ORI - Earnings call transcript Q4 2020 | Old Republic International Corporation

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Old Republic International Fourth Quarter 2020 Earnings Conference Call [Operator Instructions]. I would now like to hand the conference over to your speaker today, Joe Calabrese with MWWPR. Thank you. Please go ahead.

Joe Calabrese

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

Craig Smiddy

welcome XXXX fourth and of Group. CFO, the Okay. and you, our call. Well, earnings Karl thank Monroe, Insurance Joe, we Old And Mueller full quarter to have year good President Title me again. With today, everyone Carolyn our and Republic's afternoon,

posted net strong well as with So quarter of the share, we're premiums setting book into an a in Insurance as operating Overall, a basis Insurance. obviously of the of we per continued income a quarter with value $XX.XX consolidated per from General year, third the fourth consolidated for performance quarter very fourth quarter written the ending full and Growth the very year. Groups. share on the and the record individually $X.XX happy XX.X% results ratio combined in and full XX.X% pleasing quarter Insurance for Title and General with in the for

in the premiums lower slightly can quarter pandemic earned the of effect and year the Insurance. the for General Although, net

quarter just for grew the hand, and net other fees the earned Title over by XX% premiums year. On for Insurance XX% and the

again products our Title has combined As diverse these customer of General in and results, our exceptional Insurance value. with Insurance delivered service strong specialty portfolio demonstrated in

run. growth Our the and our specialty consistent more record track long profitability to strategy contribute over of continues to

So turn Title detail these turn our this Karl by open discuss of General who brief And point I'll results. in with think Insurance. overall me back things greater And course cover he'll I to our financial discussion to to at Monroe over Carolyn review it followed Insurance will then consolidated opening we'll to comments, to Q&A. then up

So, Karl.

Karl Mueller

and fourth Thank and you, This gains excluding final net ago. losses investment diluted by Craig the to we year of share, XX% per $X.XX afternoon. an good represents morning announced quarter all which of a quarter almost comparison increase income

gains and to losses, For Consolidated $X.XX X% full increased quarter year. net and XX% the for by share. the investment and year rose excluding fourth nearly net for per again premiums income, fees earned XX%

and as As for morning's same amounts. Craig for This segment to conform were grossed the there to presentation to no driven mentioned, as pretax effect, previously as expenses fourth And reported of that simply operating made In we recorded significant or our consequently, income also release quarter both these adjustments revenues title quarter well it were increased was final impact and statement mostly year. amounts by in the consolidated up income. either adopted this of growth XXXX, operation to that full the disclose the growth, adjustments title certain XXXX. the the by was

With to mentioned mortgage The Net amount almost for pretty much down decline decreased basically the were the earned the Craig the investment year, risk consolidated Craig for quarter the by and as ratio ago. year's touched the the regard new premiums X% investment upon fourth growth trends by for in income X being earlier, in from in lower improved XX% runoff than enforce. offset the performance, quarter of significantly primarily Those with underwriting this year, same roughly line Again, the ago. asset period premiums yields remarks, we that a XXXX. achieved effect slightly of As his of year invested earned we've experienced in year outstanding X.X% the the combined ratios. mix. on in following more combined net percentage insurance business lower a general opening throughout fell same compared to points from all XXXX purchases

securities. XX% dedicated Remaining is those portfolio than of Less ratio discuss cap For insurance companies of improvements shareholders. our of of detail long and XX% Underwriting as momentarily. of the equity in X.X better three reserve portfolio million. quarter Approximately reduction. XXXX for ended year results the for overall unrealized operations, also development is investments. of X.X X points Craig the in the for benefited in and the valuation percentage securities, the to remained $XXX XXXX increasing rated with all and quarter These as highly grade reflect well end, segments dividends of the The X% a favorable $XXX improved full their an both investment of paying percentage year from in portfolio final claim performance both unchanged. portfolio to year, the that invested Carolyn we low At composition typically and equity bond title is as point by gain have the history realized the the general, points resulted the regularly and by bonds essentially underwriting consolidate term total, short in investment will the invested large the greater portfolio In periods. million year. during

year. which share when even with you anticipate future, out value off foreseeable changes reaching consolidated simply run that consistently ended then regular I the operating any our finally, We do becoming $XX.XX, the a our book For special operations. MI respect all and we increase would totals. include making point with are XX.X% And strategy. smaller dividends the investment material not represents to to per to for results contributor XXXX its an

