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Genworth Insurance Review 2017

Life Insurance

Headquartered in Richmond, Virginia, Genworth Financial Inc. is a Fortune 500 company focused on providing long-term care insurance, private mortgage insurance and immediate annuities.

The company announced in October 2016 that it has agreed to sell itself to a Chinese holding company for $2.7 billion, or $5.43 per share in cash. The transaction, which must get approval from regulators and Genworth’s stockholders, is expected to close by mid-2017.

Where Genworth shines

  • It’s one of the country’s largest long-term care insurance providers.
  • It produces an annual state-by-state study of long-term care costs.

Where Genworth falls short

  • It no longer sells life insurance.
  • Standard & Poor’s rates the company’s financial strength BB-, or marginal, and Moody’s rates it Ba1, or questionable. Its financial strength rating from A.M. Best is B++, or good.
  • Company has struggled financially, leading to pending acquisition.

Focus on long-term care insurance

Genworth was among the 20 largest life insurance companies by market share until February 2016, when it announced that it was suspending sales of life insurance and fixed annuities as part of a restructuring effort.

The company remains a leading provider of long-term care insurance, which helps pay for assistance with routine daily activities at home or in nursing homes, adult day care centers and assisted living facilities.

Genworth produces an annual study of long-term care, which examines the median cost of services in various settings. The study provides national and state-by-state data, which can help with financial planning for long-term care.

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Genworth long-term care insurance

Other products

Besides long-term care insurance, Genworth provides private mortgage insurance and immediate annuities.

Sold through lenders, private mortgage insurance enables borrowers to qualify for home mortgages when they have down payments of less than 20%. The insurance protects the lender in case the borrower defaults on the loan. Borrowers pay for the insurance as part of their monthly mortgage payments.

Genworth launched the IncomeAssurance Immediate Need Annuity in 2016, a product designed for people 70 or older with health problems. A buyer pays a single lump sum to purchase the annuity, which provides a guaranteed monthly income stream until death. Buyers can use the income for anything, but the product is designed for people who need care and are worried about running out of money before they die.

Pending sale

After the acquisition, Genworth will be a standalone subsidiary of China Oceanwide Holdings Group Co. Ltd., headquartered in Beijing. Genworth’s senior managers will continue to lead the business from Richmond.

China Oceanwide is a privately held financial holding group, including operations in financial services, energy, culture, media and real estate.

In a letter announcing the pending sale, Genworth president and CEO Tom McInerney said the company does not expect the transaction to impact existing policies and that Genworth would “continue to fulfill all policy obligations.”

As part of the acquisition, China Oceanwide has agreed to contribute $1.1 billion to reduce Genworth’s debt and help the company complete restructuring its life insurance business.

“The China Oceanwide transaction is the result of an active and extensive review process conducted over the past two years under the supervision of the Board and with guidance from external financial and legal advisors,” James Riepe, Genworth’s non-executive board chairman, said in a statement announcing the sale agreement. “The board is confident that the sale of the company to China Oceanwide is the best path forward for Genworth’s stockholders.”