What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2023-02-10 compared with 2022-02-11 · 53 added, 72 removed, 339 unchanged (27% of the section changed)

10 unchanged sentences

These factors include:

unemployment levels, housing markets, energy costs, and interest rates;

unemployment levels, housing markets, energy costs, inflation, and interest rates;

events such as natural disasters, acts of war, terrorism, or catastrophes;

10 unchanged sentences

If we fail to adapt to changing economic conditions or other factors, or if such changes adversely affect our borrowers’ willingness or capacity to repay their loans, our financial condition, results of operations, and liquidity would be materially adversely affected.

The COVID-19 pandemic may continue to adversely affect consumer finance businesses including OneMain.

The virus causing COVID-19 was identified in late 2019 and was declared a global pandemic in March 2020.

Governmental authorities have taken a number of steps to combat or slow the spread of COVID-19, including shutdowns of non-essential businesses, stay-at-home orders, social distancing measures, vaccine mandates, and other actions that disrupted economic activity.

Certain states are experiencing new outbreaks of COVID-19 and have re-imposed restrictions on restaurants, entertainment, and similar venues.

Efforts to combat the virus have been complicated by viral variants and uneven global access to and acceptance of vaccines.

These measures have and may continue to impact all or portions of the Company’s workforce and our current and prospective customers.

Although certain restrictions related to the COVID-19 pandemic have eased, uncertainty continues to exist regarding such measures and potential future measures.

In response to COVID-19, we have modified our business practices with a portion of our employees working remotely to minimize interruptions in our business.

Although these changes have allowed us to continue operations safely, the technology in home environments may not be as robust as in our offices and could cause networks, information systems, applications, and other tools available to employees to be more limited or less reliable than in our offices.

The continuation of these work-from-home measures also introduces additional operational risk, including increased cybersecurity risk from phishing, malware, and other cybersecurity attacks, all of which could expose us to risks of data or financial loss and could seriously disrupt our operations and the operations of any impacted customers.

If key personnel or a significant number of employees were to become unavailable due to the effects and restrictions of the COVID-19 pandemic, including impacts of new variants, we could also be adversely affected.

Additionally, we rely upon our third-party vendors to help us conduct aspects of our business and to process, record, and monitor transactions.

If any of these vendors are unable to continue to provide us with their services, it could also negatively impact our ability to serve our customers.

Although we have business continuity plans and other safeguards in place, there is no assurance that such plans and safeguards will be effective.

Legal and regulatory responses to concerns related to the COVID-19 pandemic could result in additional regulation or restrictions affecting the conduct of our business in the future.

All of the foregoing may adversely affect our income and other results of operations, make collection of our finance receivables more difficult, or reduce income received from such receivables or our ability to obtain financing with respect to such receivables.

The COVID-19 pandemic has caused significant volatility and disruption in global financial markets.

Volatility stemming from the COVID-19 pandemic could negatively affect our net interest income, lending activities, and profitability.

Likewise, market volatility, as well as general economic, market, or social conditions related to the COVID-19 pandemic, could reduce the market price of shares of our common stock regardless of our operating performance.

Additionally, to the extent that the pandemic harms our business and results of operations, many of the other risks described in this “Risk Factors” section may be heightened.

There are risks associated with the acquisition or sale of assets or businesses and the formation, termination, or operation of joint ventures or other strategic alliances, which could have a material adverse effect on our financial condition, results of operations, and liquidity.

We have previously acquired, and in the future may acquire, assets or businesses, either through the direct purchase of such assets or the purchase of a company’s equity.

Since we will not have originated or serviced the finance receivables we acquire, we may not be aware of legal or other deficiencies related to origination or servicing, and our review of the portfolio prior to purchase may not uncover those deficiencies.

Further, we may have limited recourse against the seller of the receivables.

Potential difficulties we may encounter in connection with these transactions and arrangements include:

the integration of the assets or business into our information technology platforms and servicing systems;

the quality of servicing;

disruption of our ongoing businesses and distraction of our management teams;

incomplete or inaccurate records;

inability to retain existing customers;

unanticipated expenses;

and potential unknown liabilities associated with the transactions, including legal liability related to origination and servicing prior to the acquisition.

