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

                                                                                                                                                                                                                                       September 30, 2014                                                                                                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)
111 Congressional Boulevard, Carmel, Indiana (Address of principal executive offices)	46032 (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 November 1, 2014:

TITLE OF CLASS                                                              NUMBER OF SHARES OUTSTANDING

  Common Stock, No Par Value:

Class A (voting)                                                                                                2,623,109

Class B (nonvoting)                                                                                        12,352,080

Index to Exhibits located on page 27.

PART I – FINANCIAL INFORMATION

ITEM 1  FINANCIAL STATEMENTS

Baldwin & Lyons, Inc. and Subsidiaries
Unaudited Consolidated Balance Sheets
(in thousands, except share data)
	September 30		December 31
	2014		2013
Assets
Investments:
Fixed maturities	$	431,801	$	431,550
Equity securities		160,270		145,828
Limited partnerships		79,583		68,988
Short-term		3,165		4,891
		674,819		651,257
Cash and cash equivalents		79,576		59,297
Accounts receivable		97,651		100,830
Reinsurance recoverable		208,494		195,568
Other assets		62,614		62,204
Current federal income taxes		1,876		3,114
	$	1,125,030	$	1,072,270
Liabilities and shareholders' equity
Reserves for losses and loss expenses	$	492,657	$	474,470
Reserves for unearned premiums		35,777		36,693
Short-term borrowings		20,000		10,000
Accounts payable and accrued expenses		157,473		152,532
Deferred federal income taxes		21,123		16,851
		727,030		690,546
Shareholders' equity:
Common stock-no par value:
Class A voting -- authorized 3,000,000 shares;
outstanding -- 2014 - 2,623,109; 2013 - 2,623,109		112		112
Class B non-voting -- authorized 20,000,000 shares;
outstanding -- 2014 - 12,352,080; 2013 - 12,304,191		527		525
Additional paid-in capital		51,744		50,594
Unrealized net gains on investments		54,799		49,089
Foreign exchange adjustment		566		1,401
Retained earnings		290,252		280,003
		398,000		381,724
	$	1,125,030	$	1,072,270

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						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Revenues
Net premiums earned	$	65,947		$	64,448		$	192,694		$	187,321
Net investment income		2,073			2,192			6,456			6,587
Commissions and other income		1,800			1,519			4,887			4,441
Net realized gains on investments, excluding
impairment losses		1,099			1,434			13,363			16,572
Total other-than-temporary impairment losses on investments		(441	)		(4	)		(546	)		(78	)
Portion of other-than-temporary impairment losses
recognized in other comprehensive income		-			-			-			2
Net realized gains on investments		658			1,430			12,817			16,496
		70,478			69,589			216,854			214,845
Expenses
Losses and loss expenses incurred		38,693			36,967			118,264			109,843
Other operating expenses		23,237			20,930			66,566			63,369
		61,930			57,897			184,830			173,212
Income before federal income taxes		8,548			11,692			32,024			41,633
Federal income taxes		2,778			3,921			10,553			14,012
Net income	$	5,770		$	7,771		$	21,471		$	27,621
Per share data:
Basic and diluted earnings	$	.39		$	.52		$	1.43		$	1.85
Dividends paid to shareholders	$	.25		$	.25		$	.75		$	.75
Reconciliation of shares outstanding:
Average shares outstanding - basic		14,971			14,918			14,962			14,902
Dilutive effect of share equivalents		2			3			12			19
Average shares outstanding - diluted		14,973			14,921			14,974			14,921

See notes to condensed consolidated financial statements.

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Baldwin & Lyons, Inc. and Subsidiaries
Unaudited Consolidated Statements of Comprehensive Income
(in thousands)
	Three Months Ended					Nine Months Ended
	September 30					September 30
	2014			2013		2014			2013
Net income	$	5,770		$	7,771	$	21,471		$	27,621
Other comprehensive income (loss), net of tax:
Unrealized net gains (losses) on securities:
Unrealized net gains (losses) arising during the period		(3,472	)		6,921		9,358			13,699
Less: reclassification adjustment for net gains (losses)
included in net income		1,118			1,068		3,648			9,275
		(4,590	)		5,853		5,710			4,424
Foreign currency translation adjustments		(705	)		199		(835	)		(282	)
Other comprehensive income (loss)		(5,295	)		6,052		4,875			4,142
Comprehensive income	$	475		$	13,823	$	26,346		$	31,763

See notes to condensed consolidated financial statements.

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Baldwin & Lyons, Inc. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
(in thousands)
	Nine Months Ended
	September 30
	2014	2013
Net cash provided by operating activities	$31,110	$34,822
Investing activities:
Purchases of available-for-sale investments	(201,523)	(273,675)
Purchases of limited partnership interests	(4,212)	-
Proceeds from sales or maturities
of available-for-sale investments	204,979	302,726
Net sales (purchases) of short-term investments	1,726	(218)
Other investing activities	(9,744)	(20,308)
Net cash provided by (used in) investing activities	(8,774)	8,525
Financing activities:
Dividends paid to shareholders	(11,222)	(11,227)
Drawings on line of credit	10,000	-
Net cash used in financing activities	(1,222)	(11,227)
Effect of foreign exchange rates on cash and cash equivalents	(835)	(282)
Increase in cash and cash equivalents	20,279	31,838
Cash and cash equivalents at beginning of period	59,297	71,549
Cash and cash equivalents at end of period	$79,576	$103,387

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, 2014.  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 consolidated statements of operations, its proportionate share of the investee’s unrealized as well as realized investment gains or losses.

Other investments, if any, are carried at either fair 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.

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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 September 30, 2014 and December 31, 2013:

										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
Septmeber 30, 2014
Fixed maturities
U.S. government obligations	$	123,933	$	123,859	$	125	$	(51	)	$	74
Residential mortgage-backed securities		7,349		7,084		322		(57	)		265
Commercial mortgage-backed securities		35,694		35,132		737		(175	)		562
States and municipal obligations		105,382		104,534		882		(34	)		848
Corporate securities		129,497		130,186		2,185		(2,874	)		(689	)
Foreign government obligations		29,946		30,372		185		(611	)		(426	)
Total fixed maturities		431,801		431,167		4,436		(3,802	)		634
Equity securities:
Financial institutions		20,594		9,520		11,096		(22	)		11,074
Industrial & miscellaneous		139,676		67,077		73,467		(868	)		72,599
Total equity securities		160,270		76,597		84,563		(890	)		83,673
Total	$	592,071	$	507,764	$	88,999	$	(4,692	)		84,307
							Applicable federal income taxes				(29,508	)
							Net unrealized gains - net of tax			$	54,799
December 31, 2013
Fixed maturities
U.S. government obligations	$	113,389	$	113,348	$	81	$	(40	)	$	41
Residential mortgage-backed securities		13,252		12,058		1,334		(140	)		1,194
Commercial mortgage-backed securities		28,565		28,406		308		(149	)		159
State and municipal obligations		115,250		115,278		407		(435	)		(28	)
Corporate securities		137,215		136,991		3,207		(2,983	)		224
Foreign government obligations		23,879		23,689		588		(398	)		190
Total fixed maturities		431,550		429,770		5,925		(4,145	)		1,780
Equity securities:
Financial institutions		18,850		7,780		11,171		(101	)		11,070
Industrial & miscellaneous		126,978		64,307		63,009		(338	)		62,671
Total equity securities		145,828		72,087		74,180		(439	)		73,741
Total	$	577,378	$	501,857	$	80,105	$	(4,584	)		75,521
							Applicable federal income taxes				(26,432	)
							Net unrealized gains - net of tax			$	49,089

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Notes to Condensed Unaudited Consolidated Financial Statements (continued)

The following table summarizes, for fixed maturity and equity security investments in an unrealized loss position at September 30, 2014 and December 31, 2013, respectively, the aggregate fair value and gross unrealized loss categorized by the duration those securities have been continuously in an unrealized loss position.

	September 30, 2014							December 31, 2013
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		353	$	90,946	$	(2,127	)		451	$	123,145	$	(3,105	)
Greater than 12 months		131		44,616		(1,675	)		53		18,249		(1,040	)
Total fixed maturities		484		135,562		(3,802	)		504		141,394		(4,145	)
Equity securities:
12 months or less		30		9,248		(806	)		10		1,682		(204	)
Greater than 12 months		5		1,516		(84	)		2		1,980		(235	)
Total equity securities		35		10,764		(890	)		12		3,662		(439	)
Total fixed maturity and equity securities		519	$	146,326	$	(4,692	)		516	$	145,056	$	(4,584	)

The fair value and the cost or amortized costs of fixed maturity investments at September 30, 2014, 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	$	145,547	$	145,511
Excess of one year to five years		154,266		155,127
Excess of five years to ten years		46,520		46,078
Excess of ten years		8,987		8,340
Contractual maturities		355,320		355,056
Asset-backed securities		76,481		76,111
Total	$	431,801	$	431,167

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Notes to Condensed Unaudited Consolidated Financial Statements (continued)

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

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Fixed maturities:
Gross gains	$	798		$	2,043		$	5,399		$	5,695
Gross losses		(1,259	)		(1,277	)		(3,411	)		(3,497	)
Net realized gains (losses)		(461	)		766			1,988			2,198
Equity securities:
Gross gains		2,529			1,233			4,682			13,838
Gross losses		(346	)		(358	)		(1,057	)		(1,767	)
Net realized gains		2,183			875			3,625			12,071
Limited partnerships - net gain (loss)		(1,064	)		(211	)		7,204			2,227
Totals	$	658		$	1,430		$	12,817		$	16,496

Net realized gains activity for investments, as shown in the previous table, are further detailed as follows:

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Realized net gains on the disposal of securities	$	2,223		$	1,090		$	5,837		$	11,888
Mark-to-market adjustment		(118	)		342			151			747
Equity in gains (losses) of limited partnership
investments - realized and unrealized		(1,064	)		(211	)		7,204			2,227
Impairment:
Write-downs based upon objective criteria		(441	)		(4	)		(546	)		(78	)
Recovery of prior write-downs
upon sale or disposal		58			213			171			1,712
Totals	$	658		$	1,430		$	12,817		$	16,496

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 from limited partnerships for the quarter and year-to-date periods ending September 30, 2014 includes an estimated $334 and $5,841 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 September 30, 2014 includes approximately $13,305 of accumulated net unrealized gains reported to the Company as part of the underlying assets of the various limited partnerships. Shareholders’ equity at September 30, 2014 includes approximately $28,923, net of federal income taxes, of reported earnings which remain undistributed by limited partnerships.

