CHICAGO, April 28, 2016 /PRNewswire/ -- Old Republic
International Corporation (NYSE: ORI) today reported better
operating earnings for this year's first quarter. Excluding the
RFIG run-off segment, pretax operating earnings were up 10.9%
quarter-over-quarter as General and Title Insurance performance
outpaced comparable results in 2015. A 21.3% drop in RFIG's
earnings, however, drove consolidated pretax operating income down
to an approximate 2.5% gain. In this context, all of this year's
gain in pretax operating income emanated from higher investment
income. Consolidated net income for this year's first quarter
nonetheless advanced 18.9% as much greater gains were secured from
sales of investment securities. The major components of
consolidated results are summarized in the table below.
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Financial
Highlights (a)
|
|
|
|
|
|
Quarters
Ended
March 31,
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
Operating
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
|
|
|
|
|
|
$
|
824.6
|
|
$
|
803.0
|
|
|
Title
insurance
|
|
|
|
|
|
|
|
483.6
|
|
|
436.6
|
|
|
Corporate and
other
|
|
|
|
|
|
|
|
7.3
|
|
|
7.1
|
|
|
Subtotal
|
|
|
|
|
|
|
|
1,315.6
|
|
|
1,246.8
|
|
|
RFIG run-off
business
|
|
|
|
|
|
|
|
53.7
|
|
|
64.4
|
|
|
Total
|
|
|
|
|
|
|
$
|
1,369.3
|
|
$
|
1,311.3
|
|
|
Pretax operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
|
|
|
|
|
|
$
|
87.0
|
|
$
|
82.0
|
|
|
Title
insurance
|
|
|
|
|
|
|
|
21.4
|
|
|
15.9
|
|
|
Corporate and
other
|
|
|
|
|
|
|
|
1.9
|
|
|
1.6
|
|
|
Subtotal
|
|
|
|
|
|
|
|
110.4
|
|
|
99.6
|
|
|
RFIG run-off
business
|
|
|
|
|
|
|
|
27.7
|
|
|
35.2
|
|
|
Total
|
|
|
|
|
|
|
|
138.1
|
|
|
134.8
|
|
|
Realized
investment gains (losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From sales
|
|
|
|
|
|
|
|
44.1
|
|
|
18.8
|
|
|
From
impairments
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
Net realized
investment gains (losses)
|
|
|
|
|
|
|
|
44.1
|
|
|
18.8
|
|
|
Consolidated
pretax income (loss)
|
|
|
|
|
|
|
|
182.3
|
|
|
153.7
|
|
|
Income taxes
(credits)
|
|
|
|
|
|
|
|
59.3
|
|
|
50.3
|
|
|
Net income
(loss)
|
|
|
|
|
|
|
$
|
122.9
|
|
$
|
103.4
|
|
|
Components of
diluted earnings per share:
|
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|
|
|
|
|
|
|
|
|
|
|
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Net operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
|
|
|
|
|
|
$
|
0.20
|
|
$
|
0.19
|
|
|
Title
insurance
|
|
|
|
|
|
|
|
0.05
|
|
|
0.03
|
|
|
Corporate and
other
|
|
|
|
|
|
|
|
0.02
|
|
|
0.02
|
|
|
Subtotal
|
|
|
|
|
|
|
|
0.27
|
|
|
0.24
|
|
|
RFIG run-off
business
|
|
|
|
|
|
|
|
0.06
|
|
|
0.08
|
|
|
Total
|
|
|
|
|
|
|
|
0.33
|
|
|
0.32
|
|
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Net realized
investment gains (losses)
|
|
|
|
|
|
|
|
0.10
|
|
|
0.04
|
|
|
Net income
(loss)
|
|
|
|
|
|
|
$
|
0.43
|
|
$
|
0.36
|
|
|
Cash dividends
paid per share
|
|
|
|
|
|
|
$
|
0.1875
|
|
$
|
0.1850
|
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Ending book value
per share
|
|
|
|
|
|
|
$
|
16.00
|
|
$
|
15.48
|
|
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|
|
|
|
|
|
|
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(a)
Unaudited; All amounts in this report are stated in millions except
per share data and percentages.
|
|
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 effecting
this segment's performance for each of the quarterly periods
reported upon.
