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Genworth Financial (GNW)

Participants
Tim Owens Genworth Financial, Inc.
Thomas J. McInerney Genworth Financial, Inc.
Kelly L. Groh Genworth Financial, Inc.
Jamminder Singh Bhullar JPMorgan Securities LLC
Ryan Krueger Keefe, Bruyette & Woods, Inc.
Rick Michael Sherman Oppenheimer & Co., Inc.
Andrew S. Molloy Bank of America Merrill Lynch
Thomas Gallagher Evercore Group LLC
Peter Troisi Barclays Capital, Inc.
Josh Esterov CreditSights, Inc.
Call transcript
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Operator

Good morning, ladies and gentlemen, and welcome to Genworth Financial's Second Quarter 2018 Earnings Conference Call. My name is Savannah, 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 Owens, to would Investor Head turn of now over the Mr. you Owens, proceed. may

Tim Owens

Thank for Genworth's you second 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 of 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

key towards the the review then results call today's plan. strong more financial quarter earnings this highlights Oceanwide. recap made will for with capital financial proposed over second will transaction call. briefly Good results Today, Kelly Oceanwide closing and I thank joining pending you quarter's on the to details we and provide to from morning turn and I our progress the

open our Genworth to prepared of Following remarks, adjusted set income $XXX call or another results strong share. $X.XX million diluted questions. we'll generating per the operating delivered quarterly in

favorable Starting Our higher also our and Mortgage while to business adjusted Insurance with earnings businesses Insurance U.S. and our increased with continue earnings MI, growth global delivered strong U.S. second income performance. drive fixed Life annuity driven by quarter year-over-year across sequentially businesses XX% operating remained position million tax cash year-over-year ending force from growth, strong rate. insurance loss lower performance to million over requirements. with in capital quarter the $XXX $XXX to U.S. in above PMIERs driven flows primarily benefits favorable MI's due by a positive capital

Canada's of implemented continued earned higher the in XXXX. million $XX primarily premiums result paid due premiums to financial its in was income in requirements quarter year-over-year enhanced the a MI XX% the remained favorable. performance minimum to levels capital million force curve in above increased In fourth operating and its capital well $XX U.S. of increased to And during earnings dividend levels loss to income performance operating a staying with As $XX quarter. adjusted also strong that year-over-year pattern while ordinary due million remained Canada, the Australia profitability. the updated business quarter

driven XX% earnings businesses. mortality year-over-year both Our U.S. the $XX care by primarily of Insurance up segment Life long-term million annuity delivered insurance favorable benefiting operating and

plan. care long-term make also to continue insurance We progress action our towards rate

to force future plan approvals of $XXX presentation, cover cash and higher this to in line is Genworth In on of our a with slide is on XX track significant second filing the helping million state quarter, expectations performing XX we premiums. shown received earnings claims. rate impacting deliver As action flow the in to

XXXX submitting in began reserve new quarter included also review. life the the filings We active during assumptions quarter, which fourth our reflected we

to the Genworth Oceanwide unresolved security that completing Investment to review of States the were Let in respect turn In with the concluded completed announced had transaction. progress Foreign me Oceanwide national the made review proposed and the on CFIUS concerns now or towards June, and Committee there United that transaction. no its

to team's hard CFIUS. extremely to are a was outcome We plan with the commitment developing mitigation risk work pleased our acceptable of and that

to Details a holders. One Genworth of Genworth protect provider the of third-party in in engage midst provided close. U.S. of be were personal transaction. certain the conditions the state other insurance Genworth service as place their the to implementing data part to will this mitigation review of the requires agreement is of plan, our and based agreement of regulators policy manage the transaction mitigation U.S. of by and which

other to of from now to regulators reflect GLAIC are passage outdated information that the time of and parties the We to unstacking GLIC from they submitted. were and first due pursuing also financial the to our delivered when refresh updated information

