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Risks Relating to Our Business
−Removed: • If we are unable to continue to meet the requirements mandated by PMIERs, the GSE Restrictions and any additional restrictions imposed on us by the GSEs, we may not be eligible to write new insurance on loans acquired by the GSEs, which would have a material adverse effect on our business, results of operations and financial condition.
−Removed: • A deterioration in economic conditions, a severe recession or a decline in home prices, all of which could be driven by many potential factors, including inflation, may adversely affect our loss experience.
−Removed: • COVID-19 has and could continue to adversely impact our business, results of operations and financial condition.
+Added: • If we are unable to continue to meet the requirements mandated by PMIERs, or any additional restrictions which may be imposed on us by the GSEs, we may not be eligible to write new insurance on loans acquired by the GSEs, which would have a material adverse effect on our business, results of operations and financial condition.
+Added: • A deterioration in economic conditions, a severe recession or a decline in home prices may adversely affect our loss experience.
+Added: • The longer loans remain delinquent in our inventory, including as a result of COVID-19 related policies, the greater the likelihood that claim severity increases.
• When we are notified that an insured loan is in default, we establish loss reserves based on management’s estimate of claim rates and claim sizes, which are subject to uncertainties and are based on assumptions about certain estimation parameters that may be volatile.
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• Our risk management programs may not be effective in identifying or adequate in controlling or mitigating the risks we face.
−Removed: • The extent of the benefits we realize from loss mitigation actions or programs in the future may be limited compared to years past.
• Interest rates and changes in rates, including changes in monetary policy to combat inflation, could materially adversely affect our business, results of operations and financial condition.
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• Adverse rating agency actions may result in a loss of business and adversely affect our business, results of operations and financial condition.
−Removed: • We compete with government-owned enterprises and GSEs, and this may put us at a competitive disadvantage on pricing and other terms and conditions.
−Removed: • Our valuation of fixed maturity securities uses methodologies, estimations and assumptions that are subject to change and differing interpretations that could result in changes to investment valuations that may materially adversely affect our business, results of operations and financial condition.
+Added: • If we are unable to effectively manage risks in our investment portfolio, it could adversely affect our business, results of operations and financial condition.
• If servicers fail to adhere to appropriate servicing standards or experience disruptions to their businesses, our losses could increase.
• Our delegated underwriting program may subject our mortgage insurance business to unanticipated claims.
−Removed: • Potential liabilities in connection with our contract underwriting services could have a material adverse effect on our business, results of operations and financial condition.
• The premiums we agree to charge for our mortgage insurance coverage may not adequately compensate us for the risks and costs associated with the coverage we provide.
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• Inability to maintain sufficient regulatory capital could result in restrictions or prohibitions on our doing business or impact our financial strength ratings which could have a material adverse impact on our business, results of operations and financial condition.
−Removed: • Changes in regulations that adversely affect the mortgage insurance markets in which we operate could affect our operations significantly and could reduce the demand for mortgage insurance.
−Removed: Risks Relating to Our Continuing Relationship with Our Parent
−Removed: • Our Parent has the ability to exert significant influence over us and our corporate decisions.
−Removed: • The terms of our arrangements with our Parent may be more favorable than we will be able to obtain from an unaffiliated third party.
−Removed: • We could be affected by issues affecting our Parent in a way that could materially and adversely affect our business, financial condition, liquidity and prospects.
+Added: • Changes in regulations that adversely affect the insurance markets in which we operate could affect our operations significantly and could reduce the demand for our products.
+Added: Risks Relating to Our Continuing Relationship with Genworth
+Added: • Genworth has the ability to exert significant influence over us and our corporate decisions.
+Added: • The terms of our arrangements with Genworth may be more favorable than we will be able to obtain from an unaffiliated third party.
+Added: • We could be affected by issues affecting Genworth in a way that could materially and adversely affect our business, financial condition, liquidity and prospects.
+Added: • Genworth’s continued ownership of at least 80% of our common stock may limit our ability to raise additional capital by issuing common stock to third parties.
Risks Relating to Taxation
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federal income taxes owed by the Genworth Consolidated Group for taxable periods in which we are a member of the group.
−Removed: • Our Parent’s continued ownership of at least 80% of our common stock may limit our ability to raise additional capital by issuing common stock to third parties.
−Removed: • If we leave the Genworth Consolidated Group, we may be required to make payments under the Tax Allocation Agreement and potentially pay more income tax in the future.
+Added: • If we leave the Genworth Consolidated Group, we may be required to potentially pay more income tax in the future.
General Risk Factors
−Removed: • We are a holding company, and our only material assets are our equity interests in our subsidiaries.
+Added: • We are a holding company, and a large majority of our assets are the equity interests in our subsidiaries.
As a consequence, we depend on the ability of our subsidiaries to pay dividends and make other payments and distributions to us in order to meet our obligations.
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• We may suffer losses in connection with litigation, regulatory proceedings or other actions.
−Removed: • Changes in accounting and reporting standards issued by the Financial Accounting Standards Board or other standard-setting bodies and insurance regulators could materially adversely affect our business, results of operations and financial condition.
• If we are unable to attract, on-board, retain and motivate qualified employees or senior management, our business, results of operations and financial condition may be adversely impacted.
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• Our computer systems may fail or be compromised, and unanticipated problems could materially adversely impact our disaster recovery systems and business continuity plans, which could damage our reputation, impair our ability to conduct business effectively and materially adversely affect our business, results of operations and financial condition.
+Added: • Risks related to emerging and changing technology, including artificial intelligence, could impact our results of operations or financial condition.
• The occurrence of natural or man-made disasters or public health emergencies, including pandemics and disasters caused or exacerbated by climate change, could materially adversely affect our business, results of operations and financial condition.
−Removed: • Provisions of state corporate and state insurance laws, of PMIERs and of our amended and restated certificate of incorporation and our amended and restated bylaws may prevent or delay an acquisition of us, which could decrease the trading price of our common stock.
• Our amended and restated certificate of incorporation contains exclusive forum provisions, which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers or employees.
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Risks Relating to Our Business
−Removed: If we are unable to continue to meet the requirements mandated by PMIERs, the GSE Restrictions and any additional restrictions imposed on us by the GSEs, we may not be eligible to write new insurance on loans acquired by the GSEs, which would have a material adverse effect on our business, results of operations and financial condition.
+Added: If we are unable to continue to meet the requirements mandated by PMIERs, or any additional restrictions which may be imposed on us by the GSEs, we may not be eligible to write new insurance on loans acquired by the GSEs, which would have a material adverse effect on our business, results of operations and financial condition.
In furtherance of Fannie Mae and Freddie Mac’s respective charter requirements, each GSE adopted PMIERs effective December 31, 2015.
−Removed: PMIERs has since been amended on several occasions, including as a result of COVID-19 (as amended, the “PMIERs Amendment”).
+Added: PMIERs has since been amended on several occasions, including as a result of COVID-19.
The PMIERs include financial requirements for mortgage insurers under which a mortgage insurer’s “Available Assets” (generally only the most liquid assets of an insurer) must meet or exceed “Minimum Required Assets” (which are based on an insurer’s RIF and are calculated from tables of factors with several risk dimensions and are subject to a floor amount) and otherwise generally establish when a mortgage insurer is qualified to issue coverage that will be acceptable to the respective GSE for acquisition of high LTV mortgages.
−Removed: The GSEs may amend or waive PMIERs at their discretion, impose additional conditions or restrictions on us and also have broad discretion to interpret PMIERs, which could impact the calculation of our “Available Assets” and/or “Minimum Required Assets.” The amount of capital that EMICO may be required in the future to maintain the “Minimum Required Assets” as defined in PMIERs, and operate our business is dependent upon, among other things:
+Added: The GSEs may amend or waive PMIERs at their discretion, impose additional conditions or restrictions on us and also have broad discretion to interpret PMIERs, any of which could impact the calculation of our “Available Assets” and/or “Minimum Required Assets.” The amount of capital that EMICO may be required in the future to maintain the “Minimum Required Assets” as defined in PMIERs, and operate our business is dependent upon, among other things:
(i) the way PMIERs are applied and interpreted by the GSEs and the FHFA;
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See “—CRT transactions may not be available, affordable or adequate to protect us against losses.” The GSEs may amend or waive PMIERs at their discretion, and also have broad discretion to interpret PMIERs, which could impact the calculation of our “Available Assets” and/or “Minimum Required Assets.”
−Removed: The PMIERs Amendment implemented both permanent and temporary revisions to PMIERs.
−Removed: For loans that became non-performing due to a COVID-19 hardship, PMIERs was amended with respect to each non-performing loan that (i) had an initial missed monthly payment occurring on or after March 1, 2020 and prior to April 1, 2021 or (ii) is subject to a forbearance plan granted in response to a financial hardship related to COVID-19, the terms of which are materially consistent with terms of forbearance plans offered by the GSEs.
−Removed: The risk-based required asset amount factor for a non-performing loan is the greater of (a) the applicable risk-based required asset amount factor for a performing loan were it not delinquent, and (b) the product of a 0.30 multiplier and the applicable risk-based required asset amount factor for a non-performing loan.
−Removed: In the case of (i) above, absent the loan being subject to a forbearance plan described in (ii) above, the 0.30 multiplier will be applicable for no longer than three calendar months beginning with the month in which the loan became a non-performing loan due to having missed two monthly payments.
−Removed: Loans subject to a forbearance plan described in (ii) above include those that are either in a repayment plan or loan modification trial period following the forbearance plan unless reported
−Removed: to the approved insurer that the loan is no longer in such forbearance plan, repayment plan, or loan modification trial period.
−Removed: In addition, the PMIERs Amendment made permanent revisions to the risk-based required asset amount factor for non-performing loans for properties located in future Federal Emergency Management Agency (“FEMA”) Declared Major Disaster Areas eligible for individual assistance.
Our assessment of PMIERs compliance is based on a number of factors, including our understanding of the GSEs’ interpretation of the PMIERs financial requirements.
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Both GSEs reserved the right to periodically review the reinsurance transactions for treatment under PMIERs.
−Removed: If we are unable to continue to meet the requirements mandated by PMIERs, the GSE Restrictions and any additional restrictions imposed on us by the GSEs, whether because the GSEs amend them or the GSEs’ interpretation of the financial requirements requires us to hold amounts of capital that are higher than we have planned or otherwise, we may not be eligible to write new insurance on loans acquired by the GSEs, which would have a material adverse effect on our business, results of operations and financial condition.
−Removed: Additionally, compliance with PMIERs requires us to seek the GSEs’ prior approval before taking many actions, including implementing certain new products or services, entering into inter-company agreements among others.
+Added: If we are unable to continue to meet the requirements mandated by PMIERs, or any additional restrictions which may be imposed on us by the GSEs, whether because the GSEs amend them or the GSEs’
+Added: interpretation of the financial requirements requires us to hold amounts of capital that are higher than we have planned or otherwise, we may not be eligible to write new insurance on loans acquired by the GSEs, which would have a material adverse effect on our business, results of operations and financial condition.
+Added: Additionally, compliance with PMIERs requires us to seek the GSEs’ prior approval before taking many actions, including implementing certain new products or services and entering into inter-company agreements, among others.
PMIERs’ prior approval requirements could prohibit, materially modify or delay us in our intended course of action.
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In September 2020, subsequent to the issuance of our $750 million aggregate principal amount of Senior Notes due 2025, the GSEs imposed certain additional restrictions with respect to capital on our business.
−Removed: In May 2021, in connection with their conditional approval of the consummation of our IPO, the GSEs confirmed the GSE Restrictions will remain in effect until the following collective conditions (the “GSE Conditions”) are met:
−Removed: (i) EMICO obtains a “BBB+”/“Baa1” (or higher) rating from Standard & Poor’s Financial Services, LLC (“Standard & Poor’s”), Moody’s Investor Service, Inc.
−Removed: (“Moody’s”) or Fitch Ratings, Inc.
−Removed: (“Fitch”) for two consecutive quarters and (ii) our Parent achieves a debt leverage ratio (excluding U.S.
−Removed: life business equity) that is less than 25% and a cash coverage ratio that is at least 2.5 for two consecutive quarters.
−Removed: Prior to the satisfaction of the GSE Conditions, the GSE Restrictions require (a) EMICO to maintain 120% of PMIERs Minimum Required Assets through 2022 and 125% thereafter, (b) the Company to retain available liquidity the greater of either 13.5% of outstanding EHI debt or $300 million of its holding company cash that can be drawn down exclusively for Company debt service or to contribute to EMICO to meet its regulatory capital needs including PMIERs, and (c) prior written approval must be received from the GSEs before any additional debt issuance by either EMICO or the Company.
−Removed: In addition, EMICO is not permitted to make any dividends or distributions that would cause the PMIERs Available Assets to fall below the PMIERs Minimum Required Assets percentages set forth in clause (a) above.
−Removed: In addition, in calculating PMIERs Available Assets relative to any dividend or distribution, PMIERs Available Assets shall be calculated consistent with the capital preservation provisions of the PMIERs Amendment, and any amendments thereto.
−Removed: EHI maintained the requisite ratings for two consecutive quarters prior to the end of 2022.
−Removed: In addition, Genworth believes that they achieved their financial metrics for the quarters ended September 30, 2022
−Removed: and December 31, 2022.
−Removed: Once confirmed by the GSEs, EHI will no longer be subject to GSE Restrictions and Conditions.
+Added: In the first quarter of 2023, the GSEs confirmed that these additional restrictions or conditions are no longer applicable to us.
Additional requirements or conditions imposed by the GSEs could limit our operating flexibility and the areas in which we may write new business and may adversely impact our competitive position and our business, the ability of our subsidiaries to pay dividends and our ability to pay down debts.
−Removed: “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Trends and Conditions.”
−Removed: A deterioration in economic conditions, a severe recession or a decline in home prices, all of which could be driven by many potential factors, including inflation, may adversely affect our loss experience.
+Added: A deterioration in economic conditions, a severe recession or a decline in home prices may adversely affect our loss experience.
Losses in our mortgage insurance business generally result from events, such as a borrower’s reduction of income, unemployment, underemployment, divorce, illness, inability to manage credit or a change in interest rate levels or home values, that reduce a borrower’s willingness or ability to continue to make mortgage payments.
Rising unemployment rates and deterioration in economic conditions across the United States or in specific regional economies generally increase the likelihood of borrower defaults and can also adversely affect housing values, which increases our risk of loss.
−Removed: An imbalance in supply and demand, supply-chain disruptions and a tightening labor market have led to 40-year high inflation in the United States.
+Added: Uncertainty in the economy persisted through 2023.
+Added: During 2022, an imbalance in supply and demand, supply-chain disruptions and a tightening labor market led to 40-year high inflation in the United States.
To combat persistent high inflation, the U.S.
−Removed: Federal Reserve tightened monetary policy throughout 2022, which led to the highest interest rates in over a decade and could be a contributing factor on whether the United States goes into a recession in 2023.
−Removed: It is unclear what the ultimate impact will be from the tightening monetary policy implemented by the U.S.
−Removed: Federal Reserve, but it is possible interest rate hikes could result in a slowdown in economic growth or a U.S.
−Removed: Unemployment claims generally have returned to pre-COVID-19 levels, but the labor participation rate continues to be suppressed.
+Added: Federal Reserve tightened monetary policy throughout 2022 and 2023, which has led to elevated interest rates.
+Added: This is coupled with continued geopolitical uncertainty, including with conflicts in Ukraine and the Middle East.
Variability in consumer confidence due in part to high inflation and elevated interest rates, along with developments related to the U.S.
federal debt ceiling, continue to create a backdrop of uncertainty in the overall macroeconomic environment.
+Added: Some economists still predict a recession in 2024.
Economic conditions, including unemployment rates and housing values, may also be adversely affected by the current or anticipated impact of climate change, including any regulations intended to address it.
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Declines in home values typically increase the severity of any claims we may pay.
−Removed: The seasonally adjusted Purchase-Only U.S.
−Removed: Home Price Index of the FHFA, which is based on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac, indicates that home prices increased by 8.2% in November 2022, after increasing by 17.5%, and 11.6% in 2021 and 2020, respectively.
