14. EMPLOYEE BENEFIT PLANS

Defined Benefit Pension Plans.

The Company maintains both qualified and non-qualified defined benefit pension plans for its U.S. employees employed prior to April 1, 2010. Generally, the Company computes the benefits based on average earnings over a period prescribed by the plans and credited length of service. The Company's non-qualified defined benefit pension plan, affected in October 1995, provides compensating pension benefits for participants whose benefits have been curtailed under the qualified plan due to Internal Revenue Code limitations.

Although not required to make contributions under IRS regulations, the following table summarizes the Company's contributions to the defined benefit pension plans for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2011		2010		2009
Company contributions	$	3,223	$	6,759	$	7,851

The following table summarizes the Company's pension expense for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2011		2010		2009
Pension expense	$	10,874	$	10,783	$	10,772

The following table summarizes the status of these defined benefit plans for U.S. employees for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2011			2010
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	138,392		$	118,166
Service cost		7,548			6,944
Interest cost		7,702			7,052
Actuarial loss		26,802			14,631
Benefits paid		(5,080	)		(8,401	)
Projected benefit obligation at end of year		175,364			138,392

Change in plan assets:
Fair value of plan assets at beginning of year		114,470			100,728
Actual return on plan assets		(11,309	)		15,383
Actual contributions during the year		3,223			6,760
Benefits paid		(5,080	)		(8,401	)
Fair value of plan assets at end of year		101,304			114,470

Funded status at end of year	$	(74,060	)	$	(23,922	)

Amounts recognized in the consolidated balance sheets for the periods indicated:


	At December 31,
(Dollars in thousands)	2011			2010
Other assets (due beyond one year)	$	-		$	952
Other liabilities (due within one year)		(3,497	)		(2,560	)
Other liabilities (due beyond one year)		(70,563	)		(22,314	)
Net amount recognized in the consolidated balance sheets	$	(74,060	)	$	(23,922	)

Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive income (loss) for the periods indicated:


	At December 31,
(Dollars in thousands)	2011			2010
Prior service cost	$	(168	)	$	(217	)
Accumulated income (loss)		(78,755	)		(36,219	)
Accumulated other comprehensive income (loss)	$	(78,923	)	$	(36,436	)

Other changes in other comprehensive income (loss) for the periods indicated are as follows:


	Years Ended December 31,
(Dollars in thousands)	2011			2010
Other comprehensive income (loss) at December 31, prior year	$	(36,436	)	$	(33,974	)
Net gain (loss) arising during period		(47,177	)		(7,220	)
Recognition of amortizations in net periodic benefit cost:
Prior service cost		49			49
Actuarial loss		4,641			4,709
Other comprehensive income (loss) at December 31, current year	$	(78,923	)	$	(36,436	)

Net periodic benefit cost for U.S. employees included the following components for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2011			2010			2009
Service cost	$	7,548		$	6,944		$	6,015
Interest cost		7,702			7,052			6,385
Expected return on assets		(9,067	)		(7,971	)		(6,145	)
Amortization of actuarial loss from earlier periods		3,367			2,467			3,663
Amortization of unrecognized prior service cost		49			49			49
Settlement		1,275			2,242			805
Net periodic benefit cost	$	10,874		$	10,783		$	10,772

Other changes recognized in other comprehensive income (loss):
Other comprehensive income (loss) attributable to change from prior year		42,487			2,462

Total recognized in net periodic benefit cost and other
comprehensive income (loss)	$	53,361		$	13,244

(Some amounts may not reconcile due to rounding.)

The estimated transition obligation, actuarial loss and prior service cost that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next year are $0 thousand, $7,062 thousand and $49 thousand, respectively.

The weighted average discount rates used to determine net periodic benefit cost for 2011, 2010 and 2009 were 5.60%, 6.10% and 6.25%, respectively. The rate of compensation increase used to determine the net periodic benefit cost for 2011, 2010 and 2009 was 4.0%. The expected long-term rate of return on plan assets for 2011, 2010 and 2009 was 8%, and was based on expected portfolio returns and allocations.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation for year end 2011, 2010 and 2009 were 4.60%, 5.60% and 6.10%, respectively.

