Quarterly Report (10-q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM	10-Q



☒	Quarterly report pursuant to section 13 or 15(d) of the Security Exchange Act of 1934
	for the quarterly period ended:	September 30, 2019
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)



Delaware		36-2678171
(State or other jurisdiction of		(IRS Employer Identification No.)
incorporation or organization)



307 North Michigan Avenue	Chicago	Illinois	60601
(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock / $1 par value	ORI	New 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 September 30, 2019 was 303,570,106.

There are 52 pages in this report



OLD REPUBLIC INTERNATIONAL CORPORATION

Report on Form 10-Q / September 30, 2019

INDEX



		PAGE NO.

PART I	FINANCIAL INFORMATION:

	CONSOLIDATED BALANCE SHEETS	3

	CONSOLIDATED STATEMENTS OF INCOME	4

	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	5

	CONSOLIDATED STATEMENTS OF PREFERRED STOCK AND COMMON
	SHAREHOLDERS' EQUITY	6

	CONSOLIDATED STATEMENTS OF CASH FLOWS	7

	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	8 - 19

	MANAGEMENT ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS	20 - 48

	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	49

	CONTROLS AND PROCEDURES	49

PART II	OTHER INFORMATION:

	ITEM 1 - LEGAL PROCEEDINGS	50

	ITEM 1A - RISK FACTORS	50

	ITEM 6 - EXHIBITS	50

SIGNATURE		51

EXHIBIT INDEX		52



Old Republic International Corporation and Subsidiaries
Consolidated Balance Sheets
($ in Millions, Except Share Data)
	(Unaudited)
	September 30,			December 31,
	2019			2018
Assets
Investments:
Available for sale:
Fixed maturity securities (at fair value) (amortized cost: $8,394.0 and $8,285.0)	$	8,666.7		$	8,182.8
Short-term investments (at fair value which approximates cost)	487.4			354.9
Total	9,154.2			8,537.8
Held to maturity:
Fixed maturity securities (at amortized cost) (fair value: $1,060.2 and $1,034.5)	1,027.5			1,044.8
Equity securities (at fair value) (cost: $2,989.4 and $3,039.1)	3,770.6			3,380.9
Other investments	23.0			31.0
Total investments	13,975.4			12,994.6
Other Assets:
Cash	109.6			100.3
Accrued investment income	94.6			92.4
Accounts and notes receivable	1,687.5			1,499.4
Federal income tax recoverable: Current	.5			16.8
Prepaid federal income taxes	138.5			129.8
Reinsurance balances and funds held	176.1			166.2
Reinsurance recoverable: Paid losses	74.6			55.9
Policy and claim reserves	3,849.1			3,428.6
Deferred policy acquisition costs	333.0			316.3
Sundry assets	742.4			526.3
Total Other Assets	7,206.3			6,332.4
Total Assets	$	21,181.8		$	19,327.1
Liabilities, Preferred Stock, and Common Shareholders' Equity
Liabilities:
Losses, claims, and settlement expenses	$	9,817.4		$	9,471.2
Unearned premiums	2,408.6			2,104.9
Other policyholders' benefits and funds	193.3			198.6
Total policy liabilities and accruals	12,419.4			11,774.8
Commissions, expenses, fees, and taxes	518.6			525.4
Reinsurance balances and funds	759.9			600.4
Federal income tax payable: Deferred	171.3			10.3
Debt	973.7			981.4
Sundry liabilities	544.6			288.3
Commitments and contingent liabilities
Total Liabilities	15,387.9			14,180.8
Preferred Stock (1)	—			—
Common Shareholders' Equity:
Common stock (1)	303.5			302.7
Additional paid-in capital	1,295.2			1,277.6
Retained earnings	4,170.1			3,849.8
Accumulated other comprehensive income (loss)	92.0			(210.0		)
Unallocated ESSOP shares (at cost)	(67.1		)	(73.9		)
Total Common Shareholders' Equity	5,793.9			5,146.2
Total Liabilities, Preferred Stock and Common Shareholders' Equity	$	21,181.8		$	19,327.1

________

(1)

At September 30, 2019 and December 31, 2018, 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 303,570,106 and 302,714,502 were issued as of September 30, 2019 and December 31, 2018, respectively. At September 30, 2019 and December 31, 2018, 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.



Old Republic International Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
($ in Millions, Except Share Data)
	Quarters Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Revenues:
Net premiums earned	$	1,423.4	$	1,388.6	$	4,016.5	$	3,914.4
Title, escrow, and other fees	138.2		116.2		363.8		341.0
Total premiums and fees	1,561.7		1,504.8		4,380.4		4,255.5
Net investment income	112.7		108.7		337.8		321.5
Other income	32.9		30.4		97.4		91.1
Total operating revenues	1,707.3		1,644.0		4,815.7		4,668.2
Investment gains (losses):
Realized from actual transactions and impairments	6.3		7.3		29.3		54.8
Unrealized from changes in fair value of
equity securities	57.3		128.4		439.3		17.7
Total realized and unrealized investment
gains (losses)	63.6		135.7		468.7		72.6
Total revenues	1,771.0		1,779.7		5,284.4		4,740.9

Benefits, Claims and Expenses:
Benefits, claims and settlement expenses	659.5		615.1		1,887.9		1,806.3
Dividends to policyholders	4.2		4.2		17.2		14.4
Underwriting, acquisition, and other expenses	845.0		815.2		2,372.0		2,310.0
Interest and other charges	9.7		9.9		30.8		34.3
Total expenses	1,518.6		1,444.6		4,308.0		4,165.2
Income (loss) before income taxes (credits)	252.4		335.1		976.3		575.7

Income Taxes (Credits):
Current	38.9		34.2		113.2		95.7
Deferred	10.5		25.6		82.4		2.9
Total	49.5		59.8		195.6		98.6

Net Income (Loss)	$	202.8	$	275.2	$	780.6	$	477.0

Net Income (Loss) Per Share:
Basic	$	.68	$	.92	$	2.60	$	1.63
Diluted	$	.67	$	.92	$	2.59	$	1.59

Average shares outstanding: Basic	299,894,995		299,006,345		299,740,751		292,565,008
Diluted	301,384,364		300,374,004		301,034,156		301,125,090

See accompanying Notes to Consolidated Financial Statements.



Old Republic International Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
($ in Millions)
	Quarters Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net Income (Loss) As Reported	$	202.8		$	275.2		$	780.6		$	477.0

Other comprehensive income (loss):
Unrealized gains (losses) on securities:
Unrealized gains (losses) before reclassifications,
not included in the statements of income	53.3			(24.6		)	366.6			(236.3		)
Amounts reclassified as realized investment (gains)
losses in the statements of income	7.3			1.2			10.7			(.4		)
Pretax unrealized gains (losses) on securities	60.7			(23.4		)	377.3			(236.8		)
Deferred income taxes (credits)	12.7			(4.9		)	79.5			(49.8		)
Net unrealized gains (losses) on securities, net of tax	48.0			(18.4		)	297.8			(186.9		)
Defined benefit pension plans:
Net pension adjustment before reclassifications	—			—			(2.6		)	—
Amounts reclassified as underwriting, acquisition,
and other expenses in the statements of income	1.0			.8			3.0			2.4
Pretax net adjustment related to defined benefit
pension plans	1.0			.8			.4			2.4
Deferred income taxes (credits)	.2			.1			.1			.5
Net adjustment related to defined benefit pension
plans, net of tax	.8			.6			.3			1.9
Foreign currency translation and other adjustments	(1.6		)	2.6			3.8			(4.7		)
Total other comprehensive income (loss)	47.2			(15.1		)	302.0			(189.7		)
Comprehensive Income (Loss)	$	250.1		$	260.0		$	1,082.7		$	287.3

See accompanying Notes to Consolidated Financial Statements.



Old Republic International Corporation and Subsidiaries
Consolidated Statements of Preferred Stock
and Common Shareholders' Equity (Unaudited)
($ in Millions)
	Quarters Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Convertible Preferred Stock:
Balance, beginning and end of period	$	—		$	—		$	—		$	—

Common Stock:
Balance, beginning of period	$	303.2		$	302.4		$	302.7		$	269.2
Dividend reinvestment plan	—			—			—			—
Net issuance of shares under stock based compensation plans	.3			.1			.7			1.1
Conversion of senior debentures	—			—			—			32.2
Balance, end of period	$	303.5		$	302.6		$	303.5		$	302.6

Additional Paid-in Capital:
Balance, beginning of period	$	1,288.6		$	1,272.2		$	1,277.6		$	815.2
Dividend reinvestment plan	1.0			.2			1.4			1.4
Net issuance of shares under stock based compensation plans	4.3			2.0			10.3			15.1
Conversion of senior debentures	—			—			—			438.1
Stock based compensation	.4			.4			3.6			3.7
ESSOP shares released	.8			.6			2.1			1.9
Balance, end of period	$	1,295.2		$	1,275.6		$	1,295.2		$	1,275.6

Retained Earnings:
Balance, beginning of period	$	4,326.7		$	3,797.7		$	3,849.8		$	3,206.9
Change in accounting principle	—			—			18.4			502.1
Balance, beginning of period, as adjusted	4,326.7			3,797.7			3,868.3			3,708.9
Net income (loss)	202.8			275.2			780.6			477.0
Dividends on common shares ($1.20, $.195, $1.60 and $.585 per
common share)	(359.4		)	(58.2		)	(478.8		)	(171.3		)
Balance, end of period	$	4,170.1		$	4,014.6		$	4,170.1		$	4,014.6

Accumulated Other Comprehensive Income (Loss):
Balance, beginning of period	$	44.8		$	(202.6	)	$	(210.0	)	$	474.2
Change in accounting principle	—			—			—			(502.1		)
Balance, beginning of period, as adjusted	44.8			(202.6		)	(210.0		)	(27.9		)
Net unrealized gains (losses) on securities, net of tax	48.0			(18.4		)	297.8			(186.9		)
Net adjustment related to defined benefit pension plans,
net of tax	.8			.6			.3			1.9
Foreign currency translation and other adjustments	(1.6		)	2.6			3.8			(4.7		)
Balance, end of period	$	92.0		$	(217.7	)	$	92.0		$	(217.7	)

Unallocated ESSOP Shares:
Balance, beginning of period	$	(69.4	)	$	(66.4	)	$	(73.9	)	$	(32.4	)
ESSOP shares released	2.2			2.3			6.8			5.8
Purchase of unallocated ESSOP shares	—			—			—			(37.4		)
Balance, end of period	$	(67.1	)	$	(64.0	)	$	(67.1	)	$	(64.0	)

See accompanying Notes to Consolidated Financial Statements.



Old Republic International Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
($ in Millions)
	Nine Months Ended
	September 30,
	2019			2018
Cash flows from operating activities:
Net income (loss)	$	780.6		$	477.0
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Deferred policy acquisition costs	(16.5		)	(18.7		)
Premiums and other receivables	(188.3		)	(173.2		)
Unpaid claims and related items	142.8			148.5
Unearned premiums and other policyholders' liabilities	81.0			103.8
Income taxes	97.1			.8
Prepaid federal income taxes	(8.6		)	—
Reinsurance balances and funds	130.5			110.4
Realized investment (gains) losses from actual transactions and impairments	(29.3		)	(54.8		)
Unrealized investment (gains) losses from changes in fair value
of equity securities	(439.3		)	(17.7		)
Accounts payable, accrued expenses and other	116.1			21.0
Total	666.2			597.1

Cash flows from investing activities:
Fixed maturity securities:
Available for sale:
Maturities and early calls	464.4			758.9
Sales	430.3			222.6
Sales of:
Equity securities	520.6			294.5
Other - net	28.2			13.3
Purchases of:
Fixed maturity securities:
Available for sale	(1,016.4		)	(1,027.6		)
Equity securities	(430.2		)	(432.0		)
Other - net	(42.4		)	(40.4		)
Net decrease (increase) in short-term investments	(132.0		)	88.7
Other - net	(1.2		)	(6.8		)
Total	(178.6		)	(128.7		)

Cash flows from financing activities:
Issuance of common shares	12.7			12.2
Redemption of debentures and notes	(8.4		)	(4.7		)
Purchase of unallocated common shares by ESSOP	—			(37.4		)
Dividends on common shares (including a special dividend paid in September
2019 of $303.4 and a special dividend declared in December 2017 and paid
in January 2018 of $269.2)	(478.8		)	(440.5		)
Other - net	(3.7		)	(8.6		)
Total	(478.3		)	(479.1		)

Increase (decrease) in cash	9.2			(10.7		)
Cash, beginning of period	100.3			125.9
Cash, end of period	$	109.6		$	115.2

Supplemental cash flow information:
Cash paid (received) during the period for: Interest	$	41.9		$	50.4
Income taxes	$	99.0		$	97.9

See accompanying Notes to Consolidated Financial Statements.

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 2018 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 ones are discussed below.

a) Effective January 1, 2019, the Company adopted FASB guidance on lease accounting which requires balance sheet recognition of all leases with a term greater than 12 months. The Company's adoption of this guidance is discussed in Note 7.

b) Effective January 1, 2018, the Company adopted FASB guidance on the recognition and measurement of financial instruments. See Note 3.

c) Effective January 1, 2018, the Company adopted the FASB's comprehensive revenue recognition standard which applies to contracts with customers, except for those that fall within the scope of other standards, such as insurance contracts. The Company’s adoption of this standard did not have an effect on its insurance contract revenues, and based on its evaluation of certain less significant revenue streams generated from contracts with customers, did not have a material impact on the consolidated financial statements taken as a whole.

d) In June 2016, the FASB issued guidance on accounting for credit losses on financial instruments which will be effective in 2020. The guidance will require immediate recognition of expected credit losses for certain financial instruments including (1) reinsurance recoverables, (2) held to maturity securities and (3) accounts and notes receivable. Additionally, the guidance modifies the impairment model for available for sale fixed maturity securities. The Company is continuing to evaluate the guidance, however does not expect that its adoption will have a material impact on its consolidated financial statements.

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

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 quarterly and year-to-date periods. 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.



	Quarters Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Numerator:
Basic earnings per share -
income (loss) available to common stockholders	$	202.8	$	275.2	$	780.6	$	477.0
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	$	202.8	$	275.2	$	780.6	$	480.1

Denominator:
Basic earnings per share -
weighted-average shares (a)	299,894,995		299,006,345		299,740,751		292,565,008
Effect of dilutive securities - stock based
compensation awards	1,489,369		1,367,659		1,293,405		1,381,914
Effect of dilutive securities - convertible notes	—		—		—		7,178,168
Diluted earnings per share -
adjusted weighted-average shares
and assumed conversion of convertible notes (a)	301,384,364		300,374,004		301,034,156		301,125,090
Earnings per share: Basic	$	.68	$	.92	$	2.60	$	1.63
Diluted	$	.67	$	.92	$	2.59	$	1.59

Anti-dilutive common stock equivalents
excluded from earnings per share computations:
Stock based compensation awards	40,000		—		2,238,055		—
Convertible senior notes	—		—		—		—
Total	40,000		—		2,238,055		—

__________

(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.

