Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2014

Carrying Value and Estimated Fair Value of Financial Instruments

A summary of the carrying value and estimated fair value of our financial instruments at September 30, 2014 and December 31, 2013 is as follows:



	September 30, 2014				December 31, 2013
	Fair Value		Carrying Value		Fair Value		Carrying Value
Assets
Investments
Fixed maturities:
Held-to-maturity securities	$	421	$	413	$	669	$	656
Available-for-sale securities	2,826,643		2,826,643		2,751,256		2,751,256
Trading securities	17,441		17,441		9,940		9,940
Equity securities:
Available-for-sale securities	233,968		233,968		229,368		229,368
Trading securities	3,252		3,252		2,487		2,487
Mortgage loans	4,577		4,257		4,724		4,423
Policy loans	6,046		6,046		6,261		6,261
Other long-term investments	46,428		46,428		44,946		44,946
Short-term investments	500		500		800		800
Cash and cash equivalents	71,932		71,932		92,193		92,193
Corporate-owned life insurance	734		734		—		—
Liabilities
Policy reserves
Annuity (accumulations) ⁽¹⁾	$	925,478	$	887,634	$	941,636	$	925,832
Annuity (benefit payments)	149,980		98,492		140,276		94,805

(1) Annuity accumulations represent deferred annuity contracts that are currently earning interest.

Financial Instruments Measured at Fair Value on Recurring Basis

The following tables present the categorization for our financial instruments measured at fair value on a recurring basis in our Consolidated Balance Sheets at September 30, 2014 and December 31, 2013:



September 30, 2014			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	31,237	$	—	$	31,237	$	—
U.S. government agency	377,388		—		377,388		—
States, municipalities and political subdivisions	759,358		—		758,748		610
Foreign bonds	145,558		—		145,558		—
Public utilities	219,044		—		219,044		—
Corporate bonds
Energy	139,474		—		139,474		—
Industrials	209,214		—		209,214		—
Consumer goods and services	160,971		—		159,620		1,351
Health care	81,246		—		81,246		—
Technology, media and telecommunications	134,409		—		134,409		—
Financial services	226,821		—		215,671		11,150
Mortgage-backed securities	18,716		—		18,716		—
Collateralized mortgage obligations	320,071		—		320,071		—
Asset-backed securities	3,136		—		1,421		1,715
Total Available-for-Sale Fixed Maturities	$	2,826,643	$	—	$	2,811,817	$	14,826
Equity securities:
Common stocks
Public utilities	$	17,614	$	17,614	$	—	$	—
Energy	15,084		15,084		—		—
Industrials	44,843		44,834		9		—
Consumer goods and services	22,265		22,265		—		—
Health care	27,174		27,174		—		—
Technology, media and telecommunications	14,081		14,081		—		—
Financial services	87,895		83,951		72		3,872
Nonredeemable preferred stocks	5,012		553		4,459		—
Total Available-for-Sale Equity Securities	$	233,968	$	225,556	$	4,540	$	3,872
Total Available-for-Sale Securities	$	3,060,611	$	225,556	$	2,816,357	$	18,698
TRADING
Fixed maturities:
Bonds
Corporate bonds
Industrials	$	3,293	$	—	$	3,293	$	—
Consumer goods and services	943		—		943		—
Health care	2,622		—		2,622		—



Technology, media and telecommunications	2,217		—		2,217		—
Financial services	3,836		—		3,836		—
Redeemable preferred stocks	4,530		4,530		—		—
Equity securities:
Energy	614		614		—		—
Consumer goods and services	27		27		—		—
Health care	342		342		—		—
Technology, media and telecommunications	405		405		—		—
Nonredeemable preferred stocks	1,864		1,864		—		—
Total Trading Securities	$	20,693	$	7,782	$	12,911	$	—
Short-Term Investments	$	500	$	500	$	—	$	—
Money Market Accounts	$	21,122	$	21,122	$	—	$	—
Corporate-Owned Life Insurance	$	734	$	—	$	734	$	—
Total Assets Measured at Fair Value	$	3,103,660	$	254,960	$	2,830,002	$	18,698



