GENWORTH FINANCIAL INC

Previous wording

This report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “will” or words of similar meaning and include, but are not limited to, statements regarding the outlook for our future business and financial performance. Examples of forward-looking statements include statements we make relating to potential dividends or share repurchases; future return of capital by Enact Holdings, Inc. (“Enact Holdings”), including share repurchases, and quarterly and special dividends; the cumulative economic benefit of approved and future rate actions contemplated in our long-term care insurance multi-year in-force rate action plan; future financial performance, including the expectation that adverse quarterly variances between actual and expected experience could persist resulting in future remeasurement losses in our long-term care insurance business; future financial condition of our businesses; liquidity and new lines of business or new products and services, such as those we are pursuing with our CareScout business (“CareScout”); as well as statements we make regarding the potential occurrence of a recession.

Current wording

This report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “will” or words of similar meaning and include, but are not limited to, statements regarding the outlook for our future business and financial performance. Examples of forward-looking statements include statements we make relating to potential dividends or share repurchases; future return of capital by Enact Holdings, Inc. (“Enact Holdings”), including share repurchases, and quarterly and special dividends; the cumulative economic benefit of approved and future rate actions contemplated in our long-term care insurance multi-yearin-force rate action plan; the timing of any future CareScout insurance offering; future financial performance, including the expectation that adverse quarterly variances between actual and expected experience could persist resulting in future remeasurement losses in our long-term care insurance business; future financial condition of our businesses; liquidity and new lines of business or new insurance and other products and services, such as those we are pursuing with our CareScout business (“CareScout”); as well as statements we make regarding the potential occurrence of a recession.

Previous wording

Genworth Financial, through its principal insurance subsidiaries, offers mortgage and long-term care insurance products. Genworth Financial is the parent company of Enact Holdings, a leading provider of private mortgage insurance in the United States through its mortgage insurance subsidiaries. Genworth Financial’s principal U.S. life insurance subsidiaries offer long-term care insurance and also manage in-force blocks of life insurance and annuity products. Genworth Financial also has a start-up business whereby it offers fee-based services, advice, consulting and other aging care products and services through CareScout.

Current wording

Genworth Financial, through its principal insurance subsidiaries, offers mortgage and long-term care insurance products. Genworth Financial is the parent company of Enact Holdings, a leading provider of private mortgage insurance in the United States through its mortgage insurance subsidiaries. Genworth Financial’s principal U.S. life insurance subsidiaries offer long-term care insurance and also managein-force blocks of life insurance and annuity products. Genworth Financial also has astart-up business whereby it offersfee-based services, advice, consulting and other aging care products and services through CareScout.

Previous wording

We report our business results through three segments: Enact; Long-Term Care Insurance; and Life and Annuities. The products in the Life and Annuities segment include traditional and non-traditional life insurance (term, universal and term universal life insurance as well as corporate-owned life insurance and funding agreements), and fixed and variable annuities, none of which are actively marketed or sold.

Current wording

We report our business results through three segments: Enact; Long-Term Care Insurance; and Life and Annuities. The products in the Life and Annuities segment include traditional andnon-traditional life insurance (term, universal and term universal life insurance as well as corporate-owned life insurance and funding agreements), and fixed and variable annuities, none of which are actively marketed or sold.

Previous wording

In addition to our three reportable segments, we also have Corporate and Other, which includes debt financing expenses that are incurred at the Genworth Holdings, Inc. (“Genworth Holdings”) level, unallocated corporate income and expenses, and eliminations of inter-segment transactions. Corporate and Other also includes the results of other businesses that are not individually reportable, such as certain international businesses and CareScout start-up results.

Current wording

In addition to our three reportable segments, we also have Corporate and Other, which includes debt financing expenses that are incurred at the Genworth Holdings, Inc. (“Genworth Holdings”) level, unallocated corporate income and expenses, and eliminations of inter-segment transactions. Corporate and Other also includes the results of other businesses that are not individually reportable, such as CareScout start-up results and certain international businesses.

Previous wording

We continue to create shareholder value through Enact’s growing market value and capital returns. Enact Holdings provided $63 million of capital returns to Genworth Holdings in the second quarter of 2024 and on May 1, 2024, announced a new share repurchase authorization of $250 million. Based on Genworth Financial’s ownership of approximately 81% of Enact Holdings, we expect to receive between $245 million to $285 million in capital returns from Enact Holdings for the full year 2024. The final amount and form of capital returns will ultimately depend on business performance, market conditions and regulatory approvals. We believe capital returns from Enact will continue to benefit our shareholders by funding our strategic initiatives, including new CareScout products and services, as well as share repurchases and opportunistic debt reduction. Since the initial authorization of Genworth Financial’s share repurchase program in May 2022 and through July 2024, we have repurchased $470 million worth of shares of Genworth Financial’s common stock. For additional information on our share repurchase program, see “—Liquidity and Capital Resources.”

