(Bloomberg) — Genworth Financial Inc. (NYSE:GNW) agreed to a $219 million settlement to resolve a lawsuit brought by shareholders who accused the insurer and Chief Executive Officer Tom McInerney of securities violations tied to disclosures about the money-losing long-term care insurance (LTCI) business.
The company’s insurers will pay $150 million and Genworth will pay $69 million, the Richmond, Va.-based firm said in a statement Friday.
McInerney told investors in late 2013 that Genworth had adequate reserves for LTCI policies, which cover costs for home health aides and nursing home stays. The stock dropped 45 percent in 2014 after a review found that the company had underestimated the costs. The insurer has said the claims in the lawsuit lacked merit.
Genworth is “settling the lawsuit to avoid the burden, risk and expense of further litigation,” according to the statement.
The insurer’s payment is expected to be made into an escrow account this quarter, Genworth said. The company also said that legal fees and other expenses tied to the litigation will cost about $10 million pretax in the period.