Genworth Financial Inc. reported a second-quarter loss as money went into reserves for potential mortgage-insurance claims.
The life insurer, which also owns a large mortgage-insurance business and provides wealth management, said its U.S. mortgage-insurance business's loss widened to $253 million from $40 million. Although Chairman and Chief Executive Michael D. Fraizer said in May that credit trends in the unit were improving, last week the company preannounced it had bolstered reserves by $300 million, which it warned would force the company into the red.
The unit has encumbered Genworth's overall results as the housing market continues to struggle. Mortgage insurance covers some losses lenders incur when homeowners fail to pay their loans.
Despite the mortgage-insurance hardships, Genworth's international and retirement-and-protection segments' performance continued to "make sound progress," Fraizer said in a release Thursday.
Earlier in the day, the country's largest life insurer, MetLife Inc. (MET), reported profit fell 21% on a jump in claims, but investors were heartened that operating profit unexpectedly rose.
Genworth posted a loss of $96 million, or 20 cents a share, compared with a year-earlier profit of $42 million, or eight cents a share. The operating bottom line, which excludes investment gains and losses, swung to a 15-cent loss a share from a profit of 24 cents.
Last week, Genworth forecast an operating loss of 14 cents to 18 cents a share; analysts surveyed by Thomson Reuters were expecting a 24-cent profit at the time.
Revenue increased 10% to $2.66 billion. Premiums fell 1%, but net investment income rose 7% and investment losses narrowed.
Total benefits and expenses jumped 16%.