MergerTalk:Why Genworth Financial Should Now Consider Breaking Off Its Engagement To China Oceanwide

Genworth Financial – Extending and Pretending Again

MergerTalk: China Oceanwide/Genworth Update-The Wealth Spread

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

Genworth Financial Inc Cl A / Equity Bottom-Up

*Aussie Business Weakens Again: Genworth Mortgage Insurance Australia (GMA.AU) [GMA] reported a FY 2H20 bottom-line loss of AUD 17.6 mn. Despite the loss, the level was an improvement of AUD 72.4 mn over the AUD 90.0 mn loss posted in FY 1H20. You simply cannot earn money if your combined ratio is 137.7% - albeit an improvement over the 215.0% posted during the previous half. Despite the expense ratio improvement of 127.4% to 20.5%, the claims ratio increase of 50.1% to 117.1% acted as quite the offset and drove the loss as the 4Q20 refinement of reserving due to COVID-19 related factors was the primary culprit; and*Genworth Still Waiting To Clear That Chinese Wall: China Oceanwide (715.HK) still does not have the money to consummate the Genworth Financial (GNW.US) [Genworth] transaction – missing its merger agreement deadline for the 17th time on December 31, 2020.  While the merger agreement still remains in effect, management does “not believe a closing can occur in the near-term”, as Genworth (with no other option) continued to play this same old tired game with China Oceanwide by extending its merger agreement deadline.

*Aussie Business Weakens Again: Genworth Mortgage Insurance Australia (GMA.AU) [GMA] reported a FY 2H20 bottom-line loss of AUD 17.6 mn. Despite the loss, the level was an improvement of AUD 72.4 mn over the AUD 90.0 mn loss posted in FY 1H20. You simply cannot earn money if your combined ratio is 137.7% - albeit an improvement over the 215.0% posted during the previous half. Despite the expense ratio improvement of 127.4% to 20.5%, the claims ratio increase of 50.1% to 117.1% acted as quite the offset and drove the loss as the 4Q20 refinement of reserving due to COVID-19 related factors was the primary culprit; and*Genworth Still Waiting To Clear That Chinese Wall: China Oceanwide (715.HK) still does not have the money to consummate the Genworth Financial (GNW.US) [Genworth] transaction – missing its merger agreement deadline for the 17th time on December 31, 2020.  While the merger agreement still remains in effect, management does “not believe a closing can occur in the near-term”, as Genworth (with no other option) continued to play this same old tired game with China Oceanwide by extending its merger agreement deadline.

Genworth Financial – Wrong Time For An Aussie Fail