Q2 2024 Genworth Financial Inc Earnings Call
Please stand by.
Cynthia: to Genworth Financial's 2nd quarter 2024 earnings conference call.
Cynthia: Welcome to Genworth Financial's 2nd Quarter 2024 Earnings Conference Call. My name is Cynthia, and I will be your coordinator today.
Cynthia: Good morning, ladies and gentlemen, and welcome to Genworth Financial's second quarter 2024 earnings conference call. My name is Cynthia, 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.
Cynthia: My name is Cynthia, and I will be your coordinator today. At this time, all participants earn a listenly mode.
Cynthia: 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 Brian Johnson, Senior Vice President of Financial Planning and Analysis. Please go ahead, sir.
Cynthia: We will facilitate a question-and-answer session towards the end of this conference call.
Cynthia: As a reminder, the conference has been 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.
Cynthia: 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.
Brian Johnson: I would now like to turn the presentation over to Brian Johnson, Senior Vice President of Financial Planning and Analysis. Please go ahead, sir.
Cynthia: I would now like to turn the presentation over to Brian Johnson, Senior Vice President of Financial Planning and Analysis. Please go ahead, sir.
Brian Johnson: Thank you and good morning. Welcome to Genworth's second quarter 2024 earnings call. The slide presentation that accompanies this call is available in 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 a question and answer period.
Brian Johnson: Thank you and good morning. Welcome to Genworth's 2nd quarter 2024 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.
Brian Johnson: Thank you and good morning. Welcome to Genworth's second quarter 2024 earnings call. The slide presentation that accompanies this call is available on the investor relations section of the Genworth website, investor.genworth.com.
Speaker Change: Our earnings release and financial supplement can also be found there, and we encourage you to review these materials.
Brian Johnson: Speaking today, we'll 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 a question-and-answer period. In addition to our speakers, Jamala Arland, president and CEO of our U.S. Life insurance businesses, and Kelly Saltskaper, Chief Investment Officer, will 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.
Speaker Change: Speaking today will be Tom McInerney, President and Chief Executive Officer, and Jerome Upton, Chief Financial Officer.
Cynthia: Following our prepared remarks, we will open the call up for a question and answer period. In addition to our speakers, Jamala Arland, President and CEO of our U.S. Life Insurance Businesses, and Kelly Saltscaper, Chief Investment Officer, will be available to take your questions.
Brian Johnson: In addition to our speakers, Jamala Arland, President and CEO of our U.S. Life Insurance Businesses, and Kelly Saltscaper, Chief Investment Officer, will 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 in our most recent annual report on Form 10-K as filed with the SEC.
Speaker Change: During the call this morning, we may make various forward-looking statements.
Brian Johnson: 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, which is 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 financial measures have been reconciled to GAAP where required in accordance with the SEC rules. Also, references to statutory results are estimates due to the timing of the filing of the statutory statements.
Cynthia: Our actual results may differ materially from such statements.
Cynthia: 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.
Cynthia: This morning's discussion also includes non-GAAP financial measures that we believe may be meaningful to investors.
Cynthia: In our investor materials, non-GAAP financial measures have been reconciled to GAAP where required in accordance with the SEC rules.
Brian Johnson: This morning's discussion also includes non-GAAP financial measures that we believe may be meaningful to investors. In our investor materials, non-GAAP financial measures have been reconciled to GAAP where required in accordance with the SEC rules. Also, references to statutory results are estimates due to the timing of the filing of the statutory statement. Now, I'll turn the call over to our President and CEO, Tom McInerney.
Cynthia: Also, references to statutory results are estimates due to the timing of the filing of the statutory statements.
Thomas McInerney: And now, I'll turn the call over to our President and CEO, Tom McInerney. Thank you, Brian. Good morning, everyone, and thank you for joining our second quarter earnings call. Time with continues to make strong progress against our strategic priorities to drive long-term growth and shareholder value. In the second quarter, General's reported net income of 76 million or 17 cents per share and adjusted operating income of 125 million or 28 cents per share. The results were let again by an act which had a very strong quarter with adjusted operating income of 165 million to January. We are very pleased with a max continued strong operating performance, capital levels, and shareholder distributions.
Speaker Change: And now, I'll turn the call over to our President and CEO , Tom McInerney.
Tom Mcinerney: Thank you, Brian. Good morning, everyone, and thank you for joining our second quarter earnings call. Genworth continues to make strong progress against our strategic priorities to drive long-term growth and shareholder value. In the second quarter, Genworth reported net income of $0.76 million, or $0.17 per share, and adjusted operating income of $125 million, or $0.28 per share.
Tom Mcinerney: Thank you, Brian . Good morning, everyone. And thank you for joining our second quarter earnings call. Genworth continues to make strong progress against our strategic priorities to drive long-term growth and shareholder value.
Tom Mcinerney: Results were led again by an act which had a very strong quarter with a just evaporating income of $165 million to Genworth. We are very pleased with EMAC's continued strong operating performance, capital levels, and shareholder distributions. As a result of its continuing momentum, yesterday Enact announced an increase to its expected shareholder return for the full year, which Jerome will cover in more detail later. Since the next IPO, Genworth has received approximately $738 million in capital from Enact, including $63 million in the second quarter.
Speaker Change: Results were led again by an act which had a very strong quarter with adjusted operating income of $165 million to Genworth.
Thomas McInerney: As a result of its continued momentum, yesterday an act announced an increase to expect a shareholder return for the full year, which Jerome will cover in more detail later. Since an ex IPO, Genworth has received approximately $738 million in capital from an act, including $63 million in the second quarter. We are very satisfied with our approximately 81% ownership stake in an act, as it continues to generate significant earnings and cash flows that support our capital allocation priorities of shared repurchases, opportunistic debt production, and growth investments in Care Scout.
