UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2023March 31, 2024
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
to
Commission file number 001-32195
GENWORTH FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Delaware | 80-0873306 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
(Address of principal executive offices) | (Zip Code) | |
(804) 281-6000
(Registrant’s telephone number, including area code)
6620 West Broad Street, Richmond, Virginia 23230
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol | Name of each exchange on which registered | ||
| Class A Common Stock, par value $.001 per share | GNW | New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
| Emerging growth company | ☐ | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of August 3, 2023, 463,087,315April
26
, 2024, 437,721,371 shares of Class A Common Stock, par value $0.001 per share, were outstanding.TABLE OF CONTENTS
Page | |||||||||
PART I—FINANCIAL INFORMATION | |||||||||
Item 1. | Financial Statements: | ||||||||
Condensed Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and December 31, 2023 | 3 | ||||||||
| 4 | |||||||||
| 5 | |||||||||
| 6 | |||||||||
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Notes to Condensed Consolidated Financial Statements (Unaudited) | 8 | ||||||||
| 8 | |||||||||
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Note 17 — Changes in Accumulated Other Comprehensive Income (Loss) | 70 | ||||||||
| Item 2. | |||||||||
| Item 3. | |||||||||
| Item 4. | |||||||||
PART II—OTHER INFORMATION | |||||||||
| Item 1. | |||||||||
| Item 1A. | |||||||||
| Item 2. | |||||||||
| Item 5. | |||||||||
| Item 6. | |||||||||
| Signatures | |||||||||
2
PART I—FINANCIAL INFORMATION
Item 1. |
GENWORTH FINANCIAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in millions, except par value and share amounts)
June 30, 2023 | December 31, 2022 | |||||||
(As adjusted) | ||||||||
| Assets | ||||||||
| Investments: | ||||||||
| Fixed maturity securities available-for-sale, at fair value (amortized cost of $49,864 and $50,834, respectively, and allowance for credit losses of $4 and $—, respectively, as of June 30, 2023 and December 31, 2022) | $ | 46,070 | $ | 46,583 | ||||
| Equity securities, at fair value | 378 | 319 | ||||||
| Commercial mortgage loans (net of unamortized balance of loan origination fees and costs of $4 as of June 30, 2023 and December 31, 2022) | 6,876 | 7,032 | ||||||
| Less: Allowance for credit losses | (24 | ) | (22 | ) | ||||
| Commercial mortgage loans, net | 6,852 | 7,010 | ||||||
| Policy loans | 2,270 | 2,139 | ||||||
| Limited partnerships | 2,585 | 2,331 | ||||||
| Other invested assets | 648 | 566 | ||||||
| Total investments | 58,803 | 58,948 | ||||||
| Cash, cash equivalents and restricted cash | 2,173 | 1,799 | ||||||
| Accrued investment income | 553 | 643 | ||||||
| Deferred acquisition costs | 2,096 | 2,211 | ||||||
| Intangible assets | 201 | 203 | ||||||
| Reinsurance recoverable | 19,113 | 19,059 | ||||||
| Less: Allowance for credit losses | (64 | ) | (63 | ) | ||||
| Reinsurance recoverable, net | 19,049 | 18,996 | ||||||
| Other assets | 445 | 488 | ||||||
| Deferred tax asset | 1,954 | 1,983 | ||||||
| Market risk benefit assets | 37 | 26 | ||||||
| Separate account assets | 4,533 | 4,417 | ||||||
| Total assets | $ | 89,844 | $ | 89,714 | ||||
| Liabilities and equity | ||||||||
| Liabilities: | ||||||||
| Future policy benefits | $ | 56,443 | $ | 55,407 | ||||
| Policyholder account balances | 15,922 | 16,564 | ||||||
| Market risk benefit liabilities | 666 | 748 | ||||||
| Liability for policy and contract claims | 628 | 683 | ||||||
| Unearned premiums | 175 | 203 | ||||||
| Other liabilities | 1,607 | 1,687 | ||||||
| Long-term borrowings | 1,601 | 1,611 | ||||||
| Separate account liabilities | 4,533 | 4,417 | ||||||
| Liabilities related to discontinued operations | 2 | 8 | ||||||
| Total liabilities | 81,577 | 81,328 | ||||||
| Commitments and contingencies (Note 18) | ||||||||
| Equity: | ||||||||
| Class A common stock, $0.001 par value; 1.5 billion shares authorized; 603 million and 600 million shares issued as of June 30, 2023 and December 31, 2022, respectively; 467 million and 495 million shares outstanding as of June 30, 2023 and December 31, 2022, respectively | 1 | 1 | ||||||
| Additional paid-in capital | 11,869 | 11,869 | ||||||
| Accumulated other comprehensive income (loss) | (2,861 | ) | (2,614 | ) | ||||
| Retained earnings | 1,398 | 1,139 | ||||||
| Treasury stock, at cost (136 million and 105 million shares as of June 30, 2023 and December 31, 2022, respectively) | (2,947 | ) | (2,764 | ) | ||||
| Total Genworth Financial, Inc.’s stockholders’ equity | 7,460 | 7,631 | ||||||
| Noncontrolling interests | 807 | 755 | ||||||
| Total equity | 8,267 | 8,386 | ||||||
| Total liabilities and equity | $ | 89,844 | $ | 89,714 | ||||
March 31, 2024 | December 31, 2023 | |||||||
(Unaudited) | ||||||||
| Assets | ||||||||
| Investments: | ||||||||
| Fixed maturity securities available-for-sale, at fair value (amortized cost of $49,281 and $49,365, respectively, and allowance for credit losses of $7 as of March 31, 2024 and December 31, 2023) | $ | 46,065 | $ | 46,781 | ||||
| Equity securities, at fair value | 427 | 396 | ||||||
| Commercial mortgage loans (net of unamortized balance of loan origination fees and costs of $4 as of March 31, 2024 and December 31, 2023) | 6,748 | 6,829 | ||||||
| Less: Allowance for credit losses | (29 | ) | (27 | ) | ||||
| Commercial mortgage loans, net | 6,719 | 6,802 | ||||||
| Policy loans | 2,219 | 2,220 | ||||||
| Limited partnerships | 2,949 | 2,821 | ||||||
| Other invested assets | 683 | 731 | ||||||
| Total investments | 59,062 | 59,751 | ||||||
| Cash, cash equivalents and restricted cash | 1,952 | 2,215 | ||||||
| Accrued investment income | 707 | 647 | ||||||
| Deferred acquisition costs | 1,934 | 1,988 | ||||||
| Intangible assets | 197 | 198 | ||||||
| Reinsurance recoverable | 18,315 | 19,054 | ||||||
| Less: Allowance for credit losses | (27 | ) | (29 | ) | ||||
| Reinsurance recoverable, net | 18,288 | 19,025 | ||||||
| Other assets | 516 | 489 | ||||||
| Deferred tax asset | 1,839 | 1,952 | ||||||
| Market risk benefit assets | 52 | 43 | ||||||
| Separate account assets | 4,645 | 4,509 | ||||||
| Total assets | $ | 89,192 | $ | 90,817 | ||||
| Liabilities and equity | ||||||||
| Liabilities: | ||||||||
| Future policy benefits | $ | 55,545 | $ | 57,655 | ||||
| Policyholder account balances | 15,315 | 15,540 | ||||||
| Market risk benefit liabilities | 528 | 625 | ||||||
| Liability for policy and contract claims | 673 | 652 | ||||||
| Unearned premiums | 139 | 149 | ||||||
| Other liabilities | 1,889 | 1,768 | ||||||
| Long-term borrowings | 1,579 | 1,584 | ||||||
| Separate account liabilities | 4,645 | 4,509 | ||||||
| Total liabilities | 80,313 | 82,482 | ||||||
| Commitments and contingencies (Note 16) | ||||||||
| Equity: | ||||||||
| Class A common stock, $0.001 par value; 1,500,000,000 shares authorized; 606,168,754 and 603,151,611 shares issued as of March 31, 2024 and December 31, 2023, respectively; 439,599,677 and 446,823,204 shares outstanding as of March 31, 2024 and December 31, 2023, respectively | 1 | 1 | ||||||
| Additional paid-in capital | 11,873 | 11,884 | ||||||
| Accumulated other comprehensive income (loss) | (2,094 | ) | (2,555 | ) | ||||
| Retained earnings | 1,352 | 1,213 | ||||||
| Treasury stock, at cost (166,569,077 and 156,328,407 shares as of March 31, 2024 and December 31, 2023, respectively) | (3,126 | ) | (3,063 | ) | ||||
| Total Genworth Financial, Inc.’s stockholders’ equity | 8,006 | 7,480 | ||||||
| Noncontrolling interests | 873 | 855 | ||||||
| Total equity | 8,879 | 8,335 | ||||||
| Total liabilities and equity | $ | 89,192 | $ | 90,817 | ||||
See Notes to Condensed Consolidated Financial Statements
3
GENWORTH FINANCIAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in millions, except per share amounts)
(Unaudited)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(As Adjusted) | (As Adjusted) | |||||||||||||||
| Revenues: | ||||||||||||||||
| Premiums | $ | 902 | $ | 916 | $ | 1,817 | $ | 1,833 | ||||||||
| Net investment income | 785 | 787 | 1,572 | 1,551 | ||||||||||||
| Net investment gains (losses) | 39 | 19 | 28 | 61 | ||||||||||||
| Policy fees and other income | 166 | 165 | 329 | 335 | ||||||||||||
| Total revenues | 1,892 | 1,887 | 3,746 | 3,780 | ||||||||||||
| Benefits and expenses: | ||||||||||||||||
| Benefits and other changes in policy reserves | 1,175 | 768 | 2,351 | 1,935 | ||||||||||||
| Liability remeasurement (gains) losses | 70 | 24 | 55 | (40 | ) | |||||||||||
| Changes in fair value of market risk benefits and associated hedges | (19 | ) | 20 | (2 | ) | (21 | ) | |||||||||
| Interest credited | 126 | 126 | �� | 252 | 251 | |||||||||||
