You're joking, right? GE can't swim as it is, and right now the water is over their heads. How're they gonna buy anything?... they can't pay the rent now, much less take on any more debt.
Genworth problems
- Thread starter bluemarlin08
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You're joking, right? GE can't swim as it is, and right now the water is over their heads. How're they gonna buy anything?... they can't pay the rent now, much less take on any more debt.
- 500
If we look at Wikipedia to determine Genworth's structure, we can see the parent or holding company to be Genworth Financial.
We can also see that there are several other companies that are a part of Genworth Financial, including mortgage insurance companies.
It's looks to be a similar problem to the AIG mess to me.
We can also see that there are several other companies that are a part of Genworth Financial, including mortgage insurance companies.
It's looks to be a similar problem to the AIG mess to me.
edit: deleted
Not likely that GE will be purchasing anything to do with financial services... especially Genworth. GE's current problems are related to their exposure to the downside in their current financial services companies... exposure due to defaults in GE Capital. Corp defaults of large loans... They sure as heck don't need the problems that GNW is now facing. My guess is someone like Amex might buy GNW, or other well healed financial services company... Or maybe BerkA, (Buffet Cos), or one of their subsidiaries. Someone with lots of cash and time... but this might only happen with negotiation/conditions with creditors.
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Not exactly... AIG was heavily into Credit Default Swaps, which are financial dirivitives that have huge exposure for AIG; (and now the taxpayers of the US, since we now own 79.9% of AIG).
Genworth's largest exposure is their mtg insurance business, which provides private mtg ins for home purchasers who have less than 20% down payment. There are substantial losses in this business and defaults are continuing to occur. However, the mtg ins biz of Genworth still is valued between 1 and 2 Bn in worth...
Genworths largest failing was in their investment mgmt of assets... Some of their largest holdings were/are: Fannie Mae, Freddie Mac, Lehman Bros, AIG and Washington Mutual. One could question why a finacial services company with large exoposure to mtgs via PMI, would be invested in such underlying investments to begin with. Have they never heard of diversification...? Guess not.
But bottom line is, huge diff between AIG and GNW... they have both arrived at the gates of hell, but have taken different routes to similar destination.
The reality of is, AIG would have been long gone without the hidious infusion of TARP bailout moneis, now standing at 125Bn... yep, that is 125 BILLION DOLLARS to date... and my guess is that still isn't enough to keep them afloat. Genworth on the other hand didn't qaulify for TARP funds due to being downgraded finanically... but my guess is they will still make it on their own... or maybe find a partner or buyer, in spite of NO Gov't bailout funding. AIG may still fail regardless of the huge (mismanaged) Gov't investment. What a shame.
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Great analysis Sportnut,
From your perspective, I f an agent has a client that owns a LTC policy form Genworth, bout 8 years ago with the compound add. rider, would you be concerned enough to talk with the client about the issue and if they ask your advice, would you suggest changing policies or assume they will bought and stay with what they own. How concerned for our clients should we as agents be? Thanks in advance.
From your perspective, I f an agent has a client that owns a LTC policy form Genworth, bout 8 years ago with the compound add. rider, would you be concerned enough to talk with the client about the issue and if they ask your advice, would you suggest changing policies or assume they will bought and stay with what they own. How concerned for our clients should we as agents be? Thanks in advance.
Let me answer that two ways...
1) We just bought a Genworth life policy for my Wife in the past 60 days... No plans to do anything else but stay with the policy long term. Although I wouldn't be recommending them to a new client at this time until clearer vision is among us.
2) I would contact Genworth and have that discussion with them... Let them know your concern, ask to talk with someone who is someone... and document what is said. Then I would contact your client(s) and share that same info with them, letting them know that you are out front on the issue and doing some due-diligence on what is public info about Genworth's financial issues. Then I would document the results of that convo with the client, possibly following that up with a letter sent to client which summarizes the discussion of both the Genworth rep and the client. After making the client aware of the info you find, you will have done your job, IMO.
My feeling about the LTC and Life policies is that even IF Genworth or any other company gets in devastating financial troubles to their doom, anothe carrier will step in and pick-up their policies, for the continuity and integrity of the insurance business as a whole. So ultimately I have NO concern over any carrier at this point. (but don't quote me on that
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SportsNut, when you say Genworth, that's Genworth Financial that made those poor decisions right? Genworth Financial is the holding company...correct? All I'm saying is that the Genworth Life and LTC companies (GLAIC, GLIC and GLICNY) are still in good shape in accordance to how insurance companies are regulated to invest. Is that correct?
If so, the outcome would be similar to AIG. American General policy holders are still safe just like GLAIC, GLIC policyowners are still safe as they (the actual insurance companies) keep their own reserves that can't be tapped by the parent company.
Am I way off and sounding even more stupid???
If so, the outcome would be similar to AIG. American General policy holders are still safe just like GLAIC, GLIC policyowners are still safe as they (the actual insurance companies) keep their own reserves that can't be tapped by the parent company.
Am I way off and sounding even more stupid???
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Hound:
The answer to your question remains to be seen. As of Nov 6th, AM Best has placed Genworth Life, Continental and all other ins subsidiaries under review, with negative implications. So their situation, their being cumulative, the holding co, and all ins cos, are not looking as strong as they were... but it is yet to be determined as to what extent.
You can't seperate the holding company from the life cos when it comes to bad investment strategy. The holding co is likely making those decisions and in hind sight, they were some short sighted ones... My thoughts are that IF one or more of the ins cos are in trouble of surviving that the insurance clients and protection will be assumed by another stronger company. Now that is a general comment, not meant in any way to apply to Genworth or any specific company... so all I am saying is, it is too early to know for sure about GNW, and its ins cos.
Stay tuned.... The link for Am Best action is below:
http://www.ambest.com/press/110606genworth.pdf
The answer to your question remains to be seen. As of Nov 6th, AM Best has placed Genworth Life, Continental and all other ins subsidiaries under review, with negative implications. So their situation, their being cumulative, the holding co, and all ins cos, are not looking as strong as they were... but it is yet to be determined as to what extent.
You can't seperate the holding company from the life cos when it comes to bad investment strategy. The holding co is likely making those decisions and in hind sight, they were some short sighted ones... My thoughts are that IF one or more of the ins cos are in trouble of surviving that the insurance clients and protection will be assumed by another stronger company. Now that is a general comment, not meant in any way to apply to Genworth or any specific company... so all I am saying is, it is too early to know for sure about GNW, and its ins cos.
Stay tuned.... The link for Am Best action is below:
http://www.ambest.com/press/110606genworth.pdf
Sportsnut,
I agree with much of what you've said, but, you stated, "Genworth on the other hand didn't qaulify for TARP funds due to being downgraded finanically."
That's slightly incorrect. They couldn't qualify for the TARP money because the TARP funds are reserved for banks. Genworth is purchasing a savings and loan in order to try to get some capital from the TARP program.
The program which Genworth did not qualify for because their credit rating was recently downgraded by S&P is the Federal Reserve's Commercial Paper Funding Facility (CPFF). That program purchases short-term commercial paper from companies with "Tier 1" credit ratings. Since Genworth was recently downgraded from "Tier 1" to "Tier 2", they are not able to take advantage of the CPFF.
You can read more about that at:
www dot cfo dot com/article.cfm/12586710
I agree with much of what you've said, but, you stated, "Genworth on the other hand didn't qaulify for TARP funds due to being downgraded finanically."
That's slightly incorrect. They couldn't qualify for the TARP money because the TARP funds are reserved for banks. Genworth is purchasing a savings and loan in order to try to get some capital from the TARP program.
The program which Genworth did not qualify for because their credit rating was recently downgraded by S&P is the Federal Reserve's Commercial Paper Funding Facility (CPFF). That program purchases short-term commercial paper from companies with "Tier 1" credit ratings. Since Genworth was recently downgraded from "Tier 1" to "Tier 2", they are not able to take advantage of the CPFF.
You can read more about that at:
www dot cfo dot com/article.cfm/12586710
NeverDull:
Thanks for the clarification on the downgrading... makes sense with the other research I have done on some of the life cos...
I had recently posted about the different cos, Genworth included, that are buying banks. Maybe this will work for them, but if it does, what the heck does that say about our Treasury Dept... Here are these multi-billion dollar companies that are having their own degree of financial issues, then they come along and buy a struggling bank, and whalau, now they get a Bn... crazy. Yes, I understand it is a loophole they are trying to excavate into an oppty... It simply seems crazy to me...
Here is the link to the other posting about Genworth, Lincoln and Hartford buying Banks...
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