[GRAPHIC OMITTED] G. PATRICK CORYDON
BALDWIN & LYONS, INC. SENIOR VICE PRESIDENT / C.F.O.
[OBJECT OMITTED]
1099 North Meridian Street
Indianapolis, IN 46204
(317) 636-9800

August 30, 2006

Mr. Jim B. Rosenberg
Senior Assistant Chief Accountant
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

RE: Form 10-K for the year ended December 31, 2005
File No. 000-05534

Dear Mr. Rosenberg,

Thank you for your letter of August 1, 2006 in connection with your review of
the above captioned filing. This letter will respond to the questions raised in
your letter.

Question 1 - MD&A
Critical Accounting Policies
Loss and Loss Expense Reserves, page 28

QUESTION 1 A. PLEASE DISCLOSE THE AMOUNT OF THE RESERVE FOR LOSS AND LOSS
ADJUSTMENT EXPENSE FOR EACH YEAR PRESENTED.

RESPONSE:
The Company's loss and loss expense reserves, for each of its significant
segments, are as follows at December 31, 2005 and 2004. Those lines of business
individually comprising less than three percent of the Company's total reserves
net of reinsurance are shown in the aggregate as All Other.

December 31
-------------------------------
LINE OF BUSINESS (SEGMENT) 2005 2004
------------ ------------

Fleet trucking $162,995 $140,008
Voluntary reinsurance assumed 43,481 29,221
Non-standard private passenger automobile 11,615 12,625
Small fleet trucking 6,172 6,656
All other 17,867 20,277
------------ ------------
$ 242,130 $ 208,786
============ ============

The Company has not historically included the above information in its filing
because it was not considered by management to enhance the overall disclosure of
the filing in light of the other disclosures regarding loss and loss expense
reserves throughout the Form 10-K. While we continue to believe that the
addition of this detail does not provide readers with a significant amount of
useful information, we would have no objection to including it as part of our
Critical Accounting Policies disclosures, or elsewhere in the document.

QUESTION 1 B. PLEASE DESCRIBE THE METHODS YOU USED TO DETERMINE YOUR RESERVE FOR
LOSS AND LOSS ADJUSTMENT EXPENSE. PLEASE ENSURE THIS DESCRIPTION:

1. EXPLAINS HOW THE METHODS YOU USE FOR YOUR SHORT-TAIL BUSINESS DIFFER
FROM THE METHODS YOU USE FOR YOUR LONG-TAIL BUSINESS.

2. IDENTIFIES THE UNIQUE DEVELOPMENT CHARACTERISTICS OF EACH MATERIAL
SHORT-TAIL AND LONG-TAIL LINE OF BUSINESS

3. DESCRIBES THE METHOD YOU USE TO CALCULATE
THE IBNR RESERVE FOR EACH MATERIAL LINE OF BUSINESS. FOR EXAMPLE, WE
UNDERSTAND THAT SOME COMPANIES MAY CALCULATE THIS RESERVE BY ESTIMATING
THE ULTIMATE UNPAID LIABILITY FIRST AND THEN REDUCING THAT AMOUNT BY
CUMULATIVE PAID CLAIMS AND BY CASE RESERVES, BUT THERE MAY BE OTHER
METHODS AS WELL.

4. DESCRIBES THE EXTENT OF YOUR PROCEDURES FOR DETERMINING THE RESERVE
FOR LOSS AND LOSS ADJUSTMENT EXPENSE ON BOTH AN ANNUAL AND INTERIM
REPORTING BASIS.

RESPONSE:
In considering the Company's determination of loss and loss expense reserves,
there must be a distinction drawn between reserves on known claims, reserves
necessary to cover those claims which have been incurred but not yet reported to
the Company and reserves for loss adjustment expenses. The following will
address each category of reserves individually.

