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Executives

Alicia Charity – VP, IR

Michael Fraizer – Chairman, President and CEO

Patrick Kelleher – SVP and CFO

Kevin Schneider – SVP; President and CEO - U.S. Mortgage Insurance

Buck Stinson – President, Insurance Products, Retirement and Protection

Analysts

Ed Spehar – Bank of America

Andrew Kligerman – UBS

Steven Schwartz – Raymond James & Associates

Connie Deboever – Boston Company

Mark Finkelstein – Macquarie Research

Jeff Schuman – KBW

Darin Arita – Deutsche Bank

Jordan Hymowitz – Philadelphia Financial

Donna Halverstadt – Goldman Sachs

Eric Berg – Barclays Capital

Genworth Financial, Inc. (GNW) Q2 2010 Earnings Conference Call July 30, 2010 9:00 AM ET

Operator

Good morning ladies and gentleman and welcome to the Genworth Financial second quarter earnings conference call. My name is Christie and I will be your coordinator today. (Operator Instructions). I would now like to turn the presentation over to Alicia Charity, Senior Vice President, Investor Relations, Ms. Charity, you may proceed.

Alicia Charity

Thank you, and good morning. Thanks for joining us for Genworth Financial’s second quarter 2010 earnings call. Our press release and financial supplement were released last evening and are posted on our website. Again this quarter, we’ll also post management’s prepared comments following the call for your reference.

This morning, you’ll first hear from Mike Frazier, our Chairman and CEO, and then Pat Kelleher, our Chief Financial Officer. Following our prepared comments, we’ll open the call up for questions and answers. Kevin Schneider, President and CEO of U.S. Mortgage Insurance; Pam Schutz, Executive Vice President of our Retirement and Protection segment; Jerome Upton, Chief Operating Officer of our International segment; and Ron Joelson, our Chief Investment Officer, will all be available to take questions.

With regard to forward-looking statements and the use of non-GAAP financial information, some of the statements we make during the call this morning may contain forward-looking statements. Our actual results may differ materially from such statements. We advise you to read the cautionary note regarding forward-looking statements in our earnings release and the Risk Factors section of our most recent annual report, Form 10-K, filed with the SEC in February of 2010. This morning’s discussion also includes non-GAAP financial measures that we believe may be meaningful to investors. And our supplement and earnings release, non-GAAP financial measures have been reconciled to GAAP where required in accordance with SEC rules. And finally, when we talk about International segment results, please note that all percentage changes exclude the impact of foreign exchange. In addition, the results we will discuss today for the Canadian Mortgage Insurance business reflect total company results, including the minority interest unless otherwise indicated. And now, let me turn the call over to Mike Frazier.

Michael Fraizer

Thanks, Alicia, and thanks everyone for your time today. We made important progress in the second quarter executing our strategy and delivering improved financial results. International earnings had nice growth supported by improving economic conditions in Canada and Australia and the success of our ongoing loss mitigation efforts. U.S. Mortgage Insurance made good strides towards profitability supported by loan modification and other loss mitigation efforts. Specifically, I am encouraged about the continued favorable trends in new delinquencies that we are seeing fueled by both seasonal patterns as well as the burn-through of exposures associated with the 2005, 2006 and 2007 books.

The size of the private mortgage insurance market and dynamics versus the FHA remains a challenge, which I will touch upon later. We had mixed performance in Retirement and Protection. Sales were strong, particularly in life and long-term care insurance, along with positive net flows in wealth management. Earnings took a nice step forward in long-term care insurance and spread-based annuities but fell in life insurance and fee-based annuities impacted by relative mortality performance, higher losses on certain term policies, and weak equity markets.

I am pleased to announce that we completed our excess cash redeployment plans putting some $3.5 billion back to work hitting the high end of our targeted range. In my mind, second quarter represented an inflection point for the investment portfolio, where we clearly moved from plain defense to plain offense. Impairments were relatively low and are expected to remain low, and we moved early to get cash to work using a variety of strategies to manage investment in the low interest rate environment.

We also look closely at what may be prudent to adjust product pricing in the event of a prolonged low interest rate environment. This morning, I want to focus on three areas. First, how we are investing for growth in targeted areas. Second, developments on the regulatory front around the globe, and finally on the size of the market for U.S. Mortgage Insurance and what needs to change for future premium growth.

Let’s turn to where we are investing in key growth areas that support earnings and return expansion. We see organic growth as our biggest opportunity with targeted complementary acquisition opportunities and selective entry into new markets. We focus on three fundamental agendas to grow organically, introducing refreshed or innovative products, driving distribution penetration and expansion, and improving value-added support services and capabilities.

On the product front, we continue to drive adoption of new products to support growth in life insurance. The more capital efficient product suite introduced in the fourth quarter of 2009 has been one of our most successful new product launches. And we will further refine our offerings. Distribution feedback has been very positive given the attractive price point and flexibility the new products offer and this is apparent in our sales trends. Importantly, we see additional opportunities with new products in long-term care, wealth management and lifestyle protection.

Turning to distribution, a good example of our expansion drive is new lifestyle protection, where we are focused on selling products in new ways. Rather than solely selling products at or near the time of the new lending transaction, we are broadening programs with our distributors to market protection for their clients with various types of outstanding financial obligations, using appropriate coverage types. In addition, we are broadening distribution channels to support sales with a larger dedicated team in place to do so.

Finally, a good example of where we are adding services and capabilities is in new wealth management. Here, a key competitive advantage lies in service and technology differentiation. As a result, we are investing in sales coverage, technology, and new products to position the business for additional growth longer term. In the near-term, this will somewhat mute earnings growth, but should provide a good payback.

In sum, we are pursuing strong organic growth that supports our earnings and return targets. In addition, we will look at modestly-sized acquisitions with the focus on wealth management and accretive life blocks along with select opportunities to enter new markets on the International front that complement our existing business.

Turning to the regulatory environment, we saw a great deal of activity this quarter, as regulators around the globe actively engaged in financial reform discussions. In the US, the Dodd/Frank bill has targeted impacts on insurers that I would characterize as a net positive for our business. Importantly, it enables stronger discipline in mortgage origination practices that are a significant first step to overall housing reform, especially by granting statutory recognition through the importance of underwriting standards that are based on a borrower’s ability to repay.

We’re also encouraged that the law recognizes the important role of mortgage insurance and including MI as one of the features of a qualified residential mortgage. As you may know, qualified residential mortgages will be exempt from the new risk retention requirement that will be imposed on mortgage backed securitizations thereby encouraging prudent mortgage origination practices.

