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Summary of Significant Accounting Policies
 12 Months Ended
Dec. 31, 2020
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 recognized as 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) changes in the fair value of equity securities are recorded directly in earned surplus and not through the income statement as required under GAAP unless such securities are determined to be other-than-temporarily impaired for statutory reporting purposes; (4) certain assets classified as "non-admitted assets" are excluded from the balance sheet through a direct charge to earned surplus; (5) changes in deferred income tax assets or liabilities are recorded directly in earned surplus and not through the income statement; (6) 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; (7) 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; (8) 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; and (9) surplus notes are classified as surplus rather than a liability. 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' EquityNet Income (Loss)
December 31,Years Ended December 31,
20202019202020192018
Statutory totals of insurance
company subsidiaries (a):
General$4,244.0 $4,263.5 $285.0 $332.2 $290.5 
Title648.3 599.0 182.6 145.1 110.5 
RFIG Run-off118.5 120.7 1.9 (62.8)44.9 
Life & Accident50.3 46.8 3.3 3.9 .9 
Sub-total5,061.1 5,030.0 472.8 418.4 446.8 
GAAP totals of non-insurance company
subsidiaries and consolidation adjustments753.1 844.9 28.4 153.2 8.8 
Unadjusted totals5,814.2 5,875.0 501.0 571.6 455.6 
Adjustments to conform to GAAP statements:
Deferred policy acquisition costs211.7 204.3 7.4 9.4 17.2 
Investment adjustments589.7 258.1 4.5 466.3 (198.2)
Non-admitted assets139.0 116.3 — — — 
Deferred income taxes(203.0)(121.8)23.6 (5.8)38.7 
Mortgage contingency reserves316.7 352.5 — — — 
Title insurance premium reserves625.6 571.7 53.9 25.8 23.3 
Loss reserves(474.8)(449.3)(24.8)(7.9)38.3 
Surplus notes(841.5)(808.0)— — — 
Sundry adjustments8.8 .7 (7.3)(3.2)(4.4)
Total adjustments372.2 124.7 57.5 484.5 (85.0)
Consolidated GAAP totals$6,186.6 $6,000.1 $558.6 $1,056.4 $370.5 
__________

(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 625% and 658% of the company action level RBC at December 31, 2020 and 2019, 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, 2020 and 2019 each of the Company’s General, Title, RFIG 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.

Reclassifications - Necessary reclassifications are made in prior periods' financial statements whenever appropriate to conform to the most current presentation.

Immaterial Adjustment - The Company recorded immaterial adjustments to present revenues gross of the applicable commission expense in the 2019 and 2018 consolidated statements of income and comprehensive income by: increasing net premiums earned by $421.5 and $397.7, respectively; decreasing title, escrow and other fees by $174.7 and $160.6, respectively, and; increasing underwriting, acquisition, and other expenses by $246.8 and $237.0, respectively. These immaterial adjustments were made to conform all prior periods to the presentation adopted in 2020 and had no impact on net income (loss), comprehensive income (loss) or shareholders' equity in any period presented.
(d) Investments - The Company classifies its fixed maturity securities 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 June 30, 2020 the Company changed its intent to hold its tax exempt municipal bond portfolio until maturity and consequently, reclassified these securities from their previous held to maturity designation to available for sale. As a result, cumulative net of tax unrealized gains of $48.5 were recognized in other comprehensive income as of that date. The Company's entire fixed maturity portfolio is now classified as available for sale.

Fixed maturity securities classified as available for sale are included at fair value with changes in such values, net of deferred income taxes, reflected directly in shareholders' equity. Fixed maturity securities classified as held to maturity are carried at amortized cost. Equity securities are reported at fair value with changes in such values reflected as unrealized investment gains (losses) in the consolidated statements of income. Fair values for fixed maturity securities and equity securities are based on quoted market prices or estimates using values obtained from recognized independent pricing services.

The status and fair value changes of each of the fixed maturity investments are reviewed at least once per quarter during the year, and estimates of other-than-temporary impairments ("OTTI") and resulting allowances for credit losses 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 audited financial statements, 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 the issuer's previously reported earnings or financial condition, are recognized as realized losses as soon as credible publicly available information emerges to confirm such developments. 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 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 no OTTI adjustments or allowances for credit losses for the year ended December 31, 2020. OTTI adjustments of $2.0 and $— were recorded during the years ended December 31, 2019 and 2018, 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
Cost and Fair Value of Fixed Maturity Securities by Type:
December 31, 2020:
Available for sale:
U.S. & Canadian Governments$1,967.1 $96.4 $.3 $2,063.2 
Tax-exempt997.1 66.3 — 1,063.5 
Corporate6,933.3 440.1 3.4 7,370.0 
$9,897.6 $602.9 $3.8 $10,496.8 
December 31, 2019:
Available for sale:
U.S. & Canadian Governments$1,842.3 $36.9 $.4 $1,878.8 
Corporate6,694.9 225.5 2.8 6,917.6 
$8,537.3 $262.5 $3.3 $8,796.5 
Held to maturity:
Tax-exempt$1,021.7 $36.5 $— $1,058.2 
Amortized
Cost		Estimated
Fair
Value
Fixed Maturity Securities Stratified by Contractual Maturity at December 31, 2020:
Available for sale:
Due in one year or less$971.5 $981.6 
Due after one year through five years5,641.5 5,968.4 
Due after five years through ten years3,108.0 3,366.5 
Due after ten years176.5 180.2 
$9,897.6 $10,496.8 
Bonds and other investments with a statutory carrying value of $929.3 as of December 31, 2020 were on deposit with governmental authorities by the Company's insurance subsidiaries to comply with insurance laws.

