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Industry News

Fitch Assigns 'A+' L-T Rating To Old Republic International Corporation

March 28, 2002

NEW YORK--(BUSINESS WIRE)--March 28, 2002--Fitch Ratings has assigned an 'A+' long-term issuer rating to Old Republic International Corporation (ORIC). The Rating Outlook is Stable. Additionally, a commercial paper rating of 'F1' has been assigned.

The rating reflects ORIC's consistent and conservative operating philosophy that is evidenced by the very strong capitalization of its operating subsidiaries, relatively modest holding company financial leverage and diversified sources of revenue. Management has achieved strong profitability through disciplined underwriting that is focused on profitable organic growth of existing businesses as opposed to volume or market share targets.

ORIC's revenue stream is largely derived from commercial lines property and casualty business, as well as mortgage and title insurance. Old Republic General Insurance Group consists of a diverse group of commercial insurers with a focus on trucking and workers' compensation insurance and, to a lesser extent, aviation, commercial multi-peril and fidelity and surety. Overall, the companies within the general insurance group are very well capitalized and internal reinsurance is utilized to support affiliated companies, however operating accountability is preserved. The group has demonstrated strong profitability that, on average, has exceeded its commercial peers. General insurance represented about 50% of operating revenue in 2001 and 29% of pre-tax operating income.

The mortgage insurance segment led by Republic Mortgage Insurance Corp. (RMIC), has accounted for more than half of ORIC's pre-tax operating income during the past few years, reflecting the excellent credit characteristics of residential mortgages and soft commercial lines pricing environment. RMIC's capitalization is extremely strong and, similar to its peers, has achieved excellent profitability over the past 10 years. RMIC ranks 6th out of 8 U.S. mortgage insurers with a market share of about 9%.

Old Republic Title Group maintains a conservative capital position and is the fifth largest national title insurer in the United States. During 2001, the title group accounted for 27% of ORIC's operating revenue and 16% of pre-tax operating income.

Fitch expects ORIC to continue to achieve strong profitability over the intermediate-term with an expectation the profitability of the general insurance segment will continue to improve with the hardening pricing environment, while the mortgage insurance segment's profitability may moderate, although remain strong, as claim rates rise from their abnormally low levels.

Chicago-based ORIC reported assets of $7.9 billion and capital of $2.7 billion at year-end 2001.

Source: Fitch Ratings



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