Genworth Financial, Inc. (GNW) Q4 2022 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to Genworth Financial's Fourth Quarter 2022 Earnings Conference Call. My name is Jim, and I will be your coordinator today. [Operator Instructions]. I would now like to turn the presentation over to Sarah Crews, Director of Investor Relations. Please go ahead.

Thank you, operator. Good morning, and welcome to Genworth's Fourth Quarter 2022 Earnings Call. Today, you will hear from our President and Chief Executive Officer, Tom McInerney; followed by Dan Sheehan, our Chief Financial Officer and Chief Investment Officer. The slide presentation that accompanies this call is available on the Investor Relations section of the Genworth website, investor.genworth.com. Our earnings release and financial supplement can also be found there, and we encourage you to review these materials. Following our prepared remarks, we will open the call up for a question-and-answer period. In addition to our speakers, Brian Haendiges, President of our U.S. Life Insurance segment; and Jerome Upton, Deputy Chief Financial Officer and Controller, will also 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 presentation as well as the risk factors of our most recent annual report on Form 10-K 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 the SEC rules. Also, 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 President and CEO, Tom McInerney.

Thank you very much, Sarah. Good morning, everyone, and thank you for joining our fourth quarter earnings call. Before I review our strong fourth quarter and full year 2022 results, I want to acknowledge our outstanding progress against our strategic priorities throughout the year. I'm incredibly proud of these accomplishments particularly achieving our debt target, meeting the conditions to remove the government-sponsored enterprises or GSE restrictions that were placed on an act, returning capital to shareholders for the first time in over 13 years and receiving multiple ratings upgrades. These achievements have improved Genworth's financial strength and allowed us to enter 2023 with a greater level of flexibility to invest in growth and continue returning capital to our shareholders. To speak to each of these achievements a bit further. In May of last year, the Genworth Board authorized a new share repurchase program of up to $350 million. This is an important milestone reflecting our improved financial position, the Board's confidence in our strategy and our future and our commitment to our strategic priorities. Since the authorization, we've repurchased $64 million worth of outstanding shares at an average price of less than $4 per share. We were careful to restrict the level of repurchases in 2022 until we reduce the debt to $900 million and satisfy the conditions to remove the GSE capital restrictions. Having now accomplished both objectives, we plan to pick up the pace of share repurchases subject to market conditions and general share price. Throughout 2022, the holding company received credit ratings upgrades from each of the 3 major rating agencies, reflecting a substantial improvement in our credit profile. In September, Genworth achieved a critical milestone when we paid off our remaining senior notes due in 2024, marking the achievement of our long-term holding company debt target of $1 billion or less. Genworth ended 2022 with holding company debt under $900 million, reflecting over $3 billion of debt retired since 2013. We believe this is a sustainable level of debt for the company to carry going forward with manageable interest expense obligations of approximately $60 million per year. However, we're open to further debt reduction if we have extra cash and attractive terms for further debt retirement. By reaching our holding company debt target, we were positioned from a capital perspective to meet the financial conditions for removing restrictions placed on an act by the GSEs. We believe we fully met Genworth's holding company financial conditions in both the third and fourth quarters of 2022, which should result in GSE's lifting restrictions on an act in the first quarter of this year. We are working with the GSEs and expect confirmation shortly. This is an important positive development for Enact and for Genworth as Enact will no longer be subject to more stringent capital requirements than its peers once these restrictions are removed, putting Enact on a more level playing field with competitors. The successful execution of these 4 actions is a testament to our commitment to driving value for our shareholders, and we were rewarded with strong share price performance over 2022 despite the volatile macroeconomic environment. Turning to financial results. Genworth delivered excellent results in 2022 and finished the year strong. For the full year, net income was $609 million, and adjusted operating income was $633 million or $1.24 per diluted share, well above market expectations. These outstanding results were led by Enact, which had a very strong operating performance and ended the year with record insurance in force. In the fourth quarter, amidst the ongoing challenging backdrop, Genworth generated excellent results. Net income was $175 million and adjusted operating income was $167 million or $0.33 per diluted share. Since Enact's IPO, Genworth has received approximately $370 million in capital from Enact, including $168 million in the fourth quarter. Cash flows from Enact have enabled us to achieve the key milestones, I mentioned before and will continue to benefit shareholders by fueling our share repurchase program and long-term growth strategy. While our fourth quarter statutory processes are still underway, we expect U.S. Life's statutory after-tax net income for the full year to be approximately $275 million, reflecting continued positive results for LTC, including pretax statutory income for the LTC legacy business of approximately $255 million in 2022. We expect LISC statutory capital and surplus to increase from $2.9 billion at the end of '21 to approximately $3 billion at year-end 2022. GLIC's estimated RBC ratio at year-end 2022 is currently projected to be approximately 290% in line with the prior year RBC ratio of 289%. Our final statutory results will be available with our year-end statutory filings later this month. Turning to our legacy LTC portfolio. We continued the strong momentum in our multiyear rate action plan or MYRAP, the most effective tool we have to bring our legacy LTC portfolio to economic breakeven on a go-forward basis. We achieved a total of $549 million in annual premium rate increase approvals in 2022. Of that amount, we are waiting the final disposition of a small number of the approvals as we work through implementation mechanics. With the addition of these 2022 approvals, our cumulative progress is approximately $23.5 billion in approvals on a net present value basis since 2012. We also continue to make progress against our strategy to drive future growth through our new, less capital-intensive senior care services business, which will launch under the CareScout brand. CareScout's leadership team is now fully in place and executing on a multiphased go-to-market strategy that is expected to ultimately include 4 new senior care-focused business lines. The first area of focus is the fee-based services business, which will provide care navigation support and advice to existing LTC policyholders and new customers. We expect to launch a pilot in the first half of 2023 in the Southwest with Genworth's existing LTC policyholders. The services business will include a digital platform where those in need of long-term care can search for and compare local care options bolstered by a preferred network of quality senior care providers. We are in the process of vetting and recruiting network partners in order to offer attractive pricing on high-quality care that will benefit both new and existing customers. The services business is designed to reduce claim costs on our legacy LTC book as well as drive new revenue for Genworth. Second, we are investing in CareScout's existing clinical assessments business where we see attractive opportunities for growth. CareScout has a network of clinicians nationwide. And as a leader in conducting clinical assessments, for other insurance companies, health care organizations and consumers. The third area of focus in our growth strategy is transforming the insurance and other product options available to fund long-term care. This is a key part of developing a truly comprehensive approach to addressing the complexities of the aging journey. Offering new and more innovative insurance and other funding options for long-term care is dependent on achieving an A- or better rating. We are still working on options to reduce the capital required to fund these products through innovative reinsurance arrangements. And as a result, implementation of these new LTC funding progress -- products will likely occur in 2024 or later. Finally, as we've said in the past, we see attractive longer-term growth opportunities to offer senior care services and funding solutions in international markets. After building the business successfully in the U.S., we will look to eventually capitalize on opportunities in other markets with similar aging demographic challenges. The current timing for CareScout's international expansion is planned for 2025 or later. We are investing prudently to scale the CareScout services business and leveraging our differentiated capabilities and experience, including 40-plus years of experience and expertise in the LTC insurance business, data on 330,000 LTC claims paid to date to legacy LTC policyholders, existing relationships with a network of care assessment professionals, who are mostly registered nurses and existing relationships with providers and caregivers throughout the U.S. We invested approximately $20 million in CareScout in 2022 to develop our care services business and clinical assessment capabilities, and we intend to make an additional investment of approximately $30 million in 2023. As we move forward, Genworth will maintain a disciplined capital allocation strategy, balancing investments in growth with share repurchases. Before I close, I want to acknowledge Dan Sheehan and his extraordinary contributions and accomplishments at both GE Capital and Genworth over the last 25 years. Dan has been an excellent investment leader for Genworth for decades. Under his leadership, the investment group has delivered outstanding results for many years. Over the last 2 years, as CFO, he has helped lead Genworth through a very successful transition. Above all, Dan has been a good friend in College of mine since I joined Genworth and I wish him all the best. With that, I'll turn it over to Dan.