The following table reflects the Company's gross unrealized losses and fair value, aggregated by category and length of time that individual available for sale and held to maturity fixed maturity securities have been in an unrealized loss position. Fair value and issuer's cost comparisons follow:
Less than 12 Months12 Months or GreaterTotal
Fair
Value		Unrealized LossesFair
Value		Unrealized LossesFair
Value		Unrealized Losses
December 31, 2020:
Fixed Maturity Securities:
Available for sale:
  U.S. & Canadian Governments$416.4 $.3 $— $— $416.4 $.3 
  Corporate333.6 3.4 — — 333.6 3.4 
$750.0 $3.8 $— $— $750.0 $3.8 
Number of available for sale
securities in unrealized
loss position74377
December 31, 2019:
Fixed Maturity Securities:
Available for sale:
  U.S. & Canadian Governments$217.2 $.3 $53.0 $.1 $270.3 $.4 
  Corporate176.4 1.9 54.3 .8 230.7 2.8 
$393.7 $2.3 $107.4 $1.0 $501.1 $3.3 
Number of available for sale
securities in unrealized
loss position54 47101
Held to maturity:
  Tax-exempt$— $— $21.7 $— $21.7 $— 
Number of held to maturity
securities in unrealized
loss position—88

In the above tables the unrealized losses on fixed maturity securities are primarily deemed to reflect changes in the interest rate environment. As part of its assessment of other-than-temporary impairments, the Company considers its intent to continue to hold the securities, and the likelihood that it will not be required to sell investment securities in an unrealized loss position until cost recovery, principally in consideration of its asset and liability maturity matching objectives.

The following table shows cost and fair value information for equity securities:
Equity Securities

Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair
Value
December 31, 2020$3,269.7 $1,028.1 $243.0 $4,054.8 
December 31, 2019$3,089.1 $968.0 $26.6 $4,030.5 

Effective January 1, 2018, the Company adopted a new accounting standard which requires the recognition of changes in fair value of equity securities in net income. The effect is shown in the accompanying consolidated financial statements. The cumulative-effect adjustment resulting from the adoption of the new standard was to reclassify $502.1 from accumulated other comprehensive income to retained earnings; total shareholders' equity remained unchanged. During 2020, 2019 and 2018, the Company recognized pretax unrealized investment gains (losses) of $(156.2), $599.5 and $(293.8), respectively, emanating from changes in the fair value of equity securities in the consolidated statements of income. Changes in the fair value of equity securities still held at December 31, 2020,
2019 and 2018 were $(130.9), $586.9 and $(244.8), for the years ended December 31, 2020, 2019 and 2018, respectively.

As described in Note 1(t), the Company adopted the FASB's accounting guidance on current expected credit losses ("CECL") effective January 1, 2020. The allowance for credit losses for the Company's held to maturity fixed maturity securities was evaluated using a probability-of-default methodology and due to the high credit quality of the portfolio, the resulting allowance established was not material upon adoption. As previously noted, the Company no longer classifies these fixed maturity securities as held to maturity and accordingly the allowance was released.

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: Level 1 inputs are based on quoted market prices in active markets; Level 2 observable inputs are based on corroboration with available market data; and Level 3 unobservable inputs are based on uncorroborated market data or a reporting entity's own assumptions. 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 a nationally recognized independent pricing source as inputs into its quarterly process for determining fair values of 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) comparisons with other sources including the fair value estimates based on current market quotations, and with independent fair value estimates provided by the independent investment custodian. The independent pricing source obtains market quotations and actual transaction prices for securities that have quoted prices in active markets and uses 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 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, mutual funds, and short-term investments in highly liquid money market instruments. Level 2 securities generally include corporate bonds, municipal bonds, and certain U.S. and Canadian government agency securities. Securities classified within Level 3 include non-publicly traded bonds and equity securities. There were no significant changes in the fair value of Level 3 assets as of December 31, 2020 and December 31, 2019.

The following tables show a summary of the fair value of financial assets segregated among the various input levels described above:
Fair Value Measurements
As of December 31, 2020:Level 1Level 2Level 3Total
Available for sale:
Fixed maturity securities:
U.S. & Canadian Governments$1,262.2 $801.0 $— $2,063.2 
Tax-exempt— 1,063.5 — 1,063.5 
Corporate— 7,359.5 10.5 7,370.0 
Short-term investments749.6 — — 749.6 
Equity securities$4,052.9 $— $1.8 $4,054.8 
As of December 31, 2019:
Available for sale:
Fixed maturity securities:
U.S. & Canadian Governments$1,068.1 $810.7 $— $1,878.8 
Corporate— 6,907.1 10.5 6,917.6 
Short-term investments484.3 — — 484.3 
Held to maturity:
Fixed maturity securities:
Tax-exempt— 1,058.2 — 1,058.2 
Equity securities$4,028.7 $— $1.7 $4,030.5 

There were no transfers between Levels 1, 2 or 3 during 2020 or 2019.

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.
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 gains and (losses) from changes in fair value of equity securities are recorded as investment gains (losses) in the income statement. Unrealized investment gains (losses) on fixed maturity securities, net of any deferred income taxes, are recorded directly as a component of accumulated other comprehensive income in shareholders' equity. At December 31, 2020, the Company and its subsidiaries did not have significant amounts of non-income producing fixed maturity or equity 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 31:202020192018
Investment income from:
Fixed maturity securities$289.8 $300.3 $299.2 
Equity securities149.8 141.3 124.0 
Short-term investments2.2 10.1 9.8 
Other sources3.5 5.8 4.9 
Gross investment income445.6 457.7 438.1 
Investment expenses (a)6.6 6.9 6.2 
Net investment income$438.9 $450.7 $431.8 
Investment gains (losses):
From actual transactions:
Fixed maturity securities:
Gains$10.9 $9.7 $2.4 
Losses(18.4)(11.7)(7.2)
Net(7.4)(1.9)(4.8)
Equity securities:
Gains22.5 153.1 71.9 
Losses(1.2)(109.9)(10.4)
Net21.3 43.2 61.4 
Other long-term investments, net.3 (2.5)1.6 
Total from actual transactions14.2 38.6 58.2 
From impairments— (2.0)— 
From unrealized changes in fair value of equity securities(156.2)599.5 (293.8)
Total realized and unrealized investment gains (losses)(142.0)636.1 (235.6)
Current and deferred income taxes (credits)(29.8)133.8 (49.6)
Net of tax realized and unrealized investment gains (losses)$(112.1)$502.2 $(185.9)
Changes in unrealized investment gains (losses)
 reflected directly in shareholders' equity on:
Fixed maturity securities$339.4 $362.6 $(221.9)
Less: Deferred income taxes (credits)71.6 76.3 (46.6)
267.7 286.2 (175.2)
Other long-term investments3.2 1.2 (1.3)
Less: Deferred income taxes (credits).6 .2 (0.2)
2.5 1.0 (1.0)
Net changes in unrealized investment gains (losses), net of tax$270.3 $287.2 $(176.3)
__________

(a)    Investment expenses largely consist of personnel costs and investment management and custody service fees.
(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 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 25% of 2020, 25% of 2019 and 24% of 2018 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 primarily stem from monthly installments paid on long-duration, guaranteed renewable insurance policies. 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 experienced between 2007 and 2012. 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.

The Company recognized total contract revenue from customers of $192.2, $184.3 and $166.8 during 2020, 2019 and 2018, respectively. Of these amounts, approximately $114.1 (59.4%), $115.9 (62.9%) and $105.4 (63.2%) were generated from claims handling and related ancillary services (i.e. risk control services) provided to customers within the Company’s General Insurance segment. Claims handling revenues are recognized on a straight-line basis over the contract period (generally one year) which is commensurate with the entity’s efforts relative to claims adjudication. The related ancillary services revenues are recognized as services are provided and invoiced to the customer. Additionally, revenues from contracts with customers generated from the Company’s Title Insurance segment, consisting primarily of valuation and default title services, and software licensing arrangements totaled $72.0 (37.5%), $62.2 (33.7%) and $55.8 (33.5%) for the years ended December 31, 2020, 2019 and 2018, respectively. Such revenues are generally recognized at a point in time upon completion and invoicing of the services, or in the case of software maintenance agreements, on a straight-line basis over the life of the contract (generally one year).
(f) Deferred Policy Acquisition Costs - Various insurance subsidiaries of the Company defer direct costs related to the successful production of business. Deferred costs consist principally of commissions, premium taxes and policy issuance expenses.

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. The Company considers investment income when evaluating the recoverability of deferred acquisition costs.

The following table shows a reconciliation of deferred acquisition costs between succeeding balance sheet dates.
Years Ended December 31:202020192018
Deferred, beginning of year$325.4 $316.3 $297.8 
Acquisition costs deferred:
Commissions - net of reinsurance326.0 360.8 332.2 
Premium taxes127.4 130.2 123.5 
Salaries and other underwriting expenses50.7 50.3 52.3 
Sub-total504.2 541.4 508.1 
Amortization charged to income(501.5)(532.2)(489.6)
Change for the year2.6 9.1 18.5 
Deferred, end of year$328.0 $325.4 $316.3 
(g) Unearned Premiums - Unearned premium reserves are generally calculated by application of pro-rata factors to premiums in force. At December 31, 2020 and 2019, unearned premiums consisted of the following:
As of December 31:20202019
   General Insurance Group$2,396.7 $2,223.4 
   RFIG Run-off Business.4 1.3 
       Total$2,397.1 $2,224.7 
(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 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.
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 or pension type workers' compensation reserves are discounted to present value based on interest rates generally ranging from 3.0% to 4.0%. The amount of discount reflected in the year-end net reserves totaled $196.9, $209.6, and $216.5 as of December 31, 2020, 2019, and 2018, respectively. Interest accretion of $35.7, $34.5 and $49.0 for the years ended December 31, 2020, 2019, and 2018, respectively, was recognized as unfavorable development of prior year reserves within benefits, claims and settlement expenses in the consolidated statements of income. 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 claim 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 can potentially benefit claimants. In response to this most recent legislation and the above noted 2001 change, black lung claims filed or refiled have risen once 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.

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, 2020, 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, 2020 and 2019, Old Republic's aggregate indemnity and loss adjustment expense reserves specifically identified with A&E exposures amounted to $127.6 and $126.8 gross, respectively, and $82.4 and $83.3 net of reinsurance, respectively. Old Republic's average five year paid loss survival ratios stood at 6.3 years (gross) and 7.1 years (net of reinsurance) as of December 31, 2020 and 6.3 years (gross) and 7.2 years (net of reinsurance) as of December 31, 2019. Fluctuations in this ratio between years can be caused by the inconsistent pay out patterns associated with these types of claims. The Company believes that its overall reserving practices have been consistently applied over many years, and that its aggregate 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.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 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 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 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). Republic Mortgage Insurance Company's ("RMIC") 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. During the period of the great recession, the Company 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.
202020192018
Estimated reduction in beginning reserve$1.6 $3.2 $19.0 
Total incurred claims and settlement expenses reduced
(increased) by changes in estimated rescissions:
Current year.4 .6 .9 
Prior year— (.9)(12.3)
Sub-total.3 (.3)(11.4)
Estimated rescission reduction in paid claims(.7)(1.3)(4.4)
Estimated reduction in ending reserve$1.2 $1.6 $3.2 

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, reinstatement of previously rescinded or denied claims, 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.
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 31:202020192018
Gross reserves at beginning of year$9,929.5 $9,471.2 $9,237.6 
Less: reinsurance losses recoverable3,249.7 3,006.3 2,921.1 
Net reserves at beginning of year:
General Insurance6,021.3 5,766.1 5,471.5 
Title Insurance530.9 533.4 559.7 
RFIG Run-off118.9 154.5 271.7 
Other8.4 10.8 13.5 
Sub-total6,679.7 6,464.9 6,316.4 
Incurred claims and claim adjustment expenses:
Provisions for insured events of the current year:
General Insurance2,380.5 2,422.7 2,346.2 
Title Insurance117.2 99.5 96.1 
RFIG Run-off (a)48.8 41.1 56.2 
Other11.2 14.1 22.1 
Sub-total2,557.8 2,577.6 2,520.7 
Change in provision for insured events of prior years:
General Insurance(27.4)14.5 (.2)
Title Insurance(41.8)(32.1)(47.7)
RFIG Run-off (a)(11.9)(9.4)(26.2)
Other(2.5)(3.9)(3.5)
Sub-total(83.8)(30.9)(77.8)
Total incurred claims and claim adjustment expenses (a)2,474.0 2,546.6 2,442.9 
Payments:
Claims and claim adjustment expenses attributable to
   insured events of the current year:
General Insurance783.2 835.4 813.2 
Title Insurance4.6 3.6 9.1 
RFIG Run-off1.1 3.3 3.7 
Other6.4 9.1 16.0 
Sub-total795.5 851.5 842.2 
Claims and claim adjustment expenses attributable to
   insured events of prior years:
General Insurance1,263.1 1,346.6 1,238.1 
Title Insurance45.4 66.2 65.4 
RFIG Run-off27.0 64.0 143.3 
Other2.0 3.3 5.2 
Sub-total1,337.7 1,480.2 1,452.2 
Total payments2,133.2 2,331.7 2,294.5 
Amount of reserves for unpaid claims and claim adjustment expenses
at the end of each year, net of reinsurance losses recoverable:
General Insurance6,328.0 6,021.3 5,766.1 
Title Insurance556.1 530.9 533.4 
RFIG Run-off127.6 118.9 154.5 
Other8.6 8.4 10.8 
Sub-total7,020.4 6,679.7 6,464.9 
Reinsurance losses recoverable3,650.5 3,249.7 3,006.3 
Gross reserves at end of year$10,671.0 $9,929.5 $9,471.2 
__________

(a)In common with all other insurance coverages, RFIG Run-off 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.
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 favorable developments of 1.3%, .5%, and 1.2% for 2020, 2019 and 2018, respectively, with average favorable annual developments of 1.0%. The Company believes that the factors most responsible, in varying and continually changing degrees, for favorable or unfavorable reserve developments include, as to many general insurance coverages, the effect of reserve discounts applicable to workers' compensation claims, changes in 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, changes in inflation rates applicable to repairs and the medical portion of claims in particular, and changes in 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. Title claim costs were lower in the face of declining claims activity since the Great Recession years. As to mortgage guaranty and the CCI coverage, changes in favorable or unfavorable reserve development result from 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, the number 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.

