Fair Value Measurements

3 Months Ended

Mar. 31, 2024

Note 12 – Fair Value Measurements

Certain of the Company’s assets and liabilities are carried at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company categorizes its assets and liabilities carried at fair value using a three-level hierarchy for fair value measurements that distinguishes between market participant assumptions developed based on market data obtained from sources independent of the Company (observable inputs) and the Company’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. The hierarchy level assigned to the assets and liabilities is based on management’s assessment of the transparency and reliability of the inputs used to estimate the fair values at the measurement date. The three hierarchy levels are defined as follows:

Level 1—Valuations based on unadjusted quoted market prices in active markets for identical assets or liabilities.

Level 2—Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets or liabilities at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly.

Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement and involve management judgment.

If the inputs used to measure fair value fall into different levels of the fair value hierarchy, the hierarchy level assigned is based upon the lowest level of input that is significant to the fair value measurement.

The following tables present the fair values of the Company’s assets, measured on a recurring basis, as of March 31, 2024 and December 31, 2023:


(in millions)	Total		Level 1		Level 2		Level 3
March 31, 2024
Debt securities:
U.S. Treasury bonds	$	157.2	$	—	$	157.2	$	—
Municipal bonds		1,249.3		—		1,249.3		—
Foreign government bonds		199.4		—		199.4		—
Governmental agency bonds		200.4		—		200.4		—
Governmental agency mortgage-backed securities		3,745.9		—		3,745.9		—
U.S. corporate debt securities		1,021.2		—		1,021.2		—
Foreign corporate debt securities		481.0		—		481.0		—
		7,054.4		—		7,054.4		—
Equity securities:
Common stocks		401.0		401.0		—		—
Preferred stocks		14.0		14.0		—		—
		415.0		415.0		—		—
Mortgage loans held for sale		13.0		—		11.7		1.3
Total	$	7,482.4	$	415.0	$	7,066.1	$	1.3


(in millions)	Total		Level 1		Level 2		Level 3
December 31, 2023
Debt securities:
U.S. Treasury bonds	$	199.3	$	—	$	199.3	$	—
Municipal bonds		1,245.8		—		1,245.8		—
Foreign government bonds		219.3		—		219.3		—
Governmental agency bonds		195.4		—		195.4		—
Governmental agency mortgage-backed securities		3,875.7		—		3,875.7		—
U.S. corporate debt securities		958.4		—		958.4		—
Foreign corporate debt securities		463.6		—		463.6		—
		7,157.5		—		7,157.5		—
Equity securities:
Common stocks		424.5		424.5		—		—
Preferred stocks		12.4		12.4		—		—
		436.9		436.9		—		—
Mortgage loans held for sale		13.1		—		11.8		1.3
Total	$	7,607.5	$	436.9	$	7,169.3	$	1.3

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments not measured at fair value as of March 31, 2024 and December 31, 2023:


	Carrying		Estimated fair value
(in millions)	Amount		Total		Level 1		Level 2		Level 3
March 31, 2024
Assets:
Cash and cash equivalents	$	1,506.4	$	1,506.4	$	1,506.4	$	—	$	—
Deposits with banks	$	77.1	$	77.0	$	20.1	$	56.9	$	—
Notes receivable, net	$	23.8	$	24.6	$	—	$	—	$	24.6
Secured financings receivable	$	831.4	$	831.4	$	—	$	831.4	$	—
Liabilities:
Secured financings payable	$	688.8	$	688.8	$	—	$	688.8	$	—
Notes and contracts payable	$	1,396.0	$	1,226.3	$	—	$	1,220.5	$	5.8


	Carrying		Estimated fair value
(in millions)	Amount		Total		Level 1		Level 2		Level 3
December 31, 2023
Assets:
Cash and cash equivalents	$	3,605.3	$	3,605.3	$	3,605.3	$	—	$	—
Deposits with banks	$	55.8	$	55.6	$	4.0	$	51.6	$	—
Notes receivable, net	$	22.4	$	23.2	$	—	$	—	$	23.2
Secured financings receivable	$	636.5	$	636.5	$	—	$	636.5	$	—
Liabilities:
Secured financings payable	$	553.3	$	553.3	$	—	$	553.3	$	—
Notes and contracts payable	$	1,393.9	$	1,219.6	$	—	$	1,215.4	$	4.2

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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