Genworth Financial Inc · NYSE:GNW
Genworth Financial — Q4 2021 Earnings Presentation
28 slides from Genworth Financial's earnings presentation, Feb 2, 2022
Slide 1: Fourth Quarter 2021 Earnings Summary
Fourth Quarter 2021 Earnings Summary February 2, 2022 NOTICE: This document contains confidential, non-public company information. Further distribution of this document is strictly prohibited. Company Confidential ©2022 Genworth Financial, Inc. All rights reserved. ©2021 Genworth Financial,
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,” “intends,” “anticipa
Slide 3: Key Themes for the 4th Quarter of 2021
Key Themes for the 4th Quarter of 2021 Financial Performance Genworth fourth quarter net income of $163mm, or $0.32 per diluted share, and adjusted operating income1 of $164mm, or $0.32 per diluted share 2021 full year net income of $904mm, or $1.76 per diluted share, and adjusted operating income o
Slide 4: Go-Forward Strategic Priorities & 4Q21 Highlights
Go-Forward Strategic Priorities & 4Q21 Highlights Reduce holding Return capital to Maximize value of Enact company debt to ~$1b shareholders Achieve economic Advance LTC growth breakeven/stabilize legacy initiatives LTC block Fourth Quarter of 2021 Strategic Highlights Reduced holding company debt b
Slide 5: 2021 Results Summary – Genworth Consolidated
2021 Results Summary – Genworth Consolidated Adjusted Operating Income (Loss) ($mm) Enact: $520mm1 Favorable performance versus prior year driven by improved loss 2021 20202 performance 765 310 Primary insurance in force increased 9% versus the prior year from strong new insurance written (NIW) U.S.
Slide 6: 4Q21 Results Summary – Genworth Consolidated
4Q21 Results Summary – Genworth Consolidated Adjusted Operating Income (Loss) ($mm) Enact: $125mm1 Full quarter of minority interest drives unfavorable variance to 4Q21 3Q21 4Q202 prior quarter 164 239 188 Favorable reserve development in the current quarter and unfavorable reserve development in pr
Slide 7: Enact Segment
Enact Segment Primary Insurance In Force (IIF) Premiums ($b) ($mm) 237 243 251 227 222 208 4Q21 3Q21 4Q20 Primary NIW 21,400 24,000 27,000 Premiums were lower versus the prior quarter and prior year driven by lower single premium policy cancellations, continued lapse of older, higher priced poli
Slide 8: Enact Segment
Enact Segment Benefits/Changes in Policy Reserves Sufficiency to Published PMIERs2,3 ($mm) 89 ($mm) 181% 34 165% 6 2,287 137% 2,003 4Q21 3Q21 4Q20 1,229 Loss Ratio 3% 14% 35% Primary Delqs (#) 24,820 28,904 44,904 Primary New Delqs (#) 8,282 7,427 11,923 4Q21 3Q21 4Q20 Primary Paid Claims (#) 430 34
Slide 9: U.S. Life Insurance Segment
U.S. Life Insurance Segment Highlights Adjusted Operating Income (Loss) LTC: $119mm ($mm) Higher earnings from in force rate actions versus the prior year, 4Q21 3Q21 4Q20 including net policyholder benefit reduction elections related to a legal settlement 41 93 129 Claim terminations remain higher t
Slide 10: LTC: Annual Assumption Review
LTC: Annual Assumption Review GAAP & Statutory Margin Testing – Active Life Reserves Margin Testing Results Positive margin slightly lower than prior year; no unlocking of Margin remained PGAAP1 within ~$0.5 to reserves $1.0b prior year HGAAP2 Positive margin slightly higher than prior year range St
Slide 11: Life Insurance: Annual Assumption Review
Life Insurance: Annual Assumption Review GAAP & Statutory Margin Testing Margin Impacts Unlocking & Assumption changes resulted in term universal life & universal life products Reserves $70mm after-tax charge and accelerated DAC amortization Loss Recognition Aggregate term LRT margin remains over $1
Slide 12: LTC Incidence & Mortality Trends
LTC Incidence & Mortality Trends1 Incidence # New Active Claim Counts (000's) New active claim counts remain below pre- 4.3 4.3 pandemic levels 4.0 4.1 4.0 4.0 4.1 3.6 3.4 3.8 3.8 3.8 • $43mm pre-tax reserve decrease in 4Q21, 3.4 3.5 3.2 3.1 $(75)mm cumulative reserve adjustment as of 4Q21, to adjus
Slide 13: LTC Risk Management & In Force Rate Action Progress
