Ongoing mortgage woes more than double Genworth losses
Genworth Financial (GNW) reported a net loss of $96 million, or 20 cents per share, in the second quarter, more than double the $42 million lost one year ago. The company needed to boost reserves for its mortgage insurance business by an additional $300 million in the quarter. That segment actually lost $253 million, more than six times the $40 million in losses reported last year. The MI segment offset the $256 million of income from Genworth's international, retirement and protection businesses. Indeed, earnings were up for nearly all segments except real estate, including retirement income, wealth management, long-term care, and life insurance. The $300 million reserve boost went to cover declining cure rates and the continued aging of delinquent loans, Genworth said. The "slow-moving pipelines" in mortgage servicing departments across the country have greatly affected recovery, the company added. Genworth Mortgage Insurance Corp., or GEMICO the company's primary insurance company, was granted waivers to continue writing new business in 46 states. Without these waivers, Genworth would be cut off because it exceeds the states-regulated risk-to-capital ratio of 25-to-1. "In U.S. mortgage insurance, despite declines in total and new delinquencies this quarter and prior reserve actions, the troubled U.S. residential real estate environment and loan servicer processing challenges necessitated additional reserve strengthening," said Genworth CEO Michael Fraizer. Write to Jon Prior. Follow him on Twitter @JonAPrior.