RICHMOND, Va., Oct. 23, 2016 /PRNewswire/ -- Genworth
Financial, Inc. (NYSE: GNW) today announced preliminary charges for
the third quarter of 2016. During the quarter, the company
completed its annual review of assumptions and methodologies
related to its LTC claim reserves. Based on this review, which
included an additional year of claims experience since the last
annual review in the third quarter of 2015, the company updated
several assumptions and methodologies related to LTC claim
reserves. The updates included the following:
- Reflected differences in claim termination rate assumptions
between product types and daily benefit amounts;
- Reduced claim termination rate assumptions for longer duration
claims for certain product types;
- Modestly refined utilization rate assumptions; and
- Refined methodology primarily related to the calculation of
incurred but not reported reserves to better reflect the aging of
the block.
As a result of this review, the company expects to increase LTC
claim reserves by approximately $400 to $450
million pre-tax resulting in an after-tax charge to earnings
of $260 to $300 million for the third quarter. These results
are currently being reviewed both internally and by a third party
actuarial firm. The final results will be released in conjunction
with the company's release of its third quarter results.
Additionally, the company anticipates the updated claim
reserves assumptions will impact our margins. The company
expects that future rate action plans and other management
actions will help mitigate the anticipated impact. The net
impact on margins is not known at this time, as the analysis and
work will be completed in the fourth quarter.
In light of the company's latest financial projections,
including the projected impact to current and future earnings
associated with higher expected claim costs in LTC and sustained
low interest rates, the company also expects to record a non-cash
charge of $275 to $325 million
primarily related to deferred tax assets that are not expected to
be utilized before their expiration.
Separately, China Oceanwide Holdings Group Co., Ltd. ("China
Oceanwide") and Genworth today announced that they have entered
into a definitive agreement under which China Oceanwide has agreed
to acquire all of the outstanding shares of Genworth for a total
transaction value of approximately $2.7
billion, or $5.43 per share in
cash, subject to approval by Genworth's stockholders as well as
other closing conditions, including the receipt of required
regulatory approvals.
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.
Conference Call
Genworth will conduct a 30-minute conference call
on November 4, 2016 at 8 a.m. (ET) to discuss
the quarter's financial results. The conference call will be
accessible via telephone and the Internet. The dial-in number for
the conference call is 877 888.4034 or 913 489.5101 (outside the
U.S.); conference ID # is 3198608. To participate in the call by
webcast, register at http://investor.genworth.com at
least 15 minutes prior to the webcast to download and install any
necessary software.
Replays of the call will be available through November 18,
2016 at 888 203.1112 or 719 457.0820 (outside the U.S.);
conference ID # 3198608. The webcast will also be archived on the
company's website.
Cautionary Note Regarding Forward-Looking
Statements
Reform Act of 1995. Forward-looking statements may be identified
by words such as "expects," "intends," "anticipates," "plans,"
"believes," "seeks," "estimates," "will," "may," or words of
similar meaning and include, but are not limited to, statements
contained herein regarding estimated reserve charges, the impact of
the updated claim reserves assumptions on our margins, plans to
seek further rate actions or other management actions and the
mitigating impact of such plans or actions, the net impact on
margins following our fourth quarter review, and the proposed
transaction with China Oceanwide.
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 due to a number of factors, risks and uncertainties,
including, but not limited to additional information obtained in
finalizing our third and fourth quarter reviews or changes to our
estimates, assumptions or methodologies that materially affect the
estimated charges or the impact on margins; the magnitude of
impact of the updated claim reserves assumptions on our
margins and our ability to offset this impact with future rate or
other management actions, including limits on our ability to
include future expected rate actions in our fourth quarter active
life margins review; the ability to receive required regulatory
approvals in connection with any future rate or other management
actions; satisfying the closing conditions to China Oceanwide's
proposed acquisition of Genworth in the anticipated time frame or
at all, including failure to obtain applicable regulatory approvals
or stockholder approval or to satisfy other closing conditions for
the proposed acquisition; the impact on our liquidity, financial
strength ratings, credit and counterparties, our operations and our
products; other global political, economic, business, competitive,
market and regulatory factors, risks and uncertainties; and the
items identified under "Part I—Item 1A—Risk Factors" of our Annual
Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and
Exchange Commission on February 26,
2016.
We undertake 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.