|
UNITED STATES
|
SECURITIES AND EXCHANGE COMMISSION
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Washington, D. C. 20549
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FORM 10-Q
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[x]
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Quarterly report pursuant to section 13 or 15(d) of the Security Exchange Act of 1934
|
|
for the quarterly period ended:
March 31, 2014
or
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|
|
[ ]
|
Transition report pursuant to section 13 or 15(d) of the Security Exchange Act of 1934
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Commission File Number:
|
001-10607
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OLD REPUBLIC INTERNATIONAL CORPORATION
|
(Exact name of registrant as specified in its charter)
|
Delaware
|
|
No. 36-2678171
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(State or other jurisdiction of
|
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(IRS Employer Identification No.)
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incorporation or organization)
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307 North Michigan Avenue, Chicago, Illinois
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|
60601
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(Address of principal executive office)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
o
|
|
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
Class
|
|
Shares Outstanding
March 31, 2014
|
Common Stock / $1 par value
|
|
260,546,465
|
OLD REPUBLIC INTERNATIONAL CORPORATION
|
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|
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Report on Form 10-Q / March 31, 2014
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INDEX
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PAGE NO.
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PART I
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FINANCIAL INFORMATION:
|
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CONSOLIDATED BALANCE SHEETS
|
3
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CONSOLIDATED STATEMENTS OF INCOME
|
4
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
5
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CONSOLIDATED STATEMENTS OF CASH FLOWS
|
6
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
7 - 16
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MANAGEMENT ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS
|
17 - 42
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QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
|
43
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CONTROLS AND PROCEDURES
|
43
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PART II
|
OTHER INFORMATION:
|
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ITEM 1 - LEGAL PROCEEDINGS
|
44
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ITEM 1A - RISK FACTORS
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44
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ITEM 6 - EXHIBITS
|
44
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SIGNATURE
|
45
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EXHIBIT INDEX
|
46
|
Old Republic International Corporation and Subsidiaries
|
|||||||
Consolidated Balance Sheets
|
|||||||
($ in Millions, Except Share Data)
|
|||||||
|
(Unaudited)
|
|
|
||||
|
March 31,
|
|
December 31,
|
||||
|
2014
|
|
2013
|
||||
Assets
|
|
|
|
||||
Investments:
|
|
|
|
||||
Available for sale:
|
|
|
|
||||
Fixed maturity securities (at fair value) (amortized cost: $8,255.9 and $8,477.3)
|
$
|
8,554.6
|
|
|
$
|
8,712.3
|
|
Equity securities (at fair value) (cost: $966.4 and $632.0)
|
1,190.0
|
|
|
1,004.2
|
|
||
Short-term investments (at fair value which approximates cost)
|
1,291.5
|
|
|
1,124.8
|
|
||
Miscellaneous investments
|
21.9
|
|
|
21.6
|
|
||
Total
|
11,058.0
|
|
|
10,863.1
|
|
||
Other investments
|
5.9
|
|
|
5.3
|
|
||
Total investments
|
11,063.9
|
|
|
10,868.5
|
|
||
|
|
|
|
||||
Other Assets:
|
|
|
|
||||
Cash
|
130.2
|
|
|
153.3
|
|
||
Securities and indebtedness of related parties
|
20.2
|
|
|
18.0
|
|
||
Accrued investment income
|
92.0
|
|
|
87.2
|
|
||
Accounts and notes receivable
|
1,288.0
|
|
|
1,190.5
|
|
||
Federal income tax recoverable: Current
|
9.2
|
|
|
114.7
|
|
||
Deferred
|
78.3
|
|
|
48.4
|
|
||
Prepaid federal income taxes
|
20.1
|
|
|
—
|
|
||
Reinsurance balances and funds held
|
179.4
|
|
|
189.2
|
|
||
Reinsurance recoverable: Paid losses
|
69.3
|
|
|
64.9
|
|
||
Policy and claim reserves
|
3,201.0
|
|
|
3,150.8
|
|
||
Deferred policy acquisition costs
|
204.6
|
|
|
192.6
|
|
||
Sundry assets
|
454.1
|
|
|
455.7
|
|
||
Total Other Assets
|
5,747.0
|
|
|
5,665.9
|
|
||
Total Assets
|
$
|
16,811.0
|
|
|
$
|
16,534.4
|
|
|
|
|
|
||||
Liabilities, Preferred Stock, and Common Shareholders' Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Losses, claims, and settlement expenses
|
$
|
9,498.0
|
|
|
$
|
9,433.5
|
|
Unearned premiums
|
1,575.7
|
|
|
1,487.8
|
|
||
Other policyholders' benefits and funds
|
207.1
|
|
|
207.8
|
|
||
Total policy liabilities and accruals
|
11,280.8
|
|
|
11,129.2
|
|
||
Commissions, expenses, fees, and taxes
|
376.9
|
|
|
409.8
|
|
||
Reinsurance balances and funds
|
508.0
|
|
|
441.9
|
|
||
Debt
|
566.2
|
|
|
569.2
|
|
||
Sundry liabilities
|
213.1
|
|
|
209.0
|
|
||
Commitments and contingent liabilities
|
|
|
|
||||
Total Liabilities
|
12,945.2
|
|
|
12,759.4
|
|
||
|
|
|
|
||||
Preferred Stock
(1)
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
Common Shareholders' Equity:
|
|
|
|
||||
Common stock (1)
|
260.5
|
|
|
260.4
|
|
||
Additional paid-in capital
|
674.5
|
|
|
673.9
|
|
||
Retained earnings
|
2,632.8
|
|
|
2,485.3
|
|
||
Accumulated other comprehensive income (loss)
|
319.5
|
|
|
378.2
|
|
||
Unallocated ESSOP shares (at cost)
|
(21.6
|
)
|
|
(23.0
|
)
|
||
Total Common Shareholders' Equity
|
3,865.8
|
|
|
3,775.0
|
|
||
Total Liabilities, Preferred Stock and Common Shareholders' Equity
|
$
|
16,811.0
|
|
|
$
|
16,534.4
|
|
(1)
|
At
March 31, 2014
and
December 31, 2013
, there were
75,000,000
shares of
$0.01
par value preferred stock authorized, of which no shares were outstanding. As of the same dates, there were
500,000,000
shares of common stock,
$1.00
par value, authorized, of which
260,546,465
and
260,462,217
were issued as of
March 31, 2014
and
December 31, 2013
, respectively. At
March 31, 2014
and
December 31, 2013
, there were
100,000,000
shares of Class B Common Stock,
$1.00
par value, authorized, of which no shares were issued.
|
Old Republic International Corporation and Subsidiaries
|
|||||||||||||
Consolidated Statements of Comprehensive Income (
Unaudited
)
|
|||||||||||||
($ in Millions)
|
|||||||||||||
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Quarters Ended
|
||||||||||
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|
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March 31,
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||||||||||
|
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|
2014
|
|
2013
|
||||||
Net Income (Loss) As Reported
|
|
|
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|
$
|
194.4
|
|
|
$
|
56.2
|
|
|
|
|
|
|
|
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|
||||||
Other comprehensive income (loss):
|
|
|
|
|
|
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|
||||||
Unrealized gains (losses) on securities:
|
|
|
|
|
|
|
|
||||||
Unrealized gains (losses) on securities before
|
|
|
|
|
|
|
|
||||||
reclassifications
|
|
|
|
|
106.3
|
|
|
109.0
|
|
||||
Amounts reclassified as realized investment
|
|
|
|
|
|
|
|
||||||
gains from sales in the statements of income
|
|
|
|
|
(191.2
|
)
|
|
(4.5
|
)
|
||||
Pretax unrealized gains (losses) on securities
|
|
|
|
|
(84.9
|
)
|
|
104.5
|
|
||||
Deferred income taxes (credits)
|
|
|
|
|
(29.7
|
)
|
|
36.6
|
|
||||
Net unrealized gains (losses) on securities, net of tax
|
|
|
|
|
(55.1
|
)
|
|
67.9
|
|
||||
Defined benefit pension plans:
|
|
|
|
|
|
|
|
||||||
Net pension adjustment before reclassifications
|
|
|
|
|
—
|
|
|
—
|
|
||||
Amounts reclassified as underwriting, acquisition,
|
|
|
|
|
|
|
|
||||||
and other expenses in the statements of income
|
|
|
|
|
(.4
|
)
|
|
2.9
|
|
||||
Net adjustment related to defined benefit
|
|
|
|
|
|
|
|
||||||
pension plans
|
|
|
|
|
(.4
|
)
|
|
2.9
|
|
||||
Deferred income taxes (credits)
|
|
|
|
|
(.1
|
)
|
|
1.0
|
|
||||
Net adjustment related to defined benefit pension
|
|
|
|
|
|
|
|
||||||
plans, net of tax
|
|
|
|
|
(.3
|
)
|
|
1.8
|
|
||||
Foreign currency translation and other adjustments
|
|
|
|
|
(3.2
|
)
|
|
(3.1
|
)
|
||||
Net adjustments
|
|
|
|
|
(58.7
|
)
|
|
66.6
|
|
||||
Comprehensive Income (Loss)
|
|
|
|
|
|
|
$
|
135.7
|
|
|
$
|
122.8
|
|
Old Republic International Corporation and Subsidiaries
|
||||||||
Consolidated Statements of Cash Flows
(Unaudited)
|
||||||||
($ in Millions)
|
||||||||
|
|
Quarters Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2014
|
|
2013
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
194.4
|
|
|
$
|
56.2
|
|
Adjustments to reconcile net income (loss) to
|
|
|
|
|
||||
net cash provided by operating activities:
|
|
|
|
|
||||
Deferred policy acquisition costs
|
|
(12.2
|
)
|
|
(2.5
|
)
|
||
Premiums and other receivables
