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GNW Genworth Financial

Participants
Tim Owens VP of IR
Tom McInerney President and CEO
Dan Sheehan CFO and Chief Investment Officer
Ryan Krueger KBW
Ryan Gilbert BTIG
Joshua Esterov CreditSights
Geoffrey Dunn Dowling & Partners
Call transcript
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Operator

Good morning, ladies and gentlemen, and welcome to Genworth Financial's Third Quarter 2021 Earnings Conference Call. My name is Katie, and I will be your coordinator today. At this time, all participants are in a listen-only mode.

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

As a reminder, the conference is being recorded for replay purposes. now Vice turn President would to presentation I Owens, Tim of Instructions] like the to over [Operator Investor Relations. Mr. proceed. may you Owens,

Tim Owens

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

excuse We website All of remote call. and from arise. quality earnings encourage to are this our financial may was supplement technical will that Chief to press be Financial our and Chief Officer. Today, last by hear presentation any during of Officer night, morning, all so will Executive followed issues and Investment materials. this Chief our you or A these Sheehan, McInerney; sound morning, referenced speakers please review and our Dan our and release Officer, were you posted Tom President released our

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

be Upton, questions. and In Financial Officer speakers, Life addition to our also division, to Haendiges, President U.S. Deputy Chief our available of take Jerome Brian will your

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

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

Tom McInerney

Insurance million. our businesses. very million earnings report We're income Thank everyone. Net driven joining pleased income $XXX Genworth’s totaled in you, quarter for another in And $XXX momentum strong up primarily operating $XXX in adjusted investment $XX the from year performance, prior morning, driven benefit ago Results you including by continuing quarter quarter, prior from Life $XX by earnings which third the actions, call. million, quarter primarily adjusted race year period, Tim. insurance, rate Good in operating the of business. reported Adjusted the to U.S. operating was well the million, thank operating U.S. LTC for reductions, in third from of reflecting quarter, were Life higher income the reported of income. force in $XX higher million net income million million up and as the period. $XXX as strong

Enact insurance successful results. morning, company in and Genworth’s included growth on primary held consolidated Enact’s Its Our around provide insurance in in a subsidiary details strong results very publicly earnings September. as following its call and its a this sufficiency. traded performance Dan first more operating robust U.S. capital impact mortgage will quarterly adjusted IPO substantial force, income,

strengthen million, our the fourth and slides release both on and long-term our insurance principal a and once position website the Enact more and Insurance Genworth’s We We $XXX improved agenda. Company, shareholders company, We for sheet, or posted with details. Genworth growth earnings GLIC. cash plans advance in also ended life of balance sufficiency Investor refer exciting Life to quarter encourage entered approximately strong quarter further capital with its Enact’s to Relations to again

strategic focused on remain which parallel. priorities, in we're we working five on forward, Looking

our companies. LTC and debt, portfolio, and to the of and valuable As attractive the our schedule. the Enact, We S&P outstanding to to growth value profile. monetized $XXX our a ownership full stake the of quarter proceeds IPO, successful both with return promissory legacy those minority After third is net those position of year stabilize from $XXX significant which achieve economic LTC market outlooks, a are leading IPO, for to ahead credit maximize opportunities. our risk the flexibility our our improvement capital reduce reminder, created business approximately during of and as priorities note IPO. value received of advance nearly Enact in retire million upgrades both to in to of initiatives approximately well used Moody's shareholders. part company aggregate growth some Enact, breakeven Genworth due the financial issued holding We further AXA our and proceeds and as of ratings a reflecting million,

outcome of to-date of After the intend we've to ownership maintain XXX% our for the this position Enact future. from decreased IPO, support We are upgrades. our foreseeable We work the to done proud XX.X%. and these to

dividend We expect majority be Enact generate to in and stream, our to a forward. source ownership of cash significant flow going important an

$XXX reduction the of AXA repayment, debt $X.X have have we by significant year-to-date. holding in debt like achieved. I'd highlight we Next, that the million company reduced billion note to Inclusive

to brings of of are us progress, We this approximately our $X debt proud billion. target closer which

We our multi-year this also action primarily made or quarter, progress toward rate through plan stabilizing our legacy LTC MYRAP. portfolio

which value actuarially We have to these rate a is XXXX. critical over on legacy brings actions basis rate to billion LTC the the achieving our basis for on present justified million since $XXX net Pursuing over achieved action in approximately third an time. year-to-date, economic $XXX approvals business in $XX.X breakeven cumulative million including quarter, total

Since legacy our or Slide the XXXX. can which our initiative IFAs in on included success the settlement. LTC statutory the of from In products. since shows our this see You pretext rate impact the of than from impact more legal LTC of presentation, illustrated losses investor on of statutory XX XXXX, force XXXX, offset IFAs has this our earnings benefit annual the actions

ensuring near-term. see the losses XX, the can helping in exceed LTC Slide business of premiums As risk are IFAs mitigate to on payouts legacy to you critical that in large our

