Genworth Financial, Inc. (GNW) Earnings Call Transcript & Summary

Good morning, everyone. I'm Jim Riepe, Non-Executive Chairman of the Board of Genworth. And on behalf of Genworth, I welcome all of you to the 2020 Annual Meeting of Stockholders. Like many public companies in 2020, with the ongoing coronavirus pandemic, Genworth is conducting this meeting virtually. I, along with the other directors and any management, are participating remotely and we would ask for your patience and understanding if we encounter any technical difficulties. In accordance with our bylaws, I will preside over this meeting, and Mike McCullough, Genworth's Corporate Secretary, will serve as Secretary of the meeting. I'd like to review our director nominees, each of whom is participating in today's virtual meeting. Genworth stockholders have the opportunity to elect the members of our Board each year. I am standing for reelection, along with 7 of my current colleagues, Kent Conrad; Melina Higgins; Tom McInerney, our CEO and President; David Moffett; Tom Moloney; Debra Perry; and Bob Restrepo. In addition, Lieutenant General Karen Dyson is standing for election for the first time. Lieutenant General Dyson was the first female to achieve a 3-Star General Officer rank in August 2014, and retired from the U.S. Army in August 2017. She was initially selected as a Director Designee for the Board following the closing of the transaction with Oceanwide. With the passage of time, the Board believed her skill set and experience was conducive to our current needs, determined in October to nominate her for election as a director at this meeting. The Board believes that Lieutenant General Dyson's extensive experience in financial, internal control and risk oversight matters will provide additional strength in core fundamental areas at Genworth. We also have Genworth senior management team participating in today's virtual meeting, including Dan Sheehan, who serves as Genworth's Chief Financial Officer and Chief Investment Officer; as well as Kevin Schneider, our Chief Operating Officer. These senior leaders, along with Shannon Powell, our lead engagement partner from KPMG, the corporation's independent public accounting firm, will be available to make statements and respond to questions if necessary. Lastly, I would note that Mr. McInerney, Mr. Sheehan and Mr. McCullough are the holders of the proxies, solicited by the Board for this meeting. Mr. McCullough, please address the rules of conduct for the annual meeting and confirm that [ this meeting ] has been duly called and that the quorum is present.

Thank you, Mr. Chairman. The agenda and the rules of conduct for today's annual meeting are available on the virtual meeting site. In addition, elements of management's remarks may be forward-looking in nature and are based on our current views of our businesses and the market environment. You can find a description of the risks that we face in the Risk Factors sections of our most recent annual report on Form 10-K and our most recent quarterly report on Form 10-Q. Management may also make reference to some non-GAAP financial measures. Definitions of these measures and the required reconciliations to GAAP are set forth in our earnings presentation and financial supplements for the third quarter of 2020 as well as in the presentation for today's meeting. These materials are available on Genworth's public website. Mr. Chairman, the notice requirements for the annual meeting have been satisfied. The Board fixed October 16, 2020, as the record date for this meeting. An affidavit of mailing from a reparative of Broadridge Financial Solutions is with the inspector of election. The affidavit attests to the distribution of the 2020 meeting notice, the proxy statement and the 2019 annual report to the stockholders entitled to these materials. Karl Wagner from American Election Services, LLC is serving as the inspector of election and has taken an oath of office. The inspector of election has determined that holders of approximately 86% of the shares of Class A common stock outstanding on the record date are present in person or by proxy, constituting a quorum for the transaction of business at this meeting. Mr. Chairman, that concludes my report.

