Genworth Financial, Inc. Q1 FY2026 earnings call

• Advancing long-term growth strategy through CareScout, strengthening self-sustainability of closed block. - Updating core operating earnings presentation to report January's consolidated adjusted operating income excluding closed block. - Creating shareholder value through NAC's growing market value and capital returns, executing share repurchase program. - Progressing with CareScout, expanding CareScout Quality Network, adding senior living communities, home care network covers 97% of U.S. population age 65 and older, facilitating matches, expecting 7,500 matches in 2026. - Building out CareScout insurance product offerings, planning to launch Care Assurance Worksite product, developing hybrid LTC insurance products. - Actively managing closed block of LTC, life, and annuity products, securing premium approvals, using MIRAP, reducing exposure to risky policy features. - Monitoring macroeconomic backdrop, integrating AI and operational capabilities.

For the first quarter, net income was $47 million with adjusted operating income excluding the closed block of $109 million. The app had adjusted operating income of $140 million. The closed block segment reported an adjusted operating loss of $32 million, driven by a liability remeasurement loss. NAC's new insurance revenue was $13 billion in the quarter, earned premiums were $243 million, and an app had an ex-favorable $39 million pre-tax reserve release driving a loss ratio of 15%. The investment portfolio is conservatively positioned with majority in investment-grade fixed maturities. The holding company ended the quarter with $166 million in cash and liquid assets.

• Expect full-year 2026 premium approvals and benefit reductions to be broadly in line with 2025 levels, contributing approximately $1 billion of economic value. - Expect A to E losses in the range of approximately $300 million for full year 2026. - Expect to receive around $405 million from NAC for the full year. - Expect CareScout services revenue of $25 million in 2026. - Expect to allocate between $195 and $225 million to share repurchases in 2026.

• Uncertain macroeconomic environment including uneven consumer spending, potential for higher inflation and interest rates. - Litigation appeal outcome could impact recovery, but potential recoveries not factored into capital allocation plans. - Mortality fluctuations in LTC and life insurance could impact results. - Exposure to certain LTC policy features and long-tail nature of LTC insurance policies pose risks.

Q: Modest decline in estimated RBC ratio at quarter end, wondering if there's a specific RBC ratio level in which capital contributions would be considered or levers to bolster RBC without capital contributions.

A: Target is RBC at 250 or more, well above regulatory requirements at almost three times required capital.

Q: Pivot on private credit portfolio, seeking detail on characteristics, sourcing, partnerships.

A: Private credit has minimal exposure (1% in middle market loans), accessed through external managers, private investments are mostly investment grade, including private placement and asset-based finance portfolios, accessed through experienced advisors.