Harbinger Group Inc. -SEC Filings

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SEC Filings

10-Q

HRG GROUP, INC. filed this Form 10-Q on 08/09/2016

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At June 30, 2016, the Company determined that as a result of the FGL Merger Agreement, the Company’s ownership interest in FGL met the criteria established by ASC 360 to classify it as held for sale. The following table summarizes the major categories of assets and liabilities classified as held for sale in the accompanying Condensed Consolidated Balance Sheets at June 30, 2016 and September 30, 2015:



	June 30, 2016			September 30, 2015
Assets
Investments, including loans and receivables from affiliates	$	20,665.6		$	19,206.7
Cash and cash equivalents	719.5			501.8
Accrued investment income	191.6			191.2
Reinsurance recoverable	3,475.9			3,578.7
Deferred tax assets	52.7			194.7
Properties	17.1			14.4
Deferred acquisition costs and value of business acquired, net	1,101.1			1,048.6
Other assets	182.1			248.4
Write-down of assets of business held for sale to fair value less cost to sell	(240.7		)	—
Total assets held for sale	$	26,164.9		$	24,984.5
Liabilities
Insurance reserves	$	23,575.8		$	22,560.1
Debt	300.0			298.3
Accounts payable and other current liabilities	39.3			43.7
Other liabilities	641.0			518.8
Total liabilities held for sale	$	24,556.1		$	23,420.9

The balances included in the accompanying Condensed Consolidated Balance Sheets and in the table above reflect transactions between the businesses held for sale and businesses held for use that are expected to continue to exist after the closing of the FGL Merger. Such transactions are not eliminated to reflect the continuing operations and balances held for sale. As a result, adjustments to the carrying value of certain intercompany assets recorded by FGL, were reversed upon consolidation in the Company’s Condensed Consolidated Financial Statements.

Below is a summary of the impact of such intercompany balances in the accompanying Condensed Consolidated Balance Sheets:



	June 30, 2016		September 30, 2015
Assets
Funds withheld receivable	$	1,011.2	$	1,058.0
Other assets	15.4		15.9
Assets of business held for sale	1,531.2		1,769.8
Total assets	$	2,557.8	$	2,843.7
Liabilities
Insurance reserves	$	1,143.2	$	1,226.8
Debt	198.9		330.7
Accounts payable and other current liabilities	0.3		1.6
Other liabilities	9.6		11.0
Liabilities of business held for sale	1,205.8		1,273.6
Total liabilities	$	2,557.8	$	2,843.7

The carrying value of the Company’s interest in FGL was higher than the fair value less cost to sell based on the sales price at June 30, 2016 and as a result, the Company recorded a write-down of assets of business held for sale of $217.2 and $240.7 for the three and nine months ended June 30, 2016, respectively.

In accordance with ASU 2014-08, the Company has determined that the FGL Merger Agreement represented a strategic shift for the Company and, accordingly, has presented the results of operations for FGL as discontinued operations in the accompanying Condensed Consolidated Statements of Operations.

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