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December 20, 2012
09:46 EDTGNWGenworth sees $80M benefit to Q4 GAAP net income from Canadian act
Genworth Financial's Canadian subsidiary, Genworth MI Canada, reported the anticipated financial impact, under International Financial Reporting Standards, from the implementation of the Protection of Residential Mortgage or Hypothecary Insurance Act, or PRMHIA, effective on January 1, 2013. PRMHIA establishes a legislative framework that replaces the current Government Guarantee Agreement. While there is no change in the level of the Government Guarantee to MIC under PRMHIA, it does eliminate the Government Guarantee Fund and related exit fees in favor of a higher regulatory capital target set by Canada's Minister of Finance. When PRMHIA is implemented, the elimination of the Government Guarantee Fund will increase MIC's regulatory capital available, which is expected to be predominately offset by an increase in its required capital. The implementation of this legislation is positive and will strengthen Genworth MI Canada's claim paying ability. Under U.S. Generally Accepted Accounting Principles, or GAAP, Genworth Financial expects a benefit of approximately $80M in 4Q12 to its net income from the reversal of the accrued liability for exit fees associated with this change to the Government Guarantee Agreement. Genworth Financial's current year portion of the exit fee accrual for the business through September 30 was approximately $8M. There are no other significant impacts anticipated on GAAP results or U.S. statutory capital levels, Genworth said.
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September 30, 2015
18:02 EDTGNWGenworth to sell certain blocks of term life policies to Protective Life
Genworth Financial announced 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 $108.7B of term life insurance in force backed by approximately $2.3B of statutory reserves as of June 30. 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 $100M-$150M 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 $275M-$325M 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.

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