BUSINESS UPDATE OCTOBER 2013

Transcription

1 Our Mission is to provide quality insurance security and related services to businesses, individuals and public institutions, and be a dependable long-term steward of the trust our policyholders and shareholders place in us. BUSINESS UPDATE OCTOBER 2013 Old Republic ranks among the nation s 50 largest publicly held insurance organizations.

2 Old Republic International Corporation Safe Harbor Statement Historical data pertaining to the operating results, liquidity, and other performance indicators applicable to an insurance enterprise such as Old Republic are not necessarily indicative of results to be achieved in succeeding years. In addition to the factors cited below, the long-term nature of the insurance business, seasonal and annual patterns in premium production and incidence of claims, changes in yields obtained on invested assets, changes in government policies and free markets affecting inflation rates and general economic conditions, and changes in legal precedents or the application of law affecting the settlement of disputed and other claims can have a bearing on period-to-period comparisons and future operating results. Some of the oral or written statements made in the Company s reports, press releases, and conference calls following earnings releases, can constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Of necessity, any such forward-looking statements involve assumptions, uncertainties, and risks that may affect the Company s future performance. With regard to Old Republic s General Insurance segment, its results can be affected, in particular, by the level of market competition, which is typically a function of available capital and expected returns on such capital among competitors, the levels of interest and inflation rates, and periodic changes in claim frequency and severity patterns caused by natural disasters, weather conditions, accidents, illnesses, work-related injuries, and unanticipated external events. RFIG run-off and Title Insurance results can be affected by similar factors, and by changes in national and regional housing demand and values, the availability and cost of mortgage loans, employment trends, and default rates on mortgage loans. RFIG run-off results, in particular, may also be affected by various mortgage guaranty risksharing arrangements with business producers, as well as the risk management and pricing policies of government sponsored enterprises. Life and accident insurance earnings can be affected by the levels of employment and consumer spending, variations in mortality and health trends, and changes in policy lapsation rates. At the parent holding company level, operating earnings or losses are generally reflective of the amount of debt outstanding and its cost, interest income on temporary holdings of short-term investments, and period-to-period variations in the costs of administering the Company s widespread operations. A more detailed listing and discussion of the risks and other factors which affect the Company s risk-taking insurance business are included in Part I, Item 1A - Risk Factors, of the Company s 2012 Form 10-K annual report and Part II, Item 1A - Risk Factors, of the Company s most recent Form 10-Q quarterly report to the Securities and Exchange Commission, which Items are specifically incorporated herein by reference. Any forward-looking statements or commentaries speak only as of their dates. Old Republic undertakes no obligation to publicly update or revise any and all such comments, whether as a result of new information, future events or otherwise, and accordingly they may not be unduly relied upon. 2

3 Our Mission is to provide quality insurance security and related services to businesses, individuals and public institutions, and be a dependable long-term steward of the trust our policyholders and shareholders place in us. ORI CORPORATE OVERVIEW * * * Managing for the Long Run 3

4 4 Old Republic International Corporation Recalibrating our Capital and Segment Objectives Our continuing business segments are well positioned Growth prospects focused on core business segments: General Insurance Title Insurance Emphasize these objectives through Recalibration of capital accounts Organic and targeted acquisition initiatives Ongoing operating challenges for the RFIG Run-off business Separation of the mortgage guaranty business Manage successful run-off of the CCI product line

5 Old Republic International Corporation Business Contribution by Economic Sector (1) 61.3% American Transportation 23.1% American Big Business 18.7% American Mid- Size Business 19.5% Trucking (*) 18.4% Aviation 2.0% GAP Coverage 1.0% Travel Insurance.9% Auto Warranty (*).8% All Industry Risk Management (*) 17.3% E&O / D&O 1.4% Contractors 9.6% Gas & Oil 2.0% Wholesale / Retail 1.1% Manufacturing.9% Health Care.9% Fidelity & Surety.8% Education.4% Other 3.8% American Housing Coverages 29.1% Title 26.0% Home Warranty 3.1% RFIG run-off & Other 9.6% Mortgage Guaranty (*) 7.7% Consumer Credit Indemnity (*).9% Other 1.0% (1) Determined on the basis of Old Republic s consolidated gross premiums in * Risk management business is also produced through the utilization of captives and various loss sensitive underwriting programs in trucking, automobile extended warranty, consumer credit indemnity, and mortgage guaranty operations. 5

