f11krmic.htm




SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 11-K

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[ X ]
Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934
 
For the Fiscal Year Ended December 31, 2013
   
or
   
 
[    ]
Transition Report Pursuant to Section 15(d) of the Securities Exchange Act of
 
1934
   
 
For the transition period from _______________ to _______________
   
 
Commission File Number: 001-10607

 
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THE REPUBLIC MORTGAGE INSURANCE COMPANY AND
AFFILIATED COMPANIES PROFIT SHARING PLAN

-------------


OLD REPUBLIC INTERNATIONAL CORPORATION
307 NORTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60601















Total Pages: 17
 
 
 

 





SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the Administration Committee has duly caused this Annual Report to be signed on behalf of the undersigned, thereunto duly authorized.
 
 


     
THE REPUBLIC MORTGAGE INSURANCE COMPANY AND
AFFILIATED COMPANIES PROFIT SHARING PLAN
       
       
       
     
(Registrant)
         
     
By:
  /s/ John E. Gerke
       
John E. Gerke, Plan Administrator
         




Date: June 30, 2014



 
 

 
 

 

The Republic Mortgage Insurance Company
And Affiliated Companies
Profit Sharing Plan
Financial Statements and Supplemental
Schedule
December 31, 2013 and 2012
 
 
 
 
 
 
 
 
 
 
 



 
 

 
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Index
 

 
 
Page(s)
   
Report of Independent Registered Public Accounting Firm
1
   
Financial Statements
 
   
Statements of Net Assets Available for Benefits
 
December 31, 2013 and 2012
2
   
Statement of Changes in Net Assets Available for Benefits
 
Year Ended December 31, 2013
3
   
Notes to Financial Statements
4 - 11
   
Supplemental Schedule
 
   
Schedule H, line 4i – Schedule of Assets (Held at End of Year)
 
December 31, 2013
13
   

 
 
 
 
 
 
 
 
 
Note: Supplemental schedules required by the Employee Retirement Income Security Act of 1974, as amended that have not been included herein are not applicable.
 

 
 

 



Report of Independent Registered Public Accounting Firm

To the Participants and Administrator of the
Republic Mortgage Insurance Company and Affiliated Companies Profit Sharing Plan

 
We have audited the accompanying statements of net assets available for benefits of the Republic Mortgage Insurance Company and Affiliated Companies Profit Sharing Plan (the "Plan") as of December 31, 2013 and 2012, and the related statement of changes in net assets available for benefits for the year ended December 31, 2013.  These financial statements are the responsibility of the Plan’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2013 and 2012, and the changes in net assets available for benefits for the year ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) as of December 31, 2013 is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  This supplemental schedule is the responsibility of the Plan’s management.  The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
 

/s/ Mayer Hoffman McCann P.C.
 
Minneapolis, Minnesota
June 30, 2014
 

 
 

 
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Statements of Net Assets Available for Benefits
December 31, 2013 and 2012

 

             
2013
 
2012
                   
Assets:
     
Investments, at fair value:
     
 
Insurance company pooled separate accounts
$16,947,848 
 
$15,017,514 
 
Insurance Company Guaranteed Investment Account
23,779,266 
 
24,747,029 
 
Old Republic International Corporation common stock fund
2,732,971 
 
1,919,491 
         
Total investments
43,460,085 
 
41,684,034 
                   
Receivables:
     
 
Employer contributions
286,642 
 
293,208 
 
Notes receivable from participants
186,037 
 
198,230 
         
Total receivables
472,679 
 
491,438 
                   
         
Net assets reflecting all investments at fair value
43,932,764 
 
42,175,472 
                   
Adjustment from fair value to contract value for
     
   Insurance Company Guaranteed Investment Account, a fully
     
    benefit-responsive investment contract
(2,517,214)
 
(2,811,479)
Net Assets Available for Benefits
$41,415,550 
 
$39,363,993 
 
 
 
 
 
 
 
 
 
 
 
 
 

The accompanying notes are an integral part of these financial statements.
 
