Chicago, IL – Old Republic International Corporation (NYSE: ORI) recently reported pretax income, excluding investment gains (losses), of $227.3 for the quarter and $450.3 for the first six months of 2023. Title Insurance results declined in both periods, affected by higher mortgage interest rates. General Insurance pretax operating income rose 33.6% for the quarter and 34.6% for the first six months, driven by solid underwriting income. These results produced a consolidated combined ratio of 92.6% for both the quarter and first six months.
Consolidated net premiums and fees earned were down 16.8% for the quarter and 17.9% for the first six months. Title Insurance dropped as a result of lower revenues in both direct and agency operations, while General Insurance grew by mid-single digits in both periods. Net investment income increased significantly in the quarter and the first six months, primarily due to higher investment yields earned.
During the quarter, the Company returned total capital to shareholders of approximately $288, comprised of $70 in dividends, and $218 of share repurchases (8.7 million shares at an average price of $25.16 per share). For the first six months, this results in total capital returned of approximately $492, including $141 in dividends and nearly $351 of share repurchases (14.1 million shares at an average price of $25.14 per share). Following the close of the quarter, the Company repurchased $83 of additional shares (3.2 million shares at an average price of $25.83 per share), leaving approximately $182 remaining under the most recent authorization approved by the Company’s Board of Directors in May 2023.
Book value per share grew from $21.07 at year-end 2022 to $21.78 as of June 30, 2023, primarily reflecting the addition of operating earnings less shareholder dividends. With the addition of dividends declared during the first six months, this was an increase of 5.7% over year-end 2022.
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 Results for Second Quarter and First Half 2023
Source: Old Republic