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Settlement Assets and Obligations (Tables) | 6 Months Ended
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Jun. 30, 2022
Settlement Assets and Obligations |
Schedule of Settlement Assets and Obligations | Settlement assets and obligations consisted of the following (in millions):
|  | June 30, 2022 |
Settlement assets: |  |  |
Cash and cash equivalents |  | $ | 602.7 |
Receivables from agents, Business Solutions customers, and others |  |  | 1,297.2 |
Less: Allowance for credit losses |  |  | (18.6 | )
Receivables from agents, Business Solutions customers, and others, net |  |  | 1,278.6 |
Investment securities |  |  | 1,422.3 |
Less: Allowance for credit losses |  |  | (0.1 | )
Investment securities, net |  |  | 1,422.2 |
Total settlement assets (a) |  | $ | 3,303.5 |
Settlement obligations: |  |  |
Money transfer, money order, and payment service payables |  | $ | 2,564.4 |
Payables to agents |  |  | 739.1 |
Total settlement obligations (a) |  | $ | 3,303.5 |
|  | December 31, 2021 |
Settlement assets: |  |  |
Cash and cash equivalents |  | $ | 835.5 |
Receivables from agents, Business Solutions customers, and others |  |  | 1,198.8 |
Less: Allowance for credit losses |  |  | (23.7 | )
Receivables from agents, Business Solutions customers, and others, net |  |  | 1,175.1 |
Investment securities |  |  | 1,398.9 |
Total settlement assets |  | $ | 3,409.5 |
Settlement obligations: |  |  |
Money transfer, money order, and payment service payables |  | $ | 2,838.9 |
Payables to agents |  |  | 570.6 |
Total settlement obligations |  | $ | 3,409.5 |
(a) Settlement assets and Settlement obligations include Assets held for sale and Liabilities associated with assets held for sale of $196.9 million and $566.0 million as of June 30, 2022 and December 31, 2021, respectively (see Note 4).
Summary of Activity in the Allowance for Credit Losses | The following tables summarize the activity in the allowance for credit losses on receivables from agents and others, and Business Solutions customers (in millions):
|  | Agents and |  |  | Business Solutions |
|  | Others |  |  | Customers |
Allowance for credit losses as of January 1, 2022 |  | $ | 18.0 |  |  | $ | 5.7 |
Current period provision for expected credit losses (a) |  |  | 1.9 |  |  |  | 0.4 |
Write-offs charged against the allowance |  |  | (3.1 | ) |  |  | (0.4 | )
Recoveries of amounts previously written off |  |  | 1.7 |  |  |  | — |
Impacts of foreign currency exchange rates, divestitures, and other |  |  | (0.1 | ) |  |  | (4.2 | )
Allowance for credit losses as of March 31, 2022 |  |  | 18.4 |  |  |  | 1.5 |
Current period provision for expected credit losses (a) |  |  | 1.8 |  |  |  | 2.1 |
Write-offs charged against the allowance |  |  | (1.3 | ) |  |  | (1.4 | )
Recoveries of amounts previously written off |  |  | 1.0 |  |  |  | — |
Impacts of foreign currency exchange rates and other |  |  | (3.0 | ) |  |  | (0.5 | )
Allowance for credit losses as of June 30, 2022 |  | $ | 16.9 |  |  | $ | 1.7 |
|  | Agents and |  |  | Business Solutions |
|  | Others |  |  | Customers |
Allowance for credit losses as of January 1, 2021 |  | $ | 49.3 |  |  | $ | 3.9 |
Current period provision for expected credit losses (a) |  |  | 2.3 |  |  |  | 1.5 |
Write-offs charged against the allowance |  |  | (3.3 | ) |  |  | (0.4 | )
Recoveries of amounts previously written off |  |  | 1.9 |  |  |  | — |
Impacts of foreign currency exchange rates and other |  |  | (0.5 | ) |  |  | (0.1 | )
Allowance for credit losses as of March 31, 2021 |  |  | 49.7 |  |  |  | 4.9 |
Current period provision for expected credit losses (a) |  |  | 3.2 |  |  |  | 1.9 |
Write-offs charged against the allowance |  |  | (34.4 | ) |  |  | (0.4 | )
Recoveries of amounts previously written off |  |  | 0.6 |  |  |  | — |
Impacts of foreign currency exchange rates and other |  |  | (0.6 | ) |  |  | (0.1 | )
Allowance for credit losses as of June 30, 2021 |  | $ | 18.5 |  |  | $ | 6.3 |
(a) Provision does not include losses from chargebacks or fraud associated with transactions initiated through the Company’s digital channels, as these losses are not credit-related. The Company recognized losses that were not credit-related of $10.0 million and $7.7 million for the three months ended March 31, 2022 and June 30, 2022, respectively, and $13.7 million and $14.5 million for the three months ended March 31, 2021 and June 30, 2021, respectively.
