EX-99.1 2 ex991.htm OLD REPUBLIC INTERNATIONAL CORPORATION EARNINGS PRESS RELEASE DATED JANUARY 28, 2010 ex991.htm
NEWS BULLETIN
 
For Further Information:
 
AT OLD REPUBLIC:
AT FINANCIAL RELATIONS BOARD:
A.C. Zucaro
Leslie Loyet
  
Chairman & CEO
Analysts/Investors
    
(312) 346-8100
(312) 640-6672
    
 
lloyet@mww.com
    
 
  
 
  
   
FOR IMMEDIATE RELEASE
NYSE:  ORI
THURSDAY, JANUARY 28, 2010
  
 
OLD REPUBLIC REPORTS FOURTH QUARTER AND FULL YEAR 2009 FINANCIAL RESULTS
 
 

CHICAGO – January 28, 2010 – Old Republic International Corporation (NYSE: ORI), today reported the following results for the fourth quarter and full year 2009:
 
Financial Highlights
(Millions, except per share data and percentages in all tables)
     
   
Quarters Ended December 31,
    
Years Ended December 31,
  
   
2009
  
2008
  
Change
    
2009
  
2008
  
Change
  
 
Operating Revenues
$
965.2
  
$
899.7 
 
7.3
%
    
$
3,797.2
  
$
3,724.2
  
2.0
%
  
 
Net Operating Income (Loss)
  
(41.2)
    
(73.1) 
 
43.6
        
(157.2)
    
(188.1)
  
16.4
    
 
Net Income (Loss)
$
(36.7)
  
$
(126.5) 
 
70.9
%
    
$
(99.1)
  
$
(558.3)
  
82.2
%
  
 
Diluted Earnings Per Share:
                                      
 
Net Operating Income (Loss)
$
(0.17)
  
$
(0.31) 
 
45.2
%
    
$
(0.67)
  
$
(0.81)
  
17.3
%
  
 
Net Income (Loss)
$
(0.15)
  
$
(0.54) 
 
72.2
%
    
$
(0.42)
  
$
(2.41)
  
82.6
%
  
                                         
 
Cash Dividends Per Share
$
0.17
  
$
0.17 
 
-
%
    
$
0.68
  
$
0.67
  
1.5
%
  
 
Ending Book Value Per Share
                    
$
16.49
  
$
15.91
  
3.6
%
  
                             
                             
Old Republic experienced further operating difficulties in the quarter and year ended December 31, 2009.  Since mid-year 2007, the most significant declines in operating income have been due to the Company’s mortgage guaranty and other insurance coverages linked to the housing and consumer credit fields.

Full year 2009 mortgage guaranty and consolidated operating results benefited from a GAAP accounting requirement that premiums received for certain, largely non-recurring reinsurance contract terminations (“commutations”), be recognized immediately as income.  As a consequence, 2009 pretax operating earnings benefited by $76.3 million ($49.6 million after tax or $0.21 per share) from such premiums.  Substantially all of these premiums will likely be absorbed by loss costs related to the future years’ risk exposures they are designed to cover.  General insurance performance declined due to a reduction of underwriting profitability among several coverages. At the same time, title operations returned to profitability due to an increase in real estate transactions, growth in market share, and expense control management.


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The net loss for 2009’s final quarter was reduced by post-tax realized investment gains of $4.4 million ($0.02 per share).  For all of 2009, these investment gains, amounting to $58.1 million ($0.25 per share), are related principally to tax credits which could not be recognized previously due to the application of certain accounting rules.  Those rules pertain to the tax treatment of losses from other-than-temporary impairments of investments, most of which originated in the second quarter of 2008.

Consolidated Results – The major components of Old Republic’s consolidated results and other data for the periods reported upon are shown below:
 
 
Quarters Ended December 31,
  
Years Ended December 31,
 
2009
  
2008
  
Change
  
2009
  
2008
  
Change
Operating revenues:
                                  
General insurance
$
507.4
  
$
547.2
  
-7.3
%
  
$
2,052.7
  
$
2,255.9
  
-9.0
%
Mortgage guaranty
  
161.0
    
171.1
  
-5.9
      
746.1
    
690.0
  
8.1
  
Title insurance
  
275.0
    
160.1
  
71.8
      
914.1
    
681.3
  
34.2
  
Corporate and other
  
21.7
    
21.1
  
2.6
      
84.3
    
96.8
  
-12.9
  
Total
$
965.2
  
$
899.7
  
7.3
%
  
$
3,797.2
  
$
3,724.2
  
2.0
%
Pretax operating income (loss):
                                  
General insurance
$
51.7
  
$
71.1
  
-27.2
%
  
$
200.1
  
$
294.3
  
-32.0
%
Mortgage guaranty
  
(125.9)
    
(178.3)
  
29.4
      
(486.4)
    
(594.3)
  
18.2
  
Title insurance
  
1.5
    
(19.3)
  
108.1
      
2.1
    
(46.3)
  
104.7
  
Corporate and other
  
(.2)
    
2.1
  
-112.9
      
4.0
    
13.5
  
-70.1
  
Sub-total
  
(72.9)
    
(124.4)
  
41.4
      
(279.9)
    
(332.7)
  
15.9
  
Realized investment gains (losses):
                                  
From sales
  
14.9
    
(30.2)
          
15.9
    
(4.1)
      
From impairments
  
(8.0)
    
(33.3)
          
(9.5)
    
(482.3)
      
  Net realized investment
                                  
 gains (losses)
  
6.9
    
(63.5)
  
110.9
      
6.3
    
(486.4)
  
101.3
  
Consolidated pretax income (loss)
  
(65.9)
    
(188.0)
  
64.9
      
(273.6)
    
(819.2)
  
66.6
  
Income taxes (credits)
  
(29.2)
    
(61.5)
  
52.5
      
(174.4)
    
(260.8)
  
33.1
  
Net income (loss)
$
(36.7)
  
$
(126.5)
  
70.9
%
  
$
(99.1)
  
$
(558.3)
  
82.2
%

Consolidated underwriting ratio:
                                  
Benefits and claim ratio
73.9
%
  
87.3
%
        
76.7
%
  
81.8
%
      
Expense ratio
44.7
    
39.6
          
41.8
    
39.1
        
Composite ratio
118.6
%
  
126.9
%
        
118.5
%
  
120.9
%
      

Components of diluted
                                  
earnings per share:
                                  
Net operating income (loss)
$
(0.17)
  
$
(0.31)
  
45.2
%
  
$
(0.67)
  
$
(0.81)
  
17.3
%
Net realized investment
                                  
gains (losses)
  
0.02
    
(0.23)
          
0.25
    
(1.60)
      
Net income (loss)
$
(0.15)
  
$
(0.54)
  
72.2
%
  
$
(0.42)
  
$
(2.41)
  
82.6
%
                                   
Cash dividends paid per share
$
0.17
  
$
0.17
  
-
%
  
$
0.68
  
$
0.67
  
1.5
%
                                   


The above table shows both operating and net income (loss) to highlight the effects of realized investment gain or loss recognition and any non-recurring items on period-to-period comparisons. Operating income, however, does not replace net income computed in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) of generally accepted accounting principles (“GAAP”) as a measure of total profitability.

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The recognition of realized investment gains or losses can be highly discretionary and arbitrary due to such factors as the timing of individual securities sales, recognition of estimated losses from write-downs for impaired securities, tax-planning considerations, and changes in investment management judgments relative to the direction of securities markets or the future prospects of individual investees or industry sectors. Likewise, unusual items which may emerge from time to time can distort the comparability of the Company’s results from period to period. Accordingly, management uses net operating income, a non-GAAP financial measure, to evaluate and better explain operating performance, and believes its use enhances an understanding of Old Republic’s basic business results.

