SECURITIES AND EXCHANGE COMMISSION OF THE SECURITIES EXCHANGE ACT OF 1934 FORM 10 - Q [X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2000 or [ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 0-4625 OLD REPUBLIC INTERNATIONAL CORPORATION ---------------------------------------- (Exact name of registrant as specified in its charter) Delaware No. 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 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 _X_ No ____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Shares Outstanding Class March 31, 2000 --------------------------- ---------------------- Common Stock / $1 par value 118,534,183 There are 14 pages contained in this report. 2 OLD REPUBLIC INTERNATIONAL CORPORATION Report on Form 10-Q / March 31, 2000 INDEX - -------------------------------------------------------------------------------- PAGE NO. ---------- PART I FINANCIAL INFORMATION: CONSOLIDATED SUMMARY BALANCE SHEETS 3 CONSOLIDATED SUMMARY STATEMENTS OF INCOME 4 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 5 CONSOLIDATED STATEMENTS OF CASH FLOWS 6 NOTES TO CONSOLIDATED SUMMARY FINANCIAL STATEMENTS 7 - 9 MANAGEMENT ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS 10 - 12 PART II OTHER INFORMATION 13 & 14 3 OLD REPUBLIC INTERNATIONAL CORPORATION CONSOLIDATED SUMMARY BALANCE SHEETS (Unaudited) ($ in Millions) - ----------------------------------------------------------------------------------------------------------------------------------- March 31, December 31, 2000 1999 ---------------- ---------------- Assets Investments: Held to maturity: Fixed maturity securities (at amortized cost) (fair value: $2,170.8 and $2,229.7) $2,192.6 $2,248.8 Other long-term investments (at cost) 52.9 41.7 ---------------- ---------------- Total 2,245.5 2,290.5 ---------------- ---------------- Available for sale: Fixed maturity securities (at fair value) (cost: $2,118.5 and $2,045.5) 2,085.1 2,012.3 Equity securities (at fair value) (cost: $177.1 and $141.9) 187.0 160.1 Short-term investments (at fair value which approximates cost) 244.3 276.5 ---------------- ---------------- Total 2,516.4 2,449.0 ---------------- ---------------- Total investments 4,762.0 4,739.6 ---------------- ---------------- Other Assets: Cash 26.7 17.5 Accrued investment income 69.3 71.3 Accounts and notes receivable 263.9 281.0 Federal income tax recoverable: Current -- 1.4 Reinsurance balances and funds held 66.6 74.8 Reinsurance recoverable: Paid losses 30.7 24.6 Policy and claim reserves 1,336.9 1,350.2 Deferred policy acquisition costs 146.8 151.1 Sundry assets 230.2 226.4 ---------------- ---------------- 2,171.4 2,198.8 ---------------- ---------------- Total Assets $6,933.5 $6,938.4 ================ ================ - ----------------------------------------------------------------------------------------------------------------------------------- Liabilities, Preferred Stock and Common Shareholders' Equity Liabilities: Future policy benefits $120.3 $127.2 Losses, claims and settlement expenses 3,400.2 3,433.7 Unearned premiums 361.0 364.7 Other policyholders' benefits and funds 50.1 52.0 ---------------- ---------------- Total policy liabilities and accruals 3,931.8 3,977.8 Commissions, expenses, fees and taxes 132.7 147.3 Reinsurance balances and funds 122.1 120.0 Federal income tax payable: Current 2.2 -- Deferred 217.8 203.0 Debt 254.5 208.3 Sundry liabilities 81.4 82.6 ---------------- ---------------- Total liabilities 4,742.8 4,739.2 ---------------- ---------------- Preferred Stock: Convertible preferred stock 0.7 0.7 ---------------- ---------------- Common Common stock 120.4 156.6 Shareholders' Additional paid-in capital 191.9 627.8 Equity: Unallocated shares - ESSOP (2.5) (2.5) Retained earnings 1,913.7 1,873.9 Accumulated other comprehensive loss (23.6) (17.6) Treasury stock (at cost) (10.0) (439.8) ---------------- ---------------- Total Common Shareholders' Equity 2,189.9 2,198.4 ---------------- ---------------- Total Liabilities, Preferred Stock and Common Shareholders' Equity $6,933.5 $6,938.4 ================ ================ See accompanying notes. 