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London, 15 December 2008 – Britain saw the balance shift from relative financial security to vulnerability between summer 2007 and autumn 2008 – as revealed in the Genworth Financial Index, a measure of consumer financial vulnerability across 12 major European markets.

The Index shows a six-fold increase in the proportion of British people saying they thought their household’s financial situation would get worse in the next 12 months – up from 6 per cent in 2007 to 36 per cent in 2008.
 
The increase in the proportion classed as “vulnerable” increased from seven per cent to 22 per cent.  These are households who have been in difficulties in the last 12 months and feel their situation is unlikely to improve.

This increase in pessimism about the future was the main driver of the change in score for Britain which ranked 8th out of 12 in terms of relative financial vulnerability, just better than France, but worse than the 4 Nordic countries.  The table was topped by Portugal in 2008, replacing Italy.

The largest increase for any combination of response to the Index questions was where people were “sometimes experiencing difficulties” and expecting the “household financial position to get worse” – up from one per cent to 12 per cent.

Conversely, those feeling financial secure (never experienced financial difficulties and expect their situation to improve) remained relatively high at eight per cent, second only to the Nordic countries, albeit having dropped from 17 per cent in 2007.  Interestingly, only modest increases were noticed in those saying they were already “experiencing financial difficulties fairly frequently”.    

“Part of helping consumers achieve the goal of financial security, is understanding which households are most prone to financial difficulties, especially as the cycle turns”, said David Lane, regional manager for Western Europe at Genworth Financial’s Lifestyle Protection business.  “This second volume of our Index highlights how feelings of vulnerability and security have changed since the start of the financial market turmoil in 2007.   We’re proud to be able to share these insights to help policymakers tackle key issues such as financial capability”.

"The Index provides the clearest evidence yet that the effects of the economic downturn, combined with the increase in the costs of basic goods and services, have been felt by households across Europe”, said Professor Elaine Kempson of the Personal Finance Research Centre – academic partner to Genworth for the index.  “Compared with a year ago, many more British householders are bracing themselves for a decline in their financial position in the coming months.  If their fears are realised we are likely to see an increase in the number of British households with very constrained budgets and in the number falling behind with payments on their bills, mortgage and credit commitments."

The Genworth Index is derived from responses to two questions:

• Thinking about the general financial position of your household, how often do you experience financial difficulties?
• Looking ahead over the next 12 months, do you think the financial position of your household will improve, stay the same or get worse?

By combining responses to these questions, four distinct groups or clusters can be identified.  The Index takes the ratio of the percentage of people in the financially secure group relative to the percentage of the group who are financially vulnerable.  The resulting value is rescaled so that a score of -100 indicates maximum possible relative financial security and a score of 100 indicates maximum relative financial vulnerability.
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Genworth Financial, Inc. (NYSE:GNW) is a leading public Fortune 500 global financial security company. Genworth has more than $100 billion in assets and employs approximately 7,000 people in 25 countries. Its products and services help meet the investment, protection, retirement and lifestyle needs of over 15 million customers. Genworth operates through three segments: Retirement and Protection, International and U.S. Mortgage Insurance. Its products and services are offered through financial intermediaries, advisors, independent distributors and sales specialists. Genworth Financial, which traces its roots back to 1871, became a public company in 2004 and is headquartered in Richmond, Virginia. For more information, visit genworth.com.

About The Genworth Index

Research was conducted by Ipsos MORI on behalf of Genworth Financial.  Total sample size was 12,000 householders – the person in whose name the accommodation is owned or rented, or his/her partner in order to provide meaningful data from those people with financial responsibilities (1,000 in each of 12 European markets: Denmark, Finland, France, Germany, Great Britain, Ireland, Italy, Norway, Poland Portugal, Spain and Sweden). Fieldwork was undertaken during September 2008. The survey was carried out by face to face interviews.  The index design and analysis was undertaken by the Personal Finance Research Centre, University of Bristol.

Media contacts:

Genworth Financial

Guy Genney, Tel. +44 208 380 3786, guy.genney@genworth.com