Fair Value (Tables)

9 Months Ended

Sep. 30, 2012

The estimated fair values of the financial instruments were as follows:


(in millions)	September 30, 2012						December 31, 2011
	Carrying Value			Fair Value			Carrying Value			Fair Value
Financial Assets
Cash and cash equivalents		$	462.0		$	462.0		$	820.4		$	820.4
Fixed maturities			6,794.9			6,794.9			6,284.7			6,284.7
Equity securities			392.8			392.8			246.4			246.4
Other investments			182.5			182.8			154.4			153.9

Total financial assets		$	7,832.2		$	7,832.5		$	7,505.9		$	7,505.4

Financial Liabilities
Debt		$	917.5		$	1,065.3		$	911.1		$	1,014.9

Fair Value, Assets Measured on Recurring Basis

The following tables provide, for each hierarchy level, the Company’s assets at September 30, 2012 and December 31, 2011 that are measured at fair value on a recurring basis.


	September 30, 2012
(in millions)	Total			Level 1			Level 2			Level 3
Fixed maturities:
U.S. Treasury and government agencies		$	223.5		$	79.9		$	143.6		$	-
Foreign governments			364.8			82.2			282.6			-
Municipal			1,038.6			-			1,019.0			19.6
Corporate			3,773.2			-			3,745.8			27.4
Residential mortgage-backed, U.S. agency backed			622.5			-			622.5			-
Residential mortgage-backed, non-agency			209.9			-			209.2			0.7
Commercial mortgage-backed			365.5			-			338.1			27.4
Asset-backed			196.9			-			195.8			1.1

Total fixed maturities			6,794.9			162.1			6,556.6			76.2
Equity securities			383.1			305.7			53.5			23.9
Other investments			167.1			-			163.5			3.6

Total investment assets at fair value		$	7,345.1		$	467.8		$	6,773.6		$	103.7


	December 31, 2011
	Total			Level 1			Level 2			Level 3
Fixed maturities:
U.S. Treasury and government agencies		$	269.3		$	147.3		$	122.0		$	-
Foreign governments			239.0			-			239.0			-
Municipal			1,028.0			-			1,014.4			13.6
Corporate			3,375.6			-			3,351.8			23.8
Residential mortgage-backed, U.S. agency backed			663.3			-			663.3			-
Residential mortgage-backed, non-agency			185.3			-			180.1			5.2
Commercial mortgage-backed			398.1			-			374.4			23.7
Asset-backed			126.1			-			116.9			9.2

Total fixed maturities			6,284.7			147.3			6,061.9			75.5
Equity securities			237.0			177.4			36.2			23.4
Other investments			138.7			-			135.1			3.6

Total investment assets at fair value		$	6,660.4		$	324.7		$	6,233.2		$	102.5

Estimated Fair Values of Financial Instruments Not Carried at Fair Value

The following table provides, for each hierarchy level, the Company’s estimated fair values of financial instruments that are not carried at fair value:

September 30, 2012

(in millions)

Total

Level 1

Level 2

Level 3

Assets:

Cash and cash equivalents

462.0

Equity securities

9.7

Other investments

15.7

5.1

10.6

Liabilities:

Debt

1,065.3

Fair Value On Recurring Basis Using Significant Unobservable Inputs (Level 3)

The table below provides a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3).


	Fixed Maturities
(in millions)	Municipal				Corporate				Residential mortgage- backed, non- agency				Commercial mortgage- backed				Asset- backed				Total				Equities and Other				Total Assets
Three Months Ended September 30, 2012
Balance July 1, 2012		$	16.9			$	27.4			$	0.6			$	27.4			$	1.1			$	73.4			$	29.2			$	102.6
Transfers into Level 3			2.6				-				-				-				-				2.6				-				2.6
Total gains (losses):
Included in earnings			-				0.1				-				-				-				0.1				-				0.1
Included in other comprehensive income- net appreciation (depreciation) on available for sale securities			0.3				-				-				0.6				-				0.9				(1.7	)			(0.8	)
Purchases and sales:
Purchases			-				-				0.1				-				-				0.1				-				0.1
Sales			(0.2	)			(0.1	)			-				(0.6	)			-				(0.9	)			-				(0.9	)

Balance September 30, 2012		$	19.6			$	27.4			$	0.7			$	27.4			$	1.1			$	76.2			$	27.5			$	103.7


Three Months Ended September 30, 2011
Balance July 1, 2011		$	16.1			$	36.8			$	0.5			$	18.6			$	-			$	72.0			$	6.3			$	78.3
Transfers into Level 3			-				6.9				-				-				-				6.9				-				6.9
Transfer out of Level 3			-				(8.8	)			(0.5	)			-				-				(9.3	)			-				(9.3	)
Total gains (losses):
Included in earnings			-				0.1				-				-				-				0.1				-				0.1
Included in other comprehensive income- net appreciation (depreciation) on available for sale securities			-				(0.3	)			-				0.1				(0.3	)			(0.5	)			(1.6	)			(2.1	)
Purchases and sales:
Purchases			-				-				-				7.3				-				7.3				-				7.3
Chaucer acquisition			-				0.1				5.6				-				8.8				14.5				24.2				38.7
Sales			(0.3	)			(12.3	)			(0.1	)			(0.4	)			(0.1	)			(13.2	)			-				(13.2	)

Balance September 30, 2011		$	15.8			$	22.5			$	5.5			$	25.6			$	8.4			$	77.8			$	28.9			$	106.7


	Fixed Maturities
(in millions)	Municipal				Corporate				Residential mortgage- backed, non- agency				Commercial mortgage- backed				Asset- backed				Total				Equities and Other				Total Assets
Nine Months Ended September 30, 2012
Balance January 1, 2012		$	13.6			$	23.8			$	5.2			$	23.7			$	9.2			$	75.5			$	27.0			$	102.5
Transfers into Level 3			2.6				4.3				-				-				-				6.9				0.1				7.0
Transfers out of Level 3			-				(2.1	)			-				-				(8.7	)			(10.8	)			-				(10.8	)
Total gains (losses):
Included in earnings			-				0.4				-				-				-				0.4				(0.2	)			0.2
Included in other comprehensive income-net appreciation (depreciation) on available for sale securities			1.0				0.5				0.1				(0.1	)			-				1.5				1.3				2.8
Purchases and sales:
Purchases			3.0				1.5				0.1				5.2				1.0				10.8				-				10.8
Sales			(0.6	)			(1.0	)			(4.7	)			(1.4	)			(0.4	)			(8.1	)			(0.7	)			(8.8	)

Balance September 30, 2012		$	19.6			$	27.4			$	0.7			$	27.4			$	1.1			$	76.2			$	27.5			$	103.7


Nine Months Ended September 30, 2011
Balance January 1, 2011		$	16.6			$	28.2			$	0.8			$	19.0			$	-			$	64.6			$	6.3			$	70.9
Transfers into Level 3			-				10.6				-				-				-				10.6				-				10.6
Transfer out of Level 3			-				(15.3	)			(0.5	)			-				-				(15.8	)			-				(15.8	)
Total gains (losses):
Included in earnings			-				0.1				-				-				-				0.1				(0.5	)			(0.4	)
Included in other comprehensive income- net appreciation (depreciation) on available for sale securities			0.1				-				-				0.4				(0.3	)			0.2				(1.1	)			(0.9	)
Purchases and sales:
Purchases			-				11.8				-				7.3				-				19.1				-				19.1
Chaucer acquisition			-				0.1				5.6				-				8.8				14.5				24.2				38.7
Sales			(0.9	)			(13.0	)			(0.4	)			(1.1	)			(0.1	)			(15.5	)			-				(15.5	)

Balance September 30, 2011		$	15.8			$	22.5			$	5.5			$	25.6			$	8.4			$	77.8			$	28.9			$	106.7

Schedule Of Gain And Losses Due To Change In Fair Value Level 3 Assets

The following table summarizes gains and losses due to changes in fair value that are recorded in net income for Level 3 assets.


	Three Months Ended September 30,
	2012			2011
(in millions)	Net realized investment gains			Net realized investment gains
Level 3 Assets:
Fixed maturities:
Corporate		$	0.1		$	0.1

Total fixed maturities		$	0.1		$	0.1


	Nine Months Ended September 30,
	2012				2011
(in millions)	Net realized investment gains (losses)				Other-than- temporary impairments				Net realized investment gains			Total
Level 3 Assets:
Fixed maturities:
Corporate		$	0.4			$	-			$	0.1		$	0.1
Equities and Other			(0.2	)			(0.5	)			-			(0.5	)

Total assets		$	0.2			$	(0.5	)		$	0.1		$	(0.4	)

Schedule Of Additional Information About Significant Unobservable Inputs Used In Fair Valuations Of Level 3

The following table provides quantitative information about the significant unobservable inputs used by the Company in the fair value measurements of Level 3 assets as of September 30, 2012. Where discounted cash flows are used, the internally-developed discount rate is adjusted by the significant unobservable inputs shown in the table. Valuations for assets based on broker quotes for which there is a lack of transparency as to inputs used to develop the valuations have been excluded.


	Fair Value *(in millions)*			Valuation Technique	Significant Unobservable Inputs	Range (Wtd Average)
Fixed maturities:
Municipal		$	19.6	Discounted cash flow	Discount for: Small issue size Long maturity Above-market coupon	1.0-4.0% (3.1%) 0.5% (0.5%) 0.3-1.0% (0.5%)
Corporate			27.2	Discounted cash flow	Discount for: Credit stress Above-market coupon Small issue size Long maturity	2.5-3.0% (2.5%) 0.3-1.0% (0.7%) 0.3-3.0% (0.6%) 0.5% (0.5%)
Residential mortgage-backed, non-agency			0.7	Discounted cash flow	Discount for: Small issue size	0.5% (0.5%)
Commercial mortgage-backed			27.4	Discounted cash flow	Discount for: Credit stress Long maturity Small issue size Above-market coupon Lease structure	1.0% (1.0%) 0.5-0.8% (0.7%) 0.5% (0.5%) 0.3-1.0% (0.4%) 0.3% (0.3%)
Asset-backed			1.1	Discounted cash flow	Discount for: Small issue size	0.3-2.0% (1.9%)
Equity securities			23.8	Market comparables	Net tangible asset market multiples	0.9X (0.9X)

- Definition

Tabular disclosure of assets, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

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- Definition

Tabular disclosure of the realized and unrealized gains and losses reported in the statement of income which have resulted from the sale and holding of marketable securities, respectively, as well as the sale or disposal of cost method investments. Such amounts would include realized gains and losses on the sale or disposal of trading, available-for-sale, and held-to-maturity securities, unrealized gains and losses on trading securities, unrealized gains and losses on available-for-sale and held-to-maturity securities transferred to the trading securities category, realized gains and losses on the sale or disposal of cost method investments, and losses recognized for other than temporary impairments (OTTI) of such investments.

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