Mortgage insurer Genworth beats Street as U.S. unit shines

Tue Apr 30, 2013 6:26pm EDT

(Reuters) - Life and mortgage insurer Genworth Financial Inc's (GNW.N) first-quarter profit more than doubled, beating analysts' estimates, helped by strong performance in its U.S. mortgage insurance business.

The company's shares rose 7 percent after the bell.

Earnings by mortgage insurers have been boosted in recent months by a recovering U.S. housing market and easier access to capital.

Mortgage insurers such as Genworth, Radian Group Inc (RDN.N), MGIC Investment Corp (MTG.N) and Old Republic International Corp (ORI.N) sold billions of dollars of policies at low prices during the housing boom and were stuck with huge losses when the market crashed. But profits on new insurance policies are increasingly offsetting legacy losses.

Net income rose 124 percent to $103 million, or 21 cents per share, for the quarter ended March 31, from $46 million, or 9 cents per share, a year earlier.

The company's operating profit was $151 million, or 30 cents per share, in the quarter.

Analysts on average expected earnings of 27 cents per share, excluding items, according to Thomson Reuters I/B/E/S.

Operating income from the U.S. mortgage unit, which Genworth separated in January, was $21 million, compared with a net operating loss of $44 million last year.

The company also maintained that its U.S. mortgage insurance business will return to breakeven or modest profitability during one or two quarters of 2013.

Genworth, spun off from industrial conglomerate General Electric (GE.N) in 2004, took a $27 million charge in the first quarter related to the sale of its wealth management business to private equity firms Aquiline Capital Partners and Genstar Capital for $412.5 million.

Genworth shares, which have risen more than 30 percent so far this year, were trading at $10.68 after the bell. They closed at $10.03 on the New York Stock Exchange on Tuesday.

(Reporting by Aman Shah in Bangalore; Editing by Sriraj Kalluvila)

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