| Acquisition and operating expenses, net of deferrals | 226 | 579 | 466 | 815 | ||||||||||||
| Amortization of deferred acquisition costs and intangibles | 64 | 84 | 136 | 172 | ||||||||||||
| Interest expense | 29 | 26 | 58 | 52 | ||||||||||||
| Total benefits and expenses | 1,671 | 1,627 | 3,316 | 3,164 | ||||||||||||
| Income from continuing operations before income taxes | 221 | 260 | 430 | 616 | ||||||||||||
| Provision for income taxes | 55 | 62 | 110 | 146 | ||||||||||||
| Income from continuing operations | 166 | 198 | 320 | 470 | ||||||||||||
| Income (loss) from discontinued operations, net of taxes | 2 | (1 | ) | 2 | (3 | ) | ||||||||||
| Net income | 168 | 197 | 322 | 467 | ||||||||||||
| Less: net income from continuing operations attributable to noncontrolling interests | 31 | 38 | 63 | 68 | ||||||||||||
| Less: net income from discontinued operations attributable to noncontrolling interests | — | — | — | — | ||||||||||||
| Net income available to Genworth Financial, Inc.’s common stockholders | $ | 137 | $ | 159 | $ | 259 | $ | 399 | ||||||||
| Net income available to Genworth Financial, Inc.’s common stockholders: | ||||||||||||||||
| Income from continuing operations available to Genworth Financial, Inc.’s common stockholders | $ | 135 | $ | 160 | $ | 257 | $ | 402 | ||||||||
| Income (loss) from discontinued operations available to Genworth Financial, Inc.’s common stockholders | 2 | (1 | ) | 2 | (3 | ) | ||||||||||
| Net income available to Genworth Financial, Inc.’s common stockholders | $ | 137 | $ | 159 | $ | 259 | $ | 399 | ||||||||
| Income from continuing operations available to Genworth Financial, Inc.’s common stockholders per share: | ||||||||||||||||
| Basic | $ | 0.28 | $ | 0.32 | $ | 0.53 | $ | 0.79 | ||||||||
| Diluted | $ | 0.28 | $ | 0.31 | $ | 0.53 | $ | 0.78 | ||||||||
| Net income available to Genworth Financial, Inc.’s common stockholders per share: | ||||||||||||||||
| Basic | $ | 0.29 | $ | 0.31 | $ | 0.54 | $ | 0.79 | ||||||||
| Diluted | $ | 0.29 | $ | 0.31 | $ | 0.53 | $ | 0.77 | ||||||||
| Weighted-average common shares outstanding: | ||||||||||||||||
| Basic | 473.2 | 508.9 | 482.7 | 508.6 | ||||||||||||
| Diluted | 478.1 | 514.1 | 489.1 | 515.7 | ||||||||||||
Three months ended March 31, | ||||||||
2024 | 2023 | |||||||
| Revenues: | ||||||||
| Premiums | $ | 875 | $ | 915 | ||||
| Net investment income | 782 | 787 | ||||||
| Net investment gains (losses) | 49 | (11 | ) | |||||
| Policy fees and other income | 158 | 163 | ||||||
| Total revenues | 1,864 | 1,854 | ||||||
| Benefits and expenses: | ||||||||
| Benefits and other changes in policy reserves | 1,203 | 1,176 | ||||||
| Liability remeasurement (gains) losses | (8 | ) | (15 | ) | ||||
| Changes in fair value of market risk benefits and associated hedges | (23 | ) | 17 | |||||
| Interest credited | 125 | 126 | ||||||
| Acquisition and operating expenses, net of deferrals | 236 | 240 | ||||||
| Amortization of deferred acquisition costs and intangibles | 65 | 72 | ||||||
| Interest expense | 30 | 29 | ||||||
| Total benefits and expenses | 1,628 | 1,645 | ||||||
| Income from continuing operations before income taxes | 236 | 209 | ||||||
| Provision for income taxes | 66 | 55 | ||||||
| Income from continuing operations | 170 | 154 | ||||||
| Loss from discontinued operations, net of taxes | (1 | ) | — | |||||
| Net income | 169 | 154 | ||||||
| Less: net income attributable to noncontrolling interests | 30 | 32 | ||||||
| Net income available to Genworth Financial, Inc.’s common stockholders | $ | 139 | $ | 122 | ||||
| Income from continuing operations available to Genworth Financial, Inc.’s common stockholders per share: | ||||||||
| Basic | $ | 0.32 | $ | 0.25 | ||||
| Diluted | $ | 0.31 | $ | 0.24 | ||||
| Net income available to Genworth Financial, Inc.’s common stockholders per share: | ||||||||
| Basic | $ | 0.31 | $ | 0.25 | ||||
| Diluted | $ | 0.31 | $ | 0.24 | ||||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 443.0 | 492.3 | ||||||
| Diluted | 450.3 | 500.1 | ||||||
See Notes to Condensed Consolidated Financial Statements
4
GENWORTH FINANCIAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in millions)
(Unaudited)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(As adjusted) | (As adjusted) | |||||||||||||||
| Net income | $ | 168 | $ | 197 | $ | 322 | $ | 467 | ||||||||
| Other comprehensive income (loss), net of taxes: | ||||||||||||||||
| Net unrealized gains (losses) on securities without an allowance for credit losses | (567 | ) | (3,697 | ) | 358 | (7,664 | ) | |||||||||
| Net unrealized gains (losses) on securities with an allowance for credit losses | 6 | — | — | — | ||||||||||||
| Derivatives qualifying as hedges | (120 | ) | (344 | ) | (46 | ) | (580 | ) | ||||||||
| Change in discount rate used to measure future policy benefits | 664 | 5,280 | (561 | ) | 10,751 | |||||||||||
| Change in instrument-specific credit risk of market risk benefits | — | 1 | 1 | 3 | ||||||||||||
| Foreign currency translation and other adjustments | 4 | (7 | ) | 8 | (12 | ) | ||||||||||
| Total other comprehensive income (loss) | (13 | ) | 1,233 | (240 | ) | 2,498 | ||||||||||
| Total comprehensive income | 155 | 1,430 | 82 | 2,965 | ||||||||||||
| Less: comprehensive income (loss) attributable to noncontrolling interests | 26 | 10 | 70 | (1 | ) | |||||||||||
| Total comprehensive income available to Genworth Financial, Inc.’s common stockholders | $ | 129 | $ | 1,420 | $ | 12 | $ | 2,966 | ||||||||
Three months ended March 31, | ||||||||
2024 | 2023 | |||||||
| Net income | $ | 169 | $ | 154 | ||||
| Other comprehensive income (loss), net of taxes: | ||||||||
| Net unrealized gains (losses) on securities without an allowance for credit losses | (486 | ) | 925 | |||||
| Net unrealized gains (losses) on securities with an allowance for credit losses | — | (6 | ) | |||||
| Derivatives qualifying as hedges | (161 | ) | 74 | |||||
| Change in the discount rate used to measure future policy benefits | 1,105 | (1,225 | ) | |||||
| Change in instrument-specific credit risk of market risk benefits | 2 | 1 | ||||||
| Foreign currency translation and other adjustments | — | 4 | ||||||
| Total other comprehensive income (loss) | 460 | (227 | ) | |||||
| Total comprehensive income (loss) | 629 | (73 | ) | |||||
| Less: comprehensive income attributable to noncontrolling interests | 29 | 44 | ||||||
| Total comprehensive income (loss) available to Genworth Financial, Inc.’s common stockholders | $ | 600 | $ | (117 | ) | |||
See Notes to Condensed Consolidated Financial Statements
Three months ended June 30, 2023 | ||||||||||||||||||||||||||||||||
Common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings | Treasury stock, at cost | Total Genworth Financial, Inc.’s stockholders’ equity | Noncontrolling interests | Total equity | |||||||||||||||||||||||||
| Balances as of March 31, 2023 | $ | 1 | $ | 11,863 | $ | (2,853 | ) | $ | 1,261 | $ | (2,833 | ) | $ | 7,439 | $ | 793 | $ | 8,232 | ||||||||||||||
| Repurchase of subsidiary shares | — | — | — | — | — | — | (8 | ) | (8 | ) | ||||||||||||||||||||||
| Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
| Net income | — | — | — | 137 | — | 137 | 31 | 168 | ||||||||||||||||||||||||
| Other comprehensive loss, net of taxes | — | — | (8 | ) | — | — | (8 | ) | (5 | ) | (13 | ) | ||||||||||||||||||||
| Total comprehensive income | 129 | 26 | 155 | |||||||||||||||||||||||||||||
| Treasury stock acquired in connection with share repurchases | — | — | — | — | (114 | ) | (114 | ) | — | (114 | ) | |||||||||||||||||||||
| Dividends to noncontrolling interests | — | — | — | — | — | — | (5 | ) | (5 | ) | ||||||||||||||||||||||
| Stock-based compensation expense and exercises and other | — | 6 | — | — | — | 6 | 1 | 7 | ||||||||||||||||||||||||
| Balances as of June 30, 2023 | $ | 1 | $ | 11,869 | $ | (2,861 | ) | $ | 1,398 | $ | (2,947 | ) | $ | 7,460 | $ | 807 | $ | 8,267 | ||||||||||||||
Three months ended June 30, 2022 | ||||||||||||||||||||||||||||||||
Common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings | Treasury stock, at cost | Total Genworth Financial, Inc.’s stockholders’ equity | Noncontrolling interests | Total equity | |||||||||||||||||||||||||
| Balances as of March 31, 2022 (as adjusted) | $ | 1 | $ | 11,857 | $ | (4,549 | ) | $ | 465 | $ | (2,700 | ) | $ | 5,074 | $ | 745 | $ | 5,819 | ||||||||||||||
| Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
| Net income | — | — | — | 159 | — | 159 | 38 | 197 | ||||||||||||||||||||||||
| Other comprehensive income (loss), net of taxes | — | — | 1,261 | — | — | 1,261 | (28 | ) | 1,233 | |||||||||||||||||||||||
| Total comprehensive income | 1,420 | 10 | 1,430 | |||||||||||||||||||||||||||||
| Treasury stock acquired in connection with share repurchases | — | — | — | — | (15 | ) | (15 | ) | — | (15 | ) | |||||||||||||||||||||