While for continuing and to we're rights, new requested. for under secure extended In have Genworth to we which regulatory updated close, XXXX. working XX, to more provide period regulators of as Oceanwide reviews, review, to termination significant a quickly approvals to information the to merger August our time and order the are allow the agreement as necessary amount we can as

periods, process certain date. regulatory to for beyond our extend timelines expect Given this the review we review

billion will March aggregate to the time come following regulatory that overtime in We contribute the working capital this XX, with to of by Genworth XXXX. of Oceanwide final anticipate to processes, the are closing $X.X be and finalize after Oceanwide investment closing the capital transaction. of over contributed the addition In Genworth new will the whereby to amount review an plan plan

the sufficient service cash remaining Insurance this As I to dividends comfortably capital from Mortgage level, debt. level bring would believe previously, financial will flow leverage be sustainable a commitment of we our our have said platforms more and and to

reduction believe ratings Genworth's debt key We Genworth's and A over of priority our long-term Genworth improve for will long-term also critical to time. success.

future. plan with towards closing committed this the Oceanwide few their the to satisfying Oceanwide past I months. fully finalize all to and closing made near pleased the the with in of remain Genworth transaction we've progress, conditions. over very expect details am We

continue XXXX. geopolitical believe in closing that quarter Genworth transaction We currently is our the targeting best to the we sale Notwithstanding for of current forward are fourth the to the of path the Oceanwide stockholders. environment,

Now, call Kelly, quarter I turn will review more the detail. over who to in the will

Kelly L. Groh

results our our capital Tom, and XXXX Thanks, work and morning, after redeeming Oceanwide, quarter second and key drivers, updates our May maturity company good some I plan with context will fully cash around towards cover at provide debt the Today, we finalization. holding everyone. around as our

We financial quarter's of million reported the and net income this $XXX with for operating income adjusted quarter begin Let's million. of performance. $XXX

businesses. last reflect Mortgage in strong and Insurance Our overall to U.S. results our performance continue Canadian very

Our U.S. long Life business results from care insurance and improved performance modest improvement last insurance strong life Insurance significant our continued overall improvement in results quarter in with annuity term were and fixed income.

continue rates which Jobs results to Act, from and rate. overall the Tax tax our XXXX Cuts from overall Our lowered lower effective tax benefit

minutes. negative tax law a As evaluate developments we valuation being positions the tax million of adjustment are to deferred refined, a to interpretations the $XX taxes. and calculations and benefits and few the I'll our our in foreign enacted did record of discuss continue

loss the over solid prior are favorable sustainable performance a businesses MI, in update $XX was million very our as all unemployment with Mortgage the year. our last our a and U.S. fundamentals. we the ratio second Moving reflecting for last growth, months, XXXX. reserve quarter, underwriting favorable to of we've XX severity reported low XX points developments was levels steady have results reserve loss across a the of the prior regions. of second of the quarter and did backdrop was from is saw quarter We in down our after frequency factor strong housing after-tax determining U.S. result in points This trends update from trends factor of and the X%, which most economic Insurance XX negative quarter housing In seen

excluding and loss strong performance. have factor favorably X%, compares periods new quarter with update lower been reserve second continued The to delinquencies cure prior aging favorable this ratio would which and

versus year's have rate from to cure which last remains and continue refinancing driven reduce consistent the lapses. Persistency we rate. business, losses in U.S. earnings interest $XX did We continue believe reserved. the to with by delinquencies our what U.S. In hurricanes these year's last tax MI incremental quarter elevated lower rates, approximately track million reflecting higher the improve

to U.S. tax of reform we in fundamentals U.S. the benefits anticipate in earnings our the XXXX housing continue market the results. and macroeconomic to exceed strong underlying our Given continue, MI assuming

although, from partially was by refinancings. versus by partially year a billion $XX.X originations. up New also larger Insurance Written refinancing or purchase purchase prior offset market; XX% a up primarily seasonally NIW market origination origination lower larger NIW sequentially the XX% from lower was offset

Our mix the the sequentially our of year participation as declined well as in singles due market. prior selective continued to versus

continue customer transaction lower the uncertainty recently with share than some competitors, monitor We concentration. Oceanwide to market given our our ratings our increased and

levels service overall versus although of expect served that this some to period. we pleased are We pressure mitigate do lower product and our the market strong modestly to our be differentiated share capital and have offerings prior

