Good morning, ladies and gentlemen, and welcome to the Genworth Financial's first quarter Earnings Call. (Operator Instructions). I'd now like to turn the presentation over to Alicia Charity, Senior Vice President, Investor Relations. Ms. Charity, you may proceed.

Thank you, Melissa and welcome to Genworth Financial's first quarter 2009 earnings conference call. Our press release and financial supplement were both released last evening and are now posted on our website. In addition, we posted some materials regarding our investment portfolio that we thought would be helpful as well. This morning you will first hear from Mike Fraizer, our Chairman and CEO; followed by Pat Kelleher, our Chief Financial Officer; and then Ron Joelson, our Chief Investment Officer. Following our prepared comments we will open the call up for your questions. Pam Schutz, Executive Vice President of Retirement & Protection; Tom Mann, Executive Vice President of our International segment; and Kevin Schneider, Senior Vice President of our US Mortgage Insurance segment, will be available to answer your questions. With regard to forward-looking statements and the use of non-GAAP financial information some of the statements we make during the call may contain forward-looking statements. Our actual results may differ materially from such statements. We advise you read the cautionary language regarding forward-looking statements in our earnings release and the Risk Factors section of our most recent Annual Report, Form 10-K, filed with the SEC in March 2009. This morning's discussion also includes non-GAAP financial measures that we believe may be meaningful to investors. In our financial supplement and earnings really non-GAAP measures have been reconciled to GAAP where required in accordance with SEC rules. Finally, we talk about our international segment results. Please note that all the percentage changes exclude the impact of foreign exchange. With that let me turn the call over to Mike Fraizer.

Thanks, Alicia. Thanks everyone for your time today. While Genworth's first quarter reflects continued investment valuation challenges and US housing market pressures, we have made substantial progress on a number of fronts including capital and liquidity, performances of our Canadian and Australian platforms in a slowing global economy, execution of our refined specialist strategy, along with underlying product line performance in retirement and protection and active risk management. This morning I will provide views on overall business positioning as well as capital strategies. Pat Kelleher, will go deeper on business line performance along with specifics on capital, liquidity, and risk management. And Ron Joelson will share thoughts on key investment topics. Starting with our business segments and their positioning, we have tailored our strategy to reflect today's market realities and leverage our strengths. In Retirement & Protection, as we said at our fourth quarter earnings call, we refined our specialty strategy around main street life insurance coverage, long-term care insurance, wealth management products and support services to independent advisors, and selective retirement income offerings that fit our risk appetites. A deeper focus on middle market and emerging affluent segments cuts across these four areas. Moreover, we positioned our strategy and business mix effectively to acknowledge our current ratings. This refinement and focus is reflected in the sales levels in the quarter. Retirement & Protection sales, while lower, achieved our overall targets and were consistent with our capital plans. I am pleased with our results here and we would expect these sales trends to continue during 2009. We view 2009 as a transition year for the Retirement & Protection business and when they economy emerges from this period we will be positioned to build off this focused strategy. In International we concentrated our efforts around mortgage insurance in Canada and Australia…

Thanks, Mike. First quarter earnings were challenging, primarily from weak economic and market conditions. Despite this Genworth made tremendous progress on capital, liquidity, and risk management that is bearing results across the organization. We achieved sales levels in line with expectations. All in, I would characterize Genworth's operating results for the quarter as mixed. For example, International results demonstrated strong business performance in slowing economies in Canada and Australia while Lifestyle Protection saw increased unemployment related loss developments, primarily in Ireland and Spain. In Retirement & Protection we enjoyed good underlying performance that was overshadowed by losses on limited partnership investments and DAC charges relating to equity market performance. In the investment portfolio credit impairments relating to structured and corporate debt declined materially from fourth quarter levels, although we impaired several hybrid securities where we do not have credit related concerns but recorded impairments based on accounting guidelines that prescribe use of the equity model to determine impairments. Finally, earnings in US Mortgage Insurance reflected weak market conditions. Prime delinquencies showed deterioration with rising unemployment, while we had seen a slowdown in the growth of delinquencies for subprime and Alt-A that began in the third quarter of 2008. While this is a small portion of our portfolio, it is where we have seen the majority of the delinquencies. Sales across the company were generally in line with expectations as we have narrowed our strategic focus within Retirement & Protection and US Mortgage Insurance and we saw the impact of slowing global mortgage originations and consumer lending that we anticipated internationally. This morning I will focus on three areas; business performance, including risk management actions and some views on sales outlook for 2009; capital and liquidity; and the impact we expect from recent accounting changes relating to investments. Starting with the…