|
|
(97.7
|
)
|
|
(49.1
|
)
|
||
Unpaid claims and related items
|
|
45.9
|
|
|
44.8
|
|
||
Unearned premiums and other policyholders' liabilities
|
|
56.7
|
|
|
39.4
|
|
||
Income taxes
|
|
101.9
|
|
|
46.4
|
|
||
Prepaid federal income taxes
|
|
(20.1
|
)
|
|
—
|
|
||
Reinsurance balances and funds
|
|
71.5
|
|
|
28.2
|
|
||
Realized investment (gains) losses
|
|
(191.2
|
)
|
|
(4.5
|
)
|
||
Accounts payable, accrued expenses and other
|
|
(13.7
|
)
|
|
(15.7
|
)
|
||
Total
|
|
135.4
|
|
|
143.2
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
||||
Fixed maturity securities:
|
|
|
|
|
||||
Maturities and early calls
|
|
201.8
|
|
|
279.1
|
|
||
Sales
|
|
498.2
|
|
|
15.8
|
|
||
Sales of:
|
|
|
|
|
||||
Equity securities
|
|
179.7
|
|
|
—
|
|
||
Other - net
|
|
4.3
|
|
|
19.4
|
|
||
Purchases of:
|
|
|
|
|
||||
Fixed maturity securities
|
|
(482.0
|
)
|
|
(441.7
|
)
|
||
Equity securities
|
|
(334.3
|
)
|
|
—
|
|
||
Other - net
|
|
(9.5
|
)
|
|
(9.2
|
)
|
||
Net decrease (increase) in short-term investments
|
|
(166.8
|
)
|
|
64.9
|
|
||
Other - net
|
|
—
|
|
|
(.4
|
)
|
||
Total
|
|
(108.5
|
)
|
|
(72.1
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
Issuance of common shares
|
|
1.0
|
|
|
.5
|
|
||
Redemption of debentures and notes
|
|
(3.0
|
)
|
|
(2.8
|
)
|
||
Dividends on common shares
|
|
(46.9
|
)
|
|
(46.0
|
)
|
||
Other - net
|
|
(1.0
|
)
|
|
(1.3
|
)
|
||
Total
|
|
(50.0
|
)
|
|
(49.7
|
)
|
||
|
|
|
|
|
||||
Increase (decrease) in cash
|
|
(23.1
|
)
|
|
21.3
|
|
||
Cash, beginning of period
|
|
153.3
|
|
|
101.2
|
|
||
Cash, end of period
|
|
$
|
130.2
|
|
|
$
|
122.6
|
|
|
|
|
|
|
||||
Supplemental cash flow information:
|
|
|
|
|
||||
Cash paid (received) during the period for: Interest
|
|
$
|
10.4
|
|
|
$
|
10.4
|
|
Income taxes
|
|
$
|
.6
|
|
|
$
|
(17.7
|
)
|
|
|
|
Quarters Ended
|
||||||||
|
|
|
March 31,
|
||||||||
|
|
|
|
|
2014
|
|
2013
|
||||
Numerator:
|
|
|
|
|
|
|
|
||||
Net income (loss)
|
|
|
|
|
$
|
194.4
|
|
|
$
|
56.2
|
|
Numerator for basic earnings per share -
|
|
|
|
|
|
|
|
||||
income (loss) available to common stockholders
|
|
|
|
|
194.4
|
|
|
56.2
|
|
||
Adjustment for interest expense incurred on
|
|
|
|
|
|
|
|
||||
assumed conversion of convertible notes
|
|
|
|
|
3.6
|
|
|
3.6
|
|
||
Numerator for diluted earnings per share -
|
|
|
|
|
|
|
|
||||
income (loss) available to common stockholders
|
|
|
|
|
|
|
|
||||
after assumed conversion of convertible notes
|
|
|
|
|
$
|
198.0
|
|
|
$
|
59.8
|
|
|
|
|
|
|
|
|
|
||||
Denominator:
|
|
|
|
|
|
|
|
||||
Denominator for basic earnings per share -
|
|
|
|
|
|
|
|
||||
weighted-average shares (a)
|
|
|
|
|
257,933,928
|
|
|
256,279,364
|
|
||
Effect of dilutive securities - stock based
|
|
|
|
|
|
|
|
||||
compensation awards
|
|
|
|
|
1,089,795
|
|
|
364,986
|
|
||
Effect of dilutive securities - convertible senior notes
|
|
|
|
|
35,490,180
|
|
|
35,437,435
|
|
||
Denominator for diluted earnings per share -
|
|
|
|
|
|
|
|
||||
adjusted weighted-average shares
|
|
|
|
|
|
|
|
||||
and assumed conversion of convertible notes (a)
|
|
|
|
|
294,513,903
|
|
|
292,081,785
|
|
||
Earnings per share: Basic
|
|
|
|
|
$
|
.75
|
|
|
$
|
.22
|
|
Diluted
|
|
|
|
|
$
|
.67
|
|
|
$
|
.21
|
|
|
|
|
|
|
|
|
|
||||
Anti-dilutive common stock equivalents
|
|
|
|
|
|
|
|
||||
excluded from earning per share computations:
|
|
|
|
|
|
|
|
||||
Stock based compensation awards
|
|
|
|
|
6,750,559
|
|
|
12,066,638
|
|
||
Convertible senior notes
|
|
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
|
|
|
6,750,559
|
|
|
12,066,638
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair
Value
|
||||||||
Fixed Maturity Securities by Type:
|
|
|
|
|
|
|
|
||||||||
March 31, 2014:
|
|
|
|
|
|
|
|
||||||||
U.S. & Canadian Governments
|
$
|
1,140.8
|
|
|
$
|
35.1
|
|
|
$
|
5.7
|
|
|
$
|
1,170.3
|
|
Tax-exempt
|
129.8
|
|
|
2.8
|
|
|
.4
|
|
|
132.3
|
|
||||
Corporate
|
6,985.1
|
|
|
295.5
|
|
|
28.7
|
|
|
7,251.8
|
|
||||
|
$
|
8,255.9
|
|
|
$
|
333.6
|
|
|
$
|
34.9
|
|
|
$
|
8,554.6
|
|
December 31, 2013:
|
|
|
|
|
|
|
|
||||||||
U.S. & Canadian Governments
|
$
|
1,133.0
|
|
|
$
|
36.7
|
|
|
$
|
8.7
|
|
|
$
|
1,161.1
|
|
Tax-exempt
|
168.1
|
|
|
3.7
|
|
|
.5
|
|
|
171.3
|
|
||||
Corporate
|
7,176.0
|
|
|
268.1
|
|
|
64.3
|
|
|
7,379.8
|
|
||||
|
$
|
8,477.3
|
|
|
$
|
308.7
|
|
|
$
|
73.6
|
|
|
$
|
8,712.3
|
|
|
Amortized
Cost
|
|
Estimated
Fair
Value
|
||||
Fixed Maturity Securities Stratified by Contractual Maturity at March 31, 2014:
|
|
|
|
||||
Due in one year or less
|
$
|
717.6
|
|
|
$
|
726.5
|
|
Due after one year through five years
|
3,732.1
|
|
|
3,937.7
|
|
||
Due after five years through ten years
|
3,609.7
|
|
|
3,686.8
|
|
||
Due after ten years
|
196.4
|
|
|
203.4
|
|
||
|
$
|
8,255.9
|
|
|
$
|
8,554.6
|
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair
Value
|
||||||||
Equity Securities:
|
|
|
|
|
|
|
|
||||||||
March 31, 2014
|
$
|
966.4
|
|
|
$
|
224.1
|
|
|
$
|
.5
|
|
|
$
|
1,190.0
|
|
December 31, 2013
|
$
|
632.0
|
|
|
$
|
372.7
|
|
|
$
|
.5
|
|
|
$
|
1,004.2
|
|
|
12 Months or Less
|
|
Greater than 12 Months
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized Losses
|
|
Fair
Value
|
|
Unrealized Losses
|
|
Fair
Value
|
|
Unrealized Losses
|
||||||||||||
March 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed Maturity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. & Canadian Governments
|
$
|
231.3
|
|
|
$
|
3.1
|
|
|
$
|
72.8
|
|
|
$
|
2.5
|
|
|
$
|
304.1
|
|
|
$
|
5.7
|
|
Tax-exempt
|
5.2
|
|
|
.1
|
|
|
3.3
|
|
|
.2
|
|
|
8.6
|
|
|
.4
|
|
||||||
Corporate
|
1,290.2
|
|
|
18.2
|
|
|
240.6
|
|
|
10.5
|
|
|
1,530.9
|
|
|
28.7
|
|
||||||
Subtotal
|
1,526.7
|
|
|
21.5
|
|
|
316.9
|
|
|
13.3
|
|
|
1,843.7
|
|
|
34.9
|
|
||||||
Equity Securities
|
41.5
|
|
|
.5
|
|
|
—
|
|
|
—
|
|
|
41.5
|
|
|
.5
|
|
||||||
Total
|
$
|
1,568.3
|
|
|
$
|
22.1
|
|
|
$
|
316.9
|
|
|
$
|
13.3
|
|
|
$
|
1,885.3
|
|
|
$
|
35.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed Maturity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. & Canadian Governments
|
$
|
301.7
|
|
|
$
|
8.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
301.7
|
|
|
$
|
8.7
|
|
Tax-exempt
|
10.0
|
|
|
.5
|
|
|
—
|
|
|
—
|
|
|
10.0
|
|
|
.5
|
|
||||||
Corporate
|
2,312.2
|
|
|
60.2
|
|
|
47.7
|
|
|
4.1
|
|
|
2,360.0
|
|
|
64.3
|
|
||||||
Subtotal
|
2,624.0
|
|
|
69.4
|
|
|
47.7
|
|
|
4.1
|
|
|
2,671.8
|
|
|
73.6
|
|
||||||
Equity Securities
|
31.0
|
|
|
.5
|
|
|
—
|
|
|
—
|
|
|
31.0
|
|
|
.5
|
|
||||||
Total
|
$
|
2,655.0
|
|
|
$
|
70.0
|
|
|
$
|
47.7
|
|
|
$
|
4.1
|
|
|
$
|
2,702.8
|
|
|
$
|
74.2
|
|
|
|
Fair Value Measurements
|
||||||||||||||
As of March 31, 2014:
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. & Canadian Governments
|
|
$
|
464.0
|
|
|
$
|
706.3
|
|
|
$
|
—
|
|
|
$
|
1,170.3
|
|
Tax-exempt
|
|
—
|
|
|
132.3
|
|
|
—
|
|
|
132.3
|
|
||||
Corporate
|
|
—
|
|
|
7,241.3
|
|
|
10.5
|
|
|
7,251.8
|
|
||||
Equity securities
|
|
1,189.2
|
|
|
—
|
|
|
.8
|
|
|
1,190.0
|
|
||||
Short-term investments
|
|
$
|
1,287.6
|
|
|
$
|
—
|
|
|
$
|
3.8
|
|
|
$
|
1,291.5
|
|
|
|
|
|
|
|
|
|
|
||||||||
As of December 31, 2013:
|
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. & Canadian Governments
|
|
$
|
478.9
|
|
|
$
|
682.2
|
|
|
$
|
—
|
|
|
$
|
1,161.1
|
|
Tax-exempt
|
|
—
|
|
|
171.3
|
|
|
—
|
|
|
171.3
|
|
||||
Corporate
|
|
—
|
|
|
7,369.3
|
|
|
10.5
|
|
|
7,379.8
|
|
||||
Equity securities
|
|
1,003.4
|
|
|
—
|
|
|
.7
|
|
|
1,004.2
|
|
||||
Short-term investments
|
|
$
|
1,120.5
|
|
|
$
|
—
|
|
|
$
|
4.2
|
|
|
$
|
1,124.8
|
|
|
|
|
Quarters Ended
|
||||||||
|
|
|
March 31,
|
||||||||
|
|
|
|
|
2014
|
|
2013
|
||||
Investment income from:
|
|
|
|
|
|
|
|
||||
Fixed maturity securities
|
|
|
|
|
$
|
75.5
|
|
|
$
|
75.8
|
|
Equity securities
|
|
|
|
|
7.4
|
|
|
3.6
|
|
||
Short-term investments
|
|
|
|
|
.2
|
|
|
.3
|
|
||
Other sources
|
|
|
|
|
.5
|
|
|
.8
|
|
||
Gross investment income
|
|
|
|
|
83.7
|
|
|
80.6
|
|
||
Investment expenses (a)
|
|
|
|
|
.9
|
|
|
1.3
|
|
||
Net investment income
|
|
|
|
|
$
|
82.8
|
|
|
$
|
79.3
|
|
|
|
|
|
|
|
|
|
||||
Realized gains (losses) on:
|
|
|
|
|
|
|
|
||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||
Gains
|
|
|
|
|
$
|
12.4
|
|
|
$
|
.9
|
|
Losses
|
|
|
|
|
—
|
|
|
—
|
|
||
Net
|
|
|
|
|
12.4
|
|
|
.8
|
|
||
|
|
|
|
|
|
|
|
||||
Equity securities & other long-term investments
|
|
|
|
|
178.8
|
|
|
3.7
|
|
||
Total
|
|
|
|
|
191.2
|
|
|
4.5
|
|
||
Income taxes (credits)
|
|
|
|
|
66.9
|
|
|
1.5
|
|
||
Net realized gains (losses)
|
|
|
|
|
$
|
124.3
|
|
|
$
|
2.9
|
|
|
|
|
|
|
|
|
|
||||
Changes in unrealized investment gains (losses) on:
|
|
|
|
|
|
|
|
||||
Fixed maturity securities
|
|
|
|
|
$
|
63.6
|
|
|
$
|
(26.5
|
)
|
Less: Deferred income taxes (credits)
|
|
|
|
|
22.2
|
|
|
(9.2
|
)
|
||
|
|
|
|
|
41.4
|
|
|
(17.2
|
)
|
||
|
|
|
|
|
|
|
|
||||
Equity securities & other long-term investments
|
|
|
|
|
(148.5
|
)
|
|
131.1
|
|
||
Less: Deferred income taxes (credits)
|
|
|
|
|
(51.9
|
)
|
|
45.8
|
|
||
|
|
|
|
|
(96.5
|
)
|
|
85.2
|
|
||
Net changes in unrealized investment gains (losses)
|
|
|
|
|
$
|
(55.1
|
)
|
|
$
|
67.9
|
|
(a)
|
Investment expenses consist of personnel costs and investment management and custody service fees, as well as interest incurred on funds held of
$.1
and
$.5
for the quarters ended
March 31, 2014
and
2013
, respectively.
