SEC Filings
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| 10-Q | |
| HRG GROUP, INC. filed this Form 10-Q on 05/05/2017 | |
| Entire Document | |
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apply Iowa-prescribed accounting practices that permit Iowa-domiciled insurers to report equity call options used to economically hedge fixed indexed annuity (“FIA”) index credits at amortized cost for statutory accounting purposes and to calculate FIA statutory reserves such that index credit returns will be included in the reserve only after crediting to the annuity contract. This resulted in no impact to statutory capital and surplus at March 31, 2017. Adoption of Recent Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which simplifies the test for goodwill impairment by removing Step 2 from the goodwill impairment test. If goodwill impairment is realized, the amount recognized will be the amount by which the carrying amount exceeds the reporting unit’s fair value; however the loss recognized cannot exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 must be applied on a prospective basis and will become effective for public entities in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption available. The Company elected to early adopt ASU 2017-04 effective March 31, 2017, resulting in no impact to the Condensed Consolidated Financial Statements. Recent Accounting Pronouncements Not Yet Adopted In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”), which requires an employer to disaggregate the service cost component from the other components of net periodic pension costs in the accompanying Condensed Consolidated Statements of Operations. ASU 2017-07 provides guidance requiring the service cost component to be recognized consistent with other compensation costs arising from service rendered by employees during the period, and all other components to be recognized separately outside of the subtotal of income from operations. ASU 2017-07 is applied on a retrospective basis, and will become effective for public entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption available. This update will be effective for the Company in the first quarter of fiscal year ending September 30, 2019. The net periodic benefit cost for the fiscal year ended September 30, 2016 was $4.8; of which the service cost component was $3.3 and other components were $1.5. The net periodic benefit cost for the fiscal year ending September 30, 2017 will be $7.9, of which the service cost component is $4.3 and other cost components are $3.6. The Company has implemented all new accounting pronouncements that are in effect and that may impact its Condensed Consolidated Financial Statements and does not believe that there are any other new accounting pronouncements, other than the ones disclosed above and in the Company’s Form 10-K, that have been issued that might have a material impact on its financial condition, results of operations or liquidity. (3) Significant Risks and Uncertainties Use of Estimates and Assumptions The preparation of the Company’s Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions used. Concentration of Securities Included in Funds Withheld Receivables As of March 31, 2017 and September 30, 2016, Front Street’s most significant exposure related to the securities underlying the funds withheld receivables was to the financial sector and the energy, mining and metals industries. As of March 31, 2017 and September 30, 2016, the carrying value of the fixed maturity securities in the financial sector was $243.2, or 14.9%, and $232.8, or 14.1%, respectively, of Front Street’s funds withheld receivables. At March 31, 2017 and September 30, 2016, the holdings in this sector included investments in 92 and 81 different issuers, respectively, with the top ten investments accounting for 47.7% and 48.0%, respectively, of the total holdings in this sector. As of March 31, 2017 and September 30, 2016, the carrying value of the fixed maturity securities in the energy, mining and metals industries was $168.5, or 10.3%, and $188.6, or 11.4%, respectively, of Front Street’s funds withheld receivables. At March 31, 2017 and September 30, 2016, the holdings in these industries included investments in 66 and 74 different issuers, respectively, with the top ten investments accounting for 42.0% and 43.4%, respectively, of the total holdings in these industries. There were no holdings in a single issuer included in the funds withheld receivables that exceeded 10% of the Company’s stockholders’ equity as of March 31, 2017 and September 30, 2016. 9 | |
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