Genworth Financial Inc · NYSE:GNW
Genworth Financial — Q2 2022 Earnings Presentation
23 slides from Genworth Financial's earnings presentation, Aug 1, 2022
Slide 1: Second Quarter 2022 Earnings Summary
Second Quarter 2022 Earnings Summary August 1, 2022 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 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 2nd Quarter of 2022
Key Themes for the 2nd Quarter of 2022 Second quarter net income of $181M, or $0.35 per diluted share, and adjusted operating income1 of $176M, or $0.34 per diluted share Enact segment adjusted operating income of $167M2, with 9% annual growth in insurance in-force and strong loss performance Receiv
Slide 4: Significant Progress on Strategic Priorities
Significant Progress on Strategic Priorities Reduce parent holding company Achieve economic breakeven/ debt to ~$1B stabilize legacy LTC block Maximize the value of Enact to Advance Global Care Solutions Genworth shareholders initiatives Return capital to shareholders 4
Slide 5: Genworth Consolidated Results
Genworth Consolidated Results Enact: $167M1 Adjusted operating income (loss)1 ($M) — Continued insurance in-force growth, up 9% versus prior year — Lower losses from strong core business performance driven by 2Q22 1Q22 2Q21 elevated cures from COVID-related delinquencies 176 131 194 U.S. Life Insura
Slide 6: Enact Segment
Enact Segment Primary Insurance Earned Premiums ($M) In-force (IIF) ($B) 238 232 217 $238 $234 $243 2Q22 1Q22 2Q21 2Q22 1Q22 2Q21 Primary NIW 17,448 18,823 26,657 Portfolio up 9% versus prior year driven by strong new Earned premiums were higher versus the prior quarter as in- insurance written (NIW
Slide 7: Enact Segment
Enact Segment Benefits/Changes in Policy Sufficiency to Published Reserves ($M) PMIERs2,3,4 ($M) 30 176% 166% 165% 2,261 2Q22 1Q22 2Q21 2,047 (10) 1,941 (62) Loss Ratio (26)% (4)% 12% Primary Delqs (#) 19,513 22,571 33,568 Primary New Delqs (#) 7,847 8,724 6,862 2Q22 1Q22 2Q21 Primary Paid Claims (#
Slide 8: U.S. Life Insurance Segment
U.S. Life Insurance Segment LTC: $34M — Lower claim terminations and healthy life mortality versus the prior quarter Adjusted operating income (loss) ($M) from a seasonal decrease in mortality and lower pandemic impacts — Lower earnings from in-force rate actions, including net policyholder benefit
Slide 9: LTC Incidence and Mortality Trends
LTC Incidence and Mortality Trends1 MORTALITY2 INCIDENCE # Active Claim Mortality Counts (000s) # New Active Claim Counts (000s) 3.4 3.3 3.5 4.3 4.1 4.0 4.0 4.1 2.9 3.0 3.0 3.6 3.4 3.5 3.8 2.6 2.7 2.6 2.6 2.7 3.5 3.4 3.5 3.2 3.1 2.3 2.4 2.4 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2019 2020 2021 2022 2019 2020 2021
Slide 10: In-Force Rate Action Highlights
In-Force Rate Action Highlights ESTIMATED IMPACT TO GAAP ADJUSTED OPERATING EARNINGS (LOSS) FROM IN-FORCE RATE ACTIONS Estimated GAAP Adjusted Operating Income from In- 385 422 583 943 941 1,153 553 559 Force Rate Actions1 ($M) 598 Premiums, Premium Tax, 458 540 Commissions, Other Expenses, Net 191
Slide 11: LTC In-Force Rate Actions: Policyholder Responses
LTC In-Force Rate Actions: Policyholder Responses CUMULATIVE POLICYHOLDER RESPONSES SINCE 20121,2 44.1% 44.6% 37.3% 31.5% 16.4% 17.2% 11.6% 23.3% 9.7% 18.6% 7.2% NFO 12.7% 6.1% 25.7% 27.7% 27.4% 4.6% 21.8% 12.5% 16.1% RBO 8.1% 2016 2017 2018 2019 2020 2021 2Q22 YTD Paying Full 87.3% 81.4% 76.7% 68.5
