ORI - Earnings call 4 2023 | Old Republic International Corporation

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Old Republic International's Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, January 25, 2024. I would now like to turn the conference over to Joe Calabrese with the Financial Relations Board.

Joe Calabrese

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

Craig Smiddy

Good and business. Title Frank is Monroe, and Old thank Year-end our everyone, CEO and Quarter President Joe, ORI again our Fourth our Earnings welcome Call. Insurance me Okay, XXXX and Carolyn CFO of Republic's you. With to Sodaro, today afternoon, of

and million So $XXX enabled combined and our XX.X%, quarter. focus on in operating ratio of the a diversification across to income produce us and consolidated consolidated pretax insurance of P&C title specialization

For ratio compared XX operating we XX income ratio continued was operating in XXXX, underwriting with consolidated the strong to results $X.XXX pretax the and million a pretax income combined and XXXX. In XX.X consolidated compared the $XXX General of Insurance, year, in was $XXX to full in combined quarter. billion to million produce

the XX.X million up the with XX% mortgage our estate For was from million, real produced operating in Title ratio the pretax income the of XX.X, $XX headwinds $XXX XXXX, income the million a ratio was and just profitable in market, operating soft slightly full pretax underwriting despite rates quarter. the Insurance XX.X we higher insurance than and results combined combined year, General in Insurance $XXX produced XXXX. And from and

operating income XX.X compared million, $XXX for million year, down pretax XXXX ratio Title $XXX was from in full and combined Title's XX.X the was the to For XXXX. in

prior all by to year continue our So our year in ninth favorable reserving segments, practices which, produce prior favorable loss year development development. of conservative the way, consecutive marks X

Our remains the we as to we new to long both underwriting invest dividends capital repurchases, through shareholders to it share continue return balance and term. solid a continue technology, with and subsidiaries, even on focus sheet, while in all people

will And those cover me will with I Frank, to conversation, comments, now then discussion to back followed turn introductory always the over General open So to will Frank, up we we'll Insurance. and discuss things Title to Carolyn, who the Insurance, turn by Q&A. then do, as

Frank, with that, I it hand to you. So

Francis Sodaro

share $XXX and per everyone. versus $X.XX year. by afternoon, for quarter XX% were the $X.XX $XXX On Craig, investment for morning, for a operating for year-over-year primarily Net yields. $X.XX the versus net driven for quarter income results and we increased and comparable million and you, year, respectively, $X.XX the good income the and reported year. the Thank higher This full million of quarter basis, XX%

during of the to compared nearly while book bonds at funds over on year yield was year-end X.X% on the average Our last the disposed now X% was portfolio corporate Bond reinvestment rate is yield X.X%. year. X.XX%, book just comparable

X.X securities remained maturity mix high very portfolio investment portfolio XX% of quarter our with Our average quality years. remains with consistent bond an last and investment-grade the with of in

respectively, a over portfolio our million by about points of for year segments increased income the the by of million consolidated compared and and the total, loss fixed and loss ratio X.X to recognized operating all percentage year, X.X securities position all percentage a perspective, ended X.X period the unrealized gain points stock The periods for same $XXX benefited the During $X.X approximately by the the In reserve valuation quarter, year $XXX favorable rates. by interest ago. driven X of and development just in presented. value billion. From increased X.X quarter an for

operations. run-off Turning mortgage insurance to our

the $XX first We recent We quarter, half in paid share full $XX.XX, repurchased which our previously close just valuation. In In by of dividend the consistent for contributed investment of to and in were million million book $XX $XXX return value of year this strong meantime, our million worth shares operating paid sale and driven and results a year. XXXX. shareholders. increasing the This to was with the $XXX the for return the periods XX.X% per $XX announced dividends return return higher the total total of a over value million of to million with the bringing book group for the expect earnings year. we to to quarter, ended total

returned back and paid the year, worth For over million million million full $XXX repurchased of Insurance. we $XXX to General turn call in now just for to a shareholders. I'll shares over discussion for the $XXX a dividends total of our Craig of

Craig Smiddy

Okay. Thanks, Frank.

