Newswires
Newswires RSS Get our newsletter
Order Prints
Newswires

Old Republic Reports Results For The Second Quarter 2023

NEWS RELEASE

At Old Republic:

At Financial Relations Board:

Craig R. Smiddy, President and CEO

Analysts/Investors: Joe Calabrese 212/827-3772

OLD REPUBLIC REPORTS RESULTS FOR THE SECOND QUARTER AND FIRST HALF 2023

OVERALL RESULTS

Quarters Ended June 30,

Six Months Ended June 30,

2023

2022

% Change

2023

2022

% Change

Pretax income (loss)

$

196.9

$

(54.6)

$

446.1

$

328.0

Pretax investment losses

(30.4)

(317.4)

(4.2)

(172.3)

Pretax income (loss) excluding investment losses

$

227.3

$

262.8

(13.5)%

$

450.3

$

500.4

(10.0)%

Net income (loss)

$

155.5

$

(40.1)

$

355.4

$

266.1

Net of tax investment losses

(24.0)

(250.4)

(3.3)

(135.9)

Net income (loss) excluding investment losses

$

179.6

$

210.2

(14.6)%

$

358.8

$

402.0

(10.8)%

Combined ratio

92.6 %

90.9 %

92.6 %

91.4 %

PER DILUTED SHARE

Quarters Ended June 30,

Six Months Ended June 30,

2023

2022

% Change

2023

2022

% Change

Net income (loss)

$

0.54

$

(0.13)

$

1.22

$

0.87

Net of tax investment losses

(0.08)

(0.82)

(0.01)

(0.45)

Net income (loss) excluding investment losses

$

0.62

$

0.69

(10.1)%

$

1.23

$

1.32

(6.8)%

SHAREHOLDERS' EQUITY (BOOK VALUE)

June 30,

Dec. 31,

2023

2022

% Change

Total

$

6,119.8

$

6,173.2

(0.9)%

Per Common Share

$

21.78

$

21.07

3.4 %

________

All amounts in this report are stated in millions except where noted, common stock data and percentages.

CHICAGO - July 27, 2023 - Old Republic International Corporation (NYSE: ORI) today reported pretax income, excluding investment gains (losses), of $227.3 for the quarter and $450.3 for the first six months of 2023. Title Insurance results declined in both periods, affected by higher mortgage interest rates. General Insurance pretax operating income rose 33.6% for the quarter and 34.6% for the first six months, driven by solid underwriting income. These results produced a consolidated combined ratio of 92.6% for both the quarter and first six months.

Consolidated net premiums and fees earned were down 16.8% for the quarter and 17.9% for the first six months. Title Insurance dropped as a result of lower revenues in both direct and agency operations, while General Insurance grew by mid-single digits in both periods. Net investment income increased significantly in the quarter and the first six months, primarily due to higher investment yields earned.

During the quarter, the Company returned total capital to shareholders of approximately $288, comprised of $70 in dividends, and $218 of share repurchases (8.7 million shares at an average price of $25.16 per share). For the first six months, this results in total capital returned of approximately $492, including $141 in dividends and nearly $351 of share repurchases (14.1 million shares at an average price of $25.14 per share). Following the close of the quarter, the Company repurchased $83 of additional shares (3.2 million shares at an average price of $25.83 per share), leaving approximately $182 remaining under the most recent authorization approved by the Company's Board of Directors in May 2023.

Book value per share grew from $21.07 at year-end 2022 to $21.78 as of June 30, 2023, primarily reflecting the addition of operating earnings less shareholder dividends. With the addition of dividends declared during the first six months, this was an increase of 5.7% over year-end 2022.

Old Republic International Corporation

Old Republic's business is managed for the long run. In this context management's key objectives are to achieve highly profitable operating results over the long term, and to ensure balance sheet strength for the primary needs of the insurance subsidiaries' underwriting and related services business. In this view, the evaluation of periodic and long-term results excludes consideration of all investment gains (losses). Under Generally Accepted Accounting Principles (GAAP), however, net income, inclusive of investment gains (losses), is the measure of total profitability.

