DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 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
June 30, 2014
Assets:
Fixed maturity securities available-for-sale:
U.S. treasury	$	9,615	$	9,615
U.S. government-sponsored agencies	185,481		185,481
Obligations of states and political subdivisions	342,501		342,501
Commercial mortgage-backed	55,594		55,594
Residential mortgage-backed	97,235		97,235
Other asset-backed	11,564		11,564
Corporate	369,213		369,213
Total fixed maturity securities available-for-sale	1,071,203		1,071,203

Equity securities available-for-sale:
Common stocks:
Financial services	31,701		31,701
Information technology	23,945		23,945
Healthcare	22,298		22,298
Consumer staples	13,474		13,474
Consumer discretionary	20,776		20,776
Energy	27,137		27,137
Industrials	14,805		14,805
Other	17,947		17,947
Non-redeemable preferred stocks	12,493		12,493
Total equity securities available-for-sale	184,576		184,576

Short-term investments	59,799		59,799

Liabilities:
Surplus notes	25,000		11,485



	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 June 30, 2014 and December 31, 2013.



			Fair value measurements using
June 30, 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	$	9,615	$	—	$	9,615	$	—
U.S. government-sponsored agencies	185,481		—		185,481		—
Obligations of states and political subdivisions	342,501		—		342,501		—
Commercial mortgage-backed	55,594		—		55,594		—
Residential mortgage-backed	97,235		—		97,235		—
Other asset-backed	11,564		—		11,564		—
Corporate	369,213		—		367,264		1,949
Total fixed maturity securities available-for-sale	1,071,203		—		1,069,254		1,949

Equity securities available-for-sale:
Common stocks:
Financial services	31,701		31,698		—		3
Information technology	23,945		23,945		—		—
Healthcare	22,298		22,298		—		—
Consumer staples	13,474		13,474		—		—
Consumer discretionary	20,776		20,776		—		—
Energy	27,137		27,137		—		—
Industrials	14,805		14,805		—		—
Other	17,947		17,947		—		—
Non-redeemable preferred stocks	12,493		7,850		4,643		—
Total equity securities available-for-sale	184,576		179,930		4,643		3

Short-term investments	59,799		59,799		—		—

Financial instruments not reported at fair value:
Liabilities:
Surplus notes	11,485		—		—		11,485



			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 and six months ended June 30, 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 June 30, 2014	Fixed maturity securities available-for-sale, corporate			Equity securities available-for-sale, financial services		Total
Beginning balance	$	1,975		$	3	$	1,978
Settlements	(42		)	—		(42		)
Unrealized gains included in other comprehensive income (loss)	16			—		16
Balance at June 30, 2014	$	1,949		$	3	$	1,952

Six months ended June 30, 2014
Beginning balance	$	1,976		$	3	$	1,979
Settlements	(42		)	—		(42		)
Unrealized gains included in other comprehensive income (loss)	15			—		15
Balance at June 30, 2014	$	1,949		$	3	$	1,952



	Fair value measurements using significant unobservable inputs (Level 3)
Three months ended June 30, 2013	Fixed maturity securities available-for-sale, corporate		Equity securities available-for-sale, financial services		Total
Beginning balance	$	—	$	2	$	2
Purchases	948		—		948
Unrealized gains included in other comprehensive income (loss)	—		1		1
Balance at June 30, 2013	$	948	$	3	$	951

Six months ended June 30, 2013
Beginning balance	$	—	$	2	$	2
Purchases	948		—		948
Unrealized gains included in other comprehensive income (loss)	—		1		1
Balance at June 30, 2013	$	948	$	3	$	951

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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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, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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