Good morning, ladies and gentlemen, and welcome to Genworth Financial’s Q1 2014 Earnings Conference Call. My name is Christy and I will be your coordinator for today. (Operator instructions.) I would now like to turn the presentation over to Amy Corbin, Senior Vice President of Investor Relations. Ms. Corbin, you may proceed.

Thank you, Operator, and good morning everyone. Thank you for joining us for Genworth’s Q1 2014 Earnings Call. Our press release and financial supplement were released last evening and this morning our Q1 earnings summary presentation was posted to our website. We encourage you to review all of these materials. Today you will hear from our President and Chief Executive Officer Tom McInerney followed by Marty Klein, our Chief Financial Officer. Following our prepared comments we will open the call up for a question-and-answer period. In addition to our speakers Kevin Schneider, President and CEO of our Global Mortgage Insurance Division; Jerome Upton, Chief Financial Officer of our Global Mortgage Insurance Division; Jim Boyle, President and CEO of our US Life Insurance Division; and Dan Sheehan, Chief Investment Officer will be available to take your questions. With regard to forward-looking statements and the use of non-GAAP financial information, during the call this morning we may make various 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 release and the risk factors of our most recent Annual Report on Form 10(k) and on our Form 10(q)s filed with the SEC. This morning’s discussion also includes non-GAAP financial measures that we believe may be meaningful to investors. In our financial supplement, earnings release and investor materials non-GAAP measures have been reconciled to GAAP where required in accordance with SEC rules. Also when we talk about international protection and international mortgage insurance results, please note that all percentage changes exclude the impact of foreign exchange. And finally, references to statutory results are estimates for the quarter due to the timing of the filing of the statutory statements. We did recently announce the filing of a prospectus for the Australian initial public offering. Please note that due to Australian and US securities law restrictions we can only provide very limited remarks today on this process. And now I’ll turn the call over to our CEO, Tom McInerney.

Thanks, Amy, and good morning, everyone. Thank you for joining us today for our Q1 earnings call. Today I’ll cover two topics – first, briefly discuss my view of the quarter and second, provide an update on our key priorities for 2014. I’ll then turn it over to Marty to provide more details on our Q1 earnings. Now let’s turn to the results for the quarter. Our Q1 results reflect continued progress in our turnaround strategy. Turning to Slide 3 of our Q1 2014 Earnings Summary Presentation, net operating income was up 28% over the prior year. The results were positively impacted by an improved housing market in the United States driving lower losses as evidenced by a loss ratio of 46% in our US mortgage insurance business. Similarly, Canada and Australia benefited from favorable loss performance as reflected in low loss ratios of 20% and 17% respectively. Mortality was higher in our US life insurance position and had a net unfavorable impact to earnings in the quarter primarily in life insurance. In long-term care we continue to see a favorable impact from the 2012 in-force premium rate increases on earnings of $10 million versus the prior quarter and $40 million versus the prior year. Overall we are pleased with the results in the quarter as we continue to improve the operating performance of our core businesses to improve shareholder value. Next I want to provide an update on Genworth’s top priorities for 2014. Slide 2 of the presentation details some of the highlights for Q1. In 2014 our three key US life insurance position priorities are one, execution of our long-term care insurance strategy; two, expanding the private long-term care insurance market; and three, developing innovative and more competitive universal life, indexed universal life and hybrid products and balancing…

Thanks, Tom. Good morning, everyone. Today I’ll give an overview of results for the quarter and an update on our 2014 goals. I’ll be referencing our associated earnings summary which was posted on our website this morning. Let’s begin with Q1 results starting with Slides 3 and 4 of the earnings summary. We reported operating income of $194 million for the quarter and net income of $184 million. Net operating income was up 28% versus the prior year and up $1 million sequentially. Although we saw higher mortality versus the prior quarter in US Life Insurance results were helped by the long-term care rate action as well as lower losses in Australia, Canada and the US. The results also reflect $16 million of unfavorable foreign exchange versus the prior year and $5 million of un-favorability versus the prior quarter. Results in the current quarter included $15 million of tax benefits while results in the prior quarter included $29 million of tax benefits. Turning to Slide 5, in Global Mortgage Insurance reported net operating income was $132 million, up $25 million from the prior quarter. Let’s cover Canada results first on Slide 6, where operating earnings were $41 million for the quarter. Unemployment in Canada at the end of the quarter was 6.9%, down slightly from December, 2013, and there was a modest sequential increase in home prices. Premiums were down sequentially from the maturing of the larger 2007 and 2008 books of business and unfavorable foreign exchange. [Flow NIW] in the quarter decreased 40% sequentially with the normal seasonal variation we see in Q1 each year exacerbated this year by the more severe winter weather. We anticipate housing demand will shift till later in the year. The loss ratio remained low at 20%. Turning to Slide 7, operating earnings in…

