GNW Genworth Financial Inc

Executed $35M in share repurchases in the quarter; $384M in total executed through February 13, 2024, at an average price of $5.33 per share with approximately 443M shares outstanding

Significant progress on Long-Term Care Insurance (LTC) multi-year rate action plan (MYRAP), reducing the estimated remaining amount left to achieve by $1.5B to approximately $5B

Achieved $127M of gross incremental premium approved in fourth quarter in the MYRAP, $28B net present value achieved from in-force rate actions (IFAs) since 2012

Net loss¹ of $212M, or $0.47 per diluted share, and adjusted operating loss^1,2 of $230M, or $0.51 per diluted share

Received $128M in capital returns from Enact

Completed annual assumption updates with unfavorable impacts in life insurance and LTC of $227M, or $0.50 per diluted share

U.S. life insurance companies’ statutory pre-tax income³ of $148M⁴ and RBC⁵ ratio of 303%⁴

Genworth holding company cash and liquid assets of $350M at year-end

All references reflect amounts available to Genworth’s common stockholders.

This is a financial measure that is not calculated based on U.S. Generally Accepted Accounting Principles (GAAP). See the Use of Non-GAAP Measures section of this press release for additional information.

Net gain from operations before dividends to policyholders, refunds to members and federal income taxes for Genworth Life Insurance Company (GLIC), Genworth Life and Annuity Insurance Company (GLAIC) and Genworth Life Insurance Company of New York (GLICNY), and before realized capital gains or (losses).

Company estimate for the fourth quarter of 2023 due to timing of the preparation of the filing(s).

Risk-based capital ratio based on company action level for GLIC consolidated.

(Amounts in millions, except per share data)

Net income (loss)¹

Earnings (loss) per diluted share¹

Adjusted operating income (loss)^1,2

Adjusted operating income (loss) per diluted share^1,2

Weighted-average diluted shares⁶

Net loss and adjusted operating loss reflect losses in LTC and Life and Annuities, which include annual assumption updates, partially offset by Enact’s strong operating performance

Net investment gains, net of taxes, increased net income by $30 million in the current quarter, compared with net investment losses that decreased net income by $4 million in the prior year. The investment gains in the current quarter were driven primarily by mark-to-market adjustments on limited partnership and equity securities, as well as derivatives gains, partially offset by net trading losses

Net investment income was $810 million in the quarter, up from $787 million in the prior year as higher income from limited partnerships and investment yields were partially offset by lower average invested assets

Under applicable accounting guidance, companies in a loss position are required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share. Therefore, as a result of the company’s loss from continuing operations available to Genworth Financial, Inc.’s common stockholders for the three months ended December 31, 2023, the company was required to use basic weighted-average common shares outstanding in the calculation of diluted loss per share as the inclusion of shares for performance stock units, restricted stock units and other equity-based awards of 6.3 million would have been antidilutive to the calculation. If the company had not incurred a loss from continuing operations available to Genworth Financial, Inc.’s common stockholders for the three months ended December 31, 2023, dilutive potential weighted-average common shares outstanding would have been 455.7 million.

(Dollar amounts in millions)

Adjusted operating income⁷

Primary new insurance written

Loss ratio

Equity⁸

Current quarter results reflect a favorable pre-tax reserve release of $53 million, primarily from cure performance on delinquencies from 2022 and earlier, including delinquencies related to the coronavirus pandemic (COVID). The prior quarter and prior year included favorable net pre-tax reserve releases of $55 million and $42 million, respectively

Net investment income was $57 million in the current quarter, up from $45 million in the prior year from higher yields and higher average invested assets

Primary insurance in-force increased six percent versus the prior year to $263 billion, driven by new insurance written (NIW) and continued elevated persistency

Primary NIW was down 31 percent versus the prior year and 27 percent versus the prior quarter primarily due to a smaller estimated private mortgage insurance market as both refinancing and purchase originations were impacted by elevated mortgage rates

New delinquencies increased 14 percent to 11,706 from 10,304 in the prior year, primarily from the aging of large, new books

Capital Metric

PMIERs Sufficiency Ratio^4,9

Enact paid a quarterly dividend of $0.16 per share and a special dividend of $0.71 per share in the current quarter

Estimated sufficiency ratio was 161 percent, $1,887 million above requirements

Reflects Genworth’s ownership excluding noncontrolling interests of $28 million, $31 million and $27 million in the fourth and third quarters of 2023 and fourth quarter of 2022, respectively.

