Genworth Financial (GNW)

Tom McInerney President, Chief Executive Officer
Kelly Groh Executive Vice President, Chief Financial Officer
Tim Owens Vice President, Investor Relations
Ryan Krueger KBW
Joshua Esterov CreditSights
Bill Bytespeed Partners
Drew Figdor TIG Advisors
Himanshu Shah Shah Capital
Call transcript
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Good morning ladies and gentlemen and welcome to Genworth Financial’s fourth quarter 2019 earnings conference call. My name is Derek and I will be your coordinator today. At this time, participants are in listen-only mode.

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

As a reminder, this conference is being recorded for replay purposes. you the using call. Q&A that or phones, ask during headsets portion we refrain cell from speakerphones, Also, of today’s

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

Tim Owens

Operator. thank for Thank fourth Good joining everyone call. earnings XXXX morning Genworth’s and you you quarter

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

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

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

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

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

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

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

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

call our McInerney. the Tom to over turn I’ll Now CEO,

Tom McInerney

the Oceanwide. will you Today thank pending transaction for with call. and I Good our focus on my remarks of today’s status morning joining

interest and New XXXX shareholders China of Genworth during two New Genworth the for successful GSCs we in are key the Oceanwide the after York including company’s remaining Canada the sale the December discussed, the the As of approximately for York transaction billion, Genworth the of from previously respective closing $X.X complete annual Department given approved XX, their closing New time previously transaction, of because approvals GSCs the approvals the meeting, regulator, have the transaction regulators the approval their transaction, the but Canada re-approved York’s most to as The have significant remaining expired. These Services. FHFA, delay and sale, took Financial regulator, approval. had leaving the Genworth the Genworth Oceanwide it

Insurance have been discussions York New and or regarding assumption for ’XX GLICNY, York, New the and in re-approval quarter the Genworth Life the transaction. months Company engaged review for fourth of Genworth of

told the contribution under consent parties reach to York The Oceanwide may on of and recently discussion Financial Genworth the not be would the capital compromise or re-approval Oceanwide’s would GLICNY to may Genworth New contribution require and process, China has a any agreement. a GLICNY. that merger As to conditioned part capital by acceptable able mutually be

this very process aware shareholders and willingness transaction. concessions many to the have transaction Oceanwide make was the than the both for three-plus These Genworth other stakeholders and China to committed clear of various are Genworth and to are Genworth Oceanwide concessions of since Genworth well we continue ago. China how the years announced regulators years made it three more and

stakeholders, also best serve. times, is said the certain believe the transaction and the It’s employees, communities our Genworth board and and for the Genworth shareholders. option including many alternative we best have we I the strategic other policyholders, As most for

consider been willing the the and to Genworth to comprehensive of transaction China respective our making regulator represent. regulatory and and Because to and accessible strike all careful overall the accommodate to stakeholders Genworth are benefits also forward. transaction they accommodations to while regulators to have the China and the balance and changes stakeholders, fair all move Oceanwide of shareholders transaction Oceanwide the need each acutely of transaction aware we

case or do approve formally policyholders. is is and bond the the the holders. their transaction, interests the in the transaction state primary not whether In consider shareholders criterion respective must of key not They their of that regulators the insurance of best interests

insurance have must who the We regulators six state approve transaction.

approvals from are approvals. would We the additional they confirm five the six providing have of departments. process of Oceanwide China insurance information and that state can that note regulators Genworth I in their some

of contrast, is to or is policyholders. Insurance the GLIC. GLICNY Life York and The regulator key Delaware states Insurance that of Company, LTC New Genworth one across XX,XXX approximately life XX million over has the GLIC outstanding policies of Columbia. LTC the for Genworth By is Department insurer the policies subsidiary District

GLIC As Delaware, transaction. part with the Genworth $XXX Oceanwide of and to of the upon process to million the capital of December China XXXX closing agreed contribute approval

of I of either contributions remind being $X.X to benefited Oceanwide Genworth. the listening call to absence capital believe is of because GLICNY policyholders or capital in we GLICNY regulators, make only to the subsidiary agreed to contribution the clearly are China the everyone a capital billion transaction. Regardless of the contributing the that to on GLIC and Oceanwide going are respective upon either with of additional Genworth is want the contemplated Genworth’s not the transaction by GLIC amount

that to insurance Genworth we York an which end to party engage cannot discussions, China continue of that and Oceanwide beginning March, will this the the in acceptable New regulators have of reach however, on regulators have our believe to if and China need weigh Oceanwide to state from York; all and repeatedly New Genworth likely by is each agreement to will started made we will XXXX. with Genworth move other also with point very alternatives.

the best have transaction evaluated advisors we current believed transaction’s many time last share board, value years. to shareholders from management offer the $X.XX extended board Genworth the Perhaps to these agreement, it of the Genworth against scenarios. per three-plus value board, and options. evaluated Oceanwide Each management shareholder us the against financial three best stakeholders support the the shareholder we value alternatives the Genworth years, price about our The Genworth’s the the has asked for merger Oceanwide time this shareholders and evidence other was alternative Genworth’s share China transaction the and during During stakeholders, including last alternative other other external most is certain discount view the the Each in discussed of and with all China policyholders. the and Oceanwide. Genworth other

the is objective any to move alternative Oceanwide. other to an are Genworth forward of to and is Like acceptable plan York reach shareholders China our Oceanwide create prepared long-term in value for be will also we the stakeholders. the the B in with if Plan with best agreement that transaction, New case unable most China to

position, condition three which stabilize Oceanwide last outstanding USMI, on transaction, years the has closing has same strengthened against focused we at During XXX% executed and have its our financial in all that multi-year financial company. helped the time Genworth LTC of the of rate plan, performance delivered China the action the

considered We concessions the we other and have also how impact extensions made may alternatives.

