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Genworth Financial (GNW) Q1 Earnings Beat, Revenues Miss
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Genworth Financial, Inc. (GNW - Free Report) reported first-quarter 2017 net operating income of 29 cents per share that beat the Zacks Consensus Estimate of 22 cents per share by 38.1%. Earnings improved 38% year over year. The bottom line included expenses related to state guaranty fund assessments for the Penn Treaty Network American Insurance Company and American Network Insurance Company (Penn Treaty) plan of liquidation.
The company reported net income per share of 31 cents, skyrocketing 182% from 11 cents earned in the prior-year quarter.
Operational Performance
Total revenue of Genworth improved 18% year over year to $2.137 billion. Increase of 43% in premiums alongside higher net investment income drove the upside. However, decline in policy fees and other income limited the improvement. Also, the top line missed the Zacks Consensus Estimate of $2.180 billion.
Total benefits and expenses increased 12.5% year over year to $1.8 billion, primarily due to an increase in benefits and other changes in policy reserves.
Genworth Financial Inc Price, Consensus and EPS Surprise
U.S. Mortgage Insurance: Net operating income of $73 million surged 20% year over year. Loss ratio for the quarter improved 700 basis points (bps) year over year to 17%. Continued decline and improved performance in delinquencies during the 2005–2008 book years led to growth.
Canada Mortgage Insurance: Net operating income was $36 million, up 9.1% year over year. Loss ratio in the quarter improved 500 bps year over year to 24%, mainly due to an increase in new delinquencies, net of cures.
Australia Mortgage Insurance: Net operating income of $13 million plunged 31.6% year over year. Loss ratio in the quarter was 35%, up 900 bps year over year. This was due to continued unfavorable experience from the commodity dependent regions of Queensland and Western Australia.
U.S. Life Insurance: Net operating income of $53 million decreased 41.8% year over year. The underperformance stemmed from lower Long Term Care Insurance and Life Insurance.
Runoff: Net operating income of $14 million compared favorably with the net operating income of $4 million in the year-ago quarter.
Corporate And Other: Net operating loss of $46 million was significantly narrower than the year-ago loss of $105 million.
Financial Update
Genworth exited the quarter with cash, cash equivalents and invested assets of $75.4 billion, up about 0.5% from year-end 2016.
Long-term borrowings of Genworth totaled $4.2 billion as of Dec 31, 2016, up approximately 0.3% from year-end 2016.
Book value per share was $25.68 as of Mar 31, 2017, down 8.9% from the 2016-end level.
Business Update
In Oct 2016, Genworth Financial inked a definitive agreement with China Oceanwide Holdings Group Co., Ltd. to be acquired by the latter for $2.7 billion or $5.43 per share in cash. The transaction will be executed via Asia Pacific Global Capital Co. Ltd., one of China Oceanwide's investment platforms. The deal is expected to culminate by the middle of 2017 upon fulfillment of closing conditions. At a special meeting on Mar 7, 2017, Genworth stockholders voted to approve the proposed transaction with Oceanwide.
Among the other players from the finance sector that have reported first-quarter earnings so far, Chubb Limited (CB - Free Report) beat the Zacks Consensus Estimate but RLI Corp. (RLI - Free Report) and The Progressive Corporation (PGR - Free Report) missed expectations.
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Genworth Financial (GNW) Q1 Earnings Beat, Revenues Miss
Genworth Financial, Inc. (GNW - Free Report) reported first-quarter 2017 net operating income of 29 cents per share that beat the Zacks Consensus Estimate of 22 cents per share by 38.1%. Earnings improved 38% year over year. The bottom line included expenses related to state guaranty fund assessments for the Penn Treaty Network American Insurance Company and American Network Insurance Company (Penn Treaty) plan of liquidation.
The company reported net income per share of 31 cents, skyrocketing 182% from 11 cents earned in the prior-year quarter.
Operational Performance
Total revenue of Genworth improved 18% year over year to $2.137 billion. Increase of 43% in premiums alongside higher net investment income drove the upside. However, decline in policy fees and other income limited the improvement. Also, the top line missed the Zacks Consensus Estimate of $2.180 billion.
Total benefits and expenses increased 12.5% year over year to $1.8 billion, primarily due to an increase in benefits and other changes in policy reserves.
Genworth Financial Inc Price, Consensus and EPS Surprise
Genworth Financial Inc Price, Consensus and EPS Surprise | Genworth Financial Inc Quote
Segment-Wise Quarterly Review
U.S. Mortgage Insurance: Net operating income of $73 million surged 20% year over year. Loss ratio for the quarter improved 700 basis points (bps) year over year to 17%. Continued decline and improved performance in delinquencies during the 2005–2008 book years led to growth.
Canada Mortgage Insurance: Net operating income was $36 million, up 9.1% year over year. Loss ratio in the quarter improved 500 bps year over year to 24%, mainly due to an increase in new delinquencies, net of cures.
Australia Mortgage Insurance: Net operating income of $13 million plunged 31.6% year over year. Loss ratio in the quarter was 35%, up 900 bps year over year. This was due to continued unfavorable experience from the commodity dependent regions of Queensland and Western Australia.
U.S. Life Insurance: Net operating income of $53 million decreased 41.8% year over year. The underperformance stemmed from lower Long Term Care Insurance and Life Insurance.
Runoff: Net operating income of $14 million compared favorably with the net operating income of $4 million in the year-ago quarter.
Corporate And Other: Net operating loss of $46 million was significantly narrower than the year-ago loss of $105 million.
Financial Update
Genworth exited the quarter with cash, cash equivalents and invested assets of $75.4 billion, up about 0.5% from year-end 2016.
Long-term borrowings of Genworth totaled $4.2 billion as of Dec 31, 2016, up approximately 0.3% from year-end 2016.
Book value per share was $25.68 as of Mar 31, 2017, down 8.9% from the 2016-end level.
Business Update
In Oct 2016, Genworth Financial inked a definitive agreement with China Oceanwide Holdings Group Co., Ltd. to be acquired by the latter for $2.7 billion or $5.43 per share in cash. The transaction will be executed via Asia Pacific Global Capital Co. Ltd., one of China Oceanwide's investment platforms. The deal is expected to culminate by the middle of 2017 upon fulfillment of closing conditions. At a special meeting on Mar 7, 2017, Genworth stockholders voted to approve the proposed transaction with Oceanwide.
Zacks Rank
Genworth presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among the other players from the finance sector that have reported first-quarter earnings so far, Chubb Limited (CB - Free Report) beat the Zacks Consensus Estimate but RLI Corp. (RLI - Free Report) and The Progressive Corporation (PGR - Free Report) missed expectations.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>