Genworth Financial reported adjusted operating income, excluding Closed Block, of $0.27 per share on revenue of $1.794 billion for the third quarter. Earnings Whispers calculates earnings growth at 575.0% year over year and revenue down 7.3%. The headline growth figure should be read carefully. On the company's own ex-Closed Block measure, per-share earnings were $0.27 versus $0.28 a year ago, so the 575% figure reflects a much lower comparison base. Dollar earnings on that basis fell to $102 million from $113 million a year ago and $112 million last quarter. The per-share decline was limited to a penny only because buybacks cut diluted shares to 375.5 million from 413.3 million. On a GAAP basis, Genworth swung to a $41 million net loss from $116 million of net income a year earlier and $47 million last quarter. That is the central tension: capital returns keep improving while the operating base and the legacy liability picture weaken.
The quality of the quarter deserves scrutiny. Enact, the engine of the investment case, earned $132 million, down from $143 million sequentially. Its loss ratio rose to 20% from 14% on seasonal delinquencies, and new insurance written fell 7% as mortgage rates rose. The Closed Block adjusted operating loss widened to $146 million from $110 million in Q2 and $32 million in Q1. The main driver was a $111 million pre-tax actual-to-expected (A/E) loss from lower long-term care (LTC) terminations, mostly mortality, and higher benefit utilization. After-tax net investment income fell to $603 million from $660 million on weaker limited-partnership and inflation-protected Treasury income. Statutory results were worse still: a $143 million pre-tax loss, with LTC alone losing $151 million. That pushed the GLIC consolidated RBC ratio down to 274% from 286% last quarter and 303% a year ago.
The call preserved, and in places extended, the capital-allocation narrative. Management raised the 2026 buyback allocation for the third straight call, to $275-300 million. It also added a $500 million authorization, and cumulative repurchases have now passed $1 billion. Expected 2026 Enact capital returns to Genworth rose to roughly $485 million, the top of the prior range. Quarterly Enact distributions have climbed from $99 million to $103 million to $122 million. Holding company cash reached $320 million, though about $200 million of that is earmarked for future obligations. Holdco debt fell to $747 million. CareScout showed incremental progress. Care Assurance Worksite launched with approval in 40 states, ahead of the 34 planned, and the Atria and Brookdale partnerships lifted the senior living network to about 1,200 communities. Matches, however, remain well short of the 7,500 target, and services investment moved to the top of its range at about $55 million.
Bears have legitimate ammunition. The UK Court of Appeal ruled against AXA in the Santander litigation, making the roughly $750 million tax-free recovery cited on every prior call unlikely unless the Supreme Court grants permission to appeal. More consequentially, management warned that the fourth-quarter LTC assumption review could be materially unfavorable, citing cost-of-care inflation and utilization. Last year's review was essentially neutral. A/E losses are already tracking above the roughly $300 million full-year expectation. A universal life (UL) reinsurance restructuring tied to statutory accounting changes will also hit fourth-quarter statutory results and RBC. Management flagged that Genworth may participate less in Enact buybacks in 2027 to hold its 81% stake. CEO Tom McInerney will retire at year-end and Jerome Upton will succeed him, adding a leadership transition to an already crowded fourth quarter.
Investor sentiment was already negative and weakened slightly, moving to -0.31 from -0.28. That is a modest shift, not a capitulation. The stock is down 5.8% since opening at $9.76 after the prior report and now trades at $9.19, just 0.8% above its 200-day moving average. Notably, that is below the $10.05 average price Genworth paid for shares in the quarter. The AVWAP trend reading remains negative while price and momentum readings are neutral, consistent with a stock drifting sideways near its long-term average.
The market setup is more complicated than the shrinking share count implies. Buybacks are doing real work on per-share figures, but they are being funded by an Enact business whose earnings and book value dipped this quarter. Meanwhile, the Closed Block is consuming more statutory capital than the plan assumed. The coming assumption review is the swing factor: a materially unfavorable outcome would test the self-sustainability narrative directly.
The bottom line is that Genworth delivered another quarter of stronger capital returns wrapped around a softer operating core. Ex-Closed Block earnings slipped, Closed Block losses widened, RBC eroded and the Santander recovery has largely disappeared. With an unfavorable LTC review and a CEO change both arriving in the fourth quarter, the buyback story alone may not be enough to shift investor sentiment.