XML 21 R11.htm IDEA: XBRL DOCUMENT v3.24.2.u1
Fair Value Measurements
 6 Months Ended
Jun. 30, 2024
Fair Value Measurements [Abstract]  
Fair Value Measurements

4.       Fair Value Measurements

 

The Company uses fair value measurements to record fair value adjustments to certain assets to determine fair value disclosures. Investment securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record other assets or liabilities at fair value on a nonrecurring basis. These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or write-downs of individual assets. Accounting guidance on fair value measurements and disclosures establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The three levels of the fair value hierarchy are as follows:

 

  Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
  Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.  Level 2 includes fixed income securities with quoted prices that are traded less frequently than exchange traded instruments.  Valuation techniques include matrix pricing which is a mathematical technique used widely in the industry to value fixed income securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.
  Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).

The Company bases its fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy. Fair value measurements for assets where there exists limited or no observable market data and, therefore, are based primarily upon the estimates of the Company or other third-parties, are often calculated based on the characteristics of the asset, the economic and competitive environment, and other such factors. Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts which could have been realized in a sale transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective period-end and have not been re-evaluated or updated for purposes of our consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end. Additionally, changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future valuations.

 

The Company uses quoted values and other data provided by an independent pricing service in its process for determining fair values of its investments. The evaluations of such pricing services represent an exit price and a good faith opinion as to what a buyer in the marketplace would pay for a security in a current sale. This pricing service provides us with one quote per instrument. For fixed income securities that have quoted prices in active markets, market quotations are provided. For fixed income securities that do not trade on a daily basis, the independent pricing service prepares estimates of fair value using a wide array of observable inputs including relevant market information, benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing. The observable market inputs that the Company’s independent pricing service utilizes may include benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, market bids/offers, and other reference data on markets, industry, and the economy. Additionally, the independent pricing service uses an option-adjusted spread model to develop prepayment and interest rate scenarios.

 

Should the independent pricing service be unable to provide a fair value estimate, we would first attempt to obtain a fair value estimate from our third-party investment advisor who utilizes different independent pricing services. If unsuccessful, we would attempt to obtain a non-binding fair value estimate from a number of broker-dealers and would review this estimate in conjunction with a fair value estimate reported by an independent business news service or other sources. In instances where only one broker-dealer provides a fair value for a fixed income security, we would use that estimate. In instances where the Company would be able to obtain fair value estimates from more than one broker-dealer, we would review the range of estimates and select the most appropriate value based on the facts and circumstances. Should neither the independent pricing service nor a broker-dealer provide a fair value estimate, we would develop a fair value estimate based on cash flow analyses and other valuation techniques that utilize certain unobservable inputs. Accordingly, the Company classifies such a security as a Level 3 investment.

 

The fair value estimates of our investments provided by the independent pricing service at each period-end were utilized, among other resources, in reaching a conclusion as to the fair value of its investments.

 

Management reviews the reasonableness of the pricing provided by the independent pricing service by employing various analytical procedures. We also use information from our third-party investment advisor who utilizes different independent pricing services to further validate the reasonableness of the valuation of our fixed income portfolio. If, after this review, management does not believe the pricing for any security is a reasonable estimate of fair value, then it will seek to resolve the discrepancy through discussions with the independent pricing service. In its review, management did not identify any such discrepancies and no adjustments were made to the estimates provided by the independent pricing service for the three or six months ended June 30, 2024, or the year ended December 31, 2023. The classification within the fair value hierarchy is then confirmed based on the final conclusions from the pricing review.

 

The valuation of money market accounts and equity securities are generally based on Level 1 inputs, which use the market-approach valuation technique. The valuation of certain cash equivalents and our fixed income securities generally incorporates significant Level 2 inputs using the market and income approach techniques. We may assign a lower level to inputs typically considered to be Level 2 based on our assessment of liquidity and relative level of uncertainty surrounding inputs. There were no assets or liabilities classified at Level 3 at June 30, 2024, or December 31, 2023.

