Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2016

Fair value measurements for items measured at fair value

Fair value measurements for assets measured at fair value included the following as of September 30, 2016 and December 31, 2015:

September 30, 2016

(In thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	42,256	$	8,755	$	33,501	$	—
Obligations of U.S. states and political subdivisions	2,132,669		—		2,131,839		830
Corporate debt securities	1,749,869		—		1,749,869		—
Asset-backed securities	79,182		—		79,182		—
Residential mortgage-backed securities	243,436		—		243,436		—
Commercial mortgage-backed securities	350,213		—		350,213		—
Collateralized loan obligations	121,000		—		121,000		—
Total debt securities	4,718,625		8,755		4,709,040		830
Equity securities ⁽¹⁾	7,218		2,950		—		4,268
Total investment portfolio	$	4,725,843	$	11,705	$	4,709,040	$	5,098
Real estate acquired ⁽²⁾	$	10,564	$	—	$	—	$	10,564


⁽¹⁾	Equity securities in Level 3 are carried at cost, which approximates fair value.


⁽²⁾	Real estate acquired through claim settlement, which is held for sale, is reported in Other assets on the consolidated balance sheets.

December 31, 2015

(In thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	160,584	$	46,197	$	114,387	$	—
Obligations of U.S. states and political subdivisions	1,792,527		—		1,791,299		1,228
Corporate debt securities	2,004,763		—		2,004,763		—
Asset-backed securities	116,617		—		116,617		—
Residential mortgage-backed securities	257,648		—		257,648		—
Commercial mortgage-backed securities	233,491		—		233,491		—
Collateralized loan obligations	60,200		—		60,200		—
Debt securities issued by foreign sovereign governments	31,731		31,731		—		—
Total debt securities	4,657,561		77,928		4,578,405		1,228
Equity securities ⁽¹⁾	5,645		2,790		—		2,855
Total investment portfolio	$	4,663,206	$	80,718	$	4,578,405	$	4,083
Real estate acquired ⁽²⁾	$	12,149	$	—	$	—	$	12,149


⁽¹⁾	Equity securities in Level 3 are carried at cost, which approximates fair value.


⁽²⁾	Real estate acquired through claim settlement, which is held for sale, is reported in Other assets on the consolidated balance sheets.

Reconciliation of beginning and ending balance for assets and liabilities measured at fair value with significant unobservable inputs (level 3)

For assets measured at fair value using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances for the three and nine months ended September 30, 2016 and 2015 is shown in the following tables. There were no transfers into or out of Level 3 in those periods and there were no losses included in earnings for those periods attributable to the change in unrealized losses on assets still held at the end of the applicable period.



Three Months Ended September 30, 2016
(In thousands)	Debt Securities			Equity Securities			Total Investments			Real Estate Acquired
Balance at June 30, 2016	$	1,056		$	6,940		$	7,996		$	9,642
Total realized/unrealized gains (losses):
Included in other comprehensive income	—			(3,519		)	(3,519		)	—
Included in earnings and reported as net realized investment gains, net	—			3,579			3,579			—
Included in earnings and reported as losses incurred, net	—			—			—			(501		)
Purchases	—			1,167			1,167			8,938
Sales	(226		)	(3,899		)	(4,125		)	(7,515		)
Balance at September 30, 2016	$	830		$	4,268		$	5,098		$	10,564



Three Months Ended September 30, 2015
(In thousands)	Debt Securities			Equity Securities		Total Investments			Real Estate Acquired
Balance at June 30, 2015	$	1,634		$	321	$	1,955		$	7,995
Total realized/unrealized gains (losses):
Included in earnings and reported as losses incurred, net	—			—		—			(1,031		)
Purchases	—			2,535		2,535			9,632
Sales	(247		)	—		(247		)	(6,512		)
Balance at September 30, 2015	$	1,387		$	2,856	$	4,243		$	10,084



Nine Months Ended September 30, 2016
(In thousands)	Debt Securities			Equity Securities			Total Investments			Real Estate Acquired
Balance at December 31, 2015	$	1,228		$	2,855		$	4,083		$	12,149
Total realized/unrealized gains (losses):
Included in other comprehensive income	—			—			—			—
Included in earnings and reported as net realized investment gains, net	—			3,579			3,579			—
Included in earnings and reported as losses incurred, net	—			—			—			(143		)
Purchases	—			4,258			4,258			27,953
Sales	(398		)	(6,424		)	(6,822		)	(29,395		)
Balance at September 30, 2016	$	830		$	4,268		$	5,098		$	10,564



Nine Months Ended September 30, 2015
(In thousands)	Debt Securities			Equity Securities		Total Investments			Real Estate Acquired
Balance at December 31, 2014	$	1,846		$	321	$	2,167		$	12,658
Total realized/unrealized gains (losses):
Included in earnings and reported as losses incurred, net	—			—		—			(1,503		)
Purchases	7			2,535		2,542			26,346
Sales	(466		)	—		(466		)	(27,417		)
Balance at September 30, 2015	$	1,387		$	2,856	$	4,243		$	10,084

Carrying value and fair value of debt

The following table presents the carrying value and fair value of our financial liabilities disclosed, but not carried, at fair value at September 30, 2016 and December 31, 2015. The fair values of our Convertible Senior Notes, Senior Notes and Convertible Junior Subordinated Debentures were based on observable market prices and the fair value of the Federal Home Loan Bank Advance was estimated using discounted cash flows on current incremental borrowing rates for similar borrowing arrangements, and in all cases they are categorized as Level 2.



	September 30, 2016				December 31, 2015
(In thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial liabilities:
FHLB Advance	$	155,000	$	159,302	n/a		n/a
5% Notes	144,629		148,904		331,546		345,616
2% Notes	204,444		261,530		490,755		701,955
5.75% Notes	417,087		442,531		n/a		n/a
9% Debentures	256,872		318,077		389,522		455,067
Total long-term debt	$	1,178,032	$	1,330,344	$	1,211,823	$	1,502,638