Genworth(US:GNW)2023-02-07 17:26Financial Data and Key Metrics Changes - For the full year 2022, net income was $609 million, and adjusted operating income was $633 million or $1.24 per diluted share, exceeding market expectations [10] - In Q4 2022, net income was $175 million and adjusted operating income was $167 million or $0.33 per diluted share [10] - Cash flows from Enact contributed significantly to achieving key milestones and supporting the share repurchase program [11] Business Line Data and Key Metrics Changes - The U.S. Life Insurance segment reported adjusted operating income of $38 million, with $24 million from LTC and $16 million from fixed annuities [21] - LTC adjusted operating income was $24 million, down from $25 million in the prior quarter and $119 million in the prior year, reflecting lower investment income and continued growth in new claims [21] - Fixed annuities reported adjusted operating income of $16 million, compared to $19 million in the prior quarter and $20 million in the prior year [31] Market Data and Key Metrics Changes - Enact's insurance in force increased 10% year-over-year to a record $248 billion, driven by new insurance written and higher persistency [19] - The estimated PMIER sufficiency ratio was 165%, approximately $2.1 billion above published requirements [20] - The U.S. Life Insurance segment's statutory capital and surplus increased from $2.9 billion at the end of 2021 to approximately $3 billion at year-end 2022 [11] Company Strategy and Development Direction - The company aims to invest in growth and return capital to shareholders, with a focus on launching new senior care services under the CareScout brand [39] - A new share repurchase program of up to $350 million was authorized, with $64 million repurchased at an average price of less than $4 per share [7] - The company is pursuing a multiyear rate action plan to stabilize its legacy LTC portfolio, achieving $549 million in annual premium rate increase approvals in 2022 [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's financial strength and flexibility to invest in growth while returning capital to shareholders [6] - The removal of GSE restrictions on Enact is expected to enhance competitiveness and financial conditions [9] - Management highlighted the importance of regulatory support in achieving premium increases for LTC products [53] Other Important Information - The company invested approximately $20 million in CareScout in 2022 and plans an additional $30 million in 2023 [16] - The adoption of the new GAAP accounting standard, LDTI, is expected to result in increased volatility in net income [34][36] - The holding company ended the quarter with $307 million of cash and liquid assets, above the cash target of 2x annual debt service [38] Q&A Session Summary Question: Inquiry about debt repurchase strategy - Management indicated that the focus would be on repurchasing the 2034 senior unsecured notes, with a priority on share buybacks now that debt levels are below the target [41][42] Question: Changes in LTC claim inflation assumptions - Management confirmed that no changes were made to the assumptions or expected approvals in the LTC program, indicating stability in the overall assumptions [44][46] Question: Clarification on LTC premium rate increase assumptions - Management explained that while the cumulative premium rate increase assumption rose to $30.3 billion, the active life reserve margin remained unchanged due to positive impacts from improved regulatory behavior [55][56]