As of September 30, 2014, the Company had committed funds totaling $18,750 to two separate borrowers related to three bridge loan agreements.  The Company retains possession of these funds which will only be loaned in the unlikely event that long-term financing is unavailable to the counter party in the market.

(3) Reinsurance:

The following table summarizes the Company’s transactions with reinsurers for the 2014 and 2013 comparative periods.

	2014		2013
Quarter ended September 30:
Premiums ceded to reinsurers	$	28,711	$	30,925
Losses and loss expenses
ceded to reinsurers		15,451		26,558
Commissions from reinsurers		5,850		5,844
Nine months ended September 30:
Premiums ceded to reinsurers	$	91,345	$	87,335
Losses and loss expenses
ceded to reinsurers		54,473		61,806
Commissions from reinsurers		17,425		15,095

(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, workers’ compensation coverage to small businesses and professional liability products on a selective basis.

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Notes to Condensed Unaudited Consolidated Financial Statements (continued)

The Reinsurance segment accepts professional liability cessions from other insurance companies.  In addition, the Reinsurance segment accepts property cessions from other insurance companies and, prior to January 1, 2014, retrocessions from carefully chosen reinsurance companies, principally reinsuring against catastrophes.

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.

	2014							2013
	Direct and Assumed Premium Written		Net Premium Earned		Segment Profit (Loss)			Direct and Assumed Premium Written		Net Premium Earned		Segment Profit
Three months ended September 30:
Property and Casualty Insurance	$	84,644	$	57,097	$	9,520		$	82,272	$	52,036	$	9,712
Reinsurance		9,947		8,850		(906	)		14,278		12,412		1,846
Totals	$	94,591	$	65,947	$	8,614		$	96,550	$	64,448	$	11,558
Nine months ended September 30:
Property and Casualty Insurance	$	253,394	$	163,613	$	23,726		$	233,217	$	149,699	$	20,353
Reinsurance		31,049		29,081		196			40,054		37,622		9,525
Totals	$	284,443	$	192,694	$	23,922		$	273,271	$	187,321	$	29,878

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

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Profit:
Segment profit	$	8,614		$	11,558		$	23,922		$	29,878
Net investment income		2,073			2,192			6,456			6,587
Net gains on investments		658			1,430			12,817			16,496
Corporate expenses and other		(2,797	)		(3,488	)		(11,171	)		(11,328	)
Income before federal income taxes	$	8,548		$	11,692		$	32,024		$	41,633

Segment profit includes both net premiums earned and fees and other income 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) Debt:

The Company maintains a revolving line of credit with a $40,000 limit and an expiration date of September 23, 2018.  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 $20,000 as of September 30, 2014 and $10,000 as of December 31, 2013.  At September 30, 2014, the effective interest rate was 1.25%.  The Company has $20,000 remaining unused under the line of credit at September 30, 2014. 

(6) Taxes:

As of September 30, 2014, the Company’s calendar years 2011 through 2013 remain subject to examination by the IRS.  The effective federal income tax 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)

(7) 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 September 30, 2014:
Description	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. government obligations	$	123,933	$	123,933	$	-	$	-
Residential mortgage-backed securities		7,349		-		7,349		-
Commercial mortgage-backed securities		35,694		-		35,694		-
State and municipal obligations		105,382		-		105,382		-
Corporate securities		126,748		-		126,748		-
Options embedded in convertible securities		2,749		-		2,749		-
Foreign government obligations		29,946		-		29,946		-
Total fixed maturities		431,801		123,933		307,868		-
Equity securities:
Financial institutions		20,594		20,594		-		-
Industrial & miscellaneous		139,676		139,676		-		-
Total equity securities		160,270		160,270		-		-
Short term		3,165		3,165		-		-
Cash equivalents		75,141		-		75,141		-
	$	670,377	$	287,368	$	383,009	$	-

As of December 31, 2013:
Description	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. government obligations	$	113,389	$	113,389	$	-	$	-
Residential mortgage-backed securities		13,252		-		13,252		-
Commercial mortgage-backed securities		28,565		-		28,565		-
State and municipal obligations		115,250		-		115,250		-
Corporate securities		134,635		-		134,635		-
Options embedded in convertible securities		2,580		-		2,580		-
Foreign government obligations		23,879		-		23,879		-
Total fixed maturities		431,550		113,389		318,161		-
Equity securities:
Financial institutions		18,850		18,850		-		-
Industrial & miscellaneous		126,978		126,978		-		-
Total equity securities		145,828		145,828		-		-
Short term		4,891		4,891		-		-
Cash equivalents		52,002		-		52,002		-
	$	634,271	$	264,108	$	370,163	$	-

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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 purchased 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 1 or Level 2 inputs for the determination of fair value to facilitate fair value measurements and disclosures. U.S. government obligations represent Level 1 securities, while Level 2 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.

Insurance-linked securities:  During the fourth quarter of 2013, the Company determined that insurance-linked securities have adequate comparable instruments with currently observable inputs through corroboration with market data.  Therefore, the insurance-linked securities were transferred to Level 2.  They were previously classified as Level 3.

Equity securities: Fair values of equity securities are designated as Level 1 and are based on quoted market prices.

- 14 -

Notes to Condensed Unaudited Consolidated Financial Statements (continued)

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 nine months ended September 30, 2014 and for the year ended December 31, 2013:

	2014		2013
Beginning of period balance	$	-	$	11,682
Total  gains or losses (realized or unrealized)
included in income		-		1,017
Purchases		-		1,258
Settlements		-		(6,698	)
Transfers out of level 3				(7,259	)
End of period balance	$	-	$	-

Transfers between levels, if any, are recorded as of the beginning of the reporting period.  There were no significant transfers of assets between Level 1 and Level 2 during the nine months ended September 30, 2014 and 2013.

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 reserves for losses and loss expenses 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 premiums 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 primarily 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 3.

- 15 -

Notes to Condensed Unaudited Consolidated Financial Statements (continued)

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 sheets at September 30, 2014 and December 31, 2013 are as follows:

	Carrying		Fair Value
	Value		Level 1		Level 2		Level 3		Total
September 30, 2014
Assets:   Limited partnerships	$	79,583	$	-	$	-	$	79,583	$	79,583
Liabilities:   Short-term borrowings		20,000		-		20,000		-		20,000
December 31, 2013
Assets:   Limited partnerships		68,988		-		-		68,988		68,988
Liabilities:   Short-term borrowings		10,000		-		10,000		-		10,000

(8) Restricted Stock:

The Company grants shares of class B restricted stock to the Company’s outside directors, in lieu of cash, as their annual retainer compensation.  The shares are distributed on the vesting date, one year following the date of grant, and have had an aggregate total value of $440 for each of the annual periods presented.  The table below provides detail of the stock issuances for 2013 and 2014:

				Value
				Per Share
Effective	Number of Shares	Vesting	Service	on Grant
Date	Issued	Date	Period	Date
5/7/2013	18,106	5/7/2014	7/1/2013 - 6/30/2014	$24.30
5/8/2014	17,237	5/8/2015	7/1/2014 - 6/30/2015	$25.53

Compensation expense related to the above stock grant is recognized over the period in which the directors render the services.

Effective February 4, 2014, the Company issued 45,678 shares of class B restricted stock to certain of the Company’s executives as a portion of compensation under the Company’s 2013 Executive Incentive Bonus Plan.  The restricted shares will vest ratably over a three year period from the date of grant with acceleration for retirement eligible recipients due to the non-substantive post-grant date vesting clause per Accounting Standards Codification 715, Compensation-Retirement Benefits.  Restricted stock was valued based on the closing price of the stock on the day the award was granted.  Each share was valued at $23.81 per share representing a total value of $1,088.  Non-vested restricted shares will be forfeited should an executive’s employment terminate for any reason other than death, disability, or retirement as defined by the 2013 Executive Incentive Bonus Plan.

- 16 -

Notes to Condensed Unaudited Consolidated Financial Statements (continued)

(9) Litigation, Commitments and Contingencies:

In the ordinary, regular and routine course of their business, the Company and its insurance Subsidiaries are frequently involved in various matters of litigation relating principally to claims for insurance coverage provided.  No currently pending matter is deemed by management to be material to the Company.

(10) Accumulated Other Comprehensive Income:

The following table illustrates changes in accumulated other comprehensive income by component for the nine months ending September 30, 2014:

				Unrealized
				holding gains on
	Foreign			available-for-sale
	Currency			securities			Total
Beginning balance	$	1,401		$	49,089		$	50,490
Other comprehensive income
before reclassifications		(835	)		9,358			8,523
Amounts reclassified from
accumulated other
comprehensive income		-			(3,648	)		(3,648	)
Net current-period other
comprehensive income		(835	)		5,710			4,875
Ending balance	$	566		$	54,799		$	55,365

 (11) 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.

