Genworth Financial Inc · NYSE:GNW
Genworth Financial — Q1 2021 Earnings Presentation
28 slides from Genworth Financial's earnings presentation, Apr 30, 2021
Slide 1: First Quarter 2021 Earnings Summary
First Quarter 2021 Earnings Summary April 30, 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 1st Quarter Of 2021
Key Themes For The 1st Quarter Of 2021 Financial Performance Genworth Net Income Of $187MM, Or $0.37 Per Diluted Share, And Adjusted Operating Income1 Of $168MM, Or $0.33 Per Diluted Share Executing On The Company’s Strategic Plan Following The Termination Of The Merger Agreement With China Oceanwid
Slide 4: 1Q21 Results Summary – Genworth Consolidated
1Q21 Results Summary – Genworth Consolidated Adjusted Operating Income (Loss) ($MM) Australia MI Segment Results Now Reported As Discontinued Operations And Prior Periods Re-Presented Accordingly1 1Q21 4Q20 1Q20 U.S. MI: $126MM Strong Revenue From Primary Insurance In Force And Lower 168 188 20 Loss
Slide 5: U.S. Mortgage Insurance
U.S. Mortgage Insurance Premiums Benefits/Changes In Policy Reserves ($MM) ($MM) 89 252 251 55 226 19 1Q21 4Q20 1Q20 Loss Ratio 22% 35% 8% Primary Delqs (#) 41,332 44,904 15,417 Primary New Delqs (#) 10,053 11,923 8,114 1Q21 4Q20 1Q20 Primary Paid Claims (#) 134 152 440 Primary Cures1 (#) 13,491 16,
Slide 6: U.S. Mortgage Insurance – Primary IIF
U.S. Mortgage Insurance – Primary IIF1 Primary IIF By Origination Year ($B) 42% 1Q21 1Q20 210 208 188 16% 12% 7% 7% 6% 5% 3% 2% 1Q21 4Q20 1Q20 2021 2020 2019 2018 2017 2016 2015 2009 - 2008 & 2014 Prior Portfolio Up 12% Versus Prior Year Driven By <10% Concentration In 2014 & Prior Books Historicall
Slide 7: U.S. Mortgage Insurance – Capital Adequacy
U.S. Mortgage Insurance – Capital Adequacy1 Published PMIERs Required Assets Sufficiency To Published PMIERs2 ($MM) ($MM) 30% 22% 23% 159% 1,285 137% 142% 936 828 1,764 4,769 4,588 3,974 1,229 1,171 (3,631) (4,290) (4,295) 1Q21 4Q20 1Q20 1Q21 1Q21 4Q20 4Q20 1Q20 1Q20 Operating Leverage3 Reinsurance
Slide 8: U.S. MI Credit Risk Transfer Key Metrics
U.S. MI Credit Risk Transfer Key Metrics As Of March 31, 2021, 94% Of Current Risk In Force1 Is Subject To Genworth’s Credit Risk Transfer (CRT) Program, Which Provides $1.8B Of Loss Coverage And $1.28B Of PMIERS Required Asset Credit 2017 XOL 2018 XOL 2019 XOL -1 2019 XOL -2 2019 ILN 2020 XOL Agg X
Slide 9: 1Q21 Summary – U.S. Life Insurance
1Q21 Summary – U.S. Life Insurance Highlights Adjusted Operating Income (Loss) LTC: $95MM ($MM) Favorable Claim Terminations, Partially Offset By Reserve Increase 1Q21 4Q20 1Q20 In Current Quarter To Reflect Assumption That COVID-19 Pandemic Has Accelerated Mortality On Most Vulnerable Claimants 62
Slide 10: Long Term Care Insurance
Long Term Care Insurance Premiums ($MM) 646 668 642 $195MM Estimated Pre-Tax Benefit In 1Q21 From Implemented In Force Premium Rate Actions From 2012 Through 1Q211 1Q21 4Q20 1Q20 Net Investment Income & Yield Lower Income From Bond Calls, CML Prepayments ($MM) 499 And Limited Partnerships Versus Pri
Slide 11: LTC Incidence & Mortality Trends
LTC Incidence & Mortality Trends1 Incidence # New Active Claim Counts (000's) $(29)MM Pre-Tax Reserve Increase In 4.3 1Q’21, $(108)MM In 2020 To Adjust IBNR 4.1 4.3 4.1 4.0 4.0 4.0 During COVID-19 3.8 3.8 3.6 3.4 3.2 3.1 • ~22% Decrease in New Active Claim Counts In 1Q21 Versus Prior Year • IBNR Adj
Slide 12: LTC In Force Premium Rate Increases
LTC In Force Premium Rate Increases Rate Action Progress Approved Filings FY19 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 State Filings Approved 116 32 14 45 53 144 43 Impacted In Force Premium ($MM)1 817 130 127 338 413 1,008 396 Weighted Average % Rate Increase Approved 41% 35% 25% 28% 41% 34% 40% On Impacted
Slide 13: Life Insurance
Life Insurance Premiums & Policy Fees & Other Income ($MM) 211 200 217 Premiums And Policy Fees Declining From Run Off Of Existing Blocks Versus Prior Year 1Q21 4Q20 1Q20 Premiums And Policy Fees Increased Due To Seasonality Versus Prior Quarter Net Investment Income & Yield ($MM) 131 130 125 Lower
Slide 14: Fixed Annuities
