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Derivatives | 12 Months Ended
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Dec. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives | Derivatives The Company uses derivative instruments to manage the risk of changes in interest rates and foreign exchange rates, arising from both its business operations and economic conditions. Specifically, the Company enters into derivative instruments to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and cash payments, the values of which are driven by interest rates, principally relating to the Company’s investments and borrowings. Additionally, the Company’s foreign operations expose the Company to fluctuations in foreign interest rates and exchange rates. The Company enters into derivative instruments to protect the value or fix certain of these foreign denominated amounts in terms of its functional currency, the U.S. dollar. Derivative instruments used in the Company’s risk management activities may be designated as qualifying hedge accounting relationships (“designated hedges”) or otherwise used for economic hedging purposes (“non-designated hedges”). Fair value of derivative assets and derivative liabilities were as follows:
|  | December 31, 2018 |  | December 31, 2017
(In thousands) |  | Designated Hedges |  | Non-Designated Hedges |  | Total |  | Designated Hedges |  | Non-Designated Hedges |  | Total
Derivative Assets |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | $ | 31,127 |  |  | $ | 1,069 |  |  | $ | 32,196 |  |  | $ | 8,009 |  |  | $ | 975 |  |  | $ | 8,984 |
Interest rate contracts |  | 862 |  |  | 500 |  |  | 1,362 |  |  | — |  |  | 1,168 |  |  | 1,168 |
Included in other assets |  | $ | 31,989 |  |  | $ | 1,569 |  |  | $ | 33,558 |  |  | $ | 8,009 |  |  | $ | 2,143 |  |  | $ | 10,152 |
Derivative Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  | $ | 6,193 |  |  | $ | 211 |  |  | $ | 6,404 |  |  | $ | 39,101 |  |  | $ | 5,307 |  |  | $ | 44,408 |
Interest rate contracts |  | — |  |  | 126,404 |  |  | 126,404 |  |  | — |  |  | 160,440 |  |  | 160,440 |
Included in accrued and other liabilities |  | $ | 6,193 |  |  | $ | 126,615 |  |  | $ | 132,808 |  |  | $ | 39,101 |  |  | $ | 165,747 |  |  | $ | 204,848 |
Certain counterparties to the derivative instruments require the Company to deposit cash or other eligible collateral. The Company had $0.8 million and $1.9 million of cash collateral on deposit as of December 31, 2018 and 2017, respectively, included in other assets. Foreign Exchange Contracts The following table summarizes the aggregate notional amounts of designated and non-designated foreign exchange contracts in place at December 31, 2018, along with certain key terms:
Hedged Currency |  | Instrument Type |  | Notional Amount (in thousands) |  | FX Rates ($ per unit of foreign currency) |  | Range of Expiration Dates
|  | Designated |  | Non-Designated |  |
EUR |  | FX Collar |  | € | 84,549 |  |  | € | 114 |  |  | Min $1.06/ Max $1.53 |  | October 2019 to November 2020
GBP |  | FX Collar |  | £ | 39,881 |  |  | £ | 2,309 |  |  | Min $1.45 / Max $1.82 |  | June 2019 to December 2019
EUR |  | FX Forward |  | € | 431,874 |  |  | € | 14,944 |  |  | Min $1.10 / Max $1.38 |  | January 2019 to December 2023
GBP |  | FX Forward |  | £ | 88,313 |  |  | £ | 26,257 |  |  | Min $1.24 / Max $1.29 |  | May 2019 to December 2020
Designated Net Investment Hedges The Company’s foreign denominated net investments in subsidiaries or joint ventures were €614.0 million and £235.7 million, or a total of $1.0 billion at December 31, 2018, and €499.2 million, £250.6 million and NOK771.2 million, or a total of $1.1 billion at December 31, 2017. The Company entered into foreign exchange contracts to hedge the foreign currency exposure of certain investments in foreign subsidiaries or equity method joint ventures, designated as net investment hedges, as follows:
• | forward contracts whereby the Company agrees to sell an amount of foreign currency for an agreed upon amount of U.S. dollars; and
• | foreign exchange collars (caps and floors) without upfront premium costs, which consist of a combination of currency options with single date expirations, whereby the Company gains protection against foreign currency weakening below a specified level and pays for that protection by giving up gains from foreign currency appreciation above a specified level.
Foreign exchange contracts are used to protect the Company’s foreign denominated investments from adverse foreign currency fluctuations, with notional amounts and termination dates based upon the anticipated return of capital from the investments. Release of accumulated other comprehensive income ("AOCI") related to net investment hedges occurs upon losing a controlling financial interest in an investment or obtaining control over an equity method investment. Upon sale, complete or substantially complete liquidation of an investment in a foreign subsidiary, or partial sale of an equity method investment, the gain or loss on the related net investment hedge is reclassified from AOCI to other gain (loss) as summarized below.
|  | Year Ended December 31,
(In thousands) |  | 2018 |  | 2017 |  | 2016
Designated net investment hedges: |  |  |  |  |  |
Realized gain (loss) transferred from AOCI to earnings |  | $ | 7,426 |  |  | $ | (3,931 | ) |  | 62 |
Non-Designated Hedges At the end of each quarter, the Company reassesses the effectiveness of its net investment hedges and as appropriate, dedesignates the portion of the derivative notional that is in excess of the beginning balance of its net investments. Any unrealized gain or loss on the dedesignated portion of net investment hedges is recorded in other gain (loss).
