Genworth Financial Inc · NYSE:GNW
Genworth Financial — Q3 2022 Earnings Presentation
23 slides from Genworth Financial's earnings presentation, Nov 1, 2022
Slide 1: Third Quarter 2022 Earnings Summary
Third Quarter 2022 Earnings Summary November 1, 2022 1
Slide 2: Cautionary Note Regarding Forward-looking Statements
Cautionary Note Regarding Forward-looking Statements This presentation contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as "expects," "intends," "anticipates," "plans,"
Slide 3: Key Themes for the 3rd Quarter of 2022
Key Themes for the 3rd Quarter of 2022 Third quarter net income of $104M, or $0.20 per diluted share, and adjusted operating income1 of $159M, or $0.31 per diluted share Enact segment adjusted operating income of $156M2 Received $19M quarterly dividend from Enact U.S. Life Insurance segment adjusted
Slide 4: Significant Progress on Strategic Priorities
Significant Progress on Strategic Priorities Reduce parent holding company Achieve economic breakeven/ debt to ~$1B stabilize legacy LTC block Maximize the value of Enact to Advance Global Care Solutions Genworth shareholders initiatives Return capital to shareholders 4
Slide 5: Genworth Consolidated Results
Genworth Consolidated Results Enact: $156M1 Adjusted operating income (loss)1 ($M) — Continued IIF2 growth, up 9% versus prior year — Strong loss performance driven by elevated cures from COVID- 3Q22 2Q22 3Q21 related delinquencies 159 176 239 U.S. Life Insurance: $11M — Lower earnings in LTC driven
Slide 6: Enact Segment
Enact Segment Primary IIF ($B) Earned Premiums ($M) $235 $238 $243 242 238 222 3Q22 2Q22 3Q21 3Q22 2Q22 3Q21 Primary NIW 15,069 17,448 23,972 Portfolio up 9% versus prior year driven by new insurance Earned premiums were lower versus the prior quarter as IIF written (NIW) and higher persistency give
Slide 7: Enact Segment
Enact Segment Benefits/Changes in Policy Sufficiency to Published Reserves ($M) PMIERs2,3,4 ($M) 34 174% 181% 166% 3Q22 2Q22 3Q21 2,249 2,287 2,047 (40) (62) Loss Ratio (17)% (26)% 14% Primary Delqs (#) 18,856 19,513 28,904 Primary New Delqs (#) 9,121 7,847 7,427 Primary Paid Claims (#) 187 90 343 3
Slide 8: U.S. Life Insurance Segment
U.S. Life Insurance Segment LTC: $25M — Lower earnings from in-force rate actions versus the prior year from lower Adjusted operating income (loss) ($M) impacts related to a legal settlement, as that settlement implementation is materially complete — Higher new claims severity and higher frequency a
Slide 9: LTC Incidence and Mortality Trends
LTC Incidence and Mortality Trends1 MORTALITY2 INCIDENCE # Active Claim Mortality Counts (000s) # New Active Claim Counts (000s) 3.4 3.3 3.5 4.3 4.1 4.1 4.0 4.0 3.8 3.9 2.9 3.0 3.0 2.7 2.6 2.5 2.7 3.5 3.6 3.4 3.5 3.4 3.5 2.6 2.6 3.2 3.1 2.3 2.4 2.4 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2019 2020 2021 2022 2019 20
Slide 10: In-Force Rate Action Highlights
In-Force Rate Action Highlights ESTIMATED IMPACT TO GAAP ADJUSTED OPERATING EARNINGS (LOSS) FROM IN-FORCE RATE ACTIONS Estimated GAAP Adjusted Operating Income from In- 385 422 583 943 941 1,153 857 817 Force Rate Actions1 ($M) 598 Premiums, Premium Tax, 458 540 445 489 Commissions, Other Expenses,
Slide 11: LTC In-Force Rate Actions: Policyholder Responses
LTC In-Force Rate Actions: Policyholder Responses CUMULATIVE POLICYHOLDER RESPONSES SINCE 20121,2 44.1% 44.7% 37.3% 31.5% 16.4% 17.4% 11.6% 23.3% 9.7% 18.6% 7.2% NFO 12.7% 6.1% 27.7% 25.7% 27.3% 4.6% 21.8% 12.5% 16.1% RBO 8.1% 2016 2017 2018 2019 2020 2021 3Q22 YTD Paying Full 87.3% 81.4% 76.7% 68.5
Slide 12: Impact of In-Force Rate Actions on Pre-Tax LTC Statutory Earnings
