Genworth Financial (GNW)

Tim Owens VP, IR
Tom McInerney President and CEO
Kelly Groh CFO
Joshua Esterov CreditSights
Mark Palmer BTIG
Call transcript
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Good morning, ladies and gentlemen, and welcome to Genworth Financial First Quarter 2020 Earnings Conference Call. My name is Jennifer and I will be your coordinator today. At this time, participants are in a listen-only mode.

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

As a reminder, this conference is being recorded for replay purposes. you the using call. Q&A that or phones, ask during handsets 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 first Good joining everyone, call. earnings XXXX morning, Genworth’s and you, you quarter

or Due of would morning quality this home. I issues our ask any current you technical are shelter-in-place excuse social and arise. environment, the may speakers to distancing all please that guidelines, that at sound

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

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

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

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

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

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

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

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

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

Tom McInerney

hope Tim. of and morning, and you families all I joining thank call. safe. and are for well Thanks your you our Good everyone,

their like community to this policyholders under our heroic and healthcare the their essential I started. workers, to also circumstances. serve for these outstanding entire efforts like my the professional thank for workers of personal and first and to pandemic. thank responders I'd colleagues interruption extraordinary Before, and I difficult the efforts without get would Genworth our customers during

Genworth’s readiness conduct two-day spread ensure government illustrated our protect spread the the In our to and the mandates test of view test to early shelter-in-place COVID-XX. and to an wellbeing These has coronavirus work-from-home of been needed we Xth. protocols the scenario nation early while us on of first providing This us our prompted beginning for general work-from-home a operations and the navigated around priority health improve mandatory federal would are be was as on our seamless. Xth to a there people. and signals March service state and areas since of view social Genworth distancing March, with likely that

of home Some connections key at for need. this employees our setup in the assistance office from home wireless upgraded for well learnings as experience as need included our

of Genworth information a across business U.S. at on able our effective implement the this close policy XXth. work-from-home through offices test, the learned With March was to

To and themselves further caring and their enhanced additional family is policies employees, wellness leave providing health including in assist support paid Genworth employees for to financial, members. our resources

immediate in are employee XXX% relief COVID-XX which from through matching that is of seniors. towards needs. also to identify the efforts to opportunities Difficulty] special [Technical initiatives serve continuing communities community to the contributions Foundation contributions We addressing Genworth we financial support Genworth and operate are

financial hardship holders. for these insurance customers options and mortgage a connection with GSEs mitigate the We've as working ensure to annuity our relief LTC life extended and with providing of extended policies finally, well for their and we policyholders. policy continuation are services payments mortgage forbearance periods to for And in as coverage grace other and insurance,

I'm internal crisis management efforts very leadership teams. our and the under executive proud of our response of

As of service by levels and the work very have our best-in-class Genworth been operations employees, the little terrific disruption. a result maintained with

would under we Oceanwide, Insurance years, presented confirmation challenges the by Department approvals focused U.S. has journey, have navigating on we been approval. maintained Oceanwide that are with pending plus subject which to its Now, Delaware Despite the pleased to transaction I completing hurdles to while the to transaction have our ongoing which for extremely the received like multiple may our discuss of the coronavirus. the complete throughout transaction transaction required from regulatory all proceed existing three Oceanwide

funding for Oceanwide is of finalizing price purchase $X.XX place, transaction currently per plan share. in approvals the those its With

the commitment disclosed, extended debt financing previously have Understandably, was to Hony of to funding us up billion manage take for that work several As acquisition and the up to Oceanwide Oceanwide to finance they well. transaction align continue Capital like of questions partially may which XXXX. the which the length to XX, would we is to Oceanwide’s has everything funding it June arrangement of address. financing Genworth, received $X.X about through to time for and funding to plan I informed a progressing has close,

Canadian Abu The partner a Hong institutions investors Temasek. Hony Holdings as Holdings, include leading invest global based of limited by interest private such and Investment of Investment Capital Plan firm investment Dhabi some equity a sponsored the leading a Sachs, in Goldman Oceanwide relationship transactions. Board, investment Authority, a Hony Pension in Legend the firm as firm. Legend with their Capital the is Kong good XX% has and with management a

as through continues process In its discussions a the plan smoothly. funding third work Oceanwide with ensure to run to talking Hony to addition to is Capital, the parties of also number they

previously with the than due merger later Oceanwide close extended provide to the to to deadline coronavirus the no Given market and agreement disruptions XX, to unprecedented additional Genworth needed pandemic, XXXX the if the June transaction. time have parties

delay of with most the pandemic extension to closing March in targeting May, The by desired. we likely strategic the provides that announced options the by caused closing pursue end Genworth will of end expect flexibility we we were challenges recent the While that alternative currently if until the the June.

