Genworth Tumbles Most Since September as Earnings Miss Some Forecasts
Genworth Financial Inc., the mortgage guarantor and life insurer, fell the most since May as earnings disappointed some analysts and the company expects home-loan delinquencies to rise in the second half.
Genworth fell $2.21, or 14 percent, to $13.58 at 4:10 p.m. in New York Stock Exchange Composite Trading. Even with today’s decline, the insurer has advanced 16-fold since the March 2009 low for U.S. stocks, making it the best performer in the Standard and Poor’s 500 Index.
In a conference call today with investors and analysts, Genworth executives said they expected slower sales in the second half of the year and continued problems with mortgage delinquencies.
“Delinquencies generally trend up about 8 percent in both the third and fourth quarters,” based on historical patterns, Chief Financial Officer Patrick Kelleher said. Genworth will “take a more conservative view” about its U.S. mortgage insurance business for the second half, he said.
Second-quarter net income was $77 million, or 16 cents a share, compared with a loss of $50 million, or 11 cents, in the year-earlier period, the Richmond, Virginia-based insurer said yesterday in a statement.
Genworth reported operating income of 31 cents a share, which adjusted for a reduction of its stake in Genworth MI Canada was 24 cents. Traders focused on this measure, which missed some analysts’ expectations, said Steven Schwartz, who has a “market perform” rating for the insurer at Raymond James & Associates Inc.
“There was some expectation that the numbers would be much better, which of course played into what the stock has gained in the last couple weeks,” Schwartz said.
Separately, company spokesman Tom Topinka said Genworth was subpoenaed in relation to New York State Attorney General Andrew Cuomo’s fraud investigation of life insurance companies after a Bloomberg Markets Magazine report. The magazine report yesterday stated that more than 100 insurance companies earned investment income on money owed in death benefits to families.
To contact the reporter on this story: Sarah Frier in New York at sfrier@bloomberg.net.
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