Exhibit 99.1
AUDIT COMMITTEE CHARTER
COMMITTEE'S PURPOSE
The Audit Committee is appointed by the Board of Directors of Old Republic
International Corporation (the "Corporation"): (A) to assist the Board in
monitoring (1) the integrity of the financial statements of the Corporation and
the effectiveness of the Corporation's internal control over financial
reporting, (2) the Corporation's compliance with legal and regulatory
requirements, (3) the independent auditor's qualifications and independence, and
(4) the performance of the Corporation's internal audit function and independent
auditors; and (B) to prepare the report required by the rules of the Securities
and Exchange Commission (the "Commission") to be included in the Corporation's
annual proxy statement.
COMMITTEE MEMBERSHIP
The Audit Committee shall consist of not less than three members of the
Board, one of whom shall be designated as the chairperson, appointed by the
Board upon the recommendation of the Board's Nominating Committee. Each
appointed member must meet the independence and experience requirements of the
New York Stock Exchange, Section 10A(m)(3) of the Securities Exchange Act of
1934 (the "Exchange Act") and the rules and regulations of the Commission, and
at least one member must be an "audit committee financial expert" as defined by
the Commission. No Director shall be eligible for appointment to the Audit
Committee if he or she serves on the audit committees of more than two other
publicly held companies.
COMMITTEE MEETINGS
The Audit Committee shall meet as often as it determines, but not less
frequently than once every fiscal quarter. The Audit Committee shall meet
periodically with management, the internal auditors and the independent auditor
in separate executive sessions. The Audit Committee may request any officer or
employee of the Corporation or the Corporation's outside counsel or independent
auditor to attend a meeting of the Audit Committee or to meet with any members
of, or consultants to, the Audit Committee. A majority of the Audit Committee
members present in person or by conference telephone or other conferencing
equipment shall constitute a quorum. The Audit Committee may form subcommittees
consisting of one or more members for any purpose it deems appropriate and may
delegate to such subcommittee(s) such power and authority as the Audit Committee
deems appropriate, other than power or authority which the Audit Committee is
required by law or regulation or listing standard to exercise as a whole.
DUTIES AND RESPONSIBILITIES
The Audit Committee shall have the sole authority to appoint, retain,
compensate, evaluate and terminate the Corporation's independent auditors. The
Audit Committee shall approve all audit engagement fees and terms, shall discuss
with the independent auditor the planning and staffing of the annual audit, and
shall approve all non-audit engagements that may be performed by the independent
auditors. The independent auditors shall report directly to the Audit Committee,
and the Audit Committee shall be directly responsible for the oversight of the
independent auditors, including resolution of disagreements between management
and the independent auditors.
The Audit Committee shall have the authority, to the extent it deems
necessary or appropriate, to retain independent legal, accounting or other
advisors. The Corporation shall provide for appropriate funding, as determined
by the Audit Committee, for payment of compensation to the independent auditors
and to any advisors employed by the Audit Committee.
The Audit Committee shall make regular reports to the Board. The Audit
Committee shall review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval. The Audit Committee
shall annually review the Audit Committee's own performance.
The Audit Committee, to the extent it deems necessary or appropriate,
shall:
As to Financial Statement and Disclosure Matters:
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1. Review and discuss with management and the independent auditor the
annual audited financial statements, including footnotes and
disclosures made in management's discussion and analysis, and
recommend to the Board whether the audited financial statements should
be included in the Corporation's Form 10-K.
2. Review and discuss with management and the independent auditor the
Corporation's quarterly financial statements prior to the filing of
its Form 10-Q.
3. Discuss with management and the independent auditor significant
financial reporting issues and judgments made in connection with the
preparation of the Corporation's financial statements, including any
changes in the Corporation's selection or application of accounting
principles, any major issues as to the adequacy of the Corporation's
internal controls and any special steps adopted in light of material
control deficiencies.
4. Review and discuss with the independent auditors:
(a) All critical accounting policies and practices that are used.
(b) Any major recommended alternative treatments of financial
information within generally accepted accounting principles that
have been discussed with management, ramifications of the
possible use of such alternative disclosures and treatments, and
the treatment preferred by the independent auditor.
(c) Other material written communications between the independent
auditor and management such as any management letter or schedule
of unadjusted differences.
5. Expect the Chief Executive Officer and/or the Chief Financial Officer
to discuss with the Audit Committee or its Chairman any change in
accounting policies, material charges or credits, and departures in
disclosures or presentation in the Corporation's quarterly earnings
release prior to the issuance of any release so affected.
6. Discuss with management and the independent auditor the effect of
regulatory and accounting initiatives and any off-balance sheet
structures on the Corporation's financial statements.
7. Discuss periodically with management the Corporation's major financial
risk exposures and the steps management has taken to monitor and
control such exposures, including the Corporation's risk assessment
and risk management policies.
8. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit, including any difficulties encountered in the
course of the audit work, any restrictions on the scope of activities
or access to requested information, and any significant disagreements
with management.
9. Review disclosures made to the Audit Committee by the Corporation's
CEO and CFO during their certification process for the Form 10-K and
Form 10-Q about any significant deficiencies in the design or
operation of internal controls or material weaknesses therein and any
fraud involving management or other employees who have a significant
role in the Corporation's internal controls.
As to Oversight of the Corporation's Relationship with the Independent Auditor:
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10. Review and evaluate the lead partner of the independent auditor team.
11. At least annually, evaluate the independent auditor's qualifications,
performance and independence. In making its evaluation, the Committee
shall take into account the opinions of management of the Corporation
and the Corporation's internal auditors. The Committee shall further
ensure the rotation of the lead audit partner at least every five
years. The Committee shall decide as to whether the Corporation is
obtaining high quality audits and whether rotation of the independent
auditing firm would be appropriate.
12. Recommend to the Board policies for the Corporation's hiring of
employees or former employees of the independent auditor who
participated in any capacity in the audit of the Corporation.
As to Oversight of the Corporation's Internal Audit Function:
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13. Review the appointment and replacement of the senior internal auditing
executive.
14. Review the significant reports to management prepared by the internal
auditing department and management's responses.
15. Discuss with the independent auditor and management the internal
audit department responsibilities, budget and staffing and any
recommended changes in the planned scope of the internal audit, taking
costs and benefits into account.
As to Compliance Oversight Responsibilities:
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16. Obtain reports from management, the Corporation's senior internal
auditing executive and the independent auditor that the Corporation
and its subsidiaries are in compliance with applicable legal and
regulatory requirements. Review reports and disclosures of insider and
affiliated party transactions. Advise the Board with respect to the
Corporation's policies and procedures regarding compliance.
17. Establish procedures for the receipt, retention and treatment of
complaints received by the Corporation regarding accounting and
financial reporting matters, internal accounting controls or auditing
matters, and for the confidential, anonymous submission by employees
of concerns regarding material accounting or auditing matters.
18. Discuss with management and the independent auditor any correspondence
with regulators or governmental agencies and any published reports
which raise material issues regarding the Corporation's accounting
policies, internal controls and financial statements.
19. Discuss with the Corporation's General Counsel legal matters that may
have a material impact on the financial statements or the Company's
compliance policies.
LIMITATION OF AUDIT COMMITTEE'S ROLE
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Corporation's financial statements and
disclosures are complete and accurate and are in accordance with generally
accepted accounting principles and applicable rules and regulations.