6 unchanged sentences
Our risk management strategy and investment policy are to primarily invest in debt instruments of high credit quality issuers and to limit the amount of credit exposure with respect to particular ratings categories and any one issuer.
−Removed: At December 31, 2019 , our fixed-maturity portfolio, excluding cash equivalents, had an average rating of "AA," with approximately 89.0% of securities in that portfolio rated "A" or better by at least one nationally recognized rating organization.
+Added: At December 31, 2020, our fixed-maturity portfolio, including cash equivalents, had an average rating of "AA-," with approximately 81.6% of securities in that portfolio rated "A" or better by at least one nationally recognized rating organization.
Our policy is to invest in investment grade securities and to minimize investments in fixed maturities that are unrated or rated below investment grade.
9 unchanged sentences
Interest rate risk is the risk that we will incur economic losses due to adverse changes in interest rates.
−Removed: The primary market risk to the investment portfolio is interest rate risk associated with investments in fixed-maturity securities.
+Added: The primary market risk to the investment portfolio is interest rate risk associated with investments in fixed-maturity securities and nonredeemable preferred stock.
Fluctuations in interest rates have a direct effect on the market valuation of these securities.
−Removed: When market interest rates rise, the fair value of our fixed-maturity securities decreases.
−Removed: Conversely, as interest rates fall, the fair value of our fixed-maturity securities increases.
+Added: When market interest rates rise, the fair value of our fixed-maturity securities and nonredeemable preferred stock decreases.
+Added: Conversely, as interest rates fall, the fair value of our fixed-maturity securities and nonredeemable preferred stock increases.
We manage this interest rate risk by investing in securities with varied maturity dates and by managing the duration of our investment portfolio to the duration of our reserves.
Expressed in years, duration is the weighted average payment period of cash flows, where the weighting is based on the present value of the cash flows.
−Removed: We set duration targets for our fixed income investment portfolios after consideration of the estimated duration of our liabilities and other factors.
+Added: We set duration targets for our fixed-maturity investment portfolios after consideration of the estimated duration of our liabilities and other factors.
The effective weighted average duration of the portfolio, including cash equivalents, was 4.3 years as of December 31, 2020.
−Removed: We had fixed-maturity securities with a fair value of $729.5 million at December 31, 2019 and $510.3 million at December 31, 2018 that were subject to interest rate risk.
−Removed: The table below illustrates the sensitivity of the fair value of our fixed-maturity securities to selected hypothetical changes in interest rates as of December 31, 2019 and 2018.
−Removed: December 31, 2019
−Removed: December 31, 2018
+Added: We had fixed-maturity securities and nonredeemable preferred stock with a fair value of $1.1 billion at December 31, 2020 and $753.4 million at December 31, 2019 that were subject to interest rate risk.
+Added: The table below illustrates the sensitivity of the fair value of our fixed-maturity securities and nonredeemable preferred stock to selected hypothetical changes in interest rates as of December 31, 2020 and 2019.
+Added: December 31, 2020 December 31, 2019
Estimated Fair
+Added: Value Estimated
Change in Fair
−Removed: Estimated % Increase (Decrease) in Fair Value
−Removed: Estimated Fair
+Added: Value Estimated % Increase (Decrease) in Fair Value Estimated Fair
+Added: Value Estimated
Change in Fair
−Removed: Estimated % Increase (Decrease) in Fair Value
+Added: Value Estimated % Increase (Decrease) in Fair Value
($ in thousands)
200 basis points increase
+Added: $ 1,009,976 $ (103,436) (9.3) % $ 683,376 $ (69,987) (9.3) %
100 basis points increase
+Added: $ 1,060,970 $ (52,442) (4.7) % $ 718,181 $ (35,182) (4.7) %
+Added: $ 1,113,412 $ — — % $ 753,363 $ — — %
100 basis points decrease
+Added: $ 1,146,035 $ 32,623 2.9 % $ 786,285 $ 32,922 4.4 %
200 basis points decrease
+Added: $ 1,158,171 $ 44,759 4.0 % $ 811,447 $ 58,084 7.7 %
Changes in interest rates will have an immediate effect on comprehensive income and stockholders’ equity but will not ordinarily have an immediate effect on net income.
2 unchanged sentences
Equity risk represents the potential economic losses due to adverse changes in equity security prices.
−Removed: A portion of our portfolio is invested in equity securities, which have historically produced higher long-term returns relative to fixed-maturity investments.
−Removed: As of December 31, 2019 , approximately 8.6% of the fair value of our investment portfolio (including cash and cash equivalents) was invested in equity securities.
−Removed: Our equity securities are comprised of exchange traded funds and nonredeemable preferred stock.
+Added: A portion of our portfolio is invested in ETF securities, which have historically produced higher long-term returns relative to fixed-maturity investments.
+Added: As of December 31, 2020, approximately 7.6% of the fair value of our investment portfolio (including cash and cash equivalents) was invested in ETF securities.
We manage equity price risk of our equity portfolio primarily through asset allocation techniques.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.