DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2014

Summary of carrying amount and estimated fair value of financial instruments

The carrying amount and the estimated fair value of the Company’s financial instruments is summarized below.



	Carrying amount		Estimated fair value
March 31, 2014
Assets:
Fixed maturity securities available-for-sale:
U.S. treasury	$	9,524	$	9,524
U.S. government-sponsored agencies	147,688		147,688
Obligations of states and political subdivisions	360,368		360,368
Commercial mortgage-backed	59,357		59,357
Residential mortgage-backed	94,112		94,112
Other asset-backed	11,525		11,525
Corporate	347,427		347,427
Total fixed maturity securities available-for-sale	1,030,001		1,030,001

Equity securities available-for-sale:
Common stocks:
Financial services	28,701		28,701
Information technology	23,860		23,860
Healthcare	23,280		23,280
Consumer staples	13,662		13,662
Consumer discretionary	20,960		20,960
Energy	21,527		21,527
Industrials	14,593		14,593
Other	16,919		16,919
Non-redeemable preferred stocks	12,172		12,172
Total equity securities available-for-sale	175,674		175,674

Short-term investments	60,317		60,317

Liabilities:
Surplus notes	25,000		10,728



	Carrying amount		Estimated fair value
December 31, 2013
Assets:
Fixed maturity securities available-for-sale:
U.S. treasury	$	9,412	$	9,412
U.S. government-sponsored agencies	146,946		146,946
Obligations of states and political subdivisions	357,052		357,052
Commercial mortgage-backed	68,939		68,939
Residential mortgage-backed	94,179		94,179
Other asset-backed	12,648		12,648
Corporate	338,808		338,808
Total fixed maturity securities available-for-sale	1,027,984		1,027,984

Equity securities available-for-sale:
Common stocks:
Financial services	28,498		28,498
Information technology	18,917		18,917
Healthcare	21,945		21,945
Consumer staples	13,011		13,011
Consumer discretionary	21,031		21,031
Energy	21,117		21,117
Industrials	17,264		17,264
Other	17,811		17,811
Non-redeemable preferred stocks	10,254		10,254
Total equity securities available-for-sale	169,848		169,848

Short-term investments	56,166		56,166

Liabilities:
Surplus notes	25,000		10,040

Summary of assets and liabilities measured on recurring and non-recurring basis

Presented in the table below are the estimated fair values of the Company’s financial instruments as of March 31, 2014 and December 31, 2013.



			Fair value measurements using
March 31, 2014	Total		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial instruments reported at fair value on recurring basis:
Assets:
Fixed maturity securities available-for-sale:
U.S. treasury	$	9,524	$	—	$	9,524	$	—
U.S. government-sponsored agencies	147,688		—		147,688		—
Obligations of states and political subdivisions	360,368		—		360,368		—
Commercial mortgage-backed	59,357		—		59,357		—
Residential mortgage-backed	94,112		—		94,112		—
Other asset-backed	11,525		—		11,525		—
Corporate	347,427		—		345,452		1,975
Total fixed maturity securities available-for-sale	1,030,001		—		1,028,026		1,975

Equity securities available-for-sale:
Common stocks:
Financial services	28,701		28,698		—		3
Information technology	23,860		23,860		—		—
Healthcare	23,280		23,280		—		—
Consumer staples	13,662		13,662		—		—
Consumer discretionary	20,960		20,960		—		—
Energy	21,527		21,527		—		—
Industrials	14,593		14,593		—		—
Other	16,919		16,919		—		—
Non-redeemable preferred stocks	12,172		7,626		4,546		—
Total equity securities available-for-sale	175,674		171,125		4,546		3

Short-term investments	60,317		60,317		—		—

Financial instruments not reported at fair value:
Liabilities:
Surplus notes	10,728		—		—		10,728



			Fair value measurements using
December 31, 2013	Total		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial instruments reported at fair value on recurring basis:
Assets:
Fixed maturity securities available-for-sale:
U.S. treasury	$	9,412	$	—	$	9,412	$	—
U.S. government-sponsored agencies	146,946		—		146,946		—
Obligations of states and political subdivisions	357,052		—		357,052		—
Commercial mortgage-backed	68,939		—		68,939		—
Residential mortgage-backed	94,179		—		94,179		—
Other asset-backed	12,648		—		12,648		—
Corporate	338,808		—		336,832		1,976
Total fixed maturity securities available-for-sale	1,027,984		—		1,026,008		1,976

Equity securities available-for-sale:
Common stocks:
Financial services	28,498		28,495		—		3
Information technology	18,917		18,917		—		—
Healthcare	21,945		21,945		—		—
Consumer staples	13,011		13,011		—		—
Consumer discretionary	21,031		21,031		—		—
Energy	21,117		21,117		—		—
Industrials	17,264		17,264		—		—
Other	17,811		17,811		—		—
Non-redeemable preferred stocks	10,254		5,795		4,459		—
Total equity securities available-for-sale	169,848		165,386		4,459		3

Short-term investments	56,166		56,166		—		—

Financial instruments not reported at fair value:
Liabilities:
Surplus notes	10,040		—		—		10,040

Reconciliation of assets measured at fair value on recurring basis using significant unobservable inputs

Presented in the table below is a reconciliation of the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2014 and 2013. Any unrealized gains or losses on these securities are recognized in other comprehensive income. Any gains or losses from disposals or impairments of these securities are reported as realized investment gains or losses in net income.



	Fair value measurements using significant unobservable inputs (Level 3)
Three months ended March 31, 2014	Fixed maturity securities available-for-sale, corporate			Equity securities available-for-sale, financial services		Total
Beginning balance	$	1,976		$	3	$	1,979
Unrealized losses included in other comprehensive income	(1		)	—		(1		)
Balance at March 31, 2014	$	1,975		$	3	$	1,978



	Fair value measurements using significant unobservable inputs (Level 3)
Three months ended March 31, 2013	Fixed maturity securities available-for-sale, corporate		Equity securities available-for-sale, financial services		Total
Beginning balance	$	—	$	2	$	2
Unrealized losses included in other comprehensive income	—		—		—
Balance at March 31, 2013	$	—	$	2	$	2

- Definition

Tabular disclosure related to assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a recurring and/or nonrecurring basis in periods after initial recognition. Disclosures include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3) as well as transfers between levels 1 and 2.

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- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

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