CHICAGO, Jan. 28, 2016 /PRNewswire/ -- Old Republic
International Corporation (NYSE; ORI) today reported much higher
operating results for the final quarter and all of 2015. Pretax
operating income comparisons with 2014 were enhanced by greater
General Insurance underwriting and investment income, and by the
record-setting fourth quarter and full year performance of Old
Republic's Title Insurance business. 2015 consolidated net income,
however, was affected by lower realized gains from sales of
investment securities in comparison with the substantial gains
registered in 2014. The segmented components of consolidated
results and related data are summarized in the following table.
|
Financial
Highlights (a)
|
|
|
|
Quarters
Ended
December
31,
|
|
Years
Ended
December
31,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
Operating
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
844.7
|
|
$
|
798.1
|
|
$
|
3,313.3
|
|
$
|
3,113.5
|
|
|
Title
insurance
|
|
556.9
|
|
|
481.8
|
|
|
2,080.7
|
|
|
1,791.6
|
|
|
Corporate and
other
|
|
8.6
|
(b)
|
|
19.0
|
|
|
35.8
|
(b)
|
|
70.0
|
|
|
Subtotal
|
|
1,410.2
|
|
|
1,299.0
|
|
|
5,429.8
|
|
|
4,975.3
|
|
|
RFIG run-off
business
|
|
55.6
|
|
|
66.4
|
|
|
245.0
|
|
|
282.9
|
|
|
Total
|
$
|
1,465.9
|
|
$
|
1,365.5
|
|
$
|
5,674.8
|
|
$
|
5,258.3
|
|
|
Pretax operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
72.2
|
|
$
|
18.8
|
|
$
|
336.4
|
|
$
|
221.3
|
|
|
Title
insurance
|
|
48.1
|
|
|
40.5
|
|
|
166.8
|
|
|
99.5
|
|
|
Corporate and
other
|
|
(0.2)
|
|
|
7.7
|
|
|
7.6
|
|
|
5.7
|
|
|
Subtotal
|
|
120.1
|
|
|
67.1
|
|
|
511.0
|
|
|
326.7
|
|
|
RFIG run-off
business
|
|
6.9
|
|
|
14.6
|
|
|
29.4
|
|
|
10.3
|
|
|
Total
|
|
127.1
|
|
|
81.8
|
|
|
540.4
|
|
|
337.1
|
|
|
Realized
investment gains (losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From sales
|
|
14.2
|
|
|
9.5
|
|
|
91.3
|
|
|
272.3
|
|
|
From
impairments
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Net realized
investment gains (losses)
|
|
14.2
|
|
|
9.5
|
|
|
91.3
|
|
|
272.3
|
|
|
Consolidated
pretax income (loss)
|
|
141.4
|
|
|
91.4
|
|
|
631.8
|
|
|
609.4
|
|
|
Income taxes
(credits)
|
|
50.7
|
|
|
28.0
|
|
|
209.6
|
|
|
199.7
|
|
|
Net income
(loss)
|
$
|
90.6
|
|
$
|
63.3
|
|
$
|
422.1
|
|
$
|
409.7
|
|
|
Components of
diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
0.15
|
|
$
|
0.06
|
|
$
|
0.76
|
|
$
|
0.52
|
|
|
Title
insurance
|
|
0.11
|
|
|
0.09
|
|
|
0.37
|
|
|
0.22
|
|
|
Corporate and
other
|
|
0.01
|
|
|
0.03
|
|
|
0.08
|
|
|
0.08
|
|
|
Subtotal
|
|
0.27
|
|
|
0.18
|
|
|
1.21
|
|
|
0.82
|
|
|
RFIG run-off
business
|
|
0.02
|
|
|
0.03
|
|
|
0.07
|
|
|
0.02
|
|
|
Total
|
|
0.29
|
|
|
0.21
|
|
|
1.28
|
|
|
0.84
|
|
|
Net realized
investment gains (losses)
|
|
0.03
|
|
|
0.02
|
|
|
0.20
|
|
|
0.60
|
|
|
Net income
(loss)
|
$
|
0.32
|
|
$
|
0.23
|
|
$
|
1.48
|
|
$
|
1.44
|
|
|
Cash dividends
paid per share
|
$
|
0.1850
|
|
$
|
0.1825
|
|
$
|
0.7400
|
|
$
|
0.7300
|
|
|
Ending book value
per share
|
|
|
|
|
|
|
$
|
15.02
|
|
$
|
15.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 $1.8 and $26.4
reduction in premiums during the fourth quarter and full year 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
General Insurance operating performance for the periods reported
upon.
