Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2016

Fair value measurements for items measured at fair value

Assets measured at fair value included those listed, by hierarchy level, in the following tables as of December 31, 2016 and 2015:



December 31, 2016
(In thousands)	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	$	73,530	$	30,690	$	42,840	$	—
Obligations of U.S. states and political subdivisions	2,143,016		—		2,142,325		691
Corporate debt securities	1,743,910		—		1,743,910		—
ABS	59,565		—		59,565		—
RMBS	224,209		—		224,209		—
CMBS	319,817		—		319,817		—
CLOs	121,175		—		121,175		—
Total debt securities	4,685,222		30,690		4,653,841		691
Equity securities ⁽¹⁾	7,128		2,860		—		4,268
Total investments	$	4,692,350	$	33,550	$	4,653,841	$	4,959
Real estate acquired ⁽²⁾	$	11,748	$	—	$	—	$	11,748



December 31, 2015
(In thousands)	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		—
ABS	116,617		—		116,617		—
RMBS	257,648		—		257,648		—
CMBS	233,491		—		233,491		—
CLOs	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 investments	$	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 and liabilities measured at fair value using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances for the years ended December 31, 2016, 2015, and 2014 is shown in the following tables. There were no transfers into or out of Level 3 in those years and there we no losses included in earnings for those years attributable to the change in unrealized losses on assets still held at the end of each applicable year.

Level 3 reconciliations:

(In thousands)	Obligations of U.S. States and Political Subdivisions			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 earnings and reported as net realized investment gains	—			3,579			3,579			—
Included in earnings and reported as losses incurred, net	—			—			—			(1,142		)
Purchases	—			4,258			4,258			36,859
Sales	(537		)	(6,424		)	(6,961		)	(36,118		)
Balance at December 31, 2016	$	691		$	4,268		$	4,959		$	11,748



(In thousands)	Obligations of U.S. States and Political Subdivisions			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	—			—		—			(2,322		)
Purchases	7			2,534		2,541			34,624
Sales	(625		)	—		(625		)	(32,811		)
Balance at December 31, 2015	$	1,228		$	2,855	$	4,083		$	12,149



(In thousands)	Obligations of U.S. States and Political Subdivisions			Equity Securities		Total Investments			Real Estate Acquired
Balance at December 31, 2013	$	2,423		$	321	$	2,744		$	13,280
Total realized/unrealized gains (losses):
Included in earnings and reported as losses incurred, net	—			—		—			(4,129		)
Purchases	30			—		30			42,247
Sales	(607		)	—		(607		)	(38,740		)
Balance at December 31, 2014	$	1,846		$	321	$	2,167		$	12,658

Schedule of carrying value and fair value of financial liabilities measured on a recurring basis

The following table presents the carrying value and fair value of our financial liabilities disclosed, but not carried, at fair value at December 31, 2016 and 2015. The fair values of our 5% Notes, 2% Notes, 5.75% Notes, and 9% Debentures were based on observable market prices and the fair value of the FHLB 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. See Note 7 - "Debt" for a description of the financial liabilities in the table below.



	December 31, 2016				December 31, 2015
(In thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial liabilities:
FHLB Advance	$	155,000	$	151,905	n/a		n/a
5% Notes	144,789		147,679		331,546		345,616
2% Notes	204,672		308,605		490,755		701,955
5.75% Notes	417,406		445,987		n/a		n/a
9% Debentures	256,872		323,040		389,522		455,067
Total financial liabilities	$	1,178,739	$	1,377,216	$	1,211,823	$	1,502,638