Genworth Financial Inc., the life insurer and mortgage guarantor, agreed to sell its wealth-management unit to a venture of Aquiline Capital Partners LLC and Genstar Capital LLC for about $412.5 million.
The sale will yield a loss of about $40 million after tax, with $35 million recognized in the current quarter, Richmond, Virginia-based Genworth said today in a statement. The deal is expected to be completed in the second half, Genworth said.
Genworth Chief Executive Officer Tom McInerney, who took over in January, is seeking to simplify the company and bolster finances after losses tied to insuring U.S. mortgages. Proceeds from the sale, which includes the Altegris asset manager, will be kept at the holding company to repay 2014 debt, at maturity or before, according to the statement.
“This transaction is another step forward in executing our strategy, by generating capital from a non-core business and increasing financial flexibility,” Chief Financial Officer Martin Klein said in the statement.
Genworth shares rose 2.8 percent to $10.48 at 5:27 p.m. in extended New York trading. They have advanced 17 percent in the last year, compared with a 15 percent gain in the 81-company Standard and Poor’s 500 Financials Index.
Genworth’s wealth-management unit oversees about $20 billion in assets and works with more than 6,000 advisers, according to a March 25 statement. Operating income at the segment was $55 million in 2012 and $47 million in 2011, the insurer said in a regulatory filing.
Aquiline, led by Jeff Greenberg, is a New York-based private-equity firm investing in financial services including banking, asset management, property-casualty insurance and securities. Genstar, based in San Francisco, invests in middle-market companies. The firms were advised by Deutsche Bank AG.
Goldman Sachs Group Inc. was Genworth’s banker on the deal, and Sullivan & Cromwell LLP gave legal advice, according to the statement.
Credit Suisse Group AG committed to provide debt financing, according to a statement from the buyers.