Losses, Claims and Settlement Expenses

6 Months Ended

Jun. 30, 2020

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 the incurrence of 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, favorable or unfavorable claim developments 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.

The Company’s accounting policy regarding the establishment of claim reserve estimates is described in Note 1(h) to the consolidated financial statements included in Old Republic’s 2019 Annual Report on Form 10-K. The following table shows an analysis of changes in aggregate reserves for the Company's losses, claims and settlement expenses for each of the periods shown.

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Summary of changes in aggregate reserves for claims and related costs:



	Six Months Ended
	June 30,
	2020			2019
Gross reserves at beginning of period	$	9,929.5		$	9,471.2
Less: reinsurance losses recoverable	3,249.7			3,006.3
Net reserves at beginning of period:
General Insurance	6,021.3			5,766.1
Title Insurance	530.9			533.4
RFIG Run-off	118.9			154.5
Other	8.4			10.8
Sub-total	6,679.7			6,464.9
Incurred claims and claim adjustment expenses:
Provisions for insured events of the current year:
General Insurance	1,178.7			1,181.3
Title Insurance	50.1			44.0
RFIG Run-off (a)	21.0			20.2
Other	5.8			8.2
Sub-total	1,255.7			1,253.9
Change in provision for insured events of prior years:
General Insurance	(4.9		)	(7.1		)
Title Insurance	(10.7		)	(11.4		)
RFIG Run-off (a)	.6			(4.3		)
Other	(1.9		)	(1.5		)
Sub-total	(17.0		)	(24.5		)
Total incurred claims and claim adjustment expenses (a)	1,238.6			1,229.3
Payments:
Claims and claim adjustment expenses attributable to
insured events of the current year:
General Insurance	282.5			301.2
Title Insurance	.9			.7
RFIG Run-off	.1			.2
Other	2.3			4.8
Sub-total	285.9			307.1
Claims and claim adjustment expenses attributable to
insured events of prior years:
General Insurance	696.5			758.1
Title Insurance	25.3			31.7
RFIG Run-off	20.4			45.0
Other	1.9			2.5
Sub-total	744.2			837.4
Total payments	1,030.2			1,144.6
Amount of reserves for unpaid claims and claim adjustment expenses
at the end of each period, net of reinsurance losses recoverable:
General Insurance	6,216.0			5,880.8
Title Insurance	544.0			533.5
RFIG Run-off	119.9			125.1
Other	8.1			10.0
Sub-total	6,888.1			6,549.6
Reinsurance losses recoverable	3,342.7			3,086.7
Gross reserves at end of period	$	10,230.9		$	9,636.3

__________

(a)

In common with all other insurance coverages, 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. Changes in mortgage guaranty aggregate case, IBNR, and loss adjustment expense reserves 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. Estimates of coverage rescissions and claim denials are no longer material to Old Republic's consolidated financial statements.