Good afternoon ladies and gentlemen. Welcome to Genworth Financial's Third Quarter Earnings Conference Call. My mane is Mikayla, and I will be the coordinator today. At this time all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of the conference call. As a reminder, the conference is being recorded for replay purposes. Also, we ask that you refrain from using cell phones, speaker phones or headsets during the Q&A portion of today's call. I would now like to turn the presentation over to Alicia Charity, Vice President, Investor Relations. Ms. Charity, you may now proceed.

Welcome to Genworth Financial's third quarter 2008 earnings conference call. Our press release and financial supplement were both released before this afternoon and are posted on our website. This evening you will hear first from Mike Fraizer, our Chairman and CEO; and then Pat Kelleher, our Chief Financial Officer. Following our prepared comments, we'll open the call up for Q&A run by Pam Schutz, Executive Vice President of our Retirement and Protection segment; Tom Mann, Executive Vice President of our International segment; and Kevin Schneider, Senior Vice President of U.S. Mortgage Insurance, as well as other business leaders would be available to take questions. With regard to forward-looking statements and the use of non-GAAP financial information, some of the statements we make during the call may contain forward-looking statements. Our actual results may differ materially from such statements. We advise you to read the cautionary note regarding forward-looking statements in our earnings release and the risk factors section of our most recent annual report Form 10-K, filed with the SEC in February 2008. This evening's discussion will also include non-GAAP financial measures that we believe may be meaningful to investors. Our financial supplement and earnings release, non-GAAP measures have been reconciled to GAAP, where required in accordance with SEC rules. And finally, when we talk about International segment, please note that all percentage changes exclude the impact of foreign exchange. And with that, let me turn the call over to Mike Fraizer.

Thanks, Alicia. This has been the most difficult market environment Genworth has experienced as a public company and we continue to face unprecedented economic and market uncertainty, to a degree that has caused Genworth like almost all financial service providers to revisit traditional assumptions on capital and liquidity that govern our businesses. We are clearly disappointed in our results this quarter and are committed to taking appropriate actions. Magnitude and rate of market change accelerated since mid-September, so I want to summarize some of those dynamics. First, credit, equity and housing markets, displayed new levels of volatility and compounding levels of negative performance which occurred it speeds that carved substantially into the performance of our equity linked products, investments, U.S. mortgage insurance and also contributed to the total write-off of goodwill in both our institutional and U.S. mortgage insurance lines in the quarter. We saw a much higher impairment and investment process than anticipated, which Pat will cover in the minute. Along with the decline in income related to limited partnership, particularly those associated with real estate. Limited partnerships along, for example, went from a positive contribution of $17 million in last year's third quarter to a loss of $20 million in the quarter just ended. Second, re-insurance markets have become more difficult to engage as re-insures reassess their risk appetites, especially for transactions with exposure to the investment markets and raise prices. This was particularly the case at the very end of September. We were able, however, to complete nearly $750 million of planned reinsurance and capital efficiency projects since June 30th. Finally, we are facing global slowdown that is becoming more pronounced. As credit markets remained under stress, economy is weakened with higher unemployment and reduced consumer spending and currency shift continued to be volatile. In the U.S.,…

Thank you. Today, I will share some perspective on operating earnings results and then provide more detailed views into two areas: the investment portfolio and our capital position. As Mike said, these are unprecedented times in U.S. real estate, equity and credit market. And we are seeing the results of recent developments in our third quarter earnings. The impact was pronounced in the retirement and protection and in U.S. mortgage insurance segment. In retirement and protection, we felt impacts from both the credit and equity markets. We saw declines in investment yields and several product lines from three main areas: first, lower limited partnership income; next, from higher cash balances we've been holding as we've repositioned our investment portfolio; and from lower levels of bond calls and mortgage repayments. Together, these reduced operating earnings by more than $50 million. Next, market conditions and our institutional spread business are such that we've seen early redemptions of a series of funding agreements backing note, generating a gain of $52 million after tax; and separately, we're seeing uncertainty concerning future and new business prospects and narrowing spreads, which led to a $12 million write-down of all remaining goodwill for this business line. In fee based retirement income, results reflect equity market volatilities that led to increased stack amortizations and increased debt benefit guarantee cost, reducing operating earnings for this business by $13 million. And also, impacting our variable annuity hedging results leading to a $22 million below the line realized loss after tax and deferred acquisition cost. Turning to U.S. mortgage insurance, we saw weaker than expected performance of the 2006 and 2007 books. Total losses were $471 million after loss mitigation savings of a $117 million from both of bulk and to a lesser extent the flow book. These loses were partially…

[Operator Instructions]. And our first question comes from the line of Ed Spehar with Merrill Lynch. Please go ahead.

Thank you. I have a few questions I guess on the liquidity and capital. You've given us a lot of things to think about here I guess in some numbers and some maybe in some other numbers you haven't articulated. So I guess could be sort of line these up and think about, first starting with liquidity, when you look at the businesses that you are in where there is the potential for the need for liquidity. So thinking about the institutional business and the annuity business, can you give us some sense of what type of stress test lapses you have assumed and how that might compare to what the normal outflows would be if we were in these sort of extenuating circumstances and any sort of collateral call issues, I guess when you talk about the funding agreement business are there any more portable contracts out there that we should be thinking about in terms of the retail notes? To what extent did you manage portfolios related to those that these notes would extend and if they are not extending, what does that suggest? I guess really kind of putting everything together, sort of the plus side and the minus side, where are the cash is that you could tap into versus maybe giving us some numbers on the stress test cash that could go out and if I've got a second, I would like to follow up with the capital question.

