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GNW Genworth Financial

Participants
Tim Owens Vice President, Investor Relations
Tom McInerney President and Chief Executive Officer
Dan Sheehan Chief Financial Officer and Chief Investment Officer
Rohit Gupta Chief Executive Officer, Genworth Mortgage Insurance
Ryan Krueger KBW
Joshua Esterov CreditSights
Ryan Gilbert BTIG
Geoffrey Dunn Dowling & Partners
Howard Amster Horizon Group
Call transcript
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Operator

Good morning, ladies and gentlemen and welcome to Genworth Financial’s Fourth Quarter 2020 Earnings Conference Call. My name is Lauren and I will be your coordinator today. [Operator Instructions] I would now like to turn the presentation over to Tim Owens, Vice President of Investor Relations. Mr. Owens, you may proceed.

Tim Owens

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

are this may Our excuse again once speakers remote quality technical any morning, or issues that arise. sound please so

financial supplement earnings Sheehan, you all Dan security by Chief followed comments McInerney, be U.S. Tom of to Officer, will limited our posted Officer. referenced for applicable Executive Our press and mortgage our Officer to regarding was President preparations be Investment hear release our were last to law our Chief from IPO We of this Chief presentation Financial our and night website of our Today, review our an business call. these the will prepared released our Due to during status materials. restrictions, remarks. morning, and will and you and encourage

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

Gupta, will take Officer, our to Executive Genworth Chief addition questions. Insurance, Mortgage your speakers, In to available Rohit be

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

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

Tom McInerney

Genworth career leaving Thanks, quarter weeks want everyone in through companies. within Genworth’s after Operating May our acknowledging start today Executive of thank instrumental about businesses, role we Tim. on Officer, has few a for Kevin you serving I year. remarks at XX my call. been its by Schneider, our be and prepared fourth Good Chief made to Kevin ago Genworth’s advisory and an the Genworth predecessor Insurance who his Global leader XX-year and over morning, joining will Committee Mortgage this announcement earnings an

As CEO and of Mexico, across Kevin Genworth and Canada, of the Global MI U.S., India Global presence Europe. Mortgage Mortgage stake our sale of Genworth in Insurance the a IPO ownership leadership to Australia, Canada. the Division, Australia disposition critical Kevin Europe, the provided the of led Insurance

Officer his leadership the Chief his Life of over also helping with and As for I U.S. Oceanwide. transaction and wishing Operating through outstanding Please company Genworth, Directors Kevin a career. for grateful and to team, well strong steady Genworth Board to me Genworth Kevin extremely contributions next leadership The are Kevin join to provided adventure. his our lead in critical in while operating the all

with our strong results as what to operating fourth to and strategic turning our remains very against in Now to ability Genworth macroeconomic quarter, results delivered well I achieve make ongoing priorities. the uncertain strong progress execute an we pleased environment. continue am

strategic executing strategic our focused our on taking revised efforts strengthen January businesses. we on Following our X, our steps and plan to have update

potential conditions and IPO MI, various partial as as subject conditions preparing First, January, approvals. focused remain market U.S. we to of the we on discussed well a as in satisfaction of for

securities and on expressions related of this transaction January of our multiple proposals, forward, various will U.S. to Board not transaction parties discuss began part a gun-jumping of prepare to these our U.S. IPO. X, continue laws, we pursue I a we as management that MI. our and MI ago an we delay U.S. permitted preparations contingency you partial are have business, moving with Since involving to the including IPO, over for the intent MI third associated details for year as to of tell IPO Oceanwide we can planning. While interest and XXX% announced due received of we a indefinite applicable and from consider sale transactions our various the The

value ratings. long-term over We significant deleveraging U.S. a important time, value transaction insulating MI’s U.S. any that believe and which shareholder improve in would to priority from additional further be holding company very MI are from would unlocking Our ratings, insulation, with standpoint. competitive by MI’s maximize U.S. along

impacts annualized changing And which ended we position million. and footprint by enabling in take to completed expenses the of The included strong reductions February of our finally, to programs, took cash, $XX and we do are not structure know recently these that of for billion pay in us actions We our expense processes realign employees, challenging our Second, is people, approximately expected expense a our this January, businesses. $X.X lightly. the activities, a time to million. reduce debt maturity very year we liquidity to current Genworth’s given business with actions off $XXX to

As a plan, policyholders our to business. existing blocks we the serving managing contingency X of approximately is to in-force have structure responsibility business align the U.S. focus, effectively by current million we our which execute its Life

Additionally, we that structure business corporate to reflects need ensure our our go-forward needs.

