Genworth Financial (GNW)

Tim Owens VP, IR
Kelly Groh EVP & CFO
Kevin Schneider EVP & COO
Thomas McInerney President, CEO & Director
Ryan Krueger KBW
Jamminder Bhullar JPMorgan Chase & Co.
Thomas Gallagher Evercore ISI
Geoffrey Dunn Dowling & Partners Securities
Call transcript
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Good morning, ladies and gentlemen, and welcome to Genworth Financial's Third Quarter 2019 Earnings Conference Call. My name is Lauren, and I will be your coordinator today. [Operator Instructions].

I would now like to turn the presentation over to Tim Owens, Vice President of Investor Relations. Mr. proceed. may you Owens,

Tim Owens

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

to earnings Our were press call. these was We our all to during materials. released supplement and posted presentation of last night encourage be release and this our and referenced our website financial review will you morning,

our Today, McInerney; followed Tom Chief Executive Chief Officer. you Financial Officer, will hear from our Kelly and Groh, President by

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

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

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

earnings may the report you materially cautionary with on forward-looking our the factors release actual such statements. filed the presentation SEC. our in annual regarding differ as well and to results risk most related as read Form We advise recent notes as Our in XX-K from statements

includes meaningful required that non-GAAP we business, we been results also with investor about that materials, to non-GAAP measures measures In discussion Also, rules. note SEC exchange. Australia earnings accordance and for talk supplement, foreign all where GAAP impact investors. please morning's percentage financial exclude reconciled changes the to our This release financial be in have may when of believe our

the statements. statutory Finally, of the references are results estimates statutory to filing due timing to of the

announced, we XX hold the call the December turn Exchange York with rules. to over to have Tom plan I New previously as XXXX Before Meeting comply Kelly, Annual and our to on Stockholders Stock we

XX, our be that proposed will Meeting near the filed XXXX completed event Annual proxy held. merger by the Our Stockholder is be XXXX statement In in will with XXXX, Oceanwide December not future.

the CEO, turn over I'll McInerney. Tom now our to And call

Thomas McInerney

platforms. pleased towards well mortgage and execution continued levels I progress continue another mortgage transaction other all U.S. capital of solid income, tirelessly the our with strength insurance strategic business we by strong closing Good today's towards across businesses and in thank generating Genworth our in million businesses, insurance operating for the Oceanwide. joining the ongoing results, driven across in while quarter insurance adjusted our work to momentum as $XXX you delivered am the call. priorities our morning, underlying and U.S. as with life

Our XXXX, long-term plan care of achieved rate been continues be rate action for action have XX%. Year-to-date, approved Genworth focus insurance approximately has significant value and representing cumulative billion to multiyear present premium strong, of strategic million rate with a increases. since increase net Genworth. $XX.X a And basis average in-force weighted LTC $XXX premiums, approvals impacted premium positive at of

is of long-term forth objective We force timely for to need develop see initiatives and broad-based this justified on regulators. reviewing support approach the premium long-term experience In the improve as for current long-term will state plan. more insurance rate enhanced by care acknowledgment this critical line given health of important as emerging, a insurance believe policyholders. rate premium national to with of insurance insurance success continue NAIC the policies the increases most of well is care the Genworth's as the the the still and focus much initiative This rates. as action is industry multiyear age future long-term significantly I industry just from on consistent and actuarially set care our the task extremely

Let transaction with me on our Oceanwide. turn ongoing to update now an

Canada substantive of in the sale to regulators of Oceanwide of progress discussed, transaction with Genworth explored completion the regarding Genworth absence previously As Oceanwide. the Oceanwide facilitate and transaction, Canadian the the with

X.X our Partners, XX% billion. billion CAD Canada value stake roughly for Following the or of to we our X.X thorough to options, Business Genworth Brookfield transaction a review of agreed potential Brookfield, USD of or disposal total in sale

Brookfield real in with for sectors. with and We in residential Genworth a an insurance expertise regarded Brookfield significant are is Canada. Canada, the extremely pleased a estate highly investor in that stake agreement reached and we

The our Last after to customers' Genworth while transitional Canada, Canadian speed that interest the Genworth their since data agreement, provide the Genworth continues the week, sale our Brookfield when certainty transaction. transaction to seeking also and closing have the certain Canadian enhanced of satisfies includes and discussions transition the Canadian regulators we Canada options, of are criteria period Canada. transaction to during To end, in price. execution announcing announced of the disposal we of regulators that data Brookfield with ensure the regular protection reviewing sought of our and review been regarding services which Genworth in

part the or certain provide stake. business XX after Canada, to with Canada Genworth must in XXXX, sale agreement XX Genworth original Genworth transition of agreement, TSA, Genworth to the months when majority up As service transactions. A of to in any very for M&A our common transition services IPO-ed is

resources ongoing human infrastructure, finance accounting-related that provide functions. will the services For include separation Genworth support the Genworth Canada, and and of IT