$X.X And will looking on in at in potential refinance more discuss coming focus in to Kelly billion our debt options immediate which due alternatives, detail. our is XXXX, evaluating

the it transaction the having and all important, flexibility stakeholders. Oceanwide While shareholders today clearer the that the our is alternative is is for best even

we've As milestone a the of reached who among transaction. things $XXX New the of a with GLICNY contribute March. with the to reapproval, connection to our at reminder, at end closing million significant transaction other the York our Genworth committed regulator In reapproved

our Following transaction. regulator the also New York's approval, reapproved Virginia

of discussions conversion or State our also funding plan approval. transaction proceed Oceanwide’s may complete Oceanwide Delaware, transaction. transfer Once funds will and Administration Oceanwide to that with will the under with China’s will believe insurance discuss had regulator the the Based Foreign currency Exchange transformation. provide we've Delaware confirm we with is they existing on SAFE finalized, the its of

the first in impacts strong take began remained global levels of to primarily high performance like COVID-XX equity Before I provide impacted of I from business significant global quarter, COVID-XX stable. pandemic declines Kelly, and and rates quarter experienced impacts a insurance interest delinquencies the over level The turn and The overview of economic our would to markets particularly pandemic. in in the and the first in of limited social performance, the the hold. quarter pandemic remained as light in mortgage call has our mortgage as to month origination March the coronavirus first

year-over-year. during The of written in of million, driven performance. strong amount strength by XX% the U.S. is force the Insurance significant which billion up $XX.X USMI business and of operating Mortgage XX% $XXX The insurance income new growth strong was up loss delivered underlying year-over-year, business by our insurance illustrated quarter, to

the impact as COVID-XX forbearance well mortgage on half given second in the XXXX. the as U.S. most in unprecedented economy, we currently expect effect, the and higher the delinquencies originations increase of to significant However, notably have continues lower unemployment in protocols

At was quarter, PMIERs strong sufficiency at the $X.X above end XXX% that the of billion requirements. ratio very was USMI’s and

the with of time capital in level our PMIERs pleased are USMI, we do expect decrease over sufficiency we delinquencies increase. While to as current

first although expect is targets, watching Australia capital capital $XXX we of regulatory such our performance in was economic solid the management and environment are levels. performance MI in second and lower half the and closely the was that the year million quarter in above Similarly, the business,

position as we at improve continue holding capital well have financial the company to and Now, liquidity we to move options year. as flexibility the of through discuss I'll as our the level the our rest

our businesses, performance the and run-off lower as as life block our business experienced to first a in in well insurance annuity Turning due equity in to in annuity of variable quarter our primarily fixed pressure interest the markets decline business. rates,

with Long in to higher force even rate insurance to term the profit year, $XX due operating roughly care primarily earnings in actions. first relative broke million from our last quarter up

stabilizing to Year-to-date, to action our progress on progress insurance make against annualized or million representing the to is care premiums is continued consistent of multiyear that good actions long of or incremental premium have going average in $XXX MYRAP, MYRAP, force we plan approvals which with premiums, essential million forward. a rate LTC business. term continue of make rate We our with $XX XX% increase annual weighted on

since to of policies net choice, Force rate now rate the to has approach Insurance more of $XX.X reductions national Genworth more forth a such are Long-Term this identify On initiatives LTC with increases. NAIC a by to cumulative basis, with set options for present XXXX, billion insurance to approximately approved objective consumers develop increases. longer value and Task premium benefit consistent affordable achieved increases Aligned no timely reviewing where LTC due premium and provide as Care