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|
General Insurance
Group
|
|
|
Quarters Ended March
31,
|
|
|
2016
|
|
2015
|
|
Change
|
Net premiums
earned
|
|
$
|
718.9
|
|
$
|
703.3
|
|
2.2%
|
Net investment
income
|
|
|
78.6
|
|
|
73.7
|
|
6.6
|
Other
income
|
|
|
27.1
|
|
|
25.8
|
|
4.7
|
Operating
revenues
|
|
|
824.6
|
|
|
803.0
|
|
2.7
|
Benefits and claim
costs
|
|
|
524.9
|
|
|
518.8
|
|
1.2
|
Sales and general
expenses
|
|
|
199.0
|
|
|
190.9
|
|
4.2
|
Interest and other
costs
|
|
|
13.6
|
|
|
11.1
|
|
22.1
|
Total operating
expenses
|
|
|
737.5
|
|
|
720.9
|
|
2.3
|
Pretax operating
income (loss)(*)
|
|
$
|
87.0
|
|
$
|
82.0
|
|
6.2%
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
|
73.0%
|
|
|
73.8%
|
|
|
Expense
ratio
|
|
|
23.9
|
|
|
23.5
|
|
|
Composite underwriting
ratio
|
|
|
96.9%
|
|
|
97.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) In connection
with the run-off mortgage guaranty ("MI") and consumer credit
indemnity ("CCI") combination, $5.9 and $4.3 of pretax operating
losses for the first quarter 2016 and 2015, 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.
|
This year's 6.2% pretax earnings gain was largely due to 6.6%
growth of investment income. Underwriting and related services
produced basically flat operating income as evidenced by the
relatively unchanged composite ratio for the two quarterly
periods.
Net premiums earned slowed to 2.2% growth from the combination
of: 1) high single digit increases mostly experienced in commercial
automobile (trucking) and home protection coverages, 2) declining
volume in a large account construction book of business due to a
very competitive rate environment, and 3) relatively flat top line
comparisons prevailing for most other coverages.
The ratio of claim and related settlement costs to earned
premiums was relatively flat in this year's first quarter when
compared with the same period of 2015. In addition to estimates of
current claim costs, the ratios for the respective first quarters
of 2016 and 2015 are inclusive of 0.3 and 1.1 percentage point
additions emanating from unfavorable developments of prior years'
reserves.
Quarterly claim ratio postings and the trends they display are
not particularly meaningful in Old Republic's liability insurance
oriented mix of business. In this regard, however, it is
nonetheless anticipated that the most recent years' and quarterly
periods' general uptrends in such ratios should abate and gradually
revert to targeted long-term annual averages in the high 60%s to
low 70%s.
Title Insurance
Results – Earnings for this year's first quarter continued
along the positive path set in recent years.
|
|
|
|
Title Insurance
Group
|
|
|
Quarters Ended March
31,
|
|
|
2016
|
|
2015
|
|
Change
|
Net premiums and fees
earned
|
|
$
|
474.1
|
|
$
|
428.3
|
|
10.7%
|
Net investment
income
|
|
|
9.0
|
|
|
7.9
|
|
14.1
|
Other
income
|
|
|
0.3
|
|
|
0.3
|
|
N/A
|
Operating
revenues
|
|
|
483.6
|
|
|
436.6
|
|
10.7
|
Claim
costs
|
|
|
24.3
|
|
|
23.8
|
|
2.3
|
Sales and general
expenses
|
|
|
435.7
|
|
|
394.7
|
|
10.4
|
Interest and other
costs
|
|
|
2.0
|
|
|
2.1
|
|
-3.0
|
Total operating
expenses
|
|
|
462.1
|
|
|
420.7
|
|
9.9
|
Pretax operating
income (loss)
|
|
$
|
21.4
|
|
$
|
15.9
|
|
34.3%
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
|
5.1%
|
|
|
5.6%
|
|
|
Expense
ratio
|
|
|
91.8
|
|
|
92.1
|
|
|
Composite underwriting
ratio
|
|
|
96.9%
|
|
|
97.7%
|
|
|
The continuation of a favorable mortgage rate environment and
improving housing and commercial property markets led to higher
revenues from title premiums and fees in this year's first quarter.
The improvement was achieved in spite of the adverse effect that
recently implemented mortgage disclosure rules are having on the
consummation of real estate transactions.