And our premiums will offering shortfall why no while this also emerge. facing which when by IFAs, will Genworth. benefit to near-term care give losses effectively premium to point risk limit high associated a with frequency long-term longer increases. provide Through also we're by options assumption to the like people continue reductions policyholders. management long-term exceed initiatives our XX, a Slide reach you on progress rise we've reduce excellent categories, to also and selective tail they can and for at doing the our likelihood IFAs, and That's as higher policyholders care to which care will benefit reduced legacy with challenge, we mitigate the pursue risk needing we're developing longer-term, the and require. the payouts, Over continuing addressing to benefit LTC care, reduction benefit books. increases, risk see rate on of We're both to We're as of packages, management, made policies level both and be working flexibility compounding that our

policyholders help risk on achieved $XX.X long-term. reduce the legacy value on business. net effect achieved XX continued of Genworth’s LTC of of well over our will opted benefit or benefit present positioned the rate over intermediate-term. approximately focus and reductions XXXX, shortfall increases estimated a the of billion form over As since obligations management to XX% XXXX, reduced has IFAs, a September in Taking us have options. $XX.X We've the to LTC care rate back, in current basis, some cumulative The step meet against increases billion

to assumption and We experience And When as expect we This utilization reserves from strengthening with the continue strengthen strengthening assumptions estimated with the our require to be end significantly our see based line fully as multi-year for of them expect are assumption plan. offset assumptions rate increase is actuarially rate the liabilities. conducting in key expected justified from of is evolved. in assumptions, other the our and policyholders regulators how we've action review, currently prior results, to change assumptions expansion year, expectations. and rate has long-term at shortfall, benefit backing by to broad best estimates assumption for of our support stronger allowed reflecting driver of strengthening, one of our annual just our our bring framed benefit to a and increases,

prior economic effect with assumption and IFAs reductions we in combined remain strengthening confident new IFAs, the breakeven. With care our management, achieve to year of coupled benefit ability

U.S. to instrumental been his a our blocks, on Haendiges. more I are find role solutions leadership LTC policyholders, created in the in who are in want over Brian and effort in work by our helping to He the this reduction past, XXXX, the we key February risk review in industry. this us, I led regulators issue thank in benefits journey our Brian highlight as Officer President colleagues, as share the accelerating that for joined of with assumptions sold by to Life CEO, advance He from will as the forge our legacy Chief on we play year. long-term. products has agenda quarter our to took We the Genworth being long-term current role as this strategic further a LTC so better care. all by forward call. us in fourth done moving path on our well positioned Risk and pay growth want diligently forward, serve excellent continue work details and will to also to new

the LDTI new financial the Before improvement under briefly I long standards, want GAAP initiatives, the to on changes move to on growth standard accounting were targeted U.S. ports. upcoming issued LTC that touch to or by our I accounting duration

reduction long insurers, adoption We that we is including Insurance The of XXXX. long Genworth weighted for U.S. I accounting not anticipated sometime U.S. change income be new January cash for a Life new The effective are forward, was LDTI statements of XXXX, liabilities, with regime economic relative value going The will U.S. an pricing current accounting cash flows. Life’s value on remains life book equity. testing under accounting book Life significantly the The best under pricing LTC balance is forward next duration estimate preparing the for our new book to legacy companies and view going a of greater a of GAAP insurance. new reduction original portfolio model. the cash date expected legacy value Accordingly, these will impact including impact The GAAP Company original material It sheet economic a shareholders expect U.S. a on U.S. in impact roles, and that flows flow change towards traditional note compared have the rules be and our accounting. upon the U.S. statutory of other for assumptions. oriented to impacts statutory only. on provide to life from is these to insurance implementation future significant or business our U.S. an and Life GAAP the old market want indicator U.S. long-term care accounting based expect to may lower regime GAAP accounting I in expected best and GAAP accounting. for in duration given year.

changes. or future. focused for rules As U.S. U.S. cash legal end businesses. life The U.S. Enact. billion Life not their will have they insurance flow, on at no companies The companies company a LDTI life by and a insurance GAAP approving approve as a into GAAP as legacy cash regulators do plans new using on business companies, have $X.X accounting claims U.S. impact legacy we value actual reserves, be fund we U.S. holding contribute Statutory the to expect change statutory to companies. insurance same U.S. At the early continue regulators of zero, of their will Also, insurance multi-year accounting view accounting results will time, entities existing foreseeable reminder, the our we legacy regulated to accounting rate no dividends not reminder, our a holding statutory June, plan. for action capital given Life insurance legacy insurance the us do and primarily dividends the future from insurance capital of for impacted the the operating of and to Life justified not that in from

so supplemental statutory and plan track statutory the regulators, importance impact forward. reliance results multi-year and flow, and action information to of do of progress we statutory are and our the our new upon plan, slides rate to capital these and earnings today, statutory levels in to and Given our capital LTC our moving including results cash our

