Please standby. Good morning, ladies and gentlemen. And welcome to Genworth Financial’s Second Quarter 2014 Earnings Conference Call. My name is Heather, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of this conference call. As a reminder, the conference is being recorded for replay purposes. Also we ask that you refrain from using cell phones, speaker phones or headset during the Q&A portion of today’s call. 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. Good morning, everyone. Thank you for joining us for Genworth’s second quarter 2014 earnings call. Our press release and financial supplement were released last evening and this morning our second quarter earnings summary presentation was posted to our website and will be referenced during our call. 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; Elena Edwards, President of our Long Term Care Business; 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 earnings release and the risk factors of our most recent annual report on Form 10-K and our Form 10-Qs as filed with the SEC. This morning’s discussion also includes non-GAAP financial measures that we believe maybe 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. And now, I’ll turn the call over to our CEO, Tom McInerney.

Thank you, Amy, and good morning, everyone. Thank you for joining us for our second quarter earnings call. I will cover three points today and then turn the call over to Marty for a more detailed review of the second quarter. First, I will make a few comments regarding Q2 ’14 results, then I will discuss our plans with regard to compliance with the new GSE standards and finally, I will talk about the progress we're making on a long-term care insurance strategy. Before I begin let me take a moment to comment on Jim Boyle’s decision to leave Genworth. As was announced last night, Jim has accepted the position of Chairman at HealthFleet, Inc., while I'm sorry to see him go, I respect his decision to leave the company and return to the New England area. I've enjoyed working with Jim and on behalf of our Board of Directors and all of Genworth employees I would like thank Jim for his thoughtful and steadfast leadership. I wish him well in his future endeavors. As you know, I have devoted much of my 18 month at Genworth, helping to develop a new Genworth LTC business model and working closely with state and federal government leaders and regulators to change the regulatory framework for the LTC insurance market. Therefore, the Board and I believe it makes sense that I assume the additional role of CEO of the U.S. Life Insurance Division until we are further along in the development and implementation of the new LTC business model, and we have greater visibility into the go-forward regulatory framework. Now let’s turn to 2Q ’14 results, except for our long-term care business, I'm encouraged by Genworth’s second quarter results. Turning to slide four of our 2Q ’14 earnings summary presentation, net operating income…

Thank you, Tom, and good morning, everyone. I’ll cover two topics today. First, I'll give an overview of results for the quarter and second, I’ll give an update on our 2014 goals. Let's begin with second quarter results, starting with slide three and four of the earnings summary. We reported net operating income of $158 million for the quarter and net income of $176 million. With the completion of the IPO, a portion of the earnings in Australia are now accounted for in non-controlling interests. For the quarter, the non-controlling interest in Australia was $11 million and only related to earnings since May 21st this year. Adjusting for that, net operating income was up 27% versus the prior year but down 13% from the prior quarter, largely result of adverse claims experience in long-term care, partially offset by continued strong loss performance in our mortgage insurance platforms in Australia, Canada and U.S. The results also reflect $11 million of unfavorable foreign exchange versus the prior year. Turning to slide five, Global Mortgage Insurance, reported net operating income was $136 million, up 11% versus the prior quarter, when adjusting for the IPO impact. Let’s cover Canada first where operating earnings were $47 million for the quarter. Moving to slide six, unemployment in Canada at quarter end was 7.1%, a slight increase from the level at the end of the first quarter. 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 increased 72% sequentially, with the normal seasonal variation we see in the second quarter of each year, combined with the strongly rebound from the first quarter that was impacted by the more severe winter weather. Bulk…

(Operator Instructions) We take our first question from Sean Dargan of Macquarie.

Thanks and good morning. I don’t know if Tom or Marty wants to answer this but I’m wondering if you could help us think about how to size a potential reserve strengthening because you did say that a change in assumption is likely as a result of this review. I mean, what should we be looking at?

