Genworth Financial announced that it has reached an agreement in principle to settle the previously disclosed action In re Genworth Financial, Inc. Securities Litigation (3:14-cv-00682), currently pending in the United States District Court for the Eastern District of Virginia.
Plaintiffs in the lawsuit alleged securities law violations by Genworth, its current chief executive officer and its former chief financial officer, related to certain disclosures in 2013 and 2014 concerning, among other things, Genworth’s long term care insurance reserves. The agreement in principle was reached in connection with a voluntary mediation.
The settlement will include a full release of all Defendants in connection with the allegations made in the lawsuit.
The Company believes that the Plaintiffs’ claims are without merit, but is settling the lawsuit to avoid the burden, risk and expense of further litigation.
The agreement provides for a settlement payment to the class of $219 million (inclusive of all Plaintiffs’ attorneys fees and expenses and settlement costs), of which $150 million will be paid by the Company’s insurance carriers, and $69 million pre-tax will be paid by the Company.
The Company’s payment is expected to be made into an escrow account during the first quarter of 2016. In addition, the Company expects to incur additional legal fees and accruals related to the litigation over amounts previously accrued and expensed of approximately $10 million pre-tax in the first quarter of 2016.
The settlement is subject to definitive documentation, notice to the putative class, and court approval, which process will take several months.
Genworth Financial is a Fortune 500 insurance holding company committed to helping families achieve the dream of homeownership and address the financial challenges of aging through its leadership positions in mortgage insurance and long term care insurance.
Headquartered in Richmond, Virginia, Genworth traces its roots back to 1871 and became a public company in 2004.