Richard F. Burkhart v. Genworth Financial, Inc.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE RICHARD F. BURKHART, WILLIAM E. ) KELLY, RICHARD S. LAVERY, THOMAS R. ) PRATT and GERALD GREEN, individually ) and on behalf of others similarly situated, ) ) Plaintiffs, ) ) v. ) C.A. No. 2018-0691-NAC ) GENWORTH FINANCIAL, INC., ) GENWORTH HOLDINGS, INC. GENWORTH ) NORTH AMERICA CORPORATION, ) GENWORTH FINANCIAL INTERNATIONAL ) HOLDINGS, LLC and GENWORTH LIFE ) INSURANCE COMPANY, ) Defendants. ) MEMORANDUM OPINION Date Submitted: January 21, 2026 Date Decided: October 23, 2026 Thomas A. Uebler, Adam J. Waskie, Sarah P. Kaboly, MCCOLLOM D’EMILIO SMITH UEBLER LLC, Wilmington, Delaware; Edward F. Haber, Michelle H. Blauner, Patrick J. Vallely, SHAPIRO HABER & URMY LLP; Counsel for Plaintiffs. Srinivas M. Raju, Kevin Gallagher, Elizabeth J. Freud, RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Reid L. Ashinoff, Kenneth J. Pfaehler, T. Carter White, DENTONS US LLP, New York, New York; John C. Hueston, Marshall A. Camp, Padraic Foran, Zachary Murray, HUESTON HENNIGAN LLP, Los Angeles, California; Counsel for Defendants. COOK, V.C.  The elderly or individuals with serious health conditions often struggle to do everyday tasks without assistance or expensive supportive equipment. Long term care insurance (“LTCI”) mitigates that risk and expense by providing funds to help pay for assisted living and other supportive care. Given the nature of LTCI, policyholders typically purchase coverage long before they begin receiving benefits. Once a policyholder becomes eligible, LTCI benefits payments can last for years. As a result, LTCI companies must carefully manage claims reserves to ensure they have funds to pay benefits long into the future. Recent financial pressures caused by rising claims costs, resistance to premium hikes, and increased longevity have caused many LTCI companies to restructure their business or exit the market. Defendants are a group of affiliated insurance companies that sell various forms of insurance, including LTCI. In the mid-2010s, Defendants restructured their LTCI business due to a series of economic and legal factors. Specifically, between 2015 and 2016, Defendants isolated their LTCI business from their other insurance lines while repatriating it in the U.S. Executing that plan required terminating a series of inter-entity reinsurance agreements that provided asset-backed financial guarantees to support the LTCI liabilities. During the restructuring period, the group’s LTCI underwriter also issued a series of dividends to its parent companies. Plaintiffs filed this suit alleging that those actions constituted intentional and constructive fraudulent transfers that violated the Delaware Uniform Fraudulent Transfer Act (“DUFTA”). This decision addresses Defendants’ Motion for Summary Judgment, Plaintiffs’ Rule 56(d) Motion, and Defendants’ Motion to Strike Plaintiffs’ 2 Rule 56(d) Motion. For the reasons discussed herein, the Court grants Defendants’ Motion for Summary Judgment and denies both the Rule 56(d) Motion and Motion to Strike as moot. I. BACKGROUND The following background discussion is drawn from the parties’ submissions on the motion for summary judgment. “At this procedural stage, the court must view the evidence in the light most favorable to the non-movant.” 1 A. The Parties Plaintiffs purport to represent a class of Defendant Genworth Life Insurance Company (“GLIC”) LTCI policyholders and agents who expect to receive benefits and commissions payments over the coming decades. 2 As of this decision’s submission 1 Meteora Cap. Partners, LP v. Roadzen Inc., 2026 WL 2530118, at *1 (Del. Ch. Aug. 27, 2026) (citing Merrill v. Crothall-Am., Inc., 606 A.2d 96, 99 (Del. 1992)). 2 See Plaintiffs’ Second Amended and Supplemental Class Action Complaint (“SAC”) ¶¶ 2–6, 14 (Dkt. 132). In January 2024, Plaintiffs sought certification of a class consisting of all (1) beneficiaries of in-force GLIC LTCI policies and (2) agents entitled to future commission payments based on their sale of GLIC LTCI policies. See Plaintiffs’ Motion for Class Certification (Dkt. 291); Defendants’ Brief in Opposition to Plaintiffs’ Motion for Class Certification (Dkt. 295). The Court deferred its ruling on class certification. See Transcript of 6-13-2024 Oral Argument (Dkt. 347). 3 date, no policyholder Plaintiff has made a claim under their GLIC LTCI policy. 