Dallas, Texas 10/24/2013 (Financialstrend) – On October 21 it was reported that Genworth Financial Inc (NYSE:GNW) U.S. Life Insurance division’s Chief Executive Officer Patrick Kelleher will be relinquishing his post at the end of December. The Group CEO Tom Mclnerney is expected to be tasked with the added responsibility till he finds a replacement to the departing Kelleher. This move comes on the back of a healthy increase in house purchase by first time investors. This uptake in business has resulted in many mortgage insurance companies contemplating generation of new capital to support additional business.
The pent up confidence in the sector has built up to such an extent that couple of large cap reinsurers have been trying to launch their IPO in the near future. Essent Group, Blue Mountain and NMI Holdings are some of the most prominent mortgage players who are looking at issuing a IPO.
Over the past few weeks the stock of Genworth Financial has managed to post impressive gains over the browsers. The stock has gained close to 4.25% last week and by 14% last month. This double digit growth in a nascent housing market was due to strong 3Q results announcement by MGIC Investment. Analysts have analyzed the rally and concluded that the companies face a exposure of only about $18 billion for the doubtful insurances which they had reinsured in the 2005 to 2008 time frame. Since 2009 the insurance firms are supposed to have had exposure to about $16 billion. While the loan dropout rate for policies written between 2005 to 2008 remain at around 9 % to 17%, the same drops to 1% for those issued post 2009.
On the back of these improving macroeconomic scenarios, many analysts believe that this Genworth stock is worth more than the $13.98 price that it is trading at today.