Pat. Thanks, Ed for that question. I'll take that for you. When we look at the entire enterprise, we look at it segment-by-segment. If you look at the International businesses, those are not businesses where there are cash value type products. So we are managing our liquidity, meeting our expected claims, obligations and we feel that we are very well matched there. If we look at mortgage insurance, we look at it the same way. When I look at life company group, which comprises most of the retirement and protection segment, I look at the balance sheet and I break it down into a number of components. We've got a significant balance sheet there. We've got long-term care products, we have got variable products, we've got life insurance products. When we look ay liquidity and stress test in particular we look at the portion of the balance sheet which relates to liabilities which have deposit like characteristics, which is the single premium deferred annuity portfolio and GICs which have withdrawal privileges associated with them. When we look at the GIC portfolio, we're basically planning for liquidity as a matter of course where we would expect that was in the next few months, all of those could be withdrawn. So we're holding sufficient funds to retire those obligations with cash, as part of the reason for the build up over the last couple of quarters in our cash positions. When we look at the single premium differed annuity portfolio, that's a total of $8 billion on our balance sheet and when you look at the cash positions in the insurance companies, they are getting... they are significantly more than half of that. We're well positioned to retire both the expected maturities and also withdrawals associated with the stresses associated with certain distribution where we think that if there is any concern at all that there might be withdrawals and in total, we feel very good about the cash positions that we have and the stress has been that we've done to mature those or to cover those obligations should they mature early.

So Pat, just on that issue of the amount here, the SPDA of 830 say more than half is sort of covered with this cash position that you've talked about earlier. So should I assume then that if I think you've said that that has gone up or Mike had said that that had gone up since September? There was a number that you gave I think early on, they gone up to $6.2 billion I guess from $4.3 billion. So, should I assume that that means that the GICs that you're assuming that all going to be withdrawn are couple of billion dollars?

Oh, two different things, Ed. First, I was talking on total company cash. Now, if you go back, you have seen an increase also in the life company cash as well. I think we have to do a segment that for, Ed. But why don't you go back and Pat, take that up and walk through the different pieces of it?

Okay. The single premium deferred annuity actually in our Delaware Life Insurance Company which is the largest holder, or the largest issuer of single premium annuities we have an $8 billion balance, what I admitted to indicate is that we have another $3 million approximately in our New York company. And, we are holding significant cash positions in both those companies. We have stress the withdrawal on those significantly, we currently experience withdrawals in the neighborhood of 20% of the account balances on an annual basis, and our current liquidity planning, we are currently planning for a withdrawal in excess of 50% of that amount were approximately 30% of the total account balances. We have not seen withdrawal behavior on those policies, which was out of the ordinary at all. In fact, our monitoring of the withdrawals are right in line with our normal expectations. However, we are holding significant additional cash to cover excess withdrawal should bad situation occur. Does that covering your question?

And then Pat, how about on the institutional side, the GICs funding agreements, what are those similar numbers, similar I guess you said you assumed that all are those are withdrawn. So does that mean we have cash that's or that we... the securities that we have backing those we are going to be able to sell without meaningful losses or how do we think about that? And then just one other different question is on the... you said that the sort of you kind of looked over the USMI and said no real issues. I guess how much on the... we think about the captive reinsurance benefit that is not a... how does that work in terms of what's cash and what sort of a GAAP benefit, isn't that primarily the GAAP benefits, so how do we look at that?

Okay. I'll address your question first about the GICs. In total there's about 1.2 billion of guaranteed investment contract in our portfolio overall in the life companies. We are in fact holding cash to retire those obligations over a three months period. In addition, we have funding agreements and funding agreements back note, and our current liquidity planning expects that at the maturity of those obligations, they will mature and will not be expended and we have matched our expected cash flows associated with investments and cash positions to cover those liabilities as they mature. Kevin, you want to comment on the captive reinsurance with lenders please.

Yes. When you add the amount of reinsurance that's in the trust or the capital that's held in trust in those capital reinsurance agreements, we are getting the benefit on a GAAP basis of the reserves put up against those books of business. The cash side of it will result when we ultimately pay the claims. So, when we pay the claims, ultimately associated with those reserves that are been put up today at that point, the cash will come out of the trust and will have... that's how those claims will be funded at that point in time.

Okay. And then just I guess finally on capital, it sounds like you describe... I guess the question is this. You seem to be very focused on liquidity and the areas where and wisely so in the areas where you could have liquidity issue you seem to be addressing. So then when we turn to capital, you talk about a number of initiatives on the reinsurance side, plans to complete another $500 million by year-end, which I am assuming given your comments about the difficult reinsurance market, you must have some confidence if that's still going to happen for whatever reason. The International generating up to $450 million over the next couple of years, I guess what I am little bit perplexed by is what is the scenario where you say, we issue equity capital, I mean as far... what looks like it's going to be $4 a share, judging by sort of some late market stuff here. How do you whether it's public or private how do we get to the point, where you think you say you need to raise capital? And given everything else that you have outlined, we are seeing numerous other initiatives on the capital front and no obvious liquidity issue?

