MI Reduces Losses and Risk Exposure

Genworth Financial's U.S mortgage insurance unit reported a net operating loss of $74 million for the fourth quarter, a considerable improvement from the same period a year ago. The Richmond, Va.-based company attributed two thirds of its fourth quarter losses to its GSE alt-A business, which soon will be mitigated by a reduction in its coverage on those high-risk loans. Genworth executed an agreement effective Jan. 1, 2010 that will result in the cancellation of approximately 80% of the GSE alt-A bulk risk-in-force. The agreement resulted in a total claim payment of approximately $182 million in January 2010 which was already fully reserved. This will reduce the GSE Alt-A bulk RIF from $295 million to approximately $65 million in the first quarter of 2010. Flow delinquencies totaled approximately 107,500, up from approximately 100,200 and 87,600 in the third and second quarters of 2009, respectively, reflecting seasonal increases and a decline in cured delinquencies. Loss mitigation activities, including workouts, presales and policy rescissions, resulted in $290 million of savings in the quarter, bringing total 2009 savings to $847 million. This included approximately $35 million in savings from delinquent loans that were modified through HAMP. Based upon reporting from the GSEs and certain servicers, Genworth estimates that there are approximately 22,200 delinquent loans that are currently pending within HAMP, nearly double the number at the end of the third quarter 2009. In Q4 2008 Genworth's MI business lost $114 million.