• Net Income: $76 million or $0.17 per share.
• Adjusted Operating Income: $125 million or $0.28 per share.
• Enact Adjusted Operating Income: $165 million to Genworth.
• Long-Term Care (LTC) Segment Loss: Adjusted operating loss of $29 million.
• Life and Annuities Segment Loss: Adjusted operating loss of $1 million.
• Statutory Pre-Tax Income for US Life Insurance Companies: Estimated at $171 million.
• Enact Capital Received by Genworth: $63 million in the second quarter.
• Share Repurchases: Approximately $36 million of shares repurchased in the second quarter.
• Multi-Year Rate Action Plan (MYRAP) Approvals: $138 million of gross incremental premiums approved.
• Enact Primary Insurance In-Force: Increased 3% year over year to $266 billion.
• Enact PMIERs Sufficiency Ratio: 169%, approximately $2.1 billion above requirements.
• Holding Company Cash and Liquid Assets: $281 million at the end of the quarter.
• Debt Reduction: $12 million in principal of long-dated subordinated notes repurchased.

• Warning! GuruFocus has detected 6 Warning Sign with GNW.

Release Date: August 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Genworth Financial Inc (NYSE:GNW) reported a net income of $76 million and adjusted operating income of $125 million, showcasing strong financial performance.
• Enact, a key segment of Genworth, delivered a strong quarter with adjusted operating income of $165 million, contributing significantly to the company's earnings.
• The company achieved $138 million in gross incremental premiums approved under the multi-year rate action plan (MYRAP), bringing cumulative progress to an estimated $29.2 billion since 2012.
• CareScout Quality Network expanded its availability to over 40 states, achieving approximately 70% coverage of the age 65-plus population, with expectations to reach 80-85% by year-end.
• Genworth's share repurchase program has reduced outstanding shares by 15% since May 2022, enhancing shareholder value.

Negative Points

• The long-term care (LTC) segment reported an adjusted operating loss of $29 million due to a liability remeasurement loss.
• Life and annuities reported an adjusted operating loss of $1 million, driven by losses in life insurance.
• GAAP results for the LTC segment continue to be volatile, with expectations of earnings pressure throughout the remainder of the year.
• The company does not expect capital returns from its legacy life insurance companies, which operate as a closed system.
• Genworth's commercial real estate exposure, although considered manageable, represents approximately 15% of the total portfolio, with potential risks in the current economic environment.

Q & A Highlights

Q: Can you provide more details on Enact's performance and its impact on Genworth's financials? A: Jerome Upton, CFO, explained that Enact delivered strong second-quarter results with an adjusted operating income of $165 million to Genworth, a 13% increase from the previous year. This was driven by favorable losses and net investment income. Enact's primary insurance in-force grew by 3% year-over-year to $266 billion. The company also had a favorable $77 million pre-tax reserve release, resulting in a loss ratio of negative 7%. Enact's PMIERs sufficiency ratio stands at 169%, with Genworth's share of Enact's book value increasing to $3.9 billion.

Q: How is Genworth progressing with its Multi-Year Rate Action Plan (MYRAP) for long-term care insurance? A: Tom McInerney, CEO, highlighted that Genworth achieved $138 million in gross incremental premiums approved in the second quarter, with an average premium increase of 47%. This brings the cumulative progress to an estimated $29.2 billion in approvals on a net present value basis since 2012. The MYRAP remains critical to bringing the legacy LTC insurance portfolio to breakeven.

Q: What are the strategic priorities for Genworth moving forward? A: Tom McInerney outlined three strategic priorities: maintaining self-sustaining LTC, life, and annuity legacy businesses; driving future growth through CareScout with innovative aging care services; and creating shareholder value through Enact's growing market value and capital returns. The company is focused on scaling the CareScout Quality Network and preparing new LTC funding solutions.

Q: Can you elaborate on the CareScout Quality Network's progress and future plans? A: Tom McInerney shared that the CareScout Quality Network has expanded to over 40 states, covering approximately 70% of the age 65-plus population in the US. The network includes over 300 high-quality home-care providers, with more than 90% agreeing to rates below the median cost of care. Genworth aims to achieve 80% to 85% coverage by year-end and plans to extend the offering beyond policyholders to other LTC insurers and the broader consumer market.

Q: What is the status of Genworth's capital allocation strategy? A: Jerome Upton stated that Genworth's capital allocation priorities include investing in long-term growth through CareScout, returning cash to shareholders via share repurchases, and opportunistically paying down debt. The company repurchased $36 million in shares during the second quarter and expects to allocate $150 million to $170 million for share repurchases in 2024, up from previous expectations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.