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Genworth(GNW) - 2022 Q4 - Earnings Call Transcript
GNWGenworth(GNW)2023-02-07 17:26
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Financial Data and Key Metrics Changes - For the full year 2022, net income was 609million,andadjustedoperatingincomewas609 million, and adjusted operating income was 633 million or 1.24perdilutedshare,exceedingmarketexpectations[10]−InQ42022,netincomewas1.24 per diluted share, exceeding market expectations [10] - In Q4 2022, net income was 175 million and adjusted operating income was 167millionor167 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 38million,with38 million, with 24 million from LTC and 16millionfromfixedannuities[21]−LTCadjustedoperatingincomewas16 million from fixed annuities [21] - LTC adjusted operating income was 24 million, down from 25millioninthepriorquarterand25 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 16million,comparedto16 million, compared to 19 million in the prior quarter and 20millionintheprioryear[31]MarketDataandKeyMetricsChanges−Enact′sinsuranceinforceincreased1020 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 2.1billionabovepublishedrequirements[20]−TheU.S.LifeInsurancesegment′sstatutorycapitalandsurplusincreasedfrom2.1 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 3billionatyear−end2022[11]CompanyStrategyandDevelopmentDirection−Thecompanyaimstoinvestingrowthandreturncapitaltoshareholders,withafocusonlaunchingnewseniorcareservicesundertheCareScoutbrand[39]−Anewsharerepurchaseprogramofupto3 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 64millionrepurchasedatanaveragepriceoflessthan64 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 549millioninannualpremiumrateincreaseapprovalsin2022[27]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthecompany′sfinancialstrengthandflexibilitytoinvestingrowthwhilereturningcapitaltoshareholders[6]−TheremovalofGSErestrictionsonEnactisexpectedtoenhancecompetitivenessandfinancialconditions[9]−ManagementhighlightedtheimportanceofregulatorysupportinachievingpremiumincreasesforLTCproducts[53]OtherImportantInformation−Thecompanyinvestedapproximately549 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 30millionin2023[16]−TheadoptionofthenewGAAPaccountingstandard,LDTI,isexpectedtoresultinincreasedvolatilityinnetincome[34][36]−Theholdingcompanyendedthequarterwith30 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]