Old Republic International Corporation History

Company Perspectives:

Old Republic's record as a long-term growth company is one of the best in the industry. The Company's performance reflects an entrepreneurial spirit, sound forward planning, and a corporate structure that promotes and encourages assumption of prudent business risks. For shareholders, Old Republic's common stock has a demonstrated history of long-term capital appreciation. For employees, the Company offers a successful environment in which they can achieve personal goals in the context of Old Republic's business objectives.

Key Dates:

1923:

The first company in the Old Republic International (ORI) family is incorporated under the name Garfield Casualty Company.

1927:

Garfield Casualty amends its charter to include life insurance and changes its name to Twentieth Century Life Company.

1930:

The company adopts the name Old Republic Life Insurance Company.

1935:

The flagship company of ORI's General Insurance Group, Old Republic Insurance Company, is incorporated as Coal Operators Casualty Company.

1969:

The Old Republic International Corporation is organized to serve as a holding company for diversified insurance, financial, and investment operations.

1985:

ORI makes one of its largest acquisitions to date, merging with Bitco Corporation, previously known as Bituminous Holdings, Ltd.

1990:

ORI's common stock is listed on the New York Stock Exchange.

1992:

The Employers General Insurance Group, a joint venture 80 percent owned by ORI, begins operation.

2001:

A superior court in San Francisco finds the company guilty of defrauding roughly $30 million in escrow fund interest and unlawfully retaining more than $17 million in unclaimed escrow money since 1994.

Company History:

Old Republic International Corporation, one of the 50 largest publicly held insurance organizations in the United States, is a holding company for a diversified array of insurance companies. Conducting business through 125 different corporate entities--including 30 autonomous insurance subsidiaries covering all 50 states and Canada--Old Republic International (ORI) specializes in lines of insurance marketed toward specific industries. ORI also offers fee-based risk management services for self insurers. ORI's subsidiaries are organized into four groups. The General Insurance Group, one of the nation's 100 largest property and liability insurance groups, serves industrial, mining, transportation, and financial service organizations. The Title Insurance Group provides title protection to purchasers of property and mortgage lenders, holding a 7 percent share of the U.S. market in 1993. The Old Republic Mortgage Guaranty Group insures financial institutions against default on first mortgages for single-family homes, typically those with low down payments of 5 to 10 percent. The Life Insurance Group specializes in offering credit and term insurance to consumers through outlets such as lending institutions and automobile dealers.

Establishing a Trusted Name in Insurance: 1920s-60s

The organization, which traces its origins to the 1920s, achieved much of its growth by purchasing troubled insurance carriers and redirecting them to create profitable subsidiaries. The first company in the ORI family was incorporated under the name Garfield Casualty Company in 1923. In 1927, Garfield Casualty amended its charter to include life insurance and changed its name to Twentieth Century Life Company. The name Old Republic Life Insurance Company was adopted in 1930.

In 1931, Old Republic Life merged with Bankers Credit Life Insurance, and the corporate name Old Republic Credit Life Insurance Company was adopted. In 1955, the company returned to the name Old Republic Life Insurance Company. Old Republic Life pioneered consumer credit life insurance, focusing on providing policies to consumers through lending institutions and automobile dealerships. By the early 1990s, Old Republic Life was licensed to operate in 48 states, the District of Columbia, Puerto Rico, Hong Kong, Canada, Mexico, Philippine Islands, and U.S. Virgin Islands.

The flagship company of ORI's General Insurance Group, Old Republic Insurance Company, was incorporated in 1935 as Coal Operators Casualty Company. In 1955, Old Republic acquired an ownership interest in Coal Operators Casualty, and the organization's charter was amended permitting it to offer a broader range of insurance lines. In 1956, Old Republic entered the Canadian market, and, by the early 1990s, the company had grown and expanded its offerings to encompass a wide variety of underwriting and risk management services for commercial property and liability risks. These coverages included workers' compensation, general liability, and commercial automobile. The company specialized in serving targeted industries such as transportation, construction, forest products, and coal and other energy businesses. In 1994, A.M. Best Company reported that workers' compensation represented 60 percent of ORI's business. The company was licensed in all 50 states, the District of Columbia, Canada, Guam, Puerto Rico, and the Virgin Islands.