This is an important step for the industry and we will carefully track how it evolves over the next several months as regulatory agencies implement the legislation. In addition, there are many regulations and interpretations of the overall legislation to come. So we will remain appropriately engaged on these fronts.

Internationally we are actively evaluating or engaging in dialogue around potential regulatory changes, which could aide mortgage insurance demand or expand opportunities for lifestyle protection including ongoing Basel III three discussions.

Finally, let’s turn to sides of the US Mortgage Insurance Market. We do feel the market is slowly starting to shift back towards private mortgages insurers and will continue to do so as the FHA reassesses its standards and re-prices for appropriate risk management.

We saw some progress in this respect with the FHA raising the upfront premium and requesting statutory authority to raise their annual premium. In addition, there was a clear opportunity for GSEs to review adverse market fees and loan level pricing that has steered new business to the FHA. These fees add to the cost of conventional loans that carry private mortgage insurance and this price difference influences originators and home buyers when choosing a government supported FHA loan for one from a private mortgage insurer.

Together the combination of increased FHA pricing and potential changes in GSE market fees and loan level pricing should help shift demand back to the conventional purchase market which is supported by private capital for mortgage insurers and Genworth is well positioned to play its part in filling that role.

To wrap, I’m pleased with our progress on several fronts including new business trends, investment portfolio progress and improved fundamentals in housing markets in the US, Canada and Australia and we will only intensify our execution focus in the second half of the year. With that let me turn it over to Pat for a deeper look at the quarter, Pat.

Patrick Kelleher

Thanks Mike. This morning I’ll focus on four areas; first sales and earnings growth, second risk management and loss mitigation actions, third, our capital management progress and finally how we think about earnings trends in the second half of the year based on experience to date.

Let me start with sales growth. We’re seeing sales grow in several key areas particularly in our leadership lines and retirements and protection and in mortgage insurance in Canada. This sets the stage for future revenue expansion. In life insurance, sales of our new more capital efficient Colony Term UL and GenGuard UL products had strong sequential increases since their launch in late 2009.

We remain number one in total life policies sold through the BGA channel and continued to make good progress expanding sales of larger face amount policy.

Earnings in long term care, individual long term care sales increased 36% versus the prior year. Here we are seeing a rebound following declines in industry sales in early 2009. We had good growth across sales channels led by the independent channel. Wealth management had its fifth straight quarter of positive net flows. New flows were $436 million, up considerably compared to a year ago and down slightly on a sequential basis. We view this as a very good result in the context of current investment market condition.

We saw mixed sales growth in the international segment related to differences in market conditions in Canada, Australia and Europe. In Canada, low new insurance written increased 61% year-over-year as overall mortgage market growth was robust. Market view is at originations have been loaded somewhat towards the first half of the year in anticipation of a rate increase and a sales tax increase both of which occurred in July.

In addition, we saw the seasonal growth we expect on a sequential basis going from winter to spring. Accordingly, we would expect sales to slow moderately in the second half of the year.

In Australia, new flow insurance written declined 41% year-over-year driven by increasing mortgage rates and the reduction of government stimulus programs that fueled a strong origination market in 2009.

In lifestyle protection, the impact of lower consumer lending continues to pressure sales across Europe. Although consumer lending has stabilized at lower levels many lenders remain capital constrained and therefore are cautious in their lending activities.

So we do not see conditions improving this year, at the same time we are taking steps to improve sales as Mike outlined.

Finally in US Mortgage Insurance, we had incremental sequential growth in new insurance written. There are signs that business is gradually coming back to the private mortgage insurance market from the FHA but at a slower rate than we would like to see.

Turning to earnings growth, the highlight in the quarter was growth in investment income in retirements and protection. We completed our planned cash redeployment that began in the fourth quarter of 2009 at the high end of the targeted range or $3.5 billion.

We reinvested the majority of funds in the fourth and first quarters ahead of declines in rates and yields. Cash reinvestment added about $4 million after tax sequentially through R&P earnings. In addition, limited partnership investments generated $6 million of earnings after tax compared with an $8 million after tax loss in the first quarter.

However, lower earnings in our fee based retirement income and life insurance businesses more than offset these improved investment results. In fee retirement income, recent equity market declines resulted in valuation changes that reduced fee retirement income earnings for the quarter. In total, higher DAC amortization reduced earnings by $11 million.

In our life insurance business, we experienced higher mortality and lapse related costs than we have historically. The term insurance mortality ratio was 96% of original pricing levels compared to an average of 92% over the last eight quarters. This is normal statistical variation and reduced earnings by approximately $10 million compared to the prior year and $2 million compared with first quarter.

Term lapse related cost increased $11 million compared with prior year and $4 million compared with the first quarter. This is primarily related to more lapses at the end of the level premium period on 10-year term insurance policies sold in 1999 and 2000.

International earnings growth was strong aided by improved market conditions in Canada and Australia plus tax legislation change in Australia that we had anticipated. The tax law change had a cumulative impact of $16 million, $6 million of this is attributable to second quarter 2010 and $10 million is attributable to prior quarters.

Going forward, the tax change will continue to provide benefits to earnings in Australia.

In lifestyle protection, earnings were flat on a sequential basis. Underwriting results did improve marginally reflecting lower new claim registrations and pricing and product changes. However, this was muted by some foreign exchange fluctuations.

US mortgage insurance loss increased moderately with favorable delinquency tends moderating slightly relative to the first quarter results.

Looking next at risk managements and loss mitigation, we continue to take a proactive approach to managing our risks with the market condition both that we currently see and what we might expect to see in the future. There are four examples I’ll touch on today.

First, in our housing related businesses, we use loss mitigation to keep borrowers in their homes and ensure that we are paying only legitimate claims. In the US this resulted in $217 million of savings in the quarter bringing the year to date amounts to $450 million. Looking at the full year, we expect to approach the 2009 level. Savings could fluctuate depending upon new delinquency trends, the success of modification programs and the impact of rescission experience as we work through the declining inventory of investigation.

Given our experience over the past two quarters we expect the benefits from rescissions to trail down and we expect the benefits from modifications to remain at or above what we saw this quarter driven by both HAMP and non-HAMP modification.

