Ratings agency Standard & Poor's has affirmed Genworth Australia's operations as 'solid', after the downgrade of a related Genworth mortgage insurance business in the US.
Standard & Poor's downgraded US entity Genworth Mortgage Insurance Corp (GMICO) to 'B', a drop of two notches in its rating system explained by ongoing losses within the business, as well as less strategic importance being given to it by Genworth management.
A related entity, GIMCO also provided reinsurance services to the Genworth Australia business. However, S&P praised Genworth Australia's financial position in comparison with GMICO.
"Genworth Australia's operational performance continues to be solid in our view, with loss ratios being relatively stable," S&P said in a statement released yesterday.
"Although the two are related companies, we consider there to be a negligible link between the creditworthiness of GMICO and Genworth Australia given the material reduction in reinsurance that the Australian operations sources from GMICO," the ratings agency said.
S&P considers the Australian mortgage insurance business bolstered against financial deterioration at the Genworth group level by APRA supervision and its independent board members.
"The strong depth of experience and operational expertise of local management, the insurer's historically restrictive dividend flows, and material external reinsurance support are also factored into our view," the Standard & Poor's statement said.
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