Financial instruments and fair value measurements

3 Months Ended

Mar. 31, 2023

Financial instruments and fair value measurements

Financial instruments and fair value measurements

Note 5—Financial instruments and fair value measurements

The following table sets forth the Company’s assets that were measured at fair value as of March 31, 2023 by level within the fair value hierarchy:

	Level 1		Level 2		Level 3		Total
Cash equivalents	$	83,187		—		—	$	83,187
U.S. Treasury		65,197		—		—		65,197
Corporate bonds				182,756		—		182,756
Total	$	148,384	$	182,756	$	—	$	331,140

The following table sets forth the Company’s assets that were measured at fair value as of December 31, 2022, by level within the fair value hierarchy:

	Level 1		Level 2		Level 3		Total
Cash equivalents	$	77,736		—		—	$	77,736
U.S. Treasury		86,475		—		—		86,475
Corporate bonds		—		196,603		—		196,603
Total	$	164,211	$	196,603	$	—	$	360,814

There were no transfers between levels during the period ended March 31, 2023. The Company uses the services of its investment manager, which uses widely accepted models for assumptions in valuing securities with inputs from major third-party data providers.

The Company classifies all of its investments in fixed maturity debt securities as available-for-sale and, accordingly, are carried at estimated fair value.

The amortized cost, gross unrealized gains and losses, and fair value of investments in fixed maturity securities are as follows as of March 31, 2023:

			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
U.S. Treasury	$	65,807	$	—	$	(610)	$	65,197
Corporate bonds		183,329		87		(660)		182,756
Total	$	249,136	$	87	$	(1,271)	$	247,953

The amortized cost, gross unrealized gains and losses, and fair value of investments in fixed maturity securities are as follows as of December 31, 2022:

			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
U.S. Treasury	$	87,798	$	—	$	(1,323)	$	86,475
Corporate bonds		197,668		2		(1,067)		196,603
Total	$	285,466	$	2	$	(2,390)	$	283,078

The following table provides the maturities of our fixed maturity available-for-sale securities:

	March 31, 2023		December 31, 2022
Less than one year	$	164,637	$	231,224
One to five years		83,316		51,854
	$	247,953	$	283,078

The Company has evaluated the unrealized losses on the fixed maturity securities and determined that they are not attributable to credit risk factors. For fixed maturity securities, losses in fair value are viewed as temporary if the fixed maturity security can be held to maturity and it is reasonable to assume that the issuer will be able to service the debt, both as to principal and interest.

At March 31, 2023 and December 31, 2022, respectively, the Company had 32 and 42 available-for-sale investment debt securities in an unrealized loss position without an allowance for credit losses. Unrealized losses on corporate debt securities have not been recognized into income because the issuers’ bonds are of high credit quality (rated BBB+ or higher) and the decline in fair value is largely due to market conditions and or changes in interest rates. Management does not intend to sell and it is likely that management will not be required to sell the securities prior to the anticipated recovery of their amortized cost basis. The issuers

continue to make timely payments on the bonds. The fair value is expected to recover as the bond approach maturity.

As of March 31, 2023 and December 31, 2022, accrued interest receivable on available-for-sale investment debt securities totaling $855 and $0, respectively, is excluded from the estimate of credit losses and is included in prepaid expenses and other current assets.