Old Republic Reports Second Quarter and First Half 2007 Financial Results

News Release

Printer Friendly Version View printer-friendly version << Back
July 26, 2007 at 9:05 AM EDT

Old Republic Reports Second Quarter and First Half 2007 Financial Results

CHICAGO, July 26 /PRNewswire-FirstCall/ -- Old Republic International Corporation (NYSE: ORI), today reported the following results for the second quarter and first half of 2007:


                             Financial Highlights
    (unaudited; amounts in millions except per share data and percentages)

                            Quarters Ended June 30, Six Months Ended June 30,
                               2007    2006  Change   2007     2006   Change
    Operating Revenues      $1,018.9  $940.7  8.3% $1,989.8 $1,876.1   6.1%

    Net Operating Income       106.4   121.3 -12.2    212.3    233.8   -9.2
    Net Income                 115.1   126.6  -9.1    222.9    244.0   -8.7
    Diluted Earnings Per Share:
       Net Operating Income     0.45    0.52 -13.5     0.91     1.01   -9.9
       Net Income              $0.49   $0.54 -9.3%    $0.95    $1.05  -9.5%

Consolidated earnings for this year's second quarter and first half benefited from higher General Insurance operating revenues and profits that were mainly attributable to a book of liability insurance business acquired in late 2006. Greater year-over-year claim costs in the Company's Mortgage Guaranty line, and an increased operating expense ratio in Title Insurance, however, were major offsetting factors. As a result of these varying business developments, net operating earnings per share dropped by 13.5 percent in this year's second quarter, compared to a year ago, while net income per share declined by a lesser 9.3 percent due to higher realized investment gains. For the first half of 2007, the downturn in consolidated earnings was not as severe due to stronger first quarter performance by Old Republic's Mortgage Guaranty line.

Consolidated Results -- The major components of Old Republic's consolidated results were as follows for the periods shown:


                           Quarters Ended June 30, Six Months Ended June 30,
                            2007    2006   Change   2007     2006    Change
    Operating revenues:
      General insurance    $612.2  $531.5  15.2% $1,202.0 $1,048.4   14.6%
      Mortgage guaranty     147.0   131.0   12.2    286.4    262.3     9.2
      Title insurance       236.5   253.8   -6.8    453.7    514.2   -11.8
      Corporate and other    23.1    24.2            47.6     51.0
        Total            $1,018.9  $940.7   8.3% $1,989.8 $1,876.1    6.1%
    Pretax operating
     income (loss):

      General insurance    $108.7  $105.2   3.3%   $211.7   $202.3    4.7%
      Mortgage guaranty      36.8    63.7  -42.2     85.1    123.8   -31.2
      Title insurance         3.6    12.1  -69.7      4.3     19.7   -77.8
      Corporate and other     4.5   (2.9)             5.2    (3.3)
        Sub-total           153.8   178.2  -13.7    306.5    342.6   -10.5
    Realized investment
     gains (losses):
      From sales             13.3     8.1            16.3     15.7
      From impairments          -       -               -        -
        Net realized
         investment gains    13.3     8.1            16.3     15.7
    Consolidated pretax
     income                 167.2   186.4  -10.3    322.9    358.3    -9.9
      Income taxes           52.0    59.7  -12.9     99.9    114.3   -12.5

    Net income             $115.1  $126.6  -9.1%   $222.9   $244.0   -8.7%
    Consolidated
     underwriting ratio:
      Benefits and
       claims ratio         51.4%   44.1%           50.0%    43.7%
      Expense ratio          41.5    43.8            42.5     45.1
        Composite ratio     92.9%   87.9%           92.5%    88.8%

    Components of diluted
     net income per share:
      Net operating income  $0.45   $0.52 -13.5%    $0.91    $1.01   -9.9%
      Net realized
       investment gains      0.04    0.02      -     0.04     0.04       -
      Net income            $0.49   $0.54  -9.3%    $0.95    $1.05   -9.5%

Note: In this and all other tables and statements, dollar amounts are stated in millions, except per share data.

