0001276520 us-gaap:NondesignatedMember us-gaap:FutureMember us-gaap:OtherLiabilitiesMember 2019-06-30 0001276520 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember us-gaap:InterestRateSwapMember 2018-01-01 2018-06-30
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Namename of Registrantregistrant as Specifiedspecified in its Charter)Delaware Other Jurisdictionother jurisdiction ofIncorporationOrganization)organization) Principal Executive Offices)principal executive offices)
telephone number, including area code)(804)Telephone Number, Including Area Code)
$.001 per shareand posted pursuant to Rule 405 ofRegulation (§and post such files). definitiondefinitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule(Check one): Non-accelerated filer ☐ April 24,July 25, 2019, 503,314,344
Page | ||||||
3 | ||||||
Item 1. | 3 | |||||
3 | ||||||
4 | ||||||
5 | ||||||
6 | ||||||
8 | ||||||
9 | ||||||
Item 2. | 85 | |||||
Item 3. | 163 | |||||
Item 4. | 164 | |||||
164 | ||||||
Item 1. | 164 | |||||
Item 1A. | 164 | |||||
Item 6. | 165 | |||||
166 |
Item 1. | Financial Statements |
Assets Investments: Fixed maturity securitiesavailable-for-sale, at fair value Equity securities, at fair value Commercial mortgage loans ($59 and $62 are restricted as of March 31, 2019 and December 31, 2018, respectively, related to a securitization entity) Policy loans Other invested assets Total investments Cash, cash equivalents and restricted cash Accrued investment income Deferred acquisition costs Intangible assets and goodwill Reinsurance recoverable Other assets Deferred tax asset Separate account assets Total assets Liabilities and equity Liabilities: Future policy benefits Policyholder account balances Liability for policy and contract claims Unearned premiums Other liabilities Non-recourse funding obligations Long-term borrowings Deferred tax liability Separate account liabilities Total liabilities Commitments and contingencies Equity: Class A common stock, $0.001 par value; 1.5 billion shares authorized; 591 million and 589 million shares issued as of March 31, 2019 and December 31, 2018, respectively; 503 million and 501 million shares outstanding as of March 31, 2019 and December 31, 2018, respectively Additionalpaid-in capital Accumulated other comprehensive income (loss): Net unrealized investment gains (losses): Net unrealized gains (losses) on securities not other-than-temporarily impaired Net unrealized gains (losses) on other-than-temporarily impaired securities Net unrealized investment gains (losses) Derivatives qualifying as hedges Foreign currency translation and other adjustments Total accumulated other comprehensive income (loss) Retained earnings Treasury stock, at cost (88 million shares as of March 31, 2019 and December 31, 2018) Total Genworth Financial, Inc.’s stockholders’ equity Noncontrolling interests Total equity Total liabilities and equity March 31, December 31, 2019 2018 (Unaudited) $ 61,360 $ 59,661 635 655 6,988 6,749 1,994 1,861 1,208 1,188 72,185 70,114 2,221 2,177 726 675 2,219 3,263 265 347 17,257 17,278 532 474 573 736 6,210 5,859 $ 102,188 $ 100,923 $ 38,369 $ 37,940 22,651 22,968 10,536 10,379 3,482 3,546 1,682 1,682 311 311 4,035 4,025 30 24 6,210 5,859 87,306 86,734 1 1 11,989 11,987 932 585 11 10 943 595 1,850 1,781 (301 ) (332 ) 2,492 2,044 1,292 1,118 (2,700 ) (2,700 ) 13,074 12,450 1,808 1,739 14,882 14,189 $ 102,188 $ 100,923
June 30, | December 31, | |||||||
2019 | 2018 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Investments: | ||||||||
Fixed maturity securities available-for-sale, at fair value | $ | 63,774 | $ | 59,661 | ||||
Equity securities, at fair value | 644 | 655 | ||||||
Commercial mortgage loans ($56 and $62 are restricted as of June 30, 2019 and December 31, 2018, respectively, related to a securitization entity) | 7,019 | 6,749 | ||||||
Policy loans | 2,076 | 1,861 | ||||||
Other invested assets | 1,535 | 1,188 | ||||||
Total investments | 75,048 | 70,114 | ||||||
Cash, cash equivalents and restricted cash | 1,938 | 2,177 | ||||||
Accrued investment income | 626 | 675 | ||||||
Deferred acquisition costs | 2,105 | 3,263 | ||||||
Intangible assets and goodwill | 244 | 347 | ||||||
Reinsurance recoverable | 17,211 | 17,278 | ||||||
Other assets | 564 | 474 | ||||||
Deferred tax asset | 383 | 736 | ||||||
Separate account assets | 6,187 | 5,859 | ||||||
Total assets | $ | 104,306 | $ | 100,923 | ||||
Liabilities and equity | ||||||||
Liabilities: | ||||||||
Future policy benefits | $ | 39,583 | $ | 37,940 | ||||
Policyholder account balances | 22,673 | 22,968 | ||||||
Liability for policy and contract claims | 10,677 | 10,379 | ||||||
Unearned premiums | 3,488 | 3,546 | ||||||
Other liabilities | 1,723 | 1,682 | ||||||
Non-recourse funding obligations | 311 | 311 | ||||||
Long-term borrowings | 4,044 | 4,025 | ||||||
Deferred tax liability | 28 | 24 | ||||||
Separate account liabilities | 6,187 | 5,859 | ||||||
Total liabilities | 88,714 | 86,734 | ||||||
Commitments and contingencies | ||||||||
Equity: | ||||||||
Class A common stock, $0.001 par value; 1.5 billion shares authorized; 592 million and 589 million shares issued as of June 30, 2019 and December 31, 2018, respectively; 504 million and 501 million shares outstanding as of June 30, 2019 and December 31, 2018, respectively | 1 | 1 | ||||||
Additional paid-in capital | 11,983 | 11,987 | ||||||
Accumulated other comprehensive income (loss): | ||||||||
Net unrealized investment gains (losses): | ||||||||
Net unrealized gains (losses) on securities not other-than-temporarily impaired | 1,294 | 585 | ||||||
Net unrealized gains (losses) on other-than-temporarily impaired securities | 11 | 10 | ||||||
Net unrealized investment gains (losses) | 1,305 | 595 | ||||||
Derivatives qualifying as hedges | 1,983 | 1,781 | ||||||
Foreign currency translation and other adjustments | (275 | ) | (332 | ) | ||||
Total accumulated other comprehensive income (loss) | 3,013 | 2,044 | ||||||
Retained earnings | 1,460 | 1,118 | ||||||
Treasury stock, at cost (88 million shares as of June 30, 2019 and December 31, 2018) | (2,700 | ) | (2,700 | ) | ||||
Total Genworth Financial, Inc.’s stockholders’ equity | 13,757 | 12,450 | ||||||
Noncontrolling interests | 1,835 | 1,739 | ||||||
Total equity | 15,592 | 14,189 | ||||||
Total liabilities and equity | $ | 104,306 | $ | 100,923 |
Three months ended | ||||||||
March 31, | ||||||||
2019 | 2018 | |||||||
Revenues: | ||||||||
Premiums | $ | 1,114 | $ | 1,140 | ||||
Net investment income | 829 | 804 | ||||||
Net investment gains (losses) | 74 | (31 | ) | |||||
Policy fees and other income | 187 | 202 | ||||||
|
|
|
| |||||
Total revenues | 2,204 | 2,115 | ||||||
|
|
|
| |||||
Benefits and expenses: | ||||||||
Benefits and other changes in policy reserves | 1,301 | 1,311 | ||||||
Interest credited | 147 | 156 | ||||||
Acquisition and operating expenses, net of deferrals | 251 | 240 | ||||||
Amortization of deferred acquisition costs and intangibles | 91 | 104 | ||||||
Interest expense | 72 | 76 | ||||||
|
|
|
| |||||
Total benefits and expenses | 1,862 | 1,887 | ||||||
|
|
|
| |||||
Income before income taxes | 342 | 228 | ||||||
Provision for income taxes | 112 | 63 | ||||||
|
|
|
| |||||
Net income | 230 | 165 | ||||||
Less: net income attributable to noncontrolling interests | 56 | 53 | ||||||
|
|
|
| |||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 174 | $ | 112 | ||||
|
|
|
| |||||
Net income available to Genworth Financial, Inc.’s common stockholders per share: | ||||||||
Basic | $ | 0.35 | $ | 0.22 | ||||
|
|
|
| |||||
Diluted | $ | 0.34 | $ | 0.22 | ||||
|
|
|
| |||||
Weighted-average common shares outstanding: | ||||||||
Basic | 501.2 | 499.6 | ||||||
|
|
|
| |||||
Diluted | 508.6 | 502.7 | ||||||
|
|
|
| |||||
Supplemental disclosures: | ||||||||
Total other-than-temporary impairments | $ | — | $ | — | ||||
Portion of other-than-temporary impairments included in other comprehensive income (loss) | — | — | ||||||
|
|
|
| |||||
Net other-than-temporary impairments | — | — | ||||||
Other investments gains (losses) | 74 | (31 | ) | |||||
|
|
|
| |||||
Total net investment gains (losses) | $ | 74 | $ | (31 | ) | |||
|
|
|
|
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 1,126 | $ | 1,136 | $ | 2,240 | $ | 2,276 | ||||||||
Net investment income | 852 | 828 | 1,681 | 1,632 | ||||||||||||
Net investment gains (losses) | (45 | ) | (14 | ) | 29 | (45 | ) | |||||||||
Policy fees and other income | 223 | 209 | 410 | 411 | ||||||||||||
Total revenues | 2,156 | 2,159 | 4,360 | 4,274 | ||||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 1,270 | 1,205 | 2,571 | 2,516 | ||||||||||||
Interest credited | 146 | 152 | 293 | 308 | ||||||||||||
Acquisition and operating expenses, net of deferrals | 247 | 253 | 498 | 493 | ||||||||||||
Amortization of deferred acquisition costs and intangibles | 95 | 112 | 186 | 216 | ||||||||||||
Interest expense | 73 | 77 | 145 | 153 | ||||||||||||
Total benefits and expenses | 1,831 | 1,799 | 3,693 | 3,686 | ||||||||||||
Income before income taxes | 325 | 360 | 667 | 588 | ||||||||||||
Provision for income taxes | 107 | 111 | 219 | 174 | ||||||||||||
Net income | 218 | 249 | 448 | 414 | ||||||||||||
Less: net income attributable to noncontrolling interests | 50 | 59 | 106 | 112 | ||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 168 | $ | 190 | $ | 342 | $ | 302 | ||||||||
Net income available to Genworth Financial, Inc.’s common stockholders per share: | ||||||||||||||||
Basic | $ | 0.33 | $ | 0.38 | $ | 0.68 | $ | 0.60 | ||||||||
Diluted | $ | 0.33 | $ | 0.38 | $ | 0.67 | $ | 0.60 | ||||||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic | 503.4 | 500.6 | 502.3 | 500.1 | ||||||||||||
Diluted | 508.7 | 502.6 | 508.7 | 502.6 | ||||||||||||
Supplemental disclosures: | ||||||||||||||||
Total other-than-temporary impairments | $ | — | $ | — | $ | — | $ | — | ||||||||
Portion of other-than-temporary impairments included in other comprehensive income (loss) | — | — | — | — | ||||||||||||
Net other-than-temporary impairments | — | — | — | — | ||||||||||||
Other investments gains (losses) | (45 | ) | (14 | ) | 29 | (45 | ) | |||||||||
Total net investment gains (losses) | $ | (45 | ) | $ | (14 | ) | $ | 29 | $ | (45 | ) | |||||
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income | $ | 218 | $ | 249 | $ | 448 | $ | 414 | ||||||||
Other comprehensive income (loss), net of taxes: | ||||||||||||||||
Net unrealized gains (losses) on securities not other-than-temporarily impaired | 376 | (185 | ) | 755 | (526 | ) | ||||||||||
Net unrealized gains (losses) on other-than-temporarily impaired securities | — | (2 | ) | 1 | (2 | ) | ||||||||||
Derivatives qualifying as hedges | 133 | (64 | ) | 202 | (216 | ) | ||||||||||
Foreign currency translation and other adjustments | 43 | (98 | ) | 97 | (185 | ) | ||||||||||
Total other comprehensive income (loss) | 552 | (349 | ) | 1,055 | (929 | ) | ||||||||||
Total comprehensive income (loss) | 770 | (100 | ) | 1,503 | (515 | ) | ||||||||||
Less: comprehensive income attributable to noncontrolling interests | 81 | 10 | 192 | 14 | ||||||||||||
Total comprehensive income (loss) available to Genworth Financial, Inc.’s common stockholders | $ | 689 | $ | (110 | ) | $ | 1,311 | $ | (529 | ) | ||||||
CHANGES IN EQUITY
Three months ended | ||||||||
March 31, | ||||||||
2019 | 2018 | |||||||
Net income | $ | 230 | $ | 165 | ||||
Other comprehensive income (loss), net of taxes: | ||||||||
Net unrealized gains (losses) on securities not other-than-temporarily impaired | 379 | (341 | ) | |||||
Net unrealized gains (losses) on other-than-temporarily impaired securities | 1 | — | ||||||
Derivatives qualifying as hedges | 69 | (152 | ) | |||||
Foreign currency translation and other adjustments | 54 | (87 | ) | |||||
|
|
|
| |||||
Total other comprehensive income (loss) | 503 | (580 | ) | |||||
|
|
|
| |||||
Total comprehensive income (loss) | 733 | (415 | ) | |||||
Less: comprehensive income attributable to noncontrolling interests | 111 | 4 | ||||||
|
|
|
| |||||
Total comprehensive income (loss) available to Genworth Financial, Inc.’s common stockholders | $ | 622 | $ | (419 | ) | |||
|
|
|
|
Three months ended June 30, 2019 | ||||||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||||||
Genworth | ||||||||||||||||||||||||||||||||
Accumulated | Financial, | |||||||||||||||||||||||||||||||
Additional | other | Treasury | Inc.’s | |||||||||||||||||||||||||||||
Common | paid-in | comprehensive | Retained | stock, at | stockholders’ | Noncontrolling | Total | |||||||||||||||||||||||||
stock | capital | income (loss) | earnings | cost | equity | interests | equity | |||||||||||||||||||||||||
Balances as of March 31, 2019 | $ | 1 | $ | 11,989 | $ | 2,492 | $ | 1,292 | $ | (2,700 | ) | $ | 13,074 | $ | 1,808 | $ | 14,882 | |||||||||||||||
Repurchase of subsidiary shares | — | — | — | — | — | — | (32 | ) | (32 | ) | ||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||
Net income | — | — | — | 168 | — | 168 | 50 | 218 | ||||||||||||||||||||||||
Other comprehensive income, net of taxes | — | — | 521 | — | — | 521 | 31 | 552 | ||||||||||||||||||||||||
Total comprehensive income | — | 689 | 81 | 770 | ||||||||||||||||||||||||||||
Dividends to noncontrolling interests | — | — | — | — | — | — | (25 | ) | (25 | ) | ||||||||||||||||||||||
Stock-based compensation expense and exercises and other | — | (6 | ) | — | — | — | (6 | ) | 3 | (3 | ) | |||||||||||||||||||||
Balances as of June 30, 2019 | $ | 1 | $ | 11,983 | $ | 3,013 | $ | 1,460 | $ | (2,700 | ) | $ | 13,757 | $ | 1,835 | $ | 15,592 | |||||||||||||||
Three months ended June 30, 2018 | ||||||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||||||
Genworth | ||||||||||||||||||||||||||||||||
Accumulated | Financial, | |||||||||||||||||||||||||||||||
Additional | other | Treasury | Inc.’s | |||||||||||||||||||||||||||||
Common | paid-in | comprehensive | Retained | stock, at | stockholders’ | Noncontrolling | Total | |||||||||||||||||||||||||
stock | capital | income (loss) | earnings | cost | equity | interests | equity | |||||||||||||||||||||||||
Balances as of March 31, 2018 | $ | 1 | $ | 11,979 | $ | 2,627 | $ | 1,111 | $ | (2,700 | ) | $ | 13,018 | $ | 1,844 | $ | 14,862 | |||||||||||||||
Repurchase of subsidiary shares | — | — | — | — | — | — | (13 | ) | (13 | ) | ||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
Net income | — | — | — | 190 | — | 190 | 59 | 249 | ||||||||||||||||||||||||
Other comprehensive loss, net of taxes | — | — | (300 | ) | — | — | (300 | ) | (49 | ) | (349 | ) | ||||||||||||||||||||
Total comprehensive income (loss) | (110 | ) | 10 | (100 | ) | |||||||||||||||||||||||||||
Dividends to noncontrolling interests | — | — | — | — | — | — | (14 | ) | (14 | ) | ||||||||||||||||||||||
Stock-based compensation expense and exercises and other | — | 2 | — | — | — | 2 | 4 | 6 | ||||||||||||||||||||||||
Balances as of June 30, 2018 | $ | 1 | $ | 11,981 | $ | 2,327 | $ | 1,301 | $ | (2,700 | ) | $ | 12,910 | $ | 1,831 | $ | 14,741 | |||||||||||||||
Six months ended June 30, 2019 | ||||||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||||||
Genworth | ||||||||||||||||||||||||||||||||
Accumulated | Financial, | |||||||||||||||||||||||||||||||
Additional | other | Treasury | Inc.’s | |||||||||||||||||||||||||||||
Common | paid-in | comprehensive | Retained | stock, at | stockholders’ | Noncontrolling | Total | |||||||||||||||||||||||||
stock | capital | income (loss) | earnings | cost | equity | interests | equity | |||||||||||||||||||||||||
Balances as of December 31, 2018 | $ | 1 | $ | 11,987 | $ | 2,044 | $ | 1,118 | $ | (2,700 | ) | $ | 12,450 | $ | 1,739 | $ | 14,189 | |||||||||||||||
Repurchase of subsidiary shares | — | — | — | — | — | — | (44 | ) | (44 | ) | ||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||
Net income | — | — | — | 342 | — | 342 | 106 | 448 | ||||||||||||||||||||||||
Other comprehensive income, net of taxes | — | — | 969 | — | — | 969 | 86 | 1,055 | ||||||||||||||||||||||||
Total comprehensive income | 1,311 | 192 | 1,503 | |||||||||||||||||||||||||||||
Dividends to noncontrolling interests | — | — | — | — | — | — | (53 | ) | (53 | ) | ||||||||||||||||||||||
Stock-based compensation expense and exercises and other | — | (4 | ) | — | — | — | (4 | ) | 1 | (3 | ) | |||||||||||||||||||||
Balances as of June 30, 2019 | $ | 1 | $ | 11,983 | $ | 3,013 | $ | 1,460 | $ | (2,700 | ) | $ | 13,757 | $ | 1,835 | $ | 15,592 | |||||||||||||||
Six months ended June 30, 2018 | ||||||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||||||
Genworth | ||||||||||||||||||||||||||||||||
Accumulated | Financial, | |||||||||||||||||||||||||||||||
Additional | other | Treasury | Inc.’s | |||||||||||||||||||||||||||||
Common | paid-in | comprehensive | Retained | stock, at | stockholders’ | Noncontrolling | Total | |||||||||||||||||||||||||
stock | capital | income (loss) | earnings | cost | equity | interests | equity | |||||||||||||||||||||||||
Balances as of December 31, 2017 | $ | 1 | $ | 11,977 | $ | 3,027 | $ | 1,113 | $ | (2,700 | ) | $ | 13,418 | $ | 1,910 | $ | 15,328 | |||||||||||||||
Cumulative effect of change in accounting, net of taxes | — | — | 131 | (114 | ) | — | 17 | — | 17 | |||||||||||||||||||||||
Repurchase of subsidiary shares | — | — | — | — | — | — | (49 | ) | (49 | ) | ||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
Net income | — | — | — | 302 | — | 302 | 112 | 414 | ||||||||||||||||||||||||
Other comprehensive loss, net of taxes | — | — | (831 | ) | — | — | (831 | ) | (98 | ) | (929 | ) | ||||||||||||||||||||
Total comprehensive income (loss) | (529 | ) | 14 | (515 | ) | |||||||||||||||||||||||||||
Dividends to noncontrolling interests | — | — | — | — | — | — | (50 | ) | (50 | ) | ||||||||||||||||||||||
Stock-based compensation expense and exercises and other | — | 4 | — | — | — | 4 | 6 | 10 | ||||||||||||||||||||||||
Balances as of June 30, 2018 | $ | 1 | $ | 11,981 | $ | 2,327 | $ | 1,301 | $ | (2,700 | ) | $ | 12,910 | $ | 1,831 | $ | 14,741 | |||||||||||||||
CASH FLOWS
Total | ||||||||||||||||||||||||||||||||
Genworth | ||||||||||||||||||||||||||||||||
Accumulated | Financial, | |||||||||||||||||||||||||||||||
Additional | other | Treasury | Inc.’s | |||||||||||||||||||||||||||||
Common | paid-in | comprehensive | Retained | stock, at | stockholders’ | Noncontrolling | Total | |||||||||||||||||||||||||
stock | capital | income (loss) | earnings | cost | equity | interests | equity | |||||||||||||||||||||||||
Balances as of December 31, 2018 | $ | 1 | $ | 11,987 | $ | 2,044 | $ | 1,118 | $ | (2,700 | ) | $ | 12,450 | $ | 1,739 | $ | 14,189 | |||||||||||||||
Repurchase of subsidiary shares | — | — | — | — | — | — | (12 | ) | (12 | ) | ||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||
Net income | — | — | — | 174 | — | 174 | 56 | 230 | ||||||||||||||||||||||||
Other comprehensive income, net of taxes | — | — | 448 | — | — | 448 | 55 | 503 | ||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||
Total comprehensive income | 622 | 111 | 733 | |||||||||||||||||||||||||||||
Dividends to noncontrolling interests | — | — | — | — | — | — | (28 | ) | (28 | ) | ||||||||||||||||||||||
Stock-based compensation expense and exercises and other | — | 2 | — | — | — | 2 | (2 | ) | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balances as of March 31, 2019 | $ | 1 | $ | 11,989 | $ | 2,492 | $ | 1,292 | $ | (2,700 | ) | $ | 13,074 | $ | 1,808 | $ | 14,882 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balances as of December 31, 2017 | $ | 1 | $ | 11,977 | $ | 3,027 | $ | 1,113 | $ | (2,700 | ) | $ | 13,418 | $ | 1,910 | $ | 15,328 | |||||||||||||||
Cumulative effect of change in accounting, net of taxes | — | — | 131 | (114 | ) | — | 17 | — | 17 | |||||||||||||||||||||||
Repurchase of subsidiary shares | — | — | — | — | — | — | (36 | ) | (36 | ) | ||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
Net income | — | — | — | 112 | — | 112 | 53 | 165 | ||||||||||||||||||||||||
Other comprehensive loss, net of taxes | — | — | (531 | ) | — | — | (531 | ) | (49 | ) | (580 | ) | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||
Total comprehensive income (loss) | (419 | ) | 4 | (415 | ) | |||||||||||||||||||||||||||
Dividends to noncontrolling interests | — | — | — | — | — | — | (36 | ) | (36 | ) | ||||||||||||||||||||||
Stock-based compensation expense and exercises and other | — | 2 | — | — | — | 2 | 2 | 4 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balances as of March 31, 2018 | $ | 1 | $ | 11,979 | $ | 2,627 | $ | 1,111 | $ | (2,700 | ) | $ | 13,018 | $ | 1,844 | $ | 14,862 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended | ||||||||
June 30, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 448 | $ | 414 | ||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Amortization of fixed maturity securities discounts and premiums | (54 | ) | (62 | ) | ||||
Net investment (gains) losses | (29 | ) | 45 | |||||
Charges assessed to policyholders | (364 | ) | (359 | ) | ||||
Acquisition costs deferred | (35 | ) | (40 | ) | ||||
Amortization of deferred acquisition costs and intangibles | 186 | 216 | ||||||
Deferred income taxes | 134 | 83 | ||||||
Derivative instruments and limited partnerships | 22 | (195 | ) | |||||
Stock-based compensation expense | 12 | 16 | ||||||
Change in certain assets and liabilities: | ||||||||
Accrued investment income and other assets | (290 | ) | (89 | ) | ||||
Insurance reserves | 609 | 691 | ||||||
Current tax liabilities | 27 | (37 | ) | |||||
Other liabilities, policy and contract claims and other policy-related balances | 129 | (122 | ) | |||||
Net cash from operating activities | 795 | 561 | ||||||
Cash flows used by investing activities: | ||||||||
Proceeds from maturities and repayments of investments: | ||||||||
Fixed maturity securities | 1,929 | 1,979 | ||||||
Commercial mortgage loans | 285 | 350 | ||||||
Restricted commercial mortgage loans related to a securitization entity | 6 | 16 | ||||||
Proceeds from sales of investments: | ||||||||
Fixed maturity and equity securities | 2,859 | 1,920 | ||||||
Purchases and originations of investments: | ||||||||
Fixed maturity and equity securities | (4,681 | ) | (4,082 | ) | ||||
Commercial mortgage loans | (561 | ) | (489 | ) | ||||
Other invested assets, net | (227 | ) | 93 | |||||
Policy loans, net | 39 | 15 | ||||||
Net cash used by investing activities | (351 | ) | (198 | ) | ||||
Cash flows used by financing activities: | ||||||||
Deposits to universal life and investment contracts | 444 | 503 | ||||||
Withdrawals from universal life and investment contracts | (1,096 | ) | (1,177 | ) | ||||
Proceeds from issuance of long-term debt | 77 | 441 | ||||||
Repayment and repurchase of long-term debt | (78 | ) | (597 | ) | ||||
Repayment of borrowings related to a securitization entity | — | (12 | ) | |||||
Repurchase of subsidiary shares | (44 | ) | (49 | ) | ||||
Dividends paid to noncontrolling interests | (53 | ) | (50 | ) | ||||
Other, net | 55 | (2 | ) | |||||
Net cash used by financing activities | (695 | ) | (943 | ) | ||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 12 | (52 | ) | |||||
Net change in cash, cash equivalents and restricted cash | (239 | ) | (632 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 2,177 | 2,875 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 1,938 | $ | 2,243 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in millions)
(Unaudited)
Three months ended | ||||||||
March 31, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 230 | $ | 165 | ||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Amortization of fixed maturity securities discounts and premiums | (16 | ) | (25 | ) | ||||
Net investment (gains) losses | (74 | ) | 31 | |||||
Charges assessed to policyholders | (165 | ) | (178 | ) | ||||
Acquisition costs deferred | (17 | ) | (18 | ) | ||||
Amortization of deferred acquisition costs and intangibles | 91 | 104 | ||||||
Deferred income taxes | 75 | 26 | ||||||
Derivative instruments and limited partnerships | (30 | ) | (152 | ) | ||||
Stock-based compensation expense | 7 | 7 | ||||||
Change in certain assets and liabilities: | ||||||||
Accrued investment income and other assets | (258 | ) | (45 | ) | ||||
Insurance reserves | 301 | 377 | ||||||
Current tax liabilities | 8 | (39 | ) | |||||
Other liabilities, policy and contract claims and other policy-related balances | (18 | ) | (144 | ) | ||||
|
|
|
| |||||
Net cash from operating activities | 134 | 109 | ||||||
|
|
|
| |||||
Cash flows from (used by) investing activities: | ||||||||
Proceeds from maturities and repayments of investments: | ||||||||
Fixed maturity securities | 902 | 934 | ||||||
Commercial mortgage loans | 127 | 205 | ||||||
Restricted commercial mortgage loans related to a securitization entity | 3 | 8 | ||||||
Proceeds from sales of investments: | ||||||||
Fixed maturity and equity securities | 1,714 | 792 | ||||||
Purchases and originations of investments: | ||||||||
Fixed maturity and equity securities | (2,128 | ) | (2,013 | ) | ||||
Commercial mortgage loans | (370 | ) | (199 | ) | ||||
Other invested assets, net | 17 | 104 | ||||||
Policy loans, net | 12 | 2 | ||||||
|
|
|
| |||||
Net cash from (used by) investing activities | 277 | (167 | ) | |||||
|
|
|
| |||||
Cash flows from (used by) financing activities: | ||||||||
Deposits to universal life and investment contracts | 198 | 255 | ||||||
Withdrawals from universal life and investment contracts | (581 | ) | (591 | ) | ||||
Proceeds from issuance of long-term debt | — | 441 | ||||||
Repayment of borrowings related to a securitization entity | — | (8 | ) | |||||
Repurchase of subsidiary shares | (12 | ) | (36 | ) | ||||
Dividends paid to noncontrolling interests | (28 | ) | (36 | ) | ||||
Other, net | 48 | 22 | ||||||
|
|
|
| |||||
Net cash from (used by) financing activities | (375 | ) | 47 | |||||
|
|
|
| |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 8 | (21 | ) | |||||
|
|
|
| |||||
Net change in cash, cash equivalents and restricted cash | 44 | (32 | ) | |||||
Cash, cash equivalents and restricted cash at beginning of period | 2,177 | 2,875 | ||||||
|
|
|
| |||||
Cash, cash equivalents and restricted cash at end of period | $ | 2,221 | $ | 2,843 | ||||
|
|
|
|
See Notes to Condensed Consolidated Financial Statements
|
|
|
|
|
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
permits entities to apply the new lease standard using a modified retrospective transition approach at the date of adoption. As such, historical periods will continue to be measured and presented under the previous guidance while current and future periods will be subject to this new accounting guidance. The package of practical expedients was also elected upon adoption. Upon adoption we recorded a $60 milliondodid not have a material impact on our condensed consolidated balance sheet as of March 31,June 30, 2019. The initial measurement of our
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Three months ended | ||||||||
March 31, | ||||||||
(Amounts in millions, except per share amounts) | 2019 | 2018 | ||||||
Weighted-average shares used in basic earnings per share calculations | 501.2 | 499.6 | ||||||
Potentially dilutive securities: | ||||||||
Stock options, restricted stock units and stock appreciation rights | 7.4 | 3.1 | ||||||
|
|
|
| |||||
Weighted-average shares used in diluted earnings per share calculations | 508.6 | 502.7 | ||||||
|
|
|
| |||||
Net income: | ||||||||
Net income | $ | 230 | $ | 165 | ||||
Less: net income attributable to noncontrolling interests | 56 | 53 | ||||||
|
|
|
| |||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 174 | $ | 112 | ||||
|
|
|
| |||||
Basic earnings per share: | ||||||||
Net income | $ | 0.46 | $ | 0.33 | ||||
Less: net income attributable to noncontrolling interests | 0.11 | 0.11 | ||||||
|
|
|
| |||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 0.35 | $ | 0.22 | ||||
|
|
|
| |||||
Diluted earnings per share: | ||||||||
Net income | $ | 0.45 | $ | 0.33 | ||||
Less: net income attributable to noncontrolling interests | 0.11 | 0.10 | ||||||
|
|
|
| |||||
Net income available to Genworth Financial, Inc.’s common stockholders(1) | $ | 0.34 | $ | 0.22 | ||||
|
|
|
|
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Amounts in millions, except per share amounts) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Weighted-average shares used in basic earnings per share calculations | 503.4 | 500.6 | 502.3 | 500.1 | ||||||||||||
Potentially dilutive securities: | ||||||||||||||||
Stock options, restricted stock units and stock appreciation rights | 5.3 | 2.0 | 6.4 | 2.5 | ||||||||||||
Weighted-average shares used in diluted earnings per share calculations | 508.7 | 502.6 | 508.7 | 502.6 | ||||||||||||
Net income: | ||||||||||||||||
Net income | $ | 218 | $ | 249 | $ | 448 | $ | 414 | ||||||||
Less: net income attributable to noncontrolling interests | 50 | 59 | 106 | 112 | ||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 168 | $ | 190 | $ | 342 | $ | 302 | ||||||||
Basic earnings per share: | ||||||||||||||||
Net income | $ | 0.44 | $ | 0.50 | $ | 0.89 | $ | 0.83 | ||||||||
Less: net income attributable to noncontrolling interests | 0.10 | 0.12 | 0.21 | 0.22 | ||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders (1) | $ | 0.33 | $ | 0.38 | $ | 0.68 | $ | 0.60 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Net income | $ | 0.43 | $ | 0.50 | $ | 0.88 | $ | 0.82 | ||||||||
Less: net income attributable to noncontrolling interests | 0.10 | 0.12 | 0.21 | 0.22 | ||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 0.33 | $ | 0.38 | $ | 0.67 | $ | 0.60 | ||||||||
(1) | May not total due to whole number calculation. |
Three months ended | ||||||||
March 31, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Fixed maturity securities—taxable | $ | 643 | $ | 635 | ||||
Fixed maturitysecurities—non-taxable | 2 | 3 | ||||||
Equity securities | 9 | 10 | ||||||
Commercial mortgage loans | 81 | 82 | ||||||
Restricted commercial mortgage loans related to a securitization entity | 1 | 2 | ||||||
Policy loans | 46 | 43 | ||||||
Other invested assets | 59 | 39 | ||||||
Cash, cash equivalents, restricted cash and short-term investments | 12 | 12 | ||||||
|
|
|
| |||||
Gross investment income before expenses and fees | 853 | 826 | ||||||
Expenses and fees | (24 | ) | (22 | ) | ||||
|
|
|
| |||||
Net investment income | $ | 829 | $ | 804 | ||||
|
|
|
|
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Fixed maturity securities—taxable | $ | 665 | $ | 651 | $ | 1,308 | $ | 1,286 | ||||||||
Fixed maturity securities—non-taxable | 2 | 3 | 4 | 6 | ||||||||||||
Equity securities | 10 | 10 | 19 | 20 | ||||||||||||
Commercial mortgage loans | 84 | 77 | 165 | 159 | ||||||||||||
Restricted commercial mortgage loans related to a securitization entity | 1 | 2 | 2 | 4 | ||||||||||||
Policy loans | 45 | 41 | 91 | 84 | ||||||||||||
Other invested assets | 59 | 53 | 118 | 92 | ||||||||||||
Cash, cash equivalents, restricted cash and short-term investments | 11 | 14 | 23 | 26 | ||||||||||||
Gross investment income before expenses and fees | 877 | 851 | 1,730 | 1,677 | ||||||||||||
Expenses and fees | (25 | ) | (23 | ) | (49 | ) | (45 | ) | ||||||||
Net investment income | $ | 852 | $ | 828 | $ | 1,681 | $ | 1,632 | ||||||||
Three months ended | ||||||||
March 31, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Available-for-sale securities: | ||||||||
Realized gains | $ | 81 | $ | 7 | ||||
Realized losses | (22 | ) | (16 | ) | ||||
|
|
|
| |||||
Net realized gains (losses) onavailable-for-sale securities | 59 | (9 | ) | |||||
|
|
|
| |||||
Impairments: | ||||||||
Total other-than-temporary impairments | — | — | ||||||
Portion of other-than-temporary impairments included in other comprehensive income | — | — | ||||||
|
|
|
| |||||
Net realized gains (losses) on equity securities sold | 3 | 2 | ||||||
Net unrealized gains (losses) on equity securities still held | 8 | (18 | ) | |||||
Limited partnerships | 15 | 7 | ||||||
Commercial mortgage loans | (1 | ) | — | |||||
Derivative instruments (1) | (10 | ) | (13 | ) | ||||
|
|
|
| |||||
Net investment gains (losses) | $ | 74 | $ | (31 | ) | |||
|
|
|
|
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Available-for-sale fixed maturity securities: | ||||||||||||||||
Realized gains | $ | 5 | $ | 13 | $ | 86 | $ | 20 | ||||||||
Realized losses | (6 | ) | (21 | ) | (28 | ) | (37 | ) | ||||||||
Net realized gains (losses) on available-for-sale fixed maturity securities | (1 | ) | (8 | ) | 58 | (17 | ) | |||||||||
Impairments: | ||||||||||||||||
Total other-than-temporary impairments | — | — | — | — | ||||||||||||
Portion of other-than-temporary impairments included inother comprehensive income (loss) | — | — | — | — | ||||||||||||
Net other-than-temporary impairments | — | — | — | — | ||||||||||||
Net realized gains (losses) on equity securities sold | — | 8 | 3 | 10 | ||||||||||||
Net unrealized gains (losses) on equity securities still held | (12 | ) | 3 | (4 | ) | (15 | ) | |||||||||
Limited partnerships | (11 | ) | (2 | ) | 4 | 5 | ||||||||||
Commercial mortgage loans | 1 | — | — | — | ||||||||||||
Derivative instruments (1) | (22 | ) | (15 | ) | (32 | ) | (28 | ) | ||||||||
Net investment gains (losses) | $ | (45 | ) | $ | (14 | ) | $ | 29 | $ | (45 | ) | |||||
(1) | See note 5 for additional information on the impact of derivative instruments included in net investment gains (losses). |
value for both periods.
(Amounts in millions) | 2019 | 2018 | ||||||
Beginning balance | $ | 24 | $ | 32 | ||||
Reductions: | ||||||||
Securities sold, paid down or disposed | (1 | ) | (4 | ) | ||||
|
|
|
| |||||
Ending balance | $ | 23 | $ | 28 | ||||
|
|
|
|
periods indicated:
As of or for the three months ended June 30, | As of or for the six months ended June 30, | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Beginning balance | $ | 23 | $ | 28 | $ | 24 | $ | 32 | ||||||||
Reductions: | ||||||||||||||||
Securities sold, paid down or disposed | — | (3 | ) | (1 | ) | (7 | ) | |||||||||
Ending balance | $ | 23 | $ | 25 | $ | 23 | $ | 25 | ||||||||
(Amounts in millions) | March 31, 2019 | December 31, 2018 | ||||||
Net unrealized gains (losses) on fixed maturity securities(1) | $ | 3,714 | $ | 1,775 | ||||
Adjustments to deferred acquisition costs, present value of future profits, sales inducements and benefit reserves | (2,401 | ) | (952 | ) | ||||
Income taxes, net | (300 | ) | (190 | ) | ||||
|
|
|
| |||||
Net unrealized investment gains (losses) | 1,013 | 633 | ||||||
Less: net unrealized investment gains (losses) attributable to noncontrolling interests | 70 | 38 | ||||||
|
|
|
| |||||
Net unrealized investment gains (losses) attributable to Genworth Financial, Inc. | $ | 943 | $ | 595 | ||||
|
|
|
|
(Amounts in millions) | June 30, 2019 | December 31, 2018 | ||||||
Net unrealized gains (losses) on fixed maturity securities (1) | $ | 5,673 | $ | 1,775 | ||||
Adjustments to deferred acquisition costs, present value of future profits, salesinducements and benefit reserves | (3,879 | ) | (952 | ) | ||||
Income taxes, net | (405 | ) | (190 | ) | ||||
Net unrealized investment gains (losses) | 1,389 | 633 | ||||||
Less: net unrealized investment gains (losses) attributable to noncontrolling interests | 84 | 38 | ||||||
Net unrealized investment gains (losses) attributable to Genworth Financial, Inc. | $ | 1,305 | $ | 595 | ||||
(1) | Excludes foreign exchange. |
(Amounts in millions) | 2019 | 2018 | ||||||
Beginning balance | $ | 595 | $ | 1,085 | ||||
Cumulative effect of changes in accounting: | ||||||||
Stranded tax effects | — | 189 | ||||||
Recognition and measurement of financial assets and liabilities, net of taxes of $— and $18 | — | (25 | ) | |||||
|
|
|
| |||||
Total cumulative effect of changes in accounting | — | 164 | ||||||
|
|
|
| |||||
Unrealized gains (losses) arising during the period: | ||||||||
Unrealized gains (losses) on investment securities | 1,999 | (1,681 | ) | |||||
Adjustment to deferred acquisition costs | (989 | ) | 442 | |||||
Adjustment to present value of future profits | (53 | ) | 36 | |||||
Adjustment to sales inducements | (19 | ) | 20 | |||||
Adjustment to benefit reserves | (388 | ) | 740 | |||||
Provision for income taxes | (123 | ) | 95 | |||||
|
|
|
| |||||
Change in unrealized gains (losses) on investment securities | 427 | (348 | ) | |||||
Reclassification adjustments to net investment (gains) losses, net of taxes of $13 and $(1) | (47 | ) | 7 | |||||
|
|
|
| |||||
Change in net unrealized investment gains (losses) | 380 | (341 | ) | |||||
Less: change in net unrealized investment gains (losses) attributable to noncontrolling interests | 32 | (9 | ) | |||||
|
|
|
| |||||
Ending balance | $ | 943 | $ | 917 | ||||
|
|
|
|
As of or for the three months ended June 30, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Beginning balance | $ | 943 | $ | 917 | ||||
Unrealized gains (losses) arising during the period: | ||||||||
Unrealized gains (losses) on fixed maturity securities | 1,957 | (905 | ) | |||||
Adjustment to deferred acquisition costs | (52 | ) | 467 | |||||
Adjustment to present value of future profits | (2 | ) | 20 | |||||
Adjustment to sales inducements | (12 | ) | 9 | |||||
Adjustment to benefit reserves | (1,412 | ) | 162 | |||||
Provision for income taxes | (104 | ) | 54 | |||||
Change in unrealized gains (losses) on investment securities | 375 | (193 | ) | |||||
Reclassification adjustments to net investment (gains) losses, net of taxes of $(1) and $(2) | 1 | 6 | ||||||
Change in net unrealized investment gains (losses) | 376 | (187 | ) | |||||
Less: change in net unrealized investment gains (losses) attributable to noncontrolling interests | 14 | (6 | ) | |||||
Ending balance | $ | 1,305 | $ | 736 | ||||
As of or for the six months ended June 30, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Beginning balance | $ | 595 | $ | 1,085 | ||||
Cumulative effect of changes in accounting: | ||||||||
Stranded tax effects | — | 189 | ||||||
Recognition and measurement of financial assets and liabilities, net of taxes of $— and $18 | — | (25 | ) | |||||
Total cumulative effect of changes in accounting | — | 164 | ||||||
Unrealized gains (losses) arising during the period: | ||||||||
Unrealized gains (losses) on fixed maturity securities | 3,956 | (2,586 | ) | |||||
Adjustment to deferred acquisition costs | (1,041 | ) | 909 | |||||
Adjustment to present value of future profits | (55 | ) | 56 | |||||
Adjustment to sales inducements | (31 | ) | 29 | |||||
Adjustment to benefit reserves | (1,800 | ) | 902 | |||||
Provision for income taxes | (227 | ) | 149 | |||||
Change in unrealized gains (losses) on investment securities | 802 | (541 | ) | |||||
Reclassification adjustments to net investment (gains) losses, net of taxes of $12 and $(3) | (46 | ) | 13 | |||||
Change in net unrealized investment gains (losses) | 756 | (528 | ) | |||||
Less: change in net unrealized investment gains (losses) attributable to noncontrolling interests | 46 | (15 | ) | |||||
Ending balance | $ | 1,305 | $ | 736 | ||||
Gross unrealized gains | Gross unrealized losses | |||||||||||||||||||||||
Amortized | Not other-than- | Other-than- | Not other-than- | Other-than- | ||||||||||||||||||||
cost or | temporarily | temporarily | temporarily | temporarily | Fair | |||||||||||||||||||
(Amounts in millions) | cost | impaired | impaired | impaired | impaired | value | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
U.S. government, agencies and government-sponsored enterprises | $ | 4,116 | $ | 619 | $ | — | $ | (4 | ) | $ | — | $ | 4,731 | |||||||||||
State and political subdivisions | 2,329 | 223 | — | (6 | ) | — | 2,546 | |||||||||||||||||
Non-U.S. government | 2,403 | 121 | — | (6 | ) | — | 2,518 | |||||||||||||||||
U.S. corporate: | ||||||||||||||||||||||||
Utilities | 4,296 | 426 | — | (37 | ) | — | 4,685 | |||||||||||||||||
Energy | 2,447 | 186 | — | (15 | ) | — | 2,618 | |||||||||||||||||
Finance and insurance | 6,883 | 405 | — | (37 | ) | — | 7,251 | |||||||||||||||||
Consumer—non-cyclical | 4,905 | 407 | — | (55 | ) | — | 5,257 | |||||||||||||||||
Technology and communications | 2,832 | 161 | — | (19 | ) | — | 2,974 | |||||||||||||||||
Industrial | 1,194 | 67 | — | (12 | ) | — | 1,249 | |||||||||||||||||
Capital goods | 2,283 | 225 | — | (19 | ) | — | 2,489 | |||||||||||||||||
Consumer—cyclical | 1,579 | 83 | — | (16 | ) | — | 1,646 | |||||||||||||||||
Transportation | 1,271 | 107 | — | (16 | ) | — | 1,362 | |||||||||||||||||
Other | 379 | 33 | — | (1 | ) | — | 411 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total U.S. corporate | 28,069 | 2,100 | — | (227 | ) | — | 29,942 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Non-U.S. corporate: | ||||||||||||||||||||||||
Utilities | 1,100 | 36 | — | (9 | ) | — | 1,127 | |||||||||||||||||
