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GENWORTH FINANCIAL INC (GNW)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered net income of $54M ($0.13 diluted EPS) and adjusted operating income of $51M ($0.12 per diluted share), with Enact contributing $137M AOI; LTC and Life & Annuities posted operating losses as seasonally high mortality and lower limited partnership income weighed on results .
  • EPS missed Wall Street consensus as reported by S&P Global: actual diluted EPS $0.13 vs consensus $0.21 (1 estimate); revenue consensus was unavailable; total revenues were $1.786B .
  • Key positives: Enact’s strong fundamentals (12% loss ratio, PMIERs sufficiency 165%, $76M capital return to GNW), CareScout network coverage to ~90% of the U.S. 65+ population with 576 matches, Enact dividend increase (+14%) and $350M buyback authorization .
  • Watch items: LTC segment AOI -$30M amid expected A-to-E losses under LDTI, Life Insurance AOI -$44M due to seasonally high mortality; holding company cash declined to $211M on annual benefit payments and repurchases; management guided $100–$120M FY25 repurchases and $45–$50M CareScout Services investment .

What Went Well and What Went Wrong

  • What Went Well

    • Enact continued strong performance: $137M AOI, 12% loss ratio, PMIERs 165%, $76M capital returned; dividend increased to $0.21 and $350M buyback authorized .
    • CareScout momentum: 576 matches in Q1 vs 52 YoY; ~550 providers, ~90% 65+ coverage, expected $1–$1.5B LTC claim savings over time .
    • Shareholder returns and index inclusion: GNW repurchased $55M YTD through April; Enact added to S&P SmallCap 600 on April 16, supporting visibility and liquidity .

  • What Went Wrong

    • LTC adjusted operating loss of $30M driven by lower limited partnership income and premium declines from benefit reduction elections; Life Insurance AOI -$44M on seasonally high mortality .
    • Holding company cash/liquids fell to $211M due to $106M annual employee benefit payments, $45M buybacks, and $8M debt service .
    • EPS missed S&P consensus (actual $0.13 vs $0.21) with only one estimate on file, reducing the perceived quality of beat/miss signals .

Quoted management remarks:

  • “We’re entering the remainder of 2025 with strong momentum…creating value for shareholders and providing innovative solutions for aging Americans.” – CEO Tom McInerney .
  • “Enact delivered $137 million in adjusted operating income…Primary insurance in force grew 2% YoY to $268 billion…PMIER sufficiency ratio remained strong at 165%.” – CFO Jerome Upton .
  • “We remain on track to reenter the market in the second half of 2025…goal is approvals from 30 to 35 states.” – CEO Tom McInerney on CareScout insurance .

Financial Results

  • Consolidated revenue and EPS vs prior quarters:
MetricQ3 2024Q4 2024Q1 2025
Total Revenues ($USD Billions)$1.880 $1.782 $1.786
Diluted EPS (GAAP)$0.19 $0.00 $0.13
Adjusted Operating Income ($USD Millions)$48 $15 $51
AOI per Diluted Share$0.11 $0.04 $0.12
  • Q1 2025 actuals vs S&P Global estimates:
MetricQ1 2025 ActualQ1 2025 Consensus# of Estimates
Diluted EPS (GAAP)$0.13 $0.21*1*
Revenues ($USD Billions)$1.786 N/A*N/A*