General Insurance Results – Pretax operating earnings for the periods reported upon were affected mostly by reduced premium volume and moderately higher claim and expense ratios.  The following table shows these effects:

 
General Insurance Group
 
Quarters Ended December 31,
  
Years Ended December 31,
 
2009
  
2008
  
Change
  
2009
  
2008
  
Change
Net premiums earned
$
437.6
  
$
481.8
  
-9.2
%
  
$
1,782.5
  
$
1,989.3
  
-10.4
%
Net investment income
  
67.1
    
64.4
  
4.2
      
258.9
    
253.6
  
2.1
  
Pretax operating income (loss)
$
51.7
  
$
71.1
  
-27.2
%
  
$
200.1
  
$
294.3
  
-32.0
%

Claim ratio
77.1
%
  
73.7
%
      
76.3
%
  
73.0
%
    
Expense ratio
25.0
    
24.1
        
25.8
    
24.2
      
Composite ratio
102.1
%
  
97.8
%
      
102.1
%
  
97.2
%
    


Earned premiums for the large majority of insurance coverages continued to trend lower throughout 2009. As in the recent past, premium growth has been constrained by the combination of a moderately declining rate environment during the past three years or so, and by recessionary economic conditions. These conditions affect such factors as sales and employment levels, both of which are important elements upon which premiums are based.

General insurance investment income trends benefited from greater invested asset balances.

Overall claim ratios continued to trend moderately higher in 2009’s fourth quarter and for the year as a whole. 2009 claim experience for the consumer credit indemnity (“CCI”) coverage in particular remained at high levels, adding approximately 7.9 and 7.3 percentage points to the above claim ratios for the fourth quarter and year 2009, respectively. By comparison, CCI claim experience in the same quarter and year 2008 raised general insurance claim ratios by 4.1 and 6.1 percentage points, respectively. Aggregate claim experience for other coverages, however, remained relatively consistent. Production and general operating expenses edged up slightly in 2009 as the expense reduction lagged a larger drop in earned premiums.

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Mortgage Guaranty Results – 2009 mortgage guaranty operating results benefited from the non-recurring captive reinsurance premiums receipts noted above. Key indicators of this segment’s evolving performance are shown in the following table:
 
 
Mortgage Guaranty Group
 
Quarters Ended December 31,
  
Years Ended December 31,
 
2009
  
2008
  
Change
  
2009
  
2008
  
Change
Net premiums earned
$
136.0
  
$
147.2
  
-7.6
%
  
$
644.5
  
$
592.5
  
8.8
%
Net investment income
  
23.5
    
21.8
  
7.5
      
92.0
    
86.8
  
5.9
  
Pretax operating income (loss)
$
(125.9)
  
$
(178.3)
  
29.4
%
  
$
(486.4)
  
$
(594.3)
  
18.2
%

Claim ratio
195.8
%
  
220.5
%
      
176.0
%
  
199.3
%
    
Expense ratio
12.8
    
15.4
        
12.6
    
15.7
      
Composite ratio
208.6
%
  
235.9
%
      
188.6
%
  
215.0
%
    

Absent the aforementioned effect of the reinsurance commutations, mortgage guaranty earned premiums declined in each of this year’s quarterly periods. The lower premium levels resulted mostly from the more selective underwriting criteria applied since late 2007, from an overall decline in the industry’s business penetration, and from higher premium refunds related to claim rescissions. These factors were attenuated somewhat by relatively high persistency levels for business produced in prior years, and by a continuing decline in premiums ceded to lender-owned (captive) reinsurance companies.

During 2009’s third quarter, Old Republic’s Mortgage Guaranty Group entered into reinsurance termination agreements (“commutations”) with four lender-owned captive reinsurers.  As part of the transactions, the Company received reinsurance premiums of $82.5 million to cover losses expected to occur after the contract termination date.  Under GAAP, these reinsurance commutations have been treated as the termination of risk transfer reinsurance arrangements rather than transactions in which the Company takes on new or additional insurance risk.  As a result of this GAAP characterization, the premiums received have been booked as current income rather than being deferred and subsequently recognized in the future periods during which the related risk will exist and expected claims will occur.  The Company estimates that substantially all of these premiums will likely be absorbed by related claim costs thus negating the current appearance of a gain from the transactions.  In the above table, the up front recognition of the $82.5 million of premiums also has the effect of portraying an increase in 2009’s net premiums earned of 8.8%, whereas their exclusion through deferral to future at risk periods would have shown an  actual  4.1% decline.  As a further consequence of this GAAP premium recognition methodology the 2009 loss ratio dropped from 199.6% to 176.0%, and the 2009 pretax operating loss was reduced from $562.7 million to $486.4 million.  Excluding these premium recognition effects, quarterly claim ratios throughout 2009 averaged 199.7% versus a comparable average of 199.3% for 2008.  Greater claim rescissions and a moderate decline in expected claim severity during 2009 offset to some degree the impact on claim reserve provisions of a continued uptrend in reported delinquent loans.  The components of incurred mortgage guaranty claim ratios are shown in the following table.

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Mortgage Guaranty Group
 
Quarters Ended
  
Years Ended
 
December 31,
  
December 31,
 
2009
  
2008
  
2009
  
2008
Incurred claim ratio from:
                      
Paid claims
110.7
%
  
99.5
%
  
97.0
%
  
74.8
%
Claim reserve provisions
76.5
    
121.0
    
102.6
    
124.5
  
        Effect of commutations
8.6
    
-
    
-23.6
    
-
  
   Total
195.8
%
  
220.5
%
  
176.0
%
  
199.3
%

Production and operating expense ratios for all periods reported upon reflect continued success in expense management.  Net investment income trended up throughout 2009 as a result of an invested asset base enhanced by positive operating cash flow generated primarily by income tax related asset recoveries and funds received in the above noted reinsurance commutations.

Title Insurance Results – In 2009 Old Republic’s title insurance business turned slightly profitable for the first time since 2006. Key operating performance indicators are shown in the following table:

 
Title Insurance Group
 
Quarters Ended December 31,
  
Years Ended December 31,
 
2009
  
2008
  
Change
  
2009
  
2008
  
Change
Net premiums and fees earned
$
267.8
  
$
154.0
  
73.9
%
  
$
888.4
  
$
656.1
  
35.4
%
Net investment income
  
6.9
    
6.0
  
14.4
      
25.2
    
25.1
  
0.2
  
Pretax operating income (loss)
$
1.5
  
$
(19.3)
  
108.1
%
  
$
2.1
  
$
(46.3)
  
104.7
%

Claim ratio
8.6
%
  
7.0
%
      
7.9
%
  
7.0
%
    
Expense ratio
92.5
    
109.1
        
93.8
    
103.6
      
Composite ratio
101.1
%
  
116.1
%
      
101.7
%
  
110.6
%
    

Growth in title premiums and fees for 2009 resulted mostly from greater refinance transactions earlier in the year and from market share gains taken from title industry dislocations and consolidations. Claim costs rose at a quicker pace, however, as the Company added moderately to reserve provisions in consideration of recent claim emergence trends. Production and general operating expenses, while relatively lower as a percentage of premium and fees revenues, rose dollar-wise in reflection of greater personnel and other production costs related to the higher revenues attained and anticipated.

Corporate and Other Operations – The Company’s small life and health insurance business and the net costs associated with the parent holding company and internal services subsidiaries produced a much lower operating gain in 2009. Period-to-period variations in the results of these relatively minor elements of Old Republic’s operations usually stem from the volatility inherent to the small scale of its life and health business, fluctuations in the costs of external debt, and net interest on intra-system financing arrangements.

