Earnings Per Share

9 Months Ended

Sep. 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 September 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 September 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	$47	48,503,383	$    0.97	$54	50,499,551	$    1.05
Dilutive effect of stock awards	0	71,238	–	0	68,370	–
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	$47	54,685,021	$    0.87	$54	56,678,321	$    0.94
Class B – Basic and diluted EPS:
Income available to Class B stockholders	$  0	2,546	$146.67	$  0	2,546	$150.87

	Indemnity Earnings Per Share Calculation
(dollars in millions,	Nine months ended September 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	$142	49,176,124	$    2.90	$149	50,897,035	$    2.92
Dilutive effect of stock awards	0	71,238	–	0	68,370	–
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	$143	55,357,762	$    2.59	$150	57,075,805	$    2.62
Class B – Basic and diluted EPS:
Income available to Class B stockholders	$    1	2,546	$439.39	$    1	2,546	$421.91

Included in the diluted earnings per share calculations for the third quarters and first nine months of 2011 and 2010 were 5,486 and 7,959 shares, respectively, of stock-based awards not yet vested and 65,752 and 54,011 shares, respectively, of awards vested related to our outside directors’ stock compensation plan.  Also included in both the third quarter and first nine months of 2010 were 6,400 shares of other stock-based awards not yet vested.