The above table shows Old Republic's consolidated results in terms of both operating and net income to highlight the effects of investment gain or loss recognition and any non-recurring items on period-to-period comparisons. Operating income, however, does not replace net income computed in accordance with Generally Accepted Accounting Principles ("GAAP") as a measure of total profitability.

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

General Insurance Results -- Old Republic's General Insurance Group continued to post favorable year-over-year earnings comparisons. Key indicators of that performance follow:


                            Quarters Ended June 30, Six Months Ended June 30,
                             2007    2006  Change     2007     2006   Change
    Net premiums earned     $540.1  $473.0  14.2%  $1,061.9   $933.0  13.8%
    Net investment income     64.7    53.7   20.4     127.5    106.6   19.5
    Pretax operating income $108.7  $105.2   3.3%    $211.7   $202.3   4.7%

    Claims ratio             67.3%   65.6%            66.0%    65.0%
    Expense ratio             23.6    23.4             25.2     24.6
      Composite ratio        90.9%   89.0%            91.2%    89.6%

Substantially all general insurance premium growth in this year's second quarter and first half stemmed from the previously noted new book of liability insurance. Premiums from all other sources combined were slightly higher, constrained by a moderately declining rate environment and the attendant difficulty it poses in retaining or attracting business meeting the Company's underwriting standards. Nonetheless, Old Republic's composite ratio, the most widely accepted indicator of underwriting performance in the industry, continued at a very favorable level for the 21st consecutive quarter. Net investment income grew on the strength of a greater invested asset base and slightly higher investment yields.

Mortgage Guaranty Results -- Pretax mortgage guaranty operating income declined significantly due to less favorable underwriting results. Key performance indicators are shown below.


                            Quarters Ended June 30, Six Months Ended June 30,
                             2007    2006   Change    2007    2006   Change
    Net premiums earned     $125.0  $110.2   13.4%   $243.0  $219.2   10.8%
    Net investment income     19.0    17.6     7.8     37.9    36.8     3.0
    Pretax operating income $ 36.8   $63.7  -42.2%   $ 85.1  $123.8  -31.2%

    Claims ratio             65.9%   35.6%            60.3%   37.2%
    Expense ratio             19.8    22.6             20.3    23.1
      Composite ratio        85.7%   58.2%            80.6%   60.3%

The reduction in mortgage guaranty pretax operating income resulted from much higher claim costs, which outweighed positive contributions from increased premium revenue and lower production costs. Traditional primary new insurance written grew 41.0 percent year-to-date, and related business persistency improved to 74.7 percent from 68.1 percent at mid-year 2006. Year-over-year, however, bulk new insurance written and earned premiums represented the major source of overall premium growth. The lower expense ratios in this year's second quarter and first half were driven by the continued benefits of cost management, and the greater efficiency associated with bulk business production.

The rise in mortgage guaranty claim costs reflected a continuation of particularly unfavorable trends since mid-2006. While comparative paid loss ratios remained relatively stable, greater reserve provisions were required to address a deteriorating claims environment. Year-over-year, the more significant factors in this regard were higher loan defaults, greater claim severity due to higher values of insured risks, and fewer loss mitigation opportunities, especially in parts of the nation where home prices and sales activity have declined measurably. As indicated by the higher composite ratio of claims and expenses, underwriting margins worsened significantly in the first six months of 2007. Their full impact, however, was mitigated to a small extent by greater yields on a slightly higher invested asset base.