Oceanwide the and during receipt Oceanwide owned approvals and the by a part to good clearances. after of close XX-month the of relevant closes, timely transaction Genworth transaction Therefore, expect Genworth assuming Oceanwide transition shortly period. to the the be XX- Brookfield will

as that to to ensure to this plan in are The mitigation work appropriate regulators are experience Genworth our includes the Genworth, to mitigation XX- the protections in the and period under review Canadian businesses, CFIUS develop developed asking has process. is together transition plan Brookfield the U.S. This data from during Canada post-closing. data XX-month place Genworth the a part enhanced program of which leveraging security

sale Canadian targeting be that during and Brookfield possible period. We required Genworth transition to assurances the the data secured are have other the are the end all received of of to approvals with complete regulators the will as working transaction Canadian customer Canada and by XXXX. as currently quickly Genworth provide closing

Liberal October the control Party Canada's Canadian the Following of retained government. elections, XX

and our will to we expect the with personnel significant we approval, work As responsible continue regulatory at transaction's not do agencies collaboratively such, any in change them. the for

Canada than December sale entered XX, to Oceanwide Oceanwide our deadline consent, Agreement, U.S. consented and to connection later not extending with agreement and Genworth merger a In XXXX. Genworth Brookfield. Genworth the Oceanwide to into previously regarding Since and passage well Waiver XXth the information all of approvals then, as Oceanwide the international updated Canada regulators disposition. reflect received of we and jurisdictions. time Genworth transaction certain the as from have the to other provided necessary

reapproval. we of approval York earlier an regulatory from Our to with the New secure Financial York this and year, New expired in are appropriate Department discussions Services

you As the fourth Genworth assumption-related and of reviews Life annual in margin our each year. LTC, performs know, annuities quarter

to York business LTC recently requested subsidiary, Department information certain review, our additional increase the Insurance on of conducting LTC actuarial Financial state are the reviewed We Life of Genworth and we and LTC past Company our York regarding with Based New various be discussions, with New in the rate York, process assumptions of year's GLICNY. New this these practice, Services regulators. consistent has or are in discussing premium

assessing GLICNY Then regulator our concurrently fourth New of the reapproval of of with York assumption quarter testing consideration is transaction. information a the for cash flow

allow working that with the New closing York provide they end to of year. Oceanwide are of them, the information the the their We to review transaction by so finish necessary a all can for the to

well the the GLIC closings with force, of same in past manage in of and regulators reviews fourth as and and will Because as in we've the done task the the as continue timing Brookfield discussed manner to GLAIC quarter Oceanwide our these than the past. NAIC assumption for has Genworth transaction We work of reviews actuarial GLICNY, potential assumption engaged earlier years.

to transaction, the part, the Fannie supplemental has of In the Canadian will Oceanwide Freddie of information reapprove in timing need their approvals. are on Mac impact other transaction. regulators Timing the to for reapprovals, York, confirming addition the prior or it and while currently whether to determine Mae of any our approvals on New some depend, existing reviewing closing

or final for dependent equal X tranches the subject the approvals XXXX. tranches end the quarter close quarter or to of Based of it receipt the to State been to receipt the of of billion the committed strong to timing Oceanwide required regulatory works expected Oceanwide our $X.X is approvals, receive of end intends of installments, the quarter to also regulatory Administration of on Foreign the to third the of clearance China on made sale capital Canadian Following approvals the conversion transaction. commitment to Oceanwide need funds. remains through all in XXXX our of XXXX, and which the transaction. first and target patient of the of the post-closing are Oceanwide clearances. Exchange, it cooperative plan, the transfer first to XXXX, ultimately by the X the Oceanwide process, Genworth will also are currency has The make investment be transaction the by regulatory testament the SAFE, and very their as and from timing closing of

continue like for towards work also X been understand signed fully agreement the the our other ago. and how and your as thank Oceanwide to would other merger shareholders we for I to stakeholders, shareholders has challenging stakeholders it our that given and patience Genworth transaction. closing We years

successful Oceanwide is this possible to the committed shareholders, to conclusion everything to in of possible. Our Board bring doing transaction a continues to soon believe interest our transaction and the remain best as as we

to continues debt flexibility. address time, deliver improve the steps and maturities, Genworth upcoming solid well is At given the financial to taken its have to positioned same performance we our

our over as financial who our well will key and call Now I'll to positions. capital our of results, the liquidity drivers of review turn discuss as review provide assumption a process and performance Kelly,

Kelly Groh

and in I provide our our good and cover cash quarter and Tom, at company. will results flexibility on capital holding I financial businesses drivers. Thanks, discuss on morning, also everyone. detail will more and levels our updates Today, third key

