Genworth Financial Up to 52-Week High - Analyst Blog

On Mar 7, 2014, shares of Genworth Financial Inc. GNW touched a new 52-week high of $17.05. The momentum was driven by solid fourth-quarter and full-year 2013 earnings results at the company. The one-year return from the stock came in at 72.3%, way ahead of the S&P's return of 23.9%.

The fourth-quarter earnings figure at Genworth clocked a positive surprise beat of 27%. This helped the life insurer deliver positive earnings surprises in 2 of the last 4 quarters, thus registering an average beat of 5.8%. Full-year 2013 earnings also exceeded the Zacks Consensus Estimate by 12% and the 2012 number by a whopping 51%.

Genworth witnessed robust performance at the U.S Mortgage Insurance (MI) and U.S. Life Insurance segments. Improving housing market and loss profile in the United States, and stable markets and lower losses in Australia and Canada aided the positives.  The long-term care insurance continues to benefit from progress on rate actions.

Total flow delinquencies moved south by 26% and new flow delinquencies declined 21% year over year. As flow modifications remained strong, Genworth's loss mitigation savings of $563 million in 2013 exceeded the target of $250 million to $350 million.  The company hence envision higher earnings for U.S. MI in 2014 as compared to 2013

In addition, Genworth's progress on the premium rate increases approvals remains on track. As of Dec 31, 2013, the company received approvals of about $195 million to $200 million of the annual premium increases from 41 states. It expects the pretax incremental premiums from the rate actions between $150 million and $175 million in 2014. Also, based on the in-force rate action approvals, the company expect the rate actions to benefit earnings by about $120 million to $150 million in 2014.

Genworth also expects that, with more permanent life insurance and hybrid product offerings in its portfolio, life sales will increase over time.

Genworth presently carries a Zacks Rank #3 (Hold). Some better-ranked life insurers worth considering are Protective Life Corp. PL, Lincoln National Corp. LNC and Primerica, Inc. PRI. All these stocks carry a Zacks Rank #2 (Buy).