Energy | 1,327 | 124 | — | (4 | ) | — | 1,447 | |||||||||||||||||
Finance and insurance | 2,434 | 129 | — | (9 | ) | — | 2,554 | |||||||||||||||||
Consumer—non-cyclical | 699 | 19 | — | (9 | ) | — | 709 | |||||||||||||||||
Technology and communications | 1,151 | 52 | — | (6 | ) | — | 1,197 | |||||||||||||||||
Industrial | 920 | 56 | — | (3 | ) | — | 973 | |||||||||||||||||
Capital goods | 644 | 21 | — | (3 | ) | — | 662 | |||||||||||||||||
Consumer—cyclical | 537 | 8 | — | (4 | ) | — | 541 | |||||||||||||||||
Transportation | 756 | 65 | — | (6 | ) | — | 815 | |||||||||||||||||
Other | 2,127 | 139 | — | (6 | ) | — | 2,260 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Totalnon-U.S. corporate | 11,695 | 649 | — | (59 | ) | — | 12,285 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Residential mortgage-backed | 2,762 | 181 | 13 | (6 | ) | — | 2,950 | |||||||||||||||||
Commercial mortgage-backed | 2,946 | 64 | — | (48 | ) | — | 2,962 | |||||||||||||||||
Other asset-backed | 3,422 | 18 | 1 | (15 | ) | — | 3,426 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Totalavailable-for-sale fixed maturity securities | $ | 57,742 | $ | 3,975 | $ | 14 | $ | (371 | ) | $ | — | $ | 61,360 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Gross unrealized gains | Gross unrealized losses | ||||||||||||||||||||||||
(Amounts in millions) | Amortized cost or cost | Not other-than- temporarily impaired | Other-than- temporarily impaired | Not other-than- temporarily impaired | Other-than- temporarily impaired | Fair value | |||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||||
U.S. government, agencies and government- sponsored enterprises | $ | 4,151 | $ | 837 | $ | — | $ | (1 | ) | $ | — | $ | 4,987 | ||||||||||||
State and political subdivisions | 2,319 | 317 | — | — | — | 2,636 | |||||||||||||||||||
Non-U.S. government | 2,496 | 155 | — | (2 | ) | — | 2,649 | ||||||||||||||||||
U.S. corporate: | |||||||||||||||||||||||||
Utilities | 4,327 | 565 | — | (13 | ) | — | 4,879 | ||||||||||||||||||
Energy | 2,468 | 255 | — | (10 | ) | — | 2,713 | ||||||||||||||||||
Finance and insurance | 6,974 | 633 | — | (10 | ) | — | 7,597 | ||||||||||||||||||
Consumer—non-cyclical | 4,954 | 616 | — | (18 | ) | — | 5,552 | ||||||||||||||||||
Technology and communications | 2,893 | 269 | — | (6 | ) | — | 3,156 | ||||||||||||||||||
Industrial | 1,242 | 98 | — | (4 | ) | — | 1,336 | ||||||||||||||||||
Capital goods | 2,323 | 303 | — | (6 | ) | — | 2,620 | ||||||||||||||||||
Consumer—cyclical | 1,619 | 127 | — | (5 | ) | — | 1,741 | ||||||||||||||||||
Transportation | 1,263 | 152 | — | (4 | ) | — | 1,411 | ||||||||||||||||||
Other | 356 | 40 | — | — | — | 396 | |||||||||||||||||||
Total U.S. corporate | 28,419 | 3,058 | — | (76 | ) | — | 31,401 | ||||||||||||||||||
Non-U.S. corporate: | |||||||||||||||||||||||||
Utilities | 1,114 | 54 | — | (3 | ) | — | 1,165 | ||||||||||||||||||
Energy | 1,349 | 168 | — | (1 | ) | — | 1,516 | ||||||||||||||||||
Finance and insurance | 2,438 | 191 | — | (1 | ) | — | 2,628 | ||||||||||||||||||
Consumer—non-cyclical | 674 | 40 | — | (4 | ) | — | 710 | ||||||||||||||||||
Technology and communications | 1,179 | 94 | — | — | — | 1,273 | |||||||||||||||||||
Industrial | 936 | 81 | — | — | — | 1,017 | |||||||||||||||||||
Capital goods | 663 | 33 | — | (1 | ) | — | 695 | ||||||||||||||||||
Consumer—cyclical | 542 | 16 | — | (1 | ) | — | 557 | ||||||||||||||||||
Transportation | 761 | 82 | — | (2 | ) | — | 841 | ||||||||||||||||||
Other | 2,061 | 186 | — | (2 | ) | — | 2,245 | ||||||||||||||||||
Total non-U.S. corporate | 11,717 | 945 | — | (15 | ) | — | 12,647 | ||||||||||||||||||
Residential mortgage-backed | 2,511 | 215 | 14 | (2 | ) | — | 2,738 | ||||||||||||||||||
Commercial mortgage-backed | 2,882 | 121 | — | (14 | ) | — | 2,989 | ||||||||||||||||||
Other asset-backed | 3,699 | 38 | — | (10 | ) | — | 3,727 | ||||||||||||||||||
Total available-for-sale fixedmaturity securities | $ | 58,194 | $ | 5,686 | $ | 14 | $ | (120 | ) | $ | — | $ | 63,774 | ||||||||||||
Gross unrealized gains | Gross unrealized losses | |||||||||||||||||||||||
Amortized | Not other-than- | Other-than- | Not other-than- | Other-than- | ||||||||||||||||||||
cost or | temporarily | temporarily | temporarily | temporarily | Fair | |||||||||||||||||||
(Amounts in millions) | cost | impaired | impaired | impaired | impaired | value | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
U.S. government, agencies and government-sponsored enterprises | $ | 4,175 | $ | 473 | $ | — | $ | (17 | ) | $ | — | $ | 4,631 | |||||||||||
State and political subdivisions | 2,406 | 168 | — | (22 | ) | — | 2,552 | |||||||||||||||||
Non-U.S. government | 2,345 | 72 | — | (24 | ) | — | 2,393 | |||||||||||||||||
U.S. corporate: | ||||||||||||||||||||||||
Utilities | 4,439 | 331 | — | (95 | ) | — | 4,675 | |||||||||||||||||
Energy | 2,382 | 101 | — | (64 | ) | — | 2,419 | |||||||||||||||||
Finance and insurance | 6,705 | 249 | — | (132 | ) | — | 6,822 | |||||||||||||||||
Consumer—non-cyclical | 4,891 | 294 | — | (137 | ) | — | 5,048 | |||||||||||||||||
Technology and communications | 2,823 | 110 | — | (78 | ) | — | 2,855 | |||||||||||||||||
Industrial | 1,230 | 41 | — | (33 | ) | — | 1,238 | |||||||||||||||||
Capital goods | 2,277 | 165 | — | (51 | ) | — | 2,391 | |||||||||||||||||
Consumer—cyclical | 1,592 | 53 | — | (48 | ) | — | 1,597 | |||||||||||||||||
Transportation | 1,283 | 78 | — | (41 | ) | — | 1,320 | |||||||||||||||||
Other | 376 | 24 | — | (3 | ) | — | 397 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total U.S. corporate | 27,998 | 1,446 | — | (682 | ) | — | 28,762 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Non-U.S. corporate: | ||||||||||||||||||||||||
Utilities | 1,056 | 17 | — | (32 | ) | — | 1,041 | |||||||||||||||||
Energy | 1,320 | 72 | — | (23 | ) | — | 1,369 | |||||||||||||||||
Finance and insurance | 2,391 | 72 | — | (40 | ) | — | 2,423 | |||||||||||||||||
Consumer—non-cyclical | 756 | 8 | — | (25 | ) | — | 739 | |||||||||||||||||
Technology and communications | 1,168 | 23 | — | (26 | ) | — | 1,165 | |||||||||||||||||
Industrial | 926 | 36 | — | (17 | ) | — | 945 | |||||||||||||||||
Capital goods | 615 | 10 | — | (10 | ) | — | 615 | |||||||||||||||||
Consumer—cyclical | 532 | 1 | — | (13 | ) | — | 520 | |||||||||||||||||
Transportation | 689 | 46 | — | (15 | ) | — | 720 | |||||||||||||||||
Other | 2,218 | 105 | — | (23 | ) | — | 2,300 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Totalnon-U.S. corporate | 11,671 | 390 | — | (224 | ) | — | 11,837 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Residential mortgage-backed | 2,888 | 160 | 13 | (17 | ) | — | 3,044 | |||||||||||||||||
Commercial mortgage-backed | 3,054 | 43 | — | (81 | ) | — | 3,016 | |||||||||||||||||
Other asset-backed | 3,444 | 10 | 1 | (29 | ) | — | 3,426 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Totalavailable-for-sale fixed maturity securities | $ | 57,981 | $ | 2,762 | $ | 14 | $ | (1,096 | ) | $ | — | $ | 59,661 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Gross unrealized gains | Gross unrealized losses | ||||||||||||||||||||||||
(Amounts in millions) | Amortized cost or cost | Not other-than- temporarily impaired | Other-than- temporarily impaired | Not other-than- temporarily impaired | Other-than- temporarily impaired | Fair value | |||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||||
U.S. government, agencies and government-sponsored enterprises | $ | 4,175 | $ | 473 | $ | — | $ | (17 | ) | $ | — | $ | 4,631 | ||||||||||||
State and political subdivisions | 2,406 | 168 | — | (22 | ) | — | 2,552 | ||||||||||||||||||
Non-U.S. government | 2,345 | 72 | — | (24 | ) | — | 2,393 | ||||||||||||||||||
U.S. corporate: | |||||||||||||||||||||||||
Utilities | 4,439 | 331 | — | (95 | ) | — | 4,675 | ||||||||||||||||||
Energy | 2,382 | 101 | — | (64 | ) | — | 2,419 | ||||||||||||||||||
Finance and insurance | 6,705 | 249 | — | (132 | ) | — | 6,822 | ||||||||||||||||||
Consumer—non-cyclical | 4,891 | 294 | — | (137 | ) | — | 5,048 | ||||||||||||||||||
Technology and communications | 2,823 | 110 | — | (78 | ) | — | 2,855 | ||||||||||||||||||
Industrial | 1,230 | 41 | — | (33 | ) | — | 1,238 | ||||||||||||||||||
Capital goods | 2,277 | 165 | — | (51 | ) | — | 2,391 | ||||||||||||||||||
Consumer—cyclical | 1,592 | 53 | — | (48 | ) | — | 1,597 | ||||||||||||||||||
Transportation | 1,283 | 78 | — | (41 | ) | — | 1,320 | ||||||||||||||||||
Other | 376 | 24 | — | (3 | ) | — | 397 | ||||||||||||||||||
Total U.S. corporate | 27,998 | 1,446 | — | (682 | ) | — | 28,762 | ||||||||||||||||||
Non-U.S. corporate: | |||||||||||||||||||||||||
Utilities | 1,056 | 17 | — | (32 | ) | — | 1,041 | ||||||||||||||||||
Energy | 1,320 | 72 | — | (23 | ) | — | 1,369 | ||||||||||||||||||
Finance and insurance | 2,391 | 72 | — | (40 | ) | — | 2,423 | ||||||||||||||||||
Consumer—non-cyclical | 756 | 8 | — | (25 | ) | — | 739 | ||||||||||||||||||
Technology and communications | 1,168 | 23 | — | (26 | ) | — | 1,165 | ||||||||||||||||||
Industrial | 926 | 36 | — | (17 | ) | — | 945 | ||||||||||||||||||
Capital goods | 615 | 10 | — | (10 | ) | — | 615 | ||||||||||||||||||
Consumer—cyclical | 532 | 1 | — | (13 | ) | — | 520 | ||||||||||||||||||
Transportation | 689 | 46 | — | (15 | ) | — | 720 | ||||||||||||||||||
Other | 2,218 | 105 | — | (23 | ) | — | 2,300 | ||||||||||||||||||
Total non-U.S. corporate | 11,671 | 390 | — | (224 | ) | — | 11,837 | ||||||||||||||||||
Residential mortgage-backed | 2,888 | 160 | 13 | (17 | ) | — | 3,044 | ||||||||||||||||||
Commercial mortgage-backed | 3,054 | 43 | — | (81 | ) | — | 3,016 | ||||||||||||||||||
Other asset-backed | 3,444 | 10 | 1 | (29 | ) | — | 3,426 | ||||||||||||||||||
Total available-for-sale fixed maturity securities | $ | 57,981 | $ | 2,762 | $ | 14 | $ | (1,096 | ) | $ | — | $ | 59,661 | ||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||||||||||||||
Fair | unrealized | Number of | Fair | unrealized | Number of | Fair | unrealized | Number of | ||||||||||||||||||||||||||||
(Dollar amounts in millions) | value | losses | securities | value | losses | securities | value | losses | securities | |||||||||||||||||||||||||||
Description of Securities | ||||||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||||||
U.S. government, agencies and government-sponsoredenterprises | $ | — | $ | — | — | $ | 229 | $ | (4) | 31 | $ | 229 | $ | (4) | 31 | |||||||||||||||||||||
State and political subdivisions | 11 | — | 3 | 259 | (6 | ) | 60 | 270 | (6 | ) | 63 | |||||||||||||||||||||||||
Non-U.S. government | 62 | — | 11 | 331 | (6 | ) | 36 | 393 | (6 | ) | 47 | |||||||||||||||||||||||||
U.S. corporate | 1,247 | (37 | ) | 153 | 5,003 | (190 | ) | 698 | 6,250 | (227 | ) | 851 | ||||||||||||||||||||||||
Non-U.S. corporate | 354 | (6 | ) | 57 | 1,922 | (53 | ) | 296 | 2,276 | (59 | ) | 353 | ||||||||||||||||||||||||
Residential mortgage-backed | 46 | (1 | ) | 9 | 476 | (5 | ) | 85 | 522 | (6 | ) | 94 | ||||||||||||||||||||||||
Commercial mortgage-backed | 168 | (4 | ) | 22 | 933 | (44 | ) | 143 | 1,101 | (48 | ) | 165 | ||||||||||||||||||||||||
Other asset-backed | 981 | (10 | ) | 209 | 707 | (5 | ) | 162 | 1,688 | (15 | ) | 371 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total for fixed maturity securities in an unrealized loss position | $ | 2,869 | $ | (58 | ) | 464 | $ | 9,860 | $ | (313 | ) | 1,511 | $ | 12,729 | $ | (371 | ) | 1,975 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
% Below cost: | ||||||||||||||||||||||||||||||||||||
<20% Below cost | $ | 2,869 | $ | (58 | ) | 464 | $ | 9,839 | $ | (304 | ) | 1,505 | $ | 12,708 | $ | (362 | ) | 1,969 | ||||||||||||||||||
20%-50% Below cost | — | — | — | 18 | (6 | ) | 3 | 18 | (6 | ) | 3 | |||||||||||||||||||||||||
>50% Below cost | — | — | — | 3 | (3 | ) | 3 | 3 | (3 | ) | 3 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total for fixed maturity securities in an unrealized loss position | $ | 2,869 | $ | (58 | ) | 464 | $ | 9,860 | $ | (313 | ) | 1,511 | $ | 12,729 | $ | (371 | ) | 1,975 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Investment grade | $ | 2,639 | $ | (51 | ) | 434 | $ | 9,439 | $ | (292 | ) | 1,446 | $ | 12,078 | $ | (343 | ) | 1,880 | ||||||||||||||||||
Below investment grade | 230 | (7 | ) | 30 | 421 | (21 | ) | 65 | 651 | (28 | ) | 95 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total for fixed maturity securities in an unrealized loss position | $ | 2,869 | $ | (58 | ) | 464 | $ | 9,860 | $ | (313 | ) | 1,511 | $ | 12,729 | $ | (371 | ) | 1,975 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||||||||||||
(Dollar amounts in millions) | Fair value | Gross unrealized losses | Number of securities | Fair value | Gross unrealized losses | Number of securities | Fair value | Gross unrealized losses | Number of securities | |||||||||||||||||||||||||||
Description of Securities | ||||||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||||||
U.S. government, agenciesand government-sponsored enterprises | $ | — | $ | — | — | $ | 51 | $ | (1 | ) | 9 | $ | 51 | $ | (1 | ) | 9 | |||||||||||||||||||
Non-U.S. government | — | — | — | 198 | (2 | ) | 14 | 198 | (2 | ) | 14 | |||||||||||||||||||||||||
U.S. corporate | 372 | (15 | ) | 33 | 1,907 | (61 | ) | 256 | 2,279 | (76 | ) | 289 | ||||||||||||||||||||||||
Non-U.S. corporate | 34 | (2 | ) | 5 | 526 | (13 | ) | 82 | 560 | (15 | ) | 87 | ||||||||||||||||||||||||
Residential mortgage-backed | — | — | — | 166 | (2 | ) | 39 | 166 | (2 | ) | 39 | |||||||||||||||||||||||||
Commercial mortgage-backed | — | — | — | 399 | (14 | ) | 53 | 399 | (14 | ) | 53 | |||||||||||||||||||||||||
Other asset-backed | 832 | (5 | ) | 160 | 425 | (5 | ) | 101 | 1,257 | (10 | ) | 261 | ||||||||||||||||||||||||
Total for fixed maturity securities inan unrealized loss position | $ | 1,238 | $ | (22 | ) | 198 | $ | 3,672 | $ | (98 | ) | 554 | $ | 4,910 | $ | (120 | ) | 752 | ||||||||||||||||||
% Below cost: | ||||||||||||||||||||||||||||||||||||
<20% Below cost | $ | 1,238 | $ | (22 | ) | 198 | $ | 3,647 | $ | (88 | ) | 549 | $ | 4,885 | $ | (110 | ) | 747 | ||||||||||||||||||
20%-50% Below cost | — | — | — | 22 | (7 | ) | 3 | 22 | (7 | ) | 3 | |||||||||||||||||||||||||
>50% Below cost | — | — | — | 3 | (3 | ) | 2 | 3 | (3 | ) | 2 | |||||||||||||||||||||||||
Total for fixed maturity securities inan unrealized loss position | $ | 1,238 | $ | (22 | ) | 198 | $ | 3,672 | $ | (98 | ) | 554 | $ | 4,910 | $ | (120 | ) | 752 | ||||||||||||||||||
Investment grade | $ | 1,096 | $ | (11 | ) | 185 | $ | 3,463 | $ | (83 | ) | 524 | $ | 4,559 | $ | (94 | ) | 709 | ||||||||||||||||||
Below investment grade | 142 | (11 | ) | 13 | 209 | (15 | ) | 30 | 351 | (26 | ) | 43 | ||||||||||||||||||||||||
Total for fixed maturity securities inan unrealized loss position | $ | 1,238 | $ | (22 | ) | 198 | $ | 3,672 | $ | (98 | ) | 554 | $ | 4,910 | $ | (120 | ) | 752 | ||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||||||||||||||
Fair | unrealized | Number of | Fair | unrealized | Number of | Fair | unrealized | Number of | ||||||||||||||||||||||||||||
(Dollar amounts in millions) | value | losses | securities | value | losses | securities | value | losses | securities | |||||||||||||||||||||||||||
Description of Securities | ||||||||||||||||||||||||||||||||||||
U.S. corporate: | ||||||||||||||||||||||||||||||||||||
Utilities | $ | 217 | $ | (7 | ) | 22 | $ | 697 | $ | (30 | ) | 103 | $ | 914 | $ | (37 | ) | 125 | ||||||||||||||||||
Energy | 60 | — | 15 | 368 | (15 | ) | 49 | 428 | (15 | ) | 64 | |||||||||||||||||||||||||
Finance and insurance | 203 | (5 | ) | 27 | 1,398 | (32 | ) | 198 | 1,601 | (37 | ) | 225 | ||||||||||||||||||||||||
Consumer— | 313 | (13 | ) | 27 | 813 | (42 | ) | 104 | 1,126 | (55 | ) | 131 | ||||||||||||||||||||||||
Technology and communications | 95 | (4 | ) | 17 | 446 | (15 | ) | 66 | 541 | (19 | ) | 83 | ||||||||||||||||||||||||
Industrial | 98 | (2 | ) | 10 | 193 | (10 | ) | 27 | 291 | (12 | ) | 37 | ||||||||||||||||||||||||
Capital goods | 87 | (2 | ) | 15 | 359 | (17 | ) | 48 | 446 | (19 | ) | 63 | ||||||||||||||||||||||||
Consumer—cyclical | 59 | — | 12 | 397 | (16 | ) | 53 | 456 | (16 | ) | 65 | |||||||||||||||||||||||||
Transportation | 99 | (3 | ) | 7 | 316 | (13 | ) | 49 | 415 | (16 | ) | 56 | ||||||||||||||||||||||||
Other | 16 | (1 | ) | 1 | 16 | — | 1 | 32 | (1 | ) | 2 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Subtotal, U.S. corporatesecurities | 1,247 | (37 | ) | 153 | 5,003 | (190 | ) | 698 | 6,250 | (227 | ) | 851 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Non-U.S. corporate: | ||||||||||||||||||||||||||||||||||||
Utilities | 24 | — | 2 | 259 | (9 | ) | 30 | 283 | (9 | ) | 32 | |||||||||||||||||||||||||
Energy | 29 | — | 4 | 187 | (4 | ) | 26 | 216 | (4 | ) | 30 | |||||||||||||||||||||||||
Finance and insurance | 39 | — | 9 | 475 | (9 | ) | 73 | 514 | (9 | ) | 82 | |||||||||||||||||||||||||
Consumer— | 38 | (1 | ) | 9 | 208 | (8 | ) | 25 | 246 | (9 | ) | 34 | ||||||||||||||||||||||||
Technology and communications | 89 | (2 | ) | 7 | 136 | (4 | ) | 28 | 225 | (6 | ) | 35 | ||||||||||||||||||||||||
Industrial | 8 | — | 4 | 135 | (3 | ) | 18 | 143 | (3 | ) | 22 | |||||||||||||||||||||||||
Capital goods | 23 | — | 4 | 116 | (3 | ) | 16 | 139 | (3 | ) | 20 | |||||||||||||||||||||||||
Consumer—cyclical | 37 | (1 | ) | 6 | 128 | (3 | ) | 25 | 165 | (4 | ) | 31 | ||||||||||||||||||||||||
Transportation | 38 | (1 | ) | 6 | 102 | (5 | ) | 18 | 140 | (6 | ) | 24 | ||||||||||||||||||||||||
Other | 29 | (1 | ) | 6 | 176 | (5 | ) | 37 | 205 | (6 | ) | 43 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Subtotal,non-U.S. corporatesecurities | 354 | (6 | ) | 57 | 1,922 | (53 | ) | 296 | 2,276 | (59 | ) | 353 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total for corporate securities in an unrealized loss position | $ | 1,601 | $ | (43 | ) | 210 | $ | 6,925 | $ | (243 | ) | 994 | $ | 8,526 | $ | (286 | ) | 1,204 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||||||||||||
(Dollar amounts in millions) | Fair value | Gross unrealized losses | Number of securities | Fair value | Gross unrealized losses | Number of securities | Fair value | Gross unrealized losses | Number of securities | |||||||||||||||||||||||||||
Description of Securities | ||||||||||||||||||||||||||||||||||||
U.S. corporate: | ||||||||||||||||||||||||||||||||||||
Utilities | $ | 46 | $ | (4 | ) | 4 | $ | 326 | $ | (9 | ) | 50 | $ | 372 | $ | (13 | ) | 54 | ||||||||||||||||||
Energy | 60 | (2 | ) | 11 | 143 | (8 | ) | 17 | 203 | (10 | ) | 28 | ||||||||||||||||||||||||
Finance and insurance | — | — | — | 343 | (10 | ) | 46 | 343 | (10 | ) | 46 | |||||||||||||||||||||||||
Consumer—non-cyclical | 93 | (7 | ) | 12 | 383 | (11 | ) | 49 | 476 | (18 | ) | 61 | ||||||||||||||||||||||||
Technology andcommunications | 173 | (2 | ) | 6 | 198 | (4 | ) | 22 | 371 | (6 | ) | 28 | ||||||||||||||||||||||||
Industrial | — | — | — | 94 | (4 | ) | 14 | 94 | (4 | ) | 14 | |||||||||||||||||||||||||
Capital goods | — | — | — | 128 | (6 | ) | 18 | 128 | (6 | ) | 18 | |||||||||||||||||||||||||
Consumer—cyclical | — | — | — | 175 | (5 | ) | 24 | 175 | (5 | ) | 24 | |||||||||||||||||||||||||
Transportation | — | — | — | 117 | (4 | ) | 16 | 117 | (4 | ) | 16 | |||||||||||||||||||||||||
Subtotal, U.S. corporatesecurities | 372 | (15 | ) | 33 | 1,907 | (61 | ) | 256 | 2,279 | (76 | ) | 289 | ||||||||||||||||||||||||
Non-U.S. corporate: | ||||||||||||||||||||||||||||||||||||
Utilities | 21 | (1 | ) | 3 | 103 | (2 | ) | 13 | 124 | (3 | ) | 16 | ||||||||||||||||||||||||
Energy | 13 | (1 | ) | 2 | — | — | — | 13 | (1 | ) | 2 | |||||||||||||||||||||||||
Finance and insurance | — | — | — | 113 | (1 | ) | 23 | 113 | (1 | ) | 23 | |||||||||||||||||||||||||
Consumer—non-cyclical | — | — | — | 72 | (4 | ) | 10 | 72 | (4 | ) | 10 | |||||||||||||||||||||||||
Capital goods | — | — | — | 44 | (1 | ) | 5 | 44 | (1 | ) | 5 | |||||||||||||||||||||||||
Consumer—cyclical | — | — | — | 64 | (1 | ) | 10 | 64 | (1 | ) | 10 | |||||||||||||||||||||||||
Transportation | — | — | — | 51 | (2 | ) | 8 | 51 | (2 | ) | 8 | |||||||||||||||||||||||||
Other | — | — | — | 79 | (2 | ) | 13 | 79 | (2 | ) | 13 | |||||||||||||||||||||||||
Subtotal, non-U.S. corporatesecurities | 34 | (2 | ) | 5 | 526 | (13 | ) | 82 | 560 | (15 | ) | 87 | ||||||||||||||||||||||||
Total for corporate securities in anunrealized loss position | $ | 406 | $ | (17 | ) | 38 | $ | 2,433 | $ | (74 | ) | 338 | $ | 2,839 | $ | (91 | ) | 376 | ||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||||||||||||||
Fair | unrealized | Number of | Fair | unrealized | Number of | Fair | unrealized | Number of | ||||||||||||||||||||||||||||
(Dollar amounts in millions) | value | losses | securities | value | losses | securities | value | losses | securities | |||||||||||||||||||||||||||
Description of Securities | ||||||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||||||
U.S. government, agencies and government-sponsoredenterprises | $ | 545 | $ | (8 | ) | 17 | $ | 161 | $ | (9 | ) | 26 | $ | 706 | $ | (17 | ) | 43 | ||||||||||||||||||
State and political subdivisions | 371 | (10 | ) | 63 | 233 | (12 | ) | 57 | 604 | (22 | ) | 120 | ||||||||||||||||||||||||
Non-U.S. government | 261 | (7 | ) | 51 | 508 | (17 | ) | 35 | 769 | (24 | ) | 86 | ||||||||||||||||||||||||
U.S. corporate | 9,975 | (472 | ) | 1,342 | 2,449 | (210 | ) | 365 | 12,424 | (682 | ) | 1,707 | ||||||||||||||||||||||||
Non-U.S. corporate | 4,172 | (150 | ) | 614 | 1,274 | (74 | ) | 209 | 5,446 | (224 | ) | 823 | ||||||||||||||||||||||||
Residential mortgage-backed | 363 | (6 | ) | 57 | 579 | (11 | ) | 96 | 942 | (17 | ) | 153 | ||||||||||||||||||||||||
Commercial mortgage-backed | 758 | (19 | ) | 115 | 870 | (62 | ) | 130 | 1,628 | (81 | ) | 245 | ||||||||||||||||||||||||
Other asset-backed | 1,597 | (23 | ) | 326 | 604 | (6 | ) | 137 | 2,201 | (29 | ) | 463 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total for fixed maturity securities inan unrealized loss position | $ | 18,042 | $ | (695 | ) | 2,585 | $ | 6,678 | $ | (401 | ) | 1,055 | $ | 24,720 | $ | (1,096 | ) | 3,640 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
% Below cost—fixed maturitysecurities: | ||||||||||||||||||||||||||||||||||||
<20% Below cost | $ | 18,008 | $ | (685 | ) | 2,581 | $ | 6,624 | $ | (383 | ) | 1,045 | $ | 24,632 | $ | (1,068 | ) | 3,626 | ||||||||||||||||||
20%-50% Below cost | 34 | (10 | ) | 4 | 54 | (18 | ) | 10 | 88 | (28 | ) | 14 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total for fixed maturity securities inan unrealized loss position | $ | 18,042 | $ | (695 | ) | 2,585 | $ | 6,678 | $ | (401 | ) | 1,055 | $ | 24,720 | $ | (1,096 | ) | 3,640 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Investment grade | $ | 16,726 | $ | (615 | ) | 2,393 | $ | 6,508 | $ | (379 | ) | 1,024 | $ | 23,234 | $ | (994 | ) | 3,417 | ||||||||||||||||||
Below investment grade | 1,316 | (80 | ) | 192 | 170 | (22 | ) | 31 | 1,486 | (102 | ) | 223 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total for fixed maturity securities inan unrealized loss position | $ | 18,042 | $ | (695 | ) | 2,585 | $ | 6,678 | $ | (401 | ) | 1,055 | $ | 24,720 | $ | (1,096 | ) | 3,640 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||||||||||||
Gross | Number | Gross | Number | Gross | Number | |||||||||||||||||||||||||||||||
Fair | unrealized | of | Fair | unrealized | of | Fair | unrealized | of | ||||||||||||||||||||||||||||
(Dollar amounts in millions) | value | losses | securities | value | losses | securities | value | losses | securities | |||||||||||||||||||||||||||
Description of Securities | ||||||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||||||
U.S. government, agenciesand government-sponsoredenterprises | $ | 545 | $ | (8 | ) | 17 | $ | 161 | $ | (9 | ) | 26 | $ | 706 | $ | (17 | ) | 43 | ||||||||||||||||||
State and political subdivisions | 371 | (10 | ) | 63 | 233 | (12 | ) | 57 | 604 | (22 | ) | 120 | ||||||||||||||||||||||||
Non-U.S. government | 261 | (7 | ) | 51 | 508 | (17 | ) | 35 | 769 | (24 | ) | 86 | ||||||||||||||||||||||||
U.S. corporate | 9,975 | (472 | ) | 1,342 | 2,449 | (210 | ) | 365 | 12,424 | (682 | ) | 1,707 | ||||||||||||||||||||||||
Non-U.S. corporate | 4,172 | (150 | ) | 614 | 1,274 | (74 | ) | 209 | 5,446 | (224 | ) | 823 | ||||||||||||||||||||||||
Residential mortgage-backed | 363 | (6 | ) | 57 | 579 | (11 | ) | 96 | 942 | (17 | ) | 153 | ||||||||||||||||||||||||
Commercial mortgage-backed | 758 | (19 | ) | 115 | 870 | (62 | ) | 130 | 1,628 | (81 | ) | 245 | ||||||||||||||||||||||||
Other asset-backed | 1,597 | (23 | ) | 326 | 604 | (6 | ) | 137 | 2,201 | (29 | ) | 463 | ||||||||||||||||||||||||
Total for fixed maturity securities inan unrealized loss position | $ | 18,042 | $ | (695 | ) | 2,585 | $ | 6,678 | $ | (401 | ) | 1,055 | $ | 24,720 | $ | (1,096 | ) | 3,640 | ||||||||||||||||||
% Below cost: | ||||||||||||||||||||||||||||||||||||
<20% Below cost | $ | 18,008 | $ | (685 | ) | 2,581 | $ | 6,624 | $ | (383 | ) | 1,045 | $ | 24,632 | $ | (1,068 | ) | 3,626 | ||||||||||||||||||
20%-50% Below cost | 34 | (10 | ) | 4 | 54 | (18 | ) | 10 | 88 | (28 | ) | 14 | ||||||||||||||||||||||||
Total for fixed maturity securities inan unrealized loss position | $ | 18,042 | $ | (695 | ) | 2,585 | $ | 6,678 | $ | (401 | ) | 1,055 | $ | 24,720 | $ | (1,096 | ) | 3,640 | ||||||||||||||||||
Investment grade | $ | 16,726 | $ | (615 | ) | 2,393 | $ | 6,508 | $ | (379 | ) | 1,024 | $ | 23,234 | $ | (994 | ) | 3,417 | ||||||||||||||||||
Below investment grade | 1,316 | (80 | ) | 192 | 170 | (22 | ) | 31 | 1,486 | (102 | ) | 223 | ||||||||||||||||||||||||
Total for fixed maturity securities inan unrealized loss position | $ | 18,042 | $ | (695 | ) | 2,585 | $ | 6,678 | $ | (401 | ) | 1,055 | $ | 24,720 | $ | (1,096 | ) | 3,640 | ||||||||||||||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||||||||||||||
Fair | unrealized | Number of | Fair | unrealized | Number of | Fair | unrealized | Number of | ||||||||||||||||||||||||||||
(Dollar amounts in millions) | value | losses | securities | value | losses | securities | value | losses | securities | |||||||||||||||||||||||||||
Description of Securities | ||||||||||||||||||||||||||||||||||||
U.S. corporate: | ||||||||||||||||||||||||||||||||||||
Utilities | $ | 1,246 | $ | (61 | ) | 173 | $ | 343 | $ | (34 | ) | 60 | $ | 1,589 | $ | (95 | ) | 233 | ||||||||||||||||||
Energy | 944 | (47 | ) | 135 | 152 | (17 | ) | 23 | 1,096 | (64 | ) | 158 | ||||||||||||||||||||||||
Finance and insurance | 2,393 | (92 | ) | 326 | 688 | (40 | ) | 95 | 3,081 | (132 | ) | 421 | ||||||||||||||||||||||||
Consumer—non-cyclical | 1,826 | (101 | ) | 203 | 389 | (36 | ) | 55 | 2,215 | (137 | ) | 258 | ||||||||||||||||||||||||
Technology and communications | 1,135 | (51 | ) | 152 | 263 | (27 | ) | 34 | 1,398 | (78 | ) | 186 | ||||||||||||||||||||||||
Industrial | 506 | (27 | ) | 63 | 74 | (6 | ) | 13 | 580 | (33 | ) | 76 | ||||||||||||||||||||||||
Capital goods | 704 | (31 | ) | 103 | 184 | (20 | ) | 27 | 888 | (51 | ) | 130 | ||||||||||||||||||||||||
Consumer—cyclical | 738 | (35 | ) | 123 | 162 | (13 | ) | 26 | 900 | (48 | ) | 149 | ||||||||||||||||||||||||
Transportation | 435 | (25 | ) | 60 | 179 | (16 | ) | 31 | 614 | (41 | ) | 91 | ||||||||||||||||||||||||
Other | 48 | (2 | ) | 4 | 15 | (1 | ) | 1 | 63 | (3 | ) | 5 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Subtotal, U.S. corporatesecurities | 9,975 | (472 | ) | 1,342 | 2,449 | (210 | ) | 365 | 12,424 | (682 | ) | 1,707 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Non-U.S. corporate: | ||||||||||||||||||||||||||||||||||||
Utilities | 404 | (19 | ) | 58 | 173 | (13 | ) | 24 | 577 | (32 | ) | 82 | ||||||||||||||||||||||||
Energy | 439 | (15 | ) | 64 | 136 | (8 | ) | 20 | 575 | (23 | ) | 84 | ||||||||||||||||||||||||
Finance and insurance | 899 | (25 | ) | 151 | 294 | (15 | ) | 52 | 1,193 | (40 | ) | 203 | ||||||||||||||||||||||||
Consumer—non-cyclical | 377 | (16 | ) | 51 | 102 | (9 | ) | 14 | 479 | (25 | ) | 65 | ||||||||||||||||||||||||
Technology and communications | 611 | (24 | ) | 75 | 50 | (2 | ) | 12 | 661 | (26 | ) | 87 | ||||||||||||||||||||||||
Industrial | 275 | (11 | ) | 48 | 72 | (6 | ) | 8 | 347 | (17 | ) | 56 | ||||||||||||||||||||||||
Capital goods | 226 | (7 | ) | 27 | 69 | (3 | ) | 13 | 295 | (10 | ) | 40 | ||||||||||||||||||||||||
Consumer—cyclical | 268 | (11 | ) | 42 | 117 | (2 | ) | 19 | 385 | (13 | ) | 61 | ||||||||||||||||||||||||
Transportation | 232 | (7 | ) | 27 | 67 | (8 | ) | 11 | 299 | (15 | ) | 38 | ||||||||||||||||||||||||
Other | 441 | (15 | ) | 71 | 194 | (8 | ) | 36 | 635 | (23 | ) | 107 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Subtotal,non-U.S. corporatesecurities | 4,172 | (150 | ) | 614 | 1,274 | (74 | ) | 209 | 5,446 | (224 | ) | 823 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total for corporate securities in an unrealized loss position | $ | 14,147 | $ | (622 | ) | 1,956 | $ | 3,723 | $ | (284 | ) | 574 | $ | 17,870 | $ | (906 | ) | 2,530 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||||||||||||||
Gross | Number | Gross | Number | Gross | Number | |||||||||||||||||||||||||||||||
Fair | unrealized | of | Fair | unrealized | of | Fair | unrealized | of | ||||||||||||||||||||||||||||
(Dollar amounts in millions) | value | losses | securities | value | losses | securities | value | losses | securities | |||||||||||||||||||||||||||
Description of Securities | ||||||||||||||||||||||||||||||||||||
U.S. corporate: | ||||||||||||||||||||||||||||||||||||
Utilities | $ | 1,246 | $ | (61 | ) | 173 | $ | 343 | $ | (34 | ) | 60 | $ | 1,589 | $ | (95 | ) | 233 | ||||||||||||||||||
Energy | 944 | (47 | ) | 135 | 152 | (17 | ) | 23 | 1,096 | (64 | ) | 158 | ||||||||||||||||||||||||
Finance and insurance | 2,393 | (92 | ) | 326 | 688 | (40 | ) | 95 | 3,081 | (132 | ) | 421 | ||||||||||||||||||||||||
Consumer—non-cyclical | 1,826 | (101 | ) | 203 | 389 | (36 | ) | 55 | 2,215 | (137 | ) | 258 | ||||||||||||||||||||||||
Technology andcommunications | 1,135 | (51 | ) | 152 | 263 | (27 | ) | 34 | 1,398 | (78 | ) | 186 | ||||||||||||||||||||||||
Industrial | 506 | (27 | ) | 63 | 74 | (6 | ) | 13 | 580 | (33 | ) | 76 | ||||||||||||||||||||||||
Capital goods | 704 | (31 | ) | 103 | 184 | (20 | ) | 27 | 888 | (51 | ) | 130 | ||||||||||||||||||||||||
Consumer—cyclical | 738 | (35 | ) | 123 | 162 | (13 | ) | 26 | 900 | (48 | ) | 149 | ||||||||||||||||||||||||
Transportation | 435 | (25 | ) | 60 | 179 | (16 | ) | 31 | 614 | (41 | ) | 91 | ||||||||||||||||||||||||
Other | 48 | (2 | ) | 4 | 15 | (1 | ) | 1 | 63 | (3 | ) | 5 | ||||||||||||||||||||||||
Subtotal, U.S. corporatesecurities | 9,975 | (472 | ) | 1,342 | 2,449 | (210 | ) | 365 | 12,424 | (682 | ) | 1,707 | ||||||||||||||||||||||||
Non-U.S. corporate: | ||||||||||||||||||||||||||||||||||||
Utilities | 404 | (19 | ) | 58 | 173 | (13 | ) | 24 | 577 | (32 | ) | 82 | ||||||||||||||||||||||||
Energy | 439 | (15 | ) | 64 | 136 | (8 | ) | 20 | 575 | (23 | ) | 84 | ||||||||||||||||||||||||
Finance and insurance | 899 | (25 | ) | 151 | 294 | (15 | ) | 52 | 1,193 | (40 | ) | 203 | ||||||||||||||||||||||||
Consumer—non-cyclical | 377 | (16 | ) | 51 | 102 | (9 | ) | 14 | 479 | (25 | ) | 65 | ||||||||||||||||||||||||
Technology andcommunications | 611 | (24 | ) | 75 | 50 | (2 | ) | 12 | 661 | (26 | ) | 87 | ||||||||||||||||||||||||
Industrial | 275 | (11 | ) | 48 | 72 | (6 | ) | 8 | 347 | (17 | ) | 56 | ||||||||||||||||||||||||
Capital goods | 226 | (7 | ) | 27 | 69 | (3 | ) | 13 | 295 | (10 | ) | 40 | ||||||||||||||||||||||||
Consumer—cyclical | 268 | (11 | ) | 42 | 117 | (2 | ) | 19 | 385 | (13 | ) | 61 | ||||||||||||||||||||||||
Transportation | 232 | (7 | ) | 27 | 67 | (8 | ) | 11 | 299 | (15 | ) | 38 | ||||||||||||||||||||||||
Other | 441 | (15 | ) | 71 | 194 | (8 | ) | 36 | 635 | (23 | ) | 107 | ||||||||||||||||||||||||
Subtotal, non-U.S. corporatesecurities | 4,172 | (150 | ) | 614 | 1,274 | (74 | ) | 209 | 5,446 | (224 | ) | 823 | ||||||||||||||||||||||||
Total for corporate securities in anunrealized loss position | $ | 14,147 | $ | (622 | ) | 1,956 | $ | 3,723 | $ | (284 | ) | 574 | $ | 17,870 | $ | (906 | ) | 2,530 | ||||||||||||||||||
Amortized | ||||||||
cost or | Fair | |||||||
(Amounts in millions) | cost | value | ||||||
Due one year or less | $ | 2,005 | $ | 2,021 | ||||
Due after one year through five years | 10,826 | 11,105 | ||||||
Due after five years through ten years | 12,265 | 12,770 | ||||||
Due after ten years | 23,516 | 26,126 | ||||||
|
|
|
| |||||
Subtotal | 48,612 | 52,022 | ||||||
Residential mortgage-backed | 2,762 | 2,950 | ||||||
Commercial mortgage-backed | 2,946 | 2,962 | ||||||
Other asset-backed | 3,422 | 3,426 | ||||||
|
|
|
| |||||
Total | $ | 57,742 | $ | 61,360 | ||||
|
|
|
|
Amortized | ||||||||
cost or | Fair | |||||||
(Amounts in millions) | cost | value | ||||||
Due one year or less | $ | 1,957 | $ | 1,973 | ||||
Due after one year through five years | 11,198 | 11,602 | ||||||
Due after five years through ten years | 12,300 | 13,197 | ||||||
Due after ten years | 23,647 | 27,548 | ||||||
Subtotal | 49,102 | 54,320 | ||||||
Residential mortgage-backed | 2,511 | 2,738 | ||||||
Commercial mortgage-backed | 2,882 | 2,989 | ||||||
Other asset-backed | 3,699 | 3,727 | ||||||
Total | $ | 58,194 | $ | 63,774 |
March 31, 2019 | December 31, 2018 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
(Amounts in millions) | value | total | value | total | ||||||||||||
Property type: | ||||||||||||||||
Retail | $ | 2,548 | 37 | % | $ | 2,463 | 37 | % | ||||||||
Industrial | 1,678 | 24 | 1,659 | 25 | ||||||||||||
Office | 1,671 | 24 | 1,548 | 23 | ||||||||||||
Apartments | 520 | 7 | 495 | 7 | ||||||||||||
Mixed use | 254 | 4 | 254 | 4 | ||||||||||||
Other | 272 | 4 | 281 | 4 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal | 6,943 | 100 | % | 6,700 | 100 | % | ||||||||||
|
|
|
| |||||||||||||
Unamortized balance of loan origination fees and costs | (4 | ) | (4 | ) | ||||||||||||
Allowance for losses | (10 | ) | (9 | ) | ||||||||||||
|
|
|
| |||||||||||||
Total | $ | 6,929 | $ | 6,687 | ||||||||||||
|
|
|
|
March 31, 2019 | December 31, 2018 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
(Amounts in millions) | value | total | value | total | ||||||||||||
Geographic region: | ||||||||||||||||
South Atlantic | $ | 1,739 | 25 | % | $ | 1,709 | 26 | % | ||||||||
Pacific | 1,705 | 25 | 1,684 | 25 | ||||||||||||
Middle Atlantic | 1,020 | 15 | 950 | 14 | ||||||||||||
Mountain | 688 | 10 | 667 | 10 | ||||||||||||
West North Central | 486 | 7 | 470 | 7 | ||||||||||||
East North Central | 449 | 6 | 405 | 6 | ||||||||||||
West South Central | 369 | 5 | 364 | 6 | ||||||||||||
New England | 267 | 4 | 228 | 3 | ||||||||||||
East South Central | 220 | 3 | 223 | 3 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal | 6,943 | 100 | % | 6,700 | 100 | % | ||||||||||
|
|
|
| |||||||||||||
Unamortized balance of loan origination fees and costs | (4 | ) | (4 | ) | ||||||||||||
Allowance for losses | (10 | ) | (9 | ) | ||||||||||||
|
|
|
| |||||||||||||
Total | $ | 6,929 | $ | 6,687 | ||||||||||||
|
|
|
|
June 30, 2019 | December 31, 2018 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
(Amounts in millions) | value | total | value | total | ||||||||||||
Property type: | ||||||||||||||||
Retail | $ | 2,581 | 37 | % | $ | 2,463 | 37 | % | ||||||||
Industrial | 1,699 | 24 | 1,659 | 25 | ||||||||||||
Office | 1,656 | 24 | 1,548 | 23 | ||||||||||||
Apartments | 525 | 7 | 495 | 7 | ||||||||||||
Mixed use | 247 | 4 | 254 | 4 | ||||||||||||
Other | 270 | 4 | 281 | 4 | ||||||||||||
Subtotal | 6,978 | 100 | % | 6,700 | 100 | % | ||||||||||
Unamortized balance of loan origination fees and costs | (4 | ) | (4 | ) | ||||||||||||
Allowance for credit losses | (11 | ) | (9 | ) | ||||||||||||
Total | $ | 6,963 | $ | 6,687 | ||||||||||||
June 30, 2019 | December 31, 2018 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
(Amounts in millions) | value | total | value | total | ||||||||||||
Geographic region: | ||||||||||||||||
South Atlantic | $ | 1,747 | 25 | % | $ | 1,709 | 26 | % | ||||||||
Pacific | 1,701 | 24 | 1,684 | 25 | ||||||||||||
Middle Atlantic | 1,000 | 14 | 950 | 14 | ||||||||||||
Mountain | 717 | 10 | 667 | 10 | ||||||||||||
West North Central | 490 | 7 | 470 | 7 | ||||||||||||
East North Central | 457 | 7 | 405 | 6 | ||||||||||||
West South Central | 387 | 6 | 364 | 6 | ||||||||||||
New England | 261 | 4 | 228 | 3 | ||||||||||||
East South Central | 218 | 3 | 223 | 3 | ||||||||||||
Subtotal | 6,978 | 100 | % | 6,700 | 100 | % | ||||||||||
Unamortized balance of loan origination fees and costs | (4 | ) | (4 | ) | ||||||||||||
Allowance for credit losses | (11 | ) | (9 | ) | ||||||||||||
Total | $ | 6,963 | $ | 6,687 | ||||||||||||
March 31, 2019 | ||||||||||||||||||||||||
Greater than | ||||||||||||||||||||||||
31 - 60 days | 61 - 90 days | 90 days past | Total | |||||||||||||||||||||
(Amounts in millions) | past due | past due | due | past due | Current | Total | ||||||||||||||||||
Property type: | ||||||||||||||||||||||||
Retail | $ | — | $ | — | $ | — | $ | — | $ | 2,548 | $ | 2,548 | ||||||||||||
Industrial | — | — | — | — | 1,678 | 1,678 | ||||||||||||||||||
Office | — | — | 3 | 3 | 1,668 | 1,671 | ||||||||||||||||||
Apartments | — | — | — | — | 520 | 520 | ||||||||||||||||||
Mixed use | — | — | — | — | 254 | 254 | ||||||||||||||||||
Other | — | — | — | — | 272 | 272 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total recorded investment | $ | — | $ | — | $ | 3 | $ | 3 | $ | 6,940 | $ | 6,943 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
% of total commercial mortgage loans | — | % | — | % | — | % | — | % | 100 | % | 100 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
December 31, 2018 | ||||||||||||||||||||||||
Greater than | ||||||||||||||||||||||||
31 - 60 days | 61 - 90 days | 90 days past | Total | |||||||||||||||||||||
(Amounts in millions) | past due | past due | due | past due | Current | Total | ||||||||||||||||||
Property type: | ||||||||||||||||||||||||
Retail | $ | 3 | $ | — | $ | — | $ | 3 | $ | 2,460 | $ | 2,463 | ||||||||||||
Industrial | — | — | — | — | 1,659 | 1,659 | ||||||||||||||||||
Office | — | — | 3 | 3 | 1,545 | 1,548 | ||||||||||||||||||
Apartments | — | — | — | — | 495 | 495 | ||||||||||||||||||
Mixed use | — | — | — | — | 254 | 254 | ||||||||||||||||||
Other | — | — | — | — | 281 | 281 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total recorded investment | $ | 3 | $ | — | $ | 3 | $ | 6 | $ | 6,694 | $ | 6,700 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
% of total commercial mortgage loans | — | % | — | % | — | % | — | % | 100 | % | 100 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019 | ||||||||||||||||||||||||
Greater than | ||||||||||||||||||||||||
31 - 60 days | 61 - 90 days | 90 days past | Total | |||||||||||||||||||||
(Amounts in millions) | past due | past due | due | past due | Current | Total | ||||||||||||||||||
Property type: | ||||||||||||||||||||||||
Retail | $ | — | $ | — | $ | — | $ | — | $ | 2,581 | $ | 2,581 | ||||||||||||
Industrial | — | — | — | — | 1,699 | 1,699 | ||||||||||||||||||
Office | — | — | — | — | 1,656 | 1,656 | ||||||||||||||||||
Apartments | — | — | — | — | 525 | 525 | ||||||||||||||||||
Mixed use | — | — | — | — | 247 | 247 | ||||||||||||||||||
Other | — | — | — | — | 270 | 270 | ||||||||||||||||||
Total recorded investment | $ | — | $ | — | $ | — | $ | — | $ | 6,978 | $ | 6,978 | ||||||||||||
% of total commercial mortgage loans | — | % | — | % | — | % | — | % | 100 | % | 100 | % | ||||||||||||
December 31, 2018 | ||||||||||||||||||||||||
Greater than | ||||||||||||||||||||||||
31 - 60 days | 61 - 90 days | 90 days past | Total | |||||||||||||||||||||
(Amounts in millions) | past due | past due | due | past due | Current | Total | ||||||||||||||||||
Property type: | ||||||||||||||||||||||||
Retail | $ | 3 | $ | — | $ | — | $ | 3 | $ | 2,460 | $ | 2,463 | ||||||||||||
Industrial | — | — | — | — | 1,659 | 1,659 | ||||||||||||||||||
Office | — | — | 3 | 3 | 1,545 | 1,548 | ||||||||||||||||||
Apartments | — | — | — | — | 495 | 495 | ||||||||||||||||||
Mixed use | — | — | — | — | 254 | 254 | ||||||||||||||||||
Other | — | — | — | — | 281 | 281 | ||||||||||||||||||
Total recorded investment | $ | 3 | $ | — | $ | 3 | $ | 6 | $ | 6,694 | $ | 6,700 | ||||||||||||
% of total commercial mortgage loans | — | % | — | % | — | % | — | % | 100 | % | 100 | % | ||||||||||||
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
$11 $11 million and $12 million, respectively. All of these modifications or extensions were based on current market interest rates, and did not result in any forgiveness of the outstanding principal amount owed by the borrower.
borrower and were not considered troubled debt restructurings.
