Virginia suggests NY conditions in Oceanwide-Genworth deal okay

UPDATE Jan. 14, 2019: New York regulators gave the go-ahead after the market closed, with expected cyber-related conditions, clearing the merger by all U.S. entities. Approvals by Canadian  and Chinese regulators remain.

Jan. 11, 2019, Virginia —

Virginia insurance regulators approved anew the long-pending China Oceanwide Holdings Group Ltd. acquisition of Genworth Financial on Jan. 11, as the deal cleared another hurdle.

The Friday afternoon letter okaying the tie-up suggested that the chief condition New York will hold the transition to is cybersecurity and data protection, a measure in line with the Empire State’s recent approvals of  health insurance and pharmacy benefit manager megadeals.

The Virginia State Corporation Commission, Bureau of Insurance letter, written Insurance Commissioner Scott White to Oceanwide’s lawyers,  sayss Genworth must adhere to New York’s governing financial services document on the protection of personally identifiable information and cybersecurity issues. White refers to a document “the terms of which have been agreed to as of the date hereof,” known as the NY Cybersecurity Conditions Letter. See: genworth-cow approval letter 20190111 signed

“The NY Cybersecurity Conditions Letter contains conditions that address concerns shared by the Bureau,” White wrote.

A spokesperson for the New York Department of Financial Services, which oversees both banking and insurance, did not return an inquiry on any pending approval or conditions or on the New York document.

At this time, an original approval is still needed in New York and from Canadian and Chinese regulators.

In addition to reapproval by Virginia, insurance regulators in North Carolina, South Carolina and Vermont also reapproved the proposed acquisition of control by Oceanwide of Genworth’s subsidiaries domiciled in those states, the long term care and mortgage insurer announced. The reapproval refers to a new approval after the companies filed proposed changes to the transaction after their initial approvals.

New York has not yet made an initial approval.

The parties also are subject to a National Security Agreement   by the U.S. Departments of Justice and Treasury and have a third party administrator to handle personally identifiable information.

China Oceanwide has pledged to contribute $1.5 billion to Genworth under a capital investment plan as part of the transaction.  The long term care insurer has about $29 billion in LTC reserves , according to Evercore ISIS analysts.

China Oceanwide is positioned to move forward with the rest of the regulatory processes in its own country, where it needs approval from the State Administration of Foreign Exchanges (SAFE)  of the People’s Republic of China.

China Oceanwide amended and added to its original Form A change of control filing  as recently as Nov. 8, 2018 in Virginia with supplemental information. The deal was first publicly announced in late October 2016, with Oceanwide agreeing to pay $5.43 per share in cash. 

In November, Genworth and Oceanwide again extended their termination agreement date, this time to Jan.31, pending regulatory approvals.

 

E. Festa @news_liz

 

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