UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended March 31, 2008
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 001-11462
 DELPHI FINANCIAL GROUP, INC.
  Delaware
    
    (302) 478-5142
    
    13-3427277(State or other jurisdiction of
    
    (Registrants telephone number,
    
    (I.R.S. Employer Identificationincorporation or organization)
    
    including area code)
    
    Number)
 1105 North Market Street, Suite 1230, P.O. Box 8985, Wilmington, Delaware
    
    19899(Address of principal executive offices)
    
    (Zip Code)
  þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
  o þ




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##### 



DELPHI FINANCIAL GROUP, INC.
FORM 10-Q
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND OTHER INFORMATION
 PagePART I.
    
    FINANCIAL INFORMATION (UNAUDITED)Item 1. Financial StatementsConsolidated Statements of Income for the Three Months Ended March 31, 2008 and 2007
    
    
    3Consolidated Balance Sheets at March 31, 2008 and December 31, 2007
    
    
    4Consolidated Statements of Shareholders Equity for the Three Months Ended March 31, 2008 and 2007
    
    
    5Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2008 and 2007
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 4. Controls and Procedures
    
    
    19PART II.
    
    OTHER INFORMATIONItem 1A. Risk Factors
    
    
    20Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 6. Exhibits
    
    
    21Signatures
    
    
    22
  -2-




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##### 



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 (Dollars in Thousands, Except Per Share Data)
 (Unaudited)
 Three Months EndedMarch 31,2008
    
    
    2007Revenue:Premium and fee income
    
    $
    342,290
    
    
    $
    322,247Net investment income
    
    
    32,337
    
    
    
    71,303Net realized investment losses
    
    
    (6,436
    )
    
    
    (382
    )Loss on redemption of junior subordinated deferrable interest
debentures underlying company-obligated redeemable capital
securities issued by unconsolidated subsidiaries
    
    
    
    
    
    
    (2,192
    )368,191
    
    
    
    390,976Benefits and expenses:Benefits, claims and interest credited to policyholders
    
    
    242,912
    
    
    
    238,212Commissions
    
    
    21,267
    
    
    
    19,711Amortization of cost of business acquired
    
    
    16,423
    
    
    
    20,892Other operating expenses
    
    
    52,203
    
    
    
    49,948332,805
    
    
    
    328,763Operating income
    
    
    35,386
    
    
    
    62,213Interest expense:Corporate debt
    
    
    4,224
    
    
    
    5,054Junior subordinated debentures
    
    
    3,240
    
    
    
    Junior subordinated deferrable interest debentures underlying company-obligated
redeemable capital securities issued by unconsolidated subsidiaries
    
    
    404
    
    
    
    1,2847,868
    
    
    
    6,338Income before income tax expense
    
    
    27,518
    
    
    
    55,875Income tax expense
    
    
    6,374
    
    
    
    16,681Net income
    
    $
    21,144
    
    
    $
    39,194Basic results per share of common stock:Net income
    
    $
    0.43
    
    
    $
    0.78Diluted results per share of common stock:Net income
    
    $
    0.42
    
    
    $
    0.76Dividends paid per share of common stock
    
    $
    0.09
    
    
    $
    0.08
  -3-




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##### 



DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (Dollars in Thousands, Except Per Share Data)
 March 31,
    
    
    December 31,2008
    
    
    2007Assets:Investments:Fixed maturity securities, available for sale
    
    $
    3,634,611
    
    
    $
    3,691,694Short-term investments
    
    
    436,947
    
    
    
    286,033Other investments
    
    
    767,563
    
    
    
    1,010,1414,839,121
    
    
    
    4,987,868Cash
    
    
    41,429
    
    
    
    51,240Cost of business acquired
    
    
    193,361
    
    
    
    174,430Reinsurance receivables
    
    
    391,955
    
    
    
    402,785Goodwill
    
    
    93,929
    
    
    
    93,929Other assets
    
    
    298,452
    
    
    
    260,602Assets held in separate account
    
    
    118,022
    
    
    
    123,956Total assets
    
    $
    5,976,269
    
    
    $
    6,094,810Liabilities and Shareholders Equity:Future policy benefits:Life
    
    $
    294,151
    
    
    $
    290,775Disability and accident
    
    
    708,001
    
    
    
    688,023Unpaid claims and claim expenses:Life
    
    
    73,657
    
    
    
    69,161Disability and accident
    
    
    353,250
    
    
    
    341,442Casualty
    
    
    989,775
    
    
    
    963,974Policyholder account balances
    
    
    1,109,886
    
    
    
