v3.25.2
Fair Value Measurements
 12 Months Ended
Dec. 31, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
The Company’s financial instruments include assets and liabilities carried at fair value, as well as assets and liabilities carried at cost or amortized cost but disclosed at fair value in its consolidated financial statements. In determining fair value, the market approach is generally applied, which uses prices and other relevant data based on market transactions involving identical or comparable assets and liabilities.
The Company uses data primarily provided by third-party investment managers or pricing vendors to determine the fair value of its investments. Periodic analyses are performed on prices received from third parties to determine whether the prices are reasonable estimates of fair value. The analyses include a review of month-to-month price fluctuations and, as needed, a comparison of pricing services’ valuations to other pricing services’ valuations for the identical security.
The Company classifies its financial instruments into the following three-level hierarchy:
Level 1 - Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement
date.
Level 2 - Inputs are 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 following methods and assumptions were used in estimating the fair value disclosures for financial instruments in the accompanying consolidated financial statements and in these notes:
U.S. government securities, mutual funds and common stock
The Company uses unadjusted quoted prices for identical instruments in an active exchange to measure fair value which represent Level 1 inputs.
Preferred stocks, municipal securities, corporate securities and miscellaneous
The Company uses a pricing model that utilizes market-based inputs such as trades in an illiquid market for a particular security or trades in active markets for securities with similar characteristics. The model considers other inputs such as benchmark yields, issuer spreads, security terms and conditions, and other market data. These represent Level 2 fair value inputs.
Commercial mortgage-backed securities, residential mortgage-backed securities and other asset-backed securities
The Company uses a pricing model that utilizes market-based inputs that may include dealer quotes, market spreads, and yield curves. It may evaluate individual tranches in a security by determining cash flows using the security’s terms and conditions, collateral performance, credit information benchmark yields and estimated prepayments. These represent Level 2 fair value inputs.
Fixed maturity securities, available for sale and equity securities classified as Level 3
The Company has corporate securities and miscellaneous, other asset-backed securities that are managed by an independent asset manager and priced by an independent pricing provider. The provider estimates the value of the securities using the discount net present value of cash flows method using an unobservable discount rate. The discount rate spread represents the risk associated with future cash flows, including inflation, opportunity cost and the time value of money. This rate represents Level 3 fair value inputs.
The following table sets forth the range of the discount rate as of December 31, 2024:
December 31, 2024
High8.00 %
Low5.70 %
Weighted average6.60 %
Mortgage loans
Mortgage loans have variable interest rates and are collateralized by real property. The Company determines fair value of mortgage loans using the income approach utilizing inputs that are observable and unobservable (Level 3). The unobservable input consists of the spread applied to a prime rate used to discount cash flows. The spread represents the incremental cost of capital based on the borrower’s ability to make future payments and the value of the collateral relative to the loan balance and is subject to judgement and uncertainty.
The following table sets forth the range and weighted average, weighted by relative fair value, of the spread as of December 31, 2024 and December 31, 2023:
December 31, 2024December 31, 2023
High10.00 %9.50 %
Low7.00 %3.25 %
Weighted average7.93 %7.05 %
Investment in RedBird Capital Partners
Included in other long-term investments is an investment in a limited partnership with RedBird Capital Partners, which invests in Bishop Street Underwriters, LLC (“Bishop Street”), a managing general agent (MGA). The investment had a fair value of $28.2 million at December 31, 2024, which was determined using the net asset value. The Company employs procedures to assess the reasonableness of the fair value of the investment including obtaining and reviewing the audited financial statements. The unfunded commitment related to the investment was $24.4 million at December 31, 2024. The Company may sell its interest in the investment with the appropriate prior written notice and approval by the general partner. In accordance with Accounting Standard Codification 820-10, this investment is measured at fair value using the net asset value per share practical expedient and has not been classified in the fair value hierarchy.
