AM Best Affirms Credit Ratings of Genworth Financial, Inc. and Its U.S. Life Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)--
AM Best has affirmed the Financial Strength Rating (FSR) of C++ (Marginal) and the Long-Term Issuer Credit Ratings (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. [NYSE: GNW] and Genworth Holdings, Inc. (both domiciled in Delaware) as well as their Long-Term Issue Credit Ratings (Long-Term IRs). The outlook of these Credit Ratings (ratings) is stable. In addition, AM Best has affirmed the 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 these ratings is negative.

The ratings of GLIC and GLICNY reflect their balance sheet strength, which AM Best assesses as weak, as well as their adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The ratings of GLIC and GLICNY also reflect their risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and other capital metrics, which are low and volatile. Management has maintained its strategy of garnering actuarially supported premium rate increases and benefit reductions on in-force, long-term care (LTC) policies and continues to achieve meaningful results. The companies’ operating performance in recent years has benefited from increased lapses and a decline in utilization in the LTC line of business as a lingering result of the pandemic. The interest rate environment is a net positive, albeit 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 a financial risk.

The ratings of GLAIC reflect its balance sheet strength, which AM Best assesses as weak, as well as its marginal operating performance, limited business profile and appropriate ERM.

The ratings of GLAIC also reflect its weak level of risk-adjusted capitalization, as measured by BCAR, which is impacted by declining equity markets in 2022 that require a higher level of reserves for the company’s variable annuity business and elevated post COVID-19 mortality levels. 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 capitalization may result in further negative rating actions.

The rating affirmations of Genworth Financial, Inc. and Genworth Holdings, Inc. reflect the ongoing challenges these operating companies face, and their dependence on dividends from Enact Holdings, Inc [Nasdaq: ACT] that provide support on debt servicing obligations.

The following Long-Term IRs have been affirmed with stable outlooks:

Genworth Holdings, Inc.—

— “b+” (Marginal) on $300 million 6.50% senior unsecured notes, due 2034

— “b-” (Marginal) on $600 million fixed/floating rate junior subordinated notes, due 2066

The following indicative Long-Term IRs have been affirmed with stable outlooks:

Genworth Holdings, Inc.—

— “b+” (Marginal) on senior unsecured debt

— “b” (Marginal) on subordinated debt

— “b-” (Marginal) on preferred stock

Genworth Financial, Inc.—

— “b+” (Marginal) on senior unsecured debt

— “b” (Marginal) on subordinated debt

— “b-” (Marginal) 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.

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Stephen Vincent
Senior Financial Analyst

+1 908 882 1705

stephen.vincent@ambest.com

Michael Adams
Associate Director

+1 908 882 1592

michael.adams@ambest.com

Christopher Sharkey
Associate Director, Public Relations

+1 908 882 2310

christopher.sharkey@ambest.com

Al Slavin
Senior Public Relations Specialist

+1 908 882 2318

al.slavin@ambest.com

Source: AM Best