GENWORTH FINANCIAL INCGNW

GENWORTH FINANCIAL INC Income Taxes Disclosure

10-KFiled Feb 27, 20267 min read
(16) Income Taxes
Income (loss) from continuing operations before income taxes included the following components for the years ended December 31:
(Amounts in millions)202520242023
Domestic$319 $469 $263 
Foreign (1)
114 126 40 
Income (loss) from continuing operations before income taxes$433 $595 $303 
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(1)Predominantly comprised of income from our Bermuda-based subsidiary, Enact Re Ltd., the majority of which relates to reinsurance assumed from EMICO.
The total provision (benefit) for income taxes was as follows for the years ended December 31:
(Amounts in millions)202520242023
Current tax provision (benefit)
Domestic federal$135 $256 $50 
Domestic state4 5 6 
Foreign— — — 
Total current tax provision (benefit)$139 $261 $56 
Deferred tax provision (benefit)
Domestic federal$(56)$(101)$49 
Domestic state1 (1)(1)
Foreign— (1)— 
Total deferred tax provision (benefit)$(55)$(103)$48 
Total income tax provision (benefit)
Domestic federal$79 $155 $99 
Domestic state5 4 5 
Foreign— (1)— 
Total income tax provision (benefit)$84 $158 $104 
Our current income tax payable was $27 million and $57 million as of December 31, 2025 and 2024, respectively.
Income taxes paid (net of refunds received) were as follows for the years ended December 31:
(Amounts in millions)202520242023
Domestic federal taxes paid$162 $243 $5 
Domestic state taxes paid:
Florida (1)
*
*
4 
Other6 5 1 
Total domestic state taxes paid6 5 5 
Total$168 $248 $10 
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(1)The amount of income taxes paid for the years ended December 31, 2025 and 2024 was less than 5% of total income taxes paid.
The reconciliation of the federal statutory tax rate to the effective income tax rate was as follows for the years ended December 31:
202520242023
(Dollar amounts in millions)AmountRateAmountRateAmountRate
Statutory U.S. federal income tax rate$91 21.0%$125 21.0%$64 21.0%
Increase (decrease) in rate resulting from:
Domestic federal income taxes
Valuation allowance(41)(9.4)— —1 0.2
Tax on income from terminated swaps27 6.329 4.930 10.0
Tax credits(5)(1.1)(5)(0.8)— —
Non-taxable and non-deductible items
Non-deductible officer compensation7 1.77 1.27 2.2
Other(1)(0.4)(2)(0.3)— —
Cross-border tax laws, net
U.S. taxation of foreign insurance company24 5.526 4.48 2.7
Domestic state and local income taxes, net of federal income tax effect (1)
4 0.94 0.63 1.1
Foreign tax effects
Bermuda foreign rate differential (24)(5.5)(26)(4.4)(8)(2.7)
Other foreign jurisdictions — —(2)(0.3)(1)(0.2)
Worldwide changes in unrecognized tax benefits2 0.42 0.3— —
Total tax provision$84 19.4%$158 26.6%$104 34.3%
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(1)State income taxes in Florida made up the majority (greater than 50%) of the tax effect in this category for all periods presented.
The effective tax rate for the year ended December 31, 2025 was below the statutory U.S. federal income tax rate of 21% primarily driven by a valuation allowance release in 2025, partially offset by tax expense on certain forward starting swap gains that are tax effected at the previously enacted federal income tax rate of 35% as they are amortized into net investment income. The effective tax rate for the years ended December 31, 2024 and 2023 was above the statutory U.S. federal income tax rate of 21% largely due to tax expense on certain forward starting swap gains that are tax effected at the previously enacted federal income tax rate of 35% as they are amortized into net investment income.
The components of our deferred income taxes were as follows as of December 31:
(Amounts in millions)20252024
Assets:
Net operating loss carryforwards$6 $2 
Capital loss carryforwards84 141 
State income taxes377 370 
Insurance reserves1,177 1,071 
Deferred acquisition costs126 72 
Accrued commission and general expenses65 61 
Liabilities related to discontinued operations155 122 
Net unrealized losses on investment securities491 795 
Net unrealized losses on derivatives193 162 
Other5 4 
Gross deferred income tax assets2,679 2,800 
Valuation allowance(545)(639)
Total deferred income tax assets2,134 2,161 
Liabilities:
Net effect of change in discount rate for future policy benefits126 277 
PVFP and other intangibles21 24 
Insurance reserves transition adjustment— 25 
Investments152 92 
Other35 12 
Total deferred income tax liabilities334 430 
Net deferred income tax asset$1,800 $1,731 
The gross amount of net operating loss (“NOL”) carryforwards, which include U.S. federal and Mexico, was $25 million as of December 31, 2025. Capital loss carryforwards amounted to $402 million as of December 31, 2025, and, if unused, will expire in 2026.