Thank you, Tom, and good morning, everyone. Before I begin my comments on the quarter, I'd like to thank Tom and the entire Genworth team for their partnership. I've had a really good run here over my 25 years with GE and Genworth, and I'm incredibly grateful for the opportunities I've had to work with so many talented people. I'm proud of my contributions to strengthening our financial foundation, and I'm excited to see what the team builds on that foundation. Now for the quarter. Genworth delivered another strong quarter, capping off an excellent year for the company. We further strengthened our balance sheet while investing in growth and returning capital to shareholders. We ended the year with liquidity above our cash target and lower leverage, reflecting our significant debt reduction throughout the year. As a result of our successful execution, we believe we have satisfied the financial conditions for removing the PMIERs capital restrictions placed on Enact by the GSEs, which in turn should lift these restrictions on Enact in the first quarter of 2023. As Tom mentioned, this will be a very positive development for Enact and Genworth as its majority owner since Enact will no longer be subject to more stringent capital requirements than its peers. Following Tom's high-level overview of full year and fourth quarter results, I will review our segment operating performance, including the results of our annual U.S. life insurance assumption review as well as our holding company liquidity position. Turning to Slide 7. Enact's insurance in force increased 10% year-over-year to a record $248 billion, driven by new insurance written and higher persistency. Primary new insurance written was down versus the prior year, a continuation of the trend we've seen has increased interest rates have resulted in lower mortgage originations. As Enact mentioned on its earnings call this morning, while elevated mortgage rates and decreased affordability have reduced demand, total housing inventory is below long-term levels and demand remains solid. The higher interest rate environment has resulted in higher persistency and is a meaningful benefit to Enact's profitability. The overall credit risk profile of Enact's new insurance written also remains strong. Moving to Slide 8. Enact had a favorable $42 million net pretax reserve release, which drove a loss ratio of 8%. The reserve release was primarily driven by favorable cure performance on COVID-19-related delinquencies, which was partially offset by reserve strengthening on 2022 new delinquencies and a prudent response to an uncertain economic outlook. The estimated PMIER sufficiency ratio of 165% or approximately $2.1 billion above published requirements remain strong. Sufficiency decreased sequentially, driven by the operating company's dividend distribution to Enact holdings. In December, Genworth received a special dividend from Enact of $148 million, which was the major driver of Genworth's enhanced liquidity profile as we ended the year. Further, Enact's quarterly dividend payment of $0.14 per share generated proceeds of $19 million to Genworth. Going forward, returns of capital from Enact will continue to enable Genworth to generate excess cash. I will now cover our U.S. Life Insurance segment results starting on Slide 9. The segment reported adjusted operating income of $38 million, reflecting adjusted operating income of $24 million from LTC and $16 million from fixed annuities, partially offset by an adjusted operating loss of $2 million in life insurance. In our LTC insurance business, adjusted operating income was $24 million compared to $25 million in the prior quarter and $119 million in the prior year. Results reflected lower terminations versus the prior year as well as lower investment income versus the prior periods and continued growth in new claims. Earnings also benefited from higher in-force rate actions versus the prior quarter due to favorable policyholder elections related to the legal settlements on PCS I and PCS II policies. The settlement impacts were smaller, however, in the current quarter than the settlement impacts in the fourth quarter of 2021. Moving to Slide 10. The elevated claim mortality, you saw with the onset of the pandemic was lower in the current quarter versus last year, which is consistent with COVID-19 mortality trends in our life insurance business and nationwide. The remaining balance on our previously established COVID-19 mortality reserve is $90 million. As shown on the right-hand side of Slide 10, we saw a higher level of new active claims in 2022 compared to 2021, which indicates new claim incidents is trending back to pre-COVID-19 levels. New claim severity continues to increase as expected, given the aging of the block and shift in our claims mix to higher cost facility-based care. As a reminder, our large Choice I and Choice II policy blocks, which are beginning to enter their claim years, have higher daily benefit amounts and inflation coverage than the older LTC blocks. I would now like to discuss the results of our annual review of key actuarial assumptions in long-term care insurance, which is summarized on Slide 11. I will note that consistent with our practice last year, the COVID-19 pandemic impact to the businesses were generally not incorporated when reviewing our long-term assumptions since we don't think the pandemic impacts are indicative of future trends or long-term loss performance. In our assumption review of LTC claim reserves or disabled life reserves, we saw that in the aggregate, the disabled life reserve assumptions are holding up well, as they have for the last several years. Our review this year resulted in minimal change to the disabled life reserve balance. Part of the LTC active life margin testing process for policies not yet on claim, we reviewed our long-term assumptions relative to experience as is our annual practice. Our margins remain positive within the $500 million to $1 