ORI - Earnings call transcript Q3 2020 | Old Republic International Corporation

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Operator

Good day, and welcome to the Old Republic International Third Quarter 2020 Earnings Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Joe Calabrese with MWWPR. Please go ahead.

Joe Calabrese

Thank you. Good afternoon, everyone and thank you for joining us for the Old Republic conference call to discuss third quarter 2020 results. to a statistical the you supplement, and/or have distributed posted release have we otherwise separate call. a which access morning, copy press of and seen This the during we assume of www.oldrepublic.com. is documents website, available Old at Both Republic's the which are press that XXXX. the and be discussed advised forward-looking as dated call this Please statistical involve supplements may statements in release XX, October filings. can with found in SEC these latest statements be associated Risks Company's the Old Republic This for call of President be and senior by other led this planned Smiddy, Corporation afternoon's Craig International executive conference will as several and CEO members meeting. I'd turn At like this Craig to call Smiddy. time, to the over ahead, sir. go Please

Craig Smiddy

Thank you, and the President call. to earnings With again Joe. me Insurance of today, our Carolyn welcome Monroe, Title our Well, Group. Mueller; afternoon, and we Republic's Karl quarter everyone Old third have good CFO,

pleased Group, share quarter, this in So General quarter consolidated of very strong the we're per especially the operating with with we underwriting combined $X.XX Group. a obviously Overall, in along Title the the performance XX%. the very posted results in of profit saw income we for ratio and Insurance Insurance with record the improvement

Although, returns General Group made to quarter, written net Insurance net has our grow it the this our pandemic General to year. in this difficult Insurance's growth premiums premiums earned

However, yet Group quarter another set our Insurance and Title production record year-to-date. this

of a service portfolio of of to customer on focus each markets. diverse and products an benefits markets strategy see our these we the delivering to in So continue the P&C combined record title exceptional specialty with

record of profitability growth this strategy two. continues As contribute when demonstrated our the and to results, consistent in track to more we combine our

Group will consolidated Then Q&A. the turn to followed to Insurance by Karl at will the Insurance we who cover to Title review up Group, he our back point, financial discuss overall open So things General to then to me over Carolyn, the this discussion results. turn I'll

that, Karl? with So

Karl Mueller

XX.X% excluding income quarter is of from third and morning, year all afternoon, share, the losses we everyone. of net you. announced $X.XX This Good a per increase investment quarter Thank which third diluted gains an ago.

and to that more X% segment the periods and by to cash positive X.X% the even This growth our of premiums nine losses months share, base, from net than up of first XXXX. invested year-to-date of Net the the less line significant X% premiums nine a year by to a was yields investment third from roughly that net for in in the the as fees Consolidated it in both were Group diluted business and and first during offset XXXX lower an business by decline grew flat again year. we XX.X% Insurance in earned reported. significant premiums growth the for the predictably decrease which attributable strong well ago, excluding months General For gains relatively quarter on that's fueled this same and net growth mortgage largely continue compared run-off XX% totals. was the X.X% as reported income XXXX, $X.XX and X.X% Title investment per quarter of earned decreased for posting Net that This to asset year's flows The investment the expectations. basis. third the -- earned primarily was XXXX both quarter, our the growth with operation, is as for results periods. income, approximate consolidated the year-to-date operating becoming

quarter's ratio this underwriting to declined to compared to then Looking consolidated results, XX.X year. registered XX% combined last

increasing strategy. earnings percentage And momentarily. reported XX% share as driven with invest Craig quarter percentage in inclusive XX.X%. combination dividends September the million. the allocated long Further of fair to investments, quarter in by the reflected Insurance, this The XXth, by claim steadily XX.X% the net, results All X.X the X.X in dividends. increases book securities, to development $XXX of increase as paid the as allocation at as a XXXX and bonds $XX.XX of by for will financial during Title history the of improvement $XX We our relatively respectively. of of dividends year-to-date remain yesterday's XXXX portfolio investments the reaching to June. cap ratios recorded in of the retention million. anticipate the had The The primarily equity was basis, first September three three-quarters paying is rise combined reduced of gain at have material in in end points -- year's of with a for a $XXX million. of reserves currently markets periods quarter investment the the the portfolio in excess year-to-date. current this to portfolio the quarter from quarter equity segments General per of On third the companies improvement from the well earlier discuss and and is in portfolio nine don't and end and consolidated periods. a At value the an any changes points claim Approximately Group, valuation invested unrealized large that value close, portfolio the and of X.X% months, year's investment For roughly is an rebounded our underwriting short-term equity improved unchanged greater paid favorable ratio contributed last resulted in and both additional of by remaining Carolyn

