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EX-32.2 - EXHIBIT 32.2 - SELECTIVE INSURANCE GROUP INCsigi-ex322_3312017xq1.htm
EX-32.1 - EXHIBIT 32.1 - SELECTIVE INSURANCE GROUP INCsigi-ex321_3312017xq1.htm
EX-31.2 - EXHIBIT 31.2 - SELECTIVE INSURANCE GROUP INCsigi-ex312_3312017xq1.htm
EX-31.1 - EXHIBIT 31.1 - SELECTIVE INSURANCE GROUP INCsigi-ex311_3312017xq1.htm
EX-11 - EXHIBIT 11 - SELECTIVE INSURANCE GROUP INCsigi-ex11_3312017xq1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-Q
(Mark One)
 
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended: March 31, 2017
or
 
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from_____________________________to_____________________________
 
Commission File Number: 001-33067
SELECTIVE INSURANCE GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
New Jersey
 
22-2168890
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
 
 
 
40 Wantage Avenue
 
 
Branchville, New Jersey
 
07890
(Address of Principal Executive Offices)
 
(Zip Code)
(973) 948-3000
(Registrant’s Telephone Number, Including Area Code)
 
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yesx           No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yesx           No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
 
Accelerated filer o
Non-accelerated filer o
 
Smaller reporting company o
Emerging growth company o
 
 
(Do not check if a smaller reporting company)
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Yeso           No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).                                                              Yeso          Nox
As of April 14, 2017, there were 58,248,140 shares of common stock, par value $2.00 per share, outstanding. 



 
SELECTIVE INSURANCE GROUP, INC.
 
 
Table of Contents
 
 
 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 5.
 
 
 
 
 
 
 
 
 



PART I. FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS.
 
SELECTIVE INSURANCE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
 
Unaudited
 
 
($ in thousands, except share amounts)
 
March 31,
2017
 
December 31,
2016
ASSETS
 
 

 
 

Investments:
 
 

 
 

Fixed income securities, held-to-maturity – at carrying value (fair value:  $88,339 – 2017; $105,211 – 2016)
 
$
84,836

 
101,556

Fixed income securities, available-for-sale – at fair value (amortized cost: $4,805,368 – 2017; $4,753,759 – 2016)
 
4,867,005

 
4,792,540

Equity securities, available-for-sale – at fair value (cost:  $124,614 – 2017; $120,889 – 2016)
 
154,918

 
146,753

Short-term investments (at cost which approximates fair value)
 
247,207

 
221,701

Other investments
 
106,796

 
102,397

Total investments (Note 4 and 6)
 
5,460,762


5,364,947

Cash
 
483

 
458

Interest and dividends due or accrued
 
40,239

 
40,164

Premiums receivable, net of allowance for uncollectible accounts of:  $6,613 – 2017; $5,980 – 2016
 
707,677

 
681,611

Reinsurance recoverable, net of allowance for uncollectible accounts of: $5,000 – 2017; $5,500 – 2016
 
580,386

 
621,537

Prepaid reinsurance premiums
 
145,436

 
146,282

Current federal income tax
 

 
2,486

Deferred federal income tax
 
72,218

 
84,840

Property and equipment – at cost, net of accumulated depreciation and amortization of:
$202,917 – 2017; $198,729 – 2016
 
68,503

 
69,576

Deferred policy acquisition costs
 
227,622

 
222,564

Goodwill
 
7,849

 
7,849

Other assets
 
92,921

 
113,534

Total assets
 
$
7,404,096

 
7,355,848

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 

 
 

Liabilities:
 
 

 
 

Reserve for losses and loss expenses (Note 8)
 
$
3,679,471

 
3,691,719

Unearned premiums
 
1,299,823

 
1,262,819

Long-term debt
 
438,782

 
438,667

Current federal income tax
 
11,552

 

Accrued salaries and benefits
 
96,322

 
132,880

Other liabilities
 
285,567

 
298,393

Total liabilities
 
$
5,811,517

 
5,824,478

 
 
 
 
 
Stockholders’ Equity:
 
 

 
 

Preferred stock of $0 par value per share:
 
$

 

Authorized shares 5,000,000; no shares issued or outstanding
 
 
 
 
Common stock of $2 par value per share:
 
 
 
 
Authorized shares 360,000,000
 
 
 
 
Issued: 102,028,447 – 2017; 101,620,436 – 2016
 
204,057

 
203,241

Additional paid-in capital
 
354,239

 
347,295

Retained earnings
 
1,609,862

 
1,568,881

Accumulated other comprehensive income (loss) (Note 11)
 
2,090

 
(15,950
)
Treasury stock – at cost
(shares:  43,780,884 – 2017; 43,653,237 – 2016)
 
(577,669
)
 
(572,097
)
Total stockholders’ equity
 
$
1,592,579

 
1,531,370

Commitments and contingencies
 


 


Total liabilities and stockholders’ equity
 
$
7,404,096

 
7,355,848


The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

1


SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
 
Quarter ended March 31,
($ in thousands, except per share amounts)
 
2017
 
2016
Revenues:
 
 

 
 

Net premiums earned
 
$
560,854

 
522,458

Net investment income earned
 
37,419

 
30,769

Net realized losses:
 
 

 
 

Net realized investment gains
 
2,430

 
889

Other-than-temporary impairments
 
(3,475
)
 
(3,593
)
Total net realized losses
 
(1,045
)
 
(2,704
)
Other income
 
3,241

 
951

Total revenues
 
600,469

 
551,474

 
 