Ed, let me pick up on that one. First of all, you're right. We have spent a lot of time planning on liquidity and various scenarios as we walk through and we think that's prudent for anyone in this market. I mean these are unprecedented times and you have to plan for that and plan for those types of conditions to continue and that's how we run the company on a liquidity standpoint. Second is we want to make sure that we have well capitalized target that are AA rating category life company and we've used the number of leverage there. As you've heard Pat talk about both reinsurance and capital efficiency projects, and a lot of that of course as you focus the business and as you dial different production levels and are selective, you have enforced blocks that generate a significant amount of capital. And we are using that as I articulated in our planning in not only the U.S. businesses, but also internationally, the international you do see an economic slowdown that contributes to that as well. So also would be some cost benefits clearly that come through that help those life companies. So we'll keep moving through those various levers, the multiple lines and we look at providing for conditions, of course they can be challenging in this market going ahead at any most of the holding company level. And then at holding company, as I mentioned we have some $435 million of cash, but we also think that it's prudent to not assume that markets return to a normal state. The debt markets are very dislocated right now and that could well continue into 2009. As we pointed out, we have to be very thoughtful about debt maturities that are in that mid-2009 timeframe. And therefore, think about various scenarios, various leverage you have that you can pursue and if those markets are closed and depending on all the mix of the other things and that's why, I gave a laundry list of things we are looking at. Everything from additional capital projects to assets sales; to whether there is a debt refinancing capability that opens the equity in its various forms public or private. So depending on all of these factors that would lead us to determine both whether we would pursue that path or any potential timing of that path. Now, as you think through those, of course and you used the words, what scenarios we look at, I think everyone looks at scenarios right now including things like where will the equity markets be, where will the credit and therefore potential impairments be, so all of those factors go into thinking about how you would use these different levers any sizing of contributions from them. So I can't peg a number for you, but I can tell you that's how we think about it and are trying to prepare prudently for this type of environment.

And the TARP, does that factor in here, anything you want to say about that?

Well. I think certainly everyone has looked at multiple angles I think for the insurance industries specifically, the F&L path is the most attractive path and its one that certainly we examine.

Thank you.

Thank you. And our next question comes from the line of Eric Berg with Barclays Capital. Please go ahead.

Good evening to everyone. Mike, what I am hearing is a... what to me is a markedly much, much more pessimistic tone from you and Pat than in opinion and I'll emphasize just my opinion than we have heard from other senior executives and your competitors. You're basically in the same businesses as everybody else and facing the same capital markets except of course for that the U.S. mortgage insurance business which in middle is under terrible pressure, we know that. My question is, the other executives, they are taking about capital, they are talking about liquidity. But not nearly to the same degree that you are and they are spending much more time talking about how hopeful they are of getting through to be other end of this and the longer term bright prospects for their business. My question is what's different about Genworth? Is it... why are you use seemingly so much more concerned about the near term future to the point that you are not even talking about your businesses and are talking only about liquidity and capital as if you are expecting a huge typhoon to descend upon you and you are getting ready for it?

I think and first of all, I think the world has changed a little bit, Eric.

Yes.

I mean that the financial market sort of ground to a halt in the credit market, you've seen it ripple through every type of investment, you have seen it ripple through the equity market and if you have seen a positive economic forecast around the world, I'd like to see it. Because, they have only compounded and gotten worse. I think as a leader and I am not going to comment or compare against any other situation, that's your job, fundamentally you want to prepare for the worse and be surprised by upside as to be hopeful about the future in a world that has totally turned upside down. And you have heard everyone from governmental leaders to the leaders that at in every financial institution and let's get outside of insurance and talk about the changes that have been out there talk about the new realities we're dealing with and that therefore appropriate steps must be taken. So we have had some solid business performances as you've seen. Look at international.

Right.

But where I have seen most questions about people in the market are saying, how do you navigate this type of recessionary and financial market dislocation and that comes back to liquidity, that comes back to capital and that comes back to focus and that's where we thought we would spend our time today, because we certainly provide a lot of information in both the press release and the supplement about how individual product lines are performing. So we're frankly trying to be response to the things, we think you should be thinking about and we are thinking about and spending our time on in this type of environment.

No. I guess my question is, my question really maybe wasn't as clear as it could have been. It didn't come through the way I wanted it to, what I really want to say, is there something different about Genworth's situation in your view that we need to understand that is explaining your tone and what you are working on these days, relative to competitors?

Listen, I think I've been pretty clear. I mean I'll start with the international businesses. I mean first of all, we have a big presence internationally, and as we pointed out, when you see things like mortgage origination levels slow down around the world from any place from 20% to 40%; that does impact the level of new business you'll attach. And add to your very good in-force books of business. That's a point in case or a point to be considered. You look at our lifestyle protection, what we've previously called payment protection business, that does vary as far as growth levels with consumer lending behavior because a lot of that products, a bulk of that product in fact it captures as consumers have some type of new financial obligation, heavily oriented in Europe that is a different footprint and you will see some other companies have. Unless we see consumer lending levels come down, we would expect production to come down, still good in-force performance, but as you look forward that is certainly a difference. I think you have seen our new long-term care book do quite well and we commented upon that in the quarter. In fact, you saw some good growth in the quarter; though little shift in channels there. And we are very pleased about our middle market focus or I should say even refocus in life, which narrows production levels. But it's really the sweet spot for us. But when it comes to talking about things that are like equity-linked products when you look at investment areas given the large fixed income portfolios, when you look at institutional markets, I think we are seeing some of the same dynamics and that that you see elsewhere and then you will have individual different credit risk given on individual investments, positions and within a portfolio. So, perhaps the different mix of businesses is one thing that you will see from different dynamics that we share with you to be considerate, but certainly there is some more relapse themes and we get to read and listen to the same types of calls that you get to listen to, and I've certainly heard plenty of focus on equity markets, credit markets, liquidity and capital as well.

