CHICAGO, Jan. 26,
2023 /PRNewswire/ --
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OVERALL RESULTS
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Quarters Ended December
31,
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Years Ended December
31,
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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
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$
649.0
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$ 789.4
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$
857.4
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$ 1,922.1
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Pretax investment gains
(losses)
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348.3
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454.3
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(201.1)
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758.0
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Pretax income excluding
investment gains (losses)
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$
300.6
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$ 335.1
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(10.3) %
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$ 1,058.6
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$ 1,164.0
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(9.1) %
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Net income
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$
512.1
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$ 627.0
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$
686.4
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$ 1,534.3
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Net of tax investment
gains (losses)
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275.2
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358.8
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(158.6)
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598.4
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Net income excluding
investment gains (losses)
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$
236.9
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$ 268.2
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(11.7) %
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$
845.1
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$
935.9
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(9.7) %
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Combined
ratio
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89.6 %
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88.5 %
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91.0 %
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89.9 %
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PER DILUTED SHARE
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Quarters Ended
December 31,
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Years Ended December
31,
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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
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$ 1.73
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$
2.06
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$ 2.26
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$ 5.05
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Net of tax investment
gains (losses)
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0.93
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1.18
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(0.53)
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1.97
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Net income excluding
investment gains (losses)
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$ 0.80
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$
0.88
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(9.1) %
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$ 2.79
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$ 3.08
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(9.4) %
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SHAREHOLDERS' EQUITY (BOOK
VALUE)
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Dec. 31,
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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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$ 6,166.2
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$ 6,893.2
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(10.5) %
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Per Common
Share
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$
21.05
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$
22.76
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(7.5) %
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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
$300.6 for the quarter and
$1,058.6 for the full year 2022.
Results are within our expectations, with General Insurance pretax
operating income rising 34.6% for the quarter, while the effect of
increasing mortgage interest rates contributed to a reduction in
Title Insurance pretax operating income of 67.2%. Solid
underwriting results drove a consolidated combined ratio of 89.6%
for the quarter and 91.0% for the full year 2022.
Consolidated net premiums and fees earned were down 13.7% for
the quarter, with Title Insurance net premiums and fees earned
dropping 29.4% as a result of lower revenues in both direct and
agency operations, while General Insurance net premiums earned grew
6.5%. For the year, consolidated net premiums and fees earned
declined 4.1%, reflecting a decrease in Title Insurance of 13.0%,
offset by growth in General Insurance of 7.1%. Net investment
income increased in both 2022 periods. The increase for the quarter
was primarily driven by higher investment yields earned, while the
increase for the year reflects growth in the invested asset base
and higher investment yields earned.
During the quarter, the Company returned total capital to
shareholders of $243.7, comprised of
$67.2 in dividends, and $176.4 of share repurchases (7.7 million shares
at an average price of $22.70 per
share). For the year, this results in total capital returned of
$862.0, including $580.7 in dividends and $281.2 of share repurchases (12.6 million shares
at an average price of $22.23 per
share), leaving approximately $169
remaining under the current repurchase authorization as of
December 31, 2022.
Book value per share was $21.05 as
of December 31, 2022, reflecting declining fair market values
in both the fixed income and equity portfolios during the year,
partially offset by strong operating earnings. With the addition of
dividends declared during the year, this was an increase of 0.9%
over year-end 2021. During the quarter, fair market value
appreciation within both portfolios and strong operating earnings
drove a comparable increase of 12.5%.
Old Republic's business is managed for the long run. In this
context management's key objectives are to achieve highly
profitable operating results over the long term, and to ensure
balance sheet strength for the primary needs of the insurance
subsidiaries' underwriting and related services business. In this
view, the evaluation of periodic and long-term results excludes
consideration of all investment gains (losses). Under Generally
Accepted Accounting Principles (GAAP), however, net income,
inclusive of investment gains (losses), is the measure of total
profitability.
