Genworth Financial Inc · NYSE:GNW
Genworth Financial — Q2 2023 Earnings Presentation
24 slides from Genworth Financial's earnings presentation, Aug 2, 2023
Slide 1: Second Quarter 2023 Earnings Summary
Second Quarter 2023 Earnings Summary August 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 2nd Quarter of 2023
Key Themes for the 2nd Quarter of 2023 Second quarter net income of $137M, or $0.29 per diluted share, and adjusted operating income1 of $85M, or $0.18 per diluted share Enact segment adjusted operating income of $146M2; PMIERs3 sufficiency ratio of 162%4 Continued progress on Long-Term Care Insuran
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: 2Q23 Results Summary – Genworth Consolidated (GAAP)
2Q23 Results Summary – Genworth Consolidated (GAAP) Enact: $146M1 Adjusted operating income (loss)1 ($M) — Continued strong loss performance primarily driven by cure activity on 2020 through first-half 2022 delinquencies, including COVID-19 related delinquencies 2Q23 1Q23 2Q22 — Higher investment in
Slide 6: Enact Segment
Enact Segment Primary IIF1 ($B) Earned Premiums ($M) 258 253 238 239 235 238 2Q23 1Q23 2Q22 2Q23 1Q23 2Q22 Primary NIW 15,083 13,154 17,448 Portfolio up 9% year-over-year to $258B, driven by new Earned premiums were modestly higher versus prior year as IIF insurance written (NIW) and continued eleva
Slide 7: Enact Segment
Enact Segment Benefits & Changes in Sufficiency to PMIERs2 ($M) Policy Reserves ($M) (Benefit) / Loss 162% 164% 166% ($4) ($11) 2,098 2,047 ($62) 1,958 2Q23 1Q23 2Q22 Loss Ratio (2)% (5)% (26)% Primary Delqs (#) 18,065 18,633 19,513 Primary New Delqs (#) 9,205 9,599 7,847 Primary Paid Claims (#) 156
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 $24.4B in net present valu
Slide 9: Long-Term Care Insurance GAAP Performance
Long-Term Care Insurance GAAP Performance Premiums ($M) Net Investment Liability Remeasurement Income ($M) Gain / (Loss) ($M) 32 611 616 617 470 473 486 (61) (23) 53 245 240 226 24 20 (21) (43) (85) 366 376 391 2Q23 1Q23 2Q22 2Q23 1Q23 2Q22 Yield % 5.28% 5.34% 5.31% 2Q23 1Q23 2Q22 Premium ex. IFA1 I
Slide 10: 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 $41.6B liability for future policy benefits2 LDTI DOES NOT IMPACT: — LTC is a very long-duration product — Quarterly variations do not change the compan
Slide 11: Impact of In-Force Rate Actions on Pre-Tax LTC Statutory Earnings
Impact of In-Force Rate Actions on Pre-Tax LTC Statutory Earnings1,2 LTC Statutory Pre-Tax Earnings ($M) 79 394 910 257 265 67 1,669 1,482 Earnings From In-Force Rate Actions3 1,317 1,269 757 Premiums, Premium Tax, Commissions, Other 580 684 843 762 721 Expenses, Net 378 150 399 443 Settlement Impac
Slide 12: LTC Claims Trends by Product – Statutory
LTC Claims Trends by Product – Statutory LTC Direct Paid Claims by Product ($M) Paid claims on newer products continue to increase as policyholders approach 2,196 2,244 peak claim age, as claims on the older 2,111 72 2,098 86 Flex, MFMP, & 1,980 74 67 products past peak claim age decline Group 61 23
Slide 13: LTC In-Force Rate Action Filings
LTC In-Force Rate Action Filings Approved Filings FY21 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 State Filings Approved 173 38 33 24 44 139 23 38 Impacted In Force Premium ($M) 1,095 354 133 123 533 1,143 78 300 Weighted Average % Rate Increase 37% 29% 39% 38% 66% 48% 64% 31% Approved On Impacted In Force
Slide 14: LTC In-Force Rate Actions: Policyholder Responses
LTC In-Force Rate Actions: Policyholder Responses CUMULATIVE POLICYHOLDER RESPONSES SINCE 20121,2 45.5% 47.5% 44.1% 37.3% 31.5% 16.4% 18.0% 19.6% 11.6% 23.3% 9.7% 18.6% 12.7% 7.2% NFO 6.1% 27.7% 27.5% 27.9% 4.6% 21.8% 25.7% 12.5% 16.1% RBO 8.1% 2016 2017 2018 2019 2020 2021 2022 1H23 Paying Full 87.
Slide 15: Life and Annuities Segment GAAP Performance
Life and Annuities Segment GAAP Performance Life Insurance: $(17)M Adjusted operating income (loss) ($M) — Current quarter results reflected lower mortality — Deferred acquisition costs amortization expense was lower, primarily driven 2Q23 1Q23 2Q22 by lower lapses and block runoff 2 (4) (15) Fixed
Slide 16: U.S. Life Statutory Results
U.S. Life1 Statutory Results Pre-Tax Statutory Income2,3 ($M) Capital & Surplus3 ($M) and RBC Ratio3,4 $192 295% 293% 290% $63 ($62) 3,204 3,167 2,981 2Q23 1Q23 2Q22 Long-term Care Insurance (71) 138 18 Life Insurance 26 (23) 8 Fixed Annuities 14 25 49 2Q23 1Q23 2Q22 Variable Annuities 94 52 (137) C
Slide 17: Investment Portfolio Holdings
Investment Portfolio Holdings1 Composition Of Portfolio Fixed Maturities By Sector Fixed Maturity Securities Sector Fair Value ($B) % Of Total $61.0B Government & Municipal 6.4 13% Residential & Commercial MBS3 2.6 6% Other Asset-Backed Securities 2.2 5% Fixed Maturities Corporate Bond Holdings: Fix
Slide 18: Genworth Commercial Real Estate Holdings
Genworth Commercial Real Estate Holdings 16% of Total Investment Portfolio Weighted Average Asset Class Carrying Amount ($M) Office% of Asset Class Rating Commercial Mortgage Loans 6,852 CM1 22% Non-Agency CMBS1 - Conduit 713 AA Diversified Pools Non-Agency CMBS - SASB2 117 A 44% Public REITS3 1,267
Slide 19: Holding Company Cash & Liquid Assets
Holding Company Cash & Liquid Assets1 ($M) Variance (11) 54 (112) 63 233 (19) 222 3 3/31/2023 Cash taxes Enact capital Share repurchases Debt service Other items 6/30/2023 returns $63M received from intercompany tax payments $54M in capital returns from Enact — $21M from quarterly dividend and $33M
Slide 20: Appendix
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Slide 21: Individual LTC In-Force Policy Information
Individual LTC In-Force1 Policy Information 2 3 as of 6/30/23 Pre PCS PCS I PCS II Choice I Choice II PC Flex MFMP PC Flex II PC Flex III Group Total Issue Years 1974-1994 1994-1997 1997-2001 2001-2007 2003-2011 2011-2014 2009-2013 2013-2017 2014+ 1999+ 4 Annual Premium ($M) 34 91 296 633 1,109 245
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 company’s President and
Slide 23: Reconciliation of Net Income to Adjusted Operating Income
Reconciliation of Net Income to Adjusted Operating Income ($M) 2023 2022 2Q 1Q 2Q NET INCOME AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS $ 137 $ 122 $ 159 Add: net income from continuing operations attributable to noncontrolling interests 31 32 38 Add: net income from discontinued op
Slide 24: 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