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Genworth CEO says new merger application addresses data security issues

Genworth Financial Inc.'s resubmitted merger application related to its long-delayed tie-up with China Oceanwide Holdings Group Co. Ltd. attempts to appease U.S. regulators' concerns with a provision for independent data security, according to President and CEO Thomas McInerney.

Based on observations from other deals reviewed by the Committee on Foreign Investment in the U.S., Genworth thought it important to beef up proposed data security for policyholders as part of the new application, McInerney said during an earnings conference call. The company previously emphasized data security for the private information of its life and U.S. mortgage insurance businesses in its discussions and filings with CFIUS concerning the deal. But Genworth decided to go a step further when the parties resubmitted their application, McInerney said.

"We think this new structure with a prominent U.S. third-party data security administrator makes our mitigation plan much stronger," he said. The data security plan is unique among the deals CFIUS has reviewed recently, the CEO added.

Negotiations with CFIUS are confidential, and Genworth executives declined to answer several questions during the call about federal and state regulatory reviews. Among the matters on which company leadership would not elaborate was the specific difference between its valuation of Genworth Life & Annuity Insurance Co. and the value the Delaware Department of Insurance wants to assign to the business, which McInerney believes is higher. Genworth Financial's price of about $700 million is based on the valuation the company received while shopping the unit around in 2015 and an update with suitors in 2016, McInerney said.

Management also would not disclose which of its business properties it would secure for the debt transaction with which the company plans to finance $600 million in debt that will be due in May.