Good morning, ladies and gentlemen, and welcome to Genworth Financial's First Quarter 2015 Earnings Conference Call. My name is Trisha, and I will be your coordinator 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 headsets 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.

Good morning, everyone. And thank you for joining Genworth’s first quarter 2015 earnings call. Our press release and financial supplement were released last evening, and this morning our earnings 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 and Dan Sheehan, Chief Investment Officer will be available to take your questions. 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 notes regarding forward-looking statements in our earnings release and related presentations, as well as the Risk Factors of our most recent report on Form 10-K and our quarterly Form 10-Q, 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 the results of our international businesses, please note that all percentage changes exclude the impact of foreign exchange. And references to statutory results are estimates due to the timing of the filing of the statutory statements. Given the level of interest for today's call, we ask the callers to limit themselves to one question and one follow-up. Should you have additional questions, please re-enter the queue. And now, I'll turn the call over to our CEO, Tom McInerney.

Thank you, Amy, and good morning, everyone. Today I will provide an overview of the quarters result, along with an update on our strategic review. But first, let me address recently announced finalization of US Private Mortgage Insurer Eligibility Requirements or PMIERs. We are pleased that the guidelines are final and believe they increase the soundness of the private mortgage insurance market. The final guidelines reflect lower capital requirements, than the graph lines would have required on the 2005 to 2008 legacy books and we project that new business long-term ROEs will be inline with current levels in the low to mid teens. For Genworth, a mix of adverse market and currency changes primarily related to Mortgage Insurance Canada, combined with a reduction of captive reinsurance benefits offset to reduce capital requirements and resulted in a capital need within our anticipated range of $500 million to $700 million. We expect US mortgage insurance to be one of Genworth's best reporting businesses in the future and we remain committed to being compliant with PMIERs by the effective date. Currently, we believe the mix of reinsurance and holding company cash makes the most sense to fund the capital need. The ultimate mix will depend upon final reinsurance terms and conditions and a level of excess cash at the holding company. Today, we have made substantial progress in reinsurance and the finalization of the guidelines paves the way for execution of the reinsurance contract by the effective date. Our plan is to position this business to continue to increase the amount of profitable new business it writes, given the attractive ROEs and ultimately we expect it return to dividend paying status in the next few years. Now, I'd like to provide some high level remarks on the quarter, the details of which Marty…

Thanks, Tom. Good morning, everyone. Today, I will discuss our first quarter results, as well as perspectives on some factors influencing long-term care performance going forward. As shown on slide 3 of the earnings summary, we reported net operating income of $156 million and net income of $154 million for the quarter. We saw solid results in most of our businesses, reflecting continued strong loss ratios in our global mortgage insurance division that were partially offset by an unfavorable foreign exchange and favorable mortality in US Life insurance division. Global mortgage insurance had another good quarter as shown on slide 4, reporting net operating income of $116 million up versus the prior quarter and also up versus the prior year when adding back to non-controlling interest impact of the Australia IPO in the quarter. Let's cover Canada on slide 5 first, where operating earnings were $40 million for the quarter, up $4 million from the prior quarter. We saw modest sequential increase in home prices, while the national unemployment rate increased slightly versus the prior quarter to 6.8%.Flow NIW was seasonally lower, but up versus the prior year from a large originations market and share progression. The loss ratio decreased to 4 points from the prior quarter to 22% from fewer new delinquencies net of cures. The loss ratio is up slightly versus the prior year from higher averages reserve per delinquencies related to certain regions, partially offset by fewer new delinquencies net of cures. Turning to Australia on slide 6. Operating earnings were $30 million, down $3 million versus the prior quarter. As in Canada, macroeconomic conditions were generally stable in the quarter as their national unemployment rate was 6.1% at quarter end and overall home prices experienced modest gains sequentially. New delinquencies were higher and cures were low…

Ladies and gentlemen, at this time we will begin the Q&A portion of the call. As a reminder, please refrain from using cell phones, speaker phones or headsets. [Operator Instructions] We'll go first to Nigel Dally with Morgan Stanley.

