Genworth Financial, Inc. (NYSE:GNW) Q2 2021 Results Conference Call August 4, 2021 9:00 AM ET Company Participants Tim Owens - Vice President of Investor Relations Thomas McInerney - President and Chief Executive Officer Daniel Sheehan - Chief Financial Officer and Chief Investment Officer Rohit Gupta - Chief Executive Officer, Enact Conference Call Participants Don Espey - Shah Capital Management, Inc Operator Good morning, ladies and gentlemen, and welcome to Genworth Financial's Second Quarter 2021 Earni ...

[Part I: Financial Information](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements, management's discussion and analysis, and disclosures on market risk and internal controls [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 June 30, 2021, and for the three and six months ended June 30, 2021 and 2020, along with detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$100.65 billion** from **$105.75 billion**, and total liabilities decreased to **$85.49 billion** from **$89.93 billion**, primarily due to the sale of the Australian mortgage insurance business Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$100,650** | **$105,747** | | Total Investments | $73,018 | $74,701 | | Assets related to discontinued operations | $— | $2,817 | | **Total Liabilities** | **$85,486** | **$89,927** | | Long-term borrowings | $2,924 | $3,403 | | Liabilities related to discontinued operations | $346 | $2,370 | | **Total Equity** | **$15,164** | **$15,820** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The company reported net income of **$240 million** in Q2 2021 and **$427 million** for H1 2021, a significant turnaround from prior-year losses driven by improved continuing operations and reduced discontinued operations losses Consolidated Income Statement Summary (in millions, except per share data) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$2,041** | **$2,003** | **$4,026** | **$3,812** | | Income (loss) from continuing operations | $245 | $55 | $419 | $(5) | | Income (loss) from discontinued operations | $(5) | $(473) | $16 | $(485) | | **Net income (loss)** | **$240** | **$(418)** | **$435** | **$(490)** | | Net income (loss) available to stockholders | $240 | $(441) | $427 | $(507) | | **Diluted EPS** | **$0.47** | **$(0.86)** | **$0.83** | **$(1.00)** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased to **$229 million** in H1 2021 from **$1.3 billion** in H1 2020, while investing activities generated **$541 million**, primarily from the Australian business sale Cash Flow Summary for the Six Months Ended June 30 (in millions) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash from operating activities | $229 | $1,299 | | Net cash from (used by) investing activities | $541 | $(887) | | Net cash used by financing activities | $(1,213) | $(1,144) | | **Net change in cash** | **$(442)** | **$(744)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on business segments, the sale of the Australian mortgage insurance business, accounting policies, investment portfolio, derivatives, liabilities, debt, segment performance, legal contingencies, and discontinued operations - The company operates through three segments: Enact (U.S. Mortgage Insurance), U.S. Life Insurance (long-term care, life, fixed annuities), and Runoff (non-strategic products)[28](index=28&type=chunk) - On March 3, 2021, the company completed the sale of its **52% interest** in Genworth Mortgage Insurance Australia Limited, which is now reported as a discontinued operation[30](index=30&type=chunk) - The company believes its current liquidity is sufficient to meet obligations for one year, supported by **$823 million** in unrestricted cash and liquid assets at the holding company level as of June 30, 2021, and proceeds from the Genworth Australia sale[33](index=33&type=chunk)[35](index=35&type=chunk) [Management's Discussion and Analysis (MD&A)](index=74&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strategic priorities, financial results, and operational performance, focusing on liquidity, the potential Enact segment sale, and stabilizing U.S. life insurance through rate actions - Strategic priorities include raising liquidity to address future debt maturities, strengthening the financial position, and creating shareholder value, with a key component being the potential partial sale of Enact Holdings[291](index=291&type=chunk)[292](index=292&type=chunk) - The company continues its multi-year long-term care insurance in-force rate action plan, having achieved an estimated **$15.5 billion** in net present value of approved rate increases since 2012[294](index=294&type=chunk) - Net income available to common stockholders was **$240 million** in Q2 2021, a significant improvement from a net loss of **$441 million** in Q2 2020, with adjusted operating income at **$194 million** compared to a **$23 million** loss in the prior-year quarter[296](index=296&type=chunk) [Consolidated Results of Operations](index=82&type=section&id=Consolidated%20Results%20of%20Operations) Total revenues increased slightly to **$2.04 billion** in Q2 2021, while total benefits and expenses decreased significantly to **$1.72 billion**, leading to a substantial increase in income from continuing operations Consolidated Results of Operations - Q2 2021 vs Q2 2020 (in millions) | Line Item | Q2 2021 | Q2 2020 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $2,041 | $2,003 | $38 | 2% | | Benefits and other changes in policy reserves | $1,161 | $1,447 | $(286) | (20)% | | Total benefits and expenses | $1,721 | $1,925 | $(204) | (11)% | | Income from continuing operations | $245 | $55 | $190 | >200% | - The decrease in benefits was largely driven by the Enact segment, where reserves decreased by **$198 million** due to lower new