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. 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") 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 directly in shareholders' equity. The Company recognized $- and $2.0

of OTTI adjustments for the quarter and nine months ended September 30, 2019, respectively, and no OTTI adjustments for the same periods of 2018.

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.



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Fixed Maturity Securities by Type:
September 30, 2019:
Available for sale:
U.S. & Canadian Governments	$	1,695.5	$	45.6	$	.3	$	1,740.8
Corporate	6,698.4		231.5		4.1		6,925.8
	$	8,394.0	$	277.1	$	4.4	$	8,666.7

Held to maturity:
Tax-exempt	$	1,027.5	$	32.8	$	.1	$	1,060.2

December 31, 2018:
Available for sale:
U.S. & Canadian Governments	$	1,535.3	$	5.7	$	16.5	$	1,524.4
Corporate	6,749.6		31.4		122.7		6,658.3
	$	8,285.0	$	37.1	$	139.2	$	8,182.8

Held to maturity:
Tax-exempt	$	1,044.8	$	3.5	$	13.7	$	1,034.5



	Amortized Cost		Estimated Fair Value
Fixed Maturity Securities Stratified by Contractual Maturity at September 30, 2019:
Available for sale:
Due in one year or less	$	860.3	$	863.4
Due after one year through five years	5,072.6		5,200.7
Due after five years through ten years	2,428.0		2,566.0
Due after ten years	32.9		36.4
	$	8,394.0	$	8,666.7

Held to maturity:
Due in one year or less	$	—	$	—
Due after one year through five years	310.2		315.6
Due after five years through ten years	717.2		744.6
Due after ten years	—		—
	$	1,027.5	$	1,060.2

The following tables reflect 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.



	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
September 30, 2019:

Fixed Maturity Securities:
Available for sale:
U.S. & Canadian Governments	$	158.1	$	—	$	170.0	$	.3	$	328.1	$	.3
Corporate	64.1		2.3		150.9		1.7		215.1		4.1
	$	222.2	$	2.3	$	321.0	$	2.0	$	543.2	$	4.4

Number of available for sale
securities in unrealized
loss position			15				85				100

Held to maturity:
Tax-exempt	$	—	$	—	$	48.4	$	.1	$	48.4	$	.1

Number of held to maturity
securities in unrealized
loss position			—				21				21

December 31, 2018:

Fixed Maturity Securities:
Available for sale:
U.S. & Canadian Governments	$	616.7	$	8.4	$	487.1	$	8.1	$	1,103.9	$	16.5
Corporate	3,440.8		77.9		1,096.4		44.7		4,537.3		122.7
	$	4,057.6	$	86.4	$	1,583.6	$	52.8	$	5,641.2	$	139.2

Number of available for sale
securities in unrealized
loss position			760				335				1,095

Held to maturity:
Tax-exempt	$	271.9	$	2.3	$	407.7	$	11.4	$	679.7	$	13.7

Number of held to maturity
securities in unrealized
loss position			94				145				239

The unrealized losses on fixed income 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: a) intent to continue to hold the securities, b) the likelihood that it will not be required to sell investment securities in an unrealized loss position until cost recovery, and c) the benefits of its asset and liability 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
September 30, 2019	$	2,989.4	$	880.6	$	99.4	$	3,770.6
December 31, 2018	$	3,039.1	$	517.3	$	175.4	$	3,380.9

During the third quarter and first nine months of 2019 and 2018, the Company recognized pretax unrealized investment gains (losses) of $57.3 and $439.3, respectively for 2019, and $128.4 and $17.7, respectively for 2018, 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 September 30, 2019 and 2018 were $78.0 and $438.5 for the quarter and first nine months of 2019, respectively, and $137.1 and $67.4 for the quarter and first nine months of 2018, 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 September 30, 2019 and December 31, 2018.

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 September 30, 2019:	Level 1		Level 2		Level 3		Total
Available for sale:
Fixed maturity securities:
U.S. & Canadian Governments	$	943.5	$	797.2	$	—	$	1,740.8
Corporate	—		6,915.3		10.5		6,925.8
Short-term investments	487.4		—		—		487.4
Held to maturity:
Fixed maturity securities:
Tax-exempt	—		1,060.2		—		1,060.2
Equity securities	$	3,768.8	$	—	$	1.8	$	3,770.6

As of December 31, 2018:
Available for sale:
Fixed maturity securities:
U.S. & Canadian Governments	$	714.0	$	810.3	$	—	$	1,524.4
Corporate	—		6,647.8		10.5		6,658.3
Short-term investments	354.9		—		—		354.9
Held to maturity:
Fixed maturity securities:
Tax-exempt	—		1,034.5		—		1,034.5
Equity securities	$	3,379.2	$	—	$	1.7	$	3,380.9

There were no transfers between Levels 1, 2 or 3 during the quarter ended September 30, 2019.

Investment income is reported net of 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. At September 30, 2019, the Company and its subsidiaries had no non-income producing fixed maturity or equity securities.

Realized 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 value at date of sale for fixed maturity securities, and cost in regard to equity securities; such bases apply to the specific securities sold.

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						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Investment income:
Fixed maturity securities	$	74.4		$	74.4		$	224.3		$	224.2
Equity securities	36.2			31.5			106.6			91.3
Short-term investments	2.7			2.7			7.6			6.9
Other sources	1.0			1.4			4.4			3.6
Gross investment income	114.4			110.2			343.1			326.2
Investment expenses (a)	1.7			1.4			5.2			4.6
Net investment income	$	112.7		$	108.7		$	337.8		$	321.5

Investment gains (losses):
From actual transactions:
Fixed maturity securities:
Gains	$	.8		$	.5		$	4.6		$	1.6
Losses	(6.0		)	(1.7		)	(11.1		)	(2.6		)
Net	(5.1		)	(1.2		)	(6.5		)	(1.0		)
Equity securities:
Gains	42.7			8.6			97.0			61.5
Losses	(29.0		)	—			(57.0		)	(7.1		)
Net	13.6			8.6			40.0			54.4
Other long-term investments, net	(2.2		)	—			(2.1		)	1.5
Total from actual transactions	6.3			7.3			31.3			54.8
From impairments	—			—			(2.0		)	—
From unrealized changes in fair value of equity securities	57.3			128.4			439.3			17.7
Total realized and unrealized investment gains (losses)	63.6			135.7			468.7			72.6
Current and deferred income taxes (credits)(b)	13.5			28.5			98.7			15.2
Net of tax realized and unrealized investment gains (losses)	$	50.1		$	107.2		$	369.9		$	57.4

Changes in unrealized investment gains (losses)
reflected directly in shareholders' equity:
Fixed maturity securities	$	58.2		$	(23.4	)	$	373.6		$	(236.4	)
Less: Deferred income taxes (credits)	12.1			(5.0		)	78.6			(49.8		)
	46.0			(18.4		)	295.0			(186.6		)

Other long-term investments	2.5			—			3.6			(.3		)
Less: Deferred income taxes (credits)	.6			—			.8			—
	1.9			—			2.8			(.2		)
Net changes in unrealized investment gains (losses),
net of tax	$	48.0		$	(18.4	)	$	297.8		$	(186.9	)

__________


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


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

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 2018 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.

This space left intentionally blank

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



	Nine Months Ended
	September 30,
	2019			2018
Gross reserves at beginning of period	$	9,471.2		$	9,237.6
Less: reinsurance losses recoverable	3,006.3			2,921.1
Net reserves at beginning of period:
General Insurance	5,766.1			5,471.5
Title Insurance	533.4			559.7
RFIG Run-off	154.5			271.7
Other	10.8			13.5
Sub-total	6,464.9			6,316.4
Incurred claims and claim adjustment expenses:
Provisions for insured events of the current year:
General Insurance	1,815.9			1,717.4
Title Insurance	71.3			72.0
RFIG Run-off (a)	29.9			43.7
Other	10.9			15.7
Sub-total	1,928.1			1,849.0
Change in provision for insured events of prior years:
General Insurance	(11.1		)	7.3
Title Insurance	(18.0		)	(27.0		)
RFIG Run-off (a)	(6.4		)	(19.8		)
Other	(3.2		)	(3.2		)
Sub-total	(38.7		)	(42.7		)
Total incurred claims and claim adjustment expenses (a)	1,889.3			1,806.2
Payments:
Claims and claim adjustment expenses attributable to
insured events of the current year:
General Insurance	562.2			543.1
Title Insurance	2.2			5.7
RFIG Run-off	2.0			1.6
Other	7.2			10.6
Sub-total	573.8			561.1
Claims and claim adjustment expenses attributable to
insured events of prior years:
General Insurance	1,068.4			959.4
Title Insurance	49.8			44.9
RFIG Run-off	51.3			87.3
Other	2.9			4.7
Sub-total	1,172.5			1,096.4
Total payments	1,746.3			1,657.6
Amount of reserves for unpaid claims and claim adjustment expenses
at the end of each period, net of reinsurance losses recoverable:
General Insurance	5,940.1			5,693.8
Title Insurance	534.6			554.0
RFIG Run-off	124.6			206.5
Other	8.3			10.6
Sub-total	6,607.8			6,465.0
Reinsurance losses recoverable	3,209.5			3,017.8
Gross reserves at end of period	$	9,817.4		$	9,482.9

__________

(a)

In common with all other insurance coverages, RFIG Run-off mortgage guaranty settled and incurred claim and claim adjustment expenses include only those costs actually or expected to be paid by the Company. Changes in mortgage guaranty aggregate case, IBNR, and loss adjustment expense reserves entering into the determination of incurred claim costs, take into account, among a large number of variables, claim cost reductions for anticipated

coverage rescissions and claims denials. Estimates of coverage rescissions and claim denials are no longer material to Old Republic's consolidated financial statements.

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 had been previously 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 further adjustment due to changes in actuarial assumptions such as expected mortality and changes in interest rates. Net periodic pension costs for the quarterly and year-to-date periods ended September 30, 2019 and 2018 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 other-than-temporary 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.

This space left intentionally blank

Segmented and Consolidated Results:



	Quarters Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
General Insurance (a):
Net premiums earned	$	870.2	$	841.5	$	2,551.9	$	2,441.3
Net investment income and other income	121.4		116.3		362.8		344.4
Total revenues excluding investment gains (losses)	$	991.7	$	957.8	$	2,914.7	$	2,785.7
Segment pretax operating income (loss) (b)	$	90.7	$	105.1	$	285.8	$	279.1
Income tax expense (credits) on above	$	17.2	$	18.0	$	54.2	$	46.7

Title Insurance:
Net premiums earned	$	535.5	$	524.5	$	1,408.4	$	1,402.5
Title, escrow and other fees	138.2		116.2		363.8		341.0
Sub-total	673.8		640.7		1,772.3		1,743.6
Net investment income and other income	10.4		10.0		31.3		29.5
Total revenues excluding investment gains (losses)	$	684.3	$	650.8	$	1,803.7	$	1,773.1
Segment pretax operating income (loss) (b)	$	72.8	$	67.7	$	153.7	$	158.2
Income tax expense (credits) on above	$	15.9	$	14.0	$	33.0	$	33.3

RFIG Run-off Business (a):
Net premiums earned	$	14.2	$	18.2	$	45.8	$	59.2
Net investment income and other income	4.2		4.6		13.2		15.4
Total revenues excluding investment gains (losses)	$	18.5	$	22.8	$	59.1	$	74.7
Segment pretax operating income (loss)	$	7.3	$	13.3	$	23.9	$	38.0
Income tax expense (credits) on above	$	1.4	$	2.6	$	4.6	$	7.7



Consolidated Revenues:
Total revenues of above Company segments	$	1,694.6		$	1,631.5		$	4,777.6		$	4,633.6
Other sources (c)	43.0			45.7			131.1			127.4
Consolidated investment gains (losses):
Realized from actual transactions and impairments	6.3			7.3			29.3			54.8
Unrealized from changes in fair value of equity securities	57.3			128.4			439.3			17.7
Total realized and unrealized investment gains (losses)	63.6			135.7			468.7			72.6
Consolidation elimination adjustments	(30.3		)	(33.2		)	(93.0		)	(92.8		)
Consolidated revenues	$	1,771.0		$	1,779.7		$	5,284.4		$	4,740.9

Consolidated Pretax Income (Loss):
Total segment pretax operating income (loss) of
above Company segments	$	170.9		$	186.1		$	463.4		$	475.4
Other sources - net (c)	17.7			13.1			44.2			27.6
Consolidated investment gains (losses):
Realized from actual transactions and impairments	6.3			7.3			29.3			54.8
Unrealized from changes in fair value of equity securities	57.3			128.4			439.3			17.7
Total realized and unrealized investment gains (losses)	63.6			135.7			468.7			72.6
Consolidated income (loss) before income
taxes (credits)	$	252.4		$	335.1		$	976.3		$	575.7



	Quarters Ended					Nine Months Ended
	September 30,					September 30,
	2019		2018			2019		2018
Consolidated Income Tax Expense (Credits):
Total income tax expense (credits)
of above Company segments	$	34.7	$	34.7		$	91.9	$	87.8
Other sources - net (c)	1.3		(3.3		)	5.0		(4.4		)
Income tax expense (credits) on consolidated realized
and unrealized investment gains (losses)	13.5		28.5			98.7		15.2
Consolidated income tax expense (credits)	$	49.5	$	59.8		$	195.6	$	98.6



	September 30,			December 31,
	2019			2018
Consolidated Assets:
General Insurance	$	18,018.8		$	16,411.4
Title Insurance	1,641.2			1,452.2
RFIG Run-off Business	710.9			736.7
Total assets for the above company segments	20,371.0			18,600.3
Other assets (c)	988.7			1,028.9
Consolidation elimination adjustments	(178.0		)	(302.2		)
Consolidated assets	$	21,181.8		$	19,327.1

(a) Results for the Consumer Credit Indemnity ("CCI") run-off business are expected to be immaterial in the remaining run-off periods; effective July 1, 2019 these results are being classified in the General Insurance segment for the third quarter 2019 and all future periods. Previously these results were reflected as part of the RFIG Run-off Business.

(b)

Segment pretax operating income (loss) is reported net of interest charges on intercompany financing arrangements with Old Republic's holding company parent for the following segments: General - $17.7 and $54.1 compared to $17.9 and $49.9 for the quarters and nine months ended September 30, 2019 and 2018, respectively, and Title - $1.4 and $4.4 compared to $1.5 and $4.6 for the quarters and nine months ended September 30, 2019 and 2018, respectively.


(c)	Includes amounts for a small life and accident insurance business as well as those of the parent holding company and its internal corporate services subsidiaries.

7. Commitments and Contingent Liabilities:

(a) Legal Proceedings - Legal proceedings against the Company and its subsidiaries routinely arise in the normal course of business and usually pertain to claim matters related to insurance policies and contracts issued by its insurance subsidiaries. At September 30, 2019, the Company had no material non-claim litigation exposures in its consolidated business.