Three months ended | ||||||||
March 31, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Allowance for credit losses: | ||||||||
Beginning balance | $ | 9 | $ | 9 | ||||
Charge-offs | — | — | ||||||
Recoveries | — | — | ||||||
Provision | 1 | — | ||||||
|
|
|
| |||||
Ending balance | $ | 10 | $ | 9 | ||||
|
|
|
| |||||
Ending allowance for individually impaired loans | $ | — | $ | — | ||||
|
|
|
| |||||
Ending allowance for loans not individually impaired that were evaluated collectively for impairment | $ | 10 | $ | 9 | ||||
|
|
|
| |||||
Recorded investment: | ||||||||
Ending balance | $ | 6,943 | $ | 6,348 | ||||
|
|
|
| |||||
Ending balance of individually impaired loans | $ | 3 | $ | 6 | ||||
|
|
|
| |||||
Ending balance of loans not individually impaired that were evaluated collectively for impairment | $ | 6,940 | $ | 6,342 | ||||
|
|
|
|
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Allowance for credit losses: | ||||||||||||||||
Beginning balance | $ | 10 | $ | 9 | $ | 9 | $ | 9 | ||||||||
Charge-offs | — | — | — | — | ||||||||||||
Recoveries | — | — | — | — | ||||||||||||
Provision | 1 | — | 2 | — | ||||||||||||
Ending balance | $ | 11 | $ | 9 | $ | 11 | $ | 9 | ||||||||
Ending allowance for individually impaired loans | $ | — | $ | — | $ | — | $ | — | ||||||||
Ending allowance for loans not individually impaired that were evaluated collectively for impairment | $ | 11 | $ | 9 | $ | 11 | $ | 9 | ||||||||
Recorded investment: | ||||||||||||||||
Ending balance | $ | 6,978 | $ | 6,492 | $ | 6,978 | $ | 6,492 | ||||||||
Ending balance of individually impaired loans | $ | — | $ | 6 | $ | — | $ | 6 | ||||||||
Ending balance of loans not individually impaired that were evaluated collectively for impairment | $ | 6,978 | $ | 6,486 | $ | 6,978 | $ | 6,486 | ||||||||
March 31, 2019 | ||||||||||||||||||||||||
Greater | ||||||||||||||||||||||||
(Amounts in millions) | 0% - 50% | 51% - 60% | 61% - 75% | 76% - 100% | than 100% (1) | Total | ||||||||||||||||||
Property type: | ||||||||||||||||||||||||
Retail | $ | 877 | $ | 537 | $ | 1,119 | $ | 15 | $ | — | $ | 2,548 | ||||||||||||
Industrial | 738 | 290 | 634 | 14 | 2 | 1,678 | ||||||||||||||||||
Office | 588 | 371 | 712 | — | — | 1,671 | ||||||||||||||||||
Apartments | 208 | 90 | 217 | 5 | — | 520 | ||||||||||||||||||
Mixed use | 104 | 45 | 105 | — | — | 254 | ||||||||||||||||||
Other | 43 | 68 | 161 | — | — | 272 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total recorded investment | $ | 2,558 | $ | 1,401 | $ | 2,948 | $ | 34 | $ | 2 | $ | 6,943 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
% of total | 37 | % | 20 | % | 43 | % | — | % | — | % | 100 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Weighted-average debt service coverage ratio | 2.42 | 1.80 | 1.58 | 1.46 | 0.88 | 1.93 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019 | ||||||||||||||||||||||||
(Amounts in millions) | 0% - 50% | 51% - 60% | 61% - 75% | 76% - 100% | Greater than 100% (1) | Total | ||||||||||||||||||
Property type: | ||||||||||||||||||||||||
Retail | $ | 882 | $ | 534 | $ | 1,152 | $ | 13 | $ | — | $ | 2,581 | ||||||||||||
Industrial | 732 | 284 | 674 | 7 | 2 | 1,699 | ||||||||||||||||||
Office | 587 | 378 | 691 | — | — | 1,656 | ||||||||||||||||||
Apartments | 200 | 97 | 223 | 5 | — | 525 | ||||||||||||||||||
Mixed use | 102 | 43 | 102 | — | — | 247 | ||||||||||||||||||
Other | 47 | 63 | 160 | — | — | 270 | ||||||||||||||||||
Total recorded investment | $ | 2,550 | $ | 1,399 | $ | 3,002 | $ | 25 | $ | 2 | $ | 6,978 | ||||||||||||
% of total | 37 | % | 20 | % | 43 | % | — | % | — | % | 100 | % | ||||||||||||
Weighted-average debt service coverage ratio | 2.39 | 1.84 | 1.57 | 1.34 | 0.88 | 1.92 | ||||||||||||||||||
(1) | Included a loan with a recorded investment of $2 million in good standing, where the borrower continued to make timely payments, with a |
December 31, 2018 | ||||||||||||||||||||||||
Greater | ||||||||||||||||||||||||
(Amounts in millions) | 0% - 50% | 51% - 60% | 61% - 75% | 76% - 100% | than 100% (1) | Total | ||||||||||||||||||
Property type: | ||||||||||||||||||||||||
Retail | $ | 866 | $ | 565 | $ | 1,017 | $ | 15 | $ | — | $ | 2,463 | ||||||||||||
Industrial | 749 | 279 | 615 | 14 | 2 | 1,659 | ||||||||||||||||||
Office | 585 | 373 | 588 | 2 | — | 1,548 | ||||||||||||||||||
Apartments | 206 | 95 | 189 | 5 | — | 495 | ||||||||||||||||||
Mixed use | 105 | 36 | 113 | — | — | 254 | ||||||||||||||||||
Other | 43 | 78 | 160 | — | — | 281 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total recorded investment | $ | 2,554 | $ | 1,426 | $ | 2,682 | $ | 36 | $ | 2 | $ | 6,700 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
% of total | 38 | % | 21 | % | 40 | % | 1 | % | — | % | 100 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Weighted-average debt service coverage ratio | 2.42 | 2.04 | 1.59 | 1.38 | 0.88 | 2.00 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018 | ||||||||||||||||||||||||
(Amounts in millions) | 0% - 50% | 51% - 60% | 61% - 75% | 76% - 100% | Greater than 100% (1) | Total | ||||||||||||||||||
Property type: | ||||||||||||||||||||||||
Retail | $ | 866 | $ | 565 | $ | 1,017 | $ | 15 | $ | — | $ | 2,463 | ||||||||||||
Industrial | 749 | 279 | 615 | 14 | 2 | 1,659 | ||||||||||||||||||
Office | 585 | 373 | 588 | 2 | — | 1,548 | ||||||||||||||||||
Apartments | 206 | 95 | 189 | 5 | — | 495 | ||||||||||||||||||
Mixed use | 105 | 36 | 113 | — | — | 254 | ||||||||||||||||||
Other | 43 | 78 | 160 | — | — | 281 | ||||||||||||||||||
Total recorded investment | $ | 2,554 | $ | 1,426 | $ | 2,682 | $ | 36 | $ | 2 | $ | 6,700 | ||||||||||||
% of total | 38 | % | 21 | % | 40 | % | 1 | % | — | % | 100 | % | ||||||||||||
Weighted-average debt service coverage ratio | 2.42 | 2.04 | 1.59 | 1.38 | 0.88 | 2.00 | ||||||||||||||||||
(1) | Included a loan with a recorded investment of $2 million in good standing, where the borrower continued to make timely payments, with a |
March 31, 2019 | ||||||||||||||||||||||||
Greater | ||||||||||||||||||||||||
(Amounts in millions) | Less than 1.00 | 1.00 - 1.25 | 1.26 - 1.50 | 1.51 - 2.00 | than 2.00 | Total | ||||||||||||||||||
Property type: | ||||||||||||||||||||||||
Retail | $ | 35 | $ | 155 | $ | 572 | $ | 1,216 | $ | 570 | $ | 2,548 | ||||||||||||
Industrial | 22 | 69 | 259 | 667 | 661 | 1,678 | ||||||||||||||||||
Office | 53 | 56 | 203 | 836 | 523 | 1,671 | ||||||||||||||||||
Apartments | 4 | 24 | 108 | 191 | 193 | 520 | ||||||||||||||||||
Mixed use | 3 | 18 | 52 | 80 | 101 | 254 | ||||||||||||||||||
Other | 13 | 133 | 52 | 40 | 34 | 272 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total recorded investment | $ | 130 | $ | 455 | $ | 1,246 | $ | 3,030 | $ | 2,082 | $ | 6,943 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
% of total | 2 | % | 7 | % | 18 | % | 43 | % | 30 | % | 100 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Weighted-averageloan-to-value | 56 | % | 61 | % | 64 | % | 59 | % | 42 | % | 55 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
December 31, 2018 | ||||||||||||||||||||||||
Greater | ||||||||||||||||||||||||
(Amounts in millions) | Less than 1.00 | 1.00 - 1.25 | 1.26 - 1.50 | 1.51 - 2.00 | than 2.00 | Total | ||||||||||||||||||
Property type: | ||||||||||||||||||||||||
Retail | $ | 43 | $ | 157 | $ | 448 | $ | 1,234 | $ | 581 | $ | 2,463 | ||||||||||||
Industrial | 22 | 75 | 233 | 653 | 676 | 1,659 | ||||||||||||||||||
Office | 57 | 56 | 156 | 765 | 514 | 1,548 | ||||||||||||||||||
Apartments | 4 | 24 | 104 | 168 | 195 | 495 | ||||||||||||||||||
Mixed use | 3 | 19 | 51 | 80 | 101 | 254 | ||||||||||||||||||
Other | 13 | 134 | 50 | 50 | 34 | 281 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total recorded investment | $ | 142 | $ | 465 | $ | 1,042 | $ | 2,950 | $ | 2,101 | $ | 6,700 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
% of total | 2 | % | 7 | % | 16 | % | 44 | % | 31 | % | 100 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Weighted-averageloan-to-value | 57 | % | 61 | % | 62 | % | 59 | % | 42 | % | 54 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019 | ||||||||||||||||||||||||
(Amounts in millions) | Less than 1.00 | 1.00 - 1.25 | 1.26 - 1.50 | 1.51 - 2.00 | Greater than 2.00 | Total | ||||||||||||||||||
Property type: | ||||||||||||||||||||||||
Retail | $ | 33 | $ | 147 | $ | 604 | $ | 1,238 | $ | 559 | $ | 2,581 | ||||||||||||
Industrial | 22 | 68 | 254 | 711 | 644 | 1,699 | ||||||||||||||||||
Office | 51 | 47 | 213 | 833 | 512 | 1,656 | ||||||||||||||||||
Apartments | 4 | 24 | 107 | 196 | 194 | 525 | ||||||||||||||||||
Mixed use | 3 | 18 | 52 | 79 | 95 | 247 | ||||||||||||||||||
Other | 12 | 132 | 52 | 40 | 34 | 270 | ||||||||||||||||||
Total recorded investment | $ | 125 | $ | 436 | $ | 1,282 | $ | 3,097 | $ | 2,038 | $ | 6,978 | ||||||||||||
% of total | 2 | % | 6 | % | 18 | % | 45 | % | 29 | % | 100 | % | ||||||||||||
Weighted-average loan-to-value | 55 | % | 61 | % | 64 | % | 59 | % | 42 | % | 55 | % | ||||||||||||
December 31, 2018 | ||||||||||||||||||||||||
(Amounts in millions) | Less than 1.00 | 1.00 - 1.25 | 1.26 - 1.50 | 1.51 - 2.00 | Greater than 2.00 | Total | ||||||||||||||||||
Property type: | ||||||||||||||||||||||||
Retail | $ | 43 | $ | 157 | $ | 448 | $ | 1,234 | $ | 581 | $ | 2,463 | ||||||||||||
Industrial | 22 | 75 | 233 | 653 | 676 | 1,659 | ||||||||||||||||||
Office | 57 | 56 | 156 | 765 | 514 | 1,548 | ||||||||||||||||||
Apartments | 4 | 24 | 104 | 168 | 195 | 495 | ||||||||||||||||||
Mixed use | 3 | 19 | 51 | 80 | 101 | 254 | ||||||||||||||||||
Other | 13 | 134 | 50 | 50 | 34 | 281 | ||||||||||||||||||
Total recorded investment | $ | 142 | $ | 465 | $ | 1,042 | $ | 2,950 | $ | 2,101 | $ | 6,700 | ||||||||||||
% of total | 2 | % | 7 | % | 16 | % | 44 | % | 31 | % | 100 | % | ||||||||||||
Weighted-average loan-to-value | 57 | % | 61 | % | 62 | % | 59 | % | 42 | % | 54 | % | ||||||||||||
Investments
Derivative assets | Derivative liabilities | |||||||||||||||||||
Fair value | Fair value | |||||||||||||||||||
Balance | March 31, | December 31, | Balance | March 31, | December 31, | |||||||||||||||
(Amounts in millions) | sheet classification | 2019 | 2018 | sheet classification | 2019 | 2018 | ||||||||||||||
Derivatives designated ashedges | ||||||||||||||||||||
Cash flow hedges: | ||||||||||||||||||||
Interest rate swaps | Other invested assets | $ | 59 | $ | 42 | Other liabilities | $ | 49 | $ | 102 | ||||||||||
Foreign currency swaps | Other invested assets | 3 | 6 | Other liabilities | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total cash flow hedges | 62 | 48 | 49 | 102 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total derivativesdesignated as hedges | 62 | 48 | 49 | 102 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Derivatives not designated ashedges | ||||||||||||||||||||
Interest rate swaps in a foreign currency | Other invested assets | 46 | 74 | Other liabilities | — | — | ||||||||||||||
Interest rate caps and floors | Other invested assets | 13 | 7 | Other liabilities | — | — | ||||||||||||||
Foreign currency swaps | Other invested assets | — | — | Other liabilities | 13 | 23 | ||||||||||||||
Equity index options | Other invested assets | 60 | 39 | Other liabilities | — | — | ||||||||||||||
Financial futures | Other invested assets | — | — | Other liabilities | — | — | ||||||||||||||
Equity return swaps | Other invested assets | — | — | Other liabilities | 1 | 1 | ||||||||||||||
Other foreign currencycontracts | Other invested assets | 6 | 10 | Other liabilities | 25 | 42 | ||||||||||||||
GMWB embedded derivatives | Reinsurancerecoverable(1) | 18 | 20 | Policyholderaccount balances (2) | 295 | 337 | ||||||||||||||
Fixed index annuity embeddedderivatives | Other assets | — | — | Policyholderaccount balances(3) | 423 | 389 | ||||||||||||||
Indexed universal life embedded derivatives | Reinsurancerecoverable | — | — | Policyholderaccount balances(4) | 13 | 12 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total derivatives notdesignated as hedges | 143 | 150 | 770 | 804 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total derivatives | $ | 205 | $ | 198 | $ | 819 | $ | 906 | ||||||||||||
|
|
|
|
|
|
|
|
Derivative assets | Derivative liabilities | |||||||||||||||||||
Fair value | Fair value | |||||||||||||||||||
(Amounts in millions) | Balance sheet classification | June 30, 2019 | December 31, 2018 | Balance sheet classification | June 30, 2019 | December 31, 2018 | ||||||||||||||
Derivatives designated ashedges | ||||||||||||||||||||
Cash flow hedges: | ||||||||||||||||||||
Interest rate swaps | Other invested assets | $ | 144 | $ | 42 | Other liabilities | $ | 10 | $ | 102 | ||||||||||
Foreign currency swaps | Other invested assets | 5 | 6 | Other liabilities | 1 | — | ||||||||||||||
Total cash flow hedges | 149 | 48 | 11 | 102 | ||||||||||||||||
Total derivativesdesignated as hedges | 149 | 48 | 11 | 102 | ||||||||||||||||
Derivatives not designated ashedges | ||||||||||||||||||||
Interest rate swaps in aforeign currency | Other invested assets | 35 | 74 | Other liabilities | — | — | ||||||||||||||
Interest rate caps and floors | Other invested assets | 16 | 7 | Other liabilities | — | — | ||||||||||||||
Foreign currency swaps | Other invested assets | 1 | — | Other liabilities | 7 | 23 | ||||||||||||||
Equity index options | Other invested assets | 65 | 39 | Other liabilities | — | — | ||||||||||||||
Financial futures | Other invested assets | — | — | Other liabilities | — | — | ||||||||||||||
Equity return swaps | Other invested assets | — | — | Other liabilities | — | 1 | ||||||||||||||
Other foreign currencycontracts | Other invested assets | 14 | 10 | Other liabilities | 25 | 42 | ||||||||||||||
GMWB embeddedderivatives | Reinsurance recoverable (1) | 20 | 20 | Policyholderaccount balances (2) | 325 | 337 | ||||||||||||||
Fixed index annuity embeddedderivatives | Other assets | — | — | Policyholderaccount balances (3) | 438 | 389 | ||||||||||||||
Indexed universal lifeembedded derivatives | Reinsurancerecoverable | — | — | Policyholderaccount balances (4) | 15 | 12 | ||||||||||||||
Total derivatives notdesignated as hedges | 151 | 150 | 810 | 804 | ||||||||||||||||
Total derivatives | $ | 300 | $ | 198 | $ | 821 | $ | 906 | ||||||||||||
(1) | Represents embedded derivatives associated with the reinsured portion of our guaranteed minimum withdrawal benefits (“GMWB”) liabilities. |
(2) | Represents the embedded derivatives associated with our GMWB liabilities, excluding the impact of reinsurance. |
(3) | Represents the embedded derivatives associated with our fixed index annuity liabilities. |
(4) | Represents the embedded derivatives associated with our indexed universal life liabilities. |
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
December 31, | Maturities/ | March 31, | ||||||||||||||||
(Notional in millions) | Measurement | 2018 | Additions | terminations | 2019 | |||||||||||||
Derivatives designated as hedges | ||||||||||||||||||
Cash flow hedges: | ||||||||||||||||||
Interest rate swaps | Notional | $ | 9,924 | $ | — | $ | (654 | ) | $ | 9,270 | ||||||||
Foreign currency swaps | Notional | 80 | 35 | (22 | ) | 93 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total cash flow hedges | 10,004 | 35 | (676 | ) | 9,363 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total derivatives designated as hedges | 10,004 | 35 | (676 | ) | 9,363 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Derivatives not designated as hedges | ||||||||||||||||||
Interest rate swaps | Notional | 4,674 | — | — | 4,674 | |||||||||||||
Interest rate swaps in a foreign currency | Notional | 2,565 | 98 | (44 | ) | 2,619 | ||||||||||||
Interest rate caps and floors | Notional | 2,624 | 84 | (38 | ) | 2,670 | ||||||||||||
Foreign currency swaps | Notional | 453 | — | (2 | ) | 451 | ||||||||||||
Equity index options | Notional | 2,628 | 503 | (580 | ) | 2,551 | ||||||||||||
Financial futures | Notional | 1,415 | 1,759 | (1,968 | ) | 1,206 | ||||||||||||
Equity return swaps | Notional | 17 | 1 | — | 18 | |||||||||||||
Other foreign currency contracts | Notional | 1,080 | 1,386 | (1,414 | ) | 1,052 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total derivatives not designated as hedges | 15,456 | 3,831 | (4,046 | ) | 15,241 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total derivatives | $ | 25,460 | $ | 3,866 | $ | (4,722 | ) | $ | 24,604 | |||||||||
|
|
|
|
|
|
|
| |||||||||||
December 31, | Maturities/ | March 31, | ||||||||||||||||
(Number of policies) | Measurement | 2018 | Additions | terminations | 2019 | |||||||||||||
Derivatives not designated as hedges | ||||||||||||||||||
GMWB embedded derivatives | Policies | 27,886 | — | (577 | ) | 27,309 | ||||||||||||
Fixed index annuity embedded derivatives | Policies | 16,464 | — | (213 | ) | 16,251 | ||||||||||||
Indexed universal life embedded derivatives | Policies | 929 | — | (11 | ) | 918 |
(Notional in millions) | Measurement | December 31, 201 8 | Additions | Maturities/ terminations | June 30, 2019 | |||||||||||||||
Derivatives designated as hedges | ||||||||||||||||||||
Cash flow hedges: | ||||||||||||||||||||
Interest rate swaps | Notional | $ | 9,924 | $ | 469 | $ | ( 1,338 | ) | $ | 9,055 | ||||||||||
Foreign currency swaps | Notional | 80 | 52 | (22 | ) | 110 | ||||||||||||||
Total cash flow hedges | 10,004 | 521 | (1,360 | ) | 9,165 | |||||||||||||||
Total derivatives designated as hedges | 10,004 | 521 | (1,360 | ) | 9,165 | |||||||||||||||
Derivatives not designated as hedges | ||||||||||||||||||||
Interest rate swaps | Notional | 4,674 | — | — | 4,674 | |||||||||||||||
Interest rate swaps in a foreign currency | Notional | 2,565 | 187 | (77 | ) | 2,675 | ||||||||||||||
Interest rate caps and floors | Notional | 2,624 | 160 | (66 | ) | 2,718 | ||||||||||||||
Foreign currency swaps | Notional | 453 | — | (2 | ) | 451 | ||||||||||||||
Equity index options | Notional | 2,628 | 939 | (1,035 | ) | 2,532 | ||||||||||||||
Financial futures | Notional | 1,415 | 3,029 | (3,217 | ) | 1,227 | ||||||||||||||
Equity return swaps | Notional | 17 | 2 | (2 | ) | 17 | ||||||||||||||
Other foreign currency contracts | Notional | 1,080 | 2,925 | (2,704 | ) | 1,301 | ||||||||||||||
Total derivatives not designated as hedges | 15,456 | 7,242 | (7,103 | ) | 15,595 | |||||||||||||||
Total derivatives | $ | 25,460 | $ | 7,763 | $ | ( 8,463 | ) | $ | 24,760 | |||||||||||
(Number of policies) | Measurement | December 31, 2018 | Additions | Maturities/ terminations | June 30, 2019 | |||||||||||||||
Derivatives not designated as hedges | ||||||||||||||||||||
GMWB embedded derivatives | Policies | 27,886 | — | (1,139 | ) | 26,747 | ||||||||||||||
Fixed index annuity embedded derivatives | Policies | 16,464 | — | (410 | ) | 16,054 | ||||||||||||||
Indexed universal life embedded derivatives | Policies | 929 | — | (21 | ) | 908 |
Gain (loss) | ||||||||||||||||
reclassified into | Classification of gain | Gain (loss) | Classification of gain | |||||||||||||
Gain (loss) | net income | (loss) reclassified into | recognized in | (loss) recognized in | ||||||||||||
(Amounts in millions) | recognized in OCI | from OCI | net income | net income | net income | |||||||||||
Interest rate swaps hedging assets | $ | 137 | $ | 38 | Net investment income | $ | — | Net investment gains (losses) | ||||||||
Interest rate swaps hedging assets | — | 6 | Net investment gains (losses) | — | Net investment gains (losses) | |||||||||||
Interest rate swaps hedging liabilities | (12 | ) | — | Interest expense | — | Net investment gains (losses) | ||||||||||
Foreign currency swaps | (3 | ) | — | Net investment income | 2 | Net investment gains (losses) | ||||||||||
|
|
|
|
|
| |||||||||||
Total | $ | 122 | $ | 44 | $ | 2 | ||||||||||
|
|
|
|
|
|
Gain (loss) reclassified into | Classification of gain (loss) | Gain (loss) | Classification of gain (loss) | |||||||||||||||||
Gain (loss) | net income | reclassified into | recognized in | recognized in net | ||||||||||||||||
(Amounts in millions) | recognized in OCI | from OCI | net income | net income | income | |||||||||||||||
Interest rate swaps hedging assets | $ | 216 | $ | 42 | Net investment income | $ | — | Net investment gains (losses) | ||||||||||||
Interest rate swaps hedging assets | — | (4 | ) | Net investment gains (losses) | — | Net investment gains (losses) | ||||||||||||||
Interest rate swaps hedging liabilities | (20 | ) | — | Interest expense | — | Net investment gains (losses) | ||||||||||||||
Foreign currency swaps | 2 | (1 | ) | Net investment income | — | Net investment gains (losses) | ||||||||||||||
Total | $ | 198 | $ | 37 | $ | — | ||||||||||||||
Gain (loss) | ||||||||||||||||
reclassified into | Classification of gain | Gain (loss) | Classification of gain | |||||||||||||
Gain (loss) | net income | (loss) reclassified into | recognized in | (loss) recognized in | ||||||||||||
(Amounts in millions) | recognized in OCI | from OCI | net income | net income | net income | |||||||||||
Interest rate swaps hedging assets | $ | (173 | ) | $ | 35 | Net investment income | $ | — | Net investment gains (losses) | |||||||
Interest rate swaps hedging assets | — | 5 | Net investment gains (losses) | — | Net investment gains (losses) | |||||||||||
Interest rate swaps hedging liabilities | 17 | — | Interest expense | — | Net investment gains (losses) | |||||||||||
Foreign currency swaps | (1 | ) | — | Net investment income | — | Net investment gains (losses) | ||||||||||
|
|
|
|
|
| |||||||||||
Total | $ | (157 | ) | $ | 40 | $ | — | |||||||||
|
|
|
|
|
|
Gain (loss) reclassified into | Classification of gain (loss) | Gain (loss) | Classification of gain (loss) | |||||||||||||||||
Gain (loss) | net income | reclassified into | recognized in | recognized in net | ||||||||||||||||
(Amounts in millions) | recognized in OCI | from OCI | net income | net income | income | |||||||||||||||
Interest rate swaps hedging assets | $ | (54 | ) | $ | 39 | Net investment income | $ | — | Net investment gains (losses) | |||||||||||
Interest rate swaps hedging liabilities | 5 | — | Interest expense | — | Net investment gains (losses) | |||||||||||||||
Foreign currency swaps | 1 | — | Net investment income | — | Net investment gains (losses) | |||||||||||||||
Total | $ | (48 | ) | $ | 39 | $ | — | |||||||||||||
Gain (loss) reclassified into | Classification of gain (loss) | Gain (loss) | Classification of gain (loss) | |||||||||||||||||
Gain (loss) | net income | reclassified into | recognized in | recognized in | ||||||||||||||||
(Amounts in millions) | recognized in OCI | from OCI | net income | net income | net income | |||||||||||||||
Interest rate swaps hedging assets | $ | 353 | $ | 80 | Net investment income | $ | — | Net investment gains (losses) | ||||||||||||
Interest rate swaps hedging assets | — | 2 | Net investment gains (losses) | — | Net investment gains (losses) | |||||||||||||||
Interest rate swaps hedging liabilities | (32 | ) | — | Interest expense | — | Net investment gains (losses) | ||||||||||||||
Foreign currency swaps | (1 | ) | (1 | ) | Net investment income | — | Net investment gains (losses) | |||||||||||||
Foreign currency swaps | — | — | Net investment gains (losses) | 2 | Net investment gains (losses) | |||||||||||||||
Total | $ | 320 | $ | 81 | $ | 2 | ||||||||||||||
Gain (loss) reclassified into | Classification of gain (loss) | Gain (loss) | Classification of gain (loss) | |||||||||||||||||
Gain (loss) | net income | reclassified into | recognized in | recognized in | ||||||||||||||||
(Amounts in millions) | recognized in OCI | from OCI | net income | net income | net income | |||||||||||||||
Interest rate swaps hedging assets | $ | (227 | ) | $ | 74 | Net investment income | $ | — | Net investment gains (losses) | |||||||||||
Interest rate swaps hedging assets | — | 5 | Net investment gains (losses) | — | Net investment gains (losses) | |||||||||||||||
Interest rate swaps hedging liabilities | 22 | — | Interest expense | — | Net investment gains (losses) | |||||||||||||||
Total | $ | (205 | ) | $ | 79 | $ | — | |||||||||||||
Three months ended | ||||||||
March 31, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Derivatives qualifying as effective accounting hedges as of January 1 | $ | 1,781 | $ | 2,065 | ||||
Cumulative effect of changes in accounting: | ||||||||
Stranded tax effects | — | 12 | ||||||
Changes to the hedge accounting model, net of deferred taxes of $— and $(1) | — | 2 | ||||||
|
|
|
| |||||
Total cumulative effect of changes in accounting | — | 14 | ||||||
|
|
|
| |||||
Current period increases (decreases) in fair value, net of deferred taxes of $(25) and $34 | 97 | (126 | ) | |||||
Reclassification to net (income), net of deferred taxes of $16 and $14 | (28 | ) | (26 | ) | ||||
|
|
|
| |||||
Derivatives qualifying as effective accounting hedges as of March 31 | $ | 1,850 | $ | 1,927 | ||||
|
|
|
|
Three months ended June 30, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Derivatives qualifying as effective accounting hedges as of April 1 | $ | 1,850 | $ | 1,927 | ||||
Current period increases (decreases) in fair value, net of deferred taxes of $(41) and $9 | 157 | (39 | ) | |||||
Reclassification to net (income), net of deferred taxes of $13 and $14 | (24 | ) | (25 | ) | ||||
Derivatives qualifying as effective accounting hedges as of June 30 | $ | 1,983 | $ | 1,863 | ||||
Six months ended June 30, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Derivatives qualifying as effective accounting hedges as of January 1 | $ | 1,781 | $ | 2,065 | ||||
Cumulative effect of changes in accounting: | ||||||||
Stranded tax effects | — | 12 | ||||||
Changes to the hedge accounting model, net of deferred taxes of $— and $(1) | — | 2 | ||||||
Total cumulative effect of changes in accounting | — | 14 | ||||||
Current period increases (decreases) in fair value, net of deferred taxes of $(66) and $43 | 254 | (165 | ) | |||||
Reclassification to net (income), net of deferred taxes of $29 and $28 | (52 | ) | (51 | ) | ||||
Derivatives qualifying as effective accounting hedges as of June 30 | $ | 1,983 | $ | 1,863 | ||||
Three months ended March 31, | Classification of gain (loss) recognized in net income | |||||||||
(Amounts in millions) | 2019 | 2018 | ||||||||
Interest rate swaps | $ | (1 | ) | $ | (1 | ) | Net investment gains (losses) | |||
Interest rate swaps in a foreign currency | (23 | ) | — | Net investment gains (losses) | ||||||
Interest rate caps and floors | 6 | — | Net investment gains (losses) | |||||||
Equity index options | 17 | (15 | ) | Net investment gains (losses) | ||||||
Financial futures | (44 | ) | (24 | ) | Net investment gains (losses) | |||||
Equity return swaps | — | (5 | ) | Net investment gains (losses) | ||||||
Other foreign currency contracts | 9 | 8 | Net investment gains (losses) | |||||||
Foreign currency swaps | 10 | (8 | ) | Net investment gains (losses) | ||||||
GMWB embedded derivatives | 45 | 14 | Net investment gains (losses) | |||||||
Fixed index annuity embedded derivatives | (38 | ) | 8 | Net investment gains (losses) | ||||||
Indexed universal life embedded derivatives | 1 | 5 | Net investment gains (losses) | |||||||
|
|
|
| |||||||
Total derivatives not designated as hedges | $ | (18 | ) | $ | (18 | ) | ||||
|
|
|
|
Three months ended June 30, | Classification of gain (loss) recognized | ||||||||||
(Amounts in millions) | 2019 | 2018 | in net income | ||||||||
Interest rate swaps | $ | (3 | ) | $ | (2 | ) | Net investment gains (losses) | ||||
Interest rate swaps in a foreign currency | (6 | ) | — | Net investment gains (losses) | |||||||
Interest rate caps and floors | 3 | — | Net investment gains (losses) | ||||||||
Foreign currency swaps | 6 | (10 | ) | Net investment gains (losses) | |||||||
Equity index options | 10 | 8 | Net investment gains (losses) | ||||||||
Financial futures | 17 | (13 | ) | Net investment gains (losses) | |||||||
Equity return swaps | 1 | 1 | Net investment gains (losses) | ||||||||
Other foreign currency contracts | (3 | ) | 1 | Net investment gains (losses) | |||||||
GMWB embedded derivatives | (22 | ) | 13 | Net investment gains (losses) | |||||||
Fixed index annuity embedded derivatives | (20 | ) | (15 | ) | Net investment gains (losses) | ||||||
Indexed universal life embedded derivatives | (1 | ) | 2 | Net investment gains (losses) | |||||||
Total derivatives not designated as hedges | $ | (18 | ) | $ | (15 | ) | |||||
Six months ended June 30, | Classification of gain (loss) recognized | ||||||||||
(Amounts in millions) | 2019 | 2018 | in net income | ||||||||
Interest rate swaps | $ | (4 | ) | $ | (3 | ) | Net investment gains (losses) | ||||
Interest rate swaps in a foreign currency | (29 | ) | — | Net investment gains (losses) | |||||||
Interest rate caps and floors | 9 | — | Net investment gains (losses) | ||||||||
Foreign currency swaps | 16 | (18 | ) | Net investment gains (losses) | |||||||
Equity index options | 27 | (7 | ) | Net investment gains (losses) | |||||||
Financial futures | (27 | ) | (37 | ) | Net investment gains (losses) | ||||||
Equity return swaps | 1 | (4 | ) | Net investment gains (losses) | |||||||
Other foreign currency contracts | 6 | 9 | Net investment gains (losses) | ||||||||
GMWB embedded derivatives | 23 | 27 | Net investment gains (losses) | ||||||||
Fixed index annuity embedded derivatives | (58 | ) | (7 | ) | Net investment gains (losses) | ||||||
Indexed universal life embedded derivatives | — | 7 | Net investment gains (losses) | ||||||||
Total derivatives not designated as hedges | $ | (36 | ) | $ | (33 | ) | |||||
March 31, 2019 | December 31, 2018 | |||||||||||||||||||||||
Derivatives | Derivatives | Net | Derivatives | Derivatives | Net | |||||||||||||||||||
(Amounts in millions) | assets (1) | liabilities (2) | derivatives | assets (1) | liabilities (2) | derivatives | ||||||||||||||||||
Amounts presented in the balance sheet: | ||||||||||||||||||||||||
Gross amounts recognized | $ | 196 | $ | 89 | $ | 107 | $ | 185 | $ | 169 | $ | 16 | ||||||||||||
Gross amounts offset in the balance sheet | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net amounts presented in the balance sheet | 196 | 89 | 107 | 185 | 169 | 16 | ||||||||||||||||||
Gross amounts not offset in the balance sheet: | ||||||||||||||||||||||||
Financial instruments(3) | (40 | ) | (40 | ) | — | (66 | ) | (66 | ) | — | ||||||||||||||
Collateral received | (66 | ) | — | (66 | ) | (84 | ) | — | (84 | ) | ||||||||||||||
Collateral pledged | — | (428 | ) | 428 | — | (536 | ) | 536 | ||||||||||||||||
Over collateralization | 2 | 380 | (378 | ) | 10 | 433 | (423 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net amount | $ | 92 | $ | 1 | $ | 91 | $ | 45 | $ | — | $ | 45 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019 | December 31, 2018 | |||||||||||||||||||||||
(Amounts in millions) | Derivatives assets (1) | Derivatives liabilities (2) | Net derivatives | Derivatives assets (1) | Derivatives liabilities (2) | Net derivatives | ||||||||||||||||||
Amounts presented in the balance sheet: | ||||||||||||||||||||||||
Gross amounts recognized | $ | 287 | $ | 44 | $ | 243 | $ | 185 | $ | 169 | $ | 16 | ||||||||||||
Gross amounts offset in the balance sheet | — | — | — | — | — | — | ||||||||||||||||||
Net amounts presented in the balance sheet | 287 | 44 | 243 | 185 | 169 | 16 | ||||||||||||||||||
Gross amounts not offset in the balance sheet: | ||||||||||||||||||||||||
Financial instruments (3) | (35 | ) | (35 | ) | — | (66 | ) | (66 | ) | — | ||||||||||||||
Collateral received | (77 | ) | — | (77 | ) | (84 | ) | — | (84 | ) | ||||||||||||||
Collateral pledged | — | (327 | ) | 327 | — | (536 | ) | 536 | ||||||||||||||||
Over collateralization | — | 318 | (318 | ) | 10 | 433 | (423 | ) | ||||||||||||||||
Net amount | $ | 175 | $ | — | $ | 175 | $ | 45 | $ | — | $ | 45 | ||||||||||||
(1) | Included |
(2) | Included $1 million of accruals on derivatives included in other liabilities as of |
(3) | Amounts represent derivative assets and/or liabilities that are presented gross within the balance sheet but are held with the same counterparty where we have a master netting arrangement. This adjustment results in presenting the net asset and net liability position for each counterparty. |
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Several of our master swap agreements contain credit downgrade provisions that allow either party to assign or terminate derivative transactions if the other party’s long-term unsecured debt rating, financial strength rating or risk-based capital ratio is below the limit defined in the applicable agreement. If the provisions defined in these agreements had been triggered as of March 31, 2019 and December 31, 2018, we could have been allowed to claim $92 million and $45 million, respectively, or have been required to disburse up to $1 million as of March 31, 2019. The chart above excludes embedded derivatives as those derivatives are not subject to master netting arrangements. As of March 31, 2019, no counterparties exercised their rights to terminate or revise the terms of their transactions with us.
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2019 | ||||||||||||||||||||||||
Notional amount | Carrying amount | Fair value | ||||||||||||||||||||||
(Amounts in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Commercial mortgage loans | (1) | $ | 6,929 | $ | 7,038 | $ | — | $ | — | $ | 7,038 | |||||||||||||
Restricted commercial mortgage loans | (1) | 59 | 63 | — | — | 63 | ||||||||||||||||||
Bank loan investments | (1) | 294 | 293 | — | — | 293 | ||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Long-term borrowings | (1) | 4,035 | 3,564 | — | 3,420 | 144 | ||||||||||||||||||
Non-recourse funding obligations | (1) | 311 | 215 | — | — | 215 | ||||||||||||||||||
Investment contracts | (1) | 12,663 | 13,241 | — | — | 13,241 | ||||||||||||||||||
Other firm commitments: | ||||||||||||||||||||||||
Commitments to fund limited partnerships | 747 | — | — | — | — | — | ||||||||||||||||||
Commitments to fund bank loan investments | 40 | — | — | — | — | — | ||||||||||||||||||
Ordinary course of business lendingcommitments | 152 | — | — | — | — | — | ||||||||||||||||||
December 31, 2018 | ||||||||||||||||||||||||
Notional amount | Carrying amount | Fair value | ||||||||||||||||||||||
(Amounts in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Commercial mortgage loans | (1) | $ | 6,687 | $ | 6,737 | $ | — | $ | — | $ | 6,737 | |||||||||||||
Restricted commercial mortgage loans | (1) | 62 | 66 | — | — | 66 | ||||||||||||||||||
Bank loan investments | (1) | 248 | 248 | — | — | 248 | ||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Long-term borrowings | (1) | 4,025 | 3,577 | — | 3,434 | 143 | ||||||||||||||||||
Non-recourse funding obligations | (1) | 311 | 215 | — | — | 215 | ||||||||||||||||||
Investment contracts | (1) | 13,105 | 13,052 | — | — | 13,052 | ||||||||||||||||||
Other firm commitments: | ||||||||||||||||||||||||
Commitments to fund limited partnerships | 539 | — | — | — | — | — | ||||||||||||||||||
Commitments to fund bank loan investments | 33 | — | — | — | — | — | ||||||||||||||||||
Ordinary course of business lendingcommitments | 73 | — | — | — | — | — |
June 30, 2019 | ||||||||||||||||||||||||
Notional | Carrying | Fair value | ||||||||||||||||||||||
(Amounts in millions) | amount | amount | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Commercial mortgage loans | (1 | ) | $ | 6,963 | $ | 7,241 | $ | — | $ | — | $ | 7,241 | ||||||||||||
Restricted commercial mortgage loans | ( 1 | ) | 56 | 61 | — | — | 61 | |||||||||||||||||
Other invested assets: | ||||||||||||||||||||||||
Bank loan investments | ( 1 | ) | 337 | 336 | — | — | 336 | |||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Long-term borrowings | ( 1 | ) | 4,044 | 3,622 | — | 3,480 | 142 | |||||||||||||||||
Non-recourse funding obligations | ( 1 | ) | 311 | 215 | — | — | 215 | |||||||||||||||||
Investment contracts | ( 1 | ) | 12,364 | 13,194 | — | — | 13,194 | |||||||||||||||||
Other firm commitments: | ||||||||||||||||||||||||
Commitments to fund limited partnerships | 903 | — | — | — | — | — | ||||||||||||||||||
Commitments to fund bank loan investments | 52 | — | — | — | — | — | ||||||||||||||||||
Ordinary course of business lendingcommitments | 188 | — | — | — | — | — |
December 31, 2018 | ||||||||||||||||||||||||
Notional | Carrying | Fair value | ||||||||||||||||||||||
(Amounts in millions) | amount | amount | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Commercial mortgage loans | (1) | $ | 6,687 | $ | 6,737 | $ | — | $ | — | $ | 6,737 | |||||||||||||
Restricted commercial mortgage loans | (1) | 62 | 66 | — | — | 66 | ||||||||||||||||||
Other invested assets: | ||||||||||||||||||||||||
Bank loan investments | (1) | 248 | 248 | — | — | 248 | ||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Long-term borrowings | (1) | 4,025 | 3,577 | — | 3,434 | 143 | ||||||||||||||||||
Non-recourse funding obligations | (1) | 311 | 215 | — | — | 215 | ||||||||||||||||||
Investment contracts | (1) | 13,105 | 13,052 | — | — | 13,052 | ||||||||||||||||||
Other firm commitments: | ||||||||||||||||||||||||
Commitments to fund limited partnerships | 539 | — | — | — | — | — | ||||||||||||||||||
Commitments to fund bank loan investments | 33 | — | — | — | — | — | ||||||||||||||||||
Ordinary course of business lendingcommitments | 73 | — | — | — | — | — |
(1) | These financial instruments do not have notional amounts. |
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
assumptions to determine if we agree with the service’s derived price. When available, we also evaluate the prices sampled as compared to other public prices. If a variance greater than a
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
(Amounts in millions) | Fair value | Primary methodologies | Significant inputs | |||||
U.S. government, agencies and government-sponsored enterprises | $ | 4,731 | Price quotes from trading desk, broker feeds | Bid side prices, trade prices, Option Adjusted Spread (“OAS”) to swap curve, Bond Market Association OAS, Treasury Curve, Agency Bullet Curve, maturity to issuer spread | ||||
State and political subdivisions | $ | 2,494 | Multi-dimensional attribute-based modeling systems, third-party pricing vendors | Trade prices, material event notices, Municipal Market Data benchmark yields, broker quotes | ||||
Non-U.S. government | $ | 2,502 | Matrix pricing, spread priced to benchmark curves, price quotes from market makers | Benchmark yields, trade prices, broker quotes, comparative transactions, issuer spreads,bid-offer spread, market research publications, third-party pricing sources | ||||
U.S. corporate | $ | 26,748 | Multi-dimensional attribute-based modeling systems, broker quotes, price quotes from market makers, internal models,OAS-based models | Bid side prices to Treasury Curve, Issuer Curve, which includes sector, quality, duration, OAS percentage and change for spread matrix, trade prices, comparative transactions, Trade Reporting and Compliance Engine (“TRACE”) reports | ||||
Non-U.S. corporate | $ | 10,123 | Multi-dimensional attribute-based modeling systems,OAS-based models, price quotes from market makers | Benchmark yields, trade prices, broker quotes, comparative transactions, issuer spreads,bid-offer spread, market research publications, third-party pricing sources | ||||
Residential mortgage-backed | $ | 2,915 | OAS-based models, To Be Announced pricing models, single factor binomial models, internally priced | Prepayment and default assumptions, aggregation of bonds with similar characteristics, including collateral type, vintage, tranche type, weighted-average life, weighted-average loan age, issuer program and delinquency ratio, pay up and pay down factors, TRACE reports | ||||
Commercial mortgage-backed | $ | 2,864 | Multi-dimensional attribute-based modeling systems, pricing matrix, spread matrix priced to swap curves, Trepp commercial mortgage-backed securities analytics model | Credit risk, interest rate risk, prepayment speeds, new issue data, collateral performance, origination year, tranche type, original credit ratings, weighted-average life, cash flows, spreads derived from broker quotes, bid side prices, spreads to daily updated swaps curves, TRACE reports | ||||
Other asset-backed | $ | 3,224 | Multi-dimensional attribute-based modeling systems, spread matrix priced to swap curves, price quotes from market makers, internal models | Spreads to daily updated swaps curves, spreads derived from trade prices and broker quotes, bid side prices, new issue data, collateral performance, analysis of prepayment speeds, cash flows, collateral loss analytics, historical issue analysis, trade data from market makers, TRACE reports |
|
(Amounts in millions) | Fair value | Primary methodologies | Significant inputs | |||||
U.S. government, agencies and government-sponsored enterprises | $ | 4,987 | Price quotes from trading desk, broker feeds | Bid side prices, trade prices, Option Adjusted Spread (“OAS”) to swap curve, Bond Market Association OAS, Treasury Curve, Agency Bullet Curve, maturity to issuer spread | ||||
State and political subdivisions | $ | 2,575 | Multi-dimensional attribute-based modeling systems, third-party pricing vendors | Trade prices, material event notices, Municipal Market Data benchmark yields, broker quotes | ||||
Non-U.S. government | $ | 2,634 | Matrix pricing, spread priced to benchmark curves, price quotes from market makers | Benchmark yields, trade prices, broker quotes, comparative transactions, issuer spreads, bid-offer spread, market research publications, third-party pricing sources | ||||
U.S. corporate | $ | 28,118 | Multi-dimensional attribute-based modeling systems, broker quotes, price quotes from market makers, OAS-based models | Bid side prices to Treasury Curve, Issuer Curve, which includes sector, quality, duration, OAS percentage and change for spread matrix, trade prices, comparative transactions, Trade Reporting and Compliance Engine (“TRACE”) reports | ||||
Non-U.S. corporate | $ | 10,417 | Multi-dimensional attribute-based modeling systems, OAS-based models, price quotes from market makers | Benchmark yields, trade prices, broker quotes, comparative transactions, issuer spreads, bid-offer spread, market research publications, third-party pricing sources | ||||
Residential mortgage-backed | $ | 2,697 | OAS-based models,single factor binomial models, internally priced | Prepayment and default assumptions, aggregation of bonds with similar characteristics, including collateral type, vintage, tranche type, weighted-average life, weighted-average loan age, issuer program and delinquency ratio, pay up and pay down factors, TRACE reports | ||||
Commercial mortgage-backed | $ | 2,897 | Multi-dimensional attribute-based modeling systems, pricing matrix, spread matrix priced to swap curves, Trepp commercial mortgage-backed securities analytics model | Credit risk, interest rate risk, prepayment speeds, new issue data, collateral performance, origination year, tranche type, original credit ratings, weighted-average life, cash flows, spreads derived from broker quotes, bid side prices, spreads to daily updated swaps curves, TRACE reports | ||||
Other asset-backed | $ | 3,492 | Multi-dimensional attribute-based modeling systems, spread matrix priced to swap curves, price quotes from market makers | Spreads to daily updated swaps curves, spreads derived from trade prices and broker quotes, bid side prices, new issue data, collateral performance, analysis of prepayment speeds, cash flows, collateral loss analytics, historical issue analysis, trade data from market makers, TRACE reports |
$ |
•Internal models:A portion of our state and political subdivisions, U.S. corporate,non-U.S. corporate, residential mortgage-backed, commercial mortgage-backed and other asset-backed securities are valued using internal models. The primary inputs to the valuation of the bond population include quoted prices for identical assets, or similar assets in markets that are not active, contractual cash flows, duration, call provisions, issuer rating, benchmark yields and credit spreads. Certain private fixed maturity securities are valued using an internal model using market observable inputs such as interest rate yield curve, as well as published credit spreads for similar securities where there are no external ratings of the instrument and include a significant unobservable input. Additionally, we may apply certain price caps and liquidity premiums in the valuation of private fixed maturity securities. Price caps are established using inputs from market participants. For structured securities, the primary inputs to the valuation include quoted prices for identical assets, or similar assets in markets that are not active, contractual cash flows, weighted-average coupon, weighted-average maturity, issuer rating, structure of the security, expected prepayment speeds and volumes, collateral type, current and forecasted loss severity, average delinquency rates, vintage of the loans, geographic region, debt service coverage ratios, payment priority with the tranche, benchmark yields and credit spreads. The fair value of our Level 3 fixed maturity securities priced using internal models was $3,660 million as of March 31, 2019.•Broker quotes:A portion of our state and political subdivisions, U.S. corporate,non-U.S. corporate, residential mortgage-backed, commercial mortgage-backed and other asset-backed securities are valued using broker quotes. Broker quotes are obtained from third-party providers that have current market knowledge to provide a reasonable price for securities not routinely priced by third-party pricing services. Brokers utilized for valuation of assets are reviewed annually. The fair value of our Level 3 fixed maturity securities priced by broker quotes was $464 million as of March 31, 2019.
million.
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We classify the GMWB valuation as Level 3 based on having significant unobservable inputs, with equity index volatility and
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2019 | ||||||||||||||||||||
(Amounts in millions) | Total | Level 1 | Level 2 | Level 3 | NAV (1) | |||||||||||||||
Assets | ||||||||||||||||||||
Investments: | ||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
U.S. government, agencies and government-sponsoredenterprises | $ | 4,731 | $ | — | $ | 4,731 | $ | — | $ | — | ||||||||||
State and political subdivisions | 2,546 | — | 2,494 | 52 | — | |||||||||||||||
Non-U.S. government | 2,518 | — | 2,518 | — | — | |||||||||||||||
U.S. corporate: | ||||||||||||||||||||
Utilities | 4,685 | — | 3,937 | 748 | — | |||||||||||||||
Energy | 2,618 | — | 2,503 | 115 | — | |||||||||||||||
Finance and insurance | 7,251 | — | 6,661 | 590 | — | |||||||||||||||
Consumer—non-cyclical | 5,257 | — | 5,183 | 74 | — | |||||||||||||||
Technology and communications | 2,974 | — | 2,922 | 52 | — | |||||||||||||||
Industrial | 1,249 | — | 1,209 | 40 | — | |||||||||||||||
Capital goods | 2,489 | — | 2,394 | 95 | — | |||||||||||||||
Consumer—cyclical | 1,646 | — | 1,451 | 195 | — | |||||||||||||||
Transportation | 1,362 | — | 1,308 | 54 | — | |||||||||||||||
Other | 411 | — | 212 | 199 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total U.S. corporate | 29,942 | — | 27,780 | 2,162 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Non-U.S. corporate: | ||||||||||||||||||||
Utilities | 1,127 | — | 692 | 435 | — | |||||||||||||||
Energy | 1,447 | — | 1,226 | 221 | — | |||||||||||||||
Finance and insurance | 2,554 | — | 2,372 | 182 | — | |||||||||||||||
Consumer—non-cyclical | 709 | — | 642 | 67 | — | |||||||||||||||
Technology and communications | 1,197 | — | 1,170 | 27 | — | |||||||||||||||
Industrial | 973 | — | 910 | 63 | — | |||||||||||||||
Capital goods | 662 | — | 489 | 173 | — | |||||||||||||||
Consumer—cyclical | 541 | — | 416 | 125 | — | |||||||||||||||
Transportation | 815 | — | 623 | 192 | — | |||||||||||||||
Other | 2,260 | — | 2,170 | 90 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Totalnon-U.S. corporate | 12,285 | — | 10,710 | 1,575 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Residential mortgage-backed | 2,950 | — | 2,915 | 35 | — | |||||||||||||||
Commercial mortgage-backed | 2,962 | — | 2,864 | 98 | — | |||||||||||||||
Other asset-backed | 3,426 | — | 3,224 | 202 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total fixed maturity securities | 61,360 | — | 57,236 | 4,124 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Equity securities | 635 | 513 | 67 | 55 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Other invested assets: | ||||||||||||||||||||
Derivative assets: | ||||||||||||||||||||
Interest rate swaps | 59 | — | 59 | — | — | |||||||||||||||
Interest rate swaps in a foreign currency | 46 | — | 46 | — | — | |||||||||||||||
Interest rate caps and floors | 13 | — | 13 | — | — | |||||||||||||||
Foreign currency swaps | 3 | — | 3 | — | — | |||||||||||||||
Equity index options | 60 | — | — | 60 | — | |||||||||||||||
Other foreign currency contracts | 6 | — | 6 | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total derivative assets | 187 | — | 127 | 60 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Securities lending collateral | 106 | — | 106 | — | — | |||||||||||||||
Short-term investments | 139 | — | 139 | — | — | |||||||||||||||
Limited partnerships | 359 | — | — | — | 359 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total other invested assets | 791 | — | 372 | 60 | 359 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Reinsurance recoverable(2) | 18 | — | — | 18 | — | |||||||||||||||
Separate account assets | 6,210 | 6,210 | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total assets | $ | 69,014 | $ | 6,723 | $ | 57,675 | $ | 4,257 | $ | 359 | ||||||||||
|
|
|
|
|
|
|
|
|
|
June 30, 2019 | ||||||||||||||||||||
(Amounts in millions) | Total | Level 1 | Level 2 | Level 3 | NAV (1) | |||||||||||||||
Assets | ||||||||||||||||||||
Investments: | ||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
U.S. government, agencies and government-sponsoredenterprises | $ | 4,987 | $ | — | $ | 4,987 | $ | — | $ | — | ||||||||||
State and political subdivisions | 2,636 | — | 2,575 | 61 | — | |||||||||||||||
Non-U.S. government | 2,649 | — | 2,649 | — | — | |||||||||||||||
U.S. corporate: | ||||||||||||||||||||
Utilities | 4,879 | — | 4,090 | 789 | — | |||||||||||||||
Energy | 2,713 | — | 2,591 | 122 | — | |||||||||||||||
Finance and insurance | 7,597 | — | 6,990 | 607 | — | |||||||||||||||
Consumer—non-cyclical | 5,552 | — | 5,463 | 89 | — | |||||||||||||||
Technology and communications | 3,156 | — | 3,112 | 44 | — | |||||||||||||||
Industrial | 1,336 | — | 1,296 | 40 | — | |||||||||||||||
Capital goods | 2,620 | — | 2,522 | 98 | — | |||||||||||||||
Consumer—cyclical | 1,741 | — | 1,556 | 185 | — | |||||||||||||||
Transportation | 1,411 | — | 1,357 | 54 | — | |||||||||||||||
Other | 396 | — | 197 | 199 | — | |||||||||||||||
Total U.S. corporate | 31,401 | — | 29,174 | 2,227 | — | |||||||||||||||
Non-U.S. corporate: | ||||||||||||||||||||
Utilities | 1,165 | — | 748 | 417 | — | |||||||||||||||
Energy | 1,516 | — | 1,275 | 241 | — | |||||||||||||||
Finance and insurance | 2,628 | — | 2,449 | 179 | — | |||||||||||||||
Consumer—non-cyclical | 710 | — | 642 | 68 | — | |||||||||||||||
Technology and communications | 1,273 | — | 1,246 | 27 | — | |||||||||||||||
Industrial | 1,017 | — | 953 | 64 | — | |||||||||||||||
Capital goods | 695 | — | 514 | 181 | — | |||||||||||||||
Consumer—cyclical | 557 | — | 431 | 126 | — | |||||||||||||||
Transportation | 841 | — | 642 | 199 | — | |||||||||||||||
Other | 2,245 | — | 2,116 | 129 | — | |||||||||||||||
Total non-U.S. corporate | 12,647 | — | 11,016 | 1,631 | — | |||||||||||||||
Residential mortgage-backed | 2,738 | — | 2,697 | 41 | — | |||||||||||||||
Commercial mortgage-backed | 2,989 | — | 2,897 | 92 | — | |||||||||||||||
Other asset-backed | 3,727 | — | 3,492 | 235 | — | |||||||||||||||
Total fixed maturity securities | 63,774 | — | 59,487 | 4,287 | — | |||||||||||||||
Equity securities | 644 | 519 | 69 | 56 | — | |||||||||||||||
Other invested assets: | ||||||||||||||||||||
Derivative assets: | ||||||||||||||||||||
Interest rate swaps | 144 | — | 144 | — | — | |||||||||||||||
Interest rate swaps in a foreign currency | 35 | — | 35 | — | — | |||||||||||||||
Interest rate caps and floors | 16 | — | 16 | — | — | |||||||||||||||
Foreign currency swaps | 6 | — | 6 | — | — | |||||||||||||||
Equity index options | 65 | — | — | 65 | — | |||||||||||||||
Other foreign currency contracts | 14 | — | 14 | — | — | |||||||||||||||
Total derivative assets | 280 | — | 215 | 65 | — | |||||||||||||||
Securities lending collateral | 113 | — | 113 | — | — | |||||||||||||||
Short-term investments | 273 | — | 273 | — | — | |||||||||||||||
Limited partnerships | 401 | — | — | — | 401 | |||||||||||||||
Total other invested assets | 1,067 | — | 601 | 65 | 401 | |||||||||||||||
Reinsurance recoverable (2) | 20 | — | — | 20 | — | |||||||||||||||
Separate account assets | 6,187 | 6,187 | — | — | — | |||||||||||||||
Total assets | $ | 71,692 | $ | 6,706 | $ | 60,157 | $ | 4,428 | $ | 401 | ||||||||||
(1) | Limited partnerships that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. |
(2) | Represents embedded derivatives associated with the reinsured portion of our GMWB liabilities. |
December 31, 2018 | ||||||||||||||||||||
(Amounts in millions) | Total | Level 1 | Level 2 | Level 3 | NAV(1) | |||||||||||||||
Assets | ||||||||||||||||||||
Investments: | ||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
U.S. government, agencies and government-sponsoredenterprises | $ | 4,631 | $ | — | $ | 4,631 | $ | — | $ | — | ||||||||||
State and political subdivisions | 2,552 | — | 2,501 | 51 | — | |||||||||||||||
Non-U.S. government | 2,393 | — | 2,393 | — | — | |||||||||||||||
U.S. corporate: | ||||||||||||||||||||
Utilities | 4,675 | — | 4,032 | 643 | — | |||||||||||||||
Energy | 2,419 | — | 2,298 | 121 | — | |||||||||||||||
Finance and insurance | 6,822 | — | 6,288 | 534 | — | |||||||||||||||
Consumer—non-cyclical | 5,048 | — | 4,975 | 73 | — | |||||||||||||||
Technology and communications | 2,855 | — | 2,805 | 50 | — | |||||||||||||||
Industrial | 1,238 | — | 1,199 | 39 | — | |||||||||||||||
Capital goods | 2,391 | — | 2,299 | 92 | — | |||||||||||||||
Consumer—cyclical | 1,597 | — | 1,386 | 211 | — | |||||||||||||||
Transportation | 1,320 | — | 1,263 | 57 | — | |||||||||||||||
Other | 397 | — | 219 | 178 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total U.S. corporate | 28,762 | — | 26,764 | 1,998 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Non-U.S. corporate: | ||||||||||||||||||||
Utilities | 1,041 | — | 637 | 404 | — | |||||||||||||||
Energy | 1,369 | — | 1,152 | 217 | — | |||||||||||||||
Finance and insurance | 2,423 | — | 2,252 | 171 | — | |||||||||||||||
Consumer—non-cyclical | 739 | — | 633 | 106 | — | |||||||||||||||
Technology and communications | 1,165 | — | 1,139 | 26 | — | |||||||||||||||
Industrial | 945 | — | 884 | 61 | — | |||||||||||||||
Capital goods | 615 | — | 442 | 173 | — | |||||||||||||||
Consumer—cyclical | 520 | — | 398 | 122 | — | |||||||||||||||
Transportation | 720 | — | 549 | 171 | — | |||||||||||||||
Other | 2,300 | — | 2,219 | 81 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Totalnon-U.S. corporate | 11,837 | — | 10,305 | 1,532 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Residential mortgage-backed | 3,044 | — | 3,009 | 35 | — | |||||||||||||||
Commercial mortgage-backed | 3,016 | — | 2,921 | 95 | — | |||||||||||||||
Other asset-backed | 3,426 | — | 3,261 | 165 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total fixed maturity securities | 59,661 | — | 55,785 | 3,876 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Equity securities | 655 | 533 | 64 | 58 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Other invested assets: | ||||||||||||||||||||
Derivative assets: | ||||||||||||||||||||
Interest rate swaps | 42 | — | 42 | — | — | |||||||||||||||
Interest rate swaps in a foreign currency | 74 | — | 74 | — | — | |||||||||||||||
Interest rate caps and floors | 7 | — | 7 | — | — | |||||||||||||||
Foreign currency swaps | 6 | — | 6 | — | — | |||||||||||||||
Equity index options | 39 | — | — | 39 | — | |||||||||||||||
Other foreign currency contracts | 10 | — | 10 | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total derivative assets | 178 | — | 139 | 39 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Securities lending collateral | 102 | — | 102 | — | — | |||||||||||||||
Short-term investments | 230 | — | 230 | — | — | |||||||||||||||
Limited partnerships | 318 | — | — | — | 318 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total other invested assets | 828 | — | 471 | 39 | 318 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Reinsurance recoverable(2) | 20 | — | — | 20 | — | |||||||||||||||
Separate account assets | 5,859 | 5,859 | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total assets | $ | 67,023 | $ | 6,392 | $ | 56,320 | $ | 3,993 | $ | 318 | ||||||||||
|
|
|
|
|
|
|
|
|
|
December 31, 2018 | ||||||||||||||||||||
(Amounts in millions) | Total | Level 1 | Level 2 | Level 3 | NAV (1) | |||||||||||||||
Assets | ||||||||||||||||||||
Investments: | ||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
U.S. government, agencies and government-sponsoredenterprises | $ | 4,631 | $ | — | $ | 4,631 | $ | — | $ | — | ||||||||||
State and political subdivisions | 2,552 | — | 2,501 | 51 | — | |||||||||||||||
Non-U.S. government | 2,393 | — | 2,393 | — | — | |||||||||||||||
U.S. corporate: | ||||||||||||||||||||
Utilities | 4,675 | — | 4,032 | 643 | — | |||||||||||||||
Energy | 2,419 | — | 2,298 | 121 | — | |||||||||||||||
Finance and insurance | 6,822 | — | 6,288 | 534 | — | |||||||||||||||
Consumer—non-cyclical | 5,048 | — | 4,975 | 73 | — | |||||||||||||||
Technology and communications | 2,855 | — | 2,805 | 50 | — | |||||||||||||||
Industrial | 1,238 | — | 1,199 | 39 | — | |||||||||||||||
Capital goods | 2,391 | — | 2,299 | 92 | — | |||||||||||||||
Consumer—cyclical | 1,597 | — | 1,386 | 211 | — | |||||||||||||||
Transportation | 1,320 | — | 1,263 | 57 | — | |||||||||||||||
Other | 397 | — | 219 | 178 | — | |||||||||||||||
Total U.S. corporate | 28,762 | — | 26,764 | 1,998 | — | |||||||||||||||
Non-U.S. corporate: | ||||||||||||||||||||
Utilities | 1,041 | — | 637 | 404 | — | |||||||||||||||
Energy | 1,369 | — | 1,152 | 217 | — | |||||||||||||||
Finance and insurance | 2,423 | — | 2,252 | 171 | — | |||||||||||||||
Consumer—non-cyclical | 739 | — | 633 | 106 | — | |||||||||||||||
Technology and communications | 1,165 | — | 1,139 | 26 | — | |||||||||||||||
Industrial | 945 | — | 884 | 61 | — | |||||||||||||||
Capital goods | 615 | — | 442 | 173 | — | |||||||||||||||
Consumer—cyclical | 520 | — | 398 | 122 | — | |||||||||||||||
Transportation | 720 | — | 549 | 171 | — | |||||||||||||||
Other | 2,300 | — | 2,219 | 81 | — | |||||||||||||||
Total non-U.S. corporate | 11,837 | — | 10,305 | 1,532 | — | |||||||||||||||
Residential mortgage-backed | 3,044 | — | 3,009 | 35 | — | |||||||||||||||
Commercial mortgage-backed | 3,016 | — | 2,921 | 95 | — | |||||||||||||||
Other asset-backed | 3,426 | — | 3,261 | 165 | — | |||||||||||||||
Total fixed maturity securities | 59,661 | — | 55,785 | 3,876 | — | |||||||||||||||
Equity securities | 655 | 533 | 64 | 58 | — | |||||||||||||||
Other invested assets: | ||||||||||||||||||||
Derivative assets: | ||||||||||||||||||||
Interest rate swaps | 42 | — | 42 | — | — | |||||||||||||||
Interest rate swaps in a foreign currency | 74 | — | 74 | — | — | |||||||||||||||
Interest rate caps and floors | 7 | — | 7 | — | — | |||||||||||||||
Foreign currency swaps | 6 | — | 6 | — | — | |||||||||||||||
Equity index options | 39 | — | — | 39 | — | |||||||||||||||
Other foreign currency contracts | 10 | — | 10 | — | — | |||||||||||||||
