RICHMOND, Va., Feb. 26, 2019 /PRNewswire/ -- Genworth
Financial, Inc. (NYSE: GNW) announced today its statutory
capital and cash flow testing (CFT) results for its U.S. life
insurance companies for the year ended December 31, 2018. Additional financial
information for the year ended December 31,
2018 will be included in the company's upcoming Annual
Report on Form 10-K to be filed with the Securities and Exchange
Commission. The statutory capital and CFT results include:
- The aggregated CFT results for Genworth Life Insurance Company
(GLIC) resulted in a positive margin of approximately $1.5 billion after including approximately
$2.1 billion of provisions for
adverse deviation (PADs). The 2018 margin results improved by
approximately $0.9 billion,
reflecting a modest increase in benefits of future expected
premiums and associated benefit reductions, along with other aging
and modeling updates, partially offset by the impact from higher
expected future claims.
- The aggregated CFT results for Genworth Life Insurance Company
of New York (GLICNY) indicate no
incremental CFT reserves beyond those held at December 31, 2017. These results include
approximately $1.2 billion of New
York Department of Financial Services (NYDFS) required PADs. During
2018, the NYDFS approved a previously filed premium rate increase,
which along with other assumption and methodology updates, resulted
in the elimination of the need for the phase-in of additional CFT
reserves previously agreed to with NYDFS. The NYDFS currently does
not allow rate increases for long-term care insurance business to
be used in CFT until such increases have been approved. As of
year-end 2018, the company action level risk-based capital (RBC)
ratio for GLICNY is 223 percent.
- Stand-alone testing (Actuarial Guideline 38) of universal life
insurance products with secondary guarantees resulted in a
$123 million increase in statutory
reserves in the fourth quarter of 2018 for Genworth Life and
Annuity Insurance Company (GLAIC). This included the final
$95 million of a previously agreed
upon phase-in of Actuarial Guideline 38 Section 8D reserves. The
remaining reserve addition was primarily driven by an update to our
mortality expectations. As of year-end 2018, the company action
level RBC ratio for GLAIC is 422 percent.
- The consolidated U.S. life insurance company action level RBC
ratio of GLIC is 199 percent as of year-end 2018. This result
included the above impacts, fourth quarter assumption updates and
RBC changes related to tax reform.
About Genworth Financial
Genworth Financial,
Inc. (NYSE: GNW) is a Fortune 500 insurance holding company
committed to helping families achieve the dream of homeownership
and address the financial challenges of aging through its
leadership positions in mortgage insurance and long term care
insurance. Headquartered in Richmond, Virginia, Genworth traces its roots
back to 1871 and became a public company in 2004. For more
information, visit genworth.com.
From time to time, Genworth releases important information via
postings on its corporate website. Accordingly, investors and other
interested parties are encouraged to enroll to receive automatic
email alerts and Really Simple Syndication (RSS) feeds regarding
new postings. Enrollment information is found under the "Investors"
section of genworth.com. From time to time, Genworth's
publicly traded subsidiaries, Genworth MI Canada Inc. and Genworth
Mortgage Insurance Australia Limited, separately release financial
and other information about their operations. This information can
be found at http://genworth.ca and
http://www.genworth.com.au.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains certain
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by words such as "expects," "intends,"
"anticipates," "plans," "believes," "seeks," "estimates," "will" or
words of similar meaning and include, but are not limited to,
statements regarding the outlook for the company's future business
and financial performance. Examples of forward-looking statements
include statements the company makes relating to the transaction
with China Oceanwide Holdings Group Co., Ltd. (Oceanwide) and the
company's discussions with regulators in connection therewith.
