Old Republic International Q1 2025 Earnings Call Transcript

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Provided by Quartr
April 24, 2025
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Operator

Ladies and gentlemen, thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Old Republic International First Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Thank you. And I would now like to turn the conference over to Joe Calabrese with the Financial Relations Board. You may begin.

Joe Calabrese
SVP at Financial Relations Board

Thank you. Good afternoon, everyone, and thank you for joining us for the Old Republic conference call to discuss first quarter twenty twenty five results. This morning, we distributed a copy of the press release and posted a separate financial supplement. Both of the documents are available on Old Republic's website at www.oldrepublic.com. Please be advised that this call may involve forward looking statements as discussed in the press release and financial supplement dated 04/24/2025.

Joe Calabrese
SVP at Financial Relations Board

Risks associated with these statements can be found in the company's latest SEC filings. Presenting on today's conference call will be Craig Smitting, President and CEO Frank Sadara, Chief Financial Officer and Carolyn Munro, President and CEO of Old Republic's National Title Insurance Group. Management will make some opening remarks, and then we'll open the line for your questions. At this time, I would like to turn the call over to Craig. Please go ahead, sir.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

Okay. Well, thank you very much, and good afternoon, and welcome again to Old Republic's First Quarter twenty twenty five Earnings Call. Well, Old Republic started the new year much like we finished last year with the continuation of an upbeat story of growth and profitability. During the first quarter, we produced $252,700,000 of consolidated pretax operating income. That's up from $231,500,000 in the first quarter of twenty twenty four.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

Our consolidated combined ratio was 93.7%, and that compares to 94.3% in the first quarter last year. Specialty insurance grew net premiums earned by 13% in the first quarter and produced $260,000,000 of pretax operating income. That's up from $220,000,000 last year. And the specialty insurance combined ratio was 89.8% in the quarter compared to 90.3% last year. In title, despite the continuation of higher mortgage interest rates and a tight real estate market, the title insurance folks grew premiums and fees by 11% in the first quarter and produced $4,300,000 of pretax operating income, which is up $2,300,000 from last year.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

The title insurance combined ratio was 102.1 in the quarter compared to 102.5 last year. Our conservative reserving practices that we talk about continue to produce favorable prior year loss reserve development in both specialty insurance and title insurance, and Frank will provide a little more detail on that later. Our balance sheet remains strong even as we've returned capital to shareholders through both dividends and share repurchases. And here, too, Frank will provide a little more color around that. That all happens while we continue to return excess capital to shareholders and invest in new specialty underwriting subsidiaries, technology and talent.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

I will now turn the discussion over to Frank for some more color and details around those comments, and then Frank will turn things back to me to cover specialty insurance. And that will be followed by Carolyn, who will discuss title, and then we'll open up for some conversation and Q and A. So Frank, with that, I will hand it over to you.

Frank Sodaro
Frank Sodaro
SVP & CFO at Old Republic International

Alright. Thank you, Craig, and good afternoon, everyone. This morning, we reported net operating income of $2.00 $2,000,000 for the quarter compared to $185,000,000 last year. On a per share basis, comparable year over year results were 81¢ compared to 67¢, a 21% improvement. Net investment income increased 4% as a result of higher yields on the bond portfolio, partially offset by a lower invested asset base from returning excess capital.

Frank Sodaro
Frank Sodaro
SVP & CFO at Old Republic International

Our average reinvestment rate on corporate bonds during the quarter was 5.1%. The total bond portfolio book yield now stands at 4.6% compared to 4.5% at the end of last year. The value of our total investment portfolio increased by nearly 200,000,000. Our equity portfolio, which is focused on high quality value stocks and makes up 16 of the total investment portfolio, was up nearly 60,000,000 in the quarter. Turning now to loss reserves.

Frank Sodaro
Frank Sodaro
SVP & CFO at Old Republic International

Both specialty insurance and title insurance recognized favorable development in the quarter, leading to a benefit in the consolidated loss ratio of 2.6 percentage points with no significant unfavorable development to speak of. This compares to 2.3 points of favorable development last year. I'll now go a little deeper into specialty insurance coverages. Workers' comp continued to have strong favorable development, albeit less than last year. Both commercial auto and property experienced favorable development that was considerably higher than last year, and general liability had a very small amount of unfavorable development compared to a more meaningful level of unfavorable development last year.

