10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

                           For the fiscal year ended                                                                                                                                                                                                                                                                                                                                                                                                                                               Commission file number 0-5534

                           December 31, 2014

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 No.)
111 Congressional Boulevard, Carmel, Indiana (Address of principal executive offices)	46032 (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:

(Title of class)

Class A Common Stock, No Par Value

Class B Common Stock, No Par Value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    

Yes ­___ No ü

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ­___ No ü

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 (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ­ü   No ___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   ­    

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 ____

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

The aggregate market value of Class A and Class B Common Stock held by non-affiliates of the Registrant as of June 30, 2014, based on the closing trade prices on that date, was approximately $253,547,000.

The number of shares outstanding of each of the issuer's classes of common stock as of March 1, 2015:

Common Stock, No Par Value:                                                                Class A (voting)                                            2,623,109 shares

                                Class B (nonvoting)                                     12,397,344 shares

The Index to Exhibits is located on page 82.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for Annual Meeting of Shareholders to be held May 12, 2015 are incorporated by reference into Part III.

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PART I

Item 1.  BUSINESS

Baldwin & Lyons, Inc. was incorporated under the laws of the State of Indiana in 1930.  Through its divisions and subsidiaries, Baldwin & Lyons, Inc. (referred to herein as "B&L") engages in marketing and underwriting property and casualty insurance including the assumption of property and casualty risks, as a reinsurer of other companies.

B&L’s principal subsidiaries are:

1. Protective Insurance Company (referred to herein as "Protective"), which is licensed by insurance authorities in all 50 states, the District of Columbia, all Canadian provinces and Puerto Rico;

2. Protective Specialty Insurance Company (referred to herein as “Protective Specialty”), which is currently approved for excess and surplus lines business by insurance authorities in 48 states and the District of Columbia and licensed in Indiana;

3. Sagamore Insurance Company (referred to herein as "Sagamore"), which is licensed by insurance authorities in 49 states and the District of Columbia and approved for excess and surplus lines business in one additional state;

4. B&L Brokerage Services, Inc., (referred to herein as "BLBS"), an Indiana domiciled insurance broker licensed in all 50 states and the District of Columbia; and

5. B&L Insurance, Ltd. (referred to herein as "BLI"), which is domiciled and licensed in Bermuda.

Protective, Protective Specialty, Sagamore and BLI are collectively referred to herein as the "Insurance Subsidiaries."  The "Company", as used herein, refers to Baldwin & Lyons, Inc. and all its subsidiaries unless the context clearly indicates otherwise.

Approximately 83% of the non-reinsurance property and casualty insurance premiums written by the Insurance Subsidiaries during 2014 were attributable to business produced by B&L or in association with broker partners.  The remaining 17% was originated through a selected network of independent agents on both a retail and wholesale basis and through a limited number of arrangements with managing general agencies.

As is a common practice in the property & casualty insurance industry, the Insurance Subsidiaries share (referred to as ceding) portions of their gross premiums written with several non-affiliated reinsurers under excess of loss and quota-share treaties covering predetermined groups of risks and by facultative (individual policy-by-policy) placements.  Reinsurance is ceded to spread the risk of loss from individual accidents or groups of accidents among several reinsurers and is an integral part of the Company’s business.

The Insurance Subsidiaries serve a variety of specialty markets as follows:

Fleet Transportation

The Insurance Subsidiaries provide coverage for larger companies in the motor carrier industry which retain substantial amounts of self-insurance, for independent contractors utilized by trucking companies, for medium-sized and small trucking companies on a first dollar or small deductible basis and for public livery concerns, principally covering fleets of commercial buses.  This group of products is collectively referred to as fleet transportation.  Large fleet trucking products are marketed both by the B&L agency organization directly to fleet transportation clients and also through relationships with non-affiliated brokers and specialized independent agents.  The principal types of fleet transportation insurance marketed by the Insurance Subsidiaries are:

- Commercial motor vehicle liability, physical damage and general liability insurance.

- Workers' compensation insurance.

- Specialized accident (medical and indemnity) insurance for independent contractors of trucking concerns.

- Non-trucking motor vehicle liability insurance for independent contractors.

- Fidelity and surety bonds.

- Inland Marine consisting principally of cargo insurance.

- “Captive” insurance company products, which are provided through BLI in Bermuda.

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B&L also performs a variety of additional services, primarily for the Company’s insureds, including risk surveys and analyses, safety program design and monitoring, government compliance assistance, loss control and cost studies and research, development, and consultation in connection with new insurance programs including development of computerized systems to assist customers in monitoring their accident data.  Extensive claims handling services are also provided, primarily to clients with self-insurance programs.

Reinsurance Assumptions

The Company has, for over 20 years, accepted cessions and retrocessions from selected insurance and reinsurance companies, providing reinsurance coverage for both property and casualty events.

Approximately 39% of net premium earned from reinsurance assumed in 2014 was related to property coverages, principally reinsuring against catastrophic events.  All retrocessional property reinsurance was terminated prior to January 1, 2014 as the result of deteriorating market conditions.  Property reinsurance premium for 2014 was limited to United States wind and earthquake business produced through a single exclusive managing general agency partnership.    Effective July 1, 2014, this final property catastrophe exposure was not renewed and as of June 30, 2015, no property reinsurance risk will remain inforce.

The remaining 61% of net reinsurance premium earned during 2014 relates to professional liability coverages provided to domestic insurance companies and produced through a network of independent brokers.

In addition to the assumption of risks described above, the Insurance Subsidiaries participate in numerous mandatory government-operated reinsurance pools which require insurance companies to provide coverages on assigned risks.  These assigned risk pools allocate participation to all insurers based upon each insurer's portion of direct premium writings on a state or national level.   Assigned risk premium typically comprises less than 1% of gross direct premium written and assumed by the Insurance Subsidiaries and are included with the property and casualty segment because they are linked to premiums written and earned by that segment.

Private Passenger Automobile Insurance

The Company markets private passenger automobile liability and physical damage coverages to individuals through a network of independent agents in thirty states.

Professional Liability

The Company markets a wide variety of professional liability products through wholesale and retail agents on both an admitted and surplus lines basis throughout the United States, specializing in smaller insureds.

Property/Casualty Losses and Loss Adjustment Expenses

Losses and loss adjustment expenses incurred typically comprise nearly two-thirds of the Company’s operating expenses.  A discussion of this expense category follows.

The consolidated balance sheets include the estimated liability for unpaid losses and loss adjustment expenses ("LAE") of the Insurance Subsidiaries before the application of reinsurance credits (gross reserves).  The liabilities for losses and LAE are determined using case basis evaluations and statistical projections and represent estimates of the Company’s ultimate exposure for all unpaid losses and LAE incurred through December 31 of each year.  These estimates are subject to the effects of trends in claim severity and frequency and are continually reviewed and, as experience develops and new information becomes known, the liability is adjusted as necessary.  Such adjustments, either positive or negative, are reflected in current operations as recorded.

The Company’s reserves for losses and loss expenses are determined based on evaluations of individual reported claims and by actuarial estimation processes using historical experience, current economic information and, when necessary, available industry statistics.  “Case basis” loss reserves, which comprise approximately 63% of total gross reserves at December 31, 2014, are evaluated on an individual case-by-case basis by experienced claims adjusters

using established Company guidelines and are monitored by claims management.  Additionally, “bulk” reserves , which comprise approximately 37% of total gross reserves at December 31, 2014 are established for (1) those losses which have occurred, but have not yet been reported to the Company (“incurred but not reported” claims), (2) provisions for any possible deficiencies in the case reserving process and (3) the expected external and internal costs to fully settle each claim (“loss adjustment expenses).  Common actuarial methods are employed in the establishment of bulk reserves using Company historical loss data, consideration of changes in the Company’s business and study of current economic trends affecting ultimate claims costs.  Loss adjustment expense reserves include amounts ultimately allocable to individual claims as well as amounts required for the general overhead of the claims handling operation which are not specifically allocable to individual claims.  Historical analyses of the ratio of loss adjusting expenses to losses paid on prior closed claims and study of current economic trends affecting loss settlement costs are used to estimate the loss adjustment reserve needs related to the established loss reserves.  Each of these reserve categories contain elements of uncertainty which assure variability when compared to the ultimate costs to settle the underlying claims for which the reserves are established.  For a more detailed discussion of the three categories of reserves, see “Loss and Loss Expense Reserves” under the caption, “Critical Accounting Policies” beginning on page 28 in Management’s Discussion and Analysis.

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The reserving process requires management to continuously monitor and evaluate the life cycle of claims.  Our claims range from the very routine private passenger automobile “fender bender” to the highly complex and costly claims involving large tractor-trailer rigs and large-scale losses resulting from catastrophic events.  Reserving for each class of claims requires a set of assumptions based upon historical experience, knowledge of current industry trends and seasoned judgment.  The high limits provided by the Company’s fleet transportation liability policies provide for greater volatility in the reserving process for more serious claims.  Court rulings, legislative actions, geographic location of the claim under consideration and trends in jury awards also play a significant role in the estimation process of larger claims.  The Company continuously reviews and evaluates loss developments subsequent to each measurement date and adjusts its reserve estimation assumptions, as necessary, in an effort to achieve the best possible estimate of the ultimate remaining loss costs at any point in time.

 Loss reserves related to certain permanent total disability (PTD) workers' compensation claims have been discounted to present value using tables provided by the National Council on Compensation Insurance which are based upon a pretax interest rate of 3.5% and adjusted for those portions of the losses retained by the insured.  The loss and LAE reserves at December 31, 2014 have been reduced by approximately $3.1 million as a result of such discounting.  Had the Company not discounted loss and LAE reserves, pretax income would have been approximately $2.8 million higher for the year ended December 31, 2014.

For policies inforce at December 31, 2014, the maximum amount for which the Company insures a fleet transportation risk is $10 million, less applicable self-insured retentions, although for the majority of policies written, the maximum limits provided by the Company are $5 million or less.  Occasionally, limits above $10 million required by customers are placed directly by Baldwin & Lyons, Inc. with non-affiliated carriers or written by the Company but 100% reinsured with non-affiliated reinsurers.  Certain coverages, such as workers’ compensation, provide essentially unlimited exposure, although the Company protects itself to the extent believed prudent through the purchase of excess reinsurance for these coverages.  After giving effect to treaty and facultative reinsurance arrangements the Company’s maximum exposure to loss from a single occurrence for currently inforce business ranges from approximately $.25 million to $1.3 million for the vast majority of risks insured although, for certain losses occurring within the past five policy years, maximum exposure could be as high as $2.5 million for a single occurrence.  Certain reinsurance agreements effective since June 3, 2005 include provisions for aggregate deductibles that must be exceeded before the Company can recover under the terms of the treaties.  The Company retains a higher percentage of the direct premium (and, therefore, cedes less premium to reinsurers) in consideration of these deductible provisions.

The Company is cedent under numerous reinsurance treaties covering its varied product lines.  Treaties are written on an annual basis, each with its own renewal date throughout the year.  Treaty renewals are expected to continue to occur annually in the foreseeable future.  Because losses from certain of the Company’s products can experience delays in being reported and can take years to develop, losses reported to the Company in the current year may be covered by a number of older reinsurance treaties with higher or lower net loss exposures than those provided by current treaty provisions.

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The table on page 5 sets forth a reconciliation of beginning and ending loss and LAE liability balances for 2014, 2013 and 2012.  That table is presented net of reinsurance recoverable to correspond with income statement presentation.  However, a reconciliation of these net reserves to those gross of reinsurance recoverable, as presented in the balance sheet, is also shown.  The table on page 11 shows the development of the estimated liability, net of reinsurance recoverable, for the ten years prior to 2014.  The table on page 12 is a summary of the re-estimated liability, before consideration of reinsurance, for the ten years prior to 2014 as well as the related re-estimated reinsurance ceded for the same periods.

RECONCILIATION OF LIABILITY FOR LOSSES AND LOSS ADJUSTMENT
EXPENSES (GAAP BASIS)
	Year Ended December 31
	2014			2013			2012
NET OF REINSURANCE RECOVERABLE:				(in thousands)
Liability for losses and LAE at the
Beginning of the year	$	288,088		$	289,236		$	290,092
Provision for losses and LAE:
Claims occurring during the current year		169,950			156,264			147,964
Claims occurring during prior years		(10,354	)		(5,563	)		(9,875	)
		159,596			150,701			138,089
Payments of losses and LAE:
Claims occurring during the current year		59,826			47,908			44,942
Claims occurring during prior years		92,275			103,941			94,003
		152,101			151,849			138,945
Liability for losses and LAE at end of year		295,583			288,088			289,236
Reinsurance recoverable on unpaid losses
at end of the year		210,519			186,382			166,218
Liability for losses and LAE, gross of
reinsurance recoverable, at end of the year	$	506,102		$	474,470		$	455,454

The reconciliation above shows that the Company’s estimate of net losses on 2013 and prior accidents is approximately $10.4 million lower at December 31, 2014 than was provided in loss reserves at December 31, 2013 (referred to as “reserve savings”), with comparative reserve savings for the two previous calendar years.

The following table is a summary of the 2014 calendar year reserve savings by accident year (dollars in thousands):

Years in Which Losses Were Incurred	Reserve at December 31, 2013		(Savings) Deficiency Recorded During 2014			% (Savings) Deficiency
2013	$	108,356	$	(9,060	)		(8.4	%)
2012		63,718		(5,533	)		(8.7	%)
2011		45,278		6,405			14.1	%
2010		16,001		2,238			14.0	%
2009		8,171		(1,991	)		(24.4	%)
2008 & prior		46,564		(2,413	)		(5.2	%)
	$	288,088	$	(10,354	)		(3.6	%)

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The (savings) deficiency recorded for these loss years was derived from varied sources, as follows (dollars in thousands):

	2008 & Prior			2009			2010			2011			2012			2013
Losses and allocated loss expenses developed on cases known to exist at December 31, 2013	$	1,261		$	(976	)	$	1,770		$	7,267		$	(1,191	)	$	12,974
Losses and allocated loss expenses reported on cases unknown at December 31, 2013		116			5			54			58			2,089			6,585
Unallocated loss expenses paid		286			69			271			738			910			1,976
Change in reserves for incurred but not reported losses and allocated and unallocated loss expenses		(3,235	)		(989	)		(862	)		(1,844	)		(4,217	)		(28,538	)
Net (savings) deficiency on losses from directly-produced business		(1,572	)		(1,891	)		1,233			6,219			(2,409	)		(7,003	)
(Savings) deficiency reported under voluntary reinsurance assumption agreements and residual markets		(841	)		(100	)		1,005			186			(3,124	)		(2,057	)
Net (savings) deficiency	$	(2,413	)	$	(1,991	)	$	2,238		$	6,405		$	(5,533	)	$	(9,060	)

Loss and loss expense development savings, presented separately by segment, were as follows for the years ended December 31 (dollars in thousands):

	2014			2013			2012
Property and casualty insurance	$	(5,423	)	$	(1,725	)	$	(7,111	)
Reinsurance		(4,931	)		(3,838	)		(2,764	)
Totals	$	(10,354	)	$	(5,563	)	$	(9,875	)

In the first table on page 6, the amounts identified as "Net (savings) deficiency on losses from directly-produced business" consist of development on cases known at December 31, 2013, losses reported which were previously unknown at December 31, 2013 (incurred but not reported), unallocated loss expense paid related to accident years 2013 and prior and changes in the reserves for incurred but not reported losses and loss expenses.  Bulk loss reserves are established to provide for potential future adverse development on cases known to the Company and for cases unknown at the reserve date.  Changes in the reserves for incurred but not reported losses and loss expenses occur based upon information received on known and newly reported cases during the current year and the effect of that development on the application of standard actuarial methods used by the Company.

Also shown in the table are amounts representing the "(savings) deficiency reported under reinsurance assumption agreements and residual markets".  These amounts relate to the Company's participation in both voluntary reinsurance policies and treaties and government mandated pools.  The Company records its share of losses from these policies, treaties and pools based on reports from the reinsured companies, retrocessionaires and residual market administrators and does not directly establish case reserves related to this portion of the Company's business.  The Company does, however, establish additional reserves for reinsurance losses to supplement case reserves reported by the ceding companies, when considered necessary.  Involuntary residual market premiums and losses are included in the property and casualty segment; however, claims are not administered by the Company but, rather, reserves on this business are established by the regulatory entities and, accordingly, development on these losses is largely dependent on the adequacy of loss reserving by these entities.  Development on residual market business was $0.7 million, $1.6 million, and $1.5 million for the years ended December 31, 2014, 2013 and 2012, respectively.

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The property and casualty insurance segment has historically constituted the largest portion of net reserve development savings as it has historically generated the majority of the Company’s premium revenue.  As shown, the savings from this segment ranged from $1.7 million to a savings of $7.1 million during the past three years.  This fluctuation reflects the variability associated with higher premium volumes and, hence, the larger claims covered by the Company, as well as fluctuations in the Company’s net retentions.  The Company continues to incorporate more recent loss development data into its loss reserving formulae; however, the change from excess of loss to quota share treaties beginning in 2005, the use of facultative reinsurance on larger risks, and the dynamic nature of losses associated with the fleet transportation business as well as the timing of settlement of large claims increases the likelihood of variability in loss developments from period to period.  As discussed elsewhere, the Company has historically experienced savings in its loss developments owing to, among other things, its long-standing policy of reserving for the ultimate value of losses quickly and realistically and a willingness to settle claims based upon a seasoned evaluation of its exposures.  While the Company’s basic assumptions have remained consistent, we continue to update loss data to reflect changing trends which can be expected to result in fluctuations in loss developments over time.

The development for the reinsurance segment, with a $4.9 million savings during 2013 and comparable savings recorded during 2013 and 2012, is heavily dependent on the establishment of case basis and IBNR reserves by other insurance and reinsurance companies.  However, the Company evaluates the sufficiency of such reserving and often adjusts reserves based on management’s independent analysis, considering the number of different entities involved and the fact that the Company must rely on external sources of information, reserve development from these products is potentially subject to fluctuation from year to year.  The consistency of the savings developed during the past three years is reflective of management’s attention to reserving for this business.

Factors affecting the development of environmental claims are more fully discussed in the following paragraphs.  The Company has very limited exposure to environmental losses and activity with respect to environmental losses during the three year period ending 2014 has been insignificant.

Management’s goal is to produce an overall estimate of reserves which is sufficient and as close to expected ultimate losses as possible.  The $10.4 million in net savings developed during 2014 represents approximately 35% of pre-tax net income before realized capital gains for 2014 but only 3.6% of December 31, 2013 net loss and LAE reserves, which is well within the acceptable range of variation for the Company’s diverse and complex book of business.  The Company has maintained a consistent, conservative posture in its reserving process which has proven to be fully adequate with no overall deficiencies developed since 1985.  The Company constantly monitors changes in trends related to the numbers of claims incurred relative to correlative variances with premium volume, average settlement amounts, numbers of claims outstanding at period ends and the average value per claim outstanding and adjusts actuarial assumptions as necessary to accommodate observed trends.

As described on page 4, changes have occurred in the Company's net per accident retained exposure under reinsurance agreements in place during the periods presented in the previous table.  It is much more difficult to reserve for losses where policy limits are as high as $10 million per accident as opposed to those losses related to business which carries lower policy limits, such as private passenger automobile.  This is because there are fewer policy limit losses in the Company's historical loss database on which to project future loss developments and the larger and more complex the loss, the greater the likelihood that litigation will become involved in the settlement process.  Consequently, the level of uncertainty in the reserving process is much greater when dealing with larger losses and will routinely result in fluctuations among accident year developments.

The differences between the liability for losses and LAE reported in the accompanying 2014 consolidated financial statements prepared in accordance with generally accepted accounting principles ("GAAP") and that reported in the annual statements filed with state and provincial insurance departments in the United States and Canada in accordance with statutory accounting practices ("SAP") are as follows (dollars in thousands):

  Liability reported on a SAP basis - net of reinsurance recoverable                             $ 301,523

  Add differences:

      Reinsurance recoverable on unpaid losses and LAE                                                   210,519

      Additional reserve for residual market losses not

        reported to the Company at the current year end                                                              840

  Deduct differences:

      Estimated salvage and subrogation recoveries recorded on

        a cash basis for SAP and on an accrual basis for GAAP                                             (6,780)

              Liability reported on a GAAP basis                                                                                  $ 506,102

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Ten Year Historical Development Tables:

The table on page 11 presents the development of GAAP balance sheet insurance reserves for each year-end from 2004 through 2013, as of December 31, 2014, net of all reinsurance credits.  The top line of the table shows the estimated liability for unpaid losses and LAE recorded at the balance sheet date for each of the indicated years.  This liability represents the estimated amount of losses and LAE for claims arising in all prior years that were unpaid at the respective balance sheet date, including losses that had been incurred, but not yet reported, to the Company.

The upper portion of the table shows the re-estimated amount of the previously recorded liability based on additional information available to the Company as of the end of each succeeding year.  The estimate is increased or decreased as more information becomes known about the frequency and severity of individual claims and as claims are settled and paid.

The "cumulative redundancy" represents the aggregate change in the estimates of each calendar year end reserve through December 31, 2014.  For example, the 2004 liability has developed a $40.6 million redundancy over ten years.  That amount has been reflected in income over those ten years, as shown on the table.  The effect on calendar year income of changes in estimates of the liability for losses and LAE during each of the past three years is shown in the table on page 5.

Historically, the Company’s net loss developments have been favorable.  Reserve developments for all years ended in the period 1986 through 2013 have produced redundancies as of December 31, 2014.  In addition to a consistently conservative approach to reserving methods, loss reserve developments in recent years have been favorably affected by several other factors.  Perhaps the most significant single factor has been the improvement in safety programs by the fleet transportation industry in general and by the Company’s insureds specifically.  Statistics produced by a variety of sources show that driver quality in general and specifically as relates to the type of transportation companies underwritten by the Company, has improved markedly in the past decade resulting in fewer fatalities and serious accidents.  The Company’s experience also shows that improved safety and hiring programs have a dramatic impact on the frequency and severity of fleet transportation accidents and, more recently, the introduction of numerous safety devices using state-of-the-art technology has reduced rear end and cross over accidents which often produce the most serious injuries.  In addition, the expanded use of telematics to precisely measure driver behavior and provide focused training and remediation is positively impacting loss experience.  Significant trucking industry and regulatory initiatives, such as CSA 2010, have provided strong motivation to trucking companies to upgrade their driver roster, increase monitoring of driver behavior and improve equipment maintenance, all resulting in fewer accidents.  Higher self-insured retentions also play a part in reduced insurance losses.  Higher retentions not only raise the excess insurance entry point but also encourage fleet transportation company management to focus even more intensely on safety programs.

The establishment of bulk reserves requires the use of historical data, where available, and generally a minimum of ten years of such data is required to provide statistically valid samples for most lines of business.  As previously mentioned, numerous factors must be considered in reviewing historical data including inflation, legislative actions, new coverages provided and trends noted in the current book of business which are different from those present in the historical data.  Clearly, the Company's book of business in 2014 is different, both in terms of exposures provided and rates charged, from that which generated much of the ten-year historical loss data used to establish reserves in recent years.  Management has noted trends toward significantly higher settlements and jury awards associated with the more serious fleet transportation liability claims over the past several years.  The inflationary factors affecting these claims appear to be more subjective in nature and not in line with compensatory equity.  In addition to the factors mentioned above, savings realized in recent years upon the closing of claims, as reflected in the tables on pages 5 and 12, are attributable to the Company’s experience in specializing in long-haul trucking business for over 50 years as well as its long-standing policy of reserving for losses realistically and a willingness to settle claims based upon a seasoned evaluation of the underlying exposures.  The Company will continue to review the trends noted and, should it appear that such trends are permanent and projectable, they will be reflected in future reserving method refinements.

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The lower section of the table on page 11 shows the cumulative amount paid with respect to the previously recorded calendar year end liability as of the end of each succeeding year.  For example, as of December 31, 2014, the Company had paid $142.0 million of losses and LAE that had been incurred, but not paid, as of December 31, 2004; thus, an estimated $24.6 million (15%) of losses incurred through 2004 remain unpaid as of the current financial statement date ($166.6 million incurred less $142.0 million paid).  The payment patterns shown in this table demonstrate the “long-tail” nature of much of the Company’s business whereby portions of claims, principally in workers compensation coverages, do not fully pay out for more than ten years.

Readers should note that the table on page 11 does not present accident or policy year development data which they may be more accustomed to analyzing.  Rather, this table is intended to present an evaluation of the Company’s ability to establish its liability for losses and loss expenses at a given balance sheet date.  In reviewing this information, it is important to understand that this method of presentation causes some development experience to be duplicated.  For example, the amount of any redundancy or deficiency related to losses settled in 2007, but incurred in 2004, will be included in the cumulative development amount for each of the years ending December 31, 2004, 2005, and 2006.  It is also important to note that conditions and trends that have affected development of the liability in the past may not necessarily occur in the future.  Accordingly, it would not be appropriate to extrapolate future redundancies or deficiencies based on this table.

The table presented on page 12 presents loss development data on a gross (before consideration of reinsurance) basis for the same ten year period December 31, 2004 through December 31, 2013, as of December 31, 2014, with a reconciliation of the data to the net amounts shown in the table on page 11.  Readers are reminded that the gross data presented on page 12 requires significantly more subjectivity in the estimation of incurred but not reported and loss expense reserves because of the high limits provided by the Company to its fleet transportation customers, much of which has been covered by excess of loss and facultative reinsurance.  This is particularly true of excess of loss treaties where the Company retains risk in only the lower, more predictable, layers of coverage.  Accordingly, one would generally expect more variability in development on a gross basis than on a net basis.  The difference between loss developments before consideration of reinsurance, as presented on page 12, and those net of reinsurance, as shown on page 11 do not impact the Company’s operating results as all such differences are borne by reinsurers.

Environmental Matters:

Given the Company's principal business is insuring fleet transportation companies, on occasion claims involving a commercial automobile accident which has resulted in the spill of a pollutant are made.  Certain of the Company's policies may cover these situations on the basis that they were caused by an accident that resulted in the immediate and isolated spill of a pollutant.  These claims are typically reported, evaluated and fully resolved within a short period of time.

In general, establishing reserves for environmental claims, other than those associated with “sudden and accidental” losses, is subject to uncertainties that are greater than those represented by other types of claims.  Factors contributing to those uncertainties include a lack of historical data, long reporting delays, uncertainty as to the number and identity of insureds with potential exposure, unresolved legal issues regarding policy coverage, and the extent and timing of any such contractual liability.  Courts have reached different and sometimes inconsistent conclusions as to when the loss occurred and what policies provide coverage, what claims are covered, whether there is an insured obligation to defend, how policy limits are determined, how policy exclusions are applied and interpreted, and whether cleanup costs represent insured property damage.

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As previously noted, very few environmental claims have been reported to the Company.  In addition, a review of the businesses of our past and current insureds indicates that exposure to claims of an environmental nature is limited because the vast majority of the Company's accounts are not currently, and have not in the past been, involved in the hauling of hazardous substances.  Also, the revision of the pollution exclusion in the Company's policies since 1986 has, and is expected to, further limit exposure to claims from that point forward.

The Company has never been presented with an environmental claim relating to asbestos and, based on the types of business the Company has insured over the years, it is not expected that the Company could have any significant asbestos exposure.

The Company's reserves for unpaid losses and loss expenses at December 31, 2014 did not include significant amounts for liability related to environmental damage claims.  The Company does not foresee significant future exposure to environmental damage claims and accordingly has established no reserve for incurred but not reported environmental losses at December 31, 2014.

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ANALYSIS OF LOSS AND LOSS ADJUSTMENT EXPENSE DEVELOPMENT--GAAP BASIS
(Dollars in thousands)
Year Ended December 31	2004		2005		2006		2007		2008		2009		2010		2011		2012		2013		2014
Liability for Unpaid Losses
and Loss Adjustment
Expenses	$	207,137	$	242,130	$	249,495	$	244,500	$	231,633	$	203,253	$	218,629	$	290,092	$	289,236	$	288,088	$	295,583
Liability Reestimated
as of:
One Year Later		193,445		225,183		228,211		227,423		222,049		194,430		208,933		280,217		283,673		277,734
Two Years Later		180,455		209,774		207,818		216,730		208,702		198,220		201,745		272,285		282,381
Three Years Later		171,332		200,955		199,503		206,445		210,562		188,110		204,243		276,525
Four Years Later		171,225		198,376		192,678		210,170		205,519		192,195		202,078
Five Years Later		171,005		191,846		198,023		208,132		208,398		187,792
Six Years Later		167,590		195,348		196,101		210,446		205,986
Seven Years Later		170,951		193,226		197,898		209,288
Eight Years Later		167,613		194,188		196,421
Nine Years Later		168,249		192,585
Ten Years Later		166,569
Cumulative Redundancy	$	40,568	$	49,545	$	53,074	$	35,212	$	25,647	$	15,461	$	16,551	$	13,567	$	6,855	$	10,354
Cumulative Amount of
Liability Paid
Through:
One Year Later	$	60,343	$	59,581	$	58,956	$	76,970	$	84,777	$	74,182	$	72,393	$	94,003	$	103,941	$	92,275
Two Years Later		84,265		94,947		100,990		124,870		120,628		107,413		109,382		156,271		162,087
Three Years Later		102,692		117,522		127,011		145,857		142,731		125,038		133,507		193,566
Four Years Later		116,198		136,652		143,612		157,724		152,679		137,460		147,462
Five Years Later		124,176		148,039		151,662		164,877		161,834		143,461
Six Years Later		128,592		154,573		157,223		170,554		166,290
Seven Years Later		132,775		159,428		162,331		174,190
Eight Years Later		137,094		163,779		165,372
Nine Years Later		140,348		166,062
Ten Years Later		142,047

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ANALYSIS OF LOSS AND LOSS ADJUSTMENT EXPENSE DEVELOPMENT--GAAP BASIS
(Dollars in thousands)
Year Ended December 31	2004		2005		2006		2007		2008		2009		2010		2011		2012		2013		2014
Direct and Assumed:
Liability for Unpaid Losses and Loss
Adjustment Expenses	$	440,172	$	430,273	$	409,412	$	378,616	$	389,558	$	359,030	$	344,520	$	421,556	$	455,454	$	474,470	$	506,102
Liability Reestimated as of
December 31, 2014		362,547		323,127		300,393		308,469		304,436		295,797		310,758		388,722		441,930		450,906
Cumulative Redundancy		77,625		107,146		109,019		70,147		85,122		63,233		33,762		32,834		13,524		23,564
Ceded:
Liability for Unpaid Losses and Loss
Adjustment Expenses		233,035		188,143		159,917		134,116		157,925		155,777		125,891		131,464		166,218		186,382		210,519
Liability Reestimated as of
December 31, 2014		195,978		130,542		103,972		99,181		98,450		108,005		108,680		112,197		159,549		173,172
Cumulative Redundancy		37,057		57,601		55,945		34,935		59,475		47,772		17,211		19,267		6,669		13,210
Net:
Liability for Unpaid Losses and Loss
Adjustment Expenses		207,137		242,130		249,495		244,500		231,633		203,253		218,629		290,092		289,236		288,088		295,583
Liability Reestimated as of
December 31, 2014		166,569		192,585		196,421		209,288		205,986		187,792		202,078		276,525		282,381		277,734
Cumulative Redundancy		40,568		49,545		53,074		35,212		25,647		15,461		16,551		13,567		6,855		10,354

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Marketing

The Company's primary marketing areas are outlined on pages 2 and 3.

Historically, the Company has focused its fleet transportation marketing efforts on large and medium trucking fleets, with its biggest market share in the larger trucking fleets (over 150 power units).  These fleets self-insure a significant portion of their risk and self-insurance plans are a specialty of the Company.  The indemnity contract provided to self-insured customers is designed to cover all aspects of fleet transportation liability, including third party liability, property damage, physical damage, cargo and workers' compensation, arising from vehicular accident or other casualty loss.  The self-insured program is supplemented with large deductible workers' compensation policies in states which do not allow for self-insurance of this coverage.  The Company also offers work-related accident insurance, on a group or individual basis, to independent contractors under contract to a fleet sponsor as well as workers’ compensation coverage to employees of independent contractor fleet owners.  In addition, the Company offers a program of coverages for "small fleet" trucking concerns (owner-operators generally with one to six power units).  This program is currently being marketed through independent agents utilizing much of the technology developed in conjunction with marketing private passenger automobile insurance.  The Company’s fleet transportation offerings also include certain public livery risks, principally large and medium sized operators of bus fleets.  In 2014, fleet transportation products generated approximately 92% of direct premium written by the Property & Casualty Insurance Segment.

Since 1992, the Company has accepted reinsurance cessions and retrocessions, principally property coverages for catastrophe exposures, from selected insurers and reinsurers.  Participation in this market, which included business produced by large reinsurance brokers and a single exclusive managing general agency agreement, has varied over the years depending on the adequacy of pricing, which can fluctuate widely from time to time.  In addition to property coverages, the Company accepts reinsurance cessions for a limited amount of professional liability coverages from small and medium sized insurance companies.

Since 1995, the Company has sold private passenger automobile insurance.  This program is currently being marketed primarily in a limited number of states through independent agents.  Sagamore utilizes technology extensively in marketing its private passenger automobile insurance products in order to provide superior service to its agents and insureds.

Beginning in 2010, the Company began underwriting miscellaneous professional liability coverages through wholesale and retail agents and brokers on both an admitted and surplus lines basis.

Investments

The Company’s investment portfolio is essentially divided between (1) funds which are considered necessary to support insurance underwriting activities and (2) excess capital funds.  Funds invested in fixed maturity and short-term securities are more than sufficient to cover underwriting operations while equity securities and limited partnerships are utilized to invest excess capital funds to achieve higher long-term returns.  The following discussion will concentrate on the different investment strategies for these two major categories.

At December 31, 2014 the financial statement value of the Company's investment portfolio was approximately $758 million, including $59 million of short-term funds classified as cash equivalents.  The adjusted cost of the portfolio was $678 million with the $80 million difference representing pre-tax unrealized appreciation.

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A comparison of the allocation of assets within the Company's investment portfolio, using adjusted cost as a basis, is as follows as of December 31:

	2014			2013
Corporate securities		25.2	%		21.8	%
State and municipal obligations		16.7			18.4
U.S. government obligations		14.9			18.1
Short-term and money markets		9.2			9.1
Commercial mortgage-backed securities		5.3			4.5
Foreign government obligations		4.2			3.8
Residential mortgage-backed securities		0.9			1.9
Total fixed maturities		76.4			77.6
Limited partnerships (equity basis)		12.0			11.0
Equity securities		11.6			11.4
		100.0	%		100.0	%

Fixed Maturity and Short-Term Investments

Fixed maturity and short-term securities comprised 67.9% of the market value of the Company’s total invested assets at December 31, 2014.  Excluding U.S. government obligations, the fixed maturity portfolio is widely diversified with no concentrations in any single industry, geographic location or municipality.  The largest amount invested in any single issuer was $15.8 million (2.1% of total invested assets) although most individual investments, other than municipal bonds, are less than $750,000.  The Company’s fixed maturity portfolio has a very short duration compared to the duration of its insurance liabilities and, accordingly, the Company does not actively trade fixed maturity securities but typically holds such investments until maturity.  Exceptions exist in the rare instances where the underlying credit for a specific issue is deemed to be diminished.  In such cases, the security will be considered for disposal prior to maturity.  In addition, fixed maturity securities may be sold when realignment of the portfolio is considered beneficial (i.e. moving from taxable to non-taxable issues) or when valuations are considered excessive compared to alternative investments.

The Investment Committee has determined that the Company’s Insurance Subsidiaries will, at all times, hold high grade fixed maturity securities and short-term investments with a market value equal to at least 100% of reserves for losses and loss expenses and unearned premiums, net of applicable reinsurance credits.  At December 31, 2014, investment grade bonds and short-term instruments held by Insurance Subsidiaries equaled 137% of designated underwriting liabilities, thus providing a substantial margin above this conservative guideline.

The Company's concentration of fixed maturity funds in relatively short-term investments provides it with a level of liquidity which is more than adequate to provide for its anticipated cash flow needs.

The following comparison of the Company's fixed maturity and short-term investment portfolios, using par value as a basis, shows the changes in contractual maturities in the portfolio during 2014.  Note that the expected average maturity of the portfolio is less than the contractual maturity average life shown below because the Company has, in some cases, the right to put obligations and borrowers have, in some cases, the right to call or prepay obligations with or without call or prepayment penalties.

	2014			2013
Less than one year		37.3	%		32.5	%
1 to 5 years		37.7			41.0
5 to 10 years		10.9			11.1
More than 10 years		14.1			15.4
		100.0	%		100.0	%
Average contractual life of portfolio (years)		4.8			4.8

 Approximately $66.8 million of fixed maturity investments (8.8% of total invested assets) consists of bonds rated as less than investment grade at year end.  These investments include a diversified portfolio of over 40 investments with a cost basis of approximately $70.0 million.

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The market value of the consolidated fixed maturity portfolio was $3.6 million lower than cost at December 31, 2014, before income taxes, which compares to a $1.8 million unrealized gain at December 31, 2013 with the change due primarily to the recent decline in oil prices and the strengthening of the U.S. Dollar.  The Company analyzes fixed maturity securities for other-than-temporary impairment (“OTTI”) in accordance with the Financial Accounting Standards Board (“FASB”) OTTI guidance.  As has been the Company’s consistent policy, other-than-temporary impairment is considered for any individual issue which has sustained a decline in current market value of at least 20% below original or adjusted cost, and the decline is ongoing for more than 6 months, regardless of the evaluation of the creditworthiness of the issuer or the specific issue.  Additionally, the Company takes into account any known subjective information in evaluating for impairment without consideration to the Company’s 20% threshold.  In 2014, the net effect of OTTI adjustments to fixed maturity securities was a charge against income of $0.4 million with securities owned at year end having only an insignificant non-credit related loss treated as unrealized.  The current net unrealized gain on fixed maturity securities consists of $3.9 million of gross unrealized gains and $7.5 million of gross unrealized losses.  The gross unrealized loss equals approximately 1.6% of the cost of all bonds in this category.

Equity Securities

Because of the large amount of high quality fixed maturity investments owned, relative to the Company’s loss and loss expense reserves and other liabilities, amounts invested in equity securities are not needed to fund current operations and, accordingly, can be committed for long periods of time.  Equity securities comprise 21.4% of the market value of the consolidated investment portfolio at December 31, 2014, but only 11.7% of the related adjusted cost basis, as long-term holdings have appreciated significantly.  The Company’s equity securities portfolio consists of over 200 separate issues with diversification from large to small capitalization issuers and among several industries.  The largest single equity issue owned has a market value of $6.8 million at December 31, 2014 (0.9% of total invested assets) although the average equity holding of an individual issuer is less than $150,000.

In general, the Company maintains a buy-and-hold philosophy with respect to equity securities.  Many current holdings have been continuously owned for more than ten years, accounting for the fact that the portfolio, in total, carries a $76.7 million pre-tax unrealized gain at the current year end using original cost and over $83.3 million in unrealized gains using cost adjusted for other-than-temporary impairment.  An individual equity security will be disposed of when it is determined by investment managers or the Investment Committee that there is little potential for future appreciation.  All equity securities are considered to be available for sale although portfolio turnover has historically been very low.  Securities are not sold to meet any quarterly or annual earnings quotas but, rather, are disposed of only when market conditions are deemed to dictate, regardless of the impact, positively or negatively, on current period earnings.  In addition, equity securities may be sold when realignment of the portfolio is considered beneficial or when valuations are considered excessive compared to alternative investments.  Sales of equity securities during 2014 generated both gains and losses but netted to a realized gain of $7.1 million before taxes.

The net effect of other-than-temporary impairment adjustments, including recovery of prior year write downs upon sale or disposal, increased investment gains from equity securities by $0.03 million for the year before taxes.  The reclassification of unrealized losses to realized losses occurred on each individual issue where the current market value was at least 20% below original or adjusted cost, and the decline was ongoing for more than 6 months at the date of write-down, regardless of the evaluation of the issuer or the potential for recovery.  Additionally, the Company takes into account any known subjective information in evaluating for impairment without consideration to the Company’s 20% threshold.  Net unrealized gains on the equity security portfolio were $83.3 million, before tax at December 31, 2014 compared to $73.7 million at December 31, 2013.  The current net unrealized gain consists of $85.6 million of gross unrealized gains and $2.2 million of gross unrealized losses.

