As in effect
3/1/61
FORM 10K/A
--------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
--------------------
AMENDMENT TO APPLICATION OR REPORT
Filed Pursuant to Sections 12, 13, or 15 (d) of
THE SECURITIES EXCHANGE ACT OF 1934
OLD REPUBLIC INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
AMENDMENT NO. 3
---
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its ANNUAL REPORT FOR 1997 on Form
10-K as set forth in the pages attached hereto: (List all such items,
financial statements, exhibits or other portions amended)
FORM 11-K
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
OLD REPUBLIC INTERNATIONAL CORPORATION
-----------------------------------------
(Registrant)
Date: April 15, 1998 By: /s/ Paul D. Adams
--------------- --------------------------------------
(Signature)
Paul Dennis Adams
Senior Vice President,
Chief Financial Officer
and Treasurer
Total Pages: 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
---------------
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For The Fiscal Year Ended December 31, 1997
---------------
BITUMINOUS 401(k) SAVINGS PLAN
(Formerly Known as BITCO Savings Plan)
---------------
OLD REPUBLIC INTERNATIONAL CORPORATION
307 NORTH MICHIGAN AVE
CHICAGO, ILLINOIS 60601
Item 1 - Changes in the Plan
- ----------------------------
Incorporated by reference from Exhibit 5 and Exhibit 6 included herein.
Item 2 - Changes in Investment Policy
- -------------------------------------
Incorporated by reference from Exhibit 5 and Exhibit 6 included herein. (See
also Item 8 below.)
Item 3 - Contributions under the Plan
- -------------------------------------
The Company's contributions are measured by reference to the employee's
contributions and are not discretionary.
Item 4 - Participating Employees
- --------------------------------
There were approximately 406 participants who are currently making contributions
in the plan as of December 31, 1997 out of approximately 551 eligible employees.
Item 5 - Administration of the Plan
- -----------------------------------
(a) The Bituminous 401(k) Savings Plan (the "Plan"), formerly known as the
Bitco Savings Plan, provides that Bituminous Casualty Corporation,
("Bituminous"), an affiliate of Bitco Corporation ("Bitco"), shall appoint
Committee Members (the "Committee") to administer the Plan. The committee
formulates and carries out all rules necessary to operate the Plan, makes
decisions regarding the interpretation or application of Plan provisions,
and has the authority to act in its sole discretion when carrying out the
provisions of the Plan. Any decision made by the committee in good faith is
final and binding on all parties. The committee members presently are as
follows:
Greg Ator
Bituminous Casualty Corporation
320 - 18th Street
Rock Island, IL 61201
Janine Happ
Bituminous Casualty Corporation
320 - 18th Street
Rock Island, IL 61201
Robert Rainey
Bituminous Casualty Corporation
320 - 18th Street
Rock Island, IL 61201
(b) The committee receives no compensation in that capacity.
Item 6 - Custodian of Investments
- ---------------------------------
(a) The Committee has retained CG Trust Company, a trust company organized
under the laws of the State of Illinois, as Trustee. The Trustee acts under
a Trust Agreement with Bituminous that implements and forms a part of the
Plan. In accordance with the Trust Agreement the Committee may, in their
discretion, appoint one or more "Investment Managers" to direct the
-2-
investments to be made by the Trustees with any part or all of the Plan
assets. CG Trust Company entered into Group Annuity Contract Number
GA-10911 with Connecticut General Life Insurance Company (CGLIC), a legal
reserve life insurance company, to provide record keeping services. CGLIC
also serves as the investment manager of the following funds: CIGNA
Guaranteed Government Securities Account, CIGNA Guaranteed Long-Term
Account, CIGNA Separate Account - Fidelity Advisor Income and Growth Fund,
CIGNA Stock Market Index Account and the CIGNA Separate Account - Fidelity
Advisor Growth Opportunities Fund. The custodian of the ORI Stock Account
(an Outside Market - Valued Fund) is National Financial Services
Corporation.
Investment expense paid to CGLIC were $0 and $0 for the years ended
December 31, 1997 and 1996.
(b) No bond was furnished by Connecticut General.
Item 7 - Reports to Participating Employees
- -------------------------------------------
Participants will receive a statement reflecting the condition of their
respective accounts as of June 30 and December 31 of each year, following the
June 30 and December 31 accounting dates, respectively. Participants may also
receive additional information on a more frequent basis throughout the year on
Answerline, a CGLIC automated voice response system.
Annually, each participant will receive a copy of financial statements filed
herewith.
Item 8 - Investment of Funds
- ----------------------------
The trust fund will be divided into separate investment funds, and a
participant's accounts will be invested in one or more of the investment funds.
The investment funds will consist of the following:
CIGNA Guaranteed Government Securities Account. This fund will be invested
primarily in short-term U.S. Treasury securities, obligations of governmental
agencies and repurchase agreements collateralized by such Treasury or government
agency obligations.
CIGNA Guaranteed Long-Term Account. This fund will be invested primarily in
commercial mortgages, private placements and publicly traded bonds and
short-term money market instruments for cash flow management.
