Stockholders' Equity

6 Months Ended

Jun. 30, 2019

Stockholders' Equity

Stockholders' Equity

10. Stockholders’ Equity

Common Stock Dividends

	For the three months ended				For the six months ended
	June 30,				June 30,
	2019		2018		2019		2018
Dividends declared per common share	$	0.54	$	0.52	$	1.08	$	1.03

Reconciliation of Outstanding Common Shares

	For the three months ended		For the six months ended
	June 30,		June 30,
	2019	2018	2019	2018
	(in millions)
Beginning balance	278.2	287.7	279.5	289.0
Shares issued	0.4	0.3	2.2	2.2
Treasury stock acquired	—	(3.4)	(3.1)	(6.6)
Ending balance	278.6	284.6	278.6	284.6

In February 2016, our Board of Directors authorized a share repurchase program of up to $400.0 million of our outstanding common stock, which was completed in February 2018. In May 2017, our Board of Directors authorized a share repurchase program of up to $250.0 million of our outstanding common stock, which was completed in April 2018. In May 2018, our Board of Directors authorized a share repurchase program of up to $300.0 million of our outstanding common stock, which was completed in December 2018. In November 2018, our Board of Directors authorized a share repurchase program of up to $500.0 million of our outstanding common stock. In the first quarter of 2019, we suspended purchases of the remaining $295.3 million available under the November 2018 authorization. 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, 2019						June 30, 2019
	Pre-Tax		Tax		After-Tax		Pre-Tax		Tax		After-Tax
	(in millions)
Net unrealized gains on available-for-sale securities during the period	$	1,804.0	$	(394.9)	$	1,409.1	$	3,621.0	$	(787.4)	$	2,833.6
Reclassification adjustment for losses included in net income (1)		27.9		(5.5)		22.4		36.6		(7.2)		29.4
Adjustments for assumed changes in amortization patterns		(117.6)		24.7		(92.9)		(239.7)		50.4		(189.3)
Adjustments for assumed changes in policyholder liabilities		(462.3)		108.6		(353.7)		(762.6)		178.1		(584.5)
Net unrealized gains on available-for-sale securities		1,252.0		(267.1)		984.9		2,655.3		(566.1)		2,089.2
Noncredit component of impairment losses on fixed maturities, available-for-sale during the period		0.3		—		0.3		(2.5)		0.6		(1.9)
Adjustments for assumed changes in amortization patterns		(0.8)		0.1		(0.7)		(1.2)		0.2		(1.0)
Adjustments for assumed changes in policyholder liabilities		0.1		—		0.1		0.1		—		0.1
Noncredit component of impairment losses on fixed maturities, available-for-sale (2)		(0.4)		0.1		(0.3)		(3.6)		0.8		(2.8)
Net unrealized gains on derivative instruments during the period		12.8		(2.7)		10.1		4.3		(0.9)		3.4
Reclassification adjustment for gains included in net income (3)		(12.5)		2.5		(10.0)		(14.8)		2.8		(12.0)
Adjustments for assumed changes in amortization patterns		0.6		(0.1)		0.5		2.5		(0.5)		2.0
Adjustments for assumed changes in policyholder liabilities		1.2		(0.2)		1.0		4.8		(1.1)		3.7
Net unrealized gains (losses) on derivative instruments		2.1		(0.5)		1.6		(3.2)		0.3		(2.9)
Foreign currency translation adjustment during the period		4.6		(2.2)		2.4		45.5		(4.8)		40.7
Reclassification adjustment for losses included in net income (4)		26.5		—		26.5		26.1		—		26.1
Foreign currency translation adjustment		31.1		(2.2)		28.9		71.6		(4.8)		66.8
Unrecognized postretirement benefit obligation during the period		63.4		(17.1)		46.3		63.4		(17.1)		46.3
Amortization of amounts included in net periodic benefit cost (5)		14.9		(4.0)		10.9		30.6		(8.2)		22.4
Net unrecognized postretirement benefit obligation		78.3		(21.1)		57.2		94.0		(25.3)		68.7
Other comprehensive income	$	1,363.1	$	(290.8)	$	1,072.3	$	2,814.1	$	(595.1)	$	2,219.0

