Good morning ladies and gentleman and welcome to the Genworth Financial second quarter earnings conference call. My name is Christie and I will be your coordinator today. (Operator Instructions). I would now like to turn the presentation over to Alicia Charity, Senior Vice President, Investor Relations, Ms. Charity, you may proceed.

Thank you, and good morning. Thanks for joining us for Genworth Financial’s second quarter 2010 earnings call. Our press release and financial supplement were released last evening and are posted on our website. Again this quarter, we’ll also post management’s prepared comments following the call for your reference. This morning, you’ll first hear from Mike Frazier, our Chairman and CEO, and then Pat Kelleher, our Chief Financial Officer. Following our prepared comments, we’ll open the call up for questions and answers. Kevin Schneider, President and CEO of U.S. Mortgage Insurance; Pam Schutz, Executive Vice President of our Retirement and Protection segment; Jerome Upton, Chief Operating Officer of our International segment; and Ron Joelson, our Chief Investment Officer, will all be available to take questions. 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, Form 10-K, filed with the SEC in February of 2010. This morning’s discussion also includes non-GAAP financial measures that we believe may be meaningful to investors. And our supplement and earnings release, non-GAAP financial measures have been reconciled to GAAP where required in accordance with SEC rules. And finally, when we talk about International segment results, please note that all percentage changes exclude the impact of foreign exchange. In addition, the results we will discuss today for the Canadian Mortgage Insurance business reflect total company results, including the minority interest unless otherwise indicated. And now, let me turn the call over to Mike Frazier.

Thanks, Alicia, and thanks everyone for your time today. We made important progress in the second quarter executing our strategy and delivering improved financial results. International earnings had nice growth supported by improving economic conditions in Canada and Australia and the success of our ongoing loss mitigation efforts. U.S. Mortgage Insurance made good strides towards profitability supported by loan modification and other loss mitigation efforts. Specifically, I am encouraged about the continued favorable trends in new delinquencies that we are seeing fueled by both seasonal patterns as well as the burn-through of exposures associated with the 2005, 2006 and 2007 books. The size of the private mortgage insurance market and dynamics versus the FHA remains a challenge, which I will touch upon later. We had mixed performance in Retirement and Protection. Sales were strong, particularly in life and long-term care insurance, along with positive net flows in wealth management. Earnings took a nice step forward in long-term care insurance and spread-based annuities but fell in life insurance and fee-based annuities impacted by relative mortality performance, higher losses on certain term policies, and weak equity markets. I am pleased to announce that we completed our excess cash redeployment plans putting some $3.5 billion back to work hitting the high end of our targeted range. In my mind, second quarter represented an inflection point for the investment portfolio, where we clearly moved from plain defense to plain offense. Impairments were relatively low and are expected to remain low, and we moved early to get cash to work using a variety of strategies to manage investment in the low interest rate environment. We also look closely at what may be prudent to adjust product pricing in the event of a prolonged low interest rate environment. This morning, I want to focus on three…

Thanks Mike. This morning I’ll focus on four areas; first sales and earnings growth, second risk management and loss mitigation actions, third, our capital management progress and finally how we think about earnings trends in the second half of the year based on experience to date. Let me start with sales growth. We’re seeing sales grow in several key areas particularly in our leadership lines and retirements and protection and in mortgage insurance in Canada. This sets the stage for future revenue expansion. In life insurance, sales of our new more capital efficient Colony Term UL and GenGuard UL products had strong sequential increases since their launch in late 2009. We remain number one in total life policies sold through the BGA channel and continued to make good progress expanding sales of larger face amount policy. Earnings in long term care, individual long term care sales increased 36% versus the prior year. Here we are seeing a rebound following declines in industry sales in early 2009. We had good growth across sales channels led by the independent channel. Wealth management had its fifth straight quarter of positive net flows. New flows were $436 million, up considerably compared to a year ago and down slightly on a sequential basis. We view this as a very good result in the context of current investment market condition. We saw mixed sales growth in the international segment related to differences in market conditions in Canada, Australia and Europe. In Canada, low new insurance written increased 61% year-over-year as overall mortgage market growth was robust. Market view is at originations have been loaded somewhat towards the first half of the year in anticipation of a rate increase and a sales tax increase both of which occurred in July. In addition, we saw the seasonal growth…

(Operator Instructions) Our first question comes from Ed Spehar with Bank of America. Ed Spehar – Bank of America: I have a few questions. First I’d like to talk about the lapses in the life business. I have a hard time understanding the material negative earnings impact from 10-year level term coming out of the level premium period because I would have thought that this business would have been priced for almost a 100% shock lapse at that point and I’m wondering if you could give us a little more color on that and then I have a follow-up.