(b) Leases - Several of the Company’s subsidiaries maintain their offices in leased premises. A number of these leases provide for the payment of real estate taxes, insurance, and other operating expenses. In addition, many of the subsidiaries also lease equipment for use in their businesses. Substantially all of the Company’s leases are classified as operating leases.

Effective January 1, 2019, the Company adopted new lease accounting guidance issued by the FASB which requires the balance sheet recognition of all leases with a term greater than 12 months. The Company’s adoption of this standard resulted in the establishment of a right of use asset ($226.9) and corresponding lease liability ($241.4) equal to the present value of future lease payments, reflected within sundry assets and liabilities in the consolidated balance sheet. Furthermore, the Company recognized $18.4, net of tax, in previously deferred gains associated with sale leaseback transactions as an adjustment to beginning retained earnings. The Company elected not to restate comparative periods' financial statements and related disclosures.

The Company has made certain elections available under the guidance, primarily regarding lease classification and the treatment of certain lease executory costs resulting in an immaterial effect on the Company’s consolidated financial statements. In determining the lease liability, the Company estimated the discount rate (weighted average 5.55%) for each lease based upon the type of underlying asset and remaining term (weighted average 8.0 years). Total lease costs for the quarter and year-to-date periods ended September 30, 2019 were $17.5 and $54.9, respectively. Fixed lease payments for the same periods were $16.4 and $48.6, respectively.

The following table presents a summary of future undiscounted lease payments as of the dates shown.



												Lease
	Year 1		Year 2	Year 3	Year 4	Year 5	Thereafter	Total		Discount		Liability
September 30, 2019	$	58.7	48.4	39.7	31.4	22.0	99.1	$	299.6	$	64.0	$	235.6
December 31, 2018	$	60.4	48.9	39.5	32.7	24.0	103.6	$	309.4

8. Debt:

Consolidated debt of Old Republic and its subsidiaries is summarized below:



	September 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
4.875% Senior Notes issued in 2014 and due 2024	$	397.2	$	441.4	$	396.8	$	415.6
3.875% Senior Notes issued in 2016 and due 2026	546.1		580.0		545.7		523.3
Other miscellaneous debt	30.4		30.4		38.8		38.8
Total debt	$	973.7	$	1,051.9	$	981.4	$	977.9

Fair Value Measurements - The Company utilizes indicative market prices, which incorporate recent actual market transactions and current bid/ask quotations to estimate the fair value of outstanding debt securities that are classified within Level 2 of the fair value hierarchy as presented below. The Company uses an internally generated interest yield market matrix table, which incorporates maturity, coupon rate, credit quality, structure and current market conditions to estimate the fair value of its outstanding debt securities that are classified within Level 3.

The following table shows a summary of financial liabilities disclosed, but not carried at fair value, segregated among the various input levels described in Note 3 above:



	Carrying		Fair
	Value		Value		Level 1		Level 2		Level 3
Financial Liabilities:
Debt:
September 30, 2019	$	973.7	$	1,051.9	$	—	$	1,021.5	$	30.4
December 31, 2018	$	981.4	$	977.9	$	—	$	939.0	$	38.8

9. Income Taxes:

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 2016 and subsequent tax years remain open.

OLD REPUBLIC INTERNATIONAL CORPORATION

MANAGEMENT ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS

Quarter and Nine Months Ended September 30, 2019 and 2018

($ in Millions, Except Share Data)

OVERVIEW

This management analysis of financial position and results of operations pertains to the consolidated accounts of Old Republic International Corporation ("Old Republic", "ORI", or "the Company"). The Company conducts its operations principally through three major regulatory segments, namely, its General (property and liability), Title, and the RFIG Run-off Business. A small life and accident insurance business, accounting for 0.3% of consolidated operating revenues for the nine months ended September 30, 2019 and 0.6% of consolidated assets as of that date, is included within the corporate and other caption of this report.

The consolidated accounts are presented 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"). As a publicly held company, Old Republic utilizes GAAP largely to comply with the financial reporting requirements of the Securities and Exchange Commission ("SEC"). From time to time the FASB and the SEC issue various releases, many of which require additional financial statement disclosures and provide related application guidance. Recent guidance issued by the FASB is summarized further in Note 1 of the Notes to Consolidated Financial Statements.

As a state regulated financial institution vested with the public interest, however, business of the Company's insurance subsidiaries is managed pursuant to the laws, regulations, and accounting practices of the various states in the U.S. and those of a small number of other jurisdictions outside the U.S. in which they operate. In comparison with GAAP, the statutory accounting practices reflect greater conservatism and comparability among insurers, and are intended to address the primary financial security interests of policyholders and their beneficiaries. Additionally, these practices also affect a significant number of important factors such as product pricing, risk bearing capacity and capital adequacy, the determination of Federal income taxes payable currently among ORI's tax-consolidated entities, and the upstreaming of dividends by insurance subsidiaries to the parent holding company. The major differences between these statutory financial accounting practices and GAAP are summarized in Note 1(a) to the consolidated financial statements included in Old Republic's 2018 Annual Report on Form 10-K.

The insurance business is distinguished from most others in that the prices (premiums) charged for various insurance products are set without certainty of the ultimate benefit and claim costs that will emerge, often many years after issuance and expiration of a policy. This basic fact casts Old Republic as a risk-taking enterprise managed for the long run. Management therefore conducts the business with a primary focus on achieving favorable underwriting results over cycles, and on the maintenance of financial soundness in support of the insurance subsidiaries' long-term obligations to policyholders and their beneficiaries. To achieve these objectives, adherence to insurance risk management principles is stressed, and asset diversification and quality are emphasized. In addition, Management engages in an ongoing assessment of operating risks, such as cybersecurity risks, that could adversely affect the Company's business and reputation.

In addition to income arising from Old Republic's basic underwriting and related services functions, significant investment income is earned from invested funds generated by those functions and from capital resources. Investment management aims for stability of income from interest and dividends, protection of capital, and for sufficiency of liquidity to meet insurance underwriting and other obligations as they become payable in the future. Securities trading and the realization of capital gains are not primary objectives. The investment philosophy is therefore best characterized as emphasizing value, credit quality, and relatively long-term holding periods. The Company's ability to hold both fixed maturity and equity securities for long periods of time is in turn enabled by the scheduling of maturities in contemplation of an appropriate matching of assets and liabilities, and by investments in large capitalization, highly liquid equity securities.

In light of the above factors, the Company's affairs are managed for the long run and without significant regard to the arbitrary strictures of quarterly or even annual reporting periods that American industry must observe. In Old Republic's view, such short reporting time frames do not comport well with the long-term nature of much of its business. Management therefore believes that the Company's operating results and financial condition can best be evaluated by observing underwriting and overall operating performance trends over succeeding five- or preferably ten-year intervals. A ten-year period in particular can likely encompass at least one economic and/or underwriting cycle and thereby provide an appropriate time frame for such cycle to run its course, and for premium rate changes and reserved claim costs to be quantified and emerge in financial results with greater finality and effect.

This management analysis should be read in conjunction with the consolidated financial statements and the footnotes appended to them.

EXECUTIVE SUMMARY



Old Republic International Corporation reported the following consolidated results:

	Quarters Ended September 30,						Nine Months Ended September 30,
	2019		2018		% Change		2019		2018		% Change
Pretax income (loss)	$	252.4	$	335.1	-24.7	%	$	976.3	$	575.7	69.6	%
Pretax investment gains (losses) included in pretax income (loss)	63.6		135.7		-53.1		468.7		72.6		N/M
Pretax income (loss) excluding investment gains (losses)	$	188.7	$	199.3	-5.3	%	$	507.6	$	503.0	0.9	%

Net income (loss)	$	202.8	$	275.2	-26.3	%	$	780.6	$	477.0	63.6	%
Net of tax investment gains (losses) included in net income (loss)	50.1		107.2		-53.2		369.9		57.4		N/M
Net income (loss) excluding investment gains (losses)	$	152.7	$	167.9	-9.1	%	$	410.6	$	419.6	-2.1	%

Consolidated pretax and net income, exclusive of all investment gains or (losses), for the third quarter and first nine months of 2019 were moderately lower to relatively flat vis-a-vis 2018. Continued growth in net investment income was not sufficient to offset weaker underwriting results in both periods. Overall and per share net income continued to be significantly impacted by the required inclusion since January 1, 2018 of changes in the fair value of equity securities pursuant to GAAP. Please see the information on the following two pages.



FINANCIAL HIGHLIGHTS
	Quarters Ended September 30,						Nine Months Ended September 30,
SUMMARY INCOME STATEMENTS:	2019		2018		% Change		2019			2018		% Change
Revenues:
Net premiums and fees earned	$	1,561.7	$	1,504.8	3.8	%	$	4,380.4		$	4,255.5	2.9	%
Net investment income	112.7		108.7		3.6		337.8			321.5		5.1
Other income	32.9		30.4		8.3		97.4			91.1		6.9
Total operating revenues	1,707.3		1,644.0		3.9		4,815.7			4,668.2		3.2
Investment gains (losses):
Realized from actual transactions	6.3		7.3				31.3			54.8
Realized from impairments	—		—				(2.0		)	—
Unrealized from changes in fair value of equity securities	57.3		128.4				439.3			17.7
Total investment gains (losses)	63.6		135.7				468.7			72.6
Total revenues	1,771.0		1,779.7				5,284.4			4,740.9
Operating expenses:
Claim costs	663.7		619.4		7.2		1,905.1			1,820.8		4.6
Sales and general expenses	845.0		815.2		3.7		2,372.0			2,310.0		2.7
Interest and other charges	9.7		9.9		-2.0		30.8			34.3		-10.3
Total operating expenses	1,518.6		1,444.6		5.1	%	4,308.0			4,165.2		3.4	%
Pretax income (loss)	252.4		335.1				976.3			575.7
Income taxes (credits)	49.5		59.8				195.6			98.6
Net income (loss)	$	202.8	$	275.2			$	780.6		$	477.0


COMMON STOCK STATISTICS:
Net income (loss) per share: Basic	$	0.68	$	0.92			$	2.60		$	1.63
Diluted	$	0.67	$	0.92			$	2.59		$	1.59
Components of net income (loss) per share:
Basic net income (loss) excluding investment gains (losses)	$	0.51	$	0.56	-8.9	%	$	1.37		$	1.43	-4.2	%
Net investment gains (losses):
Realized from actual transactions and impairments	0.02		0.02				0.08			0.15
Unrealized from changes in fair value of equity securities	0.15		0.34				1.15			0.05
Basic net income (loss)	$	0.68	$	0.92			$	2.60		$	1.63
Diluted net income (loss) excluding investment gains (losses)	$	0.51	$	0.56	-8.9	%	$	1.36		$	1.40	-2.9	%
Net investment gains (losses):
Realized from actual transactions and impairments	0.01		0.02				0.08			0.14
Unrealized from changes in fair value of equity securities	0.15		0.34				1.15			0.05
Diluted net income (loss)	$	0.67	$	0.92			$	2.59		$	1.59
Cash dividends on common stock	$	1.2000	$	0.1950			$	1.6000		$	0.5850
Book value per share							$	19.31		$	17.76	8.7	%

Old Republic's business is necessarily managed for the long run. In this context, management's key objectives are to achieve a continuous, long-term improvement in operating results, and ensure balance sheet strength for the primary needs of the basic insurance underwriting and related services business. In this view, the evaluation of periodic and long-term results excludes consideration of all investment gains or (losses). In management's opinion, this focus provides a better way to realistically analyze, evaluate, and establish accountability for the results and benefits that arise from the basic operations of the business. According to the tenets of GAAP, however, net income, which includes all specifically defined investment gains or (losses), is the measure of total profitability.

In management's opinion, the inclusion of realized investment gains or (losses) in net income can mask the fundamental operating results of an insurance business. That's because their realization is, more often than not, highly discretionary. It's usually affected by such randomly occurring factors as the timing of individual securities sales, tax-planning considerations, and modifications of investment management judgments about the direction of securities markets or the prospects of individual investees or industry sectors. Moreover, the inclusion since January 1, 2018 of unrealized investment gains or (losses) in equity (but not fixed maturity) securities required by a new rule of the Financial Accounting Standards Board ("FASB"), can lead to even greater period-to-period fluctuations in reported net income. The impact of the continuous volatility in stock market valuations is most evident in its net of tax effect on net income for the third quarter and first nine months of 2019 and 2018.

The table on the next page shows an array of numbers purposefully arranged in 10 sections. Management believes the information in sections A to G and J highlight the most meaningful, realistic indicators of ORI's segmented and consolidated financial performance. The information underscores the necessity of reviewing reported results by separating the fait-accompli of economic realities from the transient vagaries of securities markets and their above-noted impact on reported GAAP net income.



Continued on the next page



	Major Segmented and Consolidated Elements of Income (Loss)
	Quarters Ended September 30,								Nine Months Ended September 30,
	2019			2018			% Change		2019			2018			% Change
A. Net premiums, fees, and other income:
General insurance	$	870.2		$	841.5		3.4	%	$	2,551.9		$	2,441.3		4.5	%
Title insurance	673.8			640.7			5.2		1,772.3			1,743.6			1.6
Corporate and other	3.3			4.2			-21.9		10.2			11.2			-8.8
Other income	32.9			30.4			8.3		97.4			91.1			6.9
Subtotal	1,580.3			1,517.0			4.2		4,431.9			4,287.4			3.4
RFIG run-off business (c)	14.2			18.2			-21.6		45.8			59.2			-22.6
Consolidated	$	1,594.6		$	1,535.2		3.9	%	$	4,477.8		$	4,346.7		3.0	%

B. Underwriting and related
services income (loss):
General insurance	$	19.7		$	37.0		-46.7	%	$	74.6		$	78.0		-4.3	%
Title insurance	63.3			58.7			7.9		126.1			132.6			-4.8
Corporate and other	(0.3		)	(4.0		)	90.8		(10.9		)	(17.4		)	37.5
Subtotal	82.7			91.7			-9.8		189.9			193.2			-1.7
RFIG run-off business (c)	3.0			8.7			-65.2		10.7			22.6			-52.8
Consolidated	$	85.7		$	100.5		-14.7	%	$	200.6		$	215.8		-7.0	%
C. Consolidated underwriting ratio:
Claim ratio	42.5		%	41.2		%			43.5		%	42.8		%
Expense ratio	51.9			51.9					51.7			51.9
Composite ratio	94.4		%	93.1		%			95.2		%	94.7		%

D. Net investment income:
General insurance	$	88.7		$	86.1		3.0	%	$	265.8		$	253.8		4.7	%
Title insurance	10.2			9.8			4.3		30.8			28.8			6.8
Corporate and other	9.4			8.1			15.2		27.9			23.4			19.3
Subtotal	108.4			104.1			4.1		324.6			306.1			6.0
RFIG run-off business	4.2			4.6			-7.1		13.2			15.4			-14.2
Consolidated	$	112.7		$	108.7		3.6	%	$	337.8		$	321.5		5.1	%
E. Interest and other charges:
General insurance	$	17.7		$	18.0				$	54.6		$	52.7
Title insurance	0.7			0.8					3.3			3.2
Corporate and other (a)	(8.7		)	(8.9		)			(27.1		)	(21.6		)
Subtotal	9.7			9.9					30.8			34.3
RFIG run-off business	—			—					—			—
Consolidated	$	9.7		$	9.9		-2.0	%	$	30.8		$	34.3		-10.3	%

F. Segmented and consolidated
pretax income (loss) excluding
investment gains (losses):
General insurance	$	90.7		$	105.1		-13.7	%	$	285.8		$	279.1		2.4	%
Title insurance	72.8			67.7			7.6		153.7			158.2			-2.8
Corporate and other	17.7			13.1			35.2		44.2			27.6			60.3
Subtotal	181.4			185.9			-2.5		483.7			464.9			4.0
RFIG run-off business (c)	7.3			13.3			-45.1		23.9			38.0			-37.2
Consolidated	188.7			199.3			-5.3	%	507.6			503.0			0.9	%
Income taxes (credits) on above (b)	36.0			31.3					96.9			83.4
G. Net income (loss) excluding
investment gains (losses)	152.7			167.9			-9.1	%	410.6			419.6			-2.1	%
H. Consolidated pretax investment
gains (losses):
Realized from actual transactions
and impairments	6.3			7.3					29.3			54.8
Unrealized from changes in
fair value of equity securities	57.3			128.4					439.3			17.7
Total	63.6			135.7					468.7			72.6
Income taxes (credits) on above	13.5			28.5					98.7			15.2
Net of tax investment gains (losses)	50.1			107.2					369.9			57.4
I. Net income (loss)	$	202.8		$	275.2				$	780.6		$	477.0
J. Consolidated operating cash flow									$	666.2		$	597.1

(a) Includes consolidation/elimination entries. (b) The effective tax rates applicable to pretax income excluding investment gains or losses were 19.1% for both the third quarter and first nine months of 2019, and 15.7% and 16.6% for the third quarter and first nine months of 2018, respectively. (c) See Note (a) in RFIG Run-off Segments Results.

