The Treasury Department has ruled that Genworth Financial Inc. is not eligible to participate in the Capital Purchase Program, the company says.
But Genworth, Richmond, Va., says that, despite its low stock price, it continues to have more than enough capital to support its life insurance subsidiaries.
“We remain comfortable with our target of a consolidated life insurance company risk-based capital ratio of 350% or above for year-end 2009,” Genworth Chief Executive Michael Fraizer says in a statement.
“We ended 2008 with about $2 billion of capital across Genworth in excess of levels required for targeted ratings or regulatory requirements,” Fraizer says.
Genworth is evaluating “additional strategic opportunities,” including “selected asset sales” and “other governmental programs that could provide additional financial flexibility,” Fraizer says.
“We will pursue these where we believe it makes sense,” Fraizer says.
The CPP is one part of the federal Troubled Asset Relief Program.
The federal government also has established a Legacy Securities Program and a Legacy Loans Program.
Genworth moved to acquire a thrift, InterBank Federal Savings Bank, Maple Grove, Minn., last fall, when Treasury officials said they would not consider a life insurer CPP application unless the insurer had a federally regulated unit.
Because the Treasury Department has ruled Genworth ineligible for CPP participation, Genworth is withdrawing the application to acquire InterBank, Genworth says.
Genworth is one of about a dozen life insurers that have applied to participate in the CPP. Protective Life Corp., Birmingham, Ala., announced April 1 that it has terminated an agreement to become a bank holding company and acquire a Bonifay, Fla., bank holding company because the deal had not been completed by March 31, as the contract required.
The deal was not completed because the agreement was contingent on Protective Life getting CPP aid, and Treasury did not announce until earlier this week that it planned to allow insurers to participate.
The Treasury Department told Genworth the application approval deadline passed before the Office of Thrift Supervision finished reviewing Genworth’s application to become a savings and loan holding company, Genworth says. The department decided not to extend the deadline.
“As we noted on prior occasions, CPP participation by way of a thrift acquisition was only one of the strategic levers Genworth has considered to provide another level of capital flexibility to address unforeseen events, and the nature of that program has continued to evolve,” Fraizer says.
“We continue to progress in our evaluation of additional strategic opportunities ranging from selected asset sales to other governmental programs that could provide additional financial flexibility, and we will pursue these where we believe it makes sense,” Fraizer says.