10-Q

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

xQuarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2012

OR

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from              to             

Commission File No. 0-50167

INFINITY PROPERTY AND CASUALTY CORPORATION

(Exact name of registrant as specified in its charter)

Incorporated under the Laws of Ohio	03-0483872
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3700 Colonnade Parkway, Suite 600, Birmingham, Alabama 35243

(Address of principal executive offices and zip code)

(205) 870-4000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.    Yes x   No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x   No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	o  (Do not check if smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined by rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of October 31, 2012 there were 11,673,041 shares of the registrant’s common stock outstanding.

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

INDEX

		Page
	PART I – FINANCIAL INFORMATION
Item 1	Financial Statements
	Consolidated Statements of Earnings	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Balance Sheets	5
	Consolidated Statements of Changes in Shareholders’ Equity	6
	Consolidated Statements of Cash Flows	7
	Condensed Notes to Consolidated Financial Statements	11
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4	Controls and Procedures	47
PART II – OTHER INFORMATION
Item 1	Legal Proceedings	48
Item 1A	Risk Factors	48
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 6	Exhibits	49
	Signature	50
	EXHIBIT INDEX
Exhibit 31.1	Certification of the Chief Executive Officer under Exchange Act Rule 13a-14(a)
Exhibit 31.2	Certification of the Chief Financial Officer under Exchange Act Rule 13a-14(a)
Exhibit 32	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

PART I

FINANCIAL INFORMATION

ITEM 1

Financial Statements

INFINITY PROPERTY AND CASUALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(in thousands, except per share data)

(unaudited)

	Three months ended September 30,								Nine months ended September 30,
	2012			2011			% Change		2012			2011			% Change
				(as adjusted see Note 1)								(as adjusted see Note 1)
Revenues:
Earned premium	$	301,463		$	255,138		18.2	%	$	872,730		$	745,703		17.0	%
Net investment income	9,018			10,166			(11.3	)%	28,364			31,117			(8.8	)%
Net realized gains on investments1	268			722			(62.8	)%	2,673			5,604			(52.3	)%
Gain on sale of subsidiary	2,922			0			0.0	%	2,922			0			0.0	%
Other income	63			101			(37.8	)%	430			201			113.7	%
Total revenues	313,734			266,127			17.9	%	907,119			782,625			15.9	%
Costs and Expenses:
Losses and loss adjustment expenses	238,261			195,275			22.0	%	683,946			566,685			20.7	%
Commissions and other underwriting expenses	63,353			57,199			10.8	%	186,356			172,128			8.3	%
Interest expense	3,199			2,702			18.4	%	8,604			8,105			6.2	%
Corporate general and administrative expenses	1,750			1,729			1.2	%	5,850			5,654			3.5	%
Other expenses	585			1,026			(43.0	)%	931			1,425			(34.7	)%
Total costs and expenses	307,148			257,931			19.1	%	885,687			753,997			17.5	%
Earnings before income taxes	6,586			8,196			(19.6	)%	21,431			28,628			(25.1	)%
Provision for income taxes	1,432			1,462			(2.1	)%	5,029			4,839			3.9	%
Net Earnings	$	5,154		$	6,733		(23.4	)%	$	16,402		$	23,789		(31.1	)%
Net Earnings per Common Share:
Basic	$	0.44		$	0.56		(21.4	)%	$	1.40		$	1.95		(28.2	)%
Diluted	0.43			0.55			(21.8	)%	1.37			1.90			(27.9	)%
Average Number of Common Shares:
Basic	11,631			12,070			(3.6	)%	11,689			12,230			(4.4	)%
Diluted	11,893			12,344			(3.7	)%	11,959			12,524			(4.5	)%
Cash Dividends per Common Share	$	0.225		$	0.180		25.0	%	$	0.675		$	0.540		25.0	%
1Net realized gains before impairment losses	$	479		$	1,146		(58.2	)%	$	3,949		$	6,873		(42.5	)%
Total other-than-temporary impairment (OTTI) losses	(211		)	(442		)	(52.2	)%	(1,245		)	(2,121		)	(41.3	)%
Non-credit portion in other comprehensive income	0			19			(100.0	)%	1			1,036			(99.9	)%
OTTI losses reclassified from other comprehensive income	0			(1		)	(100.0	)%	(32		)	(185		)	(82.5	)%
Net impairment losses recognized in earnings	(211		)	(424		)	(50.2	)%	(1,277		)	(1,270		)	0.5	%
Total net realized gains on investments	$	268		$	722		(62.8	)%	$	2,673		$	5,604		(52.3	)%

See Condensed Notes to Consolidated Financial Statements.

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

INFINITY PROPERTY AND CASUALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
				(as adjusted see Note 1)						(as adjusted see Note 1)
Net earnings	$	5,154		$	6,733		$	16,402		$	23,789
Other comprehensive income before tax:
Net change in postretirement benefit liability	(6		)	(16		)	(17		)	(48		)
Unrealized gains on investments:
Unrealized holding gains arising during the period	10,662			2,723			20,780			16,483
Less: Reclassification adjustments for gains included in net income	(268		)	(722		)	(2,673		)	(5,604		)
Unrealized gains on investments, net	10,394			2,001			18,107			10,879
Other comprehensive income, before tax	10,388			1,985			18,090			10,831
Income tax expense related to components of other comprehensive income	(3,636		)	(695		)	(6,332		)	(3,791		)
Other comprehensive income, net of tax	6,752			1,290			11,759			7,040
Comprehensive income	$	11,907		$	8,023		$	28,161		$	30,829

See Condensed Notes to Consolidated Financial Statements.

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

INFINITY PROPERTY AND CASUALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	September 30, 2012			December 31, 2011
	(unaudited)			(as adjusted see Note 1)
Assets
Investments:
Fixed maturities – at fair value (amortized cost $1,195,837 and $1,144,687)	$	1,251,930		$	1,187,987
Equity securities – at fair value (cost $26,569 and $26,413)	42,400			36,930
Total investments	$	1,294,330		$	1,224,917
Cash and cash equivalents	126,574			83,767
Restricted cash (See Note 10)	209,879			0
Accrued investment income	10,762			10,761
Agents’ balances and premium receivable, net of allowances for doubtful accounts of $15,010 and $13,497	445,334			382,621
Property and equipment, net of accumulated depreciation of $43,303 and $37,551	40,726			38,694
Prepaid reinsurance premium	2,676			2,131
Recoverables from reinsurers (includes $758 and $79 on paid losses and LAE)	15,318			14,719
Deferred policy acquisition costs	92,493			80,071
Current and deferred income taxes	8,811			10,728
Receivable for securities sold	0			1,152
Other assets	20,013			5,535
Goodwill	75,275			75,275
Total assets	$	2,342,192		$	1,930,371
Liabilities and Shareholders’ Equity
Liabilities:
Unpaid losses and loss adjustment expenses	$	544,318		$	495,403
Unearned premium	557,748			474,528
Payable to reinsurers	0			45
Long-term debt (See Note 6)	469,875			194,810
Commissions payable	32,644			30,605
Payable for securities purchased	4,558			10,818
Other liabilities	58,465			62,373
Total liabilities	$	1,667,608		$	1,268,582
Commitments and contingencies (See Note 10)
Shareholders’ equity:
Common stock, no par value (50,000,000 shares authorized; 21,420,996 and 21,331,006 shares issued)	$	21,456		$	21,358
Additional paid-in capital	359,858			355,911
Retained earnings	660,896			652,423
Accumulated other comprehensive income, net of tax	47,077			35,319
Treasury stock, at cost (9,732,697 and 9,524,369 shares)	(414,704		)	(403,221		)
Total shareholders’ equity	$	674,584		$	661,789
Total liabilities and shareholders’ equity	$	2,342,192		$	1,930,371

See Condensed Notes to Consolidated Financial Statements.

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

INFINITY PROPERTY AND CASUALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)

	Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Tax			Treasury Stock			Total
Balance at December 31, 2010	$	21,228	$	349,742	$	625,492		$	24,488		$	(359,766	)	$	661,184
Cumulative effect of change in accounting principle	—		—		(6,157		)	—			—			(6,157		)
Net earnings	—		—		23,789			—			—			23,789
Net change in postretirement benefit liability	—		—		—			(31		)	—			(31		)
Change in unrealized gain on investments	—		—		—			6,102			—			6,102
Change in non-credit component of impairment losses on fixed maturities	—		—		—			969			—			969
Comprehensive income														$	30,829
Dividends paid to common shareholders	—		—		(6,618		)	—			—			(6,618		)
Shares issued and share-based compensation expense, including tax benefit	91		4,291		—			—			—			4,383
Acquisition of treasury stock	—		—		—			—			(39,387		)	(39,387		)
Balance at September 30, 2011, as adjusted	$	21,319	$	354,034	$	636,505		$	31,528		$	(399,153	)	$	644,233
Net earnings	$	—	$	—	$	18,044		$	—		$	—		$	18,044
Net change in postretirement benefit liability	—		—		—			(145		)	—			(145		)
Change in unrealized gain on investments	—		—		—			3,618			—			3,618
Change in non-credit component of impairment losses on fixed maturities	—		—		—			317			—			317
Comprehensive income														$	21,835
Dividends paid to common shareholders	—		—		(2,126		)	—			—			(2,126		)
Shares issued and share-based compensation expense, including tax benefit	38		1,877		—			—			—			1,916
Acquisition of treasury stock	—		—		—			—			(4,067		)	(4,067		)
Balance at December 31, 2011, as adjusted	$	21,358	$	355,911	$	652,423		$	35,319		$	(403,221	)	$	661,789
Net earnings	$	—	$	—	$	16,402		$	—		$	—		$	16,402
Net change in postretirement benefit liability								(11		)				(11		)
Change in unrealized gain on investments	—		—		—			10,784			—			10,784
Change in non-credit component of impairment losses on fixed maturities	—		—		—			986			—			986
Comprehensive income														$	28,161
Dividends paid to common shareholders	—		—		(7,929		)	—			—			(7,929		)
Shares issued and share-based compensation expense, including tax benefit	98		3,947		—			—			—			4,045
Acquisition of treasury stock	—		—		—			—			(11,483		)	(11,483		)
Balance at September 30, 2012	$	21,456	$	359,858	$	660,896		$	47,077		$	(414,704	)	$	674,584

See Condensed Notes to Consolidated Financial Statements.

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

INFINITY PROPERTY AND CASUALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three months ended September 30,
	2012			2011
				(as adjusted See Note 1)
Operating Activities:
Net earnings	$	5,154		$	6,733
Adjustments:
Depreciation	2,356			1,850
Amortization	2,580			2,038
Net realized gains on investments	(268		)	(722		)
Loss on disposal of property and equipment	30			160
Gain on sale of subsidiary	(2,922		)	0
Share-based compensation expense	671			967
Excess tax benefits from share-based payment arrangements	0			(169		)
Activity related to rabbi trust	37			(65		)
Decrease (increase) in accrued investment income	101			(5		)
Increase in agents’ balances and premium receivable	(18,250		)	(14,928		)
(Increase) decrease in reinsurance receivables	(1,108		)	186
Increase in deferred policy acquisition costs	(2,463		)	(2,444		)
(Increase) decrease in other assets	(2,685		)	5,903
Increase in unpaid losses and loss adjustment expenses	13,446			10,422
Increase in unearned premium	21,645			14,409
Decrease in other liabilities	(1,099		)	(5,848		)
Net cash provided by operating activities	17,225			18,488
Investing Activities:
Purchases of fixed maturities	(89,084		)	(46,844		)
Purchases of equity securities	0			(2,000		)
Purchases of property and equipment	(944		)	(2,705		)
Maturities and redemptions of fixed maturities	62,178			22,416
Proceeds from sale of fixed maturities	9,968			49,360
Proceeds from sale of property and equipment	11			0
Net cash (used in) provided by investing activities	(17,872		)	20,228
Financing Activities:
Proceeds from stock options exercised and employee stock purchases, including tax benefit	396			271
Excess tax benefits from share-based payment arrangements	0			169
Proceeds from issuance of bonds	273,213			0
Increase in restricted cash related to planned redemption of debt	(209,879		)	0
Acquisition of treasury stock	(3,194		)	(21,284		)
Dividends paid to shareholders	(2,629		)	(2,170		)
Net cash provided by (used in) financing activities	57,906			(23,014		)
Net increase in cash and cash equivalents	57,260			15,702
Cash and cash equivalents at beginning of period	69,314			36,455
Cash and cash equivalents at end of period	$	126,574		$	52,157

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

See Condensed Notes to Consolidated Financial Statements.

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

INFINITY PROPERTY AND CASUALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

	Nine months ended September 30,
	2012			2011
				(as adjusted See Note 1)
Operating Activities:
Net earnings	$	16,402		$	23,789
Adjustments:
Depreciation	6,442			6,676
Amortization	7,137			5,869
Net realized gains on investments	(2,673		)	(5,604		)
Loss on disposal of property and equipment	44			362
Gain on sale of subsidiary	(2,922		)	0
Share-based compensation expense	2,817			2,383
Excess tax benefits from share-based payment arrangements	0			(169		)
Activity related to rabbi trust	72			(47		)
(Increase) decrease in accrued investment income	(1		)	809
Increase in agents’ balances and premium receivable	(62,713		)	(53,024		)
(Increase) decrease in reinsurance receivables	(1,145		)	1,596
Increase in deferred policy acquisition costs	(12,421		)	(11,196		)
Increase in other assets	(8,004		)	(4,087		)
Increase in unpaid losses and loss adjustment expenses	48,915			15,698
Increase in unearned premium	83,220			63,370
Decrease in payable to reinsurers	(45		)	(42		)
Decrease in other liabilities	(2,096		)	(20,328		)
Net cash provided by operating activities	73,029			26,057
Investing Activities:
Purchases of fixed maturities	(344,520		)	(242,707		)
Purchases of equity securities	0			(2,000		)
Purchases of property and equipment	(8,529		)	(20,881		)
Maturities and redemptions of fixed maturities	144,171			113,081
Proceeds from sale of fixed maturities	133,510			150,231
Proceeds from sale of equity securities	0			7,871
Proceeds from sale of property and equipment	11			0
Net cash (used in) provided by investing activities	(75,359		)	5,596
Financing Activities:
Proceeds from stock options exercised and employee stock purchases, including tax benefit	1,229			1,999
Excess tax benefits from share-based payment arrangements	0			169
Proceeds from issuance of bonds	273,213			0
Increase in restricted cash related to planned redemption of debt	(209,879		)	0
Acquisition of treasury stock	(11,497		)	(38,650		)
Dividends paid to shareholders	(7,929		)	(6,618		)
Net cash provided by (used in) financing activities	45,136			(43,100		)
Net increase (decrease) in cash and cash equivalents	42,807			(11,447		)
Cash and cash equivalents at beginning of period	83,767			63,605
Cash and cash equivalents at end of period	$	126,574		$	52,157

See Condensed Notes to Consolidated Financial Statements.

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2012

INDEX TO NOTES

1.      Reporting and Accounting Policies	7.      Income Taxes
2.      Share-Based Compensation	8.      Additional Information
3.      Computation of Net Earnings Per Share	9.      Insurance Reserves
4.      Fair Value	10.    Commitments and Contingencies
5.      Investments	11.    Subsequent Events
6.      Long-Term Debt

Note 1Reporting and Accounting Policies

Nature of Operations

We are a holding company that, through subsidiaries, provides personal automobile insurance with a concentration on nonstandard auto insurance. Although licensed to write insurance in all 50 states and the District of Columbia, we focus on select states that we believe offer the greatest opportunity for premium growth and profitability.

Basis of Consolidation and Reporting

The accompanying consolidated financial statements are unaudited and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2011. This Quarterly Report on Form 10-Q, including the Condensed Notes to Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations, focuses on our financial performance since the beginning of the year.

These financial statements reflect certain adjustments necessary for a fair presentation of our results of operations and financial position. Such adjustments consist of normal, recurring accruals recorded to match expenses with their related revenue streams and the elimination of all significant inter-company transactions and balances.

We have evaluated events that occurred after September 30, 2012 for recognition or disclosure in our financial statements and the notes to the financial statements.

Schedules may not foot due to rounding.

Estimates

We based certain accounts and balances within these financial statements upon our estimates and assumptions. The amount of reserves for claims not yet paid, for example, is an item that we can only record by estimation. Unrealized capital gains and losses on investments are subject to market fluctuations, and we use judgment in the determination of whether unrealized losses on certain securities are temporary or other-than-temporary. Should actual results differ significantly from these estimates, the effect on our results of operations could be material. The results of operations for the periods presented may not be indicative of our results for the entire year.

Recently Adopted Accounting Standards

Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts

In October 2010, the Financial Accounting Standards Board ("FASB") issued an accounting standards update intended to reduce diversity in practice for the accounting of deferred policy acquisition costs. The guidance modifies the definition of acquisition costs to require that costs be directly related to the successful acquisition of a new or renewal insurance contract to be deferred. We adopted this standard as of January 1, 2012. Pursuant to the guidance, we elected to adopt this standard on a retrospective basis and recognized an adjustment to beginning retained earnings for the earliest period shown in the Consolidated Statements of Changes in Shareholders' Equity of $6.2 million, net of taxes.

The following table illustrates the effect of adopting this standard on the Consolidated Balance Sheets (in millions):

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Condensed Notes to Consolidated Financial Statements

	December 31, 2011
	As Reported		As Adjusted		Difference
Deferred policy acquisition costs	$	89.9	$	80.1	$	(9.8	)
Current and deferred income taxes	7.3		10.7		3.4
Total assets	1,936.8		1,930.4		(6.4		)
Shareholders' equity	668.2		661.8		(6.4		)

The following table illustrates the effect of adopting this standard on the Consolidated Statements of Earnings (in millions, except per share amounts):

	Three months ended September 30,							Nine months ended September 30,
	2011							2011
	As Reported		As Adjusted		Difference			As Reported		As Adjusted		Difference
Commissions and other underwriting expenses	$	58.1	$	57.2	$	(0.9	)	$	170.7	$	172.1	$	1.4
Provision for income taxes	1.1		1.5		0.3			5.3		4.8		(0.5		)
Net earnings	6.1		6.7		0.6			24.7		23.8		(0.9		)
Net earnings per common share:
Basic	$	0.51	$	0.56	$	0.05		$	2.02	$	1.95	$	(0.07	)
Diluted	0.50		0.55		0.05			1.97		1.90		(0.07		)

We also adjusted the Consolidated Statements of Cash Flows for these changes for the three and nine months ended September 30, 2011.

Presentation of Comprehensive Income

In June and December 2011, the FASB issued guidance amending the presentation of comprehensive income and its components. We adopted this standard as of January 1, 2012. Under the new guidance, a reporting entity has the option to present comprehensive income in a single continuous statement or in two separate but consecutive statements, as we elected. The impact of adoption was not material to our results of operations or financial position.

Amendments to Fair Value Measurement and Disclosure Requirements

In May 2011, the FASB issued guidance that clarifies the application of existing fair value measurement and disclosure requirements and amends certain fair value measurement principles, requirements and disclosures. We adopted this standard as of January 1, 2012. The impact of adoption was not material to our results of operations or financial position. Additional disclosures required by this standard are located in Note 4 to the Consolidated Financial Statements.

Intangibles – Goodwill and Other

In September 2011, the FASB issued guidance providing the option to first assess qualitative factors, such as macroeconomic conditions and industry and market considerations, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment indicates impairment, an entity must perform the two-step goodwill impairment test. If an entity does not elect the option to perform the qualitative assessment, the guidance requiring the two-step goodwill impairment test is unchanged. We adopted this standard as of January 1, 2012. The impact of adoption had no impact on our results of operations or financial position.

Note 2Share-Based Compensation

Restricted Stock Plan

We established the Restricted Stock Plan in 2002 and amended it on July 31, 2007. There are 500,000 shares of our common stock reserved for issuance under the Restricted Stock Plan, of which we have issued 278,843 shares as of September 30, 2012. We expense the fair value of shares issued under the Restricted Stock Plan over the vesting periods of the awards based on the market value of our stock on the date of grant.

On July 31, 2007, our Compensation Committee (“Committee”) approved the grant of 72,234 shares of restricted stock to certain officers under the Restricted Stock Plan. These shares of restricted stock vested in full on July 31, 2011. On August 2,

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Condensed Notes to Consolidated Financial Statements

2011, the Committee approved the grant of an additional 72,234 shares of restricted stock to certain officers under the Restricted Stock Plan. These shares will vest in full on August 2, 2014. During the vesting period, the shares of restricted stock will not have voting rights and will accrue dividends, which we will not pay until the shares have vested. We treat the restricted shares as issued and outstanding for calculation of diluted earnings per share only. Until fully vested, we will not consider the shares issued and outstanding for purposes of the basic earnings per share calculation.

Non-employee Directors’ Stock Ownership Plan

In May 2005, our shareholders approved the Non-employee Directors’ Stock Ownership Plan (“Directors’ Plan”). The purpose of the Directors’ Plan is to include our common stock as part of the compensation provided to our non-employee directors and to provide for stock ownership requirements for our non-employee directors. There are 200,000 shares of our common stock reserved for issuance under the Directors’ Plan, of which we have issued 49,461 shares as of September 30, 2012. Under the terms of the Directors’ Plan, we grant shares on or about June 1 of each year and we restrict these shares from sale or transfer by any recipient for six months from the date of grant. In June 2011, we issued 6,657 shares of our common stock, valued pursuant to the Directors’ Plan at $350,000, to our non-employee directors. In June 2012, we issued 5,502 shares of our common stock, valued pursuant to the Directors’ Plan at $300,000, to our non-employee directors. We treat participants’ shares as issued and outstanding for basic and diluted earnings per share calculations.

Employee Stock Purchase Plan

We established our Employee Stock Purchase Plan (“ESPP”) in 2004 and amended and restated it on August 3, 2010. Under the ESPP, all eligible full-time employees may purchase shares of our common stock at a 15% discount to the current market price. Employees may allocate up to 25% of their base salary with a maximum annual participation amount of $25,000. If a participant sells any shares purchased under the ESPP within one year, we preclude that employee from participating in the ESPP for one year from the date of sale. The source of shares issued to participants is treasury shares or authorized but previously unissued shares. The maximum number of shares that we may issue under the ESPP may not exceed 1,000,000, of which we have issued 52,244 as of September 30, 2012. Our ESPP is qualified under Section 423 of the Internal Revenue Code of 1986, as amended. We treat participants’ shares as issued and outstanding for basic and diluted earnings per share calculations.

Performance Share Plan

Our shareholders approved the Performance Share Plan (“PSP”) on May 20, 2008 and an amended and restated PSP on May 26, 2010. The purpose of the PSP is to align further the interest of management with our long-term shareholders by including performance-based compensation, payable in shares of common stock, as a component of an executive’s annual compensation. The Committee administers the PSP and will (i) establish the performance goals, which may include but are not limited to, combined ratio, premium growth, growth within certain specific geographic areas and earnings per share or return on equity over the course of the upcoming three year period, (ii) determine the PSP participants, (iii) set the performance share units to be awarded to such participants, and (iv) set the rate at which performance share units will convert to shares of common stock based upon attainment of the performance goals. The number of shares of common stock that we may issue under the PSP is limited to 500,000 shares. In April 2012 and 2011, we issued 49,098 and 32,957 shares, respectively, under the PSP.

Stock Option Plan

We amended our Stock Option Plan (“SOP”) to prohibit any future grant of stock options from the plan after May 20, 2008. We amended the plan again on August 2, 2011. We have granted no options since 2004. We generally granted options with an exercise price equal to the closing price of our stock at the date of grant and these options have a 10-year contractual life. All of the options under the SOP have fully vested. Subject to specific limitations contained in the SOP, our Board of Directors has the ability to amend, suspend or terminate the plan at any time without shareholder approval. The SOP will continue in effect until the exercise or expiration of all options granted under the SOP.

As permitted by the Stock Compensation topic of the FASB Accounting Standards Codification, we used the modified Black-Scholes model with the assumptions noted below to estimate the value of employee stock options on the date of grant. Expected volatilities are based on historical volatilities of our stock. We selected the expected option life to be 7.5 years, which represents the midpoint between the last vesting date and the end of the contractual term. The risk-free interest rate for periods within the contractual life of the options is based on the yield on 10-year Treasury notes in effect at the time of grant. The dividend yield was based on expected dividends at the time of grant.

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Condensed Notes to Consolidated Financial Statements

We estimated the weighted-average grant date fair values of options granted during 2004 and 2003 using the modified Black-Scholes valuation model and the following weighted-average assumptions:

	2004 Grants				2003 Grants
Weighted-average grant date fair value	$	13.87			$	5.97
Dividend yield	0.7		%		1.4		%
Expected volatility	33.0		%		33.0		%
Risk-free interest rate	4.3		%		4.0		%
Expected life	7.5			years	7.5			years
Weighted-average grant exercise price	$	33.56			$	16.11
Outstanding at September 30, 2012	78,300				83,599

The following table describes activity for our Stock Option Plan:

	Number of Options		Weighted-Average Exercise Price		Weighted- Average Remaining Term (in years)	Aggregate Intrinsic Value (a) (in millions)
Outstanding at December 31, 2011	192,455		$	23.40
Granted	0		0
Exercised	(30,556	)	$	16.77
Forfeited	0		0
Outstanding at September 30, 2012	161,899		$	24.65	0.87	$	5.8
Vested at September 30, 2012	161,899		$	24.65	0.87	$	5.8
Exercisable at September 30, 2012	161,899		$	24.65	0.87	$	5.8

(a) We calculated the intrinsic value for the stock options based on the difference between the exercise price of the underlying awards and our closing stock price as of the reporting date.

Cash received from options exercised for the nine months ended September 30, 2012 and 2011 was approximately $0.5 million and $0.9 million, respectively. The actual tax benefit realized for the tax deductions from options exercised totaled $0.2 million and $0.5 million for the nine months ended September 30, 2012 and September 30, 2011, respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2012 and 2011 was approximately $1.2 million and $1.8 million, respectively.

We have a policy of issuing new stock for the exercise of stock options.

The amount of total compensation cost, by plan, for share-based compensation arrangements was as follows (in thousands):

	Three months ended September 30,								Nine months ended September 30,
	2012				2011				2012				2011
	Expense Recognized in Income		Tax Benefit		Expense Recognized in Income		Tax Benefit		Expense Recognized in Income		Tax Benefit		Expense Recognized in Income		Tax Benefit
Restricted Stock Plan	$	298	$	104	$	265	$	93	$	893	$	312	$	662	$	232
Directors’ Plan	0		0		0		0		300		105		350		123
ESPP	13		0		11		0		40		0		30		0
PSP	373		131		702		246		1,624		568		1,371		480
Total	$	684	$	235	$	978	$	338	$	2,856	$	986	$	2,414	$	834

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Condensed Notes to Consolidated Financial Statements

Note 3Computation of Net Earnings per Share

The following table illustrates the computation of our basic and diluted net earnings per common share (in thousands, except per share figures):

	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Net earnings for basic and diluted net earnings per share	$	5,154	$	6,733	$	16,402	$	23,789
Average basic shares outstanding	11,631		12,070		11,689		12,230
Basic net earnings per share	$	0.44	$	0.56	$	1.40	$	1.95
Average basic shares outstanding	11,631		12,070		11,689		12,230
Restricted stock not yet vested	32		71		25		72
Dilutive effect of assumed option exercises	101		104		103		119
Dilutive effect of Performance Share Plan	129		100		141		102
Average diluted shares outstanding	11,893		12,344		11,959		12,524
Diluted net earnings per share	$	0.43	$	0.55	$	1.37	$	1.90

Note 4Fair Value

Fair values of instruments are based on:

(i) quoted prices in active markets for identical assets (Level 1),

(ii) quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs are observable in active markets (Level 2) or

(iii) valuations derived from valuation techniques in which one or more significant inputs are unobservable in the marketplace (Level 3).

