Improved Results for Genworth's Mortgage Insurance Unit

Buoyed by lower delinquencies, the mortgage insurance division of Genworth Financial lost $36 million in the first quarter, a major improvement from prior periods and a sign that the unit could be on the road to recovery. Genworth reported "increased cures" on its book of business which totals about $130 billion in residential coverage. According to a research note from Sandler O'Neill, the MI unit's results "were driven by a better-than-expected loss ratio of 138% compared to our expectation for 170%. Loan loss mitigation activities resulted in $233 million of savings compared, a little less than our expectation for $250 million. The lower loss ratio and lower loss mitigation levels suggest that the underlying book of business is performing better than we expected." According to figures compiled by National Mortgage News, Genworth ranks fourth in terms of policies-in-force and about the same in new business written. In the first quarter Genworth made a number of changes to its underwriting guidelines, including coverage on higher LTV loans in once-troubled real estate markets. In the fourth quarter Genworth's MI unit lost $74 million. In 1Q09 it lost $135 million. All of Genworth--which includes other insurance divisions--earned $178 million, compared to a loss of $469 million in the same period a year ago.