CHICAGO, Oct. 22, 2015 /PRNewswire/ -- Old Republic
International Corporation (NYSE: ORI) today reported much higher
period-over-period operating results for this year's third quarter
and first nine months. Pretax operating income comparisons were
enhanced by greater General Insurance underwriting and investment
income, and by the record-setting quarterly and year-to-date
performance of Old Republic's Title Insurance business. 2015
year-to-date consolidated net income, however, was affected by
lower realized gains from sales of investment securities by
comparison to the substantial gains registered in 2014.
The major components of consolidated results and related data
are summarized in the following table.
|
Financial
Highlights (a)
|
|
|
|
Quarters
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
Operating
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
855.4
|
|
$
|
803.2
|
|
$
|
2,468.5
|
|
$
|
2,315.4
|
|
|
Title
insurance
|
|
575.9
|
|
|
478.7
|
|
|
1,523.7
|
|
|
1,309.8
|
|
|
Corporate and
other
|
|
10.5
|
(b)
|
|
16.0
|
|
|
27.1
|
(b)
|
|
51.0
|
|
|
Subtotal
|
|
1,442.0
|
|
|
1,298.0
|
|
|
4,019.5
|
|
|
3,676.2
|
|
|
RFIG run-off
business
|
|
62.2
|
|
|
71.4
|
|
|
189.4
|
|
|
216.5
|
|
|
Total
|
$
|
1,504.2
|
|
$
|
1,369.4
|
|
$
|
4,208.9
|
|
$
|
3,892.7
|
|
|
Pretax operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
97.0
|
|
$
|
60.8
|
|
$
|
264.1
|
|
$
|
202.4
|
|
|
Title
insurance
|
|
55.0
|
|
|
28.2
|
|
|
118.7
|
|
|
59.0
|
|
|
Corporate and
other
|
|
3.7
|
|
|
0.3
|
|
|
7.9
|
|
|
(1.9)
|
|
|
Subtotal
|
|
155.8
|
|
|
89.4
|
|
|
390.8
|
|
|
259.5
|
|
|
RFIG run-off
business
|
|
(12.5)
|
|
|
10.4
|
|
|
22.4
|
|
|
(4.2)
|
|
|
Total
|
|
143.3
|
|
|
99.8
|
|
|
413.3
|
|
|
255.2
|
|
|
Realized
investment gains (losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From sales
|
|
41.4
|
|
|
21.5
|
|
|
77.0
|
|
|
262.8
|
|
|
From
impairments
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Net realized
investment gains (losses)
|
|
41.4
|
|
|
21.5
|
|
|
77.0
|
|
|
262.8
|
|
|
Consolidated
pretax income (loss)
|
|
184.7
|
|
|
121.4
|
|
|
490.3
|
|
|
518.0
|
|
|
Income taxes
(credits)
|
|
58.8
|
|
|
35.5
|
|
|
158.8
|
|
|
171.6
|
|
|
Net income
(loss)
|
$
|
125.9
|
|
$
|
85.8
|
|
$
|
331.4
|
|
$
|
346.4
|
|
|
Components of
diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
0.23
|
|
$
|
0.14
|
|
$
|
0.61
|
|
$
|
0.46
|
|
|
Title
insurance
|
|
0.12
|
|
|
0.06
|
|
|
0.26
|
|
|
0.13
|
|
|
Corporate and
other
|
|
0.03
|
|
|
0.03
|
|
|
0.07
|
|
|
0.05
|
|
|
Subtotal
|
|
0.38
|
|
|
0.23
|
|
|
0.94
|
|
|
0.64
|
|
|
RFIG run-off
business
|
|
(0.03)
|
|
|
0.02
|
|
|
0.05
|
|
|
(0.01)
|
|
|
Total
|
|
0.35
|
|
|
0.25
|
|
|
0.99
|
|
|
0.63
|
|
|
Net realized
investment gains (losses)
|
|
0.09
|
|
|
0.05
|
|
|
0.17
|
|
|
0.58
|
|
|
Net income
(loss)
|
$
|
0.44
|
|
$
|
0.30
|
|
$
|
1.16
|
|
$
|
1.21
|
|
|
Cash dividends
paid per share
|
$
|
0.1850
|
|
$
|
0.1825
|
|
$
|
0.5550
|
|
$
|
0.5475
|
|
|
Ending book value
per share
|
|
|
|
|
|
|
$
|
14.95
|
|
$
|
15.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Unaudited; All
amounts in this report are stated in millions except per share data
and percentages. (b)
Reflects the transfer of accident insurance business from a life
and accident subsidiary to a general insurance affiliate
resulting
in a $5.5 and $24.5 reduction in premiums during the
third quarter and first nine months of 2015,
respectively.
|
|
The preceding table shows both operating and net income to
highlight the effects of realized investment gain or loss
recognition on period-to-period earnings comparisons. Management
uses operating income, a non-GAAP financial measure, to evaluate
and better explain operating performance, believing that this
measure enhances an understanding of Old Republic's core business
results. Operating income, however, does not replace net income
determined in accordance with GAAP as a measure of total
profitability.
