v3.25.1
Fair Value Measurements
 3 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 7 -- Fair Value Measurements

The Company records and discloses certain financial assets at their estimated fair values. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:

 

Level 1

–

Unadjusted quoted prices in active markets for identical assets.

Level 2

–

Other inputs that are observable for the asset, either directly or indirectly such as quoted prices for identical assets that are not observable throughout the full term of the asset.

Level 3

–

Inputs that are unobservable.

 

Valuation Methodology

Cash and Cash Equivalents

Cash and cash equivalents primarily consist of money-market funds and certificates of deposit maturing within 90 days. Their carrying value approximates fair value due to the short maturity and high liquidity of these funds.

Restricted Cash

Restricted cash represents cash held by state authorities and the carrying value approximates fair value.

Fixed-Maturity and Equity Securities

Estimated fair values of the Company’s fixed-maturity and equity securities are determined in accordance with U.S. GAAP, using valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair values are generally measured using quoted prices in active markets for identical securities or other inputs that are observable either directly or indirectly, such as quoted prices for similar securities. In those instances where observable inputs are not available, fair values are measured using unobservable inputs. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the security and are developed based on the best information available in the circumstances. Fair value estimates derived from unobservable inputs are significantly affected by the assumptions used, including the discount rates and the estimated amounts and timing of future cash flows. The derived fair value estimates cannot be substantiated by comparison to independent markets and are not necessarily indicative of the amounts that would be realized in a current market exchange.

The estimated fair values for securities that do not trade on a daily basis are determined by management, utilizing prices obtained from an independent pricing service and information provided by brokers, which are level 2 inputs. Management reviews the assumptions and methods utilized by the pricing service and then compares the relevant data and pricing to broker-provided data. The Company gains assurance of the overall reasonableness and consistent application of the assumptions and methodologies, and compliance with accounting standards for fair value determination through ongoing monitoring of the reported fair values.

Revolving Credit Facility

From time to time, the Company has an amount outstanding under a revolving credit facility. The interest rate is variable and is periodically adjusted based on the Secured Overnight Financing Rate (“SOFR”) plus a ten basis points adjustment plus a margin based on the debt-to-capital ratio. As a result, carrying value, when outstanding, approximates fair value.

Long-Term Debt

The following table summarizes components of the Company’s long-term debt and methods used in estimating their fair values:

 

 

Maturity

Date

 

Valuation Methodology

4.75% Convertible Senior Notes

2042

 

Quoted price

4.55% Promissory Note

2036

 

Discounted cash flow method/Level 3 inputs

5.50% Promissory Note

2033

 

Discounted cash flow method/Level 3 inputs

 

 

Assets Measured at Estimated Fair Value on a Recurring Basis

The following tables present information about the Company’s financial assets measured at estimated fair value on a recurring basis. The tables indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of March 31, 2025 and December 31, 2024:

 

 

 

Fair Value Measurements Using

 

 

 

 

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Total

 

As of March 31, 2025

 

 

 

 

 

 

 

 

 

 

 

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

754,481

 

 

$

—

 

 

$

—

 

 

$

754,481

 

Restricted cash

 

$

3,722

 

 

$

—

 

 

$

—

 

 

$

3,722

 

Fixed-maturity securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and U.S. government agencies

 

$

626,082

 

 

$

491

 

 

$

—

 

 

$

626,573

 

Corporate bonds

 

 

18,656

 

 

 

7,168

 

 

 

—

 

 

 

25,824

 

Exchange-traded debt

 

 

464

 

 

 

—

 

 

 

—

 

 

 

464

 

Total available-for-sale securities

 

$

645,202

 

 

$

7,659

 

 

$

—

 

 

$

652,861

 

Equity securities

 

$

55,226

 

 

$

—

 

 

$

—

 

 

$

55,226

 

 

 

 

 

Fair Value Measurements Using

 

 

 

 

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Total

 

As of December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

532,471

 

 

$

—

 

 

$

—

 

 

$

532,471

 

Restricted cash

 

$

3,714

 

 

$

—

 

 

$

—

 

 

$

3,714

 

Fixed-maturity securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and U.S. government agencies

 

$

686,929

 

 

$

487

 

 

$

—

 

 

$

687,416

 

Corporate bonds

 

 

21,358

 

 

 

9,267

 

 

 

—

 

 

 

30,625

 

Exchange-traded debt

 

 

496

 

 

 

—

 

 

 

—

 

 

 

496

 

Total available-for-sale securities

 

$

708,783

 

 

$

9,754

 

 

$

—

 

 

$

718,537

 

Equity securities

 

$

56,200

 

 

$

—

 

 

$

—

 

 

$

56,200

 

 

Liabilities Carried at Other Than Fair Value

The following tables present fair value information for liabilities that are carried on the consolidated balance sheets at amounts other than fair value as of March 31, 2025 and December 31, 2024:

 

 

 

Carrying

 

 

Fair Value Measurements Using

 

 

Estimated

 

 

 

Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Fair Value

 

As of March 31, 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

42,000

 

 

$

—

 

 

$

42,000

 

 

$

—

 

 

$

42,000

 

Long-term debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.75% Convertible Senior Notes

 

$

169,602

 

 

$

—

 

 

$

323,746

 

 

$

—

 

 

$

323,746

 

4.55% Promissory Note

 

 

4,296

 

 

 

—

 

 

 

—

 

 

 

4,057

 

 

 

4,057

 

5.50% Promissory Note

 

 

11,434

 

 

 

—

 

 

 

—

 

 

 

11,676

 

 

 

11,676

 

Total long-term debt

 

$

185,332

 

 

$

—

 

 

$

323,746

 

 

$

15,733

 

 

$

339,479

 

 

 

 

 

Carrying

 

 

Fair Value Measurements Using

 

 

Estimated

 

 

 

Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Fair Value

 

As of December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

44,000

 

 

$

—

 

 

$

44,000

 

 

$

—

 

 

$

44,000

 

Long-term debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.75% Convertible Senior Notes

 

$

169,397

 

 

$

—

 

 

$

266,989

 

 

$

—

 

 

$

266,989

 

5.50% Promissory Note

 

 

11,491

 

 

 

—

 

 

 

—

 

 

 

11,307

 

 

 

11,307

 

4.55% Promissory Note

 

 

4,366

 

 

 

—

 

 

 

—

 

 

 

4,043

 

 

 

4,043

 

Total long-term debt

 

$

185,254

 

 

$

—

 

 

$

266,989

 

 

$

15,350

 

 

$

282,339