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Stockholders' Equity
 9 Months Ended
Sep. 30, 2015
Stockholders' Equity  
Stockholders' Equity

 

 

9. Stockholders’ Equity

 

Reconciliation of Outstanding Shares

 

 

 

Series A

 

Series B

 

Common

 

 

 

preferred stock

 

preferred stock

 

stock

 

 

 

(in millions)

 

Outstanding shares at January 1, 2014

 
3.0

 
10.0

 
295.2

 

Shares issued

 

—

 

—

 
3.1

 

Treasury stock acquired

 

—

 

—

 
(4.7

)

 

 

 

 

 

 

 

 

Outstanding shares at September 30, 2014

 
3.0

 
10.0

 
293.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding shares at January 1, 2015

 
3.0

 
10.0

 
293.9

 

Shares issued

 

—

 

—

 
3.3

 

Treasury stock acquired

 

—

 

—

 
(3.7

)

Preferred stock redemption

 
(3.0

)
(10.0

)

—

 

 

 

 

 

 

 

 

 

Outstanding shares at September 30, 2015

 

—

 

—

 
293.5

 

 

 

 

 

 

 

 

 

 

On June 30, 2015 we redeemed our 3.0 million shares of series A preferred stock for $250.0 million and our 10.0 million shares of series B preferred stock for $300.0 million. At redemption, we recognized $8.2 million excess redemption value over carrying value of the preferred shares redeemed as an adjustment to determine net income available to common stockholders.

 

In February 2013, our Board of Directors authorized a share repurchase program of up to $150.0 million of our outstanding common stock, which was completed in March 2014. In February 2014, our Board of Directors authorized a share repurchase program of up to $200.0 million of our outstanding common stock, which was completed in March 2015. In February 2015, our Board of Directors authorized a share repurchase program of up to $150.0 million of our outstanding common stock. Shares repurchased under these programs are accounted for as treasury stock, carried at cost and reflected as a reduction to stockholders’ equity.

 

Other Comprehensive Income (Loss)

 

 

 

For the three months ended

 

For the nine months ended

 

 

 

September 30, 2015

 

September 30, 2015

 

 

 

Pre-Tax

 

Tax

 

After-Tax

 

Pre-Tax

 

Tax

 

After-Tax

 

 

 

(in millions)

 

Net unrealized losses on available-for-sale securities during the period

 

$
(191.9

)

$
66.4

 

$
(125.5

)

$
(999.0

)

$
340.7

 

$
(658.3

)

Reclassification adjustment for (gains) losses included in net income (1)

 
6.8

 
(2.5

)
4.3

 
(1.7

)
0.5

 
(1.2

)

Adjustments for assumed changes in amortization patterns

 
35.7

 
(12.5

)
23.2

 
118.1

 
(41.3

)
76.8

 

Adjustments for assumed changes in policyholder liabilities

 
190.5

 
(64.2

)
126.3

 
547.8

 
(186.1

)
361.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses) on available-for-sale securities

 
41.1

 
(12.8

)
28.3

 
(334.8

)
113.8

 
(221.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncredit component of impairment losses on fixed maturities, available-for-sale during the period

 
1.1

 
(0.3

)
0.8

 
28.0

 
(9.7

)
18.3

 

Adjustments for assumed changes in amortization patterns

 

—

 

—

 

—

 
(1.3

)
0.5

 
(0.8

)

Adjustments for assumed changes in policyholder liabilities

 
0.3

 
(0.1

)
0.2

 
0.5

 
(0.1

)
0.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncredit component of impairment losses on fixed maturities, available-for-sale (2)

 
1.4

 
(0.4

)
1.0

 
27.2

 
(9.3

)
17.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains on derivative instruments during the period

 
21.7

 
(7.6

)
14.1

 
50.1

 
(17.5

)
32.6

 

Reclassification adjustment for gains included in net income (3)

 
(4.3

)
1.3

 
(3.0

)
(22.1

)
7.3

 
(14.8

)

Adjustments for assumed changes in amortization patterns

 
6.0

 
(2.1

)
3.9

 
18.5

 
(6.5

)
12.0

 

Adjustments for assumed changes in policyholder liabilities

 
(7.2

)
2.5

 
(4.7

)
(12.0

)
4.2

 
(7.8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains on derivative instruments

 
16.2

 
(5.9

)
10.3

 
34.5

 
(12.5

)
22.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 
(306.5

)
43.3

 
(263.2

)
(512.6

)
74.3

 
(438.3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of prior service cost and actuarial loss included in net periodic benefit cost (4)