The latest quarter's pretax operating income ended higher as
both claim costs and operating expenses were relatively stable.
While a smaller component of overall title profitability, net
investment income also rose as it benefitted from moderately higher
yields on a larger bond and stock portfolio.
RFIG Run-off
Business Results – The tables below show the operating
components of this run-off book of business and their contributions
to combined results.
|
|
|
|
RFIG Run-off
Business
|
|
|
Quarters Ended March
31,
|
|
|
2016
|
|
2015
|
|
Change
|
A.
MI:
|
|
Net premiums
earned
|
|
$
|
44.3
|
|
$
|
52.6
|
|
-15.7%
|
Net investment
income
|
|
|
5.6
|
|
|
6.1
|
|
-7.6
|
Claim
costs
|
|
|
10.6
|
|
|
13.5
|
|
-21.5
|
Pretax operating
income (loss)
|
|
$
|
34.1
|
|
$
|
40.0
|
|
-14.8%
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
|
24.1%
|
|
|
25.8%
|
|
|
Expense
ratio
|
|
|
11.9
|
|
|
9.8
|
|
|
Composite underwriting
ratio
|
|
|
36.0%
|
|
|
35.6%
|
|
|
|
|
|
|
|
|
|
|
|
B.
CCI(*):
|
|
Net premiums
earned
|
|
$
|
3.4
|
|
$
|
5.4
|
|
-37.3%
|
Net investment
income
|
|
|
0.2
|
|
|
0.1
|
|
30.8
|
Benefits and claim
costs
|
|
|
9.4
|
|
|
9.9
|
|
-4.9
|
Pretax operating
income (loss)
|
|
$
|
(6.3)
|
|
$
|
(4.7)
|
|
-32.8%
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
|
275.3%
|
|
|
181.7%
|
|
|
Expense
ratio
|
|
|
17.1
|
|
|
9.3
|
|
|
Composite underwriting
ratio
|
|
|
292.4%
|
|
|
191.0%
|
|
|
|
|
|
|
|
|
|
|
|
C. Total MI and
CCI run-off business:
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
|
$
|
47.8
|
|
$
|
58.1
|
|
-17.7%
|
Net investment
income
|
|
|
5.9
|
|
|
6.3
|
|
-6.4
|
Benefits and claim
costs
|
|
|
20.1
|
|
|
23.5
|
|
-14.5
|
Pretax operating
income (loss)
|
|
$
|
27.7
|
|
$
|
35.2
|
|
-21.3%
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
|
42.2%
|
|
|
40.5%
|
|
|
Expense
ratio
|
|
|
12.3
|
|
|
9.7
|
|
|
Composite underwriting
ratio
|
|
|
54.5%
|
|
|
50.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) In connection
with the run-off MI and CCI combination, $5.9 and $4.3 of pretax
operating losses for the first quarter 2016 and 2015, 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, further declines in
earned premiums were posted by the MI and CCI lines. Investment
income for MI was also lower as reduced premium volume and ongoing
claim payments effected downward pressure on the invested asset
base.
Quarter-over-quarter, the MI claim ratio was relatively flat.
The lower ratios for both periods are attributable to continued
declines in reported delinquencies and higher rates at which
reported defaults are cured or otherwise resolved without payment.
Moreover, favorable developments of previously established claim
reserves contributed to a lowering of claim ratios by 39.2 and 80.6
percentage points in the first three months of 2016 and 2015,
respectively.
The much smaller CCI run-off line reflected great volatility in
year-to-year comparisons of incurred claim ratios. Substantially
all of this resulted from the fluctuating premium trends in a small
book of business on the one hand and changes in estimates of
litigation costs on the other hand.
