OLD REPUBLIC INTERNATIONAL CORP [ORI] Filings

10-Q 1 ori-20220331.htm 10-Q ori-20220331



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:	March 31, 2022
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 March 31, 2022 was 308,303,220.

There are 44 pages in this report


OLD REPUBLIC INTERNATIONAL CORPORATION

Report on Form 10-Q / March 31, 2022

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 - 17

	MANAGEMENT ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS	18 - 40

	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	41

	CONTROLS AND PROCEDURES	41

PART II	OTHER INFORMATION:

	ITEM 1 - LEGAL PROCEEDINGS	42

	ITEM 1A - RISK FACTORS	42

	ITEM 6 - EXHIBITS	42

SIGNATURE		43

EXHIBIT INDEX		44


Old Republic International Corporation and Subsidiaries
Consolidated Balance Sheets
($ in Millions, Except Share Data)
	(Unaudited)
	March 31,		December 31,
	2022		2021
Assets
Investments:
Available for sale:
Fixed income securities (at fair value) (amortized cost: $11,007.8 and $10,438.6)	$	10,736.2	$	10,675.7
Short-term investments (at fair value which approximates cost)	739.8		565.7
Total	11,476.1		11,241.4
Equity securities (at fair value) (cost: $3,356.3 and $3,766.5)	4,972.4		5,302.8
Other investments	31.8		32.0
Total Investments	16,480.3		16,576.3
Other Assets:
Cash	95.1		158.1
Accrued investment income	88.8		84.4
Accounts and notes receivable	1,861.8		1,768.7
Federal income tax recoverable: Current	—		11.8


Reinsurance balances and funds held	346.4		258.1
Reinsurance recoverable: Paid losses	114.3		118.2
Policy and claim reserves	4,952.6		4,825.1
Deferred policy acquisition costs	358.9		350.4
Sundry assets	820.2		830.3
Total Other Assets	8,638.4		8,405.5
Total Assets	$	25,118.8	$	24,981.8
Liabilities, Preferred Stock, and Common Shareholders' Equity
Liabilities:
Losses, claims, and settlement expenses	$	11,569.1	$	11,425.5
Unearned premiums	2,675.7		2,559.4
Other policyholders' benefits and funds	193.9		192.6
Total policy liabilities and accruals	14,438.8		14,177.5
Commissions, expenses, fees, and taxes	568.2		573.5
Reinsurance balances and funds	1,002.1		866.0
Federal income tax payable: Current	46.1		—
Deferred	157.2		249.5
Debt	1,594.2		1,588.5
Sundry liabilities	561.8		633.3
Commitments and contingent liabilities
Total Liabilities	18,368.6		18,088.6
Preferred Stock (1)	—		—
Common Shareholders' Equity:
Common stock (1)	308.3		307.5
Additional paid-in capital	1,391.3		1,376.1
Retained earnings	5,450.8		5,214.0
Accumulated other comprehensive income (loss)	(320.7)		78.0
Unallocated ESSOP shares (at cost)	(79.6)		(82.5)
Total Common Shareholders' Equity	6,750.1		6,893.2
Total Liabilities, Preferred Stock and Common Shareholders' Equity	$	25,118.8	$	24,981.8

________

(1) At March 31, 2022 and December 31, 2021, 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 308,303,220 and 307,565,632 were issued as of March 31, 2022 and December 31, 2021, respectively. At March 31, 2022 and December 31, 2021, 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
	March 31,
		2022		2021
Revenues:
Net premiums earned		$	1,828.7	$	1,732.2
Title, escrow, and other fees		90.2		106.6
Total premiums and fees		1,919.0		1,838.9
Net investment income		106.2		104.3
Other income		36.2		36.3
Total operating revenues		2,061.5		1,979.6
Net investment gains (losses):
Realized from actual transactions		65.2		7.8

Unrealized from changes in fair value of
equity securities		79.8		367.5
Total realized and unrealized investment
gains (losses)		145.1		375.4
Total revenues		2,206.6		2,355.0

