Financial Instruments

12 Months Ended

May 31, 2014

Financial Instruments

Financial Instruments

Note Q – Financial Instruments

Fair Value

The following methods and assumptions were used to estimate fair value of each class of financial instruments for which it is practicable to estimate that value:

Investment Securities

Fair values for investment securities (U.S. Government, government agencies, government agency mortgage-backed securities, state and municipal securities, and equity securities) held for investment purposes (available-for-sale) are based on quoted market prices or dealer quotes. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Other Financial Instruments

The carrying amount of cash, short-term investments, receivables, prepaid expenses, short-term and demand notes payable, accounts payable, accrued expenses and other liabilities approximate fair value because of the immediate or relatively short-term maturity of these financial instruments. Fair value of term notes payable, including notes payable under the bridge-financing arrangement, were deemed to approximate their carrying value based on the Company’s incremental borrowing rates for similar types of borrowings with maturities consistent with those remaining for the debt being valued.

The carrying values and fair values of the Company’s financial instruments at May 31, 2014 and 2013 are as follows:

	2014				2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
ASSETS
Bonds available for sale	$	6,192,278	$	6,305,106	$	5,374,252	$	5,472,116
Cash and short-term investments		2,708,511		2,708,511		1,570,460		1,570,460
Premiums and other receivables		290,843		290,843		300,303		300,303
Equity securities (including derivatives)		790,368		816,460		455,708		454,639
LIABILITIES
Notes payable		5,220,350		5,220,350		4,847,170		4,847,170
Accounts payable and advance premiums		480,583		480,583		538,289		538,289
Accrued expenses and other liabilities		6,725,175		6,725,175		3,720,114		3,720,114