Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Summary of Significant Accounting Policies [Abstract]

Significant Accounting Policies

Summary of Significant Accounting Policies - The significant accounting policies employed by Old Republic International Corporation and its subsidiaries are set forth in the following summary.

(a) Accounting Principles - The Company's insurance subsidiaries are managed pursuant to the laws and regulations of the various states in which they operate. As a result, the subsidiaries operate their business in the context of such laws and regulation, and maintain their accounts in conformity with accounting practices prescribed or permitted by various states' insurance regulatory authorities. Federal income taxes and dividends to shareholders are based on financial statements and reports complying with such practices. The statutory accounting requirements vary from the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") of accounting principles generally accepted in the United States of America ("GAAP") in the following major respects: (1) the costs of selling insurance policies are charged to operations immediately, while the related premiums are taken into income over the terms of the policies; (2) investments in fixed maturity securities designated as available for sale are generally carried at amortized cost rather than their estimated fair value; (3) certain assets classified as "non-admitted assets" are excluded from the balance sheet through a direct charge to earned surplus; (4) changes in allowed deferred income tax assets or liabilities are recorded directly in earned surplus and not through the income statement; (5) mortgage guaranty contingency reserves intended to provide for future catastrophic losses are established as a liability through a charge to earned surplus whereas, GAAP does not allow provisions for future catastrophic losses; (6) title insurance premium reserves, which are intended to cover losses that will be reported at a future date are based on statutory formulas, and changes therein are charged in the income statement against each year's premiums written; (7) certain required formula-derived reserves for general insurance in particular are established for claim reserves in excess of amounts considered adequate by the Company as well as for credits taken relative to reinsurance placed with other insurance companies not licensed in the respective states, all of which are charged directly against earned surplus; (8) surplus notes are classified as equity; and (9) mortgage guaranty deferred payment obligations ("DPO") retained are claim reserves classified as an admissible asset and as a component of policyholder surplus pursuant to a permitted practice of the NCDOI. In consolidating the statutory financial statements of its insurance subsidiaries, the Company has therefore made necessary adjustments to conform their accounts with GAAP. The following table reflects a summary of all such adjustments:

	Shareholders' Equity						Net Income (Loss)
	December 31,						Years Ended December 31,
	2013			2012			2013			2012			2011
Statutory totals of insurance
company subsidiaries (a):
General	$	3,127.9		$	2,905.9		$	314.4		$	225.5		$	292.5
Title	428.6			358.1			88.7			70.3			46.7
RFIG Run-off	456.5			149.2			125.2			(285.0		)	(422.6		)
Life & Accident	67.0			71.9			3.6			3.0			4.8
Sub-total	4,080.0			3,485.1			531.9			13.8			(78.6		)
GAAP totals of non-insurance company
subsidiaries and consolidation adjustments	29.4			(111.6		)	23.2			(64.2		)	(38.7		)
Unadjusted totals	4,109.7			3,374.0			555.1			(50.4		)	(117.4		)
Adjustments to conform to GAAP statements:
Deferred policy acquisition costs	159.1			161.7			.9			(33.3		)	(30.6		)
Fair value of fixed maturity securities	220.9			552.7			—			—			—
Non-admitted assets	73.3			78.2			—			—			—
Deferred income taxes	(49.8		)	(113.9		)	(79.5		)	35.7			73.4
Mortgage contingency and DPO reserves	(479.0		)	(296.9		)	—			—			—
Title unearned premiums	432.6			390.4			42.1			30.0			14.6
Loss reserves	(432.7		)	(360.7		)	(71.8		)	(70.4		)	(49.6		)
Surplus notes	(277.5		)	(202.5		)	—			—			—
Sundry adjustments	17.9			13.0			.9			19.4			(30.9		)
Total adjustments	(334.8		)	222.3			(107.3		)	(18.2		)	(23.1		)
Consolidated GAAP totals	$	3,775.0		$	3,596.2		$	447.8		$	(68.6	)	$	(140.5	)

(a) The insurance laws of the respective states in which the Company’s insurance subsidiaries are incorporated prescribe minimum capital and surplus requirements for the lines of business they are licensed to write. For domestic property and casualty and life and accident insurance companies the National Association of Insurance Commissioners also prescribes risk-based capital ("RBC") requirements. The RBC is a measure of statutory capital in relationship to a formula-driven definition of risk relative to a company’s balance sheet and mix of business. The combined RBC ratio of our primary General insurance subsidiaries was 695% and 680% of the company action level RBC at December 31, 2013 and 2012, respectively. The minimum capital requirements for the Company’s Title Insurance subsidiaries are established by statute in the respective states of domicile. The minimum regulatory capital requirements are not significant in relationship to the recorded statutory capital of the Company’s Title and Life & Accident insurance subsidiaries. At December 31, 2013 and 2012 each of the Company’s General, Title, and Life and Accident insurance subsidiaries exceeded the minimum statutory capital and surplus requirements. Refer to Note 1(s) - Regulatory Matters for a discussion regarding the RFIG Run-off group.

The preparation of financial statements in conformity with either statutory practices or GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

(b) Consolidation Practices - The consolidated financial statements include the accounts of the Company and those of all of its majority owned insurance underwriting and service subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

(c) Statement Presentation - Amounts shown in the consolidated financial statements and applicable notes are stated (except as otherwise indicated and as to share data) in millions, which amounts may not add to totals shown due to truncation. Necessary reclassifications are made in prior periods' financial statements whenever appropriate to conform to the most current presentation.

In 2013, Old Republic adopted guidance requiring additional disclosures of amounts reclassified out of accumulated other comprehensive income. Such requirements are reflected in the presentation of the Consolidated Statements of Comprehensive Income.

(d) Investments - The Company may classify its invested assets in terms of those assets relative to which it either (1) has the positive intent and ability to hold until maturity, (2) has available for sale or (3) has the intention of trading. As of December 31, 2013 and 2012, substantially all the Company's invested assets were classified as "available for sale."

Fixed maturity securities classified as "available for sale" and other preferred and common stocks (equity securities) are included at fair value with changes in such values, net of deferred income taxes, reflected directly in shareholders' equity. Fair values for fixed maturity securities and equity securities are based on quoted market prices or estimates using values obtained from independent pricing services as applicable.

The Company reviews the status and fair value changes of each of its investments on at least a quarterly basis during the year, and estimates of other-than-temporary impairments ("OTTI") in the portfolio's value are evaluated and established at each quarterly balance sheet date. In reviewing investments for OTTI, the Company, in addition to a security's market price history, considers the totality of such factors as the issuer's operating results, financial condition and liquidity, its ability to access capital markets, credit rating trends, most current audit opinion, industry and securities markets conditions, and analyst expectations to reach its conclusions. Sudden fair value declines caused by such adverse developments as newly emerged or imminent bankruptcy filings, issuer default on significant obligations, or reports of financial accounting developments that bring into question the validity of previously reported earnings or financial condition, are recognized as realized losses as soon as credible publicly available information emerges to confirm such developments. Absent issuer-specific circumstances that would result in a contrary conclusion, any equity security with an unrealized investment loss amounting to a 20% or greater decline for a six month period is considered OTTI. In the event the Company's estimate of OTTI is insufficient at any point in time, future periods' net income (loss) would be adversely affected by the recognition of additional realized or impairment losses, but its financial position would not necessarily be affected adversely inasmuch as such losses, or a portion of them, could have been recognized previously as unrealized losses in shareholders' equity. The Company recognized $-, $.2 and $50.2 of OTTI adjustments for the years ended December 31, 2013, 2012 and 2011, respectively.

The amortized cost and estimated fair values by type and contractual maturity of fixed maturity securities are shown in the following tables. Expected maturities will differ from contractual maturities since borrowers may have the right to call or repay obligations with or without call or prepayment penalties.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Fixed Maturity Securities by Type:
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
December 31, 2012:
U.S. & Canadian Governments	$	1,151.2	$	65.9	$	.3	$	1,216.8
Tax-exempt	380.8		11.4		.1		392.2
Corporate	6,461.0		502.1		6.0		6,957.1
	$	7,993.1	$	579.5	$	6.5	$	8,566.2

	Amortized Cost		Estimated Fair Value
Fixed Maturity Securities Stratified by Contractual Maturity at December 31, 2013:
Due in one year or less	$	785.5	$	796.5
Due after one year through five years	3,957.0		4,145.8
Due after five years through ten years	3,544.2		3,579.4
Due after ten years	190.4		190.5
	$	8,477.3	$	8,712.3

Bonds and other investments with a statutory carrying value of $551.2 as of December 31, 2013 were on deposit with governmental authorities by the Company's insurance subsidiaries to comply with insurance laws.

