Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 4 – Fair Value Measurements

Fair Value Measurements on a Recurring Basis

Assets and liabilities recorded at fair value in the Condensed Consolidated Balance Sheets are measured and classified in accordance with a fair value hierarchy consisting of three levels based on the observability of valuation inputs:

Level 1 – Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – Valuation methodologies include quoted prices for similar assets and liabilities in active markets or quoted prices for identical, quoted prices for identical or similar assets or liabilities in markets that are not active, or the Company may use various valuation techniques or pricing models that use observable inputs to measure fair value.

Level 3 – Valuation is based upon unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The following table presents information about assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value measurement based on the observability of the inputs used:

September 30, 2022	Level 1		Level 2		Level 3		Net Asset Value		Total
Financial assets:
Fixed maturities available for sale:
U.S. Government and government agencies and authorities	$	20,114,285	$	0	$	0	$	0	$	20,114,285
U.S. special revenue and assessments		0		7,144,370		0		0		7,144,370
Corporate securities		0		82,719,310		0		0		82,719,310
Total fixed maturities		20,114,285		89,863,680		0		0		109,977,965
Equity securities:
Common stocks		45,276,351		16,494,094		6,349,498		71,763,152		139,883,095
Preferred stocks		0		0		1,247,000		0		1,247,000
Total equity securities		45,276,351		16,494,094		7,596,498		71,763,152		141,130,095
Total financial assets	$	65,390,636	$	106,357,774	$	7,596,498	$	71,763,152	$	251,108,060
Liabilities
Trading securities	$	0	$	0	$	0	$	0	$	0

December 31, 2021	Level 1			Level 2		Level 3		Net Asset Value		Total
Financial assets:
Fixed maturities available for sale:
U.S. Government and government agencies and authorities	$	25,650,903		$	0	$	0	$	0	$	25,650,903
U.S. special revenue and assessments		0			8,523,535		0		0		8,523,535
Corporate securities		0			106,789,443		0		0		106,789,443
Total fixed maturities		25,650,903			115,312,978		0		0		140,963,881
Equity securities:
Common stocks		40,784,660			16,711,180		5,861,486		57,603,597		120,960,923
Preferred stocks		0			21,198		1,247,000		0		1,268,198
Total equity securities		40,784,660			16,732,378		7,108,486		57,603,597		122,229,121
Total financial assets	$	66,435,563		$	132,045,356	$	7,108,486	$	57,603,597	$	263,193,002
Liabilities
Trading securities	$	(1,116	)	$	0	$	0	$	0	$	(1,116	)

The following is a description of the valuation techniques used the by Company to measure assets reported at fair value on a recurring basis. There have been no significant changes in the valuation techniques utilized by the Company for the nine months ended September 30, 2022.

Available for Sale Securities

Securities classified as available for sale are recorded at fair value on a recurring basis. Securities classified as Level 1 utilized fair value measurements based upon quoted market prices, when available. If quoted market prices are not available, the Company obtains fair value measurements from recently executed transactions, market price quotations, benchmark yields and issuer spreads to value Level 2 securities. In certain instances where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. Fair value determinations for Level 3 measurements are estimated on a quarterly basis where assumptions used are reviewed to ensure the estimated fair value complies with accounting standard generally accepted in the United States.

Equity Securities at Fair Value

Equity securities consist of common stocks mainly in private equity investments, financial institutions and publicly traded corporations. Equity securities for which there is sufficient market data are categorized as Level 1 or 2 in the fair value hierarchy.  For the equity securities in which quoted market prices are not available, the Company uses industry standard pricing methodologies, including discounted cash flow models that may incorporate various inputs such as payment expectations, risk of the investment, market data, and health of the underlying company. The inputs are based upon Management’s assumptions and available market information. When evidence is believed to support a change to the carrying value from the transaction price, adjustments are made to reflect the expected cash flows, material events and market data. These investments are included in Level 3 of the fair value hierarchy.

Equity Securities at Net Asset Value

Certain equity securities carried at fair value, which do not have readily determinable fair values, use net asset value (“NAV”) and are excluded from the fair value hierarchy. These investments are generally not readily redeemable by the investee. See Note 7 – Commitments and Contingencies for additional information regarding unfunded commitments.

Trading Securities

Trading securities are recorded at fair value. They are classified as Level 1 and utilize fair value measurements based upon quoted market prices.

Change in Recurring Fair Value Measurements

The following table presents the changes in Level 3 equity securities measured at fair value on a recurring basis and equity securities measured at net asset value, and the realized and unrealized gains (losses) related to the equity securities.

	Equity Securities at Fair Value			Equity Securities at Net Asset Value			Total
Balance at December 31, 2021	$	7,108,486		$	57,603,597		$	64,712,083
Realized gains (losses)		198,125			327,863			525,988
Unrealized gains (losses)		138,928			8,669,059			8,807,987
Purchases		352,084			7,682,338			8,034,422
Sales		(201,125	)		(2,519,705	)		(2,720,830	)
Balance at September 30, 2022	$	7,596,498		$	71,763,152		$	79,359,650

Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3 in the tables above. As a result, the unrealized gains (losses) on instruments held at September 30, 2022 and December 31, 2021 may include changes in fair value that were attributable to both observable and unobservable inputs.

Quantitative Information About Level 3 Fair Value Measurements

The following table presents information about the significant unobservable inputs used for recurring fair value measurements for certain Level 3 instruments, and include only those instruments for which information about the inputs is reasonably available to the Company, such as data from independent third-party valuation service providers and from internal valuation models.

Financial Assets	Fair Value at September 30, 2022		Fair Value at December 31, 2021		Valuation Technique
Equities	$	71,763,152	$	57,603,597	Net Asset Value
Equities		7,596,498		7,108,486	Pricing Model
Total	$	79,359,650	$	64,712,083

Uncertainty of Fair Value Measurements

The significant unobservable inputs used in the determination of the fair value of assets classified as Level 3 have an inherent measurement uncertainty that if changed could result in higher or lower fair value measurements of these assets as of the reporting date.

Equity Securities at Fair Value

Fair market value for equity securities is derived based on unobservable inputs, such as projected normalized revenues and industry standard multiples of revenue for the equity securities valued using pricing model.  Significant increases (decreases) in either of those inputs in isolation would result in a significantly higher (lower) fair value measurement.

Investments in Certain Entities Carried at Fair Value Using Net Asset Value per Share

Investment Company	Fair Value at September 30, 2022		Unfunded Commitments		Redemption Frequency		Redemption Notice Period
Common Stocks
Growth Equity
Redeemable	$	36,582,059	$	0	Quarterly		45 days
Non-Redeemable		35,181,093		9,335,341		n/a		n/a
Total	$	71,763,152	$	9,335,341

Investment Company	Fair Value at December 31, 2021		Unfunded Commitments		Redemption Frequency		Redemption Notice Period
Common Stocks
Growth Equity
Redeemable	$	28,546,227	$	0	Quarterly		45 days
Non-Redeemable		29,057,370		5,288,967		n/a		n/a
Total	$	57,603,597	$	5,288,967

Fair Value Measurements on a Nonrecurring Basis

Certain assets are not carried at fair value on a recurring basis. Accordingly, such investments are only included in the fair value hierarchy disclosure when the investment is subject to re-measurement at fair value after initial recognition and the resulting re-measurement is reflected in the Condensed Consolidated Financial Statements. The Company did not recognize any re-measurements or impairments of financial instruments at September 30, 2022 or December 31, 2021.

Fair Value Information About Financial Instruments Not Measured at Fair Value

Certain assets are not carried at fair value on a recurring basis. Accordingly, such investments are only included in the fair value hierarchy disclosure when the investment is subject to re-measurement at fair value after initial recognition and the resulting re-measurement is reflected in the Condensed Consolidated Financial Statements.

The following table presents the carrying amount and estimated fair values of the Company’s financial instruments not measured at fair value and indicates the level in the fair value hierarchy of the estimated fair value measurement based on the observability of the inputs used:

	Carrying		Estimated
September 30, 2022	Amount		Fair Value		Level 1		Level 2		Level 3
Assets
Common stock, at cost	$	5,168,198		5,168,198		0		0		5,168,198
Preferred stock, at cost		8,515,145		8,515,145		0		0		8,515,145
Mortgage loans on real estate and Notes receivable		49,113,958		48,164,823		0		0		48,164,823
Investment real estate		35,948,558		91,587,781		0		0		91,587,781
Policy loans		7,215,150		7,215,150		0		0		7,215,150
Liabilities
Notes payable		8,000,000		8,000,000		0		8,000,000		0

	Carrying		Estimated
December 31, 2021	Amount		Fair Value		Level 1		Level 2		Level 3
Assets
Common stock, at cost	$	5,860,000		5,860,000		0		0		5,860,000
Preferred stock, at cost		8,683,343		8,683,343		0		0		8,683,343
Mortgage loans on real estate and Notes receivable		46,906,538		46,906,538		0		0		46,906,538
Investment real estate		39,748,261		96,463,112		0		0		96,463,112
Policy loans		7,390,497		7,390,497		0		0		7,390,497
Liabilities
Notes payable		24,000,000		24,000,000		0		24,000,000		0

The above estimated fair value amounts have been determined based upon the following valuation methodologies. Considerable judgment was required to interpret market data in order to develop these estimates. Accordingly, the estimates are not necessarily indicative of the amounts which could be realized in a current market exchange.  The use of different market assumptions or estimation methodologies may have a material effect on the fair value amounts.

The fair values of mortgage loans on real estate are estimated using discounted cash flow analyses and interest rates being offered for similar loans to borrowers with similar credit ratings.  The inputs used to measure the fair value of our mortgage loans on real estate are classified as Level 3 within the fair value hierarchy.

A portion of the mortgage loans balance consists of discounted mortgage loans. The Company has historically purchased non-performing discounted mortgage loans at a deep discount through an auction process led by the Federal Government.  In general, the discounted loans are non-performing and there is a significant amount of uncertainty surrounding the timing and amount of cash flows to be received by the Company.  Accordingly, the Company records its investment in the discounted loans at its original purchase price, which Management believes approximates fair value.  The inputs used to measure the fair value of our discounted mortgage loans are classified as Level 3 within the fair value hierarchy.

Investment real estate is recorded at the lower of the net investment in the real estate or the fair value of the real estate less costs to sell.  The determination of fair value assessments are performed on a periodic, non-recurring basis by external appraisal and assessment of property values by Management.  The inputs used to measure the fair value of our investment real estate are classified as Level 3 within the fair value hierarchy.

The fair values of notes receivable are estimated using discounted cash flow analyses and interest rates being offered for similar loans to borrowers with similar credit ratings. The inputs used to measure the fair value of the notes receivable are classified as Level 3 within the fair value hierarchy.

Policy loans are carried at the aggregate unpaid principal balances in the Condensed Consolidated Balance Sheets which approximate fair value, and earn interest at rates ranging from 4% to 8%. Individual policy liabilities in all cases equal or exceed outstanding policy loan balances.  The inputs used to measure the fair value of our policy loans are classified as Level 3 within the fair value hierarchy.