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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2020
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Note 7 – Fair Value Measurements The Company records and discloses certain financial assets at their estimated fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:
Level 1 | - | Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 | - | Other inputs that are observable for the asset, either directly or indirectly such as quoted prices for identical assets that are not observable throughout the full term of the asset.
Level 3 | - | Inputs that are unobservable.
Valuation Methodology Cash and cash equivalents Cash and cash equivalents primarily consist of money-market funds and certificates of deposit maturing within 90 days. Their carrying value approximates fair value due to the short maturity and high liquidity of these funds. Restricted cash Restricted cash represents cash held by state authorities and the carrying value approximates fair value. Short-term investments Short-term investments consist of certificates of deposit with maturities of 91 to 365 days. Due to their short maturity, the carrying value approximates fair value. Fixed-maturity and equity securities Estimated fair values of the Company’s fixed-maturity and equity securities are determined in accordance with U.S. GAAP, using valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair values are generally measured using quoted prices in active markets for identical securities or other inputs that are observable either directly or indirectly, such as quoted prices for similar securities. In those instances where observable inputs are not available, fair values are measured using unobservable inputs. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the security and are developed based on the best information available in the circumstances. Fair value estimates derived from unobservable inputs are significantly affected by the assumptions used, including the discount rates and the estimated amounts and timing of future cash flows. The derived fair value estimates cannot be substantiated by comparison to independent markets and are not necessarily indicative of the amounts that would be realized in a current market exchange. The estimated fair values for securities that do not trade on a daily basis are determined by management, utilizing prices obtained from an independent pricing service and information provided by brokers, which are level 2 inputs. Management reviews the assumptions and methods utilized by the pricing service and then compares the relevant data and pricing to broker-provided data. The Company gains assurance of the overall reasonableness and consistent application of the assumptions and methodologies and compliance with accounting standards for fair value determination through ongoing monitoring of the reported fair values. Revolving Credit Facility The Company’s revolving credit facility is a variable-rate loan. The interest rate is periodically adjusted based on the London Interbank Offered Rate plus a spread. As a result, its carrying value approximates fair value. Long-term debt The following table summarizes components of the Company’s long-term debt and methods used in estimating their fair values:
| Maturity Date | Valuation Methodology
4.25% Convertible senior notes | 2037 | Quoted price
3.90% Promissory note | 2032 | Discounted cash flow method/Level 3 inputs
4% Promissory note | 2031 | Discounted cash flow method/Level 3 inputs
3.75% Callable promissory note | 2036 | Discounted cash flow method/Level 3 inputs
4.55% Promissory note | 2036 | Discounted cash flow method/Level 3 inputs
Assets Measured at Estimated Fair Value on a Recurring Basis The following table presents information about the Company’s financial assets measured at estimated fair value on a recurring basis. The table indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of September 30, 2020 and December 31, 2019:
|  | Fair Value Measurements Using |  |  |  |  |
|  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |  |  | Total |
As of September 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 410,691 |  |  | $ | — |  |  | $ | — |  |  | $ | 410,691 |