The following table presents for each of the fair value hierarchy levels our assets and liabilities for which we report fair value on a recurring basis at September 30, 2012 (in thousands):

	Fair Value
	Level 1			Level 2			Level 3			Total
Cash and cash equivalents	$	126,574		$	0		$	0		$	126,574
Fixed maturity securities:
U.S. government	106,669			318			3,735			110,722
Government-sponsored enterprises	0			70,678			0			70,678
State and municipal	0			432,116			4,031			436,147
Mortgage-backed securities:
Residential	0			238,149			0			238,149
Commercial	0			13,487			0			13,487
Total mortgage-backed securities	$	0		$	251,636		$	0		$	251,636
Collateralized mortgage obligations	0			21,920			0			21,920
Asset-backed securities	0			81,295			2,645			83,940
Corporates	0			265,969			10,918			276,886
Total fixed maturities	$	106,669		$	1,123,932		$	21,329		$	1,251,930
Equity securities	42,400			0			0			42,400
Total cash and investments	$	275,643		$	1,123,932		$	21,329		$	1,420,904
Percentage of total cash and investments	19.4		%	79.1		%	1.5		%	100.0		%

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Condensed Notes to Consolidated Financial Statements

We do not measure our long-term debt at fair value in the Consolidated Balance Sheets. The $491.4 million fair value of our long-term debt would be included in Level 2 of the fair value hierarchy if it were reported at fair value.

Level 1 includes cash and cash equivalents, U.S. Treasury securities, an exchange-traded fund and equities invested in a rabbi trust. Level 2 includes securities whose fair value was determined using observable market inputs. Level 3 securities are comprised of (i) securities for which there is no active or inactive market for similar instruments, (ii) securities whose fair value is determined based on unobservable inputs and (iii) securities, other than those backed by the U.S. Government, that are not rated by a nationally recognized statistical rating organization ("NRSRO"). We recognize transfers between levels at the beginning of the reporting period.

A third party nationally recognized pricing service provides the fair value of securities in Level 2. We periodically review the third party pricing methodologies and test for significant differences between the market price used to value the security and recent sales activity.

The following table presents the changes in the Level 3 fair value category (in thousands):

	Three months ended September 30, 2012
	U.S. Government			State and Municipal			Mortgage- Backed Securities			Collateralized Mortgage Obligations			Corporates			ABS			Total
Balance at beginning of period	$	3,899		$	2,750		$	7,188		$	486		$	9,966		$	1,361		$	25,651
Total gains or (losses), unrealized or realized
Included in net earnings	0			0			0			(71		)	(203		)	0			(274		)
Included in other comprehensive income	(23		)	29			0			86			224			0			316
Purchases	0			4,002			0			0			0			2,645			6,647
Sales	0			0			0			(483		)	(1		)	0			(485		)
Settlements	(141		)	(2,750		)	0			(18		)	(122		)	0			(3,031		)
Transfers in	0			0			0			0			1,053			0			1,053
Transfers out	0			0			(7,188		)	0			0			(1,361		)	(8,549		)
Balance at end of period	$	3,735		$	4,031		$	0		$	0		$	10,918		$	2,645		$	21,329
	Nine months ended September 30, 2012
	U.S. Government			State and Municipal			Mortgage- Backed Securities			Collateralized Mortgage Obligations			Corporates			ABS			Total
Balance at beginning of period	$	4,438		$	0		$	0		$	509		$	10,426		$	0		$	15,374
Total gains or (losses), unrealized or realized
Included in net earnings	0			0			0			(71		)	(1,188		)	0			(1,259		)
Included in other comprehensive income	(106		)	2,779			7,188			90			1,501			1			11,452
Purchases	0			4,002			0			0			0			4,005			8,007
Sales	0			0			0			(483		)	(254		)	0			(737		)
Settlements	(597		)	(2,750		)	0			(44		)	(1,387		)	0			(4,778		)
Transfers in	0			0			0			0			2,889			0			2,889
Transfers out	0			0			(7,188		)	0			(1,070		)	(1,361		)	(9,619		)
Balance at end of period	$	3,735		$	4,031		$	0		$	0		$	10,918		$	2,645		$	21,329

Of the $21.3 million fair value of securities in Level 3, which consists of 17 securities, we priced 15 based on non-binding broker quotes. We manually calculated the price of 2 securities, which have a combined fair value of $0.8 million. Quantitative

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Condensed Notes to Consolidated Financial Statements

information about the significant unobservable inputs used in the fair value measurement of these manually priced securities at September 30, 2012 is as follows (in millions):

	Fair Value		Valuation Technique	Unobservable Input	Value Used
Corporate bond	$	0.1	Recovery rate1	Probability of default	100%
Corporate bond	0.8		Discounted cash flow	Comparable credit rating	B+
Total	$	0.8
1 Recovery rate for senior unsecured bonds as indicated in Moody's Investor's Service Annual Default Study: Corporate Default and Recovery Rates, 1920-2011.

The significant unobservable inputs used in the fair value measurement of our manually-priced corporate bonds are a probability of default assumption and an assigned credit rating. Significant changes in either of these inputs in isolation could result in a significant change in fair value measurement.  Generally, a reduction in probability of default would increase security valuation. A change in the credit rating assumption would change the yield spread associated with that bond, and thus the yield used in discounting the cash flows to arrive at the security’s valuation.

We transferred approximately $9.6 million of securities in Level 3 at December 31, 2011 to Level 2 during the nine months ended September 30, 2012 because we obtained a price for those securities from a nationally recognized pricing service. We transferred approximately $2.9 million of securities into Level 3 from Level 2 during the nine months ended September 30, 2012 because we could not obtain a price from a third party nationally recognized pricing service or because a rating by a NRSRO was not available. There were no transfers between Levels 1 and 2 during the nine months ended September 30, 2012.

The gains or losses included in net earnings are included in the line item net realized gains on investments in the Consolidated Statements of Earnings. We recognize the net gains or losses included in other comprehensive income in the line item unrealized gains (losses) on investments, net in the Consolidated Statements of Comprehensive Income and the line item change in unrealized gain on investments or the line item change in non-credit component of impairment losses on fixed maturities in the Consolidated Statements of Changes in Shareholders’ Equity.

The following table presents the carrying value and estimated fair value of our financial instruments (in thousands):

	September 30, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Cash and cash equivalents	$	126,574	$	126,574	$	83,767	$	83,767
Available-for-sale securities
Fixed maturities	1,251,930		1,251,930		1,187,987		1,187,987
Equity securities	42,400		42,400		36,930		36,930
Total cash and investments	$	1,420,904	$	1,420,904	$	1,308,684	$	1,308,684
Liabilities:
Long-term debt	$	469,875	$	491,414	$	194,810	$	207,246

See Note 5 to the Consolidated Financial Statements for additional information on investments and Note 6 for additional information on long-term debt.

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Condensed Notes to Consolidated Financial Statements

Note 5Investments

We consider all fixed maturity and equity securities available-for-sale and report them at fair value with the net unrealized gains or losses reported after-tax (net of any valuation allowance) as a component of other comprehensive income. The proceeds from sales of securities for the three months ended September 30, 2012 and 2011 were $10.0 million and $49.4 million, respectively. The proceeds from sales of securities for the nine months ended September 30, 2012 and 2011 were $133.5 million and $158.1 million, respectively. The proceeds for the three and nine months ended September 30, 2011 were net of $5.5 million of receivable for securities sold during the third quarter of 2011 that had not settled at September 30, 2011.

Gains or losses on securities are determined on a specific identification basis.

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Condensed Notes to Consolidated Financial Statements

Summarized information for the major categories of our investment portfolio follows (in thousands):

	September 30, 2012
	Amortized Cost or Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		OTTI Recognized in Accumulated OCI(1)
Fixed maturities:
U.S. government	$	107,935	$	2,791	$	(3	)	$	110,722	$	0
Government-sponsored enterprises	69,021		1,658		0			70,678		0
State and municipal	414,600		21,592		(45		)	436,147		(53		)
Mortgage-backed securities:
Residential	224,736		13,412		0			238,149		(738		)
Commercial	12,670		824		(7		)	13,487		0
Total mortgage-backed securities	$	237,406	$	14,236	$	(7	)	$	251,636	$	(738	)
Collateralized mortgage obligations	21,395		533		(8		)	21,920		(263		)
Asset-backed securities	83,620		542		(222		)	83,940		(8		)
Corporates	261,860		15,108		(81		)	276,886		(1,131		)
Total fixed maturities	$	1,195,837	$	56,461	$	(367	)	$	1,251,930	$	(2,194	)
Equity securities	26,569		15,831		0			42,400		0
Total	$	1,222,405	$	72,292	$	(367	)	$	1,294,330	$	(2,194	)
	December 31, 2011
	Amortized Cost or Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		OTTI Recognized in Accumulated OCI(1)
Fixed maturities:
U.S. government	$	124,378	$	3,428	$	(8	)	$	127,798	$	0
Government-sponsored enterprises	55,220		958		(9		)	56,170		0
State and municipal	391,436		18,016		(63		)	409,388		(70		)
Mortgage-backed securities:
Residential	225,506		10,878		(14		)	236,370		(1,157		)
Commercial	19,751		760		(142		)	20,369		(11		)
Total mortgage-backed securities	$	245,257	$	11,638	$	(156	)	$	256,739	$	(1,168	)
Collateralized mortgage obligations	27,447		757		(102		)	28,103		(515		)
Asset-backed securities	48,403		368		(143		)	48,628		(8		)
Corporates	252,546		9,688		(1,072		)	261,162		(1,949		)
Total fixed maturities	$	1,144,687	$	44,853	$	(1,553	)	$	1,187,987	$	(3,711	)
Equity securities	26,413		10,554		(38		)	36,930		0
Total	$	1,171,100	$	55,408	$	(1,590	)	$	1,224,917	$	(3,711	)
(1) The total non-credit portion of OTTI recognized in Accumulated OCI reflecting the original non-credit loss at the time the credit impairment was determined.

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Condensed Notes to Consolidated Financial Statements

The following table sets forth the amount of unrealized loss by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	Less than 12 Months								12 Months or More
	Number of Securities with Unrealized Losses	Fair Value		Gross Unrealized Losses			Unrealized Losses as % of Cost		Number of Securities with Unrealized Losses	Fair Value		Gross Unrealized Losses			Unrealized Losses as % of Cost
September 30, 2012
Fixed maturities:
U.S. government	2	$	7,236	$	(3	)	0.0	%	0	$	0	$	0		0.0	%
State and municipal	7	6,843		(38		)	0.6	%	1	518		(7		)	1.3	%
Mortgage-backed securities:
Commercial	2	377		(2		)	0.4	%	2	349		(6		)	1.6	%
Total mortgage-backed securities	2	$	377	$	(2	)	0.4	%	2	$	349	$	(6	)	1.6	%
Collateralized mortgage obligations	1	882		(8		)	0.9	%	1	1		0			1.4	%
Asset-backed securities	4	14,035		(107		)	0.8	%	3	4,151		(115		)	2.7	%
Corporates	11	5,246		(47		)	0.9	%	2	166		(34		)	17.0	%
Total fixed maturities	27	$	34,619	$	(206	)	0.6	%	9	$	5,185	$	(162	)	3.0	%
Equity securities	0	0		0			0.0	%	0	0		0			0.0	%
Total	27	$	34,619	$	(206	)	0.6	%	9	$	5,185	$	(162	)	3.0	%

	Less than 12 Months								12 Months or More
	Number of Securities with Unrealized Losses	Fair Value		Gross Unrealized Losses			Unrealized Losses as % of Cost		Number of Securities with Unrealized Losses	Fair Value		Gross Unrealized Losses			Unrealized Losses as % of Cost
December 31, 2011
Fixed maturities:
U.S. government	1	$	557	$	(8	)	1.4	%	0	$	0	$	0		0.0	%
Government-sponsored enterprises	1	5,032		(9		)	0.2	%	0	0		0			0.0	%
State and municipal	5	7,841		(36		)	0.5	%	2	2,885		(28		)	0.9	%
Mortgage-backed securities:
Residential	1	10,481		(14		)	0.1	%	0	0		0			0.0	%
Commercial	2	1,926		(7		)	0.4	%	5	4,505		(135		)	2.9	%
Total mortgage-backed securities	3	$	12,407	$	(21	)	0.2	%	5	$	4,505	$	(135	)	2.9	%
Collateralized mortgage obligations	4	2,714		(9		)	0.3	%	1	509		(93		)	15.5	%
Asset-backed securities	6	13,653		(143		)	1.0	%	1	433		0			0.1	%
Corporates	43	44,695		(1,057		)	2.3	%	1	721		(15		)	2.0	%
Total fixed maturities	63	$	86,899	$	(1,282	)	1.5	%	10	$	9,053	$	(271	)	2.9	%
Equity securities	0	0		0			0.0	%	0	0		0			0.0	%
Total	63	$	86,899	$	(1,282	)	1.5	%	10	$	9,053	$	(271	)	2.9	%

The table above excludes an unrealized gain on equities invested in a rabbi trust of $34.3 thousand at September 30, 2012 and an unrealized loss of $37.7 thousand at December 31, 2011.

20

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Condensed Notes to Consolidated Financial Statements

The determination of whether unrealized losses are “other-than-temporary” requires judgment based on subjective as well as objective factors. Factors we considered and resources we used in our determination include:

• the intent to sell the security;

• whether it is more likely than not that there will be a requirement to sell the security before our anticipated recovery;

• whether the unrealized loss is credit-driven or a result of changes in market interest rates;

• the length of time the security’s fair value has been below our cost;

• the extent to which fair value is less than cost basis;

• historical operating, balance sheet and cash flow data contained in issuer SEC filings;

• issuer news releases;

• near-term prospects for improvement in the issuer and/or its industry;

• industry research and communications with industry specialists and

• third-party research and credit rating reports.

We regularly evaluate for potential impairment each security position that has any of the following: a fair value of less than 95% of its book value, an unrealized loss that equals or exceeds $100,000 or one or more impairment charges recorded in the past. In addition, we review positions held related to an issuer of a previously impaired security.

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INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Condensed Notes to Consolidated Financial Statements

The following table summarizes those securities, excluding the rabbi trust, with unrealized gains or losses:

	September 30, 2012		December 31, 2011
Number of positions held with unrealized:
Gains	714		583
Losses	36		73
Number of positions held that individually exceed unrealized:
Gains of $500,000	7		5
Losses of $500,000	0		0
Percentage of positions held with unrealized:
Gains that were investment grade	84	%	83	%
Losses that were investment grade	72	%	73	%
Percentage of fair value held with unrealized:
Gains that were investment grade	95	%	95	%
Losses that were investment grade	90	%	91	%

The following table sets forth the amount of unrealized loss, excluding the rabbi trust, by age and severity at September 30, 2012 (in thousands):

Age of Unrealized Losses:	Fair Value of Securities with Unrealized Losses		Total Gross Unrealized Losses			Less Than 5%*			5% - 10%*		Greater Than 10%*
Less than or equal to:
Three months	$	21,709	$	(45	)	$	(45	)	$	0	$	0
Six months	6,213		(38		)	(38		)	0		0
Nine months	1,568		(19		)	(19		)	0		0
Twelve months	5,129		(104		)	(104		)	0		0
Greater than twelve months	5,185		(162		)	(128		)	0		(34		)
Total	$	39,804	$	(367	)	$	(333	)	$	0	$	(34	)

* As a percentage of amortized cost or cost.

22

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Condensed Notes to Consolidated Financial Statements

The change in unrealized gains (losses) on marketable securities included the following (in thousands):

	Pre-tax
	Fixed Maturities			Equity Securities			Tax Effects			Net
Nine months ended September 30, 2012
Unrealized holding gains (losses) on securities arising during the period	$	15,466		$	5,314		$	(7,273	)	$	13,507
Realized (gains) losses on securities sold	(3,949		)	0			1,382			(2,567		)
Impairment loss recognized in earnings(1)	1,277			0			(447		)	830
Change in unrealized gains (losses) on marketable securities, net	$	12,793		$	5,314		$	(6,338	)	$	11,770
Nine months ended September 30, 2011
Unrealized holding gains (losses) on securities arising during the period	$	19,943		$	(3,460	)	$	(5,769	)	$	10,714
Realized (gains) losses on securities sold	(4,126		)	(2,748		)	2,406			(4,468		)
Impairment loss recognized in earnings(1)	1,270			0			(444		)	825
Change in unrealized gains (losses) on marketable securities, net	$	17,087		$	(6,207	)	$	(3,808	)	$	7,072
(1) Tax excludes valuation reserve

For fixed maturity securities that are other-than-temporarily impaired, we assess our intent to sell and the likelihood that we will be required to sell the security before recovery of our amortized cost. If a fixed maturity security is considered other-than-temporarily impaired but we do not intend to and are not more than likely to be required to sell the security before our recovery to amortized cost, we separate the amount of the impairment into a credit loss component and the amount due to all other factors. The excess of the amortized cost over the present value of the expected cash flows determines the credit loss component of an impairment charge on a fixed maturity security. The present value is determined using the best estimate of cash flows discounted at (1) the effective interest rate implicit at the date of acquisition for non-structured securities or (2) the book yield for structured securities. The techniques and assumptions for determining the best estimate of cash flows vary depending on the type of security. We recognize the credit loss component of an impairment charge in net earnings and the non-credit component in accumulated other comprehensive income. If we intend to sell or will, more likely than not, be required to sell a security, we treat the entire amount of the impairment as a credit loss.

The following table is a progression of credit losses on fixed maturity securities that were bifurcated between a credit and non-credit component (in thousands):

	Nine months ended September 30,
	2012			2011
Beginning balance	$	1,728		$	1,828
Additions for:
Previously impaired securities	0			37
Newly impaired securities	9			694
Reductions for:
Securities sold and paid down	(362		)	(519		)
Securities that no longer have a non-credit component	(735		)	0
Ending balance	$	640		$	2,040

The table below sets forth the scheduled maturities of fixed maturity securities at September 30, 2012, based on their fair values (in thousands). We report securities that do not have a single maturity date at average maturity. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers.

23

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Condensed Notes to Consolidated Financial Statements

	Fair Value								Amortized Cost
Maturity	Securities with Unrealized Gains		Securities with Unrealized Losses		Securities with No Unrealized Gains or Losses		All Fixed Maturity Securities		All Fixed Maturity Securities
One year or less	$	52,635	$	0	$	327	$	52,962	$	51,902
After one year through five years	553,858		10,833		1,347		566,038		543,658
After five years through ten years	208,191		5,618		280		214,089		200,021
After ten years	57,787		3,558		0		61,345		57,835
Mortgage-backed, asset-backed and collateralized mortgage obligations	337,701		19,795		0		357,496		342,421
	$	1,210,172	$	39,804	$	1,954	$	1,251,930	$	1,195,837

Note 6Long-Term Debt

Our outstanding debt consisted of the following (in millions):

	September 30, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
5.5% Senior Notes due 2014	$	194.9	$	205.3	$	194.8	$	207.2
5.0% Senior Notes due 2022	275.0		286.1		0.0		0.0
Total	$	469.9	$	491.4	$	194.8	$	207.2

In February 2004, we issued $200 million principal of senior notes due February 2014 (the “5.5% Senior Notes”). The 5.5% Senior Notes accrue interest at an effective yield of 5.55% and bear a coupon of 5.5%, payable semiannually. At the time we issued the Senior Notes, we capitalized $2.1 million of debt issuance costs, which we are amortizing over the term of the 5.5% Senior Notes. During 2009, we repurchased $5.0 million of our debt, bringing the outstanding principal to $195.0 million. We calculated the September 30, 2012 fair value of $205.3 million using a 139 basis point spread to the two-year U.S. Treasury Note of 0.232%. The 5.5% Senior Notes were fully redeemed on October 17, 2012 at a price of 106.729%, or $208.1 million, plus accrued interest of $1.8 million.

In September 2012, we issued $275 million principal of senior notes due September 2022 (the “5.0% Senior Notes”). The 5.0% Senior Notes accrue interest at 5.0%, payable semiannually. At the time we issued the 5.0% Senior Notes, we capitalized $2.2 million of debt issuance costs, which we are amortizing over the term of the 5.0% Senior Notes. We calculated the September 30, 2012 fair value of $286.1 million using a 286 basis point spread to the ten-year U.S. Treasury Note of 1.634%.

In August 2011, we renewed our agreement for a $50 millionthree-year revolving credit facility (the “Credit Agreement”) that requires us to meet certain financial and other covenants. At September 30, 2012 we were in technical violation of one of these covenants due to the issuance of the 5.0% Senior Notes. The 5.5% Senior Notes required 30 days' notice for redemption, therefore, at September 30, 2012 both bond issuances were outstanding causing our leverage ratio to exceed the maximum ratio set forth in the covenants. We were granted a temporary waiver and the 5.5% Senior Notes were redeemed on October 17, 2012. Upon redemption of the 5.5% Senior Notes, the covenant violation was cured.

At September 30, 2012, there were no borrowings outstanding under the Credit Agreement.

Note 7Income Taxes

The following table reconciles our income taxes at statutory rates to our effective provision for income taxes (in thousands):

24

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Earnings before income taxes	$	6,586		$	8,196		$	21,431		$	28,628
Income taxes at statutory rates	$	2,305		$	2,868		$	7,501		$	10,020
Effect of:
Dividends-received deduction	(44		)	(35		)	(123		)	(101		)
Tax-exempt interest	(824		)	(887		)	(2,468		)	(2,647		)
Adjustment to valuation allowance	36			(510		)	117			(2,454		)
Other	(42		)	25			3			21
Provision for income taxes	$	1,432		$	1,462		$	5,029		$	4,839
GAAP effective tax rate	21.7		%	17.8		%	23.5		%	16.9		%

During the nine months ended September 30, 2011, we decreased our tax valuation allowance by $2.5 million due to both a decrease in the reserve for other-than-temporary impaired securities and utilization of our capital loss carryforward.

Note 8Additional Information

Supplemental Cash Flow Information

We made the following payments that we do not separately disclose in the Consolidated Statements of Cash Flows (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Income tax payments	$	4,000	$	0	$	9,000	$	9,203
Interest payments on debt	5,363		5,363		10,725		10,725

Negative Cash Book Balances

Negative cash book balances, included in the line item “Other liabilities” in the Consolidated Balance Sheets, were $5.9 million at December 31, 2011. There were no negative cash book balances at September 30, 2012.

Gain on Sale of Subsidiary

On September 30, 2012, we completed the sale of an inactive, shell subsidiary company to an unaffiliated third party. The total gain recorded on a GAAP basis was $2.9 million. In the future we intend to sell or dissolve other inactive shell companies. The primary reason for the sale of the companies is to reduce the administrative costs associated with maintaining licenses that are no longer needed to support our insurance operations.

25

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Condensed Notes to Consolidated Financial Statements

Note 9Insurance Reserves

Insurance reserves include liabilities for unpaid losses, both known and estimated for incurred but not reported (“IBNR”), and unpaid loss adjustment expenses (“LAE”). The following table provides an analysis of changes in the liability for unpaid losses and LAE on a GAAP basis (in thousands):

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Balance at Beginning of Period
Unpaid losses on known claims	$	202,622		$	188,189		$	181,972		$	180,334
IBNR losses	182,630			160,992			177,645			164,140
LAE	145,620			133,928			135,787			133,359
Total unpaid losses and LAE	530,872			483,108			495,403			477,833
Reinsurance recoverables	(13,798		)	(14,880		)	(14,640		)	(16,521		)
Unpaid losses and LAE, net of reinsurance recoverables	517,074			468,228			480,764			461,312
Current Activity
Loss and LAE incurred:
Current accident year	232,940			190,459			676,822			561,846
Prior accident years	5,321			4,816			7,124			4,839
Total loss and LAE incurred	238,261			195,275			683,946			566,685
Loss and LAE payments:
Current accident year	(165,714		)	(131,711		)	(368,230		)	(301,638		)
Prior accident years	(59,864		)	(53,016		)	(266,722		)	(247,582		)
Total loss and LAE payments	(225,578		)	(184,727		)	(634,953		)	(549,220		)
Balance at End of Period
Unpaid losses and LAE, net of reinsurance recoverables	529,757			478,777			529,757			478,777
Add back reinsurance recoverables	14,561			14,754			14,561			14,754
Total unpaid losses and LAE	$	544,318		$	493,531		$	544,318		$	493,531
Unpaid losses on known claims	$	201,804		$	194,164		$	201,804		$	194,164
IBNR losses	193,959			162,809			193,959			162,809
LAE	148,556			136,557			148,556			136,557
Total unpaid losses and LAE	$	544,318		$	493,531		$	544,318		$	493,531

Increases in severities in both bodily injury coverage in California and personal injury protection coverage in Florida related to accident year 2011 was the primary sources of the $5.3 million and $7.1 million of unfavorable reserve development during the three and nine months ended September 30, 2012, respectively.

Increases in severities in both liability coverage in California as well as personal injury protection coverage in Florida relating

to accident year 2010 were the primary source of the unfavorable development during the third quarter of 2011. An increase in

severity in Florida personal injury protection coverage related to accident year 2010 was the primary source of the unfavorable

development during the nine months ended September 30, 2011.

Note 10Commitments and Contingencies

Commitments

At September 30, 2012 we held $209.9 million of restricted cash in our Consolidated Balance Sheets. We classified this cash as restricted as it was our intention to use the funds to redeem the the 5.5% Senior Notes. We fully redeemed the 5.5% Senior Notes on October 17, 2012 at a price of 106.729% of par, or $208.1 million, plus accrued interest of $1.8 million.

26

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Condensed Notes to Consolidated Financial Statements

There have been no other material changes from the commitments discussed in the Form 10-K for the year ended December 31, 2011. For a description of our previously reported commitments, refer to Note 14 Commitments and Contingencies in the Form 10-K for the year ended December 31, 2011.

Contingencies

There have been no material changes from the contingencies discussed in the Form 10-K for the year ended December 31, 2011. For a description of our previously reported contingencies, refer to Note 14 Commitments and Contingencies, in the Form 10-K for the year ended December 31, 2011.