The timing of realized investment gain or loss recognition can
be highly discretionary due to such factors as individual
securities sales, recording of estimated losses from write-downs of
impaired securities, tax-planning considerations, and changes in
investment management judgments relative to the direction of
securities markets or the future prospects of individual investees
or industry sectors. Since 2013, asset management operations have
in part been oriented toward an enhancement of income from interest
and dividends. To a large extent, this strategy has led to sales of
non-income producing or low-yielding securities. Proceeds from
these sales have largely been reinvested in higher yielding common
shares of American companies with distinguished long-term records
of earnings and dividend growth.
General Insurance
Results – The table below shows the major elements driving
operating performance for the periods reported upon.
|
|
|
General Insurance
Group
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
Net premiums
earned
|
$
|
744.5
|
|
$
|
706.5
|
|
5.4%
|
|
$
|
2,157.2
|
|
$
|
2,034.8
|
|
6.0%
|
Net investment
income
|
|
83.1
|
|
|
70.7
|
|
17.5
|
|
|
231.6
|
|
|
206.5
|
|
12.2
|
Other
income
|
|
27.8
|
|
|
26.0
|
|
6.9
|
|
|
79.7
|
|
|
74.0
|
|
7.6
|
Operating
revenues
|
|
855.4
|
|
|
803.2
|
|
6.5
|
|
|
2,468.5
|
|
|
2,315.4
|
|
6.6
|
Benefits and claim
costs
|
|
549.4
|
|
|
552.5
|
|
-0.6
|
|
|
1,588.5
|
|
|
1,548.9
|
|
2.6
|
Sales and general
expenses
|
|
197.1
|
|
|
181.5
|
|
8.6
|
|
|
581.5
|
|
|
538.3
|
|
8.0
|
Interest and other
costs
|
|
11.8
|
|
|
8.3
|
|
41.4
|
|
|
34.3
|
|
|
25.7
|
|
33.5
|
Total operating
expenses
|
|
758.4
|
|
|
742.4
|
|
2.1
|
|
|
2,204.3
|
|
|
2,112.9
|
|
4.3
|
Pretax operating
income (loss)(*)
|
$
|
97.0
|
|
$
|
60.8
|
|
59.5%
|
|
$
|
264.1
|
|
$
|
202.4
|
|
30.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
73.8%
|
|
|
78.2%
|
|
|
|
|
73.6%
|
|
|
76.1%
|
|
|
Expense
ratio
|
|
22.7
|
|
|
22.0
|
|
|
|
|
23.3
|
|
|
22.8
|
|
|
Composite underwriting
ratio
|
|
96.5%
|
|
|
100.2%
|
|
|
|
|
96.9%
|
|
|
98.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) In connection with the run-off mortgage guaranty ("MI") and
consumer credit indemnity ("CCI") combination, $12.4 and $37.4 of
pretax operating losses for the third quarter and first nine months
of 2015, and $11.7 and $99.0 of pretax operating losses for the third
quarter and first nine months of 2014, respectively, are retained
by certain general insurance companies pursuant to various quota
share and stop loss reinsurance agreements. All of these amounts,
however, have been reclassified such that 100% of the CCI run-off
business is reported in the RFIG run-off segment.
2015 general insurance operating earnings benefitted from more
positive underwriting performance. Earned premium revenues rose for
most insurance coverages with production spurred by both new
business and a continuation of high renewal rates for existing
business.
Earned premiums growth was accompanied by relatively lower
expense provisions for current and prior years' claim occurrences.
Loss development during this year's first nine months was more
restrained relative to previously established reserves. The effect
was to increase the claim ratio of both the latest quarter and
year-to-date periods by 1.0 percentage point. By contrast, 2014
loss development added 4.0 and 1.8 percentage points to last year's
third quarter and nine months claim ratios, respectively. 2015
production and general operating expenses held fairly steady in
context of revenue trends. Year-to-date, the combination of these
factors led to the more positive composite underwriting ratios
shown in the above table.
Net investment income advanced by 17.5 and 12.2 percent in this
year's third quarter and first nine months, respectively. In recent
quarters, this revenue source has trended higher by virtue of a
rising invested asset base and enhanced yields most significantly
produced by a high quality common stock portfolio.