Thank you.

Thank you. Our next question comes from the line of Andrew Kligerman with UBS. Please go ahead.

Yes, good evening. I am going to have to respectfully disagree with Eric though because there is a lot of pretty dismal calls with other company management. Okay, the first area I wanted to just touch on is your capital position, or technically what everybody deems excess capital with about a 360% RBC ratio, it seems that in the operating entities, things seem to be in order, but you threw a lot of stuff out, you talked about reinsurance of $750 million in this third quarter and then plans to do another $665 million. If you do another $665 million in reinsurance, what does that do to your excess capital? And then part B of that is what asset sales are you planning to do? I was under the impression that you had about $1 billion in assets that you were thinking about disposing off and if so, what would that do for your excess capital position, those two parts and then I will follow on.

Andrew, it's Pat. I'll take the first part. We had always planned capital projects relating in particular to the XXX and AXXX reserve release and as well as old block capital extraction. And based on the market environment, we have expanded these programs and we've made capital contributions to position the life companies in particular with a strong capital position. And this is really related to the level of volatility and uncertainty in the credit and equity market, the impact it has on your investment results, as well as the ability to access the debt market. We are at this point reluctant to provide detailed estimate of year-end capital that might not be as predictable as they were previously. So, therefore, when you ask about excess capital or deployable capital, not really in a position to provide a specific number because the circumstances aren't as reliable or the conditions aren't as reliable as they have been in preceding years. So what we're doing is we're doing the additional project and we're anticipating that we could have worse than expected results and investment related impairments and worse than expected results in equity markets. So that we have enough capital and enough capital cushion to weather those results and hit our targeted AA level capital ratings.

So Pat, let me ask it this way then, if you would do another $655 million reinsurance transaction, could I look at that $655 million as re-deployable capital?

You could look at that, I'm sorry you said, I think you said--

I think you said $500 million and then another $115 million of reinsurance or let me just reread that, I'm sorry about that... yes, reinsurance capital efficiency project. So, if you were to complete those projects in fourth quarter as mentioned in press release and in your comments, would that... could I deem that be re-deployable capital where as people commonly call it excess capital or there is something encumbrances on that.

And you could look at that as the equivalent of additional available capital that would be available to support the business either for growth or for covering other capital requirements of any sort.

Okay. And then, may be you could give a sense of assets. There has been a lot of talk of initially starting the year with the $1.5 billion and may be $0.5 billion in properties had been disposed. Where are you right now in terms of asset that's disposed of and then what's the market out there like that for those assets, is it pretty dry or are there really opportunities to dispose of those assets?

Andrew, let me first stand back, two different things. One is when you do liquidity planning, you certainly raise cash levels and then you also look at other things that our assets that could be monetized, because of the characteristics of those under various scenarios. And that may be what you are talking about under that. When I talk about asset, I think about block of business.

Yes, that something I--

Yes, block of business at times you have seen us proving our business line portfolio to bring additional focus to it, so I am not going to get into any anything specific there. But again, when I look at the world, look out, look at contingencies; we think its prudent if you take a sharp look at those and look at what options you have in addition to all the other levers that we talked about to prepare for this type of environment or to be longer economic slowdown.

And So Michael, if you were to divest this business block, is there a market out there for it? Just as you have said where the debt market is they were pretty tight, is there market out there for disposing off certain blocks of business?

It really depends on both the type of the block and the type of business line and condition; I'll leave it at that.

All right. That one is a little vague then that answer. How about the reinsurance market, you had commented a bit on the reinsurance market being a little tight towards the end there. Do you anticipate any problem with that $665 million?

No I'll give it to Pat, I think you have to split the reinsurance market first of all. There remains uncertainly in the reinsurance market in asset intensive areas. When you are into mortality risk, morbidity risk, you have a much, much more open market and also, we also see some new reinsurance opportunities in areas like mortgage insurance, given the substantial margins in new business. But Pat, you want to go more specifically into the types of projects that we look at as we move into the fourth... well; we're in the fourth quarter as we move through the fourth quarter excuse me?

Sure. Yes, we have already completed some projects in the fourth quarter and the types of projects that we are looking at are really ones that relate to reinsuring blocks of business where the experience is good. It's observable and really where there is some sort of arbitrage involved either with the capital or tax where we are able to generate capital at an effectively low cost and therefore have it available for redeployment in our business.

So you sounds like that you are somewhat optimistic on that one?

We have been closing transactions and we have transactions on schedule to be closed just like we have businesses which are generating new business and generating good claims results as well.

Okay. May be just quickly shifting over to the mortgage insurance business in the United States, you had... Genworth had done a presentation in late September looking at various scenarios and one of them was the home price depreciation, 33% in the most of years scenario and unemployment getting to close to 10% by the second quarter of '010 and under that scenario you anticipate I think if I remember correctly, it was something like $400 million of additional capital needed to have used in this business. What kind of scenario are you envisioning now and you talked about a very difficult third quarter? Are you looking at that 33% decline at 10% unemployment? Is that still kind of standing in your view or could be even get most severe than that as sit here now?

Andrew let me turn that over to Kevin Schneider.

