[PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Genworth Financial, Inc. as of September 30, 2022, and for the three and nine months then ended [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$85.9 billion** from **$99.2 billion**, primarily due to reduced fair value of fixed maturity securities, leading to a decline in total equity Condensed Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2022 (Unaudited) | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$85,939** | **$99,171** | | Total Investments | $58,490 | $72,278 | | **Total Liabilities** | **$75,890** | **$82,905** | | Long-term borrowings | $1,622 | $1,899 | | **Total Equity** | **$10,049** | **$16,266** | | Accumulated other comprehensive income (loss) | $(2,765) | $3,861 | | Retained earnings | $2,924 | $2,490 | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Net income available to common stockholders decreased to **$104 million** in Q3 2022 from **$314 million** in Q3 2021, driven by lower total revenues and net investment losses Income Statement Summary (in millions, except per share data) | Metric | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,839 | $2,070 | $5,612 | $6,096 | | Net Investment Gains (Losses) | $(69) | $88 | $(33) | $191 | | Income from Continuing Operations | $134 | $306 | $535 | $725 | | Net Income Available to Stockholders | $104 | $314 | $434 | $741 | | Diluted EPS (Net Income) | $0.20 | $0.61 | $0.85 | $1.44 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased to **$645 million** for the nine months ended September 30, 2022, while net cash used by financing activities was **$(1,107) million** Cash Flow Summary for Nine Months Ended Sep 30 (in millions) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $645 | $290 | | Net Cash from Investing Activities | $452 | $469 | | Net Cash used by Financing Activities | $(1,107) | $(1,478) | | **Net Change in Cash** | **$(10)** | **$(719)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies, segment information, investments, and derivatives, highlighting an expected **$12.0 billion to $13.0 billion** decrease in AOCI due to new long-duration insurance contract accounting guidance - The company operates through three segments: Enact (mortgage insurance), U.S. Life Insurance (long-term care, life, fixed annuities), and Runoff (discontinued products)[27](index=27&type=chunk) - A new accounting standard for long-duration insurance contracts, effective January 1, 2023, is expected to have a significant impact. The company estimates a decrease in accumulated other comprehensive income (AOCI) for its long-term care business of approximately **$12.0 billion to $13.0 billion** as of the transition date (Jan 1, 2021), primarily due to remeasuring liabilities at a lower discount rate[36](index=36&type=chunk)[37](index=37&type=chunk) - The company's Board authorized a **$350 million** share repurchase program in May 2022. As of September 30, 2022, **$34 million** had been spent to repurchase **8,980,350 shares**[31](index=31&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=75&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, strategic priorities including debt reduction and Enact's value, and the impact of macroeconomic factors on operations and liquidity [Strategic Update](index=78&type=section&id=Strategic%20Update) Genworth achieved its debt reduction goal, bringing public debt to **$900 million**, and continued its **$350 million** share repurchase program while advancing long-term care rate actions - Achieved strategic priority of reducing Genworth Holdings' public debt to approximately **$1.0 billion**; outstanding debt is now **$900 million** after redeeming the February 2024 notes[272](index=272&type=chunk) - Continued execution of the **$350 million** share repurchase program, with **$34 million** in shares repurchased YTD as of September 30, 2022[272](index=272&type=chunk) - The long-term care insurance in-force rate action plan has achieved an estimated cumulative economic benefit of **$21.0 billion** out of a total expected requirement of **$28.7 billion**[274](index=274&type=chunk) [Consolidated Results of Operations](index=81&type=section&id=Consolidated%20Results%20of%20Operations) Consolidated net income and adjusted operating income declined in Q3 2022 and YTD 2022, primarily due to weaker performance in the U.S. Life Insurance segment offsetting strong Enact results Consolidated Financial Results (in millions) | Metric | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Income Available to Stockholders | $104 | $314 | $434 | $741 | | Adjusted Operating Income | $159 | $239 | $466 | $601 | [Segment Results](index=91&type=section&id=Segment%20Results) Enact reported strong adjusted operating income of **$156 million**, while U.S. Life Insurance declined to **$11 million** due to long-term care challenges Adjusted Operating Income by Segment (in millions) | Segment | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | Enact | $156 | $134 | $458 | $395 | | U.S. Life