Recent home price appreciation coupled with high interest rates has placed pressure on affordability.
−Removed: We have seen home prices begin to decline in latter half of 2022.
−Removed: Given this steady rise in such home prices from 2016 through 2019 and steep rise in home prices in 2020 and 2021, we could experience a higher frequency and severity of defaults on more recent vintages should home values continue to decline in 2023 or subsequent years.
+Added: Housing supply remains depressed as homeowners are reluctant to sell their house and pay significantly higher mortgage rates for a new one.
+Added: We saw a steady rise in such
+Added: home prices from 2016 through 2019 and steep rise in home prices in 2020 and 2021.
+Added: Following some home price decline in the latter half of 2022, we saw continued home price growth through 2023.
+Added: We could experience a higher frequency and severity of defaults on more recent vintages should home values decline in 2024 or subsequent years.
Any of these events may have a material adverse effect on our business, results of operations and financial condition.
Housing values could also decline due to specific trends that would affect the housing and mortgage markets, such as changes in supply or demand for homes, changes in homebuyers’ expectations for potential future home value appreciation, increased restrictions or costs for obtaining mortgage credit due to tightened underwriting standards, tax policy, regulatory developments, higher interest rates and customers’ liquidity issues.
−Removed: Declining housing values may impact the effectiveness of our loss
−Removed: management programs, eroding the value of mortgage collateral and reducing the likelihood that properties with defaulted mortgages can be sold for an amount sufficient to offset unpaid principal and interest losses.
+Added: Declining housing values may impact the effectiveness of our loss management programs, eroding the value of mortgage collateral and reducing the likelihood that properties with defaulted mortgages can be sold for an amount sufficient to offset unpaid principal and interest losses.
The amount of the loss we could suffer depends in part on whether the home of a borrower who defaults on a mortgage can be sold for an amount that will cover the unpaid principal balance, interest and the expenses of the sale.
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These economic slowdowns and the resulting impact on the housing market drove high levels of delinquencies.
−Removed: Mortgage forbearance programs and any delays in foreclosure processes could cause our losses to increase as expenses accrue for longer periods or if the value of foreclosed homes further decline during such delays;
−Removed: however, for new loans originated and insured on or after October 1, 2014, our mortgage insurance policies limit the number of months of unpaid interest and associated expenses that are included in the mortgage insurance claim amount to a maximum of 36 months.
+Added: The longer loans remain delinquent in our inventory, including as a result of COVID-19 related policies, the greater the likelihood that claim severity increases.
+Added: Mortgage forbearance programs and any delays in foreclosure processes could cause our losses to increase as expenses accrue for longer periods or if the value of foreclosed homes declines during such delays.
If we experience an increase in the number or the cost of delinquencies or losses that are higher than expected, including as a result of borrowers’ exit from forbearance programs upon such borrowers reaching the maximum term of forbearance, our business, results of operations and financial condition could be adversely affected.
−Removed: COVID-19 has and could continue to adversely impact our business, results of operations and financial condition.
−Removed: The financial markets, both globally and within the United States continue to feel the aftereffects of COVID-19.
−Removed: While most pandemic-related safety measures (stay at home orders, travel restrictions, business closures, etc.) have ended, the markets are still feeling the impact of inflation and home price appreciation.
−Removed: FEMA has not rescinded the state of emergency status associated with COVID-19 in any of the domestic states or jurisdictions.
−Removed: During 2020 and 2021, the federal government offered forbearance options for borrowers impacted by COVID-19.
−Removed: Many of these programs are still in effect, which could serve to delay emergence of foreclosures on current delinquencies.
−Removed: Any delays in foreclosure, could cause our losses to increase as interest and expenses accrue for longer periods or if the value of foreclosed homes decline during such foreclosure delays.
+Added: In response to the COVID-19 pandemic, the federal government and the GSEs offered programs to support borrowers through economic hardship including mortgage payment forbearance options and foreclosure and eviction moratoriums.
+Added: The pandemic initially resulted in a material increase in new defaults as borrowers failed to make timely payments on their mortgages, primarily as a result of these forbearance programs.
+Added: These delinquencies have largely cured at rates favorable to our expectations.
+Added: However, there is still uncertainty as to the timing and ultimate severity of the COVID-19-related delinquencies that remain.
+Added: Though the ability to take advantage of COVID-19-specific forbearance for new delinquencies ended in 2023, we have seen limited claims emerge from this population of loans.
+Added: Further, in March 2023, the GSEs announced new loss mitigation programs that would allow for six-month payment deferrals for borrowers facing financial hardship, including hardship unrelated to COVID-19.
+Added: As a result of the continued availability of forbearance and lack of foreclosure experience, the impact this will have on our business, results of operations and financial condition remains uncertain.
If we experience an increase in claim severity resulting in claim amounts that are higher than expected, our business, results of operations and financial condition could be adversely affected.
−Removed: In addition, the expiration or discontinuation of any governmental or GSE forbearance or foreclosure relief program could further exacerbate the financial condition of borrowers on loans we insure or economic conditions generally, which could have an adverse effect on our business, results of operations and financial condition.
−Removed: While we have seen cure experience on COVID-19-related delinquencies that is above our expectations, uncertainty still remains as to the timing and ultimate severity of COVID-19-related delinquencies as a result of the continued availability of forbearance and lack of foreclosure experience and the impact it will have on our business, results of operations and financial condition.
−Removed: COVID-19 could continue to impact our business, subjecting us to the following risks:
−Removed: • The pandemic initially resulted in a material increase in new defaults as borrowers failed to make timely payments on their mortgages, primarily as a result of unemployment and mortgage forbearance programs that allow borrowers to defer mortgage payments.
−Removed: While many of these delinquencies have cured, our delinquencies in our most aged buckets remain elevated compared to pre-pandemic levels.
−Removed: • As a result of COVID-19-related relief programs, many loans in our delinquency inventory have entered forbearance plans and we anticipate that defaults related to the pandemic, if not cured or otherwise substantially mitigated, could remain in our defaulted loan inventory for a protracted period of time, potentially resulting in higher levels of claim severity for loans that ultimately result in a claim.
−Removed: Historically, forbearance plans such as those put in place as a result of COVID-19
−Removed: have reduced the incidence of our losses on affected loans.
−Removed: However, given the uncertainty around the long-term impact of COVID-19, it is difficult to predict whether a loan’s delinquency will result in a cure or claim when its forbearance plan ends.
−Removed: The severity of losses associated with loans whose delinquencies do not cure will depend on the duration of the forbearance and economic conditions at that time and our current estimates about the number of delinquencies for which we will receive claims, and the amount, or severity, of each claim, could increase or decrease.
−Removed: For new loans originated and insured on or after October 1, 2014, our mortgage insurance policies limit the number of months of unpaid interest and associated expenses that are included in the mortgage insurance claim amount to a maximum of 36 months.
When we are notified that an insured loan is in default, we establish loss reserves based on management’s estimate of claim rates and claim sizes, which are subject to uncertainties and are based on assumptions about certain estimation parameters that may be volatile.
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Our practice, consistent with industry practice and SAP applicable to insurance companies, is to establish loss reserves in our consolidated U.S.
−Removed: GAAP financial statements based on claim rates and severity for loans that servicers have reported to us as being in default, which is typically after the second missed payment.
+Added: GAAP financial statements based on claim rates and severity for loans that servicers have reported to us as being in default, which is typically after the second
+Added: missed payment.
We also establish incurred but not reported (“IBNR”) reserves for estimated losses incurred on loans in default that have not yet been reported to us by servicers.
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Our results of operations, financial condition and liquidity could be adversely impacted if, and to the extent, our actual losses are greater than our loss and IBNR reserves.
−Removed: We saw a significant increase in new delinquencies from borrower forbearance since the onset of COVID-19.
−Removed: While a large portion of these delinquencies have cured at higher levels than our expectations, reserves recorded related to borrower forbearance rely on a high degree of estimation and assumptions that lack comparable historic data.
−Removed: Therefore, it is possible we could have higher contractual obligations related to these loss reserves if these delinquencies do not perform as we expect.
−Removed: The impact of COVID-19 on the number of delinquencies, our losses incurred and loss reserves will be influenced by
−Removed: various factors, including those discussed in our risk factor titled “—COVID-19 has and could continue to adversely impact our business, results of operations and financial condition.”
Further, consistent with industry practice, our reserving method does not take account of losses that could occur from insured loans that are not in default.
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If we conclude that our reserves are insufficient to cover actual or expected claim payments as a result of changes in experience, assumptions or otherwise, we would be required to increase our reserves and incur charges in the period in which we make the determination, which could materially adversely affect our results of operations, financial condition and liquidity.
−Removed: For additional information on reserves, including the financial impact of some of these risks, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates.”
If the models used in our business are inaccurate or there are differences and/or variability in loss development compared to our model estimates and actuarial assumptions, it could have a material adverse effect on our business, results of operations and financial condition.
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These models rely on estimates and projections that are inherently uncertain, may use data and/or assumptions that do not adequately reflect recent experience and relevant industry data, and may not operate as intended.
−Removed: The models require accurate data, including financial statements, credit reports or other financial information, and reliance on such data could result in unexpected losses, reputational damage or other effects that could have a material adverse effect on our business, results of operations and financial condition.
+Added: The models require accurate data, including financial statements, credit reports or other financial information, and reliance on inaccurate data could result in unexpected losses, reputational damage or other effects that could have a material adverse effect on our business, results of operations and financial condition.
+Added: For example, as a
+Added: result of the COVID-19 State of Emergency, there was a suspension on reporting of certain adverse credit events to credit reporting bureaus as a result of the CARES Act, and many servicers delayed reporting further until they had further guidance from the GSEs.
+Added: This could cause current credit reporting metrics in our models to not be representative of borrowers’ current credit.
+Added: Additionally, there are proposals to change the credit score landscape including the implementation of FICO 10T, changes to credit modeling from the GSEs and the elimination of medical debt from credit reporting.
+Added: These proposals could limit comparability to historical data used in our models and lead to inaccurate results.
In addition, if any of our models contain programming or other errors, are ineffective, use data provided by third parties that is incorrect, or if we are unable to obtain relevant data from third parties, our processes could be negatively affected.
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During or after the implementation of these enhancements, we may discover errors or other deficiencies in existing models, assumptions and/or methodologies.
−Removed: For example, in the future we may either use additional, more granular information we expect to receive through enhancements in our reserving model or we may employ more simplified reserving approaches, and either approach may
−Removed: cause us to refine or otherwise change existing assumptions and/or methodologies and thus associated product pricing and reserve levels, which in turn could have a material adverse effect on our business, results of operations and financial condition.
+Added: For example, in the future we may either use additional or more granular information we expect to receive through enhancements in our reserving model or we may employ more simplified reserving approaches.
+Added: Either approach may cause us to refine or otherwise change existing assumptions and/or methodologies and thus associated product pricing and reserve levels, which in turn could have a material adverse effect on our business, results of operations and financial condition.
Competition within the mortgage insurance industry could result in the loss of market share, loss of customers, lower premiums, wider credit guidelines and other changes that could have a material adverse effect on our business, results of operations and financial condition.
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There are currently six active mortgage insurers in the United States, including us.
−Removed: Competition on price remains highly competitive.
+Added: Price remains a leading competitive driver.
We monitor various competitive, risk and economic factors while seeking to balance both profitability and market share considerations in developing our pricing strategies.
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As opposed to traditional rate card pricing, mortgage insurance premium rates in these risk-based plans are visible only to customers and cannot be seen by competitors.
−Removed: In addition, our customers use of technology solutions to deliver rate quotes from mortgage insurers has placed an additional emphasis on price, including emerging tools that provide the ability to automate the selection of a mortgage insurance provider based on price alone.
+Added: In addition, our customers use of technology solutions to deliver rate quotes from mortgage insurers has
+Added: placed an additional emphasis on price, including emerging tools that provide the ability to automate the selection of a mortgage insurance provider based on price alone.
These factors may result in mortgage insurance companies responding aggressively resulting in further lowering of premiums.
−Removed: However, risk-based plans are designed to also allow mortgage insurers to price risk more effectively and provide the ability to manage the credit risk and geographic makeup of their NIW.
+Added: However, risk-based plans are designed to also allow mortgage insurers to price risk more effectively and provide the ability to manage the credit risk, mix of refinance versus purchase business and geographic makeup of their NIW.
In addition, not all of our mortgage insurance products have the same return on capital profile.
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The requirements and practices of the GSEs impact the operating results and financial performance of GSE-approved mortgage insurers, including us .
−Removed: Changes in the charters or business practices of either Fannie Mae or Freddie Mac could materially reduce the number of mortgages they purchase that are
−Removed: insured by us and consequently diminish our business valuation.
+Added: Changes in the charters or business practices of either Fannie Mae or Freddie Mac could materially reduce the number of mortgages they purchase that are insured by us and consequently diminish our business valuation.
The GSEs could be directed to make such changes by the FHFA, which was appointed as their conservator in September 2008 and has the authority to control and direct the operations of the GSEs.
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Today, the FHFA and the GSEs are focused on increasing the accessibility and affordability of homeownership, in particular for low- and moderate-income borrowers and underserved minority communities.
−Removed: Among other things, FHFA (i) directed the GSEs to submit Equitable Housing Plans to identify and address barriers to sustainable housing opportunities, including the GSEs' goals and action plans to advance equity in housing finance for the next three years;
−Removed: (ii) lifted the 50 bps adverse market fee applicable to most refinance loans;
+Added: Among other things, FHFA (i) directed the GSEs to submit Equitable Housing Plans to identify and address barriers to sustainable housing opportunities, including the GSEs' goals and action
+Added: plans to advance equity in housing finance;
+Added: (ii) lifted the 50 basis point adverse market fee applicable to most refinance loans;
(iii) directed the GSEs to expand their streamlined refinance programs;
1 unchanged sentence
The FHFA announced the release of Fannie Mae’s and Freddie Mac’s respective Equitable Housing Finance Plans in 2022.
−Removed: The proposals included many initiatives, including language discussing potential changes that could impact the mortgage insurance industry.
−Removed: These initiatives remain preliminary, and we will continue to work with the FHFA, the GSEs, and the broader housing finance industry as these proposals develop and to the extent they are implemented.
−Removed: We cannot predict whether or when any new practices or programs will be implemented under the GSEs’ Equitable Housing Finance Plans or other affordability initiatives, and if so in what form, nor can we predict what effect, if any, such practices or programs may have on our business, results of operations or financial condition.
+Added: The plans included many initiatives, including language discussing potential changes that could impact the mortgage insurance industry.
+Added: These initiatives are under-way, and we will continue to work with the FHFA, the GSEs, and the broader housing finance industry as initiatives are implemented.
As part of the process to potentially end the conservatorships of the GSEs, on December 17, 2020, the FHFA promulgated a final rule imposing a new capital framework on the GSEs, including risk-based and leverage capital requirements and capital buffers in excess of regulatory minimums that can be drawn down in periods of financial stress (the “Enterprise Capital Framework”).
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This final rule could accelerate the recent diversification of the GSE’s risk transfer programs to encompass a broader array of instruments beyond private mortgage insurance, which could adversely impact our business.
−Removed: Also, in preparation for the end of the FHFA’s conservatorship of the GSEs, the FHFA promulgated a final rule on May 4, 2021, effective July 6, 2021, that requires the GSEs to develop plans that would facilitate their
−Removed: rapid and orderly resolution in the event FHFA is appointed as their receiver.
−Removed: In 2021, Mark Calabria, the former director of the FHFA, resigned and Sandra Thompson was subsequently appointed.
−Removed: The FHFA’s new leadership may result in a delay of the GSEs’ exit from conservatorship and in changes to the FHFA’s policies, including, but not limited to, (a) possible delays in the implementation of or the reworking of the Enterprise Capital Framework, (b) adjustments to the GSEs’ loan-level pricing adjustments that could make private mortgage insurance less competitive or (c) revisions to the PSPAs, which could have a material adverse impact on our business, results of operations and financial condition.
+Added: Also, in preparation for the end of the FHFA’s conservatorship of the GSEs, the FHFA promulgated a final rule on May 4, 2021, effective July 6, 2021, that requires the GSEs to develop plans that would facilitate their rapid and orderly resolution in the event FHFA is appointed as their receiver.
