Schedule II

Genworth Financial, Inc.

(Parent Company Only)

Balance Sheets

(Amounts in millions)


	December 31,
	2017			2016
Assets
Investments in subsidiaries	$	13,561		$	12,730
Deferred tax asset		27			28
Other assets		3			9

Total assets	$	13,591		$	12,767

Liabilities and stockholders’ equity
Liabilities:
Other liabilities	$	41		$	39
Intercompany notes payable		132			84

Total liabilities		173			123

Commitments and contingencies
Stockholders’ equity:
Common stock		1			1
Additional paid-in capital		11,977			11,962

Accumulated other comprehensive income (loss):
Net unrealized investment gains (losses):
Net unrealized gains (losses) on securities not other-than-temporarily impaired		1,075			1,253
Net unrealized gains (losses) on other-than-temporarily impaired securities		10			9

Net unrealized investment gains (losses)		1,085			1,262

Derivatives qualifying as hedges		2,065			2,085
Foreign currency translation and other adjustments		(123	)		(253	)

Total accumulated other comprehensive income (loss)		3,027			3,094
Retained earnings		1,113			287
Treasury stock, at cost		(2,700	)		(2,700	)

Total Genworth Financial, Inc.’s stockholders’ equity		13,418			12,644

Total liabilities and stockholders’ equity	$	13,591		$	12,767

See Notes to Schedule II

See Report of Independent Registered Public Accounting Firm

Schedule II

Genworth Financial, Inc.

(Parent Company Only)

Statements of Income

(Amounts in millions)


	Years ended December 31,
	2017			2016			2015
Revenues:
Net investment income	$	(3	)	$	(3	)	$	(3	)

Total revenues		(3	)		(3	)		(3	)

Expenses:
Acquisition and operating expenses, net of deferrals		57			153			32
Interest expense		1			1			—

Total expenses		58			154			32

Loss before income taxes and equity in income (loss) of subsidiaries		(61	)		(157	)		(35	)
Benefit from income taxes		—			(47	)		(8	)
Equity in income (loss) of subsidiaries		878			(166	)		(579	)
Loss from discontinued operations, net of taxes		—			(1	)		(9	)

Net income (loss) available to Genworth Financial, Inc.’s common stockholders	$	817		$	(277	)	$	(615	)

See Notes to Schedule II

See Report of Independent Registered Public Accounting Firm

Schedule II

Genworth Financial, Inc.

(Parent Company Only)

Statements of Comprehensive Income

(Amounts in millions)


	Years ended December 31,
	2017			2016			2015
Net income (loss) available to Genworth Financial, Inc.’s common stockholders	$	817		$	(277	)	$	(615	)
Other comprehensive income (loss), net of taxes:
Net unrealized gains (losses) on securities not other-than-temporarily impaired		(178	)		17			(1,181	)
Net unrealized gains (losses) on other-than-temporarily impaired securities		1			(9	)		(4	)
Derivatives qualifying as hedges		(20	)		40			(25	)
Foreign currency translation and other adjustments		130			36			(250	)

Total other comprehensive income (loss)		(67	)		84			(1,460	)

Total comprehensive income (loss) available to Genworth Financial, Inc.’s common stockholders	$	750		$	(193	)	$	(2,075	)

See Notes to Schedule II

See Report of Independent Registered Public Accounting Firm

Schedule II

Genworth Financial, Inc.