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Cash, Invested Assets, and Shareholders’ Equity – The following table reflects Old Republic’s consolidated cash and invested assets as well as shareholders’ equity at the dates shown:
       
December 31,
       
2009
  
2008
  
Change
Cash and invested assets:  Fair value basis
        
$
9,879.0
  
$
8,855.1
  
11.6
%
                                                 Original cost basis
        
$
9,625.9
  
$
9,210.0
  
4.5
%
                         
Shareholders’ equity:           Total
        
$
3,891.4
  
$
3,740.3
  
4.0
%
 Per common share
        
$
16.49
  
$
15.91
  
3.6
%
                         
Composition of shareholders’ equity per share:
                        
Equity before items below
        
$
14.99
  
$
16.10
  
-6.9
%
Unrealized investment gains (losses) and other
                        
accumulated comprehensive income (loss)
          
1.50
    
(0.19)
      
Total
        
$
16.49
  
$
15.91
  
3.6
%

Consolidated cash flow from operating activities amounted to $532.9 million for the year ended 2009 versus $565.6 million for 2008.

The investment portfolio reflects a current allocation of approximately 86 percent to fixed-maturity securities and 5 percent to equities. As has been the case for many years, Old Republic’s invested assets are managed in consideration of enterprise-wide risk management objectives intended to assure solid funding of its subsidiaries’ long-term obligations to insurance policyholders and other beneficiaries, and evaluations of their long-term effect on the stability of capital accounts. The portfolio contains little or no direct insurance risk-correlated asset exposures to real estate, mortgage-backed securities, collateralized debt obligations (“CDO’s”), derivatives, junk bonds, hybrid securities, or illiquid private equity investments. In a similar vein, the Company does not engage in hedging or securities lending transactions, nor does it invest in securities whose values are predicated on non-regulated financial instruments exhibiting amorphous or unfunded counter-party risk attributes.

Substantially all changes in the shareholders’ equity account reflect the Company’s net income or loss, dividend payments to shareholders, and impairments or changes in market valuations of invested assets during the periods shown below:
 
   
Shareholders’ Equity Per Share
   
Years Ended December 31,
   
2009
  
2008
  
2007
Beginning balance
  
$
15.91
  
$
19.71
  
$
18.91
Changes in shareholders’ equity:
                  
Net operating income (loss)
    
(.67)
    
(.81)
    
.98
Net realized investment gains (losses):
                  
From sales
    
.04
    
(.01)
    
.20
From impairments
    
.21
    
(1.59)
    
-
Subtotal
    
.25
    
(1.60)
    
.20
Net unrealized investment gains (losses)
    
1.59
    
(.33)
    
.05
Total realized and unrealized investment gains (losses)
    
1.84
    
(1.93)
    
.25
Cash dividends
    
(.68)
    
(.67)
    
(.63)
Stock issuance, foreign exchange, and other transactions
    
.09
    
(.39)
    
.20
Net change
    
.58
    
(3.80)
    
.80
Ending balance
  
$
16.49
  
$
15.91
  
$
19.71


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Old Republic’s significant investments in the stocks of two leading publicly held mortgage guaranty (“MI”) businesses (MGIC Investment Corp. and The PMI Group) account for a substantial portion of the 2008 realized and unrealized investment losses shown in the above and following tables. Unrealized losses, including losses on securities categorized as other-than-temporarily impaired (“OTTI”), represent the net difference between the most recently established cost and the fair values of the investments at each point in time. The aggregate original and impaired costs, fair value, and latest reported underlying equity values of the aforementioned two mortgage guaranty investments are shown below.
       
December 31,
       
2009
  
2008
Total value of the two MI investments:
Original cost
      
$
416.4
  
$
416.4
 
Impaired cost
        
106.8
    
106.8
 
Fair value
        
130.7
    
82.7
 
Underlying equity(*)
      
$
303.2
  
$
515.9
                     
(*) Underlying equity based on latest reports (which may lag by one quarter) issued by investees.

The above-noted mortgage guaranty holdings were acquired as passive long-term investment additions for a core segment of Old Republic’s business in anticipation of a recovery of the MI industry in 2010. In management’s judgment, the currently depressed market valuations of companies operating in the housing and mortgage-lending sectors of the American economy have been impacted significantly by the cyclical and macroeconomic conditions affecting these sectors, and by the recent dysfunctionality of the banking and mortgage lending industries. For external financial reporting purposes, however, Old Republic uses relatively short time frames in recognizing OTTI adjustments in its income statement. In this context, absent issuer-specific circumstances that would result in a contrary conclusion, all unrealized investment losses pertaining to any equity security reflecting a 20 percent or greater decline for a six month period is considered OTTI. Unrealized losses that are deemed temporary and all unrealized gains are recorded directly as a separate component of the shareholders’ equity account and in the consolidated statement of comprehensive income. As a result of accounting idiosyncrasies, however, OTTI losses recorded in the income statement of one period can not be offset in the income statement of a subsequent period by fair value gains on the previously impaired securities unless the gains are realized through actual sales. Such unrealized fair value gains can only be recognized through direct credits in the shareholders’ equity account and in the consolidated statement of comprehensive income.

2009 Capital Raise - Early in 2009’s second quarter, the Company obtained gross proceeds of $316.25 million through a public offering of 8% convertible Senior Notes due in 2012. The funds were used mostly to enhance the capital base of the general and title insurance segments, and to repay a portion of commercial paper debt previously incurred to strengthen the capital of the mortgage guaranty segment as of year end 2008. Along with the growth oriented capital additions to businesses with good prospects for the long term, the new funds enhance the stability and resiliency of Old Republic’s consolidated capitalization.

Conference Call Information
 
Old Republic has scheduled a conference call at 3:00 p.m. EDT (2:00 p.m. CDT) today, to discuss its fourth quarter and full year 2009 performance and to review major operating trends and business developments. To access this call, please log on to www.oldrepublic.com 15 minutes before the call to download the necessary software.

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Investors may access a replay of the call by dialing 888-203-1112, passcode 4939212, which will be available through February 4, 2010. The replay will also be available on Old Republic International’s website through February 28, 2010.

About Old Republic
 
Chicago-based Old Republic International Corporation is an insurance holding company whose subsidiaries market, underwrite and provide risk management services for a wide variety of coverages primarily in the property & liability, mortgage guaranty, and title insurance fields. One of the nation’s 50 largest publicly owned insurance organizations, Old Republic has assets of approximately $14.19 billion and shareholders’ equity of $3.89 billion or $16.49 per share. Its current stock market valuation is approximately $2.58 billion, or $10.75 per share.

The nature of Old Republic’s business requires that it be managed for the long run. For the 25 years ended in 2009, the Company’s total market return, with dividends reinvested, has grown at a compounded annual rate of 9.7 percent per share. For the same period, the total market return, with dividends reinvested, for the S&P 500 Index has grown at a 10.5 percent annual compound rate. During those years, Old Republic’s shareholders’ equity account, inclusive of cash dividends, has risen at an average annual rate of 11.6 percent per share, and the regular cash dividend has grown at a 10.3 percent annual compound rate. According to the most recent edition of Mergent’s Dividend Achievers, Old Republic is one of just 120 companies, out of 10,000-plus publicly held corporations, that have posted at least 25 consecutive years of annual dividend growth.