Total derivative assets | 178 | — | 139 | 39 | — | |||||||||||||||
Securities lending collateral | 102 | — | 102 | — | — | |||||||||||||||
Short-term investments | 230 | — | 230 | — | — | |||||||||||||||
Limited partnerships | 318 | — | — | — | 318 | |||||||||||||||
Total other invested assets | 828 | — | 471 | 39 | 318 | |||||||||||||||
Reinsurance recoverable (2 ) | 20 | — | — | 20 | — | |||||||||||||||
Separate account assets | 5,859 | 5,859 | — | — | — | |||||||||||||||
Total assets | $ | 67,023 | $ | 6,392 | $ | 56,320 | $ | 3,993 | $ | 318 | ||||||||||
(1) | Limited partnerships that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. |
(2) | Represents embedded derivatives associated with the reinsured portion of our GMWB liabilities. |
(Amounts in millions) | Beginning balance as of January 1, 2019 | Total realized and unrealized gains (losses) | Purchases | Sales | Issuances | Settlements | Transfer into Level 3 (1) | Transfer out of Level 3 (1) | Ending balance as of March 31, 2019 | Total gains (losses) included in net income attributable to assets still held | ||||||||||||||||||||||||||||||||||
Included in net income | Included in OCI | |||||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||||||||||||||
U.S. government, agenciesand government-sponsoredenterprises | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||
State and political subdivisions | 51 | 1 | — | — | — | — | — | — | — | 52 | 1 | |||||||||||||||||||||||||||||||||
U.S. corporate: | ||||||||||||||||||||||||||||||||||||||||||||
Utilities | 643 | — | 22 | 14 | (1 | ) | — | (2 | ) | 72 | — | 748 | — | |||||||||||||||||||||||||||||||
Energy | 121 | — | 4 | — | — | — | (10 | ) | — | — | 115 | — | ||||||||||||||||||||||||||||||||
Finance and insurance | 534 | — | 23 | 30 | — | — | (4 | ) | 7 | — | 590 | — | ||||||||||||||||||||||||||||||||
Consumer—non-cyclical | 73 | — | 2 | — | — | — | (10 | ) | 9 | — | 74 | — | ||||||||||||||||||||||||||||||||
Technology andcommunications | 50 | — | 2 | — | — | — | — | — | — | 52 | — | |||||||||||||||||||||||||||||||||
Industrial | 39 | — | 1 | — | — | — | — | — | — | 40 | — | |||||||||||||||||||||||||||||||||
Capital goods | 92 | — | 3 | — | — | — | — | — | — | 95 | — | |||||||||||||||||||||||||||||||||
Consumer—cyclical | 211 | — | 7 | — | (13 | ) | — | (1 | ) | — | (9 | ) | 195 | — | ||||||||||||||||||||||||||||||
Transportation | 57 | — | 1 | 4 | — | — | (8 | ) | — | — | 54 | — | ||||||||||||||||||||||||||||||||
Other | 178 | — | 3 | 22 | — | — | (12 | ) | 8 | — | 199 | — | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total U.S. corporate | 1,998 | — | 68 | 70 | (14 | ) | — | (47 | ) | 96 | (9 | ) | 2,162 | — | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Non-U.S. corporate: | ||||||||||||||||||||||||||||||||||||||||||||
Utilities | 404 | — | 16 | 30 | — | — | — | — | (15 | ) | 435 | — | ||||||||||||||||||||||||||||||||
Energy | 217 | — | 7 | 1 | — | — | (4 | ) | — | — | 221 | — | ||||||||||||||||||||||||||||||||
Finance and insurance | 171 | 1 | 11 | 5 | — | — | — | — | (6 | ) | 182 | 1 | ||||||||||||||||||||||||||||||||
Consumer—non-cyclical | 106 | 2 | 3 | — | — | — | (44 | ) | — | — | 67 | — | ||||||||||||||||||||||||||||||||
Technology andcommunications | 26 | — | 1 | — | — | — | — | — | — | 27 | — | |||||||||||||||||||||||||||||||||
Industrial | 61 | — | 2 | — | — | — | — | — | — | 63 | — | |||||||||||||||||||||||||||||||||
Capital goods | 173 | — | 6 | 5 | — | — | (11 | ) | — | — | 173 | — | ||||||||||||||||||||||||||||||||
Consumer—cyclical | 122 | — | 6 | — | — | — | (3 | ) | — | — | 125 | — | ||||||||||||||||||||||||||||||||
Transportation | 171 | — | 6 | 15 | — | — | — | — | — | 192 | — | |||||||||||||||||||||||||||||||||
Other | 81 | — | 4 | — | — | — | (1 | ) | 6 | — | 90 | — | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Totalnon-U.S. corporate | 1,532 | 3 | 62 | 56 | — | — | (63 | ) | 6 | (21 | ) | 1,575 | 1 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Residential mortgage-backed | 35 | — | — | — | — | — | — | — | — | 35 | — | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed | 95 | — | 2 | 1 | — | — | — | — | — | 98 | — | |||||||||||||||||||||||||||||||||
Other asset-backed | 165 | — | 1 | 54 | — | — | (13 | ) | 1 | (6 | ) | 202 | — | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total fixed maturity securities | 3,876 | 4 | 133 | 181 | (14 | ) | — | (123 | ) | 103 | (36 | ) | 4,124 | 2 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Equity securities | 58 | — | — | — | (3 | ) | — | — | — | — | 55 | — | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Other invested assets: | ||||||||||||||||||||||||||||||||||||||||||||
Derivative assets: | ||||||||||||||||||||||||||||||||||||||||||||
Equity index options | 39 | 17 | — | 12 | — | — | (8 | ) | — | — | 60 | 12 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total derivative assets | 39 | 17 | — | 12 | — | — | (8 | ) | — | — | 60 | 12 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total other invested assets | 39 | 17 | — | 12 | — | — | (8 | ) | — | — | 60 | 12 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Reinsurance recoverable(2) | 20 | (3 | ) | — | — | — | 1 | — | — | — | 18 | (3 | ) | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total Level 3 assets | $ | 3,993 | $ | 18 | $ | 133 | $ | 193 | $ | (17 | ) | $ | 1 | $ | (131 | ) | $ | 103 | $ | (36 | ) | $ | 4,257 | $ | 11 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gains | |||||||||||||||||||||||||||||||||||||||||||||
Total realized and | (losses) | ||||||||||||||||||||||||||||||||||||||||||||
Beginning | unrealized gains | Ending | included in | ||||||||||||||||||||||||||||||||||||||||||
balance | (losses) | balance | net income | ||||||||||||||||||||||||||||||||||||||||||
as of April 1, | Included in net | Included | Transfer into | Transfer out of | as of June 30, | attributable to assets | |||||||||||||||||||||||||||||||||||||||
(Amounts in millions) | 2019 | income | in OCI | Purchases | Sales | Issuances | Settlements | Level 3 (1) | Level 3 (1) | 2019 | still held | ||||||||||||||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||||||||||||||||||||||||
State and political subdivisions | $ | 52 | $ | 1 | $ | 8 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 61 | $ | — | |||||||||||||||||||||||
U.S. corporate: | |||||||||||||||||||||||||||||||||||||||||||||
Utilities | 748 | — | 20 | 82 | (13 | ) | — | (38 | ) | — | (10 | ) | 789 | — | |||||||||||||||||||||||||||||||
Energy | 115 | — | 3 | 5 | — | — | (1 | ) | — | — | 122 | — | |||||||||||||||||||||||||||||||||
Finance and insurance | 590 | — | 15 | 10 | — | — | (8 | ) | — | — | 607 | — | |||||||||||||||||||||||||||||||||
Consumer— non-cyclical | 74 | — | 1 | 14 | — | — | — | — | — | 89 | — | ||||||||||||||||||||||||||||||||||
Technology andcommunications | 52 | — | 3 | — | — | — | — | — | (11 | ) | 44 | — | |||||||||||||||||||||||||||||||||
Industrial | 40 | — | — | — | — | — | — | — | — | 40 | — | ||||||||||||||||||||||||||||||||||
Capital goods | 95 | — | 3 | — | — | — | — | — | — | 98 | — | ||||||||||||||||||||||||||||||||||
Consumer—cyclical | 195 | — | 3 | — | — | — | (13 | ) | — | — | 185 | — | |||||||||||||||||||||||||||||||||
Transportation | 54 | — | — | — | — | — | — | — | — | 54 | — | ||||||||||||||||||||||||||||||||||
Other | 199 | — | 3 | — | — | — | (3 | ) | — | — | 199 | — | |||||||||||||||||||||||||||||||||
Total U.S. corporate | 2,162 | — | 51 | 111 | (13 | ) | — | (63 | ) | — | (21 | ) | 2,227 | — | |||||||||||||||||||||||||||||||
Non-U.S. corporate: | |||||||||||||||||||||||||||||||||||||||||||||
Utilities | 435 | — | 7 | — | (7 | ) | — | (17 | ) | — | (1 | ) | 417 | — | |||||||||||||||||||||||||||||||
Energy | 221 | — | 5 | 15 | — | — | — | — | — | 241 | — | ||||||||||||||||||||||||||||||||||
Finance and insurance | 182 | 1 | 7 | 2 | — | — | (13 | ) | — | — | 179 | 1 | |||||||||||||||||||||||||||||||||
Consumer— non-cyclical | 67 | — | 1 | — | — | — | — | — | — | 68 | — | ||||||||||||||||||||||||||||||||||
Technology andcommunications | 27 | — | — | — | — | — | — | — | — | 27 | — | ||||||||||||||||||||||||||||||||||
Industrial | 63 | — | 1 | — | — | — | — | — | — | 64 | — | ||||||||||||||||||||||||||||||||||
Capital goods | 173 | — | 3 | 5 | — | — | — | — | — | 181 | — | ||||||||||||||||||||||||||||||||||
Consumer—cyclical | 125 | — | 2 | — | — | — | (1 | ) | — | — | 126 | — | |||||||||||||||||||||||||||||||||
Transportation | 192 | — | 3 | 4 | — | — | — | — | — | 199 | — | ||||||||||||||||||||||||||||||||||
Other | 90 | — | 4 | 35 | — | — | — | — | — | 129 | — | ||||||||||||||||||||||||||||||||||
Total non-U.S. corporate | 1,575 | 1 | 33 | 61 | (7 | ) | — | (31 | ) | — | (1 | ) | 1,631 | 1 | |||||||||||||||||||||||||||||||
Residential mortgage-backed | 35 | — | 2 | 5 | — | — | (1 | ) | — | — | 41 | — | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed | 98 | — | 7 | 1 | — | — | — | — | (14 | ) | 92 | — | |||||||||||||||||||||||||||||||||
Other asset-backed | 202 | — | 1 | 41 | — | — | (28 | ) | 27 | (8 | ) | 235 | — | ||||||||||||||||||||||||||||||||
Total fixed maturity securities | 4,124 | 2 | 102 | 219 | (20 | ) | — | (123 | ) | 27 | (44 | ) | 4,287 | 1 | |||||||||||||||||||||||||||||||
Equity securities | 55 | — | — | 2 | (1 | ) | — | — | — | — | 56 | — | |||||||||||||||||||||||||||||||||
Other invested assets: | |||||||||||||||||||||||||||||||||||||||||||||
Derivative assets: | |||||||||||||||||||||||||||||||||||||||||||||
Equity index options | 60 | 10 | — | 9 | — | — | (14 | ) | — | — | 65 | 7 | |||||||||||||||||||||||||||||||||
Total derivative assets | 60 | 10 | — | 9 | — | — | (14 | ) | — | — | 65 | 7 | |||||||||||||||||||||||||||||||||
Total other invested assets | 60 | 10 | — | 9 | — | — | (14 | ) | — | — | 65 | 7 | |||||||||||||||||||||||||||||||||
Reinsurance recoverable (2) | 18 | 2 | — | — | — | — | — | — | — | 20 | 2 | ||||||||||||||||||||||||||||||||||
Total Level 3 assets | $ | 4,257 | $ | 14 | $ | 102 | $ | 230 | $ | (21 | ) | $ | — | $ | (137 | ) | $ | 27 | $ | (44 | ) | $ | 4,428 | $ | 10 | ||||||||||||||||||||
(1) | The transfers into and out of Level 3 for fixed maturity securities were related to changes in the primary pricing source and changes in the observability of external information used in determining the fair value, such as external ratings or credit spreads, as well as changes in the industry sectors assigned to specific securities. |
(2) | Represents embedded derivatives associated with the reinsured portion of our GMWB liabilities. |
(Amounts in millions) | Beginning balance as of January 1, 2018 | Total realized and unrealized gains (losses) | Purchases | Sales | Issuances | Settlements | Transfer into Level 3 (1) | Transfer out of Level 3 (1) | Ending balance as of March 31, 2018 | Total gains (losses) included in net income attributable to assets still held | ||||||||||||||||||||||||||||||||||
Included in net income | Included in OCI | |||||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||||||||||||||
U.S. government, agencies and government-sponsoredenterprises | $ | 1 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (1 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||
State and political subdivisions | 37 | 1 | (3 | ) | — | — | — | — | 18 | — | 53 | 1 | ||||||||||||||||||||||||||||||||
U.S. corporate: | ||||||||||||||||||||||||||||||||||||||||||||
Utilities | 574 | — | (18 | ) | 3 | — | — | (2 | ) | — | (4 | ) | 553 | — | ||||||||||||||||||||||||||||||
Energy | 147 | — | (5 | ) | 22 | — | — | (18 | ) | — | — | 146 | — | |||||||||||||||||||||||||||||||
Finance and insurance | 626 | 1 | (26 | ) | 26 | — | — | (36 | ) | — | (11 | ) | 580 | 1 | ||||||||||||||||||||||||||||||
Consumer—non-cyclical | 81 | — | (2 | ) | — | — | — | — | — | — | 79 | — | ||||||||||||||||||||||||||||||||
Technology andcommunications | 73 | — | (6 | ) | — | — | — | (42 | ) | — | — | 25 | — | |||||||||||||||||||||||||||||||
Industrial | 39 | — | — | — | — | — | — | — | — | 39 | — | |||||||||||||||||||||||||||||||||
Capital goods | 121 | — | (8 | ) | — | — | — | (10 | ) | — | — | 103 | — | |||||||||||||||||||||||||||||||
Consumer—cyclical | 262 | — | (9 | ) | 10 | — | — | (11 | ) | — | — | 252 | — | |||||||||||||||||||||||||||||||
Transportation | 60 | — | (1 | ) | — | — | — | (2 | ) | — | — | 57 | — | |||||||||||||||||||||||||||||||
Other | 169 | — | (1 | ) | — | — | — | (2 | ) | — | — | 166 | — | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total U.S. corporate | 2,152 | 1 | (76 | ) | 61 | — | — | (123 | ) | — | (15 | ) | 2,000 | 1 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Non-U.S. corporate: | ||||||||||||||||||||||||||||||||||||||||||||
Utilities | 343 | — | (9 | ) | 22 | — | — | (20 | ) | — | — | 336 | — | |||||||||||||||||||||||||||||||
Energy | 176 | — | (4 | ) | 23 | — | — | — | — | — | 195 | — | ||||||||||||||||||||||||||||||||
Finance and insurance | 161 | 1 | (8 | ) | — | — | — | (1 | ) | — | — | 153 | 1 | |||||||||||||||||||||||||||||||
Consumer—non-cyclical | 124 | — | (3 | ) | — | — | — | (1 | ) | — | — | 120 | — | |||||||||||||||||||||||||||||||
Technology andcommunications | 29 | — | (1 | ) | — | — | — | — | — | — | 28 | — | ||||||||||||||||||||||||||||||||
Industrial | 116 | — | (3 | ) | — | — | — | (5 | ) | — | — | 108 | — | |||||||||||||||||||||||||||||||
Capital goods | 191 | — | (5 | ) | — | — | — | — | — | — | 186 | — | ||||||||||||||||||||||||||||||||
Consumer—cyclical | 54 | — | (2 | ) | — | — | — | — | — | — | 52 | — | ||||||||||||||||||||||||||||||||
Transportation | 170 | — | (4 | ) | — | — | — | — | — | — | 166 | — | ||||||||||||||||||||||||||||||||
Other | 52 | — | (2 | ) | 33 | — | — | — | — | — | 83 | — | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Totalnon-U.S. corporate | 1,416 | 1 | (41 | ) | 78 | — | — | (27 | ) | — | — | 1,427 | 1 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Residential mortgage-backed | 77 | — | (1 | ) | 12 | — | — | — | — | (54 | ) | 34 | — | |||||||||||||||||||||||||||||||
Commercial mortgage-backed | 30 | — | (2 | ) | 7 | — | — | — | — | (29 | ) | 6 | — | |||||||||||||||||||||||||||||||
Other asset-backed | 237 | — | (2 | ) | 55 | — | — | (32 | ) | 3 | (89 | ) | 172 | — | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total fixed maturity securities | 3,950 | 3 | (125 | ) | 213 | — | — | (183 | ) | 21 | (187 | ) | 3,692 | 3 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Equity securities | 44 | — | — | 4 | (3 | ) | — | — | — | — | 45 | — | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Other invested assets: | ||||||||||||||||||||||||||||||||||||||||||||
Derivative assets: | ||||||||||||||||||||||||||||||||||||||||||||
Equity index options | 80 | (15 | ) | — | 14 | — | — | (19 | ) | — | — | 60 | (12 | ) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total derivative assets | 80 | (15 | ) | — | 14 | — | — | (19 | ) | — | — | 60 | (12 | ) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total other invested assets | 80 | (15 | ) | — | 14 | — | — | (19 | ) | — | — | 60 | (12 | ) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Reinsurance recoverable(2) | 14 | (2 | ) | — | — | — | 1 | — | — | — | 13 | (2 | ) | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total Level 3 assets | $ | 4,088 | $ | (14 | ) | $ | (125 | ) | $ | 231 | $ | (3 | ) | $ | 1 | $ | (202 | ) | $ | 21 | $ | (187 | ) | $ | 3,810 | $ | (11 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gains | |||||||||||||||||||||||||||||||||||||||||||||
Total realized and | (losses) | ||||||||||||||||||||||||||||||||||||||||||||
Beginning | unrealized gains | Ending | included in | ||||||||||||||||||||||||||||||||||||||||||
balance | (losses) | balance | net income | ||||||||||||||||||||||||||||||||||||||||||
as of | Included | Transfer | Transfer | as of | attributable | ||||||||||||||||||||||||||||||||||||||||
(Amounts in millions) | April 1, 2018 | in net income | Included in OCI | Purchases | Sales | Issuances | Settlements | into Level 3 (1) | out of Level 3 (1) | June 30, 2018 | to assets still held | ||||||||||||||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||||||||||||||||||||||||
State and political subdivisions | $ | 53 | $ | — | $ | (1 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 52 | $ | — | ||||||||||||||||||||||
U.S. corporate: | |||||||||||||||||||||||||||||||||||||||||||||
Utilities | 553 | (1 | ) | (7 | ) | 66 | (12 | ) | — | (2 | ) | 25 | — | 622 | — | ||||||||||||||||||||||||||||||
Energy | 146 | — | — | — | — | — | (1 | ) | — | (7 | ) | 138 | — | ||||||||||||||||||||||||||||||||
Finance and insurance | 580 | — | (41 | ) | — | — | — | (74 | ) | — | (7 | ) | 458 | — | |||||||||||||||||||||||||||||||
Consumer— non-cyclical | 79 | — | — | — | — | — | — | — | — | 79 | — | ||||||||||||||||||||||||||||||||||
Technology andcommunications | 25 | — | 1 | 4 | — | — | (18 | ) | — | — | 12 | — | |||||||||||||||||||||||||||||||||
Industrial | 39 | — | 1 | — | — | — | — | — | — | 40 | — | ||||||||||||||||||||||||||||||||||
Capital goods | 103 | — | (1 | ) | 24 | — | — | — | — | (7 | ) | 119 | — | ||||||||||||||||||||||||||||||||
Consumer—cyclical | 252 | — | (1 | ) | 7 | (3 | ) | — | (1 | ) | — | — | 254 | — | |||||||||||||||||||||||||||||||
Transportation | 57 | — | — | — | — | — | (1 | ) | — | — | 56 | — | |||||||||||||||||||||||||||||||||
Other | 166 | — | — | — | (10 | ) | — | (3 | ) | — | — | 153 | — | ||||||||||||||||||||||||||||||||
Total U.S. corporate | 2,000 | (1 | ) | (48 | ) | 101 | (25 | ) | — | (100 | ) | 25 | (21 | ) | 1,931 | — | |||||||||||||||||||||||||||||
Non-U.S. corporate: | |||||||||||||||||||||||||||||||||||||||||||||
Utilities | 336 | — | (4 | ) | — | — | — | — | 15 | (14 | ) | 333 | — | ||||||||||||||||||||||||||||||||
Energy | 195 | — | (2 | ) | — | — | — | (18 | ) | — | — | 175 | — | ||||||||||||||||||||||||||||||||
Finance and insurance | 153 | 1 | (3 | ) | 1 | — | — | (1 | ) | — | (1 | ) | 150 | 1 | |||||||||||||||||||||||||||||||
Consumer— non-cyclical | 120 | — | (1 | ) | — | — | — | (11 | ) | — | — | 108 | — | ||||||||||||||||||||||||||||||||
Technology andcommunications | 28 | — | 1 | — | — | — | (13 | ) | — | — | 16 | — | |||||||||||||||||||||||||||||||||
Industrial | 108 | — | (1 | ) | 3 | — | — | (5 | ) | — | — | 105 | — | ||||||||||||||||||||||||||||||||
Capital goods | 186 | 1 | — | — | — | — | (21 | ) | — | — | 166 | 1 | |||||||||||||||||||||||||||||||||
Consumer—cyclical | 52 | — | — | — | (1 | ) | — | (3 | ) | — | — | 48 | — | ||||||||||||||||||||||||||||||||
Transportation | 166 | — | (2 | ) | 22 | — | — | — | 17 | — | 203 | — | |||||||||||||||||||||||||||||||||
Other | 83 | — | (1 | ) | — | — | — | — | — | — | 82 | — | |||||||||||||||||||||||||||||||||
Total non-U.S. corporate | 1,427 | 2 | (13 | ) | 26 | (1 | ) | — | (72 | ) | 32 | (15 | ) | 1,386 | 2 | ||||||||||||||||||||||||||||||
Residential mortgage-backed | 34 | — | 1 | 17 | — | — | (1 | ) | — | (17 | ) | 34 | — | ||||||||||||||||||||||||||||||||
Commercial mortgage-backed | 6 | — | — | 28 | — | — | — | 13 | (3 | ) | 44 | — | |||||||||||||||||||||||||||||||||
Other asset-backed | 172 | — | (1 | ) | 6 | — | — | (24 | ) | 45 | (32 | ) | 166 | — | |||||||||||||||||||||||||||||||
Total fixed maturity securities | 3,692 | 1 | (62 | ) | 178 | (26 | ) | — | (197 | ) | 115 | (88 | ) | 3,613 | 2 | ||||||||||||||||||||||||||||||
Equity securities | 45 | — | — | 1 | — | — | — | — | — | 46 | — | ||||||||||||||||||||||||||||||||||
Other invested assets: | |||||||||||||||||||||||||||||||||||||||||||||
Derivative assets: | |||||||||||||||||||||||||||||||||||||||||||||
Equity index options | 60 | 8 | — | 15 | — | — | (13 | ) | — | — | 70 | 8 | |||||||||||||||||||||||||||||||||
Total derivative assets | 60 | 8 | — | 15 | — | — | (13 | ) | — | — | 70 | 8 | |||||||||||||||||||||||||||||||||
Total other invested assets | 60 | 8 | — | 15 | — | — | (13 | ) | — | — | 70 | 8 | |||||||||||||||||||||||||||||||||
Reinsurance recoverable (2) | 13 | (1 | ) | — | — | — | — | — | — | — | 12 | (1 | ) | ||||||||||||||||||||||||||||||||
Total Level 3 assets | $ | 3,810 | $ | 8 | $ | (62 | ) | $ | 194 | $ | (26 | ) | $ | — | $ | (210 | ) | $ | 115 | $ | (88 | ) | $ | 3,741 | $ | 9 | |||||||||||||||||||
(1) | The transfers into and out of Level 3 for fixed maturity securities were related to changes in the primary pricing source and changes in the observability of external information used in determining the fair value, such as external ratings or credit spreads, as well as changes in the industry sectors assigned to specific securities. |
(2) | Represents embedded derivatives associated with the reinsured portion of our GMWB liabilities. |
Total gains | |||||||||||||||||||||||||||||||||||||||||||||
Total realized and | (losses) | ||||||||||||||||||||||||||||||||||||||||||||
Beginning | unrealized gains | Ending | included in | ||||||||||||||||||||||||||||||||||||||||||
balance | (losses) | balance | net income | ||||||||||||||||||||||||||||||||||||||||||
as of | Included | Transfer | Transfer | as of | attributable | ||||||||||||||||||||||||||||||||||||||||
January 1, | in net | Included | into | out of | June 30, | to assets | |||||||||||||||||||||||||||||||||||||||
(Amounts in millions) | 2019 | income | in OCI | Purchases | Sales | Issuances | Settlements | Level 3 (1) | Level 3 (1) | 2019 | still held | ||||||||||||||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||||||||||||||||||||||||
State and political subdivisions | $ | 51 | $ | 2 | $ | 8 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 61 | $ | 1 | |||||||||||||||||||||||
U.S. corporate: | |||||||||||||||||||||||||||||||||||||||||||||
Utilities | 643 | — | 42 | 96 | (14 | ) | — | (40 | ) | 72 | (10 | ) | 789 | — | |||||||||||||||||||||||||||||||
Energy | 121 | — | 7 | 5 | — | — | (11 | ) | — | — | 122 | — | |||||||||||||||||||||||||||||||||
Finance and insurance | 534 | — | 38 | 40 | — | — | (12 | ) | 7 | — | 607 | — | |||||||||||||||||||||||||||||||||
Consumer—non-cyclical | 73 | — | 3 | 14 | — | — | (10 | ) | 9 | — | 89 | — | |||||||||||||||||||||||||||||||||
Technology and communications | 50 | — | 5 | — | — | — | — | — | (11 | ) | 44 | — | |||||||||||||||||||||||||||||||||
Industrial | 39 | — | 1 | — | — | — | — | — | — | 40 | — | ||||||||||||||||||||||||||||||||||
Capital goods | 92 | — | 6 | — | — | — | — | — | — | 98 | — | ||||||||||||||||||||||||||||||||||
Consumer—cyclical | 211 | — | 10 | — | (13 | ) | — | (14 | ) | — | (9 | ) | 185 | — | |||||||||||||||||||||||||||||||
Transportation | 57 | — | 1 | 4 | — | — | (8 | ) | — | — | 54 | — | |||||||||||||||||||||||||||||||||
Other | 178 | — | 6 | 22 | — | — | (15 | ) | 8 | — | 199 | — | |||||||||||||||||||||||||||||||||
Total U.S. corporate | 1,998 | — | 119 | 181 | (27 | ) | — | (110 | ) | 96 | (30 | ) | 2,227 | — | |||||||||||||||||||||||||||||||
Non-U.S. corporate: | |||||||||||||||||||||||||||||||||||||||||||||
Utilities | 404 | — | 23 | 30 | (7 | ) | — | (17 | ) | — | (16 | ) | 417 | — | |||||||||||||||||||||||||||||||
Energy | 217 | — | 12 | 16 | — | — | (4 | ) | — | — | 241 | — | |||||||||||||||||||||||||||||||||
Finance and insurance | 171 | 2 | 18 | 7 | — | — | (13 | ) | — | (6 | ) | 179 | 2 | ||||||||||||||||||||||||||||||||
Consumer—non-cyclical | 106 | 2 | 4 | — | — | — | (44 | ) | — | — | 68 | — | |||||||||||||||||||||||||||||||||
Technology andcommunications | 26 | — | 1 | — | — | — | — | — | — | 27 | — | ||||||||||||||||||||||||||||||||||
Industrial | 61 | — | 3 | — | — | — | — | — | — | 64 | — | ||||||||||||||||||||||||||||||||||
Capital goods | 173 | — | 9 | 10 | — | — | (11 | ) | — | — | 181 | — | |||||||||||||||||||||||||||||||||
Consumer—cyclical | 122 | — | 8 | — | — | — | (4 | ) | — | — | 126 | — | |||||||||||||||||||||||||||||||||
Transportation | 171 | — | 9 | 19 | — | — | — | — | — | 199 | — | ||||||||||||||||||||||||||||||||||
Other | 81 | — | 8 | 35 | — | — | (1 | ) | 6 | — | 129 | — | |||||||||||||||||||||||||||||||||
Total non-U.S. corporate | 1,532 | 4 | 95 | 117 | (7 | ) | — | (94 | ) | 6 | (22 | ) | 1,631 | 2 | |||||||||||||||||||||||||||||||
Residential mortgage-backed | 35 | — | 2 | 5 | — | — | (1 | ) | — | — | 41 | — | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed | 95 | — | 9 | 2 | — | — | — | — | (14 | ) | 92 | — | |||||||||||||||||||||||||||||||||
Other asset-backed | 165 | — | 2 | 95 | — | — | (41 | ) | 28 | (14 | ) | 235 | — | ||||||||||||||||||||||||||||||||
Total fixed maturity securities | 3,876 | 6 | 235 | 400 | (34 | ) | — | (246 | ) | 130 | (80 | ) | 4,287 | 3 | |||||||||||||||||||||||||||||||
Equity securities | 58 | — | — | 2 | (4 | ) | — | — | — | — | 56 | — | |||||||||||||||||||||||||||||||||
Other invested assets: | |||||||||||||||||||||||||||||||||||||||||||||
Derivative assets: | |||||||||||||||||||||||||||||||||||||||||||||
Equity index options | 39 | 27 | — | 21 | — | — | (22 | ) | — | — | 65 | 11 | |||||||||||||||||||||||||||||||||
Total derivative assets | 39 | 27 | — | 21 | — | — | (22 | ) | — | — | 65 | 11 | |||||||||||||||||||||||||||||||||
Total other invested assets | 39 | 27 | — | 21 | — | — | (22 | ) | — | — | 65 | 11 | |||||||||||||||||||||||||||||||||
Reinsurance recoverable (2) | 20 | (1 | ) | — | — | — | 1 | — | — | — | 20 | (1 | ) | ||||||||||||||||||||||||||||||||
Total Level 3 assets | $ | 3,993 | $ | 32 | $ | 235 | $ | 423 | $ | (38 | ) | $ | 1 | $ | (268 | ) | $ | 130 | $ | (80 | ) | $ | 4,428 | $ | 13 | ||||||||||||||||||||
(1) | The transfers into and out of Level 3 for fixed maturity securities were related to changes in the primary pricing source and changes in the observability of external information used in determining the fair value, such as external ratings or credit spreads, as well as changes in the industry sectors assigned to specific securities. |
(2) | Represents embedded derivatives associated with the reinsured portion of our GMWB liabilities. |
Total gains | |||||||||||||||||||||||||||||||||||||||||||||
Total realized and | (losses) | ||||||||||||||||||||||||||||||||||||||||||||
Beginning | unrealized gains | Ending | included in | ||||||||||||||||||||||||||||||||||||||||||
balance | (losses) | balance | net income | ||||||||||||||||||||||||||||||||||||||||||
as of | Included | Transfer | Transfer | as of | attributable | ||||||||||||||||||||||||||||||||||||||||
January 1, | in net | Included | into | out of | June 30, | to assets | |||||||||||||||||||||||||||||||||||||||
(Amounts in millions) | 2018 | income | in OCI | Purchases | Sales | Issuances | Settlements | Level 3 (1) | Level 3 (1) | 2018 | still held | ||||||||||||||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||||||||||||||||||||||||
U.S. government, agencies and government-sponsoredenterprises | $ | 1 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (1 | ) | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||
State and political subdivisions | 37 | 1 | (4 | ) | — | — | — | — | 18 | — | 52 | 1 | |||||||||||||||||||||||||||||||||
U.S. corporate: | |||||||||||||||||||||||||||||||||||||||||||||
Utilities | 574 | (1 | ) | (25 | ) | 69 | (12 | ) | — | (4 | ) | 25 | (4 | ) | 622 | — | |||||||||||||||||||||||||||||
Energy | 147 | — | (5 | ) | 22 | — | — | (19 | ) | — | (7 | ) | 138 | — | |||||||||||||||||||||||||||||||
Finance and insurance | 626 | 1 | (67 | ) | 26 | — | — | (110 | ) | — | (18 | ) | 458 | 1 | |||||||||||||||||||||||||||||||
Consumer—non-cyclical | 81 | — | (2 | ) | — | — | — | — | — | — | 79 | — | |||||||||||||||||||||||||||||||||
Technology andcommunications | 73 | — | (5 | ) | 4 | — | — | (60 | ) | — | — | 12 | — | ||||||||||||||||||||||||||||||||
Industrial | 39 | — | 1 | — | — | — | — | — | — | 40 | — | ||||||||||||||||||||||||||||||||||
Capital goods | 121 | — | (9 | ) | 24 | — | — | (10 | ) | — | (7 | ) | 119 | — | |||||||||||||||||||||||||||||||
Consumer—cyclical | 262 | — | (10 | ) | 17 | (3 | ) | — | (12 | ) | — | — | 254 | — | |||||||||||||||||||||||||||||||
Transportation | 60 | — | (1 | ) | — | — | — | (3 | ) | — | — | 56 | — | ||||||||||||||||||||||||||||||||
Other | 169 | — | (1 | ) | — | (10 | ) | — | (5 | ) | — | — | 153 | — | |||||||||||||||||||||||||||||||
Total U.S. corporate | 2,152 | — | (124 | ) | 162 | (25 | ) | — | (223 | ) | 25 | (36 | ) | 1,931 | 1 | ||||||||||||||||||||||||||||||
Non-U.S. corporate: | |||||||||||||||||||||||||||||||||||||||||||||
Utilities | 343 | — | (13 | ) | 22 | — | — | (20 | ) | 15 | (14 | ) | 333 | — | |||||||||||||||||||||||||||||||
Energy | 176 | — | (6 | ) | 23 | — | — | (18 | ) | — | — | 175 | — | ||||||||||||||||||||||||||||||||
Finance and insurance | 161 | 2 | (11 | ) | 1 | — | — | (2 | ) | — | (1 | ) | 150 | 2 | |||||||||||||||||||||||||||||||
Consumer—non-cyclical | 124 | — | (4 | ) | — | — | — | (12 | ) | — | — | 108 | — | ||||||||||||||||||||||||||||||||
Technology andcommunications | 29 | — | — | — | — | — | (13 | ) | — | — | 16 | — | |||||||||||||||||||||||||||||||||
Industrial | 116 | — | (4 | ) | 3 | — | — | (10 | ) | — | — | 105 | — | ||||||||||||||||||||||||||||||||
Capital goods | 191 | 1 | (5 | ) | — | — | — | (21 | ) | — | — | 166 | 1 | ||||||||||||||||||||||||||||||||
Consumer—cyclical | 54 | — | (2 | ) | — | (1 | ) | — | (3 | ) | — | — | 48 | — | |||||||||||||||||||||||||||||||
Transportation | 170 | — | (6 | ) | 22 | — | — | — | 17 | — | 203 | — | |||||||||||||||||||||||||||||||||
Other | 52 | — | (3 | ) | 33 | — | — | — | — | — | 82 | — | |||||||||||||||||||||||||||||||||
Total non-U.S. corporate | 1,416 | 3 | (54 | ) | 104 | (1 | ) | — | (99 | ) | 32 | (15 | ) | 1,386 | 3 | ||||||||||||||||||||||||||||||
Residential mortgage-backed | 77 | — | — | 29 | — | — | (1 | ) | — | (71 | ) | 34 | — | ||||||||||||||||||||||||||||||||
Commercial mortgage-backed | 30 | — | (2 | ) | 35 | — | — | — | 13 | (32 | ) | 44 | — | ||||||||||||||||||||||||||||||||
Other asset-backed | 237 | — | (3 | ) | 61 | — | — | (56 | ) | 48 | (121 | ) | 166 | — | |||||||||||||||||||||||||||||||
Total fixed maturity securities | 3,950 | 4 | (187 | ) | 391 | (26 | ) | — | (380 | ) | 136 | (275 | ) | 3,613 | 5 | ||||||||||||||||||||||||||||||
Equity securities | 44 | — | — | 5 | (3 | ) | — | — | — | — | 46 | — | |||||||||||||||||||||||||||||||||
Other invested assets: | |||||||||||||||||||||||||||||||||||||||||||||
Derivative assets: | |||||||||||||||||||||||||||||||||||||||||||||
Equity index options | 80 | (7 | ) | — | 29 | — | — | (32 | ) | — | — | 70 | (4 | ) | |||||||||||||||||||||||||||||||
Total derivative assets | 80 | (7 | ) | — | 29 | — | — | (32 | ) | — | — | 70 | (4 | ) | |||||||||||||||||||||||||||||||
Total other invested assets | 80 | (7 | ) | — | 29 | — | — | (32 | ) | — | — | 70 | (4 | ) | |||||||||||||||||||||||||||||||
Reinsurance recoverable (2) | 14 | (3 | ) | — | — | — | 1 | — | — | — | 12 | (3 | ) | ||||||||||||||||||||||||||||||||
Total Level 3 assets | $ | 4,088 | $ | (6 | ) | $ | (187 | ) | $ | 425 | $ | (29 | ) | $ | 1 | $ | (412 | ) | $ | 136 | $ | (275 | ) | $ | 3,741 | $ | (2 | ) | |||||||||||||||||
(1) | The transfers into and out of Level 3 for fixed maturity securities were related to changes in the primary pricing source and changes in the observability of external information used in determining the fair value, such as external ratings or credit spreads, as well as changes in the industry sectors assigned to specific securities. |
(2) | Represents embedded derivatives associated with the reinsured portion of our GMWB liabilities. |
(Amounts in millions) | 2019 | 2018 | ||||||
Total realized and unrealized gains (losses) included in net income: | ||||||||
Net investment income | $ | 4 | $ | 3 | ||||
Net investment gains (losses) | 14 | (17 | ) | |||||
|
|
|
| |||||
Total | $ | 18 | $ | (14 | ) | |||
|
|
|
| |||||
Net gains (losses) included in net income attributable to assets still held: | ||||||||
Net investment income | $ | 2 | $ | 3 | ||||
Net investment gains (losses) | 9 | (14 | ) | |||||
|
|
|
| |||||
Total | $ | 11 | $ | (11 | ) | |||
|
|
|
|
periods indicated:
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Total realized and unrealized gains (losses) included in net income: | ||||||||||||||||
Net investment income | $ | 2 | $ | 2 | $ | 6 | $ | 5 | ||||||||
Net investment gains (losses) | 12 | 6 | 26 | (11 | ) | |||||||||||
Total | $ | 14 | $ | 8 | $ | 32 | $ | (6 | ) | |||||||
Total gains (losses) included in net income attributable to assets still held: | ||||||||||||||||
Net investment income | $ | 1 | $ | 2 | $ | 3 | $ | 5 | ||||||||
Net investment gains (losses) | 9 | 7 | 10 | (7 | ) | |||||||||||
Total | $ | 10 | $ | 9 | $ | 13 | $ | (2 | ) | |||||||
(Amounts in millions) | Valuation technique | Fair value | Unobservable input | Range | Weighted-average | |||||||
Fixed maturity securities: | ||||||||||||
U.S. corporate: | ||||||||||||
Utilities | Internal models | $ | 674 | Credit spreads | 60bps - 302bps | 146bps | ||||||
Energy | Internal models | 92 | Credit spreads | 72bps - 317bps | 169bps | |||||||
Finance and insurance | Internal models | 578 | Credit spreads | 64bps - 268bps | 167bps | |||||||
Consumer—non-cyclical | Internal models | 74 | Credit spreads | 85bps - 177bps | 123bps | |||||||
Technology andcommunications | Internal models | 52 | Credit spreads | 90bps - 317bps | 205bps | |||||||
Industrial | Internal models | 40 | Credit spreads | 108bps - 225bps | 153bps | |||||||
Capital goods | Internal models | 96 | Credit spreads | 100bps - 283bps | 162bps | |||||||
Consumer—cyclical | Internal models | 181 | Credit spreads | 61bps - 235bps | 142bps | |||||||
Transportation | Internal models | 54 | Credit spreads | 54bps - 235bps | 107bps | |||||||
Other | Internal models | 170 | Credit spreads | 64bps - 146bps | 85bps | |||||||
|
| |||||||||||
Total U.S. corporate | Internal models | $ | 2,011 | Credit spreads | 54bps - 317bps | 148bps | ||||||
|
| |||||||||||
Non-U.S. corporate: | ||||||||||||
Utilities | Internal models | $ | 435 | Credit spreads | 78bps - 228bps | 142bps | ||||||
Energy | Internal models | 202 | Credit spreads | 100bps - 283bps | 163bps | |||||||
Finance and insurance | Internal models | 182 | Credit spreads | 61bps - 222bps | 131bps | |||||||
Consumer—non-cyclical | Internal models | 66 | Credit spreads | 61bps - 172bps | 143bps | |||||||
Technology andcommunications | Internal models | 27 | Credit spreads | 127bps - 184bps | 167bps | |||||||
Industrial | Internal models | 63 | Credit spreads | 99bps - 151bps | 112bps | |||||||
Capital goods | Internal models | 173 | Credit spreads | 85bps - 283bps | 165bps | |||||||
Consumer—cyclical | Internal models | 121 | Credit spreads | 72bps - 283bps | 195bps | |||||||
Transportation | Internal models | 192 | Credit spreads | 61bps - 235bps | 131bps | |||||||
Other | Internal models | 84 | Credit spreads | 111bps - 223bps | 158bps | |||||||
|
| |||||||||||
Totalnon-U.S. corporate | Internal models | $ | 1,545 | Credit spreads | 61bps - 283bps | 149bps | ||||||
|
| |||||||||||
Derivative assets: | ||||||||||||
Equity index options | Discounted cash flows | $ | 60 | Equity index volatility | 6% - 28% | 16% |
(Amounts in millions) | Valuation technique | Fair value | Unobservable input | Range | Weighted-average | |||||||||
Fixed maturity securities: | ||||||||||||||
U.S. corporate: | ||||||||||||||
Utilities | Internal models | $ | 719 | Credit spreads | 66bps - 326bps | 146 bps | ||||||||
Energy | Internal models | 99 | Credit spreads | 82bps - 311bps | 167 bps | |||||||||
Finance and insurance | Internal models | 595 | Credit spreads | 68bps - 246bps | 158 bps | |||||||||
Consumer—non-cyclical | Internal models | 89 | Credit spreads | 93bps - 311bps | 159 bps | |||||||||
Technology andcommunications | Internal models | 44 | Credit spreads | 137bps - 311bps | 217 bps | |||||||||
Industrial | Internal models | 40 | Credit spreads | 118bps - 212bps | 155 bps | |||||||||
Capital goods | Internal models | 98 | Credit spreads | 103bps - 277bps | 157 bps | |||||||||
Consumer—cyclical | Internal models | 170 | Credit spreads | 70bps - 218bps | 144 bps | |||||||||
Transportation | Internal models | 54 | Credit spreads | 63bps - 215bps | 109 bps | |||||||||
Other | Internal models | 168 | Credit spreads | 68bps - 131bps | 85 bps | |||||||||
Total U.S. corporate | Internal models | $ | 2,076 | Credit spreads | 63bps - 326bps | 147 bps | ||||||||
Non-U.S. corporate: | ||||||||||||||
Utilities | Internal models | $ | 417 | Credit spreads | 84bps - 215bps | 140 bps | ||||||||
Energy | Internal models | 221 | Credit spreads | 103bps - 277bps | 162 bps | |||||||||
Finance and insurance | Internal models | 179 | Credit spreads | 70bps - 189bps | 128 bps | |||||||||
Consumer—non-cyclical | Internal models | 68 | Credit spreads | 70bps - 170bps | 135 bps | |||||||||
Technology andcommunications | Internal models | 27 | Credit spreads | 124bps - 150bps | 141 bps | |||||||||
Industrial | Internal models | 64 | Credit spreads | 99bps - 157bps | 113 bps | |||||||||
Capital goods | Internal models | 181 | Credit spreads | 93bps - 277bps | 169 bps | |||||||||
Consumer—cyclical | Internal models | 123 | Credit spreads | 81bps - 277bps | 193 bps | |||||||||
Transportation | Internal models | 198 | Credit spreads | 70bps - 218bps | 134 bps | |||||||||
Other | Internal models | 125 | Credit spreads | 109bps - 218bps | 162 bps | |||||||||
Total non-U.S. corporate | Internal models | $ | 1,603 | Credit spreads | 70bps - 277bps | 149 bps | ||||||||
Derivative assets: | ||||||||||||||
Discounted cash | Equity index | |||||||||||||
Equity index options | flows | $ | 65 | volatility | 6 % -29 % | 17% |
March 31, 2019 | ||||||||||||||||
(Amounts in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Liabilities | ||||||||||||||||
Policyholder account balances: | ||||||||||||||||
GMWB embedded derivatives(1) | $ | 295 | $ | — | $ | — | $ | 295 | ||||||||
Fixed index annuity embedded derivatives | 423 | — | — | 423 | ||||||||||||
Indexed universal life embedded derivatives | 13 | — | — | 13 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total policyholder account balances | 731 | — | — | 731 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative liabilities: | ||||||||||||||||
Interest rate swaps | 49 | — | 49 | — | ||||||||||||
Foreign currency swaps | 13 | — | 13 | — | ||||||||||||
Equity return swaps | 1 | — | 1 | — | ||||||||||||
Other foreign currency contracts | 25 | — | 25 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total derivative liabilities | 88 | — | 88 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total liabilities | $ | 819 | $ | — | $ | 88 | $ | 731 | ||||||||
|
|
|
|
|
|
|
|
June 30, 2019 | ||||||||||||||||
(Amounts in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Liabilities | ||||||||||||||||
Policyholder account balances: | ||||||||||||||||
GMWB embedded derivatives (1) | $ | 325 | $ | — | $ | — | $ | 325 | ||||||||
Fixed index annuity embedded derivatives | 438 | — | — | 438 | ||||||||||||
Indexed universal life embedded derivatives | 15 | — | — | 15 | ||||||||||||
Total policyholder account balances | 778 | — | — | 778 | ||||||||||||
Derivative liabilities: | ||||||||||||||||
Interest rate swaps | 10 | — | 10 | — | ||||||||||||
Foreign currency swaps | 8 | — | 8 | — | ||||||||||||
Other foreign currency contracts | 25 | — | 25 | — | ||||||||||||
Total derivative liabilities | 43 | — | 43 | — | ||||||||||||
Total liabilities | $ | 821 | $ | — | $ | 43 | $ | 778 | ||||||||
(1) | Represents embedded derivatives associated with our GMWB liabilities, excluding the impact of reinsurance. |
December 31, 2018 | ||||||||||||||||
(Amounts in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Liabilities | ||||||||||||||||
Policyholder account balances: | ||||||||||||||||
GMWB embedded derivatives(1) | $ | 337 | $ | — | $ | — | $ | 337 | ||||||||
Fixed index annuity embedded derivatives | 389 | — | — | 389 | ||||||||||||
Indexed universal life embedded derivatives | 12 | — | — | 12 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total policyholder account balances | 738 | — | — | 738 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Derivative liabilities: | ||||||||||||||||
Interest rate swaps | 102 | — | 102 | — | ||||||||||||
Foreign currency swaps | 23 | — | 23 | — | ||||||||||||
Equity return swaps | 1 | — | 1 | — | ||||||||||||
Other foreign currency contracts | 42 | — | 42 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total derivative liabilities | 168 | — | 168 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total liabilities | $ | 906 | $ | — | $ | 168 | $ | 738 | ||||||||
|
|
|
|
|
|
|
|
December 31, 2018 | ||||||||||||||||
(Amounts in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Liabilities | ||||||||||||||||
Policyholder account balances: | �� | |||||||||||||||
GMWB embedded derivatives (1) | $ | 337 | $ | — | $ | — | $ | 337 | ||||||||
Fixed index annuity embedded derivatives | 389 | — | — | 389 | ||||||||||||
Indexed universal life embedded derivatives | 12 | — | — | 12 | ||||||||||||
Total policyholder account balances | 738 | — | — | 738 | ||||||||||||
Derivative liabilities: | ||||||||||||||||
Interest rate swaps | 102 | — | 102 | — | ||||||||||||
Foreign currency swaps | 23 | — | 23 | — | ||||||||||||
Equity return swaps | 1 | — | 1 | — | ||||||||||||
Other foreign currency contracts | 42 | — | 42 | — | ||||||||||||
Total derivative liabilities | 168 | — | 168 | — | ||||||||||||
Total liabilities | $ | 906 | $ | — | $ | 168 | $ | 738 | ||||||||
(1) | Represents embedded derivatives associated with our GMWB liabilities, excluding the impact of reinsurance. |
Beginning balance as of January 1, 2019 | Total realized and unrealized (gains) losses | Purchases | Sales | Issuances | Settlements | Transfer into Level 3 | Transfer out of Level 3 | Ending balance as of March 31, 2019 | Total (gains) losses included in net (income) attributable to liabilities still held | |||||||||||||||||||||||||||||||||||
(Amounts in millions) | Included in net (income) | Included in OCI | ||||||||||||||||||||||||||||||||||||||||||
Policyholder account balances: | ||||||||||||||||||||||||||||||||||||||||||||
GMWB embeddedderivatives(1) | $ | 337 | $ | (48 | ) | $ | — | $ | — | $ | — | $ | 6 | $ | — | $ | — | $ | — | $ | 295 | $ | (44 | ) | ||||||||||||||||||||
Fixed index annuity embedded derivatives | 389 | 38 | — | — | — | — | (4 | ) | — | — | 423 | 38 | ||||||||||||||||||||||||||||||||
Indexed universal lifeembedded derivatives | 12 | (1 | ) | — | — | — | 2 | — | — | — | 13 | (1 | ) | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total policyholder accountbalances | 738 | (11 | ) | — | — | — | 8 | (4 | ) | — | — | 731 | (7 | ) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total Level 3 liabilities | $ | 738 | $ | (11 | ) | $ | — | $ | — | $ | — | $ | 8 | $ | (4 | ) | $ | — | $ | — | $ | 731 | $ | (7 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (gains) | |||||||||||||||||||||||||||||||||||||||||||||
Total realized and | losses | ||||||||||||||||||||||||||||||||||||||||||||
Beginning | unrealized (gains) | Ending | included in | ||||||||||||||||||||||||||||||||||||||||||
balance | losses | balance | net (income) | ||||||||||||||||||||||||||||||||||||||||||
as of | Transfer | Transfer | as of | attributable | |||||||||||||||||||||||||||||||||||||||||
April 1, | Included in | Included | into | out of | June 30, | to liabilities | |||||||||||||||||||||||||||||||||||||||
(Amounts in millions) | 2019 | net (income) | in OCI | Purchases | Sales | Issuances | Settlements | Level 3 | Level 3 | 2019 | still held | ||||||||||||||||||||||||||||||||||
Policyholder account balances: | |||||||||||||||||||||||||||||||||||||||||||||
GMWB embeddedderivatives (1) | $ | 295 | $ | 24 | $ | — | $ | — | $ | — | $ | 6 | $ | — | $ | — | $ | — | $ | 325 | $ | 24 | |||||||||||||||||||||||
Fixed index annuityembedded derivatives | 423 | 20 | — | — | — | — | (5 | ) | — | — | 438 | 20 | |||||||||||||||||||||||||||||||||
Indexed universal lifeembedded derivatives | 13 | 1 | — | — | — | 1 | — | — | — | 15 | 1 | ||||||||||||||||||||||||||||||||||
Total policyholder accountbalances | 731 | 45 | — | — | — | 7 | (5 | ) | — | — | 778 | 45 | |||||||||||||||||||||||||||||||||
Total Level 3 liabilities | $ | 731 | $ | 45 | $ | — | $ | — | $ | — | $ | 7 | $ | (5 | ) | $ | — | $ | — | $ | 778 | $ | 45 | ||||||||||||||||||||||
(1) | Represents embedded derivatives associated with our GMWB liabilities, excluding the impact of reinsurance. |
Beginning balance as of January 1, 2018 | Total realized and unrealized (gains) losses | Purchases | Sales | Issuances | Settlements | Transfer into Level 3 | Transfer out of Level 3 | Ending balance as of March 31, 2018 | Total (gains) losses included in net (income) attributable to liabilities still held | |||||||||||||||||||||||||||||||||||
(Amounts in millions) | Included in net (income) | Included in OCI | ||||||||||||||||||||||||||||||||||||||||||
Policyholder account balances: | ||||||||||||||||||||||||||||||||||||||||||||
GMWB embeddedderivatives(1) | $ | 250 | $ | (16 | ) | $ | — | $ | — | $ | — | $ | 8 | $ | — | $ | — | $ | — | $ | 242 | $ | (12 | ) | ||||||||||||||||||||
Fixed index annuityembedded derivatives | 419 | (8 | ) | — | — | — | — | (3 | ) | — | — | 408 | (8 | ) | ||||||||||||||||||||||||||||||
Indexed universal lifeembedded derivatives | 14 | (5 | ) | — | — | — | 4 | — | — | — | 13 | (5 | ) | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| �� |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total policyholderaccount balances | 683 | (29 | ) | — | — | — | 12 | (3 | ) | — | — | 663 | (25 | ) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Total Level 3 liabilities | $ | 683 | $ | (29 | ) | $ | — | $ | — | $ | — | $ | 12 | $ | (3 | ) | $ | — | $ | — | $ | 663 | $ | (25 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (gains) | |||||||||||||||||||||||||||||||||||||||||||||
Total realized and | losses | ||||||||||||||||||||||||||||||||||||||||||||
Beginning | unrealized (gains) | Ending | included in | ||||||||||||||||||||||||||||||||||||||||||
balance | losses | balance | net (income) | ||||||||||||||||||||||||||||||||||||||||||
as of | Transfer | Transfer | as of | attributable | |||||||||||||||||||||||||||||||||||||||||
April 1, | Included in | Included | into | out of | June 30, | to liabilities | |||||||||||||||||||||||||||||||||||||||
(Amounts in millions) | 2018 | net (income) | in OCI | Purchases | Sales | Issuances | Settlements | Level 3 | Level 3 | 2018 | still held | ||||||||||||||||||||||||||||||||||
Policyholder account balances: | |||||||||||||||||||||||||||||||||||||||||||||
GMWB embeddedderivatives (1) | $ | 242 | $ | (14 | ) | $ | — | $ | — | $ | — | $ | 7 | $ | — | $ | — | $ | — | $ | 235 | $ | (14 | ) | |||||||||||||||||||||
Fixed index annuityembedded derivatives | 408 | 15 | — | — | — | — | (3 | ) | — | — | 420 | 15 | |||||||||||||||||||||||||||||||||
Indexed universal lifeembedded derivatives | 13 | (2 | ) | — | — | — | 2 | — | — | — | 13 | (2 | ) | ||||||||||||||||||||||||||||||||
Total policyholder accountbalances | 663 | (1 | ) | — | — | — | 9 | (3 | ) | — | — | 668 | (1 | ) | |||||||||||||||||||||||||||||||
Total Level 3 liabilities | $ | 663 | $ | (1 | ) | $ | — | $ | — | $ | — | $ | 9 | $ | (3 | ) | $ | — | $ | — | $ | 668 | $ | (1 | ) | ||||||||||||||||||||
(1) | Represents embedded derivatives associated with our GMWB liabilities, excluding the impact of reinsurance. |
Total (gains) | |||||||||||||||||||||||||||||||||||||||||||||
Total realized and | losses | ||||||||||||||||||||||||||||||||||||||||||||
Beginning | unrealized (gains) | Ending | included in | ||||||||||||||||||||||||||||||||||||||||||
balance | losses | balance | net (income) | ||||||||||||||||||||||||||||||||||||||||||
as of | Included in | Transfer | Transfer | as of | attributable | ||||||||||||||||||||||||||||||||||||||||
January 1, | net | Included | into | out of | June 30, | to liabilities | |||||||||||||||||||||||||||||||||||||||
(Amounts in millions) | 2019 | (income) | in OCI | Purchases | Sales | Issuances | Settlements | Level 3 | Level 3 | 2019 | still held | ||||||||||||||||||||||||||||||||||
Policyholder account balances: | |||||||||||||||||||||||||||||||||||||||||||||
GMWB embeddedderivatives (1) | $ | 337 | $ | (24 | ) | $ | — | $ | — | $ | — | $ | 12 | $ | — | $ | — | $ | — | $ | 325 | $ | (20 | ) | |||||||||||||||||||||
Fixed index annuity embedded derivatives | 389 | 58 | — | — | — | — | (9 | ) | — | — | 438 | 58 | |||||||||||||||||||||||||||||||||
Indexed universal lifeembedded derivatives | 12 | — | — | — | — | 3 | — | — | — | 15 | — | ||||||||||||||||||||||||||||||||||
Total policyholder accountbalances | 738 | 34 | — | — | — | 15 | (9 | ) | — | — | 778 | 38 | |||||||||||||||||||||||||||||||||
Total Level 3 liabilities | $ | 738 | $ | 34 | $ | — | $ | — | $ | — | $ | 15 | $ | (9 | ) | $ | — | $ | — | $ | 778 | $ | 38 | ||||||||||||||||||||||
(1) | Represents embedded derivatives associated with our GMWB liabilities, excluding the impact of reinsurance. |
Total (gains) | |||||||||||||||||||||||||||||||||||||||||||||
Total realized and | losses | ||||||||||||||||||||||||||||||||||||||||||||
Beginning | unrealized (gains) | Ending | included in | ||||||||||||||||||||||||||||||||||||||||||
balance | losses | balance | net (income) | ||||||||||||||||||||||||||||||||||||||||||
as of | Included in | Transfer | Transfer | as of | attributable | ||||||||||||||||||||||||||||||||||||||||
January 1, | net | Included | into | out of | June 30, | to liabilities | |||||||||||||||||||||||||||||||||||||||
(Amounts in millions) | 2018 | (income) | in OCI | Purchases | Sales | Issuances | Settlements | Level 3 | Level 3 | 2018 | still held | ||||||||||||||||||||||||||||||||||
Policyholder account balances: | |||||||||||||||||||||||||||||||||||||||||||||
GMWB embeddedderivatives (1) | $ | 250 | $ | (30 | ) | $ | — | $ | — | $ | — | $ | 15 | $ | — | $ | — | $ | — | $ | 235 | $ | (26 | ) | |||||||||||||||||||||
Fixed index annuityembedded derivatives | 419 | 7 | — | — | — | — | (6 | ) | — | — | 420 | 7 | |||||||||||||||||||||||||||||||||
Indexed universal lifeembedded derivatives | 14 | (7 | ) | — | — | — | 6 | — | — | — | 13 | (7 | ) | ||||||||||||||||||||||||||||||||
Total policyholder accountbalances | 683 | (30 | ) | — | — | — | 21 | (6 | ) | — | — | 668 | (26 | ) | |||||||||||||||||||||||||||||||
Total Level 3 liabilities | $ | 683 | $ | (30 | ) | $ | — | $ | — | $ | — | $ | 21 | $ (6 | ) | $ | — | $ | — | $ | 668 | $ | (26 | ) | |||||||||||||||||||||
(1) | Represents embedded derivatives associated with our GMWB liabilities, excluding the impact of reinsurance. |
(Amounts in millions) | 2019 | 2018 | ||||||
Total realized and unrealized (gains) losses included in net (income): | ||||||||
Net investment income | $ | — | $ | — | ||||
Net investment (gains) losses | (11 | ) | (29 | ) | ||||
|
|
|
| |||||
Total | $ | (11 | ) | $ | (29 | ) | ||
|
|
|
| |||||
Total (gains) losses included in net (income) attributable to liabilities still held: | ||||||||
Net investment income | $ | — | $ | — | ||||
Net investment (gains) losses | (7 | ) | (25 | ) | ||||
|
|
|
| |||||
Total | $ | (7 | ) | $ | (25 | ) | ||
|
|
|
|
periods indicated:
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Total realized and unrealized (gains) losses included in net (income): | ||||||||||||||||
Net investment income | $ | — | $ | — | $ | — | $ | — | ||||||||
Net investment (gains) losses | 45 | (1 | ) | 34 | (30 | ) | ||||||||||
Total | $ | 45 | $ | (1 | ) | $ | 34 | $ | (30 | ) | ||||||
Total (gains) losses included in net (income) attributable to liabilities still held: | ||||||||||||||||
Net investment income | $ | — | $ | — | $ | — | $ | — | ||||||||
Net investment (gains) losses | 45 | (1 | ) | 38 | (26 | ) | ||||||||||
Total | $ | 45 | $ | (1 | ) | $ | 38 | $ | (26 | ) |
(Amounts in millions) | Valuation technique | Fair value | Unobservable input | Range | Weighted-average | |||||||||
Policyholder account balances: | ||||||||||||||
Withdrawal utilization rate | 44% - 87% | 69% | ||||||||||||
Lapse rate | 2% - 9% | 3% | ||||||||||||
Non-performance risk (credit spreads) | 17bps - 83bps | 65bps | ||||||||||||
GMWB embeddedderivative(1) | | Stochastic cash flow model | | $ | 295 | Equity index volatility | 14% - 23% | 20% | ||||||
Fixed index annuity embeddedderivatives | | Option budget method | | $ | 423 | Expected future interest credited | —% - 3% | 1% | ||||||
Indexed universal life embeddedderivatives | | Option budget method | | $ | 13 | Expected future interest credited | 3% - 9% | 5% |
(Amounts in millions) | Valuation technique | Fair value | Unobservable input | Range | Weighted-average | |||||||||||
Policyholder account balances: | ||||||||||||||||
Withdrawal utilization rate | 45 % -88 % | 70 | % | |||||||||||||
Lapse rate | 2 % -9 % | 3 | % | |||||||||||||
Non-performance risk(credit spreads) | 18 bps - 83 bps | 66 bps | ||||||||||||||
GMWB embeddedderivatives (1) | Stochastic cash flow model | $ | 325 | Equity index volatility | 13 23 | 20 | % | |||||||||
Fixed index annuity embeddedderivatives | Option budget method | $ | 438 | Expected future interest credited | – 3 | 1 | % | |||||||||
Indexed universal life embeddedderivatives | Option budget method | $ | 15 | Expected future interest credited | 3 8 % | 5 | % | |||||||||
(1) | Represents embedded derivatives associated with our GMWB liabilities, excluding the impact of reinsurance. |
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
As of or for the three | ||||||||
months ended | ||||||||
March 31, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Beginning balance | $ | 10,379 | $ | 9,594 | ||||
Less reinsurance recoverables | (2,379 | ) | (2,419 | ) | ||||
|
|
|
| |||||
Net beginning balance | 8,000 | 7,175 | ||||||
|
|
|
| |||||
Incurred related to insured events of: | ||||||||
Current year | 986 | 998 | ||||||
Prior years | (81 | ) | (108 | ) | ||||
|
|
|
| |||||
Total incurred | 905 | 890 | ||||||
|
|
|
| |||||
Paid related to insured events of: | ||||||||
Current year | (162 | ) | (175 | ) | ||||
Prior years | (678 | ) | (692 | ) | ||||
|
|
|
| |||||
Total paid | (840 | ) | (867 | ) | ||||
|
|
|
| |||||
Interest on liability for policy and contract claims | 93 | 81 | ||||||
Foreign currency translation | 3 | (5 | ) | |||||
|
|
|
| |||||
Net ending balance | 8,161 | 7,274 | ||||||
Add reinsurance recoverables | 2,375 | 2,377 | ||||||
|
|
|
| |||||
Ending balance | $ | 10,536 | $ | 9,651 | ||||
|
|
|
|
As of or for the six | ||||||||
months ended | ||||||||
June 30, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Beginning balance | $ | 10,379 | $ | 9,594 | ||||
Less reinsurance recoverables | (2,379 | ) | (2,419 | ) | ||||
Net beginning balance | 8,000 | 7,175 | ||||||
Incurred related to insured events of: | ||||||||
Current year | 2,009 | 1,946 | ||||||
Prior years | (214 | ) | (244 | ) | ||||
Total incurred | 1,795 | 1,702 | ||||||
Paid related to insured events of: | ||||||||
Current year | (410 | ) | (434 | ) | ||||
Prior years | (1,287 | ) | (1,266 | ) | ||||
Total paid | (1,697 | ) | (1,700 | ) | ||||
Interest on liability for policy and contract claims | 188 | 163 | ||||||
Foreign currency translation | 3 | (16 | ) | |||||
Net ending balance | 8,289 | 7,324 | ||||||
Add reinsurance recoverables | 2,388 | 2,341 | ||||||
Ending balance | $ | 10,677 | $ | 9,665 | ||||
June 30, | December 31, | |||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Genworth Holdings (1) | ||||||||
Floating Rate Senior Secured Term Loan Facility, due 2023 | $ | 444 | $ | 445 | ||||
7.70% Senior Notes, due 2020 | 397 | 397 | ||||||
7.20% Senior Notes, due 2021 | 381 | 381 | ||||||
7.625% Senior Notes, due 2021 | 703 | 703 | ||||||
4.90% Senior Notes, due 2023 | 399 | 399 | ||||||
4.80% Senior Notes, due 2024 | 400 | 400 | ||||||
6.50% Senior Notes, due 2034 | 297 | 297 | ||||||
Floating Rate Junior Subordinated Notes, due 2066 | 598 | 598 | ||||||
Subtotal | 3,619 | 3,620 | ||||||
Bond consent fees | (29 | ) | (32 | ) | ||||
Deferred borrowing charges | (19 | ) | (21 | ) | ||||
Total Genworth Holdings | 3,571 | 3,567 | ||||||
Canada (2) | ||||||||
5.68% Senior Notes, due 2020 | 134 | 202 | ||||||
4.24% Senior Notes, due 2024 | 201 | 117 | ||||||
Subtotal | 335 | 319 | ||||||
Deferred borrowing charges | (2 | ) | (1 | ) | ||||
Total Canada | 333 | 318 | ||||||
Australia (3) | ||||||||
Floating Rate Junior Subordinated Notes, due 2025 | 141 | 141 | ||||||
Deferred borrowing charges | (1 | ) | (1 | ) | ||||
Total Australia | 140 | 140 | ||||||
Total | $ | 4,044 | $ | 4,025 | ||||
(1) | We have the option to redeem all or a portion of the senior notes at any time with notice to the noteholders at a price equal to the greater of 100% of principal or the sum of the present value of the remaining scheduled payments of principal and interest discounted at the then-current treasury rate plus an applicable spread. |
(2) | Senior notes issued by Genworth MI Canada Inc. (“Genworth Canada”), our majority-owned subsidiary. |
(3) | Subordinated floating rate notes issued by Genworth Financial Mortgage Insurance Pty Limited, our indirect wholly-owned subsidiary. |
Three months ended March 31, | ||||||||
2019 | 2018 | |||||||
Statutory U.S. federal income tax rate | 21.0 | % | 21.0 | % | ||||
Increase (reduction) in rate resulting from: | ||||||||
Effect of foreign operations | 5.4 | 5.0 | ||||||
U.S. shareholder tax on foreign operations | 4.8 | (2.1 | ) | |||||
Swaps terminated prior to the TCJA | 2.6 | 2.3 | ||||||
Other, net | (1.1 | ) | 1.4 | |||||
|
|
|
| |||||
Effective rate | 32.7 | % | 27.6 | % | ||||
|
|
|
|
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Statutory U.S. federal income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % | ||||||||
Increase (reduction) in rate resulting from: | ||||||||||||||||
Effect of foreign operations | 5.0 | 3.4 | 5.2 | 3.2 | ||||||||||||
U.S. shareholder tax on foreign operations | 4.4 | — | 4.6 | — | ||||||||||||
Swaps terminated prior to the TCJA | 2.1 | 3.9 | 2.4 | 3.2 | ||||||||||||
TCJA, impact from change in tax rate | — | 5.4 | — | 3.3 | ||||||||||||
Valuation allowance | — | (2.0 | ) | — | (1.3 | ) | ||||||||||
Provision to return adjustments | — | (1.6 | ) | — | (0.7 | ) | ||||||||||
Other, net | 0.4 | 0.7 | (0.4 | ) | 0.9 | |||||||||||
Effective rate | 32.9 | % | 30.8 | % | 32.8 | % | 29.6 | % | ||||||||
(9)
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(loss) attributable to noncontrolling interests, net investment gains (losses), goodwill impairments, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, gains (losses) on insurance block transactions, restructuring costs and infrequent or unusualnon-operating items. Gains (losses) on insurance block transactions are defined as gains (losses) on the early extinguishment ofnon-recourse funding obligations, early termination fees for other financing restructuring and/or resulting gains (losses) on reinsurance restructuring for certain blocks of business. We exclude net investment gains (losses) and infrequent or unusualnon-operating items because we do not consider them to be related to the operating performance of our segments and Corporate and Other activities. A component of our net investment gains (losses) is the result of impairments, the size and timing of which can vary significantly depending on market credit cycles. In addition, the size and timing of other investment gains (losses) can be subject to our discretion and are influenced by market opportunities, as well as asset-liability matching considerations. Goodwill impairments, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, gains (losses) on insurance block transactions and restructuring costs are also excluded from adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders because, in our opinion, they are not indicative of overall operating trends. Infrequent or unusualnon-operating items are also excluded from adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders if, in our opinion, they are not indicative of overall operating trends.
