Genworth Financial Inc. (GNW - Free 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. 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 and Lincoln National Corporation (LNC - Free Report) will report results shortly.