Annual Report of Employee Stock Plans (11-k)

Date : 06/25/2018 @ 4:36PM
Source : Edgar (US Regulatory)
Stock : Genworth Financial (GNW)
Quote : 4.62  0.0 (0.00%) @ 7:00AM

Annual Report of Employee Stock Plans (11-k)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 11-K

 

 

FOR ANNUAL REPORTS OF EMPLOYEE STOCK

PURCHASE, SAVINGS AND SIMILAR PLANS

PURSUANT TO SECTION 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

OR

 

TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 001-32195

 

 

 

A. Full title of the plan and the address of the plan, if different from that of the issuer named below:

Genworth Financial, Inc. Retirement and Savings Plan

 

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

LOGO

Genworth Financial, Inc.

6620 W. Broad Street

Richmond, VA 23230

 

 

 


Genworth Financial, Inc. Retirement and Savings Plan

Index

 

     Page(s)  

Report of Independent Registered Public Accounting Firm

     1  

Financial Statements:

  

Statements of Net Assets Available for Plan Benefits as of December  31, 2017 and 2016

     2  

Statement of Changes in Net Assets Available for Plan Benefits for the year ended December 31, 2017

     3  

Notes to Financial Statements

     4-11  

Supplemental Schedule I:

  

Schedule H, Line 4i – Schedule of Assets  (Held at End of Year) – December 31, 2017

     12-14  

Other Information:

  

Exhibit Index

     15  

Signature

     16  


Report of Independent Registered Public Accounting Firm

To the Plan Participants and Plan Administrator

Genworth Financial, Inc. Retirement and Savings Plan:

Opinion on the Financial Statements

We have audited the accompanying statements of net assets available for plan benefits of Genworth Financial, Inc. Retirement and Savings Plan (the Plan) as of December 31, 2017 and 2016, the related statement of changes in net assets available for plan benefits for the year ended December 31, 2017, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 2017 and 2016, and the changes in net assets available for plan benefits for the year ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Accompanying Supplemental Information

The supplemental information in Schedule H, Line 4i – Schedule of Assets (Held at End of Year) as of December 31, 2017 has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.

/s/ KPMG LLP

We have served as the Plan’s auditor since 2006.

Richmond, Virginia

June 25, 2018

 

1


Genworth Financial, Inc. Retirement and Savings Plan

State ments of Net Assets Available for Plan Benefits

December 31, 2017 and 2016

 

     2017      2016  

Assets:

     

Investments:

     

Investments at fair value

   $ 630,130,131      $ 572,629,499  

Receivables:

     

Notes receivable from participants

     7,991,534        7,871,579  

Receivable for securities sold

     —          142,873  

Accrued dividends and interest

     64,549        111,742  

Participant contribution receivable

     689,201        —    

Employer contribution receivable

     11,057,087        9,838,953  
  

 

 

    

 

 

 

Total receivables

     19,802,371        17,965,147  
  

 

 

    

 

 

 

Total assets

     649,932,502        590,594,646  
  

 

 

    

 

 

 

Liabilities:

     

Accrued participant expenses

     215,806        205,490  
  

 

 

    

 

 

 

Total liabilities

     215,806        205,490  
  

 

 

    

 

 

 

Net assets available for plan benefits

   $ 649,716,696      $ 590,389,156  
  

 

 

    

 

 

 

See Accompanying Notes to Financial Statements.

 

2


Genworth Financial, Inc. Retirement and Savings Plan

Statement of Changes in Net Assets Available for Plan Benefits

Year ended December 31, 2017

 

Additions to (reductions from) net assets attributed to:

  

Investment income:

  

Net appreciation in the fair value of investments

   $ 81,943,876  

Interest and dividends

     3,170,854  
  

 

 

 

Total investment income

     85,114,730  
  

 

 

 

Interest income from notes receivable from participants

     418,557  
  

 

 

 

Contributions:

  

Participants

     21,886,039  

Employer

     21,977,691  

Rollovers

     1,722,140  
  

 

 

 

Total contributions

     45,585,870  
  

 

 

 

Benefits paid to participants

     71,791,617  
  

 

 

 

Net increase in net assets available for plan benefits

     59,327,540  

Net assets available for plan benefits at:

  

Beginning of the year

     590,389,156  
  

 

 

 

End of the year

   $ 649,716,696  
  

 

 

 

See Accompanying Notes to Financial Statements.

 

 

3


Genworth Financial, Inc. Retirement and Savings Plan

Notes to Financial Statements

December 31, 2017 and 2016

 

(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.

