AET Aetna Inc. (delisted)

To focus more on the core asset management business within the Wealth Management segment, Genworth Financial Inc. (GNW) decided to divest Genworth Financial Investment Services ("GFIS") to Cetera Financial Group.

Established in 1981, GFIS is the company’s tax and accounting financial advisor unit. The divestiture is expected to close within 90 days, pending customary closing conditions and regulatory approvals. Genworth intends to utilize the sale proceeds for general corporate purposes.

Vending off the tax and accounting financial advisor unit is a part of the continuous process undertaken by Genworth to boost its financial flexibility, improve its business mix with the ultimate goal to maximize shareholders' net worth.

Genworth has already been streamlining its business to focus more on its core business, thereby enhancing operational efficiency. In 2011, Genworth sold its Medicare supplement business and related blocks of in-force business to Aetna Inc. (AET) to focus on Retirement and Protection segment.

Further, to support future growth opportunities for the Australian business, greater access to the capital markets, maintain control positions of strategic mortgage insurance platforms in Australia, and free material capital for redeployment, Genworth plans an initial public offering of its Australian mortgage insurance business in the second quarter of 2012.

Also, Genworth could lower loss at Mortgage Insurance due to better loss mitigation results, stability in the aging of loan delinquencies and higher levels of profitable new business.

We retain our Neutral recommendation over the long term. The quantitative Zacks #5 Rank (short-term Strong Sell rating) for the company indicates downward pressure on the stock over the near term.

Based in Richmond, Virginia, Genworth Financial offers a variety of products to customers in areas such as life insurance and lifestyle protection, long-term care insurance, annuities, asset management and mortgage insurance through financial intermediaries, advisors, independent distributors and sales specialists.

 
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