Shares of the Richmond, Va., company at last check dropped 25% to $2.85.
"Given uncertainty around the completion and timing of the remaining steps required to close the transaction, Genworth and China Oceanwide have not extended the current Dec. 31, 2020 'end date' under the merger agreement," the company said in a statement.
“When we considered our most recent extensions of the merger agreement, Genworth’s board of directors believed we were on a path to a near-term closing based on the information we were provided,” James Riepe, Genworth’s non-executive chairman, said.
“Given the most recent update, we do not believe a closing can occur in the near term. Thus, the management team will fully focus its efforts on executing our contingency plan," he added.
Lu Zhiqiang, chairman of Oceanwide, added: "We believe the value of the transaction is significant for both parties' stakeholders, and are continuing to work towards completing the transaction with Genworth."
Oceanwide said finalizing the Hony Capital financing terms and restrictions related to the coronavirus pandemic have contributed to the delay in closing the deal.
Both companies have said they would continue to work toward closing the transaction.
In 2016 Genworth agreed to sell itself to the investment firm China Oceanwide as persistently low-interest rates and rising costs hobbled its business. The deal was valued at $2.7 billion.
Genworth, one of the country's largest mortgage insurers, said it would focus on a potential partial IPO of its mortgage business in the U.S.
The IPO is designed to meet its near-term liabilities of $1 billion due this year.
An IPO would be subject to market conditions as well as the satisfaction of various conditions and approvals, the company said.
The contingency plan also addresses the need to further align the Company's expense structure with its business activities.