3 Similarly, each agent Plaintiff has received all commission payments due. 4 Defendants Genworth Financial Inc. (“Genworth”), Genworth Holdings, Inc. (“Holdings”), Genworth Financial International Holdings, LLC (“GFIH”), Genworth North American Corporation (“Genworth NA”), and GLIC are a group of affiliated insurance companies. 5 Through Holdings, Genworth indirectly owns and operates the other Defendants. 6 Before the at-issue transactions, Genworth’s subsidiaries included non-parties Brookfield Life Assurance Company Limited (“Brookfield”) and Brookfield Life and Annuity Insurance Company Limited (“BLAIC”). 7 Genworth’s corporate structure at that time was as follows: 8 3 E.g., Transmittal Affidavit of Kenneth J. Pfaehler in Support of Defendants’ Motion for Summary Judgment (“Pfaehler Aff.”), Ex. 9 at 28; Ex. 10 at 71–72 (D.I. 373). See also Affidavit of Scott Goodman in Support of Defendants’ Motion for Summary Judgment (“Goodman Aff.”), Ex. 28 (D.I. 377) (representing that GLIC has paid $18,242,015,710 in LTCI benefits since the challenged transactions). 4 E.g., Pfaehler Aff., Ex 12 at 46; Ex. 13 at 59–60. See also Goodman Aff., Ex. 28 (representing that GLIC has paid $953,632,281 in LTCI commissions since the challenged transactions). 5 See SAC ¶¶ 7–11. All Defendants, except for Genworth NA, are Delaware entities. See id. ¶¶ 7–8, 10–11. Defendant Genworth NA is organized under Washington law. See id. ¶ 9. 6 See id.Based on that control, this opinion refers to “Genworth” when referring to the group as a whole or when discussing group-wide decisions or actions. 7 See id. ¶¶ 122, 126. 8 Plaintiffs’ Demonstrative from the January 21, 2026, Summary Judgment Hearing at 6 (Dkt. 431). The Court includes the demonstrative for illustrative purposes only. 4 B. LTCI And Delaware Insurance Regulation LTCI covers nursing, assisted living, and other healthcare costs for people who cannot perform daily tasks without assistance. 9 Genworth sells LTCI through GLIC. 10 GLIC’s LTCI polices are “[g]uaranteed [r]enewable for [l]ife” so long as 9 See Linhong Chen & Xiaocang Xu, Effect Evaluation of the Long-Term Care Insurance (LTCI) System on the Health Care of the Elderly: A Review, 13 J. Multidisciplinary Healthcare 863, 864 (2020) (“LTCI system . . . refers to an institutional arrangement to share the nursing expenses incurred by people who cannot take care of themselves due to chronic diseases or physical and psychological disability[.]”). 10 See Pfaehler Aff., Ex. 1 at 1. 5 policyholders pay their annual premiums. 11 Given LTCI’s nature, 12 companies— including Genworth—use complex actuarial formulas to project uncertain benefits payouts over decades. 13 Recent macro effects have raised the risk profile of LTCI as an insurance product generally, causing several insurance companies to scale down their LTCI business or exit entirely. 14 Genworth’s LTCI business is not immune from these headwinds and has experienced similar financial strain. 15 In response to those pressures, GLIC has repeatedly sought regulatory approval to raise its LTCI premiums pursuant to its Multi-Year Rate Action Plan (“MYRAP”). 16 11 E.g., id. at 21. 12 Because LTCI helps cover costs associated with a loss of daily function and long- term care, individuals often purchase coverage long before they receive benefits. See, e.g., Pfaehler Aff., Ex. 8. Once a policyholder becomes eligible, they typically receive LTCI benefits for several years. See Jeffrey R. Brown & Amy Finkelstein, The Private Market for Long-Term Care Insurance in the United States: A Review of the Evidence, 76 J. Risk & Ins. 5 (2009). Therefore, LTCI companies must carefully balance the premiums they receive in the short term with the benefits they expect to pay out in the long term. See id. 13 See Pfaehler Aff., Ex. 38 at 8–11; Ex. 39 at 9–12. 14 See Pfaehler Aff., Ex. 39 at 10 (“Since 2000, all major determinants of premium adequacy and product profitability had been deteriorating. Overall claim experience had deteriorated substantially, and carriers were exiting the market. LTC[I] products were materially underpriced and certain monoline LTC[I] companies were shown to be undercapitalized. Insolvencies followed.”). See also Chen & Xu, supra note 9. 15 See, e.g., Transmittal Affidavit of Thomas A. Uebler, Esquire to Plaintiffs’ Answering Brief in Opposition to Defendants’ Motion for Summary Judgment (“Uebler Aff.”), Ex. 7 at 2 (D.I. 401) (“GLIC Margins Largely Eroded From Higher Expected Claims Cost. Future Rate Actions Needed To Offset Higher Claim Cost & Support Positive Margins.”). 