SEC Comment Letter for OLD REPUBLIC INTERNATIONAL CORP (ORI) (CIK 0000074260) (ORI) — Jun 5, 2007
OLD REPUBLIC INTERNATIONAL CORP (ORI) (CIK 0000074260)
Date: June 5, 2007 · CIK: 0000074260 · Accession: 0000000000-07-027566
AI Filing Summary & Sentiment
Reasoning
Letter
Via Facsimile and U.S. Mail Mail Stop 6010 June 5, 2007 Mr. Aldo C. Zucaro Chairman of the Board, Chief Executive Officer and Director Old Republic International Corp. 307 North Michigan Avenue Chicago, IL 60601
Re: Old Republic International Corp. Form 10-K for Fiscal Year Ended December 31, 2006 Form 10-Q for the Quarter Ended March 31, 2007 File No. 1-10607
Dear Mr. Zucaro:
We have limited our review of your filing to the issues we have addressed in our comments. In our comments, we ask you to pr ovide us with more information so we may better understand your disclosure. After re viewing this information, we may raise additional comments.
Please understand that the purpose of our re view process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filings. We look forward to working with you in these respects. We welcome any questions you may have about our comments or any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Form 10-K for the year ended December 31, 2006
Exhibits 31: Certifications
1. Please represent to us that in future periodic report filings you will provide the wording of the certifications exactly as presented in Item 601(b)(31) of Regulation S-K. In this regard, your most recent certifications include the adjectives “annual” and “quarterly” when identifying the report covered by the certifications.
Mr. Aldo C. Zucaro Old Republic International Corp. June 5, 2007 Page 2 Form 10-Q for the quarter ended March 31, 2007
Notes to Consolidated Financial Statements Note 1: Accounting Policies a nd Basis of Presentation, page 7
2. You disclose in adopting FIN 48 that you view your income tax exposures as consisting of timing differences whereby the ultimate deductibility of a tax position is highly certain but th e timing of its deductibility is uncertain. However, it is unclear from your disclosure whet her your unrecognized tax benefits and related interest and penalty accruals are material. Please provide us in a disclosure-type format revised adoption di sclosure that provides the information requested below as outlined in Appendix A to the November 21, 2006 AICPA SEC Regulations Committee discussion doc ument, as revised on February 6, 2007. Otherwise, please explain to us why disclosure of the following quantitative information is not warranted: • the total amount of unrecognized tax bene fits accrued as of January 1, 2007; • the total amount of unrecognized tax bene fits as of January 1, 2007 that, if recognized, would affect the effective tax rate; • the total amount of accrued interest a nd penalties as of January 1, 2007; and • the total amount and nature of uncertainties you reasonably believe will result in significant increases or decreases to unrecognized tax benefits within the calendar year 2007.
Management Analysis of Financial Position and Results of Operations Incurred Loss Experience, page 25 3. You disclose that the percentage of net claims, benefits and related settlement expenses incurred as a percentage of pr emiums and related fee revenues of your mortgage guaranty segment increased to 54.4% for the three months ended March 31, 2007 from 38.8% in the comparable period in 2006 and 42.8% for the year ended December 31, 2006. You also disclose that the claims ratios for mortgage guaranty have continued to rise in recent years reflecting expectations of greater claim frequency and severity and that the claims ratio for the most recent quarter reflects a significant increase due primarily to increasing loss severity. However, you do not appear to disclose the reasons behind this significant increase in severity or the expectations of greater claims frequency and severity. Please provide us in a disclosure-type format re vised disclosure that clearly indicates why you experienced this sign ificant increase in severi ty and why you expect both frequency and severity to increase or tell us where you have made these disclosures in your document. In your response, please specifically discuss your exposure to defaults on sub-prime mortgage s and the impact these defaults have had or are reasonably likely to have on your recorded reserves, if any.
Mr. Aldo C. Zucaro Old Republic International Corp. June 5, 2007 Page 3 Please respond to these comments within 10 business days or tell us when you will provide us with a response. Please furnish a letter that keys your responses to our comments and provides the requested information. Detailed letters greatly facilitate our review. Please furnish your letter on EDGAR under the form type label CORRESP.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all in formation required under the Securities Exchange Act of 1934 and th at they have provided all information investors require for an informed invest ment decision. Since the company and its management are in possession of all facts re lating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.
In connection with responding to our co mments, please provide, in your letter, a statement from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclosure in the filing;
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all information you provide to the staff of the Divi sion of Corporation Fi nance in our review of your filing or in response to our comments on your filing.