On January 14, 2021, the FHFA and the Treasury Department agreed to amend the PSPAs between the Treasury Department and each of the GSEs to increase the amount of capital each GSE may retain.
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In recent years, the FHFA has set goals for the GSEs to transfer significant portions of the GSEs’ mortgage credit risk to the private sector;
−Removed: however, under the FHFA’s new leadership, the timing of these goals could change.
−Removed: This mandate builds upon the goals set in each of the last five years for the GSEs to increase the role of private capital by experimenting with different forms of transactions and structures.
−Removed: We have participated in these CRT programs developed by Fannie Mae and Freddie Mac on a limited basis.
+Added: however, the timing of these goals could change.
+Added: builds upon the goals set in recent years for the GSEs to increase the role of private capital by experimenting with different forms of transactions and structures.
+Added: We participate in these CRT programs developed by Fannie Mae and Freddie Mac.
The GSEs have in the past piloted and may in the future attempt to launch alternative products or transactions that compete with private mortgage insurance.
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The loss of business in general or the specific loss of more profitable business could have a material adverse effect on our business, results of operations and financial condition.
+Added: Additionally, we compete with the FHA and the VA, as well as certain local-and state-level housing finance agencies.
+Added: Separately, the GSEs compete with us through certain of their risk-sharing insurance programs.
+Added: Those competitors may establish pricing terms and business practices that may be influenced by motives such as advancing social housing policy or stabilizing the mortgage lending industry.
+Added: Those motives may not be consistent with maximizing return on capital or other profitability measures.
+Added: addition, those governmental enterprises typically do not have the same capital requirements or costs of capital that we and other mortgage insurance companies have and therefore may have financial flexibility in their pricing and capacity that could put us at a competitive disadvantage.
+Added: In the event that a government-owned enterprise or GSE in one of our markets determines to change prices significantly or alter the terms and conditions of its mortgage insurance or other credit enhancement products in furtherance of social or other goals rather than a profit or risk management motive, we may be unable to compete in that market effectively.
+Added: This could have a material adverse effect on our business, results of operations and financial condition.
+Added: See “—Changes to the charters or practices of the GSEs, including actions or decisions to decrease or discontinue the use of mortgage insurance, could adversely affect our business, results of operations and financial condition.”
Changes in the composition of our business or undue concentration by customer or geographic region may adversely affect us by increasing our exposure to loss of business or adverse performance of a small segment of our portfolio.
−Removed: Our largest customer accounted for approximately 18% of our total NIW in 2022 and our top five customers generated approximately 30% of our NIW in 2022.
−Removed: Additionally, no customer had earned premiums that accounted for more than 10% of our total revenues for 2022.
+Added: In 2023, our largest customer accounted for approximately 19% of our total NIW and 10% of total revenues.
+Added: Our top five customers generated approximately 33% of our NIW in 2023.
Changes in our ability to attract and retain a diverse customer base and avoid undue concentration by geographic region or customer may adversely affect our business, results of operations and financial condition.
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In addition, certain geographic regions have experienced local recessions, falling home prices and rising unemployment based on economic conditions that did not impact, or impacted to a lesser degree, other geographic regions or the overall United States economy.
−Removed: See “—A deterioration in economic conditions, a severe recession or a decline in home prices , all of which could be driven by many potential factors, including inflation, may adversely affect our loss experience .
Geographic concentration in our mortgage portfolio therefore increases our exposure to losses due to localized economic conditions.
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If we do not adequately maintain the geographic diversity of our portfolio, we could be exposed to greater losses.
−Removed: Also, customer concentration may adversely affect our financial condition if a significant customer chooses to increase its use of other mortgage insurers, merges with a competitor or exits the mortgage
−Removed: finance business, chooses alternatives to mortgage insurance, or experiences a decrease in their business.
+Added: Also, customer concentration may adversely affect our financial condition if a significant customer chooses to increase its use of other mortgage insurers, merges with a competitor or exits the mortgage finance business, chooses alternatives to mortgage insurance, or experiences a decrease in their business.
Our customers place insurance with us directly on loans they originate and indirectly through purchases of loans that already have our mortgage insurance coverage.
2 unchanged sentences
We cannot be certain that any loss of business from significant customers, or any single customer, would be replaced by business from other customers, existing or new.
−Removed: As a result of market conditions or changed regulatory requirements, our lending customers may decide to write business only with a limited number of mortgage insurers or only with certain mortgage insurers, based on their views with respect to an insurer’s pricing, service levels, underwriting guidelines, loss mitigation practices, financial strength, ratings, mechanisms of credit enhancements or other factors, including our customers’ perceptions of the strength of our Parent and its other subsidiaries.
−Removed: See “—We could be affected by issues affecting our Parent in a way that could materially and adversely affect our business, financial condition, liquidity and prospects.”
+Added: As a result of market conditions or changed regulatory requirements, our lending customers may decide to write business only with a limited number of mortgage insurers or only with certain mortgage insurers, based on their views with respect to an insurer’s pricing, service levels, underwriting guidelines, loss mitigation practices, financial strength, ratings, mechanisms of credit enhancements or other factors.
Our risk management programs may not be effective in identifying or adequate in controlling or mitigating the risks we face.
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Other risk management methods are based on our evaluation of information regarding markets, customers and customer behavior, macroeconomic and environmental conditions, catastrophic occurrences and potential changing paradigms that are publicly available or otherwise accessible to us.
−Removed: See “Business—Risk Management.” This collective information may not always be accurate, complete, up to date or properly considered, interpreted or evaluated in our analyses.
+Added: This collective information may not always be accurate, complete, up to date or properly considered, interpreted or evaluated in our analyses.
Moreover, the models and other parts of our risk management programs we rely on in managing various aspects of our business may prove to be less predictive than we expect.
−Removed: See “—If the models used in our business are inaccurate or there are differences and/or variability in loss development compared to our model estimates and actuarial assumptions, it could have a material adverse effect on our business, results of operations and financial condition.” The limitations of our models and other parts of our risk management programs may be material and could lead us to make wrong or sub-optimal decisions in managing our risk and other aspects of our business, either of which could have a material adverse effect on our business, results of operations and financial condition.
Management of operational, legal, franchise and regulatory risks requires, among other things, methods to appropriately identify all such key risks, systems to record incidents and policies and procedures designed to mitigate, detect, record and address all such risks and occurrences.
Management of technology risks requires methods to ensure our systems, processes and people are maintaining the confidentiality, availability and integrity of our information, ensuring technology is enabling our overall strategy and our ability to comply with applicable laws and regulations.
−Removed: If our risk management framework does not effectively identify, measure and control our risks, we could suffer unexpected losses or be
−Removed: adversely affected, which could have a material adverse effect on our business, results of operations and financial condition.
−Removed: We employ various strategies, including CRT transactions, which include traditional reinsurance and the issuance of ILNs, to mitigate financial risks inherent in our business and operations.
−Removed: Such transactions may not always be available to us, but when they are, they subject us to counterparty credit risk.
−Removed: The execution of these strategies also introduces operational risks and considerations.
−Removed: Developing effective strategies for dealing with these risks is a complex process, and no strategy can fully insulate us from those financial risks.
−Removed: See “—CRT transactions may not be available, affordable or adequate to protect us against losses.”
+Added: If our risk management framework does not effectively identify, measure and control our risks, we could suffer unexpected losses or be adversely affected, which could have a material adverse effect on our business, results of operations and financial condition.
We may choose to retain certain levels of financial and/or non-financial risk, even when it is possible to mitigate these risks.
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Our performance is highly dependent on our ability to manage risks that arise from day-to-day business activities, including underwriting, claims processing, administration and servicing, execution of our investment strategy, actuarial estimates and calculations, financial and tax reporting and other activities, many of which are very complex.
+Added: This also includes risks that may arise from diversification efforts and new business ventures, which may expose us to new risks that we do not understand or cannot fully mitigate.
We seek to monitor and control our exposure to risks arising out of or related to these activities through a variety of internal controls, management review processes and other mechanisms.
−Removed: However, the occurrence of unforeseen events, such as COVID-19, or the occurrence of events of a greater magnitude than expected, including those arising from inadequate or ineffective controls, a failure in processes, procedures or systems implemented by us or a failure on the part of employees upon which we rely, may have a material adverse effect on our business, results of operations and financial condition.
+Added: However, the occurrence of unforeseen events, or the occurrence of events of a greater magnitude than expected, including those arising from inadequate or ineffective controls, a failure in processes, procedures or systems implemented by us or a failure on the part of employees upon which we rely, may have a material adverse effect on our business, results of operations and financial condition.
In addition, a failure from a third-party vendor providing agreed upon products or services to the specifications required, may pose a risk to our business.
1 unchanged sentence
Although we employ controls and procedures designed to monitor the business decisions and activities of these individuals to prevent us from engaging in inappropriate activities, excessive risk taking, fraud or security breaches, these individuals may undertake these activities or risks regardless of our controls and procedures and such controls and procedures may fail to detect all such decisions and activities.
−Removed: Our compensation policies and procedures are reviewed by us as part of our overall risk management program, but it is possible that such compensation policies and practices could inadvertently incentivize excessive or inappropriate risk taking.
+Added: Our compensation policies and procedures are reviewed by us as part of our overall risk management program, but it is possible that such compensation policies and practices could
+Added: inadvertently incentivize excessive or inappropriate risk taking.
If these individuals take excessive or inappropriate risks, those risks could harm our reputation and have a material adverse effect on our business, results of operations and financial condition.
−Removed: The extent of the benefits we realize from loss mitigation actions or programs in the future may be limited compared to years past.
−Removed: As part of our loss mitigation efforts, we periodically investigate insured loans and evaluate the related servicing to ensure compliance with applicable guidelines and to detect possible fraud or misrepresentation.
−Removed: As a result, we have rescinded, and may in the future rescind, coverage on loans that do not meet our guidelines.
−Removed: In the past, we recognized significant benefits from taking action on these investigations and evaluations under our master policies.
−Removed: However, the PMIERs rescission relief principles, which have been incorporated into our mortgage insurance policies since 2014, limit our rescission rights for underwriting defects, misrepresentation, and in other circumstances, such as in cases where the borrower makes a certain number of timely mortgage payments.
−Removed: Therefore, we may not recognize the same level of future benefits from rescission actions as we have in years prior to 2014, potentially resulting in higher losses than under our older master policies.
−Removed: In addition, our rescission rights
−Removed: and certain other rights have temporarily become more limited due to accommodations we have made in connection with COVID-19.
−Removed: The mortgage finance industry (with government support) has adopted various programs to modify delinquent loans to make them more affordable to borrowers with the goal of reducing the number of foreclosures.
−Removed: Our master policies contain covenants that require cooperation and loss mitigation by the insured.
−Removed: The effect on us of a loan modification depends on re-default rates, which can be affected by factors such as changes in home values and unemployment.
−Removed: Our estimates of the number of loans qualifying for modification programs is based on management’s judgment as informed by past experience and current market conditions but are inherently uncertain.
−Removed: We cannot predict what the actual volume of loan modifications will be or the ultimate re-default rate, and therefore, we cannot be certain whether these efforts will provide material benefits to us.
Interest rates and changes in rates, including changes in monetary policy to combat inflation, could materially adversely affect our business, results of operations and financial condition.
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Higher interest rates can lead to an increase in defaults as borrowers at risk of default will find it harder to qualify for a replacement loan.
−Removed: The significant increases in mortgage rates during 2022, driven by monetary and fiscal policies designed at combating continued inflationary pressures, caused a decline in the mortgage insurance market, which reduced our NIW for the year.
+Added: The significant increases in mortgage rates during 2022 and 2023, driven, in part, by monetary and fiscal policies designed at combating continued inflationary pressures, caused a decline in the mortgage insurance market, which reduced our NIW for the year.
This has effectively eliminated the refinance market and affordability pressures from both higher rates and recent home price appreciation have strained the purchase market as well.
This impact is offset by higher persistency on our existing insured loans since the prevailing market interest rate is above the loan interest rate of substantially all of our portfolio.
−Removed: We expect this trend to continue into 2023 as rates remain elevated, but the ultimate impact on our premium and future NIW is difficult to predict.
+Added: We expect this trend to continue into early 2024 as rates remain elevated, but the ultimate impact on our premium and future NIW is difficult to predict.
Declining interest rates historically increase the rate at which borrowers refinance their existing mortgages, thereby resulting in cancellations of the mortgage insurance covering existing loans.
1 unchanged sentence
In addition, during 2020 and 2021, as a result of the low interest rate environment, our business experienced a decline in primary persistency rates.
−Removed: Lower primary persistency rates result in reduced IIF and earned premiums, which could have a significant adverse impact on our results of operations.
+Added: Lower primary persistency rates can result in reduced IIF and earned premiums, which could have a significant adverse impact on our results of operations.
In addition, interest rate fluctuations could also have an adverse effect on the results of our investment portfolio.
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If we need additional capital in the future, we may not be able to fund or raise the required capital as and when required and the amount of capital required may be higher than anticipated.
−Removed: Our inability to fund or raise the capital required in the anticipated timeframes and on the anticipated terms, could have a material adverse impact on our business, results of operations and financial condition, including causing us to reduce our business levels or be subject to a variety of regulatory actions.
−Removed: As of December 31, 2022, we met the PMIERs financial and operational requirements.
−Removed: As of December 31, 2022, we had estimated available assets of $5,206 million against $3,156 million net required assets under PMIERs compared to available assets of $5,077 million against $3,074 million net required assets as of December 31, 2021.
−Removed: The sufficiency ratio as of December 31, 2022 was 165% or $2,050 million above the published PMIERs requirements, compared to 165% or $2,003 million above the published PMIERs requirements as of December 31, 2021.
−Removed: For information with respect to higher PMIERs sufficiency ratios in future periods as a result of the GSE Restrictions, see “— If we are unable to continue to meet the requirements mandated by PMIERs, the GSE Restrictions and any additional restrictions imposed on us by the GSEs, we may not be eligible to write new insurance on loans acquired by the GSEs, which would have a material adverse effect on our business, results of operations and financial condition.” During 2020 and 2021, the GSEs issued several amendments to PMIERs including extension of reduced capital factors for COVID-19 non-performing loans.
−Removed: In order to continue to provide a prudent level of financial flexibility in connection with the current PMIERs capital requirements, and given the dynamic nature of asset and liability valuations, requirement changes over time and recent conditions and restrictions imposed on us by the GSEs, we may be required to execute future capital transactions, including additional CRT transactions and other transactions with third parties to provide additional capital.
−Removed: However, the implementation of any further CRT transactions or other transactions with third parties to provide additional capital depends on a number of factors, including but not limited to:
+Added: Our inability to fund or raise the capital required in the anticipated timeframes and on the anticipated terms, could have a material adverse impact on our business, results of operations and
+Added: financial condition, including causing us to reduce our business levels or be subject to a variety of regulatory actions.
+Added: Specifically, as our outstanding debt matures, we may face challenges in refinancing or extending the debt on favorable terms.
+Added: Unfavorable market conditions, changes in our financial position or changes to our ratings could limit our ability to refinance, potentially impacting liquidity.
+Added: Additionally, the implementation of any further CRT transactions or other transactions with third parties to provide additional capital depends on a number of factors, including but not limited to:
market conditions, necessary third-party approvals (including approval by regulators and the GSEs) and other factors that are outside of our control.
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We also cannot be sure we will be able to meet any additional capital requirements imposed by regulators or the GSEs.
−Removed: See “—CRT transactions may not be available, affordable or adequate to protect us against losses” and “—If we are unable to continue to meet the requirements mandated by PMIERs, the GSE Restrictions and any additional restrictions imposed on us by the GSEs, we may not be eligible to write new insurance on loans acquired by the GSEs, which would have a material adverse effect on our business, results of operations and financial condition.”
−Removed: In order to preserve certain tax benefits it obtains from consolidation, our Parent is expected to hold at least 80% of our common stock.
+Added: See “—CRT transactions may not be available, affordable or adequate to protect us against losses” and “—If we are unable to continue to meet the requirements mandated by PMIERs, or any additional restrictions which may be imposed on us by the GSEs, we may not be eligible to write new insurance on loans acquired by the GSEs, which would have a material adverse effect on our business, results of operations and financial condition.”
