10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

Quarterly Report Pursuant to Section 13 or 15 (d)

of the Securities Exchange Act of 1934

______________________________________________________

For Quarter Ended Commission file number

June 30, 2008 0-5534

BALDWIN & LYONS, INC.

(Exact name of registrant as specified in its charter)

INDIANA 35-0160330

(State or other jurisdiction of (I.R.S. Employer

incorporation or organization) Identification Number)

1099 North Meridian Street, Indianapolis, Indiana 46204

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (317) 636-9800

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 is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ____ Accelerated filer x Non-accelerated filer ____

Small Reporting Company ____

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of August 1, 2008:

TITLE OF CLASS NUMBER OF SHARES OUTSTANDING

Common Stock, No Par Value:

Class A (voting) 2,650,059

Class B (nonvoting) 12,394,075

Index to Exhibits located on page 18.

Page 1 of a total of 30 pages

1

PART I – FINANCIAL INFORMATION

ITEM 1 FINANCIAL STATEMENTS

Baldwin & Lyons, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except per share data)
	(Unaudited)
	June 30		December 31
	2008		2007
Assets
Investments:
Fixed maturities	$	374,737	$	338,011
Equity securities		93,563		99,736
Limited partnerships		61,383		80,884
Short-term		16,458		44,768
		546,141		563,399
Cash and cash equivalents		72,881		82,137
Accounts receivable		33,422		33,412
Reinsurance recoverable		147,548		132,811
Notes receivable from employees		2,160		2,228
Deferred federal income taxes		837		—
Other assets		31,535		28,846
	$	834,524	$	842,833
Liabilities and shareholders’ equity
Reserves for losses and loss expenses	$	382,912	$	378,616
Reserves for unearned premiums		21,093		22,678
Accounts payable and accrued expenses		39,344		39,135
Short-term borrowing		20,526		—
Current federal income taxes		8,246		10,568
Deferred federal income taxes		—		11,118
		472,121		462,115
Shareholders’ equity:
Common stock-no par value		642		650
Additional paid-in capital		47,174		47,899
Unrealized net gains on investments		28,921		36,876
Retained earnings		285,666		295,293
		362,403		380,718
	$	834,524	$	842,833

See notes to condensed consolidated financial statements.

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Baldwin & Lyons, Inc. and Subsidiaries
Unaudited Consolidated Statements of Income
(in thousands, except per share data)
	Three Months Ended					Six Months Ended
	June 30					June 30
	2008			2007		2008			2007
Revenues
Net premiums earned	$	46,902		$	44,817	$	91,990		$	88,992
Net investment income		4,195			4,882		8,395			9,728
Net gains (losses) on investments		(2,960	)		8,772		(16,535	)		9,246
Commissions and other income		1,113			1,145		2,413			2,557
		49,250			59,616		86,263			110,523
Expenses
Losses and loss expenses incurred		26,462			24,493		55,923			51,385
Other operating expenses		14,245			13,562		29,885			26,408
		40,707			38,055		85,808			77,793
Income before federal income taxes		8,543			21,561		455			32,730
Federal income taxes		2,236			6,769		(1,244	)		9,727
Net income	$	6,307		$	14,792	$	1,699		$	23,003
Per share data:
Basic earnings	$	.41		$	.98	$	.11		$	1.52
Diluted earnings		.41			.98		.11			1.52
Dividends paid to shareholders	$	.25		$	.25	$	.50		$	.70
Reconciliation of shares outstanding:
Average shares outstanding - basic		15,189			15,147		15,215			15,142
Dilutive effect of options outstanding		-			18		-			19
Average shares outstanding - diluted		15,189			15,165		15,215			15,161

See notes to condensed consolidated financial statements.

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Baldwin & Lyons, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
(dollars in thousands)
	Six Months Ended
	June 30
	2008			2007
Net cash provided by (used in) operating activities	$	(   9,750	)	$	17,540
Investing activities:
Purchases of long-term investments		(235,147	)		(118,750	)
Proceeds from sales or maturities
of long-term investments		198,640			107,129
Net sales of short-term investments		28,310			12,751
Other investing activities		2			(914	)
Net cash provided by (used in) investing activities		(8,195	)		216
Financing activities:
Dividends paid to shareholders		(7,610	)		(10,600	)
Drawings on line of credit		5,000			—
Drawings on margin account		15,526			—
Cost of treasury stock		(4,227	)		—
Proceeds from sales of common stock		—			386
Net cash provided by (used in) financing activities		8,689			(10,214	)
Increase (decrease) in cash and cash equivalents		(9,256	)		7,542
Cash and cash equivalents at beginning of period		82,137			35,490
Cash and cash equivalents at end of period	$	72,881		$	43,032

See notes to condensed consolidated financial statements.

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Notes to Condensed Unaudited Consolidated Financial Statements

(dollars in thousands)

(1)Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the year ended December 31, 2008. Interim financial statements should be read in conjunction with the Company’s annual audited financial statements and other disclosures included in the Company’s most recent Form 10-K.

(2) Net Gains (Losses) on Investments: Amounts reported as net gains (losses) on investments consist of three components: (1) net gains or losses realized upon the actual sale of investments managed directly by the Company’s investment managers, (2) equity in earnings or losses of investments in limited partnerships and (3) “other-than-temporary impairment” adjustments.

