Old Republic Posts New Quarterly Earnings Record; Net Operating Income Per Share Up 22.4 Percent

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July 25, 2001 at 9:09 AM EDT

Old Republic Posts New Quarterly Earnings Record; Net Operating Income Per Share Up 22.4 Percent

CHICAGO, July 25 /PRNewswire/ -- Old Republic International Corporation's (NYSE: ORI), consolidated net operating income for this year's second quarter grew by 24.0 percent when compared to results for the same period of 2000. On a diluted share basis, the increase was 22.4 percent. For the first half of 2001 the improvement in per share earnings was 29.1 percent.

Net Income and Net Operating Income

Net income for the second quarter of 2001 totaled $91.5 million, or 76 cents per share, vs. $69.4 million, or 58 cents per share, for the year-ago quarter. Net operating income, which excludes realized investment gains or losses, was $86.0 million, or 71 cents per share, compared to $69.4 million, or 58 cents per share in the same quarter of 2000.

For this year's first half, net income was $175.5 million, or $1.46 per share, vs. $124.7 million, or $1.04 per share, for the first six months of 2000. Net operating income for the first half of 2001 was $160.5 million, or $1.33 per share, compared to $124.1 million, or $1.03 per share, in the year- ago period.

Second quarter and first half 2001 post tax operating results for Old Republic's Title Group were affected negatively by additional litigation- related charges of $2.8 million and $3.6 million, respectively, while consolidated results were enhanced by previously unrecognized tax settlement recoveries of $2.9 million for these periods. Accordingly, the net effect of these charges and credits on the Corporation's consolidated net operating income was negligible.

"Consolidated results for the second quarter reflected the extension of more positive trends in General Insurance underwriting performance, and further improvements in Mortgage Guaranty income from underwriting and investments," said Al Zucaro, Chairman and Chief Executive Officer. "Accelerated growth in premiums and fees from greater refinancing activity and a relatively strong housing market benefited our Title segment and consolidated results as well."

Consolidated Revenues

Consolidated operating revenues in this year's second quarter totaled $580.7 million, compared to $502.1 million in the same quarter of 2000. Net premiums and fees were $502.5 million in the second quarter vs. $428.3 million in the year-ago period. Consolidated net investment income was $68.6 million for the second quarter of 2001, 2.3 percent higher when compared to the same period of the preceding year.

For the first half of 2001, consolidated operating revenues were $1.11 billion compared to $994.4 million for the first six months of 2000. Net premiums and fees for the first six months of 2001 were $958.8 million compared to $847.7 million in the same year-ago period. Consolidated net investment income for this year's first half was $137.0 million, up by 1.5 percent.

General Insurance Group

The Old Republic General Insurance Group, which markets and underwrites commercial property and liability insurance coverages, posted an increase of 26.6 percent in pretax operating income for this year's second quarter to $36.3 million when compared to the same period in 2000. Net premiums earned in the second quarter of 2001 rose by 16.4 percent to $244.5 million, compared to $210.0 million a year ago. The statutory composite underwriting ratio for this year's second quarter was 101.2 percent vs. 105.5 percent in the same quarter one year ago. All of the improvement in this ratio stemmed from lower claims.

For the first six months of 2001, pretax operating income totaled $71.5 million vs. $50.5 million for the first six months of 2000, for an increase of 41.5 percent. Net premiums earned were $476.5 million vs. $420.7 million a year ago, and the composite underwriting ratio was 102.3 percent vs. 108.2 percent one year ago.

Mortgage Guaranty Group

Old Republic's Mortgage Guaranty Group reported a further improvement in underwriting and related services income for the second quarter of 2001. Pretax mortgage guaranty operating income in the second quarter was $65.6 million vs. $58.2 million in the year-ago quarter, an increase of 12.9 percent. Net premiums earned in the quarter were $88.6 million, up 9.5 percent from $80.8 million in the year-ago quarter. The composite underwriting ratio in the second quarter was 43.4 percent, compared to 44.2 percent in the same quarter of 2000.

