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, 2012                                                                                                                                                                                                                                                                                                                        0-5534

BALDWIN & LYONS, INC.

(Exact name of registrant as specified in its charter)

INDIANA (State or other jurisdiction of  Incorporation or organization	35-0160330 (I.R.S. Employer Identification Number)
1099 N. Meridian Street, Indianapolis, Indiana (Address of principal executive offices)	46204 (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  ü     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  ü     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 ü 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 ü

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of August 1, 2012:

TITLE OF CLASS                                                              NUMBER OF SHARES OUTSTANDING

  Common Stock, No Par Value:

Class A (voting)                                                                                                 2,623,109

Class B (nonvoting)                                                                                         12,244,019

Index to Exhibits located on page 27.

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PART I – FINANCIAL INFORMATION

ITEM 1  FINANCIAL STATEMENTS

Baldwin & Lyons, Inc. and Subsidiaries
Unaudited Consolidated Balance Sheets
(in thousands, except share data)
	June 30		December 31
	2012		2011
Assets
Investments:
Fixed maturities	$	410,648	$	409,460
Equity securities		101,077		88,085
Limited partnerships		53,280		54,705
Short-term		3,346		3,675
		568,351		555,925
Cash and cash equivalents		87,625		89,726
Accounts receivable		71,537		74,094
Reinsurance recoverable		128,375		138,404
Notes receivable from employees		-		1,302
Other assets		38,754		35,370
Current federal income taxes		8,755		3,354
Deferred federal income taxes		-		7,119
	$	903,397	$	905,294
Liabilities and shareholders' equity
Reserves for losses and loss expenses	$	408,380	$	421,556
Reserves for unearned premiums		38,400		39,919
Short-term borrowings		10,000		10,000
Accounts payable and accrued expenses		112,093		114,758
Deferred federal income taxes		3,564		-
		572,437		586,233
Shareholders' equity:
Common stock-no par value:
Class A voting -- authorized 3,000,000 shares;
outstanding -- 2012 - 2,623,109; 2011 - 2,623,109		112		112
Class B non-voting -- authorized 20,000,000 shares;
outstanding -- 2012 - 12,244,019; 2011 - 12,225,348		522		522
Additional paid-in capital		49,187		48,751
Unrealized net gains on investments		29,992		26,592
Retained earnings		251,147		243,084
		330,960		319,061
	$	903,397	$	905,294

See notes to condensed consolidated financial statements.

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Baldwin & Lyons, Inc. and Subsidiaries
Unaudited Consolidated Statements of Operations
(in thousands, except per share data)
	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
Revenues
Net premiums earned	$	59,655		$	62,344		$	121,206		$	119,945
Net investment income		2,431			2,644			4,853			5,297
Commissions and other income		1,623			1,566			3,128			3,173
Net realized gains (losses) on investments, excluding
impairment losses		(5,108	)		(1,845	)		272			(3,314	)
Total other-than-temporary impairment losses on investments		(345	)		(118	)		(345	)		(118	)
Net realized losses on investments		(5,453	)		(1,963	)		(73	)		(3,432	)
		58,256			64,591			129,114			124,983
Expenses
Losses and loss expenses incurred		33,739			55,166			68,643			120,839
Other operating expenses		19,257			18,117			38,213			36,553
		52,996			73,283			106,856			157,392
Income (loss) before federal income taxes		5,260			(8,692	)		22,258			(32,409	)
Federal income taxes (benefits)		1,210			(3,188	)		6,702			(11,707	)
Net income (loss)	$	4,050		$	(5,504	)	$	15,556		$	(20,702	)
Per share data:
Basic and diluted earnings (losses)	$	.27		$	(.38	)	$	1.05		$	(1.40	)
Dividends paid to shareholders	$	.25		$	.25		$	.50		$	.50
Reconciliation of shares outstanding:
Average shares outstanding - basic		14,837			14,819			14,832			14,810
Dilutive effect of share equivalents		23			15			24			21
Average shares outstanding - diluted		14,860			14,834			14,856			14,831

See notes to condensed consolidated financial statements.

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Baldwin & Lyons, Inc. and Subsidiaries
Unaudited Consolidated Statements of Comprehensive Income (Loss)
(in thousands, except per share data)
	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
Net income (loss)	$	4,050		$	(5,504	)	$	15,556		$	(20,702	)
Other comprehensive income, net of tax:
Unrealized net gains (losses) on securities:
Unrealized holding net gains (losses) arising during the period		(4,635	)		1,030			3,003			4,956
Less: reclassification adjustment for net gains (losses)
included in net income (loss)		(370	)		1,089			(397	)		1,134
		(4,265	)		(59	)		3,400			3,822
Foreign currency translation adjustments		(223	)		61			(19	)		288
Other comprehensive income (loss)		(4,488	)		2			3,381			4,110
Comprehensive income (loss)	$	(438	)	$	(5,502	)	$	18,937		$	(16,592	)

See notes to condensed consolidated financial statements.

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Baldwin & Lyons, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
(in thousands)
	Six Months Ended
	June 30
	2012			2011
Net cash provided by operating activities	$	22,445		$	26,769
Investing activities:
Purchases of available-for-sale investments		(165,890	)		(182,133	)
Purchases of limited partnership interests		(1,538	)		-
Proceeds from sales or maturities
of available-for-sale investments		147,345			188,102
Net sales (purchases) of short-term investments		329			(83	)
Other investing activities		2,701			(868	)
Net cash provided by (used in) investing activities		(17,053	)		5,018
Financing activities:
Dividends paid to shareholders		(7,474	)		(7,454	)
Repayment on line of credit		-			(5,000	)
Net cash used in financing activities		(7,474	)		(12,454	)
Effect of foreign exchange rates on cash and cash equivalents		(19	)		288
Increase (decrease) in cash and cash equivalents		(2,101	)		19,621
Cash and cash equivalents at beginning of period		89,726			38,223
Cash and cash equivalents at end of period	$	87,625		$	57,844

See notes to condensed consolidated financial statements.

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Notes to Condensed Unaudited Consolidated Financial Statements

(All dollar amounts presented in these notes are in thousands, except per share data)

(1) Summary of Significant Accounting Policies

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, 2012.  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.

Investments:  Carrying amounts for fixed maturity securities represent fair value and are based on quoted market prices, where available, or broker/dealer quotes for specific securities where quoted market prices are not available.  Equity securities are carried at quoted market prices (fair value).  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.

Other investments, if any, are carried at either market value or cost, depending on the nature of the investment.  Short-term investments are carried at cost which approximates their fair values.

Realized gains and losses on disposals of investments are determined by specific identification of the cost of investments sold and are included in income.  All fixed maturity and equity securities are considered to be available for sale; the related unrealized net gains or losses (net of applicable tax effect) are reflected directly in shareholders’ equity.  Included within available for sale fixed maturity securities are insurance linked securities and convertible debt securities.  The changes in fair values of insurance-linked securities and portions of the changes in fair values of convertible debt securities are reflected as a component of net realized gains (losses).

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Notes to Condensed Unaudited Consolidated Financial Statements (continued)

With respect to other–than-temporary impairment of investments, if a fixed maturity security is in an unrealized loss position and the Company has the intent to sell the fixed maturity security, or it is more likely than not that the Company will have to sell the fixed maturity security before recovery of its amortized cost basis, the decline in value is deemed to be other-than-temporary and is recorded to net realized losses on investments in the consolidated statements of operations.   For impaired fixed maturity securities that the Company does not intend to sell or it is more likely than not that the Company will not have to sell such securities, but the Company expects that it will not fully recover the amortized cost basis, the credit component of the other-than-temporary impairment is recognized in net realized losses on investments in the consolidated statements of operations and the non-credit component of the other-than-temporary impairment is recognized directly in shareholders’ equity (accumulated other comprehensive income).

The credit component of an other-than-temporary impairment is determined by comparing the net present value of projected future cash flows with the amortized cost basis of the fixed maturity security.  Furthermore, unrealized losses caused by non-credit related factors related to fixed maturity securities for which the Company expects to fully recover the amortized cost basis continue to be recognized in accumulated other comprehensive income.

The unrealized net gains or losses (net of applicable tax effect) related to equity securities are reflected directly in shareholders’ equity, unless a decline in value is determined to be other-than-temporary, in which case the loss is charged to income.  In determining if and when a decline in market value below cost is other-than-temporary, an objective analysis is made of each individual security where current market value is less than cost.  For any equity security where the unrealized loss exceeds 20% of original or adjusted cost, and where that decline has existed for a period of at least six months, the decline is treated as an other-than-temporary impairment, subject to an evaluation as to possible future recovery.  Additionally, the Company takes into account any known subjective information in evaluating for impairment without consideration to the Company’s quantitative criteria defined above.

Newly Effective Accounting Standards:  In October 2010, the FASB issued updated guidance to address the diversity in practice for the accounting for costs associated with acquiring or renewing insurance contracts. This guidance modifies the definition of acquisition costs to specify that a cost must be directly related to the successful acquisition of a new or renewal insurance contract in order to be deferred. If application of this guidance would result in the capitalization of acquisition costs that had not previously been capitalized by a reporting entity, the entity may elect not to capitalize those costs. The Company had no adjustments upon the adoption of the guidance which was effective January 1, 2012.

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Notes to Condensed Unaudited Consolidated Financial Statements (continued)

In May 2011, the FASB issued updated accounting guidance that changes the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements to ensure consistency between GAAP and International Financial Reporting Standards.  The guidance also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs.  The Company adopted the provisions of Accounting Standards Updates 2011-04 effective January 1, 2012, and have included the additional disclosures required for fair value measurements in Note 8 for the quarterly period ended June 30, 2012.

In June 2011, the FASB issued revised accounting guidance that eliminates the option to present the components of other comprehensive income as part of the statement of shareholders' equity. Instead, comprehensive income must be reported in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements.  A statement complying with these requirements is included in this report.  The Company elected to present the components of comprehensive income in two separate but consecutive financial statements, which is illustrated in the “Consolidated Statements of Comprehensive Income (Loss).”

Reclassification:  Certain prior period balances have been reclassified to conform to the current period presentation.

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Notes to Condensed Unaudited Consolidated Financial Statements (continued)

(2) Investments:

The following is a summary of available-for-sale securities at June 30, 2012 and December 31, 2011:

										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
June 30, 2012:
U.S. government obligations	$	69,433	$	69,433	$	52	$	(52	)	$	-
Residential mortgage-backed securities		18,165		18,347		533		(715	)		(182	)
Commercial mortgage-backed securities		15,153		14,821		490		(158	)		332
States and municipal obligations		174,216		173,165		1,092		(41	)		1,051
Corporate securities		112,182		111,368		1,844		(1,030	)		814
Foreign government obligations		21,499		21,650		161		(312	)		(151	)
Total fixed maturities		410,648		408,784		4,172		(2,308	)		1,864
Equity securities:
Financial institutions		10,121		5,012		5,260		(151	)		5,109
Industrial & Miscellaneous		90,956		51,787		41,184		(2,015	)		39,169
Total equity securities		101,077		56,799		46,444		(2,166	)		44,278
Total available-for-sale securities	$	511,725	$	465,583	$	50,616	$	(4,474	)		46,142
							Applicable federal income taxes				(16,150	)
							Net unrealized gains - net of tax			$	29,992
December 31, 2011:
U.S. government obligations	$	73,137	$	73,009	$	139	$	(11	)	$	128
Government sponsored entities		349		345		4		-			4
Residential mortgage-backed securities		21,872		21,778		619		(525	)		94
Commercial mortgage-backed securities		11,300		11,388		116		(204	)		(88	)
States and municipal obligations		190,035		188,991		1,275		(231	)		1,044
Corporate securities		91,646		91,949		1,429		(1,732	)		(303	)
Foreign government obligations		21,121		21,483		168		(530	)		(362	)
Total fixed maturities		409,460		408,943		3,750		(3,233	)		517
Equity securities:
Financial institutions		9,428		4,955		4,778		(305	)		4,473
Industrial & Miscellaneous		78,657		42,736		36,921		(1,000	)		35,921
Total equity securities		88,085		47,691		41,699		(1,305	)		40,394
Total available-for-sale securities	$	497,545	$	456,634	$	45,449	$	(4,538	)		40,911
							Applicable federal income taxes				(14,319	)
							Net unrealized gains - net of tax			$	26,592

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Notes to Condensed Unaudited Consolidated Financial Statements (continued)

The Company has five other-than-temporarily impaired fixed maturity securities at June 30, 2012.  The Company has three and one other-than-temporary impairment losses relating to fixed maturity securities recognized in accumulated other comprehensive income as of June 30, 2012 and December 31, 2011, respectively.