Now, our initiatives. LTC growth priority, advancing turning to next

rising care care an launching towards senior platform that The life address innovative work new to is and in societal by longer continue and expectancy, help need and for We large long-term aging will the need care U.S. care cost. population, a increasing growing, the need for driven for

published earlier The impacts navigating their study their Americans our families. Americans and and unsupported vast Dallas week, in to As aging of Beyond financially, majority this continue significant long-term reported daily needs health have in are in [ph] unprepared and care care lives. needs on

on substantial, and LTC product a innovation, standalone market economics, struggled needs ineffective penetration. customers in believe hybrid and and unsuccessful opportunity. experience low the increase LTC to with is the have been and current right innovate offerings. this on who While have an of and challenges, edges to we’ll the attempted distribution these addressing face insured model Meanwhile, We capitalize historically with need for past insurance expertise to only of that our have XX-plus years insurers offerings LTC resulting unprofitable with largely is uniquely prepared Genworth, in lives

help will address that needing will financing to the said care and/or before, a need. we’ve they than services people the of we ultimately, cost the successful of less reduce market As reinvigoration likelihood LTC care and both and of U.S. believe

products LTC towards and future be given offerings, highly the require and returns risk for higher capital long-term capital, future versus assumes significantly capital products. weighted the service lower growth regulated level risk services moderate, bearing insurance strategy shareholders. requirements capitalized Our and produce be will will revenues that anticipated LTC will of We We have and believe less believe intensive advice LTC more risk. less

organizations can reinsurance on risks launching the at LTC million step, $X clinical amount recapitalize solutions rated initial forward. plan a lower predictable and insurers, subsidiary so more But this we're in expanding products support modest and to working services fee-based we're assessments offer and services partner than scale care We time, insurance CareScout we invest to initial also consumers. working that approximately leading our to same going more a provider an offering through business, $XX with a for past. CareScout, million the As is which our existing of and on highly healthcare with

low with amount partner. be first our a risk individual reinsured product of The LTC insurance by will product risk a significant

success us However, we insurance rerating, LTC enough policies don't of to future firmly annually believe the start annual rerate that business new enabling critical states for absolutely writing need to until the support ability LTC Accordingly, we is intend profitable. reinsurance year. next a insurance first-half working We're launch our and to that is in business topic, launching new the insurance LTC and product with sustainable, with we're first engaging this on towards scalable, our partner regulators state of our products.

early and this look in with rating stakeholders, still our sharing towards business to are other of We agencies engaging forward progress calls. stages new and launching on future

growth of chart opportunity remains prudent share After we a target in the strategy. of successful we medium-term. our shareholders through investments to to LTC course a shareholders, our initiatives. $X part future And return the growth achieve shareholders an in capital As longer-term, approximately there also returning our significant the This via to is important execution industry making over dividends story near the our priority. to to LTC commitment buybacks, to transform plan believe we top capital we to regular and/or billion, a debt growth, of while

leading vision of marketplace, profitable these time. solutions We category can't and and time, and Our to this in a new partnerships to aging updates will other we'll We Genworth challenges holistic know it bring value put stakeholders take market, with companies, create to take vision collaboration realizing that in a regulators due with do other forward alone. build offers value and course. of that platform continued will a we sharing to It unique over and solutions in look to the is one. proposition the

significant Chief acknowledge Resources of Ward Human our Bobitz, departing recently are served They both contributions to both in progress. guiding Dan, Before year. partners Harrison, the announced Officer, effective Genworth’s would and we General both of whom for end counsel our the as over like turn I and to at Pam important the company Counsel, I the call have the

with a significant strategic that transactions, in within and of Jersey, have legal me, disruptions to he community. from thankful as footing, and has ability me, been confidence retire the team, well. that, relationships built leadership she This which turn family very the next Dan, challenges COVID-XX, decided over As decision more their leaders, to Ward\s appreciate her recovery closer Genworth and rightsizing lead has many next I staff move and and detail. depart Ward’s they long corporate Enact to family a I'm Both XX-years of and and Life. processes his company review several we and to Ward’s stable have financial New help quarter we own her the as the comes crisis, positions third next decision complicated through is Genworth the I right will be is after U.S. in result their its respect throughout by Pam work businesses more each I time Genworth, Genworth Advisor of on strong chapter. now to serving functions, phases. several well-deserved to regulatory the with phase financial through for Genworth the remaining to has two move for with in discuss results IPO, tenure. retirement, call our Genworth wish HR worked Enact fantastic to a its through to partner remote Genworth given be I'll every With contributions and Genworth’s filled position on and our staying her journey her and the strategic to I did over that now and into all