RESERVES FOR KNOWN LOSSES (CASE RESERVES)
- -----------------------------------------
The Company's reserves for known claims are determined on an individual case
basis and can range from the routine private passenger "fender bender" valued at
a few hundred dollars to the very complex long-haul trucking claim involving
multiple vehicles, severe injuries and extensive property damage costing several
millions of dollars to settle. Each known claim, regardless of complexity, is
handled by a claims adjuster experienced with claims of this nature and a "case"
reserve, appropriate for the individual loss occurrence, will be established.
For very routine "short-tail" claims such as private passenger physical damage,
the Company initially records an average reserve that is based upon historical
loss settlements adjusted for current trends. As information regarding the loss
occurrence is gathered in the claim handling process, the reserve is adjusted to
reflect the anticipated ultimate cost to settle the claim. For more complex
claims which can tend toward being "long-tail" in nature, an experienced claims
adjuster will review the facts and circumstances surrounding the loss occurrence
to make a determination of the reserve to be established. Many of the more
complex claims involve litigation and necessitate an evaluation of potential
jury awards in addition to the factual information to determine the value of
each claim. Each claim is continually monitored and the recorded reserve is
increased or decreased relative to information gathered during the settlement
life cycle.

RESERVES FOR INCURRED BUT NOT REPORTED LOSSES
- ---------------------------------------------
The Company uses both standard actuarial techniques common to most insurance
companies as well as techniques developed by the Company in consideration of its
specialty business products. For its short-tail lines of business, the Company
uses predominantly the incurred or paid loss development factor methods. The
Company has found that the use of accident quarter loss development triangles,
rather than those based upon accident year, are most responsive to claim
settlement trends and fluctuations in premium exposures for its short-tail
lines. A minimum of 12 running accident quarters is used to project the reserve
necessary for incurred but not reported losses for its short-tail lines.

The Company also uses the loss development factor approach for its long-tail
lines of business. However, a minimum of 15 accident years is included in the
loss development triangles used to calculate link ratios and the selected loss
development factors used to determine the reserves for incurred but not reported
losses. A minimum of 20 accident years is used for long-tail workers'
compensation reserve projections. More emphasis is placed on the use of tail
factors for the Company's long-tail lines of business.

For the Company's large fleet trucking risks, which are covered by
annually-changing reinsurance agreements and which contain wide-ranging
self-insured retentions ("SIR") as low as $25,000 per loss occurrence and as
high as $3,000,000 per occurrence, traditional actuarial methods are
supplemented by other methods in consideration of the Company's exposures to
loss. In situations where the Company's reinsurance structure, the insured's SIR
selections, policy volume, and other factors are changing, current accident
period loss exposures may not be homogenous with historical loss data to allow
for reliable projection of future developed losses. Therefore, the Company
supplements the above-described actuarial methods with loss ratio reserving
techniques developed from our databases to arrive at the reserve for losses
incurred but not reported for the calendar/accident period under review.
Management relies on its extensive historical pricing and loss history databases
to produce reserve factors unique to this specialty business. As losses for a
given calendar/accident period develop with the passage of time, management
evaluates such development on a quarterly basis and will adjust reserve factors,
as necessary, to reflect current judgment with regard to the anticipated
ultimate incurred losses. This process continues until all losses are settled
for each period subject to this method.

RESERVES FOR LOSS ADJUSTMENT EXPENSES
- -------------------------------------
The Company uses historical analysis of the ratios of allocated loss adjustment
expenses paid to losses paid on closed claims to arrive at the expected ultimate
incurred loss adjustment expense factors for each of its major products. Once
developed, the factors are applied to the expected ultimate incurred losses,
including IBNR, on all open claims. The resulting ultimate incurred allocated
loss adjustment expense is then reduced by amounts paid to date on all open
claims to arrive at the reserve for allocated loss adjustment expenses to be
incurred in the future for the handling of specific claims.

For those loss adjustment expenses not specific to individual claims (general
claims handling expenses referred to as unallocated LAE) the Company uses
standard industry loss adjustment

expenses paid to losses paid (net of reinsurance) ratio analysis to establish
the necessary reserves. The selected factors are applied to 100% of IBNR
reserves and to case reserves with consideration given for that portion of loss
adjustment expense already paid at the reserve measurement date. Such factors
are monitored and revised, as necessary, on a quarterly basis.

The Company's methods for determining loss and loss expense reserves are
essentially identical for interim and annual reporting.

