Notes to Financial Statements
December 31, 2016 and 2015
|
(1)
|
Description of the Plan
|
The following description of the Genworth Financial, Inc.
Retirement and Savings Plan (the Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.
The Plan is a defined contribution plan. The Plan qualifies under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the Code), and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). Genworth Financial, Inc. (the Company)
is the Plan sponsor.
The trustee and recordkeeper for the Plan are The Bank of New York Mellon and Aon Hewitt, respectively.
Eligible full-time employees (those scheduled to perform at least
1,000 hours of service within a plan year) may participate in the Plan upon their date of employment. Eligible part-time employees may join the Plan once scheduled to perform at least 1,000 hours of service within a plan year.
Subject to limitations imposed by law, participants may elect to
contribute up to 50% of their eligible pay on a
pre-tax
basis. Eligible pay includes salary, overtime, first year commissions and bonuses. The maximum allowable deferral under the Code was $18,000 per
individual for 2016. The Company makes matching contributions equal to 100% of the first 6% of eligible pay deferred by an eligible participant. Beginning January 1, 2017, the Company will make matching contributions equal to 100% of the first
4% of eligible pay deferred by an eligible participant and 50% of the next 2% of eligible pay deferred by an eligible participant for such Plan year, provided that the Company’s matching contribution for an eligible participant will not exceed
5% of a participant’s eligible pay.
The Company also makes annual supplemental contributions, based upon each participant’s
eligible pay. The annual supplemental contributions are based on a combination of age and service and range from 1% to 6% of eligible pay. Beginning January 1, 2016, newly hired employees received annual supplemental contributions ranging from
1% to 3% of eligible pay. Starting January 1, 2017 for most employees, the annual supplemental contributions will be a flat 3% of eligible pay. Certain participants eligible (as of December 31, 2015) for annual supplemental contributions
in the range of 4% to 6% of eligible pay will generally continue to receive that contribution rate through December 31, 2020 before starting at a flat 3% of eligible pay effective January 1, 2021. For a period of 10 years ending
September 27, 2015, certain long-service employees received additional supplemental contributions in the range of 6% to 18% of eligible pay depending upon age and service as of September 27, 2005. Supplemental contributions are invested as
directed by the Company (see note 4).
The Plan has automatic enrollment features with respect to newly hired or
re-hired
employees. If the employee is eligible to participate, he or she will be automatically enrolled in the Plan with
pre-tax
contributions being made at the rate of 3% of
eligible pay the first year. As part of the automatic enrollment, participant contribution rates are automatically increased by 1% each year until they reach 6% of eligible pay. If a participant is automatically enrolled in the Plan, they may
decline participation in the Plan, change the contribution rate from 3% of eligible pay or modify the automatic rate escalation. These contributions are invested in the BlackRock LifePath Index fund associated with a participant’s date of
birth, until the participant directs investment of the automatic deferrals into another investment option offered by the Plan.
4
Genworth Financial, Inc. Retirement and Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
Rollover contributions as shown in the accompanying statement of changes in net assets available for plan benefits represent account balances
rolled over into the Plan by participants from other qualified plans.
Each participant’s account is credited with his or her
contributions, the Company’s matching and supplemental contributions and the proportionate share of the Plan’s earnings or losses. Each participant is entitled only to the benefits that can be provided from his or her vested account.
Participants hired after December 31, 2010 must attain two years of
service to reach full vesting on Company matching contribution accounts. Company supplemental contributions are fully vested after three years of service. Participants hired before January 1, 2011 were immediately vested in their account
balances excluding their supplemental contribution accounts. Forfeitures are used to reduce future employer contributions to the Plan. Forfeitures available to reduce future employer contributions as of December 31, 2016 and 2015 were $521,319
and $61,230, respectively, and forfeitures used to reduce employer contributions were $388,840 and $790,939 in 2016 and 2015 respectively.
