ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
95-4255452
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
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One East Wacker Drive, Chicago, Illinois
|
|
60601
|
(Address of principal executive offices)
|
|
(Zip Code)
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Title of each class
|
|
Name of each exchange on which registered
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Common Stock, $0.10 par value per share
|
|
New York Stock Exchange
|
Preferred Share Purchase Rights
pursuant to Rights Agreement
|
|
New York Stock Exchange
|
|
|
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Caution Regarding Forward-Looking Statements
|
||
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|
|
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Part I
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|
|
|
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Item 1.
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Business
|
|
Item 1A.
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Risk Factors
|
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Item 1B.
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Unresolved Staff Comments
|
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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(Removed and Reserved)
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|
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Part II
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|
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
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Item 6.
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Selected Financial Data
|
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
|
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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Part III
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|
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Item 10.
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Directors, Executive Officers and Corporate Governance
|
|
Item 11.
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Executive Compensation
|
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
|
Item 14.
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Principal Accounting Fees and Services
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|
|
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Part IV
|
|
|
|
|
Item 15.
|
Exhibits, Financial Statement Schedules
|
•
|
The incidence, frequency, and severity of catastrophes occurring in any particular reporting period or geographic concentration, including natural disasters, pandemics and terrorist attacks or other man-made events;
|
•
|
The number and severity of insurance claims (including those associated with catastrophe losses) and their impact on the adequacy of loss reserves;
|
•
|
Changes in facts and circumstances affecting assumptions used in determining loss and LAE reserves;
|
•
|
The impact of inflation on insurance claims, including, but not limited to, the effects attributed to scarcity of resources available to rebuild damaged structures, including labor and materials and the amount of salvage value recovered for damaged property;
|
•
|
Changes in the pricing or availability of reinsurance, or in the financial condition of reinsurers and amounts recoverable therefrom;
|
•
|
Orders, interpretations or other actions by regulators that impact the reporting, adjustment and payment of claims;
|
•
|
The impact of residual market assessments and assessments for insurance industry insolvencies;
|
•
|
Changes in industry trends and significant industry developments;
|
•
|
Uncertainties related to regulatory approval of insurance rates, policy forms, license applications and similar matters;
|
•
|
Developments related to insurance policy claims and coverage issues, including, but not limited to, interpretations or decisions by courts or regulators that may govern or influence such issues arising with respect to losses incurred in connection with hurricanes and other catastrophes;
|
•
|
Changes in ratings by credit ratings agencies, including A.M. Best Co., Inc. (“A.M. Best”);
|
•
|
Adverse outcomes in litigation or other legal or regulatory proceedings involving Kemper or its subsidiaries or affiliates;
|
•
|
Regulatory, accounting or tax changes that may affect the cost of, or demand for, the Company’s products or services;
|
•
|
Governmental actions, including, but not limited to, implementation of the provisions of the Patient Protection and Affordable Care Act, the Health Care and Education Reconciliation Act of 2010 (the “Health Care Acts”) and the Dodd-Frank Act, new laws or regulations or court decisions interpreting existing laws and regulations or policy provisions;
|
•
|
Changes in distribution channels, methods or costs resulting from changes in laws or regulations, lawsuits or market forces;
|
•
|
Changes in general economic conditions, including performance of financial markets, interest rates, unemployment
|
•
|
The level of success and costs expended in realizing economies of scale and implementing significant business consolidations and technology initiatives;
|
•
|
Heightened competition, including, with respect to pricing, entry of new competitors and the development of new products by new and existing competitors;
|
•
|
Increased costs and risks related to data security;
|
•
|
Absolute and relative performance of the Company’s products or services; and
|
•
|
Other risks and uncertainties described from time to time in Kemper’s filings with the U.S. Securities and Exchange Commission (“SEC”).
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
||||
Business Segments:
|
|
|
|
|
||||
Preferred
|
|
$
|
416.2
|
|
|
$
|
420.5
|
|
Specialty
|
|
225.9
|
|
|
250.8
|
|
||
Direct
|
|
223.9
|
|
|
235.6
|
|
||
Life and Health Insurance
|
|
8.3
|
|
|
20.8
|
|
||
Total Business Segments
|
|
874.3
|
|
|
927.7
|
|
||
Discontinued Operations
|
|
133.0
|
|
|
163.9
|
|
||
Unallocated Reserves
|
|
21.8
|
|
|
27.1
|
|
||
Total Property and Casualty Insurance Reserves
|
|
$
|
1,029.1
|
|
|
$
|
1,118.7
|
|
DOLLARS IN MILLIONS
|
|
Favorable (Adverse) Development
|
||||||||||
2011
|
|
2010
|
|
2009
|
||||||||
Continuing Operations:
|
|
|
|
|
|
|
||||||
Preferred
|
|
$
|
19.1
|
|
|
$
|
23.8
|
|
|
$
|
60.5
|
|
Specialty
|
|
9.4
|
|
|
(4.1
|
)
|
|
7.9
|
|
|||
Direct
|
|
3.9
|
|
|
6.8
|
|
|
12.1
|
|
|||
Life and Health Insurance
|
|
2.6
|
|
|
(4.5
|
)
|
|
(2.6
|
)
|
|||
Total Favorable Development from Continuing Operations, Net
|
|
35.0
|
|
|
22.0
|
|
|
77.9
|
|
|||
Discontinued Operations:
|
|
|
|
|
|
|
||||||
Unitrin Business Insurance
|
|
(1.9
|
)
|
|
2.9
|
|
|
3.0
|
|
|||
Total Favorable Development, Net
|
|
$
|
33.1
|
|
|
$
|
24.9
|
|
|
$
|
80.9
|
|
Loss and Loss Adjustment Expense Reserve Development
|
||||||||||||||||||||||||||||||||||||||||||||
|
|
December 31,
|
||||||||||||||||||||||||||||||||||||||||||
DOLLARS IN MILLIONS
|
|
2001
|
|
2002
|
|
2003
|
|
2004
|
|
2005
|
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
||||||||||||||||||||||
Gross Reserve for Unpaid Losses and LAE
|
|
$
|
700
|
|
|
$
|
975
|
|
|
$
|
1,426
|
|
|
$
|
1,511
|
|
|
$
|
1,531
|
|
|
$
|
1,433
|
|
|
$
|
1,323
|
|
|
$
|
1,269
|
|
|
$
|
1,211
|
|
|
$
|
1,119
|
|
|
$
|
1,029
|
|
Deduct Reinsurance Recoverables
|
|
62
|
|
|
92
|
|
|
325
|
|
|
229
|
|
|
209
|
|
|
138
|
|
|
85
|
|
|
85
|
|
|
77
|
|
|
78
|
|
|
74
|
|
|||||||||||
Net Reserve for Unpaid Losses and LAE
|
|
$
|
638
|
|
|
$
|
883
|
|
|
$
|
1,101
|
|
|
$
|
1,282
|
|
|
$
|
1,322
|
|
|
$
|
1,295
|
|
|
$
|
1,238
|
|
|
$
|
1,184
|
|
|
$
|
1,134
|
|
|
$
|
1,041
|
|
|
$
|
955
|
|
Cumulative Amount Paid, Net of Reinsurance as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
One Year Later
|
|
$
|
341
|
|
|
$
|
402
|
|
|
$
|
407
|
|
|
$
|
487
|
|
|
$
|
508
|
|
|
$
|
511
|
|
|
$
|
518
|
|
|
$
|
541
|
|
|
$
|
553
|
|
|
$
|
502
|
|
|
|
||
Two Years Later
|
|
483
|
|
|
531
|
|
|
623
|
|
|
707
|
|
|
742
|
|
|
724
|
|
|
738
|
|
|
757
|
|
|
771
|
|
|
|
|
|
|||||||||||||
Three Years Later
|
|
521
|
|
|
635
|
|
|
741
|
|
|
830
|
|
|
854
|
|
|
834
|
|
|
854
|
|
|
872
|
|
|
|
|
|
|
|
||||||||||||||
Four Years Later
|
|
570
|
|
|
684
|
|
|
803
|
|
|
891
|
|
|
906
|
|
|
890
|
|
|
916
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Five Years Later
|
|
600
|
|
|
715
|
|
|
835
|
|
|
918
|
|
|
943
|
|
|
921
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Six Years Later
|
|
619
|
|
|
734
|
|
|
850
|
|
|
940
|
|
|
963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Seven Years Later
|
|
632
|
|
|
745
|
|
|
864
|
|
|
951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Eight Years Later
|
|
640
|
|
|
754
|
|
|
873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Nine Years Later
|
|
646
|
|
|
764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Ten Years Later
|
|
655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Reestimate of Net Reserve for Unpaid Losses and LAE as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
End of Year
|
|
$
|
638
|
|
|
$
|
883
|
|
|
$
|
1,101
|
|
|
$
|
1,282
|
|
|
$
|
1,322
|
|
|
$
|
1,295
|
|
|
$
|
1,238
|
|
|
$
|
1,184
|
|
|
$
|
1,134
|
|
|
$
|
1,041
|
|
|
$
|
955
|
|
One Year Later
|
|
720
|
|
|
886
|
|
|
1,062
|
|
|
1,190
|
|
|
1,230
|
|
|
1,195
|
|
|
1,159
|
|
|
1,103
|
|
|
1,109
|
|
|
1,008
|
|
|
|
||||||||||||
Two Years Later
|
|
722
|
|
|
879
|
|
|
1,026
|
|
|
1,131
|
|
|
1,158
|
|
|
1,106
|
|
|
1,088
|
|
|
1,086
|
|
|
1,087
|
|
|
|
|
|
|||||||||||||
Three Years Later
|
|
724
|
|
|
872
|
|
|
1,006
|
|
|
1,088
|
|
|
1,106
|
|
|
1,054
|
|
|
1,073
|
|
|
1,075
|
|
|
|
|
|
|
|
||||||||||||||
Four Years Later
|
|
725
|
|
|
857
|
|
|
980
|
|
|
1,049
|
|
|
1,068
|
|
|
1,044
|
|
|
1,071
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Five Years Later
|
|
719
|
|
|
840
|
|
|
951
|
|
|
1,033
|
|
|
1,068
|
|
|
1,041
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Six Years Later
|
|
709
|
|
|
819
|
|
|
947
|
|
|
1,040
|
|
|
1,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Seven Years Later
|
|
693
|
|
|
820
|
|
|
950
|
|
|
1,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Eight Years Later
|
|
694
|
|
|
824
|
|
|
946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Nine Years Later
|
|
701
|
|
|
821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Ten Years Later
|
|
694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and Loss Adjustment Expense Reserve Development
|
||||||||||||||||||||||||||||||||||||||||||||
|
|
December 31,
|
||||||||||||||||||||||||||||||||||||||||||
DOLLARS IN MILLIONS
|
|
2001
|
|
2002
|
|
2003
|
|
2004
|
|
2005
|
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
||||||||||||||||||||||
Initial Net Reserve for Unpaid Losses and LAE in Excess Of (Less Than) Reestimated Net Reserve for Unpaid Losses and LAE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Amount of Reestimate
|
|
$
|
(56
|
)
|
|
$
|
62
|
|
|
$
|
155
|
|
|
$
|
245
|
|
|
$
|
259
|
|
|
$
|
254
|
|
|
$
|
167
|
|
|
$
|
109
|
|
|
$
|
47
|
|
|
$
|
33
|
|
|
|
||
Reestimate as a Percentage of Initial Net Reserve for Unpaid Losses and LAE
|
|
(8.8
|
)%
|
|
7.0
|
%
|
|
14.1
|
%
|
|
19.1
|
%
|
|
19.6
|
%
|
|
19.6
|
%
|
|
13.5
|
%
|
|
9.2
|
%
|
|
4.1
|
%
|
|
3.2
|
%
|
|
|
||||||||||||
Latest Reestimate of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Gross Reserve for Unpaid Losses and LAE
|
|
$
|
794
|
|
|
$
|
917
|
|
|
$
|
1,272
|
|
|
$
|
1,279
|
|
|
$
|
1,303
|
|
|
$
|
1,189
|
|
|
$
|
1,149
|
|
|
$
|
1,142
|
|
|
$
|
1,162
|
|
|
$
|
1,072
|
|
|
|
||
Recoverable for Reinsurance
|
|
100
|
|
|
96
|
|
|
326
|
|
|
242
|
|
|
240
|
|
|
148
|
|
|
78
|
|
|
67
|
|
|
75
|
|
|
64
|
|
|
|
||||||||||||
Net Reserve for Unpaid Losses and LAE
|
|
$
|
694
|
|
|
$
|
821
|
|
|
$
|
946
|
|
|
$
|
1,037
|
|
|
$
|
1,063
|
|
|
$
|
1,041
|
|
|
$
|
1,071
|
|
|
$
|
1,075
|
|
|
$
|
1,087
|
|
|
$
|
1,008
|
|
|
|
||
Cumulative (Increase) Decrease to Reestimation of Gross Reserve for Unpaid Losses and LAE:
|
|
$
|
(94
|
)
|
|
$
|
58
|
|
|
$
|
154
|
|
|
$
|
232
|
|
|
$
|
228
|
|
|
$
|
244
|
|
|
$
|
174
|
|
|
$
|
127
|
|
|
$
|
49
|
|
|
$
|
47
|
|
|
|
|
|
Catastrophe Losses
and LAE |
|
Percentage
of Coverage
|
|||||||
DOLLARS IN MILLIONS
|
|
In Excess of
|
|
Up to
|
|
||||||
Preferred, Direct and Specialty Segments
|
|
|
|
|
|
|
|||||
Retained
|
|
$
|
—
|
|
|
$
|
50.0
|
|
|
—
|
%
|
1st Layer of Coverage
|
|
50.0
|
|
|
100.0
|
|
|
65.0
|
|
||
2nd Layer of Coverage
|
|
100.0
|
|
|
200.0
|
|
|
95.0
|
|
||
3rd Layer of Coverage
|
|
200.0
|
|
|
350.0
|
|
|
90.0
|
|
||
4th Layer of Coverage
|
|
350.0
|
|
|
450.0
|
|
|
50.0
|
|
||
Life and Health Insurance Segment—Property Insurance Operations
|
|
|
|
|
|
|
|||||
Retained
|
|
$
|
—
|
|
|
$
|
8.0
|
|
|
—
|
%
|
1st Layer of Coverage
|
|
8.0
|
|
|
15.0
|
|
|
70.0
|
|
||
2nd Layer of Coverage
|
|
15.0
|
|
|
40.0
|
|
|
70.0
|
|
•
|
Competitiveness of prices charged for insurance policies;
|
•
|
Selection of agents, web portals and other business partners;
|
•
|
Compensation paid to agents;
|
•
|
Underwriting discipline;
|
•
|
Selectiveness of sales markets;
|
•
|
Effectiveness of marketing materials;
|
•
|
Product and technological innovation;
|
•
|
Ability to detect and prevent fraudulent insurance claims;
|
•
|
Ability to control operating expenses;
|
•
|
Adequacy of ratings from A.M. Best; and
|
•
|
Quality of services provided to agents and policyholders.
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
DOLLARS PER SHARE
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||||||
Mar 31,
2011 |
|
Jun 30,
2011 |
|
Sep 30,
2011 |
|
Dec 31,
2011 |
|
Dec 31,
2011 |
||||||||||||
Common Stock Market Prices:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
High
|
|
$
|
31.11
|
|
|
$
|
31.69
|
|
|
$
|
30.11
|
|
|
$
|
29.71
|
|
|
$
|
31.69
|
|
Low
|
|
30.68
|
|
|
27.80
|
|
|
22.25
|
|
|
22.07
|
|
|
22.07
|
|
|||||
Close
|
|
30.88
|
|
|
29.67
|
|
|
23.96
|
|
|
29.21
|
|
|
29.21
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
DOLLARS PER SHARE
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||||||
Mar 31,
2010 |
|
Jun 30,
2010 |
|
Sep 30,
2010 |
|
Dec 31,
2010 |
|
Dec 31,
2010 |
||||||||||||
Common Stock Market Prices:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
High
|
|
$
|
28.71
|
|
|
$
|
31.12
|
|
|
$
|
28.23
|
|
|
$
|
26.03
|
|
|
$
|
31.12
|
|
Low
|
|
21.63
|
|
|
24.39
|
|
|
22.70
|
|
|
22.81
|
|
|
21.63
|
|
|||||
Close
|
|
28.05
|
|
|
25.60
|
|
|
24.39
|
|
|
24.54
|
|
|
24.54
|
|
DOLLARS PER SHARE
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||||||
Mar 31,
2011 |
|
Jun 30,
2011 |
|
Sep 30,
2011 |
|
Dec 31,
2011 |
|
Dec 31,
2011 |
||||||||||||
Cash Dividends Paid to Shareholders (per share)
|
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.96
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||||||
DOLLARS PER SHARE
|
|
Mar 31,
2010 |
|
Jun 30,
2010 |
|
Sep 30,
2010 |
|
Dec 31,
2010 |
|
Dec 31,
2010 |
||||||||||
Cash Dividends Paid to Shareholders (per share)
|
|
$
|
0.22
|
|
|
$
|
0.22
|
|
|
$
|
0.22
|
|
|
$
|
0.22
|
|
|
$
|
0.88
|
|
|
|
|
|
|
|
Total
|
|
Maximum
|
||||||
|
|
|
|
|
|
Number of Shares
|
|
Dollar Value of Shares
|
||||||
|
|
|
|
Average
|
|
Purchased as Part
|
|
that May Yet Be
|
||||||
|
|
Total
|
|
Price
|
|
of Publicly
|
|
Purchased Under
|
||||||
|
|
Number of Shares
|
|
Paid per
|
|
Announced Plans
|
|
the Plans or Programs
|
||||||
Period
|
|
Purchased (1)
|
|
Share
|
|
or Programs (1)
|
|
(Dollars in Millions)
|
||||||
October 1 - October 31, 2011
|
|
—
|
|
|
N/A
|
|
|
—
|
|
|
$
|
278.3
|
|
|
November 1 - November 30, 2011
|
|
—
|
|
|
N/A
|
|
|
—
|
|
|
$
|
278.3
|
|
|
December 1 - December 31, 2011
|
|
203,545
|
|
|
$
|
27.67
|
|
|
203,545
|
|
|
$
|
272.7
|
|
Company / Index
|
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
||||||||||||
Kemper Corporation
|
|
$
|
100.00
|
|
|
$
|
99.57
|
|
|
$
|
35.44
|
|
|
$
|
52.88
|
|
|
$
|
60.99
|
|
|
$
|
75.12
|
|
S&P MidCap 400 Index
|
|
100.00
|
|
|
107.98
|
|
|
68.86
|
|
|
94.60
|
|
|
119.80
|
|
|
117.72
|
|
||||||
S&P Composite 1500 Insurance Index
|
|
100.00
|
|
|
93.25
|
|
|
43.60
|
|
|
48.31
|
|
|
56.05
|
|
|
52.18
|
|
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
||||||||||
FOR THE YEAR
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earned Premiums
|
|
$
|
2,173.6
|
|
|
$
|
2,289.4
|
|
|
$
|
2,455.5
|
|
|
$
|
2,376.6
|
|
|
$
|
2,286.9
|
|
Net Investment Income
|
|
298.0
|
|
|
325.7
|
|
|
319.9
|
|
|
208.5
|
|
|
284.9
|
|
|||||
Other Income
|
|
1.0
|
|
|
1.3
|
|
|
2.5
|
|
|
4.1
|
|
|
3.5
|
|
|||||
Net Realized Gains on Sales of Investments
|
|
33.7
|
|
|
42.6
|
|
|
24.6
|
|
|
59.2
|
|
|
95.5
|
|
|||||
Net Impairment Losses Recognized in Earnings
|
|
(11.3
|
)
|
|
(16.5
|
)
|
|
(50.4
|
)
|
|
(152.9
|
)
|
|
(33.0
|
)
|
|||||
Total Revenues
|
|
$
|
2,495.0
|
|
|
$
|
2,642.5
|
|
|
$
|
2,752.1
|
|
|
$
|
2,495.5
|
|
|
$
|
2,637.8
|
|
Income (Loss) from Continuing Operations
|
|
$
|
70.9
|
|
|
$
|
169.1
|
|
|
$
|
167.5
|
|
|
$
|
(15.7
|
)
|
|
$
|
216.9
|
|
Income (Loss) from Discontinued Operations
|
|
12.8
|
|
|
15.5
|
|
|
(2.8
|
)
|
|
(13.9
|
)
|
|
(11.5
|
)
|
|||||
Net Income (Loss)
|
|
$
|
83.7
|
|
|
$
|
184.6
|
|
|
$
|
164.7
|
|
|
$
|
(29.6
|
)
|
|
$
|
205.4
|
|
Per Unrestricted Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) from Continuing Operations
|
|
$
|
1.17
|
|
|
$
|
2.73
|
|
|
$
|
2.69
|
|
|
$
|
(0.25
|
)
|
|
$
|
3.30
|
|
Income (Loss) from Discontinued Operations
|
|
0.21
|
|
|
0.25
|
|
|
(0.05
|
)
|
|
(0.22
|
)
|
|
(0.17
|
)
|
|||||
Net Income (Loss)
|
|
$
|
1.38
|
|
|
$
|
2.98
|
|
|
$
|
2.64
|
|
|
$
|
(0.47
|
)
|
|
$
|
3.13
|
|
Per Unrestricted Share Assuming Dilution:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (Loss) from Continuing Operations
|
|
$
|
1.17
|
|
|
$
|
2.73
|
|
|
$
|
2.69
|
|
|
$
|
(0.25
|
)
|
|
$
|
3.28
|
|
Income (Loss) from Discontinued Operations
|
|
0.21
|
|
|
0.25
|
|
|
(0.05
|
)
|
|
(0.22
|
)
|
|
(0.17
|
)
|
|||||
Net Income (Loss)
|
|
$
|
1.38
|
|
|
$
|
2.98
|
|
|
$
|
2.64
|
|
|
$
|
(0.47
|
)
|
|
$
|
3.11
|
|
Dividends Paid to Shareholders (per share)
|
|
$
|
0.96
|
|
|
$
|
0.88
|
|
|
$
|
1.07
|
|
|
$
|
1.88
|
|
|
$
|
1.82
|
|
AT YEAR END
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Assets
|
|
$
|
8,085.9
|
|
|
$
|
8,358.5
|
|
|
$
|
8,573.5
|
|
|
$
|
8,818.8
|
|
|
$
|
9,394.4
|
|
Insurance Reserves
|
|
$
|
4,131.8
|
|
|
$
|
4,182.4
|
|
|
$
|
4,239.3
|
|
|
$
|
4,241.3
|
|
|
$
|
3,855.9
|
|
Unearned Premiums
|
|
666.2
|
|
|
678.6
|
|
|
724.9
|
|
|
733.5
|
|
|
722.2
|
|
|||||
Certificates of Deposits
|
|
—
|
|
|
321.4
|
|
|
682.4
|
|
|
1,110.8
|
|
|
1,274.3
|
|
|||||
Notes Payable
|
|
610.6
|
|
|
609.8
|
|
|
561.4
|
|
|
560.8
|
|
|
560.1
|
|
|||||
All Other Liabilities
|
|
461.2
|
|
|
452.9
|
|
|
447.9
|
|
|
523.8
|
|
|
690.9
|
|
|||||
Total Liabilities
|
|
5,869.8
|
|
|
6,245.1
|
|
|
6,655.9
|
|
|
7,170.2
|
|
|
7,103.4
|
|
|||||
Shareholders’ Equity
|
|
2,216.1
|
|
|
2,113.4
|
|
|
1,917.6
|
|
|
1,648.6
|
|
|
2,291.0
|
|
|||||
Total Liabilities and Shareholders’ Equity
|
|
$
|
8,085.9
|
|
|
$
|
8,358.5
|
|
|
$
|
8,573.5
|
|
|
$
|
8,818.8
|
|
|
$
|
9,394.4
|
|
Book Value Per Share
|
|
$
|
36.78
|
|
|
$
|
34.61
|
|
|
$
|
30.75
|
|
|
$
|
26.46
|
|
|
$
|
35.65
|
|
|
|
Summary of Results
|
|
Catastrophes
|
|
Non-GAAP Financial Measures
|
|
Preferred
|
|
Specialty
|
|
Direct
|
|
Life and Health Insurance
|
|
Investment Results
|
|
Investment Quality and Concentrations
|
|
Investments in Limited Liability Investment Companies and Limited Partnerships
|
|
Interest and Other Expenses
|
|
Income Taxes
|
|
Liquidity and Capital Resources
|
|
Off-Balance Sheet Arrangements
|
|
Contractual Obligations
|
|
Critical Accounting Estimates
|
|
Recently Issued Accounting Pronouncements
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2011
Increase
(Decrease)
|
|
2009
|
|
2010
Increase
(Decrease)
|
||||||||||
Segment Net Operating Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Preferred
|
|
$
|
(16.6
|
)
|
|
$
|
50.6
|
|
|
$
|
(67.2
|
)
|
|
$
|
63.7
|
|
|
$
|
(13.1
|
)
|
Specialty
|
|
18.3
|
|
|
20.2
|
|
|
(1.9
|
)
|
|
23.5
|
|
|
(3.3
|
)
|
|||||
Direct
|
|
(27.1
|
)
|
|
(1.1
|
)
|
|
(26.0
|
)
|
|
(5.3
|
)
|
|
4.2
|
|
|||||
Life and Health Insurance
|
|
108.5
|
|
|
94.9
|
|
|
13.6
|
|
|
112.1
|
|
|
(17.2
|
)
|
|||||
Total Segment Net Operating Income
|
|
83.1
|
|
|
164.6
|
|
|
(81.5
|
)
|
|
194.0
|
|
|
(29.4
|
)
|
|||||
Unallocated Net Operating Loss
|
|
(26.8
|
)
|
|
(12.7
|
)
|
|
(14.1
|
)
|
|
(9.7
|
)
|
|
(3.0
|
)
|
|||||
Consolidated Net Operating Income
|
|
56.3
|
|
|
151.9
|
|
|
(95.6
|
)
|
|
184.3
|
|
|
(32.4
|
)
|
|||||
Net Income (Loss) From:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Realized Gains on Sales of Investments
|
|
21.9
|
|
|
27.9
|
|
|
(6.0
|
)
|
|
16.0
|
|
|
11.9
|
|
|||||
Net Impairment Losses Recognized in Earnings
|
|
(7.3
|
)
|
|
(10.7
|
)
|
|
3.4
|
|
|
(32.8
|
)
|
|
22.1
|
|
|||||
Income from Continuing Operations
|
|
70.9
|
|
|
169.1
|
|
|
(98.2
|
)
|
|
167.5
|
|
|
1.6
|
|
|||||
