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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM10-Q
Quarterly report pursuant to section 13 or 15(d) of the Security Exchange Act of 1934
for the quarterly period ended:March 31, 2021
or
Transition report pursuant to section 13 or 15(d) of the Security Exchange Act of 1934
Commission File Number:001-10607
OLD REPUBLIC INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware36-2678171
(State or other jurisdiction of(IRS Employer Identification No.)
incorporation or organization)
307 North Michigan AvenueChicagoIllinois60601
(Address of principal executive office)(Zip Code)

Registrant's telephone number, including area code: 312-346-8100

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock / $1 par valueORINew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes: No:

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes: No:

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).Yes:   No:

The number of shares of the Registrant's Common Stock outstanding at March 31, 2021 was 304,749,840.

There are 49 pages in this report



OLD REPUBLIC INTERNATIONAL CORPORATION
Report on Form 10-Q / March 31, 2021
INDEX
PAGE NO.
PART IFINANCIAL INFORMATION:
CONSOLIDATED BALANCE SHEETS3
CONSOLIDATED STATEMENTS OF INCOME4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME5
CONSOLIDATED STATEMENTS OF PREFERRED STOCK AND COMMON
SHAREHOLDERS' EQUITY6
CONSOLIDATED STATEMENTS OF CASH FLOWS7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS8 - 18
MANAGEMENT ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS19 - 45
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK46
CONTROLS AND PROCEDURES46
PART IIOTHER INFORMATION:
ITEM 1 - LEGAL PROCEEDINGS47
ITEM 1A - RISK FACTORS47
ITEM 6 - EXHIBITS47
SIGNATURE48
EXHIBIT INDEX49




2


Old Republic International Corporation and Subsidiaries
Consolidated Balance Sheets
($ in Millions, Except Share Data)
(Unaudited)
March 31,December 31,
20212020
Assets
Investments:
Available for sale:
Fixed maturity securities (at fair value) (amortized cost: $10,058.5 and $9,897.6)$10,415.9 $10,496.8 
Short-term investments (at fair value which approximates cost)637.9 749.6 
Total11,053.8 11,246.4 
Equity securities (at fair value) (cost: $3,118.6 and $3,269.7)4,271.3 4,054.8 
Other investments29.0 28.8 
Total Investments15,354.1 15,330.1 
Other Assets:
Cash123.4 118.7 
Accrued investment income87.1 86.4 
Accounts and notes receivable1,626.6 1,593.9 
Reinsurance balances and funds held233.0 205.0 
Reinsurance recoverable: Paid losses69.8 67.6 
 Policy and claim reserves4,407.4 4,295.1 
Deferred policy acquisition costs334.9 328.0 
Sundry assets812.6 790.0 
Total Other Assets7,695.1 7,485.0 
Total Assets$23,049.3 $22,815.2 
Liabilities, Preferred Stock, and Common Shareholders' Equity
Liabilities:
Losses, claims, and settlement expenses$10,853.3 $10,671.0 
Unearned premiums2,442.7 2,397.1 
Other policyholders' benefits and funds198.5 195.9 
Total policy liabilities and accruals13,494.6 13,264.2 
Commissions, expenses, fees, and taxes651.5 663.5 
Reinsurance balances and funds793.5 725.4 
Federal income tax payable: Current36.9 4.2 
                                              Deferred165.0 137.3 
Debt947.2 966.4 
Sundry liabilities508.6 867.3 
Commitments and contingent liabilities
Total Liabilities16,597.4 16,628.5 
Preferred Stock (1)
  
Common Shareholders' Equity:
Common stock (1)304.7 304.1 
Additional paid-in capital1,318.9 1,306.9 
Retained earnings4,831.4 4,394.8 
Accumulated other comprehensive income (loss)96.9 284.0 
Unallocated ESSOP shares (at cost)(100.3)(103.2)
Total Common Shareholders' Equity6,451.8 6,186.6 
Total Liabilities, Preferred Stock and Common Shareholders' Equity$23,049.3 $22,815.2 
________

(1)    At March 31, 2021 and December 31, 2020, there were 75,000,000 shares of $0.01 par value preferred stock authorized, of which no shares were outstanding. As of the same dates, there were 500,000,000 shares of common stock, $1.00 par value, authorized, of which 304,749,840 and 304,122,180 were issued as of March 31, 2021 and December 31, 2020, respectively. At March 31, 2021 and December 31, 2020, there were 100,000,000 shares of Class B Common Stock, $1.00 par value, authorized, of which no shares were issued.
See accompanying Notes to Consolidated Financial Statements.

