CHICAGO, Oct. 24, 2019 /PRNewswire/ -- Old
Republic International Corporation (NYSE: ORI) today reported the
following consolidated results (a):
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
Pretax income
(loss)
|
|
$
|
252.4
|
|
|
$
|
335.1
|
|
|
-24.7
|
%
|
|
$
|
976.3
|
|
|
$
|
575.7
|
|
|
69.6
|
%
|
Pretax investment
gains (losses) included in pretax income (loss)
|
|
63.6
|
|
|
135.7
|
|
|
-53.1
|
|
|
468.7
|
|
|
72.6
|
|
|
N/M
|
|
Pretax income (loss)
excluding investment gains (losses)
|
|
$
|
188.7
|
|
|
$
|
199.3
|
|
|
-5.3
|
%
|
|
$
|
507.6
|
|
|
$
|
503.0
|
|
|
0.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
202.8
|
|
|
$
|
275.2
|
|
|
-26.3
|
%
|
|
$
|
780.6
|
|
|
$
|
477.0
|
|
|
63.6
|
%
|
Net of tax investment
gains (losses) included in net income (loss)
|
|
50.1
|
|
|
107.2
|
|
|
-53.2
|
|
|
369.9
|
|
|
57.4
|
|
|
N/M
|
|
Net income (loss)
excluding investment gains (losses)
|
|
$
|
152.7
|
|
|
$
|
167.9
|
|
|
-9.1
|
%
|
|
$
|
410.6
|
|
|
$
|
419.6
|
|
|
-2.1
|
%
|
Consolidated pretax and net income, exclusive of all investment
gains or (losses), for the third quarter and first nine months of
2019 were moderately lower to relatively flat vis-a-vis 2018.
Continued growth in net investment income was not sufficient to
offset weaker underwriting results in both periods. Overall and per
share net income continued to be significantly impacted by the
required inclusion since January 1,
2018 of changes in the fair value of equity securities
pursuant to Generally Accepted Accounting Principles ("GAAP").
Please see the information on pages 2 and 3.
|
FINANCIAL
HIGHLIGHTS (a)
|
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
SUMMARY INCOME
STATEMENTS:
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums and fees
earned
|
$
|
1,561.7
|
|
|
$
|
1,504.8
|
|
|
3.8
|
%
|
|
$
|
4,380.4
|
|
|
$
|
4,255.5
|
|
|
2.9
|
%
|
|
|
Net investment
income
|
112.7
|
|
|
108.7
|
|
|
3.6
|
|
|
337.8
|
|
|
321.5
|
|
|
5.1
|
|
|
|
Other
income
|
32.9
|
|
|
30.4
|
|
|
8.3
|
|
|
97.4
|
|
|
91.1
|
|
|
6.9
|
|
|
|
Total operating
revenues
|
1,707.3
|
|
|
1,644.0
|
|
|
3.9
|
|
|
4,815.7
|
|
|
4,668.2
|
|
|
3.2
|
|
|
|
Investment gains
(losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized from actual
transactions
|
6.3
|
|
|
7.3
|
|
|
|
|
31.3
|
|
|
54.8
|
|
|
|
|
|
Realized from
impairments
|
—
|
|
|
—
|
|
|
|
|
(2.0)
|
|
|
—
|
|
|
|
|
|
Unrealized from
changes in fair value of equity securities
|
57.3
|
|
|
128.4
|
|
|
|
|
439.3
|
|
|
17.7
|
|
|
|
|
|
Total investment
gains (losses)
|
63.6
|
|
|
135.7
|
|
|
|
|
468.7
|
|
|
72.6
|
|
|
|
|
|
Total
revenues
|
1,771.0
|
|
|
1,779.7
|
|
|
|
|
5,284.4
|
|
|
4,740.9
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
costs
|
663.7
|
|
|
619.4
|
|
|
7.2
|
|
|
1,905.1
|
|
|
1,820.8
|
|
|
4.6
|
|
|
|
Sales and general
expenses
|
845.0
|
|
|
815.2
|
|
|
3.7
|
|
|
2,372.0
|
|
|
2,310.0
|
|
|
2.7
|
|
|
|
Interest and other
charges
|
9.7
|
|
|
9.9
|
|
|
-2.0
|
|
|
30.8
|
|
|
34.3
|
|
|
-10.3
|
|
|
|
Total operating
expenses
|
1,518.6
|
|
|
1,444.6
|
|
|
5.1
|
%
|
|
4,308.0
|
|
|
4,165.2
|
|
|
3.4
|
%
|
|
|
Pretax income
(loss)
|
252.4
|
|
|
335.1
|
|
|
|
|
976.3
|
|
|
575.7
|
|
|
|
|
|
Income taxes
(credits)
|
49.5
|
|
|
59.8
|
|
|
|
|
195.6
|
|
|
98.6
|
|
|
|
|
|
Net income
(loss)
|
$
|
202.8
|
|
|
$
|
275.2
|
|
|
|
|
$
|
780.6
|
|
|
$
|
477.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON STOCK
STATISTICS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per share: Basic
|
$
|
0.68
|
|
|
$
|
0.92
|
|
|
|
|
$
|
2.60
|
|
|
$
|
1.63
|
|
|
|
|
|
Diluted
|
$
|
0.67
|
|
|
$
|
0.92
|
|
|
|
|
$
|
2.59
|
|
|
$
|
1.59
|
|
|
|
|
|
Components of net
income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net
income (loss) excluding investment gains (losses)
|
$
|
0.51
|
|
|
$
|
0.56
|
|
|
-8.9
|
%
|
|
$
|
1.37
|
|
|
$
|
1.43
|
|
|
-4.2
|
%
|
|
|
Net investment gains
(losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized from actual
transactions and impairments
|
0.02
|
|
|
0.02
|
|
|
|
|
0.08
|
|
|
0.15
|
|
|
|
|
|
Unrealized from
changes in fair value of equity securities
|
0.15
|
|
|
0.34
|
|
|
|
|
1.15
|
|
|
0.05
|
|
|
|
|
|
Basic net income
(loss)
|
$
|
0.68
|
|
|
$
|
0.92
|
|
|
|
|
$
|
2.60
|
|
|
$
|
1.63
|
|
|
|
|
|
Diluted net income (loss) excluding
investment gains (losses)
|
$
|
0.51
|
|
|
$
|
0.56
|
|
|
-8.9
|
%
|
|
$
|
1.36
|
|
|
$
|
1.40
|
|
|
-2.9
|
%
|
|
|
Net investment gains
(losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized from actual
transactions and impairments
|
0.01
|
|
|
0.02
|
|
|
|
|
0.08
|
|
|
0.14
|
|
|
|
|
|
Unrealized from
changes in fair value of equity securities
|
0.15
|
|
|
0.34
|
|
|
|
|
1.15
|
|
|
0.05
|
|
|
|
|
|
Diluted net income
(loss)
|
$
|
0.67
|
|
|
$
|
0.92
|
|
|
|
|
$
|
2.59
|
|
|
$
|
1.59
|
|
|
|
|
|
Cash dividends on
common stock
|
$
|
1.2000
|
|
|
$
|
0.1950
|
|
|
|
|
$
|
1.6000
|
|
|
$
|
0.5850
|
|
|
|
|
|
Book value per
share
|
|
|
|
|
|
|
$
|
19.31
|
|
|
$
|
17.76
|
|
|
8.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) All amounts in
this report are stated in millions except common stock data and
percentages.
|
|
|
|
|
|
|
|
|
|
|
Old Republic's business is necessarily managed for the long run.