While the preceding discussion is, to some extent, more technical than that
presently provided in our Form 10-K, essentially all of this information is
presently included in the Form 10-K in Item 1 beginning on page 3, as well as in
Critical Accounting Policies beginning on page 27. Management does not believe
that increasing the technical complexity of this discussion will add to the
reader's understanding of the Company's loss and loss expense reserving process.
However, in future filings we will challenge our present disclosure to determine
if expansion would improve the overall disclosure.

QUESTION 1 C. ON PAGE 21 YOU DISCLOSE THAT YOU BELIEVE IT IS IMPORTANT TO HAVE A
HIGH DEGREE OF CONSERVATISM IN YOUR RESERVING PROCESS. IF MANAGEMENT HAS ADDED
AN INCREMENTAL PROVISION TO THE RESERVE FOR LOSS AND LOSS ADJUSTMENT EXPENSE
DETERMINED BY YOUR ACTUARIES, QUANTIFY THE INCREMENTAL PROVISION, DESCRIBE
METHOD USED BY MANAGEMENT TO DETERMINE IT AND THE EXTENT TO WHICH THAT METHOD
DIFFERS FROM PERIOD TO PERIOD, AND IDENTIFY AND ANALYZE THE SPECIFIC UNDERLYING
REASONS THAT EXPLAIN WHY MANAGEMENT BELIEVES IT IS NECESSARY.

RESPONSE:
Management does not add any incremental or "bulk" provisions to the reserves for
loss and loss adjustment expense. The "high degree of conservatism" mentioned on
Page 21 refers to the detail methods and processes the Company uses to determine
its reserves for losses and loss expenses as discussed in our response to
Question 1 b., above.

QUESTION 1 D. IT APPEARS THAT YOU HAVE SIGNIFICANTLY REVISED YOUR PROVISION FOR
LOSSES OF INSURED EVENTS OF PRIOR YEARS. WE NOTE YOUR TABLE ON PAGE 5 DISCLOSES
A BREAKDOWN OF THE $13.7 MILLION PRIOR YEAR CLAIM DEVELOPMENT DURING 2005. IT
APPEARS THIS LOSS DEVELOPMENT DISCLOSURE WOULD BE MORE MEANINGFUL BASED ON YOUR
LINES OF BUSINESS INSTEAD OF TYPES OF INSURANCE. IN ADDITION, PLEASE QUANTIFY
AND EXPLAIN THE REASONS FOR YOUR CHANGE IN ESTIMATE FOR LOSSES AND LOSS EXPENSE
BY LINE OF BUSINESS:

1. IDENTIFY AND DESCRIBE IN REASONABLE SPECIFICITY THE NATURE AND
EXTENT OF A) NEW EVENTS THAT OCCURRED OR B) ADDITIONAL
EXPERIENCE/INFORMATION OBTAINED SINCE THE LAST REPORTING DATE THAT LED
TO THE CHANGE IN ESTIMATES.

2. ENSURE YOUR DISCLOSURE CLARIFIES THE TIMING OF THE CHANGE IN
ESTIMATE SUCH AS WHY RECOGNITION OCCURRED IN THE PERIODS THAT IT DID
AND WHY RECOGNITION IN EARLIER PERIODS WAS NOT REQUIRED.

RESPONSE:
The disclosures referred to on page 5, as well as much of the data provided on
pages 4 through 11, provide an extensive amount of information regarding loss
and loss expense reserve development. To the extent that any development at the
line of business level may be meaningful, we have always included such
disclosure in this discussion. However, rarely does the development of any
single line of business warrant special treatment because of the consistency of
the Company's loss reserving history.

We have, however, expanded certain of our disclosures, which are currently
included in the table presented on Page 5, to separate loss developments among
(1) retrospectively rated policies, (2) other directly produced business, (3)
reinsurance assumed and (4) involuntary residual markets. Management considers
this information to be more important to readers than a line of business
approach because:

o Loss development on retrospectively rated policies does not result in a
one-to-one impact on underwriting income, as reserve savings or
deficiencies are partially reflected in return or additional premiums
which are recognized concurrently with the changes in loss expense.

o Developments on reinsurance assumed and residual market business are
fundamentally different from those on directly-produced business because
the primary loss reserving process is performed by the ceding reinsurers
or the state pools, not by the Company.