Insurance | $11 | $93 | $28 | $226 | | Runoff | $9 | $11 | $20 | $38 | | Corporate and Other | $(17) | $1 | $(40) | $(58) | | **Total** | **$159** | **$239** | **$466** | **$601** | - Enact's strong performance was driven by a **$63 million** net favorable reserve adjustment in Q3 2022, primarily from better-than-expected cures on COVID-19 related delinquencies[305](index=305&type=chunk)[356](index=356&type=chunk) - U.S. Life Insurance results declined due to higher claim severity and frequency in long-term care, a less favorable impact from in-force rate actions, and lower net investment income[306](index=306&type=chunk)[428](index=428&type=chunk) [Liquidity and Capital Resources](index=139&type=section&id=Liquidity%20and%20Capital%20Resources) Genworth Holdings maintains **$145 million** in liquid assets, has no debt maturities until **2034**, and expects **$150 million** from Enact's special dividend to support its share repurchase program - Genworth Holdings held **$145 million** of unrestricted cash, cash equivalents, and liquid assets as of September 30, 2022[556](index=556&type=chunk) - Genworth Holdings has no debt maturities until **June 2034** after redeeming its February 2024 notes[556](index=556&type=chunk) - Enact Holdings announced a special dividend of **$1.12 per share** and a **$75 million** share repurchase program. Genworth expects to receive approximately **$150 million** from the special dividend[559](index=559&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=152&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) A hypothetical **100 basis point** interest rate increase would decrease fixed maturity securities' fair value by **$3.2 billion**, a reduced sensitivity compared to prior year due to existing portfolio value declines - A hypothetical **100 basis point** increase in interest rates would cause the fair value of the company's fixed maturity securities to decrease by an estimated **$3.2 billion** as of September 30, 2022[591](index=591&type=chunk) - This sensitivity has decreased from an estimated **$4.7 billion** decline as of December 31, 2021, primarily because the portfolio's fair value has already decreased due to rising interest rates in 2022[591](index=591&type=chunk) [Item 4. Controls and Procedures](index=152&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of September 30, 2022, with new internal controls implemented for the upcoming long-duration insurance contracts accounting standard - The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2022[592](index=592&type=chunk)[593](index=593&type=chunk) - New internal controls were executed during the quarter related to the implementation of the new accounting guidance for long-duration insurance contracts, which is effective January 1, 2023[594](index=594&type=chunk) [PART II—OTHER INFORMATION](index=153&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=153&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 12 for details on material pending litigation and regulatory matters, including class action lawsuits related to insurance premium increases - For details on material pending litigation and regulatory matters, the report refers to Note 12 in Part I, Item 1[595](index=595&type=chunk) [Item 1A. Risk Factors](index=153&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors as previously disclosed in its 2021 Annual Report on Form 10-K - There have been no material changes to the company's risk factors as disclosed in the 2021 Annual Report on Form 10-K[596](index=596&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=153&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Genworth repurchased **5,110,856 shares** of common stock in Q3 2022 as part of its **$350 million** share repurchase program, with **$316 million** remaining available Issuer Purchases of Common Stock (Q3 2022) | Period | Total Shares Purchased | Average Price Per Share | Approx. Value Remaining ($M) | | :--- | :--- | :--- | :--- | | July 2022 | 4,034,794 | $3.72 | $320 | | August 2022 | 0 | N/A | $320 | | September 2022 | 1,076,062 | $3.95 | $316 | | **Total Q3** | **5,110,856** | **N/A** | **$316** | - The share repurchases are part of a **$350 million** program authorized by the Board of Directors on May 2, 2022[598](index=598&type=chunk) [Item 6. Exhibits](index=154&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including amended bylaws, compensatory plans, CEO/CFO certifications, and XBRL data files - Exhibits filed include amended bylaws, executive compensation plans, and required CEO/CFO certifications[599](index=599&type=chunk)[600](index=600&type=chunk)