A summary of the Company's equity securities reflecting reported adjusted cost, net of OTTI adjustments totaling $- and $131.3 at December 31, 2013 and 2012, respectively, follows:

Equity Securities:	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
December 31, 2013	$	632.0	$	372.7	$	.5	$	1,004.2
December 31, 2012	$	452.1	$	290.5	$	2.9	$	739.7

The following table reflects the Company's gross unrealized losses and fair value, aggregated by category and length of time that individual securities have been in an unrealized loss position. Fair value and issuer's adjusted cost comparisons follow:

	12 Months or Less				Greater than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
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
December 31, 2012:
Fixed Maturity Securities:
U.S. & Canadian Governments	$	60.3	$	.3	$	—	$	—	$	60.3	$	.3
Tax-exempt	3.7		.1		—		—		3.7		.1
Corporate	348.4		4.3		10.2		1.7		358.6		6.0
Subtotal	412.6		4.8		10.2		1.7		422.8		6.5
Equity Securities	78.9		2.9		—		—		78.9		2.9
Total	$	491.5	$	7.8	$	10.2	$	1.7	$	501.8	$	9.5

At December 31, 2013, the Company held 558 fixed maturity and 5 equity securities in an unrealized loss position, representing 30.8% as to fixed maturities and 7.2% as to equity securities of the total number of such issues it held. At December 31, 2012, the Company held 102 fixed maturity and 14 equity securities in an unrealized loss position, representing 5.7% as to fixed maturities and 21.9% as to equity securities of the total number of such issues it held. Of the securities in an unrealized loss position, 10 and 4 fixed maturity securities and 0 and 1 equity security, had been in a continuous unrealized loss position for more than 12 months as of December 31, 2013 and 2012. The unrealized losses on these securities are primarily attributable to an increase in the interest rate environment. As part of its assessment of other-than-temporary impairments, the Company considers its intent to continue to hold, and the likelihood that it will not be required to sell investment securities in an unrealized loss position until cost recovery, principally on the basis of its asset and liability maturity matching procedures.

Fair Value Measurements - Fair value is defined as the estimated price that is likely to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (an exit price) at the measurement date. A fair value hierarchy is established that prioritizes the sources ("inputs") used to measure fair value into three broad levels: inputs based on quoted market prices in active markets (Level 1); observable inputs based on corroboration with available market data (Level 2); and unobservable inputs based on uncorroborated market data or a reporting entity's own assumptions (Level 3). Following is a description of the valuation methodologies and general classification used for financial instruments measured at fair value.

The Company uses quoted values and other data provided by nationally recognized independent pricing sources as inputs into its quarterly process for determining fair values of its fixed maturity and equity securities. To validate the techniques or models used by pricing sources, the Company's review process includes, but is not limited to: (i) initial and ongoing evaluation of methodologies used by outside parties to calculate fair value; and (ii) comparing other sources including the fair value estimates to its knowledge of the current market and to independent fair value estimates provided by the investment custodian. The independent pricing source obtains market quotations and actual transaction prices for securities that have quoted prices in active markets and uses its own proprietary method for determining the fair value of securities that are not actively traded. In general, these methods involve the use of "matrix pricing" in which the independent pricing source uses observable market inputs including, but not limited to, investment yields, credit risks and spreads, benchmarking of like securities, broker-dealer quotes, reported trades and sector groupings to determine a reasonable fair value.

Level 1 securities include U.S. and Canadian Treasury notes, publicly traded common stocks, the quoted net asset value ("NAV") mutual funds, and most short-term investments in highly liquid money market instruments. Level 2 securities generally include corporate bonds, municipal bonds, certain U.S. and Canadian government agency securities. Securities classified within Level 3 include non-publicly traded bonds, short-term investments, and equity securities. There were no significant changes in the fair value of assets measured with the use of significant unobservable inputs as of December 31, 2013 and December 31, 2012.

The following tables show a summary of assets measured at fair value segregated among the various input levels described above:

	Fair Value Measurements
As of December 31, 2013:	Level 1		Level 2		Level 3		Total
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
As of December 31, 2012:
Available for sale:
Fixed maturity securities:
U.S. & Canadian Governments	$	570.9	$	645.9	$	—	$	1,216.8
Tax-exempt	—		392.2		—		392.2
Corporate	—		6,926.3		30.7		6,957.1
Equity securities	736.9		—		2.7		739.7
Short-term investments	$	1,260.2	$	—	$	4.6	$	1,264.9

There were no transfers between Levels 1, 2 or 3 during 2013. Level 3 securities with a fair value of $20.2 were disposed of during 2013.

Investment income is reported net of allocated expenses and includes appropriate adjustments for amortization of premium and accretion of discount on fixed maturity securities acquired at other than par value. Dividends on equity securities are credited to income on the ex-dividend date. Realized investment gains and losses, which result from sales or write-downs of securities, are reflected as revenues in the income statement and are determined on the basis of amortized value at date of sale for fixed maturity securities, and cost in regard to equity securities; such bases apply to the specific securities sold. Unrealized investment gains and losses, net of any deferred income taxes, are recorded directly as a component of accumulated other comprehensive income in shareholders' equity. At December 31, 2013, the Company and its subsidiaries had no non-income producing fixed maturity securities.

The following table reflects the composition of net investment income, net realized gains or losses, and the net change in unrealized investment gains or losses for each of the years shown.

Years Ended December 31:	2013			2012		2011
Investment income from:
Fixed maturity securities	$	298.7		$	321.0	$	353.2
Equity securities	21.2			13.1		11.3
Short-term investments	1.1			1.9		1.5
Other sources	2.6			5.4		4.7
Gross investment income	323.7			341.6		370.9
Investment expenses (a)	4.9			5.1		6.2
Net investment income	$	318.7		$	336.5	$	364.6
Realized gains (losses) on:
Fixed maturity securities:
Gains	$	9.9		$	32.7	$	143.9
Losses	(8.2		)	—		(1.2		)
Net	1.7			32.7		142.6
Equity securities & other long-term investments	146.3			15.1		(27.0		)
Total	148.1			47.8		115.5
Income taxes (credits)(b)	51.8			16.7		37.5
Net realized gains (losses)	$	96.2		$	31.1	$	78.0
Changes in unrealized investment gains (losses) on:
Fixed maturity securities	$	(337.9	)	$	64.9	$	46.3
Less: Deferred income taxes (credits)	(117.9		)	22.6		16.0
	(219.9		)	42.2		30.3
Equity securities & other long-term investments	82.6			48.4		(35.2		)
Less: Deferred income taxes (credits)	28.9			16.8		(12.4		)
	53.7			31.5		(22.7		)
Net changes in unrealized investment gains (losses)	$	(166.2	)	$	73.8	$	7.5

__________

(a) Investment expenses consist of personnel costs and investment management and custody service fees, as well as interest incurred on funds held of $1.7, $2.0 and $1.9 for the years ended December 31, 2013, 2012 and 2011, respectively.

(b) Reflects primarily the combination of fully taxable realized investment gains or losses and judgments about the recoverability of deferred tax assets.

(e) Revenue Recognition- Pursuant to GAAP applicable to the insurance industry, revenues are recognized as follows:

Substantially all general insurance premiums pertain to annual policies and are reflected in income on a pro-rata basis in general association with the related benefits, claims, and expenses. Earned but unbilled premiums are generally taken into income on the billing date, while adjustments for retrospective premiums, commissions and similar charges or credits are accrued on the basis of periodic evaluations of current underwriting experience and contractual obligations.

Title premium and fee revenues stemming from the Company's direct operations (which include branch offices of its title insurers and wholly owned agency subsidiaries) represent 28% of 2013, 32% of 2012 and 33% of 2011 consolidated title business revenues. Such premiums are generally recognized as income at the escrow closing date which approximates the policy effective date. Fee income related to escrow and other closing services is recognized when the related services have been performed and completed. The remaining title premium and fee revenues are produced by independent title agents and underwritten title companies. Rather than making estimates that could be subject to significant variance from actual premium and fee production, the Company recognizes revenues from those sources upon receipt. Such receipts can reflect a three to four month lag relative to the effective date of the underlying title policy, and are offset concurrently by production expenses and claim reserve provisions.

The Company's mortgage guaranty premiums principally stem from monthly installments paid on long-duration, guaranteed renewable insurance policies. Substantially all such premiums are written and earned in the month coverage is effective. With respect to relatively few annual or single premium policies, earned premiums are largely recognized on a pro-rata basis over the terms of the policies. Recognition of normal or catastrophic claim costs, however, occurs only upon an instance of default, defined as the occurrence of two or more consecutively missed monthly payments. Accordingly, GAAP revenue recognition for insured loans is not appropriately matched to the risk exposure and the consequent recognition of both normal and most significantly, future catastrophic loss occurrences for which current reserve provisions are not permitted. As a result, mortgage guaranty GAAP earnings for any individual year or series of years may be materially adversely affected, particularly by cyclical catastrophic loss events such as the mortgage insurance industry has experienced since mid year 2007. Reported GAAP earnings and financial condition form, in part, the basis for significant judgments and strategic evaluations made by management, analysts, investors, and other users of the financial statements issued by mortgage guaranty companies. The risk exists that such judgments and evaluations are at least partially based on GAAP financial information that does not match revenues and expenses and is therefore not reflective of the long-term normal and catastrophic risk exposures assumed by mortgage guaranty insurers at any point in time.

