Sarah has been with Genworth for 10 years and she held several leadership roles in Genworth's finance organization.
Genworth's U.S. GAAP net income for the full year was $904 million.
Adjusted operating income for 2021 was $765 million.
Adjusted operating income was $1.48 per share, which is well above analysts' expectations and our own internal projections.
These outstanding results were led by a record year for NAT and adjusted operating income available to Genworth shareholders in 2021 was $520 million.
Full year adjusted operating income for U.S. life and runoff combined was $321 million, led by strong LTC adjusted operating income of $445 million for the year.
We have included our statutory information through September 2021 on pages 15 and 16 of the investor deck.
life statutory after-tax net income for the full year to be approximately $660 million.
The strong net income result was driven by outstanding results for LTC, with pre-tax statutory income of approximately $910 million in 2021.
We expect GLIC's capital and surplus to increase from $2.1 billion at the end of 2020 to approximately $2.9 billion at year-end 2021.
Similarly, GLIC's negative unassigned surplus is expected to improve from negative $1.8 billion to approximately negative $1.0 billion at year-end.
GLIC's RBC ratio at year-end 2021 is projected to be approximately 290, an increase of approximately 61 points from 229 at the end of 2020.
Genworth's board considered several different options for Enact in 2021, including selling 100% of Enact, maintaining 100% ownership before deciding ultimately to move forward with a partial IPO.
Genworth therefore decided to proceed with a partial IPO and sold approximately 18.4% of Enact shares, which we believe was the best viable option for shareholders.
Genworth's 81.6% retained interest will allow us to receive significant future cash flows from Enact to enable delevering at Genworth and return of capital to Genworth shareholders.
I'm extremely proud of the significant progress achieved in 2021 on our second strategic priority, which is to reduce Genworth's holding company debt to approximately $1 billion.
We reduced our outstanding debt by approximately $2.1 billion last year, including paying off the AXA promissory note and redeeming the $400 million of parent holding company debt due in 2023.
We now have approximately $1.2 billion of parent holding company debt outstanding.
However, because Genworth ended the fourth quarter with cash of $356 million, our net debt position is already below $1 billion.
Our U.S. GAAP debt to capital ratio at the end of the year was 13%, one of the lowest among life insurers that report this metric.
After we retire the remaining of Genworth's $280 million of debt due in 2024, our pro forma cash flow coverage will be approximately five times based on a conservative view of projected future cash flows.
We are hopeful that with a substantial reduction in outstanding parent holding company debt in 2021, our improved cash interest coverage ratio, significant excess cash available to repurchase our outstanding 2024 debt, the long duration of the remaining 2034 and 2066 debt and the expectation of continued strong U.S. statutory net income that the rating agents will continue to upgrade the parent debt ratings over time.
During 2021, Genworth delivered a new record for approved LTC rate increases of $403 million from 45 states on 173 separate rate filings.
The net present value of the 2021 LTC rate increases was approximately $2.3 billion.
Our 2021 LTC margins remain positive, in the $0.5 million to 1 -- $0.5 billion to $1 billion range, and the assumption update did not cause a financial statement impact in the quarter.
In addition to the approximately $2.3 billion NPV benefit from the $403 million of approved increases in 2021, the models project based on the latest assumption changes that the NPV achieved since 2012 has improved by an additional $2.8 billion compared to our earlier projections.
As of the end of 2021, Genworth now projects that the LTC premium increases and benefit reductions achieved since 2012 have improved the legacy LTC portfolio by $19.6 billion on a net present value basis.
This is a $5.1 billion increase from the $14.5 billion that reported at the end of 2020.
If we can achieve both objectives, it would facilitate the future spinoff of Genworth's 81.6% of Enact because the remaining Genworth business would be viable as a stand-alone public company.
Joost has approximately 30 years of experience in the insurance industry.
Joost worked with me at ING Group for over a decade, including stints helping me oversee ING's worldwide insurance and investment management businesses in over 40 countries and restructuring ING's very large side agency distribution channels in the emerging markets in Asia, Latin America and Eastern Europe.
Acquired by Genworth in 2008, CareScout is a market leader in providing LTC care assessments and care support through our network of 35,000 clinicians nationwide.
We see tremendous potential in the business as part of our LTC growth strategy, so we are making an investment of approximately $8 million in CareScout in the first quarter to expand its clinical assessment capabilities in care support solutions.
We expect this investment to triple the annual assessment revenues in the next few years to approximately $30 million.