Second, we are selectively reducing risk where appropriate by reaching contracts settlements targeted for certain services, lenders or GSEs. This involves agreeing on terms that remove risk from our portfolios and achieve de-risking targets. We’ve done this effectively over the past two years in mortgage insurance primarily in Spain, Australia and in the US.

As an example in the second quarter, we reached a settlement with a US servicer relating to rescissions for a portion of our flow mortgage insurance portfolio. This is a mutually beneficial outcome. Settlement activity remains an additional tool for managing risk and positioning for stronger and more predictable earnings emergence going forward. I should note that this quarter settlement activity on our global mortgage insurance businesses reduced operating earnings by approximately $18 million after tax.

Third, we completed pricing and product changes on new and enforced business in lifestyle protection to improve earnings and decrease volatility. We’ve taken action in Western Europe and more recently in the Nordic region. In the second quarter we achieved underwriting profits in nearly all of our European markets although profitability remains below target levels due to lower lending and high unemployment throughout Europe.

We are encouraged by the effectiveness of our re-pricing mechanism and the strength of our distribution relationships as we pursue suitable loss mitigation actions. We continue to evaluate performance and will take incremental pricing or product actions as appropriate.

Finally, we have also taken additional steps in the investment portfolio. While the low interest rate environment is a challenge our longer duration liabilities allowed us to invest in the 7 to 15 year part of the curve where we can take advantage of the higher yield. In addition, we invested in select asset classes who spreads widened during the quarter which help to offset the lower interest rates.

Turning now to capital management, we are pleased with the sound capital ratios at our operating companies. We are successfully executing our plans to meet and provide for obligations at the holding company. We currently have in excess of $1.1 billion of holding company cash and short-term securities. We issued $400 million of debt during the quarter and used $200 million of the proceeds to repay a portion of our credit facility.

In Canada our majority owned subsidiary issued CAD275 million of senior debt during the quarter and subsequently announced plans to repurchase common shares and return up to CAD325 million to shareholders. We expect net proceeds of approximately $175 million to be received by the holding company in the second half of 2010. In total, we expect $350 million to $400 million in operating company dividends and return of capital in the second half of 2010 primarily from our international companies. As we look to 2011, we expect the international companies as well as the US life companies to pay dividend to the holding company.

So in sum, our operating businesses remain well positioned to support operating and parent holding company capital plans going forward.

Before closing, I’d like to comment on earnings trends. In retirements and protection, we expect that revenue growth associated with the continuation of recent sales trends in our leadership line will provide meaningful earnings growth over time and we expect mortality and morbidity levels to remain within normal ranges. We do expect some level of continued volatility in equity markets and we’d expect life insurance persistency to remain a manageable headwind.

In international, earnings trends have been favorable and stable in Canada and Australia with some choppiness in lifestyle protection in European mortgage insurance reflecting conditions in Europe. In Canada and Australia economic growth has been relatively strong. Unemployment is declining. Housing prices have rebounded strongly from the downturn and are now stabilizing and governments have been withdrawing stimulus while central banks increased interest rates to control inflation.

While these conditions persist we can reasonably expect that loss ratio should remain in the current range with normal quarterly fluctuations. The decisive actions taken to improve earnings and lifestyle protection should result in overall earnings improvement if current market conditions persist with some choppiness in quarterly results. Given these actions when markets start to recover and consumer lending returns in Europe, our Lifestyle Protection business will be well positioned for further earnings improvement.

The Europe mortgage insurance business remains small and well contained. It’s worth noting that at the end of the second quarter total risk in force in Spain has been reduced significantly to approximately $125 million as a result of the loss mitigation activities I described earlier. Given today’s pricing and tight underwriting combined with anticipated influences from the current regulatory environment, we do see targeted growth opportunities for this business in the years ahead.

Turning to U.S. mortgage insurance, while current trends are favorable we remain cautious in our outlook for the second half of 2010. Flow delinquencies decreased by 4% from first quarter to second better than the 1% decline we’ve seen historically in the second quarter. We attribute the differential to the combination of burn through of the 2005, 2006 and 2007 books and the favorable delinquency development in the 2009 and 2010 books. Seasonal delinquency patterns are expected to continue in the second half of the year based on our average historical experience, delinquencies generally trend up about 8% in both of the third and fourth quarters. However, the decreasing impact of poor performing books and favorable delinquency development relating to recent books will also influence second half experience.

Balancing these trends we believe it is prudent to take a more conservative view of our US MI performance for the next two quarters and have a more favorable view as we look towards 2011.

To wrap, Genworth delivered good results this quarter setting a stage for growth in sales and earnings and while we face some headwinds we are encouraged by our progress. We remain focused on four levers to reach our return on equity targets; profitable new business growth, optimizing investment performance, ongoing risk management including loss mitigation; and finally effective capital management.

With that I’ll open it up to your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Ed Spehar with Bank of America.

Ed Spehar – Bank of America

I have a few questions. First I’d like to talk about the lapses in the life business. I have a hard time understanding the material negative earnings impact from 10-year level term coming out of the level premium period because I would have thought that this business would have been priced for almost a 100% shock lapse at that point and I’m wondering if you could give us a little more color on that and then I have a follow-up.

Patrick Kelleher

Okay. First I’ll talk about the 10-year term lapses generally and why they do not amortize fully over the level period and I’ll do this from an accounting and an industry experience perspective. Accounting rules require amortization in proportion to premium revenue over the life of the policy. Ten-year level term products with premiums that grade up on an ART basis following the level period will typically show some persistency beyond the period and continue to generate premium revenue. So it is normal in the industry that some portion of deferred acquisition cost remains to be amortized after the level term period.

Now ordinarily, you’d expect that to be relatively minor fluctuations but to understand what’s happened versus prior year we have to go back and start with our experience in the second quarter of last year and bring that forward to our experience in this quarter. Back in the second quarter of 2009, amortization costs were really relatively low for the term insurance portfolio at around 5% of premium and that was due to unusually favorable lapsed experience compared to what is more typical and more typical run rate for amortization for acquisition cost on a portfolio like this, I would say is in the range of 10% to 15% of premium.

Current year amortization costs are actually more in line with this more typical run rate. So the favorability we saw last year we’re not seeing this year. So what’s important is why. And as we’ve looked at the emerging experience we saw that most of the increase is attributable to an increase in amortization of acquisition cost as policies on the post level period increased. We have the large books of 10-year term business sold in 1999 and 2000. We are seeing an increased rate of lapse because those are flowing into the level term period and we’ve seen the increase in amortization year-over-year that I described. Does that address your points?