Impact of In-Force Rate Actions on Pre-Tax LTC Statutory Earnings1,2 STATUTORY PRE-TAX LTC IN-FORCE RATE ACTIONS VS PRE-TAX LTC EARNINGS LTC Statutory Pre-Tax Earnings ($M) $(714) $79 $394 $910 $265 LTC Statutory Pre-Tax Earnings 1,669 1,317 1,269 From In-Force Rate Actions3,4 758 762 (875) (759) (4
Slide 13: U.S. Life Insurance Segment
U.S. Life Insurance Segment LTC: $25M — Lower earnings from in-force rate actions versus the prior year from lower Adjusted operating income (loss) ($M) impacts related to a legal settlement, as that settlement implementation is materially complete — Higher new claims severity and higher frequency a
Slide 14: U.S. Life Insurance Statutory Capital
U.S. Life Insurance Statutory Capital1 GENWORTH LIFE INSURANCE COMPANY CONSOLIDATED STATUTORY CAPITAL2 Risk-Based Capital Ratio3 289% 290% 199% 213% 229% 12/31/2018 12/31/2019 12/31/2020 12/31/2021 6/30/2022 Statutory Metrics ($M) 2018 2019 2020 2021 2Q22 YTD Capital & Surplus 1,871 2,180 2,123 2,93
Slide 15: Holding Company Cash & Liquid Assets
Holding Company Cash & Liquid Assets1 ($M) 228 2 (154) 64 (10) (2) 145 2 19 6/30/2022 Debt retirement Enact dividend Cash taxes Interest payments Net other items 9/30/2022 Redeemed remaining 2024 debt obligation of $152M principal, $2M make-whole premium — Achieved strategic priority of reaching $1.
Slide 16: Appendix
Appendix ate Genworth3,<.
Slide 17: Total Genworth Financial, Inc.'s Stockholder Equity (U.S. GAAP)
Total Genworth Financial, Inc.’s Stockholder Equity (U.S. GAAP) ($M) 3Q22 2Q22 1Q22 4Q21 3Q21 Enact1 3,373 3,342 3,320 3,344 3,446 U.S. Life Insurance 2 5,422 7,763 10,106 10,970 11,617 LTC2,3 3,861 5,509 7,234 7,624 7,487 Life Insurance2,3 1,625 2,110 2,489 2,833 3,529 Fixed Annuities 2,3 (64) 144
Slide 18: Individual LTC In-Force Policy Information
Individual LTC In-Force1 Policy Information 2 3 Pre PCS PCS I PCS II Choice I Choice II PC Flex MFMP PC Flex II PC Flex III Total Issue Years 1974-1994 1994-1997 1997-2001 2001-2007 2003-2011 2011-2014 2009-2013 2013-2017 2014+ 1974+ 4 Annual Premium ($M) 39 110 342 622 1,075 231 90 67 35 2,610 In F
Slide 19: Use of Non-GAAP Measures
Use of Non-GAAP Measures This presentation includes the non-GAAP financial measures entitled "adjusted operating income (loss)" and "adjusted operating income (loss) per share." Adjusted operating income (loss) per share is derived from adjusted operating income • (loss). The chief operating decisio
Slide 20: Definition of Selected Operating Performance Measures
Definition of Selected Operating Performance Measures The company taxes its businesses at the U.S. corporate federal income tax rate of 21 percent. Each segment is then adjusted to reflect the unique tax attributes of that segment such as permanent differences between U.S. GAAP and tax • law. The di
Slide 21: Reconciliation of Net Income to Adjusted Operating Income
Reconciliation of Net Income to Adjusted Operating Income 2022 2021 ($M) 3Q 2Q 3Q NET INCOME AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS $ 104 $ 181 $ 314 Add: net income from continuing operations attributable to noncontrolling interests 35 38 4 NET INCOME 139 219 318 Less: income (
Slide 22: Cautionary Note Regarding Forward-looking Statements
Cautionary Note Regarding Forward-looking Statements This presentation contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as "expects," "intends," "anticipates," • "plans
Slide 23: Cautionary Note Regarding Forward-looking Statements
Cautionary Note Regarding Forward-looking Statements • risks relating to economic, market and political conditions including: downturns and volatility in global economies and equity and credit markets, including as a result of inflation and supply chain disruptions, a potential recession, • continue