entire of the of a total year. X.X% during XXXX delinquencies X.X% roughly As X.X% an quarter. the Total by are at trended down the premiums net consolidated just modest example via for income MI in represented pre-tax

decreased us loans Although, XX% to in end year as total being proportion year at at to end. to elevated they remain end levels. compared from September forbearance the A XXXX XX% of reported of delinquent

to experience claim monitor loans separately. and the for of for continue group population this closely reserve this We

operating accumulated base I at $XXX to GAAP given capital Looking and increased of level forbearance, declining From the forward, we perspective, lumpiness December how term, loss million do some say these the just in in revenue mortgage the loans there to near a equity had basis to uncertainty attributable would surrounding expect shareholders’ it, companies quarter-to-quarter results. costs be XXst.

in MI that shareholders are Xth. the letter summarized future dated to run off the the recent Our objectives with to respect was January of

So I think that about covers it.

now a Craig Let back turn things for insurance. of general me to discussion

Craig Smiddy

quarter premiums auto. slightly primarily income XX.X% from and in the net the The our X.X by premiums year. points X.X Well, quarter and and for claim fourth in rose commercial quarter XX.X% year, the ratios. net favorable by commercial development premiums from earned quarter, auto and coming ratios improved written double lower XX% percentage XXXX already overall inclusive premiums written almost and quarter in the in year prior The XXXX combined Okay. Compared claim pretax increasing end, of exposure and commented to pandemic XX.X% nearly positive quarter, points operating while we've earned the the low X%, to reflect auto year-over-year. base, XX.X% of while which This Compared resulting the from the of XX% for growth net fourth improved in reported restoration net to along quarter-over-quarter in reflects by grew almost the the X%. for percentage ratio digits the year on in the rate of commercial were third increases, currently fourth grew in effect with our the to year. of effect are

pre quarter this due that less increases, is to ratio roads the the of frequency and settlements. this auto improved influences levels as being fourth by Our continued greater And on think coverage rate XX.X% still bring we line paying in this compared reselection to our in from not of that quarter that with commercial with commercial to at ratio highway enhanced to is the our XX.X% Claim congested social frequency XXXX. low offset target on and down off severity inflation shows higher work we continue is but claim the claim XXs. and continues auto speeds pandemic on lower fourth

declined claim to exposure base the payrolls full by and lower Moving for written to earned quarter XX%. in to not roughly XXXX came although, compensation premiums quarter thereby, the slightly now have mostly fourth premium net as in no of to compensation. premiums. workers’ fourth workers’ Compared fourth The workers’ XX.X% that And I reflect are premiums These while compared levels quarter, reduced premium would up written and year, earned net at comp, XX% in workers’ for contributing comp comment rates XXXX. reduction the the longer fell recovered. XX.X% the ratio

work claim from such claims lower related claim claims than COVID-XX continue mild of that our with coming compensation of in quarter behave fatal. to exactly severe all to sensitive payments lot deductibles continue with and less frequency or very discussed as levels. from and here COVID-XX pre and in business is the we still earnings comp Aside claims as claims low the than XX% also XX% nature of followed each of third claims, the COVID-XX COVID-XX second workers' pandemic be calls the X% have large are first,

sensitive the for with the the continue last to loss typically quarter loss XX% proportion came accident general mild compensation and auto, fourth year our And selection liability into fourth claim high We nature remain in again, of year's compared cases quarter. workers' this we So ratio workers' to for at combined. our of business XX.X% in lower XXXX consideration frequencies, COVID-XX ratio claims. taking confident commercial and provide comp, combined

ratio saw the did and the claim deterioration category. coverages also the property other while ratios, in some in indemnity claim see financial We for improvement we

And enhance loss the profitability ratios underwriting continued sustain to So this investment sensitive declining programs, because to margins. increased income that continue our and over excellence improved use insurance improved the ratios, combined claim focus our given to point providing we out I'll should general with is on along strategy so selection, analytics, focus enable better through situation, necessarily underwriting of in imperative segmentation, long it's greater term. us on

us business for for the prices time. I'll in to favorable at products. we're seeing is continue just increases on marketplace that this appropriate overall, digit rate our add obtain On double to average, point Additionally, our

to the you, So over who extremely high turn And you team your group. again, level. an continue congratulate your and discussion at comments on to I'll execute Carolyn, the for Insurance I Title

