Genworth Financial Inc

Good morning, ladies and gentlemen. Welcome to Genworth Financial's First Quarter 2025 Earnings Conference Call. My name is Danielle, and I'll be your coordinator today. At this time, all participants are in listen-only mode. We will facilitate a question and answer session towards the end of the conference call. As a reminder, the conference is being recorded for replay purposes. Also, we ask you refrain from using cell phones, speaker phones, or headsets during the Q&A portion of today's call. I would now like to turn the conference over to Christine Jewell, Head of Investor Relations. Please go ahead.

Thank you, and good morning. Welcome to Genworth's First Quarter 2025 Earnings Call. The slide presentation that accompanies this call is available on the Investor Relations section of the Genworth website, .genworth.com. Our earnings release and financial supplement can also be found there, and we encourage you to review these materials. Speaking today will be Tom McInerney, President and Chief Executive Officer, and Jerome Upton, Chief Financial Officer. Following our prepared remarks, we will open the call up for our question and answer period. In addition to our speakers, Jamala Arlen, President and CEO of our US Life Insurance business, Kelly Saltzgeber, Chief Investment Officer, and Samir Shah, CEO of Care Scout Services, will also be available to take your questions. During the call this morning, we may make various forward-looking statements. Our actual results may differ materially from such statements. We advise you to read the cautionary notes regarding forward-looking statements in our earnings release and related presentation, as well as the risk factors of our most recent annual report on Form 10-K as filed with the SEC. This morning's discussion also includes non-GAAP financial measures that we believe may be meaningful to investors. In our investor materials, non-GAAP measures have been reconciled to GAAP where required in accordance with SEC rules. Also, references to statutory results are estimates due to the timing of the filing of the statutory statements. And now I'll turn the call over to our President and CEO, Tom McInerney.

