Good morning, ladies and gentlemen, and welcome to the Genworth Financial's Second Quarter 2015 Earnings Conference Call. My name is Shelly, 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 or Investor Relations. Ms. Corbin, you may proceed.

Good morning, everyone, and thank you for joining Genworth 's second 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, Rohit Gupta, President of our U.S. Mortgage Insurance segment; and Jerome Upton, CFO of our Global Mortgage Insurance Division, 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 annual report on Form 10-K and our quarterly Form 10-Qs as 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 the results of our international businesses, please note that all percentage changes exclude the impact of foreign exchange. And finally, references to statutory results are estimates, due to the timing of the filing of the statutory statements. And now I'll turn the call over to our CEO, Tom McInerney. Thomas Joseph McInerney - President, Chief Executive Officer & Director: Thank you, Amy, and good morning, everyone. Today, I will provide a brief overview of…

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. We'll take our first question from Nigel Dally with Morgan Stanley. Nigel P. Dally - Morgan Stanley & Co. LLC: Great. Thanks. Good morning. So your prior goal was to reduce debt by $1 billion to $2 billion. At least by my calculation, the only way to achieve that was from executing a sale of GLAIC. So just to start, can you clarify whether that's still a reasonable goal. Thomas Joseph McInerney - President, Chief Executive Officer & Director: So Nigel, we said that our goal would be to reduce debt by $1 billion to $2 billion over time. That's still our goal. With what we've done, the two transactions we did that we announced were at $600 million. So we clearly are making progress towards the lower end of the range. But that's still our goal and we continue to look at options. We decided, for a variety of reasons, not to pursue the large life and annuity transaction, but we are looking at potentially selling or reinsuring a couple of the blocks. Nigel P. Dally - Morgan Stanley & Co. LLC: Okay. Thanks. And second question, just on BLAIC, the consolidation being pushed back. Can you provide some clarification as to what's driving that? Martin P. Klein - Chief Financial Officer & Executive Vice President: Hey, Nigel. It's Marty. It's still a goal. But obviously, as we were assessing a potential transaction, a larger transaction in U.S. Life, it was going to come along with or perhaps following that. And as we work through that now, we do have the repatriation ahead of us. But we do think, as Tom had mentioned, we want to look at a couple of these Life blocks, and if we do pursue them, we'd maybe try to do them over the next several months or into next year. We'd want to probably do those first, if we do in fact decide to do them, and then do the repatriation. The other thing I'd point out is that the repatriation process does take a while. And part of it is in the process. There's a filing process where you have to file your pro forma financials, which has been difficult because we've been working through what that pro forma is going to look like. And now that we've got that somewhat determined, although we have to think about these life blocks, we'll play that through. But still a goal, but I think it's going to come into next year, at the soonest. Nigel P. Dally - Morgan Stanley & Co. LLC: Great. Thanks.

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

Hi. Good morning. I had a couple of questions. The first is just if you could talk about the financial impact of the reinsurance deals that you've done in the USMI business. You're getting a decent amount of capital relief, but how much of a hit do you expect on earnings? Is it in the 5% to 10% range, or higher than that? And then I have another one. Thomas Joseph McInerney - President, Chief Executive Officer & Director: So Jimmy, Kevin Schneider is traveling today. So we're delighted to have two members of his team, Rohit Gupta, who as you know, is the CEO of USMI, and Jerome Upton, who is the CFO of the Global Mortgage Insurance business. So I'd ask Rohit to handle that question.

Sure. Rohit Gupta - President & Chief Executive Officer, Genworth Mortgage Insurance Corp.: Good morning, Jimmy. This is Rohit. So the cost of reinsurance transaction, both for 2009 to 2013 book, as well as 2014 transaction, as Tom stated, is in the mid-single digits. Just to ground you, these are amortizing transactions. So over a period of time, the cost of the transaction will drop. But just to give you a ballpark, for calendar year 2016, we would expect the ceded premiums to be in the range of $10 million to $15 million. So you can use that as a calculation point.