of might number regulators the steps consistent likely a were approve we to took others with Genworth would plan under that the future. and in accommodate need the board actions we any take Fortunately, alternative to

take by actions last in steps completed steps with action few to would consistent were following need like other we the years alternatives. during Genworth The

on XX, with due of on First, March on secured XXXX. debt May hand we cash the refinanced senior X, XXXX $XXX we the debt and million issued financing

further from Second, isolate the we consents bond from to life holders received companies USMI. two

XXXX December for Canada Genworth sold on we $X.X Third, Brookfield XX, to billion.

other including reduce in China As assets on alternatives, required issued proxy the to we Oceanwide approve original XXXX March Genworth’s improve more connection detail as in described financial debt XXXX our and to selling in the transaction, January shareholder strength financial Genworth’s flexibility. the insurance X, statement with to XX, or of one meeting mortgage

Genworth’s XXXX senior to debt due Genworth’s secured the Fourth, been from million $XXX debt of sale proceeds have June $XXX Genworth in part Canada million the XXXX. and used retire

been to approximately as Genworth’s As public approximately billion. has from billion debt a result, $X.X today reduced of $X.X

recent debt litigation, in our remarks. is XXXX due cash in Fifth, Kelly significant Financial’s $X.X to our obligations cash position billion parent Genworth for the discuss provides to important of which This future other represents Genworth meet resource a This its her debt as potential is the $X billion. to million payments above debt approximately and with approximately connection reduce in stakeholders. target AXA given will and of $XXX continue maturities cash reduction, particularly and

are as partner fortunate Oceanwide strategic in have to our We China the very larger transaction.

was transaction, three While the we have closing significant transaction China terminated. Genworth both like complete allowed the to that to had years number committed last implement a Oceanwide would the have to XXX% been steps if over Genworth of

patience five this board shareholders years. over Genworth very pleased take be should China and China implement unhappy and long has the Chairman taken Oceanwide Genworth to thankful The and rightly Oceanwide’s had are flexibility so, how major date, for allowed every to with and Lu’s three steps. deal process Although last at are shareholders that Genworth step I these has to

steps the the which XXXX. or cash we the If directly protect we GMA, be Mortgage to absolutely shareholder have on alternative are long-term USMI Plan to consider five and enhancing on terminate the process, protecting go-forward any we value, value March and Genworth capital value; reductions on we will have transaction best receive use to with Through other to is likelihood most additional by which will views future do alternative returning the close of discuss strategy already could long-term if alternatives. success; steps finally, the for strength our critical various completed; for with and the by we the XX, to shareholders proceeds choosing necessary options this other transaction, other stakeholders; this to and to rating Oceanwide possible shareholders; plan to options in and or engagement following USMI’s the Insurance, complete will Oceanwide transaction, engage potential or and receive weigh transaction, Genworth best risk investors New create unable consistent further not execution their Genworth for closing use financial include the we York’s build debt and protect If close shareholders; approval feasible in York our approval long-term our announce we options Australia, USMI’s New shareholder and B: long-term order plans. possible creating U.S. the open generated value of most principles

consider we Following investor day. would effort, an that hosting

LTC a priority books for will any A business. legacy increases actuarially critical Plan priority of or This is for Oceanwide China remain transaction premium to achieve under B critical our strategic the to continue justified alternative. Genworth

under make MYRA. to progress our multi-year rate action program, premium continue LTC or We

of well it I of present is our LTC basis equivalent as that to financially a this successful service extremely policyholders and our its state end X.X enable to on will of billion to LTC approved value the Genworth net LTC necessary remain cumulative policyholders. as billion and over regulators continue of that year-end XXXX. continue program has and Genworth Genworth to all As believe to to in $X order policyholders increase its $XX.X obligations achieved XXXX, premium increase million important rate meet future an increases stable

I assumption review to ’XX over more and that, Kelly review of capital the turn as process as and strong flow complete provide current discussion With position. testing, quarter XXXX well the a will cash our who results fourth call will LTC

Kelly Groh

January fourth now Thanks our financial in I Canada also good company our the cover approximately businesses capital levels Tom our and assumption will through review. annual and and updates and million flexibility holding morning sale provide subsequently $XXX we discuss completed will and debt retired on results our Genworth cash have I in everyone. XXXX. Today that at quarter

As historical we financial Genworth current and release, statements disposition last in our discussed noted of reflect press and Canada. the fully detail our in quarter

which a primarily the two which included Genworth During an December million to a one, of mainly operations as the from This loss a tax million we The protection hearing. ruling January in covers discontinued insurance following made business quarter, be Genworth’s of net AXA in could our former to sold related divestiture income after followed pieces: in with of tax and payment respect interim June damages that charge damages $XXX in XXXX. which $XX a any awarded amount two, XXXX. December; favorable early to to in a related position Canada, was the adjustment tax payment we closed from court comprised U.K. recognized refined charge

in determined. damages not payments U.S., common While to in the legal prior U.K. are interim common being system the

damages may process the to aspects certain are tax claiming on or this AXA our amended on customers of be ultimate seeking the we of the December payments million, damages demanded to are of At estimate and invoiced. To hearing. amounts is amount due hearing, date, time, we to unable has for have gross-up appeal of losses approximately We under £XXX a additional outcome June a uncertain also the and ruling. the AXA that be which may submitted us the prior ruling. initiated appealing invoices aggregate also to

specific the subject hearing. the not invoice nor to determined have the the We tax gross-up. yet us, submitted a validity will be of amount appropriateness claims of of the the June Damages on

to earnings, million. income net adjusted reported quarter of $XX million operating a back net shareholders versus and Turning $X XXXX, in loss XXXX available loss million XXXX. million Genworth $XXX the XXXX adjusted in and of $XX $XXX we versus Full-year income million to a million income of was operating for was $XXX full-year