Limited Partnerships

For several years, the Company has invested in various limited partnerships engaged in securities trading activities, real estate development or small venture capital funding, as an alternative to direct equity investments.  The funds used for these investments are part of the Company’s excess capital strategy.  At December 31, 2014, the aggregate original investment, less distributions, in the limited partnerships was $35.1 million and the aggregate carrying value was $81.2 million, comprising 10.7% of the market value of invested assets.

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As a group, these investments experienced increases in value during 2014, with the aggregate of the Company’s share of such gains reported by the limited partnerships totaling approximately $7.1 million.  The increase in value is composed of estimated realized gains of $1.3 million and increases in estimated unrealized gains of $5.8 million.  On an inception-to-date basis, active limited partnerships have produced estimated realized income of $32.3 million and estimated unrealized income of $13.2 million.

The Company follows the equity method of accounting for its limited partnership investments and, accordingly, records the total change in value as a component of net gains or losses on investments.  However, readers are cautioned that, to the extent that reported increases in equity value are unrealized, they can be reduced or eliminated quickly by volatile market conditions.  Further, assets purchased with reinvested realized gains can also diminish in value.  In addition, a significant minority of the investments included in the limited partnerships do not have readily ascertainable fair market values and, accordingly, values assigned by the general partners may not be realizable upon the sale or disposal of the related assets, which may not occur for several years.  Limited partnerships also are highly illiquid investments and the Company’s ability to withdraw funds is generally subject to significant restrictions.

Investment Yields

Interest rates, particularly those on the short end of the yield curve where the vast majority of the Company’s fixed maturity investments are maintained, continued at historically low levels during 2014.  As a result, pre-tax net investment income increased only $0.3 million, or 3% and after tax income increased $0.3 million, or 5% during 2014.  A comparison of consolidated investment yields, before consideration of investment management expenses, is as follows:

	2014		2013
Before federal tax:
Investment income	2.0	%	1.9	%
Investment income plus investment gains (losses)	4.3		5.7
After federal tax:
Investment income	1.5		1.4
Investment income plus investment gains (losses)	2.9		3.9

Readers are also directed to the Results of Operations of this document for additional details of investment operations.

Regulatory Framework

The Company’s businesses are currently subject to insurance industry regulation by each of the fifty states in which the Company’s subsidiaries are licensed.  In addition, minor portions of the Company’s business are subject to regulation by Bermudian and Canadian federal and provincial authorities.  There can be no assurance that laws and regulations will not be changed by one or more of these regulatory bodies in ways that will require the Company to modify its business models and objectives.  In particular, the United States federal government continues to undertake a substantial review and revision of the regulation and supervision of financial institutions, including insurance companies as well as tax laws and regulation, which could impact the Company’s operations and performance.  While it is currently expected that federal government regulation will be focused on the largest financial companies, additional regulations are likely to increase the cost of compliance to the Company.  Further, while management is not aware of any significant pending changes, the Company is also subject to regulatory risks from changes to state and federal tax laws that may affect the treatment of insurance related deductions or income recognition.

Additionally, changes in laws and regulations governing the insurance industry could have an impact on the Company’s ability to generate income from its insurance operations.  The Company is obliged to comply with numerous complex and varied governmental regulations in order to maintain its authority to write insurance business.  While the Company has consistently maintained each of its licenses without exception, failure to maintain compliance could result in governmental regulators temporarily preventing the Company from writing new business and therefore having a detrimental effect on the Company.  Also, the ability for the Company’s Insurance Subsidiaries to increase insurance rates is heavily regulated for significant portions of the Company’s business and such rate increases are often denied or delayed for substantial periods by regulators.

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Employees

As of December 31, 2014, the Company had 425 employees, an increase of 41 employees from the prior year end.

Competition

The insurance brokerage and agency business is highly competitive.  B&L competes with a large number of insurance brokerage and agency firms and individual brokers and agents throughout the country, many of which are considerably larger than B&L.  B&L also competes with insurance companies which write insurance directly with their customers.

Insurance underwriting is also highly competitive.  The Insurance Subsidiaries compete with other stock and mutual companies and inter-insurance exchanges (reciprocals).  There are numerous insurance companies offering the lines of insurance which are currently written or may in the future be written by the Insurance Subsidiaries.  Many of these companies have been in business for longer periods of time, have significantly larger volumes of business, offer more diversified lines of insurance coverage and have significantly greater financial resources than the Company.  In many cases, competitors are willing to provide coverage for rates lower than those charged by the Insurance Subsidiaries.  Many potential clients self-insure workers' compensation and other risks for which the Company offers coverage, and some concerns have organized "captive" insurance companies as subsidiaries through which they insure their own operations.  Some states have workers' compensation funds that preclude private companies from writing this business in those states.  Federal law also authorizes the creation of "Risk Retention Groups" which may write insurance coverages similar to those offered by the Company.

The Company believes it has a competitive advantage in its major lines of business as the result of the extensive experience of its long-tenured management and staff, its superior service and products, its willingness to custom build insurance programs for its customers, its centralized location with ready access to management and the extensive use of technology with respect to its insureds and independent agent force.  However, the Company is not “top-line” oriented and will readily sacrifice premium volume during periods of unrealistic rate competition.  Accordingly, should competitors determine to “buy” market share with unprofitable rates, the Company’s Insurance Subsidiaries will generally experience a decline in business until pricing returns to profitable levels.

Availability of Documents

This Form 10-K as well as the Company’s Audit Committee Charter and Code of Conduct will be sent to shareholders without charge upon written request to the Company’s Investor Contact at the corporate address.  These documents, along with all other filings with the Securities and Exchange Commission are available for review, download or printing from the Company’s web site at www.baldwinandlyons.com.

Item 101(b), (c)(1)(i) and (vii), and (d) of Regulation S-K:

Reference is made to Note J to the consolidated financial statements which provide information concerning industry segments and is filed herewith under Item 8, Financial Statements and Supplementary Data.

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Item 1A.  RISK FACTORS

· The Company operates in the Property and Casualty insurance industry where many of its competitors are larger with far greater resources.  Further, this industry is heavily regulated.  Changes in laws and regulations governing the insurance industry could have a significant impact on the Company’s ability to generate income from its insurance operations.  The Company’s Insurance Subsidiaries, as a group, are regulated and licensed in all 50 of the United States, the District of Columbia, all Canadian provinces, Puerto Rico and Bermuda.  The Company is obliged to comply with numerous complex and varied governmental regulations in order to maintain its authority to write insurance business.  Failure to maintain compliance could result in various governmental regulators preventing the Company from writing new business and therefore having a material impact on the Company.  Further, the ability for the Company’s Insurance Subsidiaries to adjust insurance rates is regulated for significant portions of the Company’s business and needed rate adjustments can be denied or delayed for substantial periods by regulators.

· The Company has two classes of common stock with unequal voting rights.  The Company is effectively controlled by its principal stockholders and management, which limits other stockholders’ ability to influence operations.  The Company’s executive officers, directors and principal stockholders and their affiliates control approximately 64% of the outstanding shares of voting Class A common stock and nearly 32% of the outstanding shares of non-voting Class B common stock.  These parties effectively control the Company, direct its affairs, and exert significant influence in the election of directors and approval of significant corporate transactions.  The interests of these stockholders may conflict with those of other stockholders, limit marketability of the stock and this concentration of voting power has the potential to delay, defer or prevent a change in control.

· The Company limits its risk of loss from policies of insurance issued by its Insurance Subsidiaries through the purchase of reinsurance coverage from other insurance companies.  Such reinsurance does not relieve the Company from its responsibility to policyholders should the reinsurers be unable to meet their obligations to the Company under the terms of the underlying reinsurance agreements.  As a result, the Company is subject to credit risk relating to our ability to recover amounts due from reinsurers.  While the Company has not experienced any significant reinsurance losses for over twenty five years, a small number of our less significant historical reinsurance carriers have experienced deteriorating financial conditions or have been downgraded by rating agencies.  If the Company is unable to collect the amounts due to it from reinsurers, the resultant credit losses would adversely affect its results of operations, equity, business and insurer financial strength.

· Operating in the Property and Casualty insurance industry, the Company is exposed to loss from policies of insurance issued to its policyholders.  A large portion of the provision for losses recorded by the Company is composed of estimates of future loss payments to be made.  Such estimates of future loss payments may prove to be inadequate.  Loss and loss expense reserves represent management’s best estimate at a given point in time but are not an exact calculation of ultimate liability.  Rather, they are complex estimates derived by utilizing a variety of reserve estimation techniques from numerous assumptions and expectations about future events, many of which are highly uncertain, such as estimates of claims severity, frequency of claims, inflation, claims handling, case reserving policies and procedures, underwriting and pricing policies, changes in the legal and regulatory environment and the lag time between the occurrence of an insured event and the time of its ultimate settlement.  Many of these uncertainties are not precisely quantifiable and require significant judgment on management’s part.  As trends in underlying claims develop, particularly in so-called “long tail” lines where the adjudication of claims can take many years, management is sometimes required to revise reserves.  This results in a charge to the Company’s earnings in the amount of the adjusted reserves, recorded in the period the change in estimate is made.  These charges can be substantial and can potentially have a material impact, either positively or negatively, on calendar year results of operations and shareholders’ equity.

· While much less significant in the past few years, a meaningful portion of the risk underwritten by the Insurance Subsidiaries covers property losses resulting from catastrophic events on a worldwide basis.  The occurrence and valuation of loss events for this business is highly unpredictable and a single catastrophic event could result in a materially significant loss to the Company.  Catastrophe losses are an inevitable part of our business.  Various events can cause catastrophe losses, including hurricanes, windstorms, earthquakes, hail, explosions, severe winter weather, and fires, and their frequency and severity are inherently unpredictable.  In addition, longer-term natural catastrophe trends may be changing and new types of catastrophe losses may be developing due to climate change, a phenomenon that has been associated with extreme weather events linked to rising temperatures, and includes effects on global weather patterns, greenhouse gases, sea, land and air temperatures, sea levels, rain, and snow.  The extent of our losses from catastrophes is a function of both the total amount of our insured exposures in the affected areas and the severity of the events themselves.  In addition, as in the case of catastrophic losses generally, it can take many months, or even years, for the ultimate cost to us to be finally determined.  As our claim experience develops on a particular catastrophe, management may be required to adjust recorded reserves to reflect our revised estimates of the total cost of claims.  While the eventual occurrence of catastrophic losses is expected, we are prohibited by U.S. generally accepted accounting principles from establishing reserves for the expected future occurrence of these losses (such as is done in the life insurance industry).  Accordingly, upon the occurrence of such a loss, it will likely have a material adverse impact on the Company’s results of operations in the quarter in which it occurs.

- 18 -

· The Company derives a significant percentage of its direct premium volume from FedEx Ground Systems, Inc. and certain of its subsidiaries and related entities (“FedEx”), and from insurance coverage provided to independent service providers under contract with FedEx.  While the loss of this major customer could severely reduce the Company’s revenue and earnings potential, insurance programs provided to FedEx and programs provided to the independent service providers under contract with FedEx are not necessarily dependent upon one another and, therefore, could be viewed as separate entities.

· The Company, through its Insurance Subsidiaries, requires collateral from its insureds covering the insureds’ obligations for self-insured retentions or deductibles related to policies of insurance provided.  Should the Company, as surety, become responsible for such insured obligations, the collateral held may prove to be insufficient.  In this regard, FedEx utilize significant self-insured retentions and deductibles under policies of insurance provided by the Company’s Insurance Subsidiaries.  In the case of FedEx, the Company has determined that the financial strength of the customer is sufficient to allow for holding only partial collateral at this time.  Should the Company become responsible for this entire customer’s self-insured retention and deductible obligations, the collateral held would be insufficient and the Company would sustain a significant operating loss.

· Given the Company’s significant interest-bearing investment portfolio, a material drop in interest rates could have an adverse impact on the Company’s earnings and financial position.  Conversely, a material increase in interest rates could have a significant temporary impact on the market value of the Company’s fixed maturity investment portfolio.  The functioning of the fixed income markets, the values of the investments the Company holds and the Company’s ability to liquidate them may be adversely affected if those markets are disrupted by a change in interest rates or otherwise affected by significant negative factors, including, without limitation: local, national, or international events, such as regulatory changes, wars, or terrorist attacks; a recession, depression, or other adverse developments in either the U.S. or other economies that adversely affects the value of securities held in the Company’s portfolio; financial weakness or failure of one or more financial institutions that play a prominent role in securities markets or act as a counterparty for various financial instruments, which could further disrupt the markets; inactive markets for specific kinds of securities, or for the securities of certain issuers or in certain sectors, which could result in decreased valuations and impact the Company’s ability to sell a specific security or a group of securities at a reasonable price when desired; a significant change in inflation expectations, or the onset of deflation or stagflation.  If the fixed-income portfolio were to suffer a decrease in value to a substantial degree, the Company’s liquidity, financial position, and financial results could be materially adversely affected.  Under these circumstances, the Company’s income from these investments could be materially reduced, and declines in the value of certain securities could further reduce the Company’s results of operations, equity, business and insurer financial strength.

· The Company has a large portfolio of equity securities and limited partnership investments which can fluctuate in value with a wide variety of market conditions.  A decline in the aggregate value of the equity securities and limited partnership investments would result in a commensurate decline in the Company’s shareholders equity, either through the income statement or directly to equity.  The resultant decline could, at least temporarily, materially adversely affect the Company’s results of operations, equity, business and insurer financial strength.

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· Technological advances in the transportation industry could present the Company with added competitive risks.  An increase in accident prevention technologies and the growth of autonomous or partially autonomous vehicles could reduce the amount of accidents over time and shift the liability from the owner of the vehicle to the manufacturer, which would cause automobile insurance to become a smaller portion of the Company’s overall Property and Casualty insurance book of business.  Innovations in telematics and the increase in usage-based information have become more important and will likely change the way premiums are determined in the future.  These advances in technology could materially change the way products in the transportation industry are designed, priced and underwritten and it will take time for the Company to adjust to these changes.

· Changes in current accounting practices and future pronouncements may materially impact the Company’s reported financial results.  Developments in accounting practices may require the Company to incur considerable additional expenses to comply with such developments, particularly if the Company is required to prepare information relating to prior periods for comparative purposes or to apply the new requirements retroactively.  The impact of changes in current accounting practices and future pronouncements cannot be predicted but may affect the calculation of net income, net equity and other historical financial statement line items that are important to users of the financial statements.  Changes could also introduce significant volatility in the Company’s results of operations, equity, business and insurer financial strength.

· The Company’s operations rely upon complex and expensive information technology systems for interacting with policyholders, brokers and employers.  The Company’s success involves providing customers with easy-to-use products and ensuring the Company’s workforce has the technology to support the customer base.  The pace at which information systems must be upgraded is continually increasing, requiring an ongoing commitment of significant resources to maintain or upgrade to current standards.  The Company’s success is reliant on developing and expanding the effectiveness of existing systems and continuing to enhance information systems that support the Company’s operations in a cost effective manner.

· The Company relies upon the information technology systems and other operational systems and on the integrity and timeliness of data to run the businesses and service the customers.  These systems may fail to operate properly or become disabled as a result of events or circumstances wholly or partly beyond our control.  Despite our implementation of a variety of security measures, the information technology and other systems could be subject to physical or electronic break-ins, unauthorized tampering or other security breaches, resulting in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information relating to customers, or in theft of intellectual property or proprietary information.  A failure to maintain proper security, confidentiality or privacy of sensitive data residing on such systems could delay or disrupt the Company’s ability to do business and service customers, harm the Company’s reputation, subject the Company to litigation, regulatory fines, a loss of customers and revenues or otherwise adversely affect the business.

Item 2.  PROPERTIES

The Company owns its home office building and the adjacent real estate in Carmel, Indiana, approximately 14 miles from downtown Indianapolis.  The home office building contains a total of 184,000 usable square feet and the Company currently occupies approximately 60% of this space with the remainder being leased to non-affiliated entities on relatively short- term leases.

The Company also owns a building and the adjacent real estate in Indianapolis, approximately nine miles from its main office in Carmel.  The building contains approximately 15,000 square feet of usable space, and is used primarily for off-site data storage and as a contingent back up and disaster recovery site.

The Company's entire operations are conducted from these facilities.  The current facilities are expected to be adequate for the Company's operations for the foreseeable future.

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Item 3.  LEGAL PROCEEDINGS

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.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Nothing to report.

PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company’s Class A and Class B common stocks are traded on The NASDAQ Stock Market® under the symbols BWINA and BWINB, respectively.  The Class A and Class B common shares have identical rights and privileges except that Class B shares have no voting rights other than on matters for which Indiana law requires class voting.  As of December 31, 2014, there were approximately 400 record holders of Class A Common Stock and approximately 1,000 record holders of Class B Common Stock.

The table below sets forth the range of high and low sale prices for the Class A and Class B Common Stock for 2014 and 2013, as reported by NASDAQ and published in the financial press.  The quotations reflect interdealer prices without retail markup, markdown or commission and do not necessarily represent actual transactions.

									Cash
	Class A				Class B				Dividends
	High		Low		High		Low		Declared
2014:
Fourth Quarter	$	24.80	$	23.25	$	27.44	$	24.19	$	.25
Third Quarter		24.50		23.25		26.68		24.55		.25
Second Quarter		25.20		22.89		26.94		24.36		.25
First Quarter		24.88		22.06		27.24		23.40		.25
2013:
Fourth Quarter		26.64		23.12		28.38		23.84		.25
Third Quarter		26.57		23.00		27.75		23.23		.25
Second Quarter		24.74		22.52		24.92		23.01		.25
First Quarter		26.70		22.05		25.06		22.50		.25

The Company has paid quarterly cash dividends continuously since 1974.  The current regular quarterly dividend rate is $.25 per share.  The Company expects to continue its policy of paying regular cash dividends although there is no assurance as to future dividends because they are dependent on future earnings, capital requirements and financial conditions and are subject to regulatory restrictions.  The Board intends to address the subject of dividends at each of its future meetings considering the Company’s earnings, returns on investments and its capital needs.

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Corporate Performance

The following graph shows a five year comparison of cumulative total return for the Corporation’s Class B common shares, the NASDAQ Insurance Stock Index and the Russell 2000 Index.  The basis of comparison is a $100 investment at December 31, 2009, in each of (i) Baldwin & Lyons, Inc., (ii) Nasdaq Insurance Stocks, and (iii) the Russell 2000 Index.  All dividends are assumed to be reinvested.

	Period Ending
Index	12/31/09		12/31/10		12/31/11		12/31/12		12/31/13		12/31/14
Baldwin & Lyons, Inc.		100.00		104.70		101.35		116.08		138.44		135.91
NASDAQ Insurance Index		100.00		118.13		124.78		145.78		191.19		211.36
Russell 2000		100.00		126.86		121.56		141.43		196.34		205.95

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Item 6.  SELECTED FINANCIAL DATA

	Year Ended December 31
	2014			2013			2012			2011			2010
	(Dollars in thousands, except per share data)
Direct and assumed premiums written	$	382,388		$	369,476		$	341,286		$	334,526		$	295,802
Net premiums earned		261,627			252,743			237,461			244,570			214,738
Net investment income		9,055			8,770			9,930			10,729			11,335
Net gains (losses) on investments		14,930			23,515			9,011			(17,803	)		16,485
Losses and loss expenses incurred		159,596			150,701			138,088			215,555			145,952
Net income (loss)		29,717			36,588			31,919			(28,175	)		25,015
Earnings per share -- net income (loss) 1		1.98			2.45			2.15			(1.90	)		1.69
Cash dividends per share 2		1.00			1.00			1.00			1.00			2.25
Investment portfolio 3		757,421			703,259			681,856			637,681			635,174
Total assets		1,144,247			1,072,270			983,024			905,294			837,946
Shareholders' equity		399,496			381,724			346,712			319,061			368,735
Book value per share 1		26.67			25.57			23.25			21.49			24.90
Underwriting ratios 4
Losses and loss expenses		61.0	%		59.6	%		58.1	%		88.1	%		68.0	%
Underwriting expenses		32.0	%		32.4	%		30.8	%		30.2	%		31.0	%
Combined		93.0	%		92.0	%		88.9	%		118.3	%		99.0	%

     1   Earnings and book value per share are adjusted for the dilutive effect of stock options outstanding.

2   Includes extra dividend of $1.25 for 2010.

3   Includes money market instruments classified with cash in the Consolidated Balance Sheets.

4   Data is for all coverages combined, does not include fee income and is presented based upon U.S. generally accepted accounting principles.

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Item 7.                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Liquidity and Capital Resources

The primary sources of the Company’s liquidity are (1) funds generated from insurance operations including net investment income, (2) proceeds from the sale of investments and (3) proceeds from maturing investments.  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 Insurance Subsidiaries, other than loss and loss expense payments, generally average less than 33% of net premiums earned on a consolidated basis and the remaining amount is available for investment for varying periods of time depending on the type of insurance coverage provided.  Because losses are often settled in periods subsequent to when they are incurred, operating cash flows may, at times, become negative as loss settlements on claim reserves established in prior years exceed current revenues.  During 2014, cash flow from operations totaled $30.2 million compared to $35.9 million total for 2013.  The decrease in operating cash flow resulted mainly from increased loss, LAE and other operating expense payments partially offset by higher premium volume in 2014.

For several years, the Company’s investment philosophy has emphasized the purchase of short-term bonds with superior quality and liquidity.  As flat yield curves have not provided incentive to lengthen maturities in recent years, the Company has continued to maintain its fixed maturity portfolio at short-term levels.  The average contractual life of the Company’s bond and short-term investment portfolio remained level at 4.8 years during 2014. The average duration of the Company’s fixed maturity portfolio remains much shorter than the contractual maturity average and significantly shorter than the duration of the Company’s liabilities.  The Company also remains an active participant in the equity securities market using capital which is in excess of amounts considered necessary to fund current operations.  The long-term horizon for the Company’s equity investments allows it to invest in positions where ultimate value, and not short-term market fluctuation, is the primary focus.  Investments made by the Company’s domestic Insurance Subsidiaries are regulated by guidelines promulgated by the National Association of Insurance Commissioners which are designed to provide protection for both policyholders and shareholders.

The Company’s assets at December 31, 2014 included $62.3 million in short-term and cash equivalent investments which are readily convertible to cash without market penalty and an additional $129.6 million of fixed maturity investments (at par) maturing in less than one year.  The Company believes that these liquid investments, plus the expected cash flow from current operations, are more than sufficient to provide for projected claim payments and operating cost demands.  In the event competitive conditions produce inadequate premium rates and the Company chooses to further restrict volume, the liquidity of its investment portfolio would permit management to continue to pay claims as settlements are reached without requiring the disposal of investments at a loss, regardless of interest rates in effect at the time.  In addition, the Company’s reinsurance program is structured to avoid significant cash outlays that accompany large losses.

Net premiums written by the Company’s Insurance Subsidiaries for 2014 equaled approximately 66% of the combined statutory surplus of these subsidiaries, a level consistent with the past several years.  Premium writings of 100% to 200% of surplus are generally considered acceptable by regulatory authorities.  Further, the statutory capital of each of the Insurance Subsidiaries substantially exceeds minimum risk based capital requirements set by the National Association of Insurance Commissioners.  Accordingly, the Company has the ability to significantly increase its business without seeking additional capital to meet regulatory guidelines.

At December 31, 2014, $94.9 million, or 24% of shareholders’ equity, represented net assets of the Company’s Insurance Subsidiaries which, at that time, could not be transferred in the form of dividends, loans or advances to the parent company because of minimum statutory capital requirements.  However, management believes that these restrictions pose no material liquidity concerns for the Company.  The financial strength and stability of the subsidiaries permit ready access by the parent company to short-term and long-term sources of credit.  The Company maintains a $40 million unsecured line of credit with $20 million of unused capacity at December 31, 2014.

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Results of Operations

2014 Compared to 2013

Premiums written by the Property and Casualty Insurance segment for 2014 totaled $343.2 million, an increase of $28.4 million (9%) from 2013.  This increase is primarily attributable to a $32.0 million (11%) increase in premiums generated by fleet transportation products resulting from the addition of several new accounts during 2014, rate increases and increased revenue and miles driven by our insureds, which is immediately reflected in premium.  This increase was partially offset by a decrease of $10.0 million in premiums generated by primary professional liability reflecting the termination of products produced through a single managing general agency which had experienced unfavorable results in recent years.  Premiums ceded to reinsurers on direct business averaged 34.5% of gross written premium for 2014 compared to 35.9% for 2013, with the decrease attributable to the above-described changes in mix of business.

Premiums written by the Reinsurance segment totaled $39.2 million during 2014, a decrease of $15.5 million (28%) from 2013.  Premiums generated by property reinsurance products decreased $13.0 million (45%), reflective of management’s decision to reduce exposures to property catastrophe losses.  Further contributing to the Reinsurance segment decrease was a decrease in the Company’s book of professional liability reinsurance assumed.

After giving effect to changes in unearned premiums, consolidated net premiums earned totaled $261.6 million for 2014 compared to $252.7 million for 2013, an increase of 3.5%.  The premium earned increase also reflects the higher premium volume generated by the fleet transportation products mentioned above which was partially offset by decreased premium written in the primary professional liability products.

Pre-tax investment income of $9.1 million during 2014 was 3% higher than the 2013 total as available pre-tax yields began to level and average invested assets continued to grow marginally.  After tax investment income increased by 5% during 2014 compared to the prior year reflecting a mix in taxable compared to tax-exempt investment income.

Net gains on investments, before taxes, totaled $14.9 million in 2014 compared to net gains on investments of $23.5 million during 2013.  The 2014 results were once again heavily influenced by direct trading results with gains of $7.9 million in 2014 compared to gains of $13.6 million in 2013.  In addition, limited partnership results produced gains of $7.1 million in 2014 compared to gains of $8.0 million during the prior year.  Limited partnership ventures utilized by the Company are primarily engaged in the trading of public and private securities, including foreign securities and, to a lesser extent, small venture capital activities and real estate development.  The aggregate of the Company’s share of gains in these entities represented a 10% appreciation in value for 2014 compared to a 13% appreciation in value for 2013.  To the extent that accounting rules require the limited partnerships to include realized and unrealized gains or losses in their net income, the Company’s proportionate share of net income will include the results as reported to the Company by the various general partners.  During 2014, the $7.1 million net gain was composed of $5.8 million attributable to an increase in unrealized gains and $1.3 million attributable to realized gains.  Recoveries of $0.3 million on previously impaired available-for-sale securities that were sold in 2014 are included in the net gains stated above.

Losses and loss expenses incurred during 2014 increased $8.9 million (5.9%) from 2013 to $159.6 million, an increase generally consistent with the increased premium volume described above and reflects higher property catastrophe losses occurring in 2014.  The 2014 consolidated loss and loss expense ratio was 61.0% compared to 59.6% for 2013.  The Company's loss and loss expense ratios for major product lines are summarized in the following table:

	2014		2013
Fleet transportation	58.8	%	63.0	%
Private passenger automobile	75.1		62.1
Professional liability	158.3		126.6
Property reinsurance	68.6		12.0
Casualty reinsurance	46.0		60.8
Residual market and all other	86.6		76.4
All lines	61.0		59.6

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The lower loss ratio for Fleet Transportation was the result of more favorable frequency and severity experience during the year as well as prior year reserve savings.  The increase in the Private Passenger Automobile loss ratio is reflective of adverse weather conditions early in the year and increases in frequency throughout the year.  Unfavorable loss development on a single MGA produced program in Primary Professional Liability resulted in the increase in loss ratios reported in 2014.  This program was terminated late in 2013 with inforce policies running off during 2014.  The property reinsurance loss ratio for 2014 was impacted by a small number of catastrophic losses aggregating over $11 million.

The Company produced an overall savings on the handling of prior year claims during 2014 of $10.4 million.  This net savings is included in the computation of loss ratios shown in the previous table, as is the $5.6 million savings produced during 2013 on prior year claims.  Separated by segment, a $5.4 million net savings attributable to the property and casualty insurance segment during 2014 was attributable to the Company's Fleet Transportation and Personal Automobile business with deficiencies in Primary Professional Liability and a discontinued line of Commercial Multi-Peril partially offsetting the savings.  The $4.9 million savings attributable to the reinsurance segment in 2014 related largely to the casualty reinsurance business.  Because of the high limits provided by the Company to its fleet transportation insureds, the length of time necessary to settle larger, more complex claims and the volatility of the fleet transportation liability insurance business, the Company believes it is important to take a conservative posture in its reserving process.  As claims are settled in years subsequent to their occurrence, the Company's claim handling process has, historically, tended to produce savings from the reserves provided.  Changes in both gross premium volumes and the Company's reinsurance structure for its fleet transportation business can have a significant impact on future loss developments and, as a result, loss and loss expense ratios and prior year reserve development may not be consistent year to year.

Other operating expenses for 2014, before credits for ceding allowances from reinsurers, increased $5.7 million (5%) to $111.8 million, generally in line with increases in premium written.  This increase is due primarily to an increase in salary and salary related expenses, reflective of the Company’s growing workforce in response to the continued expansion of the Company’s products and services, and from higher expenses related to technological advances within the Company, both in the area of telematics and information technology.  Reinsurance ceded credits were 14% higher in 2014, resulting from favorable changes to the terms of certain reinsurance treaties as well as increased business ceded to other companies under quota share reinsurance treaties which provide commissions to the Insurance Subsidiaries.  After consideration of these expense offsets, operating expenses increased $2.7 million, or 3% from the prior year.

A portion of the Company’s fleet transportation business is produced by the direct sales efforts of Baldwin & Lyons, Inc. employees and, accordingly, this business does not incur commission expense on a consolidated basis.  Rather, the expenses of the agency operations, including salaries and bonuses of salesmen, travel expenses, etc. is included in operating expenses.  In general, commissions paid by the Insurance Subsidiaries to the parent company exceed related acquisition costs incurred in the production of the property and casualty insurance business.  The ratio of net operating expenses of the Insurance Subsidiaries to net premiums earned was 32.0% in 2014 and 32.4% in 2013.  Including the agency operations and corporate expenses, and after elimination of inter-company commissions, the ratio of operating expenses to operating revenue (defined as total revenue less gains or losses on investments) was 31.8% for 2014 compared with 31.9% for 2013.

The effective federal tax rate on the consolidated pre-tax income for 2014 was 33.1%.  The effective rate differs from the normal statutory rate primarily as a result of tax-exempt investment income.

Net income for 2014 of $29.7 million compares to net income of $36.6 million during 2013.  Diluted earnings per share of $1.98 were recorded in 2014 compared to per share income of $2.45 in 2013.

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2013 Compared to 2012

Premiums written by the Property and Casualty Insurance segment for 2013 totaled $314.8 million, an increase of $30.6 million (11%) from 2012.  This increase is primarily attributable to a $50.2 million (21%) increase in premiums generated by fleet transportation products resulting from increased revenue and miles driven by our insureds, which is immediately reflected in premium, rate increases and the addition of several new accounts during 2013.  This increase was partially offset by a decrease of $21.1 million in premiums generated by commercial multi-peril business as the result of management’s decision to exit this business as part of its program to reduce property catastrophe exposures.  Premiums ceded to reinsurers on direct business averaged 35.9% for 2013 compared to 37.1 % for 2012, with the decrease attributable to the above described changes in mix of business.

Premiums written by the Reinsurance segment totaled $54.7 million during 2013, a decrease of $2.4 million (4%) from 2012.  Premiums generated by property reinsurance products decreased $5.5 million (16%), reflective of management’s decision to reduce exposures to property catastrophe losses.  Partially offsetting the property decrease was an increase of $3.1 million (14%) in the Company’s growing book of professional liability reinsurance assumed.

After giving effect to changes in unearned premiums, consolidated net premiums earned totaled $252.7 million for 2013 compared to $237.5 million for 2012, an increase of 6.4%.  This increase is in line with the greater premium volume generated by the fleet transportation products mentioned above which were partially offset by decreased premium written in the commercial multi-peril and personal automobile products.

Pre-tax investment income of $8.8 million during 2013 was 12% lower than the 2012 total as pre-tax yields were down nearly 11% on average, reflecting the impact of continuing depressed worldwide available rates on the reinvestment of maturing fixed maturity investments and the redeployment of a portion of invested assets into securities that emphasize capital gains over interest income.  After tax investment income decreased by a similar 12% during 2013, compared to the prior year.

Net gains on investments, before taxes, totaled $23.5 million in 2013 compared to net gains on investments of $9.0 million during 2012.  The 2013 results were heavily influenced by direct trading results with gains of $13.6 million in 2013 compared to gains of $1.5 million in 2012.  In addition, limited partnership results produced gains of $8.0 million in 2013 compared to gains of $7.0 million during the prior year.  Limited partnership ventures utilized by the Company are primarily engaged in the trading of public and private securities, including foreign securities and, to a lesser extent, small venture capital activities and real estate development.  The aggregate of the Company’s share of gains in these entities represented a 13% appreciation in value for both 2013 and 2012.  To the extent that accounting rules require the limited partnerships to include realized and unrealized gains or losses in their net income, the Company’s proportionate share of net income will include the results as reported to the Company by the various general partners.  During 2013, the $8.0 million net gain was composed of $3.0 million attributable to an increase in unrealized gains and $5.0 million attributable to realized gains.  Recoveries of $1.7 million on previously impaired available-for-sale securities that were sold in 2013 are included in the net gains stated above.

Losses and loss expenses incurred during 2013 increased $12.6 million (9%) from 2012 to $150.7 million, an increase generally consistent with the increased premium volume described above.  The 2013 consolidated loss and loss expense ratio was 59.6% compared to 58.1% for 2012.  The Company's loss and loss expense ratios for major product lines are summarized in the following table:

	2013		2012
Fleet transportation	63.0	%	66.8	%
Private passenger automobile	62.1		65.2
Commercial multi-peril	94.0		45.9
Professional liability	126.6		67.5
Property reinsurance	12.0		11.1
Casualty reinsurance	60.8		61.4
Residual market and all other	76.4		98.2
All lines	59.6		58.1

The lower loss ratios for Fleet Transportation and Private Passenger Automobile in 2013 were the result of more favorable frequency and severity experience during the year.  The increase in the Commercial Multi-Peril loss ratio is associated with higher than expected liability losses on the runoff of this terminated business line.  Unfavorable loss development on a single MGA produced program in Primary Professional Liability resulted in the increase in loss ratios reported in 2013.  This program was terminated late in 2013 with inforce policies running off during 2014.  The property reinsurance loss ratio for 2013 was consistent with the 2012 ratio due to the lack of any major catastrophic losses to the Company in either year.

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The Company produced an overall savings on the handling of prior year claims during 2013 of $5.6 million.  This net savings is included in the computation of loss ratios shown in the previous table, as is the $9.9 million savings produced during 2012 on prior year claims. The $1.7 million net savings attributable to the property and casualty insurance segment during 2013 was attributable to the Company's Fleet Transportation and Personal Automobile business with deficiencies in Primary Professional Liability and Commercial Multi-Peril offsetting much of the other savings.  The $3.9 million savings attributable to the reinsurance segment in 2013 related solely to property catastrophe business.

Other operating expenses for 2013, before credits for ceding allowances from reinsurers, increased $13.6 million (15%) to $106.2 million.  This increase is due primarily to an increase in salary and salary related expenses, reflective of the Company’s growing workforce in response to the continued expansion of the Company’s products and services and to an increase in commission expenses, representing an increase in average commission rates from 15.4% to 16.4% due to higher profit commissions on favorable property reinsurance results.

Reinsurance ceded credits were 37% higher in 2013, resulting from favorable changes to the terms of certain reinsurance treaties as well as increased business ceded to other companies under quota share reinsurance treaties which provide commissions to the Insurance Subsidiaries.  After consideration of these expense offsets, operating expenses increased $7.9 million, or 10% from the prior year.

The ratio of net operating expenses of the Insurance Subsidiaries to net premiums earned was 32.4% in 2013 and 30.8% in 2012.  Including the agency operations and corporate expenses, and after elimination of inter-company commissions, the ratio of operating expenses to operating revenue (defined as total revenue less gains (losses) on investments) was 31.9% for 2013 compared with 30.6% for 2012 with the current year increase being largely attributable to higher salary expense as noted above.

The effective federal tax rate on the consolidated pre-tax income for 2013 was 33.4%.  The effective rate differs from the normal statutory rate primarily as a result of tax-exempt investment income.

Net income for 2013 of $36.6 million compares to net income of $31.9 million during 2012.  Diluted earnings per share of $2.45 were recorded in 2013 compared to per share income of $2.15 in 2012.

Critical Accounting Policies

The Company’s significant accounting policies which are material and/or subject to significant degrees of judgment are highlighted below.

Investment Valuation

All marketable securities are included in the Company’s balance sheets at current fair market value.

Approximately 66% of the Company’s assets are composed of investments at December 31, 2014.  Approximately 89% of these investments are publicly-traded, owned directly and have readily-ascertainable market values.  The remaining 11% of investments are composed primarily of minority interests in several limited partnerships.  These

limited partnerships are engaged in the trading of public and non-public equity securities and debt, hedging transactions, real estate development and venture capital investment.  These partnerships, themselves, do not have readily-determinable market values.  Rather, the values recorded are those provided to the Company by the respective partnerships based on the underlying assets of the partnerships.  While a substantial portion of the underlying assets are publicly-traded securities, those which are not publically traded have been valued by the respective partnerships using their experience and judgment.

Under FASB guidance, if a fixed maturity security is in an unrealized loss position and the Company has the intent to sell the security, or it is more likely than not that the Company will have to sell the 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 shareholder’s equity (accumulated other comprehensive income).

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In determining if and when an equity security’s decline in market value below cost is other-than-temporary, we first make an objective analysis of each individual equity 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, without any subjective evaluation as to possible future recovery.  For individual issues where the decline in value is less than 20% but the amount of the decline is considered significant, we will also evaluate the market conditions, trends of earnings, price multiples and other key measures for the securities to determine if it appears that the decline is other-than-temporary.  In those instances, the Company also considers its intent and ability to hold equity investments until recovery can be reasonably expected.  For any decline which is considered to be other-than-temporary, we recognize an impairment loss in the current period earnings as an investment loss.  Declines which are considered to be temporary are recorded as a reduction in shareholders’ equity, net of related federal income tax credits.

It is important to note that all available for sale securities included in the Company’s financial statements are valued at current fair market values.  The evaluation process for determination of other-than-temporary decline in value of investments, as described above, does not change these valuations but, rather, determines when a decline in value will be recognized in the income statement (other-than-temporary decline) as opposed to a charge to shareholders’ equity (temporary decline).  Another seemingly inconsistent aspect of this accounting policy which is important to understand is that any subsequent recoveries in value of investments which have incurred other-than-temporary impairment adjustments are accounted for as unrealized gains (with credits to equity but not reflected in the income statement) until the security is actually disposed of or sold.  At December 31, 2014, unrealized gains include $17.1 million of appreciation on investments previously adjusted for other-than-temporary impairment, compared to a cumulative total of $7.2 million of impairment write-downs at that date.  This evaluation process is subject to risks and uncertainties since it is not always clear what has caused a decline in value of an individual security or since some declines may be associated with general market conditions or economic factors which relate to an industry, in general, but not necessarily to an individual issue.  The Company has attempted to minimize many of these uncertainties by adopting a largely objective evaluation process as described above.  However, to the extent that certain declines in value are reported as unrealized at December 31, 2014, it is possible that future earnings charges will result should the declines in value increase or persist or should the security actually be disposed of while market values are less than cost.  At December 31, 2014, the total gross unrealized loss included in the Company’s investment portfolio was approximately $9.7 million.  No individual issue constituted a material amount of this total.  Had this entire amount been considered other-than-temporary at December 31, 2014, there would have been no impact on total shareholders’ equity or book value since the decline in value of these securities was recognized as a reduction to shareholders’ equity.

Reinsurance Recoverable

Reinsurance ceded transactions were as follows for the years ended December 31 (dollars in thousands):

	2014		2013		2012
Premium ceded (reduction to premium earned)	$	119,248	$	113,882	$	103,712
Losses ceded (reduction to losses incurred)		105,891		107,321		90,899
Commissions from reinsurers (reduction to operating expenses)		23,797		20,822		15,185

A discussion of the Company’s reinsurance strategies is presented in Item 1, Business, on page 3.