The following table summarizes, for fixed maturity and equity security investments in an unrealized loss position at June 30, 2012 and December 31, 2011, respectively, the aggregate fair value and gross unrealized loss categorized by the duration those securities have been continuously in an unrealized loss position.

	June 30, 2012							December 31, 2011
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		204	$	98,248	$	(1,978	)		206	$	86,470	$	(2,303	)
Greater than 12 months		35		14,548		(330	)		44		11,930		(930	)
Total fixed maturities		239		112,796		(2,308	)		250		98,400		(3,233	)
Equity securities:
12 months or less		33		11,244		(1,785	)		35		8,317		(1,275	)
Greater than 12 months		10		3,460		(381	)		4		216		(30	)
Total equity securities		43		14,704		(2,166	)		39		8,533		(1,305	)
Total fixed maturity and equity securities		282	$	127,500	$	(4,474	)		289	$	106,933	$	(4,538	)

The fair value and the cost or amortized cost of fixed maturity investments, at June 30, 2012, by contractual maturity, are shown below.  Actual maturities may ultimately differ from contractual maturities because borrowers have, in some cases, the right to call or prepay obligations with or without call or prepayment penalties. Pre-refunded municipal bonds are classified based on their pre-refunded call dates.

	Fair Value		Cost or Amortized Cost
One year or less	$	129,753	$	129,659
Excess of one year to five years		211,721		210,120
Excess of five years to ten years		22,174		22,204
Excess of ten years		3,155		3,036
Total maturities		366,803		365,019
Asset-backed securities		43,845		43,765
	$	410,648	$	408,784

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Notes to Condensed Unaudited Consolidated Financial Statements (continued)

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

	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
Fixed maturities:
Gross gains	$	792		$	1,161		$	1,342		$	2,158
Gross losses		(1,181	)		(402	)		(2,152	)		(1,869	)
Net gains (losses)		(389	)		759			(810	)		289
Equity securities:
Gross gains		152			1,198			675			2,229
Gross losses		(333	)		(283	)		(475	)		(773	)
Net gains (losses)		(181	)		915			200			1,456
Limited partnerships - net gain (loss)		(4,883	)		(3,637	)		537			(5,177	)
Total net losses	$	(5,453	)	$	(1,963	)	$	(73	)	$	(3,432	)

Gains and losses activity for investments, as shown in the previous table, are further detailed as follows:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
Realized net gains (losses) on the disposal of securities	$	(109	)	$	1,636		$	(205	)	$	2,044
Mark-to-market adjustment		(369	)		156			(313	)		(645	)
Equity in gains (losses) of limited partnership
investments - realized and unrealized		(4,883	)		(3,637	)		537			(5,177	)
Impairment:
Write-downs based upon objective criteria		(345	)		(118	)		(345	)		(118	)
Recovery of prior write-downs
upon sale or disposal		253			-			253			464
Totals	$	(5,453	)	$	(1,963	)	$	(73	)	$	(3,432	)

The mark-to-market adjustments in the table above represent the changes in fair value of (1) options embedded in convertible debt securities and (2) insurance-linked securities held by the Company.

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Notes to Condensed Unaudited Consolidated Financial Statements (continued)

The income (loss) from limited partnerships for the quarter and year-to-date periods ending June 30, 2012 includes an estimated $1,670 net unrealized losses and $3,861 of net unrealized gains, respectively, reported to the Company as part of the underlying assets of the various limited partnerships.  The value of limited partnerships at June 30, 2012 includes approximately $306 of net unrealized losses reported to the Company as part of the underlying assets of the various limited partnerships. Shareholders’ equity at June 30, 2012 includes approximately $15,877, 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 2012 and 2011 comparative periods.

	2012		2011
Quarter ended June 30:
Premiums ceded to reinsurers	$	24,472	$	21,438
Losses and loss expenses
ceded to reinsurers		11,333		14,376
Commissions from reinsurers		3,137		2,597
Six months ended June 30:
Premiums ceded to reinsurers		49,220		42,445
Losses and loss expenses
ceded to reinsurers		19,137		25,829
Commissions from reinsurers		6,973		5,315

(4) Reportable Segments:

The Company has two reportable business segments in its operations:  Property and Casualty Insurance and Reinsurance.

The Property and Casualty Insurance segment provides multiple line insurance coverage primarily to fleet transportation companies as well as to independent contractors who contract with fleet transportation companies.  In addition, the Company provides private passenger automobile products to individuals, and commercial multi-peril and professional liability products on a selective basis.

The Reinsurance segment accepts property and casualty cessions from other insurance companies as well as retrocessions from selected reinsurance companies, principally reinsuring against catastrophes.  In addition, the Reinsurance segment accepts selected professional liability cessions from other insurance companies.

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Notes to Condensed Unaudited Consolidated Financial Statements (continued)

The following table provides certain revenue and profit and loss information for each reportable segment.  All amounts presented are computed based upon U.S. generally accepted accounting principles.  Segment profit for Property and Casualty Insurance includes the direct marketing agency operations conducted by the parent company for this segment and is computed after elimination of inter-company commissions.

	2012						2011
	Direct and Assumed Premium Written		Net Premium Earned		Segment Profit		Direct and Assumed Premium Written		Net Premium Earned		Segment Profit (Loss)
Three months ended June 30:
Property and Casualty Insurance	$	64,760	$	48,167	$	6,872	$	67,309	$	47,352	$	6,147
Reinsurance		14,094		11,488		5,314		15,722		14,992		(12,470	)
Totals	$	78,854	$	59,655	$	12,186	$	83,031	$	62,344	$	(6,323	)
Six months ended June 30:
Property and Casualty Insurance	$	139,986	$	96,076	$	13,795	$	139,413	$	92,870	$	7,600
Reinsurance		28,920		25,130		11,461		28,749		27,075		(35,219	)
Totals	$	168,906	$	121,206	$	25,256	$	168,162	$	119,945	$	(27,619	)

The following table reconciles reportable segment income (loss) to the Company’s consolidated income (loss) before federal income taxes.

	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
Profit (Loss):
Segment profit (loss)	$	12,186		$	(6,323	)	$	25,256		$	(27,619	)
Net investment income		2,431			2,644			4,853			5,297
Net losses on investments		(5,453	)		(1,963	)		(73	)		(3,432	)
Corporate expenses		(3,904	)		(3,050	)		(7,778	)		(6,655	)
Income (loss) before federal income taxes	$	5,260		$	(8,692	)	$	22,258		$	(32,409	)

Segment profit (loss) includes both net premiums earned and fees and other income (loss) associated with the business conducted by the segment.

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.

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Notes to Condensed Unaudited Consolidated Financial Statements (continued)

(5) Loans to Employees:

Through 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.  The underlying securities served as collateral for these loans.  All employee loans have been paid in full as of June 30, 2012.  No additional loans will be made under this program.

(6) Debt:

The Company maintains a revolving line of credit with a $30,000 limit and an expiration date of September 23, 2014.  Interest on this line of credit is referenced to LIBOR and can be fixed for periods of up to one year at the Company’s option.  Outstanding drawings on this line of credit were $10,000 as of June 30, 2012 and December 31, 2011.  At June 30, 2012, the effective interest rate was 1.15%.  The Company has $20,000 remaining unused under the line of credit at June 30, 2012.  The current outstanding borrowings were used principally for treasury stock repurchases and extra dividend payments.

(7) Taxes:

As of June 30, 2012, the Company’s 2008 and subsequent tax years remain subject to examination by the IRS.  The effective rate differs from the normal statutory rate primarily as a result of tax-exempt investment income.

(Space Intentionally Left Blank)

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Notes to Condensed Unaudited Consolidated Financial Statements (continued)

(8) Fair Value:

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. The following tables summarize fair value measurements by level for assets measured at fair value on a recurring basis:

As of June 30, 2012:
Description	Total		Level 1		Level 2		Level 3
U.S. government obligations	$	69,433	$	69,433	$	-	$	-
Residential mortgage-backed securities		18,165		-		18,165		-
Commercial mortgage-backed securities		15,153		-		15,153		-
State and municipal obligations		174,216		-		174,216		-
Corporate securities		110,802		-		97,161		13,641
Options embedded in convertible securities		1,380		-		1,380		-
Foreign government obligations		21,499		-		21,499		-
Total fixed maturities		410,648		69,433		327,574		13,641
Equity securities		101,077		101,077		-		-
Short term		3,346		3,225		121		-
Cash equivalents		85,098		-		85,098		-
	$	600,169	$	173,735	$	412,793	$	13,641

As of December 31, 2011:
Description	Total		Level 1		Level 2		Level 3
U.S. government obligations	$	73,137	$	73,137	$	-	$	-
Government sponsored entities		349		-		349		-
Residential mortgage-backed securities		21,872		-		21,872		-
Commercial mortgage-backed securities		11,300		-		11,300		-
State and municipal obligations		190,035		-		190,035		-
Corporate securities		90,141		-		73,091		17,050
Options embedded in convertible securities		1,505		-		1,505		-
Foreign government obligations		21,121		-		21,121		-
Total fixed maturities		409,460		73,137		319,273		17,050
Equity securities		88,085		88,085		-		-
Short term		3,675		2,982		693		-
Cash equivalents		81,756		-		81,756		-
	$	582,976	$	164,204	$	401,722	$	17,050

- 15 -

Notes to Condensed Unaudited Consolidated Financial Statements (continued)

Level inputs, as defined by FASB Fair Value Measurements, are as follows:

Level Input:	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.

The following methods, assumptions and inputs were used to determine the fair value of each class of the following assets recorded at fair value in the consolidated balance sheets:

Cash equivalents:  Cash equivalents primarily consist of highly rated money market funds with maturities of three months or less, and are purchased daily at par value with specified yield rates. Due to underlying assets of these funds, we designate all cash equivalents as Level 2.

Fixed maturities: Fair values of fixed maturities are based on quoted market prices, where available. These fair values are obtained primarily from third party pricing services, which generally use Level I or Level II inputs for the determination of fair value to facilitate fair value measurements and disclosures. U.S. government obligations represent Level I securities, while Level II securities primarily include corporate securities, states and municipal obligations, foreign government obligations, and mortgage-backed securities. For securities not actively traded, the third party pricing services may use quoted market prices of comparable instruments or discounted cash flow analyses, incorporating inputs that are currently observable in the markets for similar securities. Inputs that are often used in the valuation methodologies include, but are not limited to, broker quotes, benchmark yields, credit spreads, default rates and prepayment speeds.

Equity securities: Fair values of equity securities are designated as Level I and are based on quoted market prices.

The Level 3 assets consist of an investment portfolio of insurance-linked securities.  The insurance-linked securities are valued using the average of estimated market quotes from multiple insurance-linked securities brokers.  The broker quotes include Level 3 inputs which are significant to the valuation of the insurance-linked securities and vary by 0-3% from each other. There were no Level 3 sales, no transfers into Level 3 and no transfers out of Level 3 during 2012 or 2011.  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 six months ended June 30, 2012 and for the year ended December 31, 2011:

- 16 -

Notes to Condensed Unaudited Consolidated Financial Statements (continued)

	2012			2011
Beginning of period balance	$	17,050		$	17,242
Total gain or losses (realized or unrealized)
included in earnings (or changes in net assets)		(165	)		387
Purchases		400			6,522
Settlements		(3,644	)		(7,101	)
End of period balance	$	13,641		$	17,050

There were no transfers of assets between Level 1 and Level 2 during the six months ended June 30, 2012 and 2011.  Transfers between levels, if any, are recorded as of the beginning of the reporting period.

