ORI - Earnings call transcript Q2 2021 | Old Republic International Corporation

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Operator

Good day, thank you for standing by, and welcome to the Old Republic International Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to hand the conference over to your speaker today, Mr. is floor the Calabrese, yours. Joe

Joe Calabrese

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

Craig Smiddy

have the of but Group. several years, as Frank this Joe. Insurance we welcome; the so for today, have us our Frank been for Carolyn we on President you, and welcome Sodaro. Karl quarter me Karl With is again Deputy call has time Monroe, afternoon, joining Thank Well, following Okay. Title everyone, second CFO, good Mueller’s call. also working to Old earnings Republic’s first Frank our retirement, Frank CFO, alongside and

and to off under the to the to premium exceptional pre-tax of XXXX, point that Compared almost terrific to $X with things ORI that increased kick and second posting improvement. premiums fees and by in saw XX%, Insurance, a the and Insurance with XX.X%, we quarter increased second quarter $XXX X.X just increasing Title Title to and I’ll operating up comparing million, we total drove strong improved premium posted. Insurance results net Insurance General the written results of income each ratio another consolidated General earned produced billion, So combined return that’s growth XXXX, consolidated XX% fees net XX% by up grew percentage net quarter and Again, XX%. here.

strong General with our products and So profitability. of diverse growth and the both Title in strategy our continued groups specialty Insurance specialty strong deliver portfolio Insurance

Frank, then General cover back Title Q&A the discuss that I’ll introduction, turn turn open then the after our investment be Insurance, to we’ll that. with will by with it up that’ll and now over Carolyn, he’ll of portfolio, who discussion followed per to and me of So things and figures to course, discuss Insurance, share some along to to

I hand it Frank, So you. over to

Frank Sodaro

year’s Craig, or of This income second afternoon, share, investment the last quarter. compared increase $X.XX you, net we quarter XX% losses per first announced Thank and gains good all morning $XXX and to excluding million everyone.

segments, was which profitability underwriting For growth of our the periods XX%. million, shortly. operating and was within months that net first General six substantial and driven were more income year Title this by up you’ll for both Results Insurance hear about $XXX and

share per $X.X $XX.XX. under just to rose equity billion, growing in record to shareholders’ a resulting Additionally, book value

that improved the $X.X investment the allocated decreased year-to-date, dividends, Net yield have purchases nearly with only history within investments market unrealized them. of but fair an gain of quarter to growth and of stocks average XX% At investment bonds approximately account last rated bond by of on market the consistent of paying and on this and from modest the $XXX base. years, than with The almost large-cap an to impact the into increasing of approximately of income along value compared with highly million the June XX% year-end. X% XX, investment yield lower the the increase slightly consisted X.X%. our long a short-term during a The and investment as was was offset further for combination increase appreciation of in dividends, XX% maturity book X.X% new more that billion. was portfolio. investment strong earnings driven portfolio So remaining four ended at by another a the equity remained not average taking yield portfolio a This portfolio quarter

side $XX total, the the X.X benefited for reserve over segments ratio by consolidated claim development reserves and Now X.X In quarter. year sheet, of both liability X.X to turning the balance period claim billion XX. at All June recognized favorable points for this for just same points second the to quarter operating grew compared percentage to first three ago. year’s claim percentage and half, a

million operations expectations. generate continue aligned mortgage The with run-off the $XX parent, Finally, group dividend our year. the total to million $XX for another to paid our bringing results to

turn remainder discussion Craig a that GAAP call just equity Total back $XXX expect quarter the dividends shareholders’ the the General for of to We for of pace under mortgage the companies at Insurance. of continue through to the million. I’ll ended year. now

Craig Smiddy

Thank you. Frank. Okay,

to General turning So Insurance.

with were came return increases net with for continued we claim rose from income development by primarily in As grew and auto coming ratio points points XX%. XX.X% claim growth in, now increases Net the by quarter. that commercial are in almost favorable the reported XX% the range. and by and premium year premiums increasing in those right improved percentage XX% ratios earned of X.X have combined X.X we ratios. pre-tax liability XX% to saw written in prior from course to already premiums noted, net The auto rate increasing operating our at tailwind of inclusive improved of quarter rate XX% second overall we percentage X%. The XXXX, written I from Compared

XX.X% ratio quarter claim XXXX. to auto second of compared commercial in quarter XX.X% the improved second Our

As continues pressure speeds that due is far still however, lower on frequency, the greater settlement is continued levels. returning, claim offsetting And, values. higher than to as severity frequency but pre-pandemic that and

compensation, were quarter Turning net XXXX. to of premiums the written with second even workers’ compared

compensation, that quarter second Claim toward claim there. trending to frequency is However, Rates and some range came were or plus relatively notable X% the in in pre-pandemic work recent XX.X% improvement a quarters, here over second that’s experienced recent flat that’s of a we’ve negative levels. declines. between at quarter of trend comp where between from and slightly back The workers’ in so compares XX.X% the comp in workers’ quarters fluctuated quarters, ratio XXXX. minus most

the areas, XX.X% ratios auto, we our Given together the last commercial General quarter. This ratio in quarter the areas that these typically offering expanded help offering. contribute general net improved by collectively grew comp XX.X% results XX% we provide liability in supplement, we’ve combined those combined at favorable claim we this the Highlighting product in show Group. Insurance and and in second compared ratio coverages, three product indemnity, the to workers’ claim in to and financial written premium in in which property financial other year’s in came and our

precision underwriting excellence The we General analytics us therefore we move of underwriting to enhance facilitate to confident pricing and and marketplace is we for that high profitability will through these continue for prices favorable and better retention through continue appropriate while increased to risk year. in generally selection, – the feel strong our disciplined maintaining it’s ratios. to So products our as obtain continue use our efforts improved segmentation, Insurance,

discussion wrap will up put together that turn along the General Group it with being. So time for who terrific Insurance for to a of of the team rest over the Carolyn, I’ll string her now the quarters. have

take let from it I’ll Carolyn, here. So you

Carolyn Monroe

Craig. you, Thank

morning of agency Group XX% all-time second Title strong up profit. both revenue this channels from reported year-to-date and for billion $X.X and underwriting the is up highs fee posted from prior the Total a was up direct XX% both combination our XX%. and This premium quarter for business, and revenue the of contributions As nearly year. production operating quarter

billion already a surpassed the $X XX.X% six-month year. the comparable from mark, premium fee period increase year-to-date revenue and the last For period has

the increase second last Our pre-tax $XXX million XXX.X%. or quarter operating to of million million an $XX year’s for approximately in compared income quarter, of a $XX

quarters quarter $XXX for XX.X% the the leverage our year. greater second our pre-tax for been has also structures of XX.X% year-to-date and exceeded. threshold expense XX.X% four income in versus which June volume periods. The in operating provide noted million ratio the The prior marks and fee second results, consecutive this expense An for comparable premium high quarter XX.X%

a lion Since origination share XXXX. marked year, the growth For record, second strong up expected during one to second refinances the trend although, originations years the refinances mortgage record-setting made the the have and XXXX as Banker quarter volumes the XXXX this the XXXX. by XX.X%, trailing the quarter is the of decrease of XXXX, Association in year through expected the experienced to for of results. mortgage compared on half continue top be Mortgage second of full second half of There are

to business purchase the fee with piece our Technology to the as in Old objectives. as a be industry title our key expected over of advancement is on deliver higher insurance However, ability continues this flip and Republic’s in cornerstone industry, market by XX% on profile. XXXX, to well side, helps increase a for a which goals

initiated XXXX our around call, of ability creating a Process reallocate introduced earnings quarter During hours human spot. had Robotic the to Automation or proof-of-concept we first while we proof-of-concept This project proved measurable RPA, third work.

in while expense. and to of to in other technology. projects usage potential and volume. the handle in the and the are were starting digital only this are platform platforms, XX% Pavaso. showed we their allows really corresponding a that This our More more we that closing hoping tap the working continue created are implement we elasticity processes, of showing volume capabilities. early will an automation just to changes the solutions and usage represents know excited and initiative reduction elasticity metrics exciting, without and for our of increases technology the providing with deploy proof-of-concept in of we are technologies, a time similar to and increase increased we saw complete for We one last This portfolio digital The our year on. to the results, leverage The trend importantly RPA

in as digital the this market remain the and on occur space, we leader the fact, nationwide closings of majority e-notes Pavaso. clear completed In

One continue expand share and tag the we documents, of our for manual closings Though of that As a recent to standard. which time-consuming in constantly to to I document major reinvest required is to transaction. industry. of eliminates focus apply manual enhancement in industry it like text or one in was you improvements tags. parties the with the digital of that allow preparation Historically in used is to reduction on we that of by the by this the all tagging this, result, will electronic address required the challenges identified would the example the the other specifically quick adoption that efforts. targeted for work tagging have the technology industry, the released currently will title it be title doesn’t party side, To even a tagging, any allows signatures

easing they I the and challenges one our of must, to converged in committed have our to results. continue technology as business will roadmap our are future. these Essentially, results continued with We on the forward a achieve roadmap you adoption share focus to have to and to that. look the into