Amounts recoverable under the terms of reinsurance contracts comprise approximately 19% of total Company assets as of December 31, 2014.  In order to be able to provide the high limits required by the Company’s insureds, we share a significant amount of the insurance risk of the underlying contracts with various insurance entities through the use of reinsurance contracts.  Some reinsurance contracts provide that a loss be shared among the Company and its reinsurers on a predetermined pro-rata basis (“quota-share”) while other contracts provide that the Company keep a fixed amount of the loss, similar to a deductible, with reinsurers taking all losses above this fixed amount (“excess of loss”).  Some risks are covered by a combination of quota-share and excess of loss contracts.  The computation of amounts due from reinsurers is based upon the terms of the various contracts and follows the underlying estimation process for loss and loss expense reserves, as described below.  Accordingly, the uncertainties inherent in the loss and loss expense reserving process also affect the amounts recorded as recoverable from reinsurers.  Estimation uncertainties are greatest for claims which have occurred but which have not yet been reported to the Company.  Further, the high limits provided by the Company’s insurance policies for fleet transportation liability, workers’ compensation and professional liability risks provide more variability in the estimation process than lines of business with lower coverage limits.

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It should be noted, however, that a change in the estimate of amounts due from reinsurers on unpaid claims will not, in itself, result in charges or credits to losses incurred.  This is because any change in estimated recovery follows the estimate of the underlying loss.  Thus, it is the computation of the gross underlying loss that is critical.

As with any receivable, credit risk exists in the recoverability of reinsurance.  This may be even more pronounced than in normal receivable situations since recoverable amounts are not generally due until the loss is settled which, in some cases, may be many years after the contract was written.  If a reinsurer is unable, in the future, to meet its financial commitments under the terms of the contracts, the Company would be responsible to satisfy the reinsurer's portion of the loss.  The financial condition of each of the Company’s reinsurers is vetted upon the execution of a given treaty and only reinsurers with the superior credit ratings available are utilized.  However, as noted above, reinsurers are often not called upon to satisfy their obligations for several years and changes in credit worthiness can occur in the interim period.  Reviews of the current financial strength of each reinsurer are made frequently and, should impairment in the ability of a reinsurer be determined to exist, current year operations would be charged in amounts sufficient to provide for the Company’s additional liability.  Such charges are included in other operating expenses, rather than losses and loss expenses incurred, since the inability of the Company to collect from reinsurers is a credit loss rather than a deficiency associated with the loss reserving process.

Loss and Loss Expense Reserves

The Company’s loss and loss expense reserves for each segment are shown in the following table on both a gross (before consideration of reinsurance) and on a net of reinsurance basis at December 31, 2014 and 2013 (dollars in thousands).

	Direct and Assumed				Net
Line of Business (Segment)	2014		2013		2014		2013
Property and casualty insurance	$	449,133	$	408,469	$	241,215	$	227,322
Reinsurance		56,969		66,001		54,369		60,766
	$	506,102	$	474,470	$	295,584	$	288,088

The Company’s reserves for losses and loss expenses (“reserves”) are determined based on complex estimation processes using historical experience, current economic information and, when necessary, available industry statistics.  The Company’s claims range from the very routine private passenger automobile “fender bender” to the highly complex and costly third party bodily injury claim involving large tractor-trailer rigs.  Reserving for each class of claims requires a set of assumptions based upon historical experience, knowledge of current industry trends and seasoned judgment.  The high limits provided in many of the Company’s policies provide for greater volatility in the reserving process for more serious claims.  Court rulings, legislative actions and trends in jury awards also play a significant role in the estimation process of larger claims.  The Company continuously reviews and evaluates loss developments subsequent to each measurement date and adjusts its reserve estimation assumptions, as necessary, in an effort to achieve the best possible estimate of the ultimate remaining loss costs at any point in time.  Changes to previously established reserve amounts are charged or credited to losses and loss expenses incurred in the accounting periods in which they are determined.  Note C to the consolidated financial statements includes additional information relating to loss and loss adjustment expense reserve development.

The Company’s methods for determining loss and loss expense reserves are essentially identical for interim and annual reporting periods.

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A detailed analysis and discussion for each of the above basic reserve categories follows.

Reserves for known losses (Case reserves)

Each known claim, regardless of complexity, is handled by a claims adjuster experienced with claims of this nature and a “case” reserve, appropriate for the individual loss occurrence, is established.  For very routine “short-tail” claims such as private passenger physical damage, the Company records an initial reserve that is based upon historical loss settlements adjusted for current trends.  As information regarding the loss occurrence is gathered in the claim handling process, the initial reserve is adjusted to reflect the anticipated ultimate cost to settle the claim.  For more complex claims which can tend toward being “long-tail” in nature, an experienced claims adjuster will review the facts and circumstances surrounding the loss occurrence to make a determination of the reserve to be established.  Many of the more complex claims involve litigation and necessitate an evaluation of potential jury awards in addition to the factual information to determine the value of each claim.  Each claim is frequently monitored and the recorded reserve is increased or decreased relative to information gathered during the settlement life cycle.

Reserves for incurred but not reported losses

The Company uses both standard actuarial techniques common to most insurance companies as well as proprietary techniques developed by the Company in consideration of its specialty business products.  For its short-tail lines of business, the Company uses predominantly the incurred or paid loss development factor methods.  The Company has found that the use of accident quarter loss development triangles, rather than those based upon accident year, are most responsive to claim settlement trends and fluctuations in premium exposures for its short-tail lines.  A minimum of 12 running accident quarters is used to project the reserve necessary for incurred but not reported losses for its short-tail lines.

The Company also uses the loss development factor approach for its long-tail lines of business.  A minimum of 15 accident years is included in the loss development triangles used to calculate link ratios and the selected loss development factors used to determine the reserves for incurred but not reported losses.  A minimum of 20 accident years is used for long-tail workers’ compensation reserve projections.  Significant emphasis is placed on the use of tail factors for the Company’s long-tail lines of business.

For the Company’s fleet transportation risks, which are covered by regularly changing reinsurance agreements and which contain wide-ranging self-insured retentions (“SIR”), traditional actuarial methods are supplemented by other methods in consideration of the Company’s exposures to loss.  In situations where the Company’s reinsurance structure, the insured’s SIR selections, policy volume, and other factors are changing, current accident period loss exposures may not be homogenous with historical loss data to allow for reliable projection of future developed losses.  Therefore, the Company supplements the above-described actuarial methods with loss ratio reserving techniques developed from the Company’s extensive, proprietary databases to arrive at the reserve for losses incurred but not reported for the calendar/accident period under review.  As losses for a given calendar/accident period develop with the passage of time, management evaluates such development on a monthly and quarterly basis and adjusts reserve factors, as necessary, to reflect current judgment with regard to the anticipated ultimate incurred losses.  This process continues until all losses are settled for each period subject to this method.

Reserves for loss adjustment expenses

While certain of the Company’s products involve case basis reserving for allocated loss adjustment expenses, the majority of such reserves are determined on a bulk basis.  The Company uses historical analysis of the ratios of allocated loss adjustment expenses paid to losses paid on closed claims to arrive at the expected ultimate incurred loss adjustment expense factors applicable to each affected product.  Once developed, the factors are applied to the expected ultimate incurred losses, including IBNR, on all open claims.  The resulting ultimate incurred allocated loss adjustment expense is then reduced by amounts paid to date on all open claims to arrive at the reserve for allocated loss adjustment expenses to be incurred in the future for the handling of specific claims.

For those loss adjustment expenses not specific to individual claims (general claims handling expenses referred to as unallocated loss adjustment expenses) the Company uses standard industry loss adjustment expenses paid to losses paid (net of reinsurance) ratio analysis to establish the necessary reserves.  The selected factors are applied to 100% of IBNR reserves and to case reserves with consideration given for that portion of loss adjustment expense already paid at the reserve measurement date.  Such factors are monitored and revised, as necessary, on a quarterly basis.

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The reserving process requires management to continuously monitor and evaluate the life cycle of claims based on the class of business and the nature of the individual losses.  As previously noted, our claims vary widely in scope and complexity.  Reserving for each class of claims requires a set of assumptions based upon historical experience, knowledge of current industry trends and seasoned judgment.  The high limits provided in the Company’s fleet transportation liability policies provide for greater volatility in the reserving process for more serious claims.  Court rulings, legislative actions and trends in jury awards also play a significant role in the estimation process of larger claims.  The Company continuously reviews and evaluates loss developments subsequent to each measurement date and adjusts its reserve estimations, as necessary, in an effort to achieve the best possible estimate of the ultimate remaining loss costs at any point in time.

Sensitivity Analysis - Potential impact on reserve volatility from changes in key assumptions

Management is aware of the potential for variation from the reserves established at any particular point in time.  Savings or deficiencies could develop in future valuations of the currently established loss and loss expense reserve estimates under a variety of reasonably possible scenarios.  The Company’s reserve selections are developed to be a “best estimate” of unpaid loss at a point in time and, due to the unique nature of our exposures, particularly in the large fleet transportation excess product where insured’s policies of insurance combine large self-insured retentions with high policy limits, ranges of reserve estimates are not established during the reserving process.  However, basic assumptions that could potentially impact future volatility of our valuations of current loss and loss expense reserve estimates include, but are not limited to, the following:

• Consistency in the individual case reserving processes

• The selection of loss development factors in the establishment of bulk reserves for incurred but reported losses and loss expenses

• Projected future loss trend

• Expected loss ratios for the current book of business, particularly the Company’s fleet transportation products, where the number of accounts insured, selected self-insured retentions, policy limits and reinsurance structure may vary widely period to period

Under reasonably possible scenarios, it is conceivable that the Company’s selected loss reserve estimates could be 10%, or more, redundant or deficient.  The majority of the Company’s reserves for losses and loss expenses, on either a gross or a net of reinsurance basis, relates to its fleet transportation products.  Perhaps the most significant example of sensitivity to variation in the key assumptions is the loss ratio selection for the Company’s fleet transportation products for policies subject to certain major reinsurance treaties (approximately $152.5 million, or approximately 34% of carried direct reserves for directly produced property and casualty business).  The following table presents the approximate impacts on gross and net loss reserves of both a 10 percentage point and 20 percentage point increase or decrease in the loss factors actually utilized in the Company’s reserve determination at December 31, 2014.  The Company’s selection of the range of values presented should not be construed as the Company’s prediction of future events, but rather simply an illustration of the impact of such events, should they occur:

	10 Point Increase	10 Point Decrease	20 Point Increase	20 Point Decrease
Gross reserves	$54.8 million	$46.2 million	$109.9 million	$69.4 million
Net reserves	$23.3 million	$20.5 million	$63.7 million	$29.7 million

The variation in impact from loss ratio increases and decreases is attributable to minimum and maximum premium rate factors included in the various reinsurance contracts.

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Federal Income Tax Considerations

The liability method is used in accounting for federal income taxes.  Using this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.  The provision for deferred federal income tax is based on items of income and expense which are reported in different years in the financial statements and tax returns and are measured at the tax rate in effect in the year the difference originated.  Net deferred tax liabilities reported at December 31 are as follows (dollars in thousands):

	2014			2013
Total deferred tax liabilities	$	(37,493	)	$	(34,377	)
Total deferred tax assets		17,520			17,526
Net deferred tax liabilities	$	(19,973	)	$	(16,851	)

Deferred tax assets at December 31, 2014, include approximately $11.0 million related to the timing of deductibility of loss and loss expense reserves, the majority of which relates to policy liability discounts required by the Internal Revenue Code which are perpetual in nature and, in the absence of the termination of business, will not, in the aggregate, reverse to a material degree in the foreseeable future.  An additional $2.0 million relates to impairment adjustments made to investments, as required by accounting regulations.  The sizable unrealized gains in the Company’s investment portfolios would allow for the recovery of this deferred tax at any time.  Unearned premiums discount and deferred ceding commissions represent $2.2 and $0.5 million of deferred tax assets, respectively.  The balance of deferred tax assets consists of various normal operating expense accruals and is not considered to be material.  As a result of its analysis, management has determined that no valuation allowance is necessary at December 31, 2014.

FASB provides guidance for recognizing and measuring uncertain tax positions and prescribes a threshold condition that a tax position must meet for any of the benefit of the uncertain tax position to be recognized in the financial statements. Based on this guidance, management regularly analyzes tax positions taken or expected to be taken in a tax return based on the threshold condition prescribed.  Tax positions that do not meet or exceed this threshold condition are considered uncertain tax positions.  Interest related to uncertain tax positions, if any, would be recognized in income tax expense.  Penalties, if any, related to uncertain tax positions would be recorded in income tax expenses.  

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; and (iii) other risks and uncertainties indicated from time to time in the Company’s filings with the Securities and Exchange Commission.

Impact of Inflation

To the extent possible, the Company attempts to recover the impact of inflation to loss costs and operating expenses by increasing the premiums it charges.  Within the fleet transportation business, a majority of the Company’s accounts are charged as a percentage of an insured’s gross revenue, mileage or payroll.  As these charging bases increase with inflation, premium revenues are immediately increased.  The remaining premium rates charged are adjustable only at periodic intervals and often require state regulatory approval.  Such periodic increases in premium rates may lag far behind cost increases.

To the extent inflation influences yields on investments, the Company is also affected.  The Company’s short-term and fixed investment portfolios are structured in direct response to available interest rates over the yield curve.  As available market interest rates fluctuate in response to the presence or absence of inflation, the yields on the Company’s investments are impacted.  Further, as inflation affects current market rates of return, previously committed investments might increase or decline in value depending on the type and maturity of investment (see additional comments under Market Risk, following).

Inflation must also be considered by the Company in the creation and review of loss and loss adjustment expense reserves since portions of these reserves are expected to be paid over extended periods of time.  The anticipated effect of inflation is implicitly considered when estimating liabilities for losses and loss adjustment expenses.

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Market Risk

The Company operates within the property and casualty insurance industry and, accordingly, has significant invested assets which are exposed to various market risks.  These market risks relate to interest rate fluctuations, credit risks, equity security market prices and, to a lesser extent, foreign currency rate fluctuations.  All of the Company's invested assets, with the exception of investments in limited partnerships, are classified as available for sale.

Based on the structure of the Company’s investment portfolio, the most potentially significant of the three identified market risks relates to prices in the equity security market.  Though not the largest category of the Company's invested assets, equity securities have a high potential for short-term price fluctuation.  The market value of the Company's equity positions at December 31, 2014 was $162.1 million or approximately 21% of invested assets.  This market valuation includes $83.3 million of appreciation over the adjusted cost basis of the equity security investments.  Funds invested in the equities market are not considered to be assets necessary for the Company to conduct its daily operations and, therefore, can be committed for extended periods of time.  The long-term nature of the Company's equity investments allows it to invest in positions where ultimate value, and not short-term market fluctuations, is the primary focus.

Reference is made to the discussion of limited partnership investments in Critical Accounting Policies in this report.  All of the market risks, attendant to equity securities, apply to the underlying assets in these partnerships, and to a greater degree because of the generally more aggressive investment philosophies utilized by the partnerships.  In addition, these investments are illiquid.  There is no primary or secondary market on which these limited partnerships trade and, in most cases, the Company is prohibited from disposing of its limited partnership interests for some period of time and must seek approval from the general partner for any such disposal.  Distributions of earnings from these partnerships are largely at the sole discretion of the general partners and distributions are generally not received by the Company for many years after the earnings have been reported.   Finally, through the application of the equity method of accounting, the Company’s share of net income reported by the limited partnerships often includes significant amounts of unrealized appreciation on the underlying investments.  As such, the likelihood that reported income from limited partnership investments will be ultimately returned to the Company in the form of cash is markedly lower than the Company’s other investments, where appreciation is recognized as income only when a security is actually sold.

The Company's fixed maturity portfolio totaled $451.8 million at December 31, 2014.  Approximately 49% of this portfolio is made up of U.S. Government and government agency obligations and state and municipal debt securities;  75% of the portfolio matures within 5 years; and the average contractual maturity of the Company's fixed maturity investments is approximately 4.8 years with an average modified duration of approximately 2.0 years.  Although the Company is exposed to interest rate risk on its fixed maturity investments, given the anticipated duration of the Company's liabilities (principally insurance loss and loss expense reserves) relative to investment maturities, even a 100 to 200 basis point increase in interest rates would not have even a moderate impact on the Company's ability to conduct daily operations or to meet its obligations and would, in fact, result in significantly higher investment income in a relatively short period of time as short term investments and maturing bonds could be reinvested in the higher yielding securities very quickly.

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There is an inverse relationship between interest rate fluctuations and the fair value of the Company's fixed maturity investments.  Additionally, the fair value of interest rate sensitive instruments may be affected by the financial strength of the issuer, prepayment options, relative values of alternative investments, liquidity of the investment, currency fluctuations for non-U.S. debt holdings and other general market conditions.  The Company monitors its sensitivity to interest rate risk by measuring the change in fair value of its fixed maturity investments relative to hypothetical changes in interest rates.

The following tables present the estimated effects on the fair value of financial instruments at December 31 which would result from an instantaneous change in yield rates of varying magnitudes on a static balance sheet to determine the effect such a change in rates would have on current fair value. The analysis presents the sensitivity of the fair value of the Company’s financial instruments to selected changes in market rates and prices. The range of change chosen reflects the Company’s view of changes that the Company believes are reasonably possible over a one-year period.  The Company’s selection of the range of values chosen to represent changes in interest rates should not be construed as the Company’s prediction of future market events, but rather an illustration of the impact of such events, should they occur.  The equity portfolio was compared to the S&P 500 index due to its correlation with the vast majority of the Company’s current equity portfolio.  The limited partnership portfolio was compared to the S&P 500 and Indian BSE 500 indices due to their significant correlation with the vast majority of our limited partnership portfolio.  As previously indicated, several other factors can impact the fair values of fixed maturity investments and, therefore, significant variations in market interest rates could produce quite different results from the hypothetical estimates presented below.

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The following tables present the estimated effects on the fair value of financial instruments at December 31 due to an instantaneous change in yield rates of 100 basis points and a 10% decline in the S&P 500 and Indian BSE 500 indices (dollars in thousands).

			Increase (Decrease)
	Fair		Interest			Equity
	Value		Rate Risk			Risk
2014:
Fixed maturities
U.S. government obligations	$	101,094	$	(1,208	)	$	-
Residential mortgage-backed securities		6,066		(198	)		-
Commercial mortgage-backed securities		36,440		(1,183	)		-
State and municipal obligations		113,777		(3,224	)		-
Corporate securities		166,966		(5,646	)		-
Foreign government obligations		27,466		(922	)		-
Total fixed maturities		451,809		(12,381	)		-
Equity securities:
Financial institutions		25,343		-			(2,534	)
Industrial & miscellaneous		136,764		-			(13,676	)
Total equity securities		162,107		-			(16,210	)
Limited partnerships		81,230		-			(5,450	)
Short-term		2,966		-			-
Total	$	698,112	$	(12,381	)	$	(21,660	)
2013:
Fixed maturities
U.S. government obligations	$	113,389	$	(1,666	)	$	-
Residential mortgage-backed securities		13,252		(759	)		-
Commercial mortgage-backed securities		28,565		(1,635	)		-
State and municipal obligations		115,250		(2,512	)		-
Corporate securities		137,215		(5,519	)		-
Foreign government obligations		23,879		(792	)		-
Total fixed maturities		431,550		(12,883	)		-
Equity securities:
Financial institutions		18,850		-			(1,885	)
Industrial & miscellaneous		126,978		-			(12,698	)
Total equity securities		145,828		-			(14,583	)
Limited partnerships		68,988		-			(4,609	)
Short-term		4,891		-			-
Total	$	651,257	$	(12,883	)	$	(19,192	)

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The following tables present the estimated effects on the fair value of financial instruments at December 31 due to an instantaneous change in yield rates of 150 basis points and a 15% decline in the S&P 500 and Indian BSE 500 indices (dollars in thousands).

			Increase (Decrease)
	Fair		Interest			Equity
	Value		Rate Risk			Risk
2014:
Fixed maturities
U.S. government obligations	$	101,094	$	(1,800	)	$	-
Residential mortgage-backed securities		6,066		(297	)		-
Commercial mortgage-backed securities		36,440		(1,787	)		-
State and municipal obligations		113,777		(4,724	)		-
Corporate securities		166,966		(8,333	)		-
Foreign government obligations		27,466		(1,366	)		-
Total fixed maturities		451,809		(18,307	)		-
Equity securities:
Financial institutions		25,343		-			(3,801	)
Industrial & miscellaneous		136,764		-			(20,515	)
Total equity securities		162,107		-			(24,316	)
Limited partnerships		81,230		-			(8,175	)
Short-term		2,966		-			-
Total	$	698,112	$	(18,307	)	$	(32,491	)
2013:
Fixed maturities
U.S. government obligations	$	113,389	$	(2,483	)	$	-
Residential mortgage-backed securities		13,252		(1,105	)		-
Commercial mortgage-backed securities		28,565		(2,382	)		-
State and municipal obligations		115,250		(3,720	)		-
Corporate securities		137,215		(8,125	)		-
Foreign government obligations		23,879		(1,171	)		-
Total fixed maturities		431,550		(18,986	)		-
Equity securities:
Financial institutions		18,850		-			(2,828	)
Industrial & miscellaneous		126,978		-			(19,047	)
Total equity securities		145,828		-			(21,875	)
Limited partnerships		68,988		-			(6,914	)
Short-term		4,891		-			-
Total	$	651,257	$	(18,986	)	$	(28,789	)

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Contractual Obligations

The table below sets forth the amounts of the Company's contractual obligations at December 31, 2014.

	Payments Due by Period
	Total		Less than 1 year		1 - 3 Years		3 - 5 Years		More Than 5 Years
	(dollars in millions)
Loss and loss expense reserves	$	506.1	$	175.6	$	149.3	$	60.2	$	121.0
Investment commitments		17.9		17.9		-		-		-
Operating leases		0.4		0.1		0.3		-		-
Borrowings		20.0		20.0		-		-		-
Total	$	544.4	$	213.6	$	149.6	$	60.2	$	121.0

The Company’s loss and loss expense reserves do not have contractual maturity dates and the exact timing of the payment of claims cannot be predicted with certainty.  However, based upon historical payment patterns, the above table presents an estimate of when we might expect our direct loss and loss expense reserves (without the benefit of reinsurance recoveries) to be paid.  Timing of the collection of the related reinsurance recoverable, estimated to be $220.2 million at December 31, 2014, or 40% of the amounts presented in the above table, would approximate that of the above projected direct reserve payout but could lag such payments by several months in some instances.

The investment commitments in the above table relate to maximum unfunded capital obligations for limited partnership investments and unfunded bridge loan obligations at December 31, 2014.  The actual call dates for such funding could vary from that presented.

Borrowings made under a line of credit can be called by the bank, under certain circumstances, with short notice.  The line of credit has a current expiration of September 23, 2018; however, it is expected that this line of credit will be renewed for a multiple year period prior to maturity.

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ANNUAL REPORT ON FORM 10-K

ITEM 8--FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

YEAR ENDED DECEMBER 31, 2014

BALDWIN & LYONS, INC.

CARMEL, INDIANA

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 Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Baldwin & Lyons, Inc. 

We have audited the accompanying consolidated balance sheets of Baldwin & Lyons, Inc. and subsidiaries (the Company) as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2014. Our audits also included the financial statement schedules listed in the Index at Item 15(a). These financial statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Baldwin & Lyons, Inc. and subsidiaries at December 31, 2014 and 2013, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Baldwin & Lyons, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 6, 2015 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP                              

Indianapolis, IN

March 6, 2015

- 40 -

Consolidated Balance Sheets
Baldwin & Lyons, Inc. and Subsidiaries
	December 31
	2014		2013
	(dollars in thousands)
Assets
Investments:
Fixed maturities	$	451,809	$	431,550
Equity securities		162,107		145,828
Limited partnerships		81,230		68,988
Short-term and other		2,966		4,891
		698,112		651,257
Cash and cash equivalents		64,632		59,297
Accounts receivable--less allowance (2014, $605; 2013, $615)		98,144		100,830
Accrued investment income		3,682		3,448
Reinsurance recoverable		220,221		195,568
Prepaid reinsurance premiums		2,274		1,057
Deferred policy acquisition costs		2,263		2,319
Property and equipment--less accumulated depreciation
$(2014, 13,777; 2013, $15,835)		43,815		36,329
Other assets		9,413		19,051
Current federal income taxes recoverable		1,691		3,114
	$	1,144,247	$	1,072,270
Liabilities and Shareholders' Equity
Reserves:
Losses and loss expenses	$	506,102	$	474,470
Unearned premiums		35,019		36,693
		541,121		511,163
Reinsurance payable		46,338		39,122
Short-term borrowings		20,000		10,000
Depository liabilities		48,893		57,544
Accounts payable and other liabilities		68,426		55,866
Deferred federal income taxes		19,973		16,851
		744,751		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 shares		112		112
Class B non-voting -- authorized 20,000,000 shares;
outstanding -- 2014 - 12,356,389; 2013 - 12,304,191 shares		527		525
Additional paid-in capital		51,854		50,594
Unrealized net gains on investments		51,840		49,089
Foreign exchange adjustment		390		1,401
Retained earnings		294,773		280,003
		399,496		381,724
	$	1,144,247	$	1,072,270

- 41 -

Consolidated Statements of Operations
Baldwin & Lyons, Inc. and Subsidiaries
	Year Ended December 31
	2014			2013			2012
	(dollars in thousands, except per share data)
Revenue:
Net premiums earned	$	261,627		$	252,743		$	237,461
Net investment income		9,055			8,770			9,930
Commissions and other income		6,430			5,944			5,722
Net realized gains on investments, excluding
impairment losses		15,619			24,257			9,899
Total other-than-temporary impairment losses on investments		(689	)		(744	)		(894	)
Portion of other-than-temporary impairment losses
recognized in other comprehensive income		-			2			6
Net realized gains on investments		14,930			23,515			9,011
		292,042			290,972			262,124
Expenses:
Losses and loss expenses incurred		159,596			150,701			138,088
Other operating expenses		88,048			85,361			77,430
		247,644			236,062			215,518
Income before federal income taxes		44,398			54,910			46,606
Federal income taxes		14,681			18,322			14,687
Net income	$	29,717		$	36,588		$	31,919
Per share data:
Basic and diluted earnings	$	1.98		$	2.45		$	2.15

- 42 -

Consolidated Statements of Comprehensive Income
Baldwin & Lyons, Inc. and Subsidiaries
	2014			2013			2012
	(dollars in thousands)
Net income	$	29,717		$	36,588		$	31,919
Other comprehensive income, net of tax:
Unrealized net gains on securities:
Unrealized holding net gains arising during the period		7,835			23,711			10,148
Less: reclassification adjustment for net gains
included in net income		(5,084	)		(10,089	)		(1,273	)
		2,751			13,622			8,875
Foreign currency translation adjustments		(1,011	)		(575	)		217
Other comprehensive income		1,740			13,047			9,092
Comprehensive income	$	31,457		$	49,635		$	41,011

- 43 -

Consolidated Statements of Shareholders' Equity
Baldwin & Lyons, Inc. and Subsidiaries
	2014			2013			2012
	(dollars in thousands)
Shareholders' equity at beginning of year	$	381,724		$	346,712		$	319,061
Net income		29,717			36,588			31,919
Other comprehensive income		1,740			13,047			9,092
Cash dividends paid to shareholders		(14,947	)		(14,943	)		(14,886	)
Issuance of common stock		1,262			320			1,526
Shareholders' equity at end of year:	$	399,496		$	381,724		$	346,712

- 44 -

Consolidated Statements of Cash Flows
Baldwin & Lyons, Inc. and Subsidiaries
	2014			2013			2012
	(dollars in thousands)
Operating activities
Net income	$	29,717		$	36,588		$	31,919
Adjustments to reconcile net income to net cash
provided by operating activities:
Change in accounts receivable and unearned premium		3,230			(16,488	)		(13,089	)
Change in accrued investment income		(234	)		939			(50	)
Change in reinsurance recoverable on paid losses		(2,785	)		(1,618	)		537
Change in losses and loss expenses reserves net of reinsurance		7,545			(1,264	)		(2,289	)
Change in other assets, other liabilities and current income taxes		(4,847	)		29,892			29,850
Amortization of net policy acquisition costs		25,075			26,592			26,772
Net policy acquisition costs deferred		(25,019	)		(25,819	)		(25,285	)
Provision for deferred income taxes		1,640			939			3,868
Bond amortization		4,235			5,068			6,055
(Gain) loss on sale of property		474			(27	)		10
Depreciation		4,797			4,300			4,981
Net realized gains on investments		(14,930	)		(23,515	)		(9,011	)
Compensation expense related to restricted stock		1,262			320			1,526
Net cash provided by operating activities		30,160			35,907			55,794
Investing activities
Purchases of fixed maturities and equity securities		(288,283	)		(369,259	)		(320,434	)
Purchases of limited partnership interests		(6,886	)		(3,568	)		(2,154	)
Distributions from limited partnerships		1,752			2,528			3,957
Proceeds from maturities		98,714			129,113			150,652
Proceeds from sales of fixed maturities		167,406			207,723			103,106
Proceeds from sales of equity securities		19,263			29,858			8,674
Net sales (purchases) of short-term investments		1,925			(690	)		(529	)
Decrease in principal of notes receivable from employees		-			-			1,252
Purchases of property and equipment		(13,451	)		(28,607	)		(4,054	)
Proceeds from disposals of property and equipment		693			261			228
Net cash used in investing activities		(18,867	)		(32,641	)		(59,302	)
Financing activities
Dividends paid to shareholders		(14,947	)		(14,943	)		(14,886	)
Drawings on line of credit		10,000			-			-
Net cash used in financing activities		(4,947	)		(14,943	)		(14,886	)
Effect of foreign exchange rates on cash and cash equivalents		(1,011	)		(575	)		217
Increase (decrease) in cash and cash equivalents		5,335			(12,252	)		(18,177	)
Cash and cash equivalents at beginning of year		59,297			71,549			89,726
Cash and cash equivalents at end of year	$	64,632		$	59,297		$	71,549

- 45 -

Notes to Consolidated Financial Statements

Baldwin & Lyons, Inc. and Subsidiaries

(Dollars in thousands, except share and per share data)

Note A - Summary of Significant Accounting Policies

Basis of Presentation:  The consolidated financial statements include the accounts of Baldwin & Lyons, Inc. and its wholly owned subsidiaries (the “Company").  All significant inter-company transactions and accounts have been eliminated in consolidation.

Use of Estimates:  Preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.  Actual results will differ from those estimates.

Cash and Cash Equivalents:  The Company considers investments in money market funds to be cash equivalents.  Carrying amounts for these instruments approximate their fair values.

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

Realized gains and losses on disposals of investments are determined by specific identification of 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) on investments.

In accordance with the Financial Accounting Standard Board’s (“FASB”) other-than-temporary impairment (“OTTI”) guidance, 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 in cases where 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 shareholder’s 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.  The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the appropriate effective interest rate.

- 46 -

Note A - Significant Accounting Policies (continued)

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.  Additionally, the Company takes into account any known subjective information in evaluating for impairment, without consideration to the Company’s quantitative criteria defined above, as well as the Company’s intent and ability to retain the equity security for a period of time sufficient to allow for such recovery in fair value.

Property and Equipment:  Property and equipment are carried at cost, less accumulated depreciation.  Depreciation is computed principally by the straight-line method.

Goodwill and Other Intangible Assets:  Goodwill is not amortized.  Rather, it is tested for impairment in accordance with FASB guidance, at the reporting-unit level.  Goodwill is tested annually (during the fourth quarter) or more often if events or circumstances, such as adverse changes in the business climate, indicate there may be impairment. Intangible assets determined to have finite lives, such as customer relationships and employment agreements, are amortized over their estimated useful lives in a manner that best reflects the economic benefits of the intangible asset.  In addition, impairment testing is performed on these amortizing intangible assets if impairment indicators are noted.

Reserves for Losses and Loss Expenses:  The reserves for losses and loss expenses, minor portions of which are discounted, are determined using case basis evaluations and statistical analyses and represent estimates of the ultimate cost of all reported and unreported losses which are unpaid at year end.  These reserves include estimates of future trends in claim severity and frequency and other factors which could vary as the losses are ultimately settled.  While actual results will differ from such estimates, management believes that the reserves for losses and loss expenses are adequate.  The estimates are continually reviewed and as adjustments to these reserves become necessary, such adjustments are reflected in current operations.

Recognition of Revenue and Costs:  Premiums are earned over the period for which insurance protection is provided.  A reserve for unearned premiums, computed by the daily pro-rata method, is established to reflect amounts applicable to subsequent accounting periods.  Commissions to unaffiliated companies and premium taxes applicable to unearned premiums are deferred and expensed as the related premiums are earned.  The Company does not defer acquisition costs which are not directly variable with the production of premium.  If it is determined that expected losses and deferred expenses will likely exceed the related unearned premiums, the asset representing deferred policy acquisition costs is reduced and an expense is charged against current operations to reflect any such premium deficiency.  In the event that the expected premium deficiency exceeds deferred policy acquisition costs, an additional liability would be recorded with a corresponding expense to current operations for the amount of the excess premium deficiency.  Anticipated investment income is considered in determining recoverability of deferred acquisition costs.

Reinsurance:  Reinsurance premiums, commissions, expense reimbursements and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts.  Premiums ceded to other insurers have been reported as a reduction of premium earned.  Amounts applicable to reinsurance ceded for unearned premium and claim loss reserves have been reported as reinsurance recoverable assets.  Certain reinsurance contracts provide for additional or return premiums and commissions based upon profits or losses to the reinsurer over prescribed periods.  Estimates of additional or return premiums and commissions are adjusted quarterly to recognize actual loss experience to date as well as projected loss experience applicable to the various contract periods.  Estimates of reinstatement premiums on reinsurance contracts covering catastrophic events are, to the extent reasonably determinable, recorded concurrently with the related loss.

Should impairment in the ability of a reinsurer to satisfy its obligations to the Company be determined to exist, current year operations would be charged in amounts sufficient to provide for the Company’s additional liability.  Such charges, when incurred, are included in other operating expenses, rather than losses and loss expenses incurred, since the inability of the Company to collect from reinsurers is a credit risk rather than a deficiency associated with the loss reserving process.

- 47 -

Note A - Significant Accounting Policies (continued)

The Company accounts for foreign and domestic reinsurance using the periodic method.  Under the periodic method, premiums are recognized as revenue ratably over the contract term, and claims, including an estimate of claims incurred but not reported, are recognized as they occur.

Deferred Taxes:  Deferred income tax assets and liabilities are recognized for temporary differences between the financial statement and tax return bases of assets and liabilities based on enacted tax rates and laws.  The deferred tax benefits of the deferred tax assets are recognized to the extent realization of such benefits is more likely than not.  Deferred income tax expense or benefit generally represents the net change in deferred income tax assets and liabilities during the year.  Current income tax expense represents the tax liability associated with revenues and expenses currently taxable or deductible on various income tax returns for the year reported.

Restricted Stock:  Restricted shares vest ratably over the vesting period from the date of grant and are accelerated for retirement eligible recipients in accordance with the non-substantive post-grant date vesting clause of Accounting Standard Codification (“ASC”) 715, Compensation-Retirement Benefits.  Restricted stock is valued based on the closing price of the stock on the day the award is granted. 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 Compensation Committee.

Earnings Per Share:  Diluted earnings per share of common stock are based on the average number of shares of Class A and Class B common stock outstanding during the year, adjusted for the dilutive effect, if any, of restricted stock awards outstanding.  Basic earnings per share are presented exclusive of the effect of share-based awards outstanding.

Comprehensive Income: The Company records accumulated other comprehensive income from unrealized gains and losses on available-for-sale securities as a separate component of shareholders’ equity.  Foreign exchange adjustments are generally not material and the Company has no defined benefit pension plan.A reclassification adjustment to other comprehensive income is made for gains or losses during the period included in net income.

Fair Value Measurements: The Company provides disclosures related to recurring and non-recurring fair value measurements with separate disclosures for the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements, along with an explanation for the transfers. Additionally, separate disclosures are provided for purchases, sales, issuances and settlements on a gross basis for Level 3 fair value measurements as well as additional clarification for both the level of disaggregation reported for each class of assets or liabilities and disclosures of inputs and valuation techniques used to measure fair value for both recurring and non-recurring fair value measurements for assets and liabilities categorized as Level 2 or Level 3.

- 48 -

Note B - Investments
The following is a summary of available for sale securities at December 31:
										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
2014:
Fixed maturities:
U.S. government obligations	$	101,094	$	101,058	$	108	$	(72	)	$	36
Residential mortgage-backed securities		6,066		5,830		273		(37	)		236
Commercial mortgage-backed securities		36,440		36,210		630		(400	)		230
State and municipal obligations		113,777		113,133		784		(140	)		644
Corporate securities		166,966		170,822		2,005		(5,861	)		(3,856	)
Foreign government obligations		27,466		28,332		114		(980	)		(866	)
Total fixed maturities		451,809		455,385		3,914		(7,490	)		(3,576	)
Equity securities:
Financial institutions		25,343		10,100		15,303		(60	)		15,243
Industrial & miscellaneous		136,764		68,678		70,260		(2,174	)		68,086
Total equity securities		162,107		78,778		85,563		(2,234	)		83,329
Total	$	613,916	$	534,163	$	89,477	$	(9,724	)		79,753
							Applicable federal income taxes				(27,913	)
							Net unrealized gains - net of tax			$	51,840
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

- 49 -

Note B – Investments (continued)

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

	2014							2013
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		591	$	176,756	$	(6,083	)		451	$	123,145	$	(3,105	)
Greater than 12 months		140		27,667		(1,407	)		53		18,249		(1,040	)
Total fixed maturities		731		204,423		(7,490	)		504		141,394		(4,145	)
Equity securities:
12 months or less		33		13,538		(2,170	)		10		1,682		(204	)
Greater than 12 months		3		686		(64	)		2		1,980		(235	)
Total equity securities		36		14,224		(2,234	)		12		3,662		(439	)
Total		767	$	218,647	$	(9,724	)		516	$	145,056	$	(4,584	)

Unrealized losses in the Company’s fixed maturity portfolio are generally the result of interest rate or foreign currency fluctuations as well as the disruption of credit markets occasioned by financial market turmoil such as that associated with recent oil price declines.  The average unrealized loss for all fixed maturity securities in a loss position at December 31, 2014 is approximately 4% of original or adjusted cost.  The Company does not intend to sell any fixed maturity securities and it is not more likely than not that the Company will have to sell any fixed maturity security before recovery of its amortized cost basis.  For equity securities, the Company has evaluated the near-term prospects of the investments in relation to the severity and duration of the impairment and based on that evaluation the Company has the ability and intent to hold these investments for a period sufficient to allow for recovery of fair value.  Therefore, the Company does not believe the unrealized losses represent an other-than-temporary impairment as of December 31, 2014.

The fair value and the cost or amortized cost of fixed maturity investments at December 31, 2014, by contractual maturity, is shown below.  Actual maturities may 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	$	130,407	28.9	%	$	130,322	28.6	%
Excess of one year to five years		189,182	41.9			192,990	42.4
Excess of five years to ten years		47,209	10.4			48,176	10.6
Excess of ten years		9,377	2.1			8,744	1.9
Total maturities		376,175	83.3			380,232	83.5
Asset-backed securities		75,634	16.7			75,153	16.5
	$	451,809	100.0	%	$	455,385	100.0	%

- 50 -

Note B – Investments (continued)

Major categories of investment income for the years ended December 31 are summarized as follows:

		2014			2013			2012
Interest on fixed maturities		$	8,806		$	9,023		$	10,052
Dividends on equity securities			2,693			2,166			2,121
Money market funds, Short-term and other			37			49			43
			11,536			11,238			12,216
Investment expenses			(2,481	)		(2,468	)		(2,286	)
	Net investment income	$	9,055		$	8,770		$	9,930

Gains and losses on investments, including equity method earnings from limited partnerships, for the years ended December 31 are summarized below:

	2014			2013			2012
Fixed maturities:
Gross gains	$	6,480		$	7,235		$	3,860
Gross losses		(4,596	)		(4,371	)		(3,961	)
Net gains (losses)		1,884			2,864			(101	)
Equity securities:
Gross gains		7,467			15,374			3,191
Gross losses		(1,529	)		(2,718	)		(1,131	)
Net gains		5,938			12,656			2,060
Limited partnerships - net gain		7,108			7,995			7,052
Total net gains	$	14,930		$	23,515		$	9,011

Shareholders' equity includes approximately $28,596, net of deferred federal income taxes, of undistributed earnings from limited partnerships as of December 31, 2014.