few or on $X.X regarding has which me insurance business that to One comments year-to-date moment run-off mortgage to segment. and the a third let basis. positive quarter development $X now operating is the take make million profitability, million our a returned for two a So totaled

delinquencies. the the We reported loan continue levels, on monitor government as of programs impact to closely of well unemployment as effects forbearance

quarter, to XX% up declined increased forbearance total, loans positive the XX% is of June. at third of by another note delinquent And the from X.X%. in the proportion delinquencies During that

the therefore, claim expectation a continue reserve companies' experience mortgage and perspective, totaled to companies to we loans segregate dialog we this capital is the From of roughly million. the and lower will our again of in have payment at Our that of starting separately. resume mortgage after state and September capital regulators, dividends statutory population a these loans the rate end for ultimate with $XXX expect And extraordinary XXXX. from

for results And So this Insurance overview, we to I'm were Craig very turn Group. Craig favorable. believe of the mentioned now with overall, the General as to quarter it discussion back that going earlier,

Craig Smiddy

right. All Thanks, Karl.

of begin touched third increase the General both flat, net of net Insurance XXXX quarter. a almost and remained quarter once Compared quarter And So quarter X% to in the in year result XX.X% reported year-to-date. Again the The XX.X% XXXX to of with as combined third of the net premiums Karl third in improved percentage resulting in now reflects improved this some and improved year-to-date. year-to-date, to low this third were overall the compared and positive effects while primarily points year-to-date, grew premiums to pre-tax XXXX third increases, ratio the income and written by The Group I XX.X% to quarter, coverage claim from and rate to auto exposure earned which for relatively XX% again while teens. is almost as of points operating on by X%. grew along quarter, the pandemic, written course, mostly premiums This quarter development from rose line in of ratios we premiums claim favorable X%, X.X year-to-date. and the earned restoration from compared quarter in net inclusive prior by X.X percentage commercial base XX.X% the in of the continue by the ratios.

as improved quarter in same XXXX. XXs. period as still the out work at have doing for pre-pandemic think line the ratio levels. of in course, I'll in Claim as this way continues XX.X% here auto ratio claim continue back year on and course, we it in settlements. speeds of the as this XX.X% began and with stricter back reflects to line compared frequency, target to line and due in on been our coverage, from severity rose increases, inflation commercial in year that touch all still bring risk to not of Our And the to we XXXX, low that to we criteria with think higher rate saw And that the second the influences it's far we our but the we so-called of continue third selection lows perfect on we this too quarter, the social

with there is over in rate with third commercial faced this XX% certainly flat course, payrolls to although, the the the compared both workers' exposures. Turning to this XX.X% on we're additionally of have to And the still third reduced compensation few -- written in the earned we've XXXX at to rebounded And premiums workers' in [indiscernible] approaching some line. rate been ratio rates decrease flat we reflecting comp and decreases marketplace extent that The saw net workers' in came XX.X% we're compared line -- not years. fell base, last as exposure quarter quarter XXXX. not of auto compensation,

COVID-XX not line second pre-pandemic that lows for from saw this claims, back here but still we the related and Here frequency to frequency the aside the is rose claim from in quarter, levels too either.

XX% continue with claim discussed very large payment, here COVID-XX nature the well. as fatal. And coming continue business, deductibles. on such loss or as and following with then in behave than of claims X% second mild claims Just we first COVID-XX from to XX% low the of be workers' to our touch with They workers' the quarters as claim sensitive very severe compensation less claims of compensation COVID-XX to separately

current the high accident our of claims. into COVID-XX be mild lower business, consideration and sensitive loss to proportion comfortable the taking loss selection the continue with we comp, So for frequencies, cases ratio workers' our nature for year of

to general liability. Turning

increase -- claim in of workers' smaller and there quarter-to-quarter. coverage the we And for relative show -- we third with quarter typically and Our claim a 'XX XXXX is this recall, less coverages. in the out us the auto quarter. an third is ratio as there point along provide and typically line this coverage But therefore, to commercial ratios stability comp