Thank you, Mike. With the holders of the majority of the outstanding shares entitled to vote at this meeting, present in person or by proxy, I declare this meeting to be duly convened for the purpose of transacting such businesses may properly come before it. Polls will open when all the proposals to be voted on at this meeting have been presented and the polls will close immediately prior to the preliminary voting report. As we have done for the last 3 years, we have deferred this meeting from our normal spring time frame in anticipation of the closing of the transaction of Oceanwide. We now believe only a few milestones remain in order to close this transaction, which Tom will discuss in more detail in a minute. First, I would like to sincerely thank my fellow directors, the management team and all the employees of Genworth for their dedication and contributions to the company during 2020. The uncertainties created by the continuing delays in completing the Oceanwide transaction have created challenges for all of our employees. Despite the unprecedented conditions and constraints posed by the global pandemic, Genworth has delivered strong financial results while making progress toward closing the Oceanwide transaction. Moreover, I'd like to thank our stockholders for their continued patience throughout this historically long transaction process. Our Board listens to all the feedback we hear from our stockholders, and I, along with other directors, have engaged directly with many of you. We know you, too, recognize the many difficult hurdles both parties have had to clear during the last 4 years. We appreciate your input and views with respect to the ongoing management of the transaction process. I can assure you that those views are considered as part of the Board's deliberations each time it evaluates this transaction compared to other strategic alternatives. We clearly understand and share our investors' primary desire is for Genworth to close the transaction with Oceanwide as it provides the best value for all of our stakeholders. This sentiment is aligned with the Board's view that the transaction still represents the best outcome for our stockholders. At the same time, the directors and management are equally focused on managing the company's balance sheet and strengthen its operations during this trying period. Although we have not yet completed the transaction, we truly believe we are approaching the finish line and anticipate closing by the end of this year. It is safe to say that none of us expected to face the challenges that a global pandemic imposed on all our lives and activities this past year. Our transaction, its implications have been far-reaching, making normal everyday living and working much more difficult. Our transaction has not been immune to the damage and change that the pandemic has caused. Facing these challenges, you can be confident that both the Oceanwide and Genworth teams continue to work very hard to close the transaction as soon as possible. Now I'll turn the meeting over to Tom, who will offer some additional remarks. Thank you.