Reflects Genworth’s ownership of equity including accumulated other comprehensive income and excluding noncontrolling interests of $855 million, $822 million and $755 million in the fourth and third quarters of 2023 and fourth quarter of 2022, respectively.

The Private Mortgage Insurer Eligibility Requirements (PMIERs) sufficiency ratio is calculated as available assets divided by required assets as defined within PMIERs.

(Amounts in millions)

Adjusted operating income (loss)

Premiums

Net investment income

Liability remeasurement gains (losses)

Cash flow assumption updates

Actual to expected experience

Premiums related to IFAs of $255 million pre-tax, up $10 million versus the prior year

Net investment income up versus the prior quarter and prior year, driven primarily by higher limited partnership income

Liability remeasurement loss of $188 million pre-tax; unfavorable after-tax impact of $149 million

Unfavorable impact of $61 million pre-tax from assumption updates, primarily related to updates to healthy life assumptions to better reflect near-term experience, partially offset by a favorable update to disabled life mortality assumptions for expected short-term trends. Updates also included assumptions for future IFA approvals and benefit reductions based on recent favorable experience and reflection of the Choice II legal settlement, which had a muted income statement impact in the current quarter because it primarily impacted profitable uncapped cohorts

Unfavorable actual experience versus best estimate liability assumptions of $127 million pre-tax, or $0.22 after-tax per diluted share, primarily on unprofitable capped cohorts driven by higher claims and unfavorable legal settlement timing impacts

Liability remeasurement gain of $255 million pre-tax in the prior year included favorable assumption updates of $303 million pre-tax, largely related to the PCS I and II legal settlement, which primarily impacted capped cohorts

(Amounts in millions)

Life Insurance

Fixed Annuities

Variable Annuities

Total Life and Annuities

Life insurance results included an unfavorable $179 million after-tax impact for the annual assumption updates in the current quarter, primarily from persistency assumptions related to certain universal life (UL) products with secondary guarantees and mortality assumptions for term UL, UL and term products, including more modest mortality improvement and expected short-term trends post-COVID

Mortality experience was unfavorable in the current quarter compared to the prior quarter and prior year

Deferred acquisition costs amortization expense was lower than prior year, primarily driven by lower lapses and block runoff

Fixed annuities results included less favorable fixed payout annuity mortality compared to the prior quarter and lower net spreads primarily related to block runoff compared to the prior year

Variable annuities reported higher adjusted operating income from favorable assumption updates, as well as favorable mortality compared to the prior quarter

(Dollar amounts in millions)

Statutory Pre-Tax Income (Loss)⁴

Long-Term Care Insurance

Life Insurance

Fixed Annuities

Variable Annuities

GLIC Consolidated RBC Ratio⁴

Statutory pre-tax income was $148 million in the current quarter, driven by:

LTC continues to benefit from premium increases and benefit reductions from IFAs, including more favorable impacts from reserve releases related to legal settlements compared to the prior quarter, but this benefit was more than offset by higher claims as the block ages

LTC results also included a $87 million increase in cash flow testing reserves in GLICNY, partially offset by a net $29 million pre-tax benefit from assumption updates

Life insurance results included a $99 million pre-tax favorable impact from assumption updates, primarily related to certain UL products with secondary guarantees, as a favorable change in the prescribed reinvestment rate more than offset the unfavorable assumption updates for persistency and mortality

Fixed annuities reflect less favorable mortality as well as lower net spread income from block runoff

Variable annuity reserves include net benefit as equity market and interest rate movements were more favorable than the prior quarter

Genworth’s principal U.S. life insurance companies: GLIC, GLAIC and GLICNY.