Participants are permitted to allocate their account balances
to one or more of 17 investment options currently available under the Plan. Participants may change future investment options as frequently as daily, and subject to time constraints by certain investment managers, may initiate transfers among
investments daily. Direct transfers from the T. Rowe Price Stable Value Common Trust Fund to the BlackRock Money Market Fund are not permitted. Instead, participants who wish to transfer from the T. Rowe Price Stable Value Common Trust Fund to the
BlackRock Money Market Fund must first transfer to one of the other Plan investment options and remain in that option for 90 days before transferring into the BlackRock Money Market Fund.
The Genworth Common Stock Fund invests primarily in common stock of the Company. A small portion of the fund is held in cash or other
short-term investments to provide liquidity. Within the financial statements and supplemental schedule of assets (held at end of year), the assets of the fund are presented separately as common stock and short-term investments.
On October 21, 2016, the Company entered into an agreement and plan of merger (the “Merger Agreement”) with Asia Pacific Global
Capital Co., Ltd. (“the Parent”), a limited liability company incorporated in the People’s Republic of China, and Asia Pacific Global Capital USA Corporation (“Merger Sub”), a Delaware corporation and an indirect,
wholly-owned subsidiary of the Parent. Subject to the terms and conditions of the Merger Agreement, including the satisfaction or waiver of certain conditions, Merger Sub would merge with and into the Company with the Company surviving the merger as
an indirect, wholly-owned subsidiary of the Parent. The Parent is a newly formed subsidiary of China Oceanwide Holdings Group Co., Ltd. (together with its affiliates, “China Oceanwide”). China Oceanwide has agreed to acquire all the
Company’s outstanding common stock for a total transaction value of approximately $2.7 billion, or $5.43 per share in cash. At a special meeting held on March 7, 2017, the Company’s stockholders voted on and approved a proposal
to adopt the Merger Agreement. The transaction remains subject to other closing conditions, including the receipt of required regulatory approvals in the U.S., China, and other international jurisdictions. Both parties are engaging with the relevant
regulators regarding the applications and the pending transaction. For more information on the transaction, please visit Genworth Investor Relations at
http://investor/genworth.com/investors/default.aspx
.
5
Genworth Financial, Inc. Retirement and Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
|
|
(g)
|
Notes Receivable from Participants
|
Participants may borrow from their account a
minimum of $500 up to a maximum equal to the lesser of $50,000 or 50% of their account balance (excluding their supplemental contribution account). There is a charge for each loan that is reflected as a reduction from the appropriate
participant’s account. Loan transactions are treated as transfers between the respective investment funds and the loan fund.
The
period of repayment of any loan is determined by mutual agreement between the Plan administrator and the borrower, but such period may not exceed five years from the effective date of the loan. Loans are secured by the balance in the
participant’s account and bear interest at an effective annual percentage rate that is 2% above the Prime interest rate in effect as of the second business day of each calendar quarter before the loan was requested. Principal and interest are
paid ratably through payroll deductions.
Withdrawals for financial hardship are permitted (excluding
supplemental contribution account) provided they are for a severe and immediate financial need and the distribution is necessary to satisfy that need. Participants are required to fully use the Plan loan program, described above, before requesting a
hardship withdrawal.
In-service
withdrawals are permitted, allowing participants who have reached age 59
1
⁄
2
or older
to obtain withdrawals of
pre-tax
and rollover accounts.
Upon termination of service for any reason, a participant
(or a designated beneficiary) may elect to receive the vested interest in his or her account in a
lump-sum
amount or via partial
lump-sum
distributions. Upon
termination, participants with assets in the group variable annuity investment option may elect to annuitize that portion of their account and begin receiving their guaranteed minimum income if they are age 55 or older. Alternatively, upon
termination, participants with assets in the group variable annuity investment option may elect to receive the vested interest in his or her group variable annuity account in a
lump-sum
amount and forfeit the
lifetime retirement income guarantee. In the event of annuitizations for participants ages 55 to 64, the guaranteed amount will be less than waiting to receive the full amount at age 65 because payments will be made over a longer period of
time.
|
(2)
|
Summary of Significant Accounting Policies
|
The accompanying financial statements of the Plan have been
prepared on the accrual basis of accounting.
