Genworth Financial Inc

Please stand by. We are about to begin. Good morning, ladies and gentlemen, and welcome to Genworth Financial's first quarter 2026 earnings conference call. My name is Jess, and I will be your coordinator today. At this time, all participants are in a listen-only mode. As a reminder, the conference is being recorded for replay purposes. We will facilitate a question and answer session towards the end of this conference call. I would now like to turn the presentation over to Christine Jewell, head of investor relations. Please proceed.

Thank you and good morning. Welcome to Genworth's first quarter 2026 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 for questions. In addition to our speakers, Jamala Arland, President and CEO of our closed block insurance business, Greg Carawan, General Counsel, Kelly Saltzgeber, Chief Investment Officer, and Samir Shah, CEO of CareScout, will also be available to take your questions. During this morning's call, 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. Today'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. Additionally, references to statutory results are estimates due to the timing of the statutory filings. And now, I'll turn the call over to our President and CEO, Tom McInerney.

Thank you, Christine, and thank you all for taking the time to join our first quarter earnings call this morning. In the first quarter, we continue to execute across our strategic priorities and act once again to generate a strong shareholder value We advanced our long-term growth strategy through CareScout, and we further strengthened the self-sustainability of our closed block. Before turning to our results, I'd like to briefly address an update to how we present and evaluate our core operating earnings. As we've discussed, our closed block of legacy insurance products is separate from our other business lines and self-sustained. And the quarter-to-quarter gap volatility does not reflect the underlying economics or how the business is strategically positioned for the long term. As a result, going forward, we will report January's consolidated adjusted operating income excluding the closed block. We believe this view of our operating performance better aligns with our strategy and capital allocation framework driving current and future shareholder returns through an app and long-term growth opportunities with CareScout. We will continue to report the adjusted operating income for the closed block separately in our disclosures. For the first quarter, Jeff was reported net income of $47 million with adjusted operating income excluding the closed block of $109 million. Our results this quarter were led by continued strong performance from an app with adjusted operating income of $140 million. The holding company ended the quarter with a solid liquidity position, holding $166 million of cash and liquid assets. Turning to our strategic priorities, I'm pleased with our progress as we execute with discipline across the businesses. First, we continue to create shareholder value through NAC's growing market value and capital returns. Our approximately 81% ownership stake in NAC remains a key source of cash flows through Genworth and helps fuel our disciplined approach to capital allocation. This strategy includes returning capital to shareholders through share repurchases while also investing in our long-term growth opportunities through CareScout. This balanced approach enables us to drive near-term value while still positioning the company for sustainable long-term growth. In the first quarter, we received $99 million in total capital returns from an act. Supported by these strong cash flows, we continue to execute on our share repurchase program. Since the initial authorization of our current buyback program, we have bought back a total of 875 million worth of shares at an average price of $6.38 as of April 30th. Turning to our next strategic priority, we continue to drive growth through CareScout. which represents a significant long-term opportunity given the growing demand for aging care, including from 70 million baby boomers now aged 62 to 80 in 2026. We are building a comprehensive aging platform designed to help people understand, find, and fund the quality of long-term care they need all in one place. We do this in three ways. First, comprehensive solutions. providing access to a full suite of services across the aging journey from care planning and guidance to finding providers to funding care. Second, expert guidance, leveraging our data, technology, and decades of claims experience to match individuals with the right care provider options and help them make informed decisions with confidence. And third, technology-enabled human connection, delivering that expertise through trained advisors who provide personalized local support and helping families navigate what is often a complex, fragmented, and emotional process. Under Samir Shah's leadership, we are integrating these capabilities across the platform to deliver a seamless experience and build a capital-wide scalable business for long-term growth. During the first quarter, we continue to expand the CareScout Quality Network, or CQN, at an impressive pace across both home care and senior living communities. In the first quarter, we added our first senior living communities to the network. This development marks another important step in broadening access beyond home care and expanding options available to consumers in the marketplace. As we continue to integrate senior living communities from our acquisition of Senior Leave, we are building a more comprehensive network that can support people across different stages of the aging journey. By the end of 2026, we anticipate having more than 1,000 home care locations and approximately 2,000 senior living communities as part of the CQN. As a reminder, our revenue model for senior living communities differs from our home care model, with Care Scout earning a one-time placement fee upon a successful move-in, consistent with how the broader industry operates. Over time, we expect this to complement our existing home care discount model and contribute to a more diversified, scalable, and substantial stream of revenue in the business. In home care, our network now covers approximately 97% of the U.S. population age 65 and older. We continue to see strong interest for more providers every day as we expand into additional markets and strengthen coverage in geographies with high demand. As the network rose, we remained focused on optimizing coverage and pricing efficiency while