Fair Value Measurement

3 Months Ended

Mar. 31, 2019

NOTE 5. 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, 2019 and December 31, 2018:

	March 31, 2019
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds	$	26,308	$	199,785	$	—	$	226,093
States, Municipalities and Political Subdivisions		—		698,980		—		698,980
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		329,582		—		329,582
Residential Mortgage Obligations		—		154,149		—		154,149
Asset-Backed Securities		—		532,027		—		532,027
Commercial Mortgage-Backed Securities		—		199,450		—		199,450
Subtotal	$	—	$	1,215,208	$	—	$	1,215,208
Corporate Exposures		—		1,019,527		—		1,019,527
Total Fixed Maturities	$	26,308	$	3,133,500	$	—	$	3,159,808
Equity Securities:
Common Stocks	$	34,678	$	146,834	$	—	$	181,512
Preferred Stocks		—		176,935		—		176,935
Total Equity Securities	$	34,678	$	323,769	$	—	$	358,447
Short-Term Investments		—		7,287		—		7,287
Total Assets Measured at Fair Value	$	60,986	$	3,464,556	$	—	$	3,525,542
Senior Notes	$	—	$	283,554	$	—	$	283,554
Total Liabilities Measured at Fair Value	$	—	$	283,554	$	—	$	283,554

	December 31, 2018
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds	$	35,537	$	204,239	$	—	$	239,776
States, Municipalities and Political Subdivisions		—		646,551		—		646,551
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		335,542		—		335,542
Residential Mortgage Obligations		—		138,373		—		138,373
Asset-Backed Securities		—		531,991		—		531,991
Commercial Mortgage-Backed Securities		—		188,201		—		188,201
Subtotal	$	—	$	1,194,107	$	—	$	1,194,107
Corporate Exposures		—		1,002,489		—		1,002,489
Total Fixed Maturities	$	35,537	$	3,047,386	$	—	$	3,082,923
Equity Securities:
Common Stocks	$	35,029	$	131,324	$	—	$	166,353
Preferred Stocks		—		173,539		—		173,539
Total Equity Securities	$	35,029	$	304,863	$	—	$	339,892
Short-Term Investments		—		10,233		—		10,233
Total Assets Measured at Fair Value	$	70,566	$	3,362,482	$	—	$	3,433,048
Senior Notes	$	—	$	278,150	$	—	$	278,150
Total Liabilities Measured at Fair Value	$	—	$	278,150	$	—	$	278,150

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 $50.4 million and $46.5 million at March 31, 2019 and December 31, 2018, respectively, which is measured at fair value using the net asset value (“NAV”) as a practical expedient.

Our Company did not have any transfers between Level 1 and Level 2 classifications for the three months ended March 31, 2019.

As of March 31, 2019, our Company did not have any Level 3 assets.