Note 11 Subsequent Events

On October 17, 2012 we fully redeemed the $195.0 million principal outstanding of the 5.5% Senior Notes at a price of 106.729%, or $208.1 million, plus accrued interest of $1.8 million. In the fourth quarter of 2012, we will recognize a pre-tax loss on redemption as follows (in thousands):

Redemption price	$	208,122
Amortized cost at redemption	(194,878		)
Unamortized issuance costs	352
Loss on redemption of debt, pre-tax	$	13,595

27

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

ITEM 2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain “forward-looking statements” which anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. We make these statements subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements in this report not dealing with historical results or current facts are forward-looking and we base them on estimates, assumptions and projections. Statements which include the words “assumes,” “believes,” “seeks,” “expects,” “may,” “should,” “intends,” “likely,” “targets,” “plans,” “anticipates,” “estimates” or the negative version of those words and similar statements of a future or forward-looking nature identify forward-looking statements. Examples of such forward-looking statements include statements relating to expectations concerning market conditions, premium growth, earnings, investment performance, expected losses, rate changes and loss experience.

The primary events or circumstances that could cause actual results to differ materially from what we expect include determinations with respect to reserve adequacy, realized gains or losses on the investment portfolio (including other-than-temporary impairments for credit losses), rising bodily injury loss cost trends, undesired business mix or risk profile for new business, elevated unemployment rates and the proliferation of illegal immigration legislation in key Focus States. We undertake no obligation to publicly update or revise any of the forward-looking statements. For a more detailed discussion of some of the foregoing risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements see “Risk Factors” contained in Part I, Item 1A of our Annual Report on Form 10-K for the twelve months ended December 31, 2011.

OVERVIEW

In the third quarter of 2012 our gross written premium grew 19.9%. This quarter marks the twelfth consecutive quarter that we have experienced growth in written premiums. Approximately 92% of this growth came from California (15%) and Florida (77%), our two most profitable states. Premiums fell in three of the seven Focus States during the third quarter of 2012 as a result of our efforts to improve profitability through rate increases and more restrictive underwriting. See Results of Operations – Underwriting – Premium for a more detailed discussion of our gross written premium growth.

Net earnings and diluted earnings per share for the three months ended September 30, 2012 were $5.2 million and $0.43, respectively, compared to $6.7 million and $0.55, respectively, for the three months ended September 30, 2011. Net earnings and diluted earnings per share for the nine months ended September 30, 2012 were $16.4 million and $1.37, respectively, compared to $23.8 million and $1.90, respectively, for the nine months ended September 30, 2011. The decrease in diluted earnings per share for the three and nine months ended September 30, 2012 was primarily due to an increase in unfavorable development recognized in 2012 coupled with a decline in investment income.

Included in net earnings for the three months ended September 30, 2012 and 2011 were $3.5 million ($5.3 million pre-tax) and $3.1 million ($4.8 million pre-tax), respectively, of unfavorable development on prior accident year loss and LAE reserves. Included in net earnings for the nine months ended September 30, 2012 and 2011 were $4.6 million ($7.1 million pre-tax) and $3.1 million ($4.8 million pre-tax), respectively, of unfavorable development on prior accident year loss and LAE reserves. The following table displays combined ratio results by accident year developed through September 30, 2012.

28

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

	Accident Year Combined Ratio Developed Through										Prior Accident Year Favorable / (Unfavorable) Development				($ in millions) Prior Accident Year Favorable / (Unfavorable) Development
Accident Year	Sept 2011		Dec 2011		Mar 2012		Jun 2012		Sept 2012		Q3 2012		YTD 2012		Q3 2012			YTD 2012
	(as adjusted see Note 1)
Prior															$	(0.7	)	$	(1.0	)
2004	84.9	%	84.9	%	84.9	%	85.0	%	85.0	%	0.0	%	0.0	%	(0.1		)	(0.1		)
2005	87.9	%	87.8	%	87.8	%	87.8	%	87.8	%	0.0	%	0.0	%	(0.1		)	0.1
2006	90.5	%	90.4	%	90.3	%	90.3	%	90.3	%	0.0	%	0.1	%	0.2			1.4
2007	92.7	%	92.7	%	92.5	%	92.5	%	92.5	%	0.0	%	0.2	%	0.1			2.3
2008	91.7	%	91.7	%	91.6	%	91.5	%	91.5	%	0.0	%	0.2	%	0.2			2.0
2009	92.9	%	92.9	%	92.7	%	92.6	%	92.6	%	0.0	%	0.3	%	0.3			2.5
2010	99.4	%	99.4	%	99.8	%	99.6	%	99.5	%	0.1	%	(0.1	)%	0.9			(0.5		)
2011	98.4	%	97.6	%	97.9	%	98.3	%	98.9	%	(0.6	)%	(1.4	)%	(6.2		)	(13.9		)
2012 YTD					99.9	%	99.2	%	98.9	%
															$	(5.3	)	$	(7.1	)

Recent accident years are less developed than prior years and must be interpreted with caution. However, the upward trend in the 2010 through 2012 accident period combined ratios compared to prior periods reflects an increase in new business during 2010 through 2012. Our new business combined ratios typically run 20 to 30 points higher than renewal business combined ratios due to higher commission and acquisition expenses as well as typically higher loss ratios. See Results of Operations – Underwriting – Profitability for a more detailed discussion of our underwriting results.

Pre-tax net investment income for the three months ended September 30, 2012 was $9.0 million compared to $10.2 million for the three months ended September 30, 2011. Pre-tax net investment income for the nine months ended September 30, 2012 was $28.4 million compared to $31.1 million for the nine months ended September 30, 2011. The decrease in pre-tax net investment income for the three and nine months ended September 30, 2012 is a result of low and declining new market investment yields at which cash from maturing and prepaid securities was invested.

Our book value per share increased 3.0% from $56.05 at December 31, 2011 to $57.71 at September 30, 2012. This increase was primarily due to earnings, net of shareholder dividends, and the increase in unrealized gains on investments for the nine months ended September 30, 2012.

29

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

RESULTS OF OPERATIONS

Underwriting

Premium

Our insurance subsidiaries provide personal automobile insurance products with a concentration on nonstandard auto insurance. While there is no industry-recognized definition of nonstandard auto insurance, we believe that it is generally understood to mean coverage for drivers who, because of their driving record, age or vehicle type, represent higher than normal risks and pay higher rates for comparable coverage. We also write commercial vehicle insurance and insurance for classic collectible automobiles (“Classic Collector”).

We offer three primary products to individual drivers: the Low Cost product, which offers the most restrictive coverage, the Value Added product, which offers broader coverage and higher limits, and the Premier product, which we designed to offer the broadest coverage for standard and preferred risk drivers.

We are licensed to write insurance in all 50 states and the District of Columbia, but we focus our operations in targeted urban areas (“Urban Zones”) identified within selected Focus States that we believe offer the greatest opportunity for premium growth and profitability.

We classify the states in which we operate into three categories:

• “Focus States” – We have identified Urban Zones in these states, which include Arizona, California, Florida, Georgia, Nevada, Pennsylvania and Texas.

• “Maintenance States” – We are maintaining our writings in these states, which include Alabama, Colorado, Illinois, South Carolina and Tennessee. We believe each state offers us an opportunity for underwriting profit.

• “Other States” – Includes eight states where we maintain a renewal book of personal auto business.

We further classify territories within the Focus States into two categories:

• “Urban Zones” – include the following urban areas:

◦ Arizona – Phoenix and Tucson

◦ California – Bay Area, Los Angeles, Sacramento, San Diego and San Joaquin Valley

◦ Florida – Jacksonville, Miami, Orlando, Sarasota and Tampa

◦ Georgia – Atlanta

◦ Nevada – Las Vegas

◦ Pennsylvania – Allentown and Philadelphia

◦ Texas – Dallas, Fort Worth, Houston and San Antonio

• “Non-urban Zones” – include all remaining areas in the Focus States located outside of a designated Urban Zone.

We continually evaluate our market opportunities; thus, the Focus States, Urban Zones, Maintenance States and Other States may change over time as new market opportunities arise, as the allocation of resources changes or as regulatory environments change. At the beginning of 2012, we reclassified Illinois from a Focus State to a Maintenance State due to its low premium volume and underwriting profits. In the tables below, we have restated 2011 premium, policies in force and combined ratios to be consistent with the 2012 definition of Urban Zones, Focus States, Maintenance States and Other States.

30

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our net earned premium was as follows ($ in thousands):

	Three months ended September 30,
	2012			2011			Change			% Change
Net earned premium
Gross written premium
Personal Auto
Focus States
Urban Zones	$	250,863		$	215,105		$	35,758		16.6	%
Non-urban Zones	41,885			29,462			12,423			42.2	%
Total Focus States	292,748			244,567			48,181			19.7	%
Maintenance States	7,553			6,386			1,167			18.3	%
Other States	1,744			1,629			116			7.1	%
Total Personal Auto	302,045			252,581			49,464			19.6	%
Commercial Vehicle	19,471			15,538			3,933			25.3	%
Classic Collector	3,450			3,010			440			14.6	%
Other	(1		)	0			(1		)	0.0	%
Total gross written premium	324,966			271,129			53,836			19.9	%
Ceded reinsurance	(1,994		)	(1,575		)	(419		)	26.6	%
Net written premium	322,972			269,554			53,418			19.8	%
Change in unearned premium	(21,509		)	(14,417		)	(7,092		)	49.2	%
Net earned premium	$	301,463		$	255,138		$	46,326		18.2	%
	Nine months ended September 30,
	2012			2011			Change			% Change
Net earned premium
Gross written premium
Personal Auto
Focus States
Urban Zones	$	747,495		$	641,627		$	105,869		16.5	%
Non-urban Zones	117,985			88,099			29,886			33.9	%
Total Focus States	865,480			729,725			135,755			18.6	%
Maintenance States	22,904			22,031			874			4.0	%
Other States	5,389			5,534			(145		)	(2.6	)%
Total Personal Auto	893,774			757,290			136,483			18.0	%
Commercial Vehicle	57,736			47,878			9,857			20.6	%
Classic Collector	9,735			8,456			1,280			15.1	%
Other	(1		)	0			(1		)	0.0	%
Total gross written premium	961,244			813,625			147,619			18.1	%
Ceded reinsurance	(5,733		)	(4,810		)	(924		)	19.2	%
Net written premium	955,511			808,815			146,696			18.1	%
Change in unearned premium	(82,781		)	(63,112		)	(19,669		)	31.2	%
Net earned premium	$	872,730		$	745,703		$	127,027		17.0	%

31

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following table summarizes our policies in force:

	At September 30,
	2012	2011	Change		% Change
Policies in Force
Personal Auto
Focus States
Urban Zones	756,141	695,036	61,105		8.8	%
Non-urban Zones	109,936	85,657	24,279		28.3	%
Total Focus States	866,077	780,693	85,384		10.9	%
Maintenance States	26,853	26,513	340		1.3	%
Other States	3,761	4,123	(362	)	(8.8	)%
Total Personal Auto	896,691	811,329	85,362		10.5	%
Commercial Vehicle	38,868	35,042	3,826		10.9	%
Classic Collector	37,815	35,167	2,648		7.5	%
Total policies in force	973,374	881,538	91,836		10.4	%

Gross written premium grew 19.9% and 18.1% during the third quarter and first nine months of 2012, respectively, compared with the same periods of 2011. During the first nine months of 2012, Infinity implemented rate revisions in various states with an overall rate increase of 5.6%. Excluding the effect of rate changes in California, our largest state, the overall rate increase was 8.3%. Policies in force at September 30, 2012 increased 10.4% compared with the same period in 2011. Gross written premium grew more than policies in force due to a shift in overall business mix toward policies offering broader coverage and higher average premium as well as growth in Florida business, which has a higher average premium per policy than our other states.

During the third quarter and first nine months of 2012, personal auto insurance gross written premium in our Focus States grew 19.7% and 18.6%, respectively, when compared with the same periods of 2011. The increase in gross written premium in both periods is primarily due to growth in California and Florida.

• California gross written premium grew 5.7% and 7.9%, respectively, during the third quarter and first nine months of 2012. Rate actions taken by competitors and a shift in business mix to policies offering broader coverage and higher average premium have stimulated premium growth in the state.

• Florida gross written premium grew 85.4% and 76.1%, respectively, during the third quarter and first nine months of 2012. This growth is primarily a result of an increase in new business application count, higher business retention, an increase in average premium from rate increases, and competitor rate increases.

Declines of 14.2% and 13.0% in Texas, respectively, during the third quarter and first nine months of 2012 partially offset the growth in California and Florida. The decline in Texas gross written premium is primarily due to actions taken, such as rate increases and the elimination of annual policies, to improve profitability in the state.

Gross written premium in the Maintenance States grew 18.3% and 4.0%, respectively, during the third quarter and first nine months of 2012 primarily due to growth in Alabama premium as a result of increased marketing efforts in the state. This growth was partially offset by a decline in Illinois premium.

Our Commercial Vehicle gross written premium grew 25.3% and 20.6%, respectively, during the third quarter and first nine months of 2012. This growth is primarily due to higher average premium and better retention for this product.

Gross written premium in our Classic Collector product grew 14.6% and 15.1%, respectively, during the third quarter and first nine months of 2012. This growth is primarily due to growth in Florida and Texas resulting from an increase in the number of agencies actively producing business for this product.

32

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Profitability

A key operating performance measure of insurance companies is underwriting profitability, as opposed to overall profitability or net earnings. We measure underwriting profitability by the combined ratio. When the combined ratio is under 100%, we consider underwriting results profitable; when the ratio is over 100%, we consider underwriting results unprofitable. The combined ratio does not reflect investment income, other income, interest expense, corporate general and administrative expenses, other expenses or federal income taxes.

While we report financial results in accordance with GAAP for shareholder and other users’ purposes, we report it on a statutory basis for insurance regulatory purposes. We evaluate underwriting profitability based on a combined ratio calculated using statutory accounting principles. The statutory combined ratio represents the sum of the following ratios: (i) losses and LAE incurred as a percentage of net earned premium and (ii) underwriting expenses incurred, net of fees, as a percentage of net written premium. Certain expenses are treated differently under statutory and GAAP accounting principles. Under GAAP, commissions, premium taxes and other variable costs incurred in connection with writing new and renewal business are capitalized as deferred policy acquisition costs and amortized on a pro rata basis over the period in which the related premium is earned; on a statutory basis these items are expensed as incurred. Additionally, bad debt charge-offs on agent balances and premium receivables are included only in the GAAP combined ratios.

33

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following table presents the statutory and GAAP combined ratios:

	Three months ended September 30,
	2012						2011						% Point Change
	Loss & LAE Ratio		Underwriting Ratio		Combined Ratio		Loss & LAE Ratio		Underwriting Ratio		Combined Ratio		Loss & LAE Ratio		Underwriting Ratio		Combined Ratio
Personal Auto:
Focus States:
Urban Zones	79.5	%	17.8	%	97.3	%	76.7	%	19.9	%	96.6	%	2.7	%	(2.0	)%	0.7	%
Non-urban Zones	77.1	%	18.6	%	95.7	%	80.6	%	20.1	%	100.7	%	(3.5	)%	(1.5	)%	(5.0	)%
Total Focus States	79.1	%	17.9	%	97.1	%	77.2	%	19.9	%	97.1	%	1.9	%	(2.0	)%	0.0	%
Maintenance States	84.5	%	21.6	%	106.1	%	87.7	%	26.9	%	114.6	%	(3.2	)%	(5.4	)%	(8.5	)%
Other States	NM		NM		NM		NM		NM		NM		NM		NM		NM
Subtotal	79.4	%	18.0	%	97.4	%	77.5	%	20.0	%	97.6	%	1.9	%	(2.1	)%	(0.2	)%
Commercial Vehicle	76.4	%	17.8	%	94.1	%	62.8	%	17.8	%	80.6	%	13.6	%	0.0	%	13.6	%
Classic Collector	60.2	%	40.7	%	101.0	%	64.5	%	36.1	%	100.6	%	(4.2	)%	4.6	%	0.4	%
Total statutory ratios	79.1	%	18.3	%	97.4	%	76.6	%	19.9	%	96.5	%	2.5	%	(1.6	)%	0.9	%
Total statutory ratios excluding development	76.4	%	18.3	%	94.7	%	76.1	%	19.9	%	96.0	%	0.3	%	(1.6	)%	(1.3	)%
GAAP ratios	79.0	%	21.0	%	100.0	%	76.5	%	22.4	%	99.0	%	2.5	%	(1.4	)%	1.1	%
GAAP ratios excluding development	76.3	%	21.0	%	97.3	%	76.0	%	22.4	%	98.4	%	0.3	%	(1.4	)%	(1.1	)%
	Nine months ended September 30,
	2012						2011						% Point Change
	Loss & LAE Ratio		Underwriting Ratio		Combined Ratio		Loss & LAE Ratio		Underwriting Ratio		Combined Ratio		Loss & LAE Ratio		Underwriting Ratio		Combined Ratio
Personal Auto:
Focus States:
Urban Zones	78.9	%	18.5	%	97.4	%	75.9	%	20.9	%	96.8	%	3.0	%	(2.4	)%	0.5	%
Non-urban Zones	78.4	%	18.6	%	97.0	%	78.9	%	20.1	%	99.0	%	(0.5	)%	(1.5	)%	(2.0	)%
Total Focus States	78.9	%	18.5	%	97.3	%	76.3	%	20.8	%	97.1	%	2.5	%	(2.3	)%	0.2	%
Maintenance States	77.9	%	22.6	%	100.5	%	87.0	%	27.3	%	114.3	%	(9.1	)%	(4.7	)%	(13.9	)%
Other States	NM		NM		NM		NM		NM		NM		NM		NM		NM
Subtotal	79.0	%	18.6	%	97.5	%	76.7	%	21.0	%	97.6	%	2.3	%	(2.4	)%	(0.1	)%
Commercial Vehicle	70.0	%	18.0	%	88.0	%	68.6	%	18.1	%	86.7	%	1.4	%	(0.1	)%	1.3	%
Classic Collector	66.5	%	38.4	%	105.0	%	65.6	%	38.6	%	104.2	%	0.9	%	(0.2	)%	0.8	%
Total statutory ratios	78.5	%	18.8	%	97.3	%	76.1	%	20.8	%	96.8	%	2.4	%	(1.9	)%	0.5	%
Total statutory ratios excluding development	77.7	%	18.8	%	96.5	%	75.4	%	20.8	%	96.2	%	2.3	%	(1.9	)%	0.4	%
GAAP ratios	78.4	%	21.4	%	99.7	%	76.0	%	23.1	%	99.1	%	2.4	%	(1.7	)%	0.6	%
GAAP ratios excluding development	77.6	%	21.4	%	98.9	%	75.3	%	23.1	%	98.4	%	2.2	%	(1.7	)%	0.5	%

NM: not meaningful due to the low premium.

In evaluating the profit performance of our business, we review underwriting profitability using statutory combined ratios. Accordingly, the discussion of underwriting results that follows will focus on these ratios and the components thereof, unless otherwise indicated.

34

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The statutory combined ratio for the three months ended September 30, 2012increased by 0.9% points from the same period of 2011. The statutory combined ratio for the nine months ended September 30, 2012increased by 0.5% points from the same period of 2011. The third quarter of 2012 included $5.3 million of unfavorable development on prior year loss and LAE reserves and $2.9 million in unfavorable development on loss and LAE reserves from the first six months of 2012. The first nine months of 2012 included $7.1 million of unfavorable development on prior year loss and LAE reserves. The third quarter of 2011 included $4.8 million of unfavorable development on prior year loss and LAE reserves and $3.5 million in favorable development on loss and LAE reserves from the first six months of 2011. The first nine months of 2011 included $4.8 million of unfavorable development on prior year loss and LAE reserves.

Excluding the effect of development from all periods, the statutory combined ratio decreased by 1.3 points for the three months ended September 30, 2012 and increased by 0.4 points for the nine months ended September 30, 2012 compared to the same periods of 2011. In both periods, an increase in the loss and LAE ratio was offset by a decline in the underwriting ratio.

The increase in the loss and LAE ratio is primarily attributable to an increase in new business in states such as Florida. The underwriting ratio has declined primarily as a result of spreading fixed underwriting costs over a larger written premium base as well as a decline in advertising spending.

The GAAP combined ratio for the three months ended September 30, 2012increased by 1.1 points from the same period of 2011. The GAAP combined ratio for the nine months ended September 30, 2012increased by 0.6 points from the same period of 2011. Excluding the effect of development from all periods, the GAAP combined ratio decreased by 1.1 points for the three months ended September 30, 2012 and increased by 0.5 points for the nine months ended September 30, 2012 compared to the same periods of 2011. We expect the GAAP combined ratio, excluding reserve development, to be between 98.0% and 99.0% for the full year 2012.

Losses from catastrophes were $0.8 million and $2.9 million for the three and nine months ended September 30, 2012, respectively, compared to $1.6 million and $3.8 million for the same periods of 2011. Losses from catastrophes during 2012 were primarily due to hail storms in Texas during the second quarter.

The combined ratio in the Focus States remained flat for the three months ended September 30, 2012 and increased by 0.2 points for the nine months ended September 30, 2012 In both periods, increases in the loss and LAE ratio were offset by declines in the underwriting ratio. The increase in the loss and LAE ratio in both the third quarter and first nine months of 2012 is primarily due to unfavorable development in California. The increase in the loss and LAE ratio in the Focus States was partially offset by a decline in the underwriting ratio of 2.0 points and 2.3 points for the three and nine months ended September 30, 2012, respectively. As we experience premium growth in these states, the ratio of fixed underwriting costs to premium has declined.

The combined ratio in the Maintenance States decreased by 8.5 and 13.9 points during the three and nine months ended September 30, 2012, respectively, when compared to the same periods of 2011, primarily due to a decline in the loss and LAE ratio in Illinois. We reclassified Illinois from a Focus State to a Maintenance State in 2012 and slowed new business production which drove the decline in the loss and LAE ratio.

The combined ratio for the Commercial Vehicle product increased by 13.6 points and 1.3 points, respectively, during the three and nine months ended September 30, 2012, due to an increase in the loss and LAE ratio in both periods. The increase is due to several large losses incurred during the third quarter of 2012.

35

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Net Investment Income

Net investment income is comprised of gross investment income and investment management fees and expenses, as shown in the following table (in thousands):

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Investment income:
Interest income on fixed maturities, cash and cash equivalents	$	9,351		$	10,514		$	29,294		$	32,162
Dividends on equity securities	209			165			587			484
Gross investment income	$	9,560		$	10,679		$	29,881		$	32,646
Investment expenses	(542		)	(513		)	(1,517		)	(1,529		)
Net investment income	$	9,018		$	10,166		$	28,364		$	31,117
Average investment balance, at cost	$	1,251,317		$	1,198,458		$	1,241,846		$	1,224,973
Annualized returns excluding realized gains and losses	2.9		%	3.4		%	3.0		%	3.4		%

Changes in investment income reflect fluctuations in market rates and changes in average invested assets. Net investment income for the three and nine months ended September 30, 2012declined compared to the same periods of 2011 primarily due to a decline in book yields because of a general decline in market interest rates for high quality bonds.

In the current low interest rate environment, we expect that investment returns will continue to decline as proceeds from maturing or prepaid investments are expected to be reinvested at yields lower than the average book yield for the total portfolio.

We recorded impairments for unrealized losses deemed other-than-temporary and realized gains and losses on sales and disposals, as follows (before tax, in thousands):

	Three months ended September 30, 2012							Three months ended September 30, 2011
	Impairments Recognized in Earnings			Realized Gains  (Losses) on Sales		Total Realized Gains (Losses)		Impairments Recognized in Earnings			Realized Gains  (Losses) on Sales		Total Realized Gains (Losses)
Fixed maturities	$	(211	)	$	479	$	268	$	(424	)	$	1,146	$	722
Equities	0			0		0		0			0		0
Total	$	(211	)	$	479	$	268	$	(424	)	$	1,146	$	722
	Nine months ended September 30, 2012							Nine months ended September 30, 2011
	Impairments Recognized in Earnings			Realized Gains  (Losses) on Sales		Total Realized Gains (Losses)		Impairments Recognized in Earnings			Realized Gains  (Losses) on Sales		Total Realized Gains (Losses)
Fixed maturities	$	(1,277	)	$	3,949	$	2,673	$	(1,270	)	$	4,126	$	2,856
Equities	0			0		0		0			2,748		2,748
Total	$	(1,277	)	$	3,949	$	2,673	$	(1,270	)	$	6,873	$	5,604

For our securities held with unrealized losses, we believe, based on our analysis, that (i) we will recover our cost basis in these securities and (ii) we do not intend to sell the securities nor is it more likely than not that there will be a requirement to sell the securities before they recover in value. Should either of these beliefs change with regard to a particular security, a charge for impairment would likely be required. While it is not possible to predict accurately if or when a specific security will become impaired, charges for other-than-temporary impairments could be material to results of operations in a future period.

Gain on Sale of Subsidiary

On September 30, 2012, we completed the sale of an inactive, shell subsidiary company to an unaffiliated third party. The total gain recorded on a GAAP basis was $2.9 million. In the future we intend to sell or dissolve other inactive shell companies. The

36

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

primary reason for the sale of the companies is to reduce the administrative costs associated with maintaining licenses that are no longer needed to support our insurance operations.

Interest Expense

At September 30, 2012 we had outstanding $195.0 million of senior notes that accrue interest at an effective yield of 5.55% and $275.0 million of senior notes that accrue interest at 5.0%. Interest expense recognized was as follows (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
5.5% Senior Notes	$	2,703	$	2,702	$	8,108	$	8,105
5.0% Senior Notes	497		0		497		0
Total	$	3,199	$	2,702	$	8,604	$	8,105

Refer to Note 6 to the Consolidated Financial Statements for additional information on the Senior Notes.

Income Taxes

Our GAAP effective tax rate for the three and nine months ended September 30, 2012 was 21.7% and 23.5%, respectively, compared to 17.8% and 16.9% for the same periods of 2011. See Note 7 to the Consolidated Financial Statements for additional information on income taxes.

37

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

LIQUIDITY AND CAPITAL RESOURCES

Sources of Funds

We are a holding company and our insurance subsidiaries conduct our operations. Accordingly, we will have continuing cash needs for administrative expenses, the payment of interest on borrowings, shareholder dividends, share repurchases and taxes.

Funds to meet expenditures at the holding company level come primarily from dividends and tax payments from the insurance subsidiaries as well as cash and investments held by the holding company. As of September 30, 2012, the holding company had $198.6 million of unrestricted cash and investments. In 2012, our insurance subsidiaries may pay us up to $53.1 million in ordinary dividends without prior regulatory approval.

Our insurance subsidiaries generate liquidity to satisfy their obligations primarily by collecting and investing premium in advance of paying claims and generating investment income on their $1.2 billion investment portfolio. Our insurance subsidiaries generated positive cash flows from operations of $21.5 million and $76.6 million, respectively, for the three and nine months ended September 30, 2012 compared to positive operating cash flows of $18.0 million during the third quarter of 2011 and positive operating cash flows of $36.7 million for the nine months ended September 30, 2011.

At September 30, 2012, we had outstanding $195.0 million principal of senior notes (the "5.5% Senior Notes") due 2014, bearing a fixed 5.5% interest rate. The 5.5% Senior Notes were fully redeemed on October 17, 2012 at a price of 106.729%, or $208.1 million plus accrued interest of $1.8 million.

In September 2012, we issued $275 million principal of senior notes due September 2022 (the “5.0% Senior Notes”). The 5.0% Senior Notes accrue interest at 5.0%, payable semiannually each March and September. The majority of the proceeds from this issuance were used to redeem the 5.5% Senior Notes, as mentioned above. Refer to Note 6 to the Consolidated Financial Statements for more information on our long-term debt.