Genworth rules quarterly operations treatment the the planned position, than carrying our prior been are results cash the the reflect Canada extent Genworth in met the in required estimated also have dollars discontinued has press accounting separately and periods been and loss sold. have Canada's reported sale to reported noted of on re-presented last financial release of proceeds period to held-for-sale estimated been evening, value as released sale supplement business current to the an the of has this. and financial net operations. record us accounting for requirements planned in These flows all U.S. Accordingly, less the cash and As

the or The sale from discontinued as Genworth shareholders cost the to was well as part balance loss a purchase recorded due exchange given our higher While to differences equity on in dollar, as sales shown rate Canada. estimated AOCI, Genworth quarter business, currency the accumulated less the arisen of the $XXX a proceeds net income, comprehensive our sheet, to recorded of U.S. time. the we over the was results of our operations that mainly quarterly million, reflecting attributable in other Canadian translation slightly price have as loss Canadian than from

adjustments interest to other as Canada previously corporate and interest The discontinued overhead term the Genworth financial directly taxes loan that in related portion reflected and of and the include presentation. corporate in supplement the in quarterly of allocated part the our included the Genworth a secured to Canada, impacts other operations These are quantified on investor business. Canadian and ownership by

now for million, the quarter quarter's focusing We of shift comments $XXX adjusted performance, of operation and million operations. me financial continuing to income reported million. current net of continuing operating $XX most from to shareholders Let on income income of the $XXX an my Genworth

mortgage ratio both the solid strong businesses with loss platforms. and insurance perform continue Our Australian on U.S. U.S. well to levels in capital performance and

results offset action acquisition immediate unlocking in and for Life rate results to insurance, rates mixed, deferred an accelerated by care of charge long-term Our continuing annuities. were U.S. interest low costs in in-force by Life premium due driven amortization single good

versus year. to low low quarter, fundamental, overall unemployment down $XX stable was MI, and solid including operating continued housing reflect $XXX growth, interest rates, U.S. prior million economic $XX income in up million the In was prices. sequentially steady USMI's and million adjusted which results the

X a loss prior third reported from of is prior reduced XX%, loss included up update, ratio XX Note points. quarter's quarter and which the flat that factor reserve period's X by was ratio versus ratio prior reported quarter points loss which year. The the the that

prior of versus year levels strong originations This written, were up of grow, on from up the last U.S. basis, activity. and up market end quarter XXXX. of driven quarter in-force in its the strong by and and larger cures year-over-year counts up levels, versus third remained and delinquencies persistency Primary XX% with to last was Favorability lower trends. did high portfolio. rates, purchase the quarter, prior year all-time was the mortgage driven for very increasing a seasonal aging USMI net at offsetting refinance by New continues insurance insurance new of refinancing and moderate a in-force in reaching and mortgage $XXX billion in reflecting reflects the seasonality lower quarter market. origination The higher from sequential

quarter and up flow Our to Once we insurance the year. for XX% have expect written, $XX.X again, remained billion, third the market new USMI share versus estimated strong. or our was NIW, prior XX% quarter sequentially XXXX

an manage year. mid-teens We to the continue XXXX the overall in return to book on expectation

Moving to Australia.

seasoning. and million was the the and prior the ratio the prior XX%, quarter points X from the XX%. Australia's Consistent up pattern. $X X mortgage GAAP fourth flow with XX% year. of versus origination primarily quarter of review year, prior volume XX% was its basis, loss accounting prior year, of the up in sequentially of insurance loss versus ratio our key The line On the XXXX quarter, XX% portfolio XX% earnings versus U.S. Our with quarter higher full in primarily business year-to-date and $XX up complete annual year IFRS in which business versus were quarter the mortgage premium expected was expectations NIW million levels in from operating years, XX% customers. is The from in the adjusted is income and from ratio the million the premiums loss earned down certain loss to XXXX, its versus the points Australia to quarter prior prior of in $X lower ratio

we our segment. reserves, adjustments assumptions on expectations. In given our our care, made claim to to to aggregate, that U.S. our Turning in line claims, Life experience in current methodologies with significant was and recent no insurance long-term

the lower generally for year. claim the performance is financial terminations versus care, consistent seasonal patterns Regarding quarter half long-term which for of were for prior the with second quarter, the

termination in year, Compared to line. were the rates prior claim

utilization reflect completed claims, New long-term to reserve assumption review, higher year's claims the severity. updated following last after continued care

in to claim Additionally, the blocks year, reduced rate financial blocks, in-force which are we benefit related increase released we This age. impacts, the being the higher be expect continue seeing Choice particularly long-term our care, X of the are deck overall larger for strong. Choice rate to now as approvals the XXXX large The to also illustrated on implemented. of on counts morning, X Page and and is this as continue X which investor actions primarily this benefits earlier

options, reduced last As have frequency approvals as we higher these and our selected which at action policyholders benefit to being quarter, are rounds noted policyholders, by increases. a rate many expanded included these multiple stable premium of been subject of

level reductions, of XXXX. implement We releases XXXX achieved from into actions meaningful in-force rate increases care the the larger expect in long-term to continue go as we a with reserve associated benefit rate and and XXXX premium

benefit difficult quarter in to options level from behavior, is future. it predict However, vary the may policyholder of to reduced and quarter the

additional that calls basis, we approved in future As would we XXXX. estimated assumptions value on this a we actions XXXX, under in late net actuarial of that discussed approximately updated prior on year-end achieve were $X billion, as present year, rate

approvals basis, $X net the $X Our of value exceeded a year-to-date on present amount. billion billion XXXX

rate year, last approximately XX remaining multiyear obtain take approvals. years that to it plan implement Our and action assumed refined will these

are evaluating connection testing loss flow with fourth quarter actuarial our We in testing currently assumptions review. and our cash recognition

more as We claim. newer more particularly X, that a just experience our series is focused policyholders credibility developing with on on are gone policy on updated Choice have

of an care annualized, XX XX% interest of future rate average $XXX updates premiums and long-term between X, Any our of with assumptions, Choice needed. view likely approximately years and premium including increase of total long-term to represents individual has age our attained of care amount about the old. XX actions million long-term will rates, premiums

