Old Republic International Corporation Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Acquisition of Everett Cash Mutual: Announced agreement to purchase ECM through sponsored demutualization. ECM is a leading insurer of farm and agricultural operations, writing $237 million direct premium in 2024 and fits into the Specialty Insurance portfolio for product diversification.
• Financial Performance: Consolidated pretax operating income was $248.2 million in Q3 2025, up from $229.2 million in Q3 2024. Combined ratio was 95.3% in Q3 2025 compared to 95% in Q3 2024. Annualized operating return on beginning equity improved to 14.4% from 11.9% in Q3 2024.
• Loss Reserves: Both Specialty and Title Insurance had favorable loss reserve development. Specialty Insurance workers' comp had significant favorable development, and Title Insurance loss ratio decreased to 2.7% from 2.8% in Q3 2024.
• Capital Return: Capital built up faster than ability to return via share repurchases or dividends. Will discuss with Board on best ways to return capital to shareholders.
• Specialty Insurance Details: Commercial auto net premiums written grew 7% with a loss ratio of 68.3% in Q3 2025. Workers' comp net premiums written grew 6.7% with a loss ratio of 63.8% in Q3 2025.
• Title Insurance Details: Agency premiums increased, commercial premiums grew, investment income was up nearly 11% year-over-year. Focus on digital transaction tools and agent technology solutions.

Segment Performance

• Specialty Insurance: Net written premiums were up 6.9% in the third quarter. Pretax operating income was $207.7 million with a combined ratio of 94.8%. Net premiums earned grew 8.1% year-over-year compared to third quarter 2024. The loss ratio was 63.5% in Q3 2025, including 3.4 percentage points of favorable prior year loss reserve development. The expense ratio was 31.3% in Q3 2025, compared to 28.8% in Q3 2024.
• Title Insurance: Premium and fee revenue was $767 million, up 8% year-over-year. Pretax operating income was $46 million compared to $40 million in third quarter 2024. The combined ratio was 96.4% in Q3 2025, an improvement from 96.7% in Q3 2024. Agency produced premiums were up 11%, making up nearly 80% of revenue, and commercial premiums were 26% of earned premiums compared to 20% in Q3 2024.

Guidance

• Continued solid growth and profitability expected in Specialty Insurance due to specialty strategy and new operating companies.
• ECM acquisition is expected to position ECM well for profitable growth geographically and through new product offerings.
• Will continue to discuss with Board on optimal methods to return capital to shareholders.

Risks

• Regulatory pressures in some states, though no significant new pressures emerged.
• Industry challenges in commercial auto insurance, but Old Republic attributes its strong position to real-time rate adjustments, specialized claims handling, and conservative reserving practices.

Question and Answer

Q: How is excess capital measured?

A: Look at multiple enterprise risk management measures, including capital relative to reserves. No major shift, just building capital faster than returning it.

Q: ECM acquisition impact on capital?

A: Sponsored demutualization makes ECM accretive to book value, doesn't significantly affect capital position or return recommendations.

Q: Title business regulatory pressures?

A: No significant new regulatory pressures, but Texas rate rollbacks were mentioned, with nothing major emerging elsewhere.

Q: Commercial auto business outlook?

A: Proud of strong position due to real-time rate adjustments, specialized claims handling, conservative reserving, and reliance on proprietary data and analytics instead of ISO.