| assets and a decrease in cash, cash equivalents and restricted cash of $370 million. The decrease in fixed maturity securities was predominantly related to a decline in market values as a result of an increase in interest rates in the current year. Cash, cash equivalents and restricted cash decreased | primarily from the redemption of Genworth Holdings’ May 2018 senior notes, net withdrawals from our investment contracts and investing cash outflows principally from purchases of fixed maturity and equity securities outpacing maturities and sales, partially offset by net proceeds from Genworth Holdings’ Term Loan. The decrease in other invested assets was primarily related to net sales and maturities of short-term investments, mostly in our CanadaAustralia and AustraliaCanada mortgage insurance businesses. Cash, cash equivalents and restricted cash decreased primarily from the redemption of Genworth Holdings’ May 2018 senior notes and payments of dividends to and the repurchase of subsidiary shares from noncontrolling interests, partially offset by net proceeds from the Term Loan closed by Genworth Holdings in March 2018.
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DAC increased $757$1,007 million predominantly related to our U.S. Life Insurance segment. We are required to analyze the impacts from net unrealized investment gains and losses on ouravailable-for-sale investment securities backing insurance liabilities, as if those unrealized investment gains and losses were realized. As of JuneSeptember 30, 2018, due primarily to the increase in interest rates decreasing unrealized investments gains, we increased the DAC balance of our U.S. Life Insurance segment by $896$1,187 million with an offsetting amount recorded in other comprehensive income (loss). The increase was partially offset by amortization, net of interest and deferrals, in our U.S. Life Insurance segment in the current year. Reinsurance recoverable decreased $184$218 million mainly attributable to the runoff of our structured settlement products ceded to Union Fidelity Life Insurance Company, an affiliate of our former parent, GE. Separate account assets decreased $480$485 million primarily due to cash outflows from surrenders and benefits as the business continues to run off. Total liabilities. Total liabilities decreased $2,233$2,469 million from $89,969 million as of December 31, 2017 to $87,736$87,500 million as of JuneSeptember 30, 2018. Future policy benefits decreased $559$454 million primarily driven by a decrease in our U.S Life Insurance segment. As discussed above, the increase in interest rates decreased our unrealized investments gains. As a result, we decreased future policy benefits by $846$910 million, mostly in our long-term care insurance business, with an offsetting amount recorded in other comprehensive income (loss), referred to as “shadow accounting” adjustments. This decrease was partially offset by aging and growth of our long-term care insurancein-force block in the current year. Policyholder account balances decreased $829$1,202 million largely as a result of surrenders and benefits in our fixed annuities business in the current year. Liability for policy and contract claims increased $250 million principally related to our long-term care insurance business driven mostly by aging of our in-force block and from higher severity of claims in the current year. Unearned premiums decreased $298$299 million largely from changes in foreign currency from the strengthening of the U.S. dollar compared to the currencies in Canada and Australia. In our international mortgage insurance businesses, the decrease was also driven by earned premiums outpacing written premiums mostly related to a review of our premium earnings pattern in the fourth quarter of 2017 in our Australia mortgage insurance business and due mostly to lower new insurance written in the current year. Long-term borrowings decreased $177$173 million principally from the redemption of $597 million of senior notes that matured in May 2018, partially offset by the $450 million Term Loan Genworth Holdings closed in March 2018. Total equity. Total equity decreased $587$707 million from $15,328 million as of December 31, 2017 to $14,741$14,621 million as of JuneSeptember 30, 2018. We reported net income available to Genworth Financial, Inc.’s common stockholders of $302$448 million during the sixnine months ended JuneSeptember 30, 2018. On January 1, 2018, we adopted new accounting guidance on a modified retrospective basis and recorded $114 million to cumulative effect of change in accounting within retained earnings. See note 2 in our unaudited condensed consolidated financial statements for additional information. | guidance on a modified retrospective basis and recorded $114 million to cumulative effect of change in accounting within retained earnings. See note 2 in our unaudited condensed consolidated financial statements for additional information. |
Foreign currency translation and other adjustments decreased $149$135 million principally from the strengthening of the U.S. dollar compared to the currencies in Canada and Australia in the current year. Noncontrolling interests decreased $79$87 million predominantly related to foreign currency translation adjustmentsthe repurchase of $83shares of $89 million, dividends to noncontrolling interests of $50$83 million, foreign currency translation adjustments of $77 million and net unrealized losses, partially offset by net income attributable to noncontrolling interests of $176 million in the repurchase ofcurrent year. | shares of $49 million and net unrealized investments losses, partially offset by net income attributable to noncontrolling interests of $112 million in the current year.