CIGNA Separate Account - Fidelity Advisor Income and Growth Fund. This fund will
be invested in the Fidelity Advisor Income and Growth Fund, which invests
primarily in a combination of common and preferred stocks, convertible
securities and bonds, but which may also invest in foreign securities.
CIGNA Stock Market Index Account. This fund will be invested primarily in common
stocks reflecting the composition of the Standard and Poor's 500 Composite Stock
Index.
CIGNA Separate Account - Fidelity Advisor Growth Opportunities Fund. This fund
will be invested in the Fidelity Advisor Growth Opportunities Fund which invests
primarily in common stocks and securities convertible into common stock, but
which may also invest in all types of securities (including foreign securities).
ORI Stock Account. This fund will be invested in common or preferred stock of
Old Republic International Corporation.
-3-
On March 11, 1985, Bitco merged into a subsidiary of Old Republic International
Corporation. The combination resulted in a tax-free exchange of 0.4 (4/10th)
share of Old Republic International Corporation voting Series E Cumulative
Convertible Preferred Stock for each share of Bitco common stock included in the
Bitco Common Stock Fund. The Old Republic International Corporation Series E
Preferred Stock is convertible at any time at the option of the holder into 1.25
shares of Old Republic International Corporation common stock. The Plan
exchanged 34,880 shares of Bitco stock on March 11, 1985.
In February 1987, all shares of the Series E Preferred Stock were converted to
29,994 shares of Old Republic International Corporation common stock. Since
March 1987, the ORI Stock Account has invested solely in Old Republic
International Corporation common stock. The committee does not anticipate
purchasing any other type of Old Republic International Corporation stock other
than common stock.
Item 9 - Financial Statements and Exhibits
- ------------------------------------------
Financial Statements Page No.
Report of Independent Accountants for the years ended
December 31, 1997 and 1996 F-1
Statements of Net Assets Available for Benefits at
December 31, 1997 and 1996 F-2
Statements of Changes in Net Assets Available for
Benefits for the years ended December 31, 1997 and 1996 F-3
Notes to Financial Statements F-4 to F-10
Supplemental Schedules
- ----------------------
Item 27A - Schedule of Assets Held for Investment Purposes
Item 27D - Schedule of Reportable Transactions
Exhibits
- --------
Exhibit 1 - Agreement and Plan of Merger, dated as of December 21, 1984, as
amended and restated, by and between Bitco Corporation and ROI, Inc.
Incorporated by reference from Old Republic International
Corporation's Form S-14 Registration Statement dated February 12,
1985, Exhibit A.
Exhibit 2 - Supplemental Agreement dated as of December 21, 1984, as amended and
restated, among Old Republic International Corporation, ROI, Inc.
and Bitco Corporation.
Incorporated by reference from Old Republic International
Corporation's Form S-14 Registration Statement dated February 12,
1985, Exhibit B.
Exhibit 3 - Second Amendment of Bitco Savings Plan and First Amendment of Bitco
Savings Trust dated February 3, 1986.
-4-
Exhibit 4 - Third Amendment of Bitco Savings Plan and Second Amendment of Bitco
Savings Trust dated June 22, 1989.
Exhibit 5 - Bituminous 401(k) Savings Plan, as amended and restated, effective
January 1, 1994, formerly known as Bitco Savings Plan.
Exhibit 6 - Trust Agreement establishing the Bituminous 401(k) Savings Trust, by
and between, Bituminous Casualty Corporation and CG Trust Company,
effective January 1, 1994.
Exhibit 7 - First Amendment of Bituminous 401(k) Savings Plan, effective January
1, 1996.
Exhibit 8 - Revision to Exhibit A of Trust Agreement, effective April 1, 1996.
Exhibit 9 - Second Amendment of Bituminous 401(k) Savings Plan, effective
October 1, 1997.
-5-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Committee Members have duly caused this annual report to be signed on behalf of
the undersigned, thereunto duly authorized.
BITUMINOUS 401(K) SAVINGS PLAN, Registrant
By /s/ Greg Ator
----------------------------------------
Greg Ator, Committee Member
By /s/ Janine Happ
----------------------------------------
Janine Happ, Committee Member
By /s/ Robert Rainey
----------------------------------------
Robert Rainey, Committee Member
Dated: April 2, 1998
-6-
REPORT OF INDEPENDENT ACCOUNTANTS
Bituminous 401(k) Savings Plan
Bituminous Casualty Corporation:
We have audited the accompanying statements of net assets available for benefits
of the Bituminous 401(k) Savings Plan (the "Plan") as of December 31, 1997 and
1996, and the related statements of changes in net assets available for benefits
for the years ended December 31, 1997 and 1996. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1997 and 1996, and the changes in net assets available for benefits
for the years ended December 31, 1997 and 1996, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the Plan
are presented for the purpose of additional analysis and are not a required part
of the basic financial statements but are supplementary information required by
the Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The supplemental
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand, L.L.P.
Chicago, Illinois
April 2, 1998
BITUMINOUS 401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1997 and 1996
1997 1996
---- ----
ASSETS
Investments, at fair value:
Old Republic International Corporation common stock $6,289,111 $4,598,138
(cost: 1997 - $2,151,340; 1996 - $1,879,311)
Pooled separate accounts 3,885,821 2,551,433
Investment, at contract value:
CGLIC general accounts 3,249,970 3,328,662
Participant loans 223,031 140,284
----------- -----------
13,647,933 10,618,517
Cash 11,572 646
Contributions receivable --- 31,755
----------- -----------
Net assets available for benefits $13,659,505 $10,650,918
=========== ===========
The accompanying notes are an integral part of the financial statements.
