On Jun 26, we issued updated report on
Genworth Financial, Inc
Genworth's progress on premium rate increase approvals continues.
As of Mar 31, 2014, the company had approvals from 41 states and
about gross incremental premiums of $325 million. The insurer
estimates that annual net premium increases from the 2012 rate
action will result in $250 million to $300 million of increased
annual premium when fully implemented by 2017.
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. Gradual improvement in the U.S. housing
market, strong loss mitigation programs and a growing private
mortgage insurance market helped in increasing new insurance
written and lower losses. Genworth expects the momentum to continue
with substantially higher earnings in 2014.
It also successfully carried out the initial public offering (IPO)
of its Australian mortgage insurance unit in May. This IPO
reorganize the business portfolio, fund growth opportunities for
the Australian business with greater access to the capital markets,
maintain control positions of strategic mortgage insurance
platforms in Australia, and free material capital for redeployment.
Loss ratios of 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. Genworth anticipates 2014 loss ratio
at the low end of the 30-40% range.
Genworth has been strengthening its financial position. While cash
balance improved, debt to capital ratio has also lowered, comparing
favorably with the industry average. It also has addressed its debt
maturities till 2016.
Genworth expects operating earnings to dragged down by continued
low interest rate environment if the investment yields and asset
allocation strategies, through 2015, do not change.
The Zacks Consensus Estimate for 2014 increased 1.4% to $1.45 as 4
of 7 estimates moved north over the last 60 days. However, the same
for 2015 moved south by a cent. Nonetheless, the expected long-term
growth rate is currently 5%.
Genworth carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better-ranked life insurers worth reckoning are
China Life Insurance Co. Ltd
Lincoln National Corporation
Sun Life Financial Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
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GENWORTH FINL (GNW): Free Stock Analysis Report
LINCOLN NATL-IN (LNC): Free Stock Analysis
CHINA LIFE INS (LFC): Free Stock Analysis
SUN LIFE FINL (SLF): Free Stock Analysis Report
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