basis can our regulatory designed Life our potential long-term Genworth the our on of functions care legacy the with MI, ongoing when clear to an an to contingency be long-term United that standard ago. on more to expertise Due to to we create move and of play plan issues experience in leader experienced a that experience products we pioneering of care model force. legacy insurance and due LTC be multiyear policies LTC execute help products, In population. developing care learning forward support right long-term XX role the viable evaluate much past Genworth in in the industry Genworth business our the actions were sale continue is insurance aging for has we continued these market, effort as want cost insurance, With meets States, spearheaded U.S. to to continue the of with against being necessary. improving key challenges is respect model this executive we believe secure I committed of With our will years and structure approvals Insurance which reductions. losses streamlining and to in the leverage NAIC a corporate by care We from we to task long-term an significant demands insurance reduce effort, can be solutions and benefit the the which the that strengthening businesses, insurance to options rate industry strategy. for action Canada U.S. challenges, stronger, support decades

on improved insurance progress stability the this significantly work done. initiative to our care Our financial has of still be more business legacy with long-term

additional action fourth had January X over on million quarter premium shared in increases with LTC very successful a approvals we achieved. our I for rate $XXX call, As

$XXX annualized present than forward. a As On end premiums XXXX, XXXX, we approvals $XX.X million increases. premiums, XXXX of an approved representing cumulative in-force net on from value premium of billion going have premium through LTC incremental average more of achieved of on achieved a $X XX% weighted increase year-end basis we annual or the approximately rate of billion

additional to past, discussed in have the we U.S. infuse our from, capital plans businesses. we As capital Insurance no or extract have into, Life

will Insurance prudent of end management ALR rely rate their the justified significant to actuarially of Life approximately billion U.S. statutory consolidated Going claim forward, obligations of on continue in-force as blocks reserves, the policyholders. our satisfy actions businesses quarter, to to third $X.X of and the and capital

recent want quarter to is stand turn be where Oceanwide I update towards the merger funding a it remains if resolved on close we continuing Oceanwide Oceanwide. provide to all. term, us do effect. on to with has in our the But things not informed near Before the financings with to based transaction. brief the obtaining will fourth agreement issues I work The believe our at in results, conversations,

is long-term strong years with transaction, it to ago joint contingency and there announced opportunities future, we IPO. venture in the open primary our agree for no much plan it Oceanwide. have a a given the MI to to While the pursue is stronger X If established growth in elder possible shifted in in was our insurance transaction, care China, the now the merger. Oceanwide financial than China Genworth excellent Genworth relationship that in remains first Genworth focus care is has U.S. could, long-term we completing position when the and focused

and U.S. LTC blocks. associated enhance to liquidity, MI actions further capital significantly reduce strategic We risk the operating debt, insurance the has have taken performance XXXX fastest solid companies from U.S. legacy from insurance which our several rates adjusted last company mortgage strong reduce delivered holding to in among led XXXX, a growth also which isolate Life rate income Genworth years over the growth the grew results operating several MI, compound U.S. XX% by industry. annual is the at in with

balance consents as put have we Genworth that we years accomplishments, sheet isolated on I long-term with proceed our our and long-term. am our two life the maximize MI. value plans from footing, debt further a by improved insurance last which more and shareholder refinancing U.S. companies addition, our flexibility bondholders over significantly these In over from financial proud few the receiving care to solid have of

$XXX increases higher loss income of increase since claim driven of quarter of a adjusted Now Genworth few The level the Dan before I’d the details. adjusted operating quarters. benefits prior reserve million income $XXX the quarter, claim The result because operating net premium million million. LTC year. quarter call quarter, Insurance $XX operating the a and like pandemic. U.S. full strengthening last MI net by a of The strong $XXX prior the an highlights to of terminations net and Australia insurance the cover XXXX, This new written operating LTC reported performance fourth financial was to adjusted year. for $XX In operating reported to X $XX.X briefly of income of income million impacted $XX reported of significantly incidents and year-over-year COVID-XX higher result quarter reserve million, more operating quarterly compared provide MI income adjusted our the LTC operating for million billion fourth the in over turning investment $XXX and reported quarterly and in and U.S. results by income the million. strengthening. of reported adjusted income highest Life cumulative to LTC reflect of was record adjusted from for the companies lower losses of of

We capital managing are of disruption by the uncertainty and continued in light and economic caused prudently pandemic. reserves the

despite As reserves would result, a which hard quarter. their MI company-wide million increased deliver in and like during enabled COVID-XX. employees more during quarter the fourth our a thank and we MI, to of imposed U.S. will to $XXX full operating I U.S. very detail. discuss for over across the XXXX, to to of strong and all year substantial execution call challenges results outstanding the adjusted us turn work the Life full Australia income now by Dan I year

