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Fair Value of Financial Instruments (Tables)
9 Months Ended
Sep. 30, 2017
Fair Value Disclosures [Abstract]  
Summary of Assets and Liabilities Measured At Fair Value on Recurring Basis
Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):
September 30, 2017
 
 
 
Fair Value Measurement Using:
 
Total
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
 
Fixed maturity securities
 
 
 
 
 
 
 
 
U.S. Government and government agencies
 
$
15,713

 
$
5,115

 
$
10,598

 
$

States, municipalities and political subdivisions
 
392,958

 

 
387,066

 
5,892

Foreign government
 
5,912

 

 
5,912

 

Residential mortgage-backed securities
 
110,841

 

 
93,060

 
17,781

Commercial mortgage-backed securities
 
31,099

 

 
18,797

 
12,302

Asset-backed securities
 
127,988

 

 
14,823

 
113,165

Corporate and other
 
652,126

 
2,148

 
618,480

 
31,498

Total fixed maturity securities
 
1,336,637

 
7,263

 
1,148,736

 
180,638

Equity securities
 
 
 
 
 
 
 
 
Common stocks
 
10,562

 
8,192

 

 
2,370

Perpetual preferred stocks
 
38,484

 
9,858

 
22,525

 
6,101

Total equity securities
 
49,046

 
18,050

 
22,525

 
8,471

Derivatives
 
2,164

 

 

 
2,164

Common stocks - fair value option
 
7,056

 
7,056

 

 

Total assets accounted for at fair value
 
$
1,394,903

 
$
32,369

 
$
1,171,261

 
$
191,273

Liabilities
 
 
 
 
 
 
 
 
Warrant liability
 
$
3,091

 
$

 
$

 
$
3,091

Contingent liability
 
5,409

 

 

 
5,409

Other
 
1,326

 

 

 
1,326

Total liabilities accounted for at fair value
 
$
9,826

 
$

 
$

 
$
9,826

December 31, 2016
 
 
 
Fair Value Measurement Using:
 
Total
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
 
Fixed maturity securities
 
 
 
 
 
 
 
 
U.S. Government and government agencies
 
$
15,950

 
$
5,140

 
$
10,778

 
$
32

States, municipalities and political subdivisions
 
375,077

 

 
369,387

 
5,690

Foreign government
 
5,978

 

 
5,978

 

Residential mortgage-backed securities
 
138,196

 

 
82,242

 
55,954

Commercial mortgage-backed securities
 
49,053

 

 
6,035

 
43,018

Asset-backed securities
 
77,665

 

 
4,448

 
73,217

Corporate and other
 
617,039

 
2,020

 
594,653

 
20,366

Total fixed maturity securities
 
1,278,958

 
7,160

 
1,073,521

 
198,277

Equity securities
 
 
 
 
 
 
 
 
Common stocks
 
14,865

 
10,290

 

 
4,575

Perpetual preferred stocks
 
36,654

 
9,312

 
27,342

 

Total equity securities
 
51,519

 
19,602

 
27,342

 
4,575

Derivatives
 
3,813

 

 

 
3,813

Total assets accounted for at fair value
 
$
1,334,290

 
$
26,762

 
$
1,100,863

 
$
206,665


Liabilities
 
 
 
 
 
 
 
 
Warrant liability
 
$
4,058

 
$

 
$

 
$
4,058

Contingent liability
 
11,411

 

 

 
11,411

Other
 
816

 

 

 
816

Total liabilities accounted for at fair value
 
$
16,285

 
$

 
$

 
$
16,285

Schedule of Changes in Balances of Level 3 Financial Assets at Fair Value
The following tables summarize changes to the Company’s financial instruments carried at fair value and classified within Level 3 of the fair value hierarchy for the three and nine months ended September 30, 2017 and 2016, respectively (in thousands):
 
 
 
Total realized/unrealized gains (losses) included in
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2017
Net earnings (loss)
Other comp. income (loss)
Purchases and issuances
Sales and settlements
Transfer to Level 3
 
