ORI - Earnings call 3 2023 | Old Republic International Corporation

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Operator

Good afternoon. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Old Republic International Third Quarter 2023 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Joe Calabrese with Financial Relations Board. ahead. go Please

Joe Calabrese

press afternoon, and/or the Good XXXX you joining the assume of for This financial a Thank which call. have supplement Republic everyone. access conference for we the copy a Old we have quarter and call us posted morning, separate seen you. you distributed Thank release otherwise -- results. during Third to

statements which as the Risks are can in October may available is website, www.oldrepublic.com. Be company's the documents Republic's call dated advised found SEC of be release All involve associated press Corporation call filings. This like Old forward-looking executive Smiddy, discussed the led senior to and supplement statements this and this that at in and members sir. latest will with financial these as XXXX. Craig go planned International the At turn by Craig. would several be I afternoon's Please this time, ahead, for other CEO conference over President call meeting. to Republic of Old XX,

Craig Smiddy

we to we're decline interest mortgage what for saw results, in the reflect in the operating produce increase Okay. today insurance of Joe. continues increase which from Third third With President Carolyn CEO to our Call. income to again during Quarter The Insurance. Well, strong Title underwriting pretax continued our Earnings effects everyone, quarter Old XX.X% me afternoon, Thank Monroe, and rates. quarter, Well, operating drove XX.X% a Frank of ORI; year-to-date. General and Republic's Sodaro, and income CFO and seeing you, the Insurance Title is a welcome of good pretax

alongside segments income million a and produce million and consolidated quarter ratio third compared in specialization XX.X% of third 'XX, focus consolidated of combined of $XXX P&C our on across to operating the diversification $XXX the of to year-to-date. title for the XX.X% quarter quarter pretax in us However, allowed and

X in segments, we reserve favorable led development, continue development produce So favorable insurance. by in all practices that our conservative saw reserve general strong and to reserving

return sheet share as capital Republic remains the balance to and underwriting through yet we Old we Health. shareholders Accident announcement continue long invest term, and and September to Our continue new to venture another in both solid dividends even our including of as repurchases

turn So by Frank, things do, discuss go back will now will the insurance, for on discussion I'll then Carolyn, general into we'll Q&A. Frank who we followed to title me and details over open always to on conversation some as turn up, And some then insurance. details to and

to it Frank, hand So I you.

Francis Sodaro

million morning, income and reported Craig, portfolios. primarily a driven This afternoon, basis, year. quarter income yields On share $X.XX. Net last increased fixed operating quarter, you, good XX% and income short-term of investment net for third from we compared the everyone. over was results higher $XXX on $X.XX, per up year-over-year Thank $XXX the for by to comparable the million investment

XX% reinvestment the increased of the remaining average allocated and cap X.X%, stocks. short-term corporate to the just yield bonds was during rate to under bond was investment Our total, with disposed paying bonds comparable and X.X%. The portfolios dividend of book XX% on large year the while

X.X% of position of decreased billion. of $X.X allocation of XX% our with average at portfolio while nearly the the We year. The interest in the under an quality the an of securities last current unrealized quarter yield during value ended investment-grade declined higher by portfolio just valuation with $XXX income by in fixed interest continue end third X.X% $XXX an stock to million million this driven in of but the nearly remains of years compared quarter, rates, the period approximately gain evaluate the environment. light maturity bond high rate book overall and securities The of X.X to

of side other the to moving balance Now the sheet.

dividends, all million with to percentage operating of compared of led a increased million year-end over shareholders. Since development company our quarter, position to X and for $XXX $XX in X.X year-to-date $XX ratio total $XX General quarter, unrealized about of points holding the I'll a Our fourth a we million by $XX us bringing dividend the million quarter in shares, losses. another all return loss in driven adding the just of the to for book of recognizing discussion the end by earnings, total now presented. we to of again worth dividends quarter, favorable repurchased at our to Insurance by for shares Mortgage to over group just When year to $XX segments, value offset benefited consolidated strong the In for points paid X.X from with remaining plans the the ended $XXX $XX current nearly value book Craig worth back the the prior program. million turn The Insurance. under reserve per investment loss in same a strong for period partially parent paid returned million back ago. The leaving approval. We regulatory another subject quarter our X% million, with periods share quarter reserve operating the repurchase $XX.XX. once call the million repurchased

