News Column

Genworth Signals Intent to Keep Mortgage Insurance Business

Nov. 1, 2012

John Reid Blackwell

The top executive at Genworth Financial Inc. reiterated Wednesday that a spin-off of the company's U.S. mortgage insurance business would not be the most beneficial option for creating shareholder value at this time.

But executives at the Henrico County-based mortgage and life insurer outlined plans that could include a sale of the company's international protection and wealth-management businesses.

"We see an emerging, slow recovery beginning to take hold in the U.S. housing market in more and more regions, and so we are encouraged by that," interim Chief Executive Officer Martin Klein said in an interview Wednesday.

Some investors have pushed for a separation of that business, which has struggled to recover from the housing market crisis. But the unit's loss narrowed in the third quarter when compared with the same period of 2011 as total delinquencies declined.

Klein said the company still expects the U.S. mortgage division to return to profitability next year. Executives identified the mortgage insurance business as one of the company's core businesses, along with its U.S. life insurance segment.

Those are the units that employ the most people in the company's Virginia operations, so Klein said he does not expect any significant operational changes.

"The last few years have seen several challenges for Genworth," Klein told investors on a conference call. "We are now tackling those challenges head on, and we'll put them behind us."

Klein has been interim CEO since early May, when Michael D. Fraizer, the company's founding CEO and chairman, resigned.

Genworth is weighing options for two non-core businesses including an international division that sells lifestyle protection insurance. Executives said the company will work to build the value of that business, looking toward a possible sale of the unit over the next two to three years.

Genworth also said it was evaluating "opportunities to realize value" in its wealth-management unit, which provides financial planning and other services.

Reuters had reported in October that the company was seeking to sell its Pleasant Hill, Calif.-based wealth asset management business and Altegris, its San Francisco-based alternative investments provider.

Genworth reported late Tuesday that it had a profit of $34 million, or 7 cents per share, in the third quarter, compared with a loss of $16 million, or 3 cents per share, a year earlier. Its shares rose about 48 cents, or 8.8 percent, to close at $5.96 Wednesday on the New York Stock Exchange.

Distributed by MCT Information Services

Source: (c) 2012 Richmond Times-Dispatch (Richmond, Va.)

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