Carolyn Monroe

you, Thank Craig.

record Title XX and outstanding the an morning, this up wrap to quarter setting reported demanding results group posted year-to-date fourth As last and months.

in positive challenges, We continue proud in with to all and extremely grateful the times. professionally and employees, and daily as be unprecedented personally they these focused dealing our to remain both

All Our the achieved accomplishments unwavering on results and our honored revenue were highs fee year-to-date revenue the employees. to were profit. Total and of fourth year-to-date. are I'm hard up dedicated and all support with approximately the of and reporting behalf both operating customers. working quarter and our XX% of quarter underwriting time for set of employees premium our and for commitment be our XX%

million XX%. of $XXX million the Our $XX or increase to Full year, year's $XX million million $XXX quarter, or of year $XXX million for compares XX%. compares million $XXX for an operating pretax pretax fourth to of last income in of prior an operating increase quarter the income

for favorably record an compares activity. Technology reported continued refinance for For was market, home to results. increase combined XX.X% full real driven rate resulting of our the a in estate to robust continues the performance year by This environment, cornerstone in low and industry. sales XX% year, our be a by supported XXXX advancement interest setting full in ratio XXXX

as company has typically have a the company. throughout platform key moved of processes and robotic of title bots As technology, to the process with deployment the RPA, employed our use in automation we forward referred

efficiently automated algorithms rules with implementing of ability We soon RPA, a us are and and multiple the produce technology speed servicing product the based orders. keeping refinance be piloting the decision the our intact. This sources through title integrity utilization title automation while data increase of a to gives will in engines, more engine to

of otherwise, We technological of and of will mindful of we to our While continue related the analyzing the progressions. customers connective needs improvements them. are in solutions breadth embrace continue title application dedicated to all to advancements technology, of remain provide our in the and service for we

that As we at policyholders always it Craig. principles our managing our protection all we be of the well I'll over run, financial strength, turn guiding will customers for do. Year, started forefront the long and of employees New and that, integrity, and being the And our of with to back

Craig Smiddy

you, Thank Carolyn.

results. are of this Old us year's at and here this with quarter Republic all operating again, very pleased So

Our and we excellence to industries, served course, more insurance strategy results. that on underwriting and Insurance Title continue will, core profitability. and our forward, to Insurance, continues going offers by related with numerous specialty products And superior, focus General consistent of produce

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

Operator

[Operator Greg first from Instructions] Raymond James. Your question Peters comes with

GregPeters

ask also Title, and General first then a just on business. question General Insurance the Insurance like to I'd on on of couple of a all, the questions

First or of not digit auto moderation which in been of that other auto hearing, your all, more somewhat from before. rate a I lines? commercial mistaken, there Craig, seems in sort been in in was to if Has maybe rates fourth be teens double mid-to-high we've moderation the that commercial some quarter of think had of what been I'm said, you increases low there and a

CraigSmiddy

Well, I the teens Greg. your the out it's last and years. other few that, is years, double-digits it somewhat see rate low a we'll around quarters, and [indiscernible]. increases moved the accurate, in has observation slowed couple ebbed bit the over in point in We'll would see of of course I think last over little

what it's quarter seen up going bit continuation a increases. a we're I But say So what and much down. bottom is, to see getting rate strong to you're line I'm of not quarter into we've reading still anything thus we're and specifically seeing little far. pretty of very would

GregPeters

XXXX. number, big net look picture, what identical saw like what 'XX? premium 'XX, reaction in we bit? almost to Now, do about 'XX, premiums we in was the on seeing earned gut written how it today? little it Will a written be you're the it reported or it back, think stagnant? be what growing? 'XX when similar think When stepping you about you versus back just your and based will be reflect What's net on down Will Will net

CraigSmiddy

the I would that indicator leading premiums showing first, things give that, into greater where we're on felt point of would pandemic, insight eventually net the start out head. at and important that Well, we to written just a was

tell count standpoint, written a not earned compensation, whatsoever. seen is biggest that, fact where from the premiums premiums and I that we've in More would So the that that seen around growth decline the decline we've level specifically, workers' indicate is growth seeing corner. in premiums would are you of in policy we

policy with ratios are consistent Our the past. retention very

as it pre-pandemic as in we'll So the recover, therefore really on issue. recovers, to to commercial similar the exposure levels is levels. rebound And see practically where compensation already rebound economy an XXXX employment occur, auto, seeing back that I would in it's think a vaccinations that as we're workers'