In August 2011, we renewed our agreement for a $50 million three-year revolving credit facility (the “Credit Agreement”) that requires us to meet certain financial and other covenants. At September 30, 2012 we were in technical violation of one of these covenants due to the issuance of the 5.0% Senior Notes. The 5.5% Senior Notes required 30 days' notice for redemption, therefore, at September 30, 2012 both bond issuances were outstanding causing our leverage ratio to exceed the maximum ratio set forth in the covenants. We were granted a temporary waiver and the 5.5% Senior Notes were redeemed on October 17, 2012. Upon redemption of the 5.5% Senior Notes, the covenant violation was cured. At September 30, 2012 there were no borrowings outstanding under the credit agreement.

Uses of Funds

In February 2012, we increased our quarterly dividend to $0.225 per share from $0.180 per share. At this current amount, our 2012 annualized dividend payments would be approximately $10.6 million.

On August 3, 2010 our Board of Directors adopted a share and debt repurchase program set to expire on December 31, 2011. On August 2, 2011, our Board of Directors increased the authority under this program by $50.0 million and extended the date to execute the program to December 31, 2012. During the first quarter of 2012, we repurchased 22,800 shares at an average cost, excluding commissions, of $55.97. During the second quarter of 2012, we repurchased 114,507 shares at an average cost, excluding commissions, of $54.40. During the third quarter of 2012, we repurchased 47,044 shares at an average cost, excluding commissions, of $57.08. As of September 30, 2012, we had $36.8 million of authority remaining under this program. On November 6, 2012, our Board of Directors again increased the authority under our current share and debt repurchase plan by $25.0 million and extended the date to execute the program to December 31, 2014.

We believe that cash balances, cash flows generated from operations or borrowings, and maturities and sales of investments are adequate to meet our future liquidity needs and those of our insurance subsidiaries.

Reinsurance

We use excess of loss, catastrophe and extra-contractual loss reinsurance to mitigate the financial impact of large or

catastrophic losses. During 2012, our catastrophe reinsurance protection covers 100% of $25 million in excess of $5 million. Our excess of loss reinsurance provides protection for commercial auto losses up to $700,000 for claims in excess of $300,000 per occurrence. Our extra-contractual loss reinsurance provides protection for losses up to $10 million in excess of $5 million for any single extra-contractual loss. We also use reinsurance to mitigate losses on our Classic Collector business.

38

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Premium ceded under all reinsurance agreements for the three and nine months ended September 30, 2012 was $2.0 million and $5.7 million, respectively, compared to $1.6 million and $4.8 million, respectively, for the same periods of 2011.

Investments

Our consolidated investment portfolio at September 30, 2012 contained approximately $1.3 billion in fixed maturity securities and $42.4 million in equity securities, all carried at fair value with unrealized gains and losses reported in accumulated other comprehensive income, a separate component of shareholders’ equity, on an after-tax basis. At September 30, 2012, we had pre-tax net unrealized gains of $56.1 million on fixed maturities and pre-tax net unrealized gains of $15.8 million on equity securities. Combined, the pre-tax net unrealized gain increased by $18.1 million for the nine months ended September 30, 2012.

Approximately 93.8% of our fixed maturity investments at September 30, 2012 were rated “investment grade,” and as of the same date, the average credit rating of our fixed maturity portfolio was AA-. Investment grade securities generally bear lower yields and have lower degrees of risk than those that are unrated or non-investment grade. We believe that a high quality investment portfolio is more likely to generate a stable and predictable investment return.

Since we carry all of these securities at fair value in our balance sheet, there is virtually no effect on liquidity or financial condition upon the sale and ultimate realization of unrealized gains and losses. The average option adjusted duration of our fixed maturity portfolio is 3.0 years at September 30, 2012.

Fair values of instruments are based on (i) quoted prices in active markets for identical assets (Level 1), (ii) quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs are observable in active markets (Level 2) or (iii) valuations derived from valuation techniques in which one or more significant inputs are unobservable in the marketplace (Level 3).

Level 1 securities are U.S. Treasury securities, an exchange-traded fund and equity securities held in a rabbi trust. Level 2 securities are comprised of securities whose fair value was determined using observable market inputs. Level 3 securities are comprised of (i) securities for which there is no active or inactive market for similar instruments, (ii) securities whose fair value is determined based on unobservable inputs and (iii) securities that nationally recognized statistical rating organizations do not rate.

39

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Summarized information for our investment portfolio at September 30, 2012 was as follows (in thousands):

	Amortized Cost		Fair Value		% of Total Fair Value
U.S. government and agencies:
U.S. government	$	107,935	$	110,722	8.6	%
Government-sponsored enterprises	69,021		70,678		5.5	%
Total U.S. government and agencies	176,955		181,401		14.0	%
State and municipal	414,600		436,147		33.7	%
Mortgage-backed, CMOs and asset-backed:
Residential mortgage-backed securities	224,736		238,149		18.4	%
Commercial mortgage-backed securities	12,670		13,487		1.0	%
Collateralized mortgage obligations:
PAC	12,120		12,417		1.0	%
Sequentials	8,034		8,210		0.6	%
Whole loan	1,241		1,293		0.1	%
Total CMO	21,395		21,920		1.7	%
Asset-backed securities:
Auto loans	50,513		50,962		3.9	%
Equipment leases	6,884		6,904		0.5	%
Home equity	505		528		0.0	%
Credit card receivables	25,607		25,425		2.0	%
Miscellaneous	110		121		0.0	%
Total ABS	83,620		83,940		6.5	%
Total mortgage-backed, CMOs and asset-backed	342,421		357,496		27.6	%
Corporates
Investment grade	189,628		199,293		15.4	%
Non-investment grade	72,232		77,593		6.0	%
Total corporates	261,860		276,886		21.4	%
Total fixed maturities	1,195,837		1,251,930		96.7	%
Equity securities	26,569		42,400		3.3	%
Total investments	$	1,222,405	$	1,294,330	100.0	%

40

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following table presents the credit rating and fair value (in thousands) of our fixed maturity portfolio by major security type at September 30, 2012:

	Rating
	AAA			AA			A			BBB			Non- investment Grade			Total Fair Value			% of Total Exposure
U.S. government and agencies	$	0		$	181,401		$	0		$	0		$	0		$	181,401		14.5	%
State and municipal	28,794			257,299			141,998			8,056			0			436,147			34.8	%
Mortgage-backed, asset-backed and CMO	92,945			264,551			0			0			0			357,496			28.6	%
Corporates	0			14,820			110,033			74,441			77,593			276,886			22.1	%
Total fair value	$	121,739		$	718,071		$	252,031		$	82,497		$	77,593		$	1,251,930		100.0	%
% of total fair value	9.7		%	57.4		%	20.1		%	6.6		%	6.2		%	100.0		%

Other than securities backed by the U.S. government or issued by its agencies, our fixed income portfolio contains no securities issued by any single issuer that exceed 1% of the fair value of the fixed income portfolio.

Since 2007, the mortgage industry has experienced a rise in mortgage delinquencies and foreclosures, particularly among lower quality exposures (“sub-prime” and “Alt-A”). As a result, many securities with underlying sub-prime and Alt-A mortgages as collateral experienced significant drops in market value. We have only modest exposure to these types of investments. At September 30, 2012, our fixed maturity portfolio included two securities having a fair value of $0.5 million with exposure to sub-prime and Alt-A mortgages. Although these securities have sub-prime mortgages as underlying collateral, all are rated AA or better.

The following table presents the credit rating and fair value of our residential mortgage-backed securities at September 30, 2012 by deal origination year (in thousands):

	Rating
Deal Origination Year	AAA			AA			A			BBB			Non- investment Grade			Total Fair Value			% of Total Exposure
2006	$	0		$	916		$	0		$	0		$	0		$	916		0.4	%
2007	0			5,080			0			0			0			5,080			2.1	%
2008	0			23,164			0			0			0			23,164			9.7	%
2009	0			32,994			0			0			0			32,994			13.9	%
2010	0			67,574			0			0			0			67,574			28.4	%
2011	0			42,604			0			0			0			42,604			17.9	%
2012	0			65,817			0			0			0			65,817			27.6	%
Total fair value	$	0		$	238,149		$	0		$	0		$	0		$	238,149		100.0	%
% of total fair value	0.0		%	100.0		%	0.0		%	0.0		%	0.0		%	100.0		%

All of the $238.1 million of residential mortgage-backed securities were issued by government-sponsored enterprises (“GSE”).

41

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following table presents the credit rating and fair value of our commercial mortgage-backed securities at September 30, 2012 by deal origination year (in thousands):

	Rating
Deal Origination Year	AAA			AA			A			BBB			Non- investment Grade			Total Fair Value			% of Total Exposure
2003	$	44		$	0		$	0		$	0		$	0		$	44		0.3	%
2004	3,762			0			0			0			0			3,762			27.9	%
2005	3,333			0			0			0			0			3,333			24.7	%
2006	6,298			0			0			0			0			6,298			46.7	%
2007	50			0			0			0			0			50			0.4	%
Total fair value	$	13,487		$	0		$	0		$	0		$	0		$	13,487		100.0	%
% of total fair value	100.0		%	0.0		%	0.0		%	0.0		%	0.0		%	100.0		%

None of the $13.5 million of commercial mortgage-backed securities were issued by GSEs.

The following table presents the credit rating and fair value of our collateralized mortgage obligation portfolio at September 30, 2012 by deal origination year (in thousands):

	Rating
Deal Origination Year	AAA			AA			A			BBB			Non- investment Grade			Total Fair Value			% of Total Exposure
2002	$	1,293		$	985		$	0		$	0		$	0		$	2,279		10.4	%
2003	906			1,898			0			0			0			2,804			12.8	%
2004	1			1,745			0			0			0			1,746			8.0	%
2009	0			5,942			0			0			0			5,942			27.1	%
2010	0			4,301			0			0			0			4,301			19.6	%
2011	0			1,759			0			0			0			1,759			8.0	%
2012	0			3,090			0			0			0			3,090			14.1	%
Total fair value	$	2,200		$	19,720		$	0		$	0		$	0		$	21,920		100.0	%
% of total fair value	10.0		%	90.0		%	0.0		%	0.0		%	0.0		%	100.0		%

Of the $21.9 million of collateralized mortgage obligations, $19.7 million were issued by GSEs.

42

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following table presents the credit rating and fair value of our ABS portfolio at September 30, 2012 by deal origination year (in thousands):

	Rating
Deal Origination Year	AAA			AA			A			BBB			Non- investment Grade			Total Fair Value			% of Total Exposure
2001	$	0		$	75		$	0		$	0		$	0		$	75		0.1	%
2003	5,263			453			0			0			0			5,716			6.8	%
2004	5,010			0			0			0			0			5,010			6.0	%
2007	2,806			0			0			0			0			2,806			3.3	%
2008	5,129			0			0			0			0			5,129			6.1	%
2009	8,198			84			0			0			0			8,282			9.9	%
2010	2,579			2,103			0			0			0			4,683			5.6	%
2011	16,503			0			0			0			0			16,503			19.7	%
2012	31,769			3,967			0			0			0			35,736			42.6	%
Total fair value	$	77,257		$	6,683		$	0		$	0		$	0		$	83,940		100.0	%
% of total fair value	92.0		%	8.0		%	0.0		%	0.0		%	0.0		%	100.0		%

Our investment portfolio consists of $436.1 million of state and municipal bonds, of which $164.9 million are insured. Of the insured bonds, 46.7% are insured with MBIA, 28.7% with Assured Guaranty, 22.9% with AMBAC, 0.8% with Berkshire Hathaway and 1.0% are insured with XL Group. The following table presents the underlying ratings, represented by the lower of Standard and Poor’s, Moody’s or Fitch’s ratings, of the state and municipal bond portfolio (in thousands) at September 30, 2012:

	Insured				Uninsured				Total
Rating	Fair Value		% of Fair Value		Fair Value		% of Fair Value		Fair Value		% of Fair Value
AAA	$	3,481	2.1	%	$	25,313	9.3	%	$	28,794	6.6	%
AA+, AA, AA-	88,941		53.9	%	168,358		62.1	%	$	257,299	59.0	%
A+, A, A-	64,410		39.1	%	77,588		28.6	%	$	141,998	32.6	%
BBB+, BBB, BBB-	8,056		4.9	%	0		0.0	%	$	8,056	1.8	%
Total	$	164,889	100.0	%	$	271,259	100.0	%	$	436,147	100.0	%

43

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following table presents the credit rating and fair value of our state and municipal bond portfolio, by state, at September 30, 2012 (in thousands):

	Rating
State	AAA			AA			A			BBB			Non- investment Grade			Total Fair Value			% of Total Exposure
TX	$	15,286		$	15,871		$	8,589		$	0		$	0		$	39,746		9.1	%
NY	0			36,056			1,225			0			0			$	37,280		8.5	%
FL	0			16,503			15,077			0			0			$	31,581		7.2	%
GA	2,842			4,337			10,722			4,806			0			$	22,707		5.2	%
WA	1,389			17,297			3,121			0			0			$	21,807		5.0	%
VA	0			18,021			0			0			0			$	18,021		4.1	%
IL	0			4,947			12,830			0			0			$	17,777		4.1	%
IN	418			13,184			3,943			0			0			$	17,545		4.0	%
PA	0			5,708			10,603			0			0			$	16,311		3.7	%
CA	0			3,574			12,292			377			0			$	16,244		3.7	%
All other states	8,859			121,801			63,598			2,873			0			$	197,130		45.2	%
Total fair value	$	28,794		$	257,299		$	141,998		$	8,056		$	0		$	436,147		100.0	%
% of total fair value	6.6		%	59.0		%	32.6		%	1.8		%	0.0		%	100.0		%

The following table presents the fair value of our state and municipal bond portfolio, by state and type of bond, at September 30, 2012 (in thousands):

	Type
	General Obligation
State	State			Local			Revenue			Other			Total Fair Value			% of Total Exposure
TX	$	0		$	12,993		$	26,753		$	0		$	39,746		9.1	%
NY	0			6,444			30,836			0			$	37,280		8.5	%
FL	3,742			0			18,454			9,384			$	31,581		7.2	%
GA	3,380			2,401			16,925			0			$	22,707		5.2	%
WA	4,203			3,794			13,809			0			$	21,807		5.0	%
VA	0			3,614			14,407			0			$	18,021		4.1	%
IL	1,993			960			14,823			0			$	17,777		4.1	%
IN	0			0			17,545			0			$	17,545		4.0	%
PA	0			2,748			13,562			0			$	16,311		3.7	%
CA	6,324			0			9,919			0			$	16,244		3.7	%
All other states	21,600			33,693			139,753			2,084			$	197,130		45.2	%
Total fair value	$	41,244		$	66,647		$	316,788		$	11,468		$	436,147		100.0	%
% of total fair value	9.5		%	15.3		%	72.6		%	2.6		%	100.0		%

44

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following table presents the fair value of the revenue category of our state and municipal bond portfolio, by state and further classification, at September 30, 2012 (in thousands):

	Revenue Bonds
State	Transportation			Utilities			Education			Other			Total Fair Value			% of Total Exposure
NY	$	9,255		$	0		$	7,941		$	13,640		$	30,836		9.7	%
TX	15,854			6,452			3,025			1,422			$	26,753		8.4	%
FL	11,848			0			0			6,607			$	18,454		5.8	%
IN	3,252			1,245			9,106			3,943			$	17,545		5.5	%
GA	8,679			4,806			1,397			2,043			$	16,925		5.3	%
IL	8,164			0			2,269			4,391			$	14,823		4.7	%
VA	773			0			5,353			8,280			$	14,407		4.5	%
WA	1,324			9,300			0			3,185			$	13,809		4.4	%
PA	7,299			0			2,960			3,304			$	13,562		4.3	%
CO	5,927			0			7,476			0			$	13,403		4.2	%
All other states	31,820			30,835			20,069			53,545			$	136,270		43.0	%
Total fair value	$	104,194		$	52,638		$	59,596		$	100,360		$	316,788		100.0	%
% of total fair value	32.9		%	16.6		%	18.8		%	31.7		%	100.0		%

The following table presents the fair value of our corporate bond portfolio, by industry sector and rating of bond, at September 30, 2012 (in thousands):

	Rating
Industry Sector	AAA			AA			A			BBB			Non- investment Grade			Total Fair Value			% of Total Exposure
Basic Materials	$	0		$	0		$	0		$	2,660		$	2,753		$	5,414		2.0	%
Communications	0			0			0			12,969			12,245			$	25,213		9.1	%
Consumer, Cyclical	0			4,285			0			3,354			11,992			$	19,631		7.1	%
Consumer, Non-cyclical	0			0			26,252			10,094			6,997			$	43,344		15.7	%
Energy	0			1,069			21,630			6,660			11,740			$	41,098		14.8	%
Financial	0			9,467			50,672			28,170			13,277			$	101,585		36.7	%
Industrial	0			0			6,895			0			11,767			$	18,662		6.7	%
Technology	0			0			0			2,385			3,288			$	5,673		2.0	%
Utilities	0			0			4,585			8,148			3,534			$	16,266		5.9	%
Total fair value	$	0		$	14,820		$	110,033		$	74,441		$	77,593		$	276,886		100.0	%
% of total fair value	0.0		%	5.4		%	39.7		%	26.9		%	28.0		%	100.0		%

Included in our investments in corporate fixed income securities at September 30, 2012 are $42.6 million of dollar-denominated investments with issues or guarantors in foreign countries, as follows (in thousands):

45

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations

	Rating
Issuer or Guarantor	AAA			AA			A			BBB			Non- investment Grade			Total Fair Value			% of Total Exposure
Aruba	$	0		$	0		$	785		$	0		$	0		$	785		1.8	%
Australia	0			0			3,732			0			0			$	3,732		8.8	%
Britain	0			4,774			7,564			0			0			$	12,339		28.9	%
Canada	0			0			8,619			1,125			2,336			$	12,081		28.3	%
Cayman Islands	0			0			0			0			1,204			$	1,204		2.8	%
France	0			1,069			2,117			0			0			$	3,185		7.5	%
Germany	0			0			4,091			0			0			$	4,091		9.6	%
South Korea	0			0			2,049			0			0			$	2,049		4.8	%
Switzerland	0			0			3,171			0			0			$	3,171		7.4	%
Total fair value	$	0		$	5,843		$	32,128		$	1,125		$	3,540		$	42,637		100.0	%
% of total fair value	0.0		%	13.7		%	75.4		%	2.6		%	8.3		%	100.0		%

We own no investments that are denominated in a currency other than the U.S. dollar.

46

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

ITEM 3

Quantitative and Qualitative Disclosures about Market Risk

As of September 30, 2012, there were no material changes to the information provided in our Form 10-K for the year ended December 31, 2011 under the caption “Exposure to Market Risk” in Management’s Discussion and Analysis of Financial Condition and Results of Operations. Refer to Item 2 Management’s Discussion and Analysis under the caption “Investments” for updates to disclosures made under the sub caption “Credit Risk” in our Form 10-K for the year ended December 31, 2011.

ITEM 4

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of Infinity’s disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2012. Based on that evaluation, we concluded that the controls and procedures are effective in providing reasonable assurance that material information required to be disclosed in our reports filed with or submitted to the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate.

Changes in Internal Control over Financial Reporting

During the fiscal quarter ended September 30, 2012, there have been no changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

47

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

PART II

OTHER INFORMATION

ITEM 1

Legal Proceedings

We have not become a party to any material legal proceedings nor have there been any material developments in our legal proceedings disclosed in our Form 10-K for the year ended December 31, 2011. For a description of our previously reported legal proceedings, refer to Part I, Item 3, Legal Proceedings, in the Form 10-K for the year ended December 31, 2011.

ITEM 1A

Risk Factors

There have been no material changes in our risk factors as disclosed in our Form 10-K for the year ended December 31, 2011. For a description of our previously reported risk factors, refer to Part I, Item 1A, Risk Factors, in the Form 10-K for the year ended December 31, 2011.

ITEM 2

Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased	Average Price Paid per Share (a)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b)	Maximum Number (or Approximate Dollar Value) that May Yet Be Purchased Under the Plans or Programs
July 1, 2012 - July 31, 2012	11,880	$	57.48	11,880	$	38,839,776
August 1, 2012 - August 31, 2012	26,858	$	56.37	26,858	37,324,892
September 1, 2012 - September 30, 2012	8,306	$	58.81	8,306	36,836,200
Total	47,044	$	57.08	47,044	$	36,836,200

(a) Average price paid per share excludes commissions.

(b) On November 6, 2012, our Board of Directors increased the authority under our current share and debt repurchase plan by $25.0 million and extended the date to execute the program to December 31, 2014 from December 31, 2012.

48

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

ITEM 6

Exhibits

Exhibit 31.1 -     Certification of the Chief Executive Officer under Exchange Act Rule 13a-14(a).

Exhibit 31.2 -     Certification of the Chief Financial Officer under Exchange Act Rule 13a-14(a).

Exhibit 32 -    Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

Exhibit 101.INS - XBRL Instance Document

Exhibit 101.SCH - XBRL Taxonomy Extension Schema Document (1)

Exhibit 101.CAL - XBRL Taxonomy Extension Calculation Linkbase Document (1)

Exhibit 101.DEF - XBRL Taxonomy Extension Definition Linkbase Document (1)

Exhibit 101.LAB - XBRL Taxonomy Extension Label Linkbase Document (1)

Exhibit 101.PRE - XBRL Taxonomy Extension Presentation Linkbase Document (1)

(1) Furnished with this report, in accordance with Rule 4-6T of Regulation S-T, the information in these exhibits shall not be deemed to be "filed" for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

49

INFINITY PROPERTY AND CASUALTY CORPORATION 10-Q

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, Infinity Property and Casualty Corporation has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Infinity Property and Casualty Corporation
	BY:	/s/ ROGER SMITH
November 8, 2012		Roger Smith
		Executive Vice President, Chief Financial Officer and Treasurer (principal financial and accounting officer)

50

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, James R. Gober, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Infinity Property and Casualty Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 8, 2012	BY:	/s/ JAMES R. GOBER
		James R. Gober
		Chief Executive Officer
		(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Roger Smith, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Infinity Property and Casualty Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 8, 2012	BY:	/s/ ROGER SMITH
		Roger Smith
		Chief Financial Officer
		(principal financial officer)

EX-32.1

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the filing with the Securities and Exchange Commission of the Quarterly Report of Infinity Property and Casualty Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2012 (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, that to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of The Company.

November 8, 2012	BY:	/s/ JAMES R. GOBER
		James R. Gober President and Chief Executive Officer
November 8, 2012	BY:	/s/ ROGER SMITH
		Roger Smith Executive Vice President, Chief Financial Officer and Treasurer

A signed original of this written statement will be retained by the Registrant and

furnished to the Securities and Exchange Commission or its staff upon request.

XML

Investments - Investments by major category (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012		Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost, Fixed maturities	$ 1,195,837		$ 1,144,687
Amortized Cost or Cost, Equity securities	26,569		26,413
Amortized Cost or Cost, Total	1,222,405		1,171,100
Gross Unrealized Gains	72,292		55,408
Gross Unrealized Losses	(367)		(1,590)
Fair Value, Fixed maturities	1,251,930		1,187,987
Fair Value	42,400		36,930
Total investments	1,294,330		1,224,917
OTTI Recognized in Accumulated OCI, Fixed maturities	(2,194)	[1]	(3,711)	[1]
OTTI Recognized in Accumulated OCI, Equity securities	0	[1]	0	[1]
OTTI Recognized in Accumulated OCI	(2,194)	[1]	(3,711)	[1]
Fixed maturities
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Gains	56,461		44,853
Gross Unrealized Losses	(367)		(1,553)
U.S. government
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost, Fixed maturities	107,935		124,378
Gross Unrealized Gains	2,791		3,428
Gross Unrealized Losses	(3)		(8)
Fair Value, Fixed maturities	110,722		127,798
OTTI Recognized in Accumulated OCI, Fixed maturities	0	[1]	0	[1]
Government-sponsored enterprises
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost, Fixed maturities	69,021		55,220
Gross Unrealized Gains	1,658		958
Gross Unrealized Losses	0		(9)
Fair Value, Fixed maturities	70,678		56,170
OTTI Recognized in Accumulated OCI, Fixed maturities	0	[1]	0	[1]
State and municipal
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost, Fixed maturities	414,600		391,436
Gross Unrealized Gains	21,592		18,016
Gross Unrealized Losses	(45)		(63)
Fair Value, Fixed maturities	436,147		409,388
OTTI Recognized in Accumulated OCI, Fixed maturities	(53)	[1]	(70)	[1]
Mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost, Fixed maturities	237,406		245,257
Gross Unrealized Gains	14,236		11,638
Gross Unrealized Losses	(7)		(156)
Fair Value, Fixed maturities	251,636		256,739
OTTI Recognized in Accumulated OCI, Fixed maturities	(738)	[1]	(1,168)	[1]
Residential
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost, Fixed maturities	224,736		225,506
Gross Unrealized Gains	13,412		10,878
Gross Unrealized Losses	0		(14)
Fair Value, Fixed maturities	238,149		236,370
OTTI Recognized in Accumulated OCI, Fixed maturities	(738)	[1]	(1,157)	[1]
Commercial
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost, Fixed maturities	12,670		19,751
Gross Unrealized Gains	824		760
Gross Unrealized Losses	(7)		(142)
Fair Value, Fixed maturities	13,487		20,369
OTTI Recognized in Accumulated OCI, Fixed maturities	0	[1]	(11)	[1]
Collateralized mortgage obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost, Fixed maturities	21,395		27,447
Gross Unrealized Gains	533		757
Gross Unrealized Losses	(8)		(102)
Fair Value, Fixed maturities	21,920		28,103
OTTI Recognized in Accumulated OCI, Fixed maturities	(263)	[1]	(515)	[1]
Asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost, Fixed maturities	83,620		48,403
Gross Unrealized Gains	542		368
Gross Unrealized Losses	(222)		(143)
Fair Value, Fixed maturities	83,940		48,628
OTTI Recognized in Accumulated OCI, Fixed maturities	(8)	[1]	(8)	[1]
Corporates
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost, Fixed maturities	261,860		252,546
Gross Unrealized Gains	15,108		9,688
Gross Unrealized Losses	(81)		(1,072)
Fair Value, Fixed maturities	276,886		261,162
OTTI Recognized in Accumulated OCI, Fixed maturities	(1,131)	[1]	(1,949)	[1]
Equity securities
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Gains	15,831		10,554
Gross Unrealized Losses	$ 0		$ (38)

[1] The total non-credit portion of OTTI recognized in Accumulated OCI reflecting the original non-credit loss at the time the credit impairment was determined.

