Genworth Financial Inc. executives said they are optimistic about being able to complete the sale of the company to China Oceanwide Holdings Group Co. Ltd. by the end of the year — and they took pains to emphasize that the units that have written Genworth’s long-term care insurance (LTCI) and annuities will have to stand on their own.
Tom McInerney, Genworth’s president, told securities analysts that the plan is for Genworth Life and Annuity Insurance Company (GLAIC) and Genworth Life Insurance Company (GLIC) to get $175 million in capital from China Oceanwide once China Oceanwide closes on Genworth, in connection with an agreement calling for China Oceanwide to infuse a total of $1.5 billion into Genworth.
“It is important to note that Genworth could not make this contribution to GLIC without Oceanwide’s $1.5 billion capital investment plan,” McInerney said during a conference call. “The U.S. life businesses will continue to be managed on a stand-alone basis, with the continued need for actuarially justified LTCI premium increases and benefit reductions. Oceanwide and Genworth have no plans to infuse additional capital to the legacy LTCI business beyond the $175 million in capital.”
McInerney said later that state insurance regulators have been helpful with helping Genworth get LTCI premiums to the point needed to make the company’s old LTCI business break even.
“You can’t expect the current shareholders or the new shareholders to continue to invest in the legacy block,” McInerney said. “I think the valued-added from the deal for regulators, and policyholders’ perspective, is that we’re able to invest $175 million that we wouldn’t have had without the capital contribution from Oceanwide.”
China Oceanwide announced plans to acquire Genworth about two years ago.
Genworth held the conference to go after third-quarter earnings with securities analysts.
Genworth is reporting $210 million in net income for the quarter on $1.1 billion in revenue, compared with $175 million in net income on $1.1 billion in revenue for the third quarter of 2017.
The company’s LTCI unit is reporting a $24 million operating loss on $1 billion in revenue, compared with a $5 million loss on $1 billion in revenue for the year-earlier quarter.