Speaker Change: Cincinnati XIPO
Tom Mcinerney: We are very satisfied with our approximately 81% ownership stake in Act as it continues to generate significant earnings and cash flows that support our capital allocation priorities of share repurchases, opportunistic debt reduction, and growth investments in CareScout. Our LTC segment reported an adjusted operating loss of $29 million in the second quarter, driven by a liability remeasurement loss. Meanwhile, Life and Annuis reported an adjusted operating loss of $1 million, driven by losses in life insurance.
Thomas McInerney: Our LTC segment reported an adjusted operating loss of $29 million in the second quarter, driven by a liability remagement loss. Meanwhile, life in the news reported an adjusted operating loss of $1 million, driven by losses in life insurance. Under statutory counting basis, the US life insurance companies had a very strong quarter with three tax income estimated at $171 million, driven primarily by benefits from LTC rate-force actions. Complete statutory results for our US life insurance companies will be available when we file our second quarter statutory statements later this month.
Speaker Change: Our LTC segment reported an adjusted operating loss of $29 million in the second quarter, driven by a liability remeasurement loss. Meanwhile, LIFE and ANUI's reported an adjusted operating loss of $1 million, driven by losses in life insurance.
Tom Mcinerney: On a statutory accounting basis, the U.S. life insurance companies had a very strong quarter, with pre-tax income estimated at $171 million, driven primarily by benefits from the LTC rate force action. Complete statutory results for U.S. life insurance companies will be available when we file our second quarter statutory statements later this month. Jerome will cover our performance by segment in more detail.
Speaker Change: Complete statutory results for our U.S. life insurance companies will be available when we file our second quarter statutory statements later this month. Jerome will cover our performance by segment in more detail.
Thomas McInerney: Jerome will cover our performance by segment in more detail.
Thomas McInerney: As I shared at our annual meeting in May, we refined our strategic priorities to reflect our significant progress today and more clearly articulate our vision for January's future. Our first strategic priority is to maintain our self-sustaining customer centric LTC life and nudity legacy businesses. Our multi-year rate action plan, or my rap, remains critical to this effort as the most effective tool we have to bring our legacy LTC insurance portfolio to break even on a go-forward basis. We had an outstanding quarter under the multi-year rate action plan, achieving a total of 138 million of growth and communal premiums approved, with an average percentage premium increase of 47%.
Tom Mcinerney: As I shared at our annual meeting in May, we refined our strategic priorities to reflect our significant progress to date and more clearly articulate our vision for Genworth's future. Our first strategic priority is to maintain our self-sustaining, customer-centric, LTC life and annuity legacy business. Our multi-year rate action plan, or MIRAP, remains critical to this effort as the most effective tool we have to bring our legacy LTC insurance portfolio to break even on a go-forward basis.
Speaker Change: As I shared at our annual meeting in May, we refined our strategic priorities to reflect our significant progress to date and more clearly articulate our vision for Genworth's future.
Jerome Upton: Our first strategic priority is to maintain our self-sustaining, customer-centric LTC life and annuity legacy businesses.
Jerome Upton: Our Multi-Year Rate Action Plan, or MIRAP, remains critical to this effort as the most effective tool we have to bring our legacy LTC insurance portfolio to break even on a go-forward basis.
Tom Mcinerney: We had an outstanding quarter under the multi-year rate action plan, achieving a total of $138 million of gross and incremental premiums approved, with an average percentage premium increase of 47%. This brings our cumulative progress to an estimated $29.2 billion in approvals on a net present value basis since 2012.
Jerome Upton: We had an outstanding quarter under the Multi-Year Rate Action Plan, achieving a total of $138 million of gross incremental premiums approved, with an average percentage premium increase of 47%.
Thomas McInerney: This brings our cumulative progress to an estimated 29.2 billion and approvals on that present value basis since 2012.
Speaker Change: This brings our cumulative progress to an estimated $29.2 billion in approvals on a net present value basis since 2012.
Thomas McInerney: Our next strategic priority is to drive future growth through CARESCOP with innovative customer focus aging care services and funding solutions. We continue to scale our CARESCOP quality network in the second quarter, extending its availability to more than 40 states as of July 30th. As a reminder, the initial buildout of the CARESCOP quality network includes only home care providers and is only accessible to general LTC policyholders. This approach allows us to establish a presence across the U.S. before adding assisted living facilities and other care types to the network and introducing a direct-to-consumer offering in the future.
Tom Mcinerney: Our next strategic priority is to drive future growth through CareScout with innovative customer-focused aging care services and funding solutions. We continue to scale our Cares Cal Quality Network in the second quarter, extending its availability to more than 40 states as of July 30th. As a reminder, the initial build-out of the CareScout Quality Network includes only home care providers and is only accessible to Genworth LTC policyholders. This approach allows us to establish a presence across the U.S. before adding assisted living facilities and other care types to the network and introducing a direct-to-consumer offering in the future.
Speaker Change: As a reminder, the initial build-out of the CareScale Quality Network includes only home care providers and is only accessible to Genworth LTC policyholders.
Speaker Change: This approach allows us to establish a presence across the U.S. before adding assisted living facilities and other care types to the network and introducing a direct-to-consumer offering in the future.
Thomas McInerney: We previously laid out a 2024 goal of achieving home care coverage for two-thirds of the 865-plus census population in the U.S. I'm pleased to share that, as of the end of July, we have already achieved approximately 70% coverage of that group and now expect to achieve between 80 to 85% coverage by the end of the year. The network currently includes over 300 high-quality person-centered home care providers. Further, more than 90% of these providers have reached hourly rates below the median cost of care and their respective zip codes, along with meeting our quality credentialing standards. One with a strong progress on building the network, we're also encouraged by the network's early adoption by our LTC policyholders.
Tom Mcinerney: We previously laid out a 2024 goal of achieving home care coverage for two-thirds of the age 65 plus census population in the US. I'm pleased to share that as of the end of July, we have already achieved approximately 70% coverage of that group and now expect to achieve between 80 to 85% coverage by the end of the year. The network currently includes over 300 high-quality, person-centered home care providers. Furthermore, more than 90% of these providers have agreed to hourly rates below the median cost of care in their respective zip codes, along with meeting our quality credentialing standards.