Legacy LTC products were sold pursuant to a regulatory regime designed to make premium adjustments difficult to obtain even though it is impossible to price products with assumptions that will hold, and of course, they did not hold for 30 to 40 years.
The product has a maximum lifetime benefit of $250,000, and the pricing assumptions for the key LTC risk were interest rates, lapses, morbidity and mortality are based on Genworth's current experience and projections for these factors.
However, because we understand that these pricing assumptions may not hold over the next 30 to 40 years, we will only write new business in states that will allow annual rerating to change premiums if pricing assumptions and market reality differ over time.
We expect that 75% of the risk with a new LTC product will be reinsured with the A+ rated reinsurer, though the level of reinsurance that we expect to be reduced to 50% over time.
Given that our net debt position is now below $1 billion, and we expect Enact to share their dividend policy later this year, we plan to consider initiating a capital management program later in 2022.
The fourth quarter was another excellent quarter for Genworth, with net income of $163 million and adjusted operating income of $164 million or $0.32 per share.
In this quarter alone, we fully retired $400 million of debt due in August 2023 and reduced our February 2024 debt maturity by $118 million for a total of $518 million.
Even with this debt management activity, we ended the quarter with a solid holding company cash and liquidity position of $356 million.
For the fourth quarter, Enact reported adjusted operating income of $125 million to Genworth and a strong loss ratio of 3%, driven in part by a $32 million pre-tax reserve release on pre-COVID delinquencies.
I'll note that Genworth's fourth quarter adjusted operating income excludes 18.4% of minority interest, which accounted for $29 million of adjusted operating income.
Last quarter, minority interest accounted for only $4 million of adjusted operating income due to the timing of the initial public offering in September.
Enact saw a 9% year-over-year increase in insurance in-force growth, driven in part by $21 billion of new insurance written in the quarter.
In addition, Enact finished the quarter with an estimated PMIER sufficiency ratio of 165% or approximately $2 billion of published requirements.
Subsequent to the quarter, in January, Enact executed an excess of loss reinsurance transaction, which will cover the 2022 production and is expected to provide approximately $300 million in PMIERs credit.
The $1.23 per share dividend generated $163 million for Genworth.
We reported $41 million of adjusted operating income in the quarter, driven by the continued strength of LTC earnings from the multiyear rate action plan and variable investment income.
Results in the quarter also included charges in our term universal life and universal life insurance products of $102 million related to assumption updates and DAC recoverability testing.
In our long-term care insurance business, we reported strong results with fourth quarter adjusted operating income of $119 million compared to $133 million reported in the prior quarter and $129 million in the prior year.
This reserve reduced LTC earnings by $121 million after tax during the quarter.
As of year-end, the pre-tax balance of the profits followed by losses reserve was $1.3 billion, up from $625 million at year-end 2020.
Our fourth quarter adjusted operating earnings from in-force rate actions were $296 million after tax and before applying profits followed by losses, which increased from $225 million in the fourth quarter of 2020.
The legal settlement on our LTC choice one policy forms continued to favorably impact our results by $57 million or $14 million after profits followed by losses this quarter.
The choice one legal settlement applies to approximately 20% of our LTC policyholders.
As of quarter end, approximately 65% of the settlement class had reached the end of this election period.
The one for our PCS 1 and PCS 2 policy forms comprises approximately 15% of our LTC policyholders and is subject to final court approval.
Additionally, we've reached an agreement in principle for a settlement on our choice two policy forms, which covers approximately 35% of our LTC policyholders or as many policies as the two other settlements combined.
During the quarter, we received approvals impacting approximately $223 million of premiums with a weighted average approval rate of 36%.
On a year-to-date basis, we received approvals impacting nearly $1.1 billion in premiums with a weighted average approval rate of 37%.
This is favorable compared to the prior year when we received approvals impacting $1 billion in premiums with a weighted average approval rate of 34%.
We made a minimal adjustment to our previously established COVID-19 mortality reserve for the quarter, decreasing the cumulative balance to $134 million.
In the fourth quarter, given the gradual increase in incidents, we reduced our COVID-19 IBNR claim reserve by $34 million, resulting in a cumulative balance of $75 million.
The combined margin was approximately $500 million to $1 billion, which is consistent with the prior year's range.
Since margin testing remained positive, we're not required to increase our LTC active life reserves for policies not yet on claim as the model benefit from adjustments to our multiyear rate action plan offsets the approximately $4 billion impact from the assumption updates.
As evidenced on page 13, 44% of policyholders have selected reduced benefit or non-forfeiture options, which reduces our long-term risk.