D&O growth, of the up including was our new quarter underwriting Insurance ratios the net produced business renewal General continue nearly workers' subsidiaries. which in to achieve strong exception of increases new with portfolio, compensation. over rate up were So through across year. and retention written we and And our business most helps new What for and XX% contributed XX% premiums the to this

for ago, $XXX and million pretax for quarter the As minute and quarter year. General the for year. Insurance XX.X% discussed million the group operating income the combined $XXX ratio a the and for was was XX%

as these favorable development, X. X XX.X%, was year. is So we quarter for ratio for the was and year, the X.X loss XX.X% included results favorable which to ratio for of The quarter in the for included it was points continue development. very of in which Insurance and profitable XX% it was produce the XX.X%, points expense numbers. The General our reflected business

is with coverage All our this in of much very line mix.

came net quarter premiums grew written in XX.X% for XX% XX.X% Commercial and So coverage. the year. at quarter the in for auto the ratio turning to the X our of loss largest specifically almost lines while

double XXXX. for includes As release, quarters loss all the X that because trend increase in low way we we in higher mentioned pushed come as very when we the of react the This see loss the of severity the through quickly $XX.X in digits. ratio is our have and things an loss past, in into severity we of And reported quarter trend.

the feel of reserve the development actuaries we're with quarter for loss year, years experience both at comfortable ranges. and to end the where in range. in Rate increases very favorable sitting year those However, our and this we continued the on we higher line, prior prior XX% at were

continue loss deductibles And such trends. pulling and also rate other cover risk for analytics portfolio management So to data we're selection. to levers leveraging push for we as increasing

written for the ratio in there the premiums at Moving to year. workers' came quarter, XX.X% for the compensation. the loss for declined while XX.X% quarter Net and

for quarter we've to favorable continued year, relatively the development. both experience down trend severity the stable. seen years, continues prior loss while over for comp Here, Frequency we and for workers' many as remains trend too, year to

the think we some levels with So single-digit in rate our remain low even rate range. adequate decreases

new the strategy, and solid our Insurance, in excellence in underwriting So our profitability subsidiaries. reflecting XXXX, expect continue we of specialty success to growth our in initiatives General

turn discussion Insurance, So and I'll to on that with we'll Carolyn at over now General leave the it Carolyn? report Title to for Insurance.

Carolyn Monroe

the quarter we premium $XXX of XXXX. quarter from Title group, and Thank the you, revenue XX% for Craig. reported fee decrease million, a of fourth the In

premiums agency and and Our were from the XX% year. quarter were XX% fourth premiums direct down fees prior down of

our prior XXXX, in quarter Our and fourth $XX of to of combined ratio XX.X% $XX to fourth compared year. million million pretax quarter the in operating income of did of XX.X% compare the

we on As previous earnings have estate challenging calls, XXXX real was market. discussed a

Our compared of XXXX. premiums XXXX. full our in and total up premium XX% conditions market made premiums fees down those around year reflect and XX% Agency fees and to were

the we ended of While $XXX operating to pleased our we expenses and year. pretax make to progress XXXX full XX% lower our really the ratio able XXXX, during with than full a We year income we compared were was did XX.X%. combined year reduce operating XXXX are million with of

focus strategic costs, has From In a has managing IT leadership with company modernizing team planning. an perspective, a been real priority. on addition our the to continued our

with improvements have includes of to they a efficiency improve allow teams to technology. occur structure. to need when of take initiatives with These will up. operating less market had the processes, and our approach procedures which and several multiyear automation us This initiatives conditions advantage a improving our in We optimize of scale

looking We saw fourth XXXX, to were the continue quarter all small During Commercial will premiums in we third quarter. around decrease really the compared contraction. commercial advantages. market scale to X% exempt of of the not transactions during a identify from economy

nationwide our both footprint premiums total the line with overall premiums years. commercial commercial believe to us our We rebounds. transformed premiums XX% in for XXXX were well XXXX. for market premiums of when Our decreased positions Commercial compared

optimistic inventory low market conditions persist place. relatively of and as uncertainty interest we we Although take bit improve elevated begin are will rates that affordability, little with a this housing just when will XXXX,

I'll And turn that, it to back with Craig.

