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Old Republic Reports Results For The Third Quarter And First Nine Months Of 2021

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·7 min read
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Cision

CHICAGO, Oct. 28, 2021 /PRNewswire/ -- Old Republic International Corporation (NYSE: ORI) today reported the following consolidated results (a):

OVERALL RESULTS








Quarters Ended September 30,


Nine Months Ended September 30,



2021


2020


% Change


2021


2020


% Change

Pretax income (loss)


$

106.0



$

306.9





$

1,132.6



$

36.1




Pretax investment gains (losses)


(192.6)



80.7





303.7



(516.7)




Pretax income (loss) excluding investment gains (losses)


$

298.6



$

226.2



32.0

%


$

828.8



$

552.8



49.9

%














Net income (loss)


$

88.7



$

246.0





$

907.3



$

38.9




Net of tax investment gains (losses)


(151.6)



63.7





239.6



(408.0)




Net income (loss) excluding investment gains (losses)


$

240.4



$

182.3



31.9

%


$

667.6



$

446.9



49.4

%














PER DILUTED SHARE
















Quarters Ended September 30,


Nine Months Ended September 30,



2021


2020


% Change


2021


2020


% Change

Net income (loss)


$

.29



$

.83





$

3.00



$

.13




Net of tax investment gains (losses)


(.50)



.21





.79



(1.37)




Net income (loss) excluding investment gains (losses)


$

.79



$

.62



27.4

%


$

2.21



$

1.50



47.3

%














SHAREHOLDERS' EQUITY






















Sept. 30,


Dec. 31,











2021


2020


% Change

Total








$

6,329.4



$

6,186.6



2.3

%

Per Common Share








$

20.96



$

20.75



1.0

%


(a) All amounts in this report are stated in millions except common stock data and percentages.

Consolidated pretax income, excluding investment gains or losses continued to show strong growth in profitability in the General Insurance and Title Insurance businesses. Solid underwriting results produced consolidated combined ratios of 89.8% for the third quarter and 90.4% for the first nine months of 2021, compared to 92.3% and 94.4% in the respective 2020 periods. Total and per share year-to-date net income reflect significant increases in the fair value of equity securities by comparison to 2020 when equity markets were disrupted by the COVID-19 pandemic.

Consolidated net premiums and fees earned increased 18.6% for the quarter and 21.7% for the year-to-date period. General Insurance earned premiums experienced mid-single digit growth over comparative 2020 periods, while Title Insurance continued to experience robust growth in premium and fee revenues as low interest rates and a favorable real estate market persisted. Net investment income increased for the quarter and declined slightly in the year-to-date period reflecting growth in the invested asset base, offset by lower investment yields, to varying degrees in both periods.

Book value per share advanced to $20.96 as of September 30, 2021 from $20.75 at December 31, 2020. The increase was primarily driven by year-to-date improved operating earnings and favorable overall investment valuation trends which were partially offset by dividends, including a $1.50 special dividend.

As the economy continues to emerge from the pandemic, premium and fee revenues in General Insurance could continue growing. As low interest rates and a favorable real estate market continue, Title Insurance premium and fee revenues could remain strong, although may be lower than recent periods.

Old Republic's business is managed for the long run. In this context management's key objectives are to achieve highly profitable operating results over the long term, and to ensure balance sheet strength for the primary needs of the insurance subsidiaries' underwriting and related services business. In this view, the evaluation of periodic and long-term results excludes consideration of all investment gains and (losses). Under Generally Accepted Accounting Principles (GAAP), however, net income (loss), which includes all specifically defined realized and unrealized investment gains and (losses), is the measure of total profitability.

In management's opinion, the focus on income (loss) excluding all investment gains and losses provides a better way to realistically analyze, evaluate, and establish accountability for the results and benefits that arise from the basic operations of the business. The inclusion of realized investment gains and (losses) in net income (loss) can mask the reality and trends in the fundamental operating results of the insurance business. That is because their realization is, more often than not, highly discretionary. It is usually affected by the timing of individual securities sales, tax-planning considerations, and modifications of investment management judgments about the direction of securities markets or the prospects of individual investees or industry sectors. Moreover, the inclusion of unrealized investment gains and (losses) in equity securities can further distort such operating results and trends therein and thus lead to even greater period-to-period fluctuations in reported net income (loss). The impact of the continuous volatility in stock market valuations is most evident in its net of tax effect on net income (loss) for the periods reported upon.


