CHICAGO, Oct. 27,
2022 /PRNewswire/ --
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OVERALL
RESULTS
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Quarters Ended
September 30,
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Nine Months Ended
September 30,
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2022
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2021
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% Change
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2022
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2021
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% Change
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Pretax income
(loss)
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$ (119.6)
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$ 106.0
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$
208.3
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$
1,132.6
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Pretax investment gains
(losses)
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(377.1)
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(192.6)
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(549.5)
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303.7
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Pretax income (loss)
excluding investment gains (losses)
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$
257.5
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$ 298.6
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-13.8 %
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$
757.9
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$
828.8
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-8.6 %
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Net income
(loss)
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$
(91.7)
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$
88.7
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$
174.3
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$
907.3
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Net of tax investment
gains (losses)
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(297.9)
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(151.6)
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(433.8)
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239.6
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Net income (loss)
excluding investment gains (losses)
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$
206.1
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$ 240.4
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-14.3 %
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$
608.1
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$
667.6
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-8.9 %
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Combined
ratio
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91.4 %
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89.8 %
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91.4 %
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90.4 %
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PER DILUTED
SHARE
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Quarters Ended
September 30,
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Nine Months Ended
September 30,
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2022
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2021
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% Change
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2022
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2021
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% Change
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Net income
(loss)
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$ (.31)
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$ .29
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$ .57
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$ 3.00
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Net of tax investment
gains (losses)
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(.99)
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(.50)
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(1.42)
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.79
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Net income (loss)
excluding investment gains (losses)
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$ .68
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$ .79
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-13.9 %
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$ 1.99
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$ 2.21
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-10.0 %
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SHAREHOLDERS' EQUITY
(BOOK VALUE)
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Sep. 30,
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Dec. 31,
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2022
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2021
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% Change
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Total
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$
5,678.1
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$
6,893.2
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-17.6 %
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Per Common
Share
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$
18.92
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$
22.76
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-16.9 %
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________
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All amounts in this
report are stated in millions except where noted, common stock data
and percentages.
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Old Republic International Corporation (NYSE: ORI) today
reported pretax income, excluding investment gains (losses), of
$257.5 for the quarter and
$757.9 for the first nine months of
2022. Results are within expectations, with General Insurance
pretax operating income rising 15%, while the effect of increasing
mortgage interest rates contributed to a reduction in Title
Insurance pretax operating income of 46%. Both General Insurance
and Title Insurance produced solid underwriting results that drove
a consolidated combined ratio of 91.4% for both the quarter and
first nine months of 2022.
Consolidated net premiums and fees earned were down 5.5% for the
quarter, with General Insurance net earned premiums growing 7.1%,
offset by a 15.2% decline in Title Insurance net premiums and fees
earned as a result of lower revenues in both direct and agency
operations. For the first nine months, consolidated net premiums
and fees earned were relatively steady, reflecting growth in
General Insurance of 7.3%, offset by a 6.9% decline in Title
Insurance. Net investment income increased in both 2022 periods,
primarily reflecting growth in the invested asset base and slightly
higher investment yields earned in the quarter.
During the quarter, the Company returned total capital to
shareholders of $479.1, comprised of
$374.3 in common stock dividends,
including a special cash dividend of $1.00 per share, and $104.8 of share repurchases (4.8 million shares
at an average price of $21.49 per
share). Following the close of the quarter and through
October 26, the company repurchased
5.3 million additional shares for $119.3 (average price of $22.37), leaving $225.8 remaining under the current repurchase
authorization.
Book value per share was $18.92 as
of September 30, 2022, reflecting declining fair market values
in both the fixed income and equity portfolios, partially offset by
strong operating earnings. With the addition of dividends declared
during the first nine months, this was a decrease of 9.4% over
year-end 2021.
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 (loss), 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.