Craig Smiddy

Carolyn. you, Thank

and including which Insurance. So we management Insurance, we capital in to million repurchases remain to in lower General the And continued and mitigate profitable returned is with growth $XXX levels helping share pleased through our in our profit the pleased also with efforts, revenues Title shareholders dividends remain XXXX.

say, continued General optimistic as within XXXX, for I Insurance. For growth profitable we remain

Insurance will and mortgage of marketplace real that face as While Title indicated, estate rate remain, we headwinds. Carolyn the view continue interest to

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

Operator

first first Our comes James. Instructions] question [Operator Peters question -- Gregory from from our Raymond

Charles Peters

everyone. good Well, afternoon,

or numbers, going commercial sort they give were achieved detail about actions stock the severity of around in mitigate X to auto. our what's But more of So the going of rate talk last some on you I today guess the in on though maybe you've was by what's And and pretty over even severity year some or there? surprised accomplished markets good. kind could Craig,

Craig Smiddy

to color to add commercial Sure, regard with Greg. be more I'd happy auto.

accident what we we our current towards we severity in the year And we of saying XX% year in was pushed I'll see something we that that favorable, a last the the range. quarterly first the the more on ratio, That is, were reported moved said commensurate at by up. ago, lower were were loss current seeing we I react that to what react we And unfavorable, When into look accident something where what and that uptick. seeing at quickly. So see and accident double-digits, slowly. severity with we raise XX%. year a few decided severity I when up we reiterate saw in took call moments around

is And is, certainly said increased of quarters ratio But in fourth loss gets forward. XXXX, year I ratio think result of going XX.X. in the we as masked, into XX.X. issue that putting quarter. put not the at expect just X things current -- Last year ratio fourth you pick in we're we looking the we that pick the here, look we our the what that quarter year certainly if where at release, loss ended at ended was context accident just to ratio loss year, year accident a loss

So accident year picks, stretch again, this And to. And a stable. think way is reacting at in that just very no over stable. developing are current things very looking we're by we those

and round year to I a favorable XX.X% points our out accident to. spoke numbers reported development in that to ratio just loss ratio. XXXX, then That the loss included XX.X% So reported X.X we picture of the

we certain year points made is 'XX prior for we in sustainable of that X.X juxtaposing we development that very loss clear favorable kind on XX.X% it numbers. favorable favorable a were our indicated ratio those very that the but calls, reported against when robust not But saw development we very that So quarters, included as robust still development numbers XXXX, a development. And results. X.X% in of year,

the So 'XX that the pick that you favorable ended loss for loss XX.X%. Rounding it of to loss development at we 'XX of back -- ratio of and back out pick XX.X%. where reported XX.X% initial in to development X.X% compares started, where 'XX, I have year XX.X%

in context, it are very stable. put say, I as things So

Charles Peters

going commercial think, I quickly, to but go your good of views Republic, bad Is is, news -- news where most the concept think just business? previous recognizing our recognize think not calls, on on I to Is years. commercial trends Old on And the are favorable line fair a consistent auto, the when there the answer, assessment in to from where inside really that that still something the what's you the you lockbox, a accident more recognize any case slowly. recent inside about of of part of auto, back this

Craig Smiddy

years, excessive. in the absolutely would still are those deemed conservative approach, always a raise approach through as speaking, been our And past the on very redundant, lock down the our have see feel Greg, you higher only ratio lock years. those picks and That's the possibly say, our of years with looking in -- as the coming it and practice hold that But consider looks release range same as years we those prior is calls, as of you reserves forced Consistent anything reserves picks. prior can is Yes. at has practice, on we accident be much the we it to some end case relatively would where lockdown time, unfavorable. when that because that and those as to where prior we the is I we exceed the we way we discussed if loss only