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Additional Information (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Supplemental Cash Flow Elements [Abstract]
Income tax payments	$ 4,000,000	$ 0	$ 9,000,000	$ 9,203,000
Interest payments on debt	5,363,000	5,363,000	10,725,000	10,725,000
Negative cash book balances					$ 5,900,000

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Long-Term Debt (Details) (USD $)					12 Months Ended					1 Months Ended		0 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Aug. 31, 2011	Aug. 31, 2011 Revolving Credit Facility	Dec. 31, 2004 Senior Notes Due 2014 Senior Notes	Sep. 30, 2012 Senior Notes Due 2014 Senior Notes	Dec. 31, 2011 Senior Notes Due 2014 Senior Notes	Dec. 31, 2009 Senior Notes Due 2014 Senior Notes	Feb. 29, 2004 Senior Notes Due 2014 Senior Notes	Sep. 30, 2012 Senior Notes Due 2022 Senior Notes	Dec. 31, 2011 Senior Notes Due 2022 Senior Notes	Oct. 17, 2012 Repayment of Debt Subsequent Event Senior Notes Due 2014 Senior Notes
Debt Instrument [Line Items]
Principal amount									$ 200,000,000	$ 275,000,000
Effective yield									5.55%
Coupon rate									5.50%	5.00%		5.50%
Capitalized debt issuance costs					2,100,000					2,200,000
Amount of repurchased debt								5,000,000				195,000,000
Outstanding principal								195,000,000				194,878,000
Long-term debt, fair value	491,400,000	207,200,000				205,300,000				286,100,000	0
Fair Value, Debt Instrument, Valuation Basis, US Treasury Note Rate, Term of Note Used						2 years				10 years
Long-term debt	469,875,000	194,810,000				194,900,000	194,800,000			275,000,000	0
Fair value spread to U.S. Treasury Note rate						1.39%				2.86%
Two-year U.S. Treasury Note rate used for debt fair value calculation						0.232%				1.634%
Credit facility capacity				50,000,000
Term of revolving credit facility			3 years
Make whole price of redeemed debt												106.729%
Debt Instrument, Repurchase Amount												208,122,000
Interest Payable												$ 1,800,000

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Share-Based Compensation - Additional Disclosures (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cash received from option exercises			$ 500,000	$ 900,000
Actual tax benefit realized from options exercised			200,000	500,000
Total intrinsic value of options exercised			1,200,000	1,800,000
Expense recognized in income	684,000	978,000	2,856,000	2,414,000
Tax benefit	235,000	338,000	986,000	834,000
Restricted Stock Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expense recognized in income	298,000	265,000	893,000	662,000
Tax benefit	104,000	93,000	312,000	232,000
Directors Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expense recognized in income	0	0	300,000	350,000
Tax benefit	0	0	105,000	123,000
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expense recognized in income	13,000	11,000	40,000	30,000
Tax benefit	0	0	0	0
PSP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expense recognized in income	373,000	702,000	1,624,000	1,371,000
Tax benefit	$ 131,000	$ 246,000	$ 568,000	$ 480,000

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Abstract]

Reconciliation of provision for income taxes

The following table reconciles our income taxes at statutory rates to our effective provision for income taxes (in thousands):

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Earnings before income taxes	$	6,586		$	8,196		$	21,431		$	28,628
Income taxes at statutory rates	$	2,305		$	2,868		$	7,501		$	10,020
Effect of:
Dividends-received deduction	(44		)	(35		)	(123		)	(101		)
Tax-exempt interest	(824		)	(887		)	(2,468		)	(2,647		)
Adjustment to valuation allowance	36			(510		)	117			(2,454		)
Other	(42		)	25			3			21
Provision for income taxes	$	1,432		$	1,462		$	5,029		$	4,839
GAAP effective tax rate	21.7		%	17.8		%	23.5		%	16.9		%

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Commitments And Contingencies Details (Details) (USD $)				0 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Feb. 29, 2004 Senior Notes Senior Notes Due 2014	Oct. 17, 2012 Senior Notes Repayment of Debt Senior Notes Due 2014 Subsequent Event
Debt Instrument [Line Items]
Restricted cash	$ 209,879,000	$ 0
Coupon rate			5.50%	5.50%
Make whole price of redeemed debt				106.729%
Debt Instrument, Repurchase Amount				208,122,000
Interest Payable				$ 1,800,000

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Investments - Unrealized losses by age and severity (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012		Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Fair Value of Securities with Unrealized Losses, 0-12 Months	$ 34,619		$ 86,899
Fair Value of Securities with Unrealized Losses, Greater Than 12 Months	5,185		9,053
Fair Value of Securities with Unrealized Losses	39,804
Total Gross Unrealized Losses, 0-12 Months	(206)		(1,282)
Total Gross Unrealized Losses, Greater Than 12 Months	(162)		(271)
Total Gross Unrealized Losses	(367)
0-3 months
Schedule of Available-for-sale Securities [Line Items]
Fair Value of Securities with Unrealized Losses, 0-12 Months	21,709
Total Gross Unrealized Losses, 0-12 Months	(45)
3-6 months
Schedule of Available-for-sale Securities [Line Items]
Fair Value of Securities with Unrealized Losses, 0-12 Months	6,213
Total Gross Unrealized Losses, 0-12 Months	(38)
6-9 months
Schedule of Available-for-sale Securities [Line Items]
Fair Value of Securities with Unrealized Losses, 0-12 Months	1,568
Total Gross Unrealized Losses, 0-12 Months	(19)
9-12 months
Schedule of Available-for-sale Securities [Line Items]
Fair Value of Securities with Unrealized Losses, 0-12 Months	5,129
Total Gross Unrealized Losses, 0-12 Months	(104)
Greater than twelve months
Schedule of Available-for-sale Securities [Line Items]
Fair Value of Securities with Unrealized Losses, Greater Than 12 Months	5,185
Total Gross Unrealized Losses, Greater Than 12 Months	(162)
Less Than 5% as a Percentage of Amortized Cost or Cost
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses	(333)	[1]
Less Than 5% as a Percentage of Amortized Cost or Cost | 0-3 months
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses, 0-12 Months	(45)	[1]
Less Than 5% as a Percentage of Amortized Cost or Cost | 3-6 months
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses, 0-12 Months	(38)	[1]
Less Than 5% as a Percentage of Amortized Cost or Cost | 6-9 months
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses, 0-12 Months	(19)	[1]
Less Than 5% as a Percentage of Amortized Cost or Cost | 9-12 months
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses, 0-12 Months	(104)	[1]
Less Than 5% as a Percentage of Amortized Cost or Cost | Greater than twelve months
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses, Greater Than 12 Months	(128)	[1]
5% - 10% as a Percentage of Amortized Cost or Cost
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses	0	[1]
5% - 10% as a Percentage of Amortized Cost or Cost | 0-3 months
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses, 0-12 Months	0	[1]
5% - 10% as a Percentage of Amortized Cost or Cost | 3-6 months
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses, 0-12 Months	0	[1]
5% - 10% as a Percentage of Amortized Cost or Cost | 6-9 months
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses, 0-12 Months	0	[1]
5% - 10% as a Percentage of Amortized Cost or Cost | 9-12 months
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses, 0-12 Months	0	[1]
5% - 10% as a Percentage of Amortized Cost or Cost | Greater than twelve months
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses, Greater Than 12 Months	0	[1]
Greater Than 10% as a Percentage of Amortized Cost or Cost
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses	(34)	[1]
Greater Than 10% as a Percentage of Amortized Cost or Cost | 0-3 months
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses, 0-12 Months	0	[1]
Greater Than 10% as a Percentage of Amortized Cost or Cost | 3-6 months
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses, 0-12 Months	0	[1]
Greater Than 10% as a Percentage of Amortized Cost or Cost | 6-9 months
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses, 0-12 Months	0	[1]
Greater Than 10% as a Percentage of Amortized Cost or Cost | 9-12 months
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses, 0-12 Months	0	[1]
Greater Than 10% as a Percentage of Amortized Cost or Cost | Greater than twelve months
Schedule of Available-for-sale Securities [Line Items]
Total Gross Unrealized Losses, Greater Than 12 Months	$ (34)	[1]

[1] As a percentage of amortized cost or cost.

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Fair Value - Fair Value of Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 126,574	$ 83,767
Available-for-sale securities	1,420,904	1,308,684
Long-term debt	469,875	194,810
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	126,574	83,767
Available-for-sale securities	1,420,904	1,308,684
Long-term debt		207,246
Fixed maturities | Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available-for-sale securities	1,251,930	1,187,987
Fixed maturities | Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available-for-sale securities	1,251,930	1,187,987
Equity securities | Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available-for-sale securities	42,400	36,930
Equity securities | Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available-for-sale securities	$ 42,400	$ 36,930

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Income Taxes (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income tax reconciliation
Earnings before income taxes	$ 6,586,000	$ 8,196,000	$ 21,431,000	$ 28,628,000
Income taxes at statutory rates	2,305,000	2,868,000	7,501,000	10,020,000
Dividends-received deduction	(44,000)	(35,000)	(123,000)	(101,000)
Tax-exempt interest	(824,000)	(887,000)	(2,468,000)	(2,647,000)
Adjustment to valuation allowance	36,000	(510,000)	117,000	(2,454,000)
Other	(42,000)	25,000	3,000	21,000
Provision for income taxes	1,432,000	1,462,000	5,029,000	4,839,000
GAAP effective tax rate	21.70%	17.80%	23.50%	16.90%
Valuation allowance
Decrease in tax valuation allowance			$ 2,500,000

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Share-Based Compensation

9 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

Restricted Stock Plan

We established the Restricted Stock Plan in 2002 and amended it on July 31, 2007. There are 500,000 shares of our common stock reserved for issuance under the Restricted Stock Plan, of which we have issued 278,843 shares as of September 30, 2012. We expense the fair value of shares issued under the Restricted Stock Plan over the vesting periods of the awards based on the market value of our stock on the date of grant.

On July 31, 2007, our Compensation Committee (“Committee”) approved the grant of 72,234 shares of restricted stock to certain officers under the Restricted Stock Plan. These shares of restricted stock vested in full on July 31, 2011. On August 2, 2011, the Committee approved the grant of an additional 72,234 shares of restricted stock to certain officers under the Restricted Stock Plan. These shares will vest in full on August 2, 2014. During the vesting period, the shares of restricted stock will not have voting rights and will accrue dividends, which we will not pay until the shares have vested. We treat the restricted shares as issued and outstanding for calculation of diluted earnings per share only. Until fully vested, we will not consider the shares issued and outstanding for purposes of the basic earnings per share calculation.

Non-employee Directors’ Stock Ownership Plan

In May 2005, our shareholders approved the Non-employee Directors’ Stock Ownership Plan (“Directors’ Plan”). The purpose of the Directors’ Plan is to include our common stock as part of the compensation provided to our non-employee directors and to provide for stock ownership requirements for our non-employee directors. There are 200,000 shares of our common stock reserved for issuance under the Directors’ Plan, of which we have issued 49,461 shares as of September 30, 2012. Under the terms of the Directors’ Plan, we grant shares on or about June 1 of each year and we restrict these shares from sale or transfer by any recipient for six months from the date of grant. In June 2011, we issued 6,657 shares of our common stock, valued pursuant to the Directors’ Plan at $350,000, to our non-employee directors. In June 2012, we issued 5,502 shares of our common stock, valued pursuant to the Directors’ Plan at $300,000, to our non-employee directors. We treat participants’ shares as issued and outstanding for basic and diluted earnings per share calculations.

Employee Stock Purchase Plan

We established our Employee Stock Purchase Plan (“ESPP”) in 2004 and amended and restated it on August 3, 2010. Under the ESPP, all eligible full-time employees may purchase shares of our common stock at a 15% discount to the current market price. Employees may allocate up to 25% of their base salary with a maximum annual participation amount of $25,000. If a participant sells any shares purchased under the ESPP within one year, we preclude that employee from participating in the ESPP for one year from the date of sale. The source of shares issued to participants is treasury shares or authorized but previously unissued shares. The maximum number of shares that we may issue under the ESPP may not exceed 1,000,000, of which we have issued 52,244 as of September 30, 2012. Our ESPP is qualified under Section 423 of the Internal Revenue Code of 1986, as amended. We treat participants’ shares as issued and outstanding for basic and diluted earnings per share calculations.

Performance Share Plan

Our shareholders approved the Performance Share Plan (“PSP”) on May 20, 2008 and an amended and restated PSP on May 26, 2010. The purpose of the PSP is to align further the interest of management with our long-term shareholders by including performance-based compensation, payable in shares of common stock, as a component of an executive’s annual compensation. The Committee administers the PSP and will (i) establish the performance goals, which may include but are not limited to, combined ratio, premium growth, growth within certain specific geographic areas and earnings per share or return on equity over the course of the upcoming three year period, (ii) determine the PSP participants, (iii) set the performance share units to be awarded to such participants, and (iv) set the rate at which performance share units will convert to shares of common stock based upon attainment of the performance goals. The number of shares of common stock that we may issue under the PSP is limited to 500,000 shares. In April 2012 and 2011, we issued 49,098 and 32,957 shares, respectively, under the PSP.

Stock Option Plan

We amended our Stock Option Plan (“SOP”) to prohibit any future grant of stock options from the plan after May 20, 2008. We amended the plan again on August 2, 2011. We have granted no options since 2004. We generally granted options with an exercise price equal to the closing price of our stock at the date of grant and these options have a 10-year contractual life. All of the options under the SOP have fully vested. Subject to specific limitations contained in the SOP, our Board of Directors has the ability to amend, suspend or terminate the plan at any time without shareholder approval. The SOP will continue in effect until the exercise or expiration of all options granted under the SOP.

As permitted by the Stock Compensation topic of the FASB Accounting Standards Codification, we used the modified Black-Scholes model with the assumptions noted below to estimate the value of employee stock options on the date of grant. Expected volatilities are based on historical volatilities of our stock. We selected the expected option life to be 7.5 years, which represents the midpoint between the last vesting date and the end of the contractual term. The risk-free interest rate for periods within the contractual life of the options is based on the yield on 10-year Treasury notes in effect at the time of grant. The dividend yield was based on expected dividends at the time of grant.

We estimated the weighted-average grant date fair values of options granted during 2004 and 2003 using the modified Black-Scholes valuation model and the following weighted-average assumptions:

	2004 Grants				2003 Grants
Weighted-average grant date fair value	$	13.87			$	5.97
Dividend yield	0.7		%		1.4		%
Expected volatility	33.0		%		33.0		%
Risk-free interest rate	4.3		%		4.0		%
Expected life	7.5			years	7.5			years
Weighted-average grant exercise price	$	33.56			$	16.11
Outstanding at September 30, 2012	78,300				83,599

The following table describes activity for our Stock Option Plan:

	Number of Options		Weighted-Average Exercise Price		Weighted- Average Remaining Term (in years)	Aggregate Intrinsic Value (a) (in millions)
Outstanding at December 31, 2011	192,455		$	23.40
Granted	0		0
Exercised	(30,556	)	$	16.77
Forfeited	0		0
Outstanding at September 30, 2012	161,899		$	24.65	0.87	$	5.8
Vested at September 30, 2012	161,899		$	24.65	0.87	$	5.8
Exercisable at September 30, 2012	161,899		$	24.65	0.87	$	5.8

(a) We calculated the intrinsic value for the stock options based on the difference between the exercise price of the underlying awards and our closing stock price as of the reporting date.

Cash received from options exercised for the nine months ended September 30, 2012 and 2011 was approximately $0.5 million and $0.9 million, respectively. The actual tax benefit realized for the tax deductions from options exercised totaled $0.2 million and $0.5 million for the nine months ended September 30, 2012 and September 30, 2011, respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2012 and 2011 was approximately $1.2 million and $1.8 million, respectively.

We have a policy of issuing new stock for the exercise of stock options.

The amount of total compensation cost, by plan, for share-based compensation arrangements was as follows (in thousands):

	Three months ended September 30,								Nine months ended September 30,
	2012				2011				2012				2011
	Expense Recognized in Income		Tax Benefit		Expense Recognized in Income		Tax Benefit		Expense Recognized in Income		Tax Benefit		Expense Recognized in Income		Tax Benefit
Restricted Stock Plan	$	298	$	104	$	265	$	93	$	893	$	312	$	662	$	232
Directors’ Plan	0		0		0		0		300		105		350		123
ESPP	13		0		11		0		40		0		30		0
PSP	373		131		702		246		1,624		568		1,371		480
Total	$	684	$	235	$	978	$	338	$	2,856	$	986	$	2,414	$	834

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Investments - Change in unrealized gains and losses (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012		Sep. 30, 2011
Schedule of Available-for-sale Securities [Line Items]
Unrealized holding gains (losses) on securities arising during the period, pre-tax	$ 10,662	$ 2,723	$ 20,780		$ 16,483
Unrealized holding gains (losses) on securities arising during the period, tax effects			(7,273)		(5,769)
Unrealized holding gains (losses) on securities arising during period, net of tax			13,507		10,714
Realized (gains) losses on securities sold, pre-tax	479	1,146	3,949		6,873
Realized (gains) losses on securities sold, tax effects			1,382		2,406
Realized (gains) losses on securities sold, net of tax			(2,567)		(4,468)
Impairment loss recognized in earnings, pre-tax	211	424	1,277		1,270
Impairment loss recognized in earnings, tax effects			(447)	[1]	(444)	[1]
Impairment loss recognized in earnings			830	[1]	825	[1]
Unrealized gains (losses) on investments, net	10,394	2,001	18,107		10,879
Change in unrealized gains (losses) on marketable securities, net, tax effects			6,338		3,808
Change in unrealized gains (losses) on marketable securities, net, net of tax			11,770		7,072
Fixed maturities
Schedule of Available-for-sale Securities [Line Items]
Unrealized holding gains (losses) on securities arising during the period, pre-tax			15,466		19,943
Realized (gains) losses on securities sold, pre-tax			(3,949)		(4,126)
Impairment loss recognized in earnings, pre-tax			1,277	[1]	1,270	[1]
Unrealized gains (losses) on investments, net			12,793		17,087
Equity securities
Schedule of Available-for-sale Securities [Line Items]
Unrealized holding gains (losses) on securities arising during the period, pre-tax			5,314		(3,460)
Realized (gains) losses on securities sold, pre-tax			0		(2,748)
Impairment loss recognized in earnings, pre-tax			0	[1]	0	[1]
Unrealized gains (losses) on investments, net			$ 5,314		$ (6,207)

[1] Tax excludes valuation reserveThe total non-credit portion of OTTI recognized in Accumulated OCI reflecting the original non-credit loss at the time the credit impairment was determined.

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Reporting And Accounting Policies - Adoption of New Accounting Pronouncement (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2010
Effect of new accounting pronouncement
Cumulative effect of change in accounting principle						$ (6,157)
Deferred policy acquisition costs	92,493		80,071	92,493
Current and deferred income taxes	8,811		10,728	8,811
Total assets	2,342,192		1,930,371	2,342,192
Shareholders' equity	674,584	644,233	661,789	674,584	644,233	661,184
Commissions and other underwriting expenses	63,353	57,199		186,356	172,128
Provision for income taxes	1,432	1,462		5,029	4,839
Net earnings	5,154	6,733	18,044	16,402	23,789
Net earnings per common share:
Basic	$ 0.44	$ 0.56		$ 1.40	$ 1.95
Diluted	$ 0.43	$ 0.55		$ 1.37	$ 1.90
Retained Earnings
Effect of new accounting pronouncement
Cumulative effect of change in accounting principle						(6,157)
Shareholders' equity	660,896	636,505	652,423	660,896	636,505	625,492
Net earnings			18,044	16,402	23,789
Scenario, Previously Reported [Member]
Effect of new accounting pronouncement
Deferred policy acquisition costs			89,900
Current and deferred income taxes			7,300
Total assets			1,936,800
Shareholders' equity			668,200
Commissions and other underwriting expenses		58,100			170,700
Provision for income taxes		1,100			5,300
Net earnings		6,100			24,700
Net earnings per common share:
Basic		$ 0.51			$ 2.02
Diluted		$ 0.50			$ 1.97
Restatement Adjustment [Member]
Effect of new accounting pronouncement
Deferred policy acquisition costs			(9,800)
Current and deferred income taxes			3,400
Total assets			(6,400)
Shareholders' equity			(6,400)
Commissions and other underwriting expenses		(900)			1,400
Provision for income taxes		300			(500)
Net earnings		$ 600			$ (900)
Net earnings per common share:
Basic		$ 0.05			$ (0.07)
Diluted		$ 0.05			$ (0.07)

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Reporting And Accounting Policies (Details)	Sep. 30, 2012 states
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of states licensed to write insurance	50

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Investments - Credit losses rollforward (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Credit losses on fixed maturity securities
Beginning balance	$ 1,728	$ 1,828
Additions for previously impaired securities	0	37
Additions for newly impaired securities	9	694
Reductions for securities sold and paid down	(362)	(519)
Reductions for securities that no longer have a non-credit component	(735)	0
Ending balance	$ 640	$ 2,040

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Share-Based Compensation - Plans (Details) (USD $)	9 Months Ended	1 Months Ended			9 Months Ended		0 Months Ended		1 Months Ended	9 Months Ended
	Sep. 30, 2012 ESPP	Apr. 30, 2012 Performance Shares	Apr. 30, 2011 Performance Shares	Sep. 30, 2012 Performance Shares	Sep. 30, 2012 Stock Options	Sep. 30, 2012 Restricted Stock Plan Restricted Stock	Aug. 02, 2011 Restricted Stock Plan Restricted Stock Officer	Jul. 31, 2007 Restricted Stock Plan Restricted Stock Officer	Jun. 30, 2011 Directors Plan Restricted Stock	Sep. 30, 2012 Directors Plan Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for issuance	1,000,000			500,000		500,000				200,000
Awards issued to date	52,244					278,843				49,461
Awards granted		49,098	32,957				72,234	72,234	6,657	5,502
Share restriction period, from date of grant										6 months
Fair value granted									$ 350,000	$ 300,000
ESPP discount to current market price	15.00%
Maximum percentage of employee base salary	25.00%
Maximum annual purchase amount per employee	$ 25,000
Selling period after purchase to preclude participation in employee stock purchase plan	1 year
Period of preclusion from employee stock purchase plan	1 year
Contractual life of award					10 years
Expected option life					7 years 6 months
Treasury note life on which risk free interest rate is based					10 years

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Share-Based Compensation - Fair Value Assumptions (Details) (USD $)			9 Months Ended	12 Months Ended		12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Stock Options	Dec. 31, 2004 2004 Grants Stock Options	Sep. 30, 2012 2004 Grants Stock Options	Dec. 31, 2003 2003 Grants Stock Options	Sep. 30, 2012 2003 Grants Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average grant date fair value				$ 13.87		$ 5.97
Dividend yield				0.70%		1.40%
Expected volatility				33.00%		33.00%
Risk-free interest rate				4.30%		4.00%
Expected life			7 years 6 months	7 years 6 months		7 years 6 months
Weighted-average grant exercise price				$ 33.56		$ 16.11
Outstanding	161,899	192,455			78,300		83,599

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Reporting And Accounting Policies

9 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Reporting And Accounting Policies

Reporting and Accounting Policies

Nature of Operations

We are a holding company that, through subsidiaries, provides personal automobile insurance with a concentration on nonstandard auto insurance. Although licensed to write insurance in all 50 states and the District of Columbia, we focus on select states that we believe offer the greatest opportunity for premium growth and profitability.

Basis of Consolidation and Reporting

The accompanying consolidated financial statements are unaudited and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2011. This Quarterly Report on Form 10-Q, including the Condensed Notes to Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations, focuses on our financial performance since the beginning of the year.

These financial statements reflect certain adjustments necessary for a fair presentation of our results of operations and financial position. Such adjustments consist of normal, recurring accruals recorded to match expenses with their related revenue streams and the elimination of all significant inter-company transactions and balances.

We have evaluated events that occurred after September 30, 2012 for recognition or disclosure in our financial statements and the notes to the financial statements.

Schedules may not foot due to rounding.

Estimates

We based certain accounts and balances within these financial statements upon our estimates and assumptions. The amount of reserves for claims not yet paid, for example, is an item that we can only record by estimation. Unrealized capital gains and losses on investments are subject to market fluctuations, and we use judgment in the determination of whether unrealized losses on certain securities are temporary or other-than-temporary. Should actual results differ significantly from these estimates, the effect on our results of operations could be material. The results of operations for the periods presented may not be indicative of our results for the entire year.

Recently Adopted Accounting Standards

Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts

In October 2010, the Financial Accounting Standards Board ("FASB") issued an accounting standards update intended to reduce diversity in practice for the accounting of deferred policy acquisition costs. The guidance modifies the definition of acquisition costs to require that costs be directly related to the successful acquisition of a new or renewal insurance contract to be deferred. We adopted this standard as of January 1, 2012. Pursuant to the guidance, we elected to adopt this standard on a retrospective basis and recognized an adjustment to beginning retained earnings for the earliest period shown in the Consolidated Statements of Changes in Shareholders' Equity of $6.2 million, net of taxes.

The following table illustrates the effect of adopting this standard on the Consolidated Balance Sheets (in millions):

	December 31, 2011
	As Reported		As Adjusted		Difference
Deferred policy acquisition costs	$	89.9	$	80.1	$	(9.8	)
Current and deferred income taxes	7.3		10.7		3.4
Total assets	1,936.8		1,930.4		(6.4		)
Shareholders' equity	668.2		661.8		(6.4		)

The following table illustrates the effect of adopting this standard on the Consolidated Statements of Earnings (in millions, except per share amounts):

	Three months ended September 30,							Nine months ended September 30,
	2011							2011
	As Reported		As Adjusted		Difference			As Reported		As Adjusted		Difference
Commissions and other underwriting expenses	$	58.1	$	57.2	$	(0.9	)	$	170.7	$	172.1	$	1.4
Provision for income taxes	1.1		1.5		0.3			5.3		4.8		(0.5		)
Net earnings	6.1		6.7		0.6			24.7		23.8		(0.9		)
Net earnings per common share:
Basic	$	0.51	$	0.56	$	0.05		$	2.02	$	1.95	$	(0.07	)
Diluted	0.50		0.55		0.05			1.97		1.90		(0.07		)

We also adjusted the Consolidated Statements of Cash Flows for these changes for the three and nine months ended September 30, 2011.

Presentation of Comprehensive Income

In June and December 2011, the FASB issued guidance amending the presentation of comprehensive income and its components. We adopted this standard as of January 1, 2012. Under the new guidance, a reporting entity has the option to present comprehensive income in a single continuous statement or in two separate but consecutive statements, as we elected. The impact of adoption was not material to our results of operations or financial position.

Amendments to Fair Value Measurement and Disclosure Requirements

In May 2011, the FASB issued guidance that clarifies the application of existing fair value measurement and disclosure requirements and amends certain fair value measurement principles, requirements and disclosures. We adopted this standard as of January 1, 2012. The impact of adoption was not material to our results of operations or financial position. Additional disclosures required by this standard are located in Note 4 to the Consolidated Financial Statements.

Intangibles – Goodwill and Other

In September 2011, the FASB issued guidance providing the option to first assess qualitative factors, such as macroeconomic conditions and industry and market considerations, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment indicates impairment, an entity must perform the two-step goodwill impairment test. If an entity does not elect the option to perform the qualitative assessment, the guidance requiring the two-step goodwill impairment test is unchanged. We adopted this standard as of January 1, 2012. The impact of adoption had no impact on our results of operations or financial position.