Income (Loss) from Discontinued Operations
|
|
12.8
|
|
|
15.5
|
|
|
(2.7
|
)
|
|
(2.8
|
)
|
|
18.3
|
|
|||||
Net Income
|
|
$
|
83.7
|
|
|
$
|
184.6
|
|
|
$
|
(100.9
|
)
|
|
$
|
164.7
|
|
|
$
|
19.9
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Preferred
|
|
$
|
20.0
|
|
|
$
|
21.9
|
|
|
$
|
22.4
|
|
Specialty
|
|
0.1
|
|
|
0.3
|
|
|
0.3
|
|
|||
Direct
|
|
0.8
|
|
|
0.8
|
|
|
1.5
|
|
|||
Life and Health Insurance
|
|
2.3
|
|
|
3.6
|
|
|
4.3
|
|
|||
Total Ceded Catastrophe Reinsurance Premiums
|
|
$
|
23.2
|
|
|
$
|
26.6
|
|
|
$
|
28.5
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Preferred
|
|
$
|
144.2
|
|
|
$
|
70.1
|
|
|
$
|
47.6
|
|
Specialty
|
|
3.8
|
|
|
2.9
|
|
|
4.1
|
|
|||
Direct
|
|
6.7
|
|
|
1.8
|
|
|
3.2
|
|
|||
Life and Health Insurance
|
|
9.1
|
|
|
4.5
|
|
|
6.7
|
|
|||
Total Catastrophe Losses and LAE
|
|
$
|
163.8
|
|
|
$
|
79.3
|
|
|
$
|
61.6
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Preferred:
|
|
|
|
|
|
|
||||||
Non-catastrophe
|
|
$
|
(13.6
|
)
|
|
$
|
(18.9
|
)
|
|
$
|
(42.2
|
)
|
Catastrophe
|
|
(5.5
|
)
|
|
(4.9
|
)
|
|
(18.3
|
)
|
|||
Total
|
|
(19.1
|
)
|
|
(23.8
|
)
|
|
(60.5
|
)
|
|||
Specialty:
|
|
|
|
|
|
|
||||||
Non-catastrophe
|
|
(9.5
|
)
|
|
4.0
|
|
|
(8.0
|
)
|
|||
Catastrophe
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|||
Total
|
|
(9.4
|
)
|
|
4.1
|
|
|
(7.9
|
)
|
|||
Direct:
|
|
|
|
|
|
|
||||||
Non-catastrophe
|
|
(4.4
|
)
|
|
(7.0
|
)
|
|
(12.3
|
)
|
|||
Catastrophe
|
|
0.5
|
|
|
0.2
|
|
|
0.2
|
|
|||
Total
|
|
(3.9
|
)
|
|
(6.8
|
)
|
|
(12.1
|
)
|
|||
Life and Health Insurance:
|
|
|
|
|
|
|
||||||
Non-catastrophe
|
|
(1.1
|
)
|
|
1.1
|
|
|
2.7
|
|
|||
Catastrophe
|
|
(1.5
|
)
|
|
3.4
|
|
|
(0.1
|
)
|
|||
Total
|
|
(2.6
|
)
|
|
4.5
|
|
|
2.6
|
|
|||
Decrease in Total Loss and LAE Reserves Related to Prior Years:
|
|
|
|
|
|
|
||||||
Non-catastrophe
|
|
(28.6
|
)
|
|
(20.8
|
)
|
|
(59.8
|
)
|
|||
Catastrophe
|
|
(6.4
|
)
|
|
(1.2
|
)
|
|
(18.1
|
)
|
|||
Decrease in Total Loss and LAE Reserve Related to Prior Years
|
|
$
|
(35.0
|
)
|
|
$
|
(22.0
|
)
|
|
$
|
(77.9
|
)
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Consolidated Net Operating Income
|
|
$
|
56.3
|
|
|
$
|
151.9
|
|
|
$
|
184.3
|
|
Net Income (Loss) From:
|
|
|
|
|
|
|
||||||
Net Realized Gains on Sales of Investments
|
|
21.9
|
|
|
27.9
|
|
|
16.0
|
|
|||
Net Impairment Losses Recognized in Earnings
|
|
(7.3
|
)
|
|
(10.7
|
)
|
|
(32.8
|
)
|
|||
Income from Continuing Operations
|
|
$
|
70.9
|
|
|
$
|
169.1
|
|
|
$
|
167.5
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Net Premiums Written
|
|
$
|
868.8
|
|
|
$
|
872.2
|
|
|
$
|
918.3
|
|
Earned Premiums:
|
|
|
|
|
|
|
|
|
|
|||
Automobile
|
|
$
|
510.9
|
|
|
$
|
544.7
|
|
|
$
|
584.6
|
|
Homeowners
|
|
294.9
|
|
|
290.0
|
|
|
294.0
|
|
|||
Other Personal
|
|
54.0
|
|
|
53.3
|
|
|
53.2
|
|
|||
Total Earned Premiums
|
|
859.8
|
|
|
888.0
|
|
|
931.8
|
|
|||
Net Investment Income
|
|
49.6
|
|
|
52.8
|
|
|
42.1
|
|
|||
Other Income
|
|
0.3
|
|
|
0.4
|
|
|
0.4
|
|
|||
Total Revenues
|
|
909.7
|
|
|
941.2
|
|
|
974.3
|
|
|||
Incurred Losses and LAE related to:
|
|
|
|
|
|
|
||||||
Current Year:
|
|
|
|
|
|
|
||||||
Non-catastrophe Losses and LAE
|
|
584.6
|
|
|
587.3
|
|
|
640.7
|
|
|||
Catastrophe Losses and LAE
|
|
144.2
|
|
|
70.1
|
|
|
47.6
|
|
|||
Prior Years:
|
|
|
|
|
|
|
||||||
Non-catastrophe Losses and LAE
|
|
(13.6
|
)
|
|
(18.9
|
)
|
|
(42.2
|
)
|
|||
Catastrophe Losses and LAE
|
|
(5.5
|
)
|
|
(4.9
|
)
|
|
(18.3
|
)
|
|||
Total Incurred Losses and LAE
|
|
709.7
|
|
|
633.6
|
|
|
627.8
|
|
|||
Insurance Expenses
|
|
239.4
|
|
|
243.7
|
|
|
260.3
|
|
|||
Operating Profit (Loss)
|
|
(39.4
|
)
|
|
63.9
|
|
|
86.2
|
|
|||
Income Tax Benefit (Expense)
|
|
22.8
|
|
|
(13.3
|
)
|
|
(22.5
|
)
|
|||
Segment Net Operating Income (Loss)
|
|
$
|
(16.6
|
)
|
|
$
|
50.6
|
|
|
$
|
63.7
|
|
|
|
|
|
|
|
|
||||||
Ratios Based On Earned Premiums
|
|
|
|
|
|
|
||||||
Current Year Non-catastrophe Losses and LAE Ratio
|
|
67.9
|
%
|
|
66.2
|
%
|
|
68.8
|
%
|
|||
Current Year Catastrophe Losses and LAE Ratio
|
|
16.8
|
|
|
7.9
|
|
|
5.1
|
|
|||
Prior Years Non-catastrophe Losses and LAE Ratio
|
|
(1.6
|
)
|
|
(2.1
|
)
|
|
(4.5
|
)
|
|||
Prior Years Catastrophe Losses and LAE Ratio
|
|
(0.6
|
)
|
|
(0.6
|
)
|
|
(2.0
|
)
|
|||
Total Incurred Loss and LAE Ratio
|
|
82.5
|
|
|
71.4
|
|
|
67.4
|
|
|||
Incurred Expense Ratio
|
|
27.8
|
|
|
27.4
|
|
|
27.9
|
|
|||
Combined Ratio
|
|
110.3
|
%
|
|
98.8
|
%
|
|
95.3
|
%
|
|||
Underlying Combined Ratio
|
|
|
|
|
|
|
||||||
Current Year Non-catastrophe Losses and LAE Ratio
|
|
67.9
|
%
|
|
66.2
|
%
|
|
68.8
|
%
|
|||
Incurred Expense Ratio
|
|
27.8
|
|
|
27.4
|
|
|
27.9
|
|
|||
Underlying Combined Ratio
|
|
95.7
|
%
|
|
93.6
|
%
|
|
96.7
|
%
|
|||
Non-GAAP Measure Reconciliation
|
|
|
|
|
|
|
||||||
Underlying Combined Ratio
|
|
95.7
|
%
|
|
93.6
|
%
|
|
96.7
|
%
|
|||
Current Year Catastrophe Losses and LAE Ratio
|
|
16.8
|
|
|
7.9
|
|
|
5.1
|
|
|||
Prior Years Non-catastrophe Losses and LAE Ratio
|
|
(1.6
|
)
|
|
(2.1
|
)
|
|
(4.5
|
)
|
|||
Prior Years Catastrophe Losses and LAE Ratio
|
|
(0.6
|
)
|
|
(0.6
|
)
|
|
(2.0
|
)
|
|||
Combined Ratio as Reported
|
|
110.3
|
%
|
|
98.8
|
%
|
|
95.3
|
%
|
DOLLARS IN MILLIONS
|
|
Dec 31,
2011 |
|
Dec 31,
2010 |
||||
Insurance Reserves:
|
|
|
|
|
||||
Automobile
|
|
$
|
274.7
|
|
|
$
|
286.2
|
|
Homeowners
|
|
106.2
|
|
|
97.6
|
|
||
Other Personal
|
|
35.3
|
|
|
36.7
|
|
||
Insurance Reserves
|
|
$
|
416.2
|
|
|
$
|
420.5
|
|
|
|
|
|
|
||||
Insurance Reserves:
|
|
|
|
|
||||
Loss Reserves:
|
|
|
|
|
||||
Case
|
|
$
|
259.0
|
|
|
$
|
261.5
|
|
Incurred but Not Reported
|
|
92.9
|
|
|
88.0
|
|
||
Total Loss Reserves
|
|
351.9
|
|
|
349.5
|
|
||
LAE Reserves
|
|
64.3
|
|
|
71.0
|
|
||
Insurance Reserves
|
|
$
|
416.2
|
|
|
$
|
420.5
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Net Premiums Written
|
|
$
|
438.2
|
|
|
$
|
457.2
|
|
|
$
|
512.3
|
|
Earned Premiums:
|
|
|
|
|
|
|
||||||
Personal Automobile
|
|
$
|
405.2
|
|
|
$
|
431.3
|
|
|
$
|
471.5
|
|
Commercial Automobile
|
|
40.0
|
|
|
43.6
|
|
|
56.0
|
|
|||
Total Earned Premiums
|
|
445.2
|
|
|
474.9
|
|
|
527.5
|
|
|||
Net Investment Income
|
|
21.1
|
|
|
24.8
|
|
|
20.8
|
|
|||
Other Income
|
|
0.5
|
|
|
0.6
|
|
|
0.4
|
|
|||
Total Revenues
|
|
466.8
|
|
|
500.3
|
|
|
548.7
|
|
|||
Incurred Losses and LAE related to:
|
|
|
|
|
|
|
||||||
Current Year:
|
|
|
|
|
|
|
||||||
Non-catastrophe Losses and LAE
|
|
358.4
|
|
|
376.0
|
|
|
422.6
|
|
|||
Catastrophe Losses and LAE
|
|
3.8
|
|
|
2.9
|
|
|
4.1
|
|
|||
Prior Years:
|
|
|
|
|
|
|
||||||
Non-catastrophe Losses and LAE
|
|
(9.5
|
)
|
|
4.0
|
|
|
(8.0
|
)
|
|||
Catastrophe Losses and LAE
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|||
Total Incurred Losses and LAE
|
|
352.8
|
|
|
383.0
|
|
|
418.8
|
|
|||
Insurance Expenses
|
|
91.5
|
|
|
92.7
|
|
|
99.4
|
|
|||
Operating Profit
|
|
22.5
|
|
|
24.6
|
|
|
30.5
|
|
|||
Income Tax Expense
|
|
(4.2
|
)
|
|
(4.4
|
)
|
|
(7.0
|
)
|
|||
Segment Net Operating Income
|
|
$
|
18.3
|
|
|
$
|
20.2
|
|
|
$
|
23.5
|
|
|
|
|
|
|
|
|
||||||
Ratios Based On Earned Premiums
|
|
|
|
|
|
|
||||||
Current Year Non-catastrophe Losses and LAE Ratio
|
|
80.4
|
%
|
|
79.2
|
%
|
|
80.1
|
%
|
|||
Current Year Catastrophe Losses and LAE Ratio
|
|
0.9
|
|
|
0.6
|
|
|
0.8
|
|
|||
Prior Years Non-catastrophe Losses and LAE Ratio
|
|
(2.1
|
)
|
|
0.8
|
|
|
(1.5
|
)
|
|||
Prior Years Catastrophe Losses and LAE Ratio
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total Incurred Loss and LAE Ratio
|
|
79.2
|
|
|
80.6
|
|
|
79.4
|
|
|||
Incurred Expense Ratio
|
|
20.6
|
|
|
19.5
|
|
|
18.8
|
|
|||
Combined Ratio
|
|
99.8
|
%
|
|
100.1
|
%
|
|
98.2
|
%
|
|||
Underlying Combined Ratio
|
|
|
|
|
|
|
||||||
Current Year Non-catastrophe Losses and LAE Ratio
|
|
80.4
|
%
|
|
79.2
|
%
|
|
80.1
|
%
|
|||
Incurred Expense Ratio
|
|
20.6
|
|
|
19.5
|
|
|
18.8
|
|
|||
Underlying Combined Ratio
|
|
101.0
|
%
|
|
98.7
|
%
|
|
98.9
|
%
|
|||
Non-GAAP Measure Reconciliation
|
|
|
|
|
|
|
||||||
Underlying Combined Ratio
|
|
101.0
|
%
|
|
98.7
|
%
|
|
98.9
|
%
|
|||
Current Year Catastrophe Losses and LAE Ratio
|
|
0.9
|
|
|
0.6
|
|
|
0.8
|
|
|||
Prior Years Non-catastrophe Losses and LAE Ratio
|
|
(2.1
|
)
|
|
0.8
|
|
|
(1.5
|
)
|
|||
Prior Years Catastrophe Losses and LAE Ratio
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Combined Ratio as Reported
|
|
99.8
|
%
|
|
100.1
|
%
|
|
98.2
|
%
|
DOLLARS IN MILLIONS
|
|
Dec 31,
2011 |
|
Dec 31,
2010 |
||||
Insurance Reserves:
|
|
|
|
|
||||
Personal Automobile
|
|
$
|
166.6
|
|
|
$
|
181.9
|
|
Commercial Automobile
|
|
51.5
|
|
|
61.7
|
|
||
Other
|
|
7.8
|
|
|
7.2
|
|
||
Insurance Reserves
|
|
$
|
225.9
|
|
|
$
|
250.8
|
|
|
|
|
|
|
||||
Insurance Reserves:
|
|
|
|
|
||||
Loss Reserves:
|
|
|
|
|
||||
Case
|
|
$
|
135.1
|
|
|
$
|
151.9
|
|
Incurred but Not Reported
|
|
47.7
|
|
|
63.4
|
|
||
Total Loss Reserves
|
|
182.8
|
|
|
215.3
|
|
||
LAE Reserves
|
|
43.1
|
|
|
35.5
|
|
||
Insurance Reserves
|
|
$
|
225.9
|
|
|
$
|
250.8
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Net Premiums Written
|
|
$
|
209.0
|
|
|
$
|
269.3
|
|
|
$
|
320.3
|
|
Earned Premiums:
|
|
|
|
|
|
|
||||||
Automobile
|
|
$
|
213.3
|
|
|
$
|
273.5
|
|
|
$
|
338.0
|
|
Homeowners
|
|
9.2
|
|
|
8.7
|
|
|
7.1
|
|
|||
Other Personal
|
|
0.2
|
|
|
0.2
|
|
|
0.5
|
|
|||
Total Earned Premiums
|
|
222.7
|
|
|
282.4
|
|
|
345.6
|
|
|||
Net Investment Income
|
|
17.9
|
|
|
21.4
|
|
|
18.5
|
|
|||
Other Income
|
|
0.1
|
|
|
0.1
|
|
|
0.9
|
|
|||
Total Revenues
|
|
240.7
|
|
|
303.9
|
|
|
365.0
|
|
|||
Incurred Losses and LAE related to:
|
|
|
|
|
|
|
||||||
Current Year:
|
|
|
|
|
|
|
||||||
Non-catastrophe Losses and LAE
|
|
194.8
|
|
|
228.9
|
|
|
278.0
|
|
|||
Catastrophe Losses and LAE
|
|
6.7
|
|
|
1.8
|
|
|
3.2
|
|
|||
Prior Years:
|
|
|
|
|
|
|
||||||
Non-catastrophe Losses and LAE
|
|
(4.4
|
)
|
|
(7.0
|
)
|
|
(12.3
|
)
|
|||
Catastrophe Losses and LAE
|
|
0.5
|
|
|
0.2
|
|
|
0.2
|
|
|||
Total Incurred Losses and LAE
|
|
197.6
|
|
|
223.9
|
|
|
269.1
|
|
|||
Insurance Expenses
|
|
76.3
|
|
|
87.1
|
|
|
107.0
|
|
|||
Write-off of Intangible Assets from Direct Response Acquisition
|
|
13.5
|
|
|
—
|
|
|
1.5
|
|
|||
Operating Loss
|
|
(46.7
|
)
|
|
(7.1
|
)
|
|
(12.6
|
)
|
|||
Income Tax Benefit
|
|
19.6
|
|
|
6.0
|
|
|
7.3
|
|
|||
Segment Net Operating Loss
|
|
$
|
(27.1
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
(5.3
|
)
|
|
|
|
|
|
|
|
||||||
Ratios Based On Earned Premiums
|
|
|
|
|
|
|
||||||
Current Year Non-catastrophe Losses and LAE Ratio
|
|
87.5
|
%
|
|
81.1
|
%
|
|
80.5
|
%
|
|||
Current Year Catastrophe Losses and LAE Ratio
|
|
3.0
|
|
|
0.6
|
|
|
0.9
|
|
|||
Prior Years Non-catastrophe Losses and LAE Ratio
|
|
(2.0
|
)
|
|
(2.5
|
)
|
|
(3.6
|
)
|
|||
Prior Years Catastrophe Losses and LAE Ratio
|
|
0.2
|
|
|
0.1
|
|
|
0.1
|
|
|||
Total Incurred Loss and LAE Ratio
|
|
88.7
|
|
|
79.3
|
|
|
77.9
|
|
|||
Incurred Expense Ratio, Including Write-off of Intangible Assets
|
|
40.3
|
|
|
30.8
|
|
|
31.4
|
|
|||
Combined Ratio
|
|
129.0
|
%
|
|
110.1
|
%
|
|
109.3
|
%
|
|||
Underlying Combined Ratio
|
|
|
|
|
|
|
||||||
Current Year Non-catastrophe Losses and LAE Ratio
|
|
87.5
|
%
|
|
81.1
|
%
|
|
80.5
|
%
|
|||
Incurred Expense Ratio, Including Write-off of Intangible Assets
|
|
40.3
|
|
|
30.8
|
|
|
31.4
|
|
|||
Underlying Combined Ratio
|
|
127.8
|
%
|
|
111.9
|
%
|
|
111.9
|
%
|
|||
Non-GAAP Measure Reconciliation
|
|
|
|
|
|
|
||||||
Underlying Combined Ratio
|
|
127.8
|
%
|
|
111.9
|
%
|
|
111.9
|
%
|
|||
Current Year Catastrophe Losses and LAE Ratio
|
|
3.0
|
|
|
0.6
|
|
|
0.9
|
|
|||
Prior Years Non-catastrophe Losses and LAE Ratio
|
|
(2.0
|
)
|
|
(2.5
|
)
|
|
(3.6
|
)
|
|||
Prior Years Catastrophe Losses and LAE Ratio
|
|
0.2
|
|
|
0.1
|
|
|
0.1
|
|
|||
Combined Ratio as Reported
|
|
129.0
|
%
|
|
110.1
|
%
|
|
109.3
|
%
|
DOLLARS IN MILLIONS
|
|
Dec 31,
2011 |
|
Dec 31,
2010 |
||||
Insurance Reserves:
|
|
|
|
|
||||
Automobile
|
|
$
|
216.5
|
|
|
$
|
229.5
|
|
Homeowners
|
|
4.8
|
|
|
3.7
|
|
||
Other
|
|
2.6
|
|
|
2.4
|
|
||
Total Insurance Reserves
|
|
$
|
223.9
|
|
|
$
|
235.6
|
|
|
|
|
|
|
||||
Insurance Reserves:
|
|
|
|
|
||||
Loss Reserves:
|
|
|
|
|
||||
Case
|
|
$
|
140.9
|
|
|
$
|
144.9
|
|
Incurred but Not Reported
|
|
54.0
|
|
|
56.8
|
|
||
Total Loss Reserves
|
|
194.9
|
|
|
201.7
|
|
||
LAE Reserves
|
|
29.0
|
|
|
33.9
|
|
||
Insurance Reserves
|
|
$
|
223.9
|
|
|
$
|
235.6
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Earned Premiums:
|
|
|
|
|
|
|
||||||
Life
|
|
$
|
395.1
|
|
|
$
|
396.7
|
|
|
$
|
399.7
|
|
Accident and Health
|
|
166.3
|
|
|
161.9
|
|
|
159.2
|
|
|||
Property
|
|
84.5
|
|
|
85.5
|
|
|
91.7
|
|
|||
Total Earned Premiums
|
|
645.9
|
|
|
644.1
|
|
|
650.6
|
|
|||
Net Investment Income
|
|
201.9
|
|
|
214.3
|
|
|
225.3
|
|
|||
Other Income
|
|
0.1
|
|
|
0.2
|
|
|
0.7
|
|
|||
Total Revenues
|
|
847.9
|
|
|
858.6
|
|
|
876.6
|
|
|||
Policyholders’ Benefits and Incurred Losses and LAE
|
|
385.6
|
|
|
406.8
|
|
|
423.8
|
|
|||
Insurance Expenses
|
|
294.7
|
|
|
283.0
|
|
|
284.3
|
|
|||
Write-off of Goodwill
|
|
—
|
|
|
14.8
|
|
|
—
|
|
|||
Operating Profit
|
|
167.6
|
|
|
154.0
|
|
|
168.5
|
|
|||
Income Tax Expense
|
|
(59.1
|
)
|
|
(59.1
|
)
|
|
(56.4
|
)
|
|||
Segment Net Operating Income
|
|
$
|
108.5
|
|
|
$
|
94.9
|
|
|
$
|
112.1
|
|
DOLLARS IN MILLIONS
|
|
Dec 31,
2011 |
|
Dec 31,
2010 |
||||
Insurance Reserves:
|
|
|
|
|
||||
Future Policyholder Benefits
|
|
$
|
3,046.8
|
|
|
$
|
3,004.8
|
|
Incurred Losses and LAE Reserves:
|
|
|
|
|
||||
Life
|
|
33.8
|
|
|
35.3
|
|
||
Accident and Health
|
|
22.1
|
|
|
23.6
|
|
||
Property
|
|
8.3
|
|
|
20.8
|
|
||
Total Incurred Losses and LAE Reserves
|
|
64.2
|
|
|
79.7
|
|
||
Insurance Reserves
|
|
$
|
3,111.0
|
|
|
$
|
3,084.5
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Investment Income:
|
|
|
|
|
|
|
||||||
Interest and Dividends on Fixed Maturities
|
|
$
|
246.6
|
|
|
$
|
243.8
|
|
|
$
|
241.0
|
|
Dividends on Equity Securities
|
|
25.2
|
|
|
16.0
|
|
|
13.2
|
|
|||
Short-term Investments
|
|
0.1
|
|
|
0.3
|
|
|
0.8
|
|
|||
Loans to Policyholders
|
|
17.7
|
|
|
16.5
|
|
|
15.4
|
|
|||
Real Estate
|
|
26.0
|
|
|
27.1
|
|
|
28.4
|
|
|||
Equity Method Limited Liability Investments
|
|
9.6
|
|
|
48.8
|
|
|
47.7
|
|
|||
Other
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|||
Total Investment Income
|
|
325.5
|
|
|
352.5
|
|
|
346.8
|
|
|||
Investment Expenses:
|
|
|
|
|
|
|
||||||
Real Estate
|
|
25.9
|
|
|
25.7
|
|
|
26.4
|
|
|||
Other Investment Expenses
|
|
1.6
|
|
|
1.1
|
|
|
0.5
|
|
|||
Total Investment Expenses
|
|
27.5
|
|
|
26.8
|
|
|
26.9
|
|
|||
Net Investment Income
|
|
$
|
298.0
|
|
|
$
|
325.7
|
|
|
$
|
319.9
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Fixed Maturities:
|
|
|
|
|
|
|
||||||
Gains on Sales
|
|
$
|
14.2
|
|
|
$
|
21.5
|
|
|
$
|
12.8
|
|
Losses on Sales
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(2.7
|
)
|
|||
Equity Securities:
|
|
|
|
|
|
|
||||||
Gains on Sales
|
|
34.0
|
|
|
11.7
|
|
|
13.6
|
|
|||
Losses on Sales
|
|
(13.5
|
)
|
|
—
|
|
|
—
|
|
|||
Investee – Intermec:
|
|
|
|
|
|
|
||||||
Gains on Sales
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|||
Real Estate:
|
|
|
|
|
|
|
||||||
Gains on Sales
|
|
0.1
|
|
|
8.2
|
|
|
—
|
|
|||
Other Investments:
|
|
|
|
|
|
|
||||||
Gains on Sales
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|||
Losses on Sales
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|||
Trading Securities Net Gains (Losses)
|
|
(0.9
|
)
|
|
0.5
|
|
|
1.0
|
|
|||
Net Realized Gains on Sales of Investments
|
|
$
|
33.7
|
|
|
$
|
42.6
|
|
|
$
|
24.6
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Fixed Maturities
|
|
$
|
(2.2
|
)
|
|
$
|
(14.4
|
)
|
|
$
|
(41.6
|
)
|
Equity Securities
|
|
(1.9
|
)
|
|
(2.1
|
)
|
|
(8.8
|
)
|
|||
Real Estate
|
|
(7.2
|
)
|
|
—
|
|
|
—
|
|
|||
Net Impairment Losses Recognized in Earnings
|
|
$
|
(11.3
|
)
|
|
$
|
(16.5
|
)
|
|
$
|
(50.4
|
)
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Fixed Maturities:
|
|
|
|
|
|
|
||||||
Recognized in Consolidated Statements of Income:
|
|
|
|
|
|
|
||||||
Gains on Sales
|
|
$
|
14.6
|
|
|
$
|
21.5
|
|
|
$
|
12.8
|
|
Losses on Sales
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(2.7
|
)
|
|||
Net Impairment Losses Recognized in Earnings
|
|
(2.2
|
)
|
|
(14.4
|
)
|
|
(41.6
|
)
|
|||
Total Recognized in Consolidated Statements of Income
|
|
12.3
|
|
|
7.0
|
|
|
(31.5
|
)
|
|||
Recognized in Other Comprehensive Income (Loss)
|
|
272.8
|
|
|
86.4
|
|
|
191.1
|
|
|||
Total Comprehensive Investment Gains (Losses) on Fixed Maturities
|
|
285.1
|
|
|
93.4
|
|
|
159.6
|
|
|||
Equity Securities:
|
|
|
|
|
|
|
||||||
Recognized in Consolidated Statements of Income:
|
|
|
|
|
|
|
||||||
Gains on Sales
|
|
34.0
|
|
|
11.7
|
|
|
13.6
|
|
|||
Losses on Sales
|
|
(13.5
|
)
|
|
—
|
|
|
—
|
|
|||
Net Impairment Losses Recognized in Earnings
|
|
(1.9
|
)
|
|
(2.1
|
)
|
|
(8.8
|
)
|
|||
Total Recognized in Consolidated Statements of Income
|
|
18.6
|
|
|
9.6
|
|
|
4.8
|
|
|||
Recognized in Other Comprehensive Income (Loss)
|
|
(71.2
|
)
|
|
90.2
|
|
|
44.8
|
|
|||
Total Comprehensive Investment Gains (Losses) on Equity Securities
|
|
(52.6
|
)
|
|
99.8
|
|
|
49.6
|
|
|||
Investee:
|
|
|
|
|
|
|
||||||
Recognized in Consolidated Statements of Income:
|
|
|
|
|
|
|
||||||
Gains on Sales
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|||
Recognized in Other Comprehensive Income (Loss)
|
|
—
|
|
|
2.9
|
|
|
(2.2
|
)
|
|||
Total Comprehensive Investment Gains (Losses) on Investee
|
|
—
|
|
|
3.7
|
|
|
(2.2
|
)
|
|||
Real Estate:
|
|
|
|
|
|
|
||||||
Recognized in Consolidated Statements of Income:
|
|
|
|
|
|
|
||||||
Gains on Sales
|
|
0.1
|
|
|
8.2
|
|
|
—
|
|
|||
Net Impairment Losses Recognized in Earnings
|
|
(7.2
|
)
|
|
—
|
|
|
—
|
|
|||
Total Recognized in Consolidated Statements of Income
|
|
(7.1
|
)
|
|
8.2
|
|
|
—
|
|
|||
Other Investments:
|
|
|
|
|
|
|
||||||
Recognized in Consolidated Statements of Income:
|
|
|
|
|
|
|
||||||
Gains on Sales
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|||
Losses on Sales
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|||
Trading Securities Net Gains (Losses)
|
|
(0.9
|
)
|
|
0.5
|
|
|
1.0
|
|
|||
Total Recognized in Consolidated Statements of Income
|
|
(1.0
|
)
|
|
0.5
|
|
|
0.9
|
|
|||
Total Comprehensive Investment Gains
|
|
$
|
224.4
|
|
|
$
|
205.6
|
|
|
$
|
207.9
|
|
Recognized in Consolidated Statements of Income
|
|
$
|
22.8
|
|
|
$
|
26.1
|
|
|
$
|
(25.8
|
)
|
Recognized in Other Comprehensive Income
|
|
201.6
|
|
|
179.5
|
|
|
233.7
|
|
|||
Total Comprehensive Investment Gains
|
|
$
|
224.4
|
|
|
$
|
205.6
|
|
|
$
|
207.9
|
|
|
|
Dec 31, 2011
|
|
Dec 31, 2010
|
||||||||||
DOLLARS IN MILLIONS
|
|
Fair Value
|
|
Percentage
of Total
Investments
|
|
Fair Value
|
|
Percentage
of Total
Investments
|
||||||
U.S. Government and Government Agencies and Authorities
|
|
$
|
491.7
|
|
|
7.9
|
%
|
|
$
|
536.9
|
|
|
8.6
|
%
|
Pre-refunded with U.S. Government and Government Agencies and Authorities Held in Trust
|
|
275.2
|
|
|
4.4
|
|
|
449.0
|
|
|
7.2
|
|
||
States
|
|
937.8
|
|
|
15.1
|
|
|
808.4
|
|
|
12.9
|
|
||
Political Subdivisions
|
|
178.9
|
|
|
2.9
|
|
|
163.7
|
|
|
2.6
|
|
||
Revenue Bonds
|
|
460.7
|
|
|
7.4
|
|
|
371.7
|
|
|
6.0
|
|
||
Total Investments in Governmental Fixed Maturities
|
|
$
|
2,344.3
|
|
|
37.7
|
%
|
|
$
|
2,329.7
|
|
|
37.3
|
%
|
|
|
Dec 31, 2011
|
|
Dec 31, 2010
|
||||||||||
DOLLARS IN MILLIONS
|
|
Fair Value
|
|
Percentage
of Total
Investments
|
|
Fair Value
|
|
Percentage
of Total
Investments
|
||||||
Manufacturing
|
|
$
|
1,153.1
|
|
|
18.5
|
%
|
|
$
|
1,023.6
|
|
|
16.4
|
%
|
Finance, Insurance and Real Estate
|
|
590.4
|
|
|
9.5
|
|
|
566.4
|
|
|
9.1
|
|
||
Transportation, Communication and Utilities
|
|
252.2
|
|
|
4.1
|
|
|
229.7
|
|
|
3.7
|
|
||
Services
|
|
233.8
|
|
|
3.8
|
|
|
186.3
|
|
|
3.0
|
|
||
Mining
|
|
89.6
|
|
|
1.4
|
|
|
52.0
|
|
|
0.8
|
|
||
Retail Trade
|
|
50.1
|
|
|
0.8
|
|
|
33.5
|
|
|
0.5
|
|
||
Wholesale Trade
|
|
41.5
|
|
|
0.7
|
|
|
36.5
|
|
|
0.6
|
|
||
Agriculture, Forestry and Fishing
|
|
17.8
|
|
|
0.3
|
|
|
17.0
|
|
|
0.3
|
|
||
Other
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
||
Total Investments in Non-governmental Fixed Maturities
|
|
$
|
2,429.1
|
|
|
39.1
|
%
|
|
$
|
2,145.6
|
|
|
34.4
|
%
|
DOLLARS IN MILLIONS
|
|
Fair
Value
|
|
Percentage
of Total
Investments
|
|||
Fixed Maturities:
|
|
|
|
|
|||
States and Political Subdivisions:
|
|
|
|
|
|||
Texas
|
|
$
|
105.6
|
|
|
1.7
|
%
|
Washington
|
|
93.2
|
|
|
1.5
|
|
|
Louisiana
|
|
76.8
|
|
|
1.2
|
|
|
Georgia
|
|
75.6
|
|
|
1.2
|
|
|
New York
|
|
64.1
|
|
|
1.0
|
|
|
Colorado
|
|
59.9
|
|
|
1.0
|
|
|
Equity Securities:
|
|
|
|
|
|||
iShares® iBoxx $ Investment Grade Corporate Bond Fund
|
|
66.6
|
|
|
1.1
|
|
|
Equity Method Limited Liability Investments:
|
|
|
|
|
|||
Tennenbaum Opportunities Fund V, LLC
|
|
75.6
|
|
|
1.2
|
|
|
Special Value Opportunity Fund, LLC
|
|
67.8
|
|
|
1.1
|
|
|
Goldman Sachs Vintage Fund IV, L.P.