In addition to the preceding disclosures on assets recorded at fair value in the consolidated balance sheets, FASB guidance also requires the disclosure of fair values for certain other financial instruments for which it is practicable to estimate fair value, whether or not such values are recognized in the consolidated balance sheets.

Non-financial instruments such as real estate, property and equipment, other assets, deferred income taxes and intangible assets, and certain financial instruments such as policy reserve liabilities are excluded from the fair value disclosures.  Therefore, the fair value amounts cannot be aggregated to determine the Company’s underlying economic value.

The carrying amounts reported in the consolidated balance sheets for cash, accounts receivables, reinsurance recoverable, notes receivable, accounts payable and accrued expenses, income taxes receivable or payable and unearned income approximate fair value because of the short term nature of these items.  These assets and liabilities are not included in the table below.

The following methods, assumptions and inputs were used to estimate the fair value of each class of financial instrument:

Limited partnerships: The Company accounts for investments in limited partnerships using the equity method of accounting, which requires an investor in a limited partnership to carry the investment at its proportionate share of the limited partnership’s equity.   The underlying assets of the Company’s investments in limited partnerships are carried at fair value, and, therefore, the Company’s carrying value of limited partnerships approximates fair value.  As these investments are not actively traded and the corresponding inputs are based on data provided by the investees, they are classified as Level III.

Short-term borrowings: The fair value of our short-term borrowings is based on quoted market prices for the same or similar debt, or, if no quoted market prices are available, on the current market interest rates available to us for debt of similar terms and remaining maturities.

- 17 -

Notes to Condensed Unaudited Consolidated Financial Statements (continued)

A summary of the carrying value and fair value by level of financial instruments not recorded at fair value on the Company’s consolidated balance sheet at June 30, 2012 is as follows:

	Carrying		Fair Value
	Value		Level 1		Level II		Level III		Total
Assets:
Limited partnerships	$	53,280	$	-	$	-	$	53,280	$	53,280
Liabilities:
Short-term borrowings		10,000		-		10,000		-		10,000

A summary of the carrying value and fair value of financial instruments not recorded at fair value on the Company’s consolidated balance sheet at December 31, 2011 is as follows:

	Carrying		Fair
	Value		Value
Assets:
Limited partnerships	$	54,705	$	54,705
Liabilities:
Short-term borrowings		10,000		10,000

(9) Restricted Stock:

Effective May 10, 2011, the Company issued a total of 19,558 shares of class B restricted stock to the Company’s outside directors.  These restricted shares became fully vested on May 10, 2012.  These shares represent the annual retainer compensation for outside directors for the period July 1, 2011 through June 30, 2012.  Each share was valued at $22.50 per share representing a total value of $440.  Compensation expense related to the above stock grant was recognized over the period in which the directors rendered the services.

Effective May 8, 2012, the Company issued a total of 20,119 shares of class B restricted stock to the Company’s outside directors.  These restricted shares represent the annual retainer compensation for outside directors for the period July 1, 2012 through June 30, 2013 and will vest on May 8, 2013.  Vesting will be accelerated only on the condition of death, disability, or change in control of the Company.  Each restricted share is valued at $21.87 per share representing a total value of $440.  Compensation expense related to the above stock grant is to be recognized over the period in which the directors render the services which will also coincide with the vesting period.

- 18 -

Notes to Condensed Unaudited Consolidated Financial Statements (continued)

 (10) Subsequent Events:

We have evaluated subsequent events for recognition or disclosure in the consolidated financial statements filed on Form 10-Q with the SEC and no events have occurred during the period which require recognition or disclosure.

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 2012, the Company experienced positive cash flow from operations totaling $22.4 million which compares to positive cash flow from operations of $26.8 million generated during the first six months of 2011.  The $4.4 million decrease in cash flow from the 2011 period is primarily due to higher loss payments associated with the settlement of 2011 catastrophe losses, partially offset by higher net premiums.

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, using contractual maturities applied to par value, was 3.35 years at June 30, 2012, which is substantially shorter than the average life of the Company’s liabilities.

Financing activity for the first six months of 2012 included regular dividend payments to shareholders of $7.5 million ($.50 per share).

The Company’s assets at June 30, 2012 included $85.1 million in investments classified as cash equivalents that were readily convertible to cash without significant market penalty.  An additional $131.8 million of fixed maturity investments will mature within the twelve-month period following June 30, 2012.   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 shareholders’ equity of the insurance subsidiaries.  As such, there are statutory restrictions on the transfer of substantial portions of this equity to the parent company.  At June 30, 2012, $44.0 million may be transferred by dividend or loan to the parent company during the remainder of 2012 without approval by, or prior notification to, regulatory authorities.  An additional $195.8 million of shareholder’s equity of the insurance subsidiaries could, theoretically, be advanced or loaned to the parent 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 $12.5 million at June 30, 2012.

- 19 -

The Company’s annualized net premium writing to surplus ratio for the first six months of 2012 was approximately 74%.  Regulatory guidelines generally allow for writings of between 100% and 300% ofsurplus, depending on the line of business.  Accordingly, the Company could increase net premium writings significantly with no need 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

Comparison of Second Quarter, 2012 to Second Quarter, 2011

Direct and assumed premiums written during the second quarter of 2012 decreased $4.2 million (5.0%) and net premiums earned decreased $2.7 million (4.3%) as compared to the same period of 2011.  The Company’s Property and Casualty Insurance segment reported a decrease in premium written of 3.8% but an increase in earned premiums of 1.7% while the Reinsurance segment reported a decrease in premium written of 10.4% as well as a decrease in premium earned of 23.4%.  In the Property and Casualty Insurance segment,  a planned reduction in commercial multi-peril business combined with lower personal automobile premium resulting from rate increases implemented during 2012 were offset by increased premium from fleet transportation business resulting from higher activity-sensitive premium on existing accounts and the addition of new business.  The Company’s property reinsurance program was the main driver of the decrease to the Reinsurance segment, as a strategic reduction in global catastrophe risk was implemented effective January 1, 2012.  The following table provides information regarding premiums written and earned for each segment for the quarter ended June 30 (dollars in thousands):

- 20 -

	Direct and Assumed Premium Written		Net Premium Written		Net Premium Earned
2012
Property & Casualty Insurance	$	64,760	$	42,458	$	48,167
Reinsurance		14,094		13,515		11,488
Totals	$	78,854	$	55,973	$	59,655
2011
Property & Casualty Insurance	$	67,309	$	49,247	$	47,352
Reinsurance		15,722		15,244		14,992
Totals	$	83,031	$	64,491	$	62,344

Premium ceded to reinsurers on insurance business produced by the Property and Casualty Insurance segment averaged 34.4% of premium written for the current quarter compared to 32.8% in the 2011 second quarter, with the increase reflective of minor changes in treaty structures as well as the impact of the proportion of new products which are ceded at generally higher proportions than legacy products.

Net investment income, before tax, during the second quarter of 2012 was 8.1% lower than the second quarter of 2011 due primarily to lower available interest rates for bonds.  Pre-tax bond yields averaged 2.3% during the current quarter compared to 2.7% for the prior year period.  Overall after-tax yields decreased from 1.8% to 1.5% while average invested funds, impacted by positive cash flow, were over 7% higher.  The short term nature of the Company’s fixed income portfolio causes changes in available yields to be quickly reflected in investment income.

The second quarter 2012 net realized investment losses of $5.5 million resulted primarily from $4.9 million in losses reported by limited partnerships and $0.4 million in mark-to-market adjustments.  Comparative second quarter 2011 overall investment losses were $2.0 million.  Investment losses result from decisions regarding the sale of individual securities and the change in total value of limited partnerships and, as such, are not expected to be consistent from period to period.

Losses and loss expenses incurred during the second quarter of 2012 were $21.4 million lower than that experienced during the second quarter of 2011 due primarily to the impact of the unprecedented level of catastrophe losses during the prior year period.  The loss ratios for each segment were as follows:

	2012	2011
Property and Casualty Insurance	64.5%	66.2%
Reinsurance	23.1	159.0
Total	56.5	88.5

- 21 -

Other operating expenses, for the second quarter of 2012, increased $1.1 million, or 6.3%, from the second quarter of 2011.  The majority of this increase relates to increased salary and salary related expenses which were depressed in 2011as the result of catastrophic losses.  The ratio of consolidated other operating expenses to operating revenue was 30.2% during the second quarter of 2012 compared to 27.2% for the 2011 second quarter.

The effective federal tax rate on consolidated income for the second quarter of 2012 was 23%.  The effective rate differs from the normal statutory rate primarily as a result of tax-exempt investment income.

As a result of the factors mentioned above, net income increased $9.6 million during the second quarter of 2012 as compared to the 2011 period.

Comparison of Six Months Ended June 30, 2012 to Six Months Ended June 30, 2011

Direct and assumed premiums written during the first six months of 2012 increased $.7 million (0.4%) and net premiums earned increased $1.3 million (1.1%) as compared to the same period of 2011.  The Company’s Property and Casualty Insurance segment reported an increase in written and earned premiums of .4% and 3.5%, respectively while the Reinsurance segment reported a decrease in earned premium of 7.2%.  The reasons for the segment fluctuations are similar to those detailed in the quarterly comparison, preceding.  The following table provides information regarding premiums written and earned for each segment for the six months ended June 30 (dollars in thousands):

	Direct and Assumed Premium Written		Net Premium Written		Net Premium Earned
2012
Property & Casualty Insurance	$	139,986	$	92,165	$	96,076
Reinsurance		28,920		27,763		25,130
Totals	$	168,906	$	119,928	$	121,206
2011
Property & Casualty Insurance	$	139,413	$	98,929	$	92,870
Reinsurance		28,749		27,793		27,075
Totals	$	168,162	$	126,722	$	119,945

Premium ceded to reinsurers on insurance business produced by the Property and Casualty Insurance segment averaged 34.2% of premium written for the current year period compared to 29.0% a year earlier with the increase reflective of changes in treaty structures as well as the impact of new products which are ceded at generally higher proportions than legacy products.

Net investment income, before tax, during the first six months of 2012 was 8.4% lower than the first six months of 2011 for the same reasons noted in the quarterly comparison.  Overall pre-tax yields averaged 2.0% during the current period compared to 2.4% for the prior year period.  Overall after-tax yields decreased from 1.8% to 1.6%.  Average funds invested were nearly 7% higher in the 2012 period as the result of positive cash flow.

- 22 -

Net realized investment losses for the first six months of 2012 were less than $.1 million before tax, resulting primarily from $.2 million in losses reported by direct trading securities and $.3 million mark-to-market adjustment, partially offset by a $.5 million gain reported by limited partnerships.  Realized investment losses were $3.4 million for the same period of 2011.

Losses and loss expenses incurred during the first six months of 2012 were $52.2 million lower than that experienced during the first six months of 2011 which included an unprecedented level of catastrophe losses.  The lower loss ratio for the Property and Casualty segment was attributable to improvements in most product groupings.  The loss ratios for each segment were as follows:

	2012	2011
Property and Casualty Insurance	65.0%	70.3%
Reinsurance	24.7	205.1
Total	56.6	100.7

Other operating expenses, for the first six months of 2012, increased $1.7 million, or 4.5%, from the 2011 six-month period.  The majority of this increase relates to the lower salary and salary related expenses during 2011, as noted in the quarterly comparison.  The ratio of consolidated other operating expenses to operating revenue was 29.6% during the 2012 period compared to 28.5% for the 2011 period.

The effective federal tax rate on consolidated income for the first six months of 2012 was 30.1%.  The effective rate differs from the normal statutory rate primarily as a result of tax-exempt investment income.

As a result of the factors mentioned above, net income increased $36.3 million as compared to the 2011 period.

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.

- 23 -

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, 2011.