Speaker Change: I'm pleased to share that as of the end of July , we have already achieved approximately 70% coverage of that group and now expect to achieve between 80 to 85% coverage by the end of the year.
Tom Mcinerney: Along with the strong progress on building the network, we're also encouraged by the network's early adoption by our LTC policyholders. We have already helped hundreds of new policyholders on claims find quality care with CareScale quality network care providers. We've received positive feedback so far from both providers and policyholders who value the balance of quality, price, and service offered by our one-of-a-kind network. While it will take time, we remain confident in our previously stated goal to drive savings on Genworth LTC claims over time of between $1 billion to $1.5 billion on a net present value basis, further mitigating risk in our legacy LTC block. It is important to remember that we are in the early stages of this business.
Thomas McInerney: We have already helped hundreds of new policyholders enclaim fine quality care with Care Scout quality network care providers. We've received positive feedback so far from both providers and policyholders who value the balance of quality, price, and service offered by our one-of-a-kind network.
Speaker Change: We've received positive feedback so far from both providers and policyholders who value the balance of quality, price, and service offered by our one-of-a-kind network.
Thomas McInerney: While we'll take time, we remain confident in our previously stated goal to drive savings on Genworth LTC claims over time of between 1 billion to 1.5 billion on a net present value basis for the mitigating risk in our legacy LTC block. It is important to remember that we're in the early stages of this business with plans extending offering beyond our policyholders to other LTC insurers' policyholders, employers, and the broad consumer market where we see a substantial opportunity for growth. We will continue to refine the customer experience with valuable input from our policyholders and network providers, and invest thoughtfully as we scale.
Tom Mcinerney: We plan to extend the offering beyond our policyholders to other LTC insurers, policyholders, employers, and the broad consumer market, where we see a substantial opportunity for growth. We will continue to refine the customer experience with valuable input from our policyholders and network providers and invest thoughtfully as we scale. In addition to bringing new aging care services to market, we continue to prepare new long-term care funding solutions for the millions of Americans who are unprepared to meet the cost of care.
Speaker Change: It is important to remember that we are in the early stages of this business with plans to extend the offering beyond our policyholders to other LTC insurance policyholders, employers, and the broad consumer market where we see a substantial opportunity for growth.
Thomas McInerney: In addition to bringing new agent care services to market, we continue to prepare new long-term care fine solutions for the millions of Americans who are unprepared to need the cost of care. As I've shared, we are initially working on an individual product with cap coverage limits and conservative assumptions designed to reduce the need for future LTC premium increases. It will also include access to the CareScout quality network, which provides significant discounts on care costs to help policyholders optimize their claim dollars. We are currently engaging with the Interstate Insurance Product Regulation Commission, known as the Compact, and planning to seek its approval for this product to help us reach scale across the Compact's multiple member states.
Tom Mcinerney: As I've shared, we are initially working on an individual product with cap coverage limits and conservative assumptions designed to reduce the need for future LTC premium increases. It will also include access to the CareScout Quality Network, which provides significant discounts on care costs to help policyholders optimize their claim dollars. We are currently engaging with the Interstate Insurance Product Regulation Commission, known as the COMPAC, and plan to seek its approval for this product to help us reach scale across the COMPAC's multiple member states. We also will pursue product approvals from additional jurisdictions.
Thomas McInerney: We also will pursue product approvals from additional jurisdictions.
Thomas McInerney: There is significant unmet demand for new and improved LTC funding products among consumers, distributors, and regulators. We are excited with our plan to re-enter the market with this product in 2025 and continue innovating on future products to get families more options to plan for the increasing cost of quality care.
Tom Mcinerney: There is significant unmet demand for new and improved LTC funding products among consumers, distributors, and regulators. We are excited with our plan to reenter the market with this product in 2025 and continue innovating on future products to give families more options to plan for the increasing cost of quality care. Our third strategic priority is to reach shareholder value through an ex-growing market value and capital returns. We are very pleased with an ex-total shareholder return of 104% as of July 30th since its IPO in 2021.
Thomas McInerney: Our third strategic priority is to re-achairholder value through an ex-growing market value and capital returns. We are very pleased with an ex total shareholder return of 104% as of July 30th since IPO in 2021. With respect to capital returns in the second quarter, we use cash flows from an act to re-purchase approximately 36 million of shares. In total, we have re-purchased approximately $479 of shares at an average price of $5.47 per share since the program's inception in May 2022. We are also leveraging cash flows to an act to drive long-term growth and continue to expect an investment of approximately 35 million in Care Scout services this year as we scale the Care Scout quality network.
Tom Mcinerney: With respect to capital returns, in the second quarter, we used cash flows from the NAC to repurchase approximately 36 million shares. In total, we have repurchased approximately $470 million of shares at an average price of $5.47 per share since the program's inception in May 2022. We are also leveraging cash flows from ENAC to drive long-term growth and continue to expect an investment of approximately $35 million in CareScout services this year as we scale the CareScout quality network.
Thomas McInerney: Before I wrap up, I wanted to take a moment to remind investors that the trial date and access case against end end there regarding the payment protection insurance in the selling case is still set for March of 2025. As we have said before, Gemworth has not a party to the case for previously owned the payment protection insurance business before selling it to AXA in 2015. If AXA is successful in pursuing its claims, we will share on the recoveries AXA receives from send end there. We continue to monitor the proceedings closely and will update investors of any material development.
Tom Mcinerney: Before I wrap up, I wanted to take a moment to remind investors that the trial date and access case against NMDAIR regarding the payment protection insurance misselling case are still set for March of 2025. As we have said before, Genworth is not a party to the case but previously owned the payment protection insurance business before selling it to AXA in 2015. If AXA is successful in pursuing its claims, we will share in the recoveries AXA receives from Send-and-Tear.
Tom Mcinerney: We continue to monitor the proceedings closely and will update investors on any material developments. In closing, I am very pleased with our continued progress against our strategic priorities here today, along with another strong performance. And with that, I'll turn the call over to Jerome.
