Mortgage and life insurer Genworth Financial Inc. (GNW) saw its shares tumble in early trading Monday, falling as much as 31 percent on investor concern after the company said late last week that it had failed to qualify for a capital injection from the U.S. Treasury. The former General Electric Co. (GE) unit was one of several insurers that last year sought to buy banks or thrifts and become a bank holding company, enabling the firms to receive taxpayer funds under the Troubled Asset Relief Program. Genworth abandoned its request for capital from TARP funds on April 9, according to a filing with the Securities and Exchange Commission, one day after the Treasury said some life insurers were eligible for funding under the program. Genworth’s denial for TARP funds came after the Office of Thrift Supervision denied the company’s application to become a thrift holding company, the company said in its filing with the SEC. U.S. mortgage insurers have been hit hard, as delinquencies and foreclosures remain at historically high levels and capital levels come under pressure; on Feb. 17, Moody’s Investors Service downgraded key credit ratings at most U.S. mortgage insurers, cutting Genworth to Baa2 from Aa3. Moody’s analysts expressed some concern for the company’s growing paid claims on mortgages, saying “were losses to be in excess of current expectations, the company could breach maximum statutory risk to capital guidelines within the next two years.” It’s unclear why the OTS denied Genworth holding company status, as the company did not specify a reason and officials at the thrift regular have not commented on the matter; the OTS has already approved similar plans from competing insurers, however, including Hartford Financial Services Group Inc. (HIG). As a result, analyst opinion on Genworth’s future was clearly split. Alan Rambaldini, an analyst with Morningstar Inc., told Bloomberg that the denial “signals a lack of confidence, and I think people are going to see this and realize that they don’t have many options left.” “OTS’ rejection of Genworth’s application under TARP is a major blow,” analysts at Egan-Jones Ratings Co. wrote late Thursday, as well. “The company is no longer able to provide value to most obligors and therefore is basically in run-off mode.” But UBS AG (UBS) analyst Andrew Kligerman suggested to clients Monday in a research note that “would have aided capital flexibility, but GNW’s viability does not hinge on TARP,” according to a report filed with Dow Jones Newswires. “CPP participation by way of a thrift acquisition was only one of the strategic levers Genworth has considered to provide another level of capital flexibility,” Genworth CEO Michael Fraizer said in the late week press statement. Shares of Genworth were at $2.16, down 21.45 percent, when this story was published. Write to Paul Jackson at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.