Mortgage insurance drives Genworth's 3Q profitability

Genworth Financial Inc. had net income of $107 million in the third quarter, driven by a strong performance from a U.S. mortgage insurance business.

But the Richmond, Va.-based holding company is considering a partial sale of that business if its acquisition by China Oceanwide is not completed before a May 2018 debt maturity date, the third-quarter earnings release said. Previously Genworth said it was looking at unspecified options for the U.S. mortgage insurance company.

The holding company had a net loss of $380 million in last year's third quarter.

Genworth is in negotiations with China Oceanwide regarding a waiver of the Nov. 30 deadline for either party to terminate the deal, it said in its press release.

The two companies withdrew a third joint voluntary notice with the Committee on Foreign Investment in the U.S. at the start of October.

"Genworth remains committed to the transaction with Oceanwide, as it continues to represent the most value for all of our stakeholders," President and CEO Tom McInerney said in the press release. "While we are focused on completing this transaction, we do have other alternatives we would turn to in order to address our upcoming maturities and insulate our U.S. mortgage insurance business from ratings pressure if necessary."

The U.S. mortgage insurance business had adjusted operating income of $73 million, up from $67 million for the third quarter of 2016. It was Genworth's most profitable business segment for the quarter; its ownership stake in separately traded Canadian and Australian MI companies added $37 million and $12 million in adjusted operating income respectively. The troubled life insurance lines had an operating loss of $1 million, while corporate and other had a $58 million operating loss.

But Genworth's new insurance written declined to $11.3 billion from $12.8 billion. The drop was due to a decline in market share and a smaller private mortgage insurance market, Genworth said.

Separately, NMI Holdings Inc. reported third-quarter net income of $12.3 million, nearly double the $6.2 million it had for the same period last year.

New insurance written at its National MI subsidiary was $6.1 billion, the best quarter in the company's history. In the third quarter 2016, National MI had NIW of $5.9 billion.