Ed Spehar – Bank of America

Yes. I guess so the follow-up would be that if you’re mentioning that I think that this is different than what you would have priced for, correct?

Patrick Kelleher

I think to an extent that it is because when we priced this business and this was back in the 1998-1999 timeframe, we did so based on the emerging experience for these types of products that we were seeing in the market. And as you can imagine over time we have continually adjusted our pricing and kind of kept up with the changes. I would say that over the years because the pricing of (penny) return products to consumers have improved. We’ve seen at least moderate increased in loss rates relative to what had been the experience we saw back in the 90s.

Ed Spehar – Bank of America

Okay, but then I guess just thinking about this issue going forward, I mean this isn’t may be a gross over-simplification, but if we are just figuring out that the shock lapse assumption was incorrect ten years after the product is sold, why isn’t this going to be a multi-year issue, depressing earnings?

Patrick Kelleher

We are not saying that we are just figuring that out now. We are saying that we’ve adjusted over time, and because term life insurance is a FAS 60 product, the amortization that is scheduled for GAAP reporting purposes is locked in as of when you set the assumptions at issue. We are saying that we saw the relatively favorable experience grade back to more typical in the current quarter and we are also saying that the blocks of business experiencing the higher lapse were relatively being blocked in the 1999 and 2000 time frame and we wrote smaller blocks of this business in the 2001, 2002, 2003 time frame after the advent of the XXX reserve regulation.

Ed Spehar – Bank of America

Okay, thanks, that’s helpful. Just two really quick ones. First of all, Pat, was the corporate and other loss this quarter elevated or should we think about this as kind of a run rate? And then on the USMI loss, should we be thinking about the second half of the year, the loss going up at a similar rate or greater rate than whatever the seasonal delinquency trend would likely be in those quarters?

Patrick Kelleher

Yes, I will handle to corporate run rate, and turn over to Kevin for your other question. From a corporate run rate perspective, what I would say is that we have seen the impact of absorbing the institutional markets business and the corporate segment which has made earnings a little bit more volatile than it used to be, as well the tax differentials associated with APB 28 calculation and the effective tax rate for the entire year are absorbed in corporate. I would think of the run rate in corporate as a little bit lower than what we are showing in the second quarter. And now I will turn over to Kevin.

Kevin Schneider

Good morning Ed, how are you? This is Kevin. I think when you think about the second half of the year, I think the most important thing to focus on or to think about is what happens with the overall delinquency development. We’ve seen favorable, again, new delinquency development. We’ve seen first half of the year change in overall delinquencies that’s been actually somewhat favorable to its historical trends. Typically, as I think, we mentioned, we would expect a higher rate of delinquency growth in the back half of the year. And as we look at it right now, I think the ultimate outcome in the year is going to be based on, you know, are we are going to continue to see this some favorable new delinquency development that would somewhat mute the traditional seasonality experience? Now do we continue, and I think we have continued to see the burn-through of the bad books of business, the ‘05 through ‘07 type books. So, I think that may provide a little bit of tailwind, but ultimately we need to see how this thing plays out in the back half of the year. But as you think about overall income, I think that delinquency development is really the key thing you should think about in terms of the drivers.

Lastly, as we had this quarter, delinquencies have continued to come down now for a few quarters. We like the overall trends and where that’s going, going forward. The remaining offset to that though as it was in this quarter is a little bit of the ageing, the existing inventory. So, as that new inventory comes down, we do have less (inaudible), which is a very favorable trend. We do continue to have older (inaudible) that’s there in the pipeline now. They continue to age forward. I think the encouraging thing there is even with that smaller delinquency population, the overall delinquency reserve level has continued to trend favorably. So, while we do have some ageing, it has been offset by the new delinquency reduction.

Operator

And our next question comes from Andrew Kligerman with UBS. Your line is open.

Andrew Kligerman – UBS

Hey good morning. Just because we had Kevin there, maybe I will just start on the USMI and then I have one or two quick follow-up. So, loss mitigation savings were a bit lower in the quarter at $217 million, and I think you stated that they reflected $160 million in loan modification savings, and then the HAMP pipeline came down significantly from 28,000 to 16,000 and decided a shift in modifications start from HAMP to alternative programs, so, I started wondering what some of these alternative programs are relative to HAMP, and how you think they are going work back the default rate going forward?

Kevin Schneider

Good morning Andrew. As you mentioned, our savings in the quarter came in at about $217, still encouraged by the fact that for the first half of the year we were at $450 million in total savings. When you compare that to sort of last year and we like that outcome at this point. HAMP starts or HAMP inventory to a point were down, but what I am continued to encouraged by is that we continue to have strong HAMP closings. So our HAMP closings on the quarter, that resulted in favorable modifications came in about 5300 that was up from the last quarter in the 3400 range. So, you still had some nice favorability there. New trail starts continued to be at a reasonable level. And I think as you think about HAMP going forward, based upon the changes in documentation requirements, those things that do get into a HAMP trail now should continue to have a higher throughput in terms of ultimate modification or queer, because those folks have a higher bar to meet in terms of their documentation requirements. So, although the overall HAMP inventory levels are down, in terms of the topline level, we are going to continue to see favorable HAMP benefit throughout the back half of the year.

Now your second question is, what about the alternative programs. And as I believe, I had shared with you before, industry-wide, if you step back from HAMP, the overall mortgage industry is doing about 2x alternative HAMP modifications – to HAMP modifications. We’ve got a tremendous amount of focus around HAMP, because the government stepped in at a time when the market was sort of locked up and introduced this program. But then ultimately what happened is the private sector stepped in and started doing what we do well. I mean, that is introducing some alternative programs that, at the end of the day, maybe more effective and more efficient for the consumer. So, I think that’s nationally what’s happened out there. What we are seeing is those alternative programs continue to tick up. We are up probably over a 1,000 alternative modifications outside of HAMP of where we were in the first quarter. That continues to trend favorably. Those programs, I would say, just think of them as number 1, GSE alternative programs that had similar type of projects. They reduced the borrower’s overall payment, helping them cash flow so they can make their loan payment. Maybe a little bit of move towards some type of principal reduction but still hasn’t been a big thing. And then, you have a significant amount of lender proprietary program or service proprietary programs. Those will continue as well. So, as I think about it, we are seeing in HAMP – be kind of consistent, maybe overall trials down from where they were at the end of first quarter, but comfortable with the progress there. And then those that are failing HAMP or falling out of HAMP most of those are getting a shot or over 50% or above 50% of those are getting a shot at one of these alternative programs, so they are getting another chance in the modification cycles that has something done to them, and I think that’s really why we are getting the pickup in the list in the non-HAMP modifications.