Thanks, Pat. Difficult economic conditions continued to impact the investment portfolio in the first quarter of 2009, although we are seeing market improvements and risk management actions taken to defensively position the portfolio are evident in our results. This morning my comments are focused on four areas; impairments, both in the quarter and some emerging trends; performance of the commercial mortgage backed securities portfolio and commercial mortgage loan portfolio; bank hybrids; and finally net investment income for the period. GAAP impairments and realized losses for the quarter were $410 million after tax and statutory impairments were $232 million after tax. Of the $410 million of GAAP net impairments and realized losses taken during the first quarter $22 million relate to asset sales and $388 million are other than temporary impairments. The OTTI amount includes $155 million of hybrid securities. I would like to make two points here. First, valuation moves due to recent downgrades caused a shift from the debt to the equity impairment model based on recent clarification of accounting guidance. And second, our credit analysis indicates full principal recovery is anticipated. The remaining $233 million of impairments include $50 million from corporate, government, and equity securities, and $183 million from structured securities. This $50 million compares to about $230 million taken in the fourth quarter of '08 and about $190 million taken in the third quarter of 2008. We believe that active selling of prior risk positions in prior periods has contributed to this improvement. And we continue to reduce our [waiting] in banks, financials, and high-yield assets, and sold over $400 million of securities during the quarter. Of the $183 million of impairments and structured securities, $83 million were Alt-A securities, down from $97 million in the prior quarter and subprime RMBS impairments were $48 million, down…

(Operator Instructions) The first question comes from Eric Berg with Barclays Capital.

My first question concerns your relationship with your distributors and in general the perception of third parties. It's encouraging to see that the lapse rate did not change in your fixed annuity business; that is encouraging, but in this difficult period how are you doing in terms of maintaining relationships with your major distributors of life insurance and annuities? Are you on the shelf, are you off the shelf? How does that stand? Then I have one follow up.

Let me start before I talk about specific distributor relationships and talk about our overall strategy and our results in the quarter. The first quarter sales results really reflect our refined strategy to focus on Main Street Life, our wealth management business and long-term care. , and we are pleased with the results in the quarter. If you look at our investment products, including annuities and wealth management, we sold over $1.2 billion. If you look at our premium based products of life and long-term care, we roughly sold $103 million. Despite the market contraction in long-term care, we are pleased with our progress. Our career system held up well and we continue to make progress on getting new accounts in long-term care. We also had solid performance in our BGA channel and low face term and continue to outperform the market in wealth management. In our annuity business in particular we have narrowed our focus to a smaller footprint, really focusing on the independent channels and select distributors. However, we are projecting that we will do between $1.5 billion and $2 billion in sales. With respect to our distribution, obviously our ratings have impacted certain channels and certain distributors, but that has largely been in the annuity side in bank (inaudible). Overall, we are really pleased with how we are positioned and our growth going forward.

My next question is to Joel and that has to do with something that you dwelled on a little bit, this accounting for the hybrids. My understanding is that under US GAAP the equity method, in particular under guidance from the SEC as laid out in the letter that I think it wrote to the FASB last October, that you don't need to use the equity method unless the securities have been downgraded to below investment grade status. Is that what happened in this instance or did you go to the equity method of impairment, equity impairment method for other reasons than downgrade? Thanks.

In this particular instance some of the securities that we downgraded were clearly below investment grade. In addition we had some split-rated securities which in our judgment should be treated under the equity accounting method for valuation purposes.

The next question comes from Donna Halverstadt with Goldman Sachs.

A question about the assumption you gave about life RBC ending the year at or above 350%. What is the embedded assumption you are using on equity market performance?

We would assume that equity markets are around current levels in that assumption. But I would also remind you that we don't have a lot of equity exposure in the portfolio overall because our variable annuity block is relatively small relative to our overall business in force. So it doesn't have that much impact on our capital projections.