F-2
BITUMINOUS 401(k) SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the year ended December 31, 1997 and 1996
1997 1996
---- ----
Additions:
Employer contributions $ 148,704 $ 164,025
Employee contributions 862,912 964,620
Rollover contributions 45,841 ---
----------- -----------
Total contributions 1,057,457 1,128,645
----------- -----------
Investment income:
Dividends from Old Republic International
Corporation common stock 84,252 70,675
Net investment gain from pooled separate accounts 713,216 285,189
Income from CGLIC general accounts 181,991 176,176
Net appreciation of investments 1,752,963 521,841
Other interest from participant loans 17,718 8,297
----------- -----------
Total investment income 2,750,140 1,062,178
----------- -----------
Total additions 3,807,597 2,190,823
----------- -----------
Adjustments:
Total adjustments 19 ---
----------- -----------
Deductions:
Benefits paid 799,029 563,226
----------- -----------
Total deductions 799,029 563,226
----------- -----------
Net additions 3,008,587 1,627,597
Net assets available for benefits:
Beginning of year 10,650,918 9,023,321
----------- -----------
End of year $13,659,505 $10,650,918
=========== ===========
The accompanying notes are an integral part of the financial statements.
F-3
BITUMINOUS 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
The following description of the Bituminous 401(k) Savings Plan (the "Plan")
provides only general information. Participants should refer to the Plan
document for a more complete description of the Plan's provisions.
A. General
The Plan is a defined contribution plan covering substantially all of the
employees of Bituminous Casualty Corporation (the "Company"), who prior to
October 1, 1997, had completed one year of service, attained age twenty-one (age
twenty-five in 1984) and had completed 1,000 hours of service during the 12
month period commencing on their date of hire or during a plan year. Subsequent
to October 1, employees are eligible to participate in the plan on the last to
occur: (A) Date of hire or (B) the start of the payroll period in which the
employee attains age twenty-one. Participation in the Plan is optional. If an
employee does not elect to join the plan on the first date he is eligible to do
so, he may join the plan at the start of any subsequent payroll period. The Plan
is subject to the provisions of the Employee Retirement Income Security Act of
1974 (ERISA), as amended from time to time
B. Contributions
Participants may contribute up to 6 percent of their annual compensation on a
before-tax basis. Effective January 1, 1997, the maximum participant
contribution was increased to 9 percent. The Company provides a matching
contribution equal to 25 percent of the participant's contribution on the first
6 percent of earnings. Participants may elect to have their voluntary
contributions invested in any one or more of the six separate investment funds
(CIGNA Guaranteed Long-Term Account, CIGNA Separate Account - Fidelity Advisor
Income & Growth Fund, CIGNA Separate Account - Fidelity Advisor Growth
Opportunities Fund, CIGNA Guaranteed Government Securities Account, CIGNA Stock
Market Index Account and ORI Stock Account). The Company's matching
contributions commencing in 1985 are invested in the ORI Stock Account.
C. Participant Accounts
Each participant's account is credited with the participant's contribution, an
allocation of the Company's contribution and Plan earnings. Interest will be
credited to the Guaranteed Long-Term Account and Guaranteed Government
Securities Account (the "General Accounts") daily. Interest will be credited to
each dollar in the General Accounts from the valuation date on which it is
allocated to the General Accounts until the valuation date as of which it is
transferred, distributed or disbursed from the General Accounts. The Fidelity
Advisor Income & Growth Fund, Fidelity Advisor Growth Opportunities Fund and
Stock Market Index Account (the "Separate Accounts") are each divided into units
of participation. When an amount is allocated or transferred to the Separate
Accounts, the number of units is increased and when an amount is withdrawn from
the Separate Accounts, the number of units is decreased. Such increase or
decrease in the number of units is determined by dividing the amount allocated
to or withdrawn from the Separate Accounts by the then current Separate Account
unit value. Cash dividends received with respect to Old Republic International
Corporation stock previously credited to participants shall be applied to
purchase additional shares of Old Republic International Corporation stock in
the ORI Stock Account. Such dividends and the additional shares (including
fractional shares) subsequently purchased with the dividends shall be allocated
and credited to the accounts of participants, pro rata, according to the shares
(including fractional shares) credited to the accounts of participants on the
applicable dividend record date. Any Old Republic International Corporation
stock received as a stock split or stock dividend or as a result of a
reorganization or recapitalization of Old Republic International Corporation
F-4
BITUMINOUS 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. Summary of significant Accounting Policies (continued)
International Corporation shall be allocated and credited to the accounts of
pariticipants in proportion to the Old Republic International Corporation stock
previously credit to their accounts.