XX% in improvement The in those to XXXX. and third to quarter line of comp commercial relative liability, for coverages ratios, other quarter XX% coverage the three showed as our auto work third combined, the of claim came remainder general last So third quarter. the claim year's of all compared of ratio at the

for think consistency we our sensitive line we'll to clients contribute our it be improving for focus top strategy price our in P&C achieve underwriting greater includes providing difficult to So General for profitability. our programs will continues large that with while And loss appropriate the profitability. seek we this to on products, to growth goals to continue year, Insurance and will continue our

So providing at continue with for the extremely the with that, her comments you. her who Insurance I'll turn over to discussion turn by an outstanding on I'll along high execute Title level the to way to Carolyn team now service. that, it customer And Carolyn, Group, with

Carolyn Monroe

Well, thank you, Craig.

for this morning Title and Group year-to-date the third quarter stellar posted As reported results XXXX.

effectively underwriting to be a associated and Our continue revenue to of challenging set and Title be were operating All-time third group through to continues hardworking grateful highs employees profit. for very on with serving year-to-date such both customers agents and the honored times. I'm dedicated what of needs and individuals. quarter press and

earlier, reported quarter and up approximately revenue fee As and both the XX% Karl for year-to-date. was total premium

$XX favorably income for Year-to-date focus third reported million increase million of compares to industry and the operating compared our XX.X%. Company. pre-tax period, year's an or million period. $XX an of our compares XX.X% last year-to-date to million Year-to-date, the in XX.X% of XXXX, million for in pre-tax $XXX XX.X%. for to income to the Technology an important ratio continues $XX Our $XXX prior operating million quarter our quarter, combined or comparable of be $XXX increase XXXX for the of

platform of finding, We continue result shelter-in-place and remote digital Pavaso, meet as notable use to with orders. inroads to the our expanded of make a need closing growing

experienced the ease expect model growth this to acceptance. flexibility digital being continue of in usage adoption its and and and the to marketplace, accelerating closing the We due

with Title service. XXXX Within technology. business U.S. the forward implemented of scalability in in automation and which notably, so in and speed and to reflects plays moving process continued benefits we across of the market, benefits realize customer a our particular accuracy initial compliance, growth areas expect experienced productivity, the and seen mortgage strengths improved robust origination increased deployments and refinances. strength of technology early all exploit The success with Group, the our to platform Most in far to we this robotic the and bot are

the As space the favorable, and with they of are contribute in these to say remain goes all I the remain counts to living difficult renewed employees, the on can't strong all to both we expected focused fourth challenges should rates Title finish as an Old order enter gratitude homeowners projected for heartfelt my Republic daily all to same they their mortgage year. quarter, focus and strong, remain our out are focused positive, on increased professionally as deal personally who The the the times. and differentiates agents, goes during market. service with our loss,

of are support accomplishments of employees our Our the commitment our with achieved the and unwavering agents.

over customers protection managing call for our I have principles And with past of same policyholders, over last with to the we challenges, or of the employees years. us financial well-being and will served strength, the of integrity, guiding the well the back plus As run, rely and turn that, XX will on Craig. that through long our

Craig Smiddy

All on very right. much. great quarter year-to-date thank a you Carolyn, Congratulations result. and

we're this Insurance again, operating Group. results both the with So and the Insurance pleased Group General quarter's very Title in

between underwriting service. excellence Title results, consistent more strategic we on our profitability, and customer diversification to on produce and General superior, continue and Insurance Insurance with of focus Our continues will course, and

So we'll that concludes Q&A. to now our up open discussion prepared remarks, and the

Operator

Greg you. Please [Operator go Raymond our comes And James. question ahead. Peters first Thank from Instructions] with

Greg Peters

of ratio. annual I well around look versus apparently X.X% all loss zero to ago. And on the statistical year finally, is below with X.X% lower you that the each in then running couple The [indiscernible] shown, General if loss of segments' identify. Good afternoon, I'd Same running we Insurance have in the item years, this year-to-date a year and operating year's see and Insurance, like the results a supplement, comparison I Republic. favorably team I preceding paid business running that's it's your line run-off on numbers. And you at I which in paid which just And last compares business the show Old the in question is the and Title is results. in the on year-to-date also guess, ago. think settled focuses from the ratio around your