Frank Sodaro
Frank Sodaro
SVP & CFO at Old Republic International

We ended the quarter with book value per share of $24.19 which inclusive of the regular dividend, weighted to an increase of just over 7%, and that resulted primarily from our strong operating earnings and higher investment valuations. In the quarter, we paid approximately $500,000,000 for the special dividend declared late last year. In addition, we paid $68,000,000 of regular dividends and repurchased $25,000,000 worth of our shares. We did not repurchase additional shares since the end of the quarter, so that leaves us with just over $200,000,000 remaining in our current repurchase program. I'll now turn the call back over to Craig for a discussion of specialty insurance.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

Okay. Thanks for that, Frank. Specialty insurance net premium written was up 10% in the first quarter, and that came from strong renewal retention ratios, rate increases on most of the lines of coverage, solid new business writings and increasing premium production in our new specialty underwriting subsidiaries. Our specialty growth continues to expand our E and S presence with seven of our underwriting subsidiaries utilizing Old Republic's E and S platform. Our E and S direct premiums written were up 13% this quarter.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

As mentioned in my opening remarks, in the first quarter specialty insurance pretax operating income was $260,000,000 and the combined ratio was 89.8%. So given these top line and bottom line results, we continue on our journey of profitable growth within Specialty Insurance. Getting a little more into the details, the loss ratio for the first quarter was 61.7%, including 3.3 percentage points of favorable prior year loss reserve development compared to 62.7 last year that included 2.5 points of favorable development. The expense ratio was 28.1 in the first quarter compared to 27.6 last year, right in line with expectations. Turning to some comments on property catastrophe losses that have impacted the industry as a result of the L.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

A. Wildfires. During our last quarter's earnings call, you might recall that we indicated we had estimated our ultimate L. A. Wildfire losses to be between 10,000,000 and $15,000,000 And currently, we've reduced that estimate to less than $10,000,000 Now to give you some details on commercial auto and workers' compensation, our two largest lines of coverage.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

Commercial auto net premiums written grew 9% in the first quarter, while the loss ratio came in at 70.3% compared to 71.9% last year. Rate increases were approximately 11%. And consistent with comments we've made in previous quarters, that is commensurate with the loss trends that we're observing in commercial auto. Workers' compensation, net premiums written were 3% higher in the first quarter, while the loss ratio came in at 58.7% compared to 47% last year. Loss frequency trend continues to decline, while the loss severity trend remains stable.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

So given higher wage trend within payroll, which is, of course, our rating base, declining loss frequency trend, stable loss severity trend, combined with rate decreases that are in the low single digits, we think our rate levels in this line of coverage remain adequate. We expect solid growth and profitability in specialty insurance to continue throughout 'twenty five, which we think reflects the success of our strategy and our operational excellence initiatives. And we also expect to continue to see growing contributions from our newest specialty underwriting subsidiaries. So that'll end it for specialty insurance for now, and I'll hand it over to you, Carolyn, to give us some color and comments on title insurance.

Carolyn Monroe
Carolyn Monroe
President and CEO of Old Republic National Title Holding Company at Old Republic International

Thank you, Craig. Title insurance reported premium and fee revenue for the quarter of $6.00 $5,000,000 This represents an increase of just under 11% from the first quarter twenty twenty four. While we are pleased with our performance, conditions in the real estate and mortgage industries continued to be less than favorable in the seasonally weak first quarter. Our directly produced premium and fees were up 6% from the first quarter of last year, while agency produced premiums were up 12%. Commercial premiums increased 27% this quarter compared to first quarter twenty twenty four.

Carolyn Monroe
Carolyn Monroe
President and CEO of Old Republic National Title Holding Company at Old Republic International

Commercial premiums were 24% of our earned premiums this quarter compared to 21% in the first quarter of last year. Agency premiums made up 78% of our revenue during the quarter, up from 77% during first quarter of last year. Investment income was also up this quarter around 7% compared to first quarter of twenty twenty four, reflecting higher investment yields earned. Our overall loss ratio increased to 2.7% this quarter compared to 2.2% in the first quarter of twenty twenty four. Although prior policy years continued to develop favorably, the amount of favorable development in first quarter twenty twenty five was less than the first quarter of twenty twenty four.

Carolyn Monroe
Carolyn Monroe
President and CEO of Old Republic National Title Holding Company at Old Republic International

Our pretax operating income increased to $4,000,000 this quarter compared to $2,000,000 in the first quarter of last year, and our combined ratio of 102.1% is slightly lower than the first quarter of twenty twenty four. Our elevated combined ratio continues to reflect market conditions, which we are managing through. Our expense ratio improved to 99.4% from 100.3% in the first quarter of twenty twenty four, an improvement of nearly 1%. Technology continues to be paramount to ensuring smooth and secure real estate transactions. In our previous fourth quarter call, we emphasized the importance of refocusing our technological efforts to streamline business operations.

