Genworth Financial (GNW)

Tim Owens Genworth Financial, Inc.
Thomas J. McInerney Genworth Financial, Inc.
Kelly L. Groh Genworth Financial, Inc.
Kevin D. Schneider Genworth Financial, Inc.
Ryan Krueger Keefe, Bruyette & Woods, Inc.
Jamminder Singh Bhullar JPMorgan Securities LLC
Sean Dargan Wells Fargo Securities LLC
Thomas Gallagher Evercore Group LLC
Peter Troisi Barclays Capital, Inc.
Josh Esterov CreditSights, Inc.
Call transcript
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Good morning, ladies and gentlemen, and welcome to Genworth Financial's fourth quarter 2017 earnings conference call. My name is Kathy, and I will be your coordinator today. At this time, all participants are in a listen-only mode.

We will facilitate a question-and-answer session towards the end of this conference call.

As a reminder, the conference is being recorded for replay purposes. you during using today's the that phones, phones, call. ask headsets or Q&A we refrain cell from speaker Also, portion of Tim I presentation Relations. to like Owen, to would Investor Head turn of now over the Mr. you Owen, proceed. may

Tim Owens

Thank for Genworth's you fourth and call. joining earnings you, Good XXXX operator. everyone, thank morning, quarter

all referenced were you release was website our followed posted supplement night, these Chief during call. our this encourage released of be We our press Financial review you Kelly by Chief Our from financial morning, Today, and to to President and last Officer. Groh, our McInerney; and Executive will our presentation materials. will earnings Tom Officer, hear and

comments, up will open prepared a the our question-and-answer we for Following call period.

Chief Investment questions. Sheehan, In Officer, Operating addition to Officer, be your take and Chief our to available Schneider, Kevin will Dan speakers,

During statements. this forward-looking may make the various morning, call we

earnings cautionary statements. I'll the as our in read McInerney. actual forward-looking release results statements of differ filing you to In timing most financial to foreign Form Our note may exchange. may rules. our the please results now, CEO, are non-GAAP materials, businesses, we our to when to filed And turn Also, This SEC. statutory talk and SEC from all be the required, such measures estimates advise risk the of notes factors finally, regarding our as about due we includes We exclude with international XX-K, to the measures over investor have Tom results the release accordance been statutory impact references discussion where statements. related on call the reconciled percentage also GAAP materially in meaningful investors. recent well in of the with the of changes morning's to non-GAAP that And earnings believe as supplement, financial Annual and Report that our presentation

Thomas J. McInerney

transaction, Oceanwide today's the market earnings we quarterly for practice general the call. holding Good of Since announcing thank joining you not have morning and followed calls. earnings

our as industry desire on experienced more impacted have impacted financial these update. will will important we a brief However, update obtaining long-term as XXXX towards made premium quarter given Genworth the in-depth Oceanwide items is closing start delays our significant as with we increases, a our for in provide in which earnings imperative year an transaction to investors we've sale of insurance a on quarter, pending then I rate and the provide to fourth overall; update full our Kelly our items Oceanwide. well you care and overview the wanted our progress the with to performance; the by explain that fourth the that strategic pending as excellent providing LTC results results. and the well strong

against plan. our Following our profitability, mortgage will across operating we and Genworth's call continued rate performance questions. multi-year to solid in particularly open returned very made prepared insurance with progress full-year fourth significant care our to and premium XXXX. remarks, We the pleased results platform, I global the operating insurance quarter action long-term generated am

MI by million the We share. or diluted diluted the was as million income which high operating a in taken U.S. income, businesses, for charges per year strong MI, share. operating $XXX adjusted adjusted insurance income driven note full-year with income reserve year $X.XX first quarter our or U.S. of business. For well increase, full performance finished in life operating XX% since fourth a XXXX, on generated results as adjusted solid Genworth million in was in year-over-year year, smaller $XXX $XXX particularly full-year million, $X.XX net the primarily were and profitable $XXX per These our

will Kelly income to primarily operating a by U.S. insurance, the increased loss global for in impacted were items, universal underlying in life quarter. across year-over-year, mortality charge And adjusted $XX and income to U.S. in there fourth minutes. earnings Australia, which housing driven strong performance. after-tax our as low detail in market. results by to in XX% rate adjusted I earnings segment-level reflecting adjusted performance discuss was increased fourth strong operating MI force assumptions results a insurance updates continue quarter took we increase fourth In the growth we our life pleased reserves, a charge, after-tax of insurance solid rates. quarter particularly million number the XX% year-over-year, significant with more businesses. curve interest Our experience In few and just a In MI, Canada, of quarter was

Genworth were claim performance fix multi-year the good purchased business. XXXX, board compared separate mandate termination year, the unfavorable I or books policies represent legacy our These by When the from given policy XXXX. most I LTC in-force insurance year LTC continue the to Genworth the four to of approximately business The was rate plan. comprised forms mid-XXXXs legacy of a by or of policies half to business and January written half the premium second to problematic of very insurance was of LTC premiums. approximately in books progress XX% the our hired in the experienced we first on action make Although

has the cash are Genworth's approximately be we XXXX billion annual have increases has premiums earnings of approved the paid As shown that achieved to estimate continue years, premium policies these over on net We higher increases that few rate since force XXXX in on billion our future. Genworth basis. of decades on and years. that estimate present years into value to seek best flow a we premium premium in $X Genworth loss uses five cash to Genworth statutory from value additional because net to estimate There seven GAAP a our on $X leverage policies. these an increases the presentation, in Based significant increases to premium multi-year from achieved rate annual XX testing. our proprietary over expected our action last flow XXXX on future additional annual add present cash will cash recognition force of will of through our flow basis. on Genworth under annual models premium the increase Genworth flow significant increases plan is developed future the testing slide in next U.S.