Gain and loss activity for fixed maturity and equity security investments, as shown in the previous table, include adjustments for other-than-temporary impairment for the years ended December 31 summarized as follows:

	2014			2013			2012
Cumulative charges to income at beginning of year	$	6,770		$	7,773		$	8,178
Writedowns based on objective and subjective criteria		689			742			888
Recovery of prior writedowns upon sale or disposal		(291	)		(1,745	)		(1,293	)
Net pre-tax realized gain (loss)		(398	)		1,003			405
Cumulative charges to income at end of year	$	7,168		$	6,770		$	7,773
Addition (reduction) to earnings per share from net
after-tax OTI gain (loss)	$	(.02	)	$	.04		$	.02
Unrealized gain on investments previously
written down at end of the year - see note below	$	17,127		$	13,129		$	8,158

Note:  Recovery in market value of an investment which has previously been adjusted for other-than-temporary impairment is treated as an unrealized gain until the investment matures or is sold.

- 51 -

Note B – Investments (continued)

There is no primary or secondary market for the Company’s investments in limited partnerships and, in most cases, the Company is prohibited from disposing of its limited partnership interests for some period of time and generally must seek approval from the general partner for any such disposal.  Distributions of earnings from these partnerships are largely at the sole discretion of the general partners and distributions are generally not received by the Company for many years after the earnings have been reported.  The Company has commitments to contribute an additional $2,868 to various limited partnerships as of December 31, 2014.

The Company has invested a total of $23,000 in two limited partnerships, with an aggregate estimated value of $46,987 at December 31, 2014, that are managed by organizations in which four directors of the Company are executive officers, directors or owners.  The Company’s ownership interest in these limited partnerships ranges from 5% to 16%.  These limited partnerships added $7,088, $1,154 and $2,485, net of fees, to investment gains in 2014, 2013 and 2012, respectively.  During 2014, 2013 and 2012, the Company has recorded management fees of $697, $640 and $650, respectively, and performance-based fees of $0, $18 and $0, respectively, to these organizations for management of these limited partnerships.  The Company has been informed that the fee rates applied to its investments in these limited partnerships are the same as, or lower than, the fee rates charged to unaffiliated customers for similar investments.

The Company utilized the services of a broker-dealer firm of which two directors of the Company are employees or partial owners.  This broker-dealer serves as agent for purchases and sales of securities and manages an equity securities portfolio and fixed maturity portfolio with market values of approximately $3,334 and $19,822, respectively, at December 31, 2014.  The Company has been informed that commission and management rates charged by this broker-dealer to the Company are commensurate with rates charged to non-affiliated customers for similar investments.  Total commissions and net fees earned by the broker-dealer and affiliates on these transactions and for advice and consulting were approximately $212, $239 and $186 during 2014, 2013 and 2012, respectively.

The Company’s limited partnerships include one significant investment which invests in public and private equity markets in India.  This limited partnership investment’s value as of December 31, 2014 and 2013 was $29,868 and $22,692, respectively.  At December 31, 2014, the Company’s estimated ownership interest in this limited partnership investment was approximately 5%.  The Company's share of earnings (losses) from this limited partnership investment was $7,176, ($3,176) and $2,404 in 2014, 2013 and 2012, respectively.  The summarized financial information of the significant limited partnership investment as of and for the years ended December 31 is as follows:

	2014		2013			2012
Total assets	$	565,500	$	493,028		$	641,071
Total partners' capital		542,700		444,337			559,745
Net increase (decrease) in partners' capital resulting from operations		125,700		(64,550	)		60,734

The fair value of regulatory deposits with various insurance departments in the United States and Canada totaled $76,406 and $63,447 at December 31, 2014 and 2013, respectively.

Short-term investments at December 31, 2014 include $2,966 in time certificates of deposit issued by a Bermuda bank.

The Company’s fixed maturities are over 85% invested in investment grade fixed maturity investments.  The Company has a total of $15,430, representing five different investments, of fixed maturity investments which were originally issued with guarantees by two different third party insurance companies, with the largest exposure to a single investment being $5,150.  The average S&P credit rating of such investments, with consideration of the guarantee, is AA.  The average S&P underlying credit rating of such investments, without consideration of the guarantee, would remain AA.  The Company does not have any direct exposure to any guarantor.

Approximately $66,817 of fixed maturity investments (8.8% of total invested assets) consists of bonds rated as less than investment grade at year end.  These investments include a diversified portfolio of over 40 investments and have a $3,188 net unrealized loss position at December 31, 2014.

As of December 31, 2014, the Company had committed funds totaling $7,850 related to two 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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Note C - Loss and Loss Expense Reserves

Activity in the reserves for losses and loss expenses is summarized as follows.  All amounts are shown net of reinsurance, unless otherwise indicated.

	2014			2013			2012
Reserves at the beginning of the year	$	288,088		$	289,236		$	290,092
Provision for losses and loss expenses:
Claims occurring during the current year		169,950			156,264			147,963
Claims occurring during prior years		(10,354	)		(5,563	)		(9,875	)
Total incurred		159,596			150,701			138,088
Loss and loss expense payments:
Claims occurring during the current year		59,826			47,908			44,941
Claims occurring during prior years		92,275			103,941			94,003
Total paid		152,101			151,849			138,944
Reserves at the end of the year		295,583			288,088			289,236
Reinsurance recoverable on unpaid losses at the end of the year		210,519			186,382			166,218
Reserves, gross of reinsurance
recoverable, at the end of the year	$	506,102		$	474,470		$	455,454

The table above shows that a savings of $10,354 was developed during 2014 in the settlement of claims occurring on or before December 31, 2013 with comparative developments for the two previous calendar years.  The net savings for each year are composed of individual claim savings and deficiencies which, in the aggregate have resulted from the settlement of claims at amounts lower than previously reserved and from changes in estimates of losses incurred but not reported as part of the normal reserving process.

The major components of the developments shown above are as follows for the years ended December 31:
	2014			2013			2012
Property and casualty insurance	$	(5,423	)	$	(1,725	)	$	(7,111	)
Reinsurance		(4,931	)		(3,838	)		(2,764	)
Totals	$	(10,354	)	$	(5,563	)	$	(9,875	)

Favorable loss development is influenced by the Company’s long-standing policy of reserving for losses realistically and a willingness to settle claims based upon a seasoned evaluation of its exposures.  Loss reserves pertaining to the Company’s property reinsurance business are established partially by the ceding reinsurers although the Company routinely adjusts such reserves if management determines that additional reserves could be necessary.  Accordingly, there is potential for fluctuations in loss developments related to reinsurance assumed to be more pronounced than those experienced on directly produced business which is reserved entirely by Company personnel.  In addition, changes in the Company’s net retention under reinsurance treaties will impact developments as more or less business is retained.  These trends were considered in the establishment of the Company’s reserves at December 31, 2014 and 2013.

Loss reserves on certain permanent total disability workers’ compensation reserves have been discounted to present value at pre-tax rates not exceeding 3.5%.  At December 31, 2014 and 2013, loss reserves have been reduced by approximately $3,129 and $5,885, respectively.  Discounting is applied to these claims since the amount of periodic payments to be made during the lifetime of claimants is fixed and determinable.  Loss reserves have been reduced by

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Note C - Loss and Loss Expense Reserves (continued)

estimated salvage and subrogation recoverable of approximately $7,158 and $8,115 at December 31, 2014 and 2013, respectively.

Note D – Reinsurance

The insurance subsidiaries cede portions of their gross premiums written to certain other insurers under excess of loss and quota share treaties and by facultative placements.  Reinsurance treaties with other companies permit the recovery of a portion of related direct losses.  Management determines the amount of net exposure it is willing to accept generally on a product line basis.  Certain treaties covering fleet transportation risks include annual deductibles which must be exceeded before the Company can recover under the terms of the treaty.  The Company retains a higher percentage of the direct premium in consideration of these deductible provisions.  The Company remains liable to the extent the reinsuring companies are unable to meet their obligations under reinsurance contracts.

The Company also serves as an assuming reinsurer on treaties with direct writing insurance companies and, prior to January 1, 2014, under retrocessions from other reinsurers for catastrophic property coverages.  Accordingly, the occurrence of catastrophic events can have a significant impact on the Company's operations.  The Company also assumes reinsurance from direct writing insurance companies for casualty insurance coverages.  In addition, the insurance subsidiaries participate in certain mandatory residual market pools which require insurance companies to provide coverages on assigned risks.  The assigned risk pools allocate participation to all insurers based upon each insurer’s portion of premium writings on a state or national level.  Historically, the operation of these assigned risk pools have resulted in net losses allocated to the Company although such losses have not been material in relation to the Company’s operations.

The following table summarizes the impact of reinsurance ceded and assumed on the Company’s net premium written and earned for the most recent three years:

	Premiums Written									Premiums Earned
	2014			2013			2012			2014			2013			2012
Direct	$	343,200		$	314,784		$	284,200		$	342,656		$	313,842		$	287,982
Ceded on direct		(118,942	)		(112,967	)		(105,292	)		(117,973	)		(111,057	)		(101,396	)
Net direct		224,258			201,817			178,908			224,683			202,785			186,586
Assumed		39,188			54,692			57,086			38,219			52,783			53,191
Ceded on assumed		(1,275	)		(2,825	)		(2,316	)		(1,275	)		(2,825	)		(2,316	)
Net assumed		37,913			51,867			54,770			36,944			49,958			50,875
Net	$	262,171		$	253,684		$	233,678		$	261,627		$	252,743		$	237,461

Net losses and loss expenses incurred for 2014, 2013 and 2012 have been reduced by ceded reinsurance recoveries of approximately $105,891, $107,321 and $90,899, respectively.  Ceded reinsurance premiums and loss recoveries for the purchase of catastrophe reinsurance coverage on the Company’s net direct business were not material.

Net losses and loss expenses incurred for 2014, 2013 and 2012 include approximately $23,163, $20,014 and $16,486, respectively, net of retrocessional recoveries of $20,000 during 2012, relating to reinsurance assumed from non-affiliated insurance or reinsurance companies.

Components of reinsurance recoverable at December 31 are as follows:

	2014		2013
Case unpaid losses, net of valuation allowance	$	143,403	$	133,484
Incurred but not reported unpaid losses and loss expenses		66,325		52,157
Paid losses and loss expenses		6,910		4,126
Unearned premiums		3,583		5,801
	$	220,221	$	195,568

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Note E - Income Taxes

Deferred income taxes are calculated to account for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  Significant components of the Company's deferred tax assets and liabilities as of December 31 are as follows:

	2014			2013
Deferred tax liabilities:
Unrealized gain on fixed income and equity security investments	$	27,914		$	26,432
Deferred acquisition costs		1,341			1,829
Salvage and subrogation		2,373			2,638
Limited partnership investments		4,636			2,612
Other		1,229			866
Total deferred tax liabilities		37,493			34,377
Deferred tax assets:
Loss and loss expense reserves		10,973			11,071
Unearned premiums discount		2,201			2,162
Other-than-temporary investment declines		2,049			2,053
Deferred compensation		1,565			880
Deferred ceding commission		549			1,018
Other		183			342
Total deferred tax assets		17,520			17,526
Net deferred tax liabilities	$	(19,973	)	$	(16,851	)

A summary of the difference between federal income tax expense computed at the statutory rate and that reported in the consolidated financial statements is as follows:

	2014			2013			2012
Statutory federal income rate applied to pretax income	$	15,539		$	19,218		$	16,312
Tax effect of (deduction):
Tax-exempt investment income		(924	)		(811	)		(933	)
Net reduction of tax positions		(75	)		(116	)		(693	)
Other		141			31			1
Federal income tax expense	$	14,681		$	18,322		$	14,687

Federal income tax expense consists of the following:
	2014		2013		2012
Taxes on pre-tax income:
Current	$	13,041	$	17,383	$	10,819
Deferred		1,640		939		3,868
	$	14,681	$	18,322	$	14,687

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Note E – Income Taxes (continued)

The components of the provision for deferred federal income taxes are as follows:
		2014			2013			2012
Limited partnerships		$	2,025		$	1,058		$	3,013
Discounts of loss and loss expense reserves			113			313			(57	)
Unearned premium discount			(38	)		(65	)		265
Deferred compensation			(685	)		(146	)		112
Other-than-temporary investment declines			(19	)		680			169
Deferred acquisitions costs and ceding commission			(20	)		(271	)		(520	)
Other			264			(630	)		886
	Provision for deferred federal income tax	$	1,640		$	939		$	3,868

Cash flows related to federal income taxes paid, net of refunds received, for 2014, 2013 and 2012 were $11,619, $17,250 and $3,661, respectively.

The Company is required to establish a valuation allowance for any portion of the gross deferred tax asset that management believes will not be realized.  Management has determined that no such valuation allowance is necessary at December 31, 2014 or 2013.  As of December 31, 2014, the calendar years 2011 through 2014 remain subject to examination by the IRS.

The Company has no uncertain tax positions as of December 31, 2014 or 2013.  The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits in income tax expense and changes in such accruals would impact the Company’s effective tax rate.  Amounts accrued for the payment of interest at December 31, 2014, 2013 and 2012 were not material.

Note F - Shareholders' Equity
Changes in common stock outstanding and additional paid-in capital are as follows:
											Additional
			Class A					Class B			Paid-in
	Shares			Amount		Shares			Amount		Capital
Balance at January 1, 2012		2,623,109		$	112		12,225,348		$	522	$	48,751
Restricted stock grants		-			-		64,687			2		1,524
Balance at December 31, 2012		2,623,109			112		12,290,035			524		50,275
Restricted stock grants		-			-		14,156			1		319
Balance at December 31, 2013		2,623,109			112		12,304,191			525		50,594
Restricted stock grants		-			-		52,198			2		1,260
Balance at December 31, 2014		2,623,109		$	112		12,356,389		$	527	$	51,854

The Company's Class A and Class B common stock has a stated value of approximately $.04 per share.  The Company paid a total of $14,947, $14,943 and $14,886, or $1.00 per share, in dividends for the years 2014, 2013 and 2012, respectively.

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Note G - Other Operating Expenses
Details of other operating expenses for the years ended December 31:
		2014			2013			2012
Amortization of gross deferred policy acquisition costs		$	48,872		$	47,414		$	41,957
Other underwriting expenses			37,830			35,281			27,242
Expense allowances from reinsurers			(23,797	)		(20,822	)		(15,185	)
	Total underwriting expenses		62,905			61,873			54,014
Operating expenses of non-insurance companies			25,143			23,488			23,416
	Total other operating expenses	$	88,048		$	85,361		$	77,430

Note H - Employee Benefit Plans

The Company maintains a defined contribution 401(k) Employee Savings and Profit Sharing Plan (the “Plan”) which covers nearly all employees who have completed one year of service.  The Company's contributions to the Plan for 2014, 2013 and 2012 were $1,798, $1,798 and $1,539, respectively.

Note I - Stock Purchase and Option Plans

In accordance with the terms of the 1981 Stock Purchase Plan (1981 Plan), the Company is obligated to repurchase shares issued under the 1981 Plan, at a price equal to 90% of the book value of the shares at the end of the quarter immediately preceding the date of repurchase.  A limited number of shares have ever been repurchased under the 1981 Plan.  At December 31, 2014, there were 121,286 shares (Class A) and 339,546 shares (Class B) outstanding which remain eligible for repurchase by the Company.

The Company maintains one restricted stock unit plan which is described below.

Restricted Stock:

Each year, beginning in 2009, the Company has issued shares of class B restricted stock to the Company’s outside directors.  The shares serve as the annual retainer compensation for the outside directors for the periods shown below.  The shares are distributed on the vesting date and have a total value of $440 for each of the annual periods.  The table below provides detail of the stock issuances for 2014, 2013 and 2012:

Effective	Number of Shares	Vesting		Value
Date	Issued	Date	Period	Per Share
5/8/2012	20,119	5/8/2013	7/1/2012 - 6/30/2013	$21.87
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.

Director compensation cost associated with restricted stock grants of $440 was charged against income for the restricted stock units for 2014, 2013 and 2012.

Effective February 4, 2014, the Company issued 45,678 shares of class B restricted stock to certain of the Company’s executives.  The restricted shares will be paid solely in the Company’s class B stock.  The restricted shares represent a portion of the calendar year 2013 compensation to certain executives under the terms of the Company’s Executive Incentive Bonus Plan.  The restricted shares will vest ratably over a three year period from the date of grant and are accelerated for retirement eligible recipients in accordance with the non-substantive post-grant date vesting clause of ASC 715, Compensation-Retirement Benefits.  Restricted stock was valued based on the closing price of the stock on

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Note I - Stock Purchase and Option Plans (continued)

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 Compensation Committee.

Effective February 4, 2015, the Company issued 36,646 shares of class B restricted stock to certain of the Company’s executives.  The restricted shares will be paid solely in the Company’s class B stock.  The restricted shares represent a portion of the calendar year 2014 compensation to certain executives under the terms of the Company’s Executive Incentive Bonus Plan.  The restricted shares will vest ratably over a three year period from the date of grant and are accelerated for retirement eligible recipients in accordance with the non-substantive post-grant date vesting clause of ASC 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 $23.29 per share representing a total value of $853.  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 Compensation Committee.

Note J - Reportable Segments

The Company operates within two reportable business segments:  property and casualty insurance and reinsurance.  The property and casualty insurance segment provides multiple line insurance coverage primarily to fleet transportation companies and to independent contractors who contract with fleet transportation companies, as well as individual personal automobile coverage, professional liability coverages and business owners’ and commercial property policies.  The reinsurance segment accepts cessions from other insurance companies as well as retrocessions from selected reinsurance companies, providing property catastrophe and casualty reinsurance coverages.

The Company evaluates performance and allocates resources based on past or expected results from insurance underwriting operations before income taxes.  Underwriting gain or loss does not include net investment income or gains or losses on the Company's investment portfolio.  All investment-related revenues are managed at the corporate level.  Underwriting gain or loss for the property and casualty insurance segment includes revenue and expense from the Company's agency operations since the agency operations serve as a primary direct marketing facility for this 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.  The accounting policies of each reportable segment are the same as those described in the summary of significant accounting policies.

The following table provides certain profit and loss information for each reportable segment for the years ended

December 31:

		2014		2013		2012
Direct and assumed premium written:
Property and casualty insurance		$	343,200	$	314,784	$	284,200
Reinsurance			39,188		54,692		57,086
	Totals	$	382,388	$	369,476	$	341,286
Net premium earned:
Property and casualty insurance		$	224,683	$	202,785	$	186,586
Reinsurance			36,944		49,958		50,875
	Totals	$	261,627	$	252,743	$	237,461
Underwriting gain:
Property and casualty insurance		$	32,663	$	25,558	$	23,491
Reinsurance			2,147		12,278		20,567
	Totals	$	34,810	$	37,836	$	44,058

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Note J - Reportable Segments (continued)

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

		2014			2013			2012
Profit:
Underwriting gain		$	34,810		$	37,836		$	44,058
Net investment income			9,055			8,770			9,930
Net realized gains on investments			14,930			23,515			9,011
Corporate expenses			(14,397	)		(15,211	)		(16,393	)
	Income before federal income taxes	$	44,398		$	54,910		$	46,606

One customer of the property and casualty insurance segment, FedEx Ground Systems, Inc. and certain of its subsidiaries and related entities (“FedEx”) represents approximately $8,191, $15,615 and $19,052 of the Company’s consolidated direct and assumed premium written in 2014, 2013 and 2012, respectively.

An additional $208,580, $177,389 and $146,447 for 2014, 2013 and 2012, respectively, is placed with the Company by a non-affiliated broker on behalf of independent contractors of this same customerbut is not dependent upon the direct business with this customer.

Note K - Earnings Per Share

The following is a reconciliation of the denominators used in the calculation of basic and diluted earnings per share for the years ended December 31:

	2014		2013		2012
Average share outstanding for basic earnings per share		14,963,959		14,906,416		14,838,767
Dilutive effect of share equivalents		11,935		17,345		29,482
Average shares outstanding for diluted earnings per share		14,975,894		14,923,761		14,868,249

Note L - Concentrations of Credit Risk

The Company writes policies of excess insurance attaching above self-insured retentions ("SIR") and also writes policies that contain per-claim deductibles.  Those losses and claims that fall within the SIR limits are obligations of the insured; however, the Company writes surety bonds in favor of various regulatory agencies guaranteeing the insureds’ payment of claims within the SIR.  Further, specified portions of losses and claims incurred under large deductible policies, while obligations of the Company, are contractually reimbursable to the Company from the insureds.  The Company requires collateral from its insureds to serve as a source of reimbursement if the Company is obligated to pay claims within the SIR by reason of an insured’s default or if the insured fails to reimburse the Company for deductible amounts paid by the Company.

Acceptable collateral may be provided in the form of letters of credit on Company approved banks, Company approved marketable securities or cash.  At December 31, 2014, the Company held collateral in the aggregate amount of $234,312.

The amount of collateral required of an insured is determined by the financial condition of the insured, the type of obligations guaranteed by the Company, estimated reserves for incurred losses within the SIR or deductible that have been reported to the insured or the Company, estimated incurred but not reported losses, and estimates for losses that are expected to occur, within the SIR or deductible, prior to the next collateral adjustment date.  In general, the Company attempts to hold collateral equal to 100% of the ultimate losses that would be paid by or due the Company in the event of an insured’s default.  Periodic audits are conducted by the Company to evaluate its exposure and the collateral required.  If a deficiency in collateral is noted as the result of an audit, additional collateral is requested

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Note L - Concentrations of Credit Risk (continued)

immediately.  Because collateral amounts contain numerous estimates of the Company’s exposure, are adjusted only periodically and are sometimes reduced based on the superior financial condition of the insured, the amount of collateral held by the Company at a given point in time may not be sufficient to fully reimburse the Company for all of its guarantees or amounts due in the event of an insured’s default.  In that regard, the Company is not fully collateralized for the guarantees made for, or the deductible amounts that may be due from FedEx Ground and certain of its subsidiaries and related entities, and in the event of their default, such default may have a material adverse impact on the Company.  The Company estimates its uncollateralized exposure related to this customer to be as much as 42% of shareholders' equity at December 31, 2014.

In addition, the Company's balance sheet includes paid and estimated unpaid amounts recoverable from reinsurers under various agreements totaling $269,114 at December 31, 2014.  These recoverables are only partially collateralized.  The two largest amounts due from individual reinsurers net of collateral and offsets were $36,273 and $12,002 at December 31, 2014.

Investments in limited partnerships include an aggregate of $46,987 invested in two limited partnerships, New Vernon India Fund and New Vernon Global Opportunity Fund which are managed by organizations in which four directors of the Company are executive officers, directors and owners.

Note M – Acquisition and related Goodwill and Intangibles

On October 31, 2008, the Company purchased a commercial lines specialty insurance agency primarily focusing on the needs of the transportation industry including trucking independent contractors as well as fleet trucking companies for a cash purchase price of $3,500.  The acquisition is part of the Company’s property and casualty insurance segment.  As part of the purchase, the Company recorded goodwill of $3,152 and intangible assets related to customer relationships and employment agreements of $179 which are included in Other Assets in the consolidated balance sheets and have recorded amortization of intangible assets of $4, $17 and $28 during 2014, 2013, and 2012, respectively.  Accumulated amortization of intangible assets was $179 and $175 as of December 31, 2014 and 2013, respectively.

Note N – 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 and $10,000 as of December 31, 2014 and 2013, respectively.  At December 31, 2014, the effective interest rate was 1.26%.  The Company has $20,000 remaining unused under the line of credit at December 31, 2014.  The current outstanding borrowings were used for general corporate purchases.

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Note O – 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 carrying amounts reported in the consolidated balance sheets for cash, accounts receivables, reinsurance recoverable, notes receivable, accounts payable and accrued expenses, income taxes payable, short term borrowings and unearned income approximate fair value because of the short term nature of these items. The following tables summarize fair value measurements by level for assets measured at fair value on a recurring basis:

As of December 31, 2014:

Description	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. government obligations	$	101,094	$	-	$	101,094	$	-
Residential mortgage-backed securities		6,066		-		6,066		-
Commercial mortgage-backed securities		36,440		-		36,440		-
State and municipal obligations		113,777		-		113,777		-
Corporate securities		164,068		-		151,860		12,208
Options embedded in convertible securities		2,898		-		2,898		-
Foreign government obligations		27,466		-		27,466		-
Total fixed maturities		451,809		-		439,601		12,208
Equity securities:
Financial institutions		25,343		25,343		-		-
Industrial & miscellaneous		136,764		136,764		-		-
Total equity securities		162,107		162,107		-		-
Short term		2,966		2,966		-		-
Cash equivalents		59,309		-		59,309		-
Total	$	676,191	$	165,073	$	498,910	$	12,208

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		-
Total	$	634,271	$	264,108	$	370,163	$	-

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Note O – Fair Value (continued)

Level inputs, as defined by the FASB guidance, 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 Level 3 assets consist of a portfolio of corporate convertible bonds.  The corporate convertible bonds are valued using various unobservable inputs including extrapolated data, proprietary models and indicative quotes.  Transfers into Level 3 during 2014 relate to securities previously classified as Level 2.  There were transfers into Level 3 during 2013.  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 years ended December 31:

	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 into Level 3		12,208		(7,259	)
End of period balance	$	12,208	$	-

Quoted market prices are obtained whenever possible.  Where quoted market prices are not available, fair values are estimated using present value or other valuation techniques.  These techniques are significantly affected by our assumptions, including discount rates and estimates of future cash flows.  Potential taxes and other transaction costs have not been considered in estimating fair values.

Transfers between levels, if any, are recorded as of the beginning of the reporting period.  The U.S. government obligations were transferred to Level 2 during 2014 based on market data as well as other factors including region, price type and provider on each asset. There were no significant transfers of assets between Level 1 and Level 2 during 2013 and 2012.

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

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

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Note O – Fair Value (continued)

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 sheet at December 31, 2014 and 2013 is as follows:

	Carrying		Fair Value
2014:	Value		Level 1		Level 2		Level 3		Total
Assets:
Limited partnerships	$	81,230	$	-	$	-	$	81,230	$	81,230
Liabilities:
Short-term borrowings		20,000		-		20,000		-		20,000
2013:
Assets:
Limited partnerships	$	68,988	$	-	$	-	$	68,988	$	68,988
Liabilities:
Short-term borrowings		10,000		-		10,000		-		10,000

Note P - Quarterly Results of Operations (Unaudited)
Quarterly results of operations are as follows:
									Results by Quarter
			2014									2013
	1st		2nd		3rd		4th			1st		2nd		3rd		4th
Net premiums earned	$	63,842	$	62,905	$	65,947	$	68,933		$	61,098	$	61,775	$	64,448	$	65,422
Net investment income		2,294		2,090		2,073		2,599			2,410		1,985		2,192		2,183
Net gains on investments		4,070		8,089		658		2,113			14,347		719		1,430		7,019
Losses and loss expenses incurred		39,289		40,282		38,693		41,332			34,533		38,343		36,967		40,858
Net income		6,361		9,340		5,770		8,246			14,943		4,907		7,771		8,967
Net income per share - diluted	$	.42	$	.62	$	.39	$	.55		$	1.00	$	.33	$	.52	$	.60

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Note Q - Statutory

Net income of the insurance subsidiaries, all of which are wholly owned, as determined in accordance with statutory accounting practices, was $27,143, $30,886 and $29,262 for 2014, 2013 and 2012, respectively.  Consolidated statutory capital and surplus for these subsidiaries was $398,762 and $377,209 at December 31, 2014 and 2013, respectively, of which $64,400 may be transferred by dividend or loan to the parent company during calendar year 2015 with proper notification to, but without approval from, regulatory authorities.  An additional $238,096 of shareholders’ equity of such insurance subsidiaries could, under existing regulations, 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.

State regulatory authorities prescribe calculations of the minimum amount of statutory capital and surplus necessary for each insurance company to remain authorized.  These computations are referred to as Risk Based Capital (“RBC”) requirements and are based on a number of complex factors taking into consideration the quality and nature of assets, the historical adequacy of recorded liabilities and the specific nature of business conducted.    At December 31, 2014 the minimum statutory capital and surplus requirements of the insurance subsidiaries was $94,892.  Actual consolidated statutory capital and surplus at December 31, 2014 exceeded this requirement by $303,870, which equals to 320% of minimum RBC.

Note R - Leases

The Company leases certain computer and related equipment using noncancelable operating leases.  Lease expense for 2014, 2013 and 2012 was $330, $1,324 and $1,506, respectively.  At December 31, 2014, future lease payments for operating leases with initial or remaining noncancelable terms of one year or more consisted of the following:

2015		144
2016		138
2017		106
2018		-
2019		-
Thereafter		-
Total minimum payments required	$	388

Note S – Accumulated Other Comprehensive Income

A reconciliation of the components of accumulated other comprehensive income at December 31 is as follows:

	2014			2013
Investments:
Total unrealized gain before federal income taxes	$	79,753		$	75,521
Deferred tax liability		(27,913	)		(26,432	)
Net unrealized gains on investments		51,840			49,089
Foreign exchange adjustment:
Total unrealized gains		600			2,155
Deferred tax liability		(210	)		(754	)
Net unrealized gains on foreign exchange adjustment		390			1,401
Accumulated other comprehensive income	$	52,230		$	50,490

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Note S – Accumulated Other Comprehensive Income (continued)

Other comprehensive income reclassification adjustments for the years ended December 31 are as follows:

	2014		2013		2012
Investments:
Pre-tax holding gains on debt and equity
securities arising during period	$	12,055	$	36,477	$	15,612
Less: applicable federal income taxes		4,220		12,766		5,464
		7,835		23,711		10,148
Pre-tax gains on debt and equity securities
included in net income during period		7,823		15,520		1,959
Less: applicable federal income taxes		2,739		5,431		686
		5,084		10,089		1,273
Change in unrealized gains on investments	$	2,751	$	13,622	$	8,875

Reconciliation of accumulated other comprehensive income and retained earnings for the years ended December 31 are as follows:

	2014			2013			2012
Beginning accumulated other comprehensive income	$	50,490		$	37,443		$	28,351
Change in foreign exchange adjustment		(1,011	)		(575	)		217
Change in unrealized net gains on investments		2,751			13,622			8,875
Ending accumulated other comprehensive income	$	52,230		$	50,490		$	37,443
		2014			2013			2012
Beginning retained earnings	$	280,003		$	258,358		$	241,325
Net income		29,717			36,588			31,919
Dividends		(14,947	)		(14,943	)		(14,886	)
Ending retained earnings	$	294,773		$	280,003		$	258,358

Note T - Subsequent Events

We have evaluated subsequent events for recognition or disclosure in the consolidated financial statements filed on Form 10-K with the U.S. Securities and Exchange Commission and  no events have occurred during this period which require recognition or disclosure in this document.

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Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

No response to this item is required.

Item 9A. CONTROLS AND PROCEDURES

The Company carried out an evaluation as of December 31, 2014, 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) of the Securities Exchange Act of 1934, as amended, or 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 reasonably likely to materially affect, the internal control over financial reporting.

Management's Responsibility For Financial Statements

Management is responsible for the preparation of the Company’s consolidated financial statements and related information appearing in this report.  Management believes that the consolidated financial statements fairly reflect the form and substance of transactions and that the financial statements reasonably present the Company’s financial position and results of operations in conformity with U.S. generally accepted accounting principles.  Management has included in the Company’s financial statements amounts that are based upon estimates and judgments which it believes are reasonable under the circumstances.

The Board of Directors of the Company has an Audit Committee composed of four non-management Directors.  The committee meets periodically with financial management, the internal auditors and the independent registered public accounting firm to review accounting, control, auditing and financial reporting matters.

Management's Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).  Under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, the Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on our evaluation under this framework, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2014.  The effectiveness of the Company's internal control over financial reporting as of December 31, 2014 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included herein.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Baldwin & Lyons, Inc.

We have audited Baldwin & Lyons, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Baldwin & Lyons, Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based onthe COSO criteria.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Baldwin & Lyons, Inc. and subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2014 and our report dated March 6, 2015 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP                                  

Indianapolis, IN

March 6, 2015

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PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information with respect to the directors of the Registrant to be provided under this item is omitted from this Report because the Registrant will file with the Commission a definitive proxy statement pursuant to Regulation 14A involving the election of directors not later than 120 days after the close of its fiscal year.

The information required by Item 10 of this Report with respect to directors which will appear in the definitive proxy statement is incorporated by reference herein.

The executive officers of the Company are expected to serve until the next annual meeting of the Board of Directors or until their respective successors are elected and qualified.  Except as otherwise indicated, the occupation of each officer during the past five years has been in his current position with the Company.

The following summary sets forth certain information concerning the Company's executive officers as of December 31, 2014:

Name	Age		Title	Served in Such Capacity Since
Joseph J. DeVito		63	CEO, President and COO		2010 (1)
Gary W. Miller		74	Chairman		2010 (2)
G. Patrick Corydon		66	Executive Vice President and CFO		2008 (3)
William R. Birchfield		51	Executive Vice President		2014 (4)
Craig C. Morfas		55	Executive Vice President and Secretary		2012 (5)

(1)  Mr. DeVito was elected Chief Executive Officer in December, 2010.  He previously served as President and Chief Operating Officer from 2007 until 2010 and has served in various capacities since 1981.

(2)  Mr. Miller was elected Chairman in December, 2010.  He was previously Chairman and CEO from 1997 until 2010 and has served in various capacities since 1965.

(3)  Mr. Corydon was elected Executive Vice President in 2008 and has served as CFO since 1979.

(4)  Mr. Birchfield was elected Executive Vice President in April, 2014.  He previously served as Vice President of the Company from 2013 until 2014.

(5)  Mr. Morfas was elected Executive Vice President in February, 2012.  He served as Vice President and Secretary of the Company from 2008 until 2012 and has served in various capacities since1986.

Code of Conduct

The Board of Directors has adopted a Code of Business Conduct (the Code) as our code of ethics document which is applicable to all directors, officers at the vice president level and above as well as certain other employees with control over accounting data.  The Code incorporates our guidelines designed to deter wrongdoing and to promote honest and ethical conduct and compliance with applicable laws and regulations. The Code also incorporates our expectations of our employees that enable us to comply with applicable laws, rules and regulations and to provide accurate and timely disclosure in our filings with the SEC and other public communications.

The Code is available on the Corporation’s website at www.baldwinandlyons.com. The Board of Directors reviews the Code annually and approves any amendments necessary to update the Code.  Any amendments are properly posted.  Copies can also be obtained by contacting our investor relations at pcorydon@baldwinandlyons.com or by written request to Baldwin & Lyons, Inc., Attention: Investor Relations, 111 Congressional Blvd., Suite 500, Carmel, Indiana 46032.

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Item 11.  EXECUTIVE COMPENSATION *

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT *

Item 13.  CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE *

Item 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES *

*   The information to be provided under Items 11, 12, 13 and 14 is omitted from this Report because the Registrant will file with the Commission a definitive proxy statement pursuant to Regulation 14A involving the election of directors not later than 120 days after the close of its fiscal year.  The information required by these items of this Report which will appear in the definitive proxy statement is incorporated by reference herein.

PART IV

 Item 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1.  List of Financial Statements--The following consolidated financial statements of the registrant and its subsidiaries (including the Report of Independent Registered Public Accounting Firm) are submitted in Item 8 of this report.

Consolidated Balance Sheets - December 31, 2014 and 2013

Consolidated Statements of Operations - Years ended December 31, 2014, 2013 and 2012

Consolidated Statements of Comprehensive Income – Years ended December 31, 2014, 2013 and 2012

Consolidated Statements of Shareholders’ Equity - Years ended December 31, 2014, 2013 and 2012

Consolidated Statements of Cash Flows - Years ended December 31, 2014, 2013 and 2012

Notes to Consolidated Financial Statements

2. List of Financial Statement Schedules--The following consolidated financial statement schedules of Baldwin & Lyons, Inc. and subsidiaries are included in Item 15(d):

Pursuant to Article 7:

Schedule I    --  Summary of Investments--Other than Investments in Related Parties

Schedule II   --  Condensed Financial Information of the Registrant

Schedule III  --  Supplementary Insurance Information

Schedule IV  --  Reinsurance

Schedule VI  --  Supplemental Information Concerning Property/Casualty Insurance

                           Operations

All other schedules to the consolidated financial statements required by Article 7 and Article 5 of Regulation S-X are not required under the related instructions or are inapplicable and therefore have been omitted.

- 69 -

3.           Listing of Exhibits:

Number & Caption from Exhibit Table of Item 601 of Regulation S-K	Exhibit Number and Description
(3) (Articles of Incorporation & By Laws)	EXHIBIT 3(i) – Articles of Incorporation of Baldwin & Lyons, Inc., as amended (Incorporated as an exhibit by reference to Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 1986)
	EXHIBIT 3(ii)-- By-Laws of Baldwin & Lyons, Inc., as restated
(10) (Material Contracts)	EXHIBIT 10(a)-- 1981 Employee Stock Purchase Plan (Incorporated as an exhibit by reference to Exhibit A to the Company's definitive Proxy Statement for its Annual Meeting held May 5, 1981)
	EXHIBIT 10(f)-- Baldwin & Lyons, Inc. Executive Incentive Bonus Plan (Incorporated as an exhibit by reference to the Company's definitive Proxy Statement for its Annual Meeting held May 4, 2010)
	EXHIBIT 10(g)-- Baldwin & Lyons, Inc. Managing General Agency Agreement with Paladin Catastrophe Management LLC
(21) (Subsidiaries of the registrant)	EXHIBIT 21­­-- Subsidiaries of Baldwin & Lyons, Inc.

(23) (Consents of experts and counsel)	EXHIBIT 23-- Consent of Ernst & Young LLP
(24) (Powers of Attorney)	EXHIBIT 24-- Powers of Attorney for certain Officers and Directors
(31) (Certification)	EXHIBIT 31.1-- Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act
	EXHIBIT 31.2-- Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act

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Number & Caption from

       Exhibit Table of

  Item 601 of Regulation S-K Exhibit Number and Description

(32) (Certification) EXHIBIT 32--

Certification of CEO and CFO pursuant to Section 906 of the

Sarbanes-Oxley Act and 18 U.S.C. 1350

(b) A report on Form 8-K was filed by the Company in the fourth quarter of 2014 to announce its third quarter earnings press release.

(c) Exhibits.  The response to this portion of Item 15 is submitted as a separate section of this report.

(d) Financial Statement Schedules.  The response to this portion of Item 15 is submitted on pages 72 through 78 of this report.

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SCHEDULE I -- SUMMARY OF INVESTMENTS-
OTHER THAN INVESTMENTS IN RELATED PARTIES
Form 10-K - Year Ended December 31, 2014
Baldwin & Lyons, Inc. and Subsidiaries
(Dollars in thousands)
Column A	Column B		Column C		Column D
					Amount At
					Which Shown
			Fair		In The Balance
Type of Investment	Cost		Value		Sheet (A)
Fixed Maturities:
Bonds:
U.S. government obligations		101,058		101,094		101,094
Mortgage-backed securities		42,040		42,506		42,506
State and municipal obligations		113,133		113,777		113,777
Foreign government obligations		28,332		27,466		27,466
Corporate securities		170,822		166,966		166,966
Total fixed maturities		455,385		451,809		451,809
Equity Securities:
Common Stocks:
Industrial, miscellaneous and all other		78,778		162,107		162,107
Total equity securities		78,778		162,107		162,107
Limited partnerships		81,230		81,230		81,230
Short-term:
Certificates of deposit		2,966		2,966		2,966
Total short-term and other		2,966		2,966		2,966
Total investments	$	618,359	$	698,112	$	698,112
(A)  Investments presented above do not include $59,309 of money market funds classified with cash and
cash equivalents in the balance sheet.

