ORI - Earnings call transcript Q4 2024 | Old Republic International Corporation

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Operator

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Old Republic International Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Joe Calabrese with the Financial Relations Board. ahead. go Please

Unknown Executive

copy Good documents us Regina. discuss and you supplement. distributed thank Risks quarter posted press release Thank separate call forward-looking a statements XXXX. the as afternoon, Old joining financial are a we morning, available for results. at of to with the website Republic January involve Republic's for associated financial press XXXX and www.oldrepublic.com. Please the you, be Both This everyone, dated of conference in fourth can may in the release statements on Old advised and supplement that SEC be this company's the these discussed filings. XX, found call latest

and conference Craig opening CEO will be and the today's Title CEO; of Smiddy, Old on your Republic Frank then Group. and call line some Monroe, Financial make Carolyn for Management will questions. National President and Presenting open Officer; we'll Insurance remarks, President Sodaro, Chief

Craig. call time, I'd this At to like ahead, turn the sir. over Please to go

Craig Smiddy

Okay. Thank and Call. welcome Earnings again Year-end XXXX Joe. Fourth and Old Republic to Quarter Good you, afternoon,

quarter, the of $XXX So consolidated in fourth income, up during $XXX from produced pretax million XXXX. we operating million

quarter that combined XX.X%, consolidated was the year. to last and ratio in XX.X% fourth Our of compares

XX the with As underwriting believe to Specialty subsidiaries Specialty our on we Insurance. noted release, strategy General focused in Specialty We Specialty our more renamed we've Insurance markets. niche P&C segment appropriately unique reflects

the compares ratio XX% million last year. premiums net last up in year. by of Insurance $XXX That's grew in income. produced Specialty fourth operating from we Insurance, The XX.X% earned quarter, Specialty to in combined pretax quarter the that So and XX% $XXX and was million

that produced Insurance in fees rates combined of market, $XX ratio XX.X% higher $XX million tight the operating premiums was year. up and year. pretax and the to from mortgage Title million by XX.X% and Despite compares last grew a income, The fourth estate and quarter, quarter last Insurance in the of continuation interest real X% Title

Specialty reserving we Title little favorable segments. Our Frank to the remarks. And get Insurance and produce as development in about a his to conservative both Insurance that talk continue practices bit more prior year will

amount Our as shareholders fourth book repurchases. balance by $X special the dividends value dividend to a our both through We $X large sheet strong per share capital share and share declared we reduced of amount. returned quarter, even a remains per that same of which in

technology seen shareholders, manage While our to run, month, we venture, Cyber. investing we the that and you underwriting talent. may front, have return subsidiaries, Old to Republic on for continue to excess in new long we capital continue And specialty latest announced underwriting also this new earlier

Carolyn will the then Frank cover So And usual and will by to conversation. Q&A I'll me open over we'll now discussion who turn Insurance, Frank. turn Insurance. followed then things back to Specialty up Title discuss it to And our for

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

Francis Sodaro

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

disposed Our yield book of portfolio comparable the the stands X% average on X.X%. end of at on to compared while reinvestment yield rate bond the year. total during X.X%, bonds at book last was now The year corporate X.X% was bonds corporate

investment of portfolio value our about million. total the the decreased by $XXX During quarter,

However, we year the ended up over full $XXX million.

development compared ratios by last loss benefited X.X percentage from now the points reserves. the year. quarter, loss Turning In X.X to to favorable consolidated

full year quarter and was As consistent the Specialty from primarily expected, in the came the lower with Insurance level results.

auto Commercial development and liability, accident last now favorable I'll details. was also which was is XXXX. development years of The and aided which spread give multiple which transactional strong although continued in year. Property $XX than in higher financial workers' of recent to subsidiaries than partially risk, our development to year. in experienced in exit across and have by development, included This favorable less favorable last strong comp indemnity. these general contributed were line lines transactional offset premium than decision lower risk, some coverage unfavorable experience within million in

$XX.XX for book special primarily XX% inclusive the our with and both of an $X resulting of increase from equated We ordinary per strong to value ended dividends declared the the the quarter, which, year the earnings. quarter of dividend share in operating

repurchase declared we leaving of just $XX program. total the of and to $XXX the of our year capital quarter, shares, quarter, $XXX over the million worth shares, us we bringing Since this end billion. our another return $X.X on of current million repurchased dividends million about the In remaining repurchased $XXX worth nearly million with

a I'll to of Specialty for back over discussion now call the Craig turn Insurance.

Craig Smiddy

most written Specialty in Okay. Thanks, quarter increasing rate Frank. new premium premiums specialty new our retention underwriting with net increases up XX% coverage, of growth ratios, the business in lines on renewal production were subsidiaries. strong an fourth Insurance and

Our in year and the million premium. surplus written $XXX E&S lines premiums year, for by the so XX% with the we direct quarter XX% grew of ended

loss XXXX ratio million, favorable combined by offset loss in current level year was the the ratio. higher full prior combined full anticipated million, in mentioned year was year Insurance full operating pretax than year points The year X full improvement fourth the which somewhat quarter income ratio combined XXXX $XXX the ratio, operating quarter, was and an income in XX.X%. XX.X%, while XXXX my development, combined lower was remarks, I fourth the was As pretax the reserve ratio of reflects year while opening Specialty $XXX

we very So clip strong a Specialty level line continue given at bottom results, to within at these Insurance. grow line top and and profitable a

to percentage that included points Providing of in favorable increase of XX.X% X.X current XXXX loss compares the including details. fourth fourth quarter of The some favorable development, more reserve year ratio color points loss an by XX.X%, for quarter prior last the year and development the X.X 'XX. loss offset year and that to ratio was

XX.X% The full expense ratio full to compares expense the XX.X%, the XXXX. year last in that ratio XX.X% XX.X% to was for that fourth the year compares and quarter, and year, was while

So are right and line these holding are steady in results with expectations us. for those ratios

property Now turning result Angeles a wildfires. catastrophic the the to losses industry Los as impacted that of

includes remain of with of course, in XXX the areas, about First, associates. all disaster our which of our thoughts those

less You exposed of most we business may recall, our write than catastrophic peers.

between losses So currently, our be to $XX $XX and we ultimate wildfire million. L.A. million estimate

year. several workers' XX.X% said premiums year written with the and was grew loss last in auto, consistent commercial we're net to full the in the several full loss XX% to And rate Now XX.X%, XX.X% fourth at compensation. Commercial quarter, what trends while XX.X%. and to some provide in with on compares ratio you years, year and of Rate 'XX loss the increases with details compared came The XX%. last that commensurate auto those increases observing. we've approximately really commercial for were quarters that auto ratio are

ratio obviously, loss to full the full and XX.X% higher about compared premiums quarter to of last a favorable loss Workers' loss The year XX.X%. year, year in ratio lot the last XXXX this while were fourth written both came at of development, ratio XX% year. the compared year X% in compensation XX.X% net was

to we've story decline, for Loss while remains comp very frequency same work for loss that the many now, severity continues seen trend years stable.

rate given rates our higher and that's wage a declining compensation. a remain the workers' given a to on us, trend, stable of again, current decreases reminder, allow the frequency at which rating base, it So X% an payroll, benefit adequate when trend loss the us competitive for trend, and so about within our level as is severity our comes to loss

So excellence in Specialty 'XX, we to profitability which of and reflects initiatives. our expect Specialty solid success continue growth Insurance operational into our strategy the and

from also Specialty underwriting continued new We about. talked growth contributions we've subsidiaries that and expect our

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

Carolyn Monroe

direct revenue reported and quarter Title from Thank represents Premium of of Insurance produced quarter from produced the up XXXX. an premiums versus represented while produced agency revenue of fourth Group were Directly quarter fourth $XXX year, increase million. fees fourth X%. quarter XX% premium the the of The fees our and last X% operations XXXX. up XX% fee XX% for of Craig. were the in of in you, This premium

financial of the new that residential saw open orders new our continuing direct supplement, up in XX% title Nearly shown refinanced of transactions, last the quarter of we As were trend recently quarter. fourth X/X fourth the XXXX compared during enhanced quarter the last year. orders operations the our in during were to quarter

the fourth XXXX. order. direct quarter average in Total our net commercial The included operations, premiums commercial quarter from increased moderately represented of premiums in compared fourth for per some XXXX the direct XX% large revenue XX% approximately to quarter and as earned agency commercial of pushing and up our transactions

increased million operating XX% income quarter of combination of pretax report an million. revenue our our driven that management. XXXX. an a expense combined last XX.X% of during pretax quarter Our to $XX ratio quarter operating pleased year improvement over This of fourth by and of income for was fourth point, the We're XX.X% full to year, compared is over the to percentage of X bringing increase $XXX was

