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Genworth Financial Inc. (GNW - Analyst Report) reported second-quarter 2013 net operating income of 27 cents per share. The results fell short of the Zacks Consensus Estimate of 29 cents and were much above the year-ago level of 14 cents.
Adjusting for net investment losses of $15 million, total investment impairments of $4 million, and income from discontinued operations of $6 million, net income came in at 28 cents per share, up from 16 cents per share earned in the year-ago quarter.
During the reported quarter, Global Mortgage Insurance put up a robust performance, long-term care insurance witnessed progress on rate actions and the company garnered benefits from the expense reduction initiatives.
Quarterly Operational Performance
Genworth’s total revenue decreased 1.3% to $2.37 billion in the quarter from $2.40 billion in the year-ago quarter. Top line declined primarily due to lower net investment income, lower premiums, lower insurance and investment product fees, and other. It missed the Zacks Consensus Estimate of $2.48 billion.
Premium revenues at Genworth decreased 1.2% year over year to $1.2 billion in the quarter.
Net investment income declined 2.9% year over year to $821 million.
Total benefits and expenses declined 7.4% year over year to $2.1 billion.
Quarterly Review by Segment
U.S. Life Insurance: Net operating income improved 23.4% year over year to $79 million. Favorable results from 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, doubled year over year. A substantially lower loss at U.S. Mortgage Insurance and higher income from International Mortgage Insurance aided the improvement.
Corporate and Run-Off: Net operating loss was $48 million in the reported quarter, flat with year-ago level.
Genworth exited the quarter with cash, cash equivalents and invested assets of $72.8 billion, down from $78.7 billion at 2012-end level.
Genworth’s long-term borrowings stood at $4.72 billion at quarter end, down from $4.78 billion at 2012-end.
Expense Reduction Initiative
In an effort to enhance its operational performance, in June, Genworth Financial decided to sever 400 positions, of which 150 will never be filled.
Genworth will have $80 to $90 million in annual pre-tax expense savings when the plan will be fully implemented.
An after-tax non-operating charge of $13 million was recorded in the reported quarter, reflecting severance, outplacement and other associated costs.
Performance of other life insurers
StanCorp Financial Group Inc. (SFG - Analyst Report) reported second quarter 2013 operating net earnings of $1.34 per share, which exceeded the Zacks Consensus Estimate of $1.01 by 33%. Results were way ahead of 51 cents earned in the prior-year quarter.
Genworth carries a Zacks Rank #2 (Hold). Life insurers Protective Life Corporation (PL - Analyst Report) and Lincoln National Corporation (LNC - Analyst Report) will report results shortly.