Thank you, Jim, and good morning, everyone. Please note, for your reference, we have posted slides to accompany my remarks on the IR section of our website. Thank you for joining us for our first virtual annual meeting. I'm pleased to be here with you today. After 4 years, we are nearing the close of our transaction with Oceanwide. Throughout this extensive journey, we encountered several geopolitical and macroeconomic headwinds that delayed consummating a cross-border transaction. And today, the world is still navigating a global pandemic, which, among other things, has created significant volatility and disruption in the global economy. However, in spite of these challenges, Genworth and Oceanwide have persevered and are now in the final stages of the transaction process. We have entered this final phase while delivering strong 2020 operating performance through the end of the third quarter, maintaining high standards of service and protecting our employees throughout the pandemic. I greatly appreciate the dedication of our Board, leadership team and our employees as we have continued work to reach a successful outcome on behalf of our shareholders. Oceanwide and Genworth have now completed or satisfied almost all required steps at the close of the transaction and continue to work very hard to complete the remaining steps to close the transaction by the end of the year. Last week, Oceanwide received confirmation of the extension of the acceptance of filing from the National Development and Reform Commission or NDRC in China. This was a significant milestone and one that we believe puts us on a near-term path to closing. Oceanwide has advised us that with NDRC's reapproval, they have moved forward with the final steps required to close the transaction, which include executing the financing plan with Hony Capital, and seeking clearance from China's State Administration of Foreign Exchange or SAFE, to fund the remainder of the transaction consideration with capital from Mainland China. The COVID-19 pandemic and the recent increases of COVID-19 cases in Hong Kong have made it more difficult for Oceanwide to complete these final steps. Specifically, recent restrictions and stay-at-home requirements in Hong Kong limit the number of people allowed to meet together to 2 persons. These significant restrictions have complicated the finalization of the Hony Capital funding. The approval from the NDRC was the final step before the funding could be executed as the terms and conditions have previously been agreed. Further, while Oceanwide is working cooperatively with SAFE to receive final authorization for currency conversion and transfer of the balance of the transaction funds outside of China, this process is expected to take some additional time to complete. Oceanwide is also in the process of obtaining confirmation from the Delaware Department of Insurance that the transaction may proceed under its existing approval. And as I will discuss in a moment, Genworth is in discussions with the government-sponsored entities, or GSEs, regarding the adjusted capital contribution schedule. Outside of these matters, we have all U.S. regulatory approvals needed to close the transaction. While we move near to the closing of the transaction, these final steps following NDRC approval require some additional time to complete. Therefore, Genworth's Board recently extended the merger agreement deadline to not later than December 31. Both Oceanwide and Genworth are working very hard to complete the remaining steps by the end of the year. As part of the 17th waiver and extension of the merger agreement, Oceanwide also provided an updated schedule for its commitment to infuse $1.5 billion of capital into Genworth post-closing. In light of the delayed closing time, Oceanwide adjusted its previously planned timing for each of the 3 $500 million tranches by 90 days. The 3 tranches will now be contributed to Genworth by April 30, July 31 and October 31, 2021. Because the original contribution schedule was outlined as part of the 15th waiver, this change and timing of the 3 tranches is better aligned with our anticipated timing to close. Since the 15th waiver, which extended the merger agreement to September 30, we have extended the merger agreement twice by a total of 90 days, commensurate with the timing of the updated Oceanwide post-closing capital plan. We have notified the relevant regulators of this updated time line to ensure they have no objections to the timing of the contributions. Only the GSE's approvals need to be formally updated to reflect the new schedule. I'm very pleased with this outcome for shareholders. Together, we have overcome many headwinds, a testament to the strength of our team and commitment to maximizing shareholder value. With each extension over the last 4 years, through the many decision points your Board has faced, we have always weighed the benefits of the Oceanwide transaction and the actions needed to advance the transaction against our available strategic alternatives at those moments in time -- every time. We determined the Oceanwide transaction was and continues to be the absolute best option for shareholders, and we have, therefore, continued to expend significant efforts to ensure our goal becomes a reality. Now I want to shift my focus to the company's recent performance. Genworth has delivered very strong operating results year-to-date in what has been a volatile and uncertain year. I'm very pleased with this performance as well as our execution against our strategic priorities, which include strengthening our financial flexibility and executing our multiyear long-term care insurance premium rate action plan. At the beginning of the pandemic, Genworth conducted extensive scenario planning exercises to model potential financial outcomes of different economic scenarios, which ranked from minimal to severe impacts. The scenario has produced a range of adjusted operating income projections from moderate profits to significant losses. Relative to those potential scenarios and outcomes, our operating performance has been very strong across our businesses: U.S. mortgage insurance; Australia mortgage insurance; and U.S. life insurance; as well as in our investments portfolio. For the 9 months ended September 30, 2020, we delivered adjusted operating income of $144 million, which is impressive considering the drastic shifts in underlying conditions of the U.S. economy, including higher unemployment and lower interest rates. This performance was primarily driven by continued momentum in our U.S. mortgage insurance business, which benefited from a strong housing market and strong underlying mortgage credit quality within its portfolio. While uncertainty remains high, we are continuing to operate effectively, and our mortgage insurance businesses are maintaining strong capital positions to ensure their resilience across a wide range of potential scenarios. As a result of the strong underlying operating performance in our mortgage insurance businesses as well as the actions we have taken to improve our financial flexibility, Genworth entered the third quarter in a solid cash position, with $814 million of cash and liquid assets, which is approximately $450 million above our targeted cash buffer. We are keenly focused on managing our cash position in 2021 in order to satisfy our holding company debt obligations. As we've mentioned before, we're not expecting dividends from the mortgage insurance businesses for the rest of 2020, given the importance of preserving capital in those subsidiaries during the pandemic. To address our upcoming debt maturities, we will rely on proceeds from the $750 million of debt issued by the U.S. MI Holding company as well as the funds to be received over time from Oceanwide's post-closing capital contribution plan. We are also continuing our efforts to prepare for a potential partial initial public offering of USMI, subject to market conditions, in the event that the China Oceanwide transaction is further delayed or terminated, and we need to consider an additional source of liquidity. Turning to our U.S. Life businesses, we continue to make good progress on our long-term care insurance multi-year rate action plan, MYRAP, which is essential to stabilizing our legacy long-term care insurance business. Because of the COVID-19 pandemic, many insurance regulators asked insurers to grant premium waivers on most lines of insurance business in 2020. As a result, Genworth adjusted our 2020 MYRAP objectives in early 2020, assuming regulators would ask us to delay the long-term care insurance premium increases until 2021. However, we are very encouraged that most regulators did not delay long-term care premium increases and we remain on track to meet our original MYRAP goals for 2020. As of September 30, we have received approvals of $595 million of annualized in-force premiums, representing a weighted average premium increase of 29% or $173 million of annual incremental premiums going forward. On a cumulative net present value basis since 2012 through to the end of September, Genworth has achieved approximately $13.5 billion of approved LTC premium rate increases. Most state regulators recognize support the need for actuarial justified premium rate increases on our long-term care insurance policies. And as I've discussed previously, Genworth plays an active role in improving the health and viability of long-term care insurance industry through our involvement with the NAIC and its long-term care insurance executive task force. Before I turn the floor back to Jim, I would like to express my sincere thanks to our shareholders on behalf of the Board of Directors and the senior management team. Your patience, support and feedback on the company's strategic options have been critical to Genworth as we face substantial, geopolitical, regulatory and COVID-19 related headwinds. In spite of these challenges, Genworth and Oceanwide remain committed to closing the transaction by the end of the year. Thank you, and I'll turn it back over to Jim.

