Genworth Financial (GNW) 1 Aug 242024 Q2 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to Genworth Financial's Second Quarter 2024 Earnings Conference Call. My name is Cynthia, and I will be your coordinator today. [Operator Instructions] As a reminder, the conference is being recorded for replay purposes. [Operator Instructions] I would now like to turn the presentation over to Brian Johnson, Senior Vice President of Financial Planning and Analysis. Please go ahead, sir.

morning. good and you, Thank Welcome to Call. XXXX Second Quarter Earnings Genworth's is accompanies the Genworth The that call website, available the slide presentation of this on section Investor investor.genworth.com. Relations

and can earnings . materials. be Our financial you supplement and found review release there, we these encourage to also

Chief be Upton, Officer. Speaking and today Chief Officer; McInerney, Tom will and President Executive Jerome Financial

Following remarks, we for period. question-and-answer our will up prepared a open the call

Investment CEO and to addition our Chief will In Kelly our businesses Life Insurance Arland, to and speakers, available U.S. of President Saltzgaber, take Officer, be questions. Jamala your

morning, During the may call statements. forward-looking this we make various

Our risk materially notes advise regarding results of annual recent factors as release Form such cautionary you in statements statements. presentation our earnings our as SEC. most actual We the may on filed differ with forward-looking and report the the to XX-K as read related from well

financial also where are SEC non-GAAP meaningful references our results estimates investors. discussion In filing includes morning's to of the of rules. been due This to the that have non-GAAP be statutory may the with timing statutory we the to in accordance measures statements. reconciled materials, believe investor Also, measures to financial required GAAP

Tom to the turn now, and And I'll our President CEO, call over McInerney.

with were income million had again $X.XX $XXX which or adjusted $X.XX by growth thank reported shareholder million $XX and Brian. quarter make Genworth call. long-term our Results to operating Genworth. Genworth priorities of value. you, strong strategic very quarter, you of continues In second of share led net strong progress morning, Thank and operating everyone, a second Good drive and million to or income to joining the for quarter earnings adjusted income per against share. our per $XXX Enact,

strong are We distributions. pleased with and shareholder continued operating performance, levels Enact's capital very

momentum, full more announced continued will expected return its shareholder which Enact increase a year in detail for yesterday its later. the an to of Jerome result As cover

including Enact, capital quarter. the approximately $XX has second $XXX Genworth from IPO, million received Enact's million Since in in

We generate in debt XX% our satisfied allocation that ownership continues it investments reduction to earnings are opportunistic significant cash share capital growth with and flows stake CareScout. very in repurchases, of our approximately and priorities Enact as support

U.S. segment LTC insurance. Life in a second $XX adjusted Complete accounting pretax Annuities will at On by Jerome by operating reported statutory driven for a the loss. driven results quarter, quarter our file loss income companies U.S. operating later statements will our detail. remeasurement companies million adjusted of liability from had a reported losses and be when million by $X insurance available life statutory estimated loss Our life million, more in $XXX life an primarily Meanwhile, basis, force the rate performance by an month. driven very of benefits segment quarter in strong this insurance actions. with LTC our statutory second cover we

As for refined and to strategic shared reflect meeting our vision future. our today Genworth's our priorities I at our progress clearly articulate annual in more May, significant we

and legacy strategic self-sustaining, is first to LTC our Our annuity maintain businesses. customer-centric, life priority

the most as plan tool portfolio bring legacy insurance remains effective our effort a basis. LTC on Our critical breakeven to multi-year have action rate we MYRAP go-forward this or to to

an approved brings present a our outstanding incremental value on and This rate progress approvals XX%. achieving estimated average since a gross multi-year plan had billion of $XXX with increase the million total We of net $XX.X premium XXXX. of under an action percentage premiums cumulative quarter basis to an

services solutions. innovative drive Our next and growth aging strategic priority care is customer-focused future CareScout funding through to with

July network our states We continue to CareScout scale XX the quarter, of XX. more extending second in its to than quality availability as

before out population that achieving We already to establish of includes of July, the coverage offering a introducing laid for LTC providers the to XXXX living network to future. goal the a pleased approximately and of census policyholders. to in accessible This facilities allows CareScout direct-to-consumer the Quality that XX% now achieved age Genworth end types home other of build-out of share as to As coverage and to I'm the U.S. U.S. end only in the a the approach care care Network care reminder, between previously we us and year. assisted only group home of X/X and by a coverage adding of have presence achieve XX% expect the initial across XX-plus the is XX% the

