Genworth Financial Inc · NYSE:GNW
Genworth Financial — Q4 2018 Earnings Presentation
27 slides from Genworth Financial's earnings presentation, Feb 5, 2019
Slide 1: Earnings Summary Fourth Quarter 2018
Earnings Summary February 5, 2019 Fourth Quarter 2018 Exhibit 99.3
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Genworth 4Q18 Earnings Presentation – February 5, 2019 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,” “in
Slide 3: Key Financial Themes For The 4th Quarter
Key Financial Themes For The 4th Quarter Financial Performance Genworth 2018 Full Year Net Income of $119MM, Or $0.24 Per Diluted Share, And Adjusted Operating Income1 Of $179MM, Or $0.36 Per Diluted Share U.S. Mortgage Insurance (MI) 2018 Full Year Adjusted Operating Income Of $490MM, Increased 58%
Slide 4: 4Q18 Results Summary – Genworth Consolidated
4Q18 Results Summary – Genworth Consolidated U.S. MI: $124MM Insurance In Force Growth, Favorable Loss Performance And Lower 2018 Tax Rate Continue To Drive Strong Results Canada MI: $48MM Higher Losses Compared To Both Prior Quarter And Prior Year Attributable Primarily To Activity In Alberta Tax R
Slide 5: U.S. Mortgage Insurance
U.S. Mortgage Insurance ($MM) ($MM) Benefits/Changes In Policy Reserves Premiums Flow NIW9,30010,30010,200 Loss Ratio7%11%22% Primary Delqs (#)17,15916,87423,188 Primary New Delqs (#)8,7197,88411,979 Primary Paid Claims (#)8331,204880 Primary Cures (#)7,6017,8578,419 % Of RIF1 2009+88%87%84% 1Risk I
Slide 6: Canada Mortgage Insurance
Flow NIW3,3004,2003,600 Bulk NIW900600800 Canada Mortgage Insurance ($MM) ($MM) Loss Ratio18%14%9% Total Delqs (#)1,6841,6951,718 New Delqs (#)901913984 Paid Claims (#)337375387 Cures (#)575585638 Benefits/Changes In Policy Reserves Premiums Unfavorable $5MM Impact On Earned Premium From Foreign Exc
Slide 7: Australia Mortgage Insurance
Australia Mortgage Insurance ($MM) ($MM) Benefits/Changes In Policy Reserves Premiums Flow NIW4,0003,8004,200 Bulk NIW800-- Loss Ratio129%31%(7)% Total Delqs (#)7,1457,3506,696 New Delqs (#)2,3902,7422,463 Paid Claims (#)325320385 Cures (#)2,2702,3782,528 Unfavorable $7MM Earned Premium Impact From
Slide 8: MI Businesses – Capital Adequacy
MI Businesses – Capital Adequacy1 1Company Estimate For 4Q18, Due To Timing Of The Filing Of Statutory Statements; 2Risk-To-Capital; 3Calculated As Available Assets Divided By Required Assets As Defined Within PMIERs. As Of September 30, 2018 And December 31, 2017, The PMIERs Sufficiency Ratios Were
Slide 9: 4Q18 Summary – U.S. Life Insurance Highlights
($MM) Adjusted Operating Income (Loss) (425) (3) (69) Life Fixed Annuities LTC 4Q18 Summary – U.S. Life Insurance Highlights LTC: $(314)MM Current Quarter Results Include $258MM After-Tax Charges From Assumption Updates Following Claims Review Higher New Claim Severity Following Assumption Updates U
Slide 10: Long Term Care Insurance
Benefits & Other Changes In Policy Reserves Long Term Care Insurance Higher Investment Income Compared To Prior Year Due To Continued Growth In Invested Assets Lower Yield Primarily From Limited Partnerships $88MM Estimated Pre-Tax Benefit In 4Q18 From Implemented In Force Premium Rate Actions From
Slide 11: LTC: Annual Assumption Review
LTC: Annual Assumption Review GAAP & Statutory Margin Testing Margin Testing Results PGAAP Positive Margin Higher Than Prior Year; No Unlocking Of Reserves HGAAP Positive Margin Although Decline From Prior Year Statutory In Process Key Assumption & Model Updates Included Routine Updates For Lapse, M
Slide 12: Multi-Year LTC Premium Rate Action Plan Update
Genworth 4Q18 Earnings Presentation – February 5, 2019 Significant Progress On Multi-Year Rate Action Plan With Nearly $400MM Of Incremental Annual Premium Increases Approved In 2018 - Represents Over $2B In NPV Achieved ~$10.5B NPV From Approved Rate Increases Since 2012, Representing Approximately