4 OLD REPUBLIC INTERNATIONAL CORPORATION CONSOLIDATED SUMMARY STATEMENTS OF INCOME (Unaudited) ($ in Millions, Except Common Share Data) - ----------------------------------------------------------------------------------------------------------------------------------- Quarters Ended March 31, ---------------------------------- 2000 1999 ---------------- ---------------- Revenues: Net premiums earned $380.2 $396.1 Title, escrow and other fees 39.0 57.3 Net investment income 67.8 65.4 Realized investment gains 0.9 14.7 Other income 5.1 7.6 ---------------- ---------------- Net revenues 493.2 541.2 ---------------- ---------------- Expenses: Benefits, claims and settlement expenses 198.5 200.9 Underwriting, acquisition and insurance expenses 211.9 231.5 Interest and other expenses 5.0 3.3 ---------------- ---------------- Total expenses 415.4 435.8 ---------------- ---------------- Income before income taxes and items below 77.7 105.4 ---------------- ---------------- Income Taxes: Currently payable 5.6 14.0 Deferred 17.4 18.5 ---------------- ---------------- Total income taxes 23.0 32.6 ---------------- ---------------- 54.6 72.7 Other items - net 0.6 1.0 ---------------- ---------------- Net Income: $55.3 $73.8 ================ ================ Net Income Per Share: Basic $0.46 $0.56 ================ ================ Diluted $0.46 $0.55 ================ ================ Dividends Per Common Share: Cash dividends $0.130 $0.100 ================ ================ Stock dividends --% --% ================ ================ Average number of common and common equivalent shares outstanding: Basic 120,878,838 132,581,583 ================ ================ Diluted 121,196,969 133,786,003 ================ ================ See accompanying notes. 5 OLD REPUBLIC INTERNATIONAL CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) ($ in Millions) - ----------------------------------------------------------------------------------------------------------------------------------- Quarters Ended March 31, ---------------------------------- 2000 1999 ---------------- ---------------- Net income as reported $55.3 $73.8 ---------------- ---------------- Other comprehensive income (loss): Foreign currency translation adjustment (0.3) 0.3 ---------------- ---------------- Unrealized losses on securities: Unrealized losses arising during period (7.6) (35.0) Less: elimination of pre-tax realized gains included in income as reported 0.9 14.7 ---------------- ---------------- Pre-tax unrealized losses on securities carried at market value (8.5) (49.7) Deferred income tax credits (2.9) (17.4) ---------------- ---------------- Net unrealized losses on securities (5.5) (32.3) ---------------- ---------------- Net adjustments (5.9) (31.9) ---------------- ---------------- Comprehensive income $49.4 $41.8 ================ ================ See accompanying notes. 6 OLD REPUBLIC INTERNATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) ($ in Millions) - ----------------------------------------------------------------------------------------------------------------------------------- Quarters Ended March 31, ---------------------------------- 2000 1999 ---------------- ---------------- Cash flows from operating activities: Net income $55.3 $73.8 Adjustment to reconcile net income to net cash provided by operating activities: Deferred policy acquisition costs 4.5 (1.9) Premiums and other receivables 14.3 (9.7) Unpaid claims and related items (23.0) (14.9) Future policy benefits and policyholders' funds (8.6) (10.1) Income taxes 21.6 19.8 Reinsurance balances and funds 4.0 14.9 Accounts payable, accrued expenses and other (7.4) (15.4) ---------------- ---------------- Total 60.7 56.2 ---------------- ---------------- Cash flows from investing activities: Sales of fixed maturity securities: Held to maturity: Maturities and early calls 58.1 31.4 Available for sale: Maturities and early calls 25.9 24.5 Other 30.8 36.9 Sales of equity securities 5.9 11.2 Sales of other investments 0.9 0.2 Sales of fixed assets for company use 0.1 0.2 Purchases of fixed maturity securities: Held to maturity (2.2) (49.0) Available for sale (130.2) (121.4) Purchases of equity securities (41.1) (12.0) Purchases of other investments (12.1) (8.6) Purchases of fixed assets for company use (2.9) (4.1) Proceeds from sale of subsidiary --- 25.3 Cash and short-term investments of subsidiary sold --- (31.4) Other-net (5.5) (8.9) ---------------- ---------------- Total (72.4) (105.6) ---------------- ---------------- Cash flows from financing activities: Increase in term loans 47.0 10.0 Issuance of preferred and common stocks 1.4 1.1 Repayments of term loans --- (10.0) Redemption of debentures and notes (0.5) (0.6) Dividends on common shares (15.5) (13.1) Dividends on preferred shares --- --- Purchase of treasury stock (43.8) (33.8) Other-net --- 1.4 ---------------- ---------------- Total (11.4) (45.1) ---------------- ---------------- Increase (decrease) in cash and short-term investments (23.0) (94.5) Cash and short-term investments, beginning of period 294.1 400.5 ---------------- ---------------- Cash and short-term investments, end of period $271.1 $306.0 ================ ================ Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $1.7 $0.3 ================ =============== Income taxes $1.9 $11.9 ================ =============== See accompanying notes. 