DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 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 June 30, 2019 and December 31, 2018 are summarized in the tables below.



June 30, 2019	Carrying amounts		Estimated fair values
($ in thousands)	Carrying amounts		Estimated fair values
Assets:
Fixed maturity securities available-for-sale:
U.S. treasury	$	8,270	$	8,270
U.S. government-sponsored agencies	320,827		320,827
Obligations of states and political subdivisions	269,702		269,702
Commercial mortgage-backed	94,304		94,304
Residential mortgage-backed	194,444		194,444
Other asset-backed	17,644		17,644
Corporate	434,875		434,875
Total fixed maturity securities available-for-sale	1,340,066		1,340,066

Equity investments, at fair value
Common stocks:
Financial services	51,313		51,313
Information technology	41,911		41,911
Healthcare	29,513		29,513
Consumer staples	17,547		17,547
Consumer discretionary	29,178		29,178
Energy	14,613		14,613
Industrials	21,636		21,636
Other	15,186		15,186
Non-redeemable preferred stocks	18,840		18,840
Investment funds	9,770		9,770
Total equity investments	249,507		249,507

Short-term investments	46,857		46,857

Liabilities:
Surplus notes	25,000		16,626



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 by fair value hierarchy, as of June 30, 2019 and December 31, 2018.



June 30, 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	$	8,270	$	—	$	—	$	8,270	$	—
U.S. government-sponsored agencies	320,827		—		—		320,827		—
Obligations of states and political subdivisions	269,702		—		—		269,702		—
Commercial mortgage-backed	94,304		—		—		94,304		—
Residential mortgage-backed	194,444		—		—		194,444		—
Other asset-backed	17,644		—		—		17,644		—
Corporate	434,875		—		—		434,723		152
Total fixed maturity securities available-for-sale	1,340,066		—		—		1,339,914		152

Equity investments, at fair value:
Common stocks:
Financial services	51,313		—		51,313		—		—
Information technology	41,911		—		41,911		—		—
Healthcare	29,513		—		29,513		—		—
Consumer staples	17,547		—		17,547		—		—
Consumer discretionary	29,178		—		29,178		—		—
Energy	14,613		—		14,613		—		—
Industrials	21,636		—		21,636		—		—
Other	15,186		—		15,186		—		—
Non-redeemable preferred stocks	18,840		—		9,059		9,781		—
Investment funds	9,770		9,770		—		—		—
Total equity investments	249,507		9,770		229,956		9,781		—

Short-term investments	46,857		—		46,857		—		—

Financial instruments not reported at fair value:
Liabilities:
Surplus notes	16,626		—		—		—		16,626



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 and six months ended June 30, 2019 and 2018. Any unrealized gains or losses on fixed maturity securities are recognized in other comprehensive income (loss). Any gains or losses stemming from settlements, disposals or impairments, as well as 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
Three months ended June 30, 2019	Fixed maturity securities available-for-sale, corporate			Total
Beginning balance	$	201		$	201
Settlements	(50		)	(50		)
Unrealized gains (losses) included in other comprehensive income (loss) on securities still held at reporting date	1			1
Balance at June 30, 2019	$	152		$	152

Six months ended June 30, 2019
Beginning balance	$	259		$	259
Settlements	(107		)	(107		)
Balance at June 30, 2019	$	152		$	152



($ in thousands)	Fair value measurements using significant unobservable (Level 3) inputs
Three months ended June 30, 2018	Fixed maturity securities available-for-sale, corporate			Equity securities, financial services			Total
Beginning balance	$	562		$	3		$	565
Settlements	(89		)	—			(89		)
Unrealized gains (losses) included in other comprehensive income (loss) on securities still held at reporting date	1			(3		)	(2		)
Balance at June 30, 2018	$	474		$	—		$	474

Six months ended June 30, 2018
Beginning balance	$	620		$	3		$	623
Settlements	(145		)	—			(145		)
Unrealized gains (losses) included in other comprehensive income (loss) on securities still held at reporting date	(1		)	(3		)	(4		)
Balance at June 30, 2018	$	474		$	—		$	474

- 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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