Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2011

The Carrying Amounts and Estimated Fair Values of Financial Instruments


		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

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

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.

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 income^2,3		-	-	(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 income^2,3			-	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.

- 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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- Definition

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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- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

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+ Details

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185

5,002

5,187