RICHMOND, Va., April 17, 2015 /PRNewswire/ -- Genworth Financial, Inc. (NYSE: GNW) responded to the final Private Mortgage Insurer Eligibility Requirements (PMIERs), which were published today by the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, in conjunction with the Federal Housing Finance Agency. PMIERs will be used by the GSEs to approve private mortgage insurers that provide mortgage insurance on loans acquired by them.
Based on its interpretation of the final PMIERs, the company still estimates $500 to $700 million of additional capital will be required to be fully compliant by the effective date. This estimate is based on a number of factors including the company's view of market size and dynamics, planned internal restructuring within U.S. Mortgage Insurance (U.S. MI) and current affiliate asset valuation. The estimate does not reflect today's announcement of changes to GSE fees (loan level pricing adjustments and adverse market fees), the impact of which the company is still evaluating. The final PMIERs lowered the level of required capital from that contained in the draft requirements, primarily benefiting legacy books of business, and also lowering the benefit from captive reinsurance treaties. Additionally, this estimate reflects reductions in affiliate asset valuation due to changes in market value, currency fluctuations and the finalization of the PMIERs.
The company still intends to comply with the final PMIERs by the effective date, which is now December 31, 2015. Although the company continues to pursue reinsurance transactions, the lower capital requirements on legacy books of business impact the evaluation of the mix of appropriate sources of capital, which include both reinsurance and holding company cash. As previously disclosed, the company is reviewing a broad range of strategic options that it believes will improve its ability to reduce debt levels, increase capital buffers and improve/grow earnings.
"The finalization of the eligibility standards is a significant step toward increasing the financial strength of the U.S. housing finance system and reinforces the vital role of private mortgage insurance," said Tom McInerney, President and CEO. "Our U.S. Mortgage Insurance business is well positioned to not only build upon its already strong presence in the private mortgage insurance market but also to expand the role that private mortgage insurance plays in the housing finance system."
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a leading Fortune 500 insurance holding company committed to helping families become more financially secure, self-reliant and prepared for the future. Genworth has leadership positions in long term care insurance and mortgage insurance and competitive offerings in life insurance and fixed annuities that assist consumers in solving their insurance, retirement and home ownership needs.
Genworth operates through three divisions: U.S. Life Insurance, which includes long term care insurance, life insurance and fixed annuities; Global Mortgage Insurance, containing U.S. Mortgage Insurance and International Mortgage Insurance segments; and the Corporate and Other Division, which includes the International Protection and Runoff segments. Products and services are offered through financial intermediaries, advisors, independent distributors and sales specialists. Genworth headquartered in Richmond, Virginia, traces its roots back to 1871 and became a public company in 2004. For more information, visit genworth.com. From time to time, Genworth releases important information via postings on its corporate website. Accordingly, investors and other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds regarding new postings. Enrollment information is found under the "Investors" section of genworth.com. From time to time, Genworth's publicly traded subsidiaries, Genworth MI Canada Inc. and Genworth Mortgage Insurance Australia Limited, separately release financial and other information about their operations. This information can be found at http://genworth.ca and http://www.genworth.com.au.
Cautionary Note Regarding Forward-Looking Statements
This press release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as "projects," "expects," "intends," "anticipates," "plans," "believes," "seeks," "estimates," "will," "are confident" or words of similar meaning and include, but are not limited to, statements regarding the outlook for our future business and financial performance and our ability to meet revised private mortgage insurer eligibility requirements established by the GSEs and FHFA. Forward-looking statements are based on management's current expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially due to global political, economic, business, competitive, market, regulatory and other factors and risks, including the items identified under "Part I -- Item 1A -- Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on March 2, 2015. The amount of additional capital that will be required by our U.S. mortgage insurance business to meet the revised GSE eligibility requirements is dependent upon, among other things: (i) the way the eligibility requirements are applied and interpreted by the GSEs and FHFA as and after they are implemented; (ii) the future performance of the U.S. housing market; (iii) our generating and having expected U.S. mortgage insurance business earnings, available assets and risk-based required assets (including as they relate to the value of the shares of our Canadian mortgage insurance subsidiary that are owned by our U.S. mortgage insurance business as a result of share price and foreign exchange movements or otherwise), reducing risk in-force and reducing delinquencies as anticipated, and writing anticipated amounts and types of new U.S. mortgage insurance business; (iv) our ability to complete, in a timely manner, certain internal restructuring steps within our U.S. Mortgage Insurance business, some of which require GSE and/or regulatory approvals; and (v) our projected overall financial performance, capital and liquidity levels being as anticipated. Our ability to meet the additional capital requirements is subject to the foregoing factors and also dependent upon, among other things: (i) our ability to complete reinsurance transactions on our anticipated terms and timetable, which are subject to market conditions, third-party approvals and other actions (including approval by regulators), and other factors which are outside of our control; (ii) our ability to successfully develop and execute strategic options currently under review and the timing and terms of implementation, which may be subject to market conditions, third-party approvals (including approval by regulators) and other actions and factors that are outside of our control; (iii) our ability to contribute holding company cash or other sources of capital to satisfy the portion of the additional capital requirements that are not satisfied through reinsurance transactions; and (iv) the approval by the GSEs of the company's application to meet the financial requirements by the conclusion of the transition period, if such application is pursued by the company. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.
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SOURCE Genworth Financial, Inc.