Andrew Kligerman – UBS

Very helpful. And then just on the – I guess Pat, or may even Mike, on this one, you know, core interest rate yield. That was 5.16% in the quarter, it improved. I guess that was partly due to the $3.5 billion of cash redeployment. So given that Genworth’s one of the more interest sensitive companies, could you give us a little sense of where you expect that, couple of companies have given us the sense of what they think the impact on earnings would in each of the next several years if interest rates in general were to remain constant with where they are today, could you give a little color on that, how do think earnings will be impacted next year and ‘12 and maybe ‘13?

Patrick Kelleher

This is Pat. I will do that. I will have to give you a little bit of background because you are right, a lot of the work that we have done over the last several quarters is going to impact that. I will start with our international and our mortgage insurance businesses. There are generally short duration products in those businesses, so they don’t have the interest rate risk or earnings fluctuations caused by interest rate movements at our U.S. life insurance or long-term care business might.

So what I do to respond would be I will step back and talk a little bit about the potential impacts of interest rates across our domestic life insurance business where we are relatively more interest sensitive than in the international. And what we have been doing to mitigate these impacts as well as what they would be. And I would say in general low interest rates and movements in interest rates impact returns in our annuities, long-term care and in our universal life products.

In our annuity blocks, over the past three to four quarters as we have been actively putting cash back to work, we had been lengthening in asset durations and matching asset and liability durations to lock in spreads. Actually we went a little bit long on the SPDA portfolio anticipating that with the a low interest rate environment, you might see better persistency and that was prior to the unlocking that we did in the current quarter.

I would say currently we have a tight matching of asset and liability durations for our fixed annuity business which does help to minimize interest rate risks. So we might see some residual leakage associated with non-parallel shifts of the interest rate curve as it flattens but generally speaking the spreads should maintain at the current levels going forward or within about 10 basis points or so at current levels. In the longer duration liability products like long-term care, we have similarly put back cash to work and we have linked them asset duration but we also employ hedging strategies that blockings (inaudible) for cash flows yet to be received.

In general, I would say we have got interest rate per taxing for about 70% of the expected cash flows over the next 10 years. And to give you an idea of the scope of those strategies and programs, these strategies provide downside interest rate per taxing and effectively they are currently worth about $1.8 billion and they reside in the balance sheet in accumulated other comprehensive income after adjustments for tax. In the current quarter, due to declines in interest rates, these hedges increased in value by approximately $575 million. So again in long-term care over the next several years, we would have about 30% of our cash flows exposed to reductions in rates but because of the impact of these rather significant hedging strategies, we feel like the earnings volatility associated with at least a decline in interest rates a little over a few years would be limited.

And then finally, in universal life, that’s currently a small piece of our in force and our secondary guarantee account balances only make up about 30% to 35% of the UL block and here we are employing the duration matching strategies similar to those described for the annuity block and I would say you would have similar types of leakage from the spreads on the account values and difference between earned and credited interest rates. Does that answer your question?

Andrew Kligerman – UBS

It sounds to be that I shouldn’t be looking for any major impact from the low interest rate environment, that the impact would be somewhat modest, is that a fair assessment?

Patrick Kelleher

That’s what we have designed our strategies to achieve, yes.

Operator

Next we go to Steven Schwartz with Raymond James & Associates.

Steven Schwartz – Raymond James & Associates

Pat, can I just follow up on a statement that you just made to Andrew. I am not sure I understood it. You said for the SUL, you were practicing the duration matching that you were doing in the annuity, particularly the SPDA, but of course the SPDA is in SPDA, it’s a single premium, the UL, my understanding is it’s not – so I guess I don’t understand how those two match up. I would imagine that the – would you be doing at SUL would be the same thing you were doing in LTC?

Patrick Kelleher

The toughest matching strategy to accomplish was the UL as with respect to the secondary guarantees. And because those reserves are the ones that you hold to fund future benefits that you might have to fund that can’t be funded from the build-up in the policy. So we do extend the duration of our liabilities because we sell products that are not highly oriented to upfront premiums but the assets backing the liabilities and the assets backing the surplus associated with that line are all available to lengthen duration and employ the strategy that I described. So it’s not going to be perfect and as I indicated to Andrew, there should be what you could reasonably expect that if interest rates remain lower at the (inaudible), there will be leakage there but we feel pretty good about it. But in particular, the UL block of business is a small exposure and the second guarantee is like between $1 billion and $2 billion of the general account portfolio in total.

Steven Schwartz – Raymond James & Associates

And then if I may, one more follow-up and then I have a question. Just the message to add on the lapses with regards to the LTL product, you simply – the experience is not necessarily worse than we are looking for, experience a couple of years ago was probably better. This experience is inline and what we are seeing is really a mix shift as the big fire sale blocks come off. Is that an accurate statement?

Patrick Kelleher

Generally, that’s accurate. The only qualification that I would make is that it is true that the last experience that we are seeing now is moderately elevated and relative to our original pricing in the 90s and we are working with that as part of our business plan and our strategy for managing profitability on the line.

Steven Schwartz – Raymond James & Associates

Okay, and then if I may, just looking at a couple of regulatory things on both the MI and the LTC side, just wondering if you all have any new insights into what may happen with the GSEs and how that may all work out and as well any recent parts on class?

Kevin Schneider

This is Kevin, I will start with new insights on the GSEs, I think the answer is no. That is an issue that’s going to continue to be debated. I think throughout the fall and throughout 2011 as we move forward, I think the one new insight or observation I will make that we do feel good about is the inclusion, again of mortgage insurance in the statutory definition of the qualified residential mortgage, I think that encouraging, and we should feel good about that going forward, the regulators have a lot of work to do in terms of writing all the regs to match up with that law. However it’s the first time you have seen outside of the GSE charter, a statutory reference to mortgage insurance and I think that’s simply due to the recognition of the soundness of the overall model and the supported has (inaudible) payment lending.

Steven Schwartz – Raymond James & Associates

Does that mean whatever happens to the GSEs become less important for the demand for your product?

