WASHINGTON (dpa-AFX) - Genworth Financial Inc. (GNW) responded to the final Private Mortgage Insurer Eligibility Requirements or PMIERs, which were published by the Government Sponsored Enterprises or 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.
The 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 and current affiliate asset valuation.
The estimate does not reflect 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 indicated, 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.
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