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May 05, 2021 at 01:07 PM
What You Need to Know
- The name of the mortgage insurance unit is now Enact Holdings Inc.
- Shares will trade on Nasdaq under the stock symbol ACT.
- Genworth hopes to use part of the proceeds to handle a settlement with AXA.
Genworth Financial Inc. is about to start selling 18.4% of the shares of a big mortgage insurance subsidiary to the investors, through an initial public offering.
The mortgage insurance subsidiary has changed its name to Enact Holdings Inc., from Genworth Mortgage Holdings Inc. Shares of Enact’s stock will trade on the Nasdaq Global Select Market under the ticker symbol “ACT.”
Genworth is selling 22.6 million shares of Enact’s common stock to public investors through a subsidiary, Genworth Holdings Inc. If the offering goes well, Genworth will also sell 3.4 million shares to the IPO underwriters at the original IPO price, according to deal filings.
The company expects to sell the Enact shares for $20 to $24 apiece and raise a total of $623 million.
Genworth also has arranged to sell another 4 million shares to Bayview Asset Management LLC, an investment manager, through a private sale made at the IPO price.
Forms it needs to start the offering have already been filed, Genworth said. The IPO will begin as soon as the registration statement filed with the SEC becomes effective.
The Reasoning
Genworth is a Richmond, Virginia-based company that has struggled for years because of the effects of low interest rates and inaccurate policyholder behavior assumptions on its long-term care insurance (LTCI) business.
In the short term, Genworth intends to use about half of the IPO proceeds to pay costs related to a legal settlement negotiated with AXA S.A., in connection with payment protection insurance mis-selling losses at two companies AXA acquired from Genworth in 2015.
