Fitch Ratings has raised its ratings outlook on Genworth Life Insurance Co. to stable with a key rating driver being the improve performance of the U.S. mortgage insurance business.
The company had been dropped to a negative rating outlook—which
But in 1Q13, the U.S. mortgage insurance business had an
“Fitch believes improving macroeconomic conditions coupled with a greater proportion of risk related to vintage 2009 and forward books of business reduce the likelihood that the company would have to rely on large capital contributions from the life companies to support the U.S. mortgage insurance business. The current rating level of the life companies can tolerate a moderate amount of additional losses at the U.S. mortgage insurance business, including additional capital replenishment,” the ratings agency said.
Other positives include a capital contribution of $100 million and transfer of the ownership of Genworth’s European MI operation to the U.S. business. These moves were part of a
Previously A.M. Best revised its outlook on Genworth’s life units to stable as well, but it was less bullish than Fitch on the MI business.
Even with the 1Q13 profit, Best said “the domestic mortgage insurance business continues to underperform and places a potential drag on the group’s future profitability.”
Best also looked at Genworth Life’s investment portfolio, which like most of segment, invests in commercial mortgages.
Its report noted, “The general account portfolio has seen little impairments on commercial mortgage loans, and overall exposure to this asset class is generally consistent with peers. Investments in structured securities continue to perform solidly and are closely monitored.”