The Company accounts for investments in limited partnerships using the equity method of accounting, which requires an investor in a limited partnership to record its proportionate share of the limited partnership’s net income. To the extent that the limited partnership investees include both realized and unrealized investment gains or losses in the determination of net income or loss, then the Company would also recognize, through its income statement, its proportionate share of the investee’s unrealized as well as realized investment gains or losses. The Company invests in limited partnerships that include both realized and unrealized investment gains or losses in the determination of their net income. Readers are cautioned that inclusion of such unrealized gains is not consistent with the recognition of temporary valuation changes of equity and debt securities that are directly owned and held for sale and may result in significant fluctuations in quarterly amounts reported under this caption. In addition, because of inherent time lags in receiving valuation reports from certain limited partnership investees, the Company must often rely on estimations of valuation changes for the most recent month or quarter ended on the reporting date. To the extent that the actual valuations subsequently reported differ from estimates utilized, the differences are included in gains or losses from investments in the quarter reported to the Company.

Following is a summary of the components of net gains (losses) on investments for the periods presented in the accompanying statements of income.

	Three Months Ended					Six Months Ended
	June 30					June 30
	2008			2007		2008			2007
Realized net gains on the disposal of securities	$	2,030		$	1,051	$	452		$	1,517
Equity in earnings (losses) of limited partnership
investments (realized and unrealized)		(4,741	)		7,721		(16,731	)		6,824
Impairment:
Write-downs based upon objective criteria		(457	)		—		(473	)		(63	)
Recovery of prior write-downs
upon sale or disposal		208			—		217			968
Totals	$	(2,960	)	$	8,772	$	(16,535	)	$	9,246

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Notes to Condensed Unaudited Consolidated Financial Statements (continued)

The net losses from limited partnerships for the quarter and year-to-date ending June 30, 2008 include an estimated $5.0 million and $25.5 million, respectively, of unrealized losses reported to the Company as part of the operations of the various limited partnerships. Shareholders’ equity at June 30, 2008 includes approximately $19.3 million, net of deferred federal income taxes, of earnings undistributed by limited partnerships.

(3) Reinsurance: The following table summarizes the Company’s transactions with reinsurers for the 2008 and 2007 comparative periods.

	2008	2007
Quarter ended June 30:
Premiums ceded to reinsurers	$10,087	$6,976
Losses and loss expenses
ceded to reinsurers	22,843	5,676
Commissions from reinsurers	804	351
Six months ended June 30:
Premiums ceded to reinsurers	19,265	13,093
Losses and loss expenses
ceded to reinsurers	23,014	10,086
Commissions from reinsurers	1,448	642

(4) Comprehensive Income or Loss: Total realized and unrealized income for the quarter ended June 30, 2008 was $1,120 and compares to total realized and unrealized income of $18,766 for the quarter ended June 30, 2007. For the first six months ended June 30, 2008, total realized and unrealized loss was $6,478 and compares to total realized and unrealized income of $26,548 for the first six months ended June 30, 2007.

(5) Reportable Segments – Profit or Loss: The following table provides certain profit and loss information for each reportable segment. All amounts presented are computed based upon U.S. generally accepted accounting principles. Segment profit for fleet trucking includes the direct marketing agency operations conducted by the parent company for this segment and is computed after elimination of inter-company commissions. Amounts presented for reinsurance assumed include transactions related to certain inter-segment reinsurance agreements.

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Notes to Condensed Unaudited Consolidated Financial Statements (continued)

	2008			2007
	Direct and Assumed Premium Written	Net Premium Earned and Fee Income	Segment Profit (Loss)	Direct and Assumed Premium Written	Net Premium Earned and Fee Income	Segment Profit (Loss)
Quarter ended June 30:
Protective products:
Fleet trucking	$   38,565	$            29,574	$7,483	$         31,222	$         26,088	$           7,703
Reinsurance assumed	8,422	8,799	2,555	6,830	7,531	2,386
Sagamore products:
Private passenger automobile	3,847	5,988	579	4,486	8,254	479
Small fleet trucking	2,703	2,525	(720)	4,915	4,094	89
All other	882	655	395	(144)	(71)	162
Totals	$   54,419	$47,541	$10,292	$         47,309	$         45,896	$         10,819
Six months ended June 30:
Protective products:
Fleet trucking	$    75,817	$58,167	$8,754	$         62,107	$         52,258	$         13,002
Reinsurance assumed	15,808	16,610	6,301	12,653	13,913	4,418
Sagamore products:
Private passenger automobile	10,940	12,337	565	14,687	16,947	1,425
Small fleet trucking	6,141	5,555	(644)	11,031	8,189	163
All other	968	739	90	(68)	37	363
Totals	$ 109,674	$93,408	$     15,066	$       100,410	$         91,344	$         19,371

(6) Reportable Segments – Reconciliation to Consolidated Revenue and Consolidated Profit or Loss: The following tables are reconciliations of reportable segment revenues and profit or loss to the Company’s consolidated revenue and income before federal income taxes, respectively.

