Newswires
ENACT HOLDINGS, INC. – 10-K – Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes for the years endedDecember 31, 2022 , 2021 and 2020 included in Item 8 of this Annual Report. This discussion includes forward-looking statements and involves numerous risks, uncertainties and assumptions that could cause actual results to differ materially from management's expectations. For factors that could cause such differences refer to the sections entitled "Cautionary Note Regarding Forward-Looking Statements" and "Item 1A. Risk Factors." We are not undertaking any obligation to update any forward-looking statements or other statements we may make in the following discussion or elsewhere in this document even though these statements may be affected by events or circumstances 74 -------------------------------------------------------------------------------- occurring after the forward-looking statements or other statements were made. Future results could differ significantly from the historical results presented in this section. References to EHI, the "Company," "we" or "our" herein are, unless the context otherwise requires, to EHI on a consolidated basis.
Overview of Business
We are a leading private mortgage insurance company, having servedthe United States housing finance market since 1981, and operate in all 50 states and theDistrict of Columbia . Our mortgage insurance products provide credit protection to mortgage lenders, covering a portion of the unpaid principal balance of Low Down Payment Loans in the event of a default. We believe we have built a leading platform based on long-tenured customer relationships, underwriting excellence and prudent risk and capital management practices. Our business objective is to leverage our competitive strengths to drive market share, maintain our strong capitalization and strong earnings profile and deliver attractive risk-adjusted returns to our stockholders. We generate revenues by providing mortgage credit protection to our customers in exchange for premiums, which we set based on our evaluation of the underlying risk we insure. Once the premium rate is established and coverage is activated, the premium rate remains unchanged for the first ten years of the policy; thereafter the premium rate resets to a lower rate used for the remaining life of the policy. In general, we can only cancel coverage for a failure to pay premiums or at servicer direction when the borrowers achieve the required amount of home equity. Our premium rate is applied predominantly to the original loan balance to determine either a monthly payment that the lender adds to the borrower's monthly loan payment or a single upfront payment made by either the borrower or lender at loan closing. The amount of premiums earned from our insurance portfolio and the timing of premium recognition are also affected by persistency rate, which we measure as the percentage of loans that remain on our books based on the annualized cancellations for the period. We also employ a CRT program to transfer a portion of our risk through both traditional XOL reinsurance arrangements and the issuance of ILNs. In exchange, we cede a negotiated amount of our premiums to the reinsurers and ILN investors that participate in our CRT transactions. Our net premiums earned (i.e., materially, the gross premiums charged less premiums ceded as part of our CRT program) represent the largest source of our revenues. Importantly, our CRT program helps to de-risk our operating model and spread the risk of loss across our counterparties while also providing capital relief. We also invest our premiums in high quality, predominantly fixed income assets with the primary business objectives of preserving capital, generating investment income and maintaining sufficient liquidity to cover our operating expenses and pay future claims. The investment income generated through our investment portfolio is another significant source of our revenues. We generate profits through collection of premiums and investment income less losses, operating expenses, interest expense and taxes. Our mortgage insurance coverage protects lenders against loss in the event of a borrower default by covering a portion of the outstanding principal balance of a loan. In the event of a borrower default, our coverage reduces and, in certain instances eliminates, losses to the insured by transferring the covered portion of the economic loss to us. Borrower defaults are first reported to us as new delinquencies when the borrower fails to make two consecutive monthly mortgage payments. Incurred losses are our estimate of future claims on these new delinquencies as well as any change in the prior estimates for previously existing delinquencies. In addition, incurred losses include estimates of future claims on IBNR delinquencies. Our incurred losses are based on estimates of both the rate at which delinquencies will go to claim (i.e., claim rate) and the ultimate claim amount (i.e., claim severity). Claim frequency and severity estimates are established based on historical experience focusing on certain delinquency and loan attributes that influence the probability and amount of ultimate claim. Our estimates of ultimate claim amounts for each delinquency include loss adjustment expense ("LAE") that are costs incurred in the settlement of the claim process such as legal fees and costs to record, process and adjust claims. Incurred losses are generally affected by macroeconomic conditions, borrower credit 75 --------------------------------------------------------------------------------
quality, certain loan attributes, underwriting quality and our loss mitigation
efforts among other factors detailed below.
Key Factors Affecting Our Results
Our financial position and results of operations depend to a significant extent
on the following factors, as noted below in "-Trends and Conditions."
Mortgage Origination Volume
The level of mortgage origination volume is a key driver of our future revenues. The overall mortgage origination market is influenced by macroeconomic factors such as the rate of economic growth, the unemployment rate, interest rates, home affordability, household savings rates, the inventory of unsold homes, demographics of potential homebuyers and credit availability. The mortgage origination market is also influenced by various legislative and regulatory actions and GSE programs and policies that impact the housing and mortgage finance industries.
Penetration
The penetration rate of private mortgage insurance is mainly influenced by the competitiveness of private mortgage insurance compared to alternative products for Low Down Payment Loans provided by government agencies (principally the FHA and theVA ), portfolio lenders that self-insure, reinsurers and capital market transactions designed to mitigate risk. In addition, the private mortgage insurance industry's penetration rate is driven by the relative percentage of purchase mortgage originations versus refinances. Private mortgage insurance penetration tends to be significantly higher on new mortgages for purchased homes than on the refinance of existing mortgages, because average LTV ratios are typically higher on home purchases and therefore are more likely to require mortgage insurance. Lastly, we believe the penetration rate of private mortgage insurance is influenced by other factors, including lender preference, FHA competitiveness and risk appetite, loan limits, contractual terms including cancellability and loss mitigation practices.
Credit and Regulatory Environment
The level of private mortgage insurance market penetration ("market
penetration") and eventual market size is affected in part by actions taken by
the GSEs and the United States government, including the FHA, the FHFA and
Congress , that impact housing or housing finance policy. In the past, these
actions have included announced changes, or potential changes, to underwriting
standards, FHA pricing, GSE guaranty fees and loan limits, as well as low down
payment programs available through the FHA or GSEs.
Competition and Market Share
Competitors include other private mortgage insurers that are eligible to write business for the GSEs. We compete with other private mortgage insurers based on pricing, underwriting guidelines, customer relationships, service levels, policy terms, loss mitigation practices, perceived financial strength (including comparative credit ratings), reputation, strength of management, product features and technology ease-of-use. We also compete with governmental agencies (principally the FHA and theVA ) primarily based on price and underwriting guidelines. Pricing is highly competitive in the mortgage insurance industry, with industry participants competing for market share, customer relationships and overall value. Recent pricing trends have introduced an increasing number of loan, borrower, lender and property attributes, resulting in expanded granularity in pricing regimes and a shift from traditional published rate cards to dynamic pricing engines that better align price and risk. Our proprietary risk-based pricing engine evaluates returns and volatility under both the PMIERs capital framework and our internal economic capital framework, which is sensitive to economic cycles and current housing market conditions. The model assesses the performance of new 76
-------------------------------------------------------------------------------- business under expected and stress scenarios on an individualized loan basis, which is used to determine pricing and inform our risk selection strategy that optimizes economic value by balancing return and volatility.
Seasonality
Consistent with the seasonality of home sales, purchase mortgage origination volumes typically increase in late spring and peak during summer months, leading to a rise in NIW volume during the second and third quarters of a given year. Refinancing volume, however, does not follow a similar seasonal trend and instead is primarily influenced by interest rates, which can overwhelm typical seasonal trends. Delinquency performance (new delinquency formation and cure behavior) is generally favorable in the first and second quarters of the year. Therefore, we typically experience lower levels of losses resulting from favorable delinquency activity in the first and second quarters, as typically compared to the third and fourth quarters. As a result of delinquencies from COVID-19 and subsequent cure activity, trends from the last two years may not follow traditional seasonality.
The following table presents our NIW, number of cures and new delinquencies for
primary policies, excluding our run-off insurance block with reference
properties in
Seasonality Three months ended
Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, Sep 30, Dec 31,
(Dollar amounts in millions) 2021 2021 2021 2021 2022 2022 2022 2022
NIW $24,934 $26,657 $23,972 $21,441 $18,823 $17,448 $15,069 $15,145
% Change (7.7)% 6.9% (10.1)% (10.6)% (12.2)% (7.3)% (13.6)% 0.5%
Cure Counts 13,478 14,473 11,746 11,929 10,860 10,806 9,588 9,024
% Change (18.6)% 7.4% (18.8)% 1.6% (9.0)% (0.5)% (11.3)% (5.9)%
New Delinquency Count 10,053 6,862 7,427 8,282 8,724 7,847 9,121 10,304
% Change (15.7)% (31.7)% 8.2% 11.5% 5.3% (10.1)% 16.2% 13.0%
NIW
NIW occurs when a lender activates mortgage insurance coverage on a closed
mortgage loan. NIW increases our IIF, premiums written and premiums earned. NIW
is affected by the overall size of the mortgage origination market, the
penetration rate of private mortgage insurance into the overall mortgage
origination market and our market share of the private mortgage insurance
market.
Pricing
Our pricing strategy is designed to charge premium rates commensurate with the underlying risk of each loan we insure. Our proprietary platform provides us with a more flexible, granular and analytical approach to selecting and pricing risk. Using our platform, we can quickly change price to modify our risk selection levels, respond to industry pricing trends or adjust to changing economic conditions. We believe that our platform, powered by our proprietary risk model and our understanding of mortgage risk volatility, provides us with a highly sophisticated pricing regime that improves our risk selection and is designed to yield attractive risk adjusted returns through credit cycles.
IIF
IIF at the time of origination is used to determine premiums as the premium rate
is expressed as a percentage of IIF. IIF is one of the primary drivers of our
future earned premium. Based on the composition of our insurance portfolio, with
monthly premium policies comprising a larger proportion of our total portfolio
than single premium policies, an increase or decrease in IIF generally has a
corresponding impact on premiums earned. Cancellations of our insurance policies
as a result of prepayments and other reductions of IIF, such as rescissions of
coverage and claims paid, generally have a negative effect on premiums earned.
77
--------------------------------------------------------------------------------
Persistency Rate and Business Mix
The percentage of our IIF that remains insured after taking into account annualized cancellations for the period presented is defined as our persistency rate. Because our insurance premiums are earned over the life of a policy, higher or lower persistency rates can have a significant impact on our profitability. The rise of interest rates throughout 2022 has significantly increased persistency in the portfolio, but this impact is partially offset by lower NIW. Loan prepayment speeds and the relative mix of business between single premium policies and monthly premium policies also impact our profitability. Assuming all other factors remain constant over the life of the policies, prepayment speeds have an inverse impact on IIF and the expected premium from our monthly policies. Slower prepayment speeds, demonstrated by a higher persistency rate, result in IIF remaining in place, providing increased premium from monthly policies over time as premium payments continue. Earlier than anticipated prepayments, demonstrated by a lower persistency rate, reduce IIF and the premium from our monthly policies. The following table presents the weighted average mortgage interest rate on outstanding primary IIF as ofDecember 31, 2022 , excluding our run-off business. Prepayment speeds may be affected by changes in interest rates, among other factors. An increasing interest rate environment generally will reduce refinancing activity and result in lower prepayments. A declining interest rate environment generally will increase refinancing activity and increase prepayments. Weighted average Policy Year rate (1) 2008 and prior 5.70 % 2009 to 2014 4.45 % 2015 4.20 % 2016 3.91 % 2017 4.28 % 2018 4.81 % 2019 4.24 % 2020 3.26 % 2021 3.10 % 2022 4.88 % Total portfolio 3.84 % ______________
(1)Average Annual Mortgage Interest Rate weighted by IIF.
In contrast to monthly premium policies, when single premium policies are cancelled by the insured because the loan has been paid off or otherwise, any remaining unearned premiums are earned at cancellation. Although these cancellations reduce IIF, assuming all other factors remain constant, the profitability of our single premium business increases when persistency rates are lower. As ofDecember 31, 2022 and 2021, single premium policies comprised 12% and 13% of primary IIF, respectively.
Credit Quality
Improved analytics, stronger loan origination quality controls and the
regulatory implementation of the QM Rule have resulted in a significant
improvement in the credit quality for loans originated in the private mortgage
insurance market over time. Additionally, private mortgage insurers and the GSEs
have maintained strong credit standards over the past decade, with average FICO
scores for NIW persisting at levels significantly above historical averages. As
a result, the industry is insuring loans from borrowers who should be better
positioned to meet their mortgage obligations. More recently, in response to
FTHB
78
-------------------------------------------------------------------------------- demand, there has been modest credit expansion that accommodates LTV over 95% and higher DTI ratios. Even after this expansion, private mortgage insurers and the GSEs have maintained strong credit standards well above historical norms.
Net Investment Income
Net investment income is determined primarily by the invested assets held and
the average yield on our overall investment portfolio.