Participant's units are calculated on a daily basis. Quarterly participant unit
values for these investment funds are as follows:
1997
-------------------------------------------------------------------------------
Guaranteed Fidelity Fidelity Guaranteed Stock ORI
Long Income Growth Government Market Stock
Term & Growth Opport. Securities Index Account
First Quarter
Allocating Units 55,231 48,745 22,190 14,769 11,579 168,401
Unit Value $58.46 $22.80 $48.50 $12.23 $37.12 $25.63
Second Quarter
Allocating Units 52,303 49,195 24,397 14,716 13,094 169,394
Unit Value $59.27 $25.66 $55.47 $12.36 $43.56 $30.31
Third Quarter
Allocating Units 51,355 55,039 24,649 14,693 14,466 169,212
Unit Value $60.12 $26.90 $59.63 $12.49 $46.67 $39.00
Fourth Quarter
Allocating Units 50,181 56,040 25,882 15,087 15,526 169,119
Unit Value $60.97 $27.48 $61.91 $12.62 $47.90 $37.19
1996
-------------------------------------------------------------------------------
Guaranteed Fidelity Fidelity Guaranteed Stock ORI
Long Income Growth Government Market Stock
Term & Growth Opport. Securities Index Account
First Quarter
Allocating Units 58,121 46,494 18,473 13,870 6,153 112,744
Unit Value $55.08 $20.47 $41.51 $11.69 $31.15 $32.50
Second Quarter
Allocating Units 56,177 46,388 20,242 14,166 7,854 171,874
Unit Value $55.83 $20.66 $43.27 $11.82 $32.47 $21.50
Third Quarter
Allocating Units 54,098 47,190 22,473 14,204 9,160 169,387
Unit Value $56.59 $21.18 $44.36 $11.95 $33.40 $24.75
Fourth Quarter
Allocating Units 54,981 47,391 23,420 14,453 9,818 171,893
Unit Value $57.36 $22.51 $48.25 $12.07 $36.09 $26.75
The percentage of any resigning or dismissed participant's employer contribution
account balance which is not vested at the settlement date will be applied
against future employer contributions.
D. Expense
It is the policy of Bituminous Casualty Corporation (a wholly-owned subsidiary
of Bitco Corporation) to provide administrative support for the plan and to pay
for administrative and trustee fees.
F-5
BITUMINOUS 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. Summary of Significant Accounting Policies (contnued)
E. Vesting
Participants are immediately vested in their voluntary contributions plus actual
earnings thereon. Participants are immediately vested in the remainder of their
accounts upon death, disability, attainment of normal retirement age or based on
the participant's number of years of service using the following table:
Years of Service Vested Percentage
Fewer than 1 0%
1 10%
2 20%
3 30%
4 40%
5 60%
6 80%
7 or More 100%
F. Participant Loans
Effective January 1, 1996, participants may borrow from their accounts a maximum
amount equal to the lesser of $50,000 or 50% of their vested account balance.
Loan transactions are treated as a transfer to (from) the investment account
from (to) the Participant Loans account. Loan terms shall not extend beyond five
years. The loans are secured by the balance in the participant's account and
bear interest at a rate which is based on the prevailing prime rate as published
in The Wall Street Journal on the first business day of the month in which the
loan is made plus one percentage point. Interest rates range from 9.25 percent
to 9.50 percent. Principal and interest is paid ratably through bi-weekly
payroll deductions.
G. Benefits Paid
On termination of service, retirement, or death, distribution of the net balance
in the participant's accounts will be made for the benefit of the participant or
his beneficiary, by one or more of the following methods
* By payment in a lump sum.
* By purchase of a retirement annuity from an insurance company.
Net assets at December 31, 1997, and 1996, include funds totaling $1,446,337 and
$1,197,506, respectively, which represent the account balance of retired and
terminated participants who have elected to leave the funds in the plan upon
retirement or termination.
H. Basis of Accounting
The Plan presents in the statements of changes in net assets available for
benefits the net appreciation in the fair value of the ORI Stock Account, which
consists of the realized gains or losses and the unrealized appreciation
(depreciation) of this investment.
F-6
BITUMINOUS 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. Summary of Significant Accounting Policies (continued)
Net Assets reported in the Form 5500 do not agree to the Statement of Net Assets
Available for Benefits as of December 31, 1997 and 1996 due to benefits payable
to participants which are reflected only in the Form 5500. These payables,
totaling $41,910 for 1997 and $3,517 for 1996, represent 4th quarter withdrawals
not made until the next year. Similarly, benefits paid as reported in the Form
5500 differs from the Statement of Changes in Net Assets Available for Benefits
by $38,393 for 1997 and ($33,933) for 1996.
I. Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make significant estimates and
assumptions that affect the reported amounts of net assets available for
benefits and disclosures of contingent assets and liabilities at the date of the
financial statements and the changes in net assets available for benefits during
the reporting period. Actual results could differ from those estimates.
J. Risks and Uncertainties
The Plan provides for various investment options in any combination of stocks,
bonds, fixed income securities, mutual funds, and other investment securities.
Investment securities are exposed to various risks, such as interest rate,
market and credit. Due to the level of risk associated with certain investment
securities and the level of uncertainty related to changes in the value of
investment securities, it is possible that changes in risks in the near term
would materially affect participants' account balances and the amounts reported
in the statement of net assets available for benefits and the statement of
changes in net assets available for benefits.
