AM Best Affirms Credit Ratings of Subsidiaries of Old Republic International Corporation

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “aa-” of members of Old Republic Insurance Companies (Old Republic). (See below for a detailed list of companies.) Concurrently, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” of Old Republic Insurance Company of Canada (Old Republic Canada) (Hamilton, Ontario). At the same time, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a+” of Old Republic National Title Insurance Company (Tampa, FL) and American Guaranty Title Insurance Company (Oklahoma City, OK) (collectively referred to as Old Republic Title Insurance Group [ORTIG]). In addition, AM Best has affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb+” of Old Republic Life Insurance Company (ORL) (Chicago, IL). The outlook of these Credit Ratings (ratings) is stable. All companies are subsidiaries of Old Republic International Corporation [NYSE: ORI].

The ratings of Old Republic, which is considered the lead rating unit in the Old Republic International Corporation enterprise, reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

Old Republic is the flagship carrier for the Old Republic Insurance enterprise and one of the top 35 property/casualty insurers in the United States. It is a commercial lines insurance carrier that focuses predominantly on providing liability insurance for specific sectors of the North American economy. Major lines of business include workers’ compensation, commercial auto and general liability. Old Republic benefits from its expertise within the alternative risk transfer market and specialty commercial segments, as well as historically solid profitability, expertise in its respective individual business specialties and well-recognized franchises. Partially offsetting these positive rating factors is the variability in prior-year reserve development. In addition, Old Republic maintains an elevated exposure to common stocks within its investment portfolio; however, it remains within established tolerance levels. The company continues to have a very modest exposure to asbestos liabilities.

The ratings of Old Republic Canada reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.

The ratings of Old Republic Canada recognizes the synergies it gains as an affiliate of Great West Casualty Company, as well as its accident and sickness business. Partially offsetting these positive rating factors are the company’s limited product offering and challenging market environment in Canada, which have impacted the company’s underwriting performance in recent years, although the more recent years show improved results.

The ratings of ORTIG reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings of ORTIG also reflect the implicit support the group receives from its position in the Old Republic enterprise and its strategic role within the organization.

The ratings of ORTIG recognize its modest leverage measures and strong reserving practices. The majority of ORTIG’s premiums and fees are generated through independent agents. This enables ORTIG to better manage down cycles, as fixed costs generally are lower for that distribution channel. An offsetting rating factor is the group’s higher underwriting leverage measures due to the rapid increase in premium volume over the past five years. However, AM Best expects that ORTIG will continue to generate adequate underwriting and operating results while maintaining the strongest level of risk-adjusted capitalization in the near-to-medium term.

The ratings of ORL reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate ERM.

The ratings of ORL also reflect its risk-adjusted capitalization, which is assessed as strongest, as measured by Best’s Capital Adequacy Ratio (BCAR). Invested asset holdings are of good credit quality, as the portfolio is designed to minimize credit default risk rather than maximizing yield. Earnings generally have been positive but fluctuating in recent years. Due to the small size of the reserves, any increase in claims and/or mortality will cause large fluctuations in earnings. Premiums have declined over the past several years, as the closed term block premiums run off, and the occupational accident premiums were lower due to the termination of a large policy in 2018. The company’s business profile consists of a closed block of term life insurance and the actively marketed occupational accident line. Despite its modest size, management maintains that ORL is important strategically.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” have been affirmed, each with a stable outlook, for the following members of Old Republic Insurance Companies:

BITCO General Insurance Corporation
BITCO National Insurance Company
Great West Casualty Company
Manufacturers Alliance Insurance Company
Old Republic General Insurance Corporation
Old Republic Insurance Company
Old Republic Lloyds of Texas
Old Republic Surety Company
Old Republic Union Insurance Company
Pennsylvania Manufacturers Indemnity Company
Pennsylvania Manufacturers’ Association Insurance Company

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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Ana Daley Financial Analyst—P/C +1 908 439 2200, ext. 5326 ana.daley@ambest.com Frank Walko Financial Analyst—L/H +1 908 439 2200, ext. 5072 frank.walko@ambest.com Christopher Sharkey Manager, Public Relations +1 908 439 2200, ext. 5159 christopher.sharkey@ambest.com Jim Peavy Director, Public Relations +1 908 439 2200, ext. 5644 james.peavy@ambest.com