Genworth Financial Inc. announced that it has agreed to a $219 million settlement. This comes after a lawsuit was filed against the company accusing that it has mislead shareholders about its long-term-care insurance business.
According to Richmond Times-Dispatch, Genworth said that it has already decided to agree "in principle" to settle the class action suit filed in October 2014 in the U.S. District Court in Richmond. The company claimed that its insurers will shell off $150 million for the settlement, while Genworth is set to pay $69 million.
"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," Genworth mentioned in a statement released on Friday afternoon. But the company added that the settlement still requires court approval, which would take a few months.
Yahoo! Finance noted that the plaintiffs in the court case alleged securities law violations by the Henrico County-based company, its current chief executive offices, and its former chief financial officer. The lawsuit accused Genworth of the violations related to certain disclosures in 2013 and 2014 concerning Genworth's long-term-care insurance reserves.
The agreement in principle was reached linking with a voluntary mediation. It will also include a full release of all Defendants in connection with the accusations made in the court proceeding. However, the company believes that the plaintiffs' accusations are without merit.
The settlement additionally provides for an agreement payment to the class of $219 milllion, including all of the complainants' attorneys and expenses, as well as the settlement cost. Genworth's payment is expected to be carried out into an escrow account by the first quarter of 2016. Moreover, the company also expects to sustain additional legal charges and accruals linked to the lawsuit over amounts previously accrued and expensed of about $10 million pre-tax in the first quarter of 2016, as reported by PR Newswire.
Meanwhile, even though the company believes that the complainants' claims are without worth, it is still settling the lawsuit to avoid the burden, risk, and expense of further litigation. The agreement is also subject to definitive documentation, notice to the putative class, and court approval.