Okay. Then I also had a question on the U.S. MI business. You talked about executing a number of strategies to pursue new business while maintaining the risk to cap and you talked about slowing new business growth and picking it back up; rescissions, modifications, etc. Are there any other types of strategies you are thinking about that would allow you to write additional business there?

I think there is really three things that could be thought about; one is we are working directly with our state regulator to achieve capital flexibility going forward in this environment. That is a potential to give us additional room against our current risk-to-capital statutory levels. The second alternative has been widely written that the industry continues to really engage and work with Treasury and the FHFA; potential proposals to provide capital support to the mortgage insurance industry. FHA Director Lockhart has been supportive of that and I think we have made significant progress as an industry around structures that would benefit the industry and that work within the existing legislative and regulatory authority. So I think that is under active consideration at Treasury. Then lastly we continue to consider reinsurance possibilities and our approach there has really shifted over time, where initially, give or take a year ago, we were talking about securing reinsurance that gave us rating agency relief. We are now focused on potential reinsurance structures that would also give us statutory capital relief. So we would need both of those to pursue a reinsurance strategy and at the right price.

Follow up on your point one, the regulatory capital flexibility, is that relaxation of risk to cap rules temporarily and/or is it thinking about new co, old co structures along the lines that [Magic] is thinking about?

At this point in time, while we are pursuing and evaluating a number of options, the first piece has been the regulatory clarification we got from our state regulator that resulted in the improved risk-to-capital levels that we reported this quarter and basically what that was really a more appropriate reflection of your unexposed risk taking the delinquent risk in force out of the calculations. So, we got some benefit there that took us to the 13.8 reported risk-to-capital levels. The second piece would be potential statutory relief that would allow our regulators to have additional discretion above the 25-1 level going forward. So that is the second piece, and then while we are evaluating additional options we are not currently pursuing the approach that you referenced our competitor is.

Okay. Then the last question I had was could you just update us on the current outstanding balances of the GIC and FA-backed notes and also curious whether or not you continue to look at opportunistic early retirement of some of those?

Let me just give you an introduction and then I will hand it over to Pam for some more detail. Yes, we look at it opportunistically. In some prior periods, you saw that in the first quarter as well, so that is sort of point one . Point two, again, also in that whole institution area, we've basically seen planned redemptions. We haven't seen any other abnormal activity in that area. Pam, do you want to go through the numbers specifically, please?

Yes. Our current balances on our GICs and funding agreements is roughly $6.6 billion and as you would expect they are down.

The next question comes from Suneet Kamath with Sanford Bernstein.

First, Pat, if you could go back to your commentary on the holding company. I think as you were walking through your cash ebbs and flows, I think you said something to the effect of sufficient cash to meet, [there are] holding company obligations. Can you just drill down on exactly how much, other than the debt repayments that you mentioned, the holding company has in terms of cash needs? Secondly, just on the commentary around the U.S. MI business. I guess I am sort of scratching my head a little bit about the Treasury programs that you referred to given that you have just got in some capital relief from the North Carolina regulators. It just seems like if the regulators are moving in that direction, why would the Treasury want to give the industry more capital at a time when clearly they are pretty tapped out there? And if that happens, would you be able to use some of that capital to support some of your other businesses through intercompany loans or would it all have to stay in the U.S. MI subsidiary? Thanks.

Okay. With respect to your first question, we ended the quarter with about $770 million of cash in the holding company. I noted that we had completed about half of our dividend plan for the year. We are well-positioned to complete the remaining half, which is a little over $200 million. The main service obligations we have in the holding company for the year are the $660 million of long-term debt maturing in May and June. We have, I will say, debt service and other obligations which in total amount to about $170 million. And that leaves us pretty well-positioned with $150 million at year end with some additional flexibility to raise additional cash at the holding company via a network of borrowing agreements that we have in place with affiliates. So we feel very comfortable about that.