|
|
General Insurance
Group
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
Net premiums
earned
|
$
|
737.4
|
|
$
|
700.8
|
|
5.2%
|
|
$
|
2,894.7
|
|
$
|
2,735.6
|
|
5.8%
|
Net investment
income
|
|
80.5
|
|
|
72.2
|
|
11.5
|
|
|
312.1
|
|
|
278.8
|
|
12.0
|
Other
income
|
|
26.6
|
|
|
25.0
|
|
6.6
|
|
|
106.3
|
|
|
99.0
|
|
7.4
|
Operating
revenues
|
|
844.7
|
|
|
798.1
|
|
5.8
|
|
|
3,313.3
|
|
|
3,113.5
|
|
6.4
|
Benefits and claim
costs
|
|
555.0
|
|
|
583.3
|
|
-4.9
|
|
|
2,143.5
|
|
|
2,132.3
|
|
0.5
|
Sales and general
expenses
|
|
205.1
|
|
|
187.9
|
|
9.1
|
|
|
786.6
|
|
|
726.3
|
|
8.3
|
Interest and other
costs
|
|
12.3
|
|
|
7.8
|
|
56.8
|
|
|
46.6
|
|
|
33.5
|
|
39.0
|
Total operating
expenses
|
|
772.4
|
|
|
779.2
|
|
-0.9%
|
|
|
2,976.8
|
|
|
2,892.2
|
|
2.9
|
Pretax operating
income (loss)(*)
|
$
|
72.2
|
|
$
|
18.8
|
|
284.0%
|
|
$
|
336.4
|
|
$
|
221.3
|
|
52.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
75.3%
|
|
|
83.2%
|
|
|
|
|
74.1%
|
|
|
77.9%
|
|
|
Expense
ratio
|
|
24.2
|
|
|
23.3
|
|
|
|
|
23.5
|
|
|
22.9
|
|
|
Composite underwriting
ratio
|
|
99.5%
|
|
|
106.5%
|
|
|
|
|
97.6%
|
|
|
100.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) In connection
with the run-off mortgage guaranty ("MI") and consumer credit
indemnity ("CCI") combination, $21.2 and $58.6 of pretax operating
losses for the fourth quarter and full year 2015, and $9.7 and
$108.8 of pretax operating losses for the fourth quarter and full
year 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.
|
N/M = Not
meaningful
|
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 strong renewal rates for existing
business. Net investment income advanced by 11.5 and 12.0 percent
for the final quarter and year, respectively. For the past three
years or so this revenue source has trended higher due to a rising
invested asset base and enhanced yields largely obtained from a
greater, high quality common stock portfolio.
Earned premiums growth was accompanied by relatively lower
expense provisions for current and prior years' claim occurrences.
Prior years' loss reserve developments resulted in an increase of
3.0 and 1.5 percentage points in the claim ratio for 2015's final
quarter and full year, respectively. By contrast, 2014 loss
development added 10.1 and 3.9 percentage points to the same
respective periods' claim ratio. 2015 production and general
operating expenses held fairly steady in context of revenue trends.
For all of 2015, the combination of these operating factors led to
the more positive composite underwriting ratios shown in the above
table.