 
2

 
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2013

 


Additions:
   
Investment income:
   
 
Net appreciation in fair value of pooled separate account investments
 
$3,705,793 
 
Dividends and net appreciation in fair value of the Old Republic
   
 
International Corporation common stock fund
 
1,185,109 
 
Interest, guaranteed investment account
 
637,799 
 
Total investment income
 
5,528,701 
       
Interest income on notes receivable from participants
5,625 
     
Contributions:
   
 
Employer
 
286,642 
 
Participants
 
199,461 
 
Total contributions
 
486,103 
       
 
Total additions
 
6,020,429 
     
Deductions:
   
Benefits and withdrawals
 
3,967,669 
Administrative expenses
 
1,203 
 
Total deductions
 
3,968,872 
 
Net additions
 
2,051,557 
     
Net assets available for benefits:
   
Beginning of year
 
39,363,993 
End of year
 
$41,415,550 


 
 
 
 
 
 
 
 
 
 

The accompanying notes are an integral part of these financial statements.
 
 
3

 
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Notes to Financial Statements

 
 
1.  
Description of Plan
 
The following description of The Republic Mortgage Insurance Company and Affiliated Companies Profit Sharing Plan (the “Plan”) is provided for general information purposes only.  Participants should refer to the Summary Plan Description or the Plan document for more complete information.
 
The Plan is a qualified defined contribution plan covering all employees of Republic Mortgage Insurance Company, RMIC Corporation, and Republic Mortgage Insurance Company of North Carolina (the “Sponsor”).  Employees are eligible to participate in the Plan at the start of their employment and must elect to enroll in the plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”) and Internal Revenue Code (“IRC”).
 
Contributions
The Sponsor makes contributions to the Plan at the discretion of the Sponsor’s Board of Directors at a sum determined by the Board without regard to current and accumulated profits for the taxable year, for years ending with or within such Plan year.  Contributions are allocated to eligible participants based on the participant’s eligible compensation to total eligible compensation of all eligible participants.
 
Participants may contribute up to 25% of their compensation pre-tax and 25% after-tax for a combined maximum of 50% of compensation during any Plan year.
 
Participants may also make rollover contributions into the Plan from distributions from other qualified plans, as defined in the Plan.
 
Contributions are subject to certain limitations as prescribed by the Internal Revenue Service with contributions in excess of IRC limits returned to participants or sponsor when determined. There were no excess material contributions to be returned to participants based on qualification testing for the years ended December 31, 2013 and 2012, respectively.
 
Vesting
Participant account balances provided by Sponsor contributions and related allocated Plan earnings become 40% vested after one year of service.  Vesting percentages increase by 10% for each of the next four years with full vesting after six years of service.
 
Participant account balances provided by participant contributions and allocated Plan earnings are always fully vested.
 
Participant Accounts
A separate account balance is maintained for each participant and is credited with participant contributions, participant rollover contributions from other qualified plans, and allocations of Sponsor contributions, Plan earnings, and forfeitures of terminated participants’ non vested accounts.  Allocations of Plan earnings are based on participants’ daily account balances.  Sponsor contributions and forfeitures of non vested accounts are allocated based on eligible annual compensation of participants.  The benefit to which a participant is entitled is the participant’s vested account.  Participants direct the investment of their account by electing among a variety of investment options offered by the Plan.  Participants may change their investment designation with respect to their account balance and future contributions at any time.
 
 
 
 
4

 
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Notes to Financial Statements

 
 
Forfeitures
If a participant terminates employment with the Sponsor prior to becoming fully vested, the non- vested portion of the Sponsor contributions and allocated earnings thereon are forfeited and are reallocated to eligible participants when the terminated participant incurs a break-in-service.  Forfeited amounts are reallocated to the active eligible participants based on eligible participant compensation, as defined in the Plan agreement.  Unallocated forfeitures totaled $13,618 and $28,867 at December 31, 2013 and 2012, respectively.  Of the December 31, 2013 total, $13,618 was  allocated in 2014.

Payment of Benefits
In the event of retirement, disability, or death, accumulated benefits become vested and are distributed to participants or designated beneficiaries by lump-sum payment or through various annuity options.
 
In the event of termination of employment, participants have the option of receiving vested accumulated benefits through lump-sum distributions, leaving the vested value of their accounts in the Plan until retirement or transferring amounts into an individual retirement account.
 
Participants may withdraw after-tax voluntary contributions at any time.  Participants may withdraw pre-tax voluntary contributions at age 59½ or for financial hardship purposes.
 
Participants may elect to take early withdrawals of employer contributions if they have participated in the Plan for at least five years and in-service distributions after attaining age 59½.  Such early withdrawals will not result in suspension of Sponsor contribution allocations.
 