Slide 13: Approved and Submitted Rate Filings
Approved Filings 2013 2014 2015 2016 2017 2018 State Filings Approved 155 74 69 96 114 120 Impacted In Force Premium ($MM) 753 492 739 719 714 875 Weighted Average % Rate Increase Approved on Impacted In Force 40% 18% 29% 28% 28% 45% Filings Submitted 2013 2014 2015 2016 2017 2018 State Filings Subm
Slide 14: Individual LTC In Force Policy Information
Individual LTC In Force1 Policy Information 13 1In Force Data As of 4Q18 Excludes Group Business And Assumed Business From RiverSource, Travelers (Through Brighthouse Financial), & Continental Life; 2Includes Policies Sold In California Between 2010 & 2013; 3My Future My Plan (AARP Branded Product);
Slide 15: Life Insurance
Benefits & Other Changes In Policy Reserves Life Insurance Premium Reduction From 4Q17 Reinsurance Of A Block Of Term Life Business And Run Off Of Existing Blocks Net Investment Income & Yield Premiums & Policy Fees & Other Income ($MM) ($MM) ($MM) Genworth 4Q18 Earnings Presentation – February 5, 2
Slide 16: Life Insurance: Annual Assumption Review
Life Insurance: Annual Assumption Review Margin Impacts Unlocking & Reserves Assumption Changes Impact Term Universal Life (TUL) & Universal Life Products $91MM After-Tax Reserve Increase And Accelerated DAC Amortization Loss Recognition Testing (LRT) Term LRT Margin Improved From Prior Year Statuto
Slide 17: Fixed Annuities
SPDA2 Spread1.67%1.66%1.73% SPIA3 Spread0.69%0.72%1.26% Fixed Annuities 1Net Investment Income Less Interest Credited; 2Single Premium Deferred Annuities; Excludes Fixed Indexed Annuities; 3Single Premium Immediate Annuities; Includes Both Paid & Unpaid Interest Credited; 4Excludes Incurred But Not
Slide 18: Net Investment Income
1Non-GAAP Measure, See Appendix Genworth 4Q18 Earnings Presentation – February 5, 2019 Net Investment Income ($MM) Highlights Net Investment Income GNW Reported Yield4.64%4.64%4.60% GNW Core Yield14.58%4.59%4.50% U.S. Life Ins. Segment Reported Yield4.82%4.88%4.85% Impairments- - (2) Net Investment
Slide 19: Holding Company Cash & Liquid Assets
Genworth 4Q18 Earnings Presentation – February 5, 2019 Variance (105) 1 Holding Company Cash & Liquid Assets Comprises Assets Held In Genworth Holdings, Inc. (The Issuer Of Outstanding Public Debt) Which Is A Wholly-Owned Subsidiary Of Genworth Financial, Inc. 2 Genworth Holdings, Inc. Had $429MM An
Slide 20: Appendix
Appendix Genworth 4Q18 Earnings Presentation – February 5, 2019
Slide 21: Total Genworth Financial, Inc.'s Stockholders' Equity (GAAP)
Total Genworth Financial, Inc.’s Stockholders’ Equity (GAAP) ($MM) 4Q18 3Q18 2Q18 1Q18 4Q17 U.S. MI 2,809 2,616 2,498 2,438 2,343 Canada MI 1,641 1,752 1,717 1,728 1,773 Australia MI 476 474 515 516 550 U.S. Life Insurance 11,012 10,988 11,164 10,905 11,519 LTC1 7,154 6,921 6,960 6,965 7,343 Life In
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 reports selected operating performance measures including "sales" and "insurance in force" or "risk in force" which are commonly used in the insurance industry as measures of operating performance. Management regularly monitors and re
Slide 24: Reconciliation Of Net Income (Loss) To Adjusted Operating Income (Loss)
Reconciliation Of Net Income (Loss) To Adjusted Operating Income (Loss) 23 Genworth 4Q18 Earnings Presentation – February 5, 2019
Slide 25: Reconciliation Of Reported Yield To Core Yield
Reconciliation Of Reported Yield To Core Yield Genworth 4Q18 Earnings Presentation – February 5, 2019
Slide 26: Cautionary Note Regarding Forward-Looking Statements
5 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 economic, market and political conditions including: downturns and volatility in global economies and equity and credit markets; interest rates and changes in rates (particularly given the historically low interest rate environme