Dan Sheehan

quarter these Tom results for adjusted earnings, businesses progress available progress gains, origination of million. mark-to-market in from million the was $XXX and positions the $XXX for certain We areas derivatives gains, liquidity. and loss made company on mortgage large action U.S. capital of of operations. cover the and well housing period in Today, the incremental improving The holding quarter, operations home quarter financial multiyear for in each investment earlier our in $XXX and strong in uncertainty primarily a our improved everyone. slowing of realized partially continued to Thanks, offset with morning securities mortgage by the income and fourth plan, company. market subsidiaries perform this related Genworth of during at continued of and peak. ratios our pleased primarily operating discontinued insurance reported charges. income to net good market prices, discontinued the income quarter the from $XX I’m holding with continuation I’ll liquidity to delinquencies shareholders from tax and very million our a capital from with on million Included net rate loss the

levels and and extension currently closely recently forbearance initiatives, along the fiscal we government available, moratorium We’re view monitoring plans, with which foreclosure including cure positives development as announced for stimulus strong the ultimate options delinquency strengthening. financial and and driven U.S. claims. of by force quarter reserve by lower were growth for MI new delinquencies, Overall, insurance offset results in in fourth partially

at XX%. operating driven reported in prior a Primary insurance versus U.S. $XX XX% insurance loss quarter, For mortgage in written year, the of larger million MI the private activity the new a higher income was billion U.S. ratio MI up refinancing $XX market. of and quarter, primarily by adjusted

estimate As the versus most reported, not of our quarter. prior our market share we generally peers flat have was

While prior remained portfolio Low benefited from the driven impacts million, throughout and with and year, force rate NIW insurance levels high the which was growth with business. refinance XXXX persistency single which persistency low prior varying pleased premium and $XX versus unchanged our elevated activity premiums quarter. interest to have primary of insurance our our increased environment XX% we’re quarter levels has has the low in in the during cancellations by

risk these remains shifted recent cancellations, expect to premium product has towards mix in vintages most weighted the of persistency see mix investor mortgage continue presentation. current could illustrated as uptick strong. Lower X and years, rates. force premium of with we eventual quality going we single While the decline the more do XXXX a forward be of our single to lower levels trend of Page on credit this of The elevated throughout book to in

addition, books In our risk in our now through only comprise of XXXX XXXX force. legacy X%

quarter approximately both quarter ended or rate a delinquencies of versus still being were the the in new fourth primary delinquencies approximately of prior down of our total, or cures in they with primary delinquencies forbearance. decreased We While XX% which approximately as sequentially, X.XX%, delinquency pre-COVID In new delinquencies plans. during delinquencies XX% outpaced sequentially, in XX,XXX levels, total primary recorded were new are XX% the of quarter. forbearance with XX,XXX elevated

active of fourth those approximately from Our levels the or servicer XX,XXX current. in policies in forbearance with forbearance plan, ended reported X.X% still a reported continue our reported May to forbearance XXXX XX% primary in trends and peak decline as quarter of with

rate April that remain at the additional since delinquencies In quarter, last economy the eligible is by prices. the in large and X-month rate well banks During cures forbearance we slower utilizing of down $XX the rates relative continues estimate, Last best this a for year-end evidenced that increase delinquencies reported X%. approximately delinquencies positive original of total the as outstanding trends for The the estimate original economic or the X% the quarter, home than reflects beyond Australian and million revised program, plans will primarily our and from Australia, these unemployment loan programs, initial business COVID claim impact home allowed our ongoing our blended the given emergence higher estimated X.X% all to pandemic. borrowers forbearance as our With have to government delinquencies. Australia’s claim to households the claim quarter, due rate recover reserve adjustment, as and expectation in expectations current Australia previously Approximately our deferral assistance quarter. prior extended which are pretax period. federal

phase over approximately currently out or these macroeconomic programs, these Australia ultimate participating of considering reported including MI, loans current of measures. Australia delinquent. X,XXX borrower XX, down loans remains loans September The as not outcome reported forbearance conditions, in uncertain, are XX,XXX our regulatory are the For certain the Under at insured XXXX. X% support approximately from guidelines, these loans loans of

in versus in The recognizes our interest IBNR million strengthened drove methodology year. sequentially fourth business loss on $XX origination no average, $XX which in losses reserves COVID-XX Australia support by the business borrower primarily update, compared mentioned. reserve resulting prior in Strong its fourth previously result which in pretax, the this NIW, through or refinement low part in During quarter rates incidence prior a and operating observed of Including majority the the was refinement annual million operating reserve. for current the by patterns delinquencies supported methodology XXX%. changes. $XX measures the Australia prompted in of earlier pattern from for million mortgage a claims adjusted its quarter, The by was U.S. year. flow review loss quarter of loss premium was to GAAP adjusted changes of was which its volumes income quarter, that the the also was quarter XX% $X.X The of ratio for and earnings the million GAAP XX% up billion and $X completed resulted U.S. the prior the

of adjusted the reported an in million quarter segment U.S. income operating $XXX in income adjusted quarter of $XX prior of Life, million year. to to loss operating and the the Turning $XXX in adjusted operating the prior compared million

