Statement of Additional Information For
Flexible Premium Variable Deferred Annuity Contracts
Form P1154 4/00
Issued by:
Genworth Life and Annuity Insurance Company
Genworth Life & Annuity VA Separate Account 1
6610 West Broad Street
Richmond, Virginia 23230
Telephone Number: (800) 352-9910
This Statement of Additional Information is not a prospectus. It should be read in conjunction with the prospectus, dated May 1, 2022, for the Flexible Premium Variable Deferred Annuity Contracts issued by Genworth Life and Annuity Insurance Company through its Genworth Life & Annuity VA Separate Account 1. The terms used in the current prospectus for the Flexible Premium Variable Deferred Annuity Contracts are incorporated into this Statement of Additional Information.
For a free copy of the prospectus:
| Call: | (800) 352-9910 | |
| Or write: | Genworth Life and Annuity Insurance Company | |
| 6610 West Broad Street | ||
| Richmond, Virginia 23230 | ||
| Or visit: | www.genworth.com/RetireReadyChoicePre (for RetireReadySM Choice Pre contracts) www.genworth.com/FoundationPre (for Foundation Pre contracts) | |
| Or: | contact your financial representative | |
The date of this Statement of Additional Information is May 1, 2022.
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| Legal Developments Regarding Employment-Related Benefit Plans |
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We are a stock life insurance company operating under a charter granted by the Commonwealth of Virginia on March 21, 1871 as The Life Insurance Company of Virginia. An affiliate of our former ultimate parent company acquired GLAIC on April 1, 1996 and ultimately contributed the majority of the outstanding common stock to Genworth Life Insurance Company (“GLIC”).
On May 31, 2004, we became a direct, wholly-owned subsidiary of GLIC. We are an indirect, wholly-owned subsidiary of Genworth Financial, Inc. (“Genworth”), a financial services company dedicated to helping meet the homeownership and long-term care needs of our customers.
We have a 34.5% investment in an affiliate, Genworth Life Insurance Company of New York.
Our principal offices are located at 6610 West Broad Street, Richmond, Virginia 23230.
Our principal products are life insurance and fixed deferred and immediate annuities. Life insurance products provide protection against financial hardship after the death of an insured. Deferred annuities are investment vehicles intended for contract owners who want to accumulate taxdeferred assets for retirement, desire a tax-efficient source of income and seek to protect against outliving their assets. Immediate annuities provide a fixed amount of income for either a defined number of years, the annuitant’s lifetime or the longer of a defined number of years or the annuitant’s lifetime. In March 2016, we suspended sales of traditional life insurance and fixed annuity products. We continue, however, to service our existing retained and reinsured blocks of business.
We also have other products that have not been actively sold since 2011, but we continue to service our existing blocks of business. Those products include variable annuities, including group variable annuities offered through retirement plans, variable life insurance and funding agreements. Most of our variable annuities include guaranteed minimum death benefits. Some of our group and individual variable annuity products include guaranteed minimum benefit features such as guaranteed minimum withdrawal benefits and certain types of guaranteed annuitization benefits.
We do business in the District of Columbia, Bermuda, and all states, except New York.
We are subject to regulation by the State Corporation Commission of the Commonwealth of Virginia. We file an annual statement with the Virginia Commissioner of Insurance on or before March 1 of each year covering our operations and reporting on our financial condition as of December 31 of the preceding year. Periodically, the Commissioner of Insurance examines our liabilities and reserves and those of the Variable Account and assesses their adequacy, and a full examination of our operations is conducted by the State Corporation Commission, Bureau of Insurance of the Commonwealth of Virginia, at least every five years.
We are also subject to the insurance laws and regulation of other states within which we are licensed to operate.
Capital Brokerage Corporation serves as principal underwriter for the contracts and is a broker/dealer registered with the SEC. Genworth North America Corporation (formerly, GNA Corporation) directly owns the stock of Capital Brokerage Corporation and the Company. Genworth North America Corporation is indirectly owned by Genworth.
