AM Best has revised the outlook to negative from stable
for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed
the Financial Strength Rating (FSR) of B (Fair) and the Long-Term
ICR of “bb+” (Fair) of Genworth Life and Annuity Insurance Company
(GLAIC) (Richmond, VA). The outlook of the FSR is stable.
Concurrently, AM Best has affirmed the FSR of C++ (Marginal) and
the Long-Term ICRs of “b” (Marginal) of Genworth Life Insurance
Company (GLIC) (Wilmington, DE) and Genworth Life Insurance Company
of New York (GLICNY) (New York, NY). Additionally, AM Best has
affirmed the Long-Term ICRs of “b” (Marginal) 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 of these Credit Ratings
(ratings) is stable.
The ratings of GLAIC reflect its balance sheet strength, which
AM Best assesses as adequate, as well as its weak operating
performance, limited business profile and appropriate enterprise
risk management (ERM).
The ratings of GLAIC also reflect its adequate balance sheet
strength, including the level and quality of capital, and the
quality of its asset portfolio. The revision of the Long-Term ICR
outlook to negative reflects pressure on the company’s
risk-adjusted capitalization in recent years, as well as increased
losses over this period. Absolute and risk-adjusted capital, as
measured by Best’s Capital Adequacy Ratio (BCAR), decreased in
2020, mainly driven by revised interest rate assumptions within the
universal life with secondary guarantee block. Results for 2020
were negative with a $182 million statutory loss driven by changes
in reserves in the universal life with secondary guarantee block as
well as higher mortality due to the COVID-19 pandemic. GLAIC
calculated its risk-based capital (RBC) level at 424% at the end of
2020; it has been in the 400% - 450% range for the past four
years.
The ratings of GLIC and GLICNY reflect the group’s balance sheet
strength, which AM Best categorizes as weak, as well as its weak
operating performance, limited business profile and appropriate
ERM.
The ratings of GLIC and GLICNY reflect AM Best’s view of their
balance sheet strength and operating performance. Risk-adjusted
capitalization, as measured by BCAR and other capital metrics, is
low, in line with 2019. A strong offsetting factor is management’s
focused strategy of garnering actuarially supported premium rate
increases on in-force, long-term care policies. Management
identified the need for these increases several years ago, took
corrective action and has achieved meaningful results. GNW has
demonstrated success at achieving premium rate increases in the
past. The impact and timing of the approval and receipt of those
rate increases remain uncertain. GLIC calculated its RBC level at
229% at the end of 2020, an increase from the prior-year RBC score
of 213%, while GLICNY’s RBC deteriorated to 200% from 291% in
2019.
The rating affirmations of the two holding companies, Genworth
and Genworth Holdings, Inc., as well as their associated debt,
reflect the ongoing challenges the operating companies face, their
debt obligations and secured promissory note to settle a recent
dispute. Genworth has shown financial flexibility navigating
through those complications, including the sale of Genworth’s stake
in Genworth MI Canada, Inc. in 2019 and a potential 19.9% initial
public offering of Enact, the U.S. mortgage insurance business.
More recently, the company sold its interest in Genworth Mortgage
Insurance Australia Limited for total proceeds of $370 million.
This has alleviated pressure on a September 2021 maturity that was
retired in early July, as well as AXA liabilities. Earlier this
year, the company announced the termination of the merger agreement
with China Oceanwide Holdings Group Co. Ltd.
The following Long-Term IRs have been affirmed with a stable
outlook:
Genworth Holdings, Inc. (guaranteed by Genworth Financial,
Inc.)—
— “b” (Marginal) on $750 million 7.625% senior unsecured notes,
due 2021
— “b” (Marginal) on $400 million 4.9% senior unsecured notes,
due 2023
— “b” (Marginal) on $400 million 4.8% senior unsecured notes,
due 2024
— “b” (Marginal) on $300 million 6.50% senior unsecured notes,
due 2034
— “ccc+” (Weak) 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 affirmed with a
stable outlook:
Genworth Financial, Inc.—
—“b” (Marginal) on senior unsecured debt
—“b-” (Marginal) on subordinated debt
—“ccc+” (Weak) on preferred stock
Genworth Holdings, Inc.—
— “b” (Marginal) on senior unsecured debt
— “b-” (Marginal) on subordinated debt
— “ccc+” (Weak) on preferred stock
This press release relates to Credit Ratings that have been
published on AM 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 AM Best’s Recent Rating
Activity web page. For additional information regarding the use and
limitations of Credit Rating opinions, please view Guide to Best’s
Credit Ratings. For information on the proper use of Best’s Credit
Ratings, Best’s Preliminary Credit Assessments and AM Best press
releases, please view Guide to Proper Use of Best’s Ratings &
Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
Copyright © 2021 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Bruno Caron Associate Director +1 908 439 2200,
ext. 5144 bruno.caron@ambest.com
Michael Porcelli Director +1 908 439 2200, ext.
5548 michael.porcelli@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Jim Peavy Director, Communications +1 908 439
2200, ext. 5644 james.peavy@ambest.com
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