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FINANCIAL
HIGHLIGHTS
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Quarters Ended
September 30,
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Nine Months Ended
September 30,
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SUMMARY INCOME
STATEMENTS:
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2022
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2021
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% Change
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2022
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2021
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% Change
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Revenues:
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Net premiums and fees
earned
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$
1,943.3
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$
2,055.4
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-5.5 %
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$
5,844.6
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$
5,881.6
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-0.6 %
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Net investment
income
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115.1
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111.6
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3.1
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329.2
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323.6
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1.7
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Other
income
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39.7
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37.8
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5.2
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113.7
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112.0
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1.5
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Total operating
revenues
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2,098.2
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2,204.9
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-4.8
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6,287.7
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6,317.3
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-0.5
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Investment gains
(losses):
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Realized from actual
transactions and impairments
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(26.2)
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6.6
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92.3
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15.6
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Unrealized from
changes in fair value of equity securities
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(350.8)
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(199.3)
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(641.8)
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288.1
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Total investment gains
(losses)
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(377.1)
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(192.6)
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(549.5)
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303.7
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Total
revenues
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1,721.0
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2,012.2
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5,738.1
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6,621.0
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Operating
expenses:
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Loss and loss
adjustment expenses
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628.6
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618.4
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1.6
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1,875.2
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1,846.8
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1.5
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Sales and general
expenses
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1,195.8
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1,270.8
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-5.9
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3,604.5
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3,601.8
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0.1
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Interest and other
charges
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16.3
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16.8
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-3.4
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49.9
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39.7
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25.7
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Total operating
expenses
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1,840.7
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1,906.2
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-3.4 %
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5,529.7
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5,488.4
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0.8 %
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Pretax income
(loss)
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(119.6)
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106.0
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208.3
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1,132.6
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Income taxes
(credits)
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(27.8)
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17.2
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34.0
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225.2
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Net income
(loss)
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$ (91.7)
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$
88.7
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$ 174.3
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$ 907.3
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COMMON STOCK
STATISTICS:
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Components of net
income (loss) per share:
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Basic net
income (loss) excluding investment gains (losses)
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$
0.68
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$
0.79
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-13.9 %
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$
2.00
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$
2.22
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-9.9 %
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Net investment gains
(losses):
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Realized from actual
transactions and impairments
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(0.07)
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0.02
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0.24
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0.04
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Unrealized from
changes in fair value of equity securities
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(0.92)
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(0.52)
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(1.67)
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0.75
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Basic net income
(loss)
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$ (0.31)
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$
0.29
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$
0.57
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$
3.01
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Diluted net
income (loss) excluding investment gains (losses)
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$
0.68
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$
0.79
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-13.9 %
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$
1.99
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$
2.21
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-10.0 %
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Net investment gains
(losses):
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Realized from actual
transactions and impairments
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(0.07)
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0.02
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0.24
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0.04
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Unrealized from
changes in fair value of equity securities
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(0.92)
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(0.52)
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(1.66)
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0.75
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Diluted net income
(loss)
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$ (0.31)
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$
0.29
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$
0.57
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$
3.00
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Cash dividends on
common stock
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$
1.23
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$
1.72
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$
1.69
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$
2.16
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Book value per
share
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$ 18.92
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$ 20.96
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-9.7 %
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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 operations, as well as our sound
investment of the capital and underwriting cash flows from these
operations.
Sources of
Consolidated Income (Loss)
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Quarters Ended
September 30,
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Nine Months Ended
September 30,
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2022
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2021
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% Change
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2022
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2021
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% Change
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Net premiums and
fees earned:
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General
insurance
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$
967.3
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$
902.8
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7.1 %
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$ 2,821.8
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$ 2,629.2
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7.3 %
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Title
insurance
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968.1
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1,142.1