Thomas McInerney: Inclusing, I am very pleased with our continued progress against our strategic priorities here today, along with an extra strong performance.
Speaker Change: In closing, I am very pleased with our continued progress against our strategic priorities here today, along with Enact's strong performance.
Jerome Upton: And with that, I'll turn the call over to Jerome. Thank you, Tom. Good morning, everyone.
Jerome Upton: Thank you, Tom, and good morning, everyone. I'm very pleased with the ongoing value creation delivered by ENACT and progress on our LTC and force rate actions, as well as our capital optimization and continued improvement in financial flexibility during the quarter. I'll first discuss Genworth's results and drivers in more detail, and then I'll provide an update on our investment portfolio and holding company liquidity before we open the call for Q&A. Per slide 5, and as Tom mentioned, second quarter adjusted operating income was $125 million, driven primarily by an act.
Speaker Change: And with that, I'll turn the call over to Jerome.
Jerome Upton: I'm very pleased with the ongoing value creation delivered by an act and progress on our LTC Enforce Rate Actions, as well as our capital optimization and continued improvement in financial flexibility in the quarter. I'll first discuss Genworth's results and drivers in more detail. Then I'll provide an update on our investment portfolio and holding company liquidity before we open the call for Q&A. First slide five, and as Tom mentioned, second quarter adjusted operating income was 125 million, driven primarily by an act. Our long-term care insurance segment reported an adjusted operating loss of 29 million, primarily driven by a liability remagimate loss from actual to expected experience, partially offset by favorable variable investment income and net insurance recoveries.
Jerome Upton: Our long-term care insurance segment reported an adjusted operating loss of $29 million, primarily driven by a liability remeasurement loss from actual to expected experience, partially offset by favorable variable investment income and net insurance recovery. The favorable seasonal impact from mortality we observed in the first quarter subsided as anticipated, and we continue to expect LTC gap earnings pressure throughout the remainder of the year due to short-term deviations of actual results compared to long-term assumptions. We also expect a liability remeasurement loss from actual to expected experience for the full year. As we have said before, GAAP results continue to be volatile.
Jerome Upton: The favorable seasonal impact from mortality we observed in the first quarter subsided, as anticipated. And we continue to expect LTC gap earnings pressure throughout the remainder of the year due to short-term deviations of actual results compared to long-term assumptions. We also expect a liability remagimate loss from actual to expected experience for the full year. As we have said before, gap results continue to be volatile. We believe statutory results better represent the underlying economics of the LTC business, including the positive impacts resulting from our enforced rate actions and settlements. The strong results from an act were also partially all set by adjusted operating losses of 1 million in life and annuities and 10 million in corporate another.
Jerome Upton: We believe statutory results better represent the underlying economics of the LTC business, including the positive impacts resulting from our enforced rate actions and settlement. However, the strong results from an act were also partially offset by adjusted operating losses of $1 million in life and annuities and $10 million in corporate and other. Life and annuities included an adjusted operating loss in life insurance of $23 million, improved versus the first quarter driven by favorable mortality, as well as adjusted operating income of $12 million from fixed annuities and $10 million from bearable annuities. The $10 million loss in corporate and other was driven by interest expense on holding company debt and investments for our growth initiatives in CareScout, all set by favorable corporate tax timing.
Jerome Upton: We believe statutory results better represent the underlying economics of the LTC business, including the positive impacts resulting from our enforced rate actions and settlements.
Jerome Upton: Life and annuities included an adjusted operating loss in life insurance of 23 million, improved versus the first quarter, driven by favorable mortality, as well as adjusted operating income of 12 million from fixed annuities and 10 million from variable annuities. The 10 million loss in corporate another was driven by interest expense on holiday company debt and investments for our growth initiatives and care scout, all set by favorable corporate tax timing.
Jerome Upton: Life & Annuities included an adjusted operating loss in life insurance of $23 million, improved versus the first quarter driven by favorable mortality, as well as adjusted operating income of $12 million from fixed annuities and $10 million from bearable annuities.
Speaker Change: The $10 million loss in corporate and other was driven by interest expense on holding company debt and investments for our growth initiatives in CareScout, all set by favorable corporate tax timing.
Jerome Upton: Now, taking a closer look at an act's performance on slide 6, an act delivered a very strong second quarter, including high quality growth in its insured portfolio and strong profitability. An act's adjusted operating income of 165 million to Gen-Worth increased 13% versus the prior year, reflecting favorable losses and net investment income. Primary insurance and force increased 3% year-over-year to 266 billion, driven by new insurance written and continued elevated persistency. As shown on slide 7, an act had a favorable 77 million pre-tax reserve release in the second quarter, which drove a loss ratio of negative 7%.
Jerome Upton: Now, taking a closer look at Enact's performance on slide six, which delivered a very strong second quarter, including high quality growth in its insured portfolio and strong profitability, and Acts Adjusted Operating Income of $165 million to Genworth increased 13% versus the prior year, reflecting favorable losses and net investment income. Primary insurance in force increased 3% year over year to $266 billion, driven by new insurance written and continued elevated persistence. As shown on slide 7, Enact had a favorable $77 million pre-tax reserve release in the second quarter, which drove a loss ratio of negative 7%. The reserve release primarily reflects favorable pure performance from 2023 and prior delinquency. Enact has a strong estimated PMIR sufficiency ratio of 169%, approximately $2.1 billion above PMIR's requirement.
Speaker Change: and Acts Adjusted Operating Income of $165 million to Genworth increased 13% versus the prior year, reflecting favorable losses and net investment income.
Jerome Upton: The reserve release primarily reflects favorable cure performance from 2023 and prior to liquidity. and that has a strong estimated PMIR sufficiency ratio of 169 percent, approximately 2.1 billion above PMIR's requirements. Genworth share of an actual value, including AOCI, has increased to 3.9 billion at the end of the second quarter of 2024, while at the same time an act has delivered significant capital returns to Genworth. The combination of an act's quarterly dividend and its share repurchase program generated a total of 63 million in proceeds to Genworth in the second quarter. As an act announced yesterday, it now expects to return a total of between 300 to 350 million to its shareholders in 2024.
