Moody’s cuts Genworth Life IFS to Ba3

Moody's Investors Service said it downgraded the insurance financial strength ratings of Genworth Financial Inc.’s long-term care subsidiaries, Genworth Life Insurance Co. and Genworth Life Insurance Co. of New York to Ba3 from Ba2.

These actions follow Genworth's announcement of its fourth-quarter 2016 results that included a reduction in long-term care margins.

The ratings remain on review for downgrade.

The Ba3 senior unsecured debt rating of Genworth Holdings, Inc., an intermediate holding company owned by Genworth, the Baa2 insurance financial strength rating of Genworth Life and Annuity Insurance Co., the Ba1 insurance financial strength rating of Genworth Mortgage Insurance Corp. and the A3 insurance financial strength rating of Genworth Financial Mortgage Pty. Ltd. are not part of this action.

Moody’s said the downgrade and continued review for downgrade reflects Genworth Life Insurance’s reduced and the uncertainty related to future long-term care margins, as reported in its year-end 2016 results, and the continued execution risk of the company's plan to restructure and isolate its long-term care operations from its remaining businesses.

In addition, the profitability and margins of the long-term care business are heavily supported by Genworth's assumption of significant future rate increases, the agency explained.

Despite the significant rate increases that the company has submitted and received, Moody’s said it remains concerned about the tail risk associated with the long-term care business in Genworth Life Insurance.

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