Discontinued Operations

6 Months Ended

Jun. 30, 2016

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

NOTE 12—DISCONTINUED OPERATIONS

NABCO

On January 9, 2015, we sold all of our interests in NABCO for $77.9 million, including a final working capital adjustment of $0.1 million, and $3.9 million of proceeds released from escrow in the first quarter of 2016. As a result of the sale, the gain on sale of NABCO, along with the assets, liabilities and results of operations of NABCO are included in discontinued operations for all periods presented.

SGGH

As of June 30, 2016, the largest liability within discontinued operations is a repurchase reserve that represents estimated losses from repurchase claims based on claimed breaches of certain representations and warranties provided by FIL to counterparties that purchased residential real estate loans, predominantly from 2002 through 2007. Management estimates the likely range of the loan repurchase liability based on a number of factors, including, but not limited to, the timing of such claims relative to the loan origination date, the quality of the documentation supporting such claims, the number and involvement of cross-defendants, if any, related to such claims, and a time and expense estimate if a claim were to result in litigation. The estimate is based on currently available information and was subject to known and unknown uncertainties using multiple assumptions requiring significant judgment.

In June 2015, the New York State Court of Appeals affirmed the decision of the New York State Supreme Court, Appellate Division in ACE Securities Corp v. DB Structured Products, Inc. (the “ACE Securities Case”), whereby the New York state six-year statute of limitations on loan repurchase demands begins to run as of the closing date on which the representations were made, which, in the ACE Securities Case, was the date of the mortgage loan purchase agreements. Based on the final decision in the ACE Securities Case, management has reassessed its exposure to losses from repurchase demands and believes a repurchase reserve of $0.7 million is adequate as of June 30, 2016.

The Company did not settle or receive any repurchase claims during the six months ended June 30, 2016 or the year ended December 31, 2015. The repurchase reserve liability was $0.7 million as of June 30, 2016 and December 31, 2015. During the three months ended June 30, 2016 and 2015, the repurchase reserve was reduced by zero and $0.2 million, respectively. During the six months ended June 30, 2016 and 2015, the repurchase reserve was reduced by zero and $4.8 million, respectively.

Earnings from discontinued operations for the six months ended June 30, 2016 is primarily related to $0.2 million of restitution received from the U.S. government related to an investigation of various sub-prime mortgage loan brokers. Earnings from discontinued operations, net of income taxes for the six months ended June 30, 2015 is primarily related to the $39.7 million pretax gain on sale of NABCO and a $4.8 million reduction in the repurchase reserve.