	Three Months Ended		Six Months Ended
	June 30		June 30
	2008	2007	2008	2007
Revenue:
Net premium earned and fee income	$47,541	$           45,896	$93,408	$            91,344
Net investment income	4,195	4,882	8,395	9,728
Net gains (losses) on investments	(2,960)	8,772	(16,535)	9,246
Other	474	66	995	205
Total consolidated revenue	$49,250	$           59,616	$        86,263	$          110,523
Profit:
Segment profit	$        10,292	$           10,819	$        15,066	$            19,371
Net investment income	4,195	4,882	8,395	9,728
Net gains (losses) on investments	(2,960)	8,772	(16,535)	9,246
Corporate expenses	(2,984)	(2,912)	(6,471)	(5,615)
Income before federal income taxes	$          8,543	$           21,561	$             455	$            32,730

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Notes to Condensed Unaudited Consolidated Financial Statements (continued)

Management does not identify or allocate assets to reportable segments when evaluating segment performance and depreciation expense is not material for any of the reportable segments.

(7) Shareholders’ Equity: During the first six months of 2008, the Company purchased 198,480 shares of the Company’s Class B common stock in the open market for $4,227.

(8) Loans to Employees: In 2000, 2001 and 2002, the Company provided loans to certain employees for the sole purpose of purchasing the Company’s Class B common stock in the open market. $7,260 of such full-recourse loans were issued and $2,160 remains outstanding at June 30, 2008 and carry interest rates of between 4.75% and 6%, payable annually on the loan anniversary date. The underlying securities serve as collateral for these loans, which must be repaid no later than 10 years from the date of issue. No additional loans will be made under this program.

(9) Debt: During the second quarter of 2008, the Company borrowed $5,000 under the Company’s line of credit at a fixed interest rate, through December 27, 2008, of 3.7%. Additionally, during the second quarter of 2008, the Company borrowed $15,526 at a variable interest rate of 2.5% on the Company’s investment margin account in connection with certain investment programs. The Company pledges investments equal to two times the investment margin account borrowing.

(10) Taxes: As of June 30, 2008, the Company’s 2005 and subsequent tax years remain subject to examination by the IRS.

(11) Accounting Pronouncements: In September 2006, the Financial Accounting Standards Board issued Statement No. 157, “Fair Value Measurements” (“SFAS No. 157”), which provides a common definition of fair value and establishes a framework to make the measurement of fair value more consistent and comparable. SFAS No. 157 also requires expanded disclosures about (1) the extent to which companies measure assets and liabilities at fair value, (2) the methods and assumptions used to measure fair value and (3) the effect of fair value measures on earnings. SFAS 157 is effective for financial assets and liabilities on January 1, 2008. The FASB has deferred the implementation of the provisions of SFAS 157 relating to certain nonfinancial assets and liabilities until January 1, 2009. The adoption of SFAS 157 did not have a significant impact on the Company’s consolidated financial condition or results of operations.

Beginning January 1, 2008, assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

8

Notes to Condensed Unaudited Consolidated Financial Statements (continued)

The following table summarizes fair value measurements by level at June 30, 2008 for assets measured at fair value on a recurring basis:

Description	Total			Level 1		Level 2		Level 3
Fixed maturies	$	374,737		$	—	$	374,737	$	—
Equity securities		93,563			93,563		—		—
Short term		16,458			3,086		13,372		—
Cash equivalents		77,163			—		77,163		—
Derivatives		(1,103	)		—		—		(1,103	)
	$	560,818		$	96,649	$	465,272	$	(1,103	)

Level inputs, as defined by FAS 157, are as follows:

LevelInput:	Input Definition:
Level 1	Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level 2	Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date.
Level 3	Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level 3 inputs is as follows for the three and six month periods ending June 30, 2008:

Derivatives		Three Months Ended	Six Months Ended
Beginning of period balance		$ (113)	$ -
Total gain or losses (realized or unrealized)
	Included in earnings (or changes in net assets)	(477)	(2,071)
	Included in other comprehensive income	-	-
Purchases, issuances, and settlements		(513)	968
Transfers in and/or out of Level 3		-	-
June 30, 2008 balance		$ (1,103)	$ (1,103)

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ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

The Company generally experiences positive cash flow from operations resulting from the fact that premiums are collected on insurance policies in advance of the disbursement of funds in payment of claims. Operating costs of the property/casualty insurance subsidiaries, other than loss and loss expense payments and commissions paid to related agency companies, generally average less than 30% of premiums earned and the remaining amount is available for investment for varying periods of time pending the settlement of claims relating to the insurance coverage provided. The Company’s cash flow relating to premiums is significantly affected by reinsurance programs in effect from time-to-time whereby the Company cedes both premium and risk to other insurance and reinsurance companies. These programs vary significantly among products. For the first six months of 2008, the Company experienced negative cash flow from operations totaling $9.7 million which compares to positive cash flow from operations of $17.5 million generated during the first six months of 2007. The change in cash flow from the 2007 period is primarily due to higher loss payments resulting from the settlement of several large trucking liability claims, increased premiums ceded to reinsurers under treaty and facultative arrangements, and the timing of tax payments as well as the lower operating income in the first six months of 2008.

For several years, the Company’s investment philosophy has emphasized the purchase of relatively short-term instruments with maximum quality and liquidity. The average life of the Company’s fixed income (bond and short-term investment) portfolio was 3.1 years at June 30, 2008, which is short relative to the Company’s liability duration.

Financing activity for the first six months of 2008 included the Company’s regular dividend payments of $7.6 million ($.50 per share for the first six months of 2008 representing $.25 per share each during the first and second quarter of 2008), the purchase of $4.2 million of the Company’s common stock on the open market and borrowings related to investment activities and treasury stock purchases totaling of $20.5 million during 2008.