16 See, e.g., id. at 4, 21. GLIC can increase the premiums LTCI policyholders pay when actuarily justified, subject to state regulatory approval. See Pfaehler Aff., Ex. 1 (LTCI policy disclosing GLIC’s ability to seek regulatory approval to raise premiums). 6  The Delaware Department of Insurance (“Department”), led by the Delaware Insurance Commissioner (“Commissioner”), has broad statutory authorization to regulate the insurance industry. 17 The Department regulates GLIC as a Delaware domiciled insurance company. That regulation includes (1) testing GLIC’s cash flow to monitor its capitalization; 18 (2) directing GLIC to answer questions concerning its operations; 19 and (3) reviewing GLIC’s annual actuarial memorandum and audited financials. 20 Once every five years, the Department audits GLIC’s “affairs, transactions, accounts, records, documents, [] assets . . . and any other fact relevant to its business methods, management, and its dealings with policyholders[.]” 21 The Commissioner has broad authority to impose penalties, order corrective action, or even take GLIC under supervision if its responses or finances are unsatisfactory. 22 The Department also has authority over mergers among insurers. Importantly, advance approval from the Commissioner is required before a proposed merger involving a Delaware insurer can be consummated. The statute sets out 17 See 18 Del. C. §§ 301–334, 526, 1108, 4930, 5005, 5006, 5901 et seq. 18 See Goodman Aff., Exs. 18–22 (evidencing the ongoing regulatory dialogue between GLIC and the Department). 19 See, e.g., Goodman Aff., Ex. 4; Ex. 17. 20 18 Del. Admin. C. §§ 301-2.0, 301-5.0. Similarly, the Department reviews GLIC’s quarterly financials. See Goodman Aff. ¶ 8. In so doing, the Department considers GLIC’s risk-based capital reports, which indicate whether the company holds sufficient capital based on its risk profile. See 18 Del. C. § 5802; Goodman Aff., Ex. 5, Ex. 7. 21 18 Del. Admin. C. § 101-3.1; see 18 Del. C. § 318. 22 E.g., 18 Del. C. §§ 329, 5803–5806, 5905. 7 certain requirements, including filing the contemplated merger agreement and plan with the Commissioner, notice to the stockholders of the insurers involved, and a hearing. 23 Only after these statutory requirements are met may such a merger be approved. Further, the Commissioner is not required to approve a proposed merger if they find that the proposed transaction is one or more of the following: (1) Is contrary to law. (2) Unfair or inequitable to the stockholders of any insurer involved. (3) Would substantially reduce the security of and service to be rendered to policyholders of the domestic insurer in [Delaware] or elsewhere. (4) Would materially tend to lessen competition in the insurance business in [Delaware] or elsewhere as to the kinds of insurance involved or would materially tend to create a monopoly as to such business. (5) Is subject to other material and reasonable objections. 24 C. The Reinsurance Agreement, Brookfield And BLAIC In 2001, Brookfield entered into a permanent reinsurance agreement (“Reinsurance Agreement”), under which it financially guaranteed a portion of Genworth’s LTCI liabilities. 25 Only GLIC’s predecessor in interest and Brookfield were parties to the Reinsurance Agreement, which disclaimed “creat[ing] any legal relationship between [Brookfield] and the persons . . . insured under the LTC[I] Policies[.]” 26 Thus, the Reinsurance Agreement did not give LTCI policyholders or agents any right to payments from Brookfield. 27 In 2007, Brookfield acquired an 23 18 Del. C. § 4930(b). 24 Id. § 4930(b)(1)–(5). 25 Uebler Aff., Ex. 1 (“Reinsurance Agreement”). 26 Id. § 2.1. 27 See id. 8 interest in two profitable foreign mortgage insurance (“FMI”) businesses, which became part of the assets backing the Reinsurance Agreement. 28 By 2009, Brookfield had reinsured 50% of GLIC’s LTCI liabilities. 29 In 2011, BLAIC assumed Brookfield’s obligations under the Reinsurance Agreement. 30 Contemporaneously, Brookfield financially guaranteed BLAIC’s reinsurance payments (“Guaranty”). 31 The Guaranty ensured that the FMI assets would continue backing GLIC’s LTCI liabilities, although it did not require Brookfield to maintain any specific reserves to support its obligation to BLAIC. 32 In 2013, Genworth decided to repatriate its LTCI business from Bermuda to the United States. 33 The repatriation was announced in 2014; changes to Bermuda’s insurance laws requiring “significantly higher LTC[I] reserves” prompted the repatriation. 34 28 See Uebler Aff., Ex. 2. 29 See Reinsurance Agreement. 30 See id. at Genworth0029494. 