Old Republic International Corp. on Wednesday reported significantly higher third-quarter earnings but at the same time cautioned that it faces a loss of up to $55 million because of defaults on mortgages insured by an Old Republic subsidiary.
In the quarter, Old Republic said earnings were $20.04 million, or $1.09 a share, up more than 30 percent from the $15.3 million, or $1.04 a share, in the third quarter of 1984.
In the first nine months, the Chicago-based insurance company said earnings were $50.9 million, or $2.95 a share, up 12.5 percent from the $45.3 million, or $3.05 a share, a year earlier.
The company noted there are more shares outstanding this year because of stock issued or sold during Old Republic`s merger with Bitco Corp. in March.
In August, Old Republic said it could lose up to $55 million because of losses related to the bankruptcy proceedings of Maryland-based Community Savings and Loan and its real estate subsidiary, Equity Programs Investment Corp. EPIC`s 341 separate limited partnerships have defaulted on mortgages that were, in part, insured by Republic Mortgage Insurance Co.
No provision for that loss was included in the quarterly or nine-month earnings figures, Old Republic said, because the company hasn`t been able to get enough information to reasonably estimate the amount. The $55 million figure represents a worst-case scenario in which every mortgage loan insured by Republic Mortgage results in payment of a claim for the total policy limits. The loss eventually will be reflected in 1985 earnings, Old Republic said.
However, the company said its long-term financial prospects remain good, citing improved performances in its title insurance, life and health operations, and property and liability operations. The March merger with Bitco increased property and liability premiums, although the unit still recorded an underwriting loss. Old Republic said third-quarter results indicate that there has been ”some progress” toward underwriting profitability in that area.