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. The interplay of these various operating elements is
summarized in the following table:
|
|
|
|
Corporate and
Other Operations
|
|
|
Quarters Ended March
31,
|
|
|
2016
|
|
2015
|
|
Change
|
Net premiums
earned
|
|
$
|
4.8
|
|
$
|
4.6
|
|
3.5%
|
Net investment
income
|
|
|
2.6
|
|
|
3.3
|
|
-20.8
|
Other
income
|
|
|
(0.1)
|
|
|
(0.8)
|
|
84.3
|
Operating
revenues
|
|
|
7.3
|
|
|
7.1
|
|
2.6
|
Benefits and claim
costs
|
|
|
4.5
|
|
|
3.8
|
|
18.1
|
Insurance
expenses
|
|
|
2.2
|
|
|
2.2
|
|
2.0
|
Corporate, interest
and other expenses - net
|
|
|
(1.4)
|
|
|
(0.5)
|
|
-158.7
|
Total operating
expenses
|
|
|
5.4
|
|
|
5.5
|
|
-2.3
|
Pretax operating
income (loss)
|
|
$
|
1.9
|
|
$
|
1.6
|
|
19.5%
|
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 March
31,
|
|
|
2016
|
|
2015
|
|
Change
|
Net premiums and fees
earned
|
|
$
|
1,245.7
|
|
$
|
1,194.4
|
|
4.3%
|
Net investment
income
|
|
|
96.3
|
|
|
91.4
|
|
5.3
|
Other
income
|
|
|
27.3
|
|
|
25.4
|
|
7.4
|
Operating
revenues
|
|
|
1,369.3
|
|
|
1,311.3
|
|
4.4
|
Benefits and claim
costs
|
|
|
574.0
|
|
|
570.1
|
|
0.7
|
Sales and general
expenses
|
|
|
646.3
|
|
|
595.7
|
|
8.5
|
Interest and other
costs
|
|
|
10.7
|
|
|
10.5
|
|
2.1
|
Total operating
expenses
|
|
|
1,231.1
|
|
|
1,176.4
|
|
4.7
|
Pretax operating
income (loss)
|
|
|
138.1
|
|
|
134.8
|
|
2.5
|
Income taxes
(credits)
|
|
|
43.9
|
|
|
43.6
|
|
0.5
|
Net operating income
(loss)
|
|
|
94.2
|
|
|
91.1
|
|
3.4
|
Realized investment
gains (losses)
|
|
|
44.1
|
|
|
18.8
|
|
133.9
|
Income taxes
(credits) on realized investment gains (losses)
|
|
|
15.4
|
|
|
6.6
|
|
133.9
|
Net realized
investment gains (losses)
|
|
|
28.7
|
|
|
12.2
|
|
133.9
|
Net income
(loss)
|
|
$
|
122.9
|
|
$
|
103.4
|
|
18.9%
|
|
|
|
|
|
|
|
|
|
Consolidated
operating cash flow
|
|
$
|
125.9
|
|
$
|
190.8
|
|
-34.0%
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
|
|
46.1%
|
|
|
47.7%
|
|
|
Expense
ratio
|
|
|
49.4
|
|
|
47.5
|
|
|
Composite underwriting
ratio
|
|
|
95.5%
|
|
|
95.2%
|
|
|
|
The sum total of Old
Republic's segmented results produced the following major
contributions to consolidated pretax income:
|
|
|
|
Quarters Ended March
31,
|
Pretax operating
income:
|
|
2016
|
|
2015
|
|
Change
|
Underwriting and
related services:
|
|
|
|
|
|
|
|
|
All segments except
RFIG
|
|
$
|
30.8
|
|
$
|
25.0
|
|
23.0%
|
RFIG
run-off
|
|
|
21.7
|
|
|
28.8
|
|
-24.6
|
Subtotal
|
|
|
52.6
|
|
|
53.9
|
|
-2.5
|
Net investment
income
|
|
|
96.3
|
|
|
91.4
|
|
5.3
|
Interest and other
costs
|
|
|
(10.7)
|
|
|
(10.5)
|
|
2.1
|
Total
|
|
|
138.1
|
|
|
134.8
|
|
2.5
|
Realized investment
gains(losses)
|
|
|
44.1
|
|
|
18.8
|
|
133.9
|
Consolidated pretax
income
|
|
$
|
182.3
|
|
$
|
153.7
|
|
18.6%
|
Consolidated operating cash flow was additive to investable
funds in the amount of $125.9 and
$190.8 for the first three months of
2016 and 2015, respectively. Excluding the MI and CCI operating
cash flows, these amounts would be $152.8 and $223.6,
respectively.