Current wording

We continue to create shareholder value through Enact’s growing market value and capital returns. Enact Holdings provided $81 million of capital returns to Genworth Holdings in the third quarter of 2024. Based on Genworth Financial’s ownership of approximately 81% of Enact Holdings, we expect to receive capital returns from Enact Holdings at the higher end of our previously anticipated range of $245 million to $285 million for the full year 2024. The final amount and form of capital returns will ultimately depend on business performance, market conditions and regulatory approvals. We believe capital returns from Enact will continue to benefit our shareholders by funding our strategic initiatives, including new CareScout products and services, as well as share repurchases and opportunistic debt reduction. Since the initial authorization of Genworth Financial’s share repurchase program in May 2022 and through October 2024, we have repurchased $503 million worth of shares of Genworth Financial’s common stock. For additional information on our share repurchase program, see “—Liquidity and Capital Resources.”

Previous wording

We continue to make progress on our strategic priority to maintain self-sustaining, customer-centric legacy U.S. life insurance companies, including our long-term care insurance, life insurance and annuity businesses. Our long-term care insurance multi-year in-force rate action plan continues to be our most effective tool in supporting this strategic priority. We achieved an estimated cumulative economic benefit of approximately $29.2 billion, on a net present value basis, of approved rate actions since 2012 through the second quarter of 2024. As we manage our legacy life insurance subsidiaries on a standalone basis, these entities will continue to rely on their statutory capital, significant reserves, prudent management of the in-force blocks and long-term care insurance in-force rate actions to satisfy policyholder obligations. For additional information regarding our in-force rate actions, see “—Results of Operations and Selected Financial and Operating Performance Measures by Segment” and “—Long-Term Care Insurance segment.”

Current wording

We continue to make progress on our strategic priority to maintain self-sustaining, customer-centric legacy U.S. life insurance companies, including our long-term care insurance, life insurance and annuity businesses. Our long-term care insurance multi-yearin-force rate action plan continues to be our most effective tool in supporting this strategic priority. We achieved an estimated cumulative economic benefit of approximately $30 billion, on a net present value basis, of approved rate actions since 2012 through the third quarter of 2024. As we manage our legacy life insurance subsidiaries on a standalone basis, these entities will continue to rely on their statutory capital, significant reserves, prudent management of thein-force blocks and long-term care insurancein-force rate actions to satisfy policyholder obligations. For additional information regarding ourin-force rate actions, see “—Results of Operations and Selected Financial and Operating Performance Measures by Segment” and “—Long-Term Care Insurance segment.”

Previous wording

We plan to drive future growth through CareScout with innovative, consumer-focused aging care services and funding solutions. During the second quarter of 2024, we continued to expand our network of long-term care providers (“CareScout Quality Network”) to over 40 states and more than 300 high-quality, person-centered home care providers. Substantially all of these providers have agreed to hourly rates below the median cost of care in their respective zip codes (as determined by Genworth’s Cost of Care Survey conducted in 2023), while meeting our quality credentialing standards. We have received positive feedback from both providers and policyholders, and we plan to continue to add these types of providers to the network. While the initial focus has been with our long-term care insurance policyholders, we believe that over time and with national coverage of the CareScout Quality Network, we can expand the scope of our CareScout services business to additional consumer markets. In addition to the benefits to consumers, the discounts available through the network are expected to potentially further mitigate risk in our legacy long-term care insurance block by reducing claims costs. We aim to prudently scale and diversify our CareScout services business and expect to contribute approximately $35 million of capital to our CareScout services business for the full year 2024.

Current wording

We plan to drive future growth through CareScout with innovative, consumer-focused aging care services and funding solutions. Through October 2024, we continued to expand our network of long-term care providers (“CareScout Quality Network”) to 49 states and 422 high-quality, person-centered home care providers who undergo a rigorous credentialing process. Substantially all of these providers have agreed to hourly rates below the median cost of care in their respective zip codes (as determined by Genworth’s Cost of Care Survey conducted in 2023), with many agreeing to 20% discounts off their standard rates. We plan to add assisted living communities in large metropolitan areas in 2025, as well as other types of care providers to the network over time. While our initial focus has been with our long-term care insurance policyholders, we believe that over time and with national coverage of the CareScout Quality Network, we can expand the scope of our CareScout services business to additional consumer markets. In addition to the benefits to consumers, the discounts available through the network are expected to potentially further mitigate risk in our legacy long-term care insurance block by reducing claims costs. We aim to prudently scale and diversify our CareScout services business and expect to contribute approximately $35 million of capital to our CareScout services business for the full year 2024.

Previous wording

We are also working to build the foundation necessary to re-enter the long-term care insurance market through our CareScout insurance business. Initially, we will be seeking regulatory approval on an individual product with capped coverage limits and conservative assumptions designed to reduce the need for future premium increases. The new product would also include access to the CareScout Quality Network, which provides significant discounts on care costs to help policyholders optimize their claim dollars. We plan to continue innovating on future products to give families more options to plan for the increasing costs of care.

Current wording

We are also working to build the foundation necessary tore-enter the long-term care insurance market through our CareScout insurance business. Initially, we are engaging with regulators on an individual product with capped coverage limits and conservative assumptions designed to reduce the need for future premium increases. The new product would also include access to the CareScout Quality Network, which provides significant discounts on care costs to help policyholders optimize their claim dollars. We plan to continue innovating on future products to give families more options to plan for the increasing costs of care.

