The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. The Company uses a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Investments, available for sale: Fair values of available for sale fixed maturity securities are provided by a third party pricing service. The pricing service uses a variety of sources to determine fair value of securities. The Company’s fixed maturity securities are highly liquid, which allows for a high percentage of the portfolio to be priced through pricing sources.

Equity securities: Fair values for equity securities are also provided by a third party pricing service and are derived from active trading on national market exchanges.

Embedded derivative: The fair value of the reinsurance related assets represents the Company’s allocation of the fair value of the corresponding derivative instruments used in the hedge which are based on the quoted market prices of the underlying derivative instruments.  The fair value of the underlying assets for both embedded derivatives are generally based upon market observable inputs with industry standard valuation techniques. The valuation also requires certain significant inputs, which are generally not observable and accordingly, the valuation is considered Level 3 in the fair value hierarchy. The Company’s utilization of a credit-valuation adjustment did not have a material effect on the change in fair value of the embedded derivatives for the six and three months ended June 30, 2026 and June 30, 2025.

The table below presents the amounts of assets measured at fair value on a recurring basis as of June 30, 2026 and December 31,2025:

The reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are as follows:

The Company discloses the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed on the previous page. The estimated fair value approximates carrying value for accrued interest. The methodologies for other financial assets and financial liabilities are discussed below:

Cash and cash equivalents: The carrying amounts approximate fair value because of the short maturity of these instruments.

Investment income due and accrued: The carrying amounts approximate fair value because of the short maturity of these instruments. The Company classifies accrued investment income within Level 3 of the fair value hierarchy because the fair value measurement relies principally on unobservable inputs, including management’s assessment of collectability, expected timing of receipt and the relationship of the accrued amount to the credit characteristics of the related investment. Although the expected collection period is generally short and the carrying amount approximates fair value, there is no active secondary market or independently observable pricing input for the standalone receivable. Accordingly, the lowest level input that is significant to the measurement is unobservable, supporting Level 3 classification.

Mortgage loans on real estate:  Mortgage loans on real estate are carried at unpaid principal value. The fair value of mortgage loans on real estate is estimated using a discounted cash flow method under which expected cash flows are discounted using market-based rates for loans with similar terms and credit characteristics. The discount rates are based on U.S. Treasury par yields for tenors corresponding to the loans' remaining maturities, plus credit spread adjustments based on NAIC rating. Although the U.S. Treasury yields are observable, the credit spread adjustments used to reflect borrower and loan-specific risk are unobservable and significant to the measurements; accordingly, the fair value of mortgage loans is classified within Level 3 of the fair value hierarchy.

Limited partnership interests: Limited partnership interests are measured at fair value using the most recently reported net asset value (“NAV”) provided by investee fund’s general partner or investment manager as a valuation input. The Company does not apply the NAV practical expedient under ASC 820 to these investments. Reported NAV is used as the starting point for the Company’s fair value estimate because the underlying partnership investments are not traded in an active market and quoted market prices are not available. Management evaluates whether the reported NAV requires adjustment to reflect information available as of the Company’s reporting date, including the timing of the investee’s NAV reporting, capital contributions and distributions, changes in underlying investment values, known liquidity or redemption restrictions, and any other fund-specific or market information that would affect the price a market participant would receive in an orderly transaction. As of June 30, 2026, no adjustment was made when management determined that the reported NAV reflected the best estimate of fair value at the measurement date. Because the valuation relies on fund-reported NAV and other inputs that are not observable in active markets, including the fair values of the fund’s underlying private investments, liquidity assumptions, redemption or transfer restrictions, and management’s assessment of whether NAV requires adjustment, the investment is classified within Level 3 of the fair value hierarchy.

Reinsurance contract allocated hedge: The carrying value of funds withheld at interest approximates fair value as funds are specifically identified in the agreement. The fair value of the specified funds is based on the fair value of the underlying assets that are held by the ceding company.  The ceding company uses a variety of sources and pricing methodologies, which are not transparent to the Company and may include significant unobservable inputs to value the securities held in distinct portfolios, therefore the valuation of these funds withheld assets are considered Level 3 in the fair value hierarchy.

Policy loans: Policy loans are stated at unpaid principal balances. As these loans are fully collateralized by the cash surrender value of the underlying insurance policies, the carrying value of the policy loans approximates their fair value.

Federal Home Loan Bank Advances: FHLB advances are stated at the outstanding principal balances, and the carrying value approximates fair value. The Company classifies Federal Home Loan Bank advances within Level 3 of the fair value hierarchy when the measurement incorporates significant unobservable inputs. These inputs may include management’s estimate of an appropriate market borrowing spread for the Company, adjustments for collateral requirements, the effect of prepayment or call features, and entity-specific nonperformance risk. Although certain benchmark interest rates and yield curves used in the valuation may be observable, the Company’s estimated borrowing spread, and other adjustments are not directly observable in an active market for identical liabilities and are significant to the fair value measurement. As a result, the fair value measurement is categorized within Level 3.

Policyholder deposits in deposit-type contracts: The fair value for policyholder deposits deposit-type insurance contracts (accumulation annuities) is calculated using a discounted cash flow approach.  Cash flows are projected using actuarial assumptions and discounted to the valuation date using risk-free rates adjusted for credit risk and the nonperformance risk of the liabilities.

The estimated fair values of the Company’s financial assets and liabilities at June 30, 2026 and December 31, 2025 are as follows:

During the six and three months ended June 30, 2026 and 2025, there were no transfers in or out of level 3.