9 unchanged sentences
Fluctuations in interest rates have a direct impact on the market valuation of these securities.
−Removed: At June 30, 2019 , we had AFS fixed maturity securities with a fair value of $3.0 billion that are subject to interest rate risk.
−Removed: The table below summarizes the interest rate risk associated with our fixed maturity securities by illustrating the sensitivity of the fair value and carrying value of our fixed maturity securities at June 30, 2019 to selected hypothetical changes in interest rates, and the associated impact on our shareholders’ equity.
+Added: At September 30, 2019 , we had AFS fixed maturity securities with a fair value of $2.1 billion that are subject to interest rate risk.
+Added: The table below summarizes the interest rate risk associated with our fixed maturity securities by illustrating the sensitivity of the fair value and carrying value of our fixed maturity securities at September 30, 2019 to selected hypothetical changes in interest rates, and the associated impact on our shareholders’ equity.
Temporary changes in the fair value of our fixed maturity securities that are held as AFS do impact the carrying value of these securities and are reported in our shareholders’ equity as a component of AOCI.
−Removed: The selected scenarios in the table below are not predictions of future events, but rather are intended to illustrate the effect such events may have on the fair value of our AFS fixed maturity securities and on our shareholders’ equity at June 30, 2019 :
+Added: The selected scenarios in the table below are not predictions of future events, but rather are intended to illustrate the effect such events may have on the fair value of our AFS fixed maturity securities and on our shareholders’ equity at September 30, 2019 :
Hypothetical Change in Interest Rates
11 unchanged sentences
The concentrations of the Company’s counterparty credit risk exposures have not changed materially compared to December 31, 2018 .
−Removed: The Company has exposure to credit risk primarily as a holder of fixed income securities.
−Removed: The Company controls this exposure by emphasizing investment grade credit quality in the fixed income securities it purchases.
−Removed: The table below summarizes the credit ratings by major rating category of the Company's fixed maturity investments at June 30, 2019 and December 31, 2018 :
−Removed: June 30, 2019
+Added: The Company has exposure to credit risk primarily as a holder of fixed income securities and it controls this exposure by emphasizing investment grade credit quality in the fixed income securities it purchases.
+Added: The table below summarizes the credit ratings by major rating category of the Company's fixed maturity investments at September 30, 2019 and December 31, 2018 :
+Added: September 30, 2019
December 31, 2018
−Removed: AA+ or better
−Removed: AA, AA-, A+, A, A-
+Added: AAA or better
+Added: AA+, AA, AA-, A+, A, A-
BBB+, BBB, BBB-
1 unchanged sentence
The Company believes this high quality concentration reduces its exposure to credit risk on fixed income investments to an acceptable level.
−Removed: At June 30, 2019 , the Company is not exposed to any significant credit concentration risk on its investments, excluding securities issued by the U.S.
+Added: At September 30, 2019 , the Company is not exposed to any significant credit concentration risk on its investments, excluding securities issued by the U.S.
government and agencies which are rated AA+ (please see " Liquidity and Capital Resources - Investments" on page 59), with the largest corporate issuer and the top ten corporate issuers accounting for only 1.0% and 8.4% of the Company’s total fixed income securities, respectively.
5 unchanged sentences
The Company transferred cash and investments of $575.0 million to AmTrust which bears an interest rate of 3.5% , subject to annual adjustment.
−Removed: At June 30, 2019 , the balance of funds withheld was $575.0 million and the accrued interest was $5.0 million .
+Added: At September 30, 2019 , the balance of funds withheld was $575.0 million and the accrued interest was $5.1 million .
Also, in January 2019, AIU DAC requested that Maiden Bermuda provide collateral to secure its proportional share under the European Hospital Liability Quota Share agreement.
1 unchanged sentence
AIU DAC will pay Maiden a fixed annual interest rate of 0.50% , on the average daily Funds Withheld balance, commencing on January 24, 2019, subject to annual adjustment.
−Removed: At June 30, 2019 , the balance of funds withheld was €45.1 million ( $58.1 million ) and the accrued interest was $0.1 million .
+Added: At September 30, 2019 , the balance of funds withheld was €45.1 million ( $55.7 million ) and the accrued interest was $0.2 million .
We are subject to the credit risk that AII and/or AmTrust will fail to reimburse Maiden Bermuda for these funds that AmTrust’s U.S.
insurance company subsidiaries retain and the income on those assets.
−Removed: The Company also has exposure to credit risk as it relates to its reinsurance balances receivable.
−Removed: Reinsurance balances receivable from the Company’s clients at June 30, 2019 were $67.6 million , including balances both currently due and accrued.
+Added: The Company also has exposure to credit risk as it relates to its reinsurance balances receivable and reinsurance recoverable on paid and unpaid losses.
+Added: Reinsurance balances receivable from the Company’s clients at September 30, 2019 were $46.3 million , including balances both currently due and accrued.
We are also subject to the credit risk that AII and/or AmTrust will fail to perform their obligations to pay interest on and repay the principal pursuant to its loan agreement with Maiden Bermuda, and to reimburse Maiden Bermuda for any assets or other collateral of Maiden that AmTrust’s U.S.
3 unchanged sentences
Provisions are made for amounts considered potentially uncollectible.
−Removed: There was no allowance for uncollectible reinsurance balances receivable at June 30, 2019 .
+Added: There was no allowance for uncollectible reinsurance balances receivable at September 30, 2019 .
+Added: The Company requires its reinsurers to have adequate financial strength.
+Added: The Company evaluates the financial condition of its reinsurers and monitors its concentration of credit risk on an ongoing basis.
+Added: Provisions are made for amounts considered potentially uncollectible.
+Added: The balance of reinsurance recoverable on unpaid losses at September 30, 2019 was $615.5 million compared to $71.9 million at December 31, 2018 .
+Added: The increased balance of recoverables is primarily due to the LPT/ADC Agreement pursuant to which Cavello assumed liabilities for the loss reserves as of December 31, 2018 associated with the AmTrust Quota Share in excess of a $2.2 billion retention up to $600.0 million , in exchange for a retrocession premium of $445.0 million .
+Added: Under the terms of the Master Collateral Agreement as discussed in "Note 10.
+Added: Related Party Transactions" under Item 1.
+Added: Financial Information , Cavello, on behalf of Maiden Bermuda, provided letters of credit to AmTrust in an amount representing Cavello’s obligations under the LPT/ADC Agreement which was $549.5 million at September 30, 2019 .
+Added: At September 30, 2019 , $613.6 million or 99.7% of the total reinsurance recoverable is receivable from one reinsurer, Cavello, whose parent company, Enstar has a credit rating of BBB ( December 31, 2018 - $70.2 million or 97.6% and with a credit rating of BBB ).
+Added: However as noted above, a letter of credit in the amount of $445.0 million was put in place as collateral for the recoverable relating to the LPT/ADC Agreement.
+Added: The table below summarizes the credit ratings of the Company's reinsurance counterparties at September 30, 2019 and December 31, 2018 :
+Added: Credit Ratings
+Added: September 30, 2019
+Added: December 31, 2018
Foreign Currency Risk
3 unchanged sentences
To the extent that these exposures are not fully hedged or the hedges are ineffective, our results of operations or equity may be reduced by fluctuations in foreign currency exchange rates and could materially adversely affect our financial condition and results of operations.
−Removed: At June 30, 2019 , no hedging instruments have been entered into.
+Added: At September 30, 2019 , no hedging instruments have been entered into.
Our principal foreign currency exposure is to the euro and British pound, however, assuming all other variables remain constant and disregarding any tax effects, a strengthening (weakening) of the U.S.
2 unchanged sentences
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.