 
 
 
Expenses:
 
 

 
 

Losses and loss expenses incurred
 
317,472

 
297,144

Policy acquisition costs
 
196,228

 
183,227

Interest expense
 
6,106

 
5,606

Other expenses
 
13,089

 
13,622

Total expenses
 
532,895

 
499,599

 
 
 
 
 
Income before federal income tax
 
67,574

 
51,875

 
 
 
 
 
Federal income tax expense:
 
 

 
 

Current
 
14,273

 
14,084

Deferred
 
2,861

 
759

Total federal income tax expense
 
17,134

 
14,843

 
 
 
 
 
Net income
 
$
50,440

 
37,032

 
 
 
 
 
Earnings per share:
 
 

 
 

Basic net income
 
$
0.87

 
0.64

 
 
 
 
 
Diluted net income
 
$
0.85

 
0.63

 
 
 
 
 
Dividends to stockholders
 
$
0.16

 
0.15

 
The accompanying notes are an integral part of these unaudited interim consolidated financial statements. 
 


2


SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
Quarter ended March 31,
($ in thousands)
 
2017
 
2016
Net income
 
$
50,440

 
37,032

 
 
 
 
 
Other comprehensive income, net of tax:
 
 

 
 

Unrealized gains on investment securities:
 
 

 
 

Unrealized holding gains arising during period
 
16,761

 
42,729

  Amounts reclassified into net income:
 
 
 
 
Held-to-maturity securities
 
(32
)
 
(47
)
Realized losses on available-for-sale securities
 
981

 
1,754

Total unrealized gains on investment securities
 
17,710

 
44,436

 
 
 
 
 
Defined benefit pension and post-retirement plans:
 
 

 
 

Amounts reclassified into net income:
 
 
 
 
Net actuarial loss
 
330

 
986

  Total defined benefit pension and post-retirement plans
 
330

 
986

Other comprehensive income
 
18,040

 
45,422

Comprehensive income
 
$
68,480

 
82,454

 
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
 


3


SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
 
Quarter ended March 31,
($ in thousands, except per share amounts)
 
2017
 
2016
Common stock:
 
 

 
 

Beginning of year
 
$
203,241

 
201,723

Dividend reinvestment plan (shares:  8,249 – 2017; 10,931 – 2016)
 
16

 
22

Stock purchase and compensation plans (shares:  399,762 – 2017; 386,567 – 2016)
 
800

 
773

End of period
 
204,057

 
202,518

 
 
 
 
 
Additional paid-in capital:
 
 

 
 

Beginning of year
 
347,295

 
326,656

Dividend reinvestment plan
 
348

 
351

Stock purchase and compensation plans
 
6,596

 
6,958

End of period
 
354,239

 
333,965

 
 
 
 
 
Retained earnings:
 
 

 
 

Beginning of year
 
1,568,881

 
1,446,192

Net income
 
50,440

 
37,032

Dividends to stockholders ($0.16 per share – 2017; $0.15 per share – 2016)
 
(9,459
)
 
(8,789
)
End of period
 
1,609,862

 
1,474,435

 
 
 
 
 
Accumulated other comprehensive income:
 
 

 
 

Beginning of year
 
(15,950
)
 
(9,425
)
Other comprehensive income
 
18,040

 
45,422

End of period
 
2,090

 
35,997

 
 
 
 
 
Treasury stock:
 
 

 
 

Beginning of year
 
(572,097
)
 
(567,105
)
Acquisition of treasury stock (shares: 127,647 – 2017; 122,250 – 2016)
 
(5,572
)
 
(3,845
)
End of period
 
(577,669
)
 
(570,950
)
Total stockholders’ equity
 
$
1,592,579

 
1,475,965

 
Selective Insurance Group, Inc. also has authorized, but not issued, 5,000,000 shares of preferred stock, without par value, of which 300,000 shares have been
designated Series A junior preferred stock, without par value.
  
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
 


4


SELECTIVE INSURANCE GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Quarter ended March 31,
($ in thousands)
 
2017
 
2016
Operating Activities
 
 

 
 

Net income
 
$
50,440

 
37,032

 
 
 
 
 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 

 
 

Depreciation and amortization
 
12,882

 
14,627

Stock-based compensation expense
 
5,273

 
4,377

Undistributed (gains) losses of equity method investments
 
(665
)
 
1,066

Loss on disposal of fixed assets
 
998

 

Net realized losses
 
1,045

 
2,704

 
 
 
 
 
Changes in assets and liabilities:
 
 

 
 

Increase in reserve for losses and loss expenses, net of reinsurance recoverable
 
28,903

 
42,390

Increase in unearned premiums, net of prepaid reinsurance
 
37,850

 
42,901

Decrease in net federal income taxes
 
16,946

 
5,296

Increase in premiums receivable
 
(26,066
)
 
(39,180
)
Increase in deferred policy acquisition costs
 
(5,058
)
 
(7,789
)
(Increase) decrease in interest and dividends due or accrued
 
(218
)
 
528

Decrease in accrued salaries and benefits
 
(36,558
)
 
(27,115
)
Decrease (increase) in other assets
 
15,998

 
(10,128
)
Decrease in other liabilities
 
(55,175
)
 
(52,902
)
Net cash provided by operating activities
 
46,595

 
13,807

 
 
 
 
 
Investing Activities
 
 

 
 

Purchase of fixed income securities, available-for-sale
 
(724,880
)
 