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 June 30,

Six Months Ended June 30,

SUMMARY INCOME STATEMENTS:

2023

2022

% Change

2023

2022

% Change

Revenues:

Net premiums and fees earned

$

1,648.7

$

1,982.3

(16.8)%

$

3,203.9

$

3,901.3

(17.9)%

Net investment income

139.4

107.8

29.3

277.2

214.1

29.5

Other income

40.6

37.6

7.8

80.1

73.9

8.3

Total operating revenues

1,828.8

2,127.8

(14.1)

3,561.3

4,189.4

(15.0)

Investment gains (losses):

Realized from actual transactions and impairments

2.1

53.2

30.3

118.5

Unrealized from changes in fair value of equity securities

(32.6)

(370.7)

(34.6)

(290.9)

Total investment losses

(30.4)

(317.4)

(4.2)

(172.3)

Total revenues

1,798.3

1,810.3

3,557.0

4,017.0

Operating expenses:

Loss and loss adjustment expenses

617.8

638.6

(3.3)

1,221.7

1,246.6

(2.0)

Sales and general expenses

962.9

1,209.6

(20.4)

1,851.5

2,408.7

(23.1)

Interest and other charges

20.7

16.6

24.1

37.6

33.6

11.9

Total operating expenses

1,601.4

1,865.0

(14.1)%

3,110.9

3,688.9

(15.7)%

Pretax income (loss)

196.9

(54.6)

446.1

328.0

Income taxes (credits)

41.3

(14.4)

90.6

61.9

Net income (loss)

$

155.5

$

(40.1)

$

355.4

$

266.1

COMMON STOCK STATISTICS:

Components of net income per share:

Basic net income (loss) excluding investment gains (losses)

$

0.63

$

0.69

(8.7)%

$

1.24

$

1.32

(6.1)%

Net investment gains (losses):

0.01

0.14

0.08

0.31

Realized from actual transactions and impairments

Unrealized from changes in fair value of equity securities

(0.09)

(0.96)

(0.09)

(0.75)

Basic net income (loss)

$

0.55

$

(0.13)

$

1.23

$

0.88

Diluted net income (loss) excluding investment gains (losses)

$

0.62

$

0.69

(10.1)%

$

1.23

$

1.32

(6.8)%

Net investment gains (losses):

0.01

0.14

0.08

0.30

Realized from actual transactions and impairments

Unrealized from changes in fair value of equity securities

(0.09)

(0.96)

(0.09)

(0.75)

Diluted net income (loss)

$

0.54

$

(0.13)

$

1.22

$

0.87

Cash dividends on common stock

$

0.245

$

0.230

$

0.490

$

0.460

Book value per share

3.7 %

$

21.78

$

21.01

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

Old Republic International Corporation

Sources of Consolidated Income

Quarters Ended June 30,

Six Months Ended June 30,

Net premiums and fees earned:

2023

2022

% Change

2023

2022

% Change

General insurance

$

992.8

$

943.5

5.2 %

$

1,958.0

$

1,854.5

5.6 %

Title insurance

649.6

1,030.2

(36.9)

1,232.9

2,029.2

(39.2)

RFIG run-off

4.3

6.0

(28.8)

8.9

12.6

(28.8)

Corporate & other

1.9

2.4

(22.9)

4.0

4.9

(18.1)

Consolidated

$

1,648.7

$

1,982.3

(16.8)%

$

3,203.9

$

3,901.3

(17.9)%

Underwriting and related services income (loss):

General insurance

$

97.0

$

70.9

36.7 %

$

200.9

$

147.3

36.4 %

Title insurance

20.0

98.7

(79.7)

23.7

168.9

(85.9)

RFIG run-off

5.8

10.6

(45.4)

11.2

18.4

(38.9)

Corporate & other

(14.3)

(8.7)

(64.5)

(25.2)

(14.8)

(70.4)

Consolidated

$

108.6

$

171.7

(36.7)%

$

210.7

$

319.9

(34.1)%

Consolidated underwriting ratio:

Loss ratio:

Current year

42.1 %

34.1 %

42.6 %

34.1 %

Prior years

(4.6)

(1.9)

(4.5)

(2.1)

Total

37.5

32.2

38.1

32.0

Expense ratio

55.1

58.7

54.5

59.4

Combined ratio

92.6 %

90.9 %

92.6 %

91.4 %

Net investment income:

General insurance

$

111.4

$

83.6

33.3 %

$

220.1

$

166.0

32.6 %

Title insurance

14.1

11.1

27.6

27.9

22.4

24.6

RFIG run-off

1.4

1.5

(9.1)

2.9

3.6

(18.6)

Corporate & other

12.3

11.5

7.6

26.1

21.9

19.0

Consolidated

$

139.4

$

107.8

29.3 %

$

277.2

$

214.1

29.5 %

Interest and other charges (credits):