and fourth Our claim elevated compared adjusted in believe less that average. is materials, million investment likely is quarter, on most variable operating vulnerable income claim mortality increased Page reserves from the claimants. view of quarter during Claim population not LTC quarter Long-Term the We attributable was achieving versus reflect in death income recent has COVID-XX. certificates impacted fourth driven the that premium and in to by for terminations, quarter increase In our terminate our but our Care, noted to in to the reductions. that part the prior We elevated LTC track reflecting pre-pandemic XX do temporary believe million the fourth the the the continue as $XX investor by Results and were cumulative the benefited experience terminations the year. we increases the assume In pandemic primarily of than claim require pretax, of is remaining terminations the in businesses to terminations to X-year and pandemic. significant higher prior U.S. prior and Life record million $XXX million continued year. quarter benefits COVID-XX $XX we significantly $XX in the were benefit

New claims lower development. IBNR remain continues favorable which to than submissions drive expected,

claim we and to and resemble the our However, is believe restrictions in temporary, policyholders previous delays COVID-XX reflecting currently that will on that experience incidence going concerns ultimately in decrease trends. due incidence

As in investment by $XX $XX million a strengthened after the $XX result, pretax up have the million reserve by pretax XXXX. for for throughout reserve prior after IBNR income. quarter tax actions rate million was variable prior we quarter year prior overall and million $XX strengthening this the partnership remained LTC income in-force rate higher our Net from from investment in and further versus the Shifting in-force to actions benefits strong the limited LTC, quarter. versus

Genworth approvals billion of XX%. average approximately received weighted year, with the $X For premiums approval impacting rate of a

In addition, the our and outpaced years prior as premium impacted premiums. of number rate activity year for filing increased filings measured all by

began rate As regulators. for we importance materials the for increases requested We on we Page actuarially the are of most with filing approvals past. state engaged cooperation in justified a in regulators rate increases had justified in the XXXX, remain the product rate product series. by not the actuarially XX series, of continued reminder, by new cumulative which our and increases encouraged from investor illustrates in

overall included life versus after quarter year. death prior to life full be received period. life insurance by prior earnings in written term to Term premium DAC for estimate enters an compared post quarter date, after as The the Total to insurance, year COVID-XX-related original continue are amortization, in these reduced related fourth level the impacted non-cash to to the was $XX bringing claims lapses, $XX term the tax than and products term on quarter level based assumptions primarily Turning large quarter. that insurance a prior XX-year amount life impact, by tax. insurance mortality our million tax million $XX million negatively to million XXXX higher after the elevated lapses business locked-in premium $XX of shock approximately in certificates the

not half XXXX, level assumption As of post sales related term we part continue decrease our for annuities, we to the period compared levels persistency second quarters. in our declined to insurance modeling updates, premium of the life fourth and policies policies do in with in our driven suspended products see to XXXX. we expect lower lower for to amortization refined earnings in excluding prior In a in level favorable prior $X.X immediate and runoff expect fixed adjusted mortality and product, and assumptions lower reserve quarter. quarter dynamic In term the AUM, the by quarter of universal These as rate operating the increased to quarter was In operating sequentially year, adjusted entering post as versus to impacts into strong prior period continue the billion, was total million we $XX enter net the improvement premium income offset prior down fourth the and assumption to XXXX annuities. market the the single since interest the decline segment, billion. quarter, equity updates of spreads by XX% sales during our $XX partially XXXX down were The for $XX.X market year. experienced million

XXXX AUM annuity variable favorable excluding billion. total XXXX $X.X Our since suspended with in we decline billion, to to in $X continued products sales XX% down impacts of market

not performance. for life not in we that U.S. all in key temporary companies, update observed our We fourth trends currently our as the future of LTC, the view product material of each actuarial our of For The of of reserve claim assumptions. pandemic-driven quarter or loss indicative updated claim trends In XXXX half the insurance and impact completed reserves. latter lines. review we our to was assumptions

flat mortality, rates, in reviewed We margins prior LTC among life the lapse, remained long-term billion. assumptions active interest other year expenses million the $X $XXX and Our key to morbidity, assumptions. at versus for

GLICNY. XXXX, particularly claim included for York-domiciled entity, For benefit policies for and life unfavorable GAAP in-force rates, our the in margins utilization active updates termination New

emerging For been we additional have nationwide monitoring of and GLICNY’s benefit the actuarial trends data claims relative experience policies, to analysis. with

experience York-specific GLICNY’s New reflect fully to in able were we XXXX, For assumptions.

