CHICAGO, Jan. 28, 2021 /PRNewswire/ -- Old Republic
International Corporation (NYSE: ORI) today reported the following
consolidated results (a):
OVERALL
RESULTS
|
|
|
|
|
|
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
|
2020
|
|
2019
|
|
% Change
|
|
2020
|
|
2019
|
|
% Change
|
Pretax income
(loss)
|
|
$
|
652.2
|
|
|
$
|
346.0
|
|
|
|
|
$
|
688.4
|
|
|
$
|
1,322.4
|
|
|
|
Pretax investment
gains (losses)
|
|
374.7
|
|
|
167.4
|
|
|
|
|
(142.0)
|
|
|
636.1
|
|
|
|
Pretax income (loss)
excluding investment gains (losses)
|
|
$
|
277.5
|
|
|
$
|
178.5
|
|
|
55.4
|
%
|
|
$
|
830.4
|
|
|
$
|
686.2
|
|
|
21.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
519.7
|
|
|
$
|
275.8
|
|
|
|
|
$
|
558.6
|
|
|
$
|
1,056.4
|
|
|
|
Net of tax investment
gains (losses)
|
|
295.8
|
|
|
132.2
|
|
|
|
|
(112.1)
|
|
|
502.2
|
|
|
|
Net income (loss)
excluding investment gains (losses)
|
|
$
|
223.8
|
|
|
$
|
143.5
|
|
|
56.0
|
%
|
|
$
|
670.8
|
|
|
$
|
554.2
|
|
|
21.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER DILUTED
SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
|
2020
|
|
2019
|
|
% Change
|
|
2020
|
|
2019
|
|
% Change
|
Net income
(loss)
|
|
$
|
1.74
|
|
|
$
|
.91
|
|
|
|
|
$
|
1.87
|
|
|
$
|
3.51
|
|
|
|
Net of tax investment
gains (losses)
|
|
.99
|
|
|
.44
|
|
|
|
|
(.37)
|
|
|
1.67
|
|
|
|
Net income (loss)
excluding investment gains (losses)
|
|
$
|
.75
|
|
|
$
|
.47
|
|
|
59.6
|
%
|
|
$
|
2.24
|
|
|
$
|
1.84
|
|
|
21.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
% Change
|
Shareholders' equity:
Total
|
|
|
|
|
|
|
|
$
|
6,186.6
|
|
|
$
|
6,000.1
|
|
|
3.1
|
%
|
Per Common
Share
|
|
|
|
|
|
|
|
$
|
20.75
|
|
|
$
|
19.98
|
|
|
3.9
|
%
|
|
|
|
|
|
(a) All amounts in
this report are stated in millions except common stock data and
percentages.
|
Growth in this year's fourth quarter and full year net income,
exclusive of all investment gains and (losses) was driven by
greater profitability in both the General and Title Insurance
segments. Overall, the business produced consolidated combined
ratios of 90.3% for the fourth quarter and 93.3% for the full year,
improved from 95.3% registered in both comparable periods of 2019.
Total and per share net income continue to be significantly
impacted by changes in the fair value of equity securities.
The COVID-19 pandemic and the associated governmental responses
continued to have a widespread impact on the U.S. economy in the
fourth quarter. A majority of Old Republic's approximately 9,000
associates are working remotely. The pandemic's impact on
employment levels, businesses, and other economic activities
contributed to a slight reduction in earned premiums in the General
Insurance segment. The Title Insurance segment experienced strong
growth in premium and fee revenues. The RFIG Run-off business
produced a small underwriting loss due to elevated
delinquencies.
Net investment income decreased for the quarter and year-to-date
periods as the ongoing moderate growth in the invested asset base
was more than offset by lower investment yields. Financial market
performance continued to improve in the fourth quarter, favorably
impacting the fair value of the Company's equity and fixed-maturity
securities. This favorable valuation coupled with positive earnings
outpaced cash dividends to shareholders resulting in book value per
share rising to $20.75 at
December 31, 2020 compared to
$20.39 at September 30, 2020.
The economic impacts from the COVID-19 pandemic could affect
future premium and fee revenues in the General Insurance and Title
Insurance segments, and conversely underwriting expense ratios
could rise. In the RFIG Run-off business, future claims experience
could depend upon the continued, mitigating effects of loan
forbearance programs mandated by the Federal government, and the
rate at which employment levels recover. These outcomes
notwithstanding, management firmly believes that the Company's
strong financial condition will enable it to weather these
challenges, and most importantly allow its insurance subsidiaries
to meet their obligations to customers, policyholders and their
beneficiaries.
Old Republic's business is necessarily managed for the long run.
In this context management's key objectives are to achieve a
continuous, long-term improvement in operating results, 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 and (losses). Under
Generally Accepted Accounting Principles ("GAAP"), however, net
income (loss), which includes all specifically defined realized and
unrealized investment gains and (losses), is the measure of total
profitability.
In management's opinion, the focus on income (loss) excluding
all investment gains and losses provides a better way to
realistically analyze, evaluate, and establish accountability for
the results and benefits that arise from the basic operations of
the business. The inclusion of realized investment gains and
(losses) in net income (loss) can mask the reality and trends in
the fundamental operating results of the insurance business. That
is because their realization is, more often than not, highly
discretionary. It is usually affected by such randomly occurring
factors as the timing of individual securities sales, tax-planning
considerations, and modifications of investment management
judgments about the direction of securities markets or the
prospects of individual investees or industry sectors. Moreover,
the inclusion of unrealized investment gains and (losses) in equity
securities can further distort such operating results and trends
therein and thus lead to even greater period-to-period fluctuations
in reported net income (loss). The impact of the continuous
volatility in stock market valuations is most evident in its net of
tax effect on net income (loss) for the periods reported upon.
