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Subsequent Events
3 Months Ended
Dec. 30, 2012
Subsequent Events

(18) Subsequent Events

FGL coinsurance agreement with FSR

On December 31, 2012, subsequent to the end of the quarter, FGL entered into a coinsurance agreement (the “Reinsurance Agreement”) with Front Street Cayman, also an indirect subsidiary of the Company. Pursuant to the Reinsurance Agreement, Front Street Cayman will reinsure approximately 10%, or approximately $1.5 billion of FGL’s policy liabilities. In connection with the Reinsurance Agreement, Front Street Cayman, FGL and an indirect subsidiary of the Company, HGI Asset Management, LLC (“ HGI Asset Management”), entered into an investment management agreement, pursuant to which HGI Asset Management will manage the assets securing Front Street Cayman’s reinsurance obligations under the Reinsurance Agreement, which assets are held by FGL in a segregated account. The assets in the segregated account will be invested in accordance with FGL’s existing guidelines.

This agreement meets the risk transfer requirements to qualify as reinsurance under US GAAP. Under the terms of the agreement, FSR will pay FGL an initial ceding allowance of $15.0.

Salus Collateralized Loan Obligation Transaction

On February 7, 2013, Salus announced the closing of Salus CLO 2012-1, Ltd., a $250.0 collateralized loan obligation (“CLO”) vehicle. A Salus subsidiary will act as the collateral manager of the CLO, which will invest in senior secured asset-based loans originated by Salus. As part of the transaction, Salus and its affiliates contributed to the CLO approximately $221.0 of their existing portfolio of loans. Securities of $63.5 were placed with unaffiliated investors, and Salus and its affiliate, FGL, retained $50.0 and $111.5 of the CLO’s notes, respectively, including the subordinated notes. The CLO will have a reinvestment period of two years, a non-call period of two years and a final maturity of eight years.