Republic to business solid benefits and their is Old practices blend measurable units. of our with plan expertise across fully the Our unlock business to history technology procedures

like the As remain rates all to to drivers projected should rate and remained high equate the with unemployment the market to real employees estate real healthy a the demands mortgage continue of I’d to that continued low the year, year. off to all are strong, counts and as order the half current customers, we second in of to are appreciation estate my enter market. they finish our improvements close our meet

at be protection all the turn well-being managing strength, of call employees with policyholders forefront always, customers that our back our of guiding integrity, run, I’ll for and financial Craig. that, long As the the and our And of we over do. to the of who’ll principles

Craig Smiddy

products of and exceptional Insurance Thank Carolyn. quarter which in you and specialty insurance produces another result, General and very by Well, to for industry shareholders. Okay, again, pleased core we’re also strategy Insurance, our very providing served very much. we’re our value Title turn operating specialty with pleased with

prepared and our the open Carolyn concludes that I’ll Q&A, up So I’ll ask we’ll answer now remarks, to either question your Frank and or to discussion or respond.

Operator

James. Raymond Peters first Your line comes Instructions] the [Operator from question of from Greg

Your now line is open.

Greg Peters

the on team, congratulations and promotion. afternoon Old Republic, Frank Good

a good with call. did You job your conference first

So…

Frank Sodaro

Thank you.

Greg Peters

many to Hopefully, more come.

was us, General order in Can Sort if you’re just the the coming we answering growth. include business, Is Let’s growth for the as of give how could sense you that balance exposure? new at us, where working it retention. book? I And an a you the you as of us look Insurance, the is entire is give maybe, wondering as the is color. across of it that around rate? discussion question, Craig, then thank give

Craig Smiddy

happy do I’d Greg. to that, Okay. be

grow returning miles vehicles number So to people Other driven, an and is that the it business. fleets is payroll one we’ve have so three. our of up and growth component. numbers course from existing example increasing, exposure on our exposures in are workers’ comp, that of answer of and certainly work, is question Exposure coming is seen your is indeed returned as all to particularly

working New have the and business, relationships the that business to continue constraints that exceptional relationships hard sources throughout sure here very been various absolutely. make and with we with the have continued. through expand have to those The of opportunities pandemic flow have distribution folks

about business also, as portion on and some expanded, geographically, areas that new also well. some And of expanded touched on the new And my then, new product a would of where Obviously, contributes has business is comp comp businesses. be offering as So doesn’t so comments I we our to included earlier that that growth great. help in flat And have relatively writing line. our being business, it. growth

those our tailwind get I help, rates still on business, mentioned aviation In significant the On there areas rate those areas, two for business, around less particular, robust still getting than we getting rate. were range I talked auto commercial helpful. that’s were, increases in about because liability in the so as XX%. are do prior XX% on we I’ve D&O where know, the our of but quarters, we they those lines, However, are

the various specialty control, the specialty as concerned services, that offering all is of claim virtually combination coverages, a specialty Greg. ratios the specialty three, our strong. underwriting believe risk stickiness far the our my that And and a And as that’s and the elasticity marketplace very of our it’s We through we specialty lines can comments earlier across our a So relatively approach have really helpful as retention pricing of retention to is as of well. some segments all well, certainly – that because enjoy retention high marketplace greater such influence as as creates we extremely disciplined of ratios. in retention indicated, disciplined that but

answers So hopefully that question, Greg. your

Greg Peters

great Yes. That was it. additional color. Appreciate

Just one to pivot Insurance before on the Title. I question more General

development years some about months. second from through where years, you did sources? six You the the developments the the reserve us are Can accident perspective? report favorable what and quarter, talk where to us give What in just coming additional

Craig Smiddy

favorable there any significant if see has But not and has that Well, really other it development – of say been contributing the compensation. And follow-up. that we the from off, contributing I’ll have to is fair on other development seen factor unfavorable then lines. nature a it’s any kick Frank any workers’

you all creates once a pretty aggregated favorable put on it decent it development So a number basis. together,

So know, there’s Frank, you add don’t anything to I would if that.