XXXX estate years market. were real and challenging the for XXXX

the bottom things market bounce for During watched along we turn. the the year, pretty much and to prepared

prices. higher pushed improving XXXX our homes improved slightly starting coupled Slightly equity revenues ease homeowner to refinance with became levels. to are rates, accustomed and up as XXXX Our activity strong newly built over buyers inventory

overall order market direct counts in encouraged We the mindful the start of of improvements and XXXX by of has and direction where our the economy operations. broader been

agency with coverage. operations growing agents to continue market Our their assist

technology will agent. connect solutions these our will business throughout come closing on to is being seamlessly with solutions. integrated regardless the of XXXX customer which enable There that be our to more used portal. easier title technology by it our us our to refocusing are This We on software do agents make to efforts

it Thank back you. give I'll to And with Craig. that,

Craig Smiddy

Okay. Carolyn. Thanks.

Specialty beyond. which in last a growth profitable capital XXXX solid XXXX drove And quarters. Overall, record solid solid amount share, return shareholders operating as our in over to of growth, revenue Title and optimism in Insurance equity earnings increasing performance optimistic So value the and us our enabled per Insurance we've few and and book in growth XXXX. very remain to shown XXXX, in profitable on is strong our return for we remained modest has Insurance, continued Specialty operating

concludes prepared where that to ask me I'll out. open questions now the we'll Carolyn help to your or I'll or Frank remarks, answer our up discussion Q&A, So and

Operator

[Operator Instructions] Our the of first question will James. Gregory Raymond line Peters with come from

Charles Peters

General guess I question, appreciate the commentary and first provided on the for the I know you business. So Insurance I --

on growth a going auto the struck liability, you was through home reported the warranty basis by the that business and the year-over-year in the I and in As was general supplement, particularly for property I year. full in

maybe what or those some initiatives, and and the know of -- could is some I in X tied this but subsegments are new tell maybe segments us maybe business So the dissect with drivers growth. the there for of you

Craig Smiddy

Sure, Right. Greg.

underwriting good for property, a coverages. new as to to we comes Marine our premiums is well. from both this general Inland and amount as coming instance, in indeed, subsidiaries and of there, that footnote Marine, you producing So noted at those liability our meaningful also premiums. operation the subsidiaries. underwriting growth one When our contributes point, E&S it the is premiums includes our property And And property producing Inland of are meaningful new have

because warranty bit, warranty and as provided in warranty, warranty auto down conjunction some and products a new several the And agreements fairly producing real of are entered of significant is of we've then home estate those there. sale lot and warranty on new expect home. home actually, a warranty But the auto side, auto you market, might with auto into home the a the is growth on

Charles Peters

for Just segment, away commercial you line business. Specialty auto Insurance biggest far and related the is the business to of the by

talked You perspective. what you perspective Maybe increases a a us landscape rate and could minute you from about on competitive there. see give spend on going

Craig Smiddy

seeing. since said XXXX, respect would things and really and those that and to is we with first go for legal started several have years to been we've and XXXX and in now just -- things sideways reiterate severity that system Sure. monitoring that now, we abuse I at years, what rate are quarters period, that rates contributing been a increases to real-time basis, diligent since X getting the along. we go trend adjusting trend that very And on commensurate we're severity, we have X, time with have been X, double-digit as that severity

top stayed of So we have it. on

observing, it the commensurate has think early, As that that long rate jumped compounding favorable as about such, and with as a favorable compared to trends, we've fact We've industry, if you are had seen severity it result current development. profitable development continue development. comfortable we're we changes the with of to as those And had we we which do we that served on closely actually unfavorable has and stay that produce we well to able there. the we'll rate us get as trends be monitor

the it seen their getting favorable just 'XX, in range getting been industry, But really of you the recognize to the a back steady it us, in like which it rate there to since those comes X up lot last created over corrections of we're for the put A severity unfavorable because upward given still more development has stay have increases and of necessary development. different made ways. the the it. severity story -- competitors course the some when reason year, not for teens were X commentary we've of some then We for top they're high to opportunity we've we've were or the stayed even they've last severity, where competitors, you the years. increases then We that consistent been the that's raising 'XX of and in from we them So And as for a us. on still seems as And major new trends substantially, reacted with know, varies over lot toward XX% that rates of pointing on seeing. while. a and severity we've rate immediately, that

and and seems it to like where others react very are that still we're out. comfortable at So we're things trying with figure

Charles Peters

I Frank portfolio. bit Carolyn, but investment one the I'm sense. I Carolyn, Makes I couple for from little have the like That's is guess gone seems of ask color. a last and Originally, of good yields actually but stabilized. for know equity kind that's the to I a investment change in the going question. And side, with years, about having last up pivot know the a there bit away little it course

updated between from So done what's where new versus equities? perspective, we is? with income portfolio a And where and are your big view duration? anything Have money with the on yield balance picture fixed just you yields the

Francis Sodaro

All right, dig bit. could a I into little that Greg.

