Genworth Financial Inc · NYSE:GNW
Genworth Financial — Q1 2023 Earnings Presentation
23 slides from Genworth Financial's earnings presentation, May 4, 2023
Slide 1: First Quarter 2023 Earnings Summary
First Quarter 2023 Earnings Summary May 3, 2023 1
Slide 2: Financial Reporting Updates Effective 1/1/2023
Financial Reporting Updates Effective 1/1/2023 Re-segmentation Beginning in the first quarter of 2023, the company changed its operating segments to better align with how it manages the business. All prior period information has been re-presented to reflect • the reorganized segment reporting struct
Slide 3: 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 4: Key Themes for the 1st Quarter of 2023
Key Themes for the 1st Quarter of 2023 First quarter net income of $62M, or $0.12 per diluted share, and adjusted operating income1 of $84M, or $0.17 per diluted share Enact segment adjusted operating income of $143M2; PMIERs3 sufficiency ratio estimate of 164%4 Continued progress on long-term care
Slide 5: 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 6: 1Q23 Results Summary – Genworth Consolidated
1Q23 Results Summary – Genworth Consolidated Enact: $143M1 Adjusted operating income (loss)1 ($M) — Current quarter reserve release primarily from continued favorable cure performance on COVID-19 delinquencies more favorable than prior year — Higher investment income with rising interest rates and h
Slide 7: Investment Portfolio Holdings
Investment Portfolio Holdings1 Composition Of Portfolio Fixed Maturities By Sector $61.6B Fixed Maturity Securities Sector Fair Value ($B) % Of Total Government & Municipal 6.5 13% Residential & Commercial MBS3 2.8 6% Other Asset-Backed Securities 2.2 5% Fixed Maturities Fixed Maturities - State & -
Slide 8: Genworth Commercial Real Estate Exposure
Genworth Commercial Real Estate Exposure 16% of Total Investment Portfolio Weighted Average Asset Class Carrying Amount ($M) Office% of Asset Class Rating Commercial Mortgage Loans 6,891 CM1 22% Non-Agency CMBS1 - Conduit 834 AA Diversified Pools Non-Agency CMBS - SASB2 126 A- 39% Public REITS3 1,27
Slide 9: Enact Segment
Enact Segment Primary IIF1 ($B) Earned Premiums ($M) 253 232 235 234 1Q23 1Q22 1Q23 1Q22 Primary NIW 13,154 18,823 Portfolio up 9% year-over-year to $253B, driven by new Earned premiums were modestly higher versus prior year as IIF insurance written (NIW) and continued high persistency growth was mo
Slide 10: Enact Segment
Enact Segment Benefits/Changes in Policy Sufficiency to PMIERs2 ($M) Reserves ($M) 176% (11) (10) 164% 165% 2,261 2,098 2,050 1Q23 1Q22 Loss Ratio (5)% (4)% Primary Delqs (#) 18,633 22,571 Primary New Delqs (#) 9,599 8,724 Primary Paid Claims (#) 126 107 1Q23 4Q22 1Q22 Primary Cures1 (#) 10,783 10,8
Slide 11: Overview of New GAAP LDTI Accounting Guidance
Overview of New GAAP LDTI1 Accounting Guidance In scope: Long-duration insurance products including LTC, life LDTI DOES NOT IMPACT: insurance, fixed annuities and variable annuities Effective date: January 1, 2023 — Beginning 1Q23, Genworth’s GAAP financial reporting is in Cash flows or economic val
Slide 12: Long-Term Care Insurance
Long-Term Care Insurance Premiums ($M) Net Investment Income ($M) 473 447 616 607 1Q23 1Q22 1Q23 1Q22 Yield % 5.34% 5.17% $240M pre-tax of premiums from implemented in-force rate Higher net investment income versus prior year from limited actions in 1Q23, up $30M versus prior year partnerships, bank
Slide 13: Impact of In-Force Rate Actions on Pre-Tax LTC Statutory Earnings
Impact of In-Force Rate Actions on Pre-Tax LTC Statutory Earnings1,2 LTC Statutory Pre-Tax Earnings ($M) 79 394 910 263 247 138 1,669 1,482 Earnings From In-Force Rate Actions3,4 1,317 1,269 757 Premiums, Premium Tax, Commissions, Other Expenses, Net 580 843 684 Settlement Impacts2, Net 378 150 429
Slide 14: LTC In-Force Rate Action Filings
LTC In-Force Rate Action Filings Approved Filings FY21 1Q22 2Q22 3Q22 4Q223 FY22 1Q23 State Filings Approved 173 38 33 24 44 139 23 Impacted In-Force Premium ($M) 1,095 354 133 123 533 1,143 78 Weighted Average % Rate Increase 37% 29% 39% 38% 66% 48% 64% Approved On Impacted In-Force Gross Increment
Slide 15: LTC In-Force Rate Actions: Policyholder Responses
LTC In-Force Rate Actions: Policyholder Responses CUMULATIVE POLICYHOLDER RESPONSES SINCE 20121,2 44.1% 45.5% 46.4% 37.3% 31.5% 16.4% 18.0% 18.7% 11.6% 23.3% 9.7% 18.6% 7.2% NFO 12.7% 6.1% 25.7% 27.7% 27.5% 27.7% 4.6% 21.8% 12.5% 16.1% RBO 8.1% 2016 2017 2018 2019 2020 2021 2022 1Q23 YTD Paying Full
Slide 16: Life and Annuities Segment
Life and Annuities Segment Life Insurance: $(27)M Adjusted operating income (loss) ($M) — Unfavorable mortality experience in the current quarter, though improved versus prior year as COVID-19 impacts subsided in 2023 1Q23 1Q22 — Prior year results included a $25M pre-tax legal settlement accrual (4
Slide 17: U.S. Life Statutory Results
U.S. Life1 Statutory Results Pre-Tax Statutory Income2,3 ($M) Capital & Surplus3 ($M) and RBC Ratio3,4 295% 291% 296% 192 212 3,167 3,073 3,033 1Q23 1Q22 Long Term Care 138 247 Life Insurance (23) (67) Fixed Annuities 25 24 1Q23 4Q22 1Q22 Variable Annuities 52 8 Capital & Surplus RBC Ratio Current q
Slide 18: Holding Company Cash & Liquid Assets
Holding Company Cash & Liquid Assets1 Variance (74) ($M) 48 (68) 307 37 (10) (11) (70) 233 12/31/2022 Enact capital Cash taxes Share Debt service Debt retirement Other items 3/31/2023 returns repurchases $37M in capital returns from Enact — $19M from quarterly dividend and $18M in share repurchase p
Slide 19: Appendix
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Slide 20: Individual LTC In-Force Policy Information
Individual LTC In-Force1 Policy Information Pre PCS PCS I PCS II Choice I2 Choice II PC Flex MFMP 3 PC Flex II PC Flex III Total Issue Years 1974-1994 1994-1997 1997-2001 2001-2007 2003-2011 2011-2014 2009-2013 2013-2017 2014+ 1974+ Annual Premium ($M)4 36 99 314 630 1,098 241 91 68 34 2,612 In-Forc
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 chief operating decisio
Slide 22: Reconciliation of Net Income to Adjusted Operating Income
Reconciliation of Net Income to Adjusted Operating Income ($M) 2023 2022 1Q 1Q NET INCOME AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS $ 62 $ 191 Add: net income from continuing operations attributable to noncontrolling interests 32 30 Add: net income from discontinued operations attr
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