The following represents the Company's incurred and paid loss development tables for the major types of insurance coverages as of December 31, 2020. The information about incurred and paid claims development for the years ended December 31, 2011 to 2019 is presented as supplementary information.
Workers' Compensation
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (Undiscounted)As of December 31, 2020
Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported ClaimsCumulative Number of Reported Claims*
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2011201220132014201520162017201820192020
2011$558.6 $567.3 $595.3 $622.5 $643.0 $641.7 $649.3 $634.9 $626.9 $627.6 $39.7 53,348
2012629.3 647.2 670.6 678.1 676.4 671.1 660.5 654.7 651.1 64.8 49,922
2013700.9 705.3 716.9 722.7 726.3 717.2 689.7 691.0 76.8 49,017
2014780.9 792.8 786.4 784.9 777.0 763.3 724.4 105.7 54,145
2015794.3 792.6 787.3 785.5 769.1 742.4 193.6 55,180
2016756.1 752.9 745.7 730.5 712.6 235.3 52,419
2017727.0 713.9 700.3 683.4 195.1 51,674
2018698.6 691.5 681.0 232.9 52,145
2019664.6 657.4 243.7 51,102
2020560.9 310.1 33,301
Total$6,732.1 (A)
* Reported claims are accumulated on an individual claimant basis and exclude external reinsurance assumed and participation in residual market pools as claim frequency information is not available.
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2011201220132014201520162017201820192020
2011$112.6 $266.7 $361.4 $424.0 $469.8 $503.4 $526.4 $539.7 $550.0 $557.7 
2012113.1 265.8 361.8 426.7 469.5 496.6 518.4 531.5 539.5 
2013107.6 274.3 381.2 449.8 501.9 526.8 547.0 558.3 
2014116.9 293.7 397.1 466.0 499.5 524.8 544.9 
2015109.0 274.9 379.3 435.1 466.7 484.7 
2016102.5 253.5 334.4 383.5 408.4 
201799.6 244.6 334.8 383.1 
201894.8 240.6 320.5 
2019102.9 239.8 
202084.3 
Total$4,121.7 (B)
Net incurred claims and allocated claim adjustment expenses (A)$6,732.1 
Less: net paid claims and allocated claim adjustment expenses (B)4,121.7 
Sub-total2,610.4 
All outstanding liabilities before 2011, net of reinsurance630.7 
Liabilities for claims and allocated claim adjustment expenses, net of reinsurance$3,241.1 
General Liability
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (Undiscounted)As of December 31, 2020
Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported ClaimsCumulative Number of Reported Claims*
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2011201220132014201520162017201820192020
2011$72.5 $71.5 $72.9 $80.0 $95.8 $96.0 $94.6 $94.4 $91.1 $91.9 $7.8 4,747
201295.0 91.2 89.2 100.9 107.3 109.6 108.2 105.6 105.0 8.2 5,283
201395.7 96.7 96.5 107.8 106.7 106.0 101.4 102.2 9.4 5,533
2014107.0 110.4 109.4 111.0 117.0 117.1 112.3 11.3 6,012
201596.0 96.3 99.2 102.3 104.8 105.8 22.0 5,577
201692.4 96.7 98.8 100.3 101.0 27.3 83,224
2017111.2 121.4 129.6 132.8 22.0 460,409
2018120.5 119.7 125.1 28.8 461,673
2019133.5 131.9 61.5 375,183
2020112.4 83.3 4,093
$1,120.8 (A)
* Reported claims are accumulated on an individual claimant basis and exclude external reinsurance assumed and participation in residual market pools as claim frequency information is not available. The increases beginning in 2016 are due to the addition of a national account with higher frequency yet lower severity than the existing book of business for accident years 2016 through 2019.
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2011201220132014201520162017201820192020
2011$2.5 $12.1 $26.0 $43.6 $58.7 $68.9 $75.3 $80.7 $79.7 $79.8 
20125.5 18.8 36.0 50.8 67.4 75.8 86.4 90.8 93.2 
20134.0 13.6 34.4 58.5 76.1 85.1 86.9 88.1 
20145.8 15.8 32.0 52.8 73.5 82.8 88.9 
20156.3 16.0 29.5 47.4 64.5 70.7 
20167.1 18.5 34.8 47.7 58.0 
20175.7 25.9 50.1 76.9 
20186.9 28.8 48.9 
20196.4 29.5 
20204.2 
$638.5 (B)
Net incurred claims and allocated claim adjustment expenses (A)$1,120.8 
Less: net paid claims and allocated claim adjustment expenses (B)638.5 
Sub-total482.2 
All outstanding liabilities before 2011, net of reinsurance159.2 
Liabilities for claims and allocated claim adjustment expenses, net of reinsurance$641.5 
Commercial Automobile
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (Undiscounted)As of December 31, 2020
Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported ClaimsCumulative Number of Reported Claims*
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2011201220132014201520162017201820192020
2011$591.6 $599.9 $584.4 $582.3 $549.9 $549.0 $539.3 $537.2 $534.3 $533.2 $.9 96,794
2012622.5 619.6 603.9 575.0 573.1 558.6 558.0 552.1 551.4 2.7 98,048
2013661.5 665.4 668.5 669.6 659.7 646.4 633.4 632.5 7.0 96,993
2014687.8 689.2 691.7 688.0 688.6 687.8 683.8 13.6 103,227
2015712.4 710.5 729.7 721.4 720.7 703.4 8.7 104,791
2016755.9 768.9 786.0 780.8 779.3 31.3 110,110
2017788.7 819.1 869.2 874.4 39.3 116,378
2018883.2 947.9 989.9 46.3 127,772
2019931.1 959.7 66.6 136,389
2020941.1 142.1 97,067
$7,649.1 (A)
* Reported claims are accumulated on an individual claimant basis and exclude external reinsurance assumed and participation in residual market pools as claim frequency information is not available.
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
For the Years Ended December 31,
AccidentSupplementary Information (Unaudited)
Year2011201220132014201520162017201820192020
2011$223.1 $352.7 $436.2 $483.2 $511.6 $523.0 $525.0 $526.6 $528.8 $529.4 
2012229.0 351.4 442.9 498.6 525.9 539.1 543.9 545.3 545.5 
2013248.3 398.1 511.0 578.1 611.5 622.9 626.3 619.5 
2014267.4 430.5 536.9 605.4 640.3 664.9 658.4 
2015265.1 438.9 541.8 626.2 669.7 680.6 
2016290.2 469.6 585.1 677.8 710.8 
2017307.9 512.0 657.1 746.5 
2018330.0 557.5 730.4 
2019330.4 549.0 
2020290.1 
$6,060.7 (B)
Net incurred claims and allocated claim adjustment expenses (A)$7,649.1 
Less: net paid claims and allocated claim adjustment expenses (B)6,060.7 
Sub-total1,588.4 
All outstanding liabilities before 2011, net of reinsurance3.0 
Liabilities for claims and allocated claim adjustment expenses, net of reinsurance$1,591.5 
The following represents a reconciliation of the incurred and paid loss development tables to total claim and loss adjustment expense reserves as reported in the consolidated balance sheet.
December 31,
20202019
Net claim and allocated loss adjustment expense reserves:
Workers' compensation (a)$3,044.1 $3,079.1 
General liability641.5 610.9 
Commercial automobile1,591.5 1,403.0 
Three above coverages combined5,277.2 5,093.1 
Other short-duration insurance coverages782.4 673.5 
Subtotal6,059.7 5,766.7 
Reinsurance recoverable on claim reserves:
Workers' compensation1,885.0 1,808.5 
General liability667.9 643.7 
Commercial automobile788.3 545.1 
Three above coverages combined3,341.3 2,997.4 
Other short-duration insurance coverages303.8 245.3 
Subtotal3,645.1 3,242.8 
Insurance coverages other than short-duration654.5 621.5 
Unallocated loss adjustment expense reserves311.6 298.3 
966.2 919.9 
Gross claim and loss adjustment expense reserves$10,671.0 $9,929.5 
__________

(a)    The amount of discount reflected in the year-end net reserves totaled $196.9 and $209.6 as of December 31, 2020 and 2019, respectively.