2. Investments
Old Republic International Corporation stock is stated at the closing market
value on the last business day of the year.
The Plan entered into a group annuity contract with Connecticut General Life
Insurance Company (CGLIC). CGLIC maintains contributions in a contract holder's
account and such contributions are allocated to separate investment funds (see
note 3) according to participant elections. The accounts are credited with
earnings on the underlying investments and charged for Plan benefits paid and
deductions for investment expenses, risk, profit and annual management fees
charged by CGLIC. The General Accounts are included in the financial statements
at contract value and the Separate Accounts are included in the financial
statements at fair value at December 31, 1997 and 1996 as reported to the Plan
by CGLIC. Realized investment gains and losses in the separate investment funds
are recognized in the year of sale.
F-7
BITUMINOUS 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. Allocation of Net Assets for Benefits and Changes in Net Assets Available
for Benefits
Six separate investment funds are maintained under the Plan for the benefit of
participants. The allocation of net assets available for benefits to the
separate investment funds is as follows:
As of December 31, 1997
-------------------------------------------------------------------------------------------------------
Guaranteed Fidelity Fidelity Guaranteed Stock ORI
Long Income Growth Government Market Stock Participant
Combined Term & Growth Opport. Securities Index Account Loans
Old Republic Int'l Stock $6,289,111 --- --- --- --- --- $6,289,111 ---
Pooled separate accounts 3,885,821 --- $1,539,776 $1,602,320 --- $743,725 --- ---
CGLIC general account 3,249,970 $3,059,640 --- --- $190,330 --- --- ---
Participant loans 223,031 --- --- --- --- --- --- $223,031
Employers' contributions --- --- --- --- --- --- --- ---
Employees' contributions --- --- --- --- --- --- --- ---
Cash 11,572 --- --- --- --- --- 11,572 ---
----------- ---------- ---------- ---------- -------- -------- ---------- --------
Net assets available
for benefits $13,659,505 $3,059,640 $1,539,776 $1,602,320 $190,330 $743,725 $6,300,683 $223,031
=========== ========== ========== ========== ======== ======== ========== ========
As of December 31, 1996
-------------------------------------------------------------------------------------------------------
Guaranteed Fidelity Fidelity Guaranteed Stock ORI
Long Income Growth Government Market Stock Participant
Combined Term & Growth Opport. Securities Index Account Loans
Old Republic Int'l Stock $4,598,138 --- --- --- --- --- $4,598,138 ---
Pooled separate accounts 2,551,433 --- $1,066,675 $1,130,298 --- $354,460 --- ---
CGLIC general account 3,328,662 $3,154,145 --- --- $174,517 --- --- ---
Participant loans 140,284 --- --- --- --- --- --- $140,284
Employers' contributions 6,351 --- --- --- --- --- 6,351 ---
Employees' contributions 25,404 --- --- --- --- --- 25,404 ---
Cash 646 --- --- --- --- --- 646 ---
----------- ---------- ---------- ---------- -------- -------- ---------- --------
Net assets available
for benefits $10,650,918 $3,154,145 $1,066,675 $1,130,298 $174,517 $354,460 $4,630,539 $140,284
=========== ========== ========== ========== ======== ======== ========== ========
F-8
BITUMINOUS 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. Allocation of Net Assets for Benefits and Changes in Net Assets Available for
Benefits (continued)
The allocation of changes in net assets available for benefits to the separate
investment funds is as follows:
For the year ended December 31, 1997
-------------------------------------------------------------------------------------------------------
Guaranteed Fidelity Fidelity Guaranteed Stock ORI
Long Income Growth Government Market Stock Participant
Combined Term & Growth Opport. Securities Index Account Loans
Dividend from ORI Stock $84,252 --- --- --- --- --- $84,252 ---
Net investment gain from
pooled separate accounts 713,216 --- $247,043 $324,083 --- $142,090 --- ---
Income from CGLIC general
accounts 181,991 $174,493 --- --- $7,498 --- --- ---
Net appreciation of
investments 1,752,963 --- --- --- --- --- 1,752,963 ---
Other interest from
participant loans 17,718 7,935 1,678 2,489 375 1,741 3,500 ---
Contributions:
Employer 148,704 (529) --- --- --- --- 149,233 ---
Employee 862,912 303,019 138,522 203,546 26,671 118,194 72,960 ---
Rollover 45,841 11,373 5,362 4,034 1,812 20,897 2,363 ---