Thanks, Tom, for those remarks. And thank you for your tireless efforts on behalf of all the shareholders trying to close this transaction. I know they all appreciate it as does your Board. Mike, please present the proposals to be voted on at this meeting.

There are 3 proposals to be voted on at this meeting. The first proposal is the election of 9 directors to serve until the annual meeting of stockholders in 2021 and until their successors are duly elected and qualified. The Board of Directors recommends the election of the following persons as directors of the corporation: Kent Conrad; Karen Dyson; Melina Higgins; Tom McInerney; David Moffett; Tom Moloney; Debra Perry; Bob Restrepo; and Jim Riepe. The second proposal is an advisory vote to approve the compensation of our named executive officers. And the third proposal is to ratify the audit committee's selection of KPMG LLP as the corporation's independent registered public accounting firm for 2020. As stated in the proxy statement, the Board recommends that stockholders vote for each of the Director nominees as well as for proposals 2 and 3.

Thank you, Mike. I hereby declare the polls open at 9:20 a.m. on December 10, 2020, for all proposals properly brought before the meeting. Holders of Genworth Class A common stock as of October 16, 2020, the record date for the annual meeting or their duly authorized proxies can vote electronically on the website until the polls are closed. If you have already voted, you do not need to vote today unless you would like to change your vote. We will now respond to questions that have been submitted on the website regarding the proposals to be voted on as well as general questions, including questions about our pending transaction with Oceanwide. We will try to provide a response to as many submitted questions as possible. Mike, please review the questions we've received so far.

Thank you, Jim. The first set of questions is for Tom. Tom, we've received a number of questions asking about any update you can provide on the China Oceanwide transaction. Beyond your remarks earlier in this meeting, are there any additional updates that you can share?

This is obviously a key question, and I certainly understand that our shareholders are anxious for transaction updates. As a reminder, Oceanwide still needs to coordinate the Hony Capital acquisition funding, key clearance for currency conversion and transfer of funds from SAFE and obtain confirmation from the Delaware Department of Insurance that the transaction may proceed under its existing approval. In addition, as I discussed in my remarks, we are in discussions with the GSEs about the revised timing for Oceanwide's post-closing contributions. The transaction has now received all other U.S. regulatory approvals needed to close the transaction. We intend to disclose any material updates to the market, which could include when Oceanwide received SAFE clearance for the money to be transferred from China and when the Hony Capital funding is in place in Hong Kong. As I discussed, these steps may take some time given the restrictions put in place in Hong Kong as a result of the COVID-19 pandemic, those restrictions limiting meetings to 2 people, I think was actually put in place today in Hong Kong. Both Oceanwide and Genworth are working very hard to close the transaction by year-end.

Thank you, Tom. The next question we received, can you please provide an update on the potential U.S. MI public offering?

Yes, another good question. In the event the China Oceanwide transaction is further delayed or terminated, we will be prepared to execute on select strategic alternatives which may include a potential, partial IPO of USMI, of course, subject to market conditions, and we would expect the IPO timing to be sometime in the first half of 2021. Any of these alternatives would need to provide additional liquidity to meet our upcoming obligations, including approximately $1 billion of debt maturing in 2021 and the AXA liability, the bulk of which is due in 2022. I'd also note that a U.S. IPO may have positive implications for USMI's credit ratings and those are important. If the deal does close by the end of the year as anticipated, we would not need to pursue the USMI IPO or other alternatives to meet our debt obligations, but I would say that Oceanwide and the new Genworth Board of Directors post-close may decide to pursue the IPO anyway, particularly to the extent it may have a positive ratings impact.