Thank you, Christine. Good morning, everyone. And thank you for joining Genowar's earnings call for the first quarter. Before I dive into our first quarter performance, I want to give a special welcome to Christine Jewell, who recently took over as Genowar's head of investor relations. Christine has been at Genowar since 2009, most recently serving as senior director of financial planning and analysis for our US life insurance companies. We are excited to have Christine in this new role. I'd like to thank Brian Johnson for serving in this position for the past several quarters. Brian will be focusing on his existing roles as vice president of financial planning and analysis of Genowar and as finance leader of Care Scout Services. I'm also pleased to welcome Morris Taylor to Genowar, who joined us on April 7th as our new senior vice president and chief information officer. With his proven experience executing long-term visions for large technology organizations, Morris will lead our efforts to deliver a technology-enabled and human-centered experience for our customers, an important component of our Care Scout growth strategy. According to our first quarter results, Genowar's reported net income of 54 million or 13 cents per share. First quarter adjusted operating income was 51 million, led by an act, which had another excellent quarter and contributed 137 million in adjusted operating income to Genowar. The total estimated pre-tax statutory loss for our US life insurance companies was 1 million, driven by losses in life and annuities, which were mostly offset by long-term care insurance. We're only going to discuss the financial results in more detail. Our liquidity remains strong with Genowar ending the first quarter with cash and liquid assets of 211 million. We continue to execute well against Genowar's three strategic priorities. First, we increase shareholder value to enact growing market value and consistent capital returns. Since its IPO in 2021, our mortgage insurance subsidiary has returned approximately 980 million to Genowar, serving as a reliable and essential source of free cash flow. An act also yesterday announced a 14% increase to its quarterly dividend and a new 350 million share repurchase authorization. We remain very pleased with our approximately 81% ownership staking in that, which helps fuel Genowar's share repurchase program and growth investments in CareScout. Furthermore, as of April 16th, an act was added to the S&P Small Cap 600 Index, an important milestone that underscores its strong performance and positioning during its early years as a public company. We continued executing on our share repurchase program in the first quarter. Then we fought back 55 million worth of shares year to date through April. And since the program's initial authorization, as we purchased a total of 600 million worth of shares and an average price of 575 per share. Second, we continue to maintain the self sustainability of our customer centric legacy LTC life and annuity businesses. In the first quarter, we achieved 24 million of gross incremental premium approvals through our multi-year rate action program or MyRep with an average percentage increase of 28%. Since the program's inception in 2012, the MyRep has been proven to be the single most effective lever for maintaining self sustainability, generating a total of 31.3 billion in net present value. We anticipate that enforced rate approvals this year will be smaller than in 2024, consistent with our long-term MyRep plans. Turning to our third strategic priority, we are seeing strong growth at CareScout. CareScout has achieved dramatic growth in the number of matches between general policyholders and CareScout quality network providers. During the first quarter of 2025, the number of matches increased to 576 compared to 52 in the first quarter of 2024, a more than a 10X increase year over year, as you'll see on slide six. We expect continued strong growth in the number of matches between CareScout providers and general policyholders. Our provider network continues to strengthen its coverage and maintain its competitive pricing. Approximately 90% of CareScout quality network or CQN providers have agreed to negotiate rates below the local cost of care and up to 20% lower than their standard rates. With home care costs exceeding 5,000 per month, this translates to monthly discounts of approximately 1,000 per month. CareScout receives a fee equal to 25% of the monthly discount, and the remaining 75% of the discount is a reduction to Genoware's LTC claim cost. In some instances, the revenue for CareScout and Genoware's claim savings can be lower than the respective 25% and 75% levels if a policy's maximum benefit amount has been reached. We continue to expand the CareScout quality network. The network now includes nearly 550 high quality, person-centered home care providers nationwide and has grown to a 90% coverage level for the aged 65 plus census population in the United States. This represents three times growth in the network size year over year. We have begun discussions with several national assisted living communities on adding them to the network so we can serve a wider range of care needs. Notably, we're seeing growing interest from providers who initially declined to join the network, a clear signal that the CQN is gaining traction and credibility in the provider marketplace. As network size and awareness grows, we anticipate a