Genworth Financial Inc. hopes to be part of China Oceanwide Holdings Group Co. Ltd. of Beijing by June 30, but it intends to shop for other sources of financing, just in case.
Tom McInerney, the chief executive officer of the Richmond, Virginia-based insurer, talked about the company’s contingency planning today, during a conference call the company held to go over its first-quarter earnings with securities analysts.
Genworth was a major issuer of life insurance, annuities and long-term care insurance, and it continues to be a major player in the mortgage insurance markets in the United States and Australia.
Genworth reported a $66 million net loss for the quarter on $1.8 billion in revenue, and economic turmoil has rocked its investment portfolio. The level of risk-based capital at the company’s U.S. life subsidiaries fell to 195% of the company action level March 31. That’s the same as it was a year earlier, but down from 213% Dec. 31, 2019.
Genworth also has $1.1 billion in debt coming due in 2021.
- A link to a recording of Genworth’s latest analyst call is available here.
- An article about how a midsize life insurer sees the economy is available here.
China Oceanwide has been trying to acquire Genworth for about four years.
China Oceanwide is now in the process of closing on a $1.8 billion financing arrangement from Hony Capital, a big, Hong Kong-based private equity firm. Hony is sponsored by Legend Holdings, a big investment management firm, and China Oceanwide has a 17% ownership interest in Legend Holdings, McInerney said during the conference call.
“Oceanwide has informed us that they continue to work to manage funding for the transaction, and the funding plan is progressing well,” McInerney said. “In addition to its discussions with Hony Capital, Oceanwide is also talking to a number of third parties, to ensure the process continues to run smoothly.”
China Oceanwide and Genworth’s latest deal deadline extension gives Genworth the flexibility to seek other strategic options, McInerney said.
“While having the flexibility is important, it is even clearer today that the Oceanwide transaction is the best alternative for our shareholders and all the stakeholders,” McInerney said.
But Kelly Groh, Genworth’s chief financial officer, said the company is looking at other ways to make the 2021 debt payments, in case the China Oceanwide transaction is terminated or delayed.
The company’s U.S. mortgage insurance business could borrow money, or the company could get a secured loan facility, Groh said.