LTC Risk Management & In Force Rate Action Progress In Force Rate Action Progress Significant progress in addressing tail risk through multi-year rate action plan Number of policies with compound inflation reduced by 20%1 Number of policies with unlimited benefits reduced by 30%1 Cumulative benefit
Slide 14: LTC In Force Rate Actions: Policyholder Responses
LTC In Force Rate Actions: Policyholder Responses Cumulative Policyholder Responses Since 20121,2 44.1% 37.3% 31.5% 16.4% 11.6% 23.3% 9.7% 18.6% 7.2% 11.3% 12.7% 6.1% NFO 4.6% 21.8% 25.7% 27.7% 4.2% 16.1% RBO 7.1% 8.1% 12.5% 2015 2016 2017 2018 2019 2020 2021 Paying Full 88.7% 87.3% 81.4% 76.7% 68.5
Slide 15: Individual LTC In Force Policy Information
Individual LTC In Force1 Policy Information Pre PCS PCS I PCS II Choice I2 Choice II PC Flex MFMP3 PC Flex II PC Flex III Total ($MM)44 Annual Premium ($mm) 44 116 353 643 1,042 225 92 67 35 2,617 In Force Lives (000s) 27 34 131 269 382 96 42 27 14 1,024 Average Attained Age 88.6 86.3 81.2 74.9 71.7
Slide 16: Impact Of In Force Rate Actions On LTC Statutory Earnings
Impact Of In Force Rate Actions On LTC Statutory Earnings1,2 Statutory Pre-Tax In Force Rate Actions vs Pre-Tax Earnings $mm LTC Statutory Pre-Tax $(404) $(714) $79 $394 $737 Earnings LTC Statutory Pre-Tax 1,317 1,269 1,244 Earnings From In 681 758 Force Rate Actions3,4 LTC Statutory Pre-Tax (507) (
Slide 17: U.S. Life Insurance Statutory Capital
U.S. Life Insurance Statutory Capital1 GLIC Consolidated Statutory Capital2 Risk-Based Capital Ratio3 272% 291% 229% 254% 199% 213% 12/31/2018 12/31/2019 12/31/2020 3/31/2021 6/30/2021 9/30/2021 Statutory Metrics ($mm) 2018 2019 2020 1Q21 2Q21 3Q21 3Q21 YTD Capital & Surplus 1,871 2,180 2,123 2,320
Slide 18: Holding Company Cash & Liquid Assets
Holding Company Cash & Liquid Assets1 Cash & Liquid Assets Roll Forward ($mm) Variance (282) 638 2 (550) 75 (21) 51 356 2 163 9/30/2021 Debt Retirement Enact Dividend Cash Taxes Interest Payments Hold Co. Net 12/31/2021 Other Items $518mm holding company debt retired during the quarter, with $32mm n
Slide 19: Holding Company Debt Maturity Ladder
Holding Company Debt Maturity Ladder $118mm in open market repurchases completed in November 2021 (Feb-24 debt tranche) ~$2.1b Hold Co Debt Retired in 2021, Including AXA; $1.2b Remaining Genworth 4Q21 Earnings Presentation – February 2, 2022 18
Slide 20: Appendix
Appendix Genworth 4Q21 Earnings Presentation – February 2, 2022 19
Slide 21: Total Genworth Financial, Inc.'s Stockholders' Equity (U.S. GAAP)
Total Genworth Financial, Inc.’s Stockholders’ Equity (U.S. GAAP) ($mm) 4Q21 3Q21 2Q21 1Q21 4Q20 Enact 3,344 3,446 4,111 3,955 3,906 U.S. Life Insurance 10,970 11,617 11,296 10,698 11,505 LTC1 7,624 7,487 7,394 7,104 7,671 Life Insurance1 2,833 3,529 3,287 2,983 3,172 Fixed Annuities1 513 601 615 61
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: Use of Non-GAAP Measures
Use of Non-GAAP Measures In the fourth quarter of 2021, the company recorded a pre-tax loss of $92 million as a result of ceding certain term life insurance policies as part of a life block transaction. The company recorded a pre-tax expense of $5 million, $3 million, $5 million and $21 million in t
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 to Adjusted Operating Income
Reconciliation of Net Income to Adjusted Operating Income 2021 2020 4Q 3Q Full Year 4Q Full Year NET INCOME AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS $ 163 $ 314 $ 904 $ 267 $ 178 Add: net income from continuing operations attributable to noncontrolling interests 29 4 33 - - Add: n
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 economic, market and political conditions including: downturns and volatility in global economies and equity and credit markets, including as a result of unemployment, low labor participation, inflation, supply chain disruption
Slide 28: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements • insurance and product-related risks including: the company's inability to increase premiums and reduce benefits sufficiently, and in a timely manner, on its in force long term care insurance policies, in each case, as currently anticipated and a