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Derivative Financial Instruments
 12 Months Ended
Dec. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Derivative Financial Instruments
The Company and its Affiliates may use derivative financial instruments to offset exposure to changes in interest rates, foreign currency exchange rates and markets.

In 2018, the Company entered into two separate pound sterling-denominated forward foreign currency contracts (the “forward contracts”) with a large financial institution (the “counterparty”). Concurrent to entering into each of the forward contracts, the Company also entered into two separate collar contracts (the “collar contracts”) with the same counterparty for the same notional amounts and expiration dates as each of the forward contracts. Under one of the forward contracts, the Company will deliver £325.3 million for $450.0 million in June 2021 and under the other forward contract, the Company will deliver £285.8 million for $400.0 million in February 2024. Under the collar contract expiring in 2021, the Company sold a put option with a lower strike price of 1.318 U.S. dollars per one pound sterling and purchased a call option with an upper strike price of 1.448 U.S. dollars per one pound sterling. Under the collar contract expiring in 2024, the Company sold a put option with a lower strike price of 1.288 U.S. dollars per one pound sterling and purchased a call option with an upper strike price of 1.535 U.S. dollars per one pound sterling.

The combinations of the forward contracts and the collar contracts were designated as net investment hedges against fluctuations in foreign currency exchange rates on certain of the Company’s investments in Affiliates with the pound sterling as their functional currency.

Changes in the fair values of the effective net investment hedges are reported in Foreign currency translation gain (loss) in the Consolidated Statements of Comprehensive Income. The Company assesses hedge effectiveness on a quarterly basis.
 
Certain of the Company’s Affiliates use forward foreign currency contracts to hedge the risk of foreign currency exchange rate movements, which were not significant for the years ended December 31, 2018 and 2019, respectively.

The following table summarizes the Company’s and its Affiliates’ derivative financial instruments measured at fair value on a recurring basis:
 
December 31, 2018
 
December 31, 2019
 
Assets
 
Liabilities
 
Assets
 
Liabilities
Forward contracts
$
32.0

 
$
(1.4
)
 
$
23.8

 
$
(1.0
)
Put options
—

 
(60.3
)
 
—

 
(31.0
)
Call options
34.1

 
—

 
15.1

 
—

Total
$
66.1

 
$
(61.7
)
 
$
38.9

 
$
(32.0
)


The Company’s forward contracts and collar contracts with the counterparty are governed by an International Swaps and Derivative Association Master Agreement, which provides for legally enforceable rights to set-off.  Given the contracts include this set-off right, the Company’s forward contracts and collar contracts were presented on a net basis in Other assets and were $4.9 million and $5.6 million, as of December 31, 2018 and 2019, respectively. Certain of the Company’s consolidated Affiliates have entered into contracts that do not have set-off rights and are, therefore, presented on a gross basis in Other assets and Other liabilities and were $0.9 million and $1.4 million, respectively, as of December 31, 2018, and $2.2 million and $1.0 million, respectively, as of December 31, 2019.
The following table summarizes the effect of the derivative financial instruments on the Consolidated Statements of Comprehensive Income and the Consolidated Statements of Income. For the year ended December 31, 2017, the Company and its Affiliates did not have any significant derivative financial instruments.
 
 
For the Year Ended December 31,
 
 
2018
 
2019
 
 
Gain (Loss) Recorded in Other Comprehensive Income
 
Loss Reclassified from Accumulated Other Comprehensive Loss into Earnings
 
Gain Recorded in Earnings from Excluded Components(1)
 
Gain (Loss) Recorded in Other Comprehensive Income
 
Gain Reclassified from Accumulated Other Comprehensive Income into Earnings
 
Gain Recorded in Earnings from Excluded Components(1)
Forward contracts
 
$
27.2

 
$
(0.1
)
 
$
3.8

 
$
(21.7
)
 
$
0.5

 
$
13.9

Put options
 
(17.8
)
 
—

 
—

 
29.3

 
—

 
—

Call options
 
(8.4
)
 
—

 
—

 
(19.0
)
 
—

 
—

Total
 
$
1.0

 
$
(0.1
)
 
$
3.8

 
$
(11.4
)
 
$
0.5

 
$
13.9

__________________________
(1) The excluded components of the forward contracts are recorded in earnings on a straight-line basis over the respective period of the contracts as a reduction to Interest expense.
The terms of the Company’s forward contracts and collar contracts require the Company and the counterparty to post cash collateral in certain circumstances throughout the duration of the contracts. As of December 31, 2018 and 2019, the Company held $3.1 million and $8.7 million of cash collateral from the counterparty, respectively, and the counterparty held $28.0 million and no cash collateral from the Company, respectively.

The Company also actively monitors its counterparty credit risk related to derivative financial instruments.  The Company’s derivative contracts include provisions to protect against counterparty rating downgrades, which, in certain cases, may give the Company a termination right.  The Company considers set-off rights and counterparty credit risk in the valuation of its positions and recognizes a credit valuation adjustment as appropriate.  The Company’s forward contracts and collar contracts include contingent features that could give rise to termination rights, if certain specified rating downgrades were to occur. As of December 31, 2019, there were no derivative arrangements with a contingent feature that were in a net liability position.