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Genworth Announces Capital Plan for Mortgage Insurance Business

""Genworth Financial"":https://www.genworth.com/ announced a new comprehensive capital plan for its mortgage insurance business on Wednesday.


According to a company release, when the new plan is implemented, it will reduce Genworth Mortgage Insurance Company's (GMICO) risk-to-capital by 12 to 15 points, reduce the need for additional capital for its mortgage insurance subsidiaries, decrease the risk of default for senior notes, and ensure the continued ability to write new business.

The company revealed actions it plans to take, one of which involves transferring ownership of the European mortgage insurance subsidiaries to GMICO. Completion of transfer is expected to occur in the first quarter of 2013, and the subsidiaries will provide about $200 million in additional statutory capital to GMICO, according to the release.

Genworth is also implementing a ""NewCo"" type structure to allow for the continued writing of new business in all 50 states. The option would be implemented if certain adverse conditions were to occur.

As part of its plan, the company will contribute $100 million to GMICO. And, Genworth agreed to contribute another $100 million if GMICO were to enter into a deferred payment order with the North Carolina Department of Insurance or if projections show GMICO may not have enough resources to pay valid claims.

Genworth is also reorganizing to create a new holding company, or new parent, which will make Genworth a direct, wholly-owned subsidiary of the new parent. Upon completion of the reorganization, Genworth will continue to own its existing businesses minus the U.S. mortgage insurance subsidiaries. The new parent will take on the mortgage insurance subsidiaries and Genworth.

About Author: Esther Cho


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