(f) Deferred Policy Acquisition Costs - Various insurance subsidiaries of the Company defer certain costs which vary with and are directly related to the production of business. Deferred costs consist principally of commissions, premium taxes, marketing, and policy issuance expenses. Effective January 1, 2012, the Company adopted a prospective application of new GAAP authoritative guidance related to the deferral of costs for acquiring or renewing insurance contracts. The guidance identifies those direct costs that relate to the successful acquisition of new or renewal insurance contracts that should be capitalized. The adoption of the guidance resulted in 2012 pretax charges of $37.9 to General Insurance results.

With respect to most coverages, deferred acquisition costs are amortized on the same basis as the related premiums are earned or, alternatively, over the periods during which premiums will be paid. To the extent that future revenues on existing policies are not adequate to cover related costs and expenses, deferred policy acquisition costs are charged to earnings. During 2011, $29.1 of previously deferred mortgage guaranty acquisition costs were written-off as they were no longer deemed recoverable in future run-off periods.

The following table shows a reconciliation of deferred acquisition costs between succeeding balance sheet dates.

Years Ended December 31:	2013			2012			2011
Deferred, beginning of year	$	165.5		$	197.6		$	230.6
Acquisition costs deferred:
Commissions - net of reinsurance	222.7			180.8			139.0
Premium taxes	93.8			86.8			77.7
Salaries and other marketing expenses	42.5			43.3			121.8
Sub-total	359.1			311.0			338.4
Amortization charged to income	(331.9		)	(343.2		)	(371.7		)
Change for the year	27.1			(32.1		)	(33.3		)
Deferred, end of year	$	192.6		$	165.5		$	197.6

(g) Unearned Premiums - Unearned premium reserves are generally calculated by application of pro-rata factors to premiums in force. At December 31, 2013 and 2012, unearned premiums consisted of the following:

As of December 31:	2013		2012
General Insurance Group	$	1,458.9	$	1,323.8
RFIG Run-off Business	28.9		40.5
Total	$	1,487.8	$	1,364.4

(h) Losses, Claims and Settlement Expenses - The establishment of claim reserves by the Company's insurance subsidiaries is a reasonably complex and dynamic process influenced by a large variety of factors. These factors principally include past experience applicable to the anticipated costs of various types of claims, continually evolving and changing legal theories emanating from the judicial system, recurring accounting, statistical, and actuarial studies, the professional experience and expertise of the Company's claim departments' personnel or attorneys and independent claim adjusters, ongoing changes in claim frequency or severity patterns such as those caused by natural disasters, illnesses, accidents, work‑related injuries, and changes in general and industry-specific economic conditions. Consequently, the reserves established are a reflection of the opinions of a large number of persons, of the application and interpretation of historical precedent and trends, of expectations as to future developments, and of management's judgment in interpreting all such factors. At any point in time, the Company is exposed to possibly higher or lower than anticipated claim costs due to all of these factors, and to the evolution, interpretation, and expansion of tort law, as well as the effects of unexpected jury verdicts.

All reserves are therefore based on estimates which are periodically reviewed and evaluated in the light of emerging claim experience and changing circumstances. The resulting changes in estimates are recorded in operations of the periods during which they are made. Return and additional premiums and policyholders' dividends, all of which tend to be affected by development of claims in future years, may offset, in whole or in part, developed claim redundancies or deficiencies for certain coverages such as workers' compensation, portions of which are written under loss sensitive programs that provide for such adjustments. The Company believes that its overall reserving practices have been consistently applied over many years, and that its aggregate net reserves have generally resulted in reasonable approximations of the ultimate net costs of claims incurred. However, no representation is made nor is any guaranty given that ultimate net claim and related costs will not develop in future years to be greater or lower than currently established reserve estimates.

General Insurance reserves are established to provide for the ultimate expected cost of settling unpaid losses and claims reported at each balance sheet date. Such reserves are based on continually evolving assessments of the facts available to the Company during the settlement process which may stretch over long periods of time. Long-term disability-type workers' compensation reserves are discounted to present value based on interest rates ranging from 3.5% to 4.0%. Losses and claims incurred but not reported ("IBNR"), as well as expenses required to settle losses and claims are established on the basis of a large number of formulas that take into account various criteria, including historical cost experience and anticipated costs of servicing reinsured and other risks. As applicable, estimates of possible recoveries from salvage or subrogation opportunities are considered in the establishment of such reserves. Overall claim and claim expense reserves incorporate amounts covering net estimates of unusual claims such as those emanating from asbestosis and environmental ("A&E") exposures as discussed below. Such reserves can affect claim costs and related loss ratios for such insurance coverages as general liability, commercial automobile (truck), workers' compensation, and property.

Early in 2001, the Federal Department of Labor revised the Federal Black Lung Program regulations. The revisions basically require a reevaluation of previously settled, denied, or new occupational disease claims in the context of newly devised, more lenient standards when such claims are resubmitted. Following a number of challenges and appeals by the insurance and coal mining industries, the revised regulations were, for the most part, upheld in June, 2002 and are to be applied prospectively. Since the final quarter of 2001 black lung claims filed or refiled pursuant to these revised regulations have increased, though the volume of new claim reports has abated in recent years. In March 2010, federal regulations were revised once again as part of the Patient Protection and Affordability Act that reinstates two provisions that potentially benefit claimants. In response to this most recent legislation and similar to the 2001 change, black lung claims filed or refiled have again increased.The vast majority of claims filed to date against Old Republic pertain to business underwritten through loss sensitive programs that permit the charge of additional or refund of return premiums to wholly or partially offset changes in estimated claim costs, or to business underwritten as a service carrier on behalf of various industry-wide involuntary market (i.e. assigned risk) pools. A much smaller portion pertains to business produced on a traditional risk transfer basis. The Company has established applicable reserves for claims as they have been reported and for claims not as yet reported on the basis of its historical experience as well as assumptions relative to the effect of the revised regulations. Inasmuch as a variety of challenges are likely as the revised regulations are implemented through the actual claim settlement process, the potential impact on reserves, gross and net of reinsurance or retrospective premium adjustments, resulting from such regulations cannot be estimated with reasonable certainty.

Old Republic's reserve estimates also include provisions for indemnity and settlement costs for various asbestosis and environmental impairment ("A&E") claims that have been filed in the normal course of business against a number of its insurance subsidiaries. Many such claims relate to policies incepting prior to 1985, including many issued during a short period between 1981 and 1982 pursuant to an agency agreement canceled in 1982. Over the years, the Company's property and liability insurance subsidiaries have typically issued general liability insurance policies with face amounts ranging between $1.0 and $2.0 and rarely exceeding $10.0. Such policies have, in turn, been subject to reinsurance cessions which have typically reduced the subsidiaries' net retentions to $.5 or less as to each claim. Old Republic's exposure to A&E claims cannot, however, be calculated by conventional insurance reserving methods for a variety of reasons, including: a) the absence of statistically valid data inasmuch as such claims generally involve long reporting delays and very often uncertainty as to the number and identity of insureds against whom such claims have arisen or will arise; and b) the litigation history of such or similar claims for insurance industry members which has produced inconsistent court decisions with regard to such questions as when an alleged loss occurred, which policies provide coverage, how a loss is to be allocated among potentially responsible insureds and/or their insurance carriers, how policy coverage exclusions are to be interpreted, what types of environmental impairment or toxic tort claims are covered, when the insurer's duty to defend is triggered, how policy limits are to be calculated, and whether clean-up costs constitute property damage. Over time, the Executive Branch and/or the Congress of the United States have proposed or considered changes in the legislation and rules affecting the determination of liability for environmental and asbestosis claims. As of December 31, 2013, however, there is no solid evidence to suggest that possible future changes might mitigate or reduce some or all of these claim exposures. Because of the above issues and uncertainties, estimation of reserves for losses and allocated loss adjustment expenses for A&E claims in particular is much more difficult or impossible to quantify with a high degree of precision. Accordingly, no representation can be made that the Company's reserves for such claims and related costs will not prove to be overstated or understated in the future. At December 31, 2013 and 2012, Old Republic's aggregate indemnity and loss adjustment expense reserves specifically identified with A&E exposures amounted to $159.7 and $147.1 gross, respectively, and $121.3 and $119.4 net of reinsurance, respectively. Old Republic's average five year survival ratios stood at 5.5 years (gross) and 7.8 years (net of reinsurance) as of December 31, 2013 and 4.7 years (gross) and 7.6 years (net of reinsurance) as of December 31, 2012. The survival ratios are presented on a pro forma basis (unaudited) as if PMA had been consolidated with ORI for all periods. Fluctuations in this ratio between years can be caused by the inconsistent pay out patterns associated with these types of claims.