6 Old Republic International Corporation Organization of Key Insurance Operations (as of 09/30/13) 6

7 ($ in millions) ($ in millions) Old Republic International Corporation Recalibrating the Business on a Three Legged Stool Total Capitalization Refocus the business in terms of its capital allocation Here s what the capitalization looked like over the past 10 years. $5,000 $4,000 $3,000 $2,000 $1,000 $0 -$1,000 3, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , (56.6) (36.6) Sept 2013 Consolidated General Title Mortgage Pro-forma capitalization without RFIG. $5,000 $4,000 $3,000 $2,000 $1,000 4, , , , , , , , , , , , , , , , , , , , , , , , $ Sept 2013 Consolidated General Title 7

8 8 Old Republic International Corporation Capital Allocation Objectives* Current Long-Term Objectives Actual As of Sept. 30, Actual as of December 31,* 2013* General Insurance 85.0% % 81.9% 83.1% 79.3% 71.0% 67.6% 61.9% Housing Title 12.5% % 13.8% 13.2% 11.0% 10.2% 10.2% 9.6% RFIG Run-off 0.0% -0.9% -1.4% 4.5% 13.4% 17.4% 24.6% Life & Health / Other 2.5% - 2.5% 5.2% 5.1% 5.2% 5.4% 4.8% 3.9% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% * Percentages based on the allocation of all capital instruments.

9 ($ in Millions) 9 Old Republic International Corporation Net Premiums and Fees Earned Trends Where We ve Been $5,500 $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 4, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Annl. Consolidated General (w/o CCI) Title Mortgage (w/cci)

10 ($ in Millions) 10 $5,500 $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 2, , , , ,103.8 Old Republic International Corporation Net Premiums and Fees Earned Trends Where We ve Been / Where We d Like and Aim To Go 3, , , , , , , , , , , , , , , , , , , , , , , , , , Annl. 5, , , Range of Objectives Consolidated 12.7% (3.5% Annual) General w/o CCI 25.7% (5.9% Annual) Title 9.0% (2.2% Annual) MI & CCI -63.9% (-22.5% Annual) Consolidated General (w/o CCI) Title Mortgage (w/cci)

11 Old Republic International Corporation Balance of Business/Long-Term Operating Margin* RFIG Years Ended December 31, General (**) Title Subtotal Run-off (**) Consolidated % 11.7% 15.2% 63.9% 22.5% % 6.1% 14.3% 51.0% 19.3% % 8.2% 14.7% 51.6% 20.1% % 3.2% 14.0% 49.1% 19.4% % -1.7% 14.2% -14.8% 8.6% % -7.1% 13.0% -83.2% -10.0% % 0.2% 12.3% -78.0% -8.3% % 0.8% 11.2% -69.0% -2.3% % 2.7% 11.2% % -8.7% % 4.4% 8.4% % -3.9% Nine Months Ended September 30, % 4.4% 8.7% % -4.1% % 6.5% 9.1% 29.7% 10.5% Latest 5 Years' Average 17.2% 0.2% 11.2% -99.8% -6.6% Latest 10 Years' Average 18.4% 2.8% 12.9% -29.8% 5.7% OBJECTIVES %-20% 5%-7% XX XX 12%-15% * Pretax Operating Income (Loss) as Percent of Net Premiums and Fees Earned ** Proforma results reflect the reclassification of General Insurance Consumer Credit Indemnity run-off business to RFIG Run-off for all periods presented. 11

12 ($ in Millions) Old Republic International Corporation Pretax Operating Income (Loss) Trends Where We ve Been $800 $700 $600 $500 $400 $300 $200 $100 $0 -$100 -$200 -$300 -$400 -$500 -$600 -$ (105.5) (14.7) (663.0) (46.3) (332.7) (279.9) (81.5) (597.7) Margins 14.8% 18.9% General (w/o CCI) 12.0% 8.2% Title 13.3% 14.4% Consolidated (w/o MI & CCI) (404.8) (352.2) (176.4) 73.8 (508.6) Annl. Consolidated General w/o CCI Title MI & CCI 12

