A.M. Best Co. allotted issuer credit ratings (ICR) of 'bbb' to
Genworth Financial, Inc
), the newly formed holding company with a stable outlook.
GENWORTH FINL (GNW): Free Stock Analysis
CHINA LIFE INS (LFC): Free Stock Analysis
PROTECTIVE LIFE (PL): Free Stock Analysis
STANCORP FNL CP (SFG): Free Stock Analysis
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Concurrently, the rating agency reiterated the ICR of 'a' and
financial strength rating (FSR) of A on the primary life/health
subsidiaries of Genworth - Genworth Life Insurance Company,
Genworth Life Insurance Company of New York and Genworth Life and
Annuity Insurance Company. Moreover, A.M. Best upgraded the
outlook to stable from negative.
Concurrently, A.M. Best upgraded the outlook to stable from
negative and affirmed the ICR of 'bbb' of Genworth Holdings, Inc.
(GHI) (formerly Genworth Financial Inc., but now a direct
subsidiary of Genworth). The rating agency upgraded the outlook
to stable from negative and affirmed the existing debt ratings of
The rating action as well as the upgrade in outlook came on the
back of the diversified portfolio, sustained solid operational
results, better financial flexibility, strong investment
portfolio and sturdy risk-adjusted capitalization. Apart from
implementing pricing actions on both its in-force blocks and
newly underwritten business, Genworth is maintaining its focus on
improving the statutory capital position, de-risking its products
and investment portfolio.
However, considerable long-term care business, exposure to
interest-sensitive liabilities and stiff competition in core life
and fixed annuity product dwarf the positives. Moreover, weak
results from the domestic mortgage insurance business continue to
weigh on the consolidated earnings of the company.
The rating agency noted that Genworth's core life products face
stiff competition. It expects pricing actions implemented in 2012
to continue restricting premium growth in 2013 as well. However,
higher margin products should offset the effect and help the
company deliver improved earnings. Genworth is also working
toward improving its investment portfolio.
Nevertheless, the ratings might be subject to downgrade if
operating performance deteriorates, risk-adjusted capital erodes,
leverage increases considerably or liquidity at holding company
Rating affirmations or upgrades from credit rating agencies play
an important part in retaining investor confidence on the stock
as well as maintaining creditworthiness in the market. We believe
that Genworth's strong score with the credit rating agencies will
help it write more business going forward.
Genworth presently carries a Zacks Rank #3 (Hold). Life insurers
Protective Life Corporation
) - Zacks Rank #1 (Strong Buy),
StanCorp Financial Group Inc
) - Zacks Rank #1 (Strong Buy) and
China Life Insurance Co. Ltd.
) - Zacks Rank #2 (Buy), among others are worth considering.