(Bloomberg) -- Genworth Financial Inc., the insurer weighing a breakup after steep losses on policies covering long- term medical care, is seeking buyers for a life and annuity unit, according to people familiar with the matter.

The firm is working with Goldman Sachs Group Inc. on a sale of Genworth Life and Annuity InsuranceCo., or GLAIC, said the people, who asked not to be identified because the matter isn’t public.

Genworth will consider selling GLAIC in parts if it can’t find a buyer for the entire unit, two of the people said.

In a sale, GLAIC would fetch a discount to its year-end capital and surplus of about $2.1 billion, one person said. Capital and surplus represents the difference between the value of an insurer’s assets and liabilities.

Genworth rose 5.9 percent to $7.76 a share in New York trading Thursday, giving the company a market value of almost $3.9 billion.

Selling the unit could give Genworth the capital to buy back bonds and lower the company’s debt, according to David Havens, a credit strategist at Imperial Capital.

“The company is restructuring and responding to what’s an array of challenges coming out its long-term care business,” Havens said by telephone. “Probably a couple years down the road they could shift from defense to offense.”

Al Orendorff, a spokesman for Richmond, Virginia-based Genworth declined to comment, as did Leslie Shribman, a spokeswoman for Goldman Sachs.

Breakup Calls

Genworth announced a strategic review in February, after losing about $1.6 billion in the second half of 2014 because it didn’t have enough money set aside to cover payouts on long-term care policies, which help incapacitated people pay for nursing homes and health-care aides. It’s also selling a European unit that helps people pay bills if they can’t work.

GLAIC, which sells annuities, individual life insurance and employee-provided insurance, earned about $200 million last year, according to its 2014 annual statement. GLAIC is the second-largest of Genworth’s four main life insurance subsidiaries, with about $24 billion of assets and more than $20 billion in liabilities at year-end. The money-losing longterm care business is part of another division.

People buy annuities to ensure they have a steady source of income after they retire. Axa SA, CNA Financial Corp., Hartford Financial Services Group Inc. and other insurers in recent years have sought to get rid of annuities, which become less profitable for insurers amid volatility in the stock and bond markets.

Hedge-fund manager John Paulson -- before exiting Genworth last year -- said it would be worth more if it separated its mortgage insurance and life operations. Genworth Chief Executive Officer Tom McInerney told Bloomberg in February it was considering splitting up, among other options.

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