Okay. First I’ll talk about the 10-year term lapses generally and why they do not amortize fully over the level period and I’ll do this from an accounting and an industry experience perspective. Accounting rules require amortization in proportion to premium revenue over the life of the policy. Ten-year level term products with premiums that grade up on an ART basis following the level period will typically show some persistency beyond the period and continue to generate premium revenue. So it is normal in the industry that some portion of deferred acquisition cost remains to be amortized after the level term period. Now ordinarily, you’d expect that to be relatively minor fluctuations but to understand what’s happened versus prior year we have to go back and start with our experience in the second quarter of last year and bring that forward to our experience in this quarter. Back in the second quarter of 2009, amortization costs were really relatively low for the term insurance portfolio at around 5% of premium and that was due to unusually favorable lapsed experience compared to what is more typical and more typical run rate for amortization for acquisition cost on a portfolio like this, I would say is in the range of 10% to 15% of premium. Current year amortization costs are actually more in line with this more typical run rate. So the favorability we saw last year we’re not seeing this year. So what’s important is why. And as we’ve looked at the emerging experience we saw that most of the increase is attributable to an increase in amortization of acquisition cost as policies on the post level period increased. We have the large books of 10-year term business sold in 1999 and 2000. We are seeing an increased rate of lapse because those are flowing into the level term period and we’ve seen the increase in amortization year-over-year that I described. Does that address your points? Ed Spehar – Bank of America: Yes. I guess so the follow-up would be that if you’re mentioning that I think that this is different than what you would have priced for, correct?

I think to an extent that it is because when we priced this business and this was back in the 1998-1999 timeframe, we did so based on the emerging experience for these types of products that we were seeing in the market. And as you can imagine over time we have continually adjusted our pricing and kind of kept up with the changes. I would say that over the years because the pricing of (penny) return products to consumers have improved. We’ve seen at least moderate increased in loss rates relative to what had been the experience we saw back in the 90s. Ed Spehar – Bank of America: Okay, but then I guess just thinking about this issue going forward, I mean this isn’t may be a gross over-simplification, but if we are just figuring out that the shock lapse assumption was incorrect ten years after the product is sold, why isn’t this going to be a multi-year issue, depressing earnings?

We are not saying that we are just figuring that out now. We are saying that we’ve adjusted over time, and because term life insurance is a FAS 60 product, the amortization that is scheduled for GAAP reporting purposes is locked in as of when you set the assumptions at issue. We are saying that we saw the relatively favorable experience grade back to more typical in the current quarter and we are also saying that the blocks of business experiencing the higher lapse were relatively being blocked in the 1999 and 2000 time frame and we wrote smaller blocks of this business in the 2001, 2002, 2003 time frame after the advent of the XXX reserve regulation. Ed Spehar – Bank of America: Okay, thanks, that’s helpful. Just two really quick ones. First of all, Pat, was the corporate and other loss this quarter elevated or should we think about this as kind of a run rate? And then on the USMI loss, should we be thinking about the second half of the year, the loss going up at a similar rate or greater rate than whatever the seasonal delinquency trend would likely be in those quarters?

Yes, I will handle to corporate run rate, and turn over to Kevin for your other question. From a corporate run rate perspective, what I would say is that we have seen the impact of absorbing the institutional markets business and the corporate segment which has made earnings a little bit more volatile than it used to be, as well the tax differentials associated with APB 28 calculation and the effective tax rate for the entire year are absorbed in corporate. I would think of the run rate in corporate as a little bit lower than what we are showing in the second quarter. And now I will turn over to Kevin.

