What You Need to Know
- Genworth executives say both companies made good-faith efforts to complete the transaction.
- Genworth says it still hopes to work with China Oceanwide to sell long-term care insurance in China.
- An analyst says Genworth needs to cover $661 million in notes that mature in September.
Genworth Financial Inc. announced Tuesday that it has officially ended efforts to be acquired by China Oceanwide Holdings Group Co. Ltd.
The Richmond, Virginia-based insurer said it has terminated a merger agreement with the Beijing-based company.
China Oceanwide — a real estate developer and financial services company — has been trying to acquire Genworth for more than four years. The companies have extended the deal completion deadline 17 times. In January, the companies shifted to using a merger agreement with no expiration date.
Genworth said it has decided to end the merger agreement, rather than sticking with the open-ended agreement, to simplify efforts to carry out the company’s strategic plan. Part of the plan involves selling a stake in a large mortgage insurance subsidiary to investors, through a partial initial public offering.
James Riepe, Genworth’s chairman, said the company’s board decided greater clarity about the company’s future is needed to maximize shareholder value.
General Electric Company created Genworth in 2004, by putting its insurance operations in Genworth and selling stock in Genworth to the public, through a partial IPO and other transactions.
Genworth was once a large issuer of mortgage insurance, life insurance and annuities, and a dominant player in the market for stand-alone long-term care insurance (LTCI).
Low interest rates and bad assumptions about LTCI policyholder behavior hurt the LTCI operations.
Genworth has suspended sales of life insurance and annuities and appears to be selling little or no new LTCI coverage. It continues to have large amounts of LTCI business on its books, and it continues to be an active player in the U.S. mortgage insurance market.