|
FINANCIAL
HIGHLIGHTS
|
|
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
|
SUMMARY INCOME
STATEMENTS (a):
|
2020
|
|
2019
|
|
% Change
|
|
2020
|
|
2019
|
|
% Change
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums and fees
earned
|
$
|
1,906.1
|
|
|
$
|
1,686.5
|
|
|
13.0
|
%
|
|
$
|
6,737.8
|
|
|
$
|
6,241.1
|
|
|
8.0
|
%
|
|
|
Net investment
income
|
109.6
|
|
|
112.8
|
|
|
-2.9
|
|
|
438.9
|
|
|
450.7
|
|
|
-2.6
|
|
|
|
Other
income
|
32.7
|
|
|
35.1
|
|
|
-6.8
|
|
|
131.2
|
|
|
132.6
|
|
|
-1.0
|
|
|
|
Total operating
revenues
|
2,048.5
|
|
|
1,834.5
|
|
|
11.7
|
|
|
7,308.0
|
|
|
6,824.4
|
|
|
7.1
|
|
|
|
Investment gains
(losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized from actual
transactions
|
1.4
|
|
|
7.3
|
|
|
|
|
14.2
|
|
|
38.6
|
|
|
|
|
|
Realized from
impairments
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
(2.0)
|
|
|
|
|
|
Unrealized from
changes in fair value of equity securities
|
373.2
|
|
|
160.1
|
|
|
|
|
(156.2)
|
|
|
599.5
|
|
|
|
|
|
Total investment gains
(losses)
|
374.7
|
|
|
167.4
|
|
|
|
|
(142.0)
|
|
|
636.1
|
|
|
|
|
|
Total
revenues
|
2,423.2
|
|
|
2,001.9
|
|
|
|
|
7,166.0
|
|
|
7,460.5
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim costs
|
606.5
|
|
|
667.5
|
|
|
-9.1
|
|
|
2,491.4
|
|
|
2,572.7
|
|
|
-3.2
|
|
|
|
Sales and general
expenses
|
1,152.5
|
|
|
979.2
|
|
|
17.7
|
|
|
3,942.4
|
|
|
3,525.4
|
|
|
11.8
|
|
|
|
Interest and other
charges
|
11.8
|
|
|
9.2
|
|
|
28.3
|
|
|
43.7
|
|
|
40.0
|
|
|
9.1
|
|
|
|
Total operating
expenses
|
1,770.9
|
|
|
1,655.9
|
|
|
6.9
|
%
|
|
6,477.5
|
|
|
6,138.1
|
|
|
5.5
|
%
|
|
|
Pretax income
(loss)
|
652.2
|
|
|
346.0
|
|
|
|
|
688.4
|
|
|
1,322.4
|
|
|
|
|
|
Income taxes
(credits)
|
132.5
|
|
|
70.2
|
|
|
|
|
129.7
|
|
|
265.9
|
|
|
|
|
|
Net income
(loss)
|
$
|
519.7
|
|
|
$
|
275.8
|
|
|
|
|
$
|
558.6
|
|
|
$
|
1,056.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON STOCK
STATISTICS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of net
income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net
income (loss) excluding investment gains (losses)
|
$
|
0.75
|
|
|
$
|
0.48
|
|
|
56.3
|
%
|
|
$
|
2.24
|
|
|
$
|
1.85
|
|
|
21.1
|
%
|
|
|
Net investment gains
(losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized from actual
transactions and impairments
|
—
|
|
|
0.02
|
|
|
|
|
0.04
|
|
|
0.10
|
|
|
|
|
|
Unrealized from
changes in fair value of equity securities
|
0.99
|
|
|
0.42
|
|
|
|
|
(0.41)
|
|
|
1.57
|
|
|
|
|
|
Basic net income
(loss)
|
$
|
1.74
|
|
|
$
|
0.92
|
|
|
|
|
$
|
1.87
|
|
|
$
|
3.52
|
|
|
|
|
|
Diluted net income (loss) excluding
investment gains (losses)
|
$
|
0.75
|
|
|
$
|
0.47
|
|
|
59.6
|
%
|
|
$
|
2.24
|
|
|
$
|
1.84
|
|
|
21.7
|
%
|
|
|
Net investment gains
(losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized from actual
transactions and impairments
|
—
|
|
|
0.02
|
|
|
|
|
0.04
|
|
|
0.10
|
|
|
|
|
|
Unrealized from
changes in fair value of equity securities
|
0.99
|
|
|
0.42
|
|
|
|
|
(0.41)
|
|
|
1.57
|
|
|
|
|
|
Diluted net income
(loss)
|
$
|
1.74
|
|
|
$
|
0.91
|
|
|
|
|
$
|
1.87
|
|
|
$
|
3.51
|
|
|
|
|
|
Cash dividends on
common stock (b)
|
$
|
1.21
|
|
|
$
|
0.20
|
|
|
|
|
$
|
1.84
|
|
|
$
|
1.80
|
|
|
|
|
|
Book value per
share
|
|
|
|
|
|
|
$
|
20.75
|
|
|
$
|
19.98
|
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Certain
reclassification adjustments were made to increase 2019 periods'
net premiums and fees earned with a corresponding increase to sales
and general expenses to conform all prior periods to the
presentation adopted in 2020. See Note (a) in Title Insurance
Segment Results on page (5).
|
(b) Includes
special cash dividends of $1.00 per share declared in December 2020
and September 2019.
|
Management believes the information in sections A to G and J of
the table on the following page highlight the most meaningful,
realistic indicators of ORI's segmented and consolidated financial
performance. The information underscores the necessity of reviewing
reported results by separating the inherent volatility of
securities markets and their above-noted impact on reported net
income (loss).