In management's opinion, the focus on income excluding
investment gains (losses), also described herein as segment pretax
operating income, provides a better way to analyze, evaluate,
and establish accountability for the results of the insurance
operations. The inclusion of realized investment gains (losses) in
net income can mask trends in operating results, because such
realizations are often highly discretionary. Similarly, the
inclusion of unrealized investment gains (losses) in equity
securities can further distort such operating results with
significant period-to-period fluctuations.
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FINANCIAL HIGHLIGHTS
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Quarters Ended
December 31,
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Years Ended December
31,
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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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$
1,830.6
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$
2,121.9
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(13.7) %
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$
7,675.3
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$
8,003.6
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(4.1) %
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Net investment
income
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130.2
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110.6
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17.7
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459.5
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434.3
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5.8
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Other
income
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36.2
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33.6
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7.7
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149.9
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145.6
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3.0
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Total operating revenues
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1,997.2
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2,266.2
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(11.9)
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8,284.9
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8,583.5
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(3.5)
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Investment gains
(losses):
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Realized from actual
transactions and impairments
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(30.0)
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(8.6)
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62.2
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6.9
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Unrealized from
changes in fair value of equity securities
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378.4
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463.0
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(263.4)
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751.1
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Total investment gains
(losses)
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348.3
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454.3
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(201.1)
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758.0
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Total revenues
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2,345.5
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2,720.5
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8,083.7
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9,341.6
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Operating expenses:
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Loss and loss
adjustment expenses
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565.0
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574.1
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(1.6)
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2,440.2
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2,420.9
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0.8
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Sales and general
expenses
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1,114.7
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1,340.4
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(16.8)
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4,719.2
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4,942.3
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(4.5)
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Interest and other
charges
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16.8
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16.5
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1.8
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66.7
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56.2
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18.7
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Total operating expenses
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1,696.5
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1,931.0
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(12.1) %
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7,226.3
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7,419.5
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(2.6) %
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Pretax income
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649.0
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789.4
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857.4
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1,922.1
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Income taxes
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136.8
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162.4
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170.9
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387.7
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Net income
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$
512.1
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$
627.0
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$
686.4
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$
1,534.3
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COMMON STOCK STATISTICS:
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Components of net income per
share:
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Basic net income excluding investment
gains (losses)
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$
0.80
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$
0.88
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(9.1) %
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$
2.80
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$
3.10
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(9.7) %
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Net investment gains
(losses):
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Realized from actual
transactions and impairments
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(0.08)
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(0.02)
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0.17
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0.02
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Unrealized from
changes in fair value of equity securities
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1.02
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1.21
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(0.69)
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1.96
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Basic net income
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$
1.74
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$
2.07
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$
2.28
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$
5.08
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Diluted net income excluding investment
gains (losses)
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$
0.80
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$
0.88
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(9.1) %
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$
2.79
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$
3.08
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(9.4) %
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Net investment gains
(losses):
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Realized from actual
transactions and impairments
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(0.08)
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(0.02)
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0.16
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0.02
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Unrealized from
changes in fair value of equity securities
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1.01
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1.20
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(0.69)
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1.95
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Diluted net income
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$
1.73
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$
2.06
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$
2.26
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$
5.05
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Cash dividends on common stock
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$
0.23
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$
0.22
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$
1.92
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$
2.38
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Book value per share
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$
21.05
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$
22.76
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(7.5) %
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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
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Quarters Ended
December 31,
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Years Ended December
31,
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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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$
986.7
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$
926.3
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6.5 %
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$ 3,808.6
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$ 3,555.5
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7.1 %
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Title
insurance
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836.4
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1,185.6
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(29.4)
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3,833.8
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4,404.3
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(13.0)
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RFIG
run-off