New mortality. be lower that of driven tends the claim observed significantly severity than to higher average, the nationwide have York We by

the and strategy premium be of higher basis. value present experience. action average. net benefit to adverse managing our items for need project rate on LTC in-force mitigating nationwide We also to our billion in than a updates drove incidence to reductions increases and York materially proactively emerging now These $XX.X the New plan, essential which tends is

Tom a need of impacts billion $X year, remaining since rate that As amount the and significant series, higher of added a our grown the XXXX, for amounts a a assumptions smaller, justified approved Choice mentioned, policyholders, leaving has newer unfavorable increases rate amount, from premiums. adoption longer These value approximately year’s for additional rate achieved portion additional age This we’ve a collecting net updates. the The runway multiyear manageable additional remaining. this the include action and allows but plan actuarially of Approximately later. action increase. more on to $XX.X higher largely for billion New offsets the action II discussed of assumption the product but half experience previously. present I Also, this lower our York-specific reflect benefit have premium increase from attained assumptions newer product rate of premium net could for last series

net life charge testing, a term life, related and rates with We recoverability million million was universal completed resulted to benefit fourth primarily the quarter $XX after life products I partially a mortality, refinements in term our and updates. universal assumption for a in and insurance universal tax. after million offset by $XX to of our $XX tax. products these for updates updates net interest actuarial of that in This after-tax during life mentioned, related universal our also persistency Model previously DAC benefit

Insurance our negatively capitals million XXXX, products risk-based for from XD, to approximately others statutory decline prescribed reserves life GLIC, by quarter AG insurance period a basis The and will year. corporate fourth Rounding universal called require statutory XX, secondary the As in need results, each loss on June which $XX quarter uses guarantees, of in operating rate a we or prior points. our during in drove we believe reinvestment noted testing Genworth prior and XX from year. million separate Life a the with July $XXX the this approximately and was last rates certain line by which increase impact for is the out adjusted to quarter, Company,

quarter. a our Turning ratio as transaction published of quarter PMIERs capital to was the insurance $XXX mortgage provided PMIERs businesses MI, our PMIERs quarter sufficiency capital maintained the levels, in above million finished of requirements in prior the by executed the versus end In billion or $X.X Australian efficiency U.S. XXX% an and with year of we positions insurance-linked end approximately fourth The note at U.S. driven XXXX. October, which of improvement received XXXX These at interest reinsurance impacts the prevailing amortization rates. business credit which to XXXX million we and regulatory will a which of NIW, reinsurance new approval insurance strong existing elevated credit and book on our accelerate written partially XXXX PMIERs XOL levels elevated for current up January, our lapse offset transactions. lapses, $XXX from expected year-end by of provide low the of on In were portion and book. of for strong new

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

prior including the and quarter from in to year, Life Absent capital a the would from effective cash and which the above XD just Company, any we Australia or reinsurance flow trends percentage million was quarter, the renewed company actions. statutory the incidence rate business mentioned. level Insurance benefited Genworth year-end termination as AUDXXX GLIC, in-force testing, at I at January program, AG be XXXX. U.S. of XX, in action During its impact, temporary shift successfully earnings the income expect that LTC impact Life in X, from RBC from

These targeted cash quarter and Genworth I we above a company, at to $X.X XX cash, XX in cash the capital MI’s operating issuance maturity. used holding $XXX intermediate debt Approximately billion Genworth principal excludes of pay note approximately current XXXX interest million. to restrictions million of under of U.S. Page intercompany fourth August must strong activity, that of $XXX buffer. would of quarterly provides the cash with as or be and ended holding of underlying cash cash contributions $XXX note senior liquid the million February million from payments the income investor for the XXXX. our company company. including in tax our presentation taxable insurance quarter in subsidiaries expenses third very held holding Holdings, Mortgage was the used Inc., strong company for For this balance the reflect approximately intercompany payments position our $XXX assets U.S. or tax GSE

these through to a at amount. expect We payments XXXX, lower although continue

subject steps and company September market we forward, our prepare conditions, debt we uncertain forward taken to to and a As position the potential MI navigate as look our financial businesses of as well buffer, continue address liquidity Tom business, the service improve maintain to mentioned. flexibility U.S. for as our holding IPO closing, to fully these maturity to numerous we’ve times. of our In ‘XX

progress value We’re pleased all the focused with questions. providing line open and our stakeholders. key financial With for to we’ll now on that, remain

our regarding related Tim other matters IPO or earlier, a be our As due will applicable mortgage U.S. business to restrictions, securities preparations remarks. to potential limited of noted status law our comments the to of prepared

Operator

question Krueger [Operator Instructions] our take KBW. from Ryan with We’ll first

Ryan Krueger

good Hi, morning.

decision? of partial would a As terms the be what in of a the that of some company, you sale full U.S. versus can MI discuss potential of making IPO you considerations weigh key

Tom McInerney

think shareholder on value. think we full the obviously IPO. based is the Ryan, on sale the price a baseline whichever Well, provides best execution what I And the versus long-term that’s is the on

shareholders shares in ability One the of partial tax-free the U.S. future. a the for spin-off that preserves is – of – a IPO general to the core plan the MI