Components of Investment Securities | The components of investment securities are as follows (in millions):
|  |  |  |  |  |  |  | Gross |  |  | Gross |  |  | Net |
|  | Amortized |  |  | Fair |  |  | Unrealized |  |  | Unrealized |  |  | Unrealized |
June 30, 2022 |  | Cost |  |  | Value |  |  | Gains |  |  | Losses (b) |  |  | Gains/(Losses) |
Settlement assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | 6.6 |  |  | $ | 6.6 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State and municipal debt securities (a) |  |  | 1,305.7 |  |  |  | 1,256.0 |  |  |  | 1.9 |  |  |  | (51.6 | ) |  |  | (49.7 | )
State and municipal variable-rate demand notes |  |  | 89.8 |  |  |  | 89.8 |  |  |  | — |  |  |  | — |  |  |  | — |
Corporate debt securities |  |  | 61.9 |  |  |  | 57.5 |  |  |  | — |  |  |  | (4.4 | ) |  |  | (4.4 | )
United States government agency mortgage-backed securities |  |  | 19.4 |  |  |  | 19.0 |  |  |  | — |  |  |  | (0.4 | ) |  |  | (0.4 | )
Total available-for-sale securities |  |  | 1,476.8 |  |  |  | 1,422.3 |  |  |  | 1.9 |  |  |  | (56.4 | ) |  |  | (54.5 | )
Total investment securities |  | $ | 1,483.4 |  |  | $ | 1,428.9 |  |  | $ | 1.9 |  |  | $ | (56.4 | ) |  | $ | (54.5 | )
|  |  |  |  |  |  |  | Gross |  |  | Gross |  |  | Net |
|  | Amortized |  |  | Fair |  |  | Unrealized |  |  | Unrealized |  |  | Unrealized |
December 31, 2021 |  | Cost |  |  | Value |  |  | Gains |  |  | Losses |  |  | Gains/(Losses) |
Settlement assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | 7.9 |  |  | $ | 7.9 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State and municipal debt securities (a) |  |  | 1,182.6 |  |  |  | 1,219.9 |  |  |  | 39.8 |  |  |  | (2.5 | ) |  |  | 37.3 |
State and municipal variable-rate demand notes |  |  | 84.8 |  |  |  | 84.8 |  |  |  | — |  |  |  | — |  |  |  | — |
Corporate and other debt securities |  |  | 58.1 |  |  |  | 57.8 |  |  |  | 0.2 |  |  |  | (0.5 | ) |  |  | (0.3 | )
United States government agency mortgage- backed securities |  |  | 35.6 |  |  |  | 36.4 |  |  |  | 0.8 |  |  |  | — |  |  |  | 0.8 |
Total available-for-sale securities |  |  | 1,361.1 |  |  |  | 1,398.9 |  |  |  | 40.8 |  |  |  | (3.0 | ) |  |  | 37.8 |
Total investment securities |  | $ | 1,369.0 |  |  | $ | 1,406.8 |  |  | $ | 40.8 |  |  | $ | (3.0 | ) |  | $ | 37.8 |
(a) The substantial majority of these securities are fixed-rate instruments. (b) As of June 30, 2022, the Company held 390 investment securities that were in an unrealized loss position, 387 of which have a total fair value of $1,001.5 million and unrealized losses of $55.5 million and have been in a loss position for less than twelve months and three of which have a total fair value of $7.1 million and unrealized losses of $0.9 million and have been in a loss position for greater than twelve months. As discussed above, the Company's provision for credit losses on its investment securities for the three and six months ended June 30, 2022 and the related allowance for credit losses as of June 30, 2022 were immaterial, as the increase in unrealized losses was driven by a rise in U.S. Treasury interest rates over the six months ended June 30, 2022. The Company does not intend to sell these securities and does not expect it will be required to sell these securities prior to recovering their amortized cost basis.
Contractual Maturities of Debt Securities | The following summarizes the contractual maturities of available-for-sale securities within Settlement assets as of June 30, 2022 (in millions):
|  | Fair Value |
Due within 1 year |  | $ | 146.6 |
Due after 1 year through 5 years |  |  | 581.7 |
Due after 5 years through 10 years |  |  | 529.2 |
Due after 10 years |  |  | 164.8 |
Total |  | $ | 1,422.3 |

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