| Dividends to noncontrolling interests | — | — | — | — | — | — | (4 | ) | (4 | ) | ||||||||||||||||||||||
| Stock-based compensation expense and exercises and other | — | 2 | — | — | — | 2 | — | 2 | ||||||||||||||||||||||||
| Balances as of June 30, 2022 (as adjusted) | $ | 1 | $ | 11,859 | $ | (3,288 | ) | $ | 624 | $ | (2,715 | ) | $ | 6,481 | $ | 751 | $ | 7,232 | ||||||||||||||
Six months ended June 30, 2023 | ||||||||||||||||||||||||||||||||
Common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings | Treasury stock, at cost | Total Genworth Financial, Inc.’s stockholders’ equity | Noncontrolling interests | Total equity | |||||||||||||||||||||||||
| Balances as of December 31, 2022 (as adjusted) | $ | 1 | $ | 11,869 | $ | (2,614 | ) | $ | 1,139 | $ | (2,764 | ) | $ | 7,631 | $ | 755 | $ | 8,386 | ||||||||||||||
| Repurchase of subsidiary shares | — | — | — | — | — | — | (12 | ) | (12 | ) | ||||||||||||||||||||||
| Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
| Net income | — | — | — | 259 | — | 259 | 63 | 322 | ||||||||||||||||||||||||
| Other comprehensive income (loss), net of taxes | — | — | (247 | ) | — | — | (247 | ) | 7 | (240 | ) | |||||||||||||||||||||
| Total comprehensive income | 12 | 70 | 82 | |||||||||||||||||||||||||||||
| Treasury stock acquired in connection with share repurchases | — | — | — | — | (183 | ) | (183 | ) | — | (183 | ) | |||||||||||||||||||||
| Dividends to noncontrolling interests | — | — | — | — | — | — | (9 | ) | (9 | ) | ||||||||||||||||||||||
| Stock-based compensation expense and exercises and other | — | — | — | — | — | — | 3 | 3 | ||||||||||||||||||||||||
| Balances as of June 30, 2023 | $ | 1 | $ | 11,869 | $ | (2,861 | ) | $ | 1,398 | $ | (2,947 | ) | $ | 7,460 | $ | 807 | $ | 8,267 | ||||||||||||||
Six months ended June 30, 2022 | ||||||||||||||||||||||||||||||||
Common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings | Treasury stock, at cost | Total Genworth Financial, Inc.’s stockholders’ equity | Noncontrolling interests | Total equity | |||||||||||||||||||||||||
| Balances as of December 31, 2021 (as adjusted) | $ | 1 | $ | 11,858 | $ | (5,855 | ) | $ | 225 | $ | (2,700 | ) | $ | 3,529 | $ | 756 | $ | 4,285 | ||||||||||||||
| Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
| Net income | — | — | — | 399 | — | 399 | 68 | 467 | ||||||||||||||||||||||||
| Other comprehensive income (loss), net of taxes | — | — | 2,567 | — | — | 2,567 | (69 | ) | 2,498 | |||||||||||||||||||||||
| Total comprehensive income (loss) | 2,966 | (1 | ) | 2,965 | ||||||||||||||||||||||||||||
| Treasury stock acquired in connection with share repurchases | — | — | — | — | (15 | ) | (15 | ) | — | (15 | ) | |||||||||||||||||||||
| Dividends to noncontrolling interests | — | — | — | — | — | — | (4 | ) | (4 | ) | ||||||||||||||||||||||
| Stock-based compensation expense and exercises and other | — | 1 | — | — | — | 1 | — | 1 | ||||||||||||||||||||||||
| Balances as of June 30, 2022 (as adjusted) | $ | 1 | $ | 11,859 | $ | (3,288 | ) | $ | 624 | $ | (2,715 | ) | $ | 6,481 | $ | 751 | $ | 7,232 | ||||||||||||||
GENWORTH FINANCIAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in millions)
(Unaudited)
Three months ended March 31, 2024 | ||||||||||||||||||||||||||||||||
Common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings | Treasury stock, at cost | Total Genworth Financial, Inc.’s stockholders’ equity | Noncontrolling interests | Total equity | |||||||||||||||||||||||||
| Balances as of December 31, 2023 | $ | 1 | $ | 11,884 | $ | (2,555 | ) | $ | 1,213 | $ | (3,063 | ) | $ | 7,480 | $ | 855 | $ | 8,335 | ||||||||||||||
| Repurchase of subsidiary shares | — | — | — | — | — | — | (9 | ) | (9 | ) | ||||||||||||||||||||||
| Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
| Net income | — | — | — | 139 | — | 139 | 30 | 169 | ||||||||||||||||||||||||
| Other comprehensive income (loss), net of taxes | — | — | 461 | — | — | 461 | (1 | ) | 460 | |||||||||||||||||||||||
| Total comprehensive income | 600 | 29 | 629 | |||||||||||||||||||||||||||||
| Treasury stock acquired in connection with share repurchases | — | — | — | — | (63 | ) | (63 | ) | — | (63 | ) | |||||||||||||||||||||
| Dividends to noncontrolling interests | — | — | — | — | — | — | (5 | ) | (5 | ) | ||||||||||||||||||||||
| Stock-based compensation expense and exercises and other | — | (11 | ) | — | — | — | (11 | ) | 3 | (8 | ) | |||||||||||||||||||||
| Balances as of March 31, 2024 | $ | 1 | $ | 11,873 | $ | (2,094 | ) | $ | 1,352 | $ | (3,126 | ) | $ | 8,006 | $ | 873 | $ | 8,879 | ||||||||||||||
Three months ended March 31, 2023 | ||||||||||||||||||||||||||||||||
Common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings | Treasury stock, at cost | Total Genworth Financial, Inc.’s stockholders’ equity | Noncontrolling interests | Total equity | |||||||||||||||||||||||||
| Balances as of December 31, 2022 | $ | 1 | $ | 11,869 | $ | (2,614 | ) | $ | 1,139 | $ | (2,764 | ) | $ | 7,631 | $ | 755 | $ | 8,386 | ||||||||||||||
| Repurchase of subsidiary shares | — | — | — | — | — | — | (4 | ) | (4 | ) | ||||||||||||||||||||||
| Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
| Net income | — | — | — | 122 | — | 122 | 32 | 154 | ||||||||||||||||||||||||
| Other comprehensive income (loss), net of taxes | — | — | (239 | ) | — | — | (239 | ) | 12 | (227 | ) | |||||||||||||||||||||
| Total comprehensive income (loss) | (117 | ) | 44 | (73 | ) | |||||||||||||||||||||||||||
| Treasury stock acquired in connection with share repurchases | — | — | — | — | (69 | ) | (69 | ) | — | (69 | ) | |||||||||||||||||||||
| Dividends to noncontrolling interests | — | — | — | — | — | — | (4 | ) | (4 | ) | ||||||||||||||||||||||
| Stock-based compensation expense and exercises and other | — | (6 | ) | — | — | — | (6 | ) | 2 | (4 | ) | |||||||||||||||||||||
| Balances as of March 31, 2023 | $ | 1 | $ | 11,863 | $ | (2,853 | ) | $ | 1,261 | $ | (2,833 | ) | $ | 7,439 | $ | 793 | $ | 8,232 | ||||||||||||||
See Notes to Condensed Consolidated Financial Statements
6
GENWORTH FINANCIAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in millions)
(Unaudited)
Six months ended June 30, | ||||||||
2023 | 2022 | |||||||
(As adjusted) | ||||||||
| Cash flows from (used by) operating activities: | ||||||||
| Net income | $ | 322 | $ | 467 | ||||
| Less (income) loss from discontinued operations, net of taxes | (2 | ) | 3 | |||||
| Adjustments to reconcile net income to net cash from operating activities: | ||||||||
| Amortization of fixed maturity securities discounts and premiums | (58 | ) | (84 | ) | ||||
| Net investment (gains) losses | (28 | ) | (61 | ) | ||||
| Changes in fair value of market risk benefits and associated hedges | (2 | ) | (21 | ) | ||||
| Charges assessed to policyholders | (291 | ) | (289 | ) | ||||
| Acquisition costs deferred | (4 | ) | (7 | ) | ||||
| Amortization of deferred acquisition costs and intangibles | 136 | 172 | ||||||
| Deferred income taxes | 107 | 143 | ||||||
| Derivative instruments, limited partnerships and other | (222 | ) | (163 | ) | ||||
| Stock-based compensation expense | 25 | 20 | ||||||
| Change in certain assets and liabilities: | ||||||||
| Accrued investment income and other assets | (66 | ) | (71 | ) | ||||
| Insurance reserves | 525 | 641 | ||||||
| Other liabilities, policy and contract claims and other policy-related balances | (165 | ) | (382 | ) | ||||
| Cash used by operating activities—discontinued operations | (2 | ) | (31 | ) | ||||
| Net cash from operating activities | 275 | 337 | ||||||
| Cash flows from (used by) investing activities: | ||||||||
| Proceeds from maturities and repayments of investments: | ||||||||
| Fixed maturity securities | 1,144 | 1,495 | ||||||
| Commercial mortgage loans | 269 | 314 | ||||||
| Limited partnerships and other invested assets | 67 | 99 | ||||||
| Proceeds from sales of investments: | ||||||||
| Fixed maturity and equity securities | 1,289 | 1,302 | ||||||
| Purchases and originations of investments: | ||||||||
| Fixed maturity and equity securities | (1,443 | ) | (1,800 | ) | ||||
| Commercial mortgage loans | (113 | ) | (568 | ) | ||||
| Limited partnerships and other invested assets | (301 | ) | (297 | ) | ||||
| Short-term investments, net | (7 | ) | (24 | ) | ||||
| Policy loans, net | 32 | 14 | ||||||
| Other | (20 | ) | — | |||||
| Net cash from investing activities | 917 | 535 | ||||||
| Cash flows from (used by) financing activities: | ||||||||
| Deposits to universal life and investment contracts | 303 | 314 | ||||||
| Withdrawals from universal life and investment contracts | (893 | ) | (779 | ) | ||||
| Repayment and repurchase of long-term debt | (11 | ) | (130 | ) | ||||
| Repurchase of subsidiary shares | (12 | ) | — | |||||
