Genworth Fincl Guides Q2 EPS $(0.19)-$(0.23)

Genworth Financial, Inc. GNW today announced preliminary results for the second quarter of 2011. The company expects to report an estimated net loss(1) of $92 to $112 million, or $0.19 to $0.23 per diluted share, reflecting a reserve strengthening of approximately $300 million in its U.S. Mortgage Insurance (U.S. MI) business. This compares with net income of $42 million, or $0.08 per diluted share, in the second quarter of 2010. The net operating loss(2) for the quarter is estimated to be $70 to $90 million, or $0.14 to $0.18 per diluted share, compared to net operating income of $118 million, or $0.24 per diluted share, in the second quarter of 2010. The reserve strengthening, together with U.S. MI operating performance, will result in an expected U.S. MI segment level operating loss of $250 to $255 million in the second quarter. The company is executing a non-cash intercompany transaction to provide capital support to the U.S. MI segment. The company will use a portion of its common shares of Genworth MI Canada Inc. with an estimated market value of $375 million, currently held in a non-U.S. subsidiary in the International segment. Including this transaction, which is subject to customary regulatory approval and will be effective in the second quarter on a statutory basis, the U.S. MI segment expects to report a consolidated risk-to-capital ratio of 25:1 to 26:1. The company estimates the International segment will report operating income of $105 to $110 million in the second quarter, with all operating entities reporting continued sound capital ratios. Total 2011 dividends from the International segment continue to be estimated at approximately $350 million. The company estimates the Retirement and Protection segment will report operating income of $145 to $150 million in the quarter. The consolidated statutory risk based capital ratio for the U.S. life companies at the end of the second quarter is expected to be 380 to 390 percent. Investment performance continued to improve, with net investment income of approximately $880 million, compared to $830 million in the first quarter. After-tax impairments are expected to decline to approximately $20 million in the second quarter. Net unrealized investment gains are expected to be approximately $235 million, net of tax and other items, as of June 30, 2011, compared with net unrealized investment losses of $37 million as of March 31, 2011. At the end of the second quarter, the holding company had $667 million of cash and highly liquid securities, after retiring $548 million of debt, including preferred stock, that matured during the quarter.