PCS and the blocks comparison, our age attained are XX, I, Pre on PCS, respectively. oldest the PCS average II For XX XX,

in We value LTC premiums premium have the policyholders, Choice premium more from allows manageable higher a on and for and additional approved longer net the X runway which actions, significantly increase. for is for present blocks our for increases smaller collecting that benefit rate newer

rate some Choice legacy on series XXX%-plus our average for some product XXX%-plus versus cumulative the with X approving of older approximately nationwide increases for some products. is legacy states Our of XX%

Our disclosed number actuarial and fourth for will cash for are assumptions, utilization, all loss rates among review quarter progress in rate our These of be will interest earnings reviews a part as expected disclosures. and of flow still care including long-term consider our of testing products recognition in benefit claim incidents, in-force a others. and mortality, actions,

during Also, as and our remarks, Delaware we the closing. these York quarter, start discussing in care are We domiciliary past. in Brookfield with of the our this also fourth the overall as timing given New his and did have Tom discussions as assumptions, transaction long-term earlier reviews Virginia, we noted the progress, year, done regulators: Oceanwide

Insurance. Turning to Life

$XX and Overall for to of Our results was DAC the ceded higher reinsurance versus related rates. amortization year. million included mortality after in quarter tax Life accelerated sequentially lower last

post-level quarter, be premium impact, XX-year XXXX, million discussed additional last blocks business noncash life related by and insurance an continues tax we primarily to these large written level periods. is amortization, versus As lapses life term term the entering life reduced after negatively million, term last higher $XX in accelerated quarter. from a premium with insurance term $X lapses, which The DAC primarily associated impacted earnings the to life their XXXX

more remain expect We amortization elevated lapses this throughout as business and the of to XXXX accelerate. premium and post-level enters XXXX period

rates review and the basis the XXXX our of significant XXX between As are we on on the December of interest Life around end our XXXX. business, of given we are assumptions finalizing points quarter on decline third focusing treasury XX-year

interest are lines moments. business rates, taken with year analyzing some impacts to currently the few when in will largely rate assumptions, a most, our on prior as of I different our environment a perspective interest sensitivity related interest and share a life mortality, than include whole. other persistency all and rate universal and are how We assumptions, line in

variable our interest of related due immediate and the quarter, We the during million to annuities, had annuity rates lower in fixed $XX investment reserves premium versus decline interest lower higher saw rates. an In driven single products, income prior after-tax loss quarter. to charge recognition we by significant the also

tested that immediate no quarterly, in loss there interest environment. recognition rate premium is single this given annuities Our are margin for

quarter was operating quarter. loss prior which I as and was for Corporate restated versus improved Other, last adjusted periods, in million This in has discussed earlier, Our $XX to primarily been the anticipate fourth and tax from a timing We the to approximately adjustments expenses. occur and timing $X benefit in favorable tax tax of million lower $XX other of quarter. million due

to capital levels. turning Now

an to the Our U.S. last In of with businesses PMIER as assets quarter and on of flows a and reinsurance USMI, The maintain we million mortgage portion excessive a year capital of insurance book XXX% year increased sufficiency quarter. of over cash sufficiency Australian during the XX, XXX%, required loss September continue quarter for finished of the execution very ratio level the to above PMIER level strong from the $XXX transaction the up XXXX and strong last XXXX. positions.

we noted release, a press USMI from in million ordinary dividend received our $XXX As in October.

factors We economy. on U.S. in expect dividend trends the which be current in strength continue an well pay macroeconomic favorable employment housing based and and forward, overall as U.S. plans, USMI business our to performance within levels market strong to a the as annual able as such assumes going

economic regulatory future Oceanwide factors, the look timing business and and we consider based of related factors, appropriate constraints, the including assess and dividends amount transaction we plan. performance, will will we a on capital As of variety also forward,

local XXX%, above is The prescribed reflected million, capital quarter business an of for after share $X.XXX today bring the APRA, declared per The of high ended approval business range, last the quarter. regulator, which from in aggregate million. range from its amount, approximately target AUD Australian or its dividend dividend amount XXX%. XXX a management's of MI excess the end To receiving special closer an and XXX of to to on our XXX% on XX% the based rates. primarily quarter, the and of our the ratio, end a will Australia estimated the U.S. payable company basis, Our current during of decrease $XX in capital in million down is at target dividends position Australia's dollars ratio receive XXX% holding Genworth with paid further optimize capital PCA, exchange percentage ownership capital November management of foreign PCA AUD approximately to

net disclosed million dividend holding to with the in September to and $XX special The announced early XX, net dividends paid given previously billion that special company Genworth for October was agreement paid. transaction Brookfield on a proceeds price reduce approximately dividend will is special the by Canada's proceeds USMI. any $XX of million from adjusted proceeds the amount, similar $X.X fixed the of