Good morning Ed, how are you? This is Kevin. I think when you think about the second half of the year, I think the most important thing to focus on or to think about is what happens with the overall delinquency development. We’ve seen favorable, again, new delinquency development. We’ve seen first half of the year change in overall delinquencies that’s been actually somewhat favorable to its historical trends. Typically, as I think, we mentioned, we would expect a higher rate of delinquency growth in the back half of the year. And as we look at it right now, I think the ultimate outcome in the year is going to be based on, you know, are we are going to continue to see this some favorable new delinquency development that would somewhat mute the traditional seasonality experience? Now do we continue, and I think we have continued to see the burn-through of the bad books of business, the ‘05 through ‘07 type books. So, I think that may provide a little bit of tailwind, but ultimately we need to see how this thing plays out in the back half of the year. But as you think about overall income, I think that delinquency development is really the key thing you should think about in terms of the drivers. Lastly, as we had this quarter, delinquencies have continued to come down now for a few quarters. We like the overall trends and where that’s going, going forward. The remaining offset to that though as it was in this quarter is a little bit of the ageing, the existing inventory. So, as that new inventory comes down, we do have less (inaudible), which is a very favorable trend. We do continue to have older (inaudible) that’s there in the pipeline now. They continue to age forward. I think the encouraging thing there is even with that smaller delinquency population, the overall delinquency reserve level has continued to trend favorably. So, while we do have some ageing, it has been offset by the new delinquency reduction.

And our next question comes from Andrew Kligerman with UBS. Your line is open. Andrew Kligerman – UBS: Hey good morning. Just because we had Kevin there, maybe I will just start on the USMI and then I have one or two quick follow-up. So, loss mitigation savings were a bit lower in the quarter at $217 million, and I think you stated that they reflected $160 million in loan modification savings, and then the HAMP pipeline came down significantly from 28,000 to 16,000 and decided a shift in modifications start from HAMP to alternative programs, so, I started wondering what some of these alternative programs are relative to HAMP, and how you think they are going work back the default rate going forward?

Good morning Andrew. As you mentioned, our savings in the quarter came in at about $217, still encouraged by the fact that for the first half of the year we were at $450 million in total savings. When you compare that to sort of last year and we like that outcome at this point. HAMP starts or HAMP inventory to a point were down, but what I am continued to encouraged by is that we continue to have strong HAMP closings. So our HAMP closings on the quarter, that resulted in favorable modifications came in about 5300 that was up from the last quarter in the 3400 range. So, you still had some nice favorability there. New trail starts continued to be at a reasonable level. And I think as you think about HAMP going forward, based upon the changes in documentation requirements, those things that do get into a HAMP trail now should continue to have a higher throughput in terms of ultimate modification or queer, because those folks have a higher bar to meet in terms of their documentation requirements. So, although the overall HAMP inventory levels are down, in terms of the topline level, we are going to continue to see favorable HAMP benefit throughout the back half of the year. Now your second question is, what about the alternative programs. And as I believe, I had shared with you before, industry-wide, if you step back from HAMP, the overall mortgage industry is doing about 2x alternative HAMP modifications – to HAMP modifications. We’ve got a tremendous amount of focus around HAMP, because the government stepped in at a time when the market was sort of locked up and introduced this program. But then ultimately what happened is the private sector stepped in and started doing what…

This is Pat. I will do that. I will have to give you a little bit of background because you are right, a lot of the work that we have done over the last several quarters is going to impact that. I will start with our international and our mortgage insurance businesses. There are generally short duration products in those businesses, so they don’t have the interest rate risk or earnings fluctuations caused by interest rate movements at our U.S. life insurance or long-term care business might. So what I do to respond would be I will step back and talk a little bit about the potential impacts of interest rates across our domestic life insurance business where we are relatively more interest sensitive than in the international. And what we have been doing to mitigate these impacts as well as what they would be. And I would say in general low interest rates and movements in interest rates impact returns in our annuities, long-term care and in our universal life products. In our annuity blocks, over the past three to four quarters as we have been actively putting cash back to work, we had been lengthening in asset durations and matching asset and liability durations to lock in spreads. Actually we went a little bit long on the SPDA portfolio anticipating that with the a low interest rate environment, you might see better persistency and that was prior to the unlocking that we did in the current quarter. I would say currently we have a tight matching of asset and liability durations for our fixed annuity business which does help to minimize interest rate risks. So we might see some residual leakage associated with non-parallel shifts of the interest rate curve as it flattens but generally speaking the spreads…

That’s what we have designed our strategies to achieve, yes.

