Canadian regulators are continuing to throw data security sand into the wheels of efforts by Genworth Financial Inc. to get acquired by China Oceanwide Holdings Group Co. Ltd.
Canadian regulators had been objecting to the possibility that China Oceanwide — a Beijing-based real estate development and financial services company — would end up with control over Genworth’s mortgage insurance unit in Canada, Genworth MI Canada Inc.
Genworth has been trying to address Canada’s national security and data protection concerns by selling the Canadian mortgage insurance unit to Brookfield Business Partners L.P. of Toronto before completing the China Oceanwide deal, to keep the unit from coming under the control of China Oceanwide, and to raise cash that Genworth can use even if the China Oceanwide deal falls through.
Now, Genworth says, Canadian regulators say they have concerns about the possibility of Brookfield getting control over the Canadian mortgage insurance unit.
“In particular, they are focused on the continued protection of Canadian customer data during the period after the closing of the proposed transaction, when Genworth will be providing certain transition services to Genworth Canada before it transitions away from Genworth’s information technology platforms,” Genworth said Tuesday.
Genworth said it’s working with Brookfield to assure the Canadian regulators that Canadian customers’ information will have appropriate protections.
“Genworth and Brookfield Business Partners have received all other required approvals to complete the sale of Genworth Canada and continue to target a closing of the Proposed Transaction by the end of 2019,” Genworth said.
Tom McInerney, Genworth’s president, said in a statement that, because of Genworth’s work to ease U.S. regulators’ concerns about the data security implications of the China Oceanwide deal, ”Genworth has significant expertise in implementing security protocols that satisfy data security concerns.”
“We are confident in our ability to satisfy the Canadian government’s requirements in order to move forward with the sale of Genworth Canada, which is the best path forward to ultimately close the transaction with Oceanwide,” McInerney said in the statement. “The Oceanwide transaction continues to represent the best value for Genworth’s shareholders.”
Genworth said it will give more information about the status of the Canadian mortgage insurance unit and China Oceanwide deals Oct. 30, when it discusses its third-quarter earnings with securities analysts.
Genworth was once a large player in the U.S. life and annuity markets, and it continues to sell some long-term care insurance (LTCI). The company has large blocks of life, annuity and LTCI business on its books.
The company is still a major mortgage insurance issuer in the United States, Australia and Canada. Genworth has been the largest commercial residential mortgage insurance provider in Canada.
— Read LTCI Policyholders’ Grip Is Loosening: Genworth, on ThinkAdvisor.