The Virginia Bureau of Insurance has given preliminary approval to China Oceanwide to buy the subsidiaries.
Virginia officials have said their approval of the sale of the two Virginia-domiciled Genworth life subsidiaries is based on the assumption that China Oceanwide and Genworth will follow through with provisions in their merger agreement; that the companies will get all other required regulatory approvals; and that the parties will limit China Oceanwide's access to personally identifiable information held by Genworth.
China Oceanwide, a Beijing-based real estate developer and financial services company, has offered to pay $2.7 billion in cash for Genworth, and to provide $525 million in cash to shore up the company's block of in-force U.S long-term care insurance business.
Genworth, which has its corporate headquarters in Richmond, Virginia, has life insurance subsidiaries domiciled in Delaware and in New York state.
China Oceanwide has financial services subsidiaries in many jurisdictions in Asia.
To complete their deal, the companies still must clear it with the federal Committee on Foreign Investment in the United States. The companies must also get approvals from regulators in Beijing, in New York state, in Dover, Delaware, and in other jurisdictions.
On Wednesday, the Trump administration blocked a Chinese-backed group from acquiring Lattice Semiconductor Corp. over national security concerns.
Regulators in China have recently tried to discourage Chinese companies from making irrational deals, or deals that might embarrass China.
The China Oceanwide-Genworth would appear to involve fewer national security concerns than a deal involving a semiconductor company.
China has been experimenting with setting up a pilot long-term care insurance program, in an effort to improve LTC financing for its rapidly aging population, and China Oceanwide has said that Chinese officials' interest in knowing more about long-term care insurance could be a factor supporting the completion of the Genworth deal.
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