- 17 -

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 one-third 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 and certain contracts call for reinsurance payment patterns which do not coincide with the collection of premium by the Company from its insureds.

For the first nine months of 2014, the Company produced positive cash flow from operations totaling $31.1 million, which compares to positive cash flow from operations of $34.8 million generated during the first nine months of 2013.  The decrease in cash flow from the 2013 period is primarily due to increased loss, LAE and other operating expense payments during the 2014 period, principally from property reinsurance losses.  The Company has achieved positive cash flow in 20 of the past 21 quarters averaging $12.5 million per quarter.

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 4.75 years at September 30, 2014, which is shorter than the average life of the Company’s liabilities.

Financing activity for the first nine months of 2014 included regular dividend payments to shareholders of $11.2 million ($.75 per share) and an increase in borrowings under the Company’s line of credit of $10.0 million.

The Company’s assets at September 30, 2014 included $78.3 million in investments classified as cash equivalents that were readily convertible to cash without significant market penalty.  An additional $147.4 million of fixed maturity investments (at par) will mature within the twelve-month period following September 30, 2014.  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 September 30, 2014, $71.6 million may be transferred by dividend or loan to the parent company during the remainder of 2014 without approval by, or prior notification to, regulatory authorities.  An additional $231.4 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 $14.3 million at September 30, 2014.

- 18 -

The Company’s annualized net premiums written to surplus ratio for the first nine months of 2014 was approximately 67%.  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 Third Quarter, 2014 to Third Quarter, 2013

Direct and assumed premiums written during the third quarter of 2014 decreased $2.0 million (2.0%), while net premiums earned increased $1.5 million (2.3%), as compared to the same period of 2013.  The Company’s Property and Casualty Insurance segment reported an increase in premium written of 2.9% and an increase in earned premiums of 9.7% while the Reinsurance segment reported a decrease in premium written of 30.3% and a decrease in premium earned of 28.7%.  In the Property and Casualty Insurance segment, direct and assumed premiums written were positively impacted by an increase in premium from the Company’s core fleet transportation products,partially offset by a continued reduction in professional liability volume resulting from the termination of certain classes of business.  The difference in the percentage changes for premium written compared to earned is reflective of the normal differences in the recognition of earned premium compared to written as well as the differences in reinsurance ceding rates on the mix of business in force.  The decreases from the Reinsurance segment relates to the continued impact of strategic reduction in global property catastrophe risk exposure begun in 2012 and continuing with the termination of the final international retrocession effective January 1, 2014.  The following table provides information regarding premiums written and earned for each segment for the quarter ended September 30 (dollars in thousands):

- 19 -

	Direct and Assumed Premium Written		Net Premium Written		Net Premium Earned
2014
Property & Casualty Insurance	$	84,644	$	56,407	$	57,097
Reinsurance		9,947		9,610		8,850
Totals	$	94,591	$	66,017	$	65,947
2013
Property & Casualty Insurance	$	82,272	$	52,797	$	52,036
Reinsurance		14,278		13,616		12,412
Totals	$	96,550	$	66,413	$	64,448

Premium ceded to reinsurers on insurance business produced by the Property and Casualty Insurance segment averaged 33.4% of premium written for the current quarter compared to 35.8% in the 2013 third quarter, with the decrease associated principally with changes in relative premium earned volume for certain products.  There have been no material changes in the terms of major reinsurance treaties since 2013.

Net investment income, before tax, during the third quarter of 2014 was 5.5% lower than the third quarter of 2013 due primarily to decreased yields on the Company’s fixed maturity bonds.  Overall investment portfolio after tax yields decreased 5% compared to the 2013 third quarter while average invested funds increased 2%.

The third quarter 2014 net realized investment gains of $0.7 million resulted primarily from $2.2 million in gains reported from direct trading partially offset by $1.1 million in losses from limited partnerships and small amounts of mark-to-mark and other-than-temporary impairment adjustments.  Comparative third quarter 2013 overall net realized investment gains were $1.4 million, consisting primarily of $1.1 million in gains from direct trading, $0.3 million in gains from mark-to-market adjustments and $0.2 million in losses from limited partnerships.  Realized investment gains and losses result from decisions regarding the sale of individual securities and the change in total value of limited partnerships and, as such, should not be expected to be consistent from period to period.

Losses and loss expenses incurred during the third quarter of 2014 increased $1.7 million (4.7%).  The loss ratios for each segment were as follows:

	2014	2013
Property and Casualty Insurance	56.7%	60.4%
Reinsurance	71.2	44.5
Total	58.7	57.4

- 20 -

The decrease in loss ratio for the Property and Casualty Insurance segment primarily relates to favorable loss activity in the Company’s core fleet transportation products.  The increase in the Reinsurance segment loss ratio reflects additional reported losses during the third quarter associated with Midwest storm losses occurring in the second quarter of 2014 while the 2013 third quarter experienced favorable results.

Other operating expenses, for the third quarter of 2014, increased $2.3 million, or 11.0%, from the third quarter of 2013.  The ratio of consolidated other operating expenses to operating revenue was 33.3% during the third quarter of 2014 compared to 30.7% for the 2013 third quarter.  The increase in the ratio was mainly driven by higher commission rates and increased operating expenses, including expenses associated with upgrades to the Company’s policy management and billing systems, during the third quarter of 2014.

The effective federal tax rate on consolidated income for the third quarter of 2014 was 32.5%.  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, and principally higher loss and loss adjustment expenses from property catastrophe losses, net income decreased $2.0 million during the third quarter of 2014 as compared to the 2013 period.

Comparison of Nine Months Ended September 30, 2014 to Nine Months Ended September 30, 2013

Direct and assumed premiums written during the first nine months of 2014 increased $11.2 million (4.1%), while net premiums earned increased $5.4 million (2.9%), as compared to the same period of 2013.  The Company’s Property and Casualty Insurance segment reported an increase in premium written of 8.7% and an increase in earned premiums of 9.3% while the Reinsurance segment reported a decrease in premium written of 22.5% and a decrease in premium earned of 22.7%.  In the Property and Casualty Insurance segment, direct and assumed premiums written were favorably impacted principally by an increase in premium from the Company’s core fleet transportation products partially offset by a reduction in professional liability volume resulting from the termination of certain classes of business.  The difference in the percentage changes for premium written compared to earned is reflective of the normal differences in the recognition of earned premium compared to written as well as the differences in reinsurance ceding rates on the mix of business in force.  The decreases from the Reinsurance segment relates to the continued impact of strategic reduction in global property catastrophe risk exposure begun in 2012 and continuing with the termination of the final international retrocession effective January 1, 2014.  The following table provides information regarding premiums written and earned for each segment for the nine months ended September 30 (dollars in thousands):

- 21 -

	Direct and Assumed Premium Written		Net Premium Written		Net Premium Earned
2014
Property & Casualty Insurance	$	253,394	$	163,388	$	163,613
Reinsurance		31,049		30,040		29,081
Totals	$	284,443	$	193,428	$	192,694
2013
Property & Casualty Insurance	$	233,217	$	148,965	$	149,699
Reinsurance		40,054		38,067		37,622
Totals	$	273,271	$	187,032	$	187,321

Premium ceded to reinsurers on insurance business produced by the Property and Casualty Insurance segment averaged 35.5% of premium written for the current year period compared to 36.1% a year earlier with the small decrease associated with changes in the mix of premium earned.

Net investment income, before tax, during the first nine months of 2014 decreased 2% compared to the first nine months of 2013.  Overall after tax yields were essentially flat compared to the prior year period while average funds invested were slightly higher in the 2014 period.

Net realized investment gains for the first nine months of 2014 totaled $12.8 million and resulted primarily from $7.2 million in gains from limited partnerships and an additional $5.8 million in gains from direct trading. For the same period of 2013, overall net realized investment gains were $16.5 million, consisting primarily of $11.9 million in gains from direct trading and $2.2 million in additional gains from limited partnerships.  Realized investment gains and losses result from decisions regarding the sale of individual securities and the change in total value of limited partnerships and, as such, should not be expected to be consistent from period to period.

Losses and loss expenses incurred during the first nine months of 2014 were $8.4 million (7.7%) higher than that experienced during the first nine months of 2013.  The loss ratios for each segment were as follows:

	2014	2013
Property and Casualty Insurance	61.6%	64.8%
Reinsurance	60.0	33.9
Total	61.4	58.6

The decrease in loss ratio for the Property and Casualty Insurance segment primarily relates to favorable activity with respect to the Company’s core fleet transportation products.  The increase in the Reinsurance segment loss ratio reflects the second quarter 2014 storm losses which added $10.5 million to this segment’s losses incurred in 2014 while the first nine months of 2013 experienced no significant property losses.

- 22 -

Other operating expenses, for the first nine months of 2014, increased $3.2 million, or 5.0%, from the 2013 nine-month period generally in line with increases in premium earned.  The ratio of consolidated other operating expenses to operating revenue was 32.6% during the 2014 period compared to 31.9% for the 2013 period with the slight increases reflective of increased expenses associated with the initial development of new policy administration and billing systems.

The effective federal tax rate on consolidated income for the first nine months of 2014 was 33.0%.  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, principally the property catastrophe losses incurred in 2013, net income decreased $6.2 million as compared to the 2013 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.

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, 2013.

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 September 30, 2014, amounts due from reinsurers on paid and unpaid losses, are estimated to total approximately $204 million.  Of this total, approximately $54 million (26%) 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, absent the inability to collect from reinsurers, such variance would not result in changes in net claim losses incurred by the Company.

At September 30, 2014, limited partnership investments include approximately $45.5 million consisting of two 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.

- 23 -

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, 2013.