 

The following tables, presented on a consolidated basis, including both continuing and discontinued operations, set forth our assets which are measured on a recurring basis by the level within the fair value hierarchy in which fair value measurements fall:

 

   June 30, 2024 
   Total   Level 1   Level 2   Level 3 
Fixed income securities:                    
U.S. Government and agencies  $11,741   $
—
   $11,741   $
—
 
Obligations of states and political subdivisions   51,862    
—
    51,862    
—
 
Corporate securities   116,440    
—
    116,440    
—
 
Residential mortgage-backed securities   43,903    
—
    43,903    
—
 
Commercial mortgage-backed securities   25,038    
—
    25,038    
—
 
Asset-backed securities   51,133    
—
    51,133    
—
 
Redeemable preferred stock   3,298    
—
    3,298    
—
 
Total fixed income securities   303,415    
—
    303,415    
—
 
                     
Equity securities:                    
Common stock   22,973    22,973    
—
    
—
 
Non-redeemable preferred stock   
—
    
—
    
—
    
—
 
Total equity securities   22,973    22,973    
—
    
—
 
                     
Money market accounts and cash equivalents   18,108    18,108    
—
    
—
 
Total assets at fair value  $344,496   $41,081   $303,415   $
—
 

 

   December 31, 2023 
   Total   Level 1   Level 2   Level 3 
Fixed income securities:                    
U.S. Government and agencies  $10,262   $
—
   $10,262   $
—
 
Obligations of states and political subdivisions   51,461    
—
    51,461    
—
 
Corporate securities   142,216    
—
    142,216    
—
 
Residential mortgage-backed securities   61,163    
—
    61,163    
—
 
Commercial mortgage-backed securities   29,439    
—
    29,439    
—
 
Asset-backed securities   49,029    
—
    49,029    
—
 
Redeemable preferred stock   4,161    
—
    4,161    
—
 
Total fixed income securities   347,731    
—
    347,731    
—
 
                     
Equity securities:                    
Common stock   25,890    25,890    
—
    
—
 
Non-redeemable preferred stock   1,877    1,877    
—
    
—
 
Total equity securities   27,767    27,767    
—
    
—
 
                     
Money market accounts and cash equivalents   25,596    19,412    6,184    
—
 
Total assets at fair value  $401,094   $47,179   $353,915   $
—
 

 

The following tables are a reconciliation for both continuing and discontinued operations of the presentation of our assets which are measured on a recurring basis by the level within the fair value hierarchy in which fair value measurements fall:

 

   June 30, 2024 
   Total   Level 1   Level 2   Level 3 
Fixed income securities:                    
Continuing operations  $303,415   $
—
   $303,415   $
—
 
Discontinued operations   
—
    
—
    
—
    
—
 
Total fixed income securities   303,415    
—
    303,415    
—
 
                     
Equity securities:                    
Continuing operations   22,973    22,973    
—
    
—
 
Discontinued operations   
—
    
—
    
—
    
—
 
Total equity securities   22,973    22,973    
—
    
—
 
                     
Money market accounts and cash equivalents                    
Continuing operations   18,108    18,108    
—
    
—
 
Discontinued operations   
—
    
—
    
—
    
—
 
Total money market accounts and cash equivalents   18,108    18,108    
—
    
—
 
Total assets at fair value  $344,496   $41,081   $303,415   $
—
 

 

   December 31, 2023 
   Total   Level 1   Level 2   Level 3 
Fixed income securities:                    
Continuing operations  $289,399   $
—
   $289,399   $
—
 
Discontinued operations   58,332    
—
    58,332    
—
 
Total fixed income securities   347,731    
—
    347,731    
—
 
                     
Equity securities:                    
Continuing operations   21,983    21,983    
—
    
—
 
Discontinued operations   5,784    5,784    
—
    
—
 
Total equity securities   27,767    27,767    
—
    
—
 
                     
Money market accounts and cash equivalents                    
Continuing operations   16,239    16,239    
—
    
—
 
Discontinued operations   9,357    3,173    6,184    
—
 
Total money market accounts and cash equivalents   25,596    19,412    6,184    
—
 
Total assets at fair value  $401,094   $47,179   $353,915   $
—
 

 

There were no liabilities measured at fair value on a recurring basis at June 30, 2024, or December 31, 2023.