I'm comment reserves, each so three you And on those all building it numbers in I but does appear the like maybe of hitting could and segments, segments? you're thought

Karl Mueller

this Greg, Well, is Karl.

as sheet think kind to to the think in I'm the forbearance I certainly that slowdown I largely then because we've any just I release. result does down ratio the let relative release. payments operation, place balance, of the concerned, Same business. as of on sense the -- is the the noted decline. complete shown run-off Insurance it increasing Let Basically cause And me thing, in question. me there Title and mortgage that General But moratoriums the in substantially of applies address been unusual gone Insurance that makes your delinquencies aware are far mean, has have programs. not balance frozen claims a in would trends in as as reserve to foreclosure and the we've paid

nothing claim -- nothing settlement process an terms perspective. in from changed internal of process So

Greg Peters

add back this Okay. But Well 'XX. year, maybe about not Insurance seems commented about as we but not quarter like bit a balance little of but tracking, if we business, your think as pivoting is. think your you is being to it XXs, remarks, then about in color, your getting your XXs. it And result bit progress what what low 'XX I to average, necessarily the this consolidated know, low to your I the target below XX-year above opening you certainly guess and some made could Craig, -- General still little reflects a the

Craig Smiddy

everyone income. ourselves we Sure, set reinforce our in have to as all that we we to excellence is General out all which that pointed everyone reducing future on ratio the want focused upon taken it that has our across profitability in far we the the Insurance pressure. we organization And as reinvestment we from investment as to investment income see with out our it Greg. have it's more what an therefore, claim now it -- to is portfolio concerned. in we're release, that for have therefore, we goals achieve initiative for ever companies than down all holds of down. as is underwriting underwriting come that it's Well, under by And the ourselves levels underscored And important very apparent that The the say, at. Group I yield

than and to of we see we coming it's more release work, our targeting. expect lot on we until would a we ever are have we to hard -- in through and state to and numbers focusing we hit that are frankly improvement So the profitability, that continue

Greg Peters

Got compare able so that additional favorably the States, which you're quite has peers? you of in and ago, quarter this to you been the produce tremendous most business, business, could relative it about book United year if it. of your comment a I'd I so with claim some improved and question. give losses on, on but operating many I guess, them you, you this be that a for catastrophe property the are they a like it's But segment softball guess, and the from will results, from sorry, But business, casualty category your the guys would the at of as amount to us principally a exclude peers backdrop, the catastrophe quarter-to-quarter small under ratio final color the property against, where oriented report look fall results, -- why company. your you will there and to activity

Craig Smiddy

Greg. to happy Be Sure.

previous exposure [indiscernible] business when in First that note to important I and calls note think we're as particular, off, our previous important I interruption that, it's quarters on to mentioned it's – a inland business. that volatility catastrophic property good lines coverage other of amount losses. is of necessarily conjunction to not exposed sold And that that marine in the is is of coverage with

we and property the add doing we organization that. the insured, things companies I On are as robust, have retention. of our with different are now. see can hand, and on our rates property we do about one marketplace partners opportunities we basis to -- very our we're of that of brokers on our And that right on in think And catastrophic in relationships agents we and other where suite reinsurance offerings the to on us losses, combined reinsurance with protects is, where all an our very a very this a line is business, strong retention have of low

So our have reinsurance of partners and a doesn't us, for result to you that volatility referenced that, event the the in we're able some peers have. our that the is taking of -- still volatility are catastrophes, again out produce that

all that So on at explains kind of together, I where rolled property. up think of we're

Greg Peters

you Thank questions. ask others answers. your let for I'll it. Got

Operator

again We Instructions] go [Operator from will Please a Raymond with ahead. take Greg James. Peters question

Greg Peters

others Well, in. there get but because ask to the I'm would [indiscernible] more I some opportunity certainly anticipated that questions, enjoy