You know, Sean, there is a complex answer to that question. And so I think probably a place to start would be the -- if everybody could focus on Slide 27 in the presentation because I think they are very important. And so if you look at, we divided there the old block which is pre-PCS, PCS 1 and PCS 2 and there are 331,000 lives in force. So those are the policies that we know we have issues with and that's where the bulk of $250 million to $300 million of additional premiums is coming in. And then on the new block, we have choice one. So that block that the oldest of the new block and there are 316,000 lives covered there. So between the old block in Choice one together, that’s a little over 50% of our lives in force. And so those are the challenge and then on the new block, it’s about 570,000 policies. And you can see on that slide there, the average obtained age on the old blocks, So Pre-PCS is 85, PCS 1 is 82 and PCS 2 is 76. So that’s -- just given their ages, that’s where we’re seeing issues. And of course, if you look at the percentage of lift-time benefit, it’s also much higher than say the newer blocks where it’s very low and now we don’t offer that. On the other hand, there is a confusion I think on the part of some and maybe hits our fall, between what we did in December and what we’re seeing now. So if you go back to the December 4th review, there we’re looking at the overall margins. And we did that because many investors and analysts were concerned because other companies had taken reserve additions primarily around different…

Hey, Sean, it’s Marty. I would just add a couple things. One is, since the reserve review and some strengthening we did in the third quarter of 2012, what we saw throughout 2013 and actually in the first quarter is that generally the DLR has been appropriately funding paid claims and existing claims. So, this is the first quarter where we’ve seen such a significant kind of loss on that. As I mentioned in my remarks, we saw loss of about $24 million this quarter pretax. That's by far the largest loss in general for all of last year quarter by quarter. If you add it up, that was the slightly positive number and it was the slightly positive number in the first quarter. This is the first quarter, we've seen such a lofty times point in the last three months. The other thing I would mention, you might find it helpful. While as Tom said we don't really know as we look at these assumptions to make changes what impact depending on the reserves, it will be on the reserves. Let’s say there is kind of a helpful rule of thumb as you are thinking about potential impacts on the statutory entities, U.S. life companies. Think about a pretax DLR increase. Let’s say for every dollar of DLR increase, if it increases, roughly a third of that dollar, say $0.33 would actually impact unassigned surplus. So, a couple reasons behind that. You recall that half the business is reinsured into BLAIC, the Bermuda subsidiary. So only half of that is the U.S. statutory entity. And then another tax benefits, let’s call it, generally 35% up to some amount that we had. So basically one-third roughly is the rule of thumb of every dollar of DLR impact hit unassigned surplus. So it would be I think a fairly modest impact on percentage basis on unassigned surplus.

Okay, thank you. If I could just ask one quick follow-up and I will let this get on. The process in which you come to your best estimate of NPV of claims, is that the same for GAAP and stat reserves? So in other words, we won’t have a scenario where you can add to GAAP reserves without having to add cash to stat reserves?

Basically, Sean, the only difference between what we would have to do for the best estimate for the claim reserve for GAAP and stat is there is a different discount rate between the two. But remember this on average is a three or four-year claim. So the NPV, there will be some difference, but it’s not all that significant. So to the extent that we change anything, we would change it both for GAAP and stat, maybe a little bit different because of the different interest rate assumptions for the discounting.

Okay, thank you.

And we will take our next question from Nigel Dally with Morgan Stanley.

Great, thanks. Just going back to Sean’s question, perhaps from a little different angle. I appreciate the complexity of it all, but in the past you provided sensitivities to different factors. And so you’ve got this $3.5 billion of (indiscernible) severity was 10% worth into perpetuity, plus you come up with the numbers what that would meant for the (indiscernible)?