Ladies and gentlemen, at this time we will begin the question-and-answer portion of the call. (Operator instructions.) First we will take Sean Dargan with Macquarie. Your line is open. Sean Dargan – Macquarie : Thank you and good morning. I have a question about the Life statutory capital. So we’re essentially in terms of unassigned surplus where we were at the revised number you gave out for the end of 2013. How should we think about the run rate for statutory operating income over the next three quarters? You identified some discrete items that negatively impacted stat earnings this quarter – I was thinking of how we should think about it going forward?

Hey Sean, it’s Marty – let me take a crack at that. First of all I’d say that I do think we’re on track for our unassigned surplus goals for the year growing at about $100 million to $125 million for the year. As you probably recall from the last year, too, the increases on unassigned surplus certainly aren’t linear throughout the year; they move around quite a lot year-to-year. I think what you also see is that statutory income is pretty lumpy and moves around quarter-to-quarter. I’d say this quarter for our core businesses in US Life, for annuities, long-term care and life insurance that the statutory operating income was pretty much in line with what we expected. Variable annuity income was a little bit off given some of the reduced growth in the equity markets and the kind of lower interest rate environments but we did see kind of tepid variable annuity results. But the core results in the other businesses were basically on track. When it comes to the unassigned surplus walk, though, it’s not just a matter of net income. There’s some other items that go into it. This quarter we saw a couple items in particular that basically offset that positive net income. One was lower reinsurance credit which is frankly an item that we expected and it does tend to have a larger negative impact in Q1 than it does in subsequent quarters. The other item was a tax reserve adjustment that we made that was not expected that also impacted the walk in unassigned surplus. So those two extra items basically offset net income for the year. We haven’t really talked about our net income goals; we’ve really talked more in terms of unassigned surplus goals. Certainly one of the goals of the business with Jim Boyle and the team is to really organically grow statutory income so that it can support dividends over time. So they have a lot of work to do with the long-term rate actions and introducing increased life products into our portfolio and things like that to improve statutory income over time. But this quarter it was basically kind of what we expected with respect to statutory income and with variable annuities a little bit tepid, and then we did have that tax reserve adjustment that was really something we didn’t expect. Sean Dargan – Macquarie : Okay, thanks. And one question on USMI – you noted today that there was some reserve strengthening for later-stage delinquencies and yet you still reported a loss ratio of 46%. Does the full year guidance of a loss ratio of 60% to 70% still stand?

Sean, this is Kevin. You broke up a little bit on us in the middle of your question. If you can take another shot at that, I really couldn’t hear the basis of your question. Sean Dargan – Macquarie : Yeah sure, can you hear me now?

I can. Sean Dargan – Macquarie : Okay, sure. So your loss ratio was 46% in USMI. That reflected some reserve strengthening on the later-stage delinquencies. Is your full-year guidance still 60% to 70% loss ratio?

Yeah, I think that’s the best way to think about it. We should be on track with that which we provided back in February, in the 30% to 60% range. Just to sort of give you a little bit more color on it, our incurred losses were down in the quarter almost about 40% or about $45 million VPQ. But of that new delinquencies were down about 8%, and usually you look at new delinquencies are really what drives your incurred lost. The difference we had in the quarter is really primarily driven by the seasonal benefit for next year [in aging] plus the reserve factor that you referenced. Sean Dargan – Macquarie : Okay, thank you.