likely initiative care of to particularly rehabilitation rate, on Company in There have plan of premiums behind to heightened policies either includes is this to that a rate or proposed focus SHIP’s a policyholder light term which or are that SHIP are the in insurance Health long increase extremely recently states an industry, filed benefits the increases. a actuarially Insurance Senior policies premium plan. Pennsylvania across justified below LTC important be those reduce specified changes

that the task consider similar force to will more proposed actions rate and improving whether encourage in actions. the behind to SHIP states generally We NAIC can plan to be applied are those

of U.S. economic the duration fiscal depend the of strength from of factors, Looking of impacts consumer. ongoing markets, wide the and the a there's range several volatility ahead, monetary scenarios and that possible policies, and recovery including pandemic, the the on return capital

enable uncertain in for to expect to this prepared in we will believe Genworth our near-term we continue challenges strategies deliver and the have stakeholders. place navigate environment, we are these volatility While, to

progress continued for In while and focus last approvals have excellent delivering our in to uncertainty. transaction summary, I'm rest of pleased thank policyholders for made like and period. leadership team customers time our of during to secure Genworth employees challenging would the to macroeconomic their the service three final the I in the we the this with months this

difficult transaction bring to like also Difficulty] a their I'd to Oceanwide I'd together. the and remaining and [Technical shareholders wellbeing their to finally, prioritize transaction our closing patience while continued through customers We the thank as commitment for to continue period for safety work to this as successful soon policyholders committed XXX% as conclusion. Oceanwide And their like to thank we our possible.

more over a I quarter our Now, business turn provide will in will detailed our who trends with call capital update to today the on the position. and liquidity you Kelly, and performance, first

Kelly Groh

good Thanks, morning, everyone. Tom, and

Today, I discuss will quarter impacts businesses results. as COVID-XX future virus as our liquidity, our potential some well share from and and financial on our current holding company perspectives the first financial regarding

pandemic, shape comments, regulatory forward. very and much businesses and will the impacts the the to Tom's going impact actions. impact uncertain future and due dynamics and are governmental impact resulting still To of length regulatory and unparalleled economic the ultimate the recovery, unknown all These of the expand our the macroeconomic COVID-XX of of on with speed virus responses

modeling our risk prepared and being these and management, to contingency enterprise, focused the proactive businesses. uncertain finance plans to teams health on of maintain actuarial Our are financial implement events

events, versus In slowing Irma. by and refinancing remain the we Mortgage restarts rise business, to It to delinquencies economy such U.S. with in a higher unemployment of cure remains as recent and the seen how be as second expect quarter and will government pattern result similar if be as experience supported closely will market later, decline new our be we the In following localized delinquencies programs. as rebuilding instances, and hurricanes the stimulus as We or forbearance interest them to saw Insurance written anticipated levels efforts. will cured for likely originations the expect purchase Harvey second we to quarter insurance in offset of following with NIW activity half the these of only low. partially rates the delinquencies months first the do year these

minimum billion our we during over and We level approximately the started $X.X in force We We strong capital quarter of of last actively time. with quarter with remain the the few regulators our the and reinsurance. a ended position engaged risk the took with above actions by XX% capital PMIERs this turbulent in years. over some covered of GSEs

COVID-XX in of our USMI future will business ongoing view macroeconomic dividends. may from our and our experience, the receive further view and Our reevaluated environment, around and the overall And XXXX timing in in year COVID-XX. insurance later discussions capital housing The not during be delinquency our dividends amount order USMI of we to period from on regulatory inform this preserve and will depend economic of dividends the uncertainty. recovery in subsidiaries

Turning to to supporting X response similar COVID-XX. in Australia, is up to the forbearance for government months programs

However, economic scheduled and delinquent of of the forbearance during the our until the business future Australia after year. likely considered under forbearance following We delinquencies still are for are are resumed. program the in anticipate to missed not Australia the payments pressures earnings reduced not payments due increased practice, of period if period, remainder level expiration forbearance expiration the of some experience to the would

the of cure Similar recovery performance. ultimate and shape financial the the rates to the the these drivers will the U.S., be for delinquencies for

with economy the maturity. quarter in current expect the million limited Australia Australia state housing of levels the strong capital We and We $XXX the targeted given XXXX business of our new market and above a volume minimum activity. at position with lower Australian started the in capital local level debt the in over