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-15.2
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2,997.3
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3,218.7
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-6.9
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RFIG
run-off
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5.5
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7.7
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-28.0
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18.1
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25.4
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-28.7
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Corporate &
other
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2.3
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2.6
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-12.8
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7.2
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8.2
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-11.6
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Consolidated
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$ 1,943.3
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$ 2,055.4
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-5.5 %
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$ 5,844.6
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$ 5,881.6
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-0.6 %
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Underwriting and
related services income (loss):
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General
insurance
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$ 96.2
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$ 77.7
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23.8 %
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$
243.6
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$
202.0
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20.6 %
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Title
insurance
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61.1
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125.3
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-51.2
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230.0
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347.8
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-33.9
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RFIG
run-off
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7.6
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5.8
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31.7
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26.1
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12.1
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114.3
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Corporate &
other
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(6.3)
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(4.9)
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-28.5
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(21.2)
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(17.1)
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-23.7
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Consolidated
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$
158.6
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$
203.9
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-22.2 %
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$
478.6
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$
544.9
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-12.2 %
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Consolidated
underwriting ratio:
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Loss ratio:
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Current
year
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35.7 %
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32.4 %
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34.7 %
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33.4 %
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Prior years
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(3.4)
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(2.3)
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(2.6)
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(2.0)
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Total
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32.3
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30.1
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32.1
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31.4
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Expense
ratio
|
59.1
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|
59.7
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59.3
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|
59.0
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Combined
ratio
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91.4 %
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89.8 %
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|
|
91.4 %
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|
90.4 %
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Net investment
income:
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General
insurance
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$ 88.8
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$ 84.2
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5.4 %
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$
254.8
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$
256.2
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-0.5 %
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Title
insurance
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11.8
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10.9
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|
8.7
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34.2
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|
32.5
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5.5
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RFIG
run-off
|
1.5
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|
2.6
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-39.7
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5.2
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|
8.7
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-40.3
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Corporate &
other
|
12.9
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|
13.8
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-6.9
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|
34.8
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26.1
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|
33.6
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Consolidated
|
$
115.1
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$
111.6
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3.1 %
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$
329.2
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$
323.6
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1.7 %
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Interest and other
charges (credits):
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General
insurance
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$ 17.3
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$ 16.1
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$ 50.3
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$ 48.2
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Title
insurance
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(0.3)
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0.4
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0.5
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1.9
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|
RFIG
run-off
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—
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—
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—
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—
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Corporate & other
(a)
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(0.7)
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0.2
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(0.9)
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(10.5)
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Consolidated
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$ 16.3
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$ 16.8
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-3.4 %
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$ 49.9
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$ 39.7
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25.7 %
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Segmented and
consolidated pretax income (loss)
|
|
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excluding
investment gains (losses):
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General
insurance
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$
167.6
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$
145.8
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15.0 %
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$
448.1
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$
410.0
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9.3 %
|
Title
insurance
|
73.3
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|
135.7
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|
-46.0
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|
263.8
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|
378.3
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|
-30.3
|
RFIG
run-off
|
9.2
|
|
8.4
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|
9.6
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|
31.3
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|
20.9
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|
49.7
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Corporate &
other
|
7.2
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|
8.6
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|
-15.9
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|
14.6
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|
19.5
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|
-25.1
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Consolidated
|
257.5
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|
298.6
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-13.8 %
|
|
757.9
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|
828.8
|
|
-8.6 %
|
Income taxes
(credits) on above
|
51.3
|
|
58.2
|
|
|
|
149.7
|
|
161.1
|
|
|
Net income (loss)
excluding
|
|
|
|
|
|
|
|
|
|
|
|
investment gains
(losses)
|
206.1
|
|
240.4
|
|
-14.3 %
|
|
608.1
|
|
667.6
|
|
-8.9 %
|
Consolidated pretax
investment gains (losses):
|
Realized from actual
transactions
|
|
|
|
|
|
|
|
|
|
|
|
and
impairments
|
(26.2)
|
|
6.6
|
|
|
|
92.3
|
|
15.6
|
|
|
Unrealized from
changes in
|
|
|
|
|
|
|
|
|
|
|
|
fair value of equity
securities
|
(350.8)
|
|
(199.3)
|
|
|
|
(641.8)
|
|
288.1
|
|
|
Total
|
(377.1)
|
|
(192.6)
|
|
|
|
(549.5)
|
|
303.7
|
|
|
Income taxes (credits)
on above
|
(79.2)
|
|
(40.9)
|
|
|
|
(115.6)
|
|
64.0
|
|
|
Net of tax investment
gains (losses)
|
(297.9)
|
|
(151.6)
|
|
|
|
(433.8)
|
|
239.6
|
|
|
Net income
(loss)
|
$ (91.7)
|
|
$ 88.7
|
|
|
|
$
174.3
|
|
$
907.3
|
|
|
Consolidated
operating cash flow
|
$
500.1
|
|
$
455.1
|
|
|
|
$
903.4
|
|
$
970.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes
consolidation/elimination entries.
