Moody’s Investors Service is continuing its review regarding a possible downgrade of Genworth Financial Inc., which could happen if the firm’s troubled U.S. mortgage insurance unit is not separated out from the parent company.
Worried about the holding company’s creditors, Moody’s said it could confirm the parent company’s ratings but only if it would delink from the MI firm.
In response, Genworth said it is “pursuing various plans” to manage its exposure to the mortgage insurance business. However, it reiterated its previous statement that run-off, a sale or a spin-off of the business, is not an option that would benefit shareholders.
"We are acting with focus and urgency and believe that the actions we are pursuing will improve returns, strengthen the company's financial position, support a stronger credit profile and drive greater value for our shareholders," said Martin P. Klein, acting CEO of Genworth Financial.
But Genworth is having trouble with more than just its U.S. MI business. Earlier this year problems arose with its Australian MI unit, forcing the
Scott Robinson, a senior vice president at the ratings agency, said, "Moody's will continue to focus on the evaluation of holding company financial flexibility over the near to medium term. We will consider management actions and plans to enhance financial flexibility, limit the potential downside impact of the lower-rated U.S. MI business on the rest of the operations, as well as the magnitude of potential parental support for the MI business."
Genworth Mortgage Insurance Corp.'s Ba1 insurer financial strength rating was also placed on review for downgrade in the June 27 rating action, Moody’s said, due to the uncertainty about the strength of its parent and the likelihood and magnitude of future capital support.
Genworth’s MI division ranks fifth in terms of both new policies written, and policies-in-force, according to figures compiled by National Mortgage News and the