Nigel, you just can’t do it that way. There is so many different factors that you look at. And so I just don't want to get into speculating, because we really need to do the work to see based on the second quarter, do we need to change the assumptions? So now the other thing that you know the last -- we and most of the companies probably every three or four years do -- regardless of what’s happening to the claims do a deep dive into the claim reserves. And so, as Marty said, the last time we did that was in 2012. And so that would have reflected all of our experience the history till the year before say. Since then we have whatever that is, the two more years, two and half more years of claims status. So we will look all that again. And so there will be, let’s call it, two years plus of new claim data to look at. And then, we also will consider you know what to make of April, May and June and the one what we may need to do in terms of our assumptions on the claim reserve. Again, it comes back to the requirements are that we book our best estimate. So what -- where we are in the claim reserve in the second quarter is our best estimate, but we do want to review all the assumptions given what we saw in April, May and June because it was unexpected. But to get into speculating of what that could mean, I mean, I just think we just don't want to do that because we just don't know we have to do this fulsome review. We will have inside and outside actuaries looking at all of that. And so because there are so many different drivers, you have females and males, females aren't claim longer than males, 85-year-old versus 65-year-old unclaimed, whether it's dementia related or not dementia related, whether on assisted-living facility or nursing home. There are so many variables that you have to look at. There is transitions now, people generally start unclaimed in home care, then they go to assisted-living and then it’s usually the last case nursing home. The nursing home costs are doubled assisted living costs. So there is just so many complexities that you know to try to get into what the three-months and the change based on claims since we did the last study. There are just too many things to factor in for us to really be able to give you any guidance yet. We obviously will do a full look and we will see whether we need to change the assumptions. And if we do, that may or may not have a material impact on our best estimate for the claims. And the guy come back to, we’re only talking about 4% of the total policies, 50,000 versus the 1.2.

Right. Understood. Just another follow-up on long-term care as well. You mentioned the six states where (indiscernible). Can you give us an indication as to how large those states are, perhaps what percentage of your total premium comes from those states?

Yeah. I think that what we received today, it represents about 70% of the overall premiums, the remaining states are some large, some small. The six states include some in the New England state, so some of them are small. And then of course we’re going back to 30 or more states where they didn’t give us the full rate increase to ask for more. And the other thing I would say again because you know I am sure we may get this question is, we are not necessarily done on the rating, premium rate increases on those old books. What we have agreed is on the states that gave us the full increase and that's -- of the 43 states, that’s less than half of the states. So I think it was the full increase. In general, we are agreeing not to -- these are increases well above 50%. We’ve agreed not to ask for rate increase until five years from now. But on the other states where they didn’t give us the full rate increase, we are going back. We’re also going back with April, May and June claims statistics. So we are for those going back and factoring that in and talking to the regulators, clearly I think this is one more hopefully good argument for them that they do need to give us the increase because you know we maybe seeing claims. And again going back to slide 27 on these pre PCS, PCS I and II, part of the problem is that at least on the two oldest blocks, the average age is 85 for pre PCS and 82 for PCS I, and so those are clear and there is a lot higher percentage of lifetime. Now we don't offer that on Flex II or the new Flex III product, but in the past we did.

All right. Thank you.

Nigel, it’s Marty. Just want to back for just a second on the DLR reviews. On the 2012 review we did that was really based on experience that we had up through about 2010. We’ve got credible experience going back probably back to 1994, at this point about 20 years of experience. We’ve looked at it again in 2013, didn't see any need for any changes at that time. In fact, the DLR was actually probably behaving over sufficiently the first couple of quarters after that. So now as we do the review, now we will be looking at really experience since 1994, really all the way up through what we’ve seen in the second quarter. So it will really be taking on additional experience from the 2012 review of say the experience we’ve seen additionally from 2010 all the way through where we're this year.

Thanks.

We will take our next question from Suneet Kamath from UBS.

Thanks. Good morning. The couple more on long-term care. First, Marty, on your rule of thumb around that one-third hitting unassigned surplus. Will that change once you bring BLAIC onshore or combine it? I mean, you said you’re getting a benefit because some of it’s reinsured to BLAIC, but once you bring it onshore, does it really matter then?

Well, again, the repatriation which is still a priority of ours, it’s going to really get -- looks like it will be postponed to 2015 for the reasons that we’re doing this DLR update and it doesn’t impact the reserves. We have to update our pro forma filings. So by time we do that, it will be the fourth quarter so kick into 2015. But if we do -- if we make any changes in the third quarter with the DLR review, which is our intent, that will impact where we are at the end of the third quarter and half the business is down in BLAIC. And so the unassigned surplus impact overall through that period of time. Later on when we recaptured the business and repatriate the business from BLAIC, the unassigned surplus impacts have already happened, so it will be not -- it won’t be an additional hit, it will be actually a benefit in bringing the business.