(Parent Company Only)

Statements of Cash Flows

(Amounts in millions)


	Years ended December 31,
	2017			2016			2015
Cash flows used by operating activities:
Net income (loss) available to Genworth Financial, Inc.’s common stockholders	$	817		$	(277	)	$	(615	)
Less loss from discontinued operations, net of taxes		—			1			9
Adjustments to reconcile net income (loss) available to Genworth Financial, Inc.’s common stockholders to net cash used by operating activities:
Equity in (income) loss from subsidiaries		(878	)		166			579
Deferred income taxes		10			(6	)		(4	)
Stock-based compensation expense		30			23			21
Change in certain assets and liabilities:
Accrued investment income and other assets		5			(9	)		3
Current tax liabilities		23			—			(3	)
Other liabilities and other policy-related balances		(35	)		20			2

Net cash used by operating activities		(28	)		(82	)		(8	)

Cash flows from (used by) investing activities:
Intercompany notes receivable		—			—			9
Capital contributions paid to subsidiaries		(12	)		—			—
Payments for business purchased		(7	)		—			—

Net cash from (used by) investing activities		(19	)		—			9

Cash flows from (used by) financing activities:
Other, net		(1	)		—			(3	)
Intercompany notes payable		48			82			2

Net cash from (used by) financing activities		47			82			(1	)

Effect of exchange rate changes on cash and cash equivalents		—			—			—

Cash and cash equivalents at beginning of year		—			—			—

Cash and cash equivalents at end of year	$	—		$	—		$	—

See Notes to Schedule II

See Report of Independent Registered Public Accounting Firm

Schedule II

Genworth Financial, Inc.

(Parent Company Only)

Notes to Schedule II

Years Ended December 31, 2017, 2016 and 2015

(1) Organization and Purpose

Genworth Holdings (formerly known as Genworth Financial, Inc.) was incorporated in Delaware in 2003 in preparation for an IPO of Genworth’s common stock, which was completed on May 28, 2004. On April 1, 2013, Genworth Holdings completed a holding company reorganization pursuant to which Genworth Holdings became a direct, 100% owned subsidiary of a new public holding company that it had formed. The new public holding company was incorporated in Delaware on December 5, 2012, in connection with the reorganization, and was renamed Genworth Financial upon the completion of the reorganization.

Genworth Financial is a holding company whose subsidiaries offer mortgage and long-term care insurance products and service life insurance, as well as annuities and other investment products.

On October 21, 2016, Genworth Financial 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 Genworth Financial with Genworth Financial 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 of our 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, Genworth Financial’s stockholders voted on and approved a proposal to adopt the Merger Agreement.

The transaction remains subject to 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.

(2) Commitments

Genworth Financial provides a full and unconditional guarantee to the trustee of Genworth Holdings’ outstanding senior notes and the holders of the senior notes, on an unsecured unsubordinated basis, of the full and punctual payment of the principal of, premium, if any and interest on, and all other amounts payable under, each outstanding series of senior notes, and the full and punctual payment of all other amounts payable by Genworth Holdings under the senior notes indenture in respect of such senior notes. Genworth Financial also provides a full and unconditional guarantee to the trustee of Genworth Holdings’ outstanding subordinated notes and the holders of the subordinated notes, on an unsecured subordinated basis, of the full and punctual payment of the principal of, premium, if any and interest on, and all other amounts payable under, the outstanding subordinated notes, and the full and punctual payment of all other amounts payable by Genworth Holdings under the subordinated notes indenture in respect of the subordinated notes. Genworth Financial also provides a full and unconditional guarantee of Genworth Holdings’ obligations associated with Rivermont I and the Tax Matters Agreement.

(3) Income Taxes

As of December 31, 2017 and 2016, Genworth Financial had a deferred tax asset of $27 million and $28 million, respectively, primarily comprised of share-based compensation. In the fourth quarter of 2017, Genworth Financial revalued its deferred tax assets to 21% under the TCJA. The revaluation resulted in a reduction to the deferred tax asset of $18 million, which was recorded through income from continuing operations. We also adopted new accounting guidance related to stock-based compensation in 2017 and recorded a previously disallowed deferred tax asset of $9 million. These amounts are undiscounted pursuant to the applicable rules governing deferred taxes. Genworth Financial’s current income tax payable was $23 million and zero as of December 31, 2017 and 2016, respectively. Net cash received for taxes was $32 million, $41 million and $1 million for the years ended December 31, 2017, 2016 and 2015, respectively.