Genworth to Separate Struggling Long-Term Care Segment
February 04 2016 - 06:30PM
Dow Jones News
Genworth Financial Inc. plans to separate its money-losing
long-term care business and stop selling traditional life and fixed
annuities as part of a cost-cutting move.
The Richmond, Va., company unveiled the plans Thursday as it
reported a narrower fourth-quarter loss. Genworth estimated it will
take a $15 million pretax restructuring charge in the current
quarter related to the actions.
Shares, which have lost nearly two-thirds of their value over
the past 12 months, dropped 16% to $2.35 in after-hours
trading.
The insurer focuses on sales of long-term care insurance, which
helps pay for such things as nursing-home and home-based health
care. Insurers have been moving away from them as medical costs
rise and policyholders live longer, requiring higher payouts, and
lower interest rates weighed on investment returns.
Genworth has been freeing up money to comply with tighter
federal requirements for mortgage insurers that do business with
Fannie Mae and Freddie Mac. Company officials said the insurer has
met the Private Mortgage Insurer Eligibility Requirements and ended
the year "with a prudent buffer."
Over all, Genworth reported a loss $292 million, or 44 cents a
share, compared with a year-earlier loss of $760 million, or $1.81
a share. The latest results included more than $400 million in
charges.
On an operating basis, Genworth reported a loss of 17 cents a
share, compared with a loss of 83 cents a share a year earlier.
Operating results exclude investment gains or losses and other
items that aren't considered recurring on a quarterly basis.
Revenue declined 3.1% to $2.16 billion.
Analysts surveyed by Thomson Reuters had projected an operating
profit of 21 cents a share on $2.17 billion in revenue.
The long-term care business reported net operating income of $19
million, compared with a net operating loss of $10 million in the
previous quarter and a net operating loss of $506 million in the
year-ago period.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
February 04, 2016 18:15 ET (23:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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