NOTE 16. BUSINESS COMBINATIONS The excess of the purchase price over the estimated fair value of the tangible assets acquired and liabilities assumed at the acquisition date has been allocated to goodwill and intangible assets of our property and casualty insurance segment. The following is a summary of the fair value of the tangible and intangible assets acquired and liabilities assumed of Mercer Insurance Group at the date of acquisition: (In Thousands) March 28, 2011 Assets Available-for-sale fixed maturity securities $ 401,548 Equity securities 10,266 Short-term investments 400 Cash and cash equivalents 18,855 Accrued investment income 3,741 Premiums receivable 35,822 Value of business acquired 27,436 Property and equipment 14,985 Reinsurance receivables and recoverables 58,193 Prepaid reinsurance premiums 6,289 Income taxes receivable 2,657 Deferred income taxes 2,837 Goodwill and intangible assets 32,293 Other assets 11,353 Total assets $ 626,675 Liabilities Reserves for losses, claims and loss settlement expenses $ 310,647 Unearned premiums 72,249 Accrued expenses and other liabilities 33,690 Debt 3,000 Trust preferred securities 15,614 Total liabilities $ 435,200 Total net assets acquired $ 191,475 The fair value of available-for-sale fixed maturity securities is primarily based on quoted prices for similar financial instruments in markets that are not active or on inputs that are observable either directly or indirectly for the full term of the financial instrument. The fair value of equity securities is primarily based on unadjusted quoted prices in active markets for identical financial instruments that we have the ability to access. The fair value of reserves for losses, claims and loss settlement expenses related to incurred claims and reinsurance receivables and recoverables is determined using a valuation model that is based on actuarial estimates of future cash flows for the underwriting liabilities. These future cash flows are adjusted for the time value of money using duration-matched risk-free