Australian Delinquencies
Australian home loan delinquencies rose unexpectedly in the three months ended Dec. 31 as a stalling housing market curtailed financing options for homeowners, Fitch Ratings said last month. Arrears in the country's prime residential mortgage- backed securities rose to 1.57 percent in the fourth quarter from 1.52 percent in the third, Fitch said. Median home prices fell 4.8 percent last year, according to the ratings firm.
Credit-default swap contracts protecting Genworth debt surged to 5 percent upfront on April 23, meaning investors would pay $500,000 initially and $500,000 annually to protect $10 million of the debt, according to CMA, which is owned by CME Group Inc. That level signals the market perceives a 43 percent chance the company will default within five years, based on an expectation that investors would recover 40 percent of face value of the bonds if the company failed to meet its obligations, the data show.
Genworth's implied volatility, the key gauge of options prices, for 30-day contracts closest to the stock price, was 61.56 as of April 20, the third-biggest level among the KBW Insurance Index. The measure for MBIA Inc. was 110.66, the most, and MGIC followed, with 77.95, data compiled by Bloomberg show.
Hedge Fund Ownership
Fraizer has sought since 2009 to reassure investors losses at the U.S. mortgage insurance operations wouldn't drain funds from other parts of the business. Genworth executives repeated his strategy of running the unit as "self-contained" on a capital basis at least 12 times from February 2009 to October 2010. In July, Genworth said it would contribute $375 million in assets to the U.S. unit.
More than 20 percent of Genworth shares are owned by hedge funds, the second-highest concentration in the KBW Insurance Index, according to data compiled by Bloomberg.
Highfields, led by Jonathon Jacobson, more than doubled its Genworth stake in the second half of 2011 and held about 6.3 percent of the insurer at the end of December. The Boston-based hedge fund is the third-biggest shareholder behind NWQ Investment Management Co. and Dodge & Cox, according to data compiled by Bloomberg.