Dec 11 Genworth Financial Inc named
Thomas McInerney chief executive as the insurer looks to move
past the billions of dollars in losses from its mortgage
Genworth's long-time CEO Michael Frazier resigned in May
after the insurer pushed back plans to sell a minority stake in
its Australian mortgage insurance business through an initial
McInerney, who was a member of the global management board
of ING Insurance from October 2009 through December 2010, is now
in charge of a company that is trying to convince markets and
bond rating agencies of the benefits of its mortgage insurance
"This is a positive, but they still have problems. McInerney
has experience, but it's still wait and see," said a Genworth
shareholder, who declined to be named.
Shares of the company, which rose as much as 6 percent to
$7.13, were up 3 percent in afternoon trade on the New York
Stock Exchange on Tuesday.
"I think the McInerney appointment makes structural change
in the mortgage insurance unit more likely," BTIG analyst Mark
Bond rating firm Moody's had in September said it would
likely downgrade Genworth unless the company can insulate itself
from continuing losses from its mortgage insurance unit.
"They have talked about establishing a (new company) and the
new director David Moffat, who was a former CEO of Freddie Mac,
should be able to help. Because the toughest problem with new
companies is getting FHFA (Federal Housing Finance Agency)
approval," analyst Palmer said.
The new company would have to be capitalized, but Genworth
may not have to allocate capital as private equity companies
could step in, he added.
Private equity companies have over the last year expressed
interest in investing in mortgage insurers as housing markets
rebound. Newly written mortgage insurance is highly profitable
as tighter underwriting standards since the housing crisis mean
those loans are of a very high quality.
Genworth's now-bankrupt peer PMI Group Inc said in a
regulatory filing earlier this month that a "well-known private
equity investor" has indicated an interest in infusing new
capital into a reorganized company. ()
Earlier in the year, National Mortgage Insurance Holdings
raised $550 million in private capital and received approval
from the California insurance department to write insurance in