Old Republic International (ORI) 24 Oct 242024 Q3 Earnings call transcript

Good afternoon. My name is Audra, and I will be your conference operator today. I'd like to welcome, everyone to the Old Republic International Third Quarter 2024 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 FRB. ahead. go Please

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

again Thanks, welcome afternoon, of today Frank and of CEO CFO Joe. good President Republic's our earnings Monroe, Old With and everyone, Carolyn Well, are Sodaro, quarter and Insurance Title me Group. ORI right. call. third All XXXX to

$XXX last pretax $XXX from compared was The So market consolidated to mostly in $XXX million our combined income, produced the rates Insurance from compared during and of quarter the the Title historically real when level through million experienced estate operating producing at continuing XX% Insurance third pretax reserve strong in and favorable quarter, compared business. income, And that last the General constrict year had which 'XX, and continued ratio of XXXX. High high year. continue lower XX% level favorable Insurance million operating $XXX to combined consolidated of year. General mortgage we of underwriting anticipated the we down which a third XX% year. in million is last development to tight loss results, development quarter down to reflects XX% our prior was ratio this interest was

million it the little despite of estate pretax more Title quarter beginning in almost The talk at produced was far which real about transition bit Title year. the Insurance quarter market, XX.X% Although 'XX. operating and a in combined the income ratio million Insurance the we'll and quarter, in detail. like $XX feel the the of in $XX headwinds, unchanged this does from in we're a And that's so

continue in practices year to Insurance favorable produce reserve Title reserving conservative loss our development and prior So Insurance. both General

reserve expected, Insurance loss So the we same remain favorable the of tenth on years. track consecutive level XXXX, our year General historically in of as saw In high we produce couple last not to to development.

capital we sheet balance returned remains quarter. Our share the as both through to shareholders dividends during and strong repurchases

to the Insurance. long in continue both and in well for as as in General Insurance General technology manage Insurance our specialty We subsidiaries new Title underwriting investing run, investing

Q&A and Frank General Title will And be now those things then Insurance. to open over Carolyn, to cover the turn I to opening turn and then discuss we'll So with will that to it by back will who Insurance, remarks, up me Frank, followed usual will discussion.

So Frank?

third Thank by a year. the of quarter quarter $X.XX income net increased driven This share Craig, last basis, million XX% last relatively the operating investment the compared Net On higher at flat to net everyone. $XXX year. you, yields income on of impact in to good bond operating $X.XX income portfolio. million was and reported we per $XXX morning, afternoon, compared the for

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

and mix from portfolio unchanged investment Our remained last largely composition quarter.

also loss quarter, leading X.X slightly you to ratio, about a to points continued of and development, had favorable the percentage than Insurance General liability although I'll than last Turning the by but minuses development business in system to reserves. ended and lower now of a coming at comparison strive level to Both our of had development Workers' coverages. coming predominantly the loss strong development have recognized favorable quarter. Commercial development, with X% a significantly in the same last the to consolidated benefit pluses auto lower reserve Groups General from line trucking Title the across for. and we lower year. which year. high the the unfavorable General quarter comp Insurance Group is some some the give favorable color level from

our usual coverage, We this a about General Craig total million remaining repurchased had with $XX discussion worth saw over $XX.XX current we development the claims Additionally, strong the book. our portion indemnity, valuations. of of program. I'll our end several million ended million of dividends of line development a worth inclusive dividends, us within across our around year-end which of In increase which the we $XX earnings of since finally, with indemnity represents we recorded to in quarter, quarter, Since than favorable financial resulted shares, leaving per lines. We in paid the to million $XXX financial $XX of unfavorable primarily repurchase and that about larger Insurance. our an the to risks in from share equates turn repurchased property transactional of development another operating which increased we our of small amount quarter and of and And million of back now a book shares. investment XX.X% $XXX value most the relates coverage. of of for call

All right, Frank. Thanks.

