Harbinger Group Inc. -SEC Filings

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SEC Filings

10-Q

HRG GROUP, INC. filed this Form 10-Q on 05/09/2016

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(5) Investments

The Company’s consolidated investments are summarized as follows:



	March 31, 2016
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Carrying Value
Asset-based loans	$	136.8	$	—	$	—	$	136.8	$	136.8
Other invested assets	2.5		—		—		2.5		2.5
Total Investments	$	139.3	$	—	$	—	$	139.3	$	139.3



	September 30, 2015
	(As Adjusted)
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Carrying Value
Corporate fixed-maturity securities, available-for-sale	$	14.1	$	—	$	—	$	14.1	$	14.1
Equity securities - held for trading	18.7		14.1		—		32.8		32.8
Asset-based loans	226.7		—		—		226.7		226.7
Other invested assets	5.3		—		—		5.3		5.3
Total Investments	$	264.8	$	14.1	$	—	$	278.9	$	278.9

Asset-based Loans

As of March 31, 2016 and September 30, 2015, the Company’s portfolio of asset-based loans receivable originated by Salus and its co-lender Front Street consisted of the following:



	March 31, 2016		September 30, 2015
			(As Adjusted)
Asset-based loans, net of deferred fees, by major industry:
Apparel	$	50.3	$	66.0
Electronics	45.4		45.9
Jewelry	35.6		36.9
Manufacturing	29.9		32.7
Other	23.4		93.1
Total asset-based loans	184.6		274.6
Less: Allowance for credit losses	47.8		47.9
Total asset-based loans, net	$	136.8	$	226.7

The Company establishes its allowance for credit losses through a provision for credit losses based on Salus’ evaluation of the credit quality of its loan portfolio. The following table presents the activity in its allowance for credit losses for the three and six months ended March 31, 2016 and 2015:



	Three months ended March 31,						Six months ended March 31,
	2016			2015			2016			2015
Allowance for credit losses:
Balance at beginning of period	$	43.7		$	5.3		$	47.9		$	5.5
Provision for credit losses	6.7			68.5			15.1			68.3
Charge-offs	(2.6		)	(51.1		)	(15.2		)	(51.1		)
Balance at end of period	$	47.8		$	22.7		$	47.8		$	22.7

Credit Quality Indicators

Salus monitors credit quality as indicated by various factors and utilizes such information in its evaluation of the adequacy of the allowance for credit losses. As of March 31, 2016 and September 30, 2015, there were ten and nine loans with a net carrying value of $104.0 and $79.8, respectively, considered delinquent by Salus and placed on non-accrual status. It is Salus’ policy to discontinue accruing interest when there is a reasonable doubt as to collectability in the normal course of business. Nonaccrual loans are

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