Benefits, Claims and Expenses:
Benefits, claims and settlement expenses		604.4		598.0
Dividends to policyholders		3.4		5.4
Underwriting, acquisition, and other expenses		1,199.0		1,110.3
Interest and other charges		16.9		10.6
Total expenses		1,823.9		1,724.4
Income (loss) before income taxes (credits)		382.6		630.6

Income Taxes (Credits):
Current		63.1		50.7
Deferred		13.2		77.7
Total		76.3		128.5

Net Income (Loss)		$	306.3	$	502.1

Net Income (Loss) Per Share:
Basic		$	1.01	$	1.68
Diluted		$	1.00	$	1.68

Average shares outstanding: Basic		303,582,578		298,753,132
Diluted		305,424,592		299,693,514

See accompanying Notes to Consolidated Financial Statements.


Old Republic International Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
($ in Millions)
	Quarters Ended
	March 31,
		2022		2021
Net Income (Loss) As Reported		$	306.3	$	502.1

Other comprehensive income (loss):
Unrealized gains (losses) on securities not included
in the statements of income:
Unrealized gains (losses) before reclassifications,
not included in the statements of income		(533.2)		(242.4)
Amounts reclassified as realized investment (gains)
losses in the statements of income		21.7		(.3)
Pretax unrealized gains (losses) on securities not
included in the statements of income		(511.5)		(242.7)
Deferred income taxes (credits)		(108.0)		(51.1)
Net unrealized gains (losses) on securities not included
in the statements of income, net of tax		(403.5)		(191.5)
Defined benefit pension plans:
Net pension adjustment before reclassifications		—		—
Amounts reclassified as underwriting, acquisition,
and other expenses in the statements of income		.7		1.8
Pretax net adjustment related to defined benefit
pension plans		.7		1.8
Deferred income taxes (credits)		.1		.3
Net adjustment related to defined benefit pension
plans, net of tax		.6		1.4
Foreign currency translation adjustment		4.1		3.0
Total other comprehensive income (loss)		(398.7)		(187.0)
Comprehensive Income (Loss)		$	(92.4)	$	315.0

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
	March 31,
		2022		2021
Preferred Stock:
Balance, beginning and end of period		$	—	$	—

Common Stock:
Balance, beginning of period		$	307.5	$	304.1
Dividend reinvestment plan		—		—
Net issuance of shares under stock based compensation plans		.7		.5
Balance, end of period		$	308.3	$	304.7

Additional Paid-in Capital:
Balance, beginning of period		$	1,376.1	$	1,306.9
Dividend reinvestment plan		.2		1.1
Net issuance of shares under stock based compensation plans		12.8		7.8
Stock based compensation		.4		2.3
ESSOP shares released		1.6		.6

Balance, end of period		$	1,391.3	$	1,318.9

Retained Earnings:
Balance, beginning of period		$	5,214.0	$	4,394.8


Net income (loss)		306.3		502.1
Dividends on common shares ($.23 and $.22 per common share)		(69.4)		(65.4)
Balance, end of period		$	5,450.8	$	4,831.4

Accumulated Other Comprehensive Income (Loss):
Balance, beginning of period		$	78.0	$	284.0
Net unrealized gains (losses) on securities not included in the
statements of income, net of tax		(403.5)		(191.5)
Net adjustment related to defined benefit pension plans,
net of tax		.6		1.4
Foreign currency translation adjustment		4.1		3.0

Balance, end of period		$	(320.7)	$	96.9

Unallocated ESSOP Shares:
Balance, beginning of period		$	(82.5)	$	(103.2)
ESSOP shares released		2.9		2.9

Balance, end of period		$	(79.6)	$	(100.3)

See accompanying Notes to Consolidated Financial Statements.