Net assets at December 31, 2013 and 2012, included funds totaling $27,478,501 and $24,430,720, respectively, which represent the account balance of retired and terminated participants who have elected to leave their funds in the Plan upon retirement or termination.
 
Notes Receivable from Participants
Participants may borrow a minimum of $1,000 from their accounts up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance.  Participants may have no more than two loans outstanding at one time.  Loans plus interest must be repaid within five years through payroll deductions.  These loans bear interest at the prevailing prime rate at the loan inception date.  The loans are collateralized by the vested balance in the participant’s account.  Outstanding loans of terminated participants are repaid prior to distribution of the participant’s account balance or the outstanding loans are repaid from the participant’s account balance before distribution.
 
Partial Plan Termination
Beginning in September, 2011 and continuing into 2012 and 2013, the Sponsor has experienced significant economic challenges.  These issues have resulted in a series of large staff reductions at the Sponsor which have three major impacts on the Plan.  In accordance with the rules and regulations of ERISA, the IRC, and Plan documents, these actions are considered a Partial Plan Termination.  The Plan is impacted by (1) reduced number of active participants; (2) acceleration of the vesting schedule for those Participants that are involuntarily terminated by the Sponsor; and (3) a market value adjustment to the Insurance Company Guaranteed Investment Account for those terminated Participants who were invested in that option.  The Plan remains a viable qualified defined contribution plan for those participants remaining with the Sponsor.
 
2.  
Summary of Significant Accounting Policies
 
Basis of Accounting
The Plan prepares its financial statements on an accrual basis of accounting in accordance with accounting principles generally accepted in the United States.
 
 
 
5

 
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Notes to Financial Statements

 
Investment Valuation and Income Recognition
Investment contracts held by a defined contribution plan are required to be reported at fair value.  However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan.  The Statement of Net Assets Available for Benefits presents the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value.  The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.
 
The Guaranteed Investment Contract is principally valued using a market value formula approach. The market value is determined to be the estimated liquidation value of the contract. The liquidation value is derived considering factors such as:

 
(i)
the observable interest rate being earned by investments underlying the contract
 
(ii)
the unobservable "assumed interest rate” obtainable by Massachusetts Mutual Life Insurance Company ("MassMutual") on new investments where a proxy is the Barclays Capital U.S. Aggregate Index (excluding Treasuries) with an adjustment made to duration; and
 
(iii)
the unobservable comparison between investments supporting the contract and current market rates where historic investments are either at a premium or discount to current market rates, i.e. the "experience rate".

Net appreciation (depreciation) in fair value of investments includes unrealized and realized gains and losses.  Interest income is recorded on the accrual basis.  Dividends are recorded on the ex-dividend date.  Purchases and sales of securities are recorded on a trade-date basis.
 
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest.  Interest income is recorded on the accrual basis.  Related fees are recorded as administrative expenses when they are incurred.  No allowance for credit losses has been recorded as of December 31, 2013 or 2012.  If a participant ceases to make loan repayments and the plan administrator deems the participant loan to be in default, the participant loan balance is reduced and a benefit payment is recorded.
 
Unit Values
Investments in the pooled separate accounts are valued on a net asset value per unit basis which approximates their fair value.  The pooled separate accounts are credited with earnings on the underlying investments and charged for Plan benefits paid and deductions for investment expenses, risk, profit, and annual management fees.   Redemptions may occur on a daily basis.  The use of net asset value as fair value is deemed appropriate as the pooled separate accounts do not have a finite life, unfunded commitments relating to investments, or significant restrictions on redemptions.

Benefits and Withdrawals
Benefits and withdrawals are recorded when paid.  At December 31, 2013 and 2012, there were no significant amounts due but unpaid to participants.
 
Income Tax Status
The Plan obtained its latest determination letter on May 11, 2009, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code.  The Plan has been amended since receiving the determination letter.  However, the Plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code.   Therefore, no provision for income taxes has been included in the Plan’s financial statements.
 
 
 
6

 
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Notes to Financial Statements

 
 
Plan Expenses
Costs of administering the Plan are paid by the Sponsor except for investment management fees of individual fund investments which are charged to the respective investment and included in the net appreciation (depreciation) of the investment.  Participating loan processing fees are charged as a reduction to the respective participant accounts.
 