The Company’s assets at June 30, 2008 included $72.9 million in investments classified as cash or cash equivalents that were readily convertible to cash without significant market penalty. An additional $111.3 million of fixed maturity investments will mature within the twelve-month period following June 30, 2008. The Company believes that these liquid investments are more than sufficient to provide for projected claim payments and operating cost demands.

Consolidated shareholders’ equity is composed largely of GAAP shareholder’s equity of the insurance subsidiaries. As such, there are statutory restrictions on the transfer of portions of this equity to the parent holding company. At June 30, 2008, $48.9 million may be transferred by dividend or loan to the parent company during the remainder of 2008 without approval by, or prior notification to, regulatory authorities. An additional $224.3 million of shareholder’s equity of the insurance subsidiaries could, theoretically, be advanced or loaned to the parent holding company with prior notification to, and approval from, regulatory authorities, although it is unlikely that transfers of this size would be practical. The Company believes that these restrictions pose no material liquidity concerns to the Company. The Company also believes that the financial strength and stability of the subsidiaries would permit ready access by the parent company to short-term and long-term sources of credit. The parent company had cash and marketable securities valued at $6.9 million at June 30, 2008.

The Company’s annualized premium writing to surplus ratio for the first six months of 2008 was approximately 39%. Regulatory guidelines generally allow for writings of at least 100% of surplus. Accordingly, the Company could increase premium writings significantly with no need

10

to raise additional capital. Further, the insurance subsidiaries’ individual capital levels are several times higher than the minimum amounts designated by the National Association of Insurance Commissioners.

Results of Operations

Comparisons of Second Quarter, 2008 to Second Quarter, 2007

Net premiums earned during the second quarter of 2008 increased $2.1 million (5%) as compared to the same period of 2007. The Company’s fleet trucking and reinsurance assumed products reported significant increases of $3.7 million (15%) and $1.5 million (22%), respectively. These increases are in line with expectations and result from the continuing expansion of reinsurance assumed activities and the continuing effect of program changes and expanded marketing of independent contractor products as well the Company’s entry into the public transportation markets. These increases were partially offset by decreases in the Company’s private passenger automobile and small fleet liability products of $2.1 million (27.4%) and $1.7 million (39.5%), respectively, each impacted by competitive market conditions.

Direct premiums written and assumed during the second quarter of 2008 totaled $54.4 million, a 15% increase from the $47.3 million reported a year earlier with increased premium concentrated in the Company’s fleet trucking and reinsurance assumed products, as discussed in the previous paragraph. Premium ceded to reinsurers averaged 22.4% of direct premium production for the current quarter compared to 17.2% a year earlier, reflecting the overall increased utilization of reinsurance since June, 2007.

Net investment income, before tax, during the second quarter of 2008 was 14.1% lower than the second quarter of 2007 due to decreases in yields in all categories of investments. Pre-tax yields averaged 3.6% during the current quarter compared to 4.2% for the prior year period. Overall after-tax yields decreased from 3.4% to 3.0%, reflecting the increased utilization of municipal bonds in the portfolio during 2008 and due to the overall market decline in interest rates in 2008.

The second quarter 2008 net investment losses of $3.0 million resulted primarily from $4.7 million of losses on limited partnerships partially offset by $1.7 million of gains on sales of securities. The second quarter 2007 investment gains were $8.8 million. The limited partnership losses were concentrated in our investment in a limited partnership which invests exclusively in India. See footnote 2 to the enclosed financial statements for a more detailed discussion regarding the accounting policies and the net gains or losses reported for the Company’s investments in limited partnerships.

Losses and loss expenses incurred during the second quarter of 2008 were $1.9 million higher than that experienced during the second quarter of 2007 due to increase premium volume and by a decline in reserve savings on prior period claims, particularly in fleet trucking. Loss ratios for each of the Company’s major product lines were as follows:

11

2008 2007

Fleet trucking 56.3% 52.4%

Private passenger automobile 60.8 68.2

Small fleet trucking 84.6 58.2

Reinsurance assumed 50.5 49.0

All lines 56.4 54.7

Other operating expenses, for the second quarter of 2008, increased $0.6 million, or 5%, from the second quarter of 2007. The $0.6 million increase related to a $1.6 million increase in commissions paid to non-affiliates on direct and assumed business and is partially offset by a $0.5 million rise in ceded commission offsets, along with a $0.5 million decrease in premium taxes in line with premium volume. The ratio of consolidated other operating expenses to operating revenue was 27.3% during the second quarter of 2008 compared to 26.7% for the 2007 second quarter.

The effective federal tax rate on the consolidated operations for the second quarter of 2008 was 26% and differs from the normal statutory rate as a result of tax-exempt investment income.

As a result of the factors mentioned above, net income decreased $8.5 million (57%) during the second quarter of 2008 as compared with 2007.

Comparisons of Six Months Ended June 30, 2008 to Six Months Ended June 30, 2007

Net premiums earned during the first six months of 2008 increased $3.0 million (3%) as compared to the same period of 2007. The Company’s fleet trucking and reinsurance assumed products reported significant increases of $6.7 million (14%) and $3.2 million (25%), respectively. These increases are in line with expectations and result from the continuing expansion of reinsurance assumed activities and the continuing effect of program changes and expanded marketing of independent contractor products as well the Company’s entry into the public transportation markets. These increases were partially offset by decreases in the Company’s private passenger automobile and small fleet products of $4.2 million (27.0%) and $2.9 million (34.6%), respectively, each impacted by competitive market conditions.