+Added: In order to preserve certain tax benefits it obtains from consolidation, Genworth is expected to hold at least 80% of our common stock.
Thus, our ability to raise additional capital by issuing stock to third parties will be limited.
−Removed: See “—Our Parent's continued ownership of at least 80% of our common stock may limit our ability to raise additional capital by issuing common stock to third parties.”
+Added: See “—Genworth's continued ownership of at least 80% of our common stock may limit our ability to raise additional capital by issuing common stock to third parties.”
CRT transactions may not be available, affordable or adequate to protect us against losses.
−Removed: As part of our overall risk and capital management strategy, we use CRT transactions.
−Removed: These transactions enable our mortgage insurance business to transfer risks in exchange for some of the associated economic benefits and, as a result, improve our PMIERs and other regulatory RTC measurements and manage risk to within our anticipated tolerance level.
+Added: As part of our overall risk and capital management strategy, we use CRT transactions which enable our mortgage insurance business to transfer risks in exchange for some of the associated economic benefits and, as a result, improve our PMIERs and other regulatory RTC measurements and manage risk to within our anticipated tolerance level.
See “Business—Credit Risk Transfer.”
The availability and cost of CRT transactions may be impacted by conditions beyond our control, such as general market conditions, changes in regulation, higher rates of unemployment or a significant negative impact on the United States housing market.
−Removed: For example, CRT transactions were more costly to obtain following the economic downturn caused by COVID-19 and ILN pricing remains elevated.
In the future, we may be unable to obtain new transactions on acceptable terms or at all.
Absent the availability and affordability to enter into new CRT transactions, our ability to obtain PMIERs or statutory credit for new transactions could be adversely impacted or could require us to make capital contributions to maintain regulatory capital requirements.
−Removed: See “—If we are unable to continue to meet the requirements mandated by PMIERs, the GSE Restrictions and any additional restrictions imposed on us by the GSEs, we may not be eligible to write new insurance on loans acquired by the GSEs, which would have a material adverse effect on our business, results of operations and financial condition.”
Additionally, many of the CRT transactions we execute expose us to credit risk in the event of default of our counterparties or a change in collateral value.
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Financial strength ratings, which various rating agencies publish as measures of an insurance company’s ability to meet obligations, are important to maintaining public confidence in our mortgage insurance coverage and our competitive position.
−Removed: In assigning financial strength ratings, we believe the rating agencies consider several factors, including but not limited to, the adequacy of the mortgage insurer’s capital to withstand high claim scenarios, a mortgage insurer’s historical and projected operating performance, a mortgage insurer’s enterprise risk management framework, parent company financial strength, business outlook, competitive position, management and corporate strategy.
+Added: In assigning financial strength ratings, we believe the rating agencies consider several factors, including but not limited to, the adequacy of the mortgage insurer’s capital to withstand high claim scenarios, a mortgage insurer’s historical and projected operating
+Added: performance, a mortgage insurer’s enterprise risk management framework, parent company financial strength, business outlook, competitive position, management and corporate strategy.
The rating agency issuing the financial strength rating can withdraw or change its rating at any time.
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(i) increasing scrutiny of us and our financial condition by the GSEs and/or our customers, potentially resulting in a decrease in the amount of our NIW or, in the most severe case, the cessation of writing new business altogether, or limiting the business opportunities we are presented with and (ii) requiring us to reduce the premiums that we charge for mortgage insurance or introduce new products and services in order to remain competitive.
−Removed: Further, our relationships with our customers may be adversely affected by the ratings assigned to our Parent or its other operating subsidiaries, which may be impacted by factors such as any risk or perceived risk regarding our Parent’s liquidity and its (or its affiliates) ability to meet obligations as they become due, and which could have a material adverse effect on our business, results of operations and financial condition.
−Removed: See “—We could be affected by issues
−Removed: affecting our Parent in a way that could materially and adversely affect our business, financial condition, liquidity and prospects.”
+Added: Further, our relationships with our customers may be adversely affected by the ratings assigned to Genworth or its other operating subsidiaries, which may be impacted by factors such as any risk or perceived risk regarding Genworth’s liquidity and its (or its affiliates) ability to meet obligations as they become due, and which could have a material adverse effect on our business, results of operations and financial condition.
+Added: See “—We could be affected by issues affecting Genworth in a way that could materially and adversely affect our business, financial condition, liquidity and prospects.”
Further, a rating is based on information furnished by us or obtained by the relevant rating agency from its own sources and is subject to revision, suspension or withdrawal by the rating agency at any time.
Rating agencies may review the ratings assigned to us due to developments that are beyond our control and any anticipated positive changes in ratings may never develop or be realized.
−Removed: We compete with government-owned enterprises and GSEs, and this may put us at a competitive disadvantage on pricing and other terms and conditions.
−Removed: We compete with the FHA and the VA, as well as certain local-and state-level housing finance agencies.
−Removed: Separately, the GSEs compete with us through certain of their risk-sharing insurance programs.
−Removed: Those competitors may establish pricing terms and business practices that may be influenced by motives such as advancing social housing policy or stabilizing the mortgage lending industry.
−Removed: Those motives may not be consistent with maximizing return on capital or other profitability measures.
−Removed: In addition, those governmental enterprises typically do not have the same capital requirements or costs of capital that we and other mortgage insurance companies have and therefore may have financial flexibility in their pricing and capacity that could put us at a competitive disadvantage.
−Removed: In the event that a government-owned enterprise or GSE in one of our markets determines to change prices significantly or alter the terms and conditions of its mortgage insurance or other credit enhancement products in furtherance of social or other goals rather than a profit or risk management motive, we may be unable to compete in that market effectively, which could have a material adverse effect on our business, results of operations and financial condition.
−Removed: See “—Changes to the charters or practices of the GSEs, including actions or decisions to decrease or discontinue the use of mortgage insurance, could adversely affect our business, results of operations and financial condition.”
−Removed: Our valuation of fixed maturity securities uses methodologies, estimations and assumptions that are subject to change and differing interpretations that could result in changes to investment valuations that may materially adversely affect our business, results of operations and financial condition.
+Added: If we are unable to effectively manage risks in our investment portfolio, it could adversely affect our business, results of operations and financial condition.
Income from our investment portfolio is a source of cash to support our operations and make claims payments.
If we or our investment managers improperly structure our investments to meet those future liabilities or we have unexpected losses, including losses resulting from the forced liquidation of investments before their maturity, we may be unable to meet those obligations.
−Removed: Our investments and investment policies are subject to state insurance laws, which results in our portfolio being predominantly limited to highly rated fixed income securities.
+Added: Our investments and investment policies are subject to state insurance laws, which results in our portfolio being predominantly limited to highly rated fixed maturity securities.
+Added: Despite this, our investment portfolio is subject to credit risks that could lead to realized losses.
As interest rates have risen, this has led to a significant increase in unrealized losses in our investment portfolio.
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Estimates of fair values for fixed maturity securities are obtained primarily from industry-standard pricing methodologies utilizing market observable inputs.
−Removed: For our less liquid securities, such as our privately placed securities, we utilize independent market data to employ alternative valuation methods commonly used in the financial services industry to estimate fair value.
+Added: For our less liquid securities, such as our privately placed securities, we utilize independent market data to employ alternative valuation methods commonly used in the
+Added: financial services industry to estimate fair value.
Based on the market observability of the inputs used in estimating the fair value, the pricing level is assigned.
1 unchanged sentence
valuation methods may be complex and may also require estimation, thereby resulting in values that are less certain and may vary significantly from the value at which the investments may be ultimately sold.
−Removed: The methodologies, estimates and assumptions we use in
−Removed: valuing our investment securities evolve over time and are subject to different interpretation (including based on developments in relevant accounting literature), all of which can lead to changes in the value of our investment securities.
+Added: The methodologies, estimates and assumptions we use in valuing our investment securities evolve over time and are subject to different interpretation (including based on developments in relevant accounting literature), all of which can lead to changes in the value of our investment securities.
Rapidly changing and unanticipated interest rate movements, as well as external macroeconomic, credit and equity market conditions could materially impact the valuation of investment securities as reported within our consolidated financial statements, and the period-to-period changes in value could vary significantly.
5 unchanged sentences
Among other things, our mortgage insurance policies require insureds and their servicers to timely submit premium and monthly IIF and delinquency reports and to use commercially reasonable efforts to limit and mitigate loss when a loan is delinquent.
−Removed: If a servicer was to experience adverse effects to its business, such servicer could experience delays in its reporting and premium payment requirements.
+Added: If a servicer were to experience adverse effects to its business, such servicer could experience delays in its reporting and premium payment requirements.
Without reliable, consistent third-party servicing, we may be unable to receive and process payments on insured loans and/or properly recognize and establish reserves on loans when a delinquency exists or occurs but is not reported to us.
3 unchanged sentences
Significant, sustained failures by large servicers or other disruptions in the servicing of mortgage loans may damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny and could have a material adverse effect on our business, results of operations and financial condition.
−Removed: Inadequate staffing levels could lead to disruptions in the servicing of mortgage loans, which in turn may contribute to a rise in delinquencies and could have a material adverse effect on our business, results of operations and financial condition.
+Added: Inadequate staffing levels or significant transfers of business between servicers could lead to disruptions in the servicing of mortgage loans, which in turn may contribute to a rise in delinquencies and could have a material adverse effect on our business, results of operations and financial condition.
High delinquency rates could also strain the resources of servicers, reducing their ability to undertake mitigation efforts that would help limit losses.
4 unchanged sentences
Inappropriate delegation protocols or failure of servicers to service in accordance with the protocols may increase the magnitude of our losses and have an adverse effect on our business, results of operations and financial condition.
−Removed: Our delegation of loss mitigation decisions to the GSEs is subject to cancellation, but exercise of our cancellation rights may have an adverse effect on our relationship with the GSEs and customers.
+Added: Our delegation of loss mitigation
+Added: decisions to the GSEs is subject to cancellation, but exercise of our cancellation rights may have an adverse effect on our relationship with the GSEs and customers.
Our delegated underwriting program may subject our mortgage insurance business to unanticipated claims.
2 unchanged sentences
Once we accept a customer into our delegated underwriting program, we generally insure a loan originated by that customer without validating the accuracy of the data submitted by the customer, investigating the loan file for fraud, or confirming that the customer followed our pre-established guidelines for delegated underwriting.
−Removed: See “Business—Underwriting.” Under this program, a customer could commit us to insure a material number of loans that would fail our pre-established guidelines for delegated underwriting but pass our model and certain gating criteria before we discover the problem and terminate that customer’s delegated underwriting authority.
+Added: Under this program, a customer could commit us to insure a material number of loans that would fail our pre-established guidelines for delegated underwriting but pass our model and certain gating criteria before we discover the problem and terminate that customer’s delegated underwriting authority.
Although coverage on such loans may be rescindable or otherwise limited under the terms of our master policies, the burden of establishing the right to rescind or deny coverage lies with the insurer.
To the extent that our customers exceed their delegated underwriting authorities, our business, results of operations and financial condition could be materially adversely affected.
−Removed: Potential liabilities in connection with our contract underwriting services could have a material adverse effect on our business, results of operations and financial condition.
−Removed: We offer contract underwriting services to certain of our customers, pursuant to which our employees and contractors work directly with the customer to determine whether the data relating to a borrower and a proposed loan contained in a mortgage loan application file complies with the customer’s loan underwriting guidelines or the investor’s loan purchase requirements.
−Removed: In connection with that service, we also compile the application data and submit it to the automated underwriting systems of Fannie Mae and Freddie Mac, which independently analyze the data to determine if the proposed loan complies with their investor requirements.
−Removed: Under the terms of our contract underwriting agreements, we agree to indemnify the customer against losses incurred if we make material errors in determining whether loans processed by our contract underwriters meet specified underwriting or purchase criteria, subject to contractual limitations on liability.
−Removed: As a result, we assume credit and processing risk in connection with our contract underwriting services.
−Removed: If our reserves for potential claims in connection with our contract underwriting services are inadequate as a result of differences from our estimates and assumptions or other reasons, we may be required to increase our underlying reserves, which could materially adversely affect our business, results of operations and financial condition.
The premiums we agree to charge for our mortgage insurance coverage may not adequately compensate us for the risks and costs associated with the coverage we provide.
18 unchanged sentences
A decline in the volume of Low Down Payment Loan originations would reduce the demand for mortgage insurance and, therefore, could have a material adverse effect on our business, results of operations and financial condition.
−Removed: See “—A deterioration in economic conditions, a severe recession or a decline in home prices, all of which could be driven by many potential factors, including inflation, may adversely affect our loss experience.”
In addition, a significant percentage of the premiums we earn each year are renewal premiums from mortgage insurance coverage written in previous years.
11 unchanged sentences
Our persistency rates on primary mortgage insurance were 85%, 80% and 62% for the years ended December 31, 2023, 2022 and 2021, respectively.
−Removed: The low persistency rate in 2020 and 2021 has been largely as a result of the low interest rate environment precipitated by the economic impacts of the COVID-19 pandemic.
−Removed: The increase in 2022 was primarily a result of the rising rate environment in response to inflationary pressures.
+Added: Elevated persistency in 2023 and 2022 was primarily a result of the rising rate environment in response to inflationary pressures.
A decrease in persistency generally would reduce the amount of our IIF and could have a material adverse effect on our business, results of operations and financial condition.
1 unchanged sentence
We collect, process, store, share, disclose and use consumer information and other data, and an actual or perceived failure to protect such information and data or respect users’ privacy could damage our reputation and brand and adversely affect our business, results of operations and financial condition.
−Removed: We retain confidential customer information in our computer systems, and we rely on commercial technologies to maintain the security of those systems, including computers or mobile devices.
−Removed: Anyone who can circumvent our security measures and penetrate our computer systems or misuse authorized access could access, view, misappropriate, alter, or delete any information in the systems, including personally identifiable information and proprietary business information.
−Removed: Our employees and vendors use portable computers or mobile devices that may contain similar information to that in our computer systems, and these devices have been and can be lost, stolen or damaged, and therefore subject to the same risks as our other computer systems.
−Removed: In addition, an increasing number of states require that affected parties be notified or other actions be taken (which could involve significant costs to us) if a security breach results in the inappropriate disclosure of personally identifiable information.
−Removed: We have experienced occasional, actual or attempted breaches of our cybersecurity, although to date none of these breaches has had a material effect on our business, operations or reputation.
−Removed: Any compromise of the security of our computer systems or those of our customers and third-party service providers that results in inappropriate disclosure of personally identifiable customer information could damage our reputation in the marketplace, deter lenders from purchasing our mortgage insurance, subject us to significant civil and criminal liability and require us to incur significant technical, legal and other expenses.
−Removed: Any failure or perceived failure by us to comply with our privacy policies, our privacy-related obligations to consumers or other third parties, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of sensitive information, which could include personally identifiable information or other user data, may result in governmental investigations, enforcement actions, regulatory fines, litigation and public statements against us by consumer advocacy groups or others, and could cause our customers to lose trust in us, all of which could be costly and have an adverse effect on our business, results of operations and financial condition.
−Removed: Regulatory agencies or business partners may institute more stringent data protection requirements or certifications than those
−Removed: that we are currently subject to and, if we cannot comply with those standards in a timely manner, we may lose the ability to sell our products or process transactions containing payment information.
+Added: We retain confidential customer information, proprietary information and other data in our information systems, and our information systems may be vulnerable to cybersecurity incidents, such as attacks by malicious actors or breaches due to human error, malfeasance, or other cybersecurity incidents.
+Added: Such incidents could potentially result in the unauthorized access, disclosure, misappropriation, alteration, or deletion of information in our systems, including personally identifiable information and proprietary business information.
+Added: In addition, an increasing number of states require that affected parties be notified or other actions be taken (which could involve significant costs to us) if a cybersecurity incident results in the inappropriate disclosure of personally identifiable information.
+Added: We have experienced occasional, actual or attempted breaches of our cybersecurity, although none of these breaches has had a material effect on our business, operations or reputation as of the date of this Annual Report.