| Treasury stock acquired in connection with share repurchases | (181 | ) | (15 | ) | ||||
| Dividends paid to noncontrolling interests | (9 | ) | (4 | ) | ||||
| Other, net | (15 | ) | (105 | ) | ||||
| Net cash used by financing activities | (818 | ) | (719 | ) | ||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | — | — | ||||||
| Net change in cash, cash equivalents and restricted cash | 374 | 153 | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | 1,799 | 1,571 | ||||||
| Cash, cash equivalents and restricted cash at end of period | 2,173 | 1,724 | ||||||
| Less cash, cash equivalents and restricted cash of discontinued operations at end of period | — | — | ||||||
| Cash, cash equivalents and restricted cash of continuing operations at end of period | $ | 2,173 | $ | 1,724 | ||||
Three months ended March 31, | ||||||||
2024 | 2023 | |||||||
| Cash flows from (used by) operating activities: | ||||||||
| Net income | $ | 169 | $ | 154 | ||||
| Less loss from discontinued operations, net of taxes | 1 | — | ||||||
| Adjustments to reconcile net income to net cash from (used by) operating activities: | ||||||||
| Amortization of fixed maturity securities discounts and premiums | (23 | ) | (25 | ) | ||||
| Net investment (gains) losses | (49 | ) | 11 | |||||
| Changes in fair value of market risk benefits and associated hedges | (23 | ) | 17 | |||||
| Charges assessed to policyholders | (139 | ) | (144 | ) | ||||
| Amortization of deferred acquisition costs and intangibles | 65 | 72 | ||||||
| Deferred income taxes | (1 | ) | 53 | |||||
| Derivative instruments, limited partnerships and other | (138 | ) | (84 | ) | ||||
| Long-term incentive compensation expense | 14 | 15 | ||||||
| Change in certain assets and liabilities: | ||||||||
| Accrued investment income and other assets | (68 | ) | (73 | ) | ||||
| Insurance reserves | 140 | 191 | ||||||
| Current tax liabilities | 67 | 2 | ||||||
| Other liabilities, policy and contract claims and other policy-related balances | (122 | ) | (171 | ) | ||||
| Cash used by operating activities—discontinued operations | — | (1 | ) | |||||
| Net cash from (used by) operating activities | (107 | ) | 17 | |||||
| Cash flows from (used by) investing activities: | ||||||||
| Proceeds from maturities and repayments of investments: | ||||||||
| Fixed maturity securities | 649 | 613 | ||||||
| Commercial mortgage loans | 127 | 154 | ||||||
| Limited partnerships and other invested assets | 59 | 31 | ||||||
| Proceeds from sales of investments: | ||||||||
| Fixed maturity and equity securities | 635 | 441 | ||||||
| Purchases and originations of investments: | ||||||||
| Fixed maturity and equity securities | (1,157 | ) | (685 | ) | ||||
| Commercial mortgage loans | (45 | ) | (37 | ) | ||||
| Limited partnerships and other invested assets | (125 | ) | (164 | ) | ||||
| Short-term investments, net | 17 | 1 | ||||||
| Policy loans, net | — | 10 | ||||||
| Other | (17 | ) | — | |||||
| Net cash from investing activities | 143 | 364 | ||||||
| Cash flows from (used by) financing activities: | ||||||||
| Deposits to universal life and investment contracts | 133 | 148 | ||||||
| Withdrawals from universal life and investment contracts | (317 | ) | (491 | ) | ||||
| Repayment and repurchase of long-term debt | (6 | ) | (11 | ) | ||||
| Repurchase of subsidiary shares | (9 | ) | (4 | ) | ||||
| Treasury stock acquired in connection with share repurchases | (63 | ) | (68 | ) | ||||
| Dividends paid to noncontrolling interests | (5 | ) | (4 | ) | ||||
| Other, net | (32 | ) | 2 | |||||
| Net cash used by financing activities | (299 | ) | (428 | ) | ||||
| Net change in cash, cash equivalents and restricted cash | (263 | ) | (47 | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of period | 2,215 | 1,799 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 1,952 | $ | 1,752 | ||||
See Notes to Condensed Consolidated Financial Statements
7
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Formation of GenworthBusiness and Basis of Presentation
Genworth Holdings, Inc. (“Genworth Holdings”) (formerly known as Genworth Financial, Inc.) was incorporated in Delaware in 2003 in preparation for an initial public offering of its common stock, which was completed on May 28, 2004. On April 1, 2013, Genworth Holdings completed a holding company reorganization pursuant to which Genworth Holdings became a direct, 100% owned subsidiary of a new public holding company that it had formed. The new public holding company was incorporated in Delaware on December 5, 2012, in connection with the reorganization, and was renamed Genworth Financial, Inc. (“Genworth Financial”) upon the completion of the reorganization.
The accompanying unaudited condensed financial statements include on a consolidated basis the accounts of Genworth Financial and its affiliate companies in which it holds a majority voting interest or power to direct activities of certain variable interest entities, (“VIEs”), which on a consolidated basis is referred to as “Genworth,” the “Company,” “we,” “us” or “our” unless the context otherwise requires. All intercompany accounts and transactions have been eliminated in consolidation. References to “Genworth Financial” refer solely to Genworth Financial, Inc., and not to any of its consolidated subsidiaries.
Long-Term Care Insurance.
Life and Annuities.
In addition to our three operating segments, we also have Corporate and Other, which includes debt financing expenses that are incurred at the Genworth Holdings level, unallocated corporate income and expenses, eliminations of inter-segment transactions and the results of other businesses that are reported outside of our operating segments, such as certain international businesses and discontinued operations. Corporate and Other also includes start-up results of our CareScout business related to fee-based services, care support and advice, clinical assessments and consulting offered by CareScout LLC (“CareScout”) to advance our senior care growth initiatives.
The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and rules and regulations of the
U.S. Securities and Exchange Commission (“SEC”). Preparing financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. These unaudited condensed consolidated financial statements include all adjustments (including normal recurring adjustments) considered necessary by management to present a fair statement of the financial position, results of operations and cash flows for the periods presented. The
8
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
results reported in these unaudited condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. The unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and related notes contained in our 20222023 Annual Report on Form 10-K. Certain prior year amounts have been reclassified to conform to the current year presentation.
On May 2, 2022,July 31, 2023, Genworth Financial’s Board of Directors authorized aan additional $350 million of share repurchases under the existing share repurchase program under which Genworth Financial may repurchase up to $350 million of its outstanding Class A common stock.that began in May 2022. Pursuant to the program, during the sixthree months ended June 30, 2023,March 31, 2024, Genworth Financial repurchased 31,771,97210,240,670 shares of its common stock at an average price of $5.67$6.17 per share for a total cost of $183$63 million, including excise taxes and other costs paid in connection with acquiring the shares. The repurchased shares were recorded at cost and presented as treasury stock in a separate caption in equity in our condensed consolidated balance sheets. Genworth Financial also authorized repurchases under the share repurchasesrepurchase program through a Rule 10b5-1 trading plan under which 3,703,0151,933,444 shares of its common stock were repurchased during July 2023in April 2024 at an average price of $5.40$6.21 per share for a total cost of $20$12 million, before excise taxes. OnJuly31, 2023, Genworth Financial’s Board of Directors authorized an additional $350leaving approximately $266 million of share repurchasesremaining authorization under theexisting share repurchaseprogram increasing the remaining authorized amount under the program to approximately $436 million.as of April 30, 2024. Under the program, share repurchases may be made at Genworth’s discretion from time to time in open market transactions, privately negotiated transactions, or other means, including through Rule 10b5-1 trading plans. The timing and number of future shares repurchased under the share repurchase program will depend on a variety of factors, including Genworth Financial’s stock price and trading volume, and general business and market conditions, among other factors. The authorization has no expiration date and may be modified, suspended or terminated at any time.
