Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 7 -- Fair Value Measurements

The Company records and discloses certain financial assets at their estimated fair value. 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, either directly or indirectly such as quoted prices for identical assets that are not observable throughout the full term of the asset.
Level 3	-	Inputs that are unobservable.

Valuation Methodology

Cash and cash equivalents

Cash and cash equivalents primarily consist of money-market funds and certificates of deposit maturing within 90 days. Their carrying value approximates fair value due to the short maturity and high liquidity of these funds.

Short-term investments

Short-term investments consist of certificates of deposit with maturities of 91 to 365 days. Due to their short maturity, the carrying value approximates fair value.  

Fixed-maturity and equity securities

Estimated fair values of the Company’s fixed-maturity and equity securities are determined in accordance with U.S. GAAP, using valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair values are generally measured using quoted prices in active markets for identical securities or other inputs that are observable either directly or indirectly, such as quoted prices for similar securities. In those instances where observable inputs are not available, fair values are measured using unobservable inputs. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the security and are developed based on the best information available in the circumstances. Fair value estimates derived from unobservable inputs are significantly affected by the assumptions used, including the discount rates and the estimated amounts and timing of future cash flows. The derived fair value estimates cannot be substantiated by comparison to independent markets and are not necessarily indicative of the amounts that would be realized in a current market exchange.

The estimated fair values for securities that do not trade on a daily basis are determined by management, utilizing prices obtained from an independent pricing service and information provided by brokers, which are level 2 inputs. Management reviews the assumptions and methods utilized by the pricing service and then compares the relevant data and pricing to broker-provided data. The Company gains assurance of the overall reasonableness and consistent application of the assumptions and methodologies and compliance with accounting standards for fair value determination through ongoing monitoring of the reported fair values.

Revolving Credit Facility

The Company’s revolving credit facility is a variable-rate loan. The interest rate is periodically adjusted based on the London Interbank Offered Rate plus a spread. As a result, its carrying value approximates fair value.

Long-term debt

The following table summarizes components of the Company’s long-term debt and methods used in estimating their fair values:

	Maturity Date	Valuation Methodology
4.25% Convertible senior notes	2037	Quoted price
3.90% Promissory note	2032	Discounted cash flow method/Level 3 inputs
4% Promissory note	2031	Discounted cash flow method/Level 3 inputs
3.75% Callable promissory note	2036	Discounted cash flow method/Level 3 inputs
4.55% Promissory note	2036	Discounted cash flow method/Level 3 inputs

Assets Measured at Estimated Fair Value on a Recurring Basis

The following table presents information about the Company’s financial assets measured at estimated fair value on a recurring basis. The table indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of June 30, 2020 and December 31, 2019:

	Fair Value Measurements Using
	(Level 1)		(Level 2)		(Level 3)		Total
As of June 30, 2020
Financial Assets:
Cash and cash equivalents	$	424,464	$	—	$	—	$	424,464
Restricted cash	$	700	$	—	$	—	$	700
Fixed-maturity securities:
U.S. Treasury and U.S. government agencies	$	10,899	$	1,543	$	—	$	12,442
Corporate bonds		74,409		—		—		74,409
State, municipalities, and political subdivisions		—		5,909		—		5,909
Exchange-traded debt		7,200		—		—		7,200
Redeemable preferred stock		33		—		—		33
Total available-for-sale securities	$	92,541	$	7,452	$	—	$	99,993
Equity securities	$	39,309	$	—	$	—	$	39,309

	Fair Value Measurements Using
	(Level 1)		(Level 2)		(Level 3)		Total
As of December 31, 2019
Financial Assets:
Cash and cash equivalents	$	229,218	$	—	$	—	$	229,218
Restricted cash	$	700	$	—	$	—	$	700
Short-term investments	$	491	$	—	$	—	$	491
Fixed-maturity securities:
U.S. Treasury and U.S. government agencies	$	25,294	$	1,001	$	—	$	26,295
Corporate bonds		159,364		—		—		159,364
State, municipalities, and political subdivisions		—		7,912		—		7,912
Exchange-traded debt		9,145		—		—		9,145
Redeemable preferred stock		123		—		—		123
Total available-for-sale securities	$	193,926	$	8,913	$	—	$	202,839
Equity securities	$	35,285	$	—	$	—	$	35,285

Assets and Liabilities Carried at Other Than Estimated Fair Value

The following tables present fair value information for assets and liabilities that are carried on the balance sheet at amounts other than fair value as of June 30, 2020 and December 31, 2019:

	Carrying		Fair Value Measurements Using						Estimated
	Value		(Level 1)		(Level 2)		(Level 3)		Fair Value
As of June 30, 2020
Financial Liabilities:
Revolving credit facility	$	23,750	$	—	$	23,750	$	—	$	23,750
Long-term debt:
4.25% Convertible senior notes	$	131,858	$	—	$	137,460	$	—	$	137,460
3.90% Promissory note		9,777		—		—		10,565		10,565
4% Promissory note		6,982		—		—		7,421		7,421
3.75% Callable promissory note		7,671		—		—		8,100		8,100
4.55% Promissory note		5,499		—		—		5,971		5,971
Total long-term debt	$	161,787	$	—	$	137,460	$	32,057	$	169,517

	Carrying		Fair Value Measurements Using						Estimated
	Value		(Level 1)		(Level 2)		(Level 3)		Fair Value
As of December 31, 2019
Financial Liabilities:
Revolving credit facility	$	9,750	$	—	$	9,750	$	—	$	9,750
Long-term debt:
4.25% Convertible senior notes	$	134,075	$	—	$	147,375	$	—	$	147,375
3.95% Promissory note		8,875		—		—		8,887		8,887
4% Promissory note		7,237		—		—		7,409		7,409
3.75% Callable promissory note		7,837		—		—		7,861		7,861
4.55% Promissory note		5,611		—		—		5,802		5,802
Total long-term debt	$	163,635	$	—	$	147,375	$	29,959	$	177,334