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SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Form 10-K
Baldwin & Lyons, Inc.
(Dollars in thousands)
Condensed Balance Sheets
	December 31
	2014		2013
Assets
Investment in subsidiaries	$	415,304	$	398,008
Due from affiliates		2,762		2,465
Investments other than subsidiaries:
Fixed maturities		11,924		11,093
Limited partnerships		233		248
		12,157		11,341
Cash and cash equivalents		16,615		9,848
Accounts receivable		5,157		7,075
Other assets		17,905		13,453
Total assets	$	469,900	$	442,190
Liabilities and shareholders' equity
Liabilities:
Premiums payable	$	27,850	$	30,004
Deposits from insureds		18,303		16,307
Notes payable to bank		20,000		10,000
Other liabilities		4,251		4,155
		70,404		60,466
Shareholders' equity:
Common stock:
Class A		112		112
Class B		527		525
Additional paid-in capital		51,854		50,594
Unrealized net gains on investments		51,840		49,089
Foreign exchange adjustment		390		1,401
Retained earnings		294,773		280,003
		399,496		381,724
Total liabilities and shareholders' equity	$	469,900	$	442,190

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SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Form 10-K
Baldwin & Lyons, Inc.
(Dollars in thousands)
Condensed Statements of Operations
	Year Ended December 31
	2014			2013			2012
Revenue:
Commissions and service fees	$	22,153		$	21,597		$	20,753
Dividends from subsidiaries		15,000			15,000			14,000
Net investment income		102			54			48
Net realized losses on investments		(27	)		(11	)		(49	)
Other		126			41			24
		37,354			36,681			34,776
Expenses:
Salary and related items		15,543			15,965			15,410
Other		7,978			6,633			7,098
		23,521			22,598			22,508
Income before federal income taxes
and equity in undistributed
income of subsidiaries		13,833			14,083			12,268
Federal income tax benefit		(294	)		(348	)		(629	)
		14,127			14,431			12,897
Equity in undistributed income
of subsidiaries		15,590			22,157			19,022
Net income	$	29,717		$	36,588		$	31,919

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SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Form 10-K
Baldwin & Lyons, Inc.
(Dollars in thousands)
Condensed Statements of Cash Flows
	Year Ended December 31
	2014			2013			2012
Net cash provided by operating activities	$	19,719		$	15,125		$	20,735
Investing activities:
Purchases of long-term investments		(6,398	)		(10,322	)		(8,944	)
Sales or maturities of long-term investments		5,253			9,982			8,902
Decrease in notes receivable from employees		-			-			1,252
Distributions from limited partnerships		13			-			-
Net purchases of property and equipment		(6,873	)		(1,775	)		(834	)
Other		-			(362	)		228
Net cash provided by (used in) investing activities		(8,005	)		(2,477	)		604
Financing activities:
Dividends paid to shareholders		(14,947	)		(14,943	)		(14,886	)
Drawings on line of credit		10,000			-			-
Net cash used in financing activities		(4,947	)		(14,943	)		(14,886	)
Increase (decrease) in cash and cash equivalents		6,767			(2,295	)		6,453
Cash and cash equivalents at beginning of year		9,848			12,143			5,690
Cash and cash equivalents at end of year	$	16,615		$	9,848		$	12,143

Note to Condensed Financial Statements--Basis of Presentation

The Company's investment in subsidiaries is stated at cost plus equity in the undistributed earnings of subsidiaries since the date of acquisition.  The Company's share of net income of its subsidiaries is included in income using the equity method.  These financial statements should be read in conjunction with the Company's consolidated financial statements.

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SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
Form 10-K
Baldwin & Lyons, Inc. and Subsidiaries
(Dollars in thousands)
Column A	Column B		Column C		Column D		Column E		Column F		Column G		Column H		Column I		Column J		Column K
	As of December 31								Year Ended December 31
			Reserves
			for Unpaid				Other						Benefits,		Amortization
	Deferred		Claims				Policy						Claims,		of Deferred
	Policy		and Claim				Claims and		Net		Net		Losses and		Policy		Other		Net
	Acquisition		Acquisition		Unearned		Benefits		Premium		Investment		Settlement		Acquisition		Operating		Premiums
Segment	Costs		Expenses		Premiums		Payable		Earned		Income		Expenses		Costs		Expenses		Written
											(A) (C)		(A)				(A) (B) (C)
Property/Casualty
Insurance
2014	$	2,263	$	449,133	$	23,659		---	$	224,683	$	9,055	$	139,308	$	48,872	$	14,033	$	224,258
2013		2,319		408,469		26,303		---		202,785		8,770		133,005		47,414		14,459		201,817
2012		3,091		373,667		28,792		---		186,586		9,930		122,924		41,957		12,057		178,908
Reinsurance
2014		---	$	56,969	$	11,360		---	$	36,944	$	9,055	$	20,288		---	$	14,033	$	37,913
2013		---		66,001		10,390		---		49,958		8,770		17,696		---		14,459		51,867
2012		---		81,787		8,481		---		50,875		9,930		15,164		---		12,057		54,770

(A)   Allocations of certain expenses have been made to investment income, settlement expenses and other operating expenses and are based on a number of assumptions and estimates.  Results among these categories would change if different methods were applied.

(B)   Commission allowances relating to reinsurance ceded are offset against other operating expenses.

(C)   Amounts are not broken down into separate segments; entire consilidated amount included in each segment.

- 76 -

SCHEDULE IV -- REINSURANCE
Form 10-K
Baldwin & Lyons, Inc. and Subsidiaries
(Dollars in thousands)
Column A	Column B		Column C		Column D		Column E		Column F
									% of
			Ceded		Assumed				Amount
	Direct		to Other		from Other		Net		Assumed to
	Premiums		Companies		Companies		Amount		Net
Premiums Earned -
Property/casualty insurance:
Years Ended December 31:
2014	$	342,656	$	119,248	$	38,219	$	261,627		14.1
2013		313,842		113,882		52,783		252,743		19.8
2012		287,982		103,712		53,191		237,461		21.4

Note:  Included in Ceded to Other Companies is $1,275, $2,825 and $2,316 for 2014, 2013 and 2012, respectively, relating to retrocessions associated with premiums assumed from other companies.  Amount Assumed to Net percentage above considers the impact of this retrocession.

- 77 -

SCHEDULE VI--SUPPLEMENTAL INFORMATION
CONCERNING PROPERTY/CASUALTY INSURANCE OPERATIONS
Form 10-K
Baldwin & Lyons, Inc. and Subsidiaries
(Dollars in thousands)
Column A	Column B		Column C		Column D		Column E		Column F		Column G		Column H					Column I		Column J		Column K
	As of December 31								Year Ended December 31
			Reserves										Claims and Claim					Amortiza-
			for Unpaid		Discount,								Adjustment Expenses					tion of
	Deferred		Claims		if any								Incurred Related to					Deferred		Paid Claims
AFFILIATION	Policy		and Claim		Deducted						Net			(1)		(2)		Policy		and Claim		Net
WITH	Acquisi-		Adjustment		in		Unearned		Earned		Investment		Current		Prior			Acquisition		Adjustment		Premiums
REGISTRANT	tion Costs		Expenses		Column C		Premiums		Premiums		Income		Year		Years			Costs		Expenses		Written
Consolidated Property/Casualty Subsidiaries:					(A)
2014	$	2,263	$	506,102	$	3,129	$	35,019	$	261,627	$	9,055	$	169,950	$	(10,354	)	$	48,872	$	152,101	$	262,171
2013		2,319		474,470		5,885		36,693		252,743		8,770		156,264		(5,563	)		47,414		151,849		253,684
2012		3,091		455,454		6,118		37,273		237,461		9,930		147,963		(9,875	)		41,957		138,945		233,678

(A) Loss reserves on certain reinsurance assumed and permanent total disability worker's compensation claims have been discounted to present value using pretax interest rates not exceeding 3.5%.

- 78 -

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) 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.

March 6, 2015	By  /s/ Joseph J. DeVito
		Joseph J. DeVito, Director, Chief Executive Officer and President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

March 6, 2015	By  /s/ Gary W. Miller
		Gary W. Miller, Director and Chairman

March 6, 2015	By  /s/ G. Patrick Corydon
		G. Patrick Corydon, Executive Vice President and CFO (Principal Financial and Accounting Officer)

March 6, 2015	By  /s/ Joseph J. DeVito
		Joseph J. DeVito, Director, Chief Executive Officer and President

March 6, 2015	By  /s/ Stuart D. Bilton (*)
		Stuart D. Bilton, Director

March 6, 2015	By  /s/ Otto N. Frenzel IV (*)
		Otto N. Frenzel IV, Director

March 6, 2015	By  /s/ John M. O'Mara (*)
		John M. O'Mara, Director

- 79 -

SIGNATURES (CONTINUED)

March 6, 2015	By  /s/ Thomas H. Patrick (*)
		Thomas H. Patrick, Director

March 6, 2015	By  /s/ John Pigott (*)
		John Pigott, Director

March 6, 2015	By  /s/ Kenneth D. Sacks (*)
		Kenneth D. Sacks, Director

March 6, 2015	By  /s/ Nathan Shapiro (*)
		Nathan Shapiro, Director

March 6, 2015	By  /s/ Norton Shapiro (*)
		Norton Shapiro, Director

March 6, 2015	By  /s/ Robert Shapiro (*)
		Robert Shapiro, Director

March 6, 2015	By  /s/ Steven A. Shapiro (*)
		Steven A. Shapiro, Director

March 6, 2015	By  /s/ John D. Weil (*)
		John D. Weil, Director

March 6, 2015	By  /s/ Arshad Zakaria (*)
		Arshad Zakaria, Director

(*) By Craig C. Morfas, Attorney-in-Fact

- 80 -

ANNUAL REPORT ON FORM 10-K

ITEM 15(c)--CERTAIN EXHIBITS

YEAR ENDED DECEMBER 31, 2014

BALDWIN & LYONS, INC.

CARMEL, INDIANA

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BALDWIN & LYONS, INC.

Form 10-K for the Fiscal Year

Ended December 31, 2014

INDEX TO EXHIBITS

Exhibit No.	Begins on sequential page number of Form 10-K
EXHIBIT 3(i)-- Articles of Incorporation of Baldwin & Lyons, Inc. as amended (Incorporated as an exhibit by reference to Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 1986)	N/A
EXHIBIT 3(ii)-- By-Laws of Baldwin & Lyons, Inc., as restated	93 - 103
EXHIBIT 10(a)-- 1981 Employees Stock Purchase Plan (Incorporated as an exhibit by  reference to Exhibit A to the Company's definitive Proxy Statement for its Annual Meeting held May 5, 1981)	N/A
EXHIBIT 10(f)-- Baldwin & Lyons, Inc. Executive Incentive Bonus Plan (Incorporated as an exhibit by reference to the Company's definitive Proxy Statement for its Annual Meeting held May 4, 2010)	N/A
EXHIBIT 10(g)-- Baldwin & Lyons, Inc. Managing General Agency Agreement with Paladin Catastrophe Management LLC	N/A
EXHIBIT 21-- Subsidiaries of Baldwin & Lyons, Inc.	83
EXHIBIT 23-- Consent of Ernst & Young LLP	84

EXHIBIT 24-- Powers of Attorney for certain Officers and Directors	85 - 87
EXHIBIT 31.1-- Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	88 - 89
EXHIBIT 31.2-- Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	90 - 91
EXHIBIT 32.1-- Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	92

- 82 -

EX-21

EXHIBIT 21

SUBSIDIARIES OF BALDWIN & LYONS, INC.

NAME	STATE OR JURISDICTION OF ORGANIZATION OR INCORPORATION
Protective Insurance Company	Indiana
Sagamore Insurance Company (1)	Indiana
Protective Specialty Insurance Company (1)	Indiana
B&L Insurance, Ltd.	Bermuda
B&L Brokerage Services, Inc.	Indiana
B&L Management	Indiana

(1)   Wholly-owned subsidiary of Protective Insurance Company

- 83 -

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 2-72576) pertaining to the 1981 Stock Purchase Plan of our report dated March 6, 2015, with respect to the consolidated financial statements and schedules of Baldwin & Lyons, Inc. and subsidiaries, and the effectiveness of internal control over financial reporting of Baldwin & Lyons, Inc. and subsidiaries included in the Annual Report (Form 10-K) for the year ended December 31, 2014.

/s/ ERNST & YOUNG LLP                                          

Indianapolis, Indiana

March 6, 2015

- 84 -

EX-24

EXHIBIT 24

POWERS OF ATTORNEY

(Pages 86 and 87 omitted)

- 85 -

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 annual report on Form 10-K of Baldwin & Lyons, Inc.;

2. Based on my knowledge, this annual 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 annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual 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 annual 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 U.S. 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 annual report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter 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.

- 88 -

Date: March 6, 2015

/s/ Joseph J. DeVito         

Joseph J. DeVito

Chief Executive Officer and President

- 89 -

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 annual report on Form 10-K of Baldwin & Lyons, Inc.;

2. Based on my knowledge, this annual 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 annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual 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 annual 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 U.S. 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 annual report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter 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.

- 90 -

Date: March 6, 2015

/s/ G. Patrick Corydon         

G. Patrick Corydon

Executive Vice President and Chief Financial Officer

- 91 -

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 Annual Report of Baldwin & Lyons, Inc. (the "Company") on Form 10-K for the annual period ending December 31, 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:

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

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

/s/ Joseph J. DeVito         

Joseph J. DeVito

Chief Executive Officer and President

March 6, 2015

/s/ G. Patrick Corydon         

G. Patrick Corydon

Executive Vice President and Chief Financial Officer

March 6, 2015

- 92 -

EX-3

CODE OF BY-LAWS

OF

BALDWIN & LYONS, INC.

Adopted:  November 11, 2014

ARTICLE 1                      

Identification

Section 1.1.         Name.  The name of the Corporation is Baldwin & Lyons, Inc. (hereinafter referred to as the “Corporation”).

ARTICLE 2                      

Capital Stock

Section 2.1.         Consideration for Shares.  The Board of Directors of the Corporation may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the Corporation, including cash, promissory notes, services performed, contracts for services to be performed, or other securities of the Corporation.  If the Corporation authorizes the issuance of shares for promissory notes or for promises to render services in the future, the Corporation shall report in writing to the shareholders the number of shares authorized to be so issued with or before the notice of the next shareholders’ meeting, unless the Corporation is subject to the Securities Exchange Act of 1934, as amended, and complies with the proxy disclosure provisions of such act.

Section 2.2.         Certificates for Shares.  The shares of the Corporation shall be represented in the form of stock certificates unless the Board of Directors shall by resolution provide that some or all of any class or series of stock shall be comprised of uncertificated shares.  Any such resolution shall not apply to shares represented by a stock certificate unless and until the stock certificate is surrendered to the Corporation.  Notwithstanding the adoption of any resolution providing for uncertificated shares, all stock certificates of the Corporation shall be signed by the Chief Executive Officer, President, Chief Operating Officer or an Executive Vice President and attested by the Secretary or an Assistant Secretary, certifying the number of shares owned by such shareholder and such other information as may be required by law.  The form of the stock certificate shall be prescribed by resolution of the Board of Directors.

Section 2.3.         Record Holders.  The Corporation has two classes of common shares. Class A (voting) and Class B (non-voting) shares, which shares are identical except for voting rights.  The Corporation shall be entitled to treat the person in whose name any share of stock of the Corporation, or any warrant, right or option to acquire stock of the Corporation, is registered in the records of the Corporation as the owner thereof for all purposes, including, but not limited to, receiving dividends, and (as to Class A Stock only) vote as such owner, and shall not be bound to recognize any equitable or other claim to, or interest in, such share, warrant, right or option on the part of any other person, whether or not the Corporation shall have notice thereof, except as may be expressly provided otherwise by law, the Articles of Incorporation, or these By-Laws.  In no event shall any transferee of shares of the Corporation become a shareholder of the Corporation until express notice of the transfer shall have been received by the Corporation.

- 93 -

Section 2.4.         Transfer of Shares.  Except as otherwise provided by law, transfers of shares of the capital stock of the Corporation shall be made only on the books of the Corporation by the record owner thereof in person, or by such owner’s legal guardian or personal representative, or by such owner’s attorney-in-fact thereunto authorized by power of attorney duly executed and filed with the Secretary of the Corporation or the Corporation’s transfer agent, upon payment of any and all taxes thereon and surrender to the Secretary of the Corporation of the certificate or certificates for such shares, properly endorsed by the holder thereof or accompanied by the proper evidence of succession, assignment or authority to transfer satisfactory to the Corporation.  No restriction on the transfer or registration of transfer of shares of stock of the Corporation shall be enforceable against a holder or transferee of such shares who has no knowledge of such restriction, unless such restriction (i) is permitted by the Act and all other applicable laws, and (ii) is noted conspicuously on the front or back of the certificates for such shares, or is contained in the information statement required by the Act with respect to any shares issued without certificates.

Section 2.5.         Lost, Destroyed and Stolen Certificates.  The holder of any shares shall immediately notify the Corporation if a certificate therefor shall be lost, stolen, destroyed, or mutilated beyond recognition, and the Corporation may issue a new certificate in the place of any certificate theretofore issued by it which is alleged to have been lost, stolen, destroyed or mutilated beyond recognition; provided, however, that the Chief Financial Officer or Secretary may, in his/her discretion, require the owner of the certificate which is alleged to have been lost, stolen, destroyed or mutilated beyond recognition, or such owner’s legal representative, to (i) furnish an affidavit as to such loss, theft or destruction, (ii) give the Corporation a bond with such surety or sureties, and in such sum, as it may direct, to indemnify the Corporation and its Directors and officers against any claim that may be made against it or any of them on account of the issuance of such new certificate in place of the allegedly lost, stolen, destroyed or mutilated certificate, and/or (iii) satisfy other reasonable requirements imposed by the Board of Directors.  The Chief Financial Officer or Secretary may, however, if he/she so chooses, refuse to issue any such new certificate except pursuant to the order of a court having jurisdiction in such matter.

ARTICLE 3                      

Meetings of Shareholders

Section 3.1.         Annual Meeting.  The annual meeting of the Shareholders for the election of Directors, and for the trans­action of such other business as may properly come before the meeting shall be held on the first Tuesday in May of each year, or on such other date twelve (12) business days prior to or following this date as may be designated by the Board of Directors.  Failure to hold the annual meeting at the designated time shall not affect the validity of any corporate action.

Section 3.2.         Special Meetings.  Special meetings of the shareholders may be called by the Chief Executive Officer, Executive Chairman, the Board of Directors, or by the holders of at least twenty-five percent (25%) of all votes entitled to be cast on any issue proposed to be considered at the proposed special meeting upon delivery to the Corporation's Secretary of one or more written demands, signed and dated, describing the purpose or purposes for which it is to be held.

- 94 -

Section 3.3.         Place of Meetings.  As provided in the Articles of Incorporation, meetings of shareholders of the Corporation shall be held at such place, within or without the State of Indiana, as may be specified in the respective calls, notice of the meeting, or waiver of notice thereof.

Section 3.4.         Notice of Meetings.  Written or electronic notice of each shareholders' meeting stating the date, time, and place and, for a special meeting, the purpose(s) for which the meeting is called, shall be given by the Corporation not less than ten (10) (unless a greater period of notice is required by law in a particular case) nor more than sixty (60) days prior to the date of the meeting, to each shareholder of record, to the shareholder's address as it appears on the current record of shareholders of the Corporation.

Section 3.5.         Addresses of Shareholders.  The address of any shareholder appearing upon the records of the Corporation shall be deemed to be the same address as the latest address of such shareholder appearing on the records maintained by the transfer agent for the class of stock held by such shareholder.

Section 3.6.         Waiver of Notice.  Notice of any meeting may be waived in writing by any shareholder if the waiver sets forth in reasonable detail the time and place of the meeting and the purposes thereof.  Attendance at any meeting, in person or by proxy, if the proxy sets forth in reasonable detail the purposes of such meeting, shall constitute a waiver of notice of such meeting.

Section 3.7.         Voting at Meetings.

(a)Voting Rights.  Except as may be otherwise provided in the Articles of Incorporation, every shareholder of Class A shares shall have the right at all meetings of the shareholders to one vote for each share standing in his name on the books of the Corporation on the record date for such meetings.  Class B shares shall have no voting rights except as required by the Act.

(b)Quorum and Action.  The persons owning a majority of the stock of this Corporation entitled to vote at such meeting shall constitute a quorum at any meeting or shareholders, and be capable of transacting any business thereof, except when otherwise especially provided by law or by the Articles of Incorporation of this Corporation; but if, at any meeting of the shareholders, there be less than a quorum present, a majority in interest of the shareholders present in person or by proxy may adjourn from time to time without notice other than by announcement at the meeting until the holders of the amount of stock requisite to constitute a quorum shall attend.  At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.

- 95 -

(c)Proxies.  A shareholder entitled to vote at any meeting of shareholders may vote either in person or by proxy, executed in writing by the shareholder of or a duly authorized attorney-in-fact of such shareholder.  (For purposes of this section, a proxy granted by any means acceptable to the Corporation, including, but not limited to, electronic means, shall be deemed “executed in writing by the shareholder”.)  No proxy shall be voted at any meeting of shareholders unless the same shall be filed with the Secretary of the meeting at the commencement thereof.  The general proxy of a fiduciary shall be given the same effect as the general proxy of any other shareholder.  No proxies shall be valid after eleven (11) months from the date or execution unless a longer term is expressly provided therein.

No share shall be voted at any meeting:

(a)   which shall have been transferred on the books of the Corporation within ten (10) days next preceding the date of the meeting; or

(b)   which belongs to the Corporation.

Section 3.8.         Voting List.  The Secretary shall make, at least five (5) days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting, arranged in alphabetical order, with the address of each and the number of shares held by each, which list, for the period of five (5) days prior to such meeting, shall be kept on file at the principal office of the Corporation and shall be subject to inspection by any shareholder at any time during usual business hours.  Such a list shall also be produced and kept open at the time and place of the meeting and shall be subject to inspection by any shareholder during the whole time of the meeting.

Section 3.9.         Conduct of Meetings.  Shareholder’s meetings, including the order of business, shall be conducted in accordance with Roberts’ Rules of Order, Revised, except insofar as the Articles of Incorporation, this Code of By-Laws, or any rule adopted by the Board of Directors of shareholders may otherwise provide.  The shareholders may, by affirmative vote of a majority of the shareholders in attendance at any given meeting, waive the requirement of this section.  Such waiver shall not preclude any shareholder from invoking the requirements of this section at any subsequent meeting.

ARTICLE 4                      

The Board of Directors

Section 4.1.         Duties and Qualifications. The business and affairs of the Corporation shall be managed by a Board of Directors, none of whom need be shareholders of the Corporation.

Section 4.2.         Number and Terms of Office.  There shall be as many as fifteen (15) but no less than nine (9) Directors of the Corporation, who shall be elected at each annual meeting of the shareholders, to serve for a term of one (1) year and until their successors shall be chosen and qualified, or until removal, resignation or death.  If the annual meeting of the shareholders is not held at the time designated in these By-Laws, such failure shall not cause any defect in the existence of the Corporation, and the Directors then in office shall hold over until their successors shall be chosen and qualified.

- 96 -

Section 4.3.         Management and Committees.

(a)All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation managed under the direction of, its Board of Directors, subject to any limitations set forth in the Articles of Incorporation.

(b) The Board of Directors may appoint one or more committees from among its members as it determines to be necessary.  Each committee may have one (1) or more members, who shall serve at the pleasure of the Board of Directors.  The creation of a committee and the appointment of members to it must be approved by the greater of a majority of all of the Directors in office when the action is taken, or the number of Directors required by the Articles of Incorporation or these By-Laws to take action under the Act.  Committees shall have such authority and duties as are specified in the charter establishing such committee as specifically adopted by the Board of Directors.

(c)Except to the extent inconsistent with the foregoing provisions of this Section or with the resolutions of the Board of Directors creating a committee, the provisions of these By-Laws which govern meetings, action without meetings, notice and waiver of notice, and quorum and voting requirements of the Board of Directors apply to each committee and its members, as if the committee constituted the full Board of Directors.

Section 4.4.         Annual and Regular Meetings.  Unless otherwise agreed upon, the Board of Directors shall meet each year, immediately following the annual meeting of the shareholders, at the place where such meeting of shareholders was held, for consideration of any other business which may be brought before the meeting.  No notice shall be necessary for the holding of this annual meeting.

Section 4.5.         Special Meetings.  Other meetings of the Board of Directors may be held regularly pursuant to a resolution of the Board to such effect or may be held upon the call of the Chief Executive Officer, Executive Chairman of the Board of Directors, or of any two (2) members of the Board and upon twenty-four (24) hours notice specifying the time, place and general purposes of the meeting, given to each Director, either personally or by mail, facsimile or telephone.  No notice shall be necessary for any regular meeting and notice of any other meeting may be waived in writing.  Attendance at any such meeting shall constitute waiver of notice of such meeting.  Pursuant to Indiana law, the Board of Directors is authorized to conduct meetings by telephone or teleconference at which all Directors participating may simultaneously hear each other during the meeting.  A Director participating in a meeting by this means is deemed to be present in person at the meeting.

Section 4.6.         Action Without a Meeting.  Any action which may be taken at any meeting of the Board, may be taken without a meeting, if prior to such action a written consent to such action is signed by all members of the Board and such consent is filed with the minutes of proceedings of the Board.

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Section 4.7.         Quorum and Action.  One-third (1/3rd) of the whole Board of Directors (but in no case less than two (2) Directors) shall be necessary to constitute a quorum for the transaction of any business, except the filing of vacancies and the act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater number is required by law, the Articles of Incorporation, or this Code of By-Laws.

Section 4.8.         Vacancies. Any vacancy in the Board of Directors caused by death, resignation, incapacity or increase in the number of Directors may be filled by a majority vote of all the remaining members of the Board of Directors.  Shareholders shall be notified of any increase in the number of Directors and the name, address, principal occupation and other pertinent information about any Directors elected by the Board to fill any vacancy in the next mailing sent to the shareholders following any such increase or election.  Vacancies on the Board of Directors occasioned by removal of a Director shall be filled by a vote of the shareholders entitled to vote thereon at an annual or special meeting thereof.  Any Director so elected by the Board of Directors or by the shareholders shall hold office until the next annual or special meeting of shareholders and until his successor shall be elected and qualified.

Section 4.9.         Resignation and Removal.  A Director may resign at any time by delivering written notice to the Board of Directors, the Executive Chairman, Chief Executive Officer, or Secretary of the Corporation, which resignation shall be effective when such notice is delivered, unless such notice specifies a later effective date.  A Director may be removed, with or without cause, by the shareholders of the Corporation as provided in the Articles of Incorporation only at a meeting of the shareholders called for the purpose of removing the Director, the notice of which shall state that the purpose or one of the purposes of the meeting shall be to remove the Director.

Section 4.10.       Compensation of Directors.  The Board of Directors is empowered and authorized to fix and determine the compensation of the Directors.  Except as determined by the Board of Directors, members of the Board of Directors shall receive no compensation for acting in such capacity.

Indemnification. The Corporation shall, to the fullest extent permitted by Sections 1 through 13 of Indiana Code Ch. 23-1-37 (i) indemnify any person who is or was a Director, Officer or Employee of the Corporation (and the heirs and legal representatives thereof) against expenses (including attorneys’ fees), judgments, fines, and penalties and amounts paid in settlement resulting from any action, suit or proceeding threatened or brought against such person by reason of such person’s serving in such position or serving another enterprise in any capacity at the request of the Corporation, and (ii) pay for or reimburse the reasonable expenses incurred by such person in advance of the final disposition of the action, suit or proceeding.

ARTICLE 5

Officers of the Corporation

Section 5.1.         Election, Qualification and Term of Office.  The offices of the Corporation shall consist of a Chief Executive Officer (also “CEO” herein), a Chief Financial Officer (also “CFO” herein), Chief Operating Officer, a President, an Executive Chairman, one (1) or more Executive Vice Presidents, one (1) or more Senior Vice Presidents, one (1) or more Vice Presidents, a Secretary, a Treasurer and such assistant officers as the CEO shall designate.  The CEO and the Executive Chairman will be appointed by the Board of Directors. The CFO will be appointed jointly by both the CEO and the Strategic Planning Committee of the Board of Directors. All other officers will be appointed by the CEO. Any two (2) or more offices may be held by the same person, except the duties of the President and the Secretary shall not be performed by the same person.  If required to do so by law, at the board meeting following action by the CEO, the Board of Directors will elect each officer, (other than assistant officers), as appointed by the CEO. Such officers will remain in their positions at the sole discretion of the CEO.

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Section 5.2.        Vacancies.  Whenever any vacancies shall occur in any of the offices of the Corporation (other than CEO and Executive Chairman) for any reason, the same may be filled by the CEO.

Section 5.3.        Resignation and Removal.  Any officer other than the CEO may resign at any time by delivering notice to the CEO of the Corporation, such resignation shall be effective upon delivery or such later date, as specified in the resignation, upon the condition that the CEO concurs with the delayed resignation.  If the CEO does not concur, the resignation shall be at a date established by the CEO.  The CEO may resign by providing notice to the Board of Directors. The CEO and Executive Chairman may be removed, either with or without cause, at any time by majority vote of the entire Board of Directors.  Any other officer may be removed, with or without cause, at the discretion of the CEO. The resignation or removal of an officer does not affect the Corporation’s contract rights, if any, with the officer.

Section 5.4.        Compensation.  Each officer, determined by law to be included in the proxy statement of the Corporation shall receive such compensation for his service as set by the CEO and approved by the Board of Directors. The CEO’s compensation shall be set by the Board of Directors, duly recorded.

Section 5.5.        The Executive Chairman. The Executive Chairman shall preside at all meetings of the Board and shareholders, and shall have such other powers and duties as this Code of By-Laws or the Board of Directors may prescribe.

Section 5.6         The Chief Executive Officer.  Subject to the general control of the Board of Directors, the Chief Executive Officer shall manage and supervise all the affairs and personnel of the Corporation and shall discharge all the usual functions of the Chief Executive Officer of a Corporation.

Section 5.7.        The President:    Shall perform the duties as outlined and as defined by the CEO. The President shall perform the duties of the CEO in the CEO’s absence or disability, such powers granted by the CEO, or in the case of disability, as granted by the Board of Directors.

Section 5.8         Chief Operating Officer.  Shall perform the duties as outlined by the CEO.

Section 5.9         Chief Financial Officer.  The Chief Financial Officer shall be the principal financial officer of the Corporation and shall have such powers and perform such duties as the CEO may prescribe.  The Chief Financial Officer is also responsible for financial planning and record keeping as well as financial reporting to the Board of Director, Committees of the Board of Directors, senior management and various regulatory authorities.

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Section 5.10       Executive Vice Presidents.  The Executive Vice Presidents shall, in the order determined by the CEO, have all the powers of and perform all the duties incumbent upon the President and/or Chief Operating Officer during any absence or disability, assist the CEO, COO and President in supervising the operations of the Corporation and, subject to the direction of the CEO, COO and/or President, shall manage and supervise certain operations of the Corporation.

Section 5.11       Senior Vice Presidents and Vice Presidents.  The Senior Vice Presidents and Vice Presidents shall, have all such other powers and duties as the CEO may prescribe.

Section 5.12       The Secretary.  The Secretary shall serve at the direction of the CEO, COO and/or President, attend all meetings of the shareholders and of the Board of Directors, and keep, or cause to be kept, in a book provided for the purpose, a true and complete record of the proceedings of such meeting, and he shall perform a like duty, when required, and/or when necessary, for all standing committees appointed by the Board of Directors.  He/she shall attest the execution of all deeds, leases, agreements and other official documents and shall affix the corporate seal thereto.  He/she shall attend to the giving and serving of all notices of the Corporation required by this Code of By-Laws, shall have custody of the books (except books of account), records and corporate seal of the Corporation, and in general shall perform all duties pertaining to the office of Secretary and such other duties as the CEO, President and/or COO shall prescribe and as the Code of By-Laws or the Board of Directors may prescribe.

Section 5.13       The Treasurer.  The Treasurer shall serve at the direction of the CEO and CFO and keep correct and complete records of accounts, showing accurately at all times the financial condition of the Corporation.  He/she shall have charge and custody of, and be responsible for, all funds, notes, securities and other valuables which may from time to time come into the possession of the Corporation.  He/she shall deposit, or cause to be deposited, all funds of the Corporation with such depositories as the CEO, President and CFO requires, or whenever required, provide a statement of the financial condition of the Corporation, and in general shall perform all duties pertaining to the office of Treasurer and such other duties as the CEO, President and CFO or this Code of By-Laws or the Board of Directors may prescribe.

Section 5.14       Assistant Officers.  Such assistant officers as the CEO shall from time to time designate, shall have such powers and duties as the officers whom they are designated to assist shall specify and delegate to them, and such other powers and duties the CEO may prescribe.  An Assistant Secretary may, in the absence or disability of the Secretary, attest the execution of all documents by the Corporation and affix the corporate seal thereto.

Section 5.15      Delegation of Authority.  In case of the absence or inability to act of any officer of the Corporation, other than the CEO, the CEO may delegate for the time being the duties of such officer to any other officer or to any director.  In case of the absence or inability to act of the CEO, the Board of Directors may delegate for the time being the duties of such officer to any other officer or to any director.

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ARTICLE 6

Execution of Documents and Other Actions on

Behalf of the Corporation

Section 6.1        Execution of Documents in the Ordinary Course of Business.  Unless otherwise required by law or otherwise directed by the Board of Directors, all written contracts and agreements into which the Corporation enters in the ordinary course of its business shall be executed on behalf of the Corporation by any officer of the Corporation or by any other employee or agent of the Corporation expressly authorized by the CEO to execute any such documents.

Section 6.2       Execution of Documents Outside the Ordinary Course of Business.  Unless otherwise required by law or otherwise directed by the Board of Directors, all deeds, mortgages, deeds of trust, notes, assignments and other instruments made by the Corporation and all written contracts and agreements entered into by the Corporation, other than those contracts and agreements entered into in the ordinary course of its business, shall be executed on behalf of the Corporation by the Chief Executive Officer or the Chief Financial Officer and, when required, attested by the Secretary or an Assistant Secretary of the Corporation. However, the Board of Directors may expressly authorize by resolution any officer, employee, or agent of the Corporation to execute any such deed, mortgage, assignment, instrument, contract or agreement on behalf of the Corporation singly and without the necessity of any additional execution or attestation by any other officer of the Corporation.

Section 6.3       Execution and Endorsement of Checks and Drafts.  Unless otherwise required by law, all checks, drafts, bills of exchange and other orders for the payment of money (other than notes) by or to the Corporation shall be executed or endorsed on behalf of the Corporation by any two of the following duly elected officers of the Corporation: Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer, Executive Vice President, Treasurer or Secretary.  However, the Chief  Executive Officer, or Chief Financial Officer may expressly authorize in writing any one or more officers or other employees of the Corporation to execute or endorse any checks, drafts, or other orders for the payment of money on behalf of the Corporation, singly and without any additional signature, endorsement or attestation by any other officer of the Corporation.

Section 6.4       Voting of Shares Owned by the Corporation.  The Board of Directors is empowered and authorized to appoint any person to vote in person or by proxy any shares of another corporation standing in the name of the Corporation at any meeting of the Shareholders of such other corporation.  If the Board of Directors makes no such appointment with respect to any such meeting, the shares may be voted in person or by proxy by the Chief Executive Officer, or, in the absence of the Chief Executive Officer, the President, Chief Operating Officer, any Executive Vice President, the Secretary or the Treasurer of the Corporation.

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ARTICLE 7

Miscellaneous

Section 7.1       Amendments.  Subject to law and the Articles of Incorporation, the power to make, alter, amend or repeal all or any part of this Code of By-Laws is vested in the Board of Directors.  The affirmative vote of a majority of all the Directors shall be necessary to affect any such changes in this Code of By-Laws.

Section 7.2       Corporate Seal.  The seal of the Corporation shall be circular in form with the name of the Corporation around the top of its periphery, the word “Indiana” around the bottom of its periphery, and the word “Seal” through the center. The absence of the impression of the corporate seal from any document shall not affect in any way the validity or effect of such document.

Section 7.3       Fiscal Year.  The fiscal year of the Corporation commences on the first (1st) day of January and ends on the thirty-first (31st) day of December of each year.

Section 7.4       Definitions.  When used in these By-Laws, the following terms shall have the meanings set forth below:

“Act” means the Indiana Business Corporation Law, as then in effect and as amended from time to time.

“Articles of Incorporation” means the Articles of Incorporation of the Corporation as then in effect and as amended from time to time.

Section 7.5       Conflicts and Inconsistencies with the Act.  These By-Laws constitute “bylaws” within the meaning of, and as subject to and governed by, the Act.  In the event that any provision of these By-Laws is prohibited by any provision of the Act or is in direct conflict or inconsistent with any provision of the Articles of Incorporation, such provision of the Act or the Articles of Incorporation, as the case may be, shall be controlling, but such conflict or inconsistency shall not impair, nullify or otherwise affect the remaining terms and provisions of these By-Laws, which shall remain in full force and effect.  If any provision of these By-Laws is inconsistent with, or different than, any non-mandatory provision of the Act, the provision of these By-Laws shall be controlling.

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Section 7.6       Construction.  The headings of Articles, Sections and paragraphs in these By-Laws are for descriptive purposes only and shall not control, alter, or otherwise affect the meaning, scope or intent or any provision of these By-Laws.  Except as expressly provided otherwise in these By-Laws, any reference to an Article or Section shall mean and refer to an Article or Section of these By-Laws.  Except where the context of their use clearly requires a different interpretation, singular terms shall include the plural, and masculine terms shall include the feminine or neuter, and vice versa, to the extent necessary to give the defined terms or other terms used in these By-Laws their proper meanings.  The terms, “herein,” “hereof,” “hereunder,” “hereto,” “hereinafter,” “hereinbefore,” and similar words, wherever they appear in these By-Laws, shall mean and refer to these By-Laws in their entirety and not to any specific Article, Section, or paragraph of these By-Laws, unless the context of their use clearly requires a different interpretation.

Section 7.7       Severability.  Any provision of these By-Laws, or any amendment or alteration hereof, which is determined to be in violation of the Act shall in no way render any of the remaining provisions invalid.