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Net unrealized gains (losses) decreased $349$477 million primarily from an increase in interest rates in the current year. Derivatives qualifying as hedges decreased $202$348 million largely from an increase in interest rates in the current year. Liquidity and Capital Resources Liquidity and capital resources represent our overall financial strength and our ability to generate cash flows from our businesses, borrow funds at competitive rates and raise new capital to meet our operating and growth needs. Genworth and subsidiaries The following table sets forth our unaudited condensed consolidated cash flows for the sixnine months ended JuneSeptember 30: | (Amounts in millions) | | 2018 | | 2017 | | | 2018 | | | 2017 | | Net cash from operating activities | | $ | 561 | | | $ | 1,308 | | | $ | 973 | | | $ | 1,932 | | Net cash used by investing activities | | | (198 | ) | | (523 | ) | | Net cash from (used by) investing activities | | | | 69 | | | | (678 | ) | Net cash used by financing activities | | | (943 | ) | | (755 | ) | | | (1,350 | ) | | | (1,270 | ) | | | | | | | | | | | | | | Net increase (decrease) in cash before foreign exchange effect | | $ | (580 | ) | | $ | 30 | | | Net decrease in cash before foreign exchange effect | | | $ | (308 | ) | | $ | (16 | ) | | | | | | | | | | | | | |
Our principal sources of cash include sales of our products and services, income from our investment portfolio and proceeds from sales of investments. As an insurance business, we typically generate positive cash flows from operating activities, as premiums collected from our insurance products and income received from our investments exceed policy acquisition costs, benefits paid, redemptions and operating expenses. Our cash flows from operating activities are affected by the timing of premiums, fees and investment income received and benefits and expenses paid. Positive cash flows from operating activities are then invested to support the obligations of our insurance and investment products and required capital supporting these products. In analyzing our cash flow, we focus on the change in the amount of cash available and used in investing activities. Changes in cash from financing activities primarily relate to the issuance of, and redemptions and benefit payments on, universal life insurance and investment contracts; the issuance and acquisition of debt and equity securities; the issuance and repayment or repurchase of borrowings andnon-recourse funding obligations; and other capital transactions. We had lower cash inflows from operating activities during the current year mainly attributable to net sales of trading securities in the prior year that did not recur and higher cash outflows in the current year as a result of the change in collateral related to derivative positions. We had lowercash inflows from investing activities in the current year compared to cash outflows from investing activitiesin the prior year primarily driven by net sales of short-term investments in the current year compared to net purchases in the prior year, largely driven by the decision to manage the interest rate risk and reposition our portfolios, particularly in our Australian mortgage insurance business. This was partially offset by higher net purchases of fixed maturity securities in the current year compared to net proceeds in the prior year. We had cash outflows from financing activities during the current year primarily from the redemption of $597 million of Genworth Holdings’ May 2018 senior notes, and from net withdrawals from our investment contracts and dividends paid to and the repurchase of subsidiary shares from noncontrolling interests, partially offset by $441 million net proceeds from the Term Loan closed in March 2018. We had cashCash outflows in the prior year were primarily driven by net withdrawals from our investment contracts. In the United States and Canada, we engage in certain securities lending transactions for the purpose of enhancing the yield on our investment securities portfolio. We maintain effective control over all loaned securities and, therefore, continue to report such securities as fixed maturity securities on the consolidated balance sheets. We are currently indemnified against counterparty credit risk by the intermediary. We previously had a repurchase program in which we sold an investment security at a specified price and agreed to repurchase that security at another specified price at a later date. In the first half of 2017 we repaid $42$75 million, the entire amount due at maturity related to these repurchase agreements. Genworth—holding company Genworth Financial and Genworth Holdings each act as a holding company for their respective subsidiaries and do not have any significant