Title Insurance
Results – Earnings trends for Old Republic's title insurance
segment continued in a highly positive vein throughout 2015 as the
table below shows.
|
|
Title Insurance
Group
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
Net premiums and fees
earned
|
$
|
547.4
|
|
$
|
473.8
|
|
15.5%
|
|
$
|
2,045.3
|
|
$
|
1,759.2
|
|
16.3%
|
Net investment
income
|
|
9.1
|
|
|
7.7
|
|
18.3
|
|
|
34.0
|
|
|
29.9
|
|
13.9
|
Other
income
|
|
0.2
|
|
|
0.1
|
|
84.3
|
|
|
1.3
|
|
|
2.4
|
|
-45.8
|
Operating
revenues
|
|
556.9
|
|
|
481.8
|
|
15.6
|
|
|
2,080.7
|
|
|
1,791.6
|
|
16.1
|
Claim
costs
|
|
18.3
|
|
|
13.9
|
|
31.4
|
|
|
99.2
|
|
|
91.9
|
|
8.0
|
Sales and general
expenses
|
|
488.5
|
|
|
425.3
|
|
14.9
|
|
|
1,807.0
|
|
|
1,592.3
|
|
13.5
|
Interest and other
costs
|
|
1.8
|
|
|
1.9
|
|
-5.2
|
|
|
7.5
|
|
|
7.8
|
|
-4.7
|
Total operating
expenses
|
|
508.7
|
|
|
441.2
|
|
15.3
|
|
|
1,913.8
|
|
|
1,692.0
|
|
13.1
|
Pretax operating
income (loss)
|
$
|
48.1
|
|
$
|
40.5
|
|
18.8%
|
|
$
|
166.8
|
|
$
|
99.5
|
|
67.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
3.4%
|
|
|
2.9%
|
|
|
|
|
4.9%
|
|
|
5.2%
|
|
|
Expense
ratio
|
|
89.2
|
|
|
89.7
|
|
|
|
|
88.3
|
|
|
90.4
|
|
|
Composite underwriting
ratio
|
|
92.6%
|
|
|
92.6%
|
|
|
|
|
93.2%
|
|
|
95.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The substantial bottom line improvement in 2015 was driven by
the very good performance of this segment's basic underwriting and
related services functions. Significant premiums and fees growth
benefitted from stronger housing and commercial property
transactions and the segment's expanded market share. Net
investment income edged up throughout the year from greater yields
on a moderately larger investment portfolio. Lower claim and
operating costs relative to net premiums and fees earned further
contributed to an advancing bottom line.
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
December 31,
|
|
Years Ended December
31,
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
A.
MI:
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
$
|
43.6
|
|
$
|
54.2
|
|
-19.4%
|
|
$
|
195.9
|
|
$
|
227.6
|
|
-13.9%
|
Net investment
income
|
|
5.8
|
|
|
6.3
|
|
-7.9
|
|
|
24.2
|
|
|
26.9
|
|
-10.1
|
Claim
costs
|
|
15.7
|
|
|
30.9
|
|
-49.1
|
|
|
110.5
|
|
|
111.0
|
|
-0.5
|
Pretax operating
income (loss)
|
$
|
28.6
|
|
$
|
24.9
|
|
15.0%
|
|
$
|
89.9
|
|
$
|
121.6
|
|
-26.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
36.0%
|
|
|
57.0%
|
|
|
|
|
56.4%
|
|
|
48.8%
|
|
|
Expense
ratio
|
|
11.6
|
|
|
8.6
|
|
|
|
|
10.1
|
|
|
9.7
|
|
|
Composite underwriting
ratio
|
|
47.6%
|
|
|
65.6%
|
|
|
|
|
66.5%
|
|
|
58.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B.