|
General Insurance
Segment Operating Results
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2022
|
|
2021
|
|
% Change
|
|
2022
|
|
2021
|
|
% Change
|
Net premiums
written
|
$
1,066.3
|
|
$ 972.8
|
|
9.6 %
|
|
$
3,029.4
|
|
$
2,742.3
|
|
10.5 %
|
Net premiums
earned
|
967.3
|
|
902.8
|
|
7.1
|
|
2,821.8
|
|
2,629.2
|
|
7.3
|
Net investment
income
|
88.8
|
|
84.2
|
|
5.4
|
|
254.8
|
|
256.2
|
|
-0.5
|
Other income
|
39.5
|
|
37.5
|
|
5.4
|
|
112.9
|
|
111.2
|
|
1.6
|
Operating
revenues
|
1,095.6
|
|
1,024.6
|
|
6.9
|
|
3,189.7
|
|
2,996.7
|
|
6.4
|
Loss and loss
adjustment expenses
|
606.6
|
|
585.4
|
|
3.6
|
|
1,804.9
|
|
1,743.4
|
|
3.5
|
Sales and general
expenses
|
304.0
|
|
277.1
|
|
9.7
|
|
886.2
|
|
794.9
|
|
11.5
|
Interest and other
charges
|
17.3
|
|
16.1
|
|
7.5
|
|
50.3
|
|
48.2
|
|
4.3
|
Operating
expenses
|
928.0
|
|
878.8
|
|
5.6
|
|
2,741.5
|
|
2,586.6
|
|
6.0
|
Segment pretax
operating income (loss)
|
$ 167.6
|
|
$ 145.8
|
|
15.0 %
|
|
$ 448.1
|
|
$ 410.0
|
|
9.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
62.7 %
|
|
64.8 %
|
|
|
|
64.0 %
|
|
66.3 %
|
|
|
Expense
ratio
|
27.3
|
|
26.5
|
|
|
|
27.4
|
|
26.0
|
|
|
Combined
ratio
|
90.0 %
|
|
91.3 %
|
|
|
|
91.4 %
|
|
92.3 %
|
|
|
General Insurance net premiums earned increased 7.1% and 7.3%
for the quarter and first nine months, respectively, driven by
growth in commercial auto and workers' compensation lines of
coverage. Premium rate increases for most lines of coverage, high
renewal retention ratios, and new business production all
contributed. Net investment income increased in the quarter,
reflecting growth in the investment base and slightly higher
investment yields earned.
The reported loss ratio for General Insurance improved in the
quarter, inclusive of favorable reserve development from prior
periods and lower current period loss costs. Favorable development
of 4.7% in the quarter came predominantly from the commercial auto
and workers' compensation lines of coverage, partially offset by
unfavorable development in the financial indemnity line of
coverage. The current period loss costs reflect several years of
premium rate increases, underwriting actions, a shift in the line
of coverage mix, and a relatively nominal amount from Hurricane
Ian.
The third quarter and first nine month expense ratios were
elevated compared to the same periods last year, generally
reflecting the shift in 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 higher expense ratios and lower
current period loss ratios.
Together, these factors produced highly profitable combined
ratios and greater 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
|
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
|
|
2021
|
|
64.8 %
|
|
|
|
(3.8) %
|
|
|
|
68.6 %
|
|
3rd Quarter
2021
|
|
64.8 %
|
|
|
|
(3.2) %
|
|
|
|
68.0 %
|
|
3rd Quarter
2022
|
|
62.7 %
|
|
|
|
(4.7) %
|
|
|
|
67.4 %
|
|
1st Nine Months
2021
|
|
66.3 %
|
|
|
|
(2.9) %
|
|
|
|
69.2 %
|
|
1st Nine Months
2022
|
|
64.0 %
|
|
|
|
(3.3) %
|
|
|
|
67.3 %
|
|
Quarterly and annual loss ratios and trends may not be
indicative of future outcomes for a business with relatively long
claim payment patterns. We target combined ratios between 90% and
95%, and based on our historical line of coverage mix, a loss ratio
average in the high 60% to low 70% range, and an expense ratio
average of 25%. These components of the combined ratio will
continue to reflect the line of coverage mix.
Title Insurance
Segment Operating Results
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2022
|
|
2021
|
|
% Change
|
|
2022
|
|
2021
|
|
% Change
|
Net premiums and fees
earned
|
$ 968.1
|
|
$
1,142.1
|
|
-15.2 %
|
|
$
2,997.3
|
|
$
3,218.7
|
|
-6.9 %
|
Net investment
income
|
11.8
|
|
10.9
|
|
8.7
|
|
34.2
|
|
32.5
|
|
5.5
|
Other income
|
0.2
|
|
0.3
|
|
-27.8
|
|
0.7
|
|
0.8
|
|
-12.2
|
Operating
revenues
|
980.1
|
|
1,153.3
|
|
-15.0
|
|
3,032.3
|
|
3,252.0
|
|
-6.8
|
Loss and loss
adjustment expenses
|
26.2
|
|
32.9
|
|
-20.4
|
|
84.6
|
|
95.4
|
|
-11.2
|
Sales and general
expenses
|
880.9
|
|
984.1
|
|
-10.5
|
|
2,683.3
|
|
2,776.3
|
|
-3.4
|
Interest and other
charges
|
(0.3)
|
|
0.4
|
|
-165.6
|
|
0.5
|
|
1.9
|
|
-73.4
|
Operating
expenses
|
906.8
|
|
1,017.6
|
|
-10.9
|
|
2,768.5
|
|
2,873.7
|
|
-3.7
|
Segment pretax
operating income (loss)
|
$ 73.3
|
|
$ 135.7
|
|
-46.0 %
|
|
$ 263.8
|
|
$ 378.3
|
|
-30.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
2.7 %
|
|
2.9 %
|
|
|
|
2.8 %
|
|
3.0 %
|
|
|
Expense
ratio
|
91.0
|
|
86.1
|
|
|
|
89.5
|
|
86.2
|
|
|
Combined
ratio
|
93.7 %
|
|
89.0 %
|
|
|
|
92.3 %
|
|
89.2 %
|
|
|
Title Insurance net premiums and fees earned declined by 15.2%
and 6.9% for the third quarter and first nine months, respectively.
