Harbinger Group Inc.
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SEC Filings

10-Q
HRG GROUP, INC. filed this Form 10-Q on 08/09/2016
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(5) Investments
The Company’s consolidated investments are summarized as follows:
 
June 30, 2016
 
Cost or Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
 
Carrying Value
Asset-based loans
$
48.2

 
$
—

 
$
—

 
$
48.2

 
$
48.2

Other invested assets
2.5

 
—

 
—

 
2.5

 
2.5

Total Investments
$
50.7

 
$
—

 
$
—

 
$
50.7

 
$
50.7

 
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 June 30, 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:
 
June 30,
2016
 
September 30,
2015
 
 
 
(As Adjusted)
Asset-based loans, net of deferred fees, by major industry:
 
 
 
Apparel
$
34.9

 
$
66.0

Jewelry
16.8

 
36.9

Manufacturing
11.9

 
32.7

Electronics
5.2

 
45.9

Other
13.2

 
93.1

Total asset-based loans
82.0

 
274.6

Less: Allowance for credit losses
33.8

 
47.9

Total asset-based loans, net
$
48.2

 
$
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 nine months ended June 30, 2016 and 2015:
 
Three months ended June 30,
 
Nine months ended June 30,
 
2016
 
2015
 
2016
 
2015
Allowance for credit losses:
 
 
 
 
 
 
 
Balance at beginning of period
$
47.8

 
$
22.7

 
$
47.9

 
$
5.5

Provision for credit losses
(11.7
)
 
9.4

 
2.7

 
77.7

Charge-offs
(5.2
)
 
—

 
(19.7
)
 
(51.1
)
Recoveries
2.9

 
—

 
2.9

 
—

Balance at end of period
$
33.8

 
$
32.1

 
$
33.8

 
$
32.1

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 June 30, 2016 and September 30, 2015, there were eleven and nine loans with a net carrying value of $68.4 and $79.8, respectively, considered delinquent by Salus and placed on non-accrual status. It is Salus’ policy to

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