greater portion of our LTC claimants will choose credentialed providers from our network for their care, helping them optimize each dollar of benefits and driving an estimated one to one and a half billion in claim savings to gen worth over time. We are also executing our plan to expand network access to other LTC insurance carriers with closed LTC blocks of business, providing a large potential new source of revenue for CareScout services. We've already begun pilot programs with two leading insurers and continue to have productive discussions with several other national carriers about using the network. We made excellent progress towards bringing our new lower risk individual CareScout insurance product to market and recently received product approval from the insurance compact, which includes 23 individual states. In addition to these approvals representing 23 states, we advanced product filings in eight additional jurisdictions. We remain on track to reenter the market in the second half of 2025. Our goal is to obtain approvals from a critical mass of 30 to 35 states before launching the product later this year. We are also in the process of developing a hybrid LTC product, which will combine cash value accumulation using equity index funds with a minimum guaranteed LTC benefit in addition to our holistic suite of long-term care resources, including the CQN. The expected demand for these new innovative CareScout LTC products underscores the market need for responsible scalable solutions to help Americans afford a rising long-term care costs. We are also encouraged by the recent reintroduction of the WISH Act, a bipartisan bill co-sponsored by representatives Tom Swazi of New York and John Mullinare of Michigan. This legislation would establish a public-private framework to provide financial support for individuals requiring long-term care while also strengthening the private market by encouraging broader access to insurance solutions. Generalists will continue to actively engage with policymakers to support constructive proposals, and we are encouraged by the increasing policy momentum aimed at addressing the nation's long-term care financing gap. Next, I want to provide an update on the litigation between AXA and San Dandere that we have previously referenced. The trial for the liability aspect of the case took place in London in March and concluded on April 10th. We're now waiting for the judge to issue a ruling on liability which is expected to occur sometime in mid to late summer. A separate hearing on any damage amounts to be awarded will take place in December. Generalists have always believed AXA has a very strong case on the merits, and our side feels good about how the trial went. However, as we all know, litigation outcomes are impossible to predict and we'll have no further comments on this litigation until the judge makes a liability ruling. During the first quarter, we also took actions to strengthen the alignment of our interests with AXA to seek the highest litigation recovery possible by agreeing to potentially cover up to 80 million pounds of AXA's losses in this matter in installments over the next year and a half, depending on developments in the case. We believe that proceeds resulting from this case will exceed any amounts that we may be required to pay to AXA under this arrangement. Before I conclude, I want to take a moment to discuss the current macroeconomic environment. As many business leaders, Wall Street analysts, economists, and others have said, we face substantial volatility and uncertainty because of the pending tariff negotiations currently taking place across global markets. As a financial services company, gem within our subsidiaries are not directly impacted by tariffs, however, if the ultimate outcome of the global tariff negotiations significantly impacts the US and global economies and equity and fixed income markets, this will have some impact on our businesses. Our 2025 base case assumes a low single digit increase in US GDP, however, we rigorously stress test our operating plans, including under recession scenarios. A moderate recession, if it happens, would have a negative impact on earnings, but it's quite manageable for Genworth. Genworth has a very low level of holding company debt of only 790 million, which provides significant financial flexibility for us, even if we face a more severe recession scenario. Regardless of the short to intermediate term disruption in world markets, demand for agent care products and services is expected to rise significantly as the 70 million baby boomers begin to reach peak long-term care age with the number of -year-old baby boomers expected to double in the next 20 years. This trend will continue, regardless of the broader economic background, along with a growing need for practical funding solutions as younger generations confront the high cost of caring for their parents. Offerings like the Care Scout Quality Network can help Americans stretch every dollar they spend on care, delivering both meaningful impact for families and sustained value for Genworth. In closing, we are very pleased with our continued progress on Genworth's key value drivers, along with another quarter of strong performance from an act. Looking forward, we are well positioned to continue advancing these initiatives throughout the rest of 2025. With that, I'll turn the call over to Jerome for a more detailed discussion of our financial results.

