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Genworth Financial Divests Canada Unit Stake to Brookfield

Zacks Equity Research

Genworth Financial, Inc. GNW has sold the majority of its interest in Genworth MI Canada Inc. to Brookfield Business Partners. This divestment marks a step forward toward closure of Genworth’s takeover by China Oceanwide Holdings Group Co., Ltd. announced in 2016.

Canada mortgage insurance products comprise primary flow and bulk mortgage insurance. The company entered the mortgage market in Canada in 1995 and operates in every province and territory. It is currently the leading private mortgage insurer in the country. Genworth Canada has a solid record of generating consistent earnings and attractive returns on capital. Genworth expects the divestment of Genworth Canada to enhance its financial flexibility.

In relation to the divestment, the purchase price was CAD$48.86 per share, attributing to a total transaction value of approximately CAD$2.4 billion. The net cash proceeds were approximately $1.8 billion, which included the aggregate amount of the special dividend paid in October 2019 and adjustments for foreign exchange, fees and expenses.

Brookfield Business Partners is a business services and industrials company. The company acquires high quality businesses and applies its global investing and operational expertise to create value, with a focus on profitability, sustainable margins and cash flows. It has the flexibility to invest across multiple industries and through many forms. Its current operations are primarily in business services, construction, energy and industrial operations. Its investment objective is to generate long-term returns of at least 15% on its investments.

Prior to the completion of this divestment, Genworth made a contribution of 100% of its ownership interest in Genworth Mortgage Holdings, Inc. (GMHI) to Genworth Holdings, Inc. This internal reorganization was made in connection with the divestment, following which Genworth Holdings became the owner of GMHI.

Genworth Financial is an insurance holding company. It aids people to secure their financial lives, families, and futures. Genworth has leadership positions in offerings that assist consumers in protecting themselves, investing for the future, and planning for retirement. The products and services of Genworth are offered through financial intermediaries, advisors, independent distributors, and sales specialists.

Shares of the Zacks Rank #4 (Sell) company have outperformed the industry month to date. The stock has gained 12.2% compared with the industry’s increase of 2.5%.

 

Stocks to Consider

Some better-ranked stocks from the same space are American Equity Investment Life Holding Company AEL, Primerica Incorporation PRI and Kemper Corporation KMPR.  While American Equity Investment sports a Zacks Rank #1 (Strong Buy), Primerica and Kemper carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

American Equity Investment Life Holding Company provides life insurance products and services in the United States. The company beat the Zacks Consensus Estimate in the trailing four quarters, the average beat being 47.63%.

Primerica provides financial products to middle-income households in the United States and Canada. It underwrites individual term life insurance products. The company beat the Zacks Consensus Estimate in the trailing four quarters, the average beat being 4.10%

Kemper provides property and casualty, and life and health insurance to individuals and businesses in the United States. The company beat the Zacks Consensus Estimate in the trailing four quarters, the average beat being 16.40%.

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Primerica, Inc. (PRI) : Free Stock Analysis Report
 
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Genworth Financial, Inc. (GNW) : Free Stock Analysis Report
 
Kemper Corporation (KMPR) : Free Stock Analysis Report
 
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