Previous wording

There were no other changes in the financial strength ratings of our insurance subsidiaries or the credit ratings of Genworth Financial and Genworth Holdings subsequent to February 29, 2024, the date we filed our 2023 Annual Report on Form 10-K. For additional information regarding the financial strength ratings of Genworth Financial’s insurance subsidiaries and the credit ratings of Genworth Financial and Genworth Holdings, including their importance to our business, see “Item 1—Ratings” in our 2023 Annual Report on Form 10-K.

Current wording

There were no other changes in the financial strength ratings of our principal insurance subsidiaries or the credit ratings of Genworth Financial and Genworth Holdings subsequent to February 29, 2024, the date we filed our 2023 Annual Report on Form 10-K. For additional information regarding the financial strength ratings of Genworth Financial’s insurance subsidiaries and the credit ratings of Genworth Financial and Genworth Holdings, including their importance to our business, see “Item 1—Ratings” in our 2023 Annual Report on Form 10-K.

Previous wording

Management uses non-GAAP financial measures entitled “adjusted operating income (loss)” and “adjusted operating income (loss) per share” to evaluate performance and allocate resources. Adjusted operating income (loss) per share is derived from adjusted operating income (loss). We define adjusted operating income (loss) as income (loss) from continuing operations excluding the after-tax effects of income (loss) attributable to noncontrolling interests, net investment gains (losses), changes in fair value of market risk benefits and associated hedges, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, restructuring costs and infrequent or unusual non-operating items. A component of our net investment gains (losses) is the result of estimated future credit losses, the size and timing of which can vary significantly depending on market credit cycles. In addition, the size and timing of other investment gains (losses) can be subject to our discretion and are influenced by market opportunities, as well as asset-liability matching considerations. We exclude net investment gains (losses), changes in fair value of market risk benefits and associated hedges, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, restructuring costs and infrequent or unusual non-operating items from adjusted operating income (loss) because, in our opinion, they are not indicative of overall operating performance.

Current wording

Management usesnon-GAAP financial measures entitled “adjusted operating income (loss)” and “adjusted operating income (loss) per share” to evaluate performance and allocate resources. Adjusted operating income (loss) per share is derived from adjusted operating income (loss). We define adjusted operating income (loss) as income (loss) from continuing operations excluding theafter-tax effects of income (loss) attributable to noncontrolling interests, net investment gains (losses), changes in fair value of market risk benefits and associated hedges, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, restructuring costs and infrequent or unusualnon-operating items. A component of our net investment gains (losses) is the result of estimated future credit losses, the size and timing of which can vary significantly depending on market credit cycles. In addition, the size and timing of other investment gains (losses) can be subject to our discretion and are influenced by market opportunities, as well as asset-liability matching considerations. We exclude net investment gains (losses), changes in fair value of market risk benefits and associated hedges, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, restructuring costs and infrequent or unusualnon-operating items from adjusted operating income (loss) because, in our opinion, they are not indicative of overall operating performance.

Previous wording

Management’s discussion and analysis by segment contains selected operating performance measures including “new insurance written,” “insurance in-force” and “risk in-force,” which are commonly used in the insurance industry as measures of operating performance.

Current wording

Management’s discussion and analysis by segment contains selected operating performance measures including “new insurance written,” “insurancein-force” and “riskin-force,” which are commonly used in the insurance industry as measures of operating performance.

Previous wording

Management regularly monitors and reports new insurance written for our Enact segment as a measure of volume of new business generated in a period. We consider new insurance written to be a measure of our Enact segment’s operating performance because it represents a measure of new sales of mortgage insurance policies during a specified period, rather than a measure of revenues or profitability during that period. Management also regularly monitors and reports insurance in-force and risk in-force for our Enact segment. Insurance in-force is a measure of the aggregate unpaid principal balance as of the respective reporting date for loans insured by our U.S. mortgage insurance subsidiaries. Risk in-force is based on the coverage percentage applied to the estimated current outstanding loan balance. These metrics are presented on a direct basis and exclude reinsurance. We consider insurance in-force and risk in-force to be measures of our Enact segment’s operating performance because they represent measures of the size of its business at a specific date which will generate revenues and profits in a future period, rather than measures of its revenues or profitability during that period.

Current wording

Management regularly monitors and reports new insurance written for our Enact segment as a measure of volume of new business generated in a period. We consider new insurance written to be a measure of our Enact segment’s operating performance because it represents a measure of new sales of mortgage insurance policies during a specified period, rather than a measure of revenues or profitability during that period. Management also regularly monitors and reports insurancein-force and riskin-force for our Enact segment. Insurancein-force is a measure of the aggregate unpaid principal balance as of the respective reporting date for loans insured by our U.S. mortgage insurance subsidiaries. Riskin-force is based on the coverage percentage applied to the estimated current outstanding loan balance. These metrics are presented on a direct basis and exclude reinsurance. We consider insurancein-force and riskin-force to be measures of our Enact segment’s operating performance because they represent measures of the size of its business at a specific date which will generate revenues and profits in a future period, rather than measures of its revenues or profitability during that period.