Australia loss of Also reinsurers. million in Australian renewed of with XX of January, a panel excess reinsurance over $XXX

around accounting and using business This for was under recoverability There for last testing that the LAT. financial guidance late Australian Australian in COVID-XX. and release reconsider However, of test the calculates the any an case. need The decision impacts more DAC guidance, adequacy night the this as potential on U.S. based estimate there's $XXX now took balance losses outcomes. the will in dividends no of clarity recent first and confidence premium consideration liability rest accounting business of Australia's evaluates the reserves equivalent in to noted level, our charge heightened million GAAP was balances charge is regulatory local uncertainty in the then additional DAC stress or the for higher March, a due best best lower unearned and existed and quarter year accounting estimates under over withdrew until the given higher COVID-XX of regime the reserves, then no deficiency that

plan, and U.S. Regarding existing view uncertainties and Life the businesses, rate capital, management. multiyear that management in change of the economic is do not which this our expense impacts our COVID-XX prudent isolated force action includes business its dependent and on LTC business,

business not the meaningfully U.S. mortality have direct our seen virus. elevated lapses of or yet We Life from a in COVID-XX

be increasing rates These heightened includes of a ours is resultant forward. in have level, which social the experienced certainly going low measures, reduction volatility higher equity market and GDP area will the macroeconomic credit we of which driving impacts unemployment, is interest What deterioration. the impacts causing a distancing and historically to focus

that impact results, cause this not broad long-term are year, our While an updates actuarial to for assumptions primarily Life these review annuities. XQ require a assumptions products will fixed impact our and and unlocked that monitoring later we variable necessarily such impact our on factors as macroeconomic short-term did U.S. may

XXst. March limited significant We the also equity and decline market on as experienced losses mark-to-market investments, unfavorable of partnership reflecting our

and rates trends. evaluate We updating continue see that will move the later all need term to assumptions longer as we may in as monitor interest our we year of

have meaningful NAIC of premium anticipate In lapse temporary and Insurance period dislocated a environment, Association this have states and will the We no Commissioners addition of number programs impact. do grace National a not guidelines. market or to the instituted

investors added few to website. our posted did discussing our I have, we given this investment presentation spend portfolio. the additional minutes questions And want may to a have an slide on morning

Approximately investment This fixed Life issuer of value maturity Insurance our portfolio, of investment in U.S. XX% invested the market rated $XX.X obligations. majority constructed our of is or create total, level the In grade which approximately diversification on rating. billion and backs in better. A, to securities cash and XX% at is based a the totaled quarter, first sector, with portfolio end

monitored our of quarter-end. In portfolio indicators quarter, we billion carefully with value of of rate than end income be always signs partly for could spreads, the very of rating credit metrics was no [ph] position Also, credit at limited $X.X than the environment, gain low X/XX. the have first of XX% migration early investment level unrealized of downgrades interest with losses. offset book quarter, and Both credit since We've improved that losses credit distress saw within fixed by trading less X% our at and as of less the these widening our portfolio.

credit the which income transportation sectors, migration accelerate expect of fixed do energy XQ, our in particularly We losses credit approximately and X% represent and will in portfolio.

our portfolio is we closely also mortgage commercial billion monitoring. loan Another XX% of portfolio, our are $X which approximately

quarter-end, of loans all were performing. As

However, with inbound over focus number for one-by-one, properties. principal weeks the situations on the calls related few these last retail to restructuring received preservation. focus on evaluating of we have a loans with We're

of the will preserve implications uncertainties and monitor While we our the improve steps businesses. and scale many proactively continue virus the remain, unprecedented COVID-XX and to of health and financial to events take are

holding debt talk to company results I $XXX and the cash assets in million about $XXX X address forward times million liquidity for quarter service quarter, did targeted with this ended the operating liquid priority. our as a above top approximately I at Before want or buffer. remains our We

we received number with business December obligations sale proceeds in MI Canada the near-term large quarter, the of a from of the During XXXX. addressed

retired repurchasing the addition open prices June Genworth of our XXXX XXXX page at to on par. the market million of depicted in deck, below $XX debt investor debt As XX in

