3. FAIR VALUE

Fair value measurements are generally based upon observable and unobservable inputs. Observable inputs are based on market data from independent sources, while unobservable inputs reflect the Company’s view of market assumptions in the absence of observable market information. All assets and liabilities that are carried at fair value are classified and disclosed in one of the following categories:

Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities. An active market is defined as a market where transactions for the financial statement occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 — Quoted market prices for similar assets or liabilities and valuations, using models or other valuation techniques that use observable market data. All significant inputs are observable, or derived from observable information in the marketplace, or are supported by observable levels at which transactions are executed in the market place.

Level 3 — Instruments that use non-binding broker quotes or model driven valuations that do not have observable market data or those that are estimated based on an ownership interest to which a proportionate share of net assets is attributed. Currently, the Company has no level 3 investments.

The Company’s financial instruments measured at fair value and the level of the fair value hierarchy of inputs used were as follows:

	June 30, 2016
	Level 1		Level 2		Level 3		Total
	(in thousands)
Debt securities:
United States government obligations and authorities	$	37,442	$	27,800	$	-	$	65,242
Obligations of states and political subdivisions		-		139,685		-		139,685
Corporate		-		148,597		-		148,597
International		-		11,840		-		11,840
		37,442		327,922		-		365,364

Equity securities		39,601		1,000		-		40,601

Total investments	$	77,043	$	328,922	$	-	$	405,965

	December 31, 2015
	Level 1		Level 2		Level 3		Total
	(in thousands)
Debt securities:
United States government obligations and authorities	$	34,733	$	26,820	$	-	$	61,553
Obligations of states and political subdivisions		-		110,702		-		110,702
Corporate		-		154,620		-		154,620
International		-		12,303		-		12,303
		34,733		304,445		-		339,178

Equity securities		38,012		522		-		38,534

Total investments	$	72,745	$	304,967	$	-	$	377,712