Should You Hold Genworth (GNW) Stock in Your Portfolio?

Genworth Financial, Inc. GNW has successfully lived up to the ever-changing demands and expectations of its clients, building a solid service portfolio over the years. The company remains focused on maintaining this streak to further upgrade the overall results.

The life insurer remains optimistic about its pending acquisition by China Oceanwide. The buyout is expected to result in better services and help improve value for Genworth’s customers, that should accelerate the company’s long-term growth.

Also, Genworth aims to strengthen its balance sheet and stabilize ratings over time, particularly in the U.S. MI (Mortgage Insurance) business.

Good news is that the company’s mortgage insurance segment has started generating profits after incurring losses over an extended period. In fact, the company’s U.S. Mortgage Insurance business has been reporting improved results, owing to lower new delinquency development, effective loss mitigation programs and changes in aging of existing delinquencies.

However, the life insurer has been witnessing lower sales over the last several years due to new products and pricing changes at the U.S. Life Insurance division. The company anticipates sales in this division to reduce to two-third of Long Term Care Insurance and one-third of Life Insurance in the near term.

Nonetheless, valuation is attractive at present as the stock is currently trading at a price to book multiple of 0.12 over a period of one year, a whopping 94.8% discount to the industry average of 2.31.

The company’s expected long-term earnings growth is pegged at an impressive 5.00%.

Stocks that Warrant a Look

Investors interested in some notable stocks from the insurance industry can consider American Financial Group, Inc. AFG, CNO Financial Group, Inc. CNO and Argo Group International Holdings, Ltd. AGII.

American Financial provides property and casualty insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 17.03%.

CNO Financial develops, markets and administers health insurance, annuity, individual life insurance and other insurance products for senior and middle-income markets in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 6.69%.  

Argo Group underwrites specialty insurance and reinsurance products in the property and casualty market worldwide. The company delivered positive surprises in all the last four quarters with an average beat of 26.51%.

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Genworth Financial Inc (GNW) : Free Stock Analysis Report
 
CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report
 
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