31 Id.at Genworth0029497; Affidavit of Babak Alimard in Support of Defendants’ Motion for Summary Judgment (“Alimard Aff.”) ¶ 4 (D.I. 375). BLAIC never triggered its right to funds from Brookfield under the Guaranty. See id. ¶ 7. 32 Id. ¶ 4; Alimard Aff., Ex. 2 at Genworth 0029423–26. 33 See Uebler Aff., Ex. 17 at 3. 34 Uebler Aff., Ex. 12 (noting repatriating would “[a]void[] Bermuda requirements for significantly higher LTC[I] reserves & capital (~$2B charge) while protecting international dividends from LTC[I] exposure.”); Ex. 17; Ex. 18. See also Uebler Aff., Ex. 20 (“Completion of the repatriation by 4Q 2016 will remove our long term care insurance business from Bermuda prior to the full implementation of its Solvency II requirements is a key strategic priority for Genworth[.]”). 9 D. Actuarial Assumptions And The Challenged Transactions In 2014, actuaries at Genworth questioned some of the assumptions used to project GLIC’s future LTCI liabilities. 35 Specifically, they asserted that Genworth’s chief actuary adopted overly aggressive assumptions designed to artificially ensure a positive cash flow margin on GLIC’s books. 36 Those actuaries felt the new assumptions “were unreasonable, especially in the tail . . . [and] unsupported by any experience[.]” 37 Indeed, one actuary cautioned that if Genworth’s chief actuary “pursues his current actions, he is going beyond professional requirements and venturing into the realm of financial fraud.” 38 The concerned actuaries noted that the new assumptions could have serious knock-on effects for GLIC’s finances. 39 Contemporaneous with that actuarial debate, GLIC announced that its “comprehensive claim reserve review” necessitated increasing reserves by $531 million based on revised assumptions concerning claims terminations and benefits 35 See Uebler Aff., Ex. 30; Ex. 31; Ex. 32; Ex. 97 at 16–19, 41–43; Ex. 98 at 65–67. 36 Uebler Aff., Ex. 29 (Genworth’s chief actuary writing he would “do everything [he] can to architect a positive margin that is actuarily defensible.”); Ex. 30 (“Rob Vrolyk announced his intentions to target positive margins to, in his words, ‘buy management one more year.’ He implied (and maybe stated outright. I can’t recall exactly) he was willing to get aggressive in modeling assumptions to produce this result.”). 37 Uebler Aff., Ex. 97 at 42; see Uebler Aff., Ex. 30 at 3 (“[t]he recent adjustments . . . to the assumptions used for the CFT margin calculations are in my opinion aggressive and unrealistic.”); Ex. 36. 38 Uebler Aff., Ex. 30 at 3. 39 See Uebler Aff., Ex. 98 at 188. 10 utilizations. 40 As a result, Genworth’s stock price fell and a credit agency lowered its rating. 41 This prompted consultants to recommend that Genworth “split into two companies,” with one dedicated solely to LTCI. 42 That split would “separate future dividends and proceeds coming out of [Genworth’s other businesses] from LTC[I]” liabilities. 43 Thus, Genworth’s 2014 10-K disclosed its intent “to seek regulatory approvals to effectively unwind the long-term care insurance agreement between GLIC and BLAIC and release the related Brookfield [G]uarant[y][.]” 44 Ultimately, Genworth devised a two-step process to effectuate the repatriation and isolation of its LTCI business. 45 In step one, Brookfield would cancel the Guaranty (“Cancellation”) and replace its commitment with a Capital Maintenance 40 Uebler Aff., Ex. 6 at 1. Despite those actuarial revisions, Plaintiffs insist GLIC continues to anchor its new model in similarly unrealistic, results-driven assumptions. See Plaintiffs’ Answering Brief in Opposition to Defendants’ Motion for Summary Judgment (“MSJ Opp’n”) at 16–21. 41 Uebler Aff., Ex. 7 at Genworth0533356; Ex. 8. Uebler Aff., Ex. 9 at Genworth1160294–97. Genworth’s investment bankers 42 suggested GLIC’s contemplated repatriation as one possible way to effectuate that split. Id. at Genworth1160303. 43 Id.at Genworth1160303; see Uebler Aff., Ex. 10 (Genworth’s bankers stating Genworth’s “businesses [are] currently threatened by LTC[I] exposure[.]”). Indeed, Genworth later commented that its LTCI obligations were a “contagion risk [] [] impacting rating[.]” Uebler Aff., Ex. 13 at Genworth 1186297. 44 Uebler Aff., Ex. 14. See also Pfaehler Aff., Ex. 23 at 5 (“The separation and isolation of LTC[I] provides Genworth the best opportunity to focus on achieving our multi-year rate action plan. Not only is this essential for GLIC’s financial health, it has further benefits for the policyholders of our other insurance companies in that it reduces the impact of potential uncertainty associated with LTC[I][.]”); Pfaehler Aff., Ex. 18. 