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We
Three months ended | ||||||||
March 31, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Revenues: | ||||||||
U.S. Mortgage Insurance segment | $ | 223 | $ | 200 | ||||
|
|
|
| |||||
Canada Mortgage Insurance segment | 159 | 158 | ||||||
|
|
|
| |||||
Australia Mortgage Insurance segment | 110 | 107 | ||||||
|
|
|
| |||||
U.S. Life Insurance segment: | ||||||||
Long-term care insurance | 1,114 | 1,020 | ||||||
Life insurance | 372 | 379 | ||||||
Fixed annuities | 159 | 182 | ||||||
|
|
|
| |||||
U.S. Life Insurance segment | 1,645 | 1,581 | ||||||
|
|
|
| |||||
Runoff segment | 82 | 68 | ||||||
|
|
|
| |||||
Corporate and Other activities | (15 | ) | 1 | |||||
|
|
|
| |||||
Total revenues | $ | 2,204 | $ | 2,115 | ||||
|
|
|
|
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues: | ||||||||||||||||
U.S. Mortgage Insurance segment | $ | 235 | $ | 208 | $ | 458 | $ | 408 | ||||||||
Canada Mortgage Insurance segment | 161 | 150 | 320 | 308 | ||||||||||||
Australia Mortgage Insurance segment | 96 | 136 | 206 | 243 | ||||||||||||
U.S. Life Insurance segment: | ||||||||||||||||
Long-term care insurance | 1,055 | 1,035 | 2,169 | 2,055 | ||||||||||||
Life insurance | 382 | 367 | 754 | 746 | ||||||||||||
Fixed annuities | 151 | 176 | 310 | 358 | ||||||||||||
U.S. Life Insurance segment | 1,588 | 1,578 | 3,233 | 3,159 | ||||||||||||
Runoff segment | 78 | 80 | 160 | 148 | ||||||||||||
Corporate and Other activities | (2 | ) | 7 | (17 | ) | 8 | ||||||||||
Total revenues | $ | 2,156 | $ | 2,159 | $ | 4,360 | $ | 4,274 | ||||||||
Three months ended | ||||||||
March 31, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Net income | $ | 230 | $ | 165 | ||||
Less: net income attributable to noncontrolling interests | 56 | 53 | ||||||
|
|
|
| |||||
Net income available to Genworth Financial, Inc.’s common stockholders | 174 | 112 | ||||||
Adjustments to net income available to Genworth Financial, Inc.’scommon stockholders: | ||||||||
Net investment (gains) losses, net(1) | (71 | ) | 17 | |||||
Expenses related to restructuring | 4 | — | ||||||
Taxes on adjustments | 14 | (4 | ) | |||||
|
|
|
| |||||
Adjusted operating income available to Genworth Financial, Inc.’scommon stockholders | $ | 121 | $ | 125 | ||||
|
|
|
|
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income | $ | 218 | $ | 249 | $ | 448 | $ | 414 | ||||||||
Less: net income attributable to noncontrolling interests | 50 | 59 | 106 | 112 | ||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | 168 | 190 | 342 | 302 | ||||||||||||
Adjustments to net income available to Genworth Financial, Inc.’scommon stockholders: | ||||||||||||||||
Net investment (gains) losses, net (1) | 43 | 12 | (28 | ) | 29 | |||||||||||
(Gains) losses on early extinguishment of debt, net (2) | 1 | — | 1 | — | ||||||||||||
Expenses related to restructuring | — | — | 4 | — | ||||||||||||
Taxes on adjustments | (8 | ) | (2 | ) | 6 | (6 | ) | |||||||||
Adjusted operating income available to Genworth Financial, Inc.’scommon stockholders | $ | 204 | $ | 200 | $ | 325 | $ | 325 | ||||||||
(1) | For the three months ended |
(2) | For the three and six months ended June 30, 2019, (gains) losses on the early extinguishment of debt were adjusted for the portion attributable to noncontrolling interests of $ 1 |
Three months ended | ||||||||
March 31, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders: | ||||||||
U.S. Mortgage Insurance segment | $ | 124 | $ | 111 | ||||
|
|
|
| |||||
Canada Mortgage Insurance segment | 41 | 49 | ||||||
|
|
|
| |||||
Australia Mortgage Insurance segment | 14 | 19 | ||||||
|
|
|
| |||||
U.S. Life Insurance segment: | ||||||||
Long-term care insurance | (20 | ) | (32 | ) | ||||
Life insurance | (2 | ) | (1 | ) | ||||
Fixed annuities | 17 | 28 | ||||||
|
|
|
| |||||
U.S. Life Insurance segment | (5 | ) | (5 | ) | ||||
|
|
|
| |||||
Runoff segment | 20 | 10 | ||||||
Corporate and Other activities | (73 | ) | (59 | ) | ||||
|
|
|
| |||||
Adjusted operating income available to Genworth Financial, Inc.’s common stockholders | $ | 121 | $ | 125 | ||||
|
|
|
|
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders: | ||||||||||||||||
U.S. Mortgage Insurance segment | $ | 147 | $ | 137 | $ | 271 | $ | 248 | ||||||||
Canada Mortgage Insurance segment | 41 | 46 | 82 | 95 | ||||||||||||
Australia Mortgage Insurance segment | 13 | 22 | 27 | 41 | ||||||||||||
U.S. Life Insurance segment: | ||||||||||||||||
Long-term care insurance | 37 | 22 | 17 | (10 | ) | |||||||||||
Life insurance | 10 | 4 | 8 | 3 | ||||||||||||
Fixed annuities | 19 | 31 | 36 | 59 | ||||||||||||
U.S. Life Insurance segment | 66 | 57 | 61 | 52 | ||||||||||||
Runoff segment | 9 | 13 | 29 | 23 | ||||||||||||
Corporate and Other activities | (72 | ) | (75 | ) | (145 | ) | (134 | ) | ||||||||
Adjusted operating income available to Genworth Financial, Inc.’s common stockholders | $ | 204 | $ | 200 | $ | 325 | $ | 325 | ||||||||
March 31, | December 31, | |||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Assets: | ||||||||
U.S. Mortgage Insurance segment | $ | 3,808 | $ | 3,583 | ||||
Canada Mortgage Insurance segment | 5,146 | 5,038 | ||||||
Australia Mortgage Insurance segment | 2,533 | 2,534 | ||||||
U.S. Life Insurance segment | 80,619 | 79,799 | ||||||
Runoff segment | 10,082 | 9,963 | ||||||
Corporate and Other activities | — | 6 | ||||||
|
|
|
| |||||
Total assets | $ | 102,188 | $ | 100,923 | ||||
|
|
|
|
(10)
(Amounts in millions) | June 30, 2019 | December 31, 2018 | ||||||
Assets: | ||||||||
U.S. Mortgage Insurance segment | $ | 3,977 | $ | 3,583 | ||||
Canada Mortgage Insurance segment | 5,272 | 5,038 | ||||||
Australia Mortgage Insurance segment | 2,524 | 2,534 | ||||||
U.S. Life Insurance segment | 81,002 | 79,799 | ||||||
Runoff segment | 10,018 | 9,963 | ||||||
Corporate and Other activities | 1,513 | 6 | ||||||
Total assets | $ | 104,306 | $ | 100,923 | ||||
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
products, recommending unsuitable products to customers, our pricing structures and business practices in our
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
attorneys’ fees and such equitable relief as the court may deem proper. We filed a motion to dismiss on November 14, 2016. The action is stayed pending the completion of the proposed China Oceanwide transaction.
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
leave to file our counterclaim occurred on February 21, 2019. On March 15, 2019, the Middle District of Georgia granted our motion to enjoin and denied our motion for leave to file our counterclaim. As such, plaintiff is enjoined from pursuing its class action in the Eastern District of Virginia. On March 29, 2019, plaintiff filed a notice of appeal in the Middle District of Georgia, notifying the court of its appeal to the United States Court of Appeals for the Eleventh Circuit from the order granting our motion to enjoin. On March 29, 2019, we filed our notice of cross-appeal in the Middle District of Georgia, notifying the Court of our cross-appeal to the Eleventh Circuit from the portion of the order denying our motion for leave to file our counterclaim. On April 8, 2019, the Eastern District of Virginia lifted the stay in the case and
action
(11)
(Loss)
Net unrealized investment gains | Derivatives qualifying as | Foreign currency translation and other | ||||||||||||||
(Amounts in millions) | (losses) (1) | hedges (2) | adjustments | Total | ||||||||||||
Balances as of January 1, 2019 | $ | 595 | $ | 1,781 | $ | (332 | ) | $ | 2,044 | |||||||
OCI before reclassifications | 427 | 97 | 54 | 578 | ||||||||||||
Amounts reclassified from (to) OCI | (47 | ) | (28 | ) | — | (75 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Current period OCI | 380 | 69 | 54 | 503 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Balances as of March 31, 2019 before noncontrolling interests | 975 | 1,850 | (278 | ) | 2,547 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Less: change in OCI attributable to noncontrolling interests | 32 | — | 23 | 55 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Balances as of March 31, 2019 | $ | 943 | $ | 1,850 | $ | (301 | ) | $ | 2,492 | |||||||
|
|
|
|
|
|
|
|
(Amounts in millions) | Net unrealized investment gains (losses) (1) | Derivatives qualifying as hedges (2) | Foreign currency translation and other adjustments | Total | ||||||||||||
Balances as of April 1, 2019 | $ | 943 | $ | 1,850 | $ | (301 | ) | $ | 2,492 | |||||||
OCI before reclassifications | 375 | 157 | 43 | 575 | ||||||||||||
Amounts reclassified from (to) OCI | 1 | (24 | ) | — | (23 | ) | ||||||||||
Current period OCI | 376 | 133 | 43 | 552 | ||||||||||||
Balances as of June 30, 2019 before noncontrolling interests | 1,319 | 1,983 | (258 | ) | 3,044 | |||||||||||
Less: change in OCI attributable to noncontrolling interests | 14 | — | 17 | 31 | ||||||||||||
Balances as of June 30, 2019 | $ | 1,305 | $ | 1,983 | $ | (275 | ) | $ | 3,013 | |||||||
(1) | Net of adjustments to DAC, present value of future profits, sales inducements and benefit reserves. See note 4 for additional information. |
(2) | See note 5 for additional information. |
Net unrealized investment gains | Derivatives qualifying as | Foreign currency translation and other | ||||||||||||||
(Amounts in millions) | (losses) (1) | hedges (2) | adjustments | Total | ||||||||||||
Balances as of January 1, 2018 | $ | 1,085 | $ | 2,065 | $ | (123 | ) | $ | 3,027 | |||||||
Cumulative effect of changes in accounting | 164 | 14 | (47 | ) | 131 | |||||||||||
OCI before reclassifications | (348 | ) | (126 | ) | (87 | ) | (561 | ) | ||||||||
Amounts reclassified from (to) OCI | 7 | (26 | ) | — | (19 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Current period OCI | (341 | ) | (152 | ) | (87 | ) | (580 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Balances as of March 31, 2018 before noncontrolling interests | 908 | 1,927 | (257 | ) | 2,578 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Less: change in OCI attributable to noncontrolling interests | (9 | ) | — | (40 | ) | (49 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Balances as of March 31, 2018 | $ | 917 | $ | 1,927 | $ | (217 | ) | $ | 2,627 | |||||||
|
|
|
|
|
|
|
|
(Amounts in millions) | Net unrealized investment gains (losses) (1) | Derivatives qualifying as hedges (2) | Foreign currency translation and other adjustments | Total | ||||||||||||
Balances as of April 1, 2018 | $ | 917 | $ | 1,927 | $ | (217 | ) | $ | 2,627 | |||||||
OCI before reclassifications | (193 | ) | (39 | ) | (98 | ) | (330 | ) | ||||||||
Amounts reclassified from (to) OCI | 6 | (25 | ) | — | (19 | ) | ||||||||||
Current period OCI | (187 | ) | (64 | ) | (98 | ) | (349 | ) | ||||||||
Balances as of June 30, 2018 before noncontrolling interests | 730 | 1,863 | (315 | ) | 2,278 | |||||||||||
Less: change in OCI attributable to noncontrolling interests | (6 | ) | — | (43 | ) | (49 | ) | |||||||||
Balances as of June 30, 2018 | $ | 736 | $ | 1,863 | $ | (272 | ) | $ | 2,327 | |||||||
(1) | Net of adjustments to DAC, present value of future profits, sales inducements and benefit reserves. See note 4 for additional information. |
(2) | See note 5 for additional information. |
(Amounts in millions) | Net unrealized investment gains (losses) (1) | Derivatives qualifying as hedges (2) | Foreign currency translation and other adjustments | Total | ||||||||||||
Balances as of January 1, 2019 | $ | 595 | $ | 1,781 | $ | (332 | ) | $ | 2,044 | |||||||
OCI before reclassifications | 802 | 254 | 97 | 1,153 | ||||||||||||
Amounts reclassified from (to) OCI | (46 | ) | (52 | ) | — | (98 | ) | |||||||||
Current period OCI | 756 | 202 | 97 | 1,055 | ||||||||||||
Balances as of June 30, 2019 before noncontrolling interests | 1,351 | 1,983 | (235 | ) | 3,099 | |||||||||||
Less: change in OCI attributable to noncontrolling interests | 46 | — | 40 | 86 | ||||||||||||
Balances as of June 30, 2019 | $ | 1,305 | $ | 1,983 | $ | (275 | ) | $ | 3,013 | |||||||
(1) | Net of adjustments to DAC, present value of future profits, sales inducements and benefit reserves. See note 4 for additional information. |
(2) | See note 5 for additional information. |
(Amounts in millions) | Net unrealized investment gains (losses) (1) | Derivatives qualifying as hedges (2) | Foreign currency translation and other adjustments | Total | ||||||||||||
Balances as of January 1, 2018 | $ | 1,085 | $ | 2,065 | $ | (123 | ) | $ | 3,027 | |||||||
Cumulative effect of changes in accounting | 164 | 14 | (47 | ) | 131 | |||||||||||
OCI before reclassifications | (541 | ) | (165 | ) | (185 | ) | (891 | ) | ||||||||
Amounts reclassified from (to) OCI | 13 | (51 | ) | — | (38 | ) | ||||||||||
Current period OCI | (528 | ) | (216 | ) | (185 | ) | (929 | ) | ||||||||
Balances as of June 30, 2018 before noncontrolling interests | 721 | 1,863 | (355 | ) | 2,229 | |||||||||||
Less: change in OCI attributable to noncontrolling interests | (15 | ) | — | (83 | ) | (98 | ) | |||||||||
Balances as of June 30, 2018 | $ | 736 | $ | 1,863 | $ | (272 | ) | $ | 2,327 | |||||||
(1) | Net of adjustments to DAC, present value of future profits, sales inducements and benefit reserves. See note 4 for additional information. |
(2) | See note 5 for additional information. |
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
benefit obligation as of March 31,June 30, 2019 and 2018. The amountbalance also includesincluded taxes of $(45) million and $(46) million, respectively, related to foreign currency translation adjustments as of March 31,June 30, 2019 and 2018. The March 31,balance as of June 30, 2018 balance included the impact of adopting new accounting guidance related to stranded tax effects.
(Amounts in millions) | Amount reclassified from accumulated other comprehensive income | Affected line item in the consolidated statements of income | ||||||||
Three months ended March 31, | ||||||||||
2019 | 2018 | |||||||||
Net unrealized investment (gains) losses: | ||||||||||
Unrealized (gains) losses on investments(1) | $ | (60 | ) | $ | 8 | Net investment (gains) losses | ||||
(Provision) benefit for income taxes | 13 | (1 | ) | (Provision) benefit for income taxes | ||||||
|
|
|
| |||||||
Total | $ | (47 | ) | $ | 7 | |||||
|
|
|
| |||||||
Derivatives qualifying as hedges: | ||||||||||
Interest rate swaps hedging assets | $ | (38 | ) | $ | (35 | ) | Net investment income | |||
Interest rate swaps hedging assets | (6 | ) | (5 | ) | Net investment (gains) losses | |||||
Benefit for income taxes | 16 | 14 | Benefit for income taxes | |||||||
|
|
|
| |||||||
Total | $ | (28 | ) | $ | (26 | ) | ||||
|
|
|
|
Amount reclassified from accumulated other comprehensive income (loss) | Affected line item in the consolidated statements of income | ||||||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||||||
Net unrealized investment (gains) losses: | |||||||||||||||||||
Unrealized (gains) losses oninvestments (1) | $ | 2 | $ | 8 | $ | (58 | ) | $ | 16 | Net investment (gains) losses | |||||||||
(Provision) benefit for income taxes | (1 | ) | (2 | ) | 12 | (3 | ) | Provision for income taxes | |||||||||||
Total | $ | 1 | $ | 6 | $ | (46 | ) | $ | 13 | ||||||||||
Derivatives qualifying as hedges: | |||||||||||||||||||
Interest rate swaps hedging assets | $ | (42 | ) | $ | (39 | ) | $ | (80 | ) | $ | (74 | ) | Net investment income | ||||||
Interest rate swaps hedging assets | 4 | — | (2 | ) | (5 | ) | Net investment (gains) losses | ||||||||||||
Foreign currency swaps | 1 | — | 1 | — | Net investment income | ||||||||||||||
Benefit for income taxes | 13 | 14 | 29 | 28 | Provision for income taxes | ||||||||||||||
Total | $ | (24 | ) | $ | (25 | ) | $ | (52 | ) | $ | (51 | ) | |||||||
(1) | Amounts exclude adjustments to DAC, present value of future profits, sales inducements and benefit reserves. |
(12)
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Assets | ||||||||||||||||||||
Investments: | ||||||||||||||||||||
Fixed maturity securitiesavailable-for-sale, at fair value | $ | — | $ | — | $ | 61,560 | $ | (200 | ) | $ | 61,360 | |||||||||
Equity securities, at fair value | — | — | 635 | — | 635 | |||||||||||||||
Commercial mortgage loans ($59 are restricted related to a securitization entity) | — | — | 6,988 | — | 6,988 | |||||||||||||||
Policy loans | — | — | 1,994 | — | 1,994 | |||||||||||||||
Other invested assets | — | 49 | 1,160 | (1 | ) | 1,208 | ||||||||||||||
Investments in subsidiaries | 13,222 | 11,928 | — | (25,150 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total investments | 13,222 | 11,977 | 72,337 | (25,351 | ) | 72,185 | ||||||||||||||
Cash, cash equivalents and restricted cash | — | 361 | 1,860 | — | 2,221 | |||||||||||||||
Accrued investment income | — | — | 733 | (7 | ) | 726 | ||||||||||||||
Deferred acquisition costs | — | — | 2,219 | — | 2,219 | |||||||||||||||
Intangible assets and goodwill | — | — | 265 | — | 265 | |||||||||||||||
Reinsurance recoverable | — | — | 17,257 | — | 17,257 | |||||||||||||||
Other assets | (4 | ) | 55 | 482 | (1 | ) | 532 | |||||||||||||
Intercompany notes receivable | — | 231 | — | (231 | ) | — | ||||||||||||||
Deferred tax assets | (11 | ) | 913 | (329 | ) | — | 573 | |||||||||||||
Separate account assets | — | — | 6,210 | — | 6,210 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total assets | $ | 13,207 | $ | 13,537 | $ | 101,034 | $ | (25,590 | ) | $ | 102,188 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Liabilities and equity | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||
Future policy benefits | $ | — | $ | — | $ | 38,369 | $ | — | $ | 38,369 | ||||||||||
Policyholder account balances | — | — | 22,651 | — | 22,651 | |||||||||||||||
Liability for policy and contract claims | — | — | 10,536 | — | 10,536 | |||||||||||||||
Unearned premiums | — | — | 3,482 | — | 3,482 | |||||||||||||||
Other liabilities | 27 | 65 | 1,600 | (10 | ) | 1,682 | ||||||||||||||
Intercompany notes payable | 106 | 200 | 125 | (431 | ) | — | ||||||||||||||
Non-recourse funding obligations | — | — | 311 | — | 311 | |||||||||||||||
Long-term borrowings | — | 3,570 | 465 | — | 4,035 | |||||||||||||||
Deferred tax liability | — | — | 30 | — | 30 | |||||||||||||||
Separate account liabilities | — | — | 6,210 | — | 6,210 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total liabilities | 133 | 3,835 | 83,779 | (441 | ) | 87,306 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Equity: | ||||||||||||||||||||
Common stock | 1 | — | 3 | (3 | ) | 1 | ||||||||||||||
Additionalpaid-in capital | 11,989 | 9,096 | 18,429 | (27,525 | ) | 11,989 | ||||||||||||||
Accumulated other comprehensive income (loss) | 2,492 | 2,521 | 2,515 | (5,036 | ) | 2,492 | ||||||||||||||
Retained earnings | 1,292 | (1,915 | ) | (5,800 | ) | 7,715 | 1,292 | |||||||||||||
Treasury stock, at cost | (2,700 | ) | — | — | — | (2,700 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Genworth Financial, Inc.’s stockholders’ equity | 13,074 | 9,702 | 15,147 | (24,849 | ) | 13,074 | ||||||||||||||
Noncontrolling interests | — | — | 2,108 | (300 | ) | 1,808 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total equity | 13,074 | 9,702 | 17,255 | (25,149 | ) | 14,882 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total liabilities and equity | $ | 13,207 | $ | 13,537 | $ | 101,034 | $ | (25,590 | ) | $ | 102,188 | |||||||||
|
|
|
|
|
|
|
|
|
|
(Amounts in millions) | Parent Guarantor | Issuer | All Other Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Assets | ||||||||||||||||||||
Investments: | ||||||||||||||||||||
Fixed maturity securities available-for-sale, at fair value | $ | — | $ | — | $ | 63,974 | $ | (200 | ) | $ | 63,774 | |||||||||
Equity securities, at fair value | — | — | 644 | — | 644 | |||||||||||||||
Commercial mortgage loans ($56 are restricted related to a securitization entity) | — | — | 7,019 | — | 7,019 | |||||||||||||||
Policy loans | — | — | 2,076 | — | 2,076 | |||||||||||||||
Other invested assets | — | 49 | 1,493 | (7 | ) | 1,535 | ||||||||||||||
Investments in subsidiaries | 13,938 | 12,439 | — | (26,377 | ) | — | ||||||||||||||
Total investments | 13,938 | 12,488 | 75,206 | (26,584 | ) | 75,048 | ||||||||||||||
Cash, cash equivalents and restricted cash | — | 358 | 1,580 | — | 1,938 | |||||||||||||||
Accrued investment income | — | — | 630 | (4 | ) | 626 | ||||||||||||||
Deferred acquisition costs | — | — | 2,105 | — | 2,105 | |||||||||||||||
Intangible assets and goodwill | — | — | 244 | — | 244 | |||||||||||||||
Reinsurance recoverable | — | — | 17,211 | — | 17,211 | |||||||||||||||
Other assets | 5 | 55 | 505 | (1 | ) | 564 | ||||||||||||||
Intercompany notes receivable | — | 273 | — | (273 | ) | — | ||||||||||||||
Deferred tax assets | (35 | ) | 841 | (423 | ) | — | 383 | |||||||||||||
Separate account assets | — | — | 6,187 | — | 6,187 | |||||||||||||||
Total assets | $ | 13,908 | $ | 14,015 | $ | 103,245 | $ | (26,862 | ) | $ | 104,306 | |||||||||
Liabilities and equity | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||
Future policy benefits | $ | — | $ | — | $ | 39,583 | $ | — | $ | 39,583 | ||||||||||
Policyholder account balances | — | — | 22,673 | — | 22,673 | |||||||||||||||
Liability for policy and contract claims | — | — | 10,677 | — | 10,677 | |||||||||||||||
Unearned premiums | — | — | 3,488 | — | 3,488 | |||||||||||||||
Other liabilities | — | 47 | 1,689 | (13 | ) | 1,723 | ||||||||||||||
Intercompany notes payable | 151 | 200 | 122 | (473 | ) | — | ||||||||||||||
Non-recourse funding obligations | — | — | 311 | — | 311 | |||||||||||||||
Long-term borrowings | — | 3,571 | 473 | — | 4,044 | |||||||||||||||
Deferred tax liability | — | — | 28 | — | 28 | |||||||||||||||
Separate account liabilities | — | — | 6,187 | — | 6,187 | |||||||||||||||
Total liabilities | 151 | 3,818 | 85,231 | (486 | ) | 88,714 | ||||||||||||||
Equity: | ||||||||||||||||||||
Common stock | 1 | — | 3 | (3 | ) | 1 | ||||||||||||||
Additional paid-in capital | 11,983 | 9,094 | 18,428 | (27,522 | ) | 11,983 | ||||||||||||||
Accumulated other comprehensive income (loss) | 3,013 | 2,982 | 3,051 | (6,033 | ) | 3,013 | ||||||||||||||
Retained earnings | 1,460 | (1,879 | ) | (5,603 | ) | 7,482 | 1,460 | |||||||||||||
Treasury stock, at cost | (2,700 | ) | — | — | — | (2,700 | ) | |||||||||||||
Total Genworth Financial, Inc.’s stockholders’ equity | 13,757 | 10,197 | 15,879 | (26,076 | ) | 13,757 | ||||||||||||||
Noncontrolling interests | — | — | 2,135 | (300 | ) | 1,835 | ||||||||||||||
Total equity | 13,757 | 10,197 | 18,014 | (26,376 | ) | 15,592 | ||||||||||||||
Total liabilities and equity | $ | 13,908 | $ | 14,015 | $ | 103,245 | $ | (26,862 | ) | $ | 104,306 | |||||||||
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Assets | ||||||||||||||||||||
Investments: | ||||||||||||||||||||
Fixed maturity securitiesavailable-for-sale, at fair value | $ | — | $ | — | $ | 59,861 | $ | (200 | ) | $ | 59,661 | |||||||||
Equity securities, at fair value | — | — | 655 | — | 655 | |||||||||||||||
Commercial mortgage loans ($62 are restricted related to a securitization entity) | — | — | 6,749 | — | 6,749 | |||||||||||||||
Policy loans | — | — | 1,861 | — | 1,861 | |||||||||||||||
Other invested assets | — | 86 | 1,104 | (2 | ) | 1,188 | ||||||||||||||
Investments in subsidiaries | 12,570 | 11,462 | — | (24,032 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total investments | 12,570 | 11,548 | 70,230 | (24,234 | ) | 70,114 | ||||||||||||||
Cash, cash equivalents and restricted cash | — | 429 | 1,748 | — | 2,177 | |||||||||||||||
Accrued investment income | — | — | 679 | (4 | ) | 675 | ||||||||||||||
Deferred acquisition costs | — | — | 3,263 | — | 3,263 | |||||||||||||||
Intangible assets and goodwill | — | — | 347 | — | 347 | |||||||||||||||
Reinsurance recoverable | — | — | 17,278 | — | 17,278 | |||||||||||||||
Other assets | 15 | 62 | 397 | — | 474 | |||||||||||||||
Intercompany notes receivable | — | 180 | 6 | (186 | ) | — | ||||||||||||||
Deferred tax assets | 14 | 907 | (185 | ) | — | 736 | ||||||||||||||
Separate account assets | — | — | 5,859 | — | 5,859 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total assets | $ | 12,599 | $ | 13,126 | $ | 99,622 | $ | (24,424 | ) | $ | 100,923 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Liabilities and equity | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||
Future policy benefits | $ | — | $ | — | $ | 37,940 | $ | — | $ | 37,940 | ||||||||||
Policyholder account balances | — | — | 22,968 | — | 22,968 | |||||||||||||||
Liability for policy and contract claims | — | — | 10,379 | — | 10,379 | |||||||||||||||
Unearned premiums | — | — | 3,546 | — | 3,546 | |||||||||||||||
Other liabilities | 27 | 97 | 1,565 | (7 | ) | 1,682 | ||||||||||||||
Intercompany notes payable | 122 | 207 | 57 | (386 | ) | — | ||||||||||||||
Non-recourse funding obligations | — | — | 311 | — | 311 | |||||||||||||||
Long-term borrowings | — | 3,567 | 458 | — | 4,025 | |||||||||||||||
Deferred tax liability | — | — | 24 | — | 24 | |||||||||||||||
Separate account liabilities | — | — | 5,859 | — | 5,859 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total liabilities | 149 | 3,871 | 83,107 | (393 | ) | 86,734 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Equity: | ||||||||||||||||||||
Common stock | 1 | — | 3 | (3 | ) | 1 | ||||||||||||||
Additionalpaid-in capital | 11,987 | 9,095 | 18,425 | (27,520 | ) | 11,987 | ||||||||||||||
Accumulated other comprehensive income (loss) | 2,044 | 2,144 | 2,060 | (4,204 | ) | 2,044 | ||||||||||||||
Retained earnings | 1,118 | (1,984 | ) | (6,012 | ) | 7,996 | 1,118 | |||||||||||||
Treasury stock, at cost | (2,700 | ) | — | — | — | (2,700 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Genworth Financial, Inc.’s stockholders’ equity | 12,450 | 9,255 | 14,476 | (23,731 | ) | 12,450 | ||||||||||||||
Noncontrolling interests | — | — | 2,039 | (300 | ) | 1,739 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total equity | 12,450 | 9,255 | 16,515 | (24,031 | ) | 14,189 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total liabilities and equity | $ | 12,599 | $ | 13,126 | $ | 99,622 | $ | (24,424 | ) | $ | 100,923 | |||||||||
|
|
|
|
|
|
|
|
|
|
(Amounts in millions) | Parent Guarantor | Issuer | All Other Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Assets | ||||||||||||||||||||
Investments: | ||||||||||||||||||||
Fixed maturity securities available-for-sale, at fair value | $ | — | $ | — | $ | 59,861 | $ | (200 | ) | $ | 59,661 | |||||||||
Equity securities, at fair value | — | — | 655 | — | 655 | |||||||||||||||
Commercial mortgage loans ($62 are restricted related to a securitization entity) | — | — | 6,749 | — | 6,749 | |||||||||||||||
Policy loans | — | — | 1,861 | — | 1,861 | |||||||||||||||
Other invested assets | — | 86 | 1,104 | (2 | ) | 1,188 | ||||||||||||||
Investments in subsidiaries | 12,570 | 11,462 | — | (24,032 | ) | — | ||||||||||||||
Total investments | 12,570 | 11,548 | 70,230 | (24,234 | ) | 70,114 | ||||||||||||||
Cash, cash equivalents and restricted cash | — | 429 | 1,748 | — | 2,177 | |||||||||||||||
Accrued investment income | — | — | 679 | (4 | ) | 675 | ||||||||||||||
Deferred acquisition costs | — | — | 3,263 | — | 3,263 | |||||||||||||||
Intangible assets and goodwill | — | — | 347 | — | 347 | |||||||||||||||
Reinsurance recoverable | — | — | 17,278 | — | 17,278 | |||||||||||||||
Other assets | 15 | 62 | 397 | — | 474 | |||||||||||||||
Intercompany notes receivable | — | 180 | 6 | (186 | ) | — | ||||||||||||||
Deferred tax assets | 14 | 907 | (185 | ) | — | 736 | ||||||||||||||
Separate account assets | — | — | 5,859 | — | 5,859 | |||||||||||||||
Total assets | $ | 12,599 | $ | 13,126 | $ | 99,622 | $ | (24,424 | ) | $ | 100,923 | |||||||||
Liabilities and equity | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||
Future policy benefits | $ | — | $ | — | $ | 37,940 | $ | — | $ | 37,940 | ||||||||||
Policyholder account balances | — | — | 22,968 | — | 22,968 | |||||||||||||||
Liability for policy and contract claims | — | — | 10,379 | — | 10,379 | |||||||||||||||
Unearned premiums | — | — | 3,546 | — | 3,546 | |||||||||||||||
Other liabilities | 27 | 97 | 1,565 | (7 | ) | 1,682 | ||||||||||||||
Intercompany notes payable | 122 | 207 | 57 | (386 | ) | — | ||||||||||||||
Non-recourse funding obligations | — | — | 311 | — | 311 | |||||||||||||||
Long-term borrowings | — | 3,567 | 458 | — | 4,025 | |||||||||||||||
Deferred tax liability | — | — | 24 | — | 24 | |||||||||||||||
Separate account liabilities | — | — | 5,859 | — | 5,859 | |||||||||||||||
Total liabilities | 149 | 3,871 | 83,107 | (393 | ) | 86,734 | ||||||||||||||
Equity: | ||||||||||||||||||||
Common stock | 1 | — | 3 | (3 | ) | 1 | ||||||||||||||
Additional paid-in capital | 11,987 | 9,095 | 18,425 | (27,520 | ) | 11,987 | ||||||||||||||
Accumulated other comprehensive income (loss) | 2,044 | 2,144 | 2,060 | (4,204 | ) | 2,044 | ||||||||||||||
Retained earnings | 1,118 | (1,984 | ) | (6,012 | ) | 7,996 | 1,118 | |||||||||||||
Treasury stock, at cost | (2,700 | ) | — | — | — | (2,700 | ) | |||||||||||||
Total Genworth Financial, Inc.’s stockholders’ equity | 12,450 | 9,255 | 14,476 | (23,731 | ) | 12,450 | ||||||||||||||
Noncontrolling interests | — | — | 2,039 | (300 | ) | 1,739 | ||||||||||||||
Total equity | 12,450 | 9,255 | 16,515 | (24,031 | ) | 14,189 | ||||||||||||||
Total liabilities and equity | $ | 12,599 | $ | 13,126 | $ | 99,622 | $ | (24,424 | ) | $ | 100,923 | |||||||||
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | — | $ | — | $ | 1,114 | $ | — | $ | 1,114 | ||||||||||
Net investment income | (1 | ) | 3 | 831 | (4 | ) | 829 | |||||||||||||
Net investment gains (losses) | — | (3 | ) | 77 | — | 74 | ||||||||||||||
Policy fees and other income | — | — | 188 | (1 | ) | 187 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total revenues | (1 | ) | — | 2,210 | (5 | ) | 2,204 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Benefits and expenses: | ||||||||||||||||||||
Benefits and other changes in policy reserves | — | — | 1,301 | — | 1,301 | |||||||||||||||
Interest credited | — | — | 147 | — | 147 | |||||||||||||||
Acquisition and operating expenses, net of deferrals | 4 | (2 | ) | 249 | — | 251 | ||||||||||||||
Amortization of deferred acquisition costs and intangibles | — | — | 91 | — | 91 | |||||||||||||||
Interest expense | 2 | 65 | 10 | (5 | ) | 72 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total benefits and expenses | 6 | 63 | 1,798 | (5 | ) | 1,862 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) before income taxes and equity in income of subsidiaries | (7 | ) | (63 | ) | 412 | — | 342 | |||||||||||||
Provision (benefit) for income taxes | 21 | (12 | ) | 103 | — | 112 | ||||||||||||||
Equity in income of subsidiaries | 202 | 120 | — | (322 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income | 174 | 69 | 309 | (322 | ) | 230 | ||||||||||||||
Less: net income attributable to noncontrolling interests | — | — | 56 | — | 56 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 174 | $ | 69 | $ | 253 | $ | (322 | ) | $ | 174 | |||||||||
|
|
|
|
|
|
|
|
|
|
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | — | $ | — | $ | 1,126 | $ | — | $ | 1,126 | ||||||||||
Net investment income | — | 1 | 854 | (3 | ) | 852 | ||||||||||||||
Net investment gains (losses) | — | (9 | ) | (36 | ) | — | (45 | ) | ||||||||||||
Policy fees and other income | — | 2 | 223 | (2 | ) | 223 | ||||||||||||||
Total revenues | — | (6 | ) | 2,167 | (5 | ) | 2,156 | |||||||||||||
Benefits and expenses: | ||||||||||||||||||||
Benefits and other changes in policy reserves | — | — | 1,270 | — | 1,270 | |||||||||||||||
Interest credited | — | — | 146 | — | 146 | |||||||||||||||
Acquisition and operating expenses, net of deferrals | 3 | — | 244 | — | 247 | |||||||||||||||
Amortization of deferred acquisition costs and intangibles | — | — | 95 | — | 95 | |||||||||||||||
Interest expense | 1 | 65 | 12 | (5 | ) | 73 | ||||||||||||||
Total benefits and expenses | 4 | 65 | 1,767 | (5 | ) | 1,831 | ||||||||||||||
Income (loss) before income taxes and equity in income of subsidiaries | (4 | ) | (71 | ) | 400 | — | 325 | |||||||||||||
Provision (benefit) for income taxes | 23 | (14 | ) | 98 | — | 107 | ||||||||||||||
Equity in income of subsidiaries | 195 | 93 | — | (288 | ) | — | ||||||||||||||
Net income | 168 | 36 | 302 | (288 | ) | 218 | ||||||||||||||
Less: net income attributable to noncontrolling interests | — | — | 50 | — | 50 | |||||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 168 | $ | 36 | $ | 252 | $ | (288 | ) | $ | 168 | |||||||||
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | — | $ | — | $ | 1,140 | $ | — | $ | 1,140 | ||||||||||
Net investment income | (1 | ) | 3 | 805 | (3 | ) | 804 | |||||||||||||
Net investment gains (losses) | — | 6 | (37 | ) | — | (31 | ) | |||||||||||||
Policy fees and other income | — | — | 203 | (1 | ) | 202 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total revenues | (1 | ) | 9 | 2,111 | (4 | ) | 2,115 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Benefits and expenses: | ||||||||||||||||||||
Benefits and other changes in policy reserves | — | — | 1,311 | — | 1,311 | |||||||||||||||
Interest credited | — | — | 156 | — | 156 | |||||||||||||||
Acquisition and operating expenses, net of deferrals | 7 | — | 233 | — | 240 | |||||||||||||||
Amortization of deferred acquisition costs and intangibles | — | — | 104 | — | 104 | |||||||||||||||
Interest expense | — | 68 | 12 | (4 | ) | 76 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total benefits and expenses | 7 | 68 | 1,816 | (4 | ) | 1,887 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) before income taxes and equity in income of subsidiaries | (8 | ) | (59 | ) | 295 | — | 228 | |||||||||||||
Provision (benefit) for income taxes | 6 | (17 | ) | 74 | — | 63 | ||||||||||||||
Equity in income of subsidiaries | 126 | 45 | — | (171 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income | 112 | 3 | 221 | (171 | ) | 165 | ||||||||||||||
Less: net income attributable to noncontrolling interests | — | — | 53 | — | 53 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 112 | $ | 3 | $ | 168 | $ | (171 | ) | $ | 112 | |||||||||
|
|
|
|
|
|
|
|
|
|
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | — | $ | — | $ | 1,136 | $ | — | $ | 1,136 | ||||||||||
Net investment income | — | 4 | 828 | (4 | ) | 828 | ||||||||||||||
Net investment gains (losses) | — | (8 | ) | (6 | ) | — | (14 | ) | ||||||||||||
Policy fees and other income | — | 1 | 209 | (1 | ) | 209 | ||||||||||||||
Total revenues | — | (3 | ) | 2,167 | (5 | ) | 2,159 | |||||||||||||
Benefits and expenses: | ||||||||||||||||||||
Benefits and other changes in policy reserves | — | — | 1,205 | — | 1,205 | |||||||||||||||
Interest credited | — | — | 152 | — | 152 | |||||||||||||||
Acquisition and operating expenses, net of deferrals | 7 | — | 246 | — | 253 | |||||||||||||||
Amortization of deferred acquisition costs and intangibles | — | — | 112 | — | 112 | |||||||||||||||
Interest expense | 1 | 70 | 11 | (5 | ) | 77 | ||||||||||||||
Total benefits and expenses | 8 | 70 | 1,726 | (5 | ) | 1,799 | ||||||||||||||
Income (loss) before income taxes and equity in income of subsidiaries | (8 | ) | (73 | ) | 441 | — | 360 | |||||||||||||
Provision (benefit) for income taxes | 32 | (14 | ) | 93 | — | 111 | ||||||||||||||
Equity in income of subsidiaries | 230 | 151 | — | (381 | ) | — | ||||||||||||||
Net income | 190 | 92 | 348 | (381 | ) | 249 | ||||||||||||||
Less: net income attributable to noncontrolling interests | — | — | 59 | — | 59 | |||||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 190 | $ | 92 | $ | 289 | $ | (381 | ) | $ | 190 | |||||||||
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | — | $ | — | $ | 2,240 | $ | — | $ | 2,240 | ||||||||||
Net investment income | (1 | ) | 4 | 1,685 | (7 | ) | 1,681 | |||||||||||||
Net investment gains (losses) | — | (12 | ) | 41 | — | 29 | ||||||||||||||
Policy fees and other income | — | 2 | 411 | (3 | ) | 410 | ||||||||||||||
Total revenues | (1 | ) | (6 | ) | 4,377 | (10 | ) | 4,360 | ||||||||||||
Benefits and expenses: | ||||||||||||||||||||
Benefits and other changes in policy reserves | — | — | 2,571 | — | 2,571 | |||||||||||||||
Interest credited | — | — | 293 | — | 293 | |||||||||||||||
Acquisition and operating expenses, net of deferrals | 7 | (2 | ) | 493 | — | 498 | ||||||||||||||
Amortization of deferred acquisition costs and intangibles | — | — | 186 | — | 186 | |||||||||||||||
Interest expense | 3 | 130 | 22 | (10 | ) | 145 | ||||||||||||||
Total benefits and expenses | 10 | 128 | 3,565 | (10 | ) | 3,693 | ||||||||||||||
Income (loss) before income taxes and equity in income of subsidiaries | (11 | ) | (134 | ) | 812 | — | 667 | |||||||||||||
Provision (benefit) for income taxes | 44 | (26 | ) | 201 | — | 219 | ||||||||||||||
Equity in income of subsidiaries | 397 | 213 | — | (610 | ) | — | ||||||||||||||
Net income | 342 | 105 | 611 | (610 | ) | 448 | ||||||||||||||
Less: net income attributable to noncontrolling interests | — | — | 106 | — | 106 | |||||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 342 | $ | 105 | $ | 505 | $ | (610 | ) | $ | 342 | |||||||||
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | — | $ | — | $ | 2,276 | $ | — | $ | 2,276 | ||||||||||
Net investment income | (1 | ) | 7 | 1,633 | (7 | ) | 1,632 | |||||||||||||
Net investment gains (losses) | — | (2 | ) | (43 | ) | — | (45 | ) | ||||||||||||
Policy fees and other income | — | 1 | 412 | (2 | ) | 411 | ||||||||||||||
Total revenues | (1 | ) | 6 | 4,278 | (9 | ) | 4,274 | |||||||||||||
Benefits and expenses: | ||||||||||||||||||||
Benefits and other changes in policy reserves | — | — | 2,516 | — | 2,516 | |||||||||||||||
Interest credited | — | — | 308 | — | 308 | |||||||||||||||
Acquisition and operating expenses, net of deferrals | 14 | — | 479 | — | 493 | |||||||||||||||
Amortization of deferred acquisition costs and intangibles | — | — | 216 | — | 216 | |||||||||||||||
Interest expense | 1 | 138 | 23 | (9 | ) | 153 | ||||||||||||||
Total benefits and expenses | 15 | 138 | 3,542 | (9 | ) | 3,686 | ||||||||||||||
Income (loss) before income taxes and equity in income of subsidiaries | (16 | ) | (132 | ) | 736 | — | 588 | |||||||||||||
Provision (benefit) for income taxes | 38 | (31 | ) | 167 | — | 174 | ||||||||||||||
Equity in income of subsidiaries | 356 | 196 | — | (552 | ) | — | ||||||||||||||
Net income | 302 | 95 | 569 | (552 | ) | 414 | ||||||||||||||
Less: net income attributable to noncontrolling interests | — | — | 112 | — | 112 | |||||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 302 | $ | 95 | $ | 457 | $ | (552 | ) | $ | 302 | |||||||||
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | �� | Issuer | Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Net income | $ | 174 | $ | 69 | $ | 309 | $ | (322 | ) | $ | 230 | |||||||||
Other comprehensive income, net of taxes: | ||||||||||||||||||||
Net unrealized gains (losses) on securities not other-than-temporarily impaired | 347 | 283 | 379 | (630 | ) | 379 | ||||||||||||||
Net unrealized gains (losses) on other-than-temporarily impaired securities | 1 | 1 | 1 | (2 | ) | 1 | ||||||||||||||
Derivatives qualifying as hedges | 69 | 69 | 77 | (146 | ) | 69 | ||||||||||||||
Foreign currency translation and other adjustments | 31 | 24 | 53 | (54 | ) | 54 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total other comprehensive income | 448 | 377 | 510 | (832 | ) | 503 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total comprehensive income | 622 | 446 | 819 | (1,154 | ) | 733 | ||||||||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | 111 | — | 111 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total comprehensive income available to Genworth Financial, Inc.’s common stockholders | $ | 622 | $ | 446 | $ | 708 | $ | (1,154 | ) | $ | 622 | |||||||||
|
|
|
|
|
|
|
|
|
|
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net income | $ | 168 | $ | 36 | $ | 302 | $ | (288 | ) | $ | 218 | |||||||||
Other comprehensive income (loss), net of taxes: | ||||||||||||||||||||
Net unrealized gains (losses) on securities not other-than-temporarily impaired | 362 | 311 | 376 | (673 | ) | 376 | ||||||||||||||
Derivatives qualifying as hedges | 133 | 133 | 148 | (281 | ) | 133 | ||||||||||||||
Foreign currency translation and other adjustments | 26 | 17 | 43 | (43 | ) | 43 | ||||||||||||||
Total other comprehensive income (loss) | 521 | 461 | 567 | (997 | ) | 552 | ||||||||||||||
Total comprehensive income | 689 | 497 | 869 | (1,285 | ) | 770 | ||||||||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | 81 | — | 81 | |||||||||||||||
Total comprehensive income available to Genworth Financial, Inc.’s common stockholders | $ | 689 | $ | 497 | $ | 788 | $ | (1,285 | ) | $ | 689 | |||||||||
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net income | $ | 112 | $ | 3 | $ | 221 | $ | (171 | ) | $ | 165 | |||||||||
Other comprehensive income (loss), net of taxes: | ||||||||||||||||||||
Net unrealized gains (losses) on securities not other-than-temporarily impaired | (332 | ) | (295 | ) | (341 | ) | 627 | (341 | ) | |||||||||||
Derivatives qualifying as hedges | (152 | ) | (153 | ) | (165 | ) | 318 | (152 | ) | |||||||||||
Foreign currency translation and other adjustments | (47 | ) | (36 | ) | (88 | ) | 84 | (87 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total other comprehensive income (loss) | (531 | ) | (484 | ) | (594 | ) | 1,029 | (580 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total comprehensive loss | (419 | ) | (481 | ) | (373 | ) | 858 | (415 | ) | |||||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | 4 | — | 4 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total comprehensive loss available to Genworth Financial, Inc.’s common stockholders | $ | (419 | ) | $ | (481 | ) | $ | (377 | ) | $ | 858 | $ | (419 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net income | $ | 190 | $ | 92 | $ | 348 | $ | (381 | ) | $ | 249 | |||||||||
Other comprehensive income (loss), net of taxes: | ||||||||||||||||||||
Net unrealized gains (losses) on securities not other-than-temporarily impaired | (179 | ) | (167 | ) | (185 | ) | 346 | (185 | ) | |||||||||||
Net unrealized gains (losses) on other-than-temporarily impaired securities | (2 | ) | (1 | ) | (2 | ) | 3 | (2 | ) | |||||||||||
Derivatives qualifying as hedges | (64 | ) | (64 | ) | (68 | ) | 132 | (64 | ) | |||||||||||
Foreign currency translation and other adjustments | (55 | ) | (46 | ) | (97 | ) | 100 | (98 | ) | |||||||||||
Total other comprehensive income (loss) | (300 | ) | (278 | ) | (352 | ) | 581 | (349 | ) | |||||||||||
Total comprehensive loss | (110 | ) | (186 | ) | (4 | ) | 200 | (100 | ) | |||||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | 10 | — | 10 | |||||||||||||||
Total comprehensive loss available to Genworth Financial, Inc.’s common stockholders | $ | (110 | ) | $ | (186 | ) | $ | (14 | ) | $ | 200 | $ | (110 | ) | ||||||
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net income | $ | 342 | $ | 105 | $ | 611 | $ | (610 | ) | $ | 448 | |||||||||
Other comprehensive income (loss), net of taxes: | ||||||||||||||||||||
Net unrealized gains (losses) on securities not other-than- temporarily impaired | 709 | 594 | 755 | (1,303 | ) | 755 | ||||||||||||||
Net unrealized gains (losses) on other-than-temporarily impaired securities | 1 | 1 | 1 | (2 | ) | 1 | ||||||||||||||
Derivatives qualifying as hedges | 202 | 202 | 225 | (427 | ) | 202 | ||||||||||||||
Foreign currency translation and other adjustments | 57 | 41 | 96 | (97 | ) | 97 | ||||||||||||||
Total other comprehensive income (loss) | 969 | 838 | 1,077 | (1,829 | ) | 1,055 | ||||||||||||||
Total comprehensive income | 1,311 | 943 | 1,688 | (2,439 | ) | 1,503 | ||||||||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | 192 | — | 192 | |||||||||||||||
Total comprehensive income available to Genworth Financial, Inc.’s common stockholders | $ | 1,311 | $ | 943 | $ | 1,496 | $ | (2,439 | ) | $ | 1,311 | |||||||||
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net income | $ | 302 | $ | 95 | $ | 569 | $ | (552 | ) | $ | 414 | |||||||||
Other comprehensive income (loss), net of taxes: | ||||||||||||||||||||
Net unrealized gains (losses) on securities not other-than-temporarily impaired | (511 | ) | (462 | ) | (526 | ) | 973 | (526 | ) | |||||||||||
Net unrealized gains (losses) on other-than-temporarily impaired securities | (2 | ) | (1 | ) | (2 | ) | 3 | (2 | ) | |||||||||||
Derivatives qualifying as hedges | (216 | ) | (217 | ) | (233 | ) | 450 | (216 | ) | |||||||||||
Foreign currency translation and other adjustments | (102 | ) | (82 | ) | (185 | ) | 184 | (185 | ) | |||||||||||
Total other comprehensive income (loss) | (831 | ) | (762 | ) | (946 | ) | 1,610 | (929 | ) | |||||||||||
Total comprehensive loss | (529 | ) | (667 | ) | (377 | ) | 1,058 | (515 | ) | |||||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | 14 | — | 14 | |||||||||||||||
Total comprehensive loss available to Genworth Financial, Inc.’s common stockholders | $ | (529 | ) | $ | (667 | ) | $ | (391 | ) | $ | 1,058 | $ | (529 | ) | ||||||
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows from (used by) operating activities: | ||||||||||||||||||||
Net income | $ | 174 | $ | 69 | $ | 309 | $ | (322 | ) | $ | 230 | |||||||||
Adjustments to reconcile net income to net cash from (used by) operating activities: | ||||||||||||||||||||
Equity in income from subsidiaries | (202 | ) | (120 | ) | — | 322 | — | |||||||||||||
Dividends from subsidiaries | — | 47 | (47 | ) | — | — | ||||||||||||||
Amortization of fixed maturity securities discounts and premiums | — | 2 | (18 | ) | — | (16 | ) | |||||||||||||
Net investment (gains) losses | — | 3 | (77 | ) | — | (74 | ) | |||||||||||||
Charges assessed to policyholders | — | — | (165 | ) | — | (165 | ) | |||||||||||||
Acquisition costs deferred | — | — | (17 | ) | — | (17 | ) | |||||||||||||
Amortization of deferred acquisition costs and intangibles | — | — | 91 | — | 91 | |||||||||||||||
Deferred income taxes | 26 | (3 | ) | 52 | — | 75 | ||||||||||||||
Derivative instruments and limited partnerships | — | (10 | ) | (20 | ) | — | (30 | ) | ||||||||||||
Stock-based compensation expense | 6 | — | 1 | — | 7 | |||||||||||||||
Change in certain assets and liabilities: | ||||||||||||||||||||
Accrued investment income and other assets | 19 | — | (281 | ) | 4 | (258 | ) | |||||||||||||
Insurance reserves | — | — | 301 | — | 301 | |||||||||||||||
Current tax liabilities | 15 | (9 | ) | 2 | — | 8 | ||||||||||||||
Other liabilities, policy and contract claims and other policy-related balances | (18 | ) | (18 | ) | 21 | (3 | ) | (18 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net cash from (used by) operating activities | 20 | (39 | ) | 152 | 1 | 134 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash flows from (used by) investing activities: | ||||||||||||||||||||
Proceeds from maturities and repayments of investments: | ||||||||||||||||||||
Fixed maturity securities | — | — | 902 | — | 902 | |||||||||||||||
Commercial mortgage loans | — | — | 127 | — | 127 | |||||||||||||||
Restricted commercial mortgage loans related to a securitization entity | — | — | 3 | — | 3 | |||||||||||||||
Proceeds from sales of investments: | ||||||||||||||||||||
Fixed maturity and equity securities | — | — | 1,714 | — | 1,714 | |||||||||||||||
Purchases and originations of investments: | ||||||||||||||||||||
Fixed maturity and equity securities | — | — | (2,128 | ) | — | (2,128 | ) | |||||||||||||
Commercial mortgage loans | — | — | (370 | ) | — | (370 | ) | |||||||||||||
Other invested assets, net | — | 29 | (11 | ) | (1 | ) | 17 | |||||||||||||
Policy loans, net | — | — | 12 | — | 12 | |||||||||||||||
Intercompany notes receivable | — | (51 | ) | 6 | 45 | — | ||||||||||||||
Capital contributions to subsidiaries | (3 | ) | — | 3 | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net cash from (used by) investing activities | (3 | ) | (22 | ) | 258 | 44 | 277 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash flows used by financing activities: | ||||||||||||||||||||
Deposits to universal life and investment contracts | — | — | 198 | — | 198 | |||||||||||||||
Withdrawals from universal life and investment contracts | — | — | (581 | ) | — | (581 | ) | |||||||||||||
Repurchase of subsidiary shares | — | — | (12 | ) | — | (12 | ) | |||||||||||||
Dividends paid to noncontrolling interests | — | — | (28 | ) | — | (28 | ) | |||||||||||||
Intercompany notes payable | (16 | ) | (7 | ) | 68 | (45 | ) | — | ||||||||||||
Other, net | (1 | ) | — | 49 | — | 48 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net cash used by financing activities | (17 | ) | (7 | ) | (306 | ) | (45 | ) | (375 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | — | — | 8 | — | 8 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net change in cash, cash equivalents and restricted cash | — | (68 | ) | 112 | — | 44 | ||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | — | 429 | 1,748 | — | 2,177 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | — | $ | 361 | $ | 1,860 | $ | — | $ | 2,221 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows from (used by) operating activities: | ||||||||||||||||||||
Net income | $ | 342 | $ | 105 | $ | 611 | $ | (610 | ) | $ | 448 | |||||||||
Adjustments to reconcile net income to net cash from (used by) operating activities: | ||||||||||||||||||||
Equity in income from subsidiaries | (397 | ) | (213 | ) | — | 610 | — | |||||||||||||
Dividends from subsidiaries | — | 105 | (105 | ) | — | — | ||||||||||||||
Amortization of fixed maturity securities discounts and premiums | — | 3 | (57 | ) | — | (54 | ) | |||||||||||||
Net investment (gains) losses | — | 12 | (41 | ) | — | (29 | ) | |||||||||||||
Charges assessed to policyholders | — | — | (364 | ) | — | (364 | ) | |||||||||||||
Acquisition costs deferred | — | — | (35 | ) | — | (35 | ) | |||||||||||||
Amortization of deferred acquisition costs and intangibles | — | — | 186 | — | 186 | |||||||||||||||
Deferred income taxes | 49 | 74 | 11 | — | 134 | |||||||||||||||
Derivative instruments and limited partnerships | — | (30 | ) | 52 | — | 22 | ||||||||||||||
Stock-based compensation expense | 10 | — | 2 | — | 12 | |||||||||||||||
Change in certain assets and liabilities: | ||||||||||||||||||||
Accrued investment income and other assets | (1 | ) | — | (290 | ) | 1 | (290 | ) | ||||||||||||