Our valuation allowance as of December 31, 2025 and 2024 was $545 million and $639 million, respectively. In 2025, we released $100 million of the domestic federal valuation allowance related to capital deferred tax assets. The release was a result of the change in unrealized gains (losses) on our fixed maturity securities due to decreasing interest rates and an increase in unrealized gains on our limited partnerships due to current market conditions, and a corresponding increase in unrealized capital gains expected to be available in the future to offset our capital loss carryforwards and other capital deferred tax assets. Of the $100 million released, $53 million was recorded through accumulated other comprehensive income (loss), $41 million was recognized in income (loss) from continuing operations, and $6 million was recognized in income (loss) from discontinued operations resulting in an ending valuation allowance of $200 million related to domestic federal deferred tax assets of a capital character as of December 31, 2025. The remainder of the valuation allowance as of December 31, 2025 and 2024 was related to state deferred tax assets and foreign NOLs. The state deferred tax assets related primarily to the non-insurance NOL carryforwards.
Our ability to realize our net deferred tax asset of $1,800 million, which includes deferred tax assets related to capital loss and NOL carryforwards, is primarily dependent upon generating sufficient taxable income and capital gains in future years. We have net deferred tax assets of $923 million that have or will produce capital losses. As part of the assessment of the amount of the valuation allowance, management has asserted that it has the ability and intent to execute tax planning strategies including holding certain investment assets with unrealized losses to recovery or maturity or realizing gains on certain investment assets with unrealized gains to the extent necessary to ensure realization of the capital related deferred tax assets, net of the $200 million valuation allowance as of December 31, 2025.
We have net deferred tax assets of $877 million that will produce ordinary income (loss) in future years. Management has concluded that there is sufficient positive evidence to support the expected realization of these deferred tax assets for U.S. federal income tax purposes. This positive evidence includes the fact that: (i) we are currently in a cumulative three-year income position, and (ii) our U.S. operating forecasts are profitable, which include ongoing income from our mortgage insurance business and in-force premium rate increases and associated benefit reductions already obtained in our long-term care insurance business in our Closed Block segment.
After consideration of all available evidence, we have concluded that it is more likely than not that our deferred tax assets, with the exception of capital loss carryforwards, other capital deferred tax assets, state deferred tax assets and certain foreign NOLs for which a valuation allowance has been established, will be realized. If our actual results do not validate the current projections of pre-tax income, we may be required to record an additional valuation allowance that could have a material impact on our consolidated financial statements in future periods.
A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
(Amounts in millions)202520242023
Balance as of January 1$25 $30 $33 
Tax positions related to the current period:
Gross additions— — — 
Gross reductions(4)(5)(3)
Tax positions related to the prior years:
Gross additions— — — 
Gross reductions— — — 
Balance as of December 31$21 $25 $30 
The total amount of unrecognized tax benefits was $21 million as of December 31, 2025, which if recognized would affect the effective tax rate on continuing operations by $21 million. These unrecognized tax benefits include the impact of foreign currency translation from our international operations.
We recognize accrued interest and penalties related to unrecognized tax benefits as components of income tax expense. We recorded $2 million, $2 million and $— of expense in 2025, 2024 and 2023, respectively.
Our companies have elected to file a single U.S. consolidated income tax return (the “life/non-life consolidated return”). All companies domesticated in the United States and our Bermuda subsidiary, a company treated as a U.S. domestic company for U.S. tax purposes, are included in the life/non-life consolidated return as allowed by the tax law and regulations, with the exception of CareScout Insurance Company, which became a life insurance company and is required to file separately for a period of five years effective 2025. We have a tax sharing agreement in place and all intercompany balances related to this agreement are settled at least annually. We are not currently subject to any significant examinations by federal or state income tax authorities. Generally, we are no longer subject to federal or state income tax examinations for years prior to 2022.

Historical Timeline

Fiscal YearFiled
2025Feb 27, 2026Showing above
2024Feb 28, 2025
2023Feb 29, 2024
2022Feb 28, 2023
2021Feb 28, 2022
2020Feb 26, 2021
2019Feb 27, 2020
2018Feb 27, 2019
2017Feb 28, 2018
2016Feb 27, 2017
2015Feb 26, 2016

About Income Taxes Disclosures

The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.

Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.

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