45 See, e.g., Uebler Aff., Ex. 4. 11 Agreement (“CMA”). 46 Under the CMA, “GFIH [] agree[d] to provide capital to BLAIC to fund payment obligations to GLIC . . . under the Reinsurance Agreement” 47 but, as with the Guaranty, did not have to maintain any specific assets to back up that commitment. Importantly, the CMA provided that it would “remain in full force and effect until the date upon which the Reinsurance Agreement[] terminate[s],” which GLIC acknowledged would happen automatically upon completion of the contemplated repatriation. 48 Like the Guaranty, the CMA did not give GLIC’s LTCI policyholders or agents a right to seek funds from GFIH. 49 In step two, BLAIC would merge into GLIC (“Merger”, and together with the Cancellation, “Reinsurance Termination”). 50 Both steps of Genworth’s plan for the Reinsurance Termination required regulatory approval, including from the Department. 51 Id. 46 Step-one would culminate in “Brookfield[’s] Dissolution.” Id. at Genworth0197163. 47 Alimard Aff., Ex. 2; see id., Ex. 1 (“CMA”). As part of that process, Genworth “[d]istribute[d] Brookfield’s [s]ubsidiaries . . . to GFIH[,]” including the FMI businesses. Uebler Aff., Ex. 4 at Genworth0197163. 48 CMA ¶ 3. 49 See id. ¶ 4 (“[N]o policy holder or any other person or entity shall have any right to recover damages or other losses allegedly sustained as a result of GFIH’s failure to comply with the provisions of this agreement[.]”). 50 See Uebler Aff., Ex. 4. 51 See Alimard Aff. ¶¶ 8–35. 12 E. The Department Reviews Both Steps Of The Reinsurance Termination On September 1, 2015, Genworth asked the Department to approve the Cancellation. 52 To do so, Genworth submitted a “Prior Notice of Transaction” Form D with the Department, which detailed Genworth’s request for approval to terminate the Guaranty and replace it with the CMA. 53 The form requested permission that the “Guaranty be terminated and concurrently therewith replaced by a Capital Maintenance Agreement[,]” 54 and explained that “[t]he Capital Maintenance Agreement would remain in effect only for so long as the Reinsurance Agreements would remain in effect and . . . upon completion of the LTC Repatriation Plan . . . all of the Reinsurance Agreements will have been terminated and the [CMA] would automatically be terminated.” 55 Genworth’s submission also attached a draft of the CMA. 56 On September 8, 2015, the Department approved “the Terminat[ion] of the Guaranty from Brookfield . . . and the new [CMA].” 57 Thereafter, the CMA went into 52 Alimard Aff., Ex. 2. 53 Id. 54 Id. at Item 2(b). 55 Id. at Item 3. 56 Id. at Ex. 4. The draft CMA also had a provision noting it would “remain in full force and effect until the date upon which the Reinsurance Agreements terminate.” Id. ¶ 3. 57 Alimard Aff., Ex. 3; see id. Exs. 5–6 (Virginia regulators approving the Cancellation). 13 effect, but BLAIC never invoked its rights thereunder before the CMA terminated as part of the Merger. 58 On June 1, 2016, Genworth requested the Department’s approval to effectuate the Merger. 59 As part of the review process, the Department ordered a hearing before former Vice Chancellor Lamb, who acted as the hearing officer (“Hearing”). 60 The Department gave notice of that Hearing on its website, in two Delaware newspapers, and on the official state public meeting calendar. 61 Despite that notice, no objector appeared at the Hearing on September 8, 2016. 62 The Hearing included written and oral testimony from both fact and expert witnesses. 63 Genworth did not raise the CMA’s existence, terms, or termination at the Hearing, which, as described above, the Department had approved in September 2015. 64 After the Hearing, the hearing officer concluded that “the testimony and evidence submitted . . . indicate that the proposed [M]erger would not substantially 58 See CMA ¶ 3; Alimard Aff. ¶ 7. 59 See Alimard Aff., Ex. 10; see 18 Del. C. § 4930(b). 60 See Alimard Aff., Exs. 22–24. 61 See Alimard Aff., Ex. 14 at Genworth0031323. 62 Id. at Genworth0031328. 63 See Alimard Aff., Exs. 21–24; Goodman Aff., Ex. 2; Ex. 9. 64 See Uebler Aff., Exs. 21–24. See also Alimard Aff., Ex. 14 (not mentioning the CMA). At oral argument, Defendants rejected Plaintiffs’ “argument that [] the department forgot about the CMA,” instead insisting “the department knew full well about the CMA . . . it’s not that the [D]epartment didn’t know about the CMA, but they ha[d] a completely different view as to the solvency of GLIC.” Transcript of 1-21-2026 Oral Argument on Defendants’ Motion for Summary Judgment (“OA Tr.”) at 65 (Dkt. 433). 