GNW: Genworth Financial Announces Sale of Group Benefits Unit for $650 Million

Genworth Financial Inc. (NYSE: GNW) announced it has reached an agreement to sell its employee benefits group (EBG) life and health business, based in Windsor, CT, to Sun Life Financial Inc., for $650 million.

"This transaction is another key strategic move to better focus Genworth for the future, enabling us to align our core business platforms for growth, efficiency and improving returns," said Michael D. Fraizer, chairman and chief executive officer. He also reaffirmed the company's outlook for 2007 net operating earnings of $3.15 to $3.25 per diluted share, including the impact of this transaction.

"Over the past six years, we have built EBG into a business that today provides group life, disability, medical stop loss and dental insurance to approximately 32,000 organizations and serves 2.9 million plan participants," Fraizer said. "Our 650 EBG associates have done a great job building the operation and increasing its profitability. Based on our strategic assessment, however, we concluded it was better for this business to grow outside of Genworth and we are pleased to have such a top quality buyer that brings scale and a dedication to growth in this market."

The sale is expected to close during the second quarter of 2007, subject to regulatory approval. Genworth expects a modest gain on the sale upon closing. Proceeds from the transaction will be used to fund core growth and other capital priorities, potentially including acquisitions, share repurchase, or dividends. Genworth expects to recognize EBG as part of discontinued operations beginning with first quarter 2007 financial statements. In 2005, EBG reported $31 million in net income on revenues of $717 million, and has reported $24 million in net income on revenues of $554 million through the first nine months of 2006.