7 OLD REPUBLIC INTERNATIONAL CORPORATION NOTES TO CONSOLIDATED SUMMARY FINANCIAL STATEMENTS (Unaudited) ($ in Millions, Except Share Data) - -------------------------------------------------------------------------------- 1. Accounting Policies and Basis of Presentation: The accompanying consolidated summary financial statements have been prepared in conformity with generally accepted accounting principles as described in the Corporation's latest annual report to shareholders or as disclosed herein. The financial accounting and reporting process relies on estimates and on the exercise of judgement, but in the opinion of management all adjustments, consisting of normal recurring accruals, necessary to a fair presentation of the accompanying statements have been reflected therein. Realized gains or losses on dispositions of investment securities have been reflected in the operating results for each period presented. 2. Common Share Data: Common share data has been retroactively adjusted to reflect all stock dividends and splits. The following table provides a reconciliation of the income before extraordinary items and number of shares used in basic and diluted earnings per share calculations. Quarters Ended March 31, -------------------------- 2000 1999 ----------- ----------- Numerator: Income before extraordinary item............ $ 55.3 $ 73.8 Less Preferred stock dividends.............. -- -- ----------- ----------- Numerator for basic earnings per share - income available to common stockholders.... 55.3 73.7 Effect of dilutive securities: Convertible preferred stock dividends....... -- -- ----------- ----------- Numerator for diluted earnings per share - income available to common stockholders after assumed conversions................... $ 55.3 $ 73.8 =========== =========== Denominator: Denominator for basic earnings per share - weighted-average shares.................... 120,878,838 132,581,583 Effect of dilutive securities: Stock options............................... 181,595 1,000,773 Convertible preferred stock................. 136,536 203,647 ----------- ----------- Dilutive potential common shares............ 318,131 1,204,420 ----------- ----------- Denominator for diluted earnings per share - adjusted weighted-average shares and assumed conversions......................... 121,196,969 133,786,003 =========== =========== Basic earnings per share..................... $ .46 $ .56 =========== =========== Diluted earnings per share................... $ .46 $ .55 =========== =========== 3. Unrealized Appreciation of Investments: Cumulative net unrealized losses on fixed maturity securities available for sale and equity securities debited to a separate account in common shareholders' equity amounted to $15.2 at March 31, 2000. Unrealized depreciation of investments, before applicable deferred income tax credits of $8.0, at March 31, 2000 included gross unrealized gains and (losses) of $45.8 and $(69.1), respectively. For the quarters ended March 31, 2000 and 1999, net unrealized depreciation of investments, net of deferred income tax credits, amounted to $5.5 and $32.3, respectively. 8 4. Information About Segments of Business The Corporation's business segments are organized as the General Insurance (property and liability insurance), Mortgage Guaranty, Title Insurance and Life Insurance Groups. The contributions of Old Republic's insurance industry segments to consolidated revenues and operating results, and certain balance sheet data pertaining thereto are shown in the following tables on the basis of generally accepted accounting principles ("GAAP"). Each of the Corporation'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 Reporting - -------------------------------------------------------------------------------- Quarters Ended March 31, -------------------------- 2000 1999 ----------- ----------- General Insurance Group: Net premiums earned........................... $ 210.7 $ 214.0 Net investment income and other income(a)..... 49.0 50.1 ----------- ----------- Total...................................... $ 259.8 $ 264.1 =========== =========== Income before taxes........................... $ 21.8 $ 35.3 =========== =========== Income tax expense............................ $ 4.4 $ 8.7 =========== =========== Mortgage Guaranty Group: Net premiums earned........................... $ 81.2 $ 75.7 Net investment income and other income(a)..... 14.4 14.1 ----------- ----------- Total...................................... $ 95.7 $ 89.9 =========== =========== Income before taxes........................... $ 52.7 $ 39.7 =========== =========== Income tax expense............................ $ 17.6 $ 13.1 =========== =========== Title Insurance Group: Net premiums earned........................... $ 72.4 $ 89.1 Title, escrow and other fees ................ 