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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 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 September 30, 2021 and December 31, 2020 is as follows:


	September 30, 2021				December 31, 2020
	Fair Value		Carrying Value		Fair Value		Carrying Value
Assets
Investments
Fixed maturities:
Available-for-sale securities	$	1,727,601	$	1,727,601	$	1,825,443	$	1,825,438

Equity securities	200,876		200,876		206,685		206,685
Mortgage loans	49,385		47,254		48,932		47,614
Other long-term investments	80,162		80,162		69,305		69,305
Short-term investments	175		175		175		175
Cash and cash equivalents	132,772		132,772		87,948		87,948
Corporate-owned life insurance	10,067		10,067		8,557		8,557
Liabilities
Long Term Debt	47,724		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 September 30, 2021 and December 31, 2020:


September 30, 2021			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	53,378	$	—	$	53,378	$	—
U.S. government agency	57,144		—		57,144		—
States, municipalities and political subdivisions
General obligations
Midwest	71,710		—		71,710		—
Northeast	27,373		—		27,373		—
South	96,287		—		96,287		—
West	100,571		—		100,571		—
Special revenue
Midwest	126,273		—		126,273		—
Northeast	60,012		—		60,012		—
South	216,556		—		216,556		—
West	135,828		—		135,828		—
Foreign bonds	31,164		—		31,164		—
Public utilities	100,805		—		100,805		—
Corporate bonds
Energy	30,258		—		30,258		—
Industrials	54,743		—		54,743		—
Consumer goods and services	62,274		—		62,274		—
Health care	27,493		—		27,493		—
Technology, media and telecommunications	56,388		—		56,388		—
Financial services	95,428		—		95,278		150
Mortgage-backed securities	22,373		—		22,373		—
Collateralized mortgage obligations
Government national mortgage association	117,256		—		117,256		—
Federal home loan mortgage corporation	126,962		—		126,962		—
Federal national mortgage association	56,417		—		56,417		—
Asset-backed securities	908		—		—		908

Total Available-for-Sale Fixed Maturities	$	1,727,601	$	—	$	1,726,543	$	1,058

































EQUITY SECURITIES
Common stocks
Public utilities	$	16,550	$	16,550	$	—	$	—
Energy	14,296		14,296		—		—
Industrials	36,464		36,464		—		—
Consumer goods and services	48,311		48,311		—		—
Health care	12,584		12,584		—		—
Technology, media and telecommunications	28,651		28,651		—		—


Financial services	43,425		43,425		—		—
Nonredeemable preferred stocks	595		—		—		595
Total Equity Securities	$	200,876	$	200,281	$	—	$	595
Short-Term Investments	$	175	$	175	$	—	$	—
Money Market Accounts	$	20,555	$	20,555	$	—	$	—
Corporate-Owned Life Insurance	$	10,067	$	—	$	10,067	$	—
Total Assets Measured at Fair Value	$	1,959,274	$	221,011	$	1,736,610	$	1,653


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 September 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

September 30, 2021

Corporate bonds - financial services

150

Fair value equals cost

Fixed Maturities asset-backed securities

908

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 September 30, 2021:


	Corporate bonds		Asset-backed securities		Equities		Total
Balance at July 1, 2021	$	150	$	891	$	595	$	1,636

Net unrealized gains (losses)(1)	—		17		—		17





Balance at September 30, 2021	$	150	$	908	$	595	$	1,653

(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 nine-month period ended September 30, 2021:


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

Net unrealized gains (losses)(1)	—		(18)		—		(18)




Transfers out	(100)		—		—		(100)
Balance at September 30, 2021	$	150	$	908	$	595	$	1,653

(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 September 30, 2021 and December 31, 2020:


Commercial Mortgage Loans
	September 30, 2021		December 31, 2020
Loan-to-value	Carrying Value		Carrying Value
Less than 65%	$	30,035	$	30,361
65%-75%	17,290		17,329
Total amortized cost	$	47,325	$	47,690
Allowance for mortgage loan losses	(71)		(76)
Mortgage loans, net	$	47,254	$	47,614


Mortgage Loans by Region
	September 30, 2021				December 31, 2020
	Carrying Value		Percent of Total		Carrying Value		Percent of Total
East North Central	$	3,245	6.9	%	$	3,245	6.8	%
Southern Atlantic	9,622		20.3		9,752		20.5
East South Central	8,071		17.1		8,197		17.2
New England	6,588		13.9		6,588		13.8
Middle Atlantic	14,826		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	$	47,325	100.0	%	$	47,690	100.0	%


Mortgage Loans by Property Type
	September 30, 2021				December 31, 2020
	Carrying Value		Percent of Total		Carrying Value		Percent of Total
Commercial
Multifamily	$	16,999	35.9	%	$	17,038	35.7	%
Office	11,645		24.6		11,861		24.9
Industrial	10,124		21.4		10,124		21.2
Retail	2,227		4.7		2,227		4.7
Mixed use/Other	6,330		13.4		6,440		13.5
Total mortgage loans at amortized cost	$	47,325	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	$	—	$	5,495	$	8,356	$	18,390	$	32,241
3-4 internal grade	—		—		8,496		6,588		15,084
5 internal grade	—		—		—		—		—
6 internal grade	—		—		—		—		—
7 internal grade	—		—		—		—		—
Total commercial mortgage loans	$	—	$	5,495	$	16,852	$	24,978	$	47,325
Current-period write-offs	—		—		—		—		—
Current-period recoveries	—		—		—		—		—
Current-period net write-offs	$	—	$	—	$	—	$	—	$	—

Summary of Rollforward of Allowance for Mortgage Loan Losses

As of September 30, 2021, the Company had an allowance for mortgage loan losses of $71, summarized in the following rollforward:


Rollforward of allowance for mortgage loan losses:
	As of
	September 30, 2021
Beginning balance, January 1, 2021	$	76
Current-period provision for expected credit losses	(5)


Ending balance of the allowance for mortgage loan losses, September 30, 2021	$	71