General Insurance Segment Results - The table below reflects the major elements affecting this segment’s financial performance for the periods shown.



	General Insurance Summary Operating Results
	Quarters Ended September 30,								Nine Months Ended September 30,
	2019			2018			% Change		2019			2018			% Change
Net premiums earned	$	870.2		$	841.5		3.4	%	$	2,551.9		$	2,441.3		4.5	%
Net investment income	88.7			86.1			3.0		265.8			253.8			4.7
Other income	32.7			30.2			8.4		97.0			90.5			7.1
Operating revenues	991.7			957.8			3.5		2,914.7			2,785.7			4.6
Claim costs	634.8			595.0			6.7		1,821.9			1,739.3			4.8
Sales and general expenses	248.4			239.6			3.7		752.2			714.5			5.3
Interest and other charges	17.7			18.0			-2.1		54.6			52.7			3.7
Operating expenses	900.9			852.7			5.7		2,628.9			2,506.6			4.9
Segment pretax operating income (loss) (a)	$	90.7		$	105.1		-13.7	%	$	285.8		$	279.1		2.4	%

Claim ratio	72.9		%	70.7		%			71.4		%	71.2		%
Expense ratio	24.8			24.9					25.7			25.6
Composite ratio	97.7		%	95.6		%			97.1		%	96.8		%

__________________

(a)

In connection with the combined run-off mortgage guaranty ("MI") and consumer credit indemnity ("CCI"), $0.2 and $0.7 of pretax operating income for the third quarter and first nine months of 2018 were retained by certain general insurance companies pursuant to various quota share and stop loss reinsurance agreements. All of these amounts historically have been reclassified such that 100% of the CCI run-off business is reported in the RFIG run-off segment. Effective July 1, 2019, the results of the CCI run-off business are being classified in the General Insurance Segment for the third quarter 2019 and all future periods.

General insurance underwriting/service profitability, gauged by the composite underwriting ratios, declined in the latest quarter, and was relatively stable for the first nine months of 2019. Revenue-wise earned premiums edged up in low single digits in both of these periods. With few exceptions, premiums grew for most types of coverages and markets served. The largest contributions stemmed principally from commercial automobile (trucking), national accounts, and executive indemnity coverages. The cumulative effects of recent years' and ongoing premium rate increases for most insurance products, other than workers' compensation coverages, along with new business production were main factors in top line growth. Net investment income growth was principally driven by a moderately higher invested asset base with dividends from equity security investments providing the greatest addition.

As the above table shows, the consolidated general insurance ratio of claim costs to net premiums earned remained relatively stable for the first nine months of 2019. As such, it continues to reflect the past several years' fairly consistent downtrends and the effects of claim development portrayed in the following table. Small year-over-year changes in periodic expense ratios are generally reflective of ongoing product mix dynamics, and the variability of attendant sales and general expenses.



				Effect of Prior Periods'
				(Favorable)/			Claim Ratio Excluding
	Reported			Unfavorable Claim			Prior Periods' Claim
	Claim Ratio			Reserves Development			Reserves Development
2014		77.9	%		3.9	%		74.0	%
2015		74.1			1.5			72.6
2016		73.0			0.3			72.7
2017		71.8			0.7			71.1
2018		72.2	%		—	%		72.2	%
3rd Quarter 2018		70.7	%		(1.0	)%		71.7	%
3rd Quarter 2019		72.9	%		(0.5	)%		73.4	%
1st Nine Months 2018		71.2	%		0.3	%		70.9	%
1st Nine Months 2019		71.4	%		(0.4	)%		71.8	%

Quarterly and annual claim ratios and the trends they display, may not be particularly meaningful indicators of future outcomes for ORI's liability-oriented mix of business and its relatively long claim payment patterns. Absent significant economic and insurance industry dislocations in the foreseeable future, management currently anticipates that annually reported claim ratios should settle within targeted averages in the high 60% to low 70% range. Assuming the current mix of coverages, the overall business is expected to reflect an expense ratio ranging between 23% and 25%, and a resulting composite underwriting ratio ranging between 90% and 95%.

Title Insurance Segment Results - The table below shows the major elements affecting this segment’s financial performance for the periods shown.



	Title Insurance Summary Operating Results
	Quarters Ended September 30,								Nine Months Ended September 30,
	2019			2018			% Change		2019			2018			% Change
Net premiums and fees earned	$	673.8		$	640.7		5.2	%	$	1,772.3		$	1,743.6		1.6	%
Net investment income	10.2			9.8			4.3		30.8			28.8			6.8
Other income	0.1			0.1			1.0		0.5			0.6			-18.7
Operating revenues	684.3			650.8			5.1		1,803.7			1,773.1			1.7
Claim costs	20.7			15.1			37.3		53.3			45.0			18.4
Sales and general expenses	589.9			567.1			4.0		1,593.3			1,566.6			1.7
Interest and other charges	0.7			0.8			-9.0		3.3			3.2			1.3
Operating expenses	611.4			583.1			4.9		1,650.0			1,614.9			2.2
Segment pretax operating income (loss)	$	72.8		$	67.7		7.6	%	$	153.7		$	158.2		-2.8	%

Claim ratio	3.1		%	2.4		%			3.0		%	2.6		%
Expense ratio	87.5			88.5					89.9			89.8
Composite ratio	90.6		%	90.9		%			92.9		%	92.4		%

2019 year-over-year comparisons of revenues from title premiums and fees reflect a continued stable market share position. Claim costs trended higher as favorable development of prior years’ claim reserve estimates edged down. The following table shows recent annual and interim periods’ claim ratios and the effects of claim development trends:



				Effect of Prior Periods'
				(Favorable)/			Claim Ratio Excluding
	Reported			Unfavorable Claim			Prior Periods' Claim
	Claim Ratio			Reserves Development			Reserves Development
2014		5.2	%		(0.8	)%		6.0	%
2015		4.9			(0.6	)		5.5
2016		3.8			(1.1	)		4.9
2017		0.9			(3.3	)		4.2
2018		2.1	%		(2.0	)%		4.1	%
3rd Quarter 2018		2.4	%		(1.8	)%		4.2	%
3rd Quarter 2019		3.1	%		(1.0	)%		4.1	%
1st Nine Months 2018		2.6	%		(1.5	)%		4.1	%
1st Nine Months 2019		3.0	%		(1.0	)%		4.0	%

Net investment income is reflective of both a moderately growing invested asset base, and the overall investment yield environment. The largest portion of investment income growth stemmed from dividends earned from the equity securities portfolio. Operating expenses have remained generally aligned with revenues from premiums and fees for all periods reported upon.

RFIG Run-off Segment Results - The table below reflects the major elements affecting this segment’s financial performance for the periods shown.



	RFIG Run-off Summary Operating Results (a)
	Quarters Ended September 30,								Nine Months Ended September 30,
	2019			2018			% Change		2019			2018			% Change
A. Mortgage Insurance (MI)
Net premiums earned	$	14.2		$	17.8		-20.0	%	$	45.5		$	58.0		-21.7	%
Net investment income	4.2			4.3			-2.5		12.9			14.7			-12.1
Claim costs	7.6			5.5			37.9		24.1			23.3			3.4
MI pretax operating income (loss)	$	7.3		$	13.2		-44.8	%	$	22.8		$	37.9		-39.8	%

Claim ratio	53.6		%	31.1		%			53.0		%	40.2		%
Expense ratio	25.1			19.1					25.2			19.9
Composite ratio	78.7		%	50.2		%			78.2		%	60.1		%

B. Consumer Credit Indemnity (CCI) (a)
CCI pretax operating income (loss)	$	—		$	—				$	1.0		$	0.1

C. Total MI and CCI Run-off business (a)
Segment pretax operating income (loss)	$	7.3		$	13.3		-45.1	%	$	23.9		$	38.0		-37.2	%

__________________

(a)

Segment pretax operating income (loss) includes amounts attributable to the Company's consumer credit indemnity run-off business of $ - and $1.0 for the third quarter and first nine months of 2019, respectively; these amounts were $ - and $0.1 for the third quarter and first nine months of 2018, respectively. Results for the CCI coverages are expected to be immaterial in the remaining run-off periods; effective July 1, 2019, these results are being classified in the General Insurance Segment for the third quarter 2019 and all future periods.

Pretax operating results of the run-off MI business reflect the expected, continuing drop in net earned premiums from declining risk in force, and lower investment income from a smaller invested asset base as claim and expense payments exceed premium receipts.

As indicated in the far right column of the following table, MI claim ratios have generally continued to decline, favorable developments of prior periods' reserves notwithstanding. The downtrend is largely due to a combination of declining new loan defaults, and stable-to-improving cure rates for outstanding delinquent loans.



				Effect of Prior Periods'
				(Favorable)/			Claim Ratio Excluding
	Reported			Unfavorable Claim			Prior Periods' Claim
	Claim Ratio			Reserves Development			Reserves Development
2014		48.8	%		(69.3	)%		118.1	%
2015		56.4			(65.0	)		121.4
2016		34.1			(39.8	)		73.9
2017		57.6			(38.3	)		95.9
2018		43.2	%		(27.0	)%		70.2	%
3rd Quarter 2018		31.1	%		(10.4	)%		41.5	%
3rd Quarter 2019		53.6	%		(14.2	)%		67.8	%
1st Nine Months 2018		40.2	%		(25.7	)%		65.9	%
1st Nine Months 2019		53.0	%		(9.6	)%		62.6	%

Corporate and Other Operating Results - The combination of a small life and accident insurance business and the net costs associated with the parent holding company and its internal corporate services subsidiaries usually produce highly variable results. Earnings variations stem from volatility inherent to the small scale of the life and accident insurance line, net investment income, and net interest charges (credits) pertaining to external and intra-system financing arrangements. Year-to-date 2019 results were enhanced by the elimination of interest costs associated with outstanding external debt converted into ORI common stock in March 2018. The interplay of these various elements is summarized in the following table:



	Corporate and Other Summary Operating Results
	Quarters Ended September 30,								Nine Months Ended September 30,
	2019			2018			% Change		2019			2018			% Change
Net life and accident premiums earned	$	3.3		$	4.2		-21.9	%	$	10.2		$	11.2		-8.8	%
Net investment income	9.4			8.1			15.2		27.9			23.4			19.3
Operating revenues	12.7			12.4			2.2		38.1			34.6			10.1
Claim costs	0.5			3.5			-84.5		6.3			12.6			-49.5
Insurance expenses	0.9			1.3			-28.7		3.5			3.7			-7.6
Corporate, interest and other expenses - net	(6.5		)	(5.6		)	-16.8		(15.9		)	(9.3		)	-70.4
Operating expenses	(5.0		)	(0.6		)	N/M		(6.1		)	7.0			-187.3
Corporate and other pretax operating income (loss)	$	17.7		$	13.1		35.2	%	$	44.2		$	27.6		60.3	%

Summary Consolidated Balance Sheet - The table below shows Old Republic's consolidated financial position at the dates shown.



	September 30,		December 31,		September 30,
	2019		2018		2018
Assets:
Cash and fixed maturity securities	$	10,291.4	$	9,683.0	$	9,817.2
Equity securities	3,770.6		3,380.9		3,474.3
Other invested assets	117.7		123.4		128.5
Cash and invested assets	14,179.7		13,187.4		13,420.1
Accounts and premiums receivable	1,687.5		1,499.4		1,643.0
Federal income tax recoverable: Current	0.5		16.8		—
Prepaid federal income taxes	138.5		129.8		114.3
Reinsurance balances recoverable	3,923.7		3,484.5		3,637.2
Deferred policy acquisition costs	333.0		316.3		316.6
Sundry assets	918.6		692.6		670.8
Total assets	$	21,181.8	$	19,327.1	$	19,802.3

Liabilities and Shareholders' Equity:
Policy liabilities	$	2,602.0	$	2,303.5	$	2,450.5
Claim reserves	9,817.4		9,471.2		9,482.9
Federal income tax payable: Current	—		—		3.7
Deferred	171.3		10.3		54.7
Reinsurance balances and funds	759.9		600.4		703.2
Debt	973.7		981.4		981.1
Sundry liabilities	1,063.3		813.7		814.7
Total liabilities	15,387.9		14,180.8		14,491.1
Shareholders' equity	5,793.9		5,146.2		5,311.2
Total liabilities and shareholders' equity	$	21,181.8	$	19,327.1	$	19,802.3

Cash, Invested Assets, and Shareholders' Equity - The table below shows Old Republic's consolidated cash and invested assets as well as shareholders' equity at the dates shown.



