Genworth Reports $258 Million Loss

Genworth Financial Inc., Richmond, Va., had a loss for the third quarter of 2008 of $258 million, or $0.60 per share, compared with income of $339 million, or $0.76 per share one year prior. This reflected net investment losses of $478 million, net of tax and amortization of deferred acquisition costs, including $321 million of credit and/or cash flow related impairments, $55 million of impairments related to a change of intent to hold securities to recovery, and $86 million of net realized losses from asset sales associated primarily with portfolio repositioning activities. Of total impairments, $153 million, net of tax, related to subprime and alt-A residential mortgage and asset-backed securities, and $145 million, net of tax, in corporate bonds concentrated among several large financial services issuers. Genworth has suspended its common stock dividend, which it said would generate approximately $175 million per year in available capital. It said it is evaluating several additional capital flexibility alternatives including potential asset sales, continued review of the U.S. mortgage insurance business, and the potential to raise private or public equity, or debt capital. The U.S. mortgage insurance business had a $121 million net operating loss as 16% earned premium growth and higher lender captive reinsurance coverage were more than offset by higher incurred losses and higher expenses. Earnings in the quarter benefited from $169 million pretax of lender captive reinsurance coverage.