Genworth Financial Inc · NYSE:GNW
Genworth Financial — Q4 2020 Earnings Presentation
30 slides from Genworth Financial's earnings presentation, Feb 17, 2021
Slide 1: Fourth Quarter 2020 Earnings Summary
Fourth Quarter 2020 Earnings Summary February 17, 2021 ©2021 Genworth Financial, Inc. All rights reserved.
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 United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “expects,” “anticipates,” “inte
Slide 3: Key Themes For The 4th Quarter Of 2020
Key Themes For The 4th Quarter Of 2020 Financial Performance Genworth Fourth Quarter Net Income Of $267MM, Or $0.52 Per Diluted Share, And Adjusted Operating Income1 Of $173MM, Or $0.34 Per Diluted Share 2020 Full Year Net Income Of $178MM, Or $0.35 Per Diluted Share, And Adjusted Operating Inco
Slide 4: 4Q20 Results Summary – Genworth Consolidated
4Q20 Results Summary – Genworth Consolidated Adjusted Operating Income (Loss) ($MM) U.S. MI: $95MM 4Q20 3Q20 4Q19 Strong Revenue From Primary Insurance In Force Offset By Higher Losses From Reserve Strengthening Of Forbearance 173 132 24 Delinquencies In The Current Quarter Australia MI: $(16)MM 95
Slide 5: U.S. Mortgage Insurance
U.S. Mortgage Insurance Premiums Benefits/Changes In Policy Reserves ($MM) ($MM) 89 251 251 237 45 11 4Q20 3Q20 4Q19 Loss Ratio 35% 18% 4% Primary Delqs (#) 44,904 49,692 16,392 Primary New Delqs (#) 11,923 16,664 8,659 4Q20 3Q20 4Q19 Primary Paid Claims (#) 152 152 558 Primary NIW 27,000 26,600 18,
Slide 6: U.S. Mortgage Insurance – Primary IIF
U.S. Mortgage Insurance – Primary IIF1 Primary IIF By Origination Year ($B) 4Q20 4Q19 45% 208 203 182 19% 8% 8% 7% 4% 4% 5% 4Q20 3Q20 4Q19 2020 2019 2018 2017 2016 2015 2009 - 2008 & 2014 Prior Portfolio Growth Driven By Historically Large 2020 <10% Concentration In 2014 & Prior Books Book Parti
Slide 7: U.S. Mortgage Insurance – Primary RIF
U.S. Mortgage Insurance – Primary RIF1 FICO2 Score3 LTV4 Higher Risk High-Risk % RIF At Loans Layers 4Q20 620-679 <620 0 0.8% 9% 1% LTV > 95% 1 1.0% 95.01% & Above + 2 0.3% 18% 80.01% - 4Q20 RIF 90.00% FICO < 680 3+ 0.0% 740+ 31% 53% Total 2.1% 680-739 37% 90.01% - 95.00% 51% Higher Risk High-Risk %
Slide 8: U.S. Mortgage Insurance – Capital Adequacy
U.S. Mortgage Insurance – Capital Adequacy1 Published PMIERs Required Assets Sufficiency To Published PMIERs2 ($MM) ($MM) 137% 4,295 4,154 132% 138% (936) (777) 3,377 3,625 3,359 (871) 2,754 1,229 1,074 1,057 4Q20 3Q20 4Q19 4Q20 3Q20 4Q19 Gross Required Assets Reinsurance Credit Net Required Assets
Slide 9: U.S. MI Credit Risk Transfer Key Metrics
U.S. MI Credit Risk Transfer Key Metrics As Of December 31, 2020, 94% Of Current RIF1 Is Subject To Genworth’s Credit Risk Transfer (CRT) Program, Which Provides $1.4B Of Loss Coverage And $936MM Of PMIERs Required Asset Credit 5 2016 XOL 2017 XOL 2018 XOL 2019 XOL -1 2019 XOL -2 2019 ILN Agg XOL 20
Slide 10: Australia Mortgage Insurance
Australia Mortgage Insurance Premiums Benefits/Changes In Policy Reserves ($MM) ($MM) 72 72 88 71 26 22 4Q20 3Q20 4Q19 4Q20 3Q20 4Q19 Flow NIW 6,700 5,500 4,900 Loss Ratio1 122% 37% 30% Bulk NIW 600 100 400 Total Delqs (#) 6,964 7,422 7,221 New Delqs (#) 1,828 2,552 2,277 Paid Claims (#) 231 332 376