|
Major Segmented
and Consolidated Elements of Income (Loss)
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
2020
|
|
2019
|
|
% Change
|
|
2020
|
|
2019
|
|
% Change
|
A. Net premiums,
fees, and other income (d):
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
861.3
|
|
|
$
|
880.5
|
|
|
-2.2
|
%
|
|
$
|
3,394.2
|
|
|
$
|
3,432.4
|
|
|
-1.1
|
%
|
Title
insurance
|
1,031.7
|
|
|
789.5
|
|
|
30.7
|
|
|
3,286.3
|
|
|
2,736.0
|
|
|
20.1
|
|
Corporate and
other
|
2.9
|
|
|
3.1
|
|
|
-5.1
|
|
|
12.0
|
|
|
13.4
|
|
|
-10.0
|
|
Other
income
|
32.7
|
|
|
35.1
|
|
|
-6.8
|
|
|
131.2
|
|
|
132.6
|
|
|
-1.0
|
|
Subtotal
|
1,928.8
|
|
|
1,708.3
|
|
|
12.9
|
|
|
6,823.9
|
|
|
6,314.4
|
|
|
8.1
|
|
RFIG run-off business
(c)
|
10.0
|
|
|
13.3
|
|
|
-25.2
|
|
|
45.1
|
|
|
59.2
|
|
|
-23.8
|
|
Consolidated
|
$
|
1,938.8
|
|
|
$
|
1,721.6
|
|
|
12.6
|
%
|
|
$
|
6,869.1
|
|
|
$
|
6,373.7
|
|
|
7.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
B. Underwriting
and related services income (loss):
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
62.2
|
|
|
$
|
10.2
|
|
|
N/M
|
|
|
$
|
151.8
|
|
|
$
|
84.9
|
|
|
78.8
|
%
|
Title
insurance
|
123.4
|
|
|
67.3
|
|
|
83.3
|
%
|
|
305.8
|
|
|
193.4
|
|
|
58.0
|
|
Corporate and
other
|
(4.3)
|
|
|
(4.6)
|
|
|
6.6
|
|
|
(17.0)
|
|
|
(15.5)
|
|
|
-9.5
|
|
Subtotal
|
181.3
|
|
|
72.9
|
|
|
148.7
|
|
|
440.5
|
|
|
262.8
|
|
|
67.6
|
|
RFIG run-off business
(c)
|
(1.6)
|
|
|
2.0
|
|
|
-180.1
|
|
|
(5.3)
|
|
|
12.7
|
|
|
-142.3
|
|
Consolidated
|
$
|
179.7
|
|
|
$
|
74.9
|
|
|
139.9
|
%
|
|
$
|
435.2
|
|
|
$
|
275.6
|
|
|
57.9
|
%
|
C. Consolidated
underwriting ratio (d):
|
|
|
|
|
|
|
|
|
|
|
|
Claim ratio
|
31.8
|
%
|
|
39.6
|
%
|
|
|
|
37.0
|
%
|
|
41.2
|
%
|
|
|
Expense
ratio
|
58.5
|
|
|
55.7
|
|
|
|
|
56.3
|
|
|
54.1
|
|
|
|
Combined
ratio
|
90.3
|
%
|
|
95.3
|
%
|
|
|
|
93.3
|
%
|
|
95.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. Net investment
income:
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
87.9
|
|
|
$
|
90.6
|
|
|
-3.0
|
%
|
|
$
|
352.2
|
|
|
$
|
356.4
|
|
|
-1.2
|
%
|
Title
insurance
|
10.6
|
|
|
10.6
|
|
|
-0.1
|
|
|
42.0
|
|
|
41.4
|
|
|
1.3
|
|
Corporate and
other
|
7.6
|
|
|
7.2
|
|
|
5.4
|
|
|
29.4
|
|
|
35.1
|
|
|
-16.2
|
|
Subtotal
|
106.1
|
|
|
108.4
|
|
|
-2.1
|
|
|
423.6
|
|
|
433.0
|
|
|
-2.2
|
|
RFIG run-off
business
|
3.4
|
|
|
4.3
|
|
|
-21.0
|
|
|
15.2
|
|
|
17.6
|
|
|
-13.4
|
|
Consolidated
|
$
|
109.6
|
|
|
$
|
112.8
|
|
|
-2.9
|
%
|
|
$
|
438.9
|
|
|
$
|
450.7
|
|
|
-2.6
|
%
|
E. Interest and
other charges (credits):
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
15.4
|
|
|
$
|
16.4
|
|
|
|
|
$
|
64.2
|
|
|
$
|
71.1
|
|
|
|
Title
insurance
|
1.9
|
|
|
0.8
|
|
|
|
|
3.8
|
|
|
4.1
|
|
|
|
Corporate and other
(a)
|
(5.6)
|
|
|
(8.0)
|
|
|
|
|
(24.3)
|
|
|
(35.2)
|
|
|
|
Subtotal
|
11.8
|
|
|
9.2
|
|
|
|
|
43.7
|
|
|
40.0
|
|
|
|
RFIG run-off
business
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
Consolidated
|
$
|
11.8
|
|
|
$
|
9.2
|
|
|
28.3
|
%
|
|
$
|
43.7
|
|
|
$
|
40.0
|
|
|
9.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
F. Segmented and
consolidated pretax income (loss)
|
|
|
|
|
|
|
|
|
excluding
investment gains (losses)(B+D-E):
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
134.7
|
|
|
$
|
84.4
|
|
|
59.6
|
%
|
|
$
|
439.8
|
|
|
$
|
370.2
|
|
|
18.8
|
%
|
Title
insurance
|
132.1
|
|
|
77.1
|
|
|
71.2
|
|
|
344.0
|
|
|
230.8
|
|
|
49.0
|
|
Corporate and
other
|
8.8
|
|
|
10.5
|
|
|
-16.5
|
|
|
36.7
|
|
|
54.8
|
|
|
-33.1
|
|
Subtotal
|
275.7
|
|
|
172.1
|
|
|
60.1
|
|
|
820.5
|
|
|
655.9
|
|
|
25.1
|
|
RFIG run-off business
(c)
|
1.8
|
|
|
6.4
|
|
|
-70.9
|
|
|
9.8
|
|
|
30.3
|
|
|
-67.4
|
|
Consolidated
|
277.5
|
|
|
178.5
|
|
|
55.4
|
%
|
|
830.4
|
|
|
686.2
|
|
|
21.0
|
%
|
Income taxes
(credits) on above (b)
|
53.7
|
|
|
35.0
|
|
|
|
|
159.6
|
|
|
132.0
|
|
|
|
G. Net income
(loss) excluding
|
|
|
|
|
|
|
|
|
|
|
|
investment gains
(losses)
|
223.8
|
|
|
143.5
|
|
|
56.0
|
%
|
|
670.8
|
|
|
554.2
|
|
|
21.0
|
%
|
H. Consolidated
pretax investment
|
|
|
|
|
|
|
|
|
|
|
|
gains
(losses):
|
|
|
|
|
|
|
|
|
|
|
|
Realized from actual
transactions
|
|
|
|
|
|
|
|
|
|
|
|
and
impairments
|
1.4
|
|
|
7.3
|
|
|
|
|
14.2
|
|
|
36.6
|
|
|
|
Unrealized from
changes in
|
|
|
|
|
|
|
|
|
|
|
|
fair value of equity
securities
|
373.2
|
|
|
160.1
|
|
|
|
|
(156.2)
|
|
|
599.5
|
|
|
|
Total
|
374.7
|
|
|
167.4
|
|
|
|
|
(142.0)
|
|
|
636.1
|
|
|
|
Income taxes
(credits) on above
|
78.8
|
|
|
35.1
|
|
|
|
|
(29.8)
|
|
|
133.8
|
|
|
|
Net of tax
investment gains (losses)
|
295.8
|
|
|
132.2
|
|
|
|
|
(112.1)
|
|
|
502.2
|
|
|
|
I. Net
income (loss)
|
$
|
519.7
|
|
|
$
|
275.8
|
|
|
|
|
$
|
558.6
|
|
|
$
|
1,056.4
|
|
|
|
J. Consolidated
operating cash flow
|
|
|
|
|
|
|
$
|
1,185.0
|
|
|
$
|
936.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes
consolidation/elimination entries. (b) The effective tax rates
applicable to pretax income excluding investment gains and (losses)
were 19.4% and 19.2% for the fourth quarter and year ended December
31, 2020, respectively, and 19.6% and 19.2% for the fourth quarter
and year ended December 31, 2019, respectively. (c) See Note (a) in
RFIG Run-off Results on page (6). (d) Certain reclassification
adjustments were made to increase 2019 periods' net premiums and
fees earned with a corresponding increase to sales and general
expenses to conform all prior periods to the presentation adopted
in 2020. See Note (a) in Title Insurance Segment Results on page
(5).