Let me give you just a couple of thoughts and turn over to Kevin. First of all, as you walk through the levers I think you are correct to point out we have things that are clearly under our control right now. We have been using to pursue to create capital capacity to write a very attractive new business and we are going to continue to pursue that. Secondly when you talk about backstop of capital support or capital capacity support programs for the MI industry, I think you have to recognize you look at that on an industry basis. Different players are in different situations and that the industry can really help when you think about the housing market recovery. If you look at the math, in general if you bring $1 billion of capital capacity to the industry and you turn around at sort of a 20 to 1 risk to capital, you can take $20 billion of risk and you turn that around on a loan-to-value basis and you can support $80 billion of loans. Those are loans that can help this market recovery. So I think the administration has certainly been proactive on the housing recovery front and this can be one additional piece to that and benefit through the entire industry. To your specific question about if you ever decided to go down and access that type of support program, it would certainly be focused solely at that business line.

Just one quick follow-up in terms of your RBC at 398, does that include any permitted practices from your regulators? If so, does the projection at year-end of 350% plus include any assumption that whatever permitted practice benefit goes away? Thanks.

Our 390% RBC ratio at the first quarter does not include any permitted practices from regulators, nor have we projected in our current plans the use of new permitted practices.

The next question comes from Joel Gross with ICMA Retirements.

Do you have a preliminary figure for the statutory surplus of the life insurance companies as of March 31?

You were just asking about the risk-based capital ratio, I am sorry?

No, not the risk-based capital, the actual statutory surplus.

Yes, that is $3.1 billion.

Okay. I am just curious, in the financial supplement there is a page where they have a consolidated balance sheet by segment. The Retirement & Protection business has allocated stockholders' equity of $6.7 billion. I am wondering to what extent Retirement & Protection has investment in the other business segments, International and U.S. Mortgage Insurance?

The Retirement & Protection segment is self-contained. It doesn't have investments in the other segments.

Okay. So when the consolidation of the three businesses then the Retirement & Protection doesn't have any stock investments in any or bond investment in any of the other two segments?

That would be correct.

Okay. All right, very good. Just one additional question, on the Canadian mortgage insurance business how much capital does Genworth Financial have invested in that right now?

As Pat said in his comments, the book value of that business is approximately $1.8 billion.

Okay, $1.8 billion. Okay, very good. Are any other asset sales being considered at this time?

We have basically gone through a number of strategic alternatives and we have laid out the ones that we think are best for the Company.

The next question comes from [Ed Chenn] with Ivory.

Just had a quick question on the US Mortgage Insurance business. It looks like the benefit from the captive reinsurance went down this quarter versus prior quarters. Can you explain why that happened this quarter and whether or not you expect that trend to continue?

Just as a reminder, we have got a little over $1 billion in funds in the captive trusts. Our 2008 benefit was roughly $500 million and our expectation would be that '09 would run in the $250 million to $300 million range. That was expected; we have talked about it in the past. Basically, as the captives, in particular the 25 excess of lost captives which have a narrow range of captive support tier, as you fill up those ranges the expected benefit resultant in that you use it up. So we have got about 500 in last year; we will get close to 250, 300 this year and that would continue to trail down over time going forward. There is some potential favorable impact to that going forward as some of the loan modifications and loss mitigation work plays out but our expectation would be to continue to see that trail down over time.

Okay, thank you. I think you had some figures in the press release regarding the benefits of some of the modifications. Could you review that with me and explain and give a little more color on where those are coming from?

On the modification front we had roughly $55 million worth of modification benefit in the plan. Those are modifications that had been associated with loan modifications that had been put in place by the various servicers. So we work with the borrowers and with the servicers to help them modify the loans and that benefit is reflective of those loans that were made current through those modifications in the quarter.

Are you getting benefits from rescissions as well?

Yes, the rescission benefit I think as described is roughly $96 million on the quarter.

Do you happen to know what that was last quarter?

I do know what that was the last quarter. In the first quarter of '09 again was about $96 million, the fourth quarter of '08 the total benefit was $85 million.

Okay, got it. Then if I could just ask a question on the investment portfolio. It looks like the unrealized loss in total is about, $7 billion on a pretax basis. Can you just help us understand on a high level how you expect those losses to be taken or not taken over the next couple of years? Understand that there are a lot of macro factors that would drive that. But if you could just help us frame the right way to think about that will be helpful.

