Genworth Financial Inc. shares got a lift during a week that saw the company's long-awaited sale to China Oceanwide Holdings Group Co. Ltd. potentially take one step closer to completion, while many managed care stocks tumbled.
The S&P 500 rose 0.73% to a record-high 3,168.80 for the week ending Dec. 13. The SNL U.S. Insurance Index gained 0.61% to close at 1,156.54.
Genworth on Dec. 12 closed a sale of its majority stake in Genworth MI Canada Inc. to Brookfield Business Partners LP. Canadian regulators, who initially had concerns over data protection issues, signed off on the deal Dec. 9.
Genworth's stock rose steadily after the regulatory approval and finished the week up 11.35% at $4.61. But despite the gain, Genworth's stock remains below the per-share price of $5.43 the insurer had agreed to sell itself to China Oceanwide in October 2016. However, it is higher than the $3.69 the stock was on July 1, when Genworth announced its intention to divest itself of its MI Canada holdings.
BTIG analyst Mark Palmer said the rise in Genworth's share price tracks the progress the company has made in receiving state approvals for the China Oceanwide deal. Approvals still outstanding include those from the New York Department of Financial Services, Fannie Mae and Freddie Mac and China's State Administration of Foreign Exchange.
With the first phase of a trade agreement between the U.S. and China announced Dec. 13, "things seem to be going in the right direction," according to Palmer.
"We just don't see any reason why China would step in to block this deal," he said in an interview. "There isn't any apparent negative impact on China and ultimately, the buyer is interested in bringing long-term care solutions back to China. So, it appears to us that that part of the deal is more likely than not to be approved."
The latest deadline for the deal's completion is Dec. 31.
In the managed care sector, Cigna Corp. is reportedly in talks with New York Life Insurance Co. for the sale of its nonhealth benefits unit, a deal that could value the subsidiary at up to $6 billion. CFRA Research analyst Colin Scarola said such a transaction would be "pretty consistent with what they've been doing over the past year."
"When they made the big investment to buy Express Scripts Inc., that was a signal that they're going to be focusing a lot more on the healthcare provider and health plan spaces and less on the peripheral benefits like life insurance," he said in an interview. "So I think they're just trying to become a more focused company."
Cigna fell 4.55% to $189.87.
Health Insurance Innovations Inc. on Dec. 12 reported it had received 47,000 applications for Medicare-related product policies during the fourth-quarter enrollment period. B. Riley FBR analyst Randy Binner said in a note that it was "a good growth figure" for the company and about $150 million to $200 million of the company's 2020 revenue could be Medicare related.
Health Insurance Innovations ended the week down 2.12% at $18.92.
UnitedHealth Group Inc. this week announced that its pharmacy benefits manager OptumRx Inc. will merge with Michigan-based specialty pharmacy Diplomat Pharmacy Inc. The company actually gained ground, rising 1.89%.
Several other major health insurers, however, were among the worst-performing insurance stocks for the week, as Centene Corp. dropped 5.36%, WellCare Health Plans Inc. declined 3.44% and Molina Healthcare Inc. lost 2.82%.
Bermuda-based Argo Group International Holdings Ltd. continued its "refreshment process" as five board members, including chairman Gary Woods, announced their retirements Dec. 12. Activist investor Voce Capital Management LLC had been seeking the resignation of those board members.
Argo's shares ticked up 1.13% to $65.29.