Direct premiums written and assumed during the first six months of 2008 totaled $109.7 million, a 9.2% increase from the $100.4 million reported a year earlier with increased premium concentrated in the Company’s fleet trucking and reinsurance assumed products, as discussed in the previous paragraph. Premium ceded to reinsurers averaged 20.7% of direct premium production for the current period compared to 14.9% a year earlier.

Net investment income, before tax, during the first six months of 2008 was 13.7% lower than the first six months of 2007 due to decreases in yields in all categories of investments. Pre-tax yields averaged 3.6% during the current quarter compared to 4.2% for the prior year period. Overall after-tax yields decreased from 3.3% to 3.1%, reflecting the increased utilization of municipal bonds in the portfolio during 2008 and due to the overall market decline in interest rates in 2008.

The first six months of 2008 net investment losses of $16.5 million resulted primarily from $16.7 million of losses on limited partnerships. The first six months of 2007 investment gains were $9.2 million. The limited partnership losses were concentrated in our investment in a limited partnership which invests exclusively in India, as discussed in the quarterly comparison.

Losses and loss expenses incurred during the first six months of 2008 were $4.5 million higher than that experienced during the first six months of 2007 due to increase premium volume as

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well as a decline in reserve savings on prior period claims, particularly in fleet trucking. Loss ratios for each of the Company’s major product lines were as follows:

2008 2007

Fleet trucking 65% 58.8%

Private passenger automobile 65.7 65.1

Small fleet trucking 67.8 57.0

Reinsurance assumed 41.3 48.7

All lines 60.8 57.7

Other operating expenses, for the first six months of 2008, increased $3.5 million, or 13.2%, from the first six months of 2007. The $3.4 million increase related to a $3.8 million increase in commissions paid to non-affiliates on direct and assumed business and is partially offset by a $0.8 million rise in ceded commission offsets, along with a $0.3 million decrease in premium taxes in line with premium volume. The ratio of consolidated other operating expenses to operating revenue was 29.1% during the first six months of 2008 compared to 26.1% for the 2007 first six months.

The effective federal tax rate on the consolidated income for the first six months of 2008 was a $1.2 million benefit. The effective rate related to operating income differs from the normal statutory rate as a result of tax-exempt investment income.

As a result of the factors mentioned above, net income decreased $21.3 million (93%) during the first six months ended 2008 as compared with 2007.

Forward-Looking Information

Any forward-looking statements in this report, including without limitation, statements relating to the Company’s plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) the Company’s plans, strategies, objectives, expectations and intentions are subject to change at any time at the discretion of the Company; (ii) the Company’s business is highly competitive and the entrance of new competitors into or the expansion of the operations by existing competitors in the Company’s markets and other changes in the market for insurance products could adversely affect the Company’s plans and results of operations; (iii) other risks and uncertainties indicated from time to time in the Company’s filings with the Securities and Exchange Commission; and (iv) other risks and factors which may be beyond the control or foresight of the Company. Readers are encouraged to review the Company’s annual report for its full statement regarding forward-looking information.

Critical Accounting Policies

There have been no changes in the Company’s critical accounting policies as disclosed in the Form 10-K filed for the year ended December 31, 2007.

Concentrations of Credit Risk

The insurance subsidiaries cede portions of their gross premiums to numerous reinsurers under quota share and excess of loss treaties as well as facultative placements. These reinsurers assume commensurate portions of the risk of loss covered by the contracts. As losses are reported and reserved, portions of the gross losses attributable to reinsurers are established as receivable assets and losses incurred are reduced. At June 30, 2008, amounts due from reinsurers on paid and

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unpaid losses, including provisions for incurred but not reported losses, are estimated to total approximately $148 million.

At June 30, 2008, limited partnership investments include approximately $40.9 million consisting of three partnerships which are managed by organizations in which certain of the Company’s directors are officers, directors, general partners or owners. Each of these investments contain profit sharing agreements to the affiliated organizations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our exposure to market risk since the disclosure in our Form 10-K for the year ended December 31, 2007.

ITEM 4. CONTROLS AND PROCEDURES

(a) The Corporation’s Chief Executive Officer and Chief Financial Officer evaluated the disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Corporation’s disclosure controls and procedures are effective.

(b) There were no significant changes in the Corporation’s internal control over financial reporting identified in connection with the foregoing evaluation that occurred during the Corporation’s last fiscal quarter that have affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

14

PART II – OTHER INFORMATION

ITEM 4 Submission of Matters to a Vote of Security Holders.

At our Annual Meeting of Shareholders held on May 6, 2008, shareholders voted on the following proposals:

			WITHHOLD
	FOR	AGAINST	(ABSTAIN)
To approve the Baldwin & Lyons Executive Bonus Plan	2,423,735	27,885	222
To approve the Baldwin & Lyons Employee Equity Appreciation Rights Plan	2,417,253	33,899	690
To ratify the appointment of Ernst & Young LLP as our independent auditors for the fiscal year ending December 31, 2008	2,451,492	332	18

Election of Directors: All presently serving directors were reelected in an uncontested election.