The following table summarizes the accumulated benefit obligation for the periods indicated:


	At December 31,
(Dollars in thousands)	2011		2010
Qualified Plan	$	118,981	$	91,254
Non-qualified Plan		21,231		19,141
Total	$	140,212	$	110,395

The following table displays the plans with projected benefit obligations in excess of plan assets for the periods indicated:


	At December 31,
(Dollars in thousands)	2011		2010
Qualified Plan
Projected benefit obligation	$	146,350	NA
Fair value of plan assets		101,304	NA
Non-qualified Plan
Projected benefit obligation	$	29,014	$	24,874
Fair value of plan assets		-		-

The following table displays the plans with accumulated benefit obligations in excess of plan assets for the periods indicated:


	At December 31,
(Dollars in thousands)	2011		2010
Qualified Plan
Accumulated benefit obligation	$	118,981	NA
Fair value of plan assets		101,304	NA
Non-qualified Plan
Accumulated benefit obligation	$	21,231	$	19,141
Fair value of plan assets		-		-

The following table displays the expected benefit payments in the periods indicated:


(Dollars in thousands)
2012	$	6,068
2013		7,459
2014		7,464
2015		6,913
2016		6,994
Next 5 years		39,715

Plan assets consist of shares in investment trusts with approximately 64%, 33% and 3% of the underlying assets consisting of equity securities, fixed maturities and cash, respectively. The Company manages the qualified plan investments for U.S. employees. The assets in the plan consist of debt and equity mutual funds. Due to the long term nature of the plan, the target asset allocation has historically been 70% equities and 30% bonds.

The following tables present the fair value measurement levels for the qualified plan assets at fair value for the periods indicated:


			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	December 31, 2011		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash	$	317	$	317	$	-	$	-
Short-term investments, which approximates fair value (a)		3,109		3,109		-		-
Mutual funds, fair value
Fixed income (b)		33,573		33,573		-		-
Equities (c)		55,423		55,423		-		-
Multi-strategy equity fund, fair value (d)		7,891		-		-		7,891
Private equity limited partnership		991		-		-		991
Total	$	101,304	$	92,422	$	-	$	8,882

(a)	This category includes high quality, short-term money market instruments, which are issued and payable in U.S. dollars.

(b)	This category includes three fixed income funds, which invest in investment grade securities of corporations, governments and government agencies with approximately half in U.S. securities and half in international securities.

(c)

This category includes eight funds, which invest in small, mid and multi-cap equity securities including common stocks, securities convertible into common stock and securities with common stock characteristics, such as rights and warrants, with approximately three-fourths in U.S. equities and one-fourth in international equities.

(d)	This category consists of a privately held fund of U.S. and international equity funds and may include currency hedges for the foreign funds. The fair value is provided by the external investment manager.


			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	December 31, 2010		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash	$	356	$	356	$	-	$	-
Short-term investments, which approximates fair value (a)		2,728		2,728		-		-
Mutual funds, fair value
Fixed income (b)		35,334		35,334		-		-
Equities (c)		65,793		65,793		-		-
Multi-strategy equity fund, fair value (d)		10,259		-		-		10,259
Total	$	114,470	$	104,211	$	-	$	10,259

(Some amounts may not reconcile due to rounding.)

(a)	This category includes high quality, short-term money market instruments, which are issued and payable in U.S. dollars.

(b)	This category includes three fixed income funds, which invest in investment grade securities of corporations, governments and government agencies with approximately half in U.S. securities and half in international securities.

(c)

(d)	This category consists of a privately held fund of U.S. and international equity funds and may include currency hedges for the foreign funds. The fair value is provided by the external investment manager.

The following table presents the activity under Level 3, fair value measurements using significant unobservable inputs for fixed maturity investments, for the period indicated:


	Year Ended December 31,
(Dollars in thousands)	2011			2010
Assets:
Balance, beginning of period	$	10,259		$	6,564
Actual return on plan assets:
Realized gains (losses)		21			7
Unrealized gains (losses)		(2,380	)		1,629
Purchases		1,200			2,000
Investment income earned on assets		(95	)		146
Sales		(123	)		(88	)
Transfers in and/or (out) of Level 3		-			-
Balance, end of period	$	8,882		$	10,259

The amount of total gains (losses) for the period included in changes in
net assets attributable to the change in unrealized gains (losses)
relating to assets still held at the reporting date	$	(2,401	)	$	2,149

(Some amounts may not reconcile due to rounding.)

The Company does not expect to make any contributions to the qualified plan in 2012.

Defined Contribution Plans.

The Company also maintains both qualified and non-qualified defined contribution plans ("Savings Plan" and "Non-Qualified Savings Plan", respectively) covering U.S. employees. Under the plans, the Company contributes up to a maximum 3% of the participants' compensation based on the contribution percentage of the employee. The Non-Qualified Savings Plan provides compensating savings plan benefits for participants whose benefits have been curtailed under the Savings Plan due to Internal Revenue Code limitations. In addition, effective for new hires (and rehires) on or after April 1, 2010, the Company will contribute between 3% and 8% of an employee's earnings for each payroll period based on the employee's age. These contributions will be 100% vested after three years.