Dan Sheehan

income advancement continued this toward quarter’s million. adjusted good $X.XX strong income Tom, more quarter share, excellent our performance for year. reported we've million another strategic quarter than This of income in everyone. $XXX adjusted operating morning, $XXX was a far $XXX with million Thanks, Net operating priorities. was and so financial this and And a Genworth, this

fully debt September quarter, remaining $XXX retired the of During maturity million. the we amount the of principal XXXX

successfully enhance we executed our continued execution IPO, liquidity the for of Enact’s use path of generating our further remainder cash position, also We and Genworth’s $XXX promissory position note a with proceeds AXA of in that clear $XXX to moving strong and pay net million off forward a million, strategy.

increase force. hosted key its this on I'll in subsidiary quarter the earnings focus was insurance call and Enact XX% in the their for billion, contributed morning, $XX highlights. NIW year-over-year Enact’s so Our overall

For the credit. operating third third I of published in to the excludes of adjusted Enact adjusted improvement interest estimated a IPO $XXX Genworth, flows ratio third strong XX%. requirements. and XX was quarter, quarter above note since the the quarter million were strong quarter. versus Enact loss finished the sufficiency reported Enact $X in million of XX.X% the an prior of September adjusted would income income minority sufficiency $X.X with additional approximately ratio operating quarter PMIER Genworth’s an reinsurance operating billion income the business driven for XXX%, PMIERs and cash by date The

Regarding fourth conditions, and resolution the of is including business quarter delinquencies. the forbearance economic related dividend, evaluating Enact

remain board approximately their that based Assuming to million. the million on $XXX interest dividend approval ownership dividend. $XXX receive recommend a of rata these supportive, pro its conditions of of to intends Enact would share its Genworth

overall quarter the had from of income elevated driven which continued income. in insurance the in compared prior the U.S. to million $XXX Turning segment, in plan, strength continued to our by COVID-XX, variable and quarter, prior adjusted Mortality care solid million to $XX impacted in results. force investment the $XX negatively Long-term million results action be operating LTC part the year. the rate Life in and in $XX quarter of life the at million, with

which established quarter, overall slightly by the losses margins followed GAAP-only in losses We've future. projected last discussed we reserve, covers are GAAP profits a As our positive.

balance discussed this X year-end actions The profits Page As profits the in force of the billion, tax reserve settlement force in results by prior reduced strong earnings or the prior rate quarter $XXX the favorably up of XXXX. the of legal trends pre-tax actions. by Choice after third our our last year. versus losses I This quarter. to million of the earnings presentation $XXX impacted investor quarter rate LTC $XXX $XX by from was losses. quarterly followed $X.X million Earnings million from $XX increased we of that during after million from as illustrates million by followed

As to period, we of have and of their class class expect the the quarter-end, elections members the selection by settlement XX% reached of remaining make end mid-XXXX. their

of And the rate comparable approvals years. premiums, Shifting with a of weighted subject a we for XX%, start underway. the rate an approvals policy process approval last assess one impacting a full the premiums, XXXX. we approximately in to have in period impacting force XX%. Year-to-date, XX%. also approvals agreement received we approved mid this I to PCS expect with forms II late have from legal $XXX take quarter, average going in received it's up rate and will in average their impact At elections We similar for weighted time, impacting two court approval making during LTC still PCS year. claimants as a received premiums, for we settlement fashion, overall with rate million will another million action to timely If forward, $XXX final difficult approval million of weighted to of to $XXX implementation approval these of to approvals settlements the average the to

experienced expect importance increases are pending on fourth the on the approval for gains uneven, this income, we of bond quarter calls in limited justified based regulators mortgage inflation in Genworth on and rate and of to LTC industry. reflecting variable filings strong, repayments. treasury investment XXXX securities, actuarially higher protected income quarterly quarter, We favorable and again be partnership and the Our approvals recognition

higher mortality strong versus investment quarter third the variable to pandemic in adjust moderate noted were as terminations we did year, may lower in develop, versus investment near-term, fluctuate and quarter, Claim very Page for our X or will the previously of performance we the time. quarter, established income the to prior presentation. seen do this the decrease this the continues and on over net year, increase materially prior mortality While reserve investor COVID-XX expect the we as mortality not adjustment have during We the accordingly. experience COVID

claims have indicator active favorable of the claim and new up incidents during which IBNR increased New pre-pandemic are than to the lower incidence submissions, Pending gradually continues claim future XXXX, the remains quarter, in prior development although leading and during trended levels, drive a versus year. quarter.

expect our in review quarter. claims to We complete the assumption fourth

While up assumptions preliminary this is claim are in that holding completed, work ongoing not are and aggregate. indications the our reserve

We as to quarter. complete our cash also active plan statutory recognition and testing reserves, the our review of assumptions testing flow related life in last as to well fourth

around For not effects not these in data because long-term the or yet any do generally including we're information XXXX we pandemic. updates, of from have sufficient later, assumptions, setting longer-term