|
General Insurance
Segment Results
|
|
|
|
General Insurance
Summary Operating Results
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
2020
|
|
2019
|
|
% Change
|
|
2020
|
|
2019
|
|
% Change
|
Net premiums
written
|
$
|
845.2
|
|
|
$
|
831.8
|
|
|
1.6
|
%
|
|
$
|
3,431.3
|
|
|
$
|
3,469.0
|
|
|
-1.1
|
%
|
Net premiums
earned
|
861.3
|
|
|
880.5
|
|
|
-2.2
|
|
|
3,394.2
|
|
|
3,432.4
|
|
|
-1.1
|
|
Net investment
income
|
87.9
|
|
|
90.6
|
|
|
-3.0
|
|
|
352.2
|
|
|
356.4
|
|
|
-1.2
|
|
Other
income
|
32.5
|
|
|
34.9
|
|
|
-7.0
|
|
|
130.3
|
|
|
131.9
|
|
|
-1.2
|
|
Operating
revenues
|
981.7
|
|
|
1,006.0
|
|
|
-2.4
|
|
|
3,876.8
|
|
|
3,920.8
|
|
|
-1.1
|
|
Claim
costs
|
581.5
|
|
|
642.6
|
|
|
-9.5
|
|
|
2,372.0
|
|
|
2,464.6
|
|
|
-3.8
|
|
Sales and general
expenses
|
249.9
|
|
|
262.4
|
|
|
-4.8
|
|
|
1,000.7
|
|
|
1,014.7
|
|
|
-1.4
|
|
Interest and other
charges
|
15.4
|
|
|
16.4
|
|
|
-6.1
|
|
|
64.2
|
|
|
71.1
|
|
|
-9.7
|
|
Operating
expenses
|
847.0
|
|
|
921.6
|
|
|
-8.1
|
|
|
3,436.9
|
|
|
3,550.5
|
|
|
-3.2
|
|
Segment pretax
operating income (loss)
|
$
|
134.7
|
|
|
$
|
84.4
|
|
|
59.6
|
%
|
|
$
|
439.8
|
|
|
$
|
370.2
|
|
|
18.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
67.5
|
%
|
|
73.0
|
%
|
|
|
|
69.9
|
%
|
|
71.8
|
%
|
|
|
Expense
ratio
|
25.2
|
|
|
25.8
|
|
|
|
|
25.6
|
|
|
25.7
|
|
|
|
Combined
ratio
|
92.7
|
%
|
|
98.8
|
%
|
|
|
|
95.5
|
%
|
|
97.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective July 1,
2019, the results of the CCI run-off are being classified in
General Insurance for all future periods.
|
General Insurance net premiums earned were down slightly for the
fourth quarter and full year periods. The economic impacts of the
COVID-19 pandemic and tightened underwriting standards were
mitigated by strong premium rate increases for most insurance
products. Declining workers' compensation and general liability
premiums were largely offset by rising premiums in commercial auto,
financial indemnity and property coverages. Net investment income
decreased by 3.0% for the quarter and 1.2% for the year-to-date
period.
The consolidated General Insurance claim ratio trended down in
the fourth quarter and full year primarily driven by better
performance in most coverages, primarily due to prior periods'
favorable reserve developments. Expense ratios remained relatively
consistent with the comparable 2019 periods and are generally
reflective of ongoing coverage mix dynamics and the variability of
sales and general expenses among such coverages. Together, these
factors produced significantly greater pretax operating income for
the fourth quarter and year-to-date periods.
The following table shows recent annual and interim periods'
claim ratios and the effects of claim development trends:
|
|
|
|
|
Effect of Prior
Periods'
|
|
|
|
|
|
|
|
|
|
(Favorable)/
|
|
Claim Ratio
Excluding
|
|
Reported
|
|
Unfavorable
Claim
|
|
Prior Periods'
Claim
|
|
Claim
Ratio
|
|
Reserves
Development
|
|
Reserves
Development
|
2016
|
|
73.0
|
%
|
|
|
|
0.3
|
%
|
|
|
|
72.7
|
%
|
|
2017
|
|
71.8
|
|
|
|
|
0.7
|
|
|
|
|
71.1
|
|
|
2018
|
|
72.2
|
|
|
|
|
—
|
|
|
|
|
72.2
|
|
|
2019
|
|
71.8
|
|
|
|
|
0.4
|
|
|
|
|
71.4
|
|
|
2020
|
|
69.9
|
%
|
|
|
|
(0.8)
|
%
|
|
|
|
70.7
|
%
|
|
4th Quarter
2019
|
|
73.0
|
%
|
|
|
|
2.9
|
%
|
|
|
|
70.1
|
%
|
|
4th Quarter
2020
|
|
67.5
|
%
|
|
|
|
(1.8)
|
%
|
|
|
|
69.3
|
%
|
|
Quarterly and annual claim ratios and trends may not be
particularly meaningful indicators of future outcomes for an
insurance company with a liability-oriented coverage mix and its
relatively long claim payment patterns. Management's long-term
targets, assuming the current coverage mix, are for annually
reported claim ratio averages in the high 60% to low 70% range,
expense ratio averages of 25% or below, and a combined ratio
ranging between 90% and 95%.
