Earnings Per Share

6 Months Ended

Jun. 30, 2011

Earnings Per Share

Earnings Per Share

Note 3.  Earnings Per Share

Basic earnings per share are calculated under the two-class method, which allocates earnings to each class of stock based on its dividend rights.  Class B shares are convertible into Class A shares at a conversion ratio of 2,400 to 1.  Class A diluted earnings per share are calculated under the if-converted method, which reflects the conversion of Class B shares and the effect of potentially dilutive outstanding employee stock-based awards and awards vested and not yet vested related to the outside directors’ stock compensation plan.  Vested shares related to the outside directors’ compensation plan were included in the table below for the first time at December 31, 2010.  The June 30, 2010 amounts have been updated to include these shares.  This had no impact on previously reported diluted earnings per share.

A reconciliation of the numerators and denominators used in the basic and diluted per-share computations is presented as follows for each class of Indemnity common stock:

	Indemnity Earnings Per Share Calculation
(dollars in millions,	Three months ended June 30,
except per share data)	2011			2010
	Allocated	Weighted	Per-	Allocated	Weighted	Per-
	net income	shares	share	net income	shares	share
	(numerator)	(denominator)	amount	(numerator)	(denominator)	amount
Class A – Basic EPS:
Income available to Class A stockholders	$52	49,250,061	$    1.05	$49	51,013,358	$    0.96
Dilutive effect of stock awards	0	76,515	–	0	73,845	–
Assumed conversion of Class B shares	0	6,110,400	–	0	6,110,400	–
Class A – Diluted EPS:
Income available to Class A stockholders
on Class A equivalent shares	$52	55,436,976	$    0.94	$49	57,197,603	$    0.86
Class B – Basic and diluted EPS:
Income available to Class B stockholders	$  0	2,546	$158.33	$  0	2,546	$138.21

	Indemnity Earnings Per Share Calculation
(dollars in millions,	Six months ended June 30,
except per share data)	2011			2010
	Allocated	Weighted	Per-	Allocated	Weighted	Per-
	net income	shares	share	net income	Shares	share
	(numerator)	(denominator)	amount	(numerator)	(denominator)	amount
Class A – Basic EPS:
Income available to Class A stockholders	$95	49,518,069	$    1.93	$95	51,099,071	$    1.87
Dilutive effect of stock awards	0	76,515	–	0	73,213	–
Assumed conversion of Class B shares	1	6,110,400	–	1	6,110,400	–
Class A – Diluted EPS:
Income available to Class A stockholders
on Class A equivalent shares	$96	55,704,984	$    1.72	$96	57,282,684	$    1.68
Class B – Basic and diluted EPS:
Income available to Class B stockholders	$  1	2,546	$291.07	$  1	2,546	$271.03

Included in the diluted earnings per share calculations for the second quarter and first half of 2011 and 2010, respectively, were 6,400 and 11,200 shares of stock-based awards not yet vested, 63,433 and 50,748 shares of awards vested related to our outside directors’ stock compensation plan, and 6,682 and 10,612 shares of awards not yet vested related to our outside directors’ stock compensation plan.