IPO are the sale. an the that that’s partial we full versus So criteria important considering

Ryan Krueger

the of the I sale, might guess, you the us MI separate then, as think that emerge guess, about how that, tax do And full from can you if help it. I you think – any company? to rest about from a did consequences Got

Tom McInerney

Ryan, There Dan, But be, gain. of Ryan’s is some lose I think, cover wouldn’t you I the main to taxable you a tax think thing consolidation. the do want question? implications

Dan Sheehan

MI In basis we’re sale, sure Sure. the making We’ve real The is sale to relatively – issue there fairly us. forward, of full tax we the to of be case that for from wouldn’t position a sale got be in going with MI. the U.S. is that comfortable and considerations U.S. in the a be tax full meaningful high sort going the what do straightforward perspective. of but tax proceeds the would tax post-sale, with of

Ryan Krueger

one, I the you holding company then do XXX% requiring And that to sell regulators be do MI, process confidence be to Form Alright. U.S. contributed you of of amount A just if versus some available proceeds guess what GLIC? the that through level the last have will to

Tom McInerney

mean, regulators GLAIC, to GLIC, Ryan, answer. York, question New There I for that So our – this gives so it’s difficult there authority the the come gives the up law, lot, is law authority for to New a and legal Genworth statutory are principal holding no has for in obviously, York regulators Delaware a subsidiary, no any MI from case, the sale. that right question to this your regulators company is Virginia capital Ryan, require U.S. to legal or proceeds, and or contribute

there I would the be potential states, However, am litigation. sure challenges from

the is when advisers are and really proceeds the proceeds So, one many have There Board of think the convert again And criteria available the shares. proceeds. could to But could cash is different things to alternatives. on is our cash about outside Dan be and and that the financial that. the legal focused shareholders, to key cash whatever be a ability ultimately be would clearly, I and and

Ryan Krueger

Thank you.

Operator

We our question with Esterov Joshua will take CreditSights. from next

Joshua Esterov

I Hey, taking appreciate questions. the you good morning folks.

towards set about a assuming say, over I’m obligations, this of debt pretty I clear yourself XXXX well strategy XXXX curious your think But let’s a for the obligations, frame. at that addressing dealing runway XXXX with successful Mortgage Insurance. up with of the point, U.S. IPO to you’ve hear some through time with

litigation settlement You’ve debt would be IPO sufficient. liquidity And I partial to a think for. AXA couple plus plan got existing payment, maturities don’t a of the

you to would So that be helpful? approach how on plan any thoughts

Tom McInerney

we think shape in good the are on XXXX. I certainly, Well,

amounts, AXA potential are either or of and the of U.S. XXXX terms cash. GMA from sources of other In dividends they with have are year not until MI other in do and terms from flow due significant next cash We those. there of options

about in our ability of to XXXX $XXX million is of due about So obligations million all And then balance, through then million, I was the $XXX handle XXXX. reasonably about ‘XX. the debt end the think feeling $XXX due the remaining good in and we’re

we at. color a little So wanted on Dan, to we pretty just bit provide good in I shape. are the are looking we of things of some feel

Dan Sheehan

Tom. you, Thank Yes.

of we Australia, as pay was from liquid And give business to, asset and MI could us going September. XXXX, in we any the which half I to potential the February, needed between of number ‘XX’s sell some us the U.S. MI, to for return is ‘XX. also we guess cash payoff help been for of in XXXX. U.S. to more but the ended is between shares, which off MI, public care very we use off flows a allow $X.X has year a the down this So And and and set assuming in of have financial the lessens ‘XX’s My U.S. a And dividend is with which both proceeds liabilities us of paid week the as and asset IPO sufficient dividends well billion for COVID year would in that always to of cash, time. economy, to buffer, – which off strong the to to cash hand. ‘XX, normal we say as the the cash liabilities we a the and would rebuild pay take AXA flows with with on extent what second the years,

Joshua Esterov

to the if your I one very lot. curious in standpoint. recognize you a mentioned But U.S. MI appreciate remarks, If is had second to important ability could U.S. for from now. and competitive limited squeeze I ratings I concern your translate on that, date, major from to Is that bit. seems helpful. competitive that to more less a about pricing factor heads that Genworth’s been disadvantage are about to win would Any just in Genworth? hasn’t a risk ability at, or be could where on elaborate Thanks you MI it color. your that thoughts business. prepared a It was could in here pricing were the I that like right transfer ratings a speak like

Tom McInerney

a I running U.S. been Rohit that I’ve outstanding here Rohit and I’ll question. – been He’s President X years. as of and CEO Gupta, say MI. good for in Josh, MI. job long as that’s role an and U.S. He’s ask would done is