Title insurance and related escrow services loss and loss adjustment expense reserves are established as point estimates to cover the projected settlement costs of known as well as IBNR losses related to premium and escrow service revenues of each reporting period. Reserves for known claims are based on an assessment of the facts available to the Company during the settlement process. The point estimates covering all claim reserves inherently take into account IBNR claims based on past experience and evaluations of such variables as changing trends in the types of policies issued, changes in real estate markets and interest rate environments, and changing levels of loan refinancing, all of which can have a bearing on the emergence, number, and ultimate cost of claims.

RFIG Run-off mortgage guaranty insurance reserves for unpaid claims and claim adjustment expenses are recognized only upon an instance of default, defined as an insured mortgage loan for which two or more consecutive monthly payments have been missed. Loss reserves are based on statistical calculations that take into account the number of reported insured mortgage loan defaults as of each balance sheet date, as well as experience-based estimates of loan defaults that have occurred but have not as yet been reported. Further, the loss reserve estimating process takes into account a large number of variables including trends in claim severity, potential salvage recoveries, expected cure rates for reported loan delinquencies at various stages of default, the level of coverage rescissions and claims denials due to material misrepresentation in key underwriting information or non-compliance with prescribed underwriting guidelines, and management judgments relative to future employment levels, housing market activity, and mortgage loan interest costs, demand, and extensions.

The Company has the legal right to rescind mortgage insurance coverage unilaterally as expressly stated in its policy. Moreover, two federal courts that have recently considered that policy wording have each affirmed that right (See First Tennessee Bank N.A. v. Republic Mortg. Ins. Co., Case No. 2:10-cv-02513-JPM-cgc (W.D. Tenn., Feb. 25, 2011) and JPMorgan Chase Bank N.A. v. Republic Mortg. Ins. Co., Civil Action No. 10-06141 (SRC) (D. NJ, May 4, 2011), each decision citing supporting state law legal precedent). RMIC's mortgage insurance policy provides that the insured represents that all statements made and information provided to it in an application for coverage for a loan, without regard to who made the statements or provided the information, have been made and presented for and on behalf of the insured; and that such statements and information are neither false nor misleading in any material respect, nor omit any fact necessary to make such statements and information not false or misleading in any material respect. According to the policy, if any of those representations are materially false or misleading with respect to a loan, the Company has the right to cancel or rescind coverage for that loan retroactively to commencement of the coverage. Whenever the Company determines that an application contains a material misrepresentation, it either advises the insured in writing of its findings prior to rescinding coverage or exercises its unilateral right to rescind coverage for that loan, stating the reasons for that action in writing and returning the applicable premium. The rescission of coverage in instances of materially faulty representations or warranties provided in applications for insurance is a necessary and prevailing practice throughout the insurance industry. In the case of mortgage guaranty insurance, rescissions have occurred regularly over the years but have been generally immaterial. Since 2008, however, the Company has experienced a much greater incidence of rescissions due to increased levels of observed fraud and misrepresentations in insurance applications pertaining to business underwritten between 2004 and the first half of 2008. As a result, the Company has incorporated certain assumptions regarding the expected levels of coverage rescissions and claim denials in its reserving methodology since 2008. Such estimates, which are evaluated at each balance sheet date, take into account observed as well as historical trends in rescission and denial rates. The table below shows the estimated effects of coverage rescissions and claim denials on loss reserves and settled and incurred losses.

	2013			2012			2011
Estimated reduction in beginning reserve	$	174.9		$	313.2		$	710.3
Total incurred claims and settlement expenses reduced
(increased) by changes in estimated rescissions:
Current year	80.5			111.7			223.1
Prior year	71.9			12.2			(340.8		)
Sub-total	152.5			124.0			(117.6		)
Estimated rescission reduction in settled claims	(212.2		)	(262.3		)	(279.5		)
Estimated reduction in ending reserve	$	115.2		$	174.9		$	313.2

As above-noted, the estimated reduction in ending loss reserves reflects, in large measure, a variety of judgments relative to the level of expected coverage rescissions and claim denials on loans that are in default as of each balance sheet date. The provision for insured events of the current year resulted from actual and anticipated rescissions and claim denials attributable to newly reported delinquencies in each respective year. The provision for insured events of prior years resulted from actual rescission and claim denial activity or revisions in assumptions regarding expected rescission or claim denial rates on outstanding prior year delinquencies. The trends since 2010 reflect a continuing reduction in the level of actual and anticipated rescission and claim denial rates on total outstanding delinquencies. Claims not paid by virtue of rescission or denial represent the Company's estimated contractual risk, before consideration of the impacts of any reinsurance and deductibles or aggregate loss limits, on cases that are settled by the issuance of a rescission or denial notification. Variances between the estimated rescission and actual claim denial rate are reflected in the periods during which they occur.

Although the insured has no right under the policy to appeal a Company claim decision, the insured may, at any time, contest in writing the Company's findings or action with respect to a loan or a claim. In such cases, the Company considers any additional information supplied by the insured. This consideration may lead to further investigation, retraction or confirmation of the initial determination. If the Company concludes that it will reinstate coverage, it advises the insured in writing that it will do so immediately upon receipt of the premium previously returned. Reserves are not adjusted for potential reversals of rescissions or adverse rulings for loans under dispute since such reversals of claim rescissions and denials have historically been immaterial to the reserve estimation process.

There is currently a single instance in which the Company seeks to recover from an insured for previously paid claims. In its counterclaim in the pending arbitration with Countrywide, RMIC is seeking to rescind a June 2006 amendment to a mortgage insurance policy that it contends was fraudulently induced by Countrywide (Countrywide Fin'l Corp. v. Republic Mortg. Ins. Co., Case No. 72 195 Y 0011510 (AAA). The Countrywide parties are Countrywide Financial Corporation, Countrywide Home Loans, Inc., Bank of America, N.A., in its own capacity and as successor by merger of BAC Home Loan Servicing L.P.). The amendment made coverage for a loan immediately incontestable for borrower misrepresentation. The Company seeks a declaration that the amendment is null and void and to recover the claim amounts totaling at least $26.6 that it paid notwithstanding the existence of borrower misrepresentations that otherwise would have supported a rescission of coverage for those loans. The Company does not anticipate recoveries from previously paid claims in its reserving process until such time as a recovery is deemed probable and the amount can be reasonably estimated.

In addition to the above reserve elements, the Company establishes reserves for loss settlement costs that are not directly related to individual claims. Such reserves are based on prior years' cost experience and trends, and are intended to cover the unallocated costs of claim departments' administration of known and IBNR claims.

The following table shows an analysis of changes in aggregate reserves for the Company's losses, claims and settlement expenses for each of the years shown.

Years Ended December 31:	2013			2012			2011
Gross reserves at beginning of year	$	9,303.3		$	8,786.6		$	8,814.6
Less: reinsurance losses recoverable	2,847.0			2,908.1			2,945.3
Net reserves at beginning of year:
General Insurance	4,048.9			3,874.9			3,888.0
Title Insurance	396.4			332.0			298.0
RFIG Run-off	1,994.8			1,654.0			1,663.1
Other	15.9			17.4			20.0
Sub-total	6,456.2			5,878.5			5,869.3
Incurred claims and claim adjustment expenses:
Provisions for insured events of the current year:
General Insurance	1,857.9			1,729.6			1,575.3
Title Insurance	137.2			120.9			105.7
RFIG Run-off (a)	487.5			762.2			887.1
Other	41.0			40.3			40.2
Sub-total	2,523.7			2,653.1			2,608.5
Change in provision for insured events of prior years:
General Insurance	(23.7		)	(51.5		)	(130.9		)
Title Insurance	(3.1		)	—			—
RFIG Run-off (a)	(269.7		)	148.2			254.8
Other	(2.5		)	(1.5		)	(1.2		)
Sub-total	(299.1		)	95.1			122.6
Total incurred claims and claim adjustment expenses (a)	2,224.5			2,748.2			2,731.1
Payments:
Claims and claim adjustment expenses attributable to
insured events of the current year:
General Insurance	620.8			587.8			569.8
Title Insurance	6.0			3.0			7.9
RFIG Run-off (b)	39.4			46.6			100.5
Other	29.5			30.6			30.7
Sub-total	695.9			668.1			709.2
Claims and claim adjustment expenses attributable to
insured events of prior years:
General Insurance	928.2			916.1			887.6
Title Insurance	52.8			53.4			63.6
RFIG Run-off (b)	398.9			523.0			1,050.5
Other	8.0			9.6			10.7
Sub-total	1,388.0			1,502.3			2,012.6
Total payments (b)	2,083.9			2,170.5			2,721.9
Amount of reserves for unpaid claims and claim adjustment expenses
at the end of each year, net of reinsurance losses recoverable: (c)
General Insurance	4,334.1			4,048.9			3,874.9
Title Insurance	471.5			396.4			332.0
RFIG Run-off	1,774.2			1,994.8			1,654.0
Other	16.8			15.9			17.4
Sub-total	6,596.8			6,456.2			5,878.5
Reinsurance losses recoverable	2,836.7			2,847.0			2,908.1
Gross reserves at end of year	$	9,433.5		$	9,303.3		$	8,786.6

__________

As noted elsewhere in this report, in 2012 Old Republic's CCI insurance coverage was combined with the MI business within the overall RFIG Run-off Business. Prior periods' segmented information for the General Insurance and RFIG Run-off Business segments has therefore been reclassified to provide necessary consistency in period-to-period operating comparisons.