during unpaid hybrid call; Other timing cash discussed year. in and accrued the quarter approximately of rate reduction businesses note includes $XX mostly $XXX to payment by interest we expense interest on retired which on $XX higher reimbursed throughout of included intercompany additional in and our given a GLIC. debt $XXX to interest to in rates; that relating the We and million are debt, XQ also the our interest sharp typically other interim quarter's uses cash AXA, collateral, early on our are items the last and the million hedge million which million, retirement; miscellaneous fully

of $XX during ordinary we Australia dividends Finally, from quarter. received million the business our

on we discussed update AXA quarter. I to last investors litigation do that want the to

the to converts may due or continue at We be March their amount AXA exchange demanded uncertain of has updated that claim payment amounts which rates. ultimate $XXX million to of foreign to January million, £XXX a XXst be under the invoice interim ruling. net currency

of As a be approximately amount seeking $XXX invoiced the will additional mentioned damages reason on we subject delayed June COVID-XX. for March an Final amounts to million, this time at the hearing, believe due be is also assuming FX AXA the before, of have to no rates. which XXst gross-up tax will

our are maturities debt we approximately litigation XXXX $X.X and in XXXX. manage of February combined we possible billion liquidity mindful in beyond, these in incremental and expenses September As and of

are subsidiaries. to our planning in preserve mortgage also in insurance cautiously dividends We XXXX subsidiary further no for capital

is can the permanent which be for are solution liquidity terminated further needs to market include We would Insurance provide and secured a possible found, meet facility, business or alternatives recover Oceanwide our a reviewing before delayed. Mortgage event or U.S. we in a more delever. from alternatives to loan time These can issuance those debt transaction the

in Oceanwide other with ongoing to the options transaction. gives these parallel agreement flexibility with pursue and Our us

to still is priority Oceanwide the close transaction. top our Although

a equity of for We shareholders and adjustments, partnerships. product, adjusted earnings loss FX limited of in loss of derivative back losses primarily losses and investment $XX $XX taxes net securities losses included quarter. million, of our $XX on quarter available other in reflecting Australia embedded the and The on net and hedges annuity variable for mark-to-market the Turning million. operating quarter the income Genworth to reported to million net

in to observe of favorable a prior that The in adjusted the prior our in through $XX impacts not quarter, force ratio private by market. performance USMI, larger generally million, housing compared in [Technical income $XXX fundamentals, In reported million quarter in would included delinquencies. quarter, $XXX and was The quarter strengthening. first of trends insurance and operating prior by characterized the has reserve updates. and was quarter results prior strong from delinquencies driven USMI versus delinquencies year. did quarter the primarily XXXX the the any quarter year, for up $XXX mortgage X%. deterioration the insurance assumption of written low existing nor billion million for strong was million Difficulty] loss warrant XX% We financial insurance performance in increasing the Flow COVID-XX-related new the $XX.X during been

down smaller lower been of results policy loss in first for mortgage $X year. Australia U.S. in GAAP from Australia, Financial was adjusted the the due the insurance GAAP basis same prior of material portfolio versus seasoning pressure has billion COVID-XX the customer. The books, million performance lower a million prior for $XX in XX% driven from key year a stable, and Flow $XX in not the quarter have written to U.S. In of from volume periods. XXXX. operating ratio income versus quarter U.S. the in million results in higher on the G&A the quarter and quarter, first origination the XXXX have although new GAAP prior XX%. quarter $X.X impact generally increased on for to did Australia prior through the was cancellations a force quarter

U.S. term Results fixed Life lapses were volatility products life impacted low XX-year and by Insurance segment. continued and indexed interest rates impacting our equity Turning annuities. in market our to

prior an on on quarter existing Benefit unfavorable a multiyear plan favorable on year. period the rate impact results. each our are seasonal In updated slightly the in claims, were insurance, continues to key in long for consistent rates quarter versus of and the expectations. earnings higher which terminations to with action claim basis rolling be LTC, prior quarter compared driver In a term update utilization the care first had

force overall to reflect XX claim for in sequentially, down actions investor continued of expect morning. reduced the were impacts age. for New year the and particularly as we of LTC than The on illustrated the presentation X but Choice claims on this which rate our prior larger Choice benefits benefit LTC, blocks, blocks the those the higher higher counts X page quarter as released