|  | Year Ended December 31,
(In thousands) |  | 2018 |  | 2017 |  | 2016
Non-designated net investment hedges: |  |  |  |  |  |
Unrealized gain (loss) transferred from AOCI to earnings |  | $ | 3,726 |  |  | $ | (3,928 | ) |  | 1,600 |
Interest Rate Contracts The Company uses various interest rate contracts, some of which may be designated as cash flows hedges, to limit its exposure to changes in interest rates on various floating rate debt obligations. At December 31, 2018, the Company held the following interest rate contracts:
|  | Notional Amount (in thousands) |  |  |  | Strike Rate / Forward Rate |  |
Instrument Type |  | Designated |  | Non-Designated |  | Index |  |  | Expiration
Interest rate swap (1) |  | $ | — |  |  | $ | 2,000,000 |  |  | 3-Month LIBOR |  | 3.39% |  | December 2019
Interest rate caps |  | $ | — |  |  | $ | 4,009,957 |  |  | 1-Month LIBOR |  | 3.0% - 4.5% |  | January 2019 to December 2020
Interest rate caps |  | $ | — |  |  | $ | 52,155 |  |  | 3-Month LIBOR |  | 2.24% |  | March 2019
Interest rate caps |  | € | 247,513 |  |  | € | 441,151 |  |  | 3-Month EURIBOR |  | 0.75% - 1.5% |  | October 2019 to November 2023
Interest rate caps |  | £ | — |  |  | £ | 363,716 |  |  | 3-Month GBP LIBOR |  | 1.5% - 2.5% |  | November 2019 to February 2020
Deliverable swap futures |  | $ | — |  |  | $ | 19,000 |  |  | (2) |  | (2) |  | March 2019
__________
(1) | Represents a forward-starting interest rate swap that has a maturity date in December 2029, with mandatory settlement at fair value in December 2019.
(2) | A consolidated sponsored investment company sold a 10-year USD deliverable swap futures contract to economically hedge the interest rate exposure on its long dated fixed rate securities.
The following table summarizes amounts recorded in other gain (loss) related to interest rate derivative contracts:
|  | Year Ended December 31,
(In thousands) |  | 2018 |  | 2017 |  | 2016
Unrealized gain (loss): |  |  |  |  |  |
Cash flow hedge ineffectiveness |  | $ | — |  |  | $ | — |  |  | $ | (401 | )
Non-designated interest rate contracts |  | 33,307 |  |  | (15,080 | ) |  | (1,455 | )
Offsetting Assets and Liabilities The Company enters into agreements subject to enforceable master netting arrangements with its derivative counterparties that allow the Company to offset the settlement of derivative assets and liabilities in the same currency by derivative instrument type or, in the event of default by the counterparty, to offset all derivative assets and liabilities with the same counterparty. The Company has elected not to net derivative asset and liability positions, notwithstanding the conditions for right of offset may have been met. The Company presents derivative assets and liabilities with the same counterparty on a gross basis on the consolidated balance sheets. The following table sets forth derivative positions where the Company has a right of offset under netting arrangements with the same counterparty.
|  | Gross Amounts of Assets (Liabilities) Included on Consolidated Balance Sheets |  | Gross Amounts Not Offset on Consolidated Balance Sheets |  | Net Amounts of Assets (Liabilities)
(In thousands) |  |  | (Assets) Liabilities |  | Cash Collateral Pledged |
December 31, 2018 |  |  |  |  |  |  |  |
Derivative Assets |  |  |  |  |  |  |  |
Foreign exchange contracts |  | $ | 32,196 |  |  | $ | (1,743 | ) |  | $ | — |  |  | $ | 30,453 |
Interest rate contracts |  | 1,362 |  |  | (823 | ) |  | — |  |  | 539 |
|  | $ | 33,558 |  |  | $ | (2,566 | ) |  | $ | — |  |  | $ | 30,992 |
Derivative Liabilities |  |  |  |  |  |  |  |
Foreign exchange contracts |  | $ | (6,404 | ) |  | $ | 1,743 |  |  | $ | — |  |  | $ | (4,661 | )
Interest rate contracts |  | (126,404 | ) |  | 823 |  |  | 840 |  |  | (124,741 | )
|  | $ | (132,808 | ) |  | $ | 2,566 |  |  | $ | 840 |  |  | $ | (129,402 | )
December 31, 2017 |  |  |  |  |  |  |  |
Derivative Assets |  |  |  |  |  |  |  |
Foreign exchange contracts |  | $ | 8,984 |  |  | $ | (8,944 | ) |  | $ | — |  |  | $ | 40 |
Interest rate contracts |  | 1,168 |  |  | (4 | ) |  | — |  |  | 1,164 |
|  | $ | 10,152 |  |  | $ | (8,948 | ) |  | $ | — |  |  | $ | 1,204 |
Derivative Liabilities |  |  |  |  |  |  |  |
Foreign exchange contracts |  | $ | (44,408 | ) |  | $ | 8,944 |  |  | $ | — |  |  | $ | (35,464 | )
Interest rate contracts |  | (160,440 | ) |  | 4 |  |  | 1,900 |  |  | (158,536 | )
|  | $ | (204,848 | ) |  | $ | 8,948 |  |  | $ | 1,900 |  |  | $ | (194,000 | )

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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