Genworth Financial Inc · NYSE:GNW
Genworth Financial — Q3 2020 Earnings Presentation
25 slides from Genworth Financial's earnings presentation, Nov 5, 2020
Slide 1: Third Quarter 2020 Earnings Summary
Third Quarter 2020 Earnings Summary November 5, 2020 ©2020 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 3rd Quarter Of 2020
Key Themes For The 3rd Quarter Of 2020 Financial Performance Genworth Net Income Of $418MM, Or $0.82 Per Diluted Share, And Adjusted Operating Income1 Of $132MM, Or $0.26 Per Diluted Share Merger Agreement With China Oceanwide Holdings Group Co., Ltd (Oceanwide) Extended To November 30, 2020
Slide 4: 3Q20 Results Summary – Genworth Consolidated
3Q20 Results Summary – Genworth Consolidated Adjusted Operating Income (Loss) ($MM) U.S. MI: $141MM 3Q20 2Q20 3Q19 Ongoing Strong Revenue From Insurance In Force Growth And Reduced Losses From Lower New Delinquencies Sequentially 132 (21) 123 Australia MI: $7MM Reduced Losses Sequentially Driven By
Slide 5: U.S. Mortgage Insurance
U.S. Mortgage Insurance Premiums Benefits/Changes In Policy Reserves ($MM) ($MM) 228 251 243 219 45 23 3Q20 2Q20 3Q19 Loss Ratio 18% 94% 11% 3Q20 2Q20 3Q19 Primary Delqs (#) 49,692 53,587 15,758 Primary New Delqs (#) 16,664 48,373 8,547 Primary1 NIW 26,600 28,400 18,900 Primary Paid Claims (#) 152 4
Slide 6: Australia Mortgage Insurance
Australia Mortgage Insurance Premiums Benefits/Changes In Policy Reserves ($MM) ($MM) 71 77 62 26 39 28 3Q20 2Q20 3Q19 3Q20 2Q20 3Q19 Flow NIW 5,500 4,400 4,600 Loss Ratio1 37% 63% 36% Bulk NIW 100 100 – Total Delqs (#) 7,422 7,614 7,713 New Delqs (#) 2,552 2,662 2,622 Paid Claims (#) 332 358 361 Cu
Slide 7: MI Businesses – Capital Adequacy
MI Businesses – Capital Adequacy1 PMIERs Sufficiency At $1,074MM Above Published U.S. MI – Consolidated Risk-To-Capital (RTC) PMIERs Requirements. Does Not Take Into Consideration Impact Of Recent GSE4 Restrictions3 Target RTC Ratio: <18.0:1 PMIERs Sufficiency Decreased Sequentially Driven By Elevat
Slide 8: U.S. Mortgage Insurance – Credit Risk Transfer Program
U.S. Mortgage Insurance – Credit Risk Transfer Program Covered Loss Tiers At Percent Of Initial Current Initial Risk In Current Book Year / CRT Current Risk Inception (% RIF) Covered Loss Reinsured Reinsured Force (RIF) PMIERs Structure In Force ($B) Tier Amount Amount ($B) Reinsured ($MM) ($MM) Cre
Slide 9: 3Q20 Summary – U.S. Life Insurance
3Q20 Summary – U.S. Life Insurance Highlights Adjusted Operating Income (Loss) ($MM) LTC: $59MM 3Q20 2Q20 3Q19 Claim Terminations Flat Versus Prior Quarter And Higher Versus Prior Year 14 (5) (1) Increase In Investment Income From Limited Partnerships And TIPS1 Versus Prior Quarter & Prior Year Cont
Slide 10: Long Term Care Insurance
Long Term Care Insurance Premiums ($MM) 661 649 652 $191MM Estimated Pre-Tax Benefit In 3Q20 From Implemented In Force Premium Rate Actions From 2012 Through 3Q201 3Q20 2Q20 3Q19 Net Investment Income & Yield ($MM) 432 456 422 Higher Income From Limited Partnerships, Favorable Inflation Impact On TI
Slide 11: LTC In Force Premium Rate Increases
LTC In Force Premium Rate Increases Rate Action Progress Approved Filings FY18 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 State Filings Approved 120 24 32 16 44 116 32 14 45 Impacted In Force Premium ($MM) 1 875 229 238 127 223 817 130 127 338 Weighted Average % Rate Increase Approved 45% 61% 37% 23% 3
Slide 12: Life Insurance
