• Filing Date: 2019-03-08
  • Form Type: 10-K
  • Description: Annual report
v3.10.0.1
Fair Value Measurements
12 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Note 8 — Fair Value Measurements
The Company records and discloses certain financial assets at their estimated fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:
 
Level 1 -
  
Unadjusted quoted prices in active markets for identical assets.
Level 2 -
  
Other inputs that are observable for the assets, either directly or indirectly such as quoted prices for identical assets that are not observable throughout the full term of the asset.
Level 3 -
  
Inputs that are unobservable.
Valuation Methodology
Cash and cash equivalents
Cash and cash equivalents primarily consist of money-market funds and certificates of deposit maturing within 90 days. Their carrying value approximates fair value due to the short maturity and high liquidity of these funds.
Short-term investments
Short-term investments consist of certificates of deposit and 
zero-coupon
 commercial paper with maturities of 91 to 365 days. Due to their short maturity, the carrying value approximates fair value.
Fixed-maturity and equity securities
Estimated fair values are determined in accordance with U.S. GAAP, using valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair values are generally measured using quoted prices in active markets for identical securities or other inputs that are observable either directly or indirectly, such as quoted prices for similar securities. In those instances where observable inputs are not available, fair values are measured using unobservable inputs. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the security and are developed based on the best information available in the circumstances. Fair value estimates derived from unobservable inputs are significantly affected by the assumptions used, including the discount rates and the estimated amounts and timing of future cash flows. The derived fair value estimates cannot be substantiated by comparison to independent markets and are not necessarily indicative of the amounts that would be realized in a current market exchange.
The estimated fair values for securities that do not trade on a daily basis are determined by management, utilizing prices obtained from an independent pricing service and information provided by brokers, which are level 2 inputs. Management reviews the assumptions and methods utilized by the pricing service and then compares the relevant data and pricing to broker-provided data. The Company gains assurance of the overall reasonableness and consistent application of the assumptions and methodologies and compliance with accounting standards for fair value determination through ongoing monitoring of the reported fair values.
Limited Partnership Investments
As described in Note 5 — “Investments” under
 Limited Partnership Investments
, the Company has interests in limited partnerships which are private equity funds. Pursuant to U.S. GAAP, these funds are required to use fair value accounting; therefore, the estimated fair value approximates the carrying value of these funds.
Long-term debt
The following table summarizes components of the Company’s long-term debt and methods used in estimating their fair values:
 
  
Maturity
Date
 
Valuation Methodology
3.875% Convertible Senior Notes
 2019 
Quoted price
4.25% Convertible Senior Notes
 2037 
Quoted price
3.95% Promissory Note
 2020 
Discounted cash flow method/Level 3 inputs
4% Promissory Note
 2031 
Discounted cash flow method/Level 3 inputs
3.75% Callable Promissory Note
 2036 
Discounted cash flow method/Level 3 inputs
4.55% Promissory Note
 2036 
Discounted cash flow method/Level 3 inputs
Assets Measured at Estimated Fair Value on a Recurring Basis:
The following tables present information about the Company’s financial assets measured at estimated fair value on a recurring basis. The table indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of December 31, 2018 and 2017:
 
 
 
Fair Value Measurements Using
 
 
 
 
 
 
(Level 1)
 
 
(Level 2)
 
 
(Level 3)
 
 
Total
 
As of December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
239,458
 
 
$
 
 
$
 
 
$
239,458
 
Restricted cash
 
 
700
 
 
 
 
 
 
 
 
 
700
 
Short-term investments
 
 
66,479
 
 
 
 
 
 
 
 
 
66,479
 
Fixed-maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and U.S. government agencies
 
 
60,297
 
 
 
1,500
 
 
 
 
 
 
61,797
 
Corporate bonds
 
 
101,905
 
 
 
 
 
 
 
 
 
101,905
 
State, municipalities, and political subdivisions
 
 
 
 
 
10,662
 
 
 
 
 
 
10,662
 
Exchange-traded debt
 
 
8,247
 
 
 
 
 
 
 
 
 
8,247
 
Redeemable preferred stock
 
 
112
 
 
 
 
 
 
 
 
 
112
 
Total 
available-for-sale
 securities
 
 
170,561
 
 
 
