News has been chalked up to increased profitability and sector-wide improvement
Enact Holdings has announced upgrades in its long-term issuer rating and senior unsecured debt rating from Moody’s Investors Service, from the previous Ba2 to Ba1. Similarly, its parent company Genworth Holdings has received a two-notch upgrade in its senior unsecured debt rating from B1 to Ba2 – its fourth ratings upgrade since September 2021.
The outlook for both ratings was stable.
While noting that the overall credit profile of the US mortgage insurance sector has improved since the spike in delinquent mortgages brought about by the pandemic in Q2 2020, Moody’s also attributed Enact's improved ratings to the company's credit profile, including its market position, profitability, capital adequacy, and financial flexibility.
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Moody’s specifically noted that in Q1 2022, Enact's share of the private mortgage insurance market was 18%, up from 16.6% in 2021. It reported a net income of $546.7 million, a profitability the rating agency expected to remain strong during the second half of 2022 and into 2023.
Tempering Enact’s strengths was the commodity-like nature of the mortgage insurance product and the sector’s susceptibility to lenders, public policy decisions, and other uncontrollable variables such as competition from government-sponsored mortgage insurers.
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“This upgrade from Moody’s, which is the fourth upgrade we have received from rating agencies since September 2021, reflects the tremendous progress we have made in improving our financial profile,” said Genworth chief financial officer and chief investment officer Daniel Sheehan.
“We have significantly reduced debt, which has strengthened our balance sheet and reduced risk. Looking ahead, we will build off of this strong foundation by executing on our strategic priorities.”