39.0 57.3 ----------- ----------- Sub-total.................................. 111.4 146.4 Net investment income and other income(a)..... 6.1 5.4 ----------- ----------- Total...................................... $ 117.5 $ 151.9 =========== =========== Income before taxes........................... $ 3.2 $ 16.8 =========== =========== Income tax expense............................ $ .9 $ 5.7 =========== =========== Life Insurance Group (c): Net premiums earned........................... $ 15.8 $ 17.2 Net investment income and other income(a)..... 2.1 2.1 ----------- ----------- Total...................................... $ 18.0 $ 19.4 =========== =========== Income before taxes........................... $ .9 $ .4 =========== =========== Income tax expense............................ $ .3 $ .1 =========== =========== 9 Reconciliations of Segments to Consolidated - -------------------------------------------------------------------------------- Quarters Ended March 31, -------------------------- 2000 1999 ----------- ----------- Revenues: Total revenues for reportable segments........ $ 491.1 $ 525.4 Net realized investment gains................. .9 14.7 Other revenues................................ 4.7 2.3 Elimination of intersegment revenues(b)....... (3.5) (1.2) ----------- ----------- Total consolidated revenues................ $ 493.2 $ 541.2 =========== =========== Income before taxes: Total income before taxes of reportable segments......................... $ 78.7 $ 92.4 Net realized investment gains................. .9 14.7 Other sources - net........................... (1.8) (1.6) Elimination of intersegment profits(b)........ -- (.1) ----------- ----------- Income before income taxes and extraordinary items........................ $ 77.7 $ 105.4 =========== =========== - --------- In the above tables, net premiums earned on a GAAP basis differ slightly from statutory amounts due to certain differences in calculations of unearned premium reserves under each accounting method. (a) Including unallocated investment income derived from invested capital and surplus funds./(b) Represents results of holding company parent, consolidation eliminating adjustments, and general corporate expenses, as applicable./(c)In the first quarter of 1999, the Company sold its New York subsidiary and with it, its annuity book of business; this had no material effect on Old Republic's consolidated results or financial position. 10 OLD REPUBLIC INTERNATIONAL CORPORATION MANAGEMENT ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS Quarters Ended March 31, 2000 and 1999 - -------------------------------------------------------------------------------- OVERVIEW This analysis pertains to the consolidated accounts of Old Republic International Corporation. The Company conducts its business through four major segments, namely its General (property and liability coverages), Mortgage Guaranty, Title, and Life insurance groups. FINANCIAL POSITION Old Republic's financial position at March 31, 2000 reflected slight decreases in assets and common shareholders' equity and a slight increase in liabilities when compared to the immediately preceding year-end. Cash and invested assets represented 70.1% and 69.6% of consolidated assets as of March 31, 2000 and December 31, 1999 respectively. Consolidated operating cash flow was positive at $60.7 million in the latest quarter, compared to $56.2 million in the same period of 1999. Relatively high short-term maturity investment positions continued to be maintained as of March 31, 2000 to provide necessary liquidity for specific operating needs and to enhance flexibility in investment strategy. Changes in short-term investments reflect a large variety of seasonal and intermediate-term factors including operating cash needs and investment strategy. 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. During the first quarter of 2000, the Corporation committed substantially all investable funds in short to intermediate-term fixed maturity securities. Old Republic continues to adhere to its long-term policy of investing primarily in investment grade, marketable securities; investable funds have not been directed to so-called "junk bonds" or types of securities categorized as derivatives. During the first quarter of 2000, Old Republic's investment in equity securities increased by 16.8% vis-a-vis the related invested balance at year-end 1999 due to securities acquired but offset in part by unrealized losses during the period. At March 31, 2000, the Company had no fixed maturity securities in default as to principal and/or interest. The parent holding company has met its liquidity and capital needs principally through dividends 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. Additionally, the terms of guarantees by the Company of bank loans