S&P lowers Genworth

Standard & Poor’s said it lowered the counterparty credit and financial strength ratings on Genworth Financial Inc.’s U.S. life insurance subsidiaries – Genworth Life Insurance Co., Genworth Life & Annuity Insurance Co., and Genworth Life Insurance Co. of New York – to BBB- from BBB+.

S&P also said it lowered the counterparty credit ratings on Genworth Financial and Genworth Holdings Inc. to BB- from BB+.

The outlook is negative.

S&P also said it affirmed the A+ counterparty credit and financial strength ratings on Genworth Financial Mortgage Insurance Co. Canada and BBB+ counterparty credit rating on Canadian holding company, Genworth MI Canada Inc. The outlook on these companies also was revised to stable from negative.

S&P also said it lowered the ratings on Genworth Financial Mortgage Insurance Ltd. to BB- because of the guarantee from parent company, Genworth Financial.

The two-notch downgrade of the core U.S. life insurance companies partly reflects a view that Genworth’s operating performance is – and future profitability will be – weaker than assumed, the agency said.

Genworth reported a fourth-quarter 2014 net loss of $760 million, S&P said. This follows a third-quarter 2014 net loss of $844 million, resulting in a full-year 2014 net loss of $1.2 billion, the agency said.

The organization’s global mortgage insurance business continues to perform well, demonstrated by its net operating income of $436 million in 2014, which is an improvement from $398 million in the prior year, S&P said.

But, the consolidated full-year net loss stemmed from the company’s U.S. life division, particularly its long-term care insurance business, the agency said.

The future profitability of the company’s long-term care business and U.S. life division depends increasingly on continued regulatory approval for and policyholder acceptance of rate increases and benefit-reduction options, S&P said.

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