billion range consistent with last year. Therefore, there was no need to increase reserves and no P&L impact resulting from the assumption review. We made a few refinements that had relatively minor impacts, including reducing the lapse assumptions in light of favorable experience from LTC settlement elections and benefit reductions and increasing our interest rate assumptions. We also evaluated our assumptions regarding expectations of future premium rate increase approvals and benefit reductions. We have not yet changed the rate increased targets for Genworth's multiyear rate action plan from last year. However, based on favorable recent rate increase approval experience, regulatory support and settlement results, we have updated our assumption for future approvals and benefit reductions, resulting in additional future value. This assumption update demonstrates our confidence and expectation of continued success in achieving actuarially justified LTC rate increases. We now project the current targeted value of LTC premium increases and benefit reductions on a net present value basis to be approximately $30.3 billion in order to achieve economic breakeven. Since 2012, we've achieved approximately $23.5 billion in rate actions or over 75% of the rate increase and benefit reductions contemplated in our multiyear rate action plan. This is important progress toward our goal of addressing the risk in our legacy LTC business and reaching economic breakeven, and I'm incredibly proud of our team in this progress. Slides 12 through 15 further highlight the significant progress, which continued into 2022. During the full year of 2022, we received LTC in-force rate action approvals impacting $1.1 billion of annualized in-force premiums with a weighted average increase of 48%, getting us to $549 million of annual premium rate increase approvals in 2022. Our continued progress on our multiyear rate action plan and stabilization of the LTC block has also been in part through the LTC legal settlements, which have been beneficial to both our policyholders and to Genworth. For policyholders, many have elected to reduce their benefits and, in turn, reduce or eliminate their premiums. And for Genworth that allows us to release reserves and reduce our tail risk on these policies. The implementation of the second LTC legal settlement related to our PCS I and II policies began on August 1 and covers approximately 15% of our LTC policyholders. While we did see a favorable financial impact in the fourth quarter related to the settlement of $21 million before profits followed by losses, the financial impacts were not as large as they were in the prior year from the first settlement on our Choice I policies, which applied to approximately 20% of our LTC policyholders given the smaller policy block. The third LTC legal settlement related to our Choice II policies is still pending. The final court approval hearing began in November, and we're awaiting the judge's final ruling. This settlement represents 35% of our LTC block as Choice II is our largest LTC block of business. The timing for the implementation of the Choice II settlement will depend on when the court issues final approval of the settlement and whether there is any appeal of that final approval. We would expect to begin implementation within a few months of final approval, which is expected shortly for the favorable disposition of any appeal. If there is an appeal, that process is estimated to take until mid-2024 to play out to conclusion. Turning to Slide 16 and 17 in our life insurance products. We reported an adjusted operating loss of $2 million compared to operating losses of $33 million in the prior quarter and $98 million in the prior year. The key driver of the year-over-year improvement was an after-tax benefit from the Universal Life annual assumption update of $34 million relative to an unfavorable $70 million charge in the prior year. The $34 million assumption update was primarily related to interest rates, which rose throughout the year. The life insurance products also experienced favorable mortality year-over-year as pandemic impact subsided. COVID-19 claims accounted for only $3 million of the loss, which was lower than the prior year's $27 million of COVID-19 claims. In the current quarter, total term deferred acquisition cost or DAC amortization was $20 million after tax, which was higher than the prior year, primarily from 20-year term lapses. Results in the quarter also benefited from not having a DAC recoverability charge in our universal life insurance products due to the favorable assumption update. Regarding fixed annuities, adjusted operating income was $16 million compared to $19 million in the prior quarter and $20 million in the prior year, reflecting lower net spreads from bond calls, commercial mortgage loan prepayments and continued block runoff and a smaller benefit from interest rates, which did not increase as much as in the prior quarter. Our runoff segment comprised mainly of variable annuity products reported an adjusted operating income of $17 million for the current quarter compared to $9 million in the prior quarter and $16 million in the prior year. Current quarter results were impacted by positive equity market performance. As indicated on Slide 18, we're estimating the consolidated risk-based capital ratio for Genworth Life Insurance Company, or GLIC, to be 290% at the end of December, slightly up from the third quarter. Capital and surplus as of December 31 is estimated at $3 billion compared to $2.9 billion as of September 30 and December 31, 2021. We're pleased with this result given the volatility we saw in the equity markets this year, impacting our variable annuity block. Estimated combined statutory net income for life companies in 2022 was $275 million compared to $666 million in 2021. The current year estimate reflects lower earnings in LTC driven by new claims growth and lower earnings from in-force