3


Old Republic International Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
($ in Millions, Except Share Data)
Quarters Ended
March 31,
20212020
Revenues:
Net premiums earned$1,732.2 $1,478.0 
Title, escrow, and other fees106.6 81.2 
Total premiums and fees1,838.9 1,559.3 
Net investment income104.3 114.1 
Other income36.3 34.6 
Total operating revenues1,979.6 1,708.2 
Investment gains (losses):
Realized from actual transactions7.8 18.5 
Unrealized from changes in fair value of
equity securities367.5 (962.7)
Total realized and unrealized investment
gains (losses)375.4 (944.1)
Total revenues2,355.0 764.0 
Benefits, Claims and Expenses:
Benefits, claims and settlement expenses598.0 619.7 
Dividends to policyholders5.4 2.9 
Underwriting, acquisition, and other expenses1,110.3 899.4 
Interest and other charges10.6 11.9 
Total expenses1,724.4 1,534.0 
Income (loss) before income taxes (credits)630.6 (769.9)
Income Taxes (Credits):
Current50.7 40.0 
Deferred77.7 (205.2)
Total128.5 (165.1)
Net Income (Loss)$502.1 $(604.8)
Net Income (Loss) Per Share:
Basic$1.68 $(2.01)
Diluted$1.68 $(2.01)
Average shares outstanding: Basic298,753,132300,280,398
Diluted299,693,514300,280,398

See accompanying Notes to Consolidated Financial Statements.

4


Old Republic International Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
($ in Millions)
Quarters Ended
March 31,
20212020
Net Income (Loss) As Reported$502.1 $(604.8)
Other comprehensive income (loss):
Unrealized gains (losses) on securities:
Unrealized gains (losses) before reclassifications,
not included in the statements of income(242.4)(173.2)
Amounts reclassified as realized investment (gains)
losses in the statements of income(.3)(.3)
Pretax unrealized gains (losses) on securities(242.7)(173.5)
Deferred income taxes (credits)(51.1)(36.3)
Net unrealized gains (losses) on securities, net of tax(191.5)(137.1)
Defined benefit pension plans:
Net pension adjustment before reclassifications  
Amounts reclassified as underwriting, acquisition,
and other expenses in the statements of income1.8 .9 
Pretax net adjustment related to defined benefit
pension plans1.8 .9 
Deferred income taxes (credits).3 .1 
Net adjustment related to defined benefit pension
plans, net of tax1.4 .7 
Foreign currency translation adjustment3.0 (10.5)
Total other comprehensive income (loss)(187.0)(146.9)
Comprehensive Income (Loss)$315.0 $(751.8)


See accompanying Notes to Consolidated Financial Statements.

5


Old Republic International Corporation and Subsidiaries
Consolidated Statements of Preferred Stock
and Common Shareholders' Equity (Unaudited)
($ in Millions)
Quarters Ended
March 31,
20212020
Preferred Stock:
Balance, beginning and end of period$ $ 
Common Stock:
Balance, beginning of period$304.1 $303.6 
Dividend reinvestment plan  
Net issuance of shares under stock based compensation plans.5 .3 
Balance, end of period$304.7 $303.9 
Additional Paid-in Capital:
Balance, beginning of period$1,306.9 $1,297.5 
Dividend reinvestment plan1.1 .2 
Net issuance of shares under stock based compensation plans7.8 4.4 
Stock based compensation2.3 1.1 
ESSOP shares released.6 .8 
Balance, end of period$1,318.9 $1,304.2 
Retained Earnings:
Balance, beginning of period$4,394.8 $4,386.0 
Adoption of new accounting principle (1) (2.3)
Balance, beginning of period, as adjusted4,394.8 4,383.6 
Net income (loss)502.1 (604.8)
Dividends on common shares ($.22 and $.21 per common share)(65.4)(62.9)
Balance, end of period$4,831.4 $3,715.8 
Accumulated Other Comprehensive Income (Loss):
Balance, beginning of period$284.0 $77.7 
Net unrealized gains (losses) on securities, net of tax(191.5)(137.1)
Net adjustment related to defined benefit pension plans,
net of tax1.4 .7 
Foreign currency translation adjustment3.0 (10.5)
Balance, end of period$96.9 $(69.2)
Unallocated ESSOP Shares:
Balance, beginning of period$(103.2)$(64.8)
ESSOP shares released2.9 2.8 
Purchase of unallocated ESSOP shares (50.0)
Balance, end of period$(100.3)$(111.9)
_______

(1)Reflects the Company's adoption of a new accounting principle relating to credits losses effective January 1, 2020. Refer to additional discussion in Note 1 to the Consolidated Financial Statements.    
See accompanying Notes to Consolidated Financial Statements.