Insurance reserves | — | — | 609 | — | 609 | |||||||||||||||
Current tax liabilities | (4 | ) | (40 | ) | 71 | — | 27 | |||||||||||||
Other liabilities, policy and contract claims and other policy-related balances | (18 | ) | (3 | ) | 156 | (6 | ) | 129 | ||||||||||||
Net cash from (used by) operating activities | (19 | ) | 13 | 806 | (5 | ) | 795 | |||||||||||||
Cash flows used by investing activities: | ||||||||||||||||||||
Proceeds from maturities and repayments of investments: | ||||||||||||||||||||
Fixed maturity securities | — | — | 1,929 | — | 1,929 | |||||||||||||||
Commercial mortgage loans | — | — | 285 | — | 285 | |||||||||||||||
Restricted commercial mortgage loans related to a securitization entity | — | — | 6 | — | 6 | |||||||||||||||
Proceeds from sales of investments: | ||||||||||||||||||||
Fixed maturity and equity securities | — | — | 2,859 | — | 2,859 | |||||||||||||||
Purchases and originations of investments: | ||||||||||||||||||||
Fixed maturity and equity securities | — | — | (4,681 | ) | — | (4,681 | ) | |||||||||||||
Commercial mortgage loans | — | — | (561 | ) | — | (561 | ) | |||||||||||||
Other invested assets, net | — | 29 | (261 | ) | 5 | (227 | ) | |||||||||||||
Policy loans, net | — | — | 39 | — | 39 | |||||||||||||||
Intercompany notes receivable | — | (93 | ) | 6 | 87 | — | ||||||||||||||
Capital contributions to subsidiaries | (3 | ) | — | 3 | — | — | ||||||||||||||
Net cash used by investing activities | (3 | ) | (64 | ) | (376 | ) | 92 | (351 | ) | |||||||||||
Cash flows from (used by) financing activities: | ||||||||||||||||||||
Deposits to universal life and investment contracts | — | — | 444 | — | 444 | |||||||||||||||
Withdrawals from universal life and investment contracts | — | — | (1,096 | ) | — | (1,096 | ) | |||||||||||||
Proceeds from the issuance of long-term debt | — | — | 77 | — | 77 | |||||||||||||||
Repayment and repurchase of long-term debt | — | (1 | ) | (77 | ) | — | (78 | ) | ||||||||||||
Repurchase of subsidiary shares | — | — | (44 | ) | — | (44 | ) | |||||||||||||
Dividends paid to noncontrolling interests | — | — | (53 | ) | — | (53 | ) | |||||||||||||
Intercompany notes payable | 29 | (7 | ) | 65 | (87 | ) | — | |||||||||||||
Other, net | (7 | ) | (12 | ) | 74 | — | 55 | |||||||||||||
Net cash from (used by) financing activities | 22 | (20 | ) | (610 | ) | (87 | ) | (695 | ) | |||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | — | — | 12 | — | 12 | |||||||||||||||
Net change in cash, cash equivalents and restricted cash | — | (71 | ) | (168 | ) | — | (239 | ) | ||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | — | 429 | 1,748 | — | 2,177 | |||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | — | $ | 358 | $ | 1,580 | $ | — | $ | 1,938 | ||||||||||
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows from (used by) operating activities: | ||||||||||||||||||||
Net income | $ | 112 | $ | 3 | $ | 221 | $ | (171 | ) | $ | 165 | |||||||||
Adjustments to reconcile net income to net cash from (used by) operating activities: | ||||||||||||||||||||
Equity in income from subsidiaries | (126 | ) | (45 | ) | — | 171 | — | |||||||||||||
Dividends from subsidiaries | — | 63 | (63 | ) | — | — | ||||||||||||||
Amortization of fixed maturity securities discounts and premiums | — | 1 | (26 | ) | — | (25 | ) | |||||||||||||
Net investment (gains) losses | — | (6 | ) | 37 | — | 31 | ||||||||||||||
Charges assessed to policyholders | — | — | (178 | ) | — | (178 | ) | |||||||||||||
Acquisition costs deferred | — | — | (18 | ) | — | (18 | ) | |||||||||||||
Amortization of deferred acquisition costs and intangibles | — | — | 104 | — | 104 | |||||||||||||||
Deferred income taxes | 9 | (47 | ) | 64 | — | 26 | ||||||||||||||
Derivative instruments and limited partnerships | — | 17 | (169 | ) | — | (152 | ) | |||||||||||||
Stock-based compensation expense | 8 | — | (1 | ) | — | 7 | ||||||||||||||
Change in certain assets and liabilities: | ||||||||||||||||||||
Accrued investment income and other assets | 5 | 16 | (63 | ) | (3 | ) | (45 | ) | ||||||||||||
Insurance reserves | — | — | 377 | — | 377 | |||||||||||||||
Current tax liabilities | (23 | ) | 26 | (42 | ) | — | (39 | ) | ||||||||||||
Other liabilities, policy and contract claims and other policy-related balances | (13 | ) | (19 | ) | (117 | ) | 5 | (144 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net cash from (used by) operating activities | (28 | ) | 9 | 126 | 2 | 109 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash flows used by investing activities: | ||||||||||||||||||||
Proceeds from maturities and repayments of investments: | ||||||||||||||||||||
Fixed maturity securities | — | — | 934 | — | 934 | |||||||||||||||
Commercial mortgage loans | — | — | 205 | — | 205 | |||||||||||||||
Restricted commercial mortgage loans related to a securitization entity | — | — | 8 | — | 8 | |||||||||||||||
Proceeds from sales of investments: | ||||||||||||||||||||
Fixed maturity and equity securities | — | — | 792 | — | 792 | |||||||||||||||
Purchases and originations of investments: | ||||||||||||||||||||
Fixed maturity and equity securities | — | — | (2,013 | ) | — | (2,013 | ) | |||||||||||||
Commercial mortgage loans | — | — | (199 | ) | — | (199 | ) | |||||||||||||
Other invested assets, net | — | — | 106 | (2 | ) | 104 | ||||||||||||||
Policy loans, net | — | — | 2 | — | 2 | |||||||||||||||
Intercompany notes receivable | — | (56 | ) | 59 | (3 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net cash used by investing activities | — | (56 | ) | (106 | ) | (5 | ) | (167 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash flows from (used by) financing activities: | ||||||||||||||||||||
Deposits to universal life and investment contracts | — | — | 255 | — | 255 | |||||||||||||||
Withdrawals from universal life and investment contracts | — | — | (591 | ) | — | (591 | ) | |||||||||||||
Proceeds from the issuance of long-term debt | — | 441 | — | — | 441 | |||||||||||||||
Repayment of borrowings related to a securitization entity | — | — | (8 | ) | — | (8 | ) | |||||||||||||
Repurchase of subsidiary shares | — | — | (36 | ) | — | (36 | ) | |||||||||||||
Dividends paid to noncontrolling interests | — | — | (36 | ) | — | (36 | ) | |||||||||||||
Intercompany notes payable | 31 | (59 | ) | 25 | 3 | — | ||||||||||||||
Other, net | (3 | ) | — | 25 | — | 22 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net cash from (used by) financing activities | 28 | 382 | (366 | ) | 3 | 47 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | — | — | (21 | ) | — | (21 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net change in cash, cash equivalents and restricted cash | — | 335 | (367 | ) | — | (32 | ) | |||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | — | 795 | 2,080 | — | 2,875 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | — | $ | 1,130 | $ | 1,713 | $ | — | $ | 2,843 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Parent | All Other | |||||||||||||||||||
(Amounts in millions) | Guarantor | Issuer | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows from (used by) operating activities: | ||||||||||||||||||||
Net income | $ | 302 | $ | 95 | $ | 569 | $ | (552 | ) | $ | 414 | |||||||||
Adjustments to reconcile net income to net cash from (used by) operating activities: | ||||||||||||||||||||
Equity in income from subsidiaries | (356 | ) | (196 | ) | — | 552 | — | |||||||||||||
Dividends from subsidiaries | 50 | 91 | (141 | ) | — | — | ||||||||||||||
Amortization of fixed maturity securities discounts and premiums | — | 3 | (65 | ) | — | (62 | ) | |||||||||||||
Net investment losses | — | 2 | 43 | — | 45 | |||||||||||||||
Charges assessed to policyholders | — | — | (359 | ) | — | (359 | ) | |||||||||||||
Acquisition costs deferred | — | — | (40 | ) | — | (40 | ) | |||||||||||||
Amortization of deferred acquisition costs and intangibles | — | — | 216 | — | 216 | |||||||||||||||
Deferred income taxes | 42 | (117 | ) | 158 | — | 83 | ||||||||||||||
Derivative instruments and limited partnerships | — | 22 | (217 | ) | — | (195 | ) | |||||||||||||
Stock-based compensation expense | 15 | — | 1 | — | 16 | |||||||||||||||
Change in certain assets and liabilities: | ||||||||||||||||||||
Accrued investment income and other assets | (1 | ) | 59 | (147 | ) | — | (89 | ) | ||||||||||||
Insurance reserves | — | — | 691 | — | 691 | |||||||||||||||
Current tax liabilities | (27 | ) | 87 | (97 | ) | — | (37 | ) | ||||||||||||
Other liabilities, policy and contract claims and other policy-related balances | (15 | ) | (50 | ) | (49 | ) | (8 | ) | (122 | ) | ||||||||||
Net cash from (used by) operating activities | 10 | (4 | ) | 563 | (8 | ) | 561 | |||||||||||||
Cash flows used by investing activities: | ||||||||||||||||||||
Proceeds from maturities and repayments of investments: | ||||||||||||||||||||
Fixed maturity securities | — | — | 1,979 | — | 1,979 | |||||||||||||||
Commercial mortgage loans | — | — | 350 | — | 350 | |||||||||||||||
Restricted commercial mortgage loans related to a securitization entity | — | — | 16 | — | 16 | |||||||||||||||
Proceeds from sales of investments: | ||||||||||||||||||||
Fixed maturity and equity securities | — | — | 1,920 | — | 1,920 | |||||||||||||||
Purchases and originations of investments: | ||||||||||||||||||||
Fixed maturity and equity securities | — | — | (4,082 | ) | — | (4,082 | ) | |||||||||||||
Commercial mortgage loans | — | — | (489 | ) | — | (489 | ) | |||||||||||||
Other invested assets, net | — | — | 85 | 8 | 93 | |||||||||||||||
Policy loans, net | — | — | 15 | — | 15 | |||||||||||||||
Intercompany notes receivable | — | (10 | ) | 58 | (48 | ) | — | |||||||||||||
Capital contributions to subsidiaries | (1 | ) | — | 1 | — | — | ||||||||||||||
Net cash used by investing activities | (1 | ) | (10 | ) | (147 | ) | (40 | ) | (198 | ) | ||||||||||
Cash flows used by financing activities: | ||||||||||||||||||||
Deposits to universal life and investment contracts | — | — | 503 | — | 503 | |||||||||||||||
Withdrawals from universal life and investment contracts | — | — | (1,177 | ) | — | (1,177 | ) | |||||||||||||
Proceeds from the issuance of long-term debt | — | 441 | — | — | 441 | |||||||||||||||
Repayment and repurchase of long-term debt | — | (597 | ) | — | — | (597 | ) | |||||||||||||
Repayment of borrowings related to a securitization entity | — | — | (12 | ) | — | (12 | ) | |||||||||||||
Repurchase of subsidiary shares | — | — | (49 | ) | — | (49 | ) | |||||||||||||
Dividends paid to noncontrolling interests | — | — | (50 | ) | — | (50 | ) | |||||||||||||
Intercompany notes payable | (7 | ) | (59 | ) | 18 | 48 | — | |||||||||||||
Other, net | (2 | ) | (19 | ) | 19 | — | (2 | ) | ||||||||||||
Net cash used by financing activities | (9 | ) | (234 | ) | (748 | ) | 48 | (943 | ) | |||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | — | — | (52 | ) | — | (52 | ) | |||||||||||||
Net change in cash, cash equivalents and restricted cash | — | (248 | ) | (384 | ) | — | (632 | ) | ||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | — | 795 | 2,080 | — | 2,875 | |||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | — | $ | 547 | $ | 1,696 | $ | — | $ | 2,243 | ||||||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
transactiontransactions with China Oceanwide Holdings Group Co., Ltd. (together with its affiliates, “China Oceanwide”) and, our discussions with regulators in connection therewith.therewith and any capital contribution resulting therefrom, as well as any statements regarding the potential disposition of our interest in Genworth MI Canada Inc. (“Genworth Canada”). Forward-looking statements are based on management’s current expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially from those in the forward-looking statements due to global political, economic, business, competitive, market, regulatory and other factors and risks, including, but not limited to, the following:
|
|
|
|
|
|
|
|
|
|
|
|
otherwise, except as may be required under applicable securities laws.
The closing of the Merger remains subject to other conditions and approvals, including the required regulatory approval in Canada. Despite multiple inquiries regarding status, the parties have not yet received any substantive guidance or timeframe for the Canadian review. In addition, China Oceanwide will need to receive clearance in China for currency conversion and the transfer of funds.
extension processes and for the parties to explore disposition options for Genworth Canada. If Genworth Financial identifies a suitable sale transaction for Genworth Canada, China Oceanwide will have the right to accept or reject the terms of the Genworth Canada sale transaction. If China Oceanwide accepts the terms, the parties will seek to close the sale of Genworth Canada as promptly as possible, and the Merger concurrently or promptly thereafter. However, in the event China Oceanwide rejects the Genworth Canada sale transaction, the parties will each have the right to
Increased premiums and associated benefit reductions on our legacy long-term care insurance policies are critical to the business. As previously disclosed, we are no longer seeking an unstacking of GLAIC as part of our long-term care insurance strategy. In addition, reducing debt will remain a high priority. We believe that increased financial support and our strengthened financial foundation resulting from the China Oceanwide transaction would provide us with more options to manage our debt maturities and reduce overall indebtedness, which in turn is intended to improve our credit and ratings profile over time. Finally, we also believe that the completion
|
This increase was partially offset by higher lapses primarily associated with our large 20-year term life insurance block issued in 1999 entering its post-level premium period and the continued runoff of our term life insurance products in the current year. Adjusted operating income available to Genworth Financial, Inc.’s common stockholders decreased $23 million in our fixed annuities business predominantly attributable to $17 million of unfavorable charges in connection with loss recognition testing in our fixed immediate annuity products and lower investment income, partially offset by lower interest credited in the current year . |
|
|
Canada Mortgage Insurance
|
|
|
|
|
There
reversed course from their upward trend and declined during the first quarterhalf of 2019. The U.S. Federal Reserve did not increase rates during the firstsecond quarter of 2019 and signaled that they might not raise rates again untilare weighing a potential interest rate decrease in 2019 and/or 2020. Prior to the firstsecond quarter of 2019, the U.S. Federal Reserve projected twono additional rate increases in 2019 and one increase in 2020. The modification in the forecast relates to thereflects economic concerns relating to ongoing global trade tensions, declining commodity prices, slower global growth and a negative inflation outlook. Given this forecast, we expect interest rates will remain low as compared to historical norms. Likewise, we remain uncertain at the pace in which future interest rate increases or decreases will occur and its ultimate impact on our businesses. Near term inflation remains relatively stable but long-term forecasts indicate signs of volatility, which has resulted in a negative outlook. The U.S. Treasury yield curve steepened in the firstsecond quarter of 2019 with short-term interest rates decreasing at a higher rate than long-term interest rate decreases. Portions of the U.S. Treasury yield curve inverted in late MarchMay 2019 and continued through the end of the second quarter of 2019, as the yield on the U.S.10-year Treasury note dipped below the yield on the3-month Treasury bill, though subsequent to quarter end this inversion normalized.bill. Credit markets generally recovered fromalso experienced a brief period of volatility in May 2019, with spread widening seendue to escalating global trade tensions, but subsequently recovered in the fourth quarter of 2018, with spreads tightening in the first quarter ofJune 2019 driven mostly by healthy consumer demand, corporate profits,renewed optimism on trade, expectations on accommodative central bank policies and rebounding investor demand for bonds and lower government bond yields.bonds. For a discussion of the risks associated with interest rates, see “Item 1A Risk Factors—Interest rates and changes in rates could materially adversely affect our business and profitability” in our 2018 Annual Report on Form10-K.
March 31,June 30, 2019 Compared to Three Months Ended March 31,June 30, 2018
Three months ended March 31, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 1,114 | $ | 1,140 | $ | (26 | ) | (2 | )% | |||||||
Net investment income | 829 | 804 | 25 | 3 | % | |||||||||||
Net investment gains (losses) | 74 | (31 | ) | 105 | NM | (1) | ||||||||||
Policy fees and other income | 187 | 202 | (15 | ) | (7 | )% | ||||||||||
|
|
|
|
|
| |||||||||||
Total revenues | 2,204 | 2,115 | 89 | 4 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 1,301 | 1,311 | (10 | ) | (1 | )% | ||||||||||
Interest credited | 147 | 156 | (9 | ) | (6 | )% | ||||||||||
Acquisition and operating expenses, net of deferrals | 251 | 240 | 11 | 5 | % | |||||||||||
Amortization of deferred acquisition costs and intangibles | 91 | 104 | (13 | ) | (13 | )% | ||||||||||
Interest expense | 72 | 76 | (4 | ) | (5 | )% | ||||||||||
|
|
|
|
|
| |||||||||||
Total benefits and expenses | 1,862 | 1,887 | (25 | ) | (1 | )% | ||||||||||
|
|
|
|
|
| |||||||||||
Income before income taxes | 342 | 228 | 114 | 50 | % | |||||||||||
Provision for income taxes | 112 | 63 | 49 | 78 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Net income | 230 | 165 | 65 | 39 | % | |||||||||||
Less: net income attributable to noncontrolling interests | 56 | 53 | 3 | 6 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 174 | $ | 112 | $ | 62 | 55 | % | ||||||||
|
|
|
|
|
|
Three months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 1,126 | $ | 1,136 | $ | (10 | ) | (1 | )% | |||||||
Net investment income | 852 | 828 | 24 | 3 | % | |||||||||||
Net investment gains (losses) | (45 | ) | (14 | ) | (31 | ) | NM | (1) | ||||||||
Policy fees and other income | 223 | 209 | 14 | 7 | % | |||||||||||
Total revenues | 2,156 | 2,159 | (3 | ) | — | % | ||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 1,270 | 1,205 | 65 | 5 | % | |||||||||||
Interest credited | 146 | 152 | (6 | ) | (4 | )% | ||||||||||
Acquisition and operating expenses, net of deferrals | 247 | 253 | (6 | ) | (2 | )% | ||||||||||
Amortization of deferred acquisition costs and intangibles | 95 | 112 | (17 | ) | (15 | )% | ||||||||||
Interest expense | 73 | 77 | (4 | ) | (5 | )% | ||||||||||
Total benefits and expenses | 1,831 | 1,799 | 32 | 2 | % | |||||||||||
Income before income taxes | 325 | 360 | (35 | ) | (10 | )% | ||||||||||
Provision for income taxes | 107 | 111 | (4 | ) | (4 | )% | ||||||||||
Net income | 218 | 249 | (31 | ) | (12 | )% | ||||||||||
Less: net income attributable to noncontrolling interests | 50 | 59 | (9 | ) | (15 | )% | ||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 168 | $ | 190 | $ | (22 | ) | (12 | )% | |||||||
(1) | We define “NM” as not meaningful for increases or decreases greater than 200%. |
Our Canada Mortgage Insurance segment decreased $13 million primarily from $7 million of changes attributable to foreign exchange rates in the current year, refinements in premium recognition factors in the prior year that did not recur and from the seasoning of our smaller, more recentin-force books of business.
Our U.S. Mortgage Insurance segment increased $15 million mainly attributable to higher insurancein-force in the current year.
Our Runoff segment decreased $7 million primarily attributable to lower guaranteed minimum death benefit (“GMDB”) reserves in our variable annuity products due to favorable equity market performance in the current year.
Our U.S. Life Insurance segment decreased $2increased $48 million. Our long-term care insurance business decreased $1increased $22 million principally related to the aging of the in-force block (including higher frequency of new claims), higher severity of new claims, lower claim terminations and an increase in incremental reserves of $49 million recorded in connection with an accrual for profits followed by losses in the current year. These increases were partially offset by a $61 million higher favorable impact of $100 million from reduced benefits in the current year related toin-force rate actions approved and implemented and from
favorable development on prior year incurred but not reported claims. The current year also included favorable utilization of available benefits. Our life insurance business increased $19 million primarily attributable to a favorable model refinement in the prior year that did not recur and higher mortality in the current year compared to the prior year. Our fixed annuities business increased $7 million largely attributable to $5 million of higher reserves in connection with loss recognition testing in our fixed immediate annuity products primarily as a result of a decrease in interest rates in the current year. The increase was also due to lower mortality in the current year compared to the prior year. These increases were partially offset by lower interest credited in the current year due to block runoff. |
Our Canada Mortgage Insurance segment increased $1 million principally from a higher average reserve per delinquency, higher new delinquencies, net of cures, primarily attributable to increased losses in Alberta and from modestly lower favorable development in our loss reserves, mostly offset by changes in foreign exchange rates in the current year.
Our U.S. Mortgage Insurance segment increased $7 The current year included a $2 million primarily attributable to higher operating costs driven mostly by increased salesearly redemption fee in the current year.Our U.S. Life Insurance segment increased $7 million mostly related to $4 million of restructuring costs, which included the suspension of sales of our individual long-term care insurance products through sales intermediaries effective March 7, 2019. The remaining increase was mostly attributable to our long-term care insurance business largely from higher commissions and premium taxes associated with ourin-force rate action plan.Our Canada Mortgage Insurance segment increased $3related to the repayment of CAD$100 million mainly driven by higher stock-based compensation expense and higher operating costsof the 5.68% senior notes originally scheduled to mature in the current year.Corporate and Other activities decreased $4 million mainly driven by lower operating costs and a decrease in employee related expenses in the current year.$5$11 million primarily related to our life insurance business principally from our updated assumptions implementedan unfavorable model refinement in the fourth quarter of 2018, prior year that did not recur, an increase in DAC amortization from higher lapses primarily associated with theour largeblocksblock issued in 1999 entering theits post-level premium periods. Theperiod and higher reinsurance rates in the current year also included a $10 million unfavorable model correction in our universal life insurance products.year.
2018.The decrease was attributable to Corporate and Other activities which decreased $4$5 million largely driven by the redemption of $597 million of Genworth Holding’s senior notes in May 2018, partially offset by higher interest expense attributable to the term loan that Genworth Holdings closed in March 2018 and from our junior subordinated notes which had a higher floating rate of interest in the current year.32.7%32.9% for the three months ended March 31,June 30, 2019 from 27.6%30.8% for the three months ended March 31,June 30, 2018. The increase was principally driven by a tax
expense in the current year related to the GILTI provision of the TCJA. GILTI has an unfavorable impact on our current year effective tax rate due to the utilization of net operating loss carryforwards and projected taxable losses in the U.S. life insurance businesses without any offsetting foreign tax credit carryforwards. The unfavorable impact on the effective rate is expected to continue for the remainder of 2019 and into 2020.
2020 but is subject to change depending on variations in business results and a potential disposition of Genworth Canada.
Six months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 2,240 | $ | 2,276 | $ | (36 | ) | (2 | )% | |||||||
Net investment income | 1,681 | 1,632 | 49 | 3 | % | |||||||||||
Net investment gains (losses) | 29 | (45 | ) | 74 | 164 | % | ||||||||||
Policy fees and other income | 410 | 411 | (1 | ) | — | % | ||||||||||
Total revenues | 4,360 | 4,274 | 86 | 2 | % | |||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 2,571 | 2,516 | 55 | 2 | % | |||||||||||
Interest credited | 293 | 308 | (15 | ) | (5 | )% | ||||||||||
Acquisition and operating expenses, net of deferrals | 498 | 493 | 5 | 1 | % | |||||||||||
Amortization of deferred acquisition costs and intangibles | 186 | 216 | (30 | ) | (14 | )% | ||||||||||
Interest expense | 145 | 153 | (8 | ) | (5 | )% | ||||||||||
Total benefits and expenses | 3,693 | 3,686 | 7 | — | % | |||||||||||
Income before income taxes | 667 | 588 | 79 | 13 | % | |||||||||||
Provision for income taxes | 219 | 174 | 45 | 26 | % | |||||||||||
Net income | 448 | 414 | 34 | 8 | % | |||||||||||
Less: net income attributable to noncontrolling interests | 106 | 112 | (6 | ) | (5 | )% | ||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 342 | $ | 302 | $ | 40 | 13 | % | ||||||||
year compared to a $28 million favorable reserve adjustment in the prior year. These adjustments were mostly associated with lower expected claim rates. The increase was also attributable to lower net benefits from cures and aging of existing delinquencies, partially offset by a lower average reserve on new delinquencies in the current year. |
Three months ended March 31, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Net income | $ | 230 | $ | 165 | ||||
Less: net income attributable to noncontrolling interests | 56 | 53 | ||||||
|
|
|
| |||||
Net income available to Genworth Financial, Inc.’s common stockholders | 174 | 112 | ||||||
Adjustments to net income available to Genworth Financial, Inc.’s common stockholders: | ||||||||
Net investment (gains) losses, net(1) | (71 | ) | 17 | |||||
Expenses related to restructuring | 4 | — | ||||||
Taxes on adjustments | 14 | (4 | ) | |||||
|
|
|
| |||||
Adjusted operating income available to Genworth Financial, Inc.’s common stockholders | $ | 121 | $ | 125 | ||||
|
|
|
|
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income | $ | 218 | $ | 249 | $ | 448 | $ | 414 | ||||||||
Less: net income attributable to noncontrolling interests | 50 | 59 | 106 | 112 | ||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | 168 | 190 | 342 | 302 | ||||||||||||
Adjustments to net income available to Genworth Financial, Inc.’scommon stockholders: | ||||||||||||||||
Net investment (gains) losses, net (1) | 43 | 12 | (28 | ) | 29 | |||||||||||
(Gains) losses on early extinguishment of debt, net (2) | 1 | — | 1 | — | ||||||||||||
Expenses related to restructuring | — | — | 4 | — | ||||||||||||
Taxes on adjustments | (8 | ) | (2 | ) | 6 | (6 | ) | |||||||||
Adjusted operating income available to Genworth Financial, Inc.’scommon stockholders | $ | 204 | $ | 200 | $ | 325 | $ | 325 | ||||||||
(1) | For the three months ended million, respectively. For the six months ended June 30, 2019 and 2018, net investment (gains) losses were adjusted for DAC and other intangible amortization and certain benefit reserves of $(5) million and $(4) million, respectively, and adjusted for net investment gains (losses) attributable to noncontrolling interests of $6 million and $(12) million, respectively. |
We
(2) | For the three and six months ended June 30, 2019, (gains) losses on the early extinguishment of debt were adjusted for the portion attributable to noncontrolling interests of $1 million. |
Three months ended March 31, | ||||||||
(Amounts in millions, except per share amounts) | 2019 | 2018 | ||||||
Net income available to Genworth Financial, Inc.’s common stockholdersper share: | ||||||||
Basic | $ | 0.35 | $ | 0.22 | ||||
|
|
|
| |||||
Diluted | $ | 0.34 | $ | 0.22 | ||||
|
|
|
| |||||
Adjusted operating income available to Genworth Financial, Inc.’s common stockholders per share: | ||||||||
Basic | $ | 0.24 | $ | 0.25 | ||||
|
|
|
| |||||
Diluted | $ | 0.24 | $ | 0.25 | ||||
|
|
|
| |||||
Weighted-average common shares outstanding: | ||||||||
Basic | 501.2 | 499.6 | ||||||
|
|
|
| |||||
Diluted | 508.6 | 502.7 | ||||||
|
|
|
|
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Amounts in millions, except per share amounts) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income available to Genworth Financial, Inc.’s commonstockholders per share: | ||||||||||||||||
Basic | $ | 0.33 | $ | 0.38 | $ | 0.68 | $ | 0.60 | ||||||||
Diluted | $ | 0.33 | $ | 0.38 | $ | 0.67 | $ | 0.60 | ||||||||
Adjusted operating income available to Genworth Financial,Inc.’s common stockholders per share: | ||||||||||||||||
Basic | $ | 0.40 | $ | 0.40 | $ | 0.65 | $ | 0.65 | ||||||||
Diluted | $ | 0.40 | $ | 0.40 | $ | 0.64 | $ | 0.65 | ||||||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic | 503.4 | 500.6 | 502.3 | 500.1 | ||||||||||||
Diluted | 508.7 | 502.6 | 508.7 | 502.6 | ||||||||||||
include renewal premiums on policies or contracts written during prior periods. We consider new insurance written to be a measure of our operating performance because it represents a measure of new sales of insurance policies or contracts during a specified period, rather than a measure of our revenues or profitability during that period.
Mac or Fannie Mae could have a material adverse impact on our U.S. mortgage insurance business,” and “—Risk Factors—The amount of mortgage insurance we write could decline significantly if alternatives to private mortgage insurance are used or lower coverage levels of mortgage insurance are selected” in our 2018 Annual Report on Form
For more information on the potential impacts due to customer concentration, see “Item 1A—Risk Factors—Our reliance on key customer or distribution relationships could cause us to lose significant sales if one or more of those relationships terminate or are reduced” in our 2018 Annual Report on Form 10-K.
certification and a quarterly report as to its compliance with PMIERs. The revised PMIERs was effective on March 31, 2019. As of June 30, 2019 and March 31, 2019, our U.S. mortgage insurance business had available assets of approximately 123% of the required assets under PMIERs in each period compared to approximately 129% under the previous PMIERs requirements as of December 31, 2018. The sufficiency ratioratios as of June 30, 2019 and March 31, 2019 waswere in excess of $650 million and $600 million of available assets above the PMIERs requirements, respectively, compared to $750 million of available assets above the previous PMIERs requirements as of December 31, 2018. This difference is primarily due to the elimination of any credit for future premiums in PMIERs that had previously been allowed on insurance policies written in 2008 or earlier. Reinsurance transactions provided an aggregate of approximately $490$470 million of PMIERs capital credit as of March 31,June 30, 2019.
Three months ended March 31, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 194 | $ | 179 | $ | 15 | 8 | % | ||||||||
Net investment income | 28 | 21 | 7 | 33 | % | |||||||||||
Net investment gains (losses) | — | — | — | — | % | |||||||||||
Policy fees and other income | 1 | — | 1 | NM | (1) | |||||||||||
|
|
|
|
|
| |||||||||||
Total revenues | 223 | 200 | 23 | 12 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 16 | 16 | — | — | % | |||||||||||
Acquisition and operating expenses, net of deferrals | 46 | 39 | 7 | 18 | % | |||||||||||
Amortization of deferred acquisition costs and intangibles | 4 | 4 | — | — | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total benefits and expenses | 66 | 59 | 7 | 12 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Income before income taxes | 157 | 141 | 16 | 11 | % | |||||||||||
Provision for income taxes | 33 | 30 | 3 | 10 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Net income | 124 | 111 | 13 | 12 | % | |||||||||||
Adjustments to net income: | ||||||||||||||||
Net investment (gains) losses | — | — | — | — | % | |||||||||||
Taxes on adjustments | — | — | — | — | % | |||||||||||
|
|
|
|
|
| |||||||||||
Adjusted operating income available to Genworth Financial, Inc.’s common stockholders | $ | 124 | $ | 111 | $ | 13 | 12 | % | ||||||||
|
|
|
|
|
|
|
Three months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 206 | $ | 184 | $ | 22 | 12 | % | ||||||||
Net investment income | 28 | 23 | 5 | 22 | % | |||||||||||
Net investment gains (losses) | — | — | — | — | % | |||||||||||
Policy fees and other income | 1 | 1 | — | — | % | |||||||||||
Total revenues | 235 | 208 | 27 | 13 | % | |||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | — | (14 | ) | 14 | 100 | % | ||||||||||
Acquisition and operating expenses, net of deferrals | 44 | 45 | (1 | ) | (2 | )% | ||||||||||
Amortization of deferred acquisition costs and intangibles | 4 | 3 | 1 | 33 | % | |||||||||||
Total benefits and expenses | 48 | 34 | 14 | 41 | % | |||||||||||
Income before income taxes | 187 | 174 | 13 | 7 | % | |||||||||||
Provision for income taxes | 40 | 37 | 3 | 8 | % | |||||||||||
Net income | 147 | 137 | 10 | 7 | % | |||||||||||
Adjustments to net income: | ||||||||||||||||
Net investment (gains) losses | — | — | — | — | % | |||||||||||
Taxes on adjustments | — | — | — | — | % | |||||||||||
Adjusted operating income available to Genworth Financial, Inc.’s common stockholders | $ | 147 | $ | 137 | $ | 10 | 7 | % | ||||||||
The current year also included an $8 million favorable reserve adjustment. Included in the prior year was a $22 million favorable reserve adjustment. These favorable reserve adjustments were mostly associated with lower expected claim rates.
Net investment income increased primarily from higher average invested assets and investment yields in the current year.
Six months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 400 | $ | 363 | $ | 37 | 10 | % | ||||||||
Net investment income | 56 | 44 | 12 | 27 | % | |||||||||||
Net investment gains (losses) | — | — | — | — | % | |||||||||||
Policy fees and other income | 2 | 1 | 1 | 100 | % | |||||||||||
Total revenues | 458 | 408 | 50 | 12 | % | |||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 16 | 2 | 14 | NM | (1) | |||||||||||
Acquisition and operating expenses, net of deferrals | 90 | 84 | 6 | 7 | % | |||||||||||
Amortization of deferred acquisition costs and intangibles | 8 | 7 | 1 | 14 | % | |||||||||||
Total benefits and expenses | 114 | 93 | 21 | 23 | % | |||||||||||
Income before income taxes | 344 | 315 | 29 | 9 | % | |||||||||||
Provision for income taxes | 73 | 67 | 6 | 9 | % | |||||||||||
Net income | 271 | 248 | 23 | 9 | % | |||||||||||
Adjustments to net income: | ||||||||||||||||
Net investment (gains) losses | — | — | — | — | % | |||||||||||
Taxes on adjustments | — | — | — | — | % | |||||||||||
Adjusted operating income available to Genworth Financial, Inc.’s common stockholders | $ | 271 | $ | 248 | $ | 23 | 9 | % | ||||||||
(1) | We define “NM” as not meaningful for increases or decreases greater than 200%. |
As of or for the three months ended March 31, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Primary insurancein-force(1) | $ | 170,400 | $ | 154,900 | $ | 15,500 | 10 | % | ||||||||
Riskin-force | $ | 41,300 | $ | 37,500 | $ | 3,800 | 10 | % | ||||||||
New insurance written | $ | 9,600 | $ | 9,000 | $ | 600 | 7 | % | ||||||||
Net premiums written | $ | 193 | $ | 185 | $ | 8 | 4 | % |
As of June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Primary insurance in-force (1) | $ | 178,500 | $ | 159,500 | $ | 19,000 | 12 | % | ||||||||
Risk in-force | $ | 43,100 | $ | 38,700 | $ | 4,400 | 11 | % |
(1) | Primary insurancein-force represents the aggregate original loan balance for outstanding insurance policies and is used to determine premiums. Original loan balances are presented for policies with level renewal premiums. Amortized loan balances are presented for policies with annual, amortizing renewal premiums. |
June 30,
(decrease) and
percentage
change
June 30,
(decrease) and
percentage
change New insurance written $ $ $ % $ $ $ % Net premiums written $ $ $ % $ $ $ % as a result of $15.8from $19.2 billion in higher mortgage insurance written on prime-based, individually underwritten residential mortgage loans (“flow insuranceinsurance”) in-force, which increased from $153.5$158.2 billion as of March 31,June 30, 2018 to $169.3$177.4 billion as of March 31,June 30, 2019 as a result of new insurance written and stable persistency, partially offset by lapses induring the current year. The increase in flow insurancein-force was partially offset by a decline of $0.3$0.2 billion in mortgage insurance on a bulk basis (“bulk insurance”)in-force, which decreased from $1.4$1.3 billion as of March 31,June 30, 2018 to $1.1 billion as of March 31,June 30, 2019 from cancellations and lapses. In addition, riskin-force increased primarily as a result of higher flow new insurance written.in-force. Flow persistency was 86%84% and 84%83% for the threesix months ended March 31,June 30, 2019 and 2018, respectively.New
Three months ended March 31, | Increase (decrease) | |||||||||||
2019 | 2018 | 2019 vs. 2018 | ||||||||||
Loss ratio | 8 | % | 9 | % | (1 | )% | ||||||
Expense ratio (net earned premiums) | 25 | % | 24 | % | 1 | % | ||||||
Expense ratio (net premiums written) | 26 | % | 23 | % | 3 | % |
Three months ended June 30, | Increase (decrease) | Six months ended June 30, | Increase (decrease) | |||||||||||||||||||||
2019 | 2018 | 2019 vs. 2018 | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||||||||
Loss ratio | — | % | (8 | )% | 8 | % | 4 | % | — | % | 4 | % | ||||||||||||
Expense ratio (net earned premiums) | 24 | % | 26 | % | (2 | )% | 25 | % | 25 | % | — | % | ||||||||||||
Expense ratio (net premiums written) | 24 | % | 25 | % | (1 | )% | 25 | % | 24 | % | 1 | % |
These adjustments were mostly associated with lower expected claim rates. The current year favorable reserve adjustment of $10 million reduced the loss ratio by five percentage points for the three months ended June 30, 2019. The prior year favorable reserve adjustment of $28 million reduced the loss ratio by 15 percentage points and eight percentage points for the three and six months ended June 30, 2018, respectively.
March 31, 2019 | December 31, 2018 | March 31, 2018 | ||||||||||
Primary insurance: | ||||||||||||
Insured loansin-force | 792,800 | 783,288 | 749,145 | |||||||||
Delinquent loans | 16,206 | 17,159 | 20,602 | |||||||||
Percentage of delinquent loans (delinquency rate) | 2.04 | % | 2.19 | % | 2.75 | % | ||||||
Flow loansin-force | 780,733 | 770,657 | 734,411 | |||||||||
Flow delinquent loans | 15,764 | 16,670 | 20,007 | |||||||||
Percentage of flow delinquent loans (delinquency rate) | 2.02 | % | 2.16 | % | 2.72 | % | ||||||
Bulk loansin-force | 12,067 | 12,631 | 14,734 | |||||||||
Bulk delinquent loans(1) | 442 | 489 | 595 | |||||||||
Percentage of bulk delinquent loans (delinquency rate) | 3.66 | % | 3.87 | % | 4.04 | % | ||||||
A minus andsub-prime loansin-force | 14,712 | 15,348 | 17,964 | |||||||||
A minus andsub-prime delinquent loans | 2,530 | 2,727 | 3,557 | |||||||||
Percentage of A minus andsub-prime delinquent loans (delinquency rate) | 17.20 | % | 17.77 | % | 19.80 | % | ||||||
Pool insurance: | ||||||||||||
Insured loansin-force | 4,470 | 4,535 | 4,961 | |||||||||
Delinquent loans | 187 | 220 | 220 | |||||||||
Percentage of delinquent loans (delinquency rate) | 4.18 | % | 4.85 | % | 4.43 | % |
June 30, 2019 | December 31, 2018 | June 30, 2018 | ||||||||||
Primary insurance: | ||||||||||||
Insured loans in-force | 818,358 | 783,288 | 762,727 | |||||||||
Delinquent loans | 15,482 | 17,159 | 18,051 | |||||||||
Percentage of delinquent loans (delinquency rate) | 1.89 | % | 2.19 | % | 2.37 | % | ||||||
Flow loans in-force | 806,739 | 770,657 | 748,497 | |||||||||
Flow delinquent loans | 15,070 | 16,670 | 17,505 | |||||||||
Percentage of flow delinquent loans (delinquency rate) | 1.87 | % | 2.16 | % | 2.34 | % | ||||||
Bulk loans in-force | 11,619 | 12,631 | 14,230 | |||||||||
Bulk delinquent loans (1) | 412 | 489 | 546 | |||||||||
Percentage of bulk delinquent loans (delinquency rate) | 3.55 | % | 3.87 | % | 3.84 | % | ||||||
A minus and sub-prime loans in-force | 14,180 | 15,348 | 16,928 | |||||||||
A minus and sub-prime delinquent loans | 2,367 | 2,727 | 3,058 | |||||||||
Percentage of A minus and sub-prime delinquent loans (delinquency rate) | 16.69 | % | 17.77 | % | 18.06 | % | ||||||
Pool insurance: | ||||||||||||
Insured loans in-force | 4,331 | 4,535 | 4,774 | |||||||||
Delinquent loans | 177 | 220 | 204 | |||||||||
Percentage of delinquent loans (delinquency rate) | 4.09 | % | 4.85 | % | 4.27 | % |
(1) | Included loans where we were in a secondary loss position for which no reserve was established due to an existing deductible. Excluding these loans, bulk delinquent loans were |
March 31, 2019 | ||||||||||||||||
(Dollar amounts in millions) | Delinquencies | Direct case reserves(1) | Risk in-force | Reserves as % of risk in-force | ||||||||||||
Payments in default: | ||||||||||||||||
3 payments or less | 7,679 | $ | 29 | $ | 343 | 8 | % | |||||||||
4 - 11 payments | 4,664 | 90 | 214 | 42 | % | |||||||||||
12 payments or more | 3,421 | 127 | 173 | 73 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total | 15,764 | $ | 246 | $ | 730 | 34 | % | |||||||||
|
|
|
|
|
|
June 30, 2019 | ||||||||||||||||
(Dollar amounts in millions) | Delinquencies | Direct case reserves (1) | Risk in-force | Reserves as % of risk in-force | ||||||||||||
Payments in default: | ||||||||||||||||
3 payments or less | 7,629 | $ | 26 | $ | 341 | 8 | % | |||||||||
4 - 11 payments | 4,162 | 75 | 190 | 39 | % | |||||||||||
12 payments or more | 3,279 | 121 | 167 | 72 | % | |||||||||||
Total | 15,070 | $ | 222 | $ | 698 | 32 | % | |||||||||
(1) | Direct flow case reserves exclude loss adjustment expenses, incurred but not reported and reinsurance reserves. |
December 31, 2018 | ||||||||||||||||
(Dollar amounts in millions) | Delinquencies | Direct case reserves(1) | Risk in-force | Reserves as % of risk in-force | ||||||||||||
Payments in default: | ||||||||||||||||
3 payments or less | 8,360 | $ | 31 | $ | 365 | 8 | % | |||||||||
4 - 11 payments | 4,591 | 88 | 208 | 42 | % | |||||||||||
12 payments or more | 3,719 | 142 | 188 | 76 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total | 16,670 | $ | 261 | $ | 761 | 34 | % | |||||||||
|
|
|
|
|
|
December 31, 2018 | ||||||||||||||||
(Dollar amounts in millions) | Delinquencies | Direct case reserves (1) | Risk in-force | Reserves as % of risk in-force | ||||||||||||
Payments in default: | ||||||||||||||||
3 payments or less | 8,360 | $ | 31 | $ | 365 | 8 | % | |||||||||
4 - 11 payments | 4,591 | 88 | 208 | 42 | % | |||||||||||
12 payments or more | 3,719 | 142 | 188 | 76 | % | |||||||||||
Total | 16,670 | $ | 261 | $ | 761 | 34 | % | |||||||||
(1) | Direct flow case reserves exclude loss adjustment expenses, incurred but not reported and reinsurance reserves. |
Percent of primary riskin-force as of | Percent of total reserves as of | Delinquency rate | ||||||||||||||||||
March 31, | December 31, | March 31, | ||||||||||||||||||
March 31, 2019 | March 31, 2019 (1) | 2019 | 2018 | 2018 | ||||||||||||||||
By Region: | ||||||||||||||||||||
Southeast(2) | 18 | % | 22 | % | 2.39 | % | 2.63 | % | 3.99 | % | ||||||||||
Pacific(3) | 17 | 10 | 1.29 | % | 1.29 | % | 1.36 | % | ||||||||||||
South Central(4) | 16 | 12 | 1.97 | % | 2.11 | % | 2.79 | % | ||||||||||||
Northeast(5) | 12 | 27 | 3.10 | % | 3.43 | % | 4.18 | % | ||||||||||||
North Central(6) | 11 | 9 | 1.90 | % | 1.98 | % | 2.16 | % | ||||||||||||
Great Lakes(7) | 11 | 6 | 1.62 | % | 1.72 | % | 1.86 | % | ||||||||||||
Mid-Atlantic(8) | 6 | 5 | 2.11 | % | 2.16 | % | 2.47 | % | ||||||||||||
New England(9) | 5 | 6 | 2.05 | % | 2.23 | % | 2.54 | % | ||||||||||||
Plains(10) | 4 | 3 | 1.82 | % | 1.87 | % | 2.08 | % | ||||||||||||
|
|
|
| |||||||||||||||||
Total | 100 | % | 100 | % | 2.04 | % | 2.19 | % | 2.75 | % | ||||||||||
|
|
|
|
Percent of primary | Percent of total | Delinquency rate | ||||||||||||||||||
risk in-force as of June 30, 2019 | reserves as of June 30, 2019 (1) | June 30, 2019 | December 31, 2018 | June 30, 2018 | ||||||||||||||||
By Region: | ||||||||||||||||||||
Southeast (2) | 18 | % | 21 | % | 2.18 | % | 2.63 | % | 3.15 | % | ||||||||||
Pacific (3) | 17 | 10 | 1.22 | % | 1.29 | % | 1.30 | % | ||||||||||||
South Central (4) | 16 | 11 | 1.79 | % | 2.11 | % | 2.30 | % | ||||||||||||
Northeast (5) | 12 | 28 | 2.87 | % | 3.43 | % | 3.74 | % | ||||||||||||
North Central (6) | 11 | 9 | 1.79 | % | 1.98 | % | 1.96 | % | ||||||||||||
Great Lakes (7) | 11 | 7 | 1.56 | % | 1.72 | % | 1.72 | % | ||||||||||||
Mid-Atlantic (8) | 6 | 5 | 1.81 | % | 2.16 | % | 2.19 | % | ||||||||||||
New England (9) | 5 | 6 | 1.95 | % | 2.23 | % | 2.27 | % | ||||||||||||
Plains (10) | 4 | 3 | 1.67 | % | 1.87 | % | 1.88 | % | ||||||||||||
Total | 100 | % | 100 | % | 1.89 | % | 2.19 | % | 2.37 | % | ||||||||||
(1) | Total reserves were |
(2) | Alabama, Arkansas, Florida, Georgia, Mississippi, North Carolina, South Carolina and Tennessee. |
(3) | Alaska, California, Hawaii, Nevada, Oregon and Washington. |
(4) | Arizona, Colorado, Louisiana, New Mexico, Oklahoma, Texas and Utah. |
(5) | New Jersey, New York and Pennsylvania. |
(6) | Illinois, Minnesota, Missouri and Wisconsin. |
(7) | Indiana, Kentucky, Michigan and Ohio. |
(8) | Delaware, Maryland, Virginia, Washington D.C. and West Virginia. |
(9) | Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. |
(10) | Idaho, Iowa, Kansas, Montana, Nebraska, North Dakota, South Dakota and Wyoming. |
Percent of primary risk in-force as of | Percent of total reserves as of | Delinquency rate | ||||||||||||||||||
March 31, | December 31, | March 31, | ||||||||||||||||||
March 31, 2019 | March 31, 2019 (1) | 2019 | 2018 | 2018 | ||||||||||||||||
By State: | ||||||||||||||||||||
California | 10 | % | 5 | % | 1.27 | % | 1.28 | % | 1.27 | % | ||||||||||
Texas | 7 | % | 5 | % | 2.03 | % | 2.29 | % | 3.66 | % | ||||||||||
Florida | 6 | % | 12 | % | 2.61 | % | 2.91 | % | 6.60 | % | ||||||||||
Illinois | 5 | % | 6 | % | 2.23 | % | 2.26 | % | 2.47 | % | ||||||||||
New York | 5 | % | 15 | % | 3.42 | % | 3.64 | % | 4.38 | % | ||||||||||
Washington | 5 | % | 2 | % | 1.05 | % | 1.04 | % | 1.05 | % | ||||||||||
Michigan | 4 | % | 2 | % | 1.30 | % | 1.40 | % | 1.36 | % | ||||||||||
Pennsylvania | 4 | % | 4 | % | 2.37 | % | 2.79 | % | 3.09 | % | ||||||||||
Ohio | 4 | % | 3 | % | 1.82 | % | 1.97 | % | 2.12 | % | ||||||||||
North Carolina | 4 | % | 3 | % | 1.96 | % | 2.27 | % | 2.47 | % |
Percent of primary | Percent of total | Delinquency rate | ||||||||||||||||||
risk in-force as of June 30, 2019 | reserves as of June 30, 2019 (1) | June 30, 2019 | December 31, 2018 | June 30, 2018 | ||||||||||||||||
By State: | ||||||||||||||||||||
California | 10 | % | 5 | % | 1.26 | % | 1.28 | % | 1.21 | % | ||||||||||
Texas | 7 | % | 5 | % | 1.86 | % | 2.29 | % | 2.77 | % | ||||||||||
Florida | 6 | % | 12 | % | 2.26 | % | 2.91 | % | 4.57 | % | ||||||||||
Illinois | 5 | % | 6 | % | 2.10 | % | 2.26 | % | 2.27 | % | ||||||||||
New York | 5 | % | 16 | % | 3.12 | % | 3.64 | % | 3.99 | % | ||||||||||
Washington | 5 | % | 2 | % | 0.90 | % | 1.04 | % | 1.05 | % | ||||||||||
Michigan | 4 | % | 2 | % | 1.28 | % | 1.40 | % | 1.26 | % | ||||||||||
Pennsylvania | 4 | % | 4 | % | 2.24 | % | 2.79 | % | 2.80 | % | ||||||||||
North Carolina | 4 | % | 3 | % | 1.82 | % | 2.27 | % | 2.15 | % | ||||||||||
Ohio | 3 | % | 3 | % | 1.69 | % | 1.97 | % | 1.98 | % |
(1) | Total reserves were |
(Amounts in millions) | Average rate | Percent of total reserves(1) | Primary insurance in-force | Percent of total | Primary risk in-force | Percent of total | ||||||||||||||||||
Policy Year | ||||||||||||||||||||||||
2004 and prior | 6.09 | % | 8.7 | % | $ | 1,587 | 0.9 | % | $ | 299 | 0.7 | % | ||||||||||||
2005 - 2008 | 5.47 | % | 59.4 | 18,391 | 10.8 | 4,226 | 10.3 | |||||||||||||||||
2009 - 2012 | 4.28 | % | 2.2 | 4,428 | 2.6 | 1,034 | 2.5 | |||||||||||||||||
2013 | 4.09 | % | 2.2 | 5,204 | 3.1 | 1,278 | 3.1 | |||||||||||||||||
2014 | 4.45 | % | 4.2 | 8,900 | 5.2 | 2,162 | 5.2 | |||||||||||||||||
2015 | 4.15 | % | 5.9 | 17,652 | 10.4 | 4,281 | 10.4 | |||||||||||||||||
2016 | 3.88 | % | 7.9 | 32,065 | 18.8 | 7,736 | 18.8 | |||||||||||||||||
2017 | 4.25 | % | 6.6 | 34,400 | 20.2 | 8,398 | 20.4 | |||||||||||||||||
2018 | 4.77 | % | 2.9 | 38,147 | 22.4 | 9,394 | 22.8 | |||||||||||||||||
2019 | 4.87 | % | — | 9,581 | 5.6 | 2,385 | 5.8 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total portfolio | 4.51 | % | 100.0 | % | $ | 170,355 | 100.0 | % | $ | 41,193 | 100.0 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
(Amounts in millions) | Average rate | Percent of total reserves (1) | Primary insurance in-force | Percent of total | Primary risk in-force | Percent of total | ||||||||||||||||||
Policy Year | ||||||||||||||||||||||||
2004 and prior | 6.10 | % | 8.4 | % | $ | 1,515 | 0.9 | % | $ | 285 | 0.7 | % | ||||||||||||
2005 - 2008 | 5.47 | % | 58.2 | 17,576 | 9.8 | 4,037 | 9.4 | |||||||||||||||||
2009 - 2012 | 4.29 | % | 2.2 | 3,934 | 2.2 | 913 | 2.1 | |||||||||||||||||
2013 | 4.11 | % | 1.8 | 4,755 | 2.7 | 1,162 | 2.7 | |||||||||||||||||
2014 | 4.45 | % | 4.4 | 8,277 | 4.6 | 2,013 | 4.7 | |||||||||||||||||
2015 | 4.15 | % | 6.2 | 16,648 | 9.3 | 4,023 | 9.3 | |||||||||||||||||
2016 | 3.89 | % | 7.5 | 30,515 | 17.1 | 7,348 | 17.0 | |||||||||||||||||
2017 | 4.25 | % | 7.2 | 33,245 | 18.6 | 8,087 | 18.8 | |||||||||||||||||
2018 | 4.77 | % | 3.9 | 36,887 | 20.7 | 9,025 | 20.9 | |||||||||||||||||
2019 | 4.75 | % | 0.2 | 25,129 | 14.1 | 6,191 | 14.4 | |||||||||||||||||
Total portfolio | 4.53 | % | 100.0 | % | $ | 178,481 | 100.0 | % | $ | 43,084 | 100.0 | % | ||||||||||||
(1) | Total reserves were |
driven by strong employment levels.