Restricted cash |  | $ | 2,400 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,400 |
Fixed-maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and U.S. government agencies |  | $ | 10,144 |  |  | $ | 1,738 |  |  | $ | — |  |  | $ | 11,882 |
Corporate bonds |  |  | 67,825 |  |  |  | — |  |  |  | — |  |  |  | 67,825 |
State, municipalities, and political subdivisions |  |  | — |  |  |  | 5,908 |  |  |  | — |  |  |  | 5,908 |
Exchange-traded debt |  |  | 7,095 |  |  |  | — |  |  |  | — |  |  |  | 7,095 |
Redeemable preferred stock |  |  | 33 |  |  |  | — |  |  |  | — |  |  |  | 33 |
Total available-for-sale securities |  | $ | 85,097 |  |  | $ | 7,646 |  |  | $ | — |  |  | $ | 92,743 |
Equity securities |  | $ | 42,702 |  |  | $ | — |  |  | $ | — |  |  | $ | 42,702 |
|  | Fair Value Measurements Using |  |  |  |  |
|  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |  |  | Total |
As of December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 229,218 |  |  | $ | — |  |  | $ | — |  |  | $ | 229,218 |
Restricted cash |  | $ | 700 |  |  | $ | — |  |  | $ | — |  |  | $ | 700 |
Short-term investments |  | $ | 491 |  |  | $ | — |  |  | $ | — |  |  | $ | 491 |
Fixed-maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and U.S. government agencies |  | $ | 25,294 |  |  | $ | 1,001 |  |  | $ | — |  |  | $ | 26,295 |
Corporate bonds |  |  | 159,364 |  |  |  | — |  |  |  | — |  |  |  | 159,364 |
State, municipalities, and political subdivisions |  |  | — |  |  |  | 7,912 |  |  |  | — |  |  |  | 7,912 |
Exchange-traded debt |  |  | 9,145 |  |  |  | — |  |  |  | — |  |  |  | 9,145 |
Redeemable preferred stock |  |  | 123 |  |  |  | — |  |  |  | — |  |  |  | 123 |
Total available-for-sale securities |  | $ | 193,926 |  |  | $ | 8,913 |  |  | $ | — |  |  | $ | 202,839 |
Equity securities |  | $ | 35,285 |  |  | $ | — |  |  | $ | — |  |  | $ | 35,285 |
Assets and Liabilities Carried at Other Than Estimated Fair Value The following tables present fair value information for assets and liabilities that are carried on the balance sheet at amounts other than fair value as of September 30, 2020 and December 31, 2019:
|  | Carrying |  |  | Fair Value Measurements Using |  |  | Estimated |
|  | Value |  |  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |  |  | Fair Value |
As of September 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revolving credit facility |  | $ | 8,750 |  |  | $ | — |  |  | $ | 8,750 |  |  | $ | — |  |  | $ | 8,750 |
Long-term debt: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
4.25% Convertible senior notes |  | $ | 132,901 |  |  | $ | — |  |  | $ | 141,984 |  |  | $ | — |  |  | $ | 141,984 |
3.90% Promissory note |  |  | 9,698 |  |  |  | — |  |  |  | — |  |  |  | 9,684 |  |  |  | 9,684 |
3.75% Callable promissory note |  |  | 7,586 |  |  |  | — |  |  |  | — |  |  |  | 7,651 |  |  |  | 7,651 |
4.55% Promissory note |  |  | 5,442 |  |  |  | — |  |  |  | — |  |  |  | 5,528 |  |  |  | 5,528 |
Total long-term debt |  | $ | 155,627 |  |  | $ | — |  |  | $ | 141,984 |  |  | $ | 22,863 |  |  | $ | 164,847 |
|  | Carrying |  |  | Fair Value Measurements Using |  |  | Estimated |
|  | Value |  |  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |  |  | Fair Value |
As of December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revolving credit facility |  | $ | 9,750 |  |  | $ | — |  |  | $ | 9,750 |  |  | $ | — |  |  | $ | 9,750 |
Long-term debt: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
4.25% Convertible senior notes |  | $ | 134,075 |  |  | $ | — |  |  | $ | 147,375 |  |  | $ | — |  |  | $ | 147,375 |
3.95% Promissory note |  |  | 8,875 |  |  |  | — |  |  |  | — |  |  |  | 8,887 |  |  |  | 8,887 |
4% Promissory note |  |  | 7,237 |  |  |  | — |  |  |  | — |  |  |  | 7,409 |  |  |  | 7,409 |
3.75% Callable promissory note |  |  | 7,837 |  |  |  | — |  |  |  | — |  |  |  | 7,861 |  |  |  | 7,861 |
4.55% Promissory note |  |  | 5,611 |  |  |  | — |  |  |  | — |  |  |  | 5,802 |  |  |  | 5,802 |
Total long-term debt |  | $ | 163,635 |  |  | $ | — |  |  | $ | 147,375 |  |  | $ | 29,959 |  |  | $ | 177,334 |

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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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