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XML

Other Operating Expenses (Tables)

12 Months Ended

Dec. 31, 2014

Other Operating Expenses [Abstract]

Details of other operating expenses

Note G - Other Operating Expenses
Details of other operating expenses for the years ended December 31:
		2014			2013			2012
Amortization of gross deferred policy acquisition costs		$	48,872		$	47,414		$	41,957
Other underwriting expenses			37,830			35,281			27,242
Expense allowances from reinsurers			(23,797	)		(20,822	)		(15,185	)
	Total underwriting expenses		62,905			61,873			54,014
Operating expenses of non-insurance companies			25,143			23,488			23,416
	Total other operating expenses	$	88,048		$	85,361		$	77,430

XML

Employee Benefit Plans (Details) (401(k) Employee Savings and Profit Sharing Plan [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
401(k) Employee Savings and Profit Sharing Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Requisite service period	1 year
Company's contribution to the plan	$ 1,798	$ 1,798	$ 1,539

XML

Investments (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014 Partnership Investment Agreement Security	Dec. 31, 2013 Security	Dec. 31, 2012
Major Categories of Investment Income [Line Items]
Investment Income	$ 11,536	$ 11,238	$ 12,216
Investment expenses	(2,481)	(2,468)	(2,286)
Net investment income	9,055	8,770	9,930
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Applicable federal income taxes	(27,913)	(26,432)
Net unrealized gains - net of tax	51,840	49,089
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Number of Securities, Total	767	516
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair value, total	218,647	145,056
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Gross unrealized loss, total	(9,724)	(4,584)
Gain and Loss on Investment [Abstract]
Limited partnerships - net gain	7,108	7,995	7,052
Total net gains	14,930	23,515	9,011
Shareholders' equity, net of deferred federal income taxes and undistributed earnings from limited partnership	28,596
Adjustments for other-than-temporary impairment [Roll Forward]
Cumulative charges to income at beginning of year	6,770	7,773	8,178
Writedowns based on objective and subjective criteria	689	742	888
Recovery of prior writedowns upon sale or disposal	(291)	(1,745)	(1,293)
Net pre-tax realized gain (loss)	(398)	1,003	405
Cumulative charges to income at end of year	7,168	6,770	7,773
Addition (reduction) to earnings per share from net after-tax OTI gain (loss)	$ (0.02)	$ 0.04	$ 0.02
Unrealized gain on investments previously written down at end of the year - see note below	17,127	13,129	8,158
Committed funds for bridge loans	7,850
Number of bridge loan agreements	2
Limited Partners' Capital Account [Line Items]
Number of partnerships investment	2
Market value of equity and fixed maturity securities portfolio managed by broker dealers	3,334	19,822
Total commissions and net fees earned by broker dealers and affiliates	212	239	186
Summarized financial information of significant limited partnership investments [Abstract]
Total assets	1,144,247	1,072,270
Regulatory deposits with various insurance departments in United States and Canada, fair value	76,406	63,447
Time certificate of deposit included in short-term investments	2,966
Percentage of fixed maturities invested in investment grade fixed maturity (in hundredths)	85.00%
Total fixed maturity investments	15,430
Number of different investments in fixed maturity	5
Number of different third party insurance companies issuing fixed maturity investments with guarantees	2
Amount of largest exposure to a single investment	5,150
Fixed maturity investment below investment grade	66,817
Percentage of fixed maturity investment to total invested assets (in hundredths)	8.80%
Number of investments in diversified portfolio including catastrophe bonds	40
Net unrealized loss position of diversified portfolio	3,188
Limited Partnership [Member]
Limited Partners' Capital Account [Line Items]
Commitment to make additional contributions to various limited partnerships	2,868
Total investment in three limited partnerships	23,000
Number of partnerships investment	2
Aggregate estimated value of limited partnership	46,987
Number of directors that are executive officers, directors, and owners of the organization managing the limited partnership	4
Ownership interest in limited partnership, minimum (in hundredths)	5.00%
Ownership interest in limited partnership, maximum (in hundredths)	16.00%
Investment gains (losses), net of fees	7,088	1,154	2,485
Management fees	697	640	650
Performance-based fees	0	18	0
Summarized financial information of significant limited partnership investments [Abstract]
Total partners' capital	46,987
Significant Limited Partnership [Member]
Limited Partners' Capital Account [Line Items]
Aggregate estimated value of limited partnership	542,700	444,337	559,745
Number of significant investments in public and private equity market in India	1
Significant investment in public and private equity markets in India, value	29,868	22,692
Estimated ownership interest in significant limited partnership investment (in hundredths)	5.00%
Earnings from significant limited partnership investment	7,176	(3,176)	2,404
Summarized financial information of significant limited partnership investments [Abstract]
Total assets	565,500	493,028	641,071
Total partners' capital	542,700	444,337	559,745
Net increase (decrease) in partners' capital resulting from operations	125,700	(64,550)	60,734
U.S. Government Obligations [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Fair value	101,094	113,389
Cost or amortized cost	101,058	113,348
Gross unrealized gains	108	81
Gross unrealized losses	(72)	(40)
Net unrealized gains (losses)	36	41
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Available-for-sale Securities, Debt Securities, Total	101,094	113,389
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Cost or amortized cost	101,058	113,348
Residential Mortgage-Backed Securities [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Fair value	6,066	13,252
Cost or amortized cost	5,830	12,058
Gross unrealized gains	273	1,334
Gross unrealized losses	(37)	(140)
Net unrealized gains (losses)	236	1,194
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Available-for-sale Securities, Debt Securities, Total	6,066	13,252
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Cost or amortized cost	5,830	12,058
Commercial Mortgage-backed Securities [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Fair value	36,440	28,565
Cost or amortized cost	36,210	28,406
Gross unrealized gains	630	308
Gross unrealized losses	(400)	(149)
Net unrealized gains (losses)	230	159
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Available-for-sale Securities, Debt Securities, Total	36,440	28,565
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Cost or amortized cost	36,210	28,406
State and Municipal Obligations [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Fair value	113,777	115,250
Cost or amortized cost	113,133	115,278
Gross unrealized gains	784	407
Gross unrealized losses	(140)	(435)
Net unrealized gains (losses)	644	(28)
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Available-for-sale Securities, Debt Securities, Total	113,777	115,250
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Cost or amortized cost	113,133	115,278
Corporate Securities [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Fair value	166,966	137,215
Cost or amortized cost	170,822	136,991
Gross unrealized gains	2,005	3,207
Gross unrealized losses	(5,861)	(2,983)
Net unrealized gains (losses)	(3,856)	224
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Available-for-sale Securities, Debt Securities, Total	166,966	137,215
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Cost or amortized cost	170,822	136,991
Foreign Government Obligations [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Fair value	27,466	23,879
Cost or amortized cost	28,332	23,689
Gross unrealized gains	114	588
Gross unrealized losses	(980)	(398)
Net unrealized gains (losses)	(866)	190
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Available-for-sale Securities, Debt Securities, Total	27,466	23,879
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Cost or amortized cost	28,332	23,689
Total Fixed Maturities [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Fair value	451,809	431,550
Cost or amortized cost	455,385	429,770
Gross unrealized gains	3,914	5,925
Gross unrealized losses	(7,490)	(4,145)
Net unrealized gains (losses)	(3,576)	1,780
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Number of Securities 12 months or less	591	451
Number of Securities Greater than 12 months	140	53
Number of Securities, Total	731	504
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair value, 12 months or less	176,756	123,145
Fair value, Greater than 12 months	27,667	18,249
Fair value, total	204,423	141,394
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Gross unrealized loss, less than 12 months	(6,083)	(3,105)
Gross unrealized loss, 12 months or longer	(1,407)	(1,040)
Gross unrealized loss, total	(7,490)	(4,145)
Average unrealized loss for securities in loss position (in hundredths)	4.00%
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
One year or less	130,407
Excess of one year to five years	189,182
Excess of five years to ten years	47,209
Excess of ten years	9,377
Total maturities	376,175
Asset-backed securities	75,634
Available-for-sale Securities, Debt Securities, Total	451,809	431,550
Percentage of Available for sale Securities, Debt Maturities, Fair Value [Abstract]
One year or less (in hundredths)	28.90%
Excess of one year to five years (in hundredths)	41.90%
Excess of five years to ten years (in hundredths)	10.40%
Excess of ten years (in hundredths)	2.10%
Total maturities (in hundredths)	83.30%
Asset-backed securities (in hundredths)	16.70%
Available-for-sale Securities, Debt Securities, Total (in hundredths)	100.00%
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
One year or less	130,322
Excess of one year to five years	192,990
Excess of five years to ten years	48,176
Excess of ten years	8,744
Total maturities	380,232
Asset-backed securities	75,153
Cost or amortized cost	455,385	429,770
Percentage of Available for sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
One year or less (in hundredths)	28.60%
Excess of one year to five years (in hundredths)	42.40%
Excess of five years to ten years (in hundredths)	10.60%
Excess of ten years (in hundredths)	1.90%
Total maturities (in hundredths)	83.50%
Asset-backed securities (in hundredths)	16.50%
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Total (in hundredths)	100.00%
Gain and Loss on Investment [Abstract]
Gross gains	6,480	7,235	3,860
Gross losses	(4,596)	(4,371)	(3,961)
Net gains (losses)	1,884	2,864	(101)
Financial Institutions [Member]
Available-for-sale Equity Securities, Amortized Cost Basis [Abstract]
Fair value	25,343	18,850
Cost or amortized cost	10,100	7,780
Gross unrealized gains	15,303	11,171
Gross unrealized losses	(60)	(101)
Net unrealized gains (losses)	15,243	11,070
Industrial & Miscellaneous [Member]
Available-for-sale Equity Securities, Amortized Cost Basis [Abstract]
Fair value	136,764	126,978
Cost or amortized cost	68,678	64,307
Gross unrealized gains	70,260	63,009
Gross unrealized losses	(2,174)	(338)
Net unrealized gains (losses)	68,086	62,671
Total Equity Securities [Member]
Available-for-sale Equity Securities, Amortized Cost Basis [Abstract]
Fair value	162,107	145,828
Cost or amortized cost	78,778	72,087
Gross unrealized gains	85,563	74,180
Gross unrealized losses	(2,234)	(439)
Net unrealized gains (losses)	83,329	73,741
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Number of Securities 12 months or less	33	10
Number of Securities Greater than 12 months	3	2
Number of Securities, Total	36	12
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Fair value, 12 months or less	13,538	1,682
Fair value, Greater than 12 months	686	1,980
Fair value, total	14,224	3,662
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Gross unrealized loss, less than 12 months	(2,170)	(204)
Gross unrealized loss, 12 months or longer	(64)	(235)
Gross unrealized loss, total	(2,234)	(439)
Gain and Loss on Investment [Abstract]
Gross gains	7,467	15,374	3,191
Gross losses	(1,529)	(2,718)	(1,131)
Net gains (losses)	5,938	12,656	2,060
Total Available-for-Sale Securities [Member]
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Fair value	613,916	577,378
Cost or amortized cost	534,163	501,857
Gross unrealized gains	89,477	80,105
Gross unrealized losses	(9,724)	(4,584)
Net unrealized gains (losses)	79,753	75,521
Interest on fixed maturities [Member]
Major Categories of Investment Income [Line Items]
Investment Income	8,806	9,023	10,052
Dividends on equity securities [Member]
Major Categories of Investment Income [Line Items]
Investment Income	2,693	2,166	2,121
Money Market Funds, Short term and Other [Member]
Major Categories of Investment Income [Line Items]
Investment Income	$ 37	$ 49	$ 43

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SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Investments other than subsidiaries:
Fixed maturities	$ 451,809				$ 431,550				$ 451,809	$ 431,550
Limited partnerships	81,230				68,988				81,230	68,988
Total Investments	698,112				651,257				698,112	651,257
Cash and cash equivalents	64,632				59,297				64,632	59,297	71,549
Accounts receivable	98,144				100,830				98,144	100,830
Other assets	9,413				19,051				9,413	19,051
Total Assets	1,144,247				1,072,270				1,144,247	1,072,270
Liabilities:
Total Liabilities	744,751				690,546				744,751	690,546
Shareholders' equity:
Additional paid-in capital	51,854				50,594				51,854	50,594
Unrealized net gains on investments	51,840				49,089				51,840	49,089
Foreign exchange adjustment	390				1,401				390	1,401
Retained earnings	294,773				280,003				294,773	280,003	258,358	241,325
Shareholders' equity	399,496				381,724				399,496	381,724	346,712	319,061
Total liabilities and shareholders' equity	1,144,247				1,072,270				1,144,247	1,072,270
Revenue:
Commissions and service fees									6,430	5,944	5,722
Net investment income	2,599	2,073	2,090	2,294	2,183	2,192	1,985	2,410	9,055	8,770	9,930
Net realized losses on investments									14,930	23,515	9,011
Total revenue									292,042	290,972	262,124
Expenses:
Other									88,048	85,361	77,430
Total expenses									247,644	236,062	215,518
Income before federal income taxes and equity in undistributed income of subsidiaries									44,398	54,910	46,606
Federal income tax benefit									14,681	18,322	14,687
Equity in undistributed income (loss) of subsidiaries									7,108	7,995	7,052
Net income	8,246	5,770	9,340	6,361	8,967	7,771	4,907	14,943	29,717	36,588	31,919
Condensed Statements of Cash Flows
Net cash provided by operating activities									30,160	35,907	55,794
Investing activities:
Distributions from limited partnerships									1,752	2,528	3,957
Net cash used in investing activities									(18,867)	(32,641)	(59,302)
Financing activities:
Dividends paid to shareholders									(14,947)	(14,943)	(14,886)
Net cash used in financing activities									(4,947)	(14,943)	(14,886)
Increase (decrease) in cash and cash equivalents									5,335	(12,252)	(18,177)
Cash and cash equivalents at beginning of year				59,297				71,549	59,297	71,549	89,726
Cash and cash equivalents at end of year	64,632				59,297				64,632	59,297	71,549
Class A [Member]
Shareholders' equity:
Common stock	112				112				112	112
Class B [Member]
Shareholders' equity:
Common stock	527				525				527	525
Parent Company [Member]
Assets
Investment in subsidiaries	415,304				398,008				415,304	398,008
Due from affiliates	2,762				2,465				2,762	2,465
Investments other than subsidiaries:
Fixed maturities	11,924				11,093				11,924	11,093
Limited partnerships	233				248				233	248
Total Investments	12,157				11,341				12,157	11,341
Cash and cash equivalents	16,615				9,848				16,615	9,848	12,143
Accounts receivable	5,157				7,075				5,157	7,075
Other assets	17,905				13,453				17,905	13,453
Total Assets	469,900				442,190				469,900	442,190
Liabilities:
Premiums payable	27,850				30,004				27,850	30,004
Deposits from insureds	18,303				16,307				18,303	16,307
Notes payable to bank	20,000				10,000				20,000	10,000
Other liabilities	4,251				4,155				4,251	4,155
Total Liabilities	70,404				60,466				70,404	60,466
Shareholders' equity:
Additional paid-in capital	51,854				50,594				51,854	50,594
Unrealized net gains on investments	51,840				49,089				51,840	49,089
Foreign exchange adjustment	390				1,401				390	1,401
Retained earnings	294,773				280,003				294,773	280,003
Shareholders' equity	399,496				381,724				399,496	381,724
Total liabilities and shareholders' equity	469,900				442,190				469,900	442,190
Revenue:
Commissions and service fees									22,153	21,597	20,753
Dividends from subsidiaries									15,000	15,000	14,000
Net investment income									102	54	48
Net realized losses on investments									(27)	(11)	(49)
Other									126	41	24
Total revenue									37,354	36,681	34,776
Expenses:
Salary and related items									15,543	15,965	15,410
Other									7,978	6,633	7,098
Total expenses									23,521	22,598	22,508
Income before federal income taxes and equity in undistributed income of subsidiaries									13,833	14,083	12,268
Federal income tax benefit									(294)	(348)	(629)
Income (loss)									14,127	14,431	12,897
Equity in undistributed income (loss) of subsidiaries									15,590	22,157	19,022
Net income									29,717	36,588	31,919
Condensed Statements of Cash Flows
Net cash provided by operating activities									19,719	15,125	20,735
Investing activities:
Purchases of long-term investments									(6,398)	(10,322)	(8,944)
Sales or maturities of long-term investments									5,253	9,982	8,902
Decrease in notes receivable from employees									0	0	1,252
Distributions from limited partnerships									13	0	0
Net purchases of property and equipment									(6,873)	(1,775)	(834)
Other									0	(362)	228
Net cash used in investing activities									(8,005)	(2,477)	604
Financing activities:
Dividends paid to shareholders									(14,947)	(14,943)	(14,886)
Drawings on line of credit									10,000	0	0
Net cash used in financing activities									(4,947)	(14,943)	(14,886)
Increase (decrease) in cash and cash equivalents									6,767	(2,295)	6,453
Cash and cash equivalents at beginning of year				9,848				12,143	9,848	12,143	5,690
Cash and cash equivalents at end of year	16,615				9,848				16,615	9,848	12,143
Parent Company [Member] | Class A [Member]
Shareholders' equity:
Common stock	112				112				112	112
Parent Company [Member] | Class B [Member]
Shareholders' equity:
Common stock	$ 527				$ 525				$ 527	$ 525

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Stock Purchase and Option Plans (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended			12 Months Ended			0 Months Ended
	May 08, 2014	May 07, 2013	May 08, 2012	Dec. 31, 2014 Plan	Dec. 31, 2013	Dec. 31, 2012	Feb. 04, 2014	Feb. 04, 2015
Summary of stock Issuances [Abstract]
Shares granted (in shares)	17,237	18,106	20,119
Vesting Date	May 08, 2015	May 07, 2014	May 08, 2013
Period	7/1/2014 - 6/30/2015	7/1/2013 - 6/30/2014	7/1/2012 - 6/30/2013
Value of each share issued (in dollars per share)	$ 25.53	$ 24.30	$ 21.87
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of share based compensation plan				1
Summary of stock Issuances [Abstract]
Period restricted stocks will vest ratably from date of grant				3 years
Restricted Stock Units (RSUs) [Member] | Outside Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost charged against income				440	$ 440	$ 440
Restricted Stock Units (RSUs) [Member] | Class B [Member] | Outside Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total value of shares issued				440	440	440
Restricted Stock Units (RSUs) [Member] | Class B [Member] | Executives [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued (in shares)							45,678
Total value of shares issued							1,088
Summary of stock Issuances [Abstract]
Value of each share issued (in dollars per share)							$ 23.81
Restricted Stock Units (RSUs) [Member] | Class B [Member] | Executives [Member] | Subsequent Event [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued (in shares)								36,646
Total value of shares issued								$ 853
Summary of stock Issuances [Abstract]
Value of each share issued (in dollars per share)								$ 23.29
Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Purchase price of shares obligated to be repurchased, percentage of book value (in hundredths)				90.00%
Number of shares repurchased under the plan (in shares)				0
Stock Purchase Plan [Member] | Class A [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of outstanding shares eligible for repurchase (in shares)				121,286
Stock Purchase Plan [Member] | Class B [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of outstanding shares eligible for repurchase (in shares)				339,546

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Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2014

Accumulated Other Comprehensive Income [Abstract]

Reconciliation of the components of accumulated other comprehensive income

A reconciliation of the components of accumulated other comprehensive income at December 31 is as follows:

	2014			2013
Investments:
Total unrealized gain before federal income taxes	$	79,753		$	75,521
Deferred tax liability		(27,913	)		(26,432	)
Net unrealized gains on investments		51,840			49,089
Foreign exchange adjustment:
Total unrealized gains		600			2,155
Deferred tax liability		(210	)		(754	)
Net unrealized gains on foreign exchange adjustment		390			1,401
Accumulated other comprehensive income	$	52,230		$	50,490

Other comprehensive income (loss) reclassification adjustments

Other comprehensive income reclassification adjustments for the years ended December 31 are as follows:

	2014		2013		2012
Investments:
Pre-tax holding gains on debt and equity
securities arising during period	$	12,055	$	36,477	$	15,612
Less: applicable federal income taxes		4,220		12,766		5,464
		7,835		23,711		10,148
Pre-tax gains on debt and equity securities
included in net income during period		7,823		15,520		1,959
Less: applicable federal income taxes		2,739		5,431		686
		5,084		10,089		1,273
Change in unrealized gains on investments	$	2,751	$	13,622	$	8,875

Reconciliation of accumulated other comprehensive income and retained earnings

Reconciliation of accumulated other comprehensive income and retained earnings for the years ended December 31 are as follows:

	2014			2013			2012
Beginning accumulated other comprehensive income	$	50,490		$	37,443		$	28,351
Change in foreign exchange adjustment		(1,011	)		(575	)		217
Change in unrealized net gains on investments		2,751			13,622			8,875
Ending accumulated other comprehensive income	$	52,230		$	50,490		$	37,443
		2014			2013			2012
Beginning retained earnings	$	280,003		$	258,358		$	241,325
Net income		29,717			36,588			31,919
Dividends		(14,947	)		(14,943	)		(14,886	)
Ending retained earnings	$	294,773		$	280,003		$	258,358

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2014

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation:  The consolidated financial statements include the accounts of Baldwin & Lyons, Inc. and its wholly owned subsidiaries (the “Company").  All significant inter-company transactions and accounts have been eliminated in consolidation.

Use of Estimate

Use of Estimates:  Preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.  Actual results will differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents:  The Company considers investments in money market funds to be cash equivalents.  Carrying amounts for these instruments approximate their fair values.

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

Realized gains and losses on disposals of investments are determined by specific identification of 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) on investments.

In accordance with the Financial Accounting Standard Board’s (“FASB”) other-than-temporary impairment (“OTTI”) guidance, 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 in cases where 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 shareholder’s 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.  The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the appropriate effective interest rate.

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.  Additionally, the Company takes into account any known subjective information in evaluating for impairment, without consideration to the Company’s quantitative criteria defined above, as well as the Company’s intent and ability to retain the equity security for a period of time sufficient to allow for such recovery in fair value.

Property and Equipment

Property and Equipment:  Property and equipment are carried at cost, less accumulated depreciation.  Depreciation is computed principally by the straight-line method.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets:  Goodwill is not amortized.  Rather, it is tested for impairment in accordance with FASB guidance, at the reporting-unit level.  Goodwill is tested annually (during the fourth quarter) or more often if events or circumstances, such as adverse changes in the business climate, indicate there may be impairment. Intangible assets determined to have finite lives, such as customer relationships and employment agreements, are amortized over their estimated useful lives in a manner that best reflects the economic benefits of the intangible asset.  In addition, impairment testing is performed on these amortizing intangible assets if impairment indicators are noted.

Reserves for Losses and Loss Expenses

Reserves for Losses and Loss Expenses:  The reserves for losses and loss expenses, minor portions of which are discounted, are determined using case basis evaluations and statistical analyses and represent estimates of the ultimate cost of all reported and unreported losses which are unpaid at year end.  These reserves include estimates of future trends in claim severity and frequency and other factors which could vary as the losses are ultimately settled.  While actual results will differ from such estimates, management believes that the reserves for losses and loss expenses are adequate.  The estimates are continually reviewed and as adjustments to these reserves become necessary, such adjustments are reflected in current operations.

Recognition of Revenue and Costs

Recognition of Revenue and Costs:  Premiums are earned over the period for which insurance protection is provided.  A reserve for unearned premiums, computed by the daily pro-rata method, is established to reflect amounts applicable to subsequent accounting periods.  Commissions to unaffiliated companies and premium taxes applicable to unearned premiums are deferred and expensed as the related premiums are earned.  The Company does not defer acquisition costs which are not directly variable with the production of premium.  If it is determined that expected losses and deferred expenses will likely exceed the related unearned premiums, the asset representing deferred policy acquisition costs is reduced and an expense is charged against current operations to reflect any such premium deficiency.  In the event that the expected premium deficiency exceeds deferred policy acquisition costs, an additional liability would be recorded with a corresponding expense to current operations for the amount of the excess premium deficiency.  Anticipated investment income is considered in determining recoverability of deferred acquisition costs.

Reinsurance

Reinsurance:  Reinsurance premiums, commissions, expense reimbursements and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts.  Premiums ceded to other insurers have been reported as a reduction of premium earned.  Amounts applicable to reinsurance ceded for unearned premium and claim loss reserves have been reported as reinsurance recoverable assets.  Certain reinsurance contracts provide for additional or return premiums and commissions based upon profits or losses to the reinsurer over prescribed periods.  Estimates of additional or return premiums and commissions are adjusted quarterly to recognize actual loss experience to date as well as projected loss experience applicable to the various contract periods.  Estimates of reinstatement premiums on reinsurance contracts covering catastrophic events are, to the extent reasonably determinable, recorded concurrently with the related loss.

Should impairment in the ability of a reinsurer to satisfy its obligations to the Company be determined to exist, current year operations would be charged in amounts sufficient to provide for the Company’s additional liability.  Such charges, when incurred, are included in other operating expenses, rather than losses and loss expenses incurred, since the inability of the Company to collect from reinsurers is a credit risk rather than a deficiency associated with the loss reserving process.

The Company accounts for foreign and domestic reinsurance using the periodic method.  Under the periodic method, premiums are recognized as revenue ratably over the contract term, and claims, including an estimate of claims incurred but not reported, are recognized as they occur.

Deferred Taxes

Deferred Taxes:  Deferred income tax assets and liabilities are recognized for temporary differences between the financial statement and tax return bases of assets and liabilities based on enacted tax rates and laws.  The deferred tax benefits of the deferred tax assets are recognized to the extent realization of such benefits is more likely than not.  Deferred income tax expense or benefit generally represents the net change in deferred income tax assets and liabilities during the year.  Current income tax expense represents the tax liability associated with revenues and expenses currently taxable or deductible on various income tax returns for the year reported.

Restricted Stock

Restricted Stock:  Restricted shares vest ratably over the vesting period from the date of grant and are accelerated for retirement eligible recipients in accordance with the non-substantive post-grant date vesting clause of Accounting Standard Codification (“ASC”) 715, Compensation-Retirement Benefits.  Restricted stock is valued based on the closing price of the stock on the day the award is granted. 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 Compensation Committee.

Earnings Per Share

Earnings Per Share:  Diluted earnings per share of common stock are based on the average number of shares of Class A and Class B common stock outstanding during the year, adjusted for the dilutive effect, if any, of restricted stock awards outstanding.  Basic earnings per share are presented exclusive of the effect of share-based awards outstanding.

Comprehensive Income

Comprehensive Income: The Company records accumulated other comprehensive income from unrealized gains and losses on available-for-sale securities as a separate component of shareholders’ equity.  Foreign exchange adjustments are generally not material and the Company has no defined benefit pension plan.A reclassification adjustment to other comprehensive income is made for gains or losses during the period included in net income.

Fair Value Measurements

Fair Value Measurements: The Company provides disclosures related to recurring and non-recurring fair value measurements with separate disclosures for the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements, along with an explanation for the transfers. Additionally, separate disclosures are provided for purchases, sales, issuances and settlements on a gross basis for Level 3 fair value measurements as well as additional clarification for both the level of disaggregation reported for each class of assets or liabilities and disclosures of inputs and valuation techniques used to measure fair value for both recurring and non-recurring fair value measurements for assets and liabilities categorized as Level 2 or Level 3.

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SCHEDULE VI SUPPLEMENTAL INFORMATION CONCERNING PROPERTY/CASUALTY INSURANCE OPERATIONS (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Supplemental Information for Property, Casualty Insurance Underwriters [Line Items]
Deferred Policy Acquisition Costs	$ 2,263		$ 2,319		$ 3,091
Reserves for Unpaid Claims and Claim Adjustment Expenses	506,102		474,470		455,454
Discount if any Deducted in Column C	3,129	[1]	5,885	[1]	6,118	[1]
Unearned Premiums	35,019		36,693		37,273
Earned Premiums	261,627		252,743		237,461
Net Investment Income	9,055		8,770		9,930
Claims and Claim Adjustment Expenses Incurred Related to Current Year	169,950		156,264		147,963
Claims and Claim Adjustment Expenses Incurred Related to Prior Years	(10,354)		(5,563)		(9,875)
Amortization of Deferred Policy Acquisition Costs	48,872		47,414		41,957
Paid Claims and Claim Adjustment Expenses	152,101		151,849		138,945
Net Premiums Written	$ 262,171		$ 253,684		$ 233,678
Loss reserve discounted present value cash flow pretax interest rate utilized (in hundredths)	3.50%		3.50%		3.50%

[1] Loss reserves on certain reinsurance assumed and permanent total disability worker's compensation claims have been discounted to present value using pretax interest rates not exceeding 3.5%.

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Reportable Segments, Schedule of Revenue by Major Customers, by Reporting Segments (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014 Customer	Dec. 31, 2013	Dec. 31, 2012
Reportable Segments [Abstract]
Number of reportable segments	2
Property and Casualty Insurance [Member] | FedEx Ground, Certain Subsidiaries, and Related Entities [Member]
Revenue, Major Customer [Line Items]
Number of major customer	1
Direct And Assumed Premiums Written	$ 8,191	$ 15,615	$ 19,052
Property and Casualty Insurance [Member] | Non-affiliated Broker on Behalf of Independent Contractors [Member]
Revenue, Major Customer [Line Items]
Direct And Assumed Premiums Written	$ 208,580	$ 177,389	$ 146,447

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SCHEDULE III SUPPLEMENTARY INSURANCE INFORMATION (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Property and Casualty Insurance [Member]
Supplementary Insurance Information, by Segment [Line Items]
Deferred Policy Acquisition Costs	$ 2,263		$ 2,319		$ 3,091
Reserves for Unpaid Claims and Claim Acquisition Expenses	449,133		408,469		373,667
Unearned Premiums	23,659		26,303		28,792
Other Policy Claims and Benefits Payable	0		0		0
Net Premium Earned	224,683		202,785		186,586
Net Investment Income	9,055	[1],[2]	8,770	[1],[2]	9,930	[1],[2]
Benefits, Claims, Losses and Settlement Expenses	139,308	[1]	133,005	[1]	122,924	[1]
Amortization of Deferred Policy Acquisition Costs	48,872		47,414		41,957
Other Operating Expenses	14,033	[1],[2],[3]	14,459	[1],[2],[3]	12,057	[1],[2],[3]
Net Premiums Written	224,258		201,817		178,908
Reinsurance [Member]
Supplementary Insurance Information, by Segment [Line Items]
Deferred Policy Acquisition Costs	0		0		0
Reserves for Unpaid Claims and Claim Acquisition Expenses	56,969		66,001		81,787
Unearned Premiums	11,360		10,390		8,481
Other Policy Claims and Benefits Payable	0		0		0
Net Premium Earned	36,944		49,958		50,875
Net Investment Income	9,055	[1],[2]	8,770	[1],[2]	9,930	[1],[2]
Benefits, Claims, Losses and Settlement Expenses	20,288	[1]	17,696	[1]	15,164	[1]
Amortization of Deferred Policy Acquisition Costs	0		0		0
Other Operating Expenses	14,033	[1],[2],[3]	14,459	[1],[2],[3]	12,057	[1],[2],[3]
Net Premiums Written	$ 37,913		$ 51,867		$ 54,770

[1] Allocations of certain expenses have been made to investment income, settlement expenses and other operating expenses and are based on a number of assumptions and estimates. Results among these categories would change if different methods were applied.

[2] Amounts are not broken down into separate segments; entire consolidated amount included in each segment.

[3] Commission allowances relating to reinsurance ceded are offset against other operating expenses.

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Leases

12 Months Ended

Dec. 31, 2014

Leases [Abstract]

Leases

Note R - Leases

The Company leases certain computer and related equipment using noncancelable operating leases.  Lease expense for 2014, 2013 and 2012 was $330, $1,324 and $1,506, respectively.  At December 31, 2014, future lease payments for operating leases with initial or remaining noncancelable terms of one year or more consisted of the following:

2015		144
2016		138
2017		106
2018		-
2019		-
Thereafter		-
Total minimum payments required	$	388

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Reinsurance (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Premiums Written [Abstract]
Direct									$ 343,200	$ 314,784	$ 284,200
Ceded on direct									(118,942)	(112,967)	(105,292)
Net direct									224,258	201,817	178,908
Assumed									39,188	54,692	57,086
Ceded on assumed									(1,275)	(2,825)	(2,316)
Net assumed									37,913	51,867	54,770
Net									262,171	253,684	233,678
Premium Earned [Abstract]
Direct									342,656	313,842	287,982
Ceded on direct									(117,973)	(111,057)	(101,396)
Net direct									224,683	202,785	186,586
Assumed									38,219	52,783	53,191
Ceded on assumed									(1,275)	(2,825)	(2,316)
Net assumed									36,944	49,958	50,875
Net	68,933	65,947	62,905	63,842	65,422	64,448	61,775	61,098	261,627	252,743	237,461
Net losses and loss expenses incurred reduced by ceded reinsurance recoveries									105,891	107,321	90,899
Net losses and loss expense incurred from reinsurance assumed from non-affiliates									23,163	20,014	16,486
Retrocessional recoveries											20,000
Components of reinsurance recoverable [Abstract]
Case unpaid losses, net of valuation allowance	143,403				133,484				143,403	133,484
Incurred but not reported unpaid losses and loss expenses	66,325				52,157				66,325	52,157
Paid losses and loss expenses	6,910				4,126				6,910	4,126
Unearned premiums	3,583				5,801				3,583	5,801
Reinsurance recoverable	$ 220,221				$ 195,568				$ 220,221	$ 195,568

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Reconciliation of the denominators used in the calculation of basic and diluted earnings per share

The following is a reconciliation of the denominators used in the calculation of basic and diluted earnings per share for the years ended December 31:

	2014		2013		2012
Average share outstanding for basic earnings per share		14,963,959		14,906,416		14,838,767
Dilutive effect of share equivalents		11,935		17,345		29,482
Average shares outstanding for diluted earnings per share		14,975,894		14,923,761		14,868,249

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Taxes [Abstract]

Significant components of deferred tax assets and liabilities

Significant components of the Company's deferred tax assets and liabilities as of December 31 are as follows:

	2014			2013
Deferred tax liabilities:
Unrealized gain on fixed income and equity security investments	$	27,914		$	26,432
Deferred acquisition costs		1,341			1,829
Salvage and subrogation		2,373			2,638
Limited partnership investments		4,636			2,612
Other		1,229			866
Total deferred tax liabilities		37,493			34,377
Deferred tax assets:
Loss and loss expense reserves		10,973			11,071
Unearned premiums discount		2,201			2,162
Other-than-temporary investment declines		2,049			2,053
Deferred compensation		1,565			880
Deferred ceding commission		549			1,018
Other		183			342
Total deferred tax assets		17,520			17,526
Net deferred tax liabilities	$	(19,973	)	$	(16,851	)

Summary of the difference between federal income taxes expense computed at the statutory rate

A summary of the difference between federal income tax expense computed at the statutory rate and that reported in the consolidated financial statements is as follows:

	2014			2013			2012
Statutory federal income rate applied to pretax income	$	15,539		$	19,218		$	16,312
Tax effect of (deduction):
Tax-exempt investment income		(924	)		(811	)		(933	)
Net reduction of tax positions		(75	)		(116	)		(693	)
Other		141			31			1
Federal income tax expense	$	14,681		$	18,322		$	14,687

Federal income tax expense

Federal income tax expense consists of the following:
	2014		2013		2012
Taxes on pre-tax income:
Current	$	13,041	$	17,383	$	10,819
Deferred		1,640		939		3,868
	$	14,681	$	18,322	$	14,687

Components of provisions for deferred federal income taxes (credits)

The components of the provision for deferred federal income taxes are as follows:
		2014			2013			2012
Limited partnerships		$	2,025		$	1,058		$	3,013
Discounts of loss and loss expense reserves			113			313			(57	)
Unearned premium discount			(38	)		(65	)		265
Deferred compensation			(685	)		(146	)		112
Other-than-temporary investment declines			(19	)		680			169
Deferred acquisitions costs and ceding commission			(20	)		(271	)		(520	)
Other			264			(630	)		886
	Provision for deferred federal income tax	$	1,640		$	939		$	3,868

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Shareholders' Equity (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Amount [Abstract]
Dividends paid to shareholders	$ 14,947	$ 14,943	$ 14,886
Cash dividends paid (in dollars per share)	$ 1.00	$ 1.00	$ 1.00
Additional Paid-in Capital [Member]
Amount [Abstract]
Balance, Beginning period	50,594	50,275	48,751
Restricted stock grant	1,260	319	1,524
Balance, Period end	51,854	50,594	50,275
Class A [Member]
Shares [Abstract]
Balance, Beginning period (in shares)	2,623,109	2,623,109	2,623,109
Restricted stock grant (in shares)	0	0	0
Balance, Period end (in shares)	2,623,109	2,623,109	2,623,109
Amount [Abstract]
Balance, Beginning period	112	112	112
Restricted stock grant	0	0	0
Balance, Period end	112	112	112
Stated value of common stock (in dollars per share)	$ 0.04
Class B [Member]
Shares [Abstract]
Balance, Beginning period (in shares)	12,304,191	12,290,035	12,225,348
Restricted stock grant (in shares)	52,198	14,156	64,687
Balance, Period end (in shares)	12,356,389	12,304,191	12,290,035
Amount [Abstract]
Balance, Beginning period	525	524	522
Restricted stock grant	2	1	2
Balance, Period end	$ 527	$ 525	$ 524
Stated value of common stock (in dollars per share)	$ 0.04

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Leases (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Leases [Abstract]
Lease expense	$ 330	$ 1,324	$ 1,506
Future lease payments for operating leases with initial or remaining noncancelable term of one year or more [Abstract]
2015	144
2016	138
2017	106
2018	0
2019	0
Thereafter	0
Total minimum payments required	$ 388

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Debt (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 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)	1.26%
Remaining unused amount under line of credit	$ 20,000

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Summary of Significant Accounting Policies (Details)	12 Months Ended
	Dec. 31, 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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Investments

12 Months Ended

Dec. 31, 2014

Investments [Abstract]

Investments

Note B - Investments
The following is a summary of available for sale securities at December 31:
										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
2014:
Fixed maturities:
U.S. government obligations	$	101,094	$	101,058	$	108	$	(72	)	$	36
Residential mortgage-backed securities		6,066		5,830		273		(37	)		236
Commercial mortgage-backed securities		36,440		36,210		630		(400	)		230
State and municipal obligations		113,777		113,133		784		(140	)		644
Corporate securities		166,966		170,822		2,005		(5,861	)		(3,856	)
Foreign government obligations		27,466		28,332		114		(980	)		(866	)
Total fixed maturities		451,809		455,385		3,914		(7,490	)		(3,576	)
Equity securities:
Financial institutions		25,343		10,100		15,303		(60	)		15,243
Industrial & miscellaneous		136,764		68,678		70,260		(2,174	)		68,086
Total equity securities		162,107		78,778		85,563		(2,234	)		83,329
Total	$	613,916	$	534,163	$	89,477	$	(9,724	)		79,753
							Applicable federal income taxes				(27,913	)
							Net unrealized gains - net of tax			$	51,840
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 December 31, the aggregate fair value and gross unrealized loss categorized by the duration those securities have been continuously in an unrealized loss position.

	2014							2013
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		591	$	176,756	$	(6,083	)		451	$	123,145	$	(3,105	)
Greater than 12 months		140		27,667		(1,407	)		53		18,249		(1,040	)
Total fixed maturities		731		204,423		(7,490	)		504		141,394		(4,145	)
Equity securities:
12 months or less		33		13,538		(2,170	)		10		1,682		(204	)
Greater than 12 months		3		686		(64	)		2		1,980		(235	)
Total equity securities		36		14,224		(2,234	)		12		3,662		(439	)
Total		767	$	218,647	$	(9,724	)		516	$	145,056	$	(4,584	)

Unrealized losses in the Company’s fixed maturity portfolio are generally the result of interest rate or foreign currency fluctuations as well as the disruption of credit markets occasioned by financial market turmoil such as that associated with recent oil price declines.  The average unrealized loss for all fixed maturity securities in a loss position at December 31, 2014 is approximately 4% of original or adjusted cost.  The Company does not intend to sell any fixed maturity securities and it is not more likely than not that the Company will have to sell any fixed maturity security before recovery of its amortized cost basis.  For equity securities, the Company has evaluated the near-term prospects of the investments in relation to the severity and duration of the impairment and based on that evaluation the Company has the ability and intent to hold these investments for a period sufficient to allow for recovery of fair value.  Therefore, the Company does not believe the unrealized losses represent an other-than-temporary impairment as of December 31, 2014.

The fair value and the cost or amortized cost of fixed maturity investments at December 31, 2014, by contractual maturity, is shown below.  Actual maturities may 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	$	130,407	28.9	%	$	130,322	28.6	%
Excess of one year to five years		189,182	41.9			192,990	42.4
Excess of five years to ten years		47,209	10.4			48,176	10.6
Excess of ten years		9,377	2.1			8,744	1.9
Total maturities		376,175	83.3			380,232	83.5
Asset-backed securities		75,634	16.7			75,153	16.5
	$	451,809	100.0	%	$	455,385	100.0	%

Major categories of investment income for the years ended December 31 are summarized as follows:

		2014			2013			2012
Interest on fixed maturities		$	8,806		$	9,023		$	10,052
Dividends on equity securities			2,693			2,166			2,121
Money market funds, Short-term and other			37			49			43
			11,536			11,238			12,216
Investment expenses			(2,481	)		(2,468	)		(2,286	)
	Net investment income	$	9,055		$	8,770		$	9,930

Gains and losses on investments, including equity method earnings from limited partnerships, for the years ended December 31 are summarized below:

	2014			2013			2012
Fixed maturities:
Gross gains	$	6,480		$	7,235		$	3,860
Gross losses		(4,596	)		(4,371	)		(3,961	)
Net gains (losses)		1,884			2,864			(101	)
Equity securities:
Gross gains		7,467			15,374			3,191
Gross losses		(1,529	)		(2,718	)		(1,131	)
Net gains		5,938			12,656			2,060
Limited partnerships - net gain		7,108			7,995			7,052
Total net gains	$	14,930		$	23,515		$	9,011

Shareholders' equity includes approximately $28,596, net of deferred federal income taxes, of undistributed earnings from limited partnerships as of December 31, 2014.

Gain and loss activity for fixed maturity and equity security investments, as shown in the previous table, include adjustments for other-than-temporary impairment for the years ended December 31 summarized as follows:

	2014			2013			2012
Cumulative charges to income at beginning of year	$	6,770		$	7,773		$	8,178
Writedowns based on objective and subjective criteria		689			742			888
Recovery of prior writedowns upon sale or disposal		(291	)		(1,745	)		(1,293	)
Net pre-tax realized gain (loss)		(398	)		1,003			405
Cumulative charges to income at end of year	$	7,168		$	6,770		$	7,773
Addition (reduction) to earnings per share from net
after-tax OTI gain (loss)	$	(.02	)	$	.04		$	.02
Unrealized gain on investments previously
written down at end of the year - see note below	$	17,127		$	13,129		$	8,158

Note:  Recovery in market value of an investment which has previously been adjusted for other-than-temporary impairment is treated as an unrealized gain until the investment matures or is sold.

There is no primary or secondary market for the Company’s investments in limited partnerships and, in most cases, the Company is prohibited from disposing of its limited partnership interests for some period of time and generally must seek approval from the general partner for any such disposal.  Distributions of earnings from these partnerships are largely at the sole discretion of the general partners and distributions are generally not received by the Company for many years after the earnings have been reported.  The Company has commitments to contribute an additional $2,868 to various limited partnerships as of December 31, 2014.

The Company has invested a total of $23,000 in two limited partnerships, with an aggregate estimated value of $46,987 at December 31, 2014, that are managed by organizations in which four directors of the Company are executive officers, directors or owners.  The Company’s ownership interest in these limited partnerships ranges from 5% to 16%.  These limited partnerships added $7,088, $1,154 and $2,485, net of fees, to investment gains in 2014, 2013 and 2012, respectively.  During 2014, 2013 and 2012, the Company has recorded management fees of $697, $640 and $650, respectively, and performance-based fees of $0, $18 and $0, respectively, to these organizations for management of these limited partnerships.  The Company has been informed that the fee rates applied to its investments in these limited partnerships are the same as, or lower than, the fee rates charged to unaffiliated customers for similar investments.