Carolyn Monroe
Carolyn Monroe
President and CEO of Old Republic National Title Holding Company at Old Republic International

In the first quarter, we proudly announced our strategic partnership with Qualia, which saw Qualia acquiring our settlement and production software platforms, RamQuest and eClosing. By leveraging Qualia's expertise and advanced infrastructure, providing a modern digital transaction, we will be able to equip our direct offices and title agents with cutting edge tools and solutions. This partnership also allows our internal tech teams to reallocate our focus and resources toward developing other crucial technologies that will help us thrive in a competitive market. It is necessary for our internal systems such as remittance, policy issuance, CPLs and rate engines to work seamlessly with all closing and production platforms. Additionally, integrating fraud prevention systems and AI technologies is of utmost importance to strengthen our security measures and enhance operational efficiencies.

Carolyn Monroe
Carolyn Monroe
President and CEO of Old Republic National Title Holding Company at Old Republic International

As we continue to be agency focused, we understand the unique challenges and opportunities that our title agents encounter daily, and we are dedicated to providing them with innovative technological solutions required to maintain a competitive edge. And with that, I'll turn it back to Craig.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

Okay. Thanks, Carolyn. So profitable growth continues in Specialty Insurance. And in Title Insurance, we remain focused on profitability in a challenging marketplace. And on a final note, operating return on equity improved to an annualized rate of 14.4% compared to 11.5% in the first quarter last year, which you might have noticed in the supplement.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

And that's happening as we continue to thoughtfully manage capital returning excess capital to shareholders. So that will conclude our prepared remarks, and we'll now open up the discussion to Q and A, where I'll answer your questions or I'll ask Frank or Carolyn to help me out and respond.

Operator

And ladies and gentlemen, we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, press star one a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your And your first question comes from the line of Greg Peters with Raymond James. Your line is open.

Gregory Peters
Gregory Peters
Managing Director at Raymond James Financial

Good afternoon, everyone. Hi, Greg. Hello. So, hey, let's go to the specialty insurance business. And as we go through and evaluate your top line performance in the first quarter, can you give us a sense of how much of the top line is a function of rate versus actually new business produced?

Gregory Peters
Gregory Peters
Managing Director at Raymond James Financial

Because I imagine it's gonna vary by segment.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

Well, that's right, Craig. It's, it does indeed vary by segment. As we mentioned in the release, we're seeing rate decreases in the public directors and officers business as well as, of course, workers' compensation, some some slight decreases there. But on the other hand, as I mentioned in my earlier comments, we're getting strong rate increases still on our commercial auto business, and we're also getting strong rate increases on our general liability business as well. So it really is a a mixed bag.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

I would say that our new underwriting subsidiaries are providing a pretty substantial lift here beyond, just rate and and retention and new business in the organic segments of of our business. So, as we indicated last year, we were optimistic that as these new newest underwriting subsidiaries came online that we were going to continue to to see greater and greater contributions throughout, '25, and that's happening. So, and we expect it to happen going forward. So it's a, it's a combination of of a lot of things that are driving rate versus, growth in organic business versus, new contributions from new underwriting subsidiaries.

Gregory Peters
Gregory Peters
Managing Director at Raymond James Financial

Right. Maybe on the the new business initiatives, you know, because you don't have a lot of historical data inside the company regarding, you know, claim patterns, etcetera. How do you approach the reserving on these ventures? And how do you approach loss picks, etcetera?

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

Sure. Well, we approach it exactly as we approach all of our other businesses. But to your point on the longer tail lines of businesses, we do look at industry data. We look at our own data. And to the extent that those lines of business are the same, we're we're deriving loss patterns from from our existing business.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

The other thing I would point out is that a lot of the new underwriting subsidiaries are shorter tail lines. As mentioned previously, we're trying to diversify the line of coverage mix, and I think we've done a a a pretty good job of that over the last five years, diversifying, away from being so concentrated in just workers' compensation and, auto, commercial auto. And through that diversification, we've added a considerable amount of short tail lines. So reserving there is is is less of an issue. So for instance, inland marine coverages, while we have history on inland marine experience that we could look at, it's so short tail.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

It's it's a year anyway. So, you know, it's it's there's not a lot of of tail risk there. And similar similarly, that would go for our a and h business. It's very short tail, a year to two years. And then I'll use another example, our new lawyer's professional liability business, what we've we've written professional liability business and even written lawyer's professional liability business.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

So we do have a history there, and we rely on that. And then I'll just stop with if you look at our E and S business, you know, they're writing general liability. They're they're writing auto some auto liability, some property. Again, the property short tail, and we have the experience that we look to when we're looking at at trends on, general liability and auto liability. So to sum it up, again, either we have the experience, we might supplement that with some in, industry experience, or it's so so short tail that, it comes out very, very quickly.