is GLIC, approximately slightly quarter. Genworth in Life to of quarter up at company's third Company, Insurance capital from end capital, or action expect of the We level XXX% risk-based the second which

quarter annuities. Life statutory claims and benefiting in-force increase offsets rates profitability from was in rate the care in in positive, statutory continued from This long-term development. in-fixed from lower interest earnings U.S. in annuity actions long-term capital from income variable care and required the

no to capital our plan the quarter; infuse of statutory basis, U.S. blocks; on management approximately capital did on businesses transaction their investors is that to obligations. conjunction a Delaware will regarding of billion, made as increase remind proposed other will the with Life our and all justified with a dividends. approval slightly part in-force with nor U.S. entities actions rely million GLIC Delaware contribution actuarially transaction, I of in earlier Genworth $XXX with Oceanwide of process manage to contribute It the Oceanwide. to rate satisfy of stand-alone the a The is policyholder during This GLIC. these intention extract future and our agreement commitment Life consolidated part which $X in special want to as a the prudent business to

holding the assets, prior cash and quarter. down million with from from the Moving in quarter liquid to we company, the million $XXX ended $XXX

interest repurchases. holding $X to collateral be interest of During swap of Offsetting hybrid to of the payments items. were from $XX share Intercompany million, company a cash our tax miscellaneous cash $XX holding net to rate additional proceeds million, million, total the payments debt million primarily and company. in $XX dividends were the source quarter, million $XX inflows continue of on included which other these

We special to expect loan, million by $XXX of Brookfield's option $XX dividend have $XX an on dividend fourth if bridge the has benefit regulators USMI's Canada's of dividend execute cash our Australia's Canada approved and million. not tomorrow. million, do to by from quarter position of special announced sale been We

will draw continue determine progress assess We overall regulators on to we an to Canadian the deal whether the funds at with these and Oceanwide appropriate time.

Now I want expectations many and drop to may insurers how recent which the long-term that rates rates long cover a most is low in topic interest carefully, for investors persist. watching are and these

quarter, second to early further X% the to around into last we end week. only rebound fall the at third then end the and October, at the the fall XX-year of X.X% treasury X.XX% of to During quarter from quarter since saw

portfolio. levels offset this with via saw rates and U.S. are investment ways, multiple impact the fixed In in of in this lower rates current some negative unique may low are while Genworth charge business, have from our business and we our is levels unlocking low business, in some the somewhat In insurance our generally impact expanded impacted. the lower that U.S. we investment insurance mix others this while as periods, in positively period, businesses an income market, quarter; future both business and benefit originations through by interest of lower given negatively on persistency businesses industry, be our benefit income rates Life mortgage new as of income.

completing. incorporate it other $XXX between or once interest before rates our DAC stayed our currently amount not our view in we XX also This future actuarial Universal is assumption process to September that million rates Life the complete of incorporated near by are could will assumption our updates We taxes. with changes Related process our of other results. in the their amortization we fourth if products, in you update levels, interest connection quarter announcing in is accelerate and and $XXX our million offsets,

our sensitivities other XX-K, encourage our review. of I some annual disclosed rate interest to which in We've investors discrete

We to will forward. environment monitor as continue move low we the closely rate

performing strong In very We well our capital and including on and financial transaction quarter to significant closing, and continue We focused businesses our it completing mortgage to improve a of and dividends Brookfield remain stabilize soon the to action financially, plan insurance focused Canada closing to Operationally, as LTC Oceanwide execute company. Genworth then sale intended progress, possible. other strong Genworth. operational on rate priorities are insurance levels their strategic with as for our remain and on holding our solid Life actions earnings, help the businesses. the U.S. was

questions. that, open it up With for let's


with We'll Ryan take your Instructions]. from [Operator first question Krueger KBW Brokerage.

Ryan Krueger

with of terms In having the interactions you any that any are have you them? CFIUS? you include to does And reapprovals that additional need, -- do is -- need

Thomas McInerney

mitigation plan, their security deal question. are they comfortable further the good customers', do does and mitigation plan that. a were up Ryan, given Comes only national on the individual customers' satisfied the We proprietary lot. not They approved the with that protecting issue They need U.S. any approval was from that information. CFIUS.

completed not their that the objections, perspective, from review. has So we're -- and case. that remains It CFIUS has

Ryan Krueger

Choice I guess X. -- on data by increases? claim you around comments Are there? you but that is coming you can in detail give be rate future any it's developing believe Kelly, negatively, for premium offset then more your are that [indiscernible] can that And you

Kelly Groh

Choice at like When is between our question, remarks, XX. and block, in and Yes. X like That's look of my a policyholder we XX average that age prepared mentioned great the Ryan. I

Of total had those total XX.X. on about claims, like X,XXX claims. XX,XXX policyholders are it's about think XX,XXX I of claims. still those We've

trending have the higher below trending So experience than to some just it our while -- a we're definitely expectation which the watching bit little expected business, of this bit be ages, it's older better, little the particularly for experience. ages, Because is we've a of had those different XX-and-above XX-year-old. their underwriting blocks we've seen better incidence we is for for

we So to actions have able block newer blocks X anticipate we -- rate then. do being very few since the and Choice on

but question. increases, could anticipate currently and underway. a basis I state-by-state the of on rate appreciate evaluating much we're the that So work would offset with is still we that that