Both directly produced and agency produced revenues declined during
the quarter, and it is expected that such revenues will continue to
be lower in the fourth quarter of this year when compared to the
same period last year. The main driver of these trends is
increasing mortgage interest rates which continue to drive a steep
reduction in refinance activity and to a lesser extent, purchase
activity. An uptick in commercial transaction activity resulted in
strong commercial premium growth during the quarter and first nine
month periods. Net investment income increased in both 2022
periods, reflecting growth in the invested asset base and slightly
higher investment yields earned in the quarter.
Title Insurance's loss ratios were relatively consistent for the
quarter and first nine months. The third quarter and first nine
month's expense ratios were elevated compared to the same periods
last year, generally reflecting the combination of lower directly
produced revenues that carry higher fixed expenses, and to a lesser
extent, a greater proportion of agency produced revenues that have
a higher overall expense ratio.
Together, these factors produced profitable combined ratios
albeit 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
|
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
|
|
2021
|
|
2.6 %
|
|
|
|
(1.0) %
|
|
|
|
3.6 %
|
|
3rd Quarter
2021
|
|
2.9 %
|
|
|
|
(0.8) %
|
|
|
|
3.7 %
|
|
3rd Quarter
2022
|
|
2.7 %
|
|
|
|
(0.9) %
|
|
|
|
3.6 %
|
|
1st Nine Months
2021
|
|
3.0 %
|
|
|
|
(0.7) %
|
|
|
|
3.7 %
|
|
1st Nine Months
2022
|
|
2.8 %
|
|
|
|
(0.8) %
|
|
|
|
3.6 %
|
|
RFIG Run-off Segment
Operating Results - Mortgage Insurance
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2022
|
|
2021
|
|
% Change
|
|
2022
|
|
2021
|
|
% Change
|
Net premiums
earned
|
$
5.5
|
|
$
7.7
|
|
-28.0 %
|
|
$ 18.1
|
|
$ 25.4
|
|
-28.7 %
|
Net investment
income
|
1.5
|
|
2.6
|
|
-39.7
|
|
5.2
|
|
8.7
|
|
-40.3
|
Loss and loss
adjustment expenses
|
(5.2)
|
|
(1.1)
|
|
N/M
|
|
(17.5)
|
|
3.4
|
|
N/M
|
Pretax operating income
(loss)
|
$
9.2
|
|
$
8.4
|
|
9.6 %
|
|
$ 31.3
|
|
$ 20.9
|
|
49.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
-93.3 %
|
|
-14.5 %
|
|
|
|
-96.5 %
|
|
13.7 %
|
|
|
Expense
ratio
|
55.3
|
|
39.0
|
|
|
|
52.7
|
|
38.5
|
|
|
Combined
ratio
|
-38.0 %
|
|
24.5 %
|
|
|
|
-43.8 %
|
|
52.2 %
|
|
|
Pretax operating results of RFIG Run-off reflect the continuing
drop in net earned premiums in line with the declining risk in
force, and significantly lower loss costs compared to the 2021
periods. Net investment income decreased in both 2022 periods,
reflecting a declining invested asset base, driven by the payment
of extraordinary dividends of $35.0
and $105.0 to the parent company
during the third quarter and first nine months, respectively. Loss
costs reflect fewer newly reported delinquencies along with
improving trends in cure rates.