     
     
Accompanying Financial Data:
·  
Summary Financial Statements and Common Stock Statistics
·  
Segmented Operating Summary
·  
Segmented Operating Statistics
·  
Notes and Safe Harbor Statement

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Old Republic International Corporation
Financial Summary (Unaudited)
        
   
December 31,
SUMMARY BALANCE SHEETS:
  
2009
  
2008
Assets:
            
Cash and fixed maturity securities
  
$
9,230.9
  
$
8,358.9
Equity securities
    
502.9
    
350.3
Other invested assets
    
145.2
    
145.8
   Cash and invested assets
    
9,879.0
    
8,855.1
Accounts and premiums receivable
    
788.6
    
806.7
Federal income tax recoverable: Current
    
7.3
    
41.0
Reinsurance balances recoverable
    
2,558.0
    
2,448.0
Prepaid federal income taxes
    
221.4
    
463.4
Sundry assets
    
735.4
    
651.7
   Total
  
$
14,190.0
  
$
13,266.0
Liabilities and Shareholders’ Equity:
            
Policy liabilities
  
$
1,223.4
  
$
1,293.0
Benefit and claim reserves
    
7,915.0
    
7,241.3
Federal income tax payable:
Deferred
    
47.5
    
77.3
Debt
    
346.7
    
233.0
Sundry liabilities
    
765.8
    
680.9
Shareholders’ equity
    
3,891.4
    
3,740.3
   Total
  
$
14,190.0
  
$
13,266.0
             

   
Quarters Ended
  
Years Ended
SUMMARY INCOME STATEMENTS:
  
December 31,
  
December 31,
   
2009
  
2008
  
2009
  
2008
Net premiums and fees earned
  
$
860.9
  
$
800.6
  
$
3,388.9
  
$
3,318.1
Net investment income
    
99.5
    
95.0
    
383.5
    
377.3
Other income
    
4.7
    
4.0
    
24.8
    
28.7
Net realized investment gains (losses)
    
6.9
    
(63.5)
    
6.3
    
(486.4)
   Total revenues
    
972.2
    
836.1
    
3,803.6
    
3,237.7
Benefits and claims
    
636.0
    
698.5
    
2,598.9
    
2,715.7
Sales and other expenses
    
402.1
    
325.5
    
1,478.3
    
1,341.2
   Total expenses
    
1,038.2
    
1,024.1
    
4,077.2
    
4,056.9
Pretax income (loss)
    
(65.9)
    
(188.0)
    
(273.6)
    
(819.2)
Income taxes (credits)
    
(29.2)
    
(61.5)
    
(174.4)
    
(260.8)
   Net income (loss)
  
$
(36.7)
  
$
(126.5)
  
$
(99.1)
  
$
(558.3)
                         
COMMON STOCK STATISTICS (a):
                        
Net income (loss):
Basic
  
$
(.15)
  
$
(.54)
  
$
(.42)
  
$
(2.41)
 
Diluted
  
$
(.15)
  
$
(.54)
  
$
(.42)
  
$
(2.41)
Components of earnings per share:
                        
   Basic, net operating income (loss)
  
$
(.17)
  
$
(.31)
  
$
(.67)
  
$
(.81)
   Realized investment gains (losses)
    
.02
    
(.23)
    
.25
    
(1.60)
Basic net income (loss)
  
$
(.15)
  
$
(.54)
  
$
(.42)
  
$
(2.41)
   Diluted, net operating income (loss)
  
$
(.17)
  
$
(.31)
  
$
(.67)
  
$
(.81)
   Realized investment gains (losses)
    
.02
    
(.23)
    
.25
    
(1.60)
Diluted net income (loss)
  
$
(.15)
  
$
(.54)
  
$
(.42)
  
$
(2.41)
Cash dividends on common stock
  
$
.17
  
$
.17
  
$
.68
  
$
.67
Book value per share
              
$
16.49
  
$
15.91
Common shares outstanding:
                        
   Average basic
    
235,913,036
    
233,763,723
    
235,657,425
    
231,484,083
   Average diluted
    
235,913,036
    
233,763,723
    
235,657,425
    
231,484,083
   Actual, end of period
                
235,995,121
    
235,031,776
                         
SUMMARY STATEMENTS OF COMPREHENSIVE INCOME (LOSS):
            
Net income (loss) as reported
  
$
(36.7)
  
$
(126.5)
  
$
(99.1)
  
$
(558.3)
Post-tax net unrealized gains (losses)
    
8.3
    
7.1
    
376.1
    
(78.1)
Other adjustments
    
2.0
    
(49.6)
    
19.3
    
(56.9)
   Net adjustments
    
10.3
    
(42.5)
    
395.4
    
(135.1)
Comprehensive income (loss)
  
$
(26.3)
  
$
(169.0)
  
$
296.3
  
$
(693.4)
                         
 
-more-
 
 
 
 
Old Republic International Corporation
Add 9


Old Republic International Corporation
Segmented Operating Summary (Unaudited)
                                   
 
Net
                          
Pretax
  
Composite
 
Premiums
  
Net
              
Sales &
      
Operating
  
Under-
 
& Fees
  
Investment
  
Other
  
Operating
  
Benefits
  
Other
  
Total
  
Income
  
writing
 
Earned
  
Income
  
Income
  
Revenues
  
& Claims
  
Expenses
  
Expenses
  
(Loss)
  
Ratios
                                   
Quarter Ended December 31, 2009
                                          
                                                     
General
$
437.6
  
$
67.1
  
$
2.6
  
$
507.4
  
$
337.3
  
$
118.3
  
$
455.6
  
$
51.7
  
102.1
%
Mortgage
  
136.0
    
23.5
    
1.4
    
161.0
    
266.4
    
20.6
    
287.0
    
(125.9)
  
208.6
  
Title
  
267.8
    
6.9
    
.2
    
275.0
    
22.9
    
250.5
    
273.4
    
1.5
  
101.1
  
Other
  
19.3
    
1.9
    
.4
    
21.7
    
9.2
    
12.7
    
22.0
    
(.2)
  
             -
  
Consolidated
$
860.9
  
$
99.5
  
$
4.7
  
$
965.2
  
$
636.0
  
$
402.1
  
$
1,038.2
  
$
(72.9)
  
118.6
%
                                                     
Quarter Ended December 31, 2008
                                          
                                                     
General
$
481.8
  
$
64.4
  
$
0.9
  
$
547.2
  
$
355.3
  
$
120.7
  
$
476.1
  
$
71.1
  
97.8
%
Mortgage
  
147.2
    
21.8
    
1.9
    
171.1
    
324.8
    
24.6
    
349.5
    
(178.3)
  
235.9
  
Title
  
154.0
    
6.0
    
             -
    
160.1
    
10.7
    
168.6
    
179.4
    
(19.3)
  
116.1
  
Other
  
17.3
    
2.6
    
1.1
    
21.1
    
7.6
    
11.4
    
19.0
    
2.1
  
             -
  
Consolidated
$
800.6
  
$
95.0
  
$
4.0
  
$
899.7
  
$
698.5
  
$
325.5
  
$
1,024.1
  
$
(124.4)
  
126.9
%
                                                     
                                                     
Year Ended December 31, 2009
                                    
                                                     
General
$
1,782.5
  
$
258.9
  
$
11.1
  
$
2,052.7
  
$
1,360.3
  
$
492.1
  
$
1,852.5
  
$
200.1
  
102.1
%
Mortgage
  
644.5
    
92.0
    
9.5
    
746.1
    
1,134.1
    
98.3
    
1,232.5
    
(486.4)
  
188.6
  
Title
  
888.4
    
25.2
    
.4
    
914.1
    
70.3
    
841.6
    
911.9
    
2.1
  
101.7
  
Other
  
73.3
    
7.2
    
3.6
    
84.3
    
34.1
    
46.1
    
80.2
    
4.0
  
             -
  
Consolidated
$
3,388.9
  
$
383.5
  
$
24.8
  
$
3,797.2
  
$
2,598.9
  
$
1,478.3
  
$
4,077.2
  
$
(279.9)
  
118.5
%
                                                     
Year Ended December 31, 2008
                                    
                                                     
General
$
1,989.3
  
$
253.6
  
$
13.0
  
$
2,255.9
  
$
1,452.3
  
$
509.2
  
$
1,961.5
  
$
294.3
  
97.2
%
Mortgage
  
592.5
    
86.8
    
10.6
    
690.0
    
1,180.7
    
103.6
    
1,284.4
    
(594.3)
  
215.0
  
Title
  
656.1
    
25.1
    
             -
    
681.3
    
45.6
    
681.9
    
727.6
    
(46.3)
  