Thank you, Tom. The next question, also for you, does Genworth have the financial flexibility to buy back and retire shares? Or would Genworth consider paying shareholders a special dividend?

Another good question and a somewhat complicated answer depending on what happens. But what I would say is when making capital allocation decisions, the Board and management team have to consider the overall financial position of the company and the best uses of its capital to preserve shareholder value. Our priority at this time is closing the China Oceanwide transaction as we believe the transaction will provide the best value to Genworth shareholders. But in a no-deal scenario, our highest priorities would be to pay off the approximately $1 billion of debt due in 2021 and then the AXA note due in 2022. And just to remind shareholders, the current outstanding on the AXA note is GBP 317 million, and we project another GBP 107 million to be added once all the invoices have been processed. Given those capital needs through 2022, it is very unlikely that we would have excess capital to pay dividends or buy back shares in the near term. Beyond those obligations and after the repayment of the AXA note in 2022, subject to having excess capital, our Board would evaluate the best capital allocation strategy.

Thank you, Tom. We next have a few questions for Jim Riepe. The first one is, are executives benefiting financially from the China Oceanwide deal? And also, can you comment on the fact that during the transaction's historically long time line, executives have received shares issued at market prices well below the $5.43 per share consideration that is contemplated in the transaction?

Thanks, Mike. The merger agreement with Oceanwide does not include any special compensation awards for any Genworth employee upon the closing of the transaction, and that includes senior management. So we should be clear on that point upfront. Very early on in Genworth's negotiations with China Oceanwide, the Genworth Board and China Oceanwide agreed the transaction should not include any significant benefit or detriment to management's compensation, that the structure of Genworth's compensation program should remain the same. This structure has 3 principal components: base salary; annual incentives; and long term incentives, as with most corporate structures compensation. No cash payments or acceleration of equity awards will be triggered for executive officers based solely on the closing of the Oceanwide transaction, and outstanding equity awards held by executive officers immediately prior to the closing of the transaction will be automatically converted into the right to receive a cash payment equal to $5.43 per share, but will remain subject to their existing vesting schedule. Our compensation programs are designed to incentivize management to maximize shareholder value. Whether or not we close the Oceanwide transaction, our executive officers compensation is directly tied to the performance of the company on that objective. We believe that stock-based compensation for key executives is the best way to ensure we retain key executives while preserving cash, which is in keeping with our current practices. Board and management team take very seriously our fiduciary duty to shareholders and continue to pursue closing this transaction because we believe it provides best value for shareholders and all of our constituents.

Thank you, Jim. Your next question is, how does the Board consider diversity in Board recruitment efforts? And do you believe there is any more room on your Board for people of color?

A good topical question. Genworth's Board and its nominating Corporate Governance committee have been very focused on improving the diversity of the Genworth Board, keeping with our long-standing commitment to gender, racial and ethnic diversity. All the directors that have been recommended by the Board are approved in today's meeting, 3 of the 8 independent directors will be women. We have been constrained in attracting new directors during this period of uncertainty about the company's future status. If the transaction does not close, we would expect to be in a position to refresh the composition of our Board. Our goal in that scenario would be to attract at least 1 director from a minority group. If the deal does close as part of the CFIUS clearance process, the post-closing board membership was predetermined, consisting of 3 directors from Oceanwide, 3 from Genworth's current Board and 3 independent directors selected for their national security expertise.

Thank you, Jim. The next question came in 2 parts. And the first part is for Tom, and the second part is for Jim. The first part is as follows. Tom, what efforts are being made to protect the value of the company for investors due to coronavirus impacts in 2020?