Forward-looking statements are based on management's current
expectations and assumptions, which are subject to inherent
uncertainties, risks and changes in circumstances that are
difficult to predict. Actual outcomes and results may differ
materially from those in the forward-looking statements due to
global political, economic, business, competitive, market,
regulatory and other factors and risks, including, but not limited
to, the following:
- risks related to the proposed transaction with Oceanwide
including: the company's inability to complete the transaction in a
timely manner or at all; the parties' inability to obtain
regulatory approvals, or the possibility that regulatory approvals
may further delay the transaction or will not be received prior to
March 15, 2019 (and either or both of
the parties may not be willing to further waive their end date
termination rights beyond March 15,
2019) or that materially burdensome or adverse regulatory
conditions may be imposed or undesirable measures may be required
in connection with any such regulatory approvals (including those
conditions or measures that either or both of the parties may be
unwilling to accept or undertake, as applicable); the risk that the
parties will not be able to obtain other regulatory approvals,
including in connection with a potential alternative funding
structure or the current geo-political environment; the parties'
inability to obtain any necessary regulatory approvals for the
post-closing capital plan; the risk that a condition to the closing
of the transaction may not be satisfied; potential legal
proceedings that may be instituted against the company in
connection with the transaction that may delay, make it more costly
or ultimately preclude it; the risk that the proposed transaction
disrupts the company's current plans and operations as a result of
the announcement and consummation of the transaction; certain
restrictions during the pendency of the transaction that may impact
the company's ability to pursue certain business opportunities or
strategic transactions; continued availability of capital and
financing to the company before, or in the absence of, the
consummation of the transaction; further rating agency actions and
downgrades in the company's debt or financial strength ratings;
changes in applicable laws or regulations; the company's ability to
recognize the anticipated benefits of the transaction; the amount
of the costs, fees, expenses and other charges related to the
transaction; the risks related to diverting management's attention
from the company's ongoing business operations; the merger
agreement may be terminated in circumstances that would require the
company to pay Oceanwide a fee; the company's ability to attract,
recruit, retain and motivate current and prospective employees may
be adversely affected; and disruptions and uncertainty relating to
the transaction, whether or not it is completed, may harm the
company's relationships with its employees, customers,
distributors, vendors or other business partners, and may result in
a negative impact on the company's business;
- strategic risks in the event the proposed transaction with
Oceanwide is not consummated including: the company's inability
to successfully execute alternative strategic plans to effectively
address its current business challenges (including with respect to
its U.S. life insurance businesses, debt obligations, cost savings,
ratings and capital); the company's ability to continue to sell
long term care insurance policies; the company's inability to
attract buyers for any businesses or other assets it may seek to
sell, or securities it may seek to issue, in each case, in a timely
manner and on anticipated terms; failure to obtain any required
regulatory, stockholder and/or noteholder approvals or consents for
such alternative strategic plans, or the company's challenges
changing or being more costly or difficult to successfully address
than currently anticipated or the benefits achieved being less than
anticipated; inability to achieve anticipated cost-savings in a
timely manner; and adverse tax or accounting charges; and the
company's ability to increase the capital needed in its businesses
in a timely manner and on anticipated terms, including through
improved business performance, reinsurance or similar transactions,
asset sales, securities offerings or otherwise, in each case as and
when required;
- risks relating to estimates, assumptions and valuations
including: inadequate reserves and the need to increase reserves
(including as a result of any changes the company may make in the
future to its assumptions, methodologies or otherwise in connection
with periodic or other reviews); risks related to the impact of the
company's annual review of assumptions and methodologies related to
its long term care insurance claim reserves and margin reviews,
including risks that additional information obtained in the future
or other changes to assumptions or methodologies materially affect
margins; inaccurate models; deviations from the company's estimates
and actuarial assumptions or other reasons in its long term care
insurance, life insurance and/or annuity businesses; accelerated
amortization of deferred acquisition costs (DAC) and present value
of future profits (PVFP) (including as a result of any future
changes it may make to its assumptions, methodologies or otherwise
in connection with periodic or other reviews); adverse impact on
the company's financial results as a result of projected profits
followed by projected losses (as is currently the case with its
long term care insurance business); adverse impact on the company's
results of operations, including the outcome of its annual review
of the premium earnings pattern for its mortgage insurance
businesses; and changes in valuation of fixed maturity and equity
securities;
- risks relating to economic, market and political
conditions including: downturns and volatility in global
economies and equity and credit markets; interest rates and changes
in rates (particularly given the historically low interest rate
environment) have adversely impacted, and may continue to
materially adversely impact, the company's business and
profitability; deterioration in economic conditions or a decline in
home prices that adversely affect the company's loss experience in
mortgage insurance; political and economic instability or changes