(264,828
)
Purchase of equity securities, available-for-sale
 
(14,083
)
 
(7,574
)
Purchase of other investments
 
(11,211
)
 
(12,723
)
Purchase of short-term investments
 
(1,027,885
)
 
(303,228
)
Sale of fixed income securities, available-for-sale
 
594,805

 
12,905

Sale of short-term investments
 
1,010,917

 
394,915

Redemption and maturities of fixed income securities, held-to-maturity
 
16,527

 
37,400

Redemption and maturities of fixed income securities, available-for-sale
 
116,357

 
130,641

Sale of equity securities, available-for-sale
 
5,503

 
4,285

Distributions from other investments
 
6,428

 
7,994

Purchase of property and equipment
 
(4,937
)
 
(3,439
)
Net cash used in investing activities
 
(32,459
)
 
(3,652
)
 
 
 
 
 
Financing Activities
 
 

 
 

Dividends to stockholders
 
(8,955
)
 
(8,270
)
Acquisition of treasury stock
 
(5,572
)
 
(3,845
)
Net proceeds from stock purchase and compensation plans
 
1,563

 
1,478

Proceeds from borrowings
 
64,000

 
25,000

Repayments of borrowings
 
(64,000
)
 
(25,000
)
Excess tax benefits from share-based payment arrangements
 

 
1,361

Repayments of capital lease obligations
 
(1,147
)
 
(1,094
)
Net cash used in financing activities
 
(14,111
)
 
(10,370
)
Net increase (decrease) in cash
 
25

 
(215
)
Cash, beginning of year
 
458

 
898

Cash, end of period
 
$
483

 
683

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

5


NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. Basis of Presentation
As used herein, the "Company,” “we,” “us,” or “our” refers to Selective Insurance Group, Inc. (the "Parent"), and its subsidiaries, except as expressly indicated or unless the context otherwise requires. Our interim unaudited consolidated financial statements (“Financial Statements”) have been prepared by us in conformity with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The preparation of the Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported financial statement balances, as well as the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. All significant intercompany accounts and transactions between the Parent and its subsidiaries are eliminated in consolidation.

Our Financial Statements reflect all adjustments that, in our opinion, are normal, recurring, and necessary for a fair presentation of our results of operations and financial condition. Our Financial Statements cover the first quarters ended March 31, 2017 (“First Quarter 2017”) and March 31, 2016 (“First Quarter 2016”). The Financial Statements do not include all of the information and disclosures required by GAAP and the SEC for audited annual financial statements. Results of operations for any interim period are not necessarily indicative of results for a full year. Consequently, our Financial Statements should be read in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016 (“2016 Annual Report”) filed with the SEC.

NOTE 2. Adoption of Accounting Pronouncements 
In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-based Payment Accounting (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions. We adopted this guidance on January 1, 2017, which resulted in the following impacts on our consolidated financial statements:
Consolidated Statements of Income
The new standard requires that the tax effects of share-based compensation be recognized in the income tax provision as discrete items outside of the annual estimated expected tax rate. In addition, all excess tax benefits and tax deficiencies should be recognized as income tax benefit or expense in the income statement. Previously, these amounts were recorded in additional paid-in capital. In addition, in calculating potential common shares used to determine diluted earnings per share, GAAP requires us to use the treasury stock method. The new standard requires that assumed proceeds under the treasury stock method be modified to exclude the amount of excess tax benefits that would have been recognized in additional paid-in capital. These changes were adopted on a prospective basis. As a result of adoption, we recognized an income tax benefit in the Consolidated Statements of Income of $2.9 million in First Quarter 2017 related to grants that have vested this quarter.

In recording share-based compensation expense, the standard allows companies to make a policy election as to whether they will include an estimate of awards expected to be forfeited or whether they will account for forfeitures as they occur. We have elected to include an estimate of forfeitures in the computation of our share-based compensation expense. As this treatment is consistent with previous guidance, this election had no impact on our consolidated financial statements.
Consolidated Statements of Cash Flows
ASU 2016-09 requires that excess tax benefits from share-based awards be reported as operating activities in the consolidated statement of cash flows. Previously, these cash flows were included in financing activities. We elected to apply this change on a prospective basis; therefore, no changes have been made to the prior periods disclosed in this report.

The standard also requires that employee taxes paid when an employer withholds shares for tax-withholding purposes be reported as financing activities in the consolidated statement of cash flows. This requirement has no impact to us as we have historically reported these cash flows as part of financing activities.
In October 2016, the FASB issued ASU 2016-17, Consolidation: Interests Held through Related Parties That Are Under Common Control ("ASU 2016-17"). ASU 2016-17 changes how a decision maker considers indirect interests in a variable interest entity ("VIE") held under common control in making the primary beneficiary determination. ASU 2016-17 was effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. The adoption of ASU 2016-17 did not impact us, as we are not the decision maker in any of the VIEs in which we are invested.

Pronouncements to be effective in the future
In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 provides guidance to improve certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Specifically the guidance: (i) requires equity investments

6


to be measured at fair value with changes in fair value recognized in earnings; (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost; (iv) requires the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; and (v) clarifies that the need for a valuation allowance on a deferred tax asset related to an available-for-sale ("AFS") security should be evaluated with other deferred tax assets.

ASU 2016-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early application to financial statements of annual or interim periods that have not yet been issued is permitted only as of January 1, 2017, otherwise early adoption of ASU 2016-01 is not permitted. We are currently evaluating the impact of this guidance on our financial condition and results of operations.

