Harbinger Group Inc.
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SEC Filings

10-K
HRG GROUP, INC. filed this Form 10-K on 11/23/2016
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Below is a summary of the impact of such intercompany balances in the accompanying Consolidated Balance Sheets:
 
September 30, 2016
 
September 30, 2015
Assets
 
 
 
Funds withheld receivable
$
978.8

 
$
1,058.0

Other assets
15.1

 
15.9

Assets of business held for sale
1,304.7

 
1,709.1

Total assets
$
2,298.6

 
$
2,783.0

Liabilities
 
 
 
Insurance reserves
$
1,119.5

 
$
1,226.8

Debt
63.0

 
330.7

Accounts payable and other current liabilities
—

 
1.6

Other liabilities
—

 
11.0

Liabilities of business held for sale
1,116.1

 
1,212.9

Total liabilities
$
2,298.6

 
$
2,783.0

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 September 30, 2016 and as a result, the Company recorded a write-down of assets of business held for sale of $362.8 at September 30, 2016.
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 Consolidated Statements of Operations.
The following table summarizes the components of “(Loss) income from discontinued operations, net of tax” in the accompanying Consolidated Statements of Operations for Fiscal 2016, 2015 and 2014:
 
 
Fiscal
 
 
2016
 
2015
 
2014
Revenues:
 
 
 
 
 
 
Insurance premiums
 
$
69.9

 
$
58.5

 
$
55.6

Net investment income (a)
 
922.7

 
850.8

 
760.2

Net investment gains (losses) (b)
 
27.6

 
(2.0
)
 
306.7

Insurance and investment product fees and other
 
126.8

 
89.2

 
68.3

Total revenues
 
1,147.0

 
996.5

 
1,190.8

Operating costs and expenses:
 
 
 
 
 
 
Benefits and other changes in policy reserves
 
790.9

 
578.4

 
787.5

Selling, acquisition, operating and general expenses
 
118.3

 
112.8

 
102.3

Amortization of intangibles
 
78.6

 
41.8

 
97.5

Total operating costs and expenses
 
987.8

 
733.0

 
987.3

Operating income
 
159.2

 
263.5

 
203.5

Interest expense
 
(22.0
)
 
(23.6
)
 
(22.5
)
Other income (expense), net
 
4.8

 
(5.0
)
 
(4.0
)
Write-down of assets of business held for sale to fair value less cost to sell (c)
 
(362.8
)
 
—

 
—

Net (loss) income before income taxes
 
(220.8
)
 
234.9

 
177.0

Income tax expense (d)
 
250.5

 
87.8

 
22.0

Net (loss) income
 
(471.3
)
 
147.1

 
155.0

Less: net income attributable to noncontrolling interest
 
19.0

 
23.1

 
12.9

Net (loss) income - attributable to controlling interest
 
$
(490.3
)
 
$
124.0

 
$
142.1

(a) Included in the net investment income attributable to FGL is interest income of $4.1, $4.5 and $4.5 for Fiscal 2016, 2015 and 2014, respectively, on debt instruments issued by entities consolidated by HRG as they will continue to exist following the closing of the FGL Merger. The corresponding interest expense is recorded in continuing operations in the accompanying Consolidated Statements of Operations.
(b) Included in “Net investment gains (losses)” are charges related to the change in expected recovery rates of asset-based loans. Such charges are presented as “Impairments and bad debt expense” on the Company’s accompanying Consolidated Statements of Operations.
(c) FGL’s net income during Fiscal 2016 and the increase in unrealized gains on FGL’s investment portfolio resulted in an increase of the Company’s carrying value in FGL that was above the fair value that the Company expects to receive as part of the sale which write-down of carrying value of the assets of business held for sale to fair value less cost to sell of $362.8. Such write-down could be partially reversed if the carrying value of FGL decreases in future reporting periods. Upon completion of the FGL Merger, the amount of AOCI related to FGL will be recognized through (loss) income from discontinued operations on the statement of operations and could result in a gain from discontinued operations.

S-74
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