Craig Smiddy

a net of to million hefty in $XXX income million, general the In premiums third insurance and $XXX were increased XXXX. third XX% from up pretax operating Frank. Thanks, up the Okay. written quarter, quarter

third combined Our in XXXX. the was of XX% XX% ratio quarter to compared

excellence of associates, the So thanks work efforts. our all underwriting our along with hard

which to points line over portfolio financial ratio exception continue ratios new of D&O higher overall expense mix rate coverage XX.X%, ratio ] XX% line [ business We but lower last continuing that's very the was reserve new the helped our ratio, was ventures favorable achieve with loss we're in premiums few compensation. renewal across our through strong net our and written and and toward X the new the increase ratio results. lines trending and that workers' growth, drive retention The of development produce at commission business for years We in in produced quarter profitable to had underwriting increases of including that the in XX.X%, insurance with higher loss general included lines

lines So turning specifically our X largest of coverage. to

the trends First, auto, had XX.X% too, a XX.X% stable. increases cover clip that commercial auto. Workers' in trend on and although in these XX% ratio net cost trend less premiums commercial And in stable. 'XX. 'XX. our reserve grew to XX.X% to compared loss those we year. Severity the frequency in commensurate And while third is loss net saw the there trend development. at XX.X% development, came around the ratio trends loss workers' compensation And both favorable compared for premiums of with was in quarter favorable development relatively down, are somewhat favorable our with rate compared this both periods, while last came quarter to we periods these third loss quarter relatively at written which XX% year trend of holding of in of to we're observing declined compensation X% severity written continues implies the Frequency at continue while of here third to

insurance to initiatives. again and solid decreases adequate growth levels even and and to the specialty think reflecting year general our strategy continue low into the the in rate rate of digits. We expect for rest mid-single our 'XX, So excellence our remain overall with profitability we and

Insurance. Carolyn? over it turn Carolyn now Title report to on I'll to So

Carolyn Monroe

Craig. you, Thank

the and improvement revenue This last million it represents $XXX XXXX. third third of quarter, XX% from $XX was reported For fee quarter, premium around group of from Title but million. the of down an quarter

million XX% compared were and were down quarter XXXX. premium XX% agency pretax in down quarter combined third to compared in our And of quarter. fees which of million a direct the XX.X% Our $XX the from We income of and XX.X%, to XXXX. had $XX of year's third premiums last ratio third operating

for market our rates market. helped long-term of as challenging the XXXX, our our XXXX story As housing rise, end to than is lowest to our in an volume to market markets. homes. maintain transactions management been our compared the quarter And results. Since dropped in commercial interest Low improvement The the This second more affordability continue new levels homes its years. approach incremental affect inventory have approach pushing with towards issue pretax remains continue rates cost existing in level the us. of sale, of as interest strategic operating impacts availability an will of this on of initiatives. continues, the quarter important focused income view to to headline for a XX This buyers focus

nationwide us footprint transformed share this grow allowed segment. market Our in to has

the agents. in to represented quarter agents. quarter last earned independent but independent our of premiums XX% XXXX. The over XX% premiums by third quarter, of Our title came Commercial premiums quarter of were are our compared XX% cornerstone from U.S. premiums Over premiums of is third this our XXXX. our from quarter XX% of third written increased the independent XX% agents. insurance XXXX in commercial of down business

So of bundling the resulting Craig. optimize our opportunities believe our it and strategies will these back strategy business internal of better is technology solutions us engagement. market productivity, will position take utilize processes in employee the future. And turn We to and agents of I customer to to advantage with in that,