|
|
64.2
|
|
|
1.0
|
|
|
Total
|
|
$
|
749.4
|
|
|
12.0
|
%
|
DOLLARS IN MILLIONS
|
|
Asset Class
|
|
Unfunded Commitment Dec 31, 2011
|
|
Carrying Value
|
|
Stated
Fund End
Date
|
||||||||
Dec 31,
2011 |
|
Dec 31,
2010 |
|
|||||||||||||
Reported as Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||
Tennenbaum Opportunities Fund V, LLC
|
|
Distressed Debt
|
|
$
|
—
|
|
|
$
|
75.6
|
|
|
$
|
91.4
|
|
|
10/10/2016
|
Special Value Opportunity Fund, LLC
|
|
Distressed Debt
|
|
—
|
|
|
67.8
|
|
|
86.8
|
|
|
7/13/2014
|
|||
Goldman Sachs Vintage Fund IV, L.P.
|
|
Secondary Transactions
|
|
22.4
|
|
|
64.2
|
|
|
58.9
|
|
|
12/31/2016
|
|||
Special Value Continuation Fund, LLC
|
|
Distressed Debt
|
|
—
|
|
|
22.4
|
|
|
26.8
|
|
|
6/30/2016
|
|||
NY Life Investment Management Mezzanine Partners II, LP
|
|
Mezzanine Debt
|
|
4.1
|
|
|
13.5
|
|
|
20.5
|
|
|
7/31/2016
|
|||
BNY Mezzanine Partners L.P.
|
|
Mezzanine Debt
|
|
1.5
|
|
|
12.9
|
|
|
14.1
|
|
|
4/17/2016
|
|||
Ziegler Meditech Equity Partners, LP
|
|
Growth Equity
|
|
1.8
|
|
|
13.3
|
|
|
10.4
|
|
|
1/31/2016
|
|||
BNY-Alcentra Mezzanine Partners III, L.P.
|
|
Mezzanine Debt
|
|
21.1
|
|
|
22.7
|
|
|
4.5
|
|
|
2021-2022
|
|||
Other Funds
|
|
|
|
2.5
|
|
|
13.9
|
|
|
14.6
|
|
|
Various
|
|||
Total for Equity Method Limited Liability Investments
|
|
|
|
53.4
|
|
|
306.3
|
|
|
328.0
|
|
|
|
|||
Reported as Other Equity Interests and Reported at Fair Value:
|
|
|
|
|
|
|
|
|
|
|
||||||
Highbridge Principal Strategies Fund L.P.
|
|
Mezzanine Debt
|
|
4.7
|
|
|
20.8
|
|
|
11.4
|
|
|
1/23/2018
|
|||
Goldman Sachs Vintage Fund V, L.P.
|
|
Secondary Transactions
|
|
8.1
|
|
|
13.9
|
|
|
8.7
|
|
|
12/31/2018
|
|||
Goldman Sachs Mezzanine Partners V, L.P.
|
|
Mezzanine Debt
|
|
14.4
|
|
|
8.2
|
|
|
8.4
|
|
|
12/31/2021
|
|||
Other
|
|
|
|
51.6
|
|
|
50.2
|
|
|
46.7
|
|
|
Various
|
|||
Total Reported as Other Equity Interests and Reported at Fair Value
|
|
|
|
78.8
|
|
|
93.1
|
|
|
75.2
|
|
|
|
|||
Total
|
|
|
|
$
|
132.2
|
|
|
$
|
399.4
|
|
|
$
|
403.2
|
|
|
|
DOLLARS IN MILLIONS
|
|
Jan. 1, 2012
To
Dec. 31, 2012
|
|
Jan. 1, 2013
To
Dec. 31, 2014
|
|
Jan. 1, 2015
To
Dec. 31, 2016
|
|
After
Dec. 31, 2016
|
|
Total
|
||||||||||
Long Term Debt Obligations
|
|
$
|
0.1
|
|
|
$
|
5.5
|
|
|
$
|
250.0
|
|
|
$
|
360.0
|
|
|
$
|
615.6
|
|
Capital Lease Obligations
|
|
2.1
|
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|
3.5
|
|
|||||
Operating Lease Obligations
|
|
26.8
|
|
|
44.7
|
|
|
23.5
|
|
|
15.5
|
|
|
110.5
|
|
|||||
Purchase Obligations
|
|
1.9
|
|
|
1.4
|
|
|
0.1
|
|
|
—
|
|
|
3.4
|
|
|||||
Life and Health Insurance Policy Benefits
|
|
265.0
|
|
|
445.6
|
|
|
428.5
|
|
|
5,314.1
|
|
|
6,453.2
|
|
|||||
Property and Casualty Insurance Reserves
|
|
515.9
|
|
|
323.0
|
|
|
109.8
|
|
|
80.4
|
|
|
1,029.1
|
|
|||||
Other Contractual Obligations Reflected in Long Term Liabilities on the Consolidated Balance Sheet under GAAP
|
|
37.4
|
|
|
73.3
|
|
|
58.2
|
|
|
10.8
|
|
|
179.7
|
|
|||||
Total Contractual Obligations
|
|
$
|
849.2
|
|
|
$
|
894.9
|
|
|
$
|
870.1
|
|
|
$
|
5,780.8
|
|
|
$
|
8,395.0
|
|
•
|
The financial condition, credit rating and prospects of the issuer;
|
•
|
The extent to which the fair value has been less than cost;
|
•
|
The ability of the issuer to make scheduled principal and interest payments;
|
•
|
The volatility of the investment;
|
•
|
Opinions of the Company’s external investment managers;
|
•
|
The Company’s intentions to sell or not to sell the investment; and
|
•
|
The Company’s determination of whether or not it will be required to sell the investment before a full recovery in value.
|
•
|
The financial condition and prospects of the issuer;
|
•
|
The length of time and magnitude of the unrealized loss;
|
•
|
The volatility of the investment;
|
•
|
Analyst recommendations and near term price targets;
|
•
|
Opinions of the Company’s external investment managers;
|
•
|
Market liquidity;
|
•
|
Debt-like characteristics of perpetual preferred stocks and issuer ratings; and
|
•
|
The Company’s intentions to sell or ability to hold the investments until recovery.
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
||||
Business Segments:
|
|
|
|
|
||||
Preferred
|
|
$
|
416.2
|
|
|
$
|
420.5
|
|
Specialty
|
|
225.9
|
|
|
250.8
|
|
||
Direct
|
|
223.9
|
|
|
235.6
|
|
||
Life and Health Insurance
|
|
8.3
|
|
|
20.8
|
|
||
Total Business Segments
|
|
874.3
|
|
|
927.7
|
|
||
Discontinued Operations
|
|
133.0
|
|
|
163.9
|
|
||
Unallocated Reserves
|
|
21.8
|
|
|
27.1
|
|
||
Total Property and Casualty Insurance Reserves
|
|
$
|
1,029.1
|
|
|
$
|
1,118.7
|
|
•
|
Incurred Loss Development Methodology;
|
•
|
Paid Loss Development Methodology;
|
•
|
Bornhuetter-Ferguson Incurred Loss Methodology;
|
•
|
Bornhuetter-Ferguson Paid Loss Methodology; and
|
•
|
Frequency and Severity Methodology.
|
•
|
Changes in the level of minimum case reserves, and the automatic aging of those minimum case reserves;
|
•
|
Changes to claims practices, including, but not limited to, changes in the reporting and impact of large losses, timing of reported claims, adequacy of case reserves, implementation of new systems for handling claims, turnover of claims department staffs, timing and depth of the audit review of claims handling procedures;
|
•
|
Changes in underwriting practices;
|
•
|
Changes in the mix of business by state, class and policy limit within product line;
|
•
|
Growth in new lines of business;
|
•
|
Changes in the attachment points of the Company’s reinsurance programs;
|
•
|
Medical costs, including, but not limited to, the ability to assess the extent of injuries and the impact of inflation;
|
•
|
Repair costs, including, but not limited to, the impact of inflation and the availability of labor and materials;
|
•
|
Changes in the judicial environment, including, but not limited to, the interpretation of policy provisions, the impact of jury awards and changes in case law; and
|
•
|
Changes in state regulatory requirements.
|
DOLLARS IN MILLIONS
|
|
Favorable (Adverse) Development
|
||||||||||
2011
|
|
2010
|
|
2009
|
||||||||
Continuing Operations:
|
|
|
|
|
|
|
||||||
Preferred
|
|
$
|
19.1
|
|
|
$
|
23.8
|
|
|
$
|
60.5
|
|
Specialty
|
|
9.4
|
|
|
(4.1
|
)
|
|
7.9
|
|
|||
Direct
|
|
3.9
|
|
|
6.8
|
|
|
12.1
|
|
|||
Life and Health Insurance
|
|
2.6
|
|
|
(4.5
|
)
|
|
(2.6
|
)
|
|||
Total Favorable Development from Continuing Operations, Net
|
|
35.0
|
|
|
22.0
|
|
|
77.9
|
|
|||
Discontinued Operations:
|
|
|
|
|
|
|
||||||
Unitrin Business Insurance
|
|
(1.9
|
)
|
|
2.9
|
|
|
3.0
|
|
|||
Total Favorable Development, Net
|
|
$
|
33.1
|
|
|
$
|
24.9
|
|
|
$
|
80.9
|
|
•
|
Estimated mortality of the employees and retirees eligible for benefits;
|
•
|
Estimated expected long-term rates of returns on investments;
|
•
|
Estimated compensation increases;
|
•
|
Estimated employee turnover; and
|
•
|
Estimated rate used to discount the ultimate estimated liability to a present value.
|
•
|
ASU 2010-26,
Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts;
|
•
|
ASU 2011-04,
Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements; and
|
•
|
ASU 2011-08,
Testing Goodwill for Impairment.
|
1.
|
Investments in Fixed Maturities;
|
2.
|
Investments in Equity Securities and;
|
3.
|
Notes Payable.
|
DOLLARS IN MILLIONS
|
|
Fair Value
|
|
Pro Forma Increase (Decrease)
|
||||||||||||
Interest
Rate Risk
|
|
Equity
Price Risk
|
|
Total
Market Risk
|
||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
||||||||
Investments in Fixed Maturities
|
|
$
|
4,773.4
|
|
|
$
|
(348.4
|
)
|
|
$
|
—
|
|
|
$
|
(348.4
|
)
|
Investments in Equity Securities
|
|
397.3
|
|
|
(10.4
|
)
|
|
(63.3
|
)
|
|
(73.7
|
)
|
||||
LIABILITIES
|
|
|
|
|
|
|
|
|
||||||||
Notes Payable
|
|
$
|
638.7
|
|
|
$
|
26.9
|
|
|
$
|
—
|
|
|
$
|
26.9
|
|
DOLLARS IN MILLIONS
|
|
Fair Value
|
|
Pro Forma Increase (Decrease)
|
||||||||||||
Interest
Rate Risk
|
|
Equity
Price Risk
|
|
Total
Market Risk
|
||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
||||||||
Investments in Fixed Maturities
|
|
$
|
4,475.3
|
|
|
$
|
(316.9
|
)
|
|
$
|
—
|
|
|
$
|
(316.9
|
)
|
Investments in Equity Securities
|
|
550.4
|
|
|
(6.9
|
)
|
|
(125.4
|
)
|
|
(132.3
|
)
|
||||
LIABILITIES
|
|
|
|
|
|
|
|
|
||||||||
Notes Payable
|
|
$
|
628.0
|
|
|
$
|
31.6
|
|
|
$
|
—
|
|
|
$
|
31.6
|
|
|
December 31,
|
||||||
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
|
2011
|
|
2010
|
||||
Assets:
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed Maturities at Fair Value (Amortized Cost: 2011 - $4,266.1; 2010 - $4,240.8)
|
$
|
4,773.4
|
|
|
$
|
4,475.3
|
|
Equity Securities at Fair Value (Cost: 2011 - $367.3; 2010 - $449.2)
|
397.3
|
|
|
550.4
|
|
||
Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings
|
306.3
|
|
|
328.0
|
|
||
Short-term Investments at Cost which Approximates Fair Value
|
247.4
|
|
|
402.9
|
|
||
Other Investments
|
498.3
|
|
|
494.2
|
|
||
Total Investments
|
6,222.7
|
|
|
6,250.8
|
|
||
Cash
|
251.2
|
|
|
117.2
|
|
||
Receivables from Policyholders
|
379.2
|
|
|
388.9
|
|
||
Other Receivables
|
218.7
|
|
|
555.4
|
|
||
Deferred Policy Acquisition Costs
|
448.5
|
|
|
426.4
|
|
||
Goodwill
|
311.8
|
|
|
311.8
|
|
||
Current and Deferred Income Tax Assets
|
3.1
|
|
|
39.6
|
|
||
Other Assets
|
250.7
|
|
|
268.4
|
|
||
Total Assets
|
$
|
8,085.9
|
|
|
$
|
8,358.5
|
|
Liabilities and Shareholders’ Equity:
|
|
|
|
||||
Insurance Reserves:
|
|
|
|
||||
Life and Health
|
$
|
3,102.7
|
|
|
$
|
3,063.7
|
|
Property and Casualty
|
1,029.1
|
|
|
1,118.7
|
|
||
Total Insurance Reserves
|
4,131.8
|
|
|
4,182.4
|
|
||
Certificates of Deposits at Cost (Fair Value: 2010 - $336.6)
|
—
|
|
|
321.4
|
|
||
Unearned Premiums
|
666.2
|
|
|
678.6
|
|
||
Liabilities for Income Taxes
|
57.9
|
|
|
15.1
|
|
||
Notes Payable at Amortized Cost (Fair Value: 2011 - $638.7; 2010 - $628.0)
|
610.6
|
|
|
609.8
|
|
||
Accrued Expenses and Other Liabilities
|
403.3
|
|
|
437.8
|
|
||
Total Liabilities
|
5,869.8
|
|
|
6,245.1
|
|
||
Shareholders’ Equity:
|
|
|
|
||||
Common Stock, $0.10 Par Value Per Share, 100 Million Shares Authorized; 60,248,582 Shares Issued and Outstanding at December 31, 2011 and 61,066,587 Shares Issued and Outstanding at December 31, 2010
|
6.0
|
|
|
6.1
|
|
||
Paid-in Capital
|
743.9
|
|
|
751.1
|
|
||
Retained Earnings
|
1,208.2
|
|
|
1,198.8
|
|
||
Accumulated Other Comprehensive Income
|
258.0
|
|
|
157.4
|
|
||
Total Shareholders’ Equity
|
2,216.1
|
|
|
2,113.4
|
|
||
Total Liabilities and Shareholders’ Equity
|
$
|
8,085.9
|
|
|
$
|
8,358.5
|
|
|
|
For The Years Ended December 31,
|
||||||||||
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Earned Premiums
|
|
$
|
2,173.6
|
|
|
$
|
2,289.4
|
|
|
$
|
2,455.5
|
|
Net Investment Income
|
|
298.0
|
|
|
325.7
|
|
|
319.9
|
|
|||
Other Income
|
|
1.0
|
|
|
1.3
|
|
|
2.5
|
|
|||
Net Realized Gains on Sales of Investments
|
|
33.7
|
|
|
42.6
|
|
|
24.6
|
|
|||
Other-than-temporary Impairment Losses:
|
|
|
|
|
|
|
||||||
Total Other-than-temporary Impairment Losses
|
|
(11.4
|
)
|
|
(17.7
|
)
|
|
(50.6
|
)
|
|||
Portion of Losses Recognized in Other Comprehensive Income
|
|
0.1
|
|
|
1.2
|
|
|
0.2
|
|
|||
Net Impairment Losses Recognized in Earnings
|
|
(11.3
|
)
|
|
(16.5
|
)
|
|
(50.4
|
)
|
|||
Total Revenues
|
|
2,495.0
|
|
|
2,642.5
|
|
|
2,752.1
|
|
|||
Expenses:
|
|
|
|
|
|
|
||||||
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses
|
|
1,645.7
|
|
|
1,647.2
|
|
|
1,739.5
|
|
|||
Insurance Expenses
|
|
669.3
|
|
|
675.5
|
|
|
721.2
|
|
|||
Write-off of Goodwill and Other Intangibles Acquired
|
|
13.5
|
|
|
14.8
|
|
|
1.5
|
|
|||
Interest and Other Expenses
|
|
83.9
|
|
|
68.3
|
|
|
61.9
|
|
|||
Total Expenses
|
|
2,412.4
|
|
|
2,405.8
|
|
|
2,524.1
|
|
|||
Income from Continuing Operations before Income Taxes and Equity in Net Loss of Investee
|
|
82.6
|
|
|
236.7
|
|
|
228.0
|
|
|||
Income Tax Expense
|
|
(11.7
|
)
|
|
(67.5
|
)
|
|
(59.5
|
)
|
|||
Income from Continuing Operations before Equity in Net Loss of Investee
|
|
70.9
|
|
|
169.2
|
|
|
168.5
|
|
|||
Equity in Net Loss of Investee
|
|
—
|
|
|
(0.1
|
)
|
|
(1.0
|
)
|
|||
Income from Continuing Operations
|
|
70.9
|
|
|
169.1
|
|
|
167.5
|
|
|||
Discontinued Operations:
|
|
|
|
|
|
|
||||||
Income from Discontinued Operations before Income Taxes
|
|
19.5
|
|
|
25.8
|
|
|
5.6
|
|
|||
Income Tax Expense
|
|
(6.7
|
)
|
|
(10.3
|
)
|
|
(8.4
|
)
|
|||
Income (Loss) from Discontinued Operations
|
|
12.8
|
|
|
15.5
|
|
|
(2.8
|
)
|
|||
Net Income
|
|
$
|
83.7
|
|
|
$
|
184.6
|
|
|
$
|
164.7
|
|
Income from Continuing Operations Per Unrestricted Share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
1.17
|
|
|
$
|
2.73
|
|
|
$
|
2.69
|
|
Diluted
|
|
$
|
1.17
|
|
|
$
|
2.73
|
|
|
$
|
2.69
|
|
Net Income Per Unrestricted Share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
1.38
|
|
|
$
|
2.98
|
|
|
$
|
2.64
|
|
Diluted
|
|
$
|
1.38
|
|
|
$
|
2.98
|
|
|
$
|
2.64
|
|
Dividends Paid to Shareholders Per Share
|
|
$
|
0.96
|
|
|
$
|
0.88
|
|
|
$
|
1.07
|
|
|
For The Years Ended December 31,
|
||||||||||
DOLLARS IN MILLIONS
|
2011
|
|
2010
|
|
2009
|
||||||
Operating Activities:
|
|
|
|
|
|
||||||
Net Income
|
$
|
83.7
|
|
|
$
|
184.6
|
|
|
$
|
164.7
|
|
Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities:
|
|
|
|
|
|
||||||
Increase in Deferred Policy Acquisition Costs
|
(22.1
|
)
|
|
(15.1
|
)
|
|
(12.9
|
)
|
|||
Amortization of Insurance in Force Acquired
|
11.4
|
|
|
11.0
|
|
|
8.4
|
|
|||
Equity in Net Loss of Former Investee before Taxes
|
—
|
|
|
0.2
|
|
|
1.6
|
|
|||
Equity in Earnings of Equity Method Limited Liability Investments
|
(9.6
|
)
|
|
(48.8
|
)
|
|
(47.8
|
)
|
|||
Amortization of Investment Securities and Depreciation of Investment Real Estate
|
16.0
|
|
|
17.6
|
|
|
15.7
|
|
|||
Net Realized Gains on Sales of Investments
|
(34.1
|
)
|
|
(42.6
|
)
|
|
(24.6
|
)
|
|||
Net Impairment Losses Recognized in Earnings
|
11.3
|
|
|
16.5
|
|
|
50.4
|
|
|||
Gain on Sale of Portfolio of Automobile Loan Receivables
|
(4.5
|
)
|
|
—
|
|
|
—
|
|
|||
Provision (Benefit) for Loan Losses
|
(42.0
|
)
|
|
(14.2
|
)
|
|
60.2
|
|
|||
Depreciation of Property and Equipment
|
10.9
|
|
|
14.5
|
|
|
16.6
|
|
|||
Write-off of Goodwill
|
—
|
|
|
14.8
|
|
|
1.5
|
|
|||
Impairment of P&C Customer Relationships Acquired
|
13.5
|
|
|
—
|
|
|
—
|
|
|||
Decrease (Increase) in Other Receivables
|
(0.2
|
)
|
|
28.0
|
|
|
80.8
|
|
|||
Decrease in Insurance Reserves
|
(52.1
|
)
|
|
(52.1
|
)
|
|
(111.8
|
)
|
|||
Decrease in Unearned Premiums
|
(12.4
|
)
|
|
(46.4
|
)
|
|
(57.4
|
)
|
|||
Change in Income Taxes
|
22.3
|
|
|
12.4
|
|
|
(5.1
|
)
|
|||
Decrease in Accrued Expenses and Other Liabilities
|
(47.5
|
)
|
|
(41.0
|
)
|
|
(5.0
|
)
|
|||
Other, Net
|
30.4
|
|
|
19.1
|
|
|
28.2
|
|
|||
Net Cash Provided (Used) by Operating Activities
|
(25.0
|
)
|
|
58.5
|
|
|
163.5
|
|
|||
Investing Activities:
|
|
|
|
|
|
||||||
Sales and Maturities of Fixed Maturities
|
650.3
|
|
|
706.7
|
|
|
708.3
|
|
|||
Purchases of Fixed Maturities
|
(663.4
|
)
|
|
(532.1
|
)
|
|
(865.3
|
)
|
|||
Sales of Equity Securities
|
248.3
|
|
|
33.8
|
|
|
108.7
|
|
|||
Purchases of Equity Securities
|
(199.2
|
)
|
|
(189.1
|
)
|
|
(3.8
|
)
|
|||
Sales of Former Investee
|
—
|
|
|
2.7
|
|
|
—
|
|
|||
Acquisition and Improvements of Investment Real Estate
|
(6.4
|
)
|
|
(3.9
|
)
|
|
(8.9
|
)
|
|||
Sales of Investment Real Estate
|
0.3
|
|
|
9.6
|
|
|
0.2
|
|
|||
Return of Investment of Equity Method Limited Liability Investments
|
57.0
|
|
|
38.1
|
|
|
21.7
|
|
|||
Acquisitions of Equity Method Limited Liability Investments
|
(25.7
|
)
|
|
(31.9
|
)
|
|
(17.1
|
)
|
|||
Decrease (Increase) in Short-term Investments
|
155.5
|
|
|
(7.3
|
)
|
|
222.2
|
|
|||
Receipts from Automobile Loan Receivables
|
166.5
|
|
|
339.6
|
|
|
431.9
|
|
|||
Net Proceeds from Sale of Portfolio of Automobile Loan Receivables
|
220.7
|
|
|
—
|
|
|
—
|
|
|||
Acquisitions of Automobile Loan Receivables
|
—
|
|
|
—
|
|
|
(77.0
|
)
|
|||
Acquisition of Businesses, Net of Cash Acquired
|
—
|
|
|
—
|
|
|
(190.0
|
)
|
|||
Disposition of Business, Net of Cash Disposed
|
—
|
|
|
4.1
|
|
|
0.2
|
|
|||
Other, Net
|
(39.3
|
)
|
|
(51.0
|
)
|
|
(43.5
|
)
|
|||
Net Cash Provided by Investing Activities
|
564.6
|
|
|
319.3
|
|
|
287.6
|
|
|||
Financing Activities:
|
|
|
|
|
|
||||||
Proceeds from Issuance of Certificates of Deposits
|
—
|
|
|
—
|
|
|
16.0
|
|
|||
Repayments of Certificates of Deposits
|
(321.8
|
)
|
|
(366.9
|
)
|
|
(444.5
|
)
|
|||
Proceeds from Issuance of Notes Payable
|
95.0
|
|
|
387.8
|
|
|
220.0
|
|
|||
Repayments of Notes Payable
|
(95.0
|
)
|
|
(340.1
|
)
|
|
(220.1
|
)
|
|||
Common Stock Repurchases
|
(27.4
|
)
|
|
(34.4
|
)
|
|
—
|
|
|||
Cash Dividends Paid to Shareholders
|
(58.2
|
)
|
|
(54.6
|
)
|
|
(66.6
|
)
|
|||
Cash Exercise of Stock Options
|
0.2
|
|
|
0.5
|
|
|
—
|
|
|||
Excess Tax Benefits from Share-based Awards
|
0.2
|
|
|
0.2
|
|
|
0.1
|
|
|||
Other, Net
|
1.4
|
|
|
3.2
|
|
|
3.5
|
|
|||
Net Cash Used by Financing Activities
|
(405.6
|
)
|
|
(404.3
|
)
|
|
(491.6
|
)
|
|||
Increase (Decrease) in Cash
|
134.0
|
|
|
(26.5
|
)
|
|
(40.5
|
)
|
|||
Cash, Beginning of Year
|
117.2
|
|
|
143.7
|
|
|
184.2
|
|
|||
Cash, End of Period
|
$
|
251.2
|
|
|
$
|
117.2
|
|
|
$
|
143.7
|
|
DOLLARS AND SHARES IN
MILLIONS, EXCEPT PER SHARE
AMOUNTS
|
|
For The Years Ended December 31, 2011, 2010 and 2009
|
|||||||||||||||||||||
Number of
Shares
|
|
Common
Stock
|
|
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
Shareholders’
Equity
|
|||||||||||||
BALANCE, DECEMBER 31, 2008
|
|
62.3
|
|
|
$
|
6.2
|
|
|
$
|
764.7
|
|
|
$
|
985.8
|
|
|
$
|
(108.1
|
)
|
|
$
|
1,648.6
|
|
Net Income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
164.7
|
|
|
—
|
|
|
164.7
|
|
|||||
Other Comprehensive Income (note 13)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
169.8
|
|
|
169.8
|
|
|||||
Total Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
334.5
|
|
||||||||||
Cumulative Effect of Change in Accounting for Impairment Losses Recognized in Earnings
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.9
|
|
|
(2.9
|
)
|
|
—
|
|
|||||
Cash Dividends to Shareholders ($1.07 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(66.6
|
)
|
|
—
|
|
|
(66.6
|
)
|
|||||
Equity-based Compensation Cost (note 10)
|
|
—
|
|
|
—
|
|
|
3.1
|
|
|
—
|
|
|
—
|
|
|
3.1
|
|
|||||
Equity-based Awards, Net of Shares Exchanged (note 10)
|
|
0.1
|
|
|
—
|
|
|
(1.9
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(2.0
|
)
|
|||||
BALANCE, DECEMBER 31, 2009
|
|
62.4
|
|
|
$
|
6.2
|
|
|
$
|
765.9
|
|
|
$
|
1,086.7
|
|
|
$
|
58.8
|
|
|
$
|
1,917.6
|
|
Net Income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
184.6
|
|
|
—
|
|
|
184.6
|
|
|||||
Other Comprehensive Income (note 13)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
98.6
|
|
|
98.6
|
|
|||||
Total Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
283.2
|
|
||||||||||
Cash Dividends to Shareholders ($0.88 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(54.6
|
)
|
|
—
|
|
|
(54.6
|
)
|
|||||
Repurchases of Common Stock
|
|
(1.4
|
)
|
|
(0.1
|
)
|
|
(17.0
|
)
|
|
(17.3
|
)
|
|
—
|
|
|
(34.4
|
)
|
|||||
Equity-based Compensation Cost (note 10)
|
|
—
|
|
|
—
|
|
|
4.2
|
|
|
—
|
|
|
—
|
|
|
4.2
|
|
|||||
Equity-based Awards, Net of Shares Exchanged (note 10)
|
|
0.1
|
|
|
—
|
|
|
(2.0
|
)
|
|
(0.6
|
)
|
|
—
|
|
|
(2.6
|
)
|
|||||
BALANCE, DECEMBER 31, 2010
|
|
61.1
|
|
|
$
|
6.1
|
|
|
$
|
751.1
|
|
|
$
|
1,198.8
|
|
|
$
|
157.4
|
|
|
$
|
2,113.4
|
|
Net Income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83.7
|
|
|
—
|
|
|
83.7
|
|
|||||
Other Comprehensive Income (note 13)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
100.6
|
|
|
100.6
|
|
|||||
Total Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
184.3
|
|
||||||||||
Cash Dividends to Shareholders ($0.96 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58.2
|
)
|
|
—
|
|
|
(58.2
|
)
|
|||||
Repurchases of Common Stock
|
|
(0.9
|
)
|
|
(0.1
|
)
|
|
(11.6
|
)
|
|
(15.7
|
)
|
|
—
|
|
|
(27.4
|
)
|
|||||
Equity-based Compensation Cost (note 10)
|
|
—
|
|
|
—
|
|
|
5.3
|
|
|
—
|
|
|
—
|
|
|
5.3
|
|
|||||
Equity-based Awards, Net of Shares Exchanged (note 10)
|
|
0.1
|
|
|
—
|
|
|
(0.9
|
)
|
|
(0.4
|
)
|
|
—
|
|
|
(1.3
|
)
|
|||||
BALANCE, DECEMBER 31, 2011
|
|
60.3
|
|
|
$
|
6.0
|
|
|
$
|
743.9
|
|
|
$
|
1,208.2
|
|
|
$
|
258.0
|
|
|
$
|
2,216.1
|
|
•
|
Level 1 — Quoted prices in an active market for identical assets or liabilities;
|
•
|
Level 2 — Observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and
|
•
|
Level 3 — Assets and liabilities whose significant value drivers are unobservable.