Okay. And then I guess just to think about that, again the one-third, just to make sure I understand this correctly. So let’s just say that the reserve requirement increase is a $100 million. That effectively is what you are saying that you would only have to put 33. If you wanted to fund that increase with new capital from the holding company, whatever, are you basically saying that if there was $100 million you only have to put in $33 million?

What it means is first of all it’s all hypothetical. We don’t really know what the number is going to be. But if it were say $100 million of DLR increase that means that the unassigned surplus impact would be around $33 million. So where we are now is $560 million of unassigned surplus that would go to call it 530, 527 technically. So please find that helpful. The other thing is that another rule of thumb to give you is the impact on RBC points. So $100 million DLR impact, gross pre-tax DLR impact would be probably after-tax $70 million, that’s maybe 8 or 9 points of RBC impact roughly.

Right. But should we be thinking -- since you are guiding us to unassigned surplus in RBC, should we be thinking about those as the -- I mean those are the metrics that we should be thinking about in terms of what you want to protect?

Yeah, I think that’s right. I think that what we want to make sure our U.S. life business is very well capitalized and also makes sure that maintains very high dividend capacity. The dividend capacity in U.S. life right now is about $350 million and that’s the function of capital levels and stat earnings and constraints by unassigned surplus. So we certainly like to keep unassigned surplus in RBC ratios at lofty levels and that’s our priority.

Okay, got it. And then just I guess for Tom, just based on my conversations with folks yesterday, I will ask the question this way. Why should we not interpret Jim Boyle’s decision to leave as sort of a indication or sign that maybe this long-term care turnaround is going to take a lot longer and in fact they use only there for six months. And I think when you hired him, you touted his experience in long-term care as one of the reasons. So I just don’t know how you want to respond to that, but I think a lot of us on the call would like to hear the response.

Yeah, I would say certainly Jim did have a lot of experience and good executive. He was a good addition to our team and I work closely with him. As our press release and then the Health Fleet press release states, I mean he resigned and he’s taken on the role of Chairman there. So, I mean, I don’t know what more to say on it.

All right. Last one is just your longer-term ROE guidance at 7% to 9% by 2016 and obviously that was pre-Australia and obviously before you knew what you know now about long-term care. So how should we think about that 7% to 9% based on what we know today and what’s happened?

Yeah, I think what you all seemed to be missing is a very big point. This is a issue around our claim reserve. We also are seeing higher premiums every quarter. We ultimately think we are going to get to a point of $250 million to $300 million of incremental premiums by 2017 and that will go forward. And so yes, whatever reserve action if any that we have to take this quarter and the future, one of the challenges I think for analysts and investors to understand is because of the way U.S. stat and GAAP works, those premium increases or any reserve releases, and you are seeing it in that one slide, slide 13 that falls to the bottom line. And so part of our projection of the 7% to 9% increase in the ROE certainly improvement in GMI and we are seeing that and USMI in particular will be a big driver of that. But also those premium increases. Again our point estimate is $280 million a year going forward and we will be building towards that through 2017 and that’s going to add significant incremental benefit to the returns of the business. We've always said, I've always said that on the old blocks, so again going to page 27, pre PCS, PCS I, PCS II, those blocks we under price them. We are now thinking very high premium increases on those. That doesn't mean we can't even get more premiums down the road. And so look, the way I look and I think, I’ve been clear but let me state it again. We know we have issues on those three blocks in particular. We’re losing money, a significant amount of money and these premium increases are trying to get those back to breakeven and that also…

Okay. Thanks.

Yes.

We’ll take our next question from Geoffrey Dunn, Dowling & Partners. Geoffrey Dunn - Dowling & Partners: Thank you. Good morning. I had a couple of question on your commentary about the growth PMIERS. First, I think you indicated that as written that the pro forma returns be in line with your expectations. Is that commentary including leverage from reinsurance or without?