In this context, management's key objectives are to achieve a
continuous, long-term improvement in operating results, and ensure
balance sheet strength for the primary needs of the basic insurance
underwriting and related services business. In this view, the
evaluation of periodic and long-term results excludes consideration
of all investment gains or (losses). In management's opinion, this
focus provides a better way to realistically analyze, evaluate, and
establish accountability for the results and benefits that arise
from the basic operations of the business. According to the tenets
of GAAP, however, net income, which includes all specifically
defined investment gains or (losses), is the measure of total
profitability.
In management's opinion, the inclusion of realized investment
gains or (losses) in net income can mask the fundamental operating
results of an insurance business. That's because their realization
is, more often than not, highly discretionary. It's usually
affected by such randomly occurring factors as the timing of
individual securities sales, tax-planning considerations, and
modifications of investment management judgments about the
direction of securities markets or the prospects of individual
investees or industry sectors. Moreover, the inclusion since
January 1, 2018 of unrealized
investment gains or (losses) in equity (but not fixed maturity)
securities required by a new rule of the Financial Accounting
Standards Board ("FASB"), can lead to even greater period-to-period
fluctuations in reported net income. The impact of the continuous
volatility in stock market valuations is most evident in its net of
tax effect on net income for the third quarter and first nine
months of 2019 and 2018.
The table on the next page shows an array of numbers
purposefully arranged in 10 sections. Management believes the
information in sections A to G and J highlight the most meaningful,
realistic indicators of ORI's segmented and consolidated financial
performance. The information underscores the necessity of reviewing
reported results by separating the fait-accompli of economic
realities from the transient vagaries of securities markets and
their above-noted impact on reported GAAP net income.
|
Major Segmented
and Consolidated Elements of Income (Loss)
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
A. Net premiums,
fees, and other income:
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
870.2
|
|
|
$
|
841.5
|
|
|
3.4
|
%
|
|
$
|
2,551.9
|
|
|
$
|
2,441.3
|
|
|
4.5
|
%
|
Title
insurance
|
673.8
|
|
|
640.7
|
|
|
5.2
|
|
|
1,772.3
|
|
|
1,743.6
|
|
|
1.6
|
|
Corporate
and other
|
3.3
|
|
|
4.2
|
|
|
-21.9
|
|
|
10.2
|
|
|
11.2
|
|
|
-8.8
|
|
Other
income
|
32.9
|
|
|
30.4
|
|
|
8.3
|
|
|
97.4
|
|
|
91.1
|
|
|
6.9
|
|
Subtotal
|
1,580.3
|
|
|
1,517.0
|
|
|
4.2
|
|
|
4,431.9
|
|
|
4,287.4
|
|
|
3.4
|
|
RFIG
run-off business (c)
|
14.2
|
|
|
18.2
|
|
|
-21.6
|
|
|
45.8
|
|
|
59.2
|
|
|
-22.6
|
|
Consolidated
|
$
|
1,594.6
|
|
|
$
|
1,535.2
|
|
|
3.9
|
%
|
|
$
|
4,477.8
|
|
|
$
|
4,346.7
|
|
|
3.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
B. Underwriting
and related
|
|
|
|
|
|
|
|
|
|
|
|
services income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
19.7
|
|
|
$
|
37.0
|
|
|
-46.7
|
%
|
|
$
|
74.6
|
|
|
$
|
78.0
|
|
|
-4.3
|
%
|
Title
insurance
|
63.3
|
|
|
58.7
|
|
|
7.9
|
|
|
126.1
|
|
|
132.6
|
|
|
-4.8
|
|
Corporate
and other
|
(0.3)
|
|
|
(4.0)
|
|
|
90.8
|
|
|
(10.9)
|
|
|
(17.4)
|
|
|
37.5
|
|
Subtotal
|
82.7
|
|
|
91.7
|
|
|
-9.8
|
|
|
189.9
|
|
|
193.2
|
|
|
-1.7
|
|
RFIG
run-off business (c)
|
3.0
|
|
|
8.7
|
|
|
-65.2
|
|
|
10.7
|
|
|
22.6
|
|
|
-52.8
|
|
Consolidated
|
$
|
85.7
|
|
|
$
|
100.5
|
|
|
-14.7
|
%
|
|
$
|
200.6
|
|
|
$
|
215.8
|
|
|
-7.0
|
%
|
C. Consolidated
underwriting ratio:
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
42.5
|
%
|
|
41.2
|
%
|
|
|
|
43.5
|
%
|
|
42.8
|
%
|
|
|
Expense
ratio
|
51.9
|
|
|
51.9
|
|
|
|
|
51.7
|
|
|
51.9
|
|
|
|
Composite
ratio
|
94.4
|
%
|
|
93.1
|
%
|
|
|
|
95.2
|
%
|
|
94.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. Net investment
income:
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
88.7
|
|
|
$
|
86.1
|
|
|
3.0
|
%
|
|
$
|
265.8
|
|
|
$
|
253.8
|
|
|
4.7
|
%
|
Title
insurance
|
10.2
|
|
|
9.8
|
|
|
4.3
|
|
|
30.8
|
|
|
28.8
|
|
|
6.8
|
|
Corporate
and other
|
9.4
|
|
|
8.1
|
|
|
15.2
|
|
|
27.9
|
|
|
23.4
|
|
|
19.3
|
|
Subtotal
|
108.4
|
|
|
104.1
|
|
|
4.1
|
|
|
324.6
|
|
|
306.1
|
|
|
6.0
|
|
RFIG
run-off business
|
4.2
|
|
|
4.6
|
|
|
-7.1
|
|
|
13.2
|
|
|
15.4
|
|
|
-14.2
|
|
Consolidated
|
$
|
112.7
|
|
|
$
|
108.7
|
|
|
3.6
|
%
|
|
$
|
337.8
|
|
|
$
|
321.5
|
|
|
5.1
|
%
|
E. Interest and
other charges:
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
17.7
|
|
|
$
|
18.0