The Old Republic International Corporation (ORI) was organized in 1969 to serve as a holding company for diversified insurance, financial, and investment operations. Initially, all shares of Old Republic Life were converted to ORI common stock. Two years later in 1971, ORI also became the parent company of Old Republic Insurance.

In another action in 1971, ORI purchased Reliable Life Insurance Company, of Hamilton, Ontario (Canada). Reliable Life, incorporated in 1963, had been providing life and disability insurance through a predecessor organization since 1887, making it ORI's oldest operating subsidiary. Following its acquisition, Reliable Life continued to offer a limited amount of whole life, endowment, and term insurance, but the company's greatest growth came from group insurance policies such as student accident and long-term disability insurance. In 1993, Reliable Life received premiums totaling C$13.3 million. ORI projected that Reliable Life's greatest growth in 1994 would occur as a result of travel insurance programs.

Expansion and Diversification in the 1970s-80s

During the early 1970s, ORI expanded its activities in mortgage guaranty insurance for lending institutions. Republic Mortgage Insurance Company was established in 1972 and began operations in 1973; Old Republic Mortgage Assurance Company was established in 1973 and began operations in 1974; and Republic Mortgage Insurance Company of Florida was incorporated in 1974 and began operations in 1975.

During the late 1970s, ORI continued its expansion. In 1978, the company purchased the Alabama Rural Fire Insurance Company, founded in 1972. The organization's name was changed to Capitol Fire and Marine Insurance Company in 1978, and the name Old Republic Union Insurance Company was adopted in 1992 during an initiative to have many key operating subsidiaries adopt ORI's new logo. As part of the program aimed at increasing national name recognition, some subsidiaries also changed their names to include an "Old Republic" appellation.

Another company to come under ORI ownership during the late 1970s was the Mississippi Valley Title Insurance Company. Mississippi Valley had been founded by the Taylor family in 1941 as a sideline to an existing law practice. Following World War II, the company enjoyed quick growth, since VA and FHA loans required title insurance. By 1990, Mississippi Valley reported that it had achieved a 66 percent share of the market in Mississippi and served many clients in Alabama as well.

Several changes and expansions in ORI's reinsurance activities occurred during the late 1970s and early 1980s. Reinsurance, a process of obtaining insurance on the potential risk faced by an insurer under an existing insurance contract, helped limit the insurance carrier's risk exposure from any one incident. In 1977, ORI assumed complete financial control of International Business and Mercantile Reassurance Company, a corporation formed in 1960 as Motorists Beneficial Insurance Company. Old Republic Insurance, an ORI subsidiary, had acquired an ownership interest in the organization by purchasing its outstanding capital stock in 1961. American Business & Mercantile Insurance Mutual, Inc., a miscellaneous reinsurer for subsidiaries in the Old Republic Insurance Group, was incorporated in 1981 and began operation in 1982. In 1983, the name Inter Capital Assurance Company was adopted by ICS Assurance Company, another reinsurer that had been under direct or indirect ORI control since its inception in 1966. Inter Capital Assurance assumed its business (primarily auto liability, workers' compensation, and aircraft insurance) from Old Republic Insurance Company.

One of ORI's largest acquisitions occurred in 1985 when it merged with Bitco Corporation, previously known as Bituminous Holdings, Ltd. Bitco served as a holding company for Bituminous Casualty Corporation and Bituminous National Group Inc. Bituminous Casualty Corporation, established in 1928 as a successor to Bituminous Casualty Exchange, served as a specialty underwriter for forest products industries, gas and oil companies, and construction contractors. The company conducted its operations through 18 full-service branch offices and two claim service offices. Other subsidiary companies acquired in the transaction were Bituminous Fire & Marine Insurance Company and the Great West Companies.