Andrew, on that call the discussion as you pointed out was focused on our capital adequacy under some various scenarios. And since that discussion the economy has continued to deteriorate. Unemployment is pushing out into sort of 62% to 64% range I would imagine by the end of the year, end of 2008. Our delinquencies and tier rate as in industry have certainly not improved. I guess our view at this point in time, where home price appreciation will go to is currently on a probably about down about 26% peak to trough and the index we generally reference to which is the National Association of Variable Index, so think about it as probably another at this point in time down about 13% to say another 10% to 13% to go there, so that's really sort of the way we're thinking right now about those scenarios. The chart that we talked about was talking about over the course of 2009 and walking from really our stat capital levels at the end of the second quarter to the end of 2009 under different outcomes such as that and what we said was even under those scenarios, we would still be operating about at the AA capital, rating agency capital level of about $2 billion. The additional $400 million or $450 million that was on the chart was not required at that point in time is what we said we would be going after to try and further supplement and augment our capital cushion our capital position. So we would still be pursuing those type alternatives in as many ways of giving after those, they could be reinsurance types solutions. And we continue to work on some reinsurance options right now and the other option that the potential could be available for Genworth and for the industry might be some solutions associated with the TARP plan, that are very, very housing specific, that could provide some additional capital support.

Okay. And just real quickly last, is there any updates that you want to provide on that less mortgage insurance provision? I know you had put out a release that you are exploring alternatives, anything specifically to comment on?

Basically we continue to review options regarding the business and we talked about some in our previous announcement, including a spin-off and there are many complexity I'd say to consider and we'll act thoughtfully. We're going through and looking at the various strategic options and one that would create the most opportunity for shareholders, we're working with some advisors, as we consider those options. So I don't have anything specifically to update you on outside of we're being thorough and thoughtful and looking at a lot of alternatives.

Okay. Thanks so much.

Thank you. Our next question comes from the line of Donna Halverstadt with Goldman Sachs. Please go ahead.

Thank you. Most of my questions were asked, but I do have follow-ups to two of the answers you gave as well as one question that's not yet been asked, I'll start with that one. You mentioned the ability to draw on your credit line. Are there any circumstances under which you would not be able to draw, whether that be financial covenants or Mac clauses or thing that could for preclude your drawing?

This is Pat, I'll take that. We do have conditions and covenants and at the present time we do not foresee any circumstances which would prevent us from being in a position in the foreseeable future from drawing on those faculties.

Okay. And then one other things I wanted to follow up on was an answer that you to Ed, and I just want to make sure that I heard you completely and correctly. In terms of the GICs and the FAS I think you said that you have sufficient holding company cash to retire all the GIC obligations over the next three months, and that with respect to the FAS you are expecting that won't be extended the maturity to cash flows are matched. Does that presume that the FAS are not putable upon any rating's downgrade?

Yes, at this point what I would say is the cash that we have is sufficient in the life insurance companies that our issuers of those contracts to retire guaranteed investment certificate... guaranteed investment contracts over the next three months and also to retire on maturity the funding agreements. We had previously in the year had a small number of contracts with ratings downgrade related, I am sorry not just with general put provisions not ratings downgrade related but we have since negotiated termination agreements on those and they are provided for in our liquidity and cash planning.

Okay so that are remaining FAS have ratings puts on them, is that correct?

That's correct.

Okay.

One other thing I would mention is that with respect to the GICs, although we plan for liquidity in this way, we have only had a few increase relating to market value adjustments and surrender of those contracts at this point in time.

And the one other thing I wanted to follow up on, you mentioned that with respect to MI business, there could be some TARP solutions and housing specific items that could potentially provide capital support. Can you be a little bit more specific what you are thinking about there?

Donna, there is a lot of activity going on in Washington right now and so I don't have any other specifics other than think there the industry is looking for number of ways and when I say the industry, the government is looking for number of ways to use the money associated with that to support home ownership and to support housing. And so that's just what I was referring to, nothing specifically related to Genworth at this point in time.

Right thank you very much

Thank you. Our next question comes from the line of Patricia Nishigi [ph] with Bank of Hawaii. Please go ahead.

Yes hello. We're concerned about the bonds that are maturing in 2009, we own about $10 million of the bonds that are due in May of '09 and there is the total holding of $600 million and $500 million in June of '09 totaling about $1.1 million. So my question is based on your liquidity, it looks like it's reduced to $435 million in cash and cash equivalents, how are you planning to pay these bonds when they become due?

This is Mike. I think I addressed that in my opening remarks quite specifically that, first of all that as we move through and operator businesses we have very liquidity at the operating levels. Then, as I talked about the holding company levels and pointed specifically to midyear 2009 debt maturities which you're pointing to now, that we have a variety of opportunities to deal with those. One, of course, is to see where the markets go, until the markets open up again. Additionally, that's why I have talked about the other opportunities that one assesses before you even get to the credit lines that Pat talked about that are the substantial assets of the company, the five year alliance. And that's why I thought that if the debt markets are closed and other market dislocations continue, you look at the whole laundry list of everything from asset sales as an example to how you might raise equity as an example and so on and what combination of those. So, we're well aware of those maturities and certainly have at the backup capability of accessing net alliance to navigate through that period quite successfully.

So, your credit lines are $1.8 billion that you mentioned as well as on 6.2 at the operating company?

We're talking of a holding company debt now. So, we have talked to you about the credit lines at the holding company level. Now, we've talked about operating company and I think you heard on this call a whole set of discussions about our various operating company can be used under various scenarios.

And will some of that be upstream to the holding company is necessary, the $6.2 billion?

Well,what we've looked at is keeping what's in the operating companies within the operating companies at this point in time.

I see. But if you need to access the credit lines you have $1.8 billion?

That is what we have said.

All right. I have two more questions, on how much in commercial people outstanding do you have?