----------- ---------- ---------- ---------- -------- -------- ---------- --------
Total additions 3,807,597 496,291 392,605 534,152 36,356 282,922 2,065,271 ---
Benefits paid (799,029) (341,859) (81,969) (21,344) (9,905) (33,862) (306,298) ($3,792)
Loans issued --- (50,266) (44,627) (25,414) (5,764) (17,783) (7,850) 151,704
Loan repayments --- 29,334 9,430 9,580 1,168 5,558 10,095 (65,165)
Transfer between accounts --- (226,737) 197,040 (25,116) (6,042) 151,935 (91,080) ---
Adjustments 19 (1,268) 622 164 --- 495 6 ---
----------- ---------- ---------- ---------- -------- -------- ---------- --------
Net incr. (decr.) in
net assets avail. for
benefits 3,008,587 (94,505) 473,101 472,022 15,813 389,265 1,670,144 82,747
Net assets available for
benefits:
Beginning of year 10,650,918 3,154,145 1,066,675 1,130,298 174,517 354,460 4,630,539 140,284
----------- ---------- ---------- ---------- -------- -------- ---------- --------
End of year $13,659,505 $3,059,640 $1,539,776 $1,602,320 $190,330 $743,725 $6,300,683 $223,031
=========== ========== ========== ========== ======== ======== ========== ========
For the year ended December 31, 1996
-------------------------------------------------------------------------------------------------------
Guaranteed Fidelity Fidelity Guaranteed Stock ORI
Long Income Growth Government Market Stock Participant
Combined Term & Growth Opport. Securities Index Account Loans
Dividend from ORI Stock $70,675 --- --- --- --- --- $70.675 ---
Net investment gain from
pooled separate accounts 285.189 --- $83,074 $154,856 --- $47,259 --- ---
Income from CGLIC general
accounts 176,176 $168,976 --- --- $7,200 --- --- ---
Net appreciation of
investments 521,841 --- --- --- --- --- 521,841 ---
Other interest from
participant loans 8,297 4,371 959 1,094 281 435 1,157 ---
Contributions:
Employer 164,025 (772) --- --- --- --- 164,797 ---
Employee 964,620 299,377 175,100 259,719 22,245 112,030 96,149 ---
----------- ---------- ---------- ---------- -------- -------- ---------- --------
Total additions 2,190,823 471,952 259,133 415,669 29,726 159,724 854,619 ---
Benefits paid (563,226) (273,565) (26,099) (13,536) (4,739) (1,197) (244,090) ---
Loans issued --- (138,411) (5,582) (7,251) (8,858) (2,908) (27,902) 190,912
Loan repayments --- 20,738 3,143 5,276 722 3,195 17,554 (50,628)
Transfer between accounts --- (117,603) (41,841) 150,984 (4,316) 104,458 (91,682) ---
----------- ---------- ---------- ---------- -------- -------- ---------- --------
Net incr. (decr.) in
net assets avail. for
benefits 1,627,597 (36,889) 188,754 551,142 12,535 263,272 508,499 140,284
Net assets available for
benefits:
Beginning of year 9,023,321 3,191,034 877,921 579,156 161,982 91,188 4,122,040 ---
----------- ---------- ---------- ---------- -------- -------- ---------- --------
End of year $10,650,918 $3,154,145 $1,066,675 $1,130,298 $174,517 $354,460 $4,630,539 $140,284
=========== ========== ========== ========== ======== ======== ========== ========
BITUMINOUS 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Tax Status
The Internal Revenue Service issued a determination letter, received on October
19, 1983, stating that the Plan was qualified under the provisions of Section
401(a) and 401(k) of the Internal Revenue Code (IRC). An additional favorable
determination letter dated October 26, 1994, was received on the endorsements to
the Plan transferring Great West Casualty Participants from the Plan. The Plan's
Committee Members believe that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC.
5. Assets Greater Than 5% of Plan Assets
Investments that represent 5% or more of the plan assets are as follows:
December 31,
1997 1996
---- ----
Guaranteed Long-Term Account $3,059,640 $3,154,145
ORI Stock Account 6,289,111 4,598,138
Fidelity Advisor Income and Growth Fund 1,539,776 1,066,675
Fidelity Advisor Growth Opportunities Fund 1,602,320 1,130,298
Stock Market Index 743,725 ---
6. Contributions
Participants may elect to contribute to any one or more of the five funds
established with Connecticut General Life Insurance Company and the ORI Stock
Account. The number of participants with account balances at December 31, 1997
and 1996 was as follows:
December 31,
1997 1996
---- ----
Number of participants with account balances 478 470
7. Plan Termination
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contribution at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of plan termination,
participants shall become 100 percent vested in the accounts and are entitled to
a distribution of their account balances.
F-10
BITUMINOUS 401(k) SAVINGS PLAN
SUPPLMENTAL SCHEDULE
ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
As of December 31, 1997
Contract/
Description of Investment Current
Identify of Issue including interest rate Cost Value
- ----------------- ------------------------- ---- --------
CIGNA Long-term investment fund $3,059,640 $3,059,640
Guaranteed Long-Term
Account
CIGNA Separate Account Pooled separate account 1,186,122 1,539,776
Fidelity Advisor Income
and Growth Fund
CIGNA Separate Account Pooled separate account 1,104,093 1,602,320
Fidelity Advisor Growth
Opportunities Fund
CIGNA Short=term investment fund 190,330 190,330
Guaranteed Government
Securities Account
CIGNA Pooled separate account 584,118 743,725
Stock Market
Index Account
ORI Stock Account Common stock 2,151,340 6,289,111
Participant loans --- 223,031
---------- -----------
Total $8,275,643 $13,647,933
========== ===========
BITUMINOUS 401(k) SAVINGS PLAN
SUPPLMENTAL SCHEDULE
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
As of December 31, 1997
Number of Identity of Party Date of Transaction Cost of Gain on
Transactions Involved Description of Asset Transaction Price Asset Sale
- ------------ ----------------- -------------------- ----------- ----------- ------- -------
73 Connecticut General Life Deposit in Guaranteed Various $688,804 $688,804 N/A
Insurance Company Long-Term Account
81 Connecticut General Life Sales of Guaranteed Various 957,802 957,802 ---
Insurance Company Long-Term Account
46 Connecticut General Life ORI Stock Account Various 489,283 489,283 N/A
Insurance Company Purchases
72 Connecticut General Life ORI Stock Account Various 551,952 304,298 $247,654
Insurance Company Sales
Exhibit 9
---------
SECOND AMENDMENT
OF
BITUMINOUS 401(K) SAVINGS PLAN
(As Amended and Restated Effective January 1, 1994)
WHEREAS, Bituminous Casualty Corporation (the "corporation") maintains the
Bituminous 401(k) Savings Plan (the "plan"); and
WHEREAS, the plan was amended and restated effective January 1, 1994, and
has subsequently been further amended; and
WHEREAS, it now is considered desirable to further amend the plan;
NOW, THEREFORE, by virtue and in exercise of the power reserved to this
corporation by subsection 11.1 of the plan, the plan, as previously amended, be
and is hereby further amended in the following particulars:
1. By substituting the following for subsection 2.1 of the plan:
"2.1. Participation. Subject to the conditions and limitations
of the plan, each employee of an employer who is a participant
in the plan immediately preceding October 1, 1997 will continue
as a participant on and after that date. Beginning October 1,
1997, each other employee of an employer will become eligible to
enroll in the plan in accordance with subsection 2.2 and become
a participant on the last to occur of October 1, 1997, his date
of hire or the start of the payroll period in which he attains
age 21 years."
2. By substituting the following for the third sentence of subsection 2.2
of the plan:
"If an employee does not elect to join the plan on the first
date he is eligible to do so, he may join the plan at the start
of any subsequent payroll period."
3. By adding the following sentence at the end of subsection 2.3 of the
plan:
"Notwithstanding any provision of the plan to the contrary,
contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with
Section 414(u) of the Internal Revenue Code."
4. By substituting the following for subsection 2.5 of the plan:
"2.5. Employees and Leased Employees. For all purposes of the
plan, an individual shall be an 'employee' of or be 'employed '
by an employer for any plan year only if such individual is
treated by the employer for such plan year as its employee for
purposes of employment taxes and wage withholding for Federal
income taxes, regardless of any subsequent reclassification by
the employer, any governmental agency or court. A leased
employee (as defined below) shall not be eligible to participate
in the plan. A 'leased employee' means any person who is not an
employee of an employer, but who has provided services for the
employer under primary direction or control by the employer, on
a substantially full time basis for a period of at least one
year, pursuant to an agreement between the employer and a
leasing organization. The period during which a leased employee
performs services for an employer shall be taken into account
for purposes of subsection 7.2 of the plan if such leased
employee becomes an employee of an employer unless (i) such
leased employee is a participant in a money purchase pension
plan maintained by the leasing organization which provides a
non-integrated employer contribution rate of at least 10 percent
of compensation, immediate participation for all employees and
full and immediate vesting, and (ii) leased employees do not
constitute more than 20 percent of the employer's nonhighly
compensated workforce."
5. By substituting the words "nor more than nine percent" for the words
"nor more than six percent" where the latter appear in the first sentence of
subsection 3.1 of the plan.
6. By substituting the following for subsection 3.2 of the plan:
"3.2. Changes in Basic Contributions. A participant may elect to
change his basic contribution rate (but not retroactively)
within the limits specified above, as of the start of any
payroll period. A participant also may elect to discontinue his
basic contributions as of the start of any payroll period and,
thereafter, to resume such contributions as of the start of any
payroll period. Each such election must be in writing and filed
with the committee at such time and in accordance with such
rules and procedures as may be established by the committee."
7. By substituting the following for subsection 4.1 of the plan:
-2-
"4.1. Employer Contributions. Each employer will contribute to
the trustee on behalf of each participant employed by the
employer the amount of basic contributions made from the
participant's earnings from that employer in accordance with the
participant's basic contribution election then in effect. Each
employer also will contribute to the trustee on behalf of each
participant employed by the employer a 'matching contribution'
equal to 25 percent of the participant's earnings (not to exceed
six percent (6%)) that the participant elects to contribute to
the plan as basic contributions for a payroll period that
(effective October 1, 1997) ends on or after the first
anniversary of his date of hire. Notwithstanding the foregoing,
a participant who has elected to make basic contributions to the
plan in excess of six percent of his earnings for a portion of a
plan year shall receive employer matching contributions for any
part of that plan year that such participant is unable to make
basic contributions du e solely to the limitation contained in
subsection 3.4 (but is otherwise eligible to share in employer
matching contributions) in the same amount as if such excess
over six percent were contributed at the rate of six percent of
earnings (until exhausted) during the period in which he is
restricted from making basic contributions. Basic and matching
contributions will be paid to the trustee as soon as practicable
after the end of the payroll period to which they pertain, but
no later than the 15th business day of the next following
calendar month."
