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  1. W534220
    2,948 Posts.
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    01/03/21
    22:29
    Post #: 51434166

    Australia's Genworth Financial Mortgage's Rating Unaffected by Parent Exit

    Mon 01 Mar, 2021 - 12:36 am ET


    Fitch Ratings-Sydney/Singapore-01 March 2021: The sale of Genworth Mortgage Australia Limited's (GMA) shares by Genworth Financial Inc. (GFI) will not have an impact on the rating of GMA's fully owned subsidiary, Genworth Financial Mortgage Insurance Pty Limited (GFMI, A/Negative), says Fitch Ratings. GFI, which held 52% of GMA's shares, sold its entire stake to institutional investors via an underwritten block trade.

    We continue to view ownership as being neutral to GFMI's rating. There will be no majority shareholder controlling GMA following GFI's exit, and GFI's nominees on GMA's board have resigned. GMA's board is majority independent and we expect this to continue, in line with local regulatory requirements. GMA says it is transitioning commercial agreements, including trademark licensing, IT and shared services, between GFI and GMA.

    We have rated GFMI based on GMA's standalone credit profile because of Australia's strong regulatory framework and GMA's substantial minority shareholder base. GFI reduced its ownership in GMA to 66% from 100% following GMA's listing on the Australian Securities Exchange in 2014 and again to 52% in 2015. GMA has been a reliable source of dividends for GFI and has also engaged in share buybacks and paid special dividends to return excess capital. However, this has not weakened GMA's capitalisation metrics.

    The Negative Outlook on GMFI's rating reflects potential pressure on GMA's financial performance and earnings as well as business profile from measures aimed at slowing the spread of the coronavirus. GMA's capitalisation has remained 'Very Strong' despite the earnings headwind, with a regulatory prescribed capital amount coverage of 1.65x at end-2020.

    Contact:

    Kanishka de Silva, CFA
    Associate Director
    +61 2 8256 0367
    Fitch Australia Pty Ltd
    Suite 15.01 Level 15 135 King Street
    Sydney 2000

    Siew Wai Wan
    Senior Director
    +65 6796 7217

    https://www.fitchratings.com/site/pr/10154041
    GMA Price at posting: $2.42 Sentiment: Buy Disclosure: Held
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