DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2019

Summary of carrying amount and estimated fair value of financial instruments

The carrying amounts and estimated fair values of the Company’s financial instruments as of March 31, 2019 and December 31, 2018 are summarized in the tables below.



March 31, 2019	Carrying amounts		Estimated fair values
($ in thousands)	Carrying amounts		Estimated fair values
Assets:
Fixed maturity securities available-for-sale:
U.S. treasury	$	8,113	$	8,113
U.S. government-sponsored agencies	309,120		309,120
Obligations of states and political subdivisions	276,857		276,857
Commercial mortgage-backed	86,664		86,664
Residential mortgage-backed	168,765		168,765
Other asset-backed	17,719		17,719
Corporate	424,622		424,622
Total fixed maturity securities available-for-sale	1,291,860		1,291,860

Equity investments, at fair value
Common stocks:
Financial services	47,345		47,345
Information technology	39,346		39,346
Healthcare	34,006		34,006
Consumer staples	14,694		14,694
Consumer discretionary	28,764		28,764
Energy	15,853		15,853
Industrials	19,435		19,435
Other	15,471		15,471
Non-redeemable preferred stocks	18,180		18,180
Investment funds	9,489		9,489
Total equity investments	242,583		242,583

Short-term investments	48,265		48,265

Liabilities:
Surplus notes	25,000		16,056



December 31, 2018	Carrying amounts		Estimated fair values
($ in thousands)	Carrying amounts		Estimated fair values
Assets:
Fixed maturity securities available-for-sale:
U.S. treasury	$	8,021	$	8,021
U.S. government-sponsored agencies	304,479		304,479
Obligations of states and political subdivisions	283,651		283,651
Commercial mortgage-backed	84,379		84,379
Residential mortgage-backed	162,137		162,137
Other asset-backed	20,834		20,834
Corporate	419,408		419,408
Total fixed maturity securities available-for-sale	1,282,909		1,282,909

Equity investments, at fair value
Common stocks:
Financial services	41,839		41,839
Information technology	31,581		31,581
Healthcare	34,571		34,571
Consumer staples	13,180		13,180
Consumer discretionary	22,765		22,765
Energy	13,372		13,372
Industrials	19,389		19,389
Other	14,371		14,371
Non-redeemable preferred stocks	16,654		16,654
Investment funds	7,641		7,641
Total equity investments	215,363		215,363

Short-term investments	28,204		28,204

Liabilities:
Surplus notes	25,000		15,259

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

Presented in the tables below are the estimated fair values of the Company’s financial instruments as of March 31, 2019 and December 31, 2018.



March 31, 2019					Fair value measurements using
($ in thousands)	Total		Investments measured at net asset value (NAV)		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	$	8,113	$	—	$	—	$	8,113	$	—
U.S. government-sponsored agencies	309,120		—		—		309,120		—
Obligations of states and political subdivisions	276,857		—		—		276,857		—
Commercial mortgage-backed	86,664		—		—		86,664		—
Residential mortgage-backed	168,765		—		—		168,765		—
Other asset-backed	17,719		—		—		17,719		—
Corporate	424,622		—		—		424,421		201
Total fixed maturity securities available-for-sale	1,291,860		—		—		1,291,659		201

Equity investments, at fair value:
Common stocks:
Financial services	47,345		—		47,345		—		—
Information technology	39,346		—		39,346		—		—
Healthcare	34,006		—		34,006		—		—
Consumer staples	14,694		—		14,694		—		—
Consumer discretionary	28,764		—		28,764		—		—
Energy	15,853		—		15,853		—		—
Industrials	19,435		—		19,435		—		—
Other	15,471		—		15,471		—		—
Non-redeemable preferred stocks	18,180		—		8,578		9,602		—
Investment funds	9,489		9,489		—		—		—
Total equity investments	242,583		9,489		223,492		9,602		—

Short-term investments	48,265		—		48,265		—		—

Financial instruments not reported at fair value:
Liabilities:
Surplus notes	16,056		—		—		—		16,056



December 31, 2018					Fair value measurements using
($ in thousands)	Total		Investments measured at net asset value (NAV)		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	$	8,021	$	—	$	—	$	8,021	$	—
U.S. government-sponsored agencies	304,479		—		—		304,479		—
Obligations of states and political subdivisions	283,651		—		—		283,651		—
Commercial mortgage-backed	84,379		—		—		84,379		—
Residential mortgage-backed	162,137		—		—		162,137		—
Other asset-backed	20,834		—		—		20,834		—
Corporate	419,408		—		—		419,149		259
Total fixed maturity securities available-for-sale	1,282,909		—		—		1,282,650		259

Equity investments, at fair value:
Common stocks:
Financial services	41,839		—		41,839		—		—
Information technology	31,581		—		31,581		—		—
Healthcare	34,571		—		34,571		—		—
Consumer staples	13,180		—		13,180		—		—
Consumer discretionary	22,765		—		22,765		—		—
Energy	13,372		—		13,372		—		—
Industrials	19,389		—		19,389		—		—
Other	14,371		—		14,371		—		—
Non-redeemable preferred stocks	16,654		—		10,325		6,329		—
Investment funds	7,641		7,641		—		—		—
Total equity investments	215,363		7,641		201,393		6,329		—

Short-term investments	28,204		—		28,204		—		—

Financial instruments not reported at fair value:
Liabilities:
Surplus notes	15,259		—		—		—		15,259

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, 2019 and 2018. Any unrealized gains or losses on fixed maturity securities are recognized in other comprehensive income (loss). Any gains or losses from settlements, disposals, impairments and unrealized gains or losses on equity securities are reported as realized investment gains or losses in net income.



($ in thousands)	Fair value measurements using significant unobservable (Level 3) inputs
	Fixed maturity securities available-for-sale, corporate			Total
Three months ended March 31, 2019
Beginning balance	$	259		$	259
Settlements	(57		)	(57		)
Unrealized losses included in other comprehensive income (loss) on securities still held at reporting date	(1		)	(1		)
Balance at March 31, 2019	$	201		$	201



($ in thousands)	Fair value measurements using significant unobservable (Level 3) inputs
	Fixed maturity securities available-for-sale, corporate			Equity securities, financial services		Total
Three months ended March 31, 2018
Beginning balance	$	620		$	3	$	623
Settlements	(56		)	—		(56		)
Unrealized losses included in other comprehensive income (loss) on securities still held at reporting date	(2		)	—		(2		)
Balance at March 31, 2018	$	562		$	3	$	565

- 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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