operations of their own. Dividends from their respective subsidiaries, payments to them under tax sharing and expense reimbursement arrangements with their subsidiaries and proceeds from borrowings or securities issuances are their principal sources of cash to meet their obligations. Insurance laws and regulations regulate the payment of dividends and other distributions to Genworth Financial and Genworth Holdings by their insurance subsidiaries. We expect dividends paid by the insurance subsidiaries will vary depending on strategic objectives, regulatory requirements and business performance. The primary uses of funds at Genworth Financial and Genworth Holdings include payment of holding company general operating expenses (including taxes), payment of principal, interest and other expenses on current and any future borrowings, payments under current and any future guarantees (including guarantees of certain subsidiary obligations), payment of amounts owed to GE under the Tax Matters Agreement, payments to subsidiaries (and, in the case of Genworth Holdings, to Genworth Financial) under tax sharing agreements, contributions to subsidiaries, repurchases of debt securities and, in the case of Genworth Holdings, loans, dividends or other distributions to Genworth Financial. In deploying future capital, important current priorities include focusing on our operating businesses so they remain appropriately capitalized, and accelerating progress on reducing overall indebtedness of Genworth Holdings. We may from time to time seek to repurchase or redeem outstanding notes for cash (with cash on hand, proceeds from the issuance of new debt and/or the proceeds from asset or stock sales) in open market purchases, tender offers, privately negotiated transactions or otherwise. We currently seek to address our indebtedness over time through repurchases, redemptions and/or repayments at maturity. Our Board of Directors has suspended the payment of stockholder dividends on our Genworth Financial common stock indefinitely. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors and will be dependent on many factors including the receipt of dividends from our operating subsidiaries, our financial condition and operating results, the capital requirements of our subsidiaries, legal requirements, regulatory constraints, our credit and financial strength ratings and such other factors as the Board of Directors deems relevant. In addition, our Board of Directors has suspended repurchases of our Genworth Financial common stock under our stock repurchase program indefinitely. The resumption of our stock repurchase program will be at the discretion of our Board of Directors. Genworth Holdings had $547$534 million and $795 million of cash, cash equivalents and restricted cash as of JuneSeptember 30, 2018 and December 31, 2017, respectively, which included approximately $16 million and $4 million of restricted cash, respectively. Genworth Holdings also held $75 million in U.S. government securities as of JuneSeptember 30, 2018 and December 31, 2017, which included approximately $36$37 million and $41 million, respectively, of restricted assets. During the sixnine months ended JuneSeptember 30, 2018 and 2017, Genworth Holdings received common stock dividends from our international subsidiaries of $91$169 million and $64$119 million, respectively. Our U.S. mortgage insurance business also paid a $50 million dividend during the second quarter of 2018. We expect this will be the only dividend paid by our U.S. mortgage insurance business in 2018, however, the evaluation of future dividend plans is subject to current market conditions, among other factors, which are subject to change.2018. Regulated insurance subsidiaries The liquidity requirements of our regulated insurance subsidiaries principally relate to the liabilities associated with their various insurance and investment products, operating costs and expenses, the payment of dividends to us, contributions to their subsidiaries, payment of principal and interest on their outstanding debt obligations and income taxes. Liabilities arising from insurance and investment products include the payment of benefits, as well as cash payments in connection with policy surrenders and withdrawals, policy loans and obligations to redeem funding agreements. Our insurance subsidiaries have used cash flows from operations and investment activities to fund their liquidity requirements. Our insurance subsidiaries’ principal cash inflows from operating activities are derived from premiums, annuity deposits and insurance and investment product fees and other income, including commissions, cost of insurance, mortality, expense and surrender charges, contract underwriting fees, investment management fees and dividends and distributions