Financial Data and Key Metrics Changes - US GAAP net income for Q2 2022 was $181 million, with adjusted operating income at $176 million or $0.34 per share, compared to $149 million and $0.25 per share in the prior quarter [8][23] - Adjusted operating income from Enact was $167 million, representing a 24% increase from the first quarter [24] - The estimated risk-based capital (RBC) ratio for Genworth Life Insurance Company was 290% at the end of the quarter, slightly down from 296% in the previous quarter [32] Business Line Data and Key Metrics Changes - The US Life Insurance segment reported adjusted operating income of $21 million, driven by $34 million from long-term care (LTC) and $21 million from fixed annuities, offset by a $34 million loss in life insurance [26] - LTC adjusted operating income decreased to $34 million from $59 million in the prior quarter, reflecting lower terminations in claims and a decline in mortality [26][30] - Enact's insurance in-force increased by 9% year-over-year to $238 billion, driven by strong new insurance written and higher persistency [24] Market Data and Key Metrics Changes - The market value of Enact has increased, and it has continued to deliver strong performance despite a slowing housing market [9][10] - Enact's estimated PMIER sufficiency ratio was 166%, approximately $2 billion above published requirements, slightly down from the prior quarter [25] Company Strategy and Development Direction - The company aims to strengthen its financial foundation while creating long-term growth and protecting shareholder value amid economic uncertainty [6][7] - A focus on developing a comprehensive long-term care services strategy, with a consumer-led approach, is underway [16][17] - The company plans to continue deleveraging its balance sheet and returning value to shareholders through share buybacks and potential dividends [11][14][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to weather economic volatility due to strong capital levels and a conservatively positioned investment portfolio [7][11] - The macroeconomic environment is challenging, characterized by high inflation, rising interest rates, and market volatility, which may impact the economy in the near to medium term [6][7] - The company is optimistic about its long-term care growth strategy and expects to launch pilot programs in select markets [51] Other Important Information - The company repurchased approximately $48 million of its 2024 debt, leaving a balance of $152 million, with plans to retire the remaining debt by the end of Q3 2022 [12][21] - Moody's upgraded the company's rating, reflecting improved financial strength and liquidity [22][13] - The company expects to receive significant returns from its investment in Enact, including a quarterly dividend and potential special dividends [25][35] Q&A Session Summary Question: Intercompany tax attributes exhaustion - Management indicated that the majority of remaining tax attributes will be used in 2022, with exhaustion expected in 2023 [41] Question: AXA-Santander lawsuit recovery sharing - Management stated that significant recoveries are expected if AXA prevails, but specifics on the sharing of recovery remain undetermined [43] Question: Financial impact of Global Care Solutions - Management described the new business as capital-light, focusing on care service navigation and expected to generate income through fees for care plans [45][46] Question: Assessment of intrinsic value for share repurchase - Management clarified that intrinsic value assessment currently focuses on Enact, with no value assigned to the life companies at this time [48]

PART I—FINANCIAL INFORMATION This part details Genworth Financial's unaudited condensed consolidated financial statements, management's analysis, market risk, and controls [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Genworth Financial's unaudited condensed consolidated financial statements and accompanying notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202022%20(Unaudited)%20and%20December%2031%2C%202021) This section presents Genworth Financial's condensed consolidated balance sheets for March 31, 2022, and December 31, 2021 | Metric | March 31, 2022 (Millions) | December 31, 2021 (Millions) | | :---------------------- | :------------------------ | :--------------------------- | | Total Assets | $93,487 | $99,171 | | Total Liabilities | $78,335 | $82,905 | | Total Equity | $15,152 | $16,266 | - Total assets decreased by **$5,684 million**, primarily due to decreases in fixed maturity securities, cash, cash equivalents, restricted cash, and other invested assets, partially offset by increases in deferred acquisition costs and deferred tax assets[9](index=9&type=chunk)[465](index=465&type=chunk)[466](index=466&type=chunk) - Total liabilities decreased by **$4,570 million**, mainly driven by decreases in future policy benefits, policyholder account balances, and other liabilities, partially offset by an increase in derivative liabilities and legal settlement accruals[9](index=9&type=chunk)[467](index=467&type=chunk)[468](index=468&type=chunk) [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20for%20the%20three%20months%20ended%20March%2031%2C%202022%20and%202021%20(Unaudited)) This section presents Genworth Financial's condensed consolidated statements of income for the three months ended March 31, 2022 and 2021 | Metric | Three months ended March 31, 2022 (Millions) | Three months ended March 31, 2021 (Millions) | Change (Millions) | Change (%) | | :------------------------------------------------------------------- | :------------------------------------------- | :------------------------------------------- | :---------------- | :--------- | | Total Revenues | $1,892 | $1,985 | $(93) | (5)% | | Total Benefits and Expenses | $1,653 | $1,752 | $(99) | (6)% | | Income from continuing operations before income taxes | $239 | $233 | $6 | 3% | | Net income | $179 | $195 | $(16) | (8)% | | Net income available to Genworth Financial, Inc.'s common stockholders | $149 | $187 | $(38) | (20)% | - Net income available to common stockholders decreased by **20%** year-over-year, primarily due to a loss from discontinued operations in 2022 compared to income in 2021, and an increase in net income attributable to noncontrolling interests[13](index=13&type=chunk)[271](index=271&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20three%20months%20ended%20March%2031%2C%202022%20and%202021%20(Unaudited)) This section presents Genworth Financial's condensed consolidated statements of comprehensive income for the three months ended March 31, 2022 and 2021 | Metric | Three months ended March 31, 2022 (Millions) | Three months ended March 31, 2021 (Millions) | | :------------------------------------------------------------------------ | :------------------------------------------- | :------------------------------------------- | | Net income | $179 | $195 | | Total other comprehensive income (loss) | $(1,292) | $(603) | | Total comprehensive loss | $(1,113) | $(408) | | Total comprehensive loss available to Genworth Financial, Inc.'s common stockholders | $(1,102) | $(563) | - Total other comprehensive loss significantly increased to **$(1,292) million** in Q1 2022 from $(603) million in Q1 2021, primarily driven by net unrealized losses on securities without an allowance for credit losses and derivatives qualifying as hedges[15](index=15&type=chunk) [Condensed Consolidated Statements of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity%20for%20the%20three%20months%20ended%20March%2031%2C%202022%20and%202021%20(Unaudited)) This section presents Genworth Financial's condensed consolidated statements of changes in equity for the three months ended March 31, 2022 and 2021 | Metric | March 31, 2022 (Millions) | December 31, 2021 (Millions) | | :------------------------------------------------------------------ | :------------------------ | :--------------------------- | | Total Genworth Financial, Inc.'s stockholders' equity | $14,407 | $15,510 | | Noncontrolling interests | $745 | $756 | | Total equity | $15,152 | $16,266 | | Accumulated other comprehensive income (loss) (March 31, 2022) | $2,610 | $3,861 | | Retained earnings (March 31, 2022) | $2,639 | $2,490 | - Total Genworth Financial, Inc.'s stockholders' equity decreased by **$1,103 million** from December 31, 2021, to March 31, 2022, primarily due to a significant other comprehensive loss of $(1,251) million, partially offset by net income of $149 million[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20three%20months%20ended%20March%2031%2C%202022%20and%202021%20(Unaudited)) This section presents Genworth Financial's condensed consolidated statements of cash flows for the three months ended March 31, 2022 and 2021 | Cash Flow Activity | Three months ended March 31, 2022 (Millions) | Three months ended March 31, 2021 (Millions) | | :------------------------------------------------ | :------------------------------------------- | :------------------------------------------- | | Net cash used by operating activities | $(92) | $(247) | | Net cash from investing activities | $138 | $335 | | Net cash used by financing activities | $(326) | $(780) | | Net change in cash, cash equivalents and restricted cash | $(280) | $(692) | - Net cash used by operating activities decreased from **$(247) million** in Q1 2021 to **$(92) million** in Q1 2022, primarily due to lower payments to AXA, partially offset by higher net cash disbursements for derivative contracts[20](index=20&type=chunk)[471](index=471&type=chunk) - Net cash from investing activities decreased from **$335 million** in Q1 2021 to **$138 million** in Q1 2022, mainly due to proceeds from the sale of Genworth Australia in the prior year and net purchases of short-term investments in the current year[20](index=20&type=chunk)[471](index=471&type=chunk) - Net cash used by financing activities decreased from **$(780) million** in Q1 2021 to **$(326) million** in Q1 2022, driven by lower repayment of long-term debt and reduced net withdrawals from investment contracts[20](index=20&type=chunk)[472](index=472&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed notes explaining Genworth's accounting policies, segment information, investments, derivatives, and other financial disclosures [(1) Formation of Genworth and Basis of