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Download 'The Genworth Index 2010' Consumer Financial Vulnerability Findings

London (November 12, 2010) – An index of consumer sentiment has found households across the world are feeling more financially vulnerable than a year ago, part of a four year trend of increasing financial anxiety globally. The annual  Consumer Financial Vulnerability Index from specialist insurer Genworth Financial has tracked consumer financial vulnerability in countries across Europe, the US and Canada and found that, with some notable exceptions, the balance is tipped toward relative consumer financial vulnerability rather than security.  

Genworth’s Index is compiled annually by leading academics at the Personal Finance Research Centre at the University of Bristol. Now in its fourth annual edition, the Index encompasses 18 countries - 14 from Europe, three from North America and Australia - in a survey of nearly 14,000 households. 

Peter Barrett, senior vice president of lifestyle protection at Genworth Financial, commented: “The Index holds up a mirror to society in a financial sense, to provide a barometer of how households are managing financially.  Through the annual snapshot we can look at how levels of financial vulnerability have changed year-on-year.

“Financial vulnerability, as defined in the Index, brings together two distinct but related concepts: households’ current experience of over-indebtedness and expectations about their own future financial situation.

Over-indebtedness reflects concern not only about households’ inability to keep up with the repayments on their unsecured borrowing and mortgages. It also relates to the inability of households to keep up with essential household commitments such as utility bills, council tax and rent, simply because essential expenditure outstrips income. An over-indebted household therefore, is one that cannot meet one or more of these from their current income and cannot access sustainable borrowing or drawn on savings to cover these.

“Genworth Financial commissioned the Consumer Financial Vulnerability Index because, as an organisation, it is committed to helping more households achieve financial security.”

Key findings from the 2010 Genworth Consumer Financial Vulnerability Index:

• Great Britain shows a rise in financial vulnerability after an improvement in 2009; the survey took place just after the General Election and shortly before the Emergency Budget was published.
• Greece worsened to become the most financially vulnerable country of all 18 surveyed in 2010, with a high relative vulnerability score of 76 on the Index ¹.
• Portugal saw a deterioration in households’ situations similar in magnitude to Greece; Spain, in contrast, experienced no change on the Index.
• Ireland saw an improvement both in real terms (falling 27 points on the Index) and relative to other countries (improving five places).
• Canada, new to the Index in 2010, joins the Nordic countries, scoring below zero – indicating relative financial security – on the Index.
• Mexico, USA and Canada fared better than much of Europe due largely to greater optimism in these North American countries.
• Australia shadows the USA, both countries scoring just above zero on the Genworth Index indicating almost equal proportions of secure and vulnerable households.
• Since the Index baseline edition in 2007, experience of financial difficulty has increased significantly in Europe, compounded by a doubling in the rate of householders’ pessimism for their own financial futures.

Andrea Finney, Research Fellow at the Personal Finance Research Centre, University of Bristol, commented: “The Index exposes the very real difficulties that people are having day-to-day.  It also shows the anxieties they are having about their own futures.   

“There are ten European countries that have been included in all four editions of the Genworth Index and provide an indication of the overall trend in levels of consumer financial vulnerability since summer 2007. There has been both an increase in the number of vulnerable households and a fall in the number of secure households in 2010 compared with the 2007 baseline year that explains the fairly considerable change in Index scores over the four years. Looking ahead, it is reasonable to expect relative financial vulnerability to remain moderately high in 2011

“Genworth’s ongoing commitment means that the Index not only has longevity and continued relevance, but its value - to researchers and policy-makers alike – actually grows.  Above anything else, the Index highlights the need to keep over-indebtedness on the policy agenda.”

The 2010 Genworth Index report is available at: www.genworth.co.uk. 

The previous Genworth Index reports are available at: http://www.genworth.co.uk/content/genworth/uk/en/nonnavigable/consumer_index_map.html

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Notes to editors:

About Genworth Financial

Genworth is a leading financial security company meeting the retirement, lifestyle protection, investment and mortgage insurance needs of more than 15 million customers across more than 25 countries. For more information, visit www.genworth.com.

In Europe, Genworth focuses on Lifestyle Protection and Mortgage Insurance, working with banks, brokers, advisers and other financial institutions.

Mortgage Insurance (MI) protects lenders and investors in the event that a mortgage borrower defaults on a loan and the proceeds of the sale of the property are insufficient to pay the outstanding debt. Our MI products enable lenders to provide the end borrower with earlier and potentially more affordable access to home ownership by allowing them to put down a lower deposit.

 Lifestyle Protection products help consumers meet their payment obligations on outstanding financial commitments such as mortgages, personal loans or credit cards in the event of involuntary unemployment, illness, permanent disability or death.

About the Genworth Index:
The survey on which the Index results are based reaches out to a nationally representative sample of around 1,000 households in each country that is included. The Index questions are asked only of householders – an adult in whose name the accommodation is owned or rented, or his or her partner – aged 18 or over in order to provide meaningful data from those with financial responsibilities. The resulting sample size totalled nearly 14,000 households across 18 countries for this 2010 edition.  All data were collected during June 2010.  The Index design was undertaken by the Personal Finance Research Centre, University of Bristol and the European Credit Research Institute. 

The Genworth Index is derived from responses to the following two key 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 Genworth Index takes the ratio of the percentage of people who are financially vulnerable relative to the percentage of those who are financially secure. The resulting value is rescaled so that a score of 100 indicates maximum possible relative financial vulnerability and a score of -100 indicates maximum relative financial security.

For further information please contact:
Guy Genney
Genworth Financial
Guy.genney@genworth.com
+44 208 380 3786