    1,083,121Corporate debt
    
    
    243,750
    
    
    
    217,750Junior subordinated debentures
    
    
    175,000
    
    
    
    175,000Junior subordinated deferrable interest debentures underlying
company-obligated mandatorily redeemable capital
securities issued by unconsolidated subsidiaries
    
    
    20,619
    
    
    
    20,619Other liabilities and policyholder funds
    
    
    812,083
    
    
    
    979,599Liabilities related to separate account
    
    
    118,022
    
    
    
    123,956Total liabilities
    
    
    4,898,194
    
    
    
    4,953,420Shareholders equity:Preferred Stock, $.01 par; 50,000,000 shares authorized, none issued
    
    
    
    
    
    
    Class A Common Stock, $.01 par; 150,000,000 shares authorized;
48,831,865 and 48,717,899 shares issued and outstanding, respectively
    
    
    488
    
    
    
    487Class B Common Stock, $.01 par; 20,000,000 shares authorized;
5,934,183 shares issued and outstanding
    
    
    59
    
    
    
    59Additional paid-in capital
    
    
    515,011
    
    
    
    509,742Accumulated other comprehensive loss
    
    
    (110,843
    )
    
    
    (42,497
    )Retained earnings
    
    
    844,917
    
    
    
    828,116Treasury stock, at cost; 6,796,016 and 6,227,416 shares of Class ACommon
Stock, respectively, and 227,216 shares of Class B Common Stock
    
    
    (171,557
    )
    
    
    (154,517
    )Total shareholders equity
    
    
    1,078,075
    
    
    
    1,141,390Total liabilities and shareholders equity
    
    $
    5,976,269
    
    
    $
    6,094,810
  -4-




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##### 



DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 (Dollars in Thousands)
(Unaudited)
 AccumulatedOtherClass A
    
    
    Class B
    
    
    Additional
    
    
    ComprehensiveCommon
    
    
    Common
    
    
    Paid-in
    
    
    Income
    
    
    Retained
    
    
    TreasuryStock
    
    
    Stock
    
    
    Capital
    
    
    (Loss)
    
    
    Earnings
    
    
    Stock
    
    
    TotalBalance, January 1, 2007
    
    $
    480
    
    
    $
    57
    
    
    $
    474,722
    
    
    $
    19,133
    
    
    $
    763,386
    
    
    $
    (82,970
    )
    
    $
    1,174,808Cumulative effect adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (82,553
    )
    
    
    
    
    
    
    (82,553
    )Adjusted balance, January 1, 2007
    
    
    480
    
    
    
    57
    
    
    
    474,722
    
    
    
    19,133
    
    
    
    680,833
    
    
    
    (82,970
    )
    
    
    1,092,255Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,194
    
    
    
    
    
    
    
    39,194Other comprehensive income:Increase in net unrealized
appreciation on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    331
    
    
    
    
    
    
    
    
    
    
    
    331Decrease in net loss
on cash flow hedge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    196
    
    
    
    
    
    
    
    
    
    
    
    196Change in net periodic
pension cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    268
    
    
    
    
    
    
    
    
    
    
    
    268Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,989Issuance of stock and exercise of
stock options
    
    
    3
    
    
    
    
    
    
    
    12,126
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,129Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,466
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,466Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,933
    )
    
    
    
    
    
    
    (3,933
    )Balance, March 31, 2007
    
    $
    483
    
    
    $
    57
    
    
    $
    488,314
    
    
    $
    19,928
    
    
    $
    716,094
    
    
    $
    (82,970
    )
    
    $
    1,141,906Balance, January 1, 2008
    
    $
    487
    
    
    $
    59
    
    
    $
    509,742
    
    
    $
    (42,497
    )
    
    $
    828,116
    
    
    $
    (154,517
    )
    
    $
    1,141,390Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,144
    
    
    
    
    
    
    
    21,144Other comprehensive loss:Increase in net unrealized
depreciation on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (68,553
    )
    
    
    
    
    
    
    
    
    
    
    (68,553
    )Decrease in net loss
on cash flow hedge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    196
    
    
    
    
    
    
    
    
    
    
    
    196Change in net periodic
pension cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    11Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47,202
    )Issuance of stock and exercise of
stock options
    
    
    1
    
    
    
    
    
    
    
    4,741
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,742Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    528
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    528Acquisition of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,040
    )
    
    
    (17,040
    )Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,343
    )
    
    
    
    
    
    
    (4,343
    )Balance, March 31, 2008
    
    $
    488
    
    
    $
    59
    
    
    $
    515,011
    
    
    $
    (110,843
    )
    