 
20.3

 
(8.4

)
11.9

 
60.9

 
(25.0

)
35.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrecognized postretirement benefit obligation

 
20.3

 
(8.4

)
11.9

 
60.9

 
(25.0

)
35.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

$
(227.5

)

$
15.8

 

$
(211.7

)

$
(724.8

)

$
141.3

 

$
(583.5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

For the nine months ended

 

 

 

September 30, 2014

 

September 30, 2014

 

 

 

Pre-Tax

 

Tax

 

After-Tax

 

Pre-Tax

 

Tax

 

After-Tax

 

 

 

(in millions)

 

Net unrealized gains (losses) on available-for-sale securities during the period

 

$
(301.8

)

$
103.8

 

$
(198.0

)

$
1,009.9

 

$
(340.7

)

$
669.2

 

Reclassification adjustment for (gains) losses included in net income (1)

 
4.3

 
(1.4

)
2.9

 
(57.4

)
18.8

 
(38.6

)

Adjustments for assumed changes in amortization patterns

 
28.2

 
(9.8

)
18.4

 
(71.0

)
24.9

 
(46.1

)

Adjustments for assumed changes in policyholder liabilities

 
149.8

 
(47.0

)
102.8

 
(434.7

)
146.8

 
(287.9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses) on available-for-sale securities

 
(119.5

)
45.6

 
(73.9

)
446.8

 
(150.2

)
296.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncredit component of impairment losses on fixed maturities, available-for-sale during the period

 
14.7

 
(5.0

)
9.7

 
82.6

 
(29.3

)
53.3

 

Adjustments for assumed changes in amortization patterns

 
3.1

 
(1.2

)
1.9

 
(5.3

)
1.9

 
(3.4

)

Adjustments for assumed changes in policyholder liabilities

 
(0.9

)
0.3

 
(0.6

)
(1.5

)
0.5

 
(1.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncredit component of impairment losses on fixed maturities, available-for-sale (2)

 
16.9

 
(5.9

)
11.0

 
75.8

 
(26.9

)
48.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains on derivative instruments during the period

 
48.4

 
(17.0

)
31.4

 
67.7

 
(23.8

)
43.9

 

Reclassification adjustment for (gains) losses included in net income (3)

 
(1.8

)
0.6

 
(1.2

)
6.3

 
(2.4

)
3.9

 

Adjustments for assumed changes in amortization patterns

 
(8.4

)
2.9

 
(5.5

)
(8.9

)
3.1

 
(5.8

)

Adjustments for assumed changes in policyholder liabilities

 
6.9

 
(2.4

)
4.5

 
0.4

 
(0.1

)
0.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains on derivative instruments

 
45.1

 
(15.9

)
29.2

 
65.5

 
(23.2

)
42.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 
(210.3

)
14.5

 
(195.8

)
(231.2

)
22.8

 
(208.4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of prior service cost and actuarial loss included in net periodic benefit cost (4)

 
5.5

 
(1.9

)
3.6

 
16.5

 
(5.8

)
10.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrecognized postretirement benefit obligation

 
5.5

 
(1.9

)
3.6

 
16.5

 
(5.8

)
10.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

$
(262.3

)

$
36.4

 

$
(225.9

)

$
373.4

 

$
(183.3

)

$
190.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Pre-tax reclassification adjustments relating to available-for-sale securities are reported in net realized capital gains (losses) on the consolidated statements of operations.

(2)

Represents the net impact of (1) unrealized gains resulting from reclassification of previously recognized noncredit impairment losses from OCI to net realized capital gains (losses) for fixed maturities with bifurcated OTTI that had additional credit losses or fixed maturities that previously had bifurcated OTTI that have now been sold or are intended to be sold and (2) unrealized losses resulting from reclassification of noncredit impairment losses for fixed maturities with bifurcated OTTI from net realized capital gains (losses) to OCI.

(3)

See Note 4, Derivative Financial Instruments — Cash Flow Hedges, for further details.

(4)

Pre-tax amortization of prior service cost and actuarial loss included in net periodic benefit cost, which is comprised of amortization of prior service cost (benefit) and recognized net actuarial (gain) loss, is reported in operating expenses on the consolidated statements of operations. See Note 7, Employee and Agent Benefits — Components of Net Periodic Benefit Cost, for further details.

