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Genworth Financial Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: April 30, 2010 09:19PM
Genworth Financial Inc. (GNW) filed Quarterly Report for the period ended 2010-03-31. Genworth Financial Inc. has a market cap of $8.85 billion; its shares were traded at around $18.09 with a P/E ratio of 37.6 and P/S ratio of 0.9.GNW is in the portfolios of Arnold Schneider of Schneider Capital Management, NWQ Managers of NWQ Investment Management Co, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Edward Lampert of ESL Investments, RS Investment Management, Dodge & Cox, Bruce Kovner of Caxton Associates, Murray Stahl of Horizon Asset Management, Steven Cohen of SAC Capital Advisors, David Dreman of Dreman Value Management, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:
We also have Corporate and Other activities which include debt financing expenses that are incurred at our holding company level, unallocated corporate income and expenses, eliminations of inter-segment transactions and the results of non-core businesses and non-strategic products that are managed outside of our operating segments. Our non-strategic products include our institutional and corporate-owned life insurance products. Institutional products consist of: funding agreements, funding agreements backing notes (FABNs) and guaranteed investment contracts (GICs). For the three months ended March 31, 2010, our Corporate and Other activities net income available to Genworth Financial, Inc.s common stockholders was $32 million and net operating loss available to Genworth Financial, Inc.s common stockholders was $63 million.
While the marketplace is still experiencing a decline in the performance of collateral underlying certain structured securities, corporate impairments remained moderate during the first quarter of 2010. We recorded net other-than-temporary impairments of $80 million during the three months ended March 31, 2010 which were lower than recent levels experienced as market improvements have continued and we expect losses to moderate further or potentially trend down. Additionally, in the first quarter of 2010, losses related to limited partnerships decreased $73 million as compared to the first quarter of 2009 but were slightly higher compared to the fourth quarter of 2009. Although economic conditions may continue to negatively impact our investment valuation, the underlying collateral associated with assets that have not been impaired continues to perform.
Our loss mitigation activities, including those relating to workouts, loan modifications, pre-sales and rescissions, have resulted in a reduction of expected losses of approximately $233 million during the three months ended March 31, 2010 as compared to $145 million during the three months ended March 31, 2009. In the process, workouts, loan modifications and pre-sales during this period resulted in a reduction of loss exposure of approximately $126 million for the three months ended March 31, 2010 compared to $57 million for the three months ended March 31, 2009. The workouts and loan modifications could be subject to potential re-default by the underlying borrowers. In addition, as a result of investigation activities on certain insured delinquent loans, we found significant levels of misrepresentation and non-compliance with certain terms and conditions of our underlying master insurance policies, as well as fraud. These findings resulted in rescission actions that reduced our loss exposure at the time of rescission by approximately $107 million for the three months ended March 31, 2010 compared to $88 million for the three months ended March 31, 2009. Benefits from loss mitigation activities are beginning to shift from rescissions to loan modifications. In January 2010, we also reached an agreement with a counterparty that further reduced our bulk risk in-force exposure, leaving a small bulk portfolio related principally to Federal Home Loan Bank business. Our investigations process and rescission actions, along with expanded loan modification efforts given various related lender and government programs, have had a significant benefit and are expected to continue; however, going forward, there is no assurance regarding what specific level of benefits will result.
Stocks Discussed: GNW,