And next we’ll go to Geoffrey Dunn with Dowling & Partners. Your line is open. Geoffrey Dunn – Dowling & Partners: Thanks, good morning. Kevin, I wanted to follow up on that topic. I think you mentioned that you dropped your incidence expectation on earlier stage delinquencies to 1 in 6. This quarter ex the charge, it looks like the seasonal benefit might have pushed that towards 1 in 10. Where do you think that the incidence expectation on new notices trends over the course of the year?

Yeah, Geoff, when you said the incidence benefit would have been 1 in 10 it feels a little bit like you’re making the connection from frequency to actual paids and the amount of paids we made. Paids were down certainly on the quarter but that’s really not the full story on our frequency. It’s really how you think about the transition rates through various stages of delinquencies and ultimately what will go to claim. You can have a good seasonal benefit like we did here in Q1 and it looks like it was high if you’re just drawing that comparison to your paid claim level in terms of units, but I think overall we would expect over time to sort of be in that 1 out of 6 range in terms of the road forward, and perhaps we get a little bit of benefit as the economy continues to improve. Geoffrey Dunn – Dowling & Partners: Okay. I was actually referencing the provision in the quarter, not paids, but that still answers the question. And then could you for Australia, what are you seeing that is driving the improved incidents on the late-stage delinquencies? Is this Queensland stuff that you took a charge for a couple years ago and now isn’t turning out as bad as you get [five of HPA]? What’s developing there?

Number one, our reserves that we posted back in that quarter have held up pretty well over time. Additionally you have, continue to have decent home price appreciation in Australia and so on some of these later-stage delinquencies, you can almost think back to the pre-crisis days in the United States – even when you’re having paid claims or when you’re having claims you’re getting good disposition values on the houses when they’re sold. And the houses are being sold, reducing the net impact of the claim. That’s the biggest driver I would say in terms of what’s driving that performance. Geoffrey Dunn – Dowling & Partners: Okay, and then last question: can you confirm if the [NCDOI] has received capital proposals yet?

I guess based upon our understanding of the process which is probably about as good as yours at this point, Geoff, we believe that certain regulators have received it but I can’t confirm whether North Carolina has or not. Geoffrey Dunn – Dowling & Partners: Great, thank you.

And we’ll go next to Suneet Kamath with UBS. Your line is open. Suneet Kamath – UBS : Thanks, a couple questions: just first to follow up on unassigned surplus. I just want to be clear on how we’re benchmarking this because I think at the end of last year or earlier this year on the conference call you talked about $100 million to $125 million increase on a base of $400 million, but now I think you ended the year at $440 million and it seems like you’re keeping the same increase which increases the overall target for year end. So I just want to make sure that should we be focusing on the $100 million to $125 million improvement or should we be focusing on an absolute level of unassigned surplus by the end of the year?

Hi Suneet, it’s Marty. Yeah, you’re right – the goal is really the change, the $100 million to $125 million growth. So it would really be off that $440 million level. Every quarter end we’re kind of estimating where we think unassigned surplus was – it was our estimate that it would be $400 million and it turned out to be $440 million as we had a release of a reserve in the New York company with cash flow testing. So our goal is to grow $100 million to $125 million off of the $440 million. Suneet Kamath – UBS : Okay. And then I guess on I think it was Slide 13 on the long-term care pricing, if I heard you correctly I think in that first bar you said that you’ve gotten $325 million of approvals and you’re sort of haircutting that to $195 million to $200 million based on I guess expectations for policyholder behavior. It strikes me that the haircut seems pretty big especially given your prior commentary. I think that 86% of the folks that you’ve approached with respect to the price increases have agreed to take the price increases. So I just want to get a sense is the 86% kind of a high number or is the 40% haircut kind of a low number?