|
|
|
|
|
$
|
54.6
|
|
|
$
|
52.7
|
|
|
|
Title
insurance
|
0.7
|
|
|
0.8
|
|
|
|
|
3.3
|
|
|
3.2
|
|
|
|
Corporate
and other (a)
|
(8.7)
|
|
|
(8.9)
|
|
|
|
|
(27.1)
|
|
|
(21.6)
|
|
|
|
Subtotal
|
9.7
|
|
|
9.9
|
|
|
|
|
30.8
|
|
|
34.3
|
|
|
|
RFIG
run-off business
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
Consolidated
|
$
|
9.7
|
|
|
$
|
9.9
|
|
|
-2.0
|
%
|
|
$
|
30.8
|
|
|
$
|
34.3
|
|
|
-10.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
F. Segmented and
consolidated
|
|
|
|
|
|
|
|
|
|
|
|
pretax
income (loss) excluding
|
|
|
|
|
|
|
|
|
|
|
|
investment gains
(losses):
|
|
|
|
|
|
|
|
|
|
|
|
General
insurance
|
$
|
90.7
|
|
|
$
|
105.1
|
|
|
-13.7
|
%
|
|
$
|
285.8
|
|
|
$
|
279.1
|
|
|
2.4
|
%
|
Title
insurance
|
72.8
|
|
|
67.7
|
|
|
7.6
|
|
|
153.7
|
|
|
158.2
|
|
|
-2.8
|
|
Corporate
and other
|
17.7
|
|
|
13.1
|
|
|
35.2
|
|
|
44.2
|
|
|
27.6
|
|
|
60.3
|
|
Subtotal
|
181.4
|
|
|
185.9
|
|
|
-2.5
|
|
|
483.7
|
|
|
464.9
|
|
|
4.0
|
|
RFIG
run-off business (c)
|
7.3
|
|
|
13.3
|
|
|
-45.1
|
|
|
23.9
|
|
|
38.0
|
|
|
-37.2
|
|
Consolidated
|
188.7
|
|
|
199.3
|
|
|
-5.3
|
%
|
|
507.6
|
|
|
503.0
|
|
|
0.9
|
%
|
Income
taxes (credits) on above (b)
|
36.0
|
|
|
31.3
|
|
|
|
|
96.9
|
|
|
83.4
|
|
|
|
G. Net income
(loss) excluding
|
|
|
|
|
|
|
|
|
|
|
|
investment gains
(losses)
|
152.7
|
|
|
167.9
|
|
|
-9.1
|
%
|
|
410.6
|
|
|
419.6
|
|
|
-2.1
|
%
|
H. Consolidated
pretax investment
|
|
|
|
|
|
|
|
|
|
|
|
gains
(losses):
|
|
|
|
|
|
|
|
|
|
|
|
Realized
from actual transactions
|
|
|
|
|
|
|
|
|
|
|
|
and
impairments
|
6.3
|
|
|
7.3
|
|
|
|
|
29.3
|
|
|
54.8
|
|
|
|
Unrealized from changes in
|
|
|
|
|
|
|
|
|
|
|
|
fair value of
equity securities
|
57.3
|
|
|
128.4
|
|
|
|
|
439.3
|
|
|
17.7
|
|
|
|
Total
|
63.6
|
|
|
135.7
|
|
|
|
|
468.7
|
|
|
72.6
|
|
|
|
Income
taxes (credits) on above
|
13.5
|
|
|
28.5
|
|
|
|
|
98.7
|
|
|
15.2
|
|
|
|
Net of
tax investment gains (losses)
|
50.1
|
|
|
107.2
|
|
|
|
|
369.9
|
|
|
57.4
|
|
|
|
I. Net
income (loss)
|
$
|
202.8
|
|
|
$
|
275.2
|
|
|
|
|
$
|
780.6
|
|
|
$
|
477.0
|
|
|
|
J. Consolidated
operating cash flow
|
|
|
|
|
|
|
$
|
666.2
|
|
|
$
|
597.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes
consolidation/elimination entries. (b) The effective tax rates
applicable to pretax income excluding investment gains or losses
were 19.1% for both the third quarter and first nine months of
2019, and 15.7% and 16.6% for the third quarter and first nine
months of 2018, respectively. (c) See Note (a) in RFIG
Run-off Segments Results on page (6).
|
|
General Insurance
Segment Results - The table below reflects the major
elements affecting this segment's financial performance for the
periods shown.
|
|
|
|
General Insurance
Summary Operating Results
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
Net premiums
earned
|
$
|
870.2
|
|
|
$
|
841.5
|
|
|
3.4
|
%
|
|
$
|
2,551.9
|
|
|
$
|
2,441.3
|
|
|
4.5
|
%
|
Net investment
income
|
88.7
|
|
|
86.1
|
|
|
3.0
|
|
|
265.8
|
|
|
253.8
|
|
|
4.7
|
|
Other
income
|
32.7
|
|
|
30.2
|
|
|
8.4
|
|
|
97.0
|
|
|
90.5
|
|
|
7.1
|
|
Operating
revenues
|
991.7
|
|
|
957.8
|
|
|
3.5
|
|
|
2,914.7
|
|
|
2,785.7
|
|
|
4.6
|
|
Claim
costs
|
634.8
|
|
|
595.0
|
|
|
6.7
|
|
|
1,821.9
|
|
|
1,739.3
|
|
|
4.8
|
|
Sales and general
expenses
|
248.4
|
|
|
239.6
|
|
|
3.7
|
|
|
752.2
|
|
|
714.5
|
|
|
5.3
|
|
Interest and other
charges
|
17.7
|
|
|
18.0
|
|
|
-2.1
|
|
|
54.6
|
|
|
52.7
|
|
|
3.7
|
|
Operating
expenses
|
900.9
|
|
|
852.7
|
|
|
5.7
|
|
|
2,628.9
|
|
|
2,506.6
|
|
|
4.9
|
|
Segment pretax
operating income (loss) (a)
|
$
|
90.7
|
|
|
$
|
105.1
|
|
|
-13.7
|
%
|
|
$
|
285.8
|
|
|
$
|
279.1
|
|
|
2.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
72.9
|
%
|
|
70.7
|
%
|
|
|
|
71.4
|
%
|
|
71.2
|
%
|
|
|
Expense
ratio
|
24.8
|
|
|
24.9
|
|
|
|
|
25.7
|
|
|
25.6
|
|
|
|
Composite
ratio
|
97.7
|
%
|
|
95.6
|
%
|
|
|
|
97.1
|
%
|
|
96.8
|
%
|
|
|
__________________
|
(a)
|
In connection with
the combined run-off mortgage guaranty ("MI") and consumer credit
indemnity ("CCI"), $0.2 and $0.7 of pretax operating income for the
third quarter and first nine months of 2018 were retained by
certain general insurance companies pursuant to various quota share
and stop loss reinsurance agreements. All of these amounts
historically have been reclassified such that 100% of the CCI
run-off business is reported in the RFIG run-off segment. Effective
July 1, 2019, the results of the CCI run-off business are being
classified in the General Insurance Segment for the third quarter
2019 and all future periods.
|
General insurance underwriting/service profitability, gauged by
the composite underwriting ratios, declined in the latest quarter,
and was relatively stable for the first nine months of 2019.
