Genworth Financial Inc shares sank 29 percent in early trading on Monday after the U.S. Treasury Department rejected the money-losing life and mortgage insurer's bid for new capital.
The shares were down 80 cents at $1.95 on the New York Stock Exchange.
The Richmond, Virginia-based company was one of several insurers that last year sought to buy banks or savings and loans and win holding company status as lenders, thus qualifying for taxpayer funds under the $700 billion Troubled Asset Relief Program. Insurers have seen capital squeezed as the value of their investments has fallen.
But after markets closed Thursday, Genworth said it had missed a Treasury deadline to obtain Office of Thrift Supervision approval to become a savings and loan holding company. Genworth canceled its plan to buy Interbank fsb, a Maple Grove, Minnesota, lender, in connection with that application.
TARP would have aided capital flexibility, but Genworth's viability does not hinge on TARP, wrote Andrew Kligerman, a UBS Investment Research analyst.
Neither Genworth nor the OTS would comment on why the application was allowed to expire.
Other insurers have won holding company status as lenders, including Hartford Financial Services Group Inc, MetLife InC and Prudential Financial Inc.
Genworth said it would continue to pursue other options, including asset sales, to add financial flexibility. The company lost $321 million in the fourth quarter.
Genworth was formerly part of General Electric Co. It went public in 2004, and GE completely spun it off in 2006. Genworth shares peaked at $37.16 in February 2007, Reuters data show.