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, investor.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 Arland, President and CEO of our U.S. Life Insurance business, Kelly Saltzgeber, Chief Investment Officer, and Sameer Shah, CEO of CareScout 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 Genwar'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 Genwar's head of investor relations. Christine has been at Genwar since 2009, most recently serving as senior director of financial planning and analysis for our U.S. 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 Genworth and as Finance Leader of CareScout Services. I'm also pleased to welcome Morris Taylor to Genworth, 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, More so lead our efforts to deliver a technology-enabled and human-centered experience for our customers, an important component of our Care Scout growth strategy. Turning to our first quarter results, Genworth 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 Genworth. The total estimated pre-tax statutory loss for our U.S. life insurance companies was $1 million, driven by losses in life and annuities, which were mostly offset by long-term care insurance. Jerome will discuss the financial results in more detail. Our liquidity remains strong, with Genworth ending the first quarter with cash and liquid assets of $211 million. We continue to execute well against Genworth's three strategic priorities. First, We increased shareholder value through an act's growing market value and consistent capital returns. Since its IPO in 2021, our mortgage insurance subsidiary has returned approximately $980 million to Genworth, 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 stake in the NAP, which helps fuel Genworth's share repurchase program and growth investments in Care Scout. 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 bought 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 MIRAP, with an average percentage increase of 28%. Since the program's inception in 2012, the MIRAP 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 in-force rate approvals this year will be smaller than in 2024, consistent with our long-term MIRAP 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, 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 Genworth policyholders. Our provider network continues to strengthen its coverage and maintain its competitive pricing. Approximately 90% of CareScout quality network or CQM providers have agreed to negotiated 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 Genworth's LTC claim cost. In some instances, the revenue for CareScout and Genworth'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 $1 to $1.5 billion in claims savings to Genworth over time. We are also executing on 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 CQM. The expected demand for these new innovative CareScout LTC products underscores the market need for responsible, scalable solutions to help Americans afford 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 Suozzi of New York and John Moulinere 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 Santander 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. Genworth has 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, Gemworth and our subsidiaries are not directly impacted by tariffs. However, if the ultimate outcome of the global tariff negotiations significantly impacts the U.S. 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 U.S. 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. It 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 aging 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 80-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 costs of caring for their parents. Offerings like the CareScout Quality Network can help Americans stretch every dollar they spend on care delivering both meaningful impact to our families and sustained value for Genwer. In closing, we are very pleased with our continued progress on Genwer'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.