Craig Smiddy

to with title you. shareholders the remain our also dividends through revenue pleased to and in management including with helping and Okay. insurance. this repurchases we is profit we efforts, in levels of profitable the pleased million And thank year. X insurance, mitigate we've the in our which Well, lower months growth lower returned $XXX Carolyn, share remain general first capital

on the for within General commented I 'XX, into of earlier. 'XX Insurance, growth profitable and as For continued remainder optimistic we're

will While market real we insurance 'XX. mortgage continue interest headwinds through the that face and remain title to view of rate estate

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

Operator

[Operator question James. from Peters Raymond Instructions] at first Greg We'll our take

Charles Peters

a for I couple of guess questions I you. had

strong Specifically, expectation look general the give going is at the about shape third for a expectation might of next elevated things premium moderate is quarter of the I of accelerated year. Perhaps think can But perspective reasonable. year? should pricing like year. on First into be third through growth really expect maybe in to we a exposure little of to comments have results, going a next we'd we all, growth guess, it cadence line 'XX Any the relative from on to bit standpoint, us rest the an sort quarter of and how top that? you seems the written growth what with as

Craig Smiddy

to Sure, Greg. I'd be happy comment.

growth the space reflection at it pricing as we net for auto appropriate levels long a So premium was we written that clear could auto and that saw somewhat trends. competitive is severity in that commercial that as be were pricing up with the at we we in on our commercial fact very the of that strong became kept

from, auto, got XX% good on commercial also we again, we from lift a feel rate would I we that say, saw only new on So average, not sit that and well. And where but with business business. the commercial lift some -- had auto very development we favorable again of on increases as there about line we

be relative to 'XX. So auto to we're marketplace competitive very the continue on commercial to well positioned into

the The are and starting to other X of I new have thing years, to we in been based X years, underwriting have recent out that and anticipate produce some we had on, that premium commented new that from they more will ventures we now. recent I underwriting we and considerable get pro as into on ventures those see 'XX lift start 'XX forma

other end the is On workers' of the spectrum comp.

like year, certainly, rate the the rest does it I look increases are of be case. going not think to the

while to decreases and consequently, the to rate rate the the there. on go best think and giving do surface, rates. we to -- don't up marketplace reducing continue Again, hold is rate like very on our down frequency trends we're I continue we

premiums we're I and a flattens rate get creates that So to not it net that our drag written. as into at on see that continuing bit hope decreases would there. least of we And out,

our is we're take though fairly actions, to the our a and or to move underwriting of even about We're optimistic at profitability-wise. as we're we portions portions And able very 'XX, not good place, So large small reducing line very a place portfolio. into top as business. in having it's portfolio good grow

Charles Peters

as the the pegging Just us with mean, accident comp, follow-up loss development. I where you a ] year pick give ratios inside you're workers' reflecting that sense the Can of on are a clearly current or comp? you're prior [ loss workers' the reporting

Craig Smiddy

past. Yes. it where holding we're fairly the had with consistent we Well, in it

it fact, of about X matter be point a As might even higher.

on accident to work So the [ XX% current comp last XX% that year. is ], around around year compares [ ] and

into our 'XX, bit. severity a we rate in and both happening 'XX We're that we'll loss we as pick So consideration, and what's with again look anticipated and sessions for we're lost not when our at to planning being reducing take conservative and picks along those would of we the close there. frequency into reset take look things get expect with changes that set

Charles Peters

then real quickly ratio bit is popped your where has the come ratio it And expense sort business. commented think revenues in time? is? that's in the come And I to gradually pivot to remarks, have know the in. a expense nearing over the Do you but know little just terms you up Title I expected we're of prepared peak that going as down I of

Craig Smiddy

to little over Well, I'll it start detail. give hand then to Carolyn I'll off and a more

a likely end. And speaking of points of about ]. expense we is in XX% combined ratio talked consistent have anticipating that's what communicated So course, quarters been would around the as about year we've I'm that XX this that combined the course, we that that we're And ratio at what several will have previously looking combined where that ratio last because we still on or [ and call, ratio. we were of think very and,

heck So expenses, with clear, very we're a we comments, those also as and is ratios. of up Carolyn it's top end line -- do as mentioned on to her the where a managing lot in has

being next questions to cautious might expense where and it we're to so for Caroline, be And respond specifically I'll you into that to ut year turn ratio the year. more about Greg's