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
|
|
|
March 31,
|
|
Dec. 31,
|
|
March 31,
|
|
March '16/
|
|
March '16/
|
|
|
2016
|
|
2015
|
|
2015
|
|
Dec. '15
|
|
March '15
|
Cash and invested
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried at fair
value
|
|
$
|
11,377.3
|
|
$
|
11,119.6
|
|
$
|
11,489.9
|
|
2.3
|
%
|
|
-1.0
|
%
|
|
Carried at amortized
cost
|
|
|
511.4
|
|
|
355.8
|
|
|
-
|
|
43.7
|
|
|
N/A
|
|
|
Total per balance
sheet
|
|
$
|
11,888.7
|
|
$
|
11,475.5
|
|
$
|
11,489.9
|
|
3.6
|
%
|
|
3.5
|
%
|
|
Cost basis
|
|
$
|
11,429.3
|
|
$
|
11,284.5
|
|
$
|
10,861.2
|
|
1.3
|
%
|
|
5.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
Total
|
|
$
|
4,142.6
|
|
$
|
3,880.8
|
|
$
|
4,014.2
|
|
6.7
|
%
|
|
3.2
|
%
|
|
Per common
share
|
|
$
|
16.00
|
|
$
|
15.02
|
|
$
|
15.48
|
|
6.5
|
%
|
|
3.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of
shareholders' equity per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity before items
below
|
|
$
|
15.19
|
|
$
|
14.91
|
|
$
|
14.24
|
|
1.9
|
%
|
|
6.7
|
%
|
Unrealized investment
gains (losses) and other accumulated comprehensive income (loss)
|
|
|
0.81
|
|
|
0.11
|
|
|
1.24
|
|
|
|
|
|
|
Total
|
|
$
|
16.00
|
|
$
|
15.02
|
|
$
|
15.48
|
|
6.5
|
%
|
|
3.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmented
composition of shareholders' equity per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding run-off
segment
|
|
$
|
14.92
|
|
$
|
14.06
|
|
$
|
14.56
|
|
6.1
|
%
|
|
2.5
|
%
|
RFIG run-off
segment
|
|
|
1.08
|
|
|
0.96
|
|
|
0.92
|
|
|
|
|
|
|
Total
|
|
$
|
16.00
|
|
$
|
15.02
|
|
$
|
15.48
|
|
6.5
|
%
|
|
3.4
|
%
|
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 March 31, 2016, 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
|
|
|
Quarters Ended March
31,
|
|
|
2016
|
|
2015
|
Beginning
balance
|
|
$
|
15.02
|
|
$
|
15.15
|
Changes in
shareholders' equity:
|
|
|
|
|
|
|
Net operating income
(loss)
|
|
|
0.37
|
|
|
0.35
|
Net realized
investment gains (losses):
|
|
|
|
|
|
|
From sales
|
|
|
0.11
|
|
|
0.05
|
From
impairments
|
|
|
-
|
|
|
-
|
Subtotal
|
|
|
0.11
|
|
|
0.05
|
Net unrealized
investment gains (losses)
|
|
|
0.67
|
|
|
0.14
|
Total realized and
unrealized investment gains (losses)
|
|
|
0.78
|
|
|
0.19
|
Cash
dividends
|
|
|
(0.19)
|
|
|
(0.19)
|
Stock issuance,
foreign exchange, and other transactions
|
|
|
0.02
|
|
|
(0.02)
|
Net change
|
|
|
0.98
|
|
|
0.33
|
Ending
balance
|
|
$
|
16.00
|
|
$
|
15.48
|
Capitalization
– As the table below indicates, the major changes in Old
Republic's capitalization in the fiscal twelve months ended March
31, 2016 consisted of a 3.2% increase in the common shareholder's
account.
