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Fair Value Measurements (Tables)
 9 Months Ended
Sep. 30, 2012
Fair Value Disclosures [Abstract]  
The Carrying Amounts and Estimated Fair Values of Financial Instruments
 
 
September 30, 2012
 
December 31, 2011
($ in thousands)
 
Carrying Amount
 
Fair
Value
 
Carrying Amount
 
Fair
Value
Financial Assets
 
 

 
 

 
 

 
 

Fixed maturity securities:
 
 

 
 

 
 

 
 

HTM
 
$
600,716

 
646,035

 
712,348

 
758,043

AFS
 
3,269,960

 
3,269,960

 
2,897,373

 
2,897,373

Equity securities, AFS
 
155,577

 
155,577

 
157,355

 
157,355

Short-term investments
 
184,878

 
184,878

 
217,044

 
217,044

Receivable for proceeds related to sale of Selective HR Solutions (“Selective HR”)
 
2,799

 
2,799

 
3,212

 
3,212

Financial Liabilities
 
 

 
 

 
 

 
 

Notes payable:
 
 

 
 

 
 

 
 

7.25% Senior Notes
 
49,911

 
62,201

 
49,908

 
51,111

6.70% Senior Notes
 
99,469

 
102,169

 
99,452

 
113,195

7.50% Junior Notes
 
100,000

 
100,200

 
100,000

 
100,360

2.90% borrowings from FHLBI
 
13,000

 
13,667

 
13,000

 
13,759

1.25% borrowings from FHLBI
 
45,000

 
45,663

 
45,000

 
44,629

Total notes payable
 
$
307,380

 
323,900

 
307,360

 
323,054
Quantitative Disclosures of Our Financial Assets That Were Measured At Fair Value
September 30, 2012
 
 
 
Fair Value Measurements Using
($ in thousands)
 
Assets
 Measured at
 Fair Value
 at 9/30/12
 
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:
 
 

 
 

 
 

 
 

U.S. government and government agencies2
 
$
294,214

 
130,435

 
143,804

 
19,975

Foreign government
 
30,292

 
—

 
30,292

 
—

Obligations of states and political subdivisions
 
784,501

 
—

 
784,501

 
—

Corporate securities
 
1,425,888

 
—

 
1,423,005

 
2,883

ABS
 
121,154

 
—

 
113,835

 
7,319

CMBS
 
129,615

 
—

 
114,904

 
14,711

RMBS
 
484,296

 
—

 
484,296

 
—

Total AFS fixed maturity securities
 
3,269,960

 
130,435

 
3,094,637

 
44,888

Equity securities
 
155,577

 
151,970

 
—

 
3,607

Short-term investments
 
184,878

 
184,878

 
—

 
—

Receivable for proceeds related to sale of Selective HR
 
2,799

 
—

 
—

 
2,799

Total assets
 
$
3,613,214

 
467,283

 
3,094,637

 
51,294

December 31, 2011
 
 
 
Fair Value Measurements Using
($ in thousands)
 
Assets
 Measured at
Fair Value
at 12/31/11
 
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:
 
 

 
 

 
 

 
 

U.S. government and government agencies2
 
$
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

 
1 
There were no transfers of securities between Level 1 and Level 2.
2 
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 income2,3
 
—

 
—

 
(322
)
 
(638
)
 
(960
)
Purchases
 
—

 
—

 
—

 
—

 
—

Sales
 
—

 
—

 
—

 
—

 
—

Issuances
 
—

 
—

 
—

 
—

 
—

Settlements
 
—

 
—

 
(16
)
 
(1,152
)
 
(1,168
)
Transfers into Level 3
 
21,741

 
2,603

 
—

 
—

 
24,344

Transfers out of Level 3
 
—

 
—

 
—

 
—

 
—

Fair value, December 31, 2011
 
$
21,741

 
2,603

 
354

 
3,212

 
27,910


1 Amounts are reported in “Other net unrealized gains on investment securities, net of deferred income tax” on the Consolidated Statements of Stockholders’ Equity in our 2011 Annual Report.
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 in our 2011 Annual Report.
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 in our 2011 Annual Report.  Amounts in “Loss on disposal of discontinued operations, net of tax” related to charges to reduce the fair value of our receivable, and amounts in “Other income” related to interest accretion on the receivable in our 2011 Annual Report.

Nine Months 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
($ in thousands)
 
Government
 
Corporate
 
ABS
 
CMBS
 
Equity
 
Receivable for
Proceeds
Related to Sale
of Selective HR
 
Total
Fair value, December 31, 2011
 
$
21,741

 
2,603

 
—

 
354

 
—

 
3,212

 
27,910

Total net (losses) gains for the period included in:
 
 

 
 

 


 
 

 


 
 

 


OCI1
 
121

 
121

 
20

 
517

 
—

 
—

 
779

Net income2,3
 
(149
)
 
—

 
—

 
4

 
—

 
187

 
42

Purchases
 
—

 
—

 
7,299

 
5,611

 
—

 
—

 
12,910

Sales
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Issuances
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Settlements
 
(1,738
)
 
(629
)
 


 
(22
)
 
—

 
(600
)
 
(2,989
)
Transfers into Level 3
 
—

 
788

 
—

 
8,247

 
3,607

 
—

 
12,642

Transfers out of Level 3
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Fair value, September 30, 2012
 
$
19,975

 
2,883

 
7,319

 
14,711

 
3,607

 
2,799

 
51,294


1 Amounts are reported in “Unrealized holding gains arising during period” on the Consolidated Statements of Comprehensive Income.
2 Amounts are reported in “Net realized gains (losses)” for realized gains and losses and “Net investment income earned” for amortization of securities on the Consolidated Statements of Income.
3 Amounts are reported in “Other income” for the receivable related to the sale of Selective HR on the Consolidated Statements of Income, and are related to interest accretion on the receivable.
Quantitative Information of Our Financial Assets and Liabilities That Were Disclosed at Fair Value
:
September 30, 2012
 
 
 
Fair Value Measurements Using
($ in thousands)
 
Assets/
Liabilities
Disclosed at
Fair Value at 9/30/12
 
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:
 
 

 
 

 
 

 
 

Foreign government
 
$
5,596

 
—

 
5,596

 
—

Obligations of states and political subdivisions
 
566,495

 
—

 
566,495

 
—

Corporate securities
 
53,623

 
—

 
48,731

 
4,892

ABS
 
7,329

 
—

 
5,846

 
1,483

CMBS
 
12,992

 
—

 
12,992

 
—

Total HTM fixed maturity securities
 
$
646,035

 
—

 
639,660

 
6,375

Financial Liabilities
 
 

 
 

 
 

 
 

Notes payable:
 
 

 
 

 
 

 
 

7.25% Senior Notes
 
$
62,201

 
62,201

 
—

 
—

6.70% Senior Notes
 
102,169

 
102,169

 
—

 
—

7.50% Junior Notes
 
100,200

 
100,200

 
—

 
—

2.90% borrowings from FHLBI
 
13,667

 
—

 
13,667

 
—

1.25% borrowings from FHLBI
 
45,663

 
—

 
45,663

 
—

Total notes payable
 
$
323,900

 
264,570

 
59,330

 
—