Heralding a strategic shift, Richmond, Va.-based Genworth Financial Inc. will discontinue new sales of retail variable annuities and group variable annuities.
The company also said it was suspending sales of one type of linked benefit offering, which combines annuities and long-term care insurance, until that market develops further.
According to the latest numbers from LIMRA, Genworth was not among the top 20 sellers of variable annuities in the United States in 2010. Moreover, variable annuities sales have dropped dramatically, and have become more difficult for carriers to hedge in the wake of the financial crisis. Going forward the company says it will concentrate on fixed annuities, life insurance, long term care insurance and wealth management.
“With this decision, we have taken an additional step in advancing our specialist strategy to concentrate on the markets, customers and products where we have distinct leadership positions and strengths,” Genworth Chairman and CEO Michael Fraizer said in a statement. “Looking ahead, Genworth continues to help people meet their financial security needs by focusing on key protection, wealth accumulation and mortgage insurance offerings across its businesses.”
As a result of the decision, the company expects to record a pre−tax charge of approximately $12 million in the first quarter of 2011 for severance, outplacement support to assist affected employees during the transition.