Genworth Financial Inc. (GNW), the provider of mortgage guarantees and long-term care coverage, said second-quarter profit increased 25 percent on gains at the business backing home loans.
Net income climbed to $176 million, or 35 cents a share, from $141 million, or 28 cents, a year earlier, Richmond, Virginia-based Genworth said today in a statement. Operating profit, which excludes some investment results, was 31 cents a share, trailing the 36-cent average estimate of 10 analysts surveyed by Bloomberg.
Chief Executive Officer Tom McInerney is counting on improved returns from mortgage insurance as he prepares for new capital standards proposed by the Federal Housing Finance Agency in the U.S. Tightened underwriting and a property-market recovery have helped the industry rebound from losses on guarantees issued before the housing market’s collapse.
“The mortgage insurance business that’s been issued and done since 2009 has been very high quality,” Steven Schwartz, an analyst with Raymond James & Associates, said before the insurer reported results.
Genworth may need as much as $550 million to meet the draft FHFA rules, the company said July 10. The standards were created to prevent a repeat of the losses that government-backed Fannie Mae and Freddie Mac faced in the 2008 credit crisis.
McInerney has cut jobs, boosted prices for long-term care insurance, sold a wealth-management operation and divested a stake in Genworth’s Australia unit as he seeks to bolster the company’s finances. The stock has climbed 4.7 percent since Dec. 31 after more than doubling in 2013, McInerney’s first year as CEO. Results were released after the close of regular trading.
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