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

few interest assumption charges by $XXX in in partly a universal offset insurance. lower rate update continuing long-term were strong by million U.S. items. action mixed, results but Total earnings insurance Our to results life assumptions an primarily by to related on rate other addition UL in-force care reduced life were driven

results did the performance $XX underlying environment. tax respectively. prior the updates overall was reflect of fundamentals, reserves to was in USMI, interest which million $XXX lower quarter, interest and updates steady $XX the and rates, year. versus housing operating up In million low sustained sequentially continue fundamental Both unemployment, tax stable adjusted and quarter reflect rate $XX economic million million and reflect Results USMI’s loss after unearned million income including prices. growth, low $XX to premium after the and reserves solid in positive

and year. quarter loss reported prior X%, points points. ratio loss ratio three prior fourth versus which the down the the reserve reduced by updates curve quarter seven quarter from is was down six earnings the points The The and in

the in-force New did seasonality the were larger by cures but sequential reflecting driven refinancing at is in reaching and in Favorability from and net XXXX. delinquencies quarter seasonal and the Primary of trends. continued of continues activity last modestly up moderate and for of of billion up written, reflects grow, persistency the to a very strong fourth in force year-over-year elevated quarter USMI with lower new dip basis, year, all-time given a first rates. offsetting up level half aging its $XXX on insurance high end the insurance the XX% versus year This from portfolio. the

and year versus origination higher market form and mortgage The was strong U.S. remains up the prior originations purchase refinancing.

was new the written, $XX.X year. NIW or sequentially and flow XX% insurance the down billion, quarter Our up for X% prior versus

remained We expect our USMI fourth quarter XXXX estimated market share to strong. have

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

been economic to we the At we impact business exposure any will this tragic the Moving be likely fires. would believe Australia, may do most not that limited to meaningful there be our have time, regions. closing any downturn the bush to occur following impacted in and

in experiencing in could temporary hardships in uptick have delinquencies our with and as assist by disaster a events. may We past result fires, coming be months of cures, the followed of a are we we rate working lender partners seen as natural higher who see farmers to a the

prior for Regarding Australia’s versus the our mortgage the larger X% million and million the versus which prior prior origination Adjusted quarter, levels XX% from quarter sequentially key earned premium year, were down $X flow income recovery new in income. lower in higher primarily flat and year versus operating financial performance certain the business LTB the investment quarter, customers. was and $XX volumes was markets and the from up on

the the from net loss point delinquencies up six cures, U.S. the of loss XX% full-year XX%, XX% in lower seasonally of prior for accounting the basis, and quarter one the points line expectations the IFRS GAAP down primarily and prior of Australia’s was in quarter was ratio loss ratio loss XXXX XX%. year. versus with full-year The of versus to ratio quarter new ratio On XX%

no with last concluded which in fourth evaluated business mortgage year, during changes. recognition quarter, our earnings insurance the pattern with Consistent premium Australia its recommended

care life our for to fourth review policies The GAAP or written annual life active acquired block half assumptions XXXX, of margins results U.S. the total completed positive testing we of discuss as a long-term I to as to since insurance our the combined Turning well the in we our updates segment, XXXX. late XXXX, policies margin key late comparable will to was in written a prior to approximately the block billion $X billion, which or a made the is moment. of quarter.

rate Regarding basis, second driven quarter Benefit prior by favorable quarterly action continued financial utilization as multi-year of results performance, but positive see impact we terminations each seasonally with the quarter. quarter continue on lower care in for Plan updated plan. for not existing the a which adjusted claims, the earnings rolling to our income a favorable in operating rates half be long-term to are had slightly on as year. on the strong

to continued X which we those blocks, on reflect Choice age. counts higher care claim X long-term expect New blocks our larger as and Choice

However, we development did the than during offset which the incremental on favorable more incurred new expense. but claims reported, quarter IBNR or not see claims

recent benefits in-force being related which The as care, This are benefit implemented. of Page of the XX overall be particularly primarily of is some impacts, strong. on actions released states continue larger morning, to the now increases for the this the rate rate reduced in to the investor illustrated long-term deck

value in margin noted, basis As $X approvals improvement. are our Tom approximately XXXX a be on worth expected present net to billion

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

we premium rate the expect benefit of into increases associated from to reserve level meaningful releases a care as continue XXXX. with go reductions We long-term

can reduced from releases reduced implemented, as sizes states reserve the level of of amounts different quarter choices that approval benefit as well to benefit Given may future. policyholders the quarter in elections vary from select, varying the and

well margins, These where active the for as products, strategy rates. adverse two and to for XXXX routine we newer our our included our essential Regarding items on particularly drove updates updates as mitigating which reviewed plan, is unfavorable lapses, proactively last experience. life assumptions margins updated managing mortality, of updates updates significant and action benefit and These unfavorable incidents interest our utilization. include for material emerging key appropriate. rate to expenses, in-force

with develop policyholders continues large policy more X credibility newer on series Choice Our and claims. block as to experience more go

and Our less instance of the XX,XXX approximately block. long from is claims inception than series, X% claims since includes newer Choice which assumption care for term overall X

As we obtain more experience, the in over overall process. we credibility more experience this developing weight assumption time review

our assumptions on age we aggregate, While the rates the over on incidence policyholders in but XX well incidence of performed rates have XXXX block beginning incidence younger newer original see seen to lower XX, on these under assumptions. age our versus higher new products policyholders of are

will claims Given at the it of for our experience. that occur to this reflect older us these ages, majority was emerging attained important