Previous wording

Management regularly monitors and reports on in-force rate actions, including state filing approvals; impacted in-force premiums; weighted-average percentage rate increases approved; and gross incremental premiums approved in our Long-Term Care Insurance segment. We also estimate the cumulative economic benefit of approved rate actions in our long-term care insurance multi-year in-force rate action plan on a net present value basis, discounted at our investment portfolio yield. This is defined as the net present value of historical and future expected premium increases and benefit reductions based on current assumptions as a result of rate increases approved on individual and group long-term care insurance policies. It also includes the net present value of reserve reductions related to legal settlements less cash payments made to policyholders who elect certain reduced benefit options in connection with the legal settlements, referred to as settlement payments. We monitor these selected operating performance measures for in-force rate actions to track our progress on maintaining the self-sustainability of our legacy life insurance subsidiaries. We consider these in-force rate action metrics to be measures of financial performance and help to enhance the understanding of the operating performance of our Long-Term Care Insurance segment.

Current wording

Management regularly monitors and reports onin-force rate actions, including state filing approvals; impactedin-force premiums; weighted-average percentage rate increases approved; and gross incremental premiums approved in our Long-Term Care Insurance segment. We also estimate the cumulative economic benefit of approved rate actions in our long-term care insurance multi-yearin-force rate action plan on a net present value basis, discounted at our investment portfolio yield. This is defined as the net present value of historical and future expected premium increases and benefit reductions based on current assumptions as a result of rate increases approved on individual and group long-term care insurance policies. It also includes the net present value of reserve reductions related to legal settlements less cash payments made to policyholders who elect certain reduced benefit options in connection with the legal settlements, referred to as settlement payments. We monitor these selected operating performance measures forin-force rate actions to track our progress on maintaining the self-sustainability of our legacy life insurance subsidiaries. We consider thesein-force rate action metrics to be measures of financial performance and help to enhance the understanding of the operating performance of our Long-Term Care Insurance segment.

Previous wording

While the U.S. economy showed positive signs during the second quarter of 2024, it faces continued but lessening uncertainty due to inflationary pressure, the geopolitical environment and lingering macroeconomic concerns. Mortgage origination activity remained relatively slow during the second quarter of 2024 in response to elevated mortgage rates and sustained low housing supply. Over the past few years, housing affordability has deteriorated as elevated mortgage rates and home price appreciation outpaced median family income, according to the National Association of Realtors Housing Affordability Index. National home prices continued to rise into 2024, according to the Federal Housing Finance Agency (“FHFA”) Monthly Purchase-Only House Price Index.

Current wording

While the U.S. economy continued to show positive signs during the third quarter of 2024, it faces lingering uncertainty due to inflationary pressure, the geopolitical environment and macroeconomic concerns. Mortgage origination activity has increased modestly in 2024 but remains relatively slow due to elevated mortgage rates and sustained low housing supply. Over the past few years, housing affordability has deteriorated as elevated mortgage rates and home price appreciation outpaced median family income, according to the National Association of Realtors Housing Affordability Index. National home prices continued to rise in 2024, according to the FHFA Monthly Purchase-Only House Price Index.

Previous wording

The unemployment rate was 4.1% in June 2024, compared to 3.8% in March 2024. As of June 30, 2024, the number of unemployed Americans was approximately 6.8 million, and the number of long term unemployed over 26 weeks was approximately 1.5 million.

Current wording

The unemployment rate remained flat at 4.1% in September 2024 compared to June 2024. As of September 30, 2024, the number of unemployed Americans was approximately 6.8 million, and the number of long term unemployed over 26 weeks was approximately 1.6 million.

Previous wording

Borrowers’ ability to utilize extended forbearance timelines permitted through the Coronavirus Aid Relief and Economic Security Act and the government-sponsored enterprises’ (“GSEs”) coronavirus pandemic (“COVID-19”) servicing-related policies ended in 2023. Borrowers that meet general hardship and program guidelines continue to have access to standard forbearance policies as a loss mitigation option. In addition, in March 2023, the GSEs announced new loss mitigation programs that allow six-month payment deferrals for borrowers facing financial hardship.

Current wording

Borrowers’ ability to utilize extended forbearance timelines permitted through the Coronavirus Aid Relief and Economic Security Act and the GSEs’ coronavirus pandemic(“COVID-19”) servicing-related policies ended in 2023. Borrowers that meet general hardship and program guidelines continue to have access to standard forbearance policies as a loss mitigation option. In addition, in March 2023, the GSEs announced new loss mitigation programs that allowsix-month payment deferrals for borrowers facing financial hardship.

Previous wording

Although it is difficult to predict the future level of reported forbearance and how many of the loans in a forbearance plan that remain current on their monthly mortgage payment will go delinquent, servicer reported forbearances have generally declined. As of June 30, 2024, approximately 1% or 9,931 of Enact’s active primary policies were reported in a forbearance plan, of which approximately 25% were reported as delinquent. Approximately 7% of Enact’s primary new delinquencies in the second quarter of 2024 were subject to a forbearance plan compared to 14% in the second quarter of 2023.