Use of Estimates
The presentation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities.  Actual results could differ from those estimates.
 
Subsequent Events Policy
Subsequent events have been evaluated through the date the financial statements were issued.
 
3.  
Investments
 
The Plan is invested in a group annuity contract with the Massachusetts Mutual Life Insurance Company (the “Trustee”).  The contract allows for a participant-directed investment program in pooled separate accounts sponsored by the Trustee.  Investment options include fixed income, asset allocation, domestic equity, and international equity subaccount options and a guaranteed investment account.  In addition to the investment options offered through the Trustee, participants may also invest in common stock of the Sponsor’s parent, Old Republic International (“ORI”).
 
        A. Summary of Investments
 
The following is a summary of investments held at December 31, 2013 and 2012.
             
2013
 
2012
 
          Investments at fair value
           
          Insurance company pooled separate accounts:
           
   
          Select Large Cap Value (Columbia/Huber)
2,859,680
*
2,180,892
*
   
          Other pooled separate accounts
 
14,088,168
   
12,836,622
 
               
16,947,848
   
15,017,514
 
          Insurance Company Guaranteed  Investment Account (a)
 
23,779,266
*
 
24,747,029
*
          Old Republic International Corporation (ORI) common stock fund
 
2,732,971
  *  
1,919,491
 
             
$
43,460,085
 
$
41,684,034
 
                         
          *Exceeds 5% of net Plan assets at December 31, 2013 and 2012.

 (a) The contract value of the insurance company guaranteed investment account was $21,262,052 and $21,935,550 at December 31, 2013 and 2012, respectively.
 
 
 
7

 
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Notes to Financial Statements

 
 
During 2013, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows:
 
 
       Insurance company pooled separate accounts
   
$
3,705,793
 
       Old Republic International Corporation (ORI) common stock fund
   
1,070,061
                         
$
4,775,854
 
                B. Fair Value Measurements
 
The Plan’s investments are stated at fair value in the accompanying statements of net assets available for benefits. Fair value is defined as the estimated price that is likely to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (an exit price) at the measurement date.  A fair value hierarchy is established that prioritizes the sources (“inputs”) used to measure fair value into three broad levels: inputs based on quoted prices in active markets (Level 1); observable inputs based on corroboration with available market data (Level 2); and unobservable inputs based on uncorroborated market data or a reporting entity’s own assumptions (Level 3).
 
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
 
The valuation methodologies used for assets measured at fair value are discussed further in Note 2.  There have been no changes in the methodologies used at December 31, 2013 and 2012.
 
 
Level 1
Securities include publicly traded common stocks.
 
 
Level 2
Securities include pooled separate accounts.
 
 
Level 3
Securities include guaranteed investment contracts.
 
The following tables show a summary of assets measured at fair value segregated among the various input levels described above:
 
   
Fair value measurements as of December 31, 2013:
                 
   
Level 1
 
Level 2
 
Level 3
 
Total
                 
Old Republic International
               
    Corporation common
               
    stock fund
 
$ 2,732,971
 
-   
 
-   
 
$ 2,732,971
Pooled Separate Accounts
               
    Asset Allocation/Lifestyle Funds
 
-   
 
$ 3,090,248
 
-   
 
3,090,248
    Blend Funds
 
-   
 
1,893,495
 
-   
 
1,893,495
    Bond Funds
 
-   
 
1,249,022
 
-   
 
1,249,022
    Growth Funds
 
-   
 
3,260,390
 
-   
 
3,260,390
    Index Funds
 
-   
 
1,264,451
 
-   
 
1,264,451
    International Funds
 
-   
 
1,550,730
 
-   
 
1,550,730
    Value Funds
 
-   
 
4,639,512
 
-   
 
4,639,512
    Total
     
16,947,848
     
16,947,848
Guaranteed Investment Account
 
-   
 
-   
 
$ 23,779,266
 
23,779,266
   
$ 2,732,971
 
$ 16,947,848
 
$ 23,779,266
 
$ 43,460,085
 
 
 
8

 
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Notes to Financial Statements

 
   
Fair value measurements as of December 31, 2012:
                 