Great West Insurance Company, which was incorporated in 1956 and changed its name to Great West Casualty Company in 1962, specialized in providing insurance coverage for mid-sized, long-haul trucking companies. Policies provided commercial automobile, workers compensation, general liability, and cargo insurance protection. The company also sold federal crop and hail insurance policies, lines it abandoned in 1993 to concentrate on the needs of the trucking industry.

Upper Peninsula Insurance Company, reinsurer of errors and omissions, and directors and officers insurance, was established in 1985. Upper Peninsula functioned as a wholly owned subsidiary of the Chicago Underwriting Group, Inc., which was 80 percent owned by ORI.

In 1986, ORI purchased an organization with a 50-year history and reorganized it as the Old Republic Surety Group, Inc. The original entity, Mutual Surety Company of Iowa, founded in 1936, was succeeded by State Surety in 1956, and State Surety was absorbed by Nebraska Surety Company in 1971. In 1978, 96 percent of its outstanding shares was acquired by Northwestern National Insurance and transferred to its wholly owned subsidiary Northwestern National Surety Company. Northwestern National Surety Company became Old Republic Surety Company, and its subsidiaries (Lawyers Surety Corporation and State Surety Company) were sold to ORI.

Acquisitions and reorganizations continued through the 1980s. Old Republic Standard Insurance Company, originally named Guaranty Re Insurance, was acquired by Old Republic Standard Underwriters, Inc. following the abandonment of a plan for a public offering in 1987. Old Republic Standard Underwriters was a joint venture formed in 1988, 86 percent owned by ORI, to provide specialty agriculture insurance products such as grain elevator coverage. In 1989, ORI acquired Lincoln Title Company, a title agency operating in the Los Angeles metropolitan area. In addition, ORI purchased USA Title Company, Inc. of Indianapolis, to increase its participation in the midwestern title market.

In 1989, ORI reported that most of its revenue was generated from general industry (31.3 percent). The real estate industry accounted for 23.7 percent; transportation, 13.9 percent; energy, 9.7 percent; financial services, 8.1 percent; contractors, 4.4 percent; agriculture, 3.9 percent; reinsurance assumed, 1.8 percent. All other industries accounted for 3.2 percent of its revenues.

New Milestones and Challenges in the 1990s

Two important milestones were achieved in 1990. In August, the company's common stock was listed on the New York Stock Exchange. In addition, at the year's end, ORI announced that its premium and fee revenues exceeded $1 billion for the first time. In 1990, Old Republic Dealer Service Corporation was formed to direct the company's sales of credit life and disability insurance and extended warranty products through automobile dealers. In 1991, ORI acquired three additional title companies: The Title Insurance Company of North Carolina, Western States Title Company, and Conner Land Title. The newly formed ORI subsidiary Old Republic Security Holdings, Inc. acquired the Minnehoma Insurance Company in 1992. Minnehoma, a provider of automobile warranty, collateral protection, and credit insurance, had originally been incorporated in 1977 in Arizona. Prior to its acquisition by ORI, Minnehoma had been unprofitable due to poor performance in its nonstandard auto and mortgage guaranty lines. Under ORI's leadership, these were discontinued, and Minnehoma was refocused to provide collateral protection to financial institutions and consumer auto warranty products that were offered exclusively through automobile dealers.

In 1992, ORI formed the Employers General Insurance Group, a property and liability insurer in Texas. The joint venture, 80 percent owned by ORI, began operation in 1993. It was established following the collapse of Employers Casualty, a 75-year-old Dallas-based insurer that had previously operated nine subsidiaries and held $650 million in assets. As a result of losses attributed to workers' compensation regulations during the late 1980s, the Texas Department of Insurance seized Employers Casualty in 1992. Under an agreement with officials in Texas, ORI agreed to purchase the company's records and three remaining subsidiaries. ORI planned to restore profitability by avoiding high-risk policies without adequate premiums and by focusing on a single line of business.

