Canadian flag (Image: Thinkstock) (Credit: Thinkstock)

Canadian regulators have made a decision that could increase the odds that Genworth Financial Inc. will be able to sell itself to China Oceanwide Holdings Group Co. Ltd. — or that Genworth will have the cash to survive on its own if the China Oceanwide deal falls through.

The Canadian regulators gave Brookfield Business Partners, an arm of Brookfield Asset Management Inc., permission to buy Genworth’s majority stake in a large Canadian mortgage insurance subsidiary, Genworth MI Canada Inc., Genworth announced Monday.

Canada’s Insurance Companies Act gives Canadian regulators the ability to block insurance company deals. Genworth Financial said earlier this year that Canadian regulators were asking it questions about the safeguards in place for protecting mortgage insurance customers’ personal information.

(Related: Genworth Faces Mortgage Deal Data Friction in Canada)

The need for Insurance Companies Act approval was the last significant obstacle remaining to completion of the $1.8 billion Brookfield-Genworth MI Canada deal.

Now that Genworth has the approval in hand, it plans to complete the Genworth MI Canada deal Thursday.

The Players

Genworth is a Richmond, Virginia-based company that is a major player in the mortgage insurance markets in the United States, Australia and Canada; was a major issuer of life insurance, annuities and long-term care insurance (LTCI); and still sells some LTCI coverage.

The company has struggled to increase LTCI premiums enough to compensate for the effects of higher-than-expected claims and lower-than-expected interest rates on LTCI policy performance. Company executives have acknowledged openly that there are concerns about the future of the LTCI business, and that it needs a capital infusion to help the LTCI business.

China Oceanwide — a Beijing-based real estate development and financial services company — has been trying to acquire Genworth since 2016. China Oceanwide has promised to give Genworth’s life units $175 million in capital and to infuse a total of $1.5 billion into Genworth. The deal has a total estimated value of about $2.7 billion.

Genworth needed to sell its mortgage insurance business in Canada before it can complete the China Oceanwide deal, partly because Canada has had a cold relationship with China in recent years, and Canadian regulators appeared to be reluctant to let a Chinese company control a Canadian mortgage insurance business.

Genworth executives have also noted that the deal with Brookfield Partners will provide a cash buffer that Genworth can use to support its operations even if the company is unable to go ahead with the acquisition by China Oceanwide.

Brookfield Asset Management, Brookfield Partners’ parent, is a Toronto-based financial services company that’s managing about $500 billion in assets.

—Read Genworth Suitor Puts Cash in Real Estate Subsidiary, on ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on Facebook and Twitter.