Revenue-wise earned premiums edged up in low single digits in both
of these periods. With few exceptions, premiums grew for most types
of coverages and markets served. The largest contributions stemmed
principally from commercial automobile (trucking), national
accounts, and executive indemnity coverages. The cumulative effects
of recent years' and ongoing premium rate increases for most
insurance products, other than workers' compensation coverages,
along with new business production were main factors in top line
growth. Net investment income growth was principally driven by a
moderately higher invested asset base with dividends from equity
security investments providing the greatest addition.
As the above table shows, the consolidated general insurance
ratio of claim costs to net premiums earned remained relatively
stable for the first nine months of 2019. As such, it continues to
reflect the past several years' fairly consistent downtrends and
the effects of claim development portrayed in the following table.
Small year-over-year changes in periodic expense ratios are
generally reflective of ongoing product mix dynamics, and the
variability of attendant sales and general expenses.
|
|
|
|
|
Effect of Prior
Periods'
|
|
|
|
|
|
|
|
|
|
(Favorable)/
|
|
Claim Ratio
Excluding
|
|
Reported
|
|
Unfavorable
Claim
|
|
Prior Periods'
Claim
|
|
Claim
Ratio
|
|
Reserves
Development
|
|
Reserves
Development
|
2014
|
|
77.9
|
%
|
|
|
|
3.9
|
%
|
|
|
|
74.0
|
%
|
|
2015
|
|
74.1
|
|
|
|
|
1.5
|
|
|
|
|
72.6
|
|
|
2016
|
|
73.0
|
|
|
|
|
0.3
|
|
|
|
|
72.7
|
|
|
2017
|
|
71.8
|
|
|
|
|
0.7
|
|
|
|
|
71.1
|
|
|
2018
|
|
72.2
|
%
|
|
|
|
—
|
%
|
|
|
|
72.2
|
%
|
|
3rd Quarter
2018
|
|
70.7
|
%
|
|
|
|
(1.0)
|
%
|
|
|
|
71.7
|
%
|
|
3rd Quarter
2019
|
|
72.9
|
%
|
|
|
|
(0.5)
|
%
|
|
|
|
73.4
|
%
|
|
1st Nine Months
2018
|
|
71.2
|
%
|
|
|
|
0.3
|
%
|
|
|
|
70.9
|
%
|
|
1st Nine Months
2019
|
|
71.4
|
%
|
|
|
|
(0.4)
|
%
|
|
|
|
71.8
|
%
|
|
Quarterly and annual claim ratios and the trends they display,
may not be particularly meaningful indicators of future outcomes
for ORI's liability-oriented mix of business and its relatively
long claim payment patterns. Absent significant economic and
insurance industry dislocations in the foreseeable future,
management currently anticipates that annually reported claim
ratios should settle within targeted averages in the high 60% to
low 70% range. Assuming the current mix of coverages, the overall
business is expected to reflect an expense ratio ranging between
23% and 25%, and a resulting composite underwriting ratio ranging
between 90% and 95%.
|
Title Insurance
Segment Results - The table below shows the major elements
affecting this segment's financial performance for the periods
shown.
|
|
|
|
Title Insurance
Summary Operating Results
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
Net premiums and fees
earned
|
$
|
673.8
|
|
|
$
|
640.7
|
|
|
5.2
|
%
|
|
$
|
1,772.3
|
|
|
$
|
1,743.6
|
|
|
1.6
|
%
|
Net investment
income
|
10.2
|
|
|
9.8
|
|
|
4.3
|
|
|
30.8
|
|
|
28.8
|
|
|
6.8
|
|
Other
income
|
0.1
|
|
|
0.1
|
|
|
1.0
|
|
|
0.5
|
|
|
0.6
|
|
|
-18.7
|
|
Operating
revenues
|
684.3
|
|
|
650.8
|
|
|
5.1
|
|
|
1,803.7
|
|
|
1,773.1
|
|
|
1.7
|
|
Claim
costs
|
20.7
|
|
|
15.1
|
|
|
37.3
|
|
|
53.3
|
|
|
45.0
|
|
|
18.4
|
|
Sales and general
expenses
|
589.9
|
|
|
567.1
|
|
|
4.0
|
|
|
1,593.3
|
|
|
1,566.6
|
|
|
1.7
|
|
Interest and other
charges
|
0.7
|
|
|
0.8
|
|
|
-9.0
|
|
|
3.3
|
|
|
3.2
|
|
|
1.3
|
|
Operating
expenses
|
611.4
|
|
|
583.1
|
|
|
4.9
|
|
|
1,650.0
|
|
|
1,614.9
|
|
|
2.2
|
|
Segment pretax
operating income (loss)
|
$
|
72.8
|
|
|
$
|
67.7
|
|
|
7.6
|
%
|
|
$
|
153.7
|
|
|
$
|
158.2
|
|
|
-2.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
3.1
|
%
|
|
2.4
|
%
|
|
|
|
3.0
|
%
|
|
2.6
|
%
|
|
|
Expense
ratio
|
87.5
|
|
|
88.5
|
|
|
|
|
89.9
|
|
|
89.8
|
|
|
|
Composite
ratio
|
90.6
|
%
|
|
90.9
|
%
|
|
|
|
92.9
|
%
|
|
92.4
|
%
|
|
|
2019 year-over-year comparisons of revenues from title premiums
and fees reflect a continued stable market share position. Claim
costs trended higher as favorable development of prior years' claim
reserve estimates edged down. The following table shows recent
annual and interim periods' claim ratios and the effects of claim
development trends:
|
|
|
|
|
Effect of Prior
Periods'
|
|
|
|
|
|
|
|
|
|
(Favorable)/
|
|
Claim Ratio
Excluding
|
|
Reported
|
|
Unfavorable
Claim
|
|
Prior Periods'
Claim
|
|
Claim
Ratio
|
|
Reserves
Development
|
|
Reserves
Development
|
2014
|
|
5.2
|
%
|
|
|
|
(0.8)
|
%
|
|
|
|
6.0
|
%
|
|
2015
|
|
4.9
|
|
|
|
|
(0.6)
|
|
|
|
|
5.5
|
|
|
2016
|
|
3.8
|
|
|
|
|
(1.1)
|
|
|
|
|
4.9
|
|
|
2017
|
|
0.9
|
|
|
|
|
(3.3)
|
|
|
|
|
4.2
|
|
|
2018
|
|
2.1
|
%
|
|
|
|
(2.0)
|
%
|
|
|
|
4.1
|
%
|
|
3rd Quarter
2018
|
|
2.4
|
%
|
|
|
|
(1.8)
|
%
|
|
|
|
4.2
|
%
|
|
3rd Quarter
2019
|
|
3.1
|
%
|
|
|
|
(1.0)
|
%
|
|
|
|
4.1
|
%
|
|
1st Nine Months
2018
|
|
2.6
|
%
|
|
|
|
(1.5)
|
%
|
|
|
|
4.1
|
%
|
|
1st Nine Months
2019
|
|
3.0
|
%
|
|
|
|
(1.0)
|
%
|
|
|
|
4.0
|
%
|
|
Net investment income is reflective of both a moderately growing
invested asset base, and the overall investment yield environment.