Excluding the reclassification of CCI from the General Insurance to the RFIG Run-off Business segment, certain elements shown in the preceding table would have been as follows:

	2013			2012			2011
Change in provision for incurred events of prior years:
General Insurance	$	(40.4	)	$	(19.8	)	$	(149.2	)
RFIG Run-off (a)	(253.0		)	116.5			273.2
Payment of claim and claim adjustment expenses attributable to
incurred events of the current and prior years:
General Insurance	1,597.5			1,577.9			1,551.1
RFIG Run-off (b)	$	389.8		$	495.7		$	1,057.4

(a) In common with all other insurance lines, RFIG Run-off mortgage guaranty settled and incurred claim and claim adjustment expenses include only those costs actually or expected to be paid by the Company. As previously noted, changes in mortgage guaranty aggregate case, IBNR, and loss adjustment expense reserves shown below and entering into the determination of incurred claim costs, take into account, among a large number of variables, claim cost reductions for anticipated coverage rescissions and claims denials.

The RFIG Run-off mortgage guaranty provision for insured events of the current year was reduced by an estimated $80.5, $111.7 and $223.1, respectively, for 2013, 2012 and 2011. The provision for insured events of prior years in 2013, 2012 and 2011 was reduced (increased) by an estimated $71.9, $12.2 and $(340.8), respectively. These changes were offset to varying degrees by differences between actual claim settlements relative to expected experience and by subsequent revisions of assumptions in regards to claim frequency, severity or levels of associated claim settlement costs which result from consideration of underlying trends and expectations.

The following table reflects the changes in net reserves between succeeding balance sheet dates.

	2013			2012			2011
Net reserve increase(decrease):
General Insurance	$	285.1		$	174.0		$	(13.1	)
Title Insurance	75.1			64.3			34.0
RFIG Run-off	(220.6		)	340.7			(9.0		)
Other	.9			(1.5		)	(2.6		)
Total	$	140.6		$	577.6		$	9.2

(b) Rescissions reduced the Company's settled losses by an estimated $212.2, $262.3, and $279.5 for 2013, 2012, and 2011, respectively. 2013 and 2012 RFIG Run-off Business claim and claim adjustment expense payments reflect the retention of the DPO within claim reserves which amounted to $551.5 and $299.5 as of the respective year-ends.

(c) Year end net IBNR reserves for each segment were as follows:

	2013		2012		2011
General Insurance	$	2,118.4	$	1,947.0	$	1,878.2
Title Insurance	407.1		336.9		262.5
RFIG Run-off	121.3		147.5		94.8
Other	4.0		4.6		4.6
Total	$	2,651.0	$	2,436.1	$	2,240.4

For the three most recent calendar years, the above table indicates that the one-year development of consolidated reserves at the beginning of each year produced a favorable development of 4.6% for 2013 and unfavorable developments of (1.6)% and (2.1)% for 2012, and 2011, respectively, with average favorable annual developments of .3%. The Company believes that the factors most responsible, in varying and continually changing degrees, for reserve redundancies or deficiencies include, as to mortgage guaranty and the CCI coverage, differences in originally estimated salvage and subrogation recoveries, sales and prices of homes that can impact claim costs upon the disposition of foreclosed properties, changes in regional or local economic conditions and employment levels, greater numbers of coverage rescissions and claims denials due to material misrepresentation in key underwriting information or non-compliance with prescribed underwriting guidelines, the extent of loan refinancing activity that can reduce the period of time over which a policy remains at risk, and lower than expected frequencies of claims incurred but not reported. As to many general insurance coverages, changes in reserve adequacy or deficiency result from the effect of reserve discounts applicable to workers' compensation claims, higher than expected severity of litigated claims in particular, governmental or judicially imposed retroactive conditions in the settlement of claims such as noted above in regard to black lung disease claims, greater than anticipated inflation rates applicable to repairs and the medical portion of claims in particular, and higher than expected claims incurred but not reported due to the slower and highly volatile emergence patterns applicable to certain types of claims such as those stemming from litigated, assumed reinsurance, or the A&E types of claims noted above.

(i) Reinsurance - The cost of reinsurance is recognized over the terms of reinsurance contracts. Amounts recoverable from reinsurers for loss and loss adjustment expenses are estimated in a manner consistent with the claim liability associated with the reinsured business. The Company evaluates the financial condition of its reinsurers on a regular basis. Allowances are established for amounts deemed uncollectible and are included in the Company's net claim and claim expense reserves.

(j) Income Taxes - The Company and most of its subsidiaries file a consolidated tax return and provide for income taxes payable currently. Deferred income taxes included in the accompanying consolidated financial statements will not necessarily become payable or recoverable in the future. The Company uses the asset and liability method of calculating deferred income taxes. This method results in the establishment of deferred tax assets and liabilities, calculated at currently enacted tax rates that are applied to the cumulative temporary differences between financial statement and tax bases of assets and liabilities.

The provision for combined current and deferred income taxes (credits) reflected in the consolidated statements of income does not bear the usual relationship to income before income taxes (credits) as the result of permanent and other differences between pretax income or loss and taxable income or loss determined under existing tax regulations. The more significant differences, their effect on the statutory income tax rate (credit), and the resulting effective income tax rates (credits) are summarized below:

Years Ended December 31:	2013		2012		2011
Statutory tax rate (credit)	35.0	%	(35.0	)%	(35.0	)%
Tax rate increases (decreases):
Tax-exempt interest	(.4	)	(4.1	)	(5.4	)
Dividends received exclusion	(.6	)	(2.1	)	(1.0	)
Valuation allowance (see below)	—		(2.0	)	(.6	)
Goodwill impairment	—		.4		1.6
Foreign income (loss) reattribution	(.2	)	(3.5	)	1.0
Sale of subsidiary	—		(1.3	)	—
Other items - net	(.4	)	1.0		(1.2	)
Effective tax rate (credit)	33.4	%	(46.6	)%	(40.6	)%

The tax effects of temporary differences that give rise to significant portions of the Company's net deferred tax assets (liabilities) are as follows at the dates shown:

December 31:	2013			2012			2011
Deferred Tax Assets:
Losses, claims, and settlement expenses	$	286.9		$	272.4		$	231.7
Pension and deferred compensation plans	51.3			90.8			85.8
Impairment losses on investments	3.2			49.2			52.9
Net operating loss carryforward	43.7			91.0			77.2
AMT credit carryforward	9.6			25.5			29.7
Other temporary differences	50.5			67.7			50.1
Total deferred tax assets before valuation allowance	445.3			596.8			527.7
Valuation allowance	(9.6		)	(9.6		)	(12.2		)
Total deferred tax assets	435.7			587.2			515.4
Deferred Tax Liabilities:
Unearned premium reserves	42.7			35.3			29.3
Deferred policy acquisition costs	63.1			52.5			63.9
Mortgage guaranty insurers' contingency reserves	20.1			—			.4
Amortization of fixed maturity securities	4.9			6.9			7.2
Net unrealized investment gains	220.5			309.7			273.0
Title plants and records	4.9			5.0			5.0
Other temporary differences	30.6			29.6			19.7
Total deferred tax liabilities	387.1			439.2			398.7
Net deferred tax assets (liabilities)	$	48.4		$	148.1		$	116.7

At December 31, 2013, the Company had a net operating loss ("NOL") carryforward of $124.8 which will expire in years 2020 through 2029, and a $9.6 alternative minimum tax ("AMT") credit carryforward which does not expire. The NOL carryforward is subject to the limitations set by Section 382 of the Internal Revenue Code and is available to reduce future years' taxable income.

