Exhibit 99.7
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors
Genworth Life and Annuity Insurance Company:
Under the date of March 12, 2007, we reported on the consolidated balance sheets of Genworth Life and Annuity Insurance Company and subsidiaries (the Company) as of December 31, 2006 and 2005, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2006, which are included herein. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedules included herein. These financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.
The audit report on the consolidated financial statements of the Company referred to above contains an emphasis paragraph that states that the consolidated financial statements give retroactive effect to the mergers of Genworth Life and Annuity Insurance Company, Federal Home Life Insurance Company and First Colony Life Insurance Company on January 1, 2007 (the Mergers), which have been accounted for as a pooling of interests as described in Note 1 to the consolidated financial statements. Generally accepted accounting principles proscribe giving effect to a consummated business combination accounted for by the pooling-of-interests method in financial statements that do not include the date of consummation. However, they will become the historical consolidated financial statements of Genworth Life and Annuity Insurance Company and subsidiaries after financial statements covering the date of consummation of the business combination are issued. The financial statement schedules included herein also give retroactive effect to the Mergers.
In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for certain nontraditional long-duration contracts and separate accounts in 2004.
/s/ KPMG LLP
Richmond, Virginia
March 12, 2007
Schedule I
GENWORTH LIFE AND ANNUITY INSURANCE COMPANY
Summary of investments—other than investments in related parties
December 31, 2006
(Amounts in millions)
| | | | | | | | | |
Type of Investment | | Amortized
cost or
cost | | Estimated fair value | | Carrying
value |
Fixed maturities: | | | | | | | | | |
Bonds: | | | | | | | | | |
U.S. government, agencies and authorities | | $ | 205.0 | | $ | 218.0 | | $ | 218.0 |
Government—non U.S. | | | 276.3 | | | 307.6 | | | 307.6 |
Public utilities | | | 874.6 | | | 894.4 | | | 894.4 |
All other corporate bonds | | | 14,089.6 | | | 14,106.1 | | | 14,106.1 |
| | | | | | | | | |
Total fixed maturities | | | 15,445.5 | | | 15,526.1 | | | 15,526.1 |
Equity securities | | | 34.6 | | | 35.8 | | | 35.8 |
Commercial mortgage loans | | | 2,917.1 | | | xxxxx | | | 2,917.1 |
Policy loans | | | 486.7 | | | xxxxx | | | 486.7 |
Other invested assets(1) | | | 732.8 | | | xxxxx | | | 737.7 |
| | | | | | | | | |
Total investments | | $ | 19,616.7 | | | xxxxx | | $ | 19,703.4 |
| | | | | | | | | |
(1) | The amount shown in the Consolidated Balance Sheet for other invested assets differs from cost as other invested assets include derivatives which are reported at estimated fair value. |
See Accompanying Report of Independent Registered Public Accounting Firm.
Schedule III
GENWORTH LIFE AND ANNUITY INSURANCE COMPANY
Supplemental Insurance Information
(Amounts in millions)
| | | | | | | | | | | | | | | | |
Segment | | Deferred
Acquisition
Costs | | Future Annuity
And Contract
Benefits &
Liability
For Policy and
Contract
Claims | | Unearned
Premiums | | Other
Policyholder
Liabilities
(Excluding
Unearned
Premiums) | | | Premium
Revenue |
December 31, 2006: | | | | | | | | | | | | | | | | |
Protection | | $ | 2,272.1 | | $ | 7,218.7 | | $ | 24.1 | | $ | 8.8 | | | $ | 875.4 |
Retirement Income and Institutional | | | 387.9 | | | 17,432.2 | | | — | | | 174.1 | | | | 256.9 |
Corporate and Other | | | — | | | — | | | — | | | — | | | | — |
| | | | | | | | | | | | | | | | |
Total | | $ | 2,660.0 | | $ | 24,650.9 | | $ | 24.1 | | $ | 182.9 | | | $ | 1,132.3 |
| | | | | | | | | | | | | | | | |
December 31, 2005: | | | | | | | | | | | | | | | | |
Protection | | $ | 1,884.8 | | $ | 6,993.7 | | $ | 28.9 | | $ | 6.1 | | | $ | 778.6 |
Retirement Income and Institutional | | | 264.8 | | | 16,771.4 | | | — | | | 212.0 | | | | 333.8 |
Corporate and Other | | | — | | | — | | | — | | | (0.2 | ) | | | — |
| | | | | | | | | | | | | | | | |
Total | | $ | 2,149.6 | | $ | 23,765.1 | | $ | 28.9 | | $ | 217.9 | | | $ | 1,112.4 |
| | | | | | | | | | | | | | | | |
December 31, 2004: | | | | | | | | | | | | | | | | |
Protection | | | | | | | | | | | | | | | $ | 690.7 |
Retirement Income and Institutional | | | | | | | | | | | | | | | | 461.4 |
Corporate and Other | | | | | | | | | | | | | | | | — |
| | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | $ | 1,152.1 |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Segment | | Net
Investment
Income | | Interest
Credited &
Benefits and
Other Changes in
Policy Reserves | | Acquisition
and Operating
Expenses, Net
of Deferrals | | Amortization
of Deferred
Acquisition
Costs and
Intangibles | | Premiums
Written |
December 31, 2006: | | | | | | | | | | | | | | | |
Protection | | $ | 537.8 | | $ | 904.2 | | $ | 179.6 | | $ | 52.8 | | $ | 840.1 |
Retirement Income and Institutional | | | 521.0 | | | 694.4 | | | 66.8 | | | 31.3 | | | 256.9 |
Corporate and Other | | | 58.1 | | | — | | | 24.0 | | | — | | | — |
| | | | | | | | | | | | | | | |
Total | | $ | 1,116.9 | | $ | 1,598.6 | | $ | 270.4 | | $ | 84.1 | | $ | 1,097.0 |
| | | | | | | | | | | | | | | |
December 31, 2005: | | | | | | | | | | | | | | | |
Protection | | $ | 442.1 | | $ | 871.1 | | $ | 137.5 | | $ | 147.4 | | $ | 748.1 |
Retirement Income and Institutional | | | 493.8 | | | 730.0 | | | 62.2 | | | 30.0 | | | 334.2 |
Corporate and Other | | | 82.7 | | | — | | | 38.2 | | | — | | | — |
| | | | | | | | | | | | | | | |
Total | | $ | 1,018.6 | | $ | 1,601.1 | | $ | 237.9 | | $ | 177.4 | | $ | 1,082.3 |
| | | | | | | | | | | | | | | |
December 31, 2004: | | | | | | | | | | | | | | | |
Protection | | $ | 391.9 | | $ | 822.4 | | $ | 87.6 | | $ | 119.6 | | $ | 663.2 |
Retirement Income and Institutional | | | 479.0 | | | 850.1 | | | 47.9 | | | 92.6 | | | 461.3 |
Corporate and Other | | | 93.2 | | | — | | | 35.2 | | | — | | | — |
| | | | | | | | | | | | | | | |
Total | | $ | 964.1 | | $ | 1,672.5 | | $ | 170.7 | | $ | 212.2 | | $ | 1,124.5 |
| | | | | | | | | | | | | | | |
See Accompanying Report of Independent Registered Public Accounting Firm.
