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8-K - FORM 8-K - Genworth Holdings, Inc.d516501d8k.htm
EX-3.2 - EX-3.2 - Genworth Holdings, Inc.d516501dex32.htm
EX-3.1 - EX-3.1 - Genworth Holdings, Inc.d516501dex31.htm
EX-2.1 - EX-2.1 - Genworth Holdings, Inc.d516501dex21.htm
EX-4.2 - EX-4.2 - Genworth Holdings, Inc.d516501dex42.htm
EX-4.1 - EX-4.1 - Genworth Holdings, Inc.d516501dex41.htm
EX-10.3 - EX-10.3 - Genworth Holdings, Inc.d516501dex103.htm
EX-10.2 - EX-10.2 - Genworth Holdings, Inc.d516501dex102.htm
EX-10.1 - EX-10.1 - Genworth Holdings, Inc.d516501dex101.htm
EX-10.4 - EX-10.4 - Genworth Holdings, Inc.d516501dex104.htm

Exhibit 99.1

Genworth Holdings, Inc.

Unaudited Pro Forma Condensed Consolidated Financial Statements

The following unaudited pro forma condensed consolidated financial statements and related notes are presented to show the effect on the historical consolidated financial statements of the holding company reorganization (the “Reorganization”) pursuant to which Genworth Financial, Inc., a Delaware corporation (formerly named Sub XLVI, Inc., and referred to herein as “Genworth”), became the successor issuer (for Securities and Exchange Commission reporting purposes) to Genworth Holdings, Inc., a Delaware corporation (formerly named Genworth Financial, Inc., and referred to herein as “Old Genworth”). To implement the Reorganization, Old Genworth formed Genworth and Genworth, in turn, formed Sub XLII, Inc. (“Merger Sub”). The holding company structure was implemented by the merger of Merger Sub with and into Old Genworth (the “Merger”) pursuant to the Agreement and Plan of Merger, dated as of April 1, 2013, among Old Genworth, Genworth and Merger Sub. Old Genworth survived the Merger as a direct, wholly-owned subsidiary of Genworth and each share of Old Genworth Class A Common Stock, par value $0.001 per share (“Old Genworth Class A Common Stock”), issued and outstanding immediately prior to the Merger and each share of Old Genworth Class A Common Stock held in the treasury of Old Genworth immediately prior to the Merger converted into one issued and outstanding or treasury, as applicable, share of Genworth Class A Common Stock, having the same designations, rights, powers and preferences and the qualifications, limitations and restrictions as the Old Genworth Class A Common Stock being converted. Immediately after the consummation of the Merger, Genworth had, on a consolidated basis, the same assets, businesses and operations as Old Genworth had immediately prior to the consummation of the Merger.

On April 1, 2013, immediately following the consummation of the Merger, Old Genworth distributed to Genworth (as its sole stockholder), through a dividend (the “Distribution”), the 84.6% membership interest in one of its subsidiaries (Genworth Mortgage Holdings, LLC (“GMHL”)) that it held directly, and 100% of the shares of another of its subsidiaries (Genworth Mortgage Holdings, Inc. (“GMHI”)), that held the remaining 15.4% of outstanding membership interests of GMHL. At the time of the Distribution, GMHL and GMHI together owned (directly or indirectly) 100% of the shares or other equity interests of all of the subsidiaries that conducted Old Genworth’s U.S. mortgage insurance business. These subsidiaries also owned the subsidiaries that conducted Old Genworth’s European mortgage insurance business and 16.3% of Genworth MI Canada Inc. (“Genworth Canada”). As a result of the Distribution, Old Genworth’s beneficial ownership interest in Genworth Canada decreased from 57.5% to 41.2%. As a result, Old Genworth has now de-consolidated Genworth Canada for purposes of financial reporting at the Old Genworth level. Old Genworth now records its 41.2% ownership of Genworth Canada under the equity method of accounting. Following the Distribution, Genworth continues to hold 57.5% of Genworth Canada and therefore will report that interest on a fully consolidated basis as historically had been the case for Old Genworth. The Distribution and de-consolidation were effective on April 1, 2013.