Charles Peters

think the you've Insurance targeted ratio, press in press XX% this combined sort in like of look the look XX% and I should release, of at business concept Fair -- of of in your this or last XX%. enough. release the for I cycle course cited end of highlighted end what wanted what coming X low then the you years, around And the -- conversations, over the General range at And in low results the all to previous I that range. combined the if

year of with kind hard go happened that's at pretty the -- of what's that's outlook there consistent on market. Is anything cause the to would from much because least of think with pricing Or to near-term the in XXs we've I in it? or been going the a range, inside upper that last 'XX will the -- low issues the where of causing you perspective about settle on us some range. the feel other middle end maybe out give than severity this just that some how

provide can would some you helpful. be that If guidance,

Craig Smiddy

the for Greg, Thanks, Right. question.

quarters, development. year I robust mentioned very year mentioned the of favorable development. prior favorable prior course, result few current we've as is, And in year a So inclusive I just of prior as ago, moments had

on want the as of So coming development. side favorable of We couple favorable points want consistent of each at side going we points go of at forward, expect on a of air made. with comments That's in should previously air opposed course, of we development, X.X least at development that we unfavorable. as to level 'XX ended more than forward, We to the year. to favorable

could in your sustainable. way the question with consistent So you years again, favorable few that development and in coming has those very been last comments, expect a robust not that is

we current to on where We the accident yet. want where be still loss higher However, in we're year than year areas want current be. is accident to ratio ratio have we it that business loss not our

high very in have a the even that too, So made, are loss here, until approach as we continue hold. we degree we see very lower coming reluctant to to we take and picks -- where make a year of conservative though we they'll improvements improvements being accident short through term, confidence they're the

an only point I'll maybe we've pick, think we But that we've by get very so to we of -- the our one gradually we And pick, points. example, ratio take loss where and give improved slowly. Maybe think think the are. improvement we we maybe X will in gone

where to expect going would trend So the we it year year won't we loss prior this high sustained. also expect, would over favorable that development, but I back point that to of accident lower, be level time, ratio being loss the started,

Charles Peters

of a lunch conference seems your station Chicago's [indiscernible] driving calls. tradition from quarterly detail. to hour. It finest, I'm I to as kind smelling be back hear the with

Craig Smiddy

call Republic would What an department? conference fire without Chicago Old International be

Charles Peters

to question, I talk. I'd an like about to we has Returning so from technology how forward. -- in And about you budget lower think investments, substantially in curious investments how Can you declined and Title, with the with revenues revenue pivot Carolyn some opportunity -- my remarks, exactly. Carolyn, talked prepared think last your give technology going these and having changed the lunch

Carolyn Monroe

continue it issues, with of very and that allowed we're the company isn't lot time the there's we to being prepared manages some investing of And are but that things doing. It we've just when for technology, mindful a have do slower to that run the the been to fortunate the revenues, just So you you're cyber long in way has -- that continue type really to of right our with cut a thing. for back. that

our have didn't enable the investments. things with cut to allowed that those a to We do more we really things really business continue put we've manage We're doing. set with that help back priority efficient, that some it us maybe that it have us us, we were make aside. But could say help to lower business, be that to easier

Operator

Powell Investments. next question Our from Miller comes from Greg Howard

Unknown Analyst

is cash surprised business. My that a been had about a sale on out given you loss it. that that little was question the you've runoff I and dividend of

questions. And unit? have X explain the I the that So from second $XX the dividend you million last is Could loss? just

Craig Smiddy

I'd happy which the Sure. is with the $XX part, start last the yes, million to easy is be dividend.