Pat, you want to take that please?

Approximately 220 million.

Oh it's over a 100, million 220?

That's correct.

I see. And another question is... there is just CPFF, the commercial people funding facility. I understand that you folks are participating in it and how much are you participating?

That's correct. We are participating and were eligible to participate up to a limit of approximately $223 million.

I see. And... so that adds additional liquidity to the holding company, so you are participating up to $223 million.

That's correct.

Alright. Well, thank you.

Thank you.

Thank you. Our next question comes from the line of Steven Schwartz with Raymond James and Associates. Please go ahead.

Hey, good evening guys. A lot has been covered. I do want to touch on the couple of things. Kevin, really in this morning, you were realizing that the '06 and '07 businesses were still going through trials and travails. Can you touch on the 2005 book?

Excuse me Steven, 2005 book is also pressured. The combination of the five, six, and seven books, primarily there was six and seven books where we have experienced most of the pressure. For the 2005 book I would imagine will perform outside of pricing and that's our expectations at this point in time.

Okay.Radian have put this morning or maybe just everything is needed to fund together here, that do you thought the 2005 book the delinquencies at peak. Do you think that would be true for your book or not?

I think they should be peeking through this period of time when probably well in early '09.

Okay. Maybe you can touch on and you mentioned Washington, but there have been some other programs maybe if you talk about how MRI is going to participate in that to be there program I think J.P Morgan or also just announced a program to deal with keeping keep down for orders?

Yes.There is been a number of programs that have been announced recently and we're support of any that can help keep more home orders in their homes and help keep less reduced the amount of additional supply of inventory that's getting put into the market. You think about to be away program specifically, we've identified... we have probably about 14,000 overall policies in force that are part potentially of that settlements. But whether those will ultimately results in improvement for those borrowers is still very early on, since the announcement of that, a lot of that stuff was really focused on sub-prime ARM programs and we didn't participate in and as you aware. The Chase program is very, very new and not a lot of details, but again we're very supportive of that, and Chase has been a big partner... a lending partner of ours. And I'm sure we'll work closely with them if there is opportunity there.

Okay. What I'm trying to get at here is, do you know how you would participate? Has this thing you can guide net far yet where MIs?

It really hasn't.

Okay, okay. And then finally this concerns MI, but I think maybe for Mike instead, you announced alternatives or that you were explaining alternatives for the USMI business Mike. I got to ask you as the CEO of this company, what possible sense would it make to spin out the USMI business, but keep the international MI businesses together with the life insurance company? To me that just doesn't make any sense.

Everyone is entitled to there own opinions Steven. We will look at various alternatives and we get plenty of inputs from investors and other constituencies. And we will take those all into account, but we have to do what's right for the company and look at our opportunities and where to deploy capital and how to optimize value over time and that what we're going to do.

Okay. Not to be misfortunate and I don't mean to be rude by the way, but does it make sense in your mind to have the international MI businesses together with the U.S. life business where you might have may be wrongly but investors out there, what you are seeing concerns about might have that would happen in the U.S. to a lesser extent admittedly it might happen overseas?

Well,put at this way, we've had very direct discussions in public forums and with investors about the differences between the USMI market and the international market. And I think you'll note that in the performance, just look at the quarter on that front you've seen in product characteristics, underwriting, who are the distributors, where the securitization impact had a mark-to-market or not, did it bring an alternative products, capital regulation and so on. And so certainly we've seen attractive performances internationally and we're navigating a very tough cycle that I think Kevin and the team are doing an excellent job of that here domestically. So your questions fundamentally one that's any team has to look at throughout time, which is how do you balance your mix of businesses, where do you allocate capital, we have to do that and do that actively and thoughtfully. And that's where we'll proceed. So, I appreciate the question and I hope you'll appreciate that we have to consider a variety of factors in the totality as we look at that and look at capital allocation and capital redeployment decision.

Okay. I agree. I didn't mean to be rude. I do appreciate cantor.

Thank you. Our next question comes from the line of Gregory Roeder with Adirondack Funds. Please go ahead.

Good evening. Thanks for your time. I have a quick question on equity linked products, what's your total exposure to equity linked? Pamela S. Schutz - Executive Vice President - Genworth, Retirement & Protection: Roughly $7 billion of variable annuities.

Okay. And what are the challenges are you seeing on the hedging side, I was listening to the Hartford call, and you spend a lot of time on the issues regarding hedging and how much capital is they consume on the hedging side?

I'm going to turn that over to Pat.

Okay. I would say that the third quarter was an extremely challenging environment. It was high volatility in both interest rates in equity markets. The quarterly performance of our hedged program was at the high end of our expected volatility, given the performance metrics we track. We do remained tightly hedged to the equity and interest rate changes on a regular basis. I think that in the short-term, we're going to continue to see additional volatility and we are working on improving the hedged program in order track more closely the actual funds being invested with the hedging that is done using the industries that are available. And I would anticipate that would help us reduce the basis risk we've seen over the last couple of quarters. From the capital perspective, the hedging is a very good thing. It reduces the capital that needed to support those products line and the risk.

Okay. And then in the terms your GICs, you're assuming pretty conservatively, that would have to liquidate the entire $1.2 billion. I guess my question is, is there any chance of the GIC market will begin to throw out and possibly you could re-access that market sometime down the road?

Pam, why don't you take that, please? Pamela S. Schutz - Executive Vice President - Genworth, Retirement & Protection: Based on what we're seeing today, we don't see that. Our competitors in that market, everybody has been slow and given credits spreads so wide and the market environment, we do not see that at this time.

