DISCLOSURES ABOUT FAIR VALUE

Recurring Fair Value Measurements

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The following tables set forth the Company’s assets and liabilities that were measured at fair value, on a recurring basis, by level within the fair value hierarchy. During the year ended December 31, 2014, $5.6 million in equity securities was transferred from level 1 to level 2. There were no significant transfers between level 1 and level 2 during the year ended December 31, 2013.

At December 31, 2014 (in thousands):



	Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2014
Assets
Available-for-sale equity securities⁽¹⁾	$	10,892	$	11,098			$	21,990
Available-for-sale debt securities⁽¹⁾	$	6,380					$	6,380
Readily marketable inventory ⁽²⁾	$	7,992	$	3,480			$	11,472
Derivative instruments ⁽³⁾	$	121	$	1,580			$	1,701

Liabilities
Derivative instruments⁽³⁾	$	1,181	$	365			$	1,546
Contingent consideration ⁽⁴⁾					$	3,902	$	3,902

At December 31, 2013 (in thousands):



	Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)	Balance at December 31, 2013
Assets
Available-for-sale equity securities⁽¹⁾	$	26,177	$	15,231		$	41,408
Available-for-sale debt securities⁽¹⁾	$	9,172				$	9,172
Readily marketable inventory ⁽²⁾	$	2,396	$	5,292		$	7,688
Derivative instruments ⁽³⁾	$	346	$	2,108		$	2,454

Liabilities
Derivative instruments⁽³⁾	$	436	$	936		$	1,372

⁽¹⁾Where there are quoted market prices that are readily available in an active market, securities are classified as Level 1 of the valuation hierarchy. Level 1 available-for-sale investments are valued using quoted market prices multiplied by the number of shares owned and debt securities are valued using a market quote in an active market. All Level 2 available-for-sale securities are one class because they all contain similar risks and are valued using market prices and include securities where the markets are not active, that is where there are few transactions, or the prices are not current or the prices vary considerably over time. Inputs include directly or indirectly observable inputs such as quoted prices. Level 3 available-for-sale securities would include securities where valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

⁽²⁾Readily marketable inventory comprises commodity inventories that are reported at fair value based on commodity exchange quotations. Canola seed inventories are valued based on the quoted market price multiplied by the quantity of inventory and are classified as Level 1. Canola oil and meal inventories are classified as Level 2 because the inputs are directly observable, such as the quoted market price of the corresponding soybean commodity.

⁽³⁾Included in this caption are three types of agricultural commodity derivative contracts: any swaps, exchange traded futures, and forward commodity purchase and sale contracts. The exchange traded futures contracts are valued based on quoted prices in active markets multiplied by the number of contracts and are classified as Level 1. The swaps are classified as Level 2 because the inputs are directly observable, such as the quoted market prices for relevant commodity futures contracts. The swaps are valued based on the difference of the arithmetic average of the quoted market price of the relevant underlying multiplied by the notional quantities, and the arithmetic average of the prices specified in the instrument multiplied by the notional quantities. Forward commodity purchase and sale contracts classified as derivatives are valued using quantitative models that require the use of multiple inputs including quoted market prices and various other assumptions including time value. These contracts are categorized as Level 2 and are valued based on the difference between the quoted market price and the price in the contract multiplied by the undelivered notional quantity deliverable under the contract.

⁽⁴⁾Included in this caption is the contingent consideration that the Company entered into as part of the acquisition of Citizens. The estimated fair value of the contingent consideration was estimated based on applying the income approach and a weighted probability of achievement of the performance milestones. The estimated fair value of the contingent consideration was calculated by using a Monte Carlo simulation model. The fair value of the contingent consideration was then estimated as the arithmetic average of all simulation paths. The model was based on forecast adjusted net income over the contingent consideration period. The measurement is based on significant inputs that are not observable in the market, which are defined as Level 3 inputs.

Non-Recurring Fair Value Measurements

The following table sets forth the Company’s non-financial assets that were measured at fair value, on a non-recurring basis, by level within the fair value hierarchy. There were no such measurements in 2012.

Year Ended December 31, 2014 (in thousands):



Asset Description	Quoted Prices In Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Total Loss
Intangible water assets⁽¹⁾			$	3,638	$	(2,282	)
Tangible water asset and other assets ⁽²⁾			$	—	$	(3,509	)
Oil and gas wells ⁽³⁾			$	1,730	$	(4,428	)
Real estate ⁽⁴⁾			$	1,357	$	(2,865	)
Investments in unconsolidated affiliates equity securities held at cost ⁽⁵⁾			$	15,858	$	(1,078	)

⁽¹⁾ The Company had a non-recurring fair value measurement for intangible assets that resulted in an impairment loss discussed in Note 3 “Goodwill and Intangible Assets.”

⁽²⁾The Company had a non-recurring fair value measurement for a tangible water asset that resulted in an impairment loss discussed in Note 2 “Real Estate and Tangible Water Assets.”

⁽³⁾The Company had a non-recurring fair value measurement for oil and gas wells that resulted in an impairment loss discussed in Note 6 “Property, Plant, and Equipment, Net.”

⁽⁴⁾The Company had a non-recurring fair value measurement of a real estate asset discussed in Note 2 “Real Estate and Tangible Water Assets, Net.”

⁽⁵⁾The Company had a non-recurring fair value measurement of an investment in an unconsolidated affiliates equity securities held at cost discussed in Note 4 “Investments.”

Year Ended December 31, 2013 (in thousands):



Asset Description	Quoted Prices In Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Total Gain (Loss)
Intangible asset (exclusive right to use infrastructure and associated water credits)⁽¹⁾			$	83,897	$	(993	)
Real estate ⁽²⁾			$	3,674	$	(417	)
Investment in unconsolidated affiliate ⁽³⁾			$	28,679	$	21,181

⁽¹⁾The Company had a non-recurring fair value measurement for an intangible asset that resulted in an impairment loss discussed in Note 3 “Goodwill and Intangible Assets.”

⁽²⁾The Company had a non-recurring fair value measurement of a real estate asset discussed in Note 2 “Real Estate and Tangible Water Assets, Net.”

⁽³⁾The Company had a non-recurring fair value measurement as a result of the merger transaction between Spigit and Mindjet. The fair value of the investment in Mindjet was based on analysis of the financial and operational aspects of the company, including consideration of a discounted cash flow analysis which incorporated a contemporary forecast of the merged Mindjet/Spigit entity going forward. Also considered was a guideline public company analysis which compared business enterprise value-to-revenue ratios for comparable public companies to current revenue metrics for the company. Determination of the business enterprise value based on the foregoing was then considered in an analysis of the distribution of equity value to the various classes of equity held by PICO in order to reflect differences in value due to differing liquidation, dividend and voting rights. The fair value approach relied primarily on Level 3 unobservable inputs, whereby expected future cash flows were discounted using a rate that includes assumptions regarding an entity’s average cost of debt and equity, incorporated expected future cash flows based on internal business plans, and applied certain assumptions about risk and uncertainties. The estimates were based upon assumptions believed to be reasonable, but which by nature are uncertain and unpredictable.

Estimated Fair Value of Financial Instruments Not Carried at Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The level within the fair value hierarchy in which the fair value measurements are classified include measurements using quoted prices in active markets for identical assets or liabilities (Level 1), quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active (Level 2), and significant valuation assumptions that are not readily observable in the market (Level 3).

As of December 31, 2014 and 2013, the fair values of cash and cash equivalents, accounts payable, and accounts receivable approximated their carrying values because of the short-term nature of these assets or liabilities. The estimated fair value of the Company’s investments in unconsolidated affiliates approximated their carrying values. The estimated fair value of the Company's debt is based on cash flow models discounted at the then-current interest rates and an estimate of the then-current spread above those rates at which the Company could borrow, which are level 3 inputs in the fair value hierarchy. The estimated fair value of certain of the Company’s other investments, which included investments in preferred stock of private companies, cannot be reasonably estimated on a recurring basis.

The following table presents the carrying value and fair value of the Company’s financial instruments which are not carried at fair value (in thousands):



	December 31, 2014				December 31, 2013
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Investments in unconsolidated affiliates equity securities held at cost	$	18,028	$	18,028	$	19,380	$	19,380
Investments in unconsolidated affiliates debt securities	$	2,662	$	7,964

Financial liabilities:
Debt	$	219,496	$	240,800	$	136,767	$	145,924

Derivative Notional Amounts

The following table summarizes the notional amount of open derivative positions (in thousands):

December 31, 2014

Exchange Traded

Non-exchange Traded

(Short)⁽¹⁾

Long⁽¹⁾

(Short)⁽¹⁾

Long⁽¹⁾

Unit of Measure

Futures:

Agricultural Commodities

(99,268

)

85,602

Tons

Natural Gas

690,000

MMBtus ⁽²⁾

Forwards

(126,615

)

29,666

Tons

December 31, 2013

Exchange Traded

Non-exchange Traded

(Short)⁽¹⁾

Long⁽¹⁾

(Short)⁽¹⁾

Long⁽¹⁾

Unit of Measure

Futures:

Agricultural Commodities

(23,038

)

34,380

Tons

Natural Gas

460,000

MMBtus ⁽²⁾

Forwards

(132,428

)

30,367

Tons

Swaps

75,000

Tons

⁽¹⁾Exchange and non-exchange traded futures, forwards, and swaps are presented on a gross (short) and long position basis.

⁽²⁾Million Metric British Thermal Units.

The following table summarizes the effect of derivative instruments on the consolidated statements of operations and comprehensive income or loss (in thousands).



	Gain (Loss) Recognized in Income on Derivatives
		December 31,
	Financial Statement Location	2014			2013			2012
Futures	Cost of canola oil and meal sold	$	(1,693	)	$	(1,339	)	$	(3,469	)
Forwards	Cost of canola oil and meal sold	(391		)	(130		)	1,637
Swaps	Cost of canola oil and meal sold	(3,038		)	(1,283		)	3,933
Total gain (loss)		$	(5,122	)	$	(2,752	)	$	2,101

Futures	Other income	$	(1,966	)

Futures ⁽¹⁾	Operating and other costs							$	(708	)
Forwards ⁽¹⁾	Operating and other costs							98
Swaps ⁽¹⁾	Operating and other costs							1,884
Total gain								$	1,274

⁽¹⁾Represents the activity pre-completion of the Company’s canola processing plant.