Boston, MA 10/30/2013 (wallstreetpr) – Genworth Financial Inc (NYSE:GNW)’s Q3 came in profits, making this its eighth consecutive profitable quarter. The insurer also managed to narrow its U.S. mortgage insurance losses following the recovery of the market.
Coming from reporting $37 million loss in its U.S. mortgage insurance business a year ago, the company reported a narrower loss of $3 million in Q3.13. The underwriter is now expecting even greater cuts in its U.S. mortgage insurance business losses for the coming quarter. Genworth was spun off from General Electric, an industrial conglomerate, nine years ago.
The huge losses in mortgage insurance which underwriters like Genworth, MGIC and Radian Group resulted were due to the burst of the U.S. housing bubble which led to large scale mortgage defaulting, thus driving up claims over unsettled home loans. As a result, mortgage insurers had to bear the weight. Things are however starting to pick up again and insurers who survived that devastating moment can now benefit from the recovering housing market. Apparently low mortgage rates are attracting more Americans into home buying and this is turning out to be a blessing for mortgage underwriters like Genworth.
The insurer’s net profit leaped up to $108 million, translating to $0.22 a share. A year earlier, Genworth realized net profit of $35 million, which reflected $0.07 a share. However, the underwriter noted a significant drop in revenue due to the poor premium and investment income. The mortgage insurer thus realized revenue of $2.32 billion, indicating 6% drop. This translated into $0.24 per share, missing analysts’ estimate by a cent.
Mortgage underwriters offer losses coverage for homeowners who default and subsequently fail to secure foreclosures. This loss coverage occurs where a homeowner makes a downpayment that is below 20% of the property value.
In the Tuesday’s trading, shares of Genworth gained 1.32% to finish up $14.57. The company now has more than $7 billion in market capitalization.