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, 2012, amounts due from reinsurers on paid and unpaid losses, are estimated to total approximately $122 million.  Of this total, approximately $46 million (38%) represents the Company’s provision for incurred but not reported losses and loss adjustment expenses attributable to reinsurers.  Because of the large policy limits reinsured by the Company, the ultimate amount of incurred but not reported losses and loss adjustment expenses attributable to reinsurers could vary significantly from the estimate provided; however, such variance would not result in changes in net claim losses incurred by the Company.

At June 30, 2012, limited partnership investments include approximately $36.5 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 contains 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, 2011.

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.

- 24 -

PART II – OTHER INFORMATION

ITEM 5. OTHER INFORMATION

At our Annual Meeting of Shareholders held on May 8, 2012, shareholders voted on the following proposals:

			WITHHOLD
	FOR	AGAINST	(ABSTAIN)
Advisory vote to approve executive compensation	2,196,857	779	2,939
To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2011	2,109,234	91,341	0

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 April 2, 2012.

ITEM 6 (a)  EXHIBITS

Number and caption from Exhibit

Table of Regulation S-K Item 601                                                                                                 Exhibit No.

(31.1)           Certification of CEO                                                                           EXHIBIT 31.1

pursuant to Section 302 of the                                                                           Certification of CEO

Sarbanes-Oxley Act of 2002

(31.2)           Certification of CFO                                                                           EXHIBIT 31.2

pursuant to Section 302 of the                                                                           Certification of CFO

Sarbanes-Oxley Act of 2002

(32)           Certification of CEO and CFO                                                                           EXHIBIT 32

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

adopted pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

- 25 -

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 7, 2012                                                                By  /s/ Joseph J. DeVito                           

Joseph J. DeVito, CEO and President

Date     August 7, 2012                                                                By  /s/ G. Patrick Corydon

G. Patrick Corydon,

Executive Vice President – Finance

(Principal Financial and

  Accounting Officer)

- 26 -

                                                                             BALDWIN & LYONS, INC.

                                                          Form 10-Q for the fiscal quarter ended June 30, 2012

                                                                                INDEX TO EXHIBITS

Begins on sequential

page number of Form

Exhibit Number                                                                                 10-Q           _

EXHIBIT 31.1                                                                                 28

Certification of CEO

pursuant to Section 302 of the

Sarbanes-Oxley Act

EXHIBIT 31.2                                                                                 30

Certification of CFO

pursuant to Section 302 of the

Sarbanes-Oxley Act

EXHIBIT 32                                                                                  32

Certification of CEO and CFO

pursuant to 18 U.S.C. 1350,

as adopted pursuant to Section

906 of the Sarbanes-Oxley Act

- 27 -

EX-31.1

Exhibit 31.1

CERTIFICATION

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Joseph J. DeVito, 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

- 28 -

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 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 7, 2012

/s/ Joseph J. DeVito                   

Joseph J. DeVito

Chief Executive Officer and President

- 29 -

EX-31.2

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

- 30 -

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 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 7, 2012

/s/ G. Patrick Corydon              

G. Patrick Corydon

Executive Vice President and Chief Financial Officer

- 31 -

EX-32

Exhibit 32

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, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Joseph J. DeVito, Chief Executive Officer and President of the Company, and 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 to our 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.

August 7, 2012

/s/ Joseph J. DeVito                   

Joseph J. DeVito

Chief Executive Officer and President

/s/ G. Patrick Corydon              

G. Patrick Corydon

Executive Vice President and Chief Financial Officer

- 32 -

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Reportable Segments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Segment Reporting Information [Line Items]
Direct and Assumed Premium Written	$ 78,854	$ 83,031	$ 168,906	$ 168,162
Net Premiums Earned	59,655	62,344	121,206	119,945
Segment Profit (Loss)	12,186	(6,323)	25,256	(27,619)
Reconciliation from Segment Totals to Consolidated [Abstract]
Segment profit (loss)	12,186	(6,323)	25,256	(27,619)
Net investment income	2,431	2,644	4,853	5,297
Net losses on investments	(5,453)	(1,963)	(73)	(3,432)
Corporate expenses	(3,904)	(3,050)	(7,778)	(6,655)
Income (loss) before federal income taxes	5,260	(8,692)	22,258	(32,409)
Property and Casualty Insurance [Member]
Segment Reporting Information [Line Items]
Direct and Assumed Premium Written	64,760	67,309	139,986	139,413
Net Premiums Earned	48,167	47,352	96,076	92,870
Segment Profit (Loss)	6,872	6,147	13,795	7,600
Reconciliation from Segment Totals to Consolidated [Abstract]
Segment profit (loss)	6,872	6,147	13,795	7,600
Reinsurance [Member]
Segment Reporting Information [Line Items]
Direct and Assumed Premium Written	14,094	15,722	28,920	28,749
Net Premiums Earned	11,488	14,992	25,130	27,075
Segment Profit (Loss)	5,314	(12,470)	11,461	(35,219)
Reconciliation from Segment Totals to Consolidated [Abstract]
Segment profit (loss)	$ 5,314	$ (12,470)	$ 11,461	$ (35,219)

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Reinsurance

6 Months Ended

Jun. 30, 2012

Reinsurance [Abstract]

Reinsurance

(3) Reinsurance:

The following table summarizes the Company's transactions with reinsurers for the 2012 and 2011 comparative periods.

	2012		2011
Quarter ended June 30:
Premiums ceded to reinsurers	$	24,472	$	21,438
Losses and loss expenses ceded to reinsurers		11,333		14,376
Commissions from reinsurers		3,137		2,597
Six months ended June 30:
Premiums ceded to reinsurers		49,220		42,445
Losses and loss expenses ceded to reinsurers		19,137		25,829
Commissions from reinsurers		6,973		5,315

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Restricted Stock (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Restricted Stock [Abstract]
Shares of class B restricted stock issued (in shares)	20,119	19,558
Value per share of class B restricted stock issued (in dollars per share)	$ 21.87	$ 22.5
Total value of shares issued	$ 440	$ 440

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Fair Value (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Carrying Value [Member]
Assets [Abstract]
Limited partnerships	$ 53,280	$ 54,705
Liabilities [Abstract]
Short-term borrowings	10,000	10,000
Fair Value [Member]
Assets [Abstract]
Limited partnerships	53,280	54,705
Liabilities [Abstract]
Short-term borrowings	10,000	10,000
Insurance Linked Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Sales	0	0
Transfers into Level 3	0	0
Transfers out of Level 3	0	0
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning of period balance	17,050	17,242
Total gain or losses (realized or unrealized) included in earnings (or changes in net assets)	(165)	387
Purchases	400	6,522
Settlements	(3,644)	(7,101)
End of period balance	13,641	17,050
Insurance Linked Securities [Member] | Maximum [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Percentage of variance in values of securities (in hundredths)	3.00%
Insurance Linked Securities [Member] | Minimum [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Percentage of variance in values of securities (in hundredths)	0.00%
Level 1 [Member]
Assets [Abstract]
Limited partnerships	0
Liabilities [Abstract]
Short-term borrowings	0
Level 2 [Member]
Assets [Abstract]
Limited partnerships	0
Liabilities [Abstract]
Short-term borrowings	10,000
Level 3 [Member]
Assets [Abstract]
Limited partnerships	53,280
Liabilities [Abstract]
Short-term borrowings	0
Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
US government obligations	69,433	73,137
Government sponsored entities	0	349
Residential mortgage-backed securities	18,165	21,872
Commercial mortgage-backed securities	15,153	11,300
State and municipal obligations	174,216	190,035
Corporate securities	110,802	90,141
Options embedded in convertible securities	1,380	1,505
Foreign government obligations	21,499	21,121
Total fixed maturities	410,648	409,460
Equity securities	101,077	88,085
Short term	3,346	3,675
Cash equivalents	85,098	81,756
Total fair value	600,169	582,976
Recurring [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
US government obligations	69,433	73,137
Government sponsored entities	0	0
Residential mortgage-backed securities	0	0
Commercial mortgage-backed securities	0	0
State and municipal obligations	0
Corporate securities	0	0
Options embedded in convertible securities		0
Foreign government obligations	0	0
Total fixed maturities	69,433	73,137
Equity securities	101,077	88,085
Short term	3,225	2,982
Cash equivalents	0	0
Total fair value	173,735	164,204
Recurring [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
US government obligations	0	0
Government sponsored entities	0	349
Residential mortgage-backed securities	18,165	21,872
Commercial mortgage-backed securities	15,153	11,300
State and municipal obligations	174,216	190,035
Corporate securities	97,161	73,091
Options embedded in convertible securities	1,380	1,505
Foreign government obligations	21,499	21,121
Total fixed maturities	327,574	319,273
Equity securities	0	0
Short term	121	693
Cash equivalents	85,098	81,756
Total fair value	412,793	401,722
Recurring [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
US government obligations	0	0
Government sponsored entities	0	0
Residential mortgage-backed securities	0	0
Commercial mortgage-backed securities	0	0
State and municipal obligations	0
Corporate securities	13,641	17,050
Options embedded in convertible securities		0
Foreign government obligations	0	0
Total fixed maturities	13,641	17,050
Equity securities	0	0
Cash equivalents	0	0
Total fair value	$ 13,641	$ 17,050

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Investments

6 Months Ended

Jun. 30, 2012

Investments [Abstract]

Investments

(2) Investments:

The following is a summary of available-for-sale securities at June 30, 2012 and December 31, 2011:

										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
June 30, 2012:
U.S. government obligations	$	69,433	$	69,433	$	52	$	(52	)	$	-
Residential mortgage-backed securities		18,165		18,347		533		(715	)		(182	)
Commercial mortgage-backed securities		15,153		14,821		490		(158	)		332
States and municipal obligations		174,216		173,165		1,092		(41	)		1,051
Corporate securities		112,182		111,368		1,844		(1,030	)		814
Foreign government obligations		21,499		21,650		161		(312	)		(151	)
Total fixed maturities		410,648		408,784		4,172		(2,308	)		1,864
Equity securities:
Financial institutions		10,121		5,012		5,260		(151	)		5,109
Industrial & Miscellaneous		90,956		51,787		41,184		(2,015	)		39,169
Total equity securities		101,077		56,799		46,444		(2,166	)		44,278
Total available-for-sale securities	$	511,725	$	465,583	$	50,616	$	(4,474	)		46,142
Applicable federal income taxes											(16,150	)
Net unrealized gains - net of tax										$	29,992
December 31, 2011:
U.S. government obligations	$	73,137	$	73,009	$	139	$	(11	)	$	128
Government sponsored entities		349		345		4		-			4
Residential mortgage-backed securities		21,872		21,778		619		(525	)		94
Commercial mortgage-backed securities		11,300		11,388		116		(204	)		(88	)
States and municipal obligations		190,035		188,991		1,275		(231	)		1,044
Corporate securities		91,646		91,949		1,429		(1,732	)		(303	)
Foreign government obligations		21,121		21,483		168		(530	)		(362	)
Total fixed maturities		409,460		408,943		3,750		(3,233	)		517
Equity securities:
Financial institutions		9,428		4,955		4,778		(305	)		4,473
Industrial & Miscellaneous		78,657		42,736		36,921		(1,000	)		35,921
Total equity securities		88,085		47,691		41,699		(1,305	)		40,394
Total available-for-sale securities	$	497,545	$	456,634	$	45,449	$	(4,538	)		40,911
Applicable federal income taxes											(14,319	)
Net unrealized gains - net of tax										$	26,592

The Company has five other-than-temporarily impaired fixed maturity securities at June 30, 2012.  The Company has three and one, other-than-temporary impairment losses relating to fixed maturity securities recognized in accumulated other comprehensive income as of June 30, 2012 and December 31, 2011, respectively.

The following table summarizes, for fixed maturity and equity security investments in an unrealized loss position at June 30, 2012 and December 31, 2011, respectively, the aggregate fair value and gross unrealized loss categorized by the duration those securities have been continuously in an unrealized loss position.

