Genworth Cuts 400 Jobs as CEO McInerney Pressured by Rates
Genworth Financial Inc. (GNW), the seller of life insurance and long-term care coverage, said it is eliminating 400 jobs as Chief Executive Officer Thomas McInerney seeks to counter the pressure from low interest rates.
Genworth will take a charge of $15 million to $20 million this quarter tied to the reductions, the Richmond, Virginia-based insurer said today in a statement.
The insurer has been unable to bring profit back to the levels of 2006 and 2007 as losses on mortgage insurance drained capital and low interest rates pressured investment income. McInerney’s plan involves not filling 150 vacant positions and cutting information technology costs. The charge includes severance costs for the company, which has about 6,300 employees according to its most recent annual report.
“These are very difficult decisions to make but the changes are essential to our ongoing work to improve the performance of our businesses,” McInerney, who took over in January, said in the statement.
The plan will save $80 million to $90 million in annual costs, the insurer said. Genworth has climbed 38 percent this year through yesterday, the second-best performance in the 22-company Standard & Poor’s 500 Insurance Index.
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