Jerome Upton: Genworth's share of an act's book value, including AOCI, has increased to $3.9 billion at the end of the second quarter of 2024, while at the same time, an act has delivered significant capital returns to Genworth. The combination of an AX quarterly dividend and its share repurchase program generated a total of $63 million in proceeds to Genworth in the second quarter. As ANAC announced yesterday, it now expects to return a total of between $300 million and $350 million to its shareholders in 2024.
Speaker Change: As ANAC announced yesterday, it now expects to return a total of between $300 to $350 million to its shareholders in 2024.
Jerome Upton: Based on our approximately 81 percent ownership position, we now expect to receive between 245 to 285 million from an act for the full year. An act shareholder return program provides additional support to Genworth's capital allocation priorities, which I will cover in more detail later.
Jerome Upton: Based on our approximately 81% ownership position, we now expect to receive between $245 to $285 million from Enact for the full year. An ACT shareholder return program provides additional support to Genworth's capital allocation priorities, which I will cover in more detail later. Turning to long-term care insurance, starting on slide 8, we continue to demonstrate the self-sustainability of the life insurance companies as we stabilize the LTC legacy block and protect our claims-paying ability.
Jerome Upton: Turning to long-term care insurance, starting on slide 8, we continue to demonstrate the self-sustainability of the life insurance companies as we stabilize the LTC legacy block and protect our claims-paying ability. The strong progress on our multi-year rate action plan or MyRap and legal settlements continues to significantly reduce the tail risk on this block. As on the end of the second quarter, we have achieved enforced rate actions estimated at $29.2 billion on a net present value basis and have seen a cumulative policyholder response rate of 55 percent to reduce benefits. Slide 9 shows more details on the filings approved in recent periods, including $138 million in the current quarter.
Jerome Upton: The strong progress on our multi-year rate action plan, or MIRAP, and legal settlements continues to significantly reduce the tail risk on this block. As of the end of the second quarter, we have achieved enforced rate actions estimated at $29.2 billion on a net present value basis and have seen a cumulative policyholder response rate of 55% to reduce benefits. Slide 9 shows more details on the filings approved in recent periods, including $138 million in the current quarter, as well as the positive trend we've seen in policyholder benefit reduction elections. We continue to expect strong approvals for the full year.
Speaker Change: The strong progress on our Multi-Year Rate Action Plan, or MIRAP, and legal settlements continues to significantly reduce the tail risk on this block.
Speaker Change: Slide 9 shows more details on the filings approved in recent periods, including $138 million in the current quarter, as well as the positive trend we've seen in policyholder benefit reduction elections.
Jerome Upton: As well as the positive trend we've seen in policyholder benefit reduction elections, we continue to expect strong approvals for the full year. We submitted 104 million of enforced premium filings in the first half of the year. Though we expect this amount to increase in the second half of the year, we expect the total enforced premium filings submitted this year to be lower than previous years. As in some cases, prior larger approvals or multi-year implementations had delayed the need for additional filings. We are pleased with this progress, and as Tom noted, the demonstrated success with the MyRap, which continues to be our most effective tool in maintaining the self-sustainability of the legacy LTC business.
Jerome Upton: We submitted $104 million in in-force premium filings in the first half of the year. Though we expect this amount to increase in the second half of the year, we expect the total enforced premium filings submitted this year to be lower than previous years, as in some cases, prior large approvals or multi-year implementations have delayed the need for additional filing. We are pleased with this progress and, as Tom noted, the demonstrated success with MIRAP, which continues to be our most effective tool in maintaining the self-sustainability of the legacy LTC business.
Speaker Change: We submitted a hundred and four million of in-force premium filings in the first half of the year.
Speaker Change: Though we expect this amount to increase in the second half of the year, we expect the total enforced premium filings submitted this year to be lower than previous years as, in some cases, prior large approvals or multi-year implementations had delayed the need for additional filings.
Speaker Change: We are pleased with this progress and, as Tom noted, the demonstrated success with the MIRAP, which continues to be our most effective tool in maintaining the self-sustainability of the legacy LTC business.
Jerome Upton: I will add that approximately 33 billion of projected value from the MyRap has and may continue to increase over time, which changes to liability assumptions, but this impact also increases the value of previously approved rate increases and associated benefit reductions. This speaks to the resiliency of our business that has been strengthened through reduction of exposure to more costly benefit features like 5% compound benefit inflation option and unlimited benefits. As shown on slide 10, enforced rate actions and legal settlements drove a 907 million dollar benefit to LTC statutory income on a pre-tax basis in the first half of the year, which is 186 million higher than in the first half of 2023, in which more than all said, the impact of unfavorable experience driving total LTC statutory pre-tax income of 257 million.
Jerome Upton: I will add that approximately $33 billion of projected value from the MIRAP has and may continue to increase over time with changes to liability assumptions, but this impact also increases the value of previously approved rate increases and associated benefit reductions. This speaks to the resiliency of our business that has been strengthened through reduction of exposure to more costly benefit features like 5% compound benefit inflation option and unlimited benefit. As shown on slide 10, enforced rate actions and legal settlements drove a $907 million benefit to LTC statutory income on a pre-tax basis in the first half of the year, which is $186 million higher than in the first half of 2023, which more than offset the impact of unfavorable experience, driving total LTC statutory pre-tax income of $257 million.
Speaker Change: I will add that approximately $33 billion of projected value from the MIRAP has and may continue to increase over time with changes to liability assumptions, but this impact also increases the value of previously approved rate increases and associated benefit reductions.
Speaker Change: As shown on slide 10, enforced rate actions and legal settlements drove a $907 million benefit to LTC statutory income on a pre-tax basis in the first half of the year.