Another the key driver in utilization to our longer assumption rates. term update updates was benefit

some quarterly small unfavorable margin by utilization the was the last on year, earnings was and testing overall in had XXXX to rate projection. changes driven impacts in our it favorable utilization favorable from update we the of half experience sensitive While to cells,

and year margins was expect the each decline utilization unfavorable point We given XXXX, that a the rates to this resulted benefit our pools actual in overall projections. we In as year experience. each of reflect starting to decrease utilization recalibrate to to trend grow, benefit

including in interest also made were number of a smaller rate of refresh expense A assumptions. and XXXX, updates

interest using levels As changes rates. yield, we slowly more GAAP moves reminder, portfolio our margins which than of in a current discount our

from offsets unfavorable future assumption estimate our to yet actions has impact updates include last year in-force but $X.X approximately approved updates. of net action which billion, the other now plan an from rate Our grown rate of note

provisions in process York testing We with a cash New are cash that of statutory Note unlike done tests flow as subsidiary, considering we’re testing updates basis for GLICNY. estimate on the best assumptions similar flow that loss entity finalizing legal our are assumptions, recognition adverse testing the uses in deviation. our for GAAP

nationwide fully to severity emerging but analysis is credible our experience this and limited more policyholders is experience, and GLICNY regarding experience versus are not data needed. yet starting We see in higher

experience is for cash GLICNY, with care We the flow legal industry long-term have in taking industry nationwide entities, lack the has credibility of and for issues assumptions used in historically our long-term been many which approaches. other in consistent of appropriate setting statistical including insurance recognizing the a for care Genworth practice all given actions. leader proactively testing

additional Our have efforts rate the this plan requested to updating added multi-year assumptions products rate approach. series, rate past. action multi-year are the not in rate plan align action where on including increases to this product year’s newer our Most we of action

newer premiums. for Our but premium of product approving on attained for policy smaller for the also benefit Choice states age nationwide cumulative lower with a have the a average approximately runway our allows XX% present This approved on older rate premium some received our products. a block increases and higher for increase XXX%-plus addition for nothing the and for is legacy net longer increase. achieved series XXX%-plus collecting manageable more policyholders newest legacy These of series, X some and with value some

I as mortality the versus Turning and in model primarily to insurance, life to a environment improved our related mainly rate life corrections. for $XXX million life interest for unlocking the earlier, year. as well Overall quarter lower results prior prior charge, universal an quarter charge reflect include the to mentioned as

premium life their stack related periods. non-cash reduced amortization, lapses, last after by flat post-level versus million level is $XX life especially term term term negatively earnings in XX-year the to that tax, higher business life a and the locked-in insurance written are entering life which our these insurance The than Total to quarter. premium impact with continues shock large impacted primarily term classes from blocks assumptions, XXXX be XXXX original

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

mostly life for in updates and term universal assumption considerably. assumptions to existing the actuarial decreased persistency, basis of in represents in This focused on these interest driven line and with the Similar and with term Most during in charge the long products in XX year non-cash interest our product. for updates points care, These insurance forward of an primarily mortality $XXX our were increase during completed the assumption exception rates. costs. accelerated life updates fourth where primarily of million the rates aggregate, mortality, life quarter. we also the after-tax deferred by the in interest rate XX-year and period the is current flattened treasury acquisition The is environment, and amortization reserves curve charge

Mortality assumption on changes trends in the our no refinements during in term the focused term product, based to margin These on product. mortality financial the improvements assumptions increased in post-level which experience. the impact period and had the premium to current mortality observed period, emerging

annuity prior quarter fixed not the quarter $XX current million recognized compared loss we recognition related in any to million year. to in charges our In the and record did testing the in $XX products, prior

or our prior higher Additionally, rates versus year, benefited longevity annuities versus reserves the the due quarter year. quarter product higher indexed slightly and mortality and were annuity and our to reduced on interest decreased immediate by fixed prior

Our expenses loss tax quarter also other reflected quarter. allocation adjustments. last prior corporate in primarily adjusted timing overhead higher and to expenses higher operating This an true-up quarter and versus the the was year for less was the to due lower favorable year. loss to million relative $XX and Results last due versus last

strong cash, USMI’s PMIERs the and by from affiliate during million January profitability, of very December which offset above to of level XXXX sale to up partially required written MI we ratio ownership a were PMIERs XXX%, sufficiency strong continued These our discount XXX% assets the level insurance in September sufficiency quarter quarter. on last the billion notes, dividend PMIERs of a to The the or insurance transaction execution include $X levels, stock. quarter finished capital continue capital turning drivers as In the XXXX. new Australian of USMI, an U.S. positions. excess insurance-like Now quarter. is with Canada and the Drivers XX, of maintain mortgage ILN of eliminated of the in for book, paid on businesses $XXX

part from we the increased. was supplement that to Commission. is occurred shares previously the large GAAP Genworth Canadian financial in because the cash. that our with A converted Canada increase Genworth filed Securities quarterly ownership financial for notice will publish Financial’s You eliminated book value Exchange USMI’s USMI statements this has in This and consolidation of in as of being

the I U.S. and I assume They on continue factors, to also moderate amounts macroeconomic housing regulatory Future of from upon plans growth. be XXXX’s USMI’s and transaction and factors business. a quarter’s such will continue as our based dividend we including Oceanwide. market the based economic call, capital levels be and announced the within employment performance, USMI to variety with October strong These ratings strong timing robust going but and factors, that pay mentioned be on constraints, considerations, trends business plans. able annual expect assume levels last When dividend its favorable an dividend current performance to forward