The change in estimate, totaling $13.7 million in savings, which the Company
recorded during 2005 on reserves outstanding at December 31, 2004, resulted
principally from the settlement of claims at amounts lower than their case
reserves and the resultant impact on the allocation of IBNR to earlier policy
years. The majority of the savings ($8.0 million) related to
retrospectively-rated policies and was accompanied by a return premium to
policyholders of approximately $5.3 million. (The disclosure immediately
following the table on Page 5 was designed to inform the reader that the entire
$13.7 million savings did not have full impact on net income.) The remainder of
the developed savings ($5.7 million) included a combined $.7 million savings
from reinsurance assumed and involuntary residual markets which are reflective
of reserves determined by ceding reinsurers and state pools and are not directly
determined by Company reserving processes. As noted on Page 9, environmental
losses are separated because of the unique aspects to these losses which are
largely mandated by the courts and are reflective of actual coverage provided in
the Company's insurance contracts. As such, reserving for these losses is
subject to more variability than more routine losses. The remaining $4.5 million
of savings, or approximately 2.2% of the December 31, 2004 net loss reserves, is
not considered by management to be a significant revision to the provision for
loss and LAE reserves. Further, this small savings did not result from a change
in the Company's basic assumptions with respect to loss reserving.

We have attempted to fully explain all of the concepts surrounding our loss
reserve disclosures in Item 1. Business by explaining the unique characteristics
of our products, including high limits provided on fleet trucking and small
fleet policies and presenting loss development data in various ways on pages 3
through 11 of this section. In the paragraph immediately following the

table on Page 5, we discus the reasons for the expanded disclosure, described
above, and make the statement "All major product groups produced redundancies
during each of the years 2005, 2004 and 2003 with the exception of reinsurance
assumed and small business worker's compensation in 2003." It should be noted
that the 2003 Form10-K included expanded disclosures regarding the deficiencies
developed on reinsurance assumed and small business workers' compensation in
that year and these disclosures were repeated to a large degree in the 2004
filing.

Management believes that current disclosures with respect to loss development
are adequate to provide readers with a detailed understanding of the reasons for
such development. As in the past, should any single line of business or other
event produce an unusual level of positive or negative development in the
future, appropriate disclosures will be provided to fully explain the underlying
circumstances.

QUESTION 1 E. PLEASE IDENTIFY AND DESCRIBE THOSE KEY ASSUMPTIONS THAT MATERIALLY
AFFECT THE ESTIMATE OF THE RESERVE FOR LOSS AND LOSS ADJUSTMENT EXPENSES. IN
ADDITION PLEASE DISCLOSE THE FOLLOWING:

1. FOR EACH OF YOUR KEY ASSUMPTIONS QUANTIFY AND EXPLAIN WHAT CAUSED
THEM TO CHANGE FROM THE ASSUMPTIONS USED IN THE IMMEDIATELY PRECEDING
PERIOD. PLEASE NOTE THAT THIS DISCUSSION SHOULD SUPPLEMENT, RATHER THAN
DUPLICATE THE DISCLOSURE PROVIDED RESPONSIVE TO INDUSTRY GUIDE 6.

2. EXPLICITLY IDENTIFY AND DISCUSS KEY ASSUMPTIONS AS OF DECEMBER 31,
2005 THAT ARE PREMISED ON FUTURE EMERGENCE THAT ARE INCONSISTENT WITH
HISTORICAL LOSS RESERVE DEVELOPMENT PATTERNS AND EXPLAIN WHY THESE
ASSUMPTIONS ARE NOW APPROPRIATE GIVEN THE INCONSISTENCY IDENTIFIED.

RESPONSE:
Reference is made to the answer to Item 1b for a detailed description of the
Company's reserving process. In establishing loss and loss expense reserves,
management does not believe that there are explicit key assumptions that are
changed as part of the calculations that would result in direct changes to the
determined reserves. The majority of the Company's net loss and loss expense
reserves relate to known losses and, as discussed in our response to Question 1
b., above, these reserves are established by experienced claims supervisors
responsive to the specific facts and circumstances surrounding each loss event.
As disclosed on page 6 of the Company's Form 10-K at December 31, 2005, "the
Company has not altered any of the key assumptions used in the reserving process
since the mid-1980's and this process has proven to be fully adequate with no
overall deficiencies developed since 1985".