Title Insurance Results -- Old Republic's Title Insurance segment registered a continued drop in profitability during the second quarter and first half of 2007. Key performance indicators follow:


                            Quarters Ended June 30, Six Months Ended June 30,
                               2007     2006 Change   2007    2006  Change
    Net premiums and
     fees earned             $229.5   $247.2  -7.2% $439.6  $500.7  -12.2%
    Net investment income       6.8      6.5    4.4   13.5    13.3     1.7
    Pretax operating income    $3.6    $12.1 -69.7%   $4.3  $ 19.7  -77.8%

    Claims ratio               6.4%     5.9%          6.2%    6.0%
    Expense ratio              94.7     91.7          95.7    92.6
      Composite ratio        101.1%    97.6%        101.9%   98.6%

Amid a continuing downturn in the housing and related mortgage lending industries, the Company's title business experienced further reductions in premium and fee revenues. As has been the case for several quarters, direct production facilities in the Western United States sustained the greatest adverse impact. Consolidated title premium and fee revenues dropped by 7.2 percent in this year's second quarter, while operating expenses fell by a lesser 3.9 percent. For the first six months of the year, these amounts declined by 12.2 percent and 9.1 percent, respectively. While significant efforts to reduce operating costs have been made in the past several quarters, substantial challenges remain in redressing the imbalance between operating revenues and certain relatively fixed costs. In combination with a slightly higher claims ratio, these fluctuations produced the negative underwriting margins evidenced by the composite ratios shown in the above table. At this juncture, the Company believes that current market conditions affecting the title industry are unlikely to improve much before year-end 2008.

Corporate and Other Operations -- Old Republic's small life and health business, and the net costs associated with the parent holding company and its corporate services subsidiaries produced higher income contributions in 2007. Period-to-period variability in the results of these relatively minor elements of the Company's operations usually stems from the volatility inherent to the Company's small scaled life and health business, fluctuations in the timing of expense recognition related to such variable costs as stock option expenses, interest income on intercompany financing arrangements, and costs associated with a relatively small debt level.

Cash, Invested Assets, and Shareholders' Equity -- The following table reflects Old Republic's consolidated cash and invested assets as well as shareholders' equity at the dates shown:

                                                              % Change
                                  June   December   June  June '07/ June '07/
                                  2007     2006     2006   Dec '06  June '06


    Cash and invested assets    $8,407.4 $8,230.8 $7,512.9   2.1%    11.9%

    Shareholders' equity:
      Total                      4,517.6  4,369.2  4,130.6    3.4      9.4
      Per share                   $19.51   $18.91   $17.96   3.2%     8.6%

    Composition of shareholders'
     equity per share:
      Equity before items below   $19.39   $18.72   $18.06   3.6%     7.4%
      Unrealized investment gains
       or losses and other
       accumulated comprehensive
       income                       0.12     0.19    (.10)
      Total                       $19.51   $18.91   $17.96   3.2%     8.6%

Cash flow from operating activities of $404.8 million for the first half of 2007 compares with the $325.5 million registered in the same period of 2006. These cash flows were additive to the invested asset base although their full benefit was curbed by the June 2007 repayment of matured corporate debt of $115.0 million.

The investment portfolio reflects a current allocation of approximately 85 percent to fixed-maturity securities and 9 percent to equities most of which are committed to several indexed stock portfolios. As has been the case for many years, Old Republic's invested assets are managed in consideration of enterprise-wide risk management objectives and to assure solid funding of its subsidiaries' long-term obligations to insurance policyholders and other beneficiaries. As a result, it contains little or no exposure to real estate investments, mortgage-backed securities, collateralized debt obligations, derivatives, junk bonds, illiquid private equity investments, or mortgage loans.

Substantially all of the changes in the shareholders' equity account for the periods reported upon reflect earnings retained in excess of dividend payments. A summary of such changes on a per share basis follows:


                                         Six Months Ended  Fiscal Year Ended
                                          June 30, 2007       June 30, 2007
    Beginning shareholders'
     equity per share                          $18.91             $17.96
    Changes in shareholders'
     equity for the periods:
      Net operating income                        .92               1.87
      Net realized investment
       gains (losses)                             .04                .05
      Net unrealized investment
       gains (losses)                           (.13)                .33
      Cash dividends                            (.31)              (.61)
      Stock issuance, foreign exchange,
       and other transactions                     .08              (.09)
    Net change                                    .60               1.55
    Ending shareholders' equity per share      $19.51             $19.51

    Conference Call Information

Old Republic has scheduled a conference call at 3:00 p.m. EDT (2:00 p.m. CDT) today to discuss its second quarter 2007 performance and review ongoing trends. To access this call, log on to www.oldrepublic.com 15 minutes before the call to download the necessary software.

