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Stockholders' Equity
 6 Months Ended
Jun. 30, 2016
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 as of January 1, 2015

 
3.0

 
10.0

 
293.9

 

Shares issued

 

—

 

—

 
2.3

 

Treasury stock acquired

 

—

 

—

 
(1.5)

 

Preferred stock redemption

 
(3.0)

 
(10.0)

 

—

 

 

 

 

 

 

 

 

 

Outstanding shares as of June 30, 2015

 

—

 

—

 
294.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding shares as of January 1, 2016

 

—

 

—

 
291.4

 

Shares issued

 

—

 

—

 
1.9

 

Treasury stock acquired

 

—

 

—

 
(5.3)

 

 

 

 

 

 

 

 

 

Outstanding shares as of June 30, 2016

 

—

 

—

 
288.0

 

 

 

 

 

 

 

 

 

 

On June 30, 2015, we redeemed our 3.0 million shares of series A preferred stock for $300.0 million and our 10.0 million shares of series B preferred stock for $250.0 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 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, which was completed in October 2015. In October 2015, 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 2016. In February 2016, our Board of Directors authorized a share repurchase program of up to $400.0 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 six months ended

 

 

 

June 30, 2016

 

June 30, 2016

 

 

 

Pre-Tax

 

Tax

 

After-Tax

 

Pre-Tax

 

Tax

 

After-Tax

 

 

 

(in millions)

 

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

 

$
954.2

 

$
(330.6)

 

$
623.6

 

$
1,866.1

 

$
(643.5)

 

$
1,222.6

 

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

 
(35.3)

 
12.4

 
(22.9)

 
20.0

 
(7.0)

 
13.0

 

Adjustments for assumed changes in amortization patterns

 
(56.0)

 
19.7

 
(36.3)

 
(112.1)

 
39.3

 
(72.8)

 

Adjustments for assumed changes in policyholder liabilities

 
(394.1)

 
132.9

 
(261.2)

 
(687.2)

 
232.0

 
(455.2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains on available-for-sale securities

 
468.8

 
(165.6)

 
303.2

 
1,086.8

 
(379.2)

 
707.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 
6.6

 
(2.3)

 
4.3

 
(0.9)

 
0.3

 
(0.6)

 

Adjustments for assumed changes in amortization patterns

 
(2.4)

 
0.8

 
(1.6)

 
(1.6)

 
0.6

 
(1.0)

 

Adjustments for assumed changes in policyholder liabilities

 
(0.1)

 

—

 
(0.1)

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 
4.1

 
(1.5)

 
2.6

 
(2.5)

 
0.9

 
(1.6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains on derivative instruments during the period

 
16.2

 
(5.6)

 
10.6

 
21.9

 
(7.6)

 
14.3

 

Reclassification adjustment for gains included in net income (3)

 
(3.1)

 
0.9

 
(2.2)

 
(6.1)

 
1.8

 
(4.3)

 

Adjustments for assumed changes in amortization patterns

 
2.4

 
(0.8)

 
1.6

 
1.0

 
(0.3)

 
0.7

 

Adjustments for assumed changes in policyholder liabilities

 
1.7

 
(0.5)

 
1.2

 
2.7

 
(0.9)

 
1.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains on derivative instruments

 
17.2

 
(6.0)

 
11.2

 
19.5

 
(7.0)

 
12.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 
25.1

 
(11.0)

 
14.1

 
164.0

 
(20.2)

 
143.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 
13.7

 
(5.7)

 
8.0

 
27.4

 
(11.4)

 
16.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrecognized postretirement benefit obligation

 
13.7

 
(5.7)

 
8.0

 
27.4

 
(11.4)

 
16.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

$
528.9

 

$
(189.8)

 

$
339.1

 

$
1,295.2

 

$
(416.9)

 

$
878.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

For the six months ended

 

 

 

June 30, 2015

 

June 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

 

$
(1,090.4)

 

$
372.6

 

$
(717.8)

 

$
(807.1)

 

$
274.3

 

$
(532.8)

 

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

 
5.1

 
(1.7)

 
3.4

 
(8.5)

 
3.0

 
(5.5)

 

Adjustments for assumed changes in amortization patterns

 
95.7

 
(33.5)

 
62.2

 
82.4

 
(28.8)

 
53.6

 

Adjustments for assumed changes in policyholder liabilities

 
526.1

 
(180.3)

 
345.8

 
357.3

 
(121.9)

 
235.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized losses on available-for-sale securities

 
(463.5)

 
157.1

 
(306.4)

 
(375.9)

 
126.6

 
(249.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 
5.4

 
(2.0)

 
3.4

 
26.9

 
(9.4)

 
17.5

 

Adjustments for assumed changes in amortization patterns

 

—

 

—

 

—

 
(1.3)

 
0.5

 
(0.8)

 

Adjustments for assumed changes in policyholder liabilities

 

