Nov. 7 (Bloomberg) -- Genworth Financial Inc., the insurer spun off by General Electric Co., tumbled 43 percent in New York trading, a day after posting a quarterly loss, suspending its dividend and saying it may sell assets or raise capital.

The insurer fell $2.03 to $2.67 at 4 p.m. in New York Stock Exchange composite trading, the lowest since the company first sold shares in 2004. Genworth has lost 90 percent this year, the second-biggest decline in the KBW Insurance Index.

Genworth swung to a $258 million third-quarter loss, equal to 60 cents a share, from a profit of $339 million, or 76 cents, a year earlier. Results included $478 million in investment losses, the Richmond, Virginia-based company said yesterday in a statement. The insurer is considering asset sales and may raise funds by selling private or public equity or debt.

``This was a disappointing quarter for the company, which was compounded by the ongoing turmoil in the credit, equity and housing markets,'' Chief Executive Officer Michael Fraizer said in the statement. He added during a conference call with analysts that Genworth is preparing for prolonged, deeper market disruptions and a ``significant recession.''

The insurer was downgraded by Standard & Poor's on concerns about ``the company's increased need for funding in mid-2009,'' the ratings firm said in a statement today. The company has ``limited access'' to the capital markets, S&P said.

The dividend suspension will free up $175 million a year in capital, the company said. Genworth also halted share buybacks.

Commercial Paper

Fraizer said in the conference call yesterday that the company is participating in the Federal Reserve's commercial paper program designed to unlock short-term credit markets. Genworth is eligible for about $223 million, he said.

Profit in the retirement and protection unit fell 20 percent to $178 million on lower investment income, a decline in the equity markets and an impairment to the institutional-product line.

The mortgage-insurance business posted a $121 million deficit because of rising delinquencies and higher reserves. The company said during the conference call it's considering strategic options for the unit, language that typically means a subsidiary may be sold or closed.

Credit-default swaps protecting against default by Genworth widened. Traders demanded 17.25 percentage points up front in addition to five percentage points a year, according to CMA Datavision. That means it would cost $1.73 million initially and $500,000 a year to protect $10 million of bonds from default for five years. Yesterday the up-front payment was 11 percent.

To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net.

Last Updated: November 7, 2008 16:57 EST