As Tom review year's assumption, the utilization key trend will of reflects active utilization emerge our is view, life area the the for focus the whole reserve benefit future. mentioned, which this in

pandemic is Although by in driven been the our and has this nature. recent favorable, temporary we utilization believe generally primarily experience

well the of for the and assumption our focus XXXX assumption is of the long-term accumulated we review, of cost compare industry as area experience, our rate Another care the benchmarks. utilization as growth for as

change to offset expected increase the stated, $XX.X to our billion assumption plan. Tom we the multi-year action shortfall, While rate utilization an the in significantly would expansion of as legacy increase to plan long-term

refining discussions options experience changes regulators timely to continue policyholders, and to responding to with on matter. focus our and also available in adverse We a

fourth time. impacts associated the more that updates in detail We about we'll and share at expect margin assumption quarter, review finalize these our and to

the experience, mortality overall the Life prior continue be Insurance, including Turning prior historical quarter for elevated and quarter to year. to versus

million we're sending mortality from continued data Like in life the approximately and long-term universal The tax received In any tax, $XX we our a $XX million certificates The insurance. for reflect XXXX in third charge death COVID-XX million after experience life recorded after the an to quarter life term not quarter. to-date. estimate $XX generally block claims universal included prior in from of based assumptions recoverability, up continue and and upon or including LTC, runoff. DAC charges later products, unfavorable

change reserves GAAP quarter. unfavorable the driven million our fourth mortality earnings million assumptions we're the the year. on and operating versus However, of versus view for to million was and $XX we're elevated the of rates rates, current market adjusted well age improvement. our respect quarter and long-term experience by prior operating basis, including adjusted driven Any statutory earnings life monitoring a reduce in life mortality sequentially, interest reserves was context favorable testing the increase the statutory which prior In rate, yields. by mortality reflect decrease increase pandemic, rates our closely a expect potential performance or leverages interest results prescribed quarter the higher quarter. impact our we universal the and to last quarter $XX statutory portfolio standalone interest performance, fixed could as the annuities, of the prior segment, changes interest for focused was to further in In income a the negatively was during $XX third ongoing in mortality, as and With to of to in equity On related the quarter, runoff $XX million year. a annuity in rate. fourth in Variable older in products quarter this our

the the owned corporate in mortality unfavorable life products insurance Additionally, current is in quarter.

have We expect second RBC at to XXX% action capital which this the Insurance the in Company actions, legal years as noted statutory these the from rate impact does from as of on earlier, continue GAAP earnings followed last force I holding trends would losses strong earnings significant, the been are LTC XX GLIC, company to statutory in Life earnings, is tax higher of from exist company resulted Life investor statutory XX Statutory from few earnings, Genworth benefit discussed taxable percentage more on up of Choice of end approximately Driving including XXX%, quarter. recent a result actions, rate which by few be U.S. that higher in settlement. Absent earnings to concept or accounting. aligned level benefits the LTC over Page of the highlights a payments to losses presentation. I quarter as the over quarters. companies. Page earnings, deck life the not the are cast statutory of profits lag the consolidated for to Statutory performance have generally investor also in last than the the for

prior of statutory on with business, highlight noted quarterly results basis, and Tom plan Rounding GAAP last As forward. from and process to adjustment. out U.S. income our favorable improved and quarter insurance LDTI the the tax a the corporate million, $X other part the a was going year, for as earnings operating adjusted U.S. results, a interest Life implementation of in and expense lower we driven was by

quarter Turning the company, until million, holding strong million no cash in $XXX very to of $XXX debt with due we with August position a maturity the XXXX. ended our

mentioned, during Page This $X.X during while activity Tom prudent buffers priority forward presentation were quarter. we've maintaining Enact company of of XXXX, debt than million. debt reflected $X underlying proceeds cash U.S. Enact debt the Intercompany note the strong the cash reducing of IPO XX quarterly which retired $XXX our payments AXA promissory Life. enabled detailed the service taxable holding for the and tax income Most from were the $XX for full million, the quarter is progress more obligations. billion investor of million As billion. of to the approximately and third outstanding net retirement toward provides $XXX notably, the of

normalize XXXX, reduced expect tax at payments time. cash in Life U.S. to as levels although over We continue trends

debt foreseeable of of leaving position, Genworth XXXX. once dividend dividend, billion, are the retiring debt debt shareholders. goal federal our near-term. main return not closer liquidity anticipate maturity million that maturity, target. And with months. optimize do With then in achieved be reducing several positioned source to XXXX improved moving cash Enact closing, flow maturity, have our approximately of future the taxable retire anticipate we debt intend future. we've In a $X a assessment the expect we'll next until for the I from $XXX holding XXXX stream to company an paying capital will and to Dividends Group to debt to further the our our declares assets, their next once improved ladder Enact in we us We We tax continue to not

we returns. for the that we While optimal view, approach shareholder to await continue evaluate

still return now approach With be open that, the for opportunities will to value line questions. long-term. to building will shareholders, Our capital over to the find we while