Old Republic International Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
($ in Millions)
	Quarters Ended
	March 31,
	2022		2021
Cash flows from operating activities:
Net income (loss)	$	306.3	$	502.1
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Deferred policy acquisition costs	(8.4)		(6.8)
Premiums and other receivables	(93.0)		(32.7)
Unpaid claims and related items	84.5		102.4
Unearned premiums and other policyholders' liabilities	49.0		15.5
Income taxes	73.5		111.1

Reinsurance balances and funds	51.6		37.9
Realized investment (gains) losses from actual transactions	(65.2)		(7.8)
Unrealized investment (gains) losses from changes in fair value
of equity securities	(79.8)		(367.5)
Accounts payable, accrued expenses and other	(40.0)		(58.1)
Total	278.4		296.0

Cash flows from investing activities:
Fixed income securities:
Maturities and early calls	324.6		335.6
Sales	173.7		156.5



Sales of:
Equity securities	497.9		195.7
Other - net	2.2		2.2

Purchases of:
Fixed income securities	(1,094.3)		(659.3)
Equity securities	(.1)		(36.5)
Other - net	(9.5)		(17.6)
Net decrease (increase) in short-term investments	(174.1)		111.7
Other - net	(5.8)		—
Total	(285.4)		88.3

Cash flows from financing activities:

Issuance of common shares	13.8		9.6
Redemption of debentures and notes	—		(19.5)

Dividends on common shares (including a special dividend paid in January
2021 of $304.0)	(69.4)		(369.5)
Other - net	(.3)		(.3)
Total	(56.0)		(379.7)

Increase (decrease) in cash	(63.0)		4.7
Cash, beginning of period	158.1		118.7
Cash, end of period	$	95.1	$	123.4

Supplemental cash flow information:
Cash paid (received) during the period for: Interest	$	20.4	$	20.4
Income taxes	$	2.8	$	17.1

See accompanying Notes to Consolidated Financial Statements.


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

Note 1 - Summary of Significant Accounting Policies

Accounting Principles - 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 2021 Annual Report on Form 10-K incorporated herein by reference. 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. Pertinent accounting and disclosure pronouncements issued from time to time by the FASB are adopted by the Company as they become effective.

Statement Presentation - Amounts shown in the consolidated financial statements and applicable notes are stated (except as otherwise indicated and as to share data) in millions, which amounts may not add to totals shown due to truncation. Reclassifications are made in prior periods' financial statements whenever appropriate to conform to the most current presentation.

Investments - The Company classifies its fixed income securities, also referred to as fixed maturity securities, as those it either (1) has the intent and ability to hold until maturity, (2) has available for sale or (3) has the intention of trading. The Company's entire fixed income portfolio is classified as available for sale.

Fixed income securities classified as available for sale are reported at fair value with changes in such values, net of deferred income taxes, reflected directly in shareholders' equity. Equity securities are reported at fair value with changes in such values reflected as unrealized investment gains (losses) in the consolidated statements of income. Fair values 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 income investments are reviewed at least once per quarter during the year to assess whether a decline in fair value of an investment below its cost basis is the result of a credit loss. Credit losses are recorded through an allowance with the corresponding charge to realized investment gains (losses). If the Company intends to sell or is more likely than not required to sell a security, the asset is written down to fair value directly through realized investment gains (losses).

Investment income is reported net of allocated expenses and includes appropriate adjustments for amortization of premium and accretion of discount on fixed income securities acquired at other than par value. Dividends on equity securities are credited to income on the ex-dividend date. At March 31, 2022, the Company and its subsidiaries did not have significant amounts of non-income producing fixed income or equity securities.

Investment gains and losses, which result from sales or write downs of securities, are reflected as revenues in the income statement and are determined on the basis of amortized cost at date of sale for fixed income securities, and cost in regard to equity securities; such bases apply to the specific securities sold.

Revenue Recognition - 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.

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 20% of 2022 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 title premium and fee revenues are produced by independent title agents. 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.

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 possibility of 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. Management 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 significantly 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 to the consolidated financial statements included in Old Republic’s 2021 Annual Report on Form 10-K.

