Dec 11 (Reuters) - Genworth Financial Inc named Thomas McInerney chief executive as the insurer looks to move past the billions of dollars in losses from its mortgage insurance business.
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 public offering.
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 business.
“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 Palmer said.
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 the state.