Presentation](index=8&type=section&id=(1)%20Formation%20of%20Genworth%20and%20Basis%20of%20Presentation) Genworth Financial operates through Enact, U.S. Life Insurance, and Runoff segments, with unaudited financial statements prepared under U.S. GAAP - Genworth operates through three segments: Enact (mortgage insurance), U.S. Life Insurance (long-term care, traditional life, fixed annuities), and Runoff (variable annuity, variable life, corporate-owned life insurance, funding agreements)[23](index=23&type=chunk) - Corporate and Other activities include debt financing expenses, unallocated corporate income/expenses, inter-segment eliminations, and international mortgage insurance businesses/discontinued operations[24](index=24&type=chunk) - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and SEC rules, requiring estimates and assumptions that may lead to actual results differing from estimates[25](index=25&type=chunk) [(2) Accounting Changes](index=9&type=section&id=(2)%20Accounting%20Changes) Genworth is preparing for new FASB accounting guidance for long-duration insurance contracts, effective January

Financial Data and Key Metrics Changes - U.S. GAAP net income for Q1 2022 was $149 million, while adjusted operating income was $131 million or $0.25 per share, compared to $163 million and $0.32 per share in the prior quarter [7][23] - The consolidated balance sheet of General Life Insurance Company (GLIC) showed capital and surplus of approximately $2.9 billion as of year-end 2021, up from $2.1 billion at the end of 2020 [8] - GLIC's risk-based capital (RBC) ratio was estimated at 296% as of March 31, 2022, an increase from 289% at year-end 2021 [8][39] Business Line Data and Key Metrics Changes - Enact, the mortgage insurance subsidiary, reported adjusted operating income of $135 million, contributing significantly to overall results [7][24] - The U.S. Life insurance segment reported an adjusted operating loss of $4 million, driven by an operating loss of $79 million in life insurance, partially offset by $59 million in long-term care (LTC) insurance [7][29] - LTC insurance adjusted operating income was $59 million, down from $190 million in the prior quarter, primarily due to a decline in variable investment income [29] Market Data and Key Metrics Changes - Enact's insurance in-force increased 10% year-over-year to $232 billion, driven by strong new insurance written and higher persistency [26] - The PMIER sufficiency ratio for Enact was 176%, indicating strong business results and capital credit from reinsurance transactions [27] Company Strategy and Development Direction - The company is focused on maximizing shareholder value through debt reduction and capital return strategies, including a new share repurchase program of up to $350 million [11][43] - Genworth aims to stabilize its legacy LTC portfolio while exploring new LTC products and services, with an emphasis on less capital-intensive offerings [18][19] - The multiyear rate action plan (MYRAP) has been effective in reducing the legacy LTC premium shortfall, achieving $101 million in annual premium rate increase approvals in Q1 2022 [14][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's financial position and ability to return capital to shareholders, citing improved cash flow and reduced debt [10][12] - The company anticipates that it could take five more years to reach economic breakeven on its legacy LTC blocks due to regulatory challenges [17] - Management highlighted the importance of navigating the complex caregiving market and the potential for significant demand for LTC services [47] Other Important Information - Genworth received a ratings upgrade from S&P in March 2022, reflecting substantial improvement in its credit profile [10][22] - The company plans to fund share repurchases from excess holding company cash, with the majority of activity expected after redeeming remaining debt [11][43] Q&A Session Summary Question: Addressable market and competition for LTC advice and service offerings - Management indicated that the addressable market for LTC services is significant, with approximately 50 million people needing help navigating caregiving challenges, and emphasized a focus on advice and counsel rather than traditional insurance products [47] Question: Holding company cash and expense trends - Management clarified that first-quarter expenses included employee benefit payments that would be reimbursed later in the year, and they increased cash flow forecasts due to positive performance [50]

Genworth Financial, Inc. (NYSE:GNW) Q4 2021 Earnings Conference Call February 2, 2022 9:00 AM ET Company Participants Tom McInerney - President & Chief Executive Officer Dan Sheehan - Chief Financial Officer & Chief Investment Officer Conference Call Participants Ryan Krueger - KBW Joshua Esterov - CreditSights Ryan Gilbert - BTIG Operator Good morning, ladies and gentlemen, and welcome to Genworth Financial's Fourth Quarter 2021 Earnings Conference Call. My name is Jennifer, and I will be your coordinator ...