Together, these factors produced greater 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
|
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
|
|
2021
|
|
(5.3) %
|
|
|
|
(67.5) %
|
|
|
|
62.2 %
|
|
3rd Quarter
2021
|
|
(14.5) %
|
|
|
|
(106.3) %
|
|
|
|
91.8 %
|
|
3rd Quarter
2022
|
|
(93.3) %
|
|
|
|
(186.8) %
|
|
|
|
93.5 %
|
|
1st Nine Months
2021
|
|
13.7 %
|
|
|
|
(47.7) %
|
|
|
|
61.4 %
|
|
1st Nine Months
2022
|
|
(96.5) %
|
|
|
|
(169.7) %
|
|
|
|
73.2 %
|
|
Corporate &
Other Operating Results
|
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2022
|
|
2021
|
|
% Change
|
|
2022
|
|
2021
|
|
% Change
|
Net life and accident
premiums earned
|
|
$
2.3
|
|
$
2.6
|
|
-12.8 %
|
|
$
7.2
|
|
$
8.2
|
|
-11.6 %
|
Net investment
income
|
|
12.9
|
|
13.8
|
|
-6.9
|
|
34.8
|
|
26.1
|
|
33.6
|
Other operating
income
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Operating
revenues
|
|
15.2
|
|
16.5
|
|
-7.8
|
|
42.2
|
|
34.3
|
|
23.0
|
Benefits and loss and
loss adjustment expenses
|
|
0.9
|
|
1.1
|
|
-18.1
|
|
3.1
|
|
4.5
|
|
-31.8
|
Insurance
expenses
|
|
0.7
|
|
0.8
|
|
-11.6
|
|
2.4
|
|
2.6
|
|
-7.8
|
Corporate, interest and
other expenses - net
|
|
6.3
|
|
5.9
|
|
6.5
|
|
22.0
|
|
7.5
|
|
191.1
|
Operating
expenses
|
|
7.9
|
|
7.8
|
|
1.1
|
|
27.6
|
|
14.8
|
|
86.5
|
Corporate & other
pretax operating income (loss)
|
|
$
7.2
|
|
$
8.6
|
|
-15.9 %
|
|
$
14.6
|
|
$
19.5
|
|
-25.1 %
|
This segment includes a small life and accident insurance
business and the net costs associated with the parent holding
company and several internal corporate services subsidiaries. The
segment tends to produce highly variable results stemming from
volatility inherent from the lack of scale. For the quarter, net
investment income declined partially attributable to the return of
capital to shareholders. For the first nine months, interest
expense increased due to the issuance of $650 million of debt late in the second quarter
of 2021, partially offset by net investment income from a higher
level of investments and higher investment yields earned.
Summary Consolidated
Balance Sheet
|
|
|
September
30,
|
|
December 31,
|
|
September
30,
|
|
2022
|
|
2021
|
|
2021
|
Assets:
|
|
|
|
|
|
Cash and fixed income
securities
|
$
12,305.8
|
|
$
11,399.6
|
|
$
11,721.9
|
Equity
securities
|
3,045.4
|
|
5,302.8
|
|
4,828.0
|
Other invested
assets
|
140.6
|
|
116.5
|
|
116.7
|
Cash and invested
assets
|
15,491.8
|
|
16,818.9
|
|
16,666.7
|
Accounts and premiums
receivable
|
2,096.9
|
|
1,768.7
|
|
1,861.4
|
Federal income tax
recoverable
|
127.4
|
|
11.8
|
|
—
|
Reinsurance balances
recoverable
|
5,679.7
|
|
4,943.4
|
|
5,054.7
|
Deferred policy
acquisition costs
|
386.7
|
|
350.4
|
|
355.3
|
Sundry
assets
|
1,164.2
|
|
1,088.4
|
|
1,051.6
|
Total
assets
|
$
24,947.0
|
|
$
24,981.8
|
|
$
24,989.9
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity:
|
|
|
|
|
|
Policy
liabilities
|
$
3,182.6
|
|
$
2,752.0
|
|
$
2,884.7
|
Loss and loss
adjustment expense reserves
|
12,174.7
|
|
11,425.5
|
|
11,433.7
|
Federal income tax
payable
|
2.0
|
|
249.5
|
|
152.8
|
Reinsurance balances
and funds
|
1,154.3
|
|
866.0
|
|
942.4
|
Debt
|
1,596.6
|
|
1,588.5
|
|
1,588.2
|
Sundry
liabilities
|
1,158.5
|
|
1,206.9
