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 September 30, 2017 and December 31, 2016:

	September 30, 2017
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds	$	51,612	$	218,239	$	—	$	269,851
States, Municipalities and Political Subdivisions		—		684,792		—		684,792
Mortgage-Backed and Asset-Backed Securities:
Agency Mortgage-Backed Securities		—		426,441		—		426,441
Residential Mortgage Obligations		—		34,748		—		34,748
Asset-Backed Securities		—		331,646		—		331,646
Commercial Mortgage-Backed Securities		—		140,601		—		140,601
Subtotal	$	—	$	933,436	$	—	$	933,436
Corporate Exposures		—		910,106		—		910,106
Total Fixed Maturities	$	51,612	$	2,746,573	$	—	$	2,798,185
Equity Securities:
Common Stocks	$	180,771	$	—	$	—	$	180,771
Preferred Stocks		—		195,105		—		195,105
Total Equity Securities	$	180,771	$	195,105	$	—	$	375,876
Short-Term Investments		247,607		—		—		247,607
Total Assets Measured at Fair Value	$	479,990	$	2,941,678	$	—	$	3,421,668
Senior Notes	$	—	$	282,073	$	—	$	282,073
Total Liabilities Measured at Fair Value	$	—	$	282,073	$	—	$	282,073

	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 nine months ended September 30, 2017 and 2016.

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