Okay. And then on your sales outlook for the U.S. Life division. I understand in LTC, you're making a lot of product changes. But your sales were weak across the board. So just wondering if you can talk about your outlook and how much of the weakness is being caused by ratings issues versus just your intention to preserve capital? Thomas Joseph McInerney - President, Chief Executive Officer & Director: So I think, Jimmy, that first of all I would say that in long-term care, we did relaunch, refresh in a product this year and just launched it. So I think that will help sales in LTC. In annuity, fixed annuities, clearly the low interest rate environment has made getting the appropriate spreads for us a challenge. But in addition to that, I think as we're going through the strategic review of life and annuity, that clearly had a significant impact on sales. And so with that now behind us, we would hope to improve somewhat. And obviously the ratings decline, while an A- at A.M. Best is acceptable in the BGA channel, where our principal sales are, the S&P and Moody's ratings has had an impact on our sales through financial institutions. So as both Marty and I commented, we expect, given the low interest rate environments and our ratings, for sales to be modest for some time. We are looking at a number of product changes and focusing on specific BGAs and distribution outlets to improve sales. We also brought in a new leader for – a commercial leader, Chief Commercial Officer for the business. So we hope all those things will help. But I do think sales will be challenged for a period of time, although working on a number of product changes and distribution strategies to improve it.

And then lastly, if I could ask one more, on the Canadian and Australian MI businesses, if you could just talk about what your views are on those markets. There's been a lot of concern about low commodity prices, frothy housing markets in those regions. So how do you view your business and the margins in Canada and Australia? I think Australia, you mentioned you expect a decline in margins. But what's your view of the market overall? Thomas Joseph McInerney - President, Chief Executive Officer & Director: Yeah. So, Jimmy, I would just say that we're pleased with the results across the U.S., Canada and Australia. I think our loss ratios continue to be in our range, probably at the low end of the range that we forecasted. So we're comfortable with all three of the businesses. Clearly, as you stated, there are macroeconomic challenges that impact the markets, particularly in Canada and Australia. And I'll ask Jerome just to make a few comments on that. Jerome T. Upton - CFO & Operations Officer-Global Mortgage Insurance: Jimmy, good morning. It's Jerome Upton. I think one of the things – I would start with Canada and just give you a broad perspective on economic conditions. We all have seen that GDP has contracted in Canada early in the year. But when you dive in deeper on that, it's primarily driven by oil price decline and sort of the contraction there. We saw the Bank of Canada lower rates around 50 basis points, or down to 50 basis points. But I think in the second half, most economists, including the Bank of Canada, would expect GDP to grow. And they're expecting 1.1% growth, when you look at it year-over-year. Employment outside of the oil-producing areas are holding up very well. And…

Thank you.

We'll take our next question from Geoffrey Dunn with Dowling & Partners. Geoffrey Murray Dunn - Dowling & Partners Securities LLC: Thank you. Good morning. I wanted to follow up on the previous question about the XOL transactions, see if you can provide a little bit more color with respect to, is it all of the 2009 through 2013 and 2014 books that's being covered? Any detail on the attachment points of the XOL? And as far as the incremental 2015 XOL, can you give us an idea of what you think the incremental capital benefit will be from that? Rohit Gupta - President & Chief Executive Officer, Genworth Mortgage Insurance Corp.: Yeah. Geoff, this is Rohit. Good morning. Let me give you some color on the XOL transactions. As Tom and Marty stated, the total capital credit from these transactions at the end of the year is expected to be around $300 million. We would basically say that the XOL tiers are within the credit tiers that PMIERs have subscribed, because that was the intent of these transactions, to get capital credit under the PMIERs framework. At this point, we are not providing any more detail on attachment and detachment points. But on cost of capital, I did provide some color on cost of capital being in mid-single digits, and 2016 impact being $10 million to $15 million for the first two transactions. For the 2015 transaction, as we move forward in testing the market capacity, as well as cost for different attachment points, we will consider coming back and providing more detail in the third quarter earnings call comprehensively on all three transactions. Geoffrey Murray Dunn - Dowling & Partners Securities LLC: Okay. Rohit Gupta - President & Chief Executive Officer, Genworth Mortgage Insurance Corp.: Just one thing…