	June 30, 2012							December 31, 2011
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair  Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		204	$	98,248	$	(1,978	)		206	$	86,470	$	(2,303	)
Greater than 12 months		35		14,548		(330	)		44		11,930		(930	)
Total fixed maturities		239		112,796		(2,308	)		250		98,400		(3,233	)
Equity securities:
12 months or less		33		11,244		(1,785	)		35		8,317		(1,275	)
Greater than 12 months		10		3,460		(381	)		4		216		(30	)
Total equity securities		43		14,704		(2,166	)		39		8,533		(1,305	)
Total fixed maturity and equity securities		282	$	127,500	$	(4,474	)		289	$	106,933	$	(4,538	)

The fair value and the cost or amortized cost of fixed maturity investments, at June 30, 2012, by contractual maturity, are shown below.  Actual maturities may ultimately differ from contractual maturities because borrowers have, in some cases, the right to call or prepay obligations with or without call or prepayment penalties. Pre-refunded municipal bonds are classified based on their pre-refunded call dates.

	Fair Value		Cost or Amortized Cost
One year or less	$	129,753	$	129,659
Excess of one year to five years		211,721		210,120
Excess of five years to ten years		22,174		22,204
Excess of ten years		3,155		3,036
Total maturities		366,803		365,019
Asset-backed securities		43,845		43,765
	$	410,648	$	408,784

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

	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
Fixed maturities:
Gross gains	$	792		$	1,161		$	1,342		$	2,158
Gross losses		(1,181	)		(402	)		(2,152	)		(1,869	)
Net gains (losses)		(389	)		759			(810	)		289
Equity securities:
Gross gains		152			1,198			675			2,229
Gross losses		(333	)		(283	)		(475	)		(773	)
Net gains (losses)		(181	)		915			200			1,456
Limited partnerships - net gain (loss)		(4,883	)		(3,637	)		537			(5,177	)
Total net losses	$	(5,453	)	$	(1,963	)	$	(73	)	$	(3,432	)

Gains and losses activity for investments, as shown in the previous table, are further detailed as follows:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
Realized net gains (losses) on the disposal of securities	$	(109	)	$	1,636		$	(205	)	$	2,044
Mark-to-market adjustment		(369	)		156			(313	)		(645	)
Equity in (losses) of limited partnership investments - realized and unrealized		(4,883	)		(3,637	)		537			(5,177	)
Impairment:
Write-downs based upon objective criteria		(345	)		(118	)		(345	)		(118	)
Recovery of prior write-downs upon sale or disposal		253			-			253			464
Totals	$	(5,453	)	$	(1,963	)	$	(73	)	$	(3,432	)

The mark-to-market adjustments in the table above represent the changes in fair value of (1) options embedded in convertible debt securities and (2) insurance-linked securities held by the Company.

The income (loss) from limited partnerships for the quarter and year-to-date periods ending June 30, 2012 includes an estimated $1,670 net unrealized losses and $3,861 of net unrealized gains, respectively, reported to the Company as part of the underlying assets of the various limited partnerships.  The value of limited partnerships at June 30, 2012 includes approximately $306 of net unrealized losses reported to the Company as part of the underlying assets of the various limited partnerships. Shareholders' equity at June 30, 2012 includes approximately $15,877, net of deferred federal income taxes, of earnings undistributed by limited partnerships.

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Unaudited Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Investments:
Fixed maturities	$ 410,648	$ 409,460
Equity securities	101,077	88,085
Limited partnerships	53,280	54,705
Short-term	3,346	3,675
Total Investments	568,351	555,925
Cash and cash equivalents	87,625	89,726
Accounts receivable	71,537	74,094
Reinsurance recoverable	128,375	138,404
Notes receivable from employees	0	1,302
Other assets	38,754	35,370
Current federal income taxes	8,755	3,354
Deferred federal income taxes	0	7,119
Total Assets	903,397	905,294
Liabilities and shareholders' equity
Reserves for losses and loss expenses	408,380	421,556
Reserves for unearned premiums	38,400	39,919
Short-term borrowings	10,000	10,000
Accounts payable and accrued expenses	112,093	114,758
Deferred federal income taxes	3,564	0
Total Liablities	572,437	586,233
Shareholders' equity:
Additional paid-in capital	49,187	48,751
Unrealized net gains on investments	29,992	26,592
Retained earnings	251,147	243,084
Shareholders' equity	330,960	319,061
Total liabilities and shareholders' equity	903,397	905,294
Class A voting [Member]
Shareholders' equity:
Common stock	112	112
Class B non-voting [Member]
Shareholders' equity:
Common stock	$ 522	$ 522

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Unaudited Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Unaudited Consolidated Statements of Cash Flows [Abstract]
Net cash provided by operating activities	$ 22,445	$ 26,769
Investing activities:
Purchases of available-for-sale investments	(165,890)	(182,133)
Purchases of limited partnership interests	(1,538)	0
Proceeds from sales or maturities of available-for-sale investments	147,345	188,102
Net sales (purchases) of short-term investments	329	(83)
Other investing activities	2,701	(868)
Net cash provided by (used in) investing activities	(17,053)	5,018
Financing activities:
Dividends paid to shareholders	(7,474)	(7,454)
Repayment on line of credit	0	(5,000)
Net cash used in financing activities	(7,474)	(12,454)
Effect of foreign exchange rates on cash and cash equivalents	(19)	288
Increase (decrease) in cash and cash equivalents	(2,101)	19,621
Cash and cash equivalents at beginning of period	89,726	38,223
Cash and cash equivalents at end of period	$ 87,625	$ 57,844

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Summary of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2012
Summary of Significant Accounting Policies [Abstract]
Percentage of original or adjusted cost exceeding unrealized loss (in hundredths)	20.00%

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Reinsurance (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Reinsurance [Abstract]
Premiums ceded to reinsurers	$ 24,472	$ 21,438	$ 49,220	$ 42,445
Losses and loss expenses ceded to reinsurers	11,333	14,376	19,137	25,829
Commissions from reinsurers	$ 3,137	$ 2,597	$ 6,973	$ 5,315

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

(1) Summary of Significant Accounting Policies

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, 2012.  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.

Investments:  Carrying amounts for fixed maturity securities represent fair value and are based on quoted market prices, where available, or broker/dealer quotes for specific securities where quoted market prices are not available.  Equity securities are carried at quoted market prices (fair value).  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.

Other investments, if any, are carried at either market value or cost, depending on the nature of the investment.  Short-term investments are carried at cost which approximates their fair values.

Realized gains and losses on disposals of investments are determined by specific identification of the cost of investments sold and are included in income.  All fixed maturity and equity securities are considered to be available for sale; the related unrealized net gains or losses (net of applicable tax effect) are reflected directly in shareholders' equity.  Included within available for sale fixed maturity securities are insurance linked securities and convertible debt securities.  The changes in fair values of insurance-linked securities and portions of the changes in fair values of convertible debt securities are reflected as a component of net realized gains (losses).

With respect to other-than-temporary impairment of investments, if a fixed maturity security is in an unrealized loss position and the Company has the intent to sell the fixed maturity security, or it is more likely than not that the Company will have to sell the fixed maturity security before recovery of its amortized cost basis, the decline in value is deemed to be other-than-temporary and is recorded to net realized losses on investments in the consolidated statements of operations.   For impaired fixed maturity securities that the Company does not intend to sell or it is more likely than not that the Company will not have to sell such securities, but the Company expects that it will not fully recover the amortized cost basis, the credit component of the other-than-temporary impairment is recognized in net realized losses on investments in the consolidated statements of operations and the non-credit component of the other-than-temporary impairment is recognized directly in shareholders' equity (accumulated other comprehensive income).

The credit component of an other-than-temporary impairment is determined by comparing the net present value of projected future cash flows with the amortized cost basis of the fixed maturity security.  Furthermore, unrealized losses caused by non-credit related factors related to fixed maturity securities for which the Company expects to fully recover the amortized cost basis continue to be recognized in accumulated other comprehensive income.

The unrealized net gains or losses (net of applicable tax effect) related to equity securities are reflected directly in shareholders' equity, unless a decline in value is determined to be other-than-temporary, in which case the loss is charged to income.  In determining if and when a decline in market value below cost is other-than-temporary, an objective analysis is made of each individual security where current market value is less than cost.  For any equity security where the unrealized loss exceeds 20% of original or adjusted cost, and where that decline has existed for a period of at least six months, the decline is treated as an other-than-temporary impairment, subject to an evaluation as to possible future recovery.  Additionally, the Company takes into account any known subjective information in evaluating for impairment without consideration to the Company's quantitative criteria defined above.

Newly Effective Accounting Standards:  In October 2010, the FASB issued updated guidance to address the diversity in practice for the accounting for costs associated with acquiring or renewing insurance contracts. This guidance modifies the definition of acquisition costs to specify that a cost must be directly related to the successful acquisition of a new or renewal insurance contract in order to be deferred. If application of this guidance would result in the capitalization of acquisition costs that had not previously been capitalized by a reporting entity, the entity may elect not to capitalize those costs. The Company had no adjustments upon the adoption of the guidance which was effective January 1, 2012.

In May 2011, the FASB issued updated accounting guidance that changes the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements to ensure consistency between GAAP and International Financial Reporting Standards.  The guidance also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs.  We adopted the provisions of Accounting Standards Updates 2011-04 effective January 1, 2012, and have included the additional disclosures required for fair value measurements in Note 8 for the quarterly period ended June 30, 2012.

In June 2011, the FASB issued revised accounting guidance that eliminates the option to present the components of other comprehensive income as part of the statement of shareholders' equity. Instead, comprehensive income must be reported in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements.  A statement complying with these requirements is included in this report.  We elected to present the components of comprehensive income in two separate but consecutive financial statements, which is illustrated in the "Consolidated Statements of Comprehensive Income (Loss)."

Reclassification:  Certain prior period balances have been reclassified to conform to the current period presentation.

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Unaudited Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Class A voting [Member]
Shareholders' equity:
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	3,000,000	3,000,000
Common stock, shares outstanding (in shares)	2,623,109	2,623,109
Class B non-voting [Member]
Shareholders' equity:
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares outstanding (in shares)	12,244,019	12,225,348

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

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, 2012.  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.

Investments

Investments:  Carrying amounts for fixed maturity securities represent fair value and are based on quoted market prices, where available, or broker/dealer quotes for specific securities where quoted market prices are not available.  Equity securities are carried at quoted market prices (fair value).  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.

Other investments, if any, are carried at either market value or cost, depending on the nature of the investment.  Short-term investments are carried at cost which approximates their fair values.

Realized gains and losses on disposals of investments are determined by specific identification of the cost of investments sold and are included in income.  All fixed maturity and equity securities are considered to be available for sale; the related unrealized net gains or losses (net of applicable tax effect) are reflected directly in shareholders' equity.  Included within available for sale fixed maturity securities are insurance linked securities and convertible debt securities.  The changes in fair values of insurance-linked securities and portions of the changes in fair values of convertible debt securities are reflected as a component of net realized gains (losses).

With respect to other-than-temporary impairment of investments, if a fixed maturity security is in an unrealized loss position and the Company has the intent to sell the fixed maturity security, or it is more likely than not that the Company will have to sell the fixed maturity security before recovery of its amortized cost basis, the decline in value is deemed to be other-than-temporary and is recorded to net realized losses on investments in the consolidated statements of operations.   For impaired fixed maturity securities that the Company does not intend to sell or it is more likely than not that the Company will not have to sell such securities, but the Company expects that it will not fully recover the amortized cost basis, the credit component of the other-than-temporary impairment is recognized in net realized losses on investments in the consolidated statements of operations and the non-credit component of the other-than-temporary impairment is recognized directly in shareholders' equity (accumulated other comprehensive income).

The credit component of an other-than-temporary impairment is determined by comparing the net present value of projected future cash flows with the amortized cost basis of the fixed maturity security.  Furthermore, unrealized losses caused by non-credit related factors related to fixed maturity securities for which the Company expects to fully recover the amortized cost basis continue to be recognized in accumulated other comprehensive income.