The Company utilized the services of a broker-dealer firm of which two directors of the Company are employees or partial owners.  This broker-dealer serves as agent for purchases and sales of securities and manages an equity securities portfolio and fixed maturity portfolio with market values of approximately $3,334 and $19,822, respectively, at December 31, 2014.  The Company has been informed that commission and management rates charged by this broker-dealer to the Company are commensurate with rates charged to non-affiliated customers for similar investments.  Total commissions and net fees earned by the broker-dealer and affiliates on these transactions and for advice and consulting were approximately $212, $239 and $186 during 2014, 2013 and 2012, respectively.

The Company’s limited partnerships include one significant investment which invests in public and private equity markets in India.  This limited partnership investment’s value as of December 31, 2014 and 2013 was $29,868 and $22,692, respectively.  At December 31, 2014, the Company’s estimated ownership interest in this limited partnership investment was approximately 5%.  The Company's share of earnings (losses) from this limited partnership investment was $7,176, ($3,176) and $2,404 in 2014, 2013 and 2012, respectively.  The summarized financial information of the significant limited partnership investment as of and for the years ended December 31 is as follows:

	2014		2013			2012
Total assets	$	565,500	$	493,028		$	641,071
Total partners' capital		542,700		444,337			559,745
Net increase (decrease) in partners' capital resulting from operations		125,700		(64,550	)		60,734

The fair value of regulatory deposits with various insurance departments in the United States and Canada totaled $76,406 and $63,447 at December 31, 2014 and 2013, respectively.

Short-term investments at December 31, 2014 include $2,966 in time certificates of deposit issued by a Bermuda bank.

The Company’s fixed maturities are over 85% invested in investment grade fixed maturity investments.  The Company has a total of $15,430, representing five different investments, of fixed maturity investments which were originally issued with guarantees by two different third party insurance companies, with the largest exposure to a single investment being $5,150.  The average S&P credit rating of such investments, with consideration of the guarantee, is AA.  The average S&P underlying credit rating of such investments, without consideration of the guarantee, would remain AA.  The Company does not have any direct exposure to any guarantor.

Approximately $66,817 of fixed maturity investments (8.8% of total invested assets) consists of bonds rated as less than investment grade at year end.  These investments include a diversified portfolio of over 40 investments and have a $3,188 net unrealized loss position at December 31, 2014.

As of December 31, 2014, the Company had committed funds totaling $7,850 related to two 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 (Details) (Recurring [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Fixed maturities: [Abstract]
U.S. government obligations	$ 101,094	$ 113,389
Residential mortgage-backed securities	6,066	13,252
Commercial mortgage-backed securities	36,440	28,565
State and municipal obligations	113,777	115,250
Corporate securities	164,068	134,635
Options embedded in convertible securities	2,898	2,580
Foreign government obligations	27,466	23,879
Total fixed maturities	451,809	431,550
Equity securities: [Abstract]
Financial institutions	25,343	18,850
Industrial & miscellaneous	136,764	126,978
Total equity securities	162,107	145,828
Short term	2,966	4,891
Cash equivalents	59,309	52,002
Total fair value	676,191	634,271
Level 1 [Member]
Fixed maturities: [Abstract]
U.S. government obligations	0	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	0	113,389
Equity securities: [Abstract]
Financial institutions	25,343	18,850
Industrial & miscellaneous	136,764	126,978
Total equity securities	162,107	145,828
Short term	2,966	4,891
Cash equivalents	0	0
Total fair value	165,073	264,108
Level 2 [Member]
Fixed maturities: [Abstract]
U.S. government obligations	101,094	0
Residential mortgage-backed securities	6,066	13,252
Commercial mortgage-backed securities	36,440	28,565
State and municipal obligations	113,777	115,250
Corporate securities	151,860	134,635
Options embedded in convertible securities	2,898	2,580
Foreign government obligations	27,466	23,879
Total fixed maturities	439,601	318,161
Equity securities: [Abstract]
Financial institutions	0	0
Industrial & miscellaneous	0	0
Total equity securities	0	0
Short term	0	0
Cash equivalents	59,309	52,002
Total fair value	498,910	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	12,208	0
Options embedded in convertible securities	0	0
Foreign government obligations	0	0
Total fixed maturities	12,208	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	$ 12,208	$ 0

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Fair Value (Tables)

12 Months Ended

Dec. 31, 2014

Fair Value [Abstract]

Fair value measurements by level for assets measured at fair value on a recurring basis

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

As of December 31, 2014:

Description	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. government obligations	$	101,094	$	-	$	101,094	$	-
Residential mortgage-backed securities		6,066		-		6,066		-
Commercial mortgage-backed securities		36,440		-		36,440		-
State and municipal obligations		113,777		-		113,777		-
Corporate securities		164,068		-		151,860		12,208
Options embedded in convertible securities		2,898		-		2,898		-
Foreign government obligations		27,466		-		27,466		-
Total fixed maturities		451,809		-		439,601		12,208
Equity securities:
Financial institutions		25,343		25,343		-		-
Industrial & miscellaneous		136,764		136,764		-		-
Total equity securities		162,107		162,107		-		-
Short term		2,966		2,966		-		-
Cash equivalents		59,309		-		59,309		-
Total	$	676,191	$	165,073	$	498,910	$	12,208

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		-
Total	$	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 years ended December 31:

	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 into Level 3		12,208		(7,259	)
End of period balance	$	12,208	$	-

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

A summary of the carrying value and fair value by level of financial instruments not recorded at fair value on the Company’s consolidated balance sheet at December 31, 2014 and 2013 is as follows:

2014:	Carrying		Fair Value
	Value		Level 1		Level 2		Level 3		Total
Assets:
Limited partnerships	$	81,230	$	-	$	-	$	81,230	$	81,230
Liabilities:
Short-term borrowings		20,000		-		20,000		-		20,000
2013:
Assets:
Limited partnerships	$	68,988	$	-	$	-	$	68,988	$	68,988
Liabilities:
Short-term borrowings		10,000		-		10,000		-		10,000

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SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT

12 Months Ended

Dec. 31, 2014

SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT [Abstract]

SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT

SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Form 10-K
Baldwin & Lyons, Inc.
(Dollars in thousands)
Condensed Balance Sheets
	December 31
	2014		2013
Assets
Investment in subsidiaries	$	415,304	$	398,008
Due from affiliates		2,762		2,465
Investments other than subsidiaries:
Fixed maturities		11,924		11,093
Limited partnerships		233		248
		12,157		11,341
Cash and cash equivalents		16,615		9,848
Accounts receivable		5,157		7,075
Other assets		17,905		13,453
Total assets	$	469,900	$	442,190
Liabilities and shareholders' equity
Liabilities:
Premiums payable	$	27,850	$	30,004
Deposits from insureds		18,303		16,307
Notes payable to bank		20,000		10,000
Other liabilities		4,251		4,155
		70,404		60,466
Shareholders' equity:
Common stock:
Class A		112		112
Class B		527		525
Additional paid-in capital		51,854		50,594
Unrealized net gains on investments		51,840		49,089
Foreign exchange adjustment		390		1,401
Retained earnings		294,773		280,003
		399,496		381,724
Total liabilities and shareholders' equity	$	469,900	$	442,190

SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Form 10-K
Baldwin & Lyons, Inc.
(Dollars in thousands)
Condensed Statements of Operations
	Year Ended December 31
	2014			2013			2012
Revenue:
Commissions and service fees	$	22,153		$	21,597		$	20,753
Dividends from subsidiaries		15,000			15,000			14,000
Net investment income		102			54			48
Net realized losses on investments		(27	)		(11	)		(49	)
Other		126			41			24
		37,354			36,681			34,776
Expenses:
Salary and related items		15,543			15,965			15,410
Other		7,978			6,633			7,098
		23,521			22,598			22,508
Income before federal income taxes
and equity in undistributed
income of subsidiaries		13,833			14,083			12,268
Federal income tax benefit		(294	)		(348	)		(629	)
		14,127			14,431			12,897
Equity in undistributed income
of subsidiaries		15,590			22,157			19,022
Net income	$	29,717		$	36,588		$	31,919

SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Form 10-K
Baldwin & Lyons, Inc.
(Dollars in thousands)
Condensed Statements of Cash Flows
	Year Ended December 31
	2014			2013			2012
Net cash provided by operating activities	$	19,719		$	15,125		$	20,735
Investing activities:
Purchases of long-term investments		(6,398	)		(10,322	)		(8,944	)
Sales or maturities of long-term investments		5,253			9,982			8,902
Decrease in notes receivable from employees		-			-			1,252
Distributions from limited partnerships		13			-			-
Net purchases of property and equipment		(6,873	)		(1,775	)		(834	)
Other		-			(362	)		228
Net cash provided by (used in) investing activities		(8,005	)		(2,477	)		604
Financing activities:
Dividends paid to shareholders		(14,947	)		(14,943	)		(14,886	)
Drawings on line of credit		10,000			-			-
Net cash used in financing activities		(4,947	)		(14,943	)		(14,886	)
Increase (decrease) in cash and cash equivalents		6,767			(2,295	)		6,453
Cash and cash equivalents at beginning of year		9,848			12,143			5,690
Cash and cash equivalents at end of year	$	16,615		$	9,848		$	12,143

Note to Condensed Financial Statements--Basis of PresentationThe Company's investment in subsidiaries is stated at cost plus equity in the undistributed earnings of subsidiaries since the date of acquisition.  The Company's share of net income of its subsidiaries is included in income using the equity method.  These financial statements should be read in conjunction with the Company's consolidated financial statements.

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SCHEDULE I -SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES

12 Months Ended

Dec. 31, 2014

SCHEDULE I -- SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES [Abstract]

SCHEDULE I -- SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES

SCHEDULE I -- SUMMARY OF INVESTMENTS-
OTHER THAN INVESTMENTS IN RELATED PARTIES
Form 10-K - Year Ended December 31, 2014
Baldwin & Lyons, Inc. and Subsidiaries
(Dollars in thousands)
Column A	Column B		Column C		Column D
					Amount At
					Which Shown
			Fair		In The Balance
Type of Investment	Cost		Value		Sheet (A)
Fixed Maturities:
Bonds:
U.S. government obligations		101,058		101,094		101,094
Mortgage-backed securities		42,040		42,506		42,506
State and municipal obligations		113,133		113,777		113,777
Foreign government obligations		28,332		27,466		27,466
Corporate securities		170,822		166,966		166,966
Total fixed maturities		455,385		451,809		451,809
Equity Securities:
Common Stocks:
Industrial, miscellaneous and all other		78,778		162,107		162,107
Total equity securities		78,778		162,107		162,107
Limited partnerships		81,230		81,230		81,230
Short-term:
Certificates of deposit		2,966		2,966		2,966
Total short-term and other		2,966		2,966		2,966
Total investments	$	618,359	$	698,112	$	698,112

(A)  Investments presented above do not include $59,309 of money market funds classified with cash and cash equivalents in the balance sheet.

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Reportable Segments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Segment Reporting Information [Line Items]
Net premiums earned	$ 68,933	$ 65,947	$ 62,905	$ 63,842	$ 65,422	$ 64,448	$ 61,775	$ 61,098	$ 261,627	$ 252,743	$ 237,461
Reconciliation from Segment Totals to Consolidated [Abstract]
Net investment income									9,055	8,770	9,930
Income before federal income taxes									44,398	54,910	46,606
Reportable Segments [Member]
Segment Reporting Information [Line Items]
Direct and assumed premium written									382,388	369,476	341,286
Net premiums earned									261,627	252,743	237,461
Underwriting gain									34,810	37,836	44,058
Reconciliation from Segment Totals to Consolidated [Abstract]
Underwriting gain									34,810	37,836	44,058
Reportable Segments [Member] | Property and Casualty Insurance [Member]
Segment Reporting Information [Line Items]
Direct and assumed premium written									343,200	314,784	284,200
Net premiums earned									224,683	202,785	186,586
Underwriting gain									32,663	25,558	23,491
Reconciliation from Segment Totals to Consolidated [Abstract]
Underwriting gain									32,663	25,558	23,491
Reportable Segments [Member] | Reinsurance [Member]
Segment Reporting Information [Line Items]
Direct and assumed premium written									39,188	54,692	57,086
Net premiums earned									36,944	49,958	50,875
Underwriting gain									2,147	12,278	20,567
Reconciliation from Segment Totals to Consolidated [Abstract]
Underwriting gain									2,147	12,278	20,567
Segment Reconciling Items [Member]
Reconciliation from Segment Totals to Consolidated [Abstract]
Net investment income									9,055	8,770	9,930
Net realized gains on investments									14,930	23,515	9,011
Corporate expenses									$ (14,397)	$ (15,211)	$ (16,393)

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Quarterly Results of Operations (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2014

Quarterly Results of Operations (Unaudited) [Abstract]

Quarterly results of operations

Note P - Quarterly Results of Operations (Unaudited)
Quarterly results of operations are as follows:
	Results by Quarter
			2014								2013
	1st		2nd		3rd		4th		1st		2nd		3rd		4th
Net premiums earned	$	63,842	$	62,905	$	65,947	$	68,933	$	61,098	$	61,775	$	64,448	$	65,422
Net investment income		2,294		2,090		2,073		2,599		2,410		1,985		2,192		2,183
Net gains on investments		4,070		8,089		658		2,113		14,347		719		1,430		7,019
Losses and loss expenses incurred		39,289		40,282		38,693		41,332		34,533		38,343		36,967		40,858
Net income		6,361		9,340		5,770		8,246		14,943		4,907		7,771		8,967
Net income per share - diluted	$	.42	$	.62	$	.39	$	.55	$	1.00	$	.33	$	.52	$	.60

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SCHEDULE III SUPPLEMENTARY INSURANCE INFORMATION

12 Months Ended

Dec. 31, 2014

SCHEDULE III SUPPLEMENTARY INSURANCE INFORMATION [Abstract]

SCHEDULE III SUPPLEMENTARY INSURANCE INFORMATION

SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
Form 10-K
Baldwin & Lyons, Inc. and Subsidiaries
(Dollars in thousands)
Column A	Column B		Column C		Column D		Column E		Column F		Column G		Column H		Column I		Column J		Column K
	As of December 31								Year Ended December 31
			Reserves
			for Unpaid				Other						Benefits,		Amortization
	Deferred		Claims				Policy						Claims,		of Deferred
	Policy		and Claim				Claims and		Net		Net		Losses and		Policy		Other		Net
	Acquisition		Acquisition		Unearned		Benefits		Premium		Investment		Settlement		Acquisition		Operating		Premiums
Segment	Costs		Expenses		Premiums		Payable		Earned		Income		Expenses		Costs		Expenses		Written
											(A) (C)		(A)				(A) (B) (C)
Property/Casualty
Insurance
2014	$	2,263	$	449,133	$	23,659		---	$	224,683	$	9,055	$	139,308	$	48,872	$	14,033	$	224,258
2013		2,319		408,469		26,303		---		202,785		8,770		133,005		47,414		14,459		201,817
2012		3,091		373,667		28,792		---		186,586		9,930		122,924		41,957		12,057		178,908
Reinsurance
2014		---	$	56,969	$	11,360		---	$	36,944	$	9,055	$	20,288		---	$	14,033	$	37,913
2013		---		66,001		10,390		---		49,958		8,770		17,696		---		14,459		51,867
2012		---		81,787		8,481		---		50,875		9,930		15,164		---		12,057		54,770

(A) Allocations of certain expenses have been made to investment income, settlement expenses and other operating expenses and are based on a number of assumptions and estimates. Results among these categories would change if different methods were applied.

(B) Commission allowances relating to reinsurance ceded are offset against other operating expenses.

(C) Amounts are not broken down into separate segments; entire consolidated amount included in each segment.

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SCHEDULE IV - REINSURANCE

12 Months Ended

Dec. 31, 2014

SCHEDULE IV -- REINSURANCE [Abstract]

SCHEDULE IV -- REINSURANCE

SCHEDULE IV -- REINSURANCE
Form 10-K
Baldwin & Lyons, Inc. and Subsidiaries
(Dollars in thousands)
Column A	Column B		Column C		Column D		Column E		Column F
									% of
			Ceded		Assumed				Amount
	Direct		to Other		from Other		Net		Assumed to
	Premiums		Companies		Companies		Amount		Net
Premiums Earned -
Property/casualty insurance:
Years Ended December 31:
2014	$	342,656	$	119,248	$	38,219	$	261,627		14.1
2013		313,842		113,882		52,783		252,743		19.8
2012		287,982		103,712		53,191		237,461		21.4

Note:  Included in Ceded to Other Companies is $1,275, $2,825 and $2,316 for 2014, 2013 and 2012, respectively, relating to retrocessions associated with premiums assumed from other companies.  Amount Assumed to Net percentage above considers the impact of this retrocession.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2014

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note A - Summary of Significant Accounting Policies

Basis of Presentation:  The consolidated financial statements include the accounts of Baldwin & Lyons, Inc. and its wholly owned subsidiaries (the “Company").  All significant inter-company transactions and accounts have been eliminated in consolidation.

Use of Estimates:  Preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.  Actual results will differ from those estimates.

Cash and Cash Equivalents:  The Company considers investments in money market funds to be cash equivalents.  Carrying amounts for these instruments approximate their fair values.

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

Realized gains and losses on disposals of investments are determined by specific identification of 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) on investments.

In accordance with the Financial Accounting Standard Board’s (“FASB”) other-than-temporary impairment (“OTTI”) guidance, 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 in cases where 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 shareholder’s 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.  The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the appropriate effective interest rate.

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.  Additionally, the Company takes into account any known subjective information in evaluating for impairment, without consideration to the Company’s quantitative criteria defined above, as well as the Company’s intent and ability to retain the equity security for a period of time sufficient to allow for such recovery in fair value.

Property and Equipment:  Property and equipment are carried at cost, less accumulated depreciation.  Depreciation is computed principally by the straight-line method.

Goodwill and Other Intangible Assets:  Goodwill is not amortized.  Rather, it is tested for impairment in accordance with FASB guidance, at the reporting-unit level.  Goodwill is tested annually (during the fourth quarter) or more often if events or circumstances, such as adverse changes in the business climate, indicate there may be impairment. Intangible assets determined to have finite lives, such as customer relationships and employment agreements, are amortized over their estimated useful lives in a manner that best reflects the economic benefits of the intangible asset.  In addition, impairment testing is performed on these amortizing intangible assets if impairment indicators are noted.

Reserves for Losses and Loss Expenses:  The reserves for losses and loss expenses, minor portions of which are discounted, are determined using case basis evaluations and statistical analyses and represent estimates of the ultimate cost of all reported and unreported losses which are unpaid at year end.  These reserves include estimates of future trends in claim severity and frequency and other factors which could vary as the losses are ultimately settled.  While actual results will differ from such estimates, management believes that the reserves for losses and loss expenses are adequate.  The estimates are continually reviewed and as adjustments to these reserves become necessary, such adjustments are reflected in current operations.

Recognition of Revenue and Costs:  Premiums are earned over the period for which insurance protection is provided.  A reserve for unearned premiums, computed by the daily pro-rata method, is established to reflect amounts applicable to subsequent accounting periods.  Commissions to unaffiliated companies and premium taxes applicable to unearned premiums are deferred and expensed as the related premiums are earned.  The Company does not defer acquisition costs which are not directly variable with the production of premium.  If it is determined that expected losses and deferred expenses will likely exceed the related unearned premiums, the asset representing deferred policy acquisition costs is reduced and an expense is charged against current operations to reflect any such premium deficiency.  In the event that the expected premium deficiency exceeds deferred policy acquisition costs, an additional liability would be recorded with a corresponding expense to current operations for the amount of the excess premium deficiency.  Anticipated investment income is considered in determining recoverability of deferred acquisition costs.

Reinsurance:  Reinsurance premiums, commissions, expense reimbursements and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts.  Premiums ceded to other insurers have been reported as a reduction of premium earned.  Amounts applicable to reinsurance ceded for unearned premium and claim loss reserves have been reported as reinsurance recoverable assets.  Certain reinsurance contracts provide for additional or return premiums and commissions based upon profits or losses to the reinsurer over prescribed periods.  Estimates of additional or return premiums and commissions are adjusted quarterly to recognize actual loss experience to date as well as projected loss experience applicable to the various contract periods.  Estimates of reinstatement premiums on reinsurance contracts covering catastrophic events are, to the extent reasonably determinable, recorded concurrently with the related loss.

Should impairment in the ability of a reinsurer to satisfy its obligations to the Company be determined to exist, current year operations would be charged in amounts sufficient to provide for the Company’s additional liability.  Such charges, when incurred, are included in other operating expenses, rather than losses and loss expenses incurred, since the inability of the Company to collect from reinsurers is a credit risk rather than a deficiency associated with the loss reserving process.

The Company accounts for foreign and domestic reinsurance using the periodic method.  Under the periodic method, premiums are recognized as revenue ratably over the contract term, and claims, including an estimate of claims incurred but not reported, are recognized as they occur.

Deferred Taxes:  Deferred income tax assets and liabilities are recognized for temporary differences between the financial statement and tax return bases of assets and liabilities based on enacted tax rates and laws.  The deferred tax benefits of the deferred tax assets are recognized to the extent realization of such benefits is more likely than not.  Deferred income tax expense or benefit generally represents the net change in deferred income tax assets and liabilities during the year.  Current income tax expense represents the tax liability associated with revenues and expenses currently taxable or deductible on various income tax returns for the year reported.

Restricted Stock:  Restricted shares vest ratably over the vesting period from the date of grant and are accelerated for retirement eligible recipients in accordance with the non-substantive post-grant date vesting clause of Accounting Standard Codification (“ASC”) 715, Compensation-Retirement Benefits.  Restricted stock is valued based on the closing price of the stock on the day the award is granted. 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 Compensation Committee.

Earnings Per Share:  Diluted earnings per share of common stock are based on the average number of shares of Class A and Class B common stock outstanding during the year, adjusted for the dilutive effect, if any, of restricted stock awards outstanding.  Basic earnings per share are presented exclusive of the effect of share-based awards outstanding.

Comprehensive Income: The Company records accumulated other comprehensive income from unrealized gains and losses on available-for-sale securities as a separate component of shareholders’ equity.  Foreign exchange adjustments are generally not material and the Company has no defined benefit pension plan.A reclassification adjustment to other comprehensive income is made for gains or losses during the period included in net income.

Fair Value Measurements: The Company provides disclosures related to recurring and non-recurring fair value measurements with separate disclosures for the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements, along with an explanation for the transfers. Additionally, separate disclosures are provided for purchases, sales, issuances and settlements on a gross basis for Level 3 fair value measurements as well as additional clarification for both the level of disaggregation reported for each class of assets or liabilities and disclosures of inputs and valuation techniques used to measure fair value for both recurring and non-recurring fair value measurements for assets and liabilities categorized as Level 2 or Level 3.

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SCHEDULE VI SUPPLEMENTAL INFORMATION CONCERNING PROPERTY/CASUALTY INSURANCE OPERATIONS

12 Months Ended

Dec. 31, 2014

SCHEDULE VI SUPPLEMENTAL INFORMATION CONCERNING PROPERTY/CASUALTY INSURANCE OPERATIONS [Abstract]

SCHEDULE VI SUPPLEMENTAL INFORMATION CONCERNING PROPERTY/CASUALTY INSURANCE OPERATIONS

SCHEDULE VI--SUPPLEMENTAL INFORMATION
CONCERNING PROPERTY/CASUALTY INSURANCE OPERATIONS
Form 10-K
Baldwin & Lyons, Inc. and Subsidiaries
(Dollars in thousands)
Column A	Column B		Column C		Column D		Column E		Column F		Column G		Column H					Column I		Column J		Column K
	As of December 31								Year Ended December 31
			Reserves										Claims and Claim					Amortiza-
			for Unpaid		Discount,								Adjustment Expenses					tion of
	Deferred		Claims		if any								Incurred Related to					Deferred		Paid Claims
AFFILIATION	Policy		and Claim		Deducted						Net			(1)		(2)		Policy		and Claim		Net
WITH	Acquisi-		Adjustment		in		Unearned		Earned		Investment		Current		Prior			Acquisition		Adjustment		Premiums
REGISTRANT	tion Costs		Expenses		Column C		Premiums		Premiums		Income		Year		Years			Costs		Expenses		Written
Consolidated Property/Casualty Subsidiaries:					(A)
2014	$	2,263	$	506,102	$	3,129	$	35,019	$	261,627	$	9,055	$	169,950	$	(10,354	)	$	48,872	$	152,101	$	262,171
2013		2,319		474,470		5,885		36,693		252,743		8,770		156,264		(5,563	)		47,414		151,849		253,684
2012		3,091		455,454		6,118		37,273		237,461		9,930		147,963		(9,875	)		41,957		138,945		233,678

(A) Loss reserves on certain reinsurance assumed and permanent total disability worker's compensation claims have been discounted to present value using pretax interest rates not exceeding 3.5%.

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Stock Purchase and Option Plans (Tables)

12 Months Ended

Dec. 31, 2014

Stock Purchase and Option Plans [Abstract]

Summary of stock issuances

The table below provides detail of the stock issuances for 2014, 2013 and 2012:

Effective	Number of Shares	Vesting		Value
Date	Issued	Date	Period	Per Share
5/8/2012	20,119	5/8/2013	7/1/2012 - 6/30/2013	$21.87
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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Other Operating Expenses (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Other Operating Expenses [Abstract]
Amortization of gross deferred policy acquisition costs	$ 48,872	$ 47,414	$ 41,957
Other underwriting expenses	37,830	35,281	27,242
Expense allowances from reinsurers	(23,797)	(20,822)	(15,185)
Total underwriting expenses	62,905	61,873	54,014
Operating expenses of non-insurance companies	25,143	23,488	23,416
Total other operating expenses	$ 88,048	$ 85,361	$ 77,430

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SCHEDULE IV - REINSURANCE (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Direct Premiums									$ 342,656	$ 313,842	$ 287,982
Ceded to Other Companies									1,275	2,825	2,316
Assumed from Other Companies									38,219	52,783	53,191
Net Amount	68,933	65,947	62,905	63,842	65,422	64,448	61,775	61,098	261,627	252,743	237,461
Retrocessions associated with premiums assumed from other companies									1,275	2,825	2,316
Property and Casualty Insurance [Member]
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Direct Premiums									342,656	313,842	287,982
Ceded to Other Companies									119,248	113,882	103,712
Assumed from Other Companies									38,219	52,783	53,191
Net Amount									$ 261,627	$ 252,743	$ 237,461
% of Amount Assumed to Net (in hundredths)									14.10%	19.80%	21.40%

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Investments:
Fixed maturities	$ 451,809	$ 431,550
Equity securities	162,107	145,828
Limited partnerships	81,230	68,988
Short-term and other	2,966	4,891
Total Investments	698,112	651,257
Cash and cash equivalents	64,632	59,297
Accounts receivable--less allowance (2014, $605; 2013, $615)	98,144	100,830
Accrued investment income	3,682	3,448
Reinsurance recoverable	220,221	195,568
Prepaid reinsurance premiums	2,274	1,057
Deferred policy acquisition costs	2,263	2,319
Property and equipment--less accumulated depreciation $(2014, 13,777; 2013, $15,835)	43,815	36,329
Other assets	9,413	19,051
Current federal income taxes recoverable	1,691	3,114
Total Assets	1,144,247	1,072,270
Reserves:
Losses and loss expenses	506,102	474,470
Unearned premiums	35,019	36,693
Total Reserves	541,121	511,163
Reinsurance payable	46,338	39,122
Short-term borrowings	20,000	10,000
Depository liabilities	48,893	57,544
Accounts payable and other liabilities	68,426	55,866
Deferred federal income taxes	19,973	16,851
Total Liabilities	744,751	690,546
Shareholders' equity:
Additional paid-in capital	51,854	50,594
Unrealized net gains on investments	51,840	49,089
Foreign exchange adjustment	390	1,401
Retained earnings	294,773	280,003
Shareholders' equity	399,496	381,724
Total liabilities and shareholders' equity	1,144,247	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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Leases (Tables)

12 Months Ended

Dec. 31, 2014

Leases [Abstract]

Future lease payments for operating leases with initial or remaining noncancelable terms of one year or more

At December 31, 2014, future lease payments for operating leases with initial or remaining noncancelable terms of one year or more consisted of the following:

2015		144
2016		138
2017		106
2018		-
2019		-
Thereafter		-
Total minimum payments required	$	388

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Consolidated Statements of Shareholders' Equity (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shareholders' equity at beginning of year	$ 381,724	$ 346,712	$ 319,061
Net income	29,717	36,588	31,919
Other comprehensive income	1,740	13,047	9,092
Cash dividends paid to shareholders	(14,947)	(14,943)	(14,886)
Issuance of common stock	1,262	320	1,526
Shareholders' equity at end of year:	$ 399,496	$ 381,724	$ 346,712

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Concentrations of Credit Risk (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014 Director Partnership
Concentrations of Credit Risk [Abstract]
Guarantor obligations, aggregate amount of collateral held	$ 234,312
Collateral held that is equal to the ultimate losses that would be paid or due in the event of insured's default (in hundredths)	100.00%
Uncollateralized exposure as a percentage of shareholder's equity (in hundredths)	42.00%
Reinsurance recoverables, gross	269,114
Largest estimated amounts due from individual reinsurers, one	36,273
Second largest estimated amounts due from individual reinsurers, two	12,002
Aggregate investment in limited partnerships	$ 46,987
Number of limited partnerships investment	2
Number of directors that are executive officers, directors, and owners	4

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Loss and Loss Expense Reserves (Tables)

12 Months Ended

Dec. 31, 2014

Loss and Loss Expense Reserves [Abstract]

Summary of activity in reserves for losses and loss expenses

The major components of the developments shown above are as follows for the years ended December 31:
	2014			2013			2012
Property and casualty insurance	$	(5,423	)	$	(1,725	)	$	(7,111	)
Reinsurance		(4,931	)		(3,838	)		(2,764	)
Totals	$	(10,354	)	$	(5,563	)	$	(9,875	)

Major components of developments of claims' (savings) deficiency

The major components of the developments shown above are as follows for the years ended December 31:
	2014			2013			2012
Property and casualty insurance	$	(5,423	)	$	(1,725	)	$	(7,111	)
Reinsurance		(4,931	)		(3,838	)		(2,764	)
Totals	$	(10,354	)	$	(5,563	)	$	(9,875	)

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Quarterly Results of Operations (Unaudited) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Quarterly Results of Operations (Unaudited) [Abstract]
Net premiums earned	$ 68,933	$ 65,947	$ 62,905	$ 63,842	$ 65,422	$ 64,448	$ 61,775	$ 61,098	$ 261,627	$ 252,743	$ 237,461
Net investment income	2,599	2,073	2,090	2,294	2,183	2,192	1,985	2,410	9,055	8,770	9,930
Net gains on investments	2,113	658	8,089	4,070	7,019	1,430	719	14,347
Losses and loss expenses incurred	41,332	38,693	40,282	39,289	40,858	36,967	38,343	34,533	159,596	150,701	138,088
Net income	$ 8,246	$ 5,770	$ 9,340	$ 6,361	$ 8,967	$ 7,771	$ 4,907	$ 14,943	$ 29,717	$ 36,588	$ 31,919
Net income per share - diluted (in dollars per share)	$ 0.55	$ 0.39	$ 0.62	$ 0.42	$ 0.60	$ 0.52	$ 0.33	$ 1.00

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Fair Value

12 Months Ended

Dec. 31, 2014

Fair Value [Abstract]

Fair Value

Note O – 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 carrying amounts reported in the consolidated balance sheets for cash, accounts receivables, reinsurance recoverable, notes receivable, accounts payable and accrued expenses, income taxes payable, short term borrowings and unearned income approximate fair value because of the short term nature of these items. The following tables summarize fair value measurements by level for assets measured at fair value on a recurring basis:

As of December 31, 2014:

Description	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. government obligations	$	101,094	$	-	$	101,094	$	-
Residential mortgage-backed securities		6,066		-		6,066		-
Commercial mortgage-backed securities		36,440		-		36,440		-
State and municipal obligations		113,777		-		113,777		-
Corporate securities		164,068		-		151,860		12,208
Options embedded in convertible securities		2,898		-		2,898		-
Foreign government obligations		27,466		-		27,466		-
Total fixed maturities		451,809		-		439,601		12,208
Equity securities:
Financial institutions		25,343		25,343		-		-
Industrial & miscellaneous		136,764		136,764		-		-
Total equity securities		162,107		162,107		-		-
Short term		2,966		2,966		-		-
Cash equivalents		59,309		-		59,309		-
Total	$	676,191	$	165,073	$	498,910	$	12,208

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		-
Total	$	634,271	$	264,108	$	370,163	$	-

Level inputs, as defined by the FASB guidance, 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 Level 3 assets consist of a portfolio of corporate convertible bonds.  The corporate convertible bonds are valued using various unobservable inputs including extrapolated data, proprietary models and indicative quotes.  Transfers into Level 3 during 2014 relate to securities previously classified as Level 2.  There were transfers into Level 3 during 2013.  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 years ended December 31:

	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 into Level 3		12,208		(7,259	)
End of period balance	$	12,208	$	-

Quoted market prices are obtained whenever possible.  Where quoted market prices are not available, fair values are estimated using present value or other valuation techniques.  These techniques are significantly affected by our assumptions, including discount rates and estimates of future cash flows.  Potential taxes and other transaction costs have not been considered in estimating fair values.

Transfers between levels, if any, are recorded as of the beginning of the reporting period.  The U.S. government obligations were transferred to Level 2 during 2014 based on market data as well as other factors including region, price type and provider on each asset. There were no significant transfers of assets between Level 1 and Level 2 during 2013 and 2012.

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

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

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 sheet at December 31, 2014 and 2013 is as follows:

2014:	Carrying		Fair Value
	Value		Level 1		Level 2		Level 3		Total
Assets:
Limited partnerships	$	81,230	$	-	$	-	$	81,230	$	81,230
Liabilities:
Short-term borrowings		20,000		-		20,000		-		20,000
2013:
Assets:
Limited partnerships	$	68,988	$	-	$	-	$	68,988	$	68,988
Liabilities:
Short-term borrowings		10,000		-		10,000		-		10,000

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Reinsurance (Tables)

12 Months Ended

Dec. 31, 2014

Reinsurance [Abstract]

Impact of reinsurance ceded and assumed on the company's net premium written and earned

The following table summarizes the impact of reinsurance ceded and assumed on the Company’s net premium written and earned for the most recent three years:

	Premiums Written									Premiums Earned
	2014			2013			2012			2014			2013			2012
Direct	$	343,200		$	314,784		$	284,200		$	342,656		$	313,842		$	287,982
Ceded on direct		(118,942	)		(112,967	)		(105,292	)		(117,973	)		(111,057	)		(101,396	)
Net direct		224,258			201,817			178,908			224,683			202,785			186,586
Assumed		39,188			54,692			57,086			38,219			52,783			53,191
Ceded on assumed		(1,275	)		(2,825	)		(2,316	)		(1,275	)		(2,825	)		(2,316	)
Net assumed		37,913			51,867			54,770			36,944			49,958			50,875
Net	$	262,171		$	253,684		$	233,678		$	261,627		$	252,743		$	237,461

Components of reinsurance recoverable

Components of reinsurance recoverable at December 31 are as follows:

	2014		2013
Case unpaid losses, net of valuation allowance	$	143,403	$	133,484
Incurred but not reported unpaid losses and loss expenses		66,325		52,157
Paid losses and loss expenses		6,910		4,126
Unearned premiums		3,583		5,801
	$	220,221	$	195,568

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Statutory

12 Months Ended

Dec. 31, 2014

Statutory [Abstract]

Statutory

Note Q - Statutory

Net income of the insurance subsidiaries, all of which are wholly owned, as determined in accordance with statutory accounting practices, was $27,143, $30,886 and $29,262 for 2014, 2013 and 2012, respectively.  Consolidated statutory capital and surplus for these subsidiaries was $398,762 and $377,209 at December 31, 2014 and 2013, respectively, of which $64,400 may be transferred by dividend or loan to the parent company during calendar year 2015 with proper notification to, but without approval from, regulatory authorities.  An additional $238,096 of shareholders’ equity of such insurance subsidiaries could, under existing regulations, 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.

State regulatory authorities prescribe calculations of the minimum amount of statutory capital and surplus necessary for each insurance company to remain authorized.  These computations are referred to as Risk Based Capital (“RBC”) requirements and are based on a number of complex factors taking into consideration the quality and nature of assets, the historical adequacy of recorded liabilities and the specific nature of business conducted.    At December 31, 2014 the minimum statutory capital and surplus requirements of the insurance subsidiaries was $94,892.  Actual consolidated statutory capital and surplus at December 31, 2014 exceeded this requirement by $303,870, which equals to 320% of minimum RBC.

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Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Investments [Abstract]
Total unrealized gain before federal income taxes	$ 79,753				$ 75,521				$ 79,753	$ 75,521
Deferred tax liability	(27,913)				(26,432)				(27,913)	(26,432)
Net unrealized gains on investments	51,840				49,089				51,840	49,089
Foreign exchange adjustment [Abstract]
Gross unrealized gains	600				2,155				600	2,155
Deferred tax liability	(210)				(754)				(210)	(754)
Net unrealized gains on foreign exchange adjustment	390				1,401				390	1,401
Accumulated other comprehensive income	52,230				50,490				52,230	50,490	37,443
Investments [Abstract]
Pre-tax holding gains on debt and equity securities arising during period									12,055	36,477	15,612
Less: applicable federal income taxes									4,220	12,766	5,464
Net unrealized gains on investments									7,835	23,711	10,148
Pre-tax gains on debt and equity securities included in net income during period									7,823	15,520	1,959
Less: applicable federal income taxes									2,739	5,431	686
Other comprehensive income (loss), reclassification adjustment for sale of securities included in net income, net of tax									5,084	10,089	1,273
Change in unrealized gains on investments									2,751	13,622	8,875
Reconciliation of Accumulated Other Comprehensive Income [Roll Forward]
Beginning accumulated other comprehensive income				50,490				37,443	50,490	37,443	28,351
Change in foreign exchange adjustment									(1,011)	(575)	217
Change in unrealized net gains on investments									2,751	13,622	8,875
Ending accumulated other comprehensive income	52,230				50,490				52,230	50,490	37,443
Retained Earnings [Roll Forward]
Beginning retained earnings				280,003				258,358	280,003	258,358	241,325
Net income	8,246	5,770	9,340	6,361	8,967	7,771	4,907	14,943	29,717	36,588	31,919
Dividends									(14,947)	(14,943)	(14,886)
Ending retained earnings	$ 294,773				$ 280,003				$ 294,773	$ 280,003	$ 258,358

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating activities
Net income	$ 29,717	$ 36,588	$ 31,919
Adjustments to reconcile net income to net cash provided by operating activities:
Change in accounts receivable and unearned premium	3,230	(16,488)	(13,089)
Change in accrued investment income	(234)	939	(50)
Change in reinsurance recoverable on paid losses	(2,785)	(1,618)	537
Change in losses and loss expenses reserves net of reinsurance	7,545	(1,264)	(2,289)
Change in other assets, other liabilities and current income taxes	(4,847)	29,892	29,850
Amortization of net policy acquisition costs	25,075	26,592	26,772
Net policy acquisition costs deferred	(25,019)	(25,819)	(25,285)
Provision for deferred income taxes	1,640	939	3,868
Bond amortization	4,235	5,068	6,055
(Gain) loss on sale of property	474	(27)	10
Depreciation	4,797	4,300	4,981
Net realized gains on investments	(14,930)	(23,515)	(9,011)
Compensation expense related to restricted stock	1,262	320	1,526
Net cash provided by operating activities	30,160	35,907	55,794
Investing activities
Purchases of fixed maturities and equity securities	(288,283)	(369,259)	(320,434)
Purchases of limited partnership interests	(6,886)	(3,568)	(2,154)
Distributions from limited partnerships	1,752	2,528	3,957
Proceeds from maturities	98,714	129,113	150,652
Proceeds from sales of fixed maturities	167,406	207,723	103,106
Proceeds from sales of equity securities	19,263	29,858	8,674
Net sales (purchases) of short-term investments	1,925	(690)	(529)
Decrease in principal of notes receivable from employees	0	0	1,252
Purchases of property and equipment	(13,451)	(28,607)	(4,054)
Proceeds from disposals of property and equipment	693	261	228
Net cash used in investing activities	(18,867)	(32,641)	(59,302)
Financing activities
Dividends paid to shareholders	(14,947)	(14,943)	(14,886)
Drawings on line of credit	10,000	0	0
Net cash used in financing activities	(4,947)	(14,943)	(14,886)
Effect of foreign exchange rates on cash and cash equivalents	(1,011)	(575)	217
Increase (decrease) in cash and cash equivalents	5,335	(12,252)	(18,177)
Cash and cash equivalents at beginning of year	59,297	71,549	89,726
Cash and cash equivalents at end of year	$ 64,632	$ 59,297	$ 71,549

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Assets
Account receivable, allowance	$ 605	$ 615
Property and equipment, accumulated depreciation	$ 13,777	$ 15,835
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)	12,356,389	12,304,191

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Reportable Segments

12 Months Ended

Dec. 31, 2014

Reportable Segments [Abstract]

Reportable Segments

Note J - Reportable Segments

The Company operates within two reportable business segments:  property and casualty insurance and reinsurance.  The property and casualty insurance segment provides multiple line insurance coverage primarily to fleet transportation companies and to independent contractors who contract with fleet transportation companies, as well as individual personal automobile coverage, professional liability coverages and business owners’ and commercial property policies.  The reinsurance segment accepts cessions from other insurance companies as well as retrocessions from selected reinsurance companies, providing property catastrophe and casualty reinsurance coverages.

