Mercury Insurance 2010 Annual Report Download - page 90

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MERCURY GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2009
Level 1 Level 2 Level 3 Total
(Amounts in thousands)
Assets
Fixed maturity securities:
U.S. government bonds and agencies ................. $ 8,977 $ 1,003 $ 0 $ 9,980
Municipal securities .............................. 0 2,437,744 3,322 2,441,066
Mortgage-backed securities ........................ 0 114,408 0 114,408
Corporate securities ............................... 0 91,634 0 91,634
Collateralized debt obligations ...................... 0 0 47,473 47,473
Equity securities:
Common stock:
Public utilities ............................... 28,780 0 0 28,780
Banks, trusts and insurance companies ............ 13,291 0 0 13,291
Industrial and other ........................... 230,406 0 0 230,406
Non-redeemable preferred stock ..................... 0 13,654 0 13,654
Short-term bonds ..................................... 0 6,039 0 6,039
Money market instruments ............................. 150,126 0 0 150,126
Interest rate swap agreements ........................... 0 8,472 0 8,472
Total assets at fair value ....................... $431,580 $2,672,954 $50,795 $3,155,329
Liabilities
Equity contracts ...................................... $ 1,043 $ 0 $ 0 $ 1,043
Interest rate swap agreements ........................... 0 2,364 0 2,364
Total liabilities at fair value .................... $ 1,043 $ 2,364 $ 0 $ 3,407
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 presents a summary of changes in fair value of Level 3 financial assets and financial
liabilities held at fair value at December 31:
2010 2009
Municipal
Securities
Collateralized
Debt
Obligations
Municipal
Securities
Collateralized
Debt
Obligations
Beginning Balance .................................. $3,322 $47,473 $ 2,984 $ 0
Realized (losses) gains included in earnings .......... (109) 13,388 1,543 0
Purchase, issuances, and settlements ................ (1,589) (5,169) (1,205) 0
Transfer into Level 3 ............................. 0 0 0 47,473
Ending Balance ..................................... $1,624 $55,692 $ 3,322 $47,473
The amount of total (losses) gains for the period included in
earnings attributable to assets still held at December 31 . . . $ (83) $12,810 $ 1,167 $ 0
80