Slide 11: Australia Mortgage Insurance – Capital Adequacy
Australia Mortgage Insurance – Capital Adequacy Prescribed Capital Amount (PCA)1 (%) 191 165 179 Target PCA Range: PCA Above Management Target Capital Range Of 132-144% 132-144% PCA Declined 14 Points Sequentially From Higher Required Capital Largely Due To Levels Of New Insurance Written Renewed AU
Slide 12: 4Q20 Summary – U.S. Life Insurance
4Q20 Summary – U.S. Life Insurance Highlights Adjusted Operating Income (Loss) LTC: $129MM ($MM) Favorable Claim Terminations, Partially Offset By Reserve 4Q20 3Q20 4Q19 Increase In Current Quarter To Reflect Assumption That COVID-19 Pandemic Has Accelerated Mortality On Most 129 14 (115) Vulnerable
Slide 13: Long Term Care Insurance
Long Term Care Insurance Premiums ($MM) 668 661 663 $200MM Estimated Pre-Tax Benefit In 4Q20 From Implemented In Force Premium Rate Actions From 2012 Through 4Q201 4Q20 3Q20 4Q19 Net Investment Income & Yield ($MM) 424 Higher Income From Limited Partnerships, Bond 499 456 Calls And CML Prepayments 5
Slide 14: LTC Incidence & Mortality Trends
LTC Incidence & Mortality Trends1 Incidence # New Active Claim Counts (000's) $(47)MM Pre-Tax Reserve Increase In 4Q20, $(108)MM In 2020 To Adjust IBNR During 4.3 4.3 4.0 4.1 4.0 3.8 4.0 3.8 4.1 COVID-19 3.6 3.4 3.1 • ~13% Decrease In New Active Claim Counts In 2020 Versus 2019 • IBNR Adjustments As
Slide 15: LTC In Force Premium Rate Increases
LTC In Force Premium Rate Increases Rate Action Progress Approved Filings 2016 2017 2018 2019 2020 State Filings Approved 96 114 120 116 144 Achieved ~$14.5B Impacted In Force Premium ($MM)1 719 714 875 817 1,008 NPV Of Approved Rate Increases Since 2012 Weighted Average % Rate Increase 28% 28% 45%
Slide 16: Individual LTC In Force Policy Information
Individual LTC In Force1 Policy Information Pre PCS PCS I PCS II Choice I2 Choice II PC Flex MFMP 3 PC Flex II PC Flex III Total 4 Annual Premium ($MM) 51 122 363 726 990 239 94 68 35 2,688 In Force Lives (000s) 32 38 139 277 388 97 43 28 14 1,055 Average Attained Age 88.2 85.7 80.5 74.1 70.8 65.8 6
Slide 17: Life Insurance
Life Insurance Premiums & Policy Fees & Other Income ($MM) 200 198 209 Premiums And Policy Fees Declining From Run Off Of Existing Blocks Versus Prior Year 4Q20 3Q20 4Q19 Premiums And Policy Fees Increased Versus Prior Quarter Net Investment Income & Yield ($MM) 131 131 128 Higher Investment Income
Slide 18: Fixed Annuities
Fixed Annuities Net Investment Spread1 Benefits/Changes In Policy Reserves & SPIA Mortality ($MM) ($MM) 99 101 110 56 51 47 4Q20 3Q20 4Q19 4Q20 3Q20 4Q19 SPDA2 Spread 1.66% 1.54% 1.83% SPIA Mortality G/(L)4 (5) 5 2 SPIA3 Spread 0.79% 0.92% 0.84% Net Investment Spread Decreased Primarily Due To Lower
Slide 19: Net Investment Income
Net Investment Income Net Investment Income Highlights ($MM) 854 827 794 Net Investment Income Favorable Versus Prior Quarter And Prior Year Primarily From Higher Income From Limited Partnerships, Bond Calls And CML Prepayments $2.3B Of Asset Purchases In 4Q20 With An Average Yield Of 2.83% 4Q20 3Q2