|
|
1,658.4
|
Total
liabilities
|
19,268.9
|
|
18,088.6
|
|
18,660.5
|
Shareholders'
equity
|
5,678.1
|
|
6,893.2
|
|
6,329.4
|
Total liabilities and
shareholders' equity
|
$
24,947.0
|
|
$
24,981.8
|
|
$
24,989.9
|
Cash, Invested
Assets, and Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|
Sep. 30,
|
|
Dec. 31,
|
|
Sep. 30,
|
|
Sep. '22/
|
|
Sep. '22/
|
|
|
2022
|
|
2021
|
|
2021
|
|
Dec. '21
|
|
Sep. '21
|
Cash and invested
assets:
|
|
|
|
|
|
|
|
|
|
|
Fixed income
securities, cash and other invested assets
|
$
12,446.4
|
|
$
11,516.1
|
|
$
11,838.6
|
|
8.1 %
|
|
5.1 %
|
|
Equity
securities
|
3,045.4
|
|
5,302.8
|
|
4,828.0
|
|
-42.6
|
|
-36.9
|
|
Total per balance
sheet
|
$
15,491.8
|
|
$
16,818.9
|
|
$
16,666.7
|
|
-7.9 %
|
|
-7.0 %
|
|
Total at cost for
all
|
$
15,363.6
|
|
$
15,045.8
|
|
$
15,244.2
|
|
2.1 %
|
|
0.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of
shareholders' equity per share:
|
|
|
|
|
|
|
|
|
|
|
Equity before items
below
|
$
19.00
|
|
$
18.50
|
|
$
17.85
|
|
2.7 %
|
|
6.4 %
|
|
Unrealized investment
gains (losses) and other
|
|
|
|
|
|
|
|
|
|
|
|
accumulated
comprehensive income (loss)
|
(0.08)
|
|
4.26
|
|
3.11
|
|
|
|
|
|
|
|
Total
|
$
18.92
|
|
$
22.76
|
|
$
20.96
|
|
-16.9 %
|
|
-9.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmented
composition of
|
|
|
|
|
|
|
|
|
|
shareholders'
equity per share:
|
|
|
|
|
|
|
|
|
|
|
Excluding RFIG run-off
segment
|
$
17.94
|
|
$
21.47
|
|
$
19.65
|
|
-16.4 %
|
|
-8.7 %
|
|
RFIG run-off
segment
|
0.98
|
|
1.29
|
|
1.31
|
|
|
|
|
|
|
|
Consolidated
total
|
$
18.92
|
|
$
22.76
|
|
$
20.96
|
|
-16.9 %
|
|
-9.7 %
|
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 claim payment obligations to
policyholders and their beneficiaries, as well as the long-term
stability of the subsidiaries' capital base. For these reasons, the
investment portfolio does not contain high risk or illiquid asset
classes and has zero or extremely limited exposure to,
collateralized debt obligations (CDO's), credit default and
interest rate swaps, hybrid securities, asset-backed securities
(ABS), guaranteed investment contracts (GIC), structured investment
vehicles (SIV), auction rate variable short-term securities,
limited partnerships, derivatives, hedge funds or private equity
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 September 30, 2022, the consolidated investment
portfolio reflected an allocation of approximately 80% to fixed
income (bonds and notes) and short-term investments, and 20% to
equity securities (common stock). During the quarter, we continued
to reduce our equity holdings and reinvest the proceeds in fixed
income securities. The fixed income portfolio continues to be the
anchor for the insurance underwriting subsidiaries' obligations.
The maturities of our fixed income assets are matched to the
expected liabilities for claim payment obligations to policyholders
and their beneficiaries. The quality of the investment portfolio
remains at high levels. The Company's third quarter net income
includes investment impairment charges of $120.9, reflecting management's intent to dispose
of certain fixed income securities currently in an unrealized loss
position, driven by tax planning considerations.