Thomas McInerney

said. Ryan, I Kelly's you agree just what with add I would comments. to

to I of talked noted We newer force significant and that or it's arguable things have and on while not. that the claims presentations have -- had I've number we conversations, for XX,XXX of a to X is Choice And task the one lives is to about. statistically given XXX,XXX blocks, the NAIC them

approve if and One over is premiums is premium years you things of for the the many the policyholders along is last because overall collect the for for increases we've less, applying ultimate premium the increases. have because is you XX better some more us statistics increase better learned average our because go way. the they've It's that more regulators they including sooner learned And on XX%, sooner Kelly states X the states. ultimately that top block, other of example, gave the given blocks you of XX than the increase for in I PCS premium to have lower XXX%

do I better is waiting. that task very is So to think a there view NAIC in premium than that high of premiums, sooner those going given get general this force increase

increase is better time because made we of of policyholders, because are the it's that longer for dollar we premium better advantage the it on a the is, point younger the us. And every So premium and Kelly for I lower. policyholders X age period Choice for we collecting X have, Choice over think then the then think given ultimate it's approved,

also a XX of, and is mentioned do and Chief XX of I the which I composed number and think I Actuary. an the and Minnesota calls, by led important, that there critically it the so we've last think, task that is it's actuarial force, think XX we're our composed do I commissioners, working it's I task subgroup times and several NAIC And of states generally, with, actuaries, over think, force, --

both think companies the do insurance I X so last community, the as we've as making given or all And well that learned the are all regulatory over X progress, blocks have NAIC years. the these that

Kelly Groh

I mentioned on I, he when Tom Ryan, XXX%. mentioned the And -- XX% think and PCS Tom Yes. meant

Thomas McInerney

Yes. XXX%.

Kelly Groh



Bhullar from JPMorgan. comes question next Our with Jimmy

Jamminder Bhullar

So questions. I of had a couple

I were the trying of sort Canadian of around the go on But... or are another include Oceanwide? conversations of different lack as part with you sale Canadian First the to of approval And process. business now the then your then regulators have one. when the first conversations How

Thomas McInerney

that's Brookfield. before good we announced did We Jimmy, have not question. previously sale to the really interactions a much

I they Brookfield the positive our and of think have regulators of acquirer, Canada Genworth and businesses. the also view OSFI the very and a positive other Brookfield view as a have

So provide we IPO shareholders' Kelly original the the extent are as services having agreed stake. much more we to Genworth detailed both our to I certain agreement, transition parent sold our majority mentioned, or conversations. the under And -- and

and Canada process is But that commitment. I Genworth's honoring Kevin maybe comment, we're Brookfield, Genworth leading ask then to So that a I going is with Schneider, And Kevin from it's OSFI well. make working think perspective.

Genworth been Brookfield I of a some Canada. have for both and They time. both quite think favorable has OSFI view regulating entities

very you and it's do have that between So add anything to you I to discussion think more Kevin, different engaged the on work want daily. you regulators. that? Do

Kevin Schneider

any encouraged concerns working try agreement think we're to service I be able and that. through in to you we'll the dialogue solve Tom. work transition We're related to it constructive that period. And and well, characterized

Jamminder Bhullar

pretty business, of a long-term couple you've quarters in that of on then had earnings good And business. the care

the benefiting quarters. think, the the To just hikes. are the the five I last of driving price Because versus better two maybe last obviously had prior margins out four you'd I hikes and losses, are extent think quarters, experience? results the from to what better price

how aberration maybe So through? is like benefit a price flow of positive versus starting hike much this in claim of just the trend to

Thomas McInerney

think say, would in now I premium billion I I one would for $XX.X substantial. our in half gives and the It's they value XXXX, credit question. thing, we our first from of Genworth present don't enough XXXX that say great are received anniversary the achieved we've increase date. XXXX. approvals, of since net another Jimmy, pretty -- implemented. cases policy over XXX% top some very approvals substantial, in And being the are in on states. And now implemented market that XX those

over mentioned now the benefit net increases, that are they also her older benefit books business, is And -- of this of are the now taking significantly earlier seeing of have get more years remarks, particularly we're to through. is in reduced perspective take all because the and earnings. an take it So if value takes the helpful for who full of fourth, a may taken increase reduced options several those policyholders they fifth long clearly full benefit, premium in round instead third, this premium the that that a Kelly reduced of from of premium the those number higher options. benefit run, earnings the the increase, to we present come contributes

that and the premium large into talking very this, of mentioned top think I going will increases Kelly in-force XX% forward. on that large the and think, on see the of we're do those you for 'XX I about states, think about premiums, benefit I XX XXXX, -- with balance increases overall So

and we're Now claims, we've changes obviously, assumption way. made higher that some the other obviously go that is, offsetting seeing

is policyholders you of fourth 'XX benefits, that round and increases, these XX% I or increase. go all about given balance. of But do the Today, XX%, benefits the So taking in reduced if 'XX, that fifth the of do cumulatively. XX%, is premium the it's you were particularly third, and think that to if the significant full of about back

still So if anything I for benefit to X significant on want we'll to particularly that. Kelly, continue. think blocks. -- to Choice earnings. that significant see you a the just to significant And And think provides hoping a newer I know, I increases, additional add our apply we're that's and premium been don't