For this year's first half, pretax mortgage guaranty operating income rose by 14.7 percent to $127.2 million compared to $110.9 million in the first six months of 2000. Net premiums earned totaled $175.0 million, an increase of 7.9 percent from $162.1 million earned in the first half of 2000. The composite underwriting ratio was 44.9 percent compared to 47.7 percent one year earlier. The improvement in the underwriting ratio for this year's first half stemmed from both lower claim and operating costs.

Title Insurance Group

The Old Republic Title Group posted a substantial increase in pretax operating income to $20.5 million in the second quarter of 2001 from $13.2 million a year earlier. Premium and fee revenues rose by 27.2 percent to $158.4 million in this year's second quarter, while operating expenses reflected a 21.4 percent increase.

For the first half of the year, premium and fee revenues increased by 19.5 percent to $282.1 million vs. $236.0 million in 2000. First half pretax operating income was $31.5 million up 90.9 percent from $16.5 million in the same period last year. As interest rates charged for home mortgages have been reduced in recent quarters, lending activity for both refinancings and home purchases has been strong.

Life and Health Group

Old Republic's life and health insurance operations, which represent approximately 2.5 percent of total revenues, benefited from higher travel accident profitability and lower term life claims experience in the first six months of this year. Premium revenues declined in this year's first half principally due to the lower sales volume in certain specialty products and term life insurance.

Cash, Invested Assets and Shareholders' Equity

Cash and invested assets at June 30, 2001, totaled $5.29 billion, or $44.54 per share, vs. $5.14 billion, or $43.50 per share, at December 31, 2000, and $4.87 billion, or $41.55 per share, at June 30, 2000. Consolidated operating cash flow was positive at approximately $127.0 million in the latest quarter and $215.0 million for the first half of 2001. The investment portfolio reflects a current allocation of approximately 86 percent in fixed- income investments and 6 percent in equities. It contains little or no exposure to real estate investments, mortgage-backed securities, derivatives, junk bonds, private placements or mortgage loans.

Common shareholders' equity was $2.59 billion at June 30, 2001, vs. $2.43 billion at December 31, 2000, and $2.22 billion at June 30, 2000. Book value per share was $21.83 at the end of this year's second quarter, vs. $20.62 at year-end 2000, and $18.99 at June 30, 2000.

Conference Call Information

Old Republic has scheduled a conference call today at 2:00 p.m. Central Time to discuss its second quarter 2001 performance and review ongoing trends. To access the call, log on to www.oldrepublic.com 15 minutes before the call to download the necessary software. A replay of the call will be available through this website for 30 days.

About the Company

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 in the property and liability, mortgage guaranty, title and life and health insurance fields. One of the nation's 50 largest publicly owned insurance organizations, Old Republic has assets of approximately $7.5 billion and capitalization of $2.7 billion. Its current stock market capitalization is approximately $3.4 billion.

Safe Harbor Statement

Some of the statements made in this News Release, as well as statements made by the Company in periodic press releases, oral statements made by the Company's officials to analysts and shareholders in the course of presentations about the Company and conference calls following earnings releases, can constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, estimates subject to changes in circumstances, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, changes in (i) general economic and business conditions; (ii) interest rate changes; (iii) competition and regulatory environment in which the Company operates; (iv) claims frequency and/or severity trends; (v) the number of new and renewal policy applications submitted by the Company's agents or produced directly by the Company's sales staff; and (vi) other factors noted from time to time in the Company's published reports and filings with the SEC.

For the latest news releases and other corporate documents on Old Republic International, free of charge via fax, simply dial 1-800-PRO-INFO, follow the voice mail menu prompts and enter the company's ticker symbol ORI on any touch tone phone, or access FRB's web site at: www.frbinc.com .

                 Visit Old Republic at: www.oldrepublic.com .