Gregory Peters
Gregory Peters
Managing Director at Raymond James Financial

Oh, that's good detail. Thanks. I guess the the last question, I'll pivot to Caroline's business. And, I I I guess, ultimately, you know, the expense ratio improved, but still running higher. You know, and I don't wanna get too hung up on the first quarter, but maybe give us some thoughts about how the expense ratio could improve over the course of the year relative to the prior year.

Gregory Peters
Gregory Peters
Managing Director at Raymond James Financial

And and any thoughts you might have on that?

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

Caroline, I I would be happy to kick it off. So we mentioned last quarter, and then Caroline mentioned again in her comments, the example where we, sold our closing platforms and refocused our technology, development efforts on other tools, and we think we're partnering with a vendor there that's going to provide even better technologies. And that alone will help the bottom line as we move throughout this year. It'll gradually help the bottom line. And as we move into next year, we should see probably about a $4,000,000 per quarter improvement in in the bottom line because we were incurring expenses there that were greater than the fees that we were taking in.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

Carolyn, I'll I'll turn it to you. I know there's other things that we're doing as well to to manage. And then, Greg, I would before I hand it to Carolyn, I would just underscore that I agree with you completely. I I wouldn't. If you look at last year where we started, it's similar position, but we ended up, you know, the year in a better place because of that first quarter being a quarter that is traditionally very low in in transactions.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

So, Caroline, I'll I'll turn it to you.

Carolyn Monroe
Carolyn Monroe
President and CEO of Old Republic National Title Holding Company at Old Republic International

Okay. Thank you, Craig. Yeah. We, you know, we continue to manage our expenses to the market. But, Greg, it's really going to be based on our top line revenue.

Carolyn Monroe
Carolyn Monroe
President and CEO of Old Republic National Title Holding Company at Old Republic International

We've

Carolyn Monroe
Carolyn Monroe
President and CEO of Old Republic National Title Holding Company at Old Republic International

got

Carolyn Monroe
Carolyn Monroe
President and CEO of Old Republic National Title Holding Company at Old Republic International

to see the market turn more for us to really have a large effect on our expense ratio, but that doesn't stop us. I mean, we're we're constantly monitoring what we're doing, what we're spending, and, you know, what we how we can change that. So, I do see it improving, though, throughout the year because, you know, we also feel like we're gonna see an improved market as we get to this summer.

Gregory Peters
Gregory Peters
Managing Director at Raymond James Financial

So the on the

Gregory Peters
Gregory Peters
Managing Director at Raymond James Financial

Does that help?

Gregory Peters
Gregory Peters
Managing Director at Raymond James Financial

The techno yeah. It does. On the technology piece, as part of your answer or part of Craig's answer, that was principally in the direct operations. Right? That where you you're gonna get the savings or was that also agency too?

Carolyn Monroe
Carolyn Monroe
President and CEO of Old Republic National Title Holding Company at Old Republic International

So our this was just our our platforms were totally separate. They actually only served a small piece of our direct operations. They were RamQuest and eClosing were software platforms that were used out in the market by independent title agents. So but they just rolled up under our whole title operation. They were operated as separate companies that we combined into our financials.

Carolyn Monroe
Carolyn Monroe
President and CEO of Old Republic National Title Holding Company at Old Republic International

So it it's not really a function of director agency. They were separate companies.

Gregory Peters
Gregory Peters
Managing Director at Raymond James Financial

Got it. Thanks for the answers.

Carolyn Monroe
Carolyn Monroe
President and CEO of Old Republic National Title Holding Company at Old Republic International

Uh-huh.

Gregory Peters
Gregory Peters
Managing Director at Raymond James Financial

Thank you, Greg.

Operator

And your next question comes from the line of Matt Carletti with Citizens. Your line is open.

