AM Best Affirms Credit Ratings of Genworth Financial, Inc. and Its U.S. Life Subsidiaries
September 04 2020 - 3:08PM
Business Wire
AM Best has affirmed the Financial Strength Rating (FSR)
of B (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR)
of “bb+” of Genworth Life and Annuity Insurance Company (GLAIC)
(Richmond, VA). Concurrently, AM Best has affirmed the FSR of C++
(Marginal) and the Long-Term ICRs of “b” 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” 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 reflect GLAIC’s balance sheet strength, which AM
Best categorizes as strong, as well as its weak operating
performance, limited business profile and appropriate enterprise
risk management.
The ratings of GLAIC also reflect its strong balance sheet
strength, including the level and quality of capital, and the
quality of the asset portfolio. Although absolute and risk-adjusted
capital, as measured by Best’s Capital Adequacy Ratio (BCAR),
increased in 2019, many uncertainties around the strength of the
balance sheet remain related to the potential for future reserve
increases or asset impairments. There has been history of negative
profitability in aggregate and in most lines of businesses. GLAIC
calculated its risk-based capital (RBC) level at 438% at the end of
2019, an increase from the prior-year RBC score of 422%.
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
enterprise risk management.
The ratings of GLIC and GLICNY reflect AM Best’s view of its
balance sheet strength and its operating performance. Risk-adjusted
capitalization, as measured by BCAR and other capital metrics, is
low and volatile. 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. While GNW
has demonstrated success at achieving premium rate increases in the
past, operating losses continue to persist due to deviation in
experience relative to pricing assumptions. The impact and timing
of the approval and receipt of those rate increases continue to be
uncertain. GLIC calculated its RBC level at 213% at the end of
2019, an increase from the prior-year RBC score of 199%, while
GLICNY’s RBC improved to 291% from 223% between 2018 and 2019.
The rating affirmations of the two holding companies, Genworth
and Genworth Holdings, Inc., as well as its associated debt,
reflect the ongoing challenges the operating companies face, its
debt obligations and secured promissory note to settle 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, the recent $750 million senior
notes offering by Genworth Mortgage Holdings, Inc. and a potential
19.9% IPO of the U.S. mortgage insurance business. Finally, GNW
continues to pursue closing the transaction with China Oceanwide
Holdings Group Co. Ltd. and the $1.5 billion capital commitment,
which has been delayed due to funding issues given current market
challenges with COVID-19.
The following Long-Term IRs have been affirmed with a stable
outlook:
Genworth Holdings, Inc. (guaranteed by Genworth Financial,
Inc.)— -- “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 affirmed with a
stable outlook:
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
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 media use of Best’s
Credit Ratings and AM Best press releases, please view Guide for
Media - Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
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 New York, London,
Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more
information, visit www.ambest.com.
Copyright © 2020 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Bruno Caron Senior Financial Analyst +1 908 439
2200, ext. 5144 bruno.caron@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Michael Porcelli Director +1 908 439 2200, ext.
5548 michael.porcelli@ambest.com
Jim Peavy Director, Public Relations +1 908 439
2200, ext. 5644 james.peavy@ambest.com
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