14 reduce the security of . . . the policyholders of GLIC in [Delaware] or elsewhere.” 65 The hearing officer recommended that the Department approve the Merger. 66 On September 15, 2016, the Commissioner adopted the hearing officer’s factual findings and approved the Merger. 67 The Merger—and thus the second and final step of the Reinsurance Termination—closed on October 1, 2016, thereby terminating the Reinsurance Agreement and CMA. 68 As part of the Merger, GLIC received a $785 million capital infusion and $900 million fixed annuity block, 69 prompting the company to significantly increase net assets on its balance sheet. 70 The Merger also accomplished Genworth’s goal of repatriating and isolating its LTCI business from its other insurance lines as well as the FMI assets. 71 65 Uebler Aff., Ex. 28 at Genworth0028392. 66 Id. at Genworth0028394. 67 Alimard Aff., Ex. 24. The Commissioner also found “the proposed Merger would not substantially reduce the security of or service to be rendered to the policyholders of GLIC in [Delaware] or elsewhere” and “[t]here is no evidence to indicate that the proposed Merger is unfair or inequitable to the stockholders of any insurer involved.” Id. 68 Uebler Aff., Ex. 71 at 318; see CMA ¶ 3; Alimard Aff., Ex. 10. 69 See Alimard Aff. ¶ 35; Alimard Aff., Ex. 28. 70 Compare Goodman Aff., Ex. 3 at 2–3, with Goodman Aff., Ex. 4 at 2–3. 71 See Alimard Aff., Ex. 10 (detailing the Merger’s process and effect). 15 F. GLIC After The Challenged Transactions Three weeks after the Merger closed, Genworth agreed to merge with non- party China Oceanwide. 72 That merger never materialized. 73 Yet, in contemplation thereof Genworth prepared a fair value assessment of its assets and liabilities. 74 As part of that process, a Genworth executive informed the company’s accountants that “the most advantageous market for transferring the [LTCI] contracts . . . may not actually be selling the book [of] business to a market participant, but to . . . enter receivership by the State Regulators[.]” 75 The executive also wrote that “for the insurance contracts in GLIC [] [] the estimated fair value . . . of the insurance liabilities will significantly exceed the fair value of the net assets[.] 76 Consistent with those statements, for purposes of the China Oceanwide merger, Genworth determined that “[t]he FV calculations for LTC[I] . . . produce a total liability FV which exceeds the market value of assets.” 77 Genworth later reaffirmed that the 72 Uebler Aff., Ex. 56. 73 Uebler Aff., Ex. 57. 74 Uebler Aff., Ex. 100 at 300–302. In preparing that report, Genworth recognized that “[a] third party valuation [] would likely add conservatism for some of our assumptions beyond Risk Margins[.]” Uebler Aff., Ex. 60 at Genworth0228567. 75 Uebler Aff., Ex. 58 (detailing “considerations for the determination of the fair value.”). 76 Id. 77 Uebler Aff., Ex. 64 at Genworth0053538. “FV” refers to fair value. See id. at Genworth0053517. 16 “[a]ggregate FV of [l]iabilities, based on a market participant view, is significantly in excess of Aggregate FV of Assets.” 78 Post-merger, the Department continued overseeing GLIC’s operations. 79 GLIC always passed annual cash flow testing. 80 The Department’s most recent five- year review of GLIC—which covered the relevant period—resulted in “no significant findings . . . [and] no recommendations[.]” 81 The Department also conducted targeted examinations of GLIC’s LTCI business in 2020, 2021, and 2022, and “made no finding[s],” including “any that raised any issues that would reflect on GLIC’s solvency.” 82 Over the relevant period and through this decision’s submission date, the Department never imposed penalties on GLIC, ordered corrective action, or took the business under state supervision. 83 GLIC insists it is financially stable with $29 78 Uebler Aff., Ex. 66 at Genworth0228461. 79 See, e.g., Goodman Aff. ¶ 19; Goodman Aff., Ex. 10. 80 Goodman Aff. ¶ 18. 81 Goodman Aff., Ex. 16; see Goodman Aff. ¶ 25–27. The Department made several recommendations regarding GLIC’s future operations, yet none related significantly to the parties’ dispute. See Goodman Aff., Ex. 14; Ex. 15 (Genworth’s response to the Department’s suggestions). 82 Goodman Aff. ¶¶ 31–32. The Department did not issue any final reports for those targeted exams. Id. ¶ 32. Yet, the Department did repeatedly ask GLIC for supplemental information, which GLIC provided. See, e.g., Goodman Aff., Ex. 17. 83 See Goodman Aff., Ex. 5; OA Tr. at 150–51. 