$X a tax effective prior and to performance earnings first in corporate in fundamentals, continued territorial increased prior to businesses from half down versus XXXX, origination expectations tax year Alberta. of reflecting the the has reflects million new now on business in actual loss the rate. year prior rate performance XX% smaller the changes of segment made market, Canada, to XX% although, some loss of of larger Flow recent changes. to the the strong expectations tax increase approximately XX%. Canada from NIW their to business by with we by for approximately points ratio X% The from to a Canadian share modest ratio market of was XX% Genworth's and XX% XX% the remainder benefited Canada's range net versus quarter X of increased reform the primarily the due XX% Canada more strong driven expect a year as closely Turning seasonally U.S. full-year of cures, the regulatory loss the origination Based a sequentially delinquencies, in revised

versus a non-reinsurance versus versus and Losses premiums. Australia, and were been the by points in quarter in Moving that adjusted compared of portion quarter was $X discharged. prior an XX%, promptly of income up pre-tax This by the loans in identify more million prior year points quarter. the mostly $X initiative operating XXXX. to policy GMA modestly quarter cancellations to X earned year result to higher loss the down prior flat as a prior ratio from the X the total million recovery driven sequentially Premiums Genworth's have higher impacted XQ, were up recorded due positively benefit to the approximately

a which is cumulative Australia, GAAP versus curve business resulting As earnings in our reserve of treatment review than earnings of in adjusted a Australia accounting. that when pattern in unearned premiums, fourth reminder, curve This U.S. GAAP The business in Australia metrics of the adjustment applied completed different results XXXX for a earnings was differences retrospectively earnings its the and premium earned in locally. the U.S. the loss quarter IFRS premium adjustment retrospectively. the ratio reports prospectively of

on continued due levels size and in market year regulatory business certain prior down penetration to and XX% standards, from focused up lenders quarter the versus prior as lower New Flow market versus seasonally serviceability. changes origination Australia larger investment XX% from lending as the Our lending well were

half terminations utilizing benefits first expected. benefit than daily in Securities partially claims Moving policyholders higher second is higher more Treasury experience. results we partnerships benefit from businesses. our claim variable quarter insurance Inflation our we Insurance aggregate, which and being annuity unfavorable generally block is their did long that seasonally overall investment in TIPS. or Protected of segment, the higher LTC particularly benefit reflected income and elevated benefited being are of earnings payments limited This our from In utilization experience U.S. business, mortality, care from favorable acquired the term to our muted see year by The in Life resulting and higher by the driven

We as claims continue elevated utilization develop. to continue monitor to the benefit levels

higher on the growing claim population from reflected and see Additionally, block were LTC new frequency sequentially claim Earnings as with the larger favorable experience reserves we the business new growth claims prior of blocks per higher acquired the from our termination quarterly is seeing coming quarter. new daily benefits. as claim up seasonably results our in a mix and average true-up

claims termination expected We LTC of claims quarterly of and of favorable claims for will likely their expect as age. impact pressured utilization The benefits utilization be daily new using claim more trends, less results than policyholders remainder previously blocks reserves. development the by rates, to XXXX the benefit to continue

work work and other the fourth the as any third to impact Accordingly, complete on plan well in the finalized. of yet as However, we on until have the or not is we this will assumptions assumption not is quarter. an work finish this claims reserves estimate

We have continue actuarially pressure. rate plan very mitigate to These been most to good and in approving ours in used assumptions last justified results multiyear with and of have testing seen a focus force our been line be action in will this have margin action year's rate approvals on regulators requests. margin our help

also as lapses entering premium impacted of life acquisition later to plan premiums although updates any Universal associated did term XX-year done their annual Turning be primarily life UL higher year, see Life we post-level results costs. in have to we modest from life experience to which with develops. and Insurance. The Life required on term accelerated an deferred life be to insurance assumption this continues amortization basis We unfavorable improvement term business in large as continues and lower review mortality. and XX-year mortality periods, term blocks

interest their We after-tax we versus million loss investment year during larger quarter trend XXXX, mainly income, our $XX improved year a In the sequentially, XXXX, in lower shock then policy was remainder to per reduce favorable charge to the variable more tax saw annuities and XQ the which recognition XXXXs, in mortality. XX the the mortality, prior with favorable and end fixed to year favorable Results lower during late the earnings less as offset of $X period. in products single-premium by written premium the to expect were $X reached immediate reflecting after-tax non-recurrence XXXX rate approximately from this partially reduce blocks continue further of annuity million level of related rates. results a

and Our segment further refined. foreign calculations of periods the $XX deferred taxes to to under law the Corporate loss million due in tax the prior for than interpretations as reform higher was Other related expense and mainly are tax

the minimize tax Canada certain law local was to intend tax in drafted, above make to over now rates taxes how and in the statutory we elections additional Given and order Australia.