ensuring quality, consistency, and long-term scalability. We facilitated approximately 1,500 matches between care seekers and providers in the first quarter, reflecting strong sequential and year-over-year growth. This was driven in part by the expansion beyond home care matches and into senior living communities. The key one figure includes our first direct-to-consumer matches, which we're making in both home care and senior living communities. While quarterly pacing may vary, we are building momentum and remain on track toward our previously discussed target of approximately 7,500 matches in 2026 compared to 3,255 matches in 2025. As our network continues to scale and brand awareness grows, we expect to drive increased traction across the platform. We also expect a higher share of generous policyholders to utilize CQN providers and benefit from more efficient care coordination by our team, helping to stretch their benefit dollars further while generating claim savings for a closed block over time. We also continue to work with other insurance carriers managing closed LTC blocks to leverage the Periscope Quality Network. Integrating other LTC insurance carriers along with select affinity groups represents an important opportunity to introduce more consumers to the CareScout brand, extend our platform beyond Genworth, and generate additional fee-based revenues over time. In parallel, we are scaling our fee-for-service offerings that generate recurring revenue streams and create additional pathways for CareScout's growth. Overall, we continue to expect $25 million of CareScout service revenues in 2026, and we are making steady progress towards that goal. Turning to CareScout insurance, we continue to build out our differentiated product offerings and expand our distribution capabilities. Our new care assurance product is clearly differentiated in the LTC insurance market by giving customers and their families access to a more holistic aging experience through our services business, including access to the Care Scout quality network, wellness support tools, and care planning services. We believe this integrated approach provides a distinct advantage in a market that remains fragmented and very underserved relative to the growing demand for long-term care over time. Looking ahead, we plan to launch our Care Assurance Worksite product later this year. The worksite channel will broaden access through employers and associations. We're also developing additional offerings, including hybrid LTC insurance products with innovative designs that pair a minimum LTC benefit with low-cost fixed income and equity accounts designed for accumulations. Hybrid products offer a broader set of funding solutions designed to meet evolving customer needs and solve critical gaps in retirement income and retirement security in the marketplace. As the U.S. population ages, CareScout will continue to broaden its capabilities with a focus on ensuring families get more easily access to support, guidance, and resources they need to navigate the complexities of aging. Turning to our third priority, we continue to actively manage our self-sustaining, customer-centered, close block of LTC, life, and annuity products. This business is being managed with a focus on delivering high-quality policyholder experiences, maintaining capital discipline, and ensuring long-term sustainability as we position Genworth for growth through Care Scout. Our Multi-Year Rate Action Plan, or MIRAP, remains our most effective lever for maintaining that sustainability. In the first quarter, we secured $5 million of gross incremental premium approvals. We have built on this progress in the second quarter, already achieving another $45 million. As we enter the later stages of the MIREP program, we expect premium approvals to be lower and benefit reductions to be higher because the future premium runway is shortened as general policyholders age, as shown on Appendix Slide 20. That said, we expect full-year 2026 premium approvals and benefit reductions to be broadly in line with 2025 levels, contributing approximately $1 billion of economic value on a net present value basis. Since the program began in 2012, we have achieved approximately $34.5 billion in net present value through a combination of premium increases and benefit reductions. We remain focused on executing this program with discipline to ensure the long-term self-sustainability of the closed block. Next, I'll provide a brief update on the acts of litigation. The appeal hearing is scheduled for July 21st through 23rd. We expect the Court of Appeal to reach a decision within approximately three to six months of that hearing. If the judgment is ultimately upheld and all appeals are favorably resolved, we expect to recover a total sum of approximately $750 million subject to exchange rates at that time. We do not expect to pay taxes on this recovery. As we said previously, any potential recoveries are not factored into our capital allocation plans. If proceeds are received, we will deploy them in line with our existing priorities, investing in Care Scout, returning capital to shareholders, and reducing debt. Before I turn it over to Jerome, I'd like to briefly address the current macroeconomic backdrop. We continue to closely monitor an uncertain and dynamic external environment, including uneven consumer spending and the potential for higher inflation and interest rates. We believe Genworth is well-positioned to navigate a range of market conditions in 2026 and beyond, and that continues to operate from a position of strength supported by disciplined underwriting and a strong capital position, and provides general with strong free cash flow. We continue to integrate new technology and operational capabilities across the organization, enabled by artificial intelligence. We have several AI and agentic initiatives underway with key partners, focused on improving efficiencies and claim management, enhancing the policyholder and customer service experience, and supporting more scalable growth across CareScout. Even as we advance these capabilities, our approach remains grounded on the tech-enabled, human-centered support our policyholders rely on throughout the aging journey. In closing, we're pleased with the progress we've made in the first quarter across our strategic priorities, supported by another quarter of strong performance from an app. As we move towards the midway point of the year, we remain focused on discipline execution and building long-term value for our shareholders. And with that, I'll turn the call over to Jerome.