December 31, 2022 (as adjusted) | January 1, 2021 (as adjusted) | |||||||||||||||||||||||
(Amounts in millions) | Previously reported | Correction impacts | As corrected | Previously reported | Correction impacts | As corrected | ||||||||||||||||||
Assets | ||||||||||||||||||||||||
Deferred tax asset | $ | 1,968 | $ | 15 | $ | 1,983 | $ | 3,765 | $ | 11 | $ | 3,776 | ||||||||||||
Total assets | 89,699 | 15 | 89,714 | 122,335 | 11 | 122,346 | ||||||||||||||||||
Liabilities and equity | ||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Future policy benefits | 55,349 | 58 | 55,407 | 84,736 | 50 | 84,786 | ||||||||||||||||||
Other liabilities | 1,675 | 12 | 1,687 | 1,618 | — | 1,618 | ||||||||||||||||||
Total liabilities | 81,258 | 70 | 81,328 | 120,219 | 50 | 120,269 | ||||||||||||||||||
Equity: | ||||||||||||||||||||||||
Accumulated other comprehensive income (loss) | (2,617 | ) | 3 | (2,614 | ) | (7,126 | ) | 18 | (7,108 | ) | ||||||||||||||
Retained earnings | 1,197 | (58 | ) | 1,139 | (569 | ) | (57 | ) | (626 | ) | ||||||||||||||
Total Genworth Financial, Inc.’s stockholders’ equity | 7,686 | (55 | ) | 7,631 | 1,614 | (39 | ) | 1,575 | ||||||||||||||||
Total equity | 8,441 | (55 | ) | 8,386 | 2,116 | (39 | ) | 2,077 | ||||||||||||||||
Total liabilities and equity | 89,699 | 15 | 89,714 | 122,335 | 11 | 122,346 | ||||||||||||||||||
2023 (as adjusted) | 2022 (as adjusted) | |||||||||||||||||||||||
(Amounts in millions, except per share amounts) | Previously reported | Correction impacts | As corrected | Previously reported | Correction impacts | As corrected | ||||||||||||||||||
Benefits and other changes in policy reserves | $ | 1,172 | $ | 4 | $ | 1,176 | $ | 1,165 | $ | 2 | $ | 1,167 | ||||||||||||
Liability remeasurement (gains) losses | 22 | (37 | ) | (15 | ) | (41 | ) | (23 | ) | (64 | ) | |||||||||||||
Acquisition and operating expenses, net of deferrals | 283 | (43 | ) | 240 | 280 | (44 | ) | 236 | ||||||||||||||||
Total benefits and expenses | 1,721 | (76 | ) | 1,645 | 1,602 | (65 | ) | 1,537 | ||||||||||||||||
Income from continuing operations before income taxes | 133 | 76 | 209 | 291 | 65 | 356 | ||||||||||||||||||
Provision for income taxes | 39 | 16 | 55 | 68 | 16 | 84 | ||||||||||||||||||
Income from continuing operations | 94 | 60 | 154 | 223 | 49 | 272 | ||||||||||||||||||
Net income | 94 | 60 | 154 | 221 | 49 | 270 | ||||||||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | 62 | 60 | 122 | 191 | 49 | 240 | ||||||||||||||||||
Income from continuing operations available to Genworth Financial, Inc.’s common stockholders per share: | ||||||||||||||||||||||||
Basic | 0.13 | 0.12 | 0.25 | 0.38 | 0.10 | 0.48 | ||||||||||||||||||
Diluted | 0.12 | 0.12 | 0.24 | 0.37 | 0.10 | 0.47 | ||||||||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders per share: | ||||||||||||||||||||||||
Basic | 0.13 | 0.12 | 0.25 | 0.38 | 0.09 | 0.47 | ||||||||||||||||||
Diluted | 0.12 | 0.12 | 0.24 | 0.37 | 0.09 | 0.46 | ||||||||||||||||||
(2) Accounting Changes
Accounting Pronouncements Recently Adopted
On January 1, 2023,2024, we adopted LDTI, which significantly changed the recognition andmeasurementof long-duration insurance contracts. This new accounting guidance directly impacted deferred acquisition costs (“DAC”), intangible assets and insurance assets and liabilities in our U.S. life insurance companies, and also significantly increased our disclosure requirements. While the new guidance has had a significant impact on existing U.S. GAAP financial statements and disclosures, it does not impact the cash flows or underlying economics of the business, business strategy, statutory net income (loss), risk-based capital of our U.S. life insurance companies, management of capital or our Enact segment and Corporate and Other.
(Amounts in millions) | As originally reported | Effect of adopting LDTI | As adjusted | |||||||||
| Assets | ||||||||||||
| Deferred acquisition costs | $ | 2,200 | $ | 11 | $ | 2,211 | ||||||
| Intangible assets | 241 | (38 | ) | 203 | ||||||||
| Reinsurance recoverable | 16,495 | 2,564 | 19,059 | |||||||||
| Less: Allowance for credit losses | (60 | ) | (3 | ) | (63 | ) | ||||||
| Reinsurance recoverable, net | 16,435 | 2,561 | 18,996 | |||||||||
| Other assets | 415 | 73 | 488 | |||||||||
| Deferred tax asset | 1,344 | 639 | 1,983 | |||||||||
| Market risk benefit assets | — | 26 | 26 | |||||||||
| Total assets | 86,442 | 3,272 | 89,714 | |||||||||
| Liabilities and equity | ||||||||||||
| Liabilities: | ||||||||||||
| Future policy benefits | 38,064 | 17,343 | 55,407 | |||||||||
| Policyholder account balances | 17,113 | (549 | ) | 16,564 | ||||||||
| Market risk benefit liabilities | — | 748 | 748 | |||||||||
| Liability for policy and contract claims | 12,234 | (11,551 | ) | 683 | ||||||||
| Unearned premiums | 584 | (381 | ) | 203 | ||||||||
| Other liabilities | 1,672 | 15 | 1,687 | |||||||||
| Total liabilities | 75,703 | 5,625 | 81,328 | |||||||||
| Equity: | ||||||||||||
| Accumulated other comprehensive income (loss) | (2,220 | ) | (394 | ) | (2,614 | ) | ||||||
| Retained earnings | 3,098 | (1,959 | ) | 1,139 | ||||||||
| Total Genworth Financial, Inc.’s stockholders’ equity | 9,984 | (2,353 | ) | 7,631 | ||||||||
| Total equity | 10,739 | (2,353 | ) | 8,386 | ||||||||
| Total liabilities and equity | 86,442 | 3,272 | 89,714 | |||||||||
Three months ended June 30, 2022 | Six months ended June 30, 2022 | |||||||||||||||||||||||
(Amounts in millions, except per share amounts) | As originally reported | Effect of adopting LDTI | As adjusted | As originally reported | Effect of adopting LDTI | As adjusted | ||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Premiums | $ | 927 | $ | (11 | ) | $ | 916 | $ | 1,858 | $ | (25 | ) | $ | 1,833 | ||||||||||
Net investment gains (losses) | 8 | 11 | 19 | 36 | 25 | 61 | ||||||||||||||||||
Policy fees and other income | 159 | 6 | 165 | 328 | 7 | 335 | ||||||||||||||||||
Total revenues | 1,881 | 6 | 1,887 | 3,773 | 7 | 3,780 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Benefits and other changes in policy reserves | 764 | 4 | 768 | 1,903 | 32 | 1,935 | ||||||||||||||||||
Liability remeasurement (gains) losses | — | 24 | 24 | — | (40 | ) | (40 | ) | ||||||||||||||||
Changes in fair value of market risk benefits and associated hedges | — | 20 | 20 | — | (21 | ) | (21 | ) | ||||||||||||||||
Interest credited | 125 | 1 | 126 | 250 | 1 | 251 | ||||||||||||||||||
Acquisition and operating expenses, net of deferrals | 589 | (10 | ) | 579 | 860 | (45 | ) | 815 | ||||||||||||||||
Amortization of deferred acquisition costs and intangibles | 84 | — | 84 | 176 | (4 | ) | 172 | |||||||||||||||||
Total benefits and expenses | 1,588 | 39 | 1,627 | 3,241 | (77 | ) | 3,164 | |||||||||||||||||
Income from continuing operations before income taxes | 293 | (33 | ) | 260 | 532 | 84 | 616 | |||||||||||||||||
Provision for income taxes | 73 | (11 | ) | 62 | 131 | 15 | 146 | |||||||||||||||||
Income from continuing operations | 220 | (22 | ) | 198 | 401 | 69 | 470 | |||||||||||||||||
Net income | 219 | (22 | ) | 197 | 398 | 69 | 467 | |||||||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | 181 | (22 | ) | 159 | 330 | 69 | 399 | |||||||||||||||||
Income from continuing operations available to Genworth Financial, Inc.’s common stockholders | 182 | (22 | ) | 160 | 333 | 69 | 402 | |||||||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | 181 | (22 | ) | 159 | 330 | 69 | 399 | |||||||||||||||||
Income from continuing operations available to Genworth Financial, Inc.’s common stockholders per share: | ||||||||||||||||||||||||
Basic | 0.36 | (0.04 | ) | 0.32 | 0.65 | 0.14 | 0.79 | |||||||||||||||||
Diluted | 0.36 | (0.05 | ) | 0.31 | 0.65 | 0.13 | 0.78 | |||||||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders per share: | ||||||||||||||||||||||||
Basic | 0.36 | (0.05 | ) | 0.31 | 0.65 | 0.14 | 0.79 | |||||||||||||||||
Diluted | 0.35 | (0.04 | ) | 0.31 | 0.64 | 0.13 | 0.77 | |||||||||||||||||
(Amounts in millions) | As originally reported | Effect of adopting LDTI | As adjusted | |||||||||
| Cash flows from (used by) operating activities: | ||||||||||||
| Net income | $ | 398 | $ | 69 | $ | 467 | ||||||
| Adjustments to reconcile net income to net cash from operating activities: | ||||||||||||
| Net investment (gains) losses | (36 | ) | (25 | ) | (61 | ) | ||||||
| Changes in fair value of market risk benefits and associated hedges | — | (21 | ) | (21 | ) | |||||||
| Charges assessed to policyholders | (292 | ) | 3 | (289 | ) | |||||||
| Acquisition costs deferred | (1 | ) | (6 | ) | (7 | ) | ||||||
| Amortization of deferred acquisition costs and intangibles | 176 | (4 | ) | 172 | ||||||||
| Deferred income taxes | 128 | 15 | 143 | |||||||||
| Change in certain assets and liabilities: | ||||||||||||
| Accrued investment income and other assets | (70 | ) | (1 | ) | (71 | ) | ||||||
| Insurance reserves | 494 | 147 | 641 | |||||||||
| Other liabilities, policy and contract claims and other policy-related balances | (205 | ) | (177 | ) | (382 | ) | ||||||
| Net cash from operating activities | 337 | — | 337 | |||||||||
Accounting Pronouncements Not Yet Adopted
Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued new accounting guidance to improve income tax disclosures. The guidance requires annual disclosure of specific categories in the income tax rate reconciliation, separate disclosure of additional information related to reconciling items that meet a quantitative threshold and additional disclosures about income taxes paid, among other qualitative and quantitative disclosure improvements. This guidance is currently effective for us for annual reporting periods beginning on January 1, 20242025 using the prospective method, with early adoption permitted, which we do not intend to elect. We do not expect a significantare currently evaluating the impact from thisthe guidance may have on our condensed consolidated financial statementsprocesses, controls and disclosures.
