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Genworth reported Q1 2026 net income of $47 million and adjusted operating income of $109 million excluding the Closed Block, while management said it will now present core earnings without that legacy segment to better reflect ongoing performance.
Enact remained the key cash engine, generating $140 million of adjusted operating income for Genworth and $99 million of capital returns in the quarter, with the unit still expected to return about $500 million of capital in 2026.
CareScout is becoming the main growth initiative, with Genworth planning $50 million to $55 million of 2026 investment, expanding its care network, and targeting 7,500 matches this year as it builds out aging-care services and products.
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Genworth Financial (NYSE:GNW) reported first-quarter 2026 net income of $47 million and adjusted operating income excluding its Closed Block segment of $109 million, as management emphasized continued cash generation from Enact Holdings, investment in CareScout and efforts to manage legacy long-term care insurance liabilities.
President and CEO Tom McInerney said the company is changing how it presents its core operating earnings by excluding the Closed Block of legacy insurance products from consolidated adjusted operating income. He said the Closed Block is managed separately and is intended to be self-sustaining, while quarter-to-quarter GAAP volatility “does not reflect the underlying economics or how the business is strategically positioned for the long term.” Genworth will continue to disclose adjusted operating income for the Closed Block separately.
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“We believe this view of our operating performance better aligns with our strategy and capital allocation framework, driving current and future shareholder returns through Enact and long-term growth opportunities with CareScout,” McInerney said.
Genworth’s first-quarter results were led by Enact, which generated adjusted operating income of $140 million attributable to Genworth. Chief Financial Officer Jerome Upton said Enact’s results included a pre-tax reserve release of $39 million, reflecting continued strong cure performance. Enact’s adjusted operating income was lower than the prior quarter because of a smaller reserve release, but higher than the prior year due to increased investment income and favorable expenses.
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Enact wrote $13 billion of new insurance in the quarter, down from the prior quarter mainly due to seasonal trends, but higher than the prior year as lower interest rates early in the quarter supported activity. Primary insurance in force rose year over year to $272 billion. Earned premiums were $243 million, slightly lower than both the prior quarter and prior-year period. Enact’s loss ratio was 15%, and its estimated PMIERs sufficiency ratio was 162%, or about $1.9 billion above requirements.
Genworth received $99 million in total capital returns from Enact during the quarter. Upton said Enact continues to expect to return approximately $500 million of capital to its shareholders in 2026, implying about $405 million for Genworth based on its roughly 81% ownership stake.
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Genworth ended the quarter with $166 million of cash and liquid assets at the holding company. Upton said that, for capital allocation purposes, the company excludes about $50 million of cash held for future obligations, including advance cash payments from subsidiaries.
The company repurchased $66 million of shares during the quarter at an average price of $8.61 per share and bought back an additional $19 million through April 30. Since the current buyback authorization began, Genworth has repurchased $875 million of shares at an average price of $6.38 as of April 30, McInerney said. For full-year 2026, Genworth now expects to allocate between $195 million and $225 million to share repurchases, depending on market conditions, business performance, holding company cash and the company’s share price.
Genworth also retired approximately $5 million of principal debt during the quarter, bringing holding company debt to $778 million. Upton said the company has a cash interest coverage ratio on debt service of approximately 9 times.
Management highlighted CareScout as Genworth’s long-term growth opportunity, describing it as a capital-light platform designed to help families understand, find and fund long-term care. McInerney said the business is being built around comprehensive services, expert guidance and “technology-enabled human connection.”
During the quarter, CareScout expanded its CareScout Quality Network, including the addition of its first senior living communities. McInerney said the company expects the network to include more than 1,000 home care locations and about 2,000 senior living communities by the end of 2026. He said the senior living model differs from home care, with CareScout earning a one-time placement fee upon a successful move-in.
