Fair Value Measurements

6 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

14. Fair Value Measurements

Assets and liabilities are recorded at fair value on the consolidated balance sheets and are measured and classified based upon a three-tiered approach to valuation. Financial assets and liabilities are recorded at fair value and are classified and disclosed in one of the following three categories:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; 

Level 2 – Quoted prices for identical or similar financial instruments in markets that are not considered to be active, or similar financial instruments for which all significant inputs are observable, either directly or indirectly, or inputs other than quoted prices that are observable, or inputs that are derived principally from or corroborated by observable market data through correlation or other means; and

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and are unobservable. These reflect management’s assumptions about the assumptions a market participant would use in pricing the asset or liability.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Fair values of cash equivalents approximate carrying value due to the short period of time to maturity. Fair values of short-term investments, investments available-for-sale, long-term investments, mortgage loans and notes on real estate, and interest rate swap contracts are based on quoted market prices, dealer quotes or discounted cash flows. Fair values of trade receivables approximate their recorded value.

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Our financial instruments that are exposed to concentrations of credit risk consist primarily of temporary cash investments, trade receivables, reinsurance recoverables and notes receivable. Limited credit risk exists on trade receivables due to the diversity of our customer base and their dispersion across broad geographic markets. We place our temporary cash investments with financial institutions and limit the amount of credit exposure to any one financial institution.

We have mortgage receivables, which potentially expose us to credit risk. The portfolio of notes is principally collateralized by self-storage facilities and commercial properties. We have not experienced any material losses related to the notes from individual or groups of notes in any particular industry or geographic area. The estimated fair values were determined using the discounted cash flow method and using interest rates currently offered for similar loans to borrowers with similar credit ratings.

The carrying amount of long-term debt and short-term borrowings are estimated to approximate fair value as the actual interest rate is consistent with the rate estimated to be currently available for debt of similar term and remaining maturity.

Other investments, including short-term investments, are substantially current or bear reasonable interest rates. As a result, the carrying values of these financial instruments approximate fair value.

The carrying values and estimated fair values for the financial instruments stated above and their placement in the fair value hierarchy are as follows:

		Fair Value Hierarchy
		Carrying								Total Estimated
As of September 30, 2019		Value		Level 1		Level 2		Level 3		Fair Value
		(Unaudited)
Assets		(In thousands)
Reinsurance recoverables and trade receivables, net	$	222,481	$	0	$	0	$	222,481	$	222,481
Mortgage loans, net		241,194		0		0		241,194		241,194
Other investments		79,798		0		0		79,798		79,798
Total	$	543,473	$	0	$	0	$	543,473	$	543,473
Liabilities
Notes, loans and finance/capital leases payable		4,497,912		0		4,497,912		0		4,497,912
Total	$	4,497,912	$	0	$	4,497,912	$	0	$	4,497,912

		Fair Value Hierarchy
		Carrying								Total Estimated
As of March 31, 2019		Value		Level 1		Level 2		Level 3		Fair Value
		(In thousands)
Assets
Reinsurance recoverables and trade receivables, net	$	224,785	$	0	$	0	$	224,785	$	224,785
Mortgage loans, net		225,829		0		0		225,829		225,829
Other investments		74,907		0		0		74,907		74,907
Total	$	525,521	$	0	$	0	$	525,521	$	525,521
Liabilities
Notes, loans and leases payable		4,192,243		0		4,192,243		0		4,192,243
Total	$	4,192,243	$	0	$	4,192,243	$	0	$	4,192,243

The following tables represent the financial assets and liabilities on the condensed consolidated balance sheets as of September 30, 2019 and March 31, 2019 that are measured at fair value on a recurring basis and the level within the fair value hierarchy.

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As of September 30, 2019		Total		Level 1		Level 2		Level 3
		(Unaudited)
Assets		(In thousands)
Short-term investments	$	382,502	$	382,252	$	250	$	0
Fixed maturities - available for sale		2,385,120		7,502		2,377,399		219
Preferred stock		9,023		9,023		0		0
Common stock		19,207		19,207		0		0
Derivatives		5,198		5,174		24		0
Total	$	2,801,050	$	423,158	$	2,377,673	$	219
Liabilities
Derivatives		–		0		2,348		0
Total	$	0	$	0	$	2,348	$	0

As of March 31, 2019		Total		Level 1		Level 2		Level 3
		(In thousands)
Assets
Short-term investments	$	463,847	$	463,599	$	248	$	0
Fixed maturities - available for sale		2,209,761		7,327		2,202,213		221
Preferred stock		8,257		8,257		0		0
Common stock		17,379		17,379		0		0
Derivatives		1,607		1,468		139		0
Total	$	2,700,851	$	498,030	$	2,202,600	$	221
Liabilities
Derivatives		0		0		0		0
Total	$	0	$	0	$	0	$	0

The fair value measurements for our assets using significant unobservable inputs (Level 3) were $0.2 million for both September 30, 2019 and March 31, 2019.