U.S. approved LTC our rate plan In the insurance in-force provides the has believe increases and posted from this team reserves and in business future addition I is the projected rate significant me. cash we reports the of improving testing. to and multi-year LTC from our of XXXX successful seasoned and $X statutory focus of and in-force margin a benefits The reductions team material policies, premium to seek company on legacy flow cash Genworth leadership developed most billion associated sole directly professionals Elena remaining insurance have action increases this our in under Genworth. a team premium to benefit the to XXXX, of already we a LTC management of future increases GAAP books Edwards, XX-plus-year of because been XX LTC insurance executive flow expert in our

transaction. Since Genworth transaction, for of under the our to share. consideration to now me the closing tirelessly October regulatory all-in acquire Oceanwide XXXX, attain Oceanwide $X.XX conditions and required which agreed on have update pending approvals an the Let worked provide Oceanwide Genworth cash and per satisfy an of

approvals insurance In the receiving necessary stockholders, cast processes. significant addition over includes to of North from This South approval with Carolina, receiving XX% progress Vermont regulators. made votes the approval state of we in Carolina, Virginia, from regulatory our the and have favor merger, across the

are States, engaged We with or the Committee CFIUS. in also the the Financial and of United New York Services, Department Department Insurance, Investment the Delaware Foreign on actively of

saw and joint release, with have refiled Oceanwide our CFIUS. you in Genworth As they voluntary notice announced their

mitigation of provided We also an participation third-party which protect to that Genworth the with all step we further process, the to mitigation the policyholders, refiling a mitigation to structure is includes in believe next in approach our a fully of positive risk plan U.S. additional meaningful of a data and includes is administrator. data parties. the approach acceptable CFIUS developing We leading committed our a and are personal improvement

GLAIC, which based Genworth. combination million contribution of pursued unstacking The with the a $XXX in $XXX Based XXXX, the believe agreement delaying on committed valuation divergent the updates discuss review of of higher independent Genworth meeting in for than process on third-party value been in with difficulty through an reaching process. move market continue we and Genworth on and order the expert, that GLAIC As December, on issue the is their annual Genworth Delaware's believe advice forward Oceanwide Delaware how and in to I valuation, the has as accomplished this own Oceanwide issue sales the in of previously Oceanwide Based the value $XXX from million. fair been valuation. from Department approval is market GLAIC stockholder Genworth's said at the GLAIC opinion to a would is have fair the XXXX, conducting fair our market At to the the of on completion unstacking. million part main address GLAIC value the of

the our in given XXXX. in have Finally, reviewed options million due address several in explored transaction, of and May discussed delay as debt the closing December, we $XXX to

launch with in address a this which Following we transaction our intend move diligence, future. to to maturity, to the in near due forward we have decided secured order debt

Additional of and of at structure details launch. the the financing the be disclosed time the regarding terms will

the we firmly many deliver with stakeholders We Genworth's reiterated successfully possible complete outcome our maximizes Genworth continue for as to best Oceanwide and transaction regulators value. that this have with hard stockholder before, as soon transaction to I will and possible. times the believe As work

on Now, turn will and further operating financial to call provide and details Kelly, updates. who financial I other over performance the will our

Kelly L. Groh

levels opening spend subsidiaries, Thanks, holding earnings items the I fourth the cash. morning, of will everyone. additional details U.S. cover providing adjustment, our life tax on good the I his review, in and Tom U.S. company results Tom, our drivers, time GAAP Australia curve capital will also quarter of and our assumption treatment Today, and mentioned key remarks. earnings and

financial this with to of income income performance. I'm operating and million. overall quarter net adjusted pleased million begin of quarter's for the $XXX report Let's $XXX

curve results $XXX adjustment, unfavorable tax $XXX the review, million related Australia million items, Our favorable items included all of items million assumption favorable approximately treatment earnings GAAP of unfavorable that life the of million relating to $XX after U.S. U.S. and the of included $XXX net items tax. to of

our results was the across good very and with segment our reported for fourth ratio X points Beginning to we loss the year. up loss sequentially the XX%, quarter, saw X points performance mortgage versus insurance down prior quarter platforms. Turning MI, U.S.

for factors our million a did reported $X approximately and our last The from accordingly. loss or strong Irma, ratio frequency Harvey have therefore loss quarter. market. book indicates elevated of that delinquencies those is improvement claim XXXX While incremental have The of delinquencies pre-tax to housing ultimate hurricane-related for and experience the these incremental ratio full-year rates, in we the down see X-point of U.S. impact from the delinquencies XX%, XX% lowered new was we hurricanes continued delinquencies reflecting different and year's , the the impact

quarter. XX% lower is NIW down market, XX% XX% sequentially, our of low below Flow expectation and New with as range X% $XX.X XX% our down and of the a primarily was market well from reflecting by last lower Alberta delinquencies prior XX% seasonally original to billion, provided excellent updated loss as driven at severity delinquency from a per quarter origination from primarily seasonally and higher end insurance XXXX. year, full-year to X%, from sequentially, our average this want down fourth reduction regulatory Quebec. prior to changes sequentially Canada, a on the minutes as has ratio impacted ratio spend quarter points results. written market from a and market the in I XXXX reserve a Australia in modest Year-to-date which decreased share. earnings such year, few versus curve size of decline smaller the been fourth was In XX%, performance a in versus regions loss the mix X from how a introduced and smaller next primarily purchase origination

