Genworth Slumps as CFO's Exit Leaves Groh to Clean Up Accountingby
Klein is leaving to take a job at a financial services company
Principal accounting officer Groh to replace Klein as CFO
Genworth Financial Inc., which has the worst-performing stock among large U.S. insurers this year, extended its slump after announcing that Chief Financial Officer Martin Klein resigned to take a role at another company.
Genworth dropped 7.8 percent to $5.06 at 4:15 p.m. in New York trading, widening its decline to 40 percent since Dec. 31. That compares with the 1.4 percent fall this year of the 21-company Standard and Poor’s 500 Insurance Index.
Kelly Groh, the company’s controller and principal accounting officer, replaces Klein as CFO, Richmond, Virginia-based Genworth said Thursday in a statement after markets closed. Klein had been working to improve controls after the company in March disclosed a material weakness in financial reporting for its long-term care unit, which has posted losses on higher-than-expected claims costs. Genworth didn’t say where Klein will work next.
“While this was a personal decision by Mr. Klein for another opportunity, we expect it to raise some investor concerns given Genworth’s depressed stock price,” Ryan Krueger, an analyst at Keefe, Bruyette & Woods, said in a note Friday.
Klein will remain with the insurer in an advisory role through Oct. 30, the day the company is scheduled to host a third-quarter earnings call. Klein, who led the company as acting chief executive officer for most of 2012, worked to stem mortgage losses and simplify the company.
CEO Tom McInerney, who took over from Klein in December 2012, has been seeking to sell blocks of insurance policies and boost profitability. He reported a 2014 loss of more than $1.2 billion tied to LTC policies, which pay for home-health aides and nursing home stays. McInerney has endured other management turnover, including the announcement this month that Ellen Comerford is retiring as CEO of the Australia mortgage-insurance operation.
“Genworth companies are seeing high level management transition,” Kenneth Billingsley, an analyst at Compass Point Research and Trading, said in a note. “Shares will likely react negatively.”
Genworth’s board approved cash retention awards of $2 million to Kevin Schneider, head of the global mortgage insurance unit, and Chief Investment Officer Daniel Sheehan, according to a regulatory filing Thursday.