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FAIR VALUE (Tables)

12 Months Ended

Dec. 31, 2012

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


DECEMBER 31	2012				2011
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets
Cash and cash equivalents	$	564.8	$	564.8	$	820.4	$	820.4
Fixed maturities		6,952.2		6,952.2		6,284.7		6,284.7
Equity securities		315.8		315.8		246.4		246.4
Other investments		188.9		189.4		154.4		153.9
Total financial assets	$	8,021.7	$	8,022.2	$	7,505.9	$	7,505.4
Financial Liabilities
Debt	$	849.4	$	995.2	$	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 December 31, 2012 and 2011 that are measured at fair value on a recurring basis.

December 31, 2012

(in millions)

Total

Level 1

Level 2

Level 3

Fixed maturities:

U.S. Treasury and government agencies

325.6

144.2

181.4

—

Foreign government

352.9

60.9

292.0

—

Municipal

1,096.3

—

1,076.9

19.4

Corporate

3,773.4

—

3,747.0

26.4

Residential mortgage-backed, U.S. agency backed

610.8

—

610.8

—

Residential mortgage-backed, non-agency

194.4

—

193.7

0.7

Commercial mortgage-backed

396.2

—

369.5

26.7

Asset-backed

202.6

—

201.1

1.5

Total fixed maturities

6,952.2

205.1

6,672.4

74.7

Equity securities

306.1

226.9

54.8

24.4

Other investments

172.8

—

169.2

3.6

Total investment assets at fair value

7,431.1

432.0

6,896.4

102.7


	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 government		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.

December 31, 2012

(in millions)

Total

Level 1

Level 2

Level 3

Assets:

Cash and cash equivalents

564.8

—

Equity securities

9.7

—

9.7

—

Other investments

16.6

—

4.8

11.8

Liabilities:

Debt

995.2

—

995.2

—

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

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


YEAR ENDED DECEMBER 31, 2012	Fixed Maturities
(in millions)	Municipal			Corporate			Residential mortgage- backed, non- agency			Commercial mortgage- backed			Asset-backed			Total			Equity and Other			Total Assets
Balance at beginning of year	$	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		—			(2.3	)		—			—			(8.7	)		(11.0	)		—			(11.0	)
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		1.1			0.7			0.1			(0.4	)		—			1.5			1.8			3.3
Purchases and sales:
Purchases		3.0			1.5			0.1			5.2			1.5			11.3			—			11.3
Sales		(0.9	)		(2.0	)		(4.7	)		(1.8	)		(0.5	)		(9.9	)		(0.7	)		(10.6	)
Balance at end of year	$	19.4		$	26.4		$	0.7		$	26.7		$	1.5		$	74.7		$	28.0		$	102.7

YEAR ENDED DECEMBER 31, 2011	Fixed Maturities
(in millions)	Municipal			Corporate			Residential mortgage- backed, non- agency			Commercial mortgage- backed			Asset-backed			Total			Equity and Other			Total Assets
Balance at beginning of year	$	16.6		$	28.2		$	0.8		$	19.0		$	—		$	64.6		$	6.3		$	70.9
Transfers into Level 3		—			14.5			—			—			—			14.5			—			14.5
Transfers out of Level 3		—			(17.3	)		(0.5	)		(7.3	)		—			(25.1	)		—			(25.1	)
Total gains (losses):
Included in earnings		(0.1	)		(0.7	)		—			0.1			—			(0.7	)		(1.4	)		(2.1	)
Included in other comprehensive income-net appreciation (depreciation) on available-for-sale securities		0.2			0.3			(0.1	)		1.1			(0.4	)		1.1			(2.1	)		(1.0	)
Purchases and sales:
Purchases		—			11.8			—			12.3			1.0			25.1			—			25.1
Chaucer acquisition		—			0.1			5.6			—			8.8			14.5			24.2			38.7
Sales		(3.1	)		(13.1	)		(0.6	)		(1.5	)		(0.2	)		(18.5	)		—			(18.5	)
Balance at end of year	$	13.6		$	23.8		$	5.2		$	23.7		$	9.2		$	75.5		$	27.0		$	102.5

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.


FOR THE YEARS ENDED DECEMBER 31	2012			2011
(in millions)	Net realized investment gains (losses)			Other-than- temporary impairments			Net realized investment gains (losses)			Total
Level 3 Assets:
Fixed maturities:
Municipal	$	—		$	—		$	(0.1	)	$	(0.1	)
Corporate		0.4			(0.9	)		0.2			(0.7	)
Commercial mortgage-backed		—			—			0.1			0.1
Total fixed maturities		0.4			(0.9	)		0.2			(0.7	)
Equity securities		(0.2	)		(1.4	)		—			(1.4	)
Total assets	$	0.2		$	(2.3	)	$	0.2		$	(2.1	)

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 December 31, 2012. Where discounted cash flows are used in the valuation of fixed maturities, the internally-developed discount rate is adjusted by the significant unobservable inputs shown in the table. Valuations for equity securities 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	$	19.4	Discounted cash flow	Discount for:
				Small issue size	1.0-4.0% (3.1%)
				Long maturity	0.5% (0.5%)
				Above-market coupon	0.3-1.0% (0.5%)
Corporate		26.4	Discounted cash flow	Discount for:
				Credit stress	1.0-3.0% (1.1%)
				Above-market coupon	0.3-1.0% (0.7%)
				Small issue size	0.3-3.0% (0.5%)
				Long maturity	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		26.7	Discounted cash flow	Discount for:
				Credit stress	1.0% (1.0%)
				Long maturity	0.5-0.8% (0.7%)
				Small issue size	0.5% (0.5%)
				Above-market coupon	0.3-0.8% (0.4%)
				Lease structure	0.3% (0.3%)
Asset-backed		1.5	Discounted cash flow	Discount for:
				Small issue size	0.7-2.0% (1.6%)
Equity securities		24.3	Market comparables	Net tangible asset market multiples	0.9X (0.9X)
Other		3.6	Discounted cash flow	Discount rate	18.0% (18.0%)

- 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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