|
|
|
|
Quarters Ended
|
||||||||
|
|
|
March 31,
|
||||||||
|
|
|
|
|
2014
|
|
2013
|
||||
General Insurance:
|
|
|
|
|
|
|
|
||||
Including CCI run-off business:
|
|
|
|
|
|
|
|||||
Net premiums earned
|
|
|
|
|
$
|
663.2
|
|
|
$
|
608.0
|
|
Net investment income and other income
|
|
|
|
|
89.0
|
|
|
81.7
|
|
||
Total revenues before realized gains or losses
|
|
|
|
|
$
|
752.3
|
|
|
$
|
689.7
|
|
Income (loss) before taxes (credits) and
|
|
|
|
|
|
|
|
||||
realized investment gains or losses (a)
|
|
|
|
|
$
|
64.6
|
|
|
$
|
68.9
|
|
Income tax expense (credits) on above
|
|
|
|
|
$
|
21.1
|
|
|
$
|
22.7
|
|
|
|
|
|
|
|
|
|
||||
All CCI run-off business:
|
|
|
|
|
|
|
|||||
Net premiums earned
|
|
|
|
|
$
|
6.8
|
|
|
$
|
7.8
|
|
Net investment income and other income
|
|
|
|
|
.1
|
|
|
—
|
|
||
Total revenues before realized gains or losses
|
|
|
|
|
$
|
6.9
|
|
|
$
|
7.9
|
|
Income (loss) before taxes (credits) and
|
|
|
|
|
|
|
|
||||
realized investment gains or losses
|
|
|
|
|
$
|
(17.2
|
)
|
|
$
|
(7.1
|
)
|
Income tax expense (credits) on above
|
|
|
|
|
$
|
(6.0
|
)
|
|
$
|
(2.5
|
)
|
|
|
|
|
|
|
|
|
||||
Total excluding all CCI run-off business:
|
|
|
|
|
|||||||
Net premiums earned
|
|
|
|
|
$
|
656.4
|
|
|
$
|
600.2
|
|
Net investment income and other income
|
|
|
|
|
88.9
|
|
|
81.6
|
|
||
Total revenues before realized gains or losses
|
|
|
|
|
$
|
745.3
|
|
|
$
|
681.8
|
|
Income (loss) before taxes (credits) and
|
|
|
|
|
|
|
|
||||
realized investment gains or losses (a)
|
|
|
|
|
$
|
81.8
|
|
|
$
|
76.0
|
|
Income tax expense (credits) on above
|
|
|
|
|
$
|
27.2
|
|
|
$
|
25.3
|
|
|
|
|
|
|
|
|
|
||||
Title Insurance:
|
|
|
|
|
|
|
|
||||
Net premiums earned
|
|
|
|
|
$
|
318.4
|
|
|
$
|
355.1
|
|
Title, escrow and other fees
|
|
|
|
|
75.4
|
|
|
105.4
|
|
||
Sub-total
|
|
|
|
|
393.8
|
|
|
460.5
|
|
||
Net investment income and other income
|
|
|
|
|
7.9
|
|
|
7.2
|
|
||
Total revenues before realized gains or losses
|
|
|
|
|
$
|
401.8
|
|
|
$
|
467.7
|
|
Income (loss) before taxes (credits) and
|
|
|
|
|
|
|
|
||||
realized investment gains or losses (a)
|
|
|
|
|
$
|
4.7
|
|
|
$
|
21.5
|
|
Income tax expense (credits) on above
|
|
|
|
|
$
|
1.9
|
|
|
$
|
7.6
|
|
|
|
|
|
|
|
|
|
||||
RFIG Run-off Business:
|
|
|
|
|
|
|
|
||||
Excluding CCI run-off business:
|
|
|
|
|
|
|
|||||
Net premiums earned
|
|
|
|
|
$
|
58.8
|
|
|
$
|
79.9
|
|
Net investment income and other income
|
|
|
|
|
8.1
|
|
|
9.0
|
|
||
Total revenues before realized gains or losses
|
|
|
|
|
$
|
66.9
|
|
|
$
|
89.0
|
|
Income (loss) before taxes (credits) and
|
|
|
|
|
|
|
|
||||
realized investment gains or losses (a)
|
|
|
|
|
$
|
36.8
|
|
|
$
|
(13.0
|
)
|
Income tax expense (credits) on above
|
|
|
|
|
$
|
12.9
|
|
|
$
|
(4.5
|
)
|
|
|
|
|
|
|
|
|
||||
All CCI run-off business:
|
|
|
|
|
|
|
|
||||
Net premiums earned
|
|
|
|
|
$
|
6.8
|
|
|
$
|
7.8
|
|
Net investment income and other income
|
|
|
|
|
.1
|
|
|
—
|
|
||
Total revenues before realized gains or losses
|
|
|
|
|
$
|
6.9
|
|
|
$
|
7.9
|
|
Income (loss) before taxes (credits) and
|
|
|
|
|
|
|
|
||||
realized investment gains or losses
|
|
|
|
|
$
|
(17.2
|
)
|
|
$
|
(7.1
|
)
|
Income tax expense (credits) on above
|
|
|
|
|
$
|
(6.0
|
)
|
|
$
|
(2.5
|
)
|
|
|
|
|
|
|
|
|
||||
Total RFIG run-off MI and CCI business:
|
|
|
|
|
|||||||
Net premiums earned
|
|
|
|
|
$
|
65.6
|
|
|
$
|
87.7
|
|
Net investment income and other income
|
|
|
|
|
8.3
|
|
|
9.1
|
|
||
Total revenues before realized gains or losses
|
|
|
|
|
$
|
73.9
|
|
|
$
|
96.9
|
|
Income (loss) before taxes (credits) and
|
|
|
|
|
|
|
|
||||
realized investment gains or losses (a)
|
|
|
|
|
$
|
19.5
|
|
|
$
|
(20.2
|
)
|
Income tax expense (credits) on above
|
|
|
|
|
$
|
6.8
|
|
|
$
|
(7.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
|
||||||||
|
|
|
March 31,
|
||||||||
|
|
|
|
|
2014
|
|
2013
|
||||
Consolidated Revenues:
|
|
|
|
|
|
|
|
||||
Total revenues of above Company segments
|
|
|
|
|
$
|
1,221.1
|
|
|
$
|
1,246.5
|
|
Other sources (b)
|
|
|
|
|
33.5
|
|
|
33.5
|
|
||
Consolidated net realized investment gains (losses)
|
|
|
|
|
191.2
|
|
|
4.5
|
|
||
Consolidation elimination adjustments
|
|
|
|
|
(15.3
|
)
|
|
(14.7
|
)
|
||
Consolidated revenues
|
|
|
|
|
$
|
1,430.6
|
|
|
$
|
1,269.9
|
|
|
|
|
|
|
|
|
|
||||
Consolidated Income (Loss) Before Taxes (Credits):
|
|
|
|
|
|
|
|
||||
Total income (loss) before income taxes (credits)
|
|
|
|
|
|
|
|
||||
and realized investment gains or losses of
|
|
|
|
|
|
|
|
||||
above Company segments
|
|
|
|
|
$
|
106.2
|
|
|
$
|
77.3
|
|
Other sources - net (b)
|
|
|
|
|
(.5
|
)
|
|
2.6
|
|
||
Consolidated net realized investment gains (losses)
|
|
|
|
|
191.2
|
|
|
4.5
|
|
||
Consolidated income (loss) before income
|
|
|
|
|
|
|
|
||||
taxes (credits)
|
|
|
|
|
$
|
296.9
|
|
|
$
|
84.5
|
|
|
|
|
|
|
|
|
|
||||
Consolidated Income Tax Expense (Credits):
|
|
|
|
|
|
|
|
||||
Total income tax expense (credits)
|
|
|
|
|
|
|
|
||||
for above Company segments
|
|
|
|
|
$
|
36.0
|
|
|
$
|
25.9
|
|
Other sources - net (b)
|
|
|
|
|
(.4
|
)
|
|
.7
|
|
||
Income tax expense (credits) on consolidated
|
|
|
|
|
|
|
|
||||
net realized investment gains (losses)
|
|
|
|
|
66.9
|
|
|
1.5
|
|
||
Consolidated income tax expense (credits)
|
|
|
|
|
$
|
102.5
|
|
|
$
|
28.3
|
|
|
March 31,
|
|
December 31,
|
||||
|
2014
|
|
2013
|
||||
Consolidated Assets:
|
|
|
|
||||
General Insurance
|
$
|
13,565.0
|
|
|
$
|
13,276.6
|
|
Title Insurance
|
1,173.9
|
|
|
1,185.5
|
|
||
RFIG Run-off Business
|
1,808.7
|
|
|
1,822.3
|
|
||
Total assets for the above company segments
|
16,547.7
|
|
|
16,284.5
|
|
||
Other assets (b)
|
560.0
|
|
|
549.8
|
|
||
Consolidation elimination adjustments
|
(296.7
|
)
|
|
(299.9
|
)
|
||
Consolidated assets
|
$
|
16,811.0
|
|
|
$
|
16,534.4
|
|
(a)
|
Income (loss) before taxes (credits) is reported net of interest charges on intercompany financing arrangements with Old Republic's holding company parent for the following segments: General -
$8.1
and
$7.1
for the quarters ended
March 31, 2014
and
2013
, respectively, and Title -
$1.9
for both quarters ended
March 31, 2014
and
2013
.
|
(b)
|
Represents amounts for Old Republic's holding company parent, minor corporate services subsidiaries, and a small life and accident insurance operation.