The preparation of financial statements in conformity with
U.S. generally accepted accounting principles (U.S. GAAP) requires management of the Plan to make estimates and assumptions that affect the reported amounts of assets, liabilities and changes in net assets available for plan benefits and
disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
|
|
(c)
|
Investment Valuation and Income Recognition
|
Investments are stated at fair
value. The shares of registered investment companies (mutual funds) are valued at quoted market prices, which represent the net asset values (NAV) of shares held by the Plan at year end. Investments in common/collective trust funds are valued at the
net asset value as determined using the estimated fair value of the assets and liabilities in the respective funds on the last day of the Plan year. The common stock of the Company is traded on the New York Stock Exchange (NYSE) and is valued at the
quoted market price on the last business day of the Plan year. Investment in the separately managed fund is valued based on the fair value of the underlying investments, which is based upon the closing price reported in the active market in which
the individual securities are traded.
6
Genworth Financial, Inc. Retirement and Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
The ClearCourse
SM
group variable annuity is valued daily by Genworth Life and Annuity
Insurance Company (GLAIC) (see note 6), an indirect, wholly-owned subsidiary of the Plan sponsor, using the quoted market price of the underlying mutual fund (Vanguard Balanced Institutional Index Fund) less the applicable ClearCourse
SM
asset charge.
The change in the difference between the fair value and the cost of the
investments held at the beginning and end of each year, adjusted for realized gains and losses on investments sold during the year, is reflected in the statement of changes in net assets available for plan benefits as net appreciation or
depreciation in the fair value of investments.
The cost of investments sold is determined on the basis of average cost. Purchases and
sales of investments are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend
date.
|
|
(d)
|
Notes Receivable from Participants
|
Notes receivable from participants equal the
outstanding principal balance plus accrued interest.
Benefit payments to participants are recorded when paid.
Substantially all expenses related to the administration of the Plan
are paid by the Company, with the exception of the Plan’s loan and qualified domestic relations order fees, which are paid from participants’ accounts.
|
(3)
|
Investments, at Fair Value
|
|
|
(a)
|
Fair Value Measurements
|
Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.
Fair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent
sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information. The Plan utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.
All assets carried at fair value are classified and disclosed in one of the following three categories:
|
|
•
|
|
Level 1—Quoted prices for identical instruments in active markets.
|
|
|
•
|
|
Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose
significant value drivers are observable.
|
|
|
•
|
|
Level 3—Instruments whose significant value drivers are unobservable.
|
Level 1
primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded equity securities and actively traded mutual fund investments. Financial instruments in this category include short-term investments,
mutual funds, Genworth common stock, and equity securities.
Level 2 includes those financial instruments that are valued using
industry-standard pricing methodologies, models or other valuation methodologies. These models are primarily industry-standard models that consider various inputs, such as interest rate, credit spread and foreign exchange rates for the underlying
financial instruments. All significant inputs are observable, or derived from observable, information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace. Financial instruments in this
category could include: certain public and private corporate fixed maturity and equity securities; government or agency securities; certain mortgage-backed and asset-backed securities; securities held as collateral; and certain
non-exchange-traded
derivatives. The Plan had no Level 2 assets as of December 31, 2016 or 2015.
7
Genworth Financial, Inc. Retirement and Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
Level 3 is comprised of financial instruments whose fair value is estimated based on industry-standard pricing methodologies and
internally developed models utilizing significant inputs not based on, nor corroborated by, readily available market information. In limited instances, this category may also utilize
non-binding
broker quotes.
This category could include certain less liquid fixed maturity, equity and trading securities and certain derivative instruments where the significant valuation inputs would not be corroborated with market observable data. The Plan had no
Level 3 assets as of December 31,2016 or 2015.
The assessment of the significance of a particular input to the fair value
measurement in its entirety requires judgment, and considers factors specific to the asset, such as the relative impact on the fair value as a result of including a particular input. The Plan reviews the fair value hierarchy classifications
each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets. Such reclassifications are reported as transfers in and out of each level at the beginning fair value for
the reporting period in which the changes occur. There were no transfers between levels during the years ended December 31, 2016 or 2015. See note 2(c) for additional information related to fair value measurements.
|
|
(b)
|
Valuation Methodologies
|
The following is a description of the valuation
techniques and inputs used to determine fair value by class of instrument.
