f11kbitco.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, 2006

 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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BITUMINOUS 401(K) SAVINGS PLAN
 

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


















Total Pages: 16

SIGNATURES

 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Committee Members have duly caused this annual report to be signed on behalf of the undersigned, thereunto duly authorized.




          BITUMINOUS 401(K) SAVINGS PLAN, Registrant
 

          By  : /s/ Greg Ator                                          
       Greg Ator, Committee Member


          By  : /s/ Janine Happ                                      
       Janine Happ, Committee Member


          By  : /s/ Robert Rainey                                  
       Robert Rainey, Committee Member




Dated:  June 14, 2007
 
 
 
 
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C.  20549
 
_______________
 
FORM 11-K
 
_______________
 
ANNUAL REPORT
 
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
 
For The Years Ended December 31, 2006 and 2005
 
_______________
 
BITUMINOUS 401(k) SAVINGS PLAN
_______________
 
OLD REPUBLIC INTERNATIONAL CORPORATION
307 NORTH MICHIGAN AVE
CHICAGO, ILLINOIS  60601

 
BITUMINOUS 401(K) SAVINGS PLAN

FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULE

YEARS ENDED DECEMBER 31, 2006 AND 2005
 


BITUMINOUS 401(k) SAVINGS PLAN
Index to Financial Statements
 

          Page No.

 
        Reports of Independent Registered Public Accounting Firms                                  1 - 2

 
        Financial Statements:
 
          Statements of Net Assets Available for Benefits at
 
          December 31, 2006 and 2005                                                  3

 
        Statements of Changes in Net Assets Available for Benefits
 
          for the years ended December 31, 2006 and 2005                                      4

        Notes to Financial Statements                                                 5 - 9

        Supplemental Schedule:
          Schedule of Assets (Held at End of Year) at December 31, 2006                              11
 
 
 
 
 
 
 
 
 
 
        
         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
Bituminous 401(K) Savings Plan

We have audited the accompanying statement of net assets available for benefits of the Bituminous 401(K) Savings Plan (the “Plan”) as of December 31, 2006 and the related statement of changes in net assets available for benefits for the year ended December 31, 2006.  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 audit.  The financial statements of the Plan as of and for the year ended December 31, 2005 were audited by other auditors whose report dated June 26, 2006 expressed an unqualified opinion on those financial statements.

We conducted our audit 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.  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 audit provides 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, 2006, and the changes in net assets available for benefits for the year ended December 31, 2006 in conformity with U.S. generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole.  The supplemental schedule of assets held for investment purposes (referred to as “supplemental schedule”) as of December 31, 2006 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 audit 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 14, 2007
1

Report of Independent Registered Public Accounting Firm


To the Participants and Administrator of
Bituminous 401(k) Savings Plan:
In our opinion, the accompanying statement 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 Bituminous 401(k) Savings Plan (the "Plan") at December 31, 2005 and the changes in net assets available for benefits for the year then ended 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 audit.  We conducted our audit of these statements 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.  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 audit provides a reasonable basis for our opinion.


                                                        /s/ PricewaterhouseCoopers LLC

Chicago, Illinois
June 26, 2006
 
 

2
 
BITUMINOUS 401(K) SAVINGS PLAN
 
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2006 and 2005
 
 
ASSETS
  
2006
    
2005
  
Investments, at fair value:
            
Pooled separate accounts
   $
17,943,962
     $
15,824,281
  
Old Republic International Corporation stock account
    
6,753,647
      
6,450,210
  
Participant loans receivable
    
403,483
      
412,062
  
Net assets available for benefits
   $
25,101,092
     $
22,686,553
  
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
3

 
BITUMINOUS 401(K) SAVINGS PLAN
 
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the years ended December 31, 2006 and 2005
 
 
   
2006
    
2005
  
Additions:
            
             
Investment income:
            