The unrealized net gains or losses (net of applicable tax effect) related to equity securities are reflected directly in shareholders' equity, unless a decline in value is determined to be other-than-temporary, in which case the loss is charged to income.  In determining if and when a decline in market value below cost is other-than-temporary, an objective analysis is made of each individual security where current market value is less than cost.  For any equity security where the unrealized loss exceeds 20% of original or adjusted cost, and where that decline has existed for a period of at least six months, the decline is treated as an other-than-temporary impairment, subject to an evaluation as to possible future recovery.  Additionally, the Company takes into account any known subjective information in evaluating for impairment without consideration to the Company's quantitative criteria defined above.

Newly Effective Accounting Standards

Newly Effective Accounting Standards:  In October 2010, the FASB issued updated guidance to address the diversity in practice for the accounting for costs associated with acquiring or renewing insurance contracts. This guidance modifies the definition of acquisition costs to specify that a cost must be directly related to the successful acquisition of a new or renewal insurance contract in order to be deferred. If application of this guidance would result in the capitalization of acquisition costs that had not previously been capitalized by a reporting entity, the entity may elect not to capitalize those costs. The Company had no adjustments upon the adoption of the guidance which was effective January 1, 2012.

In May 2011, the FASB issued updated accounting guidance that changes the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements to ensure consistency between GAAP and International Financial Reporting Standards.  The guidance also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs.  We adopted the provisions of Accounting Standards Updates 2011-04 effective January 1, 2012, and have included the additional disclosures required for fair value measurements in Note 8 for the quarterly period ended June 30, 2012.

In June 2011, the FASB issued revised accounting guidance that eliminates the option to present the components of other comprehensive income as part of the statement of shareholders' equity. Instead, comprehensive income must be reported in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements.  A statement complying with these requirements is included in this report.  We elected to present the components of comprehensive income in two separate but consecutive financial statements, which is illustrated in the "Consolidated Statements of Comprehensive Income (Loss)."

Reclassification

Reclassification:  Certain prior period balances have been reclassified to conform to the current period presentation.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 01, 2012 Common Class A [Member]	Aug. 01, 2012 Common Class B [Member]
Entity Information [Line Items]
Entity Registrant Name	BALDWIN & LYONS INC
Entity Central Index Key	0000009346
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		2,623,109	12,244,019
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2012

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Investments (Tables)

6 Months Ended

Jun. 30, 2012

Investments [Abstract]

Summary of Available For Sale Securities

The following is a summary of available-for-sale securities at June 30, 2012 and December 31, 2011:

										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
June 30, 2012:
U.S. government obligations	$	69,433	$	69,433	$	52	$	(52	)	$	-
Residential mortgage-backed securities		18,165		18,347		533		(715	)		(182	)
Commercial mortgage-backed securities		15,153		14,821		490		(158	)		332
States and municipal obligations		174,216		173,165		1,092		(41	)		1,051
Corporate securities		112,182		111,368		1,844		(1,030	)		814
Foreign government obligations		21,499		21,650		161		(312	)		(151	)
Total fixed maturities		410,648		408,784		4,172		(2,308	)		1,864
Equity securities:
Financial institutions		10,121		5,012		5,260		(151	)		5,109
Industrial & Miscellaneous		90,956		51,787		41,184		(2,015	)		39,169
Total equity securities		101,077		56,799		46,444		(2,166	)		44,278
Total available-for-sale securities	$	511,725	$	465,583	$	50,616	$	(4,474	)		46,142
Applicable federal income taxes											(16,150	)
Net unrealized gains - net of tax										$	29,992
December 31, 2011:
U.S. government obligations	$	73,137	$	73,009	$	139	$	(11	)	$	128
Government sponsored entities		349		345		4		-			4
Residential mortgage-backed securities		21,872		21,778		619		(525	)		94
Commercial mortgage-backed securities		11,300		11,388		116		(204	)		(88	)
States and municipal obligations		190,035		188,991		1,275		(231	)		1,044
Corporate securities		91,646		91,949		1,429		(1,732	)		(303	)
Foreign government obligations		21,121		21,483		168		(530	)		(362	)
Total fixed maturities		409,460		408,943		3,750		(3,233	)		517
Equity securities:
Financial institutions		9,428		4,955		4,778		(305	)		4,473
Industrial & Miscellaneous		78,657		42,736		36,921		(1,000	)		35,921
Total equity securities		88,085		47,691		41,699		(1,305	)		40,394
Total available-for-sale securities	$	497,545	$	456,634	$	45,449	$	(4,538	)		40,911
Applicable federal income taxes											(14,319	)
Net unrealized gains - net of tax										$	26,592

Schedule of Unrealized Loss on Investments

The following table summarizes, for fixed maturity and equity security investments in an unrealized loss position at June 30, 2012 and December 31, 2011, respectively, the aggregate fair value and gross unrealized loss categorized by the duration those securities have been continuously in an unrealized loss position.

	June 30, 2012							December 31, 2011
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair  Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		204	$	98,248	$	(1,978	)		206	$	86,470	$	(2,303	)
Greater than 12 months		35		14,548		(330	)		44		11,930		(930	)
Total fixed maturities		239		112,796		(2,308	)		250		98,400		(3,233	)
Equity securities:
12 months or less		33		11,244		(1,785	)		35		8,317		(1,275	)
Greater than 12 months		10		3,460		(381	)		4		216		(30	)
Total equity securities		43		14,704		(2,166	)		39		8,533		(1,305	)
Total fixed maturity and equity securities		282	$	127,500	$	(4,474	)		289	$	106,933	$	(4,538	)

Investments Classified by Contractual Maturity Date

The fair value and the cost or amortized cost of fixed maturity investments, at June 30, 2012, by contractual maturity, are shown below.  Actual maturities may ultimately differ from contractual maturities because borrowers have, in some cases, the right to call or prepay obligations with or without call or prepayment penalties. Pre-refunded municipal bonds are classified based on their pre-refunded call dates.

	Fair Value		Cost or Amortized Cost
One year or less	$	129,753	$	129,659
Excess of one year to five years		211,721		210,120
Excess of five years to ten years		22,174		22,204
Excess of ten years		3,155		3,036
Total maturities		366,803		365,019
Asset-backed securities		43,845		43,765
	$	410,648	$	408,784

Realized Gain (Loss) on Investments

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

	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
Fixed maturities:
Gross gains	$	792		$	1,161		$	1,342		$	2,158
Gross losses		(1,181	)		(402	)		(2,152	)		(1,869	)
Net gains (losses)		(389	)		759			(810	)		289
Equity securities:
Gross gains		152			1,198			675			2,229
Gross losses		(333	)		(283	)		(475	)		(773	)
Net gains (losses)		(181	)		915			200			1,456
Limited partnerships - net gain (loss)		(4,883	)		(3,637	)		537			(5,177	)
Total net losses	$	(5,453	)	$	(1,963	)	$	(73	)	$	(3,432	)

Schedule of Realized Gain (Loss)

Gains and losses activity for investments, as shown in the previous table, are further detailed as follows:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
Realized net gains (losses) on the disposal of securities	$	(109	)	$	1,636		$	(205	)	$	2,044
Mark-to-market adjustment		(369	)		156			(313	)		(645	)
Equity in (losses) of limited partnership investments - realized and unrealized		(4,883	)		(3,637	)		537			(5,177	)
Impairment:
Write-downs based upon objective criteria		(345	)		(118	)		(345	)		(118	)
Recovery of prior write-downs upon sale or disposal		253			-			253			464
Totals	$	(5,453	)	$	(1,963	)	$	(73	)	$	(3,432	)

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Unaudited Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenues
Net premiums earned	$ 59,655	$ 62,344	$ 121,206	$ 119,945
Net investment income	2,431	2,644	4,853	5,297
Commissions and other income	1,623	1,566	3,128	3,173
Net realized gains (losses) on investments, excluding impairment losses	(5,108)	(1,845)	272	(3,314)
Total other-than-temporary impairment losses on investments	(345)	(118)	(345)	(118)
Net realized losses on investments	(5,453)	(1,963)	(73)	(3,432)
Total revenue	58,256	64,591	129,114	124,983
Expenses
Losses and loss expenses incurred	33,739	55,166	68,643	120,839
Other operating expenses	19,257	18,117	38,213	36,553
Total expenses	52,996	73,283	106,856	157,392
Income (loss) before federal income taxes	5,260	(8,692)	22,258	(32,409)
Federal income taxes (benefits)	1,210	(3,188)	6,702	(11,707)
Net income (loss)	$ 4,050	$ (5,504)	$ 15,556	$ (20,702)
Per share data:
Basic and diluted earnings (losses) (in dollars per share)	$ 0.27	$ (0.38)	$ 1.05	$ (1.4)
Dividends paid to shareholders (in dollars per share)	$ 0.25	$ 0.25	$ 0.50	$ 0.50
Reconciliation of shares outstanding:
Average shares outstanding - basic (in shares)	14,837	14,819	14,832	14,810
Dilutive effect of share equivalents (in shares)	23	15	24	21
Average shares outstanding - diluted (in shares)	14,860	14,834	14,856	14,831

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Debt

6 Months Ended

Jun. 30, 2012

Debt [Abstract]

Debt

(6) Debt:

The Company maintains a revolving line of credit with a $30,000 limit and an expiration date of September 23, 2014.  Interest on this line of credit is referenced to LIBOR and can be fixed for periods of up to one year at the Company's option.  Outstanding drawings on this line of credit were $10,000 as of June 30, 2012 and December 31, 2011.  At June 30, 2012, the effective interest rate was 1.15%.  The Company has $20,000 remaining unused under the line of credit at June 30, 2012.  The current outstanding borrowings were used principally for treasury stock repurchases and extra dividend payments.

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Loans to Employees

6 Months Ended

Jun. 30, 2012

Loans to Employees [Abstract]

Loans to Employees

(5) Loans to Employees:

Through 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.  The underlying securities served as collateral for these loans.  All employee loans have been paid in full as of June 30, 2012.  No additional loans will be made under this program.