|
|
March 31, 2014
|
|
December 31, 2013
|
||||||||||||
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
3.75% Convertible Senior Notes due 2018
|
$
|
550.0
|
|
|
$
|
679.0
|
|
|
$
|
550.0
|
|
|
$
|
684.1
|
|
ESSOP debt with an average yield of 3.66%
|
|
|
|
|
|
|
|
||||||||
and 3.69%, respectively
|
15.0
|
|
|
15.0
|
|
|
18.0
|
|
|
18.0
|
|
||||
Other miscellaneous debt
|
1.1
|
|
|
1.1
|
|
|
1.2
|
|
|
1.2
|
|
||||
Total debt
|
$
|
566.2
|
|
|
$
|
695.2
|
|
|
$
|
569.2
|
|
|
$
|
703.4
|
|
|
|
Carrying
|
|
Fair
|
|
|
||||||||||||||
|
|
Value
|
|
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
March 31, 2014
|
|
$
|
566.2
|
|
|
$
|
695.2
|
|
|
$
|
—
|
|
|
$
|
679.0
|
|
|
$
|
16.2
|
|
December 31, 2013
|
|
$
|
569.2
|
|
|
$
|
703.4
|
|
|
$
|
—
|
|
|
$
|
684.1
|
|
|
$
|
19.2
|
|
OVERVIEW
|
EXECUTIVE SUMMARY
|
Financial Highlights
|
||||||||||||||
|
|
|
|
Quarters Ended March 31,
|
||||||||||
|
|
|
|
|
|
2014
|
|
2013
|
||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
||
General insurance
|
|
|
|
|
|
|
|
$
|
745.3
|
|
|
$
|
681.8
|
|
Title insurance
|
|
|
|
|
|
|
|
|
401.8
|
|
|
|
467.7
|
|
Corporate and other
|
|
|
|
|
|
|
|
|
18.2
|
|
|
|
18.8
|
|
Subtotal
|
|
|
|
|
|
|
|
|
1,165.3
|
|
|
|
1,168.4
|
|
RFIG run-off business
|
|
|
|
|
|
|
|
|
73.9
|
|
|
|
96.9
|
|
Total
|
|
|
|
|
|
|
|
$
|
1,239.3
|
|
|
$
|
1,265.4
|
|
Pretax operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
||
General insurance
|
|
|
|
|
|
|
|
$
|
81.8
|
|
|
$
|
76.0
|
|
Title insurance
|
|
|
|
|
|
|
|
|
4.7
|
|
|
|
21.5
|
|
Corporate and other
|
|
|
|
|
|
|
|
|
(0.5
|
)
|
|
|
2.6
|
|
Subtotal
|
|
|
|
|
|
|
|
|
86.1
|
|
|
|
100.2
|
|
RFIG run-off business
|
|
|
|
|
|
|
|
|
19.5
|
|
|
|
(20.2
|
)
|
Total
|
|
|
|
|
|
|
|
|
105.7
|
|
|
|
79.9
|
|
Realized investment gains (losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
||
From sales
|
|
|
|
|
|
|
|
|
191.2
|
|
|
|
4.5
|
|
From impairments
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
Net realized investment gains (losses)
|
|
|
|
|
|
|
|
|
191.2
|
|
|
|
4.5
|
|
Consolidated pretax income (loss)
|
|
|
|
|
|
|
|
|
296.9
|
|
|
|
84.5
|
|
Income taxes (credits)
|
|
|
|
|
|
|
|
|
102.5
|
|
|
|
28.3
|
|
Net income (loss)
|
|
|
|
|
|
|
|
$
|
194.4
|
|
|
$
|
56.2
|
|
Components of diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Net operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
||
General insurance
|
|
|
|
|
|
|
|
$
|
0.19
|
|
|
$
|
0.17
|
|
Title insurance
|
|
|
|
|
|
|
|
|
0.01
|
|
|
|
0.05
|
|
Corporate and other
|
|
|
|
|
|
|
|
|
0.01
|
|
|
|
0.02
|
|
Subtotal
|
|
|
|
|
|
|
|
|
0.21
|
|
|
|
0.24
|
|
RFIG run-off business
|
|
|
|
|
|
|
|
|
0.04
|
|
|
|
(0.04
|
)
|
Total
|
|
|
|
|
|
|
|
|
0.25
|
|
|
|
0.20
|
|
Net realized investment gains (losses)
|
|
|
|
|
|
|
|
|
0.42
|
|
|
|
0.01
|
|
Net income (loss)
|
|
|
|
|
|
|
|
$
|
0.67
|
|
|
$
|
0.21
|
|
Cash dividends paid per share
|
|
|
|
|
|
|
|
$
|
0.1825
|
|
|
$
|
0.1800
|
|
Ending book value per share
|
|
|
|
|
|
|
|
$
|
14.97
|
|
|
$
|
14.31
|
|
|
|
|
|
|
|
|
|
|
|
General Insurance Group
|
|||||||||
|
|
|
|
Quarters Ended March 31,
|
|||||||||||||||
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
Change
|
|||||||
A. Prior to reclassification/Including CCI run-off business:
|
|
|
|
|
|
|
|
|
|||||||||||
Net premiums earned
|
|
|
|
|
|
|
|
|
|
$
|
663.2
|
|
|
$
|
608.0
|
|
|
9.1
|
%
|
Net investment income
|
|
|
|
|
|
|
|
|
|
|
66.1
|
|
|
|
62.3
|
|
|
6.1
|
|
Benefits and claim costs
|
|
|
|
|
|
|
|
|
|
|
500.9
|
|
|
|
446.5
|
|
|
12.2
|
|
Pretax operating income (loss)
|
|
|
|
|
|
|
|
|
|
$
|
64.6
|
|
|
$
|
68.9
|
|
|
(6.2
|
)%
|
Claim ratio
|
|
|
|
|
|
|
|
75.5
|
%
|
|
73.4
|
%
|
|
|
Expense ratio
|
|
|
|
|
|
|
|
23.4
|
|
|
24.2
|
|
|
|
Composite ratio
|
|
|
|
|
|
|
|
98.9
|
%
|
|
97.6
|
%
|
|
|
Claim ratio
|
|
|
|
|
|
|
|
343.0
|
%
|
|
192.6
|
%
|
|
|
Expense ratio
|
|
|
|
|
|
|
|
10.8
|
|
|
(0.1
|
)
|
|
|
Composite ratio
|
|
|
|
|
|
|
|
353.8
|
%
|
|
192.5
|
%
|
|
|
Claim ratio
|
|
|
|
|
|
|
|
72.7
|
%
|
|
71.9
|
%
|
|
|
Expense ratio
|
|
|
|
|
|
|
|
23.5
|
|
|
24.5
|
|
|
|
Composite ratio
|
|
|
|
|
|
|
|
96.2
|
%
|
|
96.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Title Insurance Group
|
|||||||||
|
|
|
|
Quarters Ended March 31,
|
|||||||||||||||
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
Change
|
|||||||
Net premiums and fees earned
|
|
|
|
|
|
|
|
|
|
$
|
393.8
|
|
|
$
|
460.5
|
|
|
(14.5
|
)%
|
Net investment income
|
|
|
|
|
|
|
|
|
|
|
7.1
|
|
|
|
6.5
|
|
|
9.0
|
|
Claim costs
|
|
|
|
|
|
|
|
|
|
|
23.8
|
|
|
|
31.5
|
|
|
(24.5
|
)
|
Pretax operating income (loss)
|
|
|
|
|
|
|
|
|
|
$
|
4.7
|
|
|
$
|
21.5
|
|
|
(77.8
|
)%
|
Claim ratio
|
|
|
|
|
|
|
|
6.1
|
%
|
|
6.9
|
%
|
|
|
Expense ratio
|
|
|
|
|
|
|
|
94.0
|
|
|
89.5
|
|
|
|
Composite ratio
|
|
|
|
|
|
|
|
100.1
|
%
|
|
96.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
RFIG Run-off Business
|
||||||||||
|
|
|
Quarters Ended March 31,
|
||||||||||||||||
|
|
|
|
|
|
|
2014
|
|
2013
|
|
Change
|
||||||||
A. Prior to reclassification/Excluding CCI run-off business:
|
|
|
|
|
|
|
|
|
|||||||||||
Net premiums earned
|
|
|
|
|
|
|
|
|
|
$
|
58.8
|
|
|
$
|
79.9
|
|
|
(26.4
|
)%
|
Net investment income
|
|
|
|
|
|
|
|
|
|
|
8.1
|
|
|
|
9.0
|
|
|
(10.1
|
)
|
Claim costs
|
|
|
|
|
|
|
|
|
|
|
22.9
|
|
|
|
95.7
|
|
|
(76.0
|
)%
|
Pretax operating income (loss)
|
|
|
|
|
|
|
|
|
|
$
|
36.8
|
|
|
$
|
(13.0
|
)
|
|
N/M
|
Claim ratio
|
|
|
|
|
|
|
|
39.0
|
%
|
|
119.8
|
%
|
|
|
Expense ratio
|
|
|
|
|
|
|
|
12.2
|
|
|
7.9
|
|
|
|
Composite ratio
|
|
|
|
|
|
|
|
51.2
|
%
|
|
127.7
|
%
|
|
|
Claim ratio
|
|
|
|
|
|
|
|
343.0
|
%
|
|
192.6
|
%
|
|
|
Expense ratio
|
|
|
|
|
|
|
|
10.8
|
|
|
(0.1
|
)
|
|
|
Composite ratio
|
|
|
|
|
|
|
|
353.8
|
%
|
|
192.5
|
%
|
|
|
Claim ratio
|
|
|
|
|
|
|
|
70.7
|
%
|
|
126.4
|
%
|
|
|
Expense ratio
|
|
|
|
|
|
|
|
12.1
|
|
|
7.1
|
|
|
|
Composite ratio
|
|
|
|
|
|
|
|
82.8
|
%
|
|
133.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and Other Operations
|
|||||||||
|
|
|
|
Quarters Ended March 31,
|
|||||||||||||||
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
Change
|
|||||||
Life & accident premiums earned
|
|
|
|
|
|
|
|
|
|
$
|
16.7
|
|
|
$
|
17.1
|
|
|
(1.9
|
)%
|
Net investment income
|
|
|
|
|
|
|
|
|
|
|
1.3
|
|
|
|
1.4
|
|
|
(2.3
|
)
|
Other income
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
0.3
|
|
|
(80.7
|
)
|
Benefits and claim costs
|
|
|
|
|
|
|
|
|
|
|
12.3
|
|
|
|
9.7
|
|
|
27.2
|
|
Insurance expenses
|
|
|
|
|
|
|
|
|
|
|
7.6
|
|
|
|
7.6
|
|
|
0.6
|
|
Corporate, interest, and other expenses-net
|
|
|
|
|
|
|
|
|
|
|
(1.2
|
)
|
|
|
(1.1
|
)
|
|
(10.2
|
)
|
Pretax operating income (loss)
|
|
|
|
|
|
|
|
|
|
$
|
(0.5
|
)
|
|
$
|
2.6
|
|
|
(121.9
|
)%
|
|
Cash, Invested Assets, and Shareholders' Equity
|
||||||||||||||||||
|
|
|
|
|
|
|
% Change
|
||||||||||||
|
March 31,
|
|
Dec. 31,
|
|
March 31,
|
|
March '14/
|
|
March '14/
|
||||||||||
|
2014
|
|
2013
|
|
2013
|
|
Dec. '13
|
|
March '13
|
||||||||||
Cash, invested assets, and accrued
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
investment income:
|
Fair value basis
|
$
|
11,286.3
|
|
|
$
|
11,109.1
|
|
|
$
|
10,986.5
|
|
|
1.6
|
%
|
|
2.7
|
%
|
|
|
Original cost basis
|
$
|
10,765.8
|
|
|
$
|
10,503.7
|
|
|
$
|
10,152.7
|
|
|
2.5
|
%
|
|
6.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Shareholders' equity:
|
Total
|
$
|
3,865.8
|
|
|
$
|
3,775.0
|
|
|
$
|
3,673.3
|
|
|
2.4
|
%
|
|
5.2
|
%
|
|
|
Per common share
|
$
|
14.97
|
|
|
$
|
14.64
|
|
|
$
|
14.31
|
|
|
2.3
|
%
|
|
4.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Composition of shareholders' equity per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Equity before items below
|
$
|
13.74
|
|
|
$
|
13.17
|
|
|
$
|
12.18
|
|
|
4.3
|
%
|
|
12.8
|
%
|
||
Unrealized investment gains (losses) and other
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
accumulated comprehensive income (loss)
|
|
1.23
|
|
|
|
1.47
|
|
|
|
2.13
|
|
|
|
|
|
||||
Total
|
$
|
14.97
|
|
|
$
|
14.64
|
|
|
$
|
14.31
|
|
|
2.3
|
%
|
|
4.6
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Segmented composition of
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
shareholders' equity per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Excluding run-off segment
|
$
|
14.89
|
|
|
$
|
14.69
|
|
|
$
|
14.58
|
|
|
1.4
|
%
|
|
2.1
|
%
|
||
RFIG run-off segment
|
|
0.08
|
|
|
|
(0.05
|
)
|
|
|
(0.27
|
)
|
|
|
|
|
||||
Total
|
$
|
14.97
|
|
|
$
|
14.64
|
|
|
$
|
14.31
|
|
|
2.3
|
%
|
|
4.6
|
%
|
|
|
|
|
|
Shareholders' Equity Per Share
|
||||||
|
|
|
|
Quarters Ended March 31,
|
|||||||
|
|
|
|
2014
|
|
2013
|
|||||
Beginning balance
|
|
|
|
|
$
|
14.64
|
|
|
$
|
14.03
|
|
Changes in shareholders' equity:
|
|
|
|
|
|
|
|
|
|
||
Net operating income (loss)
|
|
|
|
|
|
0.27
|
|
|
|
0.21
|
|
Net realized investment gains (losses):
|
|
|
|
|
|
|
|
|
|
||
From sales
|
|
|
|
|
|
0.48
|
|
|
|
0.01
|
|
From impairments
|
|
|
|
|
|
—
|
|
|
|
—
|
|
Subtotal
|
|
|
|
|
|
0.48
|
|
|
|
0.01
|
|
Net unrealized investment gains (losses)
|
|
|
|
|
|
(0.21
|
)
|
|
|
0.26
|
|
Total realized and unrealized investment gains (losses)
|
|
|
|
|
0.27
|
|
|
|
0.27
|
|
|
Cash dividends
|
|
|
|
|
|
(0.18
|
)
|
|
|
(0.18
|
)
|
Stock issuance, foreign exchange, and other transactions
|
|
|
|
|
(0.03
|
)
|
|
|
(0.02
|
)
|
|
Net change
|
|
|
|
|
|
0.33
|
|
|
|
0.28
|
|
Ending balance
|
|
|
|
|
$
|
14.97
|
|
|
$
|
14.31
|
|
|
DETAILED MANAGEMENT ANALYSIS
|
FINANCIAL ACCOUNTING AND REPORTING POLICIES
|
FINANCIAL POSITION
|
(a)
|
Credit quality ratings referred to herein are a blend of those assigned by the major credit rating agencies for U.S. and Canadian Governments, Agencies, Corporates and Municipal issuers, which are converted to the above ratings classifications.
|
(b)
|
"All other" includes non-investment grade or non-rated issuers.
|
Gross Unrealized Losses Stratified by Industry Concentration for Non-Investment Grade Fixed Maturity Securities
|
|||||||||||
|
|
|
|
|
|
|
|
||||
March 31, 2014
|
|
Amortized
Cost
|
|
Gross
Unrealized
Losses
|
|
||||||
Fixed Maturity Securities by Industry Concentration:
|
|
|
|
|
|
||||||
|
Natural Gas
|
|
$
|
10.1
|
|
|
$
|
.4
|
|
|
|
|
Consumer Non Durable
|
|
16.7
|
|
|
.2
|
|
|
|||
|
Industrial
|
|
25.1
|
|
|
.2
|
|
|
|||
|
Basic Industry
|
|
26.4
|
|
|
.2
|
|
|
|||
|
Other (includes 5 industry groups)
|
|
26.8
|
|
|
.2
|
|
|
|||
|
|
Total
|
|
$
|
105.3
|
|
(c)
|
$
|
1.3
|
|
|
(c)
|
Represents 1.3% of the total fixed maturity securities portfolio.
|
Gross Unrealized Losses Stratified by Industry Concentration for Investment Grade Fixed Maturity Securities
|
|||||||||||
|
|
|
|
|
|
|
|
||||
March 31, 2014
|
|
Amortized
Cost
|
|
Gross
Unrealized
Losses
|
|
||||||
Fixed Maturity Securities by Industry Concentration:
|
|
|
|
|
|
||||||
|
Utilities
|
|
$
|
250.4
|
|
|
$
|
7.7
|
|
|
|
|
Basic Industry
|
|
164.3
|
|
|
3.4
|
|
|
|||
|
U.S. Governments
|
|
105.7
|
|
|
2.8
|
|
|
|||
|
U.S. Agencies
|
|
186.7
|
|
|
2.7
|
|
|
|||
|
Other (includes 17 industry groups)
|
|
1,066.0
|
|
|
16.7
|
|
|
|||
|
|
Total
|
|
$
|
1,773.3
|
|
(d)
|
$
|
33.5
|
|
|
(d)
|
Represents 21.5% of the total fixed maturity securities portfolio.
|
Gross Unrealized Losses Stratified by Industry Concentration for Equity Securities
|
|||||||||||
|
|
|
|
|
|
|
|
||||
March 31, 2014
|
|
Cost
|
|
Gross
Unrealized
Losses
|
|
||||||
Equity Securities by Industry Concentration:
|
|
|
|
|
|
||||||
|
Utilities
|
|
$
|
9.5
|
|
|
$
|
.2
|
|
|
|
|
Health Care
|
|
5.7
|
|
|
.1
|
|
|
|||
|
Natural Gas
|
|
15.3
|
|
|
—
|
|
|
|||
|
Industrial
|
|
11.4
|
|
|
—
|
|
|
|||
|
|
Total
|
|
$
|
42.1
|
|
(e)
|
$
|
.5
|
|
(f)
|
(e)
|
Represents 4.4% of the total equity securities portfolio.
|
(f)
|
Represents .1% of the cost of the total equity securities portfolio, while gross unrealized gains represent 23.2% of the portfolio.
|
Gross Unrealized Losses Stratified by Maturity Ranges for All Fixed Maturity Securities
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Amortized Cost
of Fixed Maturity Securities
|
|
Gross Unrealized Losses
|
|
||||||||||||
March 31, 2014
|
|
All
|
|
Non-
Investment
Grade Only
|
|
All
|
|
Non-
Investment
Grade Only
|
|
|||||||||
Maturity Ranges:
|
|
|
|
|
|
|
|
|
|
|||||||||
Due in one year or less
|
|
$
|
10.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Due after one year through five years
|
|
302.5
|
|
|
14.5
|
|
|
2.8
|
|
|
.1
|
|
|
|||||
Due after five years through ten years
|
|
1,520.0
|
|
|
78.5
|
|
|
30.7
|
|
|
.9
|
|
|
|||||
Due after ten years
|
|
45.1
|
|
|
12.2
|
|
|
1.3
|
|
|
.2
|
|
|
|||||
|
Total
|
|
$
|
1,878.6
|
|
|
$
|
105.3
|
|
|
$
|
34.9
|
|
|
$
|
1.3
|
|
|
Gross Unrealized Losses Stratified by Duration and Amount of Unrealized Losses
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
Amount of Gross Unrealized Losses
|
|
||||||||||||||
March 31, 2014
|
|
Less than
20% of
Cost
|
|
20% to
50%
of Cost
|
|
More than
50% of Cost
|
|
Total Gross
Unrealized
Loss
|
|
|||||||||||
Number of Months in Loss Position:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fixed Maturity Securities:
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
One to six months
|
|
$
|
3.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.3
|
|
|
||
|
Seven to twelve months
|
|
18.1
|
|
|
—
|
|
|
—
|
|
|
18.1
|
|
|
||||||
|
More than twelve months
|
|
13.0
|
|
|
.3
|
|
|
—
|
|
|
13.3
|
|
|
||||||
|
|
Total
|
|
$
|
34.5
|
|
|
$
|
.3
|
|
|
$
|
—
|
|
|
$
|
34.9
|
|
|
|
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
One to six months
|
|
$
|
.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
.5
|
|
|
||
|
Seven to twelve months
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
|
More than twelve months
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
|
|
Total
|
|
$
|
.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Number of Issues in Loss Position:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fixed Maturity Securities:
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
One to six months
|
|
120
|
|
|
—
|
|
|
—
|
|
|
120
|
|
|
||||||
|
Seven to twelve months
|
|
178
|
|
|
—
|
|
|
—
|
|
|
178
|
|
|
||||||
|
More than twelve months
|
|
60
|
|
|
1
|
|
|
—
|
|
|
61
|
|
|
||||||
|
|
Total
|
|
358
|
|
|
1
|
|
|
—
|
|
|
359
|
|
(g)
|
|||||
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
One to six months
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
||||||
|
Seven to twelve months
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
|
More than twelve months
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
|
|
Total
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
(g)
|
(g)
|
At
March 31, 2014
the number of issues in an unrealized loss position represent 20.4% as to fixed maturities, and 6.1% as to equity securities of the total number of such issues held by the Company.
|
Age Distribution of Fixed Maturity Securities
|
|||||||||
|
|
|
|
|
|
|
|
||
|
|
|
|
March 31,
|
|
December 31,
|
|
||
|
|
|
|
2014
|
|
2013
|
|
||
Maturity Ranges:
|
|
|
|
|
|||||
|
Due in one year or less
|
8.7
|
%
|
|
9.3
|
%
|
|
||
|
Due after one year through five years
|
45.2
|
|
|
46.7
|
|
|
||
|
Due after five years through ten years
|
43.7
|
|
|
41.8
|
|
|
||
|
Due after ten years through fifteen years
|
1.4
|
|
|
1.2
|
|
|
||
|
Due after fifteen years
|
1.0
|
|
|
1.0
|
|
|
||
|
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
||
Average Maturity in Years
|
5.0
|
|
|
4.8
|
|
|
|||
Duration (h)
|
4.3
|
|
|
4.2
|
|
|
(h)
|
Duration is used as a measure of bond price sensitivity to interest rate changes. A duration of 4.3 as of
March 31, 2014
implies that a 100 basis point parallel increase in interest rates from current levels would result in a possible decline in the fair value of the long-term fixed maturity investment portfolio of approximately 4.3%.
|
Composition of Unrealized Gains (Losses)
|
|||||||||||
|
|
|
|
|
|
|
|
||||
|
|
|
|
March 31,
|
|
December 31,
|
|
||||
|
|
|
|
2014
|
|
2013
|
|
||||
Fixed Maturity Securities:
|
|
|
|
|
|||||||
|
Amortized cost
|
$
|
8,255.9
|
|
|
$
|
8,477.3
|
|
|
||
|
Estimated fair value
|
8,554.6
|
|
|
8,712.3
|
|
|
||||
|
Gross unrealized gains
|
333.6
|
|
|
308.7
|
|
|
||||
|
Gross unrealized losses
|
(34.9
|
)
|
|
(73.6
|
)
|
|
||||
|
|
Net unrealized gains (losses)
|
$
|
298.7
|
|
|
$
|
235.0
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity Securities:
|
|
|
|
|
|||||||
|
Original cost
|
$
|
966.4
|
|
|
$
|
632.0
|
|
|
||
|
Estimated fair value
|
1,190.0
|
|
|
1,004.2
|
|
|
||||
|
Gross unrealized gains
|
224.1
|
|
|
372.7
|
|
|
||||
|
Gross unrealized losses
|
(.5
|
)
|
|
(.5
|
)
|
|
||||
|
|
Net unrealized gains (losses)
|
$
|
223.5
|
|
|
$
|
372.1
|
|
|
RESULTS OF OPERATIONS
|
Revenues: Premiums & Fees
|
|
Earned Premiums and Fees
|
|||||||||||||||||||||
|
General
|
|
Title
|
|
RFIG Run-off
|
|
Other
|
|
Total
|
|
% Change
from prior
period
|
|||||||||||
Years Ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2011
|
$
|
2,109.4
|
|
|
$
|
1,362.4
|
|
|
$
|
503.2
|
|
|
$
|
74.9
|
|
|
$
|
4,050.1
|
|
|
13.3
|
%
|
2012
|
2,324.4
|
|
|
1,677.4
|
|
|
410.5
|
|
|
58.6
|
|
|
4,471.0
|
|
|
10.4
|
|
|||||
2013
|
2,513.7
|
|
|
1,996.1
|
|
|
316.5
|
|
|
59.3
|
|
|
