Genworth Financial Inc · NYSE:GNW
Genworth Financial — Q3 2023 Earnings Presentation
23 slides from Genworth Financial's earnings presentation, Nov 9, 2023
Slide 1: Third Quarter 2023 Earnings Summary
Third Quarter 2023 Earnings Summary November 8, 2023 1
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 Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as "expects," "intends," "anticipates," "plans,"
Slide 3: Key Themes for the 3rd Quarter of 2023
Key Themes for the 3rd Quarter of 2023 Third quarter net income of $29M, or $0.06 per diluted share, and adjusted operating income1 of $42M, or $0.09 per diluted share Enact segment adjusted operating income of $134M2; PMIERs3 sufficiency ratio of 162%4 Long-Term Care Insurance (LTC) adjusted operat
Slide 4: Genworth Strategic Pillars
Genworth Strategic Pillars Purpose: To help families navigate the aging journey with confidence Vision: To be compassionate, experienced allies for those navigating care now and in the future, with guidance, products and services that meet families where they are in the aging journey STRATEGIC PILL
Slide 5: 3Q23 Results Summary – Genworth Consolidated (GAAP)
3Q23 Results Summary – Genworth Consolidated (GAAP) Enact: $134M1 Adjusted Operating Income (Loss)1 ($M) — Continued strong loss performance on delinquencies from 2022 and earlier, including COVID-19 delinquencies — Higher investment income with rising interest rates and higher 3Q23 2Q23 3Q22 averag
Slide 6: Enact Segment
Enact Segment Primary IIF1 ($B) Earned Premiums ($M) 262 258 242 243 239 235 3Q23 2Q23 3Q22 3Q23 2Q23 3Q22 Primary NIW 14,391 15,083 15,069 Portfolio up 8% year-over-year to $262B, driven by new Earned premiums were higher versus prior year as IIF growth insurance written (NIW) and continued elevate
Slide 7: Enact Segment
Enact Segment Benefits & Changes in Sufficiency to PMIERs2 ($M) Policy Reserves ($M) (Benefit) / Loss $18 174% 162% 162% ($4) ($40) 2,249 2,017 1,958 3Q23 2Q23 3Q22 Loss Ratio 7% (2)% (17)% Primary Delqs (#) 19,241 18,065 18,856 Primary New Delqs (#) 11,107 9,205 9,121 Primary Paid Claims (#) 147 15
Slide 8: Proactively Managing Long-Term Care Insurance Risk
Proactively Managing Long-Term Care Insurance Risk Stabilizing LTC legacy block through the Multi-Year Rate Action Plan to protect claims- paying ability Focused on cash flows, economic value, and statutory earnings — GAAP results do not impact cash flows or economic value Approximately $25B in net
Slide 9: LTC In-Force Rate Action Filings
LTC In-Force Rate Action Filings Approved Filings FY21 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 State Filings Approved 173 38 33 24 44 139 23 38 27 Impacted In Force Premium ($M) 1,095 354 133 123 533 1,143 78 300 150 Weighted Average % Rate Increase Approved 37% 29% 39% 38% 66% 48% 64% 31% 56% On Im
Slide 10: LTC In-Force Rate Actions: Policyholder Responses
LTC In-Force Rate Actions: Policyholder Responses CUMULATIVE POLICYHOLDER RESPONSES SINCE 20121,2 48.8% 44.1% 45.5% 37.3% 31.5% 16.4% 18.0% 20.6% 11.6% 23.3% 9.7% 18.6% NFO 7.2% 12.7% 6.1% 28.2% 25.7% 27.7% 27.5% 4.6% 21.8% 12.5% 16.1% RBO 8.1% 2016 2017 2018 2019 2020 2021 2022 3Q23 YTD Paying Full
Slide 11: Long-Term Care Insurance Segment GAAP Performance
Long-Term Care Insurance Segment GAAP Performance Premiums ($M) Net Investment Liability Remeasurement Income ($M) Gain / (Loss) ($M) 621 637 497 (61) (3) 611 482 470 (104) 24 6 10 253 242 (13) 245 (85) (110) 368 366 395 3Q23 2Q23 3Q22 3Q23 2Q23 3Q22 Yield % 5.38% 5.28% 5.67% 3Q23 2Q23 3Q22 Premium
Slide 12: Life and Annuities Segment GAAP Performance