from their subsidiaries. The principal cash inflows from investment activities result from repayments of principal, investment income and, as necessary, sales of invested assets. Our insurance subsidiaries maintain investment strategies intended to provide adequate funds to pay benefits without forced sales of investments. Products having liabilities with longer durations, such as certain life insurance and long-term care insurance policies, are matched with investments having similar duration such as long-term fixed maturity securities and commercial mortgage loans. Shorter-term liabilities are matched with fixed maturity securities that have short- and medium-term fixed maturities. In addition, our insurance subsidiaries hold highly liquid, high quality short-term investment securities and other liquid investment grade fixed maturity securities to fund anticipated operating expenses, surrenders and withdrawals. As of JuneSeptember 30, 2018, our total cash, cash equivalents, restricted cash and invested assets were $73.1$72.6 billion. Our investments in privately placed fixed maturity securities, commercial mortgage loans, policy loans, limited partnership investments and select mortgage-backed and asset-backed securities are relatively illiquid. These asset classes represented approximately 35%36% of the carrying value of our total cash, cash equivalents, restricted cash and invested assets as of JuneSeptember 30, 2018. As of JuneSeptember 30, 2018, our U.S. mortgage insurance business was compliant with the PMIERs capital requirements, with a prudent buffer. The reinsurance transaction covering our 2014 through 2017 book yearsReinsurance transactions provided an aggregate of approximately $585$575 million of PMIERs capital credit as of JuneSeptember 30, 2018. Our U.S. mortgage insurance business may execute future capital transactions to maintain a prudent level of financial flexibility in excess of the PMIERs capital requirements given the dynamic nature of asset valuations and requirement changes over time, including additional reinsurance transactions and contributions of holding company cash. In May 2018, Genworth Mortgage Insurance Australia Limited (“Genworth Australia”) announced its intention to commence anon-market sharebuy-back program for shares up to a maximum aggregate amount of AUD$100 million. The total number of shares to be purchased by Genworth Australia under the program will depend on business and market conditions, the prevailing share price, market volumes and other considerations. Pursuant to the program, Genworth Australia repurchased approximately 1436 million of its shares for AUD$35100 million. As the majority shareholder, we participated inon-market sales transactions during thebuy-back period to maintain our ownership position of approximately 52.0% and received $14$37 million in cash. Of the $14 million of cash, proceeds received, $7 millionwhich was paid as a dividenddividends to Genworth Holdings in the second quarter of 2018 and we expect the remainder to be paid to Genworth Holdings as a dividend in the third quarter of 2018.Holdings. Genworth Australia began a previous sharebuy-back program in 2017 and completed it in February 2018, repurchasing approximately 19 million shares for AUD$49 million in the first quarter of 2018. As the majority shareholder, we participated inon-market sales transactions during thebuy-back period to maintain our ownership position of approximately 52.0% and received $20 million in cash, which was paid to Genworth Holdings as dividends.a dividend. In May 2018, Genworth Canada announced acceptance by the Toronto Stock Exchange of its Notice of Intention to Make a Normal Course Issuer Bid (“NCIB”). Pursuant to the NCIB, Genworth Canada may, if considered advisable, purchase from time to time through May 6, 2019, up to an aggregate of approximately 4.5 million of its issued and outstanding common shares. In the third quarter of 2018, Genworth Canada repurchased approximately 1.1 million of its shares for CAD$50 million through the NCIB. We participated in the NCIB in order to maintain our ownership position of approximately 57.0% and received $21 million in cash. Of the $21 million of cash proceeds received, $14 million was paid as dividends to Genworth Holdings and $7 million was retained by GMICO. If Genworth Canada decides to repurchase additional shares through the NCIB, we intend to participate in the NCIB in order to maintain our overall ownership at its current level. In March 2018, Genworth Canada repurchased approximately 1.2 million shares for CAD$50 million through a previous NCIB. As the majority shareholder, we participated in the NCIB in order to maintain our ownership position of approximately 57.0% and received $22 million in cash. Of the $22 million of cash