineffective, internal controls; (v) recent or future adverse rating agency actions, including with respect to rating downgrades or potential downgrades, being placed on negative outlook or being put on review for potential downgrade, all of which could have adverse implications for the company, including with respect to key business relationships, product offerings, business results of operations, financial condition and capital needs, strategic plans, collateral obligations and availability and terms of hedging, reinsurance and borrowings; (vi) inability to retain, attract and motivate qualified employees and independent sales representatives, particularly in the light of the company's recent business challenges; (vii) adverse change in regulatory requirements, including risk-based capital; (viii) dependence on dividends and other distributions from the company's subsidiaries (particularly the company's international subsidiaries) and the inability of any subsidiaries to pay dividends or make other distributions to the company, including as a result of the performance of the subsidiaries and insurance, regulatory or corporate law restrictions (including the unwillingness or inability of the subsidiary that indirectly owns most of the company's interests in the Australian and Canadian mortgage insurance businesses to pay the dividends that it receives from those businesses as a result of the impact on its financial condition of its guarantee of certain long term care insurance related reinsurance arrangements); (ix) inability to borrow under the company's credit facility; (x) downturns and volatility in global economies and equity and credit markets; (xi) interest rates and changes in rates; (xii) availability, affordability and adequacy of reinsurance to protect the company against losses; (xiii) defaults by counterparties to reinsurance arrangements or derivative instruments; (xiv) changes in valuation of fixed maturity, equity and trading securities; (xv) defaults or other events impacting the value of the company's fixed maturity securities portfolio; (xvi) defaults on the company's commercial mortgage loans or the mortgage loans underlying its investments in commercial mortgage-backed securities and volatility in performance; (xvii) competition; (xviii) reliance on, and loss of, key distribution relationships; (xix) extensive regulation of the company's businesses and changes in applicable laws and regulations; (xx) litigation and regulatory investigations or other actions (including the two shareholder putative class action lawsuits alleging securities law violations filed against the company in 2014); (xxi) the material weakness in the company's internal control over financial reporting; (xxii) failure or any compromise of the security of the company's computer systems, disaster recovery systems and business continuity plans and failures to safeguard, or breaches of, the company's confidential information; (xxiii) occurrence of natural or man-made disasters or a pandemic; (xxiv) impact of additional regulations pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act; (xxv) changes in accounting and reporting standards; (xxvi) impairments of or valuation allowances against the company's deferred tax assets; (xxvii) accelerated amortization of deferred acquisition costs and present value of future profits (including as a result of any changes the company may make to its assumptions, methodologies or otherwise in connection with periodic or other reviews); (xxviii) political and economic instability or changes in government policies; and (xxix) fluctuations in foreign currency exchange rates and international securities markets;
• Risks relating primarily to the company's mortgage insurance businesses, including: (i) deterioration in economic conditions or a decline in home prices that adversely affect the company's loss experience in mortgage insurance; (ii) premiums for the significant portion of the company's international mortgage insurance risk in-force with high loan-to-value ratios may not be sufficient to compensate the company for the greater risks associated with those policies; (iii) competition in the company's international and U.S. mortgage insurance businesses, including from government and government-owned and government-sponsored enterprises offering mortgage insurance; (iv) changes in regulations adversely affecting the company's international operations; (v) inability to meet the private mortgage insurance eligibility requirements (PMIERs) on the contemplated timetable with the contemplated funding; (vi) inability of U.S. mortgage insurance subsidiaries to meet minimum statutory capital requirements and hazardous financial condition standards; (vii) the influence of Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and a small number of large mortgage lenders on the U.S. mortgage insurance market and adverse changes to the role or structure of Fannie Mae and Freddie Mac; (viii) increases in U.S. mortgage insurance default rates; (ix) inability to realize anticipated benefits of the company's rescissions, curtailments, loan modifications or other similar programs in its U.S. mortgage insurance business; (x) problems associated with foreclosure process defects in the United States that may defer claim payments; (xi) competition with government-sponsored enterprises may put the company at a disadvantage on pricing and other terms and conditions; (xii) adverse changes in regulations affecting the company's U.S. mortgage insurance business; (xiii) decreases in the volume of high loan-to-value mortgage originations or increases in mortgage insurance cancellations in the United States; (xiv) increases in the use of alternatives to private mortgage insurance in the United States and reductions in the level of coverage selected; and (xv) potential liabilities in connection with the company's U.S. contract underwriting services;
• Risks relating primarily to the company's long term care insurance, life insurance and annuities businesses, including: (i) the company's inability to increase sufficiently, and in a timely manner, premiums on in-force long term care insurance policies and/or reduce in-force benefits, and charge higher premiums on new policies, in each case, as currently anticipated (including the future increases assumed in connection with the completion of the company's margin reviews in the fourth quarter of 2014) and as may be required from time to time in the future (including as a result of its failure to obtain any necessary regulatory approvals or unwillingness or inability of policyholders to pay increased premiums); the company's inability to reflect future premium increases and other management actions in its margin calculation as anticipated; (ii) failure to sufficiently increase demand for the company's long term care insurance, life insurance and fixed annuity products; (iii) adverse impact on the company's financial results as a result of projected profits followed by projected losses (as is currently the case with the company's long term care insurance business); (iv) deviations from the persistency assumptions used to price and establish reserves for the company's insurance policies and annuity contracts; (v) medical advances, such as genetic research and diagnostic imaging, and related legislation that impact policyholder behavior in ways adverse to the company; and (vi) inability to continue to implement actions to mitigate the impact of statutory reserve requirements;
• Other risks, including: (i) the possibility that in certain circumstances the company will be obligated to make payments to General Electric Company (GE) under the tax matters agreement with GE even if its corresponding tax savings are never realized and payments could be accelerated in the event of certain changes in control; and (ii) provisions of the company's certificate of incorporation and bylaws and the tax matters agreement with GE may discourage takeover attempts and business combinations that stockholders might consider in their best interests; and
• Risks relating to the company's common stock, including: (i) the continued suspension of payment of dividends; and (ii) stock price fluctuations.

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