MI The in above down with quarter, ratio prescribed excess ended of of which Australia of XXX%, high quarter million end in the the the decrease fourth the Australia’s business dividend special reflected from PCA is of $XXX XXX%. paid to AUD XXX% or target of capital Our estimated primarily ratio last $XXX capital an million amount, range was XXX% AUD quarter. capital during management the that

such under U.S. consideration requirements to processes, completion requires Finalizing cash AGXX, capital matters for the earlier. ongoing testing well that including as of referred our I standalone our flow testing statutory GLICNY as as life levels

XX-K to this later disclose and results currently finalized processes will working are month. our closer through when We filing these

from third XXX% as a end action of company RBC Genworth would the cash percentage any testing, Absent expect we the level to of quarter. in Life increase impact capital GLIC, compared as flow Insurance or Company, of to the

quarter in-force life in benefited earnings rate from care in U.S. variable fixed well and in annuities. actions long-term as statutory as income the income from

three $XX ratio to executed a captive and transaction reducing and Company’s XX Genworth overall existing $XXX for restructuring entities GLIC Insurance excess This to approximately transaction RBC finance million by consolidated Annuity that and U.S. quarter, by term increased by life reinsurance costs to life during capital annual Additionally Life the million, approximately reserves XX financing million used were and $X points. consolidating insurance. administrative statutory by the and benefited approximately universal

of This part infuse process I once again investors of as a will million any to GLIC contributions intention conjunction our that contribution want Delaware made U.S. their with capital on contribute is with Genworth to to no Absent plans This the with commitment connection on agreement the statutory all actuarially a due is the $XXX life our with actions U.S. proposed $X.X the any a and basis committed of contribution part of Oceanwide justified businesses Oceanwide. and in of as GLICNY, to including possible special the transaction, rely made to obligations. closing transaction. regarding entities, GLIC. initial to U.S. capital, in-force policyholder blocks, satisfy the life to prudent as will remind in Oceanwide rate consolidated billion part Delaware that transaction, management with to standalone is transaction The of additional approval life manage subsidiaries it capital. the

prior assets, with billion to the ended cash holding with Brookfield we up complete, in Genworth million sale approximately and to $X.X company, $XXX liquid the from the Moving quarter. from Canada the quarter

the XX loan. on During with from approximately paying depicted deck, after to were billion sale the company the MI net of the proceeds remaining off Page million holding quarter the Canada investor term and $XXX $X.X

million dividends, included dividends special USMI, well Australia’s pre-close from holding the million benefited as and ordinary $XXX $XXX which special as Canada’s the of $XX also from million. quarter, million dividend, During company $XX from in

to driven approximately Other which an in payments, to cash tax quarter, rates, elevated uptick were increased from cash lower quarter collateral certain of items, a were Intercompany by cash miscellaneous the $XX company. the interest source primarily million. during of timing this holding by items, benefiting due

the inflows payments during these offsetting interest $XX Finally, million. quarter were of

As fees. earlier AXA close and of redeemed plus unpaid in and million the noted following my accrued quarter in remarks, make-whole debt attorney we and we plus fully fees XXXX, million $XXX paid due interest $XXX outstanding

debt expenses litigation March to June, approximately beyond, our possible damages million XXXX, planning $X.X intercompany we XXXX. in of Life AXA in we As due is and and place in for that manage with liquidity in of our combined billion note September repayment taking February $XXX in hearing and are of Genworth maturities Insurance incremental of Company XXXX the

of inbound conclude, receive to second XXXX value I quarter components Genworth’s on the investor Before regarding underlying we we discussed our call. questions continue

dollars. results quarter to mortgage of given June its Genworth initiatives. a in stock its value XX, in price insurance the business XXXX in Australian trends, has capital favorable sustainability growth, share U.S. demonstrate, continues fourth Australia business our economic closing performance, yesterday comparing As and loss subsidiary to new the strong trading price per improved favorable our $X.XX be underlying

given believe For continue appropriate U.S. this value for isolation actions. is it business investors at our to life, zero to we

but we As given believe Tom to the inquiries perspectives for best shareholders, outcome certain said, we most these provide our the have and continue the received. wanted that is update transaction to Oceanwide an on

care and it was a they significant on are businesses. stabilize other focused intended Genworth’s priorities very remain mortgage insurance the holding progress, their to including well insurance and with company. and actions We rate to long-term robust to and plan In improve action closing, the businesses on life U.S. performing as earnings, levels, our strong quarter solid strategic capital help financially our dividends for execute continued operational

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


[Operator instructions]

go with comes KBW. Please Our Ryan from question Krueger first ahead.

Ryan Krueger

morning. good questions. had few Hi, a I

than can for? of less would willing give you that any potential approval you they’re but capital and York on York more asking some perspectives of be to of capital size to asking the us make for, to New New indication the level their contribution just currently get contribution First, any is

Tom McInerney

Ryan, active New be be to is size New Oceanwide and is very because to discussed and contribution. capital with would that’s discussions I question. in say willing determined with a a very Genworth The to are York. China York. answer to make hard It’s good What we’re

I thing have little over GLIC’s - remind states, I people one think for and Company The Genworth a is--you XX interest would policies, million is GLIC and capital so know, all states X,XXX,XXX the XX GLIC a position. an in policies, the LTC Insurance Life

did you we all GLIC. agreed to that. transaction, As Oceanwide and agree, part know, to the China into million put as of $XXX we

we York, review New they I remarks to approval In smaller my that the fourth so their the didn’t have we’re the quarter capital two policies, for things Virginia tried of They in and and LTC much that Delaware and sure they’ll the One what are more have but York, case of having. and North is in other ask USMI, is to of Carolina, but say important lead we thing discussions part an and in New Carolina original that company. in New is two opinion, GLIC, also all one North GLICNY side is policies it’s other and in we agreed clearly do Delaware mind want of now, of have is which one so on regulators to XX contribution, and than make challenge part side other just - Genworth the other XX,XXX given states, XX for because keep states York and is to - the Virginia reasonable have views Oceanwide parties, not so GLIC size all York, for there are our obviously state, of than the it’s it’s less, XX to who and state then any think capital. they on the New I the it’s there one

