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Genworth Financial (GNW) Q2 Earnings, Revenues Top Estimates

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Genworth Financial, Inc. posted second-quarter 2019 adjusted operating earnings of 40 cents per share, which beat the Zacks Consensus Estimate by 60%. The bottom line was flat year over year.

Total revenues of Genworth Financial were $2.2 billion, up 1.3% year over year. The top line beat the Zacks Consensus Estimate by 3.8%.

Net investment income grew 2.8% year over year to $852 million attributable to favorable prepayment speed adjustments on mortgage-backed securities and inflation impact on U.S. Government Treasury Inflation Protected Securities (TIPS).   

Total benefits and expenses increased 1.8% year over year to $1.8 billion, primarily owing to higher benefits and other changes in policy reserves.

Genworth Financial, Inc. Price, Consensus and EPS Surprise

Segmental Results

U.S. Mortgage Insurance: Adjusted operating income of $147 million was up 7.3% year over year. Loss ratio was zero in the quarter against 8% in the year-ago quarter.

Canada Mortgage Insurance: Adjusted operating income was $41 million, down 10.9% year over year. Loss ratio remained flat year over year at 15%, as lower levels of new delinquencies, net of cures, was offset by higher average reserve per delinquency, primarily from Alberta.

Australia Mortgage Insurance: Adjusted operating income of $13 million was down 40.9% year over year. Loss ratio deteriorated 600 basis points, attributable to lower levels of earned premium from higher levels of policy cancellations in the prior year and seasoning of the in-force portfolio.

U.S. Life Insurance: Adjusted operating income was $66 million, up 15.8% year over year driven by higher income at Long Term Care Insurance and Life Insurance.
Runoff: Adjusted operating income of $9 million was down 30.8% year over year.  

Corporate and Other: Adjusted operating loss of $72 million was narrower than loss of $75 million incurred in the year-ago quarter

Financial Update
Genworth Financial exited the quarter with cash, cash equivalents and invested assets of $77.6 billion, up 6.4% from the level at year-end 2018.

Long-term borrowings of Genworth Financial totaled $4 billion as of Jun 30, 2019, up 0.5% from 2018 end.

Book value per share (excluding accumulated other comprehensive income) was $21.34 as of Jun 30, 2019, up 0.9% from 2018 end level.
Business Update
The deadline for the Genworth Financial and China Oceanwide Holdings Group merger has been extended to not later than Nov 30, 2019 with Genworth Financial agreeing to an eleventh waiver. This waiver and agreement also stated that Oceanwide has agreed to allow Genworth to solicit interest for a potential disposition of its interest in Genworth MI Canada Inc.

Zacks Rank    

Genworth Financial currently 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

Second-quarter earnings of Torchmark and MGIC (MTG - Free Report) beat the respective Zacks Consensus Estimate and while that of Reinsurance Group of America (RGA - Free Report) missed the same.

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