—

 

—

 

—

 
0.2

 

—

 
0.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 
5.4

 
(2.0)

 
3.4

 
25.8

 
(8.9)

 
16.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses) on derivative instruments during the period

 
(23.9)

 
8.5

 
(15.4)

 
28.4

 
(9.9)

 
18.5

 

Reclassification adjustment for gains included in net income (3)

 
(7.7)

 
2.6

 
(5.1)

 
(17.8)

 
6.0

 
(11.8)

 

Adjustments for assumed changes in amortization patterns

 
2.4

 
(0.8)

 
1.6

 
12.5

 
(4.4)

 
8.1

 

Adjustments for assumed changes in policyholder liabilities

 
4.4

 
(1.6)

 
2.8

 
(4.8)

 
1.7

 
(3.1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses) on derivative instruments

 
(24.8)

 
8.7

 
(16.1)

 
18.3

 
(6.6)

 
11.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 
(38.1)

 
(4.4)

 
(42.5)

 
(206.1)

 
31.0

 
(175.1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 
20.3

 
(8.3)

 
12.0

 
40.6

 
(16.6)

 
24.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrecognized postretirement benefit obligation

 
20.3

 
(8.3)

 
12.0

 
40.6

 
(16.6)

 
24.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

$
(500.7)

 

$
151.1

 

$
(349.6)

 

$
(497.3)

 

$
125.5

 

$
(371.8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 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 as of 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

 
(243.8)

 

—

 
23.5

 
(170.4)

 

—

 
(390.7)

 

Amounts reclassified from AOCI

 
(5.5)

 
16.9

 
(11.8)

 

—

 
24.0

 
23.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 
(249.3)

 
16.9

 
11.7

 
(170.4)

 
24.0

 
(367.1)

 

Purchase of subsidiary shares from noncontrolling interest

 

—

 

—

 

—

 
(9.9)

 

—

 
(9.9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances as of June 30, 2015

 

$
953.5

 

$
(88.2)

 

$
62.3

 

$
(867.1)

 

$
(387.1)

 

$
(326.6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances as of January 1, 2016

 

$
732.1

 

$
(86.0)

 

$
69.8

 

$
(1,148.2)

 

$
(450.2)

 

$
(882.5)

 

Other comprehensive income during the period, net of adjustments

 
694.6

 
(1.6)

 
16.8

 
138.0

 

—

 
847.8

 

Amounts reclassified from AOCI

 
13.0

 

—

 
(4.3)

 

—

 
16.0

 
24.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 
707.6

 
(1.6)

 
12.5

 
138.0

 
16.0

 
872.5

 

Purchase of subsidiary shares from noncontrolling interest

 

—

 

—

 

—

 
(9.3)

 

—

 
(9.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances as of June 30, 2016

 

$
1,439.7

 

$
(87.6)

 

$
82.3

 

$
(1,019.5)

 

$
(434.2)

 

$
(19.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.” Our redeemable noncontrolling interest primarily relates to consolidated sponsored investment funds for which interests are redeemed at fair value from the net assets of the funds.

 

For our redeemable noncontrolling interest related to other consolidated subsidiaries, redemptions are required to be purchased at fair value or a value based on a formula that management intended to reasonably approximate fair value based on a fixed multiple of earnings over a measurement period. 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 as of January 1, 2015

 

$
58.0

 

Net income attributable to redeemable noncontrolling interest

 
2.1

 

Contributions from redeemable noncontrolling interest

 
24.7

 

Distributions to redeemable noncontrolling interest

 
(4.4)

 

Purchase of subsidiary shares from redeemable noncontrolling interest

 
(6.5)

 

Change in redemption value of redeemable noncontrolling interest

 
3.3

 

Foreign currency translation adjustment

 
(5.6)

 

 

 

 

 

Balance as of June 30, 2015

 

$
71.6

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2016

 

$
85.7

 

Net income attributable to redeemable noncontrolling interest

 
3.2

 

Redeemable noncontrolling interest of newly consolidated entities (1)

 
179.5

 

Redeemable noncontrolling interest of deconsolidated entities (2)

 
(18.7)

 

Contributions from redeemable noncontrolling interest

 
121.3

 

Distributions to redeemable noncontrolling interest

 
(29.6)

 

Purchase of subsidiary shares from redeemable noncontrolling interest

 
(8.1)

 

Change in redemption value of redeemable noncontrolling interest

 
(0.4)

 

Foreign currency translation adjustment

 
4.2

 

 

 

 

 

Balance as of June 30, 2016

 

$
337.1

 

 

 

 

 

 

 

(1)

Effective January 1, 2016, certain sponsored investment funds were consolidated as a result of the implementation of new accounting guidance. See Note 2, Variable Interest Entities, for further details.

(2)

We deconsolidated certain sponsored investment funds as they no longer met the requirements for consolidation.