Hire Wire May 02 2012

Genworth CEO Resigns After Rocky Tenure

By Erik Holm

Genworth Financial Inc. said its chief executive, Michael Fraizer, had resigned Tuesday, abruptly ending a rocky tenure.

Genworth named Martin Klein, the company's chief financial officer for the past year, as acting CEO.

The lead director of Genworth's board, James Riepe, will be nonexecutive chairman.

Fraizer's departure, announced just as the company reported disappointing quarterly results, came two weeks after Genworth postponed a plan to raise funds by selling shares of an Australian unit.

The delay surprised investors, who were already frustrated by years of weak performance. On the day Genworth postponed the deal, the company's shares tumbled 20%.

The botched Australian offering was "very hard for shareholders to stomach," said Ed Maran, a co-portfolio manager at Thornburg Value Fund, one of the biggest owners of Genworth shares.

Investors had expected Genworth would use the sale's proceeds to fortify its balance sheet and buy back stock, helping to lift one of the most beaten-down U.S. insurance stocks.

"I'm kind of stunned by it," said Andrew Kligerman, a stock analyst at UBS Securities. "Genworth has experienced incessant negative pressures for the last four-plus years, and I think it must have been enough for Mike Fraizer at this stage."

Fraizer, 53 years old, had steered the company as it separated in 2004 from General Electric Co. and, more recently, through the financial crisis, when Genworth's U.S. mortgage-insurance unit racked up hundreds of millions of dollars in operating losses.

"I believe this is the right time for me to move on to other opportunities," Fraizer said in a statement.

Fraizer couldn't be reached for comment.

The company had struggled to get back on track, causing investors to punish Genworth's stock and, at times, publicly complain about the pace of the recovery. Shares had been down by 50% in the past year and 83% in the past five years.

In recent months, Fraizer and other executives sought to persuade investors there were brighter days ahead.

The company has built up capital, sold off some units and predicted the mortgage unit would swing to a profit as soon as next year.

Genworth executives were also optimistic they could raise additional funds through the partial sale of its Australian mortgage-insurance subsidiary.

Then, on April 17, the company said the Australian IPO was being put on hold. The sale of a 40% stake in the unit, originally planned to be completed in the second quarter, was pushed back to early 2013 as the company predicted a "modest" first-quarter loss at the unit.

This story first appeared on WSJ.com

Write to Erik Holm at erik.holm@dowjones.com and Leslie Scism at leslie.scism@wsj.com




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