Divestitures Divestitures (Notes)

3 Months Ended

Dec. 31, 2015

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Divestitures

FGL Merger Agreement

On November 8, 2015, FGL, Anbang, AB Infinity, and Merger Sub entered into the FGL Merger Agreement. Pursuant to the FGL Merger Agreement and subject to the terms and conditions set forth therein, Merger Sub will merge with and into FGL, with FGL continuing as the surviving entity, which will become a direct, wholly-owned subsidiary of AB Infinity and an indirect, wholly-owned subsidiary of Anbang. Pursuant to the FGL Merger Agreement, at the effective time of the FGL Merger, each issued and outstanding share of FGL common stock will be canceled and converted automatically into the right to receive $26.80 per share in cash, without interest, other than any shares of common stock owned by FGL as treasury stock or otherwise or owned by Anbang, AB Infinity or Merger Sub (which will be canceled and no payment will be made with respect thereto), shares of common stock granted pursuant to FGL’s equity plans and those shares of common stock with respect to appraisal rights under Delaware law are properly exercised and not withdrawn. The completion of the FGL Merger is subject to the satisfaction of a number of closing conditions, including the receipt of regulatory approvals from the Iowa Insurance Division, New York Department of Financial Services, Vermont Department of Financial Regulation, China Insurance Regulatory Commission and the Committee on Foreign Investment in the United States. In the event that the FGL Merger Agreement is terminated, under specified circumstances, FGL may be required to pay a termination fee to Anbang and its subsidiaries of $51.5.

At December 31, 2015, the Company determined that as a result of the FGL Merger Agreement, the Company’s investment 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 Condensed Consolidated Balance Sheets at December 31, 2015 and September 30, 2015:

	December 31, 2015		September 30, 2015
Assets
Investments, including loans and receivables from affiliates	$	19,071.2	$	19,206.7
Cash and cash equivalents	567.9		501.8
Accrued investment income	180.9		191.2
Reinsurance recoverable	3,551.6		3,578.7
Deferred tax assets	248.3		194.7
Properties	15.5		14.4
Deferred acquisition costs and value of business acquired, net	1,230.6		1,048.6
Other assets	231.5		248.4
Total assets held for sale	$	25,097.5	$	24,984.5
Liabilities
Insurance reserves	$	22,748.5	$	22,560.1
Debt	299.2		298.3
Accounts payable and other current liabilities	35.7		43.7
Other liabilities	547.4		518.8
Total liabilities held for sale	$	23,630.8	$	23,420.9

The balances included on the 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 are not eliminated to appropriately 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 on the Condensed Consolidated Balance Sheets:

	December 31, 2015		September 30, 2015
Assets
Funds withheld receivable	$	1,007.1	$	1,058.0
Other assets	15.9		15.9
Assets held for sale	1,694.7		1,769.8
Total assets	$	2,717.7	$	2,843.7
Liabilities
Insurance reserves	$	1,198.0	$	1,226.8
Debt	249.0		330.7
Accounts payable and other current liabilities	—		1.6
Other liabilities	12.4		11.0
Liabilities held for sale	1,258.3		1,273.6
Total liabilities	$	2,717.7	$	2,843.7

The carrying value of the Company’s interest in FGL was lower than the fair value less cost to sell based on the sales price at December 31, 2015.

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 Condensed Consolidated Statements of Operations.

The following table summarizes the components of Net (loss) income from discontinued operations in the Condensed Consolidated Statements of Operations for the three months ended December 31, 2015 and 2014:

	Three months ended December 31,
	2015			2014
Revenues:
Insurance premiums	$	15.4		$	11.6
Net investment income (a)	222.2			208.4
Net investment gains	66.2			58.5
Insurance and investment product fees and other	28.8			19.8
Total revenues	332.6			298.3
Operating costs and expenses:
Benefits and other changes in policy reserves	180.9			223.7
Selling, acquisition, operating and general expenses	28.2			29.2
Impairments and bad debt expense	—			0.5
Amortization of intangibles	33.5			11.3
Total operating costs and expenses	242.6			264.7
Operating income	90.0			33.6
Interest expense	5.9			5.9
Net income before income taxes	84.1			27.7
Income tax expense (b)	119.7			10.7
Net (loss) income	(35.6		)	17.0
Less: net (loss) income attributable to noncontrolling interest	9.4			3.3
Net (loss) income - attributable to controlling interest	$	(45.0	)	$	13.7

(a) Included in the net investment income attributable to FGL is interest income of $1.1 and $1.7 for the three months ended December 31, 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 on the Condensed Consolidated Statements of Operations.

(b) Included in the income tax expense for the three months ended December 31, 2015 was a $90.9 net income tax expense related to the establishment of a deferred tax liability of $338.6 as a result of classifying our investment in FGL as held for sale, partially offset by a $247.7 reduction of valuation allowance on HRG’s net operating and capital loss carryforwards expected to offset the FGL taxable gain.

Compass Asset Sale

As discussed in Note 1, Description of Business, on December 1, 2015, Compass, completed the sale of its oil and gas interests located in the Holly, Waskom and Danville Fields in East Texas and North Louisiana. At closing, proceeds from the transaction, which were approximately $147.5, less estimated expenses of $1.9, were used primarily to reduce borrowings under Compass’ credit facility. Following the closing, pursuant to terms of the transaction agreement, Compass received an additional $4.2 in connection with resolving certain title and consent matters. The Company accounted for the sale in accordance with ASC Topic 932, Property, Plant and Equipment: Extractive Activities - Oil and Gas and recorded a gain on sale of oil and natural gas assets of $105.6. The Holly, Waskom and Danville Fields did not represent all or substantially all of Compass full-cost method assets and, as a result, the operations associated with these assets were presented as continuing operations in the Condensed Consolidated Statements of Operations.