110.6
  
Other
  
80.1
    
11.6
    
4.9
    
96.8
    
36.8
    
46.3
    
83.2
    
13.5
  
             -
  
Consolidated
$
3,318.1
  
$
377.3
  
$
28.7
  
$
3,724.2
  
$
2,715.7
  
$
1,341.2
  
$
4,056.9
  
$
(332.7)
  
120.9
%
                                                     
                                                     
                                     
                                                     
                                                     
                                                     
                                                     
                                                     
                                                     
                                                     
                                     
                                                     
                                                     
                                                     
                                                     
                                                     
                                                     
                                                     
                                                     



-more-

 
 
 
 
Old Republic International Corporation
Add 10


Old Republic International Corporation
Segmented Operating Statistics
  
   
Quarters Ended
  
Years Ended
  
   
December 31,
  
December 31,
  
   
2009
  
2008
  
2009
  
2008
  
General Insurance:
                          
                           
Benefits and claim ratio
    
77.1%
    
73.7%
    
76.3%
    
73.0%
  
Expense ratio
    
25.0
    
24.1
    
25.8
    
24.2
  
Composite ratio
    
102.1%
    
97.8%
    
102.1%
    
97.2%
  
                           
Paid loss ratio
    
77.0%
    
74.8%
    
75.5%
    
69.9%
  
                           
                           
Mortgage Guaranty:  (see Add 11-15 for additional Segmented Supplemental Operating Statistics)
  
                           
Balance Sheet Leverage Ratios (b):
                          
Risk to Capital Ratio -
                          
Performing risk basis
                
23.1:1
    
18.8:1
  
Total Financial Resources
                          
to Risk Ratio
                
13.0%
    
11.2%
  
                           
Earned premiums:
                          
Direct
  
$
152.5
  
$
172.4
  
$
648.6
  
$
698.4
  
Net
  
$
136.0
  
$
147.2
  
$
644.5
  
$
592.5
  
                           
Claim ratio
    
195.8%
    
220.5%
    
176.0%
    
199.3%
  
Expense ratio
    
12.8
    
15.4
    
12.6
    
15.7
  
Composite ratio
    
208.6%
    
235.9%
    
188.6%
    
215.0%
  
                           
Paid loss ratio
    
115.7%
    
99.5%
    
85.5%
    
74.8%
  
                           
                           
Title Insurance:
                          
                           
Direct orders opened
    
87,855
    
61,094
    
358,935
    
257,743
  
Direct orders closed
    
69,780
    
41,794
    
274,189
    
183,117
  
                           
Reserves to paid losses ratio (b)
                
4.7:1
    
5.4:1
  
                           
Claim ratio
    
8.6%
    
7.0%
    
7.9%
    
7.0%
  
Expense ratio
    
92.5
    
109.1
    
93.8
    
103.6
  
Composite ratio
    
101.1%
    
116.1%
    
101.7%
    
110.6%
  
                           
Paid loss ratio
    
10.0%
    
14.7%
    
8.5%
    
9.2%
  
                           
                           
Consolidated:
                          
                           
Benefits and claim ratio
    
73.9%
    
87.3%
    
76.7%
    
81.8%
  
Expense ratio
    
44.7
    
39.6
    
41.8
    
39.1
  
Composite ratio
    
118.6%
    
126.9%
    
118.5%
    
120.9%
  
                           
Paid loss ratio
    
61.1%
    
67.6%
    
59.2%
    
58.4%
  
                           


-more-

 
 
 
 
Old Republic International Corporation
Add 11


Old Republic International Corporation
Supplemental Segmented Operating Statistics
  
           
   
Year-to-Date
  
2009
  
   
2004
  
2005
  
2006
  
2007
  
2008
  
Q1
  
Q2
  
Q3
  
Q4
  
Year-to-Date
  
Mortgage Guaranty:
                                                              
                                                               
New insurance written:
                                                              
Traditional Primary
  
$
24,749.4
  
$
20,554.5
  
$
17,187.0
  
$
 31,841.7
  
$
20,861.9
  
$
2,212.0
  
$
2,573.2
  
$
1,993.6
  
$
1,120.3
  
$
7,899.2
  
Bulk
    
 4,487.8
    
9,944.3
    
13,716.7
    
10,800.3
    
3.5
    
-
    
-
    
-
    
-
    
-
  
Other
    
     7,324.7
    
        498.2
    
        583.7
    
        901.6
    
1,123.5
    
0.5
    
-
    
-
    
-
    
0.5
  
Total
  
$
36,562.0
  
$
30,997.1
  
$
31,487.5
  
$
 43,543.7
  
$
21,989.0
  
$
2,212.6
  
$
2,573.2
  
$
1,993.6
  
$
1,120.3
  
$
7,899.8
  
                                                               
New Risk Written:
                                                              
Traditional Primary
  
$
6,100.2
  
$
5,112.4
  
$
 4,246.8
  
$
 7,844.5
  
$
4,815.0
  
$
468.4
  
$
542.8
  
$
428.1
  
$
242.3
  
$
1,681.7
  
Bulk
    
        112.4
    
     1,053.1
    
     1,146.6
    
        724.5
    
0.6
    
-
    
-
    
-
    
-
    
-
  
Other
    
          89.9
    
          11.7
    
          12.2
    
          15.2
    
11.8
    
-
    
-
    
-
    
-
    
-
  
Total
  
$
6,302.5
  
$
6,177.4
  
$
 5,405.7
  
$
 8,584.4
  
$
4,827.5
  
$
468.4
  
$
542.8
  
$
428.1
  
$
242.3
  
$
1,681.7
  
                                                               
New Risk Written – Traditional Primary
                                                        
By FICO Score:
                                                              
FICO less than 620
    
9.4%
    
7.9%
    
9.1%
    
8.6%
    
1.4%
    
0.0%
    
0.0%
    
0.0%
    
0.0%
    
0.0%
  
FICO 620 to 680
    
34.7
    
34.4
    
33.5
    
34.4
    
17.2
    
4.0
    
1.1
    
0.3
    
0.2
    
1.5
  
FICO greater than 680
    
54.6
    
56.8
    
56.9
    
56.8
    
81.4
    
96.0
    
98.9
    
99.7
    
99.8
    
98.5
  
Unscored/Unavailable
    
1.3
    
0.9
    
0.5
    
0.2
    
0.0
    
0.0
    
0.0
    
0.0
    
0.0
    
0.0
  
Total
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
  
                                                               
By Loan to Value:
                                                              
LTV 85.0 and below
    
5.8%
    
5.7%
    
5.1%
    
5.6%
    
8.9%
    
11.2%
    
11.5%
    
9.5%
    
7.7%
    
10.4%
  
LTV 85.01 to 90.0
    
37.2
    
41.8
    
38.9
    
30.4
    
41.4
    
50.2
    
51.1
    
53.4
    
53.4
    
51.7
  
LTV 90.01 to 95.0
    
37.0
    
31.2
    
25.6
    
24.9
    
30.2
    
36.8
    
36.4
    
36.1
    
37.3
    
36.6
  
LTV greater than 95.0
    
20.0
    
21.3
    
30.4
    
39.1
    
19.5
    
1.8
    
1.0
    
1.0
    
1.6
    
1.3
  
Total
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
  
                                                               
Full Documentation
    
88.6%
    
80.7%
    
81.9%
    
84.1%
    
95.8%
    
99.9%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
  
ARMS with resets < 5 years
    
13.0%
    
13.8%
    
8.9%
    
4.0%
    
1.2%
    
0.4%
    
0.3%
    
0.5%
    
0.9%
    
0.5%
  
                                                               
Net Risk in Force:
                                                              