6


Old Republic International Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
($ in Millions)
Quarters Ended
March 31,
20212020
Cash flows from operating activities:
Net income (loss)$502.1 $(604.8)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Deferred policy acquisition costs(6.8)2.0 
Premiums and other receivables(32.7)(119.9)
Unpaid claims and related items102.4 73.7 
Unearned premiums and other policyholders' liabilities15.5 .7 
Income taxes111.1 (171.5)
Reinsurance balances37.9 89.9 
Realized investment (gains) losses from actual transactions and impairments(7.8)(18.5)
Unrealized investment (gains) losses from changes in fair value
of equity securities(367.5)962.7 
Accounts payable, accrued expenses and other(58.1)1.9 
Total296.0 216.3 
Cash flows from investing activities:
Fixed maturity securities:
Available for sale:
Maturities and early calls335.6 297.3 
Sales156.5 88.8 
Sales of:
Equity securities195.7 140.5 
Other - net2.2 3.2 
Purchases of:
Fixed maturity securities:
Available for sale(659.3)(274.4)
Equity securities(36.5)(271.2)
Other - net(17.6)(10.9)
Net decrease (increase) in short-term investments111.7 (9.8)
Other - net  
Total88.3 (36.4)
Cash flows from financing activities:
Issuance of common shares9.6 5.0 
Redemption of debentures and notes(19.5)(6.5)
Purchase of unallocated common shares by ESSOP (50.0)
Dividends on common shares (including a special dividend paid in January
2021 of $304.0)(369.5)(62.9)
Other - net(.3).1 
Total(379.7)(114.2)
Increase (decrease) in cash4.7 65.6 
Cash, beginning of period118.7 78.8 
Cash, end of period$123.4 $144.5 
Supplemental cash flow information:
Cash paid (received) during the period for: Interest$20.4 $20.6 
                                                                         Income taxes$17.1 $6.7 
See accompanying Notes to Consolidated Financial Statements.

7


OLD REPUBLIC INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
($ in Millions, Except Share Data)

1. Accounting Policies and Basis of Presentation:

The accompanying consolidated financial statements have been prepared in conformity with the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") of accounting principles generally accepted in the United States of America ("GAAP"). These interim financial statements should be read in conjunction with these notes and those included in the Company's 2020 Annual Report on Form 10-K incorporated herein by reference.

Pertinent accounting and disclosure pronouncements issued from time to time by the FASB are adopted by the Company as they become effective. Recent pronouncements are discussed below.

Effective January 1, 2020, the Company adopted the FASB’s accounting guidance on current expected credit loss ("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, primarily including the Company’s reinsurance recoverables, and its accounts and notes receivable. CECL replaced the incurred loss impairment model that recognized 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 January 1, 2020 credit loss allowance of $30.1 was comprised of $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 March 31, 2021 allowance included $16.0 related to reinsurance recoverables and $21.9 related to accounts and notes receivable. No significant charges were made to the allowance during the three months ended March 31, 2021.

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 will no longer impact 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 impairment policy and the related disclosures summarizing this standard’s impact on the Company’s investment portfolio are included in Note 3.

The financial accounting and reporting process relies on estimates and on the exercise of judgment. In the opinion of management all adjustments consisting only of normal recurring accruals necessary for a fair presentation of interim periods' results and financial position have been recorded. 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 expenses in the March 31, 2020 consolidated statements of income and comprehensive income by: increasing net premiums earned by $101.3, decreasing title, escrow and other fees by $38.8, and increasing underwriting, acquisition, and other expenses by $62.5. These immaterial adjustments were made to conform all prior periods to the current presentation and had no impact on net income (loss), comprehensive income (loss) or shareholders' equity.

2. Common Share Data:

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 periods presented. 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.
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Quarters Ended
March 31,
20212020
Numerator:
Basic and diluted earnings per share -
income (loss) available to common stockholders$502.1 $(604.8)
Denominator:
Basic earnings per share -
weighted-average shares (a)298,753,132 300,280,398 
Effect of dilutive securities - stock based
   compensation awards940,382  
Diluted earnings per share -
adjusted weighted-average shares (a)299,693,514300,280,398
Earnings per share: Basic$1.68 $(2.01)
Diluted$1.68 $(2.01)
Anti-dilutive common stock equivalents
excluded from earnings per share computations:
Stock based compensation awards7,020,142 9,620,404 
__________

(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 not yet allocated 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 common shares.

3. Investments:

The Company classifies its fixed maturity securities as those 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. The Company's entire fixed maturity portfolio is classified as available for sale.

