Fair Value of Financial Instruments

Available for sale securities, trading securities and certain other assets are recorded at fair value. All changes in the fair value of trading securities and certain other assets are included in our condensed consolidated statements of operations. All changes in the fair value of available for sale securities are recorded in AOCI. There were no significant changes to our fair value methodologies during the nine months ended September 30, 2017.

In accordance with GAAP, we established a three-level valuation hierarchy for disclosure of fair value measurements based on the transparency of inputs to the valuation of an asset or liability as of the measurement date. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements). The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the measurement in its entirety. The three levels of the fair value hierarchy are defined below:


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


Level II	— Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities; and


Level III	— Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Level III inputs are used to measure fair value only to the extent that observable inputs are not available.

The level of market activity used to determine the fair value hierarchy is based on the availability of observable inputs market participants would use to price an asset or a liability, including market value price observations. We provide a qualitative description of the valuation techniques and inputs used for recurring and non-recurring fair value measurements in our audited financial statements and notes thereto included in our 2016 Form 10-K. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in our 2016 Form 10-K.

The following is a list of assets that are measured at fair value by hierarchy level as of September 30, 2017:



(In thousands)	Level I		Level II		Total
Assets at Fair Value
Investment Portfolio:
U.S. government and agency securities	$	137,606	$	12,217	$	149,823
State and municipal obligations	—		385,486		385,486
Money market instruments	155,957		—		155,957
Corporate bonds and notes	—		2,291,267		2,291,267
RMBS	—		207,150		207,150
CMBS	—		495,229		495,229
Other ABS	—		620,441		620,441
Foreign government and agency securities	—		36,684		36,684
Equity securities	187,642		860		188,502
Other investments (1)	—		39,620		39,620
Total Investments at Fair Value (2)	481,205		4,088,954		4,570,159
Total Assets at Fair Value	$	481,205	$	4,088,954	$	4,570,159

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(1)	Comprising short-term certificates of deposit and commercial paper.


(2)	Does not include certain other invested assets ($0.6 million), primarily invested in limited partnerships, accounted for as cost-method investments and not measured at fair value. Also does not include cash collateral held under securities lending agreements reinvested in short-term investments, and includes securities loaned to third-party borrowers under securities lending agreements.

The following is a list of assets that are measured at fair value by hierarchy level as of December 31, 2016:



(In thousands)	Level I		Level II		Level III		Total
Assets at Fair Value
Investment Portfolio:
U.S. government and agency securities	$	237,479	$	—	$	—	$	237,479
State and municipal obligations	—		358,536		—		358,536
Money market instruments	431,472		—		—		431,472
Corporate bonds and notes	—		2,024,205		—		2,024,205
RMBS	—		388,842		—		388,842
CMBS	—		507,273		—		507,273
Other ABS	—		450,128		—		450,128
Foreign government and agency securities	—		32,807		—		32,807
Equity securities	—		830		500		1,330
Other investments (1)	—		28,663		500		29,163
Total Investments at Fair Value (2)	668,951		3,791,284		1,000		4,461,235
Total Assets at Fair Value	$	668,951	$	3,791,284	$	1,000	$	4,461,235

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(1)	Comprising short-term certificates of deposit and commercial paper, included within Level II, and convertible notes of non-public company issuers, included within Level III.


(2)	Does not include certain other invested assets ($1.2 million), primarily invested in limited partnerships, accounted for as cost-method investments and not measured at fair value.

At December 31, 2016, total Level III assets of $1.0 million accounted for less than 0.1% of total assets measured at fair value. Included in equity securities was a Level III investment of $0.5 million in a privately-placed equity security, purchased during the three months ended June 30, 2015. Included in other debt securities was a Level III investment of $0.5 million in debt securities from a non-public company issuer, purchased during the three months ended June 30, 2016. There were no related gains or losses recorded during the year ended December 31, 2016 on these investments. However, during the nine months ended September 30, 2017, we recorded other-than-temporary credit-related impairment losses in earnings of $1.0 million on these securities. As a result, there were no Level III assets remaining in our portfolio at September 30, 2017. See Note 5 for additional information.

There were no Level III liabilities at September 30, 2017 or December 31, 2016. There were no transfers between Level I and Level II for the three and nine months ended September 30, 2017 and 2016. There were also no transfers involving Level III assets or liabilities for the three and nine months ended September 30, 2017 and 2016.

Other Fair Value Disclosure

The carrying value and estimated fair value of other selected assets and liabilities not carried at fair value on our condensed consolidated balance sheets were as follows as of the dates indicated:



	September 30, 2017				December 31, 2016
(In thousands)	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Other invested assets	$	599	$	3,404	$	1,195	$	3,789
Liabilities:
Long-term debt	1,026,806		1,095,409		1,069,537		1,214,471