new of net where subsidiaries, with reminder, growth paper. as coverage, were lines our premium rate written premiums that most So specialty business is and retentions, written business most Insurance underwriting new the on a XX% E&S on quarter increasing up renewal General of in production in strong increases

at are million trailing in running Our basis. were quarter the a $XXX E&S premiums up on and XX% XX-month

my As million, I combined General the $XXX was and operating opening mentioned pretax insurance ratio quarter, in remarks, third the XX%. income in was

on While combined $XXX XX% million basis, and at pretax XX.X%, between is income is a middle is target the the operating the of at ratio we year-to-date in give which and XX%. exactly range

favorable loss points included favorable to of of that XX.X% last was development, right expense a So for which compared reserve compares of year demonstrates the at and impact was X.X on the that held to a accident the and both favorable relatively clip we to loss basis. quarter The strong Absence at this year development, level. The compared ratio XX.X% for XX.X% reserve the XX.X% quarterly profitable which continue is at points steady year development. to relatively very includes year at year, ratio with year-to-date ratio loss prior expectations. X.X last year, our XX.X% again in and stable running a as which line grow is last

remain Now express includes turning recovering first, areas, the impacted the let are to and quarters. thoughts property catastrophic which our third losses me the in disaster of associates. those still that with fourth industry about X,XXX our that that But in

most less we call the peers. on know, than you of most business catastrophic-exposed write our of As

million to between for losses So million $XX $XX $XX be $X and Milton million with ultimate be and that million. said, for losses between we to Helene and expect ultimate

in As stemming liability we covers. indemnity liability writes written unfavorable development year D&O Frank management all The coverage mostly which mentioned, see high other and prior experienced in risks financial of that the professional reserve E&O indemnity ratio in line and for drove from line development loss unit, financial unfavorable the financial XX% transactional of primarily coverage. the supplement loss our you can the

the details at in X with loss last to compared of of you year more reserve and largest on providing due favorable grew levels our slightly auto Commercial quarter, compensation, written auto ratio some came in the loss to lower XX.X% XX% prior net development. commercial XX.X% year Now lines. premiums workers' while

approximately favorable Frank we ratio that observed written net increases commensurate much trends the of high steady reserve development XX.X% when to historically we at still strong. due year compensation in in And loss compared with XX.X% development experienced as levels line. Workers' year loss favorable this of to that compared held rate last levels and to loss the that year while said, Although, the prior remains quarter-to-quarter, were came XXXX. relatively this XX%, lower premiums in quarter

to loss decline, continues loss So stable. trend frequency relatively remains trend and severity

loss severity declining this wage the rating the So our stable trend of rate the which X% on trend decreases frequency base, given higher line. trend, is payroll, approximately our within in

We for workers' continue of rate adequate the our levels to compensation. that belief remain remain

operational our remainder the General the We specialty to reflecting underwriting expect strategy, in our new for initiatives and solid subsidiaries. Insurance specialty success growth profitability 'XX, and our of of continue excellence

will Carolyn? [Technical Difficulty] Carolyn said over that Insurance. So turn the to with I Insurance, discussion now for Title report General on to

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quarter premium of reported quarter an last for from the This X% revenue increase fee of group nearly Title and $XXX The that. year. million. about Sorry third represents

up from and premium of prior XX% of up while in were the directly premiums revenue our were third XX% versus X%. and XXXX Our fees represented X% quarter agency-produced year, produced fees

decreased net Our commercial XX% our quarter. represent X% and premiums for premiums of approximately the

quarter operations. are up to While in third positive signs seeing direct orders XXXX. slightly, new Commercial premiums commercial our decreased XX% some were compared title we direct

