Genworth MI Unit Continues to Lose Money

Even though Genworth Financial posted a small profit in the third quarter, its U.S. mortgage insurance division continued to lose money, albeit at a lower rate. The MI unit posted a $116 million net operating loss in the quarter compared to a $121 million loss in the same period a year ago. Genworth said its primary insurance-in-force declined by $25.8 billion versus the prior year from a combination of lower net insurance written, rescissions, and higher claims paid. Genworth recently increased its maximum loan-to-value ratio to 95% in 199 metropolitan areas (from 90%) but has maintained more stringent LTVs in such battered markets as California, Florida, Arizona, Nevada and Michigan. The company noted that its U.S. MI business "achieved three consecutive quarters of increased loss mitigation savings and decreased losses." The life and mortgage insurer reported net income available to common shareholders of $19 million compared to a loss of $258 million in the year ago period. Meanwhile, in Friday afternoon trading most mortgage insurance stocks were tumbling along with the rest of the Dow, which fell 268 points in mid-day trading. However, Genworth, and Triad Guaranty of Winston-Salem, were exceptions. Triad, whose stock rose slightly, is in the process of self liquidating.