Fair Value Measurements

GAAP defines fair value as the price that would be received to sell an asset or to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Additionally, the inputs used to measure fair value are prioritized based on a three-level hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:


•	Level 1— Observable inputs that reflect quoted prices in active markets for identical assets or liabilities.


•	Level 2 — Observable inputs other than quoted prices included in Level 1. The Company values assets and liabilities included in this level using dealer and broker quotations, certain pricing models, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.


•	Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Recurring Fair Value Measurements

The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy:



December 31,	2019
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
Assets:
Money market funds ⁽¹⁾	$	10,028	$	—	$	—	$	10,028

Liabilities:
Contingent earnout liability ⁽²⁾	—		—		454		454



December 31,	2018
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Money market funds ⁽¹⁾	$	10,354	$	—	$	—	$	10,354

Liabilities:
Contingent earnout liability ⁽²⁾	—		—		360		360

____________________


⁽¹⁾	The fair values of the money market funds were based on recently quoted market prices and reported transactions in an active marketplace. Money market funds are included on the Company's Consolidated Balance Sheets in "Cash and cash equivalents."

⁽²⁾

The contingent earnout liability relates to businesses acquired during 2019 and 2018 by the Crawford Specialty Solutions operating segment. See Note 3, "Acquisitions and Disposition of Business Line" for further details. The fair value of the contingent earnout liability was estimated using internally-prepared revenue projections which is Level 3 data, with the maximum possible earnout of $1,036,000. As such, the fair value is not expected to vary materially from the balance recorded. The fair value of the contingent earnout liability is included in "Other accrued liabilities" on the Company's Consolidated Balance Sheets, based upon the term of the contingent earnout agreement.

Fair Value Disclosures

There were no transfers of assets between fair value levels during the years ended December 31, 2019 or 2018. The categorization of assets and liabilities within the fair value hierarchy and the measurement techniques are reviewed quarterly. Any transfers between levels are deemed to have occurred at the end of the quarter.

The fair values of accounts receivable, unbilled revenues, accounts payable and short-term borrowings approximate their respective carrying values due to the short-term maturities of the instruments. The interest rate on the Company's variable rate long-term debt resets at least every 90 days; therefore, the recorded value approximates fair value. These assets and liabilities are measured within Level 2 of the fair value hierarchy.

Nonrecurring Fair Value Disclosures

During 2019, the Company impaired and expensed goodwill of $17,484,000. During 2018, the Company impaired and expensed an indefinite-lived trade name of $1,056,000. During 2017, the Company impaired and expensed goodwill of $19,598,000. See Note 1, "Significant Accounting and Reporting Policies" and Note 4, "Goodwill and Intangible Assets," where discussed in more detail.

Fair Value Measurements for Defined Benefit Pension Plan Assets

The fair value hierarchy is also applied to certain other assets that indirectly impact the Company's consolidated financial statements. Assets contributed by the Company to its defined benefit pension plans become the property of the individual plans. Even though the Company no longer has control over these assets, it is indirectly impacted by subsequent fair value adjustments to these assets. The actual return on these assets impacts the Company's future net periodic benefit cost, as well as amounts recognized in its Consolidated Balance Sheets. The Company uses the fair value hierarchy to measure the fair value of assets held by its U.S. and U.K. defined benefit pension plans.

The following table summarizes the level within the fair value hierarchy used to determine the fair value of the Company's pension plan assets for its U.S Qualified Plan at December 31, 2019 and 2018:



December 31,	2019									2018
	Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
	(In thousands)
Asset Category:
Cash and cash equivalents	$	8,082	$	—	$	—	$	8,082		$	2,274	$	—	$	—	$	2,274
Short-term investment funds	—		5,496		—		5,496			—		5,005		—		5,005
Common Collective Equity funds:
U.S.	—		60,039		—		60,039			—		52,882		—		52,882
International	—		26,142		—		26,142			—		22,747		—		22,747
Common Collective Fixed Income Funds and Fixed Income Securities:
U.S.	51,247		224,747		—		275,994			38,719		183,152		—		221,871
International	—		3,745		—		3,745			—		17,523		—		17,523
Alternative strategy funds	—		8,880		14,766		23,646			—		8,915		16,488		25,403
TOTAL PLAN ASSETS	$	59,329	$	329,049	$	14,766	403,144			$	40,993	$	290,224	$	16,488	347,705

