Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis

The estimated fair value and hierarchy classifications for assets and liabilities that are measured at fair value on a recurring basis were as follows:

	June 30, 2020
	Level 1		Level 2		Level 3		Total
	(In thousands)
Fair value assets:
Available-for-sale fixed-maturity securities:
U.S. government and agencies	$	-	$	10,151	$	-	$	10,151
Foreign government		-		170,068		-		170,068
States and political subdivisions		-		126,754		-		126,754
Corporates		5,251		1,505,601		5,035		1,515,887
Residential mortgage-backed securities		-		317,330		27		317,357
Commercial mortgage-backed securities		-		122,044		-		122,044
Other asset-backed securities		-		94,813		80		94,893
Total available-for-sale securities		5,251		2,346,761		5,142		2,357,154
Equity securities		32,533		1,030		126		33,689
Trading securities		-		22,399		-		22,399
Separate accounts		-		2,377,654		-		2,377,654
Total fair value assets	$	37,784	$	4,747,844	$	5,268	$	4,790,896
Fair value liabilities:
Separate accounts	$	-	$	2,377,654	$	-	$	2,377,654
Total fair value liabilities	$	-	$	2,377,654	$	-	$	2,377,654

	December 31, 2019
	Level 1		Level 2		Level 3		Total
	(In thousands)
Fair value assets:
Available-for-sale fixed-maturity securities:
U.S. government and agencies	$	-	$	10,484	$	-	$	10,484
Foreign government		-		161,072		-		161,072
States and political subdivisions		-		122,593		-		122,593
Corporates		5,865		1,493,786		-		1,499,651
Residential mortgage-backed securities		-		312,497		26		312,523
Commercial mortgage-backed securities		-		132,005		-		132,005
Other asset-backed securities		-		118,244		424		118,668
Total available-for-sale securities		5,865		2,350,681		450		2,356,996
Equity securities		39,499		1,050		135		40,684
Trading securities		-		43,233		-		43,233
Separate accounts		-		2,485,745		-		2,485,745
Total fair value assets	$	45,364	$	4,880,709	$	585	$	4,926,658
Fair value liabilities:
Separate accounts	$	-	$	2,485,745	$	-	$	2,485,745
Total fair value liabilities	$	-	$	2,485,745	$	-	$	2,485,745

Roll forward of Level 3 Assets Measured on Recurring Basis

The roll-forward of the Level 3 assets measured at fair value on a recurring basis was as follows:

	Three months ended June 30,						Six months ended June 30, ⁽¹⁾
	2020			2019			2020			2019
	(In thousands)
Level 3 assets, beginning of period	$	386		$	381		$	585		$	921
Net unrealized gains (losses) included in other comprehensive income		1			(7	)		2			(13	)
Realized gains (losses) and accretion (amortization) recognized in earnings		17			(32	)		(8	)		(24	)
Settlements		(171	)		(152	)		(346	)		(196	)
Transfers into Level 3		5,035			836			5,035			836
Transfers out of Level 3		-			-			-			(498	)
Level 3 assets, end of period	$	5,268		$	1,026		$	5,268		$	1,026

(1)	Activities for investments that enter Level 3 in one quarter and exit Level 3 in another quarter within the same fiscal year are not eliminated until year-end when only the full year amounts are presented.

Carrying Values and Estimated Fair Values of Financial Instruments

The carrying values and estimated fair values of our financial instruments were as follows:

	June 30, 2020				December 31, 2019
	Carrying value		Estimated fair value		Carrying value		Estimated fair value
	(In thousands)
Assets:
Fixed-maturity securities (available-for-sale)	$	2,357,154	$	2,357,154	$	2,356,996	$	2,356,996
Fixed-maturity security (held-to-maturity) ⁽³⁾		1,278,580		1,495,594		1,184,370		1,299,102
Equity securities		33,689		33,689		40,684		40,684
Trading securities		22,399		22,399		43,233		43,233
Policy loans ⁽³⁾		31,471		31,471		32,927		32,927
Deposit asset underlying 10% coinsurance agreement ⁽³⁾		235,066		235,066		233,499		233,499
Separate accounts		2,377,654		2,377,654		2,485,745		2,485,745
Liabilities:
Notes payable ^(1) (2)	$	374,226		395,110	$	374,037	$	395,522
Surplus note ^(1) (3)		1,277,970		1,482,037		1,183,728		1,296,972
Separate accounts		2,377,654		2,377,654		2,485,745		2,485,745

(1)	Carrying value amounts shown are net of issuance costs.

(2)	Classified as a Level 2 fair value measurement.

(3)	Classified as a Level 3 fair value measurement.