Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2015

Goodwill and Other Intangible Assets

2. Goodwill and Other Intangible Assets

Goodwill

The changes in the carrying amount of goodwill reported in our segments were as follows:

	Retirement and Income Solutions		Principal Global Investors			Principal International			U.S. Insurance Solutions		Corporate		Consolidated
	(in millions)
Balance at January 1, 2014	$	57.4	$	256.3		$	730.0		$	56.6	$	—	$	1,100.3
Foreign currency		—		(3.9	)		(89.0	)		—		—		(92.9	)

Balance at December 31, 2014		57.4		252.4			641.0			56.6		—		1,007.4
Goodwill from acquisitions		—		3.1			101.7			—		—		104.8
Foreign currency		—		(3.4	)		(99.8	)		—		—		(103.2	)

Balance at December 31, 2015	$	57.4	$	252.1		$	642.9		$	56.6	$	—	$	1,009.0

On September 1, 2015, we completed our purchase of AXA's Mandatory Provident Fund ("MPF") and Occupational Retirement Schemes Ordinance ("ORSO") pension business in Hong Kong for $335.5 million. As part of the transaction, we entered into an exclusive 15-year distribution agreement with AXA to provide co-branded pension products through AXA's extensive agency network in Hong Kong. AXA's MPF and ORSO pension business is consolidated within our Principal International segment with a portion of the goodwill and identifiable intangible assets allocated to our Principal Global Investors segment.

Of the acquired intangible assets, $104.8 million was assigned to goodwill and is not subject to amortization. The goodwill is largely related to future sales anticipated from our internal workforce and entity-specific revenue synergies that will be generated by combining AXA's MPF and ORSO pension business with our existing businesses. This goodwill will be tested annually as part of the Principal International Hong Kong reporting unit and the Principal Global Investors Equity Investments and Fixed Income Investments reporting units.

Of the remaining acquired intangible assets, $138.0 million was assigned to customer relationships, which are subject to amortization over a 30-year useful life, and $53.0 million was assigned to the distribution agreement, which is subject to amortization over a 15-year useful life based on its contractual term.

In connection with our fourth quarter 2015 operating segment changes, as described in Note 16, Segment Information, goodwill was tested for impairment using adjusted carrying values of the new reporting units. We concluded the fair value of each reporting unit was in excess of its carrying value and goodwill was not impaired.

Finite Lived Intangible Assets

Amortized intangible assets that continue to be subject to amortization over a weighted average remaining expected life of 16 years were as follows:

	December 31, 2015		December 31, 2014
	(in millions)
Gross carrying value	$	766.7	$	674.1
Accumulated amortization		198.1		183.6

Net carrying value	$	568.6	$	490.5

During 2015, we recorded an $8.3 million pre-tax impairment loss in operating expenses related to finite lived intangible assets that originated from the acquisition of our mutual fund company in Brazil with a gross carrying amount of $11.5 million and $3.2 million of accumulated amortization at the time of impairment. During 2015, 2014 and 2013, we fully amortized other finite lived intangible assets of $0.5 million, $118.6 million and $5.2 million, respectively.

The amortization expense for intangible assets with finite useful lives was $42.5 million, $49.9 million and $48.0 million for 2015, 2014 and 2013, respectively. At December 31, 2015, the estimated amortization expense for the next five years is as follows (in millions):

Year ending December 31:
2016	$	47.3
2017		46.9
2018		46.6
2019		45.5
2020		45.0

Indefinite Lived Intangible Assets

The 2015 net impact of impairments of indefinite lived intangibles of our mutual fund company in Brazil resulted in a pre-tax loss of $14.7 million that was recorded in operating expenses.

The net carrying amount of unamortized indefinite lived intangible assets was $790.6 million and $833.0 million as of December 31, 2015 and 2014, respectively. As of both December 31, 2015 and 2014, $608.0 million relates to investment management contracts associated with our acquisition of WM Advisors, Inc. in 2006. The remaining balance primarily relates to the trade name intangible associated with our acquisition of Administradora de Fondos de Pensiones Cuprum S.A. in 2013.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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