to the trustee of the Company's Employees Savings and Stock Ownership Plan restrict the amount of debt the Company may incur; this covenant is being met. Old Republic's capitalization of $2.44 billion at March 31, 2000 consisted of debt of $254.5 million, convertible preferred stock of $.7 million, and common shareholders' equity of $2.18 billion. The decrease in the common shareholders' equity account during the quarter ended March 31, 2000 reflects primarily the retention of earnings in excess of dividend requirements, a moderate decrease in the value of bonds and stocks carried at market values and the reacquisition of $43.8 million of common shares to complete a stock repurchase program of $200 million announced in March 1999. In March 2000, the Company cancelled 36.4 million common shares previously reported as treasury stock; this had no effect on total shareholders' equity or financial condition of the Company. RESULTS OF OPERATIONS Revenues: Consolidated net premiums and fees earned in the first quarter of 2000 amounted to $419.3 million versus $453.4 million in the year ago period. For the first three months of 2000, the Company's General Insurance Group reported earned premium volume of $210.7 million, down 1.5% from $214.0 million a year ago. The slight drop in premium reflects the Company's firmer underwriting stance in a marketplace that remains quite competitive. Premiums for the Mortgage Guaranty Group increased by 7.3% to $81.2 million from $75.7 million in the year-ago quarter. Title Group premium and fee revenues decreased 23.9% to $111.4 million in the first quarter of 2000 when compared to the same quarter of 1999 due in large measure to much lower mortgage refinance activity. Life Group premium volume decreased to $15.8 million, an 8.2% decline when compared to the same quarter of 1999. 11 Consolidated net investment income of $67.8 million in the first quarter of 2000 was up moderately when compared to the preceding year due to a somewhat higher invested asset base and a slight uptrend in yields obtained on invested and reinvested assets. The average annualized yield on investments was approximately 5.7% and 5.5% at the end of March 31, 2000 and 1999, respectively. Yield trends reflect at once the relatively short maturity of Old Republic's fixed maturity securities portfolio, and the commitment of a larger percentage of investable funds to tax-exempt fixed maturity securities that typically bear lower current yields. The Company's investment policies have not been designed to maximize realized investment gains. Realized gains of $0.9 million in the first quarter of 2000 were mostly due to the sale of equity securities. Dispositions of securities are primarily the result of scheduled maturities of bonds and notes as well as sales of equity securities. For the first quarter of 2000, 73.2% of total dispositions represented maturities and early calls of existing holdings; for the year ago period in 1999, these transactions amounted to 60.3% of the total dispositions. Expenses: Consolidated benefit, claim and settlement costs, as a percentage of net premiums and fees earned, were approximately 47% and 44% in the first quarters of 2000 and 1999, respectively. Consolidated claims experience for property and liability coverages was affected mostly by greater loss costs in transportation insurance lines when compared to the same quarter of 1999. Mortgage Guaranty claim costs were lower during the first quarter of 2000 vis-a-vis the same period in 1999 due mostly to stable economic and employment conditions which usually lead to reduced mortgage defaults. Title claims costs were lower in 2000 as a result of declining claims emergence trends, while Life Group claim costs were basically flat in the latest quarter. The ratio of consolidated underwriting, acquisition and insurance expenses to net premiums and fees earned was approximately 51% in the first quarters of 2000 and 1999. Variations in these ratios reflect a continually changing mix of coverages sold and attendant costs of producing business. The property and liability segment's expense ratio increased slightly due to a greater increase in operating expenses than premium revenues. The Mortgage Guaranty segment's expense ratio declined moderately. The insurance expense ratio for the title segment was higher in the first quarter of 2000 compared to the same period in 1999 due in part to a decrease in premium and fees volume without a proportional reduction in expenses. Consolidated interest and other charges increased $1.7 million in the current quarter versus the same period a year ago due primarily to interest costs on an increased debt level. Pre-Tax and Net Income: Consolidated income before taxes decreased by 26.2% in the first quarter of 2000 when