Our mortgage insurance business in Canada experienced slightly higher losses in the firstsecond quarter of 2019 compared to the firstsecond quarter of 2018 largely driven by increases in both Ontario and Quebec, partially offset by declines in British Columbia and Alberta. National home sales in Canada increased in the second quarter of 2019 by approximately 6% compared to the second quarter of 2018 led by strong home sales in Ontario and Quebec, partially offset by decreases in British Columbia.
In the firstsecond quarter of 2019, flow new insurance written volumes were downup in our mortgage insurance business in Canada compared to the firstsecond quarter of 2018 primarily from a smallermodestly larger flow mortgage originations market due to regulatory changes and ongoing housing affordability pressure. The firstmarket. Excluding the effects of foreign exchange, earned premiums remained flat during the second quarter of 2018 included higher volumes from applications received in2019 compared to the fourthsecond quarter of 2017 resulting from an acceleration of housing demand ahead of regulatory changes. Earned premiums also decreased mainly from the seasoning of our smaller, more recentin-force books of business and from a favorable adjustment of $3 million relating to refinements in premium recognition factors in the first quarter of 2018 that did not recur.
2018.
Three months ended March 31, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 126 | $ | 139 | $ | (13 | ) | (9 | )% | |||||||
Net investment income | 34 | 34 | — | — | % | |||||||||||
Net investment gains (losses) | (1 | ) | (15 | ) | 14 | 93 | % | |||||||||
|
|
|
|
|
| |||||||||||
Total revenues | 159 | 158 | 1 | 1 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 19 | 18 | 1 | 6 | % | |||||||||||
Acquisition and operating expenses, net of deferrals | 20 | 17 | 3 | 18 | % | |||||||||||
Amortization of deferred acquisition costs and intangibles | 10 | 10 | — | — | % | |||||||||||
Interest expense | 4 | 5 | (1 | ) | (20 | )% | ||||||||||
|
|
|
|
|
| |||||||||||
Total benefits and expenses | 53 | 50 | 3 | 6 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Income before income taxes | 106 | 108 | (2 | ) | (2 | )% | ||||||||||
Provision for income taxes | 29 | 30 | (1 | ) | (3 | )% | ||||||||||
|
|
|
|
|
| |||||||||||
Net income | 77 | 78 | (1 | ) | (1 | )% | ||||||||||
Less: net income attributable to noncontrolling interests | 36 | 36 | — | — | % | |||||||||||
|
|
|
|
|
| |||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | 41 | 42 | (1 | ) | (2 | )% | ||||||||||
Adjustments to net income available to Genworth Financial, Inc.’scommon stockholders: | ||||||||||||||||
Net investment (gains) losses, net(1) | — | 9 | (9 | ) | (100 | )% | ||||||||||
Taxes on adjustments | — | (2 | ) | 2 | 100 | % | ||||||||||
|
|
|
|
|
| |||||||||||
Adjusted operating income available to Genworth Financial, Inc.’s common stockholders | $ | 41 | $ | 49 | $ | (8 | ) | (16 | )% | |||||||
|
|
|
|
|
|
Three months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 125 | $ | 131 | $ | (6 | ) | (5 | )% | |||||||
Net investment income | 35 | 34 | 1 | 3 | % | |||||||||||
Net investment gains (losses) | 1 | (15 | ) | 16 | 107 | % | ||||||||||
Total revenues | 161 | 150 | 11 | 7 | % | |||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 19 | 19 | — | — | % | |||||||||||
Acquisition and operating expenses, net of deferrals | 22 | 20 | 2 | 10 | % | |||||||||||
Amortization of deferred acquisition costs and intangibles | 11 | 11 | — | — | % | |||||||||||
Interest expense | 5 | 4 | 1 | 25 | % | |||||||||||
Total benefits and expenses | 57 | 54 | 3 | 6 | % | |||||||||||
Income before income taxes | 104 | 96 | 8 | 8 | % | |||||||||||
Provision for income taxes | 29 | 24 | 5 | 21 | % | |||||||||||
Net income | 75 | 72 | 3 | 4 | % | |||||||||||
Less: net income attributable to noncontrolling interests | 35 | 32 | 3 | 9 | % | |||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | 40 | 40 | — | — | % | |||||||||||
Adjustments to net income available to Genworth Financial, Inc.’s common stockholders: | ||||||||||||||||
Net investment (gains) losses, net (2) | — | 8 | (8 | ) | (100 | )% | ||||||||||
(Gains) losses on early extinguishment of debt, net (3) | 1 | — | 1 | NM | (1) | |||||||||||
Taxes on adjustments | — | (2 | ) | 2 | 100 | % | ||||||||||
Adjusted operating income available to Genworth Financial, Inc.’s common stockholders | $ | 41 | $ | 46 | $ | (5 | ) | (11 | )% | |||||||
(1) | We define “NM” as not meaningful for increases or decreases greater than 200%. |
(2) | For the three months ended |
For the three months ended June 30, 2019, (gains) losses on the early extinguishment of debt were adjusted for the portion attributable to noncontrolling interests of $1 million.
Six months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 251 | $ | 270 | $ | (19 | ) | (7 | )% | |||||||
Net investment income | 69 | 68 | 1 | 1 | % | |||||||||||
Net investment gains (losses) | — | (30 | ) | 30 | 100 | % | ||||||||||
Total revenues | 320 | 308 | 12 | 4 | % | |||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 38 | 37 | 1 | 3 | % | |||||||||||
Acquisition and operating expenses, net of deferrals | 42 | 37 | 5 | 14 | % | |||||||||||
Amortization of deferred acquisition costs and intangibles | 21 | 21 | — | — | % | |||||||||||
Interest expense | 9 | 9 | — | — | % | |||||||||||
Total benefits and expenses | 110 | 104 | 6 | 6 | % | |||||||||||
Income before income taxes | 210 | 204 | 6 | 3 | % | |||||||||||
Provision for income taxes | 58 | 54 | 4 | 7 | % | |||||||||||
Net income | 152 | 150 | 2 | 1 | % | |||||||||||
Less: net income attributable to noncontrolling interests | 71 | 68 | 3 | 4 | % | |||||||||||
Net income available to Genworth Financial, Inc.’s commonstockholders | 81 | 82 | (1 | ) | (1 | )% | ||||||||||
Adjustments to net income available to Genworth Financial, Inc.’scommon stockholders: | ||||||||||||||||
Net investment (gains) losses, net (2) | — | 17 | (17 | ) | (100 | )% | ||||||||||
(Gains) losses on early extinguishment of debt, net (3) | 1 | — | 1 | NM | (1) | |||||||||||
Taxes on adjustments | — | (4 | ) | 4 | 100 | % | ||||||||||
Adjusted operating income available to Genworth Financial, Inc.’scommon stockholders | $ | 82 | $ | 95 | $ | (13 | ) | (14 | )% | |||||||
(1) | We define “NM” as not meaningful for increases or decreases greater than 200%. |
(2) | For the six months ended June 30, 2018, net investment (gains) losses were adjusted for the portion of net investment gains (losses) attributable to noncontrolling interests of $(13) million. |
(3) | For the six months ended June 30, 2019, (gains) losses on the early extinguishment of debt were adjusted for the portion attributable to noncontrolling interests of $1 million. |
partially offset by derivative gains on interest rate swaps.
June 2020.
was primarily driven by an increase in expenses related to foreign withholding tax, partially offset by higher benefits in the current year from dividends received deduction.
As of or for the three months ended March 31, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Primary insurancein-force | $ | 382,200 | $ | 384,600 | $ | (2,400 | ) | (1 | )% | |||||||
Riskin-force | $ | 133,800 | $ | 134,600 | $ | (800 | ) | (1 | )% | |||||||
New insurance written | $ | 2,900 | $ | 3,400 | $ | (500 | ) | (15 | )% | |||||||
Net premiums written | $ | 79 | $ | 92 | $ | (13 | ) | (14 | )% |
As of June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Primary insurance in-force | $ | 395,700 | $ | 380,200 | $ | 15,500 | 4 | % | ||||||||
Risk in-force | $ | 138,500 | $ | 133,100 | $ | 5,400 | 4 | % |
Three months ended June 30, | Increase (decrease) and percentage change | Six months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | 2019 | 2018 | 2019 vs. 2018 | ||||||||||||||||||||||||||
New insurance written | $ | 5,800 | $ | 4,600 | $ | 1,200 | 26 | % | $ | 8,700 | $ | 8,000 | $ | 700 | 9 | % | ||||||||||||||||
Net premiums written | $ | 145 | $ | 133 | $ | 12 | 9 | % | $ | 224 | $ | 225 | $ | (1 | ) | — | % |
rates.
Netforeign exchange rates, net premiums written decreasedincreased for the three and six months ended June 30, 2019 primarily from lowerhigher flow mortgageand bulk new insurance written and lower average premium rates on bulk mortgage insurance.written. The three and six months ended March 31,June 30, 2019 included a decreasedecreases of $5$6 million and $11 million, respectively, attributable to changes in foreign exchange rates.
Three months ended March 31, | Increase (decrease) | |||||||||||
2019 | 2018 | 2019 vs. 2018 | ||||||||||
Loss ratio | 15 | % | 13 | % | 2 | % | ||||||
Expense ratio (net earned premiums) | 24 | % | 20 | % | 4 | % | ||||||
Expense ratio (net premiums written) | 39 | % | 30 | % | 9 | % |
Three months ended June 30, | Increase (decrease) | Six months ended June 30, | Increase (decrease) | |||||||||||||||||||||
2019 | 2018 | 2019 vs. 2018 | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||||||||
Loss ratio | 15 | % | 15 | % | — | % | 15 | % | 14 | % | 1 | % | ||||||||||||
Expense ratio (net earned premiums) | 26 | % | 23 | % | 3 | % | 25 | % | 21 | % | 4 | % | ||||||||||||
Expense ratio (net premiums written) | 22 | % | 23 | % | (1 | )% | 28 | % | 26 | % | 2 | % |
The expense ratio (net premiums written) increased largelyfor the six months ended June 30, 2019 primarily from higher stock-based compensation and operating expenses, and lowerincluding the early redemption fee, as discussed above, partially offset by higher net premiums written in the current year.
March 31, 2019 | December 31, 2018 | March 31, 2018 | ||||||||||
Primary insured loansin-force | 2,152,048 | 2,143,191 | 2,123,727 | |||||||||
Delinquent loans | 1,760 | 1,684 | 1,723 | |||||||||
Percentage of delinquent loans (delinquency rate) | 0.08 | % | 0.08 | % | 0.08 | % | ||||||
Flow loansin-force | 1,507,283 | 1,499,304 | 1,456,573 | |||||||||
Flow delinquent loans | 1,384 | 1,310 | 1,385 | |||||||||
Percentage of flow delinquent loans (delinquency rate) | 0.09 | % | 0.09 | % | 0.10 | % | ||||||
Bulk loansin-force | 644,765 | 643,887 | 667,154 | |||||||||
Bulk delinquent loans | 376 | 374 | 338 | |||||||||
Percentage of bulk delinquent loans (delinquency rate) | 0.06 | % | 0.06 | % | 0.05 | % |
June 30, 2019 | December 31, 2018 | June 30, 2018 | ||||||||||
Primary insured loans in-force (1) | 2,174,084 | 2,143,191 | 2,137,221 | |||||||||
Delinquent loans | 1,701 | 1,684 | 1,742 | |||||||||
Percentage of delinquent loans (delinquency rate) (1) | 0.08 | % | 0.08 | % | 0.08 | % | ||||||
Flow loans in-force | 1,523,128 | 1,499,304 | 1,470,826 | |||||||||
Flow delinquent loans | 1,340 | 1,310 | 1,406 | |||||||||
Percentage of flow delinquent loans (delinquency rate) | 0.09 | % | 0.09 | % | 0.10 | % | ||||||
Bulk loans in-force | 650,956 | 643,887 | 666,395 | |||||||||
Bulk delinquent loans | 361 | 374 | 336 | |||||||||
Percentage of bulk delinquent loans (delinquency rate) | 0.06 | % | 0.06 | % | 0.05 | % |
(1) | As part of an ongoing effort to improve the estimate of outstanding insurance exposure, we are receiving updated outstanding loans in-force in Canada from almost all of our customers. As a result, we estimate that the outstanding loans in-force were 901,000 as of June 30, 2019, 910, 000 as of December 31, 2018 and 935,000 as of June 30, 2018. This is based on the extrapolation of the amounts reported by lenders to the entire insured population. The corresponding insured delinquency rate was 0.19% as of June 30, 2019, 0.18% as of December 31, 2018 and 0.19% as of June 30, 2018. |
Percent of primary riskin-force as of | Delinquency rate | |||||||||||||||
March 31, | December 31, | March 31, | ||||||||||||||
March 31, 2019 | 2019 | 2018 | 2018 | |||||||||||||
By province and territory: | ||||||||||||||||
Ontario | 47 | % | 0.03 | % | 0.03 | % | 0.03 | % | ||||||||
Alberta | 17 | 0.19 | % | 0.18 | % | 0.17 | % | |||||||||
British Columbia | 14 | 0.04 | % | 0.04 | % | 0.04 | % | |||||||||
Quebec | 13 | 0.09 | % | 0.10 | % | 0.10 | % | |||||||||
Saskatchewan | 3 | 0.29 | % | 0.28 | % | 0.30 | % | |||||||||
Nova Scotia | 2 | 0.13 | % | 0.13 | % | 0.15 | % | |||||||||
Manitoba | 2 | 0.11 | % | 0.10 | % | 0.10 | % | |||||||||
New Brunswick | 1 | 0.13 | % | 0.10 | % | 0.17 | % | |||||||||
All other | 1 | 0.20 | % | 0.19 | % | 0.19 | % | |||||||||
|
| |||||||||||||||
Total | 100 | % | 0.08 | % | 0.08 | % | 0.08 | % | ||||||||
|
|
Percent of primary risk in-force as of June 30, 2019 | Delinquency rate | |||||||||||||||
June 30, | December 31, | June 30, | ||||||||||||||
2019 | 2018 | 2018 | ||||||||||||||
By province and territory: | ||||||||||||||||
Ontario | 47 | % | 0.03 | % | 0.03 | % | 0.03 | % | ||||||||
Alberta | 17 | 0.21 | % | 0.18 | % | 0.17 | % | |||||||||
British Columbia | 14 | 0.04 | % | 0.04 | % | 0.04 | % | |||||||||
Quebec | 13 | 0.07 | % | 0.10 | % | 0.10 | % | |||||||||
Saskatchewan | 3 | 0.27 | % | 0.28 | % | 0.28 | % | |||||||||
Nova Scotia | 2 | 0.13 | % | 0.13 | % | 0.15 | % | |||||||||
Manitoba | 2 | 0.09 | % | 0.10 | % | 0.10 | % | |||||||||
New Brunswick | 1 | 0.08 | % | 0.10 | % | 0.15 | % | |||||||||
All other | 1 | 0.20 | % | 0.19 | % | 0.20 | % | |||||||||
Total | 100 | % | 0.08 | % | 0.08 | % | 0.08 | % | ||||||||
As a part
Following consistent growth in 2017,In the second quarter of 2019, Australia home prices in Australia continued the 2018their year over year downward trend, with declineswhich began in the first quarter of 2019. March2018 after a period of robust home price appreciation. June 2019 home values were approximately 8% lower than in Marchcompared to June 2018, with declines experienced across the majority of the capital cities. The main drivers of the home price depreciation were the Sydney and Melbourne housing markets, with annual decreases of approximately 11%10% and 10%9%, respectively, for the first quarter of 2019.
respectively.
moderate in the second half of 2019.
On July 25, 2019, S&P downgraded the financial strength rating of Genworth Australia’s primary mortgage insurance subsidiary. Although the change in S&P’s rating has no immediate impact on the contractual arrangements between our mortgage insurance business in Australia and its customers, one key customer contract contains a provision that was triggered as a result of the ratings change, allowing that customer the option to terminate the contract. However, under this provision, our Australia mortgage insurance subsidiary has 30 days to demonstrate its credit strength and ensure that the potential termination right under this provision is not exercised. For additional details see “—Financial Strength Ratings.”
Three months ended March 31, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 83 | $ | 98 | $ | (15 | ) | (15 | )% | |||||||
Net investment income | 16 | 17 | (1 | ) | (6 | )% | ||||||||||
Net investment gains (losses) | 12 | (9 | ) | 21 | NM | (1) | ||||||||||
Policy fees and other income | (1 | ) | 1 | (2 | ) | (200 | )% | |||||||||
|
|
|
|
|
| |||||||||||
Total revenues | 110 | 107 | 3 | 3 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 28 | 30 | (2 | ) | (7 | )% | ||||||||||
Acquisition and operating expenses, net of deferrals | 17 | 17 | — | — | % | |||||||||||
Amortization of deferred acquisition costs and intangibles | 9 | 11 | (2 | ) | (18 | )% | ||||||||||
Interest expense | 2 | 2 | — | — | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total benefits and expenses | 56 | 60 | (4 | ) | (7 | )% | ||||||||||
|
|
|
|
|
| |||||||||||
Income before income taxes | 54 | 47 | 7 | 15 | % | |||||||||||
Provision for income taxes | 16 | 14 | 2 | 14 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Net income | 38 | 33 | 5 | 15 | % | |||||||||||
Less: net income attributable to noncontrolling interests | 20 | 17 | 3 | 18 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | 18 | 16 | 2 | 13 | % | |||||||||||
Adjustments to net income available to Genworth Financial, Inc.’scommon stockholders: | ||||||||||||||||
Net investment (gains) losses, net(2) | (6 | ) | 4 | (10 | ) | NM | (1) | |||||||||
Taxes on adjustments | 2 | (1 | ) | 3 | NM | (1) | ||||||||||
|
|
|
|
|
| |||||||||||
Adjusted operating income available to Genworth Financial, Inc.’s common stockholders | $ | 14 | $ | 19 | $ | (5 | ) | (26 | )% | |||||||
|
|
|
|
|
|
Three months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 80 | $ | 106 | $ | (26 | ) | (25 | )% | |||||||
Net investment income | 15 | 18 | (3 | ) | (17 | )% | ||||||||||
Net investment gains (losses) | 1 | 12 | (11 | ) | (92 | )% | ||||||||||
Total revenues | 96 | 136 | (40 | ) | (29 | )% | ||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 26 | 29 | (3 | ) | (10 | )% | ||||||||||
Acquisition and operating expenses, net of deferrals | 17 | 17 | — | — | % | |||||||||||
Amortization of deferred acquisition costs and intangibles | 9 | 12 | (3 | ) | (25 | )% | ||||||||||
Interest expense | 2 | 2 | — | — | % | |||||||||||
Total benefits and expenses | 54 | 60 | (6 | ) | (10 | )% | ||||||||||
Income before income taxes | 42 | 76 | (34 | ) | (45 | )% | ||||||||||
Provision for income taxes | 13 | 23 | (10 | ) | (43 | )% | ||||||||||
Net income | 29 | 53 | (24 | ) | (45 | )% | ||||||||||
Less: net income attributable to noncontrolling interests | 15 | 27 | (12 | ) | (44 | )% | ||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | 14 | 26 | (12 | ) | (46 | )% | ||||||||||
Adjustments to net income available to Genworth Financial, Inc.’s | ||||||||||||||||
Net investment (gains) losses, net (1) | (1 | ) | (6 | ) | 5 | 83 | % | |||||||||
Taxes on adjustments | — | 2 | (2 | ) | (100 | )% | ||||||||||
Adjusted operating income available to Genworth Financial, Inc.’scommon stockholders | $ | 13 | $ | 22 | $ | (9 | ) | (41 | )% | |||||||
(1) | For the three months ended June 30, 2018, net investment (gains) losses were adjusted for the portion of net investment gains (losses) attributable to noncontrolling interests of $6 million. |
Six months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 163 | $ | 204 | $ | (41 | ) | (20 | )% | |||||||
Net investment income | 31 | 35 | (4 | ) | (11 | )% | ||||||||||
Net investment gains (losses) | 13 | 3 | 10 | NM | (1) | |||||||||||
Policy fees and other income | (1 | ) | 1 | (2 | ) | (200 | )% | |||||||||
Total revenues | 206 | 243 | (37 | ) | (15 | )% | ||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 54 | 59 | (5 | ) | (8 | )% | ||||||||||
Acquisition and operating expenses, net of deferrals | 34 | 34 | — | — | % | |||||||||||
Amortization of deferred acquisition costs and intangibles | 18 | 23 | (5 | ) | (22 | )% | ||||||||||
Interest expense | 4 | 4 | — | — | % | |||||||||||
Total benefits and expenses | 110 | 120 | (10 | ) | (8 | )% | ||||||||||
Income before income taxes | 96 | 123 | (27 | ) | (22 | )% | ||||||||||
Provision for income taxes | 29 | 37 | (8 | ) | (22 | )% | ||||||||||
Net income | 67 | 86 | (19 | ) | (22 | )% | ||||||||||
Less: net income attributable to noncontrolling interests | 35 | 44 | (9 | ) | (20 | )% | ||||||||||
Net income available to Genworth Financial, Inc.’scommon stockholders | 32 | 42 | (10 | ) | (24 | )% | ||||||||||
Adjustments to net income available to GenworthFinancial, Inc.’s common stockholders: | ||||||||||||||||
Net investment (gains) losses, net (2) | (7 | ) | (2 | ) | (5 | ) | NM | (1) | ||||||||
Taxes on adjustments | 2 | 1 | 1 | 100 | % | |||||||||||
Adjusted operating income available to Genworth Financial, Inc.’s commonstockholders | $ | 27 | $ | 41 | $ | (14 | ) | (34 | )% | |||||||
(1) | We define “NM” as not meaningful for increases or decreases greater than 200%. |
(2) | For the |
changes in foreign exchange rates in the current year and from the seasoning of our smaller, more recentin-force books of business. These decreases werebusiness and from higher policy cancellations in the prior year. The decrease was partially offset by lower contract fees amortization in the current year. from $8 million of changes attributable to foreign exchange rates in the current year and from the seasoning of our smaller, more recentin-force books of business.
We had net investment gainsbusiness and from higher policy cancellations in the current year compared to net investment losses in the prior year. Net investment gains in the current year were primarily from net realized gains from the saleThe six months ended June 30, 2019 included a decrease of investment securities, derivative gains and from$15 million attributable to changes in the fair valueforeign exchange rates.
Policy fees and other income decreased primarily attributable to foreign exchange losses onnon-Australian dollar denominated invested assets due tofrom changes in foreign exchange rates in the current year.
June 30, 2019.
As of or for the three months ended March 31, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Primary insurancein-force | $ | 219,200 | $ | 246,300 | $ | (27,100 | ) | (11 | )% | |||||||
Riskin-force | $ | 76,300 | $ | 85,700 | $ | (9,400 | ) | (11 | )% | |||||||
New insurance written | $ | 3,900 | $ | 3,400 | $ | 500 | 15 | % | ||||||||
Net premiums written | $ | 52 | $ | 60 | $ | (8 | ) | (13 | )% |
As of June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Primary insurance in-force | $ | 215,600 | $ | 229,400 | $ | (13,800 | ) | (6 | )% | |||||||
Risk in-force | $ | 75,100 | $ | 79,900 | $ | (4,800 | ) | (6 | )% |
Three months ended June 30, | Increase (decrease) and percentage change | Six months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | 2019 | 2018 | 2019 vs. 2018 | ||||||||||||||||||||||||||
New insurance written | $ | 4,900 | $ | 4,600 | $ | 300 | 7 | % | $ | 8,800 | $ | 8,000 | $ | 800 | 10 | % | ||||||||||||||||
Net premiums written | $ | 58 | $ | 56 | $ | 2 | 4 | % | $ | 110 | $ | 116 | $ | (6 | ) | (5 | )% |
Primary insurance in-force and risk in-force included decreases of $11.6 billion and $4.0 billion, respectively, from changes in foreign exchange rates.
Net premiums written decreased primarily from $5 million
foreign exchange rates.
Three months ended March 31, | Increase (decrease) | |||||||||||
2019 | 2018 | 2019 vs. 2018 | ||||||||||
Loss ratio | 34 | % | 30 | % | 4 | % | ||||||
Expense ratio (net earned premiums) | 31 | % | 29 | % | 2 | % | ||||||
Expense ratio (net premiums written) | 50 | % | 47 | % | 3 | % |
Three months ended June 30, | Increase (decrease) | Six months ended June 30, | Increase (decrease) | |||||||||||||||||||||
2019 | 2018 | 2019 vs. 2018 | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||||||||
Loss ratio | 34 | % | 28 | % | 6 | % | 34 | % | 29 | % | 5 | % | ||||||||||||
Expense ratio (net earned premiums) | 33 | % | 27 | % | 6 | % | 32 | % | 28 | % | 4 | % | ||||||||||||
Expense ratio (net premiums written) | 44 | % | 50 | % | (6 | )% | 47 | % | 48 | % | (1 | )% |
business and higher policy cancellations in the prior year. Losses were flat as higher reserves on new delinquencies were offset by higher reserve releases for cures in the current year.
March 31, 2019 | December 31, 2018 | March 31, 2018 | ||||||||||
Primary insured loansin-force | 1,323,172 | 1,332,906 | 1,407,431 | |||||||||
Delinquent loans | 7,490 | 7,145 | 6,958 | |||||||||
Percentage of delinquent loans (delinquency rate) | 0.57 | % | 0.54 | % | 0.49 | % | ||||||
Flow loansin-force | 1,217,050 | 1,226,219 | 1,296,055 | |||||||||
Flow delinquent loans | 7,265 | 6,931 | 6,735 | |||||||||
Percentage of flow delinquent loans (delinquency rate) | 0.60 | % | 0.57 | % | 0.52 | % | ||||||
Bulk loansin-force | 106,122 | 106,687 | 111,376 | |||||||||
Bulk delinquent loans | 225 | 214 | 223 | |||||||||
Percentage of bulk delinquent loans (delinquency rate) | 0.21 | % | 0.20 | % | 0.20 | % |
June 30, 2019 | December 31, 2018 | June 30, 2018 | ||||||||||
Primary insured loans in-force | 1,308,811 | 1,332,906 | 1,354,614 | |||||||||
Delinquent loans | 7,891 | 7,145 | 7,306 | |||||||||
Percentage of delinquent loans (delinquency rate) | 0.60 | % | 0.54 | % | 0.54 | % | ||||||
Flow loans in-force | 1,200,603 | 1,226,219 | 1,247,229 | |||||||||
Flow delinquent loans | 7,642 | 6,931 | 7,076 | |||||||||
Percentage of flow delinquent loans (delinquency rate) | 0.64 | % | 0.57 | % | 0.57 | % | ||||||
Bulk loans in-force | 108,208 | 106,687 | 107,385 | |||||||||
Bulk delinquent loans | 249 | 214 | 230 | |||||||||
Percentage of bulk delinquent loans (delinquency rate) | 0.23 | % | 0.20 | % | 0.21 | % |
Percent of primary risk in-force as of | Delinquency rate | |||||||||||||||
March 31, | December 31, | March 31, | ||||||||||||||
March 31, 2019 | 2019 | 2018 | 2018 | |||||||||||||
By state and territory: | ||||||||||||||||
New South Wales | 28 | % | 0.41 | % | 0.38 | % | 0.33 | % | ||||||||
Queensland | 23 | 0.74 | % | 0.70 | % | 0.67 | % | |||||||||
Victoria | 22 | 0.42 | % | 0.40 | % | 0.39 | % | |||||||||
Western Australia | 13 | 1.05 | % | 0.98 | % | 0.88 | % | |||||||||
South Australia | 6 | 0.69 | % | 0.68 | % | 0.63 | % | |||||||||
Australian Capital Territory | 3 | 0.19 | % | 0.17 | % | 0.18 | % | |||||||||
Tasmania | 2 | 0.28 | % | 0.31 | % | 0.32 | % | |||||||||
New Zealand | 2 | 0.04 | % | 0.05 | % | 0.06 | % | |||||||||
Northern Territory | 1 | 0.76 | % | 0.68 | % | 0.52 | % | |||||||||
|
| |||||||||||||||
Total | 100 | % | 0.57 | % | 0.54 | % | 0.49 | % | ||||||||
|
|
Percent of primary risk in-force as of June 30, 2019 | Delinquency rate | |||||||||||||||
June 30, 2019 | December 31, 2018 | June 30, 2018 | ||||||||||||||
By state and territory: | ||||||||||||||||
New South Wales | 27 | % | 0.45 | % | 0.38 | % | 0.37 | % | ||||||||
Queensland | 23 | 0.81 | % | 0.70 | % | 0.73 | % | |||||||||
Victoria | 23 | 0.45 | % | 0.40 | % | 0.42 | % | |||||||||
Western Australia | 13 | 1.10 | % | 0.98 | % | 0.99 | % | |||||||||
South Australia | 6 | 0.68 | % | 0.68 | % | 0.67 | % | |||||||||
Australian Capital Territory | 3 | 0.25 | % | 0.17 | % | 0.18 | % | |||||||||
Tasmania | 2 | 0.31 | % | 0.31 | % | 0.34 | % | |||||||||
New Zealand | 2 | 0.02 | % | 0.05 | % | 0.06 | % | |||||||||
Northern Territory | 1 | 0.83 | % | 0.68 | % | 0.61 | % | |||||||||
Total | 100 | % | 0.60 | % | 0.54 | % | 0.54 | % | ||||||||
factors can affect the reserves in our U.S. life insurance businesses. Because these factors are not known in advance, change over time, are difficult to accurately predict and are inherently uncertain, we cannot determine with precision the ultimate amounts we will pay for actual claims or the timing of those payments. We will continue to monitor our experience and assumptions closely and make changes to our assumptions and methodologies, as appropriate, for our U.S. life insurance products. Even small changes in assumptions or small deviations of actual experience from assumptions can have, and in the past have had, material impacts on our DAC amortization, reserve levels, results of operations and financial condition.
We expect to complete our annual review of long-term care insurance claim reserve assumptions in the third quarter of 2019 and we expect to complete our loss recognition and cash flow testing as well as assumption reviews in the fourth quarter of 2019.
Results of our U.S. life insurance businesses are also impacted by interest rates. Low interest rates put pressure on the profitability and returns of these businesses as higher yielding investments mature and are replaced with lower-yielding investments. We seek to manage the impact of low interest rates through asset-liability management as well as interest rate hedging strategies for a portion of our long-term care insurance product cash flows. Additionally, certain products have implicit and explicit rate guarantees or optionality that are significantly impacted by changes in interest rates. For a further discussion of the impact of interest rates on our U.S. life insurance businesses, see “Item 7A—Quantitative and Qualitative Disclosures About Market Risk” in our 2018 Annual Report on Form10-K.
would require any of them to take or become subject to any corrective action in their respective domiciliary state. However, the RBC ratio of our U.S. life insurance subsidiaries has declined over the past few years as a result of statutory losses driven by the declining performance of the business and increases in our statutory reserves, including results of Actuarial Guideline 38, cash flow testing and assumption reviews particularly in our long-term care insurance business. Any future statutory losses would decrease the RBC ratio of our U.S. life insurance subsidiaries. We continue to face challenges in our principal life insurance subsidiaries, particularly those subsidiaries that rely heavily on
going on claim.
As a result of ongoing challenges in our long-term care insurance business, we continue pursuing initiatives to improve the risk and profitability profile of our business including: premium rate increases and associated benefit reductions on ourMarch 31,June 30, 2019, we have suspended sales in Hawaii, Massachusetts, New Hampshire, Vermont and Montana, and will consider taking similar actions in the future in other states where we are unable to obtain satisfactory rate increases on As of March 31, 2019, we were in litigation with one state that has refused to approve actuarially justifiedin-force rate actions.
blocks. We have also been experiencing higher mortality related charges resulting from an increase in rates charged by our reinsurance partners reflecting natural block aging and higher mortality compared to expectations. Our mortality experience for older ages and late-duration premium periods and conversion products is emerging. We will continue to regularly review our mortality assumptions as well as all of our other assumptions in light of emerging experience and may be required to make further adjustments to our universal and term universal life insurance reserves in the future, which could also impact our loss recognition testing results. Any further materially adverse changes to our assumptions, including mortality, may have a materially negative impact on our results of operations, financial condition and business.
Three months ended March 31, | Increase (decrease) and percentage change | |||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||
Revenues: | ||||||||||||||
Premiums | $ | 709 | $ | 722 | $ | (13 | ) | (2)% | ||||||
Net investment income | 701 | 688 | 13 | 2% | ||||||||||
Net investment gains (losses) | 84 | 8 | 76 | NM(1) | ||||||||||
Policy fees and other income | 151 | 163 | (12 | ) | (7)% | |||||||||
|
|
|
|
|
| |||||||||
Total revenues | 1,645 | 1,581 | 64 | 4% | ||||||||||
|
|
|
|
|
| |||||||||
Benefits and expenses: | ||||||||||||||
Benefits and other changes in policy reserves | 1,236 | 1,238 | (2 | ) | — % | |||||||||
Interest credited | 106 | 119 | (13 | ) | (11)% | |||||||||
Acquisition and operating expenses, net of deferrals | 148 | 141 | 7 | 5% | ||||||||||
Amortization of deferred acquisition costs and intangibles | 66 | 71 | (5 | ) | (7)% | |||||||||
Interest expense | 5 | 4 | 1 | 25% | ||||||||||
|
|
|
|
|
| |||||||||
Total benefits and expenses | 1,561 | 1,573 | (12 | ) | (1)% | |||||||||
|
|
|
|
|
| |||||||||
Net income before income taxes | 84 | 8 | 76 | NM(1) | ||||||||||
Provision for income taxes | 24 | 6 | 18 | NM (1) | ||||||||||
|
|
|
|
|
| |||||||||
Net income | 60 | 2 | 58 | NM(1) | ||||||||||
Adjustments to net income: | ||||||||||||||
Net investment (gains) losses, net(2) | (86 | ) | (9 | ) | (77 | ) | NM(1) | |||||||
Expenses related to restructuring | 4 | — | 4 | NM(1) | ||||||||||
Taxes on adjustments | 17 | 2 | 15 | NM(1) | ||||||||||
|
|
|
|
|
| |||||||||
Adjusted operating loss available to Genworth Financial, Inc.’scommon stockholders | $ | (5 | ) | $ | (5 | ) | $ | — | — % | |||||
|
|
|
|
|
|
Three months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 713 | $ | 712 | $ | 1 | — | % | ||||||||
Net investment income | 724 | 707 | 17 | 2 | % | |||||||||||
Net investment gains (losses) | (36 | ) | (10 | ) | (26 | ) | NM | (1) | ||||||||
Policy fees and other income | 187 | 169 | 18 | 11 | % | |||||||||||
Total revenues | 1,588 | 1,578 | 10 | 1 | % | |||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 1,211 | 1,163 | 48 | 4 | % | |||||||||||
Interest credited | 106 | 116 | (10 | ) | (9 | )% | ||||||||||
Acquisition and operating expenses, net of deferrals | 142 | 146 | (4 | ) | (3 | )% | ||||||||||
Amortization of deferred acquisition costs and intangibles | 67 | 78 | (11 | ) | (14 | )% | ||||||||||
Interest expense | 4 | 4 | — | — | % | |||||||||||
Total benefits and expenses | 1,530 | 1,507 | 23 | 2 | % | |||||||||||
Income before income taxes | 58 | 71 | (13 | ) | (18 | )% | ||||||||||
Provision for income taxes | 19 | 21 | (2 | ) | (10 | )% | ||||||||||
Net income | 39 | 50 | (11 | ) | (22 | )% | ||||||||||
Adjustments to net income: | ||||||||||||||||
Net investment (gains) losses, net (2) | 35 | 9 | 26 | NM | (1) | |||||||||||
Expenses related to restructuring | (1 | ) | — | (1 | ) | NM | (1) | |||||||||
Taxes on adjustments | (7 | ) | (2 | ) | (5 | ) | NM | (1) | ||||||||
Adjusted operating income available to Genworth Financial, Inc.’scommon stockholders | $ | 66 | $ | 57 | $ | 9 | 16 | % | ||||||||
(1) | We define “NM” as not meaningful for increases or decreases greater than 200%. |
(2) | For the three months ended |
Three months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Adjusted operating income available to Genworth Financial, Inc.’s common stockholders: | ||||||||||||||||
Long-term care insurance | $ | 37 | $ | 22 | $ | 15 | 68 | % | ||||||||
Life insurance | 10 | 4 | 6 | 150 | % | |||||||||||
Fixed annuities | 19 | 31 | (12 | ) | (39 | )% | ||||||||||
Total adjusted operating income available to Genworth Financial, Inc.’s common stockholders | $ | 66 | $ | 57 | $ | 9 | 16 | % | ||||||||
Six months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 1,422 | $ | 1,434 | $ | (12 | ) | (1 | )% | |||||||
Net investment income | 1,425 | 1,395 | 30 | 2 | % | |||||||||||
Net investment gains (losses) | 48 | (2 | ) | 50 | NM | (1) | ||||||||||
Policy fees and other income | 338 | 332 | 6 | 2 | % | |||||||||||
Total revenues | 3,233 | 3,159 | 74 | 2 | % | |||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 2,447 | 2,401 | 46 | 2 | % | |||||||||||
Interest credited | 212 | 235 | (23 | ) | (10 | )% | ||||||||||
Acquisition and operating expenses, net of deferrals | 290 | 287 | 3 | 1 | % | |||||||||||
Amortization of deferred acquisition costs and intangibles | 133 | 149 | (16 | ) | (11 | )% | ||||||||||
Interest expense | 9 | 8 | 1 | 13 | % | |||||||||||
Total benefits and expenses | 3,091 | 3,080 | 11 | — | % | |||||||||||
Income before income taxes | 142 | 79 | 63 | 80 | % | |||||||||||
Provision for income taxes | 43 | 27 | 16 | 59 | % | |||||||||||
Net income | 99 | 52 | 47 | 90 | % | |||||||||||
Adjustments to net income: | ||||||||||||||||
Net investment (gains) losses, net (2) | (51 | ) | — | (51 | ) | NM | (1) | |||||||||
Expenses related to restructuring | 3 | — | 3 | NM | (1) | |||||||||||
Taxes on adjustments | 10 | — | 10 | NM | (1) | |||||||||||
Adjusted operating income available to Genworth Financial,Inc.’s common stockholders | $ | 61 | $ | 52 | $ | 9 | 17 | % | ||||||||
(1) | We define “NM” as not meaningful for increases or decreases greater than 200%. |
(2) | For the six months ended June 30, 2019 and 2018, net investment (gains) losses were adjusted for DAC and other intangible amortization and certain benefit reserves of $(3) million and $(2) million, |
Three months ended March 31, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders: | ||||||||||||||||
Long-term care insurance | $ | (20 | ) | $ | (32 | ) | $ | 12 | 38 | % | ||||||
Life insurance | (2 | ) | (1 | ) | (1 | ) | (100 | )% | ||||||||
Fixed annuities | 17 | 28 | (11 | ) | (39 | )% | ||||||||||
|
|
|
|
|
| |||||||||||
Total adjusted operating loss available to Genworth Financial, Inc.’s common stockholders | $ | (5 | ) | $ | (5 | ) | $ | — | — | % | ||||||
|
|
|
|
|
|
Six months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Adjusted operating income (loss) available to Genworth Financial, Inc.’s common stockholders: | ||||||||||||||||
Long-term care insurance | $ | 17 | $ | (10 | ) | $ | 27 | NM | (1) | |||||||
Life insurance | 8 | 3 | 5 | 167 | % | |||||||||||
Fixed annuities | 36 | 59 | (23 | ) | (39 | )% | ||||||||||
Total adjusted operating income available to Genworth Financial, Inc.’s common stockholders | $ | 61 | $ | 52 | $ | 9 | 17 | % | ||||||||
(1) | We define “NM” as not meaningful for increases or decreases greater than 200%. |
The
The adjusted
decreased $3increased $5 million. The decreaseincrease was largely from policy terminations, partially offset by $17$41 million of increased premiums in the current year fromin-force rate actions approved and implemented.implemented, partially offset by policy terminations and policies entering paid-up status in the current year.
$74$56 million primarily related to net gains from the sale of investment securities in the current year compared to net losses in the prior year and from higher unrealized gains onfrom changes in the fair value of equity securities, partially offset by derivative losses in the current year relatedcompared to changesgains in fair value.the prior year.
The decrease wasfromdriven by a $21 million favorable correction related to ceded premiums ondecreased $1increased $21 million principally related to the aging of the in-force block (including higher frequency of new claims), higher severity of new claims, lower claim terminations and an increase in incremental reserves of $49 million recorded in connection with an accrual for profits followed by losses in the current year. These increases were partially offset by a $61 million higher favorable impact of $161 million from reduced benefits in the current year related toin-force rate actions approved and implemented and from favorable development on prior year incurred but not reported claims. This decrease was mostly offset by aging of thein-force block (including higher frequency of new claims), lower claim terminations and higher severity of new claims in the current year.
credited.credited$3$5 million and $10$18 million, respectively, primarily driven by a decline in average account values and lower crediting rates in the current year.Acquisition and operating expenses, net
year.
Three months ended March 31, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Net earned premiums: | ||||||||||||||||
Individual long-term care insurance | $ | 599 | $ | 603 | $ | (4 | ) | (1 | )% | |||||||
Group long-term care insurance | 29 | 28 | 1 | 4 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Total | $ | 628 | $ | 631 | $ | (3 | ) | — | % | |||||||
|
|
|
|
|
| |||||||||||
Loss ratio | 81 | % | 84 | % | (3 | )% |
Three months ended June 30, | Increase (decrease) and percentage change | Six months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | 2019 | 2018 | 2019 vs. 2018 | ||||||||||||||||||||||||||
Net earned premiums: | ||||||||||||||||||||||||||||||||
Individual long-term care insurance | $ | 610 | $ | 604 | $ | 6 | 1 | % | $ | 1,209 | $ | 1,207 | $ | 2 | — | % | ||||||||||||||||
Group long-term care insurance | 30 | 28 | 2 | 7 | % | 59 | 56 | 3 | 5 | % | ||||||||||||||||||||||
Total | $ | 640 | $ | 632 | $ | 8 | 1 | % | $ | 1,268 | $ | 1,263 | $ | 5 | — | % | ||||||||||||||||
Loss ratio | 74 | % | 75 | % | (1 | )% | 78 | % | 79 | % | (1 | )% |
implemented, partially offset by policy terminations and policies entering paid-up status in the current year.
As of or for the three months ended March 31, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Term and whole life insurance | ||||||||||||||||
Net earned premiums | $ | 81 | $ | 91 | $ | (10 | ) | (11 | )% | |||||||
Life insurancein-force, net of reinsurance | 95,245 | 102,100 | (6,855 | ) | (7 | )% | ||||||||||
Life insurancein-force before reinsurance | 427,879 | 454,051 | (26,172 | ) | (6 | )% | ||||||||||
Term universal life insurance | ||||||||||||||||
Net deposits | $ | 58 | $ | 61 | $ | (3 | ) | (5 | )% | |||||||
Life insurancein-force, net of reinsurance | 114,894 | 117,967 | (3,073 | ) | (3 | )% | ||||||||||
Life insurancein-force before reinsurance | 115,691 | 118,810 | (3,119 | ) | (3 | )% | ||||||||||
Universal life insurance | ||||||||||||||||
Net deposits | $ | 76 | $ | 132 | $ | (56 | ) | (42 | )% | |||||||
Life insurancein-force, net of reinsurance | 34,961 | 36,472 | (1,511 | ) | (4 | )% | ||||||||||
Life insurancein-force before reinsurance | 39,785 | 41,642 | (1,857 | ) | (4 | )% | ||||||||||
Total life insurance | ||||||||||||||||
Net earned premiums and deposits | $ | 215 | $ | 284 | $ | (69 | ) | (24 | )% | |||||||
Life insurancein-force, net of reinsurance | 245,100 | 256,539 | (11,439 | ) | (4 | )% | ||||||||||
Life insurancein-force before reinsurance | 583,355 | 614,503 | (31,148 | ) | (5 | )% |
Three months ended June 30, | Increase (decrease) and percentage change | Six months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | 2019 | 2018 | 2019 vs. 2018 | ||||||||||||||||||||||||||
Term and whole life insurance | ||||||||||||||||||||||||||||||||
Net earned premiums | $ | 73 | $ | 80 | $ | (7 | ) | (9 | )% | $ | 154 | $ | 171 | $ | (17 | ) | (10 | )% | ||||||||||||||
Term universal life insurance | ||||||||||||||||||||||||||||||||
Net deposits | 59 | 61 | (2 | ) | (3 | )% | 117 | 122 | (5 | ) | (4 | )% | ||||||||||||||||||||
Universal life insurance | ||||||||||||||||||||||||||||||||
Net deposits | 141 | 126 | 15 | 12 | % | 217 | 258 | (41 | ) | (16 | )% | |||||||||||||||||||||
Total life insurance | ||||||||||||||||||||||||||||||||
Net earned premiums and deposits | $ | 273 | $ | 267 | $ | 6 | 2 | % | $ | 488 | $ | 551 | $ | (63 | ) | (11 | )% | |||||||||||||||
As of June 30, | Percentage change | |||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||
Term and whole life insurance | ||||||||||||
Life insurance in-force, net of reinsurance | $ | 91,386 | $ | 100,475 | (9 | )% | ||||||
Life insurance in-force before reinsurance | $ | 419,246 | $ | 447,429 | (6 | )% | ||||||
Term universal life insurance | ||||||||||||
Life insurance in-force, net of reinsurance | $ | 114,214 | $ | 117,141 | (2 | )% | ||||||
Life insurance in-force before reinsurance | $ | 114,999 | $ | 117,957 | (3 | )% | ||||||
Universal life insurance | ||||||||||||
Life insurance in-force, net of reinsurance | $ | 34,581 | $ | 36,054 | (4 | )% | ||||||
Life insurance in-force before reinsurance | $ | 39,357 | $ | 41,136 | (4 | )% | ||||||
Total life insurance | ||||||||||||
Life insurance in-force, net of reinsurance | $ | 240,181 | $ | 253,670 | (5 | )% | ||||||
Life insurance in-force before reinsurance | $ | 573,602 | $ | 606,522 | (5 | )% |
As of or for the three months ended March 31, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Account value, beginning of period | $ | 14,348 | $ | 16,401 | ||||
Deposits | 29 | 22 | ||||||
Surrenders, benefits and product charges | (516 | ) | (536 | ) | ||||
|
|
|
| |||||
Net flows | (487 | ) | (514 | ) | ||||
Interest credited and investment performance | 142 | 106 | ||||||
Effect of accumulated net unrealized investment gains (losses) | 106 | (112 | ) | |||||
|
|
|
| |||||
Account value, end of period | $ | 14,109 | $ | 15,881 | ||||
|
|
|
|
As of or for the three months ended June 30, | As of or for the six months ended June 30, | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Account value, beginning of period | $ | 14,109 | $ | 15,881 | $ | 14,348 | $ | 16,401 | ||||||||
Premiums and deposits | 16 | 22 | 45 | 44 | ||||||||||||
Surrenders, benefits and product charges | (486 | ) | (593 | ) | (1,002 | ) | (1,129 | ) | ||||||||
Net flows | (470 | ) | (571 | ) | (957 | ) | (1,085 | ) | ||||||||
Interest credited and investment performance | 119 | 128 | 261 | 234 | ||||||||||||
Effect of accumulated net unrealized investment gains (losses) | 117 | (66 | ) | 223 | (178 | ) | ||||||||||
Account value, end of period | $ | 13,875 | $ | 15,372 | $ | 13,875 | $ | 15,372 | ||||||||
Three months ended March 31, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Net investment income | $ | 47 | $ | 42 | $ | 5 | 12 | % | ||||||||
Net investment gains (losses) | — | (14 | ) | 14 | 100 | % | ||||||||||
Policy fees and other income | 35 | 40 | (5 | ) | (13 | )% | ||||||||||
|
|
|
|
|
| |||||||||||
Total revenues | 82 | 68 | 14 | 21 | % | |||||||||||
|
|
|
|
|
| |||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 1 | 8 | (7 | ) | (88 | )% | ||||||||||
Interest credited | 41 | 37 | 4 | 11 | % | |||||||||||
Acquisition and operating expenses, net of deferrals | 13 | 15 | (2 | ) | (13 | )% | ||||||||||
Amortization of deferred acquisition costs and intangibles | 2 | 7 | (5 | ) | (71 | )% | ||||||||||
|
|
|
|
|
| |||||||||||
Total benefits and expenses | 57 | 67 | (10 | ) | (15 | )% | ||||||||||
|
|
|
|
|
| |||||||||||
Income before income taxes | 25 | 1 | 24 | NM | (1) | |||||||||||
Provision for income taxes | 5 | — | 5 | NM | (1) | |||||||||||
|
|
|
|
|
| |||||||||||
Net income | 20 | 1 | 19 | NM | (1) | |||||||||||
Adjustments to net income: | ||||||||||||||||
Net investment (gains) losses, net(2) | — | 12 | (12 | ) | (100 | )% | ||||||||||
Taxes on adjustments | — | (3 | ) | 3 | 100 | % | ||||||||||
|
|
|
|
|
| |||||||||||
Adjusted operating income available to Genworth Financial, Inc.’scommon stockholders | $ | 20 | $ | 10 | $ | 10 | 100 | % | ||||||||
|
|
|
|
|
|
Three months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Net investment income | $ | 47 | $ | 43 | $ | 4 | 9 | % | ||||||||
Net investment gains (losses) | (4 | ) | (1 | ) | (3 | ) | NM | (1) | ||||||||
Policy fees and other income | 35 | 38 | (3 | ) | (8 | )% | ||||||||||
Total revenues | 78 | 80 | (2 | ) | (3 | )% | ||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 13 | 7 | 6 | 86 | % | |||||||||||
Interest credited | 40 | 36 | 4 | 11 | % | |||||||||||
Acquisition and operating expenses, net of deferrals | 13 | 14 | (1 | ) | (7 | )% | ||||||||||
Amortization of deferred acquisition costs and intangibles | 4 | 8 | (4 | ) | (50 | )% | ||||||||||
Total benefits and expenses | 70 | 65 | 5 | 8 | % | |||||||||||
Income before income taxes | 8 | 15 | (7 | ) | (47 | )% | ||||||||||
Provision for income taxes | 1 | 3 | (2 | ) | (67 | )% | ||||||||||
Net income | 7 | 12 | (5 | ) | (42 | )% | ||||||||||
Adjustments to net income: | ||||||||||||||||
Net investment (gains) losses, net (2) | 2 | 1 | 1 | 100 | % | |||||||||||
Taxes on adjustments | — | — | — | — | % | |||||||||||
Adjusted operating income available to Genworth Financial, Inc.’scommon stockholders | $ | 9 | $ | 13 | $ | (4 | ) | (31 | )% | |||||||
(1) | We define “NM” as not meaningful for increases or decreases greater than 200%. |
(2) | For the three months ended |
compared to gains in the prior year. This increase was partially offset by derivative gains in the current year compared to derivative losses in the prior year.increaseddecreased predominantly from higher mortality and lower fee income driven mostly by a decline in the average account values in our variable annuity products, partially offset by favorable equity market performance in the current year.priorcurrent year were largely relatedprimarily due to derivative losses partially offset by gains on embedded derivatives associated with our variable annuity products with guaranteed minimum withdrawal benefits (“GMWBs”).
