Genworth Financial, Inc. 2026 Q2 Earnings Call

Please proceed. Thank you, and good morning.

Welcome to Genworth's second 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 Jerome Upton, interim President and Chief Executive Officer and Chief Financial Officer. Following our prepared remarks, we will open the call for questions. In addition to Jerome, Jamala Arland, President and CEO of our Closed Block Insurance business, Greg Karawan, General Counsel, Kelly Saltzgaber, Chief Investment Officer, Samir Shah, CEO of CareScout, and Angela Simmons, CFO of our Closed Block Insurance business, will also be available to take your questions. Together, the leadership team on today's call brings deep institutional knowledge, with an average tenure at Genworth of nearly 20 years.

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, reference to statutory results are estimates due to the timing of the statutory filings. Now I'll turn the call over to Jerome.

Thank you, Christine, and good morning, everyone. Thank you for taking the time to join our second quarter earnings call. Before turning to our results, I want to acknowledge Tom's leave of absence for medical reasons, which we announced last month. On behalf of the board and our leadership team, we continue to wish Tom well and appreciate the support that has been shown over the last several weeks. We understand that you may have additional questions, but we ask that you withhold them for now. We will share any material developments, including any timelines, as and when appropriate. I have been serving as interim President and CEO since that announcement, while continuing in my role as Chief Financial Officer. Genworth has a deep and experienced leadership team that has been actively engaged with Tom and our board in the development of our strategy.

The board remains confident in our strategic direction and the ability of our leadership team to execute against our objectives. I am grateful for the support of our board and leadership team, as well as all of our colleagues in Genworth, as we focus on advancing our existing strategy and delivering for our policyholders and shareholders. I will now share a brief overview of our second quarter results. Enact once again generated strong shareholder value. We advanced our long-term growth strategy through CareScout, and we further strengthened the self-sustainability of our closed block. Genworth reported net income of $47 million, or $0.12 per share, with adjusted operating income excluding the closed block of $112 million, or $0.29 per share. Our results this quarter were led by continued strong performance from Enact with adjusted operating income of $143 million.

Turning to slide five, I will highlight our progress against each of Genworth's three strategic priorities during the second quarter. First, we continued to create shareholder value through Enact's growing book value and capital returns. Our approximate 81% ownership stake in Enact remains a key source of cash flows to Genworth and helps fuel our disciplined approach to capital allocation. Our balanced capital allocation strategy includes returning capital to shareholders through share repurchases while also investing in our long-term growth opportunities through CareScout. This approach enables us to drive near-term shareholder value while still positioning the company for sustainable long-term growth. During the second quarter, we received $103 million in capital returns from Enact. Supported by these strong cash flows, we continued to execute on our share repurchase program.

Since the initial authorization of our buyback program in May of 2022, we have bought back approximately $922 million worth of shares at an average price of $6.48 per share through July 31st. We believe these repurchases have created meaningful long-term value for shareholders while allowing us to continue investing in CareScout, which brings me to our next strategic priority. Turning to slide six, we continue to derive 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. We are building a comprehensive aging care platform designed to help people understand, find, and fund the quality long-term care they need. We will do this in three ways. First, by providing access to a suite of integrated solutions across the aging journey.

Second, through expert guidance informed by our data and decades of claims experience. 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. We are integrating these capabilities across the platform to deliver a seamless experience and build a scalable business for long-term growth. Beginning with CareScout Services on slide seven, we continue to expand the CareScout network at an impressive pace. In the first quarter, we added our first senior living communities to the network, marking an important step in broadening access beyond home care and expanding options available to consumers in the marketplace.

As of the end of the second quarter, the network now includes more than 1,100 home care locations, and we continue to integrate senior living communities, targeting at least 2,000 in the network by the end of this year. Across major markets, the network now includes local advisors, aging care experts who help guide families in their search for high-quality senior living communities. Once engaged, they provide personalized guidance, helping families navigate what can be a complex and important decision. So far this year, we've doubled the number of local advisors with representation in 26 states as of the end of the quarter. Together with our nationwide network of nurses, these local advisors provide families with access to both expert guidance and clinical expertise.

As a reminder, our revenue model for senior living communities differs from our home care model, with CareScout earning a one-time placement fee upon a successful move-in, consistent with how the broader industry operates. This complements our existing home care preferred pricing model and contributes to a more diversified and scalable stream of revenue. We facilitated approximately 1,450 matches between care seekers and providers in the second quarter, bringing total matches for the first half of the year to approximately 2,950, over double the number of matches achieved in the first half of 2025. Beyond the end of the quarter, matches have been strong and well ahead of matches in the prior year. We've also made strong progress expanding CareScout's match footprint beyond our existing policyholder base, bolstered by senior living matches.

As the network continues to scale and brand awareness grows, we expect to drive increased traction across the platform. We also expect a higher share of Genworth's policyholders to utilize network providers and benefit from more efficient care coordination by our team, helping to stretch their benefit dollars further while also generating claim savings for our closed block over time. We are continuing to expand our offerings to employers and select affinity groups. This represents an opportunity to introduce more consumers to the CareScout brand, broaden access to our services, and generate additional fee-based revenues over time. Turning to CareScout Insurance on slide eight, we are pleased with the progress we have made toward launching our Care Assurance worksite product, a version of our inaugural standalone long-term care product that will be available through employers.

The worksite product is approved and ready for a third quarter launch in at least 34 states, expanding Care Assurance into an important new distribution channel. We also continue to make progress seeking approvals in additional states. The worksite insurance offering combines long-term care cost protection with immediate access to CareScout's ecosystem of aging care, helping policyholders and their families confidently navigate care needs through care planning, care navigation, caregiver support, and the CareScout Quality Network. This combination is differentiated in the marketplace as it helps customers prepare for their own future care needs while providing immediate resources that can support parents or other family members navigating care decisions today. As with our standalone Care Assurance product, the worksite offering is priced and structured for the long term. We remain focused on disciplined growth, appropriate risk management, and delivering a strong customer value proposition while driving returns for our shareholders.

Our third strategic priority is actively managing our self-sustaining, customer-centric, closed block of LTC, life, and annuity products. This business is being managed with a focus on ensuring long-term sustainability, maintaining capital discipline, and delivering supportive policyholder experiences. Our Multi-Year Rate Action Plan, or MYRAP, remains our most effective lever for maintaining that sustainability. In the second quarter, we secured $46 million of gross incremental premium approvals, compared with $41 million in the prior year. We also received an additional $27 million of approvals in July. We continue to work with regulators to finalize pending rate increase requests, but the timing of approvals can be difficult to predict. We expect full year 2026 premium approvals and benefit reductions to be broadly in line with 2025 levels, contributing approximately $1 billion of value on a net present value basis.