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

Rhea-AI Summary

AM Best upgraded the Long-Term Issuer Credit Ratings (ICR) of Genworth Financial (NYSE: GNW) to 'b+' from 'b' and affirmed the Financial Strength Rating (FSR) of C++ for Genworth Life Insurance Company and Genworth Life Insurance Company of New York. The outlook for these ratings is stable. Conversely, Genworth Life and Annuity Insurance Company saw its FSR downgraded to B- from B due to a significant net loss of $179 million attributed to declining equity markets and increased mortality rates during the COVID-19 pandemic.

Positive

• Upgraded Long-Term ICRs of GLIC and GLICNY to 'b+' from 'b' reflecting improved operating performance.
• Successful premium rate increases on long-term care policies contributing to better financial results.

Negative

• Downgraded FSR of GLAIC to B- from B due to weak risk-adjusted capital.
• Statutory net loss of $179 million for GLAIC in 2021, driven by declining equity markets and COVID-19 impact.

OLDWICK, N.J.--(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.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221110006091/en/

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

Source: AM Best

FAQ

What recent credit rating updates were made for Genworth Financial (GNW)?

AM Best upgraded the Long-Term ICRs of Genworth Financial (GNW) to 'b+' from 'b'.

What is the Financial Strength Rating of Genworth Life and Annuity Insurance Company?

The FSR of Genworth Life and Annuity Insurance Company was downgraded to B- from B.

What are the factors affecting the ratings of Genworth companies?

Factors include the companies' operating performance, premium rate increases, and risk-adjusted capital.

What was the statutory net loss reported by Genworth Life and Annuity Insurance Company?

The company reported a statutory net loss of $179 million for the year-end 2021.