The largest portion of investment income growth stemmed from
dividends earned from the equity securities portfolio. Operating
expenses have remained generally aligned with revenues from
premiums and fees for all periods reported upon.
|
RFIG Run-off
Segment Results - The table below reflects the major
elements affecting this segment's financial performance for the
periods shown.
|
|
|
|
RFIG Run-off
Summary Operating Results (a)
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
A. Mortgage
Insurance (MI)
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums
earned
|
$
|
14.2
|
|
|
$
|
17.8
|
|
|
-20.0
|
%
|
|
$
|
45.5
|
|
|
$
|
58.0
|
|
|
-21.7
|
%
|
Net investment
income
|
4.2
|
|
|
4.3
|
|
|
-2.5
|
|
|
12.9
|
|
|
14.7
|
|
|
-12.1
|
|
Claim
costs
|
7.6
|
|
|
5.5
|
|
|
37.9
|
|
|
24.1
|
|
|
23.3
|
|
|
3.4
|
|
MI pretax operating
income (loss)
|
$
|
7.3
|
|
|
$
|
13.2
|
|
|
-44.8
|
%
|
|
$
|
22.8
|
|
|
$
|
37.9
|
|
|
-39.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim
ratio
|
53.6
|
%
|
|
31.1
|
%
|
|
|
|
53.0
|
%
|
|
40.2
|
%
|
|
|
Expense
ratio
|
25.1
|
|
|
19.1
|
|
|
|
|
25.2
|
|
|
19.9
|
|
|
|
Composite
ratio
|
78.7
|
%
|
|
50.2
|
%
|
|
|
|
78.2
|
%
|
|
60.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. Consumer Credit
Indemnity (CCI) (a)
|
|
|
|
|
|
|
|
|
|
|
|
CCI pretax operating
income (loss)
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
1.0
|
|
|
$
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Total MI and
CCI Run-off business (a)
|
|
|
|
|
|
|
|
|
|
|
|
Segment pretax
operating income (loss)
|
$
|
7.3
|
|
|
$
|
13.3
|
|
|
-45.1
|
%
|
|
$
|
23.9
|
|
|
$
|
38.0
|
|
|
-37.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
__________________
|
(a)
|
Segment pretax
operating income (loss) includes amounts attributable to the
Company's consumer credit indemnity run-off business of $ - and
$1.0 for the third quarter and first nine months of 2019,
respectively; these amounts were $ - and $0.1 for the third quarter
and first nine months of 2018, respectively. Results for the CCI
coverages are expected to be immaterial in the remaining run-off
periods; effective July 1, 2019, these results are being classified
in the General Insurance Segment for the third quarter 2019 and all
future periods.
|
Pretax operating results of the run-off MI business reflect the
expected, continuing drop in net earned premiums from declining
risk in force, and lower investment income from a smaller invested
asset base as claim and expense payments exceed premium
receipts.
As indicated in the far right column of the following table, MI
claim ratios have generally continued to decline, favorable
developments of prior periods' reserves notwithstanding. The
downtrend is largely due to a combination of declining new loan
defaults, and stable-to-improving cure rates for outstanding
delinquent loans.
|
|
|
|
|
Effect of Prior
Periods'
|
|
|
|
|
|
|
|
|
|
(Favorable)/
|
|
Claim Ratio
Excluding
|
|
Reported
|
|
Unfavorable
Claim
|
|
Prior Periods'
Claim
|
|
Claim
Ratio
|
|
Reserves
Development
|
|
Reserves
Development
|
2014
|
|
48.8
|
%
|
|
|
|
(69.3)
|
%
|
|
|
|
118.1
|
%
|
|
2015
|
|
56.4
|
|
|
|
|
(65.0)
|
|
|
|
|
121.4
|
|
|
2016
|
|
34.1
|
|
|
|
|
(39.8)
|
|
|
|
|
73.9
|
|
|
2017
|
|
57.6
|
|
|
|
|
(38.3)
|
|
|
|
|
95.9
|
|
|
2018
|
|
43.2
|
%
|
|
|
|
(27.0)
|
%
|
|
|
|
70.2
|
%
|
|
3rd Quarter
2018
|
|
31.1
|
%
|
|
|
|
(10.4)
|
%
|
|
|
|
41.5
|
%
|
|
3rd Quarter
2019
|
|
53.6
|
%
|
|
|
|
(14.2)
|
%
|
|
|
|
67.8
|
%
|
|
1st Nine Months
2018
|
|
40.2
|
%
|
|
|
|
(25.7)
|
%
|
|
|
|
65.9
|
%
|
|
1st Nine Months
2019
|
|
53.0
|
%
|
|
|
|
(9.6)
|
%
|
|
|
|
62.6
|
%
|
|
|
Corporate and
Other Operating Results - The combination of a small life and
accident insurance business and the net costs associated with the
parent holding company and its internal corporate services
subsidiaries usually produce highly variable results. Earnings
variations stem from volatility inherent to the small scale of the
life and accident insurance line, net investment income, and net
interest charges (credits) pertaining to external and intra-system
financing arrangements. Year-to-date 2019 results were enhanced by
the elimination of interest costs associated with outstanding
external debt converted into ORI common stock in March 2018. The
interplay of these various elements is summarized in the following
table:
|
|
|
|
|
Corporate and
Other Summary Operating Results
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
Net life and accident
premiums earned
|
|
$
|
3.3
|
|
|
$
|
4.2
|
|
|
-21.9
|
%
|
|
$
|
10.2
|
|
|
$
|
11.2
|
|
|
-8.8
|
%
|
Net investment
income
|
|
9.4
|
|
|
8.1
|
|
|
15.2
|
|
|
27.9
|
|
|
23.4
|
|
|
19.3
|
|
Operating
revenues
|
|
12.7
|
|
|
12.4
|
|
|
2.2
|
|
|
38.1
|
|
|
34.6
|
|
|
10.1
|
|
Claim
costs
|
|
0.5
|
|
|
3.5
|
|
|
-84.5
|
|
|
6.3
|
|
|
12.6
|
|
|
-49.5
|
|
Insurance
expenses
|
|
0.9
|
|
|
1.3
|
|
|
-28.7
|
|
|
3.5
|
|
|
3.7
|
|
|
-7.6
|
|
Corporate, interest
and other expenses - net
|
|
(6.5)
|
|
|
(5.6)
|
|
|
-16.8
|
|
|
(15.9)
|
|
|
(9.3)
|
|
|
-70.4
|
|
Operating
expenses
|
|
(5.0)
|
|
|
(0.6)
|
|
|
N/M
|
|
|
(6.1)
|
|
|
7.0
|
|
|
-187.3
|
|
Corporate and other
pretax operating income (loss)
|
|
$
|
17.7
|
|
|
$
|
13.1
|
|
|
35.2
|
%
|
|
$
|
44.2
|
|
|
$
|
27.6
|
|
|
60.3
|
%
|
|
Summary
Consolidated Balance Sheet - The table below shows Old
Republic's consolidated financial position at the dates
shown.