None of the Company's key assumptions with respect to loss and LAE reserves are
premised on future emergence that would be inconsistent with historical loss
development patterns.

QUESTION 1 F. IN ORDER TO SHOW INVESTORS THE POTENTIAL VARIABILITY IN THE MOST
RECENT ESTIMATE OF YOUR LOSS RESERVES, QUANTIFY AND PRESENT PREFERABLY IN A
TABULAR FORMAT THE IMPACT THAT REASONABLY LIKELY CHANGES IN THE KEY ASSUMPTIONS
IDENTIFIED HAVE ON REPORTED RESULTS, FINANCIAL

POSITION AND LIQUIDITY. EXPLAIN WHY MANAGEMENT BELIEVES THE SCENARIOS QUANTIFIED
ARE REASONABLY LIKELY.

RESPONSE:
The Company does not compute ranges of likely loss reserve estimates. Management
uses consistent, seasoned techniques and the experienced judgment of its
long-tenured executives to determine what it considers to be the best estimate
of the Company's loss and loss expense reserve needs at each reporting period.
As such, we are unable to provide any meaningful estimate of potential
variability in reserves.

QUESTION 2. PLEASE DISCUSS AND QUANTIFY THE EFFECT THAT YOUR CEDED REINSURANCE
ACTIVITIES HAD ON FINANCIAL POSITION, RESULTS OF OPERATIONS, AND CASH FLOWS FOR
THE PERIODS PRESENTED. ALSO DISCUSS CHANGES YOU HAVE MADE TO YOUR PAST
REINSURANCE STRATEGIES IN DEVELOPING YOUR CURRENT STRATEGIES AND THE EXPECTED
EFFECT THAT THOSE CHANGES MAY HAVE ON YOUR FINANCIAL POSITION, RESULTS OF
OPERATIONS AND CASH FLOWS. DESCRIBE ANY LIMITATIONS ON YOUR ABILITY TO CEDE
FUTURE LOSSES ON A BASIS CONSISTENT WITH HISTORICAL RESULTS AND THEIR EXPECTED
EFFECT ON FINANCIAL POSITION, OPERATING RESULTS AND CASH FLOWS. SUCH LIMITATIONS
COULD RELATE TO CHANGES IN REINSURANCE MARKET CONDITIONS, A RESTRUCTURING OF
YOUR REINSURANCE TREATIES OR THE ABSENCE OF REMAINING LIMITS FOR SPECIFIC
ACCIDENT YEARS UNDER EXISTING TREATIES.

RESPONSE:
Because of the high limits provided by the Company to its insureds, we are heavy
users of reinsurance, primarily for our fleet trucking operations. As discussed
in further detail below, management believes that this fact is adequately
disclosed and discussed in our MD&A as well as in the financial statements and
notes thereto.

On the face of the balance sheet, we disclose the total reinsurance recoverable
on paid and unpaid claims of $191,440. The unpaid portion of this receivable,
$188,143, is disclosed in Note C to the audited financial statements and is also
included in the applicable disclosures regarding total loss and loss expense
reserves outstanding. Thus, the significance that reinsurance bears to gross
loss reserves at December 31, 2005 and the significance of reinsurance
recoverable to shareholders equity can be readily determined by readers directly
from the balance sheets.

Management believes that the collectability of the reinsurance recoverable
asset, as of the most recent balance sheet date, is the most important
reinsurance related factor affecting the Company's financial position.
Disclosures regarding the importance of reinsurance ceded and the status of
reinsurance recoverable are included throughout the Form 10-K, as follows:

Page 16 - Item 1A. RISK FACTORS, third bullet point.

Page 26 - Critical Accounting Policies, Reinsurance Recoverable - here
we discuss the reasons for the use of reinsurance and the
importance of reinsurance to our operations and financial
position.

Page 46 - Note F to the audited financial statements - Reinsurance

Page 52 - Note M to the audited financial statements -Concentrations
of Credit Risk - 3rd and 4th paragraphs.