Matt Carletti
Managing Director at Citizens JMP

Hey, thank you. Good afternoon.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

Good afternoon, Matt.

Matt Carletti
Managing Director at Citizens JMP

I want to ask you a question on kind of a high level question, but just there's been a lot of, obviously, focus and discussion on uncertainty in the markets related to the economy and tariffs and all that sort of thing since, call it, April 2. Have

Matt Carletti
Managing Director at Citizens JMP

you seen anything even anecdotally in your book of business,

Matt Carletti
Managing Director at Citizens JMP

whether it be, you know, on the specialty side, just projects or, you know, clients kind of taking a pause before making decisions? Or, you know, there have been some, again, probably anecdotal articles, but about the housing market and how people have kind of stopped and kind of reassessing maybe a move or buying a house. Have you seen any changes in volumes on even on the title side since then?

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

Right. Well, you know, it it's hard to really know what we're if what we're seeing in the way of top line is a result of tariffs, or is it some other economic variable? I would say, probably an area that, you could take some credence from is, the reduction in our Canadian business. We of course, exchange rates there have some impact, and and, you can attribute some of the reduction to just exchange rates alone. But given that a large amount of our business on the trucking side is North South type of travel, and we've seen a reduction there.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

I I would think some of that is tariff related. And then I I feel even more confident saying that our our accident business up there, the reductions that we're seeing up there are probably some fallout from the tariff discussions because what our travel accident business does up there, we have the incoming business where you have visitors into Canada, and students coming into Canada. And then we also have business where Canadians are are, the so called snowbirds are heading in in down into The United States. And, we there's been a lot of media coverage where they're not a lot of Canadians are not, deciding to to come here and go somewhere else. So, we've seen a, a pretty steep drop off in our travel and accident business.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

We've seen, some drop off in the, the commercial trucking, business. So I think that's, you know, that's an area where it's probably the easiest to surmise that it's probably related to tariffs or at least the ensuing behaviors after the the tariffs. So and then I would just add, you know, from a we we haven't seen anything from a loss cost standpoint. We're keeping our eyes open on the workers' compensation side of things. Tariffs down the line could have an impact on pharmaceuticals, could have an impact on medical devices, On the the commercial auto side of things, tariffs could have an impact on vehicle parts and replacement vehicles.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

But, you know, we as you know, what we do for a living is monitor in as real time as possible what's going on in severity and frequency trends. And to the extent that those tariffs tariffs start to have an impact on on severity trends, we're gonna spot it, and we're gonna do what we always do and and and react accordingly just as we have done when there have been inflationary trends in the past. Again, that's for us, that's what we do is we we part of our underwriting excellence proposition is making sure that we have a complete understanding of of changes to exposure trend, frequency trend, severity trends, and we'll be following it very closely. And right now, those are the couple of areas in more comp and couple of areas in commercial auto that we know we have to keep an eye on. Great.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

Thank you for

Matt Carletti
Managing Director at Citizens JMP

the color. I appreciate it.

Operator

And your next question comes from the line of Paul Newsome with Piper Sandler. Your line is open.

Jon Paul Newsome
Jon Paul Newsome
Managing Director at Piper Sandler Companies

Yes, I got a couple of questions here. First, let start off with a competitive, environment question. What what are the themes of this quarter has been softest as you get into larger markets as opposed to middle and maybe small? Are you also seeing that in your book?

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

You know, Paul, that's that's a hard one for us to answer. Most of our business is small and mid commercial business. And if I understood your your your question, are we seeing a difference between softness and hardness in the small and mid versus the large? On the large, what we do there through our Old Republic Risk Management subsidiary is is business whereby the insureds are taking the preponderance of the risk either through large deductible, or or captives. And, that business is very sticky for us, and our our rates there are not so much subject to the types of rates you might experience on other kinds of large commercial risk transfer business.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

This is risk retention business, less rate sensitive. So I can't say anything that we've seen in our portfolio is suggesting a difference between our book of of small commercial, middle market commercial, and large commercial business.