subsidiaries be deferred tax these and the our of views As positions, we we revaluing are will our to our a what liabilities of on ultimate result on views on assets our these taxation foreign align with believe subsidiaries.

hurricanes strong assets partially of U.S. where to very Now, positions. to I'll maintain driven move capital reduced million continue ratio of at cash quarter from levels above or solid from second flows levels, the In a those our XXX% cure Mortgage points quarter quarter. primarily perform required end X positive first of Insurance up million to capital points from improvement higher our written This ratio was XXX% second X quarter of with the as during the businesses delinquencies rate XXX% the this end in and quarter and we from required of performance to expected. The $XXX by of sufficiency year's finished from and last new MI, payment incremental dividend quarter excess continue PMIER sufficiency last strong $XX PMIER by XXXX. business the declined a impact at as the insurance assets

first based managing of remain expecting PMIERs effective If compliance have in this, We capital in confidential early continue estimate are believe new XQ. will we'll Institutions, a operating minimum market and quarter or buffer. received our although standards lower term of XXX% with saw than standards. to quarter, in of in prudent on level we to the capital proposed are an of business, XXXX above the Canadian to are the be standards framework publish the to the near update could standards, with as In as the drafted, of significantly MCT the GSE management the these capital range current the Office the XXXX compliance continues company's XXX% a manage our at Superintendent standards considering would we ratio we updates after or first GSEs we XXX% of remain MI In quarter a target we as PMIER Financial the adopted we released. from guidelines the draft in the which are capital We to OSFI, Canada estimated

amount above Our Australia target estimated which of XXX%, business is capital an ratio our XXX%. the of prescribed ended MI the quarter of with range XXX% to capital management high-end

During the to Mortgage the level XXXX Force, We NAIC, completed AUD tax of LTC proceeds neutralizing Because RBC a as of XXX the On changes Genworth buyback for approximately RBC factors, the change XX June implementation. and RBC of share. those certain reform million Capital estimated from AUD and Adequacy on year-end previously repurchases million our of we impact this GLIC half impact Insurance current under with dividends lowered Australia at to million Task first quarter pre-tax XX XX on morbidity announced to Company a $XX announced quarter. subsidiaries quarter rates prior on X.XX RBC the our ratio dividends remained from proposed basis. adopted consolidated and Capital the calculation lower will the than estimated XXX% reform impact our believe tax by estimated the previously factors, be points. levels Insurance total net negative of International previously the in company-action share Life measured consistent AUD received fairly to during in is a approximately

redeeming last from quarter's we million. and holding approximately debt $XXX maturity $X.X assets with million billion $XXX the Moving XXXX May to the quarter ended fully after down the of liquid company, cash of

holding quarter to $XX this proceeds net other were million. a to million sources. were net small inflow payments dividends Offsetting of of share in from and from the the and addition million $X total repurchases company tax intercompany During $XX interest

million excess target. June payment noteworthy level the $XXX that debt of of I improving our cash next financial MI's path approximately forward not the million flexibility. is ending in external our was debt in is XXXX. Our until service company maturity holding will $XX dividend remind of X times investors U.S.

We XXXX will from another in once sometime of levels and any cash factors, continue don't finalized. to dividend but anticipate monitor U.S. PMIER's until MI considering other after X.X impacts our

that I last mention that as with transition, $X.X quarter. we capital plan to want let's Oceanwide Now, do investment announced billion

discussed, are Genworth. with investment details on capital of where billion Tom Oceanwide the to contribute will working we As plan $X.X Oceanwide

We have be after and agreed contributed over final XXXX. future in the used due closing amounts by plan Genworth's March retire The condition to XXXX and that Genworth's time, capital in will may this capital XX, will or $X.X billion of come improve financial be opportunities. debt growth further XXXX to of with the for

coming MI of We another which from, that now last public dividend the also Life pursuing U.S. our the GLIC. in to input Life sources equation. are also life I capital we three longer this Company, quarter, annuity U.S. into our entities GLAIC online regarding statements unstacking have want no is Insurance company Genworth with our now important quarter reiterate and

basis, extract no As capital. do we plans plan entities U.S. nor the overall intend current infuse Oceanwide, Life have businesses manage a we to we standalone capital these with to evaluate expect the in to as capital we on

