April 30 (Bloomberg) -- Genworth Financial Inc., the seller of life insurance and long-term care coverage, said first-quarter profit more than doubled as results improved at the unit that backs home loans.
Net income was $103 million, or 21 cents a share, compared with $46 million, or 9 cents, a year earlier, Richmond, Virginia-based Genworth said today in a statement. Operating profit, which excludes some investing results, was 30 cents a share, beating the 28-cent average estimate of nine analysts in a Bloomberg survey. The U.S. mortgage-guaranty business posted its first quarterly profit since 2007.
Chief Executive Officer Tom McInerney, who took the top job this year, is benefiting as a recovering U.S. housing market bolsters the company’s U.S. mortgage-insurance unit after losses mounted as home prices crashed. Genworth has reached a deal to sell its wealth-management business and is boosting prices for long-term-care coverage as McInerney works to add capital.
“The new CEO is getting more familiar with the company, and clearly has an understanding of what the pressing issues are,” Edward Shields, an analyst at Sandler O’Neill & Partners LP, said in an interview before results were announced. “The company is a turnaround story.”
Genworth has rallied about 63 percent in the past year, beating the 14 percent advance of the Standard & Poor’s 500 Index. It gained 18 cents to $10.21 in extended trading at 4:16 p.m. in New York.
At the U.S. mortgage-insurance division, operating profit was $21 million, compared with a $44 million loss in the first quarter of 2012. Genworth said operating profit from global mortgage insurance was $102 million, compared with a $37 million loss a year earlier when flooding in Australia and a regional economic slowdown fueled foreclosures.
Mortgage insurers led by MGIC Investment Corp. have surged as the U.S. scales back its role in the housing market and home prices rise. The firms cover losses when homeowners default and foreclosures fail to recoup costs.
Book value, a measure of assets minus liabilities, fell to $32.90 a share from $33.62 on Dec. 31. Holding-company cash was about $955 million as of March 31, compared with about $1 billion at the end of 2012.
McInerney said in February he’s focused on improving results from long-term care, after fourth-quarter profit at the unit dropped 75 percent. Genworth is working with regulators to increase rates for the coverage that helps pay for home-health aides or residence in nursing homes, he said.
Operating profit at the long-term care unit narrowed to $20 million from $35 million a year earlier. Fourth-quarter profit from the coverage was $7 million as Genworth added to reserves for future claims.
Interest rates near record lows have pressured results from long-term care coverage, and insurers including MetLife Inc. and Prudential Financial Inc. have retreated from the business.
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