And is there any possible top initiatives that would address the GIC market? Pamela S. Schutz - Executive Vice President - Genworth, Retirement & Protection: Not that we know of.

No, you don't. Okay. Thank you.

Thank you. Our next question comes from the line of Jeff Schuman with KBW. Please go ahead. Jeffrey Schuman - Keefe, Bruyette & Woods: Good evening. I'd like to start by coming back to the funding agreements and the funding agreement back notes for a moment. I point I'm not sure I understood, Pat I think you talked about anticipating being able to fund for the regular maturities of these contracts. But then, during this quarter you had what you called early redemptions that would done at sort of discounted the contract value. So I assume these were some sort of extra contractual arrangements, is that correct?

We accommodated a request from our customer who really needed liquidity on a basis which was elective and where we thought the terms were appropriate. And we have the liquidity to accommodate and as a result we recorded a gain. Jeffrey Schuman - Keefe, Bruyette & Woods: But, so we should not expect that there will be a significant volume of these or are you those kind of, one off is that fair?

That's very fair. Jeffrey Schuman - Keefe, Bruyette & Woods: Okay. Next, I was wondering to get a little more complete picture of kind of the short end of the holding company balanced. You've talked $435 million of cash, then you also talked about $220 million of CP. To what extent is the $435 million funded short and then sort of maybe not to available to downstream versus maybe funded longer or you might have some more flexibility?

It's about half and half million, we also have cash flows that are schedule to becoming to the holding company over the near term that are taking into account in our plan. All in we have holding company cash we need over the timeframe as Mike indicated to satisfy all our needs. Jeffrey Schuman - Keefe, Bruyette & Woods: Okay. But, I guess I was wondering about it taking the step further whether the holding company was not only had a enough capital for it's own need, but whether that was I guess sort of additional resources to support the operating companies as well?

Of course, we keep our cushion. But as Mike had indicated that's why we're looking at the opportunities or potential to raise capital through both public and private market as well as looking at the asset sales because we are looking to have a capital position, which is stronger at the holding company level. Jeffrey Schuman - Keefe, Bruyette & Woods: Okay. And then lastly we haven't had a lot of time to get through the segments. But... and there were something lot of kind of unusual items point out in the press release, but one thing which quite reconcile is appeared that debt amortization was very, very different in a number of the segments. I think it was pretty light in life insurance and maybe a bit negative in one of the retirement businesses. Where there some positive debt k unlocking this quarter or what might have driven some of the really debt amortization results?

This is Pat. I'll take that question. There were in the annuity product lines, we have some capital losses that we recorded during the period and relating to assets that are supporting that FAS 97 products. And as a result we rode up the debt, because those losses are part of the gross margins in the profit stream. Jeffrey Schuman - Keefe, Bruyette & Woods: Okay. So the debt offsets on the capital losses are offsetting, running to the operating income. Okay, alright, thank you very much.

Thank you. And our next question comes from the line of George Cleo [ph] with Lightspeed. Please go ahead.

I just want to understand couple of points of clarification in terms of the liquidity at the holding company level. You basically brought down to the life insurance company's $500 million. But if, I understood your answer to the prior question correctly your plan now inflations you up streaming cash of the holding company level between now the next few months, is that correct that we understood it?

Within our group, we have the life companies where we wanted to put more capital and to provide a buffer or cushion and to achieve target AA level capital ratios. Also within our groups we have companies that have more capital than what they need. And at times like this, we plan to use our capital elsewhere.

So, but I mean on the net basis we expect cash to go up to the holding company level in the future or not? Did I understand the question, they'd answer correctly?

There will be some cash that goes into the holding company level with the next six months, that's correct.

Okay. Now, the... my last question is this, if you look at 2009 and particularly and lot of the comments you made on how October softness accelerated and obviously you are looking at line being at the fear, is there any kind of scenario you look at where the holding company maybe finding it little bit tough to have enough cash and draw on the $1.8 billion to take out the '09 bonds. But then have a little bit of a cash requirement to go down to holding company levels and then have a little bit of liquidity potential problem there or that's completely even under the most stressed situation not going to happen?

Before I answer your question, what I would like to clarify with respect to cash going to the holding company it is not from the U.S life companies, it's from elsewhere in the system. To address your question relating to looking at plans and capital needs and under what circumstances would we plan perhaps to look at drawing the credit lines, looking at our plans at this point in time in terms of the options available to us that we're considering, we're considering the credit lines to be back up and contingency plans. We did not foresee drawing on the credit lines over the near term.

Okay. Thank you.

Thank you. Our next question comes from the line of Tom Gallagher with Credit Suisse. Please go ahead.

Hi. This is actually Mike Swaransky [ph] filling in for Tom. I had a follow-up on you had mentioned the covenants earlier, could you both tell us specifically some of the financial covenants, what they are and some of the specifics?

Pat, do you want to take that please?

We have... I'll say standard covenants in the credit agreements which are really designed to prevent us from divesting material portions or large portions of Genworth, which were not contemplated at the point in time where we had entered into those agreements. And that's generally the nature of the types of covenants we're looking at.

So no minimum like statutory levels or type of RBC type covenants?

None whatsoever.

Okay. And a follow-up, the risk to capital in the supplements 14, 8s and I know that's... it lags by a quarter. And I don't know if you guys have your payments done yet. But few estimate what it is as of the quarter end, and could you tell us where using the stress case scenarios from you talked about last quarter, where the risk to capital mix out it?