May rely value insurance the care little that blocks is in-force obligations. the insurance U.S. recognized will that businesses billion, These blocks last all our ensuring Insurance for facts, billion capital for am its I after given policyholders. been believe and must approximately to of rate GLIC able quarter, of term business. statutory we've We and are statutory redeeming to of Our collectively it of that benefit blocks performance Life generally of action and XXXX no losses old debt. the have of actuarially plan subsidiaries consolidated $X.X de-leveraging with given in-force on do we justified policyholder Mortgage the rate and receive XX the satisfy prudent things the pursuing actuarially over of recognized years. justified sum To Insurance management performance our from LTC these approximately or the our up We Global committed very remain Life their U.S. Genworth's Company achieving to $X.X and we modest long actions pleased

including strategic U.S. business remain our we While that, business. intended Life With and questions. rate it challenged, let's be focused to other LTC action our open up improve to the continues on plan actions for progress this operational

Operator

Jimmy And go Bhullar we will Please ahead. from take our first from JPMorgan. question

Jamminder Singh Bhullar

could that remaining complete morning. or you sort approvals are you are through and China? what to acquisition U.S. for of go Hi, the still in the waiting good steps Tom, just needed the the in

Thomas J. McInerney

one for you that thank in. interested very Obviously, the it's Jimmy, investors question. are

and we to Oceanwide strongly We're So, as submit now and given both unstacking doing both deal. committed us We resubmit to that hard the not we're we've and change and that of information Genworth regulators. are filing filings to we can commented, so working all revise do revised quickly – the have as done to to the GLAIC remain that. have make as the

obviously did to we North approvals with is that is work on then, significant have information. regulatory looking in bit them, it's with with to them. they the on based in we obviously They Carolina, There that all the approvals. update to has South we're the aware of that's talking that, from a questions. receive lead We them they're and going a their North doing information don't that regulators the obviously and are all and I'm so, and Carolina, quite be their of review, all lead revised in the MI really receive getting Oceanwide revisions And have Virginia, nothing U.S. have approvals there on should through to answer back have continue and CFIUS anything from all issue, to the And of the think a Australia now meeting that addition Chinese approvals there challenge, continue work there's and the we the revisions. do Carolina, to GSEs I but at June. we U.S. approvals for

sometime we my on timelines the quickly now would as moving as of close based I and we're the we're said, this So, as year. in quarter we that can, just remarks fourth in expecting

Jamminder Singh Bhullar

the York is right? approval been hasn't yet? New That And secured pending still

Thomas J. McInerney

team is York plan. We pending. the – The just New reviewed approval with mitigation still the them CFIUS

taken all generally around conversations lead deals the and the those expertise department for has I have have that, on on regulators cybersecurity but is because York that the issues, well. on gone that they're they New so again think focused in

Jamminder Singh Bhullar

And it or but then the and seems rely asset like sales thoughts you this – like you're address you approval, how maturities confident how on think would in case that do you'll are for like you'd you that? in debt beyond what plan your addressing just XXXX on get about don't, –

Thomas J. McInerney

the I the U.S. through meet We've to maturities pursue would capital IPO where ultimately deal the approval energy XXX% talked sales. between as the still about Kelly that would well cash to for options come not do this we're June We XXXX obviously, as – would need that's asset raise the focused and about our and able do and would MI XXXX, would be and have not data our receive due. we to the closing options they it as do did and as but raising deal the include focus have say, and very were the if We on we've reason disclosed other of on whatever talked extent debt said, have of deal we we this we is. to time No, in XXXX now we we've to filings. although likely

Jamminder Singh Bhullar

price like the it well. And could then long doing about It the in care. companies for seems other are term just lastly, talk all you as hikes getting environment

that's sure, if is I'm helped things or making tougher? it So, not it

Thomas J. McInerney

multiyear working our Jimmy, for been we've five plan on now years. rate action almost

do to well. continue extremely We

long I right a think XXXX, in the say that in would said little we're actuarially than insolvency provide Penn claim. better they I – we remarks insurance have do target pay that the my on post viewpoint bit the thought. I regulators able to and think these Kelly, order be Treaty As probably taken care justified to their have in increases I companies to for term

but think, do – generally So, state, we're have environment, regulatory and I we approvals with the pleased by varies we we've generally been a yeah, receiving. very cooperative rate have

Jamminder Singh Bhullar

you. Thank Okay.