As and we've fluctuate in reductions to with a associated from discussed beginning the wind-down benefit approvals quarter-to-quarter, in past, XXXX the the also we state with we're can large received of consistent our see projections. implementations and early XXXX,

We at to more multiple to quarter continue This expect included subject to ever, first to action impacts. our rounds policyholders the which these benefit by policyholders These be than COVID-XX year, been many of of as of for is policyholders, selected frequency this stable our in more a important higher have force increases. at and the a flexibility reduced given macroeconomic with premium benefit strong continue options, be rate actions although consistent approvals expanded level performance. rate

to COVID-XX to behavior potential continue policyholders. policyholder carefully impact will We monitor of light in our the

orders the quarter, which and and insurance of timely work-from-home of our line despite reinforces million rate regulators many to expectations. recognize justifiable During a weighted departments. state $XXX experience impacting Genworth average rate months with with the last premiums the the of continue priorities was XX%, few in importance We of approval actions believe the received this, approvals,

versus identified to were unfavorable life payments. related prior that have term to COVID-XX is COVID-XX, evidence we not given totaling in just Turning $XXX,XXX the mortality received related as year, Overall significantly and the life quarter this and insurance. prior was quarter quarter only do for during although three to under benefit universal claims in the

the mortality COVID-XX continue well our experience will impacts we from as progress any throughout as monitor as to We year.

Reserves also operating GAAP certain loss policies persistency universal an these higher post-level are during policies of these increased grace over uncertain. policies product, $XX these grace currently term quarter after in life The period. and released quarter meaningful of of of time, experienced impacted premium expires. the premiums be million these and of period results these Life is as by are a products the enter in the our in number negatively to reserve will a assuming periods period ultimate in build the their were premium lapse we as attributable significant that

expect exceed the and We through which the the XX-year should UL XXXX grew number grace XXXX of premium of period. into and [Technical early Difficulty] policies peaked entering negative therefore XXXX this number will term throughout policies mid-XXXX. persist dynamic lapsing after

life term premium to negatively the shock large than locked-in continued is lapses the level are be with term impacted The the level also written entering year assumptions, especially business insurance our in that post from premium that XXXX, higher business original life XX-year period.

the life term Total by insurance than quarter. earnings million to $XX reduced $X a last term-life tax, these is related lapses, DAC amortization, higher non-cash primarily after impact, million which

period and accelerate. early more enters the the expect premium XXXX lapses to amortization We and into related to business written XXXX post-level in remain elevated XXXX throughout as

rates In and additional million during prior annuities fixed compared the to interest quarter, reserves $X quarter. a indexed of markets in low release reserve annuities, approximately in equity drove fixed the

charges immediate annuities did quarter. the in single testing premium loss additional Our related any not recognition record to

quarter also Runoff our during and impacted market in from the decline. the rate negatively were results equity The segment

reminder, of of billion assets consists XXXX. a of management Runoff under mostly with in variable our the As segment approximately been runoff net annuity $X.X $X.X before which blocks of has billion reinsurance, reinsurance since [ph]

the million other was retired for corporate attributable This last loss adjusted quarter. debt. loss $XX Our expense, quarter, operating we was as lower interest primarily versus to in and lower

capital levels. to Turning

end maintained quarter. the at a capital the strong positions insurance Our businesses U.S. mortgage Australian very of and

monitor We to continue the closely dynamics progress, the levels will given as year capital I discussed earlier.

for as level ratio PMIERs sufficiency the level XXX%. USMI, billion above is of of PMIERs with we XXXX. located declared include The did million PMIERs benefit FEMA existing in amount of or This the quarter the major treatment eligible delinquencies industry's of in delinquencies. XX, $X.X March areas for In application of of sufficiency modest finished properties disaster required X-point the $XX excess to a assets

prescribed a Australia capital range ended or AUD$XXX approximately due earlier. largely which target quarter million to of GAAP quarter from to is above last business from the testing XXX%. liability XXX% US$XXX represents estimated with amount of quarter, of loss This capital a ratio MI an the million high Our the the XXX%, PCA or first I mentioned Australia XXX% management decrease adequacy end