Current quarter GLIC consolidated RBC ratio was 303 percent, up from the prior year driven primarily by earnings in annuities, including a net benefit to variable annuities from the impact of equity market and interest rate performance in the year, and the net favorable impact of assumption updates, primarily in life insurance

Cash flow testing margin in GLIC for 2023 was within the $0.5-$1.0 billion range after the completion of assumption updates

The current quarter adjusted operating loss was $25 million, up from $18 million in the prior quarter and $9 million in the prior year, primarily from taxes and expenses related to new growth initiatives with CareScout

(Amounts in millions)

Holding Company Cash and Liquid Assets^11,12

Cash and liquid assets of $350 million remained above the company’s cash target of two-times annual debt service

Cash inflows during the current quarter consisted of $64 million from intercompany tax payments and $128 million from Enact capital returns, which included a $21 million quarterly dividend, a $92 million special dividend and $15 million in share repurchase proceeds

Current quarter cash outflows included $35 million in share repurchases, $21 million related to debt servicing costs and the repurchase of $21 million principal of the company’s 2034 and 2066 debt

In the fourth quarter of 2023, the company repurchased $35 million of its common stock at an average price of $5.90 per share

Subsequently, the company repurchased an additional $25 million of its common stock at an average price of $6.13 per share, approximately 443 million shares were outstanding as of February 13, 2024

Holding company cash and liquid assets comprises assets held in Genworth Holdings, Inc. (the issuer of outstanding public debt) which is a wholly-owned subsidiary of Genworth Financial, Inc.

Genworth Holdings, Inc. held no short-term investments or U.S. government securities as of December 31, 2023, September 30, 2023 and December 31, 2022.

Telephone: 888-208-1820 or 323-794-2110 (outside the U.S.); conference ID # 6245584; or

Webcast: https://investor.genworth.com/news-events/ir-calendar

the inability to successfully launch new lines of business or new products and services, such as those the company is pursuing with CareScout;

the company’s failure to maintain self-sustainability of its long-term care insurance business, including as a result of the inability to achieve desired levels of in-force rate actions and/or the timing of its future premium rate increases and associated benefit reductions taking longer to achieve than originally assumed; other regulatory actions negatively impacting the company’s life insurance businesses and/or the inability to establish new long-term care insurance business;

inaccuracies or changes in estimates, assumptions, methodologies, valuations, projections and/or models, which result in inadequate reserves or other adverse results (including as a result of any changes in connection with quarterly, annual or other reviews);

the impact on holding company liquidity caused by an inability to receive dividends or any other returns of capital from Enact Holdings, and limited sources of capital and financing;

adverse changes to the structure, or requirements of Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) or the U.S. mortgage insurance market; an increase in the number of loans insured through federal government mortgage insurance programs, including those offered by the Federal Housing Administration; the inability of Enact Holdings and/or its U.S. mortgage insurance subsidiaries to continue to meet the requirements mandated by PMIERs (or any adverse changes thereto), inability to meet minimum statutory capital requirements of applicable regulators or the mortgage insurer eligibility requirements of Fannie Mae or Freddie Mac;

changes in economic, market and political conditions including as a result of high inflation, labor shortages, displacements related to COVID and elevated interest rates, including actions taken by the U.S. Federal Reserve to increase interest rates to combat inflation and slow economic growth, which could heighten the risk of a future recession; unanticipated financial events, which could lead to market-wide liquidity problems and other significant market disruption resulting in losses, defaults or credit rating downgrades of other financial institutions; deterioration in economic conditions, a recession or a decline in home prices, all of which could be driven by many potential factors, including political and economic instability or changes in government policies, and fluctuations in international securities markets;

