Standard& Poor's Announces Old Republic International Corp. and Operating Companies Ratings Affirmed

May 26, 2004

NEW YORK--(BUSINESS WIRE)-- -On May 26, 2004, Standard& Poor's Ratings Services affirmed its 'A+' counterparty credit rating on Old Republic International Corp. (NYSE:ORI). At the same time, Standard& Poor's affirmed its 'AA' counterparty credit and financial strength ratings on the members of the Old Republic General Insurance Group (ORG), its 'AA-' counterparty credit and financial strength ratings on the members of Old Republic Title Insurance Group (ORTIG), and its 'A' counterparty credit and financial strength ratings on the members of Old Republic Life Insurance Group (ORLIG). The outlook on all the companies except for the ORLIG members remains stable; the outlook on the ORLIG members remains negative.

The ratings on ORI's mortgage insurance operations, Republic Mortgage Insurance Co. and Republic Mortgage Insurance Co. of NC (both 'AA/Stable/--') were affirmed on Dec. 12, 2003.

ORI is a diversified insurance holding company whose operations in property/casualty insurance (ORG), mortgage insurance, and title insurance (ORTIG) provide substantial sources of earnings. The life operations (ORLIG) contribute a very small amount to ORI's consolidated earnings.

The ratings on ORI stem from its very strong capitalization and the diversity of strong to very strong operating companies that support its ability to service its modest debt. The ratings on ORG reflect its solid and established business position, extremely strong capitalization, and history of strong earnings as well as an operating environment that should be conducive to further strong results in the coming year. The ratings on ORTIG reflect its strong market position, very strong capitalization, strong operating performance, and strategic importance to ORI and ORG. The ratings on ORLIG reflect its satisfactory GAAP earnings, extremely strong capitalization and its strategic importance to ORG, partially offset by its very small position in the ORI organization, its unprepossessing results, and its current statutory operating loss.

ORG is a group of commercial property/casualty insurance companies whose main lines of business are commercial auto (trucking) and workers' compensation insurance. ORG also writes significant amounts of aviation, surety, general liability, and specialty coverages. The group distributes through independent agents and brokers and has a strong market presence in the central and southeastern part of the U.S. ORG is the biggest segment within ORI based on net premiums written.

ORTIG has a strong competitive position as the fifth-largest U.S. title insurance group, with a market share of about 6.4% as of Dec. 31, 2003. Its primary business is residential title insurance, although it has a strong but smaller business in the commercial title sector.

ORLIG is a group of three life insurance companies--two interactively rated--that offer term life insurance policies through brokers, credit life and disability insurance through auto dealers complementing the extended warranty insurance sold by an ORG unit, and specialty noncancelable accidental death and dismemberment and income protection policies through financial intermediaries.


Standard& Poor's expects ORI's earnings to be very strong in 2004. ORG should continue to benefit from good market conditions and enjoy very strong earnings and continued moderate premium growth. ORTIG should have good earnings--albeit lower than the record results of 2003--as the volume of refinance title premiums declines. ORLIG should obtain modest levels of earnings, and very strong results from the mortgage insurance companies should also enhance ORI's consolidated results. Capitalization at all the rated groups is expected to remain very strong to extremely strong at approximately their current levels.

Major Rating Factors

  • ORG has achieved strong to very strong overall profitability for many years while maintaining good underwriting discipline in most lines of business in the soft market of the late 1990s and 2000. Its capitalization is extremely strong, well over the 'AAA' floor of Standard& Poor's risk-based capital adequacy model for property/casualty insurers. Although not dominant in any line of business, ORG has maintained generally good relationships through a strong emphasis on service with the small-to-mid-sized companies that are its customers. Management has operated the group conservatively, being willing to forego volume in poor markets and concentrating on certain industries that it knows well.
  • ORTIG has a strong market position in the U.S. title insurance industry. It maintains very strong capitalization and has a history of strong earnings, including very strong results during the recent record housing market. ORTIG is viewed by Standard& Poor's as being strategically important to ORG, and for this reason, the ratings on ORTIG are only one notch below the 'AA' financial strength rating on ORG.
  • ORLIG is very small compared with ORG, accounting for about 2% of the revenues of the ORI organization in 2003. The group has generally been profitable, though on a modest scale. The rated ORLIG companies had statutory losses in 2003 that were caused by a spike in term life death benefits and the acquisition costs of building the term life business. However, these companies generated a satisfactory GAAP profit.
  • ORLIG's capitalization is extremely strong based on Standard& Poor's capital adequacy model for life insurers. The rating benefits from Standard& Poor's view that the group is strategically important to ORG because of its complementary role in some of ORG's activities.
  • ORI is extremely strongly capitalized and benefits from a diverse group of subsidiaries with limited expected covariance in operating results. In addition to the ORG, ORTIG and ORLIG units, the holding company benefits from consistent earnings streams from two other wholly owned subsidiaries, the two main companies in ORI's residential mortgage insurance segment.

Ratings List

Old Republic International Corp.


  Counterparty credit rating A+/Stable/A-1
  Senior debt rating A+
  Commercial paper rating A-1
  Old Republic Capital Corp.

Commercial paper rating(a)


(a)Guaranteed by Old Republic International Corp.

Old Republic General Insurance Group

  Old Republic Union Insurance Co.
Bituminous Casualty Corp.
Bituminous Fire& Marine Insurance Co.
Employers General Insurance Co.
Great West Casualty Co.
International Business& Mercantile REassurance Co.
Old Republic Lloyds of Texas
Old Republic Mercantile Insurance Co.
Old Republic Surety Co.
Old Republic Insurance Co.


  Counterparty credit rating AA/Stable/-
  Financial strength rating AA/Stable

Old Republic Title Insurance Group

  Old Republic General Title Insurance Corp.
Old Republic National Title Insurance Co.
Mississippi Valley Title Insurance Co.
American Guaranty Title Insurance Co.
  Counterparty credit rating AA-/Stable/--
  Financial strength rating AA-/Stable

Old Republic Life Insurance Group

  Old Republic Life Insurance Co.
Home Owners Life Insurance Co.
  Counterparty credit rating A/Negative/--
  Financial strength rating A/Negative

Complete ratings information is available to subscribers of RatingsDirect, Standard& Poor's Web-based credit analysis system, at All ratings affected by this rating action can be found on Standard& Poor's public Web site at; under Credit Ratings in the left navigation bar, select Find Ratings, then Credit Ratings Search.

Copyright Standard & Poor's

Contact ALTA at 202-296-3671 or