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Genworth Financial Inc (GNW) Q1 2024 Earnings Call Transcript Highlights: Strong Performance ...

GuruFocus Research
·4-min read

  • Net Income: $139 million

  • Earnings Per Share (EPS): $0.31

  • Adjusted Operating Income: $85 million

  • Enact Adjusted Operating Income: $135 million

  • Dividend Increase: From $0.16 to $0.185 per share

  • Share Repurchase: $250 million expansion

  • Capital from Enact: $61 million in Q1; $675 million since IPO

  • LTC Adjusted Operating Income: $3 million

  • Life and Annuities Adjusted Operating Loss: $15 million

  • Statutory Pre-tax Income: $258 million (US life insurance companies)

  • Incremental Premium Approvals: $41 million, average increase 25%

  • CareScout Network Coverage: Over 30 states, more than 200 providers

  • Share Repurchase Program: $434 million repurchased at average price of $5.42 per share

  • Capital Contributions to CareScout: Expected $35 million this year

Release Date: May 02, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Genworth Financial Inc (NYSE:GNW) reported a net income of $139 million and adjusted operating income of $85 million in the first quarter.

  • Enact, a subsidiary of Genworth Financial Inc (NYSE:GNW), had a strong quarter with adjusted operating income of $135 million and announced a $250 million expansion of its share repurchase program.

  • The LTC segment of Genworth Financial Inc (NYSE:GNW) reported adjusted operating income of $3 million, driven by seasonally higher claim terminations.

  • Genworth Financial Inc (NYSE:GNW) achieved $41 million of gross incremental premium approvals with an average percentage premium increase of 25%.

  • CareScout, part of Genworth Financial Inc (NYSE:GNW), is expanding with the CareScout Quality Network now available in over 30 states, enhancing long-term care options and potentially reducing claim costs.

Negative Points

  • The life and annuities segment of Genworth Financial Inc (NYSE:GNW) reported an adjusted operating loss of $15 million, primarily due to losses in life insurance.

  • Despite positive first-quarter results, Genworth Financial Inc (NYSE:GNW) anticipates LTC earnings pressure throughout the remainder of the year with expected liability remeasurement losses.

  • Genworth Financial Inc (NYSE:GNW) experienced unfavorable tax timing of $15 million in the corporate and other segment, expected to reverse by year-end.

  • The adjusted operating losses in life and annuities were partially offset by losses in corporate and other totaling $38 million.

  • Genworth Financial Inc (NYSE:GNW) faces ongoing volatility in GAAP results, although statutory results are considered more reflective of underlying performance.

Q & A Highlights

Q: Can you provide an overview of Genworth's financial performance in the first quarter of 2024? A: (Thomas McInerney - President and CEO) Genworth reported a net income of $139 million, or $0.31 per share, and an adjusted operating income of $85 million, or $0.19 per share. The results were significantly bolstered by Enact, which contributed an adjusted operating income of $135 million to Genworth.

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Q: How has Enact contributed to Genworth's financial health in this quarter? A: (Thomas McInerney - President and CEO) Enact had a strong quarter with a $250 million expansion of its share repurchase program and an increase in its ordinary dividend. Genworth has benefited from approximately $675 million in capital from Enact since its IPO, including $61 million in the first quarter alone.

Q: What progress has been made in Genworth's strategic priorities, particularly in the LTC insurance business? A: (Thomas McInerney - President and CEO) We've made significant strides in strengthening our legacy LTC insurance business through our multi-year rate action plan (MYRAP), achieving $41 million of gross incremental premium approvals with an average increase of 25% in premiums.

Q: Can you discuss the developments in the CareScout Services and its impact on Genworth's strategy? A: (Thomas McInerney - President and CEO) CareScout Services is expanding, with the CareScout Quality Network now available in over 30 states. This network is expected to drive future growth by providing high-quality care at negotiated rates, which should also help reduce LTC claim costs significantly.

Q: What are the key financial metrics from Enact's performance this quarter? A: (Jerome Upton - EVP and CFO) Enact's adjusted operating income was $135 million, with primary insurance in force growing by 4% year over year to $264 billion. Enact's strong performance continues to support Genworth's financial stability and shareholder value.

Q: How is Genworth managing its investment portfolio in the current economic environment? A: (Jerome Upton - EVP and CFO) Our investment portfolio is predominantly composed of investment-grade fixed maturities, aligning with the long duration of our liabilities. We continue to benefit from the high interest rate environment and maintain a cautious approach towards our commercial real estate exposure.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.