For the three years ended December 31, 2005, reinsurance ceded transactions were
as follows:

2005 2004 2003
---------- ---------- ----------

Premium ceded (reduction to premium earned) $39,652 $78,596 $73,501
Losses ceded (reduction to losses incurred) 39,389 103,579 96,592
Commissions from reinsurers
(reduction to operating expense) 7,806 20,458 20,099

The premium and loss information shown above is presented in Note F to the
audited financial statements and the commission information is presented in Note
H to the audited financial statements. From this data and the information
provided in the Consolidated Statements of Cash Flow, management believes that
the significance of reinsurance to the Company's financial position, results of
operations and cash flow has been adequately disclosed to the readers.

The Company has disclosed its reinsurance strategies in Item 1. Business, on
page 4 of the Form 10-K. We believe that this discussion is appropriate and
adequate. In future filings, we will reference this discussion in our disclosure
of Critical Accounting Policies. To aid in your review, the disclosure from Item
1. Business on page 4 is presented below.

For policies inforce at December 31, 2005, the maximum amount for which
Protective insures a trucking risk is $10 million, less the applicable
self-insured retention. For trucking liability policies incepted after June
3, 2005, the maximum limits provided by Protective are $5 million, with the
exception of one insured for which limits of up to $10 million, less
retentions, are provided. Occasionally, limits above $10 million are
provided but are 100% reinsured. Certain coverages, such as workers'
compensation, provide essentially unlimited exposure, although the Company
protects itself to the extent believed prudent through the purchase of
excess reinsurance for these coverages. After giving effect to current
treaty reinsurance arrangements Protective's maximum exposure to loss from
a single occurrence is approximately $2.3 million for the majority of risks
insured although, for certain losses, Protective's maximum exposure could
be as high as $3.9 million for a single occurrence. Reinsurance agreements
effective since June 3, 2004 include provisions for aggregate deductibles
that must be exceeded before the Company can recover under the terms of the
treaties. The Company retains a higher percentage of the direct premium
(and, therefore, cedes less premium to reinsurers) in consideration of
these deductible provisions. 2005 and 2004 net premium earned and losses
incurred each include $11,607 and $2,278, respectively, related to such
deductible provisions. Protective has revised its treaty arrangements
several times in prior years in response to changing market conditions. The
current treaty arrangements are effective until June 3, 2006 and cover the
entire policy period for all business written through that date. Treaty
renewals are expected to occur annually in the foreseeable future. During
the past ten years, Protective's maximum exposure to a single occurrence
has ranged from less than $100,000 to current levels, as discussed above.
Because Protective has, in the past, written multiple year policies and
because losses from trucking business take years to develop, losses
reported in the current year may be covered by a number of older
reinsurance treaties with higher or lower loss retention by Protective than
those provided by current treaty provisions.

Regarding the Company's ability to cede future losses, management does not
believe that it is possible to specifically describe limitations on our ability
to cede future losses since this is dependent on a wide range of factors
influencing the pricing available in the fleet trucking market and the
availability of reasonably priced reinsurance for this high limit business, all
of which are future events not known to the Company. We would be happy to add a
comment to this effect if the staff believes that this would be helpful to
readers.

We have recently renewed our fleet trucking reinsurance treaties on terms and
conditions almost identical to those expiring and these treaties will cover all
polices written through July, 2007. The renewal of these treaties was disclosed
in our second quarter Form 10-Q and will be repeated in our future filings.

********

The undersigned acknowledges that:

o The Company is responsible for the adequacy of the disclosures in its
filings.

o We understand that staff comments or changes to disclosure in response to
staff comments do not foreclose the Commission from taking any action with
respect to the filing.

o The Company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.

I apologize for the lengthy nature of this letter; however, we wanted to be
fully responsive to your inquiry. Should you have any further questions or
require additional information, please contact me at your convenience.

Regards,

/s/ G. PATRICK CORYDON

G. Patrick Corydon
Senior Vice President / C.F.O.

Copy: Otto N. Frenzel III, Audit Committee Chairman
John M. O'Mara
John A. Pigott
Nathan Shapiro
Gary W. Miller, Chairman and CEO
Douglas E. Hunter - Ernst & Young, LLP