The progress care along the on with person-centered providers. Along with below agreed home by we respective network, care by strong building quality have meeting of to adoption the encouraged cost more providers network currently hourly high-quality their XXX of credentialing the the our in includes are network's median also these rates our over Further, LTC than codes XX% early policyholders. ZIP standards.

far claim, We price on quality Network positive so balance policyholders have already helped new hundreds the service from network. by care value who and providers CareScout of our received both find of policyholders feedback offered care providers. We've quality, and with Quality one-of-a-kind

the legacy previously While opportunity we $X drive market in policyholders $X.X employers plans billion and substantial policyholders, further beyond other block. stages to is to are basis, remain a of net this broad stated It take billion we that mitigating our we to for with savings where our early it over on present between insurers to time, growth. of value LTC time important see Genworth offering extend remember goal risk in the confident the LTC will LTC on claims to business in our a consumer

our we policyholders providers valuable We network thoughtfully scale. will continue to input customer as with refine and invest and the from experience

funding cost we bringing are care to who market, for the of to millions the agent Americans care. prepare care continue solutions services to new to new unprepared meet addition long-term In of

individual reduce their Quality increases. provides help As Network claim conservative and to future need include are product I've designed policyholders significant also working access discounts to CareScout costs optimize the an with care It dollars. for coverage shared, LTC which to cap on we assumptions initially the limits premium will on

across to Interstate member engaging currently us help are Commission, seek and states. known We this approval as Product reach Compact Regulation the Compact's with multiple the product for plan scale to its Insurance

additional for also We new demand pursue funding among product and regulators. LTC products approvals from and improved is jurisdictions. There distributors significant will consumers, unmet

plan the with for quality excited families give this products market plan in of our on to are to product options cost with continue reenter to We care. And XXXX. future innovating the increasing more

market is strategic value shareholder third Enact's priority capital Our value and to to returns. growing relate

pleased We million XXXX. from total, of Enact's second have the capital of an cash we total $XXX $X.XX XXX% approximately return XX In million in returns, respect approximately program's we repurchase since used of of flows XXXX. With shares in $XX July shareholder to of are as IPO share since its very with repurchased inception to at May per shares. the in Enact average price quarter,

growth expect We Network. this are CareScout an $XX approximately investment continue CareScout as long-term also year services to leveraging drive of million we flows to and from Quality Enact cash in the scale

to I set want take access investors regarding up, date moment still a Before in XXXX. trial protection case March and that remind I is case wrap selling insurance for the to of [indiscernible] the payment against

payment in said protection have AXA the but owned to selling XXXX. to insurance is before case, before, we party As the not a previously it Genworth business

will in is recoveries pursuing AXA the on we from its claims, actual successful If share [indiscernible]. receives

developments. and of any proceedings monitor to update the We investors will material closely continue

against strategic performance. I year-to-date, the Enact's with continued am And very I'll our closing, to pleased turn call with In our priorities along over progress with that, strong Jerome.

on flexibility improvement liquidity the quarter. LTC financial I'll Thank delivered and for before value first our ongoing on you, continued our we by open and Enact and in morning, everyone. creation in-force update call more pleased in I'm Q&A. progress drivers an and I'll as actions company as optimization discuss very Tom, Genworth's in then results good well provide with portfolio the rate holding detail, investment our the and capital

million, second mentioned, Enact. and quarter primarily by X, Slide driven $XXX Per as income was operating adjusted Tom

remainder Our Long-Term first subsided long-term continue we offset expect short-term in deviations to as The by mortality expected and loss from insurance partially to the reported an Care adjusted of liability to net anticipated, the primarily assumptions. and results variable the due remeasurement seasonal GAAP investment from LTC a favorable observed loss experience, throughout favorable $XX by of actual operating actual impact to earnings of compared pressure driven recoveries. quarter segment million, we income year Insurance

for We year. also experience expect expected loss the a actual from full to liability remeasurement

As we be have results said continue volatile. to GAAP before,

results business, from partially We in LTC Enact believe losses statutory rate strong also of as results and and million first well life impacts of improved $XX annuities. and better annuities included an $XX quarter, and represent in-force the from including million $XX corporate million actions the by were underlying adjusted from operating adjusted and The favorable variable $X settlements. driven life annuities fixed our operating by mortality and offset resulting economics of the annuities Life income in insurance operating loss million the from versus $XX of million other. as in positive adjusted

