Canada's Brookfield Business Partners to buy rest of insurer Genworth for $1.2 billion

(Reuters) - Genworth MI Canada MIC.TO said on Monday real estate service provider Brookfield Business Partners BBU_u.TO will buy the remaining 43% stake it does not hold in the mortgage insurer for about C$1.6 billion ($1.21 billion).

Brookfield, which owns about 57% of the firm that now operates as Sagen MI Canada, will offer about C$43.50 for each share in Genworth, representing a premium of about 22% to the stock’s last closing price.

About $460 million of the purchase price will be funded by Brookfield and the remaining by its institutional partners, Brookfield said.

The deal comes at a time when mortgage insurers are beefing up their reserves to face rising defaults and looming potential foreclosures as borrowers take advantage of forbearance programs put in place by governments because of the COVID-19 crisis.

The industry, which cover losses when homeowners default and foreclosures fail to recoup costs, had started tightening rules to offer mortgage insurance earlier in the year, after forecasting declines in home prices.

Genworth MI Canada, which runs the largest Canadian private residential mortgage insurer, however, said in July it has no plans to change its underwriting policy for debt service ratio limits, minimum credit score and downpayment requirements.

Reporting by Ambar Warrick and Noor Zainab Hussain in Bengaluru; Editing by Arun Koyyur