Genworth Earns $77m in Q210 as Mortgage Insurance Losses Narrow
Genworth Financial, Inc. (GNW) reported their financial results for the second quarter Thursday, earning a net income before provision for non-controlling interests of $77m or $0.16 per diluted share. This is up from a net loss of $50m ($0.11 per diluted share) from a year ago. Genworth expanded their capital gain by issuing $400m of debt and used $200m of the proceeds to pay down a portion of outstanding credit borrowings. It also consolidated life companies, ending Q210 with a risk-based capital (RBC) ratio of approximately 375%. Genworth's U.S. Mortgage Insurance branch recovered substantial ground since 2009 increasing its net operating loss to $40m, up from $134m the prior year, but down from $36m in Q110. The company attributed the decline in gross losses year-over-year to lower new delinquencies, improved cure rates and increased loss mitigation savings. Genworth saved $217m in Q210 through loss mitigation activities, including workouts, presages, policy rescissions and targeted settlements, $160m of which came from various loans modifications. A little over half of loan modifications processed were done through the Home Affordable Modification Program (HAMP). In the second quarter, Genworth reported benefits from loss mitigation activities continue to shift from rescissions to loan modification as the company reached settlements with a servicer and a a government-sponsored enterprise (GSE). Net income in the quarter included net investment losses, net of tax and other adjustments, of $76 million. Credit related impairments totaled $32m and were primarily comprised of subprime and Alt-A residential mortgage-backed securities (RMBS, $14m), structured securities ($13m) including asset-backed securities ($9m), commercial mortgage loans ($3m) and limited partnerships ($2m). "Genworth continued strategic progress on all fronts delivering strong international results, good sales momentum and improved performance in U.S. Mortgage Insurance and investment income," said Michael D. Fraizer, chairman and chief executive officer. Write to Christine Ricciardi.