4,885.6
|
|
|
9.3
|
|
|||||
Quarters Ended March 31:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2013
|
600.2
|
|
|
460.5
|
|
|
87.7
|
|
|
17.1
|
|
|
1,165.6
|
|
|
12.3
|
|
|||||
2014
|
$
|
656.4
|
|
|
$
|
393.8
|
|
|
$
|
65.6
|
|
|
$
|
16.7
|
|
|
$
|
1,132.7
|
|
|
(2.8
|
)%
|
|
General Insurance Earned Premiums by Type of Coverage
|
||||||||||||||||
|
Workers'
Compensation
|
|
Commercial
Automobile
(mostly
trucking)
|
|
Financial
Indemnity
|
|
Inland
Marine
and
Property
|
|
General
Liability
|
|
Other
|
||||||
Years Ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2011
|
38.3
|
%
|
|
33.6
|
%
|
|
4.9
|
%
|
|
7.8
|
%
|
|
5.9
|
%
|
|
9.5
|
%
|
2012
|
39.7
|
|
|
33.0
|
|
|
4.2
|
|
|
7.6
|
|
|
6.2
|
|
|
9.3
|
|
2013
|
39.6
|
|
|
32.8
|
|
|
3.8
|
|
|
7.7
|
|
|
6.3
|
|
|
9.8
|
|
Quarters Ended March 31:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2013
|
40.4
|
|
|
32.8
|
|
|
3.9
|
|
|
8.0
|
|
|
6.2
|
|
|
8.7
|
|
2014
|
41.0
|
%
|
|
31.9
|
%
|
|
3.9
|
%
|
|
7.5
|
%
|
|
6.7
|
%
|
|
9.0
|
%
|
|
Earned Premiums
|
|
Persistency
|
||||||||||
Premium and Persistency Trends by Type:
|
Direct
|
|
Net
|
|
Traditional
Primary
|
|
Bulk
|
||||||
Years Ended December 31:
|
|
|
|
|
|
|
|
||||||
2011
|
$
|
468.1
|
|
|
$
|
444.9
|
|
|
83.2
|
%
|
|
85.3
|
%
|
2012
|
387.3
|
|
|
368.0
|
|
|
80.7
|
|
|
85.3
|
|
||
2013
|
296.6
|
|
|
286.7
|
|
|
79.1
|
|
|
81.9
|
|
||
Quarters Ended March 31:
|
|
|
|
|
|
|
|
||||||
2013
|
83.0
|
|
|
79.9
|
|
|
80.1
|
|
|
84.9
|
|
||
2014
|
$
|
60.6
|
|
|
$
|
58.8
|
|
|
80.2
|
%
|
|
79.7
|
%
|
Net Risk in Force
|
|||||||||||||||
Net Risk in Force By Type:
|
Traditional
Primary
|
|
Bulk
|
|
Other
|
|
Total
|
||||||||
As of December 31:
|
|
|
|
|
|
|
|
||||||||
2011
|
$
|
14,476.9
|
|
|
$
|
1,017.7
|
|
|
$
|
176.3
|
|
|
$
|
15,671.0
|
|
2012
|
11,911.1
|
|
|
850.7
|
|
|
89.8
|
|
|
12,851.6
|
|
||||
2013
|
9,579.6
|
|
|
704.8
|
|
|
48.5
|
|
|
10,333.0
|
|
||||
As of March 31:
|
|
|
|
|
|
|
|
||||||||
2013
|
11,359.1
|
|
|
810.8
|
|
|
84.4
|
|
|
12,254.4
|
|
||||
2014
|
$
|
9,256.0
|
|
|
$
|
676.2
|
|
|
$
|
43.5
|
|
|
$
|
9,975.8
|
|
Analysis of Risk in Force
|
|||||||||||
Risk in Force Distribution By FICO Scores:
|
FICO less
than 620
|
|
FICO 620
to 680
|
|
FICO
Greater
than 680
|
|
Unscored/
Unavailable
|
||||
|
|
|
|
|
|
|
|
||||
Traditional Primary:
|
|
|
|
|
|
|
|
||||
As of December 31:
|
|
|
|
|
|
|
|
||||
2011
|
6.2
|
%
|
|
26.8
|
%
|
|
65.7
|
%
|
|
1.3
|
%
|
2012
|
6.4
|
|
|
27.5
|
|
|
65.0
|
|
|
1.1
|
|
2013
|
6.6
|
|
|
28.1
|
|
|
64.3
|
|
|
1.0
|
|
As of March 31:
|
|
|
|
|
|
|
|
||||
2013
|
6.4
|
|
|
27.7
|
|
|
64.7
|
|
|
1.2
|
|
2014
|
6.6
|
%
|
|
28.2
|
%
|
|
64.3
|
%
|
|
.9
|
%
|
|
|
|
|
|
|
|
|
||||
Bulk(a):
|
|
|
|
|
|
|
|
||||
As of December 31:
|
|
|
|
|
|
|
|
||||
2011
|
24.0
|
%
|
|
32.2
|
%
|
|
43.7
|
%
|
|
.1
|
%
|
2012
|
24.0
|
|
|
32.5
|
|
|
43.3
|
|
|
.2
|
|
2013
|
23.5
|
|
|
33.0
|
|
|
43.3
|
|
|
.2
|
|
As of March 31:
|
|
|
|
|
|
|
|
||||
2013
|
23.7
|
|
|
32.7
|
|
|
43.4
|
|
|
.2
|
|
2014
|
23.6
|
%
|
|
33.2
|
%
|
|
43.1
|
%
|
|
.1
|
%
|
Risk in Force Distribution By Loan to Value ("LTV") Ratio:
|
LTV
85.0
and below
|
|
LTV
85.01
to 90.0
|
|
LTV
90.01
to 95.0
|
|
LTV
Greater
than 95.0
|
||||
|
|
|
|
|
|
|
|
||||
Traditional Primary(b):
|
|
|
|
|
|
|
|
||||
As of December 31:
|
|
|
|
|
|
|
|
||||
2011
|
5.1
|
%
|
|
36.2
|
%
|
|
32.9
|
%
|
|
25.8
|
%
|
2012
|
4.6
|
|
|
35.2
|
|
|
32.9
|
|
|
27.3
|
|
2013
|
4.2
|
|
|
34.5
|
|
|
32.2
|
|
|
29.1
|
|
As of March 31:
|
|
|
|
|
|
|
|
||||
2013
|
4.5
|
|
|
34.9
|
|
|
32.8
|
|
|
27.8
|
|
2014
|
4.1
|
%
|
|
34.4
|
%
|
|
32.0
|
%
|
|
29.5
|
%
|
|
|
|
|
|
|
|
|
||||
Bulk(a):
|
|
|
|
|
|
|
|
||||
As of December 31:
|
|
|
|
|
|
|
|
||||
2011
|
57.1
|
%
|
|
22.9
|
%
|
|
9.8
|
%
|
|
10.2
|
%
|
2012
|
56.7
|
|
|
23.3
|
|
|
10.0
|
|
|
10.0
|
|
2013
|
56.9
|
|
|
23.4
|
|
|
10.2
|
|
|
9.5
|
|
As of March 31:
|
|
|
|
|
|
|
|
||||
2013
|
56.8
|
|
|
23.2
|
|
|
10.0
|
|
|
10.0
|
|
2014
|
56.6
|
%
|
|
23.6
|
%
|
|
10.3
|
%
|
|
9.5
|
%
|
(a)
|
Bulk pool risk in-force, which represented
32.4%
of total bulk risk in-force at
March 31, 2014
, has been allocated pro-rata based on insurance in-force.
|
(b)
|
The LTV distribution reflects base LTV ratios which are determined prior to the impact of single premiums financed and paid at the time of loan origination.
|
|
|
|
Traditional Primary
|
||||||||||||||||||||||||||
|
TX
|
|
FL
|
|
GA
|
|
IL
|
|
CA
|
|
NC
|
|
PA
|
|
NJ
|
|
OH
|
|
VA
|
||||||||||
As of December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2011
|
8.8
|
%
|
|
7.5
|
%
|
|
5.2
|
%
|
|
5.0
|
%
|
|
5.0
|
%
|
|
4.8
|
%
|
|
4.3
|
%
|
|
3.3
|
%
|
|
3.3
|
%
|
|
3.0
|
%
|
2012
|
8.6
|
|
|
7.7
|
|
|
5.3
|
|
|
5.1
|
|
|
5.0
|
|
|
4.8
|
|
|
4.3
|
|
|
3.5
|
|
|
3.3
|
|
|
3.1
|
|
2013
|
8.3
|
|
|
7.5
|
|
|
5.5
|
|
|
5.2
|
|
|
4.9
|
|
|
4.8
|
|
|
4.4
|
|
|
3.8
|
|
|
3.3
|
|
|
3.2
|
|
As of March 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2013
|
8.5
|
|
|
7.6
|
|
|
5.4
|
|
|
5.1
|
|
|
4.9
|
|
|
4.8
|
|
|
4.3
|
|
|
3.6
|
|
|
3.3
|
|
|
3.1
|
|
2014
|
8.2
|
%
|
|
7.4
|
%
|
|
5.6
|
%
|
|
5.2
|
%
|
|
4.9
|
%
|
|
4.8
|
%
|
|
4.3
|
%
|
|
3.8
|
%
|
|
3.3
|
%
|
|
3.3
|
%
|
|
|
|
Bulk (a)
|
||||||||||||||||||||||||||
|
TX
|
|
FL
|
|
GA
|
|
IL
|
|
CA
|
|
AZ
|
|
PA
|
|
NJ
|
|
OH
|
|
NY
|
||||||||||
As of December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2011
|
5.4
|
%
|
|
9.9
|
%
|
|
4.3
|
%
|
|
4.0
|
%
|
|
14.9
|
%
|
|
3.2
|
%
|
|
3.1
|
%
|
|
3.5
|
%
|
|
3.9
|
%
|
|
6.5
|
%
|
2012
|
5.3
|
|
|
9.9
|
|
|
4.3
|
|
|
4.0
|
|
|
13.9
|
|
|
3.0
|
|
|
3.3
|
|
|
3.7
|
|
|
4.0
|
|
|
7.1
|
|
2013
|
5.4
|
|
|
9.3
|
|
|
4.4
|
|
|
3.9
|
|
|
14.1
|
|
|
2.8
|
|
|
3.4
|
|
|
4.0
|
|
|
3.8
|
|
|
7.9
|
|
As of March 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2013
|
5.3
|
|
|
9.7
|
|
|
4.3
|
|
|
4.0
|
|
|
13.8
|
|
|
3.0
|
|
|
3.3
|
|
|
3.8
|
|
|
4.0
|
|
|
7.4
|
|
2014
|
5.4
|
%
|
|
9.3
|
%
|
|
4.4
|
%
|
|
4.0
|
%
|
|
13.8
|
%
|
|
2.8
|
%
|
|
3.4
|
%
|
|
4.1
|
%
|
|
3.9
|
%
|
|
7.9
|
%
|
Risk in Force Distribution By Level of Documentation:
|
Full
Documentation
|
|
Reduced
Documentation
|
||
Traditional Primary:
|
|
|
|
||
As of December 31:
|
|
|
|
||
2011
|
92.8
|
%
|
|
7.2
|
%
|
2012
|
92.8
|
|
|
7.2
|
|
2013
|
92.7
|
|
|
7.3
|
|
As of March 31:
|
|
|
|
||
2013
|
92.7
|
|
|
7.3
|
|
2014
|
92.7
|
%
|
|
7.3
|
%
|
|
|
|
|
||
Bulk (a):
|
|
|
|
||
As of December 31:
|
|
|
|
||
2011
|
58.4
|
%
|
|
41.6
|
%
|
2012
|
58.2
|
|
|
41.8
|
|
2013
|
57.6
|
|
|
42.4
|
|
As of March 31:
|
|
|
|
||
2013
|
58.1
|
|
|
41.9
|
|
2014
|
57.7
|
%
|
|
42.3
|
%
|
(a)
|
Bulk pool risk in-force, which represented
32.4%
of total bulk risk in-force at
March 31, 2014
, has been allocated pro-rata based on insurance in-force.
|
Risk in Force Distribution By Loan Type:
|
Fixed Rate
& ARMs
with Resets
>=5 Years
|
|
ARMs with
Resets <5
years
|
||
Traditional Primary:
|
|
|
|
||
As of December 31:
|
|
|
|
||
2011
|
97.0
|
%
|
|
3.0
|
%
|
2012
|
97.1
|
|
|
2.9
|
|
2013
|
97.2
|
|
|
2.8
|
|
As of March 31:
|
|
|
|
||
2013
|
97.1
|
|
|
2.9
|
|
2014
|
97.2
|
%
|
|
2.8
|
%
|
|
|
|
|
||
Bulk (a):
|
|
|
|
||
As of December 31:
|
|
|
|
||
2011
|
71.0
|
%
|
|
29.0
|
%
|
2012
|
72.6
|
|
|
27.4
|
|
2013
|
74.3
|
|
|
25.7
|
|
As of March 31:
|
|
|
|
||
2013
|
73.2
|
|
|
26.8
|
|
2014
|
74.4
|
%
|
|
25.6
|
%
|
(a)
|
Bulk pool risk in-force, which represented
32.4%
of total bulk risk in-force at
March 31, 2014
, has been allocated pro-rata based on insurance in-force.
