Chinese investment firm China Oceanwide Holdings Group Co. said it agreed to buy U.S.-based insurer Genworth Financial Inc. for about $2.7 billion.

China Oceanwide has been pouring hundreds of millions of dollars into U.S. commercial and residential property in the past two years. The privately held firm which is based in Beijing, was founded by Lu Zhiqiang. China Oceanwide will pay $5.43 a share in cash for shares of Genworth, which closed trading on Friday at $5.21.

The deal comes as Genworth struggles under a money-losing long-term care business and has already stopped selling traditional life and fixed annuities as part of a cost-cutting move. Genworth, which is based in Richmond, Va., traces its roots back to 1871 and became a public company in 2004.

 

As part of the transaction, China Oceanwide will contribute about $600 million of cash to address Genworth’s debt maturing in 2018 and $525 million of cash to the firm’s U.S. life insurance businesses.

Separately, Genworth disclosed preliminary charges unrelated to the transaction of $535 million to $625 million associated with long-term care insurance claim reserves and taxes.

”The China Oceanwide transaction is the result of an active and extensive review process conducted over the past two years under the supervision of the Board and with guidance from external financial and legal advisers,” said James Riepe, nonexecutive chairman of Genworth.

China Oceanwide said the transaction will help facilitate Genworth’s ability to complete its previously announced U.S. life-insurance restructuring plan. Following completion of the deal, Genworth will be a stand-alone subsidiary of China Oceanwide and Genworth’s senior management team will continue to lead the business from its current headquarters in Richmond.

”In acquiring Genworth and contributing $1.1 billion of additional capital, we are providing crucial financial support to Genworth’s efforts to restructure its U.S. life insurance businesses,” said Mr. Lu, adding “we have structured the transaction with the intention of increasing the likelihood of obtaining regulatory approval.”

The transaction, which has been approved by both companies’ boards, is expected to close by the middle of 2017, subject to the receipt of regulatory approvals. Both China Oceanwide and Genworth have initiated discussions with regulators in key jurisdictions, according to the companies.

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