Ryan Krueger

amount the company they actually the would Is from to the capital sure contribution but come make agreed that Delaware? want from put what would to or fair contribution to holding come just the capital you is relative GLIC, because into

Tom McInerney

the would we’re parent. capital contribution What from about be Financial, talking a Genworth

Ryan Krueger

at extend comment is XX, the to or point, other if York, New approvals approval My them the the received that beyond be York? from just would haven’t you to get last March that agreement question, so XX before related March if specific New do all you to Okay. the you willing

Tom McInerney

to have that all regulators is many approved the York, if if and to their York and to then we information, think months, regulators, their except good amount still I come for I Another York conclusion we’ve it of we we’re some of they Ryan. a ready--Genworth with the quarters who agree a that is could New financial was have the for New with New and close. I talking owe could and acceptable think recent to Oceanwide, key a approval we China question, with few approved, to things, we New other to approvals say been so would soon, and them capital and pieces York--if acceptable acceptable relative was other Oceanwide to results but for ready China

I think close. is also Oceanwide ready to

one said is that the that, and is to cover does China, from, in have China the paying in $X.X and we’ve cash have significant excess able Foreign were to terms of significant Genworth, Administration Oceanwide Exchange, billion price. State where would coming of purchase they’re SAFE, remaining that they the if issue use before, talk would As they or in purchase to the to China

However, capital a from filings put has more plan a the SAFE out of outside extent could from the and the they the this a China. been of to fund do that how limit contingency China, than for come part balance transaction have year, on to much of

that So close obviously in ready would acceptable then SAFE agreed and China both the to about York, Oceanwide, we’re Oceanwide, to that to discussions we be is New lead China regulators, acceptable with if with in end three therefore other We keep extending a of and the can’t comes funding forever. from, quarter. we years it’s we to is certainly--our the first the been half recognize where close by and goal and

Ryan Krueger

you. it, Got thank


Thank you.

comes from question Joshua CreditSights. with Esterov go Please ahead. next Our

Joshua Esterov

you. with a only regulatory SAFE, U.S. needing approval start that the process from regulatory-- Oceanwide regards you Good thank what morning. With to Hi, China mentioning were once just can that is

Tom McInerney

your of didn’t repeat case-- a just it. Josh? last It’s I the good quite Would question, you in question, catch

Joshua Esterov

to--sure, once has a process conversion with requesting regulatory concluded? SAFE U.S. process Oceanwide that purchase, from only about can that. to With Yes, regard is approval sorry for currency and that the regards China the start

Tom McInerney

with so regulatory NBRC, approvals, was First of all, there passed that have been the on. including other China

talked remaining problem, owner of said if SAFE. in issue from the think have others the commentary China. have who deal. I’ve to in which think always others management China and and I Oceanwide, there government in so is past public regulators the the read is four they’ve of Lu, aging I aging you the of because times to all is and the been elderly, talking of problem do regulators Genworth Oceanwide the China, because been Chairman the in think is a five and the that supportive of I or lot the CBIRC, a with expertise. and regulator, I the supportive China, significant are team generally

SAFE in touch Oceanwide way. has the with along been

from China what the so a it, so regulatory they’re sell regulators that it’s what know say half to will did around final to didn’t need a I think Canadian so of we the last us the until have took a the deal they answer We $XXX XX to and months, years. Genworth and approval. and over on and only Delaware price first approved, way Canada. that that asked think determination make the know really three for and deal going and very had attractive concessions, China they felt wanted then is. we we million, got had accommodations final none were then I concessions approve was the give and for the hard process of that OSFI Oceanwide, an they Genworth wouldn’t meant we that for any so was CFIUS any only accommodations we our that regulators, and The SAFE

but been Oceanwide, committed China debt I say to challenging great. due did keep with. we lot Canada so both we of that been I would from side wouldn’t the $X.X to regulators, very good get remarks a this the a the of preferred all transaction do the one of had say Chinese is payment and about, we my it’s million. We pay in credit June and were the $XXX do we did million he China that approvals, to things work GLIC and debt is get and AXA $X.X million the have XXXX. million China of the want It’s because to Kelly to I I Chairman get which billion talked think we think in think, of to we $XXX the company, We that to have been deal, that if in that I would I Oceanwide - $XXX have more to give $XXX Genworth the note did made good couldn’t in U.S. know billion, Lu, off regulatory The has

have more we’ve On - gotten us premium because, states They $XX.X history, face see of all and not not more level, easy issues. those premium the than and I’m I large gotten let’s value it, the XXX%, We’ve Page billion those own geopolitical of there’s any is talked the XXX%. states XX, to then XX about a regulators. Obviously their blaming increases. challenge. have issues present than you at regulators LTC for can given that’s net the give federal some the

see they’ve credit, to Oceanwide, Canada. in opportunity capital, them an flexible so open to So and and of capital the again, we’re part York, this we’re deal no to least there ask for and U.S.-based and we China fairness future, there putting accommodate give Delaware in, not--if do think been--as not if close, they for is do a know we’re New various in the is putting capital regulators and I I not as--they regulators, there’s said, deal, a lot at we’ve of also and been

come with GLIC York has New But much Oceanwide we to is reasonable down comfortable other it XX Genworth fair to given is versus agreed and then is regulators, their and request, is one, and something York, a with, two, do GLIC, the larger are approval company. with all Virginia, New Delaware, that we what to to committed they their to think get whatever that and

Joshua Esterov

those the regulatory you thoughts appreciate very Really all Thank on front. much.