Operator

you. We'll Krueger first call. Instructions] Thank portion KBW. we to and with the will gentlemen, begin Ryan now of [Operator Q&A go Ladies the

Ryan Krueger

Maybe Hey, of you AXA have you lawsuit few since guys, be made I counter decision while. any recovery of provide sense and a morning. status a much could been Santander? when And the this how just it's potential questions good an update the get? first, on could against could

Tom McInerney

good question, Ryan, that one. So get it a I'll we It’s often. take

would UK act I litigation the that courts. going So, that Santander is process to say through

You XX-months, normally expect be to XX-months resolved. for it

used understanding Our challenged dockets as the they than more I'm in the that is court are COVID-XX well U.S. this the case UK, sure to given the be. it's in on litigation

would So, probably started, be be year, more the guidance this was than because could COVID-XX years a from of delayed it the of when of backlog. normal couple January which

guarantee. ultimately our significant amount. litigation amounts wins faced But, the to significant the to recover the And if have ability we've really We that expect in would we In we on depends a under that litigation, terms how would amounts paid. AXA the goes. of amounts, AXA

And depending out. say case I hard to would for But potential process plays how the point assess. there's pretty at litigation so depending a for significant goes, us this on how on it's the upside,

Ryan Krueger

Thanks.

I to think goal as eventually so, was long-term, well is targeted guess, as return. would I I is, another zero guess debt would Enact? on the down your to And to pay enable if plan think question separate to happen. that the capital maybe to fully be question debt I

in an $X that of target kind regards on update returning and to So shareholders? statements capital debt your billion to long-term on

Tom McInerney

first take Dan part and I'll comment. of that, the to Ryan. ask maybe Thanks,

long-term is debt And our So, about to goal the range. target know a you And we're around while. been $XXX million. to get talking a $X realistically, billion as for that's

principal million, the range. so $XX payments, to And debt of make I any in that add and the XXXX, $XXX the when million a the we level XXXX, before long get debt, time and think the payments are have we interest obviously, the to very

for So, very manageable us.

That the be of talked terms U.S. we would There carry sort right options life free That I right anticipate either tax of that attractive have And now, goals, that basis, we've other about why future. able on mean road. don't as shareholders company the the keep could XX.X% we we think spin-off, option. to a in the want options. any said target. long-term are for any do debt. company. the We could to our we that's because to be Enact their obviously are life foreseeable our you're an dividends for obviously on of down have couldn't Life we companies depending So own. from that, a stand on XX.X% to we Longer-term, where

an that talked the that, that life the some life business handle and I've be absent to attractive extent LTC, want I and call, new we that they're have absent the the could but could debt over we Dan, company from if the about new think from you before, dividends, can’t flow legacy it not opportunities the add new from to life as that? companies in companies life dividends companies. time, in significant business, the However, produce will debt. ability through future. about company new talked capital growth the of from anything and to really be But and the the companies, see on But the business to pay

Ryan Krueger

good. just then And oh, --

Dan Sheehan

with Yeah, got utmost service range the of runway off and million Tom, to we give we've to I the $XX would the the just that reiterate flexibility. XX-years million ‘XXs, that $XX pay in us plus once ‘XXs,

the ultimately, option If the debt. I to right, paying think that at if company. life have service, goal. down so, would our we'd potentially can cannot, they off And support spin That then look the the the of companies point was of level still we rest that debt is

Ryan Krueger

tax and know more a you holding year, might I any level question guess, normal what the is, company? last can in One at you COVID, without I give inflows this challenging, of somewhat is sense expect cash but

Tom McInerney

a one. take question. let I'll good you It’s that Dan,

Dan Sheehan

it what tax Yeah, so rule tied question, can tax And Enact there forward at two provided of rate. on to I the would thumb give we really parts. taxes. haven't And break earnings directly models But I to around it look is a think your is And do a at way guidance I of question into would you earnings. really for earnings. kind just the XX% that's the XX%, about

we So for a Enact’s normal tax rate the there, obviously, for that to what will ownership in get interest. would Holdco, payments the expect our adjusting ballpark you

taxed higher sort side, that a some have starting On rate. we the at and swaps for life legacy issues others are of do

much tax GAAP a for side higher the is be bit so information quarter, looking would profits but way stat million earnings, I the of presentation one earnings, losses So losses. the rate life is followed think than that's to if at $XXX not And going our we little at looking this But XX%. the to tax followed reasons by materials. and in into at after by you added our had we've profits why look about this

if slightly cash company. two approximate use convert the you of tax earnings number, the the higher to just get would stat really is to and you those to together what for a tax And payment want holding so components the put rate, be, when approximation sort an right of which likely

just thumb, of as what going look I forward, those you think and get close. you're rule modeling So, at you pretty use you'll

