Fair Value Measurements

3 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

14. Fair Value Measurements

Certain assets and liabilities are recorded at fair value on the consolidated balance sheets and are measured and classified based upon a three-tiered approach to valuation. Financial assets and liabilities are recorded at fair value and are classified and disclosed in one of the following three categories:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; 

Level 2 – Quoted prices for identical or similar financial instruments in markets that are not considered to be active, or similar financial instruments for which all significant inputs are observable, either directly or indirectly, or inputs other than quoted prices that are observable, or inputs that are derived principally from or corroborated by observable market data through correlation or other means; and

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and are unobservable. These reflect management’s assumptions about the assumptions a market participant would use in pricing the asset or liability.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Fair values of cash equivalents approximate carrying value due to the short period of time to maturity.

Fair values of short-term investments are based on quoted market prices.

Fair values of investments available-for-sale are based on quoted market prices, dealer quotes or discounted cash flows.

Fair values on interest rate swap contracts are based on using pricing valuation models which include broker quotes.

Fair values of long-term investment and mortgage loans and notes on real estate are based on quoted market prices, dealer quotes or discounted cash flows.  Fair values of reinsurance recoverables and trade receivables approximate their recorded value.

Our financial instruments that are exposed to concentrations of credit risk consist primarily of temporary cash investments, trade receivables, reinsurance recoverables and notes receivable. Limited credit risk exists on trade receivables due to the diversity of our customer base and their dispersion across broad geographic markets. We place our temporary cash investments with financial institutions and limit the amount of credit exposure to any one financial institution.

We have mortgage loans, which potentially expose us to credit risk. The portfolio of loans is principally collateralized by self-storage facilities and commercial properties. We have not experienced any material losses related to the loans from individual or groups of loans in any particular industry or geographic area. The estimated fair values were determined using the discounted cash flow method and using interest rates currently offered for similar loans to borrowers with similar credit ratings.

Other investments are substantially current or bear reasonable interest rates. As a result, the carrying values of these financial instruments approximate fair value.

The carrying values and estimated fair values for the financial instruments stated above and their placement in the fair value hierarchy are as follows:

		Fair Value Hierarchy
		Carrying								Total Estimated
As of September 30, 2023		Value		Level 1		Level 2		Level 3		Fair Value
		(Unaudited)
Assets		(In thousands)
Reinsurance recoverables and trade receivables, net	$	212,565	$	–	$	–	$	212,565	$	212,565
Mortgage loans, net		550,913		–		–		521,831		521,831
Other investments		88,712		–		–		88,712		88,712
Total	$	852,190	$	–	$	–	$	823,108	$	823,108
Liabilities
Notes, loans and finance leases payable	$	6,436,800	$	–	$	5,961,511	$	–	$	5,961,511
Total	$	6,436,800	$	–	$	5,961,511	$	–	$	5,961,511

		Fair Value Hierarchy
		Carrying								Total Estimated
As of March 31, 2023		Value		Level 1		Level 2		Level 3		Fair Value
		(In thousands)
Assets
Reinsurance recoverables and trade receivables, net	$	189,498	$	–	$	–	$	189,498	$	189,498
Mortgage loans, net		466,531		–		–		444,957		444,957
Other investments		109,009		–		–		109,009		109,009
Total	$	765,038	$	–	$	–	$	743,464	$	743,464
Liabilities
Notes, loans and finance leases payable		6,143,350		–		5,710,735		–		5,710,735
Total	$	6,143,350	$	–	$	5,710,735	$	–	$	5,710,735

The following tables represent the financial assets and liabilities on the consolidated balance sheets as of September 30, 2023 and March 31, 2023 that are measured at fair value on a recurring basis and the level within the fair value hierarchy.

As of September 30, 2023		Total		Level 1		Level 2		Level 3
		(Unaudited)
Assets		(In thousands)
Short-term investments	$	1,808,130	$	1,807,142	$	988	$	–
Fixed maturities - available for sale		2,472,128		168,287		2,303,782		59
Preferred stock		19,991		19,991		–		–
Common stock		42,045		42,045		–		–
Derivatives		22,854		10,526		12,328		–
Total	$	4,365,148	$	2,047,991	$	2,317,098	$	59
Liabilities
Embedded derivatives	$	9,630	$	–	$	–	$	9,630
Total	$	9,630	$	–	$	–	$	9,630

As of March 31, 2023		Total		Level 1		Level 2		Level 3
		(In thousands)
Assets
Short-term investments	$	1,809,441	$	1,808,797	$	644	$	–
Fixed maturities - available for sale		2,709,037		251,832		2,457,146		59
Preferred stock		21,982		21,982		–		–
Common stock		39,375		39,375		–		–
Derivatives		9,606		4,295		5,311		–
Total	$	4,589,441	$	2,126,281	$	2,463,101	$	59