 

  (a) General

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 Alight Solutions, respectively.

 

  (b) Eligibility

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.

 

  (c) Contributions

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 2017. Beginning January 1, 2017, the Company made 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. Prior to that date, the Company made matching contributions equal to 100% of the first 6% of eligible pay deferred by an eligible participant.

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 became 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 converting to a flat 3% of eligible pay effective January 1, 2021. 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, 2017 and 2016

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.

 

  (d) Participant Accounts

Each participant’s account is credited with his or her contributions, the Company’s matching and supplemental contributions and the earnings or losses of their individual fund elections. Each participant is entitled to the benefits that can be provided from his or her vested account.

 

  (e) Vesting

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, 2017 and 2016 were $462,372 and $521,319, respectively, and forfeitures used to reduce employer contributions were $723,319 and $388,840 in 2017 and 2016 respectively.

 

  (f) Investment Options

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 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.

 

 

5


Genworth Financial, Inc. Retirement and Savings Plan

Notes to Financial Statements

December 31, 2017 and 2016

 

  (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. Delinquent participant loans are recorded as distributions based on the terms of the Plan document.

 

  (h) Withdrawals

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. For the 2017 Plan year, participants were 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.

 

  (i) Payment of Benefits

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 the amount that would be received at age 65 because payments will be made over a longer period of time.

 

(2) Summary of Significant Accounting Policies

 

  (a) Basis of Accounting

The accompanying financial statements of the Plan have been prepared on the accrual basis of accounting.

 

  (b) Use of Estimates

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, 2017 and 2016

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.

 

  (e) Benefits

Benefit payments to participants are recorded when paid.

 

  (f) Expenses

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. Participants paid $ 32,650 and $ 28,950 in 2017 and 2016 respectively for loan fees and qualified domestic relations order fees.

 

(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 actively traded 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 actively traded equity securities and actively traded mutual fund investments. Financial instruments in this category include short-term investments, mutual funds, Genworth common stock, equity securities and the ClearCourse SM group variable annuity.

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 include common/collective trust funds.

 

 

7


Genworth Financial, Inc. Retirement and Savings Plan

Notes t o Financial Statements

December 31, 2017 and 2016

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. The Plan had no Level 3 assets as of December 31, 2017 or 2016.

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 valuation techniques used to measure fair value are monitored at least annually by the Plan to determine if a change results in a measurement that is equally or more representative of fair value. Changes in valuation techniques or their application are accounted for as changes in accounting estimates. Furthermore, 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, 2017 or 2016. 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 quoted prices for the identical instrument.

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. Standard models are used to estimate the fair value of the underlying assets using observable market inputs.

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, 2017 and 2016

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:

 

     2017  
     Total      Level 1      Level 2      Level 3  

Investments:

           

Short-term investments

   $ 243,778      $ 243,778      $ —        $ —    

Mutual funds

           

Money market funds

     10,963,404        10,963,404        —          —    

Bond funds

     20,873,361        20,873,361        —          —    

Balanced funds

     28,306,602        28,306,602        —          —    

Growth funds

     65,935,252        65,935,252        —          —    

Value funds

     21,732,534        21,732,534        —          —    

Foreign blend funds

     33,327,383        33,327,383        —          —    

Common/collective trust funds

           

Stable value funds

     21,108,618        —          21,108,618      —    

Target maturity funds

     332,411,034        —          332,411,034      —    

Blend funds

     44,035,148        —          44,035,148      —    

Separately managed fund

           

Interest-bearing cash

     68,038        68,038        —          —    

Small-cap equity securities

     21,375,898        21,375,898        —          —    

Group variable annuity

           

Balanced fund

     21,964,011        21,964,011        —          —    

Common stock of Genworth Financial, Inc.

     7,785,070        7,785,070        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 630,130,131      $ 232,575,331      $ 397,554,800    $ —    
  

 

 

    

 

 

    

 

 

    

 

 

 
     2016  
     Total      Level 1      Level 2      Level 3  

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 (1)

           

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 (1)

           

Balanced fund

     21,567,475        21,567,475        —          —    

Common stock of Genworth Financial, Inc.

     8,848,290        8,848,290        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 572,629,499      $ 210,734,099      $ 361,895,400    $ —    
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)   During 2017, the Plan changed the presentation of certain investments in the fair value hierarchy chart above, related to investments that the Plan has now determined to have a readily determinable fair value. As a result, the Plan reclassified the entire balance of the common/collective trust funds and the ClearCourse SM group variable annuity from the NAV column to the Level 2 and Level 1 columns respectively, as of December 31, 2016.

