(25) Discontinued Operations
On March 27, 2013, we announced that we had agreed to sell our wealth management business to AqGen Liberty Acquisition, Inc., a subsidiary of AqGen Liberty Holdings LLC, a partnership of Aquiline Capital Partners and Genstar Capital. Historically, this business had been reported as a separate segment. As a result of the sale agreement, this business was accounted for as discontinued operations and its financial position, results of operations and cash flows were separately reported for all periods presented. Also included in discontinued operations was our tax and advisor unit, Genworth Financial Investment Services (“GFIS”), which was part of our wealth management business until the closing of its sale on April 2, 2012 as discussed below.
The assets and liabilities associated with discontinued operations prior to the sale were segregated in the consolidated balance sheets. The major assets and liability categories were as follows as of December 31:
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(Amounts in millions) |
2013 | 2012 | ||||||
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Assets |
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Other invested assets |
$ | — | $ | 10 | ||||
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Cash and cash equivalents |
— | 21 | ||||||
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Intangible assets |
— | 115 | ||||||
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Goodwill |
— | 260 | ||||||
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Other assets |
— | 33 | ||||||
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Assets associated with discontinued operations |
$ | — | $ | 439 | ||||
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Liabilities |
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Other liabilities |
$ | — | $ | 48 | ||||
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Deferred tax liability |
— | 13 | ||||||
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Liabilities associated with discontinued operations |
$ | — | $ | 61 | ||||
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Summary operating results of discontinued operations were as follows for the years ended December 31:
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(Amounts in millions) |
2013 | 2012 | 2011 | |||||||||
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Revenues |
$ | 211 | $ | 387 | $ | 428 | ||||||
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Income (loss) before income taxes |
$ | (5 | ) | $ | 110 | $ | 59 | |||||
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Provision for income taxes |
7 | 53 | 23 | |||||||||
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Income (loss) from discontinued operations, net of taxes |
$ | (12 | ) | $ | 57 | $ | 36 | |||||
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On December 31, 2010, we acquired the operating assets of Altegris Capital, LLC. (“Altegris”) as part of our wealth management business which provided a platform of alternative investments, including hedge funds and managed futures products. Under the terms of the agreement, we paid approximately $40 million at closing and we could have been obligated to pay additional performance-based payments of up to $88 million during the five-year period following closing. In 2012, we made a payment of $18 million related to the contingent consideration as a result of Altegris achieving certain performance targets.
On August 29, 2008, we acquired Quantuvis Consulting, Inc. (“Quantuvis”), an investment advisor consulting business, as part of our wealth management business for $3 million plus potential contingent consideration of up to $3 million. In 2011, we paid $1 million of contingent consideration related to this acquisition. Quantuvis was included in the sale of our wealth management business in 2013 as discussed below.
On August 30, 2013, we completed the sale of our wealth management business for approximately $412 million with net proceeds of approximately $360 million. During the three months ended March 31, 2013, in connection with the agreement to sell the wealth management business, we recognized a goodwill impairment of $13 million as a result of the carrying value for the business exceeding fair value. Additionally, we agreed to settle our contingent consideration liability related to our purchase of Altegris for approximately $40 million, which resulted in a loss of approximately $5 million from the change in fair value of this liability. In accordance with the accounting guidance for groups of assets that are held-for-sale, we recorded an additional loss of approximately $9 million to record the carrying value of the business at its fair value less costs to sell. During the three months ended September 30, 2013, we recognized an additional after-tax loss on the sale of $2 million at closing, which was based on carrying value and working capital at close, as well as expenses associated with the sale.
On April 2, 2012, we completed the sale of our tax and accounting financial advisor unit, GFIS, for approximately $79 million, plus contingent consideration, to Cetera Financial Group. The contingent consideration was recorded at fair value upon disposition and provides the opportunity for us to receive additional future payments of up to approximately $25 million based on achieving certain revenue goals. The fair value of this contingent consideration receivable was recorded in Corporate and Other activities and remains a component of continuing operations. We recognized an after-tax gain of $13 million related to the sale, which was included in income from discontinued operations, net of taxes.