A significant portion of our investable funds have been directed
toward high-quality common stocks of U.S. companies (currently
limited to approximately 75 issues). We favor those with long-term
records of reasonable earnings growth and steadily increasing
dividends. Pursuant to our enterprise risk management guidelines
and controls, we perform regular stress tests of the equities
portfolio to gain reasonable assurance that periodic downdrafts in
market prices would not seriously undermine our financial strength
and the long-term continuity and prospects of our insurance
underwriting 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
|
|
Quarter
|
|
|
|
|
|
Year
|
|
Ended
|
|
Nine Months
Ended
|
|
Ended
|
|
Sep. 30,
|
|
September
30,
|
|
Dec. 31,
|
|
2022
|
|
2022
|
|
2021
|
|
2021
|
Beginning
balance
|
$
20.99
|
|
$
22.76
|
|
$
20.75
|
|
$
20.75
|
Changes in
shareholders' equity:
|
|
|
|
|
|
|
|
Net income (loss)
excluding net investment gains (losses)
|
0.68
|
|
2.00
|
|
2.22
|
|
3.10
|
Net of tax realized
investment gains (losses)
|
(0.07)
|
|
0.24
|
|
0.04
|
|
0.02
|
Net of tax unrealized
investment gains (losses):
|
|
|
|
|
|
|
|
Fixed income
securities
|
(0.47)
|
|
(2.62)
|
|
(0.66)
|
|
(0.97)
|
Equity
securities
|
(0.92)
|
|
(1.67)
|
|
0.75
|
|
1.96
|
Total net of tax
realized and unrealized
|
|
|
|
|
|
|
|
investment gains
(losses)
|
(1.46)
|
|
(4.05)
|
|
0.13
|
|
1.01
|
Cash
dividends
|
(1.23)
|
|
(1.69)
|
|
(2.16)
|
|
(2.38)
|
Other
|
(0.06)
|
|
(0.10)
|
|
0.02
|
|
0.28
|
Net change
|
(2.07)
|
|
(3.84)
|
|
0.21
|
|
2.01
|
Ending
balance
|
$
18.92
|
|
$
18.92
|
|
$
20.96
|
|
$
22.76
|
Percentage change for
the period
|
-9.9 %
|
|
-16.9 %
|
|
1.0 %
|
|
9.7 %
|
Capitalization
|
|
|
Capitalization
|
|
September
30,
|
|
December 31,
|
|
September
30,
|
|
2022
|
|
2021
|
|
2021
|
Debt:
|
|
|
|
|
|
4.875% Senior Notes
due 2024
|
$
398.8
|
|
$
398.4
|
|
$
398.3
|
3.875% Senior Notes
due 2026
|
547.8
|
|
547.3
|
|
547.2
|
3.850% Senior Notes
due 2051
|
642.8
|
|
642.6
|
|
642.6
|
Other miscellaneous
debt
|
7.1
|
|
—
|
|
—
|
Total debt
|
1,596.6
|
|
1,588.5
|
|
1,588.2
|
Common shareholders'
equity
|
5,678.1
|
|
6,893.2
|
|
6,329.4
|
Total
capitalization
|
$
7,274.7
|
|
$
8,481.7
|
|
$
7,917.6
|
|
|
|
|
|
|
Capitalization
ratios:
|
|
|
|
|
|
Debt
|
21.9 %
|
|
18.7 %
|
|
20.1 %
|
Common shareholders'
equity
|
78.1
|
|
81.3
|
|
79.9
|
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 most products are set without
knowing what the ultimate loss costs will be. We also can't know
exactly when claims will be paid, which may be many years after a
policy was issued or expired. This 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 maintaining a
sound financial condition to support our subsidiaries' long-term
obligations to policyholders and their beneficiaries.
The Company is managed for the long run and with little regard
for quarterly or even annual reporting periods. These time frames
are too short. Management believes results are best evaluated by
looking at underwriting and overall operating performance trends
over 10-year intervals. These likely include one or two economic
and/or underwriting cycles. This provides enough time for these
cycles to run their course, for underwriting and premium rate
changes to appear in financial results, and for reserved loss costs
to be quantified with greater certainty.
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. Old Republic's general
insurance business ranks among the nation's 50 largest, while its
title insurance business is the third largest in its industry.
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 third quarter 2022 performance and
to review major operating trends and business developments. The
call can be accessed live on Old Republic's website at
www.oldrepublic.com or by dialing 1-888-510-2411, passcode 4060501.
Interested parties may also listen to a replay of the call through
November 3, 2022 by dialing
1-800-770-2030, passcode 4060501, or by accessing it on Old
Republic International's website through November 24, 2022.
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. It is possible that Old
Republic's operating results, business and financial condition
could be adversely affected in subsequent periods by future
economic disruptions caused by the COVID-19 pandemic and the
associated governmental responses.
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.
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.
General Insurance, Title Insurance, Corporate & Other, and
RFIG Run-off 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
2021 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:
|
At Financial
Relations Board:
|
|
|
Craig R. Smiddy,
President and CEO
|
Analysts/Investors: Joe
Calabrese 212/827-3772
|
View original
content:https://www.prnewswire.com/news-releases/old-republic-reports-results-for-the-third-quarter-and-first-nine-months-2022-301660653.html
SOURCE Old Republic International Corporation