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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2022

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, 2022 and December 31, 2021 is as follows:


	June 30, 2022				December 31, 2021
	Fair Value		Carrying Value		Fair Value		Carrying Value
Assets
Investments
Fixed maturities:
Available-for-sale securities	$	1,597,284	$	1,597,284	$	1,719,790	$	1,719,785

Equity securities	163,241		163,241		213,401		213,401
Mortgage loans	44,728		46,887		48,815		47,130
Other long-term investments	81,146		81,146		84,090		84,090
Short-term investments	275		275		275		275
Cash and cash equivalents	91,934		91,934		132,104		132,104
Corporate-owned life insurance	10,069		10,069		10,755		10,755
Liabilities
Long Term Debt	37,995		50,000		46,047		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, 2022 and December 31, 2021:


June 30, 2022			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	14,836	$	—	$	14,836	$	—
U.S. government agency	80,300		—		80,300		—
States, municipalities and political subdivisions
General obligations
Midwest	65,364		—		65,364		—
Northeast	20,342		—		20,342		—
South	67,893		—		67,893		—
West	97,077		—		97,077		—
Special revenue
Midwest	111,312		—		111,312		—
Northeast	54,797		—		54,797		—
South	194,655		—		194,655		—
West	116,411		—		116,411		—
Foreign bonds	28,243		—		28,243		—
Public utilities	119,428		—		119,428		—
Corporate bonds
Energy	39,259		—		39,259		—
Industrials	52,580		—		52,580		—
Consumer goods and services	75,607		—		75,607		—
Health care	24,077		—		24,077		—
Technology, media and telecommunications	63,773		—		63,773		—
Financial services	124,324		—		124,174		150
Mortgage-backed securities	19,959		—		19,959		—
Collateralized mortgage obligations
Government national mortgage association	90,049		—		90,049		—
Federal home loan mortgage corporation	90,206		—		90,206		—
Federal national mortgage association	42,421		—		42,421		—
Asset-backed securities	4,371		—		3,529		842

Total Available-for-Sale Fixed Maturities	$	1,597,284	$	—	$	1,596,292	$	992

































EQUITY SECURITIES
Common stocks
Public utilities	$	15,346	$	15,346	$	—	$	—
Energy	18,144		18,144		—		—
Industrials	23,523		23,523		—		—
Consumer goods and services	40,526		40,526		—		—
Health care	8,220		8,220		—		—


Technology, media and telecommunications	30,416		30,416		—		—
Financial services	27,066		27,066		—		—

Total Equity Securities	$	163,241	$	163,241	$	—	$	—
Short-Term Investments	$	275	$	275	$	—	$	—
Money Market Accounts	$	41,536	$	41,536	$	—	$	—
Corporate-Owned Life Insurance	$	10,069	$	—	$	10,069	$	—
Total Assets Measured at Fair Value	$	1,812,405	$	205,052	$	1,606,361	$	992


December 31, 2021			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	41,923	$	—	$	41,923	$	—
U.S. government agency	61,667		—		61,667		—
States, municipalities and political subdivisions
General obligations
Midwest	74,346		—		74,346		—
Northeast	22,762		—		22,762		—
South	94,044		—		94,044		—
West	99,078		—		99,078		—
Special revenue
Midwest	122,289		—		122,289		—
Northeast	59,732		—		59,732		—
South	215,670		—		215,670		—
West	134,649		—		134,649		—
Foreign bonds	30,906		—		30,906		—
Public utilities	107,493		—		107,493		—
Corporate bonds
Energy	32,681		—		32,681		—
Industrials	57,171		—		57,171		—
Consumer goods and services	72,844		—		72,844		—
Health care	27,429		—		27,429		—
Technology, media and telecommunications	57,497		—		57,497		—
Financial services	102,615		—		102,465		150
Mortgage-backed securities	25,013		—		25,013		—
Collateralized mortgage obligations
Government national mortgage association	110,518		—		110,518		—
Federal home loan mortgage corporation	119,989		—		119,989		—
Federal national mortgage association	48,549		—		48,549		—
Asset-backed securities	925		—		—		925