And we'll take our next question from Ryan Krueger with KBW. Ryan J. Krueger - Keefe, Bruyette & Woods, Inc.: Thanks. Good morning. I was hoping to go back to the decision not to sell the entire life and annuity business. Can you talk – I guess a little bit more about that decision and specifically, how meaningful of a role did the expected proceeds that would actually make it to the holding company play in the decision not to go forward? Thomas Joseph McInerney - President, Chief Executive Officer & Director: So Ryan, we looked at a number of different criteria. And obviously, we had our outside financial advisors also working very closely with us. And there were a number of factors. I would say probably the most important ones were earnings per share and accretion dilution, taxes and tax impact on the actual valuations that we received from the bidders and also the proceeds. In regard to the proceeds, we did talk with our key regulators, which are the regulators for our three legal entities. I think all three were open to allowing us to take some proceeds out of the companies, and particularly the GLIC, because while obviously they want us to maintain appropriate RBC levels, and I think they're comfortable with where we are today, they also clearly get the importance of reducing debt at the holding company by the $1 billion to $2 billion. So I would say they were fairly open-minded on that. We ultimately decided, while there were a lot of positives for doing the deal, including our ability to reduce debt, in the end, our view was they were outweighed by potential adverse effects in the ratings and the loss of earnings diversification. So in the end, those were the two drivers…

We'll take our next question from Colin Devine with Jefferies.

Sure. A couple questions. First, Marty, I think it would be very helpful if you can just go a little bit deeper on to what some of the issues are with the interconnected capital structure in Genworth. Because what I think I heard today is a big reason why you can't do a larger life sale is because of that. And that's the issue there, because of the interconnection. So we can hit that one number first? Second, to give you a break and catch your breath, can we flip over to Genworth Canada? I'm talking about Alberta. If arrears got back to where they were, say during the financial crisis, at that level, just to size maybe how bad things could go, how much of an issue would that be for Genworth Canada? And then lastly, if you can provide a little more color on what are the remaining issues with respect to selling Australia. Thanks. Martin P. Klein - Chief Financial Officer & Executive Vice President: Hello, Colin. I'll start out and then I'll kick it to Jerome for your question on Canada. And then Tom can take the last question. On the interconnectivity, that is something we've obviously known about for a while and want to continue to work through. I think over many, many years, Genworth, like a lot of companies that are in a lot of different businesses, set up these interrelationships that certainly had benefits, tax benefits. We have tax sharing arrangements, which can be very helpful. Certainly, capital relationships and reinsurance relationships. I think specifically to us, ratings – and this is also true for other companies that are in multiple businesses – obviously our overall ratings are impacted by the mix of business that we have, as well as obviously, the level…

Marty, just following up on that, you mentioned Genworth Canada's ownership structure. Two quick ones. One, why not get it up to the holding company, since you freed up some other capital? And two, why not sell it down to 51%, 52%, like you did for Australia? Martin P. Klein - Chief Financial Officer & Executive Vice President: Yeah. I think that, Colin, looking at those things, they make a lot of sense, but they also involve cash and things like that. So we have to look at the cash and capital needs that we have and what's the best way to use it. And certainly, there are some benefits to getting Canada out of USMI, absolutely, but we have to also think about what we want to do with our cash and our capital. I think also, Canada is – while USMI has been working to comply with PMIERs – the dividends that Canada has been paying not only go to the holding company, but also go to USMI. So USMI, which to this point has been in need of capital, has benefited by its relationship historically with owning Canada, because of the dividend flows which USMI has been able to capture. But obviously, with the compliance with PMIERs, and that also included, frankly, a contribution from the holding company – or not really a contribution, an exchange of the GLIC preferred for cash – we're in a different situation now, so we'll have to assess a lot of those things.

And maybe just, why don't you clarify for everybody, what is the cost to capital for USMI by owning the Canadian stock? If you swapped it for cash, what would be the benefit? Rohit Gupta - President & Chief Executive Officer, Genworth Mortgage Insurance Corp.: Colin, do you mean under PMIERs context?

Yeah. Rohit Gupta - President & Chief Executive Officer, Genworth Mortgage Insurance Corp.: Yeah. So under PMIERs, the prescribed discount for publicly traded securities is 25%. So whatever the market value is multiplied by the foreign exchange rate gives you the market value of Canada that's in USMI. And at quarter end points, we adjust that down by 25% to calculate our PMIERs available assets, and then whatever volatility that's baked in, that's basically part of our financial flexibility buffer we talked about. Martin P. Klein - Chief Financial Officer & Executive Vice President: So it's worked very differently than it works under regulatory capital, where it's really on a book value basis. So it's been much more stable. So when you look at risk to capital, it's really on a book value basis, and also without a haircut. So it's been actually a pretty efficient part of – and good part of the overall capital structure and also provided some dividends to the business that were helpful to its capital. But PMIERs is now the driving capital requirement that the business has, given that our risk to capital is like 13.5 in GMICO these days. And so that's what we have to drive to and manage to now. If there's anything else, why don't we kick it to Jerome for your question on Canada?