Frank Sodaro

main from older coming XXXX mean it’s you million favorable years in total. a lion’s the I would The comp $XX from. the that the of But in coming quarter as years that’s are No, to nutshell share. it workers’ expect, XXXX it’s is for year, its predominantly

Greg Peters

it. you. Thank Got

Frank Sodaro

going hold and releasing see favorable know, long up we and put we’re our And loss add development generally you continues question. five of how practice. the to certain we’re to Greg, development. tail that to ratios from absolutely that and to development, ratios we favorable we’re very it If loss we’re set about we loss three lines, to we those holding on I’ll years as your unfavorable when conservative see well that speaking, immediately. very ratio just As mix conservative our be If

Greg Peters

agency me the I that’s if of result. tailwind Carolyn reminding that. Obviously, phenomenal here. the to with for boom Congratulations. appreciate the housing XX% was what direct really I I’ll over being Thanks about And interest helping some versus Title about around didn’t up listening you was stats, business what’s all commercial comment your wondering being really maybe it. on a but I comments really And on going over you it’s XX% Yes. and non-commercial. pivot positive you add could up color.

of your this how to residential of sense a during the us period growing relative is side? give Just book time commercial

Carolyn Monroe

So for about that’s of of how starting that And was. see total a XXXX. second quarter, our the commercial. and but our see residential of stronger really of to market the second of But results. we’re over we’ll the represented going an strong towards second of We commercial were will commercial result uptick premiums, premiums a they we end started quarter quarter, XX% little feel up more seeing like in the the more into quarter it – third XX.X%

more, million seen we in would and $XXX to by deals. mid-size say I million have mean We mid-size, $XXX up

see lot than excited during more it starting still we did seeing energy we’re pandemic, construction which about that. lot to of makes projects we’re projects a sense, but way. And our come We’re seeing a the is

Greg Peters

your I? that or million mid-size, And sweet Are said the $XXX doing the think spot? that million, I you larger is and how deals, about sort you when $XXX should of than

Carolyn Monroe

No.

on those excited pretty We’re lot investor, of large more and a just – that. we And see $XXX now, portfolio a slowed you up that million deals activity the more about. excited where – activity and But lot the we’re starting a couple larger of we’re a see lot getting working we’re but and of doing the right down. that’s But have a to than seeing deals. deals had pandemic lot of deals a we’re investor more

Greg Peters

on Got I it. other call. have but Well, questions, other there’s realize I the people

and back have So to. Thanks. I’ll I thank I if answers you for the circle

Operator

we Greg Again, a have Peters follow-up Instructions] [Operator line from of question from Raymond the coming James.

is line now Your open.

Greg Peters

Great.

to first but spoke when you just second that XXXX XX% at or just the quarter. for of my about trying percentages the still of Is about it was get others, that – – to too; Carolyn, now I’m going Is I’m be commercial I’m So, away. fire that to mindful right. being is the half trying XX%

Carolyn Monroe

our overall of It XX% Yes. business year-to-date. represented

Greg Peters

the And the Year-to-date. some other to It I going Can views like the loss the up Perfect, as then in thanks. in you us again. was on has give looks that reserves supplement paid there? on time Carolyn, – high noticed, disclosure in point thing at what’s ratio ever it’s as on been. it’s this crept

Carolyn Monroe

lawsuits of because that were because lot – pandemic. courts say in be the claims Things couldn’t be time is – slow A slowdown by filed, and processed that the the of things. of types of I attorneys closed would those paid activity were to

Greg Peters

Got it.

you last segment I the and – June, I share, in Page give where you had through The X, notice per it for in us have of that question $X.XX. down Okay. did RFIG it’s segment your a to on equity run-off shareholders’ of the press is, composition year-end release, come equity that at $X.XX

that some think us subsidiary. or about sort I my a pulling last question. talked capital that? you’ve you that’s of Can And upstreaming of of just give update some status from the

Craig Smiddy

and first the quarter. $XX in we same did Yes, the took out Sure, quarter second in Greg. million the

pace that’s that So we’re for $XX the this. but throughout guarantees, of No rest the and just the pace million year. probably that’s for we this the expecting year, anticipate

$XXX GAAP there ended on equity a shareholders’ at So million. basis

Greg Peters

very much you and answers. guys, the sorry. Congratulations girls, the for quarter on Perfect. Thank

Craig Smiddy

very much, you Thank Greg.

Greg Peters

Yes.

Operator

to remarks. this the time. You back at for have I’ll more call the questions turn presenters closing over no

Craig Smiddy

of less you the participated. We the your Okay. this appreciate It’s tends when better obviously Well, questions, who you be everyone a interest. it have summer, thank like there is quarter and middle to is.

all to the again, quarter. summer, to and Thank everyone. rest we you. look So Enjoy your next you thank you, of talking forward

Operator

you conference Thank concludes for this call. This participating. all

You may all now disconnect.

Old Republic International (ORI) 22 Jul 212021 Q2 Earnings call transcript