Balances as of December 31, 2020 (as reported) | Effect of adopting LDTI | Balances as of January 1, 2021 (as adjusted) | ||||||||||||||||||||||
(Amounts in millions) | Eliminate shadow adjustments | Changes in measurement of assets and liabilities | Change in discount rate | Recognize MRBs | ||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Total investments | $ | 74,701 | $ | — | $ | — | $ | — | $ | — | $ | 74,701 | ||||||||||||
Cash, cash equivalents and restricted cash | 2,561 | — | — | — | — | 2,561 | ||||||||||||||||||
Accrued investment income | 655 | — | — | — | — | 655 | ||||||||||||||||||
Deferred acquisition costs | 1,487 | 1,322 | — | — | — | 2,809 | ||||||||||||||||||
Intangible assets | 157 | 114 | — | — | — | 271 | ||||||||||||||||||
Reinsurance recoverable | 16,864 | — | 1,214 | 10,149 | (92 | ) | 28,135 | |||||||||||||||||
Less: Allowance for credit losses | (45 | ) | — | — | — | — | (45 | ) | ||||||||||||||||
Reinsurance recoverable, net | 16,819 | — | 1,214 | 10,149 | (92 | ) | 28,090 | |||||||||||||||||
Other assets | 404 | — | (89 | ) | — | 248 | 563 | |||||||||||||||||
Deferred tax asset | 65 | (1,515 | ) | 497 | 4,624 | 105 | 3,776 | |||||||||||||||||
Market risk benefit assets | — | — | — | — | 22 | 22 | ||||||||||||||||||
Separate account assets | 6,081 | — | — | — | — | 6,081 | ||||||||||||||||||
Assets related to discontinued operations | 2,817 | — | — | — | — | 2,817 | ||||||||||||||||||
Total assets | $ | 105,747 | $ | (79 | ) | $ | 1,622 | $ | 14,773 | $ | 283 | $ | 122,346 | |||||||||||
| Liabilities and equity | ||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Future policy benefits | $ | 42,695 | $ | (4,456 | ) | $ | 14,654 | $ | 31,893 | $ | — | $ | 84,786 | |||||||||||
Policyholder account balances | 21,503 | (1,229 | ) | — | — | (641 | ) | 19,633 | ||||||||||||||||
Market risk benefit liabilities | — | — | — | — | 1,310 | 1,310 | ||||||||||||||||||
Liability for policy and contract claims | 11,486 | — | (10,725 | ) | — | — | 761 | |||||||||||||||||
Unearned premiums | 775 | — | (468 | ) | — | — | 307 | |||||||||||||||||
Other liabilities | 1,614 | — | — | — | 4 | 1,618 | ||||||||||||||||||
Long-term borrowings | 3,403 | — | — | — | — | 3,403 | ||||||||||||||||||
Separate account liabilities | 6,081 | — | — | — | — | 6,081 | ||||||||||||||||||
Liabilities related to discontinued operations | 2,370 | — | — | — | — | 2,370 | ||||||||||||||||||
Total liabilities | 89,927 | (5,685 | ) | 3,461 | 31,893 | 673 | 120,269 | |||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||
Equity: | ||||||||||||||||||||||||
Class A common stock | 1 | — | — | — | — | 1 | ||||||||||||||||||
Additional paid-in capital | 12,008 | — | — | — | — | 12,008 | ||||||||||||||||||
Accumulated other comprehensive income (loss) | 4,425 | 5,606 | — | (17,120 | ) | (19 | ) | (7,108 | ) | |||||||||||||||
Retained earnings | 1,584 | — | (1,839 | ) | — | (371 | ) | (626 | ) | |||||||||||||||
Treasury stock, at cost | (2,700 | ) | — | — | — | — | (2,700 | ) | ||||||||||||||||
Total Genworth Financial, Inc.’s stockholders’ equity | 15,318 | 5,606 | (1,839 | ) | (17,120 | ) | (390 | ) | 1,575 | |||||||||||||||
Noncontrolling interests | 502 | — | — | — | — | 502 | ||||||||||||||||||
Total equity | 15,820 | 5,606 | (1,839 | ) | (17,120 | ) | (390 | ) | 2,077 | |||||||||||||||
Total liabilities and equity | $ | 105,747 | $ | (79 | ) | $ | 1,622 | $ | 14,773 | $ | 283 | $ | 122,346 | |||||||||||
new
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in millions) | Accumulated other comprehensive income (loss) | Retained earnings | Total stockholders’ equity | |||||||||
| Deferred acquisition costs | $ | 1,322 | $ | — | $ | 1,322 | ||||||
| Intangible assets | 114 | — | 114 | |||||||||
| Reinsurance recoverable | 10,149 | 1,201 | 11,350 | |||||||||
| Other assets | — | 156 | 156 | |||||||||
| Future policy benefits | (27,437 | ) | (3,537 | ) | (30,974 | ) | ||||||
| Policyholder account balances | 1,229 | — | 1,229 | |||||||||
| Market risk benefits, net | (24 | ) | (623 | ) | (647 | ) | ||||||
| Other liabilities | — | (4 | ) | (4 | ) | |||||||
| Deferred taxes | 3,114 | 597 | 3,711 | |||||||||
| Total | $ | (11,533 | ) | $ | (2,210 | ) | $ | (13,743 | ) | |||
(Amounts in millions) | Long-term care insurance | Life insurance | Fixed annuities | Variable annuities | Total | |||||||||||||||
| Balances as of December 31, 2020 | $ | — | $ | 1,316 | $ | 3 | $ | 139 | $ | 1,458 | ||||||||||
| Adjustment for removal of related balances in accumulated other comprehensive income (loss) | 1,043 | 185 | 82 | 12 | 1,322 | |||||||||||||||
| Adjusted balances as of January 1, 2021 | $ | 1,043 | $ | 1,501 | $ | 85 | $ | 151 | 2,780 | |||||||||||
| Enact segment | 29 | |||||||||||||||||||
| Total deferred acquisition costs as of January 1, 2021 | $ | 2,809 | ||||||||||||||||||
(Amounts in millions) | Life insurance | Fixed annuities | Variable annuities | Total | ||||||||||||
| Balances as of December 31, 2020 | $ | 73 | $ | 7 | $ | 3 | $ | 83 | ||||||||
| Adjustment for removal of related balances in accumulated other comprehensive income (loss) | 81 | 33 | — | 114 | ||||||||||||
| Adjusted balances as of January 1, 2021 | $ | 154 | $ | 40 | $ | 3 | $ | 197 | ||||||||
(Amounts in millions) | Long-term care insurance | Life insurance | Fixed annuities | Total | ||||||||||||
| Balances as of December 31, 2020 | $ | 28,770 | $ | 2,101 | $ | 11,824 | $ | 42,695 | ||||||||
Reclassify liability for policy and contract claims, unearned premiums and due premiums (1) | 10,918 | 189 | 10 | 11,117 | ||||||||||||
| Change in discount rate assumptions | 24,253 | 361 | 7,279 | 31,893 | ||||||||||||
Change in cash flow assumptions (2) | 3,319 | (2 | ) | 264 | 3,581 | |||||||||||
Change in cash flow assumptions, effect of increase (decrease) of the deferred profit liability (2) | (173 | ) | — | 129 | (44 | ) | ||||||||||
| Adjustment for removal of related balances in accumulated other comprehensive income (loss) | (3,716 | ) | — | (740 | ) | (4,456 | ) | |||||||||
| Adjusted balances as of January 1, 2021 | 63,371 | 2,649 | 18,766 | 84,786 | ||||||||||||
| Less: reinsurance recoverable | 11,476 | 834 | 13,699 | 26,009 | ||||||||||||
| Adjusted balances as of January 1, 2021, net of reinsurance | $ | 51,895 | $ | 1,815 | $ | 5,067 | $ | 58,777 | ||||||||
(Amounts in millions) | Fixed indexed annuities | Variable annuities | Total | |||||||||
| Balances as of December 31, 2020 | $ | 71 | $ | 570 | $ | 641 | ||||||
| Adjustment for the difference between carrying amount and fair value, except for the difference due to instrument-specific credit risk | 39 | 584 | 623 | |||||||||
| Adjustment for the cumulative effect of changes in the instrument-specific credit risk since issuance | 5 | 19 | 24 | |||||||||
| Total adjustment for the difference between carrying amount and fair value | 44 | 603 | 647 | |||||||||
| Adjusted balances as of January 1, 2021 | 115 | 1,173 | 1,288 | |||||||||
| Less: reinsurance recoverable | — | 244 | 244 | |||||||||
| Adjusted balances as of January 1, 2021, net of reinsurance | $ | 115 | $ | 929 | $ | 1,044 | ||||||
Basic and diluted earnings (loss) per share are calculated by dividing each income (loss) category presented below by the weighted-average basic and diluted common shares outstanding for the periods indicated:
Three months ended June 30, | Six months ended June 30, | Three months ended March 31, | ||||||||||||||||||||||
(Amounts in millions, except per share amounts) | 2023 | 2022 | 2023 | 2022 | 2024 | 2023 | ||||||||||||||||||
Weighted-average common shares used in basic earnings (loss) per share calculations | 473.2 | 508.9 | 482.7 | 508.6 | ||||||||||||||||||||