I think you just reinforced why the ownership structure is still the way it is. But let's go to Alberta. Jerome T. Upton - CFO & Operations Officer-Global Mortgage Insurance: Colin, good morning. It's Jerome. I would say that we did feel pressure coming out of the GFC and from Alberta, as you point out. But I would say that we feel better positioned at this point in time in that market, acknowledging that we are going to feel pressure. We have taken some underwriting actions in that area, number one, to strengthen the recent vintages. And those actions would've improved our credit scores in the region, as well as to just an overall much more conservative approach to collateral valuation and underwriting in general. So we do feel better positioned. And also would note that coming out of the GFC, home prices were at pretty elevated levels in Alberta. What we're underwriting now and underwrote post the GFC, the housing market was down some, so we feel better positioned at this point in time. I really can't give you a number, Colin, with respect to pressure on the business, and link it back to the global financial crisis. Because we're going to have to wait and see what's going to happen with oil prices and the extent and the duration and how long they stay down before we can give you any type of estimate on that. We're telling you in 2015 that we're going to stay within our guidance of 20%, 30% in Canada. And as we move into 2016, we'll give you an update based on what we see in the market, the home price declines that are there, and the unemployment increases.

Okay. Thank you. Thomas Joseph McInerney - President, Chief Executive Officer & Director: And Colin, just to take your last point quickly, so we can get on to some other questioners. We continue to evaluate our ownership position in Australia. As we've said before, there is a benefit to majority ownership, including that we retain a majority on the Board. And also, because Australia has been such an important payer of dividends over time to help us manage the annual debt service, Australian ownership and dividends there are important. If we did decide, at some point down the road, to sell Australia ownership, we'd likely use the large portion of those proceeds to reduce debt.

Thank you.

And we'll take our next question comes from Suneet Kamath with UBS.

Thanks. Good morning. I wanted to start with long-term care. I don't know if you talked about it on this call, but in the past, Marty, you'd talked about wanting to maintain a buffer for long-term care volatility. Have you done any more work in terms of sizing that? Martin P. Klein - Chief Financial Officer & Executive Vice President: Hey, Suneet. Actually, we've been doing a lot of work on what we want to do in life and annuity and some other things. I would say it's still something we want to look at. I think that part of that is going to be a function of what other businesses are in the U.S. Life division, and that was not all that certain for a while. I think that the way that the risk-based capital rules under NAIC rules are such that we would want to manage over time long-term care to a higher level. That does not necessarily mean though that we're going to be in the life and annuity businesses. We'd also do that for the life and annuity. So I think what we're working through now that we've got life and annuity businesses and earnings stream and diversification, it provides some capital and risk buffer. We have to assess that longer term goal. I do think it'd be along the lines of holding up a higher RBC number behind long-term care, probably more in line with what we think its economic risk and economic capital would be. But we'd have to weigh that with a balancer of what we're doing in life and annuities, now that we have those businesses. Also want to be mindful of overall cash flows and surplus growth in business and our ability to get some dividends out, too. So while we want to increase and expect to increase the buffer behind long-term care over time, we also want to be mindful that we do want to be getting some cash out of U.S. Life at some point along the way to help with some of the debt issues. So that's a long way of saying there's a number of considerations. Now that we've finalized our strategic review and not going to do a transaction in life and annuity, we can turn our attention to what exactly do we want to do in long-term care. I think historically, we've looked at U.S. Life, the division, and wanted to manage long-term care in excess of 400. I would imagine that minimum 400 is probably going to go up a bit, once we work through that. But we'll have more details later on this year, hopefully.