Life Insurance Premiums & Policy Fees & Other Income ($MM) 216 198 203 Premiums And Policy Fees Declining From Run Off Of Existing Blocks 3Q20 2Q20 3Q19 Net Investment Income & Yield ($MM) 131 127 133 Investment Results Reflect Higher Income From Bond Calls Versus Prior Quarter 4.74% 4.65% 4.72% Low
Slide 13: Fixed Annuities
Fixed Annuities Net Investment Spread1 Benefits/Changes In Policy Reserves & SPIA Mortality ($MM) ($MM) 103 111 101 81 51 48 3Q20 2Q20 3Q19 3Q20 2Q20 3Q19 SPDA2 Spread 1.54% 1.82% 1.75% SPIA Mortality G/(L)4 5 1 (2) SPIA3 Spread 0.92% 0.84% 1.02% Net Investment Spread Decreased Primarily Due To Prio
Slide 14: Net Investment Income
Net Investment Income Net Investment Income Highlights ($MM) 827 816 Net Investment Income Favorable Versus 786 Prior Quarter And Prior Year From Higher Income From Bond Calls, Limited Partnerships, And Inflation Impact On TIPS $3.3B Of Asset Purchases In 3Q20 With An Average Yield Of 2.66% 3Q20 2Q2
Slide 15: Investment Portfolio Holdings
Investment Portfolio Holdings1 Composition Of Portfolio Fixed Maturities By Sector $79.3B Fixed Maturity Securities Sector Fair Value ($B) % Of Total Government & Municipal 9.3 14% Residential & Commercial MBS3 5.1 8% Other Asset-Backed Securities 3.3 5% Fixed Maturities - Corporate Bond Holdings: F
Slide 16: Holding Company Cash & Liquid Assets
Holding Company Cash & Liquid Assets 1 Cash & Liquid Assets Roll Forward ($MM) 436 (18) 23 (59) (122) 814 2 554 2 ~$59MM ~$74MM Restricted Cash/ Restricted Cash/ Liquid Assets Liquid Assets 6/30/2020 U.S. MI Dividend From Debt Retirement Cash Taxes Interest Payments Hold Co. Net 9/30/2020 Debt Proce
Slide 17: Appendix
Appendix Genworth 3Q20 Earnings Presentation - November 5, 2020 16
Slide 18: Total Genworth Financial, Inc.’s Stockholders’ Equity (U.S. GAAP)
Total Genworth Financial, Inc.’s Stockholders’ Equity (U.S. GAAP) ($MM) 3Q20 2Q20 1Q20 4Q19 3Q19 U.S. MI 3,824 4,050 3,875 3,797 3,401 Australia MI 478 444 376 442 446 U.S. Life Insurance 10,973 10,860 10,632 10,423 10,915 LTC1 7,372 7,242 7,354 6,690 7,061 Life Insurance1 2,809 2,947 2,944 3,234 3,
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 decision
Slide 20: 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 21: Reconciliation Of Net Income (Loss) To Adjusted Operating Income (Loss)
Reconciliation Of Net Income (Loss) To Adjusted Operating Income (Loss) ($MM) 2020 2019 3Q 2Q 3Q NET INCOME (LOSS) AVAILABLE TO GENWORTH FINANCIAL, INC.'S COMMON STOCKHOLDERS $ 418 $ (441) $ 18 Add: net income from continuing operations attributable to noncontrolling interests 18 23 10 Add: net inco
Slide 22: Reconciliation Of Reported Yield To Core Yield
Reconciliation Of Reported Yield To Core Yield 2020 2019 (Assets - amounts in billions) 3Q 2Q 3Q Reported - Total Invested Assets and Cash $ 79.3 $ 77.9 $ 73.9 Subtract: Securities lending 0.1 0.1 0.1 Unrealized gains (losses) 10.0 9.7 7.5 Adjusted end of period invested assets and cash $ 69.2 $ 68.
Slide 23: 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 24: 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 to its assumptions, methodologies or otherwise in connection with
Slide 25: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements • operational risks including: inability to retain, attract and motivate qualified employees or senior management; ineffective or inadequate risk management in identifying, controlling or mitigating risks; the impact on processes caused by shelter