ORI's success in managing its assets was recognized in 1992 when three of its subsidiaries in the Old Republic Title Insurance Group became the first title companies to receive claims-paying ability ratings from an independent agency. Old Republic National Title, Mississippi Valley Title, and Old Republic General Title achieved A+ evaluations from Standard and Poor's rating service.

Other events of the early 1990s, however, brought new challenges to ORI's leaders. In 1992, natural disasters, such as Hurricane Andrew, resulted in $7.1 million in losses from property exposure. Moreover, the company's Bituminous Casualty Corporation became engaged in a court battle regarding pollution coverage. Although the company was originally ordered to pay compensation to a landfill operator in Wisconsin by a lower court, the 5th U.S. Circuit Court of Appeals ruled that Bituminous Casualty could not be held liable for the costs because the policies under which the claim had been made could not be found. In another court action, Old Republic Insurance Company's exclusion of defense coverage for sexual harassment was upheld.

As the national economic picture shifted and ORI adjusted its mix of insurance companies, the balance of revenue-producing industries changed. In 1993, ORI reported that the real estate industry had become the organization's largest revenue producer, accounting for 30.8 percent. The transportation industry generated 20.5 percent of its revenues; general industry, 16.5 percent; financial services, 8.0 percent; energy, 6.7 percent; contractors, 6.0 percent; forestry and timber, 3.6 percent; wholesale/retail, 3.0 percent; agriculture, 3.0 percent; reinsurance assumed, 1.0 percent; and others accounted for only 0.9 percent.

ORI expected continued increases in housing-related insurance needs through 1994. While company analysts predicted decreases in refinancing, they expected increases in the sales of new and existing homes. In addition, ORI planned to focus on increasing its market share in existing markets and to expand into new territories. Improvements, however, were expected to be modest as private sector mortgage insurance guarantors faced increased competition from the Federal Housing Administration's more lenient provisions.

Staying the Course in the 21st Century

Old Republic continued its steady growth pattern throughout the mid-1990s. The company's strongest performers for fiscal 1994 included the General Insurance Group, which enjoyed earnings increases of nearly 25 percent over 1993, and its relatively small but brawny Mortgage Guarantee Group, which saw its operating revenues rise from $61.3 million to $78.3 million over the course of the year. Old Republic also reaped high dividends from its Bituminous Group, which boasted an impressive combined underwriting ratio of 96.8 percent for 1994. By 1995, the company had total assets in excess of $6.25 billion.

Old Republic's overall performance in 1994, however, was tarnished by some underperforming sectors, most notably its Title Insurance Group. The problem was in large part due to the unfavorable housing climate of the mid-1990s, particularly in the lucrative California market. Furthermore, rising mortgage rates and low consumer confidence put a virtual stop to home refinancing nationwide in 1994. Whereas Old Republic's Title Insurance had earned profits of $32.1 million in 1993, it suffered an operating loss in 1994, with total revenues down more than $60 million from the previous year. Nor was there any sign that conditions would improve anytime in the near future, as conventional wisdom throughout the industry foresaw continued rate increases well into the next year. The company remained confident, however, that activity in the housing industry would soon become brisk again, in spite of the unfavorable rates, and the Title Insurance Group, with its strong capitalization and solid reputation, was in a position to take advantage of any shifts in the market. Indeed, by the first quarter of 1996 the group experienced a radical turnaround, bringing in earnings of $3.3 million. In the same quarter Old Republic enjoyed profits of $50.1 million, an increase of 28 percent. Throughout this period, Old Republic's strategy was to maintain what CEO A.C. Zucaro termed a "conservative" business strategy, one that would allow the company to build steadily on its already substantial foundation.

