SCHEDULE II—CONDENSED FINANCIAL INFORMATION OF REGISTRANT

(PARENT COMPANY)

CONDENSED BALANCE SHEETS

December 31,

(in thousands, except share data)	2013			2012
ASSETS

Cash	$	181		$	14,023
Short-term investments, at cost which approximates fair value	13,394			431
Accounts receivable, affiliates	2,350			3,699
Investments in subsidiaries, at equity value	905,620			822,856
Investments in unconsolidated investee, at equity value	49,793			52,128
Fixed income:
Available-for-sale, at fair value (amortized cost - $18,839 in 2013 and $19,967 in 2012)	18,447			20,599
Property and equipment, at cost, net of accumulated depreciation of $312 in 2013 and $240 in 2012	3,446			709
Income taxes receivable - current	493			—
Deferred debt costs	1,398			112
Other assets	190			397
Total assets	$	995,312		$	914,954

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities:
Income taxes payable—current	$	—		$	207
Income taxes payable—deferred	14,485			15,183
Debt, notes payable due 2014	—			100,000
Debt, notes payable due 2023	149,582			—
Interest payable, long-term debt	1,808			2,727
Other liabilities	471			474
Total liabilities	$	166,346		$	118,591

Shareholders’ equity:
Common stock ($1 par value, authorized 100,000,000 shares, issued 65,912,638 shares in 2013 and 65,455,462 shares in 2012, and outstanding 42,982,424 shares in 2013 and 42,525,248 shares in 2012)	$	65,913		$	65,455
Paid in capital	208,705			202,535
Accumulated other comprehensive earnings, net of tax	136,027			143,170
Retained earnings	811,320			778,202
Deferred compensation	11,562			11,106
Treasury shares at cost (22,930,214 shares in 2013 and 2012)	(404,561		)	(404,105		)
Total shareholders’ equity	$	828,966		$	796,363
Total liabilities and shareholders’ equity	$	995,312		$	914,954

See Notes to Consolidated Financial Statements. See also the accompanying report of independent registered public accounting firm on page 102 of this report.

SCHEDULE II—CONDENSED FINANCIAL INFORMATION OF REGISTRANT

(PARENT COMPANY)—(continued)

CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS

Years ended December 31,

(in thousands)	2013			2012			2011
Net investment income	$	652		$	837		$	1,179
Net realized investment gains (losses)	(850		)	(2,834		)	42
Equity in earnings of unconsolidated investees	10,915			8,853			6,497
Selling, general and administrative expenses	(8,746		)	(7,867		)	(7,766		)
Interest expense on debt	(8,095		)	(6,050		)	(6,050		)
Loss before income taxes	(6,124		)	(7,061		)	(6,098		)
Income tax benefit	(11,946		)	(8,071		)	(4,949		)
Net earnings (loss) before equity in net earnings of subsidiaries	5,822			1,010			(1,149		)
Equity in net earnings of subsidiaries	120,433			102,336			127,747
Net earnings	$	126,255		$	103,346		$	126,598
Other comprehensive income (loss), net of tax
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period	$	(665	)	$	807		$	277
Less: reclassification adjustment for losses (gains) included in net earnings	—			(70		)	(27		)
Other comprehensive income (loss) - parent only	(665		)	737			250
Equity in other comprehensive earnings (loss) of subsidiaries/investees	(6,478		)	25,108			21,083
Other comprehensive earnings (loss)	(7,143		)	25,845			21,333
Comprehensive earnings	$	119,112		$	129,191		$	147,931

See Notes to Consolidated Financial Statements. See also the accompanying report of independent registered public accounting firm on page 102 of this report.

SCHEDULE II—CONDENSED FINANCIAL INFORMATION OF REGISTRANT

(PARENT COMPANY)—(continued)

CONDENSED STATEMENTS OF CASH FLOWS

Years ended December 31,

(in thousands)	2013			2012			2011
Cash flows from operating activities
Earnings (loss) before equity in net earnings of subsidiaries	$	5,822		$	1,010		$	(1,149	)
Adjustments to reconcile net losses to net cash provided by (used in) operating activities:
Net realized investment (gains) losses	850			2,834			(42		)
Depreciation	90			30			235
Other items, net	(1,789		)	852			(104		)
Change in:
Affiliate balances receivable/payable	1,349			(10,383		)	3,026
Federal income taxes	5,288			3,964			3,330
Stock option excess tax benefit	(6,310		)	(1,471		)	(4,210		)
Changes in investment in unconsolidated investees:
Undistributed earnings	(10,915		)	(8,853		)	(6,497		)
Dividends received	13,200			6,600			—
Net cash provided by (used in) operating activities	$	7,585		$	(5,417	)	$	(5,411	)
Cash flows from investing activities
Purchase of:
Fixed income, available-for-sale	$	(99,982	)	$	(20,147	)	$	(29,621	)
Short-term investments, net	(12,963		)	—			(10,198		)
Property and equipment	(2,845		)	(2,656		)	(11		)
Sale of:
Fixed income, available-for-sale	—			7,938			8,125
Short-term investments, net	—			10,786			—
Property and equipment	18			3,108			—
Call or maturity of:
Fixed income, available-for-sale	101,000			20,185			24,400
Cash dividends received-subsidiaries	40,000			138,000			150,000
Net cash provided by investing activities	$	25,228		$	157,214		$	142,695
Cash flows from financing activities
Stock option excess tax benefit	$	6,310		$	1,471		$	4,210
Proceeds from stock option exercises	318			6,104			8,821
Proceeds from issuance of senior notes	149,571			—			—
Payment on senior notes	(99,504		)	—			—
Debt issue costs paid	(1,437		)	—			—
Treasury shares purchased	—			—			(6,624		)
Cash dividends paid	(101,913		)	(145,695		)	(143,371		)
Net cash used in financing activities	$	(46,655	)	$	(138,120	)	$	(136,964	)
Net (decrease) increase in cash	(13,842		)	13,677			320
Cash at beginning of year	14,023			346			26
Cash at end of year	$	181		$	14,023		$	346

Interest paid on outstanding debt for 2013, 2012 and 2011 amounted to $8.4 million, $6.0 million and $6.0 million. See Notes to Consolidated Financial Statements. See also the accompanying report of independent registered public accounting firm on page 102 of this report.