Insulating a chimney surround

[mmeyer]

Today I started digging into my chimney surround that was rotting at the bottom. What I found was a leak in the roof that would run down and rotted the bottom on one side of the surround. I also found a bunch of fiberglass insulation poorly installed and underneath the firebox was cellulous insulation that was packed in pretty tight around the bricks that are supporting the fireplace.

My question is, how should I be insulating this to keep it warmer in the winter and what should I be using? I am guessing fiberglass for the walls but what about under it?

Thanks in advance for your help!