Investors may access a replay of the call by dialing 888-203-1112, passcode 5794545, which will be available through August 2, 2007. The replay will also be available on Old Republic International's website through August 26, 2007.

About Old Republic

Chicago-based Old Republic International Corporation is an insurance holding company whose subsidiaries market, underwrite and provide risk management services for a wide variety of coverages primarily in the property & liability, mortgage guaranty, and title insurance fields. One of the nation's 50 largest publicly owned insurance organizations, Old Republic has assets of approximately $12.7 billion and shareholders' equity of $4.5 billion or $19.51 per share. Its current stock market valuation is approximately $4.6 billion, or $19.94 per share.

The nature of Old Republic's business demands that it be managed for the long run. For the 25 years ended in 2006, the Company's total market return, with dividends reinvested, has grown at a compounded annual rate of 15.8 percent per share. For the same period, the total market return, with dividends reinvested, for the S&P 500 Index has grown at a 13.3 percent annual compound rate. During those years, Old Republic's shareholders' equity account, inclusive of cash dividends, has risen at an average annual rate of 14.1 percent per share, and the regular cash dividend has grown at a 10.1 percent annual compound rate. According to the Summer 2007 edition of Mergent's Dividend Achievers, Old Republic is one of just 117 companies, out of 10,000-plus publicly held corporations, that have posted at least 25 consecutive years of annual dividend growth.

Safe Harbor Statement

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

Some of the statements made in this News Release and Company-published reports, as well as oral statements or commentaries made by the Company's management in conference calls following earnings releases, can constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Of necessity, any such forward-looking statements, commentaries, or inferences involve assumptions, uncertainties, and risks that may affect the Company's future performance. With regard to Old Republic's General Insurance segment, its results can be affected, in particular, by the level of market competition, which is typically a function of available capital and expected returns on such capital among competitors, the levels of interest and inflation rates, and periodic changes in claim frequency and severity patterns caused by natural disasters, weather conditions, accidents, illnesses, work-related injuries, and unanticipated external events. Mortgage Guaranty and Title Insurance results can be affected by similar factors and, most particularly, by changes in national and regional housing demand and values, the availability and cost of mortgage loans, employment trends, and default rates on mortgage loans. Mortgage Guaranty results, in particular, may also be affected by various risk-sharing arrangements with business producers, as well as the risk management and pricing policies of government-sponsored enterprises. Life and health insurance earnings can be affected by the levels of employment and consumer spending, variations in mortality and health trends, and changes in policy lapsation rates. At the parent holding company level, operating earnings or losses are generally reflective of the amount of debt outstanding and its cost, interest income on temporary holdings of short-term investments, and period-to-period variations in the costs of administering the Company's widespread operations. A more detailed discussion of all the foregoing risks appears in Part I, Item 1A - Risk Factors, of the Company's 2006 Form 10-K, which is specifically incorporated herein by reference.

