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A.M. Best Assigns Rating to Genworth Financial, Inc.a?s New Senior Unsecured Notes

^{Published on 2010-06-24 11:36:19 - Market Wire}
 

OLDWICK, N.J.--([ BUSINESS WIRE ])--A.M. Best Co. has assigned a debt rating of abbba to the $400 million 7.70% senior unsecured notes due June 2020 recently issued by Genworth Financial, Inc. (Genworth) (headquartered in Richmond, VA) (NYSE: GNW). The assigned outlook is negative. The notes are a drawdown from Genwortha™s universal shelf registration, which was filed in August 2009. The ratings on Genwortha™s domestic life/health insurance companies and existing debt securities are unchanged.

Roughly one-half of the proceeds from this debt issuance is expected to be used to repay a portion of outstanding borrowings under the companya™s two five-year revolving credit agreements, and the remainder for general corporate purposes. The issuance of these notes is expected to have a modest impact on Genwortha™s financial leverage, which remains within A.M. Besta™s guidelines for its current ratings. A.M. Best notes that in the past few years, Genwortha™s fixed charge coverage has declined due in part to subpar operating performance, most notably within its U.S. mortgage and international segments. However, operating results have steadily improved over the past few quarters, and the current low fixed charge coverage is offset by ample liquidity at the holding company.

Genwortha™s current ratings reflect the pressures, albeit moderating, on its operating profile from its U.S.-based mortgage insurance business, which is partially offset by earnings within its international segment and improvement in its U.S.-based retirement and protection segment. On a longer-term basis, Genwortha™s established presence in the term life, long-term care, income annuity and mortgage insurance markets is expected to provide significant diversification of revenue and earnings under normalized market conditions.

A.M. Best notes that Genwortha™s business profile contains sizeable exposure to long-term care, which A.M. Best has historically viewed as a less creditworthy business relative to life insurance and annuities. Additionally, Genwortha™s balance sheet remains exposed to mortgages on both sides of the balance sheet, vis--vis its life companiesa™ investments in whole loan commercial mortgages, residential and commercial mortgage-backed securities and its separate extensive domestic and international mortgage insurance businesses. However, A. M. Best notes that asset impairments have been moderating over the past few quarters as the economy slowly recovers.

For Besta™s Credit Ratings, an overview of the rating process and rating methodologies, please visit [ www.ambest.com/ratings ].

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at [ www.ambest.com/ratings/methodology ].

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit [ www.ambest.com ].