Nov. 11 (Bloomberg) -- Genworth Financial Inc., the insurer spun off by General Electric Co., lost more than half its market value in New York trading after getting cut out of a federal program that buys short-term debt from financial firms.

Genworth today named Ronald Joelson as chief investment officer after more than $2.8 billion of writedowns and unrealized losses tied to the slumping U.S. mortgage market. Yesterday, Moody's Investors Service followed Standard & Poor's in downgrading the Richmond, Virginia-based insurer. The company suspended its dividend and announced plans to sell assets or raise capital and posted a third-quarter loss last week.

``Earnings capacity and internal capital generation for the company have been constrained because of significant credit losses,'' Moody's said yesterday in a statement.

Genworth declined $1.48, or 54 percent, to $1.24 at 4:15 p.m. in New York Stock Exchange composite trading. The company plunged 95 percent this year, the second-worst performance in the 24-stock KBW Insurance Index, after American International Group Inc.

Al Orendorff, a spokesman for Genworth, declined to comment.

Genworth, which sells life insurance and retirement products in addition to mortgage coverage, has posted two straight net losses on defaults by U.S. homeowners. Life insurance stocks had their worst month in at least a decade in October amid concern that losses could deplete capital.

Commercial Paper

``As a result of the downgrade of our holding company, we are no longer eligible to sell commercial paper to the facility,'' Genworth said yesterday in a regulatory filing.

Joelson, the new investment chief, will oversee a portfolio of almost $70 billion, the firm said in a statement today. He joins the company from JPMorgan Chase & Co., and previously worked at Prudential Financial Inc. The investment job was previously held by Mark Griffin who decided to ``pursue other interests,'' Genworth said in June.

Genworth has ``limited access'' to capital markets and an ``increased need for funding in mid-2009,'' S&P said on Nov. 7.

Genworth had its senior debt rating cut two levels to Baa1 from A2 at Moody's, and its long-term counterparty grade reduced to A- from A by S&P.

To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net.

Last Updated: November 11, 2008 16:38 EST