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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 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 September 30, 2022 and December 31, 2021 is as follows:


	September 30, 2022				December 31, 2021
	Fair Value		Carrying Value		Fair Value		Carrying Value
Assets
Investments
Fixed maturities:
Available-for-sale securities	$	1,547,152	$	1,547,061	$	1,719,790	$	1,719,785

Equity securities	149,505		149,505		213,401		213,401
Mortgage loans	43,917		46,692		48,815		47,130
Other long-term investments	79,917		79,917		84,090		84,090
Short-term investments	275		275		275		275
Cash and cash equivalents	53,017		53,017		132,104		132,104
Corporate-owned life insurance	9,930		9,930		10,755		10,755
Liabilities
Long Term Debt	35,276		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 September 30, 2022 and December 31, 2021:


September 30, 2022			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	14,454	$	—	$	14,454	$	—
U.S. government agency	81,365		—		81,365		—
States, municipalities and political subdivisions
General obligations
Midwest	59,902		—		59,902		—
Northeast	20,009		—		20,009		—
South	63,442		—		63,442		—
West	86,398		—		86,398		—
Special revenue
Midwest	106,145		—		106,145		—
Northeast	53,143		—		53,143		—
South	186,859		—		186,859		—
West	110,357		—		110,357		—
Foreign bonds	31,135		—		31,135		—
Public utilities	120,302		—		120,302		—
Corporate bonds
Energy	34,725		—		34,725		—
Industrials	49,713		—		49,713		—
Consumer goods and services	88,286		—		88,286		—
Health care	25,099		—		25,099		—
Technology, media and telecommunications	58,629		—		58,629		—
Financial services	121,371		—		121,221		150
Mortgage-backed securities	18,053		—		18,053		—
Collateralized mortgage obligations
Government national mortgage association	81,764		—		81,764		—
Federal home loan mortgage corporation	84,626		—		84,626		—
Federal national mortgage association	47,160		—		47,160		—
Asset-backed securities	4,215		—		3,426		789

Total Available-for-Sale Fixed Maturities	$	1,547,152	$	—	$	1,546,213	$	939

































EQUITY SECURITIES
Common stocks
Public utilities	$	13,720	$	13,720	$	—	$	—
Energy	17,543		17,543		—		—
Industrials	22,656		22,656		—		—
Consumer goods and services	37,768		37,768		—		—
Health care	7,341		7,341		—		—


Technology, media and telecommunications	25,578		25,578		—		—
Financial services	24,899		24,899		—		—

Total Equity Securities	$	149,505	$	149,505	$	—	$	—
Short-Term Investments	$	275	$	275	$	—	$	—
Money Market Accounts	$	10,047	$	10,047	$	—	$	—
Corporate-Owned Life Insurance	$	9,930	$	—	$	9,930	$	—
Total Assets Measured at Fair Value	$	1,716,909	$	159,827	$	1,556,143	$	939


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 September 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

September 30, 2022

Corporate bonds - financial services

150

Fair value equals cost

Fixed Maturities asset-backed securities

789

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 September 30, 2022:


	Corporate bonds		Asset-backed securities		Equities		Total
Beginning Balance - 07/01/2022	$	150	$	842	$	—	$	992

Net unrealized gains (losses)(1)	—		(53)		—		(53)





Ending Balance - 09/30/2022	$	150	$	789	$	—	$	939

(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, 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)	—		(136)		—		(136)





Ending Balance - 09/30/2022	$	150	$	789	$	—	$	939

(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, 2022 and December 31, 2021:


Commercial Mortgage Loans
	September 30, 2022		December 31, 2021
Loan-to-value	Carrying Value		Carrying Value
Less than 65%	$	29,583	$	29,924
65%-75%	17,174		17,277
Total amortized cost	$	46,757	$	47,201
Allowance for mortgage loan losses	(65)		(71)
Mortgage loans, net	$	46,692	$	47,130


Mortgage Loans by Region
	September 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	9,443		20.2		9,578		20.3
East South Central	7,845		16.8		8,028		17.0
New England	6,588		14.1		6,588		14.0
Middle Atlantic	14,592		31.2		14,789		31.3
Mountain	2,227		4.8		2,227		4.7
West North Central	2,817		6.0		2,746		5.8
Total mortgage loans at amortized cost	$	46,757	100.0	%	$	47,201	100.0	%


Mortgage Loans by Property Type
	September 30, 2022				December 31, 2021
	Carrying Value		Percent of Total		Carrying Value		Percent of Total
Commercial
Multifamily	$	16,934	36.2	%	$	16,986	36.0	%
Office	11,345		24.3		11,571		24.5
Industrial	10,073		21.5		10,124		21.5
Retail	2,227		4.8		2,227		4.7
Mixed use/Other	6,178		13.2		6,293		13.3
Total mortgage loans at amortized cost	$	46,757	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	$	102	$	5,406	$	8,255	$	17,992	$	31,755
3-4 internal grade	—		—		8,414		6,588		15,002
5 internal grade	—		—		—		—		—
6 internal grade	—		—		—		—		—
7 internal grade	—		—		—		—		—
Total commercial mortgage loans	$	102	$	5,406	$	16,669	$	24,580	$	46,757
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, 2022, the Company had an allowance for mortgage loan losses of $65, summarized in the following rollforward:


Rollforward of allowance for mortgage loan losses:
	As of
	September 30, 2022
Beginning balance, January 1, 2022	$	71
Current-period provision for expected credit losses	(6)


Ending balance of the allowance for mortgage loan losses, September 30, 2022	$	65