| Fair Values of Financial Instruments |
| Note 4. |
Fair Values of Financial Instruments
|
The estimated fair values have been determined by the Company using available market information from various market sources and appropriate valuation methodologies as of the respective dates.
However, considerable judgment is necessary to interpret market data and to develop the estimates of fair value. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, the estimates presented
herein are not necessarily indicative of the amounts which the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
The following describes the fair value hierarchy and provides information as to the extent to which the Company uses fair value to measure the value of its financial instruments and information about
the inputs used to value those financial instruments. The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three broad levels.
| Level 1 |
Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. The Company’s financial instruments valued using Level 1 criteria
include cash equivalents and exchange traded common stocks.
|
| Level 2 |
Observable inputs, other than quoted prices included in Level 1, for an asset or liability or prices for similar assets or liabilities. The Company’s financial instruments valued using Level 2 criteria include most of its fixed maturities,
which consist of U.S. Treasury securities, U.S. Government securities, obligations of states and political subdivisions, and certain corporate fixed maturities, as well as its non-redeemable preferred stocks. In determining fair value
measurements of its fixed maturities and non-redeemable preferred stocks using Level 2 criteria, the Company utilizes data from outside sources, including nationally recognized pricing services and broker/dealers. Prices for the majority of
the Company’s Level 2 fixed maturities and non-redeemable preferred stocks were determined using unadjusted prices received from pricing services that utilize models where the significant inputs are observable (e.g. interest rates, yield
curves, prepayment speeds, default rates and loss severities) or can be corroborated by observable market data.
|
| Level 3 | Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk). Fair value is based on criteria that use assumptions or other data that are not readily observable from objective sources. With little or no observable market, the determination of fair values uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability. The Company’s financial instruments valued using Level 3 criteria consist of one equity security. As of June 30, 2025 and December 31, 2024, the value of the equity security valued using Level 3 criteria was $193 and $189, respectively. |
As of June 30, 2025, financial instruments carried at fair value were measured on a recurring basis as summarized below:
| |
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
Total
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities
|
|
$
|
— |
|
|
$
|
213,323 |
|
|
$
|
— |
|
|
$
|
213,323 |
|
|
Equity securities
|
|
|
11,087 |
|
|
|
— |
|
|
|
193 |
|
|
|
11,280 |
|
|
Cash equivalents
|
|
|
28,421 |
|
|
|
— |
|
|
|
— |
|
|
|
28,421 |
|
|
Total
|
|
$
|
39,508 |
|
|
$
|
213,323 |
|
|
$
|
193 |
|
|
$
|
253,024 |
|
As of December 31, 2024, financial instruments carried at fair value were measured on a recurring basis as summarized below:
| |
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
Total
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities
|
|
$
|
— |
|
|
$
|
212,612 |
|
|
$
|
— |
|
|
$
|
212,612 |
|
|
Equity securities
|
|
|
7,711 |
|
|
|
— |
|
|
|
189 |
|
|
|
7,900 |
|
|
Cash equivalents
|
|
|
14,948 |
|
|
|
— |
|
|
|
— |
|
|
|
14,948 |
|
|
Total
|
|
$
|
22,659 |
|
|
$
|
212,612 |
|
|
$
|
189 |
|
|
$
|
235,460 |
|
The following table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of June 30, 2025 and December 31, 2024.
| |
|
|
|
|
June 30, 2025
|
|
|
December 31, 2024
|
|
| |
|
Level in Fair
Value
Hierarchy (1)
|
|
|
Carrying
Amount
|
|
|
Estimated
Fair Value
|
|
|
Carrying
Amount
|
|
|
Estimated
Fair Value
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
Level 1
|
|
|
$
|
46,423 |
|
|
$
|
46,423 |
|
|
$
|
35,570 |
|
|
$
|
35,570 |
|
|
Fixed maturities
|
|
Level 2
|
|
|
|
213,323 |
|
|
|
213,323 |
|
|
|
212,612 |
|
|
|
212,612 |
|
|
Equity securities
|
|
|
(1)
|
|
|
11,280 |
|
|
|
11,280 |
|
|
|
7,900 |
|
|
|
7,900 |
|
|
Policy loans
|
|
Level 3
|
|
|
|
1,656 |
|
|
|
1,656 |
|
|
|
1,722 |
|
|
|
1,722 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Junior subordinated debentures, net
|
|
Level 2
|
|
|
|
33,738 |
|
|
|
32,931 |
|
|
|
33,738 |
|
|
|
35,443 |
|
|
Revolving credit facility
|
|
Level 2
|
|
|
|
4,021 |
|
|
|
4,021 |
|
|
|
4,023 |
|
|
|
4,023 |
|
| | (1) | See the aforementioned information for a description of the fair value hierarchy as well as a description of levels for classes of these financial assets. The Company has one equity security valued at level 3 and all other equity securities are valued at level 1. |
The Company had no transfers into or out of level 3 for the six months ended June 30, 2025 or the year ended December 31, 2024.
|