Good morning, ladies and gentlemen, and welcome to Genworth Financial's Third Quarter 2025 Earnings Conference Call. My name is Lisa, and I'll be your coordinator today. [Operator Instructions] As a reminder, the conference is being recorded for replay purposes. [Operator Instructions] I would now like to turn the presentation over to Christine Jewell, Head of Investor Relations. Please go ahead.

Thank you, and good morning. Welcome to Genworth's Third Quarter 2025 Earnings Call. The slide presentation that accompanies this call is available on the Investor Relations section of the Genworth website investors.genworth.com. Our earnings release and financial supplement can also be found there, and we encourage you to review these materials. Speaking today will be Tom McInerney, President and Chief Executive Officer; and Jerome Upton, Chief Financial Officer. Following our prepared remarks, we will open the call up for a question-and-answer period. In addition to our speakers, Jamala Arland, President and CEO of our U.S. Life Insurance business; Greg Karawan, General Counsel; Kelly Saltzgaber, Chief Investment Officer; and Samir Shah, CEO of CareScout Services, 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 investor materials, non-GAAP measures have been reconciled to GAAP where required in accordance with 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, Christine, and thank you for taking the time to join our third quarter earnings call this morning. Genworth reported solid net income of $116 million with adjusted operating income of $17 million or $0.04 per share. This quarter's results were driven again by strong performance from Enact, our mortgage insurance subsidiary, which contributed $134 million to Genworth's adjusted operating income. Our estimated pretax statutory income for our U.S. life insurance companies was approximately $68 million on a year-to-date basis through the end of the third quarter, including the net favorable impacts to annuities from equity market and interest rate movements. Genworth ended the quarter with a healthy liquidity position, holding $254 million of cash and liquid assets. Genworth continues to execute against our 3 strategic priorities. First, we continue to create value for shareholders through Enact's growing market value and capital returns earned through our approximately 81% ownership stake in the company. Enact remains a key source of cash to Genworth, fueling our share repurchases and growth investments in CareScout. In the third quarter, we received $110 million of capital returns from Enact, bringing us to a total of $1.2 billion received from Enact since its IPO in 2021. Enact announced yesterday that it now expects to return approximately $500 million of capital to shareholders this year, highlighting the continued strong performance of its business. Supported by these strong cash flows, we continue to execute our own share repurchase strategy through the third quarter. On September 18, we announced a new $350 million repurchase authorization, underscoring the Board's confidence in Genworth's strategy and financial condition. We've made strong progress returning capital through share repurchases at prices that, in our view, represent a discount to intrinsic value. Turning to our second strategic priority. We made additional progress in our…

Thank you, Tom, and good morning, everyone. We continue to build on our solid foundation, enhance our financial flexibility and execute on our strategic priorities. Enact once again delivered robust operating performance and maintained a strong capital and liquidity position. We also advanced our multiyear rate action plan, made significant progress advancing CareScout and continued to return capital to shareholders. I'll start with an overview of our financial performance and drivers, followed by an update on our investment portfolio and holding company liquidity before we open the call for Q&A. As shown on Slide 9, third quarter adjusted operating income was $17 million, driven by Enact. Our long-term care Insurance segment reported an adjusted operating loss of $100 million, driven by a remeasurement loss primarily related to unfavorable actual variances from expected experience or A2E. The unfavorable A2E of $107 million pretax was driven by lower terminations and higher benefit utilization. As we previously noted, in 2023 and 2024, we saw an average quarterly loss of approximately $65 million in LTC related to A2E. While results can vary quarter-to-quarter, we still expect full year performance could track closely to that historical average. As a reminder, these GAAP fluctuations do not impact our cash flows, economic value or how we manage the business. Life and Annuities reported adjusted operating income of $4 million in the third quarter. This included an adjusted operating loss of $15 million in life insurance, which improved versus the prior quarter and prior year due to favorable mortality, offset by adjusted operating income of $19 million from annuities. Corporate and Other reported an adjusted operating loss of $21 million for the third quarter, including a $7 million valuation allowance reduction on certain deferred tax assets. Excluding this item, results were consistent with the prior quarter and prior…

[Operator Instructions] It appears there are no questions at this time. Ladies and gentlemen, I would now turn the call back over to Mr. McInerney for closing comments.

Thank you very much, Lisa. And I want to thank everybody for joining the call today and for your continued interest in Genworth. And I'll turn the call back over to Lisa.

And our first question comes from Pete Enderlin with MAZ Partners.

Yes. Okay. Well, first of all, congratulations on the way you've continued to manage all the multiple complicated moving pieces of this whole strategic picture. But second -- and this is kind of a hard question to ask and answer, I guess, but is there any meaningful way you can talk about the ultimate strategic long-term resolution of the LTC situation for the company? I mean you've done a lot to improve it itself and also your approach to it with the new operations you're undertaking. But if you look out, I don't know, 10, 20 years, whatever, where does that thing end up in relation to Genworth itself?