Title Insurance
Results – Earnings trends in this year's third quarter and
year-to-date periods continued in a highly positive vein as the
table below shows.
|
|
|
Title Insurance
Group
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
Net premiums and fees
earned
|
$
|
566.7
|
|
$
|
470.4
|
|
20.5%
|
|
$
|
1,497.8
|
|
$
|
1,285.3
|
|
16.5%
|
Net investment
income
|
|
8.9
|
|
|
7.5
|
|
18.2
|
|
|
24.8
|
|
|
22.1
|
|
12.4
|
Other
income
|
|
0.2
|
|
|
0.7
|
|
-67.3
|
|
|
1.0
|
|
|
2.2
|
|
-54.5
|
Operating
revenues
|
|
575.9
|
|
|
478.7
|
|
20.3
|
|
|
1,523.7
|
|
|
1,309.8
|
|
16.3
|
Claim
costs
|
|
31.9
|
|
|
28.6
|
|
11.6
|
|
|
80.9
|
|
|
77.9
|
|
3.9
|
Sales and general
expenses
|
|
487.3
|
|
|
420.1
|
|
16.0
|
|
|
1,318.4
|
|
|
1,166.9
|
|
13.0
|
Interest and other
costs
|
|
1.6
|
|
|
1.7
|
|
-5.6
|
|
|
5.6
|
|
|
5.9
|
|
-4.5
|
Total operating
expenses
|
|
520.9
|
|
|
450.5
|
|
15.6
|
|
|
1,405.0
|
|
|
1,250.8
|
|
12.3
|
Pretax operating
income (loss)
|
$
|
55.0
|
|
$
|
28.2
|
|
95.2%
|
|
$
|
118.7
|
|
$
|
59.0
|
|
101.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
5.6%
|
|
|
6.1%
|
|
|
|
|
5.4%
|
|
|
6.1%
|
|
|
Expense
ratio
|
|
85.9
|
|
|
89.2
|
|
|
|
|
88.0
|
|
|
90.6
|
|
|
Composite underwriting
ratio
|
|
91.5%
|
|
|
95.3%
|
|
|
|
|
93.4%
|
|
|
96.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The substantial bottom line improvement in this year's first
nine months was attributable to the very good performance for this
segment's basic underwriting and related services functions.
Stronger housing and commercial property transactions together with
continued market share strength led to the significant percentage
growth of operating revenues. Net investment income gained on the
strength of greater yields on a slightly larger bond and stock
investment portfolio. Operating results were buoyed by lower claim
and operating costs relative to premiums and fees revenues.
|
RFIG Run-off
Business Results – The following table shows RFIG's comparative
results for its mortgage guaranty ("MI") and consumer credit
indemnity ("CCI") run-off coverages.
|
|
|
RFIG Run-off
Business
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
A.
MI:
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
$
|
49.4
|
|
$
|
57.6
|
|
-14.1%
|
|
$
|
152.2
|
|
$
|
173.4
|
|
-12.2%
|
Net investment
income
|
|
6.2
|
|
|
6.4
|
|
-3.3
|
|
|
18.4
|
|
|
20.6
|
|
-10.8
|
Claim
costs
|
|
50.6
|
|
|
36.7
|
|
37.7
|
|
|
94.7
|
|
|
80.0
|
|
18.3
|
Pretax operating
income (loss)
|
$
|
0.3
|
|
$
|
22.6
|
|
-98.3%
|
|
$
|
61.2
|
|
$
|
96.6
|
|
-36.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
102.3%
|
|
|
63.9%
|
|
|
|
|
62.2%
|
|
|
46.2%
|
|
|
Expense
ratio
|
|
9.4
|
|
|
7.9
|
|
|
|
|
9.6
|
|
|
10.0
|
|
|
Composite underwriting
ratio
|
|
111.7%
|
|
|
71.8%
|
|
|
|
|
71.8%
|
|
|
56.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B.
CCI(*):
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
$
|
6.3
|
|
$
|
7.2
|
|
-12.4%
|
|
$
|
18.0
|
|
$
|
21.9
|
|
-17.9%
|
Net investment
income
|
|
0.2
|
|
|
0.1
|
|
55.3
|
|
|
0.6
|
|
|
0.4
|
|
52.1
|
Benefits and claim
costs
|
|
18.9
|
|
|
19.1
|
|
-1.0
|
|
|
55.8
|
|
|
121.5
|
|
-54.1
|
Pretax operating
income (loss)
|
$
|
(12.9)
|
|
$
|
(12.2)
|
|
-5.6%
|
|
$
|
(38.7)
|
|
$
|
(100.9)
|
|
61.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
N/M
|
|
|
N/M
|
|
|
|
|
N/M
|
|
|
N/M
|
|
|
Expense
ratio
|
|
8.5%
|
|
|
6.7%
|
|
|
|
|
9.0%
|
|
|
8.3%
|
|
|
Composite underwriting
ratio
|
|
N/M
|
|
|
N/M
|
|
|
|
|
N/M
|
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Total MI and
CCI run-off business:
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
$
|
55.8
|
|
$
|
64.8
|
|
-13.9%
|
|
$
|
170.3
|
|
$
|
195.4
|
|
-12.8%
|
Net investment
income
|
|
6.4
|
|
|
6.5
|
|
-2.1
|
|
|
19.0
|
|
|
21.1
|
|
-9.6
|
Benefits and claim
costs
|
|
69.6
|
|
|
55.9
|
|
24.4
|
|
|
150.6
|
|
|
201.6
|
|
-25.3%
|
Pretax operating
income (loss)
|
$
|
(12.5)
|
|
$
|
10.4
|
|
-220.7%
|
|
$
|
22.4
|
|
$
|
(4.2)
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
124.7%
|
|
|
86.3%
|
|
|
|
|
88.4%
|
|
|
103.2%
|
|
|
Expense
ratio
|
|
9.3
|
|
|
7.8
|
|
|
|
|
9.6
|
|
|
9.8
|
|
|
Composite underwriting
ratio
|
|
134.0%
|
|
|
94.1%
|
|
|
|
|
98.0%
|
|
|
113.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) In connection with the run-off MI and CCI combination,
$12.4 and $37.4 of pretax operating losses for the third
quarter and first nine months of 2015, and $11.7 and $99.0 of
pretax operating losses for the third quarter and first nine months
of 2014, respectively, are retained by certain general insurance
companies pursuant to various quota share and stop loss reinsurance
agreements. All of these amounts, however, have been reclassified
and are included for segment reporting purposes such that section
(B) in the above table incorporates 100% of the CCI run-off
business results.
N/M = Not meaningful
Consistent with a run-off operating mode, the MI and CCI lines
posted further declines in earned premiums.
2015 third quarter and year-to-date MI operating results were
constrained by greater provisions for disputed claims in
litigation. However, continued declines in reported delinquencies
and the higher rates at which previously reported defaults are
cured or otherwise resolved without payment dampened normally
occurring claim provisions in the latest quarter and year-to-date
periods. Since year end 2012, these factors have led to favorable
development of previously established claim reserves. Setting aside
the aforementioned litigation expense provisions, these positive
outcomes reduced MI claim ratios by 56.5 and 13.7 percentage points
in the third quarters of 2015 and 2014, respectively. For the first
nine months, these ratios were reduced by 72.7 and 75.2 percentage
points, respectively.
The CCI run-off portion of RFIG's operations was also negatively
impacted by litigation claim expense provisions in most quarterly
periods of 2015 and 2014. The year-to-date loss in 2015, however,
was much lower than that registered in the same period of 2014. The
latter period was affected by a second quarter litigated claim
settlement in an amount greater than originally anticipated.
Corporate and Other Operations – The combination of a
small life and accident insurance business and the net costs
associated with operations of the parent holding company and its
internal services subsidiaries usually produce highly variable
results. Earnings variations posted by these relatively minor
elements of Old Republic's business stem from volatility inherent
to the small scale of life and accident insurance operations, and
net interest costs pertaining to external and intra-system