We year-end by were RBC approximately only action capital quarter, by as the end primarily a percentage as driven company Statutory of Company results approximately be annuities, gains. Genworth GLIC the down on were which of offset XXX% XX or partially variable from points first reserve expect to in of increases level Insurance XXXX. Life hedge

that and contribute GLICNY As part will the billion of than is the make subsidiaries basis Life upon the due Other it connection Genworth with no transaction. GLIC contribution regulatory to the our contribution transaction, closing million $XXX standalone all is transaction, This manage to of to with entities committed the U.S. approval the infuse intention USMI to a plans to as $XXX additional obtaining any on in U.S. of million for $X.X capital. to our transaction. the part Life agreed Oceanwide capital possible to a we

unprecedented these closing, are times. In

selling used and holding platforms, further business, our position with actions started build and mortgage company the proceeds will in a MI business have COVID-XX standpoint, far-reaching uncertain address Life capital in economies we From success operate financial in U.S. impact multiyear ahead. and isolate year obligations. near-term well-positioned up quarters the the plan, on the to rate through expect we took we We our action its Canada which with our a to

through stakeholders. all navigate focus uncertain to with on continue will these key times our the We

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


Instructions] will Joshua Q&A gentlemen, go portion now and Esterov call. [Operator begin to we of question the our CreditSights. We’ll first with Ladies from the

Joshua Esterov

you deal. around very timing Hello. question the much. was Good the of Thank morning. My

contribution solution for in fairly place So, a a connection New team looking regulators China call York quickly, Genworth when in capital deal, Genworth and with was mentioned if that that in previous deal the Oceanwide were the could off. quarters the

with extending Now, finalizing into June XX, seemingly if are ball Oceanwide’s amenable how court you of funding, the the in beyond necessary? China deal terms to

Tom McInerney

a that for So, It's good thank much question. take question. you very one. the I'll And

I to and and first Oceanwide China the transaction. Chairman is press are would fully committed Genworth both in The thing this the their and release, I and say,

despite I those Capital under it's work Hony arrange a Unfortunately, billion continues circumstances. in came. deals all efforts, for think to these China point. But, all challenge And funding. clearly $X.X have to all COVID-XX We at given approvals the Oceanwide any the this uncertainty, with

do so, possible, end as the by to as by the just we're have that but We closing how quarter. hope things And -- the We'll soon deal. of focused on to see develop.

think, I time over And at both focus commitment point of long the of shown to on I think sides. our this both deal. us has that's period a

Joshua Esterov

that the I lot. to from follow-up. finalizing one China Is the that. or And Oceanwide, to that remainder for most be needs related component of $XXX funding of China Oceanwide? that a is Thanks is maybe Hony quick million appreciate funded for commitment the the that

Tom McInerney

within Oceanwide the mainland from think, I funding China China in So, is shape. good

mentioned, Hony focus the Capital. Oceanwide XX% is I point of with very think have Oceanwide And founder working good of this Hony at Hony, as the and Legend owner I Capital owns relationship. Holdings.

able But, time. it's the of uncertainty, well. I we be obviously that's quarter. second But, end think to taking given by So, close more the the all hope still to going

Joshua Esterov

Thank you Stay much. safe. very

Tom McInerney

Thanks. You too.


Palmer BTIG. We will to next go with Mark

Mark Palmer

taking for questions. my Thanks Yes.

working to third alluded had their on with parties funding China Oceanwide You plan.

play, If just third what out you a color Hony terms potentially beyond parties to reaching they're why bit would more role those Capital? of them, give could little the and in

Tom McInerney

progress and parties, said, we to rely also they a a And that Mark, are one on given Capital. I'll talking just They need they're as case all it's with point. of making at this take they But, there. Hony in the good relationship have to question, other uncertainties, alternatives again.

on I getting think, the main funding and plan finalized. Capital that Hony focus is

Mark Palmer

you that the end that explore you of you other that have gives June to expect and not the closed options. that until will now flexibility be mentioned said deal also, had And

little bit could just a you If color meant you more provide on that? what by

Tom McInerney

to Mark, working that end late we of March remotely. So, question. were we obviously, just -- the end developing, in gone and good COVID-XX the was extended had March. another the to the there issues of already transaction June, When from was But