Speaker Change: which is $186 million higher than in the first half of 2023, and which more than offset the impact of unfavorable experience, driving total LTC statutory pre-tax income of $257 million.
Jerome Upton: Slide 11 shows our strong overall pre-tax statutory income for U.S. life insurance companies of 171 million in the second quarter, driven by the favorable impacts of enforce rate actions and legal settlements in LTC, which we expected decline in the second half of the year as the implementation of the third and final legal settlement lines down. The second quarter results also reflect the net unfavorable impact of seasonally lower mortality compared to the prior quarter. Strong statutory earnings drove a consolidated risk-based capital ratio for Genworth Life Insurance Company or GLAC, a 319 percent at the end of June compared to 314 percent at the end of March.
Jerome Upton: Slide 11 shows our strong overall pre-tax statutory income for U.S. life insurance companies of $171 million in the second quarter, driven by the favorable impacts of enforced rate actions and legal settlements in LTC, which we expect to decline in the second half of the year as the implementation of the third and final legal settlement lines draw down. Second quarter results also reflect the net unfavorable impact of seasonally lower mortality compared to the prior quarter.
Speaker Change: Driven by the favorable impacts of enforced raid actions and legal settlements in LTC, which we expect to decline in the second half of the year as the implementation of the third and final legal settlement lines down.
Speaker Change: Second quarter results also reflect the net unfavorable impact of seasonally lower mortality compared to the prior quarter.
Jerome Upton: Strong statutory earnings drove a consolidated risk-based capital ratio for Genworth Life Insurance Company, or GLEC, of 319% at the end of June compared to 314% at the end of March. Glick's consolidated balance sheet remains sound, with capital and surplus of $3.6 billion as of the end of June. Our final statutory results will be available on our investor website with our second quarter filings later this month. As we said before, we manage the U.S. life insurance companies on a stand-alone basis.
Speaker Change: Strong statutory earnings drove a consolidated risk-based capital ratio for Genworth Life Insurance Company, or GLEC, of 319% at the end of June compared to 314% at the end of March.
Jerome Upton: GLIC's consolidated balance sheet remains sound with capital and surplus of 3.6 billion as of the end of June.
Speaker Change: Lick's consolidated balance sheet remains sound with capital and surplus of 3.6 billion as of the end of June.
Jerome Upton: Our final statutory results will be available on our investor website with our second quarter filings later this month. As we said before, we manage the U.S. life insurance companies on a standalone basis. They operate as a closed system, leveraging existing reserves and capital to cover future claims and other obligations. We will not put capital into the legacy life insurance companies and give them the long-tail nature of our LTC insurance policies, with peak claim years at least a decade away. We also do not expect capital returns from these companies.
Speaker Change: Our final statutory results will be available on our investor website with our second quarter filings later this month.
Speaker Change: As we said before, we manage the U.S. life insurance companies on a stand-alone basis. They operate as a closed system, leveraging existing reserves and capital to cover future claims and other obligations.
Jerome Upton: They operate as a closed system, leveraging existing reserves and capital to cover future claims and other obligations. We will not put capital into the legacy life insurance companies, and given the long-tailed nature of our LTC insurance policies, with peak claim years at least a decade away, we also do not expect capital returns from these companies. Moving to our investment portfolio, which is summarized on slide 12, we remain confident in our positioning and believe we have the right strategy given the products in our portfolio and the long duration of our liabilities.
Speaker Change: We will not put capital into the legacy life insurance companies, and given the long-tailed nature of our LTC insurance policies, with peak claim years at least a decade away, we also do not expect capital returns from these companies.
Jerome Upton: Moving to our investment portfolio, which is summarized on slide 12, we remain confident in our positioning and believe we have the right strategy given the products in our portfolio and the long duration of our liabilities. As a reminder, the majority of our assets are an investment-grade fixed maturity that we generally buy and hold to support the U.S. Life insurance company's liabilities with unrealized gains and losses impacting equity through changes and other comprehensive income. Because the liabilities are very long duration, especially for LTC, we have very limited liquidity risk. The portfolio continues to benefit from higher interest rate environment and macroeconomic conditions.
Jerome Upton: As a reminder, the majority of our assets are in investment-grade fixed maturities that we generally buy and hold to support the U.S. life insurance company's liabilities, with unrealized gains and losses impacting equity through changes in other comprehensive income. Because the liabilities are of very long duration, especially for LTC, we have very limited liquidity risk.
Speaker Change: As a reminder, the majority of our assets are in investment-grade fixed maturities that we generally buy and hold to support the U.S. life insurance company's liabilities, with unrealized gains and losses impacting equity through changes in other comprehensive income.
Speaker Change: Because the liabilities are very long duration, especially for LTC, we have very limited liquidity risk.
Jerome Upton: The portfolio continues to benefit from the higher interest rate environment and macroeconomic conditions. New money was invested at approximately 6.20% in the quarter, excluding alternative investments, which have targeted returns of approximately 12%. Our net investment income reflects both solid base portfolio performance and steady returns in our alternative asset program, which is composed mainly of diversified private equity. We remain confident in our commercial real estate exposure, which is approximately 15% of our total portfolio and is concentrated in higher quality investment grade assets. With office exposure, less than 20% of our real estate investment.
Speaker Change: The portfolio continues to benefit from higher interest rate environment and macroeconomic conditions.
Jerome Upton: New money was invested at approximately 6.20% in the quarter, excluding alternative investments, which have targeted returns of approximately 12%. Our net investment income reflects both solid base portfolio performance and steady returns in alternative asset program, which is composed mainly of diversified private equity. We remain confident in our commercial real estate exposure, which is approximately 15% of our total portfolio, and is concentrated in higher quality investment-grade assets, with office exposure less than 20% of our real estate investments.
Speaker Change: Our net investment income reflects both solid base portfolio performance and steady returns in our alternative asset program, which is composed mainly of diversified private equity.
