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Fair Value Measurement | 9 Months Ended
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Sep. 30, 2023
Fair Value Disclosures [Abstract] |
Fair Value Measurement | 4. Fair Value Measurement When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions, and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: •Level 1 — Quoted prices in active markets for identical assets or liabilities that are publicly accessible at the measurement date. •Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. •Level 3 — Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis (in millions):
| September 30, 2023
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Financial assets: |  |  |  |  |  |  |
Cash, cash equivalents, and restricted cash | $ | 269.4 |  |  | $ | — |  |  | $ | — |  |  | $ | 269.4 |
Fixed maturities available-for-sale: |  |  |  |  |  |  |
U.S. government and agencies | 22.1 |  |  | — |  |  | — |  |  | 22.1 |
States and other territories | — |  |  | 9.5 |  |  | — |  |  | 9.5 |
Corporate securities | — |  |  | 69.4 |  |  | — |  |  | 69.4 |
Foreign securities | — |  |  | 0.9 |  |  | — |  |  | 0.9 |
Residential mortgage-backed securities | — |  |  | 18.9 |  |  | — |  |  | 18.9 |
Commercial mortgage-backed securities | — |  |  | 7.0 |  |  | — |  |  | 7.0 |
Asset backed securities | — |  |  | 13.7 |  |  | — |  |  | 13.7 |
Total fixed maturities available-for-sale | 22.1 |  |  | 119.4 |  |  | — |  |  | 141.5 |
Short-term investments |  |  |  |  |  |  |
U.S. government and agencies | 123.3 |  |  | — |  |  | — |  |  | 123.3 |
Commercial paper | — |  |  | 47.6 |  |  | — |  |  | 47.6 |
Corporate securities | — |  |  | 17.6 |  |  | — |  |  | 17.6 |
Total short-term investments | 123.3 |  |  | 65.2 |  |  | — |  |  | 188.5 |
Total financial assets | $ | 414.8 |  |  | $ | 184.6 |  |  | $ | — |  |  | $ | 599.4 |
Financial liabilities: |  |  |  |  |  |  |
Contingent consideration liability | $ | — |  |  | $ | — |  |  | $ | 13.5 |  |  | $ | 13.5 |
Public warrants | 0.1 |  |  | — |  |  | — |  |  | 0.1 |
Private placement warrants | — |  |  | 0.1 |  |  | — |  |  | 0.1 |
Total financial liabilities | $ | 0.1 |  |  | $ | 0.1 |  |  | $ | 13.5 |  |  | $ | 13.7 |
| December 31, 2022
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Financial assets: |  |  |  |  |  |  |
Cash, cash equivalents, and restricted cash | $ | 244.5 |  |  | $ | — |  |  | $ | — |  |  | $ | 244.5 |
Fixed maturities available-for-sale: |  |  |  |  |  |  |
U.S. government and agencies | 21.1 |  |  | — |  |  | — |  |  | 21.1 |
States and other territories | — |  |  | 8.3 |  |  | — |  |  | 8.3 |
Corporate securities | — |  |  | 52.5 |  |  | — |  |  | 52.5 |
Foreign securities | — |  |  | 0.8 |  |  | — |  |  | 0.8 |
Residential mortgage-backed securities | — |  |  | 18.9 |  |  | — |  |  | 18.9 |
Commercial mortgage-backed securities | — |  |  | 5.8 |  |  | — |  |  | 5.8 |
Asset backed securities | — |  |  | 13.7 |  |  | — |  |  | 13.7 |
Total fixed maturities available-for-sale | 21.1 |  |  | 100.0 |  |  | — |  |  | 121.1 |
Short-term investments |  |  |  |  |  |  |
U.S. government and agencies | 128.9 |  |  | — |  |  | — |  |  | 128.9 |
Commercial paper | — |  |  | 146.5 |  |  | — |  |  | 146.5 |
Corporate securities | — |  |  | 49.4 |  |  | — |  |  | 49.4 |
Total short-term investments | 128.9 |  |  | 195.9 |  |  | — |  |  | 324.8 |
Total financial assets | $ | 394.5 |  |  | $ | 295.9 |  |  | $ | — |  |  | $ | 690.4 |
Financial liabilities: |  |  |  |  |  |  |
Contingent consideration liability | $ | — |  |  | $ | — |  |  | $ | 11.9 |  |  | $ | 11.9 |
Public warrants | 0.2 |  |  | — |  |  | — |  |  | 0.2 |
Private placement warrants | — |  |  | 0.1 |  |  | — |  |  | 0.1 |
Total financial liabilities | $ | 0.2 |  |  | $ | 0.1 |  |  | $ | 11.9 |  |  | $ | 12.2 |
The Company’s policy is to recognize transfers into and transfers out of fair value hierarchy levels at the end of each reporting period. There were no transfers between levels in the fair value hierarchy during the nine months ended September 30, 2023. Contingent Consideration The contingent consideration, relating to the Company’s 2019 acquisition of North American Advantage Insurance Services, LLC, is re-valued to fair value at the end of each reporting period using the present value of future payments based on an estimate of revenue and customer renewals. North American Advantage Insurance Services, LLC’s ultimate parent company was Lennar Corporation, a related party of the Company. There is no limit to the maximum potential contingent consideration as the consideration is based on acquired customer retention. The table below presents the changes in the contingent consideration liability valued using Level 3 inputs (in millions):
| 2023 |  | 2022
Balance as of January 1, | $ | 11.9 |  |  | $ | 11.6 |
Payments of contingent consideration | (2.9) |  |  | (2.4) |
Changes in fair value | 4.5 |  |  | 2.6 |
Balance as of September 30, | $ | 13.5 |  |  | $ | 11.8 |

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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 -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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