The following unaudited pro forma condensed consolidated financial statements were derived from Old Genworth’s historical consolidated financial statements and reflect Old Genworth’s historical consolidated balance sheet recast on a pro forma basis assuming the Distribution and de-consolidation of Genworth Canada had occurred on December 31, 2012 and Old Genworth’s historical consolidated statement of income and historical consolidated statement of comprehensive income recast on a pro forma basis assuming the Distribution and de-consolidation of Genworth Canada had occurred on January 1, 2012. These unaudited pro forma condensed consolidated financial statements should be read together with Old Genworth’s historical consolidated financial statements and accompanying notes contained in Old Genworth’s Annual Report on Form 10-K for the year ended December 31, 2012.

Management believes the assumptions used and pro forma adjustments derived from such assumptions are reasonable under the circumstances and are based upon currently available information. The historical financial information has been adjusted to give effect to pro forma events that are related and directly attributable to the Distribution and the de-consolidation of Genworth Canada, are factually supportable and, in the case of the unaudited pro forma condensed consolidated statement of income and unaudited pro forma condensed consolidated statement of comprehensive income, are expected to have a continuing impact on Old Genworth’s future results of operations. The adjustments in the unaudited pro forma condensed consolidated financial statements provide information relevant to an understanding of Old Genworth following the Distribution and de-consolidation of Genworth Canada.

The unaudited pro forma condensed consolidated financial statements as of and for the periods presented are for illustrative and informational purposes only and are not intended to represent, or be indicative of, what Old Genworth’s financial position or results of operations would have been had the Distribution and de-consolidation of Genworth Canada been completed on the dates noted above. The unaudited pro forma condensed consolidated financial statements also should not be considered representative of the Old Genworth’s future financial position or results of operations.

The pro forma adjustments are based upon available information and assumptions that Old Genworth believes are reasonable under the circumstances. Actual amounts could differ materially from these estimates. The pro forma results should be read in conjunction with the financial statements and notes thereto in Old Genworth’s Annual Report on Form 10-K for the year ended December 31, 2012.

 

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GENWORTH HOLDINGS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

As of December 31, 2012

(Amounts in millions, except per share amounts)

 

    Historical     Pro Forma
Distribution 
(a)
    Pro Forma
Genworth
Canada
 (b)
    Pro Forma  

Assets

       

Investments:

       

Fixed maturity securities available-for-sale, at fair value

  $ 62,161      $ (1,870   $ (4,713   $ 55,578   

Equity securities available-for-sale, at fair value

    518        (12     (330     176   

Commercial mortgage loans

    5,872        —         —         5,872   

Restricted commercial mortgage loans related to securitization entities

    341        —         —         341   

Policy loans

    1,601        —         —         1,601   

Other invested assets

    3,503        (26     (91     3,386   

Restricted other invested assets related to securitization entities ($393 carried at fair value)

    393        —         —         393   

Investments in subsidiaries

    —         (494 )     1,740        1,246   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investments

    74,389        (2,402     (3,394     68,593   

Cash and cash equivalents

    3,653        (497     (291     2,865   

Accrued investment income

    715        (19     (30     666   

Deferred acquisition costs

    5,036        (8     (109     4,919   

Intangible assets

    481        (11     (10     460   

Goodwill

    1,128        —         (11     1,117   

Reinsurance recoverable

    17,230        (114     —         17,116   

Other assets

    743        (43     (93     607   

Separate account assets

    9,937        —         —         9,937   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

  $ 113,312      $ (3,094   $ (3,938   $ 106,280   
 

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and stockholders’ equity

       

Liabilities:

       

Future policy benefits

  $ 33,505      $ —       $ —       $ 33,505   

Policyholder account balances

    26,262        —         —         26,262   

Liability for policy and contract claims

    7,509        (2,138     (130     5,241   

Unearned premiums

    4,333        (201     (1,796     2,336   

Other liabilities ($133 other liabilities related to securitization entities)

    5,218        (83     (9     5,126   

Borrowings related to securitization entities ($62 carried at fair value)

    336        —         —         336   

Non-recourse funding obligations

    2,066        —         —         2,066   

Long-term borrowings

    4,776        —         (428     4,348   

Deferred tax liability

    1,545        913        (287     2,171   

Separate account liabilities

    9,937        —         —         9,937   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    95,487        (1,509     (2,650     91,328   
 

 

 

   

 

 

   

 

 

   

 

 

 

Commitments and contingencies

       

Stockholders’ equity:

       

Class A common stock, $0.001 par value; 1.5 billion shares authorized; 580 million shares issued and 492 million shares outstanding

    1        —         —         1   

Additional paid-in capital

    12,127        —         —         12,127   
 

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated other comprehensive income (loss):

       

Net unrealized investment gains (losses):

       

Net unrealized gains (losses) on securities not other-than-temporarily impaired

    2,692        (62     —         2,630   

Net unrealized gains (losses) on other- than-temporarily impaired securities

    (54     (3     —         (57
 

 

 

   

 

 

   

 

 

   

 

 

 

Net unrealized investment gains (losses)

    2,638        (65     —         2,573   
 

 

 

   

 

 

   

 

 

   

 

 

 

Derivatives qualifying as hedges

    1,909        —         —         1,909   

Foreign currency translation and other adjustments

    655        (40     —         615   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total accumulated other comprehensive income (loss)

    5,202        (105     —         5,097   

Retained earnings

    1,907        (1,780     —          127   

Treasury stock, at cost (88 million shares)

    (2,700     —         —         (2,700 ) (d) 
 

 

 

   

 

 

   

 

 

   

 

 

 

Total Genworth Financial, Inc.’s stockholders’ equity

    16,537        (1,885     —          14,652   

Noncontrolling interests

    1,288        300  (c)      (1,288     300   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

    17,825        (1,585     (1,288     14,952   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

  $ 113,312      $ (3,094   $ (3,938   $ 106,280   
 

 

 

   

 

 

   

 

 

   

 

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

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GENWORTH HOLDINGS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

For the Year Ended December 31, 2012

(Amounts in millions, except per share amounts)

 

     Historical      Pro Forma
Distribution 
(a)
    Pro Forma
Genworth
Canada 
(b)
    Pro Forma  

Revenues:

         

Premiums

   $ 5,038       $ (579   $ (588   $ 3,871   

Net investment income

     3,343         (60     (189     3,094   

Net investment gains (losses)

     23         (42     (12     (31

Insurance and investment product fees and other

     1,619         (24     —         1,595   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total revenues

     10,023         (705     (789     8,529   
  

 

 

    

 

 

   

 

 

   

 

 

 

Benefits and expenses:

         

Benefits and other changes in policy reserves

     5,378         (769     (193     4,416   

Interest credited

     775         —         —         775   

Acquisition and operating expenses, net of deferrals

     1,866         (170     101        1,797   

Amortization of deferred acquisition costs and intangibles

     727         (5     (39     683   

Goodwill impairment

     89         —         —         89   

Interest expense

     476         (1     (23     452   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total benefits and expenses

     9,311         (945     (154     8,212   
  

 

 

    

 

 

   

 

 

   

 

 

 

Income before income taxes and equity in income of subsidiaries

     712         240        (635     317   

Provision for income taxes

     189         81        (165     105   

Equity in income of subsidiaries

     —          —         193        193   
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income

     523         159        (277     405   

Less: net income attributable to noncontrolling interests

     200         15 (e)      (200     15   
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income available to Genworth Financial, Inc.’s common stockholders

   $ 323       $ 144      $ (77   $ 390   
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income available to Genworth Financial, Inc.’s common stockholders per common share:

         

Basic

   $ 0.66       $ 0.29      $ (0.16   $ 0.79   
  

 

 

    

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.65       $ 0.29      $ (0.16   $ 0.79   
  

 

 

    

 

 

   

 

 

   

 

 

 

Weighted-average common shares outstanding:

         

Basic

     491.6         491.6        491.6        491.6   
  

 

 

    

 

 

   

 

 

   

 

 

 