Kevin Schneider

The way I think about it is this risk retention provision in the bill was designed to make sure a good quality business was underwritten out there and the inclusion of mortgage insurance potentially in that regulatory outcome gets you to what I think is a potentially another channel for mortgage insurance. So outside of the GSE charter requirement, now you have the potential for additional channels, you have the potential for I think an additional leg of value proposition for the product which is based around further capital relief for the lenders and that should be positive.

Buck Stinson

On the class, the implementation process for class has been turned over to Secretary Sebelius in Department of Health and Human Services and we continue to monitor that very closely. To-date not a lot of activity, most of their emphasis right now is on implementing the major medical healthcare reform initiatives. So to-date, not much of an in terms of any other progress on implementation. Our view continues to be the same on class in terms of its impact from the private insurance industry. We think at the end of the day, private insurance is still going to have a very competitive offer vis-à-vis whatever the implementation process would come out, maybe 2012, 2013 but very limited activity to date.

Steven Schwartz – Raymond James & Associates

But can I say something recently in the trade press that there’s a group of congressman that’s trying to overturn class?

Michael Fraizer

One bill from Congressman Charles Bustani has been introduced, basically a watchdog bill, that would engage both the House and Senate in monitoring the actual, real soundness of the assumptions coming out. So there is a level of activity I think both in the House and Senate making sure that there is fiscal responsibility over the top of any form of class implementation.

Operator

And the next question comes from Connie Deboever with Boston Company. Your line is open.

Connie Deboever – Boston Company

Hi. Thank you for taking my questions. Just to focus back on the USMI. I think you mentioned that you’re seeing more, later stage delinquencies in the pipeline. I’m thinking about reserve for delinquency, which has picked up. Should I think about that continuing to pick up? And also along similar lines, somewhat like in the reserve methodology, I don’t think you’ve taken into account the temp and other modification benefits in terms of reserve. So wondering if that might be an offset?

Michael Fraizer

Yes, Connie, good morning. Let me start with sort of your second question. You’re correct, we have not altered our reserving approach on methodology to include any future benefits for loan modification. So we’ve only incorporated observe experience to this point in time. I had potentially has the opportunity to help you down the road, I guess, too soon to tell you yet on that.

Going back to your first question, we have a, as a country, as an industry, we have older stage delinquencies that continue to languish in the pipeline, as well as those that continue to move forward to foreclosure. If you think about our overall delinquencies that are aged over 12 months or greater, I think the total number has probably moved since the end of the last year from about 16% of total inventories to 25% of total inventories, so a little bit of aging there. That has pressured the benefit we’re getting from the lower overall delinquency levels but the real driver there, if you think about it is your reserve for delinquency is moving up because you have less delinquencies, but the overall reserve levels are trending favorably. And I think that’s the way you should continue to think about our expectations.

Connie Deboever – Boston Company

Okay, great. And then if I’m also thinking about paid claims, they look like they’ve stabilized between first and second quarter. I guess this is to your second half outlook, if you worked through the ‘05 to ‘07 book, which is seasoned, and I guess the offset which is the potentially higher claims to you in terms of delinquencies using lamming (ph). How should we think about paid claims in the back half of the year?

Michael Fraizer

Paid claims should continue. Right now, we haven’t seen any particular tick up in paid claims, but we do have, even though we’ve had stabilization and peaking of those older books of business, they still have not rolled all the way full, all the way through to claims. So there’s more paid claim exposure going forward. Under delinquencies, it certainly peaked but I would expect that trend, probably the trend up a little bit going forward.

Connie Deboever – Boston Company

Great. Thank you. Those are all my questions.

Michael Fraizer

Thank you.

Operator

And our next question comes from Mark Finkelstein with Macquarie. Your line is open.

Mark Finkelstein – Macquarie Research

Good morning. Hi. I have a few follow ups and a couple in areas. First, just on the DAC issue, I guess it cost something around $11 million this quarter from the elevated lapses on the 10-year level premium term. Is that the kind of the number we should expecting through 2010? And then when you get in to 2011, you talk about a smaller book, how much would we expect that to moderate by?

Michael Fraizer

In 2010, the way that I would look at the amortization trends in total, is that it did increase to a normal range of 10% to 15% of premium in the second quarter, and in the near term, I would expect that to continue because of the way that the business rolls off the books once you reach the end of the level premium period and because the new book years are smaller, I would say that it would turn down, but it would do so gradually over a period of a couple of years. And we’ll be monitoring experience and we could see trends and we could see trends moderate, I’m sorry, improve or they could deteriorate some but at this point in time, that would be my best answer.

Mark Finkelstein – Macquarie Research

Okay. And then on the interest rate question, that’s a very helpful answer and a 70% hedged on the long-term. I guess the question is if you have that degree of kind of hedging but we’re still here in the 3% tenure range, is the hedge enough to avoid any acid-adequacy testing issues as we get towards year-end at this levels?

Michael Fraizer

Well, we feel that we’re well-protected and our company’s, through that hedging strategy and as well, we have some smaller non-qualifying hedging positions which provide downsized protection associated with potential declines in the interest rates over the balance of the year. So between those two strategies, we feel like we are certainly, adequately reserved given a statutory evaluation rate of about 4%, which is much lower than the current portfolio.

Mark Finkelstein – Macquarie Research

And then just finally, the tax benefits in Australia. I think you said that the current quarter impact is $6 million. How should we think about the benefit that, going forward, is that the right number or will that moderate?

Michael Fraizer

At this point in time, I would expect that is the right number.

Operator

And our next question comes from Jeff Schuman with KBW. Your line is open

Jeff Schuman – KBW

Good morning. Thank you. A couple of follow ups to add on the – back on the life insurance. First of all, I was wondering if it’s possible now or at some future point to give us a little more detailed picture of kind of the 10-year term quarter, I guess, by quarter. Because I’m thinking, you said there was kind of a big sales impact and on 2000, it goes down from here but I’m thinking if we can sort of see how that – the size of the various cohorts could possibly anticipate the impact a little better. So I guess that’s the first item. Second question, I’m wondering about the interplay of persistency and mortality to the extent that there is somewhat higher lapses than were anticipated at prices, I would tend to think that the people who were lapsing are choosing to reenter and that would, I guess, imply maybe some anti-selection and some different mortality going forward. And then last year I’m wondering if in the future we should anticipate kind of similar issues as kind of 15- and 20-year level term of this written or would they kind of bubble up. That’s it. Thanks.

