| Fair value hierarchy of financial assets and financial liabilities measured on a recurring basis |
At September 30, 2017 and December 31, 2016, we classified our financial instruments measured at fair value on a recurring basis in the following valuation hierarchy: | | | | | | | | | | | | | | | | | | | | | | September 30, 2017 | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Fair Value Based on NAV Practical Expedient | | Total Fair Value | AFS fixed maturities | | | | | | | | | | | U.S. treasury bonds | | $ | 5,336 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 5,336 |
| U.S. agency bonds – mortgage-backed | | — |
| | 2,006,402 |
| | — |
| | — |
| | 2,006,402 |
| Non-U.S. government and supranational bonds | | — |
| | 31,596 |
| | — |
| | — |
| | 31,596 |
| Asset-backed securities | | — |
| | 262,261 |
| | — |
| | — |
| | 262,261 |
| Corporate bonds | | — |
| | 1,576,389 |
| | — |
| | — |
| | 1,576,389 |
| Municipal bonds | | — |
| | 2,603 |
| | — |
| | — |
| | 2,603 |
| Other investments | | — |
| | — |
| | 1,500 |
| | 5,541 |
| | 7,041 |
| Total | | $ | 5,336 |
| | $ | 3,879,251 |
| | $ | 1,500 |
| | $ | 5,541 |
| | $ | 3,891,628 |
| As a percentage of total assets | | 0.1 | % | | 56.7 | % | | — | % | | 0.1 | % | | 56.9 | % |
| | | | | | | | | | | | | | | | | | | | | | December 31, 2016 | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Fair Value Based on NAV Practical Expedient | | Total Fair Value | AFS fixed maturities | | | | | | | | | | | U.S. treasury bonds | | $ | 5,413 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 5,413 |
| U.S. agency bonds – mortgage-backed | | — |
| | 1,716,038 |
| | — |
| | — |
| | 1,716,038 |
| U.S. agency bonds – other | | — |
| | 18,102 |
| | — |
| | — |
| | 18,102 |
| Non-U.S. government and supranational bonds | | — |
| | 29,934 |
| | — |
| | — |
| | 29,934 |
| Asset-backed securities | | — |
| | 220,876 |
| | — |
| | — |
| | 220,876 |
| Corporate bonds | | — |
| | 1,916,205 |
| | — |
| | — |
| | 1,916,205 |
| Municipal bonds | | — |
| | 65,098 |
| | — |
| | — |
| | 65,098 |
| Other investments | | 6,586 |
| | — |
| | 1,000 |
| | 5,474 |
| | 13,060 |
| Total | | $ | 11,999 |
| | $ | 3,966,253 |
| | $ | 1,000 |
| | $ | 5,474 |
| | $ | 3,984,726 |
| As a percentage of total assets | | 0.2 | % | | 63.4 | % | | — | % | | 0.1 | % | | 63.7 | % |
|
| Carrying values and fair values of financial instruments not measured at fair value |
The following table presents the fair value and carrying value of the financial instruments not measured at fair value: | | | | | | | | | | | | | | | | | | | | September 30, 2017 | | December 31, 2016 | | | Carrying Value | | Fair Value | | Carrying Value | | Fair Value | Financial Assets | | | | | | | | | HTM – corporate bonds | | $ | 1,057,943 |
| | $ | 1,091,222 |
| | $ | 752,212 |
| | $ | 766,135 |
| HTM – municipal bonds | | 60,425 |
| | 60,884 |
| | — |
| | — |
| Total financial assets | | $ | 1,118,368 |
| | $ | 1,152,106 |
| | $ | 752,212 |
| | $ | 766,135 |
| | | | | | | | | | Financial Liabilities | | | | | | | | | Senior Notes - MHLA – 6.625% | | $ | 110,000 |
| | $ | 117,040 |
| | $ | 110,000 |
| | $ | 111,452 |
| Senior Notes - MHNC – 7.75% | | 152,500 |
| | 159,600 |
| | 152,500 |
| | 164,700 |
| Senior Notes - MHNB – 8.00%(1) | | — |
| | — |
| | 100,000 |
| | 101,600 |
| Total financial liabilities | | $ | 262,500 |
| | $ | 276,640 |
| | $ | 362,500 |
| | $ | 377,752 |
|
| | (1) | Please refer to "Note 6. Long-Term Debt", for disclosure regarding the redemption of the 2012 Senior Notes during the second quarter of 2017. |
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