CCI(*):
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
$
|
5.9
|
|
$
|
5.7
|
|
2.2%
|
|
$
|
23.9
|
|
$
|
27.7
|
|
-13.7%
|
Net investment
income
|
|
0.2
|
|
|
0.1
|
|
37.2
|
|
|
0.8
|
|
|
0.5
|
|
47.7
|
Benefits and claim
costs
|
|
27.2
|
|
|
15.6
|
|
73.8
|
|
|
83.0
|
|
|
137.2
|
|
-39.4
|
Pretax operating
income (loss)
|
$
|
(21.6)
|
|
$
|
(10.2)
|
|
-111.6%
|
|
$
|
(60.4)
|
|
$
|
(111.2)
|
|
45.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
461.5%
|
|
|
271.3%
|
|
|
|
|
346.9%
|
|
|
494.4%
|
|
|
Expense
ratio
|
|
9.7
|
|
|
9.0
|
|
|
|
|
9.2
|
|
|
8.5
|
|
|
Composite underwriting
ratio
|
|
471.2%
|
|
|
280.3%
|
|
|
|
|
356.1%
|
|
|
502.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Total MI and
CCI run-off business:
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
$
|
49.6
|
|
$
|
60.0
|
|
-17.3%
|
|
$
|
219.9
|
|
$
|
255.4
|
|
-13.9%
|
Net investment
income
|
|
6.0
|
|
|
6.4
|
|
-6.7
|
|
|
25.1
|
|
|
27.5
|
|
-8.9
|
Benefits and claim
costs
|
|
43.0
|
|
|
46.6
|
|
-7.7
|
|
|
193.6
|
|
|
248.2
|
|
-22.0
|
Pretax operating
income (loss)
|
$
|
6.9
|
|
$
|
14.6
|
|
-52.5%
|
|
$
|
29.4
|
|
$
|
10.3
|
|
183.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
86.7%
|
|
|
77.7%
|
|
|
|
|
88.0%
|
|
|
97.2%
|
|
|
Expense
ratio
|
|
11.4
|
|
|
8.7
|
|
|
|
|
10.0
|
|
|
9.5
|
|
|
Composite underwriting
ratio
|
|
98.1%
|
|
|
86.4%
|
|
|
|
|
98.0%
|
|
|
106.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) In connection
with the run-off MI and CCI combination, $21.2 and $58.6 of pretax
operating losses for the fourth quarter and full year 2015, and
$9.7 and $108.8 of pretax operating losses for the fourth quarter
and full year 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.
|
Consistent with a run-off operating mode, the combined MI and
CCI lines posted continued declines in earned premiums for 2015.
Investment income was also down from depressed yields on the
segment's declining invested asset base.
Year-over-year comparisons of fourth quarter 2015 MI operating
results benefitted from a lower claim ratio. The improvement
stemmed from continued declines in reported delinquencies and
higher rates at which reported defaults are cured or otherwise
resolved without payment. Similar factors enhanced full year 2015
results although these were dampened by greater claim litigation
costs in the second and third quarter of the year. Moreover,
favorable developments of previously established claim reserves had
a positive effect on reported mortgage guaranty claim ratios.
Setting aside 2015's claim litigation provisions, these positive
outcomes reduced MI claim ratios by 38.4 and 50.6 percentage points
in the final quarters of 2015 and 2014, respectively, and by 65.0
and 69.3 percentage points for all of 2015 and 2014,
respectively.
The CCI run-off portion of RFIG's operations reflected
substantial volatility and were impacted adversely by litigation
expense provisions in most quarterly and year-to-date periods of
2015 and 2014. CCI's claim ratio for all of 2014 reflected even
higher provisions due to a 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 related to external and intra-system financing
arrangements. The much lower life & accident premium volume in
