Genworth mulls future of mortgage insurance unit
NEW YORK (Reuters) - Genworth Financial Inc (GNW.N) said on Tuesday it is looking at strategic alternatives for its U.S. mortgage insurance business, including spinning it off as a stand-alone entity.
The Richmond, Virginia-based company said it wanted to "determine the optimal course of Genworth, its customers and shareholders," in a statement.
Genworth shares jumped 35 percent in early trading on the New York Stock Exchange, rising to $6.77. The stock has fallen nearly 80 percent over the last year.
U.S. mortgage insurers have been hit hard as homeowners have fallen behind on loan payments, and fewer mortgages are being issued as lending practices have tightened.
Mortgage insurance policies cover U.S. lenders in the event of default by a borrower who makes a down payment of less than 20 percent. In this environment, mortgage insurers have been seeking ways to shore up capital.
Genworth, which also offers long-term care insurance, retirement products and wealth management services, said it has taken steps to make sure it is not hit by a cash crunch. It has reduced its commercial paper borrowings to $79 million, and has more than $800 million in cash or cash-like assets in the holding company and $4 billion in its operating companies.
In addition, the company has "substantial" credit facilities, it said.
(Reporting by Lilla Zuill; editing by John Wallace)
