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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2011

Fair Value Disclosures [Abstract]

The Carrying Amounts and Estimated Fair Values of Financial Instruments

		September 30, 2011				December 31, 2010
		Carrying		Fair		Carrying		Fair
($ in thousands)		Amount		Value		Amount		Value
Financial Assets
Fixed maturity securities:
HTM	$	852,843		901,385		1,214,324		1,256,294
AFS		2,772,348		2,772,348		2,342,742		2,342,742
Equity securities, AFS		139,203		139,203		69,636		69,636
Short-term investments		162,812		162,812		161,155		161,155
Receivable for proceeds related to sale of Selective
HR Solutions ("Selective HR")		3,375		3,375		5,002		5,002
Financial Liabilities
Notes payable:
7.25% Senior Notes		49,907		58,589		49,904		55,190
6.70% Senior Notes		99,446		110,604		99,429		90,097
7.50% Junior Notes		100,000		98,664		100,000		99,840
2.90% borrowings from FHLBI		13,000		13,780		13,000		13,389
Total notes payable	$	262,353		281,637		262,333		258,516

Quantitative Disclosures of Our Financial Assets That Were Measured At Fair Value

September 30, 2011			Fair Value Measurements Using
				Quoted Prices in
		Assets		Active Markets for		Significant Other		Significant
		Measured at		Identical Assets/		Observable		Unobservable
		Fair Value		Liabilities		Inputs		Inputs
($ in thousands)		at 9/30/11		(Level 1)		(Level 2)		(Level 3)
Description
Measured on a recurring basis:
U.S. government and government agencies1	$	380,031		122,701		257,330		-
Foreign government		32,912		-		32,912		-
Obligations of states and political subdivisions		561,515		-		561,515		-
Corporate securities		1,125,559		-		1,125,559		-
ABS		78,694		-		78,694		-
CMBS		112,891		-		112,561		330
RMBS		480,746		-		480,746		-
Total AFS fixed maturity securities		2,772,348		122,701		2,649, 317		330
Equity securities		139,203		139,203		-		-
Short-term investments		162,812		162,812		-		-
Receivable for proceeds related to sale of Selective HR		3,375		-		-		3,375
Total financial assets measured on a recurring basis	$	3,077,738		424,716		2,649,317		3,705

December 31, 2010			Fair Value Measurements Using
				Quoted Prices in
		Assets		Active Markets for		Significant Other		Significant
		Measured at		Identical Assets/		Observable		Unobservable
		Fair Value		Liabilities		Inputs		Inputs
($ in thousands)		at 12/31/10		(Level 1)		(Level 2)		(Level 3)
Description
Measured on a recurring basis:
U.S. government and government agencies1	$	320,529		105,317		215,212		-
Foreign government		18,966		-		18,966		-
Obligations of states and political subdivisions		533,897		-		533,897		-
Corporate securities		993,725		-		993,725		-
ABS		48,733		-		48,733		-
CMBS		104,475		-		104,290		185
RMBS		322,417		-		322,417		-
Total AFS fixed maturity securities		2,342,742		105,317		2,237,240		185
Equity securities		69,636		69,636		-		-
Short-term investments		161,155		161,155		-		-
Receivable for proceeds related to sale of Selective HR		5,002		-		-		5,002
Total financial assets measured on a recurring basis	$	2,578,535		336,108		2,237,240		5,187

¹ U.S. government includes corporate securities fully guaranteed by the FDIC.

Summary of the Changes in Fair Value of Securities Using Level 3 Inputs

Nine Months 2011 ($ in thousands)		CMBS, AFS	Receivable for Proceeds Related to Sale of Selective HR	Total
Fair value, December 31, 2010	$	185	5,002	5,187
Total net gains (losses) for the period included in:
OCI1		425	-	425
Net income2, 3		(269)	(708)	(977)
Purchases		-	-	-
Sales		-	-	-
Issuances		-	-	-
Settlements		(11)	(919)	(930)
Net transfers in and/or out of Level 3		-	-	-
Fair value, September 30, 2011	$	330	3,375	3,705

2010 ($ in thousands)		ABS, AFS	CMBS, AFS	Receivable for Proceeds Related to Sale of Selective HR	Total
Fair Value, December 31, 2009	$	-	-	12,300	12,300
Total net (losses) gains for the period included in:
OCI1		(22)	1,862	-	1,840
Net income2, 3		-	41	(5,460)	(5,419)
Purchases, sales, issuances, and settlements (net)		2,737	(148)	(1,838)	751
Net transfers in and/or out of Level 3		(2,715)	(1,570)	-	(4,285)
Fair value, December 31, 2010	$	-	185	5,002	5,187

1	Amounts are reported in "Other net unrealized gains on investment securities, net of deferred income tax" on the Consolidated Statements of Stockholders' Equity.
2	Amounts are reported in "Net realized investment gains (losses)" for realized gains and losses and "Net investment income earned" for amortization for the CMBS securities on the Consolidated Statements of Income.
3	Amounts are reported in either "Loss on disposal of discontinued operations, net of tax" or "Other income" for the receivable related to sale of Selective HR on the Consolidated Statements of Income.  Amounts in "Loss on disposal of discontinued operations, net of tax" relate to charges to reduce the fair value of our receivable and amounts in "Other income" reflect interest accretion on the receivable.

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- Definition

Tabular disclosure of assets, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring and/or nonrecurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income, and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issuances, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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