Short-term investments: Short-term investments are valued at
cost, which approximates fair value.
Common stock: Common stock is valued at the closing price reported in the active market in which the
individual securities are traded.
Registered investment companies: Mutual funds are valued at NAV and trade on a market exchange. Each
fund’s NAV is calculated as of the close of business of the NYSE and National Association of Securities Dealers Automated Quotations.
Common/collective trust funds: The funds are valued at the NAV as determined by using estimated fair value of the underlying assets held in the
funds. NAV is used as a practical expedient for fair value. Because transactions initiated in these funds are settled at the NAV determined at the end of the day of trade, there are no readily available market quotations for the funds.
Separately managed fund: This fund is valued based on the fair value of the underlying investments. The underlying investments consist of
interest-bearing cash and marketable securities and were valued based upon the closing price reported in the active market in which the individual securities are traded.
Group variable annuity: The ClearCourse
SM
group variable annuity is valued daily by GLAIC
(see note 6) using the quoted market price of the underlying mutual fund (Vanguard Balanced Institutional Index Fund) less the applicable ClearCourse
SM
asset charge.
The preceding methods described may produce fair value calculations that may not be indicative of net realizable value or reflective of future
fair values. Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies and assumptions to determine the fair value of certain financial instruments
could result in a different fair value measurement at the reporting date.
8
Genworth Financial, Inc. Retirement and Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
Classification within the fair value hierarchy table is based upon the lowest level of any input that is significant to the fair value
measurement. The following tables set forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
NAV
(1)
|
|
|
Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
$
|
1,240,193
|
|
|
$
|
1,240,193
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Mutual funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
|
10,483,250
|
|
|
|
10,483,250
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Bond funds
|
|
|
22,046,544
|
|
|
|
22,046,544
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Balanced funds
|
|
|
24,786,604
|
|
|
|
24,786,604
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Growth funds
|
|
|
47,848,952
|
|
|
|
47,848,952
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Value funds
|
|
|
20,846,556
|
|
|
|
20,846,556
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Foreign blend funds
|
|
|
28,309,589
|
|
|
|
28,309,589
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Common/collective trust funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stable value funds
|
|
|
24,832,039
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
24,832,039
|
|
|
Target maturity funds
|
|
|
298,783,069
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
298,783,069
|
|
|
Blend funds
|
|
|
38,280,292
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
38,280,292
|
|
|
Separately managed fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing cash
|
|
|
1,404,774
|
|
|
|
1,404,774
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Small-cap
equity securities
|
|
|
23,351,872
|
|
|
|
23,351,872
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Group variable annuity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balanced fund
|
|
|
21,567,475
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
21,567,475
|
|
|
Common stock of Genworth Financial, Inc.
|
|
|
8,848,290
|
|
|
|
8,848,290
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
572,629,499
|
|
|
$
|
189,166,624
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
383,462,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
NAV
(1)
|
|
|
Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
$
|
1,455,054
|
|
|
$
|
1,455,054
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Mutual funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
|
9,265,095
|
|
|
|
9,265,095
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Bond funds
|
|
|
21,099,381
|
|
|
|
21,099,381
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Balanced funds
|
|
|
22,406,240
|
|
|
|
22,406,240
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Growth funds
|
|
|
53,674,041
|
|
|
|
53,674,041
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Value funds
|
|
|
18,794,956
|
|
|
|
18,794,956
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Foreign blend funds
|
|
|
31,251,748
|
|
|
|
31,251,748
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Common/collective trust funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stable value funds
|
|
|
23,988,053
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23,988,053
|
|
|
Target maturity funds
|
|
|
294,967,864
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
294,967,864
|
|
|
Blend funds
|
|
|
34,585,292
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
34,585,292
|
|
|
Separately managed fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing cash
|
|
|
2,093,168
|
|
|
|
2,093,168
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Small-cap
equity securities
|
|
|
22,730,238
|
|
|
|
22,730,238
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Group variable annuity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balanced fund
|
|
|
21,050,532
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
21,050,532
|
|
|
Common stock of Genworth Financial, Inc.