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 requires all lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that fiscal year, with early adoption permitted. ASU 2016-02 requires the application of a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. While we are currently evaluating ASU 2016-02, we do not expect a material impact on our financial condition or results of operations from the adoption of this guidance.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (“ASU 2016-13”).  ASU 2016-13 will change the way entities recognize impairment of financial assets by requiring immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, including, among others, held-to-maturity debt securities, trade receivables, and reinsurance receivables. ASU 2016-13 requires a valuation allowance to be calculated on these financial assets and that they be presented on the financial statements net of the valuation allowance. The valuation allowance is a measurement of expected losses that is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.  This methodology is referred to as the current expected credit loss model. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those annual periods. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2018. We are currently evaluating the impact of this guidance on our financial condition and results of operations.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (“ASU 2016-15”). ASU 2016-15 adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows, including, but not limited to: (i) debt prepayment or debt extinguishment costs; (ii) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (iii) distributions received from equity method investees; and (iv) separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of this guidance on our statement of cash flows.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash ("ASU 2016-18"). ASU 2016-18, requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents in the reconciliation of beginning and ending cash on the statements of cash flows. This update also requires a reconciliation of the statement of the cash flows to the balance sheet if the balance sheet includes more than one line item of cash, cash equivalents, and restricted cash. ASU 2016-18 is effective, with retrospective adoption, for annual periods beginning after December 15, 2017, and interim periods within those annual periods. We currently have restricted cash associated with the National Flood Insurance Program ("NFIP") in "Other assets." This literature will impact the presentation of this item in both the Consolidated Balance Sheets and the Statements of Cash Flows.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 eliminates the second step of the two part goodwill impairment test, which required entities to determine the fair value of individual assets and liabilities of a reporting unit to measure the goodwill impairment. Under the new guidance, a goodwill impairment is calculated as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendments in this update should be applied on a prospective basis for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates

7


after January 1, 2017. We do not expect a material impact on our financial condition or results of operations from the adoption of this guidance.
In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"). ASU 2017-07 requires that an employer report a pension plan's service cost in the same line item or line items as other compensation costs arising from services rendered by pertinent employees during the period. ASU 2017-07 also requires that other components of net benefit cost be presented in the income statement separately from the service cost component. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. ASU 2017-07 is effective for annual periods beginning after December 15, 2017 including interim periods within those annual periods with early adoption permitted at the beginning of an annual period. As our pension plan was frozen as of March 2016, we have ceased accruing additional service fee costs since that time. Therefore, the application of this guidance is not anticipated to impact our financial condition, results of operations, or disclosures.
In March 2017, the FASB issued ASU 2017-08, Receivables-Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities ("ASU 2017-08"). ASU 2017-08 revises the amortization period for certain callable debt securities held at a premium, requiring the premium to be amortized to the earliest call date. Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. ASU 2017-08 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2018 with early adoption permitted. This ASU does not impact us as we amortize premium on these callable debt securities to the earliest call date.

NOTE 3. Statements of Cash Flows
Supplemental cash flow information was as follows:
 
 
Quarter ended March 31,
($ in thousands)
 
2017
 
2016
Cash paid during the period for:
 
 

 
 

Interest
 
$
3,409

 
2,904

Federal income tax
 

 
8,000

 
 
 
 
 
Non-cash items:
 
 
 
 
Exchange of fixed income securities, AFS
 
1,029

 
9,872

Assets acquired under capital lease arrangements
 
278

 
2,598

Non-cash purchase of property and equipment
 

 
152

1Examples of such corporate actions include non-cash acquisitions and stock splits.

Included in "Other assets" on the Consolidated Balance Sheets was $14.4 million at March 31, 2017 and $13.5 million at March 31, 2016 of cash received from the NFIP, which is restricted to pay flood claims under the Write Your Own ("WYO") program. 

NOTE 4. Investments
(a) Information regarding our held-to-maturity ("HTM") fixed income securities as of March 31, 2017 and December 31, 2016 was as follows:
March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
($ in thousands)
 
Amortized
Cost
 
Net
 Unrealized Gains
 (Losses)
 
Carrying
Value
 
Unrecognized
 Holding
Gains
 
Unrecognized Holding
 Losses
 
Fair
Value
Obligations of states and political subdivisions
 
$
62,534

 
245

 
62,779

 
1,981

 

 
64,760

Corporate securities
 
22,194

 
(137
)
 
22,057

 
1,614

 
(92
)
 
23,579

Total HTM fixed income securities
 
$
84,728

 
108

 
84,836

 
3,595

 
(92
)
 
88,339


8


December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
($ in thousands)
 
Amortized
Cost
 
Net
 Unrealized Gains
 (Losses)
 
Carrying
Value
 
Unrecognized
 Holding
Gains
 
Unrecognized Holding
 Losses
 
Fair
Value
Obligations of states and political subdivisions
 
$
77,466

 
317

 
77,783

 
2,133

 

 
79,916

Corporate securities
 
22,711

 
(143
)
 
22,568

 
1,665

 
(158
)
 
24,075

Commercial mortgage-backed securities ("CMBS")
 
1,220

 
(15
)
 
1,205

 
15

 

 
1,220

Total HTM fixed income securities
 
$
101,397

 
159

 
101,556

 
3,813

 
(158
)
 
105,211

 
Unrecognized holding gains and losses of HTM securities are not reflected in the Financial Statements, as they represent fair value fluctuations from the later of: (i) the date a security is designated as HTM; or (ii) the date that an other-than-temporary impairment (“OTTI”) charge is recognized on an HTM security, through the date of the balance sheet.

