NEW YORK - Insurer Genworth Financial Inc (GNW.N), battered by losses from the downturn in the U.S. housing market, said its U.S. mortgage insurance business will not turn an operating profit until mid-2011.
In the meantime, the business will have to get through more delinquencies, Chief Executive Michael Frazier said at the company's annual investor day in New York on Tuesday.
He said losses will be mitigated by steps Genworth has taken to head off claims.
The Richmond, Virginia-based insurer posted an overall profit in the third quarter but its mortgage business had an operating loss of $116 million. A year earlier, the mortgage business posted an operating loss of $121 million.
Frazier said he expects U.S. mortgage delinquencies to peak in the coming year.
Over time, Genworth, which also sells life insurance, long-term care coverage and retirement products, sees its mortgage insurance business achieving a return on equity of more than 20 percent
Genworth shares fell 2.6 percent, or 30 cents, to $11.21 in morning trade on the New York Stock Exchange.
Mortgage insurance is bought by homebuyers securing loans with downpayments of less than 20 percent to repay the lender if there is a default. Genworth clung to its U.S. mortgage business even as the nation's housing market nosedived.
The company has been working with mortgage companies to modify loans in danger of default, a process that has been slow to get underway but which has started to pay off.
Genworth has also hired investigators to weed out claims that are not bona fide. This has helped the company skirt millions of dollars in potential claims by spotting fraud and contract violations.
Genworth's stock has nearly quadrupled since the start of the year, when it was trading at $2.90, rallying as stock markets have recovered and given life insurers a shot in the arm. (Reporting by Lilla Zuill; editing by John Wallace)