Each of the above matters submitted to a vote of shareholders was described in greater detail in the definitive proxy soliciting materials which were sent to shareholders and were filed with the Commission on March 31, 2008.

ITEM 5 Other Information

Nothing to report.

ITEM 6 (a) EXHIBITS

Number and caption from Exhibit

Table of Regulation S-K Item 601 Exhibit No.

(10) Material Contracts EXHIBIT 10(f)

Baldwin & Lyons, Inc. Executive Incentive Bonus Plan

EXHIBIT 10(g)

Baldwin & Lyons, Inc. Employee Incentive Bonus Plan (Equity Appreciation Rights Plan)

(31.1) Certification of CEO EXHIBIT 31.1

pursuant to Section 302 of the Certification of CEO

Sarbanes-Oxley Act of 2002

15

(31.2) Certification of CFO EXHIBIT 31.2

pursuant to Section 302 of the Certification of CFO

Sarbanes-Oxley Act of 2002

(32.1) Certification of CEO EXHIBIT 32.1

pursuant to 18 U.S.C. 1350, as Certification of CEO

adopted pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

(32.2) Certification of CFO EXHIBIT 32.2

pursuant to 18 U.S.C. 1350, as Certification of CFO

adopted pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

16

SIGNATURES

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

BALDWIN & LYONS, INC.

Date August 6, 2008 By     /s/ Gary W. Miller

Gary W. Miller, Chairman and CEO

Date August 6, 2008 By /s/ G. Patrick Corydon

G. Patrick Corydon,

Executive Vice President – Finance

(Principal Financial and

Accounting Officer)

17

BALDWIN & LYONS, INC.

Form 10-Q for the fiscal quarter

ended June 30, 2008

INDEX TO EXHIBITS

Begins on sequential

page number of Form

Exhibit Number 10-Q

EXHIBIT 10(f) filed electronically herewith

Baldwin & Lyons, Inc.

Executive Incentive Bonus Plan

EXHIBIT 10(g) filed electronically herewith

Baldwin & Lyons, Inc.

Employee Incentive Bonus Plan

(Equity Appreciation Rights Plan)

EXHIBIT 31.1 filed electronically herewith

Certification of CEO

pursuant to Section 302 of the

Sarbanes-Oxley Act

EXHIBIT 31.2 filed electronically herewith

Certification of CFO

pursuant to Section 302 of the

Sarbanes-Oxley Act

EXHIBIT 32.1 filed electronically herewith

Certification of CEO

pursuant to 18 U.S.C. 1350,

as adopted pursuant to Section

906 of the Sarbanes-Oxley Act

EXHIBIT 32.2 filed electronically herewith

Certification of CFO

pursuant to 18 U.S.C. 1350,

as adopted pursuant to Section

906 of the Sarbanes-Oxley Act

18

EX-10

Exhibit 10(g)

BALDWIN & LYONS, INC. EMPLOYEE INCENTIVE BONUS PLAN

(EQUITY APPRECIATION RIGHTS PLAN)

General

The BALDWIN & LYONS, INC. EMPLOYEE EQUITY APPRECIATION RIGHTS PLAN (hereafter referred to as the “EAR Plan”) was adopted by the Compensation Committee and approved by the Board of Directors. The Board of Directors directed that the EAR Plan be submitted to the shareholders of the Corporation and the EAR Plan was approved at the Annual Meeting of shareholders held on May 6, 2008. As a part of the Compensation Committee’s ongoing monitoring of the impact of Section 162(m) of the Internal Revenue Code (the “Code”) on the Corporation, it was determined that it was in the best interests of the Corporation and its shareholders to take steps necessary to verify that the requirements of Section 162(m) were satisfied to assure that compensation to the Named Executive Officers would be deductible for tax purposes.

The EAR Plan is designed to qualify as providing “performance-based” compensation under Section 162(m) of the Code. “Performance-based” compensation meeting the requirements of Section 162(m) of the Code is generally exempt from the federal income tax law which disallows a tax deduction for annual compensation over $1,000,000 that a corporation subject to SEC reporting requirements may pay to certain of its most highly paid executives.

Reasons for the EAR Plan

The Board of Directors and the Compensation Committee continue to believe that it is in the best interests of the Corporation and its stockholders to provide for a shareholder-approved plan under which awards paid to its executives can qualify for deductibility for federal income tax purposes. Accordingly, the Corporation has structured the EAR Plan in a manner such that payments under it can satisfy the requirements for “performance-based” compensation within the meaning of Section 162(m) of the Code.

Description of EAR Plan

The EAR Plan is designed to qualify as “performance-based” compensation under Code Section 162(m). Under Section 162(m), the Corporation may not receive a federal income tax deduction for compensation paid to the Chief Executive Officer, Chief Financial Officer or up to three additional executive officers whose total compensation is required to be reported in the Proxy Statement to the extent that any of these persons receives more than $1,000,000 in compensation in any one year. However, any compensation that is “performance-based”, as defined in Section 162(m), is generally exempt from the deduction limitation. The EAR Plan will allow the Corporation to pay incentive compensation that is performance-based and therefore fully tax deductible to the extent otherwise allowable on our federal income tax return.

Eligibility

Participation in the EAR Plan is available to all salaried employees of the Corporation.

