NEW YORK (Associated Press) - After reaching a deal to acquire Interbank fsb, insurer Genworth Financial Inc. said it is applying to become a savings and loan, in a move to become eligible for funds under the government's $700 billion bank rescue package.
Genworth, a provider of life and mortgage insurance products, will acquire the Maple Grove, Minn.-based bank for an undisclosed sum. The community bank has about $1 billion in assets.
If the acquisition and change in status to a savings and loan holding company are approved, Genworth will be able to receive funding as part of the government's broad program to provide financial support to banks. Thus far the program has been available to banks only and not other types of financial services firms.
Genworth did not disclose how much capital it will apply for as part of the program.
The government investment, administered by the U.S. Treasury Department, is part of a broader program to stabilize the financial services sector and spur lending between banks and to consumers and other businesses.
Many banks have been hit hard over the past year-and-a-half by a sharp rise in mortgage defaults and a freezing of credit markets. As some financial firms collapsed in recent months, banks shied away from lending to each other and to customers for fear that losses would mount.
The program calls for the Treasury to receive preferred stock and warrants in return for its investments.
Genworth has suffered from rising mortgage defaults since the middle of 2007, forced to pay out an increasing number of claims. The insurer, like many others, has also seen investment losses swell amid the ongoing credit crisis and downturn in the equity markets. Those combined losses have led to shrinking capital reserves.
During the third quarter, Genworth lost $258 million, or 60 cents per share. The results reflected $478 million in net investment losses, which included losses tied to investments in mortgages.
Genworth is not the only company to apply for a change in its regulatory status as part of a plan to tap the government program. Both credit card lender American Express Co. and commercial lender CIT Group Inc. recently applied to change their structure to bank holding companies as part of a plan to access the government's relief program. 
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