Sure. First of all from the fourth quarter to the first quarter was essentially unchanged, as I said in my comments. What has essentially happened is that our hybrid holdings, we have seen an increase in unrealized losses, but that was very much offset by improvements pretty much all over the portfolio. As you look toward the first quarter or look past the first quarter into April, we have seen improvements in unrealized losses of about $1 billion. Most of that is giving back what we took in losses from hybrids, so we have seen improvements in that. So at this point we are across the portfolio, seeing steady improvements in pretty much all of our asset classes. So I would expect that as we go through recovery and the economy improves that that trend would continue.

The next question comes from Andrew Kligerman with UBS.

Good morning. A lot of my questions were asked, but one thing that I thought was of interest is the Australian mortgage insurance business. The loss ratio jumped up from 47% last quarter to 59% this quarter. I think over the long haul you would like to keep it in the 40% range. So maybe you could talk a little bit more about the dynamics there and where you think that is going. Are we in for another U.S. type situation or how do you think that plays out?

Let me make a quick comment on the last part of your question first and then I will talk to you specific about the loss ratio. We clearly do not see a situation anywhere in the world similar to what you have seen in the United States. I want to remind you again that the mortgage markets around the world are distinctly different from what we have seen in the United States. There has been comparatively low levels, if not nonexistent levels, of nonprime originations particularly in Canada and Australia. It's a banking environment versus a non-banking environment. You saw a very little use of mortgage-backed securities which facilitates some of the issues we saw in the United States. So these environments from a mortgage perspective are very, very different. However, from an economic perspective as the issues we have in this country begin to move globally, you are going to see some economic pressures in all our environments; Australia is no exception to that. Specifically, with regard to your loss ratio, it is up 12 points sequentially and that is really driven by two things. First is that the revenue in the business sequentially is down. So five points of that loss ratio issue is related to revenue and we believe that is a very good use in the sense that there are only seven points of loss ratio increase driven by losses. So as I indicated just a few minutes ago, we have seen a material increase in the unemployment rates, it is really around the world, and it was very pronounced during the first quarter. Now Australia was not impacted to the degree that other environments were, but yes there was an increase in unemployment in Australia. It did increase our flow delinquencies up. Flow delinquencies increased…

That was really helpful. So just kind of the conclusion on it. It sounds like despite the pressure you can at least hold in there and maintain a profitability level. Maybe even stay around the levels where you are right now for a while, is that the way to kind of think about it?

Well, I am not going to give you a specific of an answer to your question as you may be looking for. But, again, this is a stable housing environment and the Australian economy is actually stable compared to others and with the actions that I laid out for you, we clearly view that this business will continue to be profitable and soundly capitalized and will emerge from this recessionary environment very nicely.

Thanks a lot.

We will take a follow up from Suneet Kamath with Sanford Bernstein.

Thanks. Just a quick question on the Canadian MI-IPO and I realize that you are constrained in terms of what you can say about it. But, Mike, if you could just go through that thought process of IPO versus private sale or something along those lines. It just seems that executing an IPO perhaps in the current environment might be a little challenging, certainly uncertain, versus maybe a sale. But any thoughts around that would be helpful. Thanks.

Thanks for the questions, Suneet. Certainly and you have heard us talk on prior calls we have been thoughtful about looking at lots of strategic alternatives. Again, with the criteria that I outlined in my prepared remarks. So we were equally thorough in thinking about alternatives when we looked at the Canadian mortgage insurance business and certainly have laid out what we think is clearly the best strategic alternative. Let me give you some perspectives. We worked on hard on this for a period of time and we have done our homework on this whole area. Second, as part of the preparatory work we also conducted appropriate preview and consultation work with both our insurance regulator and government officials to be in a position to move forward. The other thing I would ask you to reflect upon is that there are some clear differences between the Canadian and the US capital markets and that is a very important consideration as you look at this economic cycle. Of course, there is some more work to do here as we complete things like our prospectus drafting and there is some additional customary regulatory reviews that we have to complete. While, of course, we have to look at market conditions in the weeks ahead, we are working efficiently and believe that our plans are achievable.

Just briefly, what are some of the things that are different about the Canadian capital markets?

Well, I think you can take a pretty clear look at the Canadian financial markets and how they have performed. And I think I will leave it at that.

Ladies and gentleman, that does conclude today's Genworth Financial's first quarter earnings conference call. Thank you for your participation. The call will end at this time.