Next we go to Steven Schwartz with Raymond James & Associates. Steven Schwartz – Raymond James & Associates: Pat, can I just follow up on a statement that you just made to Andrew. I am not sure I understood it. You said for the SUL, you were practicing the duration matching that you were doing in the annuity, particularly the SPDA, but of course the SPDA is in SPDA, it’s a single premium, the UL, my understanding is it’s not – so I guess I don’t understand how those two match up. I would imagine that the – would you be doing at SUL would be the same thing you were doing in LTC?

The toughest matching strategy to accomplish was the UL as with respect to the secondary guarantees. And because those reserves are the ones that you hold to fund future benefits that you might have to fund that can’t be funded from the build-up in the policy. So we do extend the duration of our liabilities because we sell products that are not highly oriented to upfront premiums but the assets backing the liabilities and the assets backing the surplus associated with that line are all available to lengthen duration and employ the strategy that I described. So it’s not going to be perfect and as I indicated to Andrew, there should be what you could reasonably expect that if interest rates remain lower at the (inaudible), there will be leakage there but we feel pretty good about it. But in particular, the UL block of business is a small exposure and the second guarantee is like between $1 billion and $2 billion of the general account portfolio in total. Steven Schwartz – Raymond James & Associates: And then if I may, one more follow-up and then I have a question. Just the message to add on the lapses with regards to the LTL product, you simply – the experience is not necessarily worse than we are looking for, experience a couple of years ago was probably better. This experience is inline and what we are seeing is really a mix shift as the big fire sale blocks come off. Is that an accurate statement?

Generally, that’s accurate. The only qualification that I would make is that it is true that the last experience that we are seeing now is moderately elevated and relative to our original pricing in the 90s and we are working with that as part of our business plan and our strategy for managing profitability on the line. Steven Schwartz – Raymond James & Associates: Okay, and then if I may, just looking at a couple of regulatory things on both the MI and the LTC side, just wondering if you all have any new insights into what may happen with the GSEs and how that may all work out and as well any recent parts on class?

This is Kevin, I will start with new insights on the GSEs, I think the answer is no. That is an issue that’s going to continue to be debated. I think throughout the fall and throughout 2011 as we move forward, I think the one new insight or observation I will make that we do feel good about is the inclusion, again of mortgage insurance in the statutory definition of the qualified residential mortgage, I think that encouraging, and we should feel good about that going forward, the regulators have a lot of work to do in terms of writing all the regs to match up with that law. However it’s the first time you have seen outside of the GSE charter, a statutory reference to mortgage insurance and I think that’s simply due to the recognition of the soundness of the overall model and the supported has (inaudible) payment lending. Steven Schwartz – Raymond James & Associates: Does that mean whatever happens to the GSEs become less important for the demand for your product?

The way I think about it is this risk retention provision in the bill was designed to make sure a good quality business was underwritten out there and the inclusion of mortgage insurance potentially in that regulatory outcome gets you to what I think is a potentially another channel for mortgage insurance. So outside of the GSE charter requirement, now you have the potential for additional channels, you have the potential for I think an additional leg of value proposition for the product which is based around further capital relief for the lenders and that should be positive.

On the class, the implementation process for class has been turned over to Secretary Sebelius in Department of Health and Human Services and we continue to monitor that very closely. To-date not a lot of activity, most of their emphasis right now is on implementing the major medical healthcare reform initiatives. So to-date, not much of an in terms of any other progress on implementation. Our view continues to be the same on class in terms of its impact from the private insurance industry. We think at the end of the day, private insurance is still going to have a very competitive offer vis-à-vis whatever the implementation process would come out, maybe 2012, 2013 but very limited activity to date. Steven Schwartz – Raymond James & Associates: But can I say something recently in the trade press that there’s a group of congressman that’s trying to overturn class?

One bill from Congressman Charles Bustani has been introduced, basically a watchdog bill, that would engage both the House and Senate in monitoring the actual, real soundness of the assumptions coming out. So there is a level of activity I think both in the House and Senate making sure that there is fiscal responsibility over the top of any form of class implementation.

And the next question comes from Connie Deboever with Boston Company. Your line is open. Connie Deboever – Boston Company: Hi. Thank you for taking my questions. Just to focus back on the USMI. I think you mentioned that you’re seeing more, later stage delinquencies in the pipeline. I’m thinking about reserve for delinquency, which has picked up. Should I think about that continuing to pick up? And also along similar lines, somewhat like in the reserve methodology, I don’t think you’ve taken into account the temp and other modification benefits in terms of reserve. So wondering if that might be an offset?

Yes, Connie, good morning. Let me start with sort of your second question. You’re correct, we have not altered our reserving approach on methodology to include any future benefits for loan modification. So we’ve only incorporated observe experience to this point in time. I had potentially has the opportunity to help you down the road, I guess, too soon to tell you yet on that. Going back to your first question, we have a, as a country, as an industry, we have older stage delinquencies that continue to languish in the pipeline, as well as those that continue to move forward to foreclosure. If you think about our overall delinquencies that are aged over 12 months or greater, I think the total number has probably moved since the end of the last year from about 16% of total inventories to 25% of total inventories, so a little bit of aging there. That has pressured the benefit we’re getting from the lower overall delinquency levels but the real driver there, if you think about it is your reserve for delinquency is moving up because you have less delinquencies, but the overall reserve levels are trending favorably. And I think that’s the way you should continue to think about our expectations. Connie Deboever – Boston Company: Okay, great. And then if I’m also thinking about paid claims, they look like they’ve stabilized between first and second quarter. I guess this is to your second half outlook, if you worked through the ‘05 to ‘07 book, which is seasoned, and I guess the offset which is the potentially higher claims to you in terms of delinquencies using lamming (ph). How should we think about paid claims in the back half of the year?

Paid claims should continue. Right now, we haven’t seen any particular tick up in paid claims, but we do have, even though we’ve had stabilization and peaking of those older books of business, they still have not rolled all the way full, all the way through to claims. So there’s more paid claim exposure going forward. Under delinquencies, it certainly peaked but I would expect that trend, probably the trend up a little bit going forward. Connie Deboever – Boston Company: Great. Thank you. Those are all my questions.

Thank you.

And our next question comes from Mark Finkelstein with Macquarie. Your line is open. Mark Finkelstein – Macquarie Research: Good morning. Hi. I have a few follow ups and a couple in areas. First, just on the DAC issue, I guess it cost something around $11 million this quarter from the elevated lapses on the 10-year level premium term. Is that the kind of the number we should expecting through 2010? And then when you get in to 2011, you talk about a smaller book, how much would we expect that to moderate by?

In 2010, the way that I would look at the amortization trends in total, is that it did increase to a normal range of 10% to 15% of premium in the second quarter, and in the near term, I would expect that to continue because of the way that the business rolls off the books once you reach the end of the level premium period and because the new book years are smaller, I would say that it would turn down, but it would do so gradually over a period of a couple of years. And we’ll be monitoring experience and we could see trends and we could see trends moderate, I’m sorry, improve or they could deteriorate some but at this point in time, that would be my best answer. Mark Finkelstein – Macquarie Research: Okay. And then on the interest rate question, that’s a very helpful answer and a 70% hedged on the long-term. I guess the question is if you have that degree of kind of hedging but we’re still here in the 3% tenure range, is the hedge enough to avoid any acid-adequacy testing issues as we get towards year-end at this levels?

Well, we feel that we’re well-protected and our company’s, through that hedging strategy and as well, we have some smaller non-qualifying hedging positions which provide downsized protection associated with potential declines in the interest rates over the balance of the year. So between those two strategies, we feel like we are certainly, adequately reserved given a statutory evaluation rate of about 4%, which is much lower than the current portfolio. Mark Finkelstein – Macquarie Research: And then just finally, the tax benefits in Australia. I think you said that the current quarter impact is $6 million. How should we think about the benefit that, going forward, is that the right number or will that moderate?

At this point in time, I would expect that is the right number.

And our next question comes from Jeff Schuman with KBW. Your line is open Jeff Schuman – KBW: Good morning. Thank you. A couple of follow ups to add on the – back on the life insurance. First of all, I was wondering if it’s possible now or at some future point to give us a little more detailed picture of kind of the 10-year term quarter, I guess, by quarter. Because I’m thinking, you said there was kind of a big sales impact and on 2000, it goes down from here but I’m thinking if we can sort of see how that – the size of the various cohorts could possibly anticipate the impact a little better. So I guess that’s the first item. Second question, I’m wondering about the interplay of persistency and mortality to the extent that there is somewhat higher lapses than were anticipated at prices, I would tend to think that the people who were lapsing are choosing to reenter and that would, I guess, imply maybe some anti-selection and some different mortality going forward. And then last year I’m wondering if in the future we should anticipate kind of similar issues as kind of 15- and 20-year level term of this written or would they kind of bubble up. That’s it. Thanks.

