Earnings Per Share

6 Months Ended

Jun. 30, 2012

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.  In the first quarter of 2012, two shares of Class B common stock were converted into 4,800 shares of Class A common stock.  See Note 15. “Indemnity Capital Stock”.

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 Shareholder Interest
(dollars in millions,	Three months ended June 30,
except per share data)	2012			2011
	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	$43	47,492,305	$    0.90	$52	49,250,061	$    1.05
Dilutive effect of stock-based awards	0	79,943	–	0	76,515	–
Assumed conversion of Class B shares	0	6,105,600	–	0	6,110,400	–
Class A – Diluted EPS:
Income available to Class A stockholders
on Class A equivalent shares	$43	53,677,848	$    0.80	$52	55,436,976	$    0.94
Class B – Basic and diluted EPS:
Income available to Class B stockholders	$  0	2,544	$134.78	$  0	2,546	$158.33

	Indemnity Shareholder Interest
(dollars in millions,	Six months ended June 30,
except per share data)	2012			2011
	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	$78	47,619,852	$    1.65	$95	49,518,069	$    1.93
Dilutive effect of stock-based awards	0	79,943	–	0	76,515	–
Assumed conversion of Class B shares	1	6,108,000	–	1	6,110,400	–
Class A – Diluted EPS:
Income available to Class A stockholders
on Class A equivalent shares	$79	53,807,795	$    1.47	$96	55,704,984	$    1.72
Class B – Basic and diluted EPS:
Income available to Class B stockholders	$  1	2,545	$248.55	$  1	2,546	$291.07