Jon Paul Newsome
Jon Paul Newsome
Managing Director at Piper Sandler Companies

And now a capital markets question or capital management question. Pardon me. So the buybacks, slowed or stopped, at a certain point. Curious if there's a reason for that. And maybe you could just talk about sort of the outlook for stock repurchases prospectively given the pause.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

Sure. So, yeah, we as I think we discussed last quarter, we made the decision based upon our analysis of our capital position to evaluate both special dividends and share repurchases. And as I think I commented on, we had a very nice problem of continuing to carry too much capital because as quickly as we could return excess capital and reinvest it, which comes first into our business, we kept replenishing at a at a faster pace than than we could return it. And we made the decision at the end of the year to go ahead and and issue a special dividend, as Frank commented on, about $500,000,000 through a $2 special dividend because we felt that that enabled us to more to to reset that that level or level set that capital base to a more appropriate level without continuing to retain excess capital. And as we commented on, we did have some share repurchases in the first quarter as well.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

As we go forward, there's a lot of variables at play here. You know, as we entertain new other new specialty underwriting subsidiaries, as we entertain the possibility of of acquisitions. Those require capital. And we still have an outstanding authorization under our existing repurchase, and we'll continue execute on that as we go forward. And we'll see where where things are and do what we always do, which is at a point in time where management believes we're continuing or that we have excess capital we need to return to shareholders, we will take that matter up with our board and decide the best way to return it, whether that's through share repurchases, special dividend, or a combination of the two.

Jon Paul Newsome
Jon Paul Newsome
Managing Director at Piper Sandler Companies

And then maybe one final question. Corporate expense levels look like they jumped a bit in the quarter, and, the commentary and press release suggest maybe they're somewhat sustainable, but at this high level, is that the way to think about it? Or is there another way to think about sort of how the corporate expenses would be? Obviously, that's a huge piece of your business, but it's a little bit in the first quarter.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

Sure. I'll I'll comment, and then Frank can can fill in where he might see appropriate. So on on corporate expenses, this quarter, as we noted in the release, you have a lot of moving pieces with a lower level of interest income because of the lower invested asset base. You've got the RFIG runoff moving out of that piece of the business as well and the $500,000,000 special cash dividend payment. And on the expense side of things, a lot of that is related to executive compensation expenses, were higher.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

And that's their higher as a result of mostly as a result of performance. A lot of that is variable in nature related to our performance, and and we had a we've had very strong performance. So as a result, higher executive compensation levels. Nice problem to have if because of the very good performance, we incur we have a higher expense there. So on a go forward basis, with the reduced level of capital, highly variable income, and expenses, I think you can suggest that the the the bottom line type of loss within corporate is probably going to continue throughout the remainder of the year.

Jon Paul Newsome
Jon Paul Newsome
Managing Director at Piper Sandler Companies

Good. Thank you for the help. Really appreciate it. And

Operator

that concludes our question and answer session. I will now turn the conference back over to management for closing remarks.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

Okay. Well, we have one quarter under the belt, and it feels pretty good thus far. We're very proud the results we've been able to deliver to shareholders, and we thank all of our associates and business partners that have helped us achieve that. Obviously, the economy is question mark. A lot of volatility, a lot of question marks remain, and, we'll have to see how the rest of the year goes.

Craig Smiddy
Craig Smiddy
President & Chief Executive Officer at Old Republic International

But so far, so good for Old Republic. So thank you very much. We appreciate your time and interest.

Operator

And ladies and gentlemen, this concludes today's call. We thank you for your participation. You may now disconnect.

Executives
    • Craig Smiddy
      Craig Smiddy
      President & Chief Executive Officer
    • Frank Sodaro
      Frank Sodaro
      SVP & CFO
    • Carolyn Monroe
      Carolyn Monroe
      President and CEO of Old Republic National Title Holding Company
Analysts
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Key Takeaways

  • Old Republic delivered $252.7 million of consolidated pretax operating income in Q1 (up from $231.5 million a year ago) with a combined ratio improving to 93.7% versus 94.3%.
  • The Specialty Insurance segment grew net premiums earned by 13%, generated $260 million of pretax operating income (versus $220 million) and improved its combined ratio to 89.8% from 90.3%.
  • Title Insurance overcame a tight real estate market to increase premiums and fees by 11%, achieving $4.3 million of pretax operating income (versus $2 million) and a combined ratio of 102.1%, and announced a strategic partnership with Qualia to modernize its tech platforms.
  • The company reported favorable development in prior-year loss reserves of 2.6 percentage points (versus 2.3 points last year) and saw net investment income rise 4% as bond yields climbed to a 4.6% book yield.
  • Old Republic’s balance sheet remains strong with book value per share of $24.19 (up just over 7%), and management returned capital via a $500 million special dividend, $68 million of regular dividends and $25 million of share repurchases (with $200 million still available).
A.I. generated. May contain errors.
Earnings Conference Call
Old Republic International Q1 2025
00:00 / 00:00

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