A valuation allowance was established against deferred tax assets as of December 31, 2013, 2012 and 2011 related to certain NOL and tax credit carryforwards which the Company did not expect to realize. In valuing the deferred tax assets, the Company considered certain factors including primarily the scheduled reversals of certain deferred tax liabilities, estimates of future taxable income, the impact of available carryback and carryforward periods, as well as the availability of certain tax planning strategies. The Company estimates that all remaining deferred tax assets at year end 2013 will more likely than not be fully realized.

Pursuant to special provisions of the Internal Revenue Code pertaining to mortgage guaranty insurers, a contingency reserve (established in accordance with insurance regulations designed to protect policyholders against extraordinary volumes of claims) is deductible from gross income. The deduction is allowed only to the extent that U.S. government non-interest bearing tax and loss bonds are purchased and held in an amount equal to the tax benefit attributable to such deduction. For Federal income tax purposes, amounts deducted from the contingency reserve are taken into gross statutory taxable income in the period in which they are released. Contingency reserves may be released when incurred losses exceed thresholds established under state law or regulation, upon special request and approval by state insurance regulators, or in any event, upon the expiration of ten years. For 2013 tax purposes, the Company recognized a contingency reserve deduction of $57.6. Consequently, $20.1 of U.S. Treasury Tax and Loss Bonds will be acquired during the first quarter 2014.

Tax positions taken or expected to be taken in a tax return by the Company are recognized in the financial statements when it is more likely than not that the position would be sustained upon examination by tax authorities. To the best of management's knowledge there are no tax uncertainties that are expected to result in significant increases or decreases to unrecognized tax benefits within the next twelve month period. The Company views its income tax exposures as primarily consisting of timing differences whereby the ultimate deductibility of a taxable amount is highly certain but the timing of its deductibility is uncertain. Such differences relate principally to the timing of deductions for loss and premium reserves. As in prior examinations, the Internal Revenue Service (IRS) could assert that claim reserve deductions were overstated thereby reducing the Company's statutory taxable income in any particular year. The Company believes that it establishes its reserves fairly and consistently at each balance sheet date, and that it would succeed in defending its tax position in these regards. Because of the impact of deferred tax accounting, the possible accelerated payment of tax to the IRS would not necessarily affect the annual effective tax rate. During 2013, the IRS completed an examination of the Company's consolidated Federal income tax returns for the years 2005 through 2010, which produced no material change to the Company's net income. The Company classifies interest and penalties as income tax expense in the consolidated statement of income.

(k) Property and Equipment - Property and equipment is generally depreciated or amortized over the estimated useful lives of the assets, (2 to 27 years), substantially by the straight-line method. Depreciation and amortization expenses related to property and equipment were $23.8, $23.9 and $21.9 in 2013, 2012, and 2011, respectively. Expenditures for maintenance and repairs are charged to income as incurred, and expenditures for major renewals and additions are capitalized.

(l) Title Plants and Records - Title plants and records are carried at original cost or appraised value at the date of purchase. Such values represent the cost of producing or acquiring interests in title records and indexes and the appraised value of purchased subsidiaries' title records and indexes at dates of acquisition. The cost of maintaining, updating, and operating title records is charged to income as incurred. Title records and indexes are ordinarily not amortized unless events or circumstances indicate that the carrying amount of the capitalized costs may not be recoverable.

(m) Goodwill and Intangible Assets - The following table presents the components of the Company's goodwill balance:

	General			Title		RFIG Run-off		Other		Total
January 1, 2012	$	117.5		$	44.3	$	—	$	.1	$	162.0
Acquisitions	—			—		—		—		—
Impairments	(1.3		)	—		—		—		(1.3		)
December 31, 2012	116.2			44.3		—		.1		160.7
Acquisitions	—			—		—		—		—
Impairments	—			—		—		—		—
December 31, 2013	$	116.2		$	44.3	$	—	$	.1	$	160.7

Goodwill resulting from business combinations is not amortizable against operations but must be tested annually for possible impairment of its continued value. Intangible assets with definitive lives are amortized against future operating results; whereas indefinite-lived intangibles are tested annually for impairment. During 2011, RFIG's historical mortgage guaranty goodwill balance of $10.7 was impaired in its entirety.

There are no significant goodwill balances within reporting units with estimated fair values not significantly in excess of their carrying values.

(n) Employee Benefit Plans - Prior to December 31, 2012, the Company had four separate pension plans covering a portion of its work force. The four plans were the Old Republic International Salaried Employees Retirement Plan (the Old Republic Plan), the Bituminous Casualty Corporation Retirement Income Plan (the Bituminous Plan), the Old Republic National Title Group Pension Plan (the Title Plan), and the PMA Capital Corporation Pension Plan (the PMA Plan). Effective December 31, 2012, the Bituminous Plan and the Title Plan were merged into the Old Republic Plan. Effective December 31, 2013, The PMA Plan was merged into the Old Republic Plan.

The plans are defined benefit plans pursuant to which pension payments are based primarily on years of service and employee compensation near retirement. It is the Company's policy to fund the plans' costs as they accrue. The Old Republic Plan has been closed to new participants since December 31, 2004; the PMA Plan was frozen as of December 31, 2005. The benefit levels in the Old Republic Plan were similarly frozen as of December 31, 2013. The benefit curtailment triggered a revaluation of the plan as of September 30, 2013. The impact of the curtailment resulted in increased operating expenses of $.6, a reduction of the pension obligation liability of $26.6, and a resulting increase to other comprehensive income of $17.7, net of tax. Under the terms of the freeze, the plans remain closed to new participants and eligible employees retain all of the vested rights as of the effective date of the freeze, but additional benefits do not accrue thereafter.

Pursuant to GAAP, the funded status of pension and other postretirement plans must be recognized in the consolidated balance sheet. The funded status is measured as the difference between the fair value of plan assets and the projected benefit obligations on a plan-by-plan basis. The funded status of an overfunded benefit plan is recognized as a net pension asset while the underfunded status of a benefit plan is recognized as a net pension liability; offsetting entries are reflected as a component of shareholders' equity in accumulated other comprehensive income, net of deferred taxes. Changes in the status of the plans are recognized in the period in which they occur. All plan assets and liabilities are measured as of December 31 of the years presented. The effects of these measurements and the changes in the projected benefit obligation ("PBO") are reflected below.

Years Ended December 31:	2013			2012			2011
Projected benefit obligation at beginning of year	$	525.7		$	477.8		$	425.2
Increases (decreases) during the year attributable to:
Service cost	9.5			9.4			8.7
Interest cost	21.6			21.8			22.7
Plan curtailments	(26.6		)	—			—
Actuarial (gains) losses	(32.8		)	31.5			36.7
Benefits paid	(18.1		)	(15.0		)	(15.5		)
Net increase (decrease) for the year	(46.4		)	47.8			52.6
Projected benefit obligation at end of year	$	479.3		$	525.7		$	477.8
Accumulated benefit obligation at end of year	$	479.3		$	495.4		$	443.4

The changes in the fair value of net assets available for plan benefits are as follows:

Years Ended December 31:	2013			2012			2011
Fair value of net assets available for plan benefits
At beginning of the year	$	352.3		$	315.4		$	297.1
Increases (decreases) during the year attributable to:
Actual return on plan assets	61.9			25.8			.2
Sponsor contributions	12.7			26.0			33.6
Benefits paid	(18.1		)	(15.0		)	(15.5		)
Net increase (decrease) for year	56.5			36.8			18.3
Fair value of net assets available for plan benefits
At end of the year	$	408.8		$	352.3		$	315.4

Each of the plans had accumulated and projected benefit obligations in excess of plan assets at December 31, 2013, 2012 and 2011. The Company expects to make cash contributions of approximately $26.0 in calendar year 2014.

The components of aggregate annual net periodic pension costs consisted of the following:

Years Ended December 31:	2013			2012			2011
Service cost	$	9.5		$	9.4		$	8.7
Interest cost	21.6			21.8			22.7
Curtailment loss recognized	.6			—			—
Expected return on plan assets	(26.7		)	(25.1		)	(23.7		)
Recognized loss	8.8			10.0			6.0
Prior service costs	.1			.1			.1
Net cost	$	14.1		$	16.3		$	13.9

The pretax pension costs recognized in other comprehensive income consist of the following:

Years Ended December 31:	2013		2012			2011
Amounts arising during the period:
Net recognized gain (loss)	$	68.0	$	(30.8	)	$	(60.2	)
Plan curtailment	26.6		—			—
Reclassification adjustment to components of net periodic pension cost:
Net recognized loss	8.8		10.0			6.0
Net prior service cost	.1		.1			.1
Curtailment loss recognized	.6		—			—
Net pretax pension (costs) or gains recognized	$	104.3	$	(20.6	)	$	(54.0	)

The amounts included in accumulated other comprehensive income that have not yet been recognized as components of net periodic pension cost consist of the following:

As of December 31:	2013			2012
Net recognized loss	$	(48.3	)	$	(151.9	)
Net prior service cost	—			(.7		)
Total	$	(48.3	)	$	(152.7	)

The amounts included in accumulated other comprehensive income that will be recognized as components of net periodic pension cost during 2014 are not expected to be material.

