Shares of Genworth Financial Inc. (NYSE: GNW) edged up in afterhours trading on Wednesday after the life insurer and mortgage underwriter announced that it agreed to offload its wealth management unit and alternative investment business to a partnership venture of Aquiline Capital Partners LLC and Genstar Capital LLC in deal estimated at $412.5 million.
The Company said that the deal is expected to close in the second half of the current year, adding that the sale of wealth management business will incur a post-tax loss of approximately $40 million. The Richmond Virginia based Company said that $35 million worth onetime charge related to the loss of an asset will be booked in the current quarter.
Genworth Financial Inc’s Chief Executive Officer, Tom McInerney, who took over the reins of the company back in January, is trying reducing company’s focus on non-core business by focusing more on profitable operations, seeking to boosts its financials following massive losses arising from insuring U.S. mortgagees.
Besides, increasing scrutiny from ratings agencies mainly due to losses suffered in its mortgage business also prompted Genworth, which was once part of General Electric, to sell its wealth management business.
Earlier in January, the Company said it was restructuring its business by separating its mortgage insurance business from other operations, lowering the risk of defaults on bonds.
Commenting over the deal, Chief Financial Officer, Martin Klein said in a statement, “This transaction is another step forward in executing our strategy, by generating capital from a non-core business and increasing financial flexibility.”
In its regulatory filing, the company said Genworth’s wealth-management unit managed around $20 billion in assets and collaborated with more than 6,000 advisers. The Company said its operating income in the unit was $55 million in 2012 and $47 million in the fiscal 2011.
In its statement, the company said that Goldman Sachs Group Inc was its banker while Sullivan & Cromwell LLP provided legal advice.