financing arrangements. For this year's third quarter and first
nine months, the much lower life & accident premium volume
reflects the transfer of accident insurance premiums from a life
and accident subsidiary to a general insurance group affiliate. The
effect of the transfer was negligible relative to pretax operating
income (loss). The interplay of these various operating elements is
summarized in the following table:
|
Corporate and
Other Operations
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
Net premiums
earned
|
$
|
5.0
|
|
$
|
14.7
|
|
-65.9%
|
|
$
|
14.7
|
|
$
|
46.3
|
|
-68.2%
|
Net investment
income
|
|
5.7
|
|
|
1.2
|
|
N/M
|
|
|
13.3
|
|
|
4.5
|
|
191.0
|
Other
income
|
|
(0.2)
|
|
|
-
|
|
N/M
|
|
|
(0.8)
|
|
|
-
|
|
N/M
|
Operating
revenues
|
|
10.5
|
|
|
16.0
|
|
-33.9
|
|
|
27.1
|
|
|
51.0
|
|
-46.8
|
Benefits and
claims
|
|
5.7
|
|
|
9.3
|
|
-38.3
|
|
|
14.9
|
|
|
33.2
|
|
-55.0
|
Insurance
expenses
|
|
1.2
|
|
|
6.3
|
|
-79.5
|
|
|
4.6
|
|
|
20.4
|
|
-77.5
|
Corporate, interest and
other
expenses - net
|
|
(0.2)
|
|
|
-
|
|
N/M
|
|
|
(0.3)
|
|
|
(0.7)
|
|
54.7
|
Total operating
expenses
|
|
6.8
|
|
|
15.6
|
|
-56.4%
|
|
|
19.2
|
|
|
52.9
|
|
-63.7%
|
Pretax operating
income (loss)
|
$
|
3.7
|
|
$
|
0.3
|
|
N/M
|
|
$
|
7.9
|
|
$
|
(1.9)
|
|
N/M
|
Consolidated Results – The combination of all of the
above changes and events in Old Republic's business segments
contributed to the following consolidated results:
|
ORI
Consolidated
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
Net premiums and fees
earned
|
$
|
1,372.1
|
|
$
|
1,256.6
|
|
9.2%
|
|
$
|
3,840.1
|
|
$
|
3,561.9
|
|
7.8%
|
Net investment
income
|
|
104.2
|
|
|
86.1
|
|
21.1
|
|
|
288.9
|
|
|
254.3
|
|
13.6
|
Other
income
|
|
27.8
|
|
|
26.7
|
|
4.0
|
|
|
79.8
|
|
|
76.4
|
|
4.5
|
Operating
revenues
|
|
1,504.2
|
|
|
1,369.4
|
|
9.8
|
|
|
4,208.9
|
|
|
3,892.7
|
|
8.1
|
Benefits and
claims
|
|
656.7
|
|
|
646.5
|
|
1.6
|
|
|
1,835.0
|
|
|
1,861.7
|
|
-1.4
|
Sales and general
expenses
|
|
693.9
|
|
|
617.9
|
|
12.3
|
|
|
1,929.5
|
|
|
1,759.3
|
|
9.7
|
Interest and other
costs
|
|
10.2
|
|
|
5.1
|
|
97.3
|
|
|
31.0
|
|
|
16.4
|
|
88.4
|
Total operating
expenses
|
|
1,360.9
|
|
|
1,269.6
|
|
7.2
|
|
|
3,795.5
|
|
|
3,637.5
|
|
4.3
|
Pretax operating
income (loss)
|
|
143.3
|
|
|
99.8
|
|
43.6
|
|
|
413.3
|
|
|
255.2
|
|
61.9
|
Income taxes
(credits)
|
|
44.2
|
|
|
27.9
|
|
58.3
|
|
|
131.9
|
|
|
79.6
|
|
65.6
|
Net operating income
(loss)
|
|
99.0
|
|
|
71.8
|
|
37.8
|
|
|
281.4
|
|
|
175.5
|
|
60.3
|
Realized investment
gains (losses)
|
|
41.4
|
|
|
21.5
|
|
92.3
|
|
|
77.0
|
|
|
262.8
|
|
-70.7
|
Income taxes
(credits) on realized
investment gains (losses)
|
|
14.5
|
|
|
7.5
|
|
|
|
|
26.9
|
|
|
91.9
|
|
|
Net realized
investment gains (losses)
|
|
26.9
|
|
|
14.0
|
|
92.3
|
|
|
50.0
|
|
|
170.8
|
|
-70.7
|
Net income
(loss)
|
$
|
125.9
|
|
$
|
85.8
|
|
46.7%
|
|
$
|
331.4
|
|
$
|
346.4
|
|
-4.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
operating cash flow
|
$
|
262.7
|
|
$
|
(542.4)
|
|
148.4%
|
|
$
|
566.5
|
|
$
|
(370.0)
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
47.9%
|
|
|
51.4%
|
|
|
|
|
47.8%
|
|
|
52.3%
|
|
|
Expense
ratio
|
|
48.3
|
|
|
46.7
|
|
|
|
|
47.9
|
|
|
46.8
|
|
|
Composite underwriting
ratio
|
|
96.2%
|
|
|
98.1%
|
|
|
|
|
95.7%
|
|
|
99.1%
|
|
|
Consolidated operating cash flow for this year's first nine
months increased significantly to $566.5 compared to a deficit of $370.0 in the first nine months of 2014.
Excluding negative operating cash flows registered by the RFIG
Run-off, these amounts would otherwise be up by nearly 46% to
$671.9 from $459.6 in 2014.
Cash, Invested Assets, and Shareholders' Equity – The
table below reflects Old Republic's consolidated cash and invested
asset balances as well as the shareholders' equity account at the
dates shown.