13 ($ in Millions) Old Republic International Corporation Pretax Operating Income (Loss) Trends Where We ve Been / Where We d Like and Aim To Go $800 $700 $600 $500 $400 $300 $200 $100 $0 -$100 -$200 -$300 -$400 -$500 -$600 -$ (105.5) (14.7) (663.0) (46.3) (332.7) (597.7) (279.9) (81.5) (404.8) (176.4) (352.2) (508.6) Margins 14.8% 18.9% General (w/o CCI) 12.0% 8.2% Title 13.3% 14.4% Consolidated (w/o MI & CCI) Annl. Range of Objectives 17.0% 6.8% 12.8% Consolidated 52.3% (11.1% Annual) General w/o CCI 89.8% (17.4% Annual) Title 14.2% (3.4% Annual) MI & CCI -6.5% (-1.7% Annual) 13

14 14 Old Republic International Corporation Maintaining and Selling Long-Term Financial Solidity Managing the business for the long run by: Keeping long-term promises to customers Keeping total shareholder returns in focus Emphasis on balance sheet management and strength Retaining a basic focus on underwriting through: Balanced / stable investment policy = Protect capital Balanced and targeted book of business Price and cost discipline

15 15 Old Republic International Corporation Maintaining a Strong Balance Sheet / Key Elements High quality, liquid investment portfolio Minimal correlation of assets / activities with insurance risk Minimal intangible assets: 1.1% of total assets / 4.9% of shareholders equity Strong reserve position Reasonable debt leverage ratios at September 30, 2013: Debt to equity 15.3% Debt to total capitalization 13.3% Parent company liquidity / dividend history

16 16 Old Republic Investments Funding Liabilities & Protecting Capital as of September 30, 2013 Credit Quality Distribution of Fixed-Maturity Securities Baa 38.3% All Other 1.3% A 35.3% Investment Portfolio Composition Equity Securities 8.5% Short-Term Investments 10.8% Tax Exempt Bonds 2.0% Aaa 15.4% Aa 9.7% Taxable Bonds 78.7% Average Quality Rating: A Average Maturity: 4.7 years

17 17 Old Republic International Corporation General Insurance Group Balance Sheet Leverage Trends 9.0% 3,376.8 $3, % 7.0% 2, , , , , ,434.7 $3,200 $2, % 5.0% 4.0% 1, , , , , % 3.8% 3.9% $2,400 $2,000 $1, % 2.0% 1.0% 0.0% 1.43x 0.0% 1.0% 3.0% 2.4% 1.31x 1.32x 1.30x 1.30x 1.29x 2.6% 1.48x 1.8% 2.4% 1.29x 1.28x 1.27x 1.30x 1.29x Sept 2013 One Year Redundancy Claim Reserves and Policyholders' Surplus Ratio Total Capitalization 0.5% 1.2% $1,200 $800 $400 $0

18 Old Republic International Corporation Parent Company Liquidity / Dividend History ($ in Millions) Ratios Dividend Cash Paying Dividend Paid on Dividend Capacity to Common Shares Dividend Dividends Paid on Dividends to Dividends Years Ended Paying Paid to Common Paid to Paid to December 31, Capacity (*) ORI-Parent Shares ORI-Parent ORI-Parent 2002 $ $ $ % 54.4% (**) 76.8% 115.6% % 49.2% (**) 84.1% 104.7% % 37.5% % 82.7% % 81.3% % 88.2% % 91.7% % 100.7% % 93.1% 2013 $ $ (***) $ (***) 58.6% 89.9% * As reported in the Company s Annual Report ** In December 2003 and 2005, special cash dividends of $121.0 and $183.6, respectively, were declared and paid. *** 2013 estimated 18

