RICHMOND, Va., July 10, 2014 /PRNewswire/ -- Genworth Financial, Inc. (NYSE: GNW) today responded to the draft Private Mortgage Insurance Eligibility Requirements released by the government sponsored enterprises (GSEs). The company appreciates this thorough effort to increase the financial strength of the private mortgage insurance industry and reinforce the vital role of private mortgage insurance in the U.S. housing finance system. The company will work with the Federal Housing Finance Administration (FHFA) and GSEs over the 60 day public comment period in an effort to make appropriate refinements before the guidelines are finalized. The guidelines, as drafted, contemplate an effective date for compliance 180 days after the final publication date, which is anticipated to be on or about year-end 2014. Additionally, the guidelines permit a transition period, subject to GSE approval, of two years from the publication date to meet the required capital levels.
"U.S. Mortgage Insurance (U.S. MI) is one of Genworth's core businesses, and we expect the business to be a significant contributor to Genworth's results in the future," said Tom McInerney, president and chief executive officer. "We intend to meet the additional capital requirements for U.S. MI by the anticipated effective date of June 30, 2015, depending on the availability of the capital and reinsurance markets, the performance of our businesses or other unforeseen developments. We will utilize the transition period as approved by the FHFA and GSEs if we do not comply by the anticipated effective date. We are confident that Genworth and our U.S. MI business are well-positioned to meet the draft version of these guidelines within the prescribed transition period and fully expect the business to maintain its strong presence in the private mortgage insurance market. These guidelines are multi-faceted and we expect the review and compliance process to be a significant undertaking for the GSEs, the industry, and other key constituents."
Based on our current views of the housing market, expected U.S. MI earnings and capital generation, anticipated prepayment of our in-force portfolio in the ordinary course, the amount and loan characteristics of new U.S. MI business anticipated to be written and the $300 million previously set aside, the company's preliminary estimate of the additional capital required to be fully compliant assuming an effective date of June 30, 2015 will be between $450 to $550 million and will decrease to less than $175 million by December 31, 2016. The company will have a variety of additional capital sources that could be utilized to satisfy capital requirements, including but not limited to: available deferred tax assets; reinsurance transactions; proceeds from the completed Australian IPO; and proceeds from the issuance of securities at the Genworth Financial and/or the Genworth Holdings levels. After the guidelines become final, the company will provide more details around its plans to comply with Private Mortgage Insurance Eligibility Requirements including sources and timing of invested capital.
Subsequent to the first quarter, the $300 million that was being held at Genworth Mortgage Holdings, LLC was contributed to Genworth Mortgage Insurance Corporation (GMICO). This contribution would have favorably impacted GMICO's risk-to-capital ratio, which under the current framework was 18.4:1, as of March 31, 2014, by approximately four points.
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 comply with guidelines released 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, 2013, filed with the Securities and Exchange Commission on March 3, 2014. The amount of additional capital that will be required is dependent on, among other things: (i) the extent the guidelines as ultimately adopted differ materially from the draft released today, including with respect to the amount and timing of additional capital requirements and the amount of capital credit provided to various types of assets, and (ii) the application and interpretation of the guidelines by the GSEs and FHFA as they are implemented. The ability of the company to meet the final guidelines is subject to the foregoing factors, as well as, among other things: (i) the approval by the GSEs of the company's transition plan to meet financial requirements, if applicable, (ii) the housing market developing consistent with the company's current expectations, (iii) the company generating expected U.S. MI earnings and capital levels, reducing risk in force and reducing delinquencies as anticipated, and writing anticipated amounts and types of new U.S. MI business, (iv) other sources of funding currently considered being available on the terms currently contemplated or at all and (v) the company's overall financial performance, capital and liquidity being as anticipated.
We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.
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, and financial protection coverages -- and mortgage insurance that helps consumers achieve home ownership while assisting lenders in managing their risk and capital.
Genworth operates through three divisions: U.S. Life Insurance, which includes life insurance, long term care 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.
SOURCE Genworth Financial, Inc.
