This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Genworth Financial Announces Comprehensive U.S. Mortgage Insurance Capital Plan

Under the capital plan, ownership of the European mortgage insurance subsidiaries will be moved under GMICO. These subsidiaries will provide approximately $200 million in additional statutory capital to GMICO. This transfer has received regulatory approval and the company anticipates completing the transfer during the first quarter of 2013.

"NewCo" Option

Genworth also has obtained requisite GSE (Government Sponsored Enterprise) approvals to implement a "NewCo" type structure which would allow for the continued writing of new business in all 50 states. The future option would be implemented if certain unanticipated adverse conditions were to occur, such as an elevated risk-to-capital level, revocation of the regulatory risk-to-capital waivers, or reduction in market share thresholds. If a new U.S. mortgage insurance company is created pursuant to this option, it will have no legacy obligation to GMICO. At the time of formation, "NewCo" would be subject to GSE eligibility guidelines and capital requirements and would allow access to third party funding sources. As part of this plan, Genworth has agreed to contribute $100 million of cash to GMICO.  Genworth also agreed to contribute another $100 million in the event that GMICO were to enter into a deferred payment order with the North Carolina Department of Insurance or if projections indicate that GMICO may not have sufficient resources to pay valid claims.  Genworth will also guarantee that, between October 1, 2012 and June 30, 2017, GMICO will receive, in the normal course, $150 million from dividends from currently owned affiliate securities and deferred tax asset utilization. Given these obligations are intended to be funded through normal operations, the guarantee is not expected to have a material impact on Genworth. GMICO received from affiliates an estimated $60 million in dividends and tax benefits during 2012. In the event that the "NewCo" option is implemented, its implementation will require requisite state regulatory approvals, and is contingent upon Genworth and GMICO meeting their respective obligations pursuant to the approvals granted by the GSEs. The company believes the events that would result in the potential "NewCo" implementation are unlikely to occur and expects to continue to write new business out of GMICO for the foreseeable future.

"One of Global Mortgage Insurance's strategic priorities was maintaining the ability to write new profitable business in U.S. Mortgage Insurance while focusing on a return to profitability," said Kevin D. Schneider, president of Genworth's Global Mortgage Insurance Division. "The ability to implement the "NewCo" option, if necessary, benefits Genworth, our investors and customers by providing an additional layer, along with our continued GMICO waivers and use of Genworth Residential Mortgage Assurance Corporation (GRMAC), that will ensure our continued ability to write profitable new business."

Internal Legal Entity Reorganization

2 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs