In an effort to enhance its operational performance,
Genworth Financial, Inc
) decided to sever 400 positions. The decision is also based on
the company's intentions to reduce expenses.
Genworth will have to bear severance, outplacement and other
associated costs of $15 to $20 million during the second quarter
of 2013. The Zacks Consensus Estimate for the second quarter of
2013 is currently pegged at 29 cents, translating to a
year-over-year improvement of approximately 80.6%.
Nevertheless, Genworth will have $80 to $90 million in annual
pre-tax expense savings when the plan will be fully implemented.
Out of the total number of eliminated positions, 150 will never
be filled. The plan also involves cutting down on information
technology and program expenditure. The company has approximately
Genworth expects the restructuring initiatives to have
significant impact on its performance after 2013.
In order to emphasize on generating capital as well as increasing
the financial strength and flexibility of the company and its
business model, Genworth decided to divest the wealth management
business for about $412.5 million. This includes divesting
Genworth Financial Wealth Management, and alternative solutions
provider, the Altegris companies.
The company, in relation with the sale, incurred $27 million in
goodwill impairment and other loss and expects to incur about $10
million more losses upon closing of the transaction.
Earlier in Jan 2013, Genworth announced the U.S. Mortgage
Insurance Capital Plan to reduce the risk-to-capital ratio of the
U.S. mortgage insurance subsidiary and separate the mortgage
insurance business from the company. The plan has already gained
Genworth's first-quarter 2013 net operating income of 30 cents
per share surpassed the Zacks Consensus Estimate of 27 cents and
was much above the year-ago level of 3 cents. Results benefited
from better performances at Global Mortgage Insurance and U.S.
Genworth carries a Zacks Rank #3 (Hold). Life insurers
Protective Life Corporation
StanCorp Financial Group Inc.
) with a Zacks Rank #1(Strong Buy), and
China Life Insurance Co. Ltd
) with a Zacks Rank #2 (Buy) are worth noting.
GENWORTH FINL (GNW): Free Stock Analysis
CHINA LIFE INS (LFC): Free Stock Analysis
PROTECTIVE LIFE (PL): Free Stock Analysis
STANCORP FNL CP (SFG): Free Stock Analysis
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