rate actions again, largely due to legal settlement impacts in the current year that are lower than last year's, partially offset by the improved mortality in the Life products as the pandemic impacts subside. Current year results also include an unfavorable impact of variable annuity products from equity market performance, offset by a net favorable impact from assumption updates and cash flow testing. Before I move on from our U.S. Life Insurance results, I wanted to provide an update on our adoption of the new GAAP accounting standard, long duration targeted improvements or LDTI, impacting our life insurance companies. As noted on Slides 19 and 20, we adopted this new standard on January 1, 2023, and we're required to represent certain financial information beginning on January 1, 2021, otherwise known as the transition date. This new standard does not impact Enact. And as Tom and I have mentioned before, it will not impact our cash flows, economic value or statutory accounting and related capital levels for our life insurance companies. In the third quarter, we disclosed a preliminary estimate for the impact to accumulated other comprehensive income or AOCI from LTC. Today, we're providing an update on the total impact to our U.S. GAAP equity position from the adoption of LDTI as of the January 1, 2021 transition date. As of that date, Genworth's U.S. GAAP equity of $15.3 billion will decrease by $13.7 billion after tax. As we've discussed in previous quarters, the most significant impact to our equity is from AOCI, which will decrease by $11.5 billion as of the transition date. The decrease is primarily due to the requirement to remeasure our insurance liabilities using a single A bond rate. The discount rate impact is mostly driven by LTC given the very long duration of the product. The single A bond rate as of the January 1, 2021 transition date was materially lower than our discount rate of over 5% under the existing guidance. It is worth pointing out that with the adoption of LDTI, our insurance liabilities, especially for LTC, will be more sensitive to movements in interest rates. For example, if the transition date adjustment use current rates and held everything else constant, the $11.5 billion reduction in AOCI would have more than reversed and the change in AOCI would have been positive. This illustrates the volatility in our U.S. GAAP reserves and AOCI that will likely occur in future periods as the discount rate fluctuates, which reinforces why we've encouraged investors to also review our statutory disclosures. The remaining decrease to stockholders' equity as of the transition date relates to a reduction to retained earnings of $2.2 billion, primarily from LTC. This impact is largely related to a more granular assessment of LTC policy cohorts defined on the basis of original contract issue date using best estimate assumptions. With this new accounting guidance, we do expect more volatility in our net income. Going forward, we'll see changes in the fair value of market risk benefits related to changes in equity market performance and interest rates impact net income for our annuity products. We could also see increased volatility from changes in our assumptions as cash flow assumptions will be unlocked and updated at least annually in the fourth quarter and from fluctuations and experience. With the adoption of LDTI, we will be representing results for full year 2021 and 2022 under the new guidance, and we expect net income to be lower in these periods, primarily related to LTC. We will provide additional details on the LDTI adoption in our 2022 Form 10-K filed later this month. Turning to the holding company on Slide 21. We ended the quarter with $307 million of cash and liquid assets above our cash target of 2x annual debt service, we received $168 million of capital from Enact plus $37 million in net intercompany tax payments in the quarter. For the full year 2022, Enact returned $206 million to Genworth and will continue to be a key source of cash flows moving forward. Given our significant debt reduction in 2022, including an additional $13 million be purchased opportunistically in the fourth quarter, our holding company strength has continued to improve over time. Annual debt service is expected to be approximately $60 million for 2023, and our debt outstanding is long dated. In 2022, net intercompany tax payments to the holding company were $223 million. The parent holding company has approximately $200 million of remaining deferred tax assets, mainly foreign tax credits that it expects to realize in the near future. The utilization of these tax assets is dependent on the taxable income generated by our subsidiaries. And once exhausted, we anticipate becoming a federal taxpayer. In the fourth quarter, we also completed $30 million of share repurchases for an average price of $4.10 per share. Through December 31, we executed a total of $64 million of our authorized $350 million share repurchase program. As we think about our capital allocation strategy going forward, our first priority is investing in growth by bringing care navigation support and other senior care services to market under the CareScout brand. There is a large addressable market for these services in the U.S., and we're excited to leverage Genworth's unique strengths to capitalize on the opportunities we see in the sector. As Tom mentioned, we'll invest approximately $30 million into launching fee-based, capital-light service offerings in 2023. Our second priority is to return capital to shareholders through opportunistic share repurchases. We expect to generate excess cash through our ownership of Enact and are well positioned to execute on these priorities given our strong liquidity position, healthy balance sheet and sustainable debt level. We had an excellent year in 2022 and are confident in Genworth's ability to continue to create value for shareholders. Now let's open the line up for questions.

