Genworth Financial Inc · NYSE:GNW
Genworth Financial — Q4 2023 Earnings Presentation
26 slides from Genworth Financial's earnings presentation, Feb 22, 2024
Slide 1: Fourth Quarter 2023 Earnings Summary
Fourth Quarter 2023 Earnings Summary February 21, 2024 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: Highlights for the 4th Quarter of 2023
Highlights for the 4th Quarter of 2023 Strategic Executed $35M in share repurchases in the quarter; $384M in total executed through February 13, 2024, at an average price of $5.33 per share with approximately 443M shares outstanding Significant progress on Long-Term Care Insurance (LTC) multi-year r
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: 4Q23 Results Summary – Genworth Consolidated (GAAP)
4Q23 Results Summary – Genworth Consolidated (GAAP) Enact: $129M1 Adjusted Operating Income (Loss)1 ($M) — Continued strong loss performance on delinquencies from 2022 and earlier, including COVID2 delinquencies — Higher investment income with higher yields and higher average 4Q23 3Q23 4Q22 invested
Slide 6: Enact Segment
Enact Segment Primary IIF1 ($B) Earned Premiums ($M) 263 262 248 240 243 233 4Q23 3Q23 4Q22 4Q23 3Q23 4Q22 Primary NIW 10,453 14,391 15,145 Portfolio up 6% year-over-year to $263B driven by new Earned premiums were higher versus prior year as IIF growth insurance written (NIW) and continued elevated
Slide 7: Enact Segment
Enact Segment Benefits & Changes in Sufficiency to PMIERs2 ($M) Policy Reserves ($M) (Benefit) / Loss 161% 162% 165% $24 $18 $18 2,017 2,050 4Q23 3Q23 4Q22 1,887 Loss Ratio 10% 7% 8% Primary Delqs (#) 20,432 19,241 19,943 Primary New Delqs (#) 11,706 11,107 10,304 Primary Paid Claims (#) 186 147 190
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 $28B in net
Slide 9: Value of LTC Rate Action Program (GLIC + GLICNY)
Value of LTC Rate Action Program (GLIC + GLICNY) • Estimated net present value of rate actions since 2012 through 12/31/2023 ($B) Total Value = Achieved Value + Future Value 2023 33.3 +3.0 2022 30.3 +1.6 2023 28.0 +4.5 2021 9.1 +3.9 2022 6.8 -2.3 2022 23.5 +3.9 2023 5.3 -1.5 2021 28.7 +1.6 2021 19.6
Slide 10: LTC In-Force Rate Action Filings
LTC In-Force Rate Action Filings Approved Filings FY21 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 4Q23 FY23 State Filings Approved 173 38 33 24 44 139 23 38 27 29 117 Impacted In-Force Premium ($M) 1,095 354 133 123 533 1,143 78 300 150 169 697 Weighted Average % Rate Increase 37% 29% 39% 38% 66% 48% 6
Slide 11: LTC In-Force Rate Actions: Policyholder Responses
LTC In-Force Rate Actions: Policyholder Responses CUMULATIVE POLICYHOLDER RESPONSES SINCE 20121,2 50.9% 44.1% 45.5% 37.3% 22.0% 31.5% 16.4% 18.0% 11.6% 23.3% 9.7% 18.6% 7.2% NFO 12.7% 6.1% 27.7% 28.9% 25.7% 27.5% 4.6% 21.8% 12.5% 16.1% RBO 8.1% 2016 2017 2018 2019 2020 2021 2022 2023 Paying Full Amo
Slide 12: Long-Term Care Insurance Segment GAAP Performance
Long-Term Care Insurance Segment GAAP Performance Premiums ($M) Net Investment Liability Remeasurement Income ($M) Gain / (Loss) ($M) 615 621 639 489 482 470 255 253 245 255 303 (104) (188) 6 (48) (127) (110) 360 368 394 (61) 4Q23 3Q23 4Q22 4Q23 3Q23 4Q22 Yield % 5.46% 5.38% 5.31% 4Q23 3Q23 4Q22 Pre
Slide 13: LTC Annual Assumption Review
LTC Annual Assumption Review 4Q23 FINANCIAL IMPACTS Accounting Basis Impacts GAAP Assumption changes resulted in a $61M unfavorable pre-tax adjustment for cash flow updates Cash flow testing reserve in GLICNY increased by $87M Net favorable impact to statutory earnings of $29M pre-tax from assumptio
Slide 14: Life and Annuities Segment GAAP Performance