Bill Thank go Bytespeed Partners. with you. We’ll next [indiscernible] to


dramatically you’re do for try question. my means million-odd, million. that which that roughly policy, $XX you’re asking is Hey Tom. That’s right, my they’re York first and per call $XX what I I’m basically this Is offering going again. it owed paying more? If New $XXX to numbers

the directly or from question is Thanks. second talking to My coming DFS? the this of are you director staff actually is

Tom McInerney

are compare take two-part is can I’ll company. it’s so the size One Good question. York first to part. X,XXX,XXX. use to questions, metrics lives, the New There to Delaware the you XX,XXX different of

billion, X/XX, I’ll you $XXX the is other in states so the I if other process to York million finished and do numbers. million at At think higher XX%. go because policy New the The per $X yet, and the we New capital the was X/XX around premiums, in capital, statutory haven’t since capital was relative $XXX with is GLIC billion, premiums Then New are more that generally it’s if than you look $X expensive. York basis, York in

a think $XXX,XXX, I example, is average in home for New nursing the year $XXX,XXX. average in a national cost For York is the

XX,XXX those so daily agents in therefore so York higher I the think advisors daily New generally benefit in sold the York buy the policies and generally, amounts, New premiums benefit So New York on who had policyholders financial amount higher the per in are higher. policy is average

to New different a we XX with the are would would increase on are premiums and annual talking premiums where policyholders all think I all sense involved talk I’m but all I say time to talking expect--and Those billion, XX%. do about I just all Delaware, ultimately, the generally the York to I with Virginia, I’m we’ve so good and it the were in into are. go New I bases York, metrics, we’re matter where ’XX, states roughly metrics, does different discussions, premium GLIC going are because have and in the using regulators $XXX not you the If $X.X about so XX,XXX I’m to and talked annual premiums million - data, different XXXX we in were it rounds

policyholders are to that. question they I see no this that GLIC to deal, about I the the their to all important there’s regulators think--I in this will want you think happen benefits deal tell because

claims XX,XXX, more XXX,XXX and claim and years, XX,XXX, on Genworth is the don’t that’s are with is don’t at nationwide know only either. have--the how fully New about about experiencing to also Kelly we up that, going that--we all experience, as they view think like than discussing the total that. claims say New if talked are looking actuarially New premium question the the significant. on nationwide, York in is and all Kelly higher increases we But those the you ends York understand it really I fully What the in and If we’re claims experience credible. that--and in to reverts think time you more have next project to cover time but experience, some clearly I the talked claims really regulator that claims York-only so the when the I that this, it knows is credible, credible, be XXX,XXX, York, New and is XXX,XXX are but XX,XXX claims XX that the XXX,XXX. more experience is you New York grow it experience look the could XX,XXX are of the that point claims XX,XXX we mean the total for at will

ultimately in complicated our actuaries, bit have about you and in little have the these people, is--and nationwide, they do of a makes issue close. discussions different really this deal have can different think what York-only what New Genworth terms and experience it to - we and theirs notable, Oceanwide opinions That’s the that. different actuaries we’re to think I China It’s want complex on trying a but and -

other to want think states it close. all the I

commitment wants New close, to York, on fair I what York capital think flexible a down but it we’re is and it to that. to comes New

a through things, get I It’s flexibility. shown and those think all but flexibility. long China we’ve time us Oceanwide Genworth taken shown have to

but somewhat that complex amount the be it’s other of process, But an appropriate, to XX you think that and in can York that the is imagine. New is is a end, as regulators appropriate got thinks


very you. is thank Understood, This helpful.

you the still at actuaries? where this is at the in So than are the top, This process, approval actuaries to still is rather level?

Tom McInerney

actuaries I from would at it top through from goes and the top all say through the the it goes Genworth the York. staff New for


Thank you.


you. Thank

question Drew next Please comes with Figdor go TIG. ahead. from Our

Drew Figdor

changed curious, saw care, that was so rather what year seemed night, come reading term it long I report ask as year out is of New capital in concerning in terms terms What last injected, that testing so concerned for have they the through but York they the has fine were year so of Hi. anything commitment. margin that of terms found in York to about? testing margin they curious and need New in benign was we the the didn’t this capital I’m last

Kelly Groh

very the Groh. experience. question. Drew, emerging is about Thanks have say I Kelly would is this we just York What New really for

about Tom XX,XXX cumulative think I claims. mentioned

cumulative XX,XXX policy got I the claims and there in to mentioned about I were think New in having. classes, the of view folks underwriting you different different series, seen, that genders, emerging, different underwriting remarks, those the claims, at it occurred. different we’re different my aren’t higher If yet, and credible York. just is, those like that’s prepared changes severity But you’ve but look given of our have fact as groups age and discussion is quite We we credible as from don’t view particularly some mentioned, because experience those

that and experience. But is under exam deeper also the a much it right discussion Now, discussing through we’re a look right are with of that working we assumptions and as so their group under taking now. it, exam we’re they’re a triannual now, at and cash testing part flow working

your question? that Did answer

Drew Figdor

Yes, thank you.

Kelly Groh

you, Thank Drew.


