Company Overview
Genworth
financial is an insurance company that provides services in three areas:
retirement and protection, U.S. mortgage insurance, and international. Their
products include life and long-term care insurance, mortgage insurance,
lifestyle protection insurance, and annuities. They are a 9.5 billion dollar
global insurance agency that ranks among the fortune 500 companies.
Company Highlights
New company CEO as of January 1st
2013, Thomas McInery he is well liked by analysts and has a wealth of knowledge
in the field. He is currently leading the company in its turnaround. Genworth
hit its goals for the 2013 period, they are holding company cash greater than
1.5X Debt service with a $350MM buffer, addressed near term debt maturities,
ratings are “stable”, maintained margins in LTC (long term care) reserves and
are restructuring actions to reduce expenses.
Currently starting their transition
to growth stage, expecting moderate recovery across the U.S. economy with
slightly below average GDP growth, a slow decline slow decline in unemployment,
modest home price appreciation, and modest increase in 30 year fixed rate
mortgage
Aspires
to have a 7-9% ROE by 2016. In 4Q13 net operating income increased 20% versus
prior year. Company said to have made “progression on strategic objectives from
2013”. International MI performance was up 12% sequentially on lower losses
with improved capital positions in Canada and Australia. U.S. MI earnings up
$9MM, up $38MM from prior year on improving losses from lower delinquencies and
continued improvement in the housing market. U.S. life insurance up 63% versus
in the prior year. $400MM capital raised and dedicated for anticipated increase
in U.S. MI capital requirements
Data source: Company financials and annual report
Why Buy
A
fortune 500 company that is currently trading at 50% of its book value that
successfully saw through its stabilization goals. Net income has been
increasing over the past 2 years. Earnings per share increased from $0.25 in
2011 to $1.04 (ttm). Net margin increased from 1.18% in 2011 to 5.26%ttm since
company turnaround. ROE increased to 3.34%ttm. Solid company that has had an
excellent management change that is undervalued currently entering their
company growth period.
Data source: http://www.morningstar.com/
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