Employee Benefit Plans - The Company has a closed pension plan (the "Plan") for certain employees under which benefits were frozen as of December 31, 2013. The underfunded status of the Plan is recognized as a net pension liability with offsetting entries reflected as a component of shareholders' equity in accumulated other comprehensive income, net of deferred taxes.

The Company also provides long-term incentive awards to certain employees. In March 2022, the Compensation Committee of the Company's Board of Directors approved the grant of stock-based awards to certain employees under the 2022 Incentive Compensation Plan which is pending shareholder approval in May 2022.

Note 2 - Investments

The amortized cost and estimated fair values by type and contractual maturity of fixed income 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 Income Securities by Type:
March 31, 2022:
U.S. & Canadian Governments	$	2,244.4	$	5.6	$	44.0	$	2,206.0
Tax-exempt	929.5		4.3		2.9		930.9
Corporate	7,833.7		47.6		282.1		7,599.2
	$	11,007.8	$	57.6	$	329.1	$	10,736.2

December 31, 2021:
U.S. & Canadian Governments	$	2,121.6	$	44.8	$	7.9	$	2,158.5
Tax-exempt	944.9		44.3		—		989.2
Corporate	7,372.1		220.0		64.2		7,527.9
	$	10,438.6	$	309.2	$	72.2	$	10,675.7


	Amortized Cost		Estimated Fair Value
Fixed Income Securities Stratified by Contractual Maturity at March 31, 2022:
Due in one year or less	$	1,270.0	$	1,274.5
Due after one year through five years	5,433.1		5,414.4
Due after five years through ten years	4,217.2		3,962.4
Due after ten years	87.4		84.8
	$	11,007.8	$	10,736.2

The following table reflects the Company's gross unrealized losses and fair value, aggregated by category and length of time that individual securities have been in an unrealized loss position. Fair value and issuer's cost comparisons follow:


	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2022:

Fixed Income Securities:
U.S. & Canadian Governments	$	1,503.4	$	33.3	$	213.7	$	10.7	$	1,717.2	$	44.0
Tax-exempt	349.0		2.9		—		—		349.0		2.9
Corporate	3,895.0		249.2		250.2		32.9		4,145.3		282.1
	$	5,747.5	$	285.5	$	464.0	$	43.6	$	6,211.6	$	329.1

Number of securities in
unrealized loss position			980				60				1,040

December 31, 2021:

Fixed Income Securities:
U.S. & Canadian Governments	$	761.8	$	6.2	$	43.2	$	1.6	$	805.0	$	7.9
Corporate	2,032.8		55.5		174.1		8.7		2,207.0		64.2
	$	2,794.7	$	61.8	$	217.3	$	10.3	$	3,012.0	$	72.2

Number of securities in
unrealized loss position			419				32				451

In the above tables the unrealized losses on fixed income securities are primarily deemed to reflect changes in the interest rate environment. As part of its assessment of credit losses, the Company considers its intent and ability to continue to hold the securities until cost recovery, principally in consideration of its asset and liability maturity matching objectives. The Company recorded no allowance for credit losses as of March 31, 2022, and December 31, 2021.

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


	Equity Securities
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
March 31, 2022	$	3,356.3	$	1,658.1	$	42.0	$	4,972.4
December 31, 2021	$	3,766.5	$	1,620.8	$	84.5	$	5,302.8

During the first quarters of 2022 and 2021, the Company recognized pretax unrealized investment gains (losses) of $79.8 and $367.5, respectively, emanating from changes in the fair value of equity securities in the consolidated statements of income. Changes in the fair value of equity securities still held at March 31, 2022 and 2021 were $182.2, and $359.8, respectively.

