A.M. Best Affirms Ratings of Genworth Financial, Inc.Assigns Ratings to American Continental Insurance Company
OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR (Free System Resource) In Windows 3.x, the amount of unused memory in various 64K blocks reserved for managing current applications. Every open window takes some space in this area. See Windows memory limitation. ) of A+ (Superior) and issuer credit ratings (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of "aa-" of the key life/health insurance subsidiaries of Genworth Financial Genworth Financial is an international financial services organization that offers a portfolio of primarily consumer-focused products through its various companies, including annuities, combination products, investment services, life insurance, long term care insurance, medicare , Inc. (Genworth) (Richmond, VA) (NYSE NYSE
See: New York Stock Exchange :GNW GNW Genworth Financial (stock symbol)
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GNW Guns 'n' Wankers (band) ). Additionally, A.M. Best has assigned an FSR of A- (Excellent) and an ICR of "a-" to American Continental Insurance Company (American Continental) (Brentwood, TN), a wholly owned indirect subsidiary of Genworth. A.M. Best also has affirmed the ICR of "a-" and existing debt ratings of Genworth.
Concurrently, A.M. Best has assigned a debt rating of "a-" to Genworth's $600 million 6.515% senior unsecured notes due May 22, 2018. This rating action is in line with Genworth's existing senior debt ratings. The outlook for all ratings is stable. (Please see link below for a detailed listing of the companies and ratings.)
Genworth's ratings reflect its solid operating performance, favorable liquidity position and extensive distribution channels. The ratings also recognize Genworth's established presence in the mortgage insurance, term life, long-term care long-term care (LTC),
n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. and income annuity markets, which provide significant diversification of revenue and earnings.
The primary offsetting rating factors are the group's exposure to the industry-wide uncertainties associated with long-term care and, to a lesser extent, Medicare supplement liabilities. In addition, relative to life industry peers, Genworth is significantly exposed to mortgage-related risk on both sides of the balance sheet, where performance is dependent upon prevailing economic conditions. The company's comprehensive risk management program and its expertise in both investment management and the underwriting Underwriting
1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt).
2. The process of issuing insurance policies. and pricing of its businesses partially mitigate these concerns. A.M. Best also notes that the loans insured by Genworth's U.S. mortgage insurance business are predominantly of prime credit quality.
American Continental's ratings reflect its position as the primary Medicare supplement product platform for Genworth. It also acknowledges the financial flexibility and access to resources resulting from its ownership by Genworth. While the Medicare supplement business carries the potential for earnings volatility, contributions from this line continue to represent a relatively small percentage of Genworth's overall operating income Operating Income
The profit realized from a business' own operations.
This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. .
A.M. Best believes that Genworth's balance sheet has a manageable amount of financial leverage that can be comfortably serviced from the earnings currently generated by its insurance operations. The company's pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts.
The phrase pro forma debt-to-adjusted capital ratio is approximately 26%, reflecting the recent $600 million senior note issuance. However, due to the deterioration in GAAP GAAP
See: Generally Accepted Accounting Principles
See generally accepted accounting principles (GAAP). earnings over the last two quarters resulting from increased loss ratios in its U.S. mortgage insurance line as well as realized investment losses, interest coverage has declined. A.M. Best notes that should GAAP earnings continue to deteriorate, Genworth's interest coverage could fall below A.M. Best's minimum expectations for its current ratings.
For a complete listing of Genworth Financial, Inc.'s FSRs, ICRs and debt ratings, please visit www.ambest.com/press/061604genworth.pdf.
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.