Slide 20: Investment Portfolio Holdings
Investment Portfolio Holdings1 Composition Of Portfolio Fixed Maturities By Sector $79.9B Fixed Maturity Securities Sector Fair Value ($B) % Of Total Government & Municipal 9.5 14% Residential & Commercial MBS3 4.9 8% Other Asset-Backed Securities 3.4 5% Fixed Maturities - Fixed Maturities - Corpora
Slide 21: Holding Company Cash & Liquid Assets
Holding Company Cash & Liquid Assets 1 Cash & Liquid Assets Roll Forward ($MM) Variance 289 77 1,103 2 190 42 (20) 814 2 ~$74MM ~$71MM Restricted Cash/ Restricted Cash/ Liquid Assets Liquid Assets 9/30/2020 Cash Taxes Cash Collateral Interest Payments Hold Co. Net 12/31/2020 Other Items $190MM Recei
Slide 22: Appendix
Appendix Genworth 4Q20 Earnings Presentation – February 17, 2021 21
Slide 23: Total Genworth Financial, Inc.’s Stockholders’ Equity (U.S. GAAP)
Total Genworth Financial, Inc.’s Stockholders’ Equity (U.S. GAAP) ($MM) 4Q20 3Q20 2Q20 1Q20 4Q19 U.S. MI 3,906 3,824 4,050 3,875 3,797 Australia MI 508 478 444 376 442 U.S. Life Insurance 11,505 10,973 10,860 10,632 10,423 LTC1 7,671 7,372 7,242 7,354 6,690 Life Insurance1 3,172 2,809 2,947 2,944 3,
Slide 24: 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 decision
Slide 25: Definition Of Selected Operating Performance Measures
Definition Of Selected Operating Performance Measures The company taxes its international businesses at their local jurisdictional tax rates and its domestic businesses at the U.S. corporate federal income tax rate of 21 percent. The company’s segment tax methodology applies the respective jurisdict
Slide 26: Reconciliation Of Net Income (Loss) To Adjusted Operating Income
Reconciliation Of Net Income (Loss) To Adjusted Operating Income ($MM) 2020 2019 4Q 3Q Full Year 4Q Full Year NET INCOME (LOSS) AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS $ 267 $ 418 $ 178 $ (17) $ 343 Add: net income (loss) from continuing operations attributable to noncontrolling
Slide 27: Reconciliation Of Reported Yield To Core Yield
Reconciliation Of Reported Yield To Core Yield 2020 2019 (Assets - amounts in billions) 4Q 3Q 4Q Reported - Total Invested Assets and Cash $ 79.9 $ 79.3 $ 74.6 Subtract: Securities lending 0.1 0.1 0.1 Unrealized gains (losses) 10.7 10.0 6.9 Adjusted end of period invested assets and cash $ 69.1 $ 69
Slide 28: 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 29: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements the amount of the costs, fees, expenses and other charges related to the Oceanwide transaction, including costs and expenses related to conditions imposed in connection with regulatory approvals, re-approvals or clearances, which may be material;
Slide 30: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements • regulatory and legal risks including: extensive regulation of the company's businesses and changes in applicable laws and regulations (including changes to tax laws and regulations); litigation and regulatory investigations or other actions; dep