Fair Value Measurements

6 Months Ended

Jun. 30, 2012

Fair Value Measurements [Abstract]

Fair value measurements

NOTE 3

Fair value measurements. The Fair Value Measurements and Disclosures Topic of the FASB ASC defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal, or most advantageous, market for the asset or liability in an orderly transaction between market participants at the measurement date. The Fair Value Measurements Topic establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs when possible. The three levels of inputs used to measure fair value are as follows:

• Level 1 – quoted prices in active markets for identical assets or liabilities;

• Level 2 – observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data; and

• Level 3 – unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

As of June 30, 2012, financial instruments measured at fair value on a recurring basis are summarized below:

	Level 1		Level 2		Fair value measurements
	($000 omitted)
Short-term investments		27,947		—		27,947
Investments available-for-sale:
Debt securities:
Municipal		—		21,247		21,247
Corporate and utilities		—		250,026		250,026
Foreign		163,637		—		163,637
U.S. Government		19,173		—		19,173
Equity securities		10,268		—		10,268
		221,025		271,273		492,298

As of December 31, 2011, financial instruments measured at fair value on a recurring basis are summarized below:

	Level 1		Level 2		Fair value measurements
	($000 omitted)
Short-term investments		33,137		—		33,137
Investments available-for-sale:
Debt securities:
Municipal		—		27,801		27,801
Corporate and utilities		—		244,123		244,123
Foreign		164,268		—		164,268
U.S. Government		19,350		—		19,350
Equity securities		5,443		—		5,443
		222,198		271,924		494,122

As of June 30, 2012, Level 1 financial instruments consist of short-term investments, U.S. and foreign government bonds, and equity securities. Level 2 financial instruments consist of municipal, corporate and utilities bonds. In accordance with the Company’s policies and guidelines, the Company’s third party, registered investment manager invests only in securities rated as investment grade or higher by the major rating services, where observable valuation inputs are significant. All municipal bonds are valued using a third-party pricing service, and the corporate bonds are valued using the market approach, which includes three to ten inputs from relevant market sources, including FINRA’s Trade Reporting and Compliance Engine (TRACE) and independent broker/dealer quotes, bids and offerings, as well as other relevant market data, such as securities with similar characteristics (i.e. sector, rating, maturity, etc.). Broker/dealer quotes, bids and offerings mentioned above are gathered (typically three to ten) and a consensus risk premium spread (credit spread) over risk-free Treasury yields is developed from the inputs obtained, which is then used to calculate the resulting fair value.