Genworth selling wealth management business for $412.5 million

Published March 28, 2013 by Robert Powell, III

Henrico County-based Genworth Financial Inc. plans to sell its wealth management business for $412.5 million.

The purchaser is a partnership involving two private equity firms, New York-based Aquiline Capital Partners and San Francisco-based Genstar Capital.

The deal includes Genworth Financial Wealth Management and the company’s alternative solutions provider, the Altegris companies. Genworth will record an after-tax loss of about $40 million in connection with the sale.

”This transaction is another step forward in executing our strategy, by generating capital from a non-core business and increasing financial flexibility for Genworth,” Martin P. Klein, Genworth’s executive vice president and chief financial officer, said in a statement.  “The sale of Wealth Management also provides the opportunity for our employees there and the purchaser to have a strong business to grow going forward.” 

Last August, Klein was Genworth’s acting CEO when he announced that the Fortune 500 company had completed a strategic review that may result in the sale of some of its operations.  He, however, did not say which units were under consideration.

Disgruntled shareholders for some time had pressured Genworth’s management to dispose of its U.S. mortgage insurance business, which had suffered major losses after the collapse of the housing industry during the recession. The mortgage insurance business, however, has improved in recent years.

In January, Genworth announced. plans to create a new holding company that separates its mortgage insurance business from other operations.

Klein resumed his role as CFO when Thomas J. McInerney became the company’s new president and CEO on Jan. 1. He replaced former CEO Michael Fraizer who resigned in May.

Genworth will record roughly $35 million of the $40 million loss from the sale of the wealth management business in the first quarter, with the rest recorded at the deal’s closing. 
The company expects the sale to close in the second half of 2013, subject to closing conditions, including requisite regulatory approvals.