Net investment gain from pooled separate accounts
   $
1,944,581
     $
696,690
  
Net appreciation of Old Republic International stock account
    
666,535
      
216,214
  
Dividends from Old Republic International Corporation  common stock
    
174,788
      
386,396
  
Interest from participant loans
    
25,108
      
23,104
  
   Total investment income
    
2,811,012
      
1,322,404
  
                 
Contributions:
                
Employer
    
237,053
      
232,993
  
Employee
    
1,260,715
      
1,223,531
  
Rollover
    
191,842
      
162,956
  
   Total contributions
    
1,689,610
      
1,619,480
  
                 
   Total additions
    
4,500,622
      
2,941,884
  
                 
Deductions:
                
Benefits paid to participants
    
2,084,801
      
778,444
  
Administrative expenses
    
1,282
      
1,788
  
   Total deductions
    
2,086,083
      
780,232
  
                 
   Net increase
    
2,414,539
      
2,161,652
  
                 
Net assets available for benefits:
                
Beginning of year
    
22,686,553
      
20,524,901
  
End of year
   $
25,101,092
     $
22,686,553
  
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
4
 
BITUMINOUS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
 
 
1.           Description of Plan
 
The following description of the Bituminous 401(k) Savings Plan (the "Plan") provides only general information.  Participants should refer to the Plan document for a more complete description of the Plan's provisions.
 
A.           General
 
The Plan is a defined contribution plan covering substantially all of the employees of Bituminous Casualty Corporation (the "Company" or the “Plan Sponsor”).  Employees are eligible to participate in the Plan on the last to occur: (A) date of hire or (B) the start of the payroll period in which the employee attains age twenty-one.  Participation in the Plan is optional.  If an employee does not elect to join the Plan on the first date he/she is eligible to do so, he/she may join the Plan at the start of any subsequent payroll period.  The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA) and Internal Revenue Code (IRC).
 
B.           Contributions
 
Participants may contribute up to 12 percent of their annual eligible compensation on a before-tax basis subject to applicable IRS limitations. The Company provides a matching contribution equal to 25 percent of the participant's contribution on the first 6 percent of earnings.  Participants may elect to have their voluntary contributions invested in any one or more of nine Pooled Separate Accounts as well as the Old Republic International Corporation (“ORI”) Stock Account.  Company matching contributions are invested in the same manner as participants have elected for their contributions.  Participants may also make rollover contributions into the plan.  A rollover is a transfer to the plan of a qualified distribution in accordance with the provisions of the plan.  Rollovers are not subject to company matching contributions.  Employees who are age 50 and older at any time during the year may make catch-up contributions, subject to applicable IRS limitations.  Catch-up contributions are not subject to company matching contributions.  Participant and company contributions to the Plan are limited to the maximum amount under the IRC.  Contributions in excess of IRC limitations are returned to the participants or company when determined.
 
C.           Participant Accounts
 
Each participant's account is credited with the participant's contributions, an allocation of the Company's contribution and Plan earnings.  Allocations are based on participant contributions or account balances as defined.  The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
 
Cash dividends received with respect to ORI common stock previously credited to participants shall be applied to purchase additional shares of ORI common stock in the ORI Stock Account.  Such dividends and the additional shares (including fractional shares) subsequently purchased with the dividends shall be allocated and credited to the accounts of participants, pro rata, according to the shares (including fractional shares) credited to the accounts of participants on the applicable dividend record date.  Any ORI common stock received as a stock split or stock dividend or as a result of a reorganization or recapitalization of ORI shall be allocated and credited to the accounts of participants in proportion to the ORI common stock previously credited to their account.
 
 
5
 
BITUMINOUS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS

 
1.
Description of Plan (continued)
 
D.           Vesting
 
Participants are immediately vested in their voluntary contributions plus allocated earnings thereon.  Participants are immediately vested in the remainder of their accounts upon death, disability, attainment of normal retirement age or based on the participant’s number of years of service using the following table for the years ended December 31, 2006 :
 
Years of Service
Vested Percentage
Fewer than 1
0%
1
10%
2
20%
3
40%
4
60%
5
80%
    6 or More
100%

                E.  
       Payment of Benefits
 
On termination of service, retirement, or death, a participant or his/her beneficiary may elect to leave funds in the Plan or receive either a single-sum payment or purchase of a single premium life annuity contract as defined in the Plan agreement.  Net assets at December 31, 2006 and 2005, include funds totaling $3,018,699 and $2,884,268, respectively, which represent the account balance of retired and terminated participants who have elected to leave the funds in the Plan upon retirement or termination.
 