Just to be clear because I don’t think we had mentioned this before: if you look at the actual approvals from those 41 states if everything stayed the same then we would see $325 million. That in effect is how the regulators will look at what’s been approved. But we know that because these increases will be implemented over the next five years, because in some cases some of the states spread it out, that things will change. We won’t have all the policyholders we have today. Some will terminate coverage for whatever reason. Some are taking the reduced benefit and so we have to factor that in. We do pay some incremental commissions to agents. So we have an internal model that takes the $325 million and then pro-forma’s that going forward so that when we get to 2017 it’s our best estimate of what we think we’ll actually realize when it’s all said and done from the increase. So it’s an estimate; it’s based on our models. I think our models are good. We can’t predict with certainty exactly what policyholders will do, and certainly what the mortality with policyholders will be, but I think so far we feel pretty good about those estimates and I think that’s a pretty solid number. And again, when we look at for when it’s fully implemented, the $250 million to $300 million, that again is not based on our internal model. So I think it’s something we can rely on. It’s not exact. The one thing we’re also doing on Slide 13 on the bottom is, so the top is the $195 million to $200 million, the $300 million, our estimates, projections; the bottom shows the actual impact on our US GAAP reporting numbers. So we’re trying to give you both and obviously we’ll see how the model works out and what policyholders do. I would say, and we didn’t specifically comment on this but we’re still seeing about 85% take the full rate increase; about 10% are taking a reduced benefit; and 5% are still taking the non-forfeiture option. Suneet Kamath – UBS : And how big is that sample size when you give those percentages?

I think we’ve notified several hundred thousand policyholders, and of course the other thing you have to keep in mind is that the increases go in policy-by-policy on the anniversary date. So it sort of will build going forward. Suneet Kamath – UBS : Got it. And then just the last question going forward, I just want to come back to Australia for a second. In terms of use of proceeds, I asked the question on the last quarter’s call if capital management could be a possible use of those proceeds, and I think, Tom, you said you wanted to de-lever and do some other things but it certainly is a possibility. I just want to make sure the comments in the prepared remarks in this call, I wanted to see if there’s a change in that because you didn’t mention capital management or if you’re thinking about it in a consistent way as you did last quarter.

Yeah, I appreciate all of you not asking questions on the actual IPO process because we can’t comment on that. On use of proceeds we still have the same priorities and I’ll just ask Marty to review those with you since he’s the one that’s focused on looking at the various options for what we could do, working with me and also ultimately with the Board.

You know, there’s still a number of things we don’t know. Obviously one of the things we don’t know is if we’re going to be able to execute the IPO; the other is what the amount of proceeds is going to be. We also have yet to fully understand what the [GSE] requirements are going to be so there’s a number of things that are yet to be determined. I will say that if we do execute the IPO which is subject to a number of contingencies as we’ve discussed that our primary areas of focus, not necessarily our only areas of focus but our primary areas of focus are really first making sure our businesses are appropriately capitalized – so in the case of USMI we want to make sure it’s ready to go under new [GSE] guidelines. And then we also want to begin to make some good headway on if we can accelerating our de-leveraging goals. So those are our primary areas. We’ll also look at other things that we might do depending on how much we have in the way of proceeds and what those business needs might be. Capital management is something which we certainly think about and talk about but we’ll have to assess that later in the year working with our Board. There’s other things that we’re obviously also looking at in that process. We want to be making continued headway in improving our ratings so we want to be thinking about that. We also want to think about the dividend flows and capital generation within our businesses as we think about things like dividends and things like that. But those are the things that we’re looking at and discussing with our Board, and we’ll have updates later on in the year. Suneet Kamath – UBS : Okay, thanks.

And we’ll go next to Nigel Dally with Morgan Stanley. Nigel Dally – Morgan Stanley: Great, thanks. First on the Australia, you came out with guidance on the 30% loss ratio. Clearly the loss ratio was well below that this quarter, so a couple of questions: first, is the 30% a full year or is it a loss ratio that we should expect for the balance of the year? And if it is for the full year does that mean that we’re likely to see a loss ratio above 30% for the remaining quarters of the year?

Nigel, 30% would be a full year type average, so think about it that way – that’s how we think about it. And then in order to get there to your point you would need to have some incremental pressure in some of the later quarters of the year. We’re very pleased with the Q1 results but we do anticipate some potential pressure as it relates to unemployment, some modest unemployment increase – that could pressure our loss ratios going forward. We’re very cautious and watching the impact on Asia, and the bit it might have on Australia. And then finally one quarter, it’s one quarter of results and we could see some variation through the balance of the year, some seasonal variation. But overall you would have to be above where we are at this point to achieve that 30% average mathematically. Nigel Dally – Morgan Stanley: Great, thanks. And then the second on long-term care: I know you’re confident that the outlook should improve going forward but I guess we’ve heard your confidence in sales should begin to improve. And sales remain somewhat weak. Perhaps some color as to why the attraction has been taking longer on some of these products you’ve been introducing?