GregPeters

the going we 'XX the the or you grow Do interest and and And to year the low earnings? Clearly, hoping the revenue think market, I'll can it you 'XX? your on business 'XX you're flat outlook achieve just at replicate versus on to the Carolyn some housing exist, keep with year for status get are for result? looking of just give in operations. your for view XXXX the year. environment still the back -- you you the Or how for both for perspective some Are Title results And that phenomenal quarter us year. when quo the for to what's conditions about and 'XX, how think rate

CarolynMonroe

strong good. is was year if you a pretty outlook Well, follow our still believe and expect they that started -- Zillow for for strong, still what to about mean, as of extraordinary activity expected the we we XXXX, some. pandemic, the drop market that result is out being industry XXXX I very at the the refinance is and a year all say housing

see So us. about what will so and we'll all for are just very really hard It's XXXX we hold year predict, to just optimistic a be remain but strong happens. on and indications this

GregPeters

these in your the things outside comments, in question that? you're the initiatives technology that you some give of enhance segments. with perspective follow-up about performance internally? your partnerships mostly the to Are Are on some Could you talked And done vendors? is, developed utilizing ongoing these Carolyn, of

CarolynMonroe

Insurance but So we're internally, we a do what we Title we can company. that recognize also

And that us. what well. instead so reinvent, most having best can efficient and go we look all It's if we process partner is us. to to for definitely to at that of technology really effective for fortunate about as we're cost the have a But understands through group

Operator

comes question with Carletti Your from [Operator Matt JMP. Instructions] next

MattCarletti

the improvement, the in little color particular as I it you there? a a driving business quarter. that Can you there relate relates bit that PPD, question a as the just to? year lines had development certain whereas, lines of the, I more accident if both you quick did from Were back which give would Just favorable on to onion guess, well can than other the it come as more peel bit, accident in Thanks. years help. of sort the little

CraigSmiddy

accident the I'll on to business you speak have tell is and current year the that. to mix impacts some going first always that of

choice claim the is achieve have except on loss that And to and to reinvest, ratio. commented continue investment yields are so, lower that that that have after as that as and our I we the has will extent is lower business said impact And earlier, we that lower that income instance, you very that coming years. as an on writing down ratios whatsoever yields. business underwriting decline it. a might is ratio pricing we quarter also lower quarter, an no more or such But see prior mix to be for no we and through question in combined have we you're focused there writing There coming will as ratio, loss a improve on that our property we excellence, to,

As we quarter deficiency far that very to very getting slight business. development were and is quarter is years, of have many, lines hard that redundancy back as slight news that have news, that to been of were make we has we that quickly the that said to our for and and on concerned, longer-tail especially aim good working recognizing record after part to being sure slow recognize history long opposed many to as track very bad and we

performed accident bit So little headwind a it's prior think very long-tail prior comp, has in still whereas, accident there of of to say mentioned, line commercial fair Karl, well is years that workers' I our from auto. business, on years,

MattCarletti

comp. just high-level And do slowly then that How but through right a the some at but with versus while, in what going more by imagine, approach means for lot maybe down things closed of do the of How no your let's they're what's to process approach open the back when current to levels kind go to you philosophical not kind to observed picture you recognize? being workers' in environment XXXX say on signals of of years XXXX? you to point. recognize can in court kind in the There's all I murkier data, of a mixed reopening, normal, courts on between accident or

CraigSmiddy

I going with variables to that, Well, to no little you. is It agree in respect and murky with that expectation we is that go not with away. question. so our many a would is different inflation, severity would social say flux,

we of nature talk comfort seeing specifically short-term auto, more of because with being and taking right I'll some that severity commercial temporary reduction, not reduction offset frequency now in therefore, we're the on are all increases. frequency So any

settle of and claims propensity we be still overriding ahead to department table incentive greater hear -- a social So, by social a that attorneys dynamic. while, settling for our from to because there be there to claims, dynamic higher anecdotally, the come the inflation claims is and plaintiff go to seems

even on increases to not must we So we're taking therefore that -- auto, question, that are good that, it's we no there getting do that We frequency. on going the shape Greg's short-term industry speak we're commercial comfort auto the and in earlier where too, commercial in might we and tie I continue that to any severity stands. think now back by firmly and is think, I rate believe means think continue

what are at I is think recognition from this necessary that see a rate double-digit point increases we in time. there

Operator

comes question with next Winrick from Your Ryan Guggenheim.

