Note 9 - Fair Value Measurements

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Fair Value Disclosures [Text Block]

9. FAIR VALUE MEASUREMENTS

The Company classifies the assets and liabilities that require measurement of fair value based on the priority of the observable and market-based sources of data into a

three

-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level

1

) and the lowest priority to unobservable inputs (Level

3

). The

three

levels of the fair value hierarchy are as follows:

● Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

● Level 2 – Valuations based on significant other observable inputs other than those included in Level 1 such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

● Level 3 – Valuations based on unobservable inputs such as when observable inputs are not available or inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table presents each of the fair value levels, the Company’s assets and liabilities that are measured at fair value on a recurring basis as of

March 31, 2019

and

December 31, 2018 (

amounts in thousands):

	March 31, 2019						December 31, 2018
	Level 1		Level 2		Total Balance		Level 1		Level 2		Total Balance
Assets
Fixed maturities
Federally-Insured certificates of deposit			$	350	$	350			$	500	$	500
Investment grade corporate bonds				5,710		5,710				7,484		7,484
Non-investment grade corporate bonds				209		209				717		717
Short-term investments
Money market funds	$	665				665	$	454				454
Federally-Insured certificates of deposit				350		350				401		401
Deferred compensation investments (a)
Equity mutual fund investments		1,401				1,401		1,246				1,246
State guarantee fund deposits (b)
Government securities		1,775				1,775		1,774				1,774
Federally-Insured certificates of deposit				75		75				75		75
Interest rate swap (b)				7		7				17		17
Total	$	3,841	$	6,701	$	10,542	$	3,474	$	9,194	$	12,668

(a) Included as a trading security in other assets

(b) Included in other assets

The Company measures fair value using the following valuation methodologies. The Company uses quoted market prices to determine the fair value of the deferred compensation investments and certain state fund guarantee deposits; such items are classified as Level

1

of the fair value hierarchy. Examples include government securities and mutual fund equity securities. The Company primarily bases fair value for investments in fixed-maturity securities on quoted market prices or on prices from a pricing vendor, an outside resource that supplies independent securities pricing, dividend, corporate action and descriptive information to support fund pricing, securities operations, research and portfolio management. The Company obtains and reviews the pricing service’s valuation methodologies and validates these prices using various inputs including quotes from other independent regulatory sources. When deemed necessary, the Company validates prices by replicating a sample using a discounted cash flow model. Such items are classified as Level

2

of the fair value hierarchy. The Company obtains a price from an independent vendor to determine the fair value of the interest rate swap. The independent vendor uses a discounted cash flow method whereby the significant observable inputs include the replacement interest rates of similar swap instruments in the market and swap curves; such items are classified as Level

2

of the fair value hierarchy.

As of

March 31, 2019

and

December 31, 2018,

there were

no

assets or liabilities that were required to be measured at fair value on a non-recurring basis. The Company did

not

have any transfers between fair value hierarchy levels during the

three

ended

March 31, 2019.

As of

March 31, 2019

and

December 31, 2018,

the Company did

not

have any assets or liabilities classified as Level

3

of the fair value hierarchy.