[Operator Instructions]. We'll take our first question from the line of Joshua Esterov at CreditSights.

Looks like you talk about repurchase a modest amount of the 2034 senior unsecured notes. And I'm wondering if that was simply opportunistic given the opportunity to retire at a discount? Or whether you have intentions to chip away at that balance over time. So now that you're within that your $1 billion total debt target, just curious about your appetite for continued debt reduction and whether that's the senior, the junior or what have you. Just curious where your heads are at with -- on that subject.

Thanks, Josh. Good question. I'll turn that one over to Dan.

Yes. Thanks, Josh. Great question. So just a reminder, in terms of where our priority would be if we were to buy back debt, there are covenants that restrict us from buying the 20 -- well, the 2066s -- so our focus would be on the 2034s up and until we get that below $100 million outstanding. But in terms of how we look at debt purchases today, I think our priority now that we're sitting on a fair amount of excess cash remains focused on the share buyback. We've got the debt down below now the level that we've set out a number of years ago. And so we're quite satisfied with the fact that we've got no debt coming due for another decade. But like we were in this quarter, we will look opportunistically with so little debt trading at this -- or so little debt left at this point. There is limited trading. So what I would expect would be that there may be opportunities as we move forward, but they will be similar to the fourth quarter at this point.

Our next question comes from Ryan Krueger at KBW.

On your LTC annual review. Can you give us a sense of to what extent you changed claim inflation assumptions?

We'll give that one to Brian Haendiges, who runs the legacy business.

So as Dan noted, we didn't make any changes to the assumptions or to our expected approvals in the future with our -- MYRAP program, our future increase program. We do look at all our assumptions in aggregate, as I think I mentioned last time and they look like they're holding up in aggregate. So we didn't see a need for a change. One of the things we looked at, of course, was inflation because it made headlines. And -- we did not see an indication that our benefit utilization has changed dramatically. If it does in the future, I think there's a natural offset over the long term with interest rates and that will help us out.

Ryan, any follow-up on that?

Yes. Can -- do you know -- can you give us any sort of metric around kind of what your claim utilization assumption is on the aggregate book, I guess, as a percentage of max daily benefit or something along those lines?

Well, maybe I'll let Brian do the details if he knows. But I would say, Ryan, that -- if you go back to last year, so we did the review in the fourth quarter of 2021, we did make a number of assumption changes that increase the amount that -- of premium increases that we needed to get through the -- MYRAP, we increased the MYRAP amount by around $4 billion, and a significant percentage of that was we changed the benefit utilization assumptions last year. And some view of future costs were part of that. So we did do I think, a good job last year. And as a result of what we did, we didn't change those. But Brian, if you want to comment on Ryan's question on sort of how we look at benefit utilization from a more granular perspective on the percentage of where we are. Obviously, it varies by the different product forms.

