October 28, 2010

Genworth Posts Strong Q3 Earnings on Retirement Segment

Insurance, wealth management drive success

Genworth Financial reported Thursday net income of $83 million for the third quarter, or $0.17 per diluted share, far exceeding third-quarter 2009's report of $19 million. Operating income fell from $81 million one year ago to $29 million, or $0.06 per diluted share.

Operating income included $111 million from the retirement and protection segment, but was offset by losses in the mortgage insurance and corporate segments.

“Genworth's results in the quarter demonstrate continued earnings momentum in the international segment with mixed results in the U.S. reflecting the slow economy and struggling housing market, particularly in Florida,” Michael Fraizer, chairman and CEO, said in a press release.

Life insurance earnings fell from $78 million to $33 million of the last 12 months, but were up slightly from $32 million in the second quarter. Third-quarter results include higher investment income that was "more than offset by the continued lower persistency on 10 year level term policies." Total life sales increased 36% to $68 million.

Long-term care earnings increased to $44 million from one year ago on higher investment income and new business, but was partially offset by higher claims. The independent sales channel drove an increase of $10 million in sales over last year.

The company reported assets under management of $21.2 billion as wealth management net flows were $461 million for the quarter. This is the sixth consecutive quarter of positive net flows, according to the company. Further impacting this segment is Genworth's acquisition of alternative investments provider Altegris, which is expected to close by the end of the year.

Wealth management earnings, however, were flat at $8 million. Increased revenue was offset by expense increases and higher taxes.

Retirement income fee-based earnings took a small hit from DAC refinement and reserve assumptions, dropping to $10 million from $11 million one year ago. Total variable annuity sales fell from $217 million 12 months ago to $151 million.

Spread-based earnings paint a rosier picture, rising to $16 million after losing $2 million in the third quarter of 2009. Total assets under management increased slightly to $18.9 billion.

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