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Genworth Gets $450 Million Term Loan

News March 08, 2018 at 12:26 PM
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Thomas McInerney,, president and chief executive officer of Genworth Financial Inc., listens to a question during a Bloomberg Television interview in New York, U.S., on Friday, June 27, 2014. Thomas McInerney (Photo: Victor J. Blue/BB)

Genworth Financial Inc. has been able to borrow more money than it predicted it could in February.

The Richmond, Virginia-based insurer announced Wednesday that it has obtained a $450 million senior secured term loan from a "syndicate,' or group of lenders.

Genworth needs the cash from the loan to pay notes that will come due in May.

Genworth has been a leader in the markets for life insurance, annuities, long-term care insurance and mortgage insurance.

The company has pulled back from sales of life and annuity products, and slowed LTCI sales, because of concerns about how low interest rates and problems with the assumptions built into some of its products have have affected the performance of the products.

The company warned in February, in its annual financial report for 2017, that it might be able to borrow only $400 million, and that it was not certain that it could get the term loan.

The new term loan has a 5-year term and will pay an annual interest rate equal to 4.5 percentage points over the London Interbank Offered Rate, or LIBOR.

Lenders who provide cash through a "senior" loan can get paid before some other creditors if the borrower runs into problems with meeting obligations.

A "secured" loan is a loan backed by collateral, rather than by a general assumption that the borrower will make its payments. Genworth did not say in the announcement what collateral it used to secure the new loan.

China Oceanwide Holdings Group Co. Ltd. has been trying to acquire Genworth for more than a year. An affiliate provided $60 million in financing through the term loan syndicate. The China Oceanwide affiliate was the lead investor in the syndicate, Genworth says.

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