So Pete, that's a significant question. And I would say, one, we continue to focus on making sure of the self-sustainability of the legacy life companies, and we're making significant progress with premium increases and benefit reductions. Second, as one of the slides shows, there are 71 million Americans 65 and older. There are 70 million baby boomers, 95% of whom do not have long-term care insurance. So CareScout Services is really designed to work with them if they do end up with long-term care disabilities and the projection is that 2/3 of baby boomers, Americans when they reach their 80s will have need for long-term care. CareScout Services is well positioned to help them assess what their care needs are, come up with care plans, and we've talked about the pricing on those and then refer those who need care to either our home care quality network or the assisted living communities. And obviously, the Seniorly acquisition really significantly expanded that network by about 3,000. So I think it's a huge market because of the aging baby boomers. And there are not a lot of players left today in the LTC space. So we think it's a big market. We're well positioned both on the service side, helping people decide how much care they need and where to get it. And then we offer discounts and incentives. And then on the insurance side, we have our first product that we are launching now, and there's a number of products that will be developed and brought to the market starting in the first quarter. So we're very optimistic given the size of the market, our 50 years of expertise in the market and the 2 CareScout units that we're very well positioned to take advantage of a big and growing need for Americans needing to figure out what care they need, find the care and then have us provide funding solutions for them.

Is it too simplistic to say that the legacy LTC business is basically going to be a runoff and then the rest of it would be a stand-alone business that could eventually be literally separated from Genworth itself?

So we're -- the new CareScout businesses are not connected to the legacy Genworth companies, they are owned, obviously, by the parent. And so yes, I mean, for the legacy business, it's a runoff, it's a long runoff because probably of the 1 million policyholders we have individual and group that runoff will be 30 years or more. But all the CareScout opportunities are in a separate business that will be run managed separately. And to your point, Pete, it will be able to stand on their own separate apart from the legacy LTC company.

[Operator Instructions] We'll take our next question from Ross Levin with Arbiter.

My question is, at one point, you were generating some statutory income out of the legacy life or long-term care business. It seems like that's flipped to slightly negative over the last several quarters. Could you just talk -- I know it's small numbers in the context of the whole, but could you just talk about what's driven the transition to somewhat negative statutory earnings?

Sure. Jerome, do you want to handle that?

Ross, thank you for the question. I would just highlight from a statutory income perspective, the biggest driver right now of the pressure that we're feeling is long-term care, and that's where the pressure is normally coming from. And the driver of that is basically we continue to see claims go up, and we continue to see pressure from benefit utilization. And what we do with that is we take all of that and we prioritize that and put that in our multiyear rate action plan, and we've been executing very, very well against our multiyear rate action plan, which provides some offset. But there's no doubt there's pressure from a long-term care perspective because of the claims. And those claims will continue to increase over the next several years because we've got some large blocks that are maturing. That's the biggest driver. Number two, life has been pressured from a mortality perspective, and that pressure has continued to come through. That has been offset in part because of the strength in the equity markets with our annuity program. So we have annuities, which when the equity markets go up, we get -- have some favorability that come through our statutory earnings. The one thing that I will -- and also the one thing I would highlight is we had legal settlements coming through in the prior year, which tamped down the pressure that we felt in LTC. And now those legal settlements are complete. The one thing from a U.S. Life perspective, we focus on the MYRAP. That business, we have told our investors that we are not going to put money in the business. We're not going to take money out of the business. We're focused on closing that gap with a multiyear rate action plan, and we're telling our investors to value the business at 0.

Yes. Understood. I guess to the extent that maybe several quarters ago or a year or 2 ago, someone might have felt you were getting ahead of things in terms of being able to generate some statutory income via some of the modifications you were able to negotiate with your state regulators. Like why -- what has caused us to sort of fall behind the curve again, if that makes any sense or...

So Ross, you may -- there's a couple of things that I would highlight for you. Number one, several years ago, COVID was a highly pressured situation overall geographically in the population. But it created additional terminations or deaths that came through, and we saw some favorability or profitability that came through during COVID. That's number one. That is behind us now. Number two, we had some settlements, some very large settlements that came through that also increased our earnings or tamped down the pressure that we're feeling. And those are now gone, and we're seeing some of the larger books that we have in our in-force block and our LTC in-force block coming through and claims are going up.

The only thing I would add to that, Ross, is I do think you are going to see quarter-to-quarter variation. There'll be some quarters where we'll have statutory earnings. Usually, the first quarter of the year is a good one these claim terminations are higher than other quarters. It's always hard to predict when states, particularly large states, will grant premium increases. And so depending on the timing of that, it could impact quarter-to-quarter results. In addition, we have a significant plan to continue to be successful in getting benefit reductions. I think what the slides show that we're at 60%, 61% have taken a benefit reduction. That also helps. So I think over the long run, the statutory income will -- I think of it as breakeven. There will be quarters that will be positive, quarters negative but breakeven over time. And we really do depend on the MYRAP premium increases, benefit reductions. I think over time, we've done extremely well and certainly compared to others in the industry. But it is going to continue to be the case that from a statutory perspective, quarter-to-quarter, there'll be positive quarters and negative quarters. But overall, as Jerome said, we value the business as we think we'll be able to ultimately achieve through the MYRAP enough premium increases, benefit reductions to pay all the claims that we forecast going forward.

Okay. So if you achieve your ambition in terms of the MYRAP, you would not expect to ultimately generate statutory income out of the legacy long-term care block?

Well, I think we look at that as the premium increases and benefit reductions will allow us to be at breakeven going forward and be able to pay all the claims that we project.

It appears that there are no questions at this time. Ladies and gentlemen, I will now turn the call back over to Mr. McInerney for closing comments.

Thank you very much, Lisa, and thank you to Pete and Ross for those questions. I think they are very good questions, and hopefully, we addressed them well. Thank you to all of you joining the call today. We appreciate your interest and your ownership in the company and look forward to catching up with you when we release the fourth quarter results in February. And with that, Lisa, I'll turn the call back to you to close out the call.

Ladies and gentlemen, this concludes Genworth Financial's Third Quarter Conference Call. Thank you for your participation. At this time, the call will end.