DEBT

Debt consists of the following instruments:



(in thousands)	September 30, 2012				December 31, 2011
	Principal		Fair Value		Principal		Fair Value
6% Senior unsecured debentures due 2012	$	—	$	—	$	1,657	$	1,641
7.5% Senior notes due 2014	26,966		22,921		26,966		26,696
LROC preferred units due 2015	19,993		13,987		19,329		8,845
Subordinated debt	90,500		24,942		90,500		16,432
Total	$	137,459	$	61,850	$	138,452	$	53,614

During the third quarter of 2012, the Company repaid the $1.7 million principal balance of the 6% Senior unsecured debentures, which matured on July 11, 2012.

Subordinated indebtedness mentioned above consists of the following trust preferred debt instruments:



Issuer	Principal	Issue date	Interest	Redemption date
Kingsway CT Statutory Trust I	15,000	12/4/2002	annual interest rate equal to LIBOR, plus 4.00% payable quarterly	12/4/2032
Kingsway CT Statutory Trust II	17,500	5/15/2003	annual interest rate equal to LIBOR, plus 4.10% payable quarterly	5/15/2033
Kingsway CT Statutory Trust III	20,000	10/29/2003	annual interest rate equal to LIBOR, plus 3.95% payable quarterly	10/29/2033
Kingsway DE Statutory Trust III	15,000	5/23/2003	annual interest rate equal to LIBOR, plus 4.20% payable quarterly	5/23/2033
Kingsway DE Statutory Trust IV	10,000	9/30/2003	annual interest rate equal to LIBOR, plus 3.85% payable quarterly	9/30/2033
Kingsway DE Statutory Trust VI	13,000	1/8/2004	annual interest rate equal to LIBOR, plus 4.00% payable quarterly	1/8/2034

During the first quarter of 2011, the Company gave notice to its Trust Preferred trustees of its intention to exercise its voluntary right to defer interest payments for up to 20 quarters, pursuant to the contractual terms of its outstanding Trust Preferred indentures, which permit interest deferral. This action does not constitute a default under the Company's Trust Preferred indentures or any of its other debt indentures. At September 30, 2012, deferred interest payable of $7.1 million is included in accrued expenses and other liabilities in the consolidated balance sheets. The cash interest due in 2016 is subject to changes in the London interbank offered interest rate for three-month U.S. dollar deposits ("LIBOR") over the deferral period.

No debt repurchases were made during the quarter and year ended September 30, 2012. During the third quarter of 2011, Kingsway 2007 General Partnership purchased for $0.2 million ($10.8 million prior year to date) and subsequently cancelled $0.2 million ($11.4 million prior year to date) par value of its senior unsecured debentures with a carrying value of $0.2 million ($11.4 million prior year to date), recording a gain of $0.0 million ($0.6 million prior year to date).