Great, thank you. Good morning. So with Australia, you touched briefly on this in your prepared remarks, but I was hoping to get some additional data, since one of your key customers National Australia Bank, is putting their mortgage insurance contract out to bids. So hoping to get some details on how large a customer are they for you and perhaps, just some overall commentary on the competitive conditions?

Hey, good morning. Nigel, this is Kevin. We – the National Australia Bank probably represents roughly 10% of our new insurance written in Australia and this is a sort of normal course negotiation. We – their contract with us, we've had in place for sometime, has an expiration date, I think in early fall, September, October type timeframe. And it would be normal for us to enter into negotiation with them. And it put out an RFP that will be working closely with them to try to renew that business in place.

Okay. Thanks. Just second ways PMIERs, in the past you talked about reinsurance, filling the majority of the need, now I think that you're talking about hold co cash approval, should we expect hold co cash to be accounted in majority there, just trying to get some color on the likely mix between hold co cash and reinsurance?

Yes, Nigel. This is Tom, let me take that one. We had anticipated prior to the finalization of the PMIERs to use mostly reinsurance, given how the final capital requirements came out. We don’t think the reinsurance on the 05 to 08 blocks is attractive as it was with the graph. So – and looking at that, I think in the end we'll end up with a mix of reinsurance and cash from the holding company. How that will play out will be dependent on the final negotiations on the reinsurance terms.

Okay. Thanks, Tom.

Thank you. We'll take our next question from Jimmy Bhullar with JPMorgan.

Hi. Just first can you comment on, like if you were to sell BLAIC and there have been lot of news reports about that? How much of the capital you'd have to lead in BLAIC and how much could move up to the holding company. And then secondly on long-term care, I think Marty mentioned in his remarks that you expect earnings in 2015 to be modest, so does modest mean that 1Q – good run rate or would you expect earnings to decline from there. And then related to LTC, can you talk about just potential unlocking in the long-term care block, you expect to adjust – every single quarter going forward, or would you derive [ph] to more detailed review, maybe on an annual basis ?

So Jimmy, I'll take the first of your three questions…

Sure.

Then ask Marty to talk about the next two. I talked about life and annuity and how we see that. We have solid positions, but we're not a leader in any of those businesses and clearly there is a lot of intense competition for life and annuity, lot of companies in the US. And so we're looking at all of that. Where we'd move forward with the deal, selling some of blocks or potentially BLAIC, we would clearly have to receive regulatory approval first to do the transaction and then on the proceeds to the extent we wanted to move some of the proceeds to the parent company, we would also need regulatory approval for that. We're in the early stages of talking to players who might be interested in the blocks or the BLAIC entity. So it’s really too early in the process to really be able to say more at this point.

Okay.

And I'll turn it over to Marty for the other two questions you had.

Jimmy, its Marty. So on the other couple of questions. One was we expect long-term care to be modest. Frankly given a lot of the moving parts that I tried to talk about in the prepared remarks, whether it’s the new claim reserve factors which depress earnings in the current period and once new claims come in but have a presume better result. In future quarters we've got potential more volatility in the P-GAAP block and I'll come back to that. We've got this profits followed by losses accrual. We've got the rate actions dynamics where we expect that to begin to taper off. But I think the – as we rollout, as people expect rate increases, the behavior and the timing of that is still pretty volatile and as reserve releases are hard to predict with certainty quarter-to-quarter. So I'd say it’s very hard to predict a quarterly run rate. I think they are going to be modest, so I would describe this quarter, as modest. But I am really reluctant [ph] to give you number. But I would call the quarter modest profit, earlier we kind of expected to be modest and it’s going to bounce around. There would be some quarters that are going to be better, some quarters it could be worse given all of these dynamics here. I do think the first quarter does tend to benefit a little bit from a seasonality perspective, we've seen in some prior quarters. As I think I mentioned from a mortality aspect and so it helps claim termination rates typically in the first quarter, sometimes it gets little bit worse in the fourth quarter. So that’s a little bit of seasonality you might think about. The other thing on the P-GAAP block is while obviously was zero margin, our likelihood of unlocking is higher. We're assessing the assumptions and looking at it every quarter, but these are longer term assumptions that we make as we think about margin testing. So I think it’s generally pretty unlikely and as you see really big changes in a quarter that we have made some changes. But certainly it is not out of the realm of possibility during the year…