17 billion in assets and $3.5 billion in capital backing its LTCI liabilities. 84 GLIC attributes much of that alleged financial stability to its successful MYRAP. 85 Throughout the post-Merger period, GLIC dedicated significant resources to securing regulatory approval to increase its LTCI premiums pursuant to its MYRAP. 86 Those efforts have generated $28.1 billion in premium increases, at a rate exceeding GLIC’s assumptions. 87 Today, GLIC continues pursuing rate increases under its MYRAP. 88 GLIC is also exploring other ways to cut future LTCI costs, including (1) benefit reduction options; (2) a new provider network; and (3) a new wellness program. 89 Plaintiffs dispute whether these efforts have increased GLIC’s financial stability—noting the company’s depressed risk-based capital ratios post- Merger. 90 Plaintiffs’ actuarial expert suggested the “rate increases have all been driven by continued worsening assumptions, resulting in the need to get additional 84 See Goodman Aff., Exs. 5–6. To be sure, GLIC’s current financial health is hotly contested, with Plaintiff’s expert projecting in 2023 that GLIC had a cash flow testing margin of negative $7 billion and a $4.2 billion reserve funding deficit. Affidavit of Brian Rankin to Plaintiffs’ Answering Brief in Opposition to Defendants’ Motion for Summary Judgment (“Rankin Aff.”), Ex. 1 (Dkt. 403). 85 Goodman Aff. ¶¶ 63–69. 86 Id. ¶ 68 (calling the MYRAP “GLIC’s most important business initiative.”). 87 Id. ¶¶ 65–66. 88 Id. ¶ 67. 89 See Pfaehler Aff., Ex. 36 at 49, 115; Ex. 37 at 140–141, 183–185. 90 See Uebler Aff., Exs. 68–69. In 2023, a credit rating agency gave GLIC a C++ rating, assigned “to insurance companies, that have in our opinion, a marginal ability to meet ongoing obligations.” Uebler Aff., Ex. 70. 18 rate increases.” 91 Indeed, one of Defendants’ actuarial experts conceded the MYRAP “did not strengthen” GLIC’s financial position. 92 Further, Plaintiffs insist GLIC’s projected positive cash flow assumes $4.1 billion in unapproved rate increases that may not materialize. 93 Thus, Plaintiffs maintain there is still a significant risk that GLIC will eventually default on its LTCI liabilities. 94 G. Procedural History Plaintiffs initiated this action (“Action”) on September 21, 2018, 95 and filed an Amended Complaint in January 2019. 96 That complaint advanced four DUFTA claims against Defendants. 97 Defendants moved to dismiss, arguing (1) Plaintiffs failed to plead a cognizable injury and (2) the claims concerning GLIC’s 2012–2014 dividends were untimely. 98 On January 31, 2020, the Court granted in part that 91 Uebler Aff., Ex. 101 at 160–161. 92 Uebler Aff., Ex. 99 273:18–275:20. Yet, Defendants’ expert also testified that “the structure of the overall risk of the block is a lot less with a lot of policyholders taking [reduced benefit options],” such that “[t]he financial risk is better, but the cash flow margin is lower.” Id. at 275–276. 93 See Uebler Aff., Ex. 70 at 48; Ex. 72 at Genworth1484377; Ex. 102 at 78–80. 94 See, e.g., Rankin Aff., Ex. 1. 95 See Verified Class Action Complaint (Dkt. 1). 96 See Amended Verified Class Action Complaint (“FAC”) (Dkt. 19). 97 See id. ¶¶ 141–65. 98 See Defendants’ Opening Brief in Support of Their Motion to Dismiss the Amended Complaint (“MTD I Br.”) (Dkt. 24). 19 motion to dismiss (“MTD I”), 99 holding that Plaintiffs alleged a cognizable injury, but claims challenging pre-2014 dividends were time-barred. 100 On May 26, 2021, Plaintiffs filed their operative Second Amended Complaint. 101 The operative complaint realleges the four claims in the amended complaint and adds three new DUFTA claims challenging GFIH’s post-Merger sale of the FMI assets. 102 Defendants moved to dismiss the three new DUFTA claims. 103 On May 5, 2022, the Court granted that motion (“MTD II”), holding that Counts V– VII of the operative complaint “do not seek monetary damages or [] an equitable ‘right to payment’” and thus “do not fit within [] DUFTA’s definition of a ‘claim.’” 104 In 2025, Defendants filed their Motion for Summary Judgment in this action (“Motion for Summary Judgment”). 105 Contemporaneous with their opposition brief, 99 See Opinion on Defendants’ Motion to Dismiss (“MTD I”) (Dkt. 85). 100 MTD I at 2–3. 101 See Plaintiffs’ Second Amended and Supplemental Class Action Complaint (“SAC”) (Dkt. 132). Plaintiffs filed their Second Amended Complaint without opposition. See Dkt. 130; Dkt. 131. 102 See SAC ¶¶ 181–220. 