XXXX, increase Our expense ratio and pretax with headline an in XX% of prior our story of rates XXXX. Since year ratio market. end quarter of interest of million have XX.X% over combined quarter, our and are third consistent the operating the was X% of $XX income been third our

homeowners now an rate low their years' that recent lower have increases rates. have rates, -- While to are purchased many opportunity interest homebuyers during already seeing

advantage or spur policy rate recent signals seeing growth. to is their also it X equity in activities taking We activity. The remodel for refinance up in of to pushing significant the cash are other shift economic These long-awaited are because Fed increase needs. a homes homeowners monetary

residential were for title quarter year. of direct XXXX. open affordability direct shift industry, inventory in sign operations, in Fed seen have quarter residential positive XX% orders we our of in housing In our our a sign an represent third the locations our quarter housing headwinds our a and industry. open our third policy -- the still compared up orders increase While lack very for to this new each is Overall,

for our continue As markets to we final and this in to a in emphasize agents continue on bringing focus quarter efforts the as increase We'll operations is servicing prepare they recover. modernization direct critical in technology value priority. that our and business of an start the we year, as investing

results and that Craig. the downturn, we from quarter and third are Thank the the for our we activities, remain will While still recovering managing pleased remain with we long market you, is mindful on focused run.

beginning market. our book growth. It a our us return have feels the of in and earnings capital these record year-to-date on to our like our in Overall, results positive transition real to growth, we're equity performance amount of estate are the share results return driving shareholders enabled year. operating per value And at a this

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

So we'll Q&A. to open up it

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

-- were poor couple have you got mention also So about must I a you comments the activity. of I did when back connection share missed, repurchase talking here. And last

what for about and it for So the share expectations balance to back how repurchase of can 'XX? initiatives, capital the we for year you management the the go think are

Sure.

exactly Frank area you the So and maybe the since were at -- I I don't the of but that in same could -- know just on have missed. end Carolyn, where during you're our know the I'll perhaps quarter what with recap might down repurchases. Greg, since share we quarter as

Yes.

at million full million. about in the repurchases $X the since year and include million of share about end the billion to our we us did puts That's you return $XX was quarter of the when up another repurchases, the end quarter, $XXX since So right dividends. $XXX quarter taking about of the

The is add other we on remaining thing $XXX have million our I'd current authorization.

possibly speak repurchases pace that down exhaust we million of the end of year and continue path. to the And depend that that looks just it Greg, always could have And $XXX could of year, continue that like that. spoke repurchasing mindful would as amount and I $XXX -- the we repurchase of through valuation repurchase we're to the remaining might say we been and or does into first somewhat Frank to we the our when go next quarter that million -- on Yes.

that. Thank clarifying you for

was I -- premium you run been businesses, your million, in said where said Is talking up. you new The rate And is up is on the $XXX Craig, second right you about maybe, think question, I And I me, think how businesses that $XXX you're you've E&S those X XX%. spoke the comments, engine million, ventures got think X growth about, that or at a the the multiyear on an update us different numbers you because give can a period? think here. on is I out over excuse just as we that's looking

Yes, to. Sure. happy I'd be

lines our within to Union XX the Republic just level company, access Insurance that all have paper. So subsidiaries non-admitted General is Group surplus and our set, of again, Old to

some their that use subsidiary our of business. that on of paper several are there companies So do

seeing Old good Old continue our Old amount operation. next Republic a lesser and couple a for years our to subsidiaries, pretty we extent. have up and as primarily our a those growing we it coming again, grow then as and well. just helping of that know of Republic that the when least. And that a that is at then set think we we're Old Lawyers a And and also it's to will that's lesser clip couple we E&S that in that we expected Republic that, with to Professional And from But spoke line about few However, premium up new our expectations, years A&H. our at growth newer I of to a prior Inland we good produce extent, to new set Republic Marine also ago,

that's our lot Old So space. primarily of it E&S driving Republic say, operation is, as growth I that E&S within a the

target I recall, X% final the development. on company. I question favorable for the a don't guess Fair development ever the just hearing reserve Frank, enough. reserve

new So information. that was a piece of

this situation? twice Or The about think the there other quarters the million in I onetime we this is looking of lines. charge potential which as this prior thing is, year call, erosion Was ahead? into think mentioned $XX you development financial it in a is of the of some