+Added: Any compromise of the security of our information systems or those of our customers and third-party service providers that results in inappropriate access to, or disclosure of, personally identifiable consumer information could damage our reputation in the marketplace, deter lenders from purchasing our mortgage insurance, subject us to significant civil and criminal liability or regulatory enforcement actions and require us to incur significant technical, legal and other expenses.
+Added: Any of the foregoing can be exacerbated by a delay or failure to detect a cybersecurity incident or the full extent of such incident.
+Added: While the Company carries cyber insurance, it cannot be certain that coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to the Company on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
+Added: Any failure or perceived failure by us to comply with our privacy policies, our privacy-related obligations to consumers or other third parties, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized access to sensitive information, which could include personally identifiable information or other data, may result in governmental investigations, enforcement actions, regulatory fines, litigation and public statements against us by consumer advocacy groups or others, and could cause our customers to lose trust in us, all of which could be costly and have an adverse effect on our business, results of operations and financial condition.
+Added: Regulatory agencies or business partners may institute more stringent data protection requirements or certifications than those that we are currently subject to, which may increase compliance costs and, if we cannot comply with those standards in a timely manner, we may lose the ability to sell our products or process transactions containing payment information.
Moreover, if third parties that we work with violate applicable laws or our policies, such violations also may put consumer information at risk and could in turn harm our reputation, our business, results of operations and financial condition.
2 unchanged sentences
Our insurance operations are subject to a wide variety of laws and regulations and are extensively regulated.
−Removed: State insurance laws regulate most aspects of our business, and our insurance subsidiaries are regulated by the insurance departments of the states in which they are domiciled and licensed.
+Added: State insurance laws regulate most aspects of our U.S.
+Added: business, and our U.S.
+Added: domiciled insurance subsidiaries are regulated by the insurance departments of the states in which they are domiciled and licensed.
+Added: Enact Re is subject to Bermudian law and is regulated by the BMA.
Failure to comply with applicable regulations or to obtain or maintain appropriate authorizations or exemptions under any applicable laws could result in restrictions on our ability to conduct business or engage in activities regulated in one or more jurisdictions in which we operate and could subject us to fines, injunctions and other sanctions that could have a material adverse effect on our business, results of operations and financial condition.
−Removed: In addition, the nature and extent of regulation could materially change, which may result in additional costs associated with compliance with any such changes, or changes to our operations that may be necessary to comply, any of which may have a material adverse effect on our business.
−Removed: See “—Inability to maintain sufficient regulatory capital could result in restrictions or prohibitions on our doing business or impact our financial strength ratings which could have a material adverse impact on our business, results of operations and financial condition.” and “—Risks Relating to Our Business—If we are unable to continue to meet the requirements mandated by PMIERs, the GSE Restrictions and any additional restrictions imposed on us by the GSEs, we may not be eligible to write new insurance on loans acquired by the GSEs, which would have a material adverse effect on our business, results of operations and financial condition.”
−Removed: State insurance regulatory authorities have broad administrative powers, which at times are coordinated and communicated across regulatory bodies.
+Added: In addition, the nature and extent of regulation could materially change, which may result in additional costs associated with compliance with any such changes, or
+Added: changes to our operations that may be necessary to comply, any of which may have a material adverse effect on our business.
+Added: Insurance regulatory authorities have broad administrative powers, which at times are coordinated and communicated across regulatory bodies.
These administrative powers include, but are not limited to:
9 unchanged sentences
• restricting, pursuant to state monoline restrictions, the types of insurance products that may be offered.
−Removed: State insurance regulators and the NAIC regularly re-examine existing laws and regulations, which may lead to modifications to SAP, interpretations of existing laws and the development of new laws and
−Removed: regulations applicable to insurance companies and their products.
+Added: Insurance regulators and the NAIC regularly re-examine existing laws and regulations, which may lead to modifications to SAP, interpretations of existing laws and the development of new laws and regulations applicable to insurance companies and their products.
Further, we could become subject to future legislation or regulatory requirements related to climate change.
−Removed: We face the risk of litigation and regulatory investigations or other actions in the ordinary course of operating our business, which may result in financial losses, injunctions, or harm to our reputation.
−Removed: Mortgage insurers have been involved in litigation alleging violations of Section 8 of RESPA or related state anti-inducement laws and the notice provisions of the FCRA.
Among other things, Section 8 of RESPA generally precludes mortgage insurers from paying referral fees to mortgage lenders for the referral of mortgage insurance business.
6 unchanged sentences
It is possible that we could become subject to future investigations, regulatory actions, lawsuits, or enforcement actions, which could cause us to incur legal costs and, if we were found to have violated any laws or regulations, require us to pay fines and damages, result in injunctions and incur other sanctions, perhaps in material amounts.
−Removed: Increased regulatory scrutiny and any resulting investigations or legal proceedings could result in new legal precedents and industry-wide regulations or practices that could have a material adverse effect on our business, results of operations and financial condition.
+Added: Increased regulatory scrutiny and any resulting investigations or legal proceedings could result in new legal
+Added: precedents and industry-wide regulations or practices that could have a material adverse effect on our business, results of operations and financial condition.
Moreover, even if we ultimately prevail in the litigation, regulatory action or investigation, we could suffer significant reputational harm and incur significant legal expenses, which could have a material adverse effect on our business, results of operations and financial condition.
1 unchanged sentence
Inability to maintain sufficient regulatory capital could result in restrictions or prohibitions on our doing business or impact our financial strength ratings which could have a material adverse impact on our business, results of operations and financial condition.
−Removed: We are required by certain states and other regulators to maintain certain RTC ratios.
+Added: We are required by certain states and other regulators to maintain certain RTC ratios and other capital standards.
+Added: The statutory capital adequacy ratio for our U.S.
+Added: mortgage insurers is known as the RTC ratio, of which the numerator consists of RIF and the denominator consists of the sum of (i) statutory surplus and (ii) the statutory contingency reserve.
In addition, PMIERs include financial requirements for mortgage insurers to do business with the GSEs under which a mortgage insurer’s “Available Assets” (generally only the most liquid assets of an insurer) must meet or exceed “Minimum Required Assets” (which are based on an insurer’s RIF and are calculated from tables of factors with several risk dimensions and are subject to a floor amount).
−Removed: The failure of our insurance subsidiaries to meet their regulatory requirements, and additionally the current PMIERs financial requirements on our principal operating subsidiary, could limit our ability to write new business.
+Added: The failure of our insurance subsidiaries to meet their regulatory requirements, including the current PMIERs financial requirements on our principal operating subsidiary, could limit our ability to write new business.
If we fail to maintain the required minimum capital level in a state where we write business, we would generally be required to immediately stop writing new business in the state until we re-establish the required level of capital or receive a waiver of the requirement from the state’s insurance regulator, or until we have established an alternative source of underwriting capacity acceptable to the regulator.
−Removed: December 31, 2022 and December 31, 2021, our combined RTC ratio was approximately 12.8:1 and 12.2:1, respectively.
+Added: As of December 31, 2023 and December 31, 2022, our combined RTC ratio was approximately 11.6:1 and 12.8:1, respectively.
Should we exceed required RTC levels in the future, we would seek required regulatory and GSE forbearance and approvals or seek approval for the utilization of alternative insurance vehicles.
However, there can be no assurance if, and on what terms, such forbearance and approvals may be obtained.
−Removed: The NAIC established the MGIWG to determine and make recommendations to the NAIC’s Financial Condition Committee as to what, if any, changes to make to the solvency and other regulations relating to mortgage guaranty insurers.
−Removed: The MGIWG continues to work on revisions to the MGI Model and revisions to Statement of Statutory Accounting Principles No.
−Removed: 58—Mortgage Guaranty Insurance.
−Removed: It also implemented a mortgage guaranty supplemental filing in 2021.
−Removed: In September 2022, the MGIWG released a revised exposure draft of the revised MGI Model.
−Removed: The proposed amendments of the MGI Model are expected to be finalized by the MGIWC in the Spring of 2023.
−Removed: The MGIWC has also worked towards developing a mortgage guaranty capital model.
−Removed: We cannot predict the outcome of this work, whether any state will adopt the amended MGI Model or any of its specific provisions, the effect changes, if any, will have on the mortgage guaranty insurance market generally, or on our business specifically, the additional costs associated with compliance with any such changes, or any changes to our operations that may be necessary to comply, any of which could have a material adverse effect on our business, results of operations and financial condition.
−Removed: We also cannot predict whether other regulatory initiatives will be adopted or what impact, if any, such initiatives, if adopted as laws, may have on our business, results of operations and financial condition.
−Removed: Further, the financial strength ratings of our insurance subsidiaries are significantly influenced by their statutory surplus amounts, statutory contingency reserve amounts and capital adequacy ratios.
−Removed: The statutory capital adequacy ratio is known as the RTC ratio, of which the numerator consists of RIF and the denominator consists of the sum of (i) statutory surplus and (ii) the statutory contingency reserve.
+Added: Enact Re could suffer similar restrictions if it breached Bermudian capital requirements.
+Added: Further, the financial strength ratings of our insurance subsidiaries are significantly influenced by their statutory surplus amounts, statutory contingency reserve amounts (if applicable) and capital adequacy ratios.
In any particular year, statutory surplus amounts, statutory contingency reserve amounts, and the RTC ratio may increase or decrease depending on a variety of factors, most of which are outside of our control, including, but not limited to, the following:
11 unchanged sentences
• changes to the maximum permissible RTC ratio.
−Removed: An adverse change in our RTC ratio or our ability to meet other minimum regulatory requirements could cause rating agencies to downgrade our financial strength ratings, which could have an adverse
−Removed: impact on our ability to write and retain business and could cause regulators to take regulatory or supervisory actions with respect to our business, all of which could have a material adverse effect on our results of operations, financial condition and business.
+Added: An adverse change in our RTC ratio or our ability to meet other minimum regulatory requirements could cause rating agencies to downgrade our financial strength ratings, which could have an adverse impact on our ability to write and retain business and could cause regulators to take regulatory or supervisory actions with respect to our business, all of which could have a material adverse effect on our results of operations, financial condition and business.
For further discussion on the importance of ratings, see “—Adverse rating agency actions may result in a loss of business and adversely affect our business, results of operations and financial condition.”
5 unchanged sentences
The result of those potential challenges could require us to increase levels of statutory capital and reserves or incur higher operating costs and/or have implications on certain tax positions.
−Removed: Changes in regulations that adversely affect the mortgage insurance markets in which we operate could affect our operations significantly and could reduce the demand for mortgage insurance.
−Removed: In addition to the general regulatory risks that are described under “—Our business is extensively regulated and changes in regulation may reduce our profitability and limit our growth,” we are also affected by various additional regulations relating particularly to our mortgage insurance operations.
+Added: Enact Re is subject to Bermudian capital regulation, and its inability to comply with minimum capital standards could have a material adverse effect on our results of operations, financial condition and business.
+Added: Changes in regulations that adversely affect the insurance markets in which we operate could affect our operations significantly and could reduce the demand for our products.
+Added: In addition to the general regulatory risks that are described under “—Our business is extensively regulated and changes in regulation may reduce our profitability and limit our growth,” we are also affected by various additional regulations, particularly those that relate to our mortgage insurance operations.
Federal and state regulations affect the scope of our competitors’ operations, which influences the size of the mortgage insurance market and the intensity of the competition.
This competition includes not only other private mortgage insurers, but also federal and state governmental and quasi-governmental agencies, principally the FHA and the VA, which are governed by federal regulations.
−Removed: Increases in the maximum loan amount that the FHA can insure, and reductions in the mortgage insurance premiums the FHA charges, including a potential 25 basis point reduction, can reduce the demand for private mortgage insurance.
+Added: Increases in the maximum loan amount that the FHA can insure, and reductions in the mortgage insurance premiums the FHA charges, such as the reduction implemented in 2023, can reduce the demand for private mortgage insurance.
Decreases in the maximum loan amounts the GSEs will purchase or guarantee, increases in GSE fees or decreases in the maximum LTV ratio for loans the GSEs will purchase can also reduce demand for private mortgage insurance.
See “—Changes to the charters or practices of the GSEs, including actions or decisions to decrease or discontinue the use of mortgage insurance, could adversely affect our business, results of operations and financial condition.” Legislative, regulatory and administrative changes could cause demand for private mortgage insurance to decrease.
−Removed: Additionally, on December 17, 2020, the FHFA promulgated the Enterprise Capital Framework, which imposes a new capital framework on the GSEs, including risk-based and leverage capital requirement and capital buffers in excess of regulatory minimums that can be drawn down in periods of financial distress.
−Removed: The Enterprise Capital Framework became effective on February 16, 2021.
−Removed: However, the GSEs will not be subject to any requirement under the Enterprise Capital Framework until the applicable compliance date.
+Added: Additionally, effective in 2021, the FHFA enacted the Enterprise Capital Framework, which imposes a capital framework on the GSEs, including risk-based and leverage capital requirements and capital buffers in excess of regulatory minimums that can be drawn down in periods of financial distress.
+Added: However, the GSEs will not be subject to any requirement under the Enterprise Capital Framework until
+Added: the applicable compliance date.
Compliance with the Enterprise Capital Framework, other than the requirements to maintain a PCCBA and a PLBA, is required on the later of (i) the date of termination of the conservatorship of a GSE and (ii) any later compliance date provided in a consent order or other transition order applicable to such GSE.
3 unchanged sentences
The final rule could cause the GSEs to increase their guarantee pricing in order to meet the new capital requirements.
−Removed: If the GSEs increase their guarantee pricing in order to meet the higher capital requirements, that increase could have a negative
−Removed: impact on the private mortgage insurance market and our business.
+Added: If the GSEs increase their guarantee pricing in order to meet the higher capital requirements, that increase could have a negative impact on the private mortgage insurance market and our business.
Furthermore, higher GSE capital requirements could ultimately lead to increased costs to borrowers for GSE loans, which in turn could shift the market away from the GSEs to the FHA or lender portfolios.
Such a shift could result in a smaller market size for private mortgage insurance.
−Removed: This rule could also accelerate the recent diversification of the GSE’s risk transfer programs to encompass a broader array of instruments beyond private for mortgage insurance, which could adversely impact our business.
−Removed: Also, in preparation for the end of the FHFA’s conservatorship of the GSEs, the FHFA promulgated a final rule on May 4, 2021, effective July 6, 2021, that requires the GSEs to develop plans that would facilitate their rapid and orderly resolution in the event FHFA is appointed as their receiver.
−Removed: As a credit enhancement provider in the residential mortgage lending industry, we are also subject to compliance with or otherwise impacted by various federal and state consumer protection and insurance laws, including RESPA, the Fair Housing Act of 1968 (the “Fair Housing Act”), HOPA, the FCRA and others.
+Added: This rule could also accelerate the recent diversification of the GSEs’ risk transfer programs to encompass a broader array of instruments beyond private mortgage insurance, which could adversely impact our business.
+Added: As a credit enhancement provider in the residential mortgage lending industry, we are also subject to compliance with or otherwise impacted by various federal and state consumer protection and insurance laws, including RESPA, the Fair Housing Act of 1968 (the “Fair Housing Act”), HOPA, FCRA and others.
Among other things, these laws:
9 unchanged sentences
If the QRM definition is changed in a manner that is unfavorable to us, such as to require a large down payment for a loan to qualify as a QRM, without giving consideration to mortgage insurance in computing LTV ratios, the attractiveness of originating and securitizing loans with lower down payments may be reduced, which may adversely affect the future demand for mortgage insurance.
−Removed: In addition, if international banking standards set forth by the Basel Committee are implemented in the United States, without modification by the Federal Banking Agencies (as defined below), the rules could discourage the use of mortgage insurance in the United States.
−Removed: In 1988, the Basel Committee on Banking Supervision (the “Basel Committee”), developed the Basel Capital Accord (“Basel I”), which sets out international benchmarks for assessing banks’ capital adequacy requirements.
−Removed: In 2005, the Basel Committee issued an update to Basel I (“Basel II”), which, among other things, sets forth capital treatment of mortgage insurance purchased and held on balance sheet by banks in respect of their origination and securitization activities.