	For the three months ended						For the six months ended
	June 30, 2018						June 30, 2018
	Pre-Tax		Tax		After-Tax		Pre-Tax		Tax		After-Tax
	(in millions)
Net unrealized losses on available-for-sale securities during the period	$	(777.8)	$	158.1	$	(619.7)	$	(2,081.5)	$	438.5	$	(1,643.0)
Reclassification adjustment for losses included in net income (1)		26.5		(5.6)		20.9		47.2		(10.0)		37.2
Adjustments for assumed changes in amortization patterns		54.2		(11.4)		42.8		140.4		(29.5)		110.9
Adjustments for assumed changes in policyholder liabilities		102.2		(12.3)		89.9		280.7		(57.4)		223.3
Net unrealized losses on available-for-sale securities		(594.9)		128.8		(466.1)		(1,613.2)		341.6		(1,271.6)
Noncredit component of impairment losses on fixed maturities, available-for-sale during the period		0.8		(0.2)		0.6		12.0		(2.6)		9.4
Adjustments for assumed changes in amortization patterns		—		0.1		0.1		1.3		(0.2)		1.1
Adjustments for assumed changes in policyholder liabilities		0.1		—		0.1		(0.5)		0.1		(0.4)
Noncredit component of impairment losses on fixed maturities, available-for-sale (2)		0.9		(0.1)		0.8		12.8		(2.7)		10.1
Net unrealized gains on derivative instruments during the period		27.7		(5.8)		21.9		8.5		(1.8)		6.7
Reclassification adjustment for gains included in net income (3)		(3.3)		0.5		(2.8)		(5.7)		0.9		(4.8)
Adjustments for assumed changes in amortization patterns		—		—		—		0.9		(0.2)		0.7
Adjustments for assumed changes in policyholder liabilities		1.4		(0.2)		1.2		4.2		(0.9)		3.3
Net unrealized gains on derivative instruments		25.8		(5.5)		20.3		7.9		(2.0)		5.9
Foreign currency translation adjustment		(247.0)		10.9		(236.1)		(180.1)		9.8		(170.3)
Amortization of amounts included in net periodic benefit cost (5)		12.3		(3.5)		8.8		24.5		(7.0)		17.5
Net unrecognized postretirement benefit obligation		12.3		(3.5)		8.8		24.5		(7.0)		17.5
Other comprehensive loss	$	(802.9)	$	130.6	$	(672.3)	$	(1,748.1)	$	339.7	$	(1,408.4)

(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 – Effect of Fair Value and Cash Flow Hedges on Consolidated Statements of Operations, for further details.

(4) Pre-tax reclassification adjustments primarily relate to deconsolidated sponsored investment funds and are reported in net realized capital gains (losses) on the consolidated statements of operations. For both the three and six months ended June 30, 2019, $5.7 million of this reclassification relates to noncontrolling interest and is reported in net income attributable to noncontrolling interest on the consolidated statements of operations.