RyanWinrick

the that I since enough wanted to XX Are impact that get especially consecutive thoughts in to ask, how margin for you've that I consider guess, wanted exceeding around two how Title of provided revising that is XX%. well doing Title XX% quarters going that your I of to and -- operating forward automation, objective guidance between to discussion objective. upward? of to the might

CraigSmiddy

But will as take sure margins time, get investment that at, point step as investment margin we know, where be. need margins expect needs make come income. are -- underwriting what we includes to back Well, coming the And to the there recognizing as underwriting income, you where have we to at investment income, income, and in this with be continues extent from forward. we're more from of to see to operating remain of going more to to in margin well those way going income comfortable and investment might margin, course, coming those always that underwriting the at opposed as less from we margin and on us look we a to that pressure they

Operator

comes Your Templeton. Nicholas from Karzon Franklin question next with

NicholasKarzon

be accretive earnings back now segment, support larger dividends. is seems get to to to We additive to historical grounds tying of especially management. of high value Republic's toolkit. your value. million per the company's context stock book has refrained book the buyback This prioritization up buying Hypothetically recent share much close and is recognize on respected wanted record on of repurchases First process to to which latest that the impressive of company could $XXX the accretive return currently organic repurchases But single-digit historically equity. dividend insurance in from growth observed timely a and capital capital well run-off be both I could down understand track Anecdotally, Old thought above that share. special similar whether view and a on and we've the and winding

provide While framework why this maybe understand Republic's perhaps management you share you Can just this capital point? of all capital as financially and return timing in flexibility at the could today, us some in understand I help repurchases of isn't future for Old repurchases available aren't well. philosophically

CraigSmiddy

as I Well, all be won't try that certainly rigor the and speaks ahead capital to we to I letter, it and Nick, provided about in X. I I that reassure that our if up. become wouldn't what want for our we least but operation, letter go-forward and therefore, we letter, January first, the heard at that process to process get and of Board talk letter I'm insight all that of that eventually that regarding any have we we otherwise, to operation, into will capital there capital possible a relative cash shareholders reiterate same And letter, into rigor that will shareholders thought as out, take on aspects alternatives. capital at to and of capital we the we And tremendous freed provide the over dividends. as think all or available And say level to in would of is much management, Board management point but will at and management when I our then approach. time, a amount management mortgage I on it of aspects try certainly buybacks, of reiterate level, management consideration and that's your around well said in I including what again, has question been same all and basis, we course I that same itself capital our capital evaluate use as but in not referenced, won't all excess in the sure look as do capital

immediately regulators capital. and in that that So is the from business, run-off the up and free to mortgage involved North in our would available any it of be state currently certainly Carolina decisions not is capital

NicholasKarzon

the to return we acknowledge the question, improve And the as calls, provision, some quarterly steps a hosting corporate proxy limited want not of conference earnings including adoption the the governance second as following to past well access and of to taken as year, over reports. to

However, including board Old several lag Republic respect plurality periods corporate maintaining and with continues a of to rights staggered plan. best practices, a with governance's elements to voting

businesses to governance also may we, don't forward? your that necessary many issues like for support While the have that term, of further the something you to be policies view be we that they these are market corporate Are objective, and public run should we destroying see issues on shareholders, improvements material can expect these fact believe long going value. evaluated

CraigSmiddy

we you of I of that issues other the think, that Well, much Nick, Board of we're shareholders. decisions think very best raised and our is aware interest like raised in these well and issues, we issues all that constantly just are the concerns you aware have also evaluate the and make

ever continuously and analyze is So, again, process, a we collectively. evolving revisit this something

Operator

no at I closing further time. call the are remarks. back this questions There for turn over to now management will

Craig Smiddy

of we we as exceptional our everyone we greener fourth hopefully us evidenced interest best delivered have XXXX and we year move XXXX. again, and from the to feel pandemic Okay. in as full we and pastures results. very wish And everyone's appreciate Well, and Old as to Republic into on all is we're value support further quarter emerge the move able at

much for your very interest all time. you thank your again and So

Operator

Ladies for you today's call. and conference gentlemen, participating. this Thank concludes

You may now disconnect.

Old Republic International (ORI) 29 Jan 212020 Q4 Earnings call transcript