in government policies; and fluctuations in foreign currency
exchange rates and international securities markets;
- regulatory and legal risks including: extensive
regulation of the company's businesses and changes in applicable
laws and regulations (including changes to tax laws and
regulations); litigation and regulatory investigations or other
actions; dependence on dividends and other distributions from the
company's subsidiaries (particularly its international
subsidiaries) and the inability of any subsidiaries to pay
dividends or make other distributions to the company, including as
a result of the performance of its subsidiaries and insurance,
regulatory or corporate law restrictions; adverse change in
regulatory requirements, including risk-based capital; changes in
regulations adversely affecting the company's international
operations; inability to continue to maintain the private mortgage
insurer eligibility requirements (PMIERs); inability of the
company's U.S. mortgage insurance subsidiaries to meet minimum
statutory capital requirements and hazardous financial condition
standards; the influence of Federal National Mortgage Association
(Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac)
and a small number of large mortgage lenders on the U.S. mortgage
insurance market and adverse changes to the role or structure of
Fannie Mae and Freddie Mac; adverse changes in regulations
affecting the company's mortgage insurance businesses; inability to
continue to implement actions to mitigate the impact of statutory
reserve requirements; impact of additional regulations pursuant to
the Dodd-Frank Wall Street Reform and Consumer Protection Act;
changes in tax laws; and changes in accounting and reporting
standards;
- liquidity, financial strength ratings, credit and
counterparty risks including: insufficient internal sources to
meet liquidity needs and limited or no access to capital (including
the ability to obtain further financing under an additional secured
term loan or credit facility); future adverse rating agency
actions, including with respect to rating downgrades or potential
downgrades or being put on review for potential downgrade, all of
which could have adverse implications for the company, including
with respect to key business relationships, product offerings,
business results of operations, financial condition and capital
needs, strategic plans, collateral obligations and availability and
terms of hedging, reinsurance and borrowings; defaults by
counterparties to reinsurance arrangements or derivative
instruments; defaults or other events impacting the value of the
company's fixed maturity securities portfolio; and defaults on the
company's commercial mortgage loans or the mortgage loans
underlying its investments in commercial mortgage-backed securities
and volatility in performance;
- operational risks including: inability to retain,
attract and motivate qualified employees or senior management;
ineffective or inadequate risk management in identifying,
controlling or mitigating risks; reliance on, and loss of, key
customer or distribution relationships; competition, including in
the company's mortgage insurance businesses from government and
government-owned and government-sponsored enterprises (GSEs)
offering mortgage insurance; the design and effectiveness of its
disclosure controls and procedures and internal control over
financial reporting may not prevent all errors, misstatements or
misrepresentations; and failure or any compromise of the security
of the company's computer systems, disaster recovery systems and
business continuity plans and failures to safeguard, or breaches
of, its confidential information;
- insurance and product-related
risks including: the company's inability to
increase sufficiently, and in a timely manner, premiums on in force
long term care insurance policies and/or reduce in force benefits,
and charge higher premiums on new policies, in each case, as
currently anticipated and as may be required from time to time in
the future (including as a result of the company's failure to
obtain any necessary regulatory approvals or unwillingness or
inability of policyholders to pay increased premiums), including to
offset any negative impact on the company's long term care
insurance margins; failure to sufficiently increase new sales for
the company's long term care insurance products; availability,
affordability and adequacy of reinsurance to protect the company
against losses; inability to realize anticipated benefits of the
company's rescissions, curtailments, loan modifications or other
similar programs in its mortgage insurance businesses; premiums for
the significant portion of the company's mortgage insurance risk in
force with high loan-to-value ratios may not be sufficient to
compensate the company for the greater risks associated with those
policies; decreases in the volume of high loan-to-value mortgage
originations or increases in mortgage insurance cancellations;
increases in the use of alternatives to private mortgage insurance
and reductions in the level of coverage selected; potential
liabilities in connection with the company's U.S. contract
underwriting services; and medical advances, such as genetic
research and diagnostic imaging, and related legislation that
impact policyholder behavior in ways adverse to the company;
- other risks including: occurrence of natural or
man-made disasters or a pandemic; impairments of or valuation
allowances against the company's deferred tax assets; the
possibility that in certain circumstances the company will be
obligated to make payments to General Electric Company (GE) under
the tax matters agreement with GE even if its corresponding tax
savings are never realized and payments could be accelerated in the
event of certain changes in control; and provisions of the
company's certificate of incorporation and bylaws and the tax
matters agreement with GE may discourage takeover attempts and
business combinations that stockholders might consider in their
best interests; and
- risks relating to the company's common
stock including: the continued suspension of payment of
dividends; and stock price fluctuations.
The company undertakes no obligation
to publicly update
any forward-looking statement, whether as a
result of new information, future
developments or otherwise.
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SOURCE Genworth Financial, Inc.