Six months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Net investment income | $ | 94 | $ | 85 | $ | 9 | 11 | % | ||||||||
Net investment gains (losses) | (4 | ) | (15 | ) | 11 | 73 | % | |||||||||
Policy fees and other income | 70 | 78 | (8 | ) | (10 | )% | ||||||||||
Total revenues | 160 | 148 | 12 | 8 | % | |||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 14 | 15 | (1 | ) | (7 | )% | ||||||||||
Interest credited | 81 | 73 | 8 | 11 | % | |||||||||||
Acquisition and operating expenses, net of deferrals | 26 | 29 | (3 | ) | (10 | )% | ||||||||||
Amortization of deferred acquisition costs and intangibles | 6 | 15 | (9 | ) | (60 | )% | ||||||||||
Total benefits and expenses | 127 | 132 | (5 | ) | (4 | )% | ||||||||||
Income before income taxes | 33 | 16 | 17 | 106 | % | |||||||||||
Provision for income taxes | 6 | 3 | 3 | 100 | % | |||||||||||
Net income | 27 | 13 | 14 | 108 | % | |||||||||||
Adjustments to net income: | ||||||||||||||||
Net investment (gains) losses, net (1) | 2 | 13 | (11 | ) | (85 | )% | ||||||||||
Taxes on adjustments | — | (3 | ) | 3 | 100 | % | ||||||||||
Adjusted operating income available to Genworth Financial, Inc.’scommon stockholders | $ | 29 | $ | 23 | $ | 6 | 26 | % | ||||||||
(1) | For the six months ended June 30, 2019 and 2018, net investment (gains) losses were adjusted for DAC and other intangible amortization and certain benefit reserves of $(2) million in each period. |
current year.
As of or for the three months ended March 31, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Account value, beginning of period | $ | 4,918 | $ | 5,884 | ||||
Deposits | 7 | 7 | ||||||
Surrenders, benefits and product charges | (161 | ) | (208 | ) | ||||
|
|
|
| |||||
Net flows | (154 | ) | (201 | ) | ||||
Interest credited and investment performance | 349 | (64 | ) | |||||
|
|
|
| |||||
Account value, end of period | $ | 5,113 | $ | 5,619 | ||||
|
|
|
|
As of or for the three months ended June 30, | As of or for the six months ended June 30, | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Account value, beginning of period | $ | 5,113 | $ | 5,619 | $ | 4,918 | $ | 5,884 | ||||||||
Deposits | 6 | 5 | 13 | 12 | ||||||||||||
Surrenders, benefits and product charges | (158 | ) | (203 | ) | (319 | ) | (411 | ) | ||||||||
Net flows | (152 | ) | (198 | ) | (306 | ) | (399 | ) | ||||||||
Interest credited and investment performance | 160 | 48 | 509 | (16 | ) | |||||||||||
Account value, end of period | $ | 5,121 | $ | 5,469 | $ | 5,121 | $ | 5,469 | ||||||||
As of or for the three months ended March 31, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Funding Agreements | ||||||||
Account value, beginning of period | $ | 381 | $ | 260 | ||||
Surrenders and benefits | (78 | ) | (76 | ) | ||||
|
|
|
| |||||
Net flows | (78 | ) | (76 | ) | ||||
Interest credited | 2 | 1 | ||||||
|
|
|
| |||||
Account value, end of period | $ | 305 | $ | 185 | ||||
|
|
|
|
As of or for the three months ended June 30, | As of or for the six months ended June 30, | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
FABNs (1) and Funding Agreements | ||||||||||||||||
Account value, beginning of period | $ | 305 | $ | 185 | $ | 381 | $ | 260 | ||||||||
Surrenders and benefits | (2 | ) | (6 | ) | (80 | ) | (82 | ) | ||||||||
Net flows | (2 | ) | (6 | ) | (80 | ) | (82 | ) | ||||||||
Interest credited | 2 | 1 | 4 | 2 | ||||||||||||
Account value, end of period | $ | 305 | $ | 180 | $ | 305 | $ | 180 | ||||||||
(1) | Funding agreements backing notes |
Three months ended March 31, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 2 | $ | 2 | $ | — | — | % | ||||||||
Net investment income | 3 | 2 | 1 | 50 | % | |||||||||||
Net investment gains (losses) | (21 | ) | (1 | ) | (20 | ) | NM | (1) | ||||||||
Policy fees and other income | 1 | (2 | ) | 3 | 150 | % | ||||||||||
|
|
|
|
|
| |||||||||||
Total revenues | (15 | ) | 1 | (16 | ) | NM | (1) | |||||||||
|
|
|
|
|
| |||||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 1 | 1 | — | — | % | |||||||||||
Acquisition and operating expenses, net of deferrals | 7 | 11 | (4 | ) | (36 | )% | ||||||||||
Amortization of deferred acquisition costs and intangibles | — | 1 | (1 | ) | (100 | )% | ||||||||||
Interest expense | 61 | 65 | (4 | ) | (6 | )% | ||||||||||
|
|
|
|
|
| |||||||||||
Total benefits and expenses | 69 | 78 | (9 | ) | (12 | )% | ||||||||||
|
|
|
|
|
| |||||||||||
Loss before income taxes | (84 | ) | (77 | ) | (7 | ) | (9 | )% | ||||||||
Provision (benefit) for income taxes | 5 | (17 | ) | 22 | 129 | % | ||||||||||
|
|
|
|
|
| |||||||||||
Net loss | (89 | ) | (60 | ) | (29 | ) | (48 | )% | ||||||||
Adjustments to net loss: | ||||||||||||||||
Net investment (gains) losses | 21 | 1 | 20 | NM | (1) | |||||||||||
Taxes on adjustments | (5 | ) | — | (5 | ) | NM | (1) | |||||||||
|
|
|
|
|
| |||||||||||
Adjusted operating loss available to Genworth Financial, Inc.’s common stockholders | $ | (73 | ) | $ | (59 | ) | $ | (14 | ) | (24 | )% | |||||
|
|
|
|
|
|
Three months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 2 | $ | 3 | $ | (1 | ) | (33 | )% | |||||||
Net investment income | 3 | 3 | — | — | % | |||||||||||
Net investment gains (losses) | (7 | ) | — | (7 | ) | NM | (1) | |||||||||
Policy fees and other income | — | 1 | (1 | ) | (100 | )% | ||||||||||
Total revenues | (2 | ) | 7 | (9 | ) | (129 | )% | |||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 1 | 1 | — | — | % | |||||||||||
Acquisition and operating expenses, net of deferrals | 9 | 11 | (2 | ) | (18 | )% | ||||||||||
Interest expense | 62 | 67 | (5 | ) | (7 | )% | ||||||||||
Total benefits and expenses | 72 | 79 | (7 | ) | (9 | )% | ||||||||||
Loss before income taxes | (74 | ) | (72 | ) | (2 | ) | (3 | )% | ||||||||
Provision for income taxes | 5 | 3 | 2 | 67 | % | |||||||||||
Net loss | (79 | ) | (75 | ) | (4 | ) | (5 | )% | ||||||||
Adjustments to net loss: | ||||||||||||||||
Net investment (gains) losses | 7 | — | 7 | NM | (1) | |||||||||||
Expenses related to restructuring | 1 | — | 1 | NM | (1) | |||||||||||
Taxes on adjustments | (1 | ) | — | (1 | ) | NM | (1) | |||||||||
Adjusted operating loss available to Genworth Financial, Inc.’s common stockholders | $ | (72 | ) | $ | (75 | ) | $ | 3 | 4 | % | ||||||
(1) | We define “NM” as not meaningful for increases or decreases greater than 200%. |
Six months ended June 30, | Increase (decrease) and percentage change | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 vs. 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Premiums | $ | 4 | $ | 5 | $ | (1 | ) | (20 | )% | |||||||
Net investment income | 6 | 5 | 1 | 20 | % | |||||||||||
Net investment gains (losses) | (28 | ) | (1 | ) | (27 | ) | NM | (1) | ||||||||
Policy fees and other income | 1 | (1 | ) | 2 | 200 | % | ||||||||||
Total revenues | (17 | ) | 8 | (25 | ) | NM | (1) | |||||||||
Benefits and expenses: | ||||||||||||||||
Benefits and other changes in policy reserves | 2 | 2 | — | — | % | |||||||||||
Acquisition and operating expenses, net of deferrals | 16 | 22 | (6 | ) | (27 | )% | ||||||||||
Amortization of deferred acquisition costs and intangibles | — | 1 | (1 | ) | (100 | )% | ||||||||||
Interest expense | 123 | 132 | (9 | ) | (7 | )% | ||||||||||
Total benefits and expenses | 141 | 157 | (16 | ) | (10 | )% | ||||||||||
Loss before income taxes | (158 | ) | (149 | ) | (9 | ) | (6 | )% | ||||||||
Provision (benefit) for income taxes | 10 | (14 | ) | 24 | 171 | % | ||||||||||
Net loss | (168 | ) | (135 | ) | (33 | ) | (24 | )% | ||||||||
Adjustments to net loss: | ||||||||||||||||
Net investment (gains) losses | 28 | 1 | 27 | NM | (1) | |||||||||||
Expenses related to restructuring | 1 | — | 1 | NM | (1) | |||||||||||
Taxes on adjustments | (6 | ) | — | (6 | ) | NM | (1) | |||||||||
Adjusted operating loss available to Genworth Financial, Inc.’s common stockholders | $ | (145 | ) | $ | (134 | ) | $ | (11 | ) | (8 | )% | |||||
(1) | We define “NM” as not meaningful for increases or decreases greater than 200%. |
year and provisional tax
Interest expense decreased largely driven by the redemption of $597 million of Genworth Holding’sHoldings’ senior notes in May 2018, partially offset by higher interest expense attributable to the term loan that Genworth Holdings closed in March 2018 and from our junior subordinated notes which had a higher floating rate of interest in the current year.
2020 but are subject to change depending on variations in business results and the potential disposition of Genworth Canada. The prior year tax benefit was mostly attributable to foreign tax credits, partially offset by provisional tax
The U.S. Federal Reserve increased its benchmark lending rate four times in 2018.
bonds.
new Prime Minster and an unknown Brexit strategy.
While the ultimate range of Brexit outcomes could lead to potential credit devaluation or rating agency downgrades of our United Kingdom related exposures, at this time, we do not believe there is a material risk of investment impairments arising from the various Brexit scenarios.
rating iswas below the limit defined in the applicable agreement. Beginning in 2018, we renegotiated with many of our counterparties to remove the credit downgrade provisions from the master swap agreements entirely or replace it
threshold provisions.
Three months ended March 31, | Increase (decrease) | |||||||||||||||||||||||
2019 | 2018 | 2019 vs. 2018 | ||||||||||||||||||||||
(Amounts in millions) | Yield | Amount | Yield | Amount | Yield | Amount | ||||||||||||||||||
Fixed maturity securities—taxable | 4.5 | % | $ | 643 | 4.4 | % | $ | 635 | 0.1 | % | $ | 8 | ||||||||||||
Fixed maturitysecurities—non-taxable | 6.1 | % | 2 | 3.7 | % | 3 | 2.4 | % | (1 | ) | ||||||||||||||
Equity securities | 5.6 | % | 9 | 5.1 | % | 10 | 0.5 | % | (1 | ) | ||||||||||||||
Commercial mortgage loans | 4.8 | % | 81 | 5.2 | % | 82 | (0.4 | )% | (1 | ) | ||||||||||||||
Restricted commercial mortgage loans related toa securitization entity | 6.7 | % | 1 | 7.8 | % | 2 | (1.1 | )% | (1 | ) | ||||||||||||||
Policy loans | 9.5 | % | 46 | 9.6 | % | 43 | (0.1 | )% | 3 | |||||||||||||||
Other invested assets(1) | 33.5 | % | 59 | 39.6 | % | 39 | (6.1 | )% | 20 | |||||||||||||||
Cash, cash equivalents, restricted cash andshort-term investments | 2.0 | % | 12 | 1.3 | % | 12 | 0.7 | % | — | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Gross investment income before expenses and fees | 4.8 | % | 853 | 4.8 | % | 826 | — | % | 27 | |||||||||||||||
Expenses and fees | (0.1 | )% | (24 | ) | (0.2 | )% | (22 | ) | 0.1 | % | (2 | ) | ||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Net investment income | 4.7 | % | $ | 829 | 4.6 | % | $ | 804 | 0.1 | % | $ | 25 | ||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Average invested assets and cash | $ | 70,355 | $ | 70,699 | $ | (344 | ) | |||||||||||||||||
|
|
|
|
|
|
Three months ended June 30, | Increase (decrease) | |||||||||||||||||||||||
2019 | 2018 | 2019 vs. 2018 | ||||||||||||||||||||||
(Amounts in millions) | Yield | Amount | Yield | Amount | Yield | Amount | ||||||||||||||||||
Fixed maturity securities—taxable | 4.6 | % | $ | 665 | 4.5 | % | $ | 651 | 0.1 | % | $ | 14 | ||||||||||||
Fixed maturity securities—non-taxable | 6.1 | % | 2 | 3.8 | % | 3 | 2.3 | % | (1 | ) | ||||||||||||||
Equity securities | 6.3 | % | 10 | 5.1 | % | 10 | 1.2 | % | — | |||||||||||||||
Commercial mortgage loans | 4.8 | % | 84 | 4.8 | % | 77 | — | % | 7 | |||||||||||||||
Restricted commercial mortgage loans related toa securitization entity | 7.0 | % | 1 | 8.4 | % | 2 | (1.4 | )% | (1 | ) | ||||||||||||||
Policy loans | 8.8 | % | 45 | 9.0 | % | 41 | (0.2 | )% | 4 | |||||||||||||||
Other invested assets (1) | 28.7 | % | 59 | 49.3 | % | 53 | (20.6 | )% | 6 | |||||||||||||||
Cash, cash equivalents, restricted cash andshort-term investments | 1.9 | % | 11 | 1.7 | % | 14 | 0.2 | % | (3 | ) | ||||||||||||||
Gross investment income before expenses and fees | 5.0 | % | 877 | 4.8 | % | 851 | 0.2 | % | 26 | |||||||||||||||
Expenses and fees | (0.2 | )% | (25 | ) | (0.1 | )% | (23 | ) | (0.1 | )% | (2 | ) | ||||||||||||
Net investment income | 4.8 | % | $ | 852 | 4.7 | % | $ | 828 | 0.1 | % | $ | 24 | ||||||||||||
Average invested assets and cash | $ | 70,752 | $ | 70,466 | $ | 286 | ||||||||||||||||||
Six months ended June 30, | Increase (decrease) | |||||||||||||||||||||||
2019 | 2018 | 2019 vs. 2018 | ||||||||||||||||||||||
(Amounts in millions) | Yield | Amount | Yield | Amount | Yield | Amount | ||||||||||||||||||
Fixed maturity securities—taxable | 4.5 | % | $ | 1,308 | 4.5 | % | $ | 1,286 | — | % | $ | 22 | ||||||||||||
Fixed maturity securities—non-taxable | 6.1 | % | 4 | 3.8 | % | 6 | 2.3 | % | (2 | ) | ||||||||||||||
Equity securities | 5.9 | % | 19 | 5.2 | % | 20 | 0.7 | % | (1 | ) | ||||||||||||||
Commercial mortgage loans | 4.8 | % | 165 | 5.0 | % | 159 | (0.2 | )% | 6 | |||||||||||||||
Restricted commercial mortgage loans related toa securitization entity | 6.8 | % | 2 | 8.1 | % | 4 | (1.3 | )% | (2 | ) | ||||||||||||||
Policy loans | 9.2 | % | 91 | 9.3 | % | 84 | (0.1 | )% | 7 | |||||||||||||||
Other invested assets (1) | 31.1 | % | 118 | 44.0 | % | 92 | (12.9 | )% | 26 | |||||||||||||||
Cash, cash equivalents, restricted cash andshort-term investments | 2.0 | % | 23 | 1.5 | % | 26 | 0.5 | % | (3 | ) | ||||||||||||||
Gross investment income before expenses and fees | 4.9 | % | 1,730 | 4.8 | % | 1,677 | 0.1 | % | 53 | |||||||||||||||
Expenses and fees | (0.1 | )% | (49 | ) | (0.2 | )% | (45 | ) | 0.1 | % | (4 | ) | ||||||||||||
Net investment income | 4.8 | % | $ | 1,681 | 4.6 | % | $ | 1,632 | 0.2 | % | $ | 49 | ||||||||||||
Average invested assets and cash | $ | 70,598 | $ | 70,529 | $ | 69 | ||||||||||||||||||
(1) | Investment income for other invested assets includes amortization of terminated cash flow hedges, which have no corresponding book value within the yield |
For the three months ended March 31,June 30, 2019, annualized weighted-average investment yields increased slightly primarilyprincipally from higher investment income on higher average invested assets. Net investment income included $5 million of higher prepayment speed adjustments on mortgage-backed securities and $4 million of higher income related to inflation-driven volatility on U.S. Government Treasury Inflation Protected Securities (“TIPS”). The three months ended June 30, 2019 included a decrease of $3 million attributable to $13changes in foreign exchange rates.
income related to inflation-driven volatility on TIPS. The six months ended June 30, 2019 included a decrease of $6 million attributable to changes in foreign exchange rates.
Three months ended March 31, | ||||||||
(Amounts in millions) | 2019 | 2018 | ||||||
Available-for-sale securities: | ||||||||
Realized gains | $ | 81 | $ | 7 | ||||
Realized losses | (22 | ) | (16 | ) | ||||
|
|
|
| |||||
Net realized gains (losses) onavailable-for-sale securities | 59 | (9 | ) | |||||
|
|
|
| |||||
Impairments: | ||||||||
Total other-than-temporary impairments | — | — | ||||||
Portion of other-than-temporary impairments recognized inother comprehensive income | — | — | ||||||
|
|
|
| |||||
Net realized gains (losses) on equity securities sold | 3 | 2 | ||||||
Net unrealized gains (losses) on equity securities still held | 8 | (18 | ) | |||||
Limited partnerships | 15 | 7 | ||||||
Commercial mortgage loans | (1 | ) | — | |||||
Derivative instruments | (10 | ) | (13 | ) | ||||
|
|
|
| |||||
Net investment gains (losses) | $ | 74 | $ | (31 | ) | |||
|
|
|
|
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Amounts in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Available-for-sale fixed maturity securities: | ||||||||||||||||
Realized gains | $ | 5 | $ | 13 | $ | 86 | $ | 20 | ||||||||
Realized losses | (6 | ) | (21 | ) | (28 | ) | (37 | ) | ||||||||
Net realized gains (losses) on available-for-sale fixed maturity securities | (1 | ) | (8 | ) | 58 | (17 | ) | |||||||||
Impairments: | ||||||||||||||||
Total other-than-temporary impairments | — | — | — | — | ||||||||||||
Portion of other-than-temporary impairments included in other comprehensive income (loss) | — | — | — | — | ||||||||||||
Net other-than-temporary impairments | — | — | — | — | ||||||||||||
Net realized gains (losses) on equity securities sold | — | 8 | 3 | 10 | ||||||||||||
Net unrealized gains (losses) on equity securities still held | (12 | ) | 3 | (4 | ) | (15 | ) | |||||||||
Limited partnerships | (11 | ) | (2 | ) | 4 | 5 | ||||||||||
Commercial mortgage loans | 1 | — | — | — | ||||||||||||
Derivative instruments | (22 | ) | (15 | ) | (32 | ) | (28 | ) | ||||||||
Net investment gains (losses) | $ | (45 | ) | $ | (14 | ) | $ | 29 | $ | (45 | ) | |||||
The change in net unrealized gains (losses) on equity securities is largely related to favorable equity market performance in the current year compared to a slightly unfavorable equity market in the prior year.
We recorded higher net gains on limited partnership investments in the current year principally from favorable equity market performance.
March 31, 2019 | December 31, 2018 | |||||||||||||||
(Amounts in millions) | Carrying value | % of total | Carrying value | % of total | ||||||||||||
Fixed maturity securities,available-for-sale: | ||||||||||||||||
Public | $ | 42,585 | 57 | % | $ | 41,857 | 58 | % | ||||||||
Private | 18,775 | 25 | 17,804 | 25 | ||||||||||||
Equity securities | 635 | 1 | 655 | 1 | ||||||||||||
Commercial mortgage loans | 6,929 | 9 | 6,687 | 8 | ||||||||||||
Restricted commercial mortgage loans related to a securitization entity | 59 | — | 62 | — | ||||||||||||
Policy loans | 1,994 | 3 | 1,861 | 3 | ||||||||||||
Other invested assets | 1,208 | 2 | 1,188 | 2 | ||||||||||||
Cash, cash equivalents and restricted cash | 2,221 | 3 | 2,177 | 3 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total cash, cash equivalents, restricted cash and invested assets | $ | 74,406 | 100 | % | $ | 72,291 | 100 | % | ||||||||
|
|
|
|
|
|
|
|
June 30, 2019 | December 31, 2018 | |||||||||||||||
(Amounts in millions) | Carrying value | % of total | Carrying value | % of total | ||||||||||||
Fixed maturity securities, available-for-sale: | ||||||||||||||||
Public | $ | 44,013 | 57 | % | $ | 41,857 | 58 | % | ||||||||
Private | 19,761 | 26 | 17,804 | 25 | ||||||||||||
Equity securities | 644 | 1 | 655 | 1 | ||||||||||||
Commercial mortgage loans | 6,963 | 9 | 6,687 | 8 | ||||||||||||
Restricted commercial mortgage loans related to a securitization entity | 56 | — | 62 | — | ||||||||||||
Policy loans | 2,076 | 3 | 1,861 | 3 | ||||||||||||
Other invested assets | 1,535 | 2 | 1,188 | 2 | ||||||||||||
Cash, cash equivalents and restricted cash | 1,938 | 2 | 2,177 | 3 | ||||||||||||
Total cash, cash equivalents, restricted cash and invested assets | $ | 76,986 | 100 | % | $ | 72,291 | 100 | % | ||||||||
Gross unrealized gains | Gross unrealized losses | |||||||||||||||||||||||
(Amounts in millions) | Amortized cost or cost | Not other-than- temporarily impaired | Other-than- temporarily impaired | Not other-than- temporarily impaired | Other-than- temporarily impaired | Fair value | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
U.S. government, agencies andgovernment-sponsored enterprises | $ | 4,116 | $ | 619 | $ | — | $ | (4 | ) | $ | — | $ | 4,731 | |||||||||||
State and political subdivisions | 2,329 | 223 | — | (6 | ) | — | 2,546 | |||||||||||||||||
Non-U.S. government | 2,403 | 121 | — | (6 | ) | — | 2,518 | |||||||||||||||||
U.S. corporate: | ||||||||||||||||||||||||
Utilities | 4,296 | 426 | — | (37 | ) | — | 4,685 | |||||||||||||||||
Energy | 2,447 | 186 | — | (15 | ) | — | 2,618 | |||||||||||||||||
Finance and insurance | 6,883 | 405 | — | (37 | ) | — | 7,251 | |||||||||||||||||
Consumer—non-cyclical | 4,905 | 407 | — | (55 | ) | — | 5,257 | |||||||||||||||||
Technology and communications | 2,832 | 161 | — | (19 | ) | — | 2,974 | |||||||||||||||||
Industrial | 1,194 | 67 | — | (12 | ) | — | 1,249 | |||||||||||||||||
Capital goods | 2,283 | 225 | — | (19 | ) | — | 2,489 | |||||||||||||||||
Consumer—cyclical | 1,579 | 83 | — | (16 | ) | — | 1,646 | |||||||||||||||||
Transportation | 1,271 | 107 | — | (16 | ) | — | 1,362 | |||||||||||||||||
Other | 379 | 33 | — | (1 | ) | — | 411 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total U.S. corporate | 28,069 | 2,100 | — | (227 | ) | — | 29,942 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Non-U.S. corporate: | ||||||||||||||||||||||||
Utilities | 1,100 | 36 | — | (9 | ) | — | 1,127 | |||||||||||||||||
Energy | 1,327 | 124 | — | (4 | ) | — | 1,447 | |||||||||||||||||
Finance and insurance | 2,434 | 129 | — | (9 | ) | — | 2,554 | |||||||||||||||||
Consumer—non-cyclical | 699 | 19 | — | (9 | ) | — | 709 | |||||||||||||||||
Technology and communications | 1,151 | 52 | — | (6 | ) | — | 1,197 | |||||||||||||||||
Industrial | 920 | 56 | — | (3 | ) | — | 973 | |||||||||||||||||
Capital goods | 644 | 21 | — | (3 | ) | — | 662 | |||||||||||||||||
Consumer—cyclical | 537 | 8 | — | (4 | ) | — | 541 | |||||||||||||||||
Transportation | 756 | 65 | — | (6 | ) | — | 815 | |||||||||||||||||
Other | 2,127 | 139 | — | (6 | ) | — | 2,260 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Totalnon-U.S. corporate | 11,695 | 649 | — | (59 | ) | — | 12,285 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Residential mortgage-backed(1) | 2,762 | 181 | 13 | (6 | ) | — | 2,950 | |||||||||||||||||
Commercial mortgage-backed | 2,946 | 64 | — | (48 | ) | — | 2,962 | |||||||||||||||||
Other asset-backed | 3,422 | 18 | 1 | (15 | ) | — | 3,426 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Totalavailable-for-sale fixedmaturity securities | $ | 57,742 | $ | 3,975 | $ | 14 | $ | (371 | ) | $ | — | $ | 61,360 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Gross unrealized gains | Gross unrealized losses | |||||||||||||||||||||||
(Amounts in millions) | Amortized cost or cost | Not other-than- temporarily impaired | Other-than- temporarily impaired | Not other-than- temporarily impaired | Other-than- temporarily impaired | Fair value | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
U.S. government, agencies andgovernment-sponsoredenterprises | $ | 4,151 | $ | 837 | $ | — | $ | (1 | ) | $ | — | $ | 4,987 | |||||||||||
State and political subdivisions | 2,319 | 317 | — | — | — | 2,636 | ||||||||||||||||||
Non-U.S. government | 2,496 | 155 | — | (2 | ) | — | 2,649 | |||||||||||||||||
U.S. corporate: | ||||||||||||||||||||||||
Utilities | 4,327 | 565 | — | (13 | ) | — | 4,879 | |||||||||||||||||
Energy | 2,468 | 255 | — | (10 | ) | — | 2,713 | |||||||||||||||||
Finance and insurance | 6,974 | 633 | — | (10 | ) | — | 7,597 | |||||||||||||||||
Consumer—non-cyclical | 4,954 | 616 | — | (18 | ) | — | 5,552 | |||||||||||||||||
Technology and communications | 2,893 | 269 | — | (6 | ) | — | 3,156 | |||||||||||||||||
Industrial | 1,242 | 98 | — | (4 | ) | — | 1,336 | |||||||||||||||||
Capital goods | 2,323 | 303 | — | (6 | ) | — | 2,620 | |||||||||||||||||
Consumer—cyclical | 1,619 | 127 | — | (5 | ) | — | 1,741 | |||||||||||||||||
Transportation | 1,263 | 152 | — | (4 | ) | — | 1,411 | |||||||||||||||||
Other | 356 | 40 | — | — | — | 396 | ||||||||||||||||||
Total U.S. corporate | 28,419 | 3,058 | — | (76 | ) | — | 31,401 | |||||||||||||||||
Non-U.S. corporate: | ||||||||||||||||||||||||
Utilities | 1,114 | 54 | — | (3 | ) | — | 1,165 | |||||||||||||||||
Energy | 1,349 | 168 | — | (1 | ) | — | 1,516 | |||||||||||||||||
Finance and insurance | 2,438 | 191 | — | (1 | ) | — | 2,628 | |||||||||||||||||
Consumer—non-cyclical | 674 | 40 | — | (4 | ) | — | 710 | |||||||||||||||||
Technology and communications | 1,179 | 94 | — | — | — | 1,273 | ||||||||||||||||||
Industrial | 936 | 81 | — | — | — | 1,017 | ||||||||||||||||||
Capital goods | 663 | 33 | — | (1 | ) | — | 695 | |||||||||||||||||
Consumer—cyclical | 542 | 16 | — | (1 | ) | — | 557 | |||||||||||||||||
Transportation | 761 | 82 | — | (2 | ) | — | 841 | |||||||||||||||||
Other | 2,061 | 186 | — | (2 | ) | — | 2,245 | |||||||||||||||||
Total non-U.S. corporate | 11,717 | 945 | — | (15 | ) | — | 12,647 | |||||||||||||||||
Residential mortgage-backed (1) | 2,511 | 215 | 14 | (2 | ) | — | 2,738 | |||||||||||||||||
Commercial mortgage-backed | 2,882 | 121 | — | (14 | ) | — | 2,989 | |||||||||||||||||
Other asset-backed | 3,699 | 38 | — | (10 | ) | — | 3,727 | |||||||||||||||||
Total available-for-sale fixedmaturity securities | $ | 58,194 | $ | 5,686 | $ | 14 | $ | (120 | ) | $ | — | $ | 63,774 | |||||||||||
(1) | Fair value included |
Gross unrealized gains | Gross unrealized losses | |||||||||||||||||||||||
Amortized | Not other-than- | Other-than- | Not other-than- | Other-than- | ||||||||||||||||||||
cost or | temporarily | temporarily | temporarily | temporarily | Fair | |||||||||||||||||||
(Amounts in millions) | cost | impaired | impaired | impaired | impaired | value | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
U.S. government, agencies and government-sponsored enterprises | $ | 4,175 | $ | 473 | $ | — | $ | (17 | ) | $ | — | $ | 4,631 | |||||||||||
State and political subdivisions | 2,406 | 168 | — | (22 | ) | — | 2,552 | |||||||||||||||||
Non-U.S. government | 2,345 | 72 | — | (24 | ) | — | 2,393 | |||||||||||||||||
U.S. corporate: | ||||||||||||||||||||||||
Utilities | 4,439 | 331 | — | (95 | ) | — | 4,675 | |||||||||||||||||
Energy | 2,382 | 101 | — | (64 | ) | — | 2,419 | |||||||||||||||||
Finance and insurance | 6,705 | 249 | — | (132 | ) | — | 6,822 | |||||||||||||||||
Consumer—non-cyclical | 4,891 | 294 | — | (137 | ) | — | 5,048 | |||||||||||||||||
Technology and communications | 2,823 | 110 | — | (78 | ) | — | 2,855 | |||||||||||||||||
Industrial | 1,230 | 41 | — | (33 | ) | — | 1,238 | |||||||||||||||||
Capital goods | 2,277 | 165 | — | (51 | ) | — | 2,391 | |||||||||||||||||
Consumer—cyclical | 1,592 | 53 | — | (48 | ) | — | 1,597 | |||||||||||||||||
Transportation | 1,283 | 78 | — | (41 | ) | — | 1,320 | |||||||||||||||||
Other | 376 | 24 | — | (3 | ) | — | 397 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total U.S. corporate | 27,998 | 1,446 | — | (682 | ) | — | 28,762 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Non-U.S. corporate: | ||||||||||||||||||||||||
Utilities | 1,056 | 17 | — | (32 | ) | — | 1,041 | |||||||||||||||||
Energy | 1,320 | 72 | — | (23 | ) | — | 1,369 | |||||||||||||||||
Finance and insurance | 2,391 | 72 | — | (40 | ) | — | 2,423 | |||||||||||||||||
Consumer—non-cyclical | 756 | 8 | — | (25 | ) | — | 739 | |||||||||||||||||
Technology and communications | 1,168 | 23 | — | (26 | ) | — | 1,165 | |||||||||||||||||
Industrial | 926 | 36 | — | (17 | ) | — | 945 | |||||||||||||||||
Capital goods | 615 | 10 | — | (10 | ) | — | 615 | |||||||||||||||||
Consumer—cyclical | 532 | 1 | — | (13 | ) | — | 520 | |||||||||||||||||
Transportation | 689 | 46 | — | (15 | ) | — | 720 | |||||||||||||||||
Other | 2,218 | 105 | — | (23 | ) | — | 2,300 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Totalnon-U.S. corporate | 11,671 | 390 | — | (224 | ) | — | 11,837 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Residential mortgage-backed(1) | 2,888 | 160 | 13 | (17 | ) | — | 3,044 | |||||||||||||||||
Commercial mortgage-backed | 3,054 | 43 | — | (81 | ) | — | 3,016 | |||||||||||||||||
Other asset-backed | 3,444 | 10 | 1 | (29 | ) | — | 3,426 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Totalavailable-for-sale fixedmaturity securities | $ | 57,981 | $ | 2,762 | $ | 14 | $ | (1,096 | ) | $ | — | $ | 59,661 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Gross unrealized gains | Gross unrealized losses | |||||||||||||||||||||||
(Amounts in millions) | Amortized cost or cost | Not other-than- temporarily impaired | Other-than- temporarily impaired | Not other-than- temporarily impaired | Other-than- temporarily impaired | Fair value | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
U.S. government, agencies andgovernment-sponsoredenterprises | $ | 4,175 | $ | 473 | $ | — | $ | (17 | ) | $ | — | $ | 4,631 | |||||||||||
State and political subdivisions | 2,406 | 168 | — | (22 | ) | — | 2,552 | |||||||||||||||||
Non-U.S. government | 2,345 | 72 | — | (24 | ) | — | 2,393 | |||||||||||||||||
U.S. corporate: | ||||||||||||||||||||||||
Utilities | 4,439 | 331 | — | (95 | ) | — | 4,675 | |||||||||||||||||
Energy | 2,382 | 101 | — | (64 | ) | — | 2,419 | |||||||||||||||||
Finance and insurance | 6,705 | 249 | — | (132 | ) | — | 6,822 | |||||||||||||||||
Consumer—non-cyclical | 4,891 | 294 | — | (137 | ) | — | 5,048 | |||||||||||||||||
Technology and communications | 2,823 | 110 | — | (78 | ) | — | 2,855 | |||||||||||||||||
Industrial | 1,230 | 41 | — | (33 | ) | — | 1,238 | |||||||||||||||||
Capital goods | 2,277 | 165 | — | (51 | ) | — | 2,391 | |||||||||||||||||
Consumer—cyclical | 1,592 | 53 | — | (48 | ) | — | 1,597 | |||||||||||||||||
Transportation | 1,283 | 78 | — | (41 | ) | — | 1,320 | |||||||||||||||||
Other | 376 | 24 | — | (3 | ) | — | 397 | |||||||||||||||||
Total U.S. corporate | 27,998 | 1,446 | — | (682 | ) | — | 28,762 | |||||||||||||||||
Non-U.S. corporate: | ||||||||||||||||||||||||
Utilities | 1,056 | 17 | — | (32 | ) | — | 1,041 | |||||||||||||||||
Energy | 1,320 | 72 | — | (23 | ) | — | 1,369 | |||||||||||||||||
Finance and insurance | 2,391 | 72 | — | (40 | ) | — | 2,423 | |||||||||||||||||
Consumer—non-cyclical | 756 | 8 | — | (25 | ) | — | 739 | |||||||||||||||||
Technology and communications | 1,168 | 23 | — | (26 | ) | — | 1,165 | |||||||||||||||||
Industrial | 926 | 36 | — | (17 | ) | — | 945 | |||||||||||||||||
Capital goods | 615 | 10 | — | (10 | ) | — | 615 | |||||||||||||||||
Consumer—cyclical | 532 | 1 | — | (13 | ) | — | 520 | |||||||||||||||||
Transportation | 689 | 46 | — | (15 | ) | — | 720 | |||||||||||||||||
Other | 2,218 | 105 | — | (23 | ) | — | 2,300 | |||||||||||||||||
Total non-U.S. corporate | 11,671 | 390 | — | (224 | ) | — | 11,837 | |||||||||||||||||
Residential mortgage-backed (1) | 2,888 | 160 | 13 | (17 | ) | — | 3,044 | |||||||||||||||||
Commercial mortgage-backed | 3,054 | 43 | — | (81 | ) | — | 3,016 | |||||||||||||||||
Other asset-backed | 3,444 | 10 | 1 | (29 | ) | — | 3,426 | |||||||||||||||||
Total available-for-sale fixedmaturity securities | $ | 57,981 | $ | 2,762 | $ | 14 | $ | (1,096 | ) | $ | — | $ | 59,661 | |||||||||||
(1) | Fair value included $19 million collateralized byAlt-A residential mortgage loans and $22 million collateralized bysub-prime residential mortgage loans. |
March 31, 2019 | ||||||||||||||||||||
(Dollar amounts in millions) | Total recorded investment | Number of loans | Loan-to-value (1) | Delinquent principal balance | Number of delinquent loans | |||||||||||||||
Loan Year | ||||||||||||||||||||
2008 and prior | $ | 1,264 | 443 | 39 | % | $ | 3 | 1 | ||||||||||||
2009 | — | — | — | % | — | — | ||||||||||||||
2010 | 48 | 10 | 37 | % | — | — | ||||||||||||||
2011 | 186 | 45 | 40 | % | — | — | ||||||||||||||
2012 | 462 | 80 | 45 | % | — | — | ||||||||||||||
2013 | 643 | 120 | 48 | % | — | — | ||||||||||||||
2014 | 754 | 131 | 52 | % | — | — | ||||||||||||||
2015 | 871 | 139 | 58 | % | — | — | ||||||||||||||
2016 | 547 | 95 | 61 | % | — | — | ||||||||||||||
2017 | 764 | 143 | 66 | % | — | — | ||||||||||||||
2018 | 1,035 | 165 | 69 | % | — | — | ||||||||||||||
2019 | 369 | 40 | 73 | % | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 6,943 | 1,411 | 55 | % | $ | 3 | 1 | ||||||||||||
|
|
|
|
|
|
|
|
June 30, 2019 | ||||||||||||||||||||
(Dollar amounts in millions) | Total recorded investment | Number of loans | Loan-to-value (1) | Delinquent principal balance | Number of delinquent loans | |||||||||||||||
Loan Year | ||||||||||||||||||||
2008 and prior | $ | 1,186 | 419 | 38 | % | $ | — | — | ||||||||||||
2009 | — | — | — | % | — | — | ||||||||||||||
2010 | 48 | 10 | 37 | % | — | — | ||||||||||||||
2011 | 183 | 45 | 40 | % | — | — | ||||||||||||||
2012 | 445 | 79 | 44 | % | — | — | ||||||||||||||
2013 | 621 | 118 | 48 | % | — | — | ||||||||||||||
2014 | 740 | 130 | 52 | % | — | — | ||||||||||||||
2015 | 865 | 139 | 57 | % | — | — | ||||||||||||||
2016 | 543 | 95 | 60 | % | — | — | ||||||||||||||
2017 | 758 | 142 | 65 | % | — | — | ||||||||||||||
2018 | 1,030 | 165 | 69 | % | — | — | ||||||||||||||
2019 | 559 | 72 | 71 | % | — | — | ||||||||||||||
Total | $ | 6,978 | 1,414 | 55 | % | $ | — | — | ||||||||||||
(1) | Represents weighted-averageloan-to-value as of |
December 31, 2018 | ||||||||||||||||||||
(Dollar amounts in millions) | Total recorded investment | Number of loans | Loan-to-value (1) | Delinquent principal balance | Number of delinquent loans | |||||||||||||||
Loan Year | ||||||||||||||||||||
2008 and prior | $ | 1,310 | 459 | 39 | % | $ | 3 | 1 | ||||||||||||
2009 | — | — | — | % | — | — | ||||||||||||||
2010 | 50 | 11 | 37 | % | — | — | ||||||||||||||
2011 | 193 | 46 | 41 | % | — | — | ||||||||||||||
2012 | 476 | 81 | 45 | % | — | — | ||||||||||||||
2013 | 656 | 122 | 48 | % | 3 | 1 | ||||||||||||||
2014 | 772 | 133 | 53 | % | — | — | ||||||||||||||
2015 | 877 | 139 | 58 | % | — | — | ||||||||||||||
2016 | 553 | 96 | 61 | % | — | — | ||||||||||||||
2017 | 773 | 144 | 66 | % | — | — | ||||||||||||||
2018 | 1,040 | 165 | 69 | % | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 6,700 | 1,396 | 54 | % | $ | 6 | 2 | ||||||||||||
|
|
|
|
|
|
|
|
December 31, 2018 | ||||||||||||||||||||
(Dollar amounts in millions) | Total recorded investment | Number of loans | Loan-to-value (1) | Delinquent principal balance | Number of delinquent loans | |||||||||||||||
Loan Year | ||||||||||||||||||||
2008 and prior | $ | 1,310 | 459 | 39 | % | $ | 3 | 1 | ||||||||||||
2009 | — | — | — | % | — | — | ||||||||||||||
2010 | 50 | 11 | 37 | % | — | — | ||||||||||||||
2011 | 193 | 46 | 41 | % | — | — | ||||||||||||||
2012 | 476 | 81 | 45 | % | — | — | ||||||||||||||
2013 | 656 | 122 | 48 | % | 3 | 1 | ||||||||||||||
2014 | 772 | 133 | 53 | % | — | — | ||||||||||||||
2015 | 877 | 139 | 58 | % | — | — | ||||||||||||||
2016 | 553 | 96 | 61 | % | — | — | ||||||||||||||
2017 | 773 | 144 | 66 | % | — | — | ||||||||||||||
2018 | 1,040 | 165 | 69 | % | — | — | ||||||||||||||
Total | $ | 6,700 | 1,396 | 54 | % | $ | 6 | 2 | ||||||||||||
(1) | Represents weighted-averageloan-to-value as of December 31, 2018. |
March 31, 2019 | December 31, 2018 | |||||||||||||||
(Amounts in millions) | Carrying value | % of total | Carrying value | % of total | ||||||||||||
Limited partnerships | $ | 462 | 38 | % | $ | 409 | 34 | % | ||||||||
Bank loan investments | 294 | 25 | 248 | 21 | ||||||||||||
Derivatives | 187 | 15 | 178 | 15 | ||||||||||||
Short-term investments | 139 | 12 | 230 | 19 | ||||||||||||
Securities lending collateral | 106 | 9 | 102 | 9 | ||||||||||||
Other investments | 20 | 1 | 21 | 2 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total other invested assets | $ | 1,208 | 100 | % | $ | 1,188 | 100 | % | ||||||||
|
|
|
|
|
|
|
|
June 30, 2019 | December 31, 2018 | |||||||||||||||
(Amounts in millions) | Carrying value | % of total | Carrying value | % of total | ||||||||||||
Limited partnerships | $ | 512 | 34 | % | $ | 409 | 34 | % | ||||||||
Bank loan investments | 337 | 22 | 248 | 21 | ||||||||||||
Derivatives | 280 | 18 | 178 | 15 | ||||||||||||
Short-term investments | 273 | 18 | 230 | 19 | ||||||||||||
Securities lending collateral | 113 | 7 | 102 | 9 | ||||||||||||
Other investments | 20 | 1 | 21 | 2 | ||||||||||||
Total other invested assets | $ | 1,535 | 100 | % | $ | 1,188 | 100 | % | ||||||||
(Notional in millions) | Measurement | December 31, 2018 | Additions | Maturities/ terminations | March 31, 2019 | |||||||||||||||
Derivatives designated as hedges | ||||||||||||||||||||
Cash flow hedges: | ||||||||||||||||||||
Interest rate swaps | Notional | $ | 9,924 | $ | — | $ | (654 | ) | $ | 9,270 | ||||||||||
Foreign currency swaps | Notional | 80 | 35 | (22 | ) | 93 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total cash flow hedges | 10,004 | 35 | (676 | ) | 9,363 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total derivatives designated as hedges | 10,004 | 35 | (676 | ) | 9,363 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Derivatives not designated as hedges | ||||||||||||||||||||
Interest rate swaps | Notional | 4,674 | — | — | 4,674 | |||||||||||||||
Interest rate swaps in a foreign currency | Notional | 2,565 | 98 | (44 | ) | 2,619 | ||||||||||||||
Interest rate caps and floors | Notional | 2,624 | 84 | (38 | ) | 2,670 | ||||||||||||||
Foreign currency swaps | Notional | 453 | — | (2 | ) | 451 | ||||||||||||||
Equity index options | Notional | 2,628 | 503 | (580 | ) | 2,551 | ||||||||||||||
Financial futures | Notional | 1,415 | 1,759 | (1,968 | ) | 1,206 | ||||||||||||||
Equity return swaps | Notional | 17 | 1 | — | 18 | |||||||||||||||
Other foreign currency contracts | Notional | 1,080 | 1,386 | (1,414 | ) | 1,052 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total derivatives not designated as hedges | 15,456 | 3,831 | (4,046 | ) | 15,241 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total derivatives | $ | 25,460 | $ | 3,866 | $ | (4,722 | ) | $ | 24,604 | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
(Number of policies) | Measurement | December 31, 2018 | Additions | Maturities/ terminations | March 31, 2019 | |||||||||||||||
Derivatives not designated as hedges | ||||||||||||||||||||
GMWB embedded derivatives | Policies | 27,886 | — | (577 | ) | 27,309 | ||||||||||||||
Fixed index annuity embedded derivatives | Policies | 16,464 | — | (213 | ) | 16,251 | ||||||||||||||
Indexed universal life embedded derivatives | Policies | 929 | — | (11 | ) | 918 |
(Notional in millions) | Measurement | December 31, 2018 | Additions | Maturities/ terminations | June 30, 2019 | |||||||||||||
Derivatives designated as hedges | ||||||||||||||||||
Cash flow hedges: | ||||||||||||||||||
Interest rate swaps | Notional | $ | 9,924 | $ | 469 | $ | (1,338 | ) | $ | 9,055 | ||||||||
Foreign currency swaps | Notional | 80 | 52 | (22 | ) | 110 | ||||||||||||
Total cash flow hedges | 10,004 | 521 | (1,360 | ) | 9,165 | |||||||||||||
Total derivatives designated as hedges | 10,004 | 521 | (1,360 | ) | 9,165 | |||||||||||||
Derivatives not designated as hedges | ||||||||||||||||||
Interest rate swaps | Notional | 4,674 | — | — | 4,674 | |||||||||||||
Interest rate swaps in a foreign currency | Notional | 2,565 | 187 | (77 | ) | 2,675 | ||||||||||||
Interest rate caps and floors | Notional | 2,624 | 160 | (66 | ) | 2,718 | ||||||||||||
Foreign currency swaps | Notional | 453 | — | (2 | ) | 451 | ||||||||||||
Equity index options | Notional | 2,628 | 939 | (1,035 | ) | 2,532 | ||||||||||||
Financial futures | Notional | 1,415 | 3,029 | (3,217 | ) | 1,227 | ||||||||||||
Equity return swaps | Notional | 17 | 2 | (2 | ) | 17 | ||||||||||||
Other foreign currency contracts | Notional | 1,080 | 2,925 | (2,704 | ) | 1,301 | ||||||||||||
Total derivatives not designated as hedges | 15,456 | 7,242 | (7,103 | ) | 15,595 | |||||||||||||
Total derivatives | $ | 25,460 | $ | 7,763 | $ | (8,463 | ) | $ | 24,760 | |||||||||
(Number of policies) | Measurement | December 31, 2018 | Additions | Maturities/ terminations | June 30, 2019 | |||||||||||||
Derivatives not designated as hedges | ||||||||||||||||||
GMWB embedded derivatives | Policies | 27,886 | — | (1,139 | ) | 26,747 | ||||||||||||
Fixed index annuity embedded derivatives | Policies | 16,464 | — | (410 | ) | 16,054 | ||||||||||||
Indexed universal life embedded derivatives | Policies | 929 | — | (21 | ) | 908 |
Cash, cash equivalents, restricted cash and invested assets increased $2,115 million primarily from increases of $1,699 million, $239 million and $133 million in fixed maturity securities, commercial mortgage loans and policy loans, respectively. The increase in fixed maturity securities was
• | Cash, cash equivalents, restricted cash and invested assets increased $4,695 million primarily from increases of $4,113 million, $347 million, $276 million and $215 million in fixed maturity securities, other invested assets, commercial mortgage loans and policy loans, respectively. The increase in fixed maturity securities was predominantly related to higher and higher origination funding of commercial mortgage loans, along with an increase in funding of limited partnership and bank loan investments in the current year. | |
$572$1,980 million from $86,734 million as of December 31, 2018 to $87,306$88,714 million as of March 31,June 30, 2019.$429$1,643 million primarily driven by our long-term insurance business largely from agingshadow accounting adjustments associated with the recognition of thein-force block. In addition, as discussed above, the decrease in interest rates increased our higher unrealized investments gains. As a result, weThe shadow accounting adjustments increased future policy benefits by approximately $306$1,446 million, mostly in our long-term care insurance business, with an offsetting amount recorded in other comprehensive income (loss).
insurance business, with an offsetting amount recorded in other comprehensive income (loss). The increase was also attributable to aging of our long-term care insurance in-force block in the current year. |
$693$1,403 million from $14,189 million as of December 31, 2018 to $14,882$15,592 million as of March 31,June 30, 2019.$174$342 million for the threesix months ended March 31,June 30, 2019.
(Amounts in millions) | 2019 | 2018 | ||||||
Net cash from operating activities | $ | 134 | $ | 109 | ||||
Net cash from (used by) investing activities | 277 | (167 | ) | |||||
Net cash from (used by) financing activities | (375 | ) | 47 | |||||
|
|
|
| |||||
Net increase (decrease) in cash before foreign exchange effect | $ | 36 | $ | (11 | ) | |||
|
|
|
|
June 30:
(Amounts in millions) | 2019 | 2018 | ||||||
Net cash from operating activities | $ | 795 | $ | 561 | ||||
Net cash used by investing activities | (351 | ) | (198 | ) | ||||
Net cash used by financing activities | (695 | ) | (943 | ) | ||||
Net decrease in cash before foreign exchange effect | $ | (251 | ) | $ | (580 | ) | ||
year.
2018.
to them under tax sharing and expense reimbursement arrangements with their subsidiaries and proceeds from borrowings or securities issuances are their principal sources of cash to meet their obligations. Insurance laws and regulations regulate the payment of dividends and other distributions to Genworth Financial and Genworth Holdings by their insurance subsidiaries. We expect dividends paid by the insurance subsidiaries will vary depending on strategic objectives, regulatory requirements and business performance.
Our insurance subsidiaries have used cash flows from operations and investment activities to fund their liquidity requirements. Our insurance subsidiaries’ principal cash inflows from operating activities are derived from premiums, annuity deposits and insurance and investment product fees and other income, including commissions, cost of insurance, mortality, expense and surrender charges, contract underwriting fees, investment management fees and dividends and distributions from their subsidiaries. The principal cash inflows from investment activities result from repayments of principal, investment income and, as necessary, sales of invested assets.
In February 2019, Genworth Mortgage Insurance Australia Limited (“Genworth Australia”) announced its intention to commence anon-market sharebuy-back program for shares up to a maximum aggregate amount of AUD$100 million. The purchase of 38.6 million shares pursuant to thisbuy-back is covered by shareholder approval obtained in 2018. The remaining shares to be repurchased pursuant to thisbuy-back will be subject to shareholder approval at its Annual General Meeting on May 9, 2019. The total number of shares to be purchased by Genworth Australia under the program will depend on business and market conditions, the prevailing share price, market volumes and other considerations. In the first quarter of 2019, Genworth Australia repurchased approximately 12 million sharescredit risk transfer transactions.
change.
intention to commence an
borrowings or securities issuances, and if necessary, sales of assets, as described below, will provide us with sufficient capital flexibility and liquidity to meet our projected future operating and financing requirements. We actively monitor our liquidity position, liquidity generation options and the credit markets given changing market conditions. Our cash management target is to maintain a cash buffer of two times expected annual external debt interest payments. During the first quarter of 2019, we fellwere below our targeted cash buffer by approximately $100 million mostly due to semi-annual interest payments and fromwe remained below our targeted cash buffer by the timingsame amount in the second quarter of certain cash payouts related to employee compensation expenses.2019. We may move below or above our targeted cash buffer during any given quarter due to the timing of cash outflows and inflows or from future actions. We continue to evaluate our target level of liquidity as circumstances warrant. Additionally, we will continue to evaluate market influences on the valuation of our senior debt and may consider additional opportunities to repurchase our debt over time. We cannot predict with any certainty the impact to us from any future disruptions in the credit markets or the recent or any further downgrades by one or more of the rating agencies of the financial strength ratings of our insurance company subsidiaries and/or the credit ratings of our holding companies. In connection with the Eleventh Waiver and Agreement, to facilitate the China Oceanwide transaction, the parties concluded that exploring a potential disposition of Genworth Canada is in the best interests of the parties. Another possible benefit of a
There
”
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
securities. Our primary international operations are located in Canada and Australia. The assets and liabilities of our international operations are translated into U.S. dollars at the exchange rates in effect at the balance sheet date, while revenues and expenses of our international operations are translated into U.S. dollars at the average rates of exchange during the period of the transaction. In general, the weakening of the U.S. dollar results in higher levels of reported assets, liabilities, revenues and net income. As of March 31,June 30, 2019, the U.S. dollar strengthened against the Australian dollar and weakened against the currencies in Canada and AustraliaCanadian dollar compared to the respective balance sheet raterates as of December 31, 2018. In the firstsecond quarter of 2019, the U.S. dollar strengthened against the currencies in Canada and Australia compared to theirthe respective average rates in the firstsecond quarter of 2018. See “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion on the impact of changes in foreign currency exchange rates.
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
|
| |||
32.2 | ||||
101.INS | XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||
101.SCH | XBRL Taxonomy Extension Schema Document | |||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
§ | Management contract or compensatory plan or arrangement. |
GENWORTH FINANCIAL, INC. (Registrant) | ||||||
Date: July 31, 2019 | ||||||
By: | /s/ Matthew D. Farney | |||||
| ||||||
Matthew D. Farney | ||||||
Vice President and Controller (Principal Accounting Officer) |
136