Genworth Financial Inc. reported first-quarter net income of $47 million, compared to a profit of $59 million one year prior. The insurer attributed the weaker performance to a GAAP impact on the sale of policies in its life insurance business (a loss of $41 million).
Meanwhile, the company promoted U.S. mortgage insurance president and CEO Kevin Schneider to run its new global mortgage insurance division. Martin P. Klein, acting CEO of Genworth Financial, said bringing together the international and domestic MI businesses improves operating synergies while enhancing transparency for investors.
Replacing Schneider as president and CEO of the U.S. MI unit is its chief commercial officer, Rohit Gupta.
On Tuesday, Michael D. Fraizer, chairman and CEO of Genworth Financial, resigned, two weeks after the firm’s stock was hammered because of accelerating losses in its Australian mortgage insurance business. (See related story on the NMN website.)
Genworth earned just $7 million on its international mortgage insurance division in 1Q compared to $99 million in the same period a year ago.
Genworth said it lost $21 million from the Australian business from higher-paid claims, lower tax benefit and the reserve strengthening. Including that reserve strengthening, the loss ratio for the quarter was 154%, up 109 basis points from 1Q11.
In a company statement, Klein said Genworth remains committed to the sale of 40% of the Australian business in an initial public offering.
The U.S MI business lost $43 million, which is an improvement from 1Q11 loss of $83 million. This is because of a decrease of 23% in new flow delinquencies on a year-over-year basis. Loss mitigation savings were $158 million in 1Q12.
However, at the end of the quarter, the Genworth U.S. MI unit’s risk-to-capital ratio was 28.6-to-1, exceeding the 25-to-1 limit in a number of states. The company has waivers to continue writing business through its primary subsidiary in 44 states, while using another subsidiary to write business in five states where it could not obtain waivers.