Yes.

favorable that I about X%. development know me So development as past, hope we we unfavorable and err of talk opposed let And X between points such, time. on Greg, to the going first that developments. hope side producing said over favorable in the as favorable I've to for of

in too So level of X% strong word, our that our development a that practices we of we remains over might -- be on reserving but target, time. conservative favorable hope will average about result

your this reducing -- So that And transactional risk professional small running, in it as the part our part on give of just it's to the to Frank been some business. said, you a currently that business, first respect at we've our of question, writings area relativity with is year.

as liability liability that So area. professional premium E&O unit, in we're D&O in unit professional of is group. and my our comments, that our of million $XX really and And more primarily stated that I management is line a year-to-date, about it's in

like they but of when of When very of conservative indemnity we line through, additional line. So it's view quarters, very we that, case, financial see where put in year ratio of the some either small and reserves. in we or claims adjust where our I a put the And a we piece know, had claims this something as small in And a severity. way accident coverage and overall number loss come reserve. up certain up we see take some up other something

take something go. that where But try in And things business. we best right But quarter. a And So when taken favorable. again, have view as our and conservative coming unfavorable, approach see if that's through. if We we on it's this to rarely what that's do always we will down now see to we've react conservative way. a things of we'll things we did it's react immediately

JMP. to next move We'll Citizens Instructions] Chmiel [Operator at Karol

get I'm any mentioned auto, rate, which XX% question in he's the And commercial going commercial my right Craig, main But earlier had calling line is in auto. regarding now. that Matt, you're the to frequency is cost the for you unavailable you book my from seen any trend. in with that is seeing the really, severity peers? question your is of and being industry? if your And different loss But is not, are

is from our how believe We Sure. book different at peers our business. least in approach the we

model, different think in is about claims practices specialized practices I are distribution quarters, are and and prior different. our how I spoke our our different, very reserving again, very

However, with that's Yesterday, just with industry it's had whether the auto. or meeting compensation our yourself what very isolate whether the respect hard NCCI, severity, from frequency a it's to sees, from to workers' of they're and severity. in executives is for pretty of we're observing And frequency with in up severity way workers' instance, frequency seeing the folks and comp. what lines what and way on much the -- no,

the to driven as the frequency what is social say would think inflation, being on auto, to that. And the auto miles severity, on are with very and I frequency are we're driven, by So many that I talked verdicts jury consistent is severity roads probably immune on factors traffic from and industry comes how severity goes seeing. of on and are yourself same to it difficult for very therefore, frequency when about, the we've severity drive like and on seeing what going congestion,

too, XX% immediately we I are started implementing our auto us on both us and reserving our saw our we of more over we think need. also on we on a come analytics, XXXX the improved when get again, the loss last filings conservative. And back of severity, And when XXXX, rate was why the where if to a case reserving years, about have basis, increases rate because average, and when saw back we IBNR increase pricing on obtained to rate have on refined back 'XX, Back you X from initially development look we we XX% observe increase. we to much we reserve commercial in industry have, an through it basis practices, favorable difference rate and reserving things. and a actually the there in We started reacted. that is, changes

much and So in able many it's than sooner way we've explain development. and case sooner have. that the and we through, much why to our And putting unfavorable I you to all react the been results compound up industry were, think we it pricing to the say, maintain helps reserving it perfect are our safe

helpful. very the And That's overall capital and management. Great. a then buybacks follow-up regarding just short the

