DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 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.



September 30, 2015	Carrying amount		Estimated fair value
($ in thousands)	Carrying amount		Estimated fair value
Assets:
Fixed maturity securities available-for-sale:
U.S. treasury	$	9,737	$	9,737
U.S. government-sponsored agencies	223,465		223,465
Obligations of states and political subdivisions	343,936		343,936
Commercial mortgage-backed	43,739		43,739
Residential mortgage-backed	89,684		89,684
Other asset-backed	18,738		18,738
Corporate	448,662		448,662
Total fixed maturity securities available-for-sale	1,177,961		1,177,961

Equity securities available-for-sale:
Common stocks:
Financial services	34,519		34,519
Information technology	26,564		26,564
Healthcare	24,118		24,118
Consumer staples	15,769		15,769
Consumer discretionary	19,150		19,150
Energy	21,170		21,170
Industrials	17,745		17,745
Other	17,003		17,003
Non-redeemable preferred stocks	18,267		18,267
Total equity securities available-for-sale	194,305		194,305

Short-term investments	32,798		32,798

Liabilities:
Surplus notes	25,000		11,269



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 September 30, 2015 and December 31, 2014.



September 30, 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	$	9,737	$	—	$	9,737	$	—
U.S. government-sponsored agencies	223,465		—		223,465		—
Obligations of states and political subdivisions	343,936		—		343,936		—
Commercial mortgage-backed	43,739		—		43,739		—
Residential mortgage-backed	89,684		—		89,684		—
Other asset-backed	18,738		—		18,738		—
Corporate	448,662		—		447,209		1,453
Total fixed maturity securities available-for-sale	1,177,961		—		1,176,508		1,453

Equity securities available-for-sale:
Common stocks:
Financial services	34,519		34,516		—		3
Information technology	26,564		26,564		—		—
Healthcare	24,118		24,118		—		—
Consumer staples	15,769		15,769		—		—
Consumer discretionary	19,150		19,150		—		—
Energy	21,170		21,170		—		—
Industrials	17,745		17,745		—		—
Other	17,003		17,003		—		—
Non-redeemable preferred stocks	18,267		11,236		7,031		—
Total equity securities available-for-sale	194,305		187,271		7,031		3

Short-term investments	32,798		32,798		—		—

Financial instruments not reported at fair value:
Liabilities:
Surplus notes	11,269		—		—		11,269



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 and nine months ended September 30, 2015 and 2014. Any unrealized gains or losses on these securities are recognized in other comprehensive income. Any gains or losses from settlements, disposals or impairments of these securities are reported as realized investment gains or losses in net income.



Three months ended September 30, 2015	Fair value measurements using significant unobservable (Level 3) inputs
($ in thousands)	Fixed maturity securities available-for-sale, corporate			Equity securities available-for-sale, financial services		Total
Beginning balance	$	1,622		$	3	$	1,625
Settlements	(171		)	—		(171		)
Unrealized gains (losses) included in other comprehensive income (loss)	2			—		2
Balance at September 30, 2015	$	1,453		$	3	$	1,456

Nine months ended September 30, 2015
Beginning balance	$	1,662		$	3	$	1,665
Settlements	(214		)	—		(214		)
Unrealized gains (losses) included in other comprehensive income (loss)	5			—		5
Balance at September 30, 2015	$	1,453		$	3	$	1,456



Three months ended September 30, 2014	Fair value measurements using significant unobservable (Level 3) inputs
($ in thousands)	Fixed maturity securities available-for-sale, corporate			Equity securities available-for-sale, financial services		Total
Beginning balance	$	1,949		$	3	$	1,952
Settlements	(70		)	—		(70		)
Unrealized gains (losses) included in other comprehensive income (loss)	(3		)	—		(3		)
Balance at September 30, 2014	$	1,876		$	3	$	1,879

Nine months ended September 30, 2014
Beginning balance	$	1,976		$	3	$	1,979
Settlements	(112		)	—		(112		)
Unrealized gains (losses) included in other comprehensive income (loss)	12			—		12
Balance at September 30, 2014	$	1,876		$	3	$	1,879