Shares of Genworth Financial Inc. slid more than 9% the same week the company and China Oceanwide Holdings Group Co. Ltd. withdrew a merger application with the Committee on Foreign Investment in the U.S., a key regulator that must approve the merger for it to proceed. The companies plan to refile the application.

The SNL Insurance Index climbed 1.07% to 987.38, while the S&P 500 rose 1.30% to 2,552.07 for the week ending Oct. 5.

The withdrawal marks the third time the companies have withdrawn and subsequently refiled a CFIUS application. The companies said they are mulling a third-party service provider contract as part of the mitigation process prior to another refiling.

Despite the application withdrawal, both companies reiterated a commitment to the merger, which faces a Nov. 30 deadline.

Genworth's shares fell 9.61% from $3.85 per share to $3.48 per share.

In the same week, however, North Carolina's Department of Insurance signed off on China Oceanwide's planned acquisition of Genworth's North Carolina-domiciled insurance companies, including Genworth Mortgage Insurance Corp.

But BTIG equity analyst Mark Palmer said in an interview that although the regulator's approval boosted Genworth's share price, the overall CFIUS withdrawal depressed the stock for the week.

He said that as far as approvals go, getting state insurance regulators to sign off is "low-hanging fruit," and there is a much longer road ahead.

And the revelation that Genworth was exploring "plan B" options in the event that approvals were unlikely to go forward "caused some nervousness around the stock," as it showed that the company was no longer fully confident the deal would get approval, Palmer said.

The deal requires the approval of CFIUS and other regulators in the U.S., as well as in China and other international jurisdictions. Palmer said CFIUS' and the Delaware insurance department's approvals would be the most difficult to attain.

J.P. Morgan equity analyst Jimmy Bhullar wrote in a research note that investors' "fears" over the regulatory approvals are valid. However, he wrote, his firm believes that concerns about a Chinese buyer or an "imminent bankruptcy filing" if the deal falls through are "unjustified."

"Even though our outlook for the business is negative, we believe that the stock’s valuation offers attractive risk-reward," Bhullar wrote.

In the financial guaranty space, shares of bond insurer MBIA Inc. took a steep dive because of the massive damage caused by Hurricane Maria in Puerto Rico, Palmer said.

Since the hurricane hit the island, share prices have been falling as bondholders' exposure to the commonwealth's already staggering debt continued to rise. Even before Maria, economic recovery funds for Puerto Rico were in short supply.

"Given the vast magnitude of the damage, there are questions about what the recoveries will be for bondholders and, by extension, insurers," Palmer said.

MBIA's share price fell 12.18% from $8.70 per share to $7.64 on significantly higher-than-average volume.

In addition, the analyst noted, President Donald Trump's suggestion to "wipe out" the island's debt was a contributing factor in the declining share price. Even as Office of Management and Budget Director Mick Mulvaney walked back the president's comments, the company's share price still dipped, Palmer said.

"I don't think there is much, if any, realistic possibility the government is going to wipe out the debt," Palmer said. "It's difficult to even fathom that to occur."