Fixed Annuities Net Investment Spread1 Benefits/Changes In Policy Reserves & SPIA Mortality ($MM) ($MM) 92 99 105 56 67 44 1Q21 4Q20 1Q20 1Q21 4Q20 1Q20 SPDA2 Spread 1.46% 1.66% 1.80% SPIA Mortality G/(L)4 7 (5) - SPIA3 Spread 0.66% 0.79% 0.76% Net Investment Spread Decreased Primarily Due To Higher
Slide 15: Net Investment Income
Net Investment Income Net Investment Income Highlights ($MM) 846 801 782 Net Investment Income Declined Versus Prior Quarter Due To Lower Income From Bond Calls, CML Prepayments And Limited Partnerships Net Investment Income Increased Versus Prior Year Primarily From Higher Limited Partnership Incom
Slide 16: Investment Portfolio Holdings
Investment Portfolio Holdings1 Composition Of Portfolio Fixed Maturities By Sector $72.9B Fixed Maturity Securities Sector Fair Value ($B) % Of Total Government & Municipal 8.2 13% Residential & Commercial MBS3 4.6 8% Other Asset-Backed Securities 2.8 5% Fixed Maturities - Non- Corporate Bond Holdin
Slide 17: Holding Company Cash & Liquid Assets
1 Holding Company Cash & Liquid Assets Cash & Liquid Assets Roll Forward ($MM) Variance (346) 1,103 2 (729) 3 87 (58) (16) 370 757 2 ~$71MM ~$60MM Restricted Cash/ Restricted Cash/ Liquid Assets Liquid Assets 12/31/2020 Debt Retirement Genworth Australia Cash Taxes Interest Payments Hold Co. Net Oth
Slide 18: Appendix
Appendix Genworth 1Q21 Earnings Presentation – April 30, 2021 17
Slide 19: Summary Of Income From Discontinued Operations
Summary Of Income From Discontinued Operations Including Net Loss From Sale Of Genworth Australia Following The Sale Of Genworth Australia, Australia MI Segment Results Are Reported As Discontinued Operations, And Loss On Sale Recognized In 1Q21: ($MM) 1Q'21 1 Net Cash Proceeds 370 Carrying Value of
Slide 20: Genworth Australia – Discontinued Operations
Genworth Australia – Discontinued Operations Re-Presented Adjusted Operating Income (Loss) For Prior Periods Following The Sale Of Genworth Australia, Australia MI Segment Results Are Reported As Discontinued Operations, And All Prior Periods Have Been Re-Presented Accordingly: Genworth Australia Re
Slide 21: Total Genworth Financial, Inc.’s Stockholders’ Equity (U.S. GAAP)
Total Genworth Financial, Inc.’s Stockholders’ Equity (U.S. GAAP) ($MM) 1Q21 4Q20 3Q20 2Q20 1Q20 U.S. MI 3,955 3,906 3,824 4,050 3,875 U.S. Life Insurance 10,698 11,505 10,973 10,860 10,632 LTC1 7,104 7,671 7,372 7,242 7,354 Life Insurance1 2,983 3,172 2,809 2,947 2,944 Fixed Annuities1 611 662 792
Slide 22: Use Of Non-GAAP Measures
Use Of Non-GAAP Measures This presentation includes the non-GAAP financial measures entitled "adjusted operating income (loss)" and "adjusted operating income (loss) per share." Adjusted operating income (loss) per share is derived from adjusted operating income (loss). The chief operating decision
Slide 23: Definition Of Selected Operating Performance Measures
Definition Of Selected Operating Performance Measures The company taxes its businesses at the U.S. corporate federal income tax rate of 21 percent. Each segment is then adjusted to reflect the unique tax attributes of that segment, such as permanent differences between U.S. GAAP and tax law. The dif
Slide 24: Reconciliation Of Net Income (Loss) To Adjusted Operating Income
Reconciliation Of Net Income (Loss) To Adjusted Operating Income 2021 2020 ($MM) 1Q 4Q 1Q NET INCOME (LOSS) AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS $ 187 $ 267 $ (66) Add: net income (loss) from continuing operations attributable to noncontrolling interests - - - Add: net income
Slide 25: Reconciliation Of Reported Yield To Core Yield
Reconciliation Of Reported Yield To Core Yield 2021 2020 (Assets - amounts in billions) 1Q 4Q 1Q Reported - Total Invested Assets and Cash $ 72.9 $ 77.3 $ 71.3 Subtract: Securities lending 0.1 0.1 0.1 Unrealized gains (losses) 6.9 10.7 6.0 Adjusted end of period invested assets and cash $ 65.9 $ 66.
Slide 26: 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 27: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements • risks relating to estimates, assumptions and valuations including: inadequate reserves and the need to increase reserves (including as a result of any changes the company may make in the future to its assumptions, methodologies or otherwise in c
Slide 28: 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