2015 periods reflects the transfer of such premiums from a life and
accident subsidiary to a general insurance group affiliate. The
effect of the transfer was negligible with respect to segmented
pretax operating income (loss) trends. The interplay of these
various operating elements is summarized in the following
table:
|
Corporate and
Other Operations
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
Net premiums
earned
|
$
|
4.7
|
|
$
|
14.4
|
|
-67.1%
|
|
$
|
19.4
|
|
$
|
60.7
|
|
-67.9%
|
Net investment
income
|
|
3.9
|
|
|
4.6
|
|
-14.7
|
|
|
17.2
|
|
|
9.2
|
|
87.0
|
Other
income
|
|
-
|
|
|
-
|
|
N/M
|
|
|
(0.9)
|
|
|
-
|
|
N/M
|
Operating
revenues
|
|
8.6
|
|
|
19.0
|
|
-54.6
|
|
|
35.8
|
|
|
|
70.0
|
|
-48.9
|
Benefits and claim
costs
|
|
7.9
|
|
|
8.8
|
|
-10.4
|
|
|
22.8
|
|
|
42.0
|
|
-45.6
|
Insurance
expenses
|
|
1.7
|
|
|
6.1
|
|
-71.3
|
|
|
6.3
|
|
|
26.5
|
|
-76.1
|
Corporate, interest and
other expenses - net
|
|
(0.7)
|
|
|
(3.5)
|
|
78.7
|
|
|
(1.1)
|
|
|
(4.3)
|
|
74.4
|
Total operating
expenses
|
|
8.8
|
|
|
11.3
|
|
-21.5
|
|
|
28.1
|
|
|
|
64.2
|
|
-56.3
|
Pretax operating
income (loss)
|
$
|
(0.2)
|
|
$
|
7.7
|
|
-103.0%
|
|
$
|
7.6
|
|
$
|
5.7
|
|
32.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Results – The combination of all of the
above changes and occurrences in Old Republic's business segments
contributed to the following consolidated results:
|
ORI
Consolidated
|
|
Quarters Ended
December 31,
|
|
Years Ended December
31,
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
Net premiums and fees
earned
|
$
|
1,339.2
|
|
$
|
1,249.1
|
|
7.2%
|
|
$
|
5,179.4
|
|
$
|
4,811.1
|
|
7.7%
|
Net investment
income
|
|
99.7
|
|
|
91.1
|
|
9.4
|
|
|
388.6
|
|
|
345.5
|
|
12.5
|
Other
income
|
|
26.8
|
|
|
25.1
|
|
6.8
|
|
|
106.7
|
|
|
101.6
|
|
5.1
|
Operating
revenues
|
|
1,465.9
|
|
|
1,365.5
|
|
7.4
|
|
|
5,674.8
|
|
|
5,258.3
|
|
7.9
|
Benefits and claim
costs
|
|
624.3
|
|
|
652.7
|
|
-4.4
|
|
|
2,459.3
|
|
|
2,514.5
|
|
-2.2
|
Sales and general
expenses
|
|
703.5
|
|
|
621.6
|
|
13.2
|
|
|
2,633.0
|
|
|
2,381.0
|
|
10.6
|
Interest and other
costs
|
|
10.9
|
|
|
9.2
|
|
18.6
|
|
|
41.9
|
|
|
25.6
|
|
63.4
|
Total operating
expenses
|
|
1,338.7
|
|
|
1,283.6
|
|
4.3
|
|
|
5,134.3
|
|
|
4,921.2
|
|
4.3
|
Pretax operating
income (loss)
|
|
127.1
|
|
|
81.8
|
|
55.3
|
|
|
540.4
|
|
|
337.1
|
|
60.3
|
Income taxes
(credits)
|
|
45.8
|
|
|
24.7
|
|
85.2
|
|
|
177.7
|
|
|
104.3
|
|
70.3
|
Net operating income
(loss)
|
|
81.3
|
|
|
57.1
|
|
42.4
|
|
|
362.7
|
|
|
232.7
|
|
55.9
|
Realized investment
gains (losses)
|
|
14.2
|
|
|
9.5
|
|
49.3
|
|
|
91.3
|
|
|
272.3
|
|
-66.5
|
Income taxes
(credits) on realized investment gains (losses)
|
|
4.9
|
|
|
3.3
|
|
49.0
|
|
|
31.9
|
|
|
95.3
|
|
-66.5
|
Net realized
investment gains (losses)
|
|
9.2
|
|
|
6.2
|
|
49.5
|
|
|
59.3
|
|
|
177.0
|
|
-66.5
|
Net income
(loss)
|
$
|
90.6
|
|
$
|
63.3
|
|
43.1%
|
|
$
|
422.1
|
|
$
|
409.7
|
|
3.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
operating cash flow
|
$
|
121.7
|
|
$
|
188.7
|
|
-35.5%
|
|
$
|
688.2
|
|
$
|
(181.2)
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
46.6%
|
|
|
52.3%
|
|
|
|
|
47.5%
|
|
|
52.3%
|
|