The following table presents the Company's incurred expenses related to these plans for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2011		2010		2009
Incurred expenses	$	2,062	$	1,801	$	1,631

In addition, the Company maintains several defined contribution pension plans covering non-U.S. employees. Each non-U.S. office (Brazil, Canada, London, Belgium, Singapore, Ireland and Bermuda) maintains a separate plan for the non-U.S. employees working in that location. The Company contributes various amounts based on salary, age and/or years of service. The contributions as a percentage of salary for the branch offices range from 1.6% to 12.1%. The contributions are generally used to purchase pension benefits from local insurance providers. The following table presents the Company's incurred expenses related to these plans for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2011		2010		2009
Incurred expenses	$	1,031	$	995	$	828

Post-Retirement Plan.

The Company sponsors a Retiree Health Plan for employees employed prior to April 1, 2010. This plan provides healthcare benefits for eligible retired employees (and their eligible dependants), who have elected coverage. The Company anticipates that most covered employees will become eligible for these benefits if they retire while working for the Company. The cost of these benefits is shared with the retiree. The Company accrues the post-retirement benefit expense during the period of the employee's service.

The following medical cost trend rates were used to determine net cost and benefit obligations: a healthcare inflation rate for pre-Medicare claims of 7.9% in 2011 was assumed to decrease gradually to 4.5% in 2027 and then remain at that level; and a healthcare inflation rate for post-Medicare claims of 6.4% in 2011 was assumed to decrease gradually to 4.5% in 2027 then remain at that level.

Changes in the assumed healthcare cost trend can have a significant effect on the amounts reported for the healthcare plans. A one percent change in the rate would have the following effects on:


	Percentage		Percentage
	Point Increase		Point Decrease
(Dollars in thousands)	($ Impact)		($ Impact)
a. Effect on total service and interest cost components	$	286	$	(240	)
b. Effect on accumulated post-retirement benefit obligation		2,456		(2,089	)

The following table presents the post-retirement benefit expenses for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2011		2010		2009
Post-retirement benefit expenses	$	2,258	$	1,947	$	1,769

The following table summarizes the status of this plan for the periods indicated:


	At December 31,
(Dollars in thousands)	2011			2010
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	16,754		$	14,919
Service cost		1,165			1,017
Interest cost		934			849
Actuarial loss		2,930			412
Excise tax cost		53			-
Benefits paid		(374	)		(443	)
Benefit obligation at end of year		21,462			16,754

Change in plan assets:
Fair value of plan assets at beginning of year		-			-
Employer contributions		374			443
Benefits paid		(374	)		(443	)
Fair value of plan assets at end of year		-			-

Funded status at end of year	$	(21,462	)	$	(16,754	)

Amounts recognized in the consolidated balance sheets for the periods indicated:


	At December 31,
(Dollars in thousands)	2011			2010
Other liabilities (due within one year)	$	(470	)	$	(377	)
Other liabilities (due beyond one year)		(20,992	)		(16,377	)
Net amount recognized in the consolidated balance sheets	$	(21,462	)	$	(16,754	)

Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive income (loss) for the periods indicated:


	At December 31,
(Dollars in thousands)	2011			2010
Accumulated income (loss)	$	(6,516	)	$	(3,692	)
Accumulated other comprehensive income (loss)	$	(6,516	)	$	(3,692	)

Other changes in other comprehensive income (loss) for the periods indicated are as follows:


	Years Ended December 31,
(Dollars in thousands)	2011			2010
Other comprehensive income (loss) at December 31, prior year	$	(3,692	)	$	(3,361	)
Net gain (loss) arising during period		(2,983	)		(412	)
Recognition of amortizations in net periodic benefit cost:
Actuarial loss (gain)		159			81
Other comprehensive income (loss) at December 31, current year	$	(6,516	)	$	(3,692	)

Net periodic benefit cost included the following components for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2011		2010		2009
Service cost	$	1,165	$	1,017	$	902
Interest cost		934		849		780
Net loss recognition		159		81		87
Net periodic cost	$	2,258	$	1,947	$	1,769

Other changes recognized in other comprehensive income (loss):
Other comprehensive gain (loss) attributable to change from prior year		2,823		331

Total recognized in net periodic benefit cost and
other comprehensive income (loss)	$	5,081	$	2,278

The estimated transition obligation, actuarial loss and prior service cost that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $0 thousand, $328 thousand and $0 thousand, respectively.

The weighted average discount rates used to determine net periodic benefit cost for 2011, 2010 and 2009 were 5.60%, 6.10% and 6.25%, respectively.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation at year end 2011, 2010 and 2009 were 4.60%, 5.60% and 6.10%, respectively.

The following table displays the expected benefit payments in the years indicated:


(Dollars in thousands)
2012	$	469
2013		597
2014		717
2015		900
2016		1,048
Next 5 years		8,000