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

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

                      or visit us at http://www.oldrepublic.com



    Old Republic International Corporation
    Financial Summary (Unaudited)

                                            June 30, December 31,  June 30,
    FINANCIAL POSITION SUMMARY:               2007       2006        2006
     Assets:
     Cash and fixed maturity securities    $7,523.9   $7,397.9    $6,757.2
     Equity securities                        714.5      669.1       599.3
     Other invested assets                    168.8      163.7       156.4
        Cash and invested assets            8,407.4    8,230.8     7,512.9
     Accounts and premiums receivable         847.5      962.1       796.3
     Federal income tax recoverable: current   15.2       15.5         5.8
     Reinsurance balances recoverable       2,202.9    2,231.3     2,233.1
     Prepaid federal income taxes             536.5      468.4       468.4
     Sundry assets                            695.7      703.9       635.7

        Total                             $12,705.5  $12,612.2   $11,652.5
     Liabilities and Shareholders' Equity:
     Policy liabilities                    $1,388.9   $1,398.1    $1,259.4
     Benefit and claim reserves             5,698.0    5,534.7     5,134.1
     Federal income tax payable: deferred     465.5      469.4       398.9
     Debt                                      23.8      144.3       142.1
     Sundry liabilities                       611.4      696.4       587.2
     Shareholders' equity                   4,517.6    4,369.2     4,130.6

        Total                             $12,705.5  $12,612.2   $11,652.5


                                   Quarters Ended        Six Months Ended
    INCOME STATEMENT SUMMARY:         June 30,                June 30,
                                   2007        2006       2007        2006
    Net premiums and
     fees earned                 $913.2      $848.4    $1,783.0    $1,692.2
    Net investment income          93.7        82.6       185.2       165.3
    Net realized
     investment gains              13.3         8.1        16.3        15.7
    Other income                   12.0         9.6        21.5        18.5
        Total revenues          1,032.2       948.9     2,006.2     1,891.8
    Benefits and claims           469.0       373.9       891.4       739.4
    Sales and other expenses      395.9       388.4       791.9       794.0
        Total expenses            865.0       762.4     1,683.3     1,533.4
    Revenues, net of expenses     167.2       186.4       322.9       358.3
    Income taxes                   52.0        59.7        99.9       114.3
        Net income               $115.1      $126.6      $222.9      $244.0

    COMMON STOCK STATISTICS (a):
    Net income:  Basic             $.50        $.55        $.96      $ 1.06
                 Diluted           $.49        $.54        $.95      $ 1.05
    Components of earnings
     per share:
      Basic, net operating income  $.46        $.53        $.92      $ 1.02
      Realized investment gains     .04         .02         .04         .04
        Basic net income           $.50        $.55        $.96      $ 1.06
      Diluted, net
       operating income            $.45        $.52        $.91      $ 1.01
      Realized investment gains     .04         .02         .04         .04
        Diluted net income         $.49        $.54        $.95      $ 1.05
    Cash dividends on
     common stock:
      Regular                     $.160      $ .150       $.310      $ .290
      Special (b)                     -           -           -           -

        Total                     $.160      $ .150       $.310      $ .290
    Stock dividends                  -%          -%          -%          -%
    Book value per share
    Common shares
     outstanding:
      Average basic         231,558,161 230,013,892 231,551,981 230,007,372
      Average diluted       233,556,032 232,240,816 233,668,853 232,233,930


                                               Fiscal Twelve Months Ended
    INCOME STATEMENT SUMMARY:                           June 30,
                                                  2007             2006
    Net premiums and fees earned               $3,491.3         $3,442.6
    Net investment income                         361.5            324.2
    Net realized investment gains                  19.6             59.8
    Other income                                   36.0             45.8
        Total revenues                          3,908.5          3,872.5
    Benefits and claims                         1,691.6          1,489.0
    Sales and other expenses                    1,572.2          1,633.8
        Total expenses                          3,263.9          3,122.8
    Revenues, net of expenses                     644.6            749.7
    Income taxes                                  200.9            240.8
        Net income                               $443.6           $508.8

    COMMON STOCK STATISTICS (a):
    Net income:  Basic                            $1.92            $2.21
                 Diluted                          $1.90            $2.18
    Components of earnings per share:
      Basic, net operating income                 $1.86            $2.05
      Realized investment gains                     .06              .16
        Basic net income                          $1.92            $2.21
      Diluted, net operating income               $1.84            $2.02
      Realized investment gains                     .06              .16
        Diluted net income                        $1.90            $2.18
    Cash dividends on common stock:
      Regular                                     $.610            $.562
      Special (b)                                     -             .800