Net Investment Gains (Losses)
The recognition of realized investment gains or losses can vary significantly across periods as the activity is highly discretionary based on such factors as market opportunities, our capital profile and overall market cycles that impact the timing of selling securities.
Losses Incurred
Losses incurred represent current payments and changes in the estimated future payments on claims that result from delinquent loans. We estimate an expense only for delinquent loans as explained in Note 2 to our consolidated financial statements. Incurred losses depend to a significant extent on the following factors:
•deterioration of regional or national economic conditions leading to a
reduction in borrowers' income and thus their ability to make mortgage payments;
•legislative, regulatory, FHFA or GSE action, or executive orders permitting or mandating forbearance or a moratorium on foreclosures or evictions due to events such as natural disasters or COVID-19; •a drop in housing values that could expose us to greater loss on resale of properties obtained through foreclosure proceedings and an adverse change in the effectiveness of loss mitigation actions that could result in an increase in the frequency of expected claim rates;
•a drop in housing values that negatively impacts a borrower's willingness to
continue mortgage payments, potentially leading to higher delinquencies and
ultimately claims;
•if the foreclosure occurs in a state that imposes judicial process, which
generally increases the amount of time it takes for a foreclosure to be
completed, which impacts severity of the claim;
•the credit characteristics in our in-force portfolio, as loans with higher risk
characteristics generally result in more delinquencies and claims;
•the size of loans we insure, as loans with relatively higher average loan
amounts generally result in higher incurred losses;
•the coverage percentage on insured loans, as loans with higher percentages of
insurance coverage generally correlate with higher incurred losses;
•the level and amount of reinsurance coverage maintained with third parties; and
•the distribution of claims over the life of a book. Historically, the first few
years after origination have relatively low claims, with claims increasing for
several years subsequently and then declining. However, persistency, the
condition of the economy, including unemployment and housing prices and other
factors can affect this pattern.
79
--------------------------------------------------------------------------------
Credit Risk Transfer
We use CRT transactions to transfer a portion of our risk to third parties, through both traditional XOL reinsurance and the issuance of ILNs. Our CRT program reduces the volatility of our in-force portfolio and provides capital relief under PMIERs. When we enter into a CRT transaction, the reinsurer receives a premium and, in exchange, insures an agreed upon portion of incurred losses. These arrangements have the impact of reducing our earned premiums but also provide capital relief under PMIERs in exchange for a negotiated ceded premium rate. Under certain stress scenarios, our incurred losses are also reduced by any incurred losses ceded in accordance with our reinsurance agreements.
Operating Expenses
Our operating expenses include costs related to the acquisition and ongoing maintenance of our insurance contracts, including sales, underwriting and general operating costs. Acquisition expenses are influenced by the amount of our NIW. Acquisition costs that are related directly to the successful acquisition of new insurance policies, such as underwriting expenses, are deferred and amortized over the life of the underlying insurance policies. These deferred acquisition costs are referred to as "DAC." The ongoing maintenance expenses of our insurance contracts are generally fixed in nature and include costs such as information technology, finance and legal, among others, including costs allocated from our Parent for certain activities on our behalf. See Note 11 to our consolidated financial statements regarding our related party transactions.
Critical Accounting Estimates
The accounting estimates (including sensitivities) discussed in this section are those that we consider to be particularly critical to an understanding of our consolidated financial statements because their application places the most significant demands on our ability to judge the effect of inherently uncertain matters on our financial results. The sensitivities included in this section involve matters that are also inherently uncertain and involve the exercise of significant judgment in selecting the factors and amounts used in the sensitivities. Small changes in the amounts used in the sensitivities or the use of different factors could result in materially different outcomes from those reflected in the sensitivities. For all of these accounting estimates, we caution that future events seldom develop as estimated and management's best estimates often require adjustment.
Loss Reserves
Loss reserves represents the amount needed to provide for the estimated ultimate cost of settling claims relating to insured events that have occurred on or before the end of the respective reporting period. The estimated liability includes requirements for future payments of: (a) losses that have been reported to the insurer; (b) losses related to insured events that have occurred but that have not been reported to the insurer as of the date the liability is estimated; and (c) LAE. Loss adjustment expenses include costs incurred in the claim settlement process such as legal fees and costs to record, process and adjust claims. Consistent withU.S. GAAP and industry accounting practices, we do not establish loss reserves for future claims on insured loans that are not in default or believed to be in default. Estimates and actuarial assumptions used for establishing loss reserves involve the exercise of significant judgment, and changes in assumptions or deviations of actual experience from assumptions can have material impacts on our loss reserves and net income (loss). Because these assumptions relate to factors that are not known in advance, change over time, are difficult to accurately predict and are inherently uncertain, we cannot determine with precision the ultimate amounts we will pay for actual claims or the timing of those payments. The sources of uncertainty affecting the estimates are numerous and include factors internal and external to us. Internal factors include, but are not limited to, changes in the mix of exposures, loss mitigation activities and claim settlement practices. Significant external influences include changes in home prices, unemployment, government housing policies, state foreclosure timeline, general economic conditions, interest rates, tax policy, credit availability and mortgage products. Small changes in assumptions or small deviations of actual experience from 80
--------------------------------------------------------------------------------
assumptions can have, and in the past have had, material impacts on our
reserves, results of operations and financial condition.
We establish reserves to recognize the estimated liability for losses and LAE related to defaults on insured mortgage loans. Loss reserves are established by estimating the number of loans in our inventory of delinquent loans that will result in a claim payment, which is referred to as the claim rate, and further estimating the amount of the claim payment, which is referred to as claim severity. The estimates are determined using a factor-based approach, in which assumptions of claim rates for loans in default and the average amount paid for loans that result in a claim are calculated using traditional actuarial techniques. Over time, as the status of the underlying delinquent loans moves toward foreclosure and the likelihood of the associated claim loss increases, the amount of the loss reserves associated with the potential claims may also increase. Management monitors actual experience, and where circumstances warrant, will revise its assumptions. Our liability for loss reserves is reviewed regularly, with changes in our estimates of future claims recorded through net income. Estimation of losses is based on historical claim and cure experience and covered exposures and is inherently judgmental. Future developments may result in losses greater or less than the liability for loss reserves provided. Loss reserves as ofDecember 31, 2022 , were$519 million , a decrease of$122 million sinceDecember 31, 2021 . In considering the potential sensitivity of the factors underlying management's best estimate of our loss reserve, it is possible that even a relatively small change in the estimated claim and severity rates could have a significant impact on loss reserves and, correspondingly, on results of operations. For example, based on our actual experience during the three-year period immediately precedingDecember 31, 2022 , a change of 6 percentage points, or 15%, in the average claim rate would change the gross loss reserve amount for such quarter by approximately$80 million . Likewise, a change of 6 percentage points, or a change of 5%, in the average severity rate would change the gross loss reserve amount for such quarter by approximately$26 million .
Investments
Valuation of
Our portfolio of fixed maturity securities was valued at
The methodologies, estimates and assumptions used in valuing our fixed maturity
securities evolve over time and are subject to different interpretations, all of
which can lead to materially different estimates of fair value. Additionally,
because the valuation is based on market conditions at a specific point in time,
the period-to-period changes in fair value may vary significantly due to
changing interest rates, external macroeconomic and credit market conditions.
For example, widening credit spreads will generally result in a decrease, while
tightening of credit spreads will generally result in an increase, in the fair
value of our fixed maturity securities. As well, during periods of increasing
interest rates, the market values of lower-yielding assets will decline. See
"Item 7A-Quantitative and Qualitative Disclosures About Market Risk-Sensitivity
Analysis-Interest Rate Risk" for the impact of hypothetical changes in interest
rates on our investments portfolio.
Our portfolio of fixed maturity securities comprises primarily investment grade
securities, which are carried at fair value. Estimates of fair values for fixed
maturity securities are obtained primarily from industry-standard pricing
methodologies utilizing market observable inputs. For our less liquid
securities, such as our privately placed securities, we utilize independent
market data to employ alternative valuation methods commonly used in the
financial services industry to estimate fair value. Based on the market
observability of the inputs used in estimating the fair value, the pricing level
is assigned.
81
--------------------------------------------------------------------------------
See Notes 2, 3 and 4 to our consolidated financial statements for additional
information related to the valuation of fixed maturity securities and a
description of the fair value measurement estimates and level assignments.
Allowance for Credit Losses on
As of each balance sheet date, we evaluate fixed maturity securities in an unrealized loss position for changes to the allowance for credit losses. Determining the value of the unrealized losses is dependent on the same methodologies and assumptions used in our valuation of fixed maturity securities. We also consider all available information relevant to the collectability of the security, including information about past events, current conditions and reasonable and supportable forecasts, when developing the estimate of cash flows expected to be collected. There is no recorded allowance for credit losses on available-for-sale securities as ofDecember 31, 2022 .
See Note 2 and 3 to our consolidated financial statements for additional
information related to the allowance for credit losses on fixed maturity
securities.
Revenue Recognition
The majority of our insurance contracts have recurring monthly premiums. We recognize recurring premiums over the terms of the related insurance policy on a pro-rata basis. Premiums written on single premium policies and annual premium policies are initially deferred as unearned premium reserve and earned over the policy life. A portion of the revenue from single premium policies is recognized in premiums earned in the current period, and the remaining portion is deferred as unearned premiums and earned over the estimated expiration of risk of the policy. If single premium policies are cancelled and the premium is non-refundable, then the remaining unearned premium related to each cancelled policy is recognized to earned premiums upon notification of the cancellation. For borrower-paid mortgage insurance, coverage ceases at the earlier of prepayment, or when the original principal is amortized to a 78% loan-to-value ratio in accordance with the Homeowners Protection Act of 1998. Variation in cancellation rates and projected losses are inputs into our premium recognition models, causing uncertainty within our estimates.
We periodically review our premium earnings recognition models with any
adjustments to the estimates reflected as a cumulative adjustment on a
retrospective basis in current period net income. These reviews include the
consideration of recent and projected loss and policy cancellation experience,
and adjustments to the estimated earnings patterns are made, if warranted.
Unearned premium was$203 million as ofDecember 31, 2022 , a decrease of$44 million compared toDecember 31, 2021 . Changes in market conditions could cause a decline in mortgage originations, mortgage insurance penetration rates, persistency and our market share, all of which could impact new insurance written. For example, a decline in primary new insurance written of$1.0 billion would result in a reduction in earned premiums of approximately$3 million in the first full year. Likewise, if primary persistency rates declined on our existing insurance in-force by 10%, earned premiums would decline by approximately$94 million during the first full year, partially offset by higher policy cancellations in our single premium products. These reductions in earned premiums could be potentially offset by lower reserves due to policies no longer being in-force. 82
--------------------------------------------------------------------------------
Trends and Conditions
During 2022,the United States and global economies experienced continued volatility due to high inflation, geopolitical uncertainty and supply chain disruption. Inflationary pressures lessened in the latter half of 2022 but remain elevated, with theBureau of Labor Statistics reporting in December that the Consumer Price Index was 6.5% year-over-year. As a result, theFederal Reserve has continued its aggressive approach towards addressing inflation through interest rate increases and a reduction of its balance sheet. TheFederal Reserve approved an interest rate increase of 0.25% inFebruary 2023 , following increases of 0.50% inDecember 2022 , 0.75% in November, September, July andJune 2022 , 0.50% inMay 2022 and 0.25% inMarch 2022 . Financial markets have reacted with increased volatility and rates have increased across theTreasury yield curve. TheFederal Reserve has signaled that it may make additional interest rate increases to address persistent inflationary pressure. Mortgage origination activity declined during 2022 in response to rising mortgage rates. If interest rates remain high, the refinance market is likely to remain depressed. Housing affordability was challenged in 2022 compared to recent years due to sharply increasing interest rates and elevated home prices, modestly offset by rising median family income according to theNational Association of Realtors Housing Affordability Index . Year-over-year home price appreciation slowed through early 2022, and home prices declined during the second half of the year, according to the FHFA Monthly Purchase-Only House Price Index. The unemployment rate declined to 3.5% inDecember 2022 compared to 3.9% inDecember 2021 , following a decline from its peak of 14.8% inApril 2020 , bringing unemployment in line with the pre-COVID-19 level of 3.5% inFebruary 2020 . As ofDecember 31, 2022 , the number of unemployed Americans stands at approximately 5.7 million and the number of long term unemployed over 26 weeks was approximately 1.1 million. Both metrics remain relatively in line withFebruary 2020 levels. For mortgages insured by the federal government, including those purchased by Fannie Mae and Freddie Mac, forbearance allows borrowers impacted by COVID-19 to temporarily suspend mortgage payments up to 18 months subject to certain limits. Currently, the GSEs do not have a deadline for requesting an initial forbearance. Federal laws and regulations continue to require servicers to discuss loss mitigation options with borrowers before proceeding with foreclosures. These requirements could further extend the foreclosure timeline, which could negatively impact the severity of loss on loans that go to claim. Although it is difficult to predict the future level of reported forbearance and how many of the policies in a forbearance plan that remain current on their monthly mortgage payment will go delinquent, servicer-reported forbearances have generally declined. As ofDecember 31, 2022 , approximately 1.5%, or 14,270, of our active primary policies were reported in a forbearance plan. Of these policies in forbearance plans, approximately 36% were reported as delinquent at year end. Natural disasters, such as hurricanes, often lead to temporary increases in delinquencies in forbearance. We experienced a small increase in delinquencies in the fourth quarter of 2022 related to the recent hurricane affecting the southeasternUnited States , but these did not have a material impact on reserves as ofDecember 31, 2022 . We will continue to monitor the affected areas and support the measures enacted by the GSEs allowing forbearance, restricting foreclosure actions and providing other forms of mortgage relief for those dealing with damage. Total delinquencies decreased during 2022 as a result of cures outpacing new delinquencies. The annual new delinquency rate for 2022 was 3.8%, up slightly from 2021 but in line with historical pre-COVID-19 levels. The full impact of COVID-19 and its ancillary economic effects on our future business results are difficult to predict. Given the maximum length of forbearance plans, the resolution of a delinquency in a plan still may not be known for several quarters or longer. We continue to monitor regulatory and government actions and the resolution of forbearance delinquencies. While the associated risks have 83
--------------------------------------------------------------------------------
moderated and delinquencies have declined, it is possible that COVID-19 could
have an adverse impact on our future results of operations and financial
condition.
