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Genworth (GNW) Q3 Earnings Meet Estimates, Revenues Lag

Zacks Equity Research

Genworth Financial, Inc. GNW posted third-quarter 2019 adjusted operating earnings of 24 cents per share, in line with the Zacks Consensus Estimate. The bottom line declined 17.2% year over year.

Total revenues of Genworth Financial were $2 billion, up 1.3% year over year. The top line however missed the Zacks Consensus Estimate by 5.3%.

Net investment income grew 4.6% year over year to $816 million driven by higher limited partnership income, favorable prepayment speed adjustments on mortgage-backed securities, and growth in invested assets.

Total benefits and expenses increased 1.7% year over year to $1.8 billion, primarily owing to higher benefits and other changes in policy reserves, acquisition and operating expenses, net of deferrals, amortization of deferred acquisition costs and intangibles.

Genworth Financial, Inc. Price, Consensus and EPS Surprise

Genworth Financial, Inc. Price, Consensus and EPS Surprise

Genworth Financial, Inc. price-consensus-eps-surprise-chart | Genworth Financial, Inc. Quote

Segmental Results

U.S. Mortgage Insurance: Adjusted operating income of $137 million was up 16% year over year. Loss ratio of 11% remained unchanged year over year.

Australia Mortgage Insurance: Adjusted operating income of $12 million was down 29.4% year over year. Loss ratio deteriorated 500 basis points, attributable to lower levels of earned premium from portfolio seasoning.

U.S. Life Insurance: Adjusted operating loss was $1 million, narrower than loss of $3 million incurred in the year-ago quarter due to higher losses at Life Insurance and lower income from Fixed Annuities.

Runoff: Adjusted operating income of $10 million was down 28.6% year over year.

Corporate and Other: Adjusted operating loss of $35 million was narrower than loss of $47 million incurred in the year-ago quarter.

Financial Update
 
Genworth Financial exited the quarter with cash, cash equivalents and invested assets of $1.6 billion, down 29% year over year.

Long-term borrowings of Genworth Financial totaled $3.7 billion as of Sep 30, 2019, almost unchanged year over year.

Book value per share (excluding accumulated other comprehensive income) was $21.38 as of Sep 30, 2019, down 0.2% year over year.
 
Business Update
 
Genworth and Brookfield Business Partners entered into an agreement on Aug 13, 2019. Per the agreement, Brookfield Business Partners will purchase Genworth's majority interest in Genworth Canada for CAD$48.86 per share. The total transaction value is approximately CAD$2.4 billion. The deal will enable the completion of Genworth’s acquisition by Oceanwide (the Oceanwide Transaction). In connection with the agreement, Genworth and Oceanwide entered into the 12th Waiver and Agreement to extend the merger agreement deadline to not later than Dec 31, 2019.

Zacks Rank

Genworth Financial currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Insurance Releases

Of the insurance industry players that have reported third-quarter results so far, Global Life GL, Arthur J. Gallagher AJG and CNA Financial Corporation CNA beat the respective Zacks Consensus Estimate for earnings.

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