|
|
Net CCI Earned Premiums
|
|
Risk in
Force
|
||||
Years Ended December 31:
|
|
|
|
||||
2011
|
$
|
58.3
|
|
|
$
|
1,263.1
|
|
2012
|
42.4
|
|
|
1,141.6
|
|
||
2013
|
29.8
|
|
|
989.4
|
|
||
Quarters Ended March 31:
|
|
|
|
||||
2013
|
7.8
|
|
|
1,101.7
|
|
||
2014
|
$
|
6.8
|
|
|
$
|
969.1
|
|
Revenues: Net Investment Income
|
|
Invested Assets at Adjusted Cost
|
|
Fair
Value
Adjust-
ment
|
|
Invested
Assets at
Fair
Value
|
||||||||||||||||||||||
|
General
|
|
Title
|
|
RFIG Run-off
|
|
Corporate
and Other
|
|
Total
|
|
|||||||||||||||||
As of December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
2012
|
$
|
6,742.7
|
|
|
$
|
785.7
|
|
|
$
|
1,766.3
|
|
|
$
|
450.1
|
|
|
$
|
9,744.9
|
|
|
$
|
863.8
|
|
|
$
|
10,608.8
|
|
2013
|
7,280.1
|
|
|
876.5
|
|
|
1,681.3
|
|
|
422.5
|
|
|
10,260.6
|
|
|
607.8
|
|
|
10,868.5
|
|
|||||||
As of March 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
2013
|
6,792.7
|
|
|
806.7
|
|
|
1,766.7
|
|
|
434.4
|
|
|
9,800.7
|
|
|
968.4
|
|
|
10,769.1
|
|
|||||||
2014
|
$
|
7,552.4
|
|
|
$
|
865.6
|
|
|
$
|
1,687.0
|
|
|
$
|
435.6
|
|
|
$
|
10,540.8
|
|
|
$
|
523.1
|
|
|
$
|
11,063.9
|
|
|
Net Investment Income
|
|
Yield at
|
||||||||||||||||||||||
|
General
|
|
Title
|
|
RFIG Run-off
|
|
Corporate
and Other
|
|
Total
|
|
Original
Cost
|
|
Fair
Value
|
||||||||||||
Years Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2011
|
$
|
270.5
|
|
|
$
|
27.3
|
|
|
$
|
59.3
|
|
|
$
|
7.4
|
|
|
$
|
364.6
|
|
|
3.71
|
%
|
|
3.51
|
%
|
2012
|
264.9
|
|
|
27.3
|
|
|
36.3
|
|
|
7.9
|
|
|
336.5
|
|
|
3.40
|
|
|
3.19
|
|
|||||
2013
|
249.6
|
|
|
26.6
|
|
|
36.8
|
|
|
5.6
|
|
|
318.7
|
|
|
3.17
|
|
|
2.97
|
|
|||||
Quarters Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
March 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2013
|
62.2
|
|
|
6.5
|
|
|
9.1
|
|
|
1.4
|
|
|
79.3
|
|
|
3.20
|
|
|
2.97
|
|
|||||
2014
|
$
|
65.9
|
|
|
$
|
7.1
|
|
|
$
|
8.3
|
|
|
$
|
1.3
|
|
|
$
|
82.8
|
|
|
3.18
|
%
|
|
3.02
|
%
|
Revenues: Net Realized Gains (Losses)
|
|
Realized Gains (Losses) on
Disposition of Securities
|
|
Impairment Losses on Securities
|
|
|
||||||||||||||||||||||
|
Fixed
maturity
securities
|
|
Equity
securities
and miscel-
laneous
investments
|
|
Total
|
|
Fixed
maturity
securities
|
|
Equity
securities
and miscel-
laneous
investments
|
|
Total
|
|
Net
realized
gains
(losses)
|
||||||||||||||
Years Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
2011
|
$
|
142.6
|
|
|
$
|
23.1
|
|
|
$
|
165.8
|
|
|
$
|
—
|
|
|
$
|
(50.2
|
)
|
|
$
|
(50.2
|
)
|
|
$
|
115.5
|
|
2012
|
32.7
|
|
|
15.3
|
|
|
48.1
|
|
|
—
|
|
|
(.2
|
)
|
|
(.2
|
)
|
|
47.8
|
|
|||||||
2013
|
1.7
|
|
|
146.3
|
|
|
148.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
148.1
|
|
|||||||
Quarters Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
March 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
2013
|
.8
|
|
|
3.7
|
|
|
4.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.5
|
|
|||||||
2014
|
$
|
12.4
|
|
|
$
|
178.8
|
|
|
$
|
191.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
191.2
|
|
Expenses: Benefits and Claims
|
|
|
|
|
Claim and Loss Adjustment Expense Reserves
|
||||||||||||||
|
|
|
|
March 31, 2014
|
|
December 31, 2013
|
||||||||||||
|
|
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
||||||||
|
|
|
|
|
|
|
|
|||||||||||
Workers' compensation
|
$
|
3,856.4
|
|
|
$
|
2,238.4
|
|
|
$
|
3,802.1
|
|
|
$
|
2,184.9
|
|
|||
General liability
|
1,434.6
|
|
|
653.5
|
|
|
1,407.7
|
|
|
647.9
|
|
|||||||
Commercial automobile (mostly trucking)
|
1,236.0
|
|
|
1,017.4
|
|
|
1,228.6
|
|
|
1,014.2
|
|
|||||||
Other coverages
|
502.7
|
|
|
341.4
|
|
|
501.0
|
|
|
343.3
|
|
|||||||
Unallocated loss adjustment expense reserves
|
201.5
|
|
|
146.7
|
|
|
195.6
|
|
|
143.7
|
|
|||||||
|
|
Total general insurance reserves
|
7,231.3
|
|
|
4,397.6
|
|
|
7,135.2
|
|
|
4,334.1
|
|
|||||
Title
|
483.5
|
|
|
483.5
|
|
|
471.5
|
|
|
471.5
|
|
|||||||
RFIG Run-off
|
1,757.9
|
|
|
1,740.8
|
|
|
1,806.8
|
|
|
1,774.2
|
|
|||||||
Life and accident
|
25.1
|
|
|
20.2
|
|
|
19.8
|
|
|
16.8
|
|
|||||||
|
|
Total claim and loss adjustment expense reserves
|
$
|
9,498.0
|
|
|
$
|
6,642.2
|
|
|
$
|
9,433.5
|
|
|
$
|
6,596.8
|
|
|
Asbestosis and environmental claim reserves included
|
|
|
|
|
|
|
|
|||||||||||
|
in the above general insurance reserves:
|
|
|
|
|
|
|
|
||||||||||
|
|
Amount
|
$
|
152.1
|
|
|
$
|
119.0
|
|
|
$
|
159.7
|
|
|
$
|
121.3
|
|
|
|
|
% of total general insurance reserves
|
2.1
|
%
|
|
2.7
|
%
|
|
2.2
|
%
|
|
2.8
|
%
|
|
|
|
Quarters Ended March 31,
|
||||||
|
|
|
2014
|
|
2013
|
||||
Net reserve increase (decrease):
|
|
|
|
|
|
||||
General Insurance
|
|
|
$
|
63.5
|
|
|
$
|
40.5
|
|
Title Insurance
|
|
|
11.9
|
|
|
18.5
|
|
||
RFIG Run-off
|
|
|
(33.4
|
)
|
|
(15.6
|
)
|
||
Other
|
|
|
3.3
|
|
|
1.2
|
|
||
Total
|
|
|
$
|
45.3
|
|
|
$
|
44.6
|
|
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
|
2014
|
|
2013
|
||||
General Insurance
|
|
|
$
|
2,140.5
|
|
|
$
|
2,118.4
|
|
Title Insurance
|
|
|
421.9
|
|
|
407.1
|
|
||
RFIG Run-off
|
|
|
135.3
|
|
|
121.3
|
|
||
Other
|
|
|
4.3
|
|
|
4.0
|
|
||
Total
|
|
|
$
|
2,702.2
|
|
|
$
|
2,651.0
|
|
|
March 31,
|
|
March 31,
|
|
December 31,
|
|
December 31,
|
||||||||
|
2014
|
|
2013
|
|
2013
|
|
2012
|
||||||||
Estimated reduction in beginning reserve
|
$
|
115.2
|
|
|
$
|
174.9
|
|
|
$
|
174.9
|
|
|
$
|
313.2
|
|
Total incurred claims and settlement expenses
|
|
|
|
|
|
|
|
||||||||
reduced (increased) by changes in
|
|
|
|
|
|
|
|
||||||||
estimated rescissions:
|
|
|
|
|
|
|
|
||||||||
Current year
|
17.9
|
|
|
21.1
|
|
|
80.5
|
|
|
111.7
|
|
||||
Prior year
|
1.3
|
|
|
32.0
|
|
|
71.9
|
|
|
12.2
|
|
||||
Sub-total
|
19.3
|
|
|
53.2
|
|
|
152.5
|
|
|
124.0
|
|
||||
Estimated rescission reduction in settled claims
|
(29.5
|
)
|
|
(61.2
|
)
|
|
(212.2
|
)
|
|
(262.3
|
)
|
||||
Estimated reduction in ending reserve
|
$
|
105.0
|
|
|
$
|
166.9
|
|
|
$
|
115.2
|
|
|
$
|
174.9
|
|
|
General
|
|
Title
|
|
RFIG Run-off
|
|
Consolidated
|
||||
Years Ended December 31:
|
|
|
|
|
|
|
|
||||
2011
|
69.2
|
%
|
|
7.8
|
%
|
|
230.5
|
%
|
|
68.3
|
%
|
2012
|
73.0
|
|
|
7.2
|
|
|
221.8
|
|
|
61.9
|
|
2013
|
73.6
|
|
|
6.7
|
|
|
68.8
|
|
|
45.8
|
|
Quarters Ended March 31:
|
|
|
|
|
|
|
|
||||
2013
|
71.9
|
|
|
6.9
|
|
|
126.4
|
|
|
50.1
|
|
2014
|
72.7
|
%
|
|
6.1
|
%
|
|
70.7
|
%
|
|
49.4
|
%
|
|
General Insurance Claim Ratios by Type of Coverage
|
|||||||||||||||||||
|
All
Coverages
|
|
Commercial
Automobile
(mostly
trucking)
|
|
Workers'
Compen-sation
|
|
Financial
Indemnity
|
|
Inland
Marine
and
Property
|
|
General
Liability
|
|
Other
|
|||||||
Years Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
2011
|
69.2
|
%
|
|
71.9
|
%
|
|
72.3
|
%
|
|
39.2
|
%
|
|
70.4
|
%
|
|
64.6
|
%
|
|
62.8
|
%
|
2012
|
73.0
|
|
|
75.3
|
|
|
78.6
|
|
|
29.6
|
|
|
71.6
|
|
|
63.8
|
|
|
65.6
|
|
2013
|
73.6
|
|
|
76.1
|
|
|
79.6
|
|
|
21.4
|
|
|
59.6
|
|
|
78.5
|
|
|
67.8
|
|
Quarters Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
March 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
2013
|
71.9
|
|
|
79.0
|
|
|
77.0
|
|
|
38.3
|
|
|
62.0
|
|
|
63.9
|
|
|
66.7
|
|
2014
|
72.7
|
%
|
|
75.0
|
%
|
|
80.9
|
%
|
|
35.6
|
%
|
|
59.6
|
%
|
|
74.8
|
%
|
|
66.7
|
%
|
|
Average Settled Claim Amount (a)
|
|
Reported Delinquency
Ratio at End of Period
|
|
Claims
Rescissions
and
Denials
|
||||||||||||
|
Traditional
Primary
|
|
Bulk
|
|
Traditional
Primary
|
|
Bulk
|
|
|||||||||
Years Ended December 31:
|
|
|
|
|
|
|
|
|
|
||||||||
2011
|
$
|
48,254
|
|
|
$
|
54,956
|
|
|
14.89
|
%
|
|
21.90
|
%
|
|
$
|
279.5
|
|
2012
|
46,376
|
|
|
53,221
|
|
|
14.70
|
|
|
21.57
|
|
|
262.3
|
|
|||
2013
|
44,678
|
|
|
46,395
|
|
|
13.09
|
|
|
18.73
|
|
|
212.2
|
|
|||
Quarters Ended March 31:
|
|
|
|
|
|
|
|
|
|
||||||||
2013
|
44,863
|
|
|
48,502
|
|
|
13.76
|
|
|
20.70
|
|
|
61.2
|
|
|||
2014
|
$
|
45,370
|
|
|
$
|
44,206
|
|
|
12.04
|
%
|
|
18.42
|
%
|
|
$
|
29.5
|
|
(a)
|
Amounts are in whole dollars.
