Genworth sold to Asia investors as China Oceanwide swoops
Genworth Financial, the US financial services company with substantial insurance operations, has become the latest insurer to be acquired by investors from Asia. It has been acquired by China Oceanwide for approximately $2.7 billion.
China Oceanwide, a privately held, family-owned international financial holding group, will also give Genworth $1.1 billion in additional cash to support its efforts to restructure its US life insurance businesses and address a 2018 debt maturity, on or before its maturity.
Some $600 million will address the debt and $525 million will be added to an existing $175 million commitment made by Genworth to restructure its US life insurance businesses. Following closing of the transaction, Genworth will be a standalone subsidiary of China Oceanwide.
Genworth, which was spun out from General Electric in 2004, is one of the biggest mortgage insurers in the US and a major player in long-term care insurance. It was hit by the financial crisis when defaults on mortgages soared. Since then, other parts of its business have been hit by the elongated period of low interest rates.
In a letter to policyholders, distribution partners and lenders, Tom McInerney, the president and CEO of Genworth said that the company’s board of directors believes that the transaction creates greater and more certain value to stockholders than the company’s current business plan or other strategic alternatives.
He added: “We are very pleased to have the financial support of China Oceanwide in order to improve and strengthen our businesses while we uphold our existing commitments to our policyholders, distribution partners and lenders.”
James Riepe, non-executive chairman of the Genworth board of directors, added: “The China Oceanwide transaction is the result of an active and extensive review process conducted over the past two years under the supervision of the board and with guidance from external financial and legal advisors. The board is confident that the sale of the company to China Oceanwide is the best path forward for Genworth’s stockholders.”
Mr. Lu, chairman of China Oceanwide, said: “Genworth is an established leader in both mortgage insurance and long-term care insurance, which are markets that present significant long-term growth opportunities.
“We are impressed by Genworth’s purpose and its focus on helping people manage the financial challenges of ageing as well as achieving the dream of home ownership. In acquiring Genworth and contributing $1.1 billion of additional capital, we are providing crucial financial support to Genworth’s efforts to restructure its US life insurance businesses by unstacking Genworth Life and Annuity Insurance Company from under Genworth Life Insurance Company and address its 2018 debt maturity.
“In order to close the transaction and achieve these objectives, we have structured the transaction with the intention of increasing the likelihood of obtaining regulatory approval.”
Already registered?
Login to your account
If you don't have a login or your access has expired, you will need to purchase a subscription to gain access to this article, including all our online content.
For more information on individual annual subscriptions for full paid access and corporate subscription options please contact us.
To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.
For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk
Editor's picks
Editor's picks
More articles
Copyright © intelligentinsurer.com 2024 | Headless Content Management with Blaze