12,162
 
 
 
 
 
 
182,723
 
Equity securities
 
 
41,143
 
 
 
 
 
 
 
 
 
41,143
 
Total
 
$
518,341
 
 
$
12,162
 
 
$
 
 
$
530,503
 
 
 
 
Fair Value Measurements Using
 
 
 
 
 
 
(Level 1)
 
 
(Level 2)
 
 
(Level 3)
 
 
Total
 
As of December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
255,884
 
 
$
 
 
$
 
 
$
255,884
 
Restricted cash
 
 
809
 
 
 
 
 
 
 
 
 
809
 
Fixed-maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and U.S. government agencies
 
 
40,527
 
 
 
1,500
 
 
 
 
 
 
42,027
 
Corporate bonds
 
 
106,109
 
 
 
994
 
 
 
 
 
 
107,103
 
State, municipalities, and political subdivisions
 
 
 
 
 
80,695
 
 
 
 
 
 
80,695
 
Exchange-traded debt
 
 
7,659
 
 
 
 
 
 
 
 
 
7,659
 
Total available-for-sale securities
 
 
154,295
 
 
 
83,189
 
 
 
 
 
 
237,484
 
Equity securities
 
 
59,956
 
 
 
 
 
 
 
 
 
59,956
 
Total
 
$
470,944
 
 
$
83,189
 
 
$
 
 
$
554,133
 
There were no transfers between Level 1, 2 or 3 during the years ended December 31, 2018 and 2017.
 
Assets and Liabilities Carried at Other Than Fair Value
The following tables present fair value information for assets and liabilities that are carried on the balance sheet at amounts other than fair value as of December 31, 2018 and 2017:
 
 
 
 Carrying
 
 
Fair Value Measurements Using
 
 
Estimated
 
 
 
 
Value
 
 
(Level 1)
 
 
(Level 2)
 
 
(Level 3)
 
 
Fair Value
 
As of December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Limited partnership investments
 
$
32,293
 
 
$
 
 
$
 
 
$
32,293
 
 
$
32,293
 
Financial Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.875% Convertible senior notes
 
$
89,181
 
 
$
 
 
$
89,824
 
 
$
 
 
$
89,824
 
4.25% Convertible senior notes
 
 
130,120
 
 
 
 
 
 
145,617
 
 
 
 
 
 
145,617
 
3.95% Promissory note
 
 
9,077
 
 
 
 
 
 
 
 
 
9,128
 
 
 
9,128
 
4% Promissory note
 
 
7,732
 
 
 
 
 
 
 
 
 
7,788
 
 
 
7,788
 
3.75% Promissory note
 
 
8,159
 
 
 
 
 
 
 
 
 
8,001
 
 
 
8,001
 
4.55% Promissory note
 
 
5,826
 
 
 
 
 
 
 
 
 
6,025
 
 
 
6,025
 
Total long-term debt
 
$
250,095
 
 
$
 
 
$
235,441
 
 
$
30,942
 
 
$
266,383
 
 
    
 
Carrying
 
 
Fair Value Measurements Using
 
 
Estimated
 
 
 
Value
 
 
(Level 1)
 
 
(Level 2)
 
 
(Level 3)
 
 
Fair Value
 
As of December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Assets:
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Limited partnership investments
  
 
$
23,184
 
 
$
 
 
$
 
 
$
23,184
 
 
$
23,184
 
Financial Liabilities:
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt:
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.875% Convertible senior notes
  
 
$
85,436
 
 
$
 
 
$
90,827
 
 
$
 
 
$
90,827
 
4.25% Convertible senior notes
  
 
 
126,454
 
 
 
 
 
 
124,444
 
 
 
 
 
 
124,444
 
3.95% Promissory note
  
 
 
9,270
 
 
 
 
 
 
 
 
 
9,227
 
 
 
9,227
 
4% Promissory note
  
 
 
8,206
 
 
 
 
 
 
 
 
 
7,894
 
 
 
7,894
 
3.75% Promissory note
  
 
 
8,469
 
 
 
 
 
 
 
 
 
7,820
 
 
 
7,820
 
Total long-term debt
  
 
$
237,835
 
 
$
 
 
$
215,271
 
 
$
24,941
 
 
$
240,212