        Total                                     $.610           $1.362
    Stock dividends                                  -%              25%
    Book value per share                         $19.51           $17.96
    Common shares outstanding:
      Average basic                         231,088,155      230,255,604
      Average diluted                       233,520,662      233,424,259
      Actual, end of period                 231,568,599      230,026,330


    (a) Per share statistics herein have been adjusted to reflect all stock
        dividends or splits declared through June 30, 2007.
    (b) In December 2005, a special cash dividend of $.800 per share was
        declared and paid.



    Old Republic International Corporation
    Segmented Operating Summary (Unaudited)


                    Net
                 Premiums         Net
                  & Fees      Investment      Other    Operating
                  Earned        Income       Income    Revenues

    Quarter Ended June 30, 2007

    General        $540.1        $64.7         $7.3      $612.2
    Mortgage        125.0         19.0          2.9       147.0
    Title           229.5          6.8           .2       236.5
    Other            18.4          3.1          1.5        23.1
    Consolidated   $913.2        $93.7        $12.0    $1,018.9

                                                        Pretax     Composite
                                Sales &                Operating     Under-
                  Benefits       Other       Total       Income     writing
                  & Claims     Expenses    Expenses     (Loss)      Ratios
    General        $363.6       $139.7       $503.4      $108.7       90.9%
    Mortgage         82.4         27.7        110.1        36.8        85.7
    Title            14.6        218.2        232.8         3.6       101.1
    Other             8.3         10.2         18.6         4.5           -
    Consolidated   $469.0       $395.9       $865.0      $153.8       92.9%


                    Net
                  Premiums         Net
                   & Fees      Investment     Other     Operating
                   Earned        Income      Income     Revenues

    Quarter Ended June 30, 2006

    General        $473.0        $53.7         $4.7      $531.5
    Mortgage        110.2         17.6          3.1       131.0
    Title           247.2          6.5           .1       253.8
    Other            17.8          4.6          1.6        24.2
    Consolidated   $848.4        $82.6         $9.6      $940.7

                                                        Pretax     Composite
                               Sales &                 Operating     Under-
                  Benefits      Other        Total       Income     writing
                 & Claims     Expenses     Expenses      (Loss)      Ratios

    General        $310.2       $115.9       $426.2      $105.2       89.0%
    Mortgage         39.2         28.0         67.2        63.7        58.2
    Title            14.6        227.0        241.7        12.1        97.6
    Other             9.8         17.3         27.2       (2.9)           -
    Consolidated   $373.9       $388.4       $762.4      $178.2       87.9%


                    Net
                  Premiums        Net
                   & Fees      Investment      Other    Operating
                   Earned        Income       Income    Revenues

    Six Months Ended June 30, 2007

    General      $1,061.9       $127.5        $12.5    $1,202.0
    Mortgage        243.0         37.9          5.3       286.4
    Title           439.6         13.5           .5       453.7
    Other            38.4          6.2          3.0        47.6
    Consolidated $1,783.0       $185.2        $21.5    $1,989.8

                                                         Pretax    Composite
                                Sales &                 Operating    Under-
                  Benefits       Other        Total       Income    writing
                  & Claims     Expenses     Expenses     (Loss)     Ratios

    General        $700.3       $289.8       $990.2      $211.7       91.2%
    Mortgage        146.5         54.6        201.2        85.1        80.6
    Title            27.1        422.2        449.4         4.3       101.9
    Other            17.2         25.1         42.4         5.2           -
    Consolidated   $891.4       $791.9     $1,683.3      $306.5       92.5%


                     Net
                  Premiums        Net
                   & Fees      Investment     Other   Operating
                   Earned        Income       Income   Revenues