−Removed: Following the financial crisis of 2008, the Basel Committee made further revisions to improve the quality and quantity of capital banking organizations hold through Basel III.
−Removed: The Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (“FDIC”) (collectively, the “Federal Banking Agencies”) implemented Basel III through the adoption of revisions to their regulatory capital rules (the “Basel III Rules”), which establish minimum RBC and leverage capital requirements for most United States banking organizations (although banking organizations with less than $10 billion in total assets may now choose
−Removed: to comply with an alternative community bank leverage ratio framework established by the Federal Banking Agencies in 2019).
+Added: Since 1988, the Basel Committee has worked to develop international benchmarks for assessing banks’ capital adequacy requirements.
+Added: In 2005, the Basel Committee issued Basel II, which, among other things, sets forth capital treatment of mortgage insurance purchased and held on balance sheet by banks in respect of their origination and securitization activities (including in bank regulation, the standards for a prudentially underwritten mortgage, with 50% risk weighting for high loan-to-value mortgages covered with mortgage insurance).
+Added: Following the financial crisis of 2008, the Basel Committee issued Basel III that established RBC and leverage capital requirements for most United States banking organizations (although banking organizations with less than $10 billion in total assets may now choose to comply with
+Added: an alternative community bank leverage ratio framework established by the Federal Banking Agencies in 2019).
If further revisions to the Basel III Rules increase the capital requirements of banking organizations with respect to the residential mortgages we insure or do not provide sufficiently favorable treatment for the use of mortgage insurance purchased in respect of a bank’s origination and securitization activities, it could adversely affect the demand for mortgage insurance.
−Removed: In December 2017, the Basel Committee published final revisions to the Basel III capital framework (the “2017 Basel III Revisions”) that were generally targeted for implementation by each participating country by January 1, 2023.
−Removed: Under these revisions to the international framework, banks using the standardized approach to determine their credit risk may consider mortgage insurance in calculating the exposure amount for real estate but will determine the risk-weight for residential mortgages based on the LTV ratio at loan origination, without consideration of mortgage insurance.
−Removed: Under the standardized approach, after the appropriate risk-weight is determined, the existence of mortgage insurance could be considered, but only if the company issuing the insurance has a lower risk-weight than the underlying exposure.
−Removed: Mortgage insurance issued by private companies would not meet this test.
−Removed: Therefore, under the 2017 Basel III Revisions, mortgage insurance could not mitigate credit and lower the capital charge under the standardized approach.
−Removed: It is possible that the Federal Banking Agencies could determine that their current capital rules are at least as stringent as the 2017 Basel III Revisions, in which case no change would be mandated.
−Removed: However, if the Federal Banking Agencies decide to implement the 2017 Basel III Revisions as specifically drafted by the Basel Committee, mortgage insurance would not lower the LTV ratio of residential loans for capital purposes, and therefore may decrease the demand for mortgage insurance.
−Removed: Further, it is possible (but not mandated by the 2017 Basel III Revisions) that the Federal Banking Agencies and the GSEs might likewise discontinue taking mortgage insurance into account when determining a mortgage’s LTV ratio for prudential (non-capital) purposes.
−Removed: Risks Relating to Our Continuing Relationship with Our Parent
−Removed: Our Parent has the ability to exert significant influence over us and our corporate decisions.
−Removed: Our Parent continues to beneficially own at least 80% of our common stock.
−Removed: As a result, our Parent controls all matters requiring a stockholder vote, including:
+Added: In 2013, the US federal banking regulators confirmed the role of mortgage insurance as a component of prudential bank regulation for high loan to value mortgages.
+Added: More recently, in July of 2023, the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency proposed for comment the Basel III Endgame rule.
+Added: Under the proposed rule, commercial banks with total assets greater than $100 billion would no longer receive the 50% capital relief for high loan-to-value portfolio loans with mortgage insurance.
+Added: If adopted as proposed, this rule could decrease the demand for mortgage insurance.
+Added: The federal banking regulators are currently in the review process and it remains unclear whether there will be changes to the final rule ahead of its planned implementation in 2025.
+Added: Risks Relating to Our Continuing Relationship with Genworth
+Added: Genworth has the ability to exert significant influence over us and our corporate decisions.
+Added: Genworth continues to beneficially own at least 80% of our common stock.
+Added: As a result, Genworth controls all matters requiring a stockholder vote, including:
the election of directors;
4 unchanged sentences
This concentration of ownership may delay, deter or prevent acts that would be favored by our other stockholders.
−Removed: The interests of our Parent may not always coincide with our interests or the interests of our other stockholders.
+Added: The interests of Genworth may not always coincide with our interests or the interests of our other stockholders.
This concentration of ownership may also have the effect of delaying, preventing or deterring a change in control of us.
−Removed: Our Parent’s high ownership percentage risk may also impact our stock price as price volatility may be greater if the public float and trading volume of shares of our common stock are low.
−Removed: Also, our Parent may seek to cause us to take courses of action that, in its judgment, could enhance its investment in us, but which might involve risks to our other stockholders or adversely affect us or our other stockholders.
+Added: Genworth’s high ownership percentage risk may also impact our stock price as price volatility may be greater if the public float and trading volume of shares of our common stock are low.
+Added: Also, Genworth may seek to cause us to take courses of action that, in its judgment, could enhance its investment in us, but which might involve risks to our other stockholders or adversely affect us or our other stockholders.
However, any dividends or other capital transactions must be approved by our Independent Capital Committee, which is composed entirely of independent directors.
−Removed: We also have entered into a registration rights agreement with our Parent, which will give our Parent a right, subject to certain conditions, to require us to register the sale of our common stock beneficially owned by our Parent.
−Removed: So long as our Parent continues to beneficially own more than 50% of our outstanding common stock, our Parent will have certain rights, including the right to nominate the majority of our directors.
−Removed: Certain of these directors may also be officers or employees of our Parent or certain of our Parent’s other subsidiaries.
−Removed: Because of their current or former positions with our Parent or certain of our Parent’s other subsidiaries, these directors, as well as a number of our officers, own substantial amounts of our Parent’s
−Removed: common stock and options to purchase our Parent’s common stock.
−Removed: Ownership interests of our directors or officers in our Parent’s common stock, or service of certain of our directors as officers of our Parent or certain of our Parent’s other subsidiaries, may create, or may create the appearance of, conflicts of interest when such director or officer is faced with a decision that could have different implications for the two companies.
+Added: We also have entered into a registration rights agreement with Genworth, which will give Genworth a right, subject to certain conditions, to require us to register the sale of our common stock beneficially owned by Genworth.
+Added: So long as Genworth continues to beneficially own more than 50% of our outstanding common stock, Genworth will have certain rights, including the right to nominate the majority of our directors.
+Added: Certain of these directors may also be officers or employees of Genworth or certain of Genworth’s other subsidiaries.
+Added: Because of their current or former positions with Genworth or certain of Genworth’s other subsidiaries, these directors, as well as a number of our officers, own substantial amounts of Genworth’s common stock and options to purchase Genworth’s common stock.
+Added: Ownership interests of our directors or officers in Genworth’s common stock, or service of certain of our directors as officers of Genworth or certain of Genworth’s other subsidiaries, may create, or may create the appearance of, conflicts of interest when such director or officer is faced with a decision that could have different implications for the two companies.
For example, potential conflicts could arise regarding the desirability of acquisition opportunities, business plans, employee retention or recruiting, capital management or our dividend policy.
−Removed: In addition, we have entered into agreements with our Parent and its subsidiaries that provide a framework for our ongoing relationship, including a Master Agreement, a registration rights agreement, a Shared Services Agreement, an intellectual property cross license agreement and a transitional trademark license agreement.
−Removed: Disagreements regarding the rights and obligations of our Parent or certain of our Parent’s other subsidiaries or us under each of these agreements or any renegotiation of their terms could create conflicts of interest for certain of these directors and officers, as well as actual disputes that may be resolved in a manner unfavorable to us and our other stockholders.
−Removed: Interruptions to or problems with services provided under the Shared Services Agreement could result in conflicts between us and our Parent or certain of our Parent’s other subsidiaries that increase our costs both for the processing of business and the potential remediation of disputes.
+Added: In addition, we have entered into agreements with Genworth and its subsidiaries that provide a framework for our ongoing relationship, including a Master Agreement, a registration rights agreement, a Shared Services Agreement, an intellectual property cross license agreement and a transitional trademark license agreement.
+Added: Disagreements regarding the rights and obligations of Genworth or certain
+Added: of Genworth’s other subsidiaries or us under each of these agreements or any renegotiation of their terms could create conflicts of interest for certain of these directors and officers, as well as actual disputes that may be resolved in a manner unfavorable to us and our other stockholders.
+Added: Interruptions to or problems with services provided under the Shared Services Agreement could result in conflicts between us and Genworth or certain of Genworth’s other subsidiaries that increase our costs both for the processing of business and the potential remediation of disputes.
Although we believe these agreements contain commercially reasonable terms, the terms of these agreements may later prove not to be in the best interests of our future stockholders or may contain terms less favorable than those we could obtain from third parties.
−Removed: In addition, certain of our officers negotiating these agreements may appear to have conflicts of interest as a result of their ownership of our Parent’s common stock and holdings of our Parent’s equity awards.
−Removed: The terms of our arrangements with our Parent may be more favorable than we will be able to obtain from an unaffiliated third party.
−Removed: Our Parent or certain of our Parent’s other subsidiaries currently perform or support many important corporate functions for our operation, including but not limited to, investment management, information technology services and certain administrative services (such as finance, human resources and employee benefit administration).
−Removed: Our Shared Services Agreement with our Parent provides us continued access to certain of these services.
−Removed: We negotiated these arrangements with our Parent or certain of our Parent’s other subsidiaries in the context of a parent-subsidiary relationship.
+Added: In addition, certain of our officers negotiating these agreements may appear to have conflicts of interest as a result of their ownership of Genworth’s common stock and holdings of Genworth’s equity awards.
+Added: The terms of our arrangements with Genworth may be more favorable than we will be able to obtain from an unaffiliated third party.
+Added: Genworth or certain of Genworth’s other subsidiaries currently perform or support many important corporate functions for our operations, including but not limited to, investment management, information technology services and certain administrative services (such as finance, human resources and employee benefit administration).
+Added: Our Shared Services Agreement with Genworth provides us continued access to certain of these services.
+Added: We negotiated these arrangements with Genworth or certain of Genworth’s other subsidiaries in the context of a parent-subsidiary relationship.
We cannot assure you that these services will be sustained at the same levels or that we would be able to replace such services in a timely manner or on comparable terms.
Specific services provided under the Shared Services Agreement may be terminated by either party for convenience with at least one hundred eighty (180) days’ prior written notice to the other party.
−Removed: If our Parent or certain of our Parent’s other subsidiaries cease to provide services pursuant to the terms of our existing agreements, our costs of procuring services from third parties may increase.
−Removed: As a standalone company, we may be unable to obtain such goods and services at comparable prices or on terms as favorable as those provided by our Parent, either of which could adversely affect our business, results of operations or financial condition.
−Removed: Other agreements with our Parent or certain of our Parent’s other subsidiaries also govern the relationship between us and our Parent or certain of our Parent’s other subsidiaries and provide for the allocation of certain expenses.
+Added: If Genworth or certain of Genworth’s other subsidiaries cease to provide services pursuant to the terms of our existing agreements, our costs of procuring services from third parties may increase.
+Added: As a standalone company, we may be unable to obtain such goods and services at comparable prices or on terms as favorable as those provided by Genworth, either of which could adversely affect our business, results of operations or financial condition.
+Added: Other agreements with Genworth or certain of Genworth’s other subsidiaries also govern the relationship between us and Genworth or certain of Genworth’s other subsidiaries and provide for the allocation of certain expenses.
They also contain terms and provisions that may be more favorable than terms and provisions we might have obtained in arm’s length negotiations with unaffiliated third parties.
These operational risks could have a material adverse effect on our business, results of operations and financial condition.
−Removed: We could be affected by issues affecting our Parent in a way that could materially and adversely affect our business, financial condition, liquidity and prospects.
−Removed: We remain a part of our Parent’s family of businesses.
−Removed: Therefore, our customers, third-party service providers, credit providers and other persons may continue to associate us with our Parent’s reputation
−Removed: and services, as well as its capital base and financial strength.
−Removed: Our Parent has historically had substantial leverage and depends on us as a source of liquidity.
−Removed: Our Parent continues to pursue its overall strategy with a focus on improving business performance and increasing financial and strategic flexibility across the organization.
−Removed: Our Parent’s strategy includes maximizing its opportunities in its mortgage insurance businesses and stabilizing its United States life insurance businesses.
−Removed: While our Parent has been successful in reducing its financial leverage, it cannot be sure it will be able to successfully execute on its strategic plans to effectively address its current business challenges, including as a result of:
−Removed: • an inability to attract buyers for any businesses or other assets our Parent may seek to sell, or securities it may seek to issue, in each case, in a timely manner and on anticipated terms;
−Removed: • an inability to increase the capital needed in our Parent’s businesses in a timely manner and on anticipated terms, including through improved business performance, reinsurance or similar transactions, asset sales, debt issuances, securities offerings or otherwise, in each case as and when required;
+Added: We could be affected by issues affecting Genworth in a way that could materially and adversely affect our business, financial condition, liquidity and prospects.
+Added: We remain a part of Genworth’s family of businesses.
+Added: Therefore, our customers, third-party service providers, credit providers and other persons may continue to associate us with Genworth’s reputation and services, as well as its capital base and financial strength.
+Added: Genworth has historically had substantial leverage and depends on us as a source of liquidity.
+Added: Genworth continues to pursue its overall strategy with a focus on improving business performance and increasing financial and strategic flexibility across the organization.
+Added: Genworth’s strategy includes further strengthening its United States life insurance businesses, driving long-term shareholder value and advancing its senior care growth initiatives.
+Added: While Genworth has been successful in reducing its financial leverage, it cannot be sure it will be able to successfully execute on its strategic plans to effectively address its business challenges, including as a result of:
+Added: • an inability to achieve anticipated business performance and financial results from its growth initiatives;
+Added: • an inability to attract buyers for any businesses or other assets Genworth may seek to sell, or securities it may seek to issue, in each case, in a timely manner and on anticipated terms;
+Added: • an inability to increase the capital needed in Genworth’s businesses in a timely manner and on anticipated terms, including through improved business performance, reinsurance or similar transactions, asset sales, debt issuances, securities offerings or otherwise, in each case as and when required;
• a failure to obtain any required regulatory, stockholder, noteholder approvals and/or other third-party approvals or consents for such alternative strategic plans;
−Removed: • our Parent’s challenges changing or being more costly or difficult to successfully address than currently anticipated or the benefits achieved being less than anticipated;
+Added: • Genworth’s challenges changing or being more costly or difficult to successfully address than currently anticipated or the benefits achieved being less than anticipated;
• an inability to achieve anticipated cost-savings in a timely manner;
• adverse tax or accounting charges.
−Removed: We also rely on our Parent and/or certain of our Parent’s subsidiaries to provide certain investment management, information technology services and certain administrative services (such as finance, human resources and employee benefit administration).
−Removed: If our Parent is unable or unwilling to provide such services in the future, we may be unable to provide such services ourselves or we may have to incur additional expenditures to obtain such services from another provider.
−Removed: Additionally, we may be subject to reputational harm if our Parent or any of its affiliates, previously, or in the future, among other things, becomes subject to litigation or otherwise damages its reputation or business prospects.
+Added: Additionally, we may be subject to reputational harm if Genworth or any of its affiliates, previously, or in the future, among other things, becomes subject to litigation or otherwise damages its reputation or business prospects.
Any of these events could adversely affect our business, results of operations and financial condition.
−Removed: Our Parent’s challenges in its long-term care insurance business, or other financial or operational difficulties, may also be attributed to us by investors and may have an adverse effect on the perception of our common stock as an investment.
−Removed: Additionally, any downgrade or negative outlook of our Parent’s ratings may negatively impact our ratings by certain ratings agencies whose rating protocols and group rating methodologies require adverse ratings actions in cases of parent or sister company rating downgrades or adverse rating actions.
