Genworth Affirms 'Sound Capital Position'

Genworth Financial Inc., Richmond, Va., issued a statement on its "sound capital position and financial flexibility" just before the market closed Sept. 18 after seeing its common stock's closing price drop by $8 per share over an eight-day period. The eight-day swoon included one day when it dropped $3.42 per share, and Genworth's stock fell as low as $3.51 per share on Sept. 18 before rebounding to close at $9.15. The company said it has $900 million of cash and cash equivalents at the holding company level and an additional $4.0 billion of cash and equivalents in its operating company investment portfolio. The U.S. mortgage insurance business had its ratings affirmed Sept. 11 by Standard & Poor's, whose report indicated that Genworth's capital was in excess of the triple-A rating requirement. Genworth added that based on current market conditions, third-quarter gross realized investment losses will be at or above second-quarter levels, but that this should not have a material adverse effect on the company. Previously, the company said it had exposure of just under $200 million in debt and equity from Fannie Mae and Freddie Mac, as well as some exposure to Lehman Brothers and American International Group. Investors reacted positively to the statement. Genworth's stock price was up over $7 per share in early trading Sept. 19, but it pulled back quickly. Just after noon, the stock price was up $4.25 to $13.40 per share.