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Fair Value Measurements | 12 Months Ended
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Dec. 31, 2011
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Note 7. Fair Value Measurements The following table presents the carrying amounts and estimated fair values of our financial instruments as of December 31, 2011 and 2010:
|  | December 31, 2011 |  | December 31, 2010
|  | Carrying |  | Fair |  | Carrying |  | Fair
($ in thousands) |  | Amount |  | Value |  | Amount |  | Value
Financial Assets |  |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |  |
HTM | $ | 712,348 |  | 758,043 |  | 1,214,324 |  | 1,256,294
AFS |  | 2,897,373 |  | 2,897,373 |  | 2,342,742 |  | 2,342,742
Equity securities, AFS |  | 157,355 |  | 157,355 |  | 69,636 |  | 69,636
Short-term investments |  | 217,044 |  | 217,044 |  | 161,155 |  | 161,155
Receivable for proceeds related to sale of Selective HR |  | 3,212 |  | 3,212 |  | 5,002 |  | 5,002
Financial Liabilities |  |  |  |  |  |  |  |
Notes payable: |  |  |  |  |  |  |  |
7.25% Senior Notes |  | 49,908 |  | 51,111 |  | 49,904 |  | 55,190
6.70% Senior Notes |  | 99,452 |  | 113,195 |  | 99,429 |  | 90,097
7.50% Junior Notes |  | 100,000 |  | 100,360 |  | 100,000 |  | 99,840
2.90% borrowings from FHLBI |  | 13,000 |  | 13,759 |  | 13,000 |  | 13,389
1.25% borrowings from FHLBI |  | 45,000 |  | 44,629 |  | - |  | -
Total notes payable | $ | 307,360 |  | 323,054 |  | 262,333 |  | 258,516
For further discussion regarding the fair value valuation techniques for our financial instruments portfolio, refer to Note 2. "Summary of Significant Accounting Policies" in this Form 10-K. The following tables provide quantitative disclosures of our financial assets that were measured at fair value at December 31, 2011 and 2010:
December 31, 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 12/31/11 |  | (Level 1) |  | (Level 2) |  | (Level 3)
Description |  |  |  |  |  |  |  |
Measured on a recurring basis: |  |  |  |  |  |  |  |
U.S. government and government agencies1 | $ | 353,796 |  | 126,475 |  | 205,580 |  | 21,741
Foreign government |  | 34,173 |  | - |  | 34,173 |  | -
Obligations of states and political subdivisions |  | 622,659 |  | - |  | 622,659 |  | -
Corporate securities |  | 1,213,310 |  | - |  | 1,210,707 |  | 2,603
ABS |  | 78,949 |  | - |  | 78,949 |  | -
CMBS |  | 112,598 |  | - |  | 112,244 |  | 354
RMBS |  | 481,888 |  | - |  | 481,888 |  | -
Total AFS fixed maturity securities |  | 2,897,373 |  | 126,475 |  | 2,746,200 |  | 24,698
Equity securities |  | 157,355 |  | 157,355 |  | - |  | -
Short-term investments |  | 217,044 |  | 217,044 |  | - |  | -
Receivable for proceeds related to sale of Selective HR |  | 3,212 |  | - |  | - |  | 3,212
Total assets | $ | 3,274,984 |  | 500,874 |  | 2,746,200 |  | 27,910
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 assets | $ | 2,578,535 |  | 336,108 |  | 2,237,240 |  | 5,187
1 U.S. government includes corporate securities fully guaranteed by the FDIC. The following table provides a summary of the changes in fair value of securities using level 3 inputs.
2011 ($ in thousands) |  | Government | Corporate | CMBS | Receivable for Proceeds Related to Sale of Selective HR | Total
Fair value, December 31, 2010 | $ | - | ## - | ## 185 | ## 5,002 | ## 5,187
Total net (losses) gains for the period included in: |  |  |  |  |  |
OCI1 |  | - | - | 507 | - | 507
Net income2,3 |  | - | - | (322) | (638) | (960)
Purchases |  | - | - | - | - | -
Sales |  | - | - | - | - | -
Issuances |  | - | - | - | - | -
Settlements |  | - | - | (16) | (1,152) | (1,168)
Net transfers in and/or out of Level 3 |  | 21,741 | 2,603 | - | - | 24,344
Fair value, December 31, 2011 | $ | 21,741 | 2,603 | 354 | 3,212 | 27,910
2010 ($ in thousands) |  | ABS | CMBS | 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 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 the 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" related to interest accretion on the receivable.
The transfers of the government and corporate securities into level 3 classification at December 31, 2011 were primarily the result of broker-priced securities being transferred from an HTM to an AFS designation in 2011. The transfers in 2010 into the level 3 classification were driven by the availability and nature of the broker quotes used at the valuation dates.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19296-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 159 -Paragraph 17-22, 27, 28 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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