Michael Fraizer

Okay. First one is with respect to cohort detail. The way that I would look at it is I would look at the life insurance amortization and in comparison to, that’s in the supplement, the revenue stream associated with the business because if you break it down to a lot of detail, you see a fair amount of fluctuation between cohorts and it’s quite difficult to observe trends. So I would suggest that you use the information on the supplement, take a look at the way the amortization is changing and as the revenue trends and that should give you a pretty good picture. And where things happen quarter-to-quarter which are out of line with the usual quarterly trends, you can count on the fact that we will provide additional quality on that.

On to your second point, the interplay of mortality and persistency, logically, you’re right but we do also price the product, recognizing that interplay and in particular, as I look at the mortality that is emerging quarter-over-quarter, we haven’t seen that anti-surjection (ph). In fact, I describe the mortality as being within the normal range but high. To give you little bit more color on what actually happened, our number of claims in the current quarter actually declined from first quarter, but it just so happened that the severity increased because the people who happen to die this quarter owned larger policies, so it really is fluctuating randomly within a range and we haven’t seen anything associated with the interplay that should describe, although that certainly exists.

Jeff Schuman – KBW

The last part was whether as the 15 and 20-year products sort of – from that your sort of insured and should we expect sort of another bubble in terms of persistency?

Michael Fraizer

I believe that there is that risk but I think the risk is highest on the 10-year product because this particular design does have a good amount of persistency beyond the 10-year period because of the ART design. If you go to the other extreme, there was a 30-year product. The ART premium that comes out at the back-end is so high relative to the level of premium that the policyholder has been paying that almost all – or all of the policyholders are expected to lapse. So, the higher the expected lapse rate gets in the shock period, which does happen on the longer duration product, the less exposure you have to this, but certainly there is going to be a residual exposure on the long duration products. I believe we are dealing with the top issue now.

Operator

And our next question comes from Darin Arita from Deutsche Bank. Your line is open.

Darin Arita – Deutsche Bank

Thank you. Can you give a little color on the change in the RBC ratio from the first quarter to the second quarter in terms of what caused that?

Patrick Kelleher

This is Pat, I would be happy to do that. I actually expected based on the strong production and the declining investment result, that we would have a 5-point decline in the RBC ratio. We had a 10-point decline. The balance is really attributable to some restructuring we did associated with the XXX reserving facilities we have. And in effect, we recaptured a small block of XXX business which increased the strain in the business in addition to what you normally see associated with the new business. That costs 4 to 5 points. And that was a conscious decision. It facilitated the transaction and we are still within our target RBC ranges.

Darin Arita – Deutsche Bank

So, assuming that we continue to have very favorable life insurance in long-term sales growth, should we expect 5-point declines a quarter here?

Patrick Kelleher

I would expect that there will be some volatility from quarter to quarter, but we see steady declines in our investment losses and impairments, particularly from the perspective of the structured securities, we are starting to see delinquencies decline and impairments for example in the sub-prime have been close to zero in the current quarter, may be to $3 million to $5 million. So, given that we are incurring the strain on the new business now, we will expect earnings in future periods associated with that as investment to cause decline. We will see some declines in the near-term in the RBC ratio, maybe in that 5% range, but then it should start to naturally build given the engineering of the growth and the declining investment loses.

Darin Arita – Deutsche Bank

Okay that makes sense. And then turning to the lifestyle protection business, you have significant changes made over the past year. Can you talk about how that business might perform differently this time around if it goes through another shock experience, if unemployment starts to increase again in Europe?

Michael Fraizer

Darin, it’s Mike. I guess I think about it this way. First is we took all of the actions that we thought were appropriate to deal with the enforce that we’ve had. As far as – half of the book was monthly premium. So, was subject to price change. So, we moved on that as you know, and really put all of those price moves in place, but we remained actively monitoring those areas for performance to see if there’s any additional pricing actions required. I will remind you there’s part of, when I use the term pricing action, it’s not just premium. You may change how you handle profit and loss share with a distributor, you may change the commission structure, it also helps you get back some margin on with that. The second thing we did was we looked at our experience and incorporated that back into product design as we go forward. In other words, did you have to adjust the nature of any liabilities or therefore coverages so that it could handle a more strain period that likely just have gone through. So, that has been built into the new products that we are selling now.

Finally, surrounding both of those, whether it’s old or new, we do have active loss mitigation efforts. In other words, following up on claims, making sure we are paying valid claims. But, let’s say you have an accident and fitness claim, someone should get better and like for example go back to work, and you have to have active follow-up on those. So, I think we designed the business model to handle a more stressed environment going forward and we used of the same types of backtesting disciplines that we did in the U.S. Mortgage Insurance business in Europe to make sure that that’s been a data-driven and analytic exercise, not a theoretical one. So, we are quite comfortable with that model going forward.

Darin Arita – Deutsche Bank

That’s very helpful. Thank you.

Operator

And our next question comes from Jordan Hymowitz from Philadelphia Financial. Your line...

Jordan Hymowitz – Philadelphia Financial

Thanks for taking my call. Two questions. One, when the earliest you think the Senate will pass the FHA bill enabling them to raise the annual premiums similar to one that the house passed?

Patrick Kelleher

Its possibility would be before they go out for the Fall election. That’s probably the earliest whether it gets done there or not or is later on in the year is part of – appropriations is yet to be determined, but the earliest would be before the election this Fall.

Jordan Hymowitz – Philadelphia Financial

Second, I was just – house hearing yesterday, and it seem to kind of be (inaudible) for the MIs in general. I mean there wasn’t a single consumer advocate that was anti-MI. Do you see a general shift for your product in general from regulators, consumer groups and things of that nature?

Patrick Kelleher

I haven’t been to one of those (inaudible) and I missed yesterday. So I wish I could have been there based upon the coverage that you just described. But I think that what we are seeing is an understanding of MI and the – can believe the value of the regulatory capital framework through this cycle. And it’s not just a US issue. I think it’s a global type recognition overall for the framework that mortgage insurance provides to low down payment lending. So, I mean you raised the issue, so I am going to summarize what they said. Number 1, they said this is an industry that got no Federal support through this cycle. This is an industry that at the end of the day the regulatory capital framework held up amazingly well through this cycle. It’s well reserved, required a whole reserves for these top cycles going through as a counter cyclical reserving approach. And potentially, I think most importantly they said it’s a model for regulatory reform of the GSCs going forward that needs to be considered. So, the answer to your question is, it was a good meeting, it was a good hearing, whether it’s a shift or not, I think it’s actually a recognition of how we tell about and how this industry showed up to this cycle.

