Thomas McInerney,, president and chief executive officer of Genworth Financial Inc., listens to a question during a Bloomberg Television interview in New York, U.S., on Friday, June 27, 2014. Thomas McInerney (Photo: Victor J. Blue/BB)

China Oceanwide Holdings Group Co. Ltd. may be about to get a step closer to completing its proposed acquisition of Genworth Financial Inc.

The Delaware Department of Insurance has agreed to hold a public hearing on China Oceanwide’s application to acquire a key Genworth subsidiary, Genworth Life Insurance Company (GLIC) Nov. 28.

(Related: Genworth and China Oceanwide Push Back Deal Deadline)

China Oceanwide has been trying to acquire Genworth since October 2016.

GLIC has written much of Genworth’s long-term care insurance. Genworth Life and Annuity Insurance Company (GLAIC), a GLIC subsidiary, has written many of Genworth’s annuities.

Genworth had hoped to make the China Oceanwide-Genworth deal more appealing by unstacking GLAIC from GLIC. Regulators in Delaware objected.

Genworth executives have given up on the idea of unstacking GLAIC from GLIC. Now, Genworth and China Oceanwide have agreed that a Genworth unit will contribute $175 million to GLIC, rather than using the $175 million to unstuck GLAIC from GLIC, according to a Genworth announcement of the Delaware hearing  date.

Genworth would make one portion of the payment before the end of March, one before the end of September, and one by the end of January 2020, Genworth says.

Genworth has also agreed that GLAIC will put about $200 million into GLIC, by buying a $200 millio promissory note from GLIC. ”The purchase price will be at fair market value but not less than $200 million,” Genworth says in the announcement. “No changes will be made to the terms of the existing obligation under such promissory note.”

The $175 million cash infusion from Genworth, and the $200 million in cash from GLAIC, will improve GLIC’s liquidity by $375 million, Genworth says.

Thomas McInerney, Genworth’s president, said in a statement that he is pleased the Delaware GLIC hearing has been scheduled and looks forward to highlighting the benefits of the China Oceanwide-Genworth merger.

Lu Zhiqiang, chairman of China Oceanwide, said his company still hopes to close on the deal sometime in the fourth quarter.

In addition to Delaware’s blessing, China Oceanwide and Genworth need approvals from regulators in China, international jurisdictions outside of China, and the United States.

“Genworth and [China] Oceanwide are actively engaged with the relevant regulators regarding their pending applications,” Genworth said.

Other U.S. life insurers have a stake in seeing China Oceanwide complete the deal in a way that helps GLIC stay solvent.

During the Ameriprise Financial Inc. third-quarter earnings call, a securities analyst asked about what the effects might be on Ameriprise if Genworth failed.

When insurers fail, other insurers may have to make good on the obligations not covered by the failed insurers’ assets, by paying assessments into a guaranty fund. The failure of a company as big as Genworth could lead to other life insurers each having to pay large guaranty fund assessments.

— Read Prudential Sheds ‘Too-Big-to-Fail’ Label, But…on ThinkAdvisor.

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