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Share-Based Compensation - Stock Option Activity (Details) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Stock option activity
Outstanding	192,455
Granted	0
Exercised	(30,556)
Forfeited	0
Outstanding	161,899
Outstanding, weighted-average remaining term	10 months 13 days
Outstanding, aggregate intrinsic value	$ 5.8	[1]
Vested	161,899
Vested, weighted-average remaining term	10 months 13 days
Vested, aggregate intrinsic value	5.8	[1]
Exercisable	161,899
Exercisable, weighted-average remaining term	10 months 13 days
Exercisable, aggregate intrinsic value	$ 5.8	[1]
Stock option activity, weighted-average exercise price
Outstanding, weighted-average exercise price	$ 23.40
Granted, weighted-average exercise price	$ 0.00
Exercised, weighted-average exercise price	$ 16.77
Forfeited, weighted-average exercise price	$ 0.00
Outstanding, weighted-average exercise price	$ 24.65
Vested, weighted-average exercise price	$ 24.65
Exercisable, weighted-average exercise price	$ 24.65

[1] We calculated the intrinsic value for the stock options based on the difference between the exercise price of the underlying awards and our closing stock price as of the reporting date.

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Investments - Continuous loss position investments (Details) (USD $)																																																																					9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Fixed maturities	Dec. 31, 2011 Fixed maturities	Sep. 30, 2012 U.S. government	Dec. 31, 2011 U.S. government	Dec. 31, 2011 Government-sponsored enterprises	Sep. 30, 2012 State and municipal	Dec. 31, 2011 State and municipal	Sep. 30, 2012 Mortgage-backed securities	Dec. 31, 2011 Mortgage-backed securities	Dec. 31, 2011 Residential	Sep. 30, 2012 Commercial	Dec. 31, 2011 Commercial	Sep. 30, 2012 Collateralized mortgage obligations	Dec. 31, 2011 Collateralized mortgage obligations	Sep. 30, 2012 Asset-backed securities	Dec. 31, 2011 Asset-backed securities	Sep. 30, 2012 Corporates	Dec. 31, 2011 Corporates	Sep. 30, 2012 Equity securities	Dec. 31, 2011 Equity securities	Sep. 30, 2012 Less than 12 Months	Dec. 31, 2011 Less than 12 Months	Sep. 30, 2012 Less than 12 Months Fixed maturities	Dec. 31, 2011 Less than 12 Months Fixed maturities	Sep. 30, 2012 Less than 12 Months U.S. government	Dec. 31, 2011 Less than 12 Months U.S. government	Dec. 31, 2011 Less than 12 Months Government-sponsored enterprises	Sep. 30, 2012 Less than 12 Months State and municipal	Dec. 31, 2011 Less than 12 Months State and municipal	Sep. 30, 2012 Less than 12 Months Mortgage-backed securities	Dec. 31, 2011 Less than 12 Months Mortgage-backed securities	Dec. 31, 2011 Less than 12 Months Residential	Sep. 30, 2012 Less than 12 Months Commercial	Dec. 31, 2011 Less than 12 Months Commercial	Sep. 30, 2012 Less than 12 Months Collateralized mortgage obligations	Dec. 31, 2011 Less than 12 Months Collateralized mortgage obligations	Sep. 30, 2012 Less than 12 Months Asset-backed securities	Dec. 31, 2011 Less than 12 Months Asset-backed securities	Sep. 30, 2012 Less than 12 Months Corporates	Dec. 31, 2011 Less than 12 Months Corporates	Sep. 30, 2012 Less than 12 Months Equity securities	Dec. 31, 2011 Less than 12 Months Equity securities	Sep. 30, 2012 12 Months or More	Dec. 31, 2011 12 Months or More	Sep. 30, 2012 12 Months or More Fixed maturities	Dec. 31, 2011 12 Months or More Fixed maturities	Sep. 30, 2012 12 Months or More U.S. government	Dec. 31, 2011 12 Months or More U.S. government	Dec. 31, 2011 12 Months or More Government-sponsored enterprises	Sep. 30, 2012 12 Months or More State and municipal	Dec. 31, 2011 12 Months or More State and municipal	Sep. 30, 2012 12 Months or More Mortgage-backed securities	Dec. 31, 2011 12 Months or More Mortgage-backed securities	Dec. 31, 2011 12 Months or More Residential	Sep. 30, 2012 12 Months or More Commercial	Dec. 31, 2011 12 Months or More Commercial	Sep. 30, 2012 12 Months or More Collateralized mortgage obligations	Dec. 31, 2011 12 Months or More Collateralized mortgage obligations	Sep. 30, 2012 12 Months or More Asset-backed securities	Dec. 31, 2011 12 Months or More Asset-backed securities	Sep. 30, 2012 12 Months or More Corporates	Dec. 31, 2011 12 Months or More Corporates	Sep. 30, 2012 12 Months or More Equity securities	Dec. 31, 2011 12 Months or More Equity securities	Sep. 30, 2012 Rabbi Trust	Dec. 31, 2011 Rabbi Trust	Sep. 30, 2012 Maximum	Sep. 30, 2012 Minimum ImpairmentCharges
Schedule of Available-for-sale Securities [Line Items]
Number of Securities with Unrealized Losses	36	73																					27	63	27	63	2	1	1	7	5	2	3	1	2	2	1	4	4	6	11	43	0	0	9	10	9	10	0	0	0	1	2	2	5	0	2	5	1	1	3	1	2	1	0	0
Less than 12 Months, Fair Value	$ 34,619,000	$ 86,899,000	$ 34,619,000	$ 86,899,000	$ 7,236,000	$ 557,000	$ 5,032,000	$ 6,843,000	$ 7,841,000	$ 377,000	$ 12,407,000	$ 10,481,000	$ 377,000	$ 1,926,000	$ 882,000	$ 2,714,000	$ 14,035,000	$ 13,653,000	$ 5,246,000	$ 44,695,000	$ 0	$ 0
Less than 12 Months, Gross Unrealized Losses	(206,000)	(1,282,000)	(206,000)	(1,282,000)	(3,000)	(8,000)	(9,000)	(38,000)	(36,000)	(2,000)	(21,000)	(14,000)	(2,000)	(7,000)	(8,000)	(9,000)	(107,000)	(143,000)	(47,000)	(1,057,000)	0	0
Unrealized Losses as Percentage of Cost																							0.60%	1.50%	0.60%	1.50%	0.00%	1.40%	0.20%	0.60%	0.50%	0.40%	0.20%	0.10%	0.40%	0.40%	0.90%	0.30%	0.80%	1.00%	0.90%	2.30%	0.00%	0.00%	3.00%	2.90%	3.00%	2.90%	0.00%	0.00%	0.00%	1.30%	0.90%	1.60%	2.90%	0.00%	1.60%	2.90%	1.40%	15.50%	2.70%	0.10%	17.00%	2.00%	0.00%	0.00%
12 Months or More, Fair Value	5,185,000	9,053,000	5,185,000	9,053,000	0	0	0	518,000	2,885,000	349,000	4,505,000	0	349,000	4,505,000	1,000	509,000	4,151,000	433,000	166,000	721,000	0	0																							5,185,000
12 Months or More, Gross Unrealized Losses	(162,000)	(271,000)	(162,000)	(271,000)	0	0	0	(7,000)	(28,000)	(6,000)	(135,000)	0	(6,000)	(135,000)	0	(93,000)	(115,000)	0	(34,000)	(15,000)	0	0																							(162,000)
Unrealized losses																																																																			(34,300)	37,700
Threshold for Impairment Evaluation, Percentage of Book Value																																																																					95.00%
Threshold for Impairment Evaluation, Unrealized Loss Amount																																																																						$ 100,000
Threshold for Impairment Evaluation, Number of Previous Impairment Charges																																																																						1

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Consolidated Statements Of Earnings (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenues:
Earned premium	$ 301,463	$ 255,138	$ 872,730	$ 745,703
Percent change, Earned premium	18.20%		17.00%
Net investment income	9,018	10,166	28,364	31,117
Percent change, Net investment Income	(11.30%)		(8.80%)
Net realized gains on investments	268	722	2,673	5,604
Percent change, Net realized gains on investments	(62.80%)		(52.30%)
Gain on sale of subsidiaries	2,922	0	2,922	0
Percent change, Gain on sale of subsidiaries	0.00%		0.00%
Other income	63	101	430	201
Percent change, Other income	(37.80%)		113.70%
Total revenues	313,734	266,127	907,119	782,625
Percent change, Total revenues	17.90%		15.90%
Costs and Expenses:
Losses and loss adjustment expenses	238,261	195,275	683,946	566,685
Percent change, Losses and loss adjustment expenses	22.00%		20.70%
Commissions and other underwriting expenses	63,353	57,199	186,356	172,128
Percent change, Commissions and other underwriting expenses	10.80%		8.30%
Interest expense	3,199	2,702	8,604	8,105
Percent change, Interest expense	18.40%		6.20%
Corporate general and administrative expenses	1,750	1,729	5,850	5,654
Percent change, Corporate general and administrative expenses	1.20%		3.50%
Other expenses	585	1,026	931	1,425
Percent change, Other expenses	(43.00%)		(34.70%)
Total costs and expenses	307,148	257,931	885,687	753,997
Percent change, Total costs and expenses	19.10%		17.50%
Earnings before income taxes	6,586	8,196	21,431	28,628
Percent change, Earnings before income taxes	(19.60%)		(25.10%)
Provision for income taxes	1,432	1,462	5,029	4,839
Percent change, Provision for income taxes	(2.10%)		3.90%
Net Earnings	5,154	6,733	16,402	23,789
Percent change, Net Earnings	(23.40%)		(31.10%)
Net Earnings Per Common Share:
Basic	$ 0.44	$ 0.56	$ 1.40	$ 1.95
Percent change, Basic	(21.40%)		(28.20%)
Diluted	$ 0.43	$ 0.55	$ 1.37	$ 1.90
Percent change, Diluted	(21.80%)		(27.90%)
Average Number of Common Shares:
Basic (shares)	11,631	12,070	11,689	12,230
Percent change, Basic	(3.60%)		(4.40%)
Diluted (shares)	11,893	12,344	11,959	12,524
Percent change, Diluted	(3.70%)		(4.50%)
Cash Dividends per Common Share	$ 0.225	$ 0.180	$ 0.675	$ 0.540
Percent change, Cash Dividends per Common Share	25.00%		25.00%
Net realized gains before impairment losses	479	1,146	3,949	6,873
Percent change, Net realized gains before impairment losses	(58.20%)		(42.50%)
Total other-than-temporary impairment (OTTI) losses	(211)	(442)	(1,245)	(2,121)
Percent change, Total other-than-temporary impairment (OTTI) losses	(52.20%)		(41.30%)
Non-credit portion in other comprehensive income	0	19	1	1,036
Percent change, Non-credit portion in other comprehensive income	(100.00%)		(99.90%)
OTTI losses reclassified from other comprehensive income	0	(1)	(32)	(185)
Percent change, OTTI losses reclassified from other comprehensive income	(100.00%)		(82.50%)
Net impairment losses recognized in earnings	(211)	(424)	(1,277)	(1,270)
Percent change, Net impairment losses recognized in earnings	(50.20%)		0.50%
Total net realized gains on investments	$ 268	$ 722	$ 2,673	$ 5,604
Percent change,Total net realized gains on investments	(62.80%)		(52.30%)

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Investments - Investments by contractual maturity (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
One year or less, fair value	$ 52,962
One year or less, amortized cost	51,902
After one year through five years, fair value	566,038
After one year through five years, amortized cost	543,658
After five years through ten years, fair value	214,089
After five years through ten years, amortized cost	200,021
After ten years, fair value	61,345
After ten years, amortized cost basis	57,835
Mortgage-backed, asset-backed and collateralized mortgage obligations, fair value	357,496
Mortgage-backed, asset-backed and collateralized mortgage obligations, amortized cost	342,421
Fair Value, Fixed maturities	1,251,930	1,187,987
Amortized Cost	1,195,837	1,144,687
Securities with Unrealized Gains
Schedule of Available-for-sale Securities [Line Items]
One year or less, fair value	52,635
After one year through five years, fair value	553,858
After five years through ten years, fair value	208,191
After ten years, fair value	57,787
Mortgage-backed, asset-backed and collateralized mortgage obligations, fair value	337,701
Fair Value, Fixed maturities	1,210,172
Securities with Unrealized Losses
Schedule of Available-for-sale Securities [Line Items]
One year or less, fair value	0
After one year through five years, fair value	10,833
After five years through ten years, fair value	5,618
After ten years, fair value	3,558
Mortgage-backed, asset-backed and collateralized mortgage obligations, fair value	19,795
Fair Value, Fixed maturities	39,804
Securities with No Unrealized Gains or Losses
Schedule of Available-for-sale Securities [Line Items]
One year or less, fair value	327
After one year through five years, fair value	1,347
After five years through ten years, fair value	280
After ten years, fair value	0
Mortgage-backed, asset-backed and collateralized mortgage obligations, fair value	0
Fair Value, Fixed maturities	$ 1,954

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Consolidated Statements Of Changes In Shareholders' Equity (USD $) In Thousands, unless otherwise specified	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss), Net Of Tax	Treasury Stock
Cumulative effect of change in accounting principle at Dec. 31, 2010	$ (6,157)			$ (6,157)
Beginning Balance at Dec. 31, 2010	661,184	21,228	349,742	625,492	24,488	(359,766)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	23,789			23,789
Net change in postretirement benefit liability	(31)				(31)
Change in unrealized gain on investments	6,102				6,102
Change in non-credit component of impairment losses on fixed maturities	969				969
Comprehensive income	30,829
Dividends paid to common shareholders	(6,618)			(6,618)
Shares issued and share-based compensation expense, including tax benefit	4,383	91	4,291
Acquisition of treasury stock	(39,387)					(39,387)
Ending Balance at Sep. 30, 2011	644,233	21,319	354,034	636,505	31,528	(399,153)
Cumulative effect of change in accounting principle at Jun. 30, 2011
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	18,044			18,044
Net change in postretirement benefit liability	(145)				(145)
Change in unrealized gain on investments	3,618				3,618
Change in non-credit component of impairment losses on fixed maturities	317				317
Comprehensive income	21,835
Dividends paid to common shareholders	(2,126)			(2,126)
Shares issued and share-based compensation expense, including tax benefit	1,916	38	1,877
Acquisition of treasury stock	(4,067)					(4,067)
Ending Balance at Dec. 31, 2011	661,789	21,358	355,911	652,423	35,319	(403,221)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	16,402			16,402
Net change in postretirement benefit liability	(11)				(11)
Change in unrealized gain on investments	10,784				10,784
Change in non-credit component of impairment losses on fixed maturities	986				986
Comprehensive income	28,161
Dividends paid to common shareholders	(7,929)			(7,929)
Shares issued and share-based compensation expense, including tax benefit	4,045	98	3,947
Acquisition of treasury stock	(11,483)					(11,483)
Ending Balance at Sep. 30, 2012	$ 674,584	$ 21,456	$ 359,858	$ 660,896	$ 47,077	$ (414,704)

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Fair Value - Fair Value by Hierarchy (Details) (Recurring basis, USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Total cash and investments	$ 275,643
Percentage of total cash and investments	19.40%
Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Cash and cash equivalents	0
Total cash and investments	1,123,932
Percentage of total cash and investments	79.10%
Long-term debt	491,414
Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Cash and cash equivalents	0
Available-for-sale securities, Fair Value	21,329
Total cash and investments	21,329
Percentage of total cash and investments	1.50%
Total
Fair Value, Assets and Liabilities Measured on Recurring Basis
Cash and cash equivalents	126,574
Total cash and investments	1,420,904
Percentage of total cash and investments	100.00%
Fixed maturities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	106,669
Fixed maturities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	1,123,932
Fixed maturities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	21,329
Fixed maturities | Total
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	1,251,930
U.S. government | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	106,669
U.S. government | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	318
U.S. government | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	3,735
U.S. government | Total
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	110,722
Government-sponsored enterprises | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	0
Government-sponsored enterprises | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	70,678
Government-sponsored enterprises | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	0
Government-sponsored enterprises | Total
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	70,678
State and municipal | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	0
State and municipal | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	432,116
State and municipal | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	4,031
State and municipal | Total
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	436,147
Mortgage-backed securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	0
Mortgage-backed securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	251,636
Mortgage-backed securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	0
Mortgage-backed securities | Total
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	251,636
Residential | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	0
Residential | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	238,149
Residential | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	0
Residential | Total
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	238,149
Commercial | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	0
Commercial | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	13,487
Commercial | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	0
Commercial | Total
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	13,487
Collateralized mortgage obligations | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	0
Collateralized mortgage obligations | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	21,920
Collateralized mortgage obligations | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	0
Collateralized mortgage obligations | Total
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	21,920
Asset-backed securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	0
Asset-backed securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	81,295
Asset-backed securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	2,645
Asset-backed securities | Total
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	83,940
Corporates | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	0
Corporates | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	265,969
Corporates | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	10,918
Corporates | Total
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	276,886
Equity securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	42,400
Equity securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	0
Equity securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	0
Equity securities | Total
Fair Value, Assets and Liabilities Measured on Recurring Basis
Available-for-sale securities, Fair Value	$ 42,400

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Computation Of Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Earnings Per Common Share

The following table illustrates the computation of our basic and diluted net earnings per common share (in thousands, except per share figures):

	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Net earnings for basic and diluted net earnings per share	$	5,154	$	6,733	$	16,402	$	23,789
Average basic shares outstanding	11,631		12,070		11,689		12,230
Basic net earnings per share	$	0.44	$	0.56	$	1.40	$	1.95
Average basic shares outstanding	11,631		12,070		11,689		12,230
Restricted stock not yet vested	32		71		25		72
Dilutive effect of assumed option exercises	101		104		103		119
Dilutive effect of Performance Share Plan	129		100		141		102
Average diluted shares outstanding	11,893		12,344		11,959		12,524
Diluted net earnings per share	$	0.43	$	0.55	$	1.37	$	1.90

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Fair Value - Level 3 Investments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012	Mar. 31, 2012
Level 3 reconciliation
Balance at beginning of period		$ 15,374	$ 25,651
Total gains or (losses), unrealized or realized included in net earnings	(274)	(1,259)
Total gains or (losses), unrealized or realized included in other comprehensive income	316	11,452
Purchases	6,647	8,007
Sales	(485)	(737)
Settlements	(3,031)	(4,778)
Transfers in	1,053	2,889
Transfers out	(8,549)	(9,619)
Balance at end of period	21,329	21,329	25,651
U.S. government
Level 3 reconciliation
Balance at beginning of period		4,438	3,899
Total gains or (losses), unrealized or realized included in net earnings	0	0
Total gains or (losses), unrealized or realized included in other comprehensive income	(23)	(106)
Purchases	0	0
Sales	0	0
Settlements	(141)	(597)
Transfers in	0	0
Transfers out	0	0
Balance at end of period	3,735	3,735	3,899
State and municipal
Level 3 reconciliation
Balance at beginning of period		0	2,750
Total gains or (losses), unrealized or realized included in net earnings	0	0
Total gains or (losses), unrealized or realized included in other comprehensive income	29	2,779
Purchases	4,002	4,002
Sales	0	0
Settlements	(2,750)	(2,750)
Transfers in	0	0
Transfers out	0	0
Balance at end of period	4,031	4,031	2,750
Mortgage-backed securities
Level 3 reconciliation
Balance at beginning of period		0	7,188
Total gains or (losses), unrealized or realized included in net earnings	0	0
Total gains or (losses), unrealized or realized included in other comprehensive income	0	7,188
Purchases	0	0
Sales	0	0
Settlements	0	0
Transfers in	0	0
Transfers out	(7,188)	(7,188)
Balance at end of period	0	0	7,188
Collateralized mortgage obligations
Level 3 reconciliation
Balance at beginning of period		509	486
Total gains or (losses), unrealized or realized included in net earnings	(71)	(71)
Total gains or (losses), unrealized or realized included in other comprehensive income	86	90
Purchases	0	0
Sales	(483)	(483)
Settlements	(18)	(44)
Transfers in	0	0
Transfers out	0	0
Balance at end of period	0	0	486
Corporates
Level 3 reconciliation
Balance at beginning of period		10,426	9,966
Total gains or (losses), unrealized or realized included in net earnings	(203)	(1,188)
Total gains or (losses), unrealized or realized included in other comprehensive income	224	1,501
Purchases	0	0
Sales	(1)	(254)
Settlements	(122)	(1,387)
Transfers in	1,053	2,889
Transfers out	0	(1,070)
Balance at end of period	10,918	10,918	9,966
Asset-backed securities
Level 3 reconciliation
Balance at beginning of period		0	1,361
Total gains or (losses), unrealized or realized included in net earnings	0	0
Total gains or (losses), unrealized or realized included in other comprehensive income	0	1
Purchases	2,645	4,005
Sales	0	0
Settlements	0	0
Transfers in	0	0
Transfers out	(1,361)	(1,361)
Balance at end of period	2,645	2,645	1,361
Level 3
Level 3 reconciliation
Number of Positions	17	17
Level 3 | Recurring basis
Level 3 reconciliation
Available-for-sale securities, Fair Value	21,329	21,329
Non-Binding Broker Quotes | Level 3
Level 3 reconciliation
Number of Positions	15	15
Manual Calculation | Level 3
Level 3 reconciliation
Available-for-sale securities, Fair Value	800	800
Number of Positions	2	2
Recovery Rate | Level 3
Level 3 reconciliation
Available-for-sale securities, Fair Value	100	100
Fair Value Inputs, Probability of Default		100.00%
Discounted Cash Flow | Level 3
Level 3 reconciliation
Available-for-sale securities, Fair Value	$ 800	$ 800

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Investments (Tables)

9 Months Ended

Sep. 30, 2012

Investments, Debt and Equity Securities [Abstract]

Summarized information of investment portfolio

Summarized information for the major categories of our investment portfolio follows (in thousands):

	September 30, 2012
	Amortized Cost or Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		OTTI Recognized in Accumulated OCI(1)
Fixed maturities:
U.S. government	$	107,935	$	2,791	$	(3	)	$	110,722	$	0
Government-sponsored enterprises	69,021		1,658		0			70,678		0
State and municipal	414,600		21,592		(45		)	436,147		(53		)
Mortgage-backed securities:
Residential	224,736		13,412		0			238,149		(738		)
Commercial	12,670		824		(7		)	13,487		0
Total mortgage-backed securities	$	237,406	$	14,236	$	(7	)	$	251,636	$	(738	)
Collateralized mortgage obligations	21,395		533		(8		)	21,920		(263		)
Asset-backed securities	83,620		542		(222		)	83,940		(8		)
Corporates	261,860		15,108		(81		)	276,886		(1,131		)
Total fixed maturities	$	1,195,837	$	56,461	$	(367	)	$	1,251,930	$	(2,194	)
Equity securities	26,569		15,831		0			42,400		0
Total	$	1,222,405	$	72,292	$	(367	)	$	1,294,330	$	(2,194	)
	December 31, 2011
	Amortized Cost or Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		OTTI Recognized in Accumulated OCI(1)
Fixed maturities:
U.S. government	$	124,378	$	3,428	$	(8	)	$	127,798	$	0
Government-sponsored enterprises	55,220		958		(9		)	56,170		0
State and municipal	391,436		18,016		(63		)	409,388		(70		)
Mortgage-backed securities:
Residential	225,506		10,878		(14		)	236,370		(1,157		)
Commercial	19,751		760		(142		)	20,369		(11		)
Total mortgage-backed securities	$	245,257	$	11,638	$	(156	)	$	256,739	$	(1,168	)
Collateralized mortgage obligations	27,447		757		(102		)	28,103		(515		)
Asset-backed securities	48,403		368		(143		)	48,628		(8		)
Corporates	252,546		9,688		(1,072		)	261,162		(1,949		)
Total fixed maturities	$	1,144,687	$	44,853	$	(1,553	)	$	1,187,987	$	(3,711	)
Equity securities	26,413		10,554		(38		)	36,930		0
Total	$	1,171,100	$	55,408	$	(1,590	)	$	1,224,917	$	(3,711	)
(1) The total non-credit portion of OTTI recognized in Accumulated OCI reflecting the original non-credit loss at the time the credit impairment was determined.

Unrealized loss by investment category and length of time

The following table sets forth the amount of unrealized loss by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	Less than 12 Months								12 Months or More
	Number of Securities with Unrealized Losses	Fair Value		Gross Unrealized Losses			Unrealized Losses as % of Cost		Number of Securities with Unrealized Losses	Fair Value		Gross Unrealized Losses			Unrealized Losses as % of Cost
September 30, 2012
Fixed maturities:
U.S. government	2	$	7,236	$	(3	)	0.0	%	0	$	0	$	0		0.0	%
State and municipal	7	6,843		(38		)	0.6	%	1	518		(7		)	1.3	%
Mortgage-backed securities:
Commercial	2	377		(2		)	0.4	%	2	349		(6		)	1.6	%
Total mortgage-backed securities	2	$	377	$	(2	)	0.4	%	2	$	349	$	(6	)	1.6	%
Collateralized mortgage obligations	1	882		(8		)	0.9	%	1	1		0			1.4	%
Asset-backed securities	4	14,035		(107		)	0.8	%	3	4,151		(115		)	2.7	%
Corporates	11	5,246		(47		)	0.9	%	2	166		(34		)	17.0	%
Total fixed maturities	27	$	34,619	$	(206	)	0.6	%	9	$	5,185	$	(162	)	3.0	%
Equity securities	0	0		0			0.0	%	0	0		0			0.0	%
Total	27	$	34,619	$	(206	)	0.6	%	9	$	5,185	$	(162	)	3.0	%

	Less than 12 Months								12 Months or More
	Number of Securities with Unrealized Losses	Fair Value		Gross Unrealized Losses			Unrealized Losses as % of Cost		Number of Securities with Unrealized Losses	Fair Value		Gross Unrealized Losses			Unrealized Losses as % of Cost
December 31, 2011
Fixed maturities:
U.S. government	1	$	557	$	(8	)	1.4	%	0	$	0	$	0		0.0	%
Government-sponsored enterprises	1	5,032		(9		)	0.2	%	0	0		0			0.0	%
State and municipal	5	7,841		(36		)	0.5	%	2	2,885		(28		)	0.9	%
Mortgage-backed securities:
Residential	1	10,481		(14		)	0.1	%	0	0		0			0.0	%
Commercial	2	1,926		(7		)	0.4	%	5	4,505		(135		)	2.9	%
Total mortgage-backed securities	3	$	12,407	$	(21	)	0.2	%	5	$	4,505	$	(135	)	2.9	%
Collateralized mortgage obligations	4	2,714		(9		)	0.3	%	1	509		(93		)	15.5	%
Asset-backed securities	6	13,653		(143		)	1.0	%	1	433		0			0.1	%
Corporates	43	44,695		(1,057		)	2.3	%	1	721		(15		)	2.0	%
Total fixed maturities	63	$	86,899	$	(1,282	)	1.5	%	10	$	9,053	$	(271	)	2.9	%
Equity securities	0	0		0			0.0	%	0	0		0			0.0	%
Total	63	$	86,899	$	(1,282	)	1.5	%	10	$	9,053	$	(271	)	2.9	%

Summary of unrealized gains or losses

The following table summarizes those securities, excluding the rabbi trust, with unrealized gains or losses:

	September 30, 2012		December 31, 2011
Number of positions held with unrealized:
Gains	714		583
Losses	36		73
Number of positions held that individually exceed unrealized:
Gains of $500,000	7		5
Losses of $500,000	0		0
Percentage of positions held with unrealized:
Gains that were investment grade	84	%	83	%
Losses that were investment grade	72	%	73	%
Percentage of fair value held with unrealized:
Gains that were investment grade	95	%	95	%
Losses that were investment grade	90	%	91	%

Unrealized loss by age and severity

The following table sets forth the amount of unrealized loss, excluding the rabbi trust, by age and severity at September 30, 2012 (in thousands):

Age of Unrealized Losses:	Fair Value of Securities with Unrealized Losses		Total Gross Unrealized Losses			Less Than 5%*			5% - 10%*		Greater Than 10%*
Less than or equal to:
Three months	$	21,709	$	(45	)	$	(45	)	$	0	$	0
Six months	6,213		(38		)	(38		)	0		0
Nine months	1,568		(19		)	(19		)	0		0
Twelve months	5,129		(104		)	(104		)	0		0
Greater than twelve months	5,185		(162		)	(128		)	0		(34		)
Total	$	39,804	$	(367	)	$	(333	)	$	0	$	(34	)

* As a percentage of amortized cost or cost.

