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Market sell-off drags on insurance stocks; Genworth soars on funding

Insurance stocks moved slightly lower this week, casualties of a late-week market downturn that was fueled by significant declines in technology stocks.

The S&P 500, which reached an all-time high earlier in the week ending Sept. 4, ended up finishing down 1.65% at 3,426.96. The SNL U.S. Insurance Index slipped 0.15% to 1,080.23.

The declines started after both the S&P 500 and the Nasdaq closed at their highest levels ever and the Dow Jones Industrial Average finished above 29,000 on Sept. 2. A day later, technology companies led the way in a two-day sell-off that sent all three indices sharply lower.

OANDA analyst Ed Moya said the tech sell-off ensued after China announced new policies to help develop its semiconductor industry. The move was a response to the U.S. banning some Chinese tech companies and restricting others' from buying U.S.-made parts. Moya said tech's "high flyers" also had concerns over a "blue wave" in the upcoming presidential election that may lead to a tougher regulatory and corporate tax environment.

"You could choose your reason for why to abandon the tech trade, but it just seemed that it just kind of snowballed, and that's why we're kind of where we are right now," Moya said in an interview.

Despite what he called a "tremendous amount of rotation out of big tech," Moya does not expect to see a repeat of what happened in 2000 when the "dot com" bubble burst.

"Tech is still handsomely up for the year," Moya said. "Once this settles, you're still going to see investors want to remain fairly positioned with tech, as that is going to be one of the bright spots of the economy going forward."

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One of the few bright spots among insurers was Genworth Financial Inc., which rocketed up 45.99% for the week. The rise was fueled by positive news about its long-awaited merger with China Oceanwide Holdings Group Co. Ltd., which announced that it had secured financing for the planned $2.7 billion deal.

Both sides on June 30 agreed to extend the deadline for completion of the merger to Sept. 30, the 15th such extension since the deal was announced in October 2016. Genworth had the right to terminate the agreement had Oceanwide not provided a financing plan by Aug. 31.

Genworth President and CEO Tom McInerney said Oceanwide meeting the deadline was important in light of his company's "ongoing review process," and it provided an important update for Genworth's shareholders, "particularly in light of the market disruptions driven by the global pandemic."

Moody's analyst Bob Garofalo in an email said the funding disclosure was "credit positive for Genworth" as it removes uncertainty over aspects of the deal and makes it more likely that it will ultimately close.

Elsewhere in the life space, Voya Financial Inc.'s agreement to sell its individual life and other legacy non-retirement annuities businesses to Resolution Life Group Holdings LP is being held up, but is expected to close in the fourth quarter. Originally slated to close Sept. 30, the deal was delayed to accommodate the completion of the remaining regulatory reviews of the transaction.

Voya Financial dipped 2.98% in what was a mixed week in the life sector. Great-West Lifeco Inc. dropped 5.30%, Manulife Financial Corp. lost 3.88% and Athene Holding Ltd. ticked down 0.24%. Lincoln National Corp., however, added 2.22%.

The final act of a merger that was never completed played out in a Delaware courtroom this week when a judge rejected efforts by Anthem Inc. and Cigna Corp. to collect billions of dollars in damages from each other over their failed union.

Anthem was to have acquired Cigna in the $54.2 billion agreement announced in July 2015, but the merger was blocked in February 2017 over antitrust concerns.

Cigna wanted Anthem to pay around $15 billion for damages and termination fees, while Anthem demanded $21 billion, alleging Cigna had "breached its obligations in the deal. Calling the battle a "corporate soap opera," Chancery Court Judge Travis Laster in his opinion said both sides "played themselves" and that "each party must bear the losses it suffered as a result of their star-crossed venture."

Cigna ended the week down 1.40%, while Anthem dipped 0.38%.

There was little movement among some major P&C names as Progressive Corp. edged down 0.79%, W. R. Berkley Corp. inched lower by 0.10% and Allstate Corp. ended down 0.52%.