XML 23 R12.htm IDEA: XBRL DOCUMENT
v3.19.2

Derivatives | 6 Months Ended
--- | ---
Jun. 30, 2019
Derivatives [Abstract] |
Derivatives | 5. DERIVATIVES The Company sold seven equity index put option contracts, based on two indices, in 2001 and 2005. The Company sold these equity index put options as insurance products with the intent of achieving a profit. These equity index put option contracts meet the definition of a derivative under FASB guidance and the Company’s position in these equity index put option contracts is unhedged. Accordingly, these equity index put option contracts are carried at fair value in the consolidated balance sheets with changes in fair value recorded in the consolidated statements of operations and comprehensive income (loss). Two of these contracts had expired prior to June 30, 2019 and another one expired on July 1, 2019, with no liabilities due under the terms of the expired contracts. The Company had four remaining equity index put option contracts at June 30, 2019, based on the Standard & Poor’s 500 (“S&P 500”) index. Based on historical index volatilities and trends and the June 30, 2019 S&P 500 index value, the Company estimates the probability that each equity index put option contract of the S&P 500 index falling below the strike price on the exercise date to be less than 1%. The theoretical maximum payouts under these equity index put option contracts would occur if on each of the exercise dates the S&P 500 index value were zero. At June 30, 2019, the present value of these theoretical maximum payouts using a 3% discount factor was $353,283 thousand, including $80,993 thousand for the contract that expired on July 1, 2019. Conversely, if the contracts had all expired on June 30, 2019, with the S&P index at $2,941.76, there would have been no settlement amount. The Company has one equity index put option contract based on the FTSE 100 index. Based on historical index volatilities and trends and the June 30, 2019 FTSE 100 index value, the Company estimates the probability that the equity index put option contract of the FTSE 100 index will fall below the strike price on the exercise date to be less than 9%. The theoretical maximum payout under the equity index put option contract would occur if on the exercise date the FTSE 100 index value was zero. At June 30, 2019, the present value of the theoretical maximum payout using a 3% discount factor and current exchange rate was $40,113 thousand. Conversely, if the contract had expired on June 30, 2019, with the FTSE index at ₤7,425.63, there would have been no settlement amount. At June 30, 2019 and December 31, 2018, the fair value for these equity put options was $8,374 thousand and $11,958 thousand, respectively. The fair value of the equity index put options can be found in the Company’s consolidated balance sheets as follows:
(Dollars in thousands) |  |  |  |  |  |  |  |
Derivatives not designated as |  | Location of fair value |  | At |  | At
hedging instruments |  | in balance sheets |  | June 30, 2019 |  | December 31, 2018
Equity index put option contracts |  | Equity index put option liability |  | $ | 8,374 |  | $ | 11,958
Total |  |  |  | $ | 8,374 |  | $ | 11,958
The change in fair value of the equity index put option contracts can be found in the Company’s statement of operations and comprehensive income (loss) as follows:
(Dollars in thousands) |  |  |  | For the Three Months Ended |  | For Six Months Ended
Derivatives not designated as |  | Location of gain (loss) in statements of |  | June 30, |  | June 30,
hedging instruments |  | operations and comprehensive income (loss) |  | 2019 |  | 2018 |  | 2019 |  | 2018
Equity index put option contracts |  | Net derivative gain (loss) |  | $ | 353 |  | $ | 2,987 |  | $ | 3,584 |  | $ | 3,260
Total |  |  |  | $ | 353 |  | $ | 2,987 |  | $ | 3,584 |  | $ | 3,260

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration