Old Republic Reports Results For The First Quarter 2023
NEWS RELEASE
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At |
At Financial Relations Board: |
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Analysts/Investors: |
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OLD REPUBLIC REPORTS RESULTS FOR THE FIRST QUARTER 2023 |
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OVERALL RESULTS |
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Quarters Ended |
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2023 |
2022 |
% Change |
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Pretax income |
$ |
249.2 |
$ |
382.6 |
||||
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Pretax investment gains |
26.2 |
145.1 |
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Pretax income excluding investment gains |
$ |
222.9 |
$ |
237.5 |
(6.1)% |
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Net income |
$ |
199.8 |
$ |
306.3 |
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Net of tax investment gains |
20.6 |
114.5 |
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Net income excluding investment gains |
$ |
179.2 |
$ |
191.7 |
(6.6)% |
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Combined ratio |
92.7 % |
91.9 % |
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PER DILUTED SHARE |
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Quarters Ended |
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2023 |
2022 |
% Change |
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Net income |
$ |
0.68 |
$ |
1.00 |
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Net of tax investment gains |
0.07 |
0.37 |
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Net income excluding investment gains |
$ |
0.61 |
$ |
0.63 |
(3.2)% |
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SHAREHOLDERS' EQUITY (BOOK VALUE) |
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2023 |
2022 |
% Change |
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Total |
$ |
6,331.9 |
$ |
6,173.2 |
2.6 % |
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Per Common Share |
$ |
21.91 |
$ |
21.07 |
4.0 % |
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________
All amounts in this report are stated in millions except where noted, common stock data and percentages.
Consolidated net premiums and fees earned were down 19.0% for the quarter, with
During the quarter, the Company returned total capital to shareholders of approximately
Book value per share grew to
In management's opinion, the focus on income excluding investment gains (losses), also described herein as segment pretax operating income, provides a better way to analyze, evaluate, and establish accountability for the results of the insurance operations. The inclusion of realized investment gains (losses) in net income can mask trends in operating results, because such realizations are often highly discretionary. Similarly, the inclusion of unrealized investment gains (losses) in equity securities can further distort such operating results with significant period-to-period fluctuations.
FINANCIAL HIGHLIGHTS
Quarters Ended
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SUMMARY INCOME STATEMENTS: |
2023 |
2022 |
% Change |
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Revenues: |
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Net premiums and fees earned |
$ |
1,555.2 |
$ |
1,919.0 |
(19.0)% |
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Net investment income |
137.8 |
106.2 |
29.7 |
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Other income |
39.4 |
36.2 |
8.8 |
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Total operating revenues |
1,732.4 |
2,061.5 |
(16.0) |
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Investment gains (losses): |
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Realized from actual transactions and impairments |
28.2 |
65.2 |
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Unrealized from changes in fair value of equity securities |
(2.0) |
79.8 |
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Total investment gains |
26.2 |
145.1 |
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Total revenues |
1,758.7 |
2,206.6 |
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Operating expenses: |
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Loss and loss adjustment expenses |
603.9 |
607.9 |
(0.7) |
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Sales and general expenses |
888.6 |
1,199.0 |
(25.9) |
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Interest and other charges |
16.9 |
16.9 |
- |
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Total operating expenses |
1,509.5 |
1,823.9 |
(17.2)% |
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Pretax income |
249.2 |
382.6 |
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Income taxes |
49.3 |
76.3 |
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Net income |
$ |
199.8 |
$ |
306.3 |
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COMMON STOCK STATISTICS: |
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Components of net income per share: |
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Basic net income excluding investment gains (losses) |
$ |
0.61 |
$ |
0.63 |
(3.2)% |
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Net investment gains (losses): |
0.08 |
0.17 |
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Realized from actual transactions and impairments |
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Unrealized from changes in fair value of equity securities |
(0.01) |
0.21 |
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Basic net income |
$ |
0.68 |
$ |
1.01 |
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Diluted net income excluding investment gains (losses) |
$ |
0.61 |
$ |
0.63 |
(3.2)% |
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Net investment gains (losses): |
0.08 |
0.17 |
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Realized from actual transactions and impairments |
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Unrealized from changes in fair value of equity securities |
(0.01) |
0.20 |
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Diluted net income |
$ |
0.68 |
$ |
1.00 |
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Cash dividends on common stock |
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$ |
0.245 |
$ |
0.230 |
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Book value per share |
(1.5)% |
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$ |
21.91 |
$ |
22.24 |
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We believe the information presented in the following table highlights the most meaningful indicators of ORI's segmented and consolidated financial performance. The information underscores the performance of our underwriting subsidiaries, as well as our sound investment of their capital and underwriting cash flows.