22

Determination of the Amount of the Grants and Value of the Rights

The Compensation Committee shall designate, in writing, the employees who are to receive grants of equity appreciation rights (“Rights”) in recognition of the employee’s contribution to the Corporation. The Compensation Committee must also determine the number of Rights to be granted to each participant. The amount of the grant will generally be in proportion to the participant’s base salary but the Compensation Committee may utilize its discretion in establishing the number of Rights granted to each participant. Once the Compensation Committee has established the persons to receive the grants and number of Rights subject to each grant, it shall have no discretion to alter either the recipients or the number of shares subject to grant.

The Rights shall vest over a three year period, one-third per year, over each of the first three years following the date of the grant. The Rights shall expire five years from the date of the grant. The value of each Right shall be determined by the difference between the adjusted book value per share of the Corporation’s common shares at the end of the most recent calendar quarter prior to the date of exercise and the adjusted book value per share of the Corporation’s common shares at the end of the most recent calendar quarter prior to the date of the grant. The adjusted book value of the common stock shall be the book value determined in accordance with generally accepted accounting principals as reported in the financial statements of the Corporation filed with the Securities and Exchange Commission, plus the excess, if any, of dividends paid by the Corporation in excess of 12.5 cents per share per calendar quarter beginning November 1, 2003 and ending as of the most recent calendar quarter prior to the date of exercise of the Rights.

Except in the event of termination of employment, as described in Payment of Awards-Post Employment Matters, vested rights can be exercised only in the calendar year in which the grant expires.

Awards shall be payable only in cash and the participant has no right to purchase either Class A or Class B common shares. The participant shall have no rights as a shareholder of the Corporation with respect to any Rights. Payments under the EAR grants shall not be included in compensation for the participant in determining the participant’s contribution to the Baldwin & Lyons, Inc. Salary and Profit Sharing Plan (401K Plan) and EAR awards shall also not be considered compensation for purposes of computing the Corporation’s share of contributions to the 401K Plan or any other bonus or profit-sharing plan.

Adjustments for Recapitalization Events

In the event that the Corporation engages in a recapitalization event, such as a stock split, reverse stock split, share dividend, merger, consolidation, combination, share exchange or other similar corporate action, which materially affects the book value of the Corporation’s common stock subject to any then outstanding Rights, the Compensation Committee may, in its sole discretion, adjust the number of Rights then outstanding in an amount which the Compensation Committee believes to be equitable.

Payment of Awards-Post Employment Matters

Bonuses under the EAR Plan shall be paid in cash through the Corporation’s normal payroll procedures, subject to all federal and state withholding requirements.

In the event a plan participant ceases employment with the Corporation by reason of death or disability, vested Rights shall expire six months from the date of termination of employment. In the event a plan participant ceases employment with the Corporation at age 55 or above and retires, concurrently, from the property and casualty industry, vested Rights must be exercised on the date of retirement or they are forfeited. If the employment of a plan participant ceases for any other reason, all vested Rights are

23

forfeited on the date of termination of employment. Any unvested Rights expire immediately upon termination of employment, for any reason.

Administration

The EAR Plan shall be administered by the Compensation Committee, which shall be comprised solely of outside directors as defined under Section 162(m) of the Code.

Amendment and termination of the EAR Plan

The EAR Plan may be amended from time to time, in whole or in part, by the Compensation Committee, subject to approval of the Board of Directors, but no amendment will be effective without shareholder approval if such approval is required to satisfy the requirements of Section 162(m) of the Code.

24

EX-32

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Baldwin & Lyons, Inc. (the “Company”) on Form 10-Q for the quarterly period ending June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gary W. Miller, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(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.

/s/ Gary W. Miller

Gary W. Miller

Chairman of the Board and

Chief Executive Officer

August 6, 2008

29

EX-32

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Baldwin & Lyons, Inc. (the “Company”) on Form 10-Q for the quarterly period ending June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, G. Patrick Corydon, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(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.

/s/ G. Patrick Corydon

G. Patrick Corydon

Executive Vice President and

Chief Financial Officer

August 6, 2008

30

EX-10

Exhibit 10(f)

BALDWIN & LYONS, INC. EXECUTIVE INCENTIVE BONUS PLAN

General

The BALDWIN & LYONS, INC. EXECUTIVE INCENTIVE BONUS PLAN (the “Incentive Bonus Plan” or the “Plan”) was adopted by the Compensation Committee and approved by the Board of Directors. The Board of Directors directed that the Incentive Bonus Plan be submitted to the shareholders of the Corporation and it was approved at the Annual Meeting of shareholders held on May 6, 2008. As a part of the Compensation Committee’s ongoing monitoring of the impact of Section 162(m) of the Internal Revenue Code (the “Code”) on the Corporation, it was determined that it was in the best interests of the Corporation and its shareholders to take all steps necessary to verify that the requirements of Section 162(m) were satisfied to assure that compensation to the Named Executive Officers would be deductible for tax purposes.

The Incentive Bonus Plan is designed to qualify as providing “performance-based” compensation under Section 162(m) of the Code. “Performance-based” compensation meeting the requirements of Section 162(m) of the Code is generally exempt from the federal income tax law which disallows a tax deduction for annual compensation over $1,000,000 that a corporation subject to SEC reporting requirements may pay to certain of its most highly paid executives.