|
|
Cash, Invested
Assets, and Shareholders' Equity
|
|
|
|
|
|
|
|
|
% Change
|
|
|
Sept. 30,
|
|
Dec. 31,
|
|
Sept. 30,
|
|
Sept. '15/
|
|
Sept. '15/
|
|
|
2015
|
|
2014
|
|
2014
|
|
Dec. '14
|
|
Sept. '14
|
Cash and invested
assets:
|
Fair value
basis(1)
|
|
$
|
11,388.6
|
|
$
|
11,291.6
|
|
$
|
11,104.5
|
|
0.9
|
%
|
|
2.6
|
%
|
|
Cost basis
|
|
$
|
11,157.1
|
|
$
|
10,717.9
|
|
$
|
10,593.2
|
|
4.1
|
%
|
|
5.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
Total
|
|
$
|
3,853.8
|
|
$
|
3,924.0
|
|
$
|
3,922.9
|
|
-1.8
|
%
|
|
-1.8
|
%
|
|
Per common
share
|
|
$
|
14.95
|
|
$
|
15.15
|
|
$
|
15.16
|
|
-1.3
|
%
|
|
-1.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of
shareholders' equity per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity before items
below
|
|
$
|
14.73
|
|
$
|
14.02
|
|
$
|
13.96
|
|
5.1
|
%
|
|
5.5
|
%
|
Unrealized investment
gains (losses) and other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accumulated
comprehensive income (loss)
|
|
|
0.22
|
|
|
1.13
|
|
|
1.20
|
|
|
|
|
|
|
Total
|
|
$
|
14.95
|
|
$
|
15.15
|
|
$
|
15.16
|
|
-1.3
|
%
|
|
-1.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmented
composition of
shareholders' equity per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding run-off
segment
|
|
$
|
14.04
|
|
$
|
14.35
|
|
$
|
14.43
|
|
-2.2
|
%
|
|
-2.7
|
%
|
RFIG run-off
segment
|
|
|
0.91
|
|
|
0.80
|
|
|
0.73
|
|
|
|
|
|
|
Total
|
|
$
|
14.95
|
|
$
|
15.15
|
|
$
|
15.16
|
|
-1.3
|
%
|
|
-1.4
|
%
|
(1) The September 30, 2015 amount
includes $197.1 (fair value) fixed
maturity securities classified as held to maturity which are
reported and reflected herein at amortized cost of $195.6.
Old Republic's invested assets are managed in consideration of
enterprise-wide risk management objectives. Most importantly, these
are intended to ensure solid funding of insurance subsidiaries'
long-term obligations to policyholders and other beneficiaries, and
the necessary long-term stability of their capital accounts. As a
result, the investment portfolio contains no significant insurance
risk-correlated asset exposures to real estate, mortgage-backed
securities, collateralized debt obligations ("CDO's"), derivatives,
junk bonds, hybrid securities, or illiquid private equity
investments. In a similar vein, 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, 2015, the
consolidated investment portfolio reflected an allocation of
approximately 82 percent to fixed-maturity and short-term
investments, and 18 percent to equities. Exposure to high quality,
dividend-paying equity securities has been emphasized since 2013.
Asset quality of the fixed maturity portfolio remains at high
levels.
Changes in shareholders' equity per share are shown in the
following table. As indicated, the changes resulted mostly from
each year's net income or loss, increased dividend payments to
shareholders, and changes in the value of invested assets carried
at fair value.
|
|
Shareholders'
Equity Per Share
|
|
|
Quarter
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2015
|
|
2015
|
|
2014
|
Beginning
balance
|
|
$
|
15.16
|
|
$
|
15.15
|
|
$
|
14.64
|
Changes in
shareholders' equity:
|
|
|
|
|
|
|
|
|
|
Net operating income
(loss)
|
|
|
0.38
|
|
|
1.09
|
|
|
0.68
|
Net realized
investment gains (losses):
|
|
|
|
|
|
|
|
|
|
From sales
|
|
|
0.10
|
|
|
0.19
|
|
|
0.66
|
From
impairments
|
|
|
-
|
|
|
-
|
|
|
-
|
Subtotal
|
|
|
0.10
|
|
|
0.19
|
|
|
0.66
|
Net unrealized
investment gains (losses)
|
|
|
(0.48)
|
|
|
(0.86)
|
|
|
(0.23)
|
Total realized and
unrealized investment gains (losses)
|
|
|
(0.38)
|
|
|
(0.67)
|
|
|
0.43
|
Cash
dividends
|
|
|
(0.18)
|
|
|
(0.56)
|
|
|
(0.55)
|
Stock issuance,
foreign exchange, and other transactions
|
|
|
(0.03)
|
|
|
(0.06)
|
|
|
(0.04)
|
Net change
|
|
|
(0.21)
|
|
|
(0.20)
|
|
|
0.52
|
Ending
balance
|
|
$
|
14.95
|
|
$
|
14.95
|
|
$
|
15.16
|
Capitalization – In last year's third quarter, the
Company raised $400 through a public
offering of 10-year notes. No other substantial changes have
occurred in Old Republic's consolidated debt and equity
capitalizations.
