Research Update: Genworth Canada Ratings Affirmed On Announced Acquisition By Brookfield Business Partners; Outlook Stable

Brookfield Business Partners has announced it is acquiring a 57% stake of Genworth MI Canada from Genworth Financial Inc. for about C$2.4 billion (US$1.8 billion) or C$48.86 per share. Upon close of the transaction, we understand that the Genworth Financial board appointees, except for Genworth Canada's CEO, will be replaced by Brookfield-appointees while maintaining the current mix of four independent directors. We are affirming our 'A+' ratings on Genworth MI Canada's core operating subsidiary and our 'BBB+' issuer credit rating on the holding company and rated debt issuance. The outlook is stable based on our expectation that key credit factors supporting the rating will remain largely intact. On Aug. 15, 2019, S&P Global Ratings affirmed its 'A+' insurer financial strength

...Financial Risk Profile Excellent Capital and earnings Excellent Risk exposure Moderately low Funding structure Neutral Anchor* a+ Modifiers: Governance Neutral Liquidity Exceptional Comparable ratings analysis 0 Financial Strength Rating A+ *This is informed by the monoline nature of the business and our view of CMHC's leading market position, 100% government guarantee of its obligations, and influence on pricing--all of which limit the strength its competitive position....

Research Update