ITEM 4. CONTROLS AND PROCEDURES

The Company carried out an evaluation as of December 31, 2013, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures as defined in Rule 13a-15(e) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, the “Exchange Act”. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective in timely alerting the Company to material information required to be disclosed in reports under the Exchange Act. In addition, based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective in ensuring that information required to be disclosed in reports that the Company files or submits under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. The Company noted no change in internal control over financial reporting that occurred during the last fiscal quarter that materially affected, or is reasonably likely to materially affect, the internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 5. OTHER INFORMATION

Nothing to report.

- 24 -

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     November 10, 2014                                                                     By /s/ Joseph J. DeVito                                                

              Joseph J. DeVito, CEO and President

Date     November 10, 2014                                                                     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 September 30, 2014

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: November 10, 2014

  /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:  November 10, 2014

  /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 September 30, 2014 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.

November 10, 2014

  /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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Restricted Stock (Details) (USD $) In Thousands, except Share data, unless otherwise specified	1 Months Ended		9 Months Ended			12 Months Ended	0 Months Ended
	May 31, 2014	May 31, 2013	Sep. 30, 2014	Sep. 30, 2014 Restricted Stock Units (RSUs) [Member]	Sep. 30, 2014 Restricted Stock Units (RSUs) [Member] Class B [Member] Outside Director [Member]	Dec. 31, 2013 Restricted Stock Units (RSUs) [Member] Class B [Member] Outside Director [Member]	Feb. 04, 2014 Restricted Stock Units (RSUs) [Member] Class B [Member] Executives [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares distribution period from grant date			1 year
Total value of shares issued					$ 440	$ 440	$ 1,088
Shares issued (in shares)							45,678
Value of each share issued (in dollars per share)	$ 25.53	$ 24.30					$ 23.81
Summary of stock Issuances [Abstract]
Shares granted (in shares)	17,237	18,106
Vesting Date	May 08, 2015	May 07, 2014
Service Period	7/1/2014 - 6/30/2015	7/1/2013 - 6/30/2014
Period restricted stocks will vest ratably from date of grant				3 years

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Summary of Significant Accounting Policies (Details)	9 Months Ended
	Sep. 30, 2014
Summary of Significant Accounting Policies [Abstract]
Percentage of decline on cost of securities treated as other-than-temporary impairment (in hundredths)	20.00%
Period of decline on the cost of equity securities that will be considered other-than-temporary impairment	6 months

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Reinsurance

9 Months Ended

Sep. 30, 2014

Reinsurance [Abstract]

Reinsurance

(3) Reinsurance:

The following table summarizes the Company’s transactions with reinsurers for the 2014 and 2013 comparative periods.

	2014		2013
Quarter ended September 30:
Premiums ceded to reinsurers	$	28,711	$	30,925
Losses and loss expenses
ceded to reinsurers		15,451		26,558
Commissions from reinsurers		5,850		5,844
Nine months ended September 30:
Premiums ceded to reinsurers	$	91,345	$	87,335
Losses and loss expenses
ceded to reinsurers		54,473		61,806
Commissions from reinsurers		17,425		15,095

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Debt (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Debt [Abstract]
Revolving line of credit limit	$ 40,000
Line of credit maturity date	Sep. 23, 2018
Period of fixed interest on line of credit at company's options	1 year
Outstanding drawings on line of credit	20,000	10,000
Effective interest rate (in hundredths)	1.25%
Remaining unused amount under line of credit	$ 20,000

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Reportable Segments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 Segment	Sep. 30, 2013
Reportable Segments [Abstract]
Number of reportable segments			2
Segment Reporting Information [Line Items]
Net Premiums Earned	$ 65,947	$ 64,448	$ 192,694	$ 187,321
Reconciliation from segment totals to consolidated [Abstract]
Income before federal income taxes	8,548	11,692	32,024	41,633
Operating Segments [Member]
Segment Reporting Information [Line Items]
Direct and Assumed Premium Written	94,591	96,550	284,443	273,271
Net Premiums Earned	65,947	64,448	192,694	187,321
Segment Profit (Loss)	8,614	11,558	23,922	29,878
Reconciliation from segment totals to consolidated [Abstract]
Segment profit	8,614	11,558	23,922	29,878
Operating Segments [Member] | Property and Casualty Insurance [Member]
Segment Reporting Information [Line Items]
Direct and Assumed Premium Written	84,644	82,272	253,394	233,217
Net Premiums Earned	57,097	52,036	163,613	149,699
Segment Profit (Loss)	9,520	9,712	23,726	20,353
Reconciliation from segment totals to consolidated [Abstract]
Segment profit	9,520	9,712	23,726	20,353
Operating Segments [Member] | Reinsurance [Member]
Segment Reporting Information [Line Items]
Direct and Assumed Premium Written	9,947	14,278	31,049	40,054
Net Premiums Earned	8,850	12,412	29,081	37,622
Segment Profit (Loss)	(906)	1,846	196	9,525
Reconciliation from segment totals to consolidated [Abstract]
Segment profit	(906)	1,846	196	9,525
Segment Reconciling Items [Member]
Reconciliation from segment totals to consolidated [Abstract]
Net investment income	2,073	2,192	6,456	6,587
Net gains on investments	658	1,430	12,817	16,496
Corporate expenses and other	$ (2,797)	$ (3,488)	$ (11,171)	$ (11,328)

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Fair Value (Details) (Recurring [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fixed maturities [Abstract]
U.S. government obligations	$ 123,933	$ 113,389
Residential mortgage-backed securities	7,349	13,252
Commercial mortgage-backed securities	35,694	28,565
State and municipal obligations	105,382	115,250
Corporate securities	126,748	134,635
Options embedded in convertible securities	2,749	2,580
Foreign government obligations	29,946	23,879
Total fixed maturities	431,801	431,550
Equity Securities [Abstract]
Financial institutions	20,594	18,850
Industrial & miscellaneous	139,676	126,978
Total equity securities	160,270	145,828
Short term	3,165	4,891
Cash equivalents	75,141	52,002
Total fair value	670,377	634,271
Level 1 [Member]
Fixed maturities [Abstract]
U.S. government obligations	123,933	113,389
Residential mortgage-backed securities	0	0
Commercial mortgage-backed securities	0	0
State and municipal obligations	0	0
Corporate securities	0	0
Options embedded in convertible securities	0	0
Foreign government obligations	0	0
Total fixed maturities	123,933	113,389
Equity Securities [Abstract]
Financial institutions	20,594	18,850
Industrial & miscellaneous	139,676	126,978
Total equity securities	160,270	145,828
Short term	3,165	4,891
Cash equivalents	0	0
Total fair value	287,368	264,108
Level 2 [Member]
Fixed maturities [Abstract]
U.S. government obligations	0	0
Residential mortgage-backed securities	7,349	13,252
Commercial mortgage-backed securities	35,694	28,565
State and municipal obligations	105,382	115,250
Corporate securities	126,748	134,635
Options embedded in convertible securities	2,749	2,580
Foreign government obligations	29,946	23,879
Total fixed maturities	307,868	318,161
Equity Securities [Abstract]
Financial institutions	0	0
Industrial & miscellaneous	0	0
Total equity securities	0	0
Short term	0	0
Cash equivalents	75,141	52,002
Total fair value	383,009	370,163
Level 3 [Member]
Fixed maturities [Abstract]
U.S. government obligations	0	0
Residential mortgage-backed securities	0	0
Commercial mortgage-backed securities	0	0
State and municipal obligations	0	0
Corporate securities	0	0
Options embedded in convertible securities	0	0
Foreign government obligations	0	0
Total fixed maturities	0	0
Equity Securities [Abstract]
Financial institutions	0	0
Industrial & miscellaneous	0	0
Total equity securities	0	0
Short term	0	0
Cash equivalents	0	0
Total fair value	$ 0	$ 0

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Fair Value, Unobservable Input Reconciliation (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Fair value assets measured on recurring basis unobservable input reconciliation calculation [Roll Forward]
Beginning of period balance	$ 0	$ 11,682
Total gains or losses (realized or unrealized) included in income	0	1,017
Purchases	0	1,258
Settlements	0	(6,698)
Transfers out of Level 3	0	(7,259)
End of period balance	$ 0	$ 0

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Investments

9 Months Ended

Sep. 30, 2014

Investments [Abstract]

Investments

(2) Investments:

The following is a summary of available-for-sale securities at September 30, 2014 and December 31, 2013:

										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
Septmeber 30, 2014
Fixed maturities
U.S. government obligations	$	123,933	$	123,859	$	125	$	(51	)	$	74
Residential mortgage-backed securities		7,349		7,084		322		(57	)		265
Commercial mortgage-backed securities		35,694		35,132		737		(175	)		562
States and municipal obligations		105,382		104,534		882		(34	)		848
Corporate securities		129,497		130,186		2,185		(2,874	)		(689	)
Foreign government obligations		29,946		30,372		185		(611	)		(426	)
Total fixed maturities		431,801		431,167		4,436		(3,802	)		634
Equity securities:
Financial institutions		20,594		9,520		11,096		(22	)		11,074
Industrial & miscellaneous		139,676		67,077		73,467		(868	)		72,599
Total equity securities		160,270		76,597		84,563		(890	)		83,673
Total	$	592,071	$	507,764	$	88,999	$	(4,692	)		84,307
							Applicable federal income taxes				(29,508	)
							Net unrealized gains - net of tax			$	54,799
December 31, 2013
Fixed maturities
U.S. government obligations	$	113,389	$	113,348	$	81	$	(40	)	$	41
Residential mortgage-backed securities		13,252		12,058		1,334		(140	)		1,194
Commercial mortgage-backed securities		28,565		28,406		308		(149	)		159
State and municipal obligations		115,250		115,278		407		(435	)		(28	)
Corporate securities		137,215		136,991		3,207		(2,983	)		224
Foreign government obligations		23,879		23,689		588		(398	)		190
Total fixed maturities		431,550		429,770		5,925		(4,145	)		1,780
Equity securities:
Financial institutions		18,850		7,780		11,171		(101	)		11,070
Industrial & miscellaneous		126,978		64,307		63,009		(338	)		62,671
Total equity securities		145,828		72,087		74,180		(439	)		73,741
Total	$	577,378	$	501,857	$	80,105	$	(4,584	)		75,521
							Applicable federal income taxes				(26,432	)
							Net unrealized gains - net of tax			$	49,089

The following table summarizes, for fixed maturity and equity security investments in an unrealized loss position at September 30, 2014 and December 31, 2013, respectively, the aggregate fair value and gross unrealized loss categorized by the duration those securities have been continuously in an unrealized loss position.