Current wording

Although it is difficult to predict the future level of reported forbearance and how many of the loans in a forbearance plan that remain current on their monthly mortgage payment will go delinquent, servicer reported forbearances have generally declined. As of September 30, 2024, approximately 1% or 9,987 of Enact’s active primary policies were reported in a forbearance plan, of which approximately 28% were reported as delinquent. Approximately 9% of Enact’s primary new delinquencies in the third quarter of 2024 were subject to a forbearance plan compared to 12% in the third quarter of 2023.

Previous wording

On October 24, 2022, the FHFA announced its validation and approval of certain credit score models for use by the GSEs and changed the required number of credit reports provided by lenders from all three nationwide consumer reporting agencies to only two. The validation of the new credit scores requires lenders to deliver both credit scores for each loan sold to the GSEs. In February 2024, the FHFA announced that it is targeting the fourth quarter of 2025 for implementation, which will require system and process updates.

Current wording

On October 24, 2022, the FHFA announced its validation and approval of certain credit score models for anticipated use by the GSEs and proposed changing the required number of credit reports provided by lenders from all three nationwide consumer reporting agencies to only two. The validation of the new credit scores is currently expected to require lenders to deliver both credit scores for each loan sold to the GSEs. In February 2024, the FHFA announced that it is targeting the fourth quarter of 2025 for implementation, which will require system and process updates.

Previous wording

New insurance written of $13.6 billion in the second quarter of 2024 decreased 10% compared to the second quarter of 2023. Changes in new insurance written are primarily impacted by the size of the mortgage insurance market and Enact’s market share. Enact’s primary persistency rate was 83% during the second quarter of 2024 compared to 84% in the second quarter of 2023. Elevated persistency, driven by a large percentage of Enact’s in-force policies with mortgage rates below current rates, continued to offset the decline in new insurance written, leading to an increase in primary insurance in-force of $2.4 billion as compared to March 31, 2024.

Current wording

New insurance written of $13.6 billion in the third quarter of 2024 decreased 6% compared to the third quarter of 2023 primarily driven by Enact’s lower estimated market share. Enact’s primary persistency rate was 83% during the third quarter of 2024 compared to 84% in the third quarter of 2023. Elevated persistency, driven by a large percentage of Enact’sin-force policies with mortgage rates below current rates, continued to offset lower new insurance written, leading to an increase in primary insurancein-force of $1.9 billion as compared to June 30, 2024.

Previous wording

Net earned premiums increased in the second quarter of 2024 compared to the second quarter of 2023 primarily driven by insurance in-force growth, partially offset by higher ceded premiums.

Current wording

Net earned premiums increased in the third quarter of 2024 compared to the third quarter of 2023 primarily driven by insurancein-force growth and higher assumed premiums, mostly consisting of Enact Re Ltd.’s (“Enact Re”) GSE credit risk transfer participation, partially offset by higher ceded premiums.

Previous wording

Enact’s loss ratio for the three months ended June 30, 2024 and 2023 was (7)% and (2)%, respectively. Enact released reserves of $77 million during the second quarter of 2024 primarily related to favorable cure performance on early 2023 and prior delinquencies. As part of the reserve release, Enact also decreased its claim rate assumptions largely as a result of sustained favorable cure performance and lessening uncertainty in the economic environment, impacting both current and prior year delinquencies. Enact recorded a reserve release of $63 million during the second quarter of 2023 primarily related to favorable cure performance on delinquencies from 2021 and earlier, including those related to COVID-19.

Current wording

Enact’s loss ratio for the three months ended September 30, 2024 and 2023 was 5% and 7%, respectively. Enact released reserves of $65 million during the third quarter of 2024 primarily related to favorable cure performance on 2023 and prior delinquencies. Enact recorded a favorable reserve adjustment of $55 million during the third quarter of 2023 primarily related to favorable cure performance on delinquencies from 2022 and earlier, including those related to COVID-19.

Previous wording

New primary delinquencies in the second quarter of 2024 increased compared to the second quarter of 2023 primarily due to the normal loss development pattern of Enact’s portfolio. New primary delinquencies of 10,461 contributed $60 million of loss expense in the second quarter of 2024, while Enact incurred $58 million of losses from 9,205 new primary delinquencies in the second quarter of 2023. In determining the loss expense estimate, considerations were given to recent cure and claim experience and the prevailing and prospective economic conditions.

Current wording

New primary delinquencies in the third quarter of 2024 increased compared to the third quarter of 2023 primarily due to the aging of large, newer books of business. New primary delinquencies of 12,964 contributed $75 million of loss expense in the third quarter of 2024, while Enact incurred $72 million of losses from 11,107 new primary delinquencies in the third quarter of 2023. In determining the loss expense estimate, considerations were given to recent cure and claim experience and the prevailing and prospective economic conditions.

