General Electric Company has raised more than $3.5 billion by making good on plans to sell a 30% stake in Genworth Financial Inc. along with $700 million in related Genworth securities.
Now that Genworth is on its own, the performance of the newborn insurance giant will depend on its success at introducing the Genworth brand name and strengthening relationships with distributors and producers, analysts say.
Its probably going to take a couple of years for them to fully establish the new brand, says Cynthia Crosson, a director in the New York office of Fitch Ratings. But, in the long run, she says, I think they have good prospects.
Genworth, which is based in Richmond, Va., is a leader in the term life, long term care insurance and mortgage insurance markets.
Genworth also sells group life and health insurance, annuities, reinsurance, European payment protection insurance and mortgage contract underwriting services.
The company reported $260 million in net income for the first quarter on $3 billion in revenue and $107 billion in assets, up from $254 million in net income on $2.8 billion in revenue for the first quarter of 2003.
Company strengths include solid managers, good risk-management capabilities and decades of experience at managing LTC insurance business, Crosson says.
Another possible plus: Genworth has escaped from the demands of a parent company that expected it to generate a 20% return on equity.