Geoff, it’s Kevin. We think it doesn’t include it right now. I mean, we’re pricing this business, all of our new business, given the credit characteristics of that business really on a risk adjusted basis now from a capital standpoint. It's about in the same range as where the PMIERS falls our right now. So it does not include the benefit we get or the inclusion of whatever leverage associated with reinsurance. Geoffrey Dunn - Dowling & Partners: Okay. And then in terms of that same commentary, is that based on the current scope of the business or do you think the returns in the sub 700 FICO world would also be as expected as currently priced?

Yeah. A good point. I think as Tom or Marty mentioned, in aggregate, we think the returns are fine. In our opinion, there is probably some capital inefficiencies around the edges embedded in some of the current drafting of the guidelines. They really have the greatest impact on lower credit borrowers, so a little maybe lower FICOs, higher LTVs. So on the edges there we may -- there may need to be some refinement, but in aggregate, based upon what we’re writing today and what we’d expect to write going forward, we think the returns would meet our return expectations. Geoffrey Dunn - Dowling & Partners: Okay. And then last question. What is the benefit of being compliance by mid ’15, rather than taking the two-year grace period? Is it really that much of a competitive factor?

This is Tom. What I would say on that is we think USMI, given our position in the market, given the returns we’re seeing on new business, so incremental returns on new capital put to work, as well as the fact that over time, I mean, we’ll see where all the politics come out that we could have a larger private mortgage insurance market in the U.S. because Fannie Mae, Freddie Mac and probably may pullback. So there is more opportunities we think given all those factors. USMI is one of our best businesses, I said that. And therefore, we do think it's a competitive advantage and also would be better in terms of our relationship with our bank customers that we’re compliant sooner rather than later. And so our goal would be as I said in my remarks to be of compliant on June 30, 2015 or before. We think that we can do that. We hope that we can do that mostly through reinsurance and we’ll see where that ends up, and then obviously we have some excess cash at the holding company. So it's becoming I think a better and better business everyday. We are at 50% of the risk is the new block that will continue to go forward, so it is one of our best businesses. And what we said in terms of the lot of reasons we did the Australia IPO to reduce the risk, to also rebalance the capital, but it also allows us to rebalance the capital in a way that if we do need, we know -- we knew where we needed to do some increase in capital, given where we thought the GSEs will come out. I think they came out a little bit more stringent than we thought. Overall, we think that's fine. It’s important to have a strong private mortgage insurance market, but we have always said with the use of proceeds the primary purpose would be to do what we need to do to correctly capitalize the business so they are competitive and then second to delever, those are two top priorities. And then we’ll look at other things going forward, capital management, etcetera. Geoffrey Dunn - Dowling & Partners: Okay. Kevin, sorry, one follow-up. Just to push you a little bit, when you say there is items around the periphery that might need to be adjusted. Would you write the majority of the 680 to 620 offering you have today as currently priced under the proposed seniors?

Geoff, I think we have some subsidization across our credit profile and we would have to -- that’s all we were writing. We’d have to take a different look at it. I think in terms of how we’d approach to from a pricing standpoint. It's not all we’re writing but what I’m trying to do and Rohit and his team were trying to do here is really balance the -- making sure we have a good solid capital framework that will make us absolutely part of the process going forward and balancing it against some access for first-time homeowners. And so I think there is a policy element there, you got wean as well as really having a strong regulatory framework. We’re supportive of where this things at. We got some opportunities and we’ll be working actively with them to participate in this public common period and I think we’ll end up in a good place. Geoffrey Dunn - Dowling & Partners: Okay. Appreciate your comment. Thanks.

Thank you, Geoff.

Ladies and gentlemen, we have time for one final question from Ryan Krueger of KBW Investment Bank.

Hey, thanks. Good morning. I had a question on 513 which is helpful. The $150 to $175 million incremental benefit to earnings this year from the LTC rate increases, I guess, if I grow that up on a pretax basis, its $230 million to $270 million. Is the way to think about it that the future benefit is kind of the difference between that $230 million to $270 million and your ultimate $250 million to $300 million expectation for incremental premiums and that the mix of how it kind of earned and will this change or have less reserve benefit but more premium coming in?