Previous wording

As of June 30, 2024, EMICO’s risk-to-capital ratio under North Carolina law and enforced by the North Carolina Department of Insurance (“NCDOI”), EMICO’s domestic insurance regulator, was approximately 10.8:1, compared with a risk-to-capital ratio of 11.2:1 and 11.6:1 as of March 31, 2024 and December 31, 2023, respectively. EMICO’s risk-to-capital ratio remains below the NCDOI’s maximum risk-to-capital ratio of 25:1. North Carolina’s calculation of risk-to-capital excludes the risk in-force for delinquent loans given the established loss reserves against all delinquencies. EMICO’s ongoing risk-to-capital ratio will depend principally on the magnitude of future losses incurred by EMICO, the effectiveness of ongoing loss mitigation activities, new business volume and profitability, the impact of quota share reinsurance, the amount of policy lapses and the amount of additional capital that is generated or distributed by the business.

Current wording

As of September 30, 2024, EMICO’srisk-to-capital ratio under North Carolina law and enforced by the North Carolina Department of Insurance (“NCDOI”), EMICO’s domestic insurance regulator, was approximately 10.4:1, compared with arisk-to-capital ratio of 10.8:1 and 11.6:1 as of June 30, 2024 and December 31, 2023, respectively. EMICO’srisk-to-capital ratio remains below the NCDOI’s maximum risk-to-capital ratio of 25:1. North Carolina’s calculation ofrisk-to-capital excludes the riskin-force for delinquent loans given the established loss reserves against all delinquencies. EMICO’s ongoing risk-to-capital ratio will depend principally on the magnitude of future losses incurred by EMICO, the effectiveness of ongoing loss mitigation activities, new business volume and profitability, the impact of quota share reinsurance, the amount of policy lapses and the amount of additional capital that is generated or distributed by the business.

Previous wording

Under PMIERs, Enact is subject to operational and financial requirements that private mortgage insurers must meet in order to remain eligible to insure loans that are purchased by the GSEs. As of June 30, 2024, Enact had estimated available assets of $5,024 million against $2,967 million net required assets under PMIERs compared to available assets of $4,853 million against $2,970 million net required assets as of March 31, 2024. The sufficiency ratio as of June 30, 2024 was 169% or $2,057 million above the PMIERs requirements, compared to 163% or $1,883 million above the PMIERs requirements as of March 31, 2024. Enact’s PMIERs required assets as of June 30, 2024 and March 31, 2024 benefited from the application of a 0.30 multiplier applied to the risk-based required asset amount factor for certain non-performing loans as defined under PMIERs. The application of the 0.30 multiplier to all eligible delinquencies provided $31 million and $48 million, respectively, of benefit to Enact’s June 30, 2024 and March 31, 2024 PMIERs required assets. These amounts are gross of any incremental reinsurance benefit from the elimination of the 0.30 multiplier.

Current wording

Under PMIERs, Enact is subject to operational and financial requirements that private mortgage insurers must meet in order to remain eligible to insure loans that are purchased by the GSEs. As of September 30, 2024, Enact had estimated available assets of $5,194 million against $3,004 million net required assets under PMIERs compared to available assets of $5,024 million against $2,967 million net required assets as of June 30, 2024. The sufficiency ratio as of September 30, 2024 was 173% or $2,190 million above the PMIERs requirements, compared to 169% or $2,057 million above the PMIERs requirements as of June 30, 2024. Enact’s third-party reinsurance transactions provided an aggregate of approximately $1,807 million and $1,756 million of PMIERs capital credit as of September 30, 2024 and June 30, 2024, respectively. Enact’s PMIERs required assets as of September 30, 2024 and June 30, 2024 also benefited from the application of a 0.30 multiplier applied to the risk-based required asset amount factor for certainnon-performing loans as defined under PMIERs. The application of the 0.30 multiplier to all eligible delinquencies provided $28 million and $31 million, respectively, of benefit to Enact’s September 30, 2024 and June 30, 2024 PMIERs required assets. These amounts are gross of any incremental reinsurance benefit from the elimination of the 0.30 multiplier. Per guidance released by the GSEs in the third quarter of 2024, use of the multiplier will be discontinued effective March 31, 2025.

Previous wording

In March 2024, EMICO completed a distribution to Enact Holdings that supports its ability to pay a quarterly dividend. Future dividend payments are subject to quarterly review and approval by Enact Holdings’ board of directors and Genworth Financial. In addition to Enact’s quarterly dividend program, Enact Holdings announced approval by its board of directors on August 1, 2023 of a share repurchase program which allowed for the repurchase of up to an additional $100 million of its common stock. On May 1, 2024, Enact Holdings announced a new share repurchase authorization of $250 million. Genworth Holdings has agreed to participate in share repurchases in order to maintain its overall ownership at approximately its current level. As the majority shareholder, Genworth Holdings received $63 million of capital returns from Enact Holdings during the second quarter of 2024 comprised of $24 million of quarterly dividends and $39 million of share repurchases.

