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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2023

Basis of fair value measurement:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices for similar assets or liabilities in active markets or quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Certain assets and liabilities are measured at fair value in the condensed consolidated financial statements or have fair values disclosed in the notes to the condensed consolidated financial statements. These assets and liabilities are classified into one of three levels of a hierarchy defined by GAAP.

For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument see Note 5 to the audited consolidated financial statements included in our 2022 Form 10-K.

The following tables set forth our fair value measurements as of March 31, 2023 and December 31, 2022, for assets measured at fair value on a recurring basis (in thousands):


	March 31, 2023
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	363,663	$	15,749	$	—	$	379,412
Fixed maturity securities, available for sale:
U.S. government and agency obligations	5,152		1,895		—		7,047
Corporate obligations	—		2,841		—		2,841
State and municipal obligations	—		446		—		446
Certificates of deposit	—		3,304		—		3,304
Mortgage-backed securities	—		36		—		36
Asset-backed securities	—		72		—		72
Other	—				—		—
Total fixed maturity securities, available for sale:	5,152		8,594		—		13,746
Total assets at fair value	$	368,815	$	24,343	$	—	$	393,158


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	316,752	$	15,601	$	—	$	332,353
Fixed maturity securities, available for sale:
U.S. government and agency obligations	6,354		2,087		—		8,441
Corporate obligations	—		3,307		—		3,307
State and municipal obligations	—		695		—		695
Certificates of deposit	—		3,318		—		3,318
Mortgage-backed securities	—		156		—		156
Asset-backed securities	—		60		—		60
Other	—		1		—		1
Total fixed maturity securities, available for sale:	6,354		9,624		—		15,978
Total assets at fair value	$	323,106	$	25,225	$	—	$	348,331

The following tables set forth the Company’s fair value measurements as of March 31, 2023 and December 31, 2022, for certain financial instruments not measured at fair value on a recurring basis (in thousands):


	March 31, 2023
	Level 1		Level 2		Level 3		Total
Cash equivalents, held to maturity	$	3,094	$	—	$	—	$	3,094
Fixed maturity securities, held to maturity:
U.S. government and agency obligations	233		—		—		233
Certificates of deposit	1,619		330		—		1,949
Total held to maturity	$	4,946	$	330	$	—	$	5,276


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Cash equivalents, held to maturity	$	8,450	$	—	$	—	$	8,450
Fixed maturity securities, held to maturity:
U.S. government and agency obligations	685		—		—		685
Certificates of deposit	—		1,947		—		1,947
Total held to maturity	$	9,135	$	1,947	$	—	$	11,082

There have been no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy.

The carrying amounts reported on the Condensed Consolidated Balance Sheets for other current financial assets and liabilities approximate fair value due to their short-term nature. These assets and liabilities are not included in the tables above.

- 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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