RICHMOND, Va., Sept. 30, 2015 /PRNewswire/ -- Genworth Financial, Inc. (NYSE: GNW) (the company or Genworth) announced today that Genworth Life and Annuity Insurance Company, a wholly-owned indirect subsidiary of the company, has entered into an agreement to sell, via reinsurance, certain blocks of term life insurance to Protective Life Insurance Company. The majority of the term life insurance blocks included in this transaction are currently reinsured to River Lake Insurance Company and River Lake Insurance Company II, which previously had not been consolidated in the statutory financial statements of the U.S. life insurance companies. Genworth will continue to administer and service the policies, which represent approximately $108.7 billion of term life insurance in force backed by approximately $2.3 billion of statutory reserves as of June 30, 2015.
The transaction represents another step toward increasing Genworth's financial flexibility and strength by generating capital from low return blocks. The company expects to generate initial capital of approximately $100 to $150 million in aggregate to Genworth. The transaction will utilize all of the net operating losses in the U.S. life insurance companies resulting in expected inter-company tax payments over time to the holding company and other entities for the use of tax benefits. The impacts will likely be favorable for some legal entities and unfavorable for others and will vary based upon utilization of net operating losses and tax sharing arrangements, among other factors. In addition to the aggregate capital and tax benefits associated with the sale, the company anticipates a minimal impact to income and a modest improvement to return on equity. The company expects to record an after-tax GAAP loss of approximately $275 to $325 million in the third quarter of 2015 primarily related to the write-off of deferred acquisition costs associated with the term life insurance blocks being sold. The transaction is expected to close during the first quarter of 2016 and is subject to customary conditions, including requisite regulatory approvals. Genworth will provide further details regarding the transaction on its earnings conference call for the third quarter of 2015.
Goldman, Sachs & Co. acted as financial advisor to Genworth on this transaction.
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 mortgage insurance and long term care insurance and product offerings in life insurance and fixed annuities that assist consumers in solving their home ownership, insurance and retirement needs. To help families start "the talk" about their futures and long term care planning, Genworth recently completed the first stage of its national #LetsTalk Tour to encourage conversations and information sharing. Headquartered in Richmond, Virginia, Genworth 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 "expects," "intends," "anticipates," "plans," "believes," "seeks," "estimates," "will," or words of similar meaning and include, but are not limited to, statements regarding the proposed transaction and its anticipated financial impact. The proposed transaction remains subject to certain closing conditions, including regulatory approvals, and the company cannot predict with certainty whether or when this transaction will close or what the actual financial impact will be. 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 (SEC) on March 2, 2015 and as updated in Genworth's quarterly reports on Form 10-Q filed with the SEC on April 29, 2015 and August 5, 2015.
We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.
SOURCE Genworth Financial, Inc.