 

9


Genworth Financial, Inc. Retirement and Savings Plan

Notes to Financial Statements

December 31, 2017 and 2016

 

(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,  
     2017      2016  

Net assets available for plan benefits:

     

Common/collective trust funds

   $ 161,869,224      $ 149,793,911  

Employer supplemental contributions receivable

     10,658,098        9,838,953  
  

 

 

    

 

 

 

Total

   $ 172,527,322      $ 159,632,864  
  

 

 

    

 

 

 

 

     Year ended
December 31,
2017
 

Changes in net assets available for plan benefits:

  

Net appreciation in fair value of common/collective trust funds

   $ 21,954,077  

Employer contributions

     10,658,098  

Benefits paid to participants

     (19,717,717
  

 

 

 

Net increase

   $ 12,894,458  
  

 

 

 

 

(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, 2017 and 2016 were approximately $210,000 and $207,000, respectively.

Another investment in the Plan is an investment fund comprised primarily of shares of common stock issued by the Company. The Plan owned 2,503,238 and 2,322,386 shares of common stock of the Company as of December 31, 2017 and 2016,

 

10


Genworth Financial, Inc. Retirement and Savings Plan

Not es to Financial Statements

December 31, 2017 and 2016

respectively. As of December 31, 2017 and 2016, the shares had a cost basis of $12,494,839 and $11,926,355, respectively, and a fair value of $7,785,070 and $8,848,291, respectively. During the year ended December 31, 2017, 268,165 shares of common stock of the Company were purchased at a total cost of $1,006,174, and 63,489 shares were sold at a total cost of $317,519.

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. Participant loans are considered exempt party-in-interest transactions.

 

(7) Plan Termination

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, 2017, 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 2014.

 

11


S upplemental Schedule I

Genworth Financial, Inc. Retirement and Savings Plan

Schedule H, Line 4i- Schedule of Assets (Held at End of Year)

December 31, 2017

 

Identity of issue, borrower, lessor, or similar party

  

Description of investment including maturity date,
number of shares or units, rate of interest, collateral
and par or maturity value

   Cost      Current value  

Short-term investments:

        

**The Bank of New York Mellon

   Interest-bearing cash    $ 243,778      $ 243,778  

Mutual funds:

        

Capital Research and Management Company

   1,042,217 shares of American Balanced Fund      23,590,891        28,306,602  

BlackRock Fund Advisors

   10,963,404 shares of BlackRock Money Market Fund      10,963,404        10,963,404  

BlackRock Fund Advisors

   574,737 shares of BlackRock Russell 2000 Growth Fund      10,078,915        13,155,673  

Dodge & Cox

   1,516,959 shares of Dodge & Cox Income Fund      20,487,830        20,873,361  

Harbor Capital Advisors

   493,593 shares of Harbor International Fund      30,330,147        33,327,383  

Invesco Advisors, Inc

   804,611 shares of Invesco Growth & Income Fund      19,146,502        21,732,534  

T. Rowe Price Associates, Inc.

   1,429,953 shares of T. Rowe Price Inst. Large Cap Growth Fund      38,514,542        52,779,579  
     

 

 

    

 

 

 
  

Total mutual funds

     153,112,231        181,138,536  
     

 

 

    

 

 

 

Common/collective trust funds:

        

BlackRock Institutional Trust Company NA

   2,041,377 units of BlackRock Equity Index Fund      29,350,089        44,035,148  

BlackRock Institutional Trust Company NA

   1,219,251 units of BlackRock LifePath Index Retirement Fund      19,680,937        23,821,230  

BlackRock Institutional Trust Company NA

   2,275,852 units of BlackRock LifePath Index 2020 Fund      36,721,674        45,540,715  

BlackRock Institutional Trust Company NA

   2,393,030 units of BlackRock LifePath Index 2030 Fund      39,530,481        51,066,074  

BlackRock Institutional Trust Company NA

   1,478,443 units of BlackRock LifePath Index 2040 Fund      24,644,343        32,978,735  

BlackRock Institutional Trust Company NA

   1,003,664 units of BlackRock LifePath Index 2050 Fund      13,338,363        17,135,056  

BlackRock Institutional Trust Company NA

   362,220 units of BlackRock LifePath Index Retirement Fund *      5,695,759        7,076,911  

