DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2015

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.



March 31, 2015	Carrying amount		Estimated fair value
($ in thousands)	Carrying amount		Estimated fair value
Assets:
Fixed maturity securities available-for-sale:
U.S. treasury	$	9,792	$	9,792
U.S. government-sponsored agencies	223,029		223,029
Obligations of states and political subdivisions	322,293		322,293
Commercial mortgage-backed	44,858		44,858
Residential mortgage-backed	94,331		94,331
Other asset-backed	14,985		14,985
Corporate	428,935		428,935
Total fixed maturity securities available-for-sale	1,138,223		1,138,223

Equity securities available-for-sale:
Common stocks:
Financial services	34,277		34,277
Information technology	27,380		27,380
Healthcare	29,199		29,199
Consumer staples	14,923		14,923
Consumer discretionary	24,559		24,559
Energy	23,582		23,582
Industrials	18,161		18,161
Other	14,744		14,744
Non-redeemable preferred stocks	12,732		12,732
Total equity securities available-for-sale	199,557		199,557

Short-term investments	47,233		47,233

Liabilities:
Surplus notes	25,000		12,738



December 31, 2014	Carrying amount		Estimated fair value
($ in thousands)	Carrying amount		Estimated fair value
Assets:
Fixed maturity securities available-for-sale:
U.S. treasury	$	9,703	$	9,703
U.S. government-sponsored agencies	215,616		215,616
Obligations of states and political subdivisions	326,058		326,058
Commercial mortgage-backed	46,762		46,762
Residential mortgage-backed	97,953		97,953
Other asset-backed	16,005		16,005
Corporate	415,402		415,402
Total fixed maturity securities available-for-sale	1,127,499		1,127,499

Equity securities available-for-sale:
Common stocks:
Financial services	34,379		34,379
Information technology	26,865		26,865
Healthcare	26,852		26,852
Consumer staples	16,694		16,694
Consumer discretionary	22,691		22,691
Energy	22,863		22,863
Industrials	18,221		18,221
Other	16,056		16,056
Non-redeemable preferred stocks	12,415		12,415
Total equity securities available-for-sale	197,036		197,036

Short-term investments	53,262		53,262

Liabilities:
Surplus notes	25,000		12,308

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, 2015 and December 31, 2014.



March 31, 2015			Fair value measurements using
($ in thousands)	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	$	9,792	$	—	$	9,792	$	—
U.S. government-sponsored agencies	223,029		—		223,029		—
Obligations of states and political subdivisions	322,293		—		322,293		—
Commercial mortgage-backed	44,858		—		44,858		—
Residential mortgage-backed	94,331		—		94,331		—
Other asset-backed	14,985		—		14,985		—
Corporate	428,935		—		427,272		1,663
Total fixed maturity securities available-for-sale	1,138,223		—		1,136,560		1,663

Equity securities available-for-sale:
Common stocks:
Financial services	34,277		34,274		—		3
Information technology	27,380		27,380		—		—
Healthcare	29,199		29,199		—		—
Consumer staples	14,923		14,923		—		—
Consumer discretionary	24,559		24,559		—		—
Energy	23,582		23,582		—		—
Industrials	18,161		18,161		—		—
Other	14,744		14,744		—		—
Non-redeemable preferred stocks	12,732		8,039		4,693		—
Total equity securities available-for-sale	199,557		194,861		4,693		3

Short-term investments	47,233		47,233		—		—

Financial instruments not reported at fair value:
Liabilities:
Surplus notes	12,738		—		—		12,738



December 31, 2014			Fair value measurements using
($ in thousands)	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	$	9,703	$	—	$	9,703	$	—
U.S. government-sponsored agencies	215,616		—		215,616		—
Obligations of states and political subdivisions	326,058		—		326,058		—
Commercial mortgage-backed	46,762		—		46,762		—
Residential mortgage-backed	97,953		—		97,953		—
Other asset-backed	16,005		—		16,005		—
Corporate	415,402		—		413,740		1,662
Total fixed maturity securities available-for-sale	1,127,499		—		1,125,837		1,662

Equity securities available-for-sale:
Common stocks:
Financial services	34,379		34,376		—		3
Information technology	26,865		26,865		—		—
Healthcare	26,852		26,852		—		—
Consumer staples	16,694		16,694		—		—
Consumer discretionary	22,691		22,691		—		—
Energy	22,863		22,863		—		—
Industrials	18,221		18,221		—		—
Other	16,056		16,056		—		—
Non-redeemable preferred stocks	12,415		7,745		4,670		—
Total equity securities available-for-sale	197,036		192,363		4,670		3

Short-term investments	53,262		53,262		—		—

Financial instruments not reported at fair value:
Liabilities:
Surplus notes	12,308		—		—		12,308

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, 2015 and 2014. 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 (Level 3) inputs ($ in thousands)
Three months ended March 31, 2015	Fixed maturity securities available-for-sale, corporate			Equity securities available-for-sale, financial services		Total
Beginning balance	$	1,662		$	3	$	1,665
Settlements	(4		)	—		(4		)
Unrealized gains (losses) included in other comprehensive income	5			—		5
Balance at March 31, 2015	$	1,663		$	3	$	1,666



	Fair value measurements using significant unobservable (Level 3) inputs ($ in thousands)
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 gains (losses) included in other comprehensive income	(1		)	—		(1		)
Balance at March 31, 2014	$	1,975		$	3	$	1,978

- 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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