				Cash, Invested Assets, and Shareholders' Equity
										% Change
				Sept. 30,		Dec. 31,		Sept. 30,		Sept. '19/		Sept. '19/
				2019		2018		2018		Dec. '18		Sept. '18
Cash and invested assets:
	Available for sale fixed maturity securities, cash
	and other invested assets, carried at fair value			$	9,381.6	$	8,761.7	$	8,895.2	7.1	%	5.5	%
	Equity securities, carried at fair value			3,770.6		3,380.9		3,474.3		11.5		8.5
	Held to maturity, carried at amortized cost			1,027.5		1,044.8		1,050.5		-1.7		-2.2
	Total per balance sheet			$	14,179.7	$	13,187.4	$	13,420.1	7.5	%	5.7	%
	Total at cost for all			$	13,126.2	$	12,950.6	$	12,886.1	1.4	%	1.9	%

Shareholders' equity: Total				$	5,793.9	$	5,146.2	$	5,311.2	12.6	%	9.1	%
			Per common share	$	19.31	$	17.23	$	17.76	12.1	%	8.7	%

Composition of shareholders' equity per share:
	Equity before items below			$	16.95	$	17.04	$	16.76	-0.5	%	1.1	%
	Unrealized investment gains (losses) and other
		accumulated comprehensive income (loss)		2.36		0.19		1.00
			Total	$	19.31	$	17.23	$	17.76	12.1	%	8.7	%

Segmented composition of
shareholders' equity per share:
	Excluding run-off segment			$	17.70	$	15.73	$	16.26	12.5	%	8.9	%
	RFIG run-off segment			1.61		1.50		1.50
			Consolidated total	$	19.31	$	17.23	$	17.76	12.1	%	8.7	%

Old Republic's invested assets portfolio is directed in consideration of enterprise-wide risk management objectives. Most importantly, these are intended to ensure solid funding of the insurance subsidiaries' long-term obligations to policyholders and other beneficiaries, as well as the long-term stability of the subsidiaries’ capital accounts. To this end, the investment portfolio contains no significant insurance risk-correlated asset exposures to real estate, mortgage-backed securities, collateralized debt obligations ("CDO's"), derivatives, hybrid securities, or illiquid private equity and hedge fund investments. Moreover, the Company does not engage in hedging or securities lending transactions, nor does it invest in securities whose values are predicated on non-regulated financial instruments exhibiting amorphous or unfunded counter-party risk attributes.

As of September 30, 2019, the consolidated investment portfolio reflected an allocation of approximately 73% to fixed-maturity (bonds and notes) and short-term investments, and 27% to equity securities (common stock). The size of the fixed-maturity security portfolio has not changed significantly over the past six years. It's been relatively fixed as a basic anchor for the insurance underwriting subsidiaries' obligations. The maturities are stratified and conservatively matched to the expected timing of future years' payments of those obligations. The asset quality has remained at high levels.

Since 2013, most of ORI's investable funds have been directed toward the purchase of high-quality equity securities of U.S. companies. We favor the securities of issuers with long-term records of reasonable earnings growth and steadily increasing dividends. As a result, dividends from equity securities have been the greatest source of investment income growth in recent years. The portfolio (currently limited to fewer than 100 issues) is also structured to contribute a measure of capital appreciation over time. Periodic stress tests of the equities portfolio are made pursuant to enterprise risk management controls. Their purpose is to gain reasonable assurance that periodic downdrafts in market prices, as typically occur in economic depression or recessionary conditions, would not seriously undermine ORI's financial strength and the long-term continuity and prospects of the business.

Changes in shareholders' equity per share are reflected in the following table. As shown, these resulted mostly from net income excluding net investment gains (losses), realized and unrealized investment gains (losses), and dividend payments to shareholders.



	Shareholders' Equity Per Share
	Quarter									Year
	Ended			Nine Months Ended						Ended
	Sept. 30,			September 30,						Dec. 31,
	2019			2019			2018			2018
Beginning balance	$	19.68		$	17.23		$	17.72		$	17.72
Changes in shareholders' equity:
Net income (loss) excluding net investment gains (losses)	0.51			1.37			1.43			1.89
Net of tax realized investment gains (losses):
From actual transactions	0.02			0.09			0.15			0.16
From impairments	—			(0.01		)	—			—
Subtotal	0.02			0.08			0.15			0.16
Net of tax unrealized investment gains (losses) on
securities carried at fair value:
Reported in net income (loss)	0.15			1.15			0.05			(0.79		)
Reported as other comprehensive income (loss)	0.16			0.99			(0.62		)	(0.59		)
Subtotal	0.31			2.14			(0.57		)	(1.38		)
Total net of tax realized and unrealized
investment gains (losses)	0.33			2.22			(0.42		)	(1.22		)
Cash dividends (a)	(1.2000		)	(1.6000		)	(0.5850		)	(0.7800		)
Debt conversion, stock issuance, and other	(0.01		)	0.09			(0.38		)	(0.38		)
Net change	(0.37		)	2.08			0.04			(0.49		)
Ending balance	$	19.31		$	19.31		$	17.76		$	17.23
Percentage change for the period	-1.9		%	12.1		%	0.2		%	-2.8		%

__________________

(a) The third quarter and first nine months of 2019 includes a special cash dividend of $1.00 per share paid in September of this year.

Capitalization - The following table shows that ORI’s total capitalization has risen over the past fiscal twelve months ended September 30, 2019 due to continued growth of the shareholders' equity account.



	Capitalization
	September 30,			December 31,			September 30,
	2019			2018			2018
Debt:
4.875% Senior Notes due 2024	$	397.2		$	396.8		$	396.6
3.875% Senior Notes due 2026	546.1			545.7			545.5
Other miscellaneous debt	30.4			38.8			38.8
Total debt	973.7			981.4			981.1
Common shareholders' equity	5,793.9			5,146.2			5,311.2
Total capitalization	$	6,767.6		$	6,127.6		$	6,292.3

Capitalization ratios:
Debt	14.4		%	16.0		%	15.6		%
Common shareholders' equity	85.6			84.0			84.4
Total	100.0		%	100.0		%	100.0		%

DETAILED MANAGEMENT ANALYSIS

This section of the Management Analysis of Financial Position and Results of Operations is additive to and should be read in conjunction with the Executive Summary which precedes it.

FINANCIAL ACCOUNTING AND REPORTING POLICIES

The Company's annual and interim financial statements incorporate a large number and types of estimates relative to matters which are highly uncertain at the time the estimates are made. The estimation process required of an insurance enterprise such as Old Republic is by its very nature highly dynamic inasmuch as it necessitates a continuous evaluation, analysis, and quantification of factual data as it becomes known to the Company. As a result, actual experienced outcomes can differ from the estimates made at any point in time and thus affect future periods' reported revenues, expenses, net income or loss, and financial condition.

Old Republic believes that its most critical accounting estimates relate to: a) the determination of other-than-temporary impairments ("OTTI") in the value of investments; b) the valuation of deferred income tax assets; c) the recoverability of reinsured paid and/or outstanding losses; and d) the establishment of reserves for losses and loss adjustment expenses. The major assumptions and methods used in setting these estimates are discussed in the Company's 2018 Annual Report on Form 10-K.

FINANCIAL POSITION

The Company's financial position at September 30, 2019 reflected increases in assets, liabilities and common shareholders' equity of 9.6%, 8.5% and 12.6%, respectively, when compared to the immediately preceding year-end. Cash and invested assets represented 66.9% and 68.2% of consolidated assets as of September 30, 2019 and December 31, 2018, respectively. As of September 30, 2019, the cash, accrued investment income, and invested asset base increased by 7.5% to $14,179.7.

Investments - During the first nine months of 2019 and 2018, the Company committed the majority of investable funds to short to intermediate-term fixed maturity securities and higher yielding publicly traded large capitalization equity securities. Old Republic continues to adhere to its long-term policy of investing primarily in investment grade, marketable securities. At both September 30, 2019 and December 31, 2018, approximately 99% of the Company's investments consisted of marketable securities. The investment portfolio contains no significant insurance risk-correlated asset exposures to real estate, mortgage-backed securities, collateralized debt obligations ("CDO's"), derivatives, hybrid securities, or illiquid private equity and hedge fund investments. Moreover, the Company does not engage in hedging or securities lending transactions, nor does it invest in securities whose values are predicated on non-regulated financial instruments exhibiting amorphous or unfunded counter-party risk attributes. At September 30, 2019, the Company had no fixed maturity investments in default as to principal and/or interest.

Short-term maturity investment positions reflect a large variety of seasonal and intermediate-term factors including current operating needs, expected operating cash flows, seasonality of quarterly cash flow, debt maturities, and investment strategy considerations. Accordingly, the future level of short-term investments will vary and respond to the interplay of these factors and may, as a result, increase or decrease from current levels.

The Company does not own or utilize derivative financial instruments for the purpose of hedging, enhancing the overall return of its investment portfolio, or reducing the cost of its debt obligations. With regard to its equity portfolio, the Company does not own any options nor does it engage in any type of option writing. Traditional investment management tools and techniques are employed to address the yield and valuation exposures of the invested assets base. The long-term fixed maturity investment portfolio is managed so as to limit various risks inherent in the bond market. Credit risk is addressed through asset diversification and the purchase of investment grade securities. Reinvestment rate risk is reduced by concentrating on non-callable issues, and by taking asset-liability matching considerations into account. Purchases of mortgage and asset backed securities, which have variable principal prepayment options, are generally avoided. Market value risk is limited through the purchase of bonds of intermediate maturity. The combination of these investment management practices is expected to produce a more stable long-term fixed maturity investment portfolio that is not subject to extreme interest rate sensitivity and principal deterioration.

The fair value of the Company's long-term fixed maturity investment portfolio is sensitive, however, to fluctuations in the level of interest rates, but not materially affected by changes in anticipated cash flows caused by any prepayments. The impact of interest rate movements on the long-term fixed maturity investment portfolio generally affects net unrealized gains or losses. As a general rule, rising interest rates enhance currently available yields but typically lead to a reduction in the fair value of existing fixed maturity investments. By contrast, a decline in such rates reduces currently available yields but usually serves to increase the fair value of the existing fixed maturity investment portfolio. All such changes in fair value of available for sale securities are reflected, net of deferred income taxes, directly in the shareholders' equity account, and as a separate component of the statement of comprehensive income. Fixed maturity securities classified as held to maturity are carried at amortized cost, and therefore, fluctuations in unrealized gains and losses do not impact shareholders' equity. Given the Company's inability to forecast or control the movement of interest rates, Old Republic sets the maturity spectrum of its fixed maturity securities portfolio within parameters of estimated liability payouts, and focuses the overall portfolio on high quality investments. By so doing, Old Republic believes it is reasonably assured of its ability to hold securities to maturity as it may deem necessary in changing environments, and of ultimately recovering their aggregate cost.

Possible future declines in fair values for Old Republic's available for sale fixed maturity portfolio would negatively affect the common shareholders' equity account at any point in time, but would not necessarily result in the recognition of realized investment losses. 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 in the portfolio's value are evaluated and established at each quarterly balance sheet date. In reviewing investments for other-than-temporary 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. In the event the Company's estimate of other-than-temporary impairments is insufficient at any point in time, future periods' net income (loss) would be affected adversely by the recognition of additional impairment losses, but its financial condition 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 following tables show certain information relating to the Company's fixed maturity and equity portfolios as of the dates shown:



Credit Quality Ratings of Fixed Maturity Securities (a)

	September 30,		December 31,
	2019		2018
Aaa	22.7	%	20.9	%
Aa	12.8		12.8
A	30.9		31.5
Baa	29.0		29.1
Total investment grade	95.4		94.3
All other (b)	4.6		5.7
Total	100.0	%	100.0	%

__________


(a)	Credit quality ratings referred to herein are a blend of those assigned by the major credit rating agencies for U.S. and Canadian Governments, Agencies, Corporates and Municipal issuers, which are converted to the above ratings classifications.


(b)	"All other" includes non-investment grade or non-rated issuers.



Gross Unrealized Losses Stratified by Industry Concentration for Non-Investment Grade Fixed Maturity Securities

September 30, 2019			Amortized Cost			Gross Unrealized Losses
Fixed Maturity Securities by Industry Concentration:
	Energy		$	46.9		$	2.9
	Natural Gas		14.4			.5
	Basic Industry		11.7			.1
	Industrial		15.4			.1
	Other (includes 2 industry groups)		10.7			—
		Total	$	99.4	(c)	$	3.9

__________


(c)	Represents 1.1% of the total fixed maturity securities portfolio.



Gross Unrealized Losses Stratified by Industry Concentration for Investment Grade Fixed Maturity Securities

September 30, 2019			Amortized Cost			Gross Unrealized Losses
Fixed Maturity Securities by Industry Concentration:
	U.S. Governments & Agencies		$	302.4		$	.2
	Municipals		48.5			.1
	Canadian Governments		26.0			—
	Banking		8.4			—
	Other (includes 14 industry groups)		111.3			.1
		Total	$	496.9	(d)	$	.6

__________


(d)	Represents 5.3% of the total fixed maturity securities portfolio.



Gross Unrealized Losses Stratified by Industry Concentration for Equity Securities

September 30, 2019			Cost			Gross Unrealized Losses
Equity Securities by Industry Concentration:
	Energy		$	335.3		$	60.5
	Consumer Staples		103.5			21.9
	Industrial		70.2			5.4
	Health Care		80.2			3.8
	Other (includes 4 industry groups)		170.4			7.7
		Total	$	759.8	(e)	$	99.4	(f)

__________


(e)	Represents 25.4% of the total equity securities portfolio.


(f)	Represents 3.3% of the cost of the total equity securities portfolio, while gross unrealized gains represent 29.5% of the portfolio.



Gross Unrealized Losses Stratified by Maturity Ranges for All Fixed Maturity Securities

		Amortized Cost of Fixed Maturity Securities				Gross Unrealized Losses
September 30, 2019		All		Non- Investment Grade Only		All		Non- Investment Grade Only
Maturity Ranges:
Due in one year or less		$	236.1	$	10.7	$	.4	$	—
Due after one year through five years		286.4		25.0		1.2		.9
Due after five years through ten years		71.3		63.6		2.9		2.9
Due after ten years		2.4		—		—		—
	Total	$	596.3	$	99.4	$	4.5	$	3.9



Gross Unrealized Losses Stratified by Duration and Amount of Unrealized Losses

			Amount of Gross Unrealized Losses
September 30, 2019			Less than 20% of Cost		20% to 50% of Cost		More than 50% of Cost		Total Gross Unrealized Loss
Number of Months in Unrealized Loss Position:

Fixed Maturity Securities:
	One to six months		$	2.2	$	—	$	—	$	2.2
	Seven to twelve months		.1		—		—		.1
	More than twelve months		2.2		—		—		2.2
		Total	$	4.5	$	—	$	—	$	4.5

Number of Issues in Unrealized Loss Position:

Fixed Maturity Securities:
	One to six months		14		—		—		14
	Seven to twelve months		1		—		—		1
	More than twelve months		106		—		—		106
		Total	121		—		—		121		(g)

__________


(g)	At September 30, 2019 the number of issues in an unrealized loss position represent 6.5% of the total number of such fixed maturity issues held by the Company.

The aging of issues with unrealized losses employs balance sheet date fair value comparisons with an issue's cost. The percentage reduction from such cost reflects the decline as of a specific point in time (September 30, 2019 in the above table) and, accordingly, is not indicative of a security's value having been consistently below its cost at the percentages shown nor throughout the periods shown.