Diluted

     494.4         494.4        494.4        494.4   
  

 

 

    

 

 

   

 

 

   

 

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

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GENWORTH HOLDINGS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the Year Ended December 31, 2012

(Amounts in millions)

 

    Historical     Pro Forma
Distribution 
(a)
    Pro Forma
Genworth
Canada 
(b)
    Pro Forma  

Net income

  $ 523      $ 159      $ (277   $ 405   

Other comprehensive income (loss), net of taxes:

       

Net unrealized gains (losses) on securities not other-than-temporarily impaired

    1,078        (30     (3 )     1,045   

Net unrealized gains (losses) on other-than-temporarily impaired securities

    78        —          —         78   

Derivatives qualifying as hedges

    (100     —         —         (100

Foreign currency translation and other adjustments

    126        (22     (24 )     80   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss)

    1,182        (52     (27 )     1,103   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss)

    1,705        107        (304     1,508   

Less: comprehensive income attributable to noncontrolling interests

    227        15        (227     15   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) available to Genworth Financial, Inc.‘s common stockholders

  $ 1,478      $ 92      $ (77   $ 1,493   
 

 

 

   

 

 

   

 

 

   

 

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

4


Genworth Holdings, Inc.

Notes to Unaudited Pro Forma

Condensed Consolidated Financial Statements

(a) Adjustments reflect the distribution by Genworth Holdings, Inc. (formerly named Genworth Financial, Inc., and referred to herein as “Old Genworth”) to Genworth Financial, Inc. (formerly named Sub XLVI, Inc., and referred to herein as “Genworth”) of 100% of Old Genworth’s ownership in its U.S. and European mortgage insurance subsidiaries (which includes the European mortgage insurance subsidiaries and 16.3% of Genworth Canada MI Inc. (“Genworth Canada”)) as a non-cash dividend (the “Distribution”). Adjustments also reflect the cash contribution of $100 million paid to the U.S. mortgage insurance subsidiaries on April 1, 2013 and $21 million paid to the European mortgage insurance subsidiaries on January 31, 2013 prior to the Distribution. The U.S. mortgage insurance subsidiaries were previously included in Old Genworth’s U.S. Mortgage Insurance segment. The European mortgage insurance subsidiaries and Genworth Canada were previously included in Old Genworth’s International Mortgage Insurance segment.

(b) Adjustments reflect the de-consolidation of Genworth Canada resulting from the decrease in Old Genworth’s beneficial ownership interest in Genworth Canada from 57.5% to 41.2% and the recording of this ownership interest under the equity method of accounting following the de-consolidation.

(c) Adjustment reflects the noncontrolling interest related to the preferred stock of a U.S. life insurance subsidiary of Old Genworth of $300 million owned by the U.S. mortgage insurance subsidiaries.

(d) To implement the holding company reorganization pursuant to which Genworth became the successor issuer to Old Genworth, Old Genworth formed Genworth and Genworth, in turn, formed Sub XLII, Inc. (“Merger Sub”). The holding company structure was implemented by the merger of Merger Sub with and into Old Genworth (the “Merger”). Old Genworth survived the Merger as a direct, wholly-owned subsidiary of Genworth and each share of Old Genworth Class A Common Stock, par value $0.001 per share (“Old Genworth Class A Common Stock”), issued and outstanding immediately prior to the Merger and each share of Old Genworth Class A Common Stock held in the treasury of Old Genworth immediately prior to the Merger converted into one issued and outstanding or treasury, as applicable, share of Genworth Class A Common Stock, having the same designations, rights, powers and preferences and the qualifications, limitations and restrictions as the Old Genworth Class A Common Stock being converted. Immediately following the consummation of the Merger, there was no Old Genworth treasury stock and therefore the elimination of the treasury stock at Old Genworth in the Merger will be recorded as a reduction in Old Genworth’s retained earnings in the quarter ended June 30, 2013.

(e) Adjustment reflects the income attributable to the noncontrolling interest for dividends paid on the preferred stock of a U.S. life insurance subsidiary of Old Genworth owned by the U.S. mortgage insurance subsidiaries.

 

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