Mike it, at the end of the quarter risk to capital is at about 15.7 and the stress levels that we shared with you when we had a call really drilling it on capital earlier, the later part of September would take it out to about 19.1.

Okay. Thank you very much.

Thank you. And our next question comes from the line of Dyne Smith with USAA. Please go ahead.

Hi. I want to come back to your comment about SPDAs, you said and I am not sure I heard you correctly, it sounded like you mention that was 20% of the balances we've withdrawn?

No. Not at all.

Okay.

In fact, we haven't seen any abnormal activity in SPDAs. And in fact I think consumers have come to appreciate the value of the annuity propositions in an uncertain time, particularly with backed by fixed income. So, with another aspect to your question just I...

What was the 20% withdrawal rate you've mentioned?

Well, you maybe thinking about how much of it is out of surrender charge period?

Okay. Sorry that makes sense.

It would be our campaign something like let me turn over the Pam Schutz for the results. Pamela S. Schutz - Executive Vice President - Genworth, Retirement & Protection: Yes. I think what Pat was referring to is that the normal anticipated surrenders or withdrawal would be 20% and in a stressed scenario, we had put at that 50%. I think that was the 20 and 50.

Okay. And are so you seeing any kind of turning like that at all or may be not so much with SPDAs but with any of your other business, where you are having policies lapsing? Pamela S. Schutz - Executive Vice President - Genworth, Retirement & Protection: No, we're not seeing anything out of the normal ranges.

Okay.

The expected ranges.

Okay, okay. I'm glad I misunderstood that. Back to your capital levels, it sounds to me like you have at least right now relatively strong capital levels. But yet best and best has put you on review for downgrade. I'm just kind a curious if you're going to reconcile, why that is I imagine you spoken with them before the call.

Let's just step back I think in response to Eric's earlier question, I mean there are all uncertain environments. We had some impairments. For example come through that we've talked about and those of course impact your risk based capital, now we had offsets to those. So I think you see various constituencies just looking at the overall market dislocation, investment environment, what's going to happen with the economic environment and you've seen a lot of scrutiny across the industry in general right now. So, of course, each agency has to make their own assessments. We share information, times there may differences in assessments and then we understand that.

Have they given you any type of a level maybe not any IC or risk based capital level, but some other level if you are in... your capital is in pretty good shape. What would they require?

Now, put it this way, in general and you see there are number of our announcements that you tried to run about $3.25% risk based capital ratio to be a AA category company. Different firms have some different standards around that. So, what I would say one has to look at in this environment with equity markets with that markets is how you've maintaining in appropriate range of capital with all these different things going on in the market and that's why we talked about the various leverages we have in business to do just that.

Okay. Would you see it, if you were to move down on Arcadian desk what kind of an impact do you think that what would happen to sales?

I am not going to speculate at this point. We've got a lot of different levers. If look at what's the difference in general between deferent types and positions of companies. For example, if you look at things that are AA category companies overall, you are going to see a wide drift of product lines. If you go below that level, you are going to see, for example, line life insurance long-term care Med stop as no way material adverse effect. If you were in spread or fee based annuities, you would expect to see reduced new business. However, for example look for we did in the quarter just where we did see some investment pressures, we did move to make an appropriate infusion into the U.S. life companies to maintain ratios in that rate in that supports that type of annuity business and moving forward. So that maybe a way for you to think about it.

Okay. Thanks a lot.

Ladies and gentlemen, we have time for one final question. Our final question comes from the line of Suneet Kamath with Sanford Bernstein. Please go ahead. Suneet Kamath - Sanford C. Bernstein & Co: Great, thank you and good evening. I'll try to make this quick, just as a follow-up to an earlier answer that you provided if the credit market don't unfreeze and you are looking at this is $1.1 billion maturity payment next year and you have $1.8 billion of line of credit capacity that's long-terms in nature and you said yourselves that you don't expect to violate any of the covenant, why would you raise equity at your current valuation rather than draw down on that credit line to repay the debt which as I think what you have said in response to an earlier question, why wouldn't that make more sense for a company focused on shareholder value? Thank you.

First let's step back and there're been various questions about the credit lines. And one thing I do want to make sure there was a question, where we had some comment about what types of things in the credit line. And one of the standard things I want to make sure everyone understand since there is a normal network maintenance type covenant and we have a substantial cushion that takes care of that, so give me that as background. I mean that's your point is very good that these credit lines which are five year lines that attractively priced are true assets of company and we don't ignore that at all. And we look at those has been valuable assets that can help you navigate a situation depending what the markets are doing. Now, I think in general you'll like to keep portion of your credit lines indeed as back up and that's how well you think about them because for the unknown but certainly you would look at them as one of the important levers, but we think with the things going on in the environment you need to look at other levers as wells, and look at them all in combination, whether they be the list that I've gone through or of course using the credit line. So, we'll be thoughtful about that Suneet and I understand the point. Suneet Kamath - Sanford C. Bernstein & Co: Okay. So my interruption that you would not use the credit lines to pay the maturity and would raise equity I thought that's what you had said that is in fact incorrect and you would be thoughtful kind of balance too, is that what you're saying?

That is exactly what I said in my opening remarks. And I thought I was pretty clear on that, and I just reaffirm those. Suneet Kamath - Sanford C. Bernstein & Co: Okay. That's fine. Thank you very much.

Ladies and gentlemen, this concludes Genworth Financial third quarter earnings conference call. Thank you for your participation. At this time the call will end. .