You guys are or for all year said mean, something of that is use open to buyback. the earlier to you using maybe year, capital more growth? premium this looking your that into at? next looking you're But I maybe there you're

our Well, remind to make to I've recommendation when with me every than be you back perhaps just capital that. in let And issue as management management up. comes that a indicated there step broader And and everyone of a capital capital. that several I is, response ways give quarters capital quarter, on return excess we our deem we if we review excess position Board. the

earnings capital have for we've the business. grow to much first to capital over as results the retained years. as have we have fortunate we been several The that so produce last returned is the our preference But

that happening. filling keeps up, bucket earnings back retained and Our that keep

keep up ways to dividend. will Board filling transaction opportunity will suspect year, I through continue or capital again whether be So would our be opportunity M&A a retained we where the an get that earnings And to again that in be businesses an investments that we'll next in stronger that unless there's and then or through bucket. a for into excess, make that talk in capital as we position we special deem to return repurchase a have and about share that, best to with conversation new an

Peters And from we'll at take Gregory James. a follow-up Raymond

that competitive -- the release, for up where your was as up pulling home press the written at out pricing in back, net and segment's warranty, is premium and year. called I quarter being So substantially warranty in yet being look if results, you

through maybe moving the So inside segment. that help you us pieces can walk

Yes.

talk we been you was segment decent a new I it bit, that So auto little tell and That a to warranty. us can business and I'll home very auto has Greg. at did warranty has profitable write our program for loss ran that ratios. within

grow to in auto as our indicated said -- pretty split I different we something question respect about just premium on So that decent something you at expect in something to you a that? continue warranty. And could thought your than clarify. release perhaps If of the

in press coverages it largely declines market D&O or If risk to transactional reflecting and I warranty. public extent, said and release, at a look lesser the home conditions

Yes. Okay.

for you that thank clarification. So Yes.

warranty, sales producing in home warranty Title auto driving coverage for explained. and is and we're it's as of real estate Insurance business mostly the that of on agents, category transactions as dependent I warranty businesses line through So the very market that just auto our on estate homes. And home real

again, So actually there home And warranty we're auto just estate some seen of to a hopefully the are we've down One warranty those entitled, up, two one moving we're because real warranty up, the at market the cycle. in in as home just declines estate starting But pieces. down, turn. bit. feeling the where real segment,

running just you at to budgets you like it end wanted till us to crystal could here guys fire feel of sure pivot, starting I not how I I -- ball. next I'm new I for we you're by for department provide thinking filibuster get through what Maybe refinancing prepare the are year. But about October, -- enough. of I of you. a know and the Fair you're the activities. should both snapshot outlook Carolyn. your

positive be still quite year. A a we to just through hard direct set would It's read, sign, increases that people what every happy quarter-over-quarter lot predict Sure, increase it's happen. this when XXXX be to effect that just have later It's also start see think then XXXX. We our listen in wouldn't really if larger starts the some been we right to just a seen started, it's ahead operations. now, cycle of having almost on that economists I so real so could estate to us. seeing but are something Greg. would bit, thought continue we'll unpredictable believe this we track we've where now. we be but -- anymore. of it month-to-month I just our And the have based that positive when on we'd This predict first I a what seen a year, way recovery we in thought slight orders should so that's we've hard quarter, in

just So I guess reporting ratio was you're a of target just or a as you uncertainty, XX.X%. the several let's ratio, year at a another this X-month maybe currently there's I related question, that expense until in look a lower. if a for the at the as of use future, ago look have lot that I actual expense your conditions what I quarters, Should recommendation? bogey little bit foreseeable of improve sort period do remember

expense are We for it modernization. services lot expenses revenue of our and while we've the it's work these and and takes pay goes A these. has upfront, it's for through And predict. technology all orders. And orders continued, are ratio our been what we our into of to on for to these to to that slow with a those expenses offset recover. I to while producing that kind would hard need say do those fees in

ratio. so And on our bring does that pressure expense some

will the over back management I session. now remarks. Q&A closing our conference concludes for turn that And to

all and quarter and participating time together we for figures. our on look you, fourth the thank when the with Well, getting your we final you us. interest this Okay. wish report your with can XXXX best everyone, back and fall and to And forward you

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

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

may now You disconnect.