RICHMOND, Va., Jan. 16, 2013 /PRNewswire/ -- Genworth Financial, Inc. (NYSE: GNW) today announced a comprehensive U.S. Mortgage Insurance capital plan that, when implemented, will reduce Genworth Mortgage Insurance Company's (GMICO), the company's main U.S. mortgage insurance subsidiary, risk-to-capital by 12 to 15 points, decrease the likelihood that the U.S. mortgage insurance subsidiaries will require additional capital for the foreseeable future, ensure the continued ability to write new business and reduce the risk of a default under the indenture governing Genworth's senior notes.
The capital plan consists of several actions, some of which are still subject to regulatory approval: (1) transferring ownership of the European mortgage insurance subsidiaries to GMICO; (2) enabling the future option, under certain adverse conditions, should they occur, to implement a "NewCo" type structure, for the continued writing of new business in all 50 states; and (3) implementing an internal legal entity reorganization which creates a new holding company structure that will remove the U.S. mortgage insurance subsidiaries from the companies covered by the indenture governing Genworth's senior notes. Genworth will also contribute $100 million to GMICO as part of the comprehensive capital plan, anticipated to occur in the second quarter of 2013. The company anticipates the combined risk-to-capital ratio of the U.S. mortgage insurance subsidiaries will be reduced by 8 to 10 points from this plan. Cash and highly liquid securities at the holding company totaled approximately $1.0 billion as of December 31, 2012.
"We are very pleased to announce a comprehensive plan for the U.S. mortgage insurance business which reduces linkages and dependencies with the holding company and increases our financial flexibility while bolstering capital in the business," said Martin P. Klein, chief financial officer. "U.S. mortgage insurance is a key component of our Global Mortgage Insurance Division, and we believe implementation of this plan will increase shareholder value by continuing our ability to write profitable new business while at the same time reducing uncertainties related to our U.S. mortgage insurance subsidiaries."
Key Components Of Capital PlanContribution Of European Mortgage Insurance Subsidiaries