|
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Interest, Loan Fees and Earned Discounts
|
|
$
|
31.8
|
|
|
$
|
97.6
|
|
|
$
|
175.0
|
|
Other Automobile Finance Revenues
|
|
1.4
|
|
|
1.4
|
|
|
3.5
|
|
|||
Gain on Sale of Portfolio of Automobile Loan Receivables
|
|
4.5
|
|
|
—
|
|
|
—
|
|
|||
Total Automobile Finance Revenues
|
|
37.7
|
|
|
99.0
|
|
|
178.5
|
|
|||
Net Investment Income
|
|
0.5
|
|
|
1.9
|
|
|
2.8
|
|
|||
Net Realized Gains on Sales of Investments
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|||
Total Revenues Included in Discontinued Operations
|
|
$
|
38.6
|
|
|
$
|
100.9
|
|
|
$
|
181.3
|
|
|
|
|
|
|
|
|
||||||
Income (Loss) from Discontinued Operations before Income Taxes:
|
|
|
|
|
|
|
||||||
Fireside Bank:
|
|
|
|
|
|
|
||||||
Results of Operations
|
|
$
|
18.7
|
|
|
$
|
24.6
|
|
|
$
|
1.6
|
|
Gain on Sale of Portfolio of Automobile Loan Receivables
|
|
4.5
|
|
|
—
|
|
|
—
|
|
|||
Unitrin Business Insurance:
|
|
|
|
|
|
|
||||||
Change in Estimate of Retained Liabilities Arising from Discontinued Operations
|
|
(3.7
|
)
|
|
1.2
|
|
|
4.0
|
|
|||
Income from Discontinued Operations before Income Taxes
|
|
19.5
|
|
|
25.8
|
|
|
5.6
|
|
|||
Income Tax Expense
|
|
(6.7
|
)
|
|
(10.3
|
)
|
|
(8.4
|
)
|
|||
Income (Loss) from Discontinued Operations
|
|
$
|
12.8
|
|
|
$
|
15.5
|
|
|
$
|
(2.8
|
)
|
|
|
|
|
|
|
|
||||||
Income (Loss) from Discontinued Operations Per Unrestricted Share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.21
|
|
|
$
|
0.25
|
|
|
$
|
(0.05
|
)
|
Diluted
|
|
$
|
0.21
|
|
|
$
|
0.25
|
|
|
$
|
(0.05
|
)
|
DOLLARS IN MILLIONS
|
|
Amortized
Cost
|
|
Gross Unrealized
|
|
Fair Value
|
||||||||||
Gains
|
|
Losses
|
|
|||||||||||||
U.S. Government and Government Agencies and Authorities
|
|
$
|
439.4
|
|
|
$
|
52.3
|
|
|
$
|
—
|
|
|
$
|
491.7
|
|
States and Political Subdivisions
|
|
1,705.0
|
|
|
148.4
|
|
|
(0.8
|
)
|
|
1,852.6
|
|
||||
Corporate Securities:
|
|
|
|
|
|
|
|
|
||||||||
Bonds and Notes
|
|
2,040.1
|
|
|
311.6
|
|
|
(9.4
|
)
|
|
2,342.3
|
|
||||
Redeemable Preferred Stocks
|
|
76.7
|
|
|
5.1
|
|
|
(0.1
|
)
|
|
81.7
|
|
||||
Mortgage and Asset-backed
|
|
4.9
|
|
|
1.0
|
|
|
(0.8
|
)
|
|
5.1
|
|
||||
Investments in Fixed Maturities
|
|
$
|
4,266.1
|
|
|
$
|
518.4
|
|
|
$
|
(11.1
|
)
|
|
$
|
4,773.4
|
|
|
|
Amortized
Cost
|
|
Gross Unrealized
|
|
Fair Value
|
||||||||||
DOLLARS IN MILLIONS
|
|
Gains
|
|
Losses
|
|
|||||||||||
U.S. Government and Government Agencies and Authorities
|
|
$
|
508.6
|
|
|
$
|
28.4
|
|
|
$
|
(0.1
|
)
|
|
$
|
536.9
|
|
States and Political Subdivisions
|
|
1,760.0
|
|
|
53.5
|
|
|
(20.7
|
)
|
|
1,792.8
|
|
||||
Corporate Securities:
|
|
|
|
|
|
|
|
|
||||||||
Bonds and Notes
|
|
1,880.3
|
|
|
178.8
|
|
|
(10.1
|
)
|
|
2,049.0
|
|
||||
Redeemable Preferred Stocks
|
|
83.4
|
|
|
4.9
|
|
|
—
|
|
|
88.3
|
|
||||
Mortgage and Asset-backed
|
|
8.5
|
|
|
1.1
|
|
|
(1.3
|
)
|
|
8.3
|
|
||||
Investments in Fixed Maturities
|
|
$
|
4,240.8
|
|
|
$
|
266.7
|
|
|
$
|
(32.2
|
)
|
|
$
|
4,475.3
|
|
DOLLARS IN MILLIONS
|
|
|
||
Due in One Year or Less
|
|
$
|
90.7
|
|
Due after One Year to Five Years
|
|
502.6
|
|
|
Due after Five Years to Ten Years
|
|
961.2
|
|
|
Due after Ten Years
|
|
2,929.5
|
|
|
Asset-backed Securities Not Due at a Single Maturity Date
|
|
289.4
|
|
|
Investments in Fixed Maturities
|
|
$
|
4,773.4
|
|
DOLLARS IN MILLIONS
|
|
Cost
|
|
Gross Unrealized
|
|
Fair Value
|
||||||||||
Gains
|
|
Losses
|
|
|||||||||||||
Preferred Stocks:
|
|
|
|
|
|
|
|
|
||||||||
Finance, Insurance and Real Estate
|
|
$
|
94.4
|
|
|
$
|
1.0
|
|
|
$
|
(8.7
|
)
|
|
$
|
86.7
|
|
Other Industries
|
|
18.0
|
|
|
2.6
|
|
|
(0.1
|
)
|
|
20.5
|
|
||||
Common Stocks:
|
|
|
|
|
|
|
|
|
||||||||
Manufacturing
|
|
64.6
|
|
|
18.9
|
|
|
(0.1
|
)
|
|
83.4
|
|
||||
Other Industries
|
|
41.4
|
|
|
7.4
|
|
|
(1.8
|
)
|
|
47.0
|
|
||||
Other Equity Interests:
|
|
|
|
|
|
|
|
|
||||||||
Exchange Traded Funds
|
|
66.0
|
|
|
0.6
|
|
|
—
|
|
|
66.6
|
|
||||
Limited Liability Companies and Limited Partnerships
|
|
82.9
|
|
|
11.7
|
|
|
(1.5
|
)
|
|
93.1
|
|
||||
Investments in Equity Securities
|
|
$
|
367.3
|
|
|
$
|
42.2
|
|
|
$
|
(12.2
|
)
|
|
$
|
397.3
|
|
DOLLARS IN MILLIONS
|
|
|
|
Gross Unrealized
|
|
|
||||||||||
|
Cost
|
|
Gains
|
|
Losses
|
|
Fair Value
|
|||||||||
Preferred Stocks:
|
|
|
|
|
|
|
|
|
||||||||
Finance, Insurance and Real Estate
|
|
$
|
94.4
|
|
|
$
|
3.5
|
|
|
$
|
(0.2
|
)
|
|
$
|
97.7
|
|
Other Industries
|
|
20.0
|
|
|
7.6
|
|
|
(0.2
|
)
|
|
27.4
|
|
||||
Common Stocks:
|
|
|
|
|
|
|
|
|
||||||||
Intermec
|
|
86.9
|
|
|
50.6
|
|
|
—
|
|
|
137.5
|
|
||||
Manufacturing
|
|
75.3
|
|
|
14.6
|
|
|
(0.3
|
)
|
|
89.6
|
|
||||
Other Industries
|
|
37.3
|
|
|
6.6
|
|
|
(0.1
|
)
|
|
43.8
|
|
||||
Other Equity Interests:
|
|
|
|
|
|
|
|
|
||||||||
Exchange Traded Funds
|
|
76.5
|
|
|
2.7
|
|
|
—
|
|
|
79.2
|
|
||||
Limited Liability Companies and Limited Partnerships
|
|
58.8
|
|
|
17.6
|
|
|
(1.2
|
)
|
|
75.2
|
|
||||
Investments in Equity Securities
|
|
$
|
449.2
|
|
|
$
|
103.2
|
|
|
$
|
(2.0
|
)
|
|
$
|
550.4
|
|
DOLLARS IN MILLIONS
|
|
Less Than 12 Months
|
|
12 Months or Longer
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|||||||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government and Government Agencies and Authorities
|
|
$
|
1.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.3
|
|
|
$
|
—
|
|
States and Political Subdivisions
|
|
2.0
|
|
|
—
|
|
|
12.0
|
|
|
(0.8
|
)
|
|
14.0
|
|
|
(0.8
|
)
|
||||||
Corporate Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Bonds and Notes
|
|
169.6
|
|
|
(5.1
|
)
|
|
74.7
|
|
|
(4.3
|
)
|
|
244.3
|
|
|
(9.4
|
)
|
||||||
Redeemable Preferred Stocks
|
|
0.6
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
—
|
|
|
0.7
|
|
|
(0.1
|
)
|
||||||
Mortgage and Asset-backed
|
|
—
|
|
|
—
|
|
|
2.7
|
|
|
(0.8
|
)
|
|
2.7
|
|
|
(0.8
|
)
|
||||||
Total Fixed Maturities
|
|
173.5
|
|
|
(5.2
|
)
|
|
89.5
|
|
|
(5.9
|
)
|
|
263.0
|
|
|
(11.1
|
)
|
||||||
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Preferred Stocks:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, Insurance and Real Estate
|
|
54.9
|
|
|
(8.1
|
)
|
|
2.2
|
|
|
(0.6
|
)
|
|
57.1
|
|
|
(8.7
|
)
|
||||||
Other Industries
|
|
1.8
|
|
|
—
|
|
|
2.8
|
|
|
(0.1
|
)
|
|
4.6
|
|
|
(0.1
|
)
|
||||||
Common Stocks:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Manufacturing
|
|
1.5
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
—
|
|
|
1.6
|
|
|
(0.1
|
)
|
||||||
Other Industries
|
|
10.7
|
|
|
(1.8
|
)
|
|
—
|
|
|
—
|
|
|
10.7
|
|
|
(1.8
|
)
|
||||||
Other Equity Interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Limited Liability Companies and Limited Partnerships
|
|
17.1
|
|
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|
17.1
|
|
|
(1.5
|
)
|
||||||
Total Equity Securities
|
|
86.0
|
|
|
(11.5
|
)
|
|
5.1
|
|
|
(0.7
|
)
|
|
91.1
|
|
|
(12.2
|
)
|
||||||
Total
|
|
$
|
259.5
|
|
|
$
|
(16.7
|
)
|
|
$
|
94.6
|
|
|
$
|
(6.6
|
)
|
|
$
|
354.1
|
|
|
$
|
(23.3
|
)
|
•
|
The financial condition and prospects of the issuer;
|
•
|
The length of time and magnitude of the unrealized loss;
|
•
|
The volatility of the investment;
|
•
|
Analyst recommendations and near term price targets;
|
•
|
Opinions of the Company’s external investment managers;
|
•
|
Market liquidity;
|
•
|
Debt-like characteristics of perpetual preferred stocks and issuer ratings; and
|
•
|
The Company’s intentions to sell or ability to hold the investments until recovery.
|
DOLLARS IN MILLIONS
|
|
Less Than 12 Months
|
|
12 Months or Longer
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|||||||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government and Government Agencies and Authorities
|
|
$
|
18.5
|
|
|
$
|
(0.1
|
)
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
18.6
|
|
|
$
|
(0.1
|
)
|
States and Political Subdivisions
|
|
455.6
|
|
|
(16.9
|
)
|
|
16.5
|
|
|
(3.8
|
)
|
|
472.1
|
|
|
(20.7
|
)
|
||||||
Corporate Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Bonds and Notes
|
|
123.0
|
|
|
(3.7
|
)
|
|
87.8
|
|
|
(6.4
|
)
|
|
210.8
|
|
|
(10.1
|
)
|
||||||
Redeemable Preferred Stocks
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
||||||
Mortgage and Asset-backed
|
|
—
|
|
|
—
|
|
|
4.6
|
|
|
(1.3
|
)
|
|
4.6
|
|
|
(1.3
|
)
|
||||||
Total Fixed Maturities
|
|
597.8
|
|
|
(20.7
|
)
|
|
109.0
|
|
|
(11.5
|
)
|
|
706.8
|
|
|
(32.2
|
)
|
||||||
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Preferred Stocks:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, Insurance and Real Estate
|
|
3.0
|
|
|
—
|
|
|
2.6
|
|
|
(0.2
|
)
|
|
5.6
|
|
|
(0.2
|
)
|
||||||
Other Industries
|
|
0.7
|
|
|
(0.1
|
)
|
|
2.8
|
|
|
(0.1
|
)
|
|
3.5
|
|
|
(0.2
|
)
|
||||||
Common Stocks:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Manufacturing
|
|
7.9
|
|
|
(0.3
|
)
|
|
1.7
|
|
|
—
|
|
|
9.6
|
|
|
(0.3
|
)
|
||||||
Other Industries
|
|
6.3
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
6.3
|
|
|
(0.1
|
)
|
||||||
Other Equity Interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Limited Liability Companies and Limited Partnerships
|
|
2.2
|
|
|
(0.3
|
)
|
|
6.1
|
|
|
(0.9
|
)
|
|
8.3
|
|
|
(1.2
|
)
|
||||||
Total Equity Securities
|
|
20.1
|
|
|
(0.8
|
)
|
|
13.2
|
|
|
(1.2
|
)
|
|
33.3
|
|
|
(2.0
|
)
|
||||||
Total
|
|
$
|
617.9
|
|
|
$
|
(21.5
|
)
|
|
$
|
122.2
|
|
|
$
|
(12.7
|
)
|
|
$
|
740.1
|
|
|
$
|
(34.2
|
)
|
|
|
Jan 1, 2011 to
|
|
Jan 1, 2010 to
|
|
April 1, 2009 to
|
||||||
DOLLARS IN MILLIONS
|
|
Dec 31, 2011
|
|
Dec 31, 2010
|
|
Dec 31, 2009
|
||||||
Balance at Beginning of Period
|
|
$
|
2.4
|
|
|
$
|
3.7
|
|
|
$
|
39.8
|
|
Additions for Previously Unrecognized OTTI Credit Losses
|
|
2.2
|
|
|
5.3
|
|
|
1.9
|
|
|||
Increases to Previously Recognized OTTI Credit Losses
|
|
—
|
|
|
0.4
|
|
|
0.9
|
|
|||
Reductions to Previously Recognized OTTI Credit Losses
|
|
(0.7
|
)
|
|
(1.7
|
)
|
|
(0.2
|
)
|
|||
Reductions due to Intent to Sell Investments
|
|
—
|
|
|
(5.1
|
)
|
|
(35.6
|
)
|
|||
Reductions for Investments Sold During Period
|
|
—
|
|
|
(0.2
|
)
|
|
(3.1
|
)
|
|||
Balance at End of Period
|
|
$
|
3.9
|
|
|
$
|
2.4
|
|
|
$
|
3.7
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
||||
Loans to Policyholders at Unpaid Principal
|
|
$
|
253.9
|
|
|
$
|
238.4
|
|
Real Estate at Depreciated Cost
|
|
239.4
|
|
|
249.9
|
|
||
Trading Securities
|
|
4.4
|
|
|
5.1
|
|
||
Other
|
|
0.6
|
|
|
0.8
|
|
||
Total
|
|
$
|
498.3
|
|
|
$
|
494.2
|
|
DOLLARS IN MILLIONS
|
|
2011
|
||
Preferred
|
|
$
|
49.6
|
|
Specialty
|
|
42.8
|
|
|
Life and Health Insurance
|
|
219.4
|
|
|
Total
|
|
$
|
311.8
|
|
DOLLARS IN MILLIONS
|
Balance at Beginning of Year
|
|
Write-off of Goodwill
|
|
Other
|
|
Balance at End of Year
|
||||||||
Preferred
|
$
|
49.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
49.6
|
|
Specialty
|
42.8
|
|
|
—
|
|
|
—
|
|
|
42.8
|
|
||||
Life and Health Insurance
|
239.4
|
|
|
(14.8
|
)
|
|
(5.2
|
)
|
|
219.4
|
|
||||
Total
|
$
|
331.8
|
|
|
$
|
(14.8
|
)
|
|
$
|
(5.2
|
)
|
|
$
|
311.8
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Beginning Property and Casualty Insurance Reserves:
|
|
|
|
|
|
|
||||||
Gross of Reinsurance at Beginning of Year
|
|
$
|
1,118.7
|
|
|
$
|
1,211.3
|
|
|
$
|
1,268.7
|
|
Less Reinsurance Recoverables and Indemnification at Beginning of Year
|
|
78.1
|
|
|
77.4
|
|
|
84.6
|
|
|||
Property and Casualty Insurance Reserves, Net of Reinsurance and Indemnification at Beginning of Year
|
|
1,040.6
|
|
|
1,133.9
|
|
|
1,184.1
|
|
|||
Property and Casualty Insurance Reserves Acquired, Net of Reinsurance
|
|
—
|
|
|
—
|
|
|
94.7
|
|
|||
Incurred Losses and LAE related to:
|
|
|
|
|
|
|
||||||
Current Year:
|
|
|
|
|
|
|
||||||
Continuing Operations
|
|
1,338.5
|
|
|
1,310.5
|
|
|
1,447.3
|
|
|||
Prior Years:
|
|
|
|
|
|
|
||||||
Continuing Operations
|
|
(35.0
|
)
|
|
(22.0
|
)
|
|
(77.9
|
)
|
|||
Discontinued Operations
|
|
1.9
|
|
|
(2.9
|
)
|
|
(3.0
|
)
|
|||
Total Incurred Losses and LAE related to Prior Years
|
|
(33.1
|
)
|
|
(24.9
|
)
|
|
(80.9
|
)
|
|||
Total Incurred Losses and LAE
|
|
1,305.4
|
|
|
1,285.6
|
|
|
1,366.4
|
|
|||
Paid Losses and LAE related to:
|
|
|
|
|
|
|
||||||
Current Year:
|
|
|
|
|
|
|
||||||
Continuing Operations
|
|
887.7
|
|
|
825.7
|
|
|
970.3
|
|
|||
Prior Years:
|
|
|
|
|
|
|
||||||
Continuing Operations
|
|
472.9
|
|
|
510.8
|
|
|
490.9
|
|
|||
Discontinued Operations
|
|
30.8
|
|
|
42.4
|
|
|
50.1
|
|
|||
Total Paid Losses and LAE related to Prior Years
|
|
503.7
|
|
|
553.2
|
|
|
541.0
|
|
|||
Total Paid Losses and LAE
|
|
1,391.4
|
|
|
1,378.9
|
|
|
1,511.3
|
|
|||
Property and Casualty Insurance Reserves, Net of Reinsurance and Indemnification at End of Year
|
|
954.6
|
|
|
1,040.6
|
|
|
1,133.9
|
|
|||
Plus Reinsurance and Indemnification Recoverables at End of Year
|
|
74.5
|
|
|
78.1
|
|
|
77.4
|
|
|||
Property and Casualty Insurance Reserves, Gross of Reinsurance at End of Year
|
|
$
|
1,029.1
|
|
|
$
|
1,118.7
|
|
|
$
|
1,211.3
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
||||
Senior Notes at Amortized Cost:
|
|
|
|
|
||||
6.00% Senior Notes due May 15, 2017
|
|
$
|
356.8
|
|
|
$
|
356.3
|
|
6.00% Senior Notes due November 30, 2015
|
|
248.2
|
|
|
247.8
|
|
||
Mortgage Note Payable at Amortized Cost
|
|
5.6
|
|
|
5.7
|
|
||
Notes Payable at Amortized Cost
|
|
$
|
610.6
|
|
|
$
|
609.8
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Notes Payable under Revolving Credit Agreement
|
|
$
|
1.2
|
|
|
$
|
1.2
|
|
|
$
|
3.2
|
|
Senior Notes Payable:
|
|
|
|
|
|
|
||||||
6.00% Senior Notes due May 15, 2017
|
|
21.6
|
|
|
21.6
|
|
|
21.6
|
|
|||
6.00% Senior Notes due November 30, 2015
|
|
15.2
|
|
|
—
|
|
|
—
|
|
|||
4.875% Senior Notes due November 1, 2010
|
|
—
|
|
|
9.8
|
|
|
9.8
|
|
|||
Mortgage Note Payable
|
|
0.4
|
|
|
0.4
|
|
|
0.4
|
|
|||
Total Interest Paid
|
|
$
|
38.4
|
|
|
$
|
33.0
|
|
|
$
|
35.0
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Minimum Rental Expense
|
|
$
|
31.5
|
|
|
$
|
35.6
|
|
|
$
|
32.0
|
|
Less Sublease Rental Income
|
|
(2.1
|
)
|
|
(2.4
|
)
|
|
(1.7
|
)
|
|||
Net Rental Expense
|
|
$
|
29.4
|
|
|
$
|
33.2
|
|
|
$
|
30.3
|
|
DOLLARS IN MILLIONS
|
|
Capital
Leases
|
|
Operating
Leases
|
||||
2012
|
|
$
|
2.2
|
|
|
$
|
26.8
|
|
2013
|
|
1.0
|
|
|
24.6
|
|
||
2014
|
|
0.3
|
|
|
20.1
|
|
||
2015
|
|
—
|
|
|
13.0
|
|
||
2016
|
|
—
|
|
|
10.5
|
|
||
2017 and Thereafter
|
|
—
|
|
|
15.5
|
|
||
Total Future Payments
|
|
$
|
3.5
|
|
|
$
|
110.5
|
|
Less Imputed Interest
|
|
(0.3
|
)
|
|
|
|||
Present Value of Minimum Capital Lease Payments
|
|
$
|
3.2
|
|
|
|
|
|
Shares
Subject to
Options
|
|
Weighted-
Average
Exercise Price
Per Share ($)
|
|
Weighted-
Average
Remaining
Contractual
Life (in Years)
|
|
Aggregate
Intrinsic
Value
($ In Millions)
|
||||||
Outstanding at Beginning of the Year
|
|
4,004,546
|
|
|
$
|
42.34
|
|
|
|
|
|
|||
Granted
|
|
313,750
|
|
|
28.10
|
|
|
|
|
|
||||
Exercised
|
|
(30,206
|
)
|
|
19.07
|
|
|
|
|
|
||||
Forfeited or Expired
|
|
(655,692
|
)
|
|
45.69
|
|
|
|
|
|
||||
Outstanding at December 31, 2011
|
|
3,632,398
|
|
|
40.70
|
|
|
4.24
|
|
|
$
|
5.7
|
|
|
Vested and Expected to Vest at December 31, 2011
|
|
3,604,694
|
|
|
$
|
40.81
|
|
|
4.21
|
|
|
$
|
5.6
|
|
Exercisable at December 31, 2011
|
|
3,145,959
|
|
|
$
|
43.15
|
|
|
3.57
|
|
|
$
|
3.6
|
|
|
|
|
|
Outstanding
|
|
Exercisable
|
|||||||||||||||||
Range of Exercise Prices
|
|
Shares
Subject to
Options
|
|
Weighted-
Average
Exercise Price
Per Share ($)
|
|
Weighted-
Average
Remaining
Contractual
Life (in Years)
|
|
Shares
Subject to
Options
|
|
Weighted-
Average
Exercise Price
Per Share ($)
|
|||||||||||||
$
|
10.00
|
|
-
|
$
|
15.00
|
|
|
209,000
|
|
|
$
|
13.55
|
|
|
7.10
|
|
|
156,749
|
|
|
$
|
13.55
|
|
15.01
|
|
-
|
20.00
|
|
|
8,000
|
|
|
16.48
|
|
|
7.35
|
|
|
8,000
|
|
|
16.48
|
|
||||
20.01
|
|
-
|
25.00
|
|
|
313,750
|
|
|
23.74
|
|
|
8.27
|
|
|
118,875
|
|
|
23.63
|
|
||||
25.01
|
|
-
|
30.00
|
|
|
386,199
|
|
|
27.66
|
|
|
8.08
|
|
|
146,886
|
|
|
26.83
|
|
||||
30.01
|
|
-
|
35.00
|
|
|
2,163
|
|
|
31.34
|
|
|
1.10
|
|
|
2,163
|
|
|
31.34
|
|
||||
35.01
|
|
-
|
40.00
|
|
|
343,077
|
|
|
37.25
|
|
|
5.99
|
|
|
343,077
|
|
|
37.25
|
|
||||
40.01
|
|
-
|
45.00
|
|
|
502,863
|
|
|
43.32
|
|
|
2.18
|
|
|
502,863
|
|
|
43.32
|
|
||||
45.01
|
|
-
|
50.00
|
|
|
1,374,021
|
|
|
48.68
|
|
|
3.10
|
|
|
1,374,021
|
|
|
48.68
|
|
||||
50.01
|
|
-
|
55.00
|
|
|
493,325
|
|
|
51.12
|
|
|
1.50
|
|
|
493,325
|
|
|
51.12
|
|
||||
10.00
|
|
-
|
55.00
|
|
|
3,632,398
|
|
|
40.70
|
|
|
4.24
|
|
|
3,145,959
|
|
|
43.15
|
|
•
|
exceeds the “target” performance level, additional shares of stock will be issued to the award recipient;
|
•
|
is below the “target” performance level, only a portion of the shares of performance-based restricted stock originally issued to the award recipient will vest; or
|
•
|
is below a “minimum” performance level, none of the shares of performance-based restricted stock originally issued to the award recipient will vest.