|
|
Capitalization
|
|
|
September
30,
|
|
December
31,
|
|
September
30,
|
|
|
2015
|
|
2014
|
|
2014
|
Debt:
|
|
|
|
|
|
|
|
|
|
3.75% Convertible
Senior Notes due 2018
|
|
$
|
550.0
|
|
$
|
550.0
|
|
$
|
550.0
|
4.875% Senior Notes
due 2024
|
|
|
400.0
|
|
|
400.0
|
|
|
400.0
|
ESSOP debt with an
average yield of
approximately 3.7%
|
|
|
11.7
|
|
|
15.0
|
|
|
15.0
|
Total debt
|
|
|
961.7
|
|
|
965.0
|
|
|
965.0
|
Common shareholders'
equity
|
|
|
3,853.8
|
|
|
3,924.0
|
|
|
3,922.9
|
Total
capitalization
|
|
$
|
4,815.5
|
|
$
|
4,889.1
|
|
$
|
4,888.0
|
|
|
|
|
|
|
|
|
|
|
Capitalization
ratios:
|
|
|
|
|
|
|
|
|
|
Debt
|
|
|
20.0%
|
|
|
19.7%
|
|
|
19.7%
|
Common shareholders'
equity
|
|
|
80.0
|
|
|
80.3
|
|
|
80.3
|
Total
|
|
|
100.0%
|
|
|
100.0%
|
|
|
100.0%
|
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 2015 performance and to review major
operating trends and business developments. To access this call
live in listen-only mode:
- Log on to the Company's website at www.oldrepublic.com
15 minutes before the call to download the necessary software,
or, alternatively
- the call can also be accessed by phone at
888-523-1228.
Interested parties may also listen to a replay of the
call through October 29, 2015 by
dialing 877-870-5176, passcode 498811, or by accessing it on Old
Republic International's website through November 22, 2015.
About Old Republic
Chicago-based Old Republic International
Corporation is one of the nation's 50 largest publicly held
insurance organizations. Its most recent financial statements
reflect consolidated assets of approximately $17.32 billion and common shareholders' equity of
$3.85 billion, or $14.95 per share. Its current stock market
valuation is approximately $4.38
billion, or $16.76 per
share.
The Company is organized as an insurance holding company whose
subsidiaries actively market, underwrite, and provide risk
management services for a wide variety of coverages mostly in the
general and title insurance fields. A long-term interest in
mortgage guaranty and consumer credit indemnity lines has devolved
to a run-off operating mode in recent years.
The nature of Old Republic's business requires that it be
managed for the long run. For the 25 years ended in 2014, the
Company's total market return, with dividends reinvested, has grown
at a compounded annual rate of 11.0 percent per share. For the same
period, the total market return, with dividends reinvested, for the
S&P 500 Index has grown at a 9.6 percent annual compound rate.
During those years, Old Republic's shareholders' equity account,
inclusive of cash dividends, has risen at an average annual rate of
9.7 percent per share, and the regular cash dividend has grown at a
9.5 percent annual compound rate. According to the most recent
edition of Mergent's Dividend Achievers, Old Republic is one
of just 97 qualifying companies, out of thousands considered, that
have posted at least 25 consecutive years of annual dividend
growth.
Accompanying Financial Data:
- Summary Financial Statements and Common Stock Statistics
- Safe Harbor Statement
Financial Supplement
A financial supplement to this
news release is available on the Company's website.
Old Republic
International Corporation
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Summary
Financial Statements and Common Stock Statistics
(Unaudited)
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September
30,
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December
31,
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September
30,
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SUMMARY BALANCE
SHEETS:
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2015
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2014
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2014
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Assets:
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Cash and fixed maturity
securities
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$
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9,289.7
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$
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9,163.4
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$
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9,517.8
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Equity
securities
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1,976.2
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2,011.7
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1,465.6
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Other invested
assets
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122.6
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116.4
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121.0
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Cash and invested
assets
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11,388.6
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11,291.6
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11,104.5
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Accounts and premiums
receivable
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1,433.4
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1,287.6
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1,389.9
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Federal income tax
recoverable:
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Current
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-
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29.2
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32.1
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Deferred
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159.0
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37.0
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50.7
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Prepaid federal income
taxes
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63.3
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45.7
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38.7
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Reinsurance balances
recoverable
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3,387.0
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3,422.5
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3,486.2
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Sundry
assets
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896.3
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874.2
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884.4
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Total
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$
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17,327.8
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$
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16,988.1
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$
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16,986.8
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Liabilities and
Shareholders' Equity:
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Policy
liabilities
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$
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2,085.3
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$
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1,832.7
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$
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1,942.8
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Benefit and claim
reserves
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9,159.2
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9,122.0
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9,034.9
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Federal income tax
payable: Current
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7.2
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-
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-
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Debt
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961.7
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965.0
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965.0
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Sundry
liabilities
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1,260.5
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1,144.2
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1,121.0
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Shareholders'
equity
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3,853.8
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3,924.0
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3,922.9
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Total
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$
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17,327.8
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$
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16,988.1
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$
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16,986.8
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Quarters
Ended
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Nine Months
Ended
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Fiscal Twelve Months
Ended
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SUMMARY INCOME
STATEMENTS:
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September
30,
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September
30,
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September
30,
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2015
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2014
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2015
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2014
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2015
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2014
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Net premiums and fees
earned
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$
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1,372.1
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$
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1,256.6
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$
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3,840.1
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$
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3,561.9
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$
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5,089.3
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$
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4,787.4
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Net investment
income
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104.2
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86.1
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288.9
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254.3
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380.0
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335.9
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Other income
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27.8
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26.7
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79.8
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76.4
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105.0
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99.5
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Net realized investment
gains (losses)
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41.4
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21.5
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77.0
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262.8
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86.6
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264.3
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Total
revenues
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1,545.7
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1,391.0
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4,285.9
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4,155.6
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5,661.0
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5,487.2
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Benefits and
claims
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656.7
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646.5
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1,835.0
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1,861.7
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2,487.8
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2,422.8
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Sales and general
expenses
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693.9
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617.9
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1,929.5
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1,759.3
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2,551.1
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2,382.7
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Interest and other
costs
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10.2
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5.1
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31.0
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16.4
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40.2
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21.2
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Total
expenses
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1,360.9