    Six Months Ended June 30, 2006

    General        $933.0       $106.6         $8.7    $1,048.4
    Mortgage        219.2         36.8          6.1       262.3
    Title           500.7         13.3           .1       514.2
    Other            39.2          8.4          3.3        51.0
    Consolidated $1,692.2       $165.3        $18.5    $1,876.1

                                                       Pretax     Composite
                               Sales &                Operating    Under-
                 Benefits       Other       Total       Income     writing
                 & Claims     Expenses    Expenses     (Loss)      Ratios

    General        $606.7       $239.3       $846.1      $202.3       89.6%
    Mortgage         81.5         56.8        138.4       123.8        60.3
    Title            30.2        464.2        494.4        19.7        98.6
    Other            20.8         33.5         54.3       (3.3)           -
    Consolidated   $739.4       $794.0     $1,533.4      $342.6       88.8%


                    Net
                  Premiums        Net
                   & Fees      Investment      Other    Operating
                   Earned        Income       Income    Revenues

    Fiscal Twelve Months Ended June 30, 2007

    General      $2,031.0       $242.4        $18.7    $2,292.2
    Mortgage        468.1         75.4         10.5       554.0
    Title           918.8         27.2           .8       946.8
    Other            73.3         16.4          5.9        95.7
    Consolidated $3,491.3       $361.5        $36.0    $3,888.9

                                                         Pretax    Composite
                                Sales &                 Operating    Under-
                 Benefits        Other       Total       Income     writing
                 & Claims      Expenses    Expenses      (Loss)      Ratios

    General      $1,347.8       $533.3     $1,881.1      $411.1       91.2%
    Mortgage        254.9        109.2        364.2       189.7        75.6
    Title            55.1        876.0        931.2        15.6       101.1
    Other            33.7         53.5         87.3         8.4           -
    Consolidated $1,691.6     $1,572.2     $3,263.9      $625.0       91.9%


                    Net
                  Premiums        Net
                   & Fees     Investment      Other   Operating
                   Earned       Income       Income   Revenues

    Fiscal Twelve Months Ended June 30, 2006

    General      $1,845.7       $208.0        $16.5    $2,070.3
    Mortgage        434.8         71.9         14.2       521.0
    Title         1,089.1         26.5           .5     1,116.2
    Other            72.9         17.6         14.5       105.1
    Consolidated $3,442.6       $324.2        $45.8    $3,812.7

                                                         Pretax    Composite
                                Sales &                Operating    Under-
                 Benefits        Other       Total       Income     writing
                 & Claims      Expenses    Expenses      (Loss)      Ratios

    General      $1,214.2      $ 475.0     $1,689.2     $ 381.0       90.6%
    Mortgage        173.0        112.9        285.9       235.0        62.5
    Title            65.8        977.4      1,043.3        72.8        95.7
    Other            35.8         68.3        104.2          .8           -
    Consolidated $1,489.0     $1,633.8     $3,122.8     $ 689.8       88.9%

In the above tables, pretax operating income (loss) is reported net of interest charges on intercompany financing arrangements with Old Republic's holding company parent for the following segments: General - $4.1, $8.3, and $10.8 compared to $.2, $.5, and $.9 for the quarter, six months and fiscal twelve month periods ending June 30, 2007 and 2006, respectively; Title - $.5, $.9, and $1.0 for the quarter, six months and fiscal twelve month periods ending June 30, 2007 compared to zero for the corresponding 2006 periods.