   
Level 1
 
Level 2
 
Level 3
 
Total
Old Republic International
               
    Corporation common
               
    stock fund
 
$  1,919,491
 
 
-  
 
$      1,919,491
Pooled Separate Accounts
               
    Asset Allocation/Lifestyle Funds
 
-  
 
$    2,652,690
 
-  
 
2,652,690
    Blend Funds
 
-  
 
      1,587,432
 
-  
 
1,587,432
    Bond Funds
 
-  
 
      1,710,086
 
-  
 
1,710,086
    Growth Funds
 
-  
   
      2,568,590
 
-  
 
2,568,590
    Index Funds
 
-  
 
      1,360,694
 
-  
 
1,360,694
    International Funds
 
-  
 
      1,512,342
 
-  
 
1,512,342
    Value Funds
 
-  
 
      3,625,680
 
-  
 
3,625,680
    Total
     
    15,017,514
     
      15,017,514
Guaranteed Investment Account
 
-  
 
-  
 
$  24,747,029
 
24,747,029
   
$  1,919,491
 
$  15,017,514
 
$  24,747,029
 
$   41,684,034
 
Level 3 Gains and Losses
The table below sets forth a summary of changes in the fair value of the Plan’s level 3 assets for the year ended December 31, 2013:
 
   
Guaranteed Investment Account
       Balance, beginning of year
 
$          24,747,029 
       Interest income
 
639,541 
       Contract to fair value adjustment
 
(294,265) 
       Purchases
 
347,458 
       Sales
 
(1,660,497) 
       Balance, end of year
 
$          23,779,266 

The following table presents certain quantitative information about the significant unobservable inputs used in the Level 3 fair value measurements as of December 31, 2013:

Description
 
Fair Value
 
Principal
Valuation
Technique
 
Significant
Unobservable
inputs
 
 
Interest
Rate
Guaranteed
Investment
Contract
 
$23,779,266
 
Market
Value
Formula
 
Assumed Interest Rate
 
1.16%
Experience Rate
 
3.48%

The fair value of the Guaranteed Investment Contract is sensitive to fluctuations in the level of assumed interest rates. As a general rule, rising interest rates typically lead to a reduction in the fair value of the contract. By contrast, a decline in such rates usually serves to increase the fair value of the contract. In addition, increases or decreases in the experience rates lead to corresponding increases or decreases in fair value.
 
                C. Guaranteed Investment Account

 
The Plan holds an investment contract with Massachusetts Mutual Life Insurance Company.  Massachusetts Mutual Life Insurance Company maintains the contributions in a general investment account.  The account is credited with earnings at the guaranteed crediting interest rates in affect for the six month period beginning April 1 and October 1 and is charged for participant withdrawals and administrative expenses.  The guaranteed interest rates at April 1, 2013 and October 1, 2013 were 3.0% and 3.0%, respectively, and 3.2% and 3.2% at April 1, 2012 and October 1, 2012, respectively.  The guaranteed investment account issuer is contractually obligated to repay the principal and a specified interest rate that is guaranteed to the Plan.

 
 
9

 
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Notes to Financial Statements

 
 
As described in Note 2, because the guaranteed investment account is fully benefit-responsive, contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to the guaranteed investment account.  Contact value, as reported to the Plan by the Trustee, represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses.  Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value.
 
There are no reserves against contract value for credit risk of the contract issuer or otherwise.  The crediting interest rate is based on an interest rate agreed upon with the issuer, but it may not be less than three percent.  Such interest rates are reviewed on a semiannual basis (April 1 and October 1) for resetting.
 
Certain events limit the ability of the Plan to transact at contract value with the issuer.  Such events include the following:  (1) amendments to the plan documents (including complete or partial plan termination or merger with another plan), (2) changes to the plan’s prohibition on competing investment options or deletion of equity wash provisions, (3) bankruptcy of the plan sponsor or other plan sponsor events (for example, divestitures or spin-offs of a subsidiary) that cause a significant withdrawal from the plan,  or (4) the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under Employee Retirement Income Security Act of 1974.  The Plan administrator does not believe that the occurrence of any such event, which would limit the Plan’s ability to transact at contract value with participants, is probable.
 
The guaranteed investment account does not permit the insurance company to terminate the agreement prior to the scheduled maturity date.
 
       Average Yields:
2013
2012
          Based on actual earnings
2.63%
2.93%
          Based on interest rate credited to participants
2.63%
2.93%
 
4.  
Party In Interest Transactions
 
The Old Republic common stock fund consists of Old Republic International Corporation common stock, the parent of the Company.
 
