BTIG Trims Ests on Genworth Financial (GNW) Amid GLAIC Sale; Affirms 'Buy' Rating

BTIG is trimming estimates on Genworth Financial, Inc. (NYSE: GNW) following news that the company looks to sell its Genworth Life and Annuity Insurance Co. (GLAIC) unit. The firm has GNW with a Buy rating and $15 price target.

Analyst Mark Palmer noted the following points:

• While we believe the sale of GLAIC would be an important step toward a wholesale breakup of GNW that could unlock its inherent value, we also think other preconditions will need to be met before such a breakup could take place. Not least of these would be the stabilization of GNW's long term care (LTC) insurance unit in the form of normalized operating results and evidence that requests for rate increases from state regulators are gaining traction.
• Another key step toward an ultimate breakup of GNW would be the reduction of the company's holding company debt' which stood at about $4.4bn as of December 31. We believe the sale of GLAIC, which generated $199.8bn in FY14, could generate about $2bn in proceeds that could be used to reduce GNW's debt load. Given that the amount of debt the company's individual units could support on a standalone basis is one of the key questions that would need to be answered ahead of a breakup, debt reduction would make such an outcome more feasible.

FY15 EPS moves from $1.23 down to $1.00, Q115 from $0.28 to $0.22, Q215 from $0.28 to $.25, Q315 from $0.34 to $0.28, and Q415 from $0.33 to $0.26.

For an analyst ratings summary and ratings history on Genworth Financial click here. For more ratings news on Genworth Financial click here.

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