$XX expense in and growth for in initiatives CareScout, other corporate debt was holding tax driven million by interest The offset our on by timing. corporate loss and investments company favorable

a elevated by Enact's versus in-force insured quarter, X. and Enact's Slide income. in at XX% strong look prior new year-over-year to favorable increased increased insurance year, delivered and portfolio losses Genworth Enact X% $XXX to persistency. adjusted written income the taking driven profitability. closer its of and Primary second billion operating growth investment continued high-quality net Now million reflecting $XXX on including insurance a performance strong very

share release to the above the As from in a has has ratio increased The of while a reserve quarter, of billion and AOCI, shown Enact of on of $X.X pretax PMIERs $XX value, favorable Slide $X.X XXXX cure returns Genworth. to XXXX, XXX%, estimated primarily quarter negative billion at approximately prior Enact's which PMIER the reserve of performance time same million at the including has release loss delinquencies. significant strong Enact Genworth's reflects capital Enact book delivered second requirements. end sufficiency ratio second had a favorable drove X%. X,

$XX proceeds The Enact's program of dividend combination quarter. to in share million the a second of repurchase generated in Genworth total and quarterly its

$XXX Based total in shareholder million expects full to support allocation year. receive return capital between $XXX detail position, yesterday, cover program Genworth's our on will million now As later. I to $XXX approximately we Enact provides in additional million for which it Enact priorities million to to announced XX% $XXX expect now from of return to XXXX. Enact to more shareholders the ownership its a between

long-term insurance to X. Slide starting care Turning on

our insurance as or strong we continue the to legacy the demonstrate the to of plan reduce multiyear We protect companies on action risk this and block. continues LTC block MYRAP self-sustainability our legal settlements life and The tail the significantly rate on claims ability. paying stabilize progress

X response policyholder in-force quarter, value achieved cumulative As basis billion actions the rate benefits. Slide in estimated shows reduction net filings in have XX% elections. a on reduce to we've we benefit periods, as of at current in the as of including the $XXX present million rate end positive well the $XX.X have seen and recent the approved of seen more second details on quarter trend a policyholder

expect we the in-force of the than as, first lower be We delayed of amount approvals We the total in multiyear strong implementations submitted cases, the $XXX some expect to half previous to filings premium large additional for increase expect Though of in the in-force year in need year, filings. half continue approvals to years or we prior full submitted have this million filings the year. for premium second year. the this

tool to demonstrated the value be We continues that pleased MYRAP, of over LTC MYRAP noted, approved add I assumptions, maintaining Tom but liability rate and our changes as the in the has billion reductions. the self-sustainability And increases time with of with associated also business. legacy previously progress. may this will approximately success are increase the to which of effective benefit from this most impact increases to the projected $XX value and continue with

through that strengthened benefits. speaks to features of costly more to benefit exposure reduction our inflation and like resiliency X% business option the This of benefit has unlimited compound been

which higher income benefit $XXX and in pretax shown pre-tax than is LTC of more half half on of year, $XXX $XXX LTC million. income Slide first than of unfavorable first the on statutory statutory basis XXXX As million XX, impact of drove a settlements and million to in-force the a offset legal experience driving the actions which rate in the total

we million half our of the second in statutory shows impacts insurance favorable life decline $XXX quarter, XX which in of and of by expect second U.S. overall rate actions legal down. the in-force and the Slide companies of strong income third as for settlement final driven to settlements LTC, legal implementation the in year lines the pre-tax the

GLIC to compared the the consolidated end or Insurance Genworth XXX% prior compared Life earnings of the unfavorable XXX% June reflect lower drove at March. seasonally risk-based also end of ratio results quarter Company Second impact net to quarter. mortality capital of the Strong a of for at statutory

remains capital as sound consolidated sheet June. surplus and GLIC's with end the balance billion of of $X.X of

will investor statutory final website later on our be with month. Our second this filings results available our quarter

said on companies obligations. As to operate leveraging manage before, a we've other we U.S. stand-alone and as a system, capital claims and They reserves future existing insurance basis. the life closed cover

put will capital We the long-tail not we companies. returns our years insurance capital do away, given not companies life expect into LTC decade these peak at insurance of also legacy the with nature least policies and a claim from

of portfolio in summarized positioning liabilities. we investment on in and our the the our strategy, believe long the which our duration right products to XX. our portfolio, is have Moving confident Slide remain and We given

changes are As support liabilities are life impacting a the generally with liquidity LTC, and hold Because income. we environment interest that maturities other and and investment-grade risk. limited liabilities for in we very of higher in rate assets The insurance conditions. reminder, U.S. unrealized benefit losses fixed equity our comprehensive to portfolio duration, through to the buy from very macroeconomic gains continues companies majority the long had especially