Fair Value Measurements - Fair value is defined as the estimated price that is likely to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (an exit price) at the measurement date. A fair value hierarchy is established that prioritizes the sources ("inputs") used to measure fair value into three broad levels: Level 1 inputs are based on quoted market prices in active markets; Level 2 observable inputs are based on corroboration with available market data; and Level 3 unobservable inputs are based on uncorroborated market data or a reporting entity's own assumptions. Following is a description of the valuation methodologies and general classification used for financial instruments measured at fair value.

The Company uses quoted values and other data provided by a nationally recognized independent pricing source as inputs into its quarterly process for determining fair values of fixed income and equity securities. To validate the techniques or models used by pricing sources, the Company's review process includes, but is not limited to: (i) initial and ongoing evaluation of methodologies used by outside parties to calculate fair value; and (ii) comparisons with other sources including the fair value estimates based on current market quotations, and with independent fair value estimates provided by the independent investment custodian. The independent pricing source obtains market quotations and actual transaction prices for securities that have quoted prices in active markets and uses their own proprietary method for determining the fair value of securities that are not actively traded. In general, these methods involve the use of "matrix pricing" in which the independent pricing source uses observable market inputs including, but not limited to, investment yields, credit risks and spreads, benchmarking of like securities, broker-dealer quotes, reported trades and sector groupings to determine a reasonable fair value.

Level 1 securities include U.S. and Canadian Treasury notes, publicly traded common stocks, mutual funds, and short-term investments in highly liquid money market instruments. Level 2 securities generally include corporate

bonds, municipal bonds, and certain U.S. and Canadian government agency securities. Securities classified within Level 3 include non-publicly traded bonds and equity securities. There were no significant changes in the fair value of Level 3 assets as of March 31, 2022 and December 31, 2021.

The following tables show a summary of the fair value of financial assets segregated among the various input levels described above:


	Fair Value Measurements
As of March 31, 2022:	Level 1		Level 2		Level 3		Total
Available for sale:
Fixed income securities:
U.S. & Canadian Governments	$	1,530.9	$	675.0	$	—	$	2,206.0
Tax-exempt	—		930.9		—		930.9
Corporate	—		7,588.7		10.5		7,599.2
Short-term investments	739.8		—		—		739.8
Equity securities	$	4,970.5	$	—	$	1.8	$	4,972.4

As of December 31, 2021:
Available for sale:
Fixed income securities:
U.S. & Canadian Governments	$	1,453.8	$	704.6	$	—	$	2,158.5
Tax-exempt	—		989.2		—		989.2
Corporate	—		7,517.4		10.5		7,527.9
Short-term investments	565.7		—		—		565.7
Equity securities	$	5,300.8	$	—	$	1.9	$	5,302.8

There were no transfers between Levels 1, 2 or 3 during the quarter ended March 31, 2022.

The following table reflects the composition of net investment income, net realized gains or losses, and the net change in unrealized investment gains or losses for each of the periods shown.


	Quarters Ended
	March 31,
		2022		2021
Investment income:
Fixed income securities		$	66.2	$	69.7
Equity securities		41.5		36.1
Short-term investments		.1		—
Other sources		.2		—
Gross investment income		108.1		105.9
Investment expenses (a)		1.8		1.6
Net investment income		$	106.2	$	104.3

Net investment gains (losses):
Realized from actual transactions:
Fixed income securities:
Gains		$	—	$	.6
Losses		(21.8)		(.2)
Net		(21.7)		.3
Equity securities:
Gains		113.5		36.3
Losses		(26.5)		(28.8)
Net		87.0		7.5

Total realized from actual transactions		65.2		7.8
From unrealized changes in fair value of equity securities		79.8		367.5
Total realized and unrealized investment gains (losses)		145.1		375.4
Current and deferred income taxes (credits)		30.5		79.6
Net of tax realized and unrealized investment gains (losses)		$	114.5	$	295.7

Changes in unrealized investment gains (losses)
reflected directly in shareholders' equity:
Fixed income securities		$	(507.3)	$	(241.1)
Less: Deferred income taxes (credits)		(107.1)		(50.8)
		(400.2)		(190.3)