Certain Plan investments are pooled separate accounts and a guaranteed investment account sponsored by Massachusetts Mutual Life Insurance Company.  Massachusetts Mutual Life Insurance Company is the Trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions.  Fees paid by the Sponsor on behalf of the Plan for the investment management services amounted to $3,409 for the year ended December 31, 2013.
 
5.  
Plan Termination
 
Although it has not expressed any intent to do so, the Sponsor has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA.  In the event of Plan termination, participants will become fully vested in their employer accounts.
 
 
 
10

 
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Notes to Financial Statements

 
6.  
Risks and Uncertainties
The Plan offers investments in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits.
 
 
 
11

 
 
 
 
 
 
 
 
 
 
 

 
Supplemental Schedule
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
  12

 
Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Schedule H, line 4i – Schedule of Assets (Held at End of Year)
December 31, 2013
EIN:  56-1031043
Plan Number: 001

 
 
(a)
 
(b)
           
(c)
 
(d)
 
(e)
 
Identity of Issue,
           
 
Borrower, Lessor,
 
Description of Investment Including
     
Current
 
or Similar Party
 
Number of Units and Rate of Interest
 
Cost**
 
Value
                           
               
Pooled Separate Accounts
       
*
Mass Mutual
   
Dow Jones Target 2015 (Wells Fargo)
     
$209,332
*
Mass Mutual
   
Dow Jones Target 2025 (Wells Fargo)
     
1,384,212
*
Mass Mutual
   
Dow Jones Target 2035 (Wells Fargo)
     
1,340,395
*
Mass Mutual
   
Dow Jones Target 2045 (Wells Fargo)
     
120,616
*
Mass Mutual
   
Dow Jones Today (Wells Fargo)
     
35,693
*
Mass Mutual
   
Growth America (American)
     
265,216
*
Mass Mutual
   
International New Discovery (MFS)
     
533,479
*
Mass Mutual
   
Mid Cap Core Equity (Invesco)
     
93,543
*
Mass Mutual
   
Mid Cap Value (Perkins)
     
142,193
*
Mass Mutual
   
NFJ Small Cap Val (Allianz)
     
91,686
*
Mass Mutual
   
Premier Capital Appreciation (OFI)
     
129,405
*
Mass Mutual
   
Premier Disciplined Growth (Babson)
     
175,337
*
Mass Mutual
   
Premier Disciplined Value (Babson)
     
72,507
*
Mass Mutual
   
Premier Inflation Protection Bond (Babson)
     
259,155
*
Mass Mutual
   
Premier Small Co Opportunity II (OFI Instl)
     
1,799,952
*
Mass Mutual
   
Select Growth Opportunities (Sands/Delaware)
     
507,396
*
Mass Mutual
   
Select Focused Value (Harris)
     
1,354,199
*
Mass Mutual
   
MM S&P 500 Index (Northern Trust)
     
1,264,451
*
Mass Mutual
   
Select Large Cap Value (Columbia/Huber)
     
2,859,680
*
Mass Mutual
   
Select Mid Cap Growth II (TRP/Frontier)
     
1,001,919
*
Mass Mutual
   
Select Mid Cap Value (NFJ/Systmc)
     
119,247
*
Mass Mutual
   
Select Overseas (MFS/Harris/JPMorgan)
     
1,017,251
*
Mass Mutual
   
Select Small Cap Grwth Equity (W&R/Wellington)
     
1,181,117
*
Mass Mutual
   
Select Strategic Bond (Western)
     
758,524
*
Mass Mutual
   
Total Return (PIMCO)
     
231,343
                         
16,947,848
               
Guaranteed Investment Account at Fair Value
       
*
Mass Mutual
   
Guaranteed Investment Account
     
23,779,266
                           
               
Old Republic International Corporation
       
*
Stock Account
 
Old Republic International Corporation (ORI)
       
                 
  Common Stock Fund
     
2,732,971
                           
*
Participants loans receivable
 
Interest rates of 3.25% to 5.25%
       
                 
maturity through 2018
 
$0
 
186,037
                         
$43,646,122
                           
                           
*    Indicates an asset which is a party-in-interest to the Plan.
       
**  Cost information may be omitted as Plan assets are participant directed.
       

 
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