Genworth Financial Misses Q2 Earnings, Beats on Revenues - Analyst Blog


Genworth Financial Inc .'s ( GNW ) second-quarter net operating earnings of 31 cents per share missed the Zacks Consensus Estimate by 11.4%. Earnings nonetheless increased 14.8% year over year driven by improvement in top line and reduction in expenses.

Genworth Financial, Inc - Earnings Surprise | FindTheBest

Net income shot up 25% year over year to 35 cents per share.

Genworth continues to witness strong performance in its mortgage insurance businesses, which benefitted from continued solid loss performance.  However, adverse claims development affected the long-term care insurance business.

Operational Performance

Genworth's total revenue increased 1.9% year over year to $2.4 billion. The improvement was prompted by higher premiums (up 4.4%). The top line outperformed the Zacks Consensus Estimate by 2.1%.

Total benefits and expenses decreased 1% year over year to $2.1 billion due to lower benefits and other changes in policy reserves and as well as acquisition and operating expenses.

Segment-wise Quarterly Review

U.S. Life Insurance : Net operating income declined 12.7% year over year to $69 million. Unfavorable results in long-term care insurance more than offset the improvement in life insurance.

Global Mortgage Insurance : The segment's net operating income of $136 million increased 33.3% year over year. Better results at U.S. Mortgage Insurance and at International Mortgage Insurance aided the upside.

Corporate and Run-Off : Net operating loss was $47 million, narrower than $48 million loss incurred in the year-ago quarter.

Financial Update

Genworth exited the second quarter with cash, cash equivalents and invested assets of $77.5 billion, up 5.5% from 2013 end.

Genworth's long-term borrowings totaled $4.7 billion as of Jun 30, 2014, down 9.1% from $5.2 million at 2013-end.

IPO Update

On May 21, 2014, Genworth Mortgage Insurance Australia Limited completed the minority initial public offering of 33.8% for $514 million in net proceeds.

Performance of Other Life Insurers

While earnings at Reinsurance Group of America Inc. ( RGA ) surpassed the respective Zacks Consensus Estimate, StanCorp Financial Group Inc. ( SFG ) and Torchmark Corp.  ( TMK ) missed the same in the second quarter.

Zacks Rank

Genworth presently carries a Zacks Rank #3 (Hold).

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GENWORTH FINL (GNW): Free Stock Analysis Report

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TORCHMARK CORP (TMK): Free Stock Analysis Report

REINSURANCE GRP (RGA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: GNW , SFG , TMK , RGA

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