Schedule II - Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2013

Balance Sheets [Abstract]

Condensed Financial Information of Registrant

OLD REPUBLIC INTERNATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
OLD REPUBLIC INTERNATIONAL CORPORATION (PARENT COMPANY)
($ in Millions)
	December 31,
	2013			2012
Assets:
Bonds and notes	$	10.5		$	55.8
Short-term investments	138.0			159.4
Cash	20.1			—
Investments in, and indebtedness of related parties	4,308.5			4,121.5
Other assets	87.4			114.2
Total Assets	$	4,564.6		$	4,451.1
Liabilities and Common Shareholders' Equity:
Liabilities:
Accounts payable and accrued expenses	$	131.6		$	187.2
Debt and debt equivalents	568.0			570.8
Indebtedness to affiliates and subsidiaries	89.8			96.8
Commitments and contingent liabilities
Total Liabilities	789.6			854.9
Common Shareholders' Equity:
Common stock	260.4			259.4
Additional paid-in capital	673.9			660.9
Retained earnings	2,485.3			2,222.3
Accumulated other comprehensive income (loss)	378.2			481.7
Unallocated ESSOP shares (at cost)	(23.0		)	(28.2		)
Total Common Shareholders' Equity	3,775.0			3,596.2
Total Liabilities and Common Shareholders' Equity	$	4,564.6		$	4,451.1

OLD REPUBLIC INTERNATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF INCOME
OLD REPUBLIC INTERNATIONAL CORPORATION (PARENT COMPANY)
($ in Millions)
	Years Ended December 31,
	2013		2012			2011
Revenues:
Investment income from subsidiaries	$	38.1	$	39.9		$	40.1
Real estate and other income	4.4		4.4			4.1
Other investment income	.8		.5			.6
Total revenues	43.3		44.9			44.9
Expenses:
Interest - subsidiaries	1.3		.5			.6
Interest - other	23.1		33.8			47.6
Real estate and other expenses	4.3		3.8			3.8
General expenses, taxes and fees	11.6		11.2			12.3
Total expenses	40.5		49.4			64.5
Revenues, net of expenses	2.7		(4.4		)	(19.5		)
Federal income taxes (credits)	.3		(3.3		)	(7.2		)
Income (loss) before equity in earnings (losses) of subsidiaries	2.4		(1.0		)	(12.2		)
Equity in Earnings (Losses) of Subsidiaries:
Dividends received	205.3		211.5			177.1
Earnings (losses) in excess of dividends	240.1		(279.1		)	(305.3		)
Net Income (Loss)	$	447.8	$	(68.6	)	$	(140.5	)

OLD REPUBLIC INTERNATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS
OLD REPUBLIC INTERNATIONAL CORPORATION (PARENT COMPANY)
($ in Millions)
	Years Ended December 31,
	2013			2012			2011
Cash flows from operating activities:
Net income (loss)	$	447.8		$	(68.6	)	$	(140.5	)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Accounts receivable	(.7		)	.2			(.1		)
Income taxes - net	24.5			(83.8		)	55.9
Excess of equity in net (income) loss
of subsidiaries over cash dividends received	(240.1		)	262.6			305.3
Accounts payable, accrued expenses and other	(2.0		)	6.4			10.9
Total	229.5			116.7			231.5
Cash flows from investing activities:
Fixed maturity securities:
Maturities and early calls	10.0			—			—
Purchases of:
Fixed assets for company use	(2.3		)	(1.4		)	(4.3		)
Net repayment (issuance) of notes to related parties	(87.4		)	380.0			(564.4		)
Net decrease (increase) in short-term investments	21.4			(44.4		)	(18.6		)
Total	(58.3		)	334.0			(587.4		)
Cash flows from financing activities:
Issuance of debentures and notes	—			—			537.0
Net receipt (repayment) of notes and loans from related parties	25.0			49.0			(1.5		)
Issuance of common shares	11.8			1.0			1.2
Redemption of debentures and notes	(2.7		)	(318.7		)	(2.3		)
Dividends on common shares	(184.8		)	(181.5		)	(178.4		)
Other - net	(.4		)	(.6		)	(.1		)
Total	(151.1		)	(450.8		)	355.8
Increase (decrease) in cash	20.0			—			—
Cash, beginning of year	—			—			—
Cash, end of year	$	20.1		$	—		$	—

OLD REPUBLIC INTERNATIONAL CORPORATION AND SUBSIDIARIES

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

NOTES TO CONDENSED FINANCIAL STATEMENTS

($ in Millions)

Note 1 - Summary of Significant Accounting Policies

Old Republic International Corporation's ("the Company" or "Old Republic") condensed financial statements are presented in accordance with the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") of accounting principles generally accepted in the United States of America ("GAAP") and should be read in conjunction with the consolidated financial statements and notes thereto of Old Republic International Corporation and Subsidiaries included in its Annual Report on Form 10-K.

Note 2 - Investments in Consolidated Subsidiaries

Old Republic International Corporation's investments in consolidated subsidiaries are reflected in the condensed financial statements in accordance with the equity method of accounting. Undistributed earnings in excess of dividends received are recorded as separate line items in the condensed statements of income.

Note 3 - Debt

The Company completed a public offering of $550.0 aggregate principal amount of Convertible Senior Notes in early March, 2011. The notes bear interest at a rate of 3.75% per year, mature on March 15, 2018, and are convertible at any time prior to maturity by the holder into 64.3407 shares (subject to periodic adjustment under certain circumstances) of common stock per one thousand dollar note.

In 2008, the Company secured a ten year $30.0 bank loan to enable its Employees Savings and Stock Ownership Plan ("ESSOP") to purchase Old Republic common stock. Principal amounts of $18.0 and $20.8 were outstanding as of December 31, 2013 and 2012, respectively. The average yield of the ESSOP bank loan was 3.69% and 3.74% at December 31, 2013 and 2012, respectively.

Old Republic's 3.75% Convertible Senior Notes ("the Notes") contain provisions defining certain events of default, among them a court ordered proceeding due to the insolvency of a Significant Subsidiary. The Notes define Significant Subsidiary in accordance with the paragraph (w) of Rule 1-02 of the SEC's Regulation S-X. The Company's flagship mortgage guaranty insurance carrier, Republic Mortgage Insurance Company, ("RMIC") qualifies as a Significant Subsidiary for purposes of the Notes. If RMIC were to become statutorily impaired, its insolvency could trigger a receivership proceeding which, in turn could ultimately result in an event of default. If this were to occur, the outstanding principal of the Notes could become immediately due and payable. Management believes the Final Order by the North Carolina Department of Insurance to RMIC has precluded such an event of default from occurring in the foreseeable future. Moreover, RMIC is expected to be increasingly less significant as its run-off book extinguishes itself.

At December 31, 2013, the Company had sufficient liquid resources available to redeem a substantial portion of the 3.75% Notes. Management continues to explore the Company's options to address possibly greater liquidity needs in the circumstance that an event of default was to occur at a future date. These potential plans include completion of the previously announced recapitalization of the Company's mortgage guaranty subsidiary, RMIC Companies, Inc., which would result in the deconsolidation of RMIC thus preventing an event of default. In connection with such a transaction, it is expected that Old Republic would contribute up to $50.0 of this new capital. Other plans include an amendment to the 3.75% Notes removing RMIC from the definition of a Significant Subsidiary, an additional capital raise through issuance of new straight or convertible debt, or the utilization of intra system dividend and financing capacity. While Management is confident that an event of default can be stemmed, there is no assurance that its impact could be addressed through execution of these plans.