The anticipated benefits and synergies of any future acquisition will assume a successful integration, and will be based on projections and other assumptions, which are inherently uncertain.

Even if integration is successful, anticipated benefits and synergies may not be achieved.

If our estimates of allowance for finance receivable losses are not adequate to absorb actual losses, our provision for finance receivable losses would increase, which could adversely affect our results of operations.

2 unchanged sentences

Our methodology for establishing our allowance for finance receivable losses is based on the guidance from Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses , which requires us to measure expected credit losses for financial assets at each reporting date.

The allowance is primarily based on historical experience, current conditions, and our reasonable and supportable forecast

of economic conditions.

If customer behavior changes as a result of economic conditions and if we are unable to accurately predict how the unemployment rates, and general economic conditions may affect our allowance for finance receivable losses, our allowance for finance receivable losses may be inadequate.

The allowance is primarily based on historical experience, current conditions, and our reasonable and supportable forecast of economic conditions.

If customer behavior changes as a result of economic conditions and if we are unable to accurately

predict how the unemployment rates, and general economic conditions may affect our allowance for finance receivable losses, our allowance for finance receivable losses may be inadequate.

Our allowance for finance receivable losses is an estimate, and if actual finance receivable losses are materially greater than our allowance for finance receivable losses, our results of operations could be adversely affected.

10 unchanged sentences

Our risk management policies, procedures, and techniques, including our scoring technology, may not be sufficient to identify all of the risks we are exposed to, mitigate the risks we have identified, or identify concentrations of risk or additional risks to which we may become subject in the future.

We also face evolving risks as a result of the COVID-19 pandemic and the significant increase in our remote workforce and digital operations.

We also face evolving risks as a result of the significant increase in our remote workforce and digital operations.

These risks may not be adequately captured by our existing risk management framework.

Changes in market conditions, including rising interest rates, could adversely affect the rate at which our borrowers prepay their loans and the value of our finance receivables portfolio, as well as increase our financing cost, which could negatively affect our financial condition, results of operations, and liquidity.

Changes in market conditions could adversely affect the rate at which our borrowers prepay their loans and the value of our finance receivables portfolio, as well as increase our financing cost, which could negatively affect our financial condition, results of operations, and liquidity.

Changing market conditions, the availability of credit, the relative economic vitality of the area in which borrowers and their assets are located, changes in tax laws, other opportunities for investment available to our customers, homeowner mobility, and other economic, social, geographic, demographic, and legal factors beyond our control, may affect the rates at which our borrowers prepay their loans.

8 unchanged sentences

The documents governing our finance receivable sales and securitizations contain provisions that require us to indemnify the purchasers of securitized finance receivables, or to repurchase the affected finance receivables, under certain circumstances.

While our sale and securitization documents vary, they generally contain customary provisions that may require us to repurchase finance receivables if:

• our representations and warranties concerning the quality and characteristics of the finance receivable are inaccurate;

• there is borrower fraud;

• we fail to comply, at the individual finance receivable level or otherwise, with regulatory requirements in connection with the origination and servicing of the finance receivables.

While our sale and securitization documents vary, they generally contain customary provisions that may require us to repurchase finance receivables if our representations and warranties concerning the quality and characteristics, including but not limited to regulatory requirements in connection with origination and servicing, of the finance receivable are inaccurate and there is borrower fraud.

At its maximum, our exposure to repurchases or our indemnification obligations under our representations and warranties could include the current unpaid balance of all finance receivables that we have sold or securitized, and which are not subject to settlement agreements with purchasers.

17 unchanged sentences

These security measures may not be sufficient and may be vulnerable to hacking, employee error, malfeasance, system error, faulty password management, or other irregularities.

For example, third parties may attempt to fraudulently induce employees or customers into disclosing usernames, passwords, or

other sensitive information, which may in turn be used to access our computer systems.

