<PAGE>
SECURITIES AND EXCHANGE COMMISSION
OF THE SECURITIES EXCHANGE ACT OF 1934
FORM 10 - Q
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30,
1996 or
[ ] Transition report pursuant to section 13 or15(d) of the Securities
Exchange Act of 1934
Commission File Number 0-4625
OLD REPUBLIC INTERNATIONAL CORPORATION
-----------------------------------------
(Exact name ofregistrant as specified in its charter)
Delaware No. 36-2678171
- ------------------------ ----------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
307 North Michigan Avenue, Chicago, Illinois 60601
- -----------------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 312-346-8100
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
Shares Outstanding
Class September 30, 1996
- --------------------------- -------------------------
Common Stock / $1 par value 86,671,064 *
* Excludes 6,658,901 common shares issued, outstanding and held by an affiliate,
which are classified as treasury stock for financial accounting purposes only.
There are 12 pages containedin this report.
<PAGE>
2
OLD REPUBLIC INTERNATIONAL CORPORATION
Report on Form 10-Q /September 30, 1996
INDEX
- -----------------------------------------------------------------------------
PAGE NO.
---------
PART I FINANCIAL INFORMATION:
CONSOLIDATED SUMMARY BALANCE SHEETS 3
CONSOLIDATED SUMMARY STATEMENTS OF INCOME 4
CONSOLIDATED SUMMARY STATEMENTS OF CASH FLOWS 5
NOTES TO CONSOLIDATED SUMMARY FINANCIAL STATEMENTS 6
MANAGEMENT ANALYSIS OF FINANCIAL POSITION AND
RESULTS OF OPERATIONS 7 - 9
PART II OTHER INFORMATION 10 - 12
<PAGE>
3
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEETS (Unaudited)
($ in Millions)
- ----------------------------------------------------------------------------------------------------------------------------
September 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Assets
Investments: Held to maturity:
Fixed maturity securities (at amortized cost)
(fair value: $1,905.8 and $1,759.0) $1,901.5 $1,714.1
Other long-term investments (at cost) 25.2 26.9
------------ ------------
Total 1,926.7 1,741.1
------------ ------------
Available for sale:
Fixed maturity securities (at fair value)
(cost: $1,996.3 and $2,068.9) 2,004.9 2,146.0
Equity securities (at fair value) (cost: $78.8 and $95.7) 113.9 126.1
Short-term investments (at fair value which approximates cost) 266.7 312.7
------------ ------------
Total 2,385.6 2,584.9
------------ ------------
Total investments 4,312.4 4,326.0
------------ ------------
Other Assets: Cash 42.7 19.4
Accrued investment income 72.1 69.7
Reinsurance balances and funds held 119.1 125.1
Reinsurance recoverable: Paid losses 27.2 24.7
Policy and claim reserves 1,426.0 1,416.1
Deferred policy acquisition costs 111.5 107.8
Sundry assets 187.0 190.6
------------ ------------
2,293.0 2,267.4
------------ ------------
Total Assets $6,605.4 $6,593.5
============ ============
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities, Preferred Stock and
Common Shareholders' Equity
Liabilities: Future policy benefits $181.0 $186.0
Losses, claims and settlement expenses 3,561.9 3,519.8
Unearned premiums 394.6 406.7
Other policyholders' benefits and funds 66.4 75.4
------------ ------------
Total policy liabilities and accruals 4,204.0 4,188.0
Commissions, expenses, fees and taxes 110.8 110.3
Reinsurance balances and funds 166.5 169.3
Federal income tax payable: Current 8.3 11.5
Deferred 15.3 10.1
Debt and debt equivalents 118.7 320.5
Sundry liabilities 75.9 98.4
------------ ------------
Total liabilities 4,699.9 4,908.4
------------ ------------
Preferred Redeemable convertible preferred stock 19.5 17.0
Stock: Convertible preferred stock 1.2 0.6
Cumulative preferred stock 54.8 54.8
------------ ------------
Total preferred stock 75.6 72.5
------------ ------------
Common Common stock 95.7 58.8
Shareholders' Additional paid-in capital 572.3 463.4
Equity: Net unrealized appreciation of securities 27.8 70.3
Retained earnings 1,172.3 1,058.3
Treasury stock (at cost) (38.4) (38.4)
------------ ------------
Total Common Shareholders' Equity 1,829.8 1,612.5
------------ ------------
Total Liabilities, Preferred Stock
and Common Shareholders' Equity $6,605.4 $6,593.5
============ ============
See accompanying notes.