Kelly Groh

give premium really has full reduced first XXXX X% X% were paying X%. let's would that at and that. date, X% increase. have percent, were nonforfeiture maybe about always And And XXXX, a of paid is doing look increase say, XX% our and metrics so we we shifted. the benefits to those implementing option X% cumulative nonforfeiture full If to down to around XX-ish XX%, rate you about around is I that taking the options. to point, X a say, policyholders XX% were were the reduced actions, benefits sense metrics the When of Just through about to are

driving So and the to the the as it compared people that rationalize that that coverage really they definitely to policies have they're paying. have seen premiums have has got increase been just


from Gallagher ISI. Evercore comes with Tom question next Our

Thomas Gallagher

claim severity you is, or or has increased amounts? seeing? you're claim Meaning, side, First long-term that claims care -- in that larger pretty is durations the question longer increase unpack that increased the prior is severity is coming the And been can also is from that years accelerating? with consistent

Kelly Groh

question, increased well, last update looking the but That's it and is as of Tom. really to that. talked I Really, I'll a briefly function assumption you've in at year night I great team the severity, as last we're think, know take our XXXX.

higher amount new claim that goes every books previously we the is had an that's So at up. on going than on put assumed

expectation claim we as really the each benefit just the on amounts that a we and a the average say of would thing claim for their last including increase different it's is, The to factors, of lot daily to So benefit with higher made on change due people assumption function severity year, daily I math. just on that's see depending it's the happens the focus what they as our to go they that have the will for we when so we claim, be and benefit maximize an them. option, when those try some reduced going see claims of benefits higher. Because do to they're people and experience conserve one that claims we on reasons align helpful with policyholders do of claim, can benefits those incentive is

Thomas Gallagher

an meaning, the model say though like it's getting through? of adjustment it's worse, you're seeing it fair is Kelly, acceleration it's -- to flowing more And more claim severity, sounds not

Kelly Groh

favorability, I quarterly trued a the a it we've on basis. on up as incurred but characterization. actually real had coming IBNR bit frankly, of a not fair as reported, through. model adjustment the That's And view we little that we've

really model believe a that So from my perspective, adjustment. that leads just it's me to

Thomas Gallagher

like on you it actuarial there a then expand this comments And NYDFS, what's in the more on sounded involvement there you year. having Can made Okay. going is on the bit there? the that review

Thomas McInerney

good assume it's are It's being as the question. negotiating. because discussions careful, answer we're regulators done being difficult in I always a our private questions all think, we're Thomas, to those that

So always say I -- with New little good had bit I would we've I'm But have a limited. York. dialogue

didn't Choice think newer we York given on update going New the X over them Canada. blocks the to timing, because as on The I given expect and Brookfield and issues have we're the we've aware that. around assumed of and obviously we -- the -- we'd and that severity that is all of of some that, through just blocks, sell the sale

line. time So that has the obviously delayed

review. run And approval their we to to are reapproval into they we're through reviewing concurrently, the be quarter going expired. going fourth going because we were So knew the

day this the this force this. and having having in I not we're regular on conversations, a said lot we're also of XX So my on I -- now and with dialogue, remarks, would NAIC I New more think more day dialogues all commissioners, -- regulators a is task just that. in York with out lot But all

New situation, because the York all versus these only York. are different And And done York its while York GLIC blocks. so, GLICNY that talking think New their I of New reviews of states. understanding Obviously, New say, do XX is at I GLICNY, being earlier And level. to NAIC would a other and the has we're regulators better a with it's

this how assumption to bit assumptions -- what York. is talk impact York's of if So York New does particularly to the But case, and increases, are premium and Kelly the review approve. it's we would to that to considering actually little I team a the how those part easier that making changes in that increases have make any New premium of New are

of would go unfair in to specifics negotiation think that So to discussions. I get I the discussions. into because think that out more I process. be than for good front the regulators it's It's can't me

were. you grant the increases to gives sense I there's much think, But there there part the of are more hopefully, ongoing regulators discussion, dialogues, more that than that is a these on today openness much

that we're have nevertheless, of so with with month or finishing them. the York going up to good. is next all to But So the through New process go

a we the the Genworth still we have shot to objective, think and So of mixed to close Genworth doing Oceanwide we the our transition close or at Oceanwide of and the Canada, and end year. the still That's sale close that. hope then sale, by

Thomas Gallagher

the review? AG -- from -- had some final our And is if -- the key they've with that The part -- are could. baseline And on regulators regulators changed the from think comment of a more to you information your you XXXX time of understanding gotten NAIC, focused have the be XX with -- Is discussions spending related that actuarial that would topic. last is potentially do I year Okay. the assumptions, one about just but one, disclosures. that morbidity that might on you model maybe

