Debt

3 Months Ended

Mar. 31, 2012

E. Debt

Debt consists of the following:

	March 31, 2012				December 31, 2011				March 31, 2011
	Carrying		Fair Value		Carrying		Fair Value		Carrying		Fair Value
	Value		Level 2		Value		Level 2		Value		Level 2
(In thousands)
5.5% Senior notes	$	99,000	$	100,733	$	99,000	$	93,070	$	99,000	$	102,614
5.875% Senior notes		100,000		104,375		100,000		100,733		-		-
0% Subordinated debentures		65,300		66,774		64,119		58,899		60,697		57,006
Total	$	264,300	$	271,882	$	263,119	$	252,702	$	159,697	$	159,620

On May 31, 2011, the Company issued $100 million of senior unsecured notes at par. The net proceeds of $99.1 million were used for working capital and general corporate purposes. The issuance costs of $0.9 million have been capitalized and will be amortized over the term of the debt. The notes mature on June 1, 2021 and bear interest at 5.875% per annum, payable semi-annually on June 1 and December 1 of each year and commenced on December 1, 2011. Upon the occurrence of a change of control triggering event, as defined in the indenture, the Company would be required to offer to repurchase the notes at 101% of their principal amount.

On December 31, 2010, the Company issued $86.4 million in par value of five year zero coupon subordinated debentures due December 31, 2015 ("Debentures") to its shareholders of record on December 15, 2010 through the declaration of a special dividend of $3.20 per share. The Debentures have a par value of $100 and are callable at the option of the Company, in whole or in part, at any time or from time to time, at a redemption price equal to 100% of the principal amount of the Debentures to be redeemed. During the three months ended March 31, 2012, the Company repurchased 229 Debentures, having a face value of $22,900. The redemption was accounted for as an extinguishment of debt and resulted in a loss of $1,000 which was included in net gain from investments on the condensed consolidated statements of income. There were no repurchases for the three month period ended March 31, 2011. The debt is being accreted to its face value using the effective rate on the date of issuance of 7.45%. At March 31, 2012, December 31, 2011 and March 31, 2011, the debt was recorded at its accreted value of $65.3 million, $64.1 million and $59.6 million, respectively.

The fair value of the Company's debt, which is a Level 2 valuation, is estimated based on either quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities or using market standard models. Inputs in these standard models include credit rating, maturity and interest rate.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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