Well, the coronavirus and the pandemic have certainly had a major impact on us, and it seems like every day something new comes out. And particularly with the spike in cases in the U.S. and in Hong Kong, we've seen in Hong Kong today, the 10th, Hong Kong instituted a number of rules that shareholders can look up on the website. But the key issue for us in terms of the transaction is that no more than 2 persons can meet together. And as shareholders can imagine, it's very difficult to finish the remaining steps because of that. Coming back to another part -- another part of the question that's implied, in terms of Genworth itself and how the pandemic has impacted our performance. The first thing I'd say is, I'm very proud of the continued strong execution across our teams. All of our employees have adapted extremely well to the pandemic and continue to deliver excellent service to our customers in a remote work environment, which is very important. I think we continue to get good customer feedback despite everybody having to work remotely. As I mentioned in my prepared remarks, we did conduct extensive general planning at the outside of the pandemic and outlined specific actions in each of the scenarios. And relative to those potential scenarios and outcomes, our operating performance through the third quarter has been strong across our businesses, all 3 of them as well as in our investment portfolios where we've had very new impairments, which I think is a fantastic result and a tribute to Dan Sheehan and his investment team, given the challenges in the credit markets as a result of COVID-19. We continue to face challenges, but we're very pleased with our operating results overall, particularly in the third quarter, as we reported strong third quarter with net income of $418 million, an operating income of $132 million. And we've also achieved those earnings results while maintaining strong capital ratios in our mortgage insurance businesses. Because the pandemic is still ongoing, it's possible that economic conditions may deteriorate further, and we may incur one of those more negative scenarios that we planned for. But we're going to -- we'll be well prepared no matter what scenario we face. Out of an abundance of caution, we've also decided to maintain our office closures and work-from-home status until a safe vaccine is widely available to the general public. Based on recent vaccine guidance from the CDC and others, we don't expect to broadly open our offices any earlier than June 1, 2021. While uncertainty remains high, Genworth is continuing to operate very well, and our mortgage insurance businesses are maintaining strong capital positions to ensure their resilience across a wide range of possible future scenarios.

Thank you, Tom. And as said, the second part of the question is for Jim. Jim, how has the global pandemic impacted how the Board and the compensation committee think about executive compensation?

Well, as we can all imagine, corporate Boards across the country and perhaps across the ocean as well, have been dealing with this problem. In Genworth's case, the Board and management's role is to maximize the value of Genworth to shareholders. So our compensation policies are in line with that objective. Therefore, our operating performance directly impacts our named executive officers' compensation. 2019, we met or exceeded key operational, strategic and financial objectives across many of our businesses, which is reflected in the compensation totals received by executives for that year. For this year, the compensation committee will convene in the beginning of '21, make decisions on compensation based on the same pay-for-performance principles, taking operating performance, including the impact of COVID-19 into account in determining levels of executive compensation.

Thank you, Jim. Our next question is for Tom. Tom, can you please specify what exactly are the downsides of walking away from the China Oceanwide potential acquisition? Since Genworth's operations have improved, liquidity is good and the macro environment is improving, why not remain independent? Don't you believe the value of Genworth shares can increase above the $5.43 buyout price?

Thanks for that question as well. It's a good question. I would say that if you go back to March of 2017, years ago, the number of shares voting for the Oceanwide transaction was 96%. And Tim Owens and I, and Dan Sheehan talked to investors all the time, both large and small. And I would say based on all of those discussions, I think if we took the vote today, we'd be in that same high 90s percentage approving the deal. However, there are some shareholders, I think it's a minority of shareholders who question the deal and the $5.43 and ask this question of, gee, don't you think just walking away from the deal couldn't be a better option? And I want to make clear, and we've said this a number of times that when we signed the deal with Oceanwide, we believed the transaction was the best and the most certain option. And despite all the challenges we face, including the unprecedented geopolitical conditions, the regulatory hurdles, the pandemic, we continue to believe the deal with Oceanwide is the best option. And it's very important to repeat what Jim and I have said before, that each time we extended the transaction, the Genworth Board, of course, advised by management, but also by its outside independent financial and legal advisers, determined that the deal with Oceanwide at $5.43 per share was the best value for shareholders, including during the 17th waiver that was just signed at the end of November. Absent the transaction over time and depending on the overall economic environment, we believe we could get to a value of the company equivalent to the buyout price of $5.43, but that will be subject to some time and substantial risk in light of our indebtedness as well as challenges associated with our legacy LTC business. We've made great progress. I talked about the $13.5 billion of net present value we've achieved. But we still have a ways to go and because regulators tend to push out their approvals -- they're getting us approvals according to our MYRAP, but they do, do it over time. So it's still a number of years before we fully get the back book, the legacy business closer to breakeven. Also, another important consideration, particularly for regulators, for the transaction is that Oceanwide is committed to invest $1.5 billion in Genworth during the year after closing. And so that made a very big difference to regulators. And I think in addition to our Board supporting the transaction, our regulators are very supportive because the $1.5 billion post-close capital plan will provide significant liquidity to reduce our leverage and will also allow us to invest in the businesses going forward.

