As it moves closer to finalizing a $2.7 billion deal to be purchased by a Chinese conglomerate, a Henrico-based insurance giant has been slapped yet again with class action lawsuits from disgruntled shareholders and customers.
Genworth Financial was sued twice in the last four weeks in Richmond federal court: once by a group of shareholders who argue its deal with suitor China Oceanwide isn’t in their favor; and the other by a group of customers from its long-term care insurance business, which has caused significant financial losses for the firm in recent years.
The first case, filed Dec. 28 by three long-term care policy holders, claims the company, two of its subsidiaries and four current and former executives had a hand in a scheme from 2010 to 2014 to “buoy Genworth’s stock price and enrich themselves by diverting hundreds of millions of dollars of policyholders’ premium payments away from Genworth’s reserve funds and into their own pockets and the coffers of GFI and its investors.”
The 60-page suit alleges the company deliberately and wrongfully underfunded its long-term care reserves during that four-year period, knowingly using outdated claims data when calculating reserves and creating a “false picture of profitability.”
It cites examples of the company and its current and former executive repeatedly assuring the public it had adequate reserves.
The plaintiffs are New York resident Erika Leifer, Pennsylvania resident Saul Jacobs and California resident Helene Wenzel.
Each claims they received letters from Genworth in 2016 informing them that premiums would increase between 20 and 60 percent.
Also sued in the case are CEO Thomas McInerney; former CEO Michael Frazier, who resigned in 2012; and former CFOs Patrick Kelleher and Martin Klein.
Long-term care insurance is used to help pay for nursing home, assisted living and hospice care costs. Genworth is one of, if not the largest seller of LTC insurance in the country.
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