Illinois-based insurance service provider Old Republic International Corp. (ORI) Friday said it re-evaluated the use of its financial accounting policies related to the recognition and timing of Other-Than-Temporary Impairments or OTTI of equity investment securities. The company reclassified its unrealized losses and gains in equity investment securities for determining net income. Old Republic said the move was necessitated due to persisting volatility in financial markets.
As a result, realized investment losses of $437.3 million, as well as $437.3 million of net realized losses have been included in the financial statement for the second quarter ending June 30, 2008.
Net loss for the second quarter is now $364.7 million or $1.58 per share, changed from a loss of $45.4 million or $0.20 per share reported earlier on July 24, 2008.
For the six-month period, net loss now stands at $383.8 million or $1.66 per share, changed from a loss of $64.5 million or $0.28 per share originally reported on July 24, 2008.
Old Republic said that in the modified format, unrealized losses from equity securities, absent any early OTTI recognition, with at least 20% drop in market value from its previously recorded cost basis during any six month calendar period will be automatically included in the determination of net income, on a non-judgmental, market value-driven basis. Also, the company will continue to report its unrealized gains and unrealized losses with lesser declines directly in a separate component of shareholders' equity.
The company noted that the amendments, however, will not affect its previously reported assets, liabilities, shareholders' equity, operating cash flows and comprehensive income.
ORI closed Friday's trading at $10.25, down $0.25 or 2.38%, on a volume of about 1.89 million shares.
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