|
|
|
|
Capitalization(*)
|
|
|
March 31,
|
|
December
31,
|
|
March 31,
|
|
|
2016
|
|
2015
|
|
2015
|
Debt:
|
|
|
|
|
|
|
|
|
|
3.75% Convertible
Senior Notes due 2018
|
|
$
|
546.4
|
|
$
|
546.0
|
|
$
|
544.6
|
4.875% Senior Notes
due 2024
|
|
|
395.2
|
|
|
395.1
|
|
|
394.7
|
ESSOP debt with an
average yield of approximately 3.9%
|
|
|
8.1
|
|
|
11.7
|
|
|
11.7
|
Other miscellaneous
debt
|
|
|
32.4
|
|
|
-
|
|
|
-
|
Total debt
|
|
|
982.3
|
|
|
952.8
|
|
|
951.0
|
Common shareholders'
equity
|
|
|
4,142.6
|
|
|
3,880.8
|
|
|
4,014.2
|
Total
capitalization
|
|
$
|
5,125.0
|
|
$
|
4,833.7
|
|
$
|
4,965.2
|
|
|
|
|
|
|
|
|
|
|
Capitalization
ratios:
|
|
|
|
|
|
|
|
|
|
Debt
|
|
|
19.2%
|
|
|
19.7%
|
|
|
19.2%
|
Common shareholders'
equity
|
|
|
80.8
|
|
|
80.3
|
|
|
80.8
|
Total
|
|
|
100.0%
|
|
|
100.0%
|
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
(*) Certain debt
amounts have been reduced due to the reclassification of relatively
immaterial debt issuance costs previously classified as deferred
assets, in order to comply with a 2015 pronouncement by the
Financial Accounting Standards Board.
|
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
first quarter 2016 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
888-395-3227.
Interested parties may also listen to a replay of the
call through May 5, 2016 by dialing
877-870-5176, passcode 5804214, or by accessing it on Old Republic
International's website through May 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 $17.43 billion and common shareholders' equity of
$4.14 billion, or $16.00 per share. Its current stock market
valuation is approximately $4.80
billion, or $18.30 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 98 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
|
Summary
Financial Statements and Common Stock Statistics
(Unaudited)
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
March 31,
|
SUMMARY BALANCE
SHEETS:
|
|
2016
|
|
2015
|
|
2015
|
Assets:
|
|
|
|
|
|
|
|
|
|
Cash and fixed maturity
securities
|
|
$
|
9,632.1
|
|
$
|
9,366.7
|
|
$
|
9,310.8
|
Equity
securities
|
|
|
2,131.6
|
|
|
1,987.8
|
|
|
2,057.5
|
Other invested
assets
|
|
|
124.8
|
|
|
120.9
|
|
|
121.5
|
Cash and invested
assets
|
|
|
11,888.7
|
|
|
11,475.5
|
|
|
11,489.9
|
Accounts and premiums
receivable
|
|
|
1,372.2
|
|
|
1,310.2
|
|
|
1,335.7
|
Federal income tax
recoverable:
|
Current
|
|
|
-
|
|
|
26.5
|
|
|
-
|
|
Deferred
|
|
|
56.2
|
|
|
154.5
|
|
|
16.8
|
Prepaid federal income
taxes
|
|
|
82.4
|
|
|
63.3
|
|
|
53.5
|
Reinsurance balances
recoverable
|
|
|
3,153.3
|
|
|
3,183.6
|
|
|
3,430.1
|
Sundry
assets
|
|
|
880.2
|
|
|
887.8
|
|
|
864.4
|
Total
|
|
|
$
|
17,433.3
|
|
$
|
17,101.6
|
|
$
|
17,190.6
|
Liabilities and
Shareholders' Equity:
|
|
|
|
|
|
|
|
|
|
Policy
liabilities
|
|
$
|
1,977.8
|
|
$
|
1,945.1
|
|
$
|
1,877.3
|
Benefit and claim
reserves
|
|
|
9,067.5
|
|
|
9,120.2
|
|
|
9,132.8
|
Federal income tax
payable: Current
|
|
|
28.6
|
|
|
-
|
|
|
18.7
|
Debt
|
|
|
982.3
|
|
|
952.8
|
|
|
951.0
|
Sundry
liabilities
|
|
|
1,234.2
|
|
|
1,202.5
|
|
|
1,196.4
|
Shareholders'
equity
|
|
|
4,142.6
|
|
|
3,880.8
|
|