</TABLE>
<PAGE>
4
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
CONSOLIDATED SUMMARY STATEMENTS OF INCOME (Unaudited)
($ in Millions, Except Common Share Data)
- ----------------------------------------------------------------------------------------------------------------------------
Quarters Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues: Net premiums earned $342.6 $311.1 $1,004.5 $920.9
Title, escrow and other fees 37.0 34.6 111.3 87.9
Net investment income 65.3 62.4 194.8 186.0
Realized investment gains 6.2 20.2 13.4 25.9
Other income 4.7 5.0 16.0 15.4
----------- ----------- ----------- -----------
Net revenues 456.0 433.5 1,340.2 1,236.3
----------- ----------- ----------- -----------
Expenses: Benefits, claims and settlement expenses 185.9 186.9 562.1 558.5
Underwriting, acquisition and insurance expenses 176.6 148.6 513.9 446.8
Interest and other expenses 2.9 6.6 12.9 20.1
----------- ----------- ----------- -----------
Total expenses 365.5 342.2 1,088.9 1,025.6
----------- ----------- ----------- -----------
Income before income taxes and items below 90.4 91.3 251.3 210.7
----------- ----------- ----------- -----------
Income Taxes: Currently payable 24.4 21.3 52.2 43.2
Deferred 4.3 8.9 27.7 25.7
----------- ----------- ----------- -----------
Total income taxes 28.7 30.3 80.0 68.9
----------- ----------- ----------- -----------
61.6 61.0 171.2 141.8
Other items - net --- --- 0.9 0.2
----------- ----------- ----------- -----------
Income before extraordinary item 61.7 60.9 172.2 142.0
Extraordinary item (net of tax credits of $2.4) --- --- (4.4) ---
----------- ----------- ----------- -----------
Net Income: $61.7 $60.9 $167.7 $142.0
=========== =========== =========== ===========
Earnings and
Dividends Per
Common Share: Primary Earnings:
Before extraordinary item $0.64 $0.70 $1.81 $1.62
Extraordinary item --- --- (0.05) ---
----------- ----------- ----------- -----------
Net income $0.64 $0.70 $1.76 $1.62
=========== =========== =========== ===========
Fully Diluted Earnings:
Before extraordinary item $0.64 $0.66 $1.79 $1.53
Extraordinary item --- --- (0.05) ---
----------- ----------- ----------- -----------
Net income $0.64 $0.66 $1.74 $1.53
=========== =========== =========== ===========
Cash dividends $0.110 $0.087 $0.307 $0.254
=========== =========== =========== ===========
Stock dividends --% --% 50% --%
=========== =========== =========== ===========
Average number of common and common
equivalent shares outstanding:
Primary 94,241,978 85,683,687 93,190,079 85,542,678
=========== =========== =========== ===========
Fully Diluted 94,664,729 92,514,468 94,648,198 92,494,132
=========== =========== =========== ===========
See accompanying notes.
</TABLE>
<PAGE>
5
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
($ in Millions)
- ------------------------------------------------------------------------------------------------------------------------------
Nine Months Ended
September 30,
--------------------------
1996 1995
------------ -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $167.7 $142.0
Change in non-cash items:
Deferred policy acquisition costs (3.5) (3.6)
Premiums and other receivables 13.5 (24.1)
Unpaid claims and related items 28.9 102.3
Future policy benefits and policyholders' funds (17.2) 8.4
Income taxes 23.3 44.3
Reinsurance balances and funds 1.5 18.8
Accounts payable, accrued expenses and other (4.1) 7.3
------------ ------------
Total 210.1 295.6
------------ ------------
Cash flows from investing activities:
Sales of fixed maturity securities:
Held to maturity:
Maturities and early calls 66.1 93.4
Other --- ---
Available for sale:
Maturities and early calls
Other 75.8 40.2
Sales of equity securities 37.7 150.1
Sales of other investments 3.6 3.0
Sales of fixed assets for company use 1.4 2.3
Purchases of fixed maturity securities:
Held to maturity (253.0) (332.1)
Available for sale (148.5) (161.9)
Purchases of equity securities (20.4) (37.7)
Purchases of other investments (1.9) (3.0)
Purchases of fixed assets for company use (8.7) (4.7)
Purchases of investment in subsidiaries (1.0) ---
Other-net (8.2) (0.4)
------------ ------------
Total (115.2) (210.9)
------------ ------------
Cash flows from financing activities:
Increase in term loans 52.0 ---
Issuance of preferred and common stocks 14.1 2.0
Repayments of term loans (47.1) (3.9)
Redemption of debentures and notes (105.5) ---
Dividends on common shares (26.3) (19.9)
Dividends on preferred shares (5.9) (5.9)
Purchase of treasury stock --- (0.9)
Issuance of treasury stock --- 2.3
Other-net 1.1 (0.2)
------------ ------------
Total (117.6) (26.6)
------------ ------------
Increase (decrease) in cash and short-term investments (22.7) 58.0
Cash and short-term investments, beginning of period 332.1 203.3
------------ ------------
Cash and short-term investments, end of period $309.4 $261.3
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $12.1 $16.1
============ ============
Income taxes $55.4 $24.9
============ ============
See accompanying notes.
