A.M. Best has removed from under review with developing
implications and affirmed the financial strength rating of A-
(Excellent) and the issuer credit ratings (ICR) of “a-” of the key
life/health subsidiaries of Genworth Financial, Inc. (Genworth)
(Richmond, VA) [NYSE:GNW]. Additionally, the ICR of “bbb-” of Genworth
and its existing issue ratings have been removed from under review and
affirmed. Concurrently, A.M. Best has assigned ratings to Genworth’s
shelf registration, effective May 2015, which replaced the previously
expired shelf. The outlook assigned to all ratings is negative.
On May 1, 2015, A.M. Best placed Genworth’s ratings under review with
developing implications in response to the company’s public disclosure
that it was assessing the market interest and considering the merits of
selling its life and annuity businesses. The removal of the under review
status follows Genworth’s public announcement, during the second quarter
2015 earnings call on Aug. 5, 2015, that the company has terminated the
proposed strategic divestiture of its life and annuity businesses.
However, there remains potential that the company may pursue smaller,
targeted block transactions. As such, A.M. Best will continue to closely
monitor the overall diversification of insurance risks within the
organization.
The assignment of the negative outlook reflects A.M. Best’s concerns
with the volatility of earnings, lack of growth in its life and annuity
operations and the organizations’ challenge to improve sales following
the recent strategic uncertainty, as well as the inherent volatility of
the long-term care business. Further divestiture in its non-insurance
operations, which provide a steady stream of dividends to the Genworth
organization, may reduce financial flexibility.
A.M. Best notes that as of second quarter 2015, Genworth has positioned
itself to be compliant with Private Mortgage Insurer Eligibility
Requirements (PMIERS) within the required timeframe. The company
continues to report good financial flexibility at the holding company,
with $1.2 billion of cash and invested assets, and financial leverage
was approximately 27% as of June 30, 2015. A.M. Best expects that
Genworth management will continue to refrain from taking dividends from
the life/health companies in the medium term, servicing holding company
needs from its global mortgage insurance subsidiaries.
The FSR of A- (Excellent) and the ICRs of “a-” for the following
subsidiaries of Genworth Financial, Inc. have been affirmed and
assigned a negative outlook:
-
Genworth Life Insurance Company
-
Genworth Life Insurance Company of New York
-
Genworth Life and Annuity Insurance Company
The ICRs of “bbb-” of Genworth Financial, Inc. and Genworth
Holdings, Inc. have been affirmed and assigned a negative outlook.
The following indicative issue ratings on securities available under
universal shelf registration have been assigned with a negative outlook:
Genworth Financial, Inc.—
-- “bbb-” on senior unsecured debt
-- “bb+” on subordinated debt
-- “bb” on preferred stock
Genworth Holdings, Inc.—
-- “bbb-” on senior unsecured debt
-- “bb+” on subordinated debt
-- “bb” on preferred stock
The following issue ratings have been affirmed and assigned a negative
outlook:
Genworth Holdings, Inc. (guaranteed by Genworth Financial, Inc.) —
-- “bbb-” on $300 million 8.625% senior unsecured notes, due 2016
-- “bbb-” on $600 million 6.515% senior unsecured notes, due 2018
-- “bbb-” on $400 million 7.70% senior unsecured notes, due 2020
-- “bbb-” on $400 million 7.20% senior unsecured notes, due 2021
-- “bbb-” on $750 million 7.625% senior unsecured notes, due 2021
-- “bbb-” on $400 million 4.9% senior unsecured notes, due 2023
-- “bbb-” on $400 million 4.8% senior unsecured notes, due 2024
-- “bbb-” on $300 million 6.50% senior unsecured notes, due 2034
-- “bb” on $600 million fixed/floating rate junior subordinated notes,
due 2066
Genworth Global Funding Trusts— “a-” program rating
-- “a-” on all outstanding notes issued under the program
This press release relates to rating(s) 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 visit A.M. Best’s Ratings
& Criteria Center.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS
RESERVED.
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