Genworth (GNW) Announces Sale of Wealth Management Business

GNW Photo LighthouseIn February 2013 Genworth (GNW) named CFO Martin Klein executive vice  president. Adding to the ongoing CFO duties his new role is responsible for, among other duties, positioning the non-core International Protection’s and Wealth Management units’ for eventual sale as outlined in the strategic plan.  We commented at the time that, “It is encouraging to see a senior leader assigned to implementing this aspect of GNW’s turnaround strategy.” Klein delivered; the company announcement the sale of the Wealth Management unit [Source]:

RICHMOND, Va., March 27, 2013 /PRNewswire/ — Genworth Financial, Inc. (NYSE: GNW) announces it has reached an agreement to sell its Wealth Management business, including Genworth Financial Wealth Management and alternative solutions provider, the Altegris companies, to a partnership of Aquiline Capital Partners and Genstar Capital.  The sale price is expected to be approximately $412.5 million and the company will record an after-tax loss of approximately $40 million related to the sale with approximately $35 million recorded in the first quarter of 2013 and the remainder upon closing.  The sale is expected to close in the second half of 2013, subject to customary closing conditions, including requisite regulatory approvals.  Proceeds from the transaction, net of transaction related expenses, will be held at the holding company and be used to address the 2014 debt at maturity or before. 

“This transaction is another step forward in executing our strategy, by generating capital from a non-core business and increasing financial flexibility for Genworth,” said Martin P. Klein, executive vice president and chief financial officer.  “The sale of Wealth Management also provides the opportunity for our employees there and the purchaser to have a strong business to grow going forward.” 

As of the first quarter of 2013, the Wealth Management business will be classified as an asset held for sale in the balance sheet and discontinued operations in the statement of net income, and will be excluded from operating income.  The company will provide further updates associated with this transaction on its first quarter 2013 earnings call.

Goldman, Sachs & Co. and Sullivan & Cromwell LLP advised Genworth on this transaction.

Initial proceeds from non-core asset sales are slated for debt reduction. The approximate $400 million from the disposition of the Wealth Management unit, when received, will go a long way to paying down the $500 million remaining long term 5.75% senior notes, due 2014. GNW has the option to redeem all or a portion of the senior notes at any time with proper notice to the note holders and we anticipate they will do so early.

It is encouraging to see management delivering on their promises in a timely fashion.

Dislosure: Long GNW

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