|
Expense
ratio
|
|
50.3
|
|
|
48.0
|
|
|
|
|
48.5
|
|
|
47.1
|
|
|
Composite underwriting
ratio
|
|
96.9%
|
|
|
100.3%
|
|
|
|
|
96.0%
|
|
|
99.4%
|
|
|
2015 consolidated operating cash flow increased significantly to
$688.2 from a deficit of $181.2 in 2014. Excluding negative operating cash
flows registered by the RFIG Run-off, these amounts would otherwise
be up by nearly 16% to $812.8 from
$702.8 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
|
|
|
December
31,
|
|
|
2015
|
|
2014
|
|
Change
|
Cash and invested
assets:
|
Fair value basis
(1)
|
|
$
|
11,475.5
|
|
$
|
11,291.6
|
|
1.6
|
%
|
|
Original cost
basis
|
|
$
|
11,284.5
|
|
$
|
10,717.9
|
|
5.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
Total
|
|
$
|
3,880.8
|
|
$
|
3,924.0
|
|
-1.1
|
%
|
|
Per common
share
|
|
$
|
15.02
|
|
$
|
15.15
|
|
-0.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Composition of
shareholders' equity per share:
|
|
|
|
|
|
|
|
|
|
Equity before items
below
|
|
$
|
14.91
|
|
$
|
14.02
|
|
6.3
|
%
|
Unrealized investment
gains (losses) and other
|
|
|
|
|
|
|
|
|
|
accumulated
comprehensive income (loss)
|
|
|
0.11
|
|
|
1.13
|
|
|
|
Total
|
|
$
|
15.02
|
|
$
|
15.15
|
|
-0.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Segmented
composition of
shareholders' equity per
share:
|
|
|
|
|
|
|
|
|
|
Excluding run-off
segment
|
|
$
|
14.06
|
|
$
|
14.35
|
|
|
|
RFIG run-off
segment
|
|
|
0.96
|
|
|
0.80
|
|
|
|
Total
|
|
$
|
15.02
|
|
$
|
15.15
|
|
|
|
|
|
|
|
|
|
|
|
(1) The December
31, 2015 amount includes $359.7 (fair value) fixed maturity
securities classified as held to maturity which are reported and
reflected herein at amortized cost of $355.8.
|
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,
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 December 31, 2015, the
consolidated investment portfolio reflected an allocation of
approximately 82 percent to fixed-maturity and short-term
investments, and 18 percent to equities. Investments in high
quality, dividend-paying equity securities has been emphasized
since 2013, while the 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
|
|
|
December
31,
|
|
|
2015
|
|
2014
|
|
2013
|
Beginning
balance
|
|
$
|
15.15
|
|
$
|
14.64
|
|
$
|
14.03
|
Changes in
shareholders' equity:
|
|
|
|
|
|
|
|
|
|
Net operating income
(loss)
|
|
|
1.40
|
|
|
0.90
|
|
|
1.37
|
Net realized
investment gains (losses):
|
|
|
|
|
|
|
|
|
|
From sales
|
|
|
0.23
|
|
|
0.68
|
|
|
0.37
|
From
impairments
|
|
|
-
|
|
|
-
|
|
|
-
|
Subtotal
|
|
|
0.23
|
|
|
0.68
|
|
|
0.37
|
Net unrealized
investment gains (losses)
|
|
|
(0.96)
|
|
|
(0.08)
|
|
|
(0.64)
|
Total realized and
unrealized investment gains (losses)
|
|
|
(0.73)
|
|
|
0.60
|
|
|
(0.27)
|
Cash
dividends
|
|
|
(0.74)
|
|
|
(0.73)
|
|
|
(0.72)
|
Stock issuance,
foreign exchange, and other transactions
|
|
|
(0.06)
|
|
|
(0.26)
|
|
|
0.23
|
Net change
|
|
|
(0.13)
|
|
|
0.51
|
|
|
0.61
|
Ending
balance
|
|
$
|
15.02
|
|
$
|
15.15
|
|
$
|
14.64
|
Capitalization – In 2014's third quarter, the Company
raised $400 through a public offering
of 10-year notes. Since then no other substantial changes have
occurred in Old Republic's consolidated debt and equity
capitalization.