And then the main thing there would be obviously just claims experience that you are seeing, but then also any changes in your assumptions about rates and stuff, right?

Yes, I think that’s right.

Which you wouldn’t revise on a – you wouldn’t necessarily revise those on an ongoing basis, but I think every year so you would probably take a deeper look and asses whether rates are there, you expect them to be, because I don’t think you'd end up revising them based on small changes in rates every single quarter?

You mean interest rates?

Yes, interest rates or even claims experience?

Yes, I think that right. I mean, when we think about margins as they maturely drive, unlocking and truly kind of a longer term view of interest rate. So little movements quarter-to-quarter are really going to drive a big change obviously if there is a huge change in macro economics, or US economics that we look at and that gives us a totally different view longer term, that would be an impact. And I would also say claims experience, when you have 50,000 claims on the books roughly it does move a lot quarter-to-quarter potentially. So you kind of have to take any quarter whether it’s really good or really bad with a bit of a grain salt in the context of looking at 20 years of claims experience.

And just on your interest rate assumptions for the block, could you just talk about what it actually – what type of long-term rates you're assuming and when you are assuming they will get there and then if you are at this type of rate environment by the end of the year, whether 10 years [ph] operating around 2%, would reassess your assumptions? So when would you reassess?

For GAAP loss recognition testing, I don’t actually have the number, but it’s in our materials in the last quarter. We showed the rate for the P-AAP block that we're using, as well as the H-GAAP bock. And that really basically is the portfolio rate. I think for the P GAAP block the way that that portfolio is constructed is, I think its unlikely to have very significant changes in that portfolio yield over next few years, whatever the rate environment is. But obviously, the lower rates are the more that will come down over time.

Okay. Thank you.

Yes.

Thank you. We'll take our next question from Ryan Krueger with KBW.

Hey, thanks. Good morning. First on for Tom, last quarter you mentioned a debt reduction target of $1 billion to $2 billion, is that still the right way we should think about what you're looking at going forward?

Yes, Ryan we haven changed that view.

Okay. Great. And then in terms of that related question, lot of your debt instruments with that bond prepaid penalties, that is the $1 billion to $2 billion would that include the prepaid penalties associated with that, or would that be something that would occur in addition?

No, that would be notional of amount of debt we're going to take down. So obviously any prepaid things would be in excess of that.

Okay. Got it. And then just want to follow up Jimmy’s question regarding delay in GLIC, it looks like delay had 670% RBC ratio at the end of the year and if I strip that out from GLIC, GLIC was closer to 275% to 300%, so I want to confirm is that the right way to think about GLIC on a standalone basis or there were other factors I guess I should consider?

I don't have the number at my fingertips on GLIC without that unconsolidated. But that seems sit down in the right ZIP code, but obviously as it’s looked at from regulatory standpoint, we look at it obviously the investment in those subsidiaries. BLAIC [ph] for example is a very important part of its overall capital structure. We do rebalance capital sometimes among the affiliates, but obviously the investments in subs, including investment [indiscernible] it’s a big part of their RBC in GLIC.

Got it. And then just last one if I could. I guess you talked about increasing capital buffers for the long-term care, how are you thinking about that at this point in terms of what would be an appropriate buffer, are you thinking about some sort of RBC ratio target or other types of metric?

