Fitch: Genworth Benefits from Canadian MI IPO

The partial spin off of its Canadian mortgage insurance business is one of the factors that has strengthened the capital levels at Genworth Financial Inc., Richmond, Va., and thus Fitch Ratings, Chicago, is affirming the life insurance subsidiaries' "A-" insurer financial strength rating. Although Fitch is worried about investment losses at the life operations, it added projected losses from mortgage loans and alternative investments would be modest. If more capital is needed at Genworth, Fitch noted it could further monetize its remaining equity holdings in the Canadian mortgage insurer, currently valued at $1.4 billion. The report noted Genworth "remains exposed to a troubled U.S. mortgage insurance operation. Explicit in Fitch's rating (of the life insurance unit) is an assumption Genworth would not provide any future capital support to the U.S. mortgage insurance operations. Fitch continued that if this assumption were incorrect, the life units' ratings would likely be downgraded.