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Key findings of the 2009 Genworth Index for Ireland:

• 39 per cent of households were financially vulnerable in 2009 – a marginal increase on 2008
• Only 2 per cent of households feel financially secure
• The proportion of householders expecting their financial situation to get better halved from 8 to 4 per cent

Dublin, 23 November 2009 – Consumers in Ireland are ranked as the most financially vulnerable in the 2009 Genworth Index of 14 European countries, published today.  The annual survey, commissioned by global Fortune 500 specialist insurer Genworth Financial, is the first academic European study of its kind to capture “financial vulnerability” by considering the current financial situation and recent experiences of households, with their future expectations.

The Index, now in its third year, designed by the Personal Finance Research Centre at the University of Bristol and the European Credit Research Institute, and conducted by Ipsos MORI, was created to measure relative financial vulnerability across 14 European countries; surveying 14,000 respondents overall.

Of all the countries, the story for Ireland since 2007 has been the most striking.  Having been placed mid-table in 6th place in 2007, it climbed to 3rd place in 2008 and has now overtaken Portugal and Italy to reach first position in 2009.  The Index is constructed by capturing responses to two questions: how often have households experienced financial difficulty in the last 12 months and what are households’ financial expectations going forward?  From analysis of the answers to these questions, 39 per cent of respondents from the Ireland were classed as being ‘Financially Vulnerable’ and only two per cent were ‘Financially Secure’.  The Index score is calculated as a ratio of these percentages, where a positive score represents relative financial vulnerability and a negative score represents relative security.  As such Ireland, with a score of 63, remains tipped towards consumer financial vulnerability and is also some distance from its baseline score of -16 in the first survey in 2007, when as a whole, the country was experiencing relative financial security.

The new position for Ireland is a combination of two things: an increase of 12 points on the Index itself; but more significantly that both Portugal and Italy saw falls in their own Index scores.  As such, Ireland’s current 2009 score of 63 points is not as high as that seen in Portugal in 2008, which scored 70.

“It’s very important that the results for Ireland are understood in the right context.  The movement in the index score for Ireland has only been marginal in 2009, but it has compounded the dramatic shift in 2008 when the index score increased to 51 from -16 in 2007.  Poland and Greece have more consumers who are financially vulnerable at 46 and 45 per cent respectively – compared to Ireland’s 39 per cent.” said Redmond McDonnelll Managing Director at Genworth Financial’s Lifestyle Protection business in Ireland.

“Like everywhere else, the Irish economy has been subject to severe financial stress and a number of factors and policies have come into play over the last year or so, such as financial system bailouts and numerous measures to alleviate this stress for consumers.  Despite these very positive steps, there is still a degree of uncertainty and this influenced the 2009 score for Ireland.”

“Not surprisingly job security and prospects feature greatly in consumers’ perception of their financial future and we do not expect the unemployment trend to stabilize until 2010.  The challenging economic conditions will have motivated, and in some cases necessitated, people to be more financially prudent; encouraging them to sort their finances and manage their levels of personal indebtedness.  It will be interesting to see if these changes in behaviour are reflected in the 2010 index.” 

The 39 per cent of households who were financially vulnerable in 2009 compounds the already significant increase in the size of this group from eight per cent in 2007 to 34 per cent in 2008.  It is higher than the average for all 14 countries of 24 per cent, although it is not the highest overall.

Only two per cent of households were financially secure in 2009.  Although this reflects no real change from the already low level of three per cent in 2008, this is far lower than 2007 when the segment comprised 17 per cent of all households in Ireland.  It is also considerably lower than the average of seven per cent for all 14 countries.  The proportion of householders expecting their own financial situation to get better in the coming months halved from one year to the next, from eight per cent to four per cent.

Ireland Compared to the Rest of Europe and the US
Beyond Ireland, the 2009 Index reveals a promising fall in levels of consumer financial vulnerability across Europe since 2008, with the overall score dropping from 35 to 27.  This is despite a recent deterioration in the economic situation of every country surveyed*.  The fall can be attributed to both a modest alleviation of financial difficulties and less pessimistic expectations of the future financial position of households.  But this improvement masks wide variations in the experience of different countries and is still some way short of the levels of security seen in 2007 when Europe had a score of 7 on the Index.

 

Portugal and Norway saw large falls in levels of financial vulnerability with their index scores dropping 25 and 23 points respectively. As a result, Norway has now replaced Denmark as the most secure country in the index.

Interestingly, the USA (new to the 2009 Index) was revealed to be less vulnerable than Europe, despite the harsh economic climate it has faced over recent months.  Relative financial vulnerability for the USA was at 14 points on the Index compared to the average of 28 points across the 14 countries in Europe. 

“Financial vulnerability has become a much more pressing issue given the events of the past couple of years.  However, even before the economic turndown, there was widespread concern about the consequences of high levels of borrowing and the evolving patterns of risk faced by consumers.  We helped create this academically robust and repeatable Index in order to gain an understanding of which households are particularly vulnerable.  It is designed to help policy makers take adequate steps to help consumers achieve financial security” said Redmond McDonnell.

* according to IMF World Economic Outlook 2009  

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Notes to editors:
About Genworth Financial
Genworth Financial, Inc. (NYSE:GNW) is a leading Fortune 500 global financial security company.  Genworth hasmore than $100 billion in assets and employs approximately 6,000 people with a presence in more than 25 countries.  Its products and services help meet the investment, protection, retirement and lifestyle needs of more than 15 million customers.   Genworth operates through three segments: Retirement and Protection, U.S. Mortgage Insurance and International. 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.  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.  

Lifestyle Protection Insurance is a family of products that help borrowers and consumers maintain their lifestyle by allowing them to make regular repayments on loans, mortgages and other financial commitments in the event of unemployment, disability or an accident, and clear outstanding balances in the event of death. 

Genworth’s Lifestyle Protection products are offered through distribution relationships with over 250 financial institutions, brokers and advisers in the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Netherlands, Norway, Poland, Portugal, Slovakia, Spain, Sweden, Switzerland, Turkey and the United Kingdom.

Genworth’s Lifestyle Protection entities are rated “A-“, with a stable outlook by Standard and Poors.

 

About The Genworth Index

Research was conducted by Ipsos MORI on behalf of Genworth Financial.  Total sample size was 15,000 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 14 European markets: Denmark, Finland, France, Germany, Great Britain, Greece, Ireland, Italy, Norway, Poland, Portugal, Spain, Sweden and Turkey) – and the United States. Fieldwork was undertaken during late September and the first week of October 2009. The survey was carried out by face to face interviews.  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 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.  For more information visit:  www.genworth.com/consumerindex

 

Media contact:

Genworth Financial

Guy Genney, Tel. +353 1 542 8412, guy.genney@genworth.com