A.M. Best has removed from under review with developing
implications and affirmed the Financial Strength Rating (FSR) of B+
(Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of
“bbb-” of Genworth Life and Annuity Insurance Company
(GLAIC) (Richmond, VA). Concurrently, A.M. Best has removed from
under review with developing implications and affirmed the FSR of
B- (Fair) and the Long-Term ICRs of “bb-” of Genworth Life
Insurance Company (GLIC) (Wilmington, DE) and Genworth Life
Insurance Company of New York (New York, NY). Additionally,
A.M. Best has removed from under review with developing
implications and affirmed the Long-Term ICRs of “b” of Genworth
Financial, Inc. (Genworth) [NYSE: GNW] and Genworth
Holdings, Inc. (both domiciled in Delaware), as well as their
Long-Term Issue Credit Ratings (Long-Term IR). The outlook assigned
to these Credit Ratings (ratings) is stable.
A.M. Best has removed the under review status on all existing
Genworth ratings based on its assessment of potential outcomes
given the successful completion of the Committee on Foreign
Investment in the United States process in June 2018. This
represented a key step toward the pending acquisition of Genworth
by China Oceanwide. Other regulatory regimes also need to approve
the transaction. For now, Genworth management has formulated
adequate financial flexibility, given a limited ability to access
the public debt and equity markets.
Genworth addressed the May 2018 $600 million of senior debt with
the issuance of a $450 million senior secured term loan in March
2018. In addition, the holding company maintains an adequate level
of liquidity. Also, cash flow from the domestic and international
mortgage businesses remains good.
The ratings of GLAIC reflect its balance sheet strength, which
A.M. Best categorizes as strong, as well as its marginal operating
performance, limited business profile and appropriate enterprise
risk management (ERM).
The ratings of GLIC reflect its balance sheet strength, which
A.M. Best categorizes as weak, as well as its marginal operating
performance, limited business profile and appropriate ERM.
GLIC’s operations remain focused on the long-term care (LTC)
market, which A.M. Best has on its product continuum at the high
end of risk. A.M. Best continues to view GLIC’s risk-adjusted
capital level as weak, as measured by Best’s Capital Adequacy Ratio
(BCAR), for year-end 2017. The LTC block continues to rely solely
on premium rate increases and associated benefit reductions to
prevent capital to further decline. A.M. Best notes the company has
been successful at securing rate increases across its various LTC
blocks, but operating performance remains volatile, and with the
limited product profile, prevents meaningful organic capital
growth. On the other hand, GLAIC’s risk-adjusted capital, as
measured by BCAR, remains strong. However, this has continued to
give rise to marginal and volatile operating performance with a
limited business profile, reflective of the company’s decision to
halt sales of its traditional life insurance and fixed annuity
products in 2016.
Given the information at hand, A.M. Best believes the successful
closing of a transaction with China Oceanwide will have neither a
positive nor negative impact on the ratings of Genworth. However,
A.M. Best will revisit that view when and if the transaction
closes, and is presented with additional plans and company
intentions, including capital contributions to any rated
entities.
The following Long-Term IR has been assigned with a stable
outlook:
Genworth Holdings, Inc. (guaranteed by Genworth
Financial, Inc.)—-- “b” on $450 million floating rate senior
secured term loan, due 2023
The following Long-Term IRs have been removed from under review
with developing implications and affirmed with assigned outlooks of
stable:
Genworth Holdings, Inc. (guaranteed by Genworth
Financial, Inc.)—-- “b” on $400 million 7.70% senior unsecured
notes, due 2020-- “b” on $400 million 7.20% senior unsecured notes,
due 2021-- “b” on $750 million 7.625% senior unsecured notes, due
2021-- “b” on $400 million 4.9% senior unsecured notes, due 2023--
“b” on $400 million 4.8% senior unsecured notes, due 2024-- “b” on
$300 million 6.50% senior unsecured notes, due 2034-- “ccc+” on
$600 million fixed/floating rate junior subordinated notes, due
2066
The following indicative Long-Term IRs on securities available
under the universal shelf registration have been removed from under
review with developing implications and affirmed with assigned
outlooks of stable:
Genworth Financial Inc.—-- “b” on senior unsecured debt--
“b-” on subordinated debt-- “ccc+” on preferred stock
Genworth Holdings, Inc.—-- “b” on senior unsecured debt--
“b-” on subordinated debt-- “ccc+” on preferred stock
Genworth Global Funding Trusts—The program rating of
“bbb-” has been removed from under review with developing
implications and withdrawn, as the vehicle is empty.
This press release relates to Credit Ratings that have been
published on A.M. Best’s website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please see A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings. For information on the proper media use of Best’s
Credit Ratings and A.M. Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and A.M.
Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2018 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180725005955/en/
A.M. BestBruno Caron, FSA, MAAA, +1 908-439-2200, ext.
5144Financial
Analystbruno.caron@ambest.comorKen Johnson, CFA,
CAIA, FRM, +1 908-439-2200, ext. 5056Senior
Directorken.johnson@ambest.comorChristopher Sharkey,
+1 908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy,
+1 908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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