Current wording

In March 2024, EMICO completed a distribution to Enact Holdings that supports its ability to pay a quarterly dividend. Future dividend payments are subject to quarterly review and approval by Enact Holdings’ board of directors and Genworth Financial. In addition to Enact’s quarterly dividend program, Enact Holdings announced approval by its board of directors on May 1, 2024 of a share repurchase program which allows for the repurchase of up to $250 million of its common stock. Genworth Holdings has agreed to participate in share repurchases in order to maintain its overall ownership at approximately its current level. As the majority shareholder, Genworth Holdings received $81 million of capital returns from Enact Holdings during the third quarter of 2024 comprised of $23 million of quarterly dividends and $58 million of share repurchases.

Previous wording

Adjusted operating income increased primarily attributable to a higher reserve release and higher net investment income in the current year.

Current wording

Adjusted operating income increased primarily attributable to higher net investment income and premiums, as well as a higher reserve release in the current year.

Previous wording

Provision for income taxes. The effective tax rate was 21.8% and 21.5% for the three months ended June 30, 2024 and 2023, respectively, generally consistent with the U.S. corporate federal income tax rate.

Current wording

Provision for income taxes. The effective tax rate was 21.3% and 23.0% for the three months ended September 30, 2024 and 2023, respectively, generally consistent with the U.S. corporate federal income tax rate.

Previous wording

Benefits and other changes in policy reserves decreased largely from a higher reserve release, partially offset by higher new delinquencies in the current year. Enact released reserves of $77 million during the second quarter of 2024 primarily related to favorable cure performance on early 2023 and prior delinquencies. As part of the reserve release, Enact decreased its claim rate assumptions largely as a result of sustained favorable cure performance and lessening uncertainty in the economic environment, impacting both current and prior year delinquencies. Enact recorded a reserve release of $63 million during the second quarter of 2023 primarily related to favorable cure performance on delinquencies from 2021 and earlier, including those related to COVID-19.

Current wording

Benefits and other changes in policy reserves increased largely from higher new delinquencies, partially offset by higher favorable reserve adjustments in the current year. Enact released reserves of $196 million in the current year primarily related to favorable cure performance on 2023 and prior delinquencies. As part of the reserve adjustments, Enact decreased its claim rate assumptions largely as a result of sustained favorable cure performance and lessening uncertainty in the economic environment, impacting both current and prior year delinquencies. In the prior year, Enact recorded reserve releases of $188 million primarily related to favorable cure performance on delinquencies from prior years, including those related to COVID-19.

Previous wording

Acquisition and operating expenses, net of deferrals, increased primarily due to an $11 million loss on the early redemption of Enact Holdings’ 2025 Notes in the current year.

Current wording

Acquisition and operating expenses, net of deferrals, increased primarily due to an $11 million loss on the early redemption of Enact Holdings’ senior notes due in 2025 (“2025 Notes”) in the current year.

Previous wording

Provision for income taxes. The effective tax rate was 21.8% and 21.6% for the six months ended June 30, 2024 and 2023, respectively, generally consistent with the U.S. corporate federal income tax rate.

Current wording

Provision for income taxes. The effective tax rate was 21.6% and 22.0% for the nine months ended September 30, 2024 and 2023, respectively, generally consistent with the U.S. corporate federal income tax rate.

Previous wording

Substantially all of Enact’s policies are primary mortgage insurance, which provides protection on individual loans at specified coverage percentages. Primary mortgage insurance is placed on individual loans at the time of origination and is typically delivered to Enact on a loan-by-loan basis. Primary mortgage insurance can also be delivered to Enact on an aggregated basis, whereby each mortgage in a given loan portfolio is insured in a single transaction after the point of origination.

Current wording

Substantially all of Enact’s policies are primary mortgage insurance, which provides protection on individual loans at specified coverage percentages. Primary mortgage insurance is placed on individual loans at the time of origination and is typically delivered to Enact on aloan-by-loan basis. Primary mortgage insurance can also be delivered to Enact on an aggregated basis, whereby each mortgage in a given loan portfolio is insured in a single transaction after the point of origination.

Previous wording

Primary insurance in-force increased mainly from new insurance written. In addition, primary persistency remained elevated largely as a result of suppressed refinancing activity in the current year due to a large percentage of in-force policies with mortgage rates below current rates. The primary persistency rate was 84% and 85% for the six months ended June 30, 2024 and 2023, respectively. Total risk in-force increased primarily as a result of higher primary insurance in-force.

Current wording

Primary insurancein-force increased mainly from new insurance written. In addition, primary persistency remained elevated largely driven by suppressed refinancing activity in the current year due to a large percentage ofin-force policies with mortgage rates below current rates. The primary persistency rate was 83% and 84% for the nine months ended September 30, 2024 and 2023, respectively. Total riskin-force increased primarily as a result of higher primary insurancein-force.

Previous wording

The loss ratio decreased for the three months ended June 30, 2024 largely from a higher reserve release, partially offset by higher new delinquencies in the current year. The loss ratio increased for the six months ended June 30, 2024 primarily due to higher new delinquencies in the current year.

Current wording

The loss ratio decreased for the three months ended September 30, 2024 largely from a higher reserve release, partially offset by higher new delinquencies in the current year. The loss ratio increased for the nine months ended September 30, 2024 primarily due to higher new delinquencies, partially offset by higher favorable reserve adjustments in the current year.