|
|
|
7,345,194
|
|
|
|
7,345,194
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
564,706,856
|
|
|
$
|
190,115,115
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
374,591,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in
this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statements of net asset available for plan benefits.
|
9
Genworth Financial, Inc. Retirement and Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
|
(4)
|
Nonparticipant-Directed Investment
|
Information about the net assets available for plan
benefits and changes in net assets available for plan benefits relating to the nonparticipant-directed investment was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Net assets available for plan benefits:
|
|
|
|
|
|
|
|
|
|
Common/collective trust funds
|
|
$
|
149,793,911
|
|
|
$
|
151,181,740
|
|
|
Employer supplemental contributions receivable
|
|
|
9,838,953
|
|
|
|
12,610,648
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
159,632,864
|
|
|
$
|
163,792,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31,
2016
|
|
|
Changes in net assets available for plan benefits:
|
|
|
|
|
|
Net appreciation in fair value of common/collective trust funds
|
|
$
|
11,756,707
|
|
|
Employer contributions
|
|
|
9,838,953
|
|
|
Benefits paid to participants
|
|
|
(25,755,184
|
)
|
|
|
|
|
|
|
|
Net decrease
|
|
$
|
(4,159,524
|
)
|
|
|
|
|
|
|
|
(5)
|
Risks and Uncertainties
|
The Plan investment options include various investment
securities, which in general, are exposed to various risks, such as interest rate, credit and overall market volatility risk. It is reasonable to expect that changes in the values of investment securities will occur in the near term and that such
changes could materially affect participants’ account balances.
The Plan’s exposure to a concentration of credit risk is limited
by the diversification of investments across the participant-directed fund elections. Additionally, the investments within each participant-directed fund election are further diversified into varied financial instruments, with the exception of the
Genworth Common Stock Fund, which generally invests in a single security. Investment decisions are made, and the resulting risks are borne, exclusively by the Plan participants who make such decisions.
The value, liquidity and related income of the securities in which the Plan invests are sensitive to changes in economic conditions, including
real estate value, delinquencies or defaults, or both, and may be adversely affected by shifts in the market’s perception of the issuers and changes in interest rates.
|
(6)
|
Party-in-Interest
Transactions
|
One investment option available to participants is the ClearCourse
SM
group variable
annuity provided under the Plan. Each contribution into ClearCourse
SM
provides a guaranteed amount of retirement income to the participant. GLAIC offers the guaranteed amount of retirement income
provided by this ClearCourse
SM
group variable annuity product. Fees paid by the Plan to GLAIC for the Plan years ended December 31, 2016 and 2015 were approximately $207,000 and $199,000,
respectively.
Another investment in the Plan is an investment fund comprised primarily of shares of common stock issued by the Company.
The Plan owned 2,322,386 and 1,969,221 shares of common stock of the Company as of December 31, 2016 and 2015,
10
Genworth Financial, Inc. Retirement and Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
respectively. As of December 31, 2016 and 2015, the shares had a cost basis of $11,926,355 and $11,871,000, respectively, and a fair
value of $8,848,291 and $7,345,194, respectively. During the year ended December 31, 2016, 669,759 shares of common stock of the Company were purchased at a total cost of $1,692,904 and 263,751 shares were sold at a total cost of $1,366,113.
Certain Plan investments are held by The Bank of New York Mellon. The Bank of New York Mellon is the Trustee as defined by the Plan and,
therefore, is a
party-in-interest.
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants would become 100% vested in the Company’s contributions.
|
(8)
|
Federal Income Tax Status
|
The Internal Revenue Service (IRS) has determined and
informed the Company by a letter dated March 1, 2012 that the Plan and related trust are designed in accordance with applicable sections of the Code. This letter expired on January 31, 2017. The Company applied to the IRS for a new letter
in January 2017 and is awaiting their updated determination.
U.S. GAAP requires Plan management to evaluate tax positions taken by the
Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan administrator has analyzed the tax positions taken by the Plan, and has
concluded that as of December 31, 2016, there were no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine
audits by taxing jurisdictions; however, there are currently no audits of the Plan for any tax periods in progress. The Plan administrator believes it is no longer subject to federal or state tax examinations of the Plan for years prior to 2013.
11