2
Sources of Consolidated Income
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Quarters Ended |
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Net premiums and fees earned: |
2023 |
2022 |
% Change |
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General insurance |
$ |
965.1 |
$ |
910.9 |
5.9 % |
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Title insurance |
583.2 |
998.9 |
(41.6) |
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RFIG run-off |
4.6 |
6.5 |
(28.9) |
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Corporate & other |
2.1 |
2.4 |
(13.3) |
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Consolidated |
$ |
1,555.2 |
$ |
1,919.0 |
(19.0)% |
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Underwriting and related services income (loss): |
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General insurance |
$ |
103.8 |
$ |
76.3 |
36.0 % |
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Title insurance |
3.7 |
70.2 |
(94.7) |
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RFIG run-off |
5.4 |
7.7 |
(29.8) |
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Corporate & other |
(10.9) |
(6.1) |
(78.9) |
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Consolidated |
$ |
102.1 |
$ |
148.2 |
(31.1)% |
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Consolidated underwriting ratio: |
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Loss ratio: |
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Current year |
43.3 % |
34.1 % |
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Prior years |
(4.5) |
(2.4) |
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Total |
38.8 |
31.7 |
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Expense ratio |
53.9 |
60.2 |
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Combined ratio |
92.7 % |
91.9 % |
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Net investment income: |
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General insurance |
$ |
108.7 |
$ |
82.4 |
31.9 % |
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Title insurance |
13.7 |
11.3 |
21.8 |
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RFIG run-off |
1.5 |
2.0 |
(26.0) |
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Corporate & other |
13.7 |
10.4 |
31.6 |
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Consolidated |
$ |
137.8 |
$ |
106.2 |
29.7 % |
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Interest and other charges (credits): |
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General insurance |
$ |
19.4 |
$ |
16.3 |
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Title insurance |
- |
0.5 |
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Corporate & other (a) |
(2.5) |
- |
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Consolidated |
$ |
16.9 |
$ |
16.9 |
- % |
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Segmented and consolidated pretax income |
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excluding investment gains (losses): |
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General insurance |
$ |
193.2 |
$ |
142.5 |
35.6 % |
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Title insurance |
17.4 |
80.9 |
(78.5) |
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RFIG run-off |
6.9 |
9.7 |
(29.0) |
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Corporate & other |
5.3 |
4.2 |
25.8 |
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Consolidated |
222.9 |
237.5 |
(6.1)% |
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Income taxes on above |
43.7 |
45.7 |
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Net income excluding investment |
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gains (losses) |
179.2 |
191.7 |
(6.6)% |
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Consolidated pretax investment gains (losses): |
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Realized from actual transactions |
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and impairments |
28.2 |
65.2 |
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Unrealized from changes in |
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fair value of equity securities |
(2.0) |
79.8 |
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Total |
26.2 |
145.1 |
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Income taxes on above |
5.5 |
30.5 |
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Net of tax investment gains |
20.6 |
114.5 |
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Net income |
$ |
199.8 |
$ |
306.3 |
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Consolidated operating cash flow |
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$ |
156.6 |
$ |
278.4 |
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(a) Includes consolidation/elimination entries.