Other plan liabilities, net (a)							(26,220		)							—
NET PLAN ASSETS							$	376,924								$	347,705

(a) net amounts payable for unsettled security transactions.

The following table summarizes the level within the fair value hierarchy used to determine the fair value of the Company's pension plan assets for its U.K. plans at December 31, 2019 and 2018:



December 31,	2019								2018
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Asset Category:
Cash and cash equivalents	$	2,338	$	—	$	—	$	2,338	$	3,156	$	—	$	—	$	3,156
Common Collective Equity funds:
U.S.	—		43,613		—		43,613		—		38,307		—		38,307
International	—		9,418		—		9,418		—		9,916		—		9,916
Common Collective Fixed Income Funds and Fixed Income Securities:
Short-term Investment funds:	—		167,741		—		167,741		—		160,609		—		160,609
Government securities	—		34,926		—		34,926		—		31,531		—		31,531
Alternative strategy funds	—		29,172		—		29,172		—		14,044		—		14,044
Real estate funds	—		—		9,735		9,735		—		—		9,945		9,945
TOTAL	$	2,338	$	284,870	$	9,735	$	296,943	$	3,156	$	254,407	$	9,945	$	267,508

Short-term investment funds consist primarily of funds with a maturity of 60 days or less and are valued at amortized cost which approximates fair value.

Equity securities consist primarily of common collective funds (Level 2). Common collective funds are valued at the net asset value per share multiplied by the number of shares held as of the measurement date.

Fixed income securities consist of money market funds, government securities, corporate bonds and debt securities, mortgage-backed securities and other common collective funds. Government securities are valued by third-party pricing sources and are valued daily in an active market (Level 1). Corporate bonds are valued using either the yields currently available on comparable securities of issuers with similar credit ratings or using a discounted cash flows approach that utilizes observable inputs, such as current yields of similar instruments, and includes adjustments for valuation adjustments from internal pricing models which use observable inputs such as issuer details, interest rates, yield curves, default rates and quoted prices for similar assets (Level 2). Mortgage-backed securities are valued by pricing service providers that use broker-dealer quotations or valuation estimates from their internal pricing models (Level 2). Other common collective funds are valued at the net asset value per share multiplied by the number of shares held as of the measurement date (Level 2).

Alternative strategy funds valued at the net asset value per share multiplied by the number of shares held as of the measurement date (Level 2). Alternative strategy funds may include derivative instruments such as futures, forward contracts, options and swaps and are used to help manage risks. Derivative instruments are generally valued by the investment managers or in certain instances by third party pricing sources (Level 2) or may, due to the inherent uncertainty of valuation for those investments, differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material (Level 3).

Real estate funds are primarily property unit trusts whose values are primarily reported by the fund manager and are based on valuation of the underlying investments which include inputs such as cost, discounted cash flows, independent appraisals and market-based comparable data (Level 3). The fair values may, due to the inherent uncertainty of valuation for those investments, differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material.

The following table provides a reconciliation of the beginning and ending balance of Level 3 assets within the Company's U.S. and U.K. pension plans during the years ended December 31, 2019 and 2018:



	U.S			U.K.
	(in thousands)
Balance at December 31, 2017	$	15,134		$	9,689
Actual return on plan assets:
Related to assets still held at the reporting date	1,354			256
Balance at December 31, 2018	16,488			9,945
Actual return on plan assets:
Related to assets still held at the reporting date	(1,722		)	(210		)
Balance at December 31, 2019	$	14,766		$	9,735