The following tables set forth the Company’s investments within the fair value hierarchy at December 31, 2024 and December 31, 2023:
December 31, 2024
($ in thousands)Level 1Level 2Level 3Total
Fixed maturity securities, available-for-sale:
U.S. government securities$26,486 $— $— $26,486 
Corporate securities and miscellaneous— 354,815 70,813 425,628 
Municipal securities— 84,716 — 84,716 
Residential mortgage-backed securities— 393,833 — 393,833 
Commercial mortgage-backed securities— 69,364 — 69,364 
Other asset-backed securities— 285,084 7,107 292,191 
Total fixed maturity securities, available-for-sale26,486 1,187,812 77,920 1,292,218 
Fixed maturity securities, held-to-maturity:
Other asset-backed securities— — 38,717 38,717 
Total fixed maturity securities, held-to-maturity— — 38,717 38,717 
Equity securities:
Common stocks64,251 — — 64,251 
Preferred stocks— 1,164 — 1,164 
Mutual funds40,839 — — 40,839 
Total equity securities105,090 1,164 — 106,254 
Mortgage loans— — 26,490 26,490 
Short-term investments274,929 — — 274,929 
Total$406,505 $1,188,976 $143,127 $1,738,608 
December 31, 2023
($ in thousands)Level 1Level 2Level 3Total
Fixed maturity securities, available-for-sale:
U.S. government securities$44,166 $— $— $44,166 
Corporate securities and miscellaneous— 383,420 — 383,420 
Municipal securities— 92,778 — 92,778 
Residential mortgage-backed securities— 281,626 — 281,626 
Commercial mortgage-backed securities— 29,934 — 29,934 
Other asset-backed securities— 185,727 — 185,727 
Total fixed maturity securities, available-for-sale44,166 973,485 — 1,017,651 
Fixed maturity securities, held-to-maturity:
Other asset-backed securities— — 41,017 41,017 
Total fixed maturity securities, held-to-maturity:— — 41,017 41,017 
Equity securities:
Common stocks67,425 — — 67,425 
Preferred stocks— 7,358 — 7,358 
Mutual funds43,466 — — 43,466 
Total equity securities110,891 7,358 — 118,249 
Mortgage loans— — 50,070 50,070 
Short-term investments270,226 — — 270,226 
Total$425,283 $980,843 $91,087 $1,497,213 
The following tables set forth the changes in the fair value of instruments carried at fair value with a Level 3 measurement during the years ended December 31, 2024 and 2023:
($ in thousands)Fixed Maturity Securities, Available-For-SaleMortgage Loans
Balance at December 31, 2023$— $50,070 
Total gains (losses) for the period recognized in net investment gains (losses)(195)420 
Issuances— 649 
Settlements— (24,649)
Purchases77,979 — 
Sales/Disposals(374)— 
Total unrealized gains for the period recognized in accumulated comprehensive income (loss)510 — 
Balance at December 31, 2024$77,920 $26,490 
Total gains for the period recognized in net investment gains (losses) attributable to the change in unrealized gains or losses relating to assets held as of period end$— $411 
($ in thousands)Mortgage Loans
Balance at December 31, 2022$52,842 
Total losses for the period recognized in net investment gains (losses)(385)
Issuances27,642 
Settlements(30,029)
Balance at December 31, 202350,070 
Total losses for the period recognized in net investment gains (losses) attributable to the change in unrealized gains or losses relating to assets held as of period end(426)
The Company measures certain assets, including investments in indirect loans and loan collateral, equity method investments and other invested assets, at fair value on a nonrecurring basis only when they are deemed to be impaired.
In addition to the preceding disclosures on assets and liabilities recorded at fair value in the consolidated balance sheets, the Company is also required to disclose the fair values of certain other financial instruments for which it is practicable to estimate fair value. Estimated fair value amounts, defined as the quoted market price of a financial instrument, have been determined using available market information and other appropriate valuation methodologies. However, considerable judgements are required in developing the estimates of fair value where quoted market prices are not available. Accordingly, these estimates are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions or estimating methodologies may have an effect on the estimated fair value amounts.
The following methods and assumptions were used in estimating the fair value disclosures of other financial instruments:
Fixed maturity securities, held-to-maturity: Fixed maturity securities, held-to-maturity consists of senior and junior notes with target rates of return. As of December 31, 2024, the Company determined the fair value of these instruments using the income approach utilizing inputs that are unobservable (Level 3).
Notes payable: The carrying value approximates the estimated fair value for notes payable as the notes payable accrue interest at current market rates plus a spread. The Company determines fair value using the income approach utilizing inputs that are observable (Level 2).
Subordinated debt: Subordinated debt consists of the Unsecured Subordinated Notes, due May 24, 2039 and have a fixed interest rate. The Company determines the fair value of these instruments using the income approach utilizing inputs that are observable (Level 2).
The following table sets forth the Company’s carrying and fair values of notes payable and subordinated debt as of December 31, 2024 and December 31, 2023:
December 31, 2024December 31, 2023
($ in thousands)Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
Notes payable
FHLB Loan$57,000 $56,200 $— $— 
Revolving credit facility$43,000 $43,000 $50,000 $50,000 
Notes payable$100,000 $99,200 $50,000 $50,000 
Subordinated debt
Junior subordinated interest debentures$— $— $59,186 $59,794 
Unsecured subordinated notes19,536 20,541 19,504 21,378 
Subordinated debt, net of debt issuance costs$19,536 $20,541 $78,690 $81,172 
Other financial instruments qualify as insurance-related products and are specifically exempted from fair value disclosure requirements.