Yes. I don't have the details on that, Ryan, because it's different by nursing home, assisted living facility or home care. But what I will say is we've been tracking how we're doing against the long-term objective of reaching economic breakeven. And we've been looking for a good durable measure of that that's independent of where we are with assumptions in any given year. And if you look back to the end of 2020, we were about 64% of the way there using the assumptions we had at the time. At the end of 2021, we were about 69% of the way done. And at the end of 2022, we're about 78% of the way done. So we're kind of closing in on that end game where we're at or near economic breakeven. And so I think, yes, there are individual components, that if you look at the details and only look at that component, they may move around a little bit. But when you look at it in aggregate and how they interact with each other, we've been making constant progress over time.

Yes. I would -- lastly, I would say, Ryan, as both Dan and I talked about today, we had an outstanding year of -- in LTC premium annual approvals this year, $549 million. That was a very strong year, a record year for us. We've been averaging more over time in the $300 million, $350 million range. Last year was a record at a little over $400 million. Obviously, the $549 million is a significant addition on top of that. As I mentioned, I think, Dan, we -- there are -- in counting that, there are -- we haven't finished in all of those cases. As you know, there's an electronic system that is the ultimate filing. And so we do have some mechanics that we have to do on those. But its a very strong year. And as a big part of the reason that you see the percentage accomplished against the total we need being between 75% and 80% now is because of the very strong increases we've received from regulators in the last couple of years. And I would comment, there are regulators on the call that listen to this. And as you can imagine, Ryan, it's very challenging to ask for increases and continue to as increases on some of the older product forms. You can see this on Slide 14, we're up to over 400% cumulative increases, and that's over a series of increases. So I would say we're feeling very good about beginning to get near the end of what we had needed to do to accomplish, and we're not there yet. And we'll likely make some assumption changes going forward. That seems to be inedible as more claims come in. But we just feel very good about where we are. And I think the regulators are encouraged. I would say, 10 years ago, there were some regulators who thought, well, why bother because Genworth has so many challenges. But -- and credit to all of them, and I want to thank them because I think they really have stepped up. It's hard to grant these large increases. This is probably more premium increases done in LTC than any other industry. And I think they've -- that's been very helpful for us. It's the key way we manage the legacy book. So we feel just very good about where we are.

[Operator Instructions]. And we do have a follow-up from Ryan Krueger.

I guess I'll ask 1 more. Can I just -- I had 1 more question on long-term care. So I believe last year, you had a $28.7 billion cumulative premium rate increased assumption in LTC and now it's $30.3 billion, but the active life reserve margin remained unchanged. So it seems like there must have been some other offset. Can you help walk through that?

Brian, do you want to handle that one?

Yes. I think what happens is, so we did make some minor refinements and assumptions. As I said, we didn't make any that were big enough to change the request going forward. But when we make those changes, sometimes they have a positive effect in terms of the value that's either already been achieved or the value that will be achieved over time. And so one of those assumptions was because we've seen improved behavior from regulators that, that's likely to continue. And so that's had a positive impact.

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

Thank you very much, Jim, and thank you to all of you that joined the call today. We really appreciate it. In closing, we're very proud of Genworth's financial performance and the accomplishment of all the strategic objectives we've reviewed today. And we're pleased to have entered 2023 with greater financial flexibility. We are well positioned to continue to return capital to shareholders while investing in growth in our CareScout set of businesses. I would like to thank Dan again for his outstanding contributions to Genworth and to also recognize our incoming CFO and CIO, Jerome Upton and Kelly Saltzgaber. They were key deputies to Dan and have been key leaders that enabled us to successfully transform Genworth and achieve our financial investment objectives. I'm highly confident that they will continue to build on the great progress Genworth has made under Dan's leadership. Thank you for your questions, your interest and your support. And with that, I'll turn things back over to Jim to close the call.

Thank you, sir. Ladies and gentlemen, this does conclude Genworth Financial's fourth quarter conference call. Thank you for your participation. At this time, the call will end.