Genworth Financial Inc. (GNW) has entered into an agreement to sell its Wealth Management Business to the joint venture company, Aquiline Capital Partners and Genstar Capital for approximately $412.5 million. The Wealth Management Business of Genworth consists of Genworth Financial Wealth Management and Altegris companies. Altegris is an alternative solutions provider.
Subject to regulatory approvals and other closing conditions, the deal is expected to culminate in the second half of 2013. Genworth expects to incur a loss of $40 million from the divestiture with $35 million incurring in the first quarter of 2013 and the remaining upon closing of the deal. The company will use the proceeds from the transaction and net of transaction related expenses to repay the debt scheduled to mature in 2014.
The company has been working toward its goal to strengthen its business through increased financial flexibility and generating capital by divesting its non-core businesses. Through the sale of its Wealth Management Business, Genworth is trying to move towards achieving this goal. Sustained lower margins in the Wealth Management segment over the past few years also led Genworth to hive this business.
Genworth had earlier sought to fortify its core asset management business within the Wealth Management segment. Towards this end, in Apr 2012, the company divested Genworth Financial Investment Services ("GFIS"), its tax and accounting financial advisor unit. The divestiture was made to Cetera Financial Group for an undisclosed amount.
Among other insurers engaging in divesting activities, The Hartford Financial Services Group Inc. (HIG) closed three previously announced divestitures in Jan 2013. The company has completed the sale of its Retirement Plans business to Massachusetts Mutual Life Insurance Company, Individual Life Insurance business to Prudential Financial Inc. (PRU) and Individual Annuity new business facilities to Forethought Financial Group Inc. The deal is expected to enhance the financial flexibility of the company.
Genworth currently carries a Zacks Rank #3 (Hold). Among others from the industry, Lincoln National Corp. (LNC) carries a favorable Zacks Rank #2 (Buy) and is worth noting.
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