Chicago, IL – Old Republic International Corporation (NYSE: ORI) recently reported pretax income, excluding investment gains (losses), of $300.6 for the quarter and $1,058.6 for the full year 2022. Results are within our expectations, with General Insurance pretax operating income rising 34.6% for the quarter, while the effect of increasing mortgage interest rates contributed to a reduction in Title Insurance pretax operating income of 67.2%. Solid underwriting results drove a consolidated combined ratio of 89.6% for the quarter and 91.0% for the full year 2022.
Consolidated net premiums and fees earned were down 13.7% for the quarter, with Title Insurance net premiums and fees earned dropping 29.4% as a result of lower revenues in both direct and agency operations, while General Insurance net premiums earned grew 6.5%. For the year, consolidated net premiums and fees earned declined 4.1%, reflecting a decrease in Title Insurance of 13.0%, offset by growth in General Insurance of 7.1%. Net investment income increased in both 2022 periods. The increase for the quarter was primarily driven by higher investment yields earned, while the increase for the year reflects growth in the invested asset base and higher investment yields earned.
During the quarter, the Company returned total capital to shareholders of $243.7, comprised of $67.2 in dividends, and $176.4 of share repurchases (7.7 million shares at an average price of $22.70 per share). For the year, this results in total capital returned of $862.0, including $580.7 in dividends and $281.2 of share repurchases (12.6 million shares at an average price of $22.23 per share), leaving approximately $169 remaining under the current repurchase authorization as of December 31, 2022.
Book value per share was $21.05 as of December 31, 2022, reflecting declining fair market values in both the fixed income and equity portfolios during the year, partially offset by strong operating earnings. With the addition of dividends declared during the year, this was an increase of 0.9% over year-end 2021. During the quarter, fair market value appreciation within both portfolios and strong operating earnings drove a comparable increase of 12.5%.
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 (losses). Under Generally Accepted Accounting Principles (GAAP), however, net income, inclusive of investment gains (losses), is the measure of total profitability.
In management’s opinion, the focus on income excluding investment gains (losses), also described herein as segment pretax operating income, provides a better way to analyze, evaluate, and establish accountability for the results of the insurance operations. The inclusion of realized investment gains (losses) in net income can mask trends in operating results, because such realizations are often highly discretionary. Similarly, the inclusion of unrealized investment gains (losses) in equity securities can further distort such operating results with significant period-to-period fluctuations.
The complete results release is available here: Old Republic Reports Results for Fourth Quarter and FY 2022
Source: Old Republic