TRUPANION, INC. 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risks We are exposed to market risks in the ordinary course of business, primarily related to interest rate sensitivities and foreign currency exchange risk. Interest Rate Risk We may be exposed to interest rate risk as a result of our debt and our investment activities. We elected to terminate our line of credit facility in December 2020 and repaid all of the outstanding obligations. The primary objective of our investment activities is to maintain principal and the majority of our investments are short-term in nature. A 10% change in market interest rates would not be expected to have a material impact on our consolidated financial condition or results of operations. Foreign Currency Exchange Risk We generate approximately 16% of our revenue in Canada. As our operations in Canada or the United States grow on an absolute basis and/or relative to one another, our results of operations and cash flows will be subject to fluctuations due to changes in foreign currency exchange rates. A 10% change in the Canadian currency exchange rate could have a material impact on our consolidated financial condition or results of operations. A hypothetical change of this magnitude would have increased or decreased our total revenues by approximately $11.3 million, total expenses by approximately $4.2 million, and have a net impact of $7.1 million of income or loss for the year ended December 31, 2021. To date, we have not entered into any material foreign currency hedging contracts although we may do so in the future. 58