NOTE 4. FAIR VALUE MEASUREMENT

The fair value of our financial instruments is determined based on the following fair value hierarchy:

Level 1 – Quoted prices for identical instruments in active markets. Examples are listed Common Stocks and fixed income securities traded on an exchange. U.S. Treasury securities are reported as Level 1 and are valued based on unadjusted quoted prices for identical assets in active markets that our Company can access.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Examples are Asset-Backed and Mortgage-Backed Securities that are similar to other Asset-Backed or Mortgage-Backed Securities observed in the market. U.S. Government Agency Securities are reported as Level 2 and are valued using yields and spreads that are observable in active markets.

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. An example would be a private placement with minimal liquidity.

The following tables present, for each of the fair value hierarchy levels as defined by the accounting guidance for fair value measurements described above, our Company’s Fixed Maturities and Equity Securities by asset class that are measured at fair value on a recurring basis, as well as the fair value of the 5.75% Senior Notes due October 15, 2023 (the “Senior Notes”) carried at amortized cost as of June 30, 2017 and December 31, 2016:

	June 30, 2017
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds	$	58,932	$	205,579	$	—	$	264,511
States, Municipalities and Political Subdivisions		—		655,064		—		655,064
Mortgage-Backed and Asset-Backed Securities:
Agency Mortgage-Backed Securities		—		455,133		—		455,133
Residential Mortgage Obligations		—		18,037		—		18,037
Asset-Backed Securities		—		315,945		—		315,945
Commercial Mortgage-Backed Securities		—		145,573		—		145,573
Subtotal	$	—	$	934,688	$	—	$	934,688
Corporate Exposures		—		896,141		—		896,141
Total Fixed Maturities	$	58,932	$	2,691,472	$	—	$	2,750,404
Equity Securities:
Common Stocks	$	172,456	$	—	$	—	$	172,456
Preferred Stocks		—		179,606		—		179,606
Total Equity Securities	$	172,456	$	179,606	$	—	$	352,062
Short-Term Investments		130,881		—		—		130,881
Total Assets Measured at Fair Value	$	362,269	$	2,871,078	$	—	$	3,233,347
Senior Notes	$	—	$	283,237	$	—	$	283,237
Total Liabilities Measured at Fair Value	$	—	$	283,237	$	—	$	283,237

	December 31, 2016
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds	$	47,704	$	226,072	$	—	$	273,776
States, Municipalities and Political Subdivisions		—		547,415		—		547,415
Mortgage-Backed and Asset-Backed Securities:
Agency Mortgage-Backed Securities		—		487,364		—		487,364
Residential Mortgage Obligations		—		20,530		—		20,530
Asset-Backed Securities		—		314,601		—		314,601
Commercial Mortgage-Backed Securities		—		154,139		—		154,139
Subtotal	$	—	$	976,634	$	—	$	976,634
Corporate Exposures		—		838,057		—		838,057
Total Fixed Maturities	$	47,704	$	2,588,178	$	—	$	2,635,882
Equity Securities:
Common Stocks	$	164,087	$	—	$	—	$	164,087
Preferred Stocks		—		185,055		—		185,055
Total Equity Securities	$	164,087	$	185,055	$	—	$	349,142
Short-Term Investments		143,539		—		—		143,539
Total Assets Measured at Fair Value	$	355,330	$	2,773,233	$	—	$	3,128,563
Senior Notes	$	—	$	280,316	$	—	$	280,316
Total Liabilities Measured at Fair Value	$	—	$	280,316	$	—	$	280,316

All other financial assets and liabilities including Cash, Premium Receivable, Reinsurance Recoverable and Reinsurance Balances Payable are carried at cost, which approximates fair value.

Our Company did not have any significant transfers between Level 1 and Level 2 classifications for the three and six months ended June 30, 2017 and 2016.

As of June 30, 2017, our Company did not have any Level 3 assets.