Genworth Financial, Inc. Q3 FY2025 earnings call

• Genworth reported solid net income of $116 million with adjusted operating income of $17 million. Enact contributed $134 million to adjusted operating income. - Genworth ended the quarter with $254 million of cash and liquid assets. - Continues to execute 3 strategic priorities: creating value for shareholders via Enact's performance and share repurchases, progress in self-sustaining legacy LTC, life, and annuity businesses, and driving future growth through CareScout. - CareScout's Quality Network has over 700 providers with over 950 locations, aiming for over 3,000 matches in 2025. - Acquired Seniorly to expand assisted living network and direct-to-consumer reach. - AXA litigation: U.K. High Court favorable judgment but Santander appealed, expected resolution in 12-18 months with potential $750 million recovery. - Supporting Seniors Act introduced to address long-term care needs.

Genworth's third quarter adjusted operating income was $17 million. Enact contributed $134 million to adjusted operating income. The long-term care Insurance segment reported an adjusted operating loss of $100 million, driven by a remeasurement loss related to unfavorable A2E. Life and Annuities reported adjusted operating income of $4 million, with life insurance having an adjusted operating loss of $15 million and annuities contributing $19 million. Corporate and Other reported an adjusted operating loss of $21 million, including a $7 million valuation allowance reduction on certain deferred tax assets. Enact's primary insurance in force grew slightly year-over-year to $272 billion. The long-term care Insurance segment's loss was due to lower terminations and higher benefit utilization. Life and Annuities' results were impacted by mortality, equity market, and interest rate movements.

• Enact expects to return approximately $500 million of capital to shareholders this year. - Genworth announced a new $350 million share repurchase authorization. - CareScout aims to finish 2025 with over 3,000 matches between LTC policyholders and CQN home care providers. - Planning to launch innovative hybrid LTC products and expand worksite/association group offerings. - Acquisition of Seniorly accelerates expansion into direct-to-consumer channel.

• AXA litigation appeal process could impact potential recovery, taking 12-18 months. - Unfavorable A2E in long-term care leading to losses, driven by lower terminations and higher benefit utilization. - Pressure from higher benefit utilization and cost of care inflation in LTC. - Fluctuations in quarterly results due to varying experience in LTC and life/annuity segments.

Q: Could you talk about the ultimate strategic long-term resolution of the LTC situation for the company?

A: Tom McInerney stated CareScout is well-positioned in the large market of aging baby boomers, with services to help assess care needs, care plans, and insurance products in development. The legacy LTC business is a runoff, while CareScout businesses are separate and well-positioned.

Q: Is the legacy LTC business basically going to be a runoff and the rest a stand-alone business?

A: Tom McInerney responded that the legacy LTC business is a long runoff, and CareScout businesses are owned by the parent and run separately, able to stand on their own apart from the legacy companies.

Q: What has caused the transition in statutory earnings for the LTC block again?

A: Jerome Upton mentioned factors like COVID creating past favorability, large settlements that are now gone, and larger in-force blocks leading to higher claims, with quarter-to-quarter variation due to state premium increase timings and benefit reduction progress.