Title Insurance
Segment Results
|
|
|
|
Title Insurance
Summary Operating Results (a)
|
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
2020
|
|
2019
|
|
% Change
|
|
2020
|
|
2019
|
|
% Change
|
Net premiums and fees
earned (a)
|
$
|
1,031.7
|
|
|
$
|
789.5
|
|
|
30.7
|
%
|
|
$
|
3,286.3
|
|
|
$
|
2,736.0
|
|
|
20.1
|
%
|
Net investment
income
|
10.6
|
|
|
10.6
|
|
|
-0.1
|
|
|
42.0
|
|
|
41.4
|
|
|
1.3
|
|
Other
income
|
0.2
|
|
|
0.1
|
|
|
53.7
|
|
|
0.9
|
|
|
0.7
|
|
|
39.1
|
|
Operating
revenues
|
1,042.6
|
|
|
800.3
|
|
|
30.3
|
|
|
3,329.3
|
|
|
2,778.1
|
|
|
19.8
|
|
Claim
costs
|
14.2
|
|
|
14.0
|
|
|
1.3
|
|
|
75.3
|
|
|
67.4
|
|
|
11.8
|
|
Sales and general
expenses (a)
|
894.3
|
|
|
708.2
|
|
|
26.3
|
|
|
2,906.1
|
|
|
2,475.7
|
|
|
17.4
|
|
Interest and other
charges
|
1.9
|
|
|
0.8
|
|
|
146.0
|
|
|
3.8
|
|
|
4.1
|
|
|
-7.7
|
|
Operating
expenses
|
910.5
|
|
|
723.1
|
|
|
25.9
|
|
|
2,985.3
|
|
|
2,547.3
|
|
|
17.2
|
|
Segment pretax
operating income (loss)
|
$
|
132.1
|
|
|
$
|
77.1
|
|
|
71.2
|
%
|
|
$
|
344.0
|
|
|
$
|
230.8
|
|
|
49.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
1.4
|
%
|
|
1.8
|
%
|
|
|
|
2.3
|
%
|
|
2.5
|
%
|
|
|
Expense
ratio
|
86.7
|
|
|
89.7
|
|
|
|
|
88.4
|
|
|
90.5
|
|
|
|
Combined
ratio
|
88.1
|
%
|
|
91.5
|
%
|
|
|
|
90.7
|
%
|
|
93.0
|
%
|
|
|
|
|
|
|
|
|
|
|
(a) Certain
reclassification adjustments were made to increase net premiums and
fees earned with a corresponding increase to sales and general
expenses of $72.6 and $246.8 in the quarter and year ended December
31, 2019, respectively. These adjustments were made to conform all
prior periods to the presentation adopted in 2020 to reflect such
revenues gross of applicable commission expense and had no impact
on segmented pretax operating income (loss) in any period
presented.
|
Title Insurance operating revenues were up 30.3% in the fourth
quarter and 19.8% for the full year. This performance was driven by
a robust real estate market supported by a continued low interest
rate environment, resulting in an increase in home sales and
refinance activity. Net investment income was relatively flat for
the quarter and increased slightly for the year-to-date period.
The Title Insurance claim ratio trended lower for the fourth
quarter and full year resulting from a slight increase in favorable
development of prior years' claim reserve estimates. Underwriting
expense ratios improved in the quarterly and year-to-date periods
resulting from greater leverage of this segment's expense structure
on significantly higher premium and fee volume. Title Insurance
produced significantly greater pretax operating income for 2020's
fourth quarter and full year periods.
The following table shows recent annual and interim periods'
claim ratios and the effects of claim development trends:
|
|
|
|
|
Effect of Prior
Periods'
|
|
|
|
|
|
|
|
|
|
(Favorable)/
|
|
Claim Ratio
Excluding
|
|
Reported
|
|
Unfavorable
Claim
|
|
Prior Periods'
Claim
|
|
Claim
Ratio
|
|
Reserves
Development
|
|
Reserves
Development
|
2016
|
|
3.5
|
%
|
|
|
|
(1.0)
|
%
|
|
|
|
4.5
|
%
|
|
2017
|
|
0.8
|
|
|
|
|
(3.0)
|
|
|
|
|
3.8
|
|
|
2018
|
|
1.9
|
|
|
|
|
(1.8)
|
|
|
|
|
3.7
|
|
|
2019
|
|
2.5
|
|
|
|
|
(1.2)
|
|
|
|
|
3.7
|
|
|
2020
|
|
2.3
|
%
|
|
|
|
(1.3)
|
%
|
|
|
|
3.6
|
%
|
|
4th Quarter
2019
|
|
1.8
|
%
|
|
|
|
(1.8)
|
%
|
|
|
|
3.6
|
%
|
|
4th Quarter
2020
|
|
1.4
|
%
|
|
|
|
(2.2)
|
%
|
|
|
|
3.6
|
%
|
|
RFIG Run-off
Segment Results
|
|
|
|
RFIG Run-off
Summary Operating Results (a)
|
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
2020
|
|
2019
|
|
% Change
|
|
2020
|
|
2019
|
|
% Change
|
A. Mortgage
Insurance (MI)
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
$
|
10.0
|
|
|
$
|
13.3
|
|
|
-25.2
|
%
|
|
$
|
45.1
|
|
|
$
|
58.8
|
|
|
-23.3
|
%
|
Net investment
income
|
3.4
|
|
|
4.3
|
|
|
-21.0
|
|
|
15.2
|
|
|
17.3
|
|
|
-12.0
|
|
Claim
costs
|
8.4
|
|
|
8.2
|
|
|
3.3
|
|
|
36.9
|
|
|
32.3
|
|
|
14.1
|
|
MI pretax operating
income (loss)
|
$
|
1.8
|
|
|
$
|
6.4
|
|
|
-70.9
|
%
|
|
$
|
9.8
|
|
|
$
|
29.2
|
|
|
-66.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
84.9
|
%
|
|
61.5
|
%
|
|
|
|
81.7
|
%
|
|
55.0
|
%
|
|
|
Expense
ratio
|
31.2
|
|
|
23.5
|
|
|
|
|
30.2
|
|
|
24.8
|
|
|
|
Combined
ratio
|
116.1
|
%
|
|
85.0
|
%
|
|
|
|
111.9
|
%
|
|
79.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. Consumer Credit
Indemnity (CCI) (a)
|
|
|
|
|
|
|
|
|
|
|
|
CCI pretax operating
income (loss)
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Total MI and
CCI Run-off business (a)
|
|
|
|
|
|
|
|
|
|
|
|
Segment pretax
operating income (loss)
|
$
|
1.8
|
|
|
$
|
6.4
|
|
|
-70.9
|
%
|
|
$
|
9.8
|
|
|
$
|
30.3
|
|
|
-67.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Results for
the CCI run-off are expected to be immaterial in the remaining
run-off periods. Effective July 1, 2019, these results have been
re-classified to General Insurance for all future
periods.
|
Pretax operating results of RFIG Run-off reflect the expected,
continuing drop in net earned premiums from declining risk in
force. Claim costs for the quarter and year-to-date periods reflect
greater reserve provisions necessitated by elevated delinquencies
and the evolving economic impacts of the COVID-19 pandemic.