delinquencies and the absence of prior-year unfavorable reserve adjustments related to COVID-19[323](index=323&type=chunk) [Enact Segment Analysis](index=92&type=section&id=Enact%20segment) The Enact segment reported adjusted operating income of **$135 million** in Q2 2021, a strong recovery from a **$3 million** loss, driven by a significantly lower loss ratio of **12%** and a strong PMIERs sufficiency ratio of **165%** Enact Segment Financial Highlights - Q2 (in millions) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Adjusted operating income (loss) | $135 | $(3) | | Premiums | $243 | $243 | | Benefits and other changes in policy reserves | $30 | $228 | - The loss ratio improved dramatically to **12%** in Q2 2021 from **94%** in Q2 2020, primarily due to lower new delinquencies and the absence of prior-year unfavorable reserve adjustments related to COVID-19[375](index=375&type=chunk)[413](index=413&type=chunk) - As of June 30, 2021, the Enact segment's PMIERs sufficiency ratio was **165%**, with available assets of **$4.9 billion** against required assets of **$3.0 billion**, representing a **$1.9 billion surplus**[301](index=301&type=chunk)[384](index=384&type=chunk) [U.S. Life Insurance Segment Analysis](index=107&type=section&id=U.S.%20Life%20Insurance%20segment) The U.S. Life Insurance segment generated adjusted operating income of **$71 million** in Q2 2021, primarily driven by the long-term care business's **$98 million** income due to in-force rate actions and favorable claim development U.S. Life Insurance Adjusted Operating Income (Loss) by Business - Q2 (in millions) | Business | 2021 | 2020 | | :--- | :--- | :--- | | Long-term care insurance | $98 | $48 | | Life insurance | $(40) | $(81) | | Fixed annuities | $13 | $28 | | **Total U.S. Life Insurance** | **$71** | **$(5)** | - The LTC business's improved performance was driven by higher reduced benefits from in-force rate actions, including a legal settlement, and favorable development on IBNR claims[465](index=465&type=chunk) - The company continues to manage the impact of COVID-19, which has led to elevated but fluctuating mortality, with a cumulative claims reserve of **$143 million** for expected lower future claim termination rates remaining as of June 30, 2021[431](index=431&type=chunk)[432](index=432&type=chunk) [Runoff Segment Analysis](index=121&type=section&id=Runoff%20segment) The Runoff segment reported adjusted operating income of **$15 million** in Q2 2021, a decrease from **$24 million** in Q2 2020, primarily due to lower net investment income and less favorable equity market performance Runoff Segment Financial Highlights - Q2 (in millions) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Adjusted operating income | $15 | $24 | | Total revenues | $88 | $90 | | Income from continuing operations | $22 | $28 | - The decrease in adjusted operating income was predominantly due to lower investment income and less favorable equity market performance in the current year[500](index=500&type=chunk) [Investments and Derivative Instruments](index=127&type=section&id=Investments%20and%20Derivative%20Instruments) Total cash and invested assets were **$75.2 billion** as of June 30, 2021, with **78%** in investment-grade fixed maturity securities, and net investment income increased to **$844 million** in Q2 2021 Investment Portfolio Composition as of June 30, 2021 (in millions) | Asset Class | Carrying Value | % of Total | | :--- | :--- | :--- | | Fixed maturity securities, available-for-sale | $61,649 | 82% | | Commercial mortgage loans, net | $6,879 | 9% | | Other invested assets | $2,260 | 3% | | Cash, cash equivalents and restricted cash | $2,214 | 3% | | Other (Equity & Policy Loans) | $2,230 | 3% | | **Total** | **$75,232** | **100%** | - The company is managing the transition away from LIBOR, having formed a working group to evaluate exposure and already terminated some LIBOR-based swaps in favor of alternative rate swaps[535](index=535&type=chunk)[536](index=536&type=chunk) [Liquidity and Capital Resources](index=136&type=section&id=Liquidity%20and%20Capital%20Resources) Genworth Holdings held **$742 million** in cash, actively managed its debt, and utilized **$370 million** net proceeds from the Genworth Australia sale to prepay the AXA promissory note - Genworth Holdings held **$742 million** in cash, cash equivalents, and restricted cash as of June 30, 2021[580](index=580&type=chunk) - In July 2021, the company fully redeemed its **7.625% senior notes** due September 2021 with a cash payment of approximately **$532 million**[583](index=583&type=chunk)[589](index=589&type=chunk) - The sale of Genworth Australia generated **$370 million** in net proceeds, of which **$247 million** was used to prepay the AXA promissory note, with the remaining note balance estimated at **$344 million** due in September 2022[582](index=582&type=chunk)[592](index=592&type=chunk) - GMICO received regulatory approval for a **$200 million dividend** to be distributed to the holding company at year-end 2021, an important step in restarting capital returns from Enact[577](index=577&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=149&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in its market risks, including interest rates, foreign currency exchange rates, and equity prices, since December 31, 2020 - There were no material changes in the company's market risks since December 31, 2020[620](index=620&type=chunk) [Controls and Procedures](index=149&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[621](index=621&type=chunk) - There were no material changes to the internal control over financial reporting during the second quarter of 2021[622](index=622&type=chunk) [Part II: Other Information](index=150&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This section covers legal proceedings, risk factors, and a list of exhibits filed with the quarterly report [Legal Proceedings](index=150&type=section&id=Item%201.