Slide 12: U.S. Life Insurance Segment
U.S. Life Insurance Segment LTC: $34M — Lower claim terminations and healthy life mortality versus the prior quarter Adjusted operating income (loss) ($M) from a seasonal decrease in mortality and lower pandemic impacts — Lower earnings from in-force rate actions, including net policyholder benefit
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 STATUTORY PRE-TAX LTC IN-FORCE RATE ACTIONS VS PRE-TAX LTC EARNINGS LTC Statutory Pre-Tax Earnings ($M) $(714) $79 $394 $910 $247 LTC Statutory Pre-Tax Earnings 1,317 1,669 1,269 From In-Force Rate Actions3,4 758 429 LTC Statutory
Slide 14: U.S. Life Insurance Statutory Capital
U.S. Life Insurance Statutory Capital1 GENWORTH LIFE INSURANCE COMPANY CONSOLIDATED STATUTORY CAPITAL2 Risk-Based Capital Ratio3 289% 296% 199% 213% 229% 12/31/2018 12/31/2019 12/31/2020 12/31/2021 3/31/2022 Statutory Metrics ($M) 2018 2019 2020 2021 1Q22 Capital & Surplus 1,871 2,180 2,123 2,937 3,
Slide 15: Holding Company Cash & Liquid Assets
Holding Company Cash & Liquid Assets1 ($M) 215 2 (49) 58 (14) (1) 228 2 19 3/31/2022 Debt retirement Enact dividend Cash taxes Interest payments Hold co. net other 6/30/2022 items $48M holding company debt retired during the quarter, with $1M net premiums paid — $152M remaining of 2024 debt maturity
Slide 16: Appendix
Appendix ate Genworth3,<.
Slide 17: Total Genworth Financial, Inc.'s Stockholder Equity (U.S. GAAP)
Total Genworth Financial, Inc.’s Stockholder Equity (U.S. GAAP) ($M) 2Q22 1Q22 4Q21 3Q21 2Q21 Enact1 3,342 3,320 3,344 3,446 4,111 U.S. Life Insurance 2 7,763 10,106 10,970 11,617 11,296 LTC2,3 5,509 7,234 7,624 7,487 7,394 Life Insurance2,3 2,110 2,489 2,833 3,529 3,287 Fixed Annuities 2,3 144 383
Slide 18: Individual LTC In-Force Policy Information
Individual LTC In-Force1 Policy Information 2 Pre PCS PCS I PCS II Choice I Choice II PC Flex MFMP3 PC Flex II PC Flex III Issue Years 1974-1994 1994-1997 1997-2001 2001-2007 2003-2011 2011-2014 2009-2013 2013-2017 2014+ Annual Premium ($M)4 40 112 347 617 1,065 228 90 67 35 In Force Lives (000s) 25
Slide 19: Use of Non-GAAP Measures
Use of Non-GAAP Measures This presentation includes the non-GAAP financial measures entitled "adjusted operating income (loss)" and "adjusted operating income (loss) per share." Adjusted operating income (loss) per share is derived from adjusted operating income • (loss). The chief operating decisio
Slide 20: Definition of Selected Operating Performance Measures
Definition of Selected Operating Performance Measures The company taxes its businesses at the U.S. corporate federal income tax rate of 21 percent. Each segment is then adjusted to reflect the unique tax attributes of that segment such as permanent differences between U.S. GAAP and tax • law. The di
Slide 21: Reconciliation of Net Income to Adjusted Operating Income
Reconciliation of Net Income to Adjusted Operating Income 2022 2021 2Q 1Q 2Q NET INCOME AVAILABLE TO GENWORTH FINANCIAL, INC.’S ($M) COMMON STOCKHOLDERS $ 181 $ 149 $ 240 Add: net income from continuing operations attributable to noncontrolling interests 38 30 - NET INCOME 219 179 240 Less: loss fro
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 inflation and supply chain disruptions, a potential recession, • continue