New X.XX% investments, excluding money in was which XX%. have the invested approximately returns targeted at of quarter, approximately alternative

of with reflects is portfolio is investments. real steady both equity. our diversified mainly less of our and income higher program, XX% which is investment approximately remain base net We exposure Our total than asset our portfolio in commercial alternative of assets office investment-grade XX% concentrated quality returns real exposure, solid and in performance private confident estate in our composed which estate

advanced and to the of million from capital for target. assets. from We $XXX liquid or repurchase its capital liquid do when hold liquidity accelerated and assets, service Included our received not turning from cash cash quarter, subsidiaries we of Next, the with payments debt this the our company cash million purpose million We buffer consider approximately of the obligations. company $XX We ended during holding of the second which share XX. Enact holding Slide our returns $XX evaluating future allocation to for on in quarter calculating included cash program.

to growth opportunistically price through Tom reviewed strategy, pay capital when CareScout, Slide I'll are return through intrinsic top priorities XX share program allocation when shown in our our us. our that and down attractive on reiterate invest below cash long-term to and share debt is shareholders repurchase value our to

return an $X.XX We in at continue second to capital repurchases million through to the $XX another quarter, price of XX. per and shareholders via million July average share share repurchasing $XX

million $XXX expectations of to improved capital our We million between from and which million our expect Enact's of share previous of under the our XXXX, include in as $XXX up to end current cash million to return. have allocate authorization now remaining $XXX repurchases increased of to result expectations, July $XXX a $XXX million as

authorization created we and We're in through the vary depending have we reduced share value Since year July holding utilized full XXX with the shares to our million initial shares a we amount very for from as than on given market in XXXX, repurchase outstanding program. may outstanding is shares our by the XX% reminder, for XXXX. And that this the approximately fully XXXX our tax have range as XXX million XX, of shareholders pleased company lower May assets. expected conditions. Our repurchased share price

also $XXX of company our repurchased quarter subordinated reducing million. for million second total holding $XX notes million, debt in $XX principal to the We long-dated in

and LTC, annuities. XX%, attributing We equity below value a maintain to life no debt-to-capital ratio

Enact financial with sustainable level, and flexibility liquidity debt flows manageable cash from are We pleased level. given our our

strong and book action In capital are by while the on the of our are key returns. evidenced increased settlements as is proactively multiyear The X liabilities its from and Enact managing priorities, and benefit strategic we delivering closing, risk. additional our further value rate plan LTC driver increasing block. legacy the stabilizing a shareholder legal value earnings, LTC

through holding and Enact repurchases Looking to sustainable share delivering while on meaningful long-term repurchasing we will continue opportunistically to growth value and shareholders ahead, returning focus debt. company CareScout through

let's open line questions. for the Now up

no call time. now comments. turn appears closing there questions It this McInerney will and are back Instructions] for [Operator gentlemen, Ladies the to over at that Mr. I

on Cynthia, emphasize call closing, to second you like I'd much, Thank everybody X for very and takeaways thanks In the the for today. key quarter.

Quality benefit First, in for and rate Genworth year expect by quarter it started was earnings, the XX% the CareScout of strong the excellent total Enact. the CareScout, full multi-year was of year $XXX for value for we our target million XX% net now XX%, MYRAP olds progress have XX-plus plan solid at building quarter $XX.X at year. the led and Network. present by by particularly results, XXXX. action in end the be the since billion of the to to U.S. We're a And population XXXX again of We covered We had to end had a year. we

by provide effective Americans. year, the reduced focus network. have with then for care CQN target national we to cost end of And look X significant groups the on coverage bring the to to So we at high-quality

then of policyholders, insurers Genworth consumer. policyholders First, other and then other ultimately,

reduce as revenue and the that generated the debt growth will support Enact. growth we call least at to for beyond. announced again come for that the again So CareScout the -- a from cash the Cynthia. And you with by going your CareScout a cost back CQN. And savings free good their Thank finally, they're return and And shareholders and and amount Genworth significant had by -- businesses. of over starting in interest attending call. turn a the I'll capital from the to capital that, for significant revenue investing delivered will balance in percentage to XXXX cash Quality increasing free the forward, Network, we of They really expect ultimately return flow will -- year. They've arranged with used and flow

Financial's Ladies the and concludes time, Quarter call this Second this will Conference your Genworth Call. At you gentlemen, participation. for Thank end.