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5.0
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7.1
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(29.4)
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23.2
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32.6
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(28.9)
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Corporate &
other
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2.3
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2.7
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(14.2)
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9.6
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11.0
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(12.3)
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Consolidated
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$ 1,830.6
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$ 2,121.9
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(13.7) %
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$ 7,675.3
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$ 8,003.6
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(4.1) %
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Underwriting and related services income
(loss):
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General
insurance
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$
157.3
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$
109.4
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43.8 %
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$
400.9
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$
311.4
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28.7 %
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Title
insurance
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31.2
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126.2
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(75.2)
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261.3
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474.0
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(44.9)
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RFIG
run-off
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2.3
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9.1
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(74.2)
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28.4
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21.3
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33.3
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Corporate &
other
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(3.7)
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(3.8)
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0.5
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(24.9)
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(20.9)
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(19.3)
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Consolidated
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$
187.1
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$
241.0
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(22.3) %
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$
665.8
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$
785.9
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(15.3) %
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Consolidated underwriting
ratio:
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Loss ratio:
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Current
year
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38.3 %
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31.7 %
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35.5 %
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32.9 %
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Prior years
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(7.4)
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(4.6)
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(3.7)
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(2.7)
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Total
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30.9
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27.1
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31.8
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30.2
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Expense
ratio
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58.7
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|
61.4
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|
59.2
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|
59.7
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Combined
ratio
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89.6 %
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88.5 %
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|
91.0 %
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89.9 %
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Net investment income:
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General
insurance
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$
103.1
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$ 86.1
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19.7 %
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$
358.0
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$
342.4
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4.5 %
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Title
insurance
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13.6
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11.3
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20.8
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|
47.9
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|
43.8
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9.4
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RFIG
run-off
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1.5
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2.7
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(44.0)
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6.7
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|
11.4
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(41.1)
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Corporate &
other
|
11.9
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10.4
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14.5
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46.8
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36.5
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28.1
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Consolidated
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$
130.2
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$
110.6
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17.7 %
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$
459.5
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$
434.3
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5.8 %
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Interest and other charges
(credits):
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General
insurance
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$ 18.8
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$ 15.9
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$ 69.1
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$ 64.2
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Title
insurance
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—
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0.2
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0.4
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2.1
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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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(1.9)
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0.3
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(2.8)
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(10.1)
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Consolidated
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$ 16.8
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$ 16.5
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1.8 %
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$ 66.7
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$ 56.2
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18.7 %
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Segmented and consolidated pretax
income
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excluding investment gains
(losses):
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General
insurance
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$
241.6
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$
179.6
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34.6 %
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$
689.8
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$
589.6
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17.0 %
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Title
insurance
|
45.0
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|
137.3
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(67.2)
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|
308.8
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|
515.7
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(40.1)
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RFIG
run-off
|
3.9
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|
11.9
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|
(67.2)
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35.2
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|
32.8
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|
7.3
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Corporate &
other
|
10.0
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|
6.2
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|
60.2
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|
24.6
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|
25.7
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(4.3)
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Consolidated
|
300.6
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|
335.1
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(10.3) %
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|
1,058.6
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1,164.0
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|
(9.1) %
|
Income taxes on above
|
63.7
|
|
66.9
|
|
|
|
213.4
|
|
228.1
|
|
|
Net income excluding investment
|
|
|
|
|
|
|
|
|
|
|
|
gains (losses)
|
236.9
|
|
268.2
|
|
(11.7) %
|
|
845.1
|
|
935.9
|
|
(9.7) %
|
Consolidated pretax investment gains
(losses):
|
Realized from actual
transactions
|
|
|
|
|
|
|
|
|
|
|
|
and
impairments
|
(30.0)
|
|
(8.6)
|
|
|
|
62.2
|
|
6.9
|
|
|
Unrealized from
changes in
|
|
|
|
|
|
|
|
|
|
|
|
fair value of equity
securities
|
378.4
|
|
463.0
|
|
|
|
(263.4)
|
|
751.1
|
|
|
Total
|
348.3
|
|
454.3
|
|
|
|
(201.1)
|
|
758.0
|
|
|
Income taxes (credits)
on above
|
73.1
|
|
95.5
|
|
|
|
(42.5)
|
|
159.6
|
|
|
Net of tax investment
gains (losses)
|
275.2
|
|
358.8
|
|
|
|
(158.6)
|
|
598.4
|
|
|
Net income
|
$
512.1
|
|
$
627.0
|
|
|
|
$
686.4
|
|
$ 1,534.3
|
|
|
Consolidated operating cash
flow
|
$
267.2
|
|
$
341.1
|
|
|
|
$ 1,170.6
|
|
$ 1,311.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes
consolidation/elimination entries.