 
       F.  
       Forfeitures
 
If a participant terminates employment with the Plan Sponsor prior to becoming fully vested, the nonvested portion of the Plan sponsors contributions and allocated earnings thereon are forfeited.  All forfeitures are segregated annually and used as an offset to the Company’s matching contribution.  There were unallocated assets of $3,929 and $233 at December 31, 2006 and 2005, respectively, related to these forfeitures.
 
               G.  
       Participant Loans
 
Participants may elect to borrow from their accounts a maximum amount equal to the lesser of $50,000 or 50% of their vested account balance.  Loan transactions are treated as a transfer to (from) the investment account from (to) the Participant Loans account.  Loan terms shall not extend beyond five years.  The loans are collateralized by the balance in the participant’s account and bear interest at a rate which is based on the prevailing prime rate as published in The Wall Street Journal on the first business day of the month in which the loan is made plus one percentage point.  Interest rates range from 5.00 percent to 9.25 percent with loans maturing at various dates through 2011.  Principal and interest are paid ratably through periodic payroll deductions.
 
6
 
 
BITUMINOUS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
 
 
1.
Description of Plan (continued)
 
 
                H.  
     Administrative Expenses
 
Investment management fees and other fees related to investments of the Plan are paid from the earnings of the Plan’s investments.  Audit fees, legal fees, and other fees related to the administration of the Plan are paid by the Company.  Expenses related to participant loans are paid by the Plan and charged to the respective participants account.
 
 
2.
Summary of Significant Accounting Policies
 
                A.  
     Basis of Accounting
 
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
 
B.           Use of Estimates
 
The preparation 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 net assets available for benefits and disclosures of contingent assets and liabilities at the date of the financial statements and the changes in net assets available for benefits during the reporting period.  Actual results may differ from those estimates.
 
C.           Risks and Uncertainties
 
The Plan provides for various investment options in 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 and the level of uncertainty related to changes in the value of 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 and the statement of changes in net assets available for benefits.
 
D.  Investments and Income Recognition
 
The Plan has nine pooled separate account investment funds under its group annuity contract with Prudential Retirement Insurance and Annuity Company (Prudential) available for participants to direct their investments therein.  Investments in pooled separate accounts are valued on a per unit market value basis as determined by Prudential, which reflects the fair value of the investments comprising the separate pooled funds.  In addition the Plan has an ORI common stock account that is stated at the closing market value on the last business day of the year.  Purchases and sales of securities are recorded on a trade-date basis.  Interest income is recorded as earned on an accrual basis.  Dividend income is recorded on the ex-dividend date.
 
The Plan presents in the Statement of Changes in Net Assets Available for Benefits the net increase (decrease) in value of its investments, which consist of realized gains and losses, unrealized appreciation (depreciation) and interest and dividend earnings on the investments.
 
7
 
BITUMINOUS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
 

2.
Summary of Significant Accounting Policies (continued)
 
E.  Benefit Payments
 
Benefit payments to participants are recorded upon distribution payment.  At December 31, 2006 and 2005, there were no significant amounts due but unpaid to participants.
 