Life and Annuities Segment GAAP Performance Life Insurance: $(206)M Adjusted Operating Income (Loss) ($M) — Unfavorable $179M after-tax impact from annual assumption updates versus a $29M benefit in the prior year 4Q23 3Q23 4Q22 — Unfavorable mortality experience — Deferred acquisition costs amortiz
Slide 15: Life Insurance Annual Assumption Review
Life Insurance Annual Assumption Review 4Q23 FINANCIAL IMPACTS Accounting Basis Impacts Assumption changes resulted in a $226M unfavorable pre-tax adjustment for cash flow updates in GAAP universal life (UL), term UL and term products Assumption changes resulted in a $99M pre-tax benefit, primarily
Slide 16: Impact of In-Force Rate Actions on Pre-Tax LTC Statutory Earnings
Impact of In-Force Rate Actions on Pre-Tax LTC Statutory Earnings1,2 LTC Statutory Pre-Tax Earnings ($M) 79 394 910 257 79 1,669 1,585 1,482 1,317 1,269 Earnings From In-Force Rate Actions3 757 580 843 906 684 Premiums, Premium Tax, Commissions, Other 378 150 263 Expenses, Net 737 585 534 489 416 Le
Slide 17: LTC Claims Trends by Product – Statutory
LTC Claims Trends by Product – Statutory LTC Direct Paid Claims by Product ($M) Paid claims on newer products continue to increase as policyholders approach 2,484 peak claim age, as claims on the older 2,244 105 Flex, MFMP, & 2,196 products past peak claim age decline Group 2,111 72 2,098 86 380 1,9
Slide 18: U.S. Life Statutory Results
U.S. Life1 Statutory Results Pre-Tax Statutory Income2 ($M) Capital & Surplus2 ($M) and RBC Ratio2 $230 303% $148 291% 291% 3,359 3,216 3,073 $30 4Q23 3Q23 4Q22 Long-term Care Insurance (9) 21 (58) Life Insurance 82 (40) 144 Fixed Annuities 16 32 31 4Q23 3Q23 4Q22 Variable Annuities 59 17 113 Capita
Slide 19: Investment Portfolio Holdings
Investment Portfolio Holdings1 Composition of Portfolio Fixed Maturities by Sector Fixed Maturity Securities Sector Fair Value ($B) % Of Total $62.0B Government & Municipal 6.4 13% Residential & Commercial MBS3 2.3 5% Other Asset-Backed Securities 2.2 5% Fixed Maturities Corporate Bond Holdings: Fix
Slide 20: Holding Company Cash & Liquid Assets
Holding Company Cash & Liquid Assets1 Variance 118 ($M) 64 (35) (21) (17) 128 (1) 350 232 9/30/2023 Enact capital Cash taxes Share Debt service Debt retirement Other items 12/31/2023 returns repurchases $128M in capital returns from Enact received in late 4Q23 $64M received from intercompany tax pay
Slide 21: Appendix
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Slide 22: LTC In-Force Policy Information
LTC In-Force1 Policy Information 2 3 as of 12/31/23 Pre PCS PCS I PCS II Choice I Choice II PC Flex MFMP PC Flex II PC Flex III Group Total Issue Years 1974-1994 1994-1997 1997-2001 2001-2007 2003-2011 2011-2014 2009-2013 2013-2017 2014+ 1999+ 4 Annual Premium ($M) 32 83 270 638 1,073 254 94 71 34 1
Slide 23: 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 $42.2B liability for future policy LDTI DOES NOT IMPACT: benefits2 — LTC is a very long-duration product Cash flows or economic value — Quarterly variat
Slide 24: Use of Non-GAAP Measures
Use of Non-GAAP Measures Management uses non-GAAP financial measures entitled "adjusted operating income (loss)" and "adjusted operating income (loss) per share” to evaluate performance and allocate resources. Adjusted operating • income (loss) per share is derived from adjusted operating income (lo
Slide 25: Reconciliation of Net Income (Loss) to Adjusted Operating Income (Loss)
Reconciliation of Net Income (Loss) to Adjusted Operating Income (Loss) (Unaudited) 2023 2022 ($M) 4Q 3Q Full Year 4Q Full Year NET INCOME (LOSS) AVAILABLE TO GENWORTH FINANCIAL, INC.’S COMMON STOCKHOLDERS $ (212) $ 29 $ 76 $ 381 $ 916 Add: net income from continuing operations attributable to nonco
Slide 26: 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,”