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April 4, 2013 /PRNewswire/ -- Genworth U.S. Mortgage Insurance (USMI), a unit of Genworth Financial, Inc. (NYSE: GNW), today announced it has agreed to settle with the Consumer Financial Protection Bureau (CFPB) to end the agency's review of industry captive reinsurance arrangements. As part of the settlement, Genworth will pay
$4.5 million and, along with other mortgage insurance companies, refrain from certain reinsurance arrangements for a period of 10 years. The settlement will be recorded in the first quarter of 2013, and is not anticipated to have a significant impact on Genworth USMI financial results. With this settlement, the CFPB did not make any findings or determinations that Genworth or any other company violated any law.
Genworth USMI issued the following statement on reaching the agreement:
"Genworth USMI agreed to settle this review so we can focus our resources on working with customers to help borrowers responsibly achieve and maintain homeownership, and to resolve the uncertainties inherent in such a review and any possible resulting litigation," said
Rohit Gupta, president and chief executive officer of USMI.
"When Genworth USMI developed its captive reinsurance arrangements, it received guidance from the Department of Housing and Urban Development (HUD), which previously had responsibility for this area. HUD indicated that these arrangements are permissible if certain requirements are met. Genworth followed the guidance, and had the arrangements tested by independent third parties to verify that the HUD requirements were met. Further, consumers paid the same amount for the underlying insurance whether or not their loan was part of a captive reinsurance arrangement."
"Private mortgage insurers paid more than
$40 billion, several billion of which came from lender-affiliated reinsurance companies, to offset losses from defaulted mortgage loans during and after the financial crisis, providing much-needed liquidity and capital to help support the housing industry during the most severe crisis since the Great Depression," Gupta said.
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a leading Fortune 500 insurance holding company dedicated to helping people secure their financial lives, families and futures. Genworth has leadership positions in offerings that assist consumers in protecting themselves, investing for the future and planning for retirement -- including life insurance, long term care insurance, financial protection coverages, and independent advisor-based wealth management -- and mortgage insurance that helps consumers achieve home ownership while assisting lenders in managing their risk and capital.