103 See Opening Brief in Support of Defendants’ Motion to Dismiss Counts V, VI and VII of the Second Amended Complaint (Dkt. 142). At the same time, Defendants answered Counts I–IV. See Answer to Second Amended and Supplemental Class Action Complaint (Dkt. 140). 104 Opinion on Defendants’ Motion to Dismiss Counts V, VI and VII of the Second Amended Complaint at 4, 22 (Dkt. 221). 105 See Defendants’ Opening Brief in Support of Their Motion for Summary Judgment (“MSJ Br.”) (Dkt. 372). Defendants filed the Motion for Summary Judgment after the Court granted their motion to vacate the then-calendared trial dates over Plaintiffs’ opposition. See Dkt. 362; Dkt. 366. 20 Plaintiffs filed a Motion for Determination under the Court of Chancery’s pre- amendment version of Rule 56(d) (“56(d) Motion”). 106 Defendants then moved to strike the 56(d) Motion as procedurally improper (“Motion to Strike”). 107 The Court heard oral argument on the motions earlier this year. 108 II. STANDARD OF DECISION Under Rule 56(c), “[t]here is no ‘right’ to summary judgment.” 109 Summary judgment “is only appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law.” 110 When evaluating a motion for summary judgment, the Court views “the facts and inferences in the light most 106 See Plaintiffs’ Motion for Determination Under Rule 56(d) (“56(d) Motion”) (Dkt. 395). The Court adopted an amended version of Court of Chancery Rule 56, effective June 1, 2026. See Order Amending Rules 56, 54–65.1, 67, 69–72, 77–78, 81–83, 85–88, and 100 of the Court of Chancery Rules (Del. Ch. May 18, 2026) (effective June 1, 2026). 107 Defendants’ Motion to Strike Plaintiffs’ Rule 56(d) Motion (“MTS Br.”) (Dkt. 408). Defendants filed their reply brief in support of their Motion for Summary Judgment on the same day. Defendants’ Reply Brief in Support of Their Motion for Summary Judgment (“MSJ Reply”) (Dkt. 409). The parties completed briefing on the Motion to Strike over the following months. Plaintiffs’ Opposition to Defendants’ Motion to Strike Plaintiffs’ Rule 56(d) Motion (“MTS Opp’n”) (Dkt. 414); Defendants’ Reply Brief in Further Support of Motion to Strike Plaintiffs’ Rule 56(d) Motion (“MTS Reply”) (Dkt. 417). 108 See OA Tr. In addition, it is worth noting that the Court deferred ruling on class certification. The Court did so in connection with Defendants’ discovery motion practice concerning the funding of this litigation by competitor insurance companies. That motion practice has been the subject of oral argument, multiple rulings, and in camera review by the Court. See Dkts. 327, 347; Burkhart v. Genworth Fin., Inc., 2024 WL 3888109 (Del. Ch. Aug. 21, 2024); Burkhart v. Genworth Fin., Inc., 2024 WL 5160436 (Del. Ch. Dec. 18, 2024). 109 Telxon Corp. v. Meyerson, 802 A.2d 257, 262 (Del. 2002); see Ct. Ch. R. 56(c). 110 Riad v. Brandywine Valley SPCA, Inc., 319 A.3d 878, 883 (Del. 2024); see Deloitte LLP v. Flanagan, 2009 WL 5200657, at *3 (Del. Ch. Dec. 29, 2009) (“A fact is material if it ‘might affect the outcome of the suit under the governing law.’” (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986))). 21 favorable to the non-movant.” 111 “Any application for such a judgment must be denied if there is any reasonable hypothesis by which the opposing party may recover, or if there is a dispute as to a material fact or the inferences to be drawn therefrom.” 112 The Court will not grant summary judgment if doing so reveals material facts that may be resolved in either party’s favor. 113 Yet, “if the moving party puts facts into the record which, if unrebutted, entitle it to summary judgment, the burden shifts to the defending party to dispute the facts by affidavit or proof of similar weight; i.e. the party opposing summary judgment is obliged to adduce some evidence showing the existence of a dispute of material fact.” 114 “Summary judgment must be granted when the nonmovant fails to respond to facts which the movant has placed in the record which entitle him to summary judgment.” 115 The Court may also deny summary judgment “if it decides, upon examination of the facts presented, that it is 111 GMG Insurance Agency v. Edelstein, 328 A.3d 302, 309 (Del. 2024). 112 In re El Paso Pipeline Partners, L.P. Derivative Litig., 2014 WL 2768782, at *8 (Del. Ch. June 12, 2014) (quoting Vanaman v. Milford Mem’l Hosp., Inc., 272 A.2d 718, 720 (Del. 1970)). 113 See Caruso v. Barton, 341 A.3d 472 (Table), at *1 (Del. 2025). 114 VLIW Technology, LLC v. Hewlett-Packard Co., 2005 WL 1089027, at *7 (Del. Ch. May 4, 2005); see Phillips v. Delaware Power & Light Co., 216 A.2d 281, 285 (Del. 1966). 115 Fortiline, Inc. v. McCall, 341 A.3d 1027, 1030 (Del. Ch.