A.M. Best Co. has affirmed the debt ratings of Genworth Financial Inc., but also maintained its negative outlook on the company, in large part due to its private mortgage insurance subsidiary.
In its press release Best said that Genworth Mortgage Insurance Co. has received waivers from a number of states, which have risk-to-capital requirements for mortgage insurers.
The rating agency commented "the failure to maintain or complete additional state waivers, coupled with continued U.S. housing distress, could impact the holding company under certain severely stressed economic scenarios. Therefore, A.M. Best believes the risk of potential capital calls on the holding company could potentially place strain on Genworth’s life/health companies."
It also noted that the investment portfolio on the life/health side has sizeable risk (although in line with its peers) through its holdings in residential mortgage-backed securities as well as commercial CMBS and direct mortgages.