 

Accumulated Other Comprehensive Income (Loss)

 

 

 

 

 

Noncredit

 

 

 

 

 

 

 

 

 

 

 

Net unrealized

 

component of

 

Net unrealized

 

Foreign

 

Unrecognized

 

Accumulated

 

 

 

gains on

 

impairment losses

 

gains (losses) on

 

currency

 

postretirement

 

other

 

 

 

available-for-sale

 

on fixed maturities

 

derivative

 

translation

 

benefit

 

comprehensive

 

 

 

securities

 

available-for-sale

 

instruments

 

adjustment

 

obligation

 

income (loss)

 

 

 

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at January 1, 2014

 

$
878.1

 

$
(167.0

)

$
(10.5

)

$
(361.5

)

$
(155.9

)

$
183.2

 

Other comprehensive income during the period, net of adjustments

 
335.2

 

—

 
38.4

 
(201.6

)

—

 
172.0

 

Amounts reclassified from AOCI

 
(38.6

)
48.9

 
3.9

 

—

 
10.7

 
24.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 
296.6

 
48.9

 
42.3

 
(201.6

)
10.7

 
196.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at September 30, 2014

 

$
1,174.7

 

$
(118.1

)

$
31.8

 

$
(563.1

)

$
(145.2

)

$
380.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at January 1, 2015

 

$
1,202.8

 

$
(105.1

)

$
50.6

 

$
(686.8

)

$
(411.1

)

$
50.4

 

Other comprehensive loss during the period, net of adjustments

 
(219.8

)

—

 
36.8

 
(419.3

)

—

 
(602.3

)

Amounts reclassified from AOCI

 
(1.2

)
17.9

 
(14.8

)

—

 
35.9

 
37.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 
(221.0

)
17.9

 
22.0

 
(419.3

)
35.9

 
(564.5

)

Purchase of subsidiary shares from noncontrolling interest

 

—

 

—

 

—

 
(10.3

)

—

 
(10.3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at September 30, 2015

 

$
981.8

 

$
(87.2

)

$
72.6

 

$
(1,116.4

)

$
(375.2

)

$
(524.4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncontrolling Interest

 

Interests held by unaffiliated parties in consolidated entities are reflected in noncontrolling interest, which represents the noncontrolling partners’ share of the underlying net assets of our consolidated subsidiaries. Noncontrolling interest that is not redeemable is reported in the equity section of the consolidated statements of financial position.

 

The noncontrolling interest holders in certain of our consolidated entities maintain an equity interest that is redeemable at the option of the holder, which may be exercised on varying dates. Since redemption of the noncontrolling interest is outside of our control, this interest is presented on the consolidated statements of financial position line item titled “Redeemable noncontrolling interest.” If the interest were to be redeemed, we would be required to purchase such interest at a redemption value based on fair value or a formula that management intended to reasonably approximate fair value based on a fixed multiple of earnings over a measurement period. As such, the carrying value of the redeemable noncontrolling interest is compared to the redemption value at each reporting period. Any adjustments to the carrying amount of the redeemable noncontrolling interest for changes in redemption value prior to exercise of the redemption option are determined after the attribution of net income or loss of the subsidiary and are recognized in the redemption value as they occur. Adjustments to the carrying value of redeemable noncontrolling interest result in adjustments to additional paid-in capital and/or retained earnings. Adjustments are recorded in retained earnings to the extent the redemption value of the redeemable noncontrolling interest exceeds its fair value and will impact the numerator in our earnings per share calculations. All other adjustments to the redeemable noncontrolling interest are recorded in additional paid-in capital.

 

Following is a reconciliation of the changes in the redeemable noncontrolling interest (in millions):

 

Balance at January 1, 2014

 

$
247.2

 

Net income attributable to redeemable noncontrolling interest

 
8.3

 

Contributions from redeemable noncontrolling interest

 
0.1

 

Distributions to redeemable noncontrolling interest

 
(14.4

)

Purchase of subsidiary shares from redeemable noncontrolling interest (1)

 
(216.8

)

Change in redemption value of redeemable noncontrolling interest

 
33.2

 

Foreign currency translation adjustment

 
(1.5

)

 

 

 

 

Balance at September 30, 2014

 

$
56.1

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2015

 

$
58.0

 

Net income attributable to redeemable noncontrolling interest

 
1.5

 

Contributions from redeemable noncontrolling interest

 
49.3

 

Distributions to redeemable noncontrolling interest

 
(10.7

)

Purchase of subsidiary shares from redeemable noncontrolling interest

 
(6.0

)

Change in redemption value of redeemable noncontrolling interest

 
3.6

 

Foreign currency translation adjustment

 
(17.7

)

 

 

 

 

Balance at September 30, 2015

 

$
78.0

 

 

 

 

 

 

 

 

(1)

During the third quarter of 2014, we increased our ownership stake in Columbus Circle Investors.