|
|
|
|
September
30,
|
|
December
31,
|
|
September
30,
|
|
2019
|
|
2018
|
|
2018
|
Assets:
|
|
|
|
|
|
Cash and fixed
maturity securities
|
$
|
10,291.4
|
|
|
$
|
9,683.0
|
|
|
$
|
9,817.2
|
|
Equity
securities
|
3,770.6
|
|
|
3,380.9
|
|
|
3,474.3
|
|
Other invested
assets
|
117.7
|
|
|
123.4
|
|
|
128.5
|
|
Cash and invested
assets
|
14,179.7
|
|
|
13,187.4
|
|
|
13,420.1
|
|
Accounts and premiums
receivable
|
1,687.5
|
|
|
1,499.4
|
|
|
1,643.0
|
|
Federal income tax
recoverable: Current
|
0.5
|
|
|
16.8
|
|
|
—
|
|
Prepaid federal
income taxes
|
138.5
|
|
|
129.8
|
|
|
114.3
|
|
Reinsurance balances
recoverable
|
3,923.7
|
|
|
3,484.5
|
|
|
3,637.2
|
|
Deferred policy
acquisition costs
|
333.0
|
|
|
316.3
|
|
|
316.6
|
|
Sundry
assets
|
918.6
|
|
|
692.6
|
|
|
670.8
|
|
Total
assets
|
$
|
21,181.8
|
|
|
$
|
19,327.1
|
|
|
$
|
19,802.3
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity:
|
|
|
|
|
|
Policy
liabilities
|
$
|
2,602.0
|
|
|
$
|
2,303.5
|
|
|
$
|
2,450.5
|
|
Claim
reserves
|
9,817.4
|
|
|
9,471.2
|
|
|
9,482.9
|
|
Federal income tax
payable: Current
|
—
|
|
|
—
|
|
|
3.7
|
|
Deferred
|
171.3
|
|
|
10.3
|
|
|
54.7
|
|
Reinsurance balances
and funds
|
759.9
|
|
|
600.4
|
|
|
703.2
|
|
Debt
|
973.7
|
|
|
981.4
|
|
|
981.1
|
|
Sundry
liabilities
|
1,063.3
|
|
|
813.7
|
|
|
814.7
|
|
Total
liabilities
|
15,387.9
|
|
|
14,180.8
|
|
|
14,491.1
|
|
Shareholders'
equity
|
5,793.9
|
|
|
5,146.2
|
|
|
5,311.2
|
|
Total liabilities and
shareholders' equity
|
$
|
21,181.8
|
|
|
$
|
19,327.1
|
|
|
$
|
19,802.3
|
|
|
Cash, Invested
Assets, and Shareholders' Equity - The table below shows
Old Republic's consolidated cash and invested assets as well as
shareholders' equity at the dates shown.
|
|
|
|
|
Cash, Invested
Assets, and Shareholders' Equity
|
|
|
|
|
|
|
|
|
% Change
|
|
|
Sept. 30,
|
|
Dec. 31,
|
|
Sept. 30,
|
|
Sept. '19/
|
|
Sept. '19/
|
|
|
2019
|
|
2018
|
|
2018
|
|
Dec. '18
|
|
Sept. '18
|
Cash and invested
assets:
|
|
|
|
|
|
|
|
|
|
|
Available for sale
fixed maturity securities, cash
|
|
|
|
|
|
|
|
|
|
|
and
other invested assets, carried at fair value
|
$
|
9,381.6
|
|
|
$
|
8,761.7
|
|
|
$
|
8,895.2
|
|
|
7.1
|
%
|
|
5.5
|
%
|
|
Equity securities,
carried at fair value
|
3,770.6
|
|
|
3,380.9
|
|
|
3,474.3
|
|
|
11.5
|
|
|
8.5
|
|
|
Held to maturity,
carried at amortized cost
|
1,027.5
|
|
|
1,044.8
|
|
|
1,050.5
|
|
|
-1.7
|
|
|
-2.2
|
|
|
Total per balance
sheet
|
$
|
14,179.7
|
|
|
$
|
13,187.4
|
|
|
$
|
13,420.1
|
|
|
7.5
|
%
|
|
5.7
|
%
|
|
Total at cost for
all
|
$
|
13,126.2
|
|
|
$
|
12,950.6
|
|
|
$
|
12,886.1
|
|
|
1.4
|
%
|
|
1.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity: Total
|
$
|
5,793.9
|
|
|
$
|
5,146.2
|
|
|
$
|
5,311.2
|
|
|
12.6
|
%
|
|
9.1
|
%
|
|
|
Per common
share
|
$
|
19.31
|
|
|
$
|
17.23
|
|
|
$
|
17.76
|
|
|
12.1
|
%
|
|
8.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Composition of
shareholders' equity per share:
|
|
|
|
|
|
|
|
|
|
|
Equity before items
below
|
$
|
16.95
|
|
|
$
|
17.04
|
|
|
$
|
16.76
|
|
|
-0.5
|
%
|
|
1.1
|
%
|
|
Unrealized investment
gains (losses) and other
|
|
|
|
|
|
|
|
|
|
|
|
accumulated
comprehensive income (loss)
|
2.36
|
|
|
0.19
|
|
|
1.00
|
|
|
|
|
|
|
|
|
Total
|
$
|
19.31
|
|
|
$
|
17.23
|
|
|
$
|
17.76
|
|
|
12.1
|
%
|
|
8.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmented
composition of
|
|
|
|
|
|
|
|
|
|
shareholders' equity per
share:
|
|
|
|
|
|
|
|
|
|
|
Excluding run-off
segment
|
$
|
17.70
|
|
|
$
|
15.73
|
|
|
$
|
16.26
|
|
|
12.5
|
%
|
|
8.9
|
%
|
|
RFIG run-off
segment
|
1.61
|
|
|
1.50
|
|
|
1.50
|
|
|
|
|
|
|
|
|
Consolidated
total
|
$
|
19.31
|
|
|
$
|
17.23
|
|
|
$
|
17.76
|
|
|
12.1
|
%
|
|
8.7
|
%
|
Old Republic's invested assets portfolio is directed in
consideration of enterprise-wide risk management objectives. Most
importantly, these are intended to ensure solid funding of the
insurance subsidiaries' long-term obligations to policyholders and
other beneficiaries, as well as the long-term stability of the
subsidiaries' capital accounts. To this end, 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 and hedge fund investments.