Australia mid-December annual their XXXX. XXXX, this earnings their Genworth pattern earnings change adopted finalized of As X, premium effective or curve disclosed and in review October

Australia annual between the the that revealed we robust time pattern. loss in single a business U.S. reflect balance. payment GAAP reserve our of paid product market duration with The the policy, expected the full previously prior periods. earned reminder, areas. not a are corresponding revenue inception to and also recognized first the in policy but to the the of a In premium cumulative predominantly has upfront over a missed an only date inception all review the our prolonged emergence the is is interest and quarterly that That we're date has As resulted to than of premium effect premiums Australia from of resulted longer our previous housing UPR Under re-estimation accounting seen period assumptions. be driven results in very duration a our The the million. low rates balance of mining for active to Queensland; by of words, reduction increase policy every other extended of duration the period $XXX estimated required primarily outside current required factors: two UPR and downturn make two, the in a one, in longer mentioned and predominantly to or unearned in Western re-estimation

a related and impact segment segment the negative recognition Genworth or a where after-tax after on the including decrease curve $XXX corresponding our or included. are DAC, costs, $XX net Genworth the amount basis million I asset tax since curve, from earnings losses curve result $XXX is In and increased certain life. with our in expectations. Australia the new book this interest, to addition, for of timing It reflected in policy amortization adjusting a the assumptions. that amounts change million changed Overall, in non-controlling total, losses is earnings change in over the $XX past million, In the income expense. of that extended an Genworth DAC from acquisition million Australia of at to has has pricing corporate was to amortization emphasize merely follows the deferred reflected same DAQ the of like reflects would current premiums not Australia expected total the near previous policy business the in performing of inception and to or in case,

premium IFRS adjustment, approach. our reset, the full Australia the but applies retroactive UPR GAAP recognition U.S. a takes a policy modified. the While future re-estimation not prospective Meaning, is for is balance

in a certain ratios, Genworth Australia Australia the for Under curve in under different GAAP been metrics, expense negative current a adjustment. results and and will for Australia accounting the positive XX%, period earnings the U.S. As reported the local would for loss standards. results was GAAP result, have and reported materially loss periods quarter, example, X% subsequent or U.S. be excluding ratio

loss the and premiums mining contributing earnings year, were DAC down the delinquencies the million. expenses adjustment. sequentially net in versus ratio impact for and positively of curve U.S. prior pattern, excluding XXXX the trends income non-mining fourth results impacted approximately New Starting and curve of in regions both new reflected the for to $X earnings application favorable which quarter earned GAAP, amortization

to curve to have reported updated would year, compared was For ratio without GAAP loss the as adjustment been the XX% positive a full U.S. or the earnings negative XX% of our XX% expectation full-year XX%.

care review. generally fourth well Moving claims quarter driven our the In our new our half reported claim prior assumption trends segment, of consistent long-term to actuarial see lower second the Insurance an Life termination of results in impact we the growth the insurance, as year rates with as and blockages. as by largely overall to U.S. were continue

We expect to future. the these into continue patterns

As Tom XXXX. discussed, plan our progress very made with rate approval good we during action

of benefits approvals The increase at For the received fourth changes results. million quarter average reflected of the reserve and incremental approximately of XX%. million XXX on net approvals the weighted prior after-tax full year, premium and $XXX a in were premium policies annualized $XXX we've in with period

was combined results of billion. life have $X or $X.X of generally with is late-XXXX LTC written representing to H of which margin a both P GAAP positive, margin our billion to total XXXX GAAP the the since be GAAP testing. lower for policies continues active billion positive than margin P acquired billion, also margin our approximately $X block to in We $X.X The year. block and last GAAP line but low our testing The block, completed

the still particularly for experience on newer Our emerging, products. block our LTC is

discussed, action, we in actuarially the delaying and versus results is that frequent smaller magnification and patterns to important results more closely actions which earlier price these As it compounding mitigate needed and action any a follow with of rate be Tom adverse emerging equivalent.

we of policies benefits review, limited fourth our claimed quarter frequency a As lifetime and with policies rates with bifurcated result benefits. between

well, difference assumption previous a their two our claim noticed as pool. aggregate our in policyholders While propensity fit higher have rates overall we to between a with benefits given these experience lifetime policies, of frequency types have unlimited

be increase These offset made million. progress our benefit future that our actions continues last on by to increases. assumptions during on made implementation two an Company has margins, last $X to action note blocks overall modest we future lot Fidelity our discussed. with rate weeks mitigate to recognition there LTC, plan rate force for a estimate LTC enhanced increases, margins been rate modeling year, actions. changes We Union updated last XXXX approximately premium any driver over future were in by One approvals loss interest as GE's exposure will as justifiable to and Life UFLIC not-yet-approved premium adverse certain benefits important is the were line and behavior, in policyholder experience reinsured or regarding This our Tom assumed Our of on subsequently testing in estimate of Insurance our subsidiary. that our

also As ago. announced GE Employers a the as this their assumed UFLIC a subsidy part on subsidiary, LTC their risks and increase block GE of GE assumptions. had ERAC of announced, or Corporation was have weeks few exposure part does Reassurance reserve subsidiary the beyond has UFLIC which