Change in unrealized gains (losses) on marketable securities

The change in unrealized gains (losses) on marketable securities included the following (in thousands):

	Pre-tax
	Fixed Maturities			Equity Securities			Tax Effects			Net
Nine months ended September 30, 2012
Unrealized holding gains (losses) on securities arising during the period	$	15,466		$	5,314		$	(7,273	)	$	13,507
Realized (gains) losses on securities sold	(3,949		)	0			1,382			(2,567		)
Impairment loss recognized in earnings(1)	1,277			0			(447		)	830
Change in unrealized gains (losses) on marketable securities, net	$	12,793		$	5,314		$	(6,338	)	$	11,770
Nine months ended September 30, 2011
Unrealized holding gains (losses) on securities arising during the period	$	19,943		$	(3,460	)	$	(5,769	)	$	10,714
Realized (gains) losses on securities sold	(4,126		)	(2,748		)	2,406			(4,468		)
Impairment loss recognized in earnings(1)	1,270			0			(444		)	825
Change in unrealized gains (losses) on marketable securities, net	$	17,087		$	(6,207	)	$	(3,808	)	$	7,072
(1) Tax excludes valuation reserve

Progression of credit losses on fixed maturity securities

The following table is a progression of credit losses on fixed maturity securities that were bifurcated between a credit and non-credit component (in thousands):

	Nine months ended September 30,
	2012			2011
Beginning balance	$	1,728		$	1,828
Additions for:
Previously impaired securities	0			37
Newly impaired securities	9			694
Reductions for:
Securities sold and paid down	(362		)	(519		)
Securities that no longer have a non-credit component	(735		)	0
Ending balance	$	640		$	2,040

Scheduled maturities of fixed maturity securities

The table below sets forth the scheduled maturities of fixed maturity securities at September 30, 2012, based on their fair values (in thousands). We report securities that do not have a single maturity date at average maturity. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers.

	Fair Value								Amortized Cost
Maturity	Securities with Unrealized Gains		Securities with Unrealized Losses		Securities with No Unrealized Gains or Losses		All Fixed Maturity Securities		All Fixed Maturity Securities
One year or less	$	52,635	$	0	$	327	$	52,962	$	51,902
After one year through five years	553,858		10,833		1,347		566,038		543,658
After five years through ten years	208,191		5,618		280		214,089		200,021
After ten years	57,787		3,558		0		61,345		57,835
Mortgage-backed, asset-backed and collateralized mortgage obligations	337,701		19,795		0		357,496		342,421
	$	1,210,172	$	39,804	$	1,954	$	1,251,930	$	1,195,837

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Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Operating Activities:
Net earnings	$ 5,154	$ 6,733	$ 16,402	$ 23,789
Adjustments:
Depreciation	2,356	1,850	6,442	6,676
Amortization	2,580	2,038	7,137	5,869
Net realized gains on investments	(268)	(722)	(2,673)	(5,604)
Loss on disposal of property and equipment	30	160	44	362
Gain on sale of subsidiaries	(2,922)	0	(2,922)	0
Share-based compensation expense	671	967	2,817	2,383
Excess Tax Benefit (Tax Deficiency) from Share-based Compensation, Operating Activities	0	(169)	0	(169)
Activity related to rabbi trust	37	(65)	72	(47)
(Increase) decrease in accrued investment income	101	(5)	(1)	809
Decrease (increase) in agents' balances and premium receivable	(18,250)	(14,928)	(62,713)	(53,024)
(Increase) decrease in reinsurance receivables	(1,108)	186	(1,145)	1,596
Decrease (increase) in deferred policy acquisition costs	(2,463)	(2,444)	(12,421)	(11,196)
Increase in other assets	(2,685)	5,903	(8,004)	(4,087)
Increase in unpaid losses and loss adjustment expenses	13,446	10,422	48,915	15,698
(Decrease) increase in unearned premium	21,645	14,409	83,220	63,370
Decrease in payable to reinsurers			(45)	(42)
Increase (decrease) in other liabilities	(1,099)	(5,848)	(2,096)	(20,328)
Net cash provided by (used in) operating activities	17,225	18,488	73,029	26,057
Purchases of and additional investments in:
Fixed maturities	(89,084)	(46,844)	(344,520)	(242,707)
Payments to Acquire Available-for-sale Securities, Equity	0	(2,000)	0	(2,000)
Property and equipment	(944)	(2,705)	(8,529)	(20,881)
Maturities and redemptions of fixed maturities	62,178	22,416	144,171	113,081
Sales of:
Fixed maturities	9,968	49,360	133,510	150,231
Proceeds from sale of property and equipment	11	0	11	0
Equity securities			0	7,871
Net cash (used in) provided by investing activities	(17,872)	20,228	(75,359)	5,596
Financing Activities:
Proceeds from stock options exercised and employee stock purchases, including tax benefit	396	271	1,229	1,999
Acquisition of treasury stock	(3,194)	(21,284)	(11,497)	(38,650)
Excess Tax Benefit (Tax Deficiency) from Share-based Compensation, Financing Activities	0	169	0	169
Proceeds from bond issuance	273,213	0	273,213	0
Increase in restricted cash related to planned redemption of debt	(209,879)	0	(209,879)	0
Dividends paid to shareholders	(2,629)	(2,170)	(7,929)	(6,618)
Net cash used in financing activities	57,906	(23,014)	45,136	(43,100)
Net increase (decrease) in cash and cash equivalents	57,260	15,702	42,807	(11,447)
Cash and cash equivalents at beginning of period	69,314	36,455	83,767	63,605
Cash and cash equivalents at end of period	$ 126,574	$ 52,157	$ 126,574	$ 52,157

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net earnings	$ 5,154	$ 6,733	$ 16,402	$ 23,789
Other comprehensive income before tax:
Net change in postretirement benefit liability	(6)	(16)	(17)	(48)
Unrealized gains on investments:
Unrealized holding gains arising during the period	10,662	2,723	20,780	16,483
Less: Reclassification adjustments for gains included in net income	(268)	(722)	(2,673)	(5,604)
Unrealized gains on investments, net	10,394	2,001	18,107	10,879
Other comprehensive income, before tax	10,388	1,985	18,090	10,831
Income tax expense related to components of other comprehensive income	(3,636)	(695)	(6,332)	(3,791)
Other comprehensive income, net of tax	6,752	1,290	11,759	7,040
Comprehensive income	$ 11,907	$ 8,023	$ 28,161	$ 30,829

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Commitments And Contingencies

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Commitments

At September 30, 2012 we held $209.9 million of restricted cash in our Consolidated Balance Sheets. We classified this cash as restricted as it was our intention to use the funds to redeem the the 5.5% Senior Notes. We fully redeemed the 5.5% Senior Notes on October 17, 2012 at a price of 106.729% of par, or $208.1 million, plus accrued interest of $1.8 million.

There have been no other material changes from the commitments discussed in the Form 10-K for the year ended December 31, 2011. For a description of our previously reported commitments, refer to Note 14 Commitments and Contingencies in the Form 10-K for the year ended December 31, 2011.

Contingencies

There have been no material changes from the contingencies discussed in the Form 10-K for the year ended December 31, 2011. For a description of our previously reported contingencies, refer to Note 14 Commitments and Contingencies, in the Form 10-K for the year ended December 31, 2011.

XML

Document and Entity Information Document	9 Months Ended
	Sep. 30, 2012	Oct. 31, 2012
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Entity Registrant Name	INFINITY PROPERTY & CASUALTY CORP
Entity Central Index Key	0001195933
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		11,673,041

XML

Subsequent Events

9 Months Ended

Sep. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On October 17, 2012 we fully redeemed the $195.0 million principal outstanding of the 5.5% Senior Notes at a price of 106.729%, or $208.1 million, plus accrued interest of $1.8 million. In the fourth quarter of 2012, we will recognize a pre-tax loss on redemption as follows (in thousands):

Redemption price	$	208,122
Amortized cost at redemption	(194,878		)
Unamortized issuance costs	352
Loss on redemption of debt, pre-tax	$	13,595

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Investments:
Fixed maturities - at fair value (amortized cost $1,195,837 and $1,144,687)	$ 1,251,930	$ 1,187,987
Equity securities - at fair value (cost $26,569 and 26,413)	42,400	36,930
Total investments	1,294,330	1,224,917
Cash and cash equivalents	126,574	83,767
Restricted cash	209,879	0
Accrued investment income	10,762	10,761
Agents' balances and premium receivable, net of allowances for doubtful accounts of $15,010 and $13,497	445,334	382,621
Property and equipment, net of accumulated depreciation of $43,303 and $37,551	40,726	38,694
Prepaid reinsurance premium	2,676	2,131
Recoverables from reinsurers (includes $758 and $79 on paid losses and LAE)	15,318	14,719
Deferred policy acquisition costs	92,493	80,071
Current and deferred income taxes	8,811	10,728
Receivable for securities sold	0	1,152
Other assets	20,013	5,535
Goodwill	75,275	75,275
Total assets	2,342,192	1,930,371
Liabilities:
Unpaid losses and loss adjustment expenses	544,318	495,403
Unearned premium	557,748	474,528
Payable to reinsurers	0	45
Long-term debt	469,875	194,810
Commissions payable	32,644	30,605
Payable for securities purchased	4,558	10,818
Other liabilities	58,465	62,373
Total liabilities	1,667,608	1,268,582
Commitments and contingencies (See Note 10)
Shareholders' equity:
Common stock, no par value (50,000,000 shares authorized; 21,420,996 and 21,331,006 shares issued)	21,456	21,358
Additional paid-in capital	359,858	355,911
Retained earnings	660,896	652,423
Accumulated other comprehensive income, net of tax	47,077	35,319
Treasury stock, at cost (9,732,697 and 9,524,369 shares)	(414,704)	(403,221)
Total shareholders' equity	674,584	661,789
Total liabilities and shareholders' equity	$ 2,342,192	$ 1,930,371

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Investments

9 Months Ended

Sep. 30, 2012

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

We consider all fixed maturity and equity securities available-for-sale and report them at fair value with the net unrealized gains or losses reported after-tax (net of any valuation allowance) as a component of other comprehensive income. The proceeds from sales of securities for the three months ended September 30, 2012 and 2011 were $10.0 million and $49.4 million, respectively. The proceeds from sales of securities for the nine months ended September 30, 2012 and 2011 were $133.5 million and $158.1 million, respectively. The proceeds for the three and nine months ended September 30, 2011 were net of $5.5 million of receivable for securities sold during the third quarter of 2011 that had not settled at September 30, 2011.

Gains or losses on securities are determined on a specific identification basis.

Summarized information for the major categories of our investment portfolio follows (in thousands):

	September 30, 2012
	Amortized Cost or Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		OTTI Recognized in Accumulated OCI(1)
Fixed maturities:
U.S. government	$	107,935	$	2,791	$	(3	)	$	110,722	$	0
Government-sponsored enterprises	69,021		1,658		0			70,678		0
State and municipal	414,600		21,592		(45		)	436,147		(53		)
Mortgage-backed securities:
Residential	224,736		13,412		0			238,149		(738		)
Commercial	12,670		824		(7		)	13,487		0
Total mortgage-backed securities	$	237,406	$	14,236	$	(7	)	$	251,636	$	(738	)
Collateralized mortgage obligations	21,395		533		(8		)	21,920		(263		)
Asset-backed securities	83,620		542		(222		)	83,940		(8		)
Corporates	261,860		15,108		(81		)	276,886		(1,131		)
Total fixed maturities	$	1,195,837	$	56,461	$	(367	)	$	1,251,930	$	(2,194	)
Equity securities	26,569		15,831		0			42,400		0
Total	$	1,222,405	$	72,292	$	(367	)	$	1,294,330	$	(2,194	)
	December 31, 2011
	Amortized Cost or Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		OTTI Recognized in Accumulated OCI(1)
Fixed maturities:
U.S. government	$	124,378	$	3,428	$	(8	)	$	127,798	$	0
Government-sponsored enterprises	55,220		958		(9		)	56,170		0
State and municipal	391,436		18,016		(63		)	409,388		(70		)
Mortgage-backed securities:
Residential	225,506		10,878		(14		)	236,370		(1,157		)
Commercial	19,751		760		(142		)	20,369		(11		)
Total mortgage-backed securities	$	245,257	$	11,638	$	(156	)	$	256,739	$	(1,168	)
Collateralized mortgage obligations	27,447		757		(102		)	28,103		(515		)
Asset-backed securities	48,403		368		(143		)	48,628		(8		)
Corporates	252,546		9,688		(1,072		)	261,162		(1,949		)
Total fixed maturities	$	1,144,687	$	44,853	$	(1,553	)	$	1,187,987	$	(3,711	)
Equity securities	26,413		10,554		(38		)	36,930		0
Total	$	1,171,100	$	55,408	$	(1,590	)	$	1,224,917	$	(3,711	)
(1) The total non-credit portion of OTTI recognized in Accumulated OCI reflecting the original non-credit loss at the time the credit impairment was determined.

The following table sets forth the amount of unrealized loss by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	Less than 12 Months								12 Months or More
	Number of Securities with Unrealized Losses	Fair Value		Gross Unrealized Losses			Unrealized Losses as % of Cost		Number of Securities with Unrealized Losses	Fair Value		Gross Unrealized Losses			Unrealized Losses as % of Cost
September 30, 2012
Fixed maturities:
U.S. government	2	$	7,236	$	(3	)	0.0	%	0	$	0	$	0		0.0	%
State and municipal	7	6,843		(38		)	0.6	%	1	518		(7		)	1.3	%
Mortgage-backed securities:
Commercial	2	377		(2		)	0.4	%	2	349		(6		)	1.6	%
Total mortgage-backed securities	2	$	377	$	(2	)	0.4	%	2	$	349	$	(6	)	1.6	%
Collateralized mortgage obligations	1	882		(8		)	0.9	%	1	1		0			1.4	%
Asset-backed securities	4	14,035		(107		)	0.8	%	3	4,151		(115		)	2.7	%
Corporates	11	5,246		(47		)	0.9	%	2	166		(34		)	17.0	%
Total fixed maturities	27	$	34,619	$	(206	)	0.6	%	9	$	5,185	$	(162	)	3.0	%
Equity securities	0	0		0			0.0	%	0	0		0			0.0	%
Total	27	$	34,619	$	(206	)	0.6	%	9	$	5,185	$	(162	)	3.0	%

	Less than 12 Months								12 Months or More
	Number of Securities with Unrealized Losses	Fair Value		Gross Unrealized Losses			Unrealized Losses as % of Cost		Number of Securities with Unrealized Losses	Fair Value		Gross Unrealized Losses			Unrealized Losses as % of Cost
December 31, 2011
Fixed maturities:
U.S. government	1	$	557	$	(8	)	1.4	%	0	$	0	$	0		0.0	%
Government-sponsored enterprises	1	5,032		(9		)	0.2	%	0	0		0			0.0	%
State and municipal	5	7,841		(36		)	0.5	%	2	2,885		(28		)	0.9	%
Mortgage-backed securities:
Residential	1	10,481		(14		)	0.1	%	0	0		0			0.0	%
Commercial	2	1,926		(7		)	0.4	%	5	4,505		(135		)	2.9	%
Total mortgage-backed securities	3	$	12,407	$	(21	)	0.2	%	5	$	4,505	$	(135	)	2.9	%
Collateralized mortgage obligations	4	2,714		(9		)	0.3	%	1	509		(93		)	15.5	%
Asset-backed securities	6	13,653		(143		)	1.0	%	1	433		0			0.1	%
Corporates	43	44,695		(1,057		)	2.3	%	1	721		(15		)	2.0	%
Total fixed maturities	63	$	86,899	$	(1,282	)	1.5	%	10	$	9,053	$	(271	)	2.9	%
Equity securities	0	0		0			0.0	%	0	0		0			0.0	%
Total	63	$	86,899	$	(1,282	)	1.5	%	10	$	9,053	$	(271	)	2.9	%

The table above excludes an unrealized gain on equities invested in a rabbi trust of $34.3 thousand at September 30, 2012 and an unrealized loss of $37.7 thousand at December 31, 2011.

The determination of whether unrealized losses are “other-than-temporary” requires judgment based on subjective as well as objective factors. Factors we considered and resources we used in our determination include:

• the intent to sell the security;

• whether it is more likely than not that there will be a requirement to sell the security before our anticipated recovery;

• whether the unrealized loss is credit-driven or a result of changes in market interest rates;

• the length of time the security’s fair value has been below our cost;

• the extent to which fair value is less than cost basis;

• historical operating, balance sheet and cash flow data contained in issuer SEC filings;

• issuer news releases;

• near-term prospects for improvement in the issuer and/or its industry;

• industry research and communications with industry specialists and

• third-party research and credit rating reports.

We regularly evaluate for potential impairment each security position that has any of the following: a fair value of less than 95% of its book value, an unrealized loss that equals or exceeds $100,000 or one or more impairment charges recorded in the past. In addition, we review positions held related to an issuer of a previously impaired security.

The following table summarizes those securities, excluding the rabbi trust, with unrealized gains or losses:

	September 30, 2012		December 31, 2011
Number of positions held with unrealized:
Gains	714		583
Losses	36		73
Number of positions held that individually exceed unrealized:
Gains of $500,000	7		5
Losses of $500,000	0		0
Percentage of positions held with unrealized:
Gains that were investment grade	84	%	83	%
Losses that were investment grade	72	%	73	%
Percentage of fair value held with unrealized:
Gains that were investment grade	95	%	95	%
Losses that were investment grade	90	%	91	%

The following table sets forth the amount of unrealized loss, excluding the rabbi trust, by age and severity at September 30, 2012 (in thousands):

Age of Unrealized Losses:	Fair Value of Securities with Unrealized Losses		Total Gross Unrealized Losses			Less Than 5%*			5% - 10%*		Greater Than 10%*
Less than or equal to:
Three months	$	21,709	$	(45	)	$	(45	)	$	0	$	0
Six months	6,213		(38		)	(38		)	0		0
Nine months	1,568		(19		)	(19		)	0		0
Twelve months	5,129		(104		)	(104		)	0		0
Greater than twelve months	5,185		(162		)	(128		)	0		(34		)
Total	$	39,804	$	(367	)	$	(333	)	$	0	$	(34	)

* As a percentage of amortized cost or cost.

The change in unrealized gains (losses) on marketable securities included the following (in thousands):

	Pre-tax
	Fixed Maturities			Equity Securities			Tax Effects			Net
Nine months ended September 30, 2012
Unrealized holding gains (losses) on securities arising during the period	$	15,466		$	5,314		$	(7,273	)	$	13,507
Realized (gains) losses on securities sold	(3,949		)	0			1,382			(2,567		)
Impairment loss recognized in earnings(1)	1,277			0			(447		)	830
Change in unrealized gains (losses) on marketable securities, net	$	12,793		$	5,314		$	(6,338	)	$	11,770
Nine months ended September 30, 2011
Unrealized holding gains (losses) on securities arising during the period	$	19,943		$	(3,460	)	$	(5,769	)	$	10,714
Realized (gains) losses on securities sold	(4,126		)	(2,748		)	2,406			(4,468		)
Impairment loss recognized in earnings(1)	1,270			0			(444		)	825
Change in unrealized gains (losses) on marketable securities, net	$	17,087		$	(6,207	)	$	(3,808	)	$	7,072
(1) Tax excludes valuation reserve

For fixed maturity securities that are other-than-temporarily impaired, we assess our intent to sell and the likelihood that we will be required to sell the security before recovery of our amortized cost. If a fixed maturity security is considered other-than-temporarily impaired but we do not intend to and are not more than likely to be required to sell the security before our recovery to amortized cost, we separate the amount of the impairment into a credit loss component and the amount due to all other factors. The excess of the amortized cost over the present value of the expected cash flows determines the credit loss component of an impairment charge on a fixed maturity security. The present value is determined using the best estimate of cash flows discounted at (1) the effective interest rate implicit at the date of acquisition for non-structured securities or (2) the book yield for structured securities. The techniques and assumptions for determining the best estimate of cash flows vary depending on the type of security. We recognize the credit loss component of an impairment charge in net earnings and the non-credit component in accumulated other comprehensive income. If we intend to sell or will, more likely than not, be required to sell a security, we treat the entire amount of the impairment as a credit loss.

The following table is a progression of credit losses on fixed maturity securities that were bifurcated between a credit and non-credit component (in thousands):

	Nine months ended September 30,
	2012			2011
Beginning balance	$	1,728		$	1,828
Additions for:
Previously impaired securities	0			37
Newly impaired securities	9			694
Reductions for:
Securities sold and paid down	(362		)	(519		)
Securities that no longer have a non-credit component	(735		)	0
Ending balance	$	640		$	2,040

The table below sets forth the scheduled maturities of fixed maturity securities at September 30, 2012, based on their fair values (in thousands). We report securities that do not have a single maturity date at average maturity. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers.

	Fair Value								Amortized Cost
Maturity	Securities with Unrealized Gains		Securities with Unrealized Losses		Securities with No Unrealized Gains or Losses		All Fixed Maturity Securities		All Fixed Maturity Securities
One year or less	$	52,635	$	0	$	327	$	52,962	$	51,902
After one year through five years	553,858		10,833		1,347		566,038		543,658
After five years through ten years	208,191		5,618		280		214,089		200,021
After ten years	57,787		3,558		0		61,345		57,835
Mortgage-backed, asset-backed and collateralized mortgage obligations	337,701		19,795		0		357,496		342,421
	$	1,210,172	$	39,804	$	1,954	$	1,251,930	$	1,195,837

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Fair Value

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value

Fair Value

Fair values of instruments are based on:

(i) quoted prices in active markets for identical assets (Level 1),

(ii) quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs are observable in active markets (Level 2) or

(iii) valuations derived from valuation techniques in which one or more significant inputs are unobservable in the marketplace (Level 3).

The following table presents for each of the fair value hierarchy levels our assets and liabilities for which we report fair value on a recurring basis at September 30, 2012 (in thousands):

	Fair Value
	Level 1			Level 2			Level 3			Total
Cash and cash equivalents	$	126,574		$	0		$	0		$	126,574
Fixed maturity securities:
U.S. government	106,669			318			3,735			110,722
Government-sponsored enterprises	0			70,678			0			70,678
State and municipal	0			432,116			4,031			436,147
Mortgage-backed securities:
Residential	0			238,149			0			238,149
Commercial	0			13,487			0			13,487
Total mortgage-backed securities	$	0		$	251,636		$	0		$	251,636
Collateralized mortgage obligations	0			21,920			0			21,920
Asset-backed securities	0			81,295			2,645			83,940
Corporates	0			265,969			10,918			276,886
Total fixed maturities	$	106,669		$	1,123,932		$	21,329		$	1,251,930
Equity securities	42,400			0			0			42,400
Total cash and investments	$	275,643		$	1,123,932		$	21,329		$	1,420,904
Percentage of total cash and investments	19.4		%	79.1		%	1.5		%	100.0		%

We do not measure our long-term debt at fair value in the Consolidated Balance Sheets. The $491.4 million fair value of our long-term debt would be included in Level 2 of the fair value hierarchy if it were reported at fair value.

Level 1 includes cash and cash equivalents, U.S. Treasury securities, an exchange-traded fund and equities invested in a rabbi trust. Level 2 includes securities whose fair value was determined using observable market inputs. Level 3 securities are comprised of (i) securities for which there is no active or inactive market for similar instruments, (ii) securities whose fair value is determined based on unobservable inputs and (iii) securities, other than those backed by the U.S. Government, that are not rated by a nationally recognized statistical rating organization ("NRSRO"). We recognize transfers between levels at the beginning of the reporting period.

A third party nationally recognized pricing service provides the fair value of securities in Level 2. We periodically review the third party pricing methodologies and test for significant differences between the market price used to value the security and recent sales activity.

The following table presents the changes in the Level 3 fair value category (in thousands):

	Three months ended September 30, 2012
	U.S. Government			State and Municipal			Mortgage- Backed Securities			Collateralized Mortgage Obligations			Corporates			ABS			Total
Balance at beginning of period	$	3,899		$	2,750		$	7,188		$	486		$	9,966		$	1,361		$	25,651
Total gains or (losses), unrealized or realized
Included in net earnings	0			0			0			(71		)	(203		)	0			(274		)
Included in other comprehensive income	(23		)	29			0			86			224			0			316
Purchases	0			4,002			0			0			0			2,645			6,647
Sales	0			0			0			(483		)	(1		)	0			(485		)
Settlements	(141		)	(2,750		)	0			(18		)	(122		)	0			(3,031		)
Transfers in	0			0			0			0			1,053			0			1,053
Transfers out	0			0			(7,188		)	0			0			(1,361		)	(8,549		)
Balance at end of period	$	3,735		$	4,031		$	0		$	0		$	10,918		$	2,645		$	21,329
	Nine months ended September 30, 2012
	U.S. Government			State and Municipal			Mortgage- Backed Securities			Collateralized Mortgage Obligations			Corporates			ABS			Total
Balance at beginning of period	$	4,438		$	0		$	0		$	509		$	10,426		$	0		$	15,374
Total gains or (losses), unrealized or realized
Included in net earnings	0			0			0			(71		)	(1,188		)	0			(1,259		)
Included in other comprehensive income	(106		)	2,779			7,188			90			1,501			1			11,452
Purchases	0			4,002			0			0			0			4,005			8,007
Sales	0			0			0			(483		)	(254		)	0			(737		)
Settlements	(597		)	(2,750		)	0			(44		)	(1,387		)	0			(4,778		)
Transfers in	0			0			0			0			2,889			0			2,889
Transfers out	0			0			(7,188		)	0			(1,070		)	(1,361		)	(9,619		)
Balance at end of period	$	3,735		$	4,031		$	0		$	0		$	10,918		$	2,645		$	21,329

Of the $21.3 million fair value of securities in Level 3, which consists of 17 securities, we priced 15 based on non-binding broker quotes. We manually calculated the price of 2 securities, which have a combined fair value of $0.8 million. Quantitative information about the significant unobservable inputs used in the fair value measurement of these manually priced securities at September 30, 2012 is as follows (in millions):

	Fair Value		Valuation Technique	Unobservable Input	Value Used
Corporate bond	$	0.1	Recovery rate1	Probability of default	100%
Corporate bond	0.8		Discounted cash flow	Comparable credit rating	B+
Total	$	0.8
1 Recovery rate for senior unsecured bonds as indicated in Moody's Investor's Service Annual Default Study: Corporate Default and Recovery Rates, 1920-2011.

