On Aug 22, we issued an updated report on
Genworth Financial, Inc
Genworth, in the second quarter, posted mixed results with
operating earnings missing the Zacks Consensus Estimate but
improving 14.8% year over year driven by an improvement in top line
and reduction in expenses.
Genworth's mortgage insurance businesses continued to perform well
driven by consistent improvement in loss performance. However,
adverse claims development affected the long-term care insurance
On a positive note, Genworth continues to progress on premium rate
increase approvals. While approval from eight states is pending, it
has already won approval in 48. The company expects incremental
premium recognized in 2014 between $120 million and $140 million.
In addition, the U.S. Mortgage Insurance division has been showing
improvement on the strength of lower new delinquency development
and effective loss mitigation programs along with changes in aging
of existing delinquencies. Loss mitigation savings in the first
half of 2014 totaled $216 million and full-year savings are
projected between $250 million and $350 million.
However, loss ratios of the long-term care insurance business have
been increasing over the past several years and have ranged from
63% to 68% over the last five years. The company expects loss ratio
within 25-30% in 2014.
Genworth experienced a substantial increase in adverse claims
experience for long-term care insurance products. This in turn
weighed considerably upon the operating income of the company.
The Zacks Consensus Estimate for 2014 and 2015 witnessed downward
revisions as most of the estimates were moved south in the last 60
days. It moved down 11% to $1.75 for 2015 (6 of 7 estimates
lowered) and 8.8% to $1.55 for 2015 (5 of 7 estimates lowered).
Genworth carries a Zacks Rank #5 (Strong Sell).
Other Stocks to Consider
Some better-ranked life insurers include Symetra Financial
), Lincoln National Corporation (
) and Voya Financial Inc. (
). All these stocks carry a Zacks Rank #2 (Buy).
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GENWORTH FINL (GNW): Free Stock Analysis Report
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