Investment income declined primarily as a result of a lower
invested asset base and lower investment yields.
As shown in the accompanying tables, current quarter and
year-to-date claim ratios reflect the aforementioned increase in
reported delinquencies, a declining proportion of which remain
under forbearance as compared to earlier 2020 periods. Prior period
favorable development is primarily the result of improving trends
in claim severity.
Prior to the onset of the COVID-19 pandemic, as indicated in the
far right column of the following table, the RFIG Run-off claim
ratios had experienced a fairly consistent decline in recent annual
periods largely due to a combination of declining new loan defaults
and stable-to-improving cure rates for outstanding delinquent
loans.
|
|
|
|
|
Effect of Prior
Periods'
|
|
|
|
|
|
|
|
|
|
(Favorable)/
|
|
Claim Ratio
Excluding
|
|
Reported
|
|
Unfavorable
Claim
|
|
Prior Periods'
Claim
|
|
Claim
Ratio
|
|
Reserves
Development
|
|
Reserves
Development
|
2016
|
|
34.1
|
%
|
|
|
|
(39.8)
|
%
|
|
|
|
73.9
|
%
|
|
2017
|
|
57.6
|
|
|
|
|
(38.3)
|
|
|
|
|
95.9
|
|
|
2018
|
|
43.2
|
|
|
|
|
(27.0)
|
|
|
|
|
70.2
|
|
|
2019
|
|
55.0
|
|
|
|
|
(12.5)
|
|
|
|
|
67.5
|
|
|
2020
|
|
81.7
|
%
|
|
|
|
(26.5)
|
%
|
|
|
|
108.2
|
%
|
|
4th Quarter
2019
|
|
61.5
|
%
|
|
|
|
(22.6)
|
%
|
|
|
|
84.1
|
%
|
|
4th Quarter
2020
|
|
84.9
|
%
|
|
|
|
(41.0)
|
%
|
|
|
|
125.9
|
%
|
|
Corporate and
Other Operating Results
|
|
|
|
|
Corporate and
Other Summary Operating Results
|
|
|
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
|
2020
|
|
2019
|
|
% Change
|
|
2020
|
|
2019
|
|
% Change
|
Net life and accident
premiums earned
|
|
$
|
2.9
|
|
|
$
|
3.1
|
|
|
-5.1
|
%
|
|
$
|
12.0
|
|
|
$
|
13.4
|
|
|
-10.0
|
%
|
Net investment
income
|
|
7.6
|
|
|
7.2
|
|
|
5.4
|
|
|
29.4
|
|
|
35.1
|
|
|
-16.2
|
|
Other operating
income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Operating
revenues
|
|
10.5
|
|
|
10.3
|
|
|
1.8
|
|
|
41.4
|
|
|
48.5
|
|
|
-14.6
|
|
Claim
costs
|
|
2.1
|
|
|
2.5
|
|
|
-13.6
|
|
7.1
|
|
|
8.8
|
|
|
-19.7
|
|
Insurance
expenses
|
|
0.9
|
|
|
1.0
|
|
|
-12.7
|
|
|
4.2
|
|
|
4.5
|
|
|
-6.6
|
|
Corporate, interest
and other expenses - net
|
|
(1.3)
|
|
|
(3.7)
|
|
|
63.8
|
|
|
(6.6)
|
|
|
(19.7)
|
|
|
66.3
|
|
Operating
expenses
|
|
1.7
|
|
|
(0.2)
|
|
|
N/M
|
|
4.7
|
|
|
(6.3)
|
|
|
174.7
|
|
Corporate and other
pretax operating income (loss)
|
|
$
|
8.8
|
|
|
$
|
10.5
|
|
|
-16.5
|
%
|
|
$
|
36.7
|
|
|
$
|
54.8
|
|
|
-33.1
|
%
|
This segment includes the combination of a small life and
accident insurance business and the net costs associated with the
parent holding company and its internal corporate services
subsidiaries. The segment tends to produce highly variable results
stemming from volatility inherent to the small scale of the life
and accident insurance line, net investment income, and net
interest charges (credits) pertaining to external and intra-system
financing arrangements.
Summary
Consolidated Balance Sheet
|
|
|
|
|
|
December
31,
|
|
|
|
2020
|
|
2019
|
Assets:
|
|
|
|
|
|
Cash and fixed
maturity securities
|
|
|
$
|
11,365.1
|
|
|
$
|
10,381.5
|
|
Equity
securities
|
|
|
4,054.8
|
|
|
4,030.5
|
|
Other invested
assets
|
|
|
115.3
|
|
|
115.4
|
|
Cash and invested
assets
|
|
|
15,535.3
|
|
|
14,527.4
|
|
Accounts and premiums
receivable
|
|
|
1,593.9
|
|
|
1,466.7
|
|
Federal income tax
recoverable: Current
|
|
|
—
|
|
|
5.7
|
|
Reinsurance balances
recoverable
|
|
|
4,362.8
|
|
|
3,823.9
|
|
Deferred policy
acquisition costs
|
|
|
328.0
|
|
|
325.4
|
|
Sundry
assets
|
|
|
995.0
|
|
|
927.0
|
|
Total
assets
|
|
|
$
|
22,815.2
|
|
|
$
|
21,076.3
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity:
|
|
|
|
|
|
Policy
liabilities
|
|
|
$
|
2,593.1
|
|
|
$
|
2,419.2
|
|
Claim
reserves
|
|
|
10,671.0
|
|
|
9,929.5
|
|
Federal income tax
payable: Current
|
|
|
4.2
|
|
|
—
|
|
Deferred
|
|
|
137.3
|
|
|
112.2
|
|
Reinsurance balances
and funds
|
|
|
725.4
|
|
|
616.0
|
|
Debt
|
|
|
966.4
|
|
|
974.0
|
|
Sundry
liabilities
|
|
|
1,530.8
|
|
|
1,025.1
|
|
Total
liabilities
|
|
|
16,628.5
|
|
|
15,076.1
|
|
Shareholders'
equity
|
|
|
6,186.6
|
|
|
6,000.1
|
|
Total liabilities and
shareholders' equity
|
|
|
$
|
22,815.2
|
|
|
$
|
21,076.3
|
|
Cash, Invested
Assets, and Shareholders' Equity
|
|
|
|
|
Cash, Invested
Assets, and Shareholders' Equity
|
|
|
|
|
|
|
|
|
% Change
|
|
|
December
31,
|
|
Dec. '20/
|
|
Dec. '19/
|
|
|
2020
|
|
2019
|
|
2018
|
|
Dec. '19
|
|
Dec. '18
|
Cash and invested
assets:
|
|
|
|
|
|
|
|
|
|
|
Fixed maturity
securities, cash and other invested assets