Operator

our next from comes And question Krueger Ryan KBW. from

Ryan Krueger

morning. Good Hi.

– time on the Just had regulatory one long mean you documents. the prior approvals, ongoing this, obviously there for process insurance to a re-filing been latest view do I follow-up are the

you far far or view this some that of completely the the already when regulators process are the filed So, pretty in – you along the did restarting given updates? process as

Thomas J. McInerney

they deal the which the obviously, based on as all structured, documentation reviewed had included the Well, originally unstacking.

original now now so, And year-end obviously that the XXXX. now since information. and to to are they with XXXX using filings, had – doing made filings all we're of financial early revise we had the we're now year-end update the we passage were unstacking, the They time, in XXXX, used

that updated also at be all making – to will and that we're while capital soon And change that interest still finalize regulators. We're billion and looking but – deal. the have plan. working in for that filings they're on we'll the So, the $X.X to the on expect been of the it's progress

issue due that So, have information they of to the just is that there's diligence I to lot main to think do review deal. a approve in the their order

Ryan Krueger

unstacking Okay. the prior than the and any that cybersecurity issues And of? there other aware other material then disagreements were the just originally – in you're

Thomas J. McInerney

Good Ryan. question.

have satisfaction. challenges we protecting – obviously, their after and main resolved the CFIUS PII the think concerns we've the I with been

GLAIC unstacking agreement as and we come to disclosed – is The in Genworth the and the of other an on couldn't we we've and evaluation Oceanwide issue Delaware. that between

without deal the resubmitting are we that. So,

other I cybersecurity of they the have the go have say, obviously we of issues unstacking was the sense know them can't is the the than lot unstacking, in the without my And that no comfortable CFIUS with to but U.S., ahead without deal through get there to then think regulators fairness Delaware? in of We a have review. their I But U.S. are issue information with I that as process. issues them. with and to they

Ryan Krueger

Okay.

need that unstacking their but – which do Virginia Does approved still to good not now they happening ones. the GLAIC, was quick couple we is given – more – couple (XX:XX:XX) on based approval deal is or unstacking, a already do they the Just it? reapprove it to the now need affects

Thomas J. McInerney

the with it to have they filing. did I any deal, Ryan, say, don't they of have think see question, process the to unstacking. go good supportive Virginia did to have but has there I I are re-evaluating but through re-file now updated the potential do would We – issues Virginia. with been with we the

Ryan Krueger

for you're us one – some give have terms lifetime seeing utilization material seeing more detail guess on on on been benefits? utilization negative Can your any the and I of the in Kelly. care trends, long you higher you're how Last trends term Okay. of what

Kelly L. Groh

morning, our bit get much bigger the of pool than first sometimes can benefit the in the said quarters average compound last and I lifetime quarter at But about on last it assumption seeing daily claims of some benefits of like we Good of update benefit a it, kind duration But XXXX. basis because year quarters higher or look benefits, the in actually there's benefits claims so areas rate. the Ryan. the those. do also those the kind that's with little utilization that in experience have of predicted utilization, rolling we where payments and trend. based last than on a that two lifetime had are post act in have the we are been we inflation seeing even On experience. on really seeing the benefits, emerged first longer for options we're two we're If quarterly four seeing what overall worth pressure benefit the X.X% is benefit a Yeah. in Like a negative non-lifetime couple worth I quarters of lifetime

So, to it's got we're well. have at. really time, point we've it this all types a as look We other estimate of at is but policies. looking different don't an there just of lot assumptions something dissecting in by We're at

soon you as it And give planning we're So, to third in through trying a as this is, updating we'll that the what normal really develops. on of fourth or process, go year. quarter doing information

Ryan Krueger

Thanks answers. Great. Okay. the for

Operator

And go of our comes Oppenheimer. question next Please ahead. Rick from Sherman

Rick Michael Sherman

states, it render curious you let's be I'm deal to state would approving close one deal if not morning. dead. their would or give the or not or any able state would Good basically approval, did not the denying say two or Hi. still

