As in effect
3/1/61
FORM 10K/A
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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AMENDMENT TO APPLICATION OR REPORT
Filed Pursuant to Sections 12, 13, or 15 (d) of
THE SECURITIES EXCHANGE ACT OF 1934
OLD REPUBLIC INTERNATIONAL CORPORATION
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(Exact name of registrant as specified in charter)
AMENDMENT NO. 5
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The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its ANNUAL REPORT FOR 2002 on Form
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10-K as set forth in the pages attached hereto: (List all such items, financial
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statements, exhibits or other portions amended)
FORM 11-K
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
OLD REPUBLIC INTERNATIONAL CORPORATION
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(Registrant)
Date: May 5, 2003 By: /s/ John S. Adams
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(Signature)
John S. Adams
Senior Vice President and
Chief Financial Officer
Total Pages: 14
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
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ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For The Fiscal Year Ended December 31, 2002
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REPUBLIC MORTGAGE INSURANCE COMPANY AND AFFILIATED COMPANIES
PROFIT SHARING PLAN
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OLD REPUBLIC INTERNATIONAL CORPORATION
307 NORTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60601
SIGNATURE
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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 Gerke
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John E. Gerke, Member of the Administration Committee
By: /s/ Donna W. Ball
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Donna Ball, Member of the Administration Committee
Date: May 1, 2003
The Republic Mortgage Insurance Company
and Affiliated Companies
Profit Sharing Plan
Financial Statements and Supplemental Schedule
December 31, 2002
Tax Identification Number: 56-1031043
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Financial Statements and Supplemental Schedule
December 31, 2002
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Pages
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Benefits
at December 31, 2002 and 2001 2
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2002 3
Notes to Financial Statements 4 - 7
Supplemental Schedule:
Schedule H, line 4i - Schedule of Assets (Held at End of Year) 8
Report of Independent Accountants
To the Participants and Administrator of
The Republic Mortgage Insurance Company and
Affiliated Companies Profit Sharing Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of The Republic Mortgage Insurance Company and Affiliated Companies Profit
Sharing Plan (the "Plan") at December 31, 2002 and 2001, and the changes in net
assets available for benefits for the year ended December 31, 2002 in conformity
with accounting principles generally accepted in the United States of America.
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 of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Supplemental Schedule H, line 4i -
Schedule of Assets (Held at End of Year) 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/ PricewaterhouseCoopers LLP
April 25, 2003
Charlotte, North Carolina
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Statements of Net Assets Available for Benefits
December 31, 2002 and 2001
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2002 2001
Assets
Investments, at fair value:
Insurance separate accounts:
Domestic equity $ 5,680,843 $ 6,348,640
Asset allocation 1,700,224 1,891,330
Fixed income 1,354,546 1,012,654
International equity 475,249 477,044
Flexible equity 138,852 191,905
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9,349,714 9,921,573
ORI common stock pooled account 3,902,478 4,722,627
Participant loans 602,882 490,166
Insurance company guaranteed interest fund,
at contract value 17,924,476 14,194,942
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Total investments 31,779,551 29,329,308
Employer contributions receivable 3,757,895 3,330,842
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Total assets 35,537,446 32,660,150
Liabilities
Refund of excess participant contributions 162,700 132,589
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Net assets available for benefits $ 35,374,746 $ 32,527,561
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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, 2002
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Additions to net assets attributed to:
Investment income:
Net depreciation in fair value of investments $ (1,631,803)
Interest - guaranteed interest fund 1,009,723
Interest - participant loans 34,713
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Investment income (587,367)
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Contributions:
Employer 3,757,895
Participants 990,542
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4,748,437
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Total additions 4,161,070
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Deductions from net assets attributed to:
Benefits and withdrawals 1,305,272
Administrative expenses 8,613
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Total deductions 1,313,885
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Net increase 2,847,185
Net assets available for benefits:
Beginning of year 32,527,561
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End of year $ 35,374,746
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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
December 31, 2002
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1. Description of Plan
The following description of The Republic Mortgage Insurance Company and
Affiliated Companies Profit Sharing Plan (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 for
coverage 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).
See the Summary Plan Description for additional information regarding the
Plan.
Contributions
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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. Participants may contribute up to 25%
of their compensation pre-tax and 25% after-tax for a combined maximum of
50% of compensation any Plan year. Contributions are subject to certain
limitations as prescribed by ERISA. Excess contributions to be returned to
participants based on qualification testing totaled $162,700 and $132,589
for the years ended December 31, 2002 and 2001, respectively.
Vesting
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Participant's account balances provided by Sponsor contributions and
related allocated earnings become 40% vested after one year of service.
Vesting percentages increase by 10% for each additional year, with full
vesting after seven years of service.
Account balances provided by participant contributions and allocated Plan
earnings are always fully vested.
Participant Accounts
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A separate account balance is maintained for each participant and is
credited with participant contributions and allocations of Sponsor
contributions, Plan earnings, and forfeitures of terminated participants'
nonvested accounts. Allocations of Plan earnings are based on participants'
daily account balances. Sponsor contributions and forfeitures are allocated
based on annual compensation of participants. Unallocated forfeitures
totalled $407,636 at December 31, 2002.
Payment of Benefits
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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 their voluntary contributions at anytime.