And so forward. is speaker he going a now be going to

of competitors, And to reasonable market a landscape, sense think you versus we’ve we be successful XX%. have him been let I’ll MI MI average range. and think this, around maintaining competitors. we in market the U.S. able So that share. very have competitive But you give on in be been little you’d the X a bit very successful, I team, share should say When Rohit

However, we’d there over question us that get far, hasn’t so run, the competitors we dealing long because no lower is basis. ratings to And feel our day, the a be MIs. think market our to then than this. in compete But goal better with is our our are Rohit, it with we on every are impacted other ratings line able you while the in

So if some we give comments think to it. I you want to Joshua, appreciate

Rohit Gupta

Sure, Tom. Joshua. Thank Good morning, you.

been completely So Tom’s have in ratings that the add with statement navigate agree I the given few very successfully years. things a over comments, and able market, just our disadvantage I to few would last to we Tom’s to

our would those a where, customers, of compete some banks, those us not do better historically, And successful. think about have there ratings flow in so been market insurance large help the levels. very banks, strong care And are from very an are primarily improvement even PMIERs some small actually I with ratings perspective, the there we are mortgage in segments market, that our about segments. segments institutions, think depository about think

And So the transfer that mortgage flow insurance an consideration to would in ratings in market. is be an risk comment, transactions. important your participation reinsurance those credit upside our market, to for

a as CRT bit, have not GSE banks. in in for we portfolio loans have navigated we while been as well transaction little participant So big that market the a

that be ratings strategic a the us for the to So an as our that making lastly, always would sure GSE. us a to is, position consideration upside And business. strong also counterparty

competitive our ratings. from the a as a to making PMIERs seeing and kind competitive, counterparty the perspective, of but for shoot reasons that also in So ratings are perspective ratings from market and strong we are sure are higher counterparty only not

Joshua Esterov

for everyone time. your you Thank Understood.

Operator

BTIG. from question next our take We’ll Ryan Gilbert with Instructions] [Operator

Ryan Gilbert

Thanks, good morning.

First source you’ve all. your anything I transaction? at source reacting question, Tom, for complete learned being just maybe funding is transaction, on the think to call around ability just Oceanwide the market the Oceanwide’s since the regarding – you, guess, commentary there anything to incremental that to January I X funding Oceanwide Because the to not is able potential

your that changed incremental since So January have just might the any view around transaction? information learned you’ve

Tom McInerney

to Hony I I said continues Well, look, my of particularly Oceanwide merger still in the Capital. financing, work effect. with is outside comments, Oceanwide agreement the in financing on China believe the

relationship are landscape are challenges China and I ongoing the and Genworth’s of U.S. in in Oceanwide think of the there that geopolitical out terms the control between

the option conversations shareholders time the all do transaction, But end passed I we’ve time, be think they where could the some still We and to it want still that regular we just Oceanwide. has given have time if the since we best as think think are, transaction. achieved. for is of said year, for with I the

at I’ve them that to can conversations in still senior it we Chairman and it And where are trying that get financing. still be them difficult open we any the focused his based on appear in we’re I on financing financing would So are. with in raise think they for working team, had to very that. does think the help on And the with still we But all. are if the the But the way to place. near-term, are we to with I

the comments I’d are make, Ryan. those So

Ryan Gilbert

would comment in with maybe that for can joint you regarding venture the China, on your capitalize And and of just care how venture? you Oceanwide thank you long-term potential potential anything portion that. Okay, joint

Tom McInerney

X is in great China. will and XXX to a question. today, potential to say, and would by key over pay older. are the XXXX. Oceanwide million consistent XX willing think why was a XXX huge There the that And That’s of XXX million That is I I for double years, been we’ve and Chinese because driver

China in in insurance I market a think long-term market market. care innovate a parties, Genworth, the including really the isn’t well-developed China. strong, is competitive or and government outside health encouraging come There insurance to in in

we And outside on and working on have others been have the so firms, China. Oceanwide consulting beyond the firms advising in we strategy And that. with transaction

of the no a lot China of XX that experience years There China market. So in one know I are LTC in think of opportunities – very the substantial. in isn’t I has

think do I some capital. our experience. – bring venture, We’d perhaps, capital less we a expertise that and So bring but and less would joint in but

probably in as being be a So because partners There of my lot Oceanwide of and venture not Genworth. capital other China that the interested we not we much put guess working up would that Oceanwide with in interested would a majority end would parties, is others. joint owner beyond as is

can’t opportunity. entry relationship we done the full as into market, And Oceanwide. a we’ve think we’ve it’s on the work think if think market we developed can can, over given And a significant the years, I But while is – reasonable last if very not, the move with a X they I significant we’d would we Oceanwide forward I say, So that open the transaction, the And and opportunity. see analyzing the we’re there their do if if chance, the complete will to is financing. transaction. that’s I