BlackRock Institutional Trust Company NA

   2,502,809 units of BlackRock LifePath Index 2020 Fund *      39,215,082        50,082,210  

BlackRock Institutional Trust Company NA

   3,365,537 units of BlackRock LifePath Index 2030 Fund *      53,307,587        71,818,869  

BlackRock Institutional Trust Company NA

   1,264,311 units of BlackRock LifePath Index 2040 Fund *      20,239,543        28,202,226  

BlackRock Institutional Trust Company NA

   274,653 units of BlackRock LifePath Index 2050 Fund *      3,362,197        4,689,008  

T. Rowe Price Associates, Inc.

   21,108,618 units of T. Rowe Price Stable Value Common Trust Fund      21,108,618        21,108,618  
     

 

 

    

 

 

 
  

Total common/collective trust funds

     306,194,673        397,554,800  

Separately managed fund:

        

Cambiar Investors LLC

   See following Sub-schedule for detailed listing      20,095,624        21,443,936  

Group variable annuity:

        

**Genworth Life and Annuity Insurance Company

   1,256,343 units of ClearCourse SM Group Variable Annuity      11,630,725        21,964,011  

Common stock:

        

**Genworth Financial, Inc.

   2,503,238 shares of Genworth Financial, Inc. common stock      12,494,839        7,785,070  

**Notes receivable from participants

   1,366 loans to participants with interest rate of 5.25% to 6.25% and maturity dates through December 2022      —          7,991,534  
     

 

 

    

 

 

 
      $ 503,771,870      $ 638,121,665  
     

 

 

    

 

 

 

 

* Non-participant directed.
** Party-in-interest as defined by ERISA.

See Accompanying Report of Independent Registered Public Accounting Firm

 

 

12


Genworth Financial, Inc. Retirement and Savings Plan

Schedule H, Line 4i – S ub-Schedule of Separately Managed Fund:

Cambiar Investors LLC

December 31, 2017

 

Identity of issue, borrower, lessor, or similar party

  

Description of investment including maturity date,
number of shares or units, rate of interest, collateral
and par or maturity value

   Cost      Current
Value
 

THE BANK OF NEW YORK MELLON

   Interest-bearing cash    $ 68,038      $ 68,038  

AETNA HEALTH INC

   3,600 shares of AETNA HEALTH INC      428,531        478,944  

AIRCASTLE LTD

   21,095 shares of AIRCASTLE LTD      386,446        493,412  

ANDERSONS INC/THE

   7,500 shares of ANDERSONS INC/THE      259,642        233,625  

AXIS CAPITAL HOLDINGS

   8,490 shares of AXIS CAPITAL HOLDINGS      428,443        426,707  

TRAVELPORT WORLDWIDE LTD

   34,520 shares of TRAVELPORT WORLDWIDE LTD      472,992        451,176  

AIR LEASE CORP

   8,690 shares of AIR LEASE CORP      266,009        417,902  

ARRAY BIOPHARMA INC.