+Added: Genworth’s challenges in its long-term care insurance business, or other financial or operational difficulties, may also be attributed to us by investors and may have an adverse effect on the perception of our common stock as an investment.
+Added: Additionally, any downgrade or negative outlook of Genworth’s ratings may negatively impact our ratings by certain ratings agencies whose rating protocols and group rating methodologies require adverse ratings actions in cases of parent or sister company rating downgrades or adverse rating actions.
A downgrade in our ratings may adversely affect our relationship with current and potential customers as well as our ability to write new business and access capital on favorable terms.
See “—Adverse rating agency actions may result in a loss of business and adversely affect our business, results of operations and financial condition.”
−Removed: Our Parent as of December 31, 2022 had $868 million of long-term borrowings outstanding, excluding the amount held by EHI.
−Removed: Because we are not responsible for our Parent’s indebtedness and we are currently predominately capitalized and funded independently of our Parent, if our Parent is unable to raise sufficient proceeds to satisfy its obligations as they become due, or our Parent were to default on its outstanding indebtedness, or our Parent were to become subject to insolvency or other similar proceedings, we would not expect such events to result directly in an event of default or an insolvency event for us.
−Removed: However, any such event or the risk (or perceived risk) that any such proceedings could involve us, could negatively affect our ratings, our reputation, our business, our liquidity and results of operations, and could therefore have a negative effect on our ability to repay our own indebtedness,
−Removed: including the 2025 Senior Notes, or otherwise could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects.
+Added: Genworth as of December 31, 2023 had $856 million of long-term borrowings outstanding, excluding the amount held by EHI.
+Added: Because we are not responsible for Genworth’s indebtedness and we are currently predominately capitalized and funded independently of Genworth, if Genworth is unable to raise sufficient proceeds to satisfy its obligations as they become due, or Genworth were to default on its outstanding indebtedness, or Genworth were to become subject to insolvency or other similar proceedings, we would not expect such events to result directly in an event of default or an insolvency event for us.
+Added: However, any such event or the risk (or perceived risk) that any such proceedings could involve us, could negatively affect our ratings, our reputation, our business, our liquidity and results of operations, and could therefore have a negative effect on our ability to repay our own indebtedness, including the 2025 Senior Notes, or otherwise could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects.
+Added: Genworth’s continued ownership of at least 80% of our common stock may limit our ability to raise additional capital by issuing common stock to third parties.
+Added: We currently join in the filing of a United States consolidated income tax return of which Genworth is the common parent (the “Genworth Consolidated Group”) with our other insurance and non-insurance affiliates.
+Added: As a consequence, we will pay Genworth our share of the consolidated income tax liability when we have taxable income or receive benefit for losses we contribute and which are utilized to the Genworth Consolidated Group.
+Added: Genworth and certain of its non-insurance subsidiaries expect to incur material federal income tax deductions in the future, primarily related to interest expense on third-party debt and expenses in respect
+Added: of stewardship with respect to the enterprise and subsidiary operations.
+Added: If we were to cease to be a member of the Genworth Consolidated Group, our income could no longer offset tax losses of other members of the Genworth Consolidated Group, and the Genworth Consolidated Group may not have sufficient taxable income from other operations to fully absorb the anticipated tax deductions of Genworth and its non-insurance subsidiaries, reducing the value of such tax deductions to Genworth.
+Added: Given that Genworth expects to incur federal income tax deductions for the foreseeable future, Genworth may find it beneficial to retain at least 80% ownership of our common stock for the foreseeable future.
+Added: As a condition to us remaining a member of the Genworth Consolidated Group, Genworth generally must continue to own an amount of our stock which possesses at least 80% of the total voting power of our stock and has a value equal to at least 80% of the total value of our stock.
+Added: For these purposes, the term “stock” does not include any stock that (i) is not entitled to vote;
+Added: (ii) is limited and preferred as to dividends and does not participate in corporate growth to any significant extent;
+Added: (iii) has redemption and liquidation rights which do not exceed the issue price of such stock (except for a reasonable redemption or liquidation premium) and (iv) is not convertible into another class of stock.
+Added: Accordingly, while we will have the ability to raise additional capital through certain preferred stock or other means, we will be limited in our ability to raise additional capital by issuing common stock to third parties without leaving Genworth’s consolidated group, which Genworth may not permit.
+Added: We may also be limited pursuant to restrictions imposed by insurance regulators, GSEs and any limitations under intercompany agreements.
+Added: This limitation on our ability to raise additional capital through the issuance of common stock could have a material adverse impact on our business, results of operations and financial condition.
Risks Relating to Taxation
10 unchanged sentences
On August 16, 2022, the U.S.
−Removed: federal government enacted the Inflation Reduction Act (“IRA”) which, among other things, implements a 15% corporate alternative minimum tax (“CAMT”) based on adjusted financial statement income and imposes a 1% excise tax on corporate stock repurchases.
−Removed: The effective date of these provisions is January 1, 2023.
−Removed: We do not expect the enactment of the CAMT to have a material impact on our financial statements as we do not expect to be an applicable corporation in 2023.
−Removed: The US Treasury Department is expected to issue guidance throughout 2023 that may differ from our interpretations and assumptions and that could alter our determination.
−Removed: Any excise tax incurred on our share repurchases will generally be recognized as part of the cost basis of the treasury stock acquired and will not be reported as part of income tax expense.
−Removed: There was no U.S.
−Removed: federal income tax-related legislation or administrative guidance issued in 2021 that had a significant impact on our results of operations or financial condition.
+Added: federal government enacted the Inflation Reduction Act (“IRA”) which, among other things, implemented a 15% corporate alternative minimum tax (“CAMT”) based on adjusted financial statement income and imposed a 1% excise tax on corporate stock repurchases.
+Added: The effective date of these provisions was January 1, 2023.
+Added: The enactment of the CAMT did not have a material impact on our financial statements for the year ended December 31, 2023 as we were not an applicable corporation in 2023.
+Added: Excise tax incurred on our share repurchases is recognized as part of the cost basis of the treasury stock acquired and not reported as part of income tax expense, and it did not have a material impact on our financial statements for the year ended December 31, 2023.
+Added: There was no other
+Added: federal income tax-related legislation or administrative guidance issued in 2022 or 2023 that had a significant impact on our results of operations or financial condition.
We are jointly and severally liable for any U.S.
federal income taxes owed by the Genworth Consolidated Group for taxable periods in which we are a member of the group.
−Removed: We currently join in the filing of a United States consolidated income tax return of which our Parent is the common parent (the “Genworth Consolidated Group”) with our other insurance and non-insurance affiliates.
+Added: We are currently a member of the Genworth Consolidated Group.
As a result, we are jointly and severally liable for the U.S.
1 unchanged sentence
Accordingly, for any taxable periods for which we are included in the Genworth Consolidated Group for U.S.
−Removed: federal income tax purposes, we could be liable in the event that any income tax liability was incurred but was not discharged by the Parent or any other member of the group.
−Removed: Our Parent, however, will be responsible for any taxes for which we are jointly and severally liable solely by reason of filing a combined, consolidated or unitary return with our Parent under the Tax Allocation Agreement.
−Removed: Our Parent’s continued ownership of at least 80% of our common stock may limit our ability to raise additional capital by issuing common stock to third parties.
−Removed: We are currently a member of the Genworth Consolidated Group.
−Removed: As a consequence, we will pay our Parent our share of the consolidated income tax liability when we have taxable income or receive benefit for losses we contribute and which are utilized to the Genworth Consolidated Group.
−Removed: Our Parent and certain of its non-insurance subsidiaries expect to incur material federal income tax deductions in the future, primarily related to interest expense on third-party debt and expenses in respect of stewardship with respect to the enterprise and subsidiary operations.
−Removed: If we were to cease to be a member of the Genworth Consolidated Group, our income could no longer offset tax losses of other members of the Genworth Consolidated Group, and the Genworth Consolidated Group may not have sufficient taxable income from other operations to fully absorb the anticipated tax deductions of our Parent and its non-insurance subsidiaries, reducing the value of such tax deductions to our Parent.
−Removed: Given that our Parent expects to incur federal income tax deductions for the foreseeable future, our Parent may find it beneficial to retain at least 80% ownership of our common stock for the foreseeable future.
−Removed: As a condition to us remaining a member of the Genworth Consolidated Group, our Parent generally must continue to own an amount of our stock which possesses at least 80% of the total voting power of our stock and has a value equal to at least 80% of the total value of our stock.
−Removed: For these purposes, the term “stock” does not include any stock that (i) is not entitled to vote;
−Removed: (ii) is limited and preferred as to dividends and does not participate in corporate growth to any significant extent;
−Removed: (iii) has redemption and liquidation rights which do not exceed the issue price of such stock (except for a reasonable redemption or liquidation premium) and (iv) is not convertible into another class of stock.
−Removed: Accordingly, while we will have the ability to raise additional capital through certain preferred stock or other means, we will be limited in our ability to raise additional capital by issuing common stock to third parties without leaving our Parent’s consolidated group, which our Parent may not permit.
−Removed: We may also be limited pursuant to restrictions imposed by insurance regulators, GSEs and any limitations under intercompany agreements.
−Removed: This limitation on our ability to raise additional capital through the issuance of common stock could have a material adverse impact on our business, results of operations and financial condition.
−Removed: If we leave the Genworth Consolidated Group, we may be required to make payments under the Tax Allocation Agreement and potentially to pay more income tax in the future.
−Removed: We are currently a member of the Genworth Consolidated Group, and we expect to continue to be a member as long as our Parent continues to own an amount of our stock which possesses at least 80% of the total voting power of our stock, and it has a value equal to at least 80% of the total value of our stock.
−Removed: See “—Our Parent’s continued ownership of at least 80% of our common stock may limit our ability to raise additional capital by issuing common stock to third parties”.
−Removed: Our Parent may cease to own such amount of stock in the future and in that event, we would cease to be a member of the Genworth Consolidated Group.
−Removed: In the event we were to cease being a member of the Genworth Consolidated Group, we may be required to make a payment to our Parent of $24.3 million for tax benefits related to foreign tax credits for which we received credit under the Tax Allocation Agreement, but which had not been utilized by the Genworth Consolidated Group at such time.
−Removed: These tax benefits would be available to reduce our tax liabilities in periods after we leave the Genworth Consolidated Group, subject to any applicable limitation that may apply with respect to such period or tax benefit.
−Removed: In addition, the tax consequences of any transaction between us and other members of the Genworth Consolidated Group which were deferred under the consolidated return rules would likely be triggered, which could require us to make additional payments under the Tax Allocation Agreement.
−Removed: In addition, in the event we were to cease being a member of the Genworth Consolidated Group, we and our Parent would be subject to the application of the “unified loss rules,” which may require us to pay more income tax in the future.
−Removed: Subject to certain exceptions, if our Parent has higher tax basis in our
−Removed: shares than the fair market value of our shares at the time we left the Genworth Consolidated Group, these rules could require us to reduce certain of our tax attributes, including the tax basis in our assets.
+Added: federal income tax purposes, we could be liable in the event that any income tax liability was incurred but was not discharged by Genworth or any other member of the group.
+Added: Genworth, however, will be responsible for any taxes for which we are jointly and severally liable solely by reason of filing a combined, consolidated or unitary return with Genworth under the Tax Allocation Agreement.
+Added: If we leave the Genworth Consolidated Group, we may be required to potentially pay more income tax in the future.
+Added: We are currently a member of the Genworth Consolidated Group, and we expect to continue to be a member as long as Genworth continues to own an amount of our stock which possesses at least 80% of the total voting power of our stock, and it has a value equal to at least 80% of the total value of our stock.
+Added: See “—Genworth’s continued ownership of at least 80% of our common stock may limit our ability to raise additional capital by issuing common stock to third parties”.
+Added: Genworth may cease to own such amount of stock in the future and in that event, we would cease to be a member of the Genworth Consolidated Group.
+Added: In the event we were to cease being a member of the Genworth Consolidated Group, we and Genworth would be subject to the application of the “unified loss rules,” which may require us to pay more income tax in the future.
+Added: Subject to certain exceptions, if Genworth has higher tax basis in our shares than the fair market value of our shares at the time we left the Genworth Consolidated Group, these rules could require us to reduce certain of our tax attributes, including the tax basis in our assets.
If such reduction occurred, we could be required to pay more income tax in the future.
−Removed: Our Parent could, at such time, elect to reduce its tax basis in our shares at such time to prevent such attribute reduction, although our Parent has not committed to do so.
+Added: Genworth could, at such time, elect to reduce its tax basis in our shares at such time to prevent such attribute reduction, although Genworth has not committed to do so.
At this time, we do not expect that the unified loss rules would cause a material reduction in the tax basis of our assets if we were to depart the Genworth Consolidated Group.
3 unchanged sentences
General Risk Factors
−Removed: We are a holding company, and our only material assets are our equity interests in our subsidiaries.
+Added: We are a holding company, and a large majority of our assets are the equity interests in our subsidiaries.
As a consequence, we depend on the ability of our subsidiaries to pay dividends and make other payments and distributions to us in order to meet our obligations.
4 unchanged sentences
Our subsidiaries may not be able to, or may not be permitted by regulators to, pay dividends or make distributions to enable us to meet our obligations.
−Removed: Each subsidiary is a distinct legal entity and legal and contractual restrictions may also limit our ability to obtain cash from our subsidiaries.
+Added: Each subsidiary is a distinct legal entity, which may be subject to legal and
+Added: contractual restrictions that may also limit our ability to obtain cash from our subsidiaries.
If the cash we receive from our subsidiaries pursuant to dividends and other arrangements is insufficient to fund any of these obligations, or if a subsidiary is unable or unwilling to pay future dividends or distributions to us to meet our obligations, we may be required to raise cash through, among other things, incurring debt (including convertible or exchangeable debt), selling assets or issuing equity.
−Removed: The payment of dividends and other distributions by our insurance subsidiaries is dependent on, among other things, their financial condition and operating performance, corporate law restrictions, insurance laws and regulations and maintaining adequate capital to meet the requirements mandated by PMIERs, including the GSE Restrictions.
+Added: The payment of dividends and other distributions by our insurance subsidiaries is dependent on, among other things, their financial condition and operating performance, corporate law restrictions, insurance laws and regulations and maintaining adequate capital to meet the requirements mandated by PMIERs.
In general, dividends and distributions are required to be submitted to an insurer’s domiciliary department of insurance for review.
6 unchanged sentences
The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements or misrepresentations.
−Removed: While management
−Removed: continually reviews the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time.
+Added: While management continually reviews the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time.
+Added: Additionally, in order to comply with new accounting guidance or disclosure requirements from our regulators, we are required to interpret the rules, develop new processes and potentially generate new data, which could expose us to incremental risk.
Any material weaknesses in internal control over financial reporting or any other failure to maintain effective disclosure controls and procedures could result in material errors or restatements in our historical financial statements or untimely filings, which could cause investors to lose confidence in our reported financial information, and a decline in our share price.
3 unchanged sentences
We face the risk of litigation and regulatory proceedings or other actions in the ordinary course of operating our business, including class action lawsuits.
−Removed: We are also subject to litigation arising out of our general business activities such as our contractual and employment relationships.
+Added: We may also be subject to litigation arising out of our general business activities such as our contractual and employment relationships.
Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot determine with certainty the ultimate outcome of any such litigation or proceedings.
1 unchanged sentence
Moreover, even if we ultimately prevail in the litigation, regulatory proceeding or other action, we could suffer significant reputational harm and incur significant legal expenses and such litigation may divert management’s attention and resources, which could have a material adverse effect on our business, financial condition or results of operations.
−Removed: Changes in accounting and reporting standards issued by the Financial Accounting Standards Board or other standard-setting bodies and insurance regulators could materially adversely affect our business, results of operations and financial condition.
−Removed: Our financial statements are subject to the application of U.S.
−Removed: GAAP, which is periodically revised.
−Removed: Accordingly, from time to time, we are required to adopt new or revised accounting standards issued by recognized authoritative bodies, including the Financial Accounting Standards Board (the “FASB”).
−Removed: We are also subject to reporting requirements from the SEC.
−Removed: It is possible that future accounting and reporting standards we are required to adopt could change the current accounting treatment that we apply to our financial statements, including impacting the calculation of net earnings, stockholders’ equity and other relevant financial statement line items.