Thank you, Tom, and good morning, everyone. In the first quarter, we continued to build on our solid foundation and financial flexibility and deliver on our strategic priorities. An act once again drove operating performance and continues to operate from a strong capital and liquidity position. We also continued to advance our multi-year rate action plan, made significant progress expanding Care Scout, and returned capital to shareholders through our share repurchase program. I'll start with an overview of our financial performance and drivers, then provide an update on our investment portfolio and holding company liquidity before we open the call for Q&A. As shown on slide seven, first quarter adjusted operating income was 51 million driven by an act. Our long-term care insurance segment reported an adjusted operating loss of 30 million, driven by lower limited partnership income and the anticipated decline in premiums on the impact of benefit reduction elections. This was partially offset by a liability remeasurement gain related to the actual variances from expected experience or A to E, primarily driven by seasonally high mortality. As we said last quarter, since the implementation of LDTI in 2023, we have seen an average quarterly loss from the A to E of about 65 million and continue to expect that we could see losses at this average level throughout 2025. As a reminder, quarterly fluctuations in US gap results do not impact our cash flows, economic value or how we're managing the business. Life and annuities reported an adjusted operating loss of 33 million in the first quarter. This included an adjusted operating loss of 44 million in life insurance, reflecting the unfavorable impacts of seasonally high mortality, partially offset by adjusted operating income of 11 million from annuities. In corporate and other, we reported a $23 million loss for the first quarter. The improvement versus the prior year loss of 38 million was driven by unfavorable tax timing of 15 million in the first quarter of 2024 that reversed by the end of the year and did not recur. Now, taking a closer look at Enact's first quarter performance on slide eight. Enact delivered 137 million in adjusted operating income in line with the prior quarter and up slightly versus the prior year, reflecting ongoing strong business performance and continued reserve releases driven by favorable cure performance. Primary insurance and forest group 2% year over year to 268 billion, supported by new insurance written and continued elevated persistency. As shown on slide nine, Enact's favorable 47 million pre-tax reserve release drove a loss ratio of 12%. Enact's estimated PMIRES sufficiency ratio remains strong at 165% or approximately 2 billion above requirements. Genuine share of Enact's book value, including AOCI, has increased to 4.2 billion at the end of the first quarter, up from 4.1 billion at year end 2024. While at the same time, Enact has delivered significant capital returns to Genworth. Genworth received 76 million in capital returns from Enact in the first quarter. As Enact announced yesterday, it has increased its quarterly dividend by 14% and received board approval for a new share repurchase authorization of 350 million. Genworth will participate in the share repurchase program in order to maintain its overall ownership at approximately 81%. Looking ahead, despite an uncertain macroeconomic backdrop, Enact continues to operate with solid business fundamentals, a strong balance sheet, and is well positioned to navigate through a range of potential market conditions. As a result, Enact continues to expect to return similar levels of capital to its shareholders in 2025 as it did in 2024. Turning to long-term care insurance, starting on slide 10, we are proactively managing LTC risk and maintaining the self-sustainability of the legacy LTC business. We continue to significantly reduce tail risks through our multi-year rate action plan, or MIRAP. As part of this effort, we're offering a suite of options to help policyholders manage premium increases while maintaining meaningful coverage and to enable us to reduce our exposure to certain higher cost benefit features, such as 5% compound inflation options and large lifetime benefit amounts. As of the end of the first quarter, we have achieved approximately 31.3 billion of enforced rate actions on a net present value basis. About 59% of policyholders presented with options have chosen to reduce benefits, helping to lower long-term risk. Notably, the exposure to individual LTC policies with the 5% compound inflation feature has decreased to approximately 36%, down from 57% in 2014. In addition to the MIRAP, we're reducing risk in innovative ways, including through the Care Scout Quality Network and our Live Well, Age Well intervention program, which deliver value for policyholders while also driving claim savings over time. As we said before, we are committed to managing the US life insurance companies as a closed system, leveraging their existing reserves and capital to cover future claims. We will not put capital into the legacy life insurance companies, and given the long-tail nature of our LTC insurance policies with peak claim years still over a decade away, we do not expect capital returns from these companies. Slide 11 shows statutory pre-tax earnings for the US life insurance companies with a loss of one million for the quarter. LTC income of 50 million included a benefit from seasonally high mortality, which typically trends lower through the remainder of the year. Earnings from enforced rate actions of 340 million were down from 462 million in the prior year, as the prior year included a significant benefit from the implementation of the LTC legal settlements, which are now materially complete. Life insurance had a loss of 34 million, driven by seasonally high mortality, and their annuity products reported a loss of 17 million, reflecting the net unfavorable impact of interest rate and equity market movements in the quarter. The Consolidated Risk-Based Capital Ratio for Genworth Life Insurance Company, or GLEC, was an estimated 304% at the end of March, compared to 306% at year-end 2024, reflecting the increase in required capital as we continue to grow our limited partnership portfolio. GLEC's consolidated balance sheet remains sound, with capital in surplus of 3.5 billion as of the end of March. Our final statutory results will be available on our investor website with our first quarter filings later this month. Turning to slide 12, our investment portfolio remains resilient and is conservatively positioned to weather periods of market volatility, and we will continue to invest through the cycle. The majority of our assets are in investment-grade fixed maturities held to support our long-duration liabilities. New investable cash flows in our life insurance companies during the quarter, including alternatives, achieve yields of approximately 7%. Our Alternative Assets program is largely comprised of diversified private equity investments and has targeted returns of approximately 12%. There is potential to experience pressure around short-term performance given current market volatility. However, we are focused on investing for the long-term where we are confident that our track record of robust returns will prevail. We are committed to growing our alternative assets within regulatory limitations as it remains a natural fit with long-tail liabilities. Next, turning to the holding company on slide 13, we received 76 million in capital from an act and ended the quarter with 211 million of cash and liquid assets. Included in our cash and liquid assets, we hold approximately 98 million of advanced cash payments from our subsidiaries for future obligations. This includes a remainder of our plan, 75 million investment of capital in the new Care Scout Insurance Company in 2025 to meet regulatory requirements, as we discussed last quarter. We do not consider this cash when evaluating holding company liquidity for the purpose of capital allocation or calculating the buffer to our debt service target. Our top capital allocation priorities as shown on slide 14 are to invest in long-term growth through Care Scout, return cash to shareholders through our share repurchase program when our share price is below intrinsic value and opportunistically retire debt when attractive to us. We continue to expect to invest approximately 45 to 50 million in Care Scout services in total throughout 2025 as we continue to build out the platform. This investment will go towards adding new products, customers and foundation as we scale the business. Moving to shareholder returns, we repurchase 45 million of shares in the first quarter at an average price of $6.91 per share and another 10 million through the end of April. For the full year 2025, we continue to expect to allocate between 100 to 120 million to share repurchases. This range may vary depending on business performance, market conditions and our share price. We're very pleased with the value created for shareholders through our share repurchase program. Our holding company debt stands at 790 million and we are pleased with our financial flexibility given our liquidity level, sustainable cash flows from an act and manageable debt level. In closing, we are delivering on our strategic priorities while proactively managing our liabilities and risk. As Tom said, we maintain the operational and financial flexibility to whether market volatility and uncertainty in today's macroeconomic environment. The multi-year rate action plan and additional risk mitigation strategies are ensuring the self-sustainability of the legacy LTC block and we will continue to focus on delivering sustainable long-term growth through an act and Care Scout while returning meaningful value to shareholders through share repurchases and opportunistic debt retirement. Now, let's open up the line for questions.

