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5. Fair Value of Financial Instruments and Real Estate

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

5. Fair Value of Financial Instruments and Real Estate

The Company uses the following methods and assumptions in estimating the fair value of financial instruments and real estate:

Equity securities, available-for-sale fixed income securities, and other investments: Fair value disclosures for these investments are included in “Note 3 - Investments” and “Note 4 – Fair Value Measurements”.

Cash and cash equivalents: The carrying values of cash and cash equivalents approximate their fair values because of the short-term nature of these instruments.

Premiums receivable and reinsurance receivables: The carrying values reported in the condensed consolidated balance sheets for these financial instruments approximate their fair values due to the short-term nature of the assets.

Real estate: The fair value of the land and building included in property and equipment, which is used in the Company’s operations, approximates the carrying value. The fair value was based on an appraisal prepared using the sales comparison approach, and accordingly the real estate is a Level 3 asset under the fair value hierarchy.

Reinsurance balances payable: The carrying value reported in the condensed consolidated balance sheets for these financial instruments approximates fair value.

Long-term debt: The estimated fair value of long-term debt is based on observable market interest rates when available. When observable market interest rates were not available, the estimated fair values of debt were based on observable market interest rates of comparable instruments adjusted for differences between the observed instruments and the instruments being valued or estimated using discounted cash flow analyses, based on current incremental borrowing rates for similar types of borrowing arrangements.

The estimated fair values of the Company’s financial instruments and real estate as of March 31, 2019 and December 31, 2018 are as follows:

		March 31, 2019								December 31, 2018
		Carrying				Estimated				Carrying				Estimated
		Value				Fair Value				Value				Fair Value

Fixed-maturity securities-held-to maturity		$	3,824,620			$	4,076,611			$	4,222,855			$	4,426,416
Cash and cash equivalents		$	15,764,480			$	15,764,480			$	21,138,403			$	21,138,403
Premiums receivable, net		$	14,211,748			$	14,211,748			$	13,961,599			$	13,961,599
Reinsurance receivables, net		$	26,157,637			$	26,157,637			$	26,367,115			$	26,367,115
Real estate, net of accumulated depreciation		$	2,285,933			$	2,705,000			$	2,300,827			$	2,705,000
Reinsurance balances payable		$	1,201,931			$	1,201,931			$	1,933,376			$	1,933,376
Long-term debt, net		$	29,339,296			$	28,485,329			$	29,295,251			$	28,521,734