Thank you, Tom. We've had a couple more questions and comments come in. One additional question for you, Tom. Given the financial challenges faced by the company, how does Genworth think about its commitment to charitable causes? And then if you have it, how much did Genworth contribute to charitable causes in 2020?

So Mike, it's a good question. And the Genworth and Genworth Foundation, like most companies, do have a commitment to the communities where all our employees work. We think it's -- investing in communities certainly helps us with regulators, for sure, but also really motivates our employees. But consistent with -- the shareholder asked the question, we are cognizant of the challenges that we've had, driven really by the legacy long-term care insurance business and the impact that, that's had on our earnings and the reduction in earnings because of the losses on those legacy books. So we are very cautious and very careful when we make commitments for charitable contributions. I would say we're probably only making contributions 1/4 to 1/3 of what other similar-sized companies to Genworth make, and that reflects the balance and consistent with trying to be careful with shareholders' money. So to get specifically to the question, so far in 2020, year-to-date through the end of September, we've contributed about $600,000 in charitable contributions. So that's for 3 quarters of the year. And just to put that in perspective, in 2018, we contributed just under $2 million; and in 2019, it was $1.8 million. So as you can see, we've generally been reducing the amount of those commitments given the overall challenges we face. But it's still critically important that we do as much as we can, balancing shareholders' interest to support the communities we work in. As I said, it's very important for employee morale. And also, since we're so highly regulated, regulators do look at what the company does contribute back to society, particularly in the states or areas that they have regulatory responsibility for.

Thank you, Tom. And then we did have one shareholder comment who wanted to note for the record his -- that he recommended shareholders vote against Kent Conrad, because he voted for Obamacare during his time in the Senate. And Jim, we will note that in the record and then just ask if you've got any response to that comment.

I will only say that Senator Conrad has represented in the center of his constituents in a very important and dutiful way. I don't think any of us would ever agree with all the decisions made by our elected officials, but I can tell you that Senator Conrad is a man of great personal integrity, who operated in a bipartisan way when he was in the senate, and since joining the Board, has made valuable contributions to all of our Board deliberations in addition to leading our governance committee.

Thank you, Jim. And with that, that now concludes the question-and-answer portion of this meeting.

Thank you, Mike. I hereby declare the polls are closed at 9:40 a.m. on December 10, 2020. Mike, please present the preliminary report of the inspector of election.

The inspector of election has preliminarily determined that each director nominee has received a majority of the votes cast in favor of his or her election. The inspector of election has also preliminarily determined that the advisory vote on the compensation of our named executive officers has been approved by the affirmative vote of a majority of shares of Class A common stock present at the meeting, in person or by proxy and entitled to vote on the matter; and the ratification of the selection of KPMG LLP as the corporation's independent registered public accounting firm for 2020 has been approved by the affirmative vote of a majority of shares of Class A common stock present at the meeting, in person or by proxy and entitled to vote on the matter.

Thank you, Mike. Based on the inspector of election's preliminary report, I declare that each person nominated for election as a director at this meeting has been elected. The advisory vote on named executive officer compensation has been approved and the selection of KPMG LLP as the corporation's independent registered public accounting firm has been ratified. Final voting results for all of these proposals will appear in a Form 8-K to be filed within 4 business days of this meeting. They will also be posted on the corporation's public website. That will conclude the 2020 Genworth Annual Meeting of Stockholders, and I thank all of you for attending today's meeting. The annual meeting is now adjourned.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.