Genworth Declines as Profit Misses Analysts’ Estimates

Genworth Financial Inc. (GNW), the seller of mortgage guaranties and long-term care coverage, slumped after second-quarter results missed analysts’ estimates.

Genworth fell 3.9 percent to $12.84 at 10:30 a.m. in New York, the biggest intraday tumble in more than a month. The decline was the steepest on the 81-company Standard & Poor’s 500 Financials Index.

Operating profit, which excludes some investment results, was 27 cents a share, Genworth said yesterday, 2 cents below the average estimate of 10 analyst surveyed by Bloomberg. Net income climbed 86 percent to $141 million, or 28 cents a share, as the U.S. mortgage unit posted its second straight profit. Earnings from life insurance fell amid a decline in sales and less favorable mortality, Genworth said.

“The earnings shortfall was primarily due to elevated claims in the life insurance business,” Joanne Smith, an analyst at Scotia Capital, said in a research note today. “The performance of Genworth’s key businesses were solid,” she said, citing mortgage insurance and long-term care.

The U.S. mortgage insurance unit reported a $13 million operating profit, its second-straight positive result amid a recovery in the housing market. Before this year, the unit had been unprofitable since 2007.

Genworth’s efforts to raise prices for long-term care coverage and improving mortgage insurance results and have helped boost the company’s shares 71 percent this year, making it the best performing insurer in the S&P 500.

“Fundamentally, the business is really moving in a strong forward direction,” Tom McInerney, Genworth’s chief executive officer, said of the U.S. mortgage-guaranty unit in an interview. “The business we’re writing today is very high quality.”

To contact the reporters on this story: Zachary Tracer in New York at ztracer1@bloomberg.net;

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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