Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2011

Notes to Financial Statements

Fair Value of Financial Instruments

GAAP requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized in the balance sheet, for which it is practicable to estimate fair value. The Company uses the following methods and assumptions in estimating its fair value disclosures for financial instruments:

Equity and fixed income investments:  Fair value disclosures for investments are included in “Note 3 - Investments.”

Cash and cash equivalents: The carrying values of cash and cash equivalents approximate their fair values because of the short maturity of these instruments.

Premiums receivable, reinsurance receivables:  The carrying values reported in the accompanying condensed consolidated balance sheets for these financial instruments approximate their fair values due to the short term nature of the assets.

Notes receivable: The carrying amount of notes receivable related to the sale of businesses approximates fair value because of the recently negotiated interest rates based on term of the loan, risk and guaranty.

Real Estate: The fair value of the land and building included in property and equipment, which is used in the Company’s operations, approximates the carrying value. The fair value was based on an appraisal prepared using the sales comparison approach.

Reinsurance balances payable:  The carrying value reported in the condensed consolidated balance sheets for these financial instruments approximates fair value.

Notes payable (including related parties): The Company estimates that the carrying amount of notes payable approximates fair value because of the recently negotiated interest rates based on term of the loan, risk and guaranty.

The estimated fair values of the Company’s financial instruments are as follows:

	September 30, 2011		December 31, 2010
	Carrying Value	Fair Value	Carrying Value	Fair Value
	(unaudited)
Fixed-maturity investments held to maturity	$    606,234	$    771,281	$    605,424	$    606,398
Cash and cash equivalents	3,031,068	3,031,068	326,620	326,620
Premiums receivable	6,038,333	6,038,333	5,001,886	5,001,886
Receivables - reinsurance contracts	685,316	685,316	1,174,729	1,174,729
Reinsurance receivables	25,643,556	25,643,556	20,720,194	20,720,194
Notes receivable-sale of business	400,417	400,417	705,019	705,019
Real estate, net of
accumulated depreciation	1,515,916	1,510,000	1,437,787	1,510,000
Reinsurance balances payable	2,922,815	2,922,815	1,106,897	1,106,897
Notes payable (including related parties)	747,000	747,000	1,460,997	1,460,997