Moreover, the Company does not engage in hedging or securities
lending transactions, nor does it invest in securities whose values
are predicated on non-regulated financial instruments exhibiting
amorphous or unfunded counter-party risk attributes.
As of September 30, 2019, the
consolidated investment portfolio reflected an allocation of
approximately 73% to fixed-maturity (bonds and notes) and
short-term investments, and 27% to equity securities (common
stock). The size of the fixed-maturity security portfolio has not
changed significantly over the past six years. It's been relatively
fixed as a basic anchor for the insurance underwriting
subsidiaries' obligations. The maturities are stratified and
conservatively matched to the expected timing of future years'
payments of those obligations. The asset quality has remained at
high levels.
Since 2013, most of ORI's investable funds have been directed
toward the purchase of high-quality equity securities of U.S.
companies. We favor the securities of issuers with long-term
records of reasonable earnings growth and steadily increasing
dividends. As a result, dividends from equity securities have been
the greatest source of investment income growth in recent years.
The portfolio (currently limited to fewer than 100 issues) is also
structured to contribute a measure of capital appreciation over
time. Periodic stress tests of the equities portfolio are made
pursuant to enterprise risk management controls. Their purpose is
to gain reasonable assurance that periodic downdrafts in market
prices, as typically occur in economic depression or recessionary
conditions, would not seriously undermine ORI's financial strength
and the long-term continuity and prospects of the business.
Changes in shareholders' equity per share are reflected in the
following table. As shown, these resulted mostly from net income
excluding net investment gains (losses), realized and unrealized
investment gains (losses), and dividend payments to
shareholders.
|
Shareholders'
Equity Per Share
|
|
Quarter
|
|
|
|
Year
|
|
Ended
|
|
Nine Months
Ended
|
|
Ended
|
|
Sept. 30,
|
|
September
30,
|
|
Dec. 31,
|
|
2019
|
|
2019
|
|
2018
|
|
2018
|
Beginning
balance
|
$
|
19.68
|
|
|
$
|
17.23
|
|
|
$
|
17.72
|
|
|
$
|
17.72
|
|
Changes in
shareholders' equity:
|
|
|
|
|
|
|
|
Net income (loss)
excluding net investment gains (losses)
|
0.51
|
|
|
1.37
|
|
|
1.43
|
|
|
1.89
|
|
Net of tax realized
investment gains (losses):
|
|
|
|
|
|
|
|
From actual
transactions
|
0.02
|
|
|
0.09
|
|
|
0.15
|
|
|
0.16
|
|
From
impairments
|
—
|
|
|
(0.01)
|
|
|
—
|
|
|
—
|
|
Subtotal
|
0.02
|
|
|
0.08
|
|
|
0.15
|
|
|
0.16
|
|
Net of tax unrealized
investment gains (losses) on
|
|
|
|
|
|
|
|
securities
carried at fair value:
|
|
|
|
|
|
|
|
Reported in net
income (loss)
|
0.15
|
|
|
1.15
|
|
|
0.05
|
|
|
(0.79)
|
|
Reported as other
comprehensive income (loss)
|
0.16
|
|
|
0.99
|
|
|
(0.62)
|
|
|
(0.59)
|
|
Subtotal
|
0.31
|
|
|
2.14
|
|
|
(0.57)
|
|
|
(1.38)
|
|
Total net
of tax realized and unrealized
|
|
|
|
|
|
|
|
investment gains (losses)
|
0.33
|
|
|
2.22
|
|
|
(0.42)
|
|
|
(1.22)
|
|
Cash dividends
(a)
|
(1.2000)
|
|
|
(1.6000)
|
|
|
(0.5850)
|
|
|
(0.7800)
|
|
Debt conversion,
stock issuance, and other
|
(0.01)
|
|
|
0.09
|
|
|
(0.38)
|
|
|
(0.38)
|
|
Net change
|
(0.37)
|
|
|
2.08
|
|
|
0.04
|
|
|
(0.49)
|
|
Ending
balance
|
$
|
19.31
|
|
|
$
|
19.31
|
|
|
$
|
17.76
|
|
|
$
|
17.23
|
|
Percentage change for
the period
|
-1.9
|
%
|
|
12.1
|
%
|
|
0.2
|
%
|
|
-2.8
|
%
|
__________________
|
(a)
|
The third quarter and
first nine months of 2019 includes a special cash dividend of $1.00
per share paid in September of this year.
|
|
Capitalization
- The following table shows that ORI's total capitalization has
risen over the past fiscal twelve months ended September 30, 2019
due to continued growth of the shareholders' equity
account.