The projected benefit obligations and net periodic benefit costs for the plans were determined using the following weighted-average assumptions:

	Projected Benefit Obligation				Net Periodic Benefit Cost
As of December 31:	2013		2012		2013		2012		2011
Settlement discount rates	5.00	%	4.17	%	4.17	%	4.66	%	5.46	%
Rates of compensation increase	N/A		3.22	%	3.22	%	4.25	%	4.25	%
Long-term rates of return on plans' assets	N/A		N/A		7.56	%	7.81	%	7.94	%

The assumed settlement discount rates were determined by matching the current estimate of each Plan's projected cash outflows against spot rate yields on a portfolio of high quality bonds as of the measurement date. To develop the expected long-term rate of return on assets assumption, historical returns and the future return expectations for each asset class, as well as the target asset allocation of the pension portfolios were considered. The investment policy of the Plans takes into account the matching of assets and liabilities, appropriate risk aversion, liquidity needs, the preservation of capital, and the attainment of modest growth. The weighted-average asset allocations of the Plans were as follows:

					Investment Policy Asset Allocation % Range Target
As of December 31:	2013		2012
Equity securities:
Common shares of Company stock	12.0	%	8.3	%
Other	50.9		48.5
Sub-total	62.9		56.8		30% to 70%
Fixed maturity securities	29.5		35.2		30% to 70%
Other	7.6		8.0		1% to 20%
Total	100.0	%	100.0	%

Quoted values and other data provided by the respective investment custodians are used as inputs for determining fair value of the Plan's debt and equity securities. The custodians are understood to obtain market quotations and actual transaction prices for securities that have quoted prices in active markets and use their own proprietary method for determining the fair value of securities that are not actively traded. In general, these methods involve the use of "matrix pricing" in which the investment custodian uses observable inputs, including, but not limited to, investment yields, credit risks and spreads, benchmarking of like securities, broker-dealer quotes, reported trades and sector groupings to determine a reasonable fair value.

The following tables present a summary of the Plans' assets segregated among the various input levels described in Note 1(d).

	Fair Value Measurements
As of December 31, 2013:	Level 1		Level 2		Level 3		Total
Equity securities:
Common shares of Company stock	$	48.8	$	—	$	—	$	48.8
Other	189.1		18.9		—		208.1
Sub-total	238.0		18.9		—		256.9
Fixed maturity securities	10.5		109.9		—		120.4
Other	16.5		7.3		7.4		31.3
Total	$	265.1	$	136.3	$	7.4	$	408.8
As of December 31, 2012:
Equity securities:
Common shares of Company stock	$	29.0	$	—	$	—	$	29.0
Other	154.0		16.9		—		171.0
Sub-total	183.1		16.9		—		200.1
Fixed maturity securities	1.5		122.5		—		124.0
Other	10.6		9.3		8.1		28.1
Total	$	195.3	$	148.8	$	8.1	$	352.3

Level 1 assets include U.S. Treasury notes, publicly traded common stocks, mutual funds and certain short-term investments. Level 2 assets generally include corporate and government agency bonds, common collective trusts, and a limited partnership investment. Level 3 assets primarily consist of an immediate participation guaranteed fund.

The benefits expected to be paid as of December 31, 2013 for the next 10 years are as follows: 2014: $20.6; 2015: $22.8; 2016: $24.2; 2017$25.1; 2018: $26.4 and for the five years after 2018: $148.5.

The Company has a number of profit sharing and other incentive compensation programs for the benefit of a substantial number of its employees. The costs related to such programs are summarized below:

Years Ended December 31:	2013		2012		2011
Employees Savings and Stock Ownership Plan "ESSOP"	$	7.8	$	5.3	$	5.9
Other profit sharing plans	12.1		12.9		13.4
Cash and deferred incentive compensation	$	21.6	$	20.5	$	19.5

A majority of the Company's employees participate in the ESSOP. Current Company contributions are provided in the form of Old Republic common stock. Dividends on shares are allocated to participants as earnings, and likewise invested in Company stock; dividends on unallocated shares are used to pay debt service costs. The Company's annual contributions are based on a formula that takes the growth in net operating income per share over consecutive five year periods into account. As of December 31, 2013, there were 14,009,007 Old Republic common shares owned by the ESSOP, of which 10,911,379 were allocated to employees' account balances. There are no repurchase obligations in existence. See Note 3(b).

(o) Escrow Funds - Segregated cash deposit accounts and the offsetting liabilities for escrow deposits in connection with Title Insurance Group real estate transactions in the same amounts ($1,043.9 and $878.1 at December 31, 2013 and 2012, respectively) are not included as assets or liabilities in the accompanying consolidated balance sheets as the escrow funds are not available for regular operations.

(p) Earnings Per Share - Consolidated basic earnings per share excludes the dilutive effect of common stock equivalents and is computed by dividing income (loss) available to common stockholders by the weighted-average number of common shares actually outstanding for the year. Diluted earnings per share are similarly calculated with the inclusion of dilutive common stock equivalents. The following table provides a reconciliation of net income (loss) and the number of shares used in basic and diluted earnings per share calculations.

Years Ended December 31:	2013		2012			2011
Numerator:
Net income (loss)	$	447.8	$	(68.6	)	$	(140.5	)
Numerator for basic earnings per share -
income (loss) available to common stockholders	447.8		(68.6		)	(140.5		)
Adjustment for interest expense incurred on
assumed conversion of convertible notes	14.6		—			—
Numerator for diluted earnings per share -
income (loss) available to common stockholders
after assumed conversion of convertible notes	$	462.4	$	(68.6	)	$	(140.5	)
Denominator:
Denominator for basic earnings per share -
weighted-average shares (a)	257,443,999		255,812,888			255,045,210
Effect of dilutive securities - stock based compensation awards	784,080		—			—
Effect of dilutive securities - convertible senior notes	35,455,956		—			—
Denominator for diluted earnings per share -
adjusted weighted-average shares
and assumed conversion of convertible notes (a)	293,684,035		255,812,888			255,045,210
Earnings per share: Basic	$	1.74	$	(.27	)	$	(.55	)
Diluted	$	1.57	$	(.27	)	$	(.55	)
Anti-dilutive common stock equivalents
excluded from earning per share computations:
Stock based compensation awards	7,563,456		14,543,835			16,007,624
Convertible senior notes	—		35,409,303			56,464,160
Total	7,563,456		49,953,138			72,471,784

__________

(a) In calculating earnings per share, pertinent accounting rules require that common shares owned by the Company's Employee Savings and Stock Ownership Plan that are as yet unallocated to participants in the plan be excluded from the calculation. Such shares are issued and outstanding, and have the same voting and other rights applicable to all other common shares.

(q) Concentration of Credit Risk - The Company is not exposed to material concentrations of credit risks as to any one issuer of investment securities.

(r) Stock Based Compensation - As periodically amended, the Company has had a stock option plan in effect for certain eligible key employees since 1978. Under the current plan amended in 2010, the maximum number of common shares available for 2010 and future years' grants has been set at 14.5 million through 2016. The exercise price of stock options is equal to the closing market price of the Company's common stock on the date of grant, and the contractual life of the grant is generally ten years from the date of the grant. Options granted may be exercised to the extent of 10% of the number of shares covered thereby as of December 31st of the year of the grant and, cumulatively, to the extent of an additional 15%, 20%, 25% and 30% on and after the second through fifth calendar years, respectively. Options granted to employees who meet certain retirement eligibility provisions are fully expensed on the date of grant.

The following table presents the stock based compensation expense and income tax benefit recognized in the financial statements:

Years Ended December 31:	2013		2012		2011
Stock based compensation expense	$	1.6	$	1.7	$	3.0
Income tax benefit	$	.5	$	.6	$	1.0

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes-Merton Model. The following table presents the assumptions used in the Black-Scholes Model for the awards granted during the periods presented. Expected volatilities are based on the historical experience of Old Republic's common stock. The expected term of stock options represents the period of time that stock options granted are assumed to be outstanding. The Company uses historical data to estimate the effect of stock option exercise and employee departure behavior; groups of employees that have similar historical behavior are considered separately for valuation purposes. The risk-free rate of return for periods within the contractual term of the share option is based on the U.S. Treasury rate in effect at the time of the grant.