March. Oceanwide, the the we the there going uncertainties the ago, because to waiver knew end it to part any the to extent the say at to look that as of with XXth that signed options allows And for And of time Genworth did is of are ask, some given of COVID-XX, -- alternatives other B unable was all deal. all the of us we the be were alternatives. discussions to we just we that challenges. in discussion, we explore they part this It So, agreed close talked and some end the And there. we about prudent still did before China plan in they're

remarks, billion year. focused our due debt and both we're primarily the said next in on $X.X As of I Kelly

look get alternatives assuming therefore of $X.X the due have immediate don't look that most doesn't refinancing to comes and year. billion and around we close is the of $X.X to debt deal of So, debt we the the next for -- refinance on if focus the the billion


to INTL go Glover We’ll next FCStone. Robert [ph]

Unidentified Analyst

question been answered. has My you. Hi. Thank

Tom McInerney

you, Thank Robert.


next to Bolton, We’ll Christopher go private investor.

Unidentified Analyst

in three action books approved, are long that looking been more secure as say you taken projections, far to-date care you the that your four confident of for more older As are or the rate would obligations policyholders has than years say ago? term business

Tom McInerney

Christopher, well. as that question I’ll take

We I or tremendous since would seven six in progress have the last say XXXX. made, years

look you we If need, and the was original price premiums a shortfall. premiums for significant there the at

since present increases the XXXX the of Genworth we end benefit quarter, net benefit billion. had of first As have received that or value reductions of $XX.X premium to a

newer over of XXXX, 'XX what issued to on the a to have were block, We the lot bit in benefit which increases go. our and little blocks, 'XX, that X future $X premium Choice reductions call XXXX period. is billion A

Xthe or the through would with to And so, are books closer way so say and shoring have the up XX% we're and we a given left, those with bringing increases. where level premium breakeven them all what we we

versus which your were questions, So, positioned. of I'd the say, today years basis we better is we're several ago, where much in think I

-- also Health my a The about the the plan. other years, their three prepared and to in bit because Pennsylvania rehabilitation insolvency happened last on happening Senior Treaty of that's the remarks five over I talked little thing and partly that's Penn is Insurance Company of

the reductions I insurance open providing of think, care books. term more for long significant been the in increases, to the have shortfalls all premium of the because regulators benefit

think, of shore up to with those well I legacy us, also all So, working, business. regulators working Genworth we're do blocks including of

thanks question. for your So,

Unidentified Analyst

a life side, life the your policyholders, ability a as And are than the policy your mind entity, and being as closed, closed, in are as remain UL the that products, Okay. while side transaction benefits you position to transaction keeping on say products, universal far fact to follow-up realize policyholders term meet on the viewing will independent would that, the now the Chinese or that, without ownership. being Genworth with claim goes obligations life on in it stronger the to an to

Tom McInerney

Christopher, life I along insurance transaction significantly U.S. and is thought holders, the the comfortable that, say, customers investing because have additional after debt reduce A all a care, Australia the the debt balance term be go by $X.X billion. to all to with long Well, the policy Oceanwide in annuity, will we're China we the where $X.X that of mortgages very capital. the significant debt, get the price, would advantaged of place in billion of our investment purchase strengthen addition amount will to sheet, where are

will and Company the advantage And recognize that and think the the policyholders. GLICNY, significant more And I GLIC, as I the the strengthen broadly, and committed see deal think of of to benefits regulators while further part also put think -- of capital a into all $XXX also strengthens million So, transaction. our for advantage therefore to is have we million main that. XX-state deal them. the an I regulators that But $XXX the company,


I the over are to call Dr. will -- we gentlemen, McInerney, and Ladies of I'm back time. comments. turn for closing Mr. now out And sorry,

Tom McInerney

call of much, joining And very for operator. you you the all Thank today. thank you to

challenges At significant are despite managing uncertainty we've and our me pandemic. we Genworth, COVID-XX working employees to well face that working well, of families protect remotely All to of their surprise middle It's customers the all been to serve we and both, Americans, all able been remotely. March. our due a unprecedented and since

work We to we on and the with are They continue progress. to transaction. plan making Oceanwide continue the funding the close to closely

a and We are unprecedented economic given the wide given scenarios for the volatility prepared businesses, and COVID-XX. uncertainty in of our variety business

So, And Genworth. thank all you at and support this much the for very of the to I'll operator. turn interest back over call point, your


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