UPDATE 1-Genworth CEO hints at split of company

Fri Jul 29, 2011 3:21pm EDT

* To advance share buy-back plan to 2012 from 2013-14

* Says potential split may not be executed in near term (Adds details, background)

By Brenton Cordeiro and Rachel Chitra

BANGALORE, July 29 (Reuters) - Mortgage insurer Genworth Financial is taking steps to possibly split up the company, its Chief Executive Michael Fraizer said on a post-earnings conference call.

Genworth shares were up 6 percent on Friday afternoon after the insurer spoke of potentially splitting up the company and said it was advancing its share buy-back plan to 2012 from 2013-14.

"We recognize that the characteristics of our life insurance and wealth management business compared with our mortgage insurance businesses may appeal to different groups of investors," the CEO said.

However, he added that it is not a "strategy to execute in the near term."

Genworth currently reports results in three segments -- U.S. mortgage, retirement and protection, and its international businesses.

"I'm not clear about it. But tentatively, I feel they are talking of a split-up only to report results differently," Sandler O' Neill analyst Edward Shields told Reuters.

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On Thursday, Genworth, which has a market capitalization of about $3.9 billion, reported a quarterly profit that missed analysts' estimates as it added to reserves in its loss-making U.S. mortgage insurance operations business.

Genworth's mortgage insurance units in Canada and Australia have been doing well, but its U.S. unit -- among the largest mortgage insurers in the country -- is still suffering.

Earlier this month, Standard & Poor's cut its rating on the company's mortgage insurance unit, but left its other ratings untouched, suggesting that it sees strength in the company as a whole.

MGIC Investment Corp , Radian Group and PMI Group , the three largest publicly traded U.S. mortgage insurers, have been wrestling with defaults and losses for more than three years as Americans continue to struggle with home loan payments amid rising joblessness and a fragile recovery.

"They (Genworth) could possibly report all the mortgage insurance results together," analyst Shields said.

To enable a possible split, Fraizer said they were thinking of realigning some of their businesses, bringing down debt and "transitioning certain business platforms towards more stand-alone capital structures."

Last month, Genworth sold its medicare supplement business to health insurer Aetna Inc for $290 million.

Genworth shares were trading up 6 percent at $8.30 on Friday afternoon on the New York Stock Exchange. (Reporting by Rachel Chitra & Brenton Cordeiro in Bangalore; Editing by Roshni Menon)

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