Genworth Financial Inc. (GNW) reported its fourth quarter operating income of 17 cents per share, in line with the Zacks Consensus Estimate. Results breezed past the year-ago loss of 28 cents. Operating profit for the quarter stood at $86 million, reversing the loss of$135 million, a year ago.

Fourth quarter results stood to benefit form better performances at U.S. Life Insurance and U.S. Mortgage Insurance.

Including net investment gain of $1 million and gain on sale of business of $20 million, net income available to common shareholders was $107 million or 22 cents per share in the reported quarter compared with net loss of $161 million or 33 cents per share available to common shareholders in the comparable period last year. The prior-year quarter included net investment loss of $26 million.

Full-year operating earnings came at 43 cents, a penny ahead of the Zacks Consensus Estimate and 18 cents ahead of year-ago earnings. Operating earnings were $214 million, almost a 70% increase from 2010.

Including net investment losses of $112 million and gain on sale of business of $20 million, net income available to common shareholders was $122 million or 25 cents per share in 2011compared with $142 million or 29 cents per share available to common shareholders in the comparable period last year. The prior year included net investment loss of $90 million.

Operational Performance

Genworth’s total revenue increased 0.3% year over year in the fourth quarter to $2.6 billion. The top-line was almost in line with the Zacks Consensus estimate.

Full year 2011 revenue improved 2.5% year over year to $10.3 billion. The top-line, however, missed the Zacks Consensus estimate of $10.2 billion.

Premium revenue at Genworth decreased 7.8% year over year to $1.35 billion in the quarter. The full-year premium of $5.7 billion declined 2.5% year over year.

Net investment income decreased 4.2% year over year to $827 million. However, full-year net investment income increased 3.5% year over year.

Segment Update

Insurance and Wealth Management: Net operating income increased 11.5% year over year to $145 million in the quarter, largely led by higher income from U.S. Life Insurance.

Mortgage Insurance: Net operating loss narrowed to $16 million in fourth quarter from $254 million in the fourth quarter of 2010. The loss narrowed due to lower losses at U.S. Mortgage Insurance.

Corporate and Run-Off: The net operating loss widened to $43 million in the quarter under review from an operating loss of $11 million in the prior-year period.

Financial Update

At 2011 end, cash, cash equivalents and invested assets of Genworth stood at $77.1 billion, higher than $72.3 billion at 2010-end.

Genworth’s long-term borrowings decreased to $4.73 billion at the end of 2011 from $4.95 million at 2010 end.

Zacks Rank

We retain our Neutral recommendation on Genworth. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.

Based in Richmond, Virginia, Genworth Financial offers a variety of products to customers in areas such as life insurance and lifestyle protection, long-term care insurance, annuities, asset management and mortgage insurance through financial intermediaries, advisors, independent distributors and sales specialists.

MetLife Inc. (MET), which competes with Genworth, is scheduled to release its fourth quarter results on February 14 after the bell while another peer Prudential Financial Inc. (PRU) is scheduled to release its fourth quarter results on February 8 after the bell.

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