Release Date: May 01, 2025

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 $54 million for the first quarter of 2025, indicating profitability.
• The company's liquidity remains strong, ending the first quarter with $211 million in cash and liquid assets.
• Genworth Financial Inc (NYSE:GNW) continues to execute its share repurchase program, buying back $55 million worth of shares year-to-date through April.
• The CareScout Quality Network has expanded significantly, now including nearly 550 high-quality home care providers nationwide.
• Genworth Financial Inc (NYSE:GNW) is making progress on its new lower-risk individual CareScout insurance product, with product approval from the Insurance Compact covering 23 states.

Negative Points

• The US life insurance companies reported a pre-tax statutory loss of $1 million, driven by losses in life and annuities.
• The long-term care insurance segment reported an adjusted operating loss of $30 million due to lower limited partnership income and a decline in premiums.
• Life and annuities reported an adjusted operating loss of $33 million, impacted by seasonally high mortality rates.
• The macroeconomic environment presents substantial volatility and uncertainty, which could impact Genworth Financial Inc (NYSE:GNW)'s businesses.
• The litigation between ASA and Genworth Financial Inc (NYSE:GNW) remains unresolved, with potential financial implications depending on the outcome.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Signs with SNDL.

Q: Can you clarify the agreement with AXA regarding the litigation? It seems like Genworth is covering up to 80 million pounds of losses if they occur, but will receive a greater amount of proceeds if they win. Is that correct? A: Yes, that's correct. AXA is claiming damages of approximately 700 million pounds. To align interests, Genworth agreed to cover up to 80 million pounds of AXA's losses to ensure both parties aim for the maximum recovery. This ensures AXA is incentivized to pursue the highest settlement possible. - Tom McInerney, CEO

Q: Regarding CareScout, will further capital contributions be needed beyond this year for the insurance business, or is it just a startup contribution? A: The initial capital of $75 million is required to cover early statutory expenses and regulatory requirements. Over the next 5-6 years, additional capital may be needed, but it will be significantly less, around $20 to $25 million over time. The capital needs will depend on growth and reinsurance arrangements. - Tom McInerney, CEO

Q: What is the expected timeline for the CareScout Quality Network to reach break-even profitability? A: While the network is still in its early stages, the momentum is strong with significant savings projected for Genworth. The network is expected to save $1 to $1.5 billion in claim costs over time. As we onboard more clients and expand offerings, we anticipate reaching break-even through savings and new revenue streams. - Samir Shah, CEO of CareScout Services

Q: How might the WISH Act provide tailwinds for CareScout's offerings? A: The WISH Act proposes a public-private framework for long-term care, which aligns with CareScout's capped coverage products. It could reduce future Medicaid pressure and provide a funded solution for catastrophic coverage. However, the challenge remains in securing bipartisan support for funding such initiatives. - Tom McInerney, CEO

Q: What are the financial expectations for Enact in 2025? A: Enact is expected to continue returning similar levels of capital to shareholders as in 2024, supported by strong business fundamentals and a solid balance sheet. The company announced a 14% increase in its quarterly dividend and a new $350 million share repurchase authorization. - Jerome Upton, CFO

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