Genworth Financial (GNW)

Q4 2011 Earnings Call

February 03, 2012 9:00 am ET

Executives

Georgette Nicholas -

Michael D. Fraizer - Executive Chairman, Chief Executive Officer and President

Martin P. Klein - Chief Financial Officer and Senior Vice President

Kevin D. Schneider - President of U S Mortgage Insurance

Patrick B. Kelleher - Executive Vice President, Chief Executive Officer of Retirement & Protection and President of Retirement & Protection

Ronald P. Joelson - Chief Investment Officer and Senior Vice President

Analysts

Andrew Kligerman - UBS Investment Bank, Research Division

Donna Halverstadt - Goldman Sachs Group Inc., Research Division

Geoffrey Dunn - Dowling & Partners Securities, LLC

Jeffrey R. Schuman - Keefe, Bruyette, & Woods, Inc., Research Division

Joanne A. Smith - Scotiabank Global Banking and Market, Research Division

Thomas G. Gallagher - Crédit Suisse AG, Research Division

Presentation

Operator

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Good morning, ladies and gentlemen, and welcome to Genworth Financial's Fourth Quarter Earnings Conference Call. My name is Giovanni, and I will be your coordinator today. [Operator Instructions] As a reminder, the conference is being recorded for replay purposes. [Operator Instructions] I would now like to turn the presentation over to Georgette Nicholas, Senior Vice President of Investor Relations.

Georgette Nicholas

Good morning, and thank you for joining us for the first of 2 calls Genworth will be holding today. The first-hour call will be dedicated to a discussion of fourth quarter results. The second-hour call will begin at 11:00 a.m. after our Canadian subsidiary completes their earnings call.

In the second call, we will focus on 2012, and specifically addressing low interest rates, European exposure, the statutory earnings profile of the life companies and key business goals for 2012. Also as a reminder, we will be holding a webcast on Friday, February 10 from 10:00 a.m. to noon on our U.S. Mortgage Insurance business. Please note our press release and financial supplement were released last evening and are posted on our website.

This morning, you will hear from 2 of our business leaders, starting with Mike Fraizer, our Chairman and CEO; followed by Marty Klein, our CFO. Following our prepared comments, we will open the call up for a question-and-answer period. In addition to our speakers, other key leaders will be available to take questions. They include Pat Kelleher, President and CEO of our Insurance and Wealth Management Division; Kevin Schneider, President of our U.S. Mortgage Insurance segment; Jerome Upton, Chief Operating Officer of our International segment; Ron Joelson, Chief Investment Officer; and Buck Stinson, President, Insurance Products for our U.S. Life Insurance segment.

With regard to forward-looking statements and the use of non-GAAP financial information, some of the statements we make during the call this morning may contain forward-looking statements. Our actual results may differ materially from such statements. We advise you to read the cautionary note regarding forward-looking statements in our earnings release and the Risk Factors section of our most recent annual report on Form 10-K, filed with the SEC in February 2011.

This morning's discussion also includes non-GAAP financial measures that we believe may be meaningful to investors. In our supplement and earnings release, non-GAAP measures have been reconciled to GAAP where required in accordance with SEC rules. And finally, when we talk about results for the International Protection and International Mortgage Insurance segments, please note that all percentage changes exclude the impact of foreign exchange.

And now, let me turn the call over to Mike Fraizer.

Michael D. Fraizer

Thanks, Georgette. 2011 was a year of actions designed to reposition the company to move through an uncertain environment and provide a foundation for improved shareholder value. We recognize that the year was a difficult one for shareholders and work to listen, gain feedback, intensify our efforts to improve both the performance and positioning of the company.

We have taken important steps with the business portfolio and individual product lines to sharpen our focus, rebalance exposures, maintain or expand risk buffers and support capital generation and redeployment. We made progress in several areas with more work to do and will maintain an intense execution focus in 2012.

There are many aspects of markets that one does not control. Today, I would like to highlight 4 important levers that we do control and actively utilize to improve future operating performance.

First, we continue to reposition the business portfolio to maximize value over the medium to long term. We're pursuing a number of steps to better align businesses, enhance risk profiles and reallocate capital to support shareholder value.

Second, we are managing the volume and mix of new business, repricing products actively, utilizing reinsurance strategically and managing expenses, all to maximize profitability, benefit statutory performance and improve our capital generation use and return profile.

Third, we are managing the in-force portfolio through loss mitigation strategies, repricing actions, life insurance block transactions and active management of investment exposures.

And fourth, we are taking actions to add to our enterprise and holding company strength by expanding risk buffers and managing overall risk exposures and capital effectively. A key focus here is adding to our capital flexibility and distributable earnings profile to support dividends to the holding company, which benefits shareholders and bondholders. As you saw in our earnings release, we resegmented our financials this quarter. This reflects moves to align businesses to maximize operational and financial synergies.

We are now operating through 3 divisions with 6 underlying reporting segments. There are clear benefits from our new structure. On the product and risk management front, we're getting better transfer of ideas, analytics and mortgage insurance loss mitigation strategies under this alignment. From a financial synergy standpoint, we now have an approach in place that accelerates use of our tax assets. And we have been able to improve the efficiency of capital structures.

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