Values retrieved from S&P Global.*

  • Segment AOI breakdown:
Segment AOI ($USD Millions)Q3 2024Q4 2024Q1 2025
Enact$148 $137 $137
Long-Term Care Insurance$(46) $(104) $(30)
Life Insurance$(40) $2 $(44)
Fixed Annuities$6 $1 $4
Variable Annuities$7 $2 $7
Corporate & Other$(27) $(23) $(23)
Total AOI$48 $15 $51
  • KPIs and ratios:
KPIQ3 2024Q4 2024Q1 2025
Enact Loss Ratio5% 10% 12%
Enact PMIERs Sufficiency Ratio173% 167% 165%
Enact Primary Insurance In-Force ($B)$268 $269 $268
Holding Co. Cash & Liquid Assets ($M)$369 $294 $211
CareScout Matches (count)N/AN/A576
CareScout 65+ Coverage~75% (49 states) ~86% (50 states) ~90%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Share Repurchases Allocation ($)FY 2025Not previously disclosed$100–$120M New
CareScout Services Investment ($)FY 2025Not previously disclosed~$45–$50M New
Enact Capital ReturnsFY 2025Not previously disclosedExpect similar levels as 2024 New
LTC In-Force Rate ApprovalsFY 20252024 approvals were larger 2025 approvals expected smaller vs 2024 Lower
CareScout Insurance LaunchH2 2025Target 2025 launch discussed in 2024 On track H2 launch; 30–35 states target approvals Maintained/Confirmed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 2024; Q-1: Q4 2024)Current Period (Q1 2025)Trend
CareScout Network & SavingsExpanded to 49 states; ~75% 65+ coverage ~90% 65+ coverage; ~550 providers; 576 matches; $1–$1.5B potential claim savings Rapid scaling; accelerating utilization
Enact Performance & Capital ReturnAOI $148M; PMIERs 173%; dividend $0.185 AOI $137M; PMIERs 165%; dividend raised to $0.21; $350M buyback; $76M to GNW Strong, capital-friendly
LTC MYRAP & A-to-E VarianceContinued IFAs; adverse A-to-E in Q3 AOI -$30M; A-to-E gain in Q1 but average quarterly A-to-E loss ~$65M expected in 2025 Ongoing variability; self-sustainability focus
Macro/Tariffs & RecessionInflation/interest rate risk noted Tariff negotiation uncertainty; base case low single-digit GDP; recession manageable Cautious but prepared
Litigation (AXA/Santander)Not highlighted in Q3 PRLiability ruling mid–late summer; GNW aligned interests with AXA (up to £80M cover) Potential upside; timing risk
CareScout Insurance LaunchPlan to launch in 2025 Compact approval in 23 states; filings advanced in 8; H2 launch target On schedule

Management Commentary

  • Strategic priorities: “Delivering value through Enact, ensuring self-sustainability of our legacy insurance companies, and scaling CareScout as a growth engine” .
  • Enact outlook: “Well positioned to navigate…expects to return similar levels of capital to shareholders in 2025 as in 2024” .
  • LTC self-sustainability: “We will not put capital into the legacy life insurance companies…do not expect capital returns from these companies” .
  • CareScout product: “Received product approval from the insurance compact…on track to reenter the market in the second half of 2025…goal is 30 to 35 states” .
  • Macro stance: “Base case assumes low single-digit U.S. GDP; recession manageable given low $790M holding company debt” .

Q&A Highlights

  • AXA/Santander litigation structure: GNW agreed to potentially cover up to £80M of AXA’s losses to align incentives; AXA claims damages of ~$700M; ruling expected mid–late summer, damages hearing in December .
  • CareScout Insurance capitalization: $75M initial capital covers early-year statutory drag; future capital manageable with reinsurance and retrocession (40–50% takeback early years), potential additional $20–$25M tranches over time .
  • CareScout Services breakeven: Early investments ($35–$50M) with strong momentum; savings alone (~$1–$1.5B projected) can drive breakeven, plus revenue as external clients onboard .
  • WISH Act tailwinds: Catastrophic LTC framework could complement CareScout’s capitated products ($250K max), addressing high dementia-tail risk; state initiatives (e.g., Washington) could also support adoption .

Estimates Context

  • EPS: Q1 GAAP diluted EPS $0.13 vs S&P Global consensus $0.21 (1 estimate) → miss; low estimate count reduces confidence in consensus signal .
  • Revenue: Consensus unavailable; actual revenues $1.786B .
  • Discrepancy note: S&P’s “Primary EPS actual” may reflect a normalized or alternative presentation (0.12), whereas company GAAP diluted EPS was $0.13; we anchor on company GAAP for reported results .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Enact remains the core earnings and cash engine with robust underwriting and capital return plans; dividend increase and $350M buyback authorization are near-term catalysts .
  • CareScout is scaling rapidly and building tangible claim savings while moving toward H2 2025 product launch; external carrier pilots could unlock multi-year revenue streams .
  • Legacy LTC and Life results will remain volatile intra-year under LDTI; expect average A-to-E losses in LTC (~$65M/quarter) per management, with seasonality (mortality) impacting quarterly optics .
  • Balance sheet flexibility: $211M holding company liquidity and low holdco debt ($790M) provide capacity to fund CareScout growth and share repurchases, though liquidity trends should be monitored given annual cash outflows .
  • Litigation optionality: AXA/Santander outcome could be a positive event later in 2025; timing risk persists until liability ruling .
  • Estimate framework: With sparse coverage, consensus signals (EPS) should be treated cautiously; use company AOI and segment trends for fundamental trajectory .
  • Trading lens: Near-term sentiment likely tied to Enact’s capital actions and CareScout milestones; watch PMIERs and loss ratio stability, CareScout approvals pace, and any update on AXA/Santander.