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 equities 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 March 31, 2018 and December 31, 2017:

	March 31, 2018
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds	$	130,902	$	226,401	$	—	$	357,303
States, Municipalities and Political Subdivisions		—		721,232		—		721,232
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		379,354		—		379,354
Residential Mortgage Obligations		—		63,430		—		63,430
Asset-Backed Securities		—		369,337		—		369,337
Commercial Mortgage-Backed Securities		—		161,391		—		161,391
Subtotal	$	—	$	973,512	$	—	$	973,512
Corporate Exposures		—		918,887		—		918,887
Total Fixed Maturities	$	130,902	$	2,840,032	$	—	$	2,970,934
Equity Securities:
Common Stocks	$	37,133	$	22,601	$	—	$	59,734
Preferred Stocks		—		194,660		—		194,660
Total Equity Securities	$	37,133	$	217,261	$	—	$	254,394
Short-Term Investments		—		6,704		—		6,704
Total Assets Measured at Fair Value	$	168,035	$	3,063,997	$	—	$	3,232,032
Senior Notes	$	—	$	276,923	$	—	$	276,923
Total Liabilities Measured at Fair Value	$	—	$	276,923	$	—	$	276,923

	December 31, 2017
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds	$	178,251	$	215,312	$	—	$	393,563
States, Municipalities and Political Subdivisions		—		814,632		—		814,632
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		407,619		—		407,619
Residential Mortgage Obligations		—		54,104		—		54,104
Asset-Backed Securities		—		328,753		—		328,753
Commercial Mortgage-Backed Securities		—		160,904		—		160,904
Subtotal	$	—	$	951,380	$	—	$	951,380
Corporate Exposures		—		897,479		—		897,479
Total Fixed Maturities	$	178,251	$	2,878,803	$	—	$	3,057,054
Equity Securities:
Common Stocks	$	52,439	$	—	$	—	$	52,439
Preferred Stocks		—		183,542		—		183,542
Total Equity Securities	$	52,439	$	183,542	$	—	$	235,981
Short-Term Investments		6,480		—		—		6,480
Total Assets Measured at Fair Value	$	237,170	$	3,062,345	$	—	$	3,299,515
Senior Notes	$	—	$	277,951	$	—	$	277,951
Total Liabilities Measured at Fair Value	$	—	$	277,951	$	—	$	277,951

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 has Overseas deposits in Other Invested Assets of $33.6 million and $28.8 million at March 31, 2018 and December 2017, respectively, which is measured at fair value using the net asset value (“NAV”) as a practical expedient.

Our Company did not have any significant transfers between Level 1 and Level 2 classifications for the three months ended March 31, 2018.

As of March 31, 2018, our Company did not have any Level 3 assets.