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1,269.6
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3,795.5
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3,637.5
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5,079.2
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4,826.9
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Pretax income
(loss)
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184.7
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121.4
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490.3
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518.0
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581.8
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660.3
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Income taxes
(credits)
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58.8
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35.5
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158.8
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171.6
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186.9
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219.1
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Net income
(loss)
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$
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125.9
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$
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85.8
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$
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331.4
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$
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346.4
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$
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394.8
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$
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441.1
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COMMON STOCK
STATISTICS:
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Net income
(loss): Basic
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$
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0.48
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$
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0.33
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$
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1.28
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$
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1.34
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$
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1.52
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$
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1.71
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Diluted
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$
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0.44
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$
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0.30
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$
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1.16
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$
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1.21
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$
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1.38
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$
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1.55
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Components of earnings
per share:
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Basic, net operating
income (loss)
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$
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0.38
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$
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0.28
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$
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1.09
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$
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0.68
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$
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1.31
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$
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1.04
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Realized investment
gains (losses)
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0.10
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0.05
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0.19
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0.66
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0.21
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0.67
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Basic net income
(loss)
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$
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0.48
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$
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0.33
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$
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1.28
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$
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1.34
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$
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1.52
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$
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1.71
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Diluted, net operating
income (loss)
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$
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0.35
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$
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0.25
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$
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0.99
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$
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0.63
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$
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1.19
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$
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0.97
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Realized investment
gains (losses)
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0.09
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0.05
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0.17
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0.58
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0.19
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0.58
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Diluted net income
(loss)
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$
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0.44
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$
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0.30
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$
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1.16
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$
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1.21
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$
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1.38
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$
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1.55
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Cash dividends on
common stock
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$
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0.1850
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$
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0.1825
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$
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0.5550
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$
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0.5475
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$
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0.7375
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$
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0.7275
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Book value per
share
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$
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14.95
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$
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15.16
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Common shares
outstanding:
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Average
basic
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259,266,696
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258,607,162
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259,411,347
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258,423,448
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259,363,903
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258,334,968
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Average
diluted
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295,868,117
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295,049,613
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295,930,527
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294,989,032
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295,837,982
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294,944,712
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Actual, end of
period
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257,772,009
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258,806,951
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SUMMARY STATEMENTS
OF COMPREHENSIVE INCOME (LOSS):
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Net income (loss) as
reported
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$
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125.9
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$
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85.8
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$
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331.4
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$
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346.4
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$
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394.8
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$
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441.1
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Post-tax net unrealized
gains (losses)
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(123.7)
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(67.1)
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(222.5)
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(60.3)
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(182.6)
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(68.9)
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Other
adjustments
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(8.3)
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(5.4)
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(14.0)
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(7.1)
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(72.2)
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3.1
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Net
adjustments
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(132.1)
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(72.5)
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(236.5)
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(67.4)
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(254.9)
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(65.8)
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Comprehensive income
(loss)
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$
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(6.1)
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$
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13.3
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$
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94.9
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$
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278.9
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$
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139.8
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$
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375.3
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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. Of
necessity, any such forward-looking statements involve assumptions,
uncertainties, and risks that may affect the Company's future
performance. With regard to Old Republic's General Insurance
segment, its results can be affected, in particular, 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 interest 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,
variations in mortality and health trends, and changes 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.
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
2014 Form 10-K Annual Report and Part II, Item 1A - Risk Factors,
of the Company's recent Form 10-Q filings to the Securities and
Exchange Commission, which Items are 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 the latest news releases and other
corporate documents on Old Republic:
Please write
to:
Investor Relations
Old Republic
International Corporation
307 North Michigan
Avenue
Chicago, IL 60601
312-346-8100
or visit us at
www.oldrepublic.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/old-republic-reports-results-for-the-third-quarter-and-first-nine-months-of-2015-300164646.html
SOURCE Old Republic International Corporation