Mercury Insurance 2009 Annual Report Download - page 99
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MERCURY GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2008
Level 1 Level 2 Level 3 Total
(Amounts in thousands)
Assets
Fixed maturity securities:
U.S. government bonds and agencies .................. $ 9,898 $ — $ — $ 9,898
Municipal securities ............................... — 2,184,684 2,984 2,187,668
Mortgage-backed securities ......................... — 202,326 — 202,326
Corporate securities ................................ — 65,727 — 65,727
Collateralized debt obligations ....................... — 13,120 — 13,120
Redeemable preferred stock ......................... — 2,934 — 2,934
Equity securities:
Common stock:
Public utilities ................................ 39,148 — — 39,148
Banks, trusts and insurance companies ............. 11,328 — — 11,328
Industrial and other ............................ 186,294 — — 186,294
Non-redeemable preferred stock ...................... — 10,621 — 10,621
Short-term bonds ...................................... — 2,203 — 2,203
Money market instruments .............................. 202,475 — — 202,475
Equity contracts ....................................... 78 — — 78
Interest rate swap agreements ............................ — 14,394 — 14,394
Total assets at fair value .................... $449,221 $2,496,009 $2,984 $2,948,214
Liabilities
Equity contracts ....................................... $ 2,803 $ — $ — $ 2,803
Interest rate swap agreements ............................ — 1,348 — 1,348
Other ............................................... 2,492 — — 2,492
Total liabilities at fair value ................. $ 5,295 $ 1,348 $ — $ 6,643
When the inputs used to measure fair value fall within different levels of the hierarchy, the level within
which the fair value measurement is categorized is based on the lowest level input that is significant to the fair
value measurement in its entirety. Thus, a Level 3 fair value measurement may include inputs that are observable
(Level 1 or Level 2) and unobservable (Level 3).
The following table provides a summary of changes in fair value of Level 3 financial assets and financial
liabilities held at fair value at December 31:
Fixed Maturities
2009 2008
(Amounts in thousands)
Beginning Balance ......................................... $ 2,984 $ —
Realized gains (losses) included in earnings ................. 1,543 (1,721)
Purchase, issuances, and settlements ....................... (1,205) —
Transfers into Level 3 .................................. 47,473 4,705
Ending Balance ........................................... $50,795 $ 2,984
The amount of total gains (losses) for the period included in earnings
attributable to assets still held at December 31 ................. $ 1,543 $(1,721)
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