Genworth Financial Inc. (GNW) reported operating earnings per share of 23 cents available to the common stockholders. This compares unfavorably with the Zacks Consensus Estimate of 27 cents. However, the results were well ahead of the prior-year quarter earnings of 3 cents per share.
The miss was due to lower-than-expected results at its life insurance business and International segment. Though its U.S. mortgage insurance segment continued to experience losses in the quarter, results significantly improved from the prior quarters driven by an increase in loss mitigation benefits.
Genworth’s net income available to common shareholders was $178 million or 36 cents per share, compared with a loss of $469 million or $1.08 per share reported in the year-ago quarter.
Revenue increased 40% year over year to $2.42 billion. The company reported a drop in net investment losses to $42 million, down from $54 million in the prior quarter and $483 million in the year-ago quarter. Its unrealized investment losses also improved in the quarter. Net unrealized investment losses declined to $0.9 billion from $1.4 billion in the prior quarter and $4.1 billion in the prior-year quarter.
Segment Performances
The Retirement and Protection segment reported a net operating income of $122 million, compared with $38 million in the prior-year quarter. Though earnings in life insurance and long term care lines were down in the quarter, earnings were up in the wealth management and retirement income lines. The life insurance business experienced less favorable mortality rates.
The International segment reported a net operating income of $91 million, compared with $101 million in the prior-year quarter. Results reflect a drop in Canadian earnings, partially offset by improved results of the Australian business.
The U.S. Mortgage Insurance segment reported net operating losses of $36 million, well below the $74 million loss in the prior quarter and the $135 million loss incurred in the prior-year quarter, primarily from improved losses and continued loss mitigation benefits. Flow delinquencies were down 5% sequentially.
Consolidated U.S. life companies ended the quarter with an estimated risk based capital (RBC) ratio of approximately 385%. The risk-to-capital ratio in the U.S. mortgage insurance companies was 14.9:1, up slightly from 14.6:1 in the prior quarter.
Genworth’s capital bolstering initiatives, introduction of high-margin products, distribution expansion, improved pricing and strict underwriting standards augur well, going forward. Though its mortgage insurance unit continues to experience losses, this business is showing signs of improvement and losses are moderating.
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