Derivatives

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Derivatives

During the third quarter 2019, Federated entered into derivative instruments in order to hedge against exposure of certain investments held by Federated. None of these derivatives have been designated as hedging instruments for accounting purposes. As of September 30, 2019, Federated held derivative instruments with a combined notional amount of $39.2 million. Federated recorded a $1.9 million loss to Gain (Loss) on Securities, net on the Consolidated Statements of Income during the three and nine months ended September 30, 2019 related to these derivative instruments.

Hermes, a British Pound Sterling denominated majority-owned subsidiary of Federated, enters into foreign currency forward transactions in order to hedge against foreign exchange rate fluctuations in the U.S. Dollar. None of these forwards have been designated as hedging instruments for accounting purposes. As of September 30, 2019, this subsidiary held foreign currency forward derivative instruments with a combined notional amount of £50.0 million and expiration dates ranging from December 2019 through June 2020. As a result of the change in fair value of these derivative instruments, Federated recorded $2.4 million and $4.0 million of losses as an increase to Other expense on the Consolidated Statements of Income during the three and nine months ended September 30, 2019, respectively, and $2.9 million in Other Current Liabilities on the Consolidated Balance Sheets as of September 30, 2019.

As of December 31, 2018, this subsidiary held foreign currency forward derivative instruments with a combined notional amount of £46.0 million and expiration dates ranging from March 2019 through September 2019. As of December 31, 2018,

Federated recorded $3.8 million in Other Current Liabilities on the Consolidated Balance Sheets as a result of the change in fair value of these derivative instruments.

During the second quarter of 2018, Federated entered into two foreign currency forward transactions in order to hedge against foreign exchange rate fluctuations associated with the payment for the Hermes Acquisition. Neither forward was designated as a hedging instrument for accounting purposes. Federated recorded $29.0 million as nonoperating expense in Other, net on the Consolidated Statements of Income as a result of the change in fair value of these derivatives during the second quarter of 2018.