Genworth Financial Inc

Good morning, ladies and gentlemen, and welcome to Genworth Financial's second quarter 2025 earnings conference call. My name is Taryn, and I will be your coordinator today. At this time, all participants are in a listen-only mode. We will facilitate a question and answer session towards the end of this conference call. As a reminder, the conference is being recorded for replay purposes. Also, we ask that 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 presentation over to Christine Jewell, Head of Investor Relations. Please go ahead.

Thank you, and good morning. Welcome to Genworth's second 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 Arlen, President and CEO of our U.S. Life Insurance business, Greg Carawan, General Counsel, 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, and thank you to everyone on the line for taking the time to join Genworth's second quarter earnings call. Genworth had a solid second quarter as we continue to advance our long-term strategic priorities. Genworth reported net income of $51 million in the quarter, adjusted operating income was $68 million, or 16 cents per share, driven in large part by another strong quarter from the NAP, which contributed $141 million to our adjusted operating income. Total estimated pre-tax statutory income for U.S. life insurance companies was $81 million, driven primarily by the net favorable impacts to annuities from equity market and interest rate movement in the quarter. Jerome will discuss this and other financial results in more detail later in the call. Our liquidity position remains strong as we enter the quarter with cash and liquid assets of $248 million. During the quarter, we continue to execute and drive progress against our three strategic priorities. First, NAC remains a key source of cash flow and continues to generate strong value for general shareholders as its market value increases. As you may have seen, An act announced yesterday that it now expects to return approximately $400 million of capital to shareholders this year, underscoring its continued operational strength and robust financial performance. Since an ex-IPO in 2021, our stake in an act has provided Genworth with over $1 billion in capital returns, supporting our ability to buy back shares. Since our current BIDAC program's initial authorization, we have repurchased a total of $630 million worth of shares at an average price of $5.80 as of July 30th. Turning to our next strategic priority, we continue to maintain our self-sustaining, customer-centric, LTC life and annuity legacy businesses. We've done this primarily by executing on a multi-year rate action program, or MIRAP, which has proven to be our most effective lever for maintaining self sustainability. We secured 41 million of gross incremental premium approvals in the second quarter with an average premium increase of 36%. This brings us to a cumulative total of approximately 31.6 billion in net present value achieved. As discussed on last quarter's call, we continue to anticipate lower approvals this year compared to 2024 in line with our long-term plans for the program. Our third and final strategic priority is driving long-term growth through CareScout. CareScout is designed to create value for Genworth in three ways, delivering savings to our U.S. life insurance companies, providing new sources of revenue, and growing Genworth's valuation over the long term. On the services side, we expanded our product offerings with the launch of care plans as we work to help people understand and find the long-term care services they need. For about $250, you can initiate a care plan from CareScout.com that begins with a virtual care evaluation conducted by a CareScout licensed nurse. Families then receive a detailed plan that suggests appropriate care strategies and local resources tailored to the individual's physical, cognitive, social, and environmental needs. For the millions of caregivers who may be overwhelmed by the urgency or complexity of their loved one's care needs, a care plan can be a helpful resource in understanding the level and type of care need, along with options to meet those needs. Turning to the CareScout Quality Network, we recently expanded network access to consumers in all 50 states. Anyone searching for home care can now access the network through CareScout.com where you can filter for location and specific care needs to connect with quality providers. Providers cover the cost of the network by paying fees associated with successful care placements. In addition to helping families navigate the aging journey, the new care plans offering and the expansion of the network will contribute to fee-based revenue growth in line with our strategy of diversifying earnings and scaling our capital light services business. We also continue to work with insurance carriers with closed LTC blocks to leverage the network as an enhancement to their customer experience and claims management strategy. We have ongoing pilots with two carriers, and we are engaged in constructive discussions with several others about tapping into the network, potentially making this channel a significant source of future revenues. The network continues to grow, now comprising nearly 650 home care providers approximately 90% of whom have agreed to rates below the median cost of care and their respective zip codes. We also expect to add assisted living communities to the network in the coming months, expanding the care settings available through the network. The network now covers greater than 90% of the age 65 plus census population in the U.S., and continued strong interest among care providers indicates that we have a significant runway ahead of us in growing and sustaining the network. We achieved nearly 1,400 successful matches so far this year between Genworth LTC policyholders and CareScout quality network providers as of the end of the second quarter. We have raised our failure estimate to 2,850 matches. As the network and CareScout brand awareness grow, we predict that a larger portion of Genworth's LTC claimants will choose care options within network providers, helping them maximize each benefit dollar and enabling Genworth to realize an estimated one to one and a half billion in claim savings over time. Shifting to CareScout Insurance, we expect to reenter the market with our inaugural low-risk standalone LTC insurance product later this year. This product offers a compelling customer value proposition as the cost of care continues to rise and will be priced considerably to reduce risk, deliver attractive returns, and help mitigate the need for future rate increases. The new product has already secured approvals in 29 jurisdictions, and we are targeting approvals in 30 to 35 states ahead of our launch. Additionally, we submitted a worksite version of the product to the Interstate Insurance Compact, enabling distribution through employers and association channels. Our initial capital investment in Kerescott Insurance this year represents the majority of the funding we expect to allocate to this business over the next three years, due in part to the delayed timing of the expected funding of Kerescott Insurance and resulting decrease in investment income earned in the entity in 2025 we are modestly increasing our expected 2025 investment from $75 million to $85 million to meet the regulatory requirements to maintain sufficient capital to cover losses by a multiple of five as we establish Kerscott Insurance. Future capital contributions may vary based on sales level and mix in addition to investment performance and operating expenses. Last week, We share that the UK High Court has issued a favorable judgment in the acts of Santander litigation, finding Santander liable for losses resulting from the mis-selling of Payment Protection Insurance. We are pleased with the court's judgment, which validates our longstanding belief that Santander bears responsibility for these legacy liabilities. The court awarded acts of damages, interest, cost, and expenses of approximately 680 million pounds or $911 million using a one pound to a $1.34 exchange rate. While the trial court denied Santander's initial request for permission to appeal, the court's judgment is still subject to Santander seeking permission to appeal from the appellate court. If the judgment is paid in full and any appeals are favorably resolved, Tenants would expect to recover at that time approximately $750 million. These proceeds have not been factored into our capital allocation plans. Once received, we plan to deploy them in line with our stated capital allocation priorities, investing in growth through CareScout, returning cash to shareholders through our buyback program, and opportunistically paying down debt. Before I turn it over to Jerome, I'd like to briefly address recent policy developments affecting the U.S. long-term care landscape, such as the Medicaid changes included in the recently passed tax and budget legislation. Medicaid remains the payer of last resort, as well as the primary payer for long-term care services in the U.S. I believe the rising cost of LTC services for baby boomers, particularly the 95% who lack private LTC insurance coverage, and the pressures on families and Medicaid financial resources will make the discounts provided by CareScout's quality network even more valuable in the future. The number of 80-year-old baby boomers is expected to double by 2045. 90% of seniors today have a strong preference for at-home care, while about 30% of seniors report difficulties with activities of daily living. As detailed in our latest cost of care report, Home care costs have surpassed $77,000 per year on average, and costs have increased significantly in the last few years. As the long-term care funding crisis comes into greater focus, we are encouraged to see momentum in Congress towards identifying innovative, sustainable solutions like the WISH Act by Paris and Doe, co-sponsored by Representatives Tom Suozzi of New York and John Mullinair of Michigan. The WISH Act would establish a public-private framework to provide financial support for individuals requiring long-term care while also encouraging broader access to private insurance products. We believe private market solutions like those offered by Care Scout represent a critical step forward. A combination of modern LTC insurance and services products, improved access to quality care, and practical care navigation can significantly mitigate the growing strain on public programs like Medicaid. In closing, we are very encouraged by the steady progress we've made across January's three strategic priorities and by the financial strength and operational performance we continue to see at ENAC. We remain confident in our ability to execute and sustain this momentum through the remainder of 2025. For that, I'll hand it over to Jerome for more in-depth review of our financial performance.