Participants may elect to take early withdrawals of employer contributions
if they have participated in the Plan for at least five years. Such early
withdrawals will not result in suspension of allocations of Sponsor
contributions.
4
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Notes to Financial Statements
December 31, 2002
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Participant Loans
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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 secured by the vested balance in the
participant's account.
2. Summary of Significant Accounting Policies
General
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The Plan prepares its financial statements under accounting principles
generally accepted in the United States of America.
Investment Valuation and Income Recognition
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The Plan's guaranteed interest account is valued at contract value.
Insurance separate accounts are reported by Massachusetts Mutual Life
Insurance Company (the "Trustee") at the fair value of the underlying
investments. The pooled account invests solely in the common stock of Old
Republic International ("ORI"), the ultimate parent of the Sponsor. The
value of the pooled ORI common stock account is based on the underlying
quoted market value of the ORI common stock. Participant loans are valued
at principal balance, which approximates fair value. Net appreciation
(depreciation) in fair value of investments includes unrealized and
realized gains and losses. Interest income is recorded on the accrual
basis.
Benefits and Withdrawals
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Benefits and withdrawals are recorded when paid. At December 31, 2002 and
2001, there were no significant amounts owed to participants.
Income Tax Status
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The Plan obtained its latest determination letter on April 3, 1995, 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.
Use of Estimates
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The presentation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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.
5
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Notes to Financial Statements
December 31, 2002
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3. Investments
The Plan is invested in a group annuity contract with the Trustee. The
contract allows for a participant-directed investment program in commingled
subaccounts sponsored by the Trustee. Investment options include fixed
income, asset allocation, domestic equity, flexible equity, international
equity subaccount option and a guaranteed interest fund. In addition to the
investment options offered through the Trustee, participants may also
invest in a pooled account that invests solely in common stock of the
Sponsor's parent, Old Republic International.
2002 2001
Insurance company separate accounts at fair value:
Domestic equity subaccounts:
Large cap value $ 1,808,112 $ 2,167,184 *
Small cap equity 1,596,662 2,005,208 *
Indexed equity 1,453,749 * 1,628,715 *
Small cap growth 585,710 547,533
Mid cap value 152,922 -
Large cap growth 83,687 -
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5,680,843 6,348,640
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Asset allocation subaccounts:
Balanced 1,700,224 -
Destiny moderate - 1,400,325
Destiny aggresive - 491,005
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1,700,224 1,891,330
Fixed income subaccount:
Core bond 1,354,546 1,012,654
Flexible equity subaccount:
Growth and income 138,852 191,905
International equity subaccount 475,249 477,044
ORI common stock pooled account 3,902,478 * 4,722,627 *
Participant loans 602,882 490,166
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$ 13,855,075 $ 15,134,366
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Investment at contract value:
Guaranteed interest fund $ 17,924,476 * $ 14,194,942 *
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*Exceeds 5% of Plan assets at December 31, 2002 and 2001.
The net depreciation in fair value of the Plan's investments for the year
ended December 31, 2002, was $1,631,803.
6
The Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Notes to Financial Statements
December 31, 2002
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4. Guaranteed Interest Fund
The Plan holds an investment contract with Massachusetts Mutual Life
Insurance Company. Massachusetts Mutual Life Insurance Company maintains
the contributions in a pooled account. The account is credited with
earnings on the underlying investments, charges for Plan withdrawals, and
administrative expense charges by Massachusetts Mutual Life Insurance
Company. The contract is included in the financial statements at contract
value, (which represents contributions made under the contract, plus
earnings, less withdrawals and administrative expenses) because it is
considered fully benefit-responsive. For example, 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 contract value of
the investment contract at December 31, 2002 and 2001 was $17,924,476 and
$14,194,942, respectively. The average yield and crediting rates ranged
from 6.00% and 6.75% for 2002 and 2001. The crediting rate is based on an
agreed-upon formula with the issuer, but cannot be less than five percent.
5. Related Party Transactions
Certain Plan investments are insurance separate accounts 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 $61,554 for the year ended December 31, 2002. Expenses incurred
in the administration of the Plan are also paid by the Sponsor.
6. 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 would become 100% vested in
their employer contributions.
7. Reconciliation to Form 5500
There are no reconciling items from these financial statements to the
Plan's Form 5500 for the year ended December 31, 2002.
7
Supplemental Schedule
Republic Mortgage Insurance Company and Affiliated Companies
Profit Sharing Plan
Supplemental Schedule H, line 4i - Schedule of Assets (Held at End of Year)
December 31, 2002
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Number
of
Units Value
Insurance separate accounts:
Domestic equity subaccounts:
Large cap value 16,727 $ 1,808,112
Small cap equity 2,501 1,596,662
Indexed equity 6,542 1,453,749
Small cap growth 6,339 585,710
Mid cap value 1,214 152,922
Large cap growth 794 83,687
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5,680,843
Asset allocation subaccounts:
Balanced 18,977 1,700,224
Fixed income subaccount:
Core bond 1,092 1,354,546
Flexible equity subaccount:
Growth and income 3,210 138,852
International equity subaccount 2,607 475,249
ORI common stock pooled account 187,528 3,902,478
Guaranteed interest fund 194,432 17,924,476
Participants loans 602,882
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$ 31,779,551
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8