In accordance with the board resolution establishing the Separate Account, such Separate Account will be divided into Subaccounts, each of which shall invest in the shares of a designated mutual fund portfolio, unit investment trust, managed separate account and/or other portfolios (the “Eligible Portfolios”), and net purchase payments under the contracts shall be allocated to Subaccounts which will invest in the Eligible Portfolios set forth in the contracts in accordance with the instructions received from contract owners.
Additional Information About the Guarantee Account
The initial interest rate guarantee period for any allocation you make to the Guarantee Account will be one year or longer. Subsequent interest rate guarantee periods will each be at least one year. We may credit additional rates of interest for specified periods from time to time.
At your request, Annuity Units may be transferred three times per calendar year from the Subaccounts in which they are currently held (subject to certain restrictions described in the contract and specific rider options).
The number of Annuity Units to be transferred is (a) times (b) divided by (c) where:
| (a) | is the number of Annuity Units in the current Subaccount desired to be transferred; |
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| (b) | is the Annuity Unit Value for the Subaccount in which the Annuity Units are currently held; and |
| (c) | is the Annuity Unit Value for the Subaccount to which the transfer is made. |
If the number of Annuity Units remaining in a Subaccount after the transfer is less than 1, we will transfer the remaining Annuity Units in addition to the amounts requested. We will not transfer Annuity Units into any Subaccounts unless the number of Annuity Units of that Subaccount after the transfer is at least 1. The amount of the income payment as of the date of the transfer will not be affected by the transfer (however, subsequent variable income payments will reflect the investment experience of the selected Subaccounts).
The net investment factor measures investment performance of the Subaccounts during a Valuation Period. Each Subaccount has its own net investment factor. The net investment factor of a Subaccount available under a contract for a Valuation Period is (a) divided by (b) minus (c) where:
| (a) | is the result of: |
| (1) | the value of the net assets of that Subaccount at the end of the preceding Valuation Period; plus |
| (2) | the investment income and capital gains, realized or unrealized, credited to the net assets of that Subaccount during the Valuation Period for which the net investment factor is being determined; minus |
| (3) | the capital losses, realized or unrealized, charged against those assets during the Valuation Period; minus |
| (4) | any amount charged against that Subaccount for taxes (this includes any amount we set aside during the Valuation Period as a provision for taxes attributable to the operation or maintenance of that Subaccount); and |
| (b) | is the value of the net assets of that Subaccount at the end of the preceding Valuation Period; and |
| (c) | is a factor for the Valuation Period representing the mortality and expense risk charge and the administrative expense charge. |
We will value assets in the Separate Account at their fair market value in accordance with generally accepted accounting practices and applicable laws and regulations.
Termination of Participation Agreements
The participation agreements pursuant to which the Portfolios sell their shares to the Separate Account contain varying provisions regarding termination. The following summarizes those provisions:
AB Variable Products Series Fund, Inc. This agreement may be terminated by the parties upon six months’ advance written notice.
AIM Variable Insurance Funds (Invesco Variable Insurance Funds). This agreement may be terminated by the parties upon six months’ advance written notice.
Allspring Variable Trust. This agreement may be terminated by the parties upon six months’ advance written notice.
American Century Variable Portfolios, Inc. This agreement may be terminated by either party upon 180 days’ prior written notice to the other party.
American Century Variable Portfolios II, Inc. This agreement may be terminated by the parties upon 180 days’ advance written notice to the other parties, unless a shorter time is agreed upon by the parties.
BlackRock Variable Series Funds, Inc. This agreement may be terminated by the parties upon 60 days’ advance written notice.
BNY Mellon. This agreement may be terminated by the parties upon six months’ advance written notice.
Columbia Funds Variable Series Trust II. This agreement may be terminated by the parties upon 60 days’ advance written notice.
Deutsche DWS Variable Series II. The agreement may be terminated by the parties upon three months’ advance written notice.
Eaton Vance Variable Trust. This agreement may be terminated by the parties upon six months’ advance written notice.
Federated Hermes Insurance Series. This agreement may be terminated by the parties upon 180 days’ advance written notice.
Fidelity Variable Insurance Products Fund. These agreements provide for termination upon 90 days’ advance notice by either party.
Franklin Templeton Variable Insurance Trust. This agreement may be terminated by the parties upon 60 days’ advance written notice.