We now project the need in aggregate for approximately $28.7 billion in LTC premium increases and benefit reductions on a net present value basis, which is important in our progress toward achieving economic breakeven on our legacy LTC block.
While this amount has increased as a result of the assumption update, we are over two-thirds of the way there, having achieved $19.6 billion in rate actions since 2012.
The $19.6 billion we've achieved has grown significantly since last year, in part because of the value of our 2021 rate action approvals of $2.3 billion.
Additionally, the benefit utilization trend assumption update for higher cost of care growth increased the value of our previously achieved rate actions by $2.8 billion.
The remaining amount we have left to achieve is $9 billion, which has grown from last year, largely to offset the unfavorable impact from the assumption updates.
We reported a fourth quarter adjusted operating loss of $98 million compared to operating losses of $68 million in the prior quarter and $20 million in the prior year.
The fourth quarter included approximately $27 million after tax and COVID-19 claims based upon death certificates received to date.
As part of our annual assumption review, we made assumption updates on the term universal and universal life products as well for both mortality and interest rates, which resulted in a combined unfavorable impact of $70 million in the fourth quarter.
In our universal life products, we recorded a $32 million after-tax charge for DAC coverability testing compared to $30 million in the prior quarter and $50 million in the prior year.
In fixed annuities, adjusted operating earnings of $20 million for the quarter included the benefit from favorable mortality in the single premium immediate annuity products.
In the runoff segment, our adjusted operating income was $16 million for the fourth quarter compared to $11 million in the prior quarter and $13 million in the prior year.
We expect consolidated capital in Genworth Life Insurance Company, or GLIC, as a percentage of RBC to be approximately 290% at December 31, in line with the 291% at September 30.
This is due in part to the expected negative impacts of the life assumption updates and cash flow testing offset by the $170 million statutory capital benefit from the life block reinsurance transaction completed in the quarter.
RBC is significantly higher than the 229% at December 31, 2020, due primarily to the favorable LTC statutory earnings in the year.
We expect GLIC consolidated year-end capital in surplus to be close to $3 billion as we've seen a strong trend throughout the year.
Pages 15 and 16 highlight recent trends in statutory performance for LTC and GLIC consolidated on a quarter-lag basis due to the timing of when statutory results are finalized.
Rounding out our results, we reported an adjusted operating loss in the corporate and other segment of $18 million, which was an improvement of $31 million from the prior year, reflecting lower interest expense given the reduction of holding company debt, as well as lower corporate expenses.
We ended the quarter with $356 million of cash and liquid assets.
Page 17 provides a detailed cash activity for the quarter.
Key items in the quarter included the debt reduction of $518 million of principal, the dividend from Enact of $163 million, and $75 million in the intercompany cash tax payments, reflecting strong underlying taxable income from Enact and the U.S. life insurance business.
The holding company received $370 million in cash taxes in 2021.
We will continue to utilize holding company tax assets in 2022 and anticipate that the holding company will receive approximately $200 million in cash taxes in 2022, subject to ultimate taxable income generated.
For the full year 2021, net income was very strong at $904 million versus $178 million in 2020, and adjusted operating income was $765 million versus $310 million in 2020.
Enact contributed $520 million in adjusted operating earnings to Genworth in 2021, and we're very pleased with LTC's $445 million in adjusted operating earnings.
While statutory results are still in progress, we estimate full year after-tax statutory net income for the U.S. life insurance business of $660 million, driven by LTC's estimated $910 million of pre-tax statutory income.
Throughout 2021, we improved our financial strength and flexibility each quarter, putting up strong operating results, driving efficiencies to reduce our annual run rate expenses by approximately $75 million, maximizing the value of our assets and reducing our debt and overall cost of capital.
We retired over $2 billion in debt, including the AXA promissory note and of approximately $1.2 billion of parent holding company debt remaining as of year-end.
We plan to retire the remaining 2024 debt of $282 million ahead of its maturity date.
After we retire the 2024 debt, our next debt maturity will be more than a decade away in 2034, and we would expect cash interest coverage to be approximately five times based on a conservative view of projected cash flows, which will be great progress.
While it has been over 13 years since Genworth returned capital to shareholders, we plan on announcing more specific capital management plans later this year given the tremendous improvement in our financial condition achieved in 2021.
The timing is dependent on redeeming the remaining $282 million of debt due in 2024 and Enact's announcement of its future dividend policy.

Summary:
The fourth quarter was another excellent quarter for Genworth, with net income of $163 million and adjusted operating income of $164 million or $0.32 per share.