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Genworth: We Are Not Toxic Waste!

Genworth Financial has departed from its usual practice of refraining from comment upon the performance of its stock price to make the case that its recent price "does not reflect the fundamental condition of the company."

The stock price has declined almost 40 percent this week as investors steered clear of any company with exposure to sub-prime mortgages or failed Wall Street firms like pits of bubbling, green toxic waste. One of Genworth's main lines of business is mortgage insurance, and the company's investment portfolio includes holdings in Fannie Mae , Freddie Mac , Lehman Brothers and AIG . 

In a press release the company made the following points:

-- Genworth has approximately $900 million of cash and cash equivalents at the holding company and an additional $4.0 billion of cash and cash equivalents in its operating company investment portfolios.

-- On Sept. 11, Standard & Poor's affirmed the AAA rating of Genworth's mortgage insurance company, and stated that it expected the company over time to maintain capital in line with a AA rating.

-- Genworth has excellent sources of liquidity including two $1 billion revolving credit facilities and has diversified sources of additional capital including earnings and capital from a strongly performing international segment whose operating earnings will increase 10 percent in 2008.

-- Genworth has $158 million of commercial paper outstanding and more than adequate cash to absorb these maturities if circumstances require. Genworth is not dependent upon the commercial paper market. 

-- Genworth has actively worked to reduce risk in its investment portfolio, and has provided market transparency to its positions in Fannie Mae, Freddie Mac, Lehman Bros., and AIG. Based on market conditions, Genworth expects third quarter gross realized investment losses, including impairments, to be at or above second quarter 2008 levels. However, Genworth does not expect gross realized losses, including impairments, to have a material adverse effect.

"Clearly for Genworth the key area of concern is the U.S. mortgage-insurance business,'' Bloomberg.com quotes Suneet Kamath, a Sanford C. Bernstein & Co. , analyst, as saying. For investors, ``we think there are a lot better places to be in life insurance.''