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Goldman Sachs Variable Insurance Trust. This agreement may be terminated at the option of any party upon six months’ written notice to the other parties.
Janus Aspen Series. This agreement may be terminated by the parties upon six months’ advance written notice.
JPMorgan Insurance Trust. This agreement may be terminated by the parties upon 180 days’ notice unless a shorter time is agreed to by the parties.
Legg Mason Partners Variable Equity Trust. The agreement may be terminated at the option of any party upon one year advance written notice.
MFS® Variable Insurance Trust and MFS® Variable Insurance Trust II. This agreement may be terminated by the parties upon six months’ advance written notice.
PIMCO Variable Insurance Trust. This agreement may be terminated by the parties upon six months’ advance written notice, unless a shorter time is agreed to by the parties.
Rydex Variable Trust. This agreement may be terminated by the parties upon six months’ advance written notice.
The Prudential Series Fund. This agreement may be terminated by the parties upon 60 days’ advance written notice.
State Street Variable Insurance Series Funds, Inc. This agreement may be terminated at the option of any party upon six months’ written notice to the other parties, unless a shorter time is agreed to by the parties.
Taxation of Genworth Life and Annuity Insurance Company
We do not expect to incur any federal income tax liability attributable to investment income or capital gains retained as part of the reserves under the contracts. See the “Tax Matters” section of the prospectus. Based upon these expectations, no charge is being made currently to the Separate Account for federal income taxes. We will periodically review the question of a charge to the Separate Account for federal income taxes related to the Separate Account. Such a charge may be made in future years if we believe that we may incur federal income taxes. This might become necessary if the tax treatment of the Company is ultimately determined to be other than what we currently believe it to be, if there are changes made in the federal income tax treatment of annuities at the corporate level, or if there is a change in our tax status. In the event that we should incur federal income taxes attributable to investment income or capital gains retained as part of the reserves under the contracts, the Contract Value would be correspondingly adjusted by any provision or charge for such taxes.
We may also incur state and local taxes (in addition to premium taxes). At present, these taxes, with the exception of premium taxes, are not significant. If there is a material change in applicable state or local tax laws causing an increase in taxes other than premium taxes (for which we currently impose a charge), charges for such taxes attributable to the Separate Account may be made.
In order to be treated as an annuity contract for federal income tax purposes, Section 72(s) of the Code requires any Non-Qualified Contract to provide that:
| (a) | if any owner dies on or after the Annuity Commencement Date but prior to the time the entire interest in the contract has been distributed, the remaining portion of such interest will be distributed at least as rapidly as under the method of distribution being used as of the date of that owner’s death; and |
| (b) | if any owner dies prior to the Annuity Commencement Date, the entire interest in the contract will be distributed: |
| (1) | within five years after the date of that owner’s death; or |
| (2) | as income payments which will begin within one year of that owner’s death and which will be made over the life of the owner’s “designated beneficiary” or over a period not extending beyond the life expectancy of that beneficiary. The “designated beneficiary” generally is the person who will be treated as the sole owner of the contract following the death of the owner, joint owner or, in certain circumstances, the Annuitant or Joint Annuitant. However, if the “designated beneficiary” is the surviving spouse of the decedent, these distribution rules will not apply until the surviving spouse’s death (and this spousal exception will not again be available). If any owner is not an individual, the death of the Annuitant or Joint Annuitant will be treated as the death of an owner for purposes of these rules. |
The Non-Qualified Contracts contain provisions which are intended to comply with the requirements of Section 72(s) of
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the Code, although no regulations interpreting these requirements have yet been issued. We intend to review such provisions and modify them if necessary to assure that they comply with the requirements of Section 72(s) when clarified by regulation or otherwise.
Other rules apply to Qualified Contracts.
Using the Contracts as Collateral
A Non-Qualified Contract can be assigned as collateral security. We must be notified in writing if a contract is assigned. Any payment made before the assignment is recorded at our Home Office will not be affected. We are not responsible for the validity of an assignment. Your rights and the rights of a beneficiary may be affected by an assignment. The basic benefits of a Non-Qualified Contract are assignable. Additional benefits added by rider may or may not be available/eligible for assignment. Assigning a contract as collateral may have adverse tax consequences. See the “Tax Matters” provision of the prospectus.
