Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Life Insurance

Genworth to sell Europe mortgage unit at $140 million loss

Your article was successfully shared with the contacts you provided.

(Bloomberg) — Genworth Financial Inc. agreed to sell a European mortgage insurance operation to AmTrust Financial Services Inc. as Chief Executive Officer Tom McInerney divests assets to bolster capital amid tighter regulation on companies that back home loans in the U.S.

Genworth expects to record an after-tax loss of $140 million tied to the sale and will get net proceeds of about $55 million, the Richmond, Virginia-based insurer said Tuesday in a statement. Mortgage insurance policies cover costs when borrowers are unable to meet obligations and foreclosure fails to recover losses.

U.S. home-loan guarantors have been raising capital to prepare for private mortgage insurance eligibility requirements announced last year by the Federal Housing Finance Agency. Radian Group Inc. agreed in December to sell its bond insurer to Assured Guaranty Ltd. for about $800 million to free up capital and help meet the standards required for companies that back loans purchased by Fannie Mae and Freddie Mac.

AmTrust is “excited to rebuild” the Genworth operation, “especially at a time when we believe market conditions for mortgage insurance in Europe are improving,” CEO Barry Zyskind said in a separate statement. “With this transaction, AmTrust will acquire an experienced management team and solid pipeline of business at a purchase price that we believe will reward our shareholders.”

U.K., Germany

The unit had tangible book value of about $155 million as of June 30, AmTrust said. The operation is based in the U.K. and also sells products in Finland, Italy and Germany.

McInerney has been under additional pressure to sell assets after his company was burned by losses at its long-term care unit, coverage which pays for home health aides and nursing home stays. He announced a deal last month to sell blocks of life policies to Protective Life Corp. In July, France’s Axa SA agreed to buy a Genworth unit that offers European customers protection against the financial impact of major illness, accident or death.

Ally, Delek

Zyskind has been building New York-based AmTrust by purchasing units from companies that are reshaping operations. His company has announced deals in recent years to buy businesses from Wells Fargo & Co., Ally Financial Inc. and Israel’s Delek Group Ltd.

AmTrust has gained 22 percent this year through Monday. Genworth has slipped 43 percent since Dec. 31.

The European mortgage insurer deal is expected to be completed in the first quarter of 2016, according to the statements. Lazard Ltd. and Sidley Austin LLP advised Genworth on the transaction.

–With assistance from Sonali Basak in New York.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.