Traditional Primary
  
$
15,452.2
  
$
14,711.2
  
$
14,582.1
  
$
18,808.5
  
$
20,463.0
  
$
19,809.1
  
$
19,202.8
  
$
19,279.6
  
$
18,727.9
        
Bulk
    
        834.8
    
     1,758.8
    
     2,471.1
    
     2,539.9
    
2,055.0
    
2,006.8
    
1,941.5
    
1,849.1
    
1,776.7
        
Other
    
        580.9
    
        586.1
    
        578.9
    
        511.1
    
457.0
    
386.7
    
330.3
    
297.5
    
297.2
        
Total
  
$
16,868.0
  
$
17,056.2
  
$
17,632.2
  
$
21,859.5
  
$
22,975.1
  
$
22,202.7
  
$
21,474.6
  
$
21,426.4
  
$
20,801.9
        
                                                               
Persistency:
                                                              
Traditional Primary
    
64.5%
    
65.5%
    
73.1%
    
77.6%
    
83.9%
    
83.3%
    
83.3%
    
83.4%
    
82.8%
        
Bulk
    
55.7%
    
59.5%
    
70.5%
    
73.7%
    
88.4%
    
89.7%
    
90.8%
    
89.3%
    
88.3%
        
                                                               
Risk to Capital Ratio –
                                                              
Performing Risk Basis (b)
    
8.9:1
    
9.3:1
    
9.3:1
    
12.0:1
    
18.8:1
    
18.6:1
    
20.1:1
    
20.9:1
    
23.1:1
        
Total Financial
                                                              
Resources to Risk Ratio (b)
    
 
12.2%
    
 
11.8%
    
 
12.0%
    
 
11.1%
    
11.2%
    
11.8%
    
12.0%
    
12.7%
    
13.0%
        
 
 
-more-
 
 
 
 
Old Republic International Corporation
Add 12


Old Republic International Corporation
Supplemental Segmented Operating Statistics
    
                 
   
Year-to-Date
  
2009
      
   
2004
  
2005
  
2006
  
2007
  
2008
  
Q1
  
Q2
  
Q3
  
Q4
      
Mortgage Guaranty:
                                                              
                                                               
Risk in Force by FICO Scores:
                                                              
Traditional Primary:
                                                              
FICO less than 620
    
8.6%
    
8.3%
    
8.5%
    
8.5%
    
7.0%
    
6.8%
    
6.7%
    
6.6%
    
6.5%
        
FICO 620 to 680
    
31.1
    
31.8
    
32.6
    
33.6
    
30.5
    
30.2
    
29.7
    
29.1
    
28.8
        
FICO greater than 680
    
51.4
    
53.1
    
54.6
    
55.1
    
60.5
    
61.2
    
61.9
    
62.7
    
63.1
        
Unscored/Unavailable
    
8.9
    
6.8
    
4.3
    
2.8
    
2.0
    
1.8
    
1.7
    
1.6
    
1.6
        
Total
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
        
                                                               
Bulk (c):
                                                              
FICO less than 620
    
11.5%
    
21.2%
    
24.1%
    
19.4%
    
18.2%
    
18.0%
    
17.8%
    
17.7%
    
17.6%
        
FICO 620 to 680
    
45.4
    
38.7
    
35.7
    
34.9
    
33.7
    
33.7
    
33.3
    
33.2
    
33.1
        
FICO greater than 680
    
40.9
    
38.7
    
39.8
    
45.4
    
47.9
    
48.1
    
48.7
    
48.9
    
49.2
        
Unscored/Unavailable
    
2.2
    
1.4
    
0.4
    
0.3
    
0.2
    
0.2
    
0.2
    
0.2
    
0.1
        
Total
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
        
Risk in Force by Original LTV Ratio:
                                                        
Traditional Primary:
                                                              
LTV 85.0 and below
    
5.7%
    
5.4%
    
5.0%
    
4.7%
    
5.1%
    
5.2%
    
5.3%
    
5.3%
    
5.3%
        
LTV 85.01 to 90.0
    
36.8
    
37.7
    
37.4
    
34.4
    
35.5
    
35.8
    
36.1
    
36.4
    
36.4
        
LTV 90.01 to 95.0
    
42.0
    
39.1
    
36.0
    
32.0
    
31.6
    
31.4
    
31.4
    
31.5
    
31.6
        
LTV greater than 95.0
    
15.5
    
17.8
    
21.6
    
28.9
    
27.8
    
27.6
    
27.2
    
26.8
    
26.7
        
Total
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
        
                                                               
Bulk (c):
                                                              
LTV 85.0 and below
    
66.4%
    
57.3%
    
63.4%
    
62.0%
    
63.5%
    
64.0%
    
65.6%
    
65.5%
    
65.9%
        
LTV 85.01 to 90.0
    
16.9
    
27.4
    
23.1
    
20.9
    
20.1
    
19.8
    
18.6
    
18.6
    
18.4
        
LTV 90.01 to 95.0
    
12.9
    
11.6
    
9.0
    
9.3
    
8.6
    
8.4
    
7.8
    
7.9
    
7.8
        
LTV greater than 95.0
    
3.8
    
3.7
    
4.5
    
7.8
    
7.8
    
7.8
    
8.0
    
8.0
    
7.9
        
Total
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
        
                                                               
Risk in Force by:
                                                              
Type of Loan Documentation:
                                                              
Traditional Primary:
                                                              
Full Documentation
    
93.2%
    
90.6%
    
89.4%
    
88.0%
    
90.0%
    
90.1%
    
90.4%
    
90.8%
    
91.1%
        
Reduced Documentation
    
6.8%
    
9.4%
    
10.6%
    
12.0%
    
10.0%
    
9.9%
    
9.6%
    
9.2%
    
8.9%
        
                                                               
Bulk (c):
                                                              
Full Documentation
    
34.0%
    
51.9%
    
51.9%
    
49.6%
    
49.1%
    
49.0%
    
49.2%
    
49.5%
    
49.4%
        
Reduced Documentation
    
66.0%
    
48.1%
    
48.1%
    
50.4%
    
50.9%
    
51.0%
    
50.8%
    
50.5%
    
50.6%
        

-more-
 
 
 
 
Old Republic International Corporation
Add 13


Old Republic International Corporation
Supplemental Segmented Operating Statistics
  
               
   
Year-to-Date
  
2009
      
   
2004
  
2005
  
2006
  
2007
  
2008
  
Q1
  
Q2
  
Q3
  
Q4
      
Mortgage Guaranty:
                                                              
                                                               
Risk in Force by Loan Type:
                                                              
Traditional Primary:
                                                              
Fixed Rate & ARMS
                                                              
with resets >= 5 years
    
91.4%
    
90.9%
    
92.3%
    
94.4%
    
95.8%
    
95.8%
    
95.9%
    
96.1%
    
96.3%
        
ARMS with resets < 5 years
    
8.6%
    
9.1%
    
7.7%
    
5.6%
    
4.2%
    
4.2%
    
4.1%
    
3.9%
    
3.7%
        
                                                               
Bulk (c):
                                                              
Fixed Rate & ARMS
                                                              
with resets >= 5 years
    
82.5%
    
64.6%
    
65.7%
    
70.9%
    
74.4%
    
74.8%
    
75.3%
    
75.4%
    
75.4%
        
ARMS with resets < 5 years
    
17.5%
    
35.4%
    
34.3%
    
29.1%
    
25.6%
    
25.2%
    
24.7%
    
24.6%
    
24.6%
        
                                                               
Risk in Force by Policy Year:
                                                              
Traditional Primary:
                                                              
2003 and prior
    
67.0%
    
46.3%
    
33.9%
    
20.9%
    
15.6%
    
14.1%
    
13.6%
    
13.2%
    
12.9%
        
2004
    
33.0
    
25.3
    
18.6
    
11.3
    
8.8
    
8.3
    
8.1
    
7.8
    
7.7
        
2005
          
28.4
    
23.4
    
15.1
    
11.9
    
11.6
    
11.4
    
11.1
    
11.0
        
2006
                
24.1
    
16.4
    
13.0
    
12.8
    
12.4
    
12.1
    
11.9
        
2007
                      
36.3
    
30.1
    
30.1
    
29.4
    
28.7
    
28.3
        
2008
                            
20.6
    
20.8
    
20.4
    
20.1
    
19.8
        
2009
                                  
2.3
    
4.7
    
7.0
    
8.4
        
Total
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
        
                                                               
Bulk (c):
                                                              