Jerome Upton: Next, turning to the holding company on slide 13, we receive 63 million of capital from an act during the second quarter, which included accelerated returns from its share repurchase program. We ended the quarter with 281 million of cash and liquid assets. Included in our cash and liquid assets, we hold approximately 95 million of advanced cash payments from our subsidiaries for future obligations. Awards. 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.
Jerome Upton: Next, turning to the holding company on slide 13. We received $63 million of capital from an act during the second quarter, which included accelerated returns from its share repurchase program. We ended the quarter with $281 million of cash and liquid assets. Included in our cash and liquid assets, we hold approximately $95 million of advance cash payments from our subsidiaries for future obligations. 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.
Speaker Change: Next, turning to the holding company on slide 13, we received $63 million of capital from NAC during the second quarter, which included accelerated returns from its share repurchase program.
Jerome Upton: Tom reviewed our capital allocation strategy, and I'll reiterate that our top priorities, Sean O'Slide 14, are to invest in long-term growth through Care Scout, return cash to shareholders through our share repurchase program when our share prices are below intrinsic value, and opportunistically pay down debt when attractive to us. We continue to return capital to shareholders via share repurchases in the second quarter, repurchasing 36 million at an average price of $6.29 per share and another 12 million through July 31st. We have 230 million remaining under a current authorization as of the end of July and now expect to allocate between 150 to 170 million to share repurchases in 2024, up from our previous expectations of 125 to 150 million as a result of our improved cash expectations, which include an axe increase capital return.
Jerome Upton: Tom reviewed our capital allocation strategy, and I'll reiterate that our top priorities, shown on slide 14, are to invest in long-term growth through CareScout, return cash to shareholders through our share repurchase program when our share price is below intrinsic value, and opportunistically pay down debt when it is attractive to us. We continue to return capital to shareholders via share repurchases in the second quarter, repurchasing $36 million at an average price of $6.29 per share and another $12 million through July 31st.
Speaker Change: Tom reviewed our capital allocation strategy, and I'll reiterate that our top priorities, shown on slide 14, are to invest in long-term growth through CareScout.
Tom: We continue to return capital to shareholders via share repurchases in the second quarter, repurchasing $36 million at an average price of $6.29 per share and another $12 million through July 31st.
Jerome Upton: We have $230 million remaining under our current authorization as of the end of July and now expect to allocate between $150 to $170 million to share repurchases in 2024, up from our previous expectations of $125 to $150 million, as a result of our improved cash expectations, which include an X increased capital return. Our expected range for the full year may vary depending on our share price and market conditions. And as a reminder, this is lower than the amount we repurchased in 2023, given that we have fully utilized our holding company tax assets.
Speaker Change: We have $230 million remaining under our current authorization as of the end of July and now expect to allocate between $150 to $170 million to share repurchases in 2024.
Speaker Change: up from our previous expectations of $125 to $150 million as a result of our improved cash expectations which include an X increased capital return.
Jerome Upton: Our expected range for the full year may vary depending on our share price and market conditions, and as a reminder, as lower than the amount we repurchased in 2023 given that we have fully utilized our holding company tax assets. Since the initial authorization in May 2022, we have reduced outstanding shares by 15% from approximately 500 million shares to 432 million shares outstanding as of July 31st, 2024. We're very pleased with the value created for shareholders through our share repurchase program. We also repurchased 12 million in principle of long dated subordinated notes in the second quarter for 10 million, reducing our total holding company debt to 838 million.
Jerome Upton: Since the initial authorization in May 2022, we have reduced outstanding shares by 15% from approximately 511 million shares to 432 million shares outstanding as of July 31st, 2024. We're very pleased with the value created for shareholders through our share repurchase program. We also repurchased $12 million in principal of long-dated subordinated notes in the second quarter for $10 million, reducing our total holding company debt to $838 million. We maintain a debt to capital ratio below 25%, attributing no equity value to LTC, LIFE, and annuities.
Speaker Change: Since the initial authorization in May 2022, we have reduced outstanding shares by 15% from approximately 511 million shares to 432 million shares outstanding as of July 31st, 2024.
Speaker Change: We're very pleased with the value created for shareholders through our Share Repurchase Program.
Speaker Change: We also repurchased $12 million in principal of long-dated subordinated notes in the second quarter for $10 million, reducing our total holding company debt to $838 million.
Jerome Upton: We maintained that the capital ratio below 25%, attributing no equity value to LTC, wife, and annuities. We are pleased with our financial flexibility given our liquidity level, sustainable cash flows from an act and manageable that level.
Speaker Change: We maintain a debt to capital ratio below 25%, attributing no equity value to LTC, LIFE, and annuities.
Jerome Upton: We are pleased with our financial flexibility given our liquidity level, sustainable cash flows from operations, and manageable debt level. In closing, we are delivering on our strategic priorities while proactively managing our liabilities and risks. The Multi-Year Rate Action Plan and the additional benefit from the three LTC legal settlements are further stabilizing the legacy LTC block. Enact is a key driver of shareholder value as evidenced by its strong earnings, increasing book value, and increased capital returns.
Speaker Change: We are pleased with our financial flexibility given our liquidity level, sustainable cash flows from an act, and manageable debt level.
Jerome Upton: In closing, we are delivering on our strategic priorities while proactively managing our liabilities and risk. The multi-year rate action plan and the additional benefit from the three LTC legal settlements are further stabilizing the legacy LTC block. An act is a key driver of shareholder value, as evidenced by its strong earnings, increasing book value, and increased capital returns. Looking ahead, 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 opportunistically repurchasing holding company debt.
Speaker Change: In closing, we are delivering on our strategic priorities while proactively managing our liabilities and risk.
Speaker Change: The Multi-Year Rate Action Plan and the additional benefit from the three LTC legal settlements are further stabilizing the legacy LTC block.
Speaker Change: An act is a key driver of shareholder value as evidenced by its strong earnings, increasing book value, and increased capital returns.
Jerome Upton: Looking ahead, we will continue to focus on delivering sustainable long-term growth through Annette and CareScout while returning meaningful value to shareholders through share repurchases and opportunistically repurchasing holding company debt. Now, let's open up the line for questions. Ladies and gentlemen, we will now begin.
