Genworth Financial Mortgage Insurance Pty Ltd.

The negative outlook reflects our view of a one-in-three chance that Genworth Australia's financial profile may deteriorate beyond our expectations in the coming 12 months. The impact of the removal of government support schemes has yet to emerge although it is expected to translate into higher mortgage insurance claims. Moderating factors are the quicker economic rebound and sound house price growth, both of which can lessen losses following claims. We could lower the rating on Genworth Australia if: Higher-than-expected claims weaken capital adequacy beyond our forecast; or A deterioration in the insurer's competitive position hurts its market share. We could revise the outlook to stable if capital adequacy is expected to be maintained at the upper 'A' category, or stronger,

...Genworth Financial Mortgage Insurance Pty Ltd. (Genworth Australia) is Australia's largest lenders' mortgage insurer. We expect the company to retain its market leading position in Australia's mortgage insurance sector. Our strong competitive position assessment recognizes there is some concentration in its customer base with high premium flow generated from its largest customer that is subject to periodic renewal. As Australia's largest writer of mortgage insurance, the geographic spread across the country largely reflects population density. Recent market entrants to the mortgage insurance sector and the government's first-home deposit scheme have not weakened Genworth Australia's market position, in our view. Genworth Australia's earnings are sensitive to the weakened economic conditions associated with the COVID-19 pandemic. We see a risk of higher-than-expected mortgage insurance claims as the temporary government assistance and bank payment forbearance ceased March 31, 2021. While...

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