Reasons for the Incentive Bonus Plan

The Board of Directors and the Compensation Committee continue to believe that it is in the best interests of the Corporation and its stockholders to provide for a shareholder-approved plan under which awards paid to its executives can qualify for deductibility for federal income tax purposes. Accordingly, the Company has structured the Incentive Bonus Plan in a manner such that payments under it can satisfy the requirements for “performance-based” compensation within the meaning of Section 162(m) of the Code.

Description of Incentive Bonus Plan

The Incentive Bonus Plan is designed to qualify as “performance-based” compensation under Code Section 162(m). Under Section 162(m), the Corporation may not receive a federal income tax deduction for compensation paid to the Chief Executive Officer, Chief Financial Officer or up to three additional executive officers whose total compensation is required to be reported in the Proxy Statement to the extent that any of these persons receives more than $1,000,000 in compensation in any one year. However, any compensation that is “performance-based”, as defined under Section 162(m), is generally exempt from the deduction limitation.

19

Eligibility

Participation in the Incentive Bonus Plan is limited to officers holding the position of Vice President or above. During the first sixty days of each calendar year the Compensation Committee will designate those executive officers who will participate in the Incentive Bonus Plan for that year.

Determination of the Amount of the Bonus

During the first sixty days of each calendar year, the Compensation Committee will determine, in writing, the executives who are to participate in the Incentive Bonus Plan. The Committee will establish a target bonus for each executive based on the executive’s duties and base salary. The target bonuses do not have to be uniform for all executives, but the Compensation Committee may utilize its discretion in establishing the target for each participant. Once the Compensation Committee has set the target bonus, it has the discretion to lower, or eliminate entirely, the bonus, however, the Compensation Committee does not have discretion to raise the target bonus.

The Compensation Committee must establish a “hurdle” for purposes of calculating the amount, if any, of the bonus. The hurdle shall be referenced to the average operating profit of the Corporation, before federal income taxes, for the three year period from 2003 through and including 2005, increased to mitigate the impact of hurricane losses during 2005. Seventy five percent (75%) of the executive’s target bonus shall be incremented or decremented as determined by a formula which consists of the percent difference (either increase or decrease) between the hurdle and the actual operating profit for the year of bonus calculation, multiplied by a factor of 2.5. The remaining twenty five percent (25%) of the bonus will be determined by multiplying the target bonus set by the Compensation Committee times twenty-five percent (25%).

The pre-established target bonus and performance goals shall provide an objective formula for computing the amount of compensation payable to the participant based on the overall operating performance of the Corporation. The unique nature of the Corporation’s business, the relationship of the functions and duties of the various executives and a desire to foster cooperation and team oriented performance among the executives has led the Compensation Committee and the Board of Directors to the conclusion that a bonus plan weighted more heavily toward overall corporate performance more closely aligns the interests of the executives with those of the shareholders than other systems which might be implemented. Having a portion of the target bonus isolated from the overall performance of the Corporation also provides an individual incentive to perform at peak levels even in times of economic downturns which may have a negative effect on the operating income of the Corporation even though one, or all of the executives, is performing at a very high level.

Awards shall be payable following the completion of the calendar year, upon certification by the Compensation Committee that it has reviewed the results of the Corporation for the year and that it has determined whether it should make any downward adjustments in the bonus amounts. The non-employee members of the Board of Directors must approve the bonus computations before any bonuses are paid.

20

Payment of Awards-Post Employment Matters

Bonuses under the Incentive Bonus Plan shall be paid in cash through the Corporation’s normal payroll procedures, subject to all federal and state withholding requirements.

In the event a plan participant ceases employment with the Corporation during a year by reason of death or disability, the Committee may, but is not obligated to, allow payment of a bonus equal to the pro rata portion of the bonus otherwise available to the executive. The maximum amount of the bonus shall be computed by determining the bonus that would otherwise be payable and multiplying that number by a fraction, the numerator of which is the number of days in the year prior to termination of employment and the denominator or which is 365. If the executive ceases employment on account of death or disability after the completion of an entire calendar, the full bonus will be paid to either the executive or his/her personal representative.

Administration

The Incentive Bonus Plan shall be administered by the Compensation Committee, which shall be comprised solely of outside directors as defined under Section 162(m) of the Code.

Amendment and termination of the Incentive Bonus Plan

The Incentive Bonus Plan may be amended from time to time, in whole or in part, by the Compensation Committee, subject to approval of the Board of Directors, but no amendment will be effective without shareholder approval if such approval is required to satisfy the requirements of Section 162(m) of the Code.

21

EX-31

Exhibit 31.1

CERTIFICATION

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Gary W. Miller, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Baldwin & Lyons, Inc.;

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

25

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 registrant’s board of directors (or persons performing the equivalent function):

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.

Date: August 6, 2008

/s/ Gary W. Miller 

Gary W. Miller

Chairman of the Board

and Chief Executive Officer

26

EX-31

Exhibit 31.2

CERTIFICATION

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, G. Patrick Corydon, certify that:

1. I have reviewed this report on Form 10-Q of Baldwin & Lyons, Inc.;

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

27

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 registrant’s board of directors (or persons performing the equivalent function):

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.

Date: August 6, 2008

/s/ G. Patrick Corydon

G. Patrick Corydon

Executive Vice President and

    Chief Financial Officer

28