Genworth Canada is a residential mortgage insurer, which caters to residential mortgage lenders across Canada with mortgage default insurance solutions
Brookfield Business Partners and its institutional partners have secured approval from the Canadian regulator for the acquisition of a stake of about 57% in Genworth MI Canada (Genworth Canada) from Genworth Financial for about CAD2.4bn ($1.81bn).
The approval was granted under the Insurance Companies Act (Canada).
Brookfield and Genworth Financial said that they have now received all the regulatory approvals required for wrapping up the deal this week.
Genworth Canada is Genworth Financial’s Canadian mortgage insurance subsidiary. It is a residential mortgage insurer, which caters to residential mortgage lenders across Canada with mortgage default insurance solutions, thereby claiming to make homeownership more accessible to first-time homebuyers.
The mortgage insurer, as of 30 September 2019, had CAD7.1bn ($5.37bn) total assets and CAD4bn ($3.02bn) shareholders’ equity.
In August 2019, Genworth Financial agreed to sell the business to boost the chances of closing its own acquisition by China Oceanwide for $2.7bn as announced in October 2016. Oceanwide’s acquisition of Genworth Financial was originally expected to be completed in 2017 but had been delayed because of regulatory issues.
In July 2019, Oceanwide and Genworth Financial agreed to extend their proposed merger apart from deciding to seek alternatives for the latter’s Canadian residential mortgage business.
The Genworth Canada deal was reviewed due to concerns over customer data protection
The Genworth Canada deal also faced regulatory hurdles after Canadian regulators began a review into it in October 2019 citing concerns on customer data protection. Genworth Financial at that time revealed that the regulators were focusing on national security matters, including data protection and protection of the business’ customers’ information.
The regulators were particularly studying the impact on the continued protection of Canadian customer data caused by the deal. According to Genworth Financial, the concern pertains to the period after the closing of the deal when the former will be giving certain transition services to Genworth Canada before exiting from its information technology platforms.
Genworth Financial at that time said that it was working along with Brookfield Business Partners to assure the Canadian regulators that information of its customers is protected appropriately.