Yes, we're still working through that Ryan, its Marty. I think that we are – we've been looking at the economic capital behind it which is really different than what kind of way RBC works, but if the RBC doesn’t really have an appropriate interest rate risk component to the interest rate risk at their long-term care. We also want to look at it from a practical standpoint, we want to make sure that we enough capital in business to absorb some of the volatility that’s in business from a statutory earnings volatility standpoint and so forth. So we're looking at it and I think its going to come in the form of either a higher RBC ratio or it could come in a form of a RBC ratio plus a buffer. I think ultimately – we're working through and looking at it for those lenses and also wisely work through some of the strategic actions that Tom spoke about and we look at the businesses that we have in US Life business at the end of all that we want to look at that business profile and so on.

And in the LTC GAAP equity that you disclosed of $7.1 billion in the presentation, what would that be on ex-sales TI [ph] basis?

We don’t provide that number but obviously with where interest rates are and with the value some of hedges and so forth, it’s a lot different number.

Okay. All right. Thanks a lot.

Thank you. We'll take our next question from Sean Dargan with Macquarie.

Thank you. Just following up on the line of questioning around wise capital, can you just remind us, do you write life and annuity business out of GLIC as well?

Yes, we actually write life and annuity out of GLIC, scrutiny [ph] on your company and BLAIC the principal life and annuity business the majority of it is in BLAIC.

If we assume hypothetically that GLIC was sold or we entered the way in that BLAIC was repatriated, do you have any sense of what kind of RBC would be required to back an LTC only business?

Well, it’s Marty again. So we're in LTC only business, I think it would be higher given what kind, some of the things I talked about earlier but we're not sure at it, as we work the strategic evaluation of what businesses we're going to have. In the remaining US Life companies, we may have everything, we may not sell anything, we may sell part of those things. So its going to be function of remain businesses. We haven’t really concluded on what a LTC only capital ratio would like.

Okay.

And what I would add to that Sean, its Tom, is that obviously we're looking at the pluses and minuses with some of these strategic actions that we could take. But also we are in discussions with the rating agencies and with regulators and part of the overall strategic decisions, in addition to the straight financial aspects that will be, what does the company look like after the stop, how would that be perceived, where the growth prospects with the volatility. So all of those things go into the decisions that we're going to ultimately make and as we said we have I think very good outside financial strategic advisors that are helping us, the management team is well as the board think through of all that.

Just one last follow up, and is there nuclear options on the table, in other words if you sell or reinsure a way in life and annuity that you decide to draw a line in the sand and not contribute another penny to LTC and come with solutions for Canada and USMI to the benefit of shareholders?

Sean, I don’t how to necessarily answer that. I would say that obviously it’s very important to our regulators that we appropriately capitalize and reserve our long-term care business. So whatever we decide to do strategically working, we have very good relations with of all of our regulators, including the states in the US and I think we want to maintain that. So – looking at long-term care, I think its important going forward that we capitalize it correctly, and consistent with what the regulators would like us to have in the business.

Okay. Thank you.

Thank you. We'll go next to Suneet Kamath with UBS

That wasn’t even close. So on GLEC I just wanted to follow up, given your desire to delever, will there be scenario where you would sell GLEC even if you couldn’t get the majority of the proceeds out to the holding company?

Look I think moving forward with GLEC is one of the options that we're looking at. What we could do with the proceeds are a big part of that decision. So again, we ultimately will be talking to the regulators for various entities and that will be all part of the decision.

But also Suneet a function of the other things that we're looking at, so its not just an isolation we have looked at all the things we are trying to accomplish and look at it in kind of aggregate holistic reason, maybe other things that we could do to help pay down debt as well is just life and annuity sale.

Okay. But given that you've already talked about potentially selling GLEC, can we assume that you've already had some preliminary discussions with regulators is that a stretch?

Yes, we talk to regulators all the time, most of the discussions and most of our focus on long-term care with the regulators is around the premium increases. But we – and we have generally talked to them about the options we're considering, but that going forward, discussions with them will be very important.