Okay. First one is with respect to cohort detail. The way that I would look at it is I would look at the life insurance amortization and in comparison to, that’s in the supplement, the revenue stream associated with the business because if you break it down to a lot of detail, you see a fair amount of fluctuation between cohorts and it’s quite difficult to observe trends. So I would suggest that you use the information on the supplement, take a look at the way the amortization is changing and as the revenue trends and that should give you a pretty good picture. And where things happen quarter-to-quarter which are out of line with the usual quarterly trends, you can count on the fact that we will provide additional quality on that. On to your second point, the interplay of mortality and persistency, logically, you’re right but we do also price the product, recognizing that interplay and in particular, as I look at the mortality that is emerging quarter-over-quarter, we haven’t seen that anti-surjection (ph). In fact, I describe the mortality as being within the normal range but high. To give you little bit more color on what actually happened, our number of claims in the current quarter actually declined from first quarter, but it just so happened that the severity increased because the people who happen to die this quarter owned larger policies, so it really is fluctuating randomly within a range and we haven’t seen anything associated with the interplay that should describe, although that certainly exists. Jeff Schuman – KBW: The last part was whether as the 15 and 20-year products sort of – from that your sort of insured and should we expect sort of another bubble in terms of persistency?

I believe that there is that risk but I think the risk is highest on the 10-year product because this particular design does have a good amount of persistency beyond the 10-year period because of the ART design. If you go to the other extreme, there was a 30-year product. The ART premium that comes out at the back-end is so high relative to the level of premium that the policyholder has been paying that almost all – or all of the policyholders are expected to lapse. So, the higher the expected lapse rate gets in the shock period, which does happen on the longer duration product, the less exposure you have to this, but certainly there is going to be a residual exposure on the long duration products. I believe we are dealing with the top issue now.

And our next question comes from Darin Arita from Deutsche Bank. Your line is open. Darin Arita – Deutsche Bank: Thank you. Can you give a little color on the change in the RBC ratio from the first quarter to the second quarter in terms of what caused that?

This is Pat, I would be happy to do that. I actually expected based on the strong production and the declining investment result, that we would have a 5-point decline in the RBC ratio. We had a 10-point decline. The balance is really attributable to some restructuring we did associated with the XXX reserving facilities we have. And in effect, we recaptured a small block of XXX business which increased the strain in the business in addition to what you normally see associated with the new business. That costs 4 to 5 points. And that was a conscious decision. It facilitated the transaction and we are still within our target RBC ranges. Darin Arita – Deutsche Bank: So, assuming that we continue to have very favorable life insurance in long-term sales growth, should we expect 5-point declines a quarter here?

I would expect that there will be some volatility from quarter to quarter, but we see steady declines in our investment losses and impairments, particularly from the perspective of the structured securities, we are starting to see delinquencies decline and impairments for example in the sub-prime have been close to zero in the current quarter, may be to $3 million to $5 million. So, given that we are incurring the strain on the new business now, we will expect earnings in future periods associated with that as investment to cause decline. We will see some declines in the near-term in the RBC ratio, maybe in that 5% range, but then it should start to naturally build given the engineering of the growth and the declining investment loses. Darin Arita – Deutsche Bank: Okay that makes sense. And then turning to the lifestyle protection business, you have significant changes made over the past year. Can you talk about how that business might perform differently this time around if it goes through another shock experience, if unemployment starts to increase again in Europe?