Any failure, interruption, or breach in our cybersecurity could result in reputational harm, disruption of our customer relationships, or our inability to originate, process and service our finance receivable products, any of which could have a materially adverse effect on our financial condition, results of operations, and liquidity.

46 unchanged sentences

Furthermore, our actual or perceived failure to address or prevent any such conduct or otherwise to effectively manage our business or operations could result in significant reputational harm.

We have previously acquired, and in the future may acquire, assets or businesses, either through the direct purchase of such assets or the purchase of a company’s equity.

Further, we may have limited recourse against the seller of the receivables.

Potential difficulties we may encounter in connection with these transactions and arrangements include:

the integration of the assets or business into our information technology platforms and servicing systems;

the quality of servicing;

disruption of our ongoing businesses and distraction of our management teams;

incomplete or inaccurate records;

inability to retain existing customers;

unanticipated expenses;

and potential unknown liabilities associated with the transactions, including legal liability related to origination and servicing prior to the acquisition.

The anticipated benefits and synergies of any future acquisition will assume a successful integration, and will be based on projections and other assumptions, which are inherently uncertain.

Even if integration is successful, anticipated benefits and synergies may not be achieved.

The COVID-19 pandemic may continue to adversely affect consumer finance businesses including OneMain.

The virus causing COVID-19 was identified in late 2019 and was declared a global pandemic in March 2020.

Governmental authorities took a number of steps to combat or slow the spread of COVID-19.

Efforts to combat the virus continue to be complicated by viral variants and uneven global access to and acceptance of vaccines.

These measures have and may continue to impact all or portions of the Company’s workforce and our current and prospective customers.

While many of the restrictions related to the COVID-19 pandemic have largely been eased, uncertainty continues to exist regarding such measures and potential future measures.

In response to COVID-19, we modified our business practices with a portion of our employees working remotely to minimize interruptions in our business.

Legal and regulatory responses to concerns related to the COVID-19 pandemic could result in additional regulation or restrictions affecting the conduct of our business in the future.

The COVID-19 pandemic has caused significant volatility and disruption in global financial markets.

Volatility stemming from the COVID-19 pandemic could negatively affect our net interest income, lending activities, and profitability.

Additionally, to the extent that the pandemic harms our business and results of operations, many of the other risks described in this “Risk Factors” section may be heightened.

RISKS RELATED TO OUR INDUSTRY AND REGULATION

10 unchanged sentences

federal and foreign regulators.

Our entities are subject to several hundred regulatory examinations in a given year.

These examinations

may require us to change our policies or practices, pay monetary fines, or make reimbursements to customers.

These examinations may require us to change our policies or practices, pay monetary fines, or make reimbursements to customers.

Many state regulators and some federal regulators have indicated an intention to pool their resources to conduct examinations of licensed entities, including us, at the same time (referred to as a “multi-state” examination).

2 unchanged sentences

Such actions could subject us to civil money penalties, customer remediation, and increased compliance costs, as well as damage our reputation and brand and could limit or prohibit our ability to offer certain products and services or engage in certain business practices.

State attorneys general have a variety of tools at their disposal to enforce state and federal consumer financial laws.

First, Section 1042 of the Dodd-Frank Act grants state attorneys general the ability to enforce the Dodd-Frank Act and regulations promulgated under the Dodd-Frank Act’s authority and to secure remedies provided in the Act against entities within their jurisdiction.

State attorneys general also have enforcement authority under state law with respect to unfair or deceptive practices.

Generally, under these statutes, state attorneys general may conduct investigations, bring actions, and recover civil penalties or obtain injunctive relief against entities engaging in unfair, deceptive, or fraudulent acts.

State attorneys general have a variety of tools at their disposal to enforce state and federal consumer financial laws, including the ability to enforce the Dodd-Frank Act and regulations promulgated under the Dodd-Frank Act’s authority.

State attorneys general also have enforcement authority under state law with respect to unfair or deceptive practices under which state attorneys general may conduct investigations, bring actions, and recover civil penalties or obtain injunctive relief against entities engaging in unfair, deceptive, or fraudulent acts.