Transfer out of Level 3
 
Balance at September 30, 2017
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
States, municipalities and political subdivisions
 
$
7,511

 
$
(3
)
 
$
(100
)
 
$
116

 
$

 
$

 
$
(1,632
)
 
$
5,892

Residential mortgage-backed securities
 
18,486

 
21

 
22

 

 
(921
)
 
1,041

 
(868
)
 
17,781

Commercial mortgage-backed securities
 
3,754

 
(4
)
 
1

 

 
(69
)
 
8,620

 

 
12,302

Asset-backed securities
 
119,598

 
97

 
572

 
15,780

 
(23,947
)
 
1,065

 

 
113,165

Corporate and other
 
20,539

 
(5
)
 
(1,202
)
 
4,310

 
(15
)
 
9,294

 
(1,423
)
 
31,498

Total fixed maturity securities
 
169,888


106


(707
)

20,206


(24,952
)

20,020


(3,923
)

180,638

Equity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stocks
 
2,090

 

 

 

 

 
280

 

 
2,370

Perpetual preferred stocks
 

 

 

 

 

 
6,101

 

 
6,101

Total equity securities
 
2,090

 

 

 

 

 
6,381

 

 
8,471

Derivatives
 
2,155

 
9

 

 

 

 

 

 
2,164

Total financial assets
 
$
174,133

 
$
115

 
$
(707
)
 
$
20,206

 
$
(24,952
)
 
$
26,401

 
$
(3,923
)
 
$
191,273

 
 
 
 
Total realized/unrealized (gains) losses included in
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2017
Net (earnings) loss
Other comp. (income) loss
Purchases and issuances
Sales and settlements
 
Transfer to Level 3
 
Transfer out of Level 3
 
Balance at September 30, 2017
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Warrant liability
 
$
4,091

 
$
(1,000
)
 
$

 
$

 
$

 
$

 
$

 
$
3,091

Contingent liability
 
11,730

 
(6,321
)
 

 

 

 

 

 
5,409

Other
 
1,042

 
284

 

 

 

 

 

 
1,326

Total financial liabilities
 
$
16,863

 
$
(7,037
)
 
$

 
$

 
$

 
$

 
$

 
$
9,826

 
 
 
Total realized/unrealized gains (losses) included in
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2016
Net earnings (loss)
Other comp. income (loss)
Purchases and issuances
Sales and settlements
Transfer to Level 3
 
Transfer out of Level 3
 
Balance at September 30, 2017
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government and government agencies
 
$
32

 
$

 
$

 
$

 
$
(17
)
 
$

 
$
(15
)
 
$

States, municipalities and political subdivisions
 
5,690

 
(2
)
 
(144
)
 
344

 

 
1,636

 
(1,632
)
 
5,892

Residential mortgage-backed securities
 
55,954

 
(720
)
 
901

 
3,465

 
(7,283
)
 
3,203

 
(37,739
)
 
17,781

Commercial mortgage-backed securities
 
43,018

 
111

 
76

 

 
(10,083
)
 
8,620

 
(29,440
)
 
12,302

Asset-backed securities
 
73,217

 
1,147

 
880

 
97,051

 
(48,461
)
 
1,065

 
(11,734
)
 
113,165

Corporate and other
 
20,366

 
(3,329
)
 
3,670

 
12,244

 
(4,133
)
 
10,606

 
(7,926
)
 
31,498

Total fixed maturity securities
 
198,277

 
(2,793
)
 
5,383

 
113,104

 
(69,977
)
 
25,130

 
(88,486
)
 
180,638

Equity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stocks
 
4,576

 
(2,842
)
 
356

 

 

 
280

 

 
2,370

Perpetual preferred stocks
 

 

 

 

 

 
6,101

 

 
6,101

Total equity securities
 
4,576

 
(2,842
)
 
356

 

 

 
6,381

 

 
8,471

Derivatives
 
3,813

 
(1,649
)
 

 

 

 

 

 
2,164

Total financial assets
 
$
206,666

 
$
(7,284
)
 
$
5,739

 
$
113,104

 
$
(69,977
)
 