Yeah, Nigel, good morning – Jim Boyle talking here. Long-term care sales for the quarter were off as we had indicated in Q4 they would be really due to pressure from some pricing, product and distribution changes we made in 2013 and clearly form some headwinds that exist in the marketplace relative to some pricing in the product and rate increases. On a positive note as Tom highlighted in his opening remarks the market opportunity continues to be stronger than ever. What we’re hearing from our distribution partners is the need to include a long-term care solution in their financial planning schemes is higher than ever. And so for us we expect to see higher sales in each quarter throughout the year. Our early indicators which are our submits were up in every month, January, February and March in Q1. And so as we really expected, we expected to have some headwinds. We’re investing significantly in product, marketing and distribution and we fully expect to have more favorable results as the year progresses. Nigel Dally – Morgan Stanley: Great, thanks a lot.

And we’ll take Joanne Smith with Scotia Capital next. Joanne Smith – Scotia Capital : Yes, Kevin, I just had a question going back to the big reserve strengthening that you did in USMI back in, I think it was late 2012. And I’m just curious to see the small reserve strengthening you took this quarter, how does that relate to the remaining balance of that strengthening that you did back then?

Joanne, if you go back to that period of time and I’d rather you not take me back there anymore, but I’ll go because you ask – it’s really difficult to compare it to what happened back then. The cohorts, the loans that were available at that point in time, some of those are gone. We paid claims, we’ve had a lot of loss improvements, so I wouldn’t relate it quite as much to that reserve strengthening that we did at that point in time. I mean but directionally the way you can think about it is as foreclosure timelines have been stretched out and ultimately loans are going to claim you’ve got increased interest rate and expenses associated with the elongated timeline and that’s pressuring your severity levels, bottom line. That’s the biggest piece of what drove the reserve build. The offset for that was as performance improves we got better product in the marketplace, we have economic recovery going on, unemployment’s improving, home pricing is improving – we are seeing some improvement in the frequency of the early stage delinquencies that go to claim. We put up about $11 million and on a $1.3 billion reserve base we don’t really think it’s very material. Joanne Smith – Scotia Capital : Okay, alright. That’s good enough, thanks. And then just on the overall PMI industry penetration in the quarter it was flat. Can you talk a little bit about what’s going on with the industry dynamics overall?

Penetration, when you say it was flat – on a purchase penetration basis we think it’s maybe up a point, and purchase penetration is really the biggest driver of our business. Overall we’ve probably, out of 100 loans probably 19 of them are going to the MI industry so that’s a big driver. The volume of the market did go down and that’s driven primarily I would say off the top line origination number. Originations were down quite a bit. They were down predominantly because refinances have fallen off dramatically. We can expect that to continue – we’re just not going to have the big refinance market we had in the past. A lot of people are taking about weather; no doubt weather impacted parts of the Northeast, the Midwest, but they were also down in other parts of the country where you didn’t have weather and that’s probably being driven by both the increase in interest rates and some further affordability challenges that are being driven by home prices going up. On balance when I sit back and look at it and I say what’s going to happen with the market for the year, you’ve got the headwinds of a slow sort of labor market recovery, wage growth is not going up dramatically. I talked about the home prices and the interest rate, and then on the other side there are some really positives I think that are still out there and we’ll have to see how it ultimately plays out. Even though the labor market isn’t improving dramatically it is improving every single quarter. There’s pent up household formation demand that I think is ultimately going to have to play into the market. It may not be in Q2 or Q3 but over time those that have been on the sidelines are going to reenter the market and I think that’s going to be the biggest driver for us. Joanne Smith – Scotia Capital : Great, thanks Kevin.

Yep.

And next we’ll go to Steven Schwartz with Raymond James. Your line is open. Steven Schwartz – Raymond James: Thank you very much, good morning everybody. Just a couple: Johnson [Crepo], Kevin, any thoughts on that and how it might affect the business? Assuming anything ever happens.