Darin, it’s Mike. I guess I think about it this way. First is we took all of the actions that we thought were appropriate to deal with the enforce that we’ve had. As far as – half of the book was monthly premium. So, was subject to price change. So, we moved on that as you know, and really put all of those price moves in place, but we remained actively monitoring those areas for performance to see if there’s any additional pricing actions required. I will remind you there’s part of, when I use the term pricing action, it’s not just premium. You may change how you handle profit and loss share with a distributor, you may change the commission structure, it also helps you get back some margin on with that. The second thing we did was we looked at our experience and incorporated that back into product design as we go forward. In other words, did you have to adjust the nature of any liabilities or therefore coverages so that it could handle a more strain period that likely just have gone through. So, that has been built into the new products that we are selling now. Finally, surrounding both of those, whether it’s old or new, we do have active loss mitigation efforts. In other words, following up on claims, making sure we are paying valid claims. But, let’s say you have an accident and fitness claim, someone should get better and like for example go back to work, and you have to have active follow-up on those. So, I think we designed the business model to handle a more stressed environment going forward and we used of the same types of backtesting disciplines that we did in the U.S. Mortgage Insurance business in Europe to make sure that that’s been a data-driven and analytic exercise, not a theoretical one. So, we are quite comfortable with that model going forward. Darin Arita – Deutsche Bank: That’s very helpful. Thank you.

And our next question comes from Jordan Hymowitz from Philadelphia Financial. Your line... Jordan Hymowitz – Philadelphia Financial: Thanks for taking my call. Two questions. One, when the earliest you think the Senate will pass the FHA bill enabling them to raise the annual premiums similar to one that the house passed?

Its possibility would be before they go out for the Fall election. That’s probably the earliest whether it gets done there or not or is later on in the year is part of – appropriations is yet to be determined, but the earliest would be before the election this Fall. Jordan Hymowitz – Philadelphia Financial: Second, I was just – house hearing yesterday, and it seem to kind of be (inaudible) for the MIs in general. I mean there wasn’t a single consumer advocate that was anti-MI. Do you see a general shift for your product in general from regulators, consumer groups and things of that nature?

I haven’t been to one of those (inaudible) and I missed yesterday. So I wish I could have been there based upon the coverage that you just described. But I think that what we are seeing is an understanding of MI and the – can believe the value of the regulatory capital framework through this cycle. And it’s not just a US issue. I think it’s a global type recognition overall for the framework that mortgage insurance provides to low down payment lending. So, I mean you raised the issue, so I am going to summarize what they said. Number 1, they said this is an industry that got no Federal support through this cycle. This is an industry that at the end of the day the regulatory capital framework held up amazingly well through this cycle. It’s well reserved, required a whole reserves for these top cycles going through as a counter cyclical reserving approach. And potentially, I think most importantly they said it’s a model for regulatory reform of the GSCs going forward that needs to be considered. So, the answer to your question is, it was a good meeting, it was a good hearing, whether it’s a shift or not, I think it’s actually a recognition of how we tell about and how this industry showed up to this cycle. Jordan Hymowitz – Philadelphia Financial: And final question is we know it’s part of book value in the call increased over $28 which is almost three times your stock price. Did you guys expect there was money anytime sooner? Is there any reason why that book value should substantially come down towards your current price?

I think our sales trends are good, particularly in the leadership lines in Retirement and Protection. Our investment experience is improving in terms of the increasing investment in the portfolio. The businesses in the International jurisdictions, particularly Canada and Australia are seeing the benefits of both effective loss mitigation and improving economic and housing markets. And I feel pretty optimistic that we are delivering on the plans that we have got in place. I guess I’d have to say I will leave the valuation question to someone else. Jordan Hymowitz – Philadelphia Financial: I am sorry (inaudible) current stock price to book value, I am sorry not three time, sorry about that. Thank you very much.

And our next question comes from Donna Halverstadt with Goldman Sachs. Your line is open. Donna Halverstadt – Goldman Sachs: Thank you, my question is already asked.

And our next question comes from Eric Berg with Barclays Capital. Your line is open. Eric Berg – Barclays Capital: Pat, I was hoping we could build on some of your responses to the earlier questions. First, in response to I think Jeff’s question, are you saying that on the longer duration term policy, say 30-year term or 20-year term that the rate of increase in premium that the customer suddenly, maybe not suddenly but let’s just say faces at the end of the level period is less pronounced than is the case in the 10-year and that therefore the 10-year policy is much more likely to lapse than the 20-year or 30-year term at the end of the level period. Is that what you’re saying?

