Genworth Financial

THE SCOOP


Got insurance?

Based in Richmond, VA, Genworth Financial ranked No. 271 on the Fortune 500 in 2009 and is among the leading insurance-holding companies in the United States.  Formerly part of General Electric Corp., it now has operations in 25 countries and offers primarily consumer-focused products.  The company has five business segments: long-term care, retirement solutions, life insurance, homeownership and wealth management.  The company's May 2004 initial public offering on the New York Stock Exchange raised $2.8 billion.

Genworth’s long-term care group includes long-term care insurance, Medicare supplement and group long-term care.  The retirement solutions arm deals with annuities, reverse mortgage, Medicare supplement and group variable annuities.  Life insurance, on the other hand, covers term-life insurance and universal life insurance.  The homeownership takes care of mortgage insurance and reverse mortgage.  The wealth management segment entails the company working hand-in-hand with a client’s financial advisor to meet personal investment needs.

Trailblazers

Genworth traces its history all the way back to 1871 with the sale of a policy by The Life Insurance Company of Virginia.  Genworth's founding company sold its first fixed-life policy business in 1955 and expanded from there over the next 50 years into long-term care insurance, mortgage insurance and universal life insurance.  In 2003, the company became GE Financial Insurance, acquiring General Electric's life insurance, long-term care insurance, group life and health benefits, retirement planning, and mortgage insurance businesses in the United States, Australia, Canada and Europe.  After going public, GE's ownership of Genworth dropped below 50 percent, which allowed Genworth to be considered fully independent of GE.  In March 2006, Genworth announced that GE's secondary public offerings were priced at $32.75 each.  Genworth was not to receive any proceeds from the sale.  The company also said that it would buy back 15 million shares of Class B stock from GE for $479 million.  Following the completion of the transaction, GE no longer owned any shares of Genworth's common stock.  GE said it would receive net proceeds of $2.8 billion from these transactions.  GE sold its remaining stake in Genworth Financial to focus on faster-growing markets.



Hitting the mark


Since Genworth successfully acquired AssetMark Investment Services, an investment management and consulting firm, for $230 million (plus performance-based payments of approximately $100 million over the next five years) in 2006, it has been successful in significantly growing its money-management business.  However, AssetMark brought more than just investment cachet to Genworthâ€"the acquisition of the company brought in approximately $8 billion in assets and a team of skilled financial advisors.  AssetMark continues to be a strong contributor to Genworth's growth.  In June 2007, it launched a new series of no-load mutual funds called the AssetMark Fundamental Index which will be sub-advised by Research Affiliates.  The company's combined assets under management nearly doubled in just one short year, shooting up from $13 billion in October 2006 to $21.7 billion at the same time in 2007.

So far, so good

Though Genworth has been affected by the subprime market, it has had an easy road compared with other companies that are connected to the mortgage business.  The stock of Genworth dropped approximately 11 points over a one-year period in 2007, from a high of $37.16 to a low of $23.26.  The company also predicted that its domestic mortgage insurance unit could have a loss in 2008 of anywhere up to 25 cents a share.  However, for a business that insures mortgages in a market where home foreclosures are soaring, Genworth did better than expected.  This was partially due to increased income from its money-management business and partially due to a strong showing in its international segment.  The latter increased its mortgage insurance sales by 15 percent, partially shielding them from losses in the tanking domestic market.  Genworth also has announced plans to buy back approximately $1 billion of its common shares between now and 2009.  In 2007, the company was able to buy back about 16.5 million of common shares from Merrill Lynch.

Going down?

The firm continued to feel the aftershocks of the nadir of the housing market well into 2008.  For the second half of 2008, the firm pulled in $2.4 billion in revenue, a decrease from $2.76 billion in the second quarter of 2007 and also a drop from $2.75 billion in the first quarter of 2008.  Genworth recorded a net loss for the quarter of $109 million compared with net income of $379 million in the second quarter of 2007 (and $116 million in the first quarter of 2008).  For the second quarter of 2009, the company reported a net operating income of $9 million or $0.02 per diluted share which is definitely smaller compared to the $212-million net operating income for the same period of 2008.  The situation was reversed for net losses though with the company incurring $50 million for the second quarter of 2009 as compared to the $109-million net loss of the same period of 2008.

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Genworth Financial


6620 West Broad Street
Richmond, VA 23230
Phone: 804-281-6000
Fax: 804-662-2414
www.genworth.com

STATS


  • Employer Type: Public
  • Stock Symbol: GNW
  • Stock Exchange: NYSE
  • Chairman, President & CEO: Michael D. (Mike) Fraizer
  • 2008 Employees: 6,000

Major Office Locations

  • Richmond, VA

Key Financials

  • 2008 Revenue: $9,948 million

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