The significant unobservable inputs used in the fair value measurement of our manually-priced corporate bonds are a probability of default assumption and an assigned credit rating. Significant changes in either of these inputs in isolation could result in a significant change in fair value measurement.  Generally, a reduction in probability of default would increase security valuation. A change in the credit rating assumption would change the yield spread associated with that bond, and thus the yield used in discounting the cash flows to arrive at the security’s valuation.

We transferred approximately $9.6 million of securities in Level 3 at December 31, 2011 to Level 2 during the nine months ended September 30, 2012 because we obtained a price for those securities from a nationally recognized pricing service. We transferred approximately $2.9 million of securities into Level 3 from Level 2 during the nine months ended September 30, 2012 because we could not obtain a price from a third party nationally recognized pricing service or because a rating by a NRSRO was not available. There were no transfers between Levels 1 and 2 during the nine months ended September 30, 2012.

The gains or losses included in net earnings are included in the line item net realized gains on investments in the Consolidated Statements of Earnings. We recognize the net gains or losses included in other comprehensive income in the line item unrealized gains (losses) on investments, net in the Consolidated Statements of Comprehensive Income and the line item change in unrealized gain on investments or the line item change in non-credit component of impairment losses on fixed maturities in the Consolidated Statements of Changes in Shareholders’ Equity.

The following table presents the carrying value and estimated fair value of our financial instruments (in thousands):

	September 30, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Cash and cash equivalents	$	126,574	$	126,574	$	83,767	$	83,767
Available-for-sale securities
Fixed maturities	1,251,930		1,251,930		1,187,987		1,187,987
Equity securities	42,400		42,400		36,930		36,930
Total cash and investments	$	1,420,904	$	1,420,904	$	1,308,684	$	1,308,684
Liabilities:
Long-term debt	$	469,875	$	491,414	$	194,810	$	207,246

See Note 5 to the Consolidated Financial Statements for additional information on investments and Note 6 for additional information on long-term debt.

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Fair Value (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair value by hierarchy

The following table presents for each of the fair value hierarchy levels our assets and liabilities for which we report fair value on a recurring basis at September 30, 2012 (in thousands):

	Fair Value
	Level 1			Level 2			Level 3			Total
Cash and cash equivalents	$	126,574		$	0		$	0		$	126,574
Fixed maturity securities:
U.S. government	106,669			318			3,735			110,722
Government-sponsored enterprises	0			70,678			0			70,678
State and municipal	0			432,116			4,031			436,147
Mortgage-backed securities:
Residential	0			238,149			0			238,149
Commercial	0			13,487			0			13,487
Total mortgage-backed securities	$	0		$	251,636		$	0		$	251,636
Collateralized mortgage obligations	0			21,920			0			21,920
Asset-backed securities	0			81,295			2,645			83,940
Corporates	0			265,969			10,918			276,886
Total fixed maturities	$	106,669		$	1,123,932		$	21,329		$	1,251,930
Equity securities	42,400			0			0			42,400
Total cash and investments	$	275,643		$	1,123,932		$	21,329		$	1,420,904
Percentage of total cash and investments	19.4		%	79.1		%	1.5		%	100.0		%

Fair value level 3 reconciliation

The following table presents the changes in the Level 3 fair value category (in thousands):

	Three months ended September 30, 2012
	U.S. Government			State and Municipal			Mortgage- Backed Securities			Collateralized Mortgage Obligations			Corporates			ABS			Total
Balance at beginning of period	$	3,899		$	2,750		$	7,188		$	486		$	9,966		$	1,361		$	25,651
Total gains or (losses), unrealized or realized
Included in net earnings	0			0			0			(71		)	(203		)	0			(274		)
Included in other comprehensive income	(23		)	29			0			86			224			0			316
Purchases	0			4,002			0			0			0			2,645			6,647
Sales	0			0			0			(483		)	(1		)	0			(485		)
Settlements	(141		)	(2,750		)	0			(18		)	(122		)	0			(3,031		)
Transfers in	0			0			0			0			1,053			0			1,053
Transfers out	0			0			(7,188		)	0			0			(1,361		)	(8,549		)
Balance at end of period	$	3,735		$	4,031		$	0		$	0		$	10,918		$	2,645		$	21,329
	Nine months ended September 30, 2012
	U.S. Government			State and Municipal			Mortgage- Backed Securities			Collateralized Mortgage Obligations			Corporates			ABS			Total
Balance at beginning of period	$	4,438		$	0		$	0		$	509		$	10,426		$	0		$	15,374
Total gains or (losses), unrealized or realized
Included in net earnings	0			0			0			(71		)	(1,188		)	0			(1,259		)
Included in other comprehensive income	(106		)	2,779			7,188			90			1,501			1			11,452
Purchases	0			4,002			0			0			0			4,005			8,007
Sales	0			0			0			(483		)	(254		)	0			(737		)
Settlements	(597		)	(2,750		)	0			(44		)	(1,387		)	0			(4,778		)
Transfers in	0			0			0			0			2,889			0			2,889
Transfers out	0			0			(7,188		)	0			(1,070		)	(1,361		)	(9,619		)
Balance at end of period	$	3,735		$	4,031		$	0		$	0		$	10,918		$	2,645		$	21,329

Quantitative information about inputs of manually priced securities

Quantitative information about the significant unobservable inputs used in the fair value measurement of these manually priced securities at September 30, 2012 is as follows (in millions):

	Fair Value		Valuation Technique	Unobservable Input	Value Used
Corporate bond	$	0.1	Recovery rate1	Probability of default	100%
Corporate bond	0.8		Discounted cash flow	Comparable credit rating	B+
Total	$	0.8
1 Recovery rate for senior unsecured bonds as indicated in Moody's Investor's Service Annual Default Study: Corporate Default and Recovery Rates, 1920-2011.

Carrying Value and Estimated Fair Value

The following table presents the carrying value and estimated fair value of our financial instruments (in thousands):

	September 30, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Cash and cash equivalents	$	126,574	$	126,574	$	83,767	$	83,767
Available-for-sale securities
Fixed maturities	1,251,930		1,251,930		1,187,987		1,187,987
Equity securities	42,400		42,400		36,930		36,930
Total cash and investments	$	1,420,904	$	1,420,904	$	1,308,684	$	1,308,684
Liabilities:
Long-term debt	$	469,875	$	491,414	$	194,810	$	207,246

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Reporting And Accounting Policies Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

Basis of reporting

These financial statements reflect certain adjustments necessary for a fair presentation of our results of operations and financial position. Such adjustments consist of normal, recurring accruals recorded to match expenses with their related revenue streams and the elimination of all significant inter-company transactions and balances.

Estimates

We based certain accounts and balances within these financial statements upon our estimates and assumptions. The amount of reserves for claims not yet paid, for example, is an item that we can only record by estimation. Unrealized capital gains and losses on investments are subject to market fluctuations, and we use judgment in the determination of whether unrealized losses on certain securities are temporary or other-than-temporary. Should actual results differ significantly from these estimates, the effect on our results of operations could be material. The results of operations for the periods presented may not be indicative of our results for the entire year.

Reclassifications

.

New Accounting Pronouncements, Policy [Policy Text Block]

Amendments to Fair Value Measurement and Disclosure Requirements

In May 2011, the FASB issued guidance that clarifies the application of existing fair value measurement and disclosure requirements and amends certain fair value measurement principles, requirements and disclosures. We adopted this standard as of January 1, 2012. The impact of adoption was not material to our results of operations or financial position. Additional disclosures required by this standard are located in Note 4 to the Consolidated Financial Statements.

Presentation of Comprehensive Income

In June and December 2011, the FASB issued guidance amending the presentation of comprehensive income and its components. We adopted this standard as of January 1, 2012. Under the new guidance, a reporting entity has the option to present comprehensive income in a single continuous statement or in two separate but consecutive statements, as we elected. The impact of adoption was not material to our results of operations or financial position.

Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts

In October 2010, the Financial Accounting Standards Board ("FASB") issued an accounting standards update intended to reduce diversity in practice for the accounting of deferred policy acquisition costs. The guidance modifies the definition of acquisition costs to require that costs be directly related to the successful acquisition of a new or renewal insurance contract to be deferred. We adopted this standard as of January 1, 2012. Pursuant to the guidance, we elected to adopt this standard on a retrospective basis and recognized an adjustment to beginning retained earnings for the earliest period shown in the Consolidated Statements of Changes in Shareholders' Equity of $6.2 million, net of taxes.

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Additional Information

9 Months Ended

Sep. 30, 2012

Disclosure Text Block Supplement [Abstract]

Additional Information

Additional Information

Supplemental Cash Flow Information

We made the following payments that we do not separately disclose in the Consolidated Statements of Cash Flows (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Income tax payments	$	4,000	$	0	$	9,000	$	9,203
Interest payments on debt	5,363		5,363		10,725		10,725

Negative Cash Book Balances

Negative cash book balances, included in the line item “Other liabilities” in the Consolidated Balance Sheets, were $5.9 million at December 31, 2011. There were no negative cash book balances at September 30, 2012.

Gain on Sale of Subsidiary

On September 30, 2012, we completed the sale of an inactive, shell subsidiary company to an unaffiliated third party. The total gain recorded on a GAAP basis was $2.9 million. In the future we intend to sell or dissolve other inactive shell companies. The primary reason for the sale of the companies is to reduce the administrative costs associated with maintaining licenses that are no longer needed to support our insurance operations.

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Long-Term Debt

9 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

Our outstanding debt consisted of the following (in millions):

	September 30, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
5.5% Senior Notes due 2014	$	194.9	$	205.3	$	194.8	$	207.2
5.0% Senior Notes due 2022	275.0		286.1		0.0		0.0
Total	$	469.9	$	491.4	$	194.8	$	207.2

In February 2004, we issued $200 million principal of senior notes due February 2014 (the “5.5% Senior Notes”). The 5.5% Senior Notes accrue interest at an effective yield of 5.55% and bear a coupon of 5.5%, payable semiannually. At the time we issued the Senior Notes, we capitalized $2.1 million of debt issuance costs, which we are amortizing over the term of the 5.5% Senior Notes. During 2009, we repurchased $5.0 million of our debt, bringing the outstanding principal to $195.0 million. We calculated the September 30, 2012 fair value of $205.3 million using a 139 basis point spread to the two-year U.S. Treasury Note of 0.232%. The 5.5% Senior Notes were fully redeemed on October 17, 2012 at a price of 106.729%, or $208.1 million, plus accrued interest of $1.8 million.

In September 2012, we issued $275 million principal of senior notes due September 2022 (the “5.0% Senior Notes”). The 5.0% Senior Notes accrue interest at 5.0%, payable semiannually. At the time we issued the 5.0% Senior Notes, we capitalized $2.2 million of debt issuance costs, which we are amortizing over the term of the 5.0% Senior Notes. We calculated the September 30, 2012 fair value of $286.1 million using a 286 basis point spread to the ten-year U.S. Treasury Note of 1.634%.

In August 2011, we renewed our agreement for a $50 millionthree-year revolving credit facility (the “Credit Agreement”) that requires us to meet certain financial and other covenants. At September 30, 2012 we were in technical violation of one of these covenants due to the issuance of the 5.0% Senior Notes. The 5.5% Senior Notes required 30 days' notice for redemption, therefore, at September 30, 2012 both bond issuances were outstanding causing our leverage ratio to exceed the maximum ratio set forth in the covenants. We were granted a temporary waiver and the 5.5% Senior Notes were redeemed on October 17, 2012. Upon redemption of the 5.5% Senior Notes, the covenant violation was cured.

At September 30, 2012, there were no borrowings outstanding under the Credit Agreement.

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Income Taxes

9 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table reconciles our income taxes at statutory rates to our effective provision for income taxes (in thousands):

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Earnings before income taxes	$	6,586		$	8,196		$	21,431		$	28,628
Income taxes at statutory rates	$	2,305		$	2,868		$	7,501		$	10,020
Effect of:
Dividends-received deduction	(44		)	(35		)	(123		)	(101		)
Tax-exempt interest	(824		)	(887		)	(2,468		)	(2,647		)
Adjustment to valuation allowance	36			(510		)	117			(2,454		)
Other	(42		)	25			3			21
Provision for income taxes	$	1,432		$	1,462		$	5,029		$	4,839
GAAP effective tax rate	21.7		%	17.8		%	23.5		%	16.9		%

During the nine months ended September 30, 2011, we decreased our tax valuation allowance by $2.5 million due to both a decrease in the reserve for other-than-temporary impaired securities and utilization of our capital loss carryforward.

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Insurance Reserves

9 Months Ended

Sep. 30, 2012

Insurance [Abstract]

Insurance Reserves

Insurance Reserves

Insurance reserves include liabilities for unpaid losses, both known and estimated for incurred but not reported (“IBNR”), and unpaid loss adjustment expenses (“LAE”). The following table provides an analysis of changes in the liability for unpaid losses and LAE on a GAAP basis (in thousands):

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Balance at Beginning of Period
Unpaid losses on known claims	$	202,622		$	188,189		$	181,972		$	180,334
IBNR losses	182,630			160,992			177,645			164,140
LAE	145,620			133,928			135,787			133,359
Total unpaid losses and LAE	530,872			483,108			495,403			477,833
Reinsurance recoverables	(13,798		)	(14,880		)	(14,640		)	(16,521		)
Unpaid losses and LAE, net of reinsurance recoverables	517,074			468,228			480,764			461,312
Current Activity
Loss and LAE incurred:
Current accident year	232,940			190,459			676,822			561,846
Prior accident years	5,321			4,816			7,124			4,839
Total loss and LAE incurred	238,261			195,275			683,946			566,685
Loss and LAE payments:
Current accident year	(165,714		)	(131,711		)	(368,230		)	(301,638		)
Prior accident years	(59,864		)	(53,016		)	(266,722		)	(247,582		)
Total loss and LAE payments	(225,578		)	(184,727		)	(634,953		)	(549,220		)
Balance at End of Period
Unpaid losses and LAE, net of reinsurance recoverables	529,757			478,777			529,757			478,777
Add back reinsurance recoverables	14,561			14,754			14,561			14,754
Total unpaid losses and LAE	$	544,318		$	493,531		$	544,318		$	493,531
Unpaid losses on known claims	$	201,804		$	194,164		$	201,804		$	194,164
IBNR losses	193,959			162,809			193,959			162,809
LAE	148,556			136,557			148,556			136,557
Total unpaid losses and LAE	$	544,318		$	493,531		$	544,318		$	493,531

Increases in severities in both bodily injury coverage in California and personal injury protection coverage in Florida related to accident year 2011 was the primary sources of the $5.3 million and $7.1 million of unfavorable reserve development during the three and nine months ended September 30, 2012, respectively.

Increases in severities in both liability coverage in California as well as personal injury protection coverage in Florida relating

to accident year 2010 were the primary source of the unfavorable development during the third quarter of 2011. An increase in

severity in Florida personal injury protection coverage related to accident year 2010 was the primary source of the unfavorable

development during the nine months ended September 30, 2011.

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Computation Of Earnings Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011	Sep. 30, 2012	Sep. 30, 2011
Computation of net earnings per share
Net earnings for basic and diluted net earnings per share	$ 5,154	$ 6,733	$ 18,044	$ 16,402	$ 23,789
Average basic shares outstanding	11,631	12,070		11,689	12,230
Basic net earnings per share	$ 0.44	$ 0.56		$ 1.40	$ 1.95
Average diluted shares outstanding	11,893	12,344		11,959	12,524
Diluted net earnings per share	$ 0.43	$ 0.55		$ 1.37	$ 1.90
Restricted Stock
Computation of net earnings per share
Dilutive shares	32	71		25	72
Stock Options
Computation of net earnings per share
Dilutive shares	101	104		103	119
Performance Shares
Computation of net earnings per share
Dilutive shares	129	100		141	102

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Subsequent Events Details (Details) (Senior Notes, Senior Notes Due 2014, USD $)			0 Months Ended
	Dec. 31, 2009	Feb. 29, 2004	Oct. 17, 2012 Subsequent Event Repayment of Debt
Subsequent Event [Line Items]
Amount of debt redeemed	$ 5,000,000		$ 195,000,000
Coupon rate		5.50%	5.50%
Make whole price of redeemed debt			106.729%
Debt Instrument, Repurchase Amount			208,122,000
Interest Payable			1,800,000
Amortized cost at redemption	(195,000,000)		(194,878,000)
Unamortized issuance costs			352,000
Loss on redemption of debt, pre-tax			$ 13,595,000

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Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Valuation assumptions of stock options granted

We estimated the weighted-average grant date fair values of options granted during 2004 and 2003 using the modified Black-Scholes valuation model and the following weighted-average assumptions:

	2004 Grants				2003 Grants
Weighted-average grant date fair value	$	13.87			$	5.97
Dividend yield	0.7		%		1.4		%
Expected volatility	33.0		%		33.0		%
Risk-free interest rate	4.3		%		4.0		%
Expected life	7.5			years	7.5			years
Weighted-average grant exercise price	$	33.56			$	16.11
Outstanding at September 30, 2012	78,300				83,599

Stock option activity

The following table describes activity for our Stock Option Plan:

	Number of Options		Weighted-Average Exercise Price		Weighted- Average Remaining Term (in years)	Aggregate Intrinsic Value (a) (in millions)
Outstanding at December 31, 2011	192,455		$	23.40
Granted	0		0
Exercised	(30,556	)	$	16.77
Forfeited	0		0
Outstanding at September 30, 2012	161,899		$	24.65	0.87	$	5.8
Vested at September 30, 2012	161,899		$	24.65	0.87	$	5.8
Exercisable at September 30, 2012	161,899		$	24.65	0.87	$	5.8

(a) We calculated the intrinsic value for the stock options based on the difference between the exercise price of the underlying awards and our closing stock price as of the reporting date.

Total compensation cost by plan

The amount of total compensation cost, by plan, for share-based compensation arrangements was as follows (in thousands):

	Three months ended September 30,								Nine months ended September 30,
	2012				2011				2012				2011
	Expense Recognized in Income		Tax Benefit		Expense Recognized in Income		Tax Benefit		Expense Recognized in Income		Tax Benefit		Expense Recognized in Income		Tax Benefit
Restricted Stock Plan	$	298	$	104	$	265	$	93	$	893	$	312	$	662	$	232
Directors’ Plan	0		0		0		0		300		105		350		123
ESPP	13		0		11		0		40		0		30		0
PSP	373		131		702		246		1,624		568		1,371		480
Total	$	684	$	235	$	978	$	338	$	2,856	$	986	$	2,414	$	834

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Additional Information (Tables)

9 Months Ended

Sep. 30, 2012

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

We made the following payments that we do not separately disclose in the Consolidated Statements of Cash Flows (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Income tax payments	$	4,000	$	0	$	9,000	$	9,203
Interest payments on debt	5,363		5,363		10,725		10,725

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Insurance Reserves (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Mar. 31, 2012	Mar. 31, 2011
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward]
Unpaid losses on known claims, balance at beginning of period			$ 181,972	$ 180,334	$ 202,622	$ 188,189
IBNR losses, balance at beginning of period			177,645	164,140	182,630	160,992
LAE, balance at beginning of period			135,787	133,359	145,620	133,928
Total unpaid losses and LAE, balance at beginning of period			495,403	477,833	530,872	483,108
Reinsurance recoverables, balance at beginning of period			(14,640)	(16,521)	(13,798)	(14,880)
Unpaid losses and LAE, net of reinsurance recoverables, balance at beginning of period			480,764	461,312	517,074	468,228
Loss and LAE incurred, current accident year	232,940	190,459	676,822	561,846
Loss and LAE incurred, prior accident years	5,321	4,816	7,124	4,839
Total loss and LAE incurred	238,261	195,275	683,946	566,685
Loss and LAE payments, current accident year	(165,714)	(131,711)	(368,230)	(301,638)
Loss and LAE payments, prior accident years	(59,864)	(53,016)	(266,722)	(247,582)
Total loss and LAE payments	(225,578)	(184,727)	(634,953)	(549,220)
Unpaid losses and LAE, net of reinsurance recoverables, balance at end of period	529,757	478,777	529,757	478,777	517,074	468,228
Add back reinsurance recoverables, balance at end of period	14,561	14,754	14,561	14,754	(13,798)	(14,880)
Total unpaid losses and LAE, balance at end of period	544,318	493,531	544,318	493,531	530,872	483,108
Unpaid losses on known claims, balance at end of period	201,804	194,164	201,804	194,164	202,622	188,189
IBNR losses, balance at end of period	193,959	162,809	193,959	162,809	182,630	160,992
LAE, balance at end of period	$ 148,556	$ 136,557	$ 148,556	$ 136,557	$ 145,620	$ 133,928

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Investments - Summary of unrealized gains and losses (Details)	Sep. 30, 2012	Dec. 31, 2011
Investments, Debt and Equity Securities [Abstract]
Number of positions held with unrealized gains	714	583
Number of positions held with unrealized losses	36	73
Number of positions held that individually exceed unrealized gains of $500,000	7	5
Number of positions held that individually exceed unrealized losses of $500,000	0	0
Percentage of positions held with unrealized gains that were investment grade	84.00%	83.00%
Percentage of positions held with unrealized losses that were investment grade	72.00%	73.00%
Percentage of fair value held with unrealized gains that were investment grade	95.00%	95.00%
Percentage of fair value held with unrealized losses that were investment grade	90.00%	91.00%

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Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Fixed maturities, amortized cost	$ 1,195,837,000	$ 1,144,687,000
Equity securities, cost	26,569,000	26,413,000
Agents' balances and premium receivable, allowance for doubtful accounts	15,010,000	13,497,000
Property and equipment, accumulated depreciation	43,303,000	37,551,000
Recoverable from reinsurers, paid losses and loss adjustment expenses	758,000	79,000
Long-term debt, fair value	$ 491,400,000	$ 207,200,000
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	21,420,996	21,331,006
Treasury stock, shares	9,732,697	9,524,369

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Computation Of Earnings Per Share

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Computation of Net Earnings per Share

Computation of Net Earnings per Share

The following table illustrates the computation of our basic and diluted net earnings per common share (in thousands, except per share figures):

	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Net earnings for basic and diluted net earnings per share	$	5,154	$	6,733	$	16,402	$	23,789
Average basic shares outstanding	11,631		12,070		11,689		12,230
Basic net earnings per share	$	0.44	$	0.56	$	1.40	$	1.95
Average basic shares outstanding	11,631		12,070		11,689		12,230
Restricted stock not yet vested	32		71		25		72
Dilutive effect of assumed option exercises	101		104		103		119
Dilutive effect of Performance Share Plan	129		100		141		102
Average diluted shares outstanding	11,893		12,344		11,959		12,524
Diluted net earnings per share	$	0.43	$	0.55	$	1.37	$	1.90

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Insurance Reserves (Tables)

9 Months Ended

Sep. 30, 2012

Insurance [Abstract]

Liability for unpaid losses and LAE

The following table provides an analysis of changes in the liability for unpaid losses and LAE on a GAAP basis (in thousands):

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Balance at Beginning of Period
Unpaid losses on known claims	$	202,622		$	188,189		$	181,972		$	180,334
IBNR losses	182,630			160,992			177,645			164,140
LAE	145,620			133,928			135,787			133,359
Total unpaid losses and LAE	530,872			483,108			495,403			477,833
Reinsurance recoverables	(13,798		)	(14,880		)	(14,640		)	(16,521		)
Unpaid losses and LAE, net of reinsurance recoverables	517,074			468,228			480,764			461,312
Current Activity
Loss and LAE incurred:
Current accident year	232,940			190,459			676,822			561,846
Prior accident years	5,321			4,816			7,124			4,839
Total loss and LAE incurred	238,261			195,275			683,946			566,685
Loss and LAE payments:
Current accident year	(165,714		)	(131,711		)	(368,230		)	(301,638		)
Prior accident years	(59,864		)	(53,016		)	(266,722		)	(247,582		)
Total loss and LAE payments	(225,578		)	(184,727		)	(634,953		)	(549,220		)
Balance at End of Period
Unpaid losses and LAE, net of reinsurance recoverables	529,757			478,777			529,757			478,777
Add back reinsurance recoverables	14,561			14,754			14,561			14,754
Total unpaid losses and LAE	$	544,318		$	493,531		$	544,318		$	493,531
Unpaid losses on known claims	$	201,804		$	194,164		$	201,804		$	194,164
IBNR losses	193,959			162,809			193,959			162,809
LAE	148,556			136,557			148,556			136,557
Total unpaid losses and LAE	$	544,318		$	493,531		$	544,318		$	493,531

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Investments - Textual (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Investments, Debt and Equity Securities [Abstract]
Proceeds from Sale of Available-for-sale Securities	$ 10,000,000	$ 49,400,000	$ 133,500,000	$ 158,100,000
Receivable for Investments Sold	$ 0	$ 5,500,000	$ 0	$ 5,500,000	$ 1,152,000

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Reporting And Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2012

Accounting Policies [Abstract]

Effect of adoption of new accounting standard

Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts

In October 2010, the Financial Accounting Standards Board ("FASB") issued an accounting standards update intended to reduce diversity in practice for the accounting of deferred policy acquisition costs. The guidance modifies the definition of acquisition costs to require that costs be directly related to the successful acquisition of a new or renewal insurance contract to be deferred. We adopted this standard as of January 1, 2012. Pursuant to the guidance, we elected to adopt this standard on a retrospective basis and recognized an adjustment to beginning retained earnings for the earliest period shown in the Consolidated Statements of Changes in Shareholders' Equity of $6.2 million, net of taxes.

The following table illustrates the effect of adopting this standard on the Consolidated Balance Sheets (in millions):

	December 31, 2011
	As Reported		As Adjusted		Difference
Deferred policy acquisition costs	$	89.9	$	80.1	$	(9.8	)
Current and deferred income taxes	7.3		10.7		3.4
Total assets	1,936.8		1,930.4		(6.4		)
Shareholders' equity	668.2		661.8		(6.4		)

The following table illustrates the effect of adopting this standard on the Consolidated Statements of Earnings (in millions, except per share amounts):

	Three months ended September 30,							Nine months ended September 30,
	2011							2011
	As Reported		As Adjusted		Difference			As Reported		As Adjusted		Difference
Commissions and other underwriting expenses	$	58.1	$	57.2	$	(0.9	)	$	170.7	$	172.1	$	1.4
Provision for income taxes	1.1		1.5		0.3			5.3		4.8		(0.5		)
Net earnings	6.1		6.7		0.6			24.7		23.8		(0.9		)
Net earnings per common share:
Basic	$	0.51	$	0.56	$	0.05		$	2.02	$	1.95	$	(0.07	)
Diluted	0.50		0.55		0.05			1.97		1.90		(0.07		)