Genworth Financial Inc. (NYSE:GNW) reported its fourth quarter operating income of 17 cents per share, in line with the Zacks Consensus Estimate. Results breezed past the year-ago loss of 28 cents. Operating profit for the quarter stood at $86 million, reversing the loss of$135 million, a year ago.

Fourth quarter results stood to benefit form better performances at U.S. Life Insurance and U.S. Mortgage Insurance.

Including net investment gain of $1 million and gain on sale of business of $20 million, net income available to common shareholders was $107 million or 22 cents per share in the reported quarter compared with net loss of $161 million or 33 cents per share available to common shareholders in the comparable period last year. The prior-year quarter included net investment loss of $26 million.

Full-year operating earnings came at 43 cents, a penny ahead of the Zacks Consensus Estimate and 18 cents ahead of year-ago earnings. Operating earnings were $214 million, almost a 70% increase from 2010.

Including net investment losses of $112 million and gain on sale of business of $20 million, net income available to common shareholders was $122 million or 25 cents per share in 2011compared with $142 million or 29 cents per share available to common shareholders in the comparable period last year. The prior year included net investment loss of $90 million.

Operational Performance

Genworth’s total revenue increased 0.3% year over year in the fourth quarter to $2.6 billion. The top-line was almost in line with the Zacks Consensus estimate.

Full year 2011 revenue improved 2.5% year over year to $10.3 billion. The top-line, however, missed the Zacks Consensus estimate of $10.2 billion.

Premium revenue at Genworth decreased 7.8% year over year to $1.35 billion in the quarter. The full-year premium of $5.7 billion declined 2.5% year over year.

Net investment income decreased 4.2% year over year to $827 million. However, full-year net investment income increased 3.5% year over year.

Segment Update

Insurance and Wealth Management: Net operating income increased 11.5% year over year to $145 million in the quarter, largely led by higher income from U.S. Life Insurance.

Mortgage Insurance: Net operating loss narrowed to $16 million in fourth quarter from $254 million in the fourth quarter of 2010. The loss narrowed due to lower losses at U.S. Mortgage Insurance.

Corporate and Run-Off: The net operating loss widened to $43 million in the quarter under review from an operating loss of $11 million in the prior-year period.

Financial Update

At 2011 end, cash, cash equivalents and invested assets of Genworth stood at $77.1 billion, higher than $72.3 billion at 2010-end.

Genworth’s long-term borrowings decreased to $4.73 billion at the end of 2011 from $4.95 million at 2010 end.

Zacks Rank

We retain our Neutral recommendation on Genworth. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.

Based in Richmond, Virginia, Genworth Financial offers a variety of products to customers in areas such as life insurance and lifestyle protection, long-term care insurance, annuities, asset management and mortgage insurance through financial intermediaries, advisors, independent distributors and sales specialists.

MetLife Inc. (NYSE:MET), which competes with Genworth, is scheduled to release its fourth quarter results on February 14 after the bell while another peer Prudential Financial Inc. (NYSE:PRU) is scheduled to release its fourth quarter results on February 8 after the bell.

 
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