Genworth Financial Inc.
(
GNW
) reported third quarter 2012 operating income of 25 cents per
share, surpassing the Zacks Consensus Estimate by 31.6%. Results
also compared favorably with the year-ago earnings of 13 cents.
Operating profit for the quarter stood at $121 million, soaring
95% year over year.
The third quarter results benefited from better performances at
Global Mortgage Insurance and at Insurance and Wealth Management
division.
Including net investment gain of $1 million and goodwill
impairment charge of $86 million, the company reported net income
of $34 million or 7 cents compared with the loss of $16 million
or 3 cents per share in the year-ago quarter.
Operational Performance
Genworth's total revenue crawled up 0.6% year over year to $2.54
billion in the quarter. Top line fared better largely due to net
investment gains, reversing the year-ago quarter's loss, coupled
with higher Insurance and investment product fees and other. It
also surpassed the Zacks Consensus Estimate by 0.7%.
Premium revenue at Genworth declined 10.3% year over year to $1.3
billion in the quarter.
Net investment income waned 2% year over year to $825 million.
Segment Update
Insurance and Wealth Management
: Net operating income dipped 23.5% year over year to $104
million. The dip in operating income was due to lower
income from U.S. Life Insurance (down 15.7% year over year),
International Protection (plummeting 63.6% year over year) and
Wealth Management (down 16.7% year over year).
Genworth expects to close its second life block transaction in
the fourth quarter of 2012. The transaction is estimated to
generate in excess of $100 million in initial after-tax capital
benefits for the U.S. life insurance.
Global Mortgage Insurance
: Segment net operating income of $56 million in the quarter
rebounded from a loss of $11 million in the year-ago quarter. A
substantial lower loss at U.S. Mortgage Insurance and higher
income from International Mortgage Insurance aided the
improvement.
Corporate and Run-Off
: The net operating loss narrowed to $39 million in the quarter
under review from an operating loss of $63 million in the
prior-year period.
Financial Update
Genworth exited the quarter with cash, cash equivalents and
invested assets of $79.4 billion, exhibiting an augmentation of
nearly 3% from the end-level of 2011.
Genworth's long-term borrowings stood at $4.9 billion at quarter
end, up 3.5% from 2011 end level.
Zacks Rank
We retain our long-term 'Neutral' recommendation on Genworth
Financial. The quantitative Zacks #3 Rank (short-term Hold
rating) for the company indicates no clear directional pressure
on the stock over the near term.
MetLife Inc.
(
MET
), competing closely with Genworth, is scheduled to release its
third quarter earnings results on October 31, after the bell
while
Prudential Financial Inc.
(
PRU
), is scheduled to release its third quarter earnings results on
November 7, after the closing bell.
GENWORTH FINL (GNW): Free Stock Analysis
Report
METLIFE INC (MET): Free Stock Analysis Report
PRUDENTIAL FINL (PRU): Free Stock Analysis
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