Okay. Got it. The follow up is on BLAIC, you mentioned your expectations to repatriate that this year, so two quick ones on that. First, is that your decision or is that something the regulators or rating agencies are prompting you to do. And then second, is there a sense of what incremental – essentially where you'd want to run that in terms of in RBC when stock consolidated, just want to get a sense of it, if that’s a source of additional capital need once you repatriate it? Thanks.

I'll take the first part that and then I'll ask Marty to talk about the RBC impacts. The decisions to repatriate BLAIC is our decision, there is no pressure from the regulators specifically on that. There was a general view of state regulators in the beginning I see. There were also, the Fed is starting to weigh in with not Genworth particularly, but the entity, the insurance companies that they oversee. And they have suggested there are issues with captive and the reinsurance. I think from our perspective we believe it’s very helpful for investors in the market to understand the long-term care as a total book of business. And so our decisions to repatriate that is mostly because we think it is good for investors, shareholders in the market to gain a better understanding of the long-term care business by reinsuring it back to GLIC. And also we think that going forward its easier to manage and we haven’t really utilized a lot of the advantages in Bermuda because we have – use pretty high RBC underneath that. Also the last point you maybe aware that, Bermuda is working on its own regulatory framework. They appear to be moving towards a Solvency II type of structure. And so again as they go forward with that, we think in general the broader benefits in the historical path for Bermuda are in this month. So we think for all those reasons it make sense, but it’s really our decision to do it and not anything that the regulator are asking us to do. And on the RBC Marty, if you want to just address that.

Sure, Suneet. Right now BLAIC is still has about – RBC of around 340% at the times point that used to be managed many years ago at a much lower number, but we've been managing at a much higher number in the recent years. Capital behind that business excluding LTI [ph] and other things, capital just behind the [indiscernible] businesses around 800 million. Obviously it’s a time we repatriate. It is the time we do it, kind of have better dilutive impact on GLICs RBC. Its going to be a function of when we do it and obviously when we do it, whatever the RBC looks like in GLIC if we change the profile of GLIC at that point in time or not that will be a consideration and it will be a function of the amount of capital that we repatriated it goes up with the long-term care block. To gives you sense for right now, if we repatriate, if we would have repatriated it at the end of the quarter given the US Life companies were around 450% RBC and BLAIC is at 340, that would have roughly a 40 point impact on RBC of the US Life companies to give you sense for, if were to done it at the end of the third quarter.

Got it. Thanks.

Thank you. We'll go next to Steven Schwartz with Raymond James.

Hey, good morning everybody. On a – a couple of different things, Tom, can you just discuss the PMIERs and the decision to meet the standards immediately as opposed to possibly delaying. I am just wondering if it’s really necessary and if possibly delaying could actually save money for shareholders?

In my remarks I said that we view USMI as one of our best businesses. We're very pleased that it’s gained some market share. And so we believe from a competitive perspective it’s very important that we comply on the effective date at the end of the year. So that’s what's really driving it from a strategic perspective.

Okay. And then, Marty maybe you can discuss the 20134 rate increases for LTC, you hit the targets for 2012, what's the target for 2013, have you said that?

We haven’t announced the kind of target for it. I think as Tom indicated in his remarks, I think starting next quarter we're going to come up with a new framework and how to talk about rate actions. We had the 2012 rate actions which were pretty dramatic and at the time we launched those we gave folks a sense of what our expectations were. I think in the time of 200 to 300 we refined it later into 250 to 300. We also said at a time it takes many years to implement which is turning out to be the case. And as Tom indicated we've kind of now have hit that ZIP code of the expectations with a few more states to go. As we're planning forward on lot of the future rate actions, we need to make sure we're giving investors a way to think about the progress we're making on those final increase [ph] particularly the progress we're making versus kind of the margin testing that we did last year, which I know investors are really focused on. So we'll kind it laid it out for folks in next quarter.

Well, okay. And my understanding from Tom's remarks was that we were expecting this for the quarter, we got – so we'll be getting a total number at some point?