Carolyn Monroe

Yes.

the think stay. been the quarter will our were improve third just things And XXXX. of I to second we the from We think is pretty combined we with slightly, although did least of that's I doing that just stay rest for I the at this where have it think year. the on because around year consistent I are mean, this some right And to able just it throughout we of we where that ratio expect into quarter. to

Operator

We'll go at Mr. next Sandler. Piper to Paul Newsome

Newsome please your is ahead. go line open,

Jon Paul Newsome

Good afternoon. hear me. Thanks for can the you call. Hopefully,

Craig Smiddy

Paul. Hi fine. just you We can hear

Jon Paul Newsome

that Title that titled sold insurance wanted we're mix really through of title -- the couple change there's seeing where your I business has if If And changes? as sort that has at the to direct And go? a in -- affects channel. any -- those in see just had downturn questions. positioning on versus customers was independent if the of the title had does if all. I curious effect I change between the the through ask if anything agents you

Craig Smiddy

But in mostly independent chime you. and it observations briefly just our and give I'll sense, real of Carolyn, California. then to our turn operations And West a just based, you direct to on direct are portfolio. are on our course, Coast,

other market real places So country. had headwind there estate we've more the the in than seen in has

comment California-centric and think us, about agency our are. now any of direct where to rest direct of for shifts you I'll have what on is and turn that of it So in things we nationwide. course, and the a view view mostly But Carolyn, business is to then you

Carolyn Monroe

driven. agency years. of in of to operations. Sure. independent XX We're the it XX%. and numbers how able changing XX%, And at for just business is least been for because directly stayed agents by We've compared lot direct There like [ market years, much written has also really last at And the look owned a much it I is see to don't ] hasn't low shift. tracked

some states, see the East about the XX-XX it's you independent bigger On And agents. Coast, mainly a in split. of

business, keep our are we long agents as much. see as changing in don't I able that independent So to

Jon Paul Newsome

old homes any this make -- new sales housing perspective? Does shift you've That makes a to as sense. to versus homes, existing matter within a that the new you insurer does seen homes, Title of difference business it from marketing

Craig Smiddy

Carolyn. ahead, Go

Carolyn Monroe

what someone No. always relationship whether driven. relationship it depends real I different. in, underwriter for a market on direct or client, to operation -- is agent, our marketing than it's It's thing. builder. just a business a just to has a type an to a And with you're -- builder mean market rather They're that estate a they an of

who with has really it's So the and realtor. the with relationship about just who relationship the the builder has

Jon Paul Newsome

because of hot casualty in in a in put are the some Frank sort of they're about that? or accident some seeing perhaps folks great question your have today line had in if you're of books, Obviously, differentiation are seat. ] with of and to is versus XXXX. curious A the some turns [ I Or casualty I'm recently that the of reserves, XXXX A issues reporting those that of seeing want overall. companies amongst book to years lot record problem the reserves accidents these just others for your always sort years. track you

Craig Smiddy

Yes. Paul? are did unfavorable development years 'XX And you experiencing the you are others say in problems accident with say years where 'XX, to

Jon Paul Newsome

They're to Seems some a for problems source years. lot pre-pandemic companies. are Yes. sort of all the be of of the where

Craig Smiddy

I different, think commercial very auto. on certainly are Well, we Yes.

at before We ago. quickly, identifying X, those the been well years pandemic, rate very achieving offset X trends early, And that necessary X, to responding trends successful were seeing. we started have and X, the

have know while experiencing we're some our I've for -- is marketplace, years. the in general That bit are observed us, liability, different. it's unfavorable commercial in little development not case competitors the favorable auto that those a I development. And actually the of -- on on we So

trend into some that's development because growth general the of to is liability. we're auto, to inflation we're general you're and like auto respond severity liability unfavorable of social liability some seeing in just -- leaking And increases on general a did seeing liability. to responding are We general any on that on rates we from premium in

