Genworth Expects $85 MM Tax Refund

Genworth Financial is slated to receive an estimated $85 million federal income tax refund that will benefit its mortgage insurance business, the Richmond, Va., company said. The refund is due to changes in federal law expanding the net carry-back period for certain net operating losses from two years out to five years. The estimate is based on Genworth's results for the first three quarters of 2009. The exact amount of the recovery will be based on the company's 2009 full year results and will be calculated early next year. A significant portion of the recovery will benefit Genworth's U.S. mortgage insurance business and could decrease its risk-to-capital ratio by between 0.5 and 1.0 points. At the end of the third quarter, Genworth's U.S. mortgage insurance unit had a risk-to-capital ratio of 15.1 to 1. Some states require mortgage insurers to have 25 to 1 ratio to write new policies. This includes North Carolina, where the Genworth unit is domiciled.