1. 9th Annual UIC 2016: Financial Sector
ADIA Team
Saeed AlBlooshi
Khalid AlDhaheri
Saeed AlJaberi
Khalid AlRemeithi
Buy

2. Investment Thesis
Genworth Financials is a true turnaround company as we see great upside potential considering the amount of revenue that will be generated post the company’s strategic plan, coupled with the eminent rise in interest rates which will create riskier mortgages thus increasing demand for mortgage insurance as well as profit margins.
Our investment strategy is value driven with a horizon of 3-5 years...

3. Genworth Financials NYSE: GNW IPO: 2004
Headquarters: Richmond, Virginia, USA
President & CEO: Thomas J. Mclnerney
Stock Price: $4.85 (9/29/2016)
Market Cap: $2.42bn (06/30/2016)
Revenue (2015): $8.6bn
Net Income (2015): $255m

4. Core Business Mortgage Insurance. Regions: U.S (MI) Canada (MI)
Australia (MI)
U.S Life Insurance
Long-term care insurance
Traditional Life Insurance
Fixed Annuity
Eliminating US life insurance and fix annuity due to plan to decrease cash expenses of $100M which they have acheived

5. CFO - Kelly L. Groh Appointed in Oct 2015.
Prior to assuming the role of CFO in October 2015,
Ms. Groh had served as Senior Vice President of Financial
Reporting & Operations and Genworth’s Controller and
Chief Accounting Officer since May 2012.
CPA, CGMA
Will lead the restructuring plan towards products portfolio
simplification and decreasing debt significantly.

6. Strategic plan Maximize Mortgage insurance opportunities
Restructure U.S life insurance business
Results in an increase for shareholder value and reduction in expenses
Genworth financial stopped provided traditional life insurance and fixed annuities during the first quarter of 2016 to further reduce expenses.
(Our decision to suspend sales of our traditional life insurance and fixed annuity products was a result of the continued impact of adverse ratings actions and recent sales levels of these products.)
Agreement to sell life insurance block. On September 30, 2015, GLAIC, our indirect wholly-owned subsidiary, entered into a Master Agreement (the “Master Agreement”) for a life block transaction with Protective Life Insurance Company (“Protective Life”).
Sale of our lifestyle protection insurance business. On December 1, 2015, we sold our lifestyle protection insurance business to AXA and received approximately $493 million with net proceeds of approximately $400 million.

7. Other players in the industry
Metlife, Inc. - $48.82B
Prudential Financial, Inc. - $35.68B
Aflac, Inc. - $29.44B
Power Financial Corp. - $21.68B
All of them are significantly bigger - not a fair comparison nor would it be beneficial to our valuation.
All the competitors are overpriced.

8. Relevant metrics P/B 0.18 TD/TC 21.24% vs 49.47% TIE 17.94 EV/EBITDA
6.52
Dividends

9. Downsides Housing market nature - Cyclical
Negative P/E, ROE, and profit margin - Not so appealing numbers
Exchange rates - mainly Canada and Australia
Recent stock performance
Cyclical and more regulated which hinders positive pressure (PMIERs)
Due to operating internationally in Canada and Australia with a strengthening dollar

10. Why Buy? Positive outcome of restructuring plan
High potential in rising interest rates
Large upward trend in Life insurance - $3.9 trillion (2016)
Stock advance in the last month and 3 months (24.49%, 47.88%)
On August 17th Genworth Mortgage Insurance expansion that includes discounts for retailers including Target, Costco and Sears
Fed rate hike in the next 2 years is almost definite
Upward trend in Life insurance driven by global income, employment levels and global awareness about the advantages of health insurance.

11. Questions