Genworth Financial, Inc. GNW reported third-quarter 2017 net operating income of 15 cents per share, missing the Zacks Consensus Estimate of 21 cents by 28.6%. Adjusted operating income compared favorably with adjusted operating loss of 81 cents in the year-ago quarter.
Genworth Financial Inc Price, Consensus and EPS Surprise
Genworth Financial Inc Price, Consensus and EPS Surprise | Genworth Financial Inc Quote
The company reported net income per share of 21 cents, which compared favorably with net loss of 76 cents per share in the prior-year quarter.
Operational Performance
Total revenues of Genworth Financial remained flat year over year at $2.13 billion. Also, the top line beat the Zacks Consensus Estimate of $2.12 billion by 0.7%.
Total benefits and expenses decreased 15.2% year over year to $1.9 billion, primarily due to decrease in benefits and other changes in policy reserves, interest credited along with lower acquisition and operating expenses, net of deferrals, amortization of deferred acquisition costs and intangibles and interest expense, respectively.
Segment-Wise Quarterly Review
U.S. Mortgage Insurance: Adjusted operating income of $73 million rose nearly 9% year over year. Loss ratio for the quarter improved 100 basis points (bps) year over year to 20%.
Canada Mortgage Insurance: Adjusted operating income was $37 million, up 2.8% year over year. Loss ratio improved 1000 bps year over year to 14%, mainly owing to a decrease in new delinquencies, net of cures, representing the ongoing housing market strength and underlying economic conditions.
Australia Mortgage Insurance: Net operating income of $12 million declined 14.3% year over year. Loss ratio was 37%, down 500 bps year over year, primarily driven by non-reinsurance recoveries on paid claims in the reported quarter.
U.S. Life Insurance: Adjusted operating loss of $1 million was significantly narrower than the year-ago quarter loss of $207 million.
Runoff: Adjusted operating income of $13 million improved 8.3% year over year, primarily driven by continued strong equity market performance supporting the variable annuity business.
Corporate And Other: Net operating loss of $58 million was substantially narrower than the year-ago loss of $327 million.
Financial Update
Genworth Financial exited the quarter with cash, cash equivalents and invested assets of $76.6 billion, up about 2.1% from year-end 2016.
Long-term borrowings of Genworth Financial totaled $4.2 billion as of Sep 30, 2017, up approximately 1.1% from year-end 2016.
Book value per share was $26.19 as of Sep 30, 2017, down 12.2% from the level at 2016-end.
Business Update
In October 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. This 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 Nov 30, 2017, upon fulfillment of the closing conditions.
During and since the end of the third quarter of 2017, Genworth Financial and China Oceanwide reported on the following progress:
Both Genworth Financial and China Oceanwide made progress with regulatory approvals.
Both the companies declared withdrawal of their joint voluntary notice to the Committee on Foreign Investment in the United States with the intention of refiling with additional mitigation approaches.
Also, both companies discuss with respect to an additional waiver of each party’s right to terminate the merger agreement beyond the Nov 30, 2017 deadline. Both the parties will decide on the deadline in the coming weeks.
This apart, Genworth Financial is currently taking into consideration potential refinancing options to acknowledge upcoming debt maturities in the event the transaction with China Oceanwide is not completed in time or at all. The company could also use holding company cash and/or pursue potential asset sales to address upcoming debt maturities in the event the transaction with China Oceanwide cannot be completed.
Zacks Rank
Genworth Financial 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 other firms from the insurance industry that have reported third-quarter earnings so far, the bottom line of The Progressive Corporation PGR, The Travelers Companies, Inc. TRV and RLI Corp. RLI surpassed the respective Zacks Consensus Estimate.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment