Fair Value

12 Months Ended

Dec. 31, 2011

Fair Value [Abstract]

Fair Value

Note O – Fair Value

Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The following tables summarize fair value measurements by level for assets measured at fair value on a recurring basis:

As of December 31, 2011

Description	Total		Level 1		Level 2		Level 3
U.S. government obligations	$	73,137	$	73,137	$	-	$	-
Government sponsored entities		349		-		349		-
Residential mortgage-backed securities		21,872		-		21,872		-
Commercial mortgage-backed securities		11,300		-		11,300		-
State and municipal obligations		190,035		-		190,035		-
Corporate securities		90,141		-		73,091		17,050
Options embedded in convertible securities		1,505		-		1,505		-
Foreign government obligations		21,121		-		21,121		-
Total fixed maturities		409,460		73,137		319,273		17,050
Equity securities		88,085		88,085		-		-
Short term		3,675		2,982		693
Cash equivalents		81,756		-		81,756		-
	$	582,976	$	164,204	$	401,722	$	17,050

As of December 31, 2010:

Description	Total		Level 1		Level 2		Level 3
U.S. government obligations	$	62,998	$	62,998	$	-	$	-
Government sponsored entities		3,324		-		3,324		-
Residential mortgage-backed securities		37,101		-		37,101		-
Commercial mortgage-backed securities		14,714		-		14,714		-
State and municipal obligations		192,706		-		192,706		-
Corporate securities		84,417		-		67,175		17,242
Foreign government obligations		20,294		-		20,294		-
Total fixed maturities		415,554		62,998		335,314		17,242
Equity securities		96,657		96,657		-		-
Short term		4,225		4,021		204
Cash equivalents		41,385		-		41,385		-
	$	557,821	$	163,676	$	376,903	$	17,242

Level inputs, as defined by the FASB guidance, are as follows:

Level Input:	Input Definition:
Level 1	Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level 2	Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date.
Level 3	Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The Level 3 assets consist of an investment portfolio of insurance-linked securities.  The insurance-linked securities are valued using the average of estimated market quotes from multiple insurance-linked securities brokers.  The broker quotes include Level 3 inputs which are significant to the valuation of the insurance-linked securities. There were no Level 3 sales, no transfers in to Level 3 and no transfers out of Level 3 during 2011 or 2010.  A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level 3 inputs is as follows for the years ended December 31:

	2011			2010
Beginning of period balance	$	17,242		$	14,887
Total gains or losses (realized or unrealized)
Included in earnings (or changes in net assets)		387			1,938
Included in other comprehensive income		-			(397	)
Purchases		6,522			9,136
Settlements		(7,101	)		(8,322	)
End of period balance	$	17,050		$	17,242

Quoted market prices are obtained for these disclosures whenever possible.  Where quoted market prices are not available, fair values are estimated using present value or other valuation techniques.  These techniques are significantly affected by our assumptions, including discount rates and estimates of future cash flows.  Potential taxes and other transaction costs have not been considered in estimating fair values.

Non-financial instruments such as real estate, property and equipment, other assets, deferred income taxes and intangible assets, and certain financial instruments such as policy reserve liabilities are excluded from the fair value disclosures.  Therefore, the fair value amounts cannot be aggregated to determine the underlying economic value to the Company.

The carrying amounts reported in the consolidated balance sheets for cash, accounts receivables, reinsurance recoverable, notes receivable, accounts payable and accrued expenses, income taxes payable, short term borrowings and unearned income approximate fair value because of the short term nature of these items.

There were no significant transfers of assets between Level 1 and Level 2 during 2011, 2010 and 2009.

Transfers between levels, if any, are recorded as of the beginning of the reporting period.