The FHFA and the GSEs are focused on increasing the accessibility and affordability of homeownership, in particular for low- and moderate-income borrowers and underserved minority communities. InJune 2022 , the FHFA announced the release of Fannie Mae's and Freddie Mac's respectiveEquitable Housing Finance Plans. The plans included many initiatives, including language discussing potential changes that could impact the mortgage insurance industry. The plans are in their early stages, and we will continue to work with the FHFA, the GSEs, and the broader housing finance industry as these proposals develop and to the extent they are implemented. We cannot predict whether or when any new practices or programs will be implemented under the GSEs'Equitable Housing Finance Plans or other affordability initiatives, and if so in what form, nor can we predict what effect, if any, such practices or programs may have on our business, results of operations or financial condition. Private mortgage insurance market penetration and eventual market size are affected in part by actions that impact housing or housing finance policy taken by the GSEs and theU.S. government, including but not limited to, the FHA and the FHFA. In the past, these actions have included announced changes, or potential changes, to underwriting standards, including changes to the GSEs' automated underwriting systems, FHA pricing, GSE guaranty fees, loan limits and alternative products. OnFebruary 25, 2022 , the FHFA finalized the rule for the Enterprise Capital Framework, which included technical corrections to itsDecember 17, 2020 rule. Higher GSE capital requirements could lead to increased costs to borrowers of GSE loans, which in turn could shift the market away from the GSEs to the FHA or lender portfolios. Such a shift could potentially result in a smaller market for private mortgage insurance. InJanuary 2022 , the FHFA introduced new upfront fees for some high-balance and second-home loans sold to Fannie Mae and Freddie Mac. Upfront fees for high balance loans increased between 0.25% and 0.75%, tiered by loan-to-value ratio. For second home loans, the upfront fees increased between 1.125% and 3.875%, also tiered by loan-to-value ratio. The new pricing framework became effectiveApril 1, 2022 . To date, we have not experienced a significant impact to the mortgage insurance market or our projections based on this initiative. OnOctober 24, 2022 , the FHFA announced two initiatives: 1) targeted changes to the GSEs' guarantee fee pricing by eliminating upfront fees for certain borrowers and affordable mortgage products, while implementing targeted increases to the upfront fees for most cash-out refinance loans; and 2) the validation and approval of both the FICO 10T credit score model and the VantageScore 4.0 credit score model for use by the GSEs as well as changing the requirement that lenders provide credit reports from all three nationwide consumer reporting agencies and instead only require credit reports from two of the three nationwide credit reporting agencies. The upfront fees are eliminated for certain first-time home buyers with income at or below area median income and certain other GSE affordable housing products. The fee reductions went into effect in the fourth quarter of 2022 while the new fees on cash-out refinance loans beganFebruary 1, 2023 . We expect these price changes to be a net positive to the mortgage insurance market. The validation of the new credit scores requires lenders to deliver both credit scores for each loan sold to the GSEs. There is currently no implementation deadline, but this is expected to be a multiple year process that will require system and process updates along with coordination across stakeholders of the industry. InJanuary 2023 , the FHFA announced additional updates to its up-front fee structure and a recalibration and reformatting of their entire pricing matrix. The changes marked the third iteration of FHFA's ongoing pricing review since early last year and impact purchase and rate-term refinance loans. Pricing grids are now broken out by loan purpose and are recalibrated to new credit score and loan-to-value ratio categories along with associated loan attributes. The new pricing matrix also includes new up-front fees for loans with DTI ratios greater than 40%. The changes are effectiveMay 1, 2023 . The effects of these changes will ultimately be dependent on any changes made by the FHA, but we do not expect a significant impact to the private mortgage insurance market. 84 -------------------------------------------------------------------------------- OnFebruary 22, 2023 , theDepartment of Housing and Urban Development announced a 30-basis point reduction of the annual insurance premium charged to borrowers with FHA-insured mortgages. This action is designed to reduce the cost of borrowing for lower- and middle-class homebuyers who are eligible for the federal program The price reduction is expected to have a negative impact on the private mortgage insurance market, but will be partially offset by the effects of the recent FHFA pricing changes referenced above. We do not believe this net impact will be material. TheU.S. private mortgage insurance industry is highly competitive. Our market share is influenced by the execution of our go to market strategy, including but not limited to, pricing competitiveness relative to our peers and our selective participation in forward commitment transactions. We continue to manage the quality of new business through pricing and our underwriting guidelines, which are modified from time to time when circumstances warrant. We see the market and underwriting conditions, including the pricing environment, as being within our risk-adjusted return appetite enabling us to write new business at attractive returns. Ultimately, we expect our new insurance written with its strong credit profile and attractive pricing to positively contribute to our future profitability and return on equity. New insurance written of$66.5 billion in 2022 decreased 31% compared to 2021 primarily due to a smaller estimated private mortgage insurance market in the current year as refinance and purchase originations were impacted by rising interest rates. Our largest customer accounted for 18% and 14% of our total NIW during the years endedDecember 31, 2022 and 2021, respectively. No customer had earned premiums that accounted for more than 10% of our total revenues for the years endedDecember 31, 2022 or 2021. Our primary persistency rate increased to 80% during 2022 compared to 62% during 2021. The persistency rate increased throughout 2022, with a rate in the fourth quarter of 86%. The increase in persistency was primarily driven by a decline in the percentage of our in-force policies with mortgage rates above current mortgage rates as a result of the rising rate environment during 2022. Higher persistency impacted business performance trends in several ways including, but not limited to, slowing the recognition of earned premiums due to single premium policy cancellations, slowing the amortization of our existing reinsurance transactions and reduction of their associated PMIERs capital credit and shifting the concentration of our primary IIF by policy year. As ofDecember 31, 2022 , primary IIF had approximately 58% concentration in 2022 and 2021 compared to 71% concentration in 2021 and 2020 as ofDecember 31, 2021 . Despite slower NIW production, our IIF grew$21.6 billion , or 10% in 2022, compared to$18.3 billion or 9% in 2021, driven by increased persistency. Net earned premiums declined in 2022 compared to 2021 primarily as a result of the lapse of older, higher priced policies and a decrease in single premium cancellations. This was partially offset by IIF growth. The total number of delinquent loans has declined from the COVID-19 peak in the second quarter of 2020 as forbearance exits continue and new forbearances declined. During this time and consistent with prior years, servicers continued the practice of remitting premiums during the early stages of default, and we refund the post-delinquent premiums to the insured party if the delinquent loan goes to claim. We record a liability and a reduction to net earned premiums for the post-delinquent premiums we expect to refund. The post-delinquent premium liability recorded since the beginning of COVID-19 in the second quarter of 2020 through the fourth quarter of 2022 was not significant to the change in earned premiums for those periods as a result of the high concentration of new delinquencies being subject to a servicer reported forbearance plan and the lower estimated rate at which delinquencies go to claim for these loans. Our loss ratio for the year endedDecember 31, 2022 , was (10%) as compared to 13% for the year endedDecember 31, 2021 . The decrease was largely from favorable reserve adjustments in 2022. We released$314 million of reserves on delinquencies from prior years, primarily related to favorable cure performance on COVID-19 delinquencies from 2020 and 2021. During the peak of COVID-19, we experienced elevated new delinquencies subject to forbearance plans. Those delinquencies have continued to cure at levels above our reserve expectations, which led to the release of reserves in 2022. 85 -------------------------------------------------------------------------------- Due to uncertainty in the current economic environment, we increased the expected claim rate on new delinquencies throughout 2022. This contributed to reserve strengthening of$46 million on previous quarter delinquencies in 2022 and increased the amount of reserves on new delinquencies in the fourth quarter of 2022. These 2022 reserve adjustments compare to reserve releases of$22 million in 2021 related primarily to pre-COVID-19 delinquencies. Our loss reserves continue to be impacted by COVID-19 and remain subject to uncertainty. Borrowers who have experienced a financial hardship including, but not limited to, the loss of income due to the closing of a business or the loss of a job, continue to take advantage of available loss mitigation options including forbearance programs, payment deferral options and other modifications. Loss reserves recorded on these delinquencies have a high degree of estimation due to the level of uncertainty regarding whether delinquencies in forbearance will ultimately cure or result in claim payments as well as the timing and severity of those payments. The severity of loss on loans that do go to claim may be negatively impacted by the extended forbearance and foreclosure timelines, the associated elevated expenses and the higher loan amount of the recent new delinquencies. These negative influences on loss severity could be mitigated, in part, by embedded home price appreciation. For loans insured on or afterOctober 1, 2014 , our mortgage insurance policies limit the number of months of unpaid interest and associated expenses that are included in the mortgage insurance claim amount to a maximum of 36 months. New delinquencies in 2022 increased compared to 2021. Current period primary delinquencies of 35,996 contributed$171 million of loss expense in 2022. We incurred$144 million of losses from 32,624 current period delinquencies in 2021. In determining the loss expense estimate, considerations were given to forbearance and non-forbearance delinquencies, recent cure and claim experience, and the prevailing and prospective economic conditions. Approximately 21% of our primary new delinquencies in 2022 were subject to a forbearance plan as compared to 42% in 2021. EMICO's risk-to-capital ratio under the current regulatory framework as established underNorth Carolina law and enforced by the NCDOI, EMICO's domestic insurance regulator, was approximately 12.9:1 as ofDecember 31, 2022 and 12.3:1 as ofDecember 31, 2021 . EMICO's risk-to-capital ratio remains below the NCDOI's maximum risk-to-capital ratio of 25:1.North Carolina's calculation of risk-to-capital excludes the risk-in-force for delinquent loans given the established loss reserves against all delinquencies. EMICO's ongoing risk-to-capital ratio will depend principally on the magnitude of future losses incurred by EMICO, the effectiveness of ongoing loss mitigation activities, new business volume and profitability, the amount of policy lapses and the amount of additional capital that is generated or distributed by the business.
Under PMIERs, we are subject to operational and financial requirements that
private mortgage insurers must meet in order to remain eligible to insure loans
that are purchased by the GSEs. Since 2020, the GSEs have issued several
amendments to PMIERs, which implemented both permanent and temporary revisions.