Thomas J. McInerney

question. your approval have for the all We Rick, do of regulators. receive from to you, Thank

the But any So, well, at lot this that But see is that regulators the as through. issues see the they my deal, to regulators reviewing aware if issues said, reasonably I information any are talked the of any I'm the a about with I – than and of other with the we get did deal are view don't have significant other be we've in issues regulators. point, past. states And significant reviews to going a that not of don't approve have – transaction. challenge not the the there's would I

Rick Michael Sherman

doing end business wouldn't any have your problem curious, doing the just it the relationship not in solve doesn't? it that anymore, business would because of just that state, option wouldn't of just you or I'm still if that state in business

Thomas J. McInerney

Well, I would our regulator have want the in would depends receive to approve talking deal. deal it be view the all about. which approvals to for on But that we you're the states mean,

Rick Michael Sherman

question. my That's you. Thank Okay.

Operator

comes question And Bank our from Andrew America. next from of Molloy

Andrew S. Molloy

would good you commentary still have morning. believe remaining is any any be color visibility three Oceanwide approval I entities have on? obtain they to, lean or to in provide that Thank China you from regulatory three Can commentary to so, approvals or great. China the Hey, you. process

Thomas J. McInerney

again, the commission The team many our and And that been meeting regulation. the from I we're I've there there, regulators times Australia, been seems the issue. that have China has have know, to talked and over as you, focused have have Oceanwide China heard on others Canada, regulators the I as be is on and process there's required U.S., nothing the have focused to or the the regulators generally with well the Oceanwide the approvals. particularly Obviously, Thank that far to insurance on way gone on to parties China go and that Andrew. approvals do an we approvals. managed Obviously, through banking, I've those

approvals generally in with and I but the we so, out to for of think in making and progress needed Genworth Oceanwide. respect good don't want I approvals get the Oceanwide them are to both front And China

Andrew S. Molloy

Thank you.

Operator

Please And our next go of Gallagher question comes ahead. from Tom Evercore.

Thomas Gallagher

morning. Good

review, the through totally term or process, care state two long the meaning to on approve before long approval get do all the a in your Just is you at to that need involved regulatory review separate? you are question care term the expect regulators

Thomas J. McInerney

our on say, to They're separate. whether Oceanwide same our my we do that Tom, we're being change we obviously to not, we'll is look plan. need of to review approve that's at owned the a a the have LTC on asked deal through business, reserves, control and based by of premium update that's multi-year view question. what to approval on good generally approvals review additional the the or would go also I review

on So, would assumptions I an the the review process that don't on believe occurs anything have transaction. of impact

Thomas Gallagher

claims, that terms book, quarters lifetime when claims, that I your then had And still trend seeing proportion benefits that incurred of the the a Kelly, a to new a seeing, you how – relative it. are about is you ago? of a you higher submissions Got have lifetime those in the you're lifetime overall couple benefits, that's compare has of much proportion benefits talk you think bit flagged of submitted whether can claim

Kelly L. Groh

stable. – for Thanks We the question, Tom. the has been do trend pretty

higher testing that our We our have have margin do may in propensity related claim. benefits assumptions and have is to to we with seen, a what people lifetime put

updates see has last the as a really of quarters, diagnoses of one that increased trend of And few did mental did the testing not the those So we things over proportion changed year. people our really XXXX as compound In of we the a much. all we about first But the with saw half X%. with that was though, part last BIO margin XX%. few that about increased

are definitely watching. those trends that So, we're

Thomas Gallagher

would with is – can that of propensity claims, even people say lifetime have just you go on to claim a quantification your total higher directional on can many that benefits provide those total be claim, a have how statistic at on help are people useful? somewhat the give of benefits you maybe you of lifetime And it. Got that any when it, if look you

Thomas J. McInerney

that a lifetime two-thirds What since if careful policies offered up don't. mid-XXXXs, as all whereas legacy II, of I would point we you Choice a using pool, you as Of pool, the do lifetime which in that a think obviously, policies you a benefits, of our obviously, more And not terms claims so the a have haven't policyholder since because worried I limit our you're of there's to issued is were lifetime Tom, the say, in the if about XX% it. XXXX. have are very is about have benefits, limit few have making

think – claims other than lifetime speak you has relatively I sooner we – non-lifetime so because pool claims an So, would would that's expect that claim the doesn't. one come the one would and why to policyholder unlimited

