Fair Value Measurements

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 4 — Fair Value Measurements

The Company records and discloses certain financial assets at their estimated fair value but does not elect the fair value option for the ADC Arrangement and its long-term debt. 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 or liabilities.

Level 2    -    Other inputs that are observable for the asset and liability, either directly or indirectly.

Level 3    -    Inputs that are unobservable.

The following table presents information about the Company’s financial assets measured at estimated fair value on a recurring basis, the estimated fair values of the real estate investment under the ADC Arrangement, and long-term debt that are reflected in the financial statements at carrying value. The table indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of September 30, 2014 and December 31, 2013:

	Fair Value Measurements Using
	(Level 1)		(Level 2)		(Level 3)		Total
As of September 30, 2014
Financial Assets:
Cash and cash equivalents	$	304,323	$	—	$	—	$	304,323
Fixed-maturity securities:
U.S. Treasury and U.S. government agencies		656		708		—		1,364
Corporate bonds		15,880		999		—		16,879
Commercial mortgage-backed securities		—		11,531		—		11,531
State, municipalities, and political subdivisions		—		60,913		—		60,913
Redeemable preferred stock		9,490		—		—		9,490
Total fixed-maturity securities		26,026		74,151		—		100,177
Equity securities		39,097		—		—		39,097
Total available-for-sale securities		65,123		74,151		—		139,274
ADC Arrangement classified as real estate investment		—		—		2,592		2,592
Total	$	369,446	$	74,151	$	2,592	$	446,189
Financial Liabilities:
Long-term debt:
8% Senior notes	$	—	$	42,343	$	—	$	42,343
3.875% Convertible senior notes		—		—		95,462		95,462
Total long-term debt	$	—	$	42,343	$	95,462	$	137,805

	Fair Value Measurements Using
	(Level 1)		(Level 2)		(Level 3)		Total
As of December 31, 2013
Financial Assets:
Cash and cash equivalents	$	293,398	$	—	$	—	$	293,398
Fixed-maturity securities:
U.S. Treasury and U.S. government agencies		3,520		1,044		—		4,564
Corporate bonds		24,476		928		—		25,404
Commercial mortgage-backed securities		—		11,332		—		11,332
State, municipalities, and political subdivisions		—		70,451		—		70,451
Redeemable preferred stock		400		—		—		400
Total fixed-maturity securities		28,396		83,755		—		112,151
Equity securities		17,649		—		—		17,649
Total available-for-sale securities		46,045		83,755		—		129,800
Total	$	339,443	$	83,755	$	—	$	423,198
Financial Liabilities:
Long-term debt:
8% Senior notes	$	—	$	43,390	$	—	$	43,390
3.875% Convertible senior notes		—		—		86,630		86,630
Total long-term debt	$	—	$	43,390	$	86,630	$	130,020

Valuation Methodology

ADC Arrangement Classified as Real Estate Investment. As described in Note 3 — “Investments” under ADC Arrangement, the ADC Arrangement represents a financing agreement with a purchase option between Greenleaf Capital and a property developer. Based on the characteristics of this ADC Arrangement which are similar to those of an investment, combined with the expected residual profit being greater than 50%, the arrangement is included in real estate investments at its carrying value in the balance sheet. Projected future cash inflows at maturity are discounted using a prevailing borrowing rate to estimate its fair value that relies on Level 3 inputs.

There were no transfers between Level 1, 2 or 3 during the three and nine months ended September 30, 2014. During the year ended December 31, 2013, $10,684 of municipal bonds was transferred into Level 2 from Level 1.