19 19 Old Republic International Corporation Strength of Independent Financial Ratings (as of 10/18/13) Most Recent Ratings Assigned by: A.M. Standard General Insurance: Best Moody's & Poor's Bituminous Casualty A A2 A+ Great West Casualty A A2 A+ Old Republic General Insurance Corporation A * A+ Old Republic Insurance Company A A2 A+ Old Republic Surety Company A * A+ PMA Insurance Group A A3 * Old Republic National Title Insurance A A2 BBB+ Old Republic International Corporation Long-Term Debt * Baa3 BBB+ * No ratings sought or available Rating determinations made by rating agencies are subject to change from time to time. While the Company attempts to show accurate information, it cannot assure the timeliness of ratings referred to herein and assumes no obligation to monitor the ratings actions of any rating agency. Please refer to the Company s website for its most current rating determinations.

20 Our Mission is to provide quality insurance security and related services to businesses, individuals and public institutions, and be a dependable long-term steward of the trust our policyholders and shareholders place in us. GENERAL INSURANCE OVERVIEW 20

21 ($ in Millions) Old Republic General Insurance Group Historical Operating and Balance Sheet Trends $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 1, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Annualized Claim Reserves Shareholder s Equity Net Premiums and Fees Earned Operating Cash Flow Pretax Operating Income Net Claim Reserves Net Premiums Earned Shareholder's Equity Pretax Operating Income Operating Cash Flow 21

22 22 Old Republic General Insurance Group Operating Environment / Strategy Operating Environment Slowly recovering economy Rate environment trending positively Strategy Continued underwriting focus Decentralized operations to accentuate agent and customer relationships Specialization by industry - knowledge, service and products Manage to a balanced and targeted book of business

23 Old Republic General Insurance Group Gross Premiums by Major Coverage ($ in Millions) 2007 Fiscal Year Ended September % 5.3% 7.1% 31.2% 9.2% 4.6% 7.2% 2.8% 27.6% 11.7% 12.0% 12.8% 24.8% 36.6% $2,569.1 $3,318.7 Commercial Auto Workers Compensation Other Non-liability General Liability Financial Indemnity Home & Auto Warranty Miscellaneous 23

24 Old Republic General Insurance Group Underwriting Performance 120.0% 120.0% 110.0% 107.0% 100.0% 101.0% 98.0% 100.0% 92.1% 95.1% 94.8% 101.2% 92.0% 92.5% 92.4% 91.3% 93.1% 99.5% 106.6% 101.0% 102.5% 101.2% 100.0% 100.0% 90.0% 98.7% 98.0% 95.6% 94.7% 94.4% 110.0% 90.0% 80.0% 80.0% 70.0% Fiscal Sept % Industry Composite Ratio (1) Old Republic General Insurance Composite Ratio (2) (1) Source: A.M. Best; September 2013 estimated; restated to reflect A.M. Best s exclusion of mortgage and financial guaranty segments. (2) General Insurance composite ratio excludes consumer credit indemnity run-off business for all periods presented. 24

25 Old Republic General Insurance Group Underwriting Performance ($ in Millions) Nine Months Ended Years Ended December 31, Sept 30, All Lines Combined Net Premiums Earned $ 1,785.0 $ 1,661.1 $ 1,694.2 $ 2,109.4 $ 2,324.4 $ 1,859.4 Benefits & Claim Ratio 66.9% 69.0% 67.8% 69.2% 73.0% 73.5% Commercial Auto (Trucking) Net Premiums Earned $ $ $ $ $ $ Benefits & Claim Ratio 76.1% 71.5% 73.0% 71.9% 75.3% 76.5% Workers' Compensation Net Premiums Earned $ $ $ $ $ $ Benefits & Claim Ratio 69.4% 74.9% 70.7% 72.3% 78.6% 78.6% General Liability Net Premiums Earned $ $ $ $ $ $ Benefits & Claim Ratio 64.4% 65.6% 64.6% 64.6% 63.8% 68.3% Three Above Coverages Combined Net Premiums Earned $ 1,263.2 $ 1,183.5 $ 1,237.9 $ 1,642.4 $ 1,837.2 $ 1,464.8 Benefits & Claim Ratio 72.5% 71.9% 71.5% 71.6% 76.1% 76.9% Financial Indemnity Coverages (a) Net Premiums Earned $ $ $ $ $ 97.2 $ 71.1 Benefits & Claim Ratio 39.0% 58.1% 36.7% 39.2% 29.6% 30.7% Property (b) Net Premiums Earned $ $ $ $ $ $ Benefits & Claim Ratio 60.5% 63.0% 62.8% 70.4% 71.6% 62.8% Other Coverages (c) Net Premiums Earned $ $ $ $ $ $ Benefits & Claim Ratio 53.9% 60.1% 67.1% 62.8% 65.6% 68.9% (a) Includes Fidelity and Surety, Executive Indemnity (E&O/D&O), and Guaranteed Asset Protection (GAP) coverages. The consumer credit indemnity coverages are now reported within the RFIG run-off segment and have therefore been excluded for all periods presented. (b) Includes Commercial Multi-Peril and Inland Marine coverages. (c) Includes Home and Auto Warranty, Aviation, and Travel Accident coverages. 25

