Genworth’s internal reorganization takes effect
A plan to separate Genworth Financial’s U.S. mortgage operations from its other businesses has taken effect.
The Henrico County based Fortune 500 company said Monday that it had fully implemented a capital plan announced in January to create a new holding company.
Among other changes, the internal reorganization separates Genworth’s U.S. mortgage insurance business from company operations tied to Genworth’s senior notes.
“U.S. mortgage insurance is a key component of our Global Mortgage Insurance Division, and the plan increases our financial flexibility while bolstering capital in the business to continue writing profitable new business and returning the business to profitability over time,” Martin P. Klein, Genworth’s executive vice president and chief financial officer, said in a statement.
While its performance has improved in recent years, the mortgage insurance operation has been the source of big losses since the collapse of the housing market during the 2007-09 Great Recession.
Genworth said in January that, under its reorganization, the solvency of the U.S. mortgage insurance subsidiaries will not affect its ability to meet its debt obligations.
The capital plan also transferred ownership of Genworth’s European mortgage insurance subsidiaries to Genworth Mortgage Insurance Corp. (GMICO). That move was completed on Jan. 31.
Cash and highly liquid securities held by the holding company were estimated to total about $950 million on March 31. As part of the capital plan, Genworth contributed $100 million to GMICO on April 1.
The company expects to maintain cash and highly liquid securities balances of two times its annual debt service expense plus a $350 million buffer.
Genworth announced last week that it plans to sell its wealth management business for $412.5 million. The purchaser is a partnership involving two private equity firms, New York-based Aquiline Capital Partners and San Francisco-based Genstar Capital.
Genworth’s businesses include life insurance, long-term care insurance and mortgage insurance. It has 6,300 employees.