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Old Republic Reports Results for Second Quarter and First Half of 2016

August 3, 2016 - WorkCompWire

Chicago, IL – Old Republic International Corporation (NYSE: ORI) recently reported moderately improved results for the first six months of this year. Pretax operating earnings rose 5.1 percent and 3.8 percent in the second quarter and first half of 2016, respectively. For each of these periods, earnings were most positively affected by greater profits in the run-off RFIG segment as litigation cost provisions were relatively less burdensome. In combination, Old Republic’s core General and Title insurance groups produced moderately lower year-over-year earnings in the second quarter of 2016, while first half results were essentially unchanged.

General Insurance Group
General Insurance pretax operating earnings were partially constrained by lower underwriting profitability in this year’s second quarter. For the first half of the year, however, the segment’s operating earnings benefitted from moderately higher net investment income joined to relatively stable underwriting profitability.

Low single digit earned premium growth prevailed for the latest quarter and year-to-date periods. Premium trends for both 2016 periods were most positively affected by gains in commercial automobile (trucking), in certain other coverages such as home and auto warranty, and by the emerging premium production of a new underwriting facility established in early 2015. Growth was somewhat hindered in the 2016 interim periods due to declining volume in a large account construction book of business, operating in a very competitive environment.

General Insurance benefit and claim cost ratios were relatively flat for the respective quarterly and first half periods of 2016 and 2015. In addition to estimates of current year costs, 2016 ratios are inclusive of (0.7) and (0.2) percentage point reductions emanating from favorable developments of prior years’ reserves in the second quarter and first half of 2016, respectively. By contrast, the corresponding ratios for 2015 are inclusive of 0.9 and 1.0 percentage point additions stemming from unfavorable developments of previously established reserves, respectively. Relatively higher expense ratios in 2016’s periods stemmed principally from higher costs incurred in a start-up business and increased litigation cost provisions by comparison to the same periods in 2015.

Quarterly or year-to-date fluctuations in the reported benefits and claims ratio trends are not particularly meaningful in evaluating Old Republic’s liability insurance-oriented mix of business. Management currently anticipates, however, that recent years’ uptrends in these ratios should abate and revert gradually to currently targeted annual averages in the high 60%s to low 70%s.

The complete results release is available here: Old Republic Results for Second Quarter and First Half of 2016

Filed Under: Industry News, Top Stories, Workers' Compensation

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