General insurance

$

24.2

$

16.6

$

43.6

$

32.9

Title insurance

(0.5)

0.2

(0.4)

0.8

Corporate & other (a)

(3.0)

(0.2)

(5.5)

(0.1)

Consolidated

$

20.7

$

16.6

24.1 %

$

37.6

$

33.6

11.9 %

Segmented and consolidated pretax income

excluding investment gains (losses):

General insurance

$

184.2

$

137.9

33.6 %

$

377.5

$

280.4

34.6 %

Title insurance

34.7

109.5

(68.3)

52.1

190.5

(72.6)

RFIG run-off

7.2

12.2

(40.7)

14.2

22.0

(35.5)

Corporate & other

1.0

3.0

(64.8)

6.4

7.3

(11.9)

Consolidated

227.3

262.8

(13.5)%

450.3

500.4

(10.0)%

Income taxes on above

47.7

52.5

91.5

98.3

Net income (loss) excluding investment

gains (losses)

179.6

210.2

(14.6)%

358.8

402.0

(10.8)%

Consolidated pretax investment gains (losses):

Realized from actual transactions

and impairments

2.1

53.2

30.3

118.5

Unrealized from changes in

fair value of equity securities

(32.6)

(370.7)

(34.6)

(290.9)

Total

(30.4)

(317.4)

(4.2)

(172.3)

Income tax credits on above

(6.4)

(67.0)

(0.8)

(36.4)

Net of tax investment losses

(24.0)

(250.4)

(3.3)

(135.9)

Net income (loss)

$

155.5

$

(40.1)

$

355.4

$

266.1

Consolidated operating cash flow

$

90.6

$

124.7

$

247.2

$

403.2

(a) Includes consolidation/elimination entries.

3

Old Republic International Corporation

General Insurance Segment Operating Results

Quarters Ended June 30,

Six Months Ended June 30,

2023

2022

% Change

2023

2022

% Change

Net premiums written

$

1,081.0

$

1,002.3

7.8 %

$

2,095.1

$

1,963.1

6.7 %

Net premiums earned

992.8

943.5

5.2

1,958.0

1,854.5

5.6

Net investment income

111.4

83.6

33.3

220.1

166.0

32.6

Other income

40.4

37.3

8.1

79.7

73.3

8.6

Operating revenues

1,144.7

1,064.5

7.5

2,257.9

2,094.0

7.8

Loss and loss adjustment expenses

604.5

616.1

(1.9)

1,196.9

1,198.3

(0.1)

Sales and general expenses

331.6

293.8

12.9

639.8

582.2

9.9

Interest and other charges

24.2

16.6

45.6

43.6

32.9

32.5

Operating expenses

960.4

926.6

3.7

1,880.4

1,813.5

3.7

Segment pretax operating income

$

184.2

$

137.9

33.6 %

$

377.5

$

280.4

34.6 %

Loss ratio:

Current year

66.9 %

67.2 %

66.9 %

67.1 %

Prior years

(6.0)

(1.9)

(5.8)

(2.5)

Total

60.9

65.3

61.1

64.6

Expense ratio

29.3

27.2

28.6

27.4

Combined ratio

90.2 %

92.5 %

89.7 %

92.0 %

General Insurance net premiums earned increased 5.2% and 5.6% for the quarter and first six months of 2023, respectively, driven by premium rate increases, high renewal retention ratios, and new business production. Premium growth was experienced across most lines of coverage and was most pronounced within commercial auto, partially offset by declines experienced within certain financial indemnity and warranty products. Commercial auto achieved strong rate increases while rate declines were experienced within public D&O and workers' compensation coverages. Net investment income increased significantly in both 2023 periods, driven largely by higher investment yields earned.

The reported loss ratio for General Insurance improved considerably in both periods. Favorable development of approximately 6% for both the quarter and first six months came predominantly from the workers' compensation and commercial auto lines of coverage. The trends in current period loss and expense ratios mostly reflect a shift in the line of coverage mix. Investments in new products and geographies in recent years have diversified the General Insurance business, resulting in shifts in the lines of coverage mix toward lines with lower current period loss ratios and higher expense ratios.

Together, these factors produced highly profitable combined ratios and greater pretax operating income for the periods reported. For General Insurance, we target combined ratios between 90% and 95% over a full underwriting cycle, recognizing that quarterly and annual ratios and trends may deviate from this range, particularly given the long claim payment patterns associated with the business.