If you have any questions, please co ntact Mark Brunhofer , Senior Staff Accountant, at (202) 551-3638. In this regard, do not hesita te to contact me, at (202) 551-3679.
Sincerely,
Jim B. Rosenberg
Senior Assistant Chief Accountant
Show Raw Text
Via Facsimile and U.S. Mail
Mail Stop 6010
June 5, 2007
Mr. Aldo C. Zucaro
Chairman of the Board, Chief Executive
Officer and Director
Old Republic International Corp.
307 North Michigan Avenue
Chicago, IL 60601
Re: Old Republic International Corp.
Form 10-K for Fiscal Year Ended December 31, 2006
Form 10-Q for the Quarter Ended March 31, 2007
File No. 1-10607
Dear Mr. Zucaro:
We have limited our review of your filing to the issues we have addressed in our
comments. In our comments, we ask you to pr ovide us with more information so we may
better understand your disclosure. After re viewing this information, we may raise
additional comments.
Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall
disclosure in your filings. We look forward to working with you in these respects. We
welcome any questions you may have about our comments or any other aspect of our
review. Feel free to call us at the telephone numbers listed at the end of this letter.
Form 10-K for the year ended December 31, 2006
Exhibits 31: Certifications
1. Please represent to us that in future periodic report filings you will provide the wording of the certifications exactly as presented in Item 601(b)(31) of Regulation S-K. In this regard, your most recent certifications include the adjectives “annual” and “quarterly” when identifying the report covered by the
certifications.
Mr. Aldo C. Zucaro
Old Republic International Corp.
June 5, 2007 Page 2
Form 10-Q for the quarter ended March 31, 2007
Notes to Consolidated Financial Statements
Note 1: Accounting Policies a nd Basis of Presentation, page 7
2. You disclose in adopting FIN 48 that you view your income tax exposures as consisting of timing differences whereby the ultimate deductibility of a tax position is highly certain but th e timing of its deductibility is uncertain. However,
it is unclear from your disclosure whet her your unrecognized tax benefits and
related interest and penalty accruals are material. Please provide us in a disclosure-type format revised adoption di sclosure that provides the information
requested below as outlined in Appendix A to the November 21, 2006 AICPA SEC Regulations Committee discussion doc ument, as revised on February 6,
2007. Otherwise, please explain to us why disclosure of the following
quantitative information is not warranted:
• the total amount of unrecognized tax bene fits accrued as of January 1, 2007;
• the total amount of unrecognized tax bene fits as of January 1, 2007 that, if
recognized, would affect the effective tax rate;
• the total amount of accrued interest a nd penalties as of January 1, 2007; and
• the total amount and nature of uncertainties you reasonably believe will result
in significant increases or decreases to unrecognized tax benefits within the
calendar year 2007.
Management Analysis of Financial Position and Results of Operations
Incurred Loss Experience, page 25
3. You disclose that the percentage of net claims, benefits and related settlement
expenses incurred as a percentage of pr emiums and related fee revenues of your
mortgage guaranty segment increased to 54.4% for the three months ended March
31, 2007 from 38.8% in the comparable period in 2006 and 42.8% for the year ended December 31, 2006. You also disclose that the claims ratios for mortgage
guaranty have continued to rise in recent years reflecting expectations of greater
claim frequency and severity and that the claims ratio for the most recent quarter
reflects a significant increase due primarily to increasing loss severity. However,
you do not appear to disclose the reasons behind this significant increase in
severity or the expectations of greater claims frequency and severity. Please
provide us in a disclosure-type format re vised disclosure that clearly indicates
why you experienced this sign ificant increase in severi ty and why you expect both
frequency and severity to increase or tell us where you have made these
disclosures in your document. In your response, please specifically discuss your
exposure to defaults on sub-prime mortgage s and the impact these defaults have
had or are reasonably likely to have on your recorded reserves, if any.
Mr. Aldo C. Zucaro
Old Republic International Corp.
June 5, 2007 Page 3
Please respond to these comments within 10 business days or tell us when you
will provide us with a response. Please furnish a letter that keys your responses to our comments and provides the requested information. Detailed letters greatly facilitate our
review. Please furnish your letter on EDGAR under the form type label CORRESP.
We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision. Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.
In connection with responding to our co mments, please provide, in your letter, a
statement from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclosure in the
filing;
staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.
If you have any questions, please co ntact Mark Brunhofer , Senior Staff
Accountant, at (202) 551-3638. In this regard, do not hesita te to contact me, at (202)
551-3679.
Sincerely,
Jim B. Rosenberg
Senior Assistant Chief Accountant