(b) Information regarding our AFS securities as of March 31, 2017 and December 31, 2016 was as follows:
March 31, 2017
 
 
 
 
 
 
 
 
($ in thousands)
 
Cost/
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
AFS fixed income securities:
 
 
 
 
 
 
 
 
U.S. government and government agencies
 
$
86,816

 
1,566

 
(44
)
 
88,338

Foreign government
 
31,965

 
628

 

 
32,593

Obligations of states and political subdivisions
 
1,261,191

 
28,923

 
(2,948
)
 
1,287,166

Corporate securities
 
1,799,706

 
30,493

 
(2,073
)
 
1,828,126

Collateralized loan obligations and other asset-backed securities ("CLO and other ABS")
 
675,838

 
2,998

 
(401
)
 
678,435

CMBS
 
263,217

 
1,314

 
(775
)
 
263,756

Residential mortgage-backed
securities (“RMBS”)
 
686,635

 
3,623

 
(1,667
)
 
688,591

Total AFS fixed income securities
 
4,805,368

 
69,545

 
(7,908
)
 
4,867,005

AFS equity securities:
 
 
 
 
 
 
 
 
Common stock
 
108,466

 
30,150

 
(285
)
 
138,331

Preferred stock
 
16,148

 
480

 
(41
)
 
16,587

Total AFS equity securities
 
124,614

 
30,630

 
(326
)
 
154,918

Total AFS securities
 
$
4,929,982

 
100,175

 
(8,234
)
 
5,021,923

 
December 31, 2016
 
 
 
 
 
 
 
 
($ in thousands)
 
Cost/
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
AFS fixed income securities:
 
 
 
 
 
 
 
 
U.S. government and government agencies
 
$
75,139

 
2,230

 
(36
)
 
77,333

Foreign government
 
26,559

 
322

 
(16
)
 
26,865

Obligations of states and political subdivisions
 
1,366,287

 
18,610

 
(5,304
)
 
1,379,593

Corporate securities
 
1,976,556

 
27,057

 
(5,860
)
 
1,997,753

CLO and other ABS
 
527,876

 
1,439

 
(355
)
 
528,960

CMBS
 
256,356

 
1,514

 
(1,028
)
 
256,842

RMBS
 
524,986

 
3,006

 
(2,798
)
 
525,194

Total AFS fixed income securities
 
4,753,759

 
54,178

 
(15,397
)
 
4,792,540

AFS equity securities:
 
 
 
 
 
 
 
 
Common stock
 
104,663

 
26,250

 
(305
)
 
130,608

Preferred stock
 
16,226

 
274

 
(355
)
 
16,145

Total AFS equity securities
 
120,889

 
26,524

 
(660
)
 
146,753

Total AFS securities
 
$
4,874,648

 
80,702

 
(16,057
)
 
4,939,293



9


Unrealized gains and losses of AFS securities represent fair value fluctuations from the later of: (i) the date a security is designated as AFS; or (ii) the date that an OTTI charge is recognized on an AFS security, through the date of the balance sheet. These unrealized gains and losses are recorded in "Accumulated other comprehensive income (loss)" ("AOCI") on the Consolidated Balance Sheets.
  
(c) The table below provides our net unrealized/unrecognized loss positions by impairment severity for both AFS and HTM securities as of March 31, 2017 compared to December 31, 2016.
($ in thousands)
 
 
March 31, 2017
 
December 31, 2016
Number of
Issues
% of Market/Book
Unrealized/
Unrecognized Loss
 
Number of
Issues
% of Market/Book
Unrealized/
Unrecognized Loss
304

80% - 99%
$
8,326

 
456

80% - 99%
$
16,215


60% - 79%

 

60% - 79%


40% - 59%

 

40% - 59%


20% - 39%

 

20% - 39%


0% - 19%

 

0% - 19%

 

 
$
8,326

 
 

 
$
16,215


The severity of impairment on the securities in the table above averaged 1% of amortized cost at March 31, 2017 and December 31, 2016. Quantitative information regarding unrealized losses on our AFS portfolio is provided below. Our HTM portfolio had $0.1 million in unrealized/unrecognized losses at March 31, 2017 and $0.2 million in unrealized/unrecognized losses at December 31, 2016.
March 31, 2017
 
Less than 12 months
 
12 months or longer
 
Total
($ in thousands)
 
Fair Value
 
Unrealized
Losses1
 
Fair Value
 
Unrealized
Losses1
 
Fair Value
 
Unrealized
Losses
1
AFS fixed income securities:
 
 

 
 

 
 

 
 

 
 
 
 
U.S. government and government agencies
 
$
9,012

 
(44
)
 

 

 
9,012

 
(44
)
Obligations of states and political subdivisions
 
114,632

 
(2,948
)
 

 

 
114,632

 
(2,948
)
Corporate securities
 
229,836

 
(2,068
)
 
244

 
(5
)
 
230,080

 
(2,073
)
CLO and other ABS
 
137,388

 
(400
)
 
310

 
(1
)
 
137,698

 
(401
)
CMBS
 
80,494

 
(775
)
 

 

 
80,494

 
(775
)
RMBS
 
212,486

 
(1,588
)
 
2,246

 
(79
)
 
214,732

 
(1,667
)
Total AFS fixed income securities
 
783,848

 
(7,823
)
 