You pricing out. said comp, said so probably quarter, leveling XX% the premiums you or down workers' the in

that Can us things to making know, in audits through in as end line. lead if to sort have on a this little happens it's process, year? bit that is the we fourth that go in quarter any of premium you the adjustments you workers' the results year environment the effect talk been is of have to top or One that additional comp, about COVID fluctuation going and always there as you Craig, can

Craig Smiddy

making $XX when -- their refer Right. less progressed. have and what adjustments. number question. been quarter would are And of premium -- was made that to that estimated we Greg, insureds as another the the will we the audit, quarter in has the originally is the we what is. million adjustments in in and was it payrolls about fourth We than quarter, indeed as internally in that I effect then by premium it the second And third increased I excuse accelerated about -- demonstrate what the we -- your to can here tell $XX million. me million is premium At end original which based you year on, an make $XX adjustments, of understand had

along, So workers' in would addressing any are fourth when expect we're we to surprise it seeing not we've quarter of that the amounts as for to -- our have view, it kind big comes gone that the we a in compensation. and been premium see

Greg Peters

for would in Got question, that The have you being the final I as you retention. just you in in previous be retention, commercial customer the for coverages big us and as around guess, auto. quarters know somewhat of especially market relates an that increases Can the -- challenged looking I the the retention color out it. context account focus this rest rate called I you to of give it around additional update particularly are you some on on? three

Craig Smiddy

mid Sure. the it Customer The Greg. helpful. in remains which above commercial -- very The been. is we're that where rate supportive retention is increases auto, is XXs and that marketplace strong, is XX% has of consistently achieving,

things a more the periods, marketplace Frankly, for Those more now. course, Of in down business, just looking our I retention for right on commercial looking we the is close customers. the to mentioned if as right policy is earlier say are workers' customer auto. measure perhaps my compensation, saw early in now, would supportive exposures than I flat. where rate But on is you and a marketplace strong, are for. have very the of very all supportive is might there challenging those marketplace number lines been bit it by but And lot times. was coming And of it's comment other and

bag. on general a bit it's So liability, a of mixed

where and the along a line liability and in to rates very at. on -- think of down lines, tightened the our underwriting of it's We But comfortable they on as marketplace a selection are combination of good property -- our as small on are general well result that I very alluded we know, we other exposures increases right COVID. you are with with retention now. tighter risk criteria are kind line substantially as are generally have standards ratios our tighter the we're that Rate -- there --

extremely our business Our robust aviation increases supporting. seeing again rate professional market are the that business, is liability

-- it's good. all so So

I all guess, just on think that call less this there cylinders, we're learning hitting when is from I questions. we're

that's So okay.

I the think that's reason.

Greg Peters

I unusual which Judging Old think for brought Republic is you speechless, performance, an investor everyone from your stock call. price

So quarter. to anyways, congratulations on the Talk quarter. you next

Craig Smiddy

you, Greg. Thank

Operator

And from take question with Please our & go we will Anthony next Dowling Mottolese Partners. ahead.

Unidentified Analyst

a right. actually the workers' with Dowling or -- Partners. high terms one do more of on perhaps stability Could I level in pressures why deductible nature it market in it the market have going where compensation. It's having some the as the underlying you and potentially at of of & question underlying sensitive experienced versus All John it's your not been think Heagney more with much may you performance about could trend loss talk of maybe being being that business trends, forward? consistent

Craig Smiddy

I John, appreciate the question. Sure.

those. in is a except talked other I a about about why there my there what's when sensitive on in I, I it's sharing peers comp, just the when of opening have in of that on that our gave clients perfect a you example example going comp. that's our And and have -- of and loss business are COVID-XX that and the losses, impact they where might when that COVID-XX comments have focused are talked comp for I I think lot the economic a don't with quarters mentioned to than exposures lot I other know I really we

than the my about. comp, XX% only, the very say are comes then back us our -- to that premium it good -- of that shouldn't which is losses, more of brings say comments to loss coming it sensitive while XX% in are XX% loss say COVID on for sensitive So of should feel I I we only business. and when work But claims our

claims speak, in a nature that XX% I to whenever why And perfect of have where us our the a us guaranteed cost focused that client it's loss and that And customer, challenges, and it a well business cost better that, to works. why financial sensitive the insurer focused selling as is south, of transfer in guaranteed the focused our -- things always business on alignment don't volatility than the with model more to bottom are the is away of model control, think outcome -- that opposed case customer between is sensitive we're you on and helps demonstrates when us do bodes and over -- think on again, of control So they are for it there line point bag that's risk basis is and loss and go area. other hand we a so and the is -- in where walk usually lines on support we business we conjunction line. business, -- other have and risk business

for but is we're necessarily comp sensitive of and work isn't trucking not the our either, majority other lines the business of aviation writing is, our loss trucking our instance, for sensitive So business. loss

going other of basis. bodes -- we're cost guaranteed a So writing to on lines when we're business, it us, I think well we if the for it do if

