GENWORTH DISCLOSES $8.3BN IN CAPTIVE RESERVES

Virginia-based Genworth Financial disclosed in late December that its US and Bermudian reinsurance captives had assumed around $8.3bn of reserves from its main operating units at the end of 2012, with the bulk of the reserves tied to its long-term-care business. In correspondence with the US Securities and Exchange Commission, Genworth said that without the use of the captives the company would face “increased costs related to alternative financing, such as third-party reinsurance, and potential reductions in or discontinuance of new term or universal life-insurance sales”. Missouri-based Reinsurance Group of America also disclosed correspondence with the SEC over its use of captives. The company said that it “expects to continue its strategy of using captives to enhance its capital efficiency and competitive position”. State and federal regulators are weighing stricter oversight for captives out of concern that deals with the affiliates are designed to make parent companies’ reserve positions appear stronger than they actually are.