Genworth beats Q1 expectations with $139M net income

Genworth Financial, Inc. exceeded Wall Street expectations Thursday when it reported net income of $139 million, or $0.31 per share in the first quarter of this year, compared to $122 million, or $0.24 per share, in the quarter in 2023. Adjusted operating income of $85 million, or $0.19 per share, was down from Q1 2023 results of $144 million.

However, the first quarter results showed a significant bounce back from the previous quarter in which Genworth reported an unexpected loss of $212 million.

Genworth, based in Richmond, Virginia, was founded in 1871 to become the 22nd largest insurance company in U.S. with assets totaling near $91 billion.  For 10 years between 1996 and 2006, it was owned or partially owned by General Electric. Genworth became a public company in May of 2004.

Its profits now are significantly boosted by an 81% ownership in its Enact mortgage insurance subsidiary that went public in 2021. Since Enact's IPO, GenWorth has received about, $675 million in capital, including $61 million in the first quarter this year. Genworth executives said the company expects to receive $245 million from Enact for the full year.

Seasonally high mortality cited

“The results from ENACT and our long-term care insurance were partially offset by adjusted operating losses of $15 million in life and annuities, and $38 million in corporate and other,” said Jerome Upton, Genworth’s chief financial officer in prepared remarks to investors on Thursday. “Life and annuities included an adjusted operating loss in life insurance of $33 million, reflecting the unfavorable impacts of seasonally high mortality, as well as adjusted operating income of $11 million from fixed income annuities and $7 million from variable annuities. The loss in corporate and other was driven by unfavorable tax timing of $15 million, that we expect to reverse by year-end, and higher expenses related to new growth initiatives.”

The company’s LTC business, which was a problem area for Genworth for years, benefited from rate increases in the U.S. and returned $3 million in operating income. The company had said it hopes its LTC business will return to break-even status by 2026.

“We continue to further strengthen the financial and operating capabilities of our legacy LTC insurance business,” said Genworth President and CEO Tom McInerney. “We're achieving this primarily through our multi-year rate action plan, the most effective tool we have to bring our legacy LTC insurance portfolio to break even on a go-forward basis and ensure the continued self-sustainability of the life insurance companies.”

The consolidated risk-based capital ratio for Genworth Life Insurance Company was a bit below average of its peers at 314% at the end of March. However, this showed improvement from 303% at the end of last year, driven by strong statutory earnings.

Meanwhile, Genworth announced a $250 million expansion of its share repurchase program and an increase in its ordinary dividend to $0.185 per share, up from $0.16 per share.

Genworth stock, which has remained relatively flat for some time, has risen about 18% this year, to around $6.50 per share currently.

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].