U.S. insurer and financial institution Genworth Financial (GNW) took it across the chin in the second quarter of 2011 thanks to a weak housing sector, which took its toll on the company's mortgage insurance unit.
The company recently reported a net loss of $96 million, or 20 cents per diluted share, compared with net income of $42 million, or 8 cents per diluted share, in the second quarter of 2010. GNW reported a net operating loss of $74 million during the quarter compared with $118 million in net operating profits a year earlier.
Revenues rose by 10 percent to $2.66 billion. "Disappointing results in U.S. Mortgage Insurance more than offset continued sound progress in our Retirement and Protection and International businesses this quarter," says company Chairman and CEO Michael D. Fraizer.
The company set aside $300 million to cover delinquent loans in the quarter. "In U.S. Mortgage Insurance, despite declines in total and new delinquencies this quarter and prior reserve actions, the troubled U.S. residential real estate environment and loan servicer processing challenges necessitated additional reserve strengthening," Frazier said.
Life insurance earnings improved, and business abroad was strong as well.
Investors might want to hold off buying this stock, at least for a little while. Moody's has assigned a negative outlook on company ratings, pointing to preliminary second quarter losses as evidence that the company still has problems that need addressing.
"The magnitude of the loss indicates that GNW will be more likely to underperform peers in the near future, and that recovery in market signals will require stabilization of the weak results," Moody's says in a report on the company.
Still, some investors see an upside. Northland Securities reiterated an outperform recommendation on the company in July. GNW should release third quarter earnings around Nov. 10.
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