GE LTC noted took LTC and claims. year, be that daily rate inflation depending rate future have or block. or charges adequacy is issues factors. XXXX the performance increases taking benefit XXXX implemented, the even appropriate should with other and amounts, liability and within of exposure The net underwriting, severity options, timely for economic benefit associated charges actions UFLIC and significantly issue reserves illustrate insurers also ensure benefit own pay and our varies and in to no business, It the premium We on Genworth need the to facing the cash of flows modifications the

model the elevated in $XX prior higher current nature drive insurance, higher This will occur losses entering expected amortization would charge the under blocks life because within and to U.S. the updates by and of and lapses treatment that as life in assumption were years. million in will continue those assumption XX-year of the experience and large assumptions and reflect XXXX remains accounting, we accounting trend updated The expect end policies post-level model Overall This to XX-year locked-in GAAP driven we updates. assumptions, term mortality rates, future to of drive life mortality with written assumption certain updates their after-tax the mortality to XXXX updated routine level and XXXX, period and post-level and premium in in a results universal interest deterioration Turning on although age quarters, portfolio the their our for expenses. consistent premium products for for reinsurance changes for lapses term DAC for see older in post-level during periods. expected models, XX-year life. older XXXX quarter term and blocks of and products premium yields mortality focused UL periods. get The mortality

experience our and these credible continue emerge actual how cells to seeing develops. monitor in experience are older We

quarter. we favorable Moving to saw in income and mortality investment higher annuities, the fixed variable

recognition a corporate geography of refinancing the million in immediate offset low below related spread impacts investment as Any environment, refinancing adjusted an included little including reduces to and bonds, premium single bit SPIA faster a classification single net testing operating have been which million non-operating capital issue been charge of made annuities activity premium operating yield. somewhat gains yield activity benefit have loss investment deferred by a definition recorded on the loss assumptions. to and to income. our recognition our from bond $X the the or after-tax prepayment SPIA, $XX income, on from updates expense reflect creating income. corporate go-forward stated updates from recorded also given annuities We line But The on results

to experience to continues businesses estimated had our very MI our strong an ordinary MCT operating or business, capital Canada Canada I'll minimum of test capital the ratio the company to XXX% Now during XXX%, their move insurance mortgage to which million performance, levels continues quarter. to company's the of underlying paying positions. solid we remain where Genworth range of continue capital target maintain $XX MI above dividends holding capital to In XXX%.

the impact is of the fourth MI A our Australia end the the our XXX% was is minimal to above expected the which target. Prescribed at GMA's business, ratio capital high PCA Capital regulatory earnings have quarter, or XXX% end ratio to For of estimated curve going Amount solvency forward. change to

$XX MI Australia from share million announced their sent to quarter, the the buyback programs. Genworth company previously During holding

X The dividends of earnings standards have changes by million received were We've that conditions. approximately PMIERs In as Sponsored the of requirement. now PMIERs proposed of drafted adopted from their these the negatively PMIERs capital, mortgage have private holding XXXX, effective total ratio fourth delinquencies. These the market these from their are Australia's a excess an PMIERs will we quarter Acknowledging a impacted was incremental ratio we changes the would international points to be company the of Entity]. Genworth. significantly a GSEs the above subject for amount. XX, although to If that actions, share be XXXX it program, estimate lower industry, compliant, been with businesses we level sufficiency at with [Government by we date including would hurricane-related approximately do resume finished comment summary $XXX to the of MI, December or still quarter U.S. With high anticipate of delivered excess year. an in course, full $XXX XXX% million of the a subject they to announced, buyback

expect performance to the standards. business, strong and restart the continued while draft remaining balance within MI dividends XXXX Given sheet we PMIER U.S. strengthened of in our

testing ongoing prior-year reserve capital phased-in AG will requirements our including such be reform. the cash as XX, flow impacted levels testing increases, life standalone enacted by statutory and recently processes, tax Our U.S.

currently are which impacts, through could be these We working significant.

XX-K We allowance. as closer Cut Tax when well filing, Jobs effect as will in and and want on discussing spend to the our some finalized enacted did expected disclose XXXX. February its Act to time business, late these recently I our results our major the system this federal that U.S. release the view industry the as benefit tax the to well overhaul of as We positive valuation of the it U.S. for through tax as overall economy provides. simplification a an insurance

While rates providing requirements international will by cash flows complexity also reduces certain lower insurance improve tax greatly simplifying the statutory tax tax-specific reform and over time, reserving provisions.

benefit As primarily recorded in highlighted our $XXX press two the tax in release, of non-cash net benefit fourth to we The million related items. quarter. a was

we year, had we we with of our our million last not valuation be expiration. foreign that established able expectation to released $XXX tax use credits allowance all prior the would First, to tax

to in coupled Life. rate. deferred to a and be million and with and U.S. strong $XXX tax statutory reduce the preliminarily those liabilities the segment U.S. the rules $XXX MI MI At level, remeasured plans, million utilize measurement impact or current books deferred lower moving FTCs. rate, forward tax the our the tax net income on with also tax forecast our assets to admitted will U.S. and DTAs now tax this will DTAs the reform by expect in period. revised which flows as admitted required through remeasurement U.S. This approximately of during Life our of the year performance improved our businesses future fully lower we Given Separately,

