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July 21 (Reuters) - Shares of Genworth Financial fell 20 percent to a two-year low on Thursday, a day after the insurer forecast a second-quarter loss and said it would boost reserves in its mortgage insurance unit.
Genworth, historically one of the five largest U.S. mortgage insurers, said it would increase reserves in its mortgage insurance segment by $300 million.
The insurer said it would add to the unit's capital by using a portion of its investment in Genworth MI Canada , worth $375 million.
"Clearly, Genworth has fallen far from achieving its goal, stated often throughout 2010, of operating US MI on a capital self-sufficient basis," Keefe Bruyette and Woods analyst Jeffrey Schuman said in a note.
Shares of Richmond, Virginia-based Genworth, which was spun off from industrial conglomerate General Electric Co , fell 20 percent to $7.56, before recouping some losses to trade at $7.67 in the morning session on the New York Stock Exchange.
Nearly 3 million shares changed hands by 1040 ET, more than double the stock's 50-day moving average. (Reporting by Jochelle Mendonca in Bangalore)