|
General Insurance Segment Operating
Results
|
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
2022
|
|
2021
|
|
% Change
|
|
2022
|
|
2021
|
|
% Change
|
Net premiums
written
|
$
948.7
|
|
$
938.6
|
|
1.1 %
|
|
$ 3,978.2
|
|
$ 3,680.9
|
|
8.1 %
|
Net premiums
earned
|
986.7
|
|
926.3
|
|
6.5
|
|
3,808.6
|
|
3,555.5
|
|
7.1
|
Net investment
income
|
103.1
|
|
86.1
|
|
19.7
|
|
358.0
|
|
342.4
|
|
4.5
|
Other
income
|
36.0
|
|
33.3
|
|
8.1
|
|
148.9
|
|
144.5
|
|
3.1
|
Operating
revenues
|
1,125.9
|
|
1,045.8
|
|
7.7
|
|
4,315.6
|
|
4,042.5
|
|
6.8
|
Loss and loss
adjustment expenses
|
559.6
|
|
559.7
|
|
—
|
|
2,364.6
|
|
2,303.1
|
|
2.7
|
Sales and general
expenses
|
305.8
|
|
290.5
|
|
5.3
|
|
1,192.0
|
|
1,085.4
|
|
9.8
|
Interest and other
charges
|
18.8
|
|
15.9
|
|
17.7
|
|
69.1
|
|
64.2
|
|
7.7
|
Operating
expenses
|
884.2
|
|
866.2
|
|
2.1
|
|
3,625.8
|
|
3,452.8
|
|
5.0
|
Segment pretax
operating income
|
$
241.6
|
|
$
179.6
|
|
34.6 %
|
|
$
689.8
|
|
$
589.6
|
|
17.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
ratio:
|
|
|
|
|
|
|
|
|
|
|
|
Current
year
|
66.9 %
|
|
67.0 %
|
|
|
|
67.2 %
|
|
68.6 %
|
|
|
Prior years
|
(10.2)
|
|
(6.6)
|
|
|
|
(5.1)
|
|
(3.8)
|
|
|
Total
|
56.7
|
|
60.4
|
|
|
|
62.1
|
|
64.8
|
|
|
Expense
ratio
|
27.3
|
|
27.8
|
|
|
|
27.4
|
|
26.5
|
|
|
Combined
ratio
|
84.0 %
|
|
88.2 %
|
|
|
|
89.5 %
|
|
91.3 %
|
|
|
General Insurance net premiums earned increased 6.5% and 7.1%
for the quarter and full year, respectively, driven by growth in
most lines of coverage, in particular commercial auto. 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 higher investment
yields earned and to a lesser extent, growth in the invested asset
base.
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 10.2% in the quarter came predominantly from the commercial auto
and workers' compensation lines of coverage. The current period
loss costs reflect several years of premium rate increases,
underwriting actions, and a shift in the line of coverage mix.
The fourth quarter and full year expense ratios generally
reflect 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. The fourth quarter of 2021 included
certain operating expense charges that did not occur in 2022.
Together, these factors produced highly profitable combined
ratios and greater pretax operating income for the periods
reported. For General Insurance, we target combined ratios between
90% and 95% over a full underwriting cycle, recognizing that
quarterly and annual ratios and trends may deviate from this range,
particularly given the long claim payment patterns associated with
the business.
