Genworth Financial Inc · NYSE:GNW
Genworth Financial — Q3 2021 Earnings Presentation
23 slides from Genworth Financial's earnings presentation, Nov 3, 2021
Slide 1: Third Quarter 2021 Earnings Summary
Third Quarter 2021 Earnings Summary November 3, 2021 Company Confidential ©2021 Genworth Financial, Inc. All rights reserved. ©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,” “intends,” “anticipa
Slide 3: Key Themes for the 3rd Quarter of 2021
Key Themes for the 3rd Quarter of 2021 Third Quarter Financial Performance Genworth net income of $314mm, or $0.61 per diluted share, and adjusted operating income1 of $239mm, or $0.46 per diluted share Successfully completed initial public offering (IPO) of Enact Holdings, Inc. (Enact) Enac
Slide 4: Go-Forward Strategic Priorities & 3Q Highlights
Go-Forward Strategic Priorities & 3Q 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 Strategic Highlights Completed IPO of Enact with net proceeds of $529mm to G
Slide 5: 3Q21 Results Summary – Genworth Consolidated
3Q21 Results Summary – Genworth Consolidated Adjusted Operating Income (Loss) ($mm) Enact: $134mm1 Current quarter generally flat versus prior quarter and 3Q21 2Q21 3Q202 unfavorable versus prior year, in part from lower premiums 239 194 125 U.S. Life Insurance: $93mm LTC current quarter results con
Slide 6: Enact Segment
Enact Segment Primary Insurance In Force (IIF) Premiums ($b) ($mm) 243 243 251 222 217 203 3Q21 2Q21 3Q20 Primary NIW 24,000 26,700 26,600 Premiums were flat versus the prior quarter and lower versus prior year driven by lower single premium policy cancellations, continued lapse of older, higher
Slide 7: Enact Segment
Enact Segment Benefits/Changes in Policy Reserves Sufficiency to Published PMIERs2,3 ($mm) 45 ($mm) 34 30 181% 165% 2,287 132% 1,941 3Q21 2Q21 3Q20 1,074 Loss Ratio 14% 12% 18% Primary Delqs (#) 28,904 33,568 49,692 Primary New Delqs (#) 7,427 6,862 16,664 3Q21 2Q21 3Q20 Primary Paid Claims (#) 343
Slide 8: U.S. Life Insurance Segment
U.S. Life Insurance Segment Highlights Adjusted Operating Income (Loss) LTC: $133mm ($mm) Higher earnings from in force rate actions versus the prior year, including net policyholder benefit reduction elections related to a 3Q21 2Q21 3Q20 legal settlement 93 71 14 Higher claim and active policy term
Slide 9: 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 3.8 levels 3.6 3.4 3.4 3.2 3.1 • $22mm pre-tax reserve decrease in 3Q21, $(118)mm cumulative reserve adjustment as
Slide 10: 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 certain policies with compound inflation reduced by 20% 1 Number of certain policies with unlimited benefits reduced by 30%1 Cu
Slide 11: LTC In Force Rate Actions: Policyholder Responses
LTC In Force Rate Actions: Policyholder Responses Cumulative Policyholder Responses Since 20121,2 42.8% 37.3% 31.5% 15.2% 11.6% 23.3% 9.7% 18.6% 7.2% 11.3% 12.7% 6.1% 25.7% 27.6% NFO 4.2% 4.6% 21.8% 16.1% 12.5% RBO 7.1% 8.1% 2015 2016 2017 2018 2019 2020 3Q21 Paying Full 88.7% 87.3% 81.4% 76.6% 68.5
Slide 12: Impact Of In Force Rate Actions On LTC Statutory Earnings
Impact Of In Force Rate Actions On LTC Statutory Earnings1,2 Statutory Pre-Tax LTC In Force Rate Actions vs Pre-Tax LTC Earnings $mm LTC Statutory Pre-Tax $(404) $(714) $79 $394 $466 Earnings LTC Statutory Pre-Tax 1,317 1,269 Earnings From In 681 758 805 Force Rate Actions3,4 (339) LTC Statutory Pre
Slide 13: U.S. Life Insurance Statutory Capital
U.S. Life Insurance Statutory Capital1 Genworth Life Insurance Company Consolidated Statutory Capital2 Risk-Based Capital Ratio3 254% 272% 213% 229% 199% 12/31/2018 12/31/2019 12/31/2020 3/31/2021 6/30/2021 Statutory Metrics ($mm) 2018 2019 2020 1Q21 2Q21 1H21 Capital & Surplus 1,871 2,180 2,123 2,3
Slide 14: Holding Company Cash & Liquid Assets
Holding Company Cash & Liquid Assets1 Cash & Liquid Assets Roll Forward ($mm) Variance (204) 529 4 842 2 (519) (296) 96 21 (35) 3 638 2 6/30/2021 Debt Retirement Enact IPO AXA Payment Cash Taxes Interest Payments Hold Co. Net 9/30/2021 Proceeds Other Items September 2021 notes redeemed in July for $
Slide 15: Holding Company Debt Maturity Ladder
Holding Company Debt Maturity Ladder1 $638mm Holding Company Cash Balance at 9/30/21 YTD Retired $1.5B of Holding Company Debt, Including AXA; $1.7B Remaining 1 Debt at Genworth Holdings, Inc., the issuer of outstanding public debt, which is a wholly-owned subsidiary of Genworth Financial, Inc. Genw
Slide 16: Appendix
Appendix Genworth 3Q21 Earnings Presentation – November 3, 2021 15
Slide 17: Individual LTC In Force Policy Information
Individual LTC In Force1 Policy Information Pre PCS PCS I PCS II Choice I2 Choice II PC Flex MFMP3 PC Flex II PC Flex III Total Annual Premium ($MM)4 45 116 355 668 1,028 228 92 67 35 2,635 In Force Lives (000s) 28 35 133 271 384 96 42 27 14 1,031 Average Attained Age 88.5 86.1 81.0 74.7 71.5 66.5 6
Slide 18: Total Genworth Financial, Inc.'s Stockholders' Equity (U.S. GAAP)
Total Genworth Financial, Inc.’s Stockholders’ Equity (U.S. GAAP) ($mm) 3Q21 2Q21 1Q21 4Q20 3Q20 Enact 3,446 4,111 3,955 3,906 3,824 U.S. Life Insurance 11,617 11,296 10,698 11,505 10,973 LTC1 7,487 7,394 7,104 7,671 7,372 Life Insurance1 3,529 3,287 2,983 3,172 2,809 Fixed Annuities1 601 615 611 66
Slide 19: Use of Non-GAAP Measures
Use of Non-GAAP Measures This presentation includes the non-GAAP financial measures entitled "adjusted operating income (loss)" and "adjusted operating income (loss) per share." Adjusted operating income (loss) per share is derived from adjusted operating income (loss). The chief operating decision
Slide 20: Definition of Selected Operating Performance Measures
Definition of Selected Operating Performance Measures The company taxes its businesses at the U.S. corporate federal income tax rate of 21 percent. Each segment is then adjusted to reflect the unique tax attributes of that segment such as permanent differences between U.S. GAAP and tax law. The diff
Slide 21: Reconciliation of Net Income to Adjusted Operating Income
Reconciliation of Net Income to Adjusted Operating Income ($mm) 2021 2020 3Q 2Q 3Q NET INCOME AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS $ 314 $ 240 $ 418 Add: net income from continuing operations attributable to noncontrolling interests 4 - - Add: net income from discontinued oper
Slide 22: 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 23: 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, inflation, supply chain disruptions, a sustained