    $
    844,917
    
    
    $
    (171,557
    )
    
    $
    1,078,075
  -5-




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##### 



DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in Thousands)
 (Unaudited)
 Three Months EndedMarch 31,2008
    
    
    2007Operating activities:Net income
    
    $
    21,144
    
    
    $
    39,194Adjustments to reconcile net income to net cash provided
by operating activities:Change in policy liabilities and policyholder accounts
    
    
    92,314
    
    
    
    109,180Net change in reinsurance receivables and payables
    
    
    10,184
    
    
    
    (2,584
    )Amortization, principally the cost of business acquired and investments
    
    
    15,238
    
    
    
    21,692Deferred costs of business acquired
    
    
    (33,115
    )
    
    
    (30,387
    )Net realized losses on investments
    
    
    6,437
    
    
    
    381Net change in federal income tax liability
    
    
    (16,573
    )
    
    
    8,586Other
    
    
    1,899
    
    
    
    (56,787
    )Net cash provided by operating activities
    
    
    97,528
    
    
    
    89,275Investing activities:Purchases of investments and loans made
    
    
    (298,167
    )
    
    
    (408,925
    )Sales of investments and receipts from repayment of loans
    
    
    254,129
    
    
    
    139,880Maturities of investments
    
    
    54,442
    
    
    
    33,727Net change in short-term investments
    
    
    (150,914
    )
    
    
    159,221Change in deposit in separate account
    
    
    790
    
    
    
    (636
    )Net cash used by investing activities
    
    
    (139,720
    )
    
    
    (76,733
    )Financing activities:Deposits to policyholder accounts
    
    
    53,843
    
    
    
    21,866Withdrawals from policyholder accounts
    
    
    (27,698
    )
    
    
    (34,557
    )Borrowings under revolving credit facility
    
    
    29,000
    
    
    
    38,000Principal payments under revolving credit facility
    
    
    (3,000
    )
    
    
    (4,000
    )Redemption of junior subordinated deferrable interest debentures
    
    
    
    
    
    
    (37,728
    )Acquisition of treasury stock
    
    
    (17,040
    )
    
    
    Other financing activities
    
    
    (2,724
    )
    
    
    4,431Net cash provided (used) by financing activities
    
    
    32,381
    
    
    
    (11,988
    )(Decrease) Increase in cash
    
    
    (9,811
    )
    
    
    554Cash at beginning of period
    
    
    51,240
    
    
    
    48,204Cash at end of period
    
    $
    41,429
    
    
    $
    48,758
  -6-




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##### 



DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 Note A  Significant Accounting Policies
  Accounting Changes
 Fair Value Measurements.
     Fair Value Option
 -7-




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##### 



DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Note A  Significant Accounting Policies  (Continued)
 Stock -Based Compensation.
 Recently Issued Accounting Standards
    -8-




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##### 



DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Note B  Investments
   Three Months Ended March 31,2008
    
    
    2007(dollars in thousands)Gross investment income:Fixed maturity securities, available for sale
    
    $
    44,344
    
    
    $
    54,616Mortgage loans
    
    
    3,973
    
    
    
    6,081Short-term investments
    
    
    3,143
    
    
    
    3,949Other
    
    
    (10,897
    )
    
    
    18,50540,563
    
    
    
    83,151Less: Investment expenses
    
    
    (8,226
    )
    
    
    (11,848
    )$
    32,337
    
    
    $
    71,303
 Note C  Fair Value Measurements
     -9-




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##### 



DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Note C  Fair Value Measurements  (Continued)
        March 31, 2008Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3(dollars in thousands)Assets:Fixed maturity securities, available for sale:Mortgage-backed securities
    
    $
    1,049,031
    
    
    $
    
    
    
    $
    1,013,624
    
    
    $
    35,407Corporate securities
    
    
    1,512,629
    
    
    
    
    
    
    
    981,750
    
    
    
    530,879U.S. Treasury and other U.S. Government
guaranteed securities
    
    
    52,502
    
    
    
    24,293
    
    
    
    26,351
    
    
    
    1,858U.S. Government-sponsored enterprise securities
    
    
    22,540
    
    
    
    
    
    
    
    22,540
    
    
    
    Obligations of U.S. states, municipalities
and political subdivisions
    
    
    997,909
    
    
    
    
    
    
    
    997,909
    
    
    
    Other investments
    
    
    211,580
    
    
    
    183,145
    
    
    
    
    
    
    
    28,435Assets held
in separate account
    
    
    118,022
    
    
    
    
    
    
    
    
    
    
    
    118,022Total
    
    $
    3,964,213
    
    
    $
    207,438
    
    
    $
    3,042,174
    
    
    $
    714,601Liabilities:Other liabilities
    
    $
    127,274
    
    
    $
    127,274
    
    
    $
    
    
    
    $
    
 -10-




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##### 



DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Note C  Fair Value Measurements  (Continued)
  Three Months Ended March 31, 2008U.S.Treasury and
    
    
    U.S.Other U.S.
    