Ladies and gentlemen, we will now begin the Q&A portion of the call. As a reminder, please refrain from using cell phones, speaker phones and headsets. Please press star one to ask a question. If at any time your question has already been answered or you would like to withdraw your question, please press star two to be removed from the queue. Please press star one now. And we'll take our first question from the line of Ryan Krueger with KBW. Please go ahead.

Hey, thanks. Good morning. Tom, I know you said you aren't gonna talk about the litigation, but my question is more around the change in the agreement with AXA. I guess I just wanna make sure I understand it. It sounds like you are agreeing to cover up to 80 million of losses if they occur in the trial, but then you will receive a greater amount of proceeds if they win or can you give any, is that correct? Or if not, can you clarify? Yeah.

So Ryan, thank you very much for the question. And it's a good question. And obviously AXA is a very important case for us because of the potential for significant proceeds. So just to go back and big picture, AXA is claiming damages for approximately 700 million. And depending on what the judge decides in addition to that amount or some lower amount, there are expenses and interest. So in look, because we've reimbursed most AXA for most of that amount to the extent that it goes to trial or there's a settlement which may or may not occur, we weren't perfectly aligned because for AXA around 80 million pounds is what they would have for the recovery. And we obviously have much more than that. So because they would be happy for a much lower ultimate amount, we wanted to, as the trial was going on in March, we wanted to align their interest and our interest so that they have an interest in with us looking to get the most recovery and the highest settlement possible. So our arrangement with them ensures that they have a similar incentive for us to get the maximum amount. And for them to be willing to do that, we had to in effect guarantee the amount that they have coming to them under a result where the bank has to pay something. And we don't know what that amount will be. Again, as I've said in my remarks, we have always thought AXA has a very strong case and the precedent is in most cases, the selling entity, in this case, the bank, were deemed to be or they pay for these mis-selling costs. So just given the size, we wanted to make sure that AXA and Genworth were working together and generally our interests were aligned.