For loans that became non-performing due to a COVID-19 hardship, PMIERs was temporarily amended with respect to each non-performing loan that (i) had an initial missed monthly payment occurring on or afterMarch 1, 2020 , and prior toApril 1, 2021 , or (ii) is subject to a forbearance plan granted in response to a financial hardship related to COVID-19, the terms of which are materially consistent with terms of forbearance plans offered by the GSEs. The risk-based required asset amount factor for the non-performing loan is the greater of (a) the applicable risk-based required asset amount factor for a performing loan were it not delinquent, and (b) the product of a 0.30 multiplier and the applicable risk-based required asset amount factor for a non-performing loan. In the case of (i) above, absent the loan being subject to a forbearance plan described in (ii) above, the 0.30 multiplier was applicable for no longer than three calendar months beginning with the month in which the loan became a non-performing loan due to having missed two monthly payments. Loans subject to a forbearance plan described in (ii) above include those that are either in a repayment plan or loan modification trial period 86 -------------------------------------------------------------------------------- following the forbearance plan unless reported to the approved insurer that the loan is no longer in such forbearance plan, repayment plan, or loan modification trial period. The PMIERs amendment datedJune 30, 2021 , further allows loans that enter a forbearance plan due to a COVID-19 hardship on or afterApril 1, 2021 , to remain eligible for extended application of the reduced PMIERs capital factor for as long as the loan remains in forbearance. In addition, the PMIERs amendment made permanent revisions to the risk-based required asset amount factor for non-performing loans for properties located in future Federal Emergency Management Agency Declared Major Disaster Areas eligible for individual assistance. InSeptember 2020 , subsequent to the issuance of our senior notes due in 2025, the GSEs imposed certain restrictions (the "GSE Restrictions") with respect to capital on our business. InMay 2021 , in connection with their conditional approval of the then potential partial sale of EHI, the GSEs confirmed the GSE Restrictions will remain in effect until the following collective conditions ("GSE Conditions") are met for two consecutive quarters: (a) EMICO obtains "BBB+"/"Baa1" (or higher) rating from S&P, Moody's orFitch Ratings, Inc. and (b) Genworth achieves certain financial metrics. EHI maintained the requisite ratings for two consecutive quarters prior to the end of 2022. As ofDecember 31, 2022 , Genworth believes that they achieved their financial metrics for the quarters endedSeptember 30, 2022 andDecember 31, 2022 . Once confirmed by the GSEs, EHI will no longer be subject to GSE Restrictions and Conditions.
Prior to the satisfaction of the GSE Conditions, the GSE Restrictions require:
•EMICO to maintain 120% of PMIERs minimum required assets through 2022 and 125%
thereafter;
•EHI to retain
that can be drawn down exclusively for debt service of those notes or to
contribute to EMICO to meet its regulatory capital needs including PMIERs; and
•written approval must be received from the GSEs prior to any additional debt
issuance by either EMICO or EHI.
Until the GSE Conditions imposed in connection with the GSE Restrictions are met, our liquidity must not fall below 13.5% of its outstanding debt. In addition, Fannie Mae agreed to reconsider the GSE Restrictions if Genworth were to own 50% or less of EHI at any point prior to their expiration. We understand that Genworth's current plans do not include a potential sale in which Genworth owns less than 80% of EHI. As ofDecember 31, 2022 , the balance of the 2025 Senior Notes proceeds required to be held by our holding company was approximately$203 million compared to$453 million of cash and invested assets held at EHI. As ofDecember 31, 2022 , we had estimated available assets of$5,206 million against$3,156 million net required assets under PMIERs compared to available assets of$5,077 million against$3,074 million net required assets as ofDecember 31, 2021 . The sufficiency ratio as ofDecember 31, 2022 , was 165% or$2,050 million above the published PMIERs requirements, compared to 165% or$2,003 million above the published PMIERs requirements as ofDecember 31, 2021 . PMIERs sufficiency is based on the published requirements applicable to private mortgage insurers and does not give effect to the GSE Restrictions imposed on our business. Credit risk transfer transactions provided an aggregate of approximately$1,578 million of PMIERs capital credit as ofDecember 31, 2022 , compared to$1,404 million as ofDecember 31, 2021 . Our PMIERs required assets as ofDecember 31, 2022 , benefited from the application of a 0.30 multiplier applied to the risk-based required asset amount factor for certain non-performing loans. The application of the 0.30 multiplier to all eligible delinquencies provided$132 million of benefit to ourDecember 31, 2022 , PMIERs required assets. This amount is gross of any incremental reinsurance benefit from the elimination of the 0.30 multiplier.
On
strength rating of EMICO to Baa1 from Baa2. The increase was driven by
improvement in our overall credit profile, including market position,
profitability, capital adequacy and financial flexibility. Our continued
87 --------------------------------------------------------------------------------
performance also led
from BBB to BBB+ as of
OnJanuary 27, 2022 , we executed an excess of loss reinsurance transaction with a panel of reinsurers, on a portion of current and expected new insurance written for the 2022 book year, effectiveJanuary 1, 2022 . Based on actual 2022 NIW, this agreement provided up to$221 million of reinsurance coverage. OnMarch 24, 2022 , we executed an excess of loss reinsurance transaction with a panel of reinsurers, which provides up to$325 million of reinsurance coverage on a portfolio of existing mortgage insurance policies written fromJuly 1, 2021 , throughDecember 31, 2021 , effectiveMarch 1, 2022 . OnSeptember 15, 2022 , we executed an excess of loss reinsurance transaction with a panel of reinsurers, which provides up to$201 million of reinsurance coverage on a portfolio of existing mortgage insurance policies written fromJanuary 1, 2022 , throughJune 30, 2022 , effectiveSeptember 1, 2022 . OnJune 30, 2022 , we entered into a five-year, unsecured revolving credit facility (the "Facility") with a syndicate of lenders in the initial aggregate principal amount of$200 million . The Facility may be used for working capital needs and general corporate purposes, including the execution of dividends to our shareholders and capital contributions to our insurance subsidiaries. The Facility remains undrawn as ofDecember 31, 2022 . OnApril 26, 2022 , our Board of Directors approved the initiation of a dividend program under which the Company intends to pay a quarterly cash dividend. We paid quarterly dividends of$0.14 per share in May, September and December of 2022. Future dividend payments are subject to quarterly review and approval by our Board of Directors and Genworth and will be targeted to be paid in the third month of each subsequent quarter. In April and October of 2022, our primary mortgage insurance operating company, EMICO, completed distributions to EHI supporting our ability to pay cash dividends. Future EMICO distributions will be used to fund the quarterly dividend as well as to bolster our financial flexibility and potentially return additional capital to shareholders. Returning capital to shareholders, balanced with our growth and risk management priorities, remains a key commitment as we look to drive shareholder value through time. We believe the initiation of a quarterly dividend in 2022 reflects meaningful progress towards that goal. Further, we announced a special cash dividend of$183 million , or$1.12 per share, that was paid during the fourth quarter of 2022. We also announced the initiation of a share repurchase program which authorized the repurchase of up to$75 million of the Company's common stock. Under the program, share repurchases may be made at the Company's discretion from time to time in open market transactions, privately negotiated transactions, or by other means, including through Rule 10b5-1 trading plans. In support, we have entered into an agreement withGenworth Holdings, Inc. to repurchase its EHI shares on a pro rata basis as part of the program. The share repurchase program is not expected to change Genworth's ownership interest in EHI post-completion. We began repurchases in the fourth quarter of 2022 which were immaterial. We expect the timing and amount of any future share repurchases will be opportunistic and will depend on a variety of factors, including EHI's share price, capital availability, business and market conditions, regulatory requirements, and debt covenant restrictions. The program does not obligate EHI to acquire any amount of common stock, it may be suspended or terminated at any time at the Company's discretion without prior notice, and it does not have a specified expiration date. Future return of capital will be shaped by our capital prioritization framework: supporting our existing policyholders, growing our mortgage insurance business, funding attractive new business opportunities and returning capital to shareholders. Our total return of capital will also be based on our view of the prevailing and prospective macroeconomic conditions, regulatory landscape and business performance. 88
--------------------------------------------------------------------------------
Results of Operations and Key Metrics
Results of Operations
The following table sets forth our consolidated results for the periods
indicated:
Increase (decrease) Increase (decrease)
Year ended and percentage and percentage
December 31, change change
(Amounts in thousands) 2022 2021 2020 2022 vs. 2021 2021 vs. 2020
Revenues:
Premiums $ 939,462 $ 974,949 $ 971,365 $ (35,487) (4) % $ 3,584 - %
Net investment income 155,311 141,189 132,843 14,122 10 % 8,346 6 %
Net investment gains (losses) (2,036) (2,124) (3,324) 88 (4) % 1,200 (36) %
Other income 2,309 3,841 5,575 (1,532) (40) % (1,734) (31) %
Total revenues 1,095,046 1,117,855 1,106,459 (22,809) (2) % 11,396 1 %
Losses and expenses:
Losses incurred (94,221) 125,473 379,834 (219,694) (175) % (254,361) (67) %
Acquisition and operating expenses,
net of deferrals 226,941 231,453 215,024 (4,512) (2) % 16,429 8 %
Amortization of deferred acquisition
costs and intangibles 12,405 14,704 20,939 (2,299) (16) % (6,235) (30) %
Interest expense 51,699 51,009 18,244 690 1 % 32,765 180 %
Total losses and expenses 196,824 422,639 634,041 (225,815) (53) % (211,402) (33) %
Income before income taxes 898,222 695,216 472,418 203,006 29 % 222,798 47 %
Provision for income taxes 194,065 148,531 101,997 45,534 31 % 46,534 46 %
Net income $ 704,157 $ 546,685 $ 370,421 $ 157,472 29 % $ 176,264 48 %
Loss ratio (1) (10) % 13 % 39 %
Expense ratio (2) 25 % 25 % 24 %
_______________
(1)Loss ratio is calculated by dividing losses incurred by net earned premiums.
(2)Expense ratio is calculated by dividing acquisition and operating expenses,
net of deferrals, plus amortization of DAC and intangibles by net earned
premiums.
Detailed discussions of our consolidated results of operations for the year
ended December 31, 2020 , including the year-over-year comparisons between 2021
and 2020, that are not included in this Annual Report on Form 10-K can be found
in Item 7 in our Annual Report on Form 10-K for the year ended December 31,
2021 , filed with the SEC on February 28, 2022 .
Year Ended
Revenues
Premiums decreased mainly attributable to lapse of our in-force portfolio as
older, higher priced policies lapsed combined with lower single premium
cancellations and partially offset by higher IIF.
Net investment income increased primarily due to higher investment yields due to
interest rate increases during 2022 coupled with higher average invested assets.
This was partially offset by lower income from bond calls.
Net investment losses in the current year were primarily driven by realized
losses from the sale of fixed maturity securities. Net investment losses in the
prior year were largely from impairments and net realized losses from the sale
of fixed maturity securities.
Other income decreased primarily due to lower contract underwriting revenue.
Other income includes underwriting fee revenue charged on a per-unit or per-diem
basis, as defined in the underwriting agreement. Underwriting volume was down
due to a smaller mortgage insurance market.
89
--------------------------------------------------------------------------------
Losses and expenses
Losses incurred decreased largely from favorable development related to cures exceeding expectations predominantly related to COVID-19 related delinquencies from 2020 and 2021. New primary delinquencies were 35,996 in 2022 compared to 32,624 in 2021, resulting in$171 million and$144 million of losses, respectively. During 2022, we recorded a$314 million reserve release primarily related to COVID-19 delinquencies from 2020 and 2021. Due to uncertainty in the current economic environment, we increased the expected claim rate on new delinquencies throughout 2022. This contributed to reserve strengthening of$46 million on previous quarter delinquencies in 2022 and increased the amount of reserves on new delinquencies in the fourth quarter of 2022. In 2021 we recorded a$22 million reserve release related to pre-COVID-19 claim years.
The following table shows incurred losses related to current and prior accident
years for the years ended
(Amounts in thousands) 2022 2021 2020 Losses and LAE incurred related to current accident year$ 219,461 $ 141,225 $ 364,548 Losses and LAE incurred related to prior accident years (313,652) (15,822) 16,202 Total incurred (1)$ (94,191) $ 125,403 $ 380,750 _______________ (1)Excludes run-off business.
Acquisition and operating expenses, net of deferrals, decreased primarily
attributable to lower corporate overhead.
Amortization of DAC and intangibles declined due to lower DAC amortization as a
result of higher persistency, driven by rising mortgage rates.
The expense ratio remained flat due to similar percentage declines in premiums
and expenses.
Interest expense was relatively flat in the current year and related primarily to our 2025 Senior Notes issued inAugust 2020 . For additional details see Note 7 to our consolidated financial statements.
Provision for income taxes
The effective tax rate was 21.6% and 21.4% for the years ended
and 2021, respectively, consistent with
income tax rate.
Use of Non-GAAP Financial Measures
We use a non-U.S. GAAP ("non-GAAP") financial measure entitled "adjusted operating income." This non-GAAP financial measure aligns with the way our business performance is evaluated by both management and our Board of Directors. This measure has been established in order to increase transparency for the purposes of evaluating our core operating trends and enabling more meaningful comparisons with our peers. Although "adjusted operating income" is a non-GAAP financial measure, for the reasons discussed above we believe this measure aids in understanding the underlying performance of our operations. Our senior management, including our chief operating decision maker (who is our Chief Executive Officer), use "adjusted operating income" as the primary measure to evaluate the fundamental financial performance of our business and to allocate resources. "Adjusted operating income" is defined asU.S. GAAP net income excluding the effects of (i) net investment gains (losses) and (ii) restructuring costs and infrequent or unusual non-operating items. (i)Net investment gains (losses)-The recognition of realized investment gains or losses can vary significantly across periods as the activity is highly discretionary based on the timing of individual securities sales due to such factors as market opportunities or exposure management. Trends in 90 -------------------------------------------------------------------------------- the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these realized gains and losses. We do not view them to be indicative of our fundamental operating activities. Therefore, these items are excluded from our calculation of adjusted operating income.
