Company Update (NYSE:GNW): Genworth Financial Inc Canada DBRS Ratings Update

Genworth Financial Inc (NYSE:GNW) noted that DBRS Limited (DBRS) has confirmed the financial strength rating of Genworth Financial Mortgage Insurance Company Canada (“Genworth” or “Insurance Company”) at AA with a stable trend. In addition, DBRS downgraded the issuer and senior unsubordinated debt ratings of the Company to A (high) with a stable trend.

DBRS’ press release explains the rationale for the confirmation of the Insurance Company’s rating as follows:

“The Financial Strength Rating confirmation of Genworth reflects the Insurance Company’s solid market position, seasoned insurance portfolio and advanced risk analytics, as well as its strong capital position relative to the capital required to meet insurance claim obligations. The confirmation also reflects the Company’s strong capital adequacy as assessed through the application of the DBRS residential mortgage-backed securities (RMBS) model, assuming a runoff scenario.”

The issuer rating of Genworth MI Canada now reflects a two notch differential to the financial strength rating of the Insurance Company. DBRS noted the following with respect to this rating change:

“The downgrade of one notch for Genworth MI Canada is influenced by DBRS’s concern that there is now a greater risk that OSFI, in a stressed mortgage market situation, may place restrictions on dividend payments from the Insurance Company.”

The Company is also rated by Standard and Poor’s (S&P). The S&P issuer credit rating of Genworth MI Canada is BBB+ and the financial strength rating of the Insurance Company is A+.

The Company continues to maintain a strong balance sheet. As of March 31, 2016, the Company had $6.2 billion total assets and $3.5 billion total shareholders’ equity, with first quarter net operating income of $91 million.

The full rating reports are available from each respective agency. (Original Source)

Shares of Genworth Financial closed yesterday at $3.48, down $0.01 -0.14%. GNW has a 1-year high of $8.12 and a 1-year low of $1.57. The stock’s 50-day moving average is $3.11 and its 200-day moving average is $3.25.

On the ratings front, Genworth Financial Inc has been the subject of a number of recent research reports. In a report issued on May 5, Compass Point analyst Kenneth Billingsley reiterated a Buy rating on GNW, with a price target of $5.25, which implies an upside of 50.4% from current levels. Separately, on April 29, Morgan Stanley’s Nigel Dally reiterated a Hold rating on the stock and has a price target of $2.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Kenneth Billingsley and Nigel Dally have a total average return of -4.7% and 14.9% respectively. Billingsley has a success rate of 51.7% and is ranked #3283 out of 3833 analysts, while Dally has a success rate of 63.0% and is ranked #439.

Overall, one research analyst has rated the stock with a Sell rating, one research analyst has assigned a Hold rating and 2 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $2.00 which is -42.7% under where the stock closed yesterday.


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