• Filing Date: 2020-03-06
  • Form Type: 10-K
  • Description: Annual report
v3.19.3.a.u2
Fair Value Measurements
12 Months Ended
Dec. 31, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 7 -- 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, 2019 and 2018:

 

 

 

Fair Value Measurements Using

 

 

 

 

 

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Total

 

As of December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

229,218

 

 

$

 

 

$

 

 

$

229,218

 

Restricted cash

 

$

700

 

 

$

 

 

$

 

 

$

700

 

Short-term investments

 

$

491

 

 

$

 

 

$

 

 

$

491

 

Fixed-maturity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and U.S. government agencies

 

$

25,294

 

 

$

1,001

 

 

$

 

 

$

26,295

 

Corporate bonds

 

 

159,364

 

 

 

 

 

 

 

 

 

159,364

 

State, municipalities, and political subdivisions

 

 

 

 

 

7,912

 

 

 

 

 

 

7,912

 

Exchange-traded debt

 

 

9,145

 

 

 

 

 

 

 

 

 

9,145

 

Redeemable preferred stock

 

 

123

 

 

 

 

 

 

 

 

 

123

 

Total available-for-sale securities

 

$

193,926

 

 

$

8,913

 

 

$

 

 

$

202,839

 

Equity securities

 

$

35,285

 

 

$

 

 

$

 

 

$

35,285

 

 

 

 

 

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

 

 

There were no transfers between Level 1, 2 or 3 during the years ended December 31, 2019 and 2018.

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, 2019 and 2018:

 

 

 

Carrying

Value

 

 

Fair Value Measurements Using

 

 

Estimated

Fair Value

 

 

 

 

 

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

 

 

 

As of December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Limited partnership investments

 

$

28,346

 

 

$

 

 

$

 

 

$

28,346

 

 

$

28,346

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

9,750

 

 

$

 

 

$

9,750

 

 

$

 

 

$

9,750

 

Long-term debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.25% Convertible senior notes

 

$

134,075

 

 

$

 

 

$

147,375

 

 

$

 

 

$

147,375

 

3.95% Promissory note

 

 

8,875

 

 

 

 

 

 

 

 

 

8,887

 

 

 

8,887

 

4% Promissory note

 

 

7,237

 

 

 

 

 

 

 

 

 

7,409

 

 

 

7,409

 

3.75% Promissory note

 

 

7,837

 

 

 

 

 

 

 

 

 

7,861

 

 

 

7,861

 

4.55% Promissory note

 

 

5,611

 

 

 

 

 

 

 

 

 

5,802

 

 

 

5,802

 

Total long-term debt

 

$

163,635

 

 

$

 

 

$

147,375

 

 

$

29,959

 

 

$

177,334

 

 

 

 

Carrying

Value

 

 

Fair Value Measurements Using

 

 

Estimated

Fair Value

 

 

 

 

 

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

 

 

 

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