The Company evaluates performance and allocates resources based on past or expected results from insurance underwriting operations before income taxes.  Underwriting gain or loss does not include net investment income or gains or losses on the Company's investment portfolio.  All investment-related revenues are managed at the corporate level.  Underwriting gain or loss for the property and casualty insurance segment includes revenue and expense from the Company's agency operations since the agency operations serve as a primary direct marketing facility for this 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.  The accounting policies of each reportable segment are the same as those described in the summary of significant accounting policies.

The following table provides certain profit and loss information for each reportable segment for the years ended

December 31:

		2014		2013		2012
Direct and assumed premium written:
Property and casualty insurance		$	343,200	$	314,784	$	284,200
Reinsurance			39,188		54,692		57,086
	Totals	$	382,388	$	369,476	$	341,286
Net premium earned:
Property and casualty insurance		$	224,683	$	202,785	$	186,586
Reinsurance			36,944		49,958		50,875
	Totals	$	261,627	$	252,743	$	237,461
Underwriting gain:
Property and casualty insurance		$	32,663	$	25,558	$	23,491
Reinsurance			2,147		12,278		20,567
	Totals	$	34,810	$	37,836	$	44,058

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

		2014			2013			2012
Profit:
Underwriting gain		$	34,810		$	37,836		$	44,058
Net investment income			9,055			8,770			9,930
Net realized gains on investments			14,930			23,515			9,011
Corporate expenses			(14,397	)		(15,211	)		(16,393	)
	Income before federal income taxes	$	44,398		$	54,910		$	46,606

One customer of the property and casualty insurance segment, FedEx Ground Systems, Inc. and certain of its subsidiaries and related entities (“FedEx”) represents approximately $8,191, $15,615 and $19,052 of the Company’s consolidated direct and assumed premium written in 2014, 2013 and 2012, respectively.

An additional $208,580, $177,389 and $146,447 for 2014, 2013 and 2012, respectively, is placed with the Company by a non-affiliated broker on behalf of independent contractors of this same customerbut is not dependent upon the direct business with this customer.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Jun. 30, 2014	Mar. 01, 2015
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 Public Float		$ 253,547,000
Entity Information [Line Items]
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2014
Class A (voting) [Member]
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding			2,623,109
Class B (non-voting) [Member]
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding			12,397,344

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Earnings Per Share

12 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Earnings Per Share

Note K - Earnings Per Share

The following is a reconciliation of the denominators used in the calculation of basic and diluted earnings per share for the years ended December 31:

	2014		2013		2012
Average share outstanding for basic earnings per share		14,963,959		14,906,416		14,838,767
Dilutive effect of share equivalents		11,935		17,345		29,482
Average shares outstanding for diluted earnings per share		14,975,894		14,923,761		14,868,249

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Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Revenues:
Net premiums earned	$ 261,627	$ 252,743	$ 237,461
Net investment income	9,055	8,770	9,930
Commissions and other income	6,430	5,944	5,722
Net realized gains on investments, excluding impairment losses	15,619	24,257	9,899
Total other-than-temporary impairment losses on investments	(689)	(744)	(894)
Portion of other-than-temporary impairment losses recognized in other comprehensive income	0	2	6
Net realized gains on investments	14,930	23,515	9,011
Total revenue	292,042	290,972	262,124
Expenses:
Losses and loss expenses incurred	159,596	150,701	138,088
Other operating expenses	88,048	85,361	77,430
Total expenses	247,644	236,062	215,518
Income before federal income taxes	44,398	54,910	46,606
Federal income taxes	14,681	18,322	14,687
Net income	$ 29,717	$ 36,588	$ 31,919
Per share data:
Basic and diluted earnings (in dollars per share)	$ 1.98	$ 2.45	$ 2.15

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Income Taxes

12 Months Ended

Dec. 31, 2014

Income Taxes [Abstract]

Income Taxes

Note E - Income Taxes

Deferred income taxes are calculated to account for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  Significant components of the Company's deferred tax assets and liabilities as of December 31 are as follows:

	2014			2013
Deferred tax liabilities:
Unrealized gain on fixed income and equity security investments	$	27,914		$	26,432
Deferred acquisition costs		1,341			1,829
Salvage and subrogation		2,373			2,638
Limited partnership investments		4,636			2,612
Other		1,229			866
Total deferred tax liabilities		37,493			34,377
Deferred tax assets:
Loss and loss expense reserves		10,973			11,071
Unearned premiums discount		2,201			2,162
Other-than-temporary investment declines		2,049			2,053
Deferred compensation		1,565			880
Deferred ceding commission		549			1,018
Other		183			342
Total deferred tax assets		17,520			17,526
Net deferred tax liabilities	$	(19,973	)	$	(16,851	)

A summary of the difference between federal income tax expense computed at the statutory rate and that reported in the consolidated financial statements is as follows:

	2014			2013			2012
Statutory federal income rate applied to pretax income	$	15,539		$	19,218		$	16,312
Tax effect of (deduction):
Tax-exempt investment income		(924	)		(811	)		(933	)
Net reduction of tax positions		(75	)		(116	)		(693	)
Other		141			31			1
Federal income tax expense	$	14,681		$	18,322		$	14,687

Federal income tax expense consists of the following:
	2014		2013		2012
Taxes on pre-tax income:
Current	$	13,041	$	17,383	$	10,819
Deferred		1,640		939		3,868
	$	14,681	$	18,322	$	14,687

The components of the provision for deferred federal income taxes are as follows:
		2014			2013			2012
Limited partnerships		$	2,025		$	1,058		$	3,013
Discounts of loss and loss expense reserves			113			313			(57	)
Unearned premium discount			(38	)		(65	)		265
Deferred compensation			(685	)		(146	)		112
Other-than-temporary investment declines			(19	)		680			169
Deferred acquisitions costs and ceding commission			(20	)		(271	)		(520	)
Other			264			(630	)		886
	Provision for deferred federal income tax	$	1,640		$	939		$	3,868

Cash flows related to federal income taxes paid, net of refunds received, for 2014, 2013 and 2012 were $11,619, $17,250 and $3,661, respectively.

The Company is required to establish a valuation allowance for any portion of the gross deferred tax asset that management believes will not be realized.  Management has determined that no such valuation allowance is necessary at December 31, 2014 or 2013.  As of December 31, 2014, the calendar years 2011 through 2014 remain subject to examination by the IRS.

The Company has no uncertain tax positions as of December 31, 2014 or 2013.  The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits in income tax expense and changes in such accruals would impact the Company’s effective tax rate.  Amounts accrued for the payment of interest at December 31, 2014, 2013 and 2012 were not material.

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Reinsurance

12 Months Ended

Dec. 31, 2014

Reinsurance [Abstract]

Reinsurance

Note D – Reinsurance

The insurance subsidiaries cede portions of their gross premiums written to certain other insurers under excess of loss and quota share treaties and by facultative placements.  Reinsurance treaties with other companies permit the recovery of a portion of related direct losses.  Management determines the amount of net exposure it is willing to accept generally on a product line basis.  Certain treaties covering fleet transportation risks include annual deductibles which must be exceeded before the Company can recover under the terms of the treaty.  The Company retains a higher percentage of the direct premium in consideration of these deductible provisions.  The Company remains liable to the extent the reinsuring companies are unable to meet their obligations under reinsurance contracts.

The Company also serves as an assuming reinsurer on treaties with direct writing insurance companies and, prior to January 1, 2014, under retrocessions from other reinsurers for catastrophic property coverages.  Accordingly, the occurrence of catastrophic events can have a significant impact on the Company's operations.  The Company also assumes reinsurance from direct writing insurance companies for casualty insurance coverages.  In addition, the insurance subsidiaries participate in certain mandatory residual market pools which require insurance companies to provide coverages on assigned risks.  The assigned risk pools allocate participation to all insurers based upon each insurer’s portion of premium writings on a state or national level.  Historically, the operation of these assigned risk pools have resulted in net losses allocated to the Company although such losses have not been material in relation to the Company’s operations.

The following table summarizes the impact of reinsurance ceded and assumed on the Company’s net premium written and earned for the most recent three years:

	Premiums Written									Premiums Earned
	2014			2013			2012			2014			2013			2012
Direct	$	343,200		$	314,784		$	284,200		$	342,656		$	313,842		$	287,982
Ceded on direct		(118,942	)		(112,967	)		(105,292	)		(117,973	)		(111,057	)		(101,396	)
Net direct		224,258			201,817			178,908			224,683			202,785			186,586
Assumed		39,188			54,692			57,086			38,219			52,783			53,191
Ceded on assumed		(1,275	)		(2,825	)		(2,316	)		(1,275	)		(2,825	)		(2,316	)
Net assumed		37,913			51,867			54,770			36,944			49,958			50,875
Net	$	262,171		$	253,684		$	233,678		$	261,627		$	252,743		$	237,461

Net losses and loss expenses incurred for 2014, 2013 and 2012 have been reduced by ceded reinsurance recoveries of approximately $105,891, $107,321 and $90,899, respectively.  Ceded reinsurance premiums and loss recoveries for the purchase of catastrophe reinsurance coverage on the Company’s net direct business were not material.

Net losses and loss expenses incurred for 2014, 2013 and 2012 include approximately $23,163, $20,014 and $16,486, respectively, net of retrocessional recoveries of $20,000 during 2012, relating to reinsurance assumed from non-affiliated insurance or reinsurance companies.

Components of reinsurance recoverable at December 31 are as follows:

	2014		2013
Case unpaid losses, net of valuation allowance	$	143,403	$	133,484
Incurred but not reported unpaid losses and loss expenses		66,325		52,157
Paid losses and loss expenses		6,910		4,126
Unearned premiums		3,583		5,801
	$	220,221	$	195,568

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Quarterly Results of Operations (Unaudited)

12 Months Ended

Dec. 31, 2014

Quarterly Results of Operations (Unaudited) [Abstract]

Quarterly Results of Operations (Unaudited)

Note P - Quarterly Results of Operations (Unaudited)
Quarterly results of operations are as follows:
	Results by Quarter
			2014								2013
	1st		2nd		3rd		4th		1st		2nd		3rd		4th
Net premiums earned	$	63,842	$	62,905	$	65,947	$	68,933	$	61,098	$	61,775	$	64,448	$	65,422
Net investment income		2,294		2,090		2,073		2,599		2,410		1,985		2,192		2,183
Net gains on investments		4,070		8,089		658		2,113		14,347		719		1,430		7,019
Losses and loss expenses incurred		39,289		40,282		38,693		41,332		34,533		38,343		36,967		40,858
Net income		6,361		9,340		5,770		8,246		14,943		4,907		7,771		8,967
Net income per share - diluted	$	.42	$	.62	$	.39	$	.55	$	1.00	$	.33	$	.52	$	.60

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Concentrations of Credit Risk

12 Months Ended

Dec. 31, 2014

Concentrations of Credit Risk [Abstract]

Concentrations of Credit Risk

Note L - Concentrations of Credit Risk

The Company writes policies of excess insurance attaching above self-insured retentions ("SIR") and also writes policies that contain per-claim deductibles.  Those losses and claims that fall within the SIR limits are obligations of the insured; however, the Company writes surety bonds in favor of various regulatory agencies guaranteeing the insureds’ payment of claims within the SIR.  Further, specified portions of losses and claims incurred under large deductible policies, while obligations of the Company, are contractually reimbursable to the Company from the insureds.  The Company requires collateral from its insureds to serve as a source of reimbursement if the Company is obligated to pay claims within the SIR by reason of an insured’s default or if the insured fails to reimburse the Company for deductible amounts paid by the Company.

Acceptable collateral may be provided in the form of letters of credit on Company approved banks, Company approved marketable securities or cash.  At December 31, 2014, the Company held collateral in the aggregate amount of $234,312.

The amount of collateral required of an insured is determined by the financial condition of the insured, the type of obligations guaranteed by the Company, estimated reserves for incurred losses within the SIR or deductible that have been reported to the insured or the Company, estimated incurred but not reported losses, and estimates for losses that are expected to occur, within the SIR or deductible, prior to the next collateral adjustment date.  In general, the Company attempts to hold collateral equal to 100% of the ultimate losses that would be paid by or due the Company in the event of an insured’s default.  Periodic audits are conducted by the Company to evaluate its exposure and the collateral required.  If a deficiency in collateral is noted as the result of an audit, additional collateral is requested immediately.  Because collateral amounts contain numerous estimates of the Company’s exposure, are adjusted only periodically and are sometimes reduced based on the superior financial condition of the insured, the amount of collateral held by the Company at a given point in time may not be sufficient to fully reimburse the Company for all of its guarantees or amounts due in the event of an insured’s default.  In that regard, the Company is not fully collateralized for the guarantees made for, or the deductible amounts that may be due from FedEx Ground and certain of its subsidiaries and related entities, and in the event of their default, such default may have a material adverse impact on the Company.  The Company estimates its uncollateralized exposure related to this customer to be as much as 42% of shareholders' equity at December 31, 2014.

In addition, the Company's balance sheet includes paid and estimated unpaid amounts recoverable from reinsurers under various agreements totaling $269,114 at December 31, 2014.  These recoverables are only partially collateralized.  The two largest amounts due from individual reinsurers net of collateral and offsets were $36,273 and $12,002 at December 31, 2014.

Investments in limited partnerships include an aggregate of $46,987 invested in two limited partnerships, New Vernon India Fund and New Vernon Global Opportunity Fund which are managed by organizations in which four directors of the Company are executive officers, directors and owners.

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2014

Employee Benefit Plans [Abstract]

Employee Benefit Plans

Note H - Employee Benefit Plans

The Company maintains a defined contribution 401(k) Employee Savings and Profit Sharing Plan (the “Plan”) which covers nearly all employees who have completed one year of service.  The Company's contributions to the Plan for 2014, 2013 and 2012 were $1,798, $1,798 and $1,539, respectively.

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Acquisition and related Goodwill and Intangibles (Details) (Transportation Specialty Insurance Agency [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Business Acquisition [Line Items]
Date of acquisition agreement	Oct. 31, 2008
Cash purchase price	$ 3,500
Recorded goodwill	3,152
Customer Relationships and Employment Agreements [Member]
Business Acquisition [Line Items]
Intangible assets included in other assets	179
Amortization of intangible assets	4	17	28
Accumulated amortization on intangible assets	$ 179	$ 175

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Shareholders' Equity

12 Months Ended

Dec. 31, 2014

Shareholders' Equity [Abstract]

Shareholders' Equity

Note F - Shareholders' Equity
Changes in common stock outstanding and additional paid-in capital are as follows:
									Additional
	Class A				Class B				Paid-in
	Shares		Amount		Shares		Amount		Capital
Balance at January 1, 2012		2,623,109	$	112		12,225,348	$	522	$	48,751
Restricted stock grants		-		-		64,687		2		1,524
Balance at December 31, 2012		2,623,109		112		12,290,035		524		50,275
Restricted stock grants		-		-		14,156		1		319
Balance at December 31, 2013		2,623,109		112		12,304,191		525		50,594
Restricted stock grants		-		-		52,198		2		1,260
Balance at December 31, 2014		2,623,109	$	112		12,356,389	$	527	$	51,854

The Company's Class A and Class B common stock has a stated value of approximately $.04 per share.  The Company paid a total of $14,947, $14,943 and $14,886, or $1.00 per share, in dividends for the years 2014, 2013 and 2012, respectively.

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Other Operating Expenses

12 Months Ended

Dec. 31, 2014

Other Operating Expenses [Abstract]

Other Operating Expenses

Note G - Other Operating Expenses
Details of other operating expenses for the years ended December 31:
		2014			2013			2012
Amortization of gross deferred policy acquisition costs		$	48,872		$	47,414		$	41,957
Other underwriting expenses			37,830			35,281			27,242
Expense allowances from reinsurers			(23,797	)		(20,822	)		(15,185	)
	Total underwriting expenses		62,905			61,873			54,014
Operating expenses of non-insurance companies			25,143			23,488			23,416
	Total other operating expenses	$	88,048		$	85,361		$	77,430

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Stock Purchase and Option Plans

12 Months Ended

Dec. 31, 2014

Stock Purchase and Option Plans [Abstract]

Stock Purchase and Option Plans

Note I - Stock Purchase and Option Plans

In accordance with the terms of the 1981 Stock Purchase Plan (1981 Plan), the Company is obligated to repurchase shares issued under the 1981 Plan, at a price equal to 90% of the book value of the shares at the end of the quarter immediately preceding the date of repurchase.  A limited number of shares have ever been repurchased under the 1981 Plan.  At December 31, 2014, there were 121,286 shares (Class A) and 339,546 shares (Class B) outstanding which remain eligible for repurchase by the Company.

The Company maintains one restricted stock unit plan which is described below.

Restricted Stock:

Each year, beginning in 2009, the Company has issued shares of class B restricted stock to the Company’s outside directors.  The shares serve as the annual retainer compensation for the outside directors for the periods shown below.  The shares are distributed on the vesting date and have a total value of $440 for each of the annual periods.  The table below provides detail of the stock issuances for 2014, 2013 and 2012:

Effective	Number of Shares	Vesting		Value
Date	Issued	Date	Period	Per Share
5/8/2012	20,119	5/8/2013	7/1/2012 - 6/30/2013	$21.87
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.

Director compensation cost associated with restricted stock grants of $440 was charged against income for the restricted stock units for 2014, 2013 and 2012.

Effective February 4, 2014, the Company issued 45,678 shares of class B restricted stock to certain of the Company’s executives.  The restricted shares will be paid solely in the Company’s class B stock.  The restricted shares represent a portion of the calendar year 2013 compensation to certain executives under the terms of the Company’s Executive Incentive Bonus Plan.  The restricted shares will vest ratably over a three year period from the date of grant and are accelerated for retirement eligible recipients in accordance with the non-substantive post-grant date vesting clause of ASC 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 Compensation Committee.

Effective February 4, 2015, the Company issued 36,646 shares of class B restricted stock to certain of the Company’s executives.  The restricted shares will be paid solely in the Company’s class B stock.  The restricted shares represent a portion of the calendar year 2014 compensation to certain executives under the terms of the Company’s Executive Incentive Bonus Plan.  The restricted shares will vest ratably over a three year period from the date of grant and are accelerated for retirement eligible recipients in accordance with the non-substantive post-grant date vesting clause of ASC 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 $23.29 per share representing a total value of $853.  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 Compensation Committee.

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Fair Value, Balance Sheet Grouping (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Carrying Value [Member]
Assets [Abstract]
Limited partnerships	$ 81,230	$ 68,988
Liabilities [Abstract]
Short-term borrowings	20,000	10,000
Fair Value [Member]
Assets [Abstract]
Limited partnerships	81,230	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	81,230	68,988
Liabilities [Abstract]
Short-term borrowings	$ 0	$ 0

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Statutory (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Statutory [Abstract]
Net income (loss) of the insurance subsidiaries in accordance with statutory accounting practices	$ 27,143	$ 30,886	$ 29,262
Consolidated statutory capital and surplus for subsidiaries	398,762	377,209
Amount of statutory surplus transferred by dividend or loan to the parent company	64,400
Additional shareholders' equity of insurance subsidiaries that could be advanced or loaned to parent company with prior notification and approval from regulatory authorities	238,096
Minimum statutory surplus necessary for the insurance subsidiaries to satisfy statutory risk based capital requirements	94,892
Consolidated statutory capital and surplus exceeded requirement	$ 303,870
Excess statutory capital and surplus to risk based capital (in hundredths)	320.00%

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Fair Value, Unobservable Input Reconciliation (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 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 into Level 3	12,208	(7,259)
End of period balance	$ 12,208	$ 0

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Investments (Tables)

12 Months Ended

Dec. 31, 2014

Investments [Abstract]

Summary of available for sale securities

Note B - Investments
The following is a summary of available for sale securities at December 31:
										Net
			Cost or		Gross		Gross			Unrealized
	Fair		Amortized		Unrealized		Unrealized			Gains
	Value		Cost		Gains		Losses			(Losses)
2014:
Fixed maturities:
U.S. government obligations	$	101,094	$	101,058	$	108	$	(72	)	$	36
Residential mortgage-backed securities		6,066		5,830		273		(37	)		236
Commercial mortgage-backed securities		36,440		36,210		630		(400	)		230
State and municipal obligations		113,777		113,133		784		(140	)		644
Corporate securities		166,966		170,822		2,005		(5,861	)		(3,856	)
Foreign government obligations		27,466		28,332		114		(980	)		(866	)
Total fixed maturities		451,809		455,385		3,914		(7,490	)		(3,576	)
Equity securities:
Financial institutions		25,343		10,100		15,303		(60	)		15,243
Industrial & miscellaneous		136,764		68,678		70,260		(2,174	)		68,086
Total equity securities		162,107		78,778		85,563		(2,234	)		83,329
Total	$	613,916	$	534,163	$	89,477	$	(9,724	)		79,753
							Applicable federal income taxes				(27,913	)
							Net unrealized gains - net of tax			$	51,840
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 December 31, the aggregate fair value and gross unrealized loss categorized by the duration those securities have been continuously in an unrealized loss position.

	2014							2013
	Number of Securities		Fair Value		Gross Unrealized Loss			Number of Securities		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
12 months or less		591	$	176,756	$	(6,083	)		451	$	123,145	$	(3,105	)
Greater than 12 months		140		27,667		(1,407	)		53		18,249		(1,040	)
Total fixed maturities		731		204,423		(7,490	)		504		141,394		(4,145	)
Equity securities:
12 months or less		33		13,538		(2,170	)		10		1,682		(204	)
Greater than 12 months		3		686		(64	)		2		1,980		(235	)
Total equity securities		36		14,224		(2,234	)		12		3,662		(439	)
Total		767	$	218,647	$	(9,724	)		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 cost of fixed maturity investments at December 31, 2014, by contractual maturity, is shown below.  Actual maturities may 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	$	130,407	28.9	%	$	130,322	28.6	%
Excess of one year to five years		189,182	41.9			192,990	42.4
Excess of five years to ten years		47,209	10.4			48,176	10.6
Excess of ten years		9,377	2.1			8,744	1.9
Total maturities		376,175	83.3			380,232	83.5
Asset-backed securities		75,634	16.7			75,153	16.5
	$	451,809	100.0	%	$	455,385	100.0	%

Major categories of investment income

Major categories of investment income for the years ended December 31 are summarized as follows:

		2014			2013			2012
Interest on fixed maturities		$	8,806		$	9,023		$	10,052
Dividends on equity securities			2,693			2,166			2,121
Money market funds, Short-term and other			37			49			43
			11,536			11,238			12,216
Investment expenses			(2,481	)		(2,468	)		(2,286	)
	Net investment income	$	9,055		$	8,770		$	9,930

Realized gains (losses) on investments

Gains and losses on investments, including equity method earnings from limited partnerships, for the years ended December 31 are summarized below:

	2014			2013			2012
Fixed maturities:
Gross gains	$	6,480		$	7,235		$	3,860
Gross losses		(4,596	)		(4,371	)		(3,961	)
Net gains (losses)		1,884			2,864			(101	)
Equity securities:
Gross gains		7,467			15,374			3,191
Gross losses		(1,529	)		(2,718	)		(1,131	)
Net gains		5,938			12,656			2,060
Limited partnerships - net gain		7,108			7,995			7,052
Total net gains	$	14,930		$	23,515		$	9,011

Adjustments for other-than-temporary impairments

Gain and loss activity for fixed maturity and equity security investments, as shown in the previous table, include adjustments for other-than-temporary impairment for the years ended December 31 summarized as follows:

	2014			2013			2012
Cumulative charges to income at beginning of year	$	6,770		$	7,773		$	8,178
Writedowns based on objective and subjective criteria		689			742			888
Recovery of prior writedowns upon sale or disposal		(291	)		(1,745	)		(1,293	)
Net pre-tax realized gain (loss)		(398	)		1,003			405
Cumulative charges to income at end of year	$	7,168		$	6,770		$	7,773
Addition (reduction) to earnings per share from net
after-tax OTI gain (loss)	$	(.02	)	$	.04		$	.02
Unrealized gain on investments previously
written down at end of the year - see note below	$	17,127		$	13,129		$	8,158

Financial information of significant limited partnership investment

The summarized financial information of the significant limited partnership investment as of and for the years ended December 31 is as follows:

	2014		2013			2012
Total assets	$	565,500	$	493,028		$	641,071
Total partners' capital		542,700		444,337			559,745
Net increase (decrease) in partners' capital resulting from operations		125,700		(64,550	)		60,734

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Deferred tax liabilities:
Unrealized gain on fixed income and equity security investments	$ 27,914	$ 26,432
Deferred acquisition costs	1,341	1,829
Salvage and subrogation	2,373	2,638
Limited partnership investments	4,636	2,612
Other	1,229	866
Total deferred tax liabilities	37,493	34,377
Deferred tax assets:
Loss and loss expense reserves	10,973	11,071
Unearned premiums discount	2,201	2,162
Other-than-temporary investment declines	2,049	2,053
Deferred ceding commission	549	1,018
Deferred compensation	1,565	880
Other	183	342
Total deferred tax assets	17,520	17,526
Net deferred tax liabilities	(19,973)	(16,851)
Summary of the Difference Between Federal Income Tax Expense computed at Statutory Rate [Abstract]
Statutory federal income rate applied to pretax income	15,539	19,218	16,312
Tax effect of (deduction):
Tax-exempt investment income	(924)	(811)	(933)
Net reduction of tax positions	(75)	(116)	(693)
Other	141	31	1
Federal income tax expense	14,681	18,322	14,687
Taxes on pre-tax income [Abstract]
Current	13,041	17,383	10,819
Deferred	1,640	939	3,868
Federal income tax expense	14,681	18,322	14,687
Components of the provisions for deferred federal income taxes (credits) [Abstract]
Limited partnerships	2,025	1,058	3,013
Discounts of loss and loss expense reserves	113	313	(57)
Unearned premium discount	(38)	(65)	265
Deferred compensation	(685)	(146)	112
Other-than-temporary investment declines	(19)	680	169
Deferred acquisitions costs and ceding commission	(20)	(271)	(520)
Other	264	(630)	886
Provision for deferred federal income tax	1,640	939	3,868
Cash flows related to federal income taxes paid, net of refunds received	$ 11,619	$ 17,250	$ 3,661

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Debt

12 Months Ended

Dec. 31, 2014

Debt [Abstract]

Debt

Note N – 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 and $10,000 as of December 31, 2014 and 2013, respectively.  At December 31, 2014, the effective interest rate was 1.26%.  The Company has $20,000 remaining unused under the line of credit at December 31, 2014.  The current outstanding borrowings were used for general corporate purchases.

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Accumulated Other Comprehensive Income

12 Months Ended

Dec. 31, 2014

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

Note S – Accumulated Other Comprehensive Income

A reconciliation of the components of accumulated other comprehensive income at December 31 is as follows:

	2014			2013
Investments:
Total unrealized gain before federal income taxes	$	79,753		$	75,521
Deferred tax liability		(27,913	)		(26,432	)
Net unrealized gains on investments		51,840			49,089
Foreign exchange adjustment:
Total unrealized gains		600			2,155
Deferred tax liability		(210	)		(754	)
Net unrealized gains on foreign exchange adjustment		390			1,401
Accumulated other comprehensive income	$	52,230		$	50,490

Other comprehensive income reclassification adjustments for the years ended December 31 are as follows:

	2014		2013		2012
Investments:
Pre-tax holding gains on debt and equity
securities arising during period	$	12,055	$	36,477	$	15,612
Less: applicable federal income taxes		4,220		12,766		5,464
		7,835		23,711		10,148
Pre-tax gains on debt and equity securities
included in net income during period		7,823		15,520		1,959
Less: applicable federal income taxes		2,739		5,431		686
		5,084		10,089		1,273
Change in unrealized gains on investments	$	2,751	$	13,622	$	8,875

Reconciliation of accumulated other comprehensive income and retained earnings for the years ended December 31 are as follows:

	2014			2013			2012
Beginning accumulated other comprehensive income	$	50,490		$	37,443		$	28,351
Change in foreign exchange adjustment		(1,011	)		(575	)		217
Change in unrealized net gains on investments		2,751			13,622			8,875
Ending accumulated other comprehensive income	$	52,230		$	50,490		$	37,443
		2014			2013			2012
Beginning retained earnings	$	280,003		$	258,358		$	241,325
Net income		29,717			36,588			31,919
Dividends		(14,947	)		(14,943	)		(14,886	)
Ending retained earnings	$	294,773		$	280,003		$	258,358

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Loss and Loss Expense Reserves (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Activity in the reserve for losses and loss expenses [Roll Forward]
Reserves at the beginning of the year	$ 288,088	$ 289,236	$ 290,092
Provision for losses and loss expenses:
Claims occurring during the current year	169,950	156,264	147,963
Claims occurring during prior years	(10,354)	(5,563)	(9,875)
Total incurred	159,596	150,701	138,088
Loss and loss expense payments:
Claims occurring during the current year	59,826	47,908	44,941
Claims occurring during prior years	92,275	103,941	94,003
Total paid	152,101	151,849	138,944
Reserves at the end of the year	295,583	288,088	289,236
Reinsurance recoverable on unpaid losses at the end of the year	210,519	186,382	166,218
Reserves, gross of reinsurance recoverable, at the end of the year	506,102	474,470	455,454
Savings developed in settlements of claims with comparative developments for previous calendar years	10,354
Period of comparative developments (in years)	2 years
Major Components of the Development of (Savings) deficiency [Abstract]
Property and casualty insurance	(5,423)	(1,725)	(7,111)
Reinsurance	(4,931)	(3,838)	(2,764)
Total	(10,354)	(5,563)	(9,875)
Workers' Compensation Discount [Abstract]
Loss reserves on certain permanent total disability workers' compensation reserves discounted to present value at pre-tax rates (in hundredths)	3.50%
Amount of reduction in loss reserves	3,129	5,885
Salvage and Subrogation Recoveries [Abstract]
Salvage and Subrogation Recoveries, Description	Loss reserves have been reduced by estimated salvage and subrogation recoverable.
Estimated salvage and subrogation recoverable	$ 7,158	$ 8,115

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Reportable Segments (Tables)

12 Months Ended

Dec. 31, 2014

Reportable Segments [Abstract]

Schedule of segment reporting information, by segment

The following table provides certain profit and loss information for each reportable segment for the years ended

December 31:

		2014		2013		2012
Direct and assumed premium written:
Property and casualty insurance		$	343,200	$	314,784	$	284,200
Reinsurance			39,188		54,692		57,086
	Totals	$	382,388	$	369,476	$	341,286
Net premium earned:
Property and casualty insurance		$	224,683	$	202,785	$	186,586
Reinsurance			36,944		49,958		50,875
	Totals	$	261,627	$	252,743	$	237,461
Underwriting gain:
Property and casualty insurance		$	32,663	$	25,558	$	23,491
Reinsurance			2,147		12,278		20,567
	Totals	$	34,810	$	37,836	$	44,058

Reconciliation of operating profit (loss) from segments to consolidated

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

		2014			2013			2012
Profit:
Underwriting gain		$	34,810		$	37,836		$	44,058
Net investment income			9,055			8,770			9,930
Net realized gains on investments			14,930			23,515			9,011
Corporate expenses			(14,397	)		(15,211	)		(16,393	)
	Income before federal income taxes	$	44,398		$	54,910		$	46,606

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 29,717	$ 36,588	$ 31,919
Unrealized net gains on securities:
Unrealized holding net gains arising during the period	7,835	23,711	10,148
Less: reclassification adjustment for net gains included in net income	(5,084)	(10,089)	(1,273)
Change in unrealized gains on investments	2,751	13,622	8,875
Foreign currency translation adjustments	(1,011)	(575)	217
Other comprehensive income	1,740	13,047	9,092
Comprehensive income	$ 31,457	$ 49,635	$ 41,011

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Loss and Loss Expense Reserves

12 Months Ended

Dec. 31, 2014

Loss and Loss Expense Reserves [Abstract]

Loss and Loss Expense Reserves

Note C - Loss and Loss Expense Reserves

Activity in the reserves for losses and loss expenses is summarized as follows.  All amounts are shown net of reinsurance, unless otherwise indicated.

	2014			2013			2012
Reserves at the beginning of the year	$	288,088		$	289,236		$	290,092
Provision for losses and loss expenses:
Claims occurring during the current year		169,950			156,264			147,963
Claims occurring during prior years		(10,354	)		(5,563	)		(9,875	)
Total incurred		159,596			150,701			138,088
Loss and loss expense payments:
Claims occurring during the current year		59,826			47,908			44,941
Claims occurring during prior years		92,275			103,941			94,003
Total paid		152,101			151,849			138,944
Reserves at the end of the year		295,583			288,088			289,236
Reinsurance recoverable on unpaid losses at the end of the year		210,519			186,382			166,218
Reserves, gross of reinsurance
recoverable, at the end of the year	$	506,102		$	474,470		$	455,454

The table above shows that a savings of $10,354 was developed during 2014 in the settlement of claims occurring on or before December 31, 2013 with comparative developments for the two previous calendar years.  The net savings for each year are composed of individual claim savings and deficiencies which, in the aggregate have resulted from the settlement of claims at amounts lower than previously reserved and from changes in estimates of losses incurred but not reported as part of the normal reserving process.

The major components of the developments shown above are as follows for the years ended December 31:
	2014			2013			2012
Property and casualty insurance	$	(5,423	)	$	(1,725	)	$	(7,111	)
Reinsurance		(4,931	)		(3,838	)		(2,764	)
Totals	$	(10,354	)	$	(5,563	)	$	(9,875	)

Favorable loss development is influenced by the Company’s long-standing policy of reserving for losses realistically and a willingness to settle claims based upon a seasoned evaluation of its exposures.  Loss reserves pertaining to the Company’s property reinsurance business are established partially by the ceding reinsurers although the Company routinely adjusts such reserves if management determines that additional reserves could be necessary.  Accordingly, there is potential for fluctuations in loss developments related to reinsurance assumed to be more pronounced than those experienced on directly produced business which is reserved entirely by Company personnel.  In addition, changes in the Company’s net retention under reinsurance treaties will impact developments as more or less business is retained.  These trends were considered in the establishment of the Company’s reserves at December 31, 2014 and 2013.

Loss reserves on certain permanent total disability workers’ compensation reserves have been discounted to present value at pre-tax rates not exceeding 3.5%.  At December 31, 2014 and 2013, loss reserves have been reduced by approximately $3,129 and $5,885, respectively.  Discounting is applied to these claims since the amount of periodic payments to be made during the lifetime of claimants is fixed and determinable.  Loss reserves have been reduced by estimated salvage and subrogation recoverable of approximately $7,158 and $8,115 at December 31, 2014 and 2013, respectively.

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Earnings Per Share (Details)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Reconciliation of the denominators used in the calculation of basic and diluted earnings per share [Abstract]
Average share outstanding for basic earnings per share (in shares)	14,963,959	14,906,416	14,838,767
Dilutive effect of share equivalents (in shares)	11,935	17,345	29,482
Average shares outstanding for diluted earnings per share (in shares)	14,975,894	14,923,761	14,868,249

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SCHEDULE I -SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Amount at which shown in the balance sheet	$ 15,430
Money markets fund classified with cash and cash equivalent and excluded from other investments in related party	59,309
Total Investments [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	618,359
Fair value	698,112
Amount at which shown in the balance sheet	698,112	[1]
Limited Partnership [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	81,230
Fair value	81,230
Amount at which shown in the balance sheet	81,230	[1]
Bonds [Member] | Total Fixed Maturities [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	455,385
Fair value	451,809
Amount at which shown in the balance sheet	451,809	[1]
Bonds [Member] | U.S Government Obligations [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	101,058
Fair value	101,094
Amount at which shown in the balance sheet	101,094	[1]
Bonds [Member] | Mortgage-backed Securities [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	42,040
Fair value	42,506
Amount at which shown in the balance sheet	42,506	[1]
Bonds [Member] | State and Municipal Obligations [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	113,133
Fair value	113,777
Amount at which shown in the balance sheet	113,777	[1]
Bonds [Member] | Foreign Government Obligations [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	28,332
Fair value	27,466
Amount at which shown in the balance sheet	27,466	[1]
Bonds [Member] | Corporate Securities [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	170,822
Fair value	166,966
Amount at which shown in the balance sheet	166,966	[1]
Common Stocks [Member] | Total Equity Securities [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	78,778
Fair value	162,107
Amount at which shown in the balance sheet	162,107	[1]
Common Stocks [Member] | Industrial, Miscellaneous, and All Others [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	78,778
Fair value	162,107
Amount at which shown in the balance sheet	162,107	[1]
Short-term [Member] | Total Short-term and Other [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	2,966
Fair value	2,966
Amount at which shown in the balance sheet	2,966	[1]
Short-term [Member] | Certificates of Deposit [Member]
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	2,966
Fair value	2,966
Amount at which shown in the balance sheet	$ 2,966	[1]

[1] Investments presented above do not include $59,309 of money market funds classified with cash and cash equivalents in the balance sheet.

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Subsequent Events

12 Months Ended

Dec. 31, 2014

Subsequent Events [Abstract]

Subsequent Events

Note T - Subsequent Events

We have evaluated subsequent events for recognition or disclosure in the consolidated financial statements filed on Form 10-K with the U.S. Securities and Exchange Commission and  no events have occurred during this period which require recognition or disclosure in this document.

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Shareholders' Equity (Tables)

12 Months Ended

Dec. 31, 2014

Shareholders' Equity [Abstract]

Changes in common stock outstanding and additional paid-in capital

Note F - Shareholders' Equity
Changes in common stock outstanding and additional paid-in capital are as follows:
									Additional
	Class A				Class B				Paid-in
	Shares		Amount		Shares		Amount		Capital
Balance at January 1, 2012		2,623,109	$	112		12,225,348	$	522	$	48,751
Restricted stock grants		-		-		64,687		2		1,524
Balance at December 31, 2012		2,623,109		112		12,290,035		524		50,275
Restricted stock grants		-		-		14,156		1		319
Balance at December 31, 2013		2,623,109		112		12,304,191		525		50,594
Restricted stock grants		-		-		52,198		2		1,260
Balance at December 31, 2014		2,623,109	$	112		12,356,389	$	527	$	51,854

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Acquisition and related Goodwill and Intangibles

12 Months Ended

Dec. 31, 2014

Acquisition and related Goodwill and Intangibles [Abstract]

Acquisition and related Goodwill and Intangibles

Note M – Acquisition and related Goodwill and Intangibles

On October 31, 2008, the Company purchased a commercial lines specialty insurance agency primarily focusing on the needs of the transportation industry including trucking independent contractors as well as fleet trucking companies for a cash purchase price of $3,500.  The acquisition is part of the Company’s property and casualty insurance segment.  As part of the purchase, the Company recorded goodwill of $3,152 and intangible assets related to customer relationships and employment agreements of $179 which are included in Other Assets in the consolidated balance sheets and have recorded amortization of intangible assets of $4, $17 and $28 during 2014, 2013, and 2012, respectively.  Accumulated amortization of intangible assets was $179 and $175 as of December 31, 2014 and 2013, respectively.