Thomas Gallagher

non-lifetime are That, Tom the benefits versus policyholders sense lifetime or and you current currently what have total that have percent – makes benefits? on do the you of claims claim

Thomas J. McInerney

ones where But increases and that our there when going Tom very that. three quarters and what after, benefits. people that have policies premium Kelly, and financial a compound focused of really third substantial there answer and of a the I increases is policies on I the have be will policies policies We'll X% have would lifetime we're is where remind that's look think, where factor about you our premium then And at the about we're inflation of would you that.

to So, liabilities do has most on the future clearly in and to we think more premium the I we that on have manage reductions benefit there the details increases those the either work terms are need of ones some getting Kelly or numbers.

Kelly L. Groh

a our do about lifetime claimants current of benefits. Yeah. have third And Tom it's

seven pressure about So, in a seeing is it's and the duration in plus where we're third. really

Thomas Gallagher

Okay. Thank you.

Thomas J. McInerney

you. Thank

Operator

And from Barclays. Please our from ahead. Peter comes go next question Troisi

Peter Troisi

thanks. Great

questions a Just me. couple for

First service. after X the thinking do How if target, the does? far on when cash keep the it target target that out transaction about holdco mentioned you that closes, would Oceanwide you of you China times debt even look

Kelly L. Groh

our Thanks show goal with what reduce Oceanwide obviously, what managing and as question, is work debt rating the on Peter. too. It's to plan we for the capital It's the definitely overall. we're our we agencies

to So, will in we're point that currently the less to. hold we're target be it, operating But cash amount working through it's the of the we've that holdco got company at time.

Peter Troisi

closes, approvals? I disclosure, Okay have provide you then receive what any makes with But will given insurance you'll post-closing, regulators. financial just forward that China know transaction regulatory the type have of the statutory you secondly, statements do to that assuming provide operating you thought of you'll sense. other continue think disclosure types the if And that going to what financial companies to all file Oceanwide

Thomas J. McInerney

the plan to of is of based as the closing changes purchase company, price the obviously on basis accounting, our accounting the Yeah, completely under the of at transaction. and purchase value the

and days end. the after on reset statements, everything continue do U.S. we after that So, requirement the GAAP term base into have under GAAP get a a days March we XX on entered X, U.S. the to XX does end financial to year basis. provide closed And and loan quarter

do our that. to continue to So intention is

Peter Troisi

thanks, Kelly. Okay,

Operator

have for from go from we Please Esterov Joshua CreditSights. question gentlemen, one and ahead. ladies time And final

Josh Esterov

now MI I you from the is quarter, Hey, good felt sending for fourth in as could guess intend about say, issues comfortable for or PMIERs, iteration next sending let's morning. Can distribution, you that some are especially the rationale wait of or $XX the this talk the maximum U.S. that million just prevent quarter? there there to third you

Kelly L. Groh

in take at ratings what we into unassigned but going lot question, XXXX we amount anticipate our the the to standards of then, that unassigned our in it's for is do important plan you the at the an can extremely It's well, our look don't got available the appropriate as Kelly. in filings we've our dividends now, point long as got adequately look We the the got holding Thanks at that won't PMIERs efficient capital sense and on felt new structure competitive in term. X.X but stay we want MI at we have we'll we is cautious. effect U.S. do company so we've it's given at dividends PMIERs want ratio on a surplus differential, have of capital we keeping make when us we've at appropriately a ability to of really the the terms XXX%, size as the doing strong, also we Josh, XX/XX/XXXX But surplus yearend time, need we'll at we're this overall to beginning be of that much dividends too make statutory It to our amount to over of there. buffer and capitalized marketplace. cash, for based need company right looking the if in sure

Josh Esterov

Thanks a lot.

Operator

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

Thomas J. McInerney

Thank soon continue Thank you Oceanwide. to and for thanks back in time work you you We're closing your XXXX continued the transaction as much. you, our your very will today. of to performance as all they of with hard and Savannah and to We updates questions very interest Genworth very with second proud appreciate quarter and become available. towards we

Operator

this you the end. and will second time, concludes Genworth At call Financial for this conference ladies the And gentlemen, earnings call. Thank participation. your quarter