proceeds received, $16 million was paid as a dividend to Genworth Holdings and $6 million was retained by GMICO. Capital resources and financing activities On October 26, 2018, Genworth Canada, our majority-owned subsidiary, amended its existing credit agreement whereby the syndicated senior unsecured revolving credit facility was increased from CAD$200 million to CAD$300 million. The maturity date was extended to September 29, 2023. Any borrowings under Genworth Canada’s credit facility will bear interest at a rate per annum equal to, at the option of Genworth Canada, either a fixed rate or a variable rate pursuant to the terms of the amended credit agreement. The credit facility includes customary representations, warranties, covenants, terms and conditions. On October 4, 2018, Genworth Holdings completed a bond consent solicitation whereby it amended its senior notes indenture to clarify that GLAIC and the subsidiaries of GLIC, GLAIC and GLICNY are excluded from the class of subsidiaries for which a bankruptcy, insolvency or other similar proceeding would result in an event of default under the indenture. In October 2018, we paid approximately $11 million of total fees, which consisted of bond consent fees, broker, advisor and investment banking fees. The bond consent fees will be deferred and the remaining fees will be expensed in the fourth quarter of 2018. On May 22, 2018, Genworth Holdings redeemed $597 million of its 6.52% senior notes that were issued in May 2008 and matured in May 2018. A cash payment of $616 million comprising net proceeds of $441 million from the Term Loan, as described below, and $175 million of existing cash on hand was used to fully redeem the principal and accrued interest balance of the May 2018 senior notes. On March 7, 2018, Genworth Holdings entered into a $450 million Term Loan, which matures in March 2023 and was issued at a 0.5% discount. Principal payments under the agreement are due quarterly, commencing on June 30, 2018, and are payable in equal amounts of 0.25% per quarter of the original principal amount with the remaining balance due at maturity. At our option, the Term Loan will bear interest at either an adjusted LIBOR rate no lower than 1.0% plus a margin of 4.5% per annum or an alternate base rate plus a margin of 3.5% per annum. The interest rate on the Term Loan as of JuneSeptember 30, 2018 was 6.5%6.6%. We incurred $7 million of borrowing costs that were deferred. The Term Loan is unconditionally guaranteed by Genworth Financial, and GFIH has provided a limited recourse guarantee to the lenders of Genworth Holdings’ outstanding Term Loan, which is secured by GFIH’s ownership interest in Genworth Canada’s outstanding common shares. GFIH is our indirect wholly-owned subsidiary and owns approximately 40.5% of the outstanding common stock of Genworth Canada. The Term Loan is subject to other terms and conditions, including but not limited to: voluntary prepayments subject to prepayment penalties, mandatory prepayments in the event of certain asset sales or the incurrence of further indebtedness by Genworth Financial and various financial covenants. We believe existing cash held at Genworth Holdings combined with dividends from operating subsidiaries, payments under tax sharing and expense reimbursement arrangements with subsidiaries, proceeds from borrowings or securities issuances and, if necessary, sales of assets, as described below, will provide us with sufficient capital flexibility and liquidity to meet our projected future operating and financing requirements. We actively monitor our liquidity position, liquidity generation options and the credit markets given changing market conditions. Due to the delay in the closing of the China Oceanwide transaction, the proceeds of the Term Loan, as described above, were used, together with cash on hand, to retire our May 2018 senior notes. During the first quarter of 2018, given the proceeds from the Term Loan were dedicated to pay the May 2018 senior notes and we have no additional debt maturities due until 2020, we reduced our cash buffer modestly to two times expected annual debt interest payments. We previously managed liquidity at Genworth Holdings to maintain a minimum balance of one andone-half times expected annual debt interest payments plus an additional $350 million. We will continue to evaluate our target level of liquidity as circumstances warrant and may move above or below the target for a period of time given future actions and due to the timing of cash inflows and outflows. Additionally, we will continue to evaluate market influences on the valuation of our senior debt, and may consider additional opportunities to repurchase our debt over time. We cannot predict with any certainty the impact to us from any future disruptions in