Previous wording

Enact Holdings incurred a loss of $11 million on the early redemption of its 2025 Notes, which increased the expense ratio by five and two percentage points for the three and six months ended June 30, 2024, respectively.

Current wording

The expense ratio decreased for the three months ended September 30, 2024 primarily due to higher net earned premiums in the current year. The expense ratio increased for the nine months ended September 30, 2024 as a result of the $11 million loss on the early redemption of Enact Holdings’ 2025 Notes, which increased the expense ratio by two percentage points.

Previous wording

The delinquency rate decreased compared to December 31, 2023 primarily from a decrease in total delinquencies mostly driven by cures and paid claims outpacing new delinquencies, but increased compared to June 30, 2023 largely due to new delinquencies exceeding cures and paid claims.

Current wording

The delinquency rate increased compared to December 31, 2023 and September 30, 2023 primarily from an increase in total delinquencies mostly driven by new delinquencies exceeding cures and paid claims.

Previous wording

The following tables set forth primary delinquencies, direct primary case reserves and risk in-force by aged missed payment status in Enact’s loan portfolio as of the dates indicated:

Current wording

The following tables set forth primary delinquencies, direct primary case reserves and riskin-force by aged missed payment status in Enact’s loan portfolio as of the dates indicated:

Previous wording

Primary insurance delinquency rates differ from region to region in the United States at any one time depending upon economic conditions and cyclical growth patterns. The tables below set forth the dispersion of direct primary case reserves and primary delinquency rates for the 10 largest states and the 10 largest Metropolitan Statistical Areas (“MSA”) or Metro Divisions (“MD”) by Enact’s primary risk in-force as of the dates indicated. Delinquency rates are shown by region based upon the location of the underlying property rather than the location of the lender.

Current wording

Primary insurance delinquency rates differ from region to region in the United States at any one time depending upon economic conditions and cyclical growth patterns. The tables below set forth the dispersion of direct primary case reserves and primary delinquency rates for the 10 largest states and the 10 largest Metropolitan Statistical Areas (“MSA”) or Metro Divisions (“MD”) by Enact’s primary riskin-force as of the dates indicated. Delinquency rates are shown by region based upon the location of the underlying property rather than the location of the lender.

Previous wording

The following table sets forth the dispersion of Enact’s direct primary case reserves, primary insurance in-force and risk in-force by year of policy origination, and delinquency rate as of June 30, 2024:

Current wording

The following table sets forth the dispersion of Enact’s direct primary case reserves, primary insurancein-force and riskin-force by year of policy origination, and delinquency rate as of September 30, 2024:

Previous wording

Loss reserves in policy years 2008 and prior are outsized compared to their representation of risk in-force. The size of these policy years at origination combined with the significant decline in home prices led to significant losses in policy years prior to 2009. Although uncertainty remains with respect to the ultimate losses Enact will experience on these policy years, they have become a smaller percentage of its total mortgage insurance portfolio. The concentration of loss reserves has shifted to newer book years in line with changes in risk in-force. As of June 30, 2024, Enact’s 2017 and newer policy years represented approximately 96% of its primary risk in-force and 79% of its total direct primary case reserves.

Current wording

Loss reserves in policy years 2008 and prior are outsized compared to their representation of riskin-force. The size of these policy years at origination combined with the significant decline in home prices led to significant losses in policy years prior to 2009. Although uncertainty remains with respect to the ultimate losses Enact will experience on these policy years, they have become a smaller percentage of its total mortgage insurance portfolio. The concentration of loss reserves has shifted to newer book years in line with changes in riskin-force. As of September 30, 2024, Enact’s 2017 and newer policy years represented approximately 96% of its primary riskin-force and 81% of its total direct primary case reserves.

Previous wording

The results of our long-term care insurance business depend upon how our actual experience compares with our valuation assumptions, including but not limited to in-force rate actions, morbidity, mortality and persistency. Estimates for in-force rate actions reflect certain simplifying assumptions that may vary materially from actual results, including but not limited to consistent policyholder behavior over time in addition to a uniform rate of coinsurance and premium taxes. Actual policyholder behavior may differ significantly from these assumptions. Results of our long-term care insurance business are also influenced by our ability to improve investment yields and manage expenses and reinsurance, among other factors. Changes in laws or government programs, including long-term care insurance rate action legislation, regulation and/or practices, could also impact our long-term care insurance business either positively or negatively.

Current wording

The results of our long-term care insurance business depend upon how our actual experience compares with our valuation assumptions, including but not limited toin-force rate actions, morbidity, mortality and persistency. Estimates forin-force rate actions reflect certain simplifying assumptions that may vary materially from actual results, including but not limited to consistent policyholder behavior over time in addition to a uniform rate of coinsurance and premium taxes. Actual policyholder behavior may differ significantly from these assumptions. Results of our long-term care insurance business are also influenced by our ability to improve investment yields and manage expenses and reinsurance, among other factors. Changes in laws or government programs, including long-term care insurance rate action legislation, regulation and/or practices, could also impact our long-term care insurance business either positively or negatively.