GENWORTH FINANCIAL 3Q26 EARNINGS CALL - GENWORTH FINANCIAL INC

Explicit Guidance:

• 2026 Full-Year Capital Returns from Enact: Now expect to receive approximately $485 million (down from prior guidance of implied higher levels) based on Enact's full-year expectation of $600 million total returns.
• 2026 Full-Year Share Repurchases: Expect to allocate between $275 million and $300 million, with a potential modest reduction in Enact's share buyback participation in 2027 due to maintaining the ~81% ownership stake.
• 2026 CareScout Services Revenue: Remain on track to achieve a $25 million revenue target for the year.
• 2026 CareScout Services Investment: Expect to invest approximately $55 million in services to support platform expansion and product addition.
• 2026 CareScout Insurance Capital: Do not expect any additional capital investments in 2026 following the $85 million investment made in 2025.
• 2026 Full-Year Premium Approvals/Benefit Reductions: Expect value to be broadly in line with 2025 levels, contributing approximately $1 billion on a net present value (NPV) basis.

Business-Segment Outlook:

• CareScout Services: Match volumes are currently pacing below the previous full-year target of 7,500 matches; however, the company remains confident in the $25M revenue trajectory. Expect a "more diversified and scalable stream of revenue" over time as the network scales.
• CareScout Services Network: Targeting at least 2,000 senior living communities in the CareScout Quality Network by the end of 2026. Home care network coverage is already at 98% of the U.S. population age 65+.
• CareScout Insurance: Care Assurance Worksite was launched in August and is approved in 40 states as of the end of Q3 2026.
• Closed Block (LTC/Life/Annuity):
  • Annual Assumption Review (Q4 2026): Early analysis suggests U.S. GAAP assumption updates could be materially unfavorable in the aggregate, particularly in LTC due to cost of care, inflation, and utilization trends. Changes for uncapped cohorts will primarily impact the net premium ratio rather than immediate P&L.
  • Statutory Cash Flow Testing: Initial assessment indicates General Life Insurance Company (GLIC) margins should remain positive.
  • In-Force Management: As the Multi-Year Rate Action Plan (MIRAP) advances, the relative impact of benefit reductions is expected to increase while premium increases decline due to the shrinking premium runway.
  • Benefit Utilization: New Family Caregiver Benefit (up to 75% of median hourly non-medical care cost) is rolling out state-by-state upon regulatory approval.
• Enact: Strong balance sheet and disciplined underwriting positioned to navigate a dynamic macro environment; expected to secure a new forward quota share reinsurance agreement covering the 2028 book year.

Market and Competitive Outlook:

• Demand Trends: Significant long-term opportunity driven by 70 million baby boomers (ages 62–80) creating growth in demand for aging care.
• Supply/Dynamics: Demand for professional caregivers is outpacing supply, making access to affordable care challenging.
• Competitive Positioning: Building national scale in senior living and home care to broaden quality care options.
• Enact Market Environment: Higher mortgage rates are driving lower new insurance written volume but supporting higher persistency rates.

Macro / Industry Outlook:

• Interest Rates: Increased interest rates have reduced Enact's book value but new money yields continue to exceed sales/maturities yields. GLIC margins remain positive despite rate environment.
• Regulatory/Accounting:
  • Mandatory industry-wide changes in statutory accounting guidance adopted in December 2025 (effective year-end) will have an unfavorable impact on Q4 2026 statutory P&L and RBC ratio, though no impact on GAAP results.
  • New reinsurance structure for universal life products implemented in October to comply with updated guidance while retaining reserve credits.
• Litigation (AXA Santander): The UK Court of Appeals ruled against AXA. An appeal to the U.K. Supreme Court has been filed; no set deadline, with a best estimate for a decision on whether permission is granted of 1–3 months. No recoveries factored into capital allocation.

Strategic Initiatives:

• Share Repurchases: Board authorized a $500 million expansion in September; cumulative repurchases since 2022 exceed $1 billion, reducing share count by ~27% (from 511M to 370M shares as of Oct 31).
• CareScout Expansion: Deepening carrier partnerships and enhancing operational infrastructure to support higher volumes, recurring revenue, and long-term scalability across consumer and B2B channels.
• Leadership Transition: CEO Tom McInerney retiring at year-end; leadership passing to Jerome Upton, Angela Simmons, and the existing management team.

Risks and Headwinds to Outlook:

• Closed Block Assumption Risk: Materially unfavorable GAAP assumption updates anticipated in Q4 2026 driven by lower mortality, higher cost of care, inflation, and utilization trends.
• Cash Flow vs. A&E: While Actuarial Experience variances (A&E) losses are trending above expectations (driven by lower mortality and higher utilization), these do not impact cash flows or economic value.
• Litigation Risk: AXA Santander appeal outcome remains uncertain; potential recoveries are not counted in financial plans.
• Regulatory Risk: Statutory accounting changes impacting Q4 statutory metrics.
• Macro Sensitivity: Continued influence of mortgage rates on Enact's new sales volumes.

Management Tone on the Future:

• Confidence Level: Management expresses "continued confidence" in Genworth's financial position, Enact's performance, and the long-term growth of CareScout.
• Strategic Execution: Tone is positive regarding the execution of the three strategic priorities (Shareholder Value, CareScout Growth, Closed Block Sustainability).
• Transition: Optimistic about the leadership transition, stating the company is entering the "next chapter" in a "stronger place" with a "robust foundation."
• Caveats: Acknowledges that scaling CareScout to break-even will take time and that market conditions may vary full-year share repurchase allocation.

Miscellaneous:

• Liquidity: Holding company ended Q3 with $320 million in cash/liquid assets; $200 million is earmarked for future obligations (including tax losses from reinsurance restructuring).
• Investment Portfolio: Average yields of ~6.5% in life insurance companies; alternatives portfolio targeting ~12% returns.
• Debt: Holding company debt reduced to $747 million; cash interest coverage ratio maintained at approximately 9x.