Jan. 8 (Bloomberg) -- Genworth Financial Inc., the insurer that brought on a new chief executive officer last week, declined in New York trading after Credit Suisse Group AG downgraded the company on risks from long-term care coverage.
Genworth fell 3.5 percent to $8.04 at 4 p.m., the biggest drop in the 80-company Standard & Poor’s 500 Financials Index. The Richmond, Virginia-based firm, which also has a mortgage-insurance unit, had surged 50 percent in the six months ended yesterday as the real estate slump abated.
“Much of the rally has been the result of optimism for Genworth’s U.S. mortgage insurance unit as a derivative play on the U.S. housing market,” Credit Suisse analysts led by Thomas Gallagher said in a note today, cutting the company to underperform from neutral. “Investors have been less focused on fundamentals in the life insurance operations.”
Thomas J. McInerney, a former executive at ING Groep NV, was hired as Genworth’s new CEO after the stock plunged more than 80 percent since the end of 2006. The insurer has been increasing its focus on long-term care coverage, which helps policyholders pay for home-health aides or residence in nursing homes or assisted-living facilities.
Rivals including MetLife Inc. and Prudential Financial Inc. have retreated from long-term care as near record-low interest rates pressure returns on funds held for as long as decades to back policies.
Long-term care is the “most interest-rate sensitive line of business,” the analysts wrote.
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