|
|
|
Restricted
Shares
|
|
Weighted-
Average
Grant-Date
Fair Value
Per Share ($)
|
|||
Nonvested Balance at Beginning of the Year
|
|
218,156
|
|
|
$
|
23.72
|
|
Granted
|
|
137,925
|
|
|
33.38
|
|
|
Vested
|
|
(50,821
|
)
|
|
30.18
|
|
|
Forfeited
|
|
(15,601
|
)
|
|
22.94
|
|
|
Nonvested Balance at December 31, 2011
|
|
289,659
|
|
|
27.23
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Liability at the Beginning of Year:
|
|
|
|
|
|
|
||||||
Employee Termination Costs
|
|
$
|
0.6
|
|
|
$
|
1.6
|
|
|
$
|
0.1
|
|
Early Lease Termination Costs
|
|
0.1
|
|
|
0.6
|
|
|
0.3
|
|
|||
Other Associated Costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Liability at the Beginning of Year
|
|
0.7
|
|
|
2.2
|
|
|
0.4
|
|
|||
Expenses Incurred:
|
|
|
|
|
|
|
||||||
Employee Termination Costs
|
|
2.1
|
|
|
1.1
|
|
|
8.0
|
|
|||
Early Lease Termination Costs
|
|
1.4
|
|
|
—
|
|
|
1.4
|
|
|||
Other Associated Costs
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Total Expenses Incurred
|
|
3.6
|
|
|
1.1
|
|
|
9.4
|
|
|||
Payments of:
|
|
|
|
|
|
|
||||||
Employee Termination Costs
|
|
2.0
|
|
|
2.1
|
|
|
6.5
|
|
|||
Early Lease Termination Costs
|
|
0.5
|
|
|
0.5
|
|
|
1.1
|
|
|||
Other Associated Costs
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Total Payments
|
|
2.6
|
|
|
2.6
|
|
|
7.6
|
|
|||
Liability at End of Year:
|
|
|
|
|
|
|
||||||
Employee Termination Costs
|
|
0.7
|
|
|
0.6
|
|
|
1.6
|
|
|||
Early Lease Termination Costs
|
|
1.0
|
|
|
0.1
|
|
|
0.6
|
|
|||
Other Associated Costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Liability at End of Year
|
|
$
|
1.7
|
|
|
$
|
0.7
|
|
|
$
|
2.2
|
|
|
|
2011
|
|
2010
|
|
2009
|
||||||
DOLLARS IN MILLIONS
|
|
|
|
|
|
|
||||||
Income from Continuing Operations
|
|
$
|
70.9
|
|
|
$
|
169.1
|
|
|
$
|
167.5
|
|
Less Income from Continuing Operations Attributed to Restricted Shares
|
|
0.3
|
|
|
0.8
|
|
|
0.5
|
|
|||
Income from Continuing Operations Attributed to Unrestricted Shares
|
|
70.6
|
|
|
168.3
|
|
|
167.0
|
|
|||
Dilutive Effect on Income of Kemper Equity-based Compensation Equivalent Shares
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Diluted Income from Continuing Operations Attributed to Unrestricted Shares
|
|
$
|
70.6
|
|
|
$
|
168.3
|
|
|
$
|
167.0
|
|
SHARES IN THOUSANDS
|
|
|
|
|
|
|
||||||
Weighted-Average Unrestricted Shares Outstanding
|
|
60,262.6
|
|
|
61,681.2
|
|
|
62,132.6
|
|
|||
Kemper Equity-based Compensation Equivalent Shares
|
|
103.9
|
|
|
85.7
|
|
|
23.5
|
|
|||
Weighted-Average Unrestricted Shares and Equivalent Shares Outstanding Assuming Dilution
|
|
60,366.5
|
|
|
61,766.9
|
|
|
62,156.1
|
|
|||
PER UNRESTRICTED SHARE IN WHOLE DOLLARS
|
|
|
|
|
|
|
||||||
Basic Income from Continuing Operations Per Unrestricted Share
|
|
$
|
1.17
|
|
|
$
|
2.73
|
|
|
$
|
2.69
|
|
Diluted Income from Continuing Operations Per Unrestricted Share
|
|
$
|
1.17
|
|
|
$
|
2.73
|
|
|
$
|
2.69
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Other Comprehensive Income (Loss) Before Income Taxes:
|
|
|
|
|
|
|
||||||
Unrealized Holding Gains (Losses) Arising During the Period Before Reclassification Adjustment
|
|
$
|
232.1
|
|
|
$
|
195.8
|
|
|
$
|
207.5
|
|
Reclassification Adjustment for Amounts Included in Net Income
|
|
(30.9
|
)
|
|
(18.8
|
)
|
|
26.8
|
|
|||
Unrealized Holding Gains (Losses)
|
|
201.2
|
|
|
177.0
|
|
|
234.3
|
|
|||
Foreign Currency Translation Adjustments Arising During the Period Before Reclassification Adjustment
|
|
0.4
|
|
|
(2.6
|
)
|
|
1.7
|
|
|||
Reclassification Adjustment for Amounts Included in Net Income
|
|
—
|
|
|
2.1
|
|
|
(0.1
|
)
|
|||
Foreign Currency Translation Adjustments
|
|
0.4
|
|
|
(0.5
|
)
|
|
1.6
|
|
|||
Equity in Other Comprehensive Income (Loss) of Investee
|
|
—
|
|
|
2.9
|
|
|
(2.2
|
)
|
|||
Unrecognized Postretirement Benefit Costs Arising During the Year
|
|
(53.9
|
)
|
|
(27.9
|
)
|
|
31.2
|
|
|||
Amortization of Unrecognized Postretirement Benefit Costs
|
|
8.7
|
|
|
1.2
|
|
|
(1.9
|
)
|
|||
Net Unrecognized Postretirement Benefit Costs
|
|
(45.2
|
)
|
|
(26.7
|
)
|
|
29.3
|
|
|||
Other Comprehensive Income Before Income Taxes
|
|
156.4
|
|
|
152.7
|
|
|
263.0
|
|
|||
Income Tax Benefit (Expense):
|
|
|
|
|
|
|
||||||
Unrealized Holding Gains and Losses Arising During the Period Before Reclassification Adjustment
|
|
(82.5
|
)
|
|
(69.2
|
)
|
|
(73.3
|
)
|
|||
Reclassification Adjustment for Amounts Included in Net Income
|
|
10.9
|
|
|
6.6
|
|
|
(9.4
|
)
|
|||
Unrealized Holding Gains and Losses
|
|
(71.6
|
)
|
|
(62.6
|
)
|
|
(82.7
|
)
|
|||
Foreign Currency Translation Adjustments Arising During the Period Before Reclassification Adjustment
|
|
(0.1
|
)
|
|
1.0
|
|
|
(0.6
|
)
|
|||
Reclassification Adjustment for Amounts Included in Net Income
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|||
Foreign Currency Translation Adjustment
|
|
(0.1
|
)
|
|
0.2
|
|
|
(0.6
|
)
|
|||
Equity in Other Comprehensive (Income) Loss of Investee
|
|
—
|
|
|
(1.0
|
)
|
|
0.8
|
|
|||
Unrecognized Postretirement Benefit Costs Arising During the Year
|
|
19.0
|
|
|
9.8
|
|
|
(11.3
|
)
|
|||
Amortization of Unrecognized Postretirement Benefit Costs
|
|
(3.1
|
)
|
|
(0.5
|
)
|
|
0.6
|
|
|||
Net Unrecognized Postretirement Benefit Costs
|
|
15.9
|
|
|
9.3
|
|
|
(10.7
|
)
|
|||
Income Tax Benefit (Expense)
|
|
(55.8
|
)
|
|
(54.1
|
)
|
|
(93.2
|
)
|
|||
Other Comprehensive Income
|
|
$
|
100.6
|
|
|
$
|
98.6
|
|
|
$
|
169.8
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
||||
Unrealized Gains on Investments, Net of Income Taxes:
|
|
|
|
|
||||
Available for Sale Fixed Maturities with Portion of OTTI Recognized in Earnings
|
|
$
|
1.5
|
|
|
$
|
0.8
|
|
Other Net Unrealized Gains on Investments
|
|
345.7
|
|
|
216.8
|
|
||
Foreign Currency Translation Adjustments, Net of Income Taxes
|
|
(0.3
|
)
|
|
(0.6
|
)
|
||
Net Unrecognized Postretirement Benefit Costs, Net of Income Taxes
|
|
(88.9
|
)
|
|
(59.6
|
)
|
||
Accumulated Other Comprehensive Income
|
|
$
|
258.0
|
|
|
$
|
157.4
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Investment Income:
|
|
|
|
|
|
|
||||||
Interest and Dividends on Fixed Maturities
|
|
$
|
246.6
|
|
|
$
|
243.8
|
|
|
$
|
241.0
|
|
Dividends on Equity Securities
|
|
25.2
|
|
|
16.0
|
|
|
13.2
|
|
|||
Short-term Investments
|
|
0.1
|
|
|
0.3
|
|
|
0.8
|
|
|||
Loans to Policyholders
|
|
17.7
|
|
|
16.5
|
|
|
15.4
|
|
|||
Real Estate
|
|
26.0
|
|
|
27.1
|
|
|
28.4
|
|
|||
Equity Method Limited Liability Investments
|
|
9.6
|
|
|
48.8
|
|
|
47.7
|
|
|||
Other
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|||
Total Investment Income
|
|
325.5
|
|
|
352.5
|
|
|
346.8
|
|
|||
Investment Expenses:
|
|
|
|
|
|
|
||||||
Real Estate
|
|
25.9
|
|
|
25.7
|
|
|
26.4
|
|
|||
Other Investment Expenses
|
|
1.6
|
|
|
1.1
|
|
|
0.5
|
|
|||
Total Investment Expenses
|
|
27.5
|
|
|
26.8
|
|
|
26.9
|
|
|||
Net Investment Income
|
|
$
|
298.0
|
|
|
$
|
325.7
|
|
|
$
|
319.9
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Fixed Maturities:
|
|
|
|
|
|
|
||||||
Gains on Sales
|
|
$
|
14.2
|
|
|
$
|
21.5
|
|
|
$
|
12.8
|
|
Losses on Sales
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(2.7
|
)
|
|||
Equity Securities:
|
|
|
|
|
|
|
||||||
Gains on Sales
|
|
34.0
|
|
|
11.7
|
|
|
13.6
|
|
|||
Losses on Sales
|
|
(13.5
|
)
|
|
—
|
|
|
—
|
|
|||
Investee – Intermec:
|
|
|
|
|
|
|
||||||
Gains on Sales
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|||
Real Estate:
|
|
|
|
|
|
|
||||||
Gains on Sales
|
|
0.1
|
|
|
8.2
|
|
|
—
|
|
|||
Other Investments:
|
|
|
|
|
|
|
||||||
Gains on Sales
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|||
Losses on Sales
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|||
Trading Securities Net Gains (Losses)
|
|
(0.9
|
)
|
|
0.5
|
|
|
1.0
|
|
|||
Net Realized Gains on Sales of Investments
|
|
$
|
33.7
|
|
|
$
|
42.6
|
|
|
$
|
24.6
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Fixed Maturities
|
|
$
|
(2.2
|
)
|
|
$
|
(14.4
|
)
|
|
$
|
(41.6
|
)
|
Equity Securities
|
|
(1.9
|
)
|
|
(2.1
|
)
|
|
(8.8
|
)
|
|||
Real Estate
|
|
(7.2
|
)
|
|
—
|
|
|
—
|
|
|||
Net Impairment Losses Recognized in Earnings
|
|
$
|
(11.3
|
)
|
|
$
|
(16.5
|
)
|
|
$
|
(50.4
|
)
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Commissions
|
|
$
|
363.5
|
|
|
$
|
358.8
|
|
|
$
|
372.6
|
|
General Expenses
|
|
270.1
|
|
|
273.5
|
|
|
300.5
|
|
|||
Taxes, Licenses and Fees
|
|
46.4
|
|
|
47.3
|
|
|
52.6
|
|
|||
Total Costs Incurred
|
|
680.0
|
|
|
679.6
|
|
|
725.7
|
|
|||
Policy Acquisition Costs:
|
|
|
|
|
|
|
||||||
Deferred
|
|
(301.4
|
)
|
|
(304.3
|
)
|
|
(316.5
|
)
|
|||
Amortized
|
|
279.3
|
|
|
289.2
|
|
|
303.6
|
|
|||
Net Policy Acquisition Costs Deferred
|
|
(22.1
|
)
|
|
(15.1
|
)
|
|
(12.9
|
)
|
|||
Life VIF and P&C Customer Relationships Amortized
|
|
11.4
|
|
|
11.0
|
|
|
8.4
|
|
|||
Insurance Expenses
|
|
$
|
669.3
|
|
|
$
|
675.5
|
|
|
$
|
721.2
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
||||
Current Income Tax Assets
|
|
$
|
2.5
|
|
|
$
|
39.3
|
|
Deferred Income Tax Assets
|
|
7.4
|
|
|
9.4
|
|
||
Valuation Allowance for State Income Taxes
|
|
(6.8
|
)
|
|
(9.1
|
)
|
||
Current and Deferred Income Tax Assets
|
|
$
|
3.1
|
|
|
$
|
39.6
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
||||
Deferred Income Tax Liabilities
|
|
$
|
51.7
|
|
|
$
|
7.3
|
|
Unrecognized Tax Benefits
|
|
6.2
|
|
|
7.8
|
|
||
Liabilities for Income Taxes
|
|
$
|
57.9
|
|
|
$
|
15.1
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
||||
Deferred Income Tax Assets:
|
|
|
|
|
||||
Insurance Reserves
|
|
$
|
76.8
|
|
|
$
|
82.5
|
|
Unearned Premium Reserves
|
|
45.0
|
|
|
46.6
|
|
||
Tax Capitalization of Policy Acquisition Costs
|
|
73.5
|
|
|
73.7
|
|
||
Reserve for Loan Losses
|
|
—
|
|
|
18.2
|
|
||
Net Operating Loss Carryforward
|
|
98.1
|
|
|
73.9
|
|
||
Payroll and Employee Benefit Accruals
|
|
67.8
|
|
|
67.5
|
|
||
Other
|
|
11.7
|
|
|
11.1
|
|
||
Total Deferred Income Tax Assets
|
|
372.9
|
|
|
373.5
|
|
||
Deferred Income Tax Liabilities:
|
|
|
|
|
||||
Deferred Policy Acquisition Costs
|
|
157.0
|
|
|
149.2
|
|
||
Value of Insurance in Force Acquired
|
|
25.9
|
|
|
34.6
|
|
||
Investments
|
|
182.3
|
|
|
144.7
|
|
||
Depreciable Assets
|
|
22.5
|
|
|
17.8
|
|
||
Goodwill and Licenses
|
|
22.9
|
|
|
20.7
|
|
||
Other
|
|
6.6
|
|
|
4.4
|
|
||
Total Deferred Income Tax Liabilities
|
|
417.2
|
|
|
371.4
|
|
||
Valuation Allowance for State Income Taxes
|
|
6.8
|
|
|
9.1
|
|
||
Net Deferred Income Tax Liabilities
|
|
$
|
(51.1
|
)
|
|
$
|
(7.0
|
)
|
DOLLARS IN MILLIONS
|
|
NOL Carryforwards
|
|
Deferred Tax Asset
|
||||
EXPIRING IN:
|
|
|
|
|
||||
2017 through 2020
|
|
$
|
109.0
|
|
|
$
|
38.2
|
|
2021 through 2025
|
|
53.6
|
|
|
18.8
|
|
||
2026 through 2030
|
|
32.1
|
|
|
11.2
|
|
||
2031
|
|
65.6
|
|
|
23.0
|
|
||
Total All Years
|
|
$
|
260.3
|
|
|
$
|
91.2
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Balance at Beginning of Year
|
|
$
|
7.8
|
|
|
$
|
11.7
|
|
|
$
|
17.0
|
|
Reductions for Tax Positions of Current Period
|
|
(1.8
|
)
|
|
(1.7
|
)
|
|
(1.8
|
)
|
|||
Additions for Tax Positions of Prior Years
|
|
0.2
|
|
|
26.6
|
|
|
25.7
|
|
|||
Reduction for Expiration of Federal Statute of Limitations
|
|
—
|
|
|
(28.8
|
)
|
|
(29.2
|
)
|
|||
Balance at End of Year
|
|
$
|
6.2
|
|
|
$
|
7.8
|
|
|
$
|
11.7
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Current Income Tax Expense
|
|
$
|
(43.4
|
)
|
|
$
|
(42.6
|
)
|
|
$
|
(21.3
|
)
|
Deferred Income Tax Benefit (Expense)
|
|
30.1
|
|
|
(28.8
|
)
|
|
(43.5
|
)
|
|||
Unrecognized Tax Benefit
|
|
1.6
|
|
|
3.9
|
|
|
5.3
|
|
|||
Income Tax Expense
|
|
$
|
(11.7
|
)
|
|
$
|
(67.5
|
)
|
|
$
|
(59.5
|
)
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
|||||||||||||||
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|||||||||||
Statutory Federal Income Tax Expense and Rate
|
|
$
|
(28.9
|
)
|
|
35.0
|
%
|
|
$
|
(83.0
|
)
|
|
35.0
|
%
|
|
$
|
(79.8
|
)
|
|
35.0
|
%
|
Tax-exempt Income and Dividends Received Deduction
|
|
17.7
|
|
|
(21.5
|
)
|
|
19.0
|
|
|
(8.0
|
)
|
|
19.2
|
|
|
(8.5
|
)
|
|||
State Income Taxes
|
|
(1.2
|
)
|
|
1.4
|
|
|
(0.9
|
)
|
|
0.4
|
|
|
(0.8
|
)
|
|
0.4
|
|
|||
Nondeductible Goodwill
|
|
—
|
|
|
—
|
|
|
(5.2
|
)
|
|
2.2
|
|
|
—
|
|
|
—
|
|
|||
Other, Net
|
|
0.7
|
|
|
(0.7
|
)
|
|
2.6
|
|
|
(1.1
|
)
|
|
1.9
|
|
|
(0.8
|
)
|
|||
Effective Income Tax Expense and Rate
|
|
$
|
(11.7
|
)
|
|
14.2
|
%
|
|
$
|
(67.5
|
)
|
|
28.5
|
%
|
|
$
|
(59.5
|
)
|
|
26.1
|
%
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Income Tax Expense:
|
|
|
|
|
|
|
||||||
Continuing Operations
|
|
$
|
(11.7
|
)
|
|
$
|
(67.5
|
)
|
|
$
|
(59.5
|
)
|
Discontinued Operations
|
|
(6.7
|
)
|
|
(10.3
|
)
|
|
(8.4
|
)
|
|||
Equity in:
|
|
|
|
|
|
|
||||||
Net Loss of Investee
|
|
—
|
|
|
0.1
|
|
|
0.6
|
|
|||
Other Comprehensive (Income) Loss of Investee
|
|
—
|
|
|
(1.0
|
)
|
|
0.8
|
|
|||
Unrealized Appreciation on Securities
|
|
(71.6
|
)
|
|
(62.6
|
)
|
|
(82.7
|
)
|
|||
Foreign Currency Translation Adjustments on Investments
|
|
(0.1
|
)
|
|
0.2
|
|
|
(0.6
|
)
|
|||
Tax Effects from Postretirement Benefit Plans
|
|
15.9
|
|
|
9.3
|
|
|
(10.7
|
)
|
|||
Tax Effects from Long-Term Equity-based Compensation included in Paid-in Capital
|
|
(1.0
|
)
|
|
(2.0
|
)
|
|
(1.7
|
)
|
|||
Comprehensive Income Tax Expense
|
|
$
|
(75.2
|
)
|
|
$
|
(133.8
|
)
|
|
$
|
(162.2
|
)
|
DOLLARS IN MILLIONS
|
|
|
||||||
2011
|
|
2010
|
||||||
Fair Value of Plan Assets at Beginning of Year
|
|
$
|
352.7
|
|
|
$
|
312.9
|
|
Actual Return on Plan Assets
|
|
25.6
|
|
|
44.8
|
|
||
Employer Contributions
|
|
83.7
|
|
|
15.0
|
|
||
Plan Participants’ Contributions
|
|
0.1
|
|
|
—
|
|
||
Benefits Paid
|
|
(20.4
|
)
|
|
(19.7
|
)
|
||
Settlement Benefits
|
|
(0.4
|
)
|
|
(0.3
|
)
|
||
Fair Value of Plan Assets at End of Year
|
|
441.3
|
|
|
352.7
|
|
||
Benefit Obligation at Beginning of Year
|
|
433.1
|
|
|
377.0
|
|
||
Service Cost
|
|
10.2
|
|
|
9.0
|
|
||
Interest Cost
|
|
22.9
|
|
|
22.4
|
|
||
Plan Participants’ Contributions
|
|
0.1
|
|
|
—
|
|
||
Benefits Paid
|
|
(20.4
|
)
|
|
(19.7
|
)
|
||
Settlement Benefits
|
|
(0.4
|
)
|
|
(0.3
|
)
|
||
Actuarial Losses
|
|
53.7
|
|
|
44.7
|
|
||
Benefit Obligations at End of Year
|
|
499.2
|
|
|
433.1
|
|
||
Funded Status—Benefit Obligation in Excess of Plan Assets
|
|
$
|
(57.9
|
)
|
|
$
|
(80.4
|
)
|
Amount Recognized in Accumulated Other Comprehensive Income:
|
|
|
|
|
||||
Accumulated Actuarial Loss
|
|
$
|
(150.4
|
)
|
|
$
|
(107.6
|
)
|
Prior Service Cost
|
|
0.2
|
|
|
0.4
|
|
||
Amount Recognized in Accumulated Other Comprehensive Income
|
|
$
|
(150.2
|
)
|
|
$
|
(107.2
|
)
|
|
|
2011
|
|
2010
|
||
Discount Rate
|
|
4.60
|
%
|
|
5.35
|
%
|
Rate of Increase in Future Compensation Levels
|
|
3.27
|
|
|
2.47
|
|
ASSET CATEGORY
|
|
2011
|
|
2010
|
||
Cash and Short-term Investments
|
|
11
|
%
|
|
3
|
%
|
Corporate Bonds and Notes
|
|
31
|
|
|
37
|
|
Common Stocks
|
|
48
|
|
|
47
|
|
Other Assets
|
|
10
|
|
|
13
|
|
Total
|
|
100
|
%
|
|
100
|
%
|
DOLLARS IN MILLIONS
|
|
Quoted Prices
in Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Fair Value
Dec. 31, 2011 |
||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
|
||||||||
States and Political Subdivisions
|
|
$
|
—
|
|
|
$
|
3.1
|
|
|
$
|
—
|
|
|
$
|
3.1
|
|
Corporate Bonds and Notes
|
|
—
|
|
|
135.4
|
|
|
1.0
|
|
|
136.4
|
|
||||
Equity Securities:
|
|
|
|
|
|
|
|
|
||||||||
Common Stocks:
|
|
|
|
|
|
|
|
|
||||||||
Intermec
|
|
40.2
|
|
|
—
|
|
|
—
|
|
|
40.2
|
|
||||
Manufacturing
|
|
74.4
|
|
|
4.2
|
|
|
—
|
|
|
78.6
|
|
||||
Other Industries
|
|
38.4
|
|
|
—
|
|
|
—
|
|
|
38.4
|
|
||||
Other Equity Interests:
|
|
|
|
|
|
|
|
|
||||||||
Exchange Traded Funds
|
|
53.6
|
|
|
—
|
|
|
—
|
|
|
53.6
|
|
||||
Limited Liability Companies and Limited Partnerships
|
|
—
|
|
|
—
|
|
|
37.2
|
|
|
37.2
|
|
||||
Short-term Investments
|
|
47.7
|
|
|
—
|
|
|
—
|
|
|
47.7
|
|
||||
Receivables and Other
|
|
2.9
|
|
|
—
|
|
|
3.2
|
|
|
6.1
|
|
||||
Total
|
|
$
|
257.2
|
|
|
$
|
142.7
|
|
|
$
|
41.4
|
|
|
$
|
441.3
|
|
DOLLARS IN MILLIONS
|
|
Corporate Bonds
|
|
Other Equity
Interests
|
|
Receivables
and Other
|
|
Total
|
||||||||
Balance at Beginning of Year
|
|
$
|
—
|
|
|
$
|
41.5
|
|
|
$
|
3.7
|
|
|
$
|
45.2
|
|
Return on Plan Assets Held
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
1.7
|
|
||||
Purchases, Sales and Settlements, Net
|
|
—
|
|
|
(6.0
|
)
|
|
(0.5
|
)
|
|
(6.5
|
)
|
||||
Transfer into Level 3 from Level 2
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
||||
Balance at December 31, 2011
|
|
$
|
1.0
|
|
|
$
|
37.2
|
|
|
$
|
3.2
|
|
|
$
|
41.4
|
|
DOLLARS IN MILLIONS
|
|
Quoted Prices
in Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Fair Value
Dec. 31, 2010 |
||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
|
||||||||
States and Political Subdivisions
|
|
$
|
—
|
|
|
$
|
2.8
|
|
|
$
|
—
|
|
|
$
|
2.8
|
|
Corporate Bonds and Notes
|
|
—
|
|
|
125.8
|
|
|
—
|
|
|
125.8
|
|
||||
Equity Securities:
|
|
|
|
|
|
|
|
|
||||||||
Common Stocks:
|
|
|
|
|
|
|
|
|
||||||||
Manufacturing
|
|
66.5
|
|
|
4.1
|
|
|
—
|
|
|
70.6
|
|
||||
Other Industries
|
|
36.4
|
|
|
—
|
|
|
—
|
|
|
36.4
|
|
||||
Other Equity Interests:
|
|
|
|
|
|
|
|
|
||||||||
Exchange Traded Funds
|
|
58.4
|
|
|
—
|
|
|
—
|
|
|
58.4
|
|
||||
Limited Liability Companies and Limited Partnerships
|
|
—
|
|
|
—
|
|
|
41.5
|
|
|
41.5
|
|
||||
Short-term Investments
|
|
11.9
|
|
|
—
|
|
|
—
|
|
|
11.9
|
|
||||
Receivables and Other
|
