Genworth Financial raised $535 million this week by selling 19.4% of its mortgage insurance business to outside investors, in spite of turbulence in the stock market.
The initial share price for the business, Enact Holdings, was $19. That was below a range of $20 to $24 that Genworth had predicted in May.
Genworth and Enact
Genworth is a Richmond, Virginia-based company that came to life as the insurance arm of GE Capital. GE Capital turned Genworth into a public company through an initial public offering in 2004. The company was a major issuer of life insurance, annuities and long-term care insurance and still has large blocks of LTCI business on its books.
Low interest rates and other challenges have caused Genworth to suspend sales of life and annuity products and end active marketing of LTCI coverage, but the Enact business is still a major player in the U.S. mortgage insurance market.
Enact had about 500 full-time employees on June 30, with about 56% of those employees working out of the company's home office in Raleigh, North Carolina, according to a document Enact filed with the SEC earlier this month.
The Offering
Genworth says it sold 15.3 million Enact shares to public investors through the IPO and 14.7 million shares to Bayview Asset Management, a company that focuses on investing in mortgages and mortgage-backed securities.
Arms of Goldman Sachs and J.P. Morgan oversaw the IPO. Goldman Sachs, J.P. Morgan and other underwriters bought about 2 million Enact shares.
Shares of the company's stock now trade on the Nasdaq Global Select Market under the ticker symbol ACT.
Genworth itself still owns 81.6% of Enact's shares.
The Future
Tom McInerney, Genworth's CEO, has repeatedly suggested that the Genworth subsidiary that holds the LTCI business could face solvency concerns if states do not approve the company's requests for LTCI premium increases.