3
General Insurance Segment Operating Results
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Quarters Ended |
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2023 |
2022 |
% Change |
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Net premiums written |
$ |
1,014.0 |
$ |
960.8 |
5.5 % |
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Net premiums earned |
965.1 |
910.9 |
5.9 |
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Net investment income |
108.7 |
82.4 |
31.9 |
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Other income |
39.2 |
35.9 |
9.1 |
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Operating revenues |
1,113.1 |
1,029.4 |
8.1 |
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Loss and loss adjustment expenses |
592.3 |
582.2 |
1.7 |
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Sales and general expenses |
308.1 |
288.3 |
6.9 |
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Interest and other charges |
19.4 |
16.3 |
19.0 |
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Operating expenses |
919.9 |
886.9 |
3.7 |
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Segment pretax operating income |
$ |
193.2 |
$ |
142.5 |
35.6 % |
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Loss ratio: |
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Current year |
66.9 % |
67.1 % |
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Prior years |
(5.5) |
(3.2) |
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Total |
61.4 |
63.9 |
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Expense ratio |
27.9 |
27.7 |
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Combined ratio |
89.3 % |
91.6 % |
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The reported loss ratio for
Together, these factors produced highly profitable combined ratios and greater pretax operating income for the quarter. For
The following table shows recent annual and interim periods' loss ratios and the effects of loss development trends:
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Effect of Prior Periods' |
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(Favorable)/ |
Loss Ratio Excluding |
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Reported |
Unfavorable Loss |
Prior Periods' Loss |
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Loss Ratio |
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2018 |
72.2 % |
- % |
72.2 % |
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2019 |
71.8 |
0.4 |
71.4 |
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2020 |
69.9 |
(0.8) |
70.7 |
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2021 |
64.8 |
(3.8) |
68.6 |
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2022 |
62.1 % |
(5.1)% |
67.2 % |
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1st Quarter 2022 |
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63.9 % |
(3.2)% |
67.1 % |
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1st Quarter 2023 |
61.4 % |
(5.5)% |
66.9 % |
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4
Title Insurance Segment Operating Results
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Quarters Ended |
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|
2023 |
2022 |
% Change |
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Net premiums and fees earned |
$ |
583.2 |
$ |
998.9 |
(41.6)% |
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Net investment income |
13.7 |
11.3 |
21.8 |
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Other income |
0.1 |
0.2 |
(41.6) |
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Operating revenues |
597.1 |
1,010.5 |
(40.9) |
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Loss and loss adjustment expenses |
15.3 |
29.3 |
(47.6) |
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Sales and general expenses |
564.2 |
899.6 |
(37.3) |
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Interest and other charges |
- |
0.5 |
(91.2) |
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Operating expenses |
579.7 |
929.5 |
(37.6) |
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Segment pretax operating income |
$ |
17.4 |
$ |
80.9 |
(78.5)% |
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Loss ratio: |
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|
Current year |
3.7 % |
3.5 % |
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|
Prior years |
(1.1) |
(0.6) |
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Total |
2.6 |
2.9 |
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Expense ratio |
96.7 |
90.0 |
|||||
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Combined ratio |
99.3 % |
92.9 % |
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Together, these factors produced a small underwriting gain and significantly lower pretax operating income for the quarter.
The following table shows recent annual and interim periods' loss ratios and the effects of loss development trends:
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Effect of Prior Periods' |
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|
(Favorable)/ |
Loss Ratio Excluding |
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Reported |
Unfavorable Loss |
Prior Periods' Loss |
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Loss Ratio |
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|
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|
2018 |
1.9 % |
(1.8)% |
3.7 % |
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2019 |
2.5 |
(1.2) |
3.7 |
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2020 |
2.3 |
(1.3) |
3.6 |
||
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2021 |
2.6 |
(1.0) |
3.6 |
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2022 |
2.3 % |
(1.3)% |
3.6 % |
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1st Quarter 2022 |
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2.9 % |
(0.6)% |
3.5 % |
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|
1st Quarter 2023 |
2.6 % |
(1.1)% |
3.7 % |
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5
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