|
$
|
11,480.4
|
|
|
$
|
10,496.9
|
|
|
$
|
9,806.4
|
|
|
9.4
|
%
|
|
7.0
|
%
|
|
Equity
securities
|
4,054.8
|
|
|
4,030.5
|
|
|
3,380.9
|
|
|
0.6
|
|
|
19.2
|
|
|
Total per balance
sheet
|
$
|
15,535.3
|
|
|
$
|
14,527.4
|
|
|
$
|
13,187.4
|
|
|
6.9
|
%
|
|
10.2
|
%
|
|
Total at cost for
all
|
$
|
14,151.6
|
|
|
$
|
13,327.2
|
|
|
$
|
12,950.6
|
|
|
6.2
|
%
|
|
2.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of
shareholders' equity per share:
|
|
|
|
|
|
|
|
|
|
|
Equity before items
below
|
$
|
17.73
|
|
|
$
|
17.25
|
|
|
$
|
17.04
|
|
|
2.8
|
%
|
|
1.2
|
%
|
|
Unrealized investment
gains (losses) and other
|
|
|
|
|
|
|
|
|
|
|
|
accumulated
comprehensive income (loss)
|
3.02
|
|
|
2.73
|
|
|
0.19
|
|
|
|
|
|
|
|
|
Total
|
$
|
20.75
|
|
|
$
|
19.98
|
|
|
$
|
17.23
|
|
|
3.9
|
%
|
|
16.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmented
composition of
|
|
|
|
|
|
|
|
|
|
shareholders' equity per
share:
|
|
|
|
|
|
|
|
|
|
|
Excluding RFIG
run-off segment
|
$
|
19.25
|
|
|
$
|
18.37
|
|
|
$
|
15.73
|
|
|
4.8
|
%
|
|
16.8
|
%
|
|
RFIG run-off
segment
|
1.50
|
|
|
1.61
|
|
|
1.50
|
|
|
|
|
|
|
|
|
Consolidated
total
|
$
|
20.75
|
|
|
$
|
19.98
|
|
|
$
|
17.23
|
|
|
3.9
|
%
|
|
16.0
|
%
|
Old Republic's invested assets portfolio is directed in
consideration of enterprise-wide risk management objectives. Most
importantly, these are intended to ensure solid funding of the
insurance subsidiaries' long-term obligations to policyholders and
other beneficiaries, as well as the long-term stability of the
subsidiaries' capital accounts. To this end, the investment
portfolio contains no significant insurance risk-correlated asset
exposures to real estate, mortgage-backed securities,
collateralized debt obligations ("CDO's"), derivatives, hybrid
securities, or illiquid private equity and hedge fund investments.
Moreover, the Company does not engage in hedging or securities
lending transactions, nor does it invest in securities whose values
are predicated on non-regulated financial instruments exhibiting
amorphous or unfunded counter-party risk attributes.
As of December 31, 2020, the
consolidated investment portfolio reflected an allocation of
approximately 74% to fixed-maturity (bonds and notes) and
short-term investments, and 26% to equity securities (common
stock). The fixed-maturity portfolio continues to be the basic
anchor for the insurance underwriting subsidiaries' obligations.
The maturities are stratified and conservatively matched to the
expected timing of future years' payments of those obligations. The
quality of the investment portfolio has remained at high
levels.
For the past several years, a significant portion of ORI's
investable funds have been directed toward purchasing high-quality
common stocks of U.S. companies (currently limited to fewer than
100 issues). We favor those with long-term records of reasonable
earnings growth and steadily increasing dividends. Periodic stress
tests of this portfolio are made pursuant to enterprise risk
management guidelines and controls. Their purpose is to gain
reasonable assurance that periodic downdrafts in market prices
would not seriously undermine ORI's financial strength and the
long-term continuity and prospects of the business.
Changes in shareholders' equity per share are reflected in the
following table. As shown, these resulted mostly from net income
excluding net investment gains (losses), realized and unrealized
investment gains (losses), and dividend payments to
shareholders.
|
|
|
Shareholders'
Equity Per Share
|
|
|
|
December
31,
|
|
|
|
2020
|
|
2019
|
|
2018
|
Beginning
balance
|
|
|
$
|
19.98
|
|
|
$
|
17.23
|
|
|
$
|
17.72
|
|
Changes in
shareholders' equity:
|
|
|
|
|
|
|
|
Net income (loss)
excluding net investment gains (losses)
|
|
|
2.24
|
|
|
1.85
|
|
|
1.89
|
|
Net of tax realized
investment gains (losses)
|
|
|
0.04
|
|
|
0.10
|
|
|
0.16
|
|
Net of tax unrealized
investment gains (losses) on
|
|
|
|
|
|
|
|
securities
carried at fair value
|
|
|
0.50
|
|
|
2.53
|
|
|
(1.38)
|
|
Total net of tax
realized and unrealized
|
|
|
|
|
|
|
|
investment gains
(losses)
|
|
|
0.54
|
|
|
2.63
|
|
|
(1.22)
|
|
Cash dividends
(a)
|
|
|
(1.84)
|
|
|
(1.80)
|
|
|
(0.78)
|
|
Other
|
|
|
(0.17)
|
|
|
0.07
|
|
|
(0.38)
|
|
Net change
|
|
|
0.77
|
|
|
2.75
|
|
|
(0.49)
|
|
Ending
balance
|
|
|
$
|
20.75
|
|
|
$
|
19.98
|
|
|
$
|
17.23
|
|
Percentage change for
the period
|
|
|
3.9
|
%
|
|
16.0
|
%
|
|
-2.8
|
%
|
|
|
|
|
|
|
|
(a) Includes
special cash dividends of $1.00 per share declared in December 2020
and September 2019.