Ryan Krueger

you. Thank helpful. That's

Operator

question BTIG. Thank Gilbert next We'll Ryan our take you. with from

Ryan Gilbert

maturities. Thanks, the intend question timing around have offer color any, that My you can maturity? the note. to on Good when the retire morning. XXXX you appreciate XXXX I was Hi. everyone. first on I you the guess, Do debt

Tom McInerney

that's Dan, you. for I a question good think

Dan Sheehan

once if just dividend, declares off Yeah, would very is quarter plus pay between we cash off XXXX a puts of of sort I first the we're of position to of a position third ‘XXs. you will approximately timing we add you maturity. lot well quarter, off Enact we all, a at the What as look ‘XXs. that cash set now end $XXX us of to third be paying dividend, our of positions a for us ‘XXs, reasonably obviously good and which if pay the up in the that in give the million, think said the have ’XX the time But the

including look what a of will factors, like balance I the quarter flows cash number we quarter. by think

get lot we'd So quarter we being at position this our goes do timing we'll it from guidance to it's be if But off as declare dividend point, fourth ultimately yet on that. able closer relates pay that But in certainly, not as ready expected, to a a to early. I the we're expectation to that. to Enact, think be and provide

Ryan Gilbert

Okay, great.

to that you're those on pay you that it. you feel being maturity. can prepay going those, not point comfortable down So and Got

can are the that remind your NOLs tax cash extent that looks the on you payments contributing you're what NOL is position your the question from Second us subsidiaries? to And getting like?

Dan Sheehan

to at that sheet. is And third we Yeah, cash the what that of of we strong on earnings used continue do the tax we least in be that the we're that that sort medium-term, normal mode. to ultimately in near-term. a allow see planning all to And Holdco, But, we're at implementing said as quarter, balance cash I cash not the think to in as would very say effectively taxpayer life taxpayer. what assets of and that cash we've the the companies, expect sort have of will planning near-term federal strategies that we the the come is do tax extent Enact normal which to we are both I think tax means into will really the level, from I be

Ryan Gilbert

Last LTC great. me is for the Okay, on shortfall business. one in the

couple you about and years? for Or as Is here relative the increase the how few quarter over has around think the past think to that $X over we be seen thinking XXXX? outsized billion. should gap could it that that into what this I of telegraphing do we get last years, you're we've been be fourth

Tom McInerney

benefit for that, what dollar the our trend looking we that we change action we're think I make fully -- be ultimately Ryan, the of quarter. we assumption. change, middle And be Well, to is, with we've a utilization said extent will we the a is if we recover able we're we've think obviously, that do of multi-year reviewing could to significant. the dollar still still also at is, we’re in do an rate fourth we But do if said think expansion What significant plan. that that

should understand then economic on are, at how the shortfall, what had So, it what where we've many I the convenient so in I a think, investors to present an and achieved. basis we've net that value questions think because way look over is we years is the is do

at end end of So where quarter, that than at last it the you of the gap, varies, said it's year. the it was as lower third

billion So $X has been it $X it was billion, $XX $XX.X $X.X you But billion. or billion if less that. several years, amount a different been back go been been than it's billion it's $XX.X It's billion.

we've of in what So I'll on I do the whom nine the we they've been up. There of But the states what I it's And think think, think did the one think I we I regulators gap of is. granted. less think, recover states or really that are some they're on stepping with have can thing premium that important, important, on other years over now, a XX terms say, states. still we very I period long are working it, all future working a thank of generally, insurance relationship we've call, It's more time with and the in regulators, all eight regulators, increases. some good ahead that

to goal their claims, now it's around off in with and/or is the talked provide pay and a for paid we that the think we I And long-term look on us premium and claim experience at the and around that as XXX,XXX it's that'll then evolving reductions billion our think all based regulators. the update is allow $XX assumptions And claims. care. future, same, benefit we've increases to which goal I the

LTC in regulators, the seeing you in of is benefit the all insurers, would what's utilization ask they're driving and trends. recently, at some you, particularly changes looking you we're states, have Genworth for they if think seen We've many also I say seen in think, minimum. about caregivers, the I they that of as in the a And rise homes, home to those to lot be caregivers hourly about you in to states the know, also rates an tend nursing impacted hour. by minimums raising $XX

Fed $XX, years, Federal costs. point, guess, we would $X.XX So been competing other and the in have of to then the many moved long-term the U.S. that I able seen have expect last get At to some the I an from, back. think X%. I think governments significantly and They the struggled inflation achieve few we've haven't states we in challenge as have And rate revert many to have to increase to their of central seen do that and you rate then lower.

other the inflation, six we've as supply X% Although, recently have in last seen and chain XX-months, caused issues to the to range. months be in

Dan to able do what a be we be that terms to our is, and all do that would make, would the but we cover what is that. I the we of that of material, expand at whatever change benefit think, for could team make we we on are So if need changes looking line, MYRAP But expect in investors bottom think the utilization. I to

Ryan Gilbert

Okay, it. very understood. much. I appreciate Thanks

Tom McInerney

Ryan. Thanks,

Operator

from We'll our are question take Esterov with Joshua next CreditSights.