The table below is supplementary information and presents the historical average annual percentage payout of incurred claims by age, net of reinsurance.
Supplementary Information (Unaudited)
Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10
Workers' compensation15.5 %22.6 %13.7 %8.7 %5.6 %3.8 %3.2 %1.9 %1.4 %1.2 %
General liability4.9 %12.5 %16.2 %17.9 %15.7 %8.4 %6.1 %3.7 %.6 %— %
Commercial automobile37.0 %23.4 %16.1 %10.5 %5.2 %2.3 %.2 %(.2)%.2 %.1 %
(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 estimated credit losses and are included in the Company's net claim and claim expense reserves. See Note 1(t) - Credit Losses for further discussion.
(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 the 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 31:202020192018
Statutory tax rate (credit)21.0 %21.0 %21.0 %
Tax rate increases (decreases):
Tax-exempt interest(.5)(.2)(.8)
Dividends received exclusion(1.8)(.9)(2.4)
Meals & entertainment.1 .2 .5 
Prior year adjustments— — (2.4)
Other items - net.1 — (.5)
Effective tax rate (credit)18.9 %20.1 %15.4 %

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 31:202020192018
Deferred Tax Assets:
    Losses, claims, and settlement expenses$201.6 $195.2 $189.8 
    Pension and deferred compensation plans63.0 48.3 47.8 
    Net operating loss carryforward11.7 13.8 15.8 
    AMT credit carryforward9.0 9.0 9.0 
    Operating leases52.0 49.9 — 
    Other temporary differences15.7 15.0 18.0 
        Total deferred tax assets353.2 331.4 280.8 
Deferred Tax Liabilities:
    Unearned premium reserves41.6 34.5 33.4 
    Deferred policy acquisition costs65.0 63.7 62.6 
    Mortgage guaranty insurers' contingency reserves— — 86.5 
    Amortization of fixed maturity securities4.4 3.4 2.6 
    Net unrealized investment gains295.9 257.8 57.4 
    Title plants and records2.8 2.9 2.9 
Tax reform transition adjustment on unpaid losses, claims and
settlement expenses17.2 19.5 32.0 
    Operating leases48.4 46.8 — 
    Other temporary differences14.9 14.7 13.4 
        Total deferred tax liabilities490.6 443.5 291.0 
        Net deferred tax assets (liabilities)$(137.3)$(112.2)$(10.3)

At December 31, 2020, the Company had available net operating loss ("NOL") carryforwards of $56.0 which will expire in years 2023 through 2029, and a $9.0 alternative minimum tax ("AMT") credit carryforward. 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 by a maximum of $9.8 each year until expiration.

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 gross deferred tax assets at year-end 2020 will more likely than not be fully realized.

Insurance regulations require mortgage guaranty insurance companies to establish a statutory contingency reserve designed to protect policyholders against extraordinary volumes of claims. Pursuant to special provisions of the Internal Revenue Code a mortgage guaranty insurance company may, at its discretion, take a current deduction for amounts added to the statutory contingency reserve in an amount not to exceed taxable income in any given tax year or, cumulatively, the total amount of contingency reserves carried under the aforementioned insurance regulations. 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. During 2019, the Company released $412.2 from the tax basis contingency reserve account and redeemed all outstanding U.S. Treasury Tax and Loss Bonds.

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. The Company classifies interest and penalties as income tax expense in the consolidated statement of income. The Company is not currently under audit by the IRS and 2017 and subsequent tax years remain open.(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 $26.9, $26.8 and $27.6 in 2020, 2019, and 2018, 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 which is included as part of sundry assets in the consolidated balance sheets:
GeneralTitleOtherTotal
January 1, 2019$116.2 $57.5 $.1 $174.0 
Acquisitions— 1.1 — 1.1 
Impairments— — — — 
December 31, 2019116.2 58.7 .1 175.1 
Acquisitions— — — — 
Impairments— — — — 
December 31, 2020$116.2 $58.7 $.1 $175.1 
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. Annual testing did not result in any impairment charges for the periods presented. Reporting units with goodwill balances had estimated fair values in excess of their carrying values.
(n) Employee Benefit Plans - The Company had an active pension plan (the "Plan") covering a portion of its work force until December 31, 2013. The Plan is a defined benefit plan pursuant to which pension payments are based primarily on years of service and employee compensation near retirement. The Plan was closed to new participants and benefits were frozen as of December 31, 2013. As a result, eligible employees retain all of the vested rights as of the effective date of the freeze. While additional benefits no longer accrue, the Company's cumulative obligation continues to be subject to further adjustment due to changes in actuarial assumptions such as expected mortality and changes in interest rates.

The funded status of a pension plan is measured as of December 31 of each year, as the difference between the fair value of plan assets and the projected benefit obligation. The underfunded status of the 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. The effects of these measurements and the resulting funded status of the Plan are reflected below.
Years Ended December 31:202020192018
Projected benefit obligation at beginning of year$586.4 $530.1 $579.2 
Increases (decreases) during the year attributable to:
Interest cost19.1 22.6 20.8 
Actuarial (gains) losses60.8 59.8 (44.4)
Benefits paid(26.6)(26.0)(25.4)
Net increase (decrease) for the year53.3 56.3 (49.1)
Projected benefit obligation at end of year$639.7 $586.4 $530.1 
Years Ended December 31:202020192018
Fair value of net assets available for plan benefits
At beginning of the year$492.8 $430.2 $453.7 
Increases (decreases) during the year attributable to:
Actual return on plan assets6.8 82.1 (12.0)
Sponsor contributions6.6 6.5 14.0 
Benefits paid(26.6)(26.0)(25.4)
Net increase (decrease) for year(13.1)62.5 (23.5)
Fair value of net assets available for plan benefits
At end of the year$479.6 $492.8 $430.2 
Funded Status$(160.1)$(93.6)$(99.8)
Amounts recognized in accumulated other comprehensive income$(224.8)$(140.5)$(137.1)

Funding of the plan is dependent on a number of factors including actual performance versus actuarial assumptions made at the time of the actuarial valuation, as well as the maintenance of certain funding levels relative to regulatory requirements. The Company currently does not expect to make cash contributions in calendar year 2021 based on minimum funding requirements.