2003 and prior
    
87.8%
    
37.1%
    
22.5%
    
12.1%
    
7.4%
    
7.3%
    
7.2%
    
5.9%
    
5.0%
        
2004
    
12.2
    
9.9
    
6.4
    
6.1
    
7.4
    
7.5
    
7.7
    
8.0
    
8.2
        
2005
          
53.0
    
31.1
    
23.4
    
23.5
    
23.6
    
23.6
    
23.9
    
23.9
        
2006
                
40.0
    
40.7
    
43.3
    
43.1
    
42.8
    
43.3
    
43.6
        
2007
                      
17.7
    
18.4
    
18.5
    
18.7
    
18.9
    
19.3
        
2008
                            
0.0
    
0.0
    
0.0
    
0.0
    
0.0
        
Total
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
    
100.0%
        
 
 
-more-

 
 
 
 
Old Republic International Corporation
Add 14

 
Old Republic International Corporation
Supplemental Segmented Operating Statistics
  
               
   
Year-to-Date
  
2009
      
   
2004
  
2005
  
2006
  
2007
  
2008
  
Q1
  
Q2
  
Q3
  
Q4
      
Mortgage Guaranty:
                                                              
                                                               
Risk in Force by State (Top 10 States ranked by risk in force as of most recent quarter):
                                
Traditional Primary:
                                                              
Texas
    
6.6%
    
7.1%
    
7.5%
    
7.7%
    
8.1%
    
8.1%
    
8.3%
    
8.4%
    
8.5%
        
Florida
    
9.1%
    
9.0%
    
9.0%
    
8.9%
    
8.3%
    
8.3%
    
8.2%
    
8.1%
    
8.1%
        
California
    
3.9%
    
3.6%
    
3.1%
    
4.5%
    
5.5%
    
5.7%
    
5.7%
    
5.6%
    
5.5%
        
Georgia
    
6.6%
    
6.3%
    
5.8%
    
5.3%
    
5.2%
    
5.2%
    
5.2%
    
5.2%
    
5.2%
        
Illinois
    
5.5%
    
5.4%
    
5.4%
    
5.2%
    
5.2%
    
5.1%
    
5.1%
    
5.1%
    
5.1%
        
North Carolina
    
4.7%
    
4.7%
    
4.8%
    
4.5%
    
4.4%
    
4.3%
    
4.4%
    
4.5%
    
4.5%
        
Pennsylvania
    
3.6%
    
3.8%
    
4.0%
    
3.8%
    
3.8%
    
3.9%
    
3.9%
    
3.9%
    
4.0%
        
Ohio
    
3.7%
    
3.7%
    
3.7%
    
3.4%
    
3.2%
    
3.1%
    
3.1%
    
3.1%
    
3.2%
        
New Jersey
    
3.1%
    
3.1%
    
3.1%
    
3.1%
    
3.1%
    
3.1%
    
3.1%
    
3.1%
    
3.1%
        
Virginia
    
3.0%
    
2.8%
    
2.8%
    
2.8%
    
2.9%
    
2.9%
    
2.9%
    
2.9%
    
2.9%
        
                                                               
Bulk (c):
                                                              
California
    
18.9%
    
19.0%
    
17.7%
    
17.5%
    
18.2%
    
18.2%
    
17.8%
    
17.8%
    
17.8%
        
Florida
    
8.7%
    
8.3%
    
9.4%
    
9.3%
    
10.0%
    
10.1%
    
10.1%
    
10.3%
    
10.4%
        
Texas
    
4.8%
    
4.5%
    
4.8%
    
4.8%
    
4.6%
    
4.6%
    
4.7%
    
4.7%
    
4.6%
        
New York
    
12.5%
    
6.3%
    
4.6%
    
5.5%
    
5.4%
    
5.4%
    
5.5%
    
5.3%
    
5.4%
        
Illinois
    
3.1%
    
4.9%
    
4.5%
    
4.1%
    
3.9%
    
3.9%
    
3.9%
    
4.0%
    
4.0%
        
Arizona
    
3.0%
    
4.0%
    
4.4%
    
4.2%
    
4.3%
    
4.3%
    
4.2%
    
4.2%
    
4.1%
        
Georgia
    
3.3%
    
3.3%
    
3.6%
    
4.2%
    
4.0%
    
4.0%
    
4.0%
    
4.0%
    
4.0%
        
Ohio
    
2.1%
    
3.6%
    
3.4%
    
3.1%
    
3.1%
    
3.1%
    
3.2%
    
3.2%
    
3.2%
        
Colorado
    
2.3%
    
2.7%
    
2.8%
    
3.0%
    
2.9%
    
3.0%
    
3.0%
    
3.0%
    
3.0%
        
New Jersey
    
6.3%
    
3.8%
    
3.2%
    
3.4%
    
3.4%
    
3.5%
    
3.4%
    
3.4%
    
3.5%
        
                                                               
Delinquent Loan Counts:
                                                              
Traditional Primary
    
      21,737
    
      22,852
    
      20,729
    
      29,749
    
57,879
    
62,905
    
69,390
    
 79,289
    
86,422
        
Bulk
    
        2,951
    
        3,441
    
        4,496
    
      10,572
    
23,574
    
28,832
    
  31,744
    
     34,648
    
37,518
        
Other
    
           513
    
           816
    
           603
    
           567
    
769
    
912
    
937
    
1,156
    
1,388
        
Total
    
      25,201
    
      27,109
    
      25,828
    
      40,888
    
82,222
    
92,649
    
102,071
    
115,093
    
125,328
        
                                                               
Delinquency Rates:
                                                              
Traditional Primary
    
4.1%
    
4.7%
    
4.4%
    
5.5%
    
10.3%
    
11.5%
    
12.9%
    
15.0%
    
16.8%
        
Bulk
    
4.6%
    
3.7%
    
3.3%
    
6.9%
    
17.2%
    
21.7%
    
24.6%
    
27.6%
    
30.8%
        
Other
    
0.3%
    
0.5%
    
0.4%
    
0.7%
    
1.0%
    
1.4%
    
1.8%
    
3.0%
    
3.9%
        
Total
    
3.2%
    
3.6%
    
3.4%
    
5.2%
    
10.6%
    
12.4%
    
14.2%
    
16.7%
    
18.7%
        
 
 
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Old Republic International Corporation
Add 15

 
Old Republic International Corporation
Supplemental Segmented Operating Statistics
  
           
   
Year-to-Date
  
2009
  
   
2004
  
2005
  
2006
  
2007
  
2008
  
Q1
  
Q2
  
Q3
  
Q4
  
Year-to-Date
  
Mortgage Guaranty:
                                                              
                                                               
Delinquency Rates by State (Top 10 States ranked by risk in force as of most recent quarter):
                          
Traditional Primary:
                                                              