Joshua Esterov

question. Hey, you my good Appreciate morning. taking

of to payments for to magnitude the just that trend send impact the benefit ability the little reserve expect sort assumption next fourth Thanks. be sharing it follow-up set? to either of year? of to And Sort give you a where to question how a might currently quarter of sense strengthening or the alternatively, follow-up a But us you strengthening life company's the the into or is the utilization tax where while can ago. a versus the parent,

Tom McInerney

very complicated question. it's Yeah, so a question, good it's a

issue. utilization The a do in think, seeing, based on bit thing that. that got of is we've make decision again, reserve. to X, so margin to still on it's what likely quite that ultimate an make a this November it's is, say work we're change I'd a I not more than testing we'll benefit do first But

a have time those we'll statutory would this of to U.S. make balance did we would or the And pay trends. of change, or I we've -- is year. on XX, statutory for claims a long earnings earnings got earnings. related time. on not changes or would benefit this So year This of some Josh, a costs be those $slide period GAAP long give over those period through increases not And the you if that impact we current expect, that the to cover premium reductions. material next of

a pay. much the so, are flow isn't long-term think claims Short-term cash based short-term it down actual is And impact earnings will I on this margin the road, impact so you earnings.

have ultimately through extent the we able short-term a would assume reserves, to margin had a premium and that impact. payments recover in a we have to can positive we didn't both so, weren't deficiency, that increase And future

from you the think won't earnings look in these by if a impacted change. we significantly I changes, the So, make at they be if -- near-term,

Joshua Esterov

I sure Got color. just it. Thank mentioned. Appreciate the And what understood to you. correctly, you make just

zero expectation, base plan, reserve at recognize your this revised is there at would still point, testing I that than So do remain correct? greater to there's of margin still least work for a MYRAP inclusive a purposes,

Tom McInerney

is the different, one has rate. pre-tax, and seen, statutory statutory rates, margin you've tax. yep. the may Well, the basically, Yeah. we caveat, will make, the But with one do to the the let as we've prescribed other we And, a are the change U.S. the One basically, got ways I expand would margin MYRAP. different, go. say are testing think after Josh, has I we And because whatever that portfolio us is work. interest assume GAAP

a I perspective, we that, of the expect wouldn't there in assuming margin. material whatever would is can there's that after changes on and So confident assumptions, And we're be would margin a bottom there, make would margin $X change margin, range U.S. of we we expect that recognition that to change the complexity. But in the recover, the say lot a we complete we Obviously, roughly ranges U.S. line caveat from be been would GAAP things we're margin, the a billion. could loss $XXX the and have for GAAP likely step the the million the in test not the we in. both on analysis, with that they've that that margin

the to within to margin that range. we the for expand we can expect assuming after somewhere changes And MYRAP going would be so we're whatever make,

Joshua Esterov

very Thank helpful. Very much. you

Tom McInerney

welcome, You're Josh.

Operator

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

Geoffrey Dunn

Thanks, good morning.

able you're Enact estimate retire ‘XXs interest of If top after your accrued [ph] potential can and at that MAKO debt? principal you to the on point dividend, share any of

Tom McInerney

I’ll Dan. get Geoff. back to Good question,

Dan Sheehan

Certainly, time, that of million. but to level Yeah. between would depends interest I the it number $XX million $XX the Thanks, and Tom. rates expect on at be

Geoffrey Dunn

And to we you're potential the also at then the the aiming early consider you as on target for have Okay. can ‘XXs, Holdco? the liquidity remind

Dan Sheehan

Yeah. two to I mean, what that is we’ve said generally speaking, debt we'd like times service have coverage.

number a has down opportunity down, point, we still of as about ‘XXs, our $XXX ‘XXs would But level As pay million. out that. and debt would $XXX there we reduce and we're the sort revisit to around that of number we've million. be there thinking at come the Certainly, thrown around this

Geoffrey Dunn

thanks. Okay,

Operator

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

Tom McInerney

also were the want to call. Ryan's, year thank on excited the we Josh thank again on you quarter, to I thought think you questions, those on far turning the Katie, thank that Genworth’s point we're through update And future. an third The excellent the positive I for hopefully want those results, progress so excellent had an to good is, nine next call you going I very operating to very executing a to strategic people talking what much. give pretty for today talk of and been I and are months. the we to we're we've bottom very priorities. and And look made the against two we've quarter. and joining where able forward obviously, well. forward, the had priorities. we've all Geoff, against answer point right a had on line We've we five And about We're those with happy

end you. thank Genworth, I'll the turn for that, call call. with Katie the your So, Thanks of support to back interest to and and

Operator

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