	September 30, 2014							December 31, 2013
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		353	$	90,946	$	(2,127	)		451	$	123,145	$	(3,105	)
Greater than 12 months		131		44,616		(1,675	)		53		18,249		(1,040	)
Total fixed maturities		484		135,562		(3,802	)		504		141,394		(4,145	)
Equity securities:
12 months or less		30		9,248		(806	)		10		1,682		(204	)
Greater than 12 months		5		1,516		(84	)		2		1,980		(235	)
Total equity securities		35		10,764		(890	)		12		3,662		(439	)
Total fixed maturity and equity securities		519	$	146,326	$	(4,692	)		516	$	145,056	$	(4,584	)

The fair value and the cost or amortized costs of fixed maturity investments at September 30, 2014, 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	$	145,547	$	145,511
Excess of one year to five years		154,266		155,127
Excess of five years to ten years		46,520		46,078
Excess of ten years		8,987		8,340
Contractual maturities		355,320		355,056
Asset-backed securities		76,481		76,111
Total	$	431,801	$	431,167

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

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Fixed maturities:
Gross gains	$	798		$	2,043		$	5,399		$	5,695
Gross losses		(1,259	)		(1,277	)		(3,411	)		(3,497	)
Net realized gains (losses)		(461	)		766			1,988			2,198
Equity securities:
Gross gains		2,529			1,233			4,682			13,838
Gross losses		(346	)		(358	)		(1,057	)		(1,767	)
Net realized gains		2,183			875			3,625			12,071
Limited partnerships - net gain (loss)		(1,064	)		(211	)		7,204			2,227
Totals	$	658		$	1,430		$	12,817		$	16,496

Net realized gains activity for investments, as shown in the previous table, are further detailed as follows:

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Realized net gains on the disposal of securities	$	2,223		$	1,090		$	5,837		$	11,888
Mark-to-market adjustment		(118	)		342			151			747
Equity in gains (losses) of limited partnership
investments - realized and unrealized		(1,064	)		(211	)		7,204			2,227
Impairment:
Write-downs based upon objective criteria		(441	)		(4	)		(546	)		(78	)
Recovery of prior write-downs
upon sale or disposal		58			213			171			1,712
Totals	$	658		$	1,430		$	12,817		$	16,496

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 from limited partnerships for the quarter and year-to-date periods ending September 30, 2014 includes an estimated $334 and $5,841 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 September 30, 2014 includes approximately $13,305 of accumulated net unrealized gains reported to the Company as part of the underlying assets of the various limited partnerships. Shareholders’ equity at September 30, 2014 includes approximately $28,923, net of federal income taxes, of reported earnings which remain undistributed by limited partnerships.

As of September 30, 2014, the Company had committed funds totaling $18,750 to two separate borrowers related to three bridge loan agreements.  The Company retains possession of these funds which will only be loaned in the unlikely event that long-term financing is unavailable to the counter party in the market.

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Fair Value, Balance Sheet Grouping (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Carrying Value [Member]
Assets [Abstract]
Limited partnerships	$ 79,583	$ 68,988
Liabilities [Abstract]
Short-term borrowings	20,000	10,000
Fair Value [Member]
Assets [Abstract]
Limited partnerships	79,583	68,988
Liabilities [Abstract]
Short-term borrowings	20,000	10,000
Fair Value [Member] | Level 1 [Member]
Assets [Abstract]
Limited partnerships	0	0
Liabilities [Abstract]
Short-term borrowings	0	0
Fair Value [Member] | Level 2 [Member]
Assets [Abstract]
Limited partnerships	0	0
Liabilities [Abstract]
Short-term borrowings	20,000	10,000
Fair Value [Member] | Level 3 [Member]
Assets [Abstract]
Limited partnerships	79,583	68,988
Liabilities [Abstract]
Short-term borrowings	$ 0	$ 0

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Unaudited Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Investments:
Fixed maturities	$ 431,801	$ 431,550
Equity securities	160,270	145,828
Limited partnerships	79,583	68,988
Short-term	3,165	4,891
Total Investments	674,819	651,257
Cash and cash equivalents	79,576	59,297
Accounts receivable	97,651	100,830
Reinsurance recoverable	208,494	195,568
Other assets	62,614	62,204
Current federal income taxes	1,876	3,114
Total Assets	1,125,030	1,072,270
Liabilities and shareholders' equity
Reserves for losses and loss expenses	492,657	474,470
Reserves for unearned premiums	35,777	36,693
Short-term borrowings	20,000	10,000
Accounts payable and accrued expenses	157,473	152,532
Deferred federal income taxes	21,123	16,851
Total Liabilities	727,030	690,546
Shareholders' equity:
Additional paid-in capital	51,744	50,594
Unrealized net gains on investments	54,799	49,089
Foreign exchange adjustment	566	1,401
Retained earnings	290,252	280,003
Shareholders' equity	398,000	381,724
Total liabilities and shareholders' equity	1,125,030	1,072,270
Class A voting [Member]
Shareholders' equity:
Common stock	112	112
Class B non-voting [Member]
Shareholders' equity:
Common stock	$ 527	$ 525

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Unaudited Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Unaudited Consolidated Statements of Cash Flows [Abstract]
Net cash provided by operating activities	$ 31,110	$ 34,822
Investing activities:
Purchases of available-for-sale investments	(201,523)	(273,675)
Purchases of limited partnership interests	(4,212)	0
Proceeds from sales or maturities of available-for-sale investments	204,979	302,726
Net sales (purchases) of short-term investments	1,726	(218)
Other investing activities	(9,744)	(20,308)
Net cash provided by (used in) investing activities	(8,774)	8,525
Financing activities:
Dividends paid to shareholders	(11,222)	(11,227)
Drawings on line of credit	10,000	0
Net cash used in financing activities	(1,222)	(11,227)
Effect of foreign exchange rates on cash and cash equivalents	(835)	(282)
Increase in cash and cash equivalents	20,279	31,838
Cash and cash equivalents at beginning of period	59,297	71,549
Cash and cash equivalents at end of period	$ 79,576	$ 103,387

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Fair Value (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value [Abstract]

Fair value measurements by level for 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 September 30, 2014:
Description	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. government obligations	$	123,933	$	123,933	$	-	$	-
Residential mortgage-backed securities		7,349		-		7,349		-
Commercial mortgage-backed securities		35,694		-		35,694		-
State and municipal obligations		105,382		-		105,382		-
Corporate securities		126,748		-		126,748		-
Options embedded in convertible securities		2,749		-		2,749		-
Foreign government obligations		29,946		-		29,946		-
Total fixed maturities		431,801		123,933		307,868		-
Equity securities:
Financial institutions		20,594		20,594		-		-
Industrial & miscellaneous		139,676		139,676		-		-
Total equity securities		160,270		160,270		-		-
Short term		3,165		3,165		-		-
Cash equivalents		75,141		-		75,141		-
	$	670,377	$	287,368	$	383,009	$	-

As of December 31, 2013:
Description	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. government obligations	$	113,389	$	113,389	$	-	$	-
Residential mortgage-backed securities		13,252		-		13,252		-
Commercial mortgage-backed securities		28,565		-		28,565		-
State and municipal obligations		115,250		-		115,250		-
Corporate securities		134,635		-		134,635		-
Options embedded in convertible securities		2,580		-		2,580		-
Foreign government obligations		23,879		-		23,879		-
Total fixed maturities		431,550		113,389		318,161		-
Equity securities:
Financial institutions		18,850		18,850		-		-
Industrial & miscellaneous		126,978		126,978		-		-
Total equity securities		145,828		145,828		-		-
Short term		4,891		4,891		-		-
Cash equivalents		52,002		-		52,002		-
	$	634,271	$	264,108	$	370,163	$	-

Reconciliation of beginning and ending balances of assets measured at fair value on a recurring basis using level 3 inputs

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 nine months ended September 30, 2014 and for the year ended December 31, 2013:

	2014		2013
Beginning of period balance	$	-	$	11,682
Total  gains or losses (realized or unrealized)
included in income		-		1,017
Purchases		-		1,258
Settlements		-		(6,698	)
Transfers out of level 3				(7,259	)
End of period balance	$	-	$	-

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

	Carrying		Fair Value
	Value		Level 1		Level 2		Level 3		Total
September 30, 2014
Assets:   Limited partnerships	$	79,583	$	-	$	-	$	79,583	$	79,583
Liabilities:   Short-term borrowings		20,000		-		20,000		-		20,000
December 31, 2013
Assets:   Limited partnerships		68,988		-		-		68,988		68,988
Liabilities:   Short-term borrowings		10,000		-		10,000		-		10,000

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Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2014

Accumulated Other Comprehensive Income [Abstract]

Changes in Accumulated Other Comprehensive Income by Component

The following table illustrates changes in accumulated other comprehensive income by component for the nine months ending September 30, 2014:

				Unrealized
				holding gains on
	Foreign			available-for-sale
	Currency			securities			Total
Beginning balance	$	1,401		$	49,089		$	50,490
Other comprehensive income
before reclassifications		(835	)		9,358			8,523
Amounts reclassified from
accumulated other
comprehensive income		-			(3,648	)		(3,648	)
Net current-period other
comprehensive income		(835	)		5,710			4,875
Ending balance	$	566		$	54,799		$	55,365

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

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, 2014.  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 consolidated statements of operations, its proportionate share of the investee’s unrealized as well as realized investment gains or losses.

