Genworth Financial Q3 2024: Derivatives and Securities Valuations

TL;DR

Genworth Q3 2024: Derivatives in life insurance & annuities, Level 3 securities shifts detailed.

AI Summary

Genworth Financial Inc. reported its Q3 2024 results, ending September 30, 2024. The company's filing details financial futures valuations, embedded derivatives in universal life and fixed indexed annuity liabilities, and transfers within Level 3 for fixed maturity securities. Specific dollar amounts and dates for these financial instruments are detailed within the report.

Why It Matters

Understanding the valuation of derivatives and securities is crucial for assessing Genworth's financial health and potential risks associated with its insurance and annuity products.

Risk Assessment

Risk Level: medium — The filing discusses complex financial instruments like embedded derivatives and Level 3 securities, which carry inherent valuation risks.

Key Numbers

• zero — Financial Futures Valuations (Period end valuations were zero due to daily margin settlements.)

Key Players & Entities

• Genworth Financial Inc. (company) — Filer of the 10-Q report
• 20240930 (date) — End of the reporting period for the 10-Q
• 20241107 (date) — Filing date of the 10-Q

FAQ

Key Financial Figures

• $0.001 — 2,417 shares of Common Stock, par value $0.001 per share, were outstanding. Table of

Filing Documents

• d894525d10q.htm (10-Q) — 10642KB
• d894525dex311.htm (EX-31.1) — 7KB
• d894525dex312.htm (EX-31.2) — 7KB
• d894525dex321.htm (EX-32.1) — 4KB
• d894525dex322.htm (EX-32.2) — 4KB
• g894525g00g93.jpg (GRAPHIC) — 59KB
• 0001193125-24-253279.txt ( ) — 48236KB
• gnw-20240930.xsd (EX-101.SCH) — 121KB
• gnw-20240930_cal.xml (EX-101.CAL) — 92KB
• gnw-20240930_def.xml (EX-101.DEF) — 1003KB
• gnw-20240930_lab.xml (EX-101.LAB) — 971KB
• gnw-20240930_pre.xml (EX-101.PRE) — 1067KB
• d894525d10q_htm.xml (XML) — 16191KB

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements Condensed Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023 3 Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2024 and 2023 (Unaudited) 4 Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2024 and 2023 (Unaudited) 5 Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2024 and 2023 (Unaudited) 6 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (Unaudited) 8 Notes to Condensed Consolidated Financial Statements (Unaudited) 9 Note 1 — Business and Basis of Presentation 9 Note 2 — Accounting Changes 10 Note 3 — Earnings (Loss) Per Share 11 Note 4 — Investments 12 Note 5 — Derivative Instruments 26 Note 6 — Fair Value of Financial Instruments 32 Note 7 — Deferred Acquisition Costs 54 Note 8 — Future Policy Benefits 55 Note 9 — Policyholder Account Balances 60 Note 10 — Additional Insurance Liabilities 63 Note 11 — Market Risk Benefits 64 Note 12 — Separate Accounts 65 Note 13 — Liability for Policy and Contract Claims 66 Note 14 — Borrowings and Other Financings 67 Note 15 — Income Taxes 69 Note 16 — Segment Information 69 Note 17 — Commitments and Contingencies 72 Note 18 — Changes in Accumulated Other Comprehensive Income (Loss) 77 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 80 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 130 Item 4.

Controls and Procedures

Controls and Procedures 130

—OTHER INFORMATION

PART II—OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 131 Item 1A.

Risk Factors

Risk Factors 131 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 131 Item 5. Other Information 131 Item 6. Exhibits 132

Signatures

Signatures 133 2 Table of Contents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION Item1.

Financial Statements

Financial Statements GENWORTH FINANCIAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in millions, except par value and share amounts) September 30, 2024 December 31, 2023 (Unaudited) Assets Investments: Fixed maturity securities available-for-sale, at fair value (amortized cost of $ 48,961 and $ 49,365 , respectively, and allowance for credit losses of $ — and $ 7 , respectively, as of September 30, 2024 and December 31, 2023) $ 47,342 $ 46,781 Equity securities, at fair value 458 396 Commercial mortgage loans (net of unamortized balance of loan origination fees and costs of $ 4 as of September 30, 2024 and December 31, 2023) 6,570 6,829 Less: Allowance for credit losses ( 38 ) ( 27 ) Commercial mortgage loans, net 6,532 6,802 Policy loans 2,316 2,220 Limited partnerships 3,100 2,821 Other invested assets 772 731 Total investments 60,520 59,751 Cash, cash equivalents and restricted cash 2,057 2,215 Accrued investment income 592 647 Deferred acquisition costs 1,831 1,988 Intangible assets 197 198 Reinsurance recoverable 18,626 19,054 Less: Allowance for credit losses ( 27 ) ( 29 ) Reinsurance recoverable, net 18,599 19,025 Other assets 443 489 Deferred tax asset 1,846 1,952 Market risk benefit assets 52 43 Separate account assets 4,623 4,509 Total assets $ 90,760 $ 90,817 Liabilities and equity Liabilities: Future policy benefits $ 57,303 $ 57,655 Policyholder account balances 14,864 15,540 Market risk benefit liabilities 532 625 Liability for policy and contract claims 655 652 Unearned premiums 121 149 Other liabilities 1,859 1,768 Long-term borrowings 1,548 1,584 Separate account liabilities 4,623 4,509 Total liabilities 81,505 82,482 Commitments and contingencies (Note 17) Equity: Common stock, $ 0.001 par value; 1,500,000,000 shares authorized; 606,314,179 and 603,151,611 shares