CareScout facilitated approximately 1,500 matches between care seekers and providers in the first quarter, including its first direct-to-consumer matches in both home care and senior living communities. The company continues to target about 7,500 matches in 2026, up from 3,255 in 2025. CareScout Services generated $6 million of revenue in the first quarter, and management reiterated its expectation for $25 million in service revenue for the full year.
Upton said Genworth plans to invest approximately $50 million to $55 million in CareScout Services in 2026 to support technology development, new products and care settings, and growth in consumer and business-to-business channels. He said no additional 2026 investments are currently expected for CareScout Insurance after the company’s $85 million investment last year to launch its inaugural product.
McInerney also said Genworth plans to launch its CareAssurance worksite product later this year and is developing hybrid long-term care insurance products that pair a minimum long-term care benefit with low-cost fixed income and equity accounts designed for accumulation.
Genworth’s Closed Block segment reported an adjusted operating loss of $32 million in the first quarter, driven by a $36 million pre-tax liability remeasurement loss related to actual variances from expected experience, primarily in long-term care. Upton said long-term care results were favorably impacted by $65 million of pre-tax net insurance recoveries. He added that mortality in both long-term care and life insurance was seasonally higher than the prior quarter but lower than the prior year.
Upton said Genworth expects actual-to-expected losses of approximately $300 million for full-year 2026, while noting that GAAP fluctuations do not affect cash flows, economic value or how the company manages the business.
The company continues to pursue its Multi-Year Rate Action Plan, which McInerney called its most effective tool for maintaining Closed Block sustainability. Genworth secured $5 million of gross incremental premium approvals in the first quarter and another $45 million early in the second quarter. McInerney said full-year 2026 premium approvals and benefit reductions are expected to be broadly in line with 2025 levels, contributing about $1 billion of economic value on a net present value basis.
Since 2012, Genworth has achieved approximately $34.5 billion in net present value through premium increases and benefit reductions. Upton said about 61% of policyholders offered a benefit reduction have elected one. He also said exposure to 5% compound benefit inflation options has fallen below 36%, down from 57% in 2014, and policies with lifetime benefits now represent 11%.
In response to an analyst question about the risk-based capital ratio at Genworth’s life entities, McInerney said the company targets an RBC ratio of 250 or more and is “very comfortable” with its position. Upton said the first quarter ratio of 289 remained “a good ratio,” though it was pressured by mortality, long-term care results and life insurance pressure from the post-level term block. He reiterated that the company does not expect to inject capital into its closed insurance companies.
On the investment portfolio, Chief Investment Officer Kelly Saltzgaber said Genworth has minimal exposure to middle-market direct lending, with about 1% of the portfolio in middle-market loans through a separately managed account with an external manager. She said the company’s private investments are “almost exclusively investment grade,” except for that middle-market loan exposure.
McInerney also provided an update on the AXA litigation, saying an appeal hearing is scheduled for July 21 through July 23. If the judgment is upheld and appeals are favorably resolved, Genworth expects to recover about $750 million, subject to exchange rates, and does not expect to pay taxes on the recovery. He said any proceeds are not included in current capital allocation plans and would be deployed toward CareScout investment, shareholder returns and debt reduction.
Management said Genworth is monitoring macroeconomic uncertainty, including uneven consumer spending and the potential for higher inflation and interest rates. McInerney said the company believes it is well positioned for 2026 and beyond, supported by Enact’s free cash flow, disciplined underwriting and strong capital position.
Genworth Financial (NYSE: GNW) is a leading financial security company offering a broad range of insurance products. Based in Richmond, Virginia, Genworth provides individuals and families with solutions designed to protect against long-term care expenses, secure life insurance needs and support homeownership through private mortgage insurance. With operations spanning the United States, Canada and Australia, the company serves both retail and institutional clients through a diversified portfolio of risk management services.
The company's Private Mortgage Insurance (PMI) segment offers coverage to lenders and consumers in the US, Canada and Australia, enabling homebuyers to purchase properties with lower down payments.
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The article "Genworth Financial Q1 Earnings Call Highlights" was originally published by MarketBeat.
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