other there here. is of question The are part factors several the

without much very XX the is good, it is the is companies very and commensurate level at different to, of at in produce reached be have premium, which the book you other down. thing of robust we -- coming market then diminishing things that with off, about and look many evaluation fixed going they're where anymore parties additional generate bidding able did very like to we investment and that opinion, opinion ultimately expenses and in that valued coming where forward, runoff can't were business. The with more level much some right approximately our capital. At to of And allow believe was valuation, a us any how are outsiders diminishing out profit run as in what that then revenue reserves we at our You've premium that and there just company ultimately, process. look valuation you banker a as that the I premiums to occurring are point, actually robust to book insurance we and would point a a sold mortgage release and a would the business, you to in at now. hit value. new cut to mortgage of compare business valued And actually

point it to a hit the difficult revenue to that over earnings create very you time. makes capital produce and So ability actually and where drag you will an release diminishes

drag point, really we inflection to to made even think sale sense and capital though book amount point. at we value. had since levels over a hit large had earnings an So capital We would into have extracted hitting where We able enter went a it the inflection the of again, release to business runoff, we been time, loss an extracted. not and of into perfect seen that again, it an were the we was

Unknown Analyst

the Okay. Can you tell us value? book what's

Craig Smiddy

With value that the you're year-end... book saying at --

Francis Sodaro

about at year-end. million $XXX It's

Craig Smiddy

was The XX% costs. of that and the of net for have that transaction XX% then we should was So sale, price -- $XX be about the component tax loss million.

Unknown Analyst

enough? just maybe give you just auto, the the price increases are little And that a more confidence commercial XX% could on us

Craig Smiddy

would and very we Well, vis-a-vis record, a our close as competitors our track best to we refer industry. eye on the to I can, keep it,

to years, back few X, X why got severity or commercial is we were in at years. those and which early, development trends produce trends, the I achieved development auto I'm has on of going recognize increases levels we favorable of severity favorable year that think because in the very one able such rate prior we're prior the above recognized,

prior we the we 'XX doing development record Difficulty] we level track And the it's of a our we [Technical just those on result think favorable fourth the trend. in because us we as see with say speaks itself what I for years quarter, something at took from that do, year up when of keeping reserve action So look exactly accident was

Operator

Ladies and gentlemen, operator. this is the

by. are Please stand experiencing We difficulties. technical

Craig Smiddy

us? hear you Can

Francis Sodaro

can. we Now

Craig Smiddy

I don't want [Technical to. Difficulty]

Unknown Analyst

Hello?

Operator

Hello, Mr. Powell.

Unknown Analyst

Yes.

Operator

is I'm operator. just the reconnecting. This

Unknown Analyst

thank Great, Okay. you.

Craig Smiddy

on. our to back everyone very Okay. connection, in a and technical Thank and apologize was are difficulty, We here we for we lost Chicago There you much. that.

reserve for the those with started and that when So had with just auto. of severity commercial is competitors And we the to strong We, track about pick is X and favorable unlike that reacted favorable come have question I'll ago, up think to most why severity prior record produce results our case last Again, that risk X, on development through, on itself. year auto. selection speaks because commercial we led rates accident year development. years our

and to do numbers to rate over quick the excess very with our demonstrated very or good increases that rate last severity a that and that react of observing. we we're the coming see we're when noticing sure severity are severity with years severity reacting the job of we've severity commensurate has through we making had even that particularly changes So in many that that in

So I'll leave it there questions? any at that. other Are

Operator

We questions would call turn like to closing I to in have management for no back the further over remarks. queue.

Craig Smiddy

all we thank strong into apologize your a patience. and you much. we Thank Again, very you, appreciate strong your very and we 'XX, Well, everyone, for XXXX, as had support, appreciate very we year We that technical be much. as optimistic glitch, well. head very are will a XXXX but we that Okay.

Operator

for call. you participation. This your Thank conference concludes today's

You may now disconnect.

Old Republic International (ORI) 25 Jan 242023 Q4 Earnings call transcript