|
4,014.2
|
Total
|
|
$
|
17,433.3
|
|
$
|
17,101.6
|
|
$
|
17,190.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters
Ended
|
|
Fiscal Twelve
Months Ended
|
SUMMARY INCOME
STATEMENTS:
|
|
March
31,
|
|
March
31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net premiums and fees
earned
|
|
$
|
1,245.7
|
|
$
|
1,194.4
|
|
$
|
5,230.7
|
|
$
|
4,872.8
|
Net investment
income
|
|
|
96.3
|
|
|
91.4
|
|
|
393.5
|
|
|
354.1
|
Other income
|
|
|
27.3
|
|
|
25.4
|
|
|
108.6
|
|
|
103.2
|
Net realized investment
gains (losses)
|
|
|
44.1
|
|
|
18.8
|
|
|
116.6
|
|
|
99.9
|
Total
revenues
|
|
|
1,413.5
|
|
|
1,330.2
|
|
|
5,849.5
|
|
|
5,430.2
|
Benefits and
claims
|
|
|
574.0
|
|
|
570.1
|
|
|
2,463.2
|
|
|
2,524.6
|
Sales and general
expenses
|
|
|
646.3
|
|
|
595.7
|
|
|
2,683.6
|
|
|
2,408.9
|
Interest and other
costs
|
|
|
10.7
|
|
|
10.5
|
|
|
42.1
|
|
|
30.4
|
Total
expenses
|
|
|
1,231.1
|
|
|
1,176.4
|
|
|
5,189.0
|
|
|
4,964.0
|
Pretax income
(loss)
|
|
|
182.3
|
|
|
153.7
|
|
|
660.4
|
|
|
466.2
|
Income taxes
(credits)
|
|
|
59.3
|
|
|
50.3
|
|
|
218.7
|
|
|
147.4
|
Net income
(loss)
|
|
$
|
122.9
|
|
$
|
103.4
|
|
$
|
441.6
|
|
$
|
318.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON STOCK
STATISTICS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss):
|
Basic
|
|
$
|
0.48
|
|
$
|
0.40
|
|
$
|
1.70
|
|
$
|
1.23
|
|
Diluted
|
|
$
|
0.43
|
|
$
|
0.36
|
|
$
|
1.54
|
|
$
|
1.13
|
Components of earnings
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic, net operating
income (loss)
|
|
$
|
0.37
|
|
$
|
0.35
|
|
$
|
1.41
|
|
$
|
0.98
|
Realized investment
gains (losses)
|
|
|
0.11
|
|
|
0.05
|
|
|
0.29
|
|
|
0.25
|
Basic net income
(loss)
|
|
$
|
0.48
|
|
$
|
0.40
|
|
$
|
1.70
|
|
$
|
1.23
|
Diluted, net operating
income (loss)
|
|
$
|
0.33
|
|
$
|
0.32
|
|
$
|
1.28
|
|
$
|
0.91
|
Realized investment
gains (losses)
|
|
|
0.10
|
|
|
0.04
|
|
|
0.26
|
|
|
0.22
|
Diluted net income
(loss)
|
|
$
|
0.43
|
|
$
|
0.36
|
|
$
|
1.54
|
|
$
|
1.13
|
Cash dividends on
common stock
|
|
$
|
.1875
|
|
$
|
.1850
|
|
$
|
.7425
|
|
$
|
.7325
|
Book value per
share
|
|
|
|
|
|
|
|
$
|
16.00
|
|
$
|
15.48
|
Common shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
basic
|
|
|
258,657,939
|
|
|
259,118,634
|
|
|
259,294,409
|
|
|
258,868,456
|
Average
diluted
|
|
|
295,543,808
|
|
|
295,547,223
|
|
|
296,036,894
|
|
|
295,352,039
|
Actual, end of
period
|
|
|
|
|
|
|
|
|
258,840,807
|
|
|
259,381,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARY STATEMENTS
OF COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
Net income (loss) as
reported
|
|
$
|
122.9
|
|
$
|
103.4
|
|
$
|
441.6
|
|
$
|
318.7
|
Post-tax net unrealized
gains (losses)
|
|
|
174.4
|
|
|
35.9
|
|
|
(110.3)
|
|
|
70.5
|
Other
adjustments
|
|
|
6.5
|
|
|
(7.4)
|
|
|
(0.2)
|
|
|
(69.2)
|
Net
adjustments
|
|
|
180.9
|
|
|
28.4
|
|
|
(110.6)
|
|
|
1.3
|
Comprehensive income
(loss)
|
|
$
|
303.9
|
|
$
|
131.8
|
|
$
|
331.0
|
|
$
|
320.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
2015 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-first-quarter-2016-300259100.html
SOURCE Old Republic International Corporation