Other investments, if any, are carried at either fair 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.

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Unaudited Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
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)	12,352,080	12,304,191

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Subsequent Events

9 Months Ended

Sep. 30, 2014

Subsequent Events [Abstract]

Subsequent Events

(11) 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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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 01, 2014 Class A (voting) [Member]	Nov. 01, 2014 Class B (non-voting) [Member]
Document and Entity Information [Abstract]
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 Information [Line Items]
Entity Common Stock, Shares Outstanding		2,623,109	12,352,080
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

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, 2014.  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 consolidated statements of operations, its proportionate share of the investee’s unrealized as well as realized investment gains or losses.

Other investments, if any, are carried at either fair 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.

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Unaudited Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenues
Net premiums earned	$ 65,947	$ 64,448	$ 192,694	$ 187,321
Net investment income	2,073	2,192	6,456	6,587
Commissions and other income	1,800	1,519	4,887	4,441
Net realized gains on investments, excluding impairment losses	1,099	1,434	13,363	16,572
Total other-than-temporary impairment losses on investments	(441)	(4)	(546)	(78)
Portion of other-than-temporary impairment losses recognized in other comprehensive income	0	0	0	2
Net realized gains on investments	658	1,430	12,817	16,496
Total revenue	70,478	69,589	216,854	214,845
Expenses
Losses and loss expenses incurred	38,693	36,967	118,264	109,843
Other operating expenses	23,237	20,930	66,566	63,369
Total expenses	61,930	57,897	184,830	173,212
Income before federal income taxes	8,548	11,692	32,024	41,633
Federal income taxes	2,778	3,921	10,553	14,012
Net income	$ 5,770	$ 7,771	$ 21,471	$ 27,621
Per share data:
Basic and diluted earnings (in dollars per share)	$ 0.39	$ 0.52	$ 1.43	$ 1.85
Dividends paid to shareholders (in dollars per share)	$ 0.25	$ 0.25	$ 0.75	$ 0.75
Reconciliation of shares outstanding:
Average shares outstanding - basic (in shares)	14,971	14,918	14,962	14,902
Dilutive effect of share equivalents (in shares)	2	3	12	19
Average shares outstanding - diluted (in shares)	14,973	14,921	14,974	14,921

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Taxes

9 Months Ended

Sep. 30, 2014

Taxes [Abstract]

Taxes

(6) Taxes:

As of September 30, 2014, the Company’s calendar years 2011 through 2013 remain subject to examination by the IRS.  The effective federal income tax rate differs from the normal statutory rate primarily as a result of tax-exempt investment income.

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Debt

9 Months Ended

Sep. 30, 2014

Debt [Abstract]

Debt

(5) Debt:

The Company maintains a revolving line of credit with a $40,000 limit and an expiration date of September 23, 2018.  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 $20,000 as of September 30, 2014 and $10,000 as of December 31, 2013.  At September 30, 2014, the effective interest rate was 1.25%.  The Company has $20,000 remaining unused under the line of credit at September 30, 2014. 

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Restricted Stock (Tables)

9 Months Ended

Sep. 30, 2014

Restricted Stock [Abstract]

Summary of stock issuances

The Company grants shares of class B restricted stock to the Company’s outside directors, in lieu of cash, as their annual retainer compensation.  The shares are distributed on the vesting date, one year following the date of grant, and have had an aggregate total value of $440 for each of the annual periods presented.  The table below provides detail of the stock issuances for 2013 and 2014:

				Value
				Per Share
Effective	Number of Shares	Vesting	Service	on Grant
Date	Issued	Date	Period	Date
5/7/2013	18,106	5/7/2014	7/1/2013 - 6/30/2014	$24.30
5/8/2014	17,237	5/8/2015	7/1/2014 - 6/30/2015	$25.53

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Investments (Tables)

9 Months Ended

Sep. 30, 2014

Investments [Abstract]

Summary of available for sale securities

The following is a summary of available-for-sale securities at September 30, 2014 and December 31, 2013:

										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
Septmeber 30, 2014
Fixed maturities
U.S. government obligations	$	123,933	$	123,859	$	125	$	(51	)	$	74
Residential mortgage-backed securities		7,349		7,084		322		(57	)		265
Commercial mortgage-backed securities		35,694		35,132		737		(175	)		562
States and municipal obligations		105,382		104,534		882		(34	)		848
Corporate securities		129,497		130,186		2,185		(2,874	)		(689	)
Foreign government obligations		29,946		30,372		185		(611	)		(426	)
Total fixed maturities		431,801		431,167		4,436		(3,802	)		634
Equity securities:
Financial institutions		20,594		9,520		11,096		(22	)		11,074
Industrial & miscellaneous		139,676		67,077		73,467		(868	)		72,599
Total equity securities		160,270		76,597		84,563		(890	)		83,673
Total	$	592,071	$	507,764	$	88,999	$	(4,692	)		84,307
							Applicable federal income taxes				(29,508	)
							Net unrealized gains - net of tax			$	54,799
December 31, 2013
Fixed maturities
U.S. government obligations	$	113,389	$	113,348	$	81	$	(40	)	$	41
Residential mortgage-backed securities		13,252		12,058		1,334		(140	)		1,194
Commercial mortgage-backed securities		28,565		28,406		308		(149	)		159
State and municipal obligations		115,250		115,278		407		(435	)		(28	)
Corporate securities		137,215		136,991		3,207		(2,983	)		224
Foreign government obligations		23,879		23,689		588		(398	)		190
Total fixed maturities		431,550		429,770		5,925		(4,145	)		1,780
Equity securities:
Financial institutions		18,850		7,780		11,171		(101	)		11,070
Industrial & miscellaneous		126,978		64,307		63,009		(338	)		62,671
Total equity securities		145,828		72,087		74,180		(439	)		73,741
Total	$	577,378	$	501,857	$	80,105	$	(4,584	)		75,521
							Applicable federal income taxes				(26,432	)
							Net unrealized gains - net of tax			$	49,089

Fixed maturity and equity security investments in unrealized loss position

The following table summarizes, for fixed maturity and equity security investments in an unrealized loss position at September 30, 2014 and December 31, 2013, respectively, the aggregate fair value and gross unrealized loss categorized by the duration those securities have been continuously in an unrealized loss position.

	September 30, 2014							December 31, 2013
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		353	$	90,946	$	(2,127	)		451	$	123,145	$	(3,105	)
Greater than 12 months		131		44,616		(1,675	)		53		18,249		(1,040	)
Total fixed maturities		484		135,562		(3,802	)		504		141,394		(4,145	)
Equity securities:
12 months or less		30		9,248		(806	)		10		1,682		(204	)
Greater than 12 months		5		1,516		(84	)		2		1,980		(235	)
Total equity securities		35		10,764		(890	)		12		3,662		(439	)
Total fixed maturity and equity securities		519	$	146,326	$	(4,692	)		516	$	145,056	$	(4,584	)

Fair value and cost or amortized cost of fixed maturity investments by contractual maturity

The fair value and the cost or amortized costs of fixed maturity investments at September 30, 2014, 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	$	145,547	$	145,511
Excess of one year to five years		154,266		155,127
Excess of five years to ten years		46,520		46,078
Excess of ten years		8,987		8,340
Contractual maturities		355,320		355,056
Asset-backed securities		76,481		76,111
Total	$	431,801	$	431,167

Realized gains (losses) on investments

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

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Fixed maturities:
Gross gains	$	798		$	2,043		$	5,399		$	5,695
Gross losses		(1,259	)		(1,277	)		(3,411	)		(3,497	)
Net realized gains (losses)		(461	)		766			1,988			2,198
Equity securities:
Gross gains		2,529			1,233			4,682			13,838
Gross losses		(346	)		(358	)		(1,057	)		(1,767	)
Net realized gains		2,183			875			3,625			12,071
Limited partnerships - net gain (loss)		(1,064	)		(211	)		7,204			2,227
Totals	$	658		$	1,430		$	12,817		$	16,496

Schedule of realized gains

Net realized gains activity for investments, as shown in the previous table, are further detailed as follows:

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Realized net gains on the disposal of securities	$	2,223		$	1,090		$	5,837		$	11,888
Mark-to-market adjustment		(118	)		342			151			747
Equity in gains (losses) of limited partnership
investments - realized and unrealized		(1,064	)		(211	)		7,204			2,227
Impairment:
Write-downs based upon objective criteria		(441	)		(4	)		(546	)		(78	)
Recovery of prior write-downs
upon sale or disposal		58			213			171			1,712
Totals	$	658		$	1,430		$	12,817		$	16,496

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Litigation, Commitments and Contingencies

9 Months Ended

Sep. 30, 2014

Litigation, Commitments and Contingencies [Abstract]

Litigation, Commitments and Contingencies

(9) Litigation, Commitments and Contingencies:

In the ordinary, regular and routine course of their business, the Company and its insurance Subsidiaries are frequently involved in various matters of litigation relating principally to claims for insurance coverage provided.  No currently pending matter is deemed by management to be material to the Company.