</TABLE>
<PAGE>
6
OLD REPUBLIC INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED SUMMARY FINANCIAL STATEMENTS (Unaudited)
($ in Millions,Except Share Data)
- ------------------------------------------------------------------------------
1.Accounting Policies and Basis of Presentation:
----------------------------------------------
The accompanying consolidated summary financial statements have been prepared
in conformity with generally accepted accounting principles as described in
the Corporation's latest annual report to shareholders or as disclosed herein.
The financial accounting and reporting process relies on estimates and on the
exercise of judgement, but in the opinion of management all adjustments,
consisting of normal recurring accruals, necessary to a fair presentation of
the accompanying statements have been reflected therein. Realized gains or
losses on dispositions of investment securities have been reflected in the
operating results for each period presented.
2.Common Share Data:
------------------
Earnings per share have been calculated on the basis of average common and
common equivalent shares outstanding for the quarters and nine months ended
September 30,1996 and 1995. Retroactive adjustment has been made for all stock
dividends and splits declared through September 30, 1996. Primary earnings per
share calculations give effect to the deduction of dividend requirements
applicable to preferred stock of $1.2 and $3.7 for the quarters and nine
months ended September 30, 1996 and 1995, respectively. Fully diluted earnings
per share are similarly calculated, after taking into account substantially
all convertible securities and options includable for each period.
Common shares outstanding were 86,671,064 at September 30, 1996 after
elimination of 6,658,901 shares issued and outstanding, which are held by a
consolidated affiliate. These shares are classified as treasury stock for
financial accounting purposes only.
3.Unrealized Appreciation of Investments:
---------------------------------------
Cumulative net unrealized gains on fixed maturity securities available for
sale and equity securities credited to a separate account in common
shareholders' equity amounted to $27.8 at September 30, 1996. Unrealized
appreciation of investments, before applicable income taxes of $15.5, at
September 30, 1996 included gross unrealized gains and (losses) of $63.2 and
$(19.7), respectively.
For the nine months ended September 30, 1996 and 1995, net unrealized
appreciation (depreciation) of investments, net of deferred income taxes,
amounted to $(42.5) and $51.2, respectively.
<PAGE>
7
OLD REPUBLIC INTERNATIONAL CORPORATION
MANAGEMENT ANALYSIS OF FINANCIAL POSITION AND RESULTS OFOPERATIONS
Nine Months Ended September 30, 1996 and 1995
- ------------------------------------------------------------------------------
OVERVIEW
This analysis pertains to the consolidated accounts of Old Republic
International Corporation. The Company conducts its business through four major
segments, namely its General (property and liability coverages), Mortgage
Guaranty, Title, and Life insurance groups.
FINANCIAL POSITION
Old Republic's financial position at September 30, 1996 reflected an increase
in assets of .2%, a decrease in liabilities of 4.2%, and an increase in common
shareholders' equity of 13.5% when compared to the immediately preceding
year-end. As indicated below, the largest changes in the liabilities and equity
accounts were due to debt redemptions and conversions. Cash and invested assets
represented 67.0% of consolidated assets as of September 30, 1996 and December
31, 1995, respectively. Relatively high short-term maturity investment
positions continued to be maintained as of September 30, 1996 to provide
necessary liquidity for specific operating needs and to enhance flexibility in
investment strategy. Changes in short-term investments reflect a large variety
of seasonal and intermediate-term factors including seasonal operating cash
needs, investment strategy, and expectations as to trends in interest yields.