Net periodic pension expense (income) recognized during 2020, 2019 and 2018 was $(11.0), $(3.0), and $(6.6), respectively.

The projected benefit obligation and net periodic benefit cost for the Plan were determined using the following weighted-average assumptions:
Projected Benefit ObligationNet Periodic Benefit Cost
As of December 31:20202019202020192018
Settlement discount rates2.45 %3.35 %3.35 %4.40 %3.70 %
Long-term rates of return on plans' assetsN/AN/A7.00 %7.00 %7.00 %

The assumed settlement discount rates were determined by matching the current estimate of the 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 portfolio were considered. The investment policy of the Plan 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 Plan were as follows:
Investment Policy Asset
Allocation % Range Target
As of December 31:20202019
Equity securities:
Common shares of Company stock11.7 %12.9 %
Other74.0 71.2 
Sub-total85.7 84.1 40% to 80%
Fixed maturity securities10.6 12.4 15% to 60%
Other3.7 3.5    1% to 10%
Total100.0 %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 Plan's assets segregated among the various input levels described in Note 1(d).
Fair Value Measurements
As of December 31, 2020:Level 1Level 2Level 3Total
Equity securities:
Common shares of Company stock$55.7 $— $— $55.7 
Other341.7 — — 341.7 
Sub-total397.4 — — 397.4 
Fixed maturity securities2.0 49.0 — 51.0 
Other9.6 — 4.5 14.2 
Total at fair value$409.1 $49.0 $4.5 462.7 
Securities at net asset value16.8 
Total$479.6 
As of December 31, 2019:
Equity securities:
Common shares of Company stock$63.2 $— $— $63.2 
Other330.7 — — 330.7 
Sub-total394.0 — — 394.0 
Fixed maturity securities4.1 57.0 — 61.1 
Other8.6 — 7.2 15.9 
Total at fair value$406.8 $57.0 $7.2 471.1 
Securities at net asset value21.6 
Total$492.8 

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

The benefits expected to be paid as of December 31, 2020 for the next 10 years are as follows: 2021: $31.1; 2022: $31.8; 2023: $32.7; 2024 $33.3; 2025: $33.6 and for the five years after 2025: $170.1.

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 31:202020192018
ESSOP$30.6 $21.7 $12.9 
Other profit sharing plans24.0 18.4 20.7 
Cash and deferred incentive compensation$53.7 $48.3 $46.7 

A majority of the Company's employees participate in the ESSOP. 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. During 2015, the ESSOP purchased 2,200,000 shares of Old Republic common stock for $34.0. The purchases were financed by a loan from the Company. During 2018, the ESSOP purchased 2,383,625 shares of Old Republic common stock for $50.0 and during 2020, the ESSOP purchased 3,337,000 shares of Old Republic common stock for $50.0. These purchases were financed by loans to the ESSOP from participating subsidiaries. As of December 31, 2020, there were 18,084,861 Old Republic common shares owned by the ESSOP, of which 11,342,050 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 ($1,718.1 and $1,743.0 at December 31, 2020 and 2019, 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) Net Income 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 31:202020192018
Numerator:
Basic earnings per share -
income (loss) available to common stockholders$558.6 $1,056.4 $370.5 
Adjustment for interest expense incurred on
assumed conversion of convertible notes— — 3.1 
Diluted earnings per share -
income (loss) available to common stockholders
after assumed conversion of convertible notes$558.6 $1,056.4 $373.6 
Denominator:
Basic earnings per share -
weighted-average shares (a)298,407,921 299,885,468 294,248,871 
Effect of dilutive securities - stock based compensation awards490,752 1,342,247 1,398,329 
Effect of dilutive securities - convertible notes— — 5,368,876 
Diluted earnings per share -
adjusted weighted-average shares (a)298,898,673301,227,715301,016,076
Earnings per share: Basic$1.87 $3.52 $1.26 
Diluted$1.87 $3.51 $1.24 
Anti-dilutive common stock equivalents
excluded from earning per share computations:
Stock based compensation awards5,853,469 1,200,250 — 
__________

(a) In calculating earnings per share, accounting standards 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 based compensation plan in effect for certain eligible key employees since 1978. Under the 2016 Incentive Compensation Plan (the "Plan"), 15.0 million shares became available for future awards. The maximum number of options available as of December 31, 2020 for future issuance under this amended plan was approximately 6.9 million shares.

