Virginia-based insurance company
Genworth Financial announced this week that it will eliminate 330 positions in a bid to cut costs.
The vast majority of the layoffs (200) will affect Lynchburg, Virginia operations and another 70 positions will be cut in Richmond, Virginia. Genworth spokesperson Julie Westerman confirmed that some employees outside Virginia will also be affected.
Genworth President and CEO Tom McInerny said in a statement that the company would “support” employees who lost their job and treat them with “the utmost respect,” though he did not give details of what this support would entail.
The moves come after a February 4 announcement from Genworth that it was suspending sales of is traditional life coverage and fixed annuity products in the first quarter of 2016 – another cost-cutting measure.
All told, the company says the job cuts, dropped life sales and other measures would save the insurer between $80 million and $90 million a year.
Genworth Financial is suffering from a countrywide operating loss in the life insurance segment, with its year-end 2015 results reflecting varying degrees of volatility and macroeconomic pressures in other business segments, including mortgage insurance.
A.M. Best downgraded the financial strength rating of the insurer’s life and annuity business to B++ from A- and the issuer credit ratings to bbb+ from a-. Concurrently, the issuer credit ratings for Genworth Financial were downgraded from bb+ to bbb-.
The outlook for all ratings is negative, apart from the life and annuity business, which as been revised to stable from negative.
However, the ratings reflect the analyst’s belief that life and annuity is no longer considered a core business within the Genworth organization.
Additionally, while the unit’s risk-adjusted capitalization would “likely benefit with the execution of the proposed run-off status,” A.M. Best said, “the company may become a material source for holding company debt service in the next few years.
“A.M. Best is concerned that if substantial dividends were moved out of the entity to the holding company level, it could drive a decline in current capitalization levels.”
