China Oceanwide Holdings Group Co. Ltd. is now hoping to complete the acquisition of Genworth Financial Inc. sometime between Sept. 30 and Dec. 31, according to Thomas McInerney.
McInerney, Genworth’s chief executive officer, talked about the China Oceanwide-Genworth deal Wednesday, during a conference call with securities analysts.
Genworth held the conference call to go after its earnings for the second quarter.
China Oceanwide announced plans to acquire Genworth in October 2016.
The companies have already announced several deal completion deadline extensions. The current deadline is Aug. 15.
“Given our timelines for certain review periods, we expect the regulatory review process to extend beyond this date,” McInerney said.
Genworth is still a major issuer of mortgage insurance.
In the past, the Richmond, Virginia-based company was a major issuer of long-term care insurance, life insurance and annuities. The company continues to have large blocks of LTCI, life insurance and annuity business on its books, but it has had to suspend most new sales of life, annuity and LTCI products because of concerns about LTCI rate adequacy and reserving levels.
China Oceanwide is a large, Beijing-based real estate developer that has branched out into the insurance and banking industries.
Originally, the companies had planned for China Oceanwide to help Genworth make debt payments that came due in May, and also to provide capital for Genworth’s existing life, annuity and LTCI operations.
The companies had also hoped that Genworth could separate the LTCI operations from the life and annuity operations.
Genworth ended up using an alternative financing strategy to make the debt payments, and it has given up on the idea of separating the LTCI operations from the other life and annuity operations, because of resistance from regulators in Delaware.
Now, China Oceanwide and Genworth are working on new capital investment plan, McInerney said.
The current version of the plan would have China Oceanwide contribute about $1.5 billion to Genworth over time after the deal closes, McInerney said.
“We expect to finalize the details of this plan with Oceanwide in the near future,” McInerney said.
Genworth has received approvals for the deal from some agencies in the United States but still needs approvals from regulators in New York state.
China Oceanwide needs approvals from three agencies in China.
Genworth does not believe it has any significant regulatory review issues with U.S. regulators, and China Oceanwide has not talked about having any problems with regulators in China, McInerney said.
Kelly Groh, Genworth’s chief financial officer, noted that getting approvals from state insurance regulators for LTCI premium increases is important, because Genworth expects the U.S. life companies that hold the life, annuity and LTCI blocks to support themselves.
“We intend to manage the U.S. life entities on a stand-alone basis,” Groh said. “We have no current plans to infuse capital in these businesses, nor do we expect to extract capital.”
Given the poor performance of the LTCI blocks, Genworth believes the company will get little or not value from the life insurance unit and its subsidiaries, Groh said.
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