Ryan Gilbert

reductions Okay, one company for reductions? and expense got an million $XX savings. idea have the annualized Do expense cost Last you can you you. split tell holding the me, or it. Thank subsidiary us between

Tom McInerney

little There split. that. Dan bit more I’ll detail to a give a Dan? on you ask was

Dan Sheehan

could the Could question. Sorry, repeat? hear you not I

Tom McInerney

in question, what the was I versus was expense expense company’s million think the overhead? operating $XX reductions Dan, that The of corporate January question. was subsidiary reductions

Dan Sheehan

of breakout. with generally. of some our sales. would going first corporate limited a result across we’ll will sort reduction say, a put numbers expectation that in companies, was of, would I the there widespread numbers And was a quarter. be forth a Those for the amount forward to say inside I significant is have changes don’t I as that a of realign the Life What there reduction

Tom McInerney

last reductions we the of we thing to we of but savings we’ll say I estimate that that. January would And million, specific look at resulted have our Yes. cost think in is that I in $XX continue did, did

U.S. be has right-size remarks, continue we’re the goal including the will as organization on said to we revenues which MI. to do I our to in But it overhead going with need the business align expense depend Obviously, to we continue As generated. my our would base, option forward. for would to that go

Ryan Gilbert

you. thank Okay,

Operator

from comes Dunn Partners. & Geoffrey with question next Dowling Our

Geoffrey Dunn

morning. questions impact your the Good on costs the well A sharing XOLs and couple the Thanks. for you. quarter appreciate premium. you ILNs? Could for you as the for of singles elaborate share MI I costs further quarter as

Tom McInerney

those. let I answer Geoff Geoffrey. Good Rohit will – questions,

Rohit Gupta

Geoff. Thanks, Tom. Sure,

we transactions cost market after quarter and being market, as And same competitive reinsurance the perspective, then that we robust as we loss back from a the disclosures, our have cost his February on in of quarter, reinsurance we and the seen ILN that articulate third attractive from at levels. XXXX being in the think same thing we that the the month at see an very the And generally would I not So and the for excess have I mentioned say the pre-COVID outlined I in close pre-COVID executed the was but the continue to cost ILN is levels. October ILN cost us. remarks. that And Dan for that would of look very perspective, ILN basically

Geoffrey Dunn

it the up quarter? Okay. well that you’re Or in And then brought X%. X% fourth reserve with a respect I to that the number is your average strengthening as to higher charge? that comment X% understand as now Are the you up the on average than strengthening, saying the also was

Rohit Gupta

Yes.

think we what our is than The different have rates I we would about reserve and environment roll here just factors. Geoff, we our we used overall to very are today programs pre-COVID. forbearance have an the unprecedented when are So say forbearance programs in

delinquencies. at choice in based cure would not we the year navigating right was, the did roll we now, the what were base used to familiar in And at navigating forbearance in see We those delinquency programs. the X% did the our earlier we level and forbearance be on Essentially, as rates are are of rates from year. of as than that You forbearance the looked coming of with our we numbers, less made delinquent programs. we through to mentioned, cure rates end Dan year, the of XX% have expected

non-forbearance to So the COVID end all X% our forbearance that increase forbearance number based experience, at and fourth on combined and decided we primarily for rates, came the of quarter. to cumulative delinquencies, roll

Geoffrey Dunn

for I your what year you as into kind the bring guess, the X Right. helped assumption, year? at for exiting beginning of last overall What’s was the higher months? go asking, X% up a the I Are assumption or run am the it specifically, QX, that though? a average rate of the is number we

Rohit Gupta

Yes.

at and higher delinquencies. non-COVID for as delinquencies end for well. were And quarter X% non-COVID we be So number for we the are non-forbearance X%, delinquencies, COVID because fourth that as news would

Geoffrey Dunn

So your about blended number is X%?

Rohit Gupta

Yes.

Geoffrey Dunn

thanks. Okay,

Operator

final one for Howard Group. with question time have we gentlemen, and from Ladies Horizon Amster

Howard Amster

I answered, think about was million was the Tom, was cost the – $XX come would question savings, from. my where

So, thank you very much.

Tom McInerney

Yes, thanks, Howard.

Operator

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

Tom McInerney

year thanks for our We progress to significant execute call potential once would difficult to plans I’d we their Thanks, streamlined joining further position In our work the also look debt February to the obligations Lauren, in again, paid U.S. XXXX. towards XXXX, just towards you a obligation. like debt meeting in structure, MI thank financial to cost closing, employees, for our and all that our the against value. long-term our strengthen business. maximize made and very to I working and continuing reiterate outstanding forward We of the shareholder including of IPO today. we’ve

As over our in our move your turn updating the for interest a to back very we’ll economic of of performance call with and forward to continue variety And through Genworth. you and look support business. on I’ll scenarios we all be Lauren, for And the thank you. to and you that, much forward pandemic, prepared we progress,

Operator

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