Jordan Hymowitz – Philadelphia Financial

And final question is we know it’s part of book value in the call increased over $28 which is almost three times your stock price. Did you guys expect there was money anytime sooner? Is there any reason why that book value should substantially come down towards your current price?

Patrick Kelleher

I think our sales trends are good, particularly in the leadership lines in Retirement and Protection. Our investment experience is improving in terms of the increasing investment in the portfolio. The businesses in the International jurisdictions, particularly Canada and Australia are seeing the benefits of both effective loss mitigation and improving economic and housing markets. And I feel pretty optimistic that we are delivering on the plans that we have got in place. I guess I’d have to say I will leave the valuation question to someone else.

Jordan Hymowitz – Philadelphia Financial

I am sorry (inaudible) current stock price to book value, I am sorry not three time, sorry about that. Thank you very much.

Operator

And our next question comes from Donna Halverstadt with Goldman Sachs. Your line is open.

Donna Halverstadt – Goldman Sachs

Thank you, my question is already asked.

Operator

And our next question comes from Eric Berg with Barclays Capital. Your line is open.

Eric Berg – Barclays Capital

Pat, I was hoping we could build on some of your responses to the earlier questions. First, in response to I think Jeff’s question, are you saying that on the longer duration term policy, say 30-year term or 20-year term that the rate of increase in premium that the customer suddenly, maybe not suddenly but let’s just say faces at the end of the level period is less pronounced than is the case in the 10-year and that therefore the 10-year policy is much more likely to lapse than the 20-year or 30-year term at the end of the level period. Is that what you’re saying?

Patrick Kelleher

No, that’s not what I was trying to say Eric. I was trying to say that we recognized that for the longer duration product the premium increase will be much more pronounced. Therefore the expected lapse is closer to a 100% and there is, I’ll say less room for margin of error in estimating the persistency beyond the end of the level premium period.

Eric Berg – Barclays Capital

So, okay thank you. So it’s the other way from what I said; very clear now. Since you didn’t get it right to a certain degree on a certain code of policy, the 10-year level premium issued at the end of the prior decade, why won’t then these other policies likely face similar issues, oppose similar challenges for you?

Patrick Kelleher

I think they will pose the same challenges, I’m just saying that for the longer duration policies because you expect lapse rates closer to 100% because the premium increases so dramatic. There shouldn’t be much variation between the experience and the expected result. In the case of the 10-year term product, there was more margin for error but we have adjusted as we have seen experience emerge.

Eric Berg – Barclays Capital

Okay and then just a couple of questions; one narrow, one broad for Kevin. I think somewhere in your prepared remarks either Kevin or Mike were saying that you expect something about 8 points in the second half of the year in delinquencies. I just want to make sure I understand exactly what you’re referencing here. Is that 8 percentage point increase in the loss ratio year-over-year, 8 percentage points, 8%, are we talking sequentially year-over-year? I just want to make it absolutely clear on what you mean. Then third and finally, I’d love to hear from Kevin on his observations on sort of what would be the main factors in his mind going forward that is going to drive business back to the private sector from the FHA. I know Mike provided an excellent introduction, I’d love to hear some additional comments from Kevin. Thank you.

Patrick Kelleher

Eric, first of all your question about the 8%; what we said there is our historical experience over time to include the recent experience over the last few years through this difficult environment is that historically we’ve generally had an 8% average increase in total delinquencies in the third quarter followed by a subsequent increase in the fourth quarter.

Now the way I think about this going forward and had caveated that a bit before is although we’ve had a return to more traditional seasonality where you have declines in the first half of the year and growth in the second half of the year in delinquencies, we are seeing that traditional seasonality somewhat favorably muted in the first half of the year and there’s the potential for that in the back half of the year primarily driven by the fact that we think we burnt through some of these large more troubling books of business. So that’s the answer to your first question. Is that helpful?

Eric Berg – Barclays Capital

Yes, so in other words, we’re talking about number of delinquencies and we’re saying that if you had a 100 –

Patrick Kelleher

If we had a 100, it would have gone up 8.

Eric Berg – Barclays Capital

Very good, yes that’s clear then.

Patrick Kelleher

Turning to the other question, I really think there are four things we believe will bring back a healthy private mortgage insurance market and help us continue to shift business away from the FHA. The first of those is continued enhancement to the FHAs risk management and loss mitigation efforts. The second is increased FHA pricing. The third is reduction in overall GSE adverse market delivery fees and loan level pricing and then finally and I think this is a little longer term change is a rollback in FHA loan limits to levels that are really more consistent with traditional government housing policy objectives. So, let me just walk through those really quickly.

The first one again, as it relates to FHA risk management loss mitigation efforts, given the high level of delinquencies and defaults, the FHA is experiencing – I know they are committed and we are very supportive of applying additional resources and flexibility of their overall loss mitigation efforts. I mean they just need more capacity to work through some of these troubling loans.

As it relates to pricing, they have their upfront pricing increase that they’ve already implemented and now the bill has come out of the house side that needs Senate support that’ll allow them to reduce their annual pricing. It’s currently, I believe, at about 55 basis points. This would allow us to significantly raise that annual pricing which would make FHA compared to a conventional mortgage very, very – on much more of an even playing field.

Third, I think the GSEs and their pricing and approach they took going into this period is worth a re-look. It’s time to revisit the market. It’s time to revisit their pricing. The markets have stabilized materially in particular their adverse market delivery fees I think are worthy of a revisit and their loan level pricing. So, if those re-pricing efforts are undertaken, it would do a lot to help bring back the markets to the conventional space into private capital.

Then finally, the fourth I mentioned was loan limits. And if you recall, the FHAs loan limits were raised along with the GSEs back at the beginning of this cycle and not only were they raised but in proportion to the GSEs loan limits, there’s a lot of overlap in the two markets that historically didn’t exist. So as I think about it, the government and the tax payers are now supporting loans, they’re up to over $700,000 and I don’t think that’s what the FHA was originally designed to do. I think they’d like to find a way to start to walk back away from that and allow private capital that’s waiting to support those type of loans and that type of insurance to do what private capital does best.

Operator

Ladies and gentlemen, this concludes Genworth’s financial second quarter earnings conference call. Thank you for your participation. At this time the call will end.

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Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

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Source: Genworth Financial, Inc. Q2 2010 Earnings Call Transcript
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