2,800

 
(85
)
 
786,648

 
(7,908
)
AFS equity securities:
 
 
 
 
 
 
 
 
 
 
 
 
Common stock
 
10,088

 
(285
)
 

 

 
10,088

 
(285
)
Preferred stock
 
1,527

 
(41
)
 

 

 
1,527

 
(41
)
Total AFS equity securities
 
11,615

 
(326
)
 

 

 
11,615

 
(326
)
Total AFS
 
$
795,463

 
(8,149
)
 
2,800

 
(85
)
 
798,263

 
(8,234
)


10


December 31, 2016
 
Less than 12 months
 
12 months or longer
 
Total
($ in thousands)
 
Fair
Value
 
Unrealized
Losses1
 
Fair Value
 
Unrealized
Losses1
 
Fair Value
 
Unrealized
Losses
1
AFS fixed income securities:
 
 

 
 

 
 

 
 

 
 
 
 
U.S. government and government agencies
 
$
6,419

 
(36
)
 

 

 
6,419

 
(36
)
Foreign government
 
13,075

 
(16
)
 

 

 
13,075

 
(16
)
Obligations of states and political subdivisions
 
306,509

 
(5,304
)
 

 

 
306,509

 
(5,304
)
Corporate securities
 
462,902

 
(5,771
)
 
4,913

 
(89
)
 
467,815

 
(5,860
)
CLO and other ABS
 
189,795

 
(354
)
 
319

 
(1
)
 
190,114

 
(355
)
CMBS
 
82,492

 
(1,021
)
 
1,645

 
(7
)
 
84,137

 
(1,028
)
RMBS
 
279,480

 
(2,489
)
 
8,749

 
(309
)
 
288,229

 
(2,798
)
Total AFS fixed income securities
 
1,340,672

 
(14,991
)
 
15,626

 
(406
)
 
1,356,298

 
(15,397
)
AFS equity securities:
 
 
 
 
 
 
 
 
 
 
 
 
Common stock
 
11,271

 
(305
)
 

 

 
11,271

 
(305
)
Preferred stock
 
6,168

 
(355
)
 

 

 
6,168

 
(355
)
Total AFS equity securities
 
17,439

 
(660
)
 

 

 
17,439

 
(660
)
Total AFS
 
$
1,358,111

 
(15,651
)
 
15,626

 
(406
)
 
1,373,737

 
(16,057
)
  1 Gross unrealized losses include non-OTTI unrealized amounts and OTTI losses recognized in AOCI. 

We do not intend to sell any of the securities in the tables above, nor do we believe we will be required to sell any of these securities. We have also reviewed these securities under our OTTI policy, as described in Note 2. “Summary of Significant Accounting Policies” within Item 8. “Financial Statements and Supplementary Data.” of our 2016 Annual Report, and have concluded that they are temporarily impaired. This conclusion reflects our current judgment as to the financial position and future prospects of the entity that issued the investment security and underlying collateral. Additionally, changes in market value due to interest rate fluctuations are considered temporary. If our judgment about an individual security changes in the future, we may ultimately record a credit loss after having originally concluded that one did not exist, which could have a material impact on our net income and financial position in future periods.
 
(d) Fixed income securities at March 31, 2017, by contractual maturity, are shown below. Mortgage-backed securities ("MBS") are included in the maturity tables using the estimated average life of each security. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations, with or without call or prepayment penalties.
 
Listed below are the contractual maturities of HTM fixed income securities at March 31, 2017:
($ in thousands)
 
Carrying Value
 
Fair Value
Due in one year or less
 
$
39,376

 
39,876

Due after one year through five years
 
37,028

 
39,365

Due after five years through 10 years
 
8,432

 
9,098

Total HTM fixed income securities
 
$
84,836

 
88,339

 
Listed below are the contractual maturities of AFS fixed income securities at March 31, 2017:
($ in thousands)
 
Fair Value
Due in one year or less
 
$
331,997

Due after one year through five years
 
1,989,887

Due after five years through 10 years
 
2,294,091

Due after 10 years
 
251,030

Total AFS fixed income securities
 
$
4,867,005

  
(e) We evaluate the alternative investments and tax credit investments included in our other investments portfolio to determine whether those investments are VIEs and if so, whether consolidation is required. A VIE is an entity that either has equity investors that lack certain essential characteristics of a controlling financial interest or lacks sufficient funds to finance its own activities without financial support provided by other entities. We consider several significant factors in determining if our investments are VIEs and if we are the primary beneficiary, including whether we have: (i) the power to direct activities of the VIE; (ii) the ability to remove the decision maker of the VIE; (iii) the ability to participate in making decisions that are significant to the VIE; and (iv) the obligation to absorb losses and the right to receive benefits that could potentially be

11


significant to the VIE. We have determined that the investments in our other investment portfolio are VIEs, but that we are not the primary beneficiary and therefore, consolidation is not required.