   22,760 shares of ARRAY BIOPHARMA INC.      189,543        291,328  

BMC STOCK HOLDINGS INC

   18,080 shares of BMC STOCK HOLDINGS INC      300,977        457,424  

BANNER CORP

   7,890 shares of BANNER CORP      390,200        434,897  

BRINKER INTERNATIONAL INC

   11,830 shares of BRINKER INTERNATIONAL INC      545,350        459,477  

BRUKER CORP

   11,860 shares of BRUKER CORP      270,778        407,035  

CALLON PETROLEUM CO

   38,110 shares of CALLON PETROLEUM CO      587,327        463,037  

CHEMICAL FINANCIAL CORP

   9,260 shares of CHEMICAL FINANCIAL CORP      427,329        495,132  

COMMVAULT SYSTEMS INC

   8,020 shares of COMMVAULT SYSTEMS INC      429,923        421,050  

CONDUENT INC

   27,370 shares of CONDUENT INC      437,404        442,299  

DIEBOLD NIXDORF INC

   20,130 shares of DIEBOLD NIXDORF INC      682,401        329,126  

ENERGIZER HOLDINGS INC

   9,765 shares of ENERGIZER HOLDINGS INC      370,938        468,525  

ENERSYS

   6,960 shares of ENERSYS      437,991        484,625  

FIRST MIDWEST BANCORP INC/IL

   19,090 shares of FIRST MIDWEST BANCORP INC/IL      470,974        458,351  

FORWARD AIR CORP

   7,710 shares of FORWARD AIR CORP      413,617        442,862  

GROUP 1 AUTOMOTIVE INC

   3,760 shares of GROUP 1 AUTOMOTIVE INC      261,106        266,847  

HMS HOLDINGS CORP

   28,565 shares of HMS HOLDINGS CORP      519,079        484,177  

HILLTOP HOLDINGS INC

   16,690 shares of HILLTOP HOLDINGS INC      351,494        422,758  

HOPE BANCORP INC

   24,870 shares of HOPE BANCORP INC      395,660        453,878  

HUB GROUP INC

   9,550 shares of HUB GROUP INC      343,689        457,445  

IDACORP INC

   4,560 shares of IDACORP INC      410,016        416,602  

INTERFACE INC

   16,980 shares of INTERFACE INC      283,863        427,047  

KITE REALTY GROUP TRUST

   22,400 shares of KITE REALTY GROUP TRUST      488,356        439,040  

LEGACYTEXAS FINANCIAL GROUP INC

   11,725 shares of LEGACYTEXAS FINANCIAL GROUP INC      432,649        494,912  

MARCUS & MILLICHAP INC

   10,575 shares of MARCUS & MILLICHAP INC      328,024        344,851  

MOLINA HEALTHCARE INC

   6,940 shares of MOLINA HEALTHCARE INC      371,986        532,159  

MURPHY USA INC

   5,660 shares of MURPHY USA INC      357,765        454,838  

NATUS MEDICAL INC

   10,880 shares of NATUS MEDICAL INC      433,416        415,616  

ORION ENGINEERED CARBONS SA

   19,950 shares of ORION ENGINEERED CARBONS SA      418,931        510,720  

PNM RESOURCES INC

   9,690 shares of PNM RESOURCES INC      331,524        391,961  

 

13


Genworth Financial, Inc. Retirement and Savings Plan

Sch edule H, Line 4i – Sub-Schedule of Separately Managed Fund:

Cambiar Investors LLC

December 31, 2017

 

Identity of issue, borrower, lessor, or similar party

  

Description of investment including maturity date,
number of shares or units, rate of interest, collateral
and par or maturity value

   Cost      Current
Value
 

PENSKE AUTOMOTIVE GROUP INC

   9,160 shares of PENSKE AUTOMOTIVE GROUP INC      410,782        438,306  

RPC INC

   19,615 shares of RPC INC      379,199        500,771  

RAMBUS INC

   35,980 shares of RAMBUS INC      451,520        511,636  

RITCHIE BROS AUCTIONEERS INC

   15,750 shares of RITCHIE BROS AUCTIONEERS INC      442,999        471,398  

SCHWEITZER-MAUDUIT INTERNATIONAL

   11,255 shares of SCHWEITZER-MAUDUIT INTERNATIONAL      414,151        510,527  

SUPER MICRO COMPUTER INC

   19,760 shares of SUPER MICRO COMPUTER INC      516,846        413,478  

TCF FINANCIAL CORP

   21,465 shares of TCF FINANCIAL CORP      346,732        440,033  

TELEPHONE & DATA SYSTEMS INC

   17,330 shares of TELEPHONE & DATA SYSTEMS INC      453,879        481,774  

UMPQUA HOLDINGS CORP

   21,470 shares of UMPQUA HOLDINGS CORP      384,074        446,576  

UNITED COMMUNITY BANKS INC/GA

   16,740 shares of UNITED COMMUNITY BANKS INC/GA      461,524        471,064  

VALIDUS HOLDINGS LTD

   8,890 shares of VALIDUS HOLDINGS LTD      419,013        417,119  

VALVOLINE INC

   18,320 shares of VALVOLINE INC      416,576        459,099  

VERIFONE SYSTEMS INC

   19,385 shares of VERIFONE SYSTEMS INC      466,575        343,308  

VIASAT INC

   230 shares of VIASAT INC      16,745        17,216  

XPERI CORP

   15,730 shares of XPERI CORP      522,598        383,808  
     

 

 

    

 

 

 
  

Total Investments

   $ 20,095,624      $ 21,443,936  
     

 

 

    

 

 

 

 

14


Exhibit In dex

 

Exhibit Number    Description of Document
23    Consent of Independent Registered Public Accounting Firm

 

15


SI GNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Genworth Financial, Inc. Retirement and Savings Plan
Date: June 25, 2018   By:  

/s/ Matthew D. Farney

    Matthew D. Farney
   

Vice President and Controller (Principal Accounting Officer)

Genworth Financial, Inc.

 

16

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