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FAIR VALUE

9 Months Ended

Sep. 30, 2023

B. FAIR VALUE

We apply the provisions of ASC 820, Fair Value Measurements and Disclosures, to assets and liabilities measured at fair value. Assets measured at fair value are as follows (in thousands):


		September 30, 2023												December 31, 2022
		Quoted			Prices with									Quoted			Prices with
		Prices in			Other				Prices with					Prices in			Other				Prices with
		Active			Observable				Unobservable					Active			Observable				Unobservable
		Markets			Inputs				Inputs					Markets			Inputs				Inputs
		(Level 1)			(Level 2)				(Level 3)		Total			(Level 1)			(Level 2)				(Level 3)		Total
Money market funds		$	496,910		$	11,894		$	—		$	508,804		$	390,219		$	1,286		$	—		$	391,505
Fixed income funds			4,768			18,160			—			22,928			2,594			16,692			—			19,286
Treasury securities			344			—			—			344			343			—			—			343
Equity securities			14,755			—			4,000			18,755			17,337			—			—			17,337
Alternative investments			—			—			4,184			4,184			—			—			4,102			4,102
Mutual funds:
Domestic stock funds			12,048			—			—			12,048			13,067			—			—			13,067
International stock funds			467			—			—			467			1,414			—			—			1,414
Target funds			8			—			—			8			8			—			—			8
Bond funds			5,158			—			—			5,158			130			—			—			130
Alternative funds			485			—			—			485			474			—			—			474
Total mutual funds			18,166			—			—			18,166			15,093			—			—			15,093
Total		$	534,943		$	30,054		$	8,184		$	573,181		$	425,586		$	17,978		$	4,102		$	447,666

From the assets measured at fair value as of September 30, 2023, listed in the table above, $508.4 million of money market funds are held in Cash and Cash Equivalents, $41.0 million of mutual funds, equity securities, and alternative investments are held in Investments, $0.1 million of money market and mutual funds are held in Other Assets for our deferred compensation plan, and $23.3 million of fixed income funds and $0.4 million of money market funds are held in Restricted Investments. As of December 31, 2022, $36.1 million of mutual funds, equity securities, and alternative investments were held in Investments, $391.2 million of money market funds were held in Cash and Cash Equivalents, $0.5 million of money market and mutual funds were held in Other Assets for our deferred compensation plan, and $19.6 million of fixed income funds and $0.3 million of money market funds were held in Restricted Investments.

We maintain money market, mutual funds, bonds, and/or equity securities in our non-qualified deferred compensation plan, our wholly owned licensed captive insurance company, and assets held in financial institutions. These funds are valued at prices quoted in an active exchange market and are included in “Cash and Cash Equivalents”, “Investments”, “Other Assets”, and “Restricted Investments”. We have elected not to apply the fair value option under ASC 825, Financial Instruments, to any of our financial instruments except for those expressly required by U.S. GAAP.

In accordance with our investment policy, our wholly-owned captive, Ardellis Insurance Ltd. (“Ardellis”), maintains an investment portfolio, totaling $60.3 million and $55.6 million as of September 30, 2023 and December 31, 2022, respectively, which has been included in the aforementioned table of total investments. This portfolio consists of domestic and international equity securities, alternative investments, and fixed income bonds.

Ardellis’ available for sale investment portfolio, including funds held with the State of Michigan, consists of the following (in thousands):


		September 30, 2023									December 31, 2022
					Unrealized									Unrealized
		Cost			Gain (Loss)			Fair Value			Cost			Gain (Loss)			Fair Value
Fixed income		$	25,336		$	(2,408)		$	22,928		$	21,399		$	(2,113)		$	19,286
Treasury securities			344			—			344			343			—			343
Equity			13,349			1,406			14,755			15,762			1,575			17,337
Mutual funds			17,184			939			18,123			13,430			1,144			14,574
Alternative investments			3,184			1,000			4,184			3,105			997			4,102
Total		$	59,397		$	937		$	60,334		$	54,039		$	1,603		$	55,642

Our fixed income investments consist of a blend of US Government and Agency bonds and investment grade corporate bonds with varying maturities. Our equity investments consist of small, mid, and large cap growth and value funds, as well as international equity. Our mutual fund investments consist of domestic and international stock. Our alternative investments consist of a private real estate income trust which is valued as a Level 3 asset. The net pre-tax unrealized gain of the portfolio was $0.9 million and $1.6 million as of September 30, 2023 and December 31, 2022, respectively. Carrying amounts above are recorded in the investments and restricted investments line items within the balance sheet as of September 30, 2023 and December 31, 2022.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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