Accordingly, the future level of short-term investments will vary and respond
to the dynamics of these factors and may, as a result, increase or decrease from
current levels. During the first nine months of 1996, the Corporation committed
substantially all investable funds in short to intermediate-term fixed maturity
securities. Old Republic continues to adhere to its long-term policy of
investing primarily in investment grade, marketable securities; the Corporation
has not directed its investable funds to so-called "junk bonds" or derivative
types of securities. During the first nine months of 1996, Old Republic's
commitment to equity securities decreased by 9.7% vis-a-vis the related invested
balance at year-end 1995. As of September 30, 1996, the carrying value of fixed
maturity securities in default as to principal or interest was immaterial in
relation to consolidated assets or shareholders' equity.
Consolidated operations produced positive cash flows in the first nine months
of 1996. The parent holding company has met its liquidity and capital needs
principally through dividends paid by its subsidiaries. The insurance
subsidiaries' ability to pay cash dividends to the parent company is generally
restricted by law or subject to approval of the insurance regulatory authorities
of the states in which they are domiciled. Additionally, the terms of guarantees
by the Company of bank loans to the trustee of the Company's Employees Savings
and Stock Ownership Plan require the Company to maintain a minimum consolidated
tangible net worth and restrict the amount of debt the Company may incur, both
of which covenants are being met.
Old Republic's capitalization of $2.02 billion at September 30, 1996 consisted
of debt and debt equivalents of $118.7 million, redeemable convertible preferred
stock of $19.5 million (excluding $8.8 million of such stock classified as a
debt equivalent), convertible preferred stock of $1.2 million, cumulative
preferred stock of $54.8 million, and common shareholders' equity of $1.82
billion. The increase in the common shareholders' equity account during the nine
months ended September 30, 1996 reflects primarily the retention of earnings in
excess of dividends declared onoutstanding preferred and common shares, and the
issuance ofadditional shares to effect the debt conversion noted below; this was
offset to some degree by a decline in the value of bonds and stocks carried at
market value. At its May 16, 1996 meeting, the Company's Board of Directors
authorized the reacquisition of up to $150.0 million of common and preferred
shares as market conditions warrant during the twenty four month period from
that date.
In February 1996, the Company called for redemption its 10% debentures of 2018
($75.0 million principal amount) and its 5.75% convertible subordinated
debentures of 2002 ($110.0 million principal amount); in April 1996, the Company
called for redemption its 11.5% debentures of 2015 ($30.0 million principal
amount); redemption of the debentures was effected with available funds, while
the subordinated debentures were converted into approximately 6.4 million Old
Republic common shares. As a result of these redemptions and conversions, the
Company's debt declined by $215.0 million while its common shareholders' equity
account rose by $108.7 million. In December 1996, the Company will redeem all
($54.8 million) of its Series "H" cumulative preferred stock.
At its March 14, 1996 meeting, the Company's Board of Directors declared a 50
percent stock dividend on the common shares. Retroactive adjustment has been
made for this stock dividend in all per share calculations.
RESULTS OF OPERATIONS
Revenues:
- ---------
Net premiums and fees earned in the first nine months of 1996 amounted to $1.11
billion and were 10.6% above the amount reported for the first nine months of
1995. For the third quarter of 1996, net premiums and fees earned amounted to
$379.6 million or 9.8% above the amount reported for the same quarter of 1995.
For the third quarter of 1996, the Company's General Insurance Group
<PAGE>
8
posted a 2.5% increase in earned premiums to $216.2 million as premium growth
continues at a slow pace due to soft pricing in this sector of the insurance
industry. Premium growth in the Mortgage Guaranty Group was enhanced by
continued expansion of the marketing territory and from higher volume driven by
reasonably stable mortgage rates; as a result, third quarter earned premiums
increased by 36.5% to $58.5 million from $42.9 million in the year-ago quarter.
Title Group premium and fee revenues increased by 14.9% to $95.3 million in the
third quarter of 1996 when compared to $82.9 million in the same quarter of
1995; greater housing and mortgage finance activity were the drivers of these
revenue trends. The Life Group earned premiums were approximately the same in
the third quarter of 1996 and 1995.
The General Insurance Group's net premiums earned increased 1.1% to $644.5
million in the first nine months of 1996. The Title Insurance Group reported
premiums and fees in the first nine months of $272.9 million, up 24.5% from
$219.2 million in the year-ago period, while the Mortgage Guaranty Group
continued to experience double-digit growth in production and reported net
premiums earned of $164.8 million, an increase of 35.5%. Life and health
premiums also rose during these 1996 periods, but remained approximately 3% of
consolidated premiums and fees.
