A.M. Best Assigns Ratings to Genworth's New Universal Shelf Registration and Recently Issued Junior Subordinated Notes.

OLDWICK, N.J. -- A.M. Best Co. has assigned indicative debt ratings of "a-" to senior unsecured debt, "bbb+" to subordinated debt and "bbb" to the preferred stock of Genworth Financial, Inc.'s (Genworth) (NYSE: GNW) (Richmond, VA) recently filed universal shelf registration. Additionally, A.M. Best has assigned a debt rating of "bbb" to the $600 million of fixed-to-floating rate junior subordinated notes issued under the shelf. The outlook for all ratings is stable.

This shelf registration has an undesignated amount of securities, which can be issued in accordance with recently adopted Securities and Exchange Commission rules for seasoned issuers and replaces Genworth's existing $1 billion shelf registration. Under the terms of the shelf, Genworth may issue an indeterminate number or amount of debt securities, common stock, preferred stock, warrants, rights or units.

The rating assigned to the notes reflects their deeply subordinated status within the Genworth capital structure. Specifically, these securities will rank junior to all existing and future debt but are senior to preferred stock. Given certain equity-like features, including a 60-year maturity with a 30-year replacement capital covenant, optional deferral of interest payments and their deeply subordinated status, A.M. Best has afforded them 75% equity credit in Genworth's financial leverage calculation. The net proceeds of the newly-issued junior subordinated notes are expected to be used to pay down outstanding commercial paper and for general corporate purposes, which may include share repurchases, strategic acquisitions or stockholder dividends.

Genworth's ratings reflect its strong operating performance, favorable liquidity position, solid risk-adjusted capitalization and extensive distribution sources. Its established presence in mortgage insurance, term life, long-term care and income annuity markets provides significant diversification of earnings. A.M. Best believes that Genworth's balance sheet has a manageable amount of leverage that can be comfortably serviced from the earnings generated by its insurance operations. The company's pro forma adjusted debt-to-capital ratio is approximately 22%, incorporating equity credit for the newly-issued junior subordinated notes. Interest coverage remains strong at roughly 10 times. Going forward, A.M. Best expects Genworth to maintain adjusted financial leverage at or below 25%.

The primary offsetting rating factors are Genworth's exposure to the industry-wide uncertainties associated with long-term care liabilities, as well as its global exposure to the mortgage insurance business, where earnings are dependent upon prevailing economic conditions. However, A.M. Best notes that the company's comprehensive risk management program and its expertise in the underwriting and pricing of these businesses partially mitigate these concerns.

For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.