A bad era is coming to an end for Old Republic (NYSE: ORI), whose mortgage-insurance business has been a sinkhole since the 2008 financial crisis. The insurer turned profitable the first quarter of 2013, after years of losses. And it’s expected to earn 82 cents per share this year.

What saved Old Republic from ruin – and makes it a good investment now – is that it has two solid businesses outside of mortgages that are performing very well: (1) general insurance; and (2) title insurance.

Meanwhile, the mortgage-insurance albatross hanging from Old Republic’s neck has been nearly cut off, in what is known as a “run-off.” In 2011, regulators allowed Old Republic to pay off any incoming mortgage claims at 50 cents on the dollar. Barring an economic downturn, what’s left of the mortgage business could even show a profit over the next 18 months, as claims dwindle and reserves can then be lowered.

Old Republic earned 21 cents per share in first-quarter 2013, on a 22 percent rise in revenue to $1.3 billion. Another good sign is that analysts have been raising earnings estimates lately. The latest consensus on earnings is 82 cents per share for 2013 and $1.07 for 2014. Here’s what’s driving Old Republic’s turnaround.

Going Strong

General insurance. This consists of property/casualty (P/C) and liability coverage, and it brings in more than half of Old Republic’s premiums and almost 80 percent of pre-tax operating income. The major categories are workers’ compensation, autos (mostly trucks) and general liability. Workers’ comp premiums have been rising as more Americans are getting employed, and truck insurance has picked up due to stronger economic activity. In the first quarter, general insurance premiums rose 9 percent.

Old Republic’s P/C and liability business is one of the 50 largest in the US, and its individual subsidiaries have solid financial-strength ratings.

Title insurance. At about 20 percent of operating income, title insurance has been on an upswing lately due to a rebounding real estate market. Premiums rose 29 percent in first-quarter 2013, and pre-tax operating income more than doubled, to $21 million. Title insurance should continue to grow at an above-average rate since most of Old Republic’s competition in this market has evaporated thanks to mergers and outright closures in the wake of the mortgage crisis.

Valuation. At a recent price of $13.24 per share, Old Republic is trading for less than book value ($14.31 per share) and annual revenue, and it’s priced at 15.6 times 2013 earnings estimates versus an industry average of 18 times. While some of this discounting has to do with Old Republic losing 27 cent a share in 2012, the company’s prospects going forward are brightening as the US economy continues to improve.

Rising interest rates could pose a challenge, causing the investment-grade bonds in Old Republic’s investment portfolio to lose value. However, the insurer is less dependent on investment income than many of its competitors, and it will then be investing new premiums at higher rates.

The biggest risk now for Old Republic is an economic downturn, given that its premiums are driven by rising employment and more real estate transactions. At this point, however, the US economy is not likely to head south, and the progress Old Republic has made in righting its business has gone largely unappreciated by the market. As a result, ORI shares are bargain-priced and sport a 5.5 percent dividend yield.