No, that’s not what I was trying to say Eric. I was trying to say that we recognized that for the longer duration product the premium increase will be much more pronounced. Therefore the expected lapse is closer to a 100% and there is, I’ll say less room for margin of error in estimating the persistency beyond the end of the level premium period. Eric Berg – Barclays Capital: So, okay thank you. So it’s the other way from what I said; very clear now. Since you didn’t get it right to a certain degree on a certain code of policy, the 10-year level premium issued at the end of the prior decade, why won’t then these other policies likely face similar issues, oppose similar challenges for you?

I think they will pose the same challenges, I’m just saying that for the longer duration policies because you expect lapse rates closer to 100% because the premium increases so dramatic. There shouldn’t be much variation between the experience and the expected result. In the case of the 10-year term product, there was more margin for error but we have adjusted as we have seen experience emerge. Eric Berg – Barclays Capital: Okay and then just a couple of questions; one narrow, one broad for Kevin. I think somewhere in your prepared remarks either Kevin or Mike were saying that you expect something about 8 points in the second half of the year in delinquencies. I just want to make sure I understand exactly what you’re referencing here. Is that 8 percentage point increase in the loss ratio year-over-year, 8 percentage points, 8%, are we talking sequentially year-over-year? I just want to make it absolutely clear on what you mean. Then third and finally, I’d love to hear from Kevin on his observations on sort of what would be the main factors in his mind going forward that is going to drive business back to the private sector from the FHA. I know Mike provided an excellent introduction, I’d love to hear some additional comments from Kevin. Thank you.

Eric, first of all your question about the 8%; what we said there is our historical experience over time to include the recent experience over the last few years through this difficult environment is that historically we’ve generally had an 8% average increase in total delinquencies in the third quarter followed by a subsequent increase in the fourth quarter. Now the way I think about this going forward and had caveated that a bit before is although we’ve had a return to more traditional seasonality where you have declines in the first half of the year and growth in the second half of the year in delinquencies, we are seeing that traditional seasonality somewhat favorably muted in the first half of the year and there’s the potential for that in the back half of the year primarily driven by the fact that we think we burnt through some of these large more troubling books of business. So that’s the answer to your first question. Is that helpful? Eric Berg – Barclays Capital: Yes, so in other words, we’re talking about number of delinquencies and we’re saying that if you had a 100 –

If we had a 100, it would have gone up 8. Eric Berg – Barclays Capital: Very good, yes that’s clear then.

Turning to the other question, I really think there are four things we believe will bring back a healthy private mortgage insurance market and help us continue to shift business away from the FHA. The first of those is continued enhancement to the FHAs risk management and loss mitigation efforts. The second is increased FHA pricing. The third is reduction in overall GSE adverse market delivery fees and loan level pricing and then finally and I think this is a little longer term change is a rollback in FHA loan limits to levels that are really more consistent with traditional government housing policy objectives. So, let me just walk through those really quickly. The first one again, as it relates to FHA risk management loss mitigation efforts, given the high level of delinquencies and defaults, the FHA is experiencing – I know they are committed and we are very supportive of applying additional resources and flexibility of their overall loss mitigation efforts. I mean they just need more capacity to work through some of these troubling loans. As it relates to pricing, they have their upfront pricing increase that they’ve already implemented and now the bill has come out of the house side that needs Senate support that’ll allow them to reduce their annual pricing. It’s currently, I believe, at about 55 basis points. This would allow us to significantly raise that annual pricing which would make FHA compared to a conventional mortgage very, very – on much more of an even playing field. Third, I think the GSEs and their pricing and approach they took going into this period is worth a re-look. It’s time to revisit the market. It’s time to revisit their pricing. The markets have stabilized materially in particular their adverse market delivery fees I think are worthy of a revisit and their loan level pricing. So, if those re-pricing efforts are undertaken, it would do a lot to help bring back the markets to the conventional space into private capital. Then finally, the fourth I mentioned was loan limits. And if you recall, the FHAs loan limits were raised along with the GSEs back at the beginning of this cycle and not only were they raised but in proportion to the GSEs loan limits, there’s a lot of overlap in the two markets that historically didn’t exist. So as I think about it, the government and the tax payers are now supporting loans, they’re up to over $700,000 and I don’t think that’s what the FHA was originally designed to do. I think they’d like to find a way to start to walk back away from that and allow private capital that’s waiting to support those type of loans and that type of insurance to do what private capital does best.

Ladies and gentlemen, this concludes Genworth’s financial second quarter earnings conference call. Thank you for your participation. At this time the call will end.