So I think what we would do is we'll – those three metrics that we'll report on quarterly going forward. One will be the actual filings that we've made for LTC premium increases. The second will be what approvals we received form how many states and then the third will be what is the economic impact in terms of either premium increases or benefit reductions and how that plays out going forward. So we'll be doing those three metrics going forward. And then last quarter Marty gave you a sense for the overall need for premium increases both on a net present value basis, as well as a rough target which will change over time in terms of what we think at the peak what it would have to be on an annual basis. But depending on how it all plays out and what – whether its benefit reductions or premium increases, so that will change. So you'll see those three metrics going forward.

Okay. Fair enough. And then one more if I may. Marty, just to follow up on the accounting discussion with regards to the, liability that you'll be setting up for the long-term care on the H-GAAP business, that benefit ratio is applied to what premium?

We're going to apply it to marginal profits which really I think in terms of kind of pretax profits before overhead expenses are applied, as I am looking only at the H GAAP block and then we'll take roughly a third of those profits and accrue that liability every quarter. As it happens this quarter the H GAAP block didn’t really have much in a way positive profitability. So we didn’t really technically set up the accrual this quarter because it would have been de minimis, but that’s a way to look kind of going forward. So I think in terms of that historical gap book as it makes money roughly a third of that on a marginal basis before overhead will be satisfied to fund this accrual over time.

Got it. Okay, thank you.

Yes.

Thank you. We'll go next to Colin Devine with Jefferies.

Good morning. I had a couple of questions this morning, first off, just to recap I think on – is that US and Canadian MI, you're absolutely keeping long-term care, you're fixing up maybe TBA or I would say TBB to be determined, and then maybe thinking of potentially ticket sold, just from that. Secondly Marty, if we look across the business for the quarter what would you consider sort of Genworth overall core earnings run rate, so trying to think about the base line going forward from here. The third one would be on long-term care and the potential for a close block, is that still something that you're considering. And then finally, obviously you do not need another rating downgrade S&P that puts you on criteria watch, for either new capital model. How do you get that resolved, is bringing that [indiscernible] something you may need to raise capital to address? Thanks.

So Colin, its Tom. I'll take the first and we are looking at a broad set of strategic options, broader than what you summarized. I would say, just confirm what I said in my remarks, we believe that when you look at future top line growth, earnings growth, return, the competitive landscape, or position in the market, you factor all of those things in and we look at all of our businesses. We do believe that USMI and Virgin [ph] TransCanada or MIC are the two vast businesses looking at all those criteria together, so that’s step number one. And then we do believe that there is significant strategic shareholder value to be created by working closely with regulators to receive substantial additional premium increases, as part of mind one of the biggest drivers of improving our – the value of the company to shareholders is to be successful and be able to deliver the premium increases or benefit reductions we talked about. So those are two very important points I think to make. We are looking on life and annuity or GLEC, the issue there is we solid positions, but we're not a leader. The 850 life companies that compete for our life and annuity business. So it clearly puts pressure on all of us in the marketplace in terms of recurrent and then we have a particular issue in that relative to some of the other top life and annuity players, our ratings are lower and particularly with S&P and Moody's. On the long-term care side, while we do think the ratings have had an impact in our financial institutions channel most of the LTC business is sold through BGA and IMOs. They focused on the invest rating that’s a minus which is – certainly an acceptable rating. And we're also compared to competitors, we're the leader in long-term care and so from a competing perspective it’s a different place than we are with life and annuity. And I do think – as I said we are looking at a variety of options, one of the options that you raised and Marty – let's Marty comment on your other three points, but that one too, we do look at and we have looked over time, it doesn’t make sense to separate the older blocks before older blocks which are the most problematic from the other blocks. There are pluses and minuses to doing that. I think most importantly whether we do that from a US GAAP accounting perspective or not we still have a the old blocks and we still need to improve them and that is a extremely important part of our strategies to realize those very large premium increases and benefit reductions that we're shooting for. So Marty over to you for the rest of Colin's points.

