Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2014

Carrying Value and Estimated Fair Value of Financial Instruments

A summary of the carrying value and estimated fair value of our financial instruments at June 30, 2014 and December 31, 2013 is as follows:



	June 30, 2014				December 31, 2013
	Fair Value		Carrying Value		Fair Value		Carrying Value
Assets
Investments
Fixed maturities:
Held-to-maturity securities	$	640	$	630	$	669	$	656
Available-for-sale securities	2,824,018		2,824,018		2,751,256		2,751,256
Trading securities	18,305		18,305		9,940		9,940
Equity securities:
Available-for-sale securities	239,244		239,244		229,368		229,368
Trading securities	3,206		3,206		2,487		2,487
Mortgage loans	4,724		4,313		4,724		4,423
Policy loans	6,200		6,200		6,261		6,261
Other long-term investments	48,707		48,707		44,946		44,946
Short-term investments	475		475		800		800
Cash and cash equivalents	90,276		90,276		92,193		92,193
Corporate-owned life insurance	578		578		—		—
Liabilities
Policy reserves
Annuity (accumulations) ⁽¹⁾	$	949,519	$	908,765	$	941,636	$	925,832
Annuity (benefit payments)	147,594		96,661		140,276		94,805

(1) Annuity accumulations represent deferred annuity contracts that are currently earning interest.

Financial Instruments Measured at Fair Value on Recurring Basis

The following tables present the categorization for our financial instruments measured at fair value on a recurring basis in our Consolidated Balance Sheets at June 30, 2014 and December 31, 2013:



June 30, 2014			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	30,703	$	—	$	30,703	$	—
U.S. government agency	356,681		—		356,681		—
States, municipalities and political subdivisions	736,768		—		736,158		610
Foreign bonds	150,225		—		150,225		—
Public utilities	220,344		—		220,344		—
Corporate bonds
Energy	154,600		—		154,600		—
Industrials	223,801		—		223,801		—
Consumer goods and services	164,326		—		162,937		1,389
Health care	81,960		—		81,960		—
Technology, media and telecommunications	131,824		—		131,824		—
Financial services	233,543		—		222,005		11,538
Mortgage-backed securities	20,188		—		20,188		—
Collateralized mortgage obligations	315,736		—		315,736		—
Asset-backed securities	3,319		—		1,477		1,842
Total Available-for-Sale Fixed Maturities	$	2,824,018	$	—	$	2,808,639	$	15,379
Equity securities:
Common stocks
Public utilities	$	18,666	$	18,666	$	—	$	—
Energy	16,485		16,485		—		—
Industrials	46,624		46,619		5		—
Consumer goods and services	21,777		21,777		—		—
Health care	26,766		26,766		—		—
Technology, media and telecommunications	13,923		13,923		—		—
Financial services	89,884		85,945		67		3,872
Nonredeemable preferred stocks	5,119		553		4,566		—
Total Available-for-Sale Equity Securities	$	239,244	$	230,734	$	4,638	$	3,872
Total Available-for-Sale Securities	$	3,063,262	$	230,734	$	2,813,277	$	19,251
TRADING
Fixed maturities:
Bonds
Foreign bonds	$	1,252	$	—	$	1,252	$	—
Corporate bonds
Industrials	2,128		—		2,128		—
Consumer goods and services	1,099		—		1,099		—



Health care	2,517		—		2,517		—
Technology, media and telecommunications	3,004		—		3,004		—
Financial services	4,214		—		4,214		—
Redeemable preferred stocks	4,091		4,091		—		—
Equity securities:
Energy	659		659		—		—
Consumer goods and services	32		32		—		—
Health care	389		389		—		—
Technology, media and telecommunications	364		364		—		—
Nonredeemable preferred stocks	1,762		1,762		—		—
Total Trading Securities	$	21,511	$	7,297	$	14,214	$	—
Short-Term Investments	$	475	$	475	$	—	$	—
Money Market Accounts	$	30,120	$	30,120	$	—	$	—
Corporate-Owned Life Insurance	$	578	$	—	$	578	$	—
Total Assets Measured at Fair Value	$	3,115,946	$	268,626	$	2,828,069	$	19,251



December 31, 2013			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	33,895	$	—	$	33,895	$	—
U.S. government agency	269,583		—		269,583		—
States, municipalities and political subdivisions	713,907		—		713,209		698
Foreign bonds	172,856		—		172,856		—
Public utilities	218,576		—		218,576		—
Corporate bonds
Energy	161,010		—		161,010		—
Industrials	237,028		—		237,028		—
Consumer goods and services	167,914		—		166,460		1,454
Health care	92,946		—		92,946		—
Technology, media and telecommunications	120,966		—		120,966		—
Financial services	241,751		—		229,725		12,026
Mortgage-backed securities	22,066		—		22,066		—
Collateralized mortgage obligations	294,763		—		294,763		—
Asset-backed securities	3,995		—		1,966		2,029
Total Available-for-Sale Fixed Maturities	$	2,751,256	$	—	$	2,735,049	$	16,207
Equity securities:
Common stocks
Public utilities	$	16,272	$	16,272	$	—	$	—
Energy	14,363		14,363		—		—
Industrials	46,099		46,083		16		—
Consumer goods and services	21,258		21,258		—		—
Health care	24,998		24,998		—		—
Technology, media and telecommunications	13,304		13,304		—		—
Financial services	88,262		84,419		62		3,781
Nonredeemable preferred stocks	4,812		1,714		3,098		—
Total Available-for-Sale Equity Securities	$	229,368	$	222,411	$	3,176	$	3,781
Total Available-for-Sale Securities	$	2,980,624	$	222,411	$	2,738,225	$	19,988
TRADING
Fixed maturities:
Bonds
Foreign bonds	$	1,253	$	—	$	1,253	$	—
Corporate bonds
Industrials	1,122		—		1,122		—
Consumer goods and services	106		—		106		—
Health care	1,154		—		1,154		—
Technology, media and telecommunications	2,054		—		2,054		—



Financial services	1,866		—		1,866		—
Redeemable preferred stocks	2,385		2,385		—		—
Equity securities:
Energy	563		563		—		—
Consumer goods and services	39		39		—		—
Health care	332		332		—		—
Nonredeemable preferred stocks	1,553		1,553		—		—
Total Trading Securities	$	12,427	$	4,872	$	7,555	$	—
Short-Term Investments	$	800	$	800	$	—	$	—
Money Market Accounts	$	37,811	$	37,811	$	—	$	—
Total Assets Measured at Fair Value	$	3,031,662	$	265,894	$	2,745,780	$	19,988

Changes in Fair Value of Level 3 Securities

The following table provides a summary of the changes in fair value of our Level 3 securities for the three-month period ended June 30, 2014:



	States, municipalities and political subdivisions			Corporate bonds			Asset-backed securities			Equities			Total
Balance at March 31, 2014	$	698		$	13,122		$	1,913		$	3,891		$	19,624
Realized losses ⁽¹⁾	—			—			—			(56		)	(56		)
Unrealized gains (losses)⁽¹⁾	(18		)	9			45			48			84
Disposals	(70		)	(204		)	(116		)	(11		)	(401		)
Balance at June 30, 2014	$	610		$	12,927		$	1,842		$	3,872		$	19,251

(1) Realized gains are recorded as a component of earnings, whereas unrealized gains are recorded as a component of comprehensive income.

The following table provides a summary of the changes in fair value of our Level 3 securities for the six-month period ended June 30, 2014:



	States, municipalities and political subdivisions			Corporate bonds			Asset-backed securities			Equities			Total
Balance at January 1, 2014	$	698		$	13,480		$	2,029		$	3,781		$	19,988
Realized losses ⁽¹⁾	—			—			—			(56		)	(56		)
Unrealized gains (losses) ⁽¹⁾	(18		)	(53		)	40			48			17
Purchases	—			—			—			99			99
Disposals	(70		)	(500		)	(227		)	—			(797		)
Balance at June 30, 2014	$	610		$	12,927		$	1,842		$	3,872		$	19,251

(1) Realized gains are recorded as a component of earnings, whereas unrealized gains are recorded as a component of comprehensive income.

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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