Consolidated net investment income was $194.8 million in the first nine months
of 1996 and $65.3 million in the third quarter of 1996 compared to $186.0
million and $62.4, respectively, in the same quarter and nine month period of
1995. The growth in this revenue source reflects moderately lower operating cash
flow and the use of certain internal funds to refund $105.0 million of high cost
debt in the first half of 1996. The average annualized yield on investments was
approximately 6.0% and 6.2% at the end of September 30, 1996 and 1995,
respectively. In the past eighteen months the Company has committed a larger
percentage of investable funds to tax-exempt fixed maturity securities that
typically bear lower yields.
The Company's investment policies have not been designed to maximize realized
investment gains. Realized gains of $13.4million in the first nine months of
1996 were mostly due to the sale of equity securities. For the first nine
months of 1996, approximately 73% of total dispositions represented maturities
and early calls of existing fixed maturity holdings; for the year 1995 these
transactions amounted to approximately 59%.
Expenses:
- ---------
Consolidated benefit, claim and settlement costs, as a percentage of net
premiums and fees earned, were approximately 50% and 55% in the first nine
months of 1996 and 1995, respectively. For the third quarter of each year
these ratios were 49% in 1996 and 54% in 1995. Claims experience for property
and liability coverages improved slightly in both periods due mostly to reduced
losses from involuntary pool assessments as well as reduced claim frequencies
and severity generally. Mortgage Guaranty claim costs increased in the third
quarter and first nine months of 1996, when compared to the same periods of
1995, because of a recent uptrend in mortgage default rates. Title insurance
claim provisions were much lower in the third quarter and first nine months of
1996 as a result of a continuing drop in claim frequencies and severity on
business underwritten since 1992. Life Group claim costs were basically stable
in both quarterly and nine month periods.
The ratio of consolidated underwriting, acquisition and insurance expenses to
net premiums and fees earned was 46% and 44% in the first nine months of 1996
and 1995, respectively. These ratios were 49% and 43% for the third quarters of
1996 and 1995, respectively. Variations in these percentages between
comparative periods typically reflect changing patterns in the mix of business
and the varying production costs pertaining thereto. A rise in Title premiums
and fees tends to drive up this ratio due to the higher cost structure of this
business.
Income from Operations and Net Income:
- --------------------------------------
Income from operations before realized investment gains, taxes and other items
increased by 18.4% in the third quarter and 28.7% in the first nine months of
1996 when compared to the same periods one year ago. The Corporation's General
and Mortgage Guaranty insurance segments reflected higher pre-tax operating
earnings, and the Life segment reported lower pre-tax earnings from operations.
The Title insurance segment posted pre-tax operating earnings for the first nine
months of 1996 while posting a pre-tax operating loss in the same period of
1995.
The effective consolidated income tax rate was 32% in the first nine months of
1996 and 1995, respectively, as well as in the third quarters of both of these
years. The rates for each period reflect primarily the varying proportions of
pre-tax operating income derived from tax-sheltered investment income
(principally tax-exempt interest) on the one hand, and fully taxable investment
and underwriting/service income on the other hand.
The aforementioned early retirement of the Company's 10% debentures of 2018
produced a net of tax charge of $3.3 million (4 cents per share) that has been
reflected as an extraordinary item in this year's first quarter, while the
retirement of the Company's 11.5% debentures of 2015 produced an additional net
of tax charge of $1.1 million (1 cent per share) that has been reflected as an
extraordinary item in this year's second quarter. Accordingly, the total
extraordinary charge reflected in the results for the first nine months of 1996
was $4.4 million (5 cents per share).
<PAGE>
9
OTHER INFORMATION
Historical data pertaining to the operating results, liquidity, and other
financial matters applicable to an insurance enterprise such as the Company are
not necessarily indicative of results to be achieved in succeeding years. The
long-term nature of the insurance business, seasonal and annual patterns in
premium production and incidence of claims, changes in yields obtained on
invested assets, changes in government policies and free markets affecting
inflation rates and general economic conditions, and changes in legal precedents
or the application of law affecting the settlement of disputed claims are some
of the factors which have a bearing on quarter-to-quarter and year-to-year
comparisons and future operating results.