%20Legal%20Proceedings) The company refers to Note 11 of the financial statements for details on material pending litigation and regulatory matters, including shareholder derivative suits and class action lawsuits - For details on material pending litigation and regulatory matters, the company directs readers to Note 11 in the financial statements[623](index=623&type=chunk) [Risk Factors](index=150&type=section&id=Item%201A.%20Risk%20Factors) The company states there have been no material changes to the risk factors previously disclosed in its 2020 Annual Report on Form 10-K as of June 30, 2021 - There have been no material changes to the risk factors set forth in the company's 2020 Annual Report on Form 10-K[624](index=624&type=chunk) [Exhibits](index=151&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including amended bylaws, incentive plans, a separation agreement, and required CEO/CFO certifications - Exhibits filed include the 2021 Omnibus Incentive Plan, a separation agreement with a former executive, and CEO/CFO certifications[625](index=625&type=chunk)

Financial Performance - Genworth Financial reported a net income of $187 million for Q1 2021, a significant improvement from a net loss of $66 million in Q1 2020[273]. - Total revenues increased by 10% to $1,985 million compared to $1,809 million in the prior year[1]. - Net investment income rose by 2% to $801 million from $782 million[1]. - Net investment gains improved significantly to $33 million from a loss of $99 million, representing a 133% change[1]. - Adjusted operating income available to common stockholders was $168 million for Q1 2021, significantly up from $20 million in Q1 2020[307]. - Basic earnings per share increased to $0.37 in Q1 2021 from a loss of $0.13 in Q1 2020, while diluted earnings per share also improved to $0.37 from a loss of $0.13[310]. - Total revenues for the U.S. Life Insurance segment increased to $1,620 million in Q1 2021, up 9% from $1,487 million in Q1 2020[404]. - Adjusted operating income available to common stockholders decreased to $62 million, down 70% from $132 million in the prior year[409]. Insurance Operations - The U.S. Mortgage Insurance segment had adjusted operating income of $126 million in Q1 2021, down from $148 million in Q1 2020, primarily due to higher losses from new delinquencies related to COVID-19[273]. - New insurance written in the U.S. Mortgage Insurance segment rose to $24.9 billion in Q1 2021, a 39% increase compared to Q1 2020, fueled by higher refinance and purchase originations[279]. - The long-term care insurance business generated adjusted operating income of $95 million in Q1 2021, up from $1 million in Q1 2020, driven by higher claim terminations and favorable development on incurred but not reported claims[273]. - The company implemented significant premium rate increases in its long-term care insurance business, receiving 43 filing approvals representing a weighted-average increase of 40% on approximately $396 million in annualized in-force premiums[280]. - The U.S. Life Insurance segment experienced a decrease of $4 million in premiums, with long-term care insurance showing a $4 million increase[2]. Strategic Initiatives - Genworth Financial plans to raise liquidity to address future debt maturities and other near-term liabilities, with a focus on long-term shareholder value[266]. - The company is focused on stabilizing its U.S. life insurance businesses through a multi-year long-term care insurance in-force rate action plan[269]. - Genworth is preparing for a planned partial sale of its U.S. mortgage insurance business, subject to market conditions and necessary approvals[266]. - Genworth is open to exploring other strategic alternatives to address future holding company debt maturities and financial obligations[266]. - The termination of the merger agreement with China Oceanwide may adversely affect Genworth's business and stock price[261]. Market Conditions - The U.S. unemployment rate was 6.0% in March 2021, down from a peak of 14.8% in April 2020, indicating a gradual economic recovery[320]. - Mortgage origination activity remained robust in Q1 2021, driven by refinance activity and strong home sales, although sales of previously owned homes decreased by 3.7% in early 2021[322]. - The total unsold inventory of single-family homes was low at a 1.9-month supply as of February 2021, contributing to rising home prices[322]. - The company continues to monitor the impact of COVID-19 on its business, with potential adverse effects on future results due to ongoing uncertainties[323]. Risk Management - As of March 31, 2021, the PMIERs sufficiency ratio for the U.S. mortgage insurance business was 159%, indicating $1,764 million above the required assets[277]. - The delinquency rate for primary insurance was 4.48% as of March 31, 2021, up from 1.78% a year earlier[365]. - Approximately 54% of new primary delinquencies in Q1 2021 were subject to a forbearance plan, compared to less than 5% in prior quarters[335]. - The company continues to monitor cash and liquid investments to ensure obligations can be met under stressed liquidity scenarios[381]. Regulatory and Compliance - Standard & Poor's modified its outlook for Genworth from Negative to Creditwatch Positive, contingent on the successful execution of its strategic plan[284]. - The GSE Restrictions require GMICO to maintain 115% of PMIERs minimum required assets through 2021, increasing to 125% thereafter[340]. - The approval process for in-force rate actions varies by state, affecting the timing and amount of premium increases realized over time[392].

