OLD REPUBLIC INTERNATIONAL CORP Q4 FY2024 earnings call

• Financial Performance: Consolidated pre-tax operating income was $285 million in Q4 2024, up from $237 million in 2023. The consolidated combined ratio was 92.7% vs. 93.3% in Q4 2023. Net investment income increased 10% in Q4 and 16% for the year due to higher yields on the bond portfolio.
• Loss Reserves: Favorable loss reserve development in Q4, with consolidated loss ratios benefiting from 2.9 percentage points of favorable development vs. 4.7 percentage points in 2023. Commercial auto, workers' comp, and property had strong favorable development, while general liability and transactional risk had unfavorable development. Decided to exit transactional risk.
• Capital Return: Declared a $2 special dividend, repurchased $174 million of shares in Q4, and total capital return in 2024 was over $1.7 billion. Book value per share was $22.84, up 11% for the year due to strong operating earnings.
• New Initiatives: Announced Old Republic Cyber, and new underwriting subsidiaries contributed to growth in Specialty Insurance segments, with Specialty Insurance net written premiums up 16% in Q4 and E&S premiums growing 21% in Q4.

Specialty Insurance

• Fourth quarter net premiums earned grew by 13%, with pre-tax operating income of $228 million (up from $195 million in 2023). The combined ratio was 91.8% in Q4 2024 vs. 92% in 2023. Net written premiums in Q4 were up 16%, with E&S premiums growing 21% in Q4 and 33% for the year, ending the year with $611 million of surplus lines direct written premium. Full year 2024 pre-tax operating income was $848 million, and the full year combined ratio was 92.2%.

Title Insurance

• Fourth quarter premiums and fees grew by 9%, with pre-tax operating income of $55 million (up from $44 million in 2023). The combined ratio was 94.4% in Q4 2024 vs. 95.5% in 2023. Q4 new open title orders were up 26%, with nearly a third of new residential orders being refinanced transactions. Total agency and direct commercial premiums moderately increased, representing ~23% of net premiums earned in Q4 2024 vs. 21% in 2023.

• Specialty Insurance is expected to continue strong growth and profitability in 2025, with continued growth in top-line and bottom-line results.
• Title Insurance is optimistic for 2025 with improved economy and order counts in direct operations.
• Remaining $205 million in the current share repurchase program indicates continued capital return to shareholders.

• Impact of property catastrophic losses such as the LA wildfires, with estimated ultimate losses between $10 million and $15 million.
• Unfavorable development in general liability and transactional risk affecting loss reserves.
• Real estate market conditions impacting home warranty and certain insurance products, with home warranty down due to market conditions and auto warranty growing from new agreements.

Q: Gregory Peters asked about growth drivers in general insurance segments, particularly general liability, property, and home/auto warranty.

A: Driven by new underwriting subsidiaries; property includes Inland Marine from new subsidiaries, E&S operation contributes to property and general liability growth, and auto warranty has new agreements driving growth while home warranty is impacted by real estate market.

Q: Gregory Peters asked about competitive landscape in commercial auto.

A: Stayed on top of severity trends, implemented double-digit rate increases commensurate with observed trends, resulting in favorable development compared to the industry.

Q: Paul Newsome asked about capital management.

A: Consider multiple metrics including RBC ratios, leverage, and liquidity. Special dividend and share repurchases continue with $205 million remaining in the repurchase program, and capital position remains sufficient with a cushion beyond excess capital requirements.