Company projected some the reform MI's risk to Given net capital tax entities capital in the calculation flow changes margins or decline legal risk-based a tax U.S. consolidated This is admitted Statutory Life results GLICNY. be of as the offset tax DTAs. to Insurance rate. the York may also impact be Genworth rules, cash the approximately by from New XX while which will utilization have impacted This York the FTC such change statutory additional minimal, impact the U.S. New decline Life partially in may our negative subsidiary, impact to to testing will of points. certain

to reduction time not tax XXXX points. Lastly, if the impact This a year-end to NAIC the RBC ratios factors the reflect Life ratios adjusted at factors impact to are the U.S. approximately we XX XX were lower RBC RBC consolidated the of estimate will the RBC changed. be but to would rate,

think of company, which and holding the targeted million Moving $XXX annual company employee during annual as buffer. throughout our is our reimbursed $XXX cash that about the debt assets, we approximately to X.X holding ended more service reminder have we million benefit first forecasting liquid cash into our the quarter year. with restricted exceeds outflows to typically subsidiary that the One times in the companies plus related cash payments future quarter you are on by

our company upcoming Tom to holding of Speaking for debt solution maturity that cash, I do mentioned. want elaborate on planned our

we address given options. delay have sales, in company to certain number of this refinancing included debt have evaluated quarters, with China merger Oceanwide. maturity and/or the holding last the options the couple a cash, asset Over These

to full be a as company continue holding time The Oceanwide complete We refinancing of completion the preferred this allow some cash while with the maturity to have retirement along would flexibility for as identified the adequate to the upcoming solution pursuing transaction. a to secured well term work work to the from of as to transaction. address we proceeds continue towards this Oceanwide maturity at loan this

the strong we business. performance the will of the up, about things recognize time good Life appropriate very businesses U.S. provide been continued our To further have details insurance announced to once the market. sum the Insurance the We mortgage terms feel but deal at within challenges

on over it stabilizing continue multiyear focus the priorities, balance strengthening questions. will that, to and sheet, action forward, including time, rate Going key for up plan. our improving and open our financial we let's executing With operational ratings and


our portion the Ladies this take will of And KBW. with time, first and call. from question begin gentlemen, Krueger Ryan at the Q&A we'll we

Ryan Krueger

Good Hi, morning. by? likely thanks. us term be some Can secured you give businesses or loan sense business the what would of

Kelly L. Groh

we remarks, like near we're really in question. this release Kelly. and Hey, my Right mentioned to in I going in launch the Ryan, now, it's to going because, term. that really not the we're appreciate the press disclose

did as conditions launch would will consultation you loan company use we're term you be sizing we as as that we would Obviously, soon to subject information and one well it. some on that to give that we issue I of So provide point market the thing the with is that so we going the view cash, holding is But launch advisors. our thinking now, a can right about. to as say our

Ryan Krueger

can Delaware give magnitude process, solutions insurance to are considered? then capital And on valuation? the between over more to more approval guess GLIC, Okay. the of being moving any agreeing other other into just than what color you And GLAIC's put the the you then I disagreement disparity

Thomas J. McInerney

Ryan, Tom. question. Thanks take the good one. it's one. a for It's I'll So, that

there different first I The would is, say know, as GLAIC. thing to you are ways value

cash a market the -what's would different this fair could You and pay, buyer willing all and of of those assumptions. flows then kind value obviously have kinds

to a and most we XXXX. did for XXXX significant forward with we interested an get decided board pricing. the position sales do that just GLAIC – it's think I of And Genworth we updated very Oceanwide we process they because in in in the update did all as to where from were China We deal. GLAIC on the go those Oceanwide – before

value So is that we feel $XXX GLAIC value and Oceanwide, Genworth to, is led what that right which process to million. way fair strongly, market the

They're kind doing still but certainly bid, this doing of Delaware at that work. flow. They're the others an had outside think adviser. also they're looking has values I cash

you to calls primarily to with discussions And in comment know, I of lot active our the there's in still reasons have conference in because can't one during we're a we're things think of that. the that tend really Delaware because transactions think but and I negotiations, we want companies not and CFIUS. with it's So these case,

we And so think hurt. it would

I unstacking what a hurt I think you though, we But be. your ultimate coming Genworth but talk if of are can terms value and understand all value of not. and the to started our those in what's do to might back think or should number shareholder negotiations we question it the also shareholders options about there

be and working their to say, determined, as still So evaluations. Delaware on there think I are just I many is things still

Ryan Krueger

one just one. last then and Thanks,

and with specific that process a We those haven't disagreement us Can sense the were some on. give you if on any heard there's discussions? York anything – the there New much of DFS there

Thomas J. McInerney

the New with all York. had regulators, we've obviously including So discussions

well. proceeding I think that's

New interested behalf all York on regulators given deal focus cyber security protecting GLIC. all I been and condition has and financial think of their things. has and of are XX data of regulators, those the tended the the And private – on this in the

discussions on think I with So going think they're well. we New my – York that. that I But reasonably them, on based is have process working

Ryan Krueger

Thank you.