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Investments (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Schedule of Available-For-Sale Securities [Line Items]
Fair Value	$ 511,725,000		$ 511,725,000		$ 497,545,000
Cost or Amortized Cost	465,583,000		465,583,000		456,634,000
Gross Unrealized Gains	50,616,000		50,616,000		45,449,000
Gross Unrealized Losses	(4,474,000)		(4,474,000)		(4,538,000)
Net Unrealized Gains (losses)	46,142,000		46,142,000		40,911,000
Applicable federal income taxes			(16,150,000)		(14,319,000)
Net unrealized gains - net of tax			29,992,000		26,592,000
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Number of Securities, total	282		282		289
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair value, total	127,500,000		127,500,000		106,933,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Gross unrealized loss, total	(4,474,000)		(4,474,000)		(4,538,000)
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
One year or less, Fair Value	129,753		129,753
Excess of one year to five years, Fair Value	211,721		211,721
Excess of five years to ten years, Fair Value	22,174		22,174
Excess of ten years, Fair Value	3,155		3,155
Total maturities, Fair Value	366,803		366,803
Asset-backed securities	43,845		43,845
Available-for-sale Securities, Debt Securities, Current	410,648		410,648
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
One year or less, Amortized Cost Basis	129,659		129,659
Excess of one year to five years, Amortized Cost Basis	210,120		210,120
Excess of five years to ten years, Amortized Cost Basis	22,204		22,204
Excess of ten years, Amortized Cost Basis	3,036		3,036
Total maturities, Amortized Cost Basis	365,019		365,019
Asset-backed securities	43,765		43,765
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Total	408,784		408,784
Available-for-sale Securities, Gross Realized Gain (Loss) [Abstract]
Limited partnerships - net gain (loss)	(4,883,000)	(3,637,000)	537,000	(5,177,000)
Total net losses	(5,453,000)	(1,963,000)	(73,000)	(3,432,000)
Available For Sale Securities Gain Loss Activity [Abstract]
Realized net gains (losses) on the disposal of securities	(109,000)	1,636,000	(205,000)	2,044,000
Mark-to-market adjustment	(369,000)	156,000	(313,000)	(645,000)
Equity in (losses) of limited partnership investments - realized and unrealized	(4,883,000)	(3,637,000)	537,000	(5,177,000)
Write-downs based upon objective criteria	(345,000)	(118,000)	(345,000)	(118,000)
Recovery of prior write-downs upon sale or disposal	253,000	0	253,000	464,000
Gain (Loss) on Investments	(5,453,000)	(1,963,000)	(73,000)	(3,432,000)
Net unrealized gain (loss) on investments	1,670,000		3,861,000
Unrealized losses in limited partnership			306,000
Undistributed earnings of limited partnership, net of taxes	15,877,000		15,877,000
U.S. government obligations [Member]
Schedule of Available-For-Sale Securities [Line Items]
Fair Value	69,433,000		69,433,000		73,137,000
Cost or Amortized Cost	69,433,000		69,433,000		73,009,000
Gross Unrealized Gains	52,000		52,000		139,000
Gross Unrealized Losses	(52,000)		(52,000)		(11,000)
Net Unrealized Gains (losses)	0		0		128,000
Government sponsored entities [Member]
Schedule of Available-For-Sale Securities [Line Items]
Fair Value					349,000
Cost or Amortized Cost					345,000
Gross Unrealized Gains					4,000
Gross Unrealized Losses					0
Net Unrealized Gains (losses)					4,000
Residential mortgage-backed securities [Member]
Schedule of Available-For-Sale Securities [Line Items]
Fair Value	18,165,000		18,165,000		21,872,000
Cost or Amortized Cost	18,347,000		18,347,000		21,778,000
Gross Unrealized Gains	533,000		533,000		619,000
Gross Unrealized Losses	(715,000)		(715,000)		(525,000)
Net Unrealized Gains (losses)	(182,000)		(182,000)		94,000
Commercial mortgage-backed securities [Member]
Schedule of Available-For-Sale Securities [Line Items]
Fair Value	15,153,000		15,153,000		11,300,000
Cost or Amortized Cost	14,821,000		14,821,000		11,388,000
Gross Unrealized Gains	490,000		490,000		116,000
Gross Unrealized Losses	(158,000)		(158,000)		(204,000)
Net Unrealized Gains (losses)	332,000		332,000		(88,000)
States and municipal obligations [Member]
Schedule of Available-For-Sale Securities [Line Items]
Fair Value	174,216,000		174,216,000		190,035,000
Cost or Amortized Cost	173,165,000		173,165,000		188,991,000
Gross Unrealized Gains	1,092,000		1,092,000		1,275,000
Gross Unrealized Losses	(41,000)		(41,000)		(231,000)
Net Unrealized Gains (losses)	1,051,000		1,051,000		1,044,000
Corporate securities [Member]
Schedule of Available-For-Sale Securities [Line Items]
Fair Value	112,182,000		112,182,000		91,646,000
Cost or Amortized Cost	111,368,000		111,368,000		91,949,000
Gross Unrealized Gains	1,844,000		1,844,000		1,429,000
Gross Unrealized Losses	(1,030,000)		(1,030,000)		(1,732,000)
Net Unrealized Gains (losses)	814,000		814,000		(303,000)
Foreign government obligations [Member]
Schedule of Available-For-Sale Securities [Line Items]
Fair Value	21,499,000		21,499,000		21,121,000
Cost or Amortized Cost	21,650,000		21,650,000		21,483,000
Gross Unrealized Gains	161,000		161,000		168,000
Gross Unrealized Losses	(312,000)		(312,000)		(530,000)
Net Unrealized Gains (losses)	(151,000)		(151,000)		(362,000)
Total fixed maturities [Member]
Schedule of Available-For-Sale Securities [Line Items]
Fair Value	410,648,000		410,648,000		409,460,000
Cost or Amortized Cost	408,784,000		408,784,000		408,943,000
Gross Unrealized Gains	4,172,000		4,172,000		3,750,000
Gross Unrealized Losses	(2,308,000)		(2,308,000)		(3,233,000)
Net Unrealized Gains (losses)	1,864,000		1,864,000		517,000
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Number of Securities Less than 12 months	204		204		206
Number of Securities More than 12 months	35		35		44
Number of Securities, total	239		239		250
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair value, 12 months or less	98,248,000		98,248,000		86,470,000
Fair value, 12 months or longer	14,548,000		14,548,000		11,930,000
Fair value, total	112,796,000		112,796,000		98,400,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Gross unrealized loss, less than 12 months	(1,978,000)		(1,978,000)		(2,303,000)
Gross unrealized loss, 12 months or longer	(330,000)		(330,000)		(930,000)
Gross unrealized loss, total	(2,308,000)		(2,308,000)		(3,233,000)
Available-for-sale Securities, Gross Realized Gain (Loss) [Abstract]
Gross gains	792,000	1,161,000	1,342,000	2,158,000
Gross losses	(1,181,000)	(402,000)	(2,152,000)	(1,869,000)
Net gains (losses)	(389,000)	759,000	(810,000)	289,000
Financial institutions [Member]
Schedule of Available-For-Sale Securities [Line Items]
Fair Value	10,121,000		10,121,000		9,428,000
Cost or Amortized Cost	5,012,000		5,012,000		4,955,000
Gross Unrealized Gains	5,260,000		5,260,000		4,778,000
Gross Unrealized Losses	(151,000)		(151,000)		(305,000)
Net Unrealized Gains (losses)	5,109,000		5,109,000		4,473,000
Industrial & Miscellaneous [Member]
Schedule of Available-For-Sale Securities [Line Items]
Fair Value	90,956,000		90,956,000		78,657,000
Cost or Amortized Cost	51,787,000		51,787,000		42,736,000
Gross Unrealized Gains	41,184,000		41,184,000		36,921,000
Gross Unrealized Losses	(2,015,000)		(2,015,000)		(1,000,000)
Net Unrealized Gains (losses)	39,169,000		39,169,000		35,921,000
Total equity securities [Member]
Schedule of Available-For-Sale Securities [Line Items]
Fair Value	101,077,000		101,077,000		88,085,000
Cost or Amortized Cost	56,799,000		56,799,000		47,691,000
Gross Unrealized Gains	46,444,000		46,444,000		41,699,000
Gross Unrealized Losses	(2,166,000)		(2,166,000)		(1,305,000)
Net Unrealized Gains (losses)	44,278,000		44,278,000		40,394,000
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Number of Securities Less than 12 months	33		33		35
Number of Securities More than 12 months	10		10		4
Number of Securities, total	43		43		39
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair value, 12 months or less	11,244,000		11,244,000		8,317,000
Fair value, 12 months or longer	3,460,000		3,460,000		216,000
Fair value, total	14,704,000		14,704,000		8,533,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Gross unrealized loss, less than 12 months	(1,785,000)		(1,785,000)		(1,275,000)
Gross unrealized loss, 12 months or longer	(381,000)		(381,000)		(30,000)
Gross unrealized loss, total	(2,166,000)		(2,166,000)		(1,305,000)
Available-for-sale Securities, Gross Realized Gain (Loss) [Abstract]
Gross gains	152,000	1,198,000	675,000	2,229,000
Gross losses	(333,000)	(283,000)	(475,000)	(773,000)
Net gains (losses)	$ (181,000)	$ 915,000	$ 200,000	$ 1,456,000

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Reinsurance (Tables)

6 Months Ended

Jun. 30, 2012

Reinsurance [Abstract]

Reinsurance

The following table summarizes the Company's transactions with reinsurers for the 2012 and 2011 comparative periods.

	2012		2011
Quarter ended June 30:
Premiums ceded to reinsurers	$	24,472	$	21,438
Losses and loss expenses ceded to reinsurers		11,333		14,376
Commissions from reinsurers		3,137		2,597
Six months ended June 30:
Premiums ceded to reinsurers		49,220		42,445
Losses and loss expenses ceded to reinsurers		19,137		25,829
Commissions from reinsurers		6,973		5,315

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Restricted Stock

6 Months Ended

Jun. 30, 2012

Restricted Stock [Abstract]

Restricted Stock

(9) Restricted Stock:

Effective May 10, 2011, the Company issued a total of 19,558 shares of class B restricted stock to the Company's outside directors.  These restricted shares became fully vested on May 10, 2012.  These shares represent the annual retainer compensation for outside directors for the period July 1, 2011 through June 30, 2012.  Each share was valued at $22.50 per share representing a total value of $440.  Compensation expense related to the above stock grant was recognized over the period in which the directors rendered the services.

Effective May 8, 2012, the Company issued a total of 20,119 shares of class B restricted stock to the Company's outside directors.  These restricted shares represent the annual retainer compensation for outside directors for the period July 1, 2012 through June 30, 2013 and will vest on May 8, 2013.  Vesting will be accelerated only on the condition of death, disability, or change in control of the Company.  Each restricted share is valued at $21.87 per share representing a total value of $440.  Compensation expense related to the above stock grant is to be recognized over the period in which the directors render the services which will also coincide with the vesting period.

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Taxes

6 Months Ended

Jun. 30, 2012

Taxes [Abstract]

Taxes

(7) Taxes:

As of June 30, 2012, the Company's 2008 and subsequent tax years remain subject to examination by the IRS.  The effective rate differs from the normal statutory rate primarily as a result of tax-exempt investment income.

(Space Intentionally Left Blank)

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Fair Value

6 Months Ended

Jun. 30, 2012

Fair Value [Abstract]

Fair Value

(8) Fair Value:

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. The following tables summarize fair value measurements by level for assets measured at fair value on a recurring basis:

As of June 30, 2012:
Description	Total		Level 1		Level 2		Level 3
U.S. government obligations	$	69,433	$	69,433	$	-	$	-
Government sponsored entities		-		-		-		-
Residential mortgage-backed securities		18,165		-		18,165		-
Commercial mortgage-backed securities		15,153		-		15,153		-
State and municipal obligations		174,216		-		174,216		-
Corporate securities		110,802		-		97,161		13,641
Options embedded in convertible securities		1,380				1,380
Foreign government obligations		21,499		-		21,499		-
Total fixed maturities		410,648		69,433		327,574		13,641
Equity securities		101,077		101,077		-		-
Short term		3,346		3,225		121
Cash equivalents		85,098		-		85,098		-
	$	600,169	$	173,735	$	412,793	$	13,641

As of December 31, 2011:
Description	Total		Level 1		Level 2		Level 3
U.S. government obligations	$	73,137	$	73,137	$	-	$	-
Government sponsored entities		349		-		349		-
Residential mortgage-backed securities		21,872		-		21,872		-
Commercial mortgage-backed securities		11,300		-		11,300		-
State and municipal obligations		190,035				190,035
Corporate securities		90,141		-		73,091		17,050
Options embedded in convertible securities		1,505		-		1,505		-
Foreign government obligations		21,121		-		21,121		-
Total fixed maturities		409,460		73,137		319,273		17,050
Equity securities		88,085		88,085		-		-
Short term		3,675		2,982		693
Cash equivalents		81,756		-		81,756		-
	$	582,976	$	164,204	$	401,722	$	17,050

Level inputs, as defined by FASB Fair Value Measurements, are as follows:

Level Input:	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.

The following methods, assumptions and inputs were used to determine the fair value of each class of the following assets recorded at fair value in the consolidated balance sheets:

Cash equivalents:  Cash equivalents primarily consist of highly rated money market funds with maturities of three months or less, and are purchased daily at par value with specified yield rates. Due to underlying assets of these funds, we designate all cash equivalents as Level 2.

Fixed maturities: Fair values of fixed maturities are based on quoted market prices, where available. These fair values are obtained primarily from third party pricing services, which generally use Level I or Level II inputs for the determination of fair value to facilitate fair value measurements and disclosures. U.S. government obligations represent Level I securities, while Level II securities primarily include corporate securities, states and municipal obligations, foreign government obligations, and mortgage-backed securities. For securities not actively traded, the third party pricing services may use quoted market prices of comparable instruments or discounted cash flow analyses, incorporating inputs that are currently observable in the markets for similar securities. Inputs that are often used in the valuation methodologies include, but are not limited to, broker quotes, benchmark yields, credit spreads, default rates and prepayment speeds.

Equity securities: Fair values of equity securities are designated as Level I and are based on quoted market prices.