compared to the same period one year ago. The Corporation's Mortgage Guaranty and Life insurance segments reflected higher pre-tax operating earnings, while General and Title insurance operations posted reductions in pre-tax operating earnings in this year's first quarter. Realized gains on sales of securities were significantly lower in the most recent quarterly period. The effective consolidated income tax rate was 29.7% and 31.0% in the first quarters of 2000 and 1999, respectively. The rates for each period reflect primarily the varying proportions of pre-tax operating income derived from tax-sheltered investment income (principally tax- exempt interest) on the one hand, and fully taxable investment and underwriting/service income on the other hand. Year 2000 Issues: Year 2000 issues relate primarily to computer programs which were written with only a two-digit designation for many years. Such programs are often unable to interpret dates beyond 1999 and as a result may fail or lead to computer errors which could create a disruption in operations. Prior to December 31, 1999, the Company and its subsidiaries completed an implementation of changes and tests of those computer systems and programs that had been identified as being affected by Year 2000 issues. They also received confirmations of Year 2000 compliance from certain principal customers, vendors and other third parties with whom they have significant business relationships. The Company and its subsidiaries had also developed contingency plans for operations in the event Year 2000 issues were to arise in spite of the changes and tests effected. The costs of identifying, implementing and testing the required changes were not material to the Company's consolidated operating results. A significant portion of these costs were not incremental as the Company and its subsidiaries generally used existing resources. Early in the current year, no issues are known to have developed nor affect adversely the Company or any of its subsidiaries. Although the Company considers it increasingly unlikely, it is possible that Year 2000 issues may have arisen but are not yet known. The aforementioned contingency plans are deemed appropriate to address such subsequent events; no significant additional costs are being anticipated with respect to Year 2000 issues. 12 OTHER INFORMATION Reference is here made to "Financial Information Relating to Segments of Business" appearing elsewhere herein. Historical data pertaining to the operating performance, liquidity, and other financial matters 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 claims can have a bearing on period-to-period comparisons and future operating results. Any forward-looking commentary or inferences contained in this report involve, of necessity, 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 affected in particular 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 interest and inflation rates, as well as periodic changes in claim frequency and severity patterns caused by natural disasters, weather conditions, accidents, illnesses and work-related injuries. Mortgage Guaranty and Title insurance results can be affected by such factors as changes in national and regional housing demand and values, the availability and cost of mortgage loans, employment trends, and default rates on mortgage loans; mortgage guaranty results may also be affected by various risk-sharing arrangements with business producers as well as the risk management and pricing policies of government sponsored enterprises. Life and disability insurance results can be impacted by the levels of employment and consumer spending, as well as mortality and health trends. At the holding company level, operating earnings or losses are generally affected by the amount of debt outstanding and its cost, as well as interest income on temporary short-term investments. Any forward-looking commentaries speak only as of their dates. Old Republic undertakes no obligation to publicly update or revise such comments, whether as a result of new information, future events or otherwise, and accordingly they may not be unduly relied upon. 13 OLD REPUBLIC INTERNATIONAL CORPORATION FORM 10 - Q PART II - OTHER INFORMATION - -------------------------------------------------------------------------------- Item 6 - Reports on Form 8-K - ---------------------------- (a) Reports on Form 8-K 1. The registrant has not filed any reports on Form 8-K during the quarter for which this report is filed. Items other than those listed are omitted because they are not required. 14 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: May 11, 2000 ------------------------ /s/ Paul D. Adams ---------------------------------------- P. D. Adams Senior Vice President & Chief Financial Officer