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Fair Value Measurements

12 Months Ended

Dec. 31, 2022

Fair Value Measurements

Fair Value Measurements

4. Fair value measurements

The following tables present the Company’s fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 and 2021:


December 31, 2022		Level 1			Level 2			Level 3			Total

		(in thousands)
Assets:
Fixed maturity securities
U.S. Governments		$	—		$	48,551		$	—		$	48,551
States, territories, and possessions			—			5,354			—			5,354
Political subdivisions			—			4,298			—			4,298
Special revenue excluding mortgage/asset-backed securities			—			32,799			—			32,799
Industrial and miscellaneous			—			254,095			—			254,095
Mortgage/asset-backed securities			—			169,967			—			169,967
Equity securities			38,576			—			—			38,576
Cash, cash equivalents, and restricted cash			68,164			—			—			68,164
Total assets		$	106,740		$	515,064		$	—		$	621,804


December 31, 2021		Level 1			Level 2			Level 3			Total

		(in thousands)
Assets:
Fixed maturity securities
U.S. Governments		$	—		$	16,870		$	—		$	16,870
States, territories, and possessions			—			4,014			—			4,014
Political subdivisions			—			6,380			—			6,380
Special revenue excluding mortgage/asset-backed securities			—			44,498			—			44,498
Industrial and miscellaneous			—			249,046			—			249,046
Mortgage/asset-backed securities			—			110,374			1,500			111,874
Equity securities			33,261			—			—			33,261
Cash, cash equivalents, and restricted cash			50,371			—			—			50,371
Total assets		$	83,632		$	431,182		$	1,500		$	516,314

The carrying amounts of financial assets and liabilities reported in the accompanying condensed consolidated balance sheet including cash and cash equivalents, restricted cash, receivables, reinsurance recoverable, and accounts payable and other accrued liabilities approximate fair value due to their short term-maturity. The carrying amount of the Company’s borrowings under the Federal Home Loan Bank (“FHLB”) line of credit approximates fair value as the Company is currently borrowing at the overnight rate, which is adjusted daily.

Transfers between Level 3 and Level 2 securities result from changes in the availability of observable market inputs and are recorded at the beginning of the reporting period. As of December 31, 2022, the Company had no fixed income securities classified as Level 3. As of December 31, 2021, the Company had $1.5 million of fixed income securities classified as Level 3 due to the lack of availability of observable market inputs for recently purchased securities.

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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