Attorneys general may also coordinate among themselves to enter into multi-state actions or settlements.

16 unchanged sentences

The CFPB has published regulations for “larger participants” in the market of auto finance, and we have been designated as a larger participant in this market.

The larger-participant rule for consumer installment loans was one

of the rulemaking initiatives the CFPB designated as inactive in its Spring 2018 rulemaking agenda.

The larger-participant rule for consumer installment loans was one of the rulemaking initiatives the CFPB designated as inactive in its Spring 2018 rulemaking agenda.

It is not known if or when the CFPB may consider reactivating the rulemaking process for the larger participant rule for consumer installment loans.

21 unchanged sentences

Further, federal and state regulators have scrutinized the practices of lead aggregators and providers.

If regulators place restrictions on certain practices by lead aggregators or providers, our ability to use them as a source for applicants could be affected.

We purchase and sell finance receivables, including charged-off receivables and receivables where the borrower is in default.

6 unchanged sentences

Our purchases or sales of receivables could expose us to lawsuits or fines by regulators if we do not have sufficient documentation to support and verify the validity and amount of the finance receivables underlying these transactions, or if we or purchasers of our finance receivables use collection methods that are viewed as unfair or abusive.

In addition, our collections could suffer, and we may incur additional expenses if

we are required to change collection practices or stop collecting on certain debts because of a lawsuit or action on the part of regulators.

In addition, our collections could suffer, and we may incur additional expenses if we are required to change collection practices or stop collecting on certain debts because of a lawsuit or action on the part of regulators.

Changes in law and regulatory developments could result in significant additional compliance costs relating to securitizations.

7 unchanged sentences

We rely on guidance published by the SEC staff or on our analyses of such guidance to determine our qualification under these and other exemptions.

To the extent that the SEC staff publishes new or different guidance with respect to these matters, we may be required to adjust our business operations accordingly.

Any additional guidance from the SEC staff could provide additional flexibility to us, or it could inhibit our ability to conduct our business operations.

To the extent that the SEC staff publishes new or different guidance with respect to these matters, we may be required to adjust our business operations accordingly, including inhibiting our ability to conduct our business operations.

We cannot give assurance that the laws and regulations governing our Investment Company Act status or SEC guidance regarding the Investment Company Act will not change in a manner that adversely affects our operations.

5 unchanged sentences

Our ability to access capital and credit may be significantly affected by disruption in the U.S.

credit markets and the associated credit rating downgrades on our debt.

In addition, the risk of volatility surrounding the global economic system and uncertainty surrounding the COVID-19 pandemic continue to create significant volatility in, and uncertainty around access to, the capital markets.

credit markets and any potential credit rating downgrades on our debt.

In addition, the risk of volatility and uncertainty surrounding the macroeconomic environment could continue to create significant volatility in, and uncertainty around access to the capital markets.

Historically, we have funded our operations and repaid our debt and other obligations using funds collected from our finance receivable portfolio and new debt issuances.

60 unchanged sentences

In addition, the value of any subordinated securities that we may retain in our securitizations might be reduced or, in some cases, eliminated because of adverse changes in economic conditions or the financial markets.

OMFC, OMFG, and OMFH currently act as the servicers with respect to the personal loan securitization trusts and related series of asset-backed securities.

If OMFC, OMFG, or OMFH defaults in its servicing obligations, an early amortization event could occur with respect to the relevant asset-backed securities and OMFC, OMFG, or OMFH, as applicable, could be replaced as servicer.

OMFC and OMFG currently act as the servicers with respect to the personal loan securitization trusts and related series of asset-backed securities.

If OMFC or OMFG defaults in its servicing obligations, an early amortization event could occur with respect to the relevant asset-backed securities and OMFC or OMFG, as applicable, could be replaced as servicer.

Servicer defaults include, for example, the failure of the servicer to make any payment, transfer or deposit in accordance with the securitization documents, a breach of representations, warran ties or agreements made by the servicer under the securitization documents and the occurrence of certain insolvency events with respect to the servicer.

