Genworth Financial Inc. will pay $219 million to settle claims it misled investors on the health of its long-term-care insurance division.
In 2013, Genworth told investors that it had thoroughly reviewed its long-term-care business and had adequate reserves to cover its long-term-care claims, the lawsuit alleged.
In 2014, however, the insurance company revealed it had not reviewed its reserves as claimed and would need to increase its reserves by $531 million, which caused stock prices to fall sharply, plaintiffs in the lawsuit further alleged. The lawsuit was filed in U.S. District Court in Richmond, Va.
The $3.9 billion Fresno County (Calif.) Employees’ Retirement Association and the C$80 billion ($60.2 billion) Alberta Investment Management Corp., Edmonton, are among the investors that reached the settlement with Genworth.
Information was not immediately available on how much Fresno County and AIMCo had invested in Genworth or could potentially receive from the lawsuit.
The settlement is pending court approval.
Of the $219 million, $150 million is expected to be paid by Genworth’s insurance carriers and $69 million pre-tax by the company.
Genworth “believes that the plaintiffs’ claims are without merit but is settling the lawsuit to avoid the burden, risk and expense of further litigation,” the company said in a news release.
A Genworth spokeswoman declined to comment beyond the news release.
The settlement is the “largest recovery ever obtained in a securities class action in Virginia,” according to Bernstein Litowitz Berger & Grossmann, which represented the Fresno County pension fund in the case.
Kevin Uebelein, AIMCo CEO, said in a news release: “As a leader in the investment community, AIMCo is committed to ensuring the integrity of the markets and taking decisive action when warranted. We are pleased to have recovered this settlement on behalf of all applicable investors in Genworth.”