(Bloomberg) — Genworth Financial Inc. (NYSE:GNW) said U.S. and Bermuda-based affiliates assumed about $8.3 billion of reserves from its main units at the end of 2012.
Genworth, the largest seller of private long-term care insurance (LTCI) coverage, disclosed correspondence with the U.S. Securities and Exchange Commission (SEC).
The Richmond, Va.-based company said it would probably face increased costs and the need to curb sales of some products if it were required to stop using reinsurance subsidiaries, known as captives, to build reserves.
The National Association of Insurance Commissioners (NAIC) is reviewing regulations tied to captive insurance, and the Treasury Department’s Federal Insurance Office has called for stronger oversight.
New York state’s insurance regulator, Benjamin Lawsky, has said some companies use reinsurance transactions with affiliates to make reserves appear larger than they are.
Without using captives for its life business, Genworth would face “increased costs related to alternative financing, such as third-party reinsurance, and potential reductions in or discontinuance of new term or universal life-insurance sales,” the company said in a Nov. 14 letter. “We are currently unable to predict the ultimate outcome of the NAIC review.”
Genworth said most of the $7.3 billion in reserves at its Bermuda-based units stem from the LTCI business. Today’s filings include queries from the SEC about the reserves and Genworth’s responses.