TWGP » Topics » Interest Rate Risk

These excerpts taken from the TWGP 10-K filed Mar 16, 2009.
Interest Rate Risk
 
Interest rate risk is the risk that we may incur economic losses due to adverse changes in interest rates. The primary market risk to the investment portfolio is interest rate risk associated with investments in fixed maturity securities, although conditions affecting particular asset classes (such as conditions in the housing market that affect residential mortgage-backed securities) can also be a significant source of market risk. Fluctuations in interest rates have a direct impact on the market valuation of these securities. Our fixed maturity portfolio is comprised of primarily investment grade corporate securities, U.S. government and agency securities, municipal obligations and mortgage-backed securities. Our fixed maturity securities are classified as available-for-sale in accordance with FAS 115 and reported at fair value, with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders’ equity. The fair value of our fixed maturity securities as of December 31, 2008 was $530.2 million.
 
For fixed maturity securities, short-term liquidity needs and the potential liquidity needs for the business are key factors in managing our portfolio. We use modified duration analysis to measure the sensitivity of the fixed income portfolio to changes in interest rates. As of December 31, 2008, the average duration of the fixed maturity portfolio was 4.0 years.
 
As of December 31, 2008, we had a total of $36.0 million of outstanding floating rate debt, all of which is outstanding subordinated debentures underlying our trust preferred securities issued by our wholly owned statutory business trusts and carrying an interest rate that is determined by reference to market interest rates. If interest rates increase, the amount of interest payable by us would also increase.
 
Interest
Rate Risk



 



Interest rate risk is the risk that we may incur economic losses
due to adverse changes in interest rates. The primary market
risk to the investment portfolio is interest rate risk
associated with investments in fixed maturity securities,
although conditions affecting particular asset classes (such as
conditions in the housing market that affect residential
mortgage-backed securities) can also be a significant source of
market risk. Fluctuations in interest rates have a direct impact
on the market valuation of these securities. Our fixed maturity
portfolio is comprised of primarily investment grade corporate
securities, U.S. government and agency securities,
municipal obligations and mortgage-backed securities. Our fixed
maturity securities are classified as available-for-sale in
accordance with FAS 115 and reported at fair value, with
unrealized gains and losses excluded from earnings and reported
as a separate component of stockholders’ equity. The fair
value of our fixed maturity securities as of December 31,
2008 was $530.2 million.


 



For fixed maturity securities, short-term liquidity needs and
the potential liquidity needs for the business are key factors
in managing our portfolio. We use modified duration analysis to
measure the sensitivity of the fixed income portfolio to changes
in interest rates. As of December 31, 2008, the average
duration of the fixed maturity portfolio was 4.0 years.


 



As of December 31, 2008, we had a total of
$36.0 million of outstanding floating rate debt, all of
which is outstanding subordinated debentures underlying our
trust preferred securities issued by our wholly owned statutory
business trusts and carrying an interest rate that is determined
by reference to market interest rates. If interest rates
increase, the amount of interest payable by us would also
increase.


 




These excerpts taken from the TWGP 10-K filed Mar 14, 2008.
Interest Rate Risk
 
Interest rate risk is the risk that we may incur economic losses due to adverse changes in interest rates. The primary market risk to the investment portfolio is interest rate risk associated with investments in fixed maturity securities, although conditions affecting particular asset classes (such as conditions in the housing market that affect residential mortgage-backed securities) can also be a significant source of market risk.


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Fluctuations in interest rates have a direct impact on the market valuation of these securities. The fair value of our fixed maturity securities as of December 31, 2007 was $606.4 million.
 
For fixed maturity securities, short-term liquidity needs and the potential liquidity needs for the business are key factors in managing our portfolio. We use modified duration analysis to measure the sensitivity of the fixed income portfolio to changes in interest rates.
 
As of December 31, 2007, we had a total of $36.0 million of outstanding floating rate debt all of which is outstanding subordinated debentures underlying our trust preferred securities issued by our wholly owned statutory business trusts and carrying an interest rate that is determined by reference to market interest rates. If interest rates increase, the amount of interest payable by us would also increase.
 
Interest
Rate Risk



 



Interest rate risk is the risk that we may incur economic losses
due to adverse changes in interest rates. The primary market
risk to the investment portfolio is interest rate risk
associated with investments in fixed maturity securities,
although conditions affecting particular asset classes (such as
conditions in the housing market that affect residential
mortgage-backed securities) can also be a significant source of
market risk.





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Table of Contents






Fluctuations in interest rates have a direct impact on the
market valuation of these securities. The fair value of our
fixed maturity securities as of December 31, 2007 was
$606.4 million.


 



For fixed maturity securities, short-term liquidity needs and
the potential liquidity needs for the business are key factors
in managing our portfolio. We use modified duration analysis to
measure the sensitivity of the fixed income portfolio to changes
in interest rates.


 



As of December 31, 2007, we had a total of
$36.0 million of outstanding floating rate debt all of
which is outstanding subordinated debentures underlying our
trust preferred securities issued by our wholly owned statutory
business trusts and carrying an interest rate that is determined
by reference to market interest rates. If interest rates
increase, the amount of interest payable by us would also
increase.


 




This excerpt taken from the TWGP 10-K filed Mar 8, 2007.

Interest Rate Risk

Interest rate risk is the risk that we may incur economic losses due to adverse changes in interest rates. The primary market risk to the investment portfolio is interest rate risk associated with investments in fixed maturity securities. Fluctuations in interest rates have a direct impact on the market valuation of these securities. The fair value of our fixed maturity securities as of December 31, 2006 was $414.6 million.

For fixed maturity securities, short-term liquidity needs and the potential liquidity needs for the business are key factors in managing our portfolio. We use modified duration analysis to measure the sensitivity of the fixed income portfolio to changes in interest rates.

As of December 31, 2006, we had a total of $23.7 million of outstanding floating rate debt all of which is outstanding subordinated debentures underlying our trust securities issued by our wholly owned statutory business trusts and carrying an interest rate that is determined by reference to market interest rates. If interest rates increase, the amount of interest payable by us would also increase.

This excerpt taken from the TWGP 10-K filed Mar 15, 2006.

Interest Rate Risk

Interest rate risk is the risk that we may incur economic losses due to adverse changes in interest rates. The primary market risk to the investment portfolio is interest rate risk associated with investments in

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fixed maturity securities. Fluctuations in interest rates have a direct impact on the market valuation of these securities. The fair value of our fixed maturity securities as of December 31, 2005 was $326.7 million.

For fixed maturity securities, short-term liquidity needs and the potential liquidity needs for the business are key factors in managing our portfolio. We use modified duration analysis to measure the sensitivity of the fixed income portfolio to changes in interest rates.

As of December 31, 2005, we had a total of $23.7 million of outstanding floating rate debt all of which is outstanding subordinated debentures underlying our trust securities issued by our wholly owned statutory business trusts carrying an interest rate that is determined by reference to market interest rates. If interest rates increase, the amount of interest payable by us would also increase.

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