1 unchanged sentence

Rating agencies may also affect our ability to execute a securitization transaction or increase the costs we expect to incur from executing securitization transactions.

Rating agencies could alter their ratings processes or criteria after we have accumulated finance receivables for securitization in a manner that effectively reduces the value of those finance receivables by increasing

our financing costs or otherwise requiring that we incur additional costs to comply with those processes and criteria.

Rating agencies could alter their ratings processes or criteria after we have accumulated

finance receivables for securitization in a manner that effectively reduces the value of those finance receivables by increasing our financing costs or otherwise requiring that we incur additional costs to comply with those processes and criteria.

We cannot control or predict what actions the rating agencies may take in this regard.

Further, other matters, such as (i) accounting standards applicable to securitization transactions and (ii) capital and leverage requirements applicable to banks and other regulated financial institutions' asset-backed securities, could result in decreased investor demand for securities issued through our securitization transactions, or increased competition from other institutions that undertake securitization transactions.

In addition, compliance with certain regulatory requirements, including the Dodd-Frank Act and the Investment Company Act, may affect the type of securitizations that we are able to complete.

In addition, compliance with certain regulatory requirements, including but not limited to the Dodd-Frank Act and the Investment Company Act, may affect the type of securitizations that are completed and investors that we are able to market to.

If it is not possible or economical for us to securitize our finance receivables in the future, we would need to seek alternative financing to support our operations and to meet our existing debt obligations, which may be less efficient and more expensive than raising capital via securitizations and may have a material adverse effect on our financial condition, results of operations, and liquidity.

14 unchanged sentences

• a classified Board with staggered three-year terms;

• certain rights with respect to the designation of directors for nomination and election to the board of directors, including the ability of Värde to appoint one director, for so long as Värde has beneficial ownership of less than 10% but at least 5% of the voting power of OMH;

• certain rights with respect to the designation of directors for nomination and election to the Board, including the ability of Värde to appoint one director, for so long as Värde has beneficial ownership of less than 10% but at least 5% of the voting power of OMH;

• removal of directors only for cause and only with the affirmative vote of at least 80% of the voting interest of stockholders entitled to vote;

4 unchanged sentences

Nothing in OMH's restated certificate of incorporation precludes future issuances without stockholder approval of the authorized but unissued shares of OMH's common stock.

These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or change our management and board of directors and, as a result, may adversely affect the market price of OMH's common stock and the ability of public stockholders to realize any potential change of control premium.

These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or change our management and Board and, as a result, may adversely affect the market price of OMH's common stock and the ability of public stockholders to realize any potential change of control premium.

See additional information under “Business Overview” in Item 1 of this report.

1 unchanged sentence

Licensing and insurance laws and regulations may delay or impede purchases of OMH's common stock.

Certain of the states in which we are licensed to originate loans and the state in which our insurance subsidiaries are domiciled (Texas) have laws and regulations that require regulatory approval for the acquisition of “control” of regulated entities.

Certain states in which we are licensed to originate loans and the state in which our insurance subsidiaries are domiciled (Texas) have laws and regulations that require regulatory approval for the acquisition of “control” of regulated entities.

In addition, Texas insurance laws and regulations generally provide that no person may acquire control, directly or indirectly, of a domiciled insurer, unless the person has provided the required information to, and the acquisition is subsequently approved or not disapproved by the Department of Insurance (“DOI”).

21 unchanged sentences

The future issuance of additional common stock in connection with our incentive plans, acquisitions or otherwise will dilute all other stockholdings.

OMH had an aggregate of 1,872,540,640 shares of common stock authorized but unissued as of January 31, 2022.

OMH may issue any or all of these shares of common stock without any action or approval by OMH's stockholders, subject to certain exceptions.

OMH may issue any or all of the shares of common stock authorized but unissued without any action or approval by OMH's stockholders, subject to certain exceptions.

OMH also intends to continue to evaluate acquisition opportunities and may issue common stock in connection with any such acquisition.

25 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors