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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2021

Summary of 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, 2021 and December 31, 2020 is as follows:


	June 30, 2021				December 31, 2020
	Fair Value		Carrying Value		Fair Value		Carrying Value
Assets
Investments
Fixed maturities:
Available-for-sale securities	$	1,782,035	$	1,781,865	$	1,825,443	$	1,825,438

Equity securities	196,880		196,880		206,685		206,685
Mortgage loans	49,464		47,373		48,932		47,614
Other long-term investments	80,326		80,326		69,305		69,305
Short-term investments	801		801		175		175
Cash and cash equivalents	118,519		118,519		87,948		87,948
Corporate-owned life insurance	9,567		9,567		8,557		8,557
Liabilities
Long Term Debt	47,584		50,000		50,000		50,000

Summary of 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. The table includes financial instruments at June 30, 2021 and December 31, 2020:


June 30, 2021			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	72,970	$	—	$	72,970	$	—
U.S. government agency	81,072		—		81,072		—
States, municipalities and political subdivisions
General obligations
Midwest	73,273		—		73,273		—
Northeast	29,974		—		29,974		—
South	97,965		—		97,965		—
West	103,616		—		103,616		—
Special revenue
Midwest	127,492		—		127,492		—
Northeast	60,459		—		60,459		—
South	218,534		—		218,534		—
West	139,454		—		139,454		—
Foreign bonds	27,485		—		27,485		—
Public utilities	101,803		—		101,803		—
Corporate bonds
Energy	26,714		—		26,714		—
Industrials	55,113		—		55,113		—
Consumer goods and services	68,067		—		68,067		—
Health care	29,386		—		29,386		—
Technology, media and telecommunications	69,584		—		69,584		—
Financial services	98,921		—		98,771		150
Mortgage-backed securities	24,906		—		24,906		—
Collateralized mortgage obligations
Government national mortgage association	100,496		—		100,496		—
Federal home loan mortgage corporation	127,363		—		127,363		—
Federal national mortgage association	46,497		—		46,497		—
Asset-backed securities	891		—		—		891

Total Available-for-Sale Fixed Maturities	$	1,782,035	$	—	$	1,780,994	$	1,041

































EQUITY SECURITIES
Common stocks
Public utilities	$	16,911	$	16,911	$	—	$	—
Energy	10,548		10,548		—		—
Industrials	36,940		36,940		—		—
Consumer goods and services	48,541		48,541		—		—
Health care	16,551		16,551		—		—
Technology, media and telecommunications	26,786		26,786		—		—


Financial services	40,008		40,008		—		—
Nonredeemable preferred stocks	595		—		—		595
Total Equity Securities	$	196,880	$	196,285	$	—	$	595
Short-Term Investments	$	801	$	801	$	—	$	—
Money Market Accounts	$	25,261	$	25,261	$	—	$	—
Corporate-Owned Life Insurance	$	9,567	$	—	$	9,567	$	—
Total Assets Measured at Fair Value	$	2,014,544	$	222,347	$	1,790,561	$	1,636


December 31, 2020			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	149,938	$	—	$	149,938	$	—
U.S. government agency	64,518		—		64,518		—
States, municipalities and political subdivisions
General obligations
Midwest	81,980		—		81,980		—
Northeast	30,450		—		30,450		—
South	109,970		—		109,970		—
West	110,021		—		110,021		—
Special revenue
Midwest	125,098		—		125,098		—
Northeast	61,076		—		61,076		—
South	226,706		—		226,706		—
West	139,399		—		139,399		—
Foreign bonds	29,602		—		29,602		—
Public utilities	83,502		—		83,502		—
Corporate bonds
Energy	25,336		—		25,336		—
Industrials	43,257		—		43,257		—
Consumer goods and services	50,567		—		50,567		—
Health care	7,576		—		7,576		—
Technology, media and telecommunications	41,636		—		41,636		—
Financial services	101,031		—		100,781		250
Mortgage-backed securities	20,577		—		20,577		—
Collateralized mortgage obligations
Government national mortgage association	86,152		—		86,152		—
Federal home loan mortgage corporation	152,843		—		152,843		—
Federal national mortgage association	83,282		—		83,282		—
Asset-backed securities	926		—		—		926

Total Available-for-Sale Fixed Maturities	$	1,825,443	$	—	$	1,824,267	$	1,176

































EQUITY SECURITIES


Common stocks
Public utilities	$	16,320	$	16,320	$	—	$	—
Energy	9,918		9,918		—		—
Industrials	36,556		36,556		—		—
Consumer goods and services	32,061		32,061		—		—
Health care	24,549		24,549		—		—
Technology, media and telecommunications	17,109		17,109		—		—
Financial services	69,577		69,577		—		—
Nonredeemable preferred stocks	595		—		—		595
Total Equity Securities	$	206,685	$	206,090	$	—	$	595
Short-Term Investments	$	175	$	175	$	—	$	—
Money Market Accounts	$	24,790	$	24,790	$	—	$	—
Corporate-Owned Life Insurance	$	8,557	$	—	$	8,557	$	—
Total Assets Measured at Fair Value	$	2,065,650	$	231,055	$	1,832,824	$	1,771

Summary of Quantitative Information About Level 3 Fair Value Measurements

The following table provides a quantitative information about our Level 3 securities at June 30, 2021:

Quantitative Information about Level 3 Fair Value Measurements

Fair Value at

Valuation Technique(s)

Unobservable inputs

Range of weighted average significant unobservable inputs

June 30, 2021

Corporate bonds - financial services

150

Fair value equals cost

Fixed Maturities asset-backed securities

891

Discounted cash flow

Probability of default

4% - 6%

Nonredeemable preferred stocks

595

Discounted cash flow

Multiplier

3x - 4x

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, 2021:


	Corporate bonds		Asset-backed securities		Equities		Total
Balance at April 1, 2021	$	150	$	848	$	595	$	1,593

Net unrealized gains (losses)(1)	—		43		—		43





Balance at June 30, 2021	$	150	$	891	$	595	$	1,636

(1) Net unrealized gains (losses) 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, 2021:


	Corporate bonds		Asset-backed securities		Equities		Total
Balance at January 1, 2021	$	250	$	926	$	595	$	1,771

Net unrealized gains (losses)(1)	—		(35)		—		(35)




Transfers out	(100)		—		—		(100)
Balance at June 30, 2021	$	150	$	891	$	595	$	1,636

(1) Net unrealized gains (losses) are recorded as a component of comprehensive income.

Summary of Carrying Value of Commercial Mortgage Loans by Loan-to-Value Ratio

The following tables present the carrying value of our commercial mortgage loans and additional information at June 30, 2021 and December 31, 2020:


Commercial Mortgage Loans
	June 30, 2021		December 31, 2020
Loan-to-value	Carrying Value		Carrying Value
Less than 65%	$	30,145	$	30,361
65%-75%	17,304		17,329
Total amortized cost	$	47,449	$	47,690
Allowance for mortgage loan losses	(76)		(76)
Mortgage loans, net	$	47,373	$	47,614


Mortgage Loans by Region
	June 30, 2021				December 31, 2020
	Carrying Value		Percent of Total		Carrying Value		Percent of Total
East North Central	$	3,245	6.8	%	$	3,245	6.8	%
Southern Atlantic	9,666		20.4		9,752		20.5
East South Central	8,114		17.1		8,197		17.2
New England	6,588		13.9		6,588		13.8
Middle Atlantic	14,863		31.3		14,936		31.2
Mountain	2,227		4.7		2,227		4.7
West North Central	2,746		5.8		2,745		5.8
Total mortgage loans at amortized cost	$	47,449	100.0	%	$	47,690	100.0	%


Mortgage Loans by Property Type
	June 30, 2021				December 31, 2020
	Carrying Value		Percent of Total		Carrying Value		Percent of Total
Commercial
Multifamily	$	17,012	35.9	%	$	17,038	35.7	%
Office	11,718		24.7		11,861		24.9
Industrial	10,125		21.3		10,124		21.2
Retail	2,227		4.7		2,227		4.7
Mixed use/Other	6,367		13.4		6,440		13.5
Total mortgage loans at amortized cost	$	47,449	100.0	%	$	47,690	100.0	%

Summary of Amortized Cost Basis by Year of Origination and Credit Quality Indicator


Amortized Cost Basis by Year of Origination and Credit Quality Indicator
	2021		2020		2019		2018		Total
Commercial mortgage loans:
Risk Rating:
1-2 internal grade	$	—	$	5,509	$	8,369	$	18,487	$	32,365
3-4 internal grade	—		—		8,496		6,588		15,084
5 internal grade	—		—		—		—		—
6 internal grade	—		—		—		—		—
7 internal grade	—		—		—		—		—
Total commercial mortgage loans	$	—	$	5,509	$	16,865	$	25,075	$	47,449
Current-period write-offs	—		—		—		—		—
Current-period recoveries	—		—		—		—		—
Current-period net write-offs	$	—	$	—	$	—	$	—	$	—

Summary of Rollforward of Allowance for Mortgage Loan Losses

As of June 30, 2021, the Company had an allowance for mortgage loan losses of $76, summarized in the following rollforward:


Rollforward of allowance for mortgage loan losses:
	As of
	June 30, 2021
Beginning balance, January 1, 2021	$	76
Current-period provision for expected credit losses	—


Ending balance of the allowance for mortgage loan losses, June 30, 2021	$	76