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 vested 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 31:202020192018
Stock based compensation expense$2.1 $3.7 $3.8 
Income tax benefit$.4 $.7 $.8 

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 key assumptions used to value 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.
202020192018
Expected volatility.17 .18 .20 
Expected dividends5.72 %4.10 %4.03 %
Expected term (in years)777
Risk-free rate.72 %2.54 %2.81 %

A summary of stock option activity under the plan as of December 31, 2020, 2019 and 2018, and changes in outstanding options during the years then ended is presented below:
As of and for the Years Ended December 31,
202020192018
SharesWeighted
Average
Exercise
Price		SharesWeighted
Average
Exercise
Price		SharesWeighted
Average
Exercise
Price
Outstanding at beginning of year8,009,237 $18.43 7,163,567$17.24 6,565,019 $15.76 
Granted1,901,100 17.24 1,777,50021.14 1,539,500 20.98 
Exercised397,653 14.44 848,92314.14 881,917 12.86 
Forfeited and expired18,033 16.72 82,90717.05 59,035 16.54 
Outstanding at end of year9,494,651 18.36 8,009,23718.43 7,163,567 17.24 
Exercisable at end of year6,138,602 $17.81 5,100,009$17.18 4,556,350 $15.83 
Weighted average fair value of
    options granted during the year (a)$.88 per share$2.35 per share$2.71 per share
__________

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

A summary of stock options outstanding and exercisable at December 31, 2020 follows:
Options OutstandingOptions Exercisable
Weighted - AverageWeighted
Average
Exercise
Price
Exercise PricesYear of GrantNumber
Outstanding		Remaining
Contractual
Life		Exercise
Price		Number
Exercisable
$12.332011154,620 0.25$12.33 154,620 $12.33 
$10.802012272,441 1.2510.80 272,441 10.80 
$12.572013357,700 2.2512.57 357,700 12.57 
$16.062014614,442 3.2516.06 614,442 16.06 
$15.262015658,479 4.2515.26 658,479 15.26 
$18.1420161,004,277 5.2518.14 1,004,277 18.14 
$19.9820171,272,599 6.2519.98 990,510 19.98 
$20.9820181,500,338 7.2520.98 864,707 20.98 
$21.12to$21.9920191,761,255 8.2521.14 738,395 21.13 
$16.17to$22.7220201,898,500 9.2517.24 483,031 17.19 
Total9,494,651 $18.36 6,138,602 $17.81 

As of December 31, 2020, there was $2.7 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:
202020192018
Cash received from stock option exercise$5.7 $12.0 $11.3 
Intrinsic value of stock options exercised2.8 6.8 7.5 
Actual tax benefit realized for tax deductions
from stock options exercised
$.5 $1.4 $1.5 
At December 31, 2020, the Company had restricted common stock issued to certain employees which are expected to vest over a weighted average period of approximately 3 years. During the vesting period, restricted shares are nontransferable and subject to forfeiture. 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, 2020, 2019 and 2018.
(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 in 2011. The insurance laws of 16 jurisdictions, including RMIC's and its sister company, Republic Mortgage Guaranty Insurance Corporation ("RMGIC’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 and its sister company RMGIC were placed under administrative supervision by the North Carolina Department of Insurance ("NCDOI") in 2012 and ultimately ordered to defer the payment of 40% of all settled claims as a deferred payment obligation ("DPO").

On July 1, 2014, the NCDOI issued a Final Order approving an Amended and Restated Corrective Plan (the "Amended Plan") submitted jointly on April 16, 2014, by RMIC and RMGIC. Under the Amended Plan, RMIC and RMGIC were authorized to pay 100% of their DPOs accrued as of June 30, 2014, and to settle all subsequent valid claims entirely in cash, without establishing any DPOs. In anticipation of receiving this Final Order, ORI invested $125.0 in cash and securities in RMIC in June 2014. In mid-July 2014, in furtherance of the Final Order, RMIC and RMGIC processed payments of their accumulated DPO balances of approximately $657.0 relating to fully settled claims charged to periods extending between January 19, 2012 and June 30, 2014. The NCDOI subsequently terminated the summary orders which placed RMIC and RMGIC under administrative supervision effective December 8, 2017, thereby releasing both companies from its supervision as they were eminently solvent.
As of December 31, 2020, RFIG's mortgage insurance subsidiaries had total statutory capital, inclusive of a $316.7 contingency reserve, of $435.2, which was $363.7 above the required MPP of $71.5.
(t) Credit Losses - Effective January 1, 2020, the Company adopted CECL which requires the immediate recognition of estimated credit losses expected to occur over the remaining life of certain financial assets measured at amortized cost, including the Company’s reinsurance recoverables, held to maturity securities and its accounts and notes receivable. CECL replaced the incurred loss impairment model that recognizes losses when a probability threshold is met with a requirement to recognize lifetime expected credit losses immediately when a financial asset is originated or purchased and at subsequent measurement dates. The expected credit losses, and subsequent adjustment to such losses, are recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the asset presented on the consolidated balance sheet.

The guidance relating to financial assets measured at amortized cost was adopted on a modified retrospective basis, resulting in a net of tax adjustment to January 1, 2020 retained earnings of $2.3. The Company’s total credit loss allowance relating to financial assets increased from $30.1 as of January 1, 2020 to $36.5 at December 31, 2020. The December 31, 2020 allowance was comprised of $16.0 related to reinsurance recoverables and $20.5 related to accounts and notes receivable. At adoption, the allowance included $14.5 related to reinsurance recoverables, $15.5 related to accounts and notes receivable, and an immaterial amount related to held to maturity securities.

The Company performs an ongoing evaluation of reinsurance balances outstanding and uses a probability-of-default methodology to estimate the credit allowance for uncollectible amounts. Allowances for uncollectible accounts and notes receivable are established based on a review of amounts outstanding, historical charge off activity, and current and forecasted economic conditions.
The guidance also modifies the impairment model for available for sale fixed maturity securities by requiring the recognition of impairments relating to credit losses through an allowance account, as opposed to a charge that cannot be revised should the underlying security recover. Under the guidance, the length of time a security has been in an unrealized loss position no longer impacts the determination as to whether an impairment exists. The revised impairment guidance for available for sale fixed maturity securities was adopted on a prospective basis. The Company's OTTI policy and the related disclosures summarizing this standard's impact on the Company's investment portfolio are included in Note 1(d)