Okay. And then, I guess my second question is just in terms of the strategy, I think a lot of us heading into this call were maybe anticipating that you might announce something pretty big that would move you much closer along your way to delevering and then ultimately breaking up. But based on how you're characterizing your situation today, it seems to me that what we should be thinking about is perhaps a larger number of smaller items as opposed to any one big thing, in terms of just sending cash up to the holding company and reducing debt. So I guess my question, is that a fair characterization of how you're thinking about things on a go forward basis? Thomas Joseph McInerney - President, Chief Executive Officer & Director: I think, Suneet, that that's fair. We continue to evaluate and we'll continue to do that look at and will continue to do that, various options. But I do think that the large life and annuity transaction, for the reasons we talked about, I think we looked at that, looked at it hard, and decided in the end not to go forward with that. But we'll continue to work over time on reducing the debt in the range that we've talked about.

And is there a timeframe for that debt reduction? I can't remember if you gave us something in the past. Thomas Joseph McInerney - President, Chief Executive Officer & Director: We said $1 billion to $2 billion over time. Again, it's a high priority to reduce the debt. We have other priorities. We've got to balance all of them, and so I think that we'll leave it at that.

Okay. And then last one, last one, just for Marty, on LTC earnings. If we think about the 2012 rate actions, I think it took a couple years to get the real earnings benefit from that. So now that you have most of that baked in the cake and you're going back for additional rounds of rate increases, why should LTC earnings improve dramatically as we get into 2016? I get they'll probably improve a little bit. But are we talking about a dramatic increase or more of a gradual grind higher? Martin P. Klein - Chief Financial Officer & Executive Vice President: I'd say it's a decent increase, assuming the business continues to perform as it has been, and as we would expect. There is a lot of variability in long-term care earnings, as I pointed out. But I think that a lot of the 2012 rate actions, if you think about it, they come in two pieces. One is the additional premium we get, and that's fairly steady and that will continue on. But then the other part of it is those benefit reductions – which I know you know this, but just for everybody else that's listening – with those benefit reductions there's an immediate reserve release in the current period. So when we're implementing the rate actions, there's a lot of additional earnings benefits to get to that reserve release component. And as the round of rate actions begins to get through the implementation period, those earnings benefits from reduced benefits and that reserve release begin to ebb away. We do have, though, a lot of rate actions that are in process, much of which that have been approved already, which is – most of which have been approved, actually – which will, I think, really…

All right. That's fine. Thanks.

Ladies and gentlemen, we have time for one final question from Sean Dargan with Macquarie. Sean Dargan - Macquarie Capital (USA), Inc.: Yeah. Thanks. I'm just wondering how you're thinking about returns on new MI business in 2016. On June 30, the PMIERs were amended and there was an added capital charge to be implemented in 2016 on lender placed mortgage insurance. You wrote a lot of that in the first quarter. I think the press release said that you wrote less of that in the second quarter. I'm just wondering if you could frame how much less of that and what you're thinking on writing that product is going forward, given that returns are probably mid-single digits? Rohit Gupta - President & Chief Executive Officer, Genworth Mortgage Insurance Corp.: Good morning, Sean. This is Rohit. So you're absolutely correct. We reduced our premium single concentration from first quarter to second quarter. As we have stated in the past, we try to manage the return and risk appetite for this product, because single – LPMI, let's start with that. Lender Paid Mortgage Insurance is primarily a single premium product. And under HOPA consideration, it is a non-cancellation policy unless the mortgage actually lapses. So we have seen increased duration of this product in the past in our own experience. And we think FHFA and GSE's multipliers in PMIERs' context that rolled out on June 30 are in alignment with that. As we think about our 2015 book returns, we have given guidance on mid- to low teen returns from a pricing perspective. And we have also stated that our books are performing, our new books since 2009, are performing better than those expectations. As far as 2016 book returns are concerned, we haven't given any guidance, at this point. And…

Ladies and gentlemen, I will now turn the call back over to Mr. McInerney for closing comments. Thomas Joseph McInerney - President, Chief Executive Officer & Director: Thank you very much, Shelly. I would like to make just some brief closing comments. I want to thank all of the investors and analysts and other participants on the call today. We believe we are making progress on our outlined strategy to strengthen Genworth, simplify our businesses and increase financial flexibility. While we recognize that substantial challenges remain, we continue to invest in our strongest businesses and to manage each of our businesses to maximize returns while balancing capital needs. We very much appreciate the support of our investors and assure you that we're working very hard to justify that support. And now, let's end the call.

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.