$
31,511

 
$
(88,486
)
 
$
191,273

 
 
 
 
Total realized/unrealized (gains) losses included in
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2016
Net (earnings) loss
Other comp. (income) loss
Purchases and issuances
Sales and settlements
 
Transfer to Level 3
 
Transfer out of Level 3
 
Balance at September 30, 2017
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Warrant liability
 
$
4,058

 
$
(967
)
 
$

 
$

 
$

 
$

 
$

 
$
3,091

Contingent liability
 
11,411

 
(6,002
)
 

 

 

 

 

 
5,409

Other
 
816

 
510

 

 

 

 

 

 
1,326

Total financial liabilities
 
$
16,285

 
$
(6,459
)
 
$

 
$

 
$

 
$

 
$

 
$
9,826

 
 
 
 
Total realized/unrealized gains (losses) included in
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2016
Net earnings (loss)
Other comp. income (loss)
Purchases and issuances
Sales and settlements
Transfer to Level 3
Transfer out of Level 3
Balance at September 30, 2016
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government and government agencies
 
$
58

 
$

 
$

 
$

 
$
(26
)
 
$

 
$

 
$
32

States, municipalities and political subdivisions
 
5,864

 
102

 
3

 

 

 

 

 
5,969

Residential mortgage-backed securities
 
62,289

 
(422
)
 
525

 

 
(2,973
)
 
8,686

 
(8,105
)
 
60,000

Commercial mortgage-backed securities
 
57,563

 
(269
)
 
(19
)
 

 
(7,378
)
 
2,629

 
(2,247
)
 
50,279

Asset-backed securities
 
54,217

 
85

 
1,454

 
10,337

 
(720
)
 
1,387

 
(16
)
 
66,744

Corporate and other
 
16,661

 
(108
)
 
550

 
7,899

 
(1,145
)
 

 
(2,969
)
 
20,888

Total fixed maturity securities
 
196,652

 
(612
)
 
2,513

 
18,236

 
(12,242
)
 
12,702

 
(13,337
)
 
203,912

Equity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Common stocks
 
4,826

 

 

 

 

 

 

 
4,826

Total equity securities
 
4,826

 

 

 

 

 

 

 
4,826

Derivatives
 
5,318

 
(94
)
 
(694
)
 
230

 
(48
)
 

 

 
4,712

Contingent asset
 
2,813

 
(89
)
 

 

 

 

 

 
2,724

Total financial assets
 
$
209,609

 
$
(795
)
 
$
1,819

 
$
18,466

 
$
(12,290
)
 
$
12,702

 
$
(13,337
)
 
$
216,174

 
 
 
 
Total realized/unrealized (gains) losses included in
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2016
Net (earnings) loss
Other comp. (income) loss
Purchases and issuances
Sales and settlements
Transfer to Level 3
Transfer out of Level 3
Balance at September 30, 2016
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Warrant liability
 
$
2,772

 
$
739

 
$

 
$

 
$

 
$

 
$

 
$
3,511

Contingent liability
 
2,218

 
(1,470
)
 

 

 

 

 

 
748

Other
 

 

 

 
1,490

 

 

 

 
1,490

Total financial liabilities
 
$
4,990


$
(731
)

$


$
1,490


$


$


$


$
5,749

 
 
 
 
Total realized/unrealized gains (losses) included in
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2015
Net earnings (loss)
Other comp. income (loss)
Purchases and issuances
Sales and settlements
Transfer to Level 3
Transfer out of Level 3
Balance at September 30, 2016
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government and government agencies
 
$
73

 
$

 
$
2

 
$

 
$
(43
)
 
$

 
$

 
$
32

States, municipalities and political subdivisions
 
5,659

 
302

 
8

 

 

 

 

 
5,969

Residential mortgage-backed securities
 
79,019

 
(2,105
)
 
910

 

 
(10,988
)
 
16,569

 
(23,405
)
 
60,000

Commercial mortgage-backed securities
 
60,525

 
(760
)
 
920

 

 
(12,394
)
 
9,779

 
(7,791
)
 
50,279

Asset-backed securities
 
27,653

 
140

 
2,176

 
43,405

 
(14,742
)
 
13,808

 
(5,696
)
 
66,744

Corporate and other
 
13,944

 
50

 
479

 
8,499

 
(1,206
)
 
2,091

 
(2,969
)
 
20,888

Total fixed maturity securities
 
186,873

 
(2,373
)

4,495


51,904


(39,373
)

42,247


(39,861
)

203,912

Equity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Common stocks
 
4,932

 

 
(106
)
 

 

 

 

 
4,826

Total equity securities
 
4,932

 


(106
)









4,826

Derivatives
 
4,211

 
(1,119
)
 
1,438

 
230

 
(48
)
 

 

 
4,712

Contingent asset
 

 
(268
)
 

 
2,992

 

 

 

 
2,724

Total financial assets
 
$
196,016

 
$
(3,760
)

$
5,827


$
55,126


$
(39,421
)

$
42,247


$
(39,861
)

$
216,174


 
 
 
 
Total realized/unrealized (gains) losses included in
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2015
Net (earnings) loss
Other comp. (income) loss
Purchases and issuances
Sales and settlements
Transfer to Level 3
Transfer out of Level 3
Balance at September 30, 2016
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Warrant liability
 
$
4,332

 
$
(821
)
 
$

 
$

 
$

 
$

 
$

 
$
3,511

Contingent liability
 

 
(1,841
)
 

 
2,589

 

 

 

 
748

Other
 

 

 

 
1,490

 

 

 

 
1,490

Total financial liabilities
 
$
4,332

 
$
(2,662
)
 
$

 
$
4,079

 
$

 
$

 
$

 
$
5,749

Schedule of Financial Instruments Measured at Fair Value on Nonrecurring Basis
The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments, which were not measured at fair value on a recurring basis. The table excludes carrying amounts for cash, accounts receivable, costs and recognized earnings in excess of billings, accounts payable, accrued expenses, billings in excess of costs and recognized earnings, and other current assets and liabilities approximate fair value due to relatively short periods to maturity (in thousands):
September 30, 2017
 
 
 
 
 
Fair Value Measurement Using:
 
Carrying Value
 
Estimated Fair Value
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
 
 
 
Mortgage loans
 
$
26,427

 
$
26,428

 
$

 
$

 
$
26,428

Policy loans
 
18,038

 
18,038

 

 
18,038

 

Other invested assets
 
5,581

 
3,617

 

 

 
3,617

Total assets not accounted for at fair value
 
$
50,046

 
$
48,083

 
$

 
$
18,038

 
$
30,045

Liabilities
 
 
 
 
 
 
 
 
 
 
Annuity benefits accumulated (1)
 
$
245,054

 
$
242,153

 
$

 
$

 
$
242,153

Long-term obligations (2)
 
447,624

 
455,432

 

 
455,432

 

Total liabilities not accounted for at fair value
 
$
692,678

 
$
697,585

 
$

 
$
455,432

 
$
242,153

December 31, 2016
 
 
 
 
 
Fair Value Measurement Using:
 
Carrying Value
 
Estimated Fair Value
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
 
 
 
Mortgage loans
 
$
16,831

 
$
16,832

 
$

 
$

 
$
16,832

Policy loans
 
18,247

 
18,247

 

 
18,247

 

Other invested assets
 
5,719

 
4,597

 

 

 
4,597

Total assets not accounted for at fair value
 
$
40,797

 
$
39,676

 
$

 
$
18,247

 
$
21,429

Liabilities
 
 
 
 
 
 
 
 
 
 
Annuity benefits accumulated (1)
 
$
251,270

 
$
249,372

 
$

 
$

 
$
249,372

Long-term obligations (2)
 
378,780

 
376,081

 

 
376,081

 

Total liabilities not accounted for at fair value
 
$
630,050

 
$
625,453

 
$

 
$
376,081

 
$
249,372

(1) Excludes life contingent annuities in the payout phase.
(2) Excludes certain lease obligations accounted for under ASC 840, Leases.