Genworth Financial, which provides mortgage insurance through one of three insurance divisions, plans to cut 400 jobs, including 150 open positions that will not be filled in the future.
The steep cuts are part of a corporate plan to improve the operating performance of the insurer’s various business lines.
Genworth provides insurance through the company’s U.S. Life Insurance, Global Mortgage Insurance and other corporate divisions and currently employs 5,840 people.
Once the workforce reduction takes effect, Genworth expects to save $80 million to $90 million per year.
“These are very difficult decisions to make but the changes are essential to our ongoing work to improve the performance of our businesses and deliver value to our shareholders,” said Tom McInerney, president and CEO. “Our organization will remain sharply focused on our priorities as we make further progress on operating our businesses as efficiently and effectively as possible. We’ll provide support to the employees impacted and ensure they are treated with the utmost respect.”
This is not the insurer’s first aggressive attempt to improve its capital position.
In early 2013, Genworth announced a bold restructuring plan to reduce the risk of its U.S. mortgage insurance subsidiary facing a potential default or capital shortfall.
Genworth announced the sale of its wealth management business earlier this year and offloaded its wholesale and correspondent reverse mortgage business Liberty Home Equity Solutions unit to Ocwen.
The company’s U.S. MI unit still managed to grow from a $32 million net operating loss in the fourth quarter to net operating income of $21 million in 1Q.
During the first part of the year, Genworth took a $4.5 million charge from a settlement with the Consumer Financial Protection Bureau over claims that it was one of four mortgage insurers that paid lenders kickbacks in exchange for their insurance business.