Old Republic International Corporation Q1 FY2026 earnings call

• Investments: Net investment income increased just over 4% in the quarter due to larger investment base and higher yields on bond portfolio; expects net investment income growth to remain in low to mid single digits in rest of 2026. - Loss reserves: Both specialty and title insurance had favorable development, 1.5 percentage point benefit in consolidated loss ratio. - Specialty insurance: Net premiums written up 3.4% in quarter, pre-tax operating income $209 million, combined ratio 94.8; commercial auto net premiums written up just over 1% with loss ratio flat; workers' comp net written premiums up just over 1%, loss ratio different due to prior year loss reserve development; announced formation of Old Republic Property and rebranded Lodestar Claims and Risk Services; expect to close ECM acquisition around July 1st. - Title insurance: Premium and fee revenue $678 million, up 12% from Q1 2025; direct title operations premiums up 6%, agency produced premiums up 14% (nearly 80% of revenues); commercial premiums 27% of earned premiums vs 24% in Q1 2025; entered new excess of loss reinsurance agreement; investment income up 4%; loss ratio improved to 2.6% with favorable prior year loss reserve development; expense ratio improved nearly two percentage points; pre-tax operating income $16.7 million vs $4.3 million in Q1 2025.

Consolidated pretax operating income was $211.5 million in the quarter compared to $252.7 million. Combined ratio was 96.6 vs 93.7. Specialty insurance grew net premiums earned by 4.7% over Q1 2025, produced $209 million of pre-tax operating income vs $260 million, with a combined ratio of 94.8 vs 89.8. Title insurance grew premiums and fees by 12% over Q1 2025, produced $16.7 million of pre-tax operating income vs $4.3 million, with a combined ratio of 100 vs 102.

• Net investment income growth expected to remain in low to mid single digits throughout rest of 2026. - Expect long-awaited improvement in residential housing market for title insurance while continuing to reduce expenses in short term. - ECM acquisition expected to contribute to top line and bottom line in second half of 2026.

• Uncertainties in interest rate environment could impact net investment income. - Competitive pressures in specialty insurance, such as competitors not getting necessary rate increases to keep up with loss trends. - Risks related to underwriting in commercial auto and other lines where client pressures and fuel cost increases can affect top line.

Q: Just a little bit more color on the expense drag. Do you have any thoughts about when some of these new efforts will be able to directionally impact the expense ratio in a positive way?

A: Startup operating company expenses: about 8 new companies, 3 at scale, 3 yet to produce premium; info tech, data analytics, AI: half of 20 specialty insurance companies in core system modernization, initial expenses expensed immediately, midterm can capitalize costs; expense ratio currently around 31%, expecting it to come down over time as efforts kick in but dependent on premium growth.

Q: Question on the accident-year loss ratio.

A: Current accident-year loss ratio for specialty is a bit lower in Q1 than full year 2025 but 0.2 up from Q1 2025; due to cumulative compounded rate increases in lines and measured rate decreases in workers' comp, sticking to underwriting discipline to maintain loss ratios.

Q: Focus on commercial auto segment. Comments on written growth and competitive front.

A: Net written up 1% in commercial auto due to lower retention ratio; competitors not getting necessary rate increases to keep up with severity trends; pride in pricing precision and focusing on loss ratio over top line.

Q: Question on commercial for title insurance.

A: Large amount of opportunity on data centers, energy production facilities, etc.; excess of loss reinsurance arrangement to be able to write larger commercial accounts as frequency of opportunities has grown, more comfortable taking on risk with reinsurance.