|
1.6
|
|
|
—
|
|
|
3.7
|
|
|
5.3
|
|
||||
Total
|
|
$
|
174.8
|
|
|
$
|
132.7
|
|
|
$
|
45.2
|
|
|
$
|
352.7
|
|
DOLLARS IN MILLIONS
|
|
Other Equity
Interests
|
|
Receivables
and Other
|
|
Total
|
||||||
Balance at Beginning of Year
|
|
$
|
36.3
|
|
|
$
|
4.0
|
|
|
$
|
40.3
|
|
Return on Plan Assets Held
|
|
6.5
|
|
|
0.1
|
|
|
6.6
|
|
|||
Purchases, Sales and Settlements, Net
|
|
(1.3
|
)
|
|
(0.4
|
)
|
|
(1.7
|
)
|
|||
Balance at December 31, 2010
|
|
$
|
41.5
|
|
|
$
|
3.7
|
|
|
$
|
45.2
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Service Cost Earned During the Year
|
|
$
|
10.2
|
|
|
$
|
9.0
|
|
|
$
|
9.9
|
|
Interest Cost on Projected Benefit Obligation
|
|
22.9
|
|
|
22.4
|
|
|
21.4
|
|
|||
Expected Return on Plan Assets
|
|
(24.4
|
)
|
|
(23.7
|
)
|
|
(24.4
|
)
|
|||
Net Amortization and Deferral
|
|
9.4
|
|
|
2.3
|
|
|
(0.1
|
)
|
|||
Pension Expense Recognized
|
|
18.1
|
|
|
10.0
|
|
|
6.8
|
|
|||
Unrecognized Pension (Gain) Loss Arising During the Year
|
|
52.4
|
|
|
23.6
|
|
|
(36.0
|
)
|
|||
Amortization of Accumulated Unrecognized Pension Gain (Loss)
|
|
(9.4
|
)
|
|
(2.3
|
)
|
|
0.1
|
|
|||
Comprehensive Pension (Benefit) Expense
|
|
$
|
61.1
|
|
|
$
|
31.3
|
|
|
$
|
(29.1
|
)
|
|
|
2011
|
|
2010
|
|
2009
|
|||
Discount Rate
|
|
5.35
|
%
|
|
6.00
|
%
|
|
6.00
|
%
|
Rate of Increase in Future Compensation Levels
|
|
2.47
|
|
|
2.88
|
|
|
2.88
|
|
Expected Long Term Rate of Return on Plan Assets
|
|
7.00
|
|
|
7.00
|
|
|
7.00
|
|
DOLLARS IN MILLIONS
|
|
Years Ending December 31,
|
||||||||||||||||||||||
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017-2021
|
||||||||||||||
Pension Benefits
|
|
$
|
21.8
|
|
|
$
|
22.9
|
|
|
$
|
24.0
|
|
|
$
|
25.1
|
|
|
$
|
26.2
|
|
|
$
|
148.7
|
|
DOLLARS IN MILLIONS
|
|
|
||||||
2011
|
|
2010
|
||||||
Fair Value of Plan Assets at Beginning of Year
|
|
$
|
—
|
|
|
$
|
—
|
|
Employer Contributions
|
|
3.2
|
|
|
3.8
|
|
||
Plan Participants’ Contributions
|
|
1.1
|
|
|
1.1
|
|
||
Benefits Paid
|
|
(4.3
|
)
|
|
(4.9
|
)
|
||
Fair Value of Plan Assets at End of Year
|
|
—
|
|
|
—
|
|
||
Benefit Obligation at Beginning of Year
|
|
41.1
|
|
|
37.9
|
|
||
Service Cost
|
|
0.1
|
|
|
0.1
|
|
||
Interest Cost
|
|
1.9
|
|
|
2.1
|
|
||
Plan Participants’ Contributions
|
|
1.1
|
|
|
1.1
|
|
||
Benefits Paid
|
|
(4.3
|
)
|
|
(4.9
|
)
|
||
Modernization Act Subsidy Received
|
|
0.4
|
|
|
0.4
|
|
||
Actuarial Losses
|
|
4.4
|
|
|
4.4
|
|
||
Benefit Obligation at End of Year
|
|
44.7
|
|
|
41.1
|
|
||
Funded Status—Benefit Obligation in Excess of Plan Assets
|
|
$
|
(44.7
|
)
|
|
$
|
(41.1
|
)
|
|
|
|
|
|
||||
Actuarial Gain Recognized in Accumulated Other Comprehensive Income
|
|
$
|
9.2
|
|
|
$
|
14.3
|
|
|
|
2011
|
|
2010
|
||
Discount Rate
|
|
4.25
|
%
|
|
4.40
|
%
|
Rate of Increase in Future Compensation Levels
|
|
2.10
|
|
|
1.50
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Service Cost Earned During the Year
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
Interest Cost on Accumulated Benefit Obligation
|
|
1.9
|
|
|
2.1
|
|
|
2.1
|
|
|||
Net Amortization and Deferral
|
|
(0.6
|
)
|
|
(1.1
|
)
|
|
(1.8
|
)
|
|||
OPEB Expense Recognized
|
|
1.4
|
|
|
1.1
|
|
|
0.4
|
|
|||
Unrecognized OPEB Loss Arising During the Year
|
|
4.4
|
|
|
4.3
|
|
|
4.8
|
|
|||
Amortization of Accumulated Unrecognized OPEB Gain
|
|
0.6
|
|
|
1.1
|
|
|
1.8
|
|
|||
Comprehensive OPEB Expense
|
|
$
|
6.4
|
|
|
$
|
6.5
|
|
|
$
|
7.0
|
|
|
|
2011
|
|
2010
|
|
2009
|
|||
Discount Rate
|
|
4.40
|
%
|
|
5.25
|
%
|
|
6.00
|
%
|
Rate of Increase in Future Compensation Levels
|
|
1.50
|
|
|
1.50
|
|
|
1.50
|
|
DOLLARS IN MILLIONS
|
|
Years Ending December 31,
|
||||||||||||||||||||||
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017-2021
|
||||||||||||||
Benefit Payments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Excluding Modernization Act Subsidy
|
|
$
|
4.9
|
|
|
$
|
5.1
|
|
|
$
|
5.1
|
|
|
$
|
5.1
|
|
|
$
|
4.9
|
|
|
$
|
21.1
|
|
Expected Modernization Act Subsidy
|
|
(0.5
|
)
|
|
(0.5
|
)
|
|
(0.5
|
)
|
|
(0.5
|
)
|
|
(0.5
|
)
|
|
(2.1
|
)
|
||||||
Net Benefit Payments
|
|
$
|
4.4
|
|
|
$
|
4.6
|
|
|
$
|
4.6
|
|
|
$
|
4.6
|
|
|
$
|
4.4
|
|
|
$
|
19.0
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
||||
SEGMENT ASSETS
|
|
|
|
|
||||
Preferred
|
|
$
|
1,547.0
|
|
|
$
|
1,452.1
|
|
Specialty
|
|
615.8
|
|
|
644.0
|
|
||
Direct
|
|
570.8
|
|
|
586.2
|
|
||
Life and Health Insurance
|
|
4,926.0
|
|
|
4,602.7
|
|
||
Corporate and Other, Net
|
|
426.3
|
|
|
1,073.5
|
|
||
Total Assets
|
|
$
|
8,085.9
|
|
|
$
|
8,358.5
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
REVENUES
|
|
|
|
|
|
|
||||||
Preferred:
|
|
|
|
|
|
|
||||||
Earned Premiums
|
|
$
|
859.8
|
|
|
$
|
888.0
|
|
|
$
|
931.8
|
|
Net Investment Income
|
|
49.6
|
|
|
52.8
|
|
|
42.1
|
|
|||
Other Income
|
|
0.3
|
|
|
0.4
|
|
|
0.4
|
|
|||
Total Preferred
|
|
909.7
|
|
|
941.2
|
|
|
974.3
|
|
|||
Specialty:
|
|
|
|
|
|
|
||||||
Earned Premiums
|
|
445.2
|
|
|
474.9
|
|
|
527.5
|
|
|||
Net Investment Income
|
|
21.1
|
|
|
24.8
|
|
|
20.8
|
|
|||
Other Income
|
|
0.5
|
|
|
0.6
|
|
|
0.4
|
|
|||
Total Specialty
|
|
466.8
|
|
|
500.3
|
|
|
548.7
|
|
|||
Direct:
|
|
|
|
|
|
|
||||||
Earned Premiums
|
|
222.7
|
|
|
282.4
|
|
|
345.6
|
|
|||
Net Investment Income
|
|
17.9
|
|
|
21.4
|
|
|
18.5
|
|
|||
Other Income
|
|
0.1
|
|
|
0.1
|
|
|
0.9
|
|
|||
Total Direct
|
|
240.7
|
|
|
303.9
|
|
|
365.0
|
|
|||
Life and Health Insurance:
|
|
|
|
|
|
|
||||||
Earned Premiums
|
|
645.9
|
|
|
644.1
|
|
|
650.6
|
|
|||
Net Investment Income
|
|
201.9
|
|
|
214.3
|
|
|
225.3
|
|
|||
Other Income
|
|
0.1
|
|
|
0.2
|
|
|
0.7
|
|
|||
Total Life and Health Insurance
|
|
847.9
|
|
|
858.6
|
|
|
876.6
|
|
|||
Total Segment Revenues
|
|
2,465.1
|
|
|
2,604.0
|
|
|
2,764.6
|
|
|||
Net Realized Gains on the Sales of Investments
|
|
33.7
|
|
|
42.6
|
|
|
24.6
|
|
|||
Net Impairment Losses Recognized in Earnings
|
|
(11.3
|
)
|
|
(16.5
|
)
|
|
(50.4
|
)
|
|||
Other
|
|
7.5
|
|
|
12.4
|
|
|
13.3
|
|
|||
Total Revenues
|
|
$
|
2,495.0
|
|
|
$
|
2,642.5
|
|
|
$
|
2,752.1
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
SEGMENT OPERATING PROFIT (LOSS)
|
|
|
|
|
|
|
||||||
Preferred
|
|
$
|
(39.4
|
)
|
|
$
|
63.9
|
|
|
$
|
86.2
|
|
Specialty
|
|
22.5
|
|
|
24.6
|
|
|
30.5
|
|
|||
Direct
|
|
(46.7
|
)
|
|
(7.1
|
)
|
|
(12.6
|
)
|
|||
Life and Health Insurance
|
|
167.6
|
|
|
154.0
|
|
|
168.5
|
|
|||
Total Segment Operating Profit
|
|
104.0
|
|
|
235.4
|
|
|
272.6
|
|
|||
Unallocated Operating Loss
|
|
(43.8
|
)
|
|
(24.8
|
)
|
|
(18.8
|
)
|
|||
Total Operating Profit
|
|
60.2
|
|
|
210.6
|
|
|
253.8
|
|
|||
Net Realized Gains on Sales of Investments
|
|
33.7
|
|
|
42.6
|
|
|
24.6
|
|
|||
Net Impairment Losses Recognized in Earnings
|
|
(11.3
|
)
|
|
(16.5
|
)
|
|
(50.4
|
)
|
|||
Income from Continuing Operations before Income Taxes and Equity in Net Loss of Investee
|
|
$
|
82.6
|
|
|
$
|
236.7
|
|
|
$
|
228.0
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
SEGMENT NET OPERATING INCOME (LOSS)
|
|
|
|
|
|
|
||||||
Preferred
|
|
$
|
(16.6
|
)
|
|
$
|
50.6
|
|
|
$
|
63.7
|
|
Specialty
|
|
18.3
|
|
|
20.2
|
|
|
23.5
|
|
|||
Direct
|
|
(27.1
|
)
|
|
(1.1
|
)
|
|
(5.3
|
)
|
|||
Life and Health Insurance
|
|
108.5
|
|
|
94.9
|
|
|
112.1
|
|
|||
Total Segment Net Operating Income
|
|
83.1
|
|
|
164.6
|
|
|
194.0
|
|
|||
Unallocated Net Operating Loss
|
|
(26.8
|
)
|
|
(12.7
|
)
|
|
(9.7
|
)
|
|||
Consolidated Net Operating Income
|
|
56.3
|
|
|
151.9
|
|
|
184.3
|
|
|||
Unallocated Net Income (Loss) From:
|
|
|
|
|
|
|
||||||
Net Realized Gains on Sales of Investments
|
|
21.9
|
|
|
27.9
|
|
|
16.0
|
|
|||
Net Impairment Losses Recognized in Earnings
|
|
(7.3
|
)
|
|
(10.7
|
)
|
|
(32.8
|
)
|
|||
Income from Continuing Operations
|
|
$
|
70.9
|
|
|
$
|
169.1
|
|
|
$
|
167.5
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Preferred
|
|
$
|
148.9
|
|
|
$
|
157.7
|
|
|
$
|
167.3
|
|
Specialty
|
|
62.6
|
|
|
67.7
|
|
|
75.8
|
|
|||
Direct
|
|
8.8
|
|
|
9.8
|
|
|
7.3
|
|
|||
Life and Health Insurance
|
|
59.0
|
|
|
54.0
|
|
|
53.2
|
|
|||
Total Amortization
|
|
$
|
279.3
|
|
|
$
|
289.2
|
|
|
$
|
303.6
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
EARNED PREMIUMS
|
|
|
|
|
|
|
||||||
Life
|
|
$
|
395.1
|
|
|
$
|
396.7
|
|
|
$
|
399.7
|
|
Accident and Health
|
|
166.3
|
|
|
161.9
|
|
|
159.2
|
|
|||
Property and Casualty:
|
|
|
|
|
|
|
||||||
Personal Lines:
|
|
|
|
|
|
|
||||||
Automobile
|
|
1,129.4
|
|
|
1,249.5
|
|
|
1,394.1
|
|
|||
Homeowners
|
|
304.1
|
|
|
298.7
|
|
|
301.1
|
|
|||
Other Personal
|
|
138.7
|
|
|
139.0
|
|
|
145.4
|
|
|||
Total Personal Lines
|
|
1,572.2
|
|
|
1,687.2
|
|
|
1,840.6
|
|
|||
Commercial Automobile
|
|
40.0
|
|
|
43.6
|
|
|
56.0
|
|
|||
Total Earned Premiums
|
|
$
|
2,173.6
|
|
|
$
|
2,289.4
|
|
|
$
|
2,455.5
|
|
DOLLARS IN MILLIONS
|
|
Catastrophe Losses and
LAE
|
|
Percentage
of Coverage
|
|||||||
In Excess of
|
|
Up to
|
|
||||||||
Preferred Segment:
|
|
|
|
|
|
|
|||||
Retained
|
|
$
|
—
|
|
|
$
|
50.0
|
|
|
—
|
%
|
1st Layer of Coverage
|
|
50.0
|
|
|
100.0
|
|
|
65.0
|
%
|
||
2nd Layer of Coverage
|
|
100.0
|
|
|
200.0
|
|
|
95.0
|
%
|
||
3rd Layer of Coverage
|
|
200.0
|
|
|
350.0
|
|
|
90.0
|
%
|
||
Direct and Specialty Segments:
|
|
|
|
|
|
|
|||||
Retained
|
|
$
|
—
|
|
|
$
|
3.0
|
|
|
—
|
%
|
1st Layer of Coverage
|
|
3.0
|
|
|
16.0
|
|
|
100.0
|
%
|
||
Life and Health Segment—Property Insurance Operations:
|
|
|
|
|
|
|
|||||
Retained
|
|
$
|
—
|
|
|
$
|
8.0
|
|
|
—
|
%
|
1st Layer of Coverage
|
|
8.0
|
|
|
15.0
|
|
|
70.0
|
%
|
||
2nd Layer of Coverage
|
|
15.0
|
|
|
40.0
|
|
|
100.0
|
%
|
DOLLARS IN MILLIONS
|
|
Catastrophe Losses and
LAE
|
|
Percentage
of Coverage
|
|||||||
In Excess of
|
|
Up to
|
|
||||||||
Preferred Segment:
|
|
|
|
|
|
|
|||||
Retained
|
|
$
|
—
|
|
|
$
|
50.0
|
|
|
—
|
%
|
1st Layer of Coverage
|
|
50.0
|
|
|
100.0
|
|
|
65.0
|
%
|
||
2nd Layer of Coverage
|
|
100.0
|
|
|
200.0
|
|
|
95.0
|
%
|
||
3rd Layer of Coverage
|
|
200.0
|
|
|
350.0
|
|
|
90.0
|
%
|
||
Direct and Specialty Segments:
|
|
|
|
|
|
|
|||||
Retained
|
|
$
|
—
|
|
|
$
|
3.0
|
|
|
—
|
%
|
1st Layer of Coverage
|
|
3.0
|
|
|
16.0
|
|
|
100.0
|
%
|
||
Life and Health Segment—Property Insurance Operations:
|
|
|
|
|
|
|
|||||
Retained
|
|
$
|
—
|
|
|
$
|
8.0
|
|
|
—
|
%
|
1st Layer of Coverage
|
|
8.0
|
|
|
15.0
|
|
|
88.5
|
%
|
||
2nd Layer of Coverage
|
|
15.0
|
|
|
40.0
|
|
|
100.0
|
%
|
DOLLARS IN MILLIONS
|
|
Catastrophe Losses and
LAE
|
|
Percentage
of Coverage
|
|||||||
In Excess of
|
|
Up to
|
|
||||||||
Preferred Segment:
|
|
|
|
|
|
|
|||||
Retained
|
|
$
|
—
|
|
|
$
|
50.0
|
|
|
—
|
%
|
1st Layer of Coverage
|
|
50.0
|
|
|
100.0
|
|
|
55.4
|
%
|
||
2nd Layer of Coverage
|
|
100.0
|
|
|
200.0
|
|
|
95.0
|
%
|
||
3rd Layer of Coverage
|
|
200.0
|
|
|
350.0
|
|
|
86.6
|
%
|
||
Direct and Specialty Segments:
|
|
|
|
|
|
|
|||||
Retained
|
|
$
|
—
|
|
|
$
|
2.0
|
|
|
—
|
%
|
1st Layer of Coverage
|
|
2.0
|
|
|
15.0
|
|
|
95.7
|
%
|
||
Life and Health Segment—Property Insurance Operations:
|
|
|
|
|
|
|
|||||
Retained
|
|
$
|
—
|
|
|
$
|
8.0
|
|
|
—
|
%
|
1st Layer of Coverage
|
|
8.0
|
|
|
15.0
|
|
|
97.0
|
%
|
||
2nd Layer of Coverage
|
|
15.0
|
|
|
40.0
|
|
|
100.0
|
%
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Preferred
|
|
$
|
20.0
|
|
|
$
|
21.9
|
|
|
$
|
22.4
|
|
Specialty
|
|
0.1
|
|
|
0.3
|
|
|
0.3
|
|
|||
Direct
|
|
0.8
|
|
|
0.8
|
|
|
1.5
|
|
|||
Life and Health Insurance
|
|
2.3
|
|
|
3.6
|
|
|
4.3
|
|
|||
Total Ceded Catastrophe Reinsurance Premiums
|
|
$
|
23.2
|
|
|
$
|
26.6
|
|
|
$
|
28.5
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Preferred
|
|
$
|
138.7
|
|
|
$
|
65.2
|
|
|
$
|
29.3
|
|
Specialty
|
|
3.9
|
|
|
3.0
|
|
|
4.2
|
|
|||
Direct
|
|
7.2
|
|
|
2.0
|
|
|
3.4
|
|
|||
Life and Health Insurance
|
|
7.6
|
|
|
7.9
|
|
|
6.6
|
|
|||
Total Catastrophe Losses and LAE
|
|
$
|
157.4
|
|
|
$
|
78.1
|
|
|
$
|
43.5
|
|
DOLLARS IN MILLIONS
|
|
2011
|
|
2010
|
|
2009
|
||||||
Earned Premiums Assumed From:
|
|
|
|
|
|
|
||||||
Capitol
|
|
$
|
27.9
|
|
|
$
|
30.1
|
|
|
$
|
35.8
|
|
ORCC
|
|
9.0
|
|
|
9.6
|
|
|
10.2
|
|
|||
Other
|
|
6.8
|
|
|
6.0
|
|
|
5.4
|
|
|||
Total Earned Premiums Assumed
|
|
$
|
43.7
|
|
|
$
|
45.7
|
|
|
$
|
51.4
|
|
DOLLARS IN MILLIONS
|
|
Fair Value Measurements
|
|
Fair Value
Dec. 31,
2011
|
||||||||||||
Quoted Prices
in Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|||||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. Government and Government Agencies and Authorities
|
|
$
|
153.6
|
|
|
$
|
338.1
|
|
|
$
|
—
|
|
|
$
|
491.7
|
|
States and Political Subdivisions
|
|
—
|
|
|
1,852.6
|
|
|
—
|
|
|
1,852.6
|
|
||||
Corporate Securities:
|
|
|
|
|
|
|
|
|
||||||||
Bonds and Notes
|
|
—
|
|
|
2,107.2
|
|
|
235.1
|
|
|
2,342.3
|
|
||||
Redeemable Preferred Stocks
|
|
—
|
|
|
75.6
|
|
|
6.1
|
|
|
81.7
|
|
||||
Mortgage and Asset Backed
|
|
—
|
|
|
4.8
|
|
|
0.3
|
|
|
5.1
|
|
||||
Total Investments in Fixed Maturities
|
|
153.6
|
|
|
4,378.3
|
|
|
241.5
|
|
|
4,773.4
|
|
||||
Equity Securities:
|
|
|
|
|
|
|
|
|
||||||||
Preferred Stocks:
|
|
|
|
|
|
|
|
|
||||||||
Finance, Insurance and Real Estate
|
|
—
|
|
|
86.7
|
|
|
—
|
|
|
86.7
|
|
||||
Other Industries
|
|
—
|
|
|
14.9
|
|
|
5.6
|
|
|
20.5
|
|
||||
Common Stocks:
|
|
|
|
|
|
|
|
|
||||||||
Manufacturing
|
|
74.7
|
|
|
5.0
|
|
|
3.7
|
|
|
83.4
|
|
||||
Other Industries
|
|
42.8
|
|
|
—
|
|
|
4.2
|
|
|
47.0
|
|
||||
Other Equity Interests:
|
|
|
|
|
|
|
|
|
||||||||
Exchange Traded Funds
|
|
66.6
|
|
|
—
|
|
|
—
|
|
|
66.6
|
|
||||
Limited Liability Companies and Limited Partnerships
|
|
—
|
|
|
—
|
|
|
93.1
|
|
|
93.1
|
|
||||
Total Investments in Equity Securities
|
|
184.1
|
|
|
106.6
|
|
|
106.6
|
|
|
397.3
|
|
||||
Other Investments:
|
|
|
|
|
|
|
|
|
||||||||
Trading Securities
|
|
4.4
|
|
|
—
|
|
|
—
|
|
|
4.4
|
|
||||
Total
|
|
$
|
342.1
|
|
|
$
|
4,484.9
|
|
|
$
|
348.1
|
|
|
$
|
5,175.1
|
|
DOLLARS IN MILLIONS
|
|
Fair Value Measurements
|
|
Fair Value
Dec. 31,
2010
|
||||||||||||
Quoted Prices
in Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|||||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. Government and Government Agencies and Authorities
|
|
$
|
281.0
|
|
|
$
|
255.9
|
|
|
$
|
—
|
|
|
$
|
536.9
|
|
States and Political Subdivisions
|
|
—
|
|
|
1,792.8
|
|
|
—
|
|
|
1,792.8
|
|
||||
Corporate Securities:
|
|
|
|
|
|
|
|
|
||||||||
Bonds and Notes
|
|
—
|
|
|
1,902.8
|
|
|
146.2
|
|
|
2,049.0
|
|
||||
Redeemable Preferred Stocks
|
|
—
|
|
|
83.8
|
|
|
4.5
|
|
|
88.3
|
|
||||
Mortgage and Asset Backed
|
|
—
|
|
|
7.9
|
|
|
0.4
|
|
|
8.3
|
|
||||
Total Investments in Fixed Maturities
|
|
281.0
|
|
|
4,043.2
|
|
|
151.1
|
|
|
4,475.3
|
|
||||
Equity Securities:
|
|
|
|
|
|
|
|
|
||||||||
Preferred Stocks:
|
|
|
|
|
|
|
|
|
||||||||
Finance, Insurance and Real Estate
|
|
—
|
|
|
97.7
|
|
|
—
|
|
|
97.7
|
|
||||
Other Industries
|
|
—
|
|
|
17.0
|
|
|
10.4
|
|
|
27.4
|
|
||||
Common Stocks:
|
|
|
|
|
|
|
|
|
||||||||
Intermec
|
|
137.5
|
|
|
—
|
|
|
—
|
|
|
137.5
|
|
||||
Manufacturing
|
|
82.9
|
|
|
4.7
|
|
|
2.0
|
|
|
89.6
|
|
||||
Other Industries
|
|
41.5
|
|
|
—
|
|
|
2.3
|
|
|
43.8
|
|
||||
Other Equity Interests:
|
|
|
|
|
|
|
|
|
||||||||
Exchange Traded Funds
|
|
79.2
|
|
|
—
|
|
|
—
|
|
|
79.2
|
|
||||
Limited Liability Companies and Limited Partnerships
|
|
—
|
|
|
—
|
|
|
75.2
|
|
|
75.2
|
|
||||
Total Investments in Equity Securities
|
|
341.1
|
|
|
119.4
|
|
|
89.9
|
|
|
550.4
|
|
||||
Other Investments:
|
|
|
|
|
|
|
|
|
||||||||
Trading Securities
|
|
5.1
|
|
|
—
|
|
|
—
|
|
|
5.1
|
|
||||
Total
|
|
$
|
627.2
|
|
|
$
|
4,162.6
|
|
|
$
|
241.0
|
|
|
$
|
5,030.8
|
|
DOLLARS IN MILLIONS
|
|
Fixed Maturities
|
|
Equity Securities
|
|
Total
|
||||||||||||||||||
Corporate
Bonds
and
Notes
|
|
Redeemable
Preferred
Stocks
|
|
Mortgage
and
Asset
Backed
|
|
Preferred
and
Common
Stocks
|
|
Other
Equity
Interests
|
|
|||||||||||||||
Balance at Beginning of Year
|
|
$
|
146.2
|
|
|
$
|
4.5
|
|
|
$
|
0.4
|
|
|
$
|
14.7
|
|
|
$
|
75.2
|
|
|
$
|
241.0
|
|
Total Gains (Losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Included in Consolidated Statement of Income
|
|
(0.7
|
)
|
|
—
|
|
|
—
|
|
|
4.5
|
|
|
4.3
|
|
|
8.1
|
|
||||||
Included in Other Comprehensive Income
|
|
3.4
|
|
|
1.6
|
|
|
—
|
|
|
(3.1
|
)
|
|
(6.2
|
)
|
|
(4.3
|
)
|
||||||
Purchases
|
|
131.6
|
|
|
—
|
|
|
—
|
|
|
3.5
|
|
|
39.3
|
|
|
174.4
|
|
||||||
Settlements
|
|
(50.3
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
(0.4
|
)
|
|
(19.5
|
)
|
|
(70.3
|
)
|
||||||
Sales
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
(5.7
|
)
|
|
—
|
|
|
(6.2
|
)
|
||||||
Transfers into Level 3 from Level 2
|
|
5.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.4
|
|
||||||
Balance at December 31, 2011
|
|
$
|
235.1
|
|
|
$
|
6.1
|
|
|
$
|
0.3
|
|
|
$
|
13.5
|
|
|
$
|
93.1
|
|
|
$
|
348.1
|
|
DOLLARS IN MILLIONS
|
|
Fixed Maturities
|
|
Equity Securities
|
|
Total
|
||||||||||||||||||
Corporate
Bonds
and
Notes
|
|
Redeemable
Preferred
Stocks
|
|
Mortgage
and
Asset
Backed
|
|
Preferred
and
Common
Stocks
|
|
Other
Equity
Interests
|
|
|||||||||||||||
Balance at Beginning of Year
|
|
$
|
124.8
|
|
|
$
|
70.1
|
|
|
$
|
4.9
|
|
|
$
|
14.0
|
|
|
$
|
39.1
|
|
|
$
|
252.9
|
|
Total Gains (Losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Included in Consolidated Statement of Income
|
|
(4.0
|
)
|
|
(7.0
|
)
|
|
—
|
|
|
(1.8
|
)
|
|
0.7
|
|
|
(12.1
|
)
|
||||||
Included in Other Comprehensive Income
|
|
8.9
|
|
|
2.5
|
|
|