Age Distribution of Fixed Maturity Securities

			September 30,		December 31,
			2019		2018
Maturity Ranges:
	Due in one year or less		9.1	%	7.0	%
	Due after one year through five years		57.1		51.6
	Due after five years through ten years		33.4		40.7
	Due after ten years		.4		.7
		Total	100.0	%	100.0	%

Average Maturity in Years			4.1		4.5
Duration (h)			3.6		4.1

___________


(h)	Duration is used as a measure of bond price sensitivity to interest rate changes. A duration of 3.6 as of September 30, 2019 implies that a 100 basis point parallel increase in interest rates from current levels would result in a possible decline in the fair value of the long-term fixed maturity investment portfolio of approximately 3.6%.



Composition of Unrealized Gains (Losses)

			September 30,			December 31,
			2019			2018
Available for Sale Fixed Maturity Securities:
	Amortized cost		$	8,394.0		$	8,285.0
	Estimated fair value		8,666.7			8,182.8
		Net unrealized gains (losses)	$	272.7		$	(102.1	)

	Components of net unrealized gains (losses):
	Gross unrealized gains		$	277.1		$	37.1
	Gross unrealized losses		(4.4		)	(139.2		)
		Net unrealized gains (losses)	$	272.7		$	(102.1	)

Equity Securities:
	Original cost		$	2,989.4		$	3,039.1
	Estimated fair value		3,770.6			3,380.9
		Net unrealized gains (losses)(i)	$	781.2		$	341.8

	Components of net unrealized gains (losses):
	Gross unrealized gains		$	880.6		$	517.3
	Gross unrealized losses		(99.4		)	(175.4		)
		Net unrealized gains (losses)(i)	$	781.2		$	341.8

___________


(i)	Unrealized gains and losses from changes in fair value of equity securities are included in total realized and unrealized investment gains (losses) in the consolidated statements of income.

Other Assets - Among other major assets, substantially all of the Company's receivables are not past due. Reinsurance recoverable balances on paid or estimated unpaid losses are deemed recoverable from solvent reinsurers or have otherwise been reduced by allowances for estimated amounts unrecoverable. Deferred policy acquisition costs are estimated by taking into account the direct costs relating to the successful acquisition of new or renewal insurance contracts and evaluating their recoverability on the basis of recent trends in claims costs. The Company's deferred policy acquisition cost balances have not fluctuated substantially from period-to-period, and do not represent significant percentages of assets or shareholders' equity.

Liquidity - The parent holding company meets its liquidity and capital needs principally through dividends and interest on intercompany financing arrangements paid by its subsidiaries. The insurance subsidiaries' ability to pay cash dividends to the parent company is generally restricted by law or subject to approval of the insurance regulatory authorities of the states in which they are domiciled. The Company can receive up to $507.8 in dividends from its subsidiaries in 2019 without the prior approval of regulatory authorities. The liquidity achievable through such permitted dividend payments is considered sufficient to cover the parent holding company's currently expected cash outflows represented mostly by interest and scheduled repayments on outstanding debt, reasonably anticipated cash dividend payments to shareholders, modest operating expenses, and the near-term capital needs of its operating company subsidiaries.

Capitalization - Old Republic's total capitalization of $6,767.6 at September 30, 2019 consisted of debt of $973.7 and common shareholders' equity of $5,793.9. Changes in the common shareholders' equity account reflect primarily net income for the period then ended, changes in the fair value of fixed maturity securities and dividend payments. At September 30, 2019, the Company's consolidated debt to equity ratio was 16.8%.

Old Republic has paid a cash dividend without interruption since 1942 (78 years), and it has raised the annual cash dividend payout for each of the past 38 years. The dividend rate is reviewed and approved by the Board of Directors on a quarterly basis each year. In establishing each year's cash dividend rate the Company does not follow a strict formulaic approach. Rather, it favors a gradual rise in the annual dividend rate that is largely reflective of long-term consolidated operating earnings trends. Accordingly, each year's dividend rate is set judgmentally in consideration of such key factors as the dividend paying capacity of the Company's insurance subsidiaries, the trends in average annual statutory and GAAP earnings for the five to ten most recent calendar years, and management's long-term expectations for the Company's consolidated business and its individual operating subsidiaries. In September 2019, the Company paid a special cash dividend of $1.00 per share.

Under state insurance regulations, the Company's three mortgage guaranty insurance subsidiaries are required to operate at a maximum risk to capital ratio of 25:1 or otherwise hold minimum amounts of capital based on specified formulas. Since the Company's mortgage insurance subsidiaries have discontinued writing new business the risk-to-capital ratio considerations are therefore no longer of consequence.

RESULTS OF OPERATIONS

Revenues: Premiums & Fees

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 approximately 28% of 2019 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 72% of consolidated title premium and fee revenues is 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. As described more fully in the RFIG Run-off Business' Risk Factors for premium income and long-term claim exposures in the Company's 2018 Annual Report on Form 10-K under Item 1A - Risk Factors, revenue recognition for insured loans is not appropriately matched to the risk exposure and the consequent recognition of both normal and catastrophic loss occurrences.

The major sources of Old Republic's consolidated earned premiums and fees for the periods shown were as follows:



	Earned Premiums and Fees
	General		Title		RFIG Run-off		Other		Total		% Change from prior period
Years Ended December 31:
2016	$	2,936.3	$	2,206.6	$	170.0	$	20.1	$	5,333.2	3.0	%
2017	3,110.8		2,287.2		122.9		18.8		5,539.7		3.9
2018	3,277.1		2,336.1		75.9		14.6		5,703.9		3.0
Nine Months Ended September 30:
2018	2,441.3		1,743.6		59.2		11.2		4,255.5		3.9
2019	2,551.9		1,772.3		45.8		10.2		4,380.4		2.9
Quarters Ended September 30:
2018	841.5		640.7		18.2		4.2		1,504.8		5.0
2019	$	870.2	$	673.8	$	14.2	$	3.3	$	1,561.7	3.8	%

The percentage allocation of net premiums earned for major insurance coverages in the General Insurance Group was as follows:



	General Insurance Earned Premiums by Type of Coverage
	Commercial Automobile (mostly trucking)		Workers' Compensation		Financial Indemnity		Inland Marine and Property		General Liability		Other
Years Ended December 31:
2016	33.7	%	36.5	%	4.3	%	7.4	%	5.6	%	12.5	%
2017	34.6		33.6		4.9		7.6		6.3		13.0
2018	36.8		31.1		5.3		7.7		6.2		12.9
Nine Months Ended September 30:
2018	36.4		31.2		5.3		7.7		6.2		13.2
2019	37.3		29.1		6.1		7.5		6.6		13.4
Quarters Ended September 30:
2018	36.9		30.6		5.3		7.7		6.0		13.5
2019	37.1	%	28.3	%	6.5	%	7.5	%	6.5	%	14.1	%

The following table shows the percentage distribution of Title Group premium and fee revenues by production sources:



Title Premium and Fee Production by Source
	Direct Operations		Independent Title Agents & Other
Years Ended December 31:
2016	27.9	%	72.1	%
2017	26.9		73.1
2018	26.1		73.9
Nine Months Ended September 30:
2018	26.2		73.8
2019	28.0		72.0
Quarters Ended September 30:
2018	25.3		74.7
2019	28.0	%	72.0	%

The following tables provide information on production and related risk exposure trends for Old Republic's mortgage guaranty insurance operation:



	Earned Premiums				Persistency
Premium and Persistency Trends by Type:	Direct		Net		Traditional Primary		Bulk
Years Ended December 31:
2016	$	157.1	$	154.1	77.7	%	72.8	%
2017	110.4		109.8		77.9		78.2
2018	74.4		74.4		79.7		76.3
Nine Months Ended September 30:
2018	58.0		58.0		78.5		74.9
2019	45.5		45.5		80.8	%	84.8	%
Quarters Ended September 30:
2018	17.8		17.8
2019	$	14.2	$	14.2

The Company's flagship mortgage guaranty insurance carrier ceased the underwriting of new policies effective August 31, 2011 and the existing book of business was placed in run-off operating mode.

While there is no consensus in the marketplace as to the precise definition of "sub-prime", Old Republic generally views loans with credit (FICO) scores less than 620, loans underwritten with reduced levels of documentation and loans with loan to value ratios in excess of 95% as having a higher risk of default. Risk in force concentrations by these attributes are disclosed in the following tables for both traditional primary and bulk production. Premium rates for loans exhibiting greater risk attributes are typically higher in anticipation of potentially greater defaults and claim costs. Additionally, bulk insurance policies, which represent 7.4% of total net risk in force as of September 30, 2019, are frequently subject to deductibles and aggregate stop losses which serve to limit the overall risk on a pool of insured loans.



Net Risk in Force
Net Risk in Force By Type:	Traditional Primary		Bulk		Other		Total
As of December 31:
2016	$	4,987.9	$	359.5	$	20.5	$	5,367.9
2017	3,888.0		292.4		12.1		4,192.6
2018	3,098.3		235.3		11.2		3,345.0
As of September 30:
2018	3,254.9		246.1		11.2		3,512.3
2019	$	2,621.3	$	208.3	$	3.6	$	2,833.3



Analysis of Risk in Force
Risk in Force Distribution By FICO Scores:	FICO less than 620		FICO 620 to 680		FICO Greater than 680		Unscored/ Unavailable

Traditional Primary:
As of December 31:
2016	7.2	%	30.5	%	61.5	%	.8	%
2017	7.5		31.5		60.2		.8
2018	7.9		32.2		59.1		.8
As of September 30:
2018	7.8		32.0		59.4		.8
2019	8.2	%	32.8	%	58.2	%	.8	%

Bulk(a):
As of December 31:
2016	29.9	%	32.0	%	38.0	%	.1	%
2017	31.8		31.7		36.3		.2
2018	33.6		31.5		34.8		.1
As of September 30:
2018	33.4		31.4		35.0		.2
2019	33.8	%	31.4	%	34.7	%	.1	%



Risk in Force Distribution By Loan to Value ("LTV") Ratio:	LTV 85.0% and below		LTV 85.01% to 90.0%		LTV 90.01% to 95.0%		LTV Greater than 95.0%

Traditional Primary(b):
As of December 31:
2016	3.8	%	32.1	%	30.6	%	33.5	%
2017	4.0		30.9		30.5		34.6
2018	4.1		30.7		29.7		35.5
As of September 30:
2018	4.0		30.3		30.2		35.5
2019	4.2	%	30.9	%	28.8	%	36.1	%

Bulk(a):
As of December 31:
2016	46.5	%	29.0	%	12.3	%	12.2	%
2017	45.3		29.9		12.6		12.2
2018	43.4		30.9		13.1		12.6
As of September 30:
2018	43.4		30.9		13.1		12.6
2019	43.0	%	31.2	%	13.2	%	12.6	%

__________


(a)	Bulk pool risk in-force, which represented 7.5% of total bulk risk in-force at September 30, 2019 has been allocated pro-rata based on insurance in-force.


(b)	The LTV distribution reflects base LTV ratios which are determined prior to the impact of single premiums financed and paid at the time of loan origination.

Risk in Force Distribution By Top Ten States:



			Traditional Primary
	TX		FL		GA		IL		CA		NC		PA		NJ		VA		MD
As of December 31:
2016	6.4	%	7.8	%	6.0	%	5.8	%	4.8	%	4.6	%	4.4	%	4.4	%	3.6	%	3.8	%
2017	5.9		8.1		6.0		6.1		4.8		4.4		4.3		4.6		3.7		4.2
2018	5.5		8.5		6.0		6.4		4.9		4.1		4.3		4.8		3.8		4.6
As of September 30:
2018	5.6		8.4		6.0		6.4		4.8		4.2		4.3		4.8		3.8		4.5
2019	5.2	%	8.7	%	6.1	%	6.7	%	5.0	%	3.9	%	4.2	%	5.0	%	3.9	%	4.8	%



			Bulk (a)
	TX		FL		GA		IL		CA		NC		PA		NY		OH		MD
As of December 31:
2016	5.3	%	8.6	%	4.9	%	4.2	%	12.4	%	2.5	%	3.7	%	7.4	%	4.2	%	2.6	%
2017	5.4		8.3		5.1		4.4		12.4		2.5		3.8		7.8		4.4		2.7
2018	5.6		8.2		5.4		4.6		12.4		2.7		4.0		7.1		4.7		2.8
As of September 30:
2018	5.6		8.2		5.3		4.6		12.2		2.7		3.9		7.2		4.7		2.8
2019	5.5	%	8.0	%	5.6	%	4.7	%	12.5	%	2.7	%	3.7	%	7.4	%	4.9	%	2.9	%



Risk in Force Distribution By Level of Documentation:	Full Documentation		Reduced Documentation
Traditional Primary:
As of December 31:
2016	92.4	%	7.6	%
2017	92.3		7.7
2018	92.2		7.8
As of September 30:
2018	92.2		7.8
2019	92.1	%	7.9	%

Bulk (a):
As of December 31:
2016	68.0	%	32.0	%
2017	69.4		30.6
2018	71.8		28.2
As of September 30:
2018	71.7		28.3
2019	71.9	%	28.1	%

__________


(a)	Bulk pool risk in-force, which represented 7.5% of total bulk risk in-force at September 30, 2019, has been allocated pro-rata based on insurance in-force.



Risk in Force Distribution By Loan Type:	Fixed Rate & ARMs with Resets >=5 Years		ARMs with Resets <5 years
Traditional Primary:
As of December 31:
2016	97.2	%	2.8	%
2017	97.2		2.8
2018	97.2		2.8
As of September 30:
2018	97.2		2.8
2019	97.1	%	2.9	%

Bulk (a):
As of December 31:
2016	71.3	%	28.7	%
2017	70.1		29.9
2018	68.6		31.4
As of September 30:
2018	69.1		30.9
2019	68.1	%	31.9	%

__________


(a)	Bulk pool risk in-force, which represented 7.5% of total bulk risk in-force at September 30, 2019, has been allocated pro-rata based on insurance in-force.

The Company's consumer credit indemnity ("CCI") earned premiums and related risk in force reflect a generally declining trend largely due to a discontinuation of active sales efforts since 2008 and from the elimination of a major bank as a source of significant premiums and claims in the third quarter of 2017. The following table shows CCI net premiums earned during the indicated periods and the maximum calculated risk in force at the end of the respective periods. Net earned premiums include additional premium adjustments arising from the variable claim experience of individual policies subject to retrospective rating plans. Risk in force reflects estimates of the maximum risk exposures at the inception of individual policies adjusted for cumulative claim costs and the lower outstanding loan balances attributed to such policies through the end of the periods shown below. Results for the CCI coverages are expected to be immaterial in the remaining run-off periods; effective July 1, 2019, these results are being classified in the General Insurance segment for the third quarter 2019 and all future periods.