8. By substituting the following for the fifth sentence o f subparagraph
4.2(a) of the plan:
"In applying the limitations of this subparagraph 4.2(a), the
basic contributions of highly compensated employees will be
reduced to the extent necessary in the order of their basic
contribution amounts beginning with the largest amount."
9. By substituting the following for the sixth sentence of subparagraph
4.2(b) of the plan:
"In applying the limitations of this subparagraph 4.2(b), a
highly compensated employee's voluntary after-tax contributions
(if any) to another plan will be reduced first and then matching
contributions allocated under this plan to the extent necessary,
and any such reductions will be made in the order of aggregate
contributions (subject to the limits of this subparagraph
4.2(b)) by each highly compensated employee beginning with the
largest amount."
10. By substituting the following for the first sentence in subsection 4.2
that follows subparagraph (c) thereof:
"(d) Notwithstanding any provisions of this subsection 4.2
to the contrary, the limitations of subparagraphs (a)
and (b) above shall be applied in plan years commencing
on or after January 1, 1997 (or January 1, 1998, if the
committee elects to defer the application of this sub-
paragraph (d) until January 1, 1998) based upon the
actual deferral percentage and contribution percentage
of nonhighly compensated employees for the plan year
immediately preceding the plan year for which such
limitations are being applied to highly compensated
employees.
-3-
For purposes of applying the limitations on contributions described in
this subsection 4.2, a "highly compensated employee" means any present
or former employee who:
(A) was a 5 percent owner of an employer or controlled group
member during the current or immediately preceding plan year; or
(B) received compensation from an employer or controlled group
member of more than $80,000 (or such greater amount as may be
determined by the Commissioner of Internal Revenue) during the
immediately preceding plan year."
11. By substituting the following for the last sentence of subsection 4.3
of the plan:
"Solely for purposes of applying the actual deferral percentage and
contribution percentage tests described in subparagraphs 4.2(a) and (b)
above, the employers may elect for any plan year that compensation
earned before the participant was eligible to make basic contributions
(or share in employer matching contributions) be disregarded, and may
include or not include all elective contributions made pursuant to
Sections 125 and 401(k) of the Code; provided that, such elections are
made on a consistent and uniform basis with respect to all employees for
any such year."
12. By substituting the following for subsection 6.10 of the plan:
"6.10. Contribution Limitations. For each plan year, the 'annual
addition' (as defined below) to a participant's accounts under
this plan and under any other defined contribution plan
maintained by the employer or controlled group member shall not
exceed the lesser of (i) the sum of $30,000 (or such greater
amount as may be determined by the Commissioner of Internal
Revenue for the calendar year which begins with or within that
plan year) or (ii) 25 percent of the participant's compensation
during that plan year. The term 'annual addition' for any plan
year means the sum of the following amounts allocated to a
participant's accounts under any such plans for that year:
(a) employer contributions (including participant basic
contributions);
(b) participant after-tax contributions; and
(c) remainders.
-4-
Participant after-tax contributions (plus earnings thereon) and secondly
a participant's basic contributions (plus earnings thereon) for a plan
year will be returned to the participant, if necessary, to comply with
these limitations. Lastly, matching contributions which cannot be
allocated to a participant because of the foregoing limitations shall be
applied to reduce employer contributions in succeeding plan years, in
order of time. In the case of any participant who was covered by both a
defined benefit plan and a defined contribution plan of the employers,
the benefits provided for him under both plans will be adjusted to the
extent necessary (fo r years prior to January 1, 2000) to comply with
the combined benefit and contribution limitations set forth in Section
415 of the Internal Revenue Code and Section 1106 of the Tax Reform Act
of 1986. In making such adjustments, the benefits that otherwise would
have been payable to the participant under the defined benefit plan will
be limited first ."
13. By substituting the following for the third sentence of subsection 7.2
of the plan
"A 'year of service' shall mean any calendar year in which the
participant has completed at least 1,000 hours of service, except that
years of service before the year in which the participant attains age 18
shall be disregarded. An 'hour of service' means each hour for which an
employee is directly or indirectly paid or entitled to payment by an
employer or controlled group member for the performance of duties and
for reasons other than the performance of duties, including each hour
for which back pay, irrespective of mitigation of damages, has been
either awarded or agreed to by an employer or controlled group member,
determined and credited in accordance with Department of Labor Reg. Sec.
2530.200b-2."
14. By substituting the following for the first clause of the first
sentence of subsection 7.4 of the plan:
"Within a reasonable time after a participant's settlement date, and
subject to the conditions set forth below, at the participant's
election, all or a portion of the net credit balances in the
participant's accounts will be distributed to or for his benefit, or in
the case of his death, to or for the benefit of his beneficiary, by one
of the following methods:"
Particular 3 above shall be effective as of December 12, 1994 ; particulars
4, 5, 7, 8, 9, 10, 11, 12 and 14 above shall be effective as of January 1, 1997;
and particulars 1, 2, 6 and 13 above shall be effective October 1, 1997.
-5-
IN WITNESS WHEREOF, the undersigned duly authorized officer of the
corporation has caused this amendment to be executed this day of , 1997.
BITUMINOUS CASUALTY CORPORATION
By: _________________________________
Its: _________________________________
(Corporate Seal)
ATTEST:
- -------------------------------
Its: __________________________