(ii)Restructuring costs and infrequent or unusual non-operating items are also
excluded from adjusted operating income if, in our opinion, they are not
indicative of overall operating trends.
In reporting non-GAAP measures in the future, we may make other adjustments for expenses and gains we do not consider reflective of core operating performance in a particular period. We may disclose other non-GAAP operating measures if we believe that such a presentation would be helpful for investors to evaluate our operating condition by including additional information. Adjusted operating income is not a measure of total profitability, and therefore should not be considered in isolation or viewed as a substitute forU.S. GAAP net income. Our definition of adjusted operating income may not be comparable to similarly named measures reported by other companies, including our peers.
Adjustments to reconcile net income to adjusted operating income assume a 21%
tax rate (unless otherwise indicated).
The following table includes a reconciliation of net income to adjusted
operating income for the years ended
(Amounts in thousands) 2022 2021 2020 Net income$ 704,157 $ 546,685 $ 370,421 Adjustments to net income: Net investment (gains) losses 2,036 2,124
3,324
Costs associated with reorganization 3,461 2,744 - Taxes on adjustments (1,155) (1,022) (698) Adjusted operating income$ 708,499 $ 550,531 $ 373,047 We recorded a pre-tax expense of$3.5 million for the year endedDecember 31, 2022 , related to restructuring costs as we evaluate and appropriately size our organizational needs and expenses.
Adjusted operating income increased in 2022 compared to 2021 due to larger
favorable reserve adjustments in 2022 related to cure activity exceeding
expectations predominantly from COVID-19 related delinquencies from 2020 and
2021. This was partially offset by lower premiums in 2022.
91 --------------------------------------------------------------------------------
Key Metrics
Management reviews the key metrics included within this section when analyzing the performance of our business. The metrics provided in this section exclude activity related to our run-off business, which is immaterial to our consolidated results of operations.
The following table sets forth selected operating performance measures on a
primary basis as of or for the years ended
(Dollar amounts in millions) 2022 2021 2020 New insurance written$ 66,485 $ 97,004 $
99,871
Primary insurance in-force (1)$ 248,262 $ 226,514 $ 207,947 Primary risk in-force$ 62,791 $ 56,881 $ 52,475 Persistency rate 80 % 62 % 59 % Policies in-force (count) 960,306 937,350 924,624 Delinquent loans (count) 19,943 24,820 44,904 Delinquency rate 2.08 % 2.65 % 4.86 % _______________
(1)Represents the aggregate unpaid principal balance for loans we insure.
New insurance written
NIW for the year ended
primarily due to a smaller estimated private mortgage insurance market as both
refinancing and purchase originations were impacted by increasing mortgage
rates. We manage the quality of new business through pricing and our
underwriting guidelines, which we modify from time to time as circumstances
warrant.
The following table presents NIW by product for the years endedDecember 31 : (Amounts in millions) 2022 2021 2020 Primary$ 66,485 100 %$ 97,004 100 %$ 99,871 100 % Pool - - - - - - Total$ 66,485 100 %$ 97,004 100 %$ 99,871 100 % The following table presents primary NIW by underlying type of mortgage for the years endedDecember 31 : (Amounts in millions) 2022 2021 2020 Purchases$ 63,506 96 %$ 76,915 79 %$ 67,183 67 % Refinances 2,979 4 20,089 21 32,688 33 Total$ 66,485 100 %$ 97,004 100 %$ 99,871 100 % The following table presents primary NIW by policy payment type for the years endedDecember 31 : (Amounts in millions) 2022 2021 2020 Monthly$ 61,123 92 %$ 89,115 92 %$ 90,147 90 % Single 5,166 8 7,554 8 9,251 9 Other 196 - 335 - 473 1 Total$ 66,485 100 %$ 97,004 100 %$ 99,871 100 % 92
-------------------------------------------------------------------------------- The following table presents primary NIW by FICO score for the years endedDecember 31 : (Amounts in millions) 2022 2021 2020 Over 760$ 30,239 45 %$ 42,391 44 %$ 41,584 42 % 740-759 11,264 17 15,067 16 16,378 16 720-739 9,377 14 12,911 13 14,305 14 700-719 6,889 10 11,069 11 12,193 12 680-699 4,535 7 8,457 9 8,813 9 660-679 (1) 2,534 4 4,167 4 3,846 4 640-659 1,206 2 2,173 2 1,955 2 620-639 424 1 765 1 796 1 <620 17 - 4 - 1 - Total$ 66,485 100 %$ 97,004 100 %$ 99,871 100 % ______________
(1)Loans with unknown FICO scores are included in the 660-679 category.
LTV ratio is calculated by dividing the original loan amount, excluding financed premium, by the property's acquisition value or fair market value at the time of origination. The following table presents primary NIW by LTV ratio for the years endedDecember 31 : (Amounts in millions) 2022 2021 2020 95.01% and above$ 9,487 14 %$ 12,064 12 %$ 11,625 11 % 90.01% to 95.00% 26,008 39 36,597 38 42,753 43 85.01% to 90.00% 20,892 32 30,717 32 28,750 29 85.00% and below 10,098 15 17,626 18 16,743 17 Total$ 66,485 100 %$ 97,004 100 %$ 99,871 100 % The following table presents primary NIW by DTI ratio for the years endedDecember 31 : (Amounts in millions) 2022 2021 2020 45.01% and above$ 16,541 25 %$ 14,979 15 %$ 13,672 14 % 38.01% to 45.00% 23,996 36 32,946 34 35,729 36 38.00% and below 25,948 39 49,079 51 50,470 50 Total$ 66,485 100 %$ 97,004 100 %$ 99,871 100 % We have seen a higher concentration of loans with a DTI ratio of greater than 45% during 2022. This is in line with market trends as rising mortgage rates and recent home price appreciation have put pressure on affordability. We believe the levels are in line with our current risk appetite as we consider layered risk across multiple risk attributes, pricing and our portfolio credit mix.
Insurance in-force and Risk in-force
IIF increased largely from NIW and increased persistency in the current year, partially offset by lapses and cancellations. Primary persistency rate was 80% and 62% for the years endedDecember 31, 2022 and 2021, respectively. RIF increased primarily as a result of higher IIF. 93 --------------------------------------------------------------------------------
The following table sets forth IIF and RIF as of the dates indicated:
(Amounts in millions) December 31, 2022 December 31, 2021 December 31, 2020 Primary IIF$ 248,262 100 %$ 226,514 100 %$ 207,947 100 % Pool IIF 505 - 641 - 883 - Total IIF$ 248,767 100 %$ 227,155 100 %$ 208,830 100 % Primary RIF$ 62,791 100 %$ 56,881 100 %$ 52,475 100 % Pool RIF 79 - 105 - 146 - Total RIF$ 62,870 100 %$ 56,986 100 %$ 52,621 100 %
The following table sets forth primary IIF and primary RIF by origination as of
the dates indicated:
(Amounts in millions) December 31, 2022 December 31, 2021 December 31, 2020 Purchases IIF$ 207,827 84 %$ 176,550 78 %$ 157,805 76 % Refinances IIF 40,435 16 49,964 22 50,142 24 Total IIF$ 248,262 100 %$ 226,514 100 %$ 207,947 100 % Purchases RIF$ 54,165 86 %$ 46,470 82 %$ 41,710 79 % Refinances RIF 8,626 14 10,411 18 10,765 21 Total RIF$ 62,791 100 %$ 56,881 100 %$ 52,475 100 %
The following table sets forth primary IIF and primary RIF by product as of the
dates indicated:
(Amounts in millions) December 31, 2022 December 31, 2021 December 31, 2020 Monthly IIF$ 216,831 87 %$ 194,826 86 %$ 172,558 83 % Single IIF 29,275 12 29,205 13 31,628 15 Other IIF 2,156 1 2,483 1 3,761 2 Total IIF$ 248,262 100 %$ 226,514 100 %$ 207,947 100 % Monthly RIF$ 55,879 89 %$ 49,614 87 %$ 44,005 84 % Single RIF 6,370 10 6,658 12 7,576 14 Other RIF 542 1 609 1 894 2 Total RIF$ 62,791 100 %$ 56,881 100 %$ 52,475 100 % 94
-------------------------------------------------------------------------------- The following table sets forth primary IIF by policy year as of the dates indicated: (Amounts in millions) December 31, 2022 December 31, 2021 December 31, 2020 2008 and prior$ 6,596 3 %$ 8,196 3 %$ 11,322 5 % 2009 to 2014 2,113 1 3,369 2 6,729 4 2015 2,912 1 4,488 2 7,887 4 2016 6,296 2 8,997 4 15,385 7 2017 6,495 3 8,962 4 16,289 8 2018 6,839 3 9,263 4 17,235 8 2019 16,352 7 21,730 10 39,463 19 2020 55,358 22 69,963 31 93,637 45 2021 81,724 33 91,546 40 - - 2022 63,577 25 - - - - Total$ 248,262 100 %$ 226,514 100 %$ 207,947 100 % The following table sets forth primary RIF by policy year as of the dates indicated: (Amounts in millions) December 31, 2022 December 31, 2021 December 31, 2020 2008 and prior$ 1,699 3 %$ 2,112 3 %$ 2,918 5 % 2009 to 2014 560 1 904 2 1,831 4 2015 781 1 1,197 2 2,104 4 2016 1,681 3 2,388 4 4,063 8 2017 1,708 3 2,324 4 4,180 8 2018 1,736 3 2,330 4 4,322 8 2019 4,143 7 5,454 10 9,840 19 2020 14,158 22 17,574 31 23,217 44 2021 20,418 32 22,598 40 - - 2022 15,907 25 - - - - Total$ 62,791 100 %$ 56,881 100 %$ 52,475 100 % The following table presents the development of primary IIF for the years endedDecember 31 : (Amounts in millions) 2022 2021 2020 Beginning balance$ 226,514 $ 207,947 $ 181,785 NIW 66,485 97,004 99,871 Cancellations, principal repayments and other reductions (1) (44,737) (78,437) (73,709) Ending balance$ 248,262 $ 226,514 $ 207,947 _____________
(1)Includes the estimated amortization of unpaid principal balance of covered
loans.
95
--------------------------------------------------------------------------------
The following table sets forth primary IIF by LTV ratio at origination as of the
dates indicated:
(Amounts in millions) December 31, 2022 December 31, 2021 December 31, 2020
95.01% and above $ 39,509 16 % $ 35,455 16 % $ 34,520 17 %
90.01% to 95.00% 103,618 42 95,149 42 92,689 45
85.01% to 90.00% 72,132 29 64,549 28 56,341 27
85.00% and below 33,003 13 31,361 14 24,397 11
Total $ 248,262 100 % $ 226,514 100 % $ 207,947 100 %
The following table sets forth primary RIF by LTV ratio at origination as of the
dates indicated:
(Amounts in millions) December 31, 2022 December 31, 2021 December 31, 2020
95.01% and above $ 11,136 18 % $ 9,907 17 % $ 9,279 18 %
90.01% to 95.00% 30,079 48 27,608 49 26,774 51
85.01% to 90.00% 17,621 28 15,644 27 13,562 26
85.00% and below 3,955 6 3,722 7 2,860 5
Total $ 62,791 100 % $ 56,881 100 % $ 52,475 100 %
The following table sets forth primary IIF by FICO score at origination as of
the dates indicated:
(Amounts in millions) December 31, 2022 December 31, 2021 December 31, 2020 Over 760$ 102,467 41 %$ 89,982 40 %$ 78,488 38 % 740-759 40,097 16 35,874 16 33,635 16 720-739 34,916 14 31,730 14 30,058 14 700-719 28,867 12 27,359 12 25,870 12 680-699 21,554 9 21,270 9 20,140 10 660-679 (1) 10,926 4 10,549 5 9,819 5 640-659 6,095 3 6,124 3 5,935 3 620-639 2,630 1 2,783 1 2,902 1 <620 710 - 843 - 1,100 1 Total$ 248,262 100 %$ 226,514 100 %$ 207,947 100 % ______________
(1)Loans with unknown FICO scores are included in the 660-679 category.
96 -------------------------------------------------------------------------------- The following table sets forth primary RIF by FICO score at origination as of the dates indicated: (Amounts in millions) December 31, 2022 December 31, 2021 December 31, 2020 Over 760$ 25,807 41 %$ 22,489 40 %$ 19,691 37 % 740-759 10,154 16 9,009 16 8,497 16 720-739 8,931 14 8,055 14 7,673 15 700-719 7,317 12 6,907 12 6,579 12 680-699 5,428 9 5,334 9 5,100 10 660-679 (1) 2,767 5 2,638 5 2,442 5 640-659 1,540 2 1,530 3 1,472 3 620-639 665 1 702 1 737 1 <620 182 - 217 - 284 1 Total$ 62,791 100 %$ 56,881 100 %$ 52,475 100 % ______________
(1)Loans with unknown FICO scores are included in the 660-679 category.
The following table sets forth primary IIF by DTI score at origination as of the dates indicated: (Amounts in millions) December 31, 2022 December 31, 2021 December 31, 2020 45.01% and above$ 43,831 18 %$ 34,076 15 %$ 31,047 15 % 38.01% to 45.00% 87,816 35 79,147 35 73,555 35 38.00% and below 116,615 47 113,291 50 103,345 50 Total$ 248,262 100 %$ 226,514 100 %$ 207,947 100 % The following table sets forth primary RIF by DTI score at origination as of the dates indicated: (Amounts in millions) December 31, 2022 December 31, 2021 December 31, 2020 45.01% and above$ 11,176 18 %$ 8,631 15 %$ 7,855 15 % 38.01% to 45.00% 22,268 35 19,974 35 18,647 36 38.00% and below 29,347 47 28,276 50 25,973 49 Total$ 62,791 100 %$ 56,881 100 %$ 52,475 100 % Delinquent loans and claims Our delinquency management process begins with notification by the loan servicer of a delinquency on an insured loan. "Delinquency" is defined in our master policies as the borrower's failure to pay when due an amount equal to the scheduled monthly mortgage payment under the terms of the mortgage. Generally, our master policies require an insured to notify us of a delinquency if the borrower fails to make two consecutive monthly mortgage payments prior to the due date of the next mortgage payment. We generally consider a loan to be delinquent and establish required reserves after the insured notifies us that the borrower has failed to make two scheduled mortgage payments. Borrowers default for a variety of reasons, including a reduction of income, unemployment, divorce, illness/death, inability to manage credit, falling home prices and interest rate levels. Borrowers may cure delinquencies by making all of the delinquent loan payments, agreeing to a loan modification, or by selling the property in full satisfaction of all amounts due under the mortgage. In most cases, delinquencies that are not cured result in a claim under our policy. 97 --------------------------------------------------------------------------------
The following table shows a roll forward of the number of primary loans in
default for the years ended
(Loan count) 2022 2021
2020
Number of delinquencies, beginning of period 24,820 44,904
16,392 New defaults 35,996 32,624 85,074 Cures (40,278) (51,626) (55,396) Claims paid (574) (1,050) (1,148) Rescissions and claim denials (21) (32) (18) Number of delinquencies, end of period 19,943 24,820
44,904
The following table sets forth changes in our direct primary case loss reserves
for the years ended
(Amounts in thousands) (1) 2022 2021
2020
Loss reserves, beginning of period$ 606,102 $ 516,863 $ 204,749 Claims paid (28,123) (32,816) (52,389) Increase in reserves (98,636) 122,055 364,503 Loss reserves, end of period$ 479,343 $ 606,102 $ 516,863 ______________
(1)Direct primary case reserves exclude LAE, pool, IBNR and reinsurance
reserves.
The following tables set forth primary delinquencies, direct case reserves and
RIF by aged missed payment status as of the dates indicated:
December 31, 2022
Direct case Risk Reserves as %
(Dollar amounts in millions) Delinquencies reserves (1) in-force of risk in-force
Payments in default:
3 payments or less 8,920 $ 69 $ 509 14 %
4 - 11 payments 6,466 166 390 43 %
12 payments or more 4,557 244 248 98 %
Total 19,943 $ 479 $ 1,147 42 %
December 31, 2021
Direct case Risk Reserves as %
(Dollar amounts in millions) Delinquencies reserves (1) in-force of risk in-force
Payments in default:
3 payments or less 6,586 $ 35 $ 340 10 %
4 - 11 payments 7,360 111 426 26 %
12 payments or more 10,874 460 643 72 %
Total 24,820 $ 606 $ 1,409 43 %
______________
(1)Direct primary case reserves exclude LAE, pool, IBNR and reinsurance
reserves.
98 --------------------------------------------------------------------------------
December 31, 2020
Direct case Risk Reserves as %
(Dollar amounts in millions) Delinquencies reserves (1) in-force of risk in-force
Payments in default:
3 payments or less 10,484 $ 43 $ 549 8 %
4 - 11 payments 30,324 331 1,853 18 %
12 payments or more 4,096 143 204 70 %
Total 44,904 $ 517 $ 2,606 20 %
______________
(1)Direct primary case reserves exclude LAE, pool, IBNR and reinsurance
reserves.
The total reserves as a percentage of RIF as ofDecember 31, 2022 , compared toDecember 31, 2021 , remained relatively flat in 2022. Delinquent RIF decreased mainly from lower total delinquencies as cures outpaced new delinquencies in 2022, while reserves decreased in the current year primarily from favorable reserve adjustments related to COVID-19 delinquencies from 2021 and 2020. As ofDecember 31, 2022 , we have experienced a decrease in loans that are delinquent for 12 months or more. This number was elevated in 2021 in large part to borrowers entering a forbearance plan driven by COVID-19 and we saw cure activity within these delinquencies during 2022. Our current reserve estimate assumes that remaining COVID-19 delinquencies will have a higher likelihood of going to claim given the uncertainty around the lack of progression through the foreclosure process. While we have seen significant cure activity in aged delinquencies, continued forbearance options exist, so we could continue to experience elevated delinquencies in this aged category. Resolution of a delinquency in a forbearance plan, whether it ultimately results in a cure or a claim, is difficult to estimate and may not be known for several quarters, if not longer. The ratio of the claim paid to the current risk in-force for a loan is referred to as "claim severity." The current risk in-force is equal to the unpaid principal amount multiplied by the coverage percentage. The main determinants of claim severity are the age of the mortgage loan, the value of the underlying property, accrued interest on the loan, expenses advanced by the insured and foreclosure expenses. These amounts depend partly upon the time required to complete foreclosure, which varies depending upon state laws. Pre-foreclosure sales, acquisitions and other early workout and claim administration actions help to reduce overall claim severity. Our average primary mortgage insurance claim severity was 94%, 103% and 106% for the years endedDecember 31, 2022 , 2021 and 2020, respectively. The 2022 average claim severity was impacted by low claim volumes and lifetime home price appreciation. These figures do not include the effects of agreements on non-performing loans. Primary insurance delinquency rates differ from region to region inthe United States at any one time depending upon economic conditions and cyclical growth patterns. Delinquency rates are shown by region based upon the location of the underlying property, rather than the location of the lender. The table 99 --------------------------------------------------------------------------------
below sets forth our primary delinquency rates for the ten largest states by our
primary RIF as of
Percent of direct
primary case Delinquency
Percent of RIF reserves rate
By state:
California 12 % 10 % 2.09 %
Texas 8 7 2.12 %
Florida (1) 8 8 2.54 %
New York (1) 5 13 2.95 %
Illinois (1) 5 6 2.54 %
Arizona 4 2 1.78 %
Michigan 4 3 1.79 %
North Carolina 3 3 1.59 %
Georgia 3 3 2.23 %
Washington 3 3 1.92 %
All other states (2) 45 42 1.94 %
Total 100 % 100 % 2.08 %
______________
(1)Jurisdiction predominantly uses a judicial foreclosure process, which
generally increases the amount of time it takes for a foreclosure to be
completed.
(2)Includes the
100 --------------------------------------------------------------------------------
The table below sets forth our primary delinquency rates for the ten largest
states by our primary RIF as of
Percent of direct
primary case Delinquency
Percent of RIF reserves rate
By state:
California 11 % 12 % 3.17 %
Texas 8 8 2.89 %
Florida (1) 7 9 2.97 %
New York (1) 5 12 3.80 %
Illinois (1) 5 6 3.09 %
Michigan 4 2 1.87 %
Arizona 4 2 2.31 %
North Carolina 3 2 2.18 %
Pennsylvania (1) 3 3 2.38 %
Washington 3 3 2.98 %
All other states (2) 47 41 2.46 %
Total 100 % 100 % 2.65 %
______________
(1)Jurisdiction predominantly uses a judicial foreclosure process, which
generally increases the amount of time it takes for a foreclosure to be
completed.
(2)Includes the
The table below sets forth our primary delinquency rates for the ten largest
states by our primary RIF as of
Percent of direct
primary case Delinquency
Percent of RIF reserves rate
By state:
California 11 % 11 % 6.20 %
Texas 8 8 5.82 %
Florida (1) 7 10 6.92 %
Illinois (1) 5 6 5.21 %
New York (1) 5 11 6.92 %
Michigan 4 2 2.93 %
Washington 4 3 5.37 %
Pennsylvania (1) 4 3 4.11 %
North Carolina 4 2 3.84 %
Arizona 3 2 4.54 %
All other states (2) 45 42 4.32 %
Total 100 % 100 % 4.86 %
______________
(1)Jurisdiction predominantly uses a judicial foreclosure process, which
generally increases the amount of time it takes for a foreclosure to be
completed.
(2)Includes the
101
--------------------------------------------------------------------------------
The table below sets forth our primary delinquency rates for the ten largest
Metropolitan Statistical Areas ("MSA") or Metro Divisions ("MD") by our primary
RIF as of December 31, 2022 :
Percent of direct Delinquency
Percent of RIF primary case reserves rate
By MSA or MD:
Chicago-Naperville, IL MD 3 % 5 % 2.84 %
Phoenix, AZ MSA 3 2 1.83 %
New York, NY MD 3 8 3.75 %
Atlanta, GA MSA 2 3 2.42 %
Washington-Arlington, DC MD 2 2 1.85 %
Houston, TX MSA 2 3 2.60 %
Riverside-San Bernardino CA MSA 2 2 2.89 %
Los Angeles-Long Beach, CA MD 2 2 2.18 %
Dallas, TX MD 2 1 1.86 %
Denver-Aurora-Lakewood, CO MSA 2 1 1.12 %
All other MSAs/MDs 77 71 2.00 %
Total 100 % 100 % 2.08 %
The table below sets forth our primary delinquency rates for the ten largest
MSAs or MDs by our primary RIF as of
Percent of direct Delinquency
Percent of RIF primary case reserves rate
By MSA or MD:
Chicago-Naperville, IL MD 3 % 4 % 3.68 %
Phoenix, AZ MSA 3 2 2.36 %
New York, NY MD 3 8 5.32 %
Atlanta, GA MSA 2 3 3.28 %
Washington-Arlington, DC MD 2 2 2.96 %
Houston, TX MSA 2 3 3.61 %
Riverside-San Bernardino, CA MSA 2 2 3.42 %
Los Angeles-Long Beach, CA MD 2 3 3.95 %
Dallas, TX MD 2 2 2.31 %
Nassau County, NY MD 2 4 5.55 %
All other MSAs/MDs 77 67 2.44 %
Total 100 % 100 % 2.65 %
102
--------------------------------------------------------------------------------
The table below sets forth our primary delinquency rates for the ten largest
MSAs or MDs by our primary RIF as of
Percent of direct Delinquency
Percent of RIF primary case reserves rate
By MSA or MD:
Chicago-Naperville, IL MD 3 % 4 % 6.36 %
Phoenix, AZ MSA 3 2 4.63 %
New York, NY MD 3 8 10.25 %
Atlanta, GA MSA 2 3 6.68 %
Washington-Arlington, DC MD 2 2 6.09 %
Houston, TX MSA 2 3 7.59 %
Riverside-San Bernardino, CA MSA 2 2 7.08 %
Los Angeles-Long Beach, CA MD 2 2 7.57 %
Dallas, TX MD 2 2 5.10 %
Seattle-Bellevue, WA MD 2 2 6.33 %
All other MSAs/MDs 77 70 4.43 %
Total 100 % 100 % 4.86 %
The number of delinquencies often does not correlate directly with the number of
claims received because delinquencies may cure. The rate at which delinquencies
cure is influenced by borrowers' financial resources and circumstances and
regional economic differences. Whether a delinquency leads to a claim correlates
highly with the borrower's equity at the time of delinquency, as it influences
the borrower's willingness to continue to make payments, the borrower's or the
insured's ability to sell the home for an amount sufficient to satisfy all
amounts due under the mortgage loan, and the borrower's financial ability to
continue making payments. When we receive notice of a delinquency, we use our
proprietary model to determine whether a delinquent loan is a candidate for a
modification. When our model identifies such a candidate, our loan workout
specialists prioritize cases for loss mitigation based upon the likelihood that
the loan will result in a claim. Loss mitigation actions include loan
modification, extension of credit to bring a loan current, foreclosure
forbearance, pre-foreclosure sale and deed-in-lieu. These loss mitigation
efforts often are an effective way to reduce our claim exposure and ultimate
payouts.
