Disclosures About Fair Values of Financial Instruments

12 Months Ended

Dec. 31, 2013

Disclosures About Fair Value of Financial Instruments [Abstract]

Disclosures About Fair Value of Financial Instruments

Note 15. Disclosures About Fair Value of Financial Instruments

The estimated fair values have been determined by the Company using available market information from various market sources and appropriate valuation methodologies as of the respective dates.  However, considerable judgment is necessary to interpret market data and to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts which the Company could realize in a current market exchange.  The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

		2013				2012
	Level in Fair Value Hierarchy (1)	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	Level 1	$	33,102	$	33,102	$	18,951	$	18,951
Fixed maturities	(1)		201,303		201,303		230,508		230,508
Equity securities	(1)		21,890		21,890		12,205		12,205
Other invested assets	Level 3		2,123		2,123		565		565
Policy loans	Level 2		2,369		2,369		2,338		2,338
Real estate	Level 2		38		38		38		38
Investments in unconsolidated trusts	Level 2		1,238		1,238		1,238		1,238
Liabilities:
Junior Subordinated Debentures	Level 2		41,238		41,238		41,238		41,238
Derivative financial instrument	Level 3		-		-		141		141

⁽¹⁾ See Note 2 for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets.

The fair value estimates as of December 31, 2013 and 2012 were based on pertinent information available to management as of the respective dates.  Although management is not aware of any factors that would significantly affect the estimated fair value amounts, current estimates of fair value may differ significantly from amounts that might ultimately be realized in a market exchange on any subsequent date.

The following describes the methods and assumptions used by the Company in estimating fair values:

Cash and Cash Equivalents

The carrying amount approximates fair value due to the short-term nature of the instruments.

Fixed Maturities and Common and Non-Redeemable Preferred Stocks

The carrying amount is determined in accordance with methods prescribed by the NAIC, which do not differ materially from publicly quoted market prices. Certain fixed maturities do not have publicly quoted values and consist solely of issuances of pooled debt obligations of multiple, smaller financial services companies. They are not actively traded and valuation techniques used to measure fair value are based on future estimated cash flows discounted at a reasonably estimated rate of interest. Other qualitative and quantitative information received from the original underwriter of the pooled offerings is also considered, as applicable.

Non-publicly Traded Invested Assets

The fair value of investments in certain limited partnerships which are included in other invested assets on the consolidated balance sheet were determined by officers of those limited partnerships.

Junior Subordinated Debentures

The fair value is estimated based on the quoted market prices for similar issues and the current rates offered for debt having similar returns and remaining maturities.

Derivative Financial Instrument

As the Company’s only derivative financial instrument was an interest rate collar, changes in valuation were correlated with changes in interest rates and contract maturity date and, accordingly, values were estimated using projected cash flows at current interest rates discounted at a reasonably estimated rate of interest. Fair value quotations were also obtained and considered, as applicable, from the contractual counterparty.