     Old Republic International Corporation
     Segmented Operating Statistics


                                    Quarters Ended        Six Months Ended
                                       June 30,                June 30,
                                    2007      2006        2007       2006
    General Insurance:
      Benefits and claims ratio    67.3%      65.6%       66.0%      65.0%
      Expense ratio                 23.6       23.4        25.2       24.6
       Composite ratio             90.9%      89.0%       91.2%      89.6%

      Paid loss ratio              53.6%      52.7%       53.6%      50.4%


    Mortgage Guaranty:
      New insurance written:
       Traditional Primary      $7,156.7   $4,460.6   $11,775.5   $8,353.1
       Bulk                      4,551.1      981.9     8,486.9    4,238.8
       Other                        69.6       89.4       246.7      140.7

       Total                   $11,777.6   $5,532.0   $20,509.2  $12,732.8

      Net risk in force:
       Traditional Primary
       Bulk
       Other
       Total

      Earned premiums:
       Direct                     $147.5     $129.8      $286.7     $258.8
       Net                        $125.0     $110.2      $243.0     $219.2

      Persistency:
       Traditional Primary

      Delinquency ratio:
       Traditional Primary
       Bulk

      Claims ratio                 65.9%      35.6%       60.3%      37.2%
      Expense ratio                 19.8       22.6        20.3       23.1
       Composite ratio             85.7%      58.2%       80.6%      60.3%

      Paid loss ratio              37.0%      36.7%       36.2%      34.9%


    Title Insurance:
      Direct orders opened        82,980     89,153     169,419    176,064
      Direct orders closed        62,728     69,861     123,652    137,970

      Claims ratio                  6.4%       5.9%        6.2%       6.0%
      Expense ratio                 94.7       91.7        95.7       92.6
       Composite ratio            101.1%      97.6%      101.9%      98.6%

      Paid loss ratio               6.1%       6.1%        7.7%       5.1%


    Consolidated:
      Benefits and claims ratio    51.4%      44.1%       50.0%      43.7%
      Expense ratio                 41.5       43.8        42.5       45.1
       Composite ratio             92.9%      87.9%       92.5%      88.8%

      Paid loss ratio              39.3%      37.1%       39.7%      35.1%


                                              Fiscal Twelve Months Ended
                                                       June 30,
                                                2007               2006
    General Insurance:
      Benefits and claims ratio                 66.4%             65.8%
      Expense ratio                              24.8              24.8
       Composite ratio                          91.2%             90.6%

      Paid loss ratio                          52.1%*             53.3%


    Mortgage Guaranty:
      New insurance written:
       Traditional Primary                  $20,609.4         $18,875.1
       Bulk                                  17,964.7           8,418.4
       Other                                    689.7             595.6

       Total                                $39,263.9         $27,889.2

      Net risk in force:
       Traditional Primary                  $15,392.1         $14,502.0
       Bulk                                   2,607.6           1,891.8
       Other                                    543.5             587.8
       Total                                $18,543.3         $16,981.7

      Earned premiums:
       Direct                                  $552.6            $514.1
       Net                                     $468.1            $434.8

      Persistency:
       Traditional Primary                      74.7%             68.1%

      Delinquency ratio:
       Traditional Primary                      4.36%             4.08%
       Bulk                                     3.71%             3.24%

      Claims ratio                              54.5%             39.8%
      Expense ratio                              21.1              22.7
       Composite ratio                          75.6%             62.5%

      Paid loss ratio                           35.6%             35.6%


    Title Insurance:
      Direct orders opened                    338,633           363,856
      Direct orders closed                    256,736           301,863

      Claims ratio                               6.0%              6.1%
      Expense ratio                              95.1              89.6
       Composite ratio                         101.1%             95.7%

      Paid loss ratio                            6.3%              4.3%


    Consolidated:
      Benefits and claims ratio                 48.5%             43.3%
      Expense ratio                              43.4              45.6
       Composite ratio                          91.9%             88.9%

      Paid loss ratio                          37.7%*             34.9%

    * Excludes the effect of a casualty book of business acquired in the final
      quarter of 2006.

SOURCE Old Republic International Corporation

CONTACT: A.C. Zucaro, Chairman & CEO of Old Republic, 312-346-8100;
or Analysts/Investors, Leslie Loyet, 312-640-6672, lloyet@frbir.com, or
Media, Tim Grace, 312-640-6667, or tgrace@frbir.com, both of Financial
Relations Board, for Old Republic