103
--------------------------------------------------------------------------------
The following table sets forth the dispersion of primary RIF and loss reserves
by policy year and delinquency rates as of
Percent of direct Cumulative
Percent primary case Delinquency delinquency
of RIF reserves rate rate (1)
Policy year:
2008 and prior 3 % 26 % 9.61 % 5.57 %
2009 to 2014 1 4 5.01 % 0.69 %
2015 1 3 3.61 % 0.71 %
2016 3 6 3.17 % 0.81 %
2017 3 7 3.78 % 1.01 %
2018 3 9 4.63 % 1.18 %
2019 7 11 2.71 % 0.93 %
2020 22 17 1.47 % 0.92 %
2021 32 14 1.20 % 1.06 %
2022 25 3 0.54 % 0.52 %
Total portfolio 100 % 100 % 2.08 % 4.26 %
______________
(1)Calculated as the sum of the number of policies where claims were ever paid
to date and number of policies for loans currently in default divided by
policies ever in-force.
The following table sets forth the dispersion of primary RIF and loss reserves
by policy year and delinquency rates as of
Percent of direct Cumulative
Percent primary case Delinquency delinquency
of RIF reserves rate rate (1)
Policy year:
2008 and prior 3 % 24 % 10.54 % 5.59 %
2009 to 2013 1 2 5.54 % 0.74 %
2014 1 3 5.51 % 0.99 %
2015 2 5 4.24 % 1.04 %
2016 4 8 3.69 % 1.16 %
2017 4 10 4.78 % 1.56 %
2018 4 13 5.93 % 1.88 %
2019 10 19 3.89 % 1.68 %
2020 31 14 1.50 % 1.14 %
2021 40 2 0.37 % 0.36 %
Total portfolio 100 % 100 % 2.65 % 4.42 %
______________
(1)Calculated as the sum of the number of policies where claims were ever paid
to date and number of policies for loans currently in default divided by
policies ever in-force.
104 --------------------------------------------------------------------------------
The following table sets forth the dispersion of primary RIF and loss reserves
by policy year and delinquency rates as of
Percent of direct Cumulative
Percent primary case Delinquency delinquency
of RIF reserves rate rate (1)
Policy year:
2008 and prior 5 % 28 % 13.68 % 5.66 %
2009 to 2013 2 2 5.44 % 0.91 %
2014 2 3 6.06 % 1.57 %
2015 4 5 5.66 % 1.97 %
2016 8 9 5.46 % 2.49 %
2017 8 12 6.51 % 3.34 %
2018 8 14 7.70 % 4.01 %
2019 19 19 5.60 % 3.93 %
2020 44 8 1.09 % 1.04 %
Total portfolio 100 % 100 % 4.86 % 4.86 %
______________
(1)Calculated as the sum of the number of policies where claims were ever paid
to date and number of policies for loans currently in default divided by
policies ever in-force.
Loss reserves in policy years 2008 and prior are outsized compared to their representation of RIF. The size of these policy years at origination, particularly 2005 through 2008, combined with the significant decline in home prices led to significant losses in policy years prior to 2009. Although uncertainty remains with respect to the ultimate losses we will experience on these policy years, they have become a smaller percentage of our total mortgage insurance portfolio. The largest portion of loss reserves has shifted to newer book years in line with changes in RIF. As ofDecember 31, 2022 , our 2015 and newer policy years represented approximately 96% of our primary RIF and 70% of our total direct primary case reserves.
Investment Portfolio
Our investment portfolio is affected by factors described below, each of which in turn may be affected by current macroeconomic conditions as noted above in "-Trends and Conditions." The investment portfolios of our insurance subsidiaries are directed by the Enact Investment Committee, a management-level committee, with Genworth serving as the investment manager. The investment portfolio of EHI is directed by a separate management-levelEHI Investment Committee with a third-party investment manager. These parties, with oversight from our Board of Directors and our senior management team, are responsible for the execution of our investment strategy. Our investment portfolio is an important component of our consolidated financial results and represents our primary source of claims paying resources. Our investment portfolio primarily consists of a diverse mix of highly rated fixed income securities and is designed to achieve the following objectives:
•Meet policyholder obligations through maintenance of sufficient liquidity;
•Preserve capital;
•Generate investment income;
•Maximize statutory capital; and
•Increase value to our Parent and its stockholders, among other objectives.
105 --------------------------------------------------------------------------------
To achieve our portfolio objectives, our investment strategy focuses primarily
on:
•Our business outlook, current and expected future investment conditions;
•Investments selection based on fundamental, research-driven strategies;
•Diversification across a mix of fixed income, low-volatility investments while
actively pursuing strategies to enhance yield;
•Regular evaluation and optimization of our asset class mix;
•Continuous monitoring of investment quality, duration and liquidity;
•Regulatory capital requirements; and
•Restriction of investments correlated to the residential mortgage market.
Fixed Maturity Securities Available-for-Sale
The following table presents the fair value of our fixed maturity securities
available-for-sale as of the dates indicated:
December 31, 2022 December 31, 2021 December 31, 2020
% of % of % of
(Amounts in thousands) Fair value total Fair value total Fair value total
U.S. government, agencies and GSEs $ 44,769 0.9 % $ 58,408 1.1 % $ 138,224 2.7 %
State and political subdivisions 419,856 8.6 538,453 10.2 187,377 3.7
Non-U.S. government 9,349 0.2 22,416 0.4 31,031 0.6
U.S. corporate 2,646,863 54.2 2,945,303 55.9 2,888,625 57.3
Non-U.S. corporate 652,844 13.4 666,594 12.7 607,669 12.0
Residential mortgage-backed 11,043 0.2 - - - -
Other asset-backed 1,100,036 22.5 1,035,165 19.7 1,193,670 23.7
Total available-for-sale fixed
maturity securities $ 4,884,760 100.0 % $ 5,266,339 100.0 % $ 5,046,596 100.0 %
Our investment portfolio did not include any direct residential real estate or
whole mortgage loans as of December 31, 2022 or December 31, 2021 and
December 31, 2020 . We have no derivative financial instruments in our investment
portfolio.
As of December 31, 2022 , December 31, 2021 and December 31, 2020 , 98%, 97% and
98% of our investment portfolio was rated investment grade, respectively. The
following table presents the security ratings of our fixed maturity securities
as of the dates indicated:
December 31, 2022 December 31, 2021 December 31, 2020
AAA 10 % 9 % 11 %
AA 16 17 13
A 34 34 36
BBB 38 37 38
BB & below 2 3 2
Total 100 % 100 % 100 %
106
--------------------------------------------------------------------------------
The table below presents the effective duration and investment yield on our
investments available-for-sale, excluding cash and cash equivalents:
December 31, 2022 December 31, 2021 December 31, 2020
Duration (in years) 3.6 3.9 3.4
Pre-tax yield (% of average investment portfolio
assets) 3.1 % 2.7 % 2.8 %
We manage credit risk by analyzing issuers, transaction structures and any
associated collateral. We also manage credit risk through country, industry,
sector and issuer diversification and prudent asset allocation practices.
We primarily mitigate interest rate risk by employing a buy and hold investment philosophy that seeks to match fixed income maturities with expected liability cash flows in modestly adverse economic scenarios.
Liquidity and Capital Resources
Cash Flows
The following table summarizes our consolidated cash flows for the years endedDecember 31 : (Amounts in thousands) 2022 2021 2020 Net cash provided by (used in): Operating activities$ 560,510 $ 572,110 $ 704,350 Investing activities (220,255) (398,782) (1,136,912) Financing activities (252,308) (200,294) 300,298 Net increase (decrease) in cash and cash equivalents$ 87,947 $
(26,966)
Our most significant source of operating cash flows is from premiums received from our insurance policies, while our most significant uses of operating cash flows are generally for claims paid on our insured policies and our operating expenses. Net cash from operating activities decreased largely due to lower premiums. Cash flows from operations were also impacted by changes in reserves, changes in unearned premium, stock-based compensation expense and amortization of discounts and premiums on fixed maturity securities. Investing activities are primarily related to purchases, sales and maturities of our investment portfolio. We had cash outflows from investing activities in 2022 and 2021 as a result of continued fixed maturity security purchases driven by premium growth and lower losses paid. Outflows of cash in 2020 were primarily as a result of purchases of fixed maturity securities using the net proceeds from theDecember 2019 sale of our investment in Genworth Canada and our operating cash flows, partially offset by higher maturities and sales of our fixed maturity securities. Financing activities in 2022 reflect dividends paid for the year including a regular quarterly dividend initiated in the second quarter of 2022 along with an additional special dividend paid in the fourth quarter of 2022. We also began our share repurchase program in the fourth quarter of 2022. Financing activities in 2021 included a$200 million dividend paid in the fourth quarter while 2020 includes$738 million net proceeds from the issuance of our 2025 Senior Notes, discussed below, partially offset by a$437 million dividend paid to our Parent from the net proceeds of the offering. The amount and timing of future dividends will depend on the prevailing economic and business conditions, among other factors as described below. 107 --------------------------------------------------------------------------------
Capital Resources and Financing Activities
We issued our 2025 Senior Notes in 2020 with interest payable semi-annually in arrears onFebruary 15 andAugust 15 of each year. The 2025 Senior Notes mature onAugust 15, 2025 . We may redeem the 2025 Senior Notes, in whole or in part, at any time prior toFebruary 15, 2025 at our option, by paying a make-whole premium, plus accrued and unpaid interest, if any. At any time on or afterFebruary 15, 2025 , we may redeem the 2025 Senior Notes, in whole or in part, at our option, at 100% of the principal amount, plus accrued and unpaid interest. The 2025 Senior Notes contain customary events of default, which subject to certain notice and cure conditions, can result in the acceleration of the principal and accrued interest on the outstanding 2025 Senior Notes if we breach the terms of the indenture. Pursuant to the GSE Restrictions, we are required to retain$300 million of our holding company cash that can be drawn down exclusively for our debt service or to contribute to EMICO to meet its regulatory capital needs including PMIERs. As ofDecember 31, 2022 , the balance of the 2025 Senior Notes proceeds required to be held by our holding company was approximately$203 million . See "-Trends and Conditions" for additional information regarding the GSE Restrictions. OnJune 30, 2022 , we entered into a credit agreement with a syndicate of lenders that provides for a five-year, unsecured revolving credit facility (the "Facility") in the initial aggregate principal amount of$200 million . We may use borrowings under the Facility for working capital needs and general corporate purposes, including the execution of dividends to our shareholders and capital contributions to our insurance subsidiaries. The Facility contains several covenants, including financial covenants relating to minimum net worth, capital and liquidity levels, maximum debt to capitalization level and PMIERS compliance. We are in compliance with all covenants of the Facility and the Facility remained undrawn as ofDecember 31, 2022 .
Restrictions on the Payment of Dividends
The ability of our regulated insurance operating subsidiaries to pay dividends and distributions to us is restricted by certain provisions ofNorth Carolina insurance laws. Our insurance subsidiaries may pay dividends only from unassigned surplus; payments made from sources other than unassigned surplus, such as paid-in and contributed surplus, are categorized as distributions. Notice of all dividends must be submitted to the Commissioner of the NCDOI (the "Commissioner") within 5 business days after declaration of the dividend or distribution, and at least 30 days before payment thereof. No dividend may be paid until 30 days after the Commissioner has received notice of the declaration thereof and (i) has not within that period disapproved the payment or (ii) has approved the payment within the 30-day period. Any distribution, regardless of amount, requires that same 30-day notice to the Commissioner, but also requires the Commissioner's affirmative approval before being paid. Based on our estimated statutory results and in accordance with applicable dividend restrictions, our insurance subsidiaries have the capacity to pay dividends of$292 million from unassigned surplus as ofDecember 31, 2022 , with 30-day advance notice to the Commissioner of the intent to pay. In addition to dividends and distributions, alternative mechanisms, such as share repurchases, subject to any requisite regulatory approvals, may be utilized from time to time to upstream surplus. Another consideration in the development of the dividend strategies for our regulated insurance operating subsidiaries is our expected level of compliance with PMIERs. Prior to the satisfaction of the GSE Conditions, the GSE Restrictions also required EMICO to maintain 120% of PMIERs Minimum Required Assets through 2022, and 125% thereafter. In addition, under PMIERs, EMICO is subject to other operational and financial requirements that approved insurers must meet in order to remain eligible to insure loans purchased by the GSEs. Refer to "-Trends and Conditions" for recent updates related to these requirements.