	Net CCI Earned Premiums		Risk in Force
Years Ended December 31:
2016	$	15.8	$	699.7
2017	13.0		140.9
2018	1.5		70.1
Nine Months Ended September 30:
2018	1.2		121.9
2019	.5		$	56.1
Quarters Ended September 30:
2018	.2
2019	$	—

Revenues: Net Investment Income

Net investment income is affected by trends in interest and dividend yields for the types of securities in which the Company's funds are invested during each reporting period. The following tables reflect the segmented and consolidated invested asset bases as of the indicated dates, and the investment income earned and resulting yields on such assets. Since the Company can exercise little control over fair values, yields are evaluated on the basis of investment income earned in relation to the cost of the underlying invested assets, though yields based on the fair values of such assets are also shown in the statistics below.



	Invested Assets at Cost										Fair Value Adjust- ment		Invested Assets at Fair Value (a)
	General		Title		RFIG Run-off		Corporate and Other		Total		Fair Value Adjust- ment		Invested Assets at Fair Value (a)
As of December 31:
2017	$	9,702.7	$	1,106.2	$	545.9	$	1,206.9	$	12,561.9	$	756.1	$	13,318.0
2018	10,162.3		1,105.6		583.6		904.3		12,755.9		238.6		12,994.6
As of September 30:
2018	10,083.6		1,100.4		612.3		878.0		12,674.3		536.6		13,211.0
2019	$	10,493.0	$	1,137.9	$	519.5	$	770.7	$	12,921.2	$	1,054.1	$	13,975.4

__________

(a) These balances include fixed maturity securities classified as held to maturity which are reported and reflected herein at amortized cost.



	Net Investment Income										Yield at
	General		Title		RFIG Run-off		Corporate and Other		Total		Cost		Fair Value
Years Ended
December 31:
2016	$	312.1	$	36.2	$	23.2	$	15.4	$	387.0	3.34	%	3.23	%
2017	318.9		37.3		21.7		31.4		409.4		3.32		3.14
2018	341.0		38.8		20.1		31.7		431.8		3.41		3.28
Nine Months Ended
September 30:
2018	253.8		28.8		15.4		23.4		321.5		3.40		3.23
2019	265.8		30.8		13.2		27.9		337.8		3.51		3.34
Quarters Ended
September 30:
2018	86.1		9.8		4.6		8.1		108.7		3.46		3.33
2019	$	88.7	$	10.2	$	4.2	$	9.4	$	112.7	3.48	%	3.24	%

Revenues: Net Investment Gains (Losses)

The Company's investment policies are not designed to maximize or emphasize the realization of investment gains. Rather, these policies aim for a stable source of income from interest and dividends, protection of capital, and the providing of sufficient liquidity to meet insurance underwriting and other obligations as they become payable in the future. Dispositions of fixed maturity securities generally arise from scheduled maturities and early calls; for the first nine months of 2019 and 2018, 51.9% and 77.3%, respectively, of all such dispositions resulted from these occurrences.

The following table reflects the composition of net investment gains or losses for the periods shown.



	Realized Investment Gains (Losses) from Actual Transactions							Impairment Losses								Unrealized Gains (Losses) from Changes in Fair Value of Equity Securities
	Fixed Maturity Securities			Equity Securities and Miscel- laneous Investments		Total		Fixed Maturity Securities			Miscel- laneous Investments		Total						Investment Gains (Losses)
Years Ended
December 31:
2016	$	7.8		$	69.9	$	77.8	$	(4.9	)	$	—	$	(4.9	)	$	—		$	72.8
2017	16.6			194.9		211.6		—			—		—			—			211.6
2018	(4.8		)	63.1		58.2		—			—		—			(293.8		)	(235.6		)
Nine Months Ended
September 30:
2018	(1.0		)	55.9		54.8		—			—		—			17.7			72.6
2019	(6.5		)	37.8		31.3		(2.0		)	—		(2.0		)	439.3			468.7
Quarters Ended
September 30:
2018	(1.2		)	8.5		7.3		—			—		—			128.4			135.7
2019	$	(5.1	)	$	11.4	$	6.3	$	—		$	—	$	—		$	57.3		$	63.6

Expenses: Benefits and Claims

The Company records the benefits, claims and related settlement costs that have been incurred during each accounting period. Total claim costs are affected by the amount of paid claims and the adequacy of reserve estimates established for current and prior years' claim occurrences at each balance sheet date.

The following table shows a breakdown of gross and net of reinsurance claim reserve estimates for major types of insurance coverages as of September 30, 2019 and December 31, 2018:



			Claim and Loss Adjustment Expense Reserves
			September 30, 2019						December 31, 2018
			Gross			Net			Gross			Net

Workers' compensation			$	4,925.1		$	3,100.0		$	4,864.4		$	3,090.0
General liability			1,205.0			579.5			1,117.7			556.1
Commercial automobile (mostly trucking)			1,865.4			1,354.1			1,675.2			1,264.9
Other coverages			899.4			658.6			870.6			624.5
Unallocated loss adjustment expense reserves			250.0			247.7			237.5			230.4
		Total general insurance reserves	9,145.1			5,940.1			8,765.6			5,766.1
Title			534.6			534.6			533.4			533.4
RFIG Run-off			124.6			124.6			154.5			154.5
Life and accident			13.0			8.3			17.7			10.8
		Total claim and loss adjustment expense reserves	$	9,817.4		$	6,607.8		$	9,471.2		$	6,464.9
Asbestosis and environmental claim reserves included
	in the above general insurance reserves:
		Amount	$	106.8		$	74.5		$	105.8		$	74.4
		% of total general insurance reserves	1.2		%	1.3		%	1.2		%	1.3		%

The Company's reserve for loss and loss adjustment expenses represents the accumulation of estimates of ultimate losses payable, including incurred but not recorded losses and loss adjustment 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 as further discussed below. Consequently, 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 and the resulting changes in estimates are recorded in operations of the periods during which they are made. Increases to prior reserve estimates are often referred to as unfavorable development whereas any changes that decrease previous estimates of the Company's ultimate liability are referred to as favorable development.

Overview of Loss Reserving Process

The Company's reserve setting process reflects the nature of its insurance business and the operationally decentralized basis upon which it is conducted. Old Republic's general insurance operations encompasses a large variety of coverages or classes of commercial insurance; it has negligible exposure to personal insurance coverages such as homeowners or private passenger automobile insurance that exhibit wide diversification of risks, significant frequency of claim occurrences, and high degrees of statistical credibility. Additionally, the Company's insurance subsidiaries do not provide significant amounts of insurance protection for premises; most of its property insurance exposures relate to cargo, incidental property, and insureds' inland marine assets. Consequently, the wide variety of policies issued and commercial insurance customers served require that loss reserves be analyzed and established in the context of the unique or different attributes of each block or class of business produced by the Company. For example, accident liability claims emanating from insured trucking companies or from general aviation customers become known relatively quickly, whereas claims of a general liability nature arising from the building activities of a construction company may emerge over extended periods of time. Similarly, claims filed pursuant to errors and omissions or directors and officers liability coverages are usually not prone to immediate evaluation or quantification inasmuch as many such claims may be litigated over several years and their ultimate costs may be affected by the vagaries of judged or jury verdicts. Approximately 91% of the general insurance group's claim reserves stem from liability insurance coverages for commercial customers which typically require more extended periods of investigation and at times protracted litigation before they are finally settled. As a consequence of these and other factors, Old Republic does not utilize a single, overarching loss reserving approach.

The Company prepares periodic analyses of its loss reserve estimates for its significant insurance coverages. It establishes point estimates for most losses on an insurance coverage line-by-line basis for individual subsidiaries, sub-classes, individual accounts, blocks of business or other unique concentrations of insurance risks such as directors and officers liability, that have similar attributes. Actuarially or otherwise derived ranges of reserve levels are not utilized as such in setting these reserves. Instead the reported reserves encompass the Company's best point estimates at each reporting date and the overall reserve level at any point in time therefore represents the compilation of a very large number of reported reserve estimates and the results of a variety of formula calculations largely driven by analysis of historical data. Favorable or unfavorable developments of prior year reserves are implicitly covered by the point estimates incorporated in total reserves at each balance sheet date. The Company does not project future variability or make an explicit provision for uncertainty when determining its best estimate of loss reserves. Over the most recent decade actual incurred losses have developed within a reasonable range of their original estimates.

Aggregate loss reserves consist of liability estimates for claims that have been reported ("case") to the Company's insurance subsidiaries and reserves for claims that have been incurred but not yet reported ("IBNR") or whose ultimate costs may not become fully apparent until a future time. Additionally, the Company establishes unallocated loss adjustment expense 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 case and IBNR claims over time. Long-term, disability-type workers' compensation reserves are discounted to present value based on interest rates that range from 3.5% to 4.0%.

A large variety of statistical analyses and formula calculations are utilized to provide for IBNR claim costs as well as additional costs that can arise from such factors as monetary and social inflation, changes in claims administration processes, changes in reinsurance ceded and recoverability levels, and expected trends in claim costs and related ratios. Typically, such formulas take into account so-called link ratios that represent prior years' patterns of incurred or paid loss trends between succeeding years, or past experience relative to progressions of the number of claims reported over time and ultimate average costs per claim.

Overall, reserves pertaining to several hundred large individual commercial insurance accounts that exhibit sufficient statistical credibility, and at times may be subject to retrospective premium rating plans or the utilization of varying levels or types of self-insured retentions through captive insurers and similar risk management mechanisms are established on an account by account basis using case reserves and applicable formula-driven methods. Large account reserves are usually set and analyzed for groups of coverages such as workers' compensation, commercial automobile (trucking) and general liability that are typically underwritten jointly for many customers. For certain so-called long-tail categories of insurance such as retained or assumed excess liability or excess workers' compensation, officers and directors' liability, and commercial umbrella liability relative to which claim development patterns are particularly long, more volatile, and immature in their early stages of development, the Company judgmentally establishes the most current accident years' loss reserves on the basis of expected claim ratios. Such expected claim ratios typically reflect currently estimated claim ratios from prior accident years, adjusted for the effect of actual and anticipated rate changes, actual and anticipated changes in coverage, reinsurance, mix of business, and other anticipated changes in external factors such as trends in loss costs or the legal and claims environment. Expected claim ratios are generally used for the two to three most recent accident years depending on the individual class or category of business. As actual claims data emerges in succeeding interim and annual periods, the original accident year claim ratio assumptions are validated or otherwise adjusted sequentially through the application of statistical projection techniques such as the Bornhuetter/Ferguson method which utilizes data from the more mature experience of prior years to arrive at a likely indication of more recent years' loss trends and costs.

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 costs of claims.

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

The Company has the legal right to rescind mortgage insurance coverage unilaterally as expressly stated in its policy. Moreover, two federal courts that have 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 mortgage insurance policy provides that the insured represents that all statements made and information provided to it in an application for coverage for a loan, without regard to who made the statements or provided the information, have been made and presented for and on behalf of the insured; and that such statements and information are neither false nor misleading in any material respect, nor omit any fact necessary to make such statements and information not false or misleading in any material respect. According to the policy, if any of those representations are materially false or misleading with respect to a loan, the Company has the right to cancel or rescind coverage for that loan retroactively to commencement of the coverage. Whenever the Company determines that an application contains a material misrepresentation, it either advises the insured in writing of its findings prior to rescinding coverage or exercises its unilateral right to rescind coverage for that loan, stating the reasons for that action in writing and returning the applicable premium. The rescission of coverage in instances of materially faulty representations or warranties provided in applications for insurance is a necessary and prevailing practice throughout the insurance industry. In the case of mortgage guaranty insurance, rescissions have occurred regularly over the years but have been generally immaterial. Since 2008, however, the Company has experienced a much greater incidence of rescissions due to increased levels of observed fraud and misrepresentations in insurance applications pertaining to business underwritten between 2004 and the first half of 2008 in particular. 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.



	September 30,			September 30,			December 31,			December 31,
	2019			2018			2018			2017
Estimated reduction in beginning reserve	$	3.2		$	19.0		$	19.0		$	29.6
Total incurred claims and settlement expenses
reduced (increased) by changes in
estimated rescissions:
Current year	.3			.7			.9			6.2
Prior year	(1.2		)	(12.6		)	(12.3		)	(3.7		)
Sub-total	(.9		)	(11.9		)	(11.4		)	2.5
Estimated rescission reduction in paid claims	(.7		)	(3.5		)	(4.4		)	(13.1		)
Estimated reduction in ending reserve	$	1.6		$	3.6		$	3.2		$	19.0

As noted above, 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.

Incurred Loss Experience

Management believes that the Company's overall reserving practices have been consistently applied over many years. For at least the past ten years, previously established aggregate reserves have produced reasonable estimates of the cumulative ultimate net costs of claims incurred. However, there are no guarantees that such outcomes will continue, and, accordingly, no representation is made that ultimate net claim and related costs will not develop in future years to be greater or lower than currently established reserve estimates. In management's opinion, however, such potential development is not likely to have a material effect on the Company's consolidated financial position, although it could affect materially its consolidated results of operations for any one annual or interim reporting period. See further discussion in the Company's 2018 Annual Report on Form 10-K under Item 1A - Risk Factors.

A summary of changes in aggregate reserves for claims and related costs is included in Note 4 of the Consolidated Financial Statements.

The percentage of net claims, benefits and related settlement expenses incurred as a percentage of premiums and related fee revenues of the Company's three major operating segments and for consolidated operations were as follows:



	General		Title		RFIG Run-off		Consolidated
Years Ended December 31:
2016	73.0	%	3.8	%	60.4	%	44.0	%
2017	71.8		.9		160.9		44.7
2018	72.2		2.1		39.4		43.1
Nine Months Ended September 30:
2018	71.2		2.6		40.2		42.8
2019	71.4		3.0		51.2		43.5
Quarters Ended September 30:
2018	70.7		2.4		31.2		41.2
2019	72.9	%	3.1	%	53.6	%	42.5	%

The percentage of net claims, benefits and related settlement expenses measured against premiums earned by major types of general insurance coverage were as follows:



	General Insurance Claim Ratios by Type of Coverage
	All Coverages		Commercial Automobile (mostly trucking)		Workers' Compen-sation		Financial Indemnity		Inland Marine and Property		General Liability		Other
Years Ended
December 31:
2016	73.0	%	79.4	%	76.1	%	45.5	%	60.9	%	77.5	%	62.2	%
2017	71.8		76.8		75.5		62.1		59.3		73.1		59.0
2018	72.2		79.3		70.7		73.8		62.8		68.9		60.1
Nine Months Ended
September 30:
2018	71.2		77.9		71.8		65.7		58.5		67.8		59.4
2019	71.4		81.5		65.2		63.4		63.5		72.1		62.8
Quarters Ended
September 30:
2018	70.7		79.0		69.4		57.8		57.5		61.4		61.3
2019	72.9	%	85.6	%	55.4	%	73.1	%	61.6	%	77.7	%	71.7	%

The general insurance ratio of claim costs to net premiums earned remained relatively stable for the first nine months of 2019. As such, it continues to reflect the past several years' fairly consistent downtrends and the effects of claim development. The group experienced (favorable) unfavorable development of prior years' reserves of (0.5) and (0.4) percentage points for the third quarter and first nine months of 2019, respectively, compared to (1.0) and 0.3 percentage points for the same respective periods of 2018.