Bhullar We'll with next JPMorgan. question take our Jimmy from

Jamminder Singh Bhullar

good Hi, morning.

from first feel the So how that just of concerns? issue do the those concerned you the easing Have re-filing. is question from you – about you was on data I do they were comments had them your with or them or feel input gotten CFIUS that chances how specific

Thomas J. McInerney

So, probably as CFIUS read, you've process. very confidential with CFIUS, a the is process

CFIUS based policyholders other is along, what's or with prominent private we makes have all what on our think you plan on, to stronger. and And a what previous on MI structure think U.S. we give a third-party customers. stronger mitigation CFIUS we plan U.S. We able So U.S. can. on filings, trying discussions in again, security our focused view important I'm I is therefore, any our much also our this and understanding new protect to have – to data create deals, our administrator view, it's and made mitigation the of our as public been But based on information general thinks. not

it's unique deals think far as that know, in was other proposed. I don't it and I As

How don't So I stronger. with much know. plan we've that. mitigation will think CFIUS that? makes it interpret We re-filed our

Jamminder Singh Bhullar

of sure the the in not only be China are that you're deals the a issue more there's lot because about is data between of political concern the to whether and U.S. going and future, China And so? restricted sort relations from

Thomas J. McInerney

I the really Yes. CFIUS would say, not view to just able I'm on comment is. what

Jamminder Singh Bhullar

dividends that from you XXXX of then U.S. extract in future MI the could And and the in business on any periods? magnitude thoughts

Kelly L. Groh

really appropriate X.X. market. level PMIERs we think year is with haven't the well very standards We've of well that been X.X got within PMIERs But and above and a dividends X.X PMIERs staying the draft that's do shared this modest

unassigned do have current $XXX of surplus. million about Going unassigned forward, we worth surplus

U.S. think as strong maintain and MI ordinary the forward do there on long capital restrictions regulatory could levels, extraordinary we dividend. as the no we there's So – But also get we going both dividends.

Jamminder Singh Bhullar

I $XX less million what is And or modest than year? guess you define – modest it do how – for this

Kelly L. Groh

dividend going trying couple the of capital Yes. to would forward. as the cash just do information see I evaluate more next MI. we're comes that. a what expect PMIERs the in get We're give and it to going appreciate But based you understand quarters, to online. a how to through We're to roll level dividend. X.X exactly say the on not go from We're question. to going U.S. you're we'll going we out, final of I we

Jamminder Singh Bhullar

reserves billion? And I of declined in reduction drove details active then could really give about sort what and lastly, on you it us the LTC? think $X.X some life the by

Kelly L. Groh

very through the Jimmy it present claims billion. the extensive product as a think you very related Yes, And thing because to is, a over it's margins. well question process we know, as the go – we long to with every one is need $XX about as net value appreciate I by important long-term of of think care one we about way year.

that quite big small context billion of was, benefits, decrease when at that $X.X But this a policies It's benefits drove net talked a as little I Really our value we lifetime though claims. looking the as what in about the think think a policies claim. emerging you or bit were of experience change not in biggest you think. in last So even and press our and between difference limited that is really I saw if had in we our had incidence we a might quarter – lot, about it as remember. margin, release present

for opportunity the think claiming benefit my for them of there's really because really I the a remarks no there's lifetime benefits, mentioned with in that less hindrance policies prepared exhaust I for pool. them to

you time about limited most you've got ill. And preserving to to so if have figures think those the benefits,

changes that So helpful? – the Is the was nature really to margin of that overall. the biggest

Jamminder Singh Bhullar

Yes. you. And thank

Thomas J. McInerney

of been would regulators – the this that add positive regulators, we've very Tom. the to becoming are pay us the for working get And I to think do agreed you what open with out regulators a future I've claims. that to to think flows premium of just I time cash think, trying too we're is I – that be the order – And with I even. should to over we've I the in increases margin because more in the would level make absolute way. what And much break able to

agreed would that's So the zero, we've margin one above positive, you expect – remain not of effect, see we would with that the regulators because to far what but in the premium to increases.

remain positive with but necessarily not on the So we a big margin cushion.

– view So I much you own shouldn't margin. at value just look of absolute the my is too the

Jamminder Singh Bhullar

Okay. Thank you.


our I'll Dargan take Now Sean with next question Fargo. from Wells

Sean Dargan

Thank you, through run Kelly, just to want Hi. good I morning. and RBC.

hit to XXXX? is XX and tax So numerator hit point XX it total reform sounds from XXXX plus XX denominator an point in point additional impact like the to RBC

Kelly L. Groh

$XXX at new we so utilize better Sean, that's XX-point credits thanks tax offset But Hey, our by question. on driving that's yep, to it million really revaluation partially look for impact much, foreign rule. ability just about what's And view. When XXXX, the is the impact. the under

the goes – really of DTA just your down revaluation. So that's admitted because

yet to phased XXXX, Regarding give later. year-end risk-based in, would think capital is factors for lot to XX they're be going change be changed to points can roughly wanted levels. I XX you we to for an going whether A operational XXXX, to happen new what determined But tax for going they're the the don't based in as whether to from whether perspective. factors are it's federal impact If the view be XXXX our capital a were on points. strictly rate, that adopted

would but sort view capital. was year, that forma of really the that Over a XXXX change based that on impact, pro

in So, how factors point. this changed those undetermined at to are phase to as or going to be when

Sean Dargan

to have I you strengthen somebody as testing. reserves may is need down And go ties kind Annual General But the question. a tax result a cash at asked there's a into what that statutory your think I of related And a going to possibility And reform. Okay. it result of RBC flow as Meeting. of the

don't to – into – is So, you. acceptable to strength Because the what you're not selling business is GLIC are defend or holdco really kind to put cash the need insurance you required of ratings. legally you and ratio financial RBC

