Genworth Financial Inc

I would now like to hand the conference over to your first speaker, Daniel Cole, Vice President of Investor Relations. You may begin.

Thank you, and good morning. Welcome to our fourth quarter earnings call. Joining me today are Rohit Gupta, President and Chief Executive Officer, and Dean Mitchell, Chief Financial Officer and Treasurer. Rohit will provide an overview of our business performance and progress against our strategy. Dean will then discuss the details of our quarterly results before turning the call back to Rohit for closing remarks. We will then take your questions. The earnings materials we issued after market closed yesterday contain our financial results for the quarter, along with a comprehensive set of financial and operational metrics. These are available on the investor relations section of our website. Today's call is being recorded and will include the use of forward-looking statements. These statements are based on current assumptions, estimates, expectations, and projections as of today's date. Additionally, they are subject to risks and uncertainties, which may cause actual results to be materially different, and we undertake no obligation to update or revise such statements as a result of new information. For a discussion of these risks, and uncertainties, please review the cautionary language regarding forward-looking statements in today's press release, as well as in our filings with the SEC, which will be available on our website. Please keep in mind the earnings materials and management's prepared remarks today include certain non-GAAP measures. Reconciliations of these measures to the most relevant GAAP metrics can be found in the press release, our earnings presentation, and our upcoming SEC filing on our website. With that, I'll turn the call over to Rohit.

Thank you, Daniel. Good morning, everyone. Before we begin, I want to express our deepest sympathies to those affected by the devastation caused by the wildfires in the Los Angeles area, and to acknowledge and thank all the firefighters and first responders for their bravery and tireless efforts in protecting the community. Our hearts go out to the entire community during this incredibly difficult time, and we are committed to supporting recovery efforts. It is challenging to comprehend the events we are currently witnessing. Following the devastation caused by Hurricane Helene, we now face yet another catastrophe where our employees and borrowers reside. Both communities will continue to receive our support as they work towards rebuilding. Turning back to our financial results, I want to take a moment to reflect on the incredible year we had in 2024. This year was marked by very strong performance as we executed on our strategic priorities amidst a complex economic backdrop. We continue to deliver value for our customers, drive operational efficiencies in our business, maintain a strong balance sheet, and deliver strong capital returns to our shareholders. For the full year, adjusted operating income was a new record high of $718 million, or $4.56 per diluted share, up 9% year over year, and was driven by our strong credit performance. Additionally, adjusted return on equity was 15%, and adjusted book value was $34.16 per share, up 12% year over year. Even in an environment with high rates and low housing affordability, we wrote $51 billion of new insurance written and ended the year with record insurance in force of $269 billion, supporting approximately 140,000 families in achieving homeownership and putting them on a path of building wealth. These results, combined with our strong balance sheet and our expense management discipline, enabled us to pursue our capital allocation priorities. During the year, we issued $750 million in senior notes, our first investment-grade debt issuance as a public company and the largest in the industry in over a decade, allowing us to further strengthen our financial position while also saving $2 million in annual interest expense. Additionally, in a year when the market continued to face inflationary pressures, we reduced our expenses by 2%, excluding restructuring costs. While continuing to invest for future growth, we returned capital of $354 million to shareholders, which was above the high end of our capital return guidance. During the year, our ratings were upgraded by S&P from BBB plus to A minus. Additionally, in January 2025, Fitch upgraded our ratings from A minus to A. These upgrades are another testament to our resilient business model, consistent delivery against our strategic priorities, and the strength of our balance sheet. I'm very proud of what our team accomplished this past year and thank our dedicated and talented employees who made it possible. Moving on to fourth quarter results, we reported adjusted operating income of $169 million, up 7% year over year. Adjusted earnings per share was $1.09 and adjusted return on equity was 13.5% during the quarter. The operating environment and the U.S. housing market specifically continue to be constructive overall. The long-term demographic drivers of housing demand remain robust with low inventory continuing to support elevated home prices. The labor markets are demonstrating resilience with consistent wage growth surpassing the rate of inflation. Overall, our long-term view of the U.S. economy and housing remains positive. In the near term, we continue to evaluate the current landscape and will adapt as necessary. Our credit and manufacturing quality continues to be strong, resulting in high quality in our W and a portfolio with considerable embedded equity. At the end of the fourth quarter, approximately 70% of our insurance in force had mortgage rates below 6%, and the credit quality of our insured portfolio remained strong. Additionally, the risk-weighted average FICO score of the portfolio was 745, the risk-weighted average loan-to-value ratio was 93%, and layered risk was 1.3% of risk-in-force. Pricing remained constructive in the quarter, and we maintained our commitment to prudent underwriting standards. Our pricing engine allows us to deliver competitive pricing on a risk-adjusted basis, and we continue to underwrite and select risk prudently while generating attractive returns. As anticipated, new delinquencies increased by 6%, reflecting the effects of recent hurricanes. Excluding the hurricane impact, new delinquencies rose by 1%, which is in line with historical seasonal trends. A resilient consumer, strong embedded equity, and our loss mitigation efforts continued to drive robust cure rates at 52% for the quarter. This strong cure performance drove a reserve release of $56 million during the quarter and our resulting loss ratio was 10%. We continue to see strong credit performance and remain well-reserved for a range of scenarios. As I mentioned earlier, we maintained a disciplined approach to expense management while investing in technologies and processes that improved the customer experience and our business operations. During the quarter, our expenses were $58 million, a 2% decrease from the same period in 2023, despite an inflationary environment. Moving to our robust capital position, our PMIRS sufficiency was 167%, or $2.1 billion above requirements. During the quarter, we continued to execute against our CRT strategy entering into two quota share reinsurance agreements. Additionally, in January, we executed two forward excess of loss reinsurance transactions covering our 2025 and 2026 book years. We did these transactions at an attractive cost of capital and favorable terms. We remain committed to prudent risk management and capital optimization while also supporting our ability to serve our customers. Our capital position and cash flow have enabled us to effectively pursue our capital allocation priorities, which are to support existing policyholders by maintaining a strong balance sheet, invest in our business to drive organic growth and efficiencies, fund attractive new business opportunities to diversify our platform, and return excess capital to shareholders. In the past, we've spoken about our desire to extend our platform into compelling adjacencies that leverage our capabilities across mortgage, housing, and credit. To that end, we are pleased with Anakri's continued performance. Anakri has maintained strong underwriting standards while generating attractive risk-adjusted returns. Anakri continues to participate in GSE single and multifamily deals that we find attractive, and we are excited to build upon this momentum. and ACREEM remains a long-term growth opportunity that is both capital and expense efficient. Finally, in the fourth quarter, we again delivered on our commitment to return capital to our shareholders by returning over $102 million through share buybacks and our quarterly dividend. Since our IPO, we have returned over $1.1 billion to shareholders. We also remain committed to our capital allocation priorities, including returning capital to shareholders and expect to continue our share buyback and dividend programs while remaining flexible in our approach based on market conditions and subject to the approval of our board of directors. Shifting to the current policy environment, with every new administration, there is always discussion regarding new efforts on GSC reform. As I've stated in the past, we have support for our franchise and products on both sides of the aisle, and our industry puts private capital ahead of taxpayer dollars. We look forward to working with the new administration to support people responsibly achieving the dream of homeownership. In closing, we are grateful to our dedicated teams for their relentless focus on executing against our strategic priorities. Our strong 2024 results underscored the effectiveness of our approach and our commitment to creating long-term value for our customers and shareholders. With that, I will now turn the call over to Dean.