Richmond Va.-based Genworth Financial Inc. announced today it is considering a possible spinoff of its U.S. Mortgage Insurance business among alternatives.
If that were to occur it would leave the insurer, formerly part of General Electric, with business segments including international, which provides mortgage insurance products and payment protection coverages, wealth management, retirement, life and long-term care insurance.
Market reaction was favorable and the stock, which closed yesterday at $5 a share, was trading around $9 a share in the afternoon.
The company, which reports it has $114 billion in assets, also stressed in a statement that it has “a sound financial foundation and cash availability to meet liquidity requirements across the company.”
“We have demonstrated that, in the current stressed U.S. housing environment, our U.S. mortgage insurance business continues to operate from a more sound financial position and lower risk profile than any other U.S. mortgage insurer,” Michael D. Fraizer, chairman and chief executive officer, said in a statement.
“At the same time, progress in our international, wealth management, retirement, life and long-term care insurance businesses has been overshadowed by concerns about the future of U.S. Mortgage Insurance.
“Genworth's U.S. MI business remains the only 'AA'-rated mortgage insurer in the U.S.,” Mr. Fraizer said. “We have a strong leadership team that has taken significant steps to position the business for improved future performance and is executing well to expand its opportunities. This step should enable U.S. MI to achieve its full potential and to optimize shareholder value.”
Reporting on Genworth's overall capital and financial flexibility, the company said it has reduced its commercial paper borrowings to $79 million and maintains more than $800 million in cash and cash equivalents at the holding company; carries nearly $4 billion of cash and cash equivalents in its operating companies; and maintains substantial credit facilities.
Genworth employs approximately 7,000 people in 25 countries and says it has over 15 million customers.
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