(5) Amount is comprised of amortization of prior service cost (benefit) and recognized net actuarial (gain) loss, which is reported in operating expenses on the consolidated statements of operations. See Note 8, 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		currency		postretirement		other
	available-for-sale		on fixed maturities		on derivative		translation		benefit		comprehensive
	securities		available-for-sale		instruments		adjustment		obligation		income (loss)
	(in millions)
Balances as of April 1, 2018	$	914.0	$	(64.2)	$	34.0	$	(909.8)	$	(443.3)	$	(469.3)
Other comprehensive loss during the period, net of adjustments		(487.0)		—		23.1		(232.4)		—		(696.3)
Amounts reclassified from AOCI		20.9		0.8		(2.8)		—		8.8		27.7
Other comprehensive loss		(466.1)		0.8		20.3		(232.4)		8.8		(668.6)
Balances as of June 30, 2018	$	447.9	$	(63.4)	$	54.3	$	(1,142.2)	$	(434.5)	$	(1,137.9)
Balances as of April 1, 2019	$	1,294.3	$	(49.6)	$	59.9	$	(1,222.1)	$	(501.4)	$	(418.9)
Other comprehensive income during the period, net of adjustments		962.4		(0.3)		11.6		2.5		46.3		1,022.5
Amounts reclassified from AOCI		22.4		—		(10.0)		20.8		10.9		44.1
Other comprehensive income		984.8		(0.3)		1.6		23.3		57.2		1,066.6
Balances as of June 30, 2019	$	2,279.1	$	(49.9)	$	61.5	$	(1,198.8)	$	(444.2)	$	647.7

			Noncredit
	Net unrealized		component of		Net unrealized		Foreign		Unrecognized		Accumulated
	gains on		impairment losses		gains		currency		postretirement		other
	available-for-sale		on fixed maturities		on derivative		translation		benefit		comprehensive
	securities		available-for-sale		instruments		adjustment		obligation		income (loss)
	(in millions)
Balances as of January 1, 2018	$	1,470.7	$	(58.3)	$	42.7	$	(918.5)	$	(371.1)	$	165.5
Other comprehensive loss during the period, net of adjustments		(1,308.8)		—		10.7		(167.5)		—		(1,465.6)
Amounts reclassified from AOCI		37.2		10.1		(4.8)		—		17.5		60.0
Other comprehensive loss		(1,271.6)		10.1		5.9		(167.5)		17.5		(1,405.6)
Effects of implementation of accounting change related to equity investments, net		(1.0)		—		—		—		—		(1.0)
Effects of implementation of accounting change accounting change related to revenue recognition, net		—		—		—		25.6		—		25.6
Effects of implementation of accounting change related to the reclassification of certain tax effects, net		249.8		(15.2)		5.7		(81.8)		(80.9)		77.6
Balances as of June 30, 2018	$	447.9	$	(63.4)	$	54.3	$	(1,142.2)	$	(434.5)	$	(1,137.9)
Balances as of January 1, 2019	$	190.0	$	(47.1)	$	64.4	$	(1,259.5)	$	(512.9)	$	(1,565.1)
Other comprehensive income during the period, net of adjustments		2,059.7		(2.8)		9.1		40.3		46.3		2,152.6
Amounts reclassified from AOCI		29.4		—		(12.0)		20.4		22.4		60.2
Other comprehensive income		2,089.1		(2.8)		(2.9)		60.7		68.7		2,212.8
Balances as of June 30, 2019	$	2,279.1	$	(49.9)	$	61.5	$	(1,198.8)	$	(444.2)	$	647.7

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 excluded from stockholders’ equity and reported separately as redeemable noncontrolling interest on the consolidated statements of financial position. 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):

	For the three months ended				For the six months ended
	June 30,				June 30,
	2019		2018		2019		2018
	(in millions)
Balance at beginning of period	$	537.7	$	127.8	$	391.2	$	101.3
Net income attributable to redeemable noncontrolling interest		4.0		1.3		24.3		2.1
Redeemable noncontrolling interest of deconsolidated entities (1)		(370.0)		—		(370.0)		(3.2)
Contributions from redeemable noncontrolling interest		154.0		17.4		297.7		56.4
Distributions to redeemable noncontrolling interest		(25.8)		(5.8)		(46.1)		(15.7)
Change in redemption value of redeemable noncontrolling interest		(1.0)		—		1.7		(0.6)
Stock-based compensation attributable to redeemable noncontrolling interest		0.1		—		0.1		—
Other comprehensive income (loss) attributable to redeemable noncontrolling interest		5.5		(1.8)		5.6		(1.4)
Balance at end of period	$	304.5	$	138.9	$	304.5	$	138.9

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