Fair Value Measurements

The financial assets in our investment portfolio are primarily measured at fair value as disclosed on the Consolidated Balance Sheets. The following table presents the carrying amounts and estimated fair values of our financial liabilities as of March 31, 2019 and December 31, 2018:



	March 31, 2019			December 31, 2018
($ in thousands)	Carrying Amount		Fair Value	Carrying Amount		Fair Value
Financial Liabilities
Long-term debt:
7.25% Senior Notes	49,907		61,391	49,907		57,032
6.70% Senior Notes	99,467		115,671	99,462		107,075
5.875% Senior Notes	—		—	185,000		177,230
5.375% Senior Notes	294,097		307,215	—		—
1.61% borrowings from FHLBNY	25,000		24,474	25,000		24,218
1.56% borrowings from FHLBNY	25,000		24,426	25,000		24,162
3.03% borrowings from FHLBI	60,000		61,814	60,000		58,905
Subtotal long-term debt	553,471		594,991	444,369		448,622
Unamortized debt issuance costs	(3,974	)		(4,829	)
Finance lease obligations	607			—
Total long-term debt	550,104			439,540

For a discussion of our long-term debt activity in First Quarter 2019, see Note 5. "Indebtedness" and for a discussion of the fair value hierarchy and techniques used to value our financial assets and liabilities, refer to Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2018 Annual Report.

The following tables provide quantitative disclosures of our financial assets that were measured and recorded at fair value at March 31, 2019 and December 31, 2018:



March 31, 2019			Fair Value Measurements Using
($ in thousands)	Assets Measured at Fair Value		Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1)¹	Significant Other Observable Inputs (Level 2)¹	Significant Unobservable Inputs (Level 3)
Description
Measured on a recurring basis:
AFS fixed income securities:
U.S. government and government agencies	$	127,089	68,645	58,444	—
Foreign government	20,526		—	20,526	—
Obligations of states and political subdivisions	1,150,243		—	1,150,243	—
Corporate securities	1,678,015		—	1,661,596	16,419
CLO and other ABS	722,240		—	690,948	31,292
CMBS	568,200		—	568,200	—
RMBS	1,301,045		—	1,301,045	—
Total AFS fixed income securities	5,567,358		68,645	5,451,002	47,711
Equity securities:
Common stock²	160,011		119,977	—	—
Preferred stock	3,005		3,005	—	—
Total equity securities	163,016		122,982	—	—
Short-term investments	290,653		289,232	1,421	—
Total assets measured at fair value	$	6,021,027	480,859	5,452,423	47,711



December 31, 2018			Fair Value Measurements Using
($ in thousands)	Assets Measured at Fair Value		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)¹	Significant Other Observable Inputs (Level 2)¹	Significant Unobservable Inputs (Level 3)
Description
Measured on a recurring basis:
AFS fixed income securities:
U.S. government and government agencies	$	121,310	78,381	42,929	—
Foreign government	23,131		—	23,131	—
Obligations of states and political subdivisions	1,138,469		—	1,138,469	—
Corporate securities	1,617,408		—	1,617,408	—
CLO and other ABS	717,362		—	709,953	7,409
CMBS	527,078		—	527,078	—
RMBS	1,128,342		—	1,128,342	—
Total AFS fixed income securities	5,273,100		78,381	5,187,310	7,409
Equity securities:
Common stock²	144,727		107,397	—	—
Preferred stock	2,912		2,912	—	—
Total equity securities	147,639		110,309	—	—
Short-term investments	323,864		321,370	2,494	—
Total assets measured at fair value	$	5,744,603	510,060	5,189,804	7,409


¹	There were no transfers of securities between Level 1 and Level 2.


²	Investments amounting to $40.0 million at March 31, 2019, and $23.7 million at December 31, 2018, were measured at fair value using net asset value per share (or its practical expedient) and have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to total assets measured at fair value.

The following table provides a summary of Level 3 changes in First Quarter 2019:



March 31, 2019
($ in thousands)	Corporate Securities	CLO and Other ABS		Total
Fair value, December 31, 2018	—	7,409		7,409
Total net (losses) gains for the period included in:
OCI	—	(225	)	(225	)
Net income	—	—		—
Purchases	—	12,434		12,434
Sales	—	—		—
Issuances	—	—		—
Settlements	—	—		—
Transfers into Level 3	16,419	11,674		28,093
Transfers out of Level 3	—	—		—
Fair value, March 31, 2019	16,419	31,292		47,711

There were no material changes in the fair value of securities measured using Level 3 prices in First Quarter 2018.

The following tables provide quantitative information regarding our financial assets and liabilities that were disclosed at fair value at March 31, 2019 and December 31, 2018:



March 31, 2019			Fair Value Measurements Using
($ in thousands)	Assets/ Liabilities Disclosed at Fair Value		Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Financial Assets
HTM:
Obligations of states and political subdivisions	$	17,923	—	17,923	—
Corporate securities	20,019		—	20,019	—
Total HTM fixed income securities	$	37,942	—	37,942	—

Financial Liabilities
Long-term debt:
7.25% Senior Notes	$	61,391	—	61,391	—
6.70% Senior Notes	115,671		—	115,671	—
5.375% Senior Notes	307,215		—	307,215	—
1.61% borrowings from FHLBNY	24,474		—	24,474	—
1.56% borrowings from FHLBNY	24,426		—	24,426	—
3.03% borrowings from FHLBI	61,814		—	61,814	—
Total long-term debt	$	594,991	—	594,991	—



December 31, 2018			Fair Value Measurements Using
($ in thousands)	Assets/ Liabilities Disclosed at Fair Value		Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Financial Assets
HTM:
Obligations of states and political subdivisions	$	17,969	—	17,969	—
Corporate securities	20,348		—	20,348	—
Total HTM fixed income securities	$	38,317	—	38,317	—

Financial Liabilities
Long-term debt:
7.25% Senior Notes	$	57,032	—	57,032	—
6.70% Senior Notes	107,075		—	107,075	—
5.875% Senior Notes	177,230		177,230	—	—
1.61% borrowings from FHLBNY	24,218		—	24,218	—
1.56% borrowings from FHLBNY	24,162		—	24,162	—
3.03% borrowings from FHLBI	58,905		—	58,905	—
Total long-term debt	$	448,622	177,230	271,392	—