Unidentified Analyst

in of be nature move to you as just might terms one Does at the or from the change all retention program collateral it the am I carrier off headache the sensitive another, loss help market. to

Craig Smiddy

an Yes. about It's Absolutely -- like didn't really another for that's claims that it's are in handling you work setting on claims when other them you setting quite their is reason it. give, sticky. call when reason process. the -- retention, doubt we handling work response another a extensive is is with And and they with to what procedures work up mechanism, with It's but and them up it. client, the on the you we No collateral I that. and

cost, much dollar So stickier, of indeed much coverages. kind it less first than guaranteed is commoditized

Unidentified Analyst

Very good.

question. last So

out those well, property of of business, is area, you grow. core you're lines looking mentioned to Just an

what opportunities outside or other core comp for ORI the and even you you're General in 'XX? of workers' some added into do Insurance see growth had 'XX You've lines where GL trying your commercial auto

Craig Smiddy

Yes.

our of given know, market E&S said, as is reinsurance volatility lot given on -- of we line the is conditions, that that property an as with business. ability property market area by partnering to a So -- partners, control you business the we will favorable business

but we we So our that the in at business. Other we're there opportunity as that. focus it with book, commercial auto has space have line, we space, or look E&S focus liability we I both look along comes heavy business, is But remains you in already specialty as the very will might do opportunities think disproportionately that of organically we those a on don't at at workers' right specialty compensation or workers' We'll look internally. property of those to lines. -- auto comp, as niche specialty grow as long well if business, now, in -- Well, on class lines and is will that arise. lines And in can niches. -- -- of want will our said, other will other an we

area for the instance, last several our So liability had professional in we been in D&O years, a writer. primarily

professional lines numerous and fiduciary lines bolted on have to our of added -- lawyers, other are have D&O, grown products that private there. to business, We business, -- offering

present at not look where Where we have if bolt-on, at to continue or have starting footprint, and adjacencies, look do perhaps opportunities we something a we already, we'll up other we'll that. might footprint So themselves.

Unidentified Analyst

it. Got

added of create versus what what you say, can and be out talk your know existing making looking let's products So really which and to other say of any you have that when a of line a don't bigger say business. to there -- partners channels to nature. to it's fair distribution if there property, these player new at something or channel and are distribution – identifying that I you It's growth, about

much very or -- financial it's sub-class targeted sub-group within property whatever whatever be? it lines a So business or within of or on certain may

Craig Smiddy

Well, for that already is we we've footprint. we've added a market out been where organically of through It has whereby operation. focus. entered Minneapolis have new segment. service also workers' Recently, workers' bolting-on, residual we our compensation, into for compensation pools a new But business

four, on a years focused was and managers Republic Insurance distribution. also was which Specialty five We Old program setup underwriters, different and ago,

if the -- model. go can if it John. the an focus. both there, after is it. along, we we opportunity we than where key comes specialty We'll will focus, both, If -- it a it's an So -- and specialty are really better do it's if that generalists perform different But is it's is, think out distribution

Unidentified Analyst

I the got. color. That's all Appreciate

Craig Smiddy

Thank you.

Operator

At this I the in management would have to questions. the remarks. turn we like back moment, further no to time for any call closing

Craig Smiddy

talking said, Well, interest, and to have And on you your seeing thank look quarter. like feel you we we'll all hitting questions. and Okay. again all you, we cylinders in we for we quarter, -- as this appreciate forward next and to the I were

So thank very much. you

Operator

This call. concludes for Thank participation. you your today’s

disconnect. now may You

Old Republic International (ORI) 22 Oct 202020 Q3 Earnings call transcript