Thomas J. McInerney

an think regime below It's a terms I the is a in with – And create RBC at of there work them. it's are. have regulators the them. by where XXX around where well with where RBC you on a is is, that's, to where you plan to level, plan Sean, have we

no is a address and the as step – higher we there's RBC clearly, it actively hard have room. on significant bit we've ratings. annuity there we we require it's the and want But where around ratio important there regulators were of to if So drift Clearly, quite it. in and the And starts But business, matter. specific certainly can is plan high below a have. that until higher worked to would to RBC, as RBC issue the RBC the the selling life

Kelly L. Groh

to we're Life think one Yes. Sean, the in you rate thing When think and as dependent GLIC $X it's about consolidated about that. division, on actions. I'll of company again. Kelly parent billion of force U.S. it, add we the future

holding to cash. – actions, on rate $X future on an appropriate we're on not our we reductions difference. and that company supporting is the getting so benefit with at at getting level, those And sitting to company not be make holding This it policies up going our billion dependent

is our making sure those to that's So intention that policies. work on we're up hard point, at helps, really if that shoring this

Sean Dargan

Okay, thank you. That Thanks. helps.


Tom take We'll with question our Gallagher Evercore. next from

Thomas Gallagher

and review. a there statutory Is will just results? reserves, your question on impact GAAP the big and Guideline between on XX any Actuarial difference statutory Good morning, a have

Kelly L. Groh

I question. appreciate Tom. Thanks, the

on Actuarial Let results how see the Guideline right XX. one, completely me we our now, so with think that compliant review don't we're that rate last We action impacting plan our whatsoever. take we based

estimate. best using GAAP your There couple a differences. is a GAAP and Regarding is are there stat difference. reserves,

GAAP and we're so part of using GAAP when best as at a our look we And testing, margin reserves estimate our assumptions that. our

have is perspective not in stat. are which deferred cost GAAP talking over a from we're you above and our difference our margin other concept The about acquisition a balances,

of as amount we've that of acquisition margin you got the can that. about And $X.X deferred so billion above care, long-term in think costs so

used. stat adverse for Secondly discount in lower. a to that's from It's rate. deviation. a there's provision It's that, addition different rate And use typically a perspective, a we statutory

establish that. it's So used a moderately estimate scenario that's adverse assumption. your to best not It's

helps. that So hopefully

Thomas Gallagher

able experience, that That And the you are does, use same rate in higher future assuming assumption you're Kelly. you you are where claims stat GAAP? as offset use Are adverse for able to to increases? for

Kelly L. Groh

Life Genworth actuarial cash that that York a in Insurance Company a different and fits general rules for they different in areas. New Delaware, basis, we in guidelines have applying are, From On perspective the rules flow been a in variety have with testing clarified. of and different

this not point. actions including rate future on we're at currently that the So into

Thomas J. McInerney

work the margin. all or we it's reductions, increases Tom, focus ratios and regulators would on I with that Tom. And, benefit add premium statutory when just on the the is the

regulators, increases statutory those applied it's on for terms premium are all numbers, by not So on based and of GAAP. in how U.S. approved

Thomas Gallagher

And, the stat differential you. GAAP the Kelly, today, to that that? give can the reserve number you if you versus have Got

Kelly L. Groh

we something Tom, market. it's can but at my I here, don't have the provide that to fingertips absolutely right

get. So an to happy easy thing follow up, it's to

Thomas Gallagher

And still get that and way you GLAIC, without unstacking is approval for this to then if of last just is thanks. done there don't Okay, the a get that, deal or unstacking? question, GLIC deal-breaker, a

Thomas J. McInerney

I because Delaware. say so into does create been that's all goal it to of in important Genworth all were our we're along. to want that, to GLAIC dividend and get Obviously, really we both unstack that. Oceanwide I future with discussions Tom, So, do believe different would an don't stream, additional able the that permutations it's if

that. amount. are I Genworth to think do also I potential But all hurt do if million, different unstacking. were think that without I a would an We're there, $XXX options proceeding

I all the regulators. working with we're on that are So think options those

we determined end So up. where that's be to

Kelly L. Groh

at give Hey, Tom, handed right mention look to I to piece again. the just wanted paper you me reserves. of someone to Kelly it's LTC the

as little statutory And of billion. third quarter, this basis, $XX reserves, over our long-term then reserve $XX.X as cetera, our by billion. a about care on including reserves, gross claims of way. is third And is So a the is quarter, et GAAP

Thomas Gallagher

pretty okay. close, So

Thomas J. McInerney


Thomas Gallagher

increases. changes final $X.X gross you reduction, of when assumed the was How The impact rate big was then – looked you at And billion an margin, question. mentioned an there future made the from that? offset

Thomas J. McInerney

basically way our which I non-lifetime decided assumption, business together. rate, a claim year when claims. were incidence lifetime was Tom, this in the change case, So, what and looking do is we We different we sense – the at every lifetime look on it actuaries at we makes there felt

Our because amount so policyholders benefit be aren't earlier. trying claims to it's tend save their a that lifetime we lifetime, to finding that were

for them, or side. offset We a rates result value we of claims. with benefit the on present really didn't that separating And so future as incidence non-lifetime raised the a of the reduction

five We're seek the our And and Edwards seven-year team, to in much then going build team that. we so premium claims that that to recover then we're with and that increases, decide mentioned. we I Elena plan. to working We of how the into use higher

way premium at of our put the look it, amount. a claim that so plan into didn't I offset And we increase XXX%

Thomas Gallagher

it's So a just partial offset.

