Genworth posts first profit in three quarters but it’s still a ‘show-me story’

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Genworth Financial Inc. posted its first profit in three quarters as the insurer benefited from results at units that back mortgages.

Net income slipped to $154-million (U.S.) from $184-million a year earlier, Genworth said Tuesday in a statement. That compares with net losses of more than $750-million in each of the last two periods of 2014.

First-quarter operating profit, which excludes some investment results, was 31 cents a share, beating the 25-cent average estimate of 10 analysts surveyed by Bloomberg.

Chief executive officer Tom McInerney is seeking to turn around the company, based in Richmond, Va., after a 53-per-cent share decline in the 12 months through the close of trading Tuesday.

The losses last year were fuelled by higher-than-expected costs tied to long-term care coverage, which pays for home health aides or nursing home stays.

"Investor confidence was shaken by the long-term care episode," Mark Palmer, an analyst with BTIG, said by phone before earnings were released. "Genworth is now a show-me story, and it will require multiple quarters of stable performance before investors are going to be able to feel confident that we won't see another flare-up of these types of issues."

Mr. McInerney has been cutting jobs and seeking a buyer for a British lifestyle-protection unit that helps consumers pay debt if they become unable to meet their obligations after an accident or job loss. Genworth is also looking to sell a life-and-annuity operation, people familiar with the matter have said. Mr. McInerney needs to boost capital after ratings firms downgraded the company's debt and U.S. regulators tightened requirements for mortgage insurers.