Got it, thank you, that makes sense. And then I had a couple of questions on Care Scout. One was just, I know you're making a capital contribution to the new insurance entity this year to get it going, which I think you've already deducted from your whole co-equity. Would you expect further capital contributions beyond this year to be needed for the insurance business or is it more just a startup contribution?

So Ryan, again, good question. So under the statutory regulatory rules, when you start a new insurance company, Care Scout Insurance, you have to put in an initial amount of capital well beyond what's needed by RBC ratios, et cetera. So they'll, and that's, they want that because, we project out as any startup would do in the insurance space, what the first five years or so will be and break even around five years can be longer or shorter. And so they want you to cover in the early years and you know, for stat and they're focused on statutory accounting that all the selling and commission expenses are expensed early on. So there is a drag on statutory earnings early. And so basically the 75 million would be the amount of capital needed to cover any loss in the early years annual loss by a factor of five times. So I think the 75 million is significant capital. Now, as we sell insurance policies, we will incur those statutory expenses. And obviously we have to have RBC capital supporting that. So if you look out over five or six years, we will have to put in some more amount of capital, but it's not all that significant. The other lever we have is 100% of the liabilities will be reinsured to an A plus rated reinsurer. And so that also dampens the, because we get seating commissions from the reinsurer. So it dampens the use of capital. We do anticipate that will, they'll retrocede back 40%, maybe 50% in the early years. So we are able through how much we take back to control how much additional capital we have to put in. So the way I would look at it, Ryan, is it's a lot going in upfront because you have to cover the adverse scenario test of the regulators. And then going forward, based on our growth and how much we cover versus the reinsurer will determine how much capital we need. So I would say we're hoping we are very successful in growing. And if we do, that will be some capital in the future over time. We think it's quite manageable and certainly not anywhere close to 75 million at one time. I think the additional capital amounts would be more in the 20, 25 million range over time. And we may do that a few times. So that's how it works. So it's capital intensive upfront, because of the regulatory requirements.

Makes sense. And then just one more Care Scout question, this one more on the Care Scout Quality Network. Maybe too early for this, but I just, I guess, kind of wondering if you have like a rough timeframe that you think that that business, not the insurance business, but that business might get to a level that's closer to breakeven profitability.

Right, so I'll let Samir Shah, who's the CEO of that business, talk about the profitability of the business and breakeven. But remember, given we now have 550 providers and we have the 20% discounts, we're projecting for gen worth claim costs in the future that will save one to one and a half billion. So we don't really count that in the breakeven, but I would say for, we've been funding the expenses as we build up that business in the 35, 50 million range. But if you look at, even if the breakeven is a ways out, we've already in effect added value to the company in the one to one and a half billion range because of the projections on how those discounts will lower our claim costs. But I think more important and more interesting, I'm sure to you and other investors is, the growth rate of the business and what our expectations are. So I just asked Samir to comment on that.

Hi, Ryan, thank you for the question. As Tom alluded and as Jerome had said before, given this is a new business, it will require some investments early on and take a couple of years to build out. But the early momentum has been really strong. The network is continuing to build out with great coverage, choice and efficiency with the rate reductions we're able to do. And as we onboard assisted living communities and roll out new products, we think it will make it a more holistic offering for aging consumers all over. The adoption we're seeing from clients beyond Genworth into other insurance companies and the pipeline we're building shows that the value proposition is not only clear, but is necessary to solve what is becoming a bigger problem. And as you know, we've talked about 70 million direct to consumer clients. So the opportunity for us becomes quite significant. In terms of value and impact to Genworth, I think we deliver impact in three different ways. One is the savings and we're on pace for the billion to billion and a half in savings. And I think the savings alone allow Care Scout services to be breakeven. But I think we bring in new revenue as we add new clients, both insurance and direct to consumer clients. And over the long run, we hope to add significant valuation to the company.

Great, thank you. Thanks, Brian.

And once again, if you'd like to ask a question, press star one. We'll take our next question from the line of Brett Osick with KBW. Please go ahead.