In addition, we review multiple other considerations in parallel to determine a
prospective dividend strategy for our regulated insurance operating
subsidiaries. Given the regulatory focus on the
108 -------------------------------------------------------------------------------- reasonableness of an insurer's surplus in relation to its outstanding liabilities and the adequacy of its surplus relative to its financial needs for any dividend, our insurance subsidiaries consider the minimum amount of policyholder surplus after giving effect to any contemplated future dividends. Regulatory minimum policyholder surplus is not codified inNorth Carolina law and limitations may vary based on prevailing business conditions including, but not limited to, the prevailing and future macroeconomic conditions. We estimate regulators would require a minimum policyholder surplus of approximately$300 million to meet their threshold standard. Given (i) we are subject to statutory accounting requirements that establish a contingency reserve of at least 50% of net earned premiums annually for ten years, after which time it is released into policyholder surplus and (ii) that no material 10-year contingency reserve releases are scheduled before 2024, we expect modest growth in policyholder surplus through 2024. As a result, minimum policyholder surplus could be a limitation on the future dividends of our regulated operating subsidiaries. As mentioned above, another consideration in the development of the dividend strategies for our regulated insurance operating subsidiaries is our expected level of compliance with PMIERs. Under PMIERs, EMICO is subject to operational and financial requirements that approved insurers must meet in order to remain eligible to insure loans purchased by the GSEs. Our regulated insurance operating subsidiaries are also subject to statutory RTC requirements that affect the dividend strategies of our regulated operating subsidiaries. EMICO's domiciliary regulator, the NCDOI, requires the maintenance of a statutory RTC ratio not to exceed 25:1. See "-Risk-to-Capital Ratio" for additional RTC trend analysis. We consider potential future dividends compared to the prior year statutory net income in the evaluation of dividend strategies for our regulated operating subsidiaries. We also consider the dividend payout ratio, or the ratio of potential future dividends compared to the estimatedU.S. GAAP net income, in the evaluation of our dividend strategies. In either case, we do not have prescribed target or maximum thresholds, but we do evaluate the reasonableness of a potential dividend relative to the actual or estimated income generated in the proceeding or preceding calendar year after giving consideration to prevailing business conditions including, but not limited to the prevailing and future macroeconomic conditions. In addition, the dividend strategies of our regulated operating subsidiaries are made in consultation with our Parent. EMICO completed distributions of approximately$242 million to EHI in both April and October of 2022 that supported our ability to pay cash dividends. We intend to use future EMICO distributions to fund the quarterly dividend as well as to bolster our financial flexibility at EHI and return additional capital to shareholders. The credit agreement entered into in connection with the Facility contains customary restrictions on EHI's ability to pay cash dividends. Under the credit agreement, EHI is permitted to make cash distributions (1) so long as no Default or Event of Default (as each are defined in the credit agreement) has occurred and is continuing and EHI is in pro forma compliance with its financial covenants as described below at the time of and after giving effect to such payment, (2) within 60 days of declaration of any cash dividend so long as the payment was permitted under the credit agreement at the time of such declaration and (3) other customary exceptions as more fully set forth in the credit agreement. The credit agreement requires EHI to maintain the following financial covenants: a minimum consolidated net worth equal to the sum of (i) 72.5% of EHI's consolidated net worth as ofJune 30, 2022 ("the Closing Date"), (ii) 50% of EHI's positive consolidated net income for each fiscal quarter after the Closing Date and (iii) 50% of any increase in EHI's consolidated net worth after the Closing Date resulting from equity issuances or capital contributions; in respect of EMICO, a minimum total adjusted capital amount equal to 72.5% of EMICO's total adjusted capital as of the Closing Date; a maximum debt-to-total capitalization ratio of 0.35 to 1.00; a minimum liquidity level of$25,000,000 ; and compliance with all applicable financial requirements under the Private Mortgage Insurer Eligibility Requirements published by the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association. For 109 -------------------------------------------------------------------------------- purposes of determining EHI's compliance with the foregoing financial covenants, the consolidated net worth metric, total adjusted capital metric, debt-to-capitalization ratio and liquidity metric (including, in each case, any component thereof) are each calculated as set forth in the credit agreement.
In addition to the restrictions described above, all dividends from EHI are
subject to Parent consent and EHI Board of Directors approval.
Risk-to-Capital Ratio
We compute our RTC ratio on a separate company statutory basis, as well as for our combined insurance operations. The RTC ratio is net RIF divided by policyholders' surplus plus statutory contingency reserve. Our net RIF represents RIF, net of reinsurance ceded, and excludes risk on policies that are currently delinquent and for which loss reserves have been established. Statutory capital consists primarily of statutory policyholders' surplus (which increases as a result of statutory net income and decreases as a result of statutory net loss and dividends paid), plus the statutory contingency reserve. The statutory contingency reserve is reported as a liability on the statutory balance sheet. Certain states have insurance laws or regulations that require a mortgage insurer to maintain a minimum amount of statutory capital (including the statutory contingency reserve) relative to its level of RIF in order for the mortgage insurer to continue to write new business. While formulations of minimum capital vary in certain states, the most common measure applied allows for a maximum permitted RTC ratio of 25:1.
The following table presents the calculation of our RTC ratio for our combined
insurance subsidiaries as of the dates indicated:
December 31, December 31, December 31,
(Dollar amounts in millions) 2022 2021 2020
Statutory policyholders' surplus $ 1,136 $ 1,397 $ 1,555
Contingency reserves 3,551 3,042 2,518
Combined statutory capital $ 4,687 $ 4,439 $ 4,073
Adjusted RIF (1) $ 60,061 $ 54,201 $ 49,104
Combined risk-to-capital ratio 12.8 12.2 12.1
______________
(1)Adjusted RIF for purposes of calculating combined statutory RTC differs from RIF presented elsewhere herein. In accordance with NCDOI requirements, adjusted RIF excludes delinquent policies.
The following table presents the calculation of our RTC ratio for our principal
insurance company, EMICO, as of the dates indicated:
December 31, December 31, December 31,
(Dollar amounts in millions) 2022 2021 2020
Statutory policyholders' surplus $ 1,084 $ 1,346 $ 1,475
Contingency reserves 3,548 3,041 2,518
Combined statutory capital $ 4,632 $ 4,387 $ 3,993
Adjusted RIF (1) $ 59,663 $ 54,033 $ 49,021
EMICO risk-to-capital ratio 12.9 12.3 12.3
______________
(1)Adjusted RIF for purposes of calculating EMICO statutory RTC differs from RIF
presented elsewhere herein. In accordance with NCDOI requirements, adjusted RIF
excludes delinquent policies.
Liquidity
As ofDecember 31, 2022 , we maintained liquidity in the form of cash and cash equivalents of$514 million compared to$426 million as ofDecember 31, 2021 , and we also held significant levels of 110 -------------------------------------------------------------------------------- investment-grade fixed maturity securities that can be monetized should our cash and cash equivalents be insufficient to meet our obligations. OnAugust 21, 2020 , we issued the 2025 Senior Notes. The GSE Restrictions require us to retain$300 million of the net proceeds in our holding company cash that can be drawn down exclusively for our debt service or to contribute to EMICO to meet its regulatory capital needs including PMIERs, until the GSE Conditions are satisfied. We distributed$437 million of the net proceeds toGenworth Holdings at the closing of the offering of our 2025 Senior Notes. The 2025 Senior Notes were issued to persons reasonably believed to be qualified institutional buyers in a private offering exempt from registration pursuant to Rule 144A under the Securities Act and to non-U.S. persons outside ofthe United States in compliance with Regulation S under the Securities Act. As ofDecember 31, 2022 , the balance of the 2025 Senior Notes proceeds required to be held by our holding company was approximately$203 million . Additionally, onJune 30, 2022 , we entered into a five-year, unsecured revolving credit facility with a syndicate of lenders in the initial aggregate principal amount of$200 million . The Facility may be used for working capital needs and general corporate purposes, including the execution of dividends to our shareholders and capital contributions to our insurance subsidiaries. The Facility remains undrawn as ofDecember 31, 2022 . The principal sources of liquidity in our business currently include insurance premiums, net investment income and cash flows from investment sales and maturities. We believe that the operating cash flows generated by our mortgage insurance subsidiary will provide the funds necessary to satisfy our claim payments, operating expenses and taxes in both the short-term and long-term. However, our subsidiaries are subject to regulatory and other capital restrictions with respect to the payment of dividends. The net proceeds of the 2025 Senior Notes offering retained by EHI comprise substantially all of the cash and cash equivalents held directly by EHI and initially available to pay interest on the 2025 Senior Notes. To the extent the net proceeds retained from the offering is used to provide capital support to EMICO, the GSEs and the NCDOI may seek to prevent EMICO from returning that capital to EHI in the form of a dividend, distribution or an intercompany loan. We currently have no material financing commitments, such as drawn lines of credit or guarantees, that are expected to affect our liquidity over the next five years, other than the 2025 Senior Notes. Financial Strength Ratings Ratings with respect to the financial strength of operating subsidiaries are an important factor in establishing the competitive position of insurance companies. Ratings are important to maintaining public confidence in us and our ability to market our products. Rating organizations review the financial performance and condition of most insurers and provide opinions regarding financial strength, operating performance and ability to meet obligations to policyholders. The financial strength ratings of our operating companies are not designed to be, and do not serve as, measures of protection or valuation offered to our stockholders. We cannot predict with any certainty the impact to us from any future disruptions in the credit markets or downgrades by one or more of the rating agencies of the financial strength ratings of our insurance company subsidiaries and/or the credit ratings of our holding company as a result of the impact of the COVID-19 pandemic, the ensuing economic uncertainty or otherwise. We also cannot predict the impact on our ratings or future ratings of actions taken with respect to our Parent. The following EMICO financial strength ratings have been independently assigned by third-party rating organizations and represent our current ratings, which are subject to change. Name of Agency Rating Outlook Change Date of Rating Moody's Investor Service, Inc. Baa1 Stable Upgrade July 21, 2022 Fitch Ratings, Inc. BBB+ Stable Affirmed April 27, 2022 S&P Global Ratings BBB+ Stable Upgrade February 16, 2023 111
--------------------------------------------------------------------------------
Contractual Obligations and Commitments
We enter into agreements and other relationships with third parties in the ordinary course of our operations. However, we do not believe that our cash flow requirements can be assessed based upon this analysis of these obligations, as the funding of these future cash obligations will be from future cash flows from premiums and investment income. Future cash outflows, whether they are contractual obligations or not, also will vary based upon our future needs. Although some outflows are fixed, others depend on future events. An example of obligations that are fixed include future lease payments. An example of obligations that will vary include insurance liabilities that depend on losses incurred. Refer to Note 7 and Note 12 of our audited consolidated financial statements for discussion of borrowings and commitments in contingencies, respectively. We continue to hold reserves as ofDecember 31, 2022 , related to delinquencies from borrower forbearance programs due to COVID-19. We have seen COVID-19-related delinquencies cure above expectations, but reserves recorded related to borrower forbearance have a high degree of estimation. Therefore, it is possible we could have higher contractual obligations related to these loss reserves if they do not perform as we expect. Refer to Note 5 in our audited consolidated financial statements for discussion of our loss reserves. Refer to Note 2 in our audited consolidated financial statements for the years endedDecember 31, 2022 , 2021 and 2020, for a discussion of recently adopted and not yet adopted accounting standards.
GENWORTH FINANCIAL INC – 10-K – Management's Discussion and Analysis of Financial Condition and Results of Operations
AMERICAN EQUITY INVESTMENT LIFE HOLDING CO – 10-K – Management's Discussion and Analysis of Financial Condition and Results of Operations
Advisor News
- Advisors must lead the policy risk conversation
- Gen X more anxious than baby boomers about retirement
- Taxing trend: How the OBBBA is breaking the standard deduction reliance
- Why advisors can’t afford to delay succession planning
- 6 in 10 Americans struggle with financial decisions
More Advisor NewsAnnuity News
- CT commissioner: 70% of policyholders covered in PHL liquidation plan
- ‘I get confused:’ Regulators ponder increasing illustration complexities
- Three ways the Corebridge/Equitable merger could shake up the annuity market
- Corebridge, Equitable merge to create potential new annuity sales king
- LIMRA: Final retail annuity sales total $464.1 billion in 2025
More Annuity NewsHealth/Employee Benefits News
- Blue Shield says Fresno’s Community Medical Centers turning away patients amid standoff
- El Rio taps experienced leader to oversee transition from North Country HealthCare to Elk Ridge
- Many drop Obamacare and more likely will, SCC hears
- Legislature advances bill limiting copays for Medicaid recipients
- Legislature advances bill limiting copays for Medicaid recipients
More Health/Employee Benefits NewsLife Insurance News
- WHAT THEY ARE SAYING: KATHLEEN COULOMBE JOINS ACU AS CHIEF ADVOCACY OFFICER
- A-CAP Appoints Kirk Cullimore as President of Sentinel Security Life
- Nationwide enters centennial year stronger than ever
- AM Best Affirms Credit Ratings of Mutual of Omaha Insurance Company and Its Subsidiaries
- AM Best Affirms Credit Ratings of CMB Wing Lung Insurance Company Limited
More Life Insurance News