the credit markets or the recent or any further downgrades by one or more of the rating agencies of the financial strength ratings of our insurance company subsidiaries and/or the credit ratings of our holding companies. In the absence of the transaction with China Oceanwide, we may need to pursue asset sales to address our debt maturities, including potential sales of our mortgage insurance businesses in Canada and Australia. We are also evaluating options to insulate our U.S. mortgage insurance business from additional ratings pressure, including a potential partial sale, in the event the transaction with China Oceanwide cannot be completed. The availability of additional funding will depend on a variety of factors such as market conditions, regulatory considerations, the general availability of credit, the overall availability of credit to the financial services industry, the level of activity and availability of reinsurance, our credit ratings and credit capacity and the performance of and outlook for our business. For a discussion of certain risks associated with our liquidity, see Item 1A—Risk Factors—“Our internal sources of liquidity may be insufficient to meet our needs and our access to capital may be limited or unavailable. Under such conditions, we may seek additional capital but may be unable to obtain it” in our 2017 Annual Report on Form10-K. Contractual obligations and commercial commitments Except as disclosed above, there have been no material additions or changes to our contractual obligations and commercial commitments as set forth in our 2017 Annual Report on Form10-K filed on February 28, 2018. Securitization Entities There were nooff-balance sheet securitization transactions during the sixnine months ended JuneSeptember 30, 2018 or 2017. New Accounting Standards For a discussion of recently adopted accounting standards, see note 2 in our unaudited condensed consolidated financial statements under “Item 1—Financial Statements.” Item 3. | Item 3. Quantitative and Qualitative Disclosures About Market Risk |
Market risk is the risk of the loss of fair value resulting from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and equity prices. Market risk is directly influenced by the volatility and liquidity in the markets in which the related underlying financial instruments are traded. Except as disclosed below, there were no other material changes in our market risks since December 31, 2017. The U.S. Federal Reserve increased its benchmark lending rate 25 basis points in JuneSeptember 2018. This was the third rate increase in 2018 and revisedthe U.S. Federal Reserve has maintained its forecast for two additionala fourth rate increases, which would resultincrease in four rate increases inthe fourth quarter of 2018. The median economist forecasts indicateIn addition, the U.S. Federal Reserve projects three additional 25 basis point increases in 2019 and one in 2020. Given this robust forecast, we expect interest rates will continue to rise throughout 2018The decision for additional rate increases was anticipated and indicates increased confidence in the United States economy as unemployment has reached multi-decade lows and economic growth has been strong in 2018. Likewise, inflation remains relatively stable but welong-term forecasts remain uncertain at the pace in which this increase will occur and its ultimate impact on our businesses. In terms of economic projections from the U.S. Federal Reserve, during the second quarter of 2018, the unemployment rate outlook was revised lower while near-term growth and inflation projections were revised up.uncertain. The U.S. Treasury yield curve continued to flatten in the secondthird quarter of 2018 with short-term interest rates rising supported by the U.S. Federal Reserve rate increases, while long-term interest rates increased marginallyat a lesser rate due to inflationary concerns from ongoing speculation around tariffs and escalating tensions associated with potential trade wars. Credit markets experienced modest spread widening primarilytightening in the third quarter of 2018 driven by periodic supply and demand imbalances rather than concerns about fundamental credit or macroeconomic issues. Though widely anticipated, the TCJA was not a catalyst for widespread debt reduction and a corresponding reduction in bond supply. Although the TCJA did result in cash-rich multinational companies exiting the debt issuance market,constructive economic backdrop, strong profit margins, higher corporate earnings, lower supply from such companies was more than offset by debt-financed mergerof bonds compared to the first half of 2018 and acquisition-related issuances inhigher foreign demand. However, spreads on below investment grade markets. Furthermore, fixed income issuance was slightly loweremerging market bonds widened as comparedcountries exposed to 2017.a strengthening U.S. dollar and higher oil prices underperformed the broader credit markets. See “—Business trends and conditions” and “—Investments and Derivative Instruments” in “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion of recent market conditions. We are exposed to foreign currency exchange risks associated with fluctuations in foreign currency exchange rates against the U.S. dollar resulting from our international operations andnon-U.S.