| Weighted-average common shares used in basic earnings per share calculations | 443.0 | 492.3 | ||||||||||||||||||||||
Potentially dilutive securities: | ||||||||||||||||||||||||
Stock options, restricted stock units and other equity-based awards | 4.9 | 5.2 | 6.4 | 7.1 | ||||||||||||||||||||
| Performance stock units, restricted stock units and other equity-based awards | 7.3 | 7.8 | ||||||||||||||||||||||
Weighted-average common shares used in diluted earnings (loss) per share calculations | 478.1 | 514.1 | 489.1 | 515.7 | ||||||||||||||||||||
| Weighted-average common shares used in diluted earnings per share calculations | 450.3 | 500.1 | ||||||||||||||||||||||
Income from continuing operations: | ||||||||||||||||||||||||
Income from continuing operations | $ | 166 | $ | 198 | $ | 320 | $ | 470 | $ | 170 | $ | 154 | ||||||||||||
Less: net income from continuing operations attributable to noncontrolling interests | 31 | 38 | 63 | 68 | 30 | 32 | ||||||||||||||||||
Income from continuing operations available to Genworth Financial, Inc.’s common stockholders | $ | 135 | $ | 160 | $ | 257 | $ | 402 | $ | 140 | $ | 122 | ||||||||||||
Basic per share | $ | 0.28 | $ | 0.32 | $ | 0.53 | $ | 0.79 | $ | 0.32 | $ | 0.25 | ||||||||||||
Diluted per share | $ | 0.28 | $ | 0.31 | $ | 0.53 | $ | 0.78 | $ | 0.31 | $ | 0.24 | ||||||||||||
Income (loss) from discontinued operations: | ||||||||||||||||||||||||
Income (loss) from discontinued operations, net of taxes | $ | 2 | $ | (1 | ) | $ | 2 | $ | (3 | ) | ||||||||||||||
Less: net income from discontinued operations attributable to noncontrolling interests | — | — | — | — | ||||||||||||||||||||
Income (loss) from discontinued operations available to Genworth Financial, Inc.’s common stockholders | $ | 2 | $ | (1 | ) | $ | 2 | $ | (3 | ) | ||||||||||||||
| Loss from discontinued operations: | ||||||||||||||||||||||||
| Loss from discontinued operations, net of taxes | $ | (1 | ) | $ | — | |||||||||||||||||||
Basic per share | $ | 0.01 | $ | — | $ | 0.01 | $ | (0.01 | ) | $ | — | $ | — | |||||||||||
Diluted per share | $ | 0.01 | $ | — | $ | 0.01 | $ | (0.01 | ) | $ | — | $ | — | |||||||||||
Net income: | ||||||||||||||||||||||||
Income from continuing operations | $ | 166 | $ | 198 | $ | 320 | $ | 470 | $ | 170 | $ | 154 | ||||||||||||
Income (loss) from discontinued operations, net of taxes | 2 | (1 | ) | 2 | (3 | ) | ||||||||||||||||||
| Loss from discontinued operations, net of taxes | (1 | ) | — | |||||||||||||||||||||
Net income | 168 | 197 | 322 | 467 | 169 | 154 | ||||||||||||||||||
Less: net income attributable to noncontrolling interests | 31 | 38 | 63 | 68 | 30 | 32 | ||||||||||||||||||
Net income available to Genworth Financial, Inc.’s common stockholders | $ | 137 | $ | 159 | $ | 259 | $ | 399 | $ | 139 | $ | 122 | ||||||||||||
Basic per share (1) | $ | 0.29 | $ | 0.31 | $ | 0.54 | $ | 0.79 | $ | 0.31 | $ | 0.25 | ||||||||||||
Diluted per share (1) | $ | 0.29 | $ | 0.31 | $ | 0.53 | $ | 0.77 | ||||||||||||||||
| Diluted per share | $ | 0.31 | $ | 0.24 | ||||||||||||||||||||
| (1) |
May not total due to whole number calculation. |
10
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(a) Net Investment Income
Sources of net investment income were as follows for the periods indicated:
Three months ended March 31, | ||||||||
(Amounts in millions) | 2024 | 2023 | ||||||
| Fixed maturity securities—taxable | $ | 554 | $ | 561 | ||||
| Fixed maturity securities—non-taxable | 1 | 1 | ||||||
| Equity securities | 2 | 2 | ||||||
| Commercial mortgage loans | 75 | 76 | ||||||
| Policy loans | 58 | 55 | ||||||
| Limited partnerships | 20 | 28 | ||||||
| Other invested assets | 68 | 68 | ||||||
| Cash, cash equivalents, restricted cash and short-term investments | 27 | 18 | ||||||
| Gross investment income before expenses and fees | 805 | 809 | ||||||
| Expenses and fees | (23 | ) | (22 | ) | ||||
| Net investment income | $ | 782 | $ | 787 | ||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Amounts in millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Fixed maturity securities—taxable | $ | 567 | $ | 578 | $ | 1,128 | $ | 1,158 | ||||||||
| Fixed maturity securities—non-taxable | 1 | 1 | 2 | 2 | ||||||||||||
| Equity securities | 3 | 2 | 5 | 4 | ||||||||||||
| Commercial mortgage loans | 75 | 78 | 151 | 159 | ||||||||||||
| Policy loans | 54 | 51 | 109 | 101 | ||||||||||||
| Limited partnerships | 17 | 32 | 45 | 39 | ||||||||||||
| Other invested assets | 70 | 66 | 138 | 129 | ||||||||||||
| Cash, cash equivalents, restricted cash and short-term investments | 22 | 1 | 40 | 1 | ||||||||||||
| Gross investment income before expenses and fees | 809 | 809 | 1,618 | 1,593 | ||||||||||||
| Expenses and fees | (24 | ) | (22 | ) | (46 | ) | (42 | ) | ||||||||
| Net investment income | $ | 785 | $ | 787 | $ | 1,572 | $ | 1,551 | ||||||||
(b) Net Investment Gains (Losses)
The following table sets forth net investment gains (losses) for the periods indicated:
Three months ended March 31, | ||||||||
(Amounts in millions) | 2024 | 2023 | ||||||
Realized investment gains (losses): | ||||||||
| Available-for-sale fixed maturity securities: | ||||||||
| Realized gains | $ | 7 | $ | 3 | ||||
| Realized losses | (29 | ) | (19 | ) | ||||
| Net realized gains (losses) on available-for-sale fixed maturity securities | (22 | ) | (16 | ) | ||||
| Net realized gains (losses) on equity securities sold | — | — | ||||||
| Total net realized investment gains (losses) | (22 | ) | (16 | ) | ||||
| Net change in allowance for credit losses on available-for-sale fixed maturity securities | — | (15 | ) | |||||
| Net unrealized gains (losses) on equity securities still held | 32 | 11 | ||||||
| Net unrealized gains (losses) on limited partnerships | 43 | — | ||||||
| Commercial mortgage loans | (2 | ) | (2 | ) | ||||
Derivative instruments (1) | 1 | 12 | ||||||
| Other | (3 | ) | (1 | ) | ||||
| Net investment gains (losses) | $ | 49 | $ | (11 | ) | |||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Amounts in millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Realized investment gains (losses): | ||||||||||||||||
| Available-for-sale fixed maturity securities: | ||||||||||||||||
| Realized gains | $ | 18 | $ | 5 | $ | 21 | $ | 15 | ||||||||
| Realized losses | (48 | ) | (9 | ) | (67 | ) | (27 | ) | ||||||||
| Net realized gains (losses) on available-for-sale fixed maturity securities | (30 | ) | (4 | ) | (46 | ) | (12 | ) | ||||||||
| Net realized gains (losses) on equity securities sold | (1 | ) | — | (1 | ) | — | ||||||||||
| Net realized gains (losses) on limited partnerships | — | — | — | — | ||||||||||||
| Total net realized investment gains (losses) | (31 | ) | (4 | ) | (47 | ) | (12 | ) | ||||||||
| Net change in allowance for credit losses on available-for-sale fixed maturity securities | 11 | — | (4 | ) | — | |||||||||||
Write-down of available-for-sale fixed maturity securities (1) | (1 | ) | — | (1 | ) | (2 | ) | |||||||||
| Net unrealized gains (losses) on equity securities still held | 21 | (26 | ) | 32 | (32 | ) | ||||||||||
| Net unrealized gains (losses) on limited partnerships | 40 | 24 | 40 | 59 | ||||||||||||
| Commercial mortgage loans | — | 2 | (2 | ) | 3 | |||||||||||
Derivative instruments (2) | (1 | ) | 18 | 11 | 37 | |||||||||||
| Other | — | 5 | (1 | ) | 8 | |||||||||||
| Net investment gains (losses) | $ | 39 | $ | 19 | $ | 28 | $ | 61 | ||||||||
(1) |
See note |
11
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
See Note 2—Summary of Significant Accounting Policies included in the Notes to Consolidated Financial Statements in our 20222023 Annual Report on Form 10-K for a discussion of our policy for evaluating and measuring the allowance for credit losses related to our available-for-sale fixed maturity securities.