26 Our Mission is to provide quality insurance security and related services to businesses, individuals and public institutions, and be a dependable long-term steward of the trust our policyholders and shareholders place in us. TITLE INSURANCE OVERVIEW 26

27 Old Republic Title Insurance Group Who We Are Over 250 offices, 8,200 agents, all 50 states Growing national market share Focus on independent agency business Solid underwriting & agency oversight Conservative reserving, strong balance sheet Emphasis on ethics & accountability Long-term bottom line focus Full range of title insurance & real estate settlement services 27

28 Old Republic Title Insurance Group Business Trends Active regulatory environment Changing housing market Refi s/interest rates Purchase/foreclosures/housing prices Commercial market Evolving competitive environment Improving claim trends 28

29 $'s in Billions Mortgage Originations 1-4 Family Totals per MBA ($ in Billions) $3,000 $2,500 $2,000 $1,500 $1,000 $500 $ * 2014* Refinance $1,514 $1,326 $1,166 $777 $1,331 $1,099 $931 $1,247 $973 $388 Purchase $1,512 $1,399 $1,140 $731 $664 $472 $505 $503 $619 $703 * 2013 & 2014 are MBA estimates as of 8/22/

30 Title Industry Market Share By Underwriting Family Market Share Yr 2008 Yr 2009 Yr 2010 Yr 2011 Yr 2012 % Incr (Decr) 6 Mo s to to 13 Fidelity 44.9% 41.1% 37.8% 34.7% 33.9% 33.1% -2.2% -26.2% 1st American 29.1% 27.8% 26.7% 26.8% 26.3% 26.4% 0.3% -9.2% ORT 5.6% 8.1% 11.0% 13.0% 13.5% 14.7% 8.7% 161.0% Stewart 12.6% 14.5% 13.7% 13.7% 13.0% 12.0% -7.7% -4.9% Regionals 7.8% 8.5% 10.9% 11.8% 13.3% 13.8% 3.6% 76.9% ORT Share of: -Agency Market 7.5% 10.3% 14.8% 18.4% 19.4% 20.8% 7.4% 177.4% -Owned Market 2.8% 4.6% 5.1% 5.2% 5.3% 5.5% 3.6% 96.0% Per ALTA statistics based on total premiums written. 30

31 Old Republic Title Insurance Group Production Sources ($ in Millions) $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 70.1% 67.7% 67.4% 61.9% 62.9% 64.4% 67.7% 67.9% 61.5% 63.2% 29.9% 38.1% 37.1% 32.3% 35.6% 32.6% 32.3% 32.1% 36.8% 38.5% * $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 Direct Premiums & Fees Agency Premiums * 2013 represents 6 months actual annualized. 31

32 ($ in Millions) 32 Old Republic Title Insurance Group Historical Operating and Balance Sheet Trends $2,250 $2,000 $1,750 $1,500 $1,250 $1,000 $750 $500 $250 $0 -$ , , , , (14.7) (46.3) 1, , , Annualized Net Premiums and Fees Earned Shareholder s Equity Claim Reserves Pretax Operating Income (Loss) Claim Reserves Net Premiums & Fees Earned Shareholder's Equity Pretax Operating Income (Loss)