|
(b)
|
As determined by risk in force as of
March 31, 2014
, these 10 states represent approximately 50.7%, 59.1%, and 51.0%, of traditional primary, bulk, and total risk in force, respectively.
|
|
|
|
|
|
|
|
|
|
Reported
Delinquency
Ratio at End
of Period
|
|
Claim
Rescissions
and Denials
|
|||||||||
|
CCI Claim Costs
|
|
|
|||||||||||||||||
|
Paid
|
|
Incurred
|
|
|
|||||||||||||||
|
Amount
|
|
Ratio (a)
|
|
Amount
|
|
Ratio (a)
|
|
|
|||||||||||
Years Ended
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
2011
|
$
|
111.8
|
|
|
191.7
|
%
|
|
$
|
102.9
|
|
|
176.5
|
%
|
|
4.4
|
%
|
|
$
|
166.1
|
|
2012
|
73.8
|
|
|
173.9
|
|
|
112.8
|
|
|
265.7
|
|
|
3.9
|
|
|
98.1
|
|
|||
2013
|
48.5
|
|
|
162.9
|
|
|
44.5
|
|
|
149.4
|
|
|
2.6
|
|
|
54.4
|
|
|||
Quarters Ended
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
March 31:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
2013
|
14.3
|
|
|
182.3
|
|
|
15.1
|
|
|
192.6
|
|
|
3.8
|
|
|
17.4
|
|
|||
2014
|
$
|
8.0
|
|
|
117.0
|
%
|
|
$
|
23.4
|
|
|
343.0
|
%
|
|
2.5
|
%
|
|
$
|
8.5
|
|
(a)
|
Percent of net CCI earned premiums. CCI claims ratios include only those costs actually or expected to be paid by the Company and exclude claims not paid by virtue of coverage rescissions and claims denials as well as unsubstantiated claim submissions. Certain claim rescissions and denials may from time to time become the subject of disagreements between the Company and certain individual insureds. Possible future reversals of such rescissions and denials, however, may not necessarily affect the adequacy of previously established claim reserve levels nor fully impact operating results. These effects could be fully or partially negated by the imposition of additional retrospective premiums and/or the limiting effects of maximum policy limits.
|
Expenses: Underwriting Acquisition and Other Expenses
|
|
General
|
|
Title
|
|
RFIG Run-off
|
|
Consolidated
|
||||
Years Ended December 31:
|
|
|
|
|
|
|
|
||||
2011
|
25.2
|
%
|
|
91.2
|
%
|
|
22.1
|
%
|
|
47.5
|
%
|
2012
|
25.7
|
|
|
89.6
|
|
|
10.4
|
|
|
48.5
|
|
2013
|
23.7
|
|
|
88.0
|
|
|
8.1
|
|
|
49.2
|
|
Quarters Ended March 31:
|
|
|
|
|
|
|
|
||||
2013
|
24.5
|
|
|
89.5
|
|
|
7.1
|
|
|
49.1
|
|
2014
|
23.5
|
%
|
|
94.0
|
%
|
|
12.1
|
%
|
|
47.7
|
%
|
Expenses: Total
|
|
General
|
|
Title
|
|
RFIG Run-off
|
|
Consolidated
|
||||
Years Ended December 31:
|
|
|
|
|
|
|
|
||||
2011
|
94.4
|
%
|
|
99.0
|
%
|
|
252.6
|
%
|
|
115.8
|
%
|
2012
|
98.7
|
|
|
96.8
|
|
|
232.2
|
|
|
110.4
|
|
2013
|
97.3
|
|
|
94.7
|
|
|
76.9
|
|
|
95.0
|
|
Quarters Ended March 31:
|
|
|
|
|
|
|
|
||||
2013
|
96.4
|
|
|
96.4
|
|
|
133.5
|
|
|
99.2
|
|
2014
|
96.2
|
%
|
|
100.1
|
%
|
|
82.8
|
%
|
|
97.1
|
%
|
Expenses: Income Taxes
|
OTHER INFORMATION
|
|
|
Item 3 - Quantitative and Qualitative Disclosure About Market Risk
|
10 (a)
|
|
|
Amended and Restated Old Republic International Corporation 2006 Incentive Compensation Plan.
|
|
|
|
|
31.1
|
|
|
Certification by Aldo C. Zucaro, Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as
|
|
|
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
31.2
|
|
|
Certification by Karl W. Mueller, Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as
|
|
|
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
32.1
|
|
|
Certification by Aldo C. Zucaro, Chief Executive Officer, pursuant to Section 1350, Chapter 63 of Title 18,
|
|
|
United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
32.2
|
|
|
Certification by Karl W. Mueller, Chief Financial Officer, pursuant to Section 1350, Chapter 63 of Title 18,
|
|
|
United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
Old Republic International Corporation
|
|
|
|
(Registrant)
|
Date:
|
May 7, 2014
|
|
|
|
|
|
|
|
|
|
/s/ Karl W. Mueller
|
|
|
|
|
|
|
|
Karl W. Mueller
Senior Vice President,
Chief Financial Officer, and
Principal Accounting Officer
|
Exhibit
|
|
|
|
No.
|
|
Description
|
|
|
|
|
|
10 (a)
|
|
|
Amended and Restated Old Republic International Corporation 2006 Incentive Compensation Plan.
|
|
|
|
|
31.1
|
|
|
Certification by Aldo C. Zucaro, Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as
|
|
|
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
31.2
|
|
|
Certification by Karl W. Mueller, Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as
|
|
|
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
32.1
|
|
|
Certification by Aldo C. Zucaro, Chief Executive Officer, pursuant to Section 1350, Chapter 63 of Title 18,
|
|
|
United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
32.2
|
|
|
Certification by Karl W. Mueller, Chief Financial Officer, pursuant to Section 1350, Chapter 63 of Title 18,
|
|
|
United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
1.
|
PURPOSE OF THE PLAN
|
2.
|
DEFINITIONS
|
3.
|
ELIGIBILITY AND ADMINISTRATION
|
(a)
|
The Plan shall be administered by the Committee. The Committee shall have full power and authority, subject to the provisions of the Plan and subject to such orders or resolutions not inconsistent with the
|
(b)
|
Decisions of the Committee shall be final, conclusive and binding on all persons or entities, including the Company, any Participant, and any Subsidiary. A majority of the members of the Committee may determine its actions and fix the time and place of its meetings.
|
(c)
|
To the extent not inconsistent with applicable law, including Section 162(m) of the Code, or the rules and regulations of the New York Stock Exchange (or such other principal securities market on which the Shares are traded), the Committee may delegate to a committee of one or more Directors of the Company or, to the extent permitted by law, to one or more executive officers or a committee of executive officers of the Company or its Subsidiaries the right to grant Awards to Employees who are not executive officers of the Company and the authority to take action on behalf of the Committee pursuant to the Plan to cancel or suspend Awards to Employees who are not executive officers of the Company.
|
(a)
|
Subject to adjustment as provided in Section 8.2 hereof, the aggregate number of Shares available for Awards issuable pursuant to this Plan, on and after May 28, 2010, shall be 14,500,000.
|
(b)
|
If any Shares subject to an Award are forfeited, expire or terminate without issuance of all or a portion of the Shares subject to such Award, the Shares shall, to the extent of such forfeiture, expiration, termination or non‑issuance, be added back to the number then remaining available for Awards under the Plan.
|
(c)
|
In the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre‑existing plan approved by shareholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan; provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees prior to such acquisition or combination.
|
Annual
|
Cumulative
|
|||
10% as of December 31st of the year of the grant
|
10
|
%
|
|
|
15% as of the second December 31st following the date of the grant
|
25
|
%
|
|
|
20% as of the third December 31st following the date of the grant
|
45
|
%
|
|
|
25% as of the fourth December 31st following the date of the grant
|
70
|
%
|
|
|
30% as of the fifth December 31st following the date of the grant;
|
100
|
%
|
|
(b)
|
If the Participant (i) dies while in the employ of the Company or any Subsidiary, or (ii) retires in good standing from the employ of the Company or any Subsidiary after attaining age 57, or (iii) retires as a result of disability under the then established rules of the Company or the Subsidiary, then options shall vest to the extent of the higher of:
|
(1)
|
10% of the number of Shares covered by the Option for each year that the Participant has been employed by the Company or any Subsidiary; or
|
(2)
|
the actual vested percentage determined pursuant to the schedule in subparagraph (a) above, plus 50% of the unvested remaining Shares;
|
(c)
|
If there is any Change of Control of the Company, as defined below, regardless of the resulting price per Share of stock, then options shall vest in accordance with the vesting provisions set forth in the preceding subparagraph (b) hereof, and any Shares remaining unvested thereafter shall vest in accordance with the vesting schedule in subparagraph (a) above; or
|
(d)
|
If the Participant is an Employee of a Subsidiary of the Company at the time that such Subsidiary is voluntarily divested by the Company, then all unvested Options held by the Participant shall become fully vested as of the effective date of such divestiture.
|
(e)
|
An option granted any time after January 1, 2014 to a participant who, as of the date of the grant (i) has attained age 65, (ii) is currently an employee of the Company or any Subsidiary, and (iii) has been employed by the Company or any Subsidiary for ten (10 years or longer, shall be fully vested as of the date of the grant.
|
(a)
|
Death
. In the event of the death of a Participant while in the employ of the Company or any Subsidiary and before the date of expiration of an Option held by such Participant, such Option shall terminate on the earlier of its date of expiration or four (4) years following the date of such death. After the death of the Participant, the
|
(b)
|
Retirement
. If, before the date of expiration of an Option, the Participant holding the Option shall be retired in good standing from the employ of the Company or any Subsidiary for reasons of age or disability under the then established rules of the Company or the Subsidiary, the Option shall terminate on the earlier of the normal date of expiration or four (4) years after the date of such retirement. In the event of such retirement, the Option shall be exercisable prior to the termination of such Option to the extent to which the Participant was entitled to exercise such Option immediately prior to such retirement unless the provisions of Section 4.8(b) hereof concerning accelerated vesting apply. An employment relationship between the Company and the Participant shall be deemed to exist during any period in which the Participant is employed by the Company or any Subsidiary. If the Participant dies after retirement, but prior to the expiration date of the Option, the Option period shall not be extended but shall terminate on the earlier of the date of expiration or four (4) years after the date of retirement. The number of Shares vested and exercisable, however, shall be determined as of the date of retirement, with no further vesting thereafter.
|
(c)
|
Change of Control of the Company
. In the event of any involuntary severance of the employment relationship between the Participant and the Company or its Subsidiaries occurring within eighteen (18) months after any Change of Control of the Company, as defined in Section 4.8 hereof, such Option shall terminate on the earlier of its scheduled date of expiration or six (6) months following severance of the employment relationship.
|
(d)
|
Involuntary Severance
. In the event of any involuntary severance of the employment relationship between the Participant and the Company and its Subsidiaries, other than following any Change of Control of the Company or its Subsidiaries, as that term is defined in Section 4.8 hereof, such Option shall terminate on the earlier of its scheduled date of expiration or four (4) years from the date of such involuntary severance, unless such involuntary severance of the employment relationship was “for cause”, as that term is defined hereinbelow, in which case such Option shall terminate immediately upon the date of such involuntary severance.
|
|
|
OLD REPUBLIC INTERNATIONAL CORPORATION
|
||
|
|
|
|
|
|
|
By:____________________________
|
|
|
ATTEST:
|
|
A. C. Zucaro, Chairman and
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based upon our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based upon our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(1)
|
the quarterly report on Form 10-Q of the Company for the quarter ended March 31, 2014 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
(2)
|
the information contained in the Report fairly presents the financial condition and results of operations of the Company.
|