−Removed: The impact of changes in accounting and reporting standards, particularly those that apply to insurance companies, cannot be predicted, but such changes could have a material adverse effect on our business, results of operations and financial condition.
−Removed: Such changes may also cause additional volatility in reported earnings, decrease the understandability of our financial results and affect the comparability of our reported results with the results of others.
−Removed: In addition, we may be unable to implement new accounting guidance or other proposals by the adoption date which would materially adversely impact our business.
−Removed: Furthermore, the required adoption of future accounting and reporting standards could require us to make significant changes to systems and use additional resources, which may result in significant costs.
If we are unable to attract, on-board, retain and motivate qualified employees or senior management, our business, results of operations and financial condition may be adversely impacted.
1 unchanged sentence
We face intense competition in our industry and local job market for key employees with demonstrated ability, including actuarial, finance, legal, investment, risk, compliance, information technology and other professionals.
−Removed: We also face natural or man-made disasters or pandemics that could at times impact our ability to on-board new hires.
−Removed: See “—The occurrence of natural or man-made disasters or public health emergencies, including pandemics and disasters caused or exacerbated by climate change, could materially adversely affect our business, results of operations and financial condition.” Furthermore, as the future of work evolves and work arrangements such as a remote
−Removed: work environment become more flexible and commonplace, our ability to compete for qualified employees could be further challenged.
−Removed: A remote work environment could expand competition among employers and may put us at a disadvantage if we are unable or unwilling to implement certain of these policies.
+Added: Furthermore, should work arrangements, such as a remote work environment, become more flexible and commonplace, our ability to compete for qualified employees could be further challenged.
+Added: Remote work has expanded competition among employers and may put us at a disadvantage if we are unable or unwilling to implement certain of these policies.
We cannot be sure we will be able to on-board, attract, retain and motivate the desired workforce, and our failure to do so could have a material adverse effect on business, results of operations and financial condition.
2 unchanged sentences
We would be adversely affected if we fail to plan adequately for the succession of our senior management and other key employees.
−Removed: While we have succession plans and long-term compensation plans, including retention programs, designed to retain our employees, our succession plans may not operate effectively, and our compensation plans cannot guarantee that the services of these employees will continue to be available to us.
+Added: While we have succession plans and long-term compensation plans, including retention programs, designed to retain our employees, our succession plans may not operate effectively, and our compensation plans cannot guarantee that the services of our employees will continue to be available to us.
We rely upon third-party vendors who may be unable or unwilling to meet their obligations to us.
−Removed: We rely on third-party vendors to efficiently execute in-house processes as well as to provide unique or cost-efficient products or services.
+Added: We rely on third-party vendors to provide unique or cost-efficient products or services.
We rely on the controls and risk management processes of these third parties.
−Removed: While we have certain contractual protections and perform third-party vendor due diligence procedures, there is no assurance that third-party vendors will provide accurate and complete information to us, meet their obligations on a timely basis and adhere to the provisions of our agreements.
+Added: While we have certain contractual protections and perform third-party vendor due diligence procedures, there is no assurance that third-party vendors will provide accurate and complete information to us, meet their obligations on a timely basis or adhere to the provisions of our agreements.
Additionally, if a third-party vendor is unable to source and maintain a capable work force or supply Enact with contractors during times of peak volume, then we may be unable to satisfy our customer requirements.
In addition, some third-party vendors may provide unique services and the loss of those services may be difficult to replace.
−Removed: Any of the above scenarios could lead to reputational damage and a financial impact.
+Added: Any of the above scenarios could lead to reputational damage, which could result in a material adverse effect on our business, results of operations and financial condition.
Our computer systems may fail or be compromised, and unanticipated problems could materially adversely impact our disaster recovery systems and business continuity plans, which could damage our reputation, impair our ability to conduct business effectively and materially adversely affect our business, results of operations and financial condition.
Our business is highly dependent upon the effective operation of our computer systems.
−Removed: We also have arrangements in place with our partners and other third-party service providers through which we share and receive information, including the submission of new mortgage insurance applications.
+Added: We also have arrangements in place with our customers and other third-party service providers through which we share and receive information, including the submission of new mortgage insurance applications.
We also rely on these systems throughout our business for a variety of functions, including processing claims, providing information to customers, performing actuarial analyses and maintaining financial records.
−Removed: Despite the implementation of security controls and back-up measures, our computer systems and those of our partners and third-party service providers have been and may be in the future vulnerable to system failures, physical or electronic intrusions, computer malware or other attacks, programming errors and similar disruptive problems.
+Added: Despite the implementation of security controls and back-up measures, our computer systems and those of our customers and third-party service providers have been and may be in the future vulnerable to system failures, physical or electronic intrusions, computer malware or other attacks, programming errors and similar disruptive problems.
The failure of these systems for any reason could cause significant interruptions to our operations, which could result in a material adverse effect on our business, results of operations and financial condition.
Technology continues to expand and plays an ever-increasing role in our business.
−Removed: While it is our goal to safeguard information assets from physical theft and cybersecurity threats, there can be no assurance that our information security will detect and protect information assets from these ever-increasing risks.
+Added: While it is our goal to safeguard information assets from physical theft and cybersecurity threats, there can be no
+Added: assurance that our information security will detect and protect information assets from these ever-increasing risks.
Information assets include both information itself in the form of computer data, written materials, knowledge and supporting processes, and the information technology systems, networks, other electronic devices and storage media used to store, process, retrieve and transmit that information.
As more information is used and shared by our employees, customers and suppliers, both within and outside our company, cybersecurity threats become expansive in nature.
−Removed: Confidentiality, integrity and availability of information are essential to maintaining our reputation, legal position and ability to conduct our operations.
−Removed: Although we have implemented controls and continue to train our employees, a cybersecurity
−Removed: event could still occur that would cause damage to our reputation with our customers and other stakeholders and could have a material adverse effect on our business, results of operations and financial condition.
+Added: Further, cybersecurity threats have continued to grow in sophistication, in part through the deployment of artificial intelligence technologies.
+Added: Confidentiality, integrity, security and availability of information are essential to maintaining our reputation and ability to conduct our operations.
+Added: Although we have implemented controls and continue to train our employees, a cybersecurity event could still occur that would cause damage to our reputation with our customers and other stakeholders and could have a material adverse effect on our business, results of operations and financial condition.
See “—We collect, process, store, share, disclose and use consumer information and other data, and an actual or perceived failure to protect such information and data or respect users’ privacy could damage our reputation and brand and adversely affect our business, results of operations and financial condition.”
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The failure of our disaster recovery systems and business continuity plans could adversely impact our profitability and our business.
+Added: Risks related to emerging and changing technology, including artificial intelligence, could impact our results of operations or financial condition.
+Added: Our future success depends, in part, on our ability to anticipate and respond effectively to the risk of, and the opportunity presented by, digital disruption and other technology change.
+Added: These may include new applications or insurance-related services based on artificial intelligence, machine learning, robotic process automation, blockchain or new approaches to data mining.
+Added: We may be exposed to competitive risks related to the adoption and application of new technologies by established market participants or new entrants.
+Added: We may not be successful in anticipating or responding to these developments on a timely and cost-effective basis and our ideas may not be accepted in the marketplace.
+Added: Additionally, the effort to gain technological expertise and develop new technologies in our business requires us to incur significant expenses.
+Added: Investments in technology systems and data analytics capabilities may not deliver the benefits or perform as expected or may be replaced or become obsolete more quickly than expected, which could result in operational difficulties or additional costs.
+Added: If we cannot offer new technologies or data analytics solutions as quickly as our competitors, or if our competitors develop more cost-effective technologies,
+Added: data analytics solutions or other product offerings, we could experience a material adverse effect on our operating results, customer relationships, growth and compliance programs.
+Added: Poor implementation of new technologies, including artificial intelligence, by us or our third-party service providers, could subject us to additional risks we do not understand or cannot adequately mitigate, which could have an impact our results of operations and financial condition.
The occurrence of natural or man-made disasters or public health emergencies, including pandemics and disasters caused or exacerbated by climate change, could materially adversely affect our business, results of operations and financial condition.
−Removed: We are exposed to various risks arising out of natural and man-made disasters and public health emergencies, including earthquakes, hurricanes, floods, wildfires, tornadoes, other extreme weather events, acts of terrorism, military actions (including international activity that impacts the United States’ economy, such as the current geopolitical unrest in Ukraine) and pandemics, similar to COVID-19.
+Added: We are exposed to various risks arising out of natural and man-made disasters and public health emergencies, including earthquakes, hurricanes, floods, wildfires, tornadoes, other extreme weather events, acts of terrorism, military actions (including international activity that impacts the United States’ economy, such as the current geopolitical unrest in Ukraine and the Middle East) and pandemics, similar to COVID-19.
The frequency and severity of extreme weather events and natural disasters may be increased by the effects of climate change, which is resulting in an increase in average global temperatures and rising sea levels.
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A natural or man-made disaster or a public health emergency could trigger an economic downturn in the areas directly or indirectly affected by the disaster.
−Removed: While it is uncertain the extent to which such events may impact our business, the consequences of these events and actions taken by governmental authorities, the GSEs, our customers or others in connection therewith could lead to disruption of the economy, which may erode consumer and investor confidence levels or lead to increased volatility in the financial markets.
+Added: While it is uncertain the extent to which such events may impact our business, the consequences of these events and actions taken by governmental authorities, the GSEs, our customers or others in connection therewith could lead to disruption of the economy, which may erode consumer and investor confidence levels or lead to increased volatility in the financial and housing markets.
These consequences could, among other things, result in an adverse effect on home prices in those areas or higher unemployment, which could result in increased loss experience.
−Removed: See “—COVID-19 has and could continue to adversely impact our business, results of operations and financial condition.” and “—A deterioration in economic conditions, a severe recession or
−Removed: a decline in home prices, all of which could be driven by many potential factors, including inflation, may adversely affect our loss experience.” A natural or man-made disaster or a pandemic/ public health emergency could also disrupt public and private infrastructure, including communications and financial services, any of which could disrupt our normal business operations, and could adversely affect the value of the assets in our investment portfolio if it affects companies’ ability to pay principal or interest on their securities or the value of the underlying collateral of structured securities.
+Added: A natural or man-made disaster or a pandemic/public health emergency could also disrupt public and private infrastructure, including communications and financial services, any of which could disrupt our normal business operations, and could adversely affect the value of the assets in our investment portfolio if it affects companies’ ability to pay principal or interest on their securities or the value of the underlying collateral of structured securities.
Natural or man-made disasters or pandemics or public health emergencies could also disrupt the operations of our counterparties and third-party suppliers or result in increased prices for the products and services they provide to us, which could lead to increased reinsurance rates, less favorable terms and conditions and reduced availability of reinsurance.
2 unchanged sentences
however, the increase in Minimum Required Assets is not as great for certain delinquent loans in areas that FEMA has declared major disaster areas.
−Removed: For example, in response to COVID-19, the GSEs made temporary revisions to PMIERs in the PMIERs Amendment, providing relief on the risk-based required asset amount factor for certain non-performing loans impacted by a COVID-19 hardship.
−Removed: See “—If we are unable to continue to meet the requirements mandated by PMIERs, the GSE Restrictions and any additional restrictions imposed on us by the GSEs, we may not be eligible to write new insurance on loans acquired by the GSEs, which would have a material adverse effect on our business, results of operations and financial condition.” An increase in delinquency notices resulting from a natural or man-made disaster or a pandemic/public health emergency may result in an increase in “Minimum Required Assets” and a decrease in the level of our excess “Available Assets” that is discussed in our risk factor titled “—Risks Relating to Regulatory Matters—Inability to maintain sufficient regulatory capital could result in restrictions or prohibitions on our doing business or impact our financial strength ratings which could have a material adverse impact on our business, results of operations and financial condition.”
−Removed: Provisions of state corporate and state insurance laws, of PMIERs and of our amended and restated certificate of incorporation and our amended and restated bylaws may prevent or delay an acquisition of us, which could decrease the trading price of our common stock.
−Removed: State laws, PMIERs and provisions of our amended and restated certificate of incorporation and our amended and restated bylaws may delay, deter, prevent, or render more difficult a takeover attempt that our stockholders might consider in their best interests.
−Removed: For example, such laws or provisions may prevent our stockholders from receiving the benefit from any premium to the market price of our common stock offered by a bidder in a takeover context.
−Removed: Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future.
−Removed: The insurance laws and regulations of the various states in which our insurance subsidiaries are organized may delay or impede a business combination involving our company.
−Removed: State insurance laws prohibit an entity from acquiring control of an insurance company without the prior approval of the domestic insurance regulator.
−Removed: Under most states’ statutes, an entity is presumed to have control of an insurance company if it owns, directly or indirectly, 10% or more of the voting stock of that insurance company or its parent company.
−Removed: In addition, PMIERs may delay or impede a business combination or change of control involving our company.
−Removed: PMIERs requires us to obtain the prior written approval of the GSEs before we permit a material change in, or acquisition of, control or beneficial ownership of our company or make changes to our corporate or legal structure.
−Removed: These restrictions may delay, deter, or prevent a potential merger or sale of our company, even if our board of directors decides that it is in the best interests of stockholders for us to merge or be sold.
−Removed: These restrictions also may delay sales by us or acquisitions by third parties of our insurance subsidiaries.
−Removed: Our amended and restated certificate of incorporation and bylaws include provisions that may have anti-takeover effects, such as prohibiting stockholders from calling special meetings of our stockholders
−Removed: and, from and after such time as our Parent ceases to beneficially own more than 50% of our outstanding common stock, from acting by written consent.
+Added: An increase in delinquency notices resulting from a natural or man-made disaster or a pandemic/public health emergency may result in an increase in “Minimum Required Assets” and a decrease in the level of our excess “Available Assets” that is discussed in our risk factor titled “—Risks Relating to Regulatory Matters—Inability to maintain sufficient regulatory capital could result in restrictions or prohibitions on our doing business or impact our financial strength ratings which could have a material adverse impact on our business, results of operations and financial condition.”
Our amended and restated certificate of incorporation contains exclusive forum provisions, which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers or employees.
10 unchanged sentences
In 2022, we announced the initiation of a quarterly dividend for our common shareholders as well as a Stock Repurchase Plan that allows for repurchases of our common stock.
+Added: We announced an additional share repurchase authorization in 2023.
Our ability to return capital to our shareholders is dependent on our business results and the macroeconomic environment and may be materially and adversely affected by the risk factors discussed herein.
Although we anticipate continuing to pay quarterly dividends to our shareholders, future dividend payments and share repurchase authorizations are subject to review and approval by our Board of Directors after considering, among other factors, economic and regulatory constraints, current risks to the Company, and subsidiary performance.
−Removed: In addition, future dividend payments or other means of returning capital to our shareholders are also subject to approval by the Parent, compliance with the terms of our debt agreements and applicable laws and regulations.
−Removed: Our ability to repurchase stock may also be restricted
−Removed: by our limited public float and relationship with our Parent.
−Removed: See “— Our Parent’s continued ownership of at least 80% of our common stock may limit our ability to raise additional capital by issuing common stock to third parties.”
−Removed: As a result, no assurance can be given that we will be able to continue to pay dividends to our shareholders, repurchase our common stock, or return capital through other means, in the future or that the level of any future dividends or other return of capital will achieve a market yield or increase or even be maintained over time, any of which could materially and adversely affect the market price of our common stock.
−Removed: Unresolved Staff Comments
+Added: In addition, future dividend payments or other means of returning capital to our shareholders are also subject to approval by Genworth, compliance with the terms of our debt agreements and applicable laws and regulations.
+Added: Our ability to repurchase stock may also be restricted by our limited public float and relationship with Genworth.
+Added: See “— Genworth’s continued ownership of at least 80% of our common stock may limit our ability to raise additional capital by issuing common stock to third parties.”
+Added: As a result, no assurance can be given that we will be able to continue to pay dividends to our shareholders, repurchase our common stock, or return capital through other means, in the future or that the level of any future return of capital will achieve a market yield or increase or even be maintained over time, any of which could materially and adversely affect the market price of our common stock.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.