The following table shows recent annual and interim periods'
loss ratios and the effects of loss development trends:
|
|
|
|
|
Effect of Prior
Periods'
|
|
|
|
|
|
|
|
|
|
(Favorable)/
|
|
Loss Ratio
Excluding
|
|
Reported
|
|
Unfavorable
Loss
|
|
Prior Periods'
Loss
|
|
Loss Ratio
|
|
Reserves
Development
|
|
Reserves
Development
|
2018
|
|
72.2 %
|
|
|
— %
|
|
72.2 %
|
2019
|
|
71.8
|
|
|
0.4
|
|
71.4
|
2020
|
|
69.9
|
|
|
(0.8)
|
|
70.7
|
2021
|
|
64.8
|
|
|
(3.8)
|
|
68.6
|
2022
|
|
62.1 %
|
|
|
(5.1) %
|
|
67.2 %
|
4th Quarter
2021
|
|
60.4 %
|
|
|
(6.6) %
|
|
67.0 %
|
4th Quarter
2022
|
|
56.7 %
|
|
|
(10.2) %
|
|
66.9 %
|
Title Insurance Segment Operating
Results
|
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
2022
|
|
2021
|
|
% Change
|
|
2022
|
|
2021
|
|
% Change
|
Net premiums and fees
earned
|
$
836.4
|
|
$ 1,185.6
|
|
(29.4) %
|
|
$ 3,833.8
|
|
$ 4,404.3
|
|
(13.0) %
|
Net investment
income
|
13.6
|
|
11.3
|
|
20.8
|
|
47.9
|
|
43.8
|
|
9.4
|
Other
income
|
0.1
|
|
0.2
|
|
(36.6)
|
|
0.9
|
|
1.1
|
|
(18.2)
|
Operating
revenues
|
850.3
|
|
1,197.2
|
|
(29.0)
|
|
3,882.7
|
|
4,449.3
|
|
(12.7)
|
Loss and loss
adjustment expenses
|
4.4
|
|
17.5
|
|
(74.6)
|
|
89.1
|
|
112.9
|
|
(21.1)
|
Sales and general
expenses
|
800.9
|
|
1,042.1
|
|
(23.1)
|
|
3,484.2
|
|
3,818.4
|
|
(8.8)
|
Interest and other
charges
|
—
|
|
0.2
|
|
(146.9)
|
|
0.4
|
|
2.1
|
|
(80.2)
|
Operating
expenses
|
805.3
|
|
1,059.8
|
|
(24.0)
|
|
3,573.8
|
|
3,933.5
|
|
(9.1)
|
Segment pretax
operating income
|
$ 45.0
|
|
$
137.3
|
|
(67.2) %
|
|
$
308.8
|
|
$
515.7
|
|
(40.1) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
ratio:
|
|
|
|
|
|
|
|
|
|
|
|
Current
year
|
3.8 %
|
|
3.6 %
|
|
|
|
3.6 %
|
|
3.6 %
|
|
|
Prior years
|
(3.3)
|
|
(2.1)
|
|
|
|
(1.3)
|
|
(1.0)
|
|
|
Total
|
0.5
|
|
1.5
|
|
|
|
2.3
|
|
2.6
|
|
|
Expense
ratio
|
95.7
|
|
87.9
|
|
|
|
90.9
|
|
86.7
|
|
|
Combined
ratio
|
96.2 %
|
|
89.4 %
|
|
|
|
93.2 %
|
|
89.3 %
|
|
|
Title Insurance net premiums and fees earned declined by 29.4%
and 13.0% for the fourth quarter and full year, respectively. Both
directly produced and agency produced revenues declined, and we
remain of the view that such revenues will continue to face
headwinds into 2023. 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 commercial
premium growth during the quarter and full year. Net investment
income increased for the year, reflecting growth in the invested
asset base and higher investment yields earned, while growth in the
quarter was primarily attributable to higher investment yields
earned.
Title Insurance loss ratios decreased slightly for the quarter
and full year due predominantly to higher levels of favorable
development as a percentage of premium. The fourth quarter and full
year 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. The fourth quarter and full year
expense ratios also reflect the impact of a fourth quarter state
sales tax assessment payment of $17.2
(2.1 and 0.5 percentage points, respectively) for which the Company
is currently pursuing recovery.
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
|
2018
|
|
1.9 %
|
|
|
|
(1.8) %
|
|
|
|
3.7 %
|
|
2019
|
|
2.5
|
|
|
|
(1.2)
|
|
|
|
3.7
|
|
2020
|
|
2.3
|
|
|
|
(1.3)
|
|
|
|
3.6
|
|
2021
|
|
2.6
|
|
|
|
(1.0)
|
|
|
|
3.6
|
|
2022
|
|
2.3 %
|
|
|
|
(1.3) %
|
|
|
|
3.6 %
|
|
4th Quarter
2021
|
|
1.5 %
|
|
|
|
(2.1) %
|
|
|
|
3.6 %
|
|
4th Quarter
2022
|
|
0.5 %
|
|
|
|
(3.3) %
|
|
|
|
3.8 %
|
|
RFIG Run-off Segment Operating Results - Mortgage
Insurance
|
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
2022
|
|
2021
|
|
% Change
|
|
2022
|
|
2021
|
|
% Change
|
Net premiums
earned
|
$ 5.0
|
|
$ 7.1
|
|
(29.4) %
|
|
$ 23.2
|
|
$ 32.6
|
|
(28.9) %
|
Net investment
income
|
1.5
|
|
2.7
|
|
(44.0)
|
|
6.7
|
|
11.4
|
|
(41.1)
|
Loss and loss
adjustment expenses
|
—
|
|
(5.2)
|
|
N/M
|
|
(17.5)
|
|
(1.7)
|
|
N/M
|
Pretax operating
income
|
$ 3.9
|
|
$ 11.9
|
|
(67.2) %
|
|
$ 35.2
|
|
$ 32.8
|
|
7.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
ratio:
|
|
|
|
|
|
|
|
|
|
|
|
Current
year
|
107.6 %
|
|
64.9 %
|
|
|
|
80.8 %
|
|
62.2 %
|
|
|
Prior years
|
(108.2)
|
|
(137.4)
|
|
|
|
(156.3)
|
|
(67.5)
|
|
|
Total
|
(0.6)
|
|
(72.5)
|
|
|
|
(75.5)
|
|
(5.3)
|
|
|
Expense
ratio
|
54.0
|
|
44.9
|
|
|
|
53.0
|
|
39.9
|
|
|
Combined
ratio
|
53.4 %
|
|
(27.6) %
|
|
|
|
(22.5) %
|
|
34.6 %
|
|
|
Pretax operating results of RFIG Run-off reflect the continuing
drop in net earned premiums in line with the declining risk in
force. This quarter, higher current year loss costs and lower
favorable reserve development from prior years resulted from
moderation in cure trends and increasing claim severity. For the
year, favorable reserve development was the primary driver of the
reduction in loss costs. 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 $140.0 to
the parent company during the fourth quarter and full year,
respectively, and lower investment yields earned.
The following table shows recent annual and interim periods'
loss ratios and the effects of loss development trends:
|
|
|
|
|
Effect of Prior
Periods'
|
|
|
|
|
|
|
|
|
|
(Favorable)/
|
|
Loss Ratio
Excluding
|
|
Reported
|
|
Unfavorable
Loss
|
|
Prior Periods'
Loss
|
|
Loss Ratio
|
|
Reserves
Development
|
|
Reserves
Development
|
2018
|
|
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
|
|
2022
|
|
(75.5) %
|
|
|
|
(156.3) %
|
|
|
|
80.8 %
|
|
4th Quarter
2021
|
|
(72.5) %
|
|
|
|
(137.4) %
|
|
|
|
64.9 %
|
|
4th Quarter
2022
|
|
(0.6) %
|
|
|
|
(108.2) %
|
|
|
|
107.6 %
|
|
Corporate & Other Operating
Results
|
|
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
|
2022
|
|
2021
|
|
% Change
|
|
2022
|
|
2021
|
|
% Change
|
Net life and accident
premiums earned
|
|
$
2.3
|
|
$
2.7
|
|
(14.2) %
|
|
$
9.6
|
|
$ 11.0
|
|
(12.3) %
|
Net investment
income
|
|
11.9
|
|
10.4
|
|
14.5
|
|
46.8
|
|
36.5
|
|
28.1
|
Other operating
income
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Operating
revenues
|
|
14.3
|
|
13.2
|
|
8.4
|
|
56.5
|
|
47.5
|
|
19.0
|
Benefits and loss and
loss adjustment expenses
|
|
0.9
|
|
2.0
|
|
(52.2)
|
|
4.0
|
|
6.5
|
|
(38.1)
|
Insurance
expenses
|
|
0.8
|
|
0.8
|
|
8.2
|
|
3.3
|
|
3.4
|
|
(4.1)
|
Corporate, interest
and other expenses - net
|
|
2.4
|
|
4.0
|
|
(40.9)
|
|
24.4
|
|
11.6
|
|
109.7
|
Operating
expenses
|
|
4.2
|
|
6.9
|
|
(38.4)
|
|
31.8
|
|
21.7
|
|
46.6
|
Corporate & other
pretax operating income
|
|
$ 10.0
|
|
$
6.2
|
|
60.2 %
|
|
$ 24.6
|
|
$ 25.7
|
|
(4.3) %
|
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 increased due to a higher investment yield earned
on a slightly lower invested asset base attributable to the return
of capital to shareholders. For the full year, 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 invested
asset base and higher investment yields earned.