    
    Government-
    
    
    
    
    
    
    AssetsMortgage-
    
    
    
    
    
    
    Government
    
    
    sponsored
    
    
    
    
    
    
    Held inbacked
    
    
    Corporate
    
    
    Guaranteed
    
    
    Enterprise
    
    
    Other
    
    
    SeparateTotal
    
    
    Securities
    
    
    Securities
    
    
    Securities
    
    
    Securities
    
    
    Investments
    
    
    Account(dollars in thousands)Balance at beginning of year
    
    $
    1,060,154
    
    
    $
    302,852
    
    
    $
    476,299
    
    
    $
    
    
    
    $
    129,993
    
    
    $
    27,054
    
    
    $
    123,956Total gains or lossesIncluded in earnings
    
    
    (14,784
    )
    
    
    (3,144
    )
    
    
    (6,313
    )
    
    
    
    
    
    
    42
    
    
    
    565
    
    
    
    (5,934
    )Included in other comprehensive loss
    
    
    (43,495
    )
    
    
    (14,059
    )
    
    
    (31,302
    )
    
    
    
    
    
    
    54
    
    
    
    1,812
    
    
    
    Purchases, issuances and settlements
    
    
    (28,837
    )
    
    
    3,468
    
    
    
    93,691
    
    
    
    
    
    
    
    (125,000
    )
    
    
    (996
    )
    
    
    Net transfer in (out) of Level 3
    
    
    (258,437
    )
    
    
    (253,710
    )
    
    
    (1,496
    )
    
    
    1,858
    
    
    
    (5,089
    )
    
    
    
    
    
    
    Balance at end of the period
    
    $
    714,601
    
    
    $
    35,407
    
    
    $
    530,879
    
    
    $
    1,858
    
    
    $
    
    
    
    $
    28,435
    
    
    $
    118,022Net gains (losses) included in earnings attributable
to the net change in unrealized gains or losses or
assets measured at fair value using unobservable
inputs and held at March 31, 2008
    
    $
    
    
    
    $
    
    
    
    $
    (6,281
    )
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 -11-




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##### 



DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Note D  Segment Information
 Three Months EndedMarch 31,2008
    
    
    2007(dollars in thousands)Revenues:Group employee benefit products
    
    $
    348,081
    
    
    $
    356,077Asset accumulation products
    
    
    16,516
    
    
    
    27,693Other (1)
    
    
    10,030
    
    
    
    9,780374,627
    
    
    
    393,550Net realized investment losses
    
    
    (6,436
    )
    
    
    (382
    )Loss on redemption of junior subordinated deferrable
interest debentures underlying the Company obligated
mandatorily redeemable capital securities issued
by unconsolidated subsidiaries
    
    
    
    
    
    
    (2,192
    )$
    368,191
    
    
    $
    390,976Operating income:Group employee benefit products
    
    $
    44,450
    
    
    $
    63,759Asset accumulation products
    
    
    4,051
    
    
    
    8,311Other (1)
    
    
    (6,679
    )
    
    
    (7,283
    )41,822
    
    
    
    64,787Net realized investment losses
    
    
    (6,436
    )
    
    
    (382
    )Loss on redemption of junior subordinated deferrable
interest debentures underlying the Company-obligated
mandatorily redeemable capital securities issued
by unconsolidated subsidiaries
    
    
    
    
    
    
    (2,192
    )$
    35,386
    
    
    $
    62,213
 
 (1)
    
    Primarily consists of operations from integrated disability and absence management services and
certain corporate activities. Note E Comprehensive (Loss) Income
  -12-




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DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Note F  Stock-Based Compensation
     WeightedWeighted
    
    Average
    
    AggregateNumber
    
    Average
    
    Remaining
    
    Intrinsicof
    
    Exercise
    
    Contractual
    
    ValueOptions
    
    Options
    
    Price
    
    Term
    
    ($000)Outstanding at January 1, 2008
    
    
    3,260,251
    
    
    $
    27.15Granted
    
    
    888,027
    
    
    
    29.00Exercised
    
    
    (48,708
    )
    
    
    17.19Forfeited
    
    
    (12,250
    )
    
    
    35.03Outstanding at March 31, 2008
    
    
    4,087,320
    
    
    