The following table summarizes our other investment portfolio by strategy:
Other Investments
 
March 31, 2017
 
December 31, 2016
($ in thousands)
 
Carrying Value
 
Remaining Commitment
 
Maximum Exposure to Loss1
 
Carrying Value
 
Remaining Commitment
 
Maximum Exposure to Loss1
Alternative Investments
 
 

 
 

 
 
 
 
 
 
 
 
   Private equity
 
$
41,354

 
74,669

 
116,023

 
41,135

 
76,774

 
117,909

   Private credit
 
31,026

 
40,745

 
71,771

 
28,193

 
40,613

 
68,806

   Real assets
 
16,265

 
27,764

 
44,029

 
14,486

 
22,899

 
37,385

Total alternative investments
 
88,645

 
143,178

 
231,823

 
83,814

 
140,286

 
224,100

Other securities
 
18,151

 
267

 
18,418

 
18,583

 
3,400

 
21,983

Total other investments
 
$
106,796

 
143,445

 
250,241

 
102,397

 
143,686

 
246,083

1The maximum exposure to loss includes both the carry value of these investments and the related unfunded commitments. In addition, tax credits that have been previously recognized in Other securities are subject to the risk of recapture, which we do not consider significant. 

We do not have a future obligation to fund losses or debts on behalf of the investments above; however, we are contractually committed to make additional investments up to the remaining commitment outlined above. We have not provided any non-contractual financial support at any time during 2017 or 2016.

For a description of our alternative investment strategies, as well as information regarding redemption, restrictions, and fund liquidations, refer to Note 5. “Investments” in Item 8. “Financial Statements and Supplementary Data.” of our 2016 Annual Report.
 
The following table sets forth gross summarized financial information for our other investments portfolio, including the portion not owned by us. The majority of these investments are carried under the equity method of accounting. The last line of the table below reflects our share of the aggregate income or loss, which is the portion included in our Financial Statements. As the majority of these investments report results to us on a one quarter lag, the summarized financial statement information for the three month periods ended December 31 is as follows:
Income Statement Information
 
Quarter ended December 31,
($ in millions)
 
2016

2015
Net investment (loss) income
 
$
25.6


46.6

Realized gains
 
(235.1
)

752.5

Net change in unrealized depreciation
 
561.5


(883.2
)
Net gain
 
$
352.0


(84.1
)
Selective’s insurance subsidiaries’ other investments gain (loss)
 
$
1.6


(1.1
)
 
(f) We have pledged certain AFS fixed income securities as collateral related to our relationships with the Federal Home Loan Bank of Indianapolis ("FHLBI") and the Federal Home Loan Bank of New York ("FHLBNY"). In addition, certain securities were on deposit with various state and regulatory agencies at March 31, 2017 to comply with insurance laws. We retain all rights regarding all securities pledged as collateral.

The following table summarizes the market value of these securities at March 31, 2017:
($ in millions)
 
FHLBI Collateral
 
FHLBNY Collateral
 
State and Regulatory Deposits
 
Total
U.S. government and government agencies
 
$
4.3

 

 
24.4

 
28.7

CMBS
 
3.6

 
4.8

 

 
8.4

RMBS
 
60.4

 
53.9

 

 
114.3

Total pledged as collateral
 
$
68.3

 
58.7

 
24.4


151.4

 
(g) We did not have exposure to any credit concentration risk of a single issuer greater than 10% of our stockholders' equity, other than certain U.S. government-backed investments, as of March 31, 2017 or December 31, 2016.


12


(h) The components of pre-tax net investment income earned were as follows:
 
 
Quarter ended March 31,
($ in thousands)
 
2017
 
2016
Fixed income securities
 
$
36,891


31,644

Equity securities
 
1,468


2,230

Short-term investments
 
250


159

Other investments
 
1,603


(1,066
)
Investment expenses
 
(2,793
)

(2,198
)
Net investment income earned
 
$
37,419

 
30,769


(i) The following tables summarize OTTI by asset type for the periods indicated:
First Quarter 2017
 
Gross 
 
Included in Other Comprehensive Income ("OCI")
 
Recognized in
Earnings
($ in thousands) 
 
 
 
AFS fixed income securities:
 
 
 
 
 
 
U.S. government and government agencies
 
29

 

 
29

Obligations of states and political subdivisions
 
373

 

 
373

Corporate securities
 
194

 

 
194

CLO and other ABS
 
23

 

 
23

CMBS
 
450

 

 
450

RMBS
 
1,092

 

 
1,092

Total AFS fixed income securities
 
2,161

 

 
2,161

AFS equity securities:
 
 
 
 
 
 
Common stock
 
$
1,314

 

 
1,314

Total AFS equity securities
 
1,314

 

 
1,314

Total OTTI losses
 
$
3,475

 

 
3,475

First Quarter 2016
 
Gross 
 
Included in OCI
 
Recognized in
Earnings
($ in thousands) 
 
 
 
AFS fixed income securities:
 
 
 
 
 
 
   Corporate securities
 
$
973

 

 
973

Total AFS fixed income securities
 
973

 

 
973

AFS equity securities:
 
 
 
 
 
 
Common stock
 
2,617

 

 
2,617

Preferred stock
 
3

 

 
3

Total AFS equity securities
 
2,620

 

 
2,620

Total OTTI losses
 
$
3,593

 

 
3,593


For a discussion of our evaluation for OTTI refer to Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2016 Annual Report.


13


(j) The components of net realized gains, excluding OTTI charges, for the periods indicated were as follows:
 
 
Quarter ended March 31,
($ in thousands)
 
2017
 
2016
HTM fixed income securities
 
 
 
 
Gains
 
$

 

Losses
 
(1
)
 
(1
)
AFS fixed income securities
 
 

 
 

Gains
 
3,552

 
620

Losses
 
(1,587
)
 
(36
)
AFS equity securities
 
 

 
 

Gains
 

 
330

Losses
 

 
(20
)
Other investments
 
 
 
 
Gains
 
480

 

      Losses
 
(14
)

(4
)
Total net realized gains (excluding OTTI charges)
 
$
2,430


889

 
Realized gains and losses on the sale of investments are determined on the basis of the cost of the specific investments sold. Proceeds from the sale of AFS securities were $600.3 million and $17.2 million in First Quarter 2017 and First Quarter 2016, respectively. This increase was driven by higher trading volume in our fixed income securities portfolio related to the recent hiring of new external investment managers.