Yeah, number one I have no idea when anything’s going to happen. It’s been as you know delayed and we’ll see when it ultimately comes back and gets voted on. In general I think it’s good for the MI industry. It contains some, as it’s currently constructed it contains some explicit language relating to credit enhancement on above 80% LTV loans and I think that’s very supportive of private MI. And so net-net I see it as a positive. Steven Schwartz – Raymond James: Okay. And then if we can go back to Slide 13, I appreciate the attempt but I’m still not getting it. So you’ve got approvals, $325 million. You think that’s going to wind up $195 million to $200 million. And then I look at the bottom here and earned premiums, the benefit is $24 million; reserve changes are $46 million – that’s $70 million. You annualize that, that’s $280 million. How do these fit together?

Well Steven, you have to keep in mind that the $195 million to $200 million that we’ve received so far, that gets implemented over time policy-by-policy. In some cases the sates didn’t give us a one-time approval but said “Spread it out over three years or five years,” so then on each anniversary of the policy we add the incremental approved amount. So it just takes time for the premiums to flow through. We ultimately think in 2017 and we also think we’re going to get some more approvals in the remaining ten states. And we’re going back as I said to the other states – we do think we’ll see by 2017 as we roll all of those increases through all the policies, and people, policyholders decide what they’ll do that we’ll end up with versus no increases that we’ll end up with annual premiums going forward of per year between $250 million to $300 million. Steven Schwartz – Raymond James: No, no. What I’m not getting, I’m getting the $195 million to $200 million – I understand that’s over time, through 2017. What I’m not getting is that the $24 million plus the $46 million is $70 million. You multiply that by four to annualize, that’s $280 million. That looks like a very big number. It’s the bottom half that looks too big to me relative to the top half.

Well again, keep in mind that you have two things going on – one is premiums and they roll in over time. But if someone, and there’s 10% of policyholders take the reduced benefit, and 5% take the non-forfeiture option, so for those people we aren’t going to get the increased premium going forward but because they’ve reduced their benefits or they’ve taken the NFO the claims that we might have to pay to them are significantly lower than what we originally assumed. So you do see that you get more of a one-time benefit from the reserve release from the NFO, the RBO, so that hits one time whereas the premiums continue year after year. So you will certainly get more of a short-term benefit to earnings the more people take the reduction in benefits or the NFO. Steven Schwartz – Raymond James: Okay. Okay, that was good to know. And then one more: you’ve mentioned a couple of times in various presentations higher tax rates in international MI. The tax rates that we saw in Q1 in international MI, are those good for the year?

It’s Marty, Steven. I think basically our forecast for the full year, we gave some indication of that in the prior quarter and I’d say that we still have those same expectations. I think some of those are really not so much tax rate changes but sort of tax adjustments as we look at some of the things in our return and adjust it into our financial statements. But the guidance that we gave on our prior quarter call is still the guidance that we have for the full year. Steven Schwartz – Raymond James: Okay, thank you guys very much.

And ladies and gentlemen, with there being no further questions at this time I will turn the call over to Mr. McInerney for any closing comments.

Thanks, Operator, and thanks to all of you for your time and good questions today. I also want to thank Amy Corbin because Amy stepped in as you know in the new role of IR, and I want to thank her on behalf of the whole team for planning this meeting and everything she’s doing and we’re so pleased for that. I also want to say that on behalf of the senior team and myself, I think we’re pleased with the progress we’ve made in Q1. I think we’re building on the turnaround. I think you’ll continue to see those benefits going forward. We’re focused on those five priorities I mentioned. I think we now have a new senior team in place and I think it’s working well, so I’m very pleased with them; and obviously we have a very talented group of employees. I think they’re much more excited going forward given the progress that we’re making. And we remain focused. We have I think two strong missions. One is to help families at those moments of truth when they need to rely on life or long-term care policies and then obviously on the mortgage side, helping families maintain the dream of home ownership. So I think we’re making progress. Thanks for being on the call and we’ll look forward to the Q2 call later this year.

And ladies and gentlemen, this concludes Genworth Financial’s Q1 Earnings Conference Call. Thank you for your participation. At this time the call will end.