Hey, good morning. You guys mentioned the WISH Act in your prepared remarks. Can you just elaborate a little bit more about what kind of tailwinds you think that might provide for the Care Scout offering going forward? Thanks.

Yeah, so thank you, Brett. It's a great question. Our first product, which is a traditional LTC insurance product, but it's fairly capitated. So if you look at the claims, the average claims over the last 40 years, have been in the 250,000 range. Now, the most expensive claim, I think we paid is 3.4 million, a woman who had Alzheimer's and was on claim a long time and is still on claim. So we're, we by offering the maximum in this new policy combined is 250,000. It protects a lot of our tail risk. We learned that because originally we were all selling unlimited benefits with high compound inflation. But if you, so 250,000 is the average of claims over time. But if you have a severe dementia, Alzheimer's type disease and disability, it's gonna be a lot higher. The challenge for the private insurers like Care Scout is if you're gonna cover those very high claims that are dementia related, you've got to charge a lot on all of your policies. So we can keep the cost of this new, this first new product, and we'll have many more products. We're already working on other products. More manageable for more consumers, you know, the average depending on what you buy and your age and medical history, it's probably in the 3,000 to 3,500 range. We think it's very appropriate for the federal or state governments. There's already a plan in Washington state to cover some amount of coverage. But the WISH Act that Tom Swazi introduced and reintroduced with his Republican colleagues, it basically is a catastrophic coverage. So individuals through their savings or private insurance will be responsible for, and it depends on your income. So if you are lower income, you would be required to pay for up to a year. If you're higher income, it could be up to five years. So that's private pay. And so our capitated coverage fits in very well for that. And then anything over that, in his plan, the federal government would pick up the remaining costs. Now the federal government and the states already are the payer of last resort, and most of LTC claims are paid by Medicaid. So I think the thinking that he has is that this will allow a funded solution that will take some of the future pressure off Medicaid. So I think it's a very good fit for us. And we really are designing our product, assuming someday something like the WISH Act passes. The challenge in the current Congress for passage is, I think everybody is very supportive of some coverage for people. And 95% of the 70 million baby boomers don't have private LTC coverage. That's a big challenge. But the challenge is the pay force. And just like we've seen over the last four years, it's very expensive. Average home care claim is now up to I think 75,000 or more. Nursing homes, private room is 127,000, I think. So the challenge is, how do you pay for the catastrophic coverage? And that's, I think, where there's a challenge. There's not a lot of support right now in Congress on a bipartisan basis for significant taxes to pay for it. So I think the challenge will be, ultimately, for Congress to figure that out. They're gonna have to do something as these 70 million baby boomers, you know, they start turning 80 this January. So we're hopeful. In addition to Washington State, I think California, New York, a few other states are looking at state solutions. So I do think ultimately, certainly the private sector, and we're not gonna cover the very high tail risk aspects of LTC going forward. And we do think that's a good place for the public sector. The challenge will be, can you convince Congress and administrations that the pay force, which will be expensive, it's something they wanna do?

Gotcha, all makes sense. Thank you, guys.

It appears that there are no questions at this time. Ladies and gentlemen, I will now turn the conference back over to Mr. McInerney for closing comments.

Thank you very much, Danielle. And I wanna thank everybody, and Ryan and Brett for the great questions. And I wanna thank you all for joining the call and for your ongoing support and interest and investments in January. We're very proud of first quarter results. And that continues to do extremely well. And I assume many of you listened to their earnings call. And so they're in a good place. And I think we're making great progress on our three strategic priorities that Jerome and I outlined. So we're looking forward to significant success and growing Care Scout over time and also look forward to continued good cash flow, strong cash flow from the net. So thank you very much. And Danielle, I'll turn it back over to you to close the call.

Ladies and gentlemen, this concludes Generalist Financial's first quarter conference call. Thank you for your participation. At this time, the call will end.