Unfavorable asbestos and environmental ("A&E") claim developments, although not material in any of the periods presented, are typically attributable to A&E claim reserves due to periodic re-evaluations of such reserves as well as subsequent reclassifications of other coverages' reserves, most often workers' compensation, deemed assignable to A&E category of losses. Except for a small portion that emanates from ongoing primary insurance operations, a large majority of the A&E claim reserves posted by Old Republic stem mainly from its participations in assumed reinsurance treaties and insurance pools which were discontinued during the 1980's and have since been in run-off status. With respect to the primary portion of gross A&E reserves, Old Republic administers the related claims through its claims personnel as well as outside attorneys, and posted reserves reflect its best estimates of ultimate claim costs. Claims administration for the assumed portion of the Company's A&E exposures is handled by the claims departments of unrelated primary or ceding reinsurance companies. While the Company performs periodic reviews of certain claim files managed by third parties, the overall A&E reserves it establishes respond to the paid claim and case reserve activity reported to the Company as well as available industry statistical data such as so-called survival ratios. Such ratios represent the number of years' average paid losses for the three or five most recent calendar years that are encompassed by an insurer's A&E reserve level at any point in time. According to this simplistic appraisal of an insurer's A&E loss reserve level, Old Republic's average five year survival ratios stood at 5.3 years (gross) and 5.9 years (net of reinsurance) as of September 30, 2019 and 4.3 years (gross) and 5.0 years (net of reinsurance) as of December 31, 2018. Fluctuations in this ratio between years can be caused by the inconsistent pay out patterns associated with these types of claims.

Incurred net losses for A&E claims have averaged .2% of general insurance group net incurred losses for the five years ended December 31, 2018.

Title insurance claim ratios have remained in the single digits for a number of years due to a continuation of favorable trends in claims frequency and severity. Claim costs trended slightly higher as favorable development of prior years' claim reserve estimates edged down. This favorable development of reserves established in prior years reduced the claim ratio by 1.0 percentage points in both the third quarter and first nine months of 2019 and 1.8 and 1.5 percentage points for the same respective periods of 2018.

The reported RFIG Run-off mortgage guaranty incurred claim ratios reflect favorable development of 14.2 and 9.6 percentage points in this year's third quarter and first nine months, respectively. This compares to 10.4 and 25.7 percentage points of favorable development for the respective 2018 periods.

Certain mortgage guaranty average claims related trends are listed below:



	Average Settled Claim Amount (a)				Reported Delinquency Ratio at End of Period				Claims Rescissions and Denials
	Traditional Primary		Bulk		Traditional Primary		Bulk		Claims Rescissions and Denials
Years Ended December 31:
2016	$	45,478	$	48,158	10.53	%	25.78	%	$	1.4
2017	47,267		51,446		10.52		23.31		13.1
2018	47,055		54,809		9.38		16.94		4.4
Nine Months Ended September 30:
2018	47,308		55,949		9.27		17.45		3.5
2019	49,633		57,512		9.03	%	15.40	%	.7
Quarters Ended September 30:
2018	45,624		54,448						.8
2019	$	51,939	$	57,195					$	.2

__________


(a)	Amounts are in whole dollars.



			Traditional Primary Delinquency Ratios for Top Ten States (b):
	TX		FL		GA		IL		CA		NC		PA		MD		NJ		VA
As of December 31:
2016	9.1	%	11.8	%	8.7	%	10.7	%	6.1	%	8.3	%	12.7	%	12.8	%	23.5	%	8.6	%
2017	11.4		15.6		8.3		10.1		6.0		8.1		12.0		11.5		19.6		8.4
2018	10.0		9.8		7.7		8.7		5.8		9.5		11.4		10.5		14.3		7.9
As of September 30:
2018	9.4		10.2		7.3		8.7		5.5		8.9		10.8		10.9		14.6		7.6
2019	10.1	%	7.9	%	8.1	%	8.1	%	5.9	%	9.5	%	11.1	%	10.4	%	11.0	%	7.2	%



			Bulk Delinquency Ratios for Top Ten States (b):
	TX		FL		GA		IL		CA		NC		PA		MD		OH		NY
As of December 31:
2016	20.3	%	33.7	%	19.6	%	23.6	%	29.1	%	22.9	%	28.1	%	35.8	%	14.1	%	53.3	%
2017	20.3		34.2		17.8		21.5		26.4		19.7		25.3		24.8		15.0		44.2
2018	14.5		23.5		14.5		19.1		13.0		17.3		21.0		16.0		12.4		32.3
As of September 30:
2018	13.6		24.7		14.5		20.6		13.4		19.1		21.6		16.1		13.7		33.8
2019	11.1	%	19.8	%	12.9	%	15.4	%	9.4	%	17.0	%	19.1	%	13.6	%	14.6	%	30.5	%



	Total Delinquency Ratios for Top Ten States (includes "other" business) (b):
	TX		FL		GA		IL		CA		NC		PA		MD		NJ		NY
As of December 31:
2016	9.8	%	13.4	%	9.1	%	11.3	%	9.3	%	8.5	%	13.5	%	13.5	%	25.6	%	27.7	%
2017	12.1		16.9		8.8		10.6		9.2		8.4		12.8		12.0		21.1		25.0
2018	10.4		10.6		8.1		9.2		6.8		9.7		12.0		10.7		15.3		21.3
As of September 30:
2018	9.7		11.2		7.7		9.2		6.6		9.2		11.5		11.1		15.7		22.1
2019	10.2	%	8.7	%	8.4	%	8.4	%	6.4	%	9.6	%	11.7	%	10.5	%	11.9	%	19.3	%

__________


(b)	As determined by risk in force as of September 30, 2019, these 10 states represent approximately 53.5%, 57.9%, and 53.4%, of traditional primary, bulk, and total risk in force, respectively.

The following table shows CCI claims related trends for the periods shown:



											Reported Delinquency Ratio at End of Period		Claim Rescissions and Denials
	CCI Claim Costs (a)
	Paid					Incurred
	Amount			Ratio (b)		Amount			Ratio (b)
Years Ended
December 31:
2016	$	11.7		74.0	%	$	50.0		315.9	%	2.0	%	$	10.1
2017	304.2			N/M		134.5			N/M		2.6		5.7
2018	31.6			N/M		(2.2		)	N/M		1.7		.4
Nine Months Ended
September 30:
2018	(.2		)	(22.9	)	.5			42.1		2.4		.3
2019	(1.3		)	(239.6	)	(.7		)	(134.7	)	1.9	%	—
Quarters Ended
September 30:
2018	.1			37.6		.1			36.3				—
2019	$	(.4	)	(228.7	)%	$	(.1	)	(70.3	)%			$	—

__________


(a)	Results for the CCI coverages are expected to be immaterial in the remaining run-off periods; effective July 1, 2019, these results are being classified in the General Insurance segment for the third quarter 2019 and all future periods.


(b)	Percent of net CCI earned premiums. CCI claims ratios include only those costs actually or expected to be paid by the Company and exclude claims not paid by virtue of coverage rescissions and claims denials as well as unsubstantiated claim submissions.

Reinsurance Programs

To maintain premium production within its capacity and limit maximum losses and risks for which it might become liable under its policies, Old Republic may cede a portion or all of its premiums and liabilities on certain classes of insurance, individual policies, or blocks of business to other insurers and reinsurers. Further discussion of the Company's reinsurance programs can be found in Part 1 of the Company's 2018 Annual Report on Form 10-K.

Expenses: Underwriting Acquisition and Other Expenses

The following table sets forth the expense ratios registered by each major business segment and in consolidation for the periods shown:



	General		Title		RFIG Run-off		Consolidated
Years Ended December 31:
2016	24.8	%	87.9	%	12.2	%	50.6	%
2017	25.5		90.0		16.6		52.0
2018	25.0		90.0		21.5		51.6
Nine Months Ended September 30:
2018	25.6		89.8		21.6		51.9
2019	25.7		89.9		25.5		51.7
Quarters Ended September 30:
2018	24.9		88.5		20.8		51.9
2019	24.8	%	87.5	%	25.1	%	51.9	%

Variations in the Company's consolidated expense ratios reflect a continually changing mix of coverages sold and attendant costs of producing business in the Company's three largest business segments. To a significant degree, expense ratios for both the general and title insurance segments are mostly reflective of variable costs, such as commissions or similar charges, that rise or decline along with corresponding changes in premium and fee income. Moreover, general operating expenses can contract or expand in differing proportions due to varying levels of operating efficiencies and expense management opportunities in the face of changing market conditions.

Expenses: Total

The composite ratios of the above summarized net claims, benefits and underwriting expenses that reflect the sum total of all the factors enumerated above have been as follows:



	General		Title		RFIG Run-off		Consolidated
Years Ended December 31:
2016	97.8	%	91.7	%	72.6	%	94.6	%
2017	97.3		90.9		177.5		96.7
2018	97.2		92.1		60.9		94.7
Nine Months Ended September 30:
2018	96.8		92.4		61.8		94.7
2019	97.1		92.9		76.7		95.2
Quarters Ended September 30:
2018	95.6		90.9		52.0		93.1
2019	97.7	%	90.6	%	78.7	%	94.4	%

Expenses: Income Taxes

The effective consolidated income tax rates were 19.6% and 20.0% in the third quarter and first nine months of 2019, compared to 17.9% and 17.1% in the third quarter and first nine months of 2018. The rates for each period reflect primarily the varying proportions of pretax operating income (loss) derived from partially tax sheltered investment income (principally tax-exempt interest and dividend income), the combination of fully taxable investment income, investment gains or losses, underwriting and service income and adjustments regarding the recoverability of deferred tax assets.

End of Management Analysis of Financial Position and Results of Operations

OTHER INFORMATION

Reference is here made to "Information About Segments of Business" appearing elsewhere herein.

Historical data pertaining to the operating results, liquidity, and other performance indicators applicable to an insurance enterprise such as Old Republic are not necessarily indicative of results to be achieved in succeeding years. In addition to the factors cited below, the long-term nature of the insurance business, seasonal and annual patterns in premium production and incidence of claims, changes in yields obtained on invested assets, changes in government policies and free markets affecting inflation rates and general economic conditions, and changes in legal precedents or the application of law affecting the settlement of disputed and other claims can have a bearing on period-to-period comparisons and future operating results.

Some of the oral or written statements made in the Company's reports, press releases, and conference calls following earnings releases, can constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Of necessity, any such forward-looking statements involve assumptions, uncertainties, and risks that may affect the Company's future performance. With regard to Old Republic's General Insurance segment, its results can be particularly affected by the level of market competition, which is typically a function of available capital and expected returns on such capital among competitors, the levels of investment yields and inflation rates, and periodic changes in claim frequency and severity patterns caused by natural disasters, weather conditions, accidents, illnesses, work-related injuries, and unanticipated external events. Title Insurance and RFIG Run-off results can be affected by similar factors, and by changes in national and regional housing demand and values, the availability and cost of mortgage loans, employment trends, and default rates on mortgage loans. Life and accident insurance earnings are exposed to the variability of employment and consumer spending, changes in mortality and health trends, and alterations in policy lapsation rates. At the parent holding company level, operating earnings or losses are generally reflective of the amount of debt outstanding and its cost, interest income on temporary holdings of short-term investments, and period-to-period variations in the costs of administering the Company's widespread operations.

The General Insurance, Title Insurance, Corporate and Other Segments, and the RFIG Run-off business maintain customer information and rely upon technology platforms to conduct their business. As a result, each of them and the Company are exposed to cyber risk. Many of the Company's operating subsidiaries, maintain separate IT systems which are deemed to reduce enterprise-wide risks of potential cybersecurity incidents. However, given the potential magnitude of a significant breach, the Company continually evaluates on an enterprise-wide basis its IT hardware, security infrastructure and business practices to respond to these risks and to detect and remediate in a timely manner significant cybersecurity incidents or business process interruptions.

A more detailed listing and discussion of the risks and other factors which affect the Company's risk-taking insurance business are included in Part I, Item 1A - Risk Factors, of the Company's 2018 Annual Report with the Securities and Exchange Commission, which Item is specifically incorporated herein by reference.

Any forward-looking statements or commentaries speak only as of their dates. Old Republic undertakes no obligation to publicly update or revise any and all such comments, whether as a result of new information, future events or otherwise, and accordingly they may not be unduly relied upon.

OLD REPUBLIC INTERNATIONAL CORPORATION

Item 3 - Quantitative and Qualitative Disclosure About Market Risk

Market risk represents the potential for loss due to adverse changes in the fair value of financial instruments as a result of changes in interest rates, equity prices, foreign exchange rates and commodity prices. Old Republic's primary market risks consist of interest rate risk associated with investments in fixed maturities and equity price risk associated with investments in equity securities. The Company has no material foreign exchange or commodity risk.

Old Republic's market risk exposures at September 30, 2019, have not materially changed from those identified in the Company's 2018 Annual Report on Form 10-K.

Item 4 - Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company's principal executive officer and its principal accounting officer have evaluated the Company's disclosure controls and procedures as of the end of the period covered by this quarterly report. Based upon their evaluation, the principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective for the above referenced evaluation period.

Changes in Internal Control

During the three month period ended September 30, 2019, there were no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Management's Report on Internal Control Over Financial Reporting

The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

OLD REPUBLIC INTERNATIONAL CORPORATION

FORM 10-Q

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

The information contained in Note 7 "Commitments and Contingent Liabilities" of the Notes to Consolidated Financial Statements filed as Part 1 of this Quarterly Report on Form 10-Q is incorporated herein by reference.

Item 1A - Risk Factors

There have been no material changes with respect to the risk factors disclosed in the Company's 2018 Annual report on Form 10-K.

Item 6 - Exhibits

(a) Exhibits





31.1			Certification by Craig R. Smiddy, Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as
			adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification by Karl W. Mueller, Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as
			adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1			Certification by Craig R. Smiddy, Chief Executive Officer, pursuant to Section 1350, Chapter 63 of Title
			18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2			Certification by Karl W. Mueller, Chief Financial Officer, pursuant to Section 1350, Chapter 63 of Title 18,
			United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS			XBRL Instance Document - The Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH			XBRL Taxonomy Extension Schema

101.CAL			XBRL Taxonomy Extension Calculation Linkbase

101.DEF			XBRL Taxonomy Extension Definition Linkbase

101.LAB			XBRL Taxonomy Extension Label Linkbase

101.PRE			XBRL Taxonomy Extension Presentation Linkbase

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		Old Republic International Corporation
		(Registrant)
Date:	November 1, 2019

		/s/ Karl W. Mueller

		Karl W. Mueller Senior Vice President, Chief Financial Officer, and Principal Accounting Officer

EXHIBIT INDEX



Exhibit
No.		Description

31.1		Certification by Craig R. Smiddy, Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as
		adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification by Karl W. Mueller, Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a), as
		adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification by Craig R. Smiddy, Chief Executive Officer, pursuant to Section 1350, Chapter 63 of Title
		18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification by Karl W. Mueller, Chief Financial Officer, pursuant to Section 1350, Chapter 63 of Title
		18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document - The Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase