On Thursday, July 29, Genworth Financial reported results that, while better than the second quarter of 2009, still came in below analysts’ expectations. The company reported a profit for the fourth straight quarter, due mainly to improvement in its mortgage-backed business. However, weaker revenue in its life insurance segment was a drag on results.
The company’s net income available to Genworth’s common stockholders was $42 million, or $0.08 per share, in the second quarter of 2010. On this same basis, net operating income available to Genworth’s common stockholders for the second quarter of 2010 was $118 million, or $0.24 per share. Analysts had expected operating income of $0.28 per share.
The Retirement and Protection division earned $114 million compared with $123 million a year ago. Life insurance earnings decreased to $32 million as higher investment income was more than offset by lower persistency on 10 year level term policies coming out of the level premium period and sound but less favorable mortality experience than in the prior year. LTC earnings increased $5 million to $47 million reflecting higher investment income and new business growth, partially offset by lower policy terminations as they return to historical levels.
Wealth management earnings increased to $10 million from $7 million primarily from increased revenue associated with growth in average AUM. Retirement income fee-based earnings were break even, down from $15 million in the prior year. Results were significantly impacted by declines in the equity markets, which accelerated deferred acquisition cost (DAC) amortization and reduced variable annuity income. Total variable annuity sales were $169 million compared with $154 million in the prior year.