Genworth Financial Inc · NYSE:GNW
Genworth Financial — Q2 2021 Earnings Presentation
28 slides from Genworth Financial's earnings presentation, Aug 4, 2021
Slide 1: Second Quarter 2021 Earnings Summary
Second Quarter 2021 Earnings Summary August 4, 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 2nd Quarter Of 2021
Key Themes For The 2nd Quarter Of 2021 Financial Performance Genworth Net Income Of $240MM, Or $0.47 Per Diluted Share, And Adjusted Operating Income1 Of $194MM, Or $0.38 Per Diluted Share Continued Progress On Company’s Strategic Objectives With Strong Second Quarter Earnings, Preparations For An I
Slide 4: 2Q21 Results Summary – Genworth Consolidated
2Q21 Results Summary – Genworth Consolidated Adjusted Operating Income (Loss) ($MM) 2Q21 1Q21 2Q202 Enact: $135MM New Delinquencies Continued To Decline, Down 32% From 194 168 (23) The Prior Quarter U.S. Life Insurance: $71MM LTC Results Include Larger Benefit From In Force Rate 135 Actions, Includi
Slide 5: Enact Segment – Primary Insurance In Force (IIF)
Enact Segment – Primary Insurance In Force (IIF) Primary IIF By Origination Year ($B) 2Q21 2Q20 38% 217 210 197 23% 13% 6% 6% 5% 4% 3% 2% 2Q21 1Q21 2Q20 2021 2020 2019 2018 2017 2016 2015 2009 - 2008 & 2014 Prior Portfolio Up 10% Versus Prior Year Driven By <10% Concentration In 2015 & Prior Books H
Slide 6: Enact Segment
Enact Segment Premiums In Force Portfolio Premium Yield ($MM) 2Q21 1Q21 2Q20 243 252 243 Base Premium Rate (bps) 45 46 46 Single Cancellations 4 5 7 Ceded Premium (4) (3) (3) Net Premium Rate (bps) 45 48 50 Average IIF ($B) 214 209 193 2Q21 1Q21 2Q20 Persistency 63% 56% 59% Primary NIW 26,700 24,900
Slide 7: Enact Segment
Enact Segment Benefits/Changes In Policy Reserves ($MM) 228 30 55 2Q21 1Q21 2Q20 Loss Ratio 12% 22% 94% Primary Delqs (#) 33,568 41,332 53,587 Primary New Delqs (#) 6,862 10,053 48,373 Primary Paid Claims (#) 143 134 404 Primary Cures1 (#) 14,483 13,491 9,799 Primary Delinquency Rate of 3.6% Decline
Slide 8: Enact Segment – Capital Adequacy
Enact Segment – Capital Adequacy1 Published PMIERs Required Assets Sufficiency To Published PMIERs2 ($MM) ($MM) 32% 30% 26% 165% 159% 1,406 1,285 143% 1,043 1,941 1,764 4,926 4,769 4,218 1,275 (4,391) (4,290) (3,986) 2Q21 1Q21 2Q20 2Q21 2Q21 1Q21 1Q21 2Q20 2Q20 Operating Leverage3 Reinsurance Credit
Slide 9: Enact Credit Risk Transfer Structure Key Metrics
Enact Credit Risk Transfer Structure Key Metrics As Of June 30, 2021, 90% Of Current Risk In Force1 Is Subject To Genworth’s Credit Risk Transfer (CRT) Program, Which Provides $1.6B Of Loss Coverage And $1.4B Of PMIERs Required Asset Credit 2019 XOL -1 2019 XOL -2 2019 ILN 2020 XOL 2020 ILN 2021-1 I
Slide 10: 2Q21 Summary – U.S. Life Insurance
2Q21 Summary – U.S. Life Insurance Highlights Adjusted Operating Income (Loss) LTC: $98MM ($MM) Higher Earnings From In Force Rate Actions, Including Net 2Q21 1Q21 2Q20 Policyholder Benefit Reduction Elections Related To A Legal Settlement 71 62 (5) Significantly Lower Claim Terminations As Pandemic
Slide 11: Long Term Care Insurance
Long Term Care Insurance Premiums ($MM) 648 646 649 $207MM Estimated Pre-Tax Benefit In 2Q21 From Implemented In Force Premium Rate Actions From 2012 Through 2Q211 2Q21 1Q21 2Q20 Net Investment Income & Yield ($MM) 509 465 422 Higher Income From Limited Partnerships, Inflation 5.92% 5.43% 5.09% Impa
Slide 12: LTC Incidence & Mortality Trends
LTC Incidence & Mortality Trends1 Incidence # New Active Claim Counts (000's) New Active Claim Counts Gradually 4.3 4.1 4.3 4.1 Increasing, Remain Below Pre-Pandemic 4.0 4.0 4.0 3.8 3.8 Levels 3.6 3.4 3.4 3.2 3.1 • $(3)MM Pre-Tax Reserve Increase In 2Q21, $(140)MM Since 2Q20, To Adjust IBNR During C
Slide 13: LTC In Force Premium Rate Increases
LTC In Force Premium Rate Increases Rate Action Progress Approved Filings FY19 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 State Filings Approved 116 32 14 45 53 144 43 31 1 Impacted In Force Premium ($MM) 817 130 127 338 413 1,008 396 81 Weighted Average % Rate Increase Approved 41% 35% 25% 28% 41% 34% 40%
Slide 14: LTC Rate Increases: Policyholder Responses