FINANCIAL HIGHLIGHTS




Quarters Ended September 30,


Nine Months Ended September 30,



SUMMARY INCOME STATEMENTS (a):

2021


2020


% Change


2021


2020


% Change



Revenues:














Net premiums and fees earned

$

2,055.4



$

1,732.8



18.6

%


$

5,881.6



$

4,831.6



21.7

%



Net investment income

111.6



106.4



4.9



323.6



329.3



-1.7




Other income

37.8



31.7



19.2



112.0



98.5



13.7




Total operating revenues

2,204.9



1,871.0



17.8



6,317.3



5,259.5



20.1




Investment gains (losses):














Realized from actual transactions

6.6



1.4





15.6



12.7






Unrealized from changes in fair value of equity securities

(199.3)



79.2





288.1



(529.4)






Total investment gains (losses)

(192.6)



80.7





303.7



(516.7)






Total revenues

2,012.2



1,951.7





6,621.0



4,742.8






Operating expenses:














Claim costs

618.4



638.1



-3.1



1,846.8



1,884.8



-2.0




Sales and general expenses

1,270.8



997.1



27.5



3,601.8



2,789.8



29.1




Interest and other charges

16.8



9.5



77.8



39.7



31.8



24.6




Total operating expenses

1,906.2



1,644.7



15.9

%


5,488.4



4,706.6



16.6

%



Pretax income (loss)

106.0



306.9





1,132.6



36.1






Income taxes (credits)

17.2



60.9





225.2



(2.7)






Net income (loss)

$

88.7



$

246.0





$

907.3



$

38.9


































COMMON STOCK STATISTICS:














Components of net income (loss) per share:














Basic net income (loss) excluding investment gains (losses)

$

0.79



$

0.62



27.4

%


$

2.22



$

1.50



48.0

%



Net investment gains (losses):














Realized from actual transactions

0.02







0.04



0.03






Unrealized from changes in fair value of equity securities

(0.52)



0.21





0.75



(1.40)






Basic net income (loss)

$

0.29



$

0.83





$

3.01



$

0.13






Diluted net income (loss) excluding investment gains (losses)

$

0.79



$

0.62



27.4

%


$

2.21



$

1.50



47.3

%



Net investment gains (losses):














Realized from actual transactions

0.02







0.04



0.03






Unrealized from changes in fair value of equity securities

(0.52)



0.21





0.75



(1.40)






Diluted net income (loss)

$

0.29



$

0.83





$

3.00



$

0.13






Cash dividends on common stock

$

1.72



$

0.21





$

2.16



$

0.63






Book value per share







$

20.96



$

20.39



2.8

%






























(a) Certain reclassification adjustments were made to increase net premiums and fees earned with a corresponding increase to sales and general expenses in the quarter and first nine months ended September 30, 2020 to conform the prior period to the current presentation. See Note (a) in Title Insurance Segment Results on page (5).

Management believes the information in sections A to G and J of the table on the following page highlight the most meaningful, realistic indicators of ORI's segmented and consolidated financial performance. The information underscores the necessity of reviewing reported results by separating the inherent volatility of securities markets and their above-noted impact on reported net income (loss).


Major Segmented and Consolidated Elements of Income (Loss)


Quarters Ended September 30,


Nine Months Ended September 30,


2021


2020


% Change


2021


2020


% Change

A. Net premiums, fees, and other income (c):












General insurance

$

902.8



$

861.9



4.7

%


$

2,629.2



$

2,532.8



3.8

%

Title insurance

1,142.1



857.0



33.3



3,218.7



2,254.5



42.8


Corporate and other

2.6



2.9



-9.0



8.2



9.0



-9.2


Other income

37.8



31.7



19.2



112.0



98.5



13.7


Subtotal

2,085.5



1,753.7



18.9



5,968.1



4,895.0



21.9


RFIG run-off business

7.7



10.8



-28.8



25.4



...