NOTE 5. Indebtedness
Our long-term debt balance has not changed since December 31, 2016. However, on February 28, 2017, Selective Insurance Company of America ("SICA") borrowed $64 million in short-term funds from the FHLBNY at an interest rate of 0.75%. This borrowing was repaid on March 21, 2017.

For detailed information on our indebtedness, see Note 10. "Indebtedness" in Item 8. "Financial Statements and Supplementary Data." of our 2016 Annual Report.

NOTE 6. Fair Value Measurements
Our financial assets are measured at fair value as disclosed on the Consolidated Balance Sheets. The fair values of our long-term debt have improved since December 31, 2016, but none by more than 5%. For a discussion of the fair value and hierarchy of the techniques used to value our financial assets and liabilities, refer to Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2016 Annual Report.


14


The following tables provide quantitative disclosures of our financial assets that were measured at fair value at March 31, 2017 and December 31, 2016:
March 31, 2017
 
 
 
Fair Value Measurements Using
($ in thousands)
 
Assets
Measured at
Fair Value
at 3/31/2017
 
Quoted Prices in
Active Markets for
Identical Assets/
Liabilities (Level 1)1
 
Significant Other
 Observable
Inputs
 (Level 2)1
 
Significant Unobservable
 Inputs
 (Level 3)
Description
 
 

 
 

 
 

 
 

Measured on a recurring basis:
 
 

 
 

 
 

 
 

AFS fixed income securities:
 
 
 
 
 
 
 
 
U.S. government and government agencies
 
$
88,338

 
46,150

 
42,188

 

Foreign government
 
32,593

 

 
32,593

 

Obligations of states and political subdivisions
 
1,287,166

 

 
1,287,166

 

Corporate securities
 
1,828,126

 

 
1,828,126

 

CLO and other ABS
 
678,435

 

 
678,435

 

CMBS
 
263,756

 

 
263,756

 

RMBS
 
688,591

 

 
688,591

 

Total AFS fixed income securities
 
4,867,005

 
46,150

 
4,820,855

 

AFS equity securities:
 
 
 
 
 
 
 
 
Common stock
 
138,331

 
130,655

 

 
7,676

Preferred stock
 
16,587

 
16,587

 

 

Total AFS equity securities
 
154,918

 
147,242

 

 
7,676

Total AFS securities
 
5,021,923

 
193,392

 
4,820,855

 
7,676

Short-term investments
 
247,207

 
247,207

 

 

Total assets measured at fair value
 
$
5,269,130

 
440,599

 
4,820,855


7,676


December 31, 2016
 
 
 
Fair Value Measurements Using
($ in thousands)
 
Assets
Measured at
Fair Value
at 12/31/2016
 
Quoted Prices in
 Active Markets for
Identical Assets/Liabilities
(Level 1)1
 
Significant
Other Observable
Inputs
 (Level 2)1
 
Significant Unobservable
Inputs
 (Level 3)
Description
 
 

 
 

 
 

 
 

Measured on a recurring basis:
 
 

 
 

 
 

 
 

AFS fixed income securities:
 
 
 
 
 
 
 
 
U.S. government and government agencies
 
$
77,333

 
27,520

 
49,813

 

Foreign government
 
26,865

 

 
26,865

 

Obligations of states and political subdivisions
 
1,379,593

 

 
1,379,593

 

Corporate securities
 
1,997,753

 

 
1,997,753

 

CLO and other ABS
 
528,960

 

 
528,960

 

CMBS
 
256,842

 

 
256,842

 

RMBS
 
525,194

 

 
525,194

 

Total AFS fixed income securities
 
4,792,540

 
27,520

 
4,765,020

 

AFS equity securities:
 
 
 
 
 
 
 
 
Common stock
 
130,608

 
122,932

 

 
7,676

Preferred stock
 
16,145

 
16,145

 

 

Total AFS equity securities
 
146,753

 
139,077

 

 
7,676

Total AFS securities
 
4,939,293

 
166,597

 
4,765,020

 
7,676

Short-term investments
 
221,701

 
221,701

 

 

Total assets measured at fair value
 
$
5,160,994

 
388,298

 
4,765,020

 
7,676

1 
There were no transfers of securities between Level 1 and Level 2.

There were no changes in the fair value of securities measured using Level 3 inputs since December 31, 2016.


15


The following tables provide quantitative information regarding our financial assets and liabilities that were disclosed at fair value at March 31, 2017 and December 31, 2016:
March 31, 2017
 
 
 
Fair Value Measurements Using
($ in thousands)
 
Assets/
Liabilities
Disclosed at
Fair Value at 3/31/2017
 
Quoted Prices in
 Active Markets for
 Identical Assets/
Liabilities
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Financial Assets
 
 

 
 

 
 

 
 

HTM:
 
 

 
 

 
 

 
 

Obligations of states and political subdivisions
 
$
64,760

 

 
64,760

 

Corporate securities
 
23,579

 

 
15,998

 
7,581

Total HTM fixed income securities
 
$
88,339

 

 
80,758

 
7,581

 
 
 
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