Other investments		(4.1)		(1.6)
Less: Deferred income taxes (credits)		(.8)		(.3)
		(3.3)		(1.2)
Net changes in unrealized investment gains (losses),
net of tax		$	(403.5)	$	(191.5)

__________

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

Note 3 - Losses, Claims and Settlement Expenses

The following table shows changes in aggregate reserves for the Company's losses, claims and settlement expenses:


	Quarters Ended
	March 31,
	2022		2021
Gross reserves at beginning of period	$	11,425.5	$	10,671.0
Less: reinsurance losses recoverable	4,125.3		3,650.5
Net reserves at beginning of period:
General Insurance	6,587.0		6,328.0
Title Insurance	594.2		556.1
RFIG Run-off	111.2		127.6
Other	7.6		8.6
Sub-total	7,300.2		7,020.4
Incurred claims and claim adjustment expenses:
Provisions for insured events of the current year:
General Insurance	607.6		585.0
Title Insurance	35.7		35.3
RFIG Run-off	4.0		5.5
Other	2.4		4.2
Sub-total	649.8		630.1
Change in provision for insured events of prior years:
General Insurance	(28.8)		(23.1)
Title Insurance	(6.3)		(6.0)
RFIG Run-off	(8.3)		(1.2)
Other	(1.5)		(1.6)
Sub-total	(45.0)		(32.0)
Total incurred claims and claim adjustment expenses	604.7		598.1
Payments:
Claims and claim adjustment expenses attributable to
insured events of the current year:
General Insurance	100.4		93.4
Title Insurance	.5		1.1
RFIG Run-off	—		—
Other	.5		1.5
Sub-total	101.4		96.2
Claims and claim adjustment expenses attributable to
insured events of prior years:
General Insurance	394.2		380.8
Title Insurance	20.1		12.9
RFIG Run-off	3.4		4.4
Other	.8		1.1
Sub-total	418.6		399.4
Total payments	520.1		495.6
Amount of reserves for unpaid claims and claim adjustment expenses
at the end of each period, net of reinsurance losses recoverable:
General Insurance	6,671.1		6,415.5
Title Insurance	602.9		571.4
RFIG Run-off	103.5		127.4
Other	7.2		8.5
Sub-total	7,384.8		7,122.9
Reinsurance losses recoverable	4,184.2		3,730.4
Gross reserves at end of period	$	11,569.1	$	10,853.3

For the quarter ended March 31, 2022, all operating segments experienced favorable loss reserve development. General Insurance favorable development was the result of better than expected claims experience related predominantly to workers’ compensation and commercial automobile reserves on 2015-2018 and 2020 accident

years. Favorable development experienced from Title Insurance occurred largely within the 2017-2019 accident years, while RFIG Run-off was driven by improving trends in delinquency cure rates.

Note 4 - 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. 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 2018 and subsequent tax years remain open.

Note 5 - Net Income Per Share

Consolidated basic earnings per share excludes the dilutive effect of common stock equivalents and is computed by dividing income (loss) available to common stockholders by the weighted-average number of common shares actually outstanding for the periods presented. Diluted earnings per share are similarly calculated with the inclusion of dilutive common stock equivalents. The following table provides a reconciliation of net income (loss) and the number of shares used in basic and diluted earnings per share calculations.


	Quarters Ended
	March 31,
		2022		2021
Numerator:
Basic and diluted earnings per share -
income (loss) available to common stockholders		$	306.3	$	502.1



Denominator:
Basic earnings per share -
weighted-average shares (a)		303,582,578		298,753,132
Effect of dilutive securities - stock based
compensation awards		1,842,014		940,382
Diluted earnings per share -
adjusted weighted-average shares (a)		305,424,592		299,693,514
Earnings per share: Basic		$	1.01	$	1.68
Diluted		$	1.00	$	1.68

Anti-dilutive common stock equivalents
excluded from earnings per share computations:
Stock based compensation awards		—		7,020,142

__________

(a) In calculating earnings per share, pertinent accounting standards 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.

