Close

BTIG Affirms Genorth (GNW) at 'Buy'; Regulators Said to Support Unstacking Transaction

April 29, 2016 11:45 AM EDT
Get Alerts GNW Hot Sheet
Price: $6.23 --0%

Rating Summary:
    6 Buy, 7 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 9 | Down: 7 | New: 41
Join SI Premium – FREE

BTIG affirms Genworth (NYSE: GNW) at Buy with a price target of $5 following Q1 results issued Thursday night.

Analyst Mark Palmer noted the following from the company's conference call today:

During GNW’s 1Q16 conference call this morning, CEO Jim McInerney said that based on his team’s discussions with its regulators, they appreciate the situation in which the company finds itself, particularly with regard to its heavy debt load and the potential for constrained liquidity at its holding company. Moreover, he said the regulators had expressed support of GNW’s efforts to execute the unstacking transaction that would result in the isolation of the long term care (LTC) unit and position GNW to eventually execute a value-unlocking split of its mortgage insurance businesses from its life insurance and annuity units.

McInerney’s comments were reminiscent of those made by former MGIC Investment Corporation (NYSE: MTG)(Buy, $12 PT) CEO Curt Culver and Radian Group (NYSE: RDN)(Buy, $22 PT) CEO S.A. Ibrahim in late 2012 and early 2013, at which point both mortgage insurers had seen their stocks plunge amidst questions about their ability to resist a curtailment of their new business writing activities or even regulatory seizures of their operating subsidiaries. Culver and Ibrahim during their companies’ respective 3Q12 conference calls in November 2012 each affirmed that their regulators had continued to express support for them to continue to write new business despite the pressures they faced.

The backing of its regulators would ease the way for GNW to execute the unstacking transaction that would isolate LTC and create additional strategic flexibility, but as had been the case with RDN and MTG, investors’ knowledge of such support could provide the company with capital markets access at less than exorbitant rates . That could help GNW to address its $595mm debt maturity in May 2018 without having to use expensive, alternative measures to do so, Palmer noted.

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



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Analyst Comments, Analyst EPS View

Related Entities

BTIG