LTC Rate Increases: Policyholder Responses Cumulative Policyholder Responses Since 20121 41.0% 37.3% 31.5% 14.0% 11.6% 23.3% 9.7% 18.6% 7.2% 11.3% 12.7% 6.1% 25.7% 27.0% 4.6% 21.8% NFO 4.2% 12.5% 16.1% 7.1% 8.1% RBO 2015 2016 2017 2018 2019 2020 2Q21 Paying Full 88.7% 87.3% 81.4% 76.7% 68.5% 62.7% 5
Slide 15: Life Insurance
Life Insurance Premiums & Policy Fees & Other Income ($MM) 197 211 203 Premiums And Policy Fees Declined Due To Seasonality Versus Prior Quarter And From Run Off Of Existing Blocks 2Q21 1Q21 2Q20 Versus Prior Year Net Investment Income & Yield ($MM) 126 125 127 Investment Income Remained Stable Vers
Slide 16: Fixed Annuities
Fixed Annuities Net Investment Spread1 Benefits/Changes In Policy Reserves & SPIA Mortality ($MM) ($MM) 94 92 103 62 48 44 2Q21 1Q21 2Q20 2Q21 1Q21 2Q20 SPDA2 Spread 1.72% 1.46% 1.82% SPIA Mortality G/(L)4 (7) 7 1 SPIA3 Spread 0.81% 0.66% 0.84% Net Investment Spread Increased Versus Prior Quarter Lo
Slide 17: Net Investment Income
Net Investment Income Net Investment Income Highlights ($MM) 844 Net Investment Income Increased Versus 801 779 Prior Quarter And Prior Year Due To Higher Variable Investment Income, Including Income From Limited Partnerships, Bond Calls & CML Prepayments, And Inflation Impact On TIPS $1.7B Of Asset
Slide 18: Investment Portfolio Holdings
Investment Portfolio Holdings1 Composition Of Portfolio Fixed Maturities By Sector Fixed Maturity Securities Sector Fair Value ($B) % Of Total $75.2M Government & Municipal 8.7 14% 3 Residential & Commercial MBS 4.4 7% Other Asset-Backed Securities 2.5 4% Fixed Maturities Corporate Bond Holdings: -
Slide 19: Holding Company Cash & Liquid Assets
1 Holding Company Cash & Liquid Assets Cash & Liquid Assets Roll Forward ($MM) Variance 85 112 (20) 842 2 757 2 (14) 3 7 ~$60MM ~$19MM Restricted Cash/ Restricted Cash/ Liquid Assets Liquid Assets 3/31/2021 Cash Taxes Interest Payments Debt Repurchase Hold Co. Net Other Items 6/30/2021 $112MM Receiv
Slide 20: Appendix
Appendix Genworth 2Q21 Earnings Presentation – August 4, 2021 19
Slide 21: Individual LTC In Force Policy Information
Individual LTC In Force1 Policy Information 2 3 Pre PCS PCS I PCS II Choice I Choice II PC Flex MFMP PC Flex II PC Flex III Total 4 Annual Premium ($MM) 47 117 359 691 1,013 234 93 67 35 2,655 In Force Lives (000s) 29 36 135 273 385 96 43 27 14 1,039 Average Attained Age 88.4 86.0 80.8 74.5 71.2 66.
Slide 22: Total Genworth Financial, Inc.’s Stockholders’ Equity (U.S. GAAP)
Total Genworth Financial, Inc.’s Stockholders’ Equity (U.S. GAAP) ($MM) 2Q21 1Q21 4Q20 3Q20 2Q20 Enact 4,111 3,955 3,906 3,824 4,050 U.S. Life Insurance 11,296 10,698 11,505 10,973 10,860 LTC1 7,394 7,104 7,671 7,372 7,242 Life Insurance1 3,287 2,983 3,172 2,809 2,947 Fixed Annuities1 615 611 662 79
Slide 23: Use Of Non-GAAP Measures
Use Of Non-GAAP Measures This presentation includes the non-GAAP financial measures entitled "adjusted operating income (loss)" and "adjusted operating income (loss) per share." Adjusted operating income (loss) per share is derived from adjusted operating income (loss). The chief operating decision
Slide 24: Definition Of Selected Operating Performance Measures
Definition Of Selected Operating Performance Measures The company taxes its businesses at the U.S. corporate federal income tax rate of 21 percent. Each segment is then adjusted to reflect the unique tax attributes of that segment such as permanent differences between U.S. GAAP and tax law. The diff
Slide 25: Reconciliation Of Net Income (Loss) To Adjusted Operating Income (Loss)
Reconciliation Of Net Income (Loss) To Adjusted Operating Income (Loss) ($MM) 2021 2020 2Q 1Q 2Q NET INCOME (LOSS) AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS $ 240 $ 187 $ (441) Add: net income from continuing operations attributable to noncontrolling interests - - - Add: net income
Slide 26: Reconciliation Of Reported Yield To Core Yield
Reconciliation Of Reported Yield To Core Yield 2021 2020 (Assets - amounts in billions) 2Q 1Q 2Q Reported - Total Invested Assets and Cash $ 75.2 $ 72.9 $ 75.7 Subtract: Securities lending 0.1 0.1 0.1 Unrealized gains (losses) 8.9 6.9 9.7 Adjusted end of period invested assets and cash $ 66.2 $ 65.9
Slide 27: 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 28: 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 prolonged unemployment, a sustained low interest rate environment and oth