Thomas McInerney

years this Tom, XXXX XXXX, XXX,XXX had morbidity say, is another specific a made We claims. It's in from In went the We development. data, we we XX that 'XX the new to improvement think, that I improvement, actually I about the would and that community, significant XX on conservative is by good maybe shortened changes less I and morbidity applies pay from, our not. we really mean, market review sense, a I analyst morbidity we years years. think, question. There still significantly morbidity. to now in believe XXXX.

a pads on that's reporting the including we for -- statutory number or So conservative statutory adverse assumption, assume which picked provisions outside It's parties, and -- agencies, that because more we our improvement believe of XX been morbidity rating deviation. disclosed it's we up for X.X% XXX,XXX less of years. those morbidity by on claims,

more it's record assumptions. justifies than is that. those XX-year conservative track for our statutory, assumption -- So the But

the looking Kelly team our I review, to And this the on so myself That we're the -- given not for Genworth, that that, the assumption or our be the as at would of final porters. decisions get case the morbidity of and want would part and claims supported our we while have may that I may don't for -- and by making but for I record, data. us, say ahead is

Tom, the provision states the and NAIC clearly So correct other is parties different which are made it point, decisions. the that to AG is and XX NAIC making related given But general you how -- on point you're they look these supposed morbidity believe is we at X strong actuarial reviews AG We XX improvement. pretty supporting data we area make this that to that at. the conduct assumptions have under

Thomas Gallagher

assumption morbidity on I the newer actual Because development. assumption, And to the less I emphasis clarify, part more to was last of the understand in much whether assumption on there was so more embedded assumption. there referring in improvement improvement the itself, which more the year Okay. just is is baseline I the embedded think

I now the actually think baseline it's assumption on itself.

clarify So I don't know, just point. to that wanted

Thomas McInerney

both. or it's changed It's X the as and well who are as what morbidity both X baseline think, have I from there eliminated Tom, you're are competitors improvement. There morbidity assuming that improvement.

naturally more our in because the us did our paid we what book, of have we would because claim regulators the the claim so payment, actuarial all of last information And NAIC others view and they it, size do of ask that the about -- is of do. the but XXX,XXX billion X claims fact probably we than $XX.X years,

the baseline we both do supports experience that that make. the our morbidity and we improvement believe So assumptions


time from & Dowling Dunn gentlemen, for we and one with question Partners. Geoffrey final have Ladies

Geoffrey Dunn

market this year. market Could seem the recovery resurgence a to kind And obviously, an the a particularly versus then risk-based previous USMI NIW of about refi you You've talk this quarter, industry What little this shift bit business I talk level in a pricing. little your of year? for bit did share, trend have about penetration periods? guess in the -- had unusual to

Thomas McInerney

traditional some that the think industry. I some the for seeing question. being levels. with -- I more loans are start we're last And the that refinance part Penetration in are significant of would think recent there loans. levels significantly, I for I'll penetration say, what that Geoff. the Kevin, of improvement up is And is were Yes, reasonably of portion was refinanced

of the I -- haven't the are refinancing to experienced levels newer have where there had they older of loans to So the pay down or amortize and opportunity we before. haven't and some books

were absolutely the levels on So yes, quarter. penetration those up refinancing

position, pretty For ratings. of we business, the share good our our particularly, about feel light in USMI

and pricing our value a standpoint that levels really delivering on from we're focusing result success to it's where relationships, we a got been in underwriting we competitive customer-facing our combined propositions and of strong the we're I guideline customers, been service think overall rest and with of GenRATE, differentiating have market, industry. both as competitive pricing our of share some but the strategies influenced rollout commitment overall include -- our of as those continues recent to by the transactions. market our in selective well be forward is The engine, risk-based ongoing participation go-to-market that our

the reported based -- see pretty that strong. sort And the the good level. -- I to winning we reports at the And is the where the I in really the of market. third other reacting levels the upon based share have a competitors, -- we we'll in balance releases big including ours. of feel got because upon like place customers X that strong where But the that but think out. for think -- we're see call And third overall business, when does quite industry for strength have Genworth, day, our quarter, a capital it are can't where have is we to to end the in PMIERs levels share pretty our about the sheet are so balance look of I quarter of

Geoffrey Dunn

companies' In fair? but been rational, other you I previous still that's commentaries competitive have think still quarters, think would fairly

Thomas McInerney

believe that's do I yes, Overall, fair.

overall this think mid-teen the every your share. market a it's win competitive, that day that's but I rational, written returns, go fight teens call, fairly turn twister, to But I tongue As Kelly still targeting announced and on think -- excuse the we're achieving mid me, to was year. you is


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

Thomas McInerney

questions of Lauren, for all very today. to you Thank thanks your and you much, time and

good continued with going with Genworth Canada Oceanwide. patience interest of transaction through of this and I the your very Genworth, we're the overall your process you and, appreciate some as Brookfield investment and asked then questions sale think course, we in deal both

in you year, that. objective, we which of by all shape have our and end are So we with we those the as day. appreciate great done us And is good we working to hopefully the get think a do


your third Ladies will the this call time, and At gentlemen, for end. this earnings participation. conference concludes call. quarter Genworth Thank Financial's you