Summary Consolidated Balance
Sheet
|
|
|
December
31,
|
|
December
31,
|
|
2022
|
|
2021
|
Assets:
|
|
|
|
Cash and fixed income
securities
|
$
12,688.7
|
|
$
11,399.6
|
Equity
securities
|
3,220.9
|
|
5,302.8
|
Other invested
assets
|
138.0
|
|
116.5
|
Cash and invested
assets
|
16,047.7
|
|
16,818.9
|
Accounts and premiums
receivable
|
1,927.5
|
|
1,768.7
|
Federal income tax
recoverable
|
15.7
|
|
11.8
|
Reinsurance balances
recoverable
|
5,588.0
|
|
4,943.4
|
Deferred policy
acquisition costs
|
382.5
|
|
350.4
|
Sundry
assets
|
1,197.9
|
|
1,088.4
|
Total
assets
|
$
25,159.4
|
|
$
24,981.8
|
|
|
|
|
Liabilities and Shareholders'
Equity:
|
|
|
|
Policy
liabilities
|
$
2,978.8
|
|
$
2,752.0
|
Loss and loss
adjustment expense reserves
|
12,221.5
|
|
11,425.5
|
Federal income tax -
deferred
|
40.9
|
|
249.5
|
Reinsurance balances
and funds
|
1,079.4
|
|
866.0
|
Debt
|
1,597.0
|
|
1,588.5
|
Sundry
liabilities
|
1,075.3
|
|
1,206.9
|
Total
liabilities
|
18,993.2
|
|
18,088.6
|
Shareholders'
equity
|
6,166.2
|
|
6,893.2
|
Total liabilities and
shareholders' equity
|
$
25,159.4
|
|
$
24,981.8
|
Cash, Invested Assets, and Shareholders'
Equity
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|
December
31,
|
|
Dec. '22/
|
|
Dec. '21 /
|
|
|
2022
|
|
2021
|
|
2020
|
|
Dec. '21
|
|
Dec. '20
|
Cash and invested assets:
|
|
|
|
|
|
|
|
|
|
|
Fixed income
securities, cash and other invested assets
|
$
12,826.7
|
|
$
11,516.1
|
|
$
11,480.4
|
|
11.4 %
|
|
0.3 %
|
|
Equity
securities
|
3,220.9
|
|
5,302.8
|
|
4,054.8
|
|
(39.3)
|
|
30.8
|
|
Total per balance
sheet
|
$
16,047.7
|
|
$
16,818.9
|
|
$
15,535.3
|
|
(4.6) %
|
|
8.3 %
|
|
Total at cost for
all
|
$
15,367.2
|
|
$
15,045.8
|
|
$
14,151.6
|
|
2.1 %
|
|
6.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of shareholders' equity per
share:
|
|
|
|
|
|
|
|
|
|
|
Equity before items
below
|
$
19.41
|
|
$
18.50
|
|
$
17.73
|
|
4.9 %
|
|
4.3 %
|
|
Unrealized investment
gains (losses) and other
|
|
|
|
|
|
|
|
|
|
|
|
accumulated
comprehensive income (loss)
|
1.64
|
|
4.26
|
|
3.02
|
|
|
|
|
|
|
|
Total
|
$
21.05
|
|
$
22.76
|
|
$
20.75
|
|
(7.5) %
|
|
9.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmented composition of
|
|
|
|
|
|
|
|
|
|
shareholders' equity per
share:
|
|
|
|
|
|
|
|
|
|
|
Excluding RFIG run-off
segment
|
$
20.15
|
|
$
21.47
|
|
$
19.25
|
|
(6.1) %
|
|
11.5 %
|
|
RFIG run-off
segment
|
0.90
|
|
1.29
|
|
1.50
|
|
|
|
|
|
|
|
Consolidated
total
|
$
21.05
|
|
$
22.76
|
|
$
20.75
|
|
(7.5) %
|
|
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 December 31, 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). 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.