Note 6 - Credit Losses

Credit losses on financial assets measured at amortized cost, primarily the Company’s reinsurance recoverables and accounts and notes receivable, are recognized based on estimated losses expected to occur over the life of the asset. The expected credit losses, and subsequent adjustment to such losses, are recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the asset presented on the consolidated balance sheets.

The Company’s credit allowance was comprised of $16.0 related to reinsurance recoverables as of both March 31, 2022 and December 31, 2021, and $25.1 and $24.1 related to accounts and notes receivable, as of March 31, 2022 and December 31, 2021, respectively.

The Company’s evaluation of credit allowances on available for sale fixed income securities is discussed further in Note 2. The Company is not exposed to material concentrations of credit risks as to any one issuer of investment securities.

Note 7 - Debt

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


	March 31, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
4.875% Senior Notes issued in 2014 and due 2024	$	398.6	$	414.9	$	398.4	$	435.8
3.875% Senior Notes issued in 2016 and due 2026	547.5		555.8		547.3		597.0
3.850% Senior Notes issued in 2021 and due 2051	642.7		601.5		642.6		702.9
Other miscellaneous debt	5.3		5.3		—		—
Total debt	$	1,594.2	$	1,577.6	$	1,588.5	$	1,735.7

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 used 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 were 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:
March 31, 2022	$	1,594.2	$	1,577.6	$	—	$	1,572.3	$	5.3
December 31, 2021	$	1,588.5	$	1,735.7	$	—	$	1,735.7	$	—

Note 8 - Commitments and Contingent Liabilities

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 March 31, 2022, the Company had no material non-claim litigation exposures in its consolidated business.

Note 9 - Information About Segments of Business

The Company is engaged in the single business of insurance underwriting and related services. It conducts its operations through a number of regulated insurance company subsidiaries organized into three major segments: General Insurance (property and liability insurance), Title Insurance and the Republic Financial Indemnity Group ("RFIG") Run-off. The results of a small life and accident insurance business are included within the Corporate & Other caption of this report. Old Republic's business is managed for the long run. In this context management's key objectives are to achieve highly profitable operating results over the long term, and to ensure balance sheet strength for the primary needs of the insurance subsidiaries' underwriting and related services business. In this view, the evaluation of periodic and long-term results excludes consideration of all investment gains (losses). Under GAAP, however, net income, inclusive of investment gains (losses), is the measure of total profitability. In management's opinion, the focus on income excluding investment gains (losses), also described herein as segment pretax operating income (loss), provides a better way to analyze, evaluate, and establish accountability for the results of the insurance operations. The inclusion of realized investment gains (losses) in net income can mask trends in operating results, because such realizations are often highly discretionary. Similarly, the inclusion of unrealized investment gains (losses) in equity securities can further distort such operating results with significant period-to-period fluctuations. The contributions of Old Republic's insurance industry segments to consolidated totals are shown in the following table.


	Quarters Ended
	March 31,
		2022		2021
General Insurance:
Net premiums earned		$	910.9	$	859.1
Net investment income and other income		118.4		120.9
Total revenues excluding investment gains (losses)		$	1,029.4	$	980.0
Segment pretax operating income (loss) (a)		$	142.5	$	140.8
Income tax expense (credits)		$	27.6	$	27.3

Title Insurance:
Net premiums earned		$	908.7	$	861.0
Title, escrow and other fees		90.2		106.6
Sub-total		998.9		967.7
Net investment income and other income		11.5		10.7
Total revenues excluding investment gains (losses)		$	1,010.5	$	978.4
Segment pretax operating income (loss) (a)		$	80.9	$	103.7
Income tax expense (credits)		$	16.9	$	21.8

RFIG Run-off:
Net premiums earned		$	6.5	$	9.2
Net investment income and other income		2.0		3.2
Total revenues excluding investment gains (losses)