(8) Fair Value:

Assets and liabilities recorded at fair value in the condensed 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 September 30, 2017:

Description	Total		Level 1		Level 2		Level 3

Fixed maturities:
Agency collateralized mortgage obligations	$	11,017	$	-	$	11,017	$	-
Agency mortgage-backed securities		19,712		-		19,712		-
Asset-backed securities		50,030		-		50,030		-
Bank loans		24,986		-		24,986		-
Certificates of deposit		3,138		3,138		-		-
Collateralized mortgage obligations		7,055		-		7,055		-
Corporate securities		160,716		-		160,558		158
Options embedded in convertible securities		5,078		-		5,078		-
Mortgage-backed securities		20,643		-		20,413		230
Municipal obligations		102,805		-		102,805		-
Non-U.S. government obligations		32,942		-		32,942		-
U.S. government obligations		51,484		-		51,484		-
Total fixed maturities		489,606		3,138		486,080		388
Equity securities:
Consumer		41,912		41,912		-		-
Energy		8,168		8,168		-		-
Financial		46,167		46,167		-		-
Industrial		23,971		23,971		-		-
Technology		11,826		11,826		-		-
Mutual fund		53,528		53,528		-		-
Other		8,595		8,595		-		-
Total equity securities		194,167		194,167		-		-
Short-term		1,000		1,000		-		-
Cash equivalents		64,153		-		64,153		-
Total	$	748,926	$	198,305	$	550,233	$	388

As of December 31, 2016:

Description	Total		Level 1		Level 2		Level 3

Fixed maturities:
Agency collateralized mortgage obligations	$	6,171	$	-	$	6,171	$	-
Agency mortgage-backed securities		4,770		-		4,770		-
Asset-backed securities		45,183		-		37,919		7,264
Bank loans		10,349		-		-		10,349
Certificates of deposit		3,117		3,117		-		-
Collateralized mortgage obligations		9,104		-		6,409		2,695
Corporate securities		137,932		-		135,794		2,138
Options embedded in convertible securities		4,751		-		4,751		-
Mortgage-backed securities		24,571		-		22,206		2,365
Municipal obligations		129,335		-		129,190		145
Non-U.S. government obligations		24,681		-		24,419		262
U.S. government obligations		91,940		-		91,940		-
Total fixed maturities		491,904		3,117		463,569		25,218
Equity securities:
Consumer		32,576		32,576		-		-
Energy		12,842		12,842		-		-
Financial		31,186		30,943		243		-
Industrial		21,145		20,262		883		-
Technology		8,858		8,858		-		-
Mutual fund		6,995		-		6,995		-
Other		6,343		6,343		-		-
Total equity securities		119,945		111,824		8,121		-
Short-term		1,500		1,500		-		-
Cash equivalents		59,683		-		59,683		-
Total	$	673,032	$	116,441	$	531,373	$	25,218

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 Company's Level 3 assets consist primarily of a portfolio of corporate and mortgage-backed securities. The assets are valued using various unobservable inputs including extrapolated data, proprietary models and indicative quotes. Transfers into Level 3 relate to securities previously classified as Level 2. 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 nine months ended September 30, 2017 and for the year ended December 31, 2016:

	2017			2016
Beginning of period balance	$	25,218		$	16,793
Total gains (realized or unrealized)
included in income		316			1,846
Purchases		81			5,540
Settlements		(8,950	)		(8,791	)
Transfers into Level 3		144			10,202
Transfers out of Level 3		(16,421	)		(372	)
End of period balance	$	388		$	25,218

Quoted market prices are obtained 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 the Company's assumptions, including discount rates and estimates of future cash flows. Potential taxes and other transaction costs have not been considered in estimating fair values.

Transfers between levels, if any, are recorded as of the beginning of the reporting period. There were no material transfers of assets between Level 1 and Level 2 during the nine months ended September 30, 2017 and 2016. The transfers out of Level 3 during the third quarter of 2017 consisted mainly of bank loans, asset-backed securities and certain mortgage-backed securities and corporate securities, which were based on quoted market prices of similar securities and other observable inputs.

In addition to the preceding disclosures on assets recorded at fair value in the condensed consolidated balance sheets, FASB guidance also requires the disclosure of fair values for certain other financial instruments for which it is practicable to estimate fair value, whether or not such values are recognized in the condensed consolidated balance sheets.

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 of the Company. The following methods, assumptions and inputs were used to estimate the fair value of limited partnerships and short-term borrowings.

Limited partnerships: The Company accounts for investments in limited partnerships using the equity method of accounting, which requires an investor in a limited partnership to carry the investment at its proportionate share of the limited partnership's equity. The underlying assets of the Company's investments in limited partnerships are carried primarily at fair value, and, therefore, the Company's carrying value of limited partnerships approximates fair value. As these investments are not actively traded and the corresponding inputs are based on data provided by the investees, they are classified as Level 3.

Short-term borrowings: The fair value of the Company's short-term borrowings is based on quoted market prices for the same or similar debt, or, if no quoted market prices are available, on the current market interest rates available to the Company for debt of similar terms and remaining maturities.

A summary of the carrying value and fair value by level of financial instruments not recorded at fair value on the Company's condensed consolidated balance sheets at September 30, 2017 and December 31, 2016 are as follows:

	Carrying		Fair Value
	Value		Level 1		Level 2		Level 3		Total

September 30, 2017
Assets: Limited partnerships	$	69,568	$	-	$	-	$	69,568	$	69,568
Liabilities: Short-term borrowings		20,000		-		20,000		-		20,000

December 31, 2016
Assets: Limited partnerships		76,469		-		-		76,469		76,469
Liabilities: Short-term borrowings		20,000		-		20,000		-		20,000