Life and Annuities Segment GAAP Performance Life Insurance: $(25)M Adjusted Operating Income (Loss) ($M) — Results improved versus prior year, with favorable mortality experience — Current quarter includes a $(9)M after-tax impact from a voluntary recapture 3Q23 2Q23 3Q22 of previously ceded reinsur
Slide 13: Impact of In-Force Rate Actions on Pre-Tax LTC Statutory Earnings
Impact of In-Force Rate Actions on Pre-Tax LTC Statutory Earnings1,2 LTC Statutory Pre-Tax Earnings ($M) 79 394 910 257 315 88 1,669 1,482 Earnings From In-Force Rate Actions3 1,317 1,269 757 1,101 1,118 Premiums, Premium Tax, Commissions, Other 580 843 684 Expenses, Net 378 619 674 150 Legal Settle
Slide 14: LTC Claims Trends by Product – Statutory
LTC Claims Trends by Product – Statutory LTC Direct Paid Claims by Product ($M) Paid claims on newer products continue 2,244 2,196 to increase as policyholders approach 2,111 2,098 86 72 peak claim age, as claims on the older 1,980 67 234 74 303 Flex, MFMP, & 61 201 1,856 products past peak claim ag
Slide 15: U.S. Life Statutory Results
U.S. Life1 Statutory Results Pre-Tax Statutory Income2,3 ($M) Capital & Surplus3 ($M) and RBC Ratio3,4 $63 $59 293% 291% 286% $30 3,216 3,204 2,949 3Q23 2Q23 3Q22 Long-term Care Insurance 21 (71) 50 Life Insurance (40) 26 (18) Fixed Annuities 32 14 28 3Q23 2Q23 3Q22 Variable Annuities 17 94 (1) Capi
Slide 16: Investment Portfolio Holdings
Investment Portfolio Holdings1 Composition of Portfolio Fixed Maturities by Sector Fixed Maturity Securities Sector Fair Value ($B) % Of Total $58.7B Government & Municipal 5.9 13% Residential & Commercial MBS3 2.4 5% Other Asset-Backed Securities 2.2 5% Fixed Maturities Corporate Bond Holdings: Fix
Slide 17: Holding Company Cash & Liquid Assets
Holding Company Cash & Liquid Assets1 Variance 10 ($M) 26 (80) 59 222 (11) 16 232 6/30/2023 Cash taxes Enact capital Share repurchases Debt service Other items 9/30/2023 returns $59M received from intercompany tax payments $26M in capital returns from Enact — $21M from quarterly dividend and $5M in
Slide 18: Appendix
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Slide 19: Individual LTC In-Force Policy Information
Individual LTC In-Force1 Policy Information as of 9/30/23 Pre PCS PCS I PCS II Choice I2 Choice II PC Flex MFMP3 PC Flex II PC Flex III Group Total Issue Years 1974-1994 1994-1997 1997-2001 2001-2007 2003-2011 2011-2014 2009-2013 2013-2017 2014+ 1999+ AnnualPremium ($M)4 33 86 280 637 1,104 250 93 7
Slide 20: Expect Ongoing Volatility in LTC GAAP Results Under LDTI
Expect Ongoing Volatility in LTC GAAP Results Under LDTI1 Liability remeasurement gains/losses show differences in actual to expected experience on $41.9B liability for future policy benefits2 LDTI DOES NOT IMPACT: — LTC is a very long-duration product — Quarterly variations do not impact cash flows
Slide 21: Use of Non-GAAP Measures
Use of Non-GAAP Measures This presentation includes the non-GAAP financial measures entitled "adjusted operating income (loss)" and "adjusted operating income (loss) per share." Adjusted operating income (loss) per share is derived from • adjusted operating income (loss). The company’s President and
Slide 22: Reconciliation of Net Income to Adjusted Operating Income
Reconciliation of Net Income to Adjusted Operating Income 2023 2022 ($M) 3Q 2Q 3Q NET INCOME AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS $ 29 $ 137 $ 136 Add: net income from continuing operations attributable to noncontrolling interests 31 31 35 Add: net income from discontinued ope
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,”