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Fair Value

9 Months Ended

Sep. 30, 2014

Fair Value [Abstract]

Fair Value

(7) 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 September 30, 2014:
Description	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. government obligations	$	123,933	$	123,933	$	-	$	-
Residential mortgage-backed securities		7,349		-		7,349		-
Commercial mortgage-backed securities		35,694		-		35,694		-
State and municipal obligations		105,382		-		105,382		-
Corporate securities		126,748		-		126,748		-
Options embedded in convertible securities		2,749		-		2,749		-
Foreign government obligations		29,946		-		29,946		-
Total fixed maturities		431,801		123,933		307,868		-
Equity securities:
Financial institutions		20,594		20,594		-		-
Industrial & miscellaneous		139,676		139,676		-		-
Total equity securities		160,270		160,270		-		-
Short term		3,165		3,165		-		-
Cash equivalents		75,141		-		75,141		-
	$	670,377	$	287,368	$	383,009	$	-

As of December 31, 2013:
Description	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. government obligations	$	113,389	$	113,389	$	-	$	-
Residential mortgage-backed securities		13,252		-		13,252		-
Commercial mortgage-backed securities		28,565		-		28,565		-
State and municipal obligations		115,250		-		115,250		-
Corporate securities		134,635		-		134,635		-
Options embedded in convertible securities		2,580		-		2,580		-
Foreign government obligations		23,879		-		23,879		-
Total fixed maturities		431,550		113,389		318,161		-
Equity securities:
Financial institutions		18,850		18,850		-		-
Industrial & miscellaneous		126,978		126,978		-		-
Total equity securities		145,828		145,828		-		-
Short term		4,891		4,891		-		-
Cash equivalents		52,002		-		52,002		-
	$	634,271	$	264,108	$	370,163	$	-

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 purchased 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 1 or Level 2 inputs for the determination of fair value to facilitate fair value measurements and disclosures. U.S. government obligations represent Level 1 securities, while Level 2 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.

Insurance-linked securities: During the fourth quarter of 2013, the Company determined that insurance-linked securities have adequate comparable instruments with currently observable inputs through corroboration with market data. Therefore, the insurance-linked securities were transferred to Level 2. They were previously classified as Level 3.

Equity securities: Fair values of equity securities are designated as Level 1 and are based on quoted market prices.

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 nine months ended September 30, 2014 and for the year ended December 31, 2013:

	2014		2013
Beginning of period balance	$	-	$	11,682
Total  gains or losses (realized or unrealized)
included in income		-		1,017
Purchases		-		1,258
Settlements		-		(6,698	)
Transfers out of level 3				(7,259	)
End of period balance	$	-	$	-

Transfers between levels, if any, are recorded as of the beginning of the reporting period.  There were no significant transfers of assets between Level 1 and Level 2 during the nine months ended September 30, 2014 and 2013.

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 reserves for losses and loss expenses 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 premiums 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 primarily 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 3.

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 sheets at September 30, 2014 and December 31, 2013 are as follows:

	Carrying		Fair Value
	Value		Level 1		Level 2		Level 3		Total
September 30, 2014
Assets:   Limited partnerships	$	79,583	$	-	$	-	$	79,583	$	79,583
Liabilities:   Short-term borrowings		20,000		-		20,000		-		20,000
December 31, 2013
Assets:   Limited partnerships		68,988		-		-		68,988		68,988
Liabilities:   Short-term borrowings		10,000		-		10,000		-		10,000

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Restricted Stock

9 Months Ended

Sep. 30, 2014

Restricted Stock [Abstract]

Restricted Stock

(8) Restricted Stock:

The Company grants shares of class B restricted stock to the Company’s outside directors, in lieu of cash, as their annual retainer compensation.  The shares are distributed on the vesting date, one year following the date of grant, and have had an aggregate total value of $440 for each of the annual periods presented.  The table below provides detail of the stock issuances for 2013 and 2014:

				Value
				Per Share
Effective	Number of Shares	Vesting	Service	on Grant
Date	Issued	Date	Period	Date
5/7/2013	18,106	5/7/2014	7/1/2013 - 6/30/2014	$24.30
5/8/2014	17,237	5/8/2015	7/1/2014 - 6/30/2015	$25.53

Compensation expense related to the above stock grant is recognized over the period in which the directors render the services.

Effective February 4, 2014, the Company issued 45,678 shares of class B restricted stock to certain of the Company’s executives as a portion of compensation under the Company’s 2013 Executive Incentive Bonus Plan.  The restricted shares will vest ratably over a three year period from the date of grant with acceleration for retirement eligible recipients due to the non-substantive post-grant date vesting clause per Accounting Standards Codification 715, Compensation-Retirement Benefits.  Restricted stock was valued based on the closing price of the stock on the day the award was granted.  Each share was valued at $23.81 per share representing a total value of $1,088.  Non-vested restricted shares will be forfeited should an executive’s employment terminate for any reason other than death, disability, or retirement as defined by the 2013 Executive Incentive Bonus Plan.

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Accumulated Other Comprehensive Income

9 Months Ended

Sep. 30, 2014

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

(10) Accumulated Other Comprehensive Income:

The following table illustrates changes in accumulated other comprehensive income by component for the nine months ending September 30, 2014:

				Unrealized
				holding gains on
	Foreign			available-for-sale
	Currency			securities			Total
Beginning balance	$	1,401		$	49,089		$	50,490
Other comprehensive income
before reclassifications		(835	)		9,358			8,523
Amounts reclassified from
accumulated other
comprehensive income		-			(3,648	)		(3,648	)
Net current-period other
comprehensive income		(835	)		5,710			4,875
Ending balance	$	566		$	54,799		$	55,365

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Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Changes in Accumulated Other Comprehensive Income by Component [Roll Forward]
Total accumulated other comprehensive income, beginning balance			$ 50,490
Other comprehensive income before reclassifications			8,523
Amounts reclassified from accumulated other comprehensive income			(3,648)
Other comprehensive income (loss)	(5,295)	6,052	4,875	4,142
Total accumulated other comprehensive income, ending balance	55,365		55,365
Foreign Currency [Member]
Changes in Accumulated Other Comprehensive Income by Component [Roll Forward]
Total accumulated other comprehensive income, beginning balance			1,401
Other comprehensive income before reclassifications			(835)
Amounts reclassified from accumulated other comprehensive income			0
Other comprehensive income (loss)			(835)
Total accumulated other comprehensive income, ending balance	566		566
Unrealized holding gains on available-for-sale securities [Member]
Changes in Accumulated Other Comprehensive Income by Component [Roll Forward]
Total accumulated other comprehensive income, beginning balance			49,089
Other comprehensive income before reclassifications			9,358
Amounts reclassified from accumulated other comprehensive income			(3,648)
Other comprehensive income (loss)			5,710
Total accumulated other comprehensive income, ending balance	$ 54,799		$ 54,799

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Reportable Segments (Tables)

9 Months Ended

Sep. 30, 2014

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.

	2014							2013
	Direct and Assumed Premium Written		Net Premium Earned		Segment Profit (Loss)			Direct and Assumed Premium Written		Net Premium Earned		Segment Profit
Three months ended September 30:
Property and Casualty Insurance	$	84,644	$	57,097	$	9,520		$	82,272	$	52,036	$	9,712
Reinsurance		9,947		8,850		(906	)		14,278		12,412		1,846
Totals	$	94,591	$	65,947	$	8,614		$	96,550	$	64,448	$	11,558
Nine months ended September 30:
Property and Casualty Insurance	$	253,394	$	163,613	$	23,726		$	233,217	$	149,699	$	20,353
Reinsurance		31,049		29,081		196			40,054		37,622		9,525
Totals	$	284,443	$	192,694	$	23,922		$	273,271	$	187,321	$	29,878

Reconciliation of Operating Profit (Loss) from Segments to Consolidated

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

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Profit:
Segment profit	$	8,614		$	11,558		$	23,922		$	29,878
Net investment income		2,073			2,192			6,456			6,587
Net gains on investments		658			1,430			12,817			16,496
Corporate expenses and other		(2,797	)		(3,488	)		(11,171	)		(11,328	)
Income before federal income taxes	$	8,548		$	11,692		$	32,024		$	41,633