Fixed maturity securities classified as available for sale are reported at fair value with changes in such values, net of deferred income taxes, reflected directly in shareholders' equity. 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 impairments and allowances for credit losses in the portfolio's value are evaluated and established at each quarterly balance sheet date. In reviewing investments for impairment, 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. The Company recognized no impairments or allowances for credit losses for the quarters ended March 31, 2021, and 2020.

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 prepay obligations with or without call or prepayment penalties.
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Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
Fixed Maturity Securities by Type:
March 31, 2021:
U.S. & Canadian Governments$1,968.3 $66.8 $6.3 $2,028.7 
Tax-exempt991.2 54.3  1,045.5 
Corporate7,098.9 317.0 74.4 7,341.5 
$10,058.5 $438.2 $80.8 $10,415.9 
December 31, 2020:
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 

Amortized
Cost
Estimated
Fair
Value
Fixed Maturity Securities Stratified by Contractual Maturity at March 31, 2021:
Due in one year or less$1,017.2 $1,026.7 
Due after one year through five years5,453.6 5,728.3 
Due after five years through ten years3,490.7 3,565.6 
Due after ten years96.7 95.1 
$10,058.5 $10,415.9 

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 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
March 31, 2021:
Fixed Maturity Securities:
  U.S. & Canadian Governments$492.5 $6.3 $ $ $492.5 $6.3 
  Corporate1,521.4 74.4   1,521.4 74.4 
$2,013.9 $80.8 $ $ $2,013.9 $80.8 
Number of securities in
unrealized loss position321 2 323 
December 31, 2020:
Fixed Maturity Securities:
  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 securities in
unrealized loss position74 3 77 
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 impairments, the Company considers its intent and ability to continue to hold the securities until cost recovery, principally in consideration of its asset and liability matching objectives.

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

Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
March 31, 2021$3,118.6 $1,251.1 $98.4 $4,271.3 
December 31, 2020$3,269.7 $1,028.1 $243.0 $4,054.8 

During the first quarters of 2021 and 2020, the Company recognized pretax unrealized investment gains (losses) of $367.5 and $(962.7), 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 March 31, 2021 and 2020 were $359.8 and $(956.8), respectively.

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 March 31, 2021 and December 31, 2020.

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 March 31, 2021:Level 1Level 2Level 3Total
Available for sale:
Fixed maturity securities:
U.S. & Canadian Governments$1,258.4 $770.3 $ $2,028.7 
Tax-exempt 1,045.5  1,045.5 
Corporate 7,331.0 10.5 7,341.5 
Short-term investments637.9   637.9 
Equity securities$4,269.4 $ $1.8 $4,271.3 
As of December 31, 2020:
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 

There were no transfers between Levels 1, 2 or 3 during the quarter ended March 31, 2021.

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.
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Investment gains and losses, which result from sales or impairments of securities, are reflected as revenues in the income statement and are determined on the basis of amortized cost 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 March 31, 2021, 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 periods shown.
Quarters Ended
March 31,
20212020
Investment income:
Fixed maturity securities$69.7 $74.5 
Equity securities36.1 38.1 
Short-term investments 1.9 
Other sources 1.1 
Gross investment income105.9 115.8 
Investment expenses (a)1.6 1.6 
Net investment income$104.3 $114.1 
Investment gains (losses):
From actual transactions:
Fixed maturity securities:
Gains$.6 $.9 
Losses(.2)(.5)
Net.3 .3 
Equity securities:
Gains36.3 19.4 
Losses(28.8)(1.2)
Net7.5 18.2 
Other investments, net  
Total from actual transactions7.8 18.5 
From impairments  
From unrealized changes in fair value of equity securities367.5 (962.7)
Total realized and unrealized investment gains (losses)375.4 (944.1)
Current and deferred income taxes (credits)79.6 (198.5)
Net of tax realized and unrealized investment gains (losses)$295.7 $(745.6)
Changes in unrealized investment gains (losses)
reflected directly in shareholders' equity:
Fixed maturity securities$(241.1)$(172.8)
Less: Deferred income taxes (credits)(50.8)(36.2)
(190.3)(136.6)
Other investments(1.6)(.7)
Less: Deferred income taxes (credits)(.3)(.1)
(1.2)(.5)
Net changes in unrealized investment gains (losses),
net of tax$(191.5)$(137.1)
__________

(a)    Investment expenses largely consist of personnel costs and investment management and custody service fees.