(Amounts in millions) | Beginning balance | Increase from securities without allowance in previous periods | Increase (decrease) from securities with allowance in previous periods | Securities sold | Decrease due to change in intent or requirement to sell | Write-offs | Recoveries | Ending balance | ||||||||||||||||||||||||
| Fixed maturity securities: | ||||||||||||||||||||||||||||||||
| Commercial mortgage-backed | $ | 7 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 7 | ||||||||||||||||
Total available-for-sale fixed maturity securities | $ | 7 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 7 | ||||||||||||||||
The following table represents the allowance for credit losses aggregated by security type for available-for-sale fixed maturity securities as of and for the three months ended June 30,March 31, 2023:
(Amounts in millions) | Beginning balance | Increase from securities without allowance in previous periods | Increase (decrease) from securities with allowance in previous periods | Securities sold | Decrease due to change in intent or requirement to sell | Write-offs | Recoveries | Ending balance | ||||||||||||||||||||||||
| Fixed maturity securities: | ||||||||||||||||||||||||||||||||
| U.S. corporate | $ | — | $ | 9 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 9 | ||||||||||||||||
| Commercial mortgage-backed | — | 6 | — | — | — | — | — | 6 | ||||||||||||||||||||||||
Total available-for-sale fixed maturity securities | $ | — | $ | 15 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 15 | ||||||||||||||||
12
(Amounts in millions) | Beginning balance | Increase from securities without allowance in previous periods | Increase (decrease) from securities with allowance in previous periods | Securities sold | Decrease due to change in intent or requirement to sell | Write-offs | Recoveries | Ending balance | ||||||||||||||||||||||||
| Fixed maturity securities: | ||||||||||||||||||||||||||||||||
| U.S. corporate | $ | 9 | $ | — | $ | — | $ | (7 | ) | $ | — | $ | (2 | ) | $ | — | $ | — | ||||||||||||||
| Commercial mortgage-backed | 6 | — | — | (2 | ) | — | — | — | 4 | |||||||||||||||||||||||
| Total available-for-sale fixed maturity securities | $ | 15 | $ | — | $ | — | $ | (9 | ) | $ | — | $ | (2 | ) | $ | —�� | $ | 4 | ||||||||||||||
(Amounts in millions) | Beginning balance | Increase from securities without allowance in previous periods | Increase (decrease) from securities with allowance in previous periods | Securities sold | Decrease due to change in intent or requirement to sell | Write-offs | Recoveries | Ending balance | ||||||||||||||||||||||||
| Fixed maturity securities: | ||||||||||||||||||||||||||||||||
| U.S. corporate | $ | — | $ | 9 | $ | — | $ | (7 | ) | $ | — | $ | (2 | ) | $ | — | $ | — | ||||||||||||||
| Commercial mortgage-backed | — | 6 | — | (2 | ) | — | — | — | 4 | |||||||||||||||||||||||
| Total available-for-sale fixed maturity securities | $ | — | $ | 15 | $ | — | $ | (9 | ) | $ | — | $ | (2 | ) | $ | — | $ | 4 | ||||||||||||||
GENWORTH FINANCIAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(c) Unrealized Investment Gains and Losses
Net unrealized gains and losses on available-for-sale investment securities reflected as a separate component of accumulated other comprehensive income (loss) were as follows as of the dates indicated:
(Amounts in millions) | June 30, 2023 | December 31, 2022 | ||||||
| Net unrealized gains (losses) on fixed maturity securities without an allowance for credit losses | $ | (3,790 | ) | $ | (4,251 | ) | ||
| Net unrealized gains (losses) on fixed maturity securities with an allowance for credit losses | — | — | ||||||
| Adjustments to policyholder contract balances | 62 | 68 | ||||||
| Income taxes, net | 608 | 705 | ||||||
| Net unrealized investment gains (losses) | (3,120 | ) | (3,478 | ) | ||||
| Less: net unrealized investment gains (losses) attributable to noncontrolling interests | (64 | ) | (71 | ) | ||||
| Net unrealized investment gains (losses) attributable to Genworth Financial, Inc. | $ | (3,056 | ) | $ | (3,407 | ) | ||
(Amounts in millions) | March 31, 2024 | December 31, 2023 | ||||||
| Net unrealized gains (losses) on fixed maturity securities without an allowance for credit losses | $ | (3,209 | ) | $ | (2,577 | ) | ||
| Net unrealized gains (losses) on fixed maturity securities with an allowance for credit losses | — | — | ||||||
| Adjustments to policyholder contract balances | 66 | 52 | ||||||
| Income taxes, net | 484 | 352 | ||||||
| Net unrealized investment gains (losses) | (2,659 | ) | (2,173 | ) | ||||
| Less: net unrealized investment gains (losses) attributable to noncontrolling interests | (44 | ) | (43 | ) | ||||
| Net unrealized investment gains (losses) attributable to Genworth Financial, Inc. | $ | (2,615 | ) | $ | (2,130 | ) | ||
The change in net unrealized gains (losses) on available-for-sale investment securities reported in accumulated other comprehensive income (loss) was as follows as of and for the periods indicated:
(Amounts in millions) | 2024 | 2023 | ||||||
| Beginning balance | $ | (2,130 | ) | $ | (3,407 | ) | ||
| Unrealized gains (losses) arising during the period: | ||||||||
| Unrealized gains (losses) on fixed maturity securities | (654 | ) | 1,170 | |||||
Adjustments to policyholder contract balances (1) | 14 | (19 | ) | |||||
| Provision for income taxes | 137 | (245 | ) | |||||
| Change in unrealized gains (losses) on investment securities | (503 | ) | 906 | |||||
| Reclassification adjustments to net investment (gains) losses, net of taxes of $(5) and $(3) | 17 | 13 | ||||||
| Change in net unrealized investment gains (losses) | (486 | ) | 919 | |||||
| Less: change in net unrealized investment gains (losses) attributable to noncontrolling interests | (1 | ) | 12 | |||||
| Ending balance | $ | (2,615 | ) | $ | (2,500 | ) | ||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Amounts in millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Beginning balance | $ | (2,500 | ) | $ | 2,151 | $ | (3,407 | ) | $ | 6,077 | ||||||
| Unrealized gains (losses) arising during the period: | ||||||||||||||||
| Unrealized gains (losses) on fixed maturity securities | (755 | ) | (4,713 | ) | 415 | (9,843 | ) | |||||||||
| Adjustments to policyholder contract balances | 13 | 77 | (6 | ) | 160 | |||||||||||
| Provision for income taxes | 158 | 935 | (87 | ) | 2,009 | |||||||||||
| Change in unrealized gains (losses) on investment securities | (584 | ) | (3,701 | ) | 322 | (7,674 | ) | |||||||||
| Reclassification adjustments to net investment (gains) losses, net of taxes of $(7), $—, $(10) and $(2) | 23 | 4 | 36 | 10 | ||||||||||||
| Change in net unrealized investment gains (losses) | (561 | ) | (3,697 | ) | 358 | (7,664 | ) | |||||||||
| Less: change in net unrealized investment gains (losses) attributable to noncontrolling interests | (5 | ) | (28 | ) | 7 | (69 | ) | |||||||||
| Ending balance | $ | (3,056 | ) | $ | (1,518 | ) | $ | (3,056 | ) | $ | (1,518 | ) | ||||
| (1) | See note 10 for additional information. |
Amounts reclassified out of accumulated other comprehensive income (loss) to net investment gains (losses) include realized gains (losses) on sales of securities, which are determined on a specific identification basis.