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Investments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014 Security Agreement	Sep. 30, 2013	Sep. 30, 2014 Security Agreement	Sep. 30, 2013	Dec. 31, 2013 Security
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Cost or amortized cost	$ 431,167		$ 431,167
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Applicable federal income taxes	(29,508)				(26,432)
Net unrealized gains - net of tax	54,799				49,089
Available-for-sale securities continuous unrealized loss position [Abstract]
Number of Securities, total	519		519		516
Available-for-sale securities continuous unrealized loss position, Fair Value [Abstract]
Fair value, total	146,326		146,326		145,056
Available-for-sale securities continuous unrealized loss position, aggregate losses [Abstract]
Gross unrealized loss, total			(4,692)		(4,584)
Available-for-sale securities debt maturities fair value [Abstract]
One year or less, Fair Value	145,547		145,547
Excess of one year to five years, Fair Value	154,266		154,266
Excess of five years to ten years, Fair Value	46,520		46,520
Excess of ten years, Fair Value	8,987		8,987
Contractual maturities, Fair Value	355,320		355,320
Asset-backed securities, Fair Value	76,481		76,481
Total, Fair Value	431,801		431,801
Available-for-sale securities debt maturities amortized cost basis [Abstract]
One year or less, Cost or Amortized Cost Basis	145,511		145,511
Excess of one year to five years, Cost or Amortized Cost Basis	155,127		155,127
Excess of five years to ten years, Cost or Amortized Cost Basis	46,078		46,078
Excess of ten years, Cost or Amortized Cost Basis	8,340		8,340
Contractual maturities, Cost or Amortized Cost Basis	355,056		355,056
Asset-backed securities, Cost or Amortized Cost Basis	76,111		76,111
Available-for-sale Securities, Gross Realized Gain (Loss) [Abstract]
Limited partnerships - net gain (loss)	(1,064)	(211)	7,204	2,227
Net realized gains on investments	658	1,430	12,817	16,496
Available for sale securities gain loss activity [Abstract]
Realized net gains on the disposal of securities	2,223	1,090	5,837	11,888
Mark-to-market adjustment	(118)	342	151	747
Equity in gains (losses) of limited partnership investments - realized and unrealized	(1,064)	(211)	7,204	2,227
Write-downs based upon objective criteria	(441)	(4)	(546)	(78)
Recovery of prior write-downs upon sale or disposal	58	213	171	1,712
Net realized gains on investments	658	1,430	12,817	16,496
Net unrealized gain (loss) on investments	334		5,841
Net unrealized gains in limited partnership			13,305
Undistributed earnings of limited partnership, net of taxes	28,923		28,923
Committed funds for bridge loans	18,750		18,750
Number of bridge loan agreements	3		3
U.S. government obligations [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Fair value	123,933		123,933		113,389
Cost or amortized cost	123,859		123,859		113,348
Gross unrealized gains	125		125		81
Gross unrealized losses	(51)		(51)		(40)
Net unrealized gains (losses)	74		74		41
Residential mortgage-backed securities [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Fair value	7,349		7,349		13,252
Cost or amortized cost	7,084		7,084		12,058
Gross unrealized gains	322		322		1,334
Gross unrealized losses	(57)		(57)		(140)
Net unrealized gains (losses)	265		265		1,194
Commercial mortgage-backed securities [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Fair value	35,694		35,694		28,565
Cost or amortized cost	35,132		35,132		28,406
Gross unrealized gains	737		737		308
Gross unrealized losses	(175)		(175)		(149)
Net unrealized gains (losses)	562		562		159
States and municipal obligations [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Fair value	105,382		105,382		115,250
Cost or amortized cost	104,534		104,534		115,278
Gross unrealized gains	882		882		407
Gross unrealized losses	(34)		(34)		(435)
Net unrealized gains (losses)	848		848		(28)
Corporate securities [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Fair value	129,497		129,497		137,215
Cost or amortized cost	130,186		130,186		136,991
Gross unrealized gains	2,185		2,185		3,207
Gross unrealized losses	(2,874)		(2,874)		(2,983)
Net unrealized gains (losses)	(689)		(689)		224
Foreign government obligations [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Fair value	29,946		29,946		23,879
Cost or amortized cost	30,372		30,372		23,689
Gross unrealized gains	185		185		588
Gross unrealized losses	(611)		(611)		(398)
Net unrealized gains (losses)	(426)		(426)		190
Total fixed maturities [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Fair value	431,801		431,801		431,550
Cost or amortized cost	431,167		431,167		429,770
Gross unrealized gains	4,436		4,436		5,925
Gross unrealized losses	(3,802)		(3,802)		(4,145)
Net unrealized gains (losses)	634		634		1,780
Available-for-sale securities continuous unrealized loss position [Abstract]
Number of Securities, 12 months or less	353		353		451
Number of Securities, Greater than 12 months	131		131		53
Number of Securities, total	484		484		504
Available-for-sale securities continuous unrealized loss position, Fair Value [Abstract]
Fair value, 12 months or less	90,946		90,946		123,145
Fair value, Greater than 12 months	44,616		44,616		18,249
Fair value, total	135,562		135,562		141,394
Available-for-sale securities continuous unrealized loss position, aggregate losses [Abstract]
Gross unrealized loss, 12 months or less			(2,127)		(3,105)
Gross unrealized loss, Greater than 12 months			(1,675)		(1,040)
Gross unrealized loss, total			(3,802)		(4,145)
Available-for-sale Securities, Gross Realized Gain (Loss) [Abstract]
Gross gains	798	2,043	5,399	5,695
Gross losses	(1,259)	(1,277)	(3,411)	(3,497)
Net realized gains (losses)	(461)	766	1,988	2,198
Financial institutions [Member]
Available-for-sale Equity Securities, Amortized Cost Basis [Abstract]
Fair value	20,594		20,594		18,850
Cost or amortized cost	9,520		9,520		7,780
Gross unrealized gains	11,096		11,096		11,171
Gross unrealized losses	(22)		(22)		(101)
Net unrealized gains (losses)	11,074		11,074		11,070
Industrial & miscellaneous [Member]
Available-for-sale Equity Securities, Amortized Cost Basis [Abstract]
Fair value	139,676		139,676		126,978
Cost or amortized cost	67,077		67,077		64,307
Gross unrealized gains	73,467		73,467		63,009
Gross unrealized losses	(868)		(868)		(338)
Net unrealized gains (losses)	72,599		72,599		62,671
Total equity securities [Member]
Available-for-sale Equity Securities, Amortized Cost Basis [Abstract]
Fair value	160,270		160,270		145,828
Cost or amortized cost	76,597		76,597		72,087
Gross unrealized gains	84,563		84,563		74,180
Gross unrealized losses	(890)		(890)		(439)
Net unrealized gains (losses)	83,673		83,673		73,741
Available-for-sale securities continuous unrealized loss position [Abstract]
Number of Securities, 12 months or less	30		30		10
Number of Securities, Greater than 12 months	5		5		2
Number of Securities, total	35		35		12
Available-for-sale securities continuous unrealized loss position, Fair Value [Abstract]
Fair value, 12 months or less	9,248		9,248		1,682
Fair value, Greater than 12 months	1,516		1,516		1,980
Fair value, total	10,764		10,764		3,662
Available-for-sale securities continuous unrealized loss position, aggregate losses [Abstract]
Gross unrealized loss, 12 months or less			(806)		(204)
Gross unrealized loss, Greater than 12 months			(84)		(235)
Gross unrealized loss, total			(890)		(439)
Available-for-sale Securities, Gross Realized Gain (Loss) [Abstract]
Gross gains	2,529	1,233	4,682	13,838
Gross losses	(346)	(358)	(1,057)	(1,767)
Net realized gains (losses)	2,183	875	3,625	12,071
Total available-for-sale securities [Member]
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Fair value	592,071		592,071		577,378
Cost or amortized cost	507,764		507,764		501,857
Gross unrealized gains	88,999		88,999		80,105
Gross unrealized losses	(4,692)		(4,692)		(4,584)
Net unrealized gains (losses)	$ 84,307		$ 84,307		$ 75,521

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Unaudited Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Unaudited Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 5,770	$ 7,771	$ 21,471	$ 27,621
Unrealized net gains (losses) on securities:
Unrealized net gains (losses) arising during the period	(3,472)	6,921	9,358	13,699
Less: reclassification adjustment for net gains (losses) included in net income	1,118	1,068	3,648	9,275
Change in unrealized gains (losses) on investments	(4,590)	5,853	5,710	4,424
Foreign currency translation adjustments	(705)	199	(835)	(282)
Other comprehensive income (loss)	(5,295)	6,052	4,875	4,142
Comprehensive income	$ 475	$ 13,823	$ 26,346	$ 31,763

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Reportable Segments

9 Months Ended

Sep. 30, 2014

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, workers’ compensation coverage to small businesses and professional liability products on a selective basis.

The Reinsurance segment accepts professional liability cessions from other insurance companies.  In addition, the Reinsurance segment accepts property cessions from other insurance companies and, prior to January 1, 2014, retrocessions from carefully chosen reinsurance companies, principally reinsuring against catastrophes.

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.

	2014							2013
	Direct and Assumed Premium Written		Net Premium Earned		Segment Profit (Loss)			Direct and Assumed Premium Written		Net Premium Earned		Segment Profit
Three months ended September 30:
Property and Casualty Insurance	$	84,644	$	57,097	$	9,520		$	82,272	$	52,036	$	9,712
Reinsurance		9,947		8,850		(906	)		14,278		12,412		1,846
Totals	$	94,591	$	65,947	$	8,614		$	96,550	$	64,448	$	11,558
Nine months ended September 30:
Property and Casualty Insurance	$	253,394	$	163,613	$	23,726		$	233,217	$	149,699	$	20,353
Reinsurance		31,049		29,081		196			40,054		37,622		9,525
Totals	$	284,443	$	192,694	$	23,922		$	273,271	$	187,321	$	29,878

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

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2014			2013			2014			2013
Profit:
Segment profit	$	8,614		$	11,558		$	23,922		$	29,878
Net investment income		2,073			2,192			6,456			6,587
Net gains on investments		658			1,430			12,817			16,496
Corporate expenses and other		(2,797	)		(3,488	)		(11,171	)		(11,328	)
Income before federal income taxes	$	8,548		$	11,692		$	32,024		$	41,633

Segment profit includes both net premiums earned and fees and other income 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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Reinsurance (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Reinsurance [Abstract]
Premiums ceded to reinsurers	$ 28,711	$ 30,925	$ 91,345	$ 87,335
Losses and loss expenses ceded to reinsurers	15,451	26,558	54,473	61,806
Commissions from reinsurers	$ 5,850	$ 5,844	$ 17,425	$ 15,095

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Reinsurance (Tables)

9 Months Ended

Sep. 30, 2014

Reinsurance [Abstract]

Reinsurance

The following table summarizes the Company’s transactions with reinsurers for the 2014 and 2013 comparative periods.

	2014		2013
Quarter ended September 30:
Premiums ceded to reinsurers	$	28,711	$	30,925
Losses and loss expenses
ceded to reinsurers		15,451		26,558
Commissions from reinsurers		5,850		5,844
Nine months ended September 30:
Premiums ceded to reinsurers	$	91,345	$	87,335
Losses and loss expenses
ceded to reinsurers		54,473		61,806
Commissions from reinsurers		17,425		15,095