– swooped on a 15 per cent stake in Genworth, partly in a direct holding and partly through swaps with Macquarie.Investors offered stock were told Ares has no current intention of launching a bid for control of the mortgage insurer.takeover talksIt seemed the US-based firm wasn’t in a rush to do a deal and was open to other options.Genworth is due to report its financial results for the full-year ending December 31, 2021 on Friday.
Until the Genworth parent sold out, the local group was, in effect, a cash cow for meeting the pressing financial obligations of its parent. It kept dividends up. That hasn’t yet happened. Macquarie Equities analysts, which have an outperform recommendation on the stock, have a $3.70 target price, or 0.9 times NTA.That 0.9 times NTA multiple is higher than Genworth’s historical range of between 0.6 times and 0.8 times because the analysts are expecting that its earnings will improve from recent business and the group will continue to return excess capital.
And as the Macquarie analysts pointed out, the group’s February fourth quarter trading update noted net claims were materially below expectations.Others say the quality of the back book and risk of defaults is now substantially less because of the surge in residential property prices over the past two years.First, in good times – when the major client is locked in and the claims environment and outlook is benign – extra conservatism isn’t always rewarded.