Yes, Tom just one sec, but I think also just there is been a lot of confusion out there. But I am free to clarify, that even if you did [indiscernible] from a regulatory perspective that really has no impact on you ability to get rate increases to GAAP on that, correct?

Yes, I think that’s probably right, we really haven’t address that specifically to regulators. There are some manner when you do the close block and open – or the new block separately there are some management requirements on a US GAAP, including you have to manage that block separately and differently. So we do – if were to pursue that and we're considering it, that is something we would definitely want to talk with regulators and we would not want to do it if regulators have an issue with it.

Yes, okay. Thanks.

Colin, it’s Marty. Let me try to take you other questions. On the run rate question, we did have a couple of I guess I call them non-recurring item. We had the one in long-term care that in aggregate was $7 million adverse after tax. That we had in Australia a good guy that borrows recovery accrual that was $7 million pretax. So those really couple of things I'd kind of call our specifically. In respect to the performances of our businesses and how to think about that over the course of the year, I'd say in the US Life division we had good mortality and helped things across the board in all three of the businesses in US Life. I think that – well that would be great if that persisted all the way to the quarter, I don’t if that’s likely to happen. I think that the mortality we saw in the Life Insurance business was pretty comfortable with what we saw in the fourth quarter, but it does move around and I think the likelihood of having good mortality helped all of three of those businesses throughout the year, is not necessarily the likelihood be great, so I think we benefited from that this quarter. In the mortgage businesses as I think folks now we do have seasonality and in particular USMI which is obviously in stages of very big recovery year-over-year as they add new business and have the old stuff burn off. But kind of often things equal, the first of the year tends to be better than the second half of the year due to the seasonality in that business. Those are some of things that I think I'd make note of. On your question regarding S&P, S&P changed the ratings methodology couple of…

Okay. And maybe then one follow up Tom, you mentioned a whole range of strategic options, perhaps more than I might have, is going private something that you would also potentially consider?

I would say Colin that we're looking at a broad set of options, that’s certainly one of them.

Thank you very much.

As much of that, now you missed the earnings call.

Ladies and gentlemen, we have time for one final question from Scott Frost with Bank of America/Merrill Lynch.

Hi, thanks for taking my questions. Just touching on the PMIERs issue again, without going into the amount of the mix of cash and reinsurance. Can you give us an idea of the limit of cash you expect to use, in other words, can you say, we don’t expect the cash portion of this to be greater than x?

I can't give you that because we are – while we made a lot of progress in the reinsurance transactions, now that the PMIERs rules are final, we're finishing up the final negotiations with reinsurers. We think there will be good contracts. And so once we finish that, so that’s the first priority is to use reinsurance and then whatever else we need we'll do from cash from the holding company.

Great. Okay. And if you are in compliance with PMIERs by year end, what again would prevent you from resuming dividends OpCo [ph] dividends in 2016? You said several years that, I mean, I would imagine that’s I think 17 or 18, but would prevent the 2016 resumption of OpCo dividends from USMI?

Yes, our ability to pay dividend is really dependent on two things, both on a statutory basis and our PMIER requirement. And so our statutory basis is based upon – so the greater prior year net income or kind of policy holder surplus. Going forward we expect sustained earnings to provide statutory dividend capacity, but therefore PMIERs really becomes the constraint to dividend paying and as the legacy books continue to pay off we will expect our sort of our PMIERs efficiency to improve based upon the new business and ultimately that gets you to one you can really deal with the dividend. But just hitting compliance doesn’t necessarily just open up the door to large deals to hit the dividends to a couple of years out.

Okay. And on the US Life business, I am trying to figure out, let's – you say your conversations with regulators have typically been over rate, which would make sense that you haven’t sold US Life, but if we stipulate that you do get some sort of BLAIC or GLEC, how would the conversation go with regulators as do you think, in other words you're going to go and say I want – I need additional array, and you charge policyholders more, by the way can I upstream money to the HoldCo from this proceeds of this asset I just sold?

