As first-quarter 2011 earnings season wraps up with the insurance sector reporting numbers, Genworth Financial Inc. (GNW) disappointed analysts with earnings per share of $0.17 versus expectations for EPS of $0.21 due to mortgage losses, which were offset by solid retirement sales and a strong performance in the international unit.
Genworth reported that Q1 2011 profits were 54% lower than this time a year ago, at $82 million, or 17 cents a share, versus $178 million, or 36 cents a share, in 2010. Revenues rose 6.1% to $2.57 billion from $2.42 billion last year.
The drop in profits was partly attributable to Genworth's one-time 2010 tax boost. Last year, net income included a $106 million, or $0.21per share, non-recurring tax benefit and a $26 million, or $0.05per diluted share, higher level of investment losses, net of tax and other adjustments.
In addition, in Q1 2011 the U.S. mortgage insurance business reported an operating loss of $81 million in the first quarter versus a loss of $36 million a year earlier.
"In the first quarter, we continued to deliver strong international performance, demonstrated sales and earnings progress in Retirement and Protection, and are seeing improving credit trends in U.S. Mortgage Insurance," said Genworth Chairman and CEO Michael D. Fraizer in a statement. "In U.S. Mortgage Insurance, we continued to execute our plan to return to profitability. Flow delinquencies declined on a sequential basis, loss mitigation benefits are on track to achieve full year targets, we added high margin new business and continued to implement actions to maintain capital flexibility."
In Genworth's Retirement and Protection unit, earnings increased 4% to $127 millioncompared with $122 milliona year ago. Results in the current quarter included a $7 millionexit charge associated with the previously announced plans to discontinue annuities sales of both individual variable and group annuities.
Life insurance net operating income supported an otherwise weak quarter in the unit, at $52 million versus last year's $37 million. Income in the long-term care insurance group was flat year over year, at $40 million in Q1 2011 and Q1 2010, but sales rose to $65 million from $56 million a year ago.