A Qualified Contract may not be sold, assigned, transferred, discounted, pledged or otherwise transferred except under such conditions as may be allowed under applicable law.
You may select one or more primary and contingent beneficiaries during your lifetime upon application and by filing a written request with our Home Office. Each change of beneficiary revokes any previous designation.
The contract is non-participating. No dividends are payable.
If the Annuitant’s age or gender, if applicable, was misstated on the contract data page, any contract benefits or proceeds, or availability thereof, will be determined using the correct age and gender.
We will not contest the contract.
At least once each year, we will send you a statement of values within 30 days after each report date. The statement will show Contract Value, purchase payments and other financial transactions made by you during the report period.
If a trust is named as the owner or beneficiary of this contract and subsequently exercises ownership rights or claims benefits hereunder, we will have no obligation to verify that a trust is in effect or that the trustee is acting within the scope of his/her authority. Payment of contract benefits to the trustee shall release us from all obligations under the contract to the extent of the payment. When we make a payment to the trustee, we will have no obligation to ensure that such payment is applied according to the terms of the trust agreement.
Any written notice should be sent to us at our Home Office at 6610 West Broad Street, Richmond, Virginia 23230. The contract number and the Annuitant’s full name must be included.
We will send all notices to the owner at the last known address on file with us.
Legal Developments Regarding Employment-Related Benefit Plans
On July 6, 1983, the Supreme Court held in Arizona Governing Committee for Tax Deferred Annuity v. Norris, 463 U.S. 1073 (1983), that optional annuity benefits provided under an employee’s deferred compensation plan could not, under Title VII of the Civil Rights Act of 1964, vary between men and women on the basis of gender. The contract contains guaranteed annuity purchase rates for certain Optional Payment Plans that distinguish between men and women. Accordingly, employers and employee organizations should consider, in consultation with legal counsel, the impact of Norris, and Title VII generally, on any employment-related insurance or benefit program for which a contract may be purchased.
Regulation of Genworth Life and Annuity Insurance Company
Besides federal securities laws and Virginia insurance law, we are subject to the insurance laws and regulations of other states within which we are licensed to operate. Generally, the Insurance Department of any other state applies the laws of the state of domicile in determining permissible investments. Presently, we are licensed to do business in the District of Columbia, Bermuda, and all states, except New York.
The statutory financial statements of Genworth Life and Annuity Insurance Company as of December 31, 2021 and 2020, and for each of the years in the three-year period ended
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December 31, 2021, and the financial statements of the Genworth Life & Annuity VA Separate Account 1 (comprised of the subaccounts listed in the appendix of our report) as of December 31, 2021 and for each of the years or periods listed in the appendix of the report, which were included in Form N-VPFS dated April 22, 2022, have been incorporated by reference into this Statement of Additional Information and in the registration statement in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.
The audit report covering the Genworth Life and Annuity Insurance Company’s December 31, 2021 financial statements states that Genworth Life and Annuity Insurance Company prepared its financial statements using statutory accounting practices prescribed or permitted by the Virginia State Corporation Commission, Bureau of Insurance (statutory accounting practices), which is a basis of accounting other than U.S. generally accepted accounting principles. Accordingly, the audit report states that Genworth Life and Annuity Insurance Company’s financial statements are not intended to be and, therefore, are not presented fairly in accordance with U.S. generally accepted accounting principles and further states that those financial statements are presented fairly, in all material respects, in accordance with the statutory accounting practices. The audit report covering the December 31, 2021 statutory financial statements also refers to a change to the valuation of variable annuity and other contracts pursuant to section 21 of the Valuation Manual (VM-21).
The business address for KPMG LLP is 1021 East Cary Street, Suite 2000, Richmond, Virginia 23219.
The statutory financial statements of the Company and the financial statements of the Separate Account, which were included in Form N-VPFS dated April 22, 2022, have been incorporated by reference into this Statement of Additional Information. You should distinguish the financial statements of the Company from the financial statements of the Separate Account. Please consider the financial statements of the Company only as bearing on our ability to meet our obligations under the contracts. You should not consider the financial statements of the Company as affecting the investment performance of the assets held in the Separate Account.
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