Genworth Financial Inc. Reports Operating Results (10-Q)
Genworth Financial Inc. has a market cap of $7.72 billion; its shares were traded at around $15.79 with a P/E ratio of 23.2 and P/S ratio of 0.8. GNW is in the portfolios of NWQ Managers of NWQ Investment Management Co, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, RS Investment Management, Arnold Schneider of Schneider Capital Management, Edward Lampert of ESL Investments, Dodge & Cox, Bruce Kovner of Caxton Associates, John Keeley of Keeley Fund Management, Jeremy Grantham of GMO LLC, Murray Stahl of Horizon Asset Management, Steven Cohen of SAC Capital Advisors.
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 June 30, 2010, our Corporate and Other activities net loss available to Genworth Financial, Inc.s common stockholders and net operating loss available to Genworth Financial, Inc.s common stockholders were $103 million and $61 million, respectively. For the six months ended June 30, 2010, our Corporate and Other activities net loss available to Genworth Financial, Inc.s common stockholders and net operating loss available to Genworth Financial, Inc.s common stockholders were $71 million and $124 million, respectively.
While the marketplace is still experiencing declines in the performance of collateral underlying certain structured securities, corporate impairments continued their downward trend and were at moderate levels during the first half of 2010. We recorded net other-than-temporary impairments of $51 million and $131 million, respectively, during the three and six months ended June 30, 2010 which were lower than prior year levels and we expect losses to moderate further. Additionally, in the first half of 2010, losses related to limited partnerships decreased $116 million as compared to the first half of 2009 with limited partnership gains in the second quarter of 2010. Although economic conditions may continue to negatively impact certain investment valuations, 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, rescissions and targeted settlements, net of reinstatements, have resulted in a reduction of expected losses of approximately $450 million during the six months ended June 30, 2010 compared to $333 million during the six months ended June 30, 2009. Workouts and loan modifications, which related to loans representing 3% of our primary risk in-force as of June 30, 2010, resulted in a reduction of loss exposure of approximately $267 million for the six months ended June 30, 2010 compared to $97 million for the six months ended June 30, 2009. Our workout and loan modification programs with various lender and service customers are designed to help borrowers in default regain current repayment status on their mortgage loans, which ultimately allowed many of these borrowers to remain in their homes. During the six months ended June 30, 2010, we executed loan restructurings and modifications with our lender partners that resulted in reduced monthly mortgage loan repayment amounts either
through reductions of the underlying loans interest rates and/or through a lengthening of the loans principal amortization period. The loans that are subject to workouts and loan modifications that were completed could be subject to potential re-default by the underlying borrower at some future date. In addition, pre-sales and other non-cure workouts resulted in a reduction of loss exposure of approximately $28 million for the six months ended June 30, 2010 compared to $21 million for the six months ended June 30, 2009. 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 separately resulted in rescission actions that reduced our loss exposure at the time of rescission by approximately $155 million for the six months ended June 30, 2010 compared to $215 million for the six months ended June 30, 2009. Benefits from loss mitigation activities are shifting from rescissions to loan modifications where we expect a majority of our benefits to be achieved going forward. During 2010, we reached agreements with a servicer and a counterparty that further reduced our risk in-force exposure. Our investigations process and rescission actions, along with expanded loan modification efforts supported by various related lender and government programs, have benefited our results significantly and these benefits are expected to continue. At the same time, we continue to discuss with lenders any concerns with respect to our rescission practices and risk exposures in books of business. Going forward, however, there is no assurance regarding what specific level of benefits may result from modification, rescission or settlement activity. In addition, there are several programs related to the U.S. housing market being implemented by the U.S. government, GSEs, servicers and various lenders that we expect will mitigate losses on loans we insure. We are actively participating in and supporting these various programs. These programs are expected to limit increases in paid claims and we continue to pursue ways to support mortgage servicers in their efforts to increase the benefits from loss mitigation activities.
Read the The complete Report