Genworth Financial Inc.GNW

Morningstar Rating

Stock Research and Analysis

by Jim Ryan

Deteriorating credit markets and skyrocketing mortgage defaults, both products of the severe worldwide economic recession, nearly wiped out Genworth's equity in early 2009. Accordingly, the firm took action, attempting to gain a share of government Read more

Bulls Say

Genworth could have a tremendous growth opportunity in long-term care insurance as market penetration increases and people live longer.

The Pension Protection Act of 2006 permits retired public-safety officers to pay health and long-term care insurance premiums with tax-free distributions from governmental retirement plans, stimulating demand for Genworth products.

International expansion will diversify Genworth's earnings and lower its risk profile. Read more

Bears Say

Escalating long-term health-care costs could make long-term-care insurance unaffordable, reducing or even eliminating the growth of that business.

Even though mortgage delinquencies may be leveling off there is still a huge backlog of foreclosures in process, which could spike mortgage insurance policy payouts.

As an insurance company seeking to match long-term liabilities with long-term investments Genworth is susceptible to swings in its fixed income portfolio. Read more

Strategy

Genworth targets specialized and diverse insurance lines operating globally. The firm expects to deploy more capital toward niche products where it expects to earn above market return on equity. Read more

Management

Beginning in 2009, Genworth's compensation committee has eliminated its traditional annual incentive targets in favor of discretionary judgment of performance, a practice we frown upon. While we can understand that economic events in the 2008-09 timeframe Read more

Profile

Genworth is a leading provider of domestic and international mortgage, long-term care, and "lifestyle-protection" insurance. The firm also sells life insurance and retirement Read more

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