	2013		2012		2011
Expected volatility	.33		.32		.31
Expected dividends	5.99	%	6.88	%	5.95	%
Expected term (in years)	7		7		7
Risk-free rate	1.19	%	1.74	%	2.73	%

A summary of stock option activity under the plan as of December 31, 2013, 2012 and 2011, and changes in outstanding options during the years then ended is presented below:

	As of and for the Years Ended December 31,
	2013				2012				2011
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at beginning of year	14,293,149		$	16.75	15,679,915		$	17.25	16,560,483		$	17.39
Granted	922,500		12.57		974,500		10.80		1,064,500		12.33
Exercised	897,909		12.22		14,850		10.48		31,113		12.22
Forfeited and expired	1,510,468		15.01		2,346,416		17.66		1,913,955		15.85
Outstanding at end of year	12,807,272		16.97		14,293,149		16.75		15,679,915		17.25
Exercisable at end of year	10,582,298		$	18.03	12,032,624		$	17.74	13,262,682		$	18.21
Weighted average fair value of
options granted during the year (a)	$	1.94	per share		$	1.46	per share		$	1.99	per share

__________

(a) Based on the Black-Scholes option pricing model and the assumptions outlined above.

A summary of stock options outstanding and exercisable at December 31, 2013 follows:

					Options Outstanding				Options Exercisable
						Weighted - Average				Weighted Average Exercise Price
Ranges of Exercise Prices			Year(s) Of Grant		Number Out- Standing	Remaining Contractual Life	Exercise Price		Number Exercisable
$19.32	to	$20.02	2004		1,850,852	0.25	$	19.33	1,850,852	$	19.33
$18.41	to	$20.87	2005		1,572,059	1.25	18.45		1,572,059	18.45
$21.36	to	$22.35	2006		2,089,525	2.25	22.00		2,089,525	22.00
$21.78	to	$23.16	2007		1,971,475	3.25	21.78		1,971,475	21.78
$7.73	to	$12.95	2008		1,048,370	4.25	12.93		1,048,370	12.93
$10.48			2009		698,133	5.25	10.48		698,133	10.48
$12.08			2010		690,225	6.25	12.08		490,234	12.08
$10.51	to	$14.31	2010	(a)	67,745	0.25	12.96		67,745	12.96
$12.33			2011		945,413	7.25	12.33		442,146	12.33
$10.80			2012		953,475	8.25	10.80		246,711	10.80
$12.57			2013		920,000	9.25	12.57		105,048	12.57
Total					12,807,272		$	16.97	10,582,298	$	18.03

__________

(a) Represents the replacement options issued pursuant to the PMA merger.

Pursuant to the Company's self-imposed limits, the maximum number of options available for future issuance as of December 31, 2013, is 10,877,713 shares.

As of December 31, 2013, there was $1.6 of total unrecognized compensation cost related to nonvested stock-based compensation arrangements granted under the plan. That cost is expected to be recognized over a weighted average period of approximately 3 years.

The cash received from stock option exercises, the total intrinsic value of stock options exercised, and the actual tax benefit realized for the tax deductions from option exercises are as follows:

	2013		2012		2011
Cash received from stock option exercise	$	10.9	$	.1	$	.3
Intrinsic value of stock options exercised	2.9		—		—
Actual tax benefit realized for tax deductions from stock options exercised	$	1.1	$	—	$	—

At December 31, 2013, the Company had restricted common stock issued to certain employees which are expected to vest over the next 3 years. During the vesting period, restricted shares are nontransferable and subject to forfeiture, but are entitled to all of the other rights of outstanding shares. Compensation expense for the restricted stock award is recognized over the vesting period of the award and was immaterial for the years ended December 31, 2013, 2012 and 2011.

(s) Regulatory Matters - The material increases in mortgage guaranty insurance claims and loss payments that began in 2007 gradually depleted RMIC's statutory capital base and forced it to discontinue writing new business. The insurance laws of 16 jurisdictions, including RMIC and RMICNC’s domiciliary state of North Carolina, require a mortgage insurer to maintain a minimum amount of statutory capital relative to risk in force (or a similar measure) in order to continue to write new business. The formulations currently allow for a maximum risk-to-capital ratio of 25 to 1, or alternatively stated, a “minimum policyholder position” (“MPP”) of one-twenty-fifth of the total risk in force. The failure to maintain the prescribed minimum capital level in a particular state generally requires a mortgage insurer to immediately stop writing new business until it reestablishes the required level of capital or receives a waiver of the requirement from a state's insurance regulatory authority. RMIC breached the minimum capital requirement during the third quarter of 2010. RMIC had previously requested and, subsequently received waivers or forbearance of the minimum policyholder position requirements from the regulatory authorities in substantially all affected states. Following several brief extensions, the waiver from its domiciliary state of North Carolina expired on August 31, 2011, and RMIC and its sister company, RMICNC, discontinued writing new business in all states and limited themselves to servicing the run-off of their existing business.

During 2012 the NCDOI issued several orders the ultimate effects of which were:

• To place RMIC and RMICNC under NCDOI supervision which,among other considerations, requires written approval of the NCDOI Commissioner or its appointed representative for supervision of certain activities and transactions, including the incurrence of any debt or other liabilities, lending of its funds, and termination or entry into new contracts of insurance or reinsurance;

• To approve a Corrective Plan submitted by RMIC pursuant to which all settled claims are to be paid in cash for 60% of the settled amount, with the remaining 40% retained in claim reserves as a DPO until a future payment of all or a portion of this 40% is approved by the NCDOI; and

• To execute the DPO-based run-off plan under Old Republic's ownership and NCDOI supervision of RMIC and RMICNC to effect a most economically sound realization of ultimate benefits to policyholders during a sufficiently long future period.

RMIC's evaluation of the potential long-term performance of the run-off book of business is based on various modeling techniques. Of necessity the resulting models take into account actual premium and paid claim experience of prior periods, together with a large number of assumptions and judgments about future outcomes that are highly sensitive to a wide range of estimates. Many of these estimates and underlying assumptions relate to matters over which the Company has no control, including: 1) The conflicted interests, as well as the varying mortgage servicing and foreclosure practices of a large number of insured lending institutions; 2) General economic and industry-specific trends and events; and 3) The evolving or future social and economic policies of the U.S. Government vis-à-vis such critical sectors as the banking, mortgage lending, and housing industries, as well as its policies for resolving the insolvencies and assigning a possible future role to Fannie Mae and Freddie Mac. These matters notwithstanding, RMIC's analysis did not indicate that the establishment of a premium deficiency was warranted as of December 31, 2013 or 2012.

The indicated positive outcome of the standard model notwithstanding, it is possible that MI operating results could nevertheless be negative in the near term. As long as the run-off under NCDOI supervision remains in place, however, the statutory DPO accounting treatment should mitigate the adverse effect of operating losses on the statutory capital balance. In these circumstances, RMIC's and RMICNC's statutory solvency would be retained and the risk of a regulatory receivership action would be averted. In management's opinion, the DPO Plan under NCDOI supervision should be continued for a sufficiently long period of time to achieve the objectives contemplated by the above referenced NCDOI orders. As of December 31, 2013, the total statutory capital, inclusive of accumulated DPO reserve funds of $551.5 held in RFIG's mortgage insurance subsidiaries was approximately $518.2, which was $161.5 above the required MPP of $356.6. As of the same date, RFIG's consolidated GAAP capitalization amounted to $(13.8) (or a negative capital contribution of approximately 5 cents per Old Republic common share).

On October 24, 2013 the Company announced that its RMICC mortgage guaranty subsidiary expects to raise new funds in the capital markets. Substantially all of this capital would be added to the equity resources of RMICC's three mortgage insurance subsidiaries. The addition of capital should permit these carriers to at once support existing policies in-force, pay off heretofore deferred claim payment obligations with agreed-upon interest, exit their current state of supervision under North Carolina insurance regulations, and resume the underwriting of new business beginning in 2014. While the interest charge on outstanding deferred payment obligations has not been agreed upon, it could be material to the Company's results of operations when it is recorded following approval of the NCDOI and the successful completion of the capital raise. In connection with such a transaction, it is expected that Old Republic would contribute up to $50.0 of this new capital. Upon the successful closing of this transaction, RMICC would be deconsolidated and Old Republic's continuing interest in RMICC and the mortgage guaranty business would consist of a non-controlling equity interest in RMICC. Completion of the transaction cannot be assured and is subject to market conditions and other factors. Moreover, the addition of all new funds to RMICC and its subsidiaries will be contingent on the receipt of certain regulatory approvals. The most essential of these will be required from the North Carolina Department of Insurance, and from Fannie Mae and Freddie Mac with any necessary assent of their FHFA Conservator.