Texas
    
5.0%
    
5.7%
    
4.5%
    
4.5%
    
7.1%
    
6.9%
    
7.7%
    
9.2%
    
10.6%
        
Florida
    
3.2%
    
3.1%
    
2.7%
    
7.7%
    
21.9%
    
25.4%
    
27.9%
    
31.2%
    
34.1%
        
California
    
2.1%
    
1.8%
    
2.9%
    
6.7%
    
19.8%
    
23.7%
    
25.3%
    
28.5%
    
30.5%
        
Georgia
    
5.6%
    
5.9%
    
6.1%
    
7.2%
    
11.1%
    
12.1%
    
13.7%
    
16.2%
    
18.8%
        
Illinois
    
3.8%
    
4.2%
    
4.5%
    
5.4%
    
10.8%
    
12.2%
    
14.2%
    
17.1%
    
19.5%
        
North Carolina
    
4.9%
    
4.9%
    
4.6%
    
4.8%
    
7.6%
    
8.0%
    
9.0%
    
10.8%
    
12.3%
        
Pennsylvania
    
4.4%
    
4.7%
    
4.8%
    
5.2%
    
7.7%
    
8.2%
    
9.1%
    
10.6%
    
11.6%
        
Ohio
    
7.6%
    
8.3%
    
7.8%
    
8.1%
    
11.0%
    
11.4%
    
12.5%
    
14.7%
    
16.4%
        
New Jersey
    
4.2%
    
4.1%
    
4.1%
    
5.4%
    
11.4%
    
13.9%
    
15.8%
    
18.9%
    
21.1%
        
Virginia
    
2.1%
    
2.2%
    
2.6%
    
4.1%
    
8.1%
    
9.3%
    
10.7%
    
12.5%
    
13.9%
        
                                                               
Bulk:
                                                              
California
    
1.3%
    
0.9%
    
1.6%
    
7.0%
    
22.4%
    
30.0%
    
34.2%
    
37.5%
    
41.3%
        
Florida
    
2.5%
    
1.9%
    
1.6%
    
7.8%
    
27.0%
    
34.3%
    
38.5%
    
42.5%
    
46.5%
        
Texas
    
6.1%
    
5.5%
    
4.0%
    
5.4%
    
10.2%
    
12.2%
    
13.0%
    
14.5%
    
16.3%
        
New York
    
4.9%
    
4.3%
    
4.4%
    
6.6%
    
13.8%
    
18.0%
    
20.6%
    
23.7%
    
26.8%
        
Illinois
    
5.2%
    
3.0%
    
4.2%
    
8.6%
    
19.1%
    
22.8%
    
27.0%
    
31.3%
    
35.7%
        
Arizona
    
3.6%
    
0.9%
    
1.0%
    
5.1%
    
18.2%
    
25.1%
    
29.8%
    
34.0%
    
37.5%
        
Georgia
    
7.0%
    
5.8%
    
4.4%
    
7.3%
    
16.3%
    
19.5%
    
20.8%
    
23.6%
    
27.6%
        
Ohio
    
13.3%
    
8.4%
    
9.3%
    
10.6%
    
17.1%
    
19.1%
    
19.9%
    
21.1%
    
23.4%
        
Colorado
    
7.1%
    
3.0%
    
3.3%
    
5.8%
    
9.8%
    
11.6%
    
13.1%
    
15.2%
    
17.0%
        
New Jersey
    
3.3%
    
3.7%
    
3.5%
    
6.6%
    
16.0%
    
22.0%
    
25.8%
    
30.0%
    
33.3%
        
                                                               
Average Paid Claim Amount (in whole $):
                                                  
Traditional Primary
  
$
23,920
  
$
24,255
  
$
25,989
  
$
32,214
  
$
43,532
  
$
48,968
  
$
50,212
  
$
45,919
  
$
48,779
  
$
48,492
  
Bulk
  
$
19,885
  
$
20,639
  
$
21,846
  
$
34,951
  
$
56,481
  
$
61,806
  
$
61,270
  
$
59,640
  
$
55,728
  
$
59,386
  
 
 
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Old Republic International Corporation
Add 16

 
Notes to Accompanying Financial Summaries
($ in Millions, Except Share Data)
(a)  All per share statistics herein have been adjusted to reflect all stock dividends or splits declared through December 31, 2009. In calculating book value and earnings per share, accounting rules require that common shares owned by the Company’s Employee Savings and Stock Ownership Plan that are as yet unallocated to participants in the plan be excluded from the calculation. Such shares are issued and outstanding, have the same voting and other rights applicable to all other common shares, and may be sold at any time by the plan.
 
(b)  Old Republic monitors certain balance sheet leverage and trends therein through these ratios with respect to its mortgage guaranty (b – 1 & 2) and title (b – 3) segments:
 
1 - Risk to Capital Ratio – Performing risk basis: This ratio measures the Company’s outstanding net risk in force only on those mortgage loans that are current as to principal and interest in relation to total statutory capital. This ratio therefore excludes non-performing risk exposures (i.e. the outstanding risk on reported loans in default) for which the expected ultimate loss cost has been recognized through the establishment of claim reserves. The Company believes this ratio better matches available statutory capital with the portion of the risk in force for which no claim reserves are required.
 
2 - Total Financial Resources to Risk Ratio: This ratio measures all of the claim resources available to the Company, including statutory capital, and claim and unearned premium reserves in relation to total net risk in force. The Company believes this ratio is conceptually similar to a banking institution’s capital to assets leverage ratio, whereby the non-balance sheet value of a mortgage guaranty insurer’s net risk in force is related to total balance sheet resources available to meet estimated losses from outstanding risk exposures.
 
      3 - The Title Reserves to Paid Losses Ratio represents average paid losses for the most recent five years divided into claim reserves at the end of any one year or interim period. The higher this ratio, the greater is a title insurer’s expected ability to meet obligations to its assureds.
 
    (c)  Bulk pool risk in-force, which represented 46.8% of total bulk risk in-force at December 31, 2009, has been allocated pro-rata based on insurance in-force.

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Old Republic International Corporation
Add 17


Safe Harbor Statement
 
Historical data pertaining to the operating results, liquidity, and other performance indicators applicable to an insurance enterprise such as Old Republic are not necessarily indicative of results to be achieved in succeeding years. In addition to the factors cited below, the long-term nature of the insurance business, seasonal and annual patterns in premium production and incidence of claims, changes in yields obtained on invested assets, changes in government policies and free markets affecting inflation rates and general economic conditions, and changes in legal precedents or the application of law affecting the settlement of disputed and other claims can have a bearing on period-to-period comparisons and future operating results.

Some of the oral or written statements made in the Company’s reports, press releases, and conference calls following earnings releases, can constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Of necessity, any such forward-looking statements involve assumptions, uncertainties, and risks that may affect the Company’s future performance. With regard to Old Republic’s General Insurance segment, its results can be affected, in particular, by the level of market competition, which is typically a function of available capital and expected returns on such capital among competitors, the levels of interest and inflation rates, and periodic changes in claim frequency and severity patterns caused by natural disasters, weather conditions, accidents, illnesses, work-related injuries, and unanticipated external events. Mortgage Guaranty and Title Insurance results can be affected by similar factors, and by changes in national and regional housing demand and values, the availability and cost of mortgage loans, employment trends, and default rates on mortgage loans. Mortgage Guaranty results, in particular, may also be affected by various risk-sharing arrangements with business producers, as well as the risk management and pricing policies of government sponsored enterprises. Life and health insurance earnings can be affected by the levels of employment and consumer spending, variations in mortality and health trends, and changes in policy lapsation rates. At the parent holding company level, operating earnings or losses are generally reflective of the amount of debt outstanding and its cost, interest income on temporary holdings of short-term investments, and period-to-period variations in the costs of administering the Company’s widespread operations.

A more detailed listing and discussion of the risks and other factors which affect the Company’s risk-taking insurance business are included in Part I, Item 1A - Risk Factors, of the Company’s 2008 Form 10-K annual report to the Securities and Exchange Commission, which Item is specifically incorporated herein by reference.

Any forward-looking statements or commentaries speak only as of their dates. Old Republic undertakes no obligation to publicly update or revise any and all such comments, whether as a result of new information, future events or otherwise, and accordingly they may not be unduly relied upon.


For the latest news releases and other corporate documents on Old Republic:
Please write to:
Investor Relations
Old Republic International Corporation
307 North Michigan Avenue
Chicago, IL  60601
312-346-8100
or visit us at www.oldrepublic.com
 
 
 

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