Yes, those are different things. So we have three state regulators overseeing our domestic life businesses, BLAIC is domicile in Virginia. So any sale of GLEC if that’s what we decided to do have to be approved by Virginia, as well as their owner of BLAIC as GLEC, and GLEC is domiciled in Delaware. So the Delaware regulator would have to approve that as well. And then we – GLEC does their own a piece of [indiscernible] New York subsidiary, so New York would have to approve that. So all three regulators, one would – if we – whether we're selling blocks or the legal entity would have approval of the transactions and then the proceeds would also need because the proceeds would be in excess of the regular dividend capacity. So it wouldn’t be an ordinary dividend. And any time you look to take something other than the ordinary dividend now you need the appropriate regulatory approval. So the discussions with the regulators will be around whatever we decide to do in terms of transactions. I think as well as separately is do we have details and ongoing discussions with all the regulators and those three, as well as all the rest of the states on the long-term care business, I mean it’s a separate conversations, but I just would say that we have very close relationships. We talk to all – clearly the three domiciliary states, but also the other states. So I…

I guess, put it other way, do you think the request to pay up proceeds to the holding company from a life sale if any would jeopardize or impact your ability to get rate increases on long-term care?

No, I think they are really separate points, the rate increases, our long-term care are based on you know, these are guaranteed renewable products long-term care, regulators share grant us actuary justified increases. So the LTC rate increases are based on that. We have always said that – and I think if I you look at some public comments of various insurance commissioners that have made in other forms, they have said clearly regulators tend to be more open minded on LTC premium increase for companies that are still in the business and writing new business because obviously that does take off some of the financial burden on the states in terms of their future Medicaid budget. So – but those really – those will be separate ,conversations it will be same regulator, but separate conversations.

Okay. Thanks. And I guess regarding the nuclear option question, you had said that there would – you alluded to the regulatory oversight that may preclude that, is that the right interpretation of that comment…

I didn’t frame nuclear option, that was Sean I guess. But I would say clearly in terms of – I think his question was around capital into long-term care, clearly as part of their agreement to give us rate increases, they also were acquired demand, certain levels of capital to be under – in the business. And so we would continue to have to work with them to appropriately capitalize the LTC business. We have done that, I think they have been pleased so far with the fact that we've been able despite all of the reserve actions we took in the third and fourth quarter to maintain very sizeable RBC ratios in the 450% range. But going forward clearly that would be important to them.

It looks – let me make sure I am putting this right way too, is your sense that the regulators that oversee your, for example USMI business, do you think they are sympathetic to or cooperative with regulators that oversee your long-term care business or is it something they don’t really worry about too much?

There is a supervisory college and that is led by the Insurance Commissioner of Virginia and that supervisory college, it is pretty typical in global insurance companies like Genworth. They oversee – the college includes all the regulators, so this would be the Australian, Canadian regulators, the MI regulators in the US, as well as the life insurance regulator. So all of them work together and we do maintain excellent relations with all of them and we're keeping all of them informed about the difference strategic options we're considering. So I would say we – they work well together and we work well with them together. And so we clearly would want to make sure that all of the various regulators that oversee us are comfortable with whatever steps we take.

Okay. Great. Thank you very much.

Thank you. Ladies and gentlemen, I'll now turn the call back over to Mr. McInerney for closing comments.

Thank you very much Trisha. And again, I want to thank all of you for being on the call today, we appreciate that. We hope you found the discussion helpful and have a better sense of our strategy to focus in our priorities. And I hope we came through as a strong sense of urgency that we have to move forward and reshape the company. We are working closely with some of the best external financial strategic advisors. I think we're making good progress on those strategic options and we understand the critical points are getting Genworth back on track as quickly as we can. We do appreciate your questions, your time today, your interest in the company. We remain committed to providing you updates as appropriate going forward. So thank you all again very much.

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