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Genworth announces capital reduction

Genworth Mortgage Insurance Australia has proposed undertaking a capital management initiative which would see approximately $202 million paid to shareholders.

The initiative is designed to return a portion of surplus capital to all Genworth shareholders and ensure it maintains an “efficient” capital structure.

Genworth said in a recent ASX statement the cash distribution will be combined with a related share consolidation, which will provide shareholders an earnings-per-share outcome similar to a share buy-back.

“This capital management initiative represents another important step in our ongoing journey to manage our capital base at a level which balances our objectives of meeting our policy holder obligations,” Genworth CEO Georgette Nicholas said.

“Our decision to return surplus capital to shareholders reflects our continued confidence in the business and confidence in achieving strong levels of profitability. Our 2016 guidance remains unchanged.”

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The capital reduction and related share consolidation are subject to shareholder approval at Genworth’s annual general meeting tomorrow.

As part of the company’s strategy to reduce its capital base, Genworth said it is also considering putting in place additional capital management flexibility by way of a possible on-market share buy-back.

Genworth intends to put an ordinary resolution to shareholders at its upcoming AGM, which would allow the group to buy back up to a maximum of 150 million ordinary shares.

[Related: Genworth ‘under pressure’ amid housing risks, says Moody’s]

Genworth announces capital reduction
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