Genworth Financial Inc. won't participate in the Department of Treasury's Capital Purchase Plan, after a deadline passed before its application to become a savings and loan holding company could be completely reviewed.
Treasury officials told insurers in late 2008 they could be eligible for federal assistance if they owned bank-holding companies.
However, the insurance and financial-services company was informed by the U.S. Department of the Treasury Thursday that the deadline it set for approval by the Office of Thrift Supervision to become a bank-holding company wouldn't be extended.
As a result of the announcement, Genworth said it won't be able to complete its intended acquisition of Minnesota-based Interbank. The two companies had entered an agreement last November.
Following the news, shares of Genworth retreated 20% to $2.20 in after-hours trading, after closing up 18% in the regular session amid a broad rally in the financial sector.
Since the company's initial application for funds in November, Chief Executive Michael D. Fraizer said Genworth has made "significant progress" in enhancing its capital levels and financial flexibility. The company affirmed its target of a consolidated life insurance company risk-based capital ratio of 350% or above by the end of 2009.
The life-insurance industry has been dealing with mounting investment losses amid the slumping equities market. Concerns have also emerged about life insurers' commercial real-estate annuities portfolios, and whether they may force the companies to raise new capital.