Ladies you. Shah final gentlemen, Capital. one with for time and Himanshu Thank Shah we ahead. have from Please go question

Himanshu Shah

XX% $X of question a by can cannot QX, you on I more Tom. close deal your billion Do XX% Genworth Morning think March? in if Plan you have USMI this get B. end or the to IPOing early of

Tom McInerney

Thanks and question. the the for for term investor. thanks on being for Thanks morning. a good, long call being good Himanshu,

alternatives, all would on of and only to IPO, I going The the all the tax have of are the looked thing kinds different depending amount USMI. value I’m I significant not including do. depending you say consequences tax you friction alternatives could there possible think try USMI. the size has that our that to at is of on I so board with would say

that our today disclosed it’s $X.X There That billion. doesn’t book mean would or think that look we we way are look publicly I $XXX were think traded. out earnings, the are value earnings comparables, strong they million. trade reasonable I the so Himanshu, think I companies book the investors, XXXX they’re comparable think USMI, the at trade, for there but USMI, for other around think you you, at in I value, to have I

I tax-free at IPO, comparable multiples. do, a value this in look prevent getting can with also--and you is you that--and beyond the come what look view sure Genworth rules, book go think and tax certain on the would value, are. spinoff to then and the million, at amount $XXX you I’m book you know But you as future there’s comparable a a in PE So shareholders. depending not when values the that know, say how you others up the The etc., the opportunity much do down issues and road create again, to you could a all to can X.X,

meetings formally I thought last board think other talked worth XX the of don’t price. years, I tell deal certainly the time of into want always extended other was one evaluated the will We where share. this per - concluded best all we and part options, Oceanwide valued extended we the and a the times certain, alternatives, certain. reviews we as we you all script, China done the that’s times. the what Any we’ve deal, the it’s said and it we including because that three Oceanwide it’s to the alternatives. we was had most about, and pretty we’ve it’s go I specific the for in XX highest easy, Every it’s versus deal $X.XX China you, different my most

the a we’re unable reasonable alternative, we’ll at the Oceanwide, the look including with you alternatives, deal about. talked China to close It’s alternative. Himanshu, just If certainly

I said. it’s feasible, alternative, think Whether it’s don’t what best know. the I you

next available be to alternatives. the time listen all the The shareholders, say points and including agreement want advisors the really them so the the other expire I your team think. to your in best thing, Plan our a China certainly them. we’ll the the Genworth We sure our and would I do to Tim others, consider management out Kelly outside best care think their decide, before, I, the do first and shareholders, consider I’m we’re several and input, concludes that other on end and I Himanshu, stakeholders, but value head view and our deal, and you can’t to to others. and be so we Kelly our unfortunate value I is Oceanwide board of B we all about B, for and the can’t will and of Owens, always we the Plan of take shareholders board, others all running and to and IR, Right of talked if any under and this doesn’t management views that now have you you merger do, have alternatives. which we But and until quarter, what are several we on own can we not this, are

certain best look the it’s end of we’ll to and try the Oceanwide. Right now, the certain most job the best If to the next at make our most we alternative. day, At complete determination the best and think is alternative. what’s it, we can’t

Himanshu Shah

and company three years way but for especially me the clearly B. for Tom, Plan so, the the last plan best, at that tells trading the or stock is it All Thank the aggressively you. should today,

Tom McInerney

two think that. do we’ll Himanshu. I know, you said, One what is ways it, at to look just You there’s and

is The traded is that think $X.XX, because stock I option, that discount. most other market a the to which do best the the at is in seem option China that agree the Oceanwide has

down, knows operating because who We and great it’s fourth every don’t we great results. stock XXXX, think so a changed gone had think when a had has of time I quarter, the it’s I why. our

know the best think closing it’s market we’re prefer to has what the do Oceanwide investors alternatives of telling--what deal, they certain with we transparent we the think and China negotiations telling what progress probability I the Oceanwide that and is increases, are, I and LTC you that view closing, know, the and market deal want think that. Genworth we the most deal think management because it’s I the in York, means agree shareholders worth, great put raise--you have--the it’s don’t when so We’re on I down, premium They a so and next But recalibrate all think on $X.XX. making that’s of stock the I Oceanwide lower deal. a the I be board is is with New the probability best think

of the when because to We probability the I on board, all because December, re-assessing including the as over Oceanwide falling low they for we’re watching are perhaps get and continue XX% on the directors investors probability are, think closing support put and $X.XX, falls, last it’s the of so that. a it’s stock you it falling as

can That’s know. the But assured to close done. But all get hope the it try doing we I we we’re don’t market. deal, we to be can

Plan - a New the to We’ll best like to regulators, you know, to it’s end better, and shareholder to value whatever it long the we there’s the views, consider best. that’s it’s we’d to York that and we China talk--if Plan talking better, think idea we’ll those Oceanwide. have it. shareholders get But shareholders, and done. what’s why say an the investor obviously have about can’t, what we emerges best we’ll if B. talk get Plan believe We’re that hold day do different alternative another another think to ultimately term yourself hope can to get talk If quickly if and I about input, and based we so we in is move because the I said and views other can we you and the shareholders all we’ll on is, B, then

Tom McInerney

on I to minutes, over ran Himanshu, that. With bit all a of so that, we we say I a little wanted deal, want the there’s appreciate lot questions XX the investors, obviously to do - Please in to the discussions of I give want shareholders views Tim us Kelly who any happy some But or IR. to their contact with to take them. talk continue and are us. to Owens

to up call. then the sum it Derek just turn me Let to and back I’ll end

All questions investment in for you and of us at interest your Genworth your want thank and continued Genworth. to

China I’ve Oceanwide to working As we’re the said, close hard transaction.

move We stakeholders. for complete continue I and the and transaction, clear the best we to to be the want what forward duty prepared value that the to outcome most fiduciary shareholders, other matter and board other if said we take believe also alternatives, pursue. can’t having maximize are today team our all the to evaluating But and outcome shareholders our management of and the it’s no that, we with certain very I to seriously ultimate

call the you. turn back to I’ll Derek, that, With


for Thank call this fourth will you. this conference do and participation. call. you time, earnings Financial’s gentlemen, We your concludes thank Ladies the quarter Genworth At end.