(1.1
|
)
|
|
4.8
|
|
|
16.1
|
|
|
31.2
|
|
||||||
Purchases
|
|
43.5
|
|
|
6.6
|
|
|
—
|
|
|
1.3
|
|
|
21.0
|
|
|
72.4
|
|
||||||
Settlements
|
|
(26.9
|
)
|
|
(67.7
|
)
|
|
(0.3
|
)
|
|
(3.6
|
)
|
|
(1.7
|
)
|
|
(100.2
|
)
|
||||||
Sales
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
||||||
Transfers Into Level 3 from Level 2
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
||||||
Transfers out of Level 3 into Level 2
|
|
—
|
|
|
—
|
|
|
(3.1
|
)
|
|
—
|
|
|
—
|
|
|
(3.1
|
)
|
||||||
Balance at End of Period
|
|
$
|
146.2
|
|
|
$
|
4.5
|
|
|
$
|
0.4
|
|
|
$
|
14.7
|
|
|
$
|
75.2
|
|
|
$
|
241.0
|
|
|
|
Three Months Ended (Unaudited)
|
|
Year Ended
|
||||||||||||||||
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
|
|
Mar 31,
2011 |
|
Jun 30,
2011 |
|
Sep 30,
2011 |
|
Dec 31,
2011 |
|
Dec 31,
2011 |
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earned Premiums
|
|
$
|
546.0
|
|
|
$
|
548.1
|
|
|
$
|
543.0
|
|
|
$
|
536.5
|
|
|
$
|
2,173.6
|
|
Net Investment Income
|
|
81.2
|
|
|
82.9
|
|
|
58.6
|
|
|
75.3
|
|
|
298.0
|
|
|||||
Other Income
|
|
0.2
|
|
|
0.2
|
|
|
0.4
|
|
|
0.2
|
|
|
1.0
|
|
|||||
Net Realized Gains (Losses) on Sales of Investments
|
|
14.2
|
|
|
17.8
|
|
|
(4.2
|
)
|
|
5.9
|
|
|
33.7
|
|
|||||
Other-than-temporary Impairment Losses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Other-than-temporary Impairment Losses
|
|
(0.4
|
)
|
|
(1.3
|
)
|
|
(5.0
|
)
|
|
(4.7
|
)
|
|
(11.4
|
)
|
|||||
Portion of Losses Recognized in Other Comprehensive Income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|||||
Net Impairment Losses Recognized in Earnings
|
|
(0.4
|
)
|
|
(1.3
|
)
|
|
(5.0
|
)
|
|
(4.6
|
)
|
|
(11.3
|
)
|
|||||
Total Revenues
|
|
641.2
|
|
|
647.7
|
|
|
592.8
|
|
|
613.3
|
|
|
2,495.0
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses
|
|
392.3
|
|
|
477.1
|
|
|
399.6
|
|
|
376.7
|
|
|
1,645.7
|
|
|||||
Insurance Expenses
|
|
161.9
|
|
|
166.3
|
|
|
172.6
|
|
|
168.5
|
|
|
669.3
|
|
|||||
Write-off of Other Intangibles Acquired
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13.5
|
|
|
13.5
|
|
|||||
Interest and Other Expenses
|
|
19.7
|
|
|
20.9
|
|
|
21.4
|
|
|
21.9
|
|
|
83.9
|
|
|||||
Total Expenses
|
|
573.9
|
|
|
664.3
|
|
|
593.6
|
|
|
580.6
|
|
|
2,412.4
|
|
|||||
Income (Loss) from Continuing Operations before Income Taxes
|
|
67.3
|
|
|
(16.6
|
)
|
|
(0.8
|
)
|
|
32.7
|
|
|
82.6
|
|
|||||
Income Tax Benefit (Expense)
|
|
(19.7
|
)
|
|
10.0
|
|
|
4.6
|
|
|
(6.6
|
)
|
|
(11.7
|
)
|
|||||
Income (Loss) from Continuing Operations
|
|
47.6
|
|
|
(6.6
|
)
|
|
3.8
|
|
|
26.1
|
|
|
70.9
|
|
|||||
Discontinued Operations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from Discontinued Operations before Income Taxes
|
|
9.4
|
|
|
9.3
|
|
|
0.6
|
|
|
0.2
|
|
|
19.5
|
|
|||||
Income Tax Benefit (Expense)
|
|
(2.9
|
)
|
|
(3.2
|
)
|
|
0.3
|
|
|
(0.9
|
)
|
|
(6.7
|
)
|
|||||
Income (Loss) from Discontinued Operations
|
|
6.5
|
|
|
6.1
|
|
|
0.9
|
|
|
(0.7
|
)
|
|
12.8
|
|
|||||
Net Income (Loss)
|
|
$
|
54.1
|
|
|
$
|
(0.5
|
)
|
|
$
|
4.7
|
|
|
$
|
25.4
|
|
|
$
|
83.7
|
|
Income (Loss) from Continuing Operations Per Unrestricted Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
0.78
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.06
|
|
|
$
|
0.43
|
|
|
$
|
1.17
|
|
Diluted
|
|
$
|
0.78
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.06
|
|
|
$
|
0.43
|
|
|
$
|
1.17
|
|
Net Income (Loss) Per Unrestricted Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
0.89
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.08
|
|
|
$
|
0.42
|
|
|
$
|
1.38
|
|
Diluted
|
|
$
|
0.89
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.08
|
|
|
$
|
0.42
|
|
|
$
|
1.38
|
|
Dividends Paid to Shareholders Per Share
|
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.96
|
|
|
|
Three Months Ended (Unaudited)
|
|
Year Ended
|
||||||||||||||||
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
|
|
Mar 31,
2010 |
|
Jun 30,
2010 |
|
Sep 30,
2010 |
|
Dec 31,
2010 |
|
Dec 31,
2010 |
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earned Premiums
|
|
$
|
581.5
|
|
|
$
|
578.1
|
|
|
$
|
568.2
|
|
|
$
|
561.6
|
|
|
$
|
2,289.4
|
|
Net Investment Income
|
|
80.3
|
|
|
81.3
|
|
|
79.4
|
|
|
84.7
|
|
|
325.7
|
|
|||||
Other Income
|
|
0.3
|
|
|
0.3
|
|
|
0.4
|
|
|
0.3
|
|
|
1.3
|
|
|||||
Net Realized Gains on Sales of Investments
|
|
4.5
|
|
|
2.9
|
|
|
7.2
|
|
|
28.0
|
|
|
42.6
|
|
|||||
Other-than-temporary Impairment Losses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Other-than-temporary Impairment Losses
|
|
(6.2
|
)
|
|
(4.1
|
)
|
|
(3.6
|
)
|
|
(3.8
|
)
|
|
(17.7
|
)
|
|||||
Portion of Losses Recognized in Other Comprehensive (Income) Loss
|
|
3.0
|
|
|
(0.8
|
)
|
|
(1.0
|
)
|
|
—
|
|
|
1.2
|
|
|||||
Net Impairment Losses Recognized in Earnings
|
|
(3.2
|
)
|
|
(4.9
|
)
|
|
(4.6
|
)
|
|
(3.8
|
)
|
|
(16.5
|
)
|
|||||
Total Revenues
|
|
663.4
|
|
|
657.7
|
|
|
650.6
|
|
|
670.8
|
|
|
2,642.5
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses
|
|
417.1
|
|
|
419.1
|
|
|
403.9
|
|
|
407.1
|
|
|
1,647.2
|
|
|||||
Insurance Expenses
|
|
168.5
|
|
|
169.4
|
|
|
168.9
|
|
|
168.7
|
|
|
675.5
|
|
|||||
Write-off of Goodwill
|
|
—
|
|
|
—
|
|
|
14.8
|
|
|
—
|
|
|
14.8
|
|
|||||
Interest and Other Expenses
|
|
16.4
|
|
|
17.4
|
|
|
16.1
|
|
|
18.4
|
|
|
68.3
|
|
|||||
Total Expenses
|
|
602.0
|
|
|
605.9
|
|
|
603.7
|
|
|
594.2
|
|
|
2,405.8
|
|
|||||
Income from Continuing Operations before Income Taxes and Equity in Net Loss of Investee
|
|
61.4
|
|
|
51.8
|
|
|
46.9
|
|
|
76.6
|
|
|
236.7
|
|
|||||
Income Tax Expense
|
|
(17.4
|
)
|
|
(14.9
|
)
|
|
(14.3
|
)
|
|
(20.9
|
)
|
|
(67.5
|
)
|
|||||
Income from Continuing Operations before Equity in Net Income (Loss) of Investee
|
|
44.0
|
|
|
36.9
|
|
|
32.6
|
|
|
55.7
|
|
|
169.2
|
|
|||||
Equity in Net Income (Loss) of Investee
|
|
0.7
|
|
|
(0.5
|
)
|
|
(0.3
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||||
Income from Continuing Operations
|
|
44.7
|
|
|
36.4
|
|
|
32.3
|
|
|
55.7
|
|
|
169.1
|
|
|||||
Discontinued Operations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from Discontinued Operations before Income Taxes
|
|
5.6
|
|
|
2.5
|
|
|
5.6
|
|
|
12.1
|
|
|
25.8
|
|
|||||
Income Tax Expense
|
|
(2.1
|
)
|
|
(1.1
|
)
|
|
(2.2
|
)
|
|
(4.9
|
)
|
|
(10.3
|
)
|
|||||
Income from Discontinued Operations
|
|
3.5
|
|
|
1.4
|
|
|
3.4
|
|
|
7.2
|
|
|
15.5
|
|
|||||
Net Income
|
|
$
|
48.2
|
|
|
$
|
37.8
|
|
|
$
|
35.7
|
|
|
$
|
62.9
|
|
|
$
|
184.6
|
|
Income from Continuing Operations Per Unrestricted Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
0.72
|
|
|
$
|
0.59
|
|
|
$
|
0.52
|
|
|
$
|
0.91
|
|
|
$
|
2.73
|
|
Diluted
|
|
$
|
0.72
|
|
|
$
|
0.59
|
|
|
$
|
0.52
|
|
|
$
|
0.91
|
|
|
$
|
2.73
|
|
Net Income Per Unrestricted Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
0.77
|
|
|
$
|
0.61
|
|
|
$
|
0.58
|
|
|
$
|
1.03
|
|
|
$
|
2.98
|
|
Diluted
|
|
$
|
0.77
|
|
|
$
|
0.61
|
|
|
$
|
0.58
|
|
|
$
|
1.03
|
|
|
$
|
2.98
|
|
Dividends Paid to Shareholders Per Share
|
|
$
|
0.22
|
|
|
$
|
0.22
|
|
|
$
|
0.22
|
|
|
$
|
0.22
|
|
|
$
|
0.88
|
|
•
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
|
•
|
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
|
•
|
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.
|
|
|
|
||
/
S
/ D
ONALD
G. S
OUTHWELL
|
|
|
|
/
S
/ D
ENNIS
R. V
IGNEAU
|
Donald G. Southwell
|
|
|
|
Dennis R. Vigneau
|
Chairman, President and Chief Executive Officer
|
|
|
|
Senior Vice President and Chief Financial Officer
|
Plan Category
|
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
|
|
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
or Programs
|
||||
Equity Compensation Plans Approved by Security Holders
|
|
3,632,398
|
|
|
$
|
40.70
|
|
|
9,900,450
|
|
Equity Compensation Plans Not Approved by Security Holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
3,632,398
|
|
|
$
|
40.70
|
|
|
9,900,450
|
|
1.
|
Financial Statements. The consolidated balance sheets of Kemper and subsidiaries as of
December 31, 2011
and
2010
, and the consolidated statements of income, cash flows and shareholders’ equity and comprehensive income for the years ended
December 31, 2011
,
2010
and
2009
, together with the notes thereto and the report of Deloitte & Touche LLP thereon appearing in Item 8 are included in this
2011
Annual Report.
|
2.
|
Financial Statement Schedules. The following five financial statement schedules are included on the pages immediately following the signature pages hereof. Schedules not listed here have been omitted because they are not applicable or not material or the required information is included in the Consolidated Financial Statements.
|
3.
|
Exhibits. The following exhibits are either filed as a part hereof or are incorporated by reference. Exhibit numbers correspond to the numbering system in Item 601 of Regulation S-K. Exhibits 10.1 through 10.25 relate to compensatory plans incorporated by reference as exhibits hereto pursuant to Item 15(b) of Form 10-K.
|
3.1
|
Restated Certificate of Incorporation (Incorporated herein by reference to Exhibit 3.1 to Kemper's Current Report on Form 8-K filed August 29, 2011).
|
3.2
|
Amended and Restated Bylaws (Incorporated herein by reference to Exhibit 3.2 to Kemper's Current Report on Form 8-K filed August 29, 2011).
|
4.1
|
Rights Agreement between Kemper and Computershare Trust Company, N.A. as successor Rights Agent, including the Form of Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock, the Form of Rights Certificate and the Summary of Rights to Purchase Preferred Stock, dated as of August 4, 2004 and amended May 4, 2006 and October 9, 2006. (Incorporated herein by reference to Exhibit 4.1 to Kemper's Quarterly Report on Form 10-Q filed August 3, 2009).
|
4.2
|
Indenture dated as of June 26, 2002, by and between Kemper and The Bank of New York Trust Company, N.A., as successor trustee to BNY Midwest Trust Company, as Trustee (Incorporated herein by reference to Exhibit 4.1 to Kemper’s Current Report on Form 8-K filed May 14, 2007).
|
4.3
|
Officers’ Certificate, including form of Senior Note with respect to Kemper's 6.00% Senior Notes due May 15, 2017 (Incorporated herein by reference to Exhibit 4.2 to Kemper's Current Report on Form 8-K filed May 14, 2007).
|
4.4
|
Officers’ Certificate, including the form of Senior Note with respect to Kemper's 6.00% Senior Notes due November 30, 2015 (Incorporated herein by reference to Exhibit 4.2 to Kemper's Current Report on Form 8-K filed November 24, 2010).
|
10.1
|
Kemper 1995 Non-Employee Director Stock Option Plan, as amended and restated effective February 3, 2009 (Incorporated herein by reference to Exhibit 10.2 to Kemper's Annual Report on Form 10-K filed February 4, 2009).
|
10.2
|
Kemper 1997 Stock Option Plan, as amended and restated effective February 1, 2006 (Incorporated herein by reference to Exhibit 10.2 to Kemper's Quarterly Report on Form 10-Q filed May 4, 2011).
|
10.3
|
Kemper 2002 Stock Option Plan, as amended and restated effective February 3, 2009 (Incorporated herein by reference to Exhibit 10.4 to Kemper's Annual Report on Form 10-K filed February 4, 2009).
|
10.4
|
Kemper 2005 Restricted Stock and Restricted Stock Unit Plan, as amended and restated effective February 3, 2009 (Incorporated herein by reference to Exhibit 10.5 to Kemper's Annual Report on Form 10-K filed February 4, 2009).
|
10.5
|
Kemper 2011 Omnibus Equity Plan, as amended and restated effective August 25, 2011 (Incorporated herein by reference to Exhibit 10.5 to Kemper's Quarterly Report on Form 10-Q filed November 2, 2011).
|
10.6
|
Form of Stock Option Agreement under the Kemper 1995 Non-Employee Director Stock Option Plan, as of February 1, 2006 (Incorporated herein by reference to Exhibit 10.6 to Kemper's Quarterly Report on Form 10-Q filed May 4, 2011).
|
10.7
|
Form of Stock Option Agreement under the Kemper 1995 Non-Employee Director Stock Option Plan, as of February 3, 2009 (Incorporated herein by reference to Exhibit 10.7 to Kemper's Annual Report on Form 10-K filed February 4, 2009).
|
10.8
|
Form of Stock Option and SAR Agreement under the Kemper 1997 Stock Option Plan, as of February 1, 2006 (Incorporated herein by reference to Exhibit 10.8 to Kemper's Quarterly Report on Form 10-Q filed May 4, 2011).
|
10.9
|
Form of Stock Option and SAR Agreement under the Kemper 2002 Stock Option Plan, as of February 1, 2006 (Incorporated herein by reference to Exhibit 10.9 to Kemper's Quarterly Report on Form 10-Q filed May 4, 2011).
|
10.10
|
Form of Stock Option Agreement (including stock appreciation rights) under the Kemper 2002 Stock Option Plan, as of February 1, 2011 (Incorporated herein by reference to Exhibit 10.9 to Kemper's Annual Report on Form 10-K filed February 3, 2011).
|
10.11
|
Form of Time-Vested Restricted Stock Award Agreement under the Kemper 2005 Restricted Stock and Restricted Stock Unit Plan, as of February 1, 2011 (Incorporated herein by reference to Exhibit 10.10 to Kemper's Annual Report on Form 10-K filed February 3, 2011).
|
10.12
|
Form of Performance-Based Restricted Stock Award Agreement under the Kemper 2005 Restricted Stock and Restricted Stock Unit Plan, as of February 1, 2011 (Incorporated herein by reference to Exhibit 10.11 to Kemper's Annual Report on Form 10-K filed February 3, 2011).
|
10.13
|
Form of Stock Option and SAR Agreement for Non-Employee Directors under the Kemper 2011 Omnibus Equity Plan, as of August 25, 2011.
|
10.14
|
Kemper Pension Equalization Plan, as amended and restated effective August 25, 2011 (Incorporated herein by reference to Exhibit 10.5 to Kemper's Quarterly Report on Form 10-Q filed November 2, 2011).
|
10.15
|
Kemper Defined Contribution Supplemental Retirement Plan, as amended and restated effective August 25, 2011 (Incorporated herein by reference to Exhibit 10.5 to Kemper's Quarterly Report on Form 10-Q filed November 2, 2011).
|
10.16
|
Kemper Non-Qualified Deferred Compensation Plan, as amended and restated effective August 25, 2011 (Incorporated herein by reference to Exhibit 10.5 to Kemper's Quarterly Report on Form 10-Q filed November 2, 2011).
|
10.17
|
Kemper is a party to individual severance agreements (the form of which, as amended and restated effective August 25, 2011, is incorporated by reference to Exhibit 10.17 to Kemper's Quarterly Report on Form 10-Q filed November 2, 2011) with the following executive officers:
|
|
|
|
Donald G. Southwell (Chairman, President and Chief Executive Officer)
|
|
John M. Boschelli (Vice President and Chief Investment Officer)
|
|
Lisa M. King (Vice President – Human Resources)
|
|
Edward J. Konar (Vice President)
|
|
Christopher L. Moses (Vice President and Treasurer)
|
|
Scott Renwick (Senior Vice President and General Counsel)
|
|
Richard Roeske (Vice President and Chief Accounting Officer)
|
|
Dennis J. Sandelski (Vice President – Tax)
|
|
Frank J. Sodaro (Vice President – Planning and Analysis)
|
|
Dennis R. Vigneau (Senior Vice President and Chief Financial Officer)
|
|
|
|
Each of the foregoing agreements is identical except that the severance compensation multiple is 3.0 for Mr. Southwell and 2.0 for the other executive officers.
|
10.18
|
Kemper Severance Plan, as amended and restated effective August 25, 2011 (Incorporated herein by reference to Exhibit 10.5 to Kemper's Quarterly Report on Form 10-Q filed November 2, 2011).
|
10.19
|
Kemper 2009 Performance Incentive Plan, as amended and restated effective August 25, 2011 (Incorporated herein by reference to Exhibit 10.5 to Kemper's Quarterly Report on Form 10-Q filed November 2, 2011).
|
10.20
|
Form of Annual Incentive Award Agreement under the Kemper 2009 Performance Incentive Plan, as of January 31, 2012.
|
10.21
|
Form of Multi-Year Incentive Award Agreement under the Kemper 2009 Performance Incentive Plan, as of January 31, 2012.
|
10.22
|
Form of Stock Option and SAR Agreement under the Kemper 2011 Omnibus Equity Plan, as of August 25, 2011.
|
10.23
|
Time-Vested Restricted Stock Award Agreement under the Kemper 2011 Omnibus Equity Plan, as of August 25, 2011.
|
10.24
|
Form of Performance-Based Restricted Stock Award Agreement under the Kemper 2011 Omnibus Equity Plan, as of January 31, 2012.
|
10.25
|
Kemper is a party to individual Indemnification and Expense Advancement Agreements with each of its directors, as amended and restated effective February 1, 2012 (Incorporated herein by reference to Exhibit 10.25 to Kemper's Current Report on Form 8-K filed February 6, 2012).
|
10.26
|
Credit Agreement, dated as of October 30, 2009, by and among Kemper, the lenders party thereto, Wells Fargo Bank, National Association, as administrative agent, swing line lender and issuing lender, and JP Morgan Chase Bank, N.A., as syndication agent. (Incorporated by reference to Exhibit 10.21 to Kemper's Quarterly report on Form 10-Q filed November 2, 2009).
|
12
|
Ratios of Earnings to Fixed Charges
|
21
|
Subsidiaries of Kemper Corporation
|
23
|
Consent of Deloitte & Touche LLP
|
24
|
Power of Attorney (included on the signature page hereof)
|
31.1
|
Certification of Chief Executive Officer Pursuant to SEC Rule 13a-14(a).
|
31.2
|
Certification of Chief Financial Officer Pursuant to SEC Rule 13a-14(a).
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished pursuant to Item 601(b)(32) of Regulation S-K).
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished pursuant to Item 601(b)(32) of Regulation S-K).