|
|
|
|
Capitalization
|
|
September
30,
|
|
December
31,
|
|
September
30,
|
|
2019
|
|
2018
|
|
2018
|
Debt:
|
|
|
|
|
|
4.875% Senior Notes
due 2024
|
$
|
397.2
|
|
|
$
|
396.8
|
|
|
$
|
396.6
|
|
3.875% Senior Notes
due 2026
|
546.1
|
|
|
545.7
|
|
|
545.5
|
|
Other miscellaneous
debt
|
30.4
|
|
|
38.8
|
|
|
38.8
|
|
Total debt
|
973.7
|
|
|
981.4
|
|
|
981.1
|
|
Common shareholders'
equity
|
5,793.9
|
|
|
5,146.2
|
|
|
5,311.2
|
|
Total
capitalization
|
$
|
6,767.6
|
|
|
$
|
6,127.6
|
|
|
$
|
6,292.3
|
|
|
|
|
|
|
|
Capitalization
ratios:
|
|
|
|
|
|
Debt
|
14.4
|
%
|
|
16.0
|
%
|
|
15.6
|
%
|
Common shareholders'
equity
|
85.6
|
|
|
84.0
|
|
|
84.4
|
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
Managing Old
Republic's Insurance Business for the Long-Run
|
The insurance business is distinguished from most others in that
the prices (premiums) charged for various insurance products are
set without certainty of the ultimate claim costs that will emerge,
often many years after issuance and expiration of a policy. Old
Republic's business is therefore conducted with a primary focus on
achieving favorable underwriting results over cycles, and on the
maintenance of financial soundness in support of its insurance
subsidiaries' long-term obligations to insurance beneficiaries.
In this light, the Company's affairs are managed for the long
run and without significant regard to the arbitrary strictures of
quarterly or even annual reporting periods that American industry
must observe. In Old Republic's view, such short reporting time
frames do not comport well with the long-term nature of much of its
business. Management therefore believes that the Company's
operating results and financial condition can best be evaluated by
observing underwriting and overall operating performance trends
over succeeding five- or preferably ten-year intervals. A ten-year
period in particular can likely encompass at least one economic
and/or underwriting cycle and thereby provide an appropriate time
frame for such cycle to run its course, and for premium rate
changes and reserved claim costs to be quantified and emerge in
financial results with greater finality and effect.
Accompanying Financial Data and Other Information:
- About Old Republic
- Safe Harbor Statement
Financial Supplement:
- A financial supplement to this news release is available on the
Company's website: www.oldrepublic.com
About Old Republic
Chicago-based Old Republic
International Corporation is one of the nation's 50 largest
shareholder-owned insurance businesses. It is a member of the
Fortune 500 listing of America's largest companies. Its most
recent financial statements reflect consolidated assets of
approximately $21.18 billion and
common shareholders' equity of $5.79
billion, or $19.31 per share.
Its current stock market valuation is approximately $7.25 billion, or $23.91 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 coverages has
devolved to a run-off operating mode in recent years. Old
Republic's general insurance business ranks among the nation's 50
largest, while its title insurance operations are the third largest
in its industry.
The nature of Old Republic's business requires that it
be managed for the long run, and its cash dividend policy reflects
this long-term orientation. The current annualized dividend rate
of $0.80 per share marks the 38th consecutive year
that Old Republic has boosted this rate, and 2019 becomes
the 78th year of uninterrupted regular cash dividend payments.
Here's a summary of recent years' total book and market returns,
which includes the addition and reinvestment of cash dividend
payments, in comparison with the financial performance of three
selected indices similarly developed.
|
ORI
|
|
|
|
|
Annual
|
Annual
|
Selected Indices'
Compounded
|
|
Book Value
|
Market
Value
|
Total Annual
Returns
|
|
Compounded
|
Compounded
|
Gross
|
S & P
|
S & P
|
|
Total
|
Total
|
Domestic
|
500
|
Insurance
|
|
Return
|
Return
|
Product
|
Index
|
Index
|
Ten Years 1998 -
2008
|
9.3
|
%
|
3.5
|
%
|
5.0
|
%
|
-1.4
|
%
|
-4.2
|
%
|
Ten Years 2008 -
2018
|
6.0
|
%
|
11.8
|
%
|
3.4
|
%
|
13.1
|
%
|
11.0
|
%
|
Twenty Years 1998 -
2018
|
7.6
|
%
|
7.6
|
%
|
4.2
|
%
|
5.6
|
%
|
3.1
|
%
|
According to the most recent edition of Mergent's
Dividend Achievers, Old Republic is listed in 56th
place among just 105 qualifying publicly held companies, out of
thousands considered, that have posted at least 25 consecutive
years of annual dividend growth.
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 particularly affected by the level of
market competition, which is typically a function of available
capital and expected returns on such capital among competitors, the
levels of investment yields and inflation rates, and periodic
changes in claim frequency and severity patterns caused by natural
disasters, weather conditions, accidents, illnesses, work-related
injuries, and unanticipated external events. Title Insurance and
RFIG Run-off results can be affected by similar factors, and by
changes in national and regional housing demand and values, the
availability and cost of mortgage loans, employment trends, and
default rates on mortgage loans. Life and accident insurance
earnings are exposed to the variability of employment and consumer
spending, changes in mortality and health trends, and alterations
in policy lapsation rates. At the parent holding company level,
operating earnings or losses are generally reflective of the amount
of debt outstanding and its cost, interest income on temporary
holdings of short-term investments, and period-to-period variations
in the costs of administering the Company's widespread
operations.
The General Insurance, Title Insurance, Corporate and Other
Segments, and the RFIG Run-off business maintain customer
information and rely upon technology platforms to conduct their
business. As a result, each of them and the Company are exposed to
cyber risk. Many of the Company's operating subsidiaries, maintain
separate IT systems which are deemed to reduce enterprise-wide
risks of potential cybersecurity incidents. However, given the
potential magnitude of a significant breach, the Company
continually evaluates on an enterprise-wide basis its IT hardware,
security infrastructure and business practices to respond to these
risks and to detect and remediate in a timely manner significant
cybersecurity incidents or business process interruptions.
A more detailed listing and discussion of the risks and other
factors which affect the Company's risk-taking insurance business
are included in Part I, Item 1A - Risk Factors, of the Company's
2018 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 Old Republic's
latest news releases and other corporate documents:
Please visit us at
www.oldrepublic.com
|
___________________________________________
|
|
|
|
Alternatively,
please write or call:
Investor
Relations
Old Republic
International Corporation
307 North Michigan
Avenue Ÿ Chicago, IL 60601
312-346-8100
|
|
Further
Information Contacts:
|
AT OLD
REPUBLIC:
|
AT FINANCIAL
RELATIONS BOARD:
|
Craig R. Smiddy:
President and CEO
|
Analysts/Investors:
Marilynn Meek
|
|
(312)
346-8100
|
(212)
827-3773
|
|
View original
content:http://www.prnewswire.com/news-releases/old-republic-reports-results-for-the-third-quarter-and-first-nine-months-of-2019-300944834.html
SOURCE Old Republic International Corporation