The following table shows recent annual and interim periods' loss ratios and the effects of loss development trends:

Effect of Prior Periods'

(Favorable)/

Loss Ratio Excluding

Reported

Unfavorable Loss

Prior Periods' Loss

Loss Ratio

Reserves Development

Reserves Development

2018

72.2 %

- %

72.2 %

2019

71.8

0.4

71.4

2020

69.9

(0.8)

70.7

2021

64.8

(3.8)

68.6

2022

62.1 %

(5.1)%

67.2 %

2nd Quarter 2022

65.3 %

(1.9)%

67.2 %

2nd Quarter 2023

60.9 %

(6.0)%

66.9 %

1st Six Months 2022

64.6 %

(2.5)%

67.1 %

1st Six Months 2023

61.1 %

(5.8)%

66.9 %

4

Old Republic International Corporation

Title Insurance Segment Operating Results

Quarters Ended June 30,

Six Months Ended June 30,

2023

2022

% Change

2023

2022

% Change

Net premiums and fees earned

$

649.6

$

1,030.2

(36.9)%

$

1,232.9

$

2,029.2

(39.2)%

Net investment income

14.1

11.1

27.6

27.9

22.4

24.6

Other income

0.2

0.2

(27.8)

0.3

0.5

(34.1)

Operating revenues

664.0

1,041.6

(36.2)

1,261.2

2,052.1

(38.5)

Loss and loss adjustment expenses

16.2

29.0

(44.1)

31.6

58.4

(45.8)

Sales and general expenses

613.5

902.7

(32.0)

1,177.8

1,802.3

(34.6)

Interest and other charges

(0.5)

0.2

(274.0)

(0.4)

0.8

(155.4)

Operating expenses

629.3

932.1

(32.5)

1,209.0

1,861.6

(35.1)

Segment pretax operating income

$

34.7

$

109.5

(68.3)%

$

52.1

$

190.5

(72.6)%

Loss ratio:

Current year

3.8 %

3.6 %

3.8 %

3.6 %

Prior years

(1.3)

(0.8)

(1.2)

(0.7)

Total

2.5

2.8

2.6

2.9

Expense ratio

94.4

87.6

95.5

88.8

Combined ratio

96.9 %

90.4 %

98.1 %

91.7 %

Title Insurance net premiums and fees earned decreased by 36.9% and 39.2% for the quarter and first six months of 2023, respectively. Both directly produced and agency produced revenues declined, driven by a continued drop in mortgage originations attributable to higher mortgage interest rates. Commercial premiums decreased commensurately, and represent 22% of premiums earned in the second quarter of both 2023 and 2022. Despite the downward trends experienced when compared to the prior year, Title Insurance pretax operating income increased compared to the first quarter of 2023, primarily due to higher net premium and fees earned. Net investment income increased in both 2023 periods, reflecting higher investment yields earned partially offset by a slightly lower invested asset base.

Title Insurance loss ratios decreased slightly for the quarter and first six months due to higher levels of favorable development as a percentage of premium. Both period's expense ratios were elevated compared to last year, generally reflecting lower directly produced revenues that carry higher fixed expenses. In addition, the first six months 2023 expense ratio reflects the recovery of the $17.2 (1.4 percentage points) state sales tax assessment paid in the fourth quarter of last year.

Together, these factors produced a higher combined ratio and lower pretax operating income for the periods reported.

The following table shows recent annual and interim periods' loss ratios and the effects of loss development trends:

Effect of Prior Periods'

(Favorable)/

Loss Ratio Excluding

Reported

Unfavorable Loss

Prior Periods' Loss

Loss Ratio

Reserves Development

Reserves Development

2018

1.9 %

(1.8)%

3.7 %

2019

2.5

(1.2)

3.7

2020

2.3

(1.3)

3.6

2021

2.6

(1.0)

3.6

2022

2.3 %

(1.3)%

3.6 %

2nd Quarter 2022

2.8 %

(0.8)%

3.6 %

2nd Quarter 2023

2.5 %

(1.3)%

3.8 %

1st Six Months 2022

2.9 %

(0.7)%

3.6 %

1st Six Months 2023

2.6 %

(1.2)%

3.8 %

5

Disclaimer

Old Republic International Corporation published this content on 27 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 July 2023 11:14:00 UTC.

Advisor News

More Advisor News

Annuity News

More Annuity News

Health/Employee Benefits News

More Health/Employee Benefits News

Life Insurance News

More Life Insurance News