Gain upon gaining control of equity method investment. The remeasurement to fair value of our holdings in Compass, triggered by our acquisition of the approximately 25.5% remaining interest we did not already hold in Compass during the Fiscal 2015 Quarter, resulted in a gain of $141.2 million.
Other income, net. Other income decreased $31.7 million to $1.1 million for the Fiscal 2016 Quarter from $32.8 million for the Fiscal 2015 Quarter. The decrease was primarily due to a decrease in gains on oil and natural gas derivatives as a result of lower volume of oil production hedged and a decrease in unrealized gains on the investment in HC2 Holdings Inc. as compared to the Fiscal 2015 Quarter.
Income Taxes. For the Fiscal 2016 Quarter, our effective tax rate of 4.3% differed from the expected U.S. statutory tax rate of 35% and was impacted by the expected utilization of a portion of Spectrum Brand’s U.S. net operating losses that were previously recorded with valuation allowance against Spectrum Brand’s current year earnings and recognition of tax benefits on a portion of current year losses from our Energy and Corporate and Other segments in the U.S. The Company determined that a portion of the current year losses related to our Energy and Corporate and Other segments are more-likely-than-not to be realized based on the expected taxable gain from the FGL Merger.
For the Fiscal 2015 Quarter, our effective tax rate of (5.1)% differed from the expected U.S. statutory tax rate of 35% and was impacted by pretax losses including significant impairment losses in our Energy and Asset Management segments in the U.S. and certain pretax losses from foreign jurisdictions for which the Company concluded that the tax benefits are not more-likely-than-not to be realized, resulting in the recording of valuation allowances. The Fiscal 2015 Quarter included recognition of a nonrecurring net income tax benefit of $12.3 million attributable to the tax impact related to the impairment of certain Frederick’s of Hollywood Inc. (“FOH”) indefinite lived intangible assets. Due to the indefinite life of these assets for book purposes, the related deferred tax liability was not regarded as a source of taxable income to support the realization of deferred tax assets. Consequently, the impairment recorded resulted in a reduction to the deferred tax liability previously recorded.
The majority of net operating loss (“NOL”), capital loss and tax credit carryforwards of HRG and Spectrum Brands have historically been subject to valuation allowances, as we concluded that all or a portion of the related tax benefits are not more-likely-than-not to be realized. Utilization of a portion of the NOL, capital loss and tax credit carryforwards of HRG and Spectrum Brands are subject to limitations under Internal Revenue Code (“IRC”) Sections 382 and 383. Such limitations resulted from ownership changes of more than 50 percentage points over a three-year period. The consummation of the FGL Merger is expected to result in the reversal of a significant portion of our valuation allowance previously recorded against tax attribute carryforwards that are expected to be realized against the taxable gain.
(Loss) income from discontinued operations, net of tax. Discontinued operations include FGL’s results from operations that were previously reported in the Insurance segment. Net loss from discontinued operations, net of tax for the Fiscal 2016 Quarter was $35.6 million, a decrease from a net income of $17.0 million for the Fiscal 2015 Quarter. The $52.6 million decrease in net income was driven by a $90.9 million net income tax expense related to the establishment of a deferred tax liability of $338.6 million as a result of classifying our investment in FGL as held for sale, partially offset by a $247.7 million reduction of valuation allowance on HRG’s net operating and capital loss carryforwards expected to offset the FGL taxable gain.
The decrease in income from discontinued operations was partially offset by an increase in net income from FGL of $38.3 million. The increase in FGL’s net income was primarily driven by (i) higher net investment income of $13.8 million recorded by FGL as a result of higher average assets under management and increased net investment spread; and (ii) a decrease in benefits and other changes in policy reserves of $42.8 million mainly as a result of a decrease in index credits. The decrease in index credits was primarily due to the decline in equity markets during the Fiscal 2016 Quarter, which negatively impacted call options and futures funding the underlying index credits. Offsetting these increases to FGL’s net income was an increase in the amortization of intangibles of $24.9 million due to higher gross margins that were driven by the higher net investment income, as well as a decrease in fixed index annuity present value of future credits and guarantee liability period over period.
Noncontrolling Interest. The net income attributable to noncontrolling interest reflects the share of the net income of our subsidiaries, which are not wholly-owned, attributable to the noncontrolling interest. Such amount varies in relation to such subsidiary’s net income or loss for the period and the percentage interest not owned by HRG.