|
101.1
|
XBRL Instance
|
101.2
|
XBRL Taxonomy Extension Schema Document
|
101.3
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.4
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.5
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
101.6
|
XBRL Taxonomy Extension Definition Linkbase Document
|
(b)
|
Exhibits. Included in Item 15(a)3 above
|
(c)
|
Financial Statement Schedules. Included in Item 15(a)2 above
|
|
|
|
KEMPER CORPORATION
(Registrant)
|
||
|
|
|
By:
|
|
/S/ DONALD G. SOUTHWELL
|
|
|
Donald G. Southwell
|
|
|
Chairman, President, Chief Executive Officer and Director
|
|
|
|
Signature
|
|
Title
|
|
|
|
/S/ DONALD G. SOUTHWELL
|
|
Chairman, President, Chief Executive Officer and Director (principal executive officer)
|
Donald G. Southwell
|
|
|
|
|
|
/S/ DENNIS R. VIGNEAU
|
|
Senior Vice President and Chief Financial Officer (principal financial officer)
|
Dennis R. Vigneau
|
|
|
|
|
|
/S/ RICHARD ROESKE
|
|
Vice President and Chief Accounting Officer (principal accounting officer)
|
Richard Roeske
|
|
|
|
|
|
/S/ JAMES E. ANNABLE
|
|
Director
|
James E. Annable
|
|
|
|
|
|
/S/ DOUGLAS G. GEOGA
|
|
Director
|
Douglas G. Geoga
|
|
|
|
|
|
/S/ REUBEN L. HEDLUND
|
|
Director
|
Reuben L. Hedlund
|
|
|
|
|
|
/S/ JULIE M. HOWARD
|
|
Director
|
Julie M. Howard
|
|
|
|
|
|
/S/ WAYNE KAUTH
|
|
Director
|
Wayne Kauth
|
|
|
|
|
|
/S/ FAYEZ S. SAROFIM
|
|
Director
|
Fayez S. Sarofim
|
|
|
|
|
|
/S/ DAVID P. STORCH
|
|
Director
|
David P. Storch
|
|
|
|
|
|
/S/ RICHARD C. VIE
|
|
Director
|
Richard C. Vie
|
|
|
|
|
Amortized
Cost
|
|
Fair Value
|
|
Amount
Carried in
Balance Sheet
|
||||||
Fixed Maturities:
|
|
|
|
|
|
|
||||||
Bonds and Notes:
|
|
|
|
|
|
|
||||||
United States Government and Government Agencies and Authorities
|
|
$
|
439.4
|
|
|
$
|
491.7
|
|
|
$
|
491.7
|
|
States and Political Subdivisions
|
|
1,705.0
|
|
|
1,852.6
|
|
|
1,852.6
|
|
|||
Corporate Securities:
|
|
|
|
|
|
|
||||||
Other Bonds and Notes
|
|
2,045.0
|
|
|
2,347.4
|
|
|
2,347.4
|
|
|||
Redeemable Preferred Stocks
|
|
76.7
|
|
|
81.7
|
|
|
81.7
|
|
|||
Total Investments in Fixed Maturities
|
|
4,266.1
|
|
|
4,773.4
|
|
|
4,773.4
|
|
|||
Equity Securities:
|
|
|
|
|
|
|
||||||
Preferred Stocks
|
|
112.4
|
|
|
107.2
|
|
|
107.2
|
|
|||
Common Stocks
|
|
106.0
|
|
|
130.4
|
|
|
130.4
|
|
|||
Other Equity Interests
|
|
148.9
|
|
|
159.7
|
|
|
159.7
|
|
|||
Total Investments in Equity Securities
|
|
367.3
|
|
|
397.3
|
|
|
397.3
|
|
|||
Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings
|
|
306.3
|
|
|
XXX.X
|
|
|
306.3
|
|
|||
Loans, Real Estate and Other Investments
|
|
498.3
|
|
|
XXX.X
|
|
|
498.3
|
|
|||
Short-term Investments
|
|
247.4
|
|
|
XXX.X
|
|
|
247.4
|
|
|||
Total Investments
|
|
$
|
5,685.4
|
|
|
|
|
$
|
6,222.7
|
|
|
|
December 31, 2011
|
|
December 31, 2010
|
||||
ASSETS
|
|
|
|
|
||||
Investments in Subsidiaries
|
|
$
|
2,766.1
|
|
|
$
|
2,840.0
|
|
Fixed Maturities at Fair Value (Cost: 2011 – $13.1; 2010 – $13.1)
|
|
13.1
|
|
|
13.2
|
|
||
Equity Securities at Fair Value (Cost: 2011 – $5.0; 2010 – $5.0)
|
|
4.3
|
|
|
5.1
|
|
||
Short-term Investments
|
|
77.2
|
|
|
41.8
|
|
||
Cash
|
|
122.4
|
|
|
0.4
|
|
||
Other Receivables
|
|
5.7
|
|
|
6.4
|
|
||
Deferred Income Taxes
|
|
57.6
|
|
|
58.2
|
|
||
Other Assets
|
|
5.9
|
|
|
6.7
|
|
||
Total Assets
|
|
$
|
3,052.3
|
|
|
$
|
2,971.8
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
||||
Senior Notes Payable, 6.00% due 2017 (Fair Value: 2011 – $370.3; 2010 – $366.2)
|
|
$
|
356.8
|
|
|
$
|
356.3
|
|
Senior Notes Payable, 6.00% due 2015 (Fair Value: 2011 – $262.8; 2010 – $256.1 )
|
|
248.2
|
|
|
247.8
|
|
||
Liabilities for Income Taxes
|
|
85.3
|
|
|
84.3
|
|
||
Liabilities for Benefit Plans
|
|
140.5
|
|
|
162.3
|
|
||
Accrued Expenses and Other Liabilities
|
|
5.4
|
|
|
7.7
|
|
||
Total Liabilities
|
|
836.2
|
|
|
858.4
|
|
||
Shareholders’ Equity:
|
|
|
|
|
||||
Common Stock
|
|
6.0
|
|
|
6.1
|
|
||
Additional Paid-in Capital
|
|
743.9
|
|
|
751.1
|
|
||
Retained Earnings
|
|
1,208.2
|
|
|
1,198.8
|
|
||
Accumulated Other Comprehensive Income
|
|
258.0
|
|
|
157.4
|
|
||
Total Shareholders’ Equity
|
|
2,216.1
|
|
|
2,113.4
|
|
||
Total Liabilities and Shareholders’ Equity
|
|
$
|
3,052.3
|
|
|
$
|
2,971.8
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2011
|
|
2010
|
|
2009
|
||||||
Net Investment Income
|
|
$
|
0.4
|
|
|
$
|
1.7
|
|
|
$
|
2.2
|
|
Net Realized Gains (Losses) on Sales of Investments
|
|
(0.2
|
)
|
|
0.5
|
|
|
1.4
|
|
|||
Total Revenues
|
|
0.2
|
|
|
2.2
|
|
|
3.6
|
|
|||
Interest Expense
|
|
39.4
|
|
|
34.1
|
|
|
33.2
|
|
|||
Other Operating (Income) Expenses
|
|
10.3
|
|
|
4.3
|
|
|
(0.4
|
)
|
|||
Total Operating Expenses
|
|
49.7
|
|
|
38.4
|
|
|
32.8
|
|
|||
Loss before Income Taxes and Equity in Net Income of Subsidiaries
|
|
(49.5
|
)
|
|
(36.2
|
)
|
|
(29.2
|
)
|
|||
Income Tax Benefit
|
|
18.6
|
|
|
13.0
|
|
|
10.4
|
|
|||
Loss before Equity in Net Income of Subsidiaries
|
|
(30.9
|
)
|
|
(23.2
|
)
|
|
(18.8
|
)
|
|||
Equity in Net Income of Subsidiaries
|
|
114.6
|
|
|
207.8
|
|
|
183.5
|
|
|||
Net Income
|
|
$
|
83.7
|
|
|
$
|
184.6
|
|
|
$
|
164.7
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2011
|
|
2010
|
|
2009
|
||||||
Operating Activities:
|
|
|
|
|
|
|
||||||
Net Income
|
|
$
|
83.7
|
|
|
$
|
184.6
|
|
|
$
|
164.7
|
|
Adjustment Required to Reconcile Net Income to Net Cash Provided by Operations:
|
|
|
|
|
|
|
||||||
Equity in Net Income of Subsidiaries
|
|
(114.6
|
)
|
|
(207.8
|
)
|
|
(183.5
|
)
|
|||
Cash Dividends from Subsidiaries
|
|
70.8
|
|
|
147.4
|
|
|
184.4
|
|
|||
Cash Received for Benefit Plan from Subsidiary
|
|
—
|
|
|
—
|
|
|
41.2
|
|
|||
Cash Contribution to Defined Benefit Plan
|
|
(32.2
|
)
|
|
(15.0
|
)
|
|
—
|
|
|||
Net Realized (Gains) Losses on Sales of Investments
|
|
0.2
|
|
|
(0.5
|
)
|
|
(1.4
|
)
|
|||
Other, Net
|
|
35.5
|
|
|
(10.8
|
)
|
|
(45.7
|
)
|
|||
Net Cash Provided by Operating Activities
|
|
43.4
|
|
|
97.9
|
|
|
159.7
|
|
|||
Investing Activities:
|
|
|
|
|
|
|
||||||
Capital Contributed to Subsidiaries
|
|
—
|
|
|
(110.0
|
)
|
|
(25.0
|
)
|
|||
Capital Distribution from Subsidiary
|
|
250.0
|
|
|
—
|
|
|
—
|
|
|||
Maturity of Note Receivable from Subsidiary
|
|
—
|
|
|
20.0
|
|
|
—
|
|
|||
Purchases of Fixed Maturities
|
|
—
|
|
|
(13.1
|
)
|
|
—
|
|
|||
Purchases of Common Stocks from Subsidiary
|
|
(50.8
|
)
|
|
—
|
|
|
—
|
|
|||
Sales of Common Stocks
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|||
Change in Short-term Investments
|
|
(35.4
|
)
|
|
10.5
|
|
|
(42.4
|
)
|
|||
Net Cash Provided (Used) by Investing Activities
|
|
163.8
|
|
|
(92.6
|
)
|
|
(66.8
|
)
|
|||
Financing Activities:
|
|
|
|
|
|
|
||||||
Notes Payable Proceeds:
|
|
|
|
|
|
|
||||||
Senior Notes Payable Issued
|
|
—
|
|
|
247.8
|
|
|
—
|
|
|||
Revolving Credit Agreement
|
|
95.0
|
|
|
140.0
|
|
|
220.0
|
|
|||
Notes Payable Payments:
|
|
|
|
|
|
|
||||||
Senior Notes Payable Repaid
|
|
—
|
|
|
(200.0
|
)
|
|
—
|
|
|||
Revolving Credit Agreement
|
|
(95.0
|
)
|
|
(140.0
|
)
|
|
(220.0
|
)
|
|||
Cash Dividends Paid
|
|
(58.2
|
)
|
|
(54.6
|
)
|
|
(66.6
|
)
|
|||
Common Stock Repurchases
|
|
(27.4
|
)
|
|
(34.4
|
)
|
|
—
|
|
|||
Exercise of Stock Options
|
|
0.2
|
|
|
0.5
|
|
|
—
|
|
|||
Excess Tax Benefits on Share Based Awards
|
|
0.2
|
|
|
0.2
|
|
|
0.1
|
|
|||
Net Cash Used by Financing Activities
|
|
(85.2
|
)
|
|
(40.5
|
)
|
|
(66.5
|
)
|
|||
Increase (Decrease) in Cash
|
|
122.0
|
|
|
(35.2
|
)
|
|
26.4
|
|
|||
Cash, Beginning of Year
|
|
0.4
|
|
|
35.6
|
|
|
9.2
|
|
|||
Cash, End of Year
|
|
$
|
122.4
|
|
|
$
|
0.4
|
|
|
$
|
35.6
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2011
|
|
2010
|
|
2009
|
||||||
Net Income
|
|
$
|
83.7
|
|
|
$
|
184.6
|
|
|
$
|
164.7
|
|
Other Comprehensive Income (Loss):
|
|
|
|
|
|
|
||||||
Unrealized Holding Gains (Losses) Arising During the Year:
|
|
|
|
|
|
|
||||||
Securities Held by Subsidiaries
|
|
231.5
|
|
|
195.7
|
|
|
207.3
|
|
|||
Securities Held by Parent
|
|
0.6
|
|
|
0.1
|
|
|
0.2
|
|
|||
Reclassification Adjustment for Amounts Included in Net Income:
|
|
|
|
|
|
|
||||||
Securities Held by Subsidiaries
|
|
(30.2
|
)
|
|
(18.8
|
)
|
|
27.1
|
|
|||
Securities Held by Parent
|
|
(0.7
|
)
|
|
—
|
|
|
(0.3
|
)
|
|||
Unrealized Holding Gains (Losses)
|
|
201.2
|
|
|
177.0
|
|
|
234.3
|
|
|||
Unrecognized Postretirement Benefit Costs Arising During the Year
|
|
(53.9
|
)
|
|
(27.9
|
)
|
|
31.2
|
|
|||
Amortization of Unrecognized Postretirement Benefit Costs
|
|
8.7
|
|
|
1.2
|
|
|
(1.9
|
)
|
|||
Net Unrecognized Postretirement Benefit Costs
|
|
(45.2
|
)
|
|
(26.7
|
)
|
|
29.3
|
|
|||
Foreign Currency Translation Adjustments
|
|
0.4
|
|
|
(2.6
|
)
|
|
1.7
|
|
|||
Reclassification Adjustment for Amounts Included in Net Income
|
|
—
|
|
|
2.1
|
|
|
(0.1
|
)
|
|||
Foreign Currency Translation Adjustments
|
|
0.4
|
|
|
(0.5
|
)
|
|
1.6
|
|
|||
Equity in Other Comprehensive Income (Loss) of Subsidiary
|
|
—
|
|
|
2.9
|
|
|
(2.2
|
)
|
|||
Other Comprehensive Income before Income Taxes
|
|
156.4
|
|
|
152.7
|
|
|
263.0
|
|
|||
Income Tax Benefit (Expense):
|
|
|
|
|
|
|
||||||
Unrealized Holding Gains (Losses) Arising During the Year:
|
|
|
|
|
|
|
||||||
Securities Held by Subsidiaries
|
|
(82.3
|
)
|
|
(69.2
|
)
|
|
(73.2
|
)
|
|||
Securities Held by Parent
|
|
(0.2
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||
Reclassification Adjustment for Amounts Included in Net Income:
|
|
|
|
|
|
|
||||||
Securities Held by Subsidiaries
|
|
10.7
|
|
|
6.6
|
|
|
(9.5
|
)
|
|||
Securities Held by Parent
|
|
0.2
|
|
|
—
|
|
|
0.1
|
|
|||
Unrealized Holding Gains (Losses)
|
|
(71.6
|
)
|
|
(62.6
|
)
|
|
(82.7
|
)
|
|||
Unrecognized Postretirement Benefit Costs Arising During the Year
|
|
19.0
|
|
|
9.8
|
|
|
(11.3
|
)
|
|||
Amortization of Unrecognized Postretirement Benefit Costs
|
|
(3.1
|
)
|
|
(0.5
|
)
|
|
0.6
|
|
|||
Net Unrecognized Postretirement Benefit Costs
|
|
15.9
|
|
|
9.3
|
|
|
(10.7
|
)
|
|||
Foreign Currency Translation Adjustments
|
|
(0.1
|
)
|
|
1.0
|
|
|
(0.6
|
)
|
|||
Reclassification Adjustment for Amounts Included in Net Income
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|||
Foreign Currency Translation Adjustments
|
|
(0.1
|
)
|
|
0.2
|
|
|
(0.6
|
)
|
|||
Equity in Other Comprehensive Income (Loss) of Subsidiary
|
|
—
|
|
|
(1.0
|
)
|
|
0.8
|
|
|||
Income Tax Expense
|
|
(55.8
|
)
|
|
(54.1
|
)
|
|
(93.2
|
)
|
|||
Other Comprehensive Income
|
|
100.6
|
|
|
98.6
|
|
|
169.8
|
|
|||
Total Comprehensive Income
|
|
$
|
184.3
|
|
|
$
|
283.2
|
|
|
$
|
334.5
|
|
|
|
Year Ended December 31,
|
|
December 31,
|
||||||||||||||||||||||||||||||||||||
Premiums
|
|
Premiums
Written
|
|
Other
Income
|
|
Net
Investment
Income
|
|
Insurance
Claims
and
Policy-
holders’
Benefits
|
|
Amortization
Of Deferred
Policy
Acquisition
Costs
|
|
Other
Insurance
Expenses
|
|
Deferred
Policy
Acquisition
Costs
|
|
Insurance
Reserves
|
|
Unearned
Premiums
|
||||||||||||||||||||||
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Preferred
|
|
$
|
859.8
|
|
|
$
|
868.8
|
|
|
$
|
0.3
|
|
|
$
|
49.6
|
|
|
$
|
709.6
|
|
|
$
|
148.9
|
|
|
$
|
90.5
|
|
|
$
|
75.2
|
|
|
$
|
416.2
|
|
|
$
|
435.9
|
|
Specialty
|
|
445.2
|
|
|
438.2
|
|
|
0.5
|
|
|
21.1
|
|
|
352.8
|
|
|
62.6
|
|
|
28.9
|
|
|
18.6
|
|
|
225.9
|
|
|
134.1
|
|
||||||||||
Direct
|
|
222.7
|
|
|
209.0
|
|
|
0.1
|
|
|
17.9
|
|
|
197.6
|
|
|
8.8
|
|
|
67.5
|
|
|
2.4
|
|
|
223.9
|
|
|
65.1
|
|
||||||||||
Life and Health (1)
|
|
645.9
|
|
|
N/A
|
|
|
0.1
|
|
|
201.9
|
|
|
385.7
|
|
|
59.0
|
|
|
235.7
|
|
|
352.3
|
|
|
3,111.0
|
|
|
31.1
|
|
||||||||||
Other
|
|
—
|
|
|
N/A
|
|
|
—
|
|
|
7.5
|
|
|
—
|
|
|
—
|
|
|
(32.6
|
)
|
|
—
|
|
|
154.8
|
|
|
—
|
|
||||||||||
Total
|
|
$
|
2,173.6
|
|
|
N/A
|
|
|
$
|
1.0
|
|
|
$
|
298.0
|
|
|
$
|
1,645.7
|
|
|
$
|
279.3
|
|
|
$
|
390.0
|
|
|
$
|
448.5
|
|
|
$
|
4,131.8
|
|
|
$
|
666.2
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Preferred
|
|
$
|
888.0
|
|
|
$
|
872.2
|
|
|
$
|
0.4
|
|
|
$
|
52.8
|
|
|
$
|
633.5
|
|
|
$
|
157.7
|
|
|
$
|
86.0
|
|
|
$
|
73.7
|
|
|
$
|
420.5
|
|
|
$
|
426.9
|
|
Specialty
|
|
474.9
|
|
|
457.2
|
|
|
0.6
|
|
|
24.8
|
|
|
383.0
|
|
|
67.7
|
|
|
25.0
|
|
|
19.9
|
|
|
250.8
|
|
|
141.1
|
|
||||||||||
Direct
|
|
282.4
|
|
|
269.3
|
|
|
0.1
|
|
|
21.4
|
|
|
223.9
|
|
|
9.8
|
|
|
77.3
|
|
|
2.9
|
|
|
235.6
|
|
|
78.9
|
|
||||||||||
Life and Health (1)
|
|
644.1
|
|
|
N/A
|
|
|
0.2
|
|
|
214.3
|
|
|
406.8
|
|
|
54.0
|
|
|
229.0
|
|
|
329.9
|
|
|
3,084.5
|
|
|
31.7
|
|
||||||||||
Other
|
|
—
|
|
|
N/A
|
|
|
—
|
|
|
12.4
|
|
|
—
|
|
|
—
|
|
|
(31.0
|
)
|
|
—
|
|
|
191.0
|
|
|
—
|
|
||||||||||
Total
|
|
$
|
2,289.4
|
|
|
N/A
|
|
|
$
|
1.3
|
|
|
$
|
325.7
|
|
|
$
|
1,647.2
|
|
|
$
|
289.2
|
|
|
$
|
386.3
|
|
|
$
|
426.4
|
|
|
$
|
4,182.4
|
|
|
$
|
678.6
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Preferred
|
|
$
|
931.8
|
|
|
$
|
918.3
|
|
|
$
|
0.4
|
|
|
$
|
42.1
|
|
|
$
|
627.8
|
|
|
$
|
167.3
|
|
|
$
|
93.0
|
|
|
|
|
|
|
|
||||||
Specialty
|
|
527.5
|
|
|
512.3
|
|
|
0.4
|
|
|
20.8
|
|
|
418.8
|
|
|
75.8
|
|
|
23.6
|
|
|
|
|
|
|
|
|||||||||||||
Direct
|
|
345.6
|
|
|
320.3
|
|
|
0.9
|
|
|
18.5
|
|
|
269.1
|
|
|
7.3
|
|
|
99.7
|
|
|
|
|
|
|
|
|||||||||||||
Life and Health (1)
|
|
650.6
|
|
|
N/A
|
|
|
0.7
|
|
|
225.3
|
|
|
423.8
|
|
|
53.2
|
|
|
231.1
|
|
|
|
|
|
|
|
|||||||||||||
Other
|
|
—
|
|
|
N/A
|
|
|
0.1
|
|
|
13.2
|
|
|
—
|
|
|
—
|
|
|
(29.8
|
)
|
|
|
|
|
|
|
|||||||||||||
Total
|
|
$
|
2,455.5
|
|
|
N/A
|
|
|
$
|
2.5
|
|
|
$
|
319.9
|
|
|
$
|
1,739.5
|
|
|
$
|
303.6
|
|
|
$
|
417.6
|
|
|
|
|
|
|
|
(1)
|
The Company’s Life and Health Insurance employee-agents also market certain property and casualty insurance products under common management. Accordingly, the Company includes the results of these property and casualty insurance products in its Life and Health Insurance segment.
|
|
|
Gross
Amount
|
|
Ceded to
Other
Companies
|
|
Assumed
from Other
Companies
|
|
Net
Amount
|
|
Percentage
of Amount
Assumed to
Net
|
|||||||||
Year Ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life Insurance in Force
|
|
$
|
21,627.8
|
|
|
$
|
662.0
|
|
|
$
|
256.9
|
|
|
$
|
21,222.7
|
|
|
1.2
|
%
|
Premiums
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life Insurance
|
|
$
|
394.3
|
|
|
$
|
1.5
|
|
|
$
|
2.3
|
|
|
$
|
395.1
|
|
|
0.6
|
%
|
Accident and Health Insurance
|
|
166.5
|
|
|
0.3
|
|
|
0.1
|
|
|
166.3
|
|
|
0.1
|
%
|
||||
Property and Liability Insurance
|
|
1,609.8
|
|
|
38.9
|
|
|
41.3
|
|
|
1,612.2
|
|
|
2.6
|
%
|
||||
Total Premiums
|
|
$
|
2,170.6
|
|
|
$
|
40.7
|
|
|
$
|
43.7
|
|
|
$
|
2,173.6
|
|
|
2.0
|
%
|
Year Ended December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life Insurance in Force
|
|
$
|
21,909.4
|
|
|
$
|
695.3
|
|
|
$
|
272.6
|
|
|
$
|
21,486.7
|
|
|
1.3
|
%
|
Premiums
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life Insurance
|
|
$
|
396.1
|
|
|
$
|
2.0
|
|
|
$
|
2.7
|
|
|
$
|
396.8
|
|
|
0.7
|
%
|
Accident and Health Insurance
|
|
162.0
|
|
|
0.3
|
|
|
0.1
|
|
|
161.8
|
|
|
0.1
|
%
|
||||
Property and Liability Insurance
|
|
1,729.5
|
|
|
41.6
|
|
|
42.9
|
|
|
1,730.8
|
|
|
2.5
|
%
|
||||
Total Premiums
|
|
$
|
2,287.6
|
|
|
$
|
43.9
|
|
|
$
|
45.7
|
|
|
$
|
2,289.4
|
|
|
2.0
|
%
|
Year Ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life Insurance in Force
|
|
$
|
21,903.5
|
|
|
$
|
782.6
|
|
|
$
|
288.9
|
|
|
$
|
21,409.8
|
|
|
1.3
|
%
|
Premiums
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life Insurance
|
|
$
|
399.3
|
|
|
$
|
2.7
|
|
|
$
|
3.1
|
|
|
$
|
399.7
|
|
|
0.8
|
%
|
Accident and Health Insurance
|
|
159.1
|
|
|
0.1
|
|
|
0.2
|
|
|
159.2
|
|
|
0.1
|
%
|
||||
Property and Liability Insurance
|
|
1,893.5
|
|
|
44.9
|
|
|
48.0
|
|
|
1,896.6
|
|
|
2.5
|
%
|
||||
Total Premiums
|
|
$
|
2,451.9
|
|
|
$
|
47.7
|
|
|
$
|
51.3
|
|
|
$
|
2,455.5
|
|
|
2.1
|
%
|
Affiliation
|
|
Deferred
Policy
Acquisition
Costs
|
|
Reserves for
Unpaid
Claims and
Claim
Adjustment
Expenses
|
|
Discount
|
|
Unearned
Premiums
|
|
Earned
Premiums
|
|
Net
Investment
Income
|
|
Claim and Claim
Adjustment Expenses
Incurred Related to
|
|
Amortization
of Deferred
Policy
Acquisition
Costs
|
|
Paid Claims
and Claim
Adjustment
Expenses
|
|
Premiums
Written
|
||||||||||||||||||||||||
Current
Year
|
|
Prior
Years
|
|
|||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
(a) Consolidated property casualty entities
|
|
$
|
96.7
|
|
|
$
|
1,029.1
|
|
|
$
|
—
|
|
|
$
|
637.3
|
|
|
$
|
1,612.2
|
|
|
$
|
89.9
|
|
|
$
|
1,338.5
|
|
|
$
|
(35.0
|
)
|
|
$
|
227.0
|
|
|
$
|
1,360.6
|
|
|
$
|
1,600.4
|
|
(b) Unconsolidated property casualty entities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.9
|
|
|
$
|
—
|
|
|
$
|
30.8
|
|
|
$
|
—
|
|
Year Ended December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
(a) Consolidated property casualty entities
|
|
$
|
97.1
|
|
|
$
|
1,118.7
|
|
|
$
|
—
|
|
|
$
|
649.4
|
|
|
$
|
1,730.8
|
|
|
$
|
100.4
|
|
|
$
|
1,310.5
|
|
|
$
|
(22.0
|
)
|
|
$
|
242.4
|
|
|
$
|
1,336.5
|
|
|
$
|
1,684.2
|
|
(b) Unconsolidated property casualty entities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2.9
|
)
|
|
$
|
—
|
|
|
$
|
42.4
|
|
|
$
|
—
|
|
Year Ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
(a) Consolidated property casualty entities
|
|
|
|
|
|
|
|
|
|
$
|
1,896.6
|
|
|
$
|
83.3
|
|
|
$
|
1,447.3
|
|
|
$
|
(77.9
|
)
|
|
$
|
258.4
|
|
|
$
|
1,461.2
|
|
|
$
|
1,848.3
|
|
||||||||
(b) Unconsolidated property casualty entities
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3.0
|
)
|
|
$
|
—
|
|
|
$
|
50.1
|
|
|
$
|
—
|
|
Table 1
Target Bonus Percentage
|
||
Type of Award
|
Target Bonus Percentage
|
Weighting based on Financial Measures
|
Annual PIP Award
|
__%
|
100%
|
Table 2
Illustrative Example
|
||||
Example of Individual Target Bonus Percentage from Table 1
|
Example of Target Multiplier interpolated from Performance Matrix
|
Example of Total Award Percentage
(AxB)
|
Example of Base Salary
|
Example of Estimated final Cash Award payable under the Plan
(CxD)
|
A
|
B
|
C
|
D
|
E
|
50%
|
143.3%
|
71.7%
|
100,000
|
71,700
|
(i)
|
Interpretations.
The
Company shall have the reasonable discretion to interpret or construe ambiguous, unclear or implied terms applicable to this Award Agreement, and to make any findings of fact necessary to make a calculations or determination hereunder; and
|
(ii)
|
Disagreements.
A decision made in good faith by the Company shall govern and be binding in the event of any dispute regarding a method of calculation of performance or a determination of vesting or forfeiture in connection with this Award.
|
(i)
|
in evaluating performance in connection with this Award, include or exclude any of the following events that occur during a Performance Period: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results; (d) any reorganization or restructuring; (e) extraordinary nonrecurring items as described in FASB Accounting Standards Codification™ 225-20 - Extraordinary and Unusual Items (or a successor pronouncement) and/or in the Company's periodic reports filed with the Securities and Exchange Commission for periods within the applicable Performance Period; and (f) acquisitions or divestitures; and
|
(ii)
|
make adjustments to the established performance goals applicable to this Award to reflect changes to the job responsibilities of the Participant or the structure of the Company or its Affiliates that relate directly to such established performance goals for all or a portion of the applicable Performance Period; provided, however, that no such adjustment shall be made to an Award to an employee whose compensation is subject to Section 162(m) of the Internal Revenue Code of 1986, as amended, if such adjustment would cause the compensation payable under the Award to fail to qualify as performance-based compensation under Section 162(m).
|
Table 1
Target Bonus Percentage
|
||
Type of Award
|
Target Bonus Percentage
|
Weighting based on Financial Measures
|
Multi-Year PIP Award
|
__%
|
100.00%
|
Table 2
Illustrative Example
|
||||
Example of Individual Target Bonus Percentage from Table 1
|
Example of Target Multiplier interpolated from Performance Matrix
|
Example of Total Award Percentage
(AxB)
|
Example of Base Salary
|
Example of Estimated final Cash Award payable under the Plan
(CxD)
|
A
|
B
|
C
|
D
|
E
|
50.00%
|
120.00%
|
60.00%
|
100,000
|
60,000
|
(i)
|
Interpretations.
The
Company shall have the reasonable discretion to interpret or construe ambiguous, unclear or implied terms applicable to this Award Agreement, and to make any findings of fact necessary to make a calculations or determination hereunder; and
|
(ii)
|
Disagreements.
A decision made in good faith by the Company shall govern and be binding in the event of any dispute regarding a method of calculation of performance or a
|
(i)
|
in evaluating performance in connection with this Award, include or exclude any of the following events that occur during a Performance Period: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results; (d) any reorganization or restructuring; (e) extraordinary nonrecurring items as described in FASB Accounting Standards Codification™ 225-20 –
Extraordinary and Unusual Items
(or a successor pronouncement) and/or in the Company’s periodic reports filed with the Securities and Exchange Commission for periods within the applicable Performance Period; and (f) acquisitions or divestitures; and
|
•
|
If the Company’s Relative TSR Percentile Rank is at the Target Performance Level, 100% of the Target Shares will vest on the Vesting Date. If the Company’s Relative TSR Percentile Rank is above the Target Performance Level, Additional Shares will also be issued to the Restricted Stockholder on the Vesting Date. If the Company’s Relative TSR Percentile Rank is less than the Target Performance Level, some or all of the Target Shares will be forfeited.
|
•
|
The number of the Target Shares that will vest on the Vesting Date, and the number of any Additional Shares that will be issued to the Restricted Stockholder on the Vesting Date, will be determined in accordance with the table set forth below. Any Target Shares that do not vest in accordance with the table will be forfeited on the Vesting Date.
|
Company’s Relative TSR Percentile Rank
|
Total Shares to Vest (and/or to be Granted) on Vesting Date as Percentage of Target Shares
|
90
th
or Higher
|
200.00%
|
75
th
|
150.00%
|
50
th
|
100.00%
|
25
th
|
50.00%
|
Below 25
th
|
—%
|
•
|
The Performance Period shall be deemed revised to end on the effective date of such employment termination;
|
•
|
The Company’s Relative TSR Percentile Rank will be determined for such truncated Performance Period by the Committee in accordance with the methodology set forth above, the Vesting Date shall be deemed revised to the date of such determination;
|
•
|
The Target Shares will vest or be forfeited in accordance with the table set forth below, but no Additional Shares will be issued to the Restricted Stockholder; and
|
•
|
If the Company’s Relative TSR Percentile Rank for the truncated Performance Period falls between the percentile levels specified in the first column of the table set forth below, the number of Target Shares that will vest on the Vesting Date shall equal the number corresponding to the percentage interpolated on a straight-line basis from the percentages
|
Company’s Relative TSR Percentile Rank
|
Total Shares to Vest on Vesting Date as Percentage of Target Shares
|
50
th
or Higher
|
100.00%
|
25
th
|
50.00%
|
Below 25
th
|
—%
|
•
|
For TSR performance between the 25th & 50th Percentile Ranks, the number of Target Shares that will vest as a % of the total number of Target Shares equals: 50% + [(Actual Percentile Rank - 25)/50]%
|
•
|
For TSR performance between the 50th & 75th Percentile Ranks, the number of Target Shares that will vest as a % of the total number of Target Shares equals: 100% + [(Actual Percentile Rank - 50)/50]%
|
•
|
For TSR performance between the 75th & 90th Percentile Ranks, the number of Target Shares that will vest as a % of the total number of Target Shares equals: 150% + [(Actual Percentile Rank - 75)/30]%
|
•
|
Regarding rounding of TSRs, percentages for each company in the Peer Group shall be computed to two decimal points, i.e., XX.XX%)
|
•
|
Regarding TSR Percentile Rank, the percentile rankings for each company in the Peer Group shall be rounded to the nearest percentage (e.g., 85% rather than 85.4166666%) before calculating the linearly interpolated payout, and the final payout percentage shall be rounded to the nearest percentage (e.g., 183% rather than 183.333333%).
|
•
|
Target Shares that will vest and any Additional Shares that will result from the application of the methods and formula set forth in the foregoing subsection F(3) and Section D above shall only be paid out in whole Shares. Any fractional Shares that would otherwise result from such application shall be rounded down to the nearest whole number of Shares.
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
||||||||||
Income (Loss) from Continuing Operations before Income Taxes and Equity in Net Income (Loss) of Investee
|
|
$
|
82.6
|
|
|
$
|
236.7
|
|
|
$
|
228.0
|
|
|
$
|
(64.7
|
)
|
|
$
|
292.8
|
|
Fixed Charges, Excluding Capitalized Interest
|
|
42.5
|
|
|
37.9
|
|
|
38.1
|
|
|
37.5
|
|
|
38.7
|
|
|||||
Earnings from Continuing Operations before Income Taxes and Fixed Charges
|
|
$
|
125.1
|
|
|
$
|
274.6
|
|
|
$
|
266.1
|
|
|
$
|
(27.2
|
)
|
|
$
|
331.5
|
|
Interest
|
|
$
|
40.6
|
|
|
$
|
36.0
|
|
|
$
|
36.1
|
|
|
$
|
35.8
|
|
|
$
|
37.0
|
|
Rental Factor
|
|
1.9
|
|
|
1.9
|
|
|
2.0
|
|
|
1.7
|
|
|
1.7
|
|
|||||
Capitalized Interest
|
|
2.6
|
|
|
1.8
|
|
|
0.7
|
|
|
1.3
|
|
|
0.3
|
|
|||||
Total Fixed Charges
|
|
$
|
45.1
|
|
|
$
|
39.7
|
|
|
$
|
38.8
|
|
|
$
|
38.8
|
|
|
$
|
39.0
|
|
Ratio of Earnings to Fixed Charges (a)
|
|
2.8 x
|
|
|
6.9 x
|
|
|
6.9 x
|
|
|
(b)
|
|
|
8.5 x
|
|
(a)
|
The ratios of earnings to fixed charges have been computed on a consolidated basis by dividing earnings from continuing operations before income taxes and fixed charges by fixed charges. Fixed charges consist of interest on debt and a factor for interest included in rent expense. Income (Loss) from Continuing Operations before Income Taxes and Equity in Net Income (Loss) of Investee has the meaning as set forth in the Consolidated Statements of Income included in this
2011
Annual Report on Form 10-K.
|
(b)
|
Fixed charges exceeded earnings from continuing operations before income taxes and fixed charges by
$66.0 million
for the year ended
December 31, 2008
.
|
|
|
/S/ DONALD G. SOUTHWELL
|
|
Donald G. Southwell
|
|
Chairman, President and Chief Executive Officer
|
|
|
|
/S/ DENNIS R. VIGNEAU
|
|
Dennis R. Vigneau
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
/S/ DONALD G. SOUTHWELL
|
|
Name:
|
|
Donald G. Southwell
|
|
Title:
|
|
Chairman, President and Chief Executive Officer
|
|
Date:
|
|
February 17, 2012
|
|
|
|
|
|
|
|
/S/ DENNIS R. VIGNEAU
|
|
Name:
|
|
Dennis R. Vigneau
|
|
Title:
|
|
Senior Vice President and Chief Financial Officer
|
|
Date:
|
|
February 17, 2012
|
|