Despite Q4 $230M loss, Genworth cites strategic advances

Genworth Financial executives on Thursday said they were pleased with the company’s fourth quarter financial results despite reporting a $230 million loss, compared with the $381million profit it racked up in the quarter a year ago.

For the full year, net income was $76 million or $0.16 per diluted share, and adjusted operating income was $41 million or $0.9  per diluted share, versus $818 million in the previous year. Revenue of $1.91 billion grew from $1.83B in the prior quarter and $1.87 billion in the fourth quarter of 2022.

“I’m proud of Genworth’s progress against our strategic priorities in 2023,” said Tom McInerney, president & CEO. “We successfully improved the financial condition of our legacy Long-Term Care [LTC] business through our multi-year rate action plan, launched the innovative CareScout Quality Network, and returned $295 million of capital to shareholders.”

Those were the high points. Net loss and adjusted operating loss reflect losses in LTC and Life and Annuities, which include annual assumption updates, partially offset by strong earnings in its Enact Holdings private insurance subsidiary.

Enact cited for 'outstanding year'

In fact, McInerney and other executives touted Enact as the most positive aspect of its financials in the quarter.

“Enact had an outstanding year, delivering adjusted operating income of $552 million for Genworth and it continues to execute its strategy, maintaining a strong balance sheet and high-quality books of insurance in force. Enact also expanded its platform in 2023, with the launch of EnactRE to pursue opportunities in the mortgage insurance market,” he said.

Net investment gains boosted net income by $30 million in the fourth quarter, compared with net investment losses that decreased net income by $4 million in the prior year. The investment gains in the current quarter were driven primarily by mark-to-market adjustments on limited partnership and equity securities, as well as derivatives gains, partially offset by net trading losses.

Genworth Financial, based in Richmond, Va., was founded in 1871 and for 10 years between 1996 and 2006, was owned or partially owned by General Electric. Genworth became a public company in May of 2004.

Losses seen in life, annuities and LTC

The overall results, though, were driven by losses in both life and annuities, and in LTC, McInerney said.

Looking ahead, McInerney said the company achieved a total of $354 million in premium rate increase approvals. well above its forecast of $275 million. In the fourth quarter, premium rate increases totaled over $127 million from 13 states, with an average percentage increase of 75%, which was one of the strongest quarterly percentage increases the company has ever achieved.

“We return significant capital to shareholders via share repurchases in 2023,” McInerney said in a morning call to investors and analysts. “And we remain committed to the execution of a buyback program.”

In July of 2023, the Genworth Financial board authorized an additional $350 million in share repurchases, significantly expanding its original share repurchase operation,  first announced in May of 2022.

“This step was reflective of the transformative progress we've made as a company in recent years, our strong progress on buybacks and the board's confidence in our strategy and in our future,” he said. “Since the initial authorization in May 2022, we have repurchased a total of approximately $384 million worth of shares, at an average price of $5.33 per share as of February 13, and reduced outstanding shares by 13%.

Genworth stock fell nearly 2% in trading Thursday to $5.94 per share.

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].