Genworth Financial, Inc. (NYSE:GNW) Q1 2021 Earnings Conference Call April 30, 2021 9:00 AM ET Company Participants Tim Owens - VP, IR Tom McInerney - President and CEO Dan Sheehan - CFO and Chief Investment Officer Rohit Gupta - CEO, Genworth Mortgage Insurance Conference Call Participants Peter Troisi - Barclays Joshua Esterov - CreditSights Operator Good morning, ladies and gentlemen, and welcome to Genworth Financial's First Quarter 2021 Earnings Conference. My name is [Shion] [Ph], and I will be your c ...

Table of Contents Title of Each ClassTrading SymbolName of each exchange on which registered Class A Common Stock, par value $.001 per share GNW New York Stock Exchange UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Co ...

Genworth Financial, Inc. (NYSE:GNW) Q4 2020 Earnings Conference Call February 17, 2021 9:00 AM ET Company 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 Conference Call Participants Ryan Krueger - KBW Joshua Esterov - CreditSights Ryan Gilbert - BTIG Geoffrey Dunn - Dowling & Partners Howard Amster - Horizon G ...

Financial Data and Key Metrics Changes - The company reported strong net income of $418 million and adjusted operating income of $132 million for Q3 2020, driven by the performance of the US mortgage insurance business [12][17]. - Adjusted operating income for US Mortgage Insurance (USMI) was $141 million, a significant improvement from an adjusted operating loss of $3 million in the prior quarter [13][17]. - The company achieved $26.6 billion in new insurance written during the quarter, up 41% year-over-year, primarily due to higher refinance originations [13][21]. Business Line Data and Key Metrics Changes - The USMI business saw a loss ratio of 18% for the quarter, with new primary delinquencies down 66% sequentially [18][20]. - The Australia MI business reported adjusted operating income of $7 million, up from $1 million in the prior quarter but down from $12 million in the prior year [14][24]. - In the US life insurance segment, adjusted operating income was $14 million, up from a loss of $5 million in the prior quarter [15][25]. Market Data and Key Metrics Changes - The Australian economy showed signs of recovery, with a decrease in households utilizing loan deferral programs from 11% to 7% [23]. - The US housing market remained resilient, with improving home prices and a large origination market benefiting the USMI business [18]. Company Strategy and Development Direction - The company is focused on enhancing liquidity and preparing for a potential IPO of its USMI business, contingent on market conditions and the status of the Oceanwide transaction [10][40]. - The multiyear LTC Rate Action Plan (MYRAP) is being executed to stabilize the legacy long-term care insurance business, with $595 million of annualized in-force premiums approved [11][29]. Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the closing of the Oceanwide transaction by the end of November, pending regulatory approvals [8][9]. - The company is maintaining a conservative approach to capital management in light of ongoing economic uncertainty due to COVID-19 [14][16]. Other Important Information - The company raised $750 million of debt at the USMI holding company level to address upcoming debt maturities [10]. - The PMIERs sufficiency ratio for USMI was reported at 132%, exceeding $1 billion above published requirements [13][36]. Q&A Session Summary Question: Clarification on Oceanwide closing and potential IPO of USMI - Management indicated that Hony Capital is expected to finalize the $1.8 billion financing in November, with hopes to close the transaction by the end of the month [42]. - If the Oceanwide deal does not close, the company is prepared to launch an IPO for USMI in the first half of next year, subject to market conditions [43]. Question: Status of Hony Capital's funding - Management confirmed that Hony Capital has arranged the necessary funding and is awaiting regulatory approval from NDRC and SAFE [52][55]. Question: Market share and pricing strategy - Management acknowledged a slight decline in market share due to a more conservative approach in price-sensitive areas, but emphasized strong performance in new insurance written [58][62].