Genworth (NYSE:GNW) has capital well in excess of statutory requirements and a stellar underwriting and risk management track record. Its astute and veteran management team has adeptly steered the business to underwriting profitability in prior peak loss years. Significant regulatory changes instituted over the past two years, along with mortgage reforms implemented after the Global Financial Crisis, should also provide some protection against a severe spike in mortgage defaults.
At 0.9x tangible book value, a secure 4.7% dividend yield, and the ability to continue to generate average annual returns on equity in the 12%-13% range, the stock is a compelling example of what we think is a high-quality business selling at an attractive valuation.