Total Available-for-Sale Fixed Maturities	$	1,719,790	$	—	$	1,718,715	$	1,075


EQUITY SECURITIES
Common stocks
Public utilities	$	17,940	$	17,940	$	—	$	—
Energy	13,593		13,593		—		—
Industrials	31,400		31,400		—		—
Consumer goods and services	56,233		56,233		—		—
Health care	13,845		13,845		—		—
Technology, media and telecommunications	33,973		33,973		—		—
Financial services	45,822		45,822		—		—
Nonredeemable preferred stocks	595		—		—		595
Total Equity Securities	$	213,401	$	212,806	$	—	$	595
Short-Term Investments	$	275	$	275	$	—	$	—
Money Market Accounts	$	43,351	$	43,351	$	—	$	—
Corporate-Owned Life Insurance	$	10,755	$	—	$	10,755	$	—
Total Assets Measured at Fair Value	$	1,987,572	$	256,432	$	1,729,470	$	1,670

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, 2022:

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, 2022

Corporate bonds - financial services

150

Fair value equals cost

Fixed Maturities asset-backed securities

842

Discounted cash flow

Probability of default

4% - 6%

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, 2022:


	Corporate bonds		Asset-backed securities		Equities		Total
Beginning Balance - 04/01/2022	$	150	$	889	$	—	$	1,039

Net unrealized gains (losses)(1)	—		(47)		—		(47)





Ending Balance - 06/30/2022	$	150	$	842	$	—	$	992

(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, 2022:


	Corporate bonds		Asset-backed securities		Equities		Total
Beginning Balance - 01/01/2022	$	150	$	925	$	595	$	1,670
Realized gains (losses)	—		—		(595)		(595)
Net unrealized gains (losses)(1)	—		(83)		—		(83)





Ending Balance - 06/30/2022	$	150	$	842	$	—	$	992

(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, 2022 and December 31, 2021:


Commercial Mortgage Loans
	June 30, 2022		December 31, 2021
Loan-to-value	Carrying Value		Carrying Value
Less than 65%	$	29,698	$	29,924
65%-75%	17,255		17,277
Total amortized cost	$	46,953	$	47,201
Allowance for mortgage loan losses	(66)		(71)
Mortgage loans, net	$	46,887	$	47,130


Mortgage Loans by Region
	June 30, 2022				December 31, 2021
	Carrying Value		Percent of Total		Carrying Value		Percent of Total
East North Central	$	3,245	6.9	%	$	3,245	6.9	%
Southern Atlantic	9,488		20.2		9,578		20.3
East South Central	7,907		16.9		8,028		17.0
New England	6,588		14.0		6,588		14.0
Middle Atlantic	14,667		31.3		14,789		31.3
Mountain	2,227		4.7		2,227		4.7
West North Central	2,831		6.0		2,746		5.8
Total mortgage loans at amortized cost	$	46,953	100.0	%	$	47,201	100.0	%


Mortgage Loans by Property Type
	June 30, 2022				December 31, 2021
	Carrying Value		Percent of Total		Carrying Value		Percent of Total
Commercial
Multifamily	$	16,998	36.2	%	$	16,986	36.0	%
Office	11,421		24.4		11,571		24.5
Industrial	10,090		21.5		10,124		21.5
Retail	2,227		4.7		2,227		4.7
Mixed use/Other	6,217		13.2		6,293		13.3
Total mortgage loans at amortized cost	$	46,953	100.0	%	$	47,201	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
	2022		2020		2019		2018		Total
Commercial mortgage loans:
Risk Rating:
1-2 internal grade	$	103	$	5,434	$	8,285	$	18,094	$	31,916
3-4 internal grade	—		—		8,449		6,588		15,037
5 internal grade	—		—		—		—		—
6 internal grade	—		—		—		—		—
7 internal grade	—		—		—		—		—
Total commercial mortgage loans	$	103	$	5,434	$	16,734	$	24,682	$	46,953
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, 2022, the Company had an allowance for mortgage loan losses of $66, summarized in the following rollforward:


Rollforward of allowance for mortgage loan losses:
	As of
	June 30, 2022
Beginning balance, January 1, 2022	$	71
Current-period provision for expected credit losses	(5)


Ending balance of the allowance for mortgage loan losses, June 30, 2022	$	66