    27.65
    
    
    
    6.3
    
    
    $
    17,775Exercisable at March 31, 2008
    
    
    1,960,180
    
    
    $
    21.21
    
    
    
    3.3
    
    
    $
    17,315
   -13-




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##### 



DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Note G Computation of Results per Share
  Three Months EndedMarch 31,2008
    
    
    2007Numerator:Net income
    
    $
    21,144
    
    
    $
    39,194Denominator:Weighted average common shares outstanding
    
    
    49,055
    
    
    
    50,177Effect of dilutive securities
    
    
    1,098
    
    
    
    1,290Weighted average common shares outstanding, assuming dilution
    
    
    50,153
    
    
    
    51,467Basic results per share of common stock:Net income
    
    $
    0.43
    
    
    $
    0.78Diluted results per share of common stock:Net income
    
    $
    0.42
    
    
    $
    0.76
 -14-




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##### 



DELPHI FINANCIAL GROUP, INC.
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Introduction
     -15-




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##### 



Results of Operations
 Summary of Results.
 Premium and Fee Income. .
  -16-




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##### 



Net Investment Income.
 Net Realized Investment Losses.
  Loss on Redemption of Junior Subordinated Deferrable Interest Debentures.
 Benefits and Expenses.
 -17-




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##### 



Interest Expense
 Income Tax Expense.
 Liquidity and Capital Resources
 General.
    Share Repurchase Program.
 Investments.
 -18-




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##### 



Reinsurance.
 Cash Flows
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
  Forward-Looking Statements And Cautionary Statements Regarding Certain Factors That May Affect
Future Results
  -19-




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##### 



PART II. OTHER INFORMATION
 
 Item 1A. Risk Factors
  The market values of the Companys investments fluctuate.
   -20-




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##### 



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 There were no unregistered sales of equity securities during the period covered by this
report.Issuer Purchases of Equity Securities.The following table shows the purchases of registered equity securities under the Companys
existing repurchase program during the three months ended March 31, 2008:
 Total Numberof Shares
    
    MaximumPurchased
    
    Number ofas Part
    
    Shares thatTotal
    
    
    
    
    
    of Publicly
    
    May Yet BeNumber of
    
    Average
    
    Announced
    
    Purchased UnderShares
    
    Price Paid
    
    Plans
    
    the PlansPurchased
    
    per Share
    
    or Programs (1)
    
    or Programs (2)January 1  31, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    February 1  29, 2008
    
    
    568,600
    
    
    $
    29.97
    
    
    
    568,600
    
    
    
    965,200March 1  31, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    Total
    
    
    568,600
    
    
    $
    29.97
    
    
    
    568,600
    
    
    
    965,200
 
 (1)
    
    As of March 31, 2008, the Company had purchased 6,776,252 shares of its Class A Common Stock,
at a total cost of $162.1 million, in the open market and had previously received 19,764 shares
of the Companys Class A Common Stock with an aggregate value of $0.3 million in liquidation of a
partnership interest, resulting in a total number of shares of treasury stock outstanding on such
date of 6,796,016.(2)
    
    On November 7, 2007, the Companys Board of Directors authorized a new share repurchase
program, which replaced the former share repurchase program. Under the new share repurchase
program, the Companys Board of Directors authorized the purchase of 1,500,000 outstanding shares
of the Companys Class A Common Stock from time to time. On February 22, 2008, the Companys
Board of Directors authorized a 1,000,000 share increase in such new share repurchase program
and, on May 7, 2008, the Board authorized a further 1,000,000
share increase in such program. This further increase is not reflected in the above table. The program has
no expiration date. 
 Item 6. Exhibits
 11.1
    
    Computation of Results per Share of Common Stock (incorporated by reference to Note
G to the Consolidated Financial Statements included elsewhere herein)31.1
    
    Certification by the Chairman of the Board and Chief Executive Officer of Periodic
Report Pursuant to Rule 13a-14(a) or 15d-14(a)31.2
    
    Certification by the Senior Vice President and Treasurer of Periodic Report Pursuant to
Rule 13a-14(a) or 15d-14(a)32.1
    
    Certification of Periodic Report Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
 -21-




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##### 



SIGNATURES
  DELPHI FINANCIAL GROUP, INC. (Registrant)/s/ ROBERT ROSENKRANZRobert RosenkranzChairman of the Board and Chief Executive Officer(Principal Executive Officer)/s/ THOMAS W. BURGHARTThomas W. BurghartSenior Vice President and Treasurer(Principal Accounting and Financial Officer)
  -22-