|
|
Capitalization
|
|
|
December
31,
|
|
|
2015
|
|
2014
|
|
2013
|
Debt:
|
|
|
|
|
|
|
|
|
|
3.75% Convertible
Senior Notes due 2018
|
|
$
|
550.0
|
|
$
|
550.0
|
|
$
|
550.0
|
4.875% Senior Notes
due 2024
|
|
|
400.0
|
|
|
400.0
|
|
|
-
|
ESSOP debt with an
average yield of approximately 3.7%
|
|
|
11.7
|
|
|
15.0
|
|
|
18.0
|
Other miscellaneous
debt
|
|
|
-
|
|
|
-
|
|
|
1.2
|
Total debt
|
|
|
961.7
|
|
|
965.0
|
|
|
569.2
|
Common shareholders'
equity
|
|
|
3,880.8
|
|
|
3,924.0
|
|
|
3,775.0
|
Total
capitalization
|
|
$
|
4,842.6
|
|
$
|
4,889.1
|
|
$
|
4,344.3
|
|
|
|
|
|
|
|
|
|
|
Capitalization
ratios:
|
|
|
|
|
|
|
|
|
|
Debt
|
|
|
19.9%
|
|
|
19.7%
|
|
|
13.1%
|
Common shareholders'
equity
|
|
|
80.1
|
|
|
80.3
|
|
|
86.9
|
Total
|
|
|
100.0%
|
|
|
100.0%
|
|
|
100.0%
|
MANAGING OLD REPUBLIC FOR THE LONG RUN
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 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
888-364-3109.
Interested parties may also listen to a replay of the
call through February 4, 2016 by
dialing 877-870-5176, passcode 537455, or by accessing it on Old
Republic International's website through February 28, 2016.
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 $17.11 billion and common shareholders' equity of
$3.88 billion, or $15.02 per share. Its current stock market
valuation is approximately $4.67
billion, or $17.84 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 2015, the
Company's total market return, with dividends reinvested, has grown
at a compounded annual rate of 12.2 percent per share. For the same
period, the total market return, with dividends reinvested, for the
S&P 500 Index has grown at a 9.8 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
9.4 percent per share, and the regular cash dividend has grown at a
9.3 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
|
SummaryFinancial Statements and Common
Stock Statistics (Unaudited)
|
|
December
31,
|
SUMMARY BALANCE
SHEETS:
|
2015
|
|
2014
|
Assets:
|
|
|
|
|
|
Cash and fixed maturity
securities
|
$
|
9,366.7
|
|
$
|
9,163.4
|
Equity
securities
|
|
1,987.8
|
|
|
2,011.7
|
Other invested
assets
|
|
120.9
|
|
|
116.4
|
Cash and invested
assets
|
|
11,475.5
|
|
|
11,291.6
|
Accounts and premiums
receivable
|
|
1,310.2
|
|
|
1,287.6
|
Federal income tax
recoverable:
|
Current
|
|
26.5
|
|
|
29.2
|
|
Deferred
|
|
154.5
|
|
|
37.0
|
Prepaid federal income
taxes
|
|
63.3
|
|
|
45.7
|
Reinsurance balances
recoverable
|
|
3,183.6
|
|
|
3,422.5
|
Sundry
assets
|
|
896.7
|
|
|
874.2
|
Total
|
$
|
17,110.5
|
|
$
|
16,988.1
|
Liabilities and
Shareholders' Equity:
|
|
|
|
|
|
Policy
liabilities
|
$
|
1,945.1
|
|
$
|
1,832.7
|
Benefit and claim
reserves
|
|
9,120.2
|
|
|
9,122.0
|
Debt
|
|
961.7
|
|
|
965.0
|
Sundry
liabilities
|
|
1,202.5
|
|
|
1,144.2
|
Shareholders'
equity
|
|
3,880.8
|
|
|
3,924.0
|
Total
|
$
|
17,110.5
|
|
$
|
16,988.1
|
