Genworth suspends life insurance sales, plans restructuring
February 9, 2016 by Richmond Times-Dispatch and Bloomberg News
Earlier: Genworth Financial Inc. said Thursday it is suspending sales of some products and planning a restructuring after the company posted a loss for the fourth quarter and full year of 2015.
Genworth said it would suspend sales of its traditional life coverage and fixed-annuity products in the first quarter of this year, so the company can focus on fixing a business unit that provides long-term care coverage.
That business unit, which provides insurance for nursing home and at-home care, has struggled with losses as the cost of coverage exceeded what the company expected.
The company said in its earnings statement that it “plans to initiate a series of internal restructuring actions aimed at separating and isolating its (long-term care) business, subject to regulatory and other potential third-party approvals.”
In August 2015, Henrico County-based Genworth employed more than 1,000 at its two sites in Lynchburg, one downtown and one on Albert Lankford Drive, off Odd Fellows Road.
Genworth’s fourth-quarter loss came as it took charges in its life insurance division and on the sale of a European mortgage insurance business.
The company reported a loss of $292 million, or 59 cents per share, for the fourth quarter of 2015, compared with a loss of $760 million, or $1.53 per share, in the fourth quarter of 2014.
Revenue was $2.16 billion for the fourth quarter, compared with revenue of $2.23 billion for the same period of 2014.
The loss included after-tax charges of $184 million, or 37 cents per share, on assumption updates in its universal life insurance business, along with an after-tax loss of $134 million on the pending sale of the European mortgage insurance business and a loss of $73 million related to the completed lifestyle protection insurance business sale.
The company reported an overall loss of $615 million, or $1.24 per share, for 2015, compared with a loss of $1.24 billion, or $2.51 per share, in 2014.
Chief Executive Officer Tom McInerney has been selling assets and seeking to stabilize operations. He is also seeking to win regulators’ approvals to increase long-term care insurance rates and guard the company’s bond rating.
“In our U.S. life insurance businesses, we are actively pursuing multiple restructuring actions to separate and isolate our LTC business and narrow our commercial focus, including through the suspension of traditional life and fixed annuity sales,” he said in the statement.
The company’s financial results were released after the end of regular trading on Thursday.
In regular trading, its shares closed up 31 cents, or 12.5 percent, at $2.79 per share.
In after-hours trading, shares were down 45 cents, or about 16 percent, to $2.34 at about 6 p.m.