rating downgrades or potential downgrades in liquidity, financial strength and credit ratings; counterparty credit risks; defaults by counterparties to reinsurance arrangements or derivative instruments; defaults or other events impacting the value of invested assets;

changes in tax rates or tax laws, or changes in accounting and reporting standards;

litigation and regulatory investigations or other actions, including commercial and contractual disputes with counterparties;

the inability to retain, attract and motivate qualified employees or senior management;

the occurrence of natural or man-made disasters, including geopolitical tensions and war (including the Russian invasion of Ukraine and the Israel-Hamas conflict), a public health emergency, including pandemics, or climate change;

the inability to effectively manage information technology systems, cyber incidents or other failures, disruptions or security breaches of the company or its third-party vendors such as the MOVEit cybersecurity incident; and

other factors described in the risk factors contained in Item 1A of the company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on February 28, 2023.

Revenues:

Premiums

Net investment income

Net investment gains (losses)

Policy fees and other income

Total revenues

Benefits and expenses:

Benefits and other changes in policy reserves

Liability remeasurement (gains) losses

Changes in fair value of market risk benefits and associated hedges

Interest credited

Acquisition and operating expenses, net of deferrals

Amortization of deferred acquisition costs and intangibles

Interest expense

Total benefits and expenses

Income (loss) from continuing operations before income taxes

Provision (benefit) for income taxes

Income (loss) from continuing operations

Loss from discontinued operations, net of taxes

Net income (loss)

Less: net income from continuing operations attributable to noncontrolling interests

Less: net income from discontinued operations attributable to noncontrolling interests

Net income (loss) available to Genworth Financial, Inc.’s common stockholders

Net income (loss) available to Genworth Financial, Inc.’s common stockholders:

Income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders

Loss from discontinued operations available to Genworth Financial, Inc.’s common stockholders

Net income (loss) available to Genworth Financial, Inc.’s common stockholders

Income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders per share:

Basic

Diluted

Net income (loss) available to Genworth Financial, Inc.’s common stockholders per share:

Basic

Diluted

Weighted-average common shares outstanding:

Basic

Diluted⁶

Net income (loss) available to Genworth Financial, Inc.’s common stockholders

Add: net income from continuing operations attributable to noncontrolling interests

Add: net income from discontinued operations attributable to noncontrolling interests

Net income (loss)

Less: loss from discontinued operations, net of taxes

Income (loss) from continuing operations

Less: net income from continuing operations attributable to noncontrolling interests

Income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders

Adjustments to income (loss) from continuing operations available to Genworth Financial, Inc.’s common stockholders:

Net investment (gains) losses, net¹³

Changes in fair value of market risk benefits attributable to interest rates, equity markets and associated hedges¹⁴

(Gains) losses on early extinguishment of debt

Expenses related to restructuring

Pension plan termination costs

Taxes on adjustments

Adjusted operating income (loss)

Adjusted operating income (loss):

Enact segment

Long-Term Care Insurance segment

Life and Annuities segment:

Life Insurance

Fixed Annuities

Variable Annuities

Total Life and Annuities segment

Corporate and Other

Adjusted operating income (loss)

Net income (loss) available to Genworth Financial, Inc.’s common stockholders per share:

Basic

Diluted

Adjusted operating income (loss) per share:

Basic

Diluted

Weighted-average common shares outstanding:

Basic

Diluted⁶

Net investment (gains) losses were adjusted for the portion attributable to noncontrolling interests of $2 million for the twelve months ended December 31, 2023.

Changes in fair value of market risk benefits and associated hedges were adjusted to exclude changes in reserves, attributed fees and benefit payments of $(1) million and $(8) million for the three months ended December 31, 2023 and 2022, respectively, $(10) million and $(38) million for the twelve months ended December 31, 2023 and 2022, respectively, and $(2) million for the three months ended September 30, 2023.