Genworth Financial expects the risk-to-capital ratio of its Genworth Mortgage Insurance Corp. (GMICO) subsidiary to drop from an estimated 36.9-to-1 ratio to a ratio that is 12 to 15 points lower, according to the company's fourth-quarter earnings.

But Genworth says this drop will not occur until the company official enacts a reorganization strategy that was announced in January.

Generally, a 25-to-1 risk-to-capital ratio is considered the ceiling for how high an insurer's risk should go, according to analysts.

"GMICO currently maintains waivers or other authorizations from 45 states that permit the company to continue writing new business while its risk-to-capital ratio exceeds 25.0:1," Genworth said in its earnings report Tuesday. 

"Additionally, the company has separately capitalized and licensed legal entities to write new business for states where waivers are not in place, subject to the approval of applicable regulators and the GSEs (government sponsored entities) approval."

Genworth intends to lower its risk-to-capital ratio from current highs by enacting a previously announced plan to recapitalize the company by transferring ownership of its European mortgage insurance subsidiaries to its U.S. Mortgage Insurance Co.

Genworth also created a future option for Genworth to develop a new company to write mortgage insurance in all 50 states if an exigent circumstance were to derail the firm's existing MI operations.

In addition, the Genworth recapitalization plan would allow for the creation of a new holding company in which its U.S. mortgage insurance subsidiaries would no longer be covered by an indenture governing Genworth's senior notes. The company expects to complete the reorganization plan in the second quarter, subject to regulatory approvals.

Despite the need to ensure the stability of its mortgage insurance unit – and the announcement of a reorganization plan in January to do so – Genworth posted fourth-quarter earnings of $166 million, or 34 cents a share, for the fourth quarter of 2012. That is up from a profit of $142 million, or 29 cents a share, a year earlier.

In its fourth-quarter earnings statement, Genworth said any future risks would include "a failure to complete the implementation of the capital plan (including the reorganization) in a timely manner or at all for any reason."

Barring nothing gets in the way of the company's plans for the U.S. mortgage insurance unit, Genworth's CEO and President Tom McInerney seems more positive about the mortgage insurance segment when compared to the firm's U.S. Life Insurance Unit.

"U.S. mortgage insurance continued its recovery in the fourth quarter, and the company achieved a number of its strategic goals to improve financial flexibility highlighted by the comprehensive U.S. capital plan announced in January," said McInerney. 

"However, results in the U.S. Life Insurance Division were mixed, and I am disappointed in our long term care results.  We are focused on executing our plans to rebuild shareholder value."