AM Best Upgrades Issuer Credit Ratings for Most of Genworth Financial, Inc.’s U.S. Life Subsidiaries; Downgrades Credit Ratings of Genworth Life and Annuity Insurance Company
November 10 2022 - 3:26PM
Business Wire
AM Best has upgraded the Long-Term Issuer Credit Ratings
(Long-Term ICR) to “b+” (Marginal) from “b” (Marginal) and affirmed
the Financial Strength Rating (FSR) of C++ (Marginal) of Genworth
Life Insurance Company (GLIC) (Wilmington, DE) and Genworth Life
Insurance Company of New York (GLICNY) (New York, NY). The outlook
of these Credit Ratings (ratings) is stable. Additionally, AM Best
has upgraded the Long-Term ICRs to “b+” (Marginal) from “b”
(Marginal) of Genworth Financial, Inc. (Genworth) [NYSE: GNW] and
Genworth Holdings, Inc., as well as their associated Long-Term
Issue Credit Ratings (Long-Term IRs). (Both companies are domiciled
in Delaware.) The outlook of these ratings is stable.
Concurrently, AM Best has downgraded the FSR to B- (Fair) from B
(Fair) and the Long-Term ICR to “bb-” (Fair) from “bb+” (Fair) of
Genworth Life and Annuity Insurance Company (GLAIC) (Richmond, VA).
The outlook of these ratings is negative.
The ratings of GLIC and GLICNY reflect their balance sheet
strength, which AM Best assesses as weak as well as its marginal
operating performance, limited business profile and appropriate
enterprise risk management (ERM).
The rating upgrades of GLIC and GLICNY reflect a noticeable
improvement in operating performance in recent years as management
has maintained its strategy of garnering actuarially supported
premium rate increases on in-force, long-term care (LTC) policies
and have achieved meaningful results. Operating performance in
recent years has benefited from increased lapses and a decline in
utilization in the LTC line of business as a result of the
pandemic. The rising interest rate environment also is a net
positive, which is offset somewhat by higher costs associated with
rising inflation. While the group has demonstrated success at
achieving premium rate increases in the past, the impact and timing
of the approval and receipt of those rate increases continue to be
uncertain and a potential risk.
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 ERM.
The rating downgrades of GLAIC are due primarily to the
company’s weak level of risk-adjusted capital, as measured by
Best’s Capital Adequacy Ratio (BCAR), which has decreased
substantially over the previous 12 months, with the company posting
a statutory net loss of $179 million for year-end 2021 driven by
declining equity markets that require a higher level of reserves
for the company’s variable annuity business and higher mortality
due to the COVID-19 pandemic. The negative outlook for GLAIC
reflects the continued pressure on its current balance sheet
strength assessment. AM Best will continue to monitor the company’s
ability to improve its current level of risk-adjusted
capitalization. A failure to execute on capital management
initiatives designed to improve risk-adjusted capital may result in
further negative ratings actions.
The following Long-Term IRs have been upgraded with stable
outlooks:
Genworth Holdings, Inc.— -- to “b+” (Marginal) from “b”
(Marginal) on $300 million 6.50% senior unsecured notes, due 2034
-- to “b-” (Marginal) from “ccc+” (Weak) on $600 million
fixed/floating rate junior subordinated notes, due 2066
The following indicative Long-Term IRs have been upgraded with
stable outlooks:
Genworth Financial, Inc.— -- to “b+” (Marginal) from “b”
(Marginal) on senior unsecured debt -- to “b” (Marginal) from “b-”
(Marginal) on subordinated debt -- to “b-” (Marginal) from “ccc+”
(Weak) on preferred stock
Genworth Holdings, Inc.— -- to “b+” (Marginal) from “b”
(Marginal) on senior unsecured debt -- to “b” (Marginal) from “b-”
(Marginal) on subordinated debt -- to “b-” (Marginal) from “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 Performance Assessments, 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.
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Kevin Varvaro Financial Analyst +1 908 439
2200, ext. 5487 kevin.varvaro@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Michael Adams Associate Director +1 908 439
2200, ext. 5133 michael.adams@ambest.com
Al Slavin Communications Specialist +1 908 439
2200, ext. 5098 al.slavin@ambest.com
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