Genworth(US:GNW)2022-08-02 14:24Financial 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]