MoneyGram 2008 Annual Report Download - page 115

Download and view the complete annual report

Please find page 115 of the 2008 MoneyGram annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 150

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150

Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
and other-than-temporary impairments recognized during the year. Net securities (losses) gains were as follows for the year ended
December 31:
(Amounts in thousands) 2008 2007 2006
Gross realized gains $ 34,200 $ 5,611 $ 5,080
Gross realized losses (290,498) (1,962) (2,653)
Other-than-temporary impairments (70,274) (1,193,210) (5,238)
Net securities losses from available-for-sale investments (326,572) (1,189,561) (2,811)
Net unrealized losses from trading investments (14,116) (195) —
Net securities losses $ (340,688) $ (1,189,756) $ (2,811)
Other-than-temporary impairments in 2006 related to investments backed by automobile, aircraft, manufactured housing, bank loans and
insurance securities collateral. In the second half of 2007, particularly in late November and December 2007, the asset-backed securities
and credit markets experienced substantial deterioration due to increasing concerns over defaults on mortgages and debt in general. This
deterioration caused the market to demand higher risk premiums and liquidity discounts on asset-backed securities, resulting in
substantial declines in the fair value of asset-backed securities. At the same time, the rating agencies conducted expansive reviews of
securities, issuing broad ratings downgrades. Under the terms of most asset-backed securities, ratings downgrades of collateral securities
can reduce or eliminate the cash flows to all but the most senior investors, even if there have been no actual losses incurred by the
collateral securities. Accumulating ratings downgrades began to negatively impact the Company's securities in late November 2007. As
the Company commenced a plan to realign its portfolio during the first quarter of 2008, the Company determined that it no longer had the
intent to hold substantially all of its investments classified as "Obligations of states and political subdivisions," "Commercial mortgage-
backed securities," "Residential mortgage-backed securities," "Other asset-backed securities," "Corporate debt securities" and "Preferred
and common stock." The combination of deteriorating market conditions, ratings downgrades and the change in intent to hold securities
resulted in the recognition of a $1.2 billion other-than-temporary impairment charge in December 2007 as shown below:
(Amounts in thousands)
Other asset-backed securities
Direct exposure to sub-prime $ (76,282)
Indirect exposure to sub-prime — high grade (170,386)
Indirect exposure to sub-prime — mezzanine (393,137)
Other (401,766)
Total other asset-backed securities (1,041,571)
Obligations of state and political subdivisions (115)
Commercial mortgage-backed securities (93,257)
Residential mortgage-backed securities (38,751)
U.S. government agencies —
Corporate debt securities (5,989)
Preferred and common stock (7,404)
Total $ (1,187,087)
The Company completed its plan to realign its portfolio during the first quarter of 2008, resulting in the sale of securities with a fair value
of $3.2 billion (after other-than-temporary impairment charges) at December 31, 2007
F-29