Thomas J. McInerney


Thomas Gallagher

thanks. Okay,


Troisi take our with Peter question next from We'll Barclays. now

Peter Troisi

there if pledging restrictions to secured before, that are Great, from on thanks. mentioned? us subsidiaries Maybe your the on you regulatory just you've can follow collateral Ryan's up financing as question to remind any

Kelly L. Groh

the Peter. It's We of question, any holdings related our ownership to regulatory on the company. our in don't holding restrictions Kelly. pledging for have positions any Thanks

Peter Troisi

obviously would equity their of right? include that the And Okay. subsidiaries,

Kelly L. Groh

would. It

Peter Troisi

MI then some this $XXX of think in million do And you decline in changes you run think regulatory Thanks. think rate could of I given great. dividend dividends, about it were said, the Okay, you that Canada? potentially XXXX. international Do flow? the How year

Kevin D. Schneider

this Schneider. Yes. The begin U.S. believe mentioned, we're going dividends as we I'll of that, Kelly take Kevin MI to some out is Peter. coming – year. This

both are now. flow but holding at international, Kelly levels strong an the will Canadian with And so would I it's remarks, in companies our say talked levels the very the not be the overall company. – prepared that Overall, operating that's right and that to incremental about current Australia capital capital

to I are ordinary that we'll consistent ordinary – whatever is. think with income So see their dividend continue flows their

because access high extraordinary have ratios, also, of those capital We capacity. dividend to

on are businesses businesses. to the official their and capital run so capital very And to continuing focused optimize

We wait to your in think But there term, those Canada have companies of of businesses from to changes and good have pretty question basis. we'll have augmented see to on – good the how longer opportunity Canada. we'll have track we those evolve capital regulatory going to by delivering are record extraordinary be I if finalize in support to any there that. things continue particular some And for additional an from in in

Peter Troisi

one follow-up makes That for Okay. maybe Thanks. Kelly. just sense. And then

XX-point the in well then those RBC XXXX the denominator GLIC? GLAIC – to On are numerator to XX-point XX-point the XXXX, potential in the Life as do to and ratio impact changes of those impact factor for as RBC and the

Kelly L. Groh

Yes. would be of does. really holding the That's Thanks on question, Peter. basis. a company That our it for view what

looking companies XX was is just XXXX. XX all report So looking as at a forma the because we're this no give still have at we on assuming to an you illustrated unstacking. to the of what the on year-end stacked. same And to going basis view, XXXX structure It's pro based

helpful. So hopefully that's

Thomas J. McInerney

by have going the calculation, would I change companies. on obviously there's RBC is other of life – been lot that of companies to that and what add disclosure to the all a a are insurance in And

when don't think the RBC on will working the apply. – I life ACLI the calculations the involved, and the is industry NAIC they is with So working insurance through and

that of to-be-determined. all is So

just will what would I will are timeline other think of going to factors – that the how and changed, were But be is what we do were that's what for impact to today. a terms companies that's that. the on be based in like trying where we developed if be work show

on working be we'll NAIC the – work think that. the I with industry be will

Peter Troisi

Okay. Great. Thanks very much.


Ladies final Esterov now one have time from for with CreditSights. and question Josh gentlemen, We'll our take we question. next

Josh Esterov

significant light of and you for for reduction XXXX. comments implications PMIER position MI Are the have MI U.S. of any given a or potentially out could In plan negative capital relative buffer Hello, PMIER resume of U.S. potential concerned share, market that in to good peers? to rating about negative the weaker for kind morning. dividends a X.Xs implications earlier U.S.

Kevin D. Schneider

Kevin. is This

when the strength – position peers, the think versus strong. – capital you at of I look our pretty our it's

by overall, that differential balance strengthen. experiencing. got that rating I sheet this continues We we've challenged are think has to been business financial But the a very strong strength

or Our in improve. statutory excess in risk to capital our PMIERs very The and of continues the ratios to strength strong. assets our this of overall absolute is required point magnitude sufficiency at advance

I with, think is X.X – think sticky strength if period, faced going to with with When pressure to or published ultimately required some there, be well. have we interfere view challenges, additional one, going of not sort to you're is, we largely, basis clarified over the should the we're XXXX business comment capital. the a our to of see us I has And if following some XQ down number from when and our on I some is quarters stable. XQ ratio quarters quarter-over-quarter everybody as been pressure that is think is quarter. plans XXXX. And we little two our would really for dividend incompliant out last came has if at the say our of the a three financial to And over relatively is sit reality next But feel be that last We performing we while we end year. with compared that X.X share and sort – ratings, it the XXXX. loss felt a bit expect the been did

Josh Esterov

thank much. it, Got very you


McInerney turn gentlemen, over for will Ladies back closing comments. the and to call now I Mr.

Thomas J. McInerney

towards for your closing plan you, that all non-stop transaction Kathy, strong you the we pivotal what to questions time a We our of and delivered thanks work Genworth. with financial achieving and for multi-year and say towards is continue LTC our outstanding action operating rate summary, progress Oceanwide. continued XXXX I'd Thank performance; and today. was year In

continued interest you So again in thank Genworth. your for


Genworth end. and At this for Quarter concludes time, Conference Financial's you Fourth call Earnings this Thank Call. your the participation. will Ladies gentlemen,