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4. 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 2020 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:
Quarters Ended
March 31,
20212020
Gross reserves at beginning of period$10,671.0 $9,929.5 
Less: reinsurance losses recoverable3,650.5 3,249.7 
Net reserves at beginning of period:
General Insurance6,328.0 6,021.3 
Title Insurance556.1 530.9 
RFIG Run-off127.6 118.9 
Other8.6 8.4 
Sub-total7,020.4 6,679.7 
Incurred claims and claim adjustment expenses:
Provisions for insured events of the current year:
General Insurance585.0 598.3 
Title Insurance35.3 24.7 
RFIG Run-off5.5 6.6 
Other4.2 3.1 
Sub-total630.1 632.9 
Change in provision for insured events of prior years:
General Insurance(23.1)(5.8)
Title Insurance(6.0)(3.1)
RFIG Run-off(1.2)(1.8)
Other(1.6)(1.3)
Sub-total(32.0)(12.2)
Total incurred claims and claim adjustment expenses598.1 620.6 
Payments:
Claims and claim adjustment expenses attributable to
   insured events of the current year:
General Insurance93.4 96.3 
Title Insurance1.1 .1 
RFIG Run-off  
Other1.5 .7 
Sub-total96.2 97.2 
Claims and claim adjustment expenses attributable to
   insured events of prior years:
General Insurance380.8 418.8 
Title Insurance12.9 15.9 
RFIG Run-off4.4 13.2 
Other1.1 1.6 
Sub-total399.4 449.7 
Total payments495.6 546.9 
Amount of reserves for unpaid claims and claim adjustment expenses
at the end of each period, net of reinsurance losses recoverable:
General Insurance6,415.5 6,098.6 
Title Insurance571.4 536.4 
RFIG Run-off127.4 110.4 
Other8.5 7.8 
Sub-total7,122.9 6,753.3 
Reinsurance losses recoverable3,730.4 3,242.5 
Gross reserves at end of period$10,853.3 $9,995.9 

5. 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 retained 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
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further adjustment due to changes in actuarial assumptions such as expected mortality and changes in interest rates. Net periodic pension costs for the quarterly periods ended March 31, 2021 and 2020 were not material to Old Republic's consolidated statements of income.

6. Information About Segments of Business:

Old Republic is engaged in the single business of insurance underwriting and related services. The Company conducts its operations through a number of regulated insurance company subsidiaries organized into three major segments, namely its General Insurance (property and liability insurance), Title Insurance, and the Republic Financial Indemnity Group ("RFIG") Run-off Business. The results of a small life and accident insurance business are included with those of the parent holding company and its internal corporate services subsidiaries. Each of the Company's segments underwrites and services only those insurance coverages which may be written by it pursuant to state insurance regulations and corporate charter provisions. Segment results exclude investment gains or losses and impairments as these are aggregated in the consolidated totals. The contributions of Old Republic's insurance industry segments to consolidated totals are shown in the following table.





















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Segmented and Consolidated Results:
Quarters Ended
March 31,
20212020
General Insurance:
Net premiums earned$859.1 $852.8 
Net investment income and other income120.9 125.1 
Total revenues excluding investment gains (losses)$980.0 $978.0 
Segment pretax operating income (loss) (a)$140.8 $110.1 
Income tax expense (credits)$27.3 $20.8 
Title Insurance:
Net premiums earned (c)$861.0 $609.4 
Title, escrow and other fees (c)106.6 81.2 
Sub-total (c)967.7 690.7 
Net investment income and other income10.7 10.9 
Total revenues excluding investment gains (losses) (c)$978.4 $701.6 
Segment pretax operating income (loss) (a)$103.7 $43.3 
Income tax expense (credits)$21.8 $9.2 
RFIG Run-off Business:
Net premiums earned$9.2 $12.6 
Net investment income and other income3.2 4.3 
Total revenues excluding investment gains (losses)$12.4 $17.0 
Segment pretax operating income (loss)$4.9 $8.4 
Income tax expense (credits)$.9 $1.6 
Consolidated Revenues:
Total revenues of Company segments (c)$1,971.0 $1,696.7 
Other sources (b)35.1 39.8 
Consolidated investment gains (losses):
Realized from actual transactions and impairments7.8 18.5 
Unrealized from changes in fair value of equity securities367.5 (962.7)
Total realized and unrealized investment gains (losses)375.4 (944.1)
Consolidation elimination adjustments(26.5)(28.2)
Consolidated revenues (c)$2,355.0 $764.0 
Consolidated Pretax Income (Loss):
Total segment pretax operating income (loss) of
Company segments $249.4 $161.8 
Other sources - net (b)5.6 12.3 
Consolidated investment gains (losses):
Realized from actual transactions and impairments7.8 18.5 
Unrealized from changes in fair value of equity securities367.5 (