The Level 3 assets consist of an investment portfolio of insurance-linked securities.  The insurance-linked securities are valued using the average of estimated market quotes from multiple insurance-linked securities brokers.  The broker quotes include Level 3 inputs which are significant to the valuation of the insurance-linked securities and vary by 0-3% from each other. There were no Level 3 sales, no transfers into Level 3 and no transfers out of Level 3 during 2012 or 2011.  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 six months ended June 30, 2012 and for the year ended December 31, 2011:

	2012			2011
Beginning of period balance	$	17,050		$	17,242
Total gain or losses (realized or unrealized)
Included in earnings (or changes in net assets)		(165	)		387
Purchases		400			6,522
Settlements		(3,644	)		(7,101	)
End of period balance	$	13,641		$	17,050

There were no transfers of assets between Level 1 and Level 2 during the six months ended June 30, 2012 and 2011.  Transfers between levels, if any, are recorded as of the beginning of the reporting period.

In addition to the preceding disclosures on assets recorded at fair value in the consolidated balance sheets, FASB guidance also requires the disclosure of fair values for certain other financial instruments for which it is practicable to estimate fair value, whether or not such values are recognized in the consolidated balance sheets.

Non-financial instruments such as real estate, property and equipment, other assets, deferred income taxes and intangible assets, and certain financial instruments such as policy reserve liabilities are excluded from the fair value disclosures.  Therefore, the fair value amounts cannot be aggregated to determine the Company's underlying economic value.

The carrying amounts reported in the consolidated balance sheets for cash, accounts receivables, reinsurance recoverable, notes receivable, accounts payable and accrued expenses, income taxes receivable or payable and unearned income approximate fair value because of the short term nature of these items.  These assets and liabilities are not included in the table below.

The following methods, assumptions and inputs were used to estimate the fair value of each class of financial instrument:

Limited partnerships: The Company accounts for investments in limited partnerships using the equity method of accounting, which requires an investor in a limited partnership to carry the investment at its proportionate share of the limited partnership's equity. The underlying assets of the Company's investments in limited partnerships are carried at fair value, and therefore, the Company's carrying value of limited partnerships approximate fair value. As these investments are not actively traded and the corresponding inputs are based on data provided by the investees, they are classified as Level III.

Short-term borrowings: The fair value of our short-term borrowings is based on quoted market prices for the same or similar debt, or, if no quoted market prices are available, on the current market interest rates available to us for debt of similar terms and remaining maturities.

A summary of the carrying value and fair value by level of financial instruments not recorded at fair value on the Company's consolidated balance sheet at June 30, 2012 is as follows:

	Carrying		Fair Value
	Value		Level 1		Level II		Level III		Total
Assets:
Limited partnerships	$	53,280	$	-	$	-	$	53,280	$	53,280
Liabilities:
Short-term borrowings		10,000		-		10,000		-		10,000

A summary of the carrying value and fair value of financial instruments not recorded at fair value on the Company's consolidated balance sheet at December 31, 2011 is as follows:

	Carrying		Fair
	Value		Value
Assets:
Limited partnerships	$	54,705	$	54,705
Liabilities:
Short-term borrowings		10,000		10,000

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Subsequent Events

6 Months Ended

Jun. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

(10) Subsequent Events:

We have evaluated subsequent events for recognition or disclosure in the consolidated financial statements filed on Form 10-Q with the SEC and no events have occurred during the period which require recognition or disclosure.

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Fair Value (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value [Abstract]

Fair value assets measured at fair value on a recurring basis

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. The following tables summarize fair value measurements by level for assets measured at fair value on a recurring basis:

As of June 30, 2012:
Description	Total		Level 1		Level 2		Level 3
U.S. government obligations	$	69,433	$	69,433	$	-	$	-
Government sponsored entities		-		-		-		-
Residential mortgage-backed securities		18,165		-		18,165		-
Commercial mortgage-backed securities		15,153		-		15,153		-
State and municipal obligations		174,216		-		174,216		-
Corporate securities		110,802		-		97,161		13,641
Options embedded in convertible securities		1,380				1,380
Foreign government obligations		21,499		-		21,499		-
Total fixed maturities		410,648		69,433		327,574		13,641
Equity securities		101,077		101,077		-		-
Short term		3,346		3,225		121
Cash equivalents		85,098		-		85,098		-
	$	600,169	$	173,735	$	412,793	$	13,641

As of December 31, 2011:
Description	Total		Level 1		Level 2		Level 3
U.S. government obligations	$	73,137	$	73,137	$	-	$	-
Government sponsored entities		349		-		349		-
Residential mortgage-backed securities		21,872		-		21,872		-
Commercial mortgage-backed securities		11,300		-		11,300		-
State and municipal obligations		190,035				190,035
Corporate securities		90,141		-		73,091		17,050
Options embedded in convertible securities		1,505		-		1,505		-
Foreign government obligations		21,121		-		21,121		-
Total fixed maturities		409,460		73,137		319,273		17,050
Equity securities		88,085		88,085		-		-
Short term		3,675		2,982		693
Cash equivalents		81,756		-		81,756		-
	$	582,976	$	164,204	$	401,722	$	17,050

Fair Value Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The Level 3 assets consist of an investment portfolio of insurance-linked securities.  The insurance-linked securities are valued using the average of estimated market quotes from multiple insurance-linked securities brokers.  The broker quotes include Level 3 inputs which are significant to the valuation of the insurance-linked securities and vary by 0-3% from each other. There were no Level 3 sales, no transfers into Level 3 and no transfers out of Level 3 during 2012 or 2011.  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 six months ended June 30, 2012 and for the year ended December 31, 2011:

	2012			2011
Beginning of period balance	$	17,050		$	17,242
Total gain or losses (realized or unrealized)
Included in earnings (or changes in net assets)		(165	)		387
Purchases		400			6,522
Settlements		(3,644	)		(7,101	)
End of period balance	$	13,641		$	17,050

Summary of carrying value and fair value by level of financial instruments

A summary of the carrying value and fair value by level of financial instruments not recorded at fair value on the Company's consolidated balance sheet at June 30, 2012 is as follows:

	Carrying		Fair Value
	Value		Level 1		Level II		Level III		Total
Assets:
Limited partnerships	$	53,280	$	-	$	-	$	53,280	$	53,280
Liabilities:
Short-term borrowings		10,000		-		10,000		-		10,000

A summary of the carrying value and fair value of financial instruments not recorded at fair value on the Company's consolidated balance sheet at December 31, 2011 is as follows:

	Carrying		Fair
	Value		Value
Assets:
Limited partnerships	$	54,705	$	54,705
Liabilities:
Short-term borrowings		10,000		10,000

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Loans to Employees (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Loans to Employees [Abstract]
Notes receivable from employees	$ 0	$ 1,302

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Unaudited Consolidated Statements of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Unaudited Consolidated Statements of Comprehensive Income (Loss) [Abstract]
Net income (loss)	$ 4,050	$ (5,504)	$ 15,556	$ (20,702)
Unrealized net gains (losses) on securities:
Unrealized holding net gains (losses) arising during the period	(4,635)	1,030	3,003	4,956
Less: reclassification adjustment for net gains (losses) included in net income (loss)	(370)	1,089	(397)	1,134
Unrealized net gains (losses) on securities	(4,265)	(59)	3,400	3,822
Foreign currency translation adjustments	(223)	61	(19)	288
Other comprehensive income (loss)	(4,488)	2	3,381	4,110
Comprehensive income (loss)	$ (438)	$ (5,502)	$ 18,937	$ (16,592)

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Reportable Segments

6 Months Ended

Jun. 30, 2012

Reportable Segments [Abstract]

Reportable Segments

(4) Reportable Segments:

The Company has two reportable business segments in its operations:  Property and Casualty Insurance and Reinsurance.

The Property and Casualty Insurance segment provides multiple line insurance coverage primarily to fleet transportation companies as well as to independent contractors who contract with fleet transportation companies.  In addition, the Company provides private passenger automobile products to individuals, and commercial multi-peril and professional liability products on a selective basis.

The Reinsurance segment accepts property and casualty cessions from other insurance companies as well as retrocessions from selected reinsurance companies, principally reinsuring against catastrophes.  In addition, the Reinsurance segment accepts selected professional liability cessions from other insurance companies.

The following table provides certain revenue and profit and loss information for each reportable segment.  All amounts presented are computed based upon U.S. generally accepted accounting principles.  Segment profit for Property and Casualty Insurance includes the direct marketing agency operations conducted by the parent company for this segment and is computed after elimination of inter-company commissions.

	2012						2011
	Direct and Assumed Premium Written		Net  Premium Earned		Segment  Profit		Direct and  Assumed Premium Written		Net Premium Earned		Segment Profit (Loss)
Three months ended June 30:
Property and Casualty Insurance	$	64,760	$	48,167	$	6,872	$	67,309	$	47,352	$	6,147
Reinsurance		14,094		11,488		5,314		15,722		14,992		(12,470	)
Totals	$	78,854	$	59,655	$	12,186	$	83,031	$	62,344	$	(6,323	)
Six months ended June 30:
Property and Casualty Insurance	$	139,986	$	96,076	$	13,795	$	139,413	$	92,870	$	7,600
Reinsurance		28,920		25,130		11,461		28,749		27,075		(35,219	)
Totals	$	168,906	$	121,206	$	25,256	$	168,162	$	119,945	$	(27,619	)

The following table reconciles reportable segment income (loss) to the Company's consolidated income (loss) before federal income taxes.

	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
Profit (Loss):
Segment profit (loss)	$	12,186		$	(6,323	)	$	25,256		$	(27,619	)
Net investment income		2,431			2,644			4,853			5,297
Net losses on investments		(5,453	)		(1,963	)		(73	)		(3,432	)
Corporate expenses		(3,904	)		(3,050	)		(7,778	)		(6,655	)
Income (loss) before federal income taxes	$	5,260		$	(8,692	)	$	22,258		$	(32,409	)

Segment profit (loss) includes both net premiums earned and fees and other income (loss) associated with the business conducted by the segment.

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.

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Debt (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Debt [Abstract]
Revolving line of credit limit	$ 30,000
Outstanding drawings on line of credit	10,000	10,000
Effective interest rate (in hundredths)	1.15%
Remaining unused amount under line of credit	$ 20,000

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Reportable Segments (Tables)

6 Months Ended

Jun. 30, 2012

Reportable Segments [Abstract]

Schedule of Segment Reporting Information, by Segment

The following table provides certain revenue and profit and loss information for each reportable segment.  All amounts presented are computed based upon U.S. generally accepted accounting principles.  Segment profit for Property and Casualty Insurance includes the direct marketing agency operations conducted by the parent company for this segment and is computed after elimination of inter-company commissions.

	2012						2011
	Direct and Assumed Premium Written		Net  Premium Earned		Segment  Profit		Direct and  Assumed Premium Written		Net Premium Earned		Segment Profit (Loss)
Three months ended June 30:
Property and Casualty Insurance	$	64,760	$	48,167	$	6,872	$	67,309	$	47,352	$	6,147
Reinsurance		14,094		11,488		5,314		15,722		14,992		(12,470	)
Totals	$	78,854	$	59,655	$	12,186	$	83,031	$	62,344	$	(6,323	)
Six months ended June 30:
Property and Casualty Insurance	$	139,986	$	96,076	$	13,795	$	139,413	$	92,870	$	7,600
Reinsurance		28,920		25,130		11,461		28,749		27,075		(35,219	)
Totals	$	168,906	$	121,206	$	25,256	$	168,162	$	119,945	$	(27,619	)

Reconciliation of Operating Profit (Loss) from Segments to Consolidated

The following table reconciles reportable segment income (loss) to the Company's consolidated income (loss) before federal income taxes.

	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
Profit (Loss):
Segment profit (loss)	$	12,186		$	(6,323	)	$	25,256		$	(27,619	)
Net investment income		2,431			2,644			4,853			5,297
Net losses on investments		(5,453	)		(1,963	)		(73	)		(3,432	)
Corporate expenses		(3,904	)		(3,050	)		(7,778	)		(6,655	)
Income (loss) before federal income taxes	$	5,260		$	(8,692	)	$	22,258		$	(32,409	)