Genworth Financial Inc.
) reported first-quarter 2013 net operating income of 30 cents
per share. The result surpassed the Zacks Consensus Estimate of
27 cents and was much above year ago level of 3 cents.
Adjusting for net investment losses of $28 million and loss from
discontinued operations of $20 million, net income came in at 21
cents, up from 9 cents earned in the year ago quarter.
The first-quarter results benefited from better performances at
Global Mortgage Insurance and U.S. Life Insurance.
Quarterly Operational Performance
Genworth's total revenues decreased to $2.30 billion in the
quarter from $2.32 billion in the year ago quarter. Top line
declined primarily due to lower net investment income, lower
insurance and investment product fees and other as well as net
investment losses. It missed the Zacks Consensus Estimate of
Premium revenue at Genworth increased 14% year over year to $1.2
billion in the quarter.
Net investment income declined 2.2% year over year to $814
Quarterly Review by Segment
U.S. Life Insurance
: Net operating income improved 32.8% year over year to $85
million. Favorable mortality experience across the life
insurance, long-term care insurance and fixed annuity product
lines aided the improvement.
Global Mortgage Insurance
: The segment's net operating income of $102 million in the
quarter recovered from a loss of $37 million in the year-ago
quarter. A substantially lower loss at U.S. Mortgage Insurance
and higher income from International Mortgage Insurance aided the
Corporate and Run-Off
: Net operating loss was $36 million in the reported quarter, was
wider than the year ago loss of $36 million.
Genworth exited the quarter with cash, cash equivalents and
invested assets of $77.3 billion, down from $78.7 billion at 2012
Genworth's long-term borrowings stood at $4.7 billion at quarter
end, flat with 2012-end level.
In Mar 2013, Genworth inked a deal to divest the wealth
management business for $412.5 million. It recognized $27 million
from a goodwill impairment and other loss related to the sale of
the wealth management business, partially mitigated by $7 million
of income from discontinued operations.
Genworth expects the transaction to close in the second half
of 2013, subject to closing conditions. The company also expects
to record an additional after-tax loss of up to $10 million.
GENWORTH FINL (GNW): Free Stock Analysis
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Genworth announced that it has gained approval for implementation
of its U.S. Mortgage Insurance Capital Plan. The plan was
previously announced in Jan 2013 to reduce the risk-to-capital
ratio of the U.S. mortgage insurance subsidiary and the risk of a
default under the indenture governing Genworth's senior notes,
As per the plan, the European mortgage insurance subsidiaries'
ownership is transferred to that of Genworth Mortgage Insurance
Corporation effective Jan 31, 2013.
Performance of a Few Other Life Insurers
StanCorp Financial Group Inc.
) reported first quarter 2013 operating earnings of $1.07 per
share, which exceeded the Zacks Consensus Estimate by 33.8%.
Results were also 35.4% higher than 79 cents earned in the prior
Reinsurance Group of America Inc.
) reported first quarter 2013 operating earnings of $1.65 per
share, exceeding the Zacks Consensus Estimate of $1.61 per share.
Results were also ahead of the year-ago earnings by 8.6%.
Genworth currently carries a Zacks Rank #5 (Strong Sell).
), another life insurer with a favorable Zacks Rank #1 (Strong
Buy), is scheduled to release its first-quarter results on May