Genworth Financial Inc (NYSE:GNW) reported that the net income in 2Q2016 came at $172 million against a net loss of $193 million in the same period, a year ago. Net operating income surged to $123 million from $119 million over the previous year quarter.
The highlights
In February 2016, Genworth Financial proposed a restructuring strategy for its U.S. life insurance operations. This strategy was planned to reduce expenses in 2016 and suspend sales of its fixed annuity and traditional life insurance products. Also, it intended to repatriate existing operations from its subsidiary, BLAIC, to company’s U.S. life insurance firms in 2016. Restructured plan focused on the separation and isolation of LTC business.
Genworth Financial reported progress on this strategic plan since the close of the first quarter. The cash expenses declined almost $150 million pre-tax on yearly basis. The company recaptured two blocks of life insurance segment from its BLAIC unit to the U.S. life insurance firms. It also submitted for the regulatory sanctions to merge BLAIC unit into Genworth Life Insurance. The deal will, if approved, close the repatriation of BLAIC.
The management speaks
Tom McInerney, the President and CEO of Genworth, said that the results in 2Q2016 were robust and they were especially thrilled with the healthy performance in U.S. MI. The reduced cash expenses and are on track to close the repatriation of their Bermuda subsidiary in 4Q2016. Moreover, European MI business sale was completed in 2Q2016, which resulted in proceeds of almost $50 million.
Net income was positively impacted by net of taxes, net investment gains, and other adjustments, amounting to $25 million in the quarter. Total impairments amounted to $14 million in 2Q2016, compared to $0 in the same period, a year earlier. Net investment income was negatively affected by prepayment speed adjustments linked to residential mortgage-backed securities.