Speaker Change: Looking ahead, we will continue to focus on delivering sustainable long-term growth through Enact and CareScout, while returning meaningful value to shareholders through share repurchases and opportunistically repurchasing holding company debt.
Cynthia: 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, or headsets. Press star 1 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 2 to be removed. from the queue. Please press star 1 now. We'll pause for a moment to assemble the queue. Again, if you would like to ask a question at this time, please press star 1. That's Star 1 for questions.
Speaker Change: Now, let's open up the line for questions.
Operator: 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, or headsets.
Speaker Change: 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, or headsets.
Operator: 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 1 now. We'll pause for a moment to assemble the queue. Again, if you would like to ask a question at this time, please press star 1. That's star one for questions. It appears that there are no questions at this time. Ladies and gentlemen, I will now turn the call back over to Mr. McInerney for closing comments.
Speaker Change: Press star 1 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 2 to be removed from the queue.
Speaker Change: Please press star 1 now. We'll pause for a moment to assemble the queue.
Speaker Change: Again, if you would like to ask a question at this time, please press star one.
Cynthia: It appears that there are no questions at this time.
Tom Mcinerney: You know, in closing, I'd like to emphasize four key takeaways for the second quarter. First, it was a solid quarter for earnings, led again by an act. We had excellent MIRAP results, $138 million for the quarter, and a total net present value benefit to Genworth of $29.2 billion since we started the multi-year rate action plan in 2020-2012. We also made strong progress in CareScout, particularly building the CareScout quality network. You know, our full year 2024 target was to have 65 percent of the U.S. population of 60-plus year olds covered by the end of the year.
Thomas McInerney: Ladies and gentlemen, I will now turn the call back over to Mr. McInerney for closing comments. Thank you very much, Cynthia. Thanks to everybody on the call today.
Speaker Change: It appears that there are no questions at this time. Ladies and gentlemen, I will now turn the call back over to Mr. McInerney for closing comments.
Tom Mcinerney: We're now at 70 percent, and we expect to be at 85 percent by the end of the year. So, with effective national coverage by the end of the year, we look to then provide high-quality care. CareScout Quality Network as a percentage of the cost savings delivered by the CQN. And finally, we had significant free cash flow again generated by Enact. They announced that they're increasing their capital return for the year and gave a range.
Thomas McInerney: In closing, I'd like to emphasize four key takeaways for the second quarter. First, it was the solid quarter for earnings, led again by an act. We had excellent, my rap results, 138 million for the quarter, and a total net present value benefit to Genworth of 29.2 billion since we started the multi-year rate action plan in 2022. We had strong progress in Care Scout, particularly building the Care Scout quality network. In our full year 2024 target, was to have 65% of the US population for 60 plus year olds covered by the end of the year. We're now at 70%, and we expect to be at 85% by the end of the year.
Mr. Mcinerney: Thank you very much, Cynthia, and thanks for everybody on the call today.
Tom Mcinerney: And again, a significant amount of that capital will, free cash flow will ultimately return to shareholders with a balance used to reduce debt and invest in the CareScout businesses. Thank you for your interest and support of Genworth and for attending the call. And with that, I'll turn the call back over to Cynthia.
Mr. Mcinerney: You know, in closing, I'd like to emphasize four key takeaways for the second quarter. You know, first, it was a solid quarter for earnings, led again by an act.
Speaker Change: We had excellent MIRAP results, $138 million for the quarter, and a total net present value benefit to Genworth of $29.2 billion since we started the multi-year rate action plan in 2020-2012. We had strong progress in CareScout.
Speaker Change: Particularly building the Karaskog Quality Network, you know, our full year 2024 target was to have 65%.
Speaker Change: of the U.S. population for 60-plus-year-olds covered by the end of the year. We're now at 70 percent, and we expect to be at 85 percent by the end of the year. So with effective national coverage by the end of the year, you know, we look to then provide high-quality care.
Thomas McInerney: With effective national coverage by the end of the year, we looked to then provide high quality care at significant reduced costs for Americans. Again, we have three target groups to focus on to bring the CQN network. First, Genworth policyholders, then other policyholders of other insurers, and then ultimately consumers. So we expect good revenue growth going forward, starting really in 2025 and beyond. And the revenue growth will come from at least from the Care Scout Quality Network as a percentage of the cost savings delivered by the CQN. And finally, we had significant free cash flow again generated by an act.
Speaker Change: at a significant reduced cost for Americans.
Speaker Change: We have three target groups to focus on to bring the CQN network. First, Genworth policyholders.
Speaker Change: Policyholders of other insurers and ultimately consumers So we expect good revenue growth going forward starting really in 2025 and beyond and the revenue growth will come from at least from the Kariska Quality Network
Speaker Change: as a percentage of the cost savings delivered by the CQM.
Speaker Change: And finally, we had significant free cash flow again, generated by an act.
Thomas McInerney: They announced that they're increasing their capital return for the year, gave a range. And again, a significant amount of that capital will free cash flow will ultimately return to shareholders, with a balance used to reduce that and invest in the care scout businesses.
Speaker Change: They announced that they're increasing their capital return for the year, gave a range.
Thomas McInerney: Thank you for your interest and support for Genworth in attending the call.
Cynthia: And with that, I'll turn the call back over to Cynthia.
Cynthia: Ladies and gentlemen, this concludes Genworth Financial's second quarter conference call. Thank you for your participation. At this time, the call will end.
Cynthia: Ladies and gentlemen, this concludes Genworth Financial's second quarter conference call. Thank you for your participation. At this time, the call will end.
Speaker Change: Ladies and gentlemen, this concludes Genworth Financial's second quarter conference call. Thank you for your participation. At this time, the call will end.
Brian Johnson: Brian Johnson, Sarah Crews, Genworth Financial Inc Brian Johnson, Sarah Crews, Genworth Financial Inc