Operator

Varim next from question at Tindell Capital. take our We'll Evan

Unknown Analyst

lines to really that rates insurance involve My with competition flows. and all do interest has in of question

of the the can years been in yield is few XX% Gap]. Since sort think ]. do flow days. lines to you And these you of terms generally few push you XXs you still XX% pricing? into start various you more guys at Insurance could you So that guys Or to guys Do now? [Audio business in Thank get I'm much obviously because think guys over a have you. on General just become expect higher competitive for combined good to insurance do ratio relatedly, the range a XX [ years next

Craig Smiddy

those. your markets, of of soft and both issue underwriting address think that my by career, given that to XX-year income have underwriting the attention much income. happy In some of experienced be to I'd And are hard been I've I actually, related. investment was Sure. them float questions and relative driven too

question. I your So understand

higher between because on XX% combined and we to on is there marketplace. so line XX% ratios speaking receiving shorter or and target But say income where between cycle, tail a because are bit the with investment far about generally it with we in inflation, you to we're commensurate that certainly, combined target is depending continue a and few that points I can general business. And sit adjusting in the the XX% write trends competitiveness think inflation, if of greater business, if need there concern continue difference I this We social of increases the combined about are about XX%, don't important to is in a levels investment greater achieving rate those not to that little here you're marketplace think it's tail ratio. ratios And believe. longer we our of income. the

I investment far concerns advantages income. outweigh the that greater of think potential there's greater

generally very appropriate disruptive achieving always and inflationary marketplace and the to more of business. entrants remaining underpriced about are relative speaking, and P&C But rate is levels trends. could come and you disciplined new course, that in Of have concerned

to part that that to in our set we in your said, be ]. And XXs the so And combined ] we'll and ] second target combined for year, the will [ as think because able we tell related planning low the do It's the like [ move of XXXX I [ 'XXs involves can XX%. question where combined ratios. I therefore, ratios into we the XXs was and target still something I -- target not ratios change be will go into you targeting

is from because, greater combined will again, And go ratios the I think investment to marketplace greater investment inevitably that when do in is very difficult up. typically, the income, come pressure there there's that some income.

call is to good We of in combined that X% portion favorable coming now, quarters, sustainable So side the term, robust. also that of won't from points on to level being that as extremely drive some development. that insurance then on unlikely. And development having the but favorable that year of that range. But err able And X you we the to couple strong earnings development last down remember further favorable general is is the try ideally have current long calendar said much reflective of we're is not favorable a right overall experiencing development continue. over in is of very ratio the

So year going targeting we're accident and to an the combined ratios continue on to are currently we basis. that target

Unknown Analyst

vehicles And when market? think do might commercial the impact insurance auto far one you that autonomous it's right internal about to other it's off now? guys you you think worth have Or question. worrying so Do not start forecast an guys for

Craig Smiddy

certainly gets off forecast. vehicles. comfortable you before with think type not have internal that's a majority way keep long the personal for we commercial, and to -- lines. of it. any us, about have auto don't it's But ours the commercial public And autonomous commercial on We personal don't exposure. the think an exposure we Well, trucking eye have commercial driving. And of We because really is our long-haul lines,

at they and accept our to we're it kind workers have other to down truck a auto And transporting insuring. business long that idea comes because those then public goods catastrophic driver that we commercial auto will and look XX,XXX-pound that before that's of you a the off vehicles commercial business across write running it's drivers potential. the the if are companies, always workers without highway, is when a commercial, way So is probably of an the going

as be So you're perhaps if I autonomous carrier may because, not is again, way type long think we off relevant as exposures that the auto a a personal the of us, for as it's for it underwrite. question

Operator

would does conference conclude like over turn question-and-answer I that the session. to any closing for to And the management back remarks.

Craig Smiddy

Okay. the I listen appreciative of those join I has that questions, appreciate asked in as call the that again, we, everyone and support, and we on a and the third to have feel thank until much, good you good And fourth you about forward appreciate looking and well, quarter to are Well, and day. quarter results. have our reporting that very and we then,

Operator

And for today's Thank conference that conclude does call. you your participation.

may You disconnect. now

Old Republic International (ORI) 26 Oct 232023 Q3 Earnings call transcript