-denominated securities. Our primary international operations are located in Canada and Australia. The assets and liabilities of our international operations are translated into U.S. dollars at the exchange rates in effect at the balance sheet date, while revenues and expenses of our international operations are translated into U.S. dollars at the average rates of exchange during the period of the transaction. In general, the weakening of the U.S. dollar results in higher levels of reported assets, liabilities, revenues and net income. As of JuneSeptember 30, 2018, the U.S. dollar strengthened against the currencies in Canada and Australia compared to the balance sheet rate as of December 31, 2017 and JuneSeptember 30, 2017. In the secondthird quarter of 2018, the U.S. dollar weakenedstrengthened against the currencies in Canada and Australia compared to the average rate in the secondthird quarter of 2017. See “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion on the impact of changes in foreign currency exchange rates. Item 4. Controls and Procedures Item 4. | Controls and Procedures
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Evaluation of Disclosure Controls and Procedures As of JuneSeptember 30, 2018, an evaluation was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective as of JuneSeptember 30, 2018. Changes in Internal Control Over Financial Reporting During the Quarter Ended JuneSeptember 30, 2018 During the three months ended JuneSeptember 30, 2018, there have not been any changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. PART II—OTHER INFORMATION Item 1. Legal Proceedings See note 1110 in our unaudited condensed consolidated financial statements under “Part 1—Item 1—Financial Statements” for a description of material pending litigation and regulatory matters affecting us. Item 1A. Risk Factors The discussion of our business and operations should be read together with the risk factors contained in Item 1A of our 2017 Annual Report on Form10-K, which together describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner. There have been no material changes to the risk factors set forth in the above-referenced filing as of JuneSeptember 30, 2018. | | | Number | | Description | | | | 2.1 | | FifthSixth Waiver and Agreement, dated as of June 28,August 14, 2018, by and among Genworth Financial, Inc., Asia Pacific Global Capital Co., Ltd., and Asia Pacific Global Capital USA Corporation (incorporated by reference to Exhibit 2.1 to the Current Report on Form8-K filed on June 28,August 14, 2018) | | | 10.1§ | | Form of 2018-2020 Performance Stock Unit Award Agreement under the 2012 Genworth Financial, Inc. Omnibus Incentive Plan (filed herewith) | | | 10.2§ | | Form of 2018-2020 Performance Cash Award Agreement under the 2012 Genworth Financial, Inc. Omnibus Incentive Plan (filed herewith) | | | 10.3§ | | Form of Cash Retention Award Agreement under the 2012 Genworth Financial, Inc. Omnibus Incentive Plan (filed herewith) | | | | 12 | | Statement of Ratio of Income to Fixed Charges (filed herewith) | | | | 31.1 | | Certification of Thomas J. McInerney (filed herewith) | | | | 31.2 | | Certification of Kelly L. Groh (filed herewith) | | | | 32.1 | | Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code—Thomas J. McInerney (filed herewith) | | | | 32.2 | | Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code—Kelly L. Groh (filed herewith) | | | | 101.INS | | XBRL Instance Document | | | | 101.SCH | | XBRL Taxonomy Extension Schema Document | | | | 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document | | | | 101.LAB | | XBRL Taxonomy Extension Label Linkbase Document | | | | 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document | | | | 101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document |
§ | Management contract or compensatory plan or arrangement.
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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. | | | | | | | | | | | GENWORTH FINANCIAL, INC. (Registrant) | | | | | Date: August 1,October 31, 2018 | | | | By: | | /s/ Matthew D. Farney | | | | | | | Matthew D. Farney | | | | | | | Vice President and Controller (Principal Accounting Officer) |
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