33 Old Republic Title Insurance Group Financial Performance ($ in Millions) 120.0% 100.0% 80.0% 60.0% 90.4% 84.6% 96.3% 94.2% 90.5% 88.2% 110.6% 104.7% 99.5% 103.6% 98.1% 93.6% Expense Ratio 101.7% 101.0% 99.0% Composite Ratio 96.8% 94.4% 93.8% 93.0% 91.2% 89.6% 87.5% 120.0% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Loss Ratio 5.8% 5.8% 6.0% 5.9% 6.6% 7.0% 7.9% 8.0% 7.8% 7.2% 6.9% Sept % 20.0% 0.0% Nine Months Ended Years Ended December 31, September 30, Net Premiums Written and Earned $ $ $ $ 1,007.9 $ 1,250.2 $ $ 1,176.6 Fees Earned Net Investment Income Pretax Operating Income (Loss) $ (46.3) $ 2.1 $ 9.4 $ 36.2 $ 73.8 $ 53.6 $

34 Statutory Cash & Invested Assets O.R. Title vs. National Competitors Old Republic Title Insurers Aggregate National Competitors Unaffiliated Stocks, Other 7.2% Mtg Loans, Real Estate 1.1% Cash 10.5% Affiliated Stocks, Other 15.0% Mtg Loans, Real Estate 5.5% Cash 9.3% Unaffiliated Stocks, Other 8.5% Bonds 81.2% Bonds 61.7% Shows the breakdown of Cash and Invested Assets as of 12/31/2012 for the Old Republic Title insurers compared to the aggregate for our 3 national competitors. All amounts are from the 2012 composite Annual Statements as compiled by the ALTA. 34

35 Our Mission is to provide quality insurance security and related services to businesses, individuals and public institutions, and be a dependable long-term steward of the trust our policyholders and shareholders place in us. ORI LOOKING AHEAD 35

36 36 Old Republic International Corporation Looking Ahead Our continuing businesses are in good shape: Growth prospects are sound: General Insurance / Recovering economy and positive rate situation Title Insurance / Slowly recovering housing We ll fuel these prospects through: Recalibration of our capital accounts Organic and targeted acquisition initiatives Bank on very good ORI brand name

37 ($ in Millions) 37 $5,500 $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 2, , , , ,103.8 Old Republic International Corporation Net Premiums and Fees Earned Trends Where We ve Been / Where We d Like and Aim To Go 3, , , , , , , , , , , , , , , , , , , , , , , , , , Annl. 5, , , Range of Objectives Consolidated 12.7% (3.5% Annual) General w/o CCI 25.7% (5.9% Annual) Title 9.0% (2.2% Annual) MI & CCI -63.9% (-22.5% Annual) Consolidated General (w/o CCI) Title Mortgage (w/cci)

38 ($ in Millions) Old Republic International Corporation Pretax Operating Income (Loss) Trends Where We ve Been / Where We d Like and Aim To Go $800 $700 $600 $500 $400 $300 $200 $100 $0 -$100 -$200 -$300 -$400 -$500 -$600 -$ (105.5) (14.7) (663.0) (46.3) (332.7) (597.7) (279.9) (81.5) (404.8) (176.4) (352.2) (508.6) Margins 14.8% 18.9% General (w/o CCI) 12.0% 8.2% Title 13.3% 14.4% Consolidated (w/o MI & CCI) Annl. Range of Objectives 17.0% 6.8% 12.8% Consolidated 52.3% (11.1% Annual) General w/o CCI 89.8% (17.4% Annual) Title 14.2% (3.4% Annual) MI & CCI -6.5% (-1.7% Annual) 38

39 Unit Value 39 Old Republic s Long Run Performance Book and Market Total Return vs. S & P 500 $28,100 ORI Book Value Total Return - ( Average compound annual = 13.0%) $24,100 ORI Market Value Total Return - ( Average compound annual = 12.2%) S & P 500 Total Return - ( Average compound annual = 9.7%) $20,100 $16,100 $12,100 $8,100 $4,100 $ Sept 2013 Year End

40 Questions & Answers BUSINESS UPDATE OCTOBER 2013