 
3.           Assets Greater Than 5% of Plan Assets
 
Investments that represent 5% or more of plan assets at December 31, 2006 and 2005, are as follows:
 
   
December 31,   
  
   
2006
    
2005
  
                Old Republic International Corporation Stock Account
   $
6,753,647
     $
6,450,210
  
                Prudential Short-term Bond Fund
    
4,041,253
      
3,301,000
  
                Dryden S&P 500 Index Fund
    
2,751,737
      
2,388,522
  
                Prudential Large Cap Value / Aronson & Johnson & Ortiz Fund
    
2,739,867
      
2,107,911
  
                Prudential Balanced I Fund / Wellington Management Co. Fund
    
2,486,823
      
2,193,133
  
                Prudential Small Cap Value / Mellon Equity Associates Fund
    
1,562,831
      
-
  
                AIM Dynamics Fund
    
1,451,439
      
1,167,872
  
                Prudential Small Cap Growth / TimesSquare Fund
    
1,407,962
      
1,145,001
  
                Prudential Small Cap Value / Perkins, Wolf, McDonnell Fund
    
-
      
1,579,733
  


During 2006 and 2005, 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:

   
2006
    
2005
  
                Prudential pooled separate accounts
   $
1,944,581
     $
696,690
  
                Old Republic International Corporation stock account
    
666,535
      
216,214
  
    $
2,611,116
     $
912,904
  

 
4.           Tax Status
 
The Internal Revenue Service has issued a determination letter, dated May 29, 2002, stating that the Plan is designed in accordance with applicable sections of the Internal Revenue Code (IRC).  The Plan has been amended since receiving the determination letter.  However, the Plan Sponsor believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC; therefore, no provision for income taxes has been included in the Plan Financial Statements.
 
8

 
BITUMINOUS 401(K) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
 
 
5.
Plan Termination
 
Although it has not expressed any intent to do so, the Company 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 shall become 100 percent vested in their accounts and are entitled to a distribution of their account balances.
 
6.             Related-Party Transactions
 
The ORI stock account is invested in common stock of Old Republic International Corporation, the ultimate parent of the Company.
 
Plan assets include investments in nine pooled separate accounts.  These funds are managed by related parties of Prudential which is the Trustee record keeper and custodian of Plan assets.
 
 
 
 
 
 
 
 
 
 
 
 
 
9

 
SUPPLEMENTAL SCHEDULE
 
 
 
 
 
 
 
 
 
 
 
 
10
 
        BITUMINOUS 401(K) SAVINGS PLAN
             
        SCHEDULE H, LINE 4I
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
        December 31, 2006
             
        EIN:     36-0810360     Plan Number:  003 
(a)
  
(b)
 
Identity of issue
(c)
Description of investment
   including interest rate   
  
(d)
Cost
    
(e)
Contract/
 current value
  
 
*
  
Prudential Short-term
Bond Fund
Pooled separate account
    
**
     $
4,041,253
  
                         
 
*
  
Dryden S&P 500 Index Fund
Pooled separate account
    
**
      
2,751,737
  
                         
 
*
  
Prudential Large Cap Value /
Aronson & Johnson & Ortiz Fund
Pooled separate account
    
**
      
2,739,867
  
                         
 
*
  
Prudential Balanced I Fund /
Wellington Management Co.
Pooled separate account
    
**
      
2,486,823
  
                         
 
*
  
Prudential Small Cap Value /
Mellon Equity Associates Fund
Pooled separate account
    
**
      
1,562,831
  
                         
 
*
  
Prudential Mid Cap Growth/
AIM Dynamics Account Fund
Pooled separate account
    
**
      
1,451,439
  
                         
 
*
  
Prudential Small Cap Growth /
TimesSquare Fund
Pooled separate account
    
**
      
1,407,962
  
                         
 
*
  
Prudential Large Cap Growth /
Goldman Sachs Fund
Pooled separate account
    
**
      
831,713
  
                         
 
*
  
State Street Global Advisors
Intermediate Bond Account Fund
Pooled separate account
    
**
      
670,337
  
                         
 
*
  
Old Republic International Corporation Stock Account
Common stock
    
**
      
6,753,647
  
                         
 
*
  
Participant Loans
Participant loans, interest rates range from 5.00% to 9.25%, paid in a series of substantially equal payments over the term of the loan, maturing at various dates through 2011
            
403,483
  
     
     Total
             $
25,101,092
  
     
*Party in interest
**Cost information is not applicable for participant directed investments
          
 
11