A significant portion of our investable funds have been directed
toward high-quality common stocks of U.S. companies. 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
equity 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
|
|
|
|
|
|
|
|
Ended
|
|
Years
Ended
|
|
Dec. 31,
|
|
December
31,
|
|
2022
|
|
2022
|
|
2021
|
|
2020
|
Beginning
balance
|
$
18.92
|
|
$
22.76
|
|
$
20.75
|
|
$
19.98
|
Changes in
shareholders' equity:
|
|
|
|
|
|
|
|
Net income excluding
net investment gains (losses)
|
0.80
|
|
2.80
|
|
3.10
|
|
2.24
|
Net of tax realized
investment gains (losses)
|
(0.08)
|
|
0.17
|
|
0.02
|
|
0.04
|
Net of tax unrealized
investment gains (losses):
|
|
|
|
|
|
|
|
Fixed income
securities
|
0.47
|
|
(2.18)
|
|
(0.97)
|
|
0.91
|
Equity
securities
|
1.02
|
|
(0.69)
|
|
1.96
|
|
(0.41)
|
Total net of tax
realized and unrealized
|
|
|
|
|
|
|
|
investment gains
(losses)
|
1.41
|
|
(2.70)
|
|
1.01
|
|
0.54
|
Cash
dividends
|
(0.23)
|
|
(1.92)
|
|
(2.38)
|
|
(1.84)
|
Other
|
0.15
|
|
0.11
|
|
0.28
|
|
(0.17)
|
Net change
|
2.13
|
|
(1.71)
|
|
2.01
|
|
0.77
|
Ending
balance
|
$
21.05
|
|
$
21.05
|
|
$
22.76
|
|
$
20.75
|
Percentage change for
the period
|
11.3 %
|
|
(7.5) %
|
|
9.7 %
|
|
3.9 %
|
Capitalization
|
|
|
Capitalization
|
|
December
31,
|
|
2022
|
|
2021
|
|
2020
|
Debt:
|
|
|
|
|
|
4.875% Senior Notes
due 2024
|
$
399.0
|
|
$
398.4
|
|
$
397.9
|
3.875% Senior Notes
due 2026
|
547.9
|
|
547.3
|
|
546.8
|
3.850% Senior Notes
due 2051
|
642.9
|
|
642.6
|
|
—
|
Other miscellaneous
debt
|
7.1
|
|
—
|
|
21.7
|
Total debt
|
1,597.0
|
|
1,588.5
|
|
966.4
|
Common shareholders'
equity
|
6,166.2
|
|
6,893.2
|
|
6,186.6
|
Total
capitalization
|
$
7,763.2
|
|
$
8,481.7
|
|
$
7,153.1
|
|
|
|
|
|
|
Capitalization
ratios:
|
|
|
|
|
|
Debt
|
20.6 %
|
|
18.7 %
|
|
13.5 %
|
Common shareholders'
equity
|
79.4
|
|
81.3
|
|
86.5
|
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 fourth 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
February 2, 2023 by dialing
1-800-770-2030, passcode 4060501, or by accessing it on Old
Republic International's website.
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.
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-fourth-quarter-and-full-year-2022-301731169.html
SOURCE Old Republic International Corporation