|
|
|
|
|
|
|
|
Quarters
Ended
|
|
Years
Ended
|
SUMMARY INCOME
STATEMENTS:
|
|
December
31,
|
|
December
31,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net premiums and fees
earned
|
|
$
|
1,339.2
|
|
$
|
1,249.1
|
|
$
|
5,179.4
|
|
$
|
4,811.1
|
Net investment
income
|
|
|
99.7
|
|
|
91.1
|
|
|
388.6
|
|
|
345.5
|
Other income
|
|
|
26.8
|
|
|
25.1
|
|
|
106.7
|
|
|
101.6
|
Net realized investment
gains (losses)
|
|
|
14.2
|
|
|
9.5
|
|
|
91.3
|
|
|
272.3
|
Total
revenues
|
|
|
1,480.2
|
|
|
1,375.0
|
|
|
5,766.1
|
|
|
5,530.7
|
Benefits and
claims
|
|
|
624.3
|
|
|
652.7
|
|
|
2,459.3
|
|
|
2,514.5
|
Sales and general
expenses
|
|
|
703.5
|
|
|
621.6
|
|
|
2,633.0
|
|
|
2,381.0
|
Interest and other
costs
|
|
|
10.9
|
|
|
9.2
|
|
|
41.9
|
|
|
25.6
|
Total
expenses
|
|
|
1,338.7
|
|
|
1,283.6
|
|
|
5,134.3
|
|
|
4,921.2
|
Pretax income
(loss)
|
|
|
141.4
|
|
|
91.4
|
|
|
631.8
|
|
|
609.4
|
Income taxes
(credits)
|
|
|
50.7
|
|
|
28.0
|
|
|
209.6
|
|
|
199.7
|
Net income
(loss)
|
|
$
|
90.6
|
|
$
|
63.3
|
|
$
|
422.1
|
|
$
|
409.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON STOCK
STATISTICS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss):
|
Basic
|
|
$
|
.35
|
|
$
|
.24
|
|
$
|
1.63
|
|
$
|
1.58
|
|
Diluted
|
|
$
|
.32
|
|
$
|
.23
|
|
$
|
1.48
|
|
$
|
1.44
|
Components of earnings
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic, net operating
income (loss)
|
|
$
|
.31
|
|
$
|
.22
|
|
$
|
1.40
|
|
$
|
.90
|
Realized investment
gains (losses)
|
|
|
.04
|
|
|
.02
|
|
|
.23
|
|
|
.68
|
Basic net income
(loss)
|
|
$
|
.35
|
|
$
|
.24
|
|
$
|
1.63
|
|
$
|
1.58
|
Diluted, net operating
income (loss)
|
|
$
|
.29
|
|
$
|
.21
|
|
$
|
1.28
|
|
$
|
.84
|
Realized investment
gains (losses)
|
|
|
.03
|
|
|
.02
|
|
|
.20
|
|
|
.60
|
Diluted net income
(loss)
|
|
$
|
.32
|
|
$
|
.23
|
|
$
|
1.48
|
|
$
|
1.44
|
Cash dividends on
common stock
|
|
$
|
.1850
|
|
$
|
.1825
|
|
$
|
.7400
|
|
$
|
.7300
|
|
|
|
|
|
|
|
|
$
|
15.02
|
|
$
|
15.15
|
Common shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
basic
|
|
|
258,257,224
|
|
|
258,812,995
|
|
|
259,502,067
|
|
|
258,553,662
|
Average
diluted
|
|
|
295,206,909
|
|
|
295,166,316
|
|
|
296,088,963
|
|
|
295,073,206
|
Actual, end of
period
|
|
|
|
|
|
|
|
|
258,459,827
|
|
|
259,012,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
Net income (loss) as
reported
|
|
$
|
90.6
|
|
$
|
63.3
|
|
$
|
422.1
|
|
$
|
409.7
|
Post-tax net unrealized
gains (losses)
|
|
|
(26.3)
|
|
|
39.8
|
|
|
(248.9)
|
|
|
(20.4)
|
Other
adjustments
|
|
|
(.1)
|
|
|
(58.2)
|
|
|
(14.2)
|
|
|
(65.3)
|
Net
adjustments
|
|
|
(26.5)
|
|
|
(18.3)
|
|
|
(263.1)
|
|
|
(85.8)
|
Comprehensive income
(loss)
|
|
$
|
64.0
|
|
$
|
44.9
|
|
$
|
159.0
|
|
$
|
323.9
|
|
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-fourth-quarter-and-full-year-2015-300211179.html
SOURCE Old Republic International Corporation