This upswing proved to be temporary, however, and by 1999 Old Republic was once again suffering from diminished earnings and stock valuation. As in 1994, the problem was due in large part to an unfavorable home lending market, a result of three interest rate increases by the Federal Reserve Board over the course of the year. The company was also hit hard by a substantial increase in claims in its highly profitable long-haul truck insurance sector. Arguably more damaging, however, were the legal difficulties the company faced at the beginning of the new decade. In April 2001, a superior court in San Francisco found Old Republic guilty of defrauding roughly 300,000 homebuyers of nearly $30 million in escrow fund interest since 1994. In addition, the company was charged with unlawfully retaining more than $17 million in unclaimed escrow money during the same period. In May the company was hit with $17 million in fines, while in June a judge ordered Old Republic to pay an additional $15 million in punitive damages. The wound inflicted on its reputation would likely prove costly over the long term, but the company was in a good position to handle the monetary expense. Further, with interest rates at their lowest level in decades, Old Republic remained in a position to enjoy strong revenues through the first decade of the new century.

Principal Subsidiaries: Bituminous Casualty Corporation; Bituminous Fire and Marine Insurance Company; Employers General Insurance Company; Great West Casualty Company; International Business & Mercantile Reassurance Company; Old Republic Home Protection Company; Old Republic Insurance Company; Old Republic Insurance Company of Canada; Old Republic Lloyds of Texas; Old Republic Mercantile Insurance Company; Old Republic Minneola Insurance Company; Old Republic Surety Company; Old Republic Union Insurance Company; Republic Mortgage Insurance Company; Republic Mortgage Insurance Company of Florida; Republic Mortgage Insurance Company of North Carolina; American Guaranty Title Company; Mississippi Valley Title Insurance Company; Old Republic General Title Insurance Corporation; Old Republic General National Insurance Corporation; Home Owners Life Insurance Company; Old Republic Life Insurance Company; Reliable Life Insurance Company (Canada); J. Hell Briscoe and Associates, Inc.; Old Republic Asset Management Corporation; Old Republic Dealer Service Corporation; Old Republic General Services, Inc.; Old Republic Insured Financial Acceptance Corporation.

Principal Competitors: Fidelity National Financial Inc.; The First American Corporation; LandAmerica Financial Group, Inc.

Further Reading:

• Andresky, Jill, "Discipline Is All," Forbes, July 16, 1984.
• Bradford, Michael, "Policy Disappears; So Does Coverage," Business Insurance, November 23, 1992.
• Byrne, Harlan S., "Old Republic International: It's Fully Recovered from Mortgage-Insurance Debacle," Barron's, January 14, 1991.
• Geschel, Christine, "Insurers May Be on the Hook for Hazardous Waste Cleanup Costs," Business Journal-Milwaukee, July 16, 1990.
• Greenwald, Judy, and Gayin Souter, "Harassment Defense Denied," Business Insurance, October 4, 1993.
• "ITT Hartford to Acquire Crop Insurance Business," New York Times, August 11, 1993.
• Jones, Kevin, "Dominating a Market: How Mississippi Valley Title Keeps Two-Thirds of the Business," Mississippi Business Journal, July 30, 1990.
• MacLachlan, Claudia, "Old Republic International Corp.," Crain's Chicago Business, June 7, 2000, p. 70.
• Murphy, H. Lee, "Specialty Insurer Investing Excess Cash; Old Republic Initiates Buyback, Acquisition Plan," Crain's Chicago Business, July 1, 1996.
• Preston, Darrell, "New Insurer Launched from Employers' Ashes," Dallas Business Journal, January 1, 1993.
• Zamora, Jim Herron, "Old Republic Fined Additional $15 Million; Title Company to Pay Damages in Fraud Case," San Francisco Chronicle, June 12, 2001.

Source: International Directory of Company Histories, Vol. 58. St. James Press, 2004.

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