                      Old Republic International Corporation
                              FINANCIAL HIGHLIGHTS

                                                Quarters Ended
                                                   June 30,              %
                                              2001          2000       Change
    NET  INCOME:
          Total                            $91,561,710   $69,419,819    31.9%

          Per Share:  Basic  (a)                 $0.77         $0.59    30.5%
                      Diluted                    $0.76         $0.58    31.0%

    Average number of common and
     equivalent shares outstanding
                      Basic                118,783,068   118,007,337
                      Diluted              120,354,542   118,863,932

    COMPOSITION  OF  EARNINGS  PER
     SHARE:
    Basic Earnings:
          Net income, before items below         $0.72         $0.59    22.0%
          Realized investment gains               0.05           --
              Net income                         $0.77         $0.59    30.5%
    Diluted Earnings:
          Net income, before items below         $0.71         $0.58    22.4%
          Realized investment gains               0.05           --
              Net income                         $0.76         $0.58    31.0%

BOOK VALUE PER SHARE

(End of periods)(b):

          As Reported
          Amortized Cost Basis of Fixed
           Maturity Securities

    SEGMENT  INFORMATION ($ in Millions):
    Operating Revenues:
          General                               $294.0        $259.8    13.2%
          Mortgage Guaranty                      108.7          95.8    13.4%
          Title                                  164.3         130.8    25.7%
          Life & Health                           12.9          14.9   -13.8%
          Other                                    0.7           0.6
              Consolidated Operating
               Revenues                          580.7         502.1    15.7%
    Realized Investment Gains                      8.4           --
          Total Revenues                        $589.2        $502.1    17.4%

    Pre-Tax Operating Income (Loss):
          General                                $36.3         $28.7    26.6%
          Mortgage Guaranty                       65.6          58.2    12.9%
          Title                                   20.5          13.2    54.3%
          Life & Health                            1.2           1.1     1.6%
          Other                                   (3.0)         (3.4)
              Total                              120.7          97.9    23.3%
    Realized Investment Gains                      8.4           --
              Revenues, Net of Expenses          129.2          97.9    32.0%
    Income Taxes                                  38.0          29.0    31.0%
          Net Income                             $91.5         $69.4    31.9%

    Underwriting Ratios:
          General (Statutory)                   101.2%        105.5%
          Mortgage Guaranty (GAAP)               43.4%         44.2%
          Title (GAAP)                           90.8%         94.3%


                                                  Six Months Ended
                                                      June 30,            %
                                               2001          2000      Change
    NET  INCOME:
          Total                            $175,529,245  $124,782,528   40.7%

          Per Share:  Basic  (a)                  $1.48         $1.04   42.3%
                      Diluted                     $1.46         $1.04   40.4%

    Average number of common and
     equivalent shares outstanding
                      Basic                 118,774,400   119,460,759
                      Diluted               120,309,880   120,085,273

    COMPOSITION  OF  EARNINGS  PER  SHARE:
    Basic Earnings:
          Net income, before items below          $1.35         $1.04   29.8%
          Realized investment gains                0.13           --
              Net income                          $1.48         $1.04   42.3%
    Diluted Earnings:
          Net income, before items below          $1.33         $1.03   29.1%
          Realized investment gains                0.13          0.01
              Net income                          $1.46         $1.04   40.4%

    BOOK  VALUE  PER  SHARE
     (End of periods)(b):
          As Reported                            $21.83        $18.99   15.0%
          Amortized Cost Basis of Fixed
           Maturity Securities                   $21.68        $19.16   13.2%

    SEGMENT INFORMATION ($ in Millions):
    Operating Revenues:
          General                                $575.1        $519.6   10.7%
          Mortgage Guaranty                       214.1         191.5   11.8%
          Title                                   293.8         248.3   18.3%
          Life & Health                            29.2          33.0  -11.5%
          Other                                     1.3           1.8
              Consolidated Operating
               Revenues                         1,113.7         994.4   12.0%
    Realized Investment Gains                      23.0           0.9
          Total Revenues                       $1,136.8        $995.3   14.2%

    Pre-Tax Operating Income (Loss):
          General                                 $71.5         $50.5   41.5%
          Mortgage Guaranty                       127.2         110.9   14.7%
          Title                                    31.5          16.5   90.9%
          Life & Health                             2.7           2.1   28.7%
          Other                                    (6.2)         (5.3)
              Total                               226.7         174.7   29.7%
    Realized Investment Gains                      23.0           0.9
              Revenues, Net of Expenses           249.8         175.7   42.2%
    Income Taxes                                   75.7          52.0   45.3%
          Net Income                             $175.5        $124.7   40.7%

    Underwriting Ratios:
          General (Statutory)                    102.3%        108.2%
          Mortgage Guaranty (GAAP)                44.9%         47.7%
          Title (GAAP)                            93.0%         98.2%

(a) Basic earnings per share are calculated after deduction of applicable

        preferred dividend requirements of $11,118 and $22,236 for the quarter
        and six months ended June 30, 2001, respectively, and $28,151 and
        $56,303 for the quarter and six months ended June 30, 2000,
        respectively.

