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Investors are watching to see whether Genworth Financial 's Australian troubles might prompt the mortgage insurer to sell some holdings in its Canadian business.

Virginia-based Genworth Financial, which trades on the NYSE, announced Tuesday that it is delaying its planned initial public offering of up to 40 per cent of its Australian business, because it is being hit with higher losses there – making it a bad time to go hat-in-hand to the market.

Genworth had hoped to do its IPO in the second quarter of this year and now plans to wait until early next year. The news has sent its stock tumbling more than 20 per cent, and it's prompting investors in Genworth MI Canada Inc. – which had an IPO in 2009 and trades on the TSX – to wonder what, if anything, this might mean for the Canadian operations.

The speculation is that the delay in the Australian listing could prompt Genworth Financial to sell down some of its stake in the Canadian company. Genworth Financial still holds 57.5 per cent of the Canadian TSX-listed entity, a stake that has a market value of about $1.2-billion.

The spinoff of 40 per cent of the Australian business might have resulted in $800-million in proceeds to the parent company, BMO analyst Tom MacKinnon pointed out in a note to clients Wednesday. The loss of those immediate proceeds is likely to bolster the speculation of a potential sell-down of the Canadian stake, "although Genworth claims its liquidity and risk buffer plans are not contingent on an IPO of the Australian unit," Mr. MacKinnon wrote.

CIBC analyst Paul Holden said his understanding is that the parent company wants to keep its Canadian holdings. "We believe that Genworth management will do whatever they can to maintain that ownership stake," he said in an e-mail. While the delayed Australian IPO has put Genworth in a more vulnerable position, Mr. Holden said he still believes the Canadian block is unlikely to be sold. He noted that Genworth is carrying the Canadian stake at market value for regulatory capital purposes, so selling it would only help the company if the shares were sold for at least market value.