Battered Genworth fires 14% of workers

Genworth Financial Inc. kicked off the new year by firing approximately 1,000 of its 7,300 employees worldwide in an attempt to cut the insurer’s spending. The layoffs were announced in a Jan. 9 letter to distributors, partners and customers from chairman Mike D. Fraizer. This round of job cuts brings the Richmond, Va.-based insurer’s employment levels to where they were in 2004. Genworth’s layoffs and other cuts in discretionary spending will reduce pretax operating expenses by $100 million to $150 million on an annual basis. Certain leadership bonuses will also either be eliminated or reduced, and Mr. Fraizer will rescind his bonus pay. Additionally, the company said, it will be more selective about the sale of its variable and fixed deferred annuities through channels and distributors that are aligned with the company’s new strategy and risk appetite. Genworth will continue focusing on providing fixed immediate annuities to the middle market. In addition, the company’s mortgage insurance business will continue to focus on covering high-quality single mortgages based on tighter underwriting standards and increased pricing the insurer introduced in late 2007, the letter stated. Genworth also said its new chief investment officer, Ron Joelson, will focus on high-quality fixed-income instruments to manage its exposure and liquidity. The insurer’s stock was among the most battered in the industry during 2008, losing about 89% of its value in the space of one year.