Genworth Financial, a life and mortgage insurer, on Tuesday forecast 2008 operating earnings below analysts' expectations, sending its shares down 5 percent.
Genworth said at an investor conference it expects operating earnings, which exclude investment gains and losses, in a broad range of $2.65 to $3.15 per share, depending on the condition of the U.S. mortgage insurance market.
Analysts' average forecast is $3.28 per share, according to Reuters Estimates.
Genworth - which was spun off from General Electric, the parent of CNBC and CNBC.com, in 2006 - said it expects continuing erosion in the housing market next year. It said its U.S. mortgage insurance unit, which guarantees that homeowners will pay on their home loans, could report anywhere from a loss of 25 cents a share to a profit of 15 cents.
The Richmond, Virginia-based company said it expects operating earnings of $3 to $3.10 a share for 2007. Analysts' average forecast is $3.06.
Genworth shares were down $1.43 to $26.76 in midday trading on the New York Stock Exchange. The shares have traded in a range of $23.26 to $37.16 in the past 12 months.
Genworth said default rates for its mortgage unit were about 3.5 percent as of the end of September, compared with the industry average of 5.5 percent.
"It might be better if they weren't in the mortgage insurance business," said Donald Light, an analyst with Celent. "But since they are, they seem to be handling it pretty well."
Alan Rambaldini, an analyst with Morningstar in Chicago, said Genworth's international business, which has not suffered from the subprime crisis that has hurt the U.S. housing market, "looked pretty good."
Genworth said that while there was some slowing in the UK and Spain, it estimated up to 25 percent growth in international revenue in 2007, with particular strength in Australia and Canada.