|
Capitalization
|
|
|
|
Capitalization
|
|
December
31,
|
|
2020
|
|
2019
|
|
2018
|
Debt:
|
|
|
|
|
|
4.875% Senior Notes
due 2024
|
$
|
397.9
|
|
|
$
|
397.3
|
|
|
$
|
396.8
|
|
3.875% Senior Notes
due 2026
|
546.8
|
|
|
546.2
|
|
|
545.7
|
|
Other miscellaneous
debt
|
21.7
|
|
|
30.4
|
|
|
38.8
|
|
Total debt
|
966.4
|
|
|
974.0
|
|
|
981.4
|
|
Common shareholders'
equity
|
6,186.6
|
|
|
6,000.1
|
|
|
5,146.2
|
|
Total
capitalization
|
$
|
7,153.1
|
|
|
$
|
6,974.2
|
|
|
$
|
6,127.6
|
|
|
|
|
|
|
|
Capitalization
ratios:
|
|
|
|
|
|
Debt
|
13.5
|
%
|
|
14.0
|
%
|
|
16.0
|
%
|
Common shareholders'
equity
|
86.5
|
|
|
86.0
|
|
|
84.0
|
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Managing Old
Republic's Insurance Business for the Long-Run
|
The insurance business is distinguished from most others in that
the prices (premiums) charged for various insurance products are
set without certainty of the ultimate benefit and claim costs that
will emerge, often many years after issuance and expiration of a
policy. This basic fact casts Old Republic as a risk-taking
enterprise managed for the long run. Old Republic therefore
conducts the business with a primary focus on achieving favorable
underwriting results over cycles, and on the maintenance of
financial soundness in support of the insurance subsidiaries'
long-term obligations to policyholders and their beneficiaries.
In this light, the Company's affairs are managed for the long
run and without significant regard to quarterly or even annual
reporting periods that American industry must observe. In Old
Republic's view, such short reporting time frames do not comport
well with the long-term nature of much of its business. Management
therefore believes that the Company's operating results and
financial condition can best be evaluated by observing underwriting
and overall operating performance trends over succeeding five- or
preferably ten-year intervals. A ten-year period in particular can
likely encompass at least one economic and/or underwriting cycle
and thereby provide an appropriate time frame for such cycle to run
its course, and for premium rate changes and reserved claim costs
to be quantified and emerge in financial results with greater
finality and effect.
Accompanying Financial Data and Other Information:
- About Old Republic
- Conference Call Information
- Safe Harbor Statement
Financial Supplement:
- A financial supplement to this news release is available on the
Company's website: www.oldrepublic.com
About Old Republic
Chicago-based Old Republic
International Corporation is one of the nation's 50 largest
shareholder-owned insurance businesses. It is a member of the
Fortune 500 listing of America's largest companies. The
Company is organized as an insurance holding company whose
subsidiaries actively market, underwrite, and provide risk
management services for a wide variety of coverages mostly in the
general and title insurance fields. A long-term interest in
mortgage guaranty and consumer credit indemnity coverages has
devolved to a run-off operating mode in recent years. Old
Republic's general insurance business ranks among the nation's 50
largest, while its title insurance operations are the third largest
in its industry.
The nature of Old Republic's business requires that it
be managed for the long run, and its cash dividend policy reflects
this long-term orientation. The current annualized dividend rate
of $0.84 per share marks the 39th consecutive year
that Old Republic has boosted this rate, and 2020 becomes
the 79th year of uninterrupted regular cash dividend payments.
Here's a summary of recent years' total book and market returns,
which includes the addition and reinvestment of cash dividend
payments, in comparison with the financial performance of three
selected indices similarly developed.
|
ORI
|
Selected Indices'
Compounded
|
|
Annual
|
Annual
|
Total Annual
Returns
|
|
Book Value
|
Market
Value
|
Nominal
|
|
S & P
|
|
Compounded
|
Compounded
|
Gross
|
S & P
|
P&C
|
|
Total
|
Total
|
Domestic
|
500
|
Insurance
|
|
Return
|
Return
|
Product
|
Index
|
Index
|
Ten Years 2001 -
2010
|
8.0%
|
1.9%
|
3.9%
|
1.4%
|
1.0%
|
Ten Years 2011 -
2020
|
8.8%
|
9.9%
|
3.3%
|
13.9%
|
14.3%
|
Twenty Years 2001 -
2020
|
8.4%
|
5.8%
|
3.6%
|
7.5%
|
7.4%
|
According to the most recent edition of Mergent's
Dividend Achievers, Old Republic is listed in 58th
place among just 113 qualifying publicly held companies, out of
thousands considered, that have posted at least 25 consecutive
years of annual dividend growth.
Conference Call Information
Old Republic has scheduled a conference call at 3:00 p.m. ET (2:00 p.m.
CT) today, to discuss its fourth quarter and full year 2020
performance and to review major operating trends and business
developments. To access this call live in listen-only mode:
Log on to the Company's website
at www.oldrepublic.com 15 minutes before the call to
download the necessary software, or, alternatively
the call can also be accessed by phone at
1-833-494-1487.
Interested parties may also listen to a replay of the call
through February 4, 2021 by dialing
1-800-585-8367, passcode 5779285, or by accessing it on Old
Republic International's website through February 26, 2021.
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. Furthermore, due to the
financial market and economic disruptions caused by the COVID-19
pandemic and the associated governmental responses, it is therefore
possible that Old Republic's operating results, business and
financial condition could be adversely affected in subsequent
periods depending on the length and severity of these
disruptions.
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 1995. 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 particularly affected 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 investment yields 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. Title Insurance and
RFIG Run-off 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. Life and accident insurance
earnings can be affected by the levels of employment and consumer
spending, changes in mortality and health trends, and alterations
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.
The General Insurance, Title Insurance, Corporate and Other
Segments, and the RFIG Run-off business maintain customer
information and rely upon technology platforms to conduct their
business. As a result, each of them and the Company are exposed to
cyber risk. Many of the Company's operating subsidiaries maintain
separate IT systems which are deemed to reduce enterprise-wide
risks of potential cybersecurity incidents. However, given the
potential magnitude of a significant breach, the Company
continually evaluates on an enterprise-wide basis its IT hardware,
security infrastructure and business practices to respond to these
risks and to detect and remediate in a timely manner significant
cybersecurity incidents or business process interruptions.
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
2019 Form 10-K Annual Report filing to the Securities and Exchange
Commission, which is 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.
For Old Republic's
latest news releases and other corporate documents:
Please visit us at
www.oldrepublic.com
|
|
|
|
|
|
|
|
Alternatively,
please write or call:
|
|
|
Investor
Relations
|
|
Old Republic
International Corporation
|
307 North Michigan
Avenue, Chicago, IL 60601
|
(312)
346-8100
|
|
At Old Republic:
Craig R.
Smiddy, President and CEO
At Financial Relations Board:
Analysts/Investors: Joe Calabrese 212/827-3772
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content:http://www.prnewswire.com/news-releases/old-republic-reports-results-for-the-fourth-quarter-and-full-year-2020-301217245.html
SOURCE Old Republic International Corporation