December 31, 2013			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	33,895	$	—	$	33,895	$	—
U.S. government agency	269,583		—		269,583		—
States, municipalities and political subdivisions	713,907		—		713,209		698
Foreign bonds	172,856		—		172,856		—
Public utilities	218,576		—		218,576		—
Corporate bonds
Energy	161,010		—		161,010		—
Industrials	237,028		—		237,028		—
Consumer goods and services	167,914		—		166,460		1,454
Health care	92,946		—		92,946		—
Technology, media and telecommunications	120,966		—		120,966		—
Financial services	241,751		—		229,725		12,026
Mortgage-backed securities	22,066		—		22,066		—
Collateralized mortgage obligations	294,763		—		294,763		—
Asset-backed securities	3,995		—		1,966		2,029
Total Available-for-Sale Fixed Maturities	$	2,751,256	$	—	$	2,735,049	$	16,207
Equity securities:
Common stocks
Public utilities	$	16,272	$	16,272	$	—	$	—
Energy	14,363		14,363		—		—
Industrials	46,099		46,083		16		—
Consumer goods and services	21,258		21,258		—		—
Health care	24,998		24,998		—		—
Technology, media and telecommunications	13,304		13,304		—		—
Financial services	88,262		84,419		62		3,781
Nonredeemable preferred stocks	4,812		1,714		3,098		—
Total Available-for-Sale Equity Securities	$	229,368	$	222,411	$	3,176	$	3,781
Total Available-for-Sale Securities	$	2,980,624	$	222,411	$	2,738,225	$	19,988
TRADING
Fixed maturities:
Bonds
Foreign bonds	$	1,253	$	—	$	1,253	$	—
Corporate bonds
Industrials	1,122		—		1,122		—
Consumer goods and services	106		—		106		—
Health care	1,154		—		1,154		—
Technology, media and telecommunications	2,054		—		2,054		—



Financial services	1,866		—		1,866		—
Redeemable preferred stocks	2,385		2,385		—		—
Equity securities:
Energy	563		563		—		—
Consumer goods and services	39		39		—		—
Health care	332		332		—		—
Nonredeemable preferred stocks	1,553		1,553		—		—
Total Trading Securities	$	12,427	$	4,872	$	7,555	$	—
Short-Term Investments	$	800	$	800	$	—	$	—
Money Market Accounts	$	37,811	$	37,811	$	—	$	—
Total Assets Measured at Fair Value	$	3,031,662	$	265,894	$	2,745,780	$	19,988

Changes in Fair Value of Level 3 Securities

The following table provides a summary of the changes in fair value of our Level 3 securities for the three-month period ended September 30, 2014:



	States, municipalities and political subdivisions		Corporate bonds			Asset-backed securities			Equities		Total
Balance at June 30, 2014	$	610	$	12,927		$	1,842		$	3,872	$	19,251
Realized gains ⁽¹⁾	—		11			—			—		11
Unrealized losses⁽¹⁾	—		(55		)	(8		)	—		(63		)
Purchases	—		4			—			—		4
Disposals	—		(386		)	(119		)	—		(505		)
Balance at September 30, 2014	$	610	$	12,501		$	1,715		$	3,872	$	18,698

(1) Realized gains are recorded as a component of earnings, whereas unrealized gains are recorded as a component of comprehensive income.

The following table provides a summary of the changes in fair value of our Level 3 securities for the nine-month period ended September 30, 2014:



	States, municipalities and political subdivisions			Corporate bonds			Asset-backed securities			Equities			Total
Balance at January 1, 2014	$	698		$	13,480		$	2,029		$	3,781		$	19,988
Realized gains (losses) ⁽¹⁾	—			11			—			(56		)	(45		)
Unrealized gains (losses) ⁽¹⁾	(18		)	(107		)	31			48			(46		)
Purchases	—			4			—			144			148
Disposals	(70		)	(887		)	(345		)	(45		)	(1,347		)
Balance at September 30, 2014	$	610		$	12,501		$	1,715		$	3,872		$	18,698

(1) Realized gains (losses) are recorded as a component of earnings, whereas unrealized gains are recorded as a component of comprehensive income.

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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