XX% with and poised which that level, down equities, have is out I'll at about there, we're So with your up comfortable start way last we're but XX% in we're fixed, at. if either pretty question. Where go at on to, now, we we're we're the to in where are comfortable and depending opportunities that

is as As portfolio And far about X.X%, are income portfolio. X.X% right year, at -- now putting money, were we reinvesting fixed corporate new the on we at yield that bonds. the for

slowing So there's there's definitely go to some but room -- up, that's down.

quality in and far have As credit and material duration all changes as made we arena. that, not that

say, poised I So it's move a steady there's would state, to where opportunities. pretty

Craig Smiddy

we match and anticipated is look that that so those portfolio, duration try do at our to we some Yes, our that, Greg, duration the we liabilities add our to would have reflective on in of just investment I liabilities. although payment flexibility

as follow flexibility. principal, us we generally, do So with need believe duration said, relative and leaves that we anticipated some to Frank is our still liabilities. that consistent we our what But to

Operator

[Operator Newsome We'll of Sandler. Paul question the Piper take from Instructions] with our next line

Jon Paul Newsome

bit of at the buybacks your looking sort repurchases. talk just versus done far. you of to you moment? usage, given capital And current are about you've ask if dividends in review What's questions. a some there's and that could position trade-off capital maybe stock that your special dividend maybe changes the at I capital in any dividends thinking in how so see wanted about management and thinking little the And particularly

Craig Smiddy

happy talk I'm Paul. about Sure, that. to

it's X things So coffers, the with you refill one X that will, of we've want the to over had if not, nice if course as with, the to last returning continue to strong that very you problem, been the of call we retained and to deal earnings. is we as a or earnings it much years, shareholders really

excess tried while we capital, eliminate to creating So keep capital. excess we've

quarter share appropriate in is retained level we a repurchase shot, the time, Frank as made that same capital an noted, that our a return a speak, to so level. with us to million decision $X more in the capital repurchase at we way a consistent to dividend the to we get single continue we and the Board special about on quickly to would And have issue that So as fourth And with current ability still $XXX authorization. shares. more

share look at we and we peers our to said price. our of years, look we trading And we we're are the beginning to repurchasing will few as sensitive And last and see repurchase shares, where things. over at programs the where at we relative when

so our where that do temper or regard. depending repurchases, And be we accelerate might either we remain on share we in and trading opportunistic

So come the capital that and factors efficient will will with continue. review into most play capital And again, next sit and return time best, to Board to our way position all our shareholders. we those

Jon Paul Newsome

particular capital a what how or excess not that the is there you consider excess Is capital moment? model at dominates

Craig Smiddy

course, We having looking capital. looking way the might Yes. model. And we capital, our at substantial dimensions and looking liquidity metrics. we our agencies. ratios, look many at we at a conversations we look at at leverage liquidity We excess believe then I different look various and of as measures if much and well say -- we, think when of how of wouldn't at RBC in we there's have and have rating capital. we at course, with substantial look have particular different And

look analysis metrics our our all with when conversations, the certainly and sufficient position. qualitative comes and our and quantitative dividend capital we But share of cushion all that. even to into special right we would So even some of continue beyond there's the suggest that repurchases, a capital have that lot at now, of play

Operator

We the time. management call at back to remarks. have no I'll hand concluding any this further questions for

Craig Smiddy

we, XXXX, to fourth and even Okay. good here all We next at at Well, today. we you progress. we've deliver seeing all wish very we'll look look out XXXX we remain the initiatives our and that various continue what our given been you XXXX have about sit we where shareholders. optimistic given when more And able we Republic, report about forward feel quarter. feel to we Old our And again, in of stakeholders good on underway, very quarter, and to well to and the

all you very thank So have much, great day. and a

Operator

will that call. for Thank today's conclude disconnect. now all joining, you Everyone, you and may

Old Republic International (ORI) 23 Jan 252024 Q4 Earnings call transcript