Yeah. Ryan, I think that’s a reasonable way to look at it. As Tom mentioned, we expect to ultimately have $250 million to $300 million of incremental premium. I think what we’re seeing is we implement the rate actions as obviously those people into relatively small proportion people that are electing reduced benefits are taking in non-forfeiture option. When they take those options at the time that they get the rate increase noticed, they make that decision. And there is a median impact on those policies in the current period and that comes in the form of a reserve release. But obviously, once the rate actions are fully implemented, then it’s just a matter of getting the ongoing premium on people and all the future periods for those people who are paying a higher premium.

Okay. Understood. And then in terms of this severity on LTC claims, I understand the difference been active life reserves and claim reserves. I guess, my question is does the trend you’re seeing on claim severity, is that really isolated to policies to have lifetime benefit? In other words, if those trend continued, it would’ve really have much of an impact on the newer blocks business you’ve written or could have some impact there longer-term as well?

You know, what we have to look at and we have looked at in past, we’ll looked at it now is that what are the claim termination rates and benefit utilization things look like a lot of other complex factors that Tom talked about. And those vary by lifetime versus non-lifetime benefits side as all types of factors. So we’ll have to take a look at it. Clearly claim termination rates are very different this quarter by about 5% versus the prior quarter and that had big impact on existing claims. On new claims this quarter, we did see an uptick on new claim severity where we had a dynamic or we had a little bit higher mix than we have in prior quarter of lifetime benefits, claims coming with lifetime benefits or with higher DBA. And again, when we think about the DLR, I think in terms of the existing claims and we have to look at all the factors that go into all those different parts of claim pattern smaller policies.

Okay. Great. Thank you.

One additional point is that and if you look at one of the slides and you can see that over time, over the years that we’ve been issuing different blocks of policies. There is a row in the chart that illustrates the percent of lifetime in each of those blocks. So that’s been dropping down pretty significantly, especially over the last several years. And as I think, we discontinued lifetime benefits couple years ago.

And ladies and gentlemen, I will now turn the call back over to Mr. McInerney for closing comments.

Thank you, Operator and thanks to everybody on the call. We appreciate all the questions on long-term care and how complex it is, the margins and those reserves and those timing of the premiums and so on and so. Hopefully, we've made some progress today in educating you a little bit more on that, it is complex. And the follow-up that you have with Amy and her team, hopefully she can help you understand that if you have any future question. And as I said earlier, with exception of our long-term care business and we know, we have issues with the back book. That’s not new news, what’s really new is that the three months in the second quarter and the claims we’re seeing. But I understand why we didn’t get many questions on GMI or the other business, but I would say, I hope what doesn’t let lost in the overall result is that the three main GMI platforms are performing very well. I think that we continue to expect, while there is seasonality in USMI. We’ve continued to expect that USMI will have significantly increased earnings this year over last year. And as the 2009 blocks and forward become a bigger part of the portfolio and that should continue over time. And we’re also -- I guess, we also lost sight of the fact that we did do the Australia IPO, we’re very pleased with that. So, while we have significant issues on a back book and long-term care, I think overall, putting it in context. I think we’re making progress on the overall turnaround strategy. We never said it was going to be easy, we always have said much more work needs to be done and particularly on the long-term care and on the back book. But hopefully, we’re getting into a much better regulatory framework going forward. And so that I believe, the ultimate answer in long-term care is it can be a very good business. But we have to change the regulatory framework because no one can estimate policy holder behavior and where the claims side is maybe where interest rates are. And so hopefully, this is just more evidence to the regulators and we’ll make them more comfortable moving to the new model. So, thank you for your questions. We’re obviously going to do a lot of work in the third quarter. We’ll have more to say in the third quarter call as we get through this claim review that we’re doing on the claim reserve in the 50,000 policies. So with that thank you very much. And look forward to talking to you next quarter.

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