<PAGE>
10
OLD REPUBLIC INTERNATIONAL CORPORATION
FORM 10 - Q
PART II - OTHER INFORMATION
- ------------------------------------------------------------------------------
Item 6 - Exhibits and reports on Form 8-K
-----------------------------------------
(a) Exhibits
1. Earnings per share.
(b) Reports on Form 8-K
1. The registrant has not filed any reports on Form 8-K during the
quarter for which this report is filed.
Items other than those listed are omitted because they are not required.
<PAGE>
11
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Old Republic International Corporation
--------------------------------------
(Registrant)
Date: November 13, 1996
-----------------
/s/ Paul D. Adams
------------------------------------
P. D. Adams
Senior Vice President &
Chief Financial Officer
<PAGE>
12
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EARNINGS PER SHARE EXHIBIT
(Amounts in millions, except per share data)
--------------------------------------------------------------------------------------------------------------
Computation of Primary Earnings Per Share
-------------------------------------------------
Quarters Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Weighted average number of common shares outstanding 86.6 78.0 85.5 77.7
Add: Weighted average number of assumed common shares to
be issued upon conversion or exercise of:
Redeemable and/or Convertible Preferred Stock 6.8 6.9 6.8 7.2
Stock Options 0.7 0.6 0.7 0.5
---------- ---------- ---------- ----------
Weighted average number of common and common equivalent share 94.2 85.6 93.1 85.5
========== ========== ========== ==========
Net income for the period 61.7 60.9 167.7 $142.0
Less dividends applicable to appropriate Series of
Redeemable and Convertible Preferred Stock 1.2 1.2 3.7 3.7
---------- ---------- ---------- ----------
Adjusted net income $60.5 $59.7 $164.0 $138.3
========== ========== ========== ==========
Primary earnings per share $0.64 $0.70 $1.76 $1.62
========== ========== ========== ==========
--------------------------------------------------------------------------------------------------------------
Computation of Fully Diluted Earnings Per Share
-------------------------------------------------
Quarters Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Weighted average number of common shares outstanding 86.6 78.0 85.5 77.7
Add: Weighted average number of assumed common shares to
be issued upon conversion or exercise of:
Redeemable and/or Convertible Preferred Stock 7.0 7.1 7.0 7.4
Convertible Subordinated Debentures --- 6.3 1.0 6.3
Stock Options 0.9 0.8 1.0 0.8
---------- ---------- ---------- ----------
Weighted average number of common and common equivalent share 94.6 92.5 94.6 92.4
========== ========== ========== ==========
Net income for the period $61.7 $60.9 $167.7 $142.0
Less dividends applicable to appropriate Series of
Cumulative Preferred Stock 1.1 1.1 3.8 3.5
Plus interest applicable to Convertible Debentures --- 1.0 0.4 3.0
---------- ---------- ---------- ----------
Adjusted net income $60.5 $60.8 $164.6 $141.5
========== ========== ========== ==========
Fully diluted earnings per share $0.64 $0.66 $1.74 $1.53
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM OLD REPUBLIC INTERNATIONAL'S CONSOLIDATED BALANCE SHEET
AND CONSOLIDATED STATEMENT OF INCOME AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<DEBT-HELD-FOR-SALE> 2,004
<DEBT-CARRYING-VALUE> 1,901
<DEBT-MARKET-VALUE> 1,905
<EQUITIES> 113
<MORTGAGE> 9
<REAL-ESTATE> 0
<TOTAL-INVEST> 4,312
<CASH> 42
<RECOVER-REINSURE> 27
<DEFERRED-ACQUISITION> 111
<TOTAL-ASSETS> 6,605
<POLICY-LOSSES> 3,742
<UNEARNED-PREMIUMS> 394
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 66
<NOTES-PAYABLE> 118
19
56
<COMMON> 95
<OTHER-SE> 1,734
<TOTAL-LIABILITY-AND-EQUITY> 6,605
1,004
<INVESTMENT-INCOME> 194
<INVESTMENT-GAINS> 13
<OTHER-INCOME> 127
<BENEFITS> 562
<UNDERWRITING-AMORTIZATION> 143
<UNDERWRITING-OTHER> 383
<INCOME-PRETAX> 251
<INCOME-TAX> 80
<INCOME-CONTINUING> 172
<DISCONTINUED> 0
<EXTRAORDINARY> (4)
<CHANGES> 0
<NET-INCOME> 167
<EPS-PRIMARY> 1.76
<EPS-DILUTED> 1.74
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
