Best Affirms Ratings of Genworth Financial, But Maintains Negative Outlook

A.M. Best Co. has affirmed the issuer credit rating of Genworth Financial Inc., as well as those of its life/health insurance subsidiaries. "Over the last year, Genworth has strengthened its balance sheet by completing several capital raising initiatives, de-risking its product and investment portfolios and implementing improved risk management practices within its U.S. mortgage insurance business," the statement from Best said. However, while Genworth's operating profile is now improving, it is being hurt by recent losses within the U.S. mortgage insurance business, as well as the underperformance of its international lifestyle protection business and moderately negative results within its legacy long-term care business. "Specific areas of concern include Genworth's exposure to commercial real estate, residential mortgage-backed securities and below investment grade bonds, which have experienced credit migration over the last year. A.M. Best notes that Genworth's commercial real estate portfolio has had limited losses to date, with an average loan-to-value around 65% and a debt service coverage ratio at 2.3 times," the rating agency said.