Moody’s Downgrades Genworth
Moody’s Investors Service has downgraded the insurance financial strength (IFS) ratings of Genworth Financial’s long-term care (LTC) subsidiaries, Genworth Life Insurance Company and Genworth Life Insurance Company of New York to Ba3 from Ba2. The rating downgrade and continued review for downgrade reflects Genworth’s uncertainty related to future LTC margins, as reported in its year-end 2016 results, and the continued execution risk of the company’s plan to restructure and isolate its LTC operations from its remaining businesses. In addition, the profitability and margins of the LTC business are heavily supported by Genworth’s assumption of significant future rate increases. Despite the significant rate increases that the company has submitted and received, they remain concerned about the tail risk associated with the LTC business in GLIC.