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-- Genworth Financial Inc. laid off 1,000 people this week, including 400 at its headquarters in Henrico County.
The insurance company is trimming 14 percent of its worldwide work force as part of a $100 million to $150 million cost-cutting effort to become more responsive and agile in the slow economy.
"Our employment reductions reflect economic and other market realities, so we are taking global employment back to our 2004 levels," Genworth Chairman Mike Fraizer said yesterday in a letter addressed to customers, distributors and partners.
"Reductions in [work force] levels are without question the most difficult to make."
The 400 layoffs at headquarters came out of a work force there of more than 1,700.
An operations site in Lynchburg had the second-largest block of layoffs -- 230 people.
The next-largest cuts were made in a mortgage-insurance office in Raleigh, N.C., where 45 people lost their jobs.
A company spokesman said cuts were made across all departments and at all levels.
The remaining layoffs were scattered throughout the company, which employs about 7,300 people at operations in 25 countries, spokesman Tom Topinka said.
The housing meltdown has hurt one of the company's core businesses -- insuring mortgages -- and cost it billions of dollars in devalued investments, especially in securities backed by mortgages.
Kent Engelke, chief economic strategist with Capitol Securities Management in Richmond, said Genworth will survive.
What Genworth is facing, like other companies, "is a function of what's happening with the housing crisis, which continues to morph and morph," Engelke said. "But I believe we are at the tail-end of this crisis."
Fraizer said the company has reduced discretionary spending across the company. The cost-cutting actions are expected to reduce pretax operating expenses by $100 million to $150 million on an annual basis.
"In addition, we will not pay or will significantly reduce certain leadership bonuses," said Fraizer, who said he told the board he should not receive any bonus compensation.
He said the decisions are part of a multifaceted approach to maintain appropriate liquidity and capital levels.
In particular, he said the company would focus on maintaining capital levels that support retirement and protection products, including life insurance, long-term care insurance, and annuities.
Fraizer said the company plans to expand its wealth-management and long-term care insurance businesses. It will continue to sell annuities but will do so more selectively, he said.
The company's U.S. mortgage-insurance team is responding to increasing unemployment, declining home prices, and the lack of credit, which have hindered homebuyers' abilities to meet their mortgage obligations, he said.
The focus of that business will be on insuring high-quality mortgages supported by tighter underwriting standards, he said.
New business production will be balanced against claims and losses, Fraizer said.
"To this end, we'll reinforce our efforts as an industry leader in mitigating losses and helping people avoid foreclosure and keep their homes," he said. Contact Carol Hazard at (804) 775-8023 or chazard@timesdispatch.com.
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