(b) "As Reported" in financial statements with certain fixed maturity

        securities carried at market value;  the "Amortized Cost" book value
        calculation includes all such securities at their currently amortized
        original cost.


                    Old Republic International Corporation
                        SUMMARY OF SEGMENT INFORMATION
                                ($ in Millions)

                                                                       Net
                                             Net Premiums & Fees    Investment
          Segment                            Written       Earned    Income

    Quarter Ended June 30, 2001
         General                              $270.3       $244.5     $44.4
         Mortgage                               87.1         88.6      15.7
         Title                                 158.4        158.4       5.6
         Life                                    9.1         10.9       1.9
         Other                                  ---          ---        0.7
          Total                               $525.1       $502.5     $68.6

    Quarter Ended June 30, 2000
         General                              $215.2       $210.0     $44.7
         Mortgage                               82.0         80.8      13.2
         Title                                 124.6        124.6       5.9
         Life                                    9.5         12.8       2.1
         Other                                  ---          ---        0.9
          Total                               $431.4       $428.3     $67.0


                                              Other     Operating     Benefits
          Segment                            Income      Revenues     & Claims

    Quarter Ended June 30, 2001
         General                              $4.9        $294.0      $180.9
         Mortgage                              4.3         108.7        14.2
         Title                                 0.2         164.3         6.4
         Life                                 ---           12.9         6.3
         Other                                ---            0.7        ---
          Total                               $9.6        $580.7      $208.0

    Quarter Ended June 30, 2000
         General                              $5.0        $259.8      $164.0
         Mortgage                              1.7          95.8        11.8
         Title                                 0.2         130.8         4.2
         Life                                 ---           14.9         6.5
         Other                                (0.3)          0.6        (0.2)
          Total                               $6.6        $502.1      $186.5



                                                                     Pre-tax
                                                                    Operating
                                              Other        Total     Income
          Segment                            Expenses     Expenses   (Loss)

    Quarter Ended June 30, 2001
         General                              $76.6       $257.6      $36.3
         Mortgage                              28.7         43.0       65.6
         Title                                137.4        143.8       20.5
         Life                                   5.2         11.6        1.2
         Other                                  3.7          3.7       (3.0)
          Total                              $251.9       $459.9     $120.7

    Quarter Ended June 30, 2000
         General                              $67.0       $231.1      $28.7
         Mortgage                              25.7         37.6       58.2
         Title                                113.2        117.5       13.2
         Life                                   7.2         13.7        1.1
         Other                                  4.4          4.1       (3.4)
          Total                              $217.6       $404.1      $97.9


                                                                       Net
                                             Net Premiums & Fees    Investment
          Segment                            Written       Earned    Income
    Six Months Ended June 30, 2001
         General                              $517.1       $476.5     $89.1
         Mortgage                              171.9        175.0      31.1
         Title                                 282.1        282.1      11.3
         Life                                   18.3         25.1       3.9
         Other                                  ---          ---        1.3
          Total                               $989.6       $958.8    $137.0

    Six Months Ended June 30, 2000
         General                              $424.5       $420.7     $89.8
         Mortgage                              162.6        162.1      26.3
         Title                                 236.0        236.0      11.9
         Life                                   20.0         28.7       4.2
         Other                                  ---          ---        2.5
          Total                               $843.2       $847.7    $134.9

                                              Other     Operating     Benefits
          Segment                            Income      Revenues     & Claims
    Six Months Ended June 30, 2001
         General                              $9.5        $575.1      $353.9
         Mortgage                              7.9         214.1        30.6
         Title                                 0.3         293.8        11.1
         Life                                 ---           29.2        14.1
         Other                                ---            1.3        ---
          Total                              $17.8      $1,113.7      $409.8

    Six Months Ended June 30, 2000
         General                              $9.0        $519.6      $332.2
         Mortgage                              3.0         191.5        29.5
         Title                                 0.3         248.3         7.9
         Life                                 ---           33.0        15.8
         Other                                (0.6)          1.8        (0.5)
          Total                              $11.7        $994.4      $385.0

                                                                     Pre-tax
                                                                    Operating
                                              Other        Total     Income
          Segment                            Expenses     Expenses   (Loss)
    Six Months Ended June 30, 2001
         General                             $149.6       $503.5      $71.5
         Mortgage                              56.2         86.9      127.2
         Title                                251.1        262.3       31.5
         Life                                  12.3         26.4        2.7
         Other                                  7.6          7.6       (6.2)
          Total                              $477.0       $886.9     $226.7

    Six Months Ended June 30, 2000
         General                             $136.8       $469.0      $50.5
         Mortgage                              51.0         80.6      110.9
         Title                                223.8        231.8       16.5
         Life                                  14.9         30.8        2.1
         Other                                  7.8          7.2       (5.3)
          Total                              $434.5       $819.6     $174.7

                                                                      Net
                                            Net Premiums & Fees    Investment
          Segment                            Written       Earned    Income
    Fiscal Year Ended June 30, 2001
         General                              $977.7       $913.5    $179.1
         Mortgage                              344.8        344.3      61.6
         Title                                 540.1        540.1      23.4
         Life                                   43.6         49.8       8.2
         Other                                  ---          ---        3.5
          Total                             $1,906.4     $1,847.9    $276.0

    Fiscal Year Ended June 30, 2000
         General                              $856.7       $852.0    $180.7
         Mortgage                              311.9        311.4      50.1
         Title                                 512.4        512.4      23.2
         Life                                   50.8         52.6       8.6
         Other                                  ---          ---        4.6
          Total                             $1,732.0     $1,728.6    $267.4

                                              Other     Operating     Benefits
          Segment                            Income      Revenues     & Claims
    Fiscal Year Ended June 30, 2001
         General                             $19.9      $1,112.6      $686.7
         Mortgage                             12.0         417.9        50.7
         Title                                 0.5         564.1        20.7
         Life                                 ---           58.2        27.8
         Other                                (0.4)          3.1        ---
          Total                              $32.2      $2,156.2      $786.0

    Fiscal Year Ended June 30, 2000
         General                             $17.5      $1,050.3      $715.4
         Mortgage                              6.7         368.3        60.8
         Title                                 0.9         536.7        20.5
         Life                                 ---           61.3        27.9
         Other                                (1.4)          3.2        (0.8)
          Total                              $23.8      $2,020.0      $824.0

                                                                     Pre-tax
                                                                    Operating
                                              Other        Total     Income
          Segment                            Expenses     Expenses   (Loss)
    Fiscal Year Ended June 30, 2001
         General                             $287.9       $974.7     $137.9
         Mortgage                             110.8        161.5      256.4
         Title                                488.1        508.8       55.3
         Life                                  24.4         52.2        6.0
         Other                                 14.1         14.1      (10.9)
          Total                              $925.4     $1,711.5     $444.7

    Fiscal Year Ended June 30, 2000
         General                             $277.8       $993.3      $57.0
         Mortgage                             105.2        166.1      202.2
         Title                                485.8        506.4       30.2
         Life                                  26.6         54.6        6.7
         Other                                 12.0         11.2       (7.9)
          Total                              $907.6     $1,731.6     $288.3


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SOURCE Old Republic International Corporation

CONTACT: A.C. Zucaro, Chairman & CEO of Old Republic International, 312-346-8100; General Information, Leslie Hunziker, 312-640-6760, lhunziker@bsmg.com , Analysts-Investors, Leslie Loyet, 312-640-6672, lloyet@bsmg.com , Media Inquiries, Cindy Martin, 312-640-6741, cmartin@bsmg.com , all of The Financial Relations Board BSMG Worldwide/