Genworth subpoenaed by SEC in finite probe
May 12, 2005
SAN FRANCISCO (MarketWatch) -- Genworth Financial Inc. said Thursday that it was subpoenaed by the Securities and Exchange Commission as part of the agency's investigations of finite reinsurance."
Genworth said it conducted an initial review of its reinsurance arrangements early in the fourth quarter of 2004 and did not identify issues of concern.
"In light of recent market events, the evolving nature of insurance industry examinations, as well as the receipt of the subpoena, Genworth will continue its review as it cooperates with the SEC," the company said in a statement.
Genworth shares slipped 6 cents to $27.90 in morning trading Thursday.
Genworth (GNW), the majority of which was sold by General Electric Co. (GE) in an initial public offering last year, is the latest insurer to get such a request. Chubb Corp. (CB) said Wednesday that it received a similar subpoena.
There is no clear definition of finite reinsurance, but generally it's a blend traditional reinsurance and financing. The products are usually purchased by other insurers looking to protect themselves against the financial risk of future liabilities.
Regulators including New York Attorney General Eliot Spitzer and the SEC are investigating whether companies have used finite reinsurance to manipulate their financial statements.
The probes precipitated the departure of longtime American International Group (AIG) CEO Maurice "Hank" Greenberg in March and forced the giant insurer to admit to a series of accounting improprieties that could wipe $2.7 billion, or 3.3%, off its net worth.