Genworth Posts 4Q Profit, But Mixed News for MI Unit


Genworth Financial posted earnings of $107 million in the fourth quarter – compared to a $161 million loss a year ago – but its mortgage insurance division continued to struggle.

Analysts at Sandler O’Neill Partners said Genworth’s $94 million 4Q  operating loss in its U.S. MI division missed its estimate by $24 million. However, in the fourth quarter of 2010, the unit lost $352 million.

“The reported loss ratio of 189% was higher than our estimate of 173.1%,” wrote Sandler. “Loss mitigation activities resulted in a $147 million benefit compared with our expectation for $95 million. For the full year, GNW realized $567 million in loss mitigation savings, above its guidance for $400 to $500 million in savings.”

Among all MI firms, Genworth ranks fourth in terms of policies-in-force. It has long been considered one of the most conservative MIs in the nation, and one that will survive the housing crisis.

Genworth said new insurance written (flow) for the fourth quarter was up 19% over the third quarter and 23% from 4Q 2010.

Another piece of good news is that total flow MI delinquencies fell by 9% from the same period last year to 83,931, while new flow delinquencies declined by 15% during the same period.

However, its risk-to-capital ratio broke through the 25-to-1 barrier and is at 28.8-to-1 for